Tag Archives: Illegal

Should You View a Competitor’s Illegally Published Code on the Internet? Four Points

Situation: A CEO recently learned that the proprietary code for both his company’s and his principal competitor’s products have been published on an international web site. He is conflicted about whether he should look at his competitor’s code, knowing that this would potentially be illegal in the US. Lawyers have offered conflicting and vague advice. Should you view a competitor’s illegally published code on the Internet?

Advice from the CEOs:

  • Consider the status of IP protection outside the United States.
    • In some countries there do not appear to be clear legal guidelines. One of these countries is likely where this situation originated. The country in question either lacks rules governing IP or the ability to enforce rules that exist.
    • The frustrating thing is that the playing field is not level between US and non-US companies. US companies are held to a high ethical standard by US law, whereas competitors in other countries that are not held to the same standard are free to review the illegal source code and learn from it as they can.
  • How complicated and expensive would it be to change the code? If this is feasible and not prohibitively expensive this may be the best option. Updated code can be provided to users through a software update.
  • Any company has to assess their own ethics as they craft a response to this situation. Make sure that the solution is consistent with the company’s ethical standards.
  • Could this have been an act of economic terrorism and/or theft?
    • If so, it is possible that the U.S. Justice Department could step in if one can make a case for national or economic security (unfair trade) based on violation of software copyright laws.
    • An action like this would, at a minimum, discourage similar future events. It could also help reduce the likelihood that competitors would try to profit from this situation at the company’s expense.

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How Do You Obtain Competitive Intelligence Ethically? Six Points

Situation: A CEO is concerned that many of the ways that her company might gain competitive intelligence could compromise the ethics and values that she has worked to instill in the company. What legal and ethical methods have others used to gain competitive intelligence? How do you obtain competitive intelligence ethically?

Advice from the CEOs:

  • It’s critical not to use methods that compromise the company’s legal position. Using spies or spy devices fit into the category of both illegal and unwise methods to obtain intelligence.
  • Do not misrepresent the company, or have employees misrepresent themselves to competitors in order to obtain competitive information.
  • Do not talk about prices directly with your competitors. This compromises both companies legally.
  • Here’s a test: If an action is being considered to gain competitive intelligence, would the company be willing to put up a banner in the office for all employees to see, telling them about this? If not, don’t do it. If questionable activities are employed, it’s likely that they will find out no matter what is done to hide these activities.
  • Here are primary sources for gathering competitive intelligence ethically:
    • Customers;
    • Competitors’ customer service and engineering departments, possibly through 3rd parties;
    • Editors of trade journals;
    • Former employees of competitors;
    • Trade Associations; and
    • Trade shows and conferences.
  • In addition, these are good secondary sources:
    • Google and other search engines – whatever appears through these is publicly available;
    • D&B Hoovers;
    • Web sites;
    • Reverse engineering – without using information obtained unethically;
    • 10Ks and Annual Reports available on the SEC web site.

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