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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