DSC/Alcatel .vs. Evan Brown, the saga continues
Evan Brown
DSC/Alcatel .vs. Evan Brown, the saga continues
I have disclosed my "idea" to the court so now DSC has my "idea."
I worked at DSC facilities (PB-6 building, Plano, TX) from June 26th
until Sept 6th. DSC provided a small conference room with computer
equipment and a security guard (to watch over my shoulder as I worked
and keep track of potty breaks etc.). Since Sep 6th, I've worked on
the disclosure from here at the farm.
DSC is very creative. Back on Aug 23rd, DSC brought in a new security
guard (Christina) to click her pen, shuffle her jacket and rattle papers
while I tried to concentrate. Christina was also very sick with a
cold/flu. I asked her to stay outside the room but Kay Gregory
(secretary for Chris Cole, assistant general council for DSC) ordered
Christina to stay in the room with me.
Guess what? I caught the cold and have been sick ever since. I went
to the medical clinic in Hamilton about 10 days ago because I was only
getting worse. I learned that I had developed a form of pneumonia and
the medication was $8.44 per pill. I'm doing better but at least I
finished my disclosure.
I thought a lot about how to "fully and completely" disclose my "idea"
such that my disclosure would satisfy the court. I'm a technical
computer programmer, not a writer. It occurred to me that if I gave
them a working computer program that implemented my "idea", that
would certainly constitute a full and complete disclosure. A working
computer program would show that, not only was all the logic there, but
it would also show that my "idea" does work.
My "idea" does work.
- Evan Brown
PS. This article in the Bloomberg News just came out today
---------------------------------------------------------------
Evan, here's the wire version of the story. The magazine version should
be out in a week or so, and I will mail you a copy when I get it. Please
keep me posted on events as they unfold. I may check back with you from
time to time. Thanks again,
Loren
Alcatel, Fired Worker Tangle Over Who Owns Software Idea
9/27/0 3:21 (New York)
Alcatel, Fired Worker Tangle Over Who Owns Software Idea
(Published in the October issue of Bloomberg Markets magazine.)
Farm-to-Market Road 219, outside Fairy, Texas, Sept. 27
(Bloomberg) -- For 14 weeks starting in June, Evan Brown climbed
into his dust-covered Ford pickup and drove 160 miles from
central Texas to Alcatel SA's U.S. headquarters near Dallas,
compelled by a state judge's order to divulge one of his few
remaining assets: his thoughts.
DSC Communications Corp., now owned by Paris-based Alcatel,
fired Brown in 1997 after he refused to divulge his idea for
software that would modernize DSC's telephone switches, which
route calls over the world's phone networks. Then DSC sued Brown,
charging that he'd breached a contract that required him to turn
over inventions to the company.
Out of a job and out of money, Brown, 48, has had little
choice but to shed the trappings of his former success. He sold
his Cessna 210 single-engine plane and used the cash to build a
metal barn on 300 hardscrabble acres northwest of Waco, where he
weathered months of 100-degree days before installing air-
conditioning. He brings in about $2,000 a year by leasing his
land to farmers -- in stark contrast to his $100,000 annual
salary at DSC.
Long gone are his single-story brick home on a tree-lined
cul-de-sac in the Dallas suburb of Plano, his Mercedes 300 SD
sedan, and his prized gun collection: rifles, shotguns, and
pistols he'd acquired since college.
The Battle for Ideas
While Brown's situation may be extreme, the issue that's
driven him into such dire circumstances has become increasingly
important in an economy powered by technology -- and the people
who invent it.
Companies such as Alcatel are getting more aggressive in
cases involving employee ideas -- officially dubbed
``intellectual property'' -- as they fight to keep knowledge they
deem vital from falling into competitors' hands. Legal experts
predict the number of suits against workers and rival companies
will balloon as competition for skilled employees intensifies and
turnover in engineering jobs runs as high as 15 percent.
This year alone, some of the biggest names in the computer
world -- including Intel Corp., Cisco Systems Inc. and Lucent
Technologies Inc. -- are involved in trade-secret suits.
``There's absolutely no question we're seeing more
intellectual property disputes and disputes with departing
employees,'' says Michael Epstein, head of the technology and
proprietary rights practice at New York law firm Weil, Gotshal &
Manges. ``It's a huge concern among high-tech companies.''
High Stakes
The cases can involve considerable stakes. Brown estimates
he's spent $500,000 on legal fees. He says he can't find work
aside from the occasional consulting agreement because no
employer wants to take on his legal woes. What's worse, the court
order forced him to spend more than three months at his former
workplace to develop and test his software idea -- without pay,
without a stipend for his expenses, and with little hope of
benefiting from what he estimates is a $1.5 billion market for
his idea.
``They're trying to make an example out of me for all their
other employees,'' Brown says from under the brim of his white
cowboy hat, his boots lacerated from the limestone rock that dots
his farmland. ``They are not entitled to this. Corporations
cannot own parts of people. They can't own your brain.''
Alcatel doesn't agree. ``We have lots of assets, but there
are no assets anywhere near as valuable as our intellectual
property,'' says George Brunt, Alcatel's U.S. general counsel.
``The competition is all based around who can innovate.''
Lawsuits Galore
Europe's second-largest phone equipment maker has suits
pending against big companies such as Cisco and start-ups
including optical switch developer Chiaro Networks Ltd. In the
past four years, Alcatel -- and DSC before it -- have won most of
them, collecting a judgment of $140.7 million against Next Level
Communications Inc., in 1997.
That's a hefty sum, considering some intellectual property
cases are settled for no more than legal fees and an agreement to
keep workers from disclosing secrets at the new job.
Alcatel isn't alone. Fujitsu Ltd. is suing Cisco, claiming
the No. 1 maker of networking equipment hired 27 Fujitsu workers
to steal secrets about communications gear. Fujitsu filed the
case in December 1999 in the courthouse where Brown's suit is
pending.
Employees as Suspects
In March No. 1 computer-chip maker Intel sued Broadcom
Corp., a fast-growing rival in which Intel was an early investor.
The suit claimed Broadcom hired four Intel workers to gain
designs and marketing plans for communications chips.
A state district judge in California, where the case was
filed, ruled in May that three of the employees hadn't revealed
Intel secrets. The judge issued an injunction against the fourth,
preventing him from being hired because he had allegedly
mentioned confidential Intel information in his job interview at
Broadcom.
Intel fired a new round in August. It sued Broadcom in
federal district court in Wilmington, Delaware, and accused its
rival of using a ``carefully crafted plan'' to build its business
with Intel patents for cable and high-speed networking products.
Broadcom responded that Intel is simply trying to discourage
its employees from seeking better jobs.
More Than Tech Companies
Companies outside the computer industry aren't immune. In
one of the most publicized cases, No. 1 retailer Wal-Mart Stores
Inc. accused Amazon.com Inc. of raiding 15 top workers in 1998.
The suit, filed in Arkansas state court in October of that year,
claimed the biggest Internet bookseller and Drugstore.com Inc.,
in which Amazon holds a 23 percent stake, wanted Wal-Mart's
expertise in computerized systems to help Amazon sell more
general merchandise.
The companies settled in April 1999 after Amazon agreed to
limit the duties of former Wal-Mart executives and consultants.
The companies also agreed not to solicit each other's employees
for a year. No money changed hands.
Legal Muscle
Brunt, the Alcatel general counsel who had the same job at
DSC, says his company has an obligation to protect information
that could be ferreted away by workers and used against it.
When Alcatel bought DSC in 1998, it inherited Brunt's legal
strategy and his formidable track record in court. DSC's biggest
victory was its $140.7 million judgment against Next Level, now
majority owned by Motorola Inc.
The company claimed two workers had formed Next Level while
at DSC and had used DSC technology to make Next Level's set-top
boxes for cable TV service and Internet access.
In December Alcatel squared off in a Dallas courtroom with
Samsung Electronics Co., accusing the Korean company of stealing
designs for phone switching systems by hiring Alcatel workers.
The companies settled out of court in January. Terms weren't
disclosed.
Brunt rejects any notion that his company is a legal bully.
``We've had some high-profile cases and some big judgments that
have put it a little more in the limelight,'' he says. ``One of
the primary vehicles for companies to protect their intellectual
property is to go to court.''
Top Secret
The first line of defense for companies anxious to protect
intellectual property is to get employees to sign confidentiality
agreements, says Epstein, the Weil Gotshal attorney.
``The rule is that any confidential information that an
employee learns during the employee's job belongs to the
employer,'' he says.
Even so, courts are finding it harder to distinguish between
confidential information and general knowledge. Also,
intellectual property is still a relatively young branch of
jurisprudence, meaning, courts must look to different areas of
the law -- from contracts to patents -- for guidance.
In many cases, Alcatel has used an argument termed
``inevitable disclosure.'' The concept stems from a 1995 federal
appeals court ruling in Chicago involving soft drink maker
PepsiCo Inc. and Quaker Oats Co. PepsiCo sued over Quaker's
hiring of a key PepsiCo executive, William Redmond.
The court found that Redmond knew about PepsiCo's marketing
plan for its All Sport drink and that he inevitably would use his
knowledge to help Quaker market its rival Gatorade. ``Redmond
could not be trusted to avoid that conflict of interest,'' the
appeals court said.
The ruling prevented Redmond from doing his job for six
months and from ever disclosing PepsiCo secrets. ``I was at
Quaker, but basically on the bench,'' says Redmond, who left in
1996 to join Garden Way, a Troy, New York, maker of tillers, snow
blowers, and lawn mowers.
Sue First, Question Later
For high-tech companies, simply getting a new design to
customers first often ensures success. The process can go into
warp speed when new technology is at stake. A microprocessor, for
example, can move from design to production in 12 months compared
with two to three years for a new car.
``As the economy and technology move faster, people do rely
on other ways of keeping their information confidential,'' says
Chuck Oslakovic, an attorney specializing in trade-secret law at
Chicago firm Leydig, Voit & Mayer. That may mean suing departing
employees as a preemptive strike against a future competitive
threat.
For Brown it's meant spending eight hours a day at Alcatel's
offices hunched over a computer screen. He says that Alcatel
forbids him to leave the room to go to a vending machine, and an
employee assigned to watch him notes his rest room breaks.
Billion-Dollar Idea?
The idea that has spawned so much trouble sounds simple:
develop software that translates outdated computer languages into
one that today's machines can understand. So far, though, no one
has created a program that can read all the quirks in the older
systems.
``This could be extremely valuable if there's anything
behind the idea,'' says Brunt, who believes the concept has merit
because Brown is ``an expert in developing software tools.''
Brown claims he began working on the idea as far back as
1976, 11 years before DSC hired him. When he joined DSC in April
1987, he signed an agreement that he would disclose any
inventions related to his job as a software designer.
In 1996 the solution to the computer code problem he'd been
pondering came to him. He filed a notice with DSC's legal
department in April of that year saying he had developed his idea
``from my own personal experience and on my own time.'' He asked
the company to issue a release, stating that his idea wasn't
covered by his employment agreement because it involved
``software reverse engineering'' -- basically taking modern
computer code, breaking it down, and rewriting it in the outdated
language.
``DSC is not in the business of software reverse
engineering, and my job at DSC does not involve reverse
engineering,'' Brown wrote in his April 19 notice to DSC.
Slippery Slope
DSC disagreed, and the company and Brown spent almost a year
trying to reach a compromise. Brown says he went on vacation to
Europe in April 1997 and returned to find he'd been fired. DSC
sued days later, claiming Brown was trying to sell the concept to
competitors. Brown says that wasn't the case.
Few things have gone Brown's way since. In June 1997 State
District Judge Curt Henderson ordered him to disclose the idea to
attorneys and DSC engineers. Brown claims he explained the
concept to the DSC team but the team couldn't make it work. DSC
argued the disclosure wasn't complete, and the judge agreed.
In January of this year, Henderson again ordered Brown to
disclose the idea. The judge sanctioned Brown for failing to
properly reveal it the first time and awarded DSC 20 percent
ownership should it be patented. In other words, Alcatel will get
20 percent of any revenue if the idea is successful. So far,
neither side has sought a patent.
Brown filed for bankruptcy in late January, delaying the
suit even longer, in part because the bankruptcy court had to
determine whether the idea was an asset. Legally, the idea is
worthless because no one's offered to pay for it, the bankruptcy
judge decided.
The case began moving forward again in June, when Brown was
ordered to report to DSC's headquarters and begin the disclosure.
No Shower, Lots of Armadillos
Brown now calls home his farm near the hamlet of Cranfills
Gap in the Texas Hill Country. Except for a high-speed phone
line, his new residence offers few amenities. Even a shower is a
mile down a dirt road in a farmhouse that his sister is
restoring.
The turn of events has left him plenty of time to ruminate
as he watches deer congregate near a cedar brake at dusk and
chases armadillos that root around in his garden.
He's determined to implement his invention on Alcatel's
computers so the company can't again claim he's holding back.
Only after the judge finds Brown has fully revealed the idea can
the case go to trial, where Brown believes he finally may
prevail. ``The only chance I have is, get before a jury,'' he
says.
Brunt says Alcatel is equally determined to fight for
valuable intellectual property. One of the few things he and
Brown agree on is that the software could be worth more than $1
billion.
As Brown wraps up the disclosure this week, he says he has
seen signs that the idea would work, which makes his ordeal even
tougher because it could mean giving Alcatel what he has spent
years trying to protect.
``That really eats on me, but I'm not going to give up,'' he
says. ``My freedom of my thoughts is worth everything I own or
possess.''
--Loren Steffy in Dallas (214) 740-0870 or at
ste...@Bloomberg.net with reporting by Daniel Tilles in Paris
through the Princeton newsroom (609) 279-4000/gcr.
Story illustration: To compare the performance of Alcatel's
American depositary receipts with the Standard & Poor's 500
Index, see {ALA US <Equity> COMP <GO>}
--
The Telecom Digest is currently robomoderated. Please mail
messages to edi...@telecom-digest.org.
John De Hoog
>DSC/Alcatel vs. Evan Brown, the saga continues
>
>I have disclosed my "idea" to the court so now DSC has my "idea."
This highly interesting and difficult issue reminds me of a major
difference between the US and Japan. That's the relationship one has
with one's employer. Traditionally, the Japanese have been fiercely
loyal to their company, so that the distinction you make regarding your
own idea, developed on your own time, would not even exist here. If your
idea could help your company win out over other companies, that would be
all that mattered to you.
I don't want to get into which way is best (and obviously things are
changing in today's Japan); but it strikes me that if someone wants to
develop ideas on their own and sell them to the highest bidder, they
should start their own company (venture business), not be sitting at the
desk of a big firm like DSC/Alcatel that might reasonably be expected to
have an interest in such technology. As you've discovered, it's pretty
hard to have it both ways.
--
John De Hoog, Tokyo http://dehoog.org
Peter F. Dubuque
> Evan Brown wrote...
>>DSC/Alcatel vs. Evan Brown, the saga continues
>>
>>I have disclosed my "idea" to the court so now DSC has my "idea."
> I don't want to get into which way is best (and obviously things are
> changing in today's Japan); but it strikes me that if someone wants to
> develop ideas on their own and sell them to the highest bidder, they
> should start their own company (venture business), not be sitting at the
> desk of a big firm like DSC/Alcatel that might reasonably be expected to
> have an interest in such technology. As you've discovered, it's pretty
> hard to have it both ways.
Quitting one's job and starting a company to develop an idea is a fine
thing. But by your logic, the person should quit their job before having
the idea. How's that supposed to work in the real world where people need
to have a source of income for things like food, housing, etc.?
--
Peter F. Dubuque - pet...@shore.net - Enemy of Reason(TM) O-
Paul Wallich
<pet...@shore.net> wrote:
>In accordance with the prophecy, John De Hoog <deh...@nifty.com> wrote:
>> Evan Brown wrote...
>
>>>DSC/Alcatel vs. Evan Brown, the saga continues
>>>
>>>I have disclosed my "idea" to the court so now DSC has my "idea."
>
>> I don't want to get into which way is best (and obviously things are
>> changing in today's Japan); but it strikes me that if someone wants to
>> develop ideas on their own and sell them to the highest bidder, they
>> should start their own company (venture business), not be sitting at the
>> desk of a big firm like DSC/Alcatel that might reasonably be expected to
>> have an interest in such technology. As you've discovered, it's pretty
>> hard to have it both ways.
>
>Quitting one's job and starting a company to develop an idea is a fine
>thing. But by your logic, the person should quit their job before having
>the idea. How's that supposed to work in the real world where people need
>to have a source of income for things like food, housing, etc.?
In this instance , assuming Brown's version is accurate, the question becomes
even tougher -- say you have an idea, try to develop it and fail, go to work in
an unrelated (!) job to support yourself, and then one day suddenly have the
inspiration that makes the job workable.
For the company to claim ownership of the original idea is a little like the
"all rights" contracts the some newspapers and other publishers are
trying to impose on freelance writers, in which the writer ostensibly gives
up ownership not only of their current assignment but of all previous writing
that they've ever done.
paul
John De Hoog
>>...it strikes me that if someone wants to
>> develop ideas on their own and sell them to the highest bidder, they
>> should start their own company (venture business), not be sitting at the
>> desk of a big firm like DSC/Alcatel that might reasonably be expected to
>> have an interest in such technology. As you've discovered, it's pretty
>> hard to have it both ways.
>
>Quitting one's job and starting a company to develop an idea is a fine
>thing. But by your logic, the person should quit their job before having
>the idea. How's that supposed to work in the real world where people need
>to have a source of income for things like food, housing, etc.?
That's what I meant about "having it both ways". What you see as
perfectly logical is that a person should be able to sell himself to
a company, depend on that company for his livelihood, milking it for
all he can (expensive cars and gun collections!), and yet not owe
that company any more than time served. This seems to be the
American way. From here it looks just a little strange, but perhaps
we can chalk that up to culture differences.
In this case, where Alcatel seems to be laying claim to an idea that
Mr. Brown had in his head prior to being hired (by DSC), a key issue
of course is whether one justification for Mr. Brown's high salary
was his possession of a brain likely to hatch ideas that might be
useful to DSC. It's sort of like buying oil rights to a patch of
land without knowing for sure of its yield. If so, and if he chose
instead to keep his best ideas for himself, then Alcatel might well
feel he had not lived up to his part of the bargain. But then, we
don't know for sure what that bargain was in the first place. It
certainly is an issue that comes up constantly in American technical
companies, and I don't pretend it is an easy one. I just think we
ought to look carefully at both sides.
--
John De Hoog, Tokyo
http://dehoog.org