Intellectual Property

As the pace of technological innovation increases, there are frequently conflicting claims over who "owns" new developments. Such disputes are resolved under the nation's intellectual property laws, which attorneys see as checks and balances that protect innovation while deterring excessive claims of technology ownership.

Sometimes intellectual property disputes arise over patents. One recent example is a patent issued to St. Louis-based aircraft manufacturer McDonnell Douglas Corp. for the "windowing" year 2000 remediation technique. In windowing, some two-digit years, such as 99, are assigned to the 20th century, while earlier years, such as 11, are assigned to the 21st century. The company transferred the patent to its inventor, Bruce Dickens, who announced that he would demand an up-front fee and royalty payments from every corporation that has used windowing.

Can You Keep a Secret?



In addition to covering patents, intellectual property covers products and personal technical knowledge, as information technology workers who change jobs sometimes find out when they or their new employers are sued for theft of trade secrets. Jonathan Band, an attorney at the Washington office of San Francisco-based Morrison & Foerster LLP, says, "In the old days, it wasn't such an issue because someone would work for IBM for his whole career. Now people work for a couple of companies and then start their own companies.

"Plus," he added, "things are more complicated now. In the old days, employees were asked to sign nondisclosure agreements (about technology that was considered a trade secret). Now, as people bounce from company to company, sometimes as contractors, sometimes as employees, they are sometimes asked to sign agreements and sometimes they aren't. It's all very sloppy because it's not clear what IT workers agree to."

As for Dickens, will he prevail and send legal ripples throughout the world of IT innovation? Kenneth K. Dort, a senior litigation partner at Gordon & Glickson LLC in Chicago, says he doesn't think so -- largely because of some built-in safeguards in intellectual property law that weed out ideas that shouldn't be protected.

"Most people don't think the Dickens patent is valid," Dort says. "To patent an invention, it must be novel -- new and different -- and nonobvious. Most people view this approach as obvious. The standard for obviousness is, 'Would someone in the cutting edge of the relevant art think it was obvious?' Most people think that masking the date in software, as windowing does, is not all that ingenious."

But what if Dickens' claims are upheld? The claims are based partly on an important 1998 federal appeals court decision, the State Street Bank & Trust Co. case, says Jeffrey R. Kuester, an intellectual property attorney at Thomas, Kayden, Horstemeyer & Risley LLP in Atlanta.

In that case, a federal court expanded on the idea that software should be patented rather than copyrighted when it upheld a patent covering a business method of calculating financial information. Patents are believed to be the stronger legal protection, so the decision opened the door to patenting business methods. Kuester says he sees mixed results for IT if Dickens prevails.

"The patent would effectively give him a limited-time monopoly, and innovation would be encouraged from that perspective," Kuester says. "But another way that innovation occurs is by people using existing technology as a footstool to better technology. Software is unique in that it involves borrowing from other systems and solutions. If Dickens is successful, will people innovate in the future by incorporating known software technology into their new solutions? The answer is, 'Maybe not.' "

Band says that even if the Dickens patent stands up, its impact may not be far-reaching.

"You can have a legal case, such as the State Street Bank & Trust decision, which goes beyond the specific facts of the case and establishes new legal doctrines," Band says. "I don't think that will come out of the Dickens patent. I think it could ultimately have a limited impact in that it would affect people who did Y2K work, but it doesn't have implications for anything else."

Can't Take It With You

Intellectual property law also deals with how technical knowledge affects IT workers' jobs. When Seattle-based Inc. hired 10 former IT employees of Wal-Mart Stores Inc., Wal-Mart sued, alleging theft of trade secrets. The case later was settled out of court. But Bentonville, Ark.-based Wal-Mart didn't have a strong case because it hadn't clearly explained to IT employees what information it considered to be secret, Dort says.

The IT technology at stake involved modern data warehousing, but suits of this type are hardly new. For many years, technology firms have been sensitive about IT people leaving companies and taking their technical know-how with them.

"It's still as big a problem as (it has) ever been," Kuester says. "Any knowledge that employees take with them that is considered to be a trade secret of the former employer cannot be used to implement a solution for the new employer. But the problem is that not all companies require employees to sign agreements that cover this, and many employers are not even clear about what is a trade secret. As a result, many IT employees don't know what they can and cannot use if they leave."

How do such cases get resolved? Unless a company can prove that a former employee has improperly used its trade secrets, the courts tend to side with the worker, Dort says.

Facts, or Protected Data?

Intellectual property law is in a state of flux, and the big issue this year will be whether Congress votes to extend legal protection to factual information contained in databases, says Marc Pearl, general counsel and senior vice president of governmental affairs at the Information Technology Association of America in Arlington, Va.

Some companies that compile databases want such protection, while other companies oppose it for fear that widely used data such as basketball scores or stock quotes suddenly could become legally protected -- and thus restricted -- information.

Jonathan Band, an attorney at the Washington office of San Francisco-based Morrison & Foerster, says he would rather not see today's intellectual property laws changed because he believes they provide a good balance between enough protection for technology developers and enough freedom to promote technological progress.

"We need to have intellectual property laws because we need some incentives for people to invest in the development of innovative products," Band says. "But if there's too much protection, it stifles innovation. If a person with a previous invention can stop me from doing something new based on what he or she did, I will never be able to do anything."

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Copyright © 2000 IDG Communications, Inc.

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