Theft of electronics I.P.  to start rival electronics company. - Page 1
Forum section: electronics / general

author: ocset
author_rank: Super Contributor
timestamp: April 06, 2019, 05:48:56 pm
content: Hi,My friend owns an electronics company that designs some electronics, but imports most of it in direct from China (into UK and Europe).His Ops Director recently left the company, and set up his own rival electronics company, importing stuff from the same Chinese designer/manufacturer that My freind uses.The ops director has basically stolen the Chinese contact details and started up a rival business.Does my friend have legal grounds to sue? (in UK)Because its basically theft of I.P.Sorry to speak of UK, but this could happen in any country

author: PyroDan
author_rank: Newbie
timestamp: April 06, 2019, 05:53:54 pm
content: What have you been smoking? and where do I get some.

author: ataradov
author_rank: Super Contributor
timestamp: April 06, 2019, 06:02:07 pm
content: Oh, the infamous friend again. Really, what if your/his problem?Also, sounds like he was reselling Chinese junk. Now someone else does the same. I see no problem here.

author: Andy Watson
author_rank: Super Contributor
timestamp: April 06, 2019, 06:05:58 pm
content: Unless the Chineese manufacturer is making products to a specific contract covered by some sort of NDA I don't think contact details constitute IP.

author: nctnico
author_rank: Super Contributor
timestamp: April 06, 2019, 06:18:07 pm
content: Quote from: Andy Watson on April 06, 2019, 06:05:58 pmIndeed.@treez: your friend should have put a good non-compete in to place with his employees. Without that you can't do anything against these kind of situations.

author: rstofer
author_rank: Super Contributor
timestamp: April 06, 2019, 06:40:50 pm
content: Quote from: nctnico on April 06, 2019, 06:18:07 pmAnd they don't hold up in the US. I can work anywhere I want. I can't steal real IP but if I happen to know how something works, well, I am pretty much free to use it.https://www.lexology.com/library/detail.aspx?g=193109da-d1f1-4684-a37a-ebe45c4ed5a1I can't use legitimate trade secrets and this arguably includes customer lists but, really, everybody making anything already knows who buys these things so it's hard to claim 'trade secret' for customers. How much they bought, how much they paid, that kind of thing is probably a trade secret. But not the customer list or phone numbers. After all, everybody goes to the same seminars - it's called social networking and that's one way to find a better job.Know how - what I learn on the job - can not be protected. If it is not eligible to be considered a trade secret, it can't be limited.Post employment contracts may limit such dissemination but, unless there is MONEY attached to a post employment contract, why sign up? At the working level, there are no employment contracts in the US. Maybe company officers are under contract but I don't swim in that pond.A list of suppliers? Probably common knowledge in the industry. As long as the devices from China aren't protected by local patent or IP laws (and they won't be if they were designed in China) then nothing is going to prevent the Chinese from selling their stuff to anybody they want. Besides, they have trade delegations promoting all the popular manufacturers.

author: amyk
author_rank: Super Contributor
timestamp: April 06, 2019, 06:46:03 pm
content: Does that company happen to produce LED drivers...?

author: nctnico
author_rank: Super Contributor
timestamp: April 06, 2019, 06:51:30 pm
content: Quote from: rstofer on April 06, 2019, 06:40:50 pmThe article you linked to explicitely mentions non-compete agreements being the solution. However the article seems to have been written from a position where a non-compete wasn't in place and thus it focusses mostly on damage control. IMHO it is utterly stupid to have no non-compete agreement in place with (at least) the employees which deal with customers. Over here is it common for every employee to have a non-compete agreement as part of their contract.

author: SiliconWizard
author_rank: Super Contributor
timestamp: April 06, 2019, 07:00:56 pm
content: "Theft" of supplier contacts is not theft of IP.Your list of suppliers may or may not be considered confidential - if it's stated in no contract, there's nothing you can do.Theft of a customers' database may be another story. But apart from that, from your description it all comes down to a matter of the existence of a non-compete clause in this guy's contract. And frankly, if a key manager in any company doesn't have a non-compete clause, well... this company is probably fucked up in some way.

author: nctnico
author_rank: Super Contributor
timestamp: April 06, 2019, 07:20:30 pm
content: Agreed. And I want to add that putting a valid non-compete in place requires help from a specialised lawyer!

author: SiliconWizard
author_rank: Super Contributor
timestamp: April 06, 2019, 07:28:08 pm
content: A good reason why some companies don't add that kind of clause is that they can be costly. I think in most countries they have to be assiociated with financial compensation when the person leaves the company. Some companies just don't want to have to shell out more money when someone leaves and they think they'll find a way to sue the person anyway, even without the clause, and spend the same amount on a lawsuit if it ever arises. Stupid management, but I've seen it a couple times.

author: hans
author_rank: Super Contributor
timestamp: April 06, 2019, 07:42:16 pm
content: Also, it can be quite hard to write and enforce such ruling.In particular if your trade is quite generic, for example you're a backend webdeveloper for eCommerce or a PCB design engineer. Can a company really ban you from working at another place for a certain period or radius? That's ridiculous. You're not going tounlearnhow to write backends or design PCBs if you leave. Similarly, I think it's quite hard to ban an employee not to stay in contact with your suppliers or customers.Secondly attempt to define theft. I'm not a lawyer by any means, but if I imagine IP theft then I think we're talking about source documents, such as source code, schematic designs and PCB layouts. For example, if you attempt to "clone" a product from a competitor by reusing the production molds/stencils/etc. for your own supply chain.However, if you reproduce these source documents yourself through reverse engineering, that may be considered unethical and on the edge of legality, but very hard to proof that it's an actual IP theft or copyright violation (patents is a different story). I've heard stories about this being done for some mass consumer products at multinational companies.

author: ebclr
author_rank: Super Contributor
timestamp: April 06, 2019, 07:42:52 pm
content: This happens every day, Chinese is like a prostitute , if you have money deal is made, Forget about

author: nctnico
author_rank: Super Contributor
timestamp: April 06, 2019, 07:47:29 pm
content: Quote from: hans on April 06, 2019, 07:42:16 pmWhen it comes to dealing with customers the rulings in the NL often favour the former employer in case someone decides to poach customers and there is a non-compete in place. As -for example- an electronics designer you might be limited to not working for the direct competitor for a certain period of time.

author: donotdespisethesnake
author_rank: Super Contributor
timestamp: April 06, 2019, 07:54:02 pm
content: Quote from: treez on April 06, 2019, 05:48:56 pmAbsolutely none.Next.

author: Red Squirrel
author_rank: Super Contributor
timestamp: April 06, 2019, 08:01:01 pm
content: Actually I was thinking about that, say a company like Apple outsources to China, and China makes a rip off version, would it constitute IP violation to then, make a rip off of the rip off? You're technically not ripping off the Apple one. Could be an interesting way around IP laws if there is a tech in a certain product you want to use, just see if a chinese rip off also has the same tech and your defence could be that you used China's tech. Don't know if it would hold in court though...

author: soldar
author_rank: Super Contributor
timestamp: April 06, 2019, 08:54:13 pm
content: Quote from: treez on April 06, 2019, 05:48:56 pmThe correct answer is that he should consult with a lawyer licensed in his jurisdiction. Any advice you get here is worth exactly what you pay for it or maybe less than that.

author: Zero999
author_rank: Super Contributor
timestamp: April 06, 2019, 09:03:12 pm
content: Quote from: Red Squirrel on April 06, 2019, 08:01:01 pmI would think it would still be considered a breach of copyright/patent/trademark or whatever.The trouble is companies can't protect every single aspect of their designs and this wouldn't be good for the economy if they could. In some respects patents and copyright laws are too strong, but that's another debate.

author: Red Squirrel
author_rank: Super Contributor
timestamp: April 06, 2019, 11:39:41 pm
content: Quote from: Zero999 on April 06, 2019, 09:03:12 pmYeah true now that I think of it does not matter where you got the design from, you could have even gotten it from your head, if it happens to be patented it's still breach. And yes I agree the laws are too strong. Copyright, patents, even trademarks, all of it, is way too strong. I get the reasoning for the laws and they need to exist, but they should not be as strong as they currently are.

author: rstofer
author_rank: Super Contributor
timestamp: April 07, 2019, 12:08:50 am
content: In California, where all the magic really happens, non-compete clauses are unenforceable. See paragraph 4https://en.wikipedia.org/wiki/Non-compete_clauseIn other jurisdictions, there has to be a 'consideration' (like money) and the clause has to be time limited and location specific.There have been HUGE lawsuits in Silicon Valley overcompaniesagreeing to non-compete by deciding not to raid each other's employees. Non-poaching they called it. Cost them nearly a half billion dollars:http://fortune.com/2015/09/03/koh-anti-poach-order/Employment contracts in the US are exceedingly rare. Most states are like California - employment at will. The employer can fire the employee for any reason or no reason at all. OTOH, the employee can walk out for any reason or no reason at all. In Silicon Valley you change jobs by driving in the wrong driveway in the morning. If you know anything at all, you'll be hired in a heartbeat.This topic is really pretty complicated and is going to depend on location. There's a lot of case law in the US, some good, some bad.Do you know why Silicon Valley companies seldom patent anything? Because they would have to disclose how it works or the process for creating it. The disclosure would give the competitors a leg up while the life cycle of the product might be quite short.One company I worked for manufactured electrical products. We weren't allowed to have competitor's literature in our office even if we got it at a trade show or it was a commercial catalog. No supplier's coffee mugs, hats or other trinkets either. If the word "Proprietary" showed up anywhere in a document, we were to dispose of the item immediately. We shouldn't have gotten it in the first place. Pretty strict!

author: Mickster
author_rank: Contributor
timestamp: April 07, 2019, 12:13:42 am
content: Quote from: blueskull on April 06, 2019, 11:46:43 pmI'll bet 250 salvaged MLCC capacitors (any size/value) that Simon gets there first.

author: EEVblog
author_rank: Unknown
timestamp: April 07, 2019, 12:22:41 am
content: Reminds me of those cheap Maynou electronic loads on ebay.Maynou was found by a former Itech engineer who left the company and took with him the technical documentation of the Itech line of products.

author: EEVblog
author_rank: Unknown
timestamp: April 07, 2019, 12:24:15 am
content: Quote from: PyroDan on April 06, 2019, 05:53:54 pmSorry but I don't understand the reference and hostility in this thread. Does Treez some history here I'm not aware of?

author: Red Squirrel
author_rank: Super Contributor
timestamp: April 07, 2019, 12:27:36 am
content: Quote from: rstofer on April 07, 2019, 12:08:50 amWow that's one thing California does right! I always found those clauses were pure BS. My workplace actually has a clause that ANYTHING you create even on your own time, they own. I've never actually heard of any instance of them enforcing it, but it's there. I imagine it's reserved for very specific cases that cause a conflict of interest or something.

author: EEVblog
author_rank: Unknown
timestamp: April 07, 2019, 12:28:45 am
content: Quote from: treez on April 06, 2019, 05:48:56 pmSupplier lists are not IP. Anyone can find the same supplier and contact details.You can sue for anything and the lawyers will happily take your money, but you won't win.

author: EEVblog
author_rank: Unknown
timestamp: April 07, 2019, 12:31:13 am
content: Quote from: Red Squirrel on April 07, 2019, 12:27:36 amThe Altium employment contract had that (legally BS) clause, and said if you wanted to avoid that you had to detail what ideas and products are yours at the time of signing the contract. I handed over a 10 page document listing all my projects and ideas and they were stunned, no one had ever bothered to do that before.I went for a job at Silverbook research once, got to the third and final interview with the 2IC and he wasn't happy with me doing anythingoutsideof work. I finally got down to the ridiculous example of me writing a single gardening blog post, and that was a nope too. I left.

author: ataradov
author_rank: Super Contributor
timestamp: April 07, 2019, 12:35:07 am
content: Quote from: EEVblog on April 07, 2019, 12:24:15 amYes, he and his "friend from China" get to some questionable adventures once every few weeks.

author: Brumby
author_rank: Unknown
timestamp: April 07, 2019, 12:40:26 am
content: Quote from: ataradov on April 07, 2019, 12:35:07 amThat's being diplomatic.

author: electromotive
author_rank: Regular Contributor
timestamp: April 07, 2019, 05:36:21 am
content: Quote from: EEVblog on April 07, 2019, 12:31:13 amBefore I started at a major railcar repair company, I handed in a multi-page document as well. I retained the right to any specialized tooling and/or process efficiencies I discovered / created. I did the same at a major sawmill (formerly the largest supplier of rift and quartered oak in the United States). When I left the sawmill, my SQL scripts and automation software came with me. I developed them on my own time at home to make my job easier. There was no chance I was going to simply give it away.

author: rstofer
author_rank: Super Contributor
timestamp: April 07, 2019, 06:02:17 am
content: Patents by employees for non work related things used to be a problem. I don't know how it works today but you just about signed your patent life away when you hired on.The classic story was the guy working in an aircraft plant, driving a rivet hammer, who invented a baby bottle nipple and the company owned the patent. This is another thing California gets right:http://www.intellectualpropertylawfirms.com/resources/intellectual-property/patents/employee-patent-policy.htmSee "Limitations on Preinvention Assignments"There's some pretty good case law coming out of California but notice that it may not apply to independent contractors and there's a lot of that kind of employment going around.Shop Rights - another interesting way to get use of an employees patent without paying for it.

author: AndyC_772
author_rank: Super Contributor
timestamp: April 07, 2019, 08:13:10 am
content: Quote from: Red Squirrel on April 07, 2019, 12:27:36 amIt's there to catch the situation where someone works in a particular industry, has a brilliant idea while at work one day, then goes off and starts their own business using it or takes it to a competitor. Without this clause, they could always claim that they came up with the idea during a period of insomnia at 3am (ie. their own time), rather than while in the office, and it would be impossible to prove otherwise.

author: Zero999
author_rank: Super Contributor
timestamp: April 07, 2019, 08:26:29 am
content: Quote from: EEVblog on April 07, 2019, 12:24:15 amI believe he was banned on a previous occasion for starting threads which broke the rules in some way, but you'll have to ask Simon,Anyway, I often find his threads entertaining and he's never bothered me.

author: Simon
author_rank: Unknown
timestamp: April 07, 2019, 08:53:04 am
content: My workplace contract has nothing that stops me working for myself. i have quoted the same custers as them several times on the same job after the customer turned their nose up at works quote. I only do the electronics that go along with what my employer supplies so i am not "competing" over the whole shebang but it actually means I am potentially working for their competitors.

author: mikeselectricstuff
author_rank: Super Contributor
timestamp: April 07, 2019, 09:18:08 am
content: Quote from: treez on April 06, 2019, 05:48:56 pmThat would only be the case if the Chinese co. was making stuff to the original company's designs. Even then there would need to be some pretty strong protection like patents or registered designs to stand any chance, and even then, chances are the only winners would be the lawyers.Forget it and move on.

author: EEVblog
author_rank: Unknown
timestamp: April 07, 2019, 09:24:56 am
content: Quote from: AndyC_772 on April 07, 2019, 08:13:10 amSo what if you came up wit the idea at work.If you were not paid to research those ideas, and especially if the idea has nothing to do with the companies products or industry, you'd be fine.

author: AndyC_772
author_rank: Super Contributor
timestamp: April 07, 2019, 11:10:16 am
content: That's the point you'd make as part of your contract negotiation, prior to starting work, but it's not in the company's interests to volunteer that limitation. By doing so, they only create the headache for themselves of having to prove that something was within the scope of the restriction.In some cases it would be obvious, like if someone invents a baby product whilst working for an aircraft company.But, suppose you hire someone who, whilst working for you, comes up with an idea for something you don't currently make, but could. (Or maybe, a type of product which you already have plans to start making, or which you started making since the day the contract was signed).Say your company makes batteries, and one of your researchers comes up with a novel charging method. You don't currently make battery chargers, but doing so would be a natural extension of your business, especially if you now have a unique selling point that your company could benefit from. The argument could go either way as to whether the invention was (or is, or could be, or could have been foreseen to be...) within the scope of your business.

author: Simon
author_rank: Unknown
timestamp: April 07, 2019, 11:31:52 am
content: Quote from: AndyC_772 on April 07, 2019, 11:10:16 amThat is why i have at least one email saved from my MD telling me he does not want me to work on a certain project that he deems not a good use of my time as I'm too busy and he does not wan tto pursue the enquiry. The day they ever try to have a go at me I will pull it out and shove it up their arse.granted to contact ones emplyers customers and offer to do work for them as an individual or ones own company is a no no, but if they come knoking to me i consider it fair game.

author: tooki
author_rank: Super Contributor
timestamp: April 07, 2019, 12:21:32 pm
content: Quote from: EEVblog on April 07, 2019, 12:24:15 amEvidently!Treez is (in)famous here for posting questions about LED streetlight drivers, usually beginning with some preposterous assumption that no amount of facts can dissuade him from, and from that assumption asking for help on things he (as someone working as an EE at a lighting company in the UK) should already know how to do, then rejecting sound advice, clicking "like" even on the most scathing comments, and then coming back a few weeks later with a new question based on a new preposterous assumption. And it's all peppered with conspiracy theories about how politics have decimated the UK electronics industry. It's rather entertaining to watch, though frustrating to participate in.

author: ebastler
author_rank: Super Contributor
timestamp: April 07, 2019, 05:57:05 pm
content: Quote from: tooki on April 07, 2019, 12:21:32 pmI fully agree. Yet somehow these threads stimulate rather lively discussion. Like the present one: Just a single initial post from treez has triggered 38 replies, and counting...There must be pronounced masochistic tendencies among engineers.Now here's a psychology or sociology thesis waiting to be written...

author: rstofer
author_rank: Super Contributor
timestamp: April 07, 2019, 06:09:08 pm
content: Quote from: AndyC_772 on April 07, 2019, 11:10:16 amSee "Shop Rights" in my link to Reply 30. Basically, the company could use the idea or even the patent under "Shop Rights" if the device/gadget/process is related to their business even though it was developed off-site.When you get into these arrangements, better bring a team of lawyers. It's going to get ugly!There are reasons why employment contracts are rare in the US. Among them is the fact that both parties give up on "Employment at will". That's a big 'give' for the employer.https://www.alliottgroup.net/practice-management-resources-for-owner-managed-firms/guide-to-employment-contracts-in-united-states/

author: nctnico
author_rank: Super Contributor
timestamp: April 07, 2019, 08:53:14 pm
content: Quote from: rstofer on April 07, 2019, 06:09:08 pmAccording to this article 20% of the working people in the US have a non-compete agreement. I wouldn't call that rare:https://www.upcounsel.com/non-compete-california

author: rstofer
author_rank: Super Contributor
timestamp: April 07, 2019, 11:00:11 pm
content: QuoteThe system is being used to create some kind of indentured servitude. Even sandwich makers are having to sign non-competes. Like there is something magic about making a sandwich. The employers are trying to stop turnover.States are slowly catching on. Massachusetts is on board but allows 1 year limited coverage. Others are getting close.True, I only worked in California but I don't know of ANYBODY with a non-compete that would be enforceable. Why would $40k workers have a non-compete? By definition, they don't know enough about anything to make a median income living in the US ($56k) much less in Caifornia ($72k). And none of the engineers in Silicon Valley are working for median income. It is not unusual for a working couple to gross upwards of $400k if they have specific skills.The effect of a non-compete is to lock an employee out of their field for the duration of the contract. Imagine an EE who signs one of these things leaving the company and joining another. Even if the new company isn't a competitor, the old company could claim they are entering the same market and the employee knew stuff about the plans. In effect, the EE would be out of work for the duration - at any company. And some states don't limit the duration so it is possible the engineer is out of the field forever.The way it is handled in Silicon Valley is simple: Every company trains their employees in one way of another. This raises the level for all their employees and when they change jobs, cross pollination occurs which raises the level some more. You simply can't force people to work for a specific company. They have the right to peddle their skills to the highest bidder, so long as they don't disclose trade secrets. And that has to be proven in court, not suggested in a meeting.Quotehttps://www.upcounsel.com/non-compete-californiaThat's a long but interesting write-up. California is far ahead of other states. Maybe that's why we make so much money both as employees and employers. Working 'at will'...

author: nctnico
author_rank: Super Contributor
timestamp: April 08, 2019, 10:09:51 pm
content: Quote from: rstofer on April 07, 2019, 11:00:11 pmThe alternative to a non-compete is an NDA which IS enforcable in California. So there is your loop-hole. People can choose to work for your competitor but they still aren't allowed to tell your competitor your company secrets.

author: LaserSteve
author_rank: Super Contributor
timestamp: April 09, 2019, 12:13:02 pm
content: I have an old NDA / Agreement that says I can not work on optics or lasers in Gallatin County, Montana or the three counties around it for one year after leaving my employer unless I was downsized. It simply made me weary, and actually deterred me from buying a house there while I worked as a field engineer for the company. It also turned out to be a common clause used by the 40 or so companies that do optics and lasers around Bozeman. Evidently before I joined the company the poaching / startup/ IP wars became very damaging to the industry so the majority agreed to try to add the same clause. In that state, it is enforceable because it is such a small community and culture.I dutifully returned the customer list, test software, supplier list, and company phone directory, and I'm glad I did.. It pays off to have good relations with your ex- employer, even though things ended on a bad note. Simply because I'm part of a small niche industry.My former Boss however decided that shipping the basically unused and expensive company issue ergonomic desk and chair from Ohio to Montana was a bad idea due to expense. That ended up as a perk for leaving, but I was sweating having to return it out of my own pocket to be reimbursed later, if ever.If I had to do it again I would have line item edited out some of the clauses in said agreement before signing.Steve

author: G7PSK
author_rank: Super Contributor
timestamp: April 09, 2019, 03:01:01 pm
content: It used be quite common to have contract clauses that prohibited employees in manergerial positions from leaving the company and setting up in opposition or moving into the same position in another company for a year after leaving.I know of one instance in the mid 70's where two managers left a freight company and took all the customers with them and set up their own company which made theire former employers go bankrupt.

author: Wilksey
author_rank: Super Contributor
timestamp: April 09, 2019, 03:28:37 pm
content: Is anyone else scrolling past the "serious comments" to get to the interesting ones (calling treez out)?How on earth can using someones customer list even be conceived as I.P theft?! Intellectual Property, the clue is in the name!Just because you single source doesn't mean they single supply, they don't exist for just one company, if someone is willing to cough up the dollar they will sell, like anyone in business would (within reason).If someone walked into a shoe shop directly after you and bought the same shoes that you just walked out with, is that I.P theft??Use your noodle dude!(v.entertaining nonetheless)

author: HwAoRrDk
author_rank: Super Contributor
timestamp: April 09, 2019, 04:30:36 pm
content: In the contract for a job I had many moons ago, there was a clause that stated that you had to provide the company with (and keep up to date) a list of all web sites or pages that you authored, published or otherwise contributed to. This was well before the days of social networks like Facebook or Twitter, and personal blogs were only just becoming a thing, so this was highly unusual.I found out through the grapevine that what brought this about was that a former employee, after having been unceremoniously fired (if memory serves, him crashing and writing-off a company vehicle for athirdtime was the last straw), set up a website slandering not just the company but also the CEO personally, and had sent links around to various people he knew within the industry. I don't know whether there was any legal trouble (it all happened before I joined), but the CEO was from then on definitely very paranoid about keeping track of the 'cyber activity' of employees.Of course, it was a futile endeavour, as no-one ever kept the HR department updated, and if someone were to ever do something similar again, why would they tell the company first?

author: Simon
author_rank: Unknown
timestamp: April 09, 2019, 04:43:41 pm
content: Quote from: HwAoRrDk on April 09, 2019, 04:30:36 pmSeems like they were to stupid to realize that you can take someone to court for slander and therefore limit their future work prospectives instead of punishing all future employees.