Tag Archives: Protection

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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Better to Focus on Cash or IP Protection? Three Suggestions

Situation: A company is resource constrained and faced with a serious trade-off: do they focus on short term cash needs – immediate product improvements that will speed new product iterations to boost sales; or longer term strategic concerns – assuring that they have good IP protection on their technology before they launch new versions? When you are resource constrained, does it make more sense to focus on initiatives that will quickly produce cash or strategic concerns that will protect your future?

Advice from the CEOs:

  • Build two timelines – one for shoring up the patent portfolio so that you can safely build and launch new IP-protected versions of your technology and one for quickly completing product improvements to speed development of new product iterations which will generate cash. Assess both the energy requirements and the dollar risks and implications of each timeline. If you do not have the resources to do both in parallel, this analysis will help you to determine your best course of action. The risk analysis of each timeline should take into account what would happen if another company were to duplicate your technology and get to market with improvements before you do.
  • As a compliment to the above exercise, ask what happens if I don’t do either A or B? Do a SWOT and investment analysis on both. Which is the greater risk – launching with insufficiently protected IP or risking not being first to market?
  • These analyses will help you assess whether it may be feasible to accomplish part or all of either task with dollars in lieu of your own resources.

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How Do You Reset Pricing When The Game Changes? Five Parameters

Situation: The Company sells customized products and pricing has been per product/per customer. A large client has proposed to purchase product rights across a number of products and uses. The technology is early in its expected 5-year life span. How should the Company set pricing to this customer?

Advice from the CEOs:

  • Start with a series of questions:
    • What is the value of your technology to the customer?
    • How much competition do you face?
    • What other solutions are available to the customer?
  • Based on this framework, ask contacts within the customer company open-ended questions that will reveal what is important to them including:
    • Licensing objectives,
    • Planned use of the technology, and
    • Any protections that they seek.
    • You need to understand these before you can make decisions on pricing.
  • There are several pricing scenarios:
    • Set up a scale with a declining pricing driven by volume.
    • A large lump sum payment now, non-transferable if the customer is acquired by another company.
    • A large annual fee to cover a preset number of uses and volumes, with small increments for additional purchases.
    • The final arrangement will depend on the priorities of the customer.
  • Find out what the customer is willing to pay, but you set the terms.
  • Ask what guarantees they desire to protect their position. This includes:
    • The customer’s key risk factors.
    • Whether they want exclusive or usage rights. Exclusive is worth more.

Key Words: Pricing, Custom, Technology, Life-span, Value, Competition, Licensing, Objectives, Protection, Scenario, Scale, Lump-sum, Annual Fee, Guarantee, Exclusive, Usage  [like]