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Legal Question

Let's say that I worked at a small software company.  Vertical Market type.  I learned the business processes and knew how the software worked.  One day I quit because the company wasn't doing so well and quite frankly the software sucked.  I knew what had to be done to make the software robust and saleable.  So I went ahead and created a new product myself that does the exact same thing as the product I worked on at the company.  Of course it's all my code and design.  I did not sign a non-compete agreement with the software company.  The only piece of paper I signed was a Word document that said I was on a 6 months probation period and of course the standard 1099 tax form or whatever form it is.

Off the top of your heads would i be violating any laws if I went ahead and marketed said product?

Wednesday, October 08, 2003

Not a lawyer, etc.

BUt anyway, I doubt that you technically can be sued for writing a product that competes with a previous employer. As I understand it, they can seldom do that even if you *did* sign a non-compete.

However, they can still sue, at it's a fine enough line that they could tie you up in court for a while.

ANyone have any other thoughts?

Damn, my shift key's sticking...

Mike Swieton
Wednesday, October 08, 2003

IANAL (I am not a lawyer) either ... the only angle that comes to mind would be lawsuit due to disclosure of proprietary knowledge or information owned by your prior employer via your program's design and operation. And just remember that life isn't certain, and regardless of contracts or lack thereof, anyone can sue anyone for any reason, even a stupid reason.

Find your own business lawyer and pay for a session to ascertain your potential liabilities.

My own guess is that if the company were so clueless that they didn't make you sign a non-compete, then I would be surprised if they came after you. But spite is a powerful emotion, too...

Bored Bystander
Wednesday, October 08, 2003

I've done something similar. Here's the advice I got from some very expensive lawyers: As long as the code is 100% new code,  you started it after you left, and you had no access to the former code or possession of any company material, you're in the clear. I was advised to be very certain about the possession of materials - no disks, no printouts, no nothing  - and to keep a handwritten, dated notebook that kept track of what I worked on and when. I specifically asked about electronic records, such as those kept by CVS, and was advised they are not adequate from a legal perspective.

In my case, because of the companies involved (big, international banks) it wasn't about protecting my fledgling company - we would never be worth the trouble to sue - it was about protecting my deep-pocketed customers.

I suggest finding a lawyer and building a relationship and history with them. Don't leave yourself exposed if there is any whiff of doubt about the provenance of your work.

Jim S.
Wednesday, October 08, 2003

Actually, those kinds of companies are the *most* likely to pursue legal claims.

[This is not legal advice]
Two primary causes of action come to mind: copyright violation (you copied their code, even if it wasn't in front of you) or theft of trade secret.
If you were 1099, then their ownership of the code in the first place is in question, if you didn't sign a contract releasing the license to them. In addition, trade secrets generally have to be protected by NDA.

[This is legal advice]
See a lawyer before proceeding. The cost of a consultation to understand your rights and prepare your business properly will be insignificant compared to the cost of losing your business or being in court forever if you do it wrong.


Wednesday, October 08, 2003

"[This is not legal advice]"

Spoken like a true lawyer. :)

I do have to second that getting real legal advice is the only way to protect yourself. Spend a grand, save a hundred-grand. Trust me.

Wednesday, October 08, 2003

Jim, there's also the issue of the interface being copywritten. Code is just part of the whole package.

Wednesday, October 08, 2003

Incidentally, let me amplify what Jim said - you pay now to get a lawyer to set up everything and walk you through the minefield. Then when the Bad Company sues you, your first stop is the lawyer that set everything up. He'll be able to look at the complaint and start your case for probably 1/10th the cost than if the first time you see a lawyer is when you're served.


Thursday, October 09, 2003

To reiterate what philo said, all that a lawyer will do is say "well, you might get sued. if you do, come back to us for help!"  I wouldn't worry too much about legal issues. If your software is successful enough for you to be noticed and sued, you will have more than enough money to take care of the legal issues after the fact. Just be crafty enough to not get sued in the first place.

Thursday, October 09, 2003

This reminds me of Compaq reverse-engineering the IBM PC:

"Compaq couldn't just copy IBM's BIOS to make their new machine guaranteed IBM compatible, this would be illegal, and easily proven by IBM.

Solution: Reverse-engineer IBM's BIOS. Compaq used two sets of programmers, one group who had access to IBM's source code and another who knew nothing about it.

The first group closely looked at the original code, and made notes of exactly what it did.

The second group took these notes, and wrote their own BIOS that performed exactly the same.

After one year and a million dollars, they were successfull. They had a legal BIOS identical in operation to that of the IBM computer. "

Chi Lambda
Thursday, October 09, 2003

If there is a trade secret involved then I would worry, otherwise not.
Good examples of trade secrets for which you could be sued are:

Layout algorithm, e.g. cutting patterns out of a board, or optimal printing arrangements on a sheet of paper. (alternatively rooms in hotels etc)
Methods of calculating interest rate derivatives quickly.
Methods of making CDs sound better by dithering and sloping the bottom few digits of the data.

If you think you could be in one of those kind of areas, the best bet is to specify the problem (minus algorithm) and PAY someone else to implement these bits, thus duplicating a clean room implementation.

Peter Ibbotson
Thursday, October 09, 2003

Yeah, yeah, go see a lawyer. But, here is some real info in the meantime.

1) Did you sign a non-disclosure agreement? If so, then this will prohibit what you can and can't do.

2) Non-competes are hard to use (for them) so don't worry too much. We all have a right to work. These are only enforceable if you are a leader in your field.

3) Did you look at copyrighted or patented code? If so, you will have a problem. Make sure (if you can) that your code is at least 20% different. 80% would be better. Patents are MUCH worse than copyrights.

4) Did you look at proprietary information that was marked as such? If so, then you will have a tiny problem if you directly use this information.

5) Are you using your experience or detailed insider information to launch your business? A jury will care how you answer this one. Be honest.

In general,we are all products of our experience and the courts tend to favor the rights of the individual unless the company can prove you willfully violated a signed agreement and/or directly stole their property and/or used secrect/inside information to directly compete with them. The last angle is the weakest. If you can honestly say these don't apply to you then get a lawyer and go for it. My last advice: get a lawyer that knows what they are doing. They are like doctors and tend to specialize in every possible area. A lawyer with small business and intellectual property skills sounds like the ticket here.

Thursday, October 09, 2003

All of the code is 100% new and not in any way similar to the code the company has.  (My code actually works.)
I have no disks or other resources from the company with code on them.  I never have.
I have no manuals or documentation becuase there simply weren't any.
I have absolutely nothing except my bounced paychecks, my pay receipts, my 1099 and the 6 month probationary agreement.
The interface is different, but...

As an example:

Let's say the company made a word processor using a text box control.  If I use a text box control in a similar manner would that be violating any copyright or law?  Or is it just the design (i.e. layout) of the interface that matters?

Thursday, October 09, 2003

rz, with all due respect, STFU. :-)

"If your software is successful enough for you to be noticed and sued, you will have more than enough money to take care of the legal issues after the fact."

And if you're not that successful but your former employer is bitter, you could lose your house.

"Just be crafty enough to not get sued in the first place."

And to be crafty it's best to know the law. You can either take the time to learn the ins and outs of contract law, trade secret law, copyright law, and civil procedure, or you can hire an expert.

And again let me point out that if you get an attorney to help you set everything up, you'll get much better help if and when you get sued. When you go to a lawyer for defense against a lawsuit, do you really want his first comment to be "too bad you didn't [x]"?

"Did you look at copyrighted or patented code?"
If he looked at any code, he did. Creative works are copyrighted upon creation.


Thursday, October 09, 2003

Philo, of course you are giving him wise, very conservative advice. The problem I have with what you are saying is that in my experience, the lawyer this guy wants either does not exist, or is very hard to find.

He doesn't want a lawyer who will say, "No, you are violating laws. Don't do that. Come to me when you get sued." The alternative, "You are not violating any laws. You might get sued anyway. Come back to me when you get sued." Also isn't very useful.

What he wants is a lawyer who will say "Well you might get sued. Here is some legal scheming I can help you with now to protect yourself from being sued in the future. What you need to do is incorporate yourself in state X because it is harder to prosecute software infringement cases there. Then say that this software is a 'Home Sandwich Ingredient Organizer' instead of 'Enterprise Sandwich Ingredient Organizer' because that safely puts you into this category of product..bla bla bla legal bla bla.'

This is sort of what Leo Katz defines the role of the lawyer to be in the book "Ill gotten gains" (i.e. the lawyer is there to help you succeed by getting around the labyrinth of laws we have constructed in our society). But that's another thread. (definately read that book if you haven't)

Unfortunately, in my experience, I have never found this lawyer. I'm guessing she exists somewhere, but is very expensive and usually works with big corporations. I have had experience with the other type of lawyer I mention three too many times. Each time I received vague advice that I already knew from reading books by nolo press. Only instead of paying $29 for a nolo book, I was out $1200. 

What I would LOVE to see is the next time someone has a legal question on this site, is instead of everyone saying "SEE A LAWYER"  someone chimes in with "SEE THIS LAWYER: RACHEL KATZ. SHE HELPED ME OUT WITH EXACTLY THE PROBLEM YOU MENTION."  Saying "see a lawyer" is NOT helpful!!! What would be truly helpful is for someone to point out lawyers  who actually know what they are talking about regarding software/business/copyright/licensing because I already know three of them who seemingly know nothing about it.


Thursday, October 09, 2003

Did your old company create the text box control? If not, then no worries. There is absolutely nothing wrong with using 3rd party tools in the same way as them. It's normal and expected.

Regarding your claim that you didn't take any materials with you is irrelevant. If you signed a non-disclosure agreement, the burden of proof is now on YOU to convince a jury that you didn't REMEMBER what you saw and that you didn't use ANY of it in your current design/code. That's the tricky part of NDAs and why most VCs won't sign them in order to look at your plan.

If you didn't sign an NDA, there is still a small burden on you to prove that you didn't mentally abscond with the keys to their castle. It sounds like they were idiots though and you really are improving upon their design/implementation by a lot. If you're telling the truth that is. ;-)

"If he looked at any code, he did." I agree, but there's more to my comment and more to the situation. First of all, you're right: everything is copyrighted. However, simply having a copyright is not the same as registering it and registering it is not the same as patenting it. Each step secures much greater legal protection. I would expect that "borrowing" something that says "Copyright" or "Patent Pending" on it is much worse than simply remembering some algorithms (and avoiding them ;-).

Also, when I said "code" I was referring to other related work like possibly the interface. The design of an interface can be, and almost always is, "coded" and this should be considered copyrighted material. Anon should consider how much he is borrowing from this as well. Loosely, I was referring to any other materials related to the product in question. It would suck for him to lose on a minor technicality like he ripped off some marketing pitch from their manual and later got sued over it.

Thursday, October 09, 2003

I did not sign a NDA.  I signed nothing.  Absoluetly nothing except the 1099 and the 6 month Probation agreement which is a 2 line MS-Word document stating, "You are now hired here for 6 months probabtionary period. Eligible for benefits after 3 months."

The companies software is not patented.  There are no trademarks or copyrights associated with the software except of course the implied copyright from creating said software and the company name trademark.

Finding a lawyer is tough.  Everyone that I have spoken to said they would be able to help me out. /sigh

Maybe I'll just anon post the thing on the internet for free download.  Or I could try to sell it to a software publishing house... /ugh

Thursday, October 09, 2003

Sticky Wicket - what you say is generally true, except that don't forget that they always *can* sue, regardless of how much code was borrowed/stolen. ;-)
Also, remember that Patent and Copyright are wholly different, not degrees of the same.

rz - simple solution: hire me. If you're in Virginia. ;-) And that's why people probably don't generally give referrals online - fifty states, fifty state bars.

Anon - said they *would* help you out? Or "wouldn't"?


Thursday, October 09, 2003

You are right and I do understand the difference. I paint them similarly from Mr. Anon's PoV because they can all bite him and his old boss *can* sue. Perhaps we should work together sometime. I like logical people :-)

Thursday, October 09, 2003

look, copyright the idea yourself, and then when they sue you you can countersue, that they stoled the whole thing from you.

Thursday, October 09, 2003

Given that you signed NOTHING, if you are in the US you have NO problem. In fact, you OWN the copyright on the code you did write for them and are free to use the portions of it that are not trade secrets. For them to own the copyright, it would have to be work for hire, which would have to be specified in a contract for this sort of IP. They have a unrestricted license to use the code you wrote for them, but you own the copyright on the code.

If you want to go beyond that and do a clean room reimplementation and then enhance it, you are free and clear.

None of this will stop them from suing you though if they want to, and from a practical standpoint, whoever has the deeper pockets wins in these sorts of cases.

So your main strategy should be both not to tick them off, and to have a IP lawyer lined up. ASk your family lawyer (you do have one, right) for a recommendation for an honest, knowledgeable IP attorney. Expect to pay $500-$1000/hr for his advise.

Dennis Atkins
Thursday, October 09, 2003

"Given that you signed NOTHING, if you are in the US you have NO problem. In fact, you OWN the copyright on the code you did write for them and are free to use the portions of it that are not trade secrets. For them to own the copyright, it would have to be work for hire, which would have to be specified in a contract for this sort of IP. They have a unrestricted license to use the code you wrote for them, but you own the copyright on the code."

Since Anon was evidently an employee, not a contractor, your statement isn't true. If you are an employee of a company, everything is considered to be "work for hire".

Thursday, October 09, 2003

Anon kept saying "signed a 1099". A 1099 is a contractor agreement - W2 is employee. Sounds like the original employer screwed themselves over.

The only other kind of paperwork would be a confidentiality agreement. That's one of those "You can't use or reveal company or customer secrets" documents. That could bite you.

Chris Tavares
Thursday, October 09, 2003

You're right, I didn't see, "Absoluetly nothing except the 1099 and the 6 month Probation agreement which is a 2 line MS-Word document stating, "You are now hired here for 6 months probabtionary period. Eligible for benefits after 3 months."" originally.

It looks like he was 'hired' in a contract-to-hire arrangement. I'm not sure how that would impact the 'work for hire' normally in effect for most employees.

Something to check out with a lawyer - maybe he could get his old source from the company if it is his property...

Thursday, October 09, 2003

Ya Rocket, what Chris said.
1099, wheee yah! All code is mine!

Dennis Atkins
Thursday, October 09, 2003

You are in the right and have little to worry about. Former employees branch our and release improved products all the time.

Employment law explicitly recognises the right of employees to move elsewhere and use their existing stock of knowledge, including that gained working on copyrighted material, so long as the actual material is not re-used.

The advice about documenting the progress of your work in a notebook is the best I've seen.

rz summarises the situation well. If you become successful enough to get sued, you will have lawyers on tap anyway. If you don't, don't waste money on them.

Saturday, October 11, 2003

Yeah, and you only need a seatbelt when you're in an accident, so don't bother buckling up until you're in one.


Saturday, October 11, 2003

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