June 13, 2005
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There have been several prominent California trials in the public eye: O.J. Simpson, Peterson and Michael Jackson. The EDA industry has its own set of interesting litigations. Magma Design Automation and Synopsys Inc are currently embroiled in a major patent litigation fight. Before we examine the details of this litigation, let us review some general information that has been presented in earlier weekly editorial about
A patent is a property right granted by the U.S. Government to an inventor “to exclude others from making, using, offering for sale, or selling the invention throughout the U.S. or importing the invention into the U.S.” for a limited time in exchange for public disclosure of the invention when the patent is granted. Patent rights date back to the U.S. Constitution Article 1, Section 8, Clause 8 to wit: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” The first patent was granted in 1790.
broad. The person or firm contesting a patent does not have to demonstrate they are entitled to the patent but that the patent was improperly granted or interpreted.
that this section requires the inventor to file a patent application within one year of his or her publication, public use or marketing of an invention.
One can violate another's patent inadvertently and even without any knowledge of that patent's existence. Of course it can be argued that sophisticated firms working in a narrow area should be aware of relevant patents. Knowledge, or lack thereof, is generally irrelevant to issues of liability. Independent development is not a defense. Knowledge of the patent by the infringer, however, can be relevant to damages. The owner of a patent is entitled to seek redress by can stop offender royalties for past sales.
The theft or misappropriation of trade secrets was criminalized by the Economic Espionage Act of 1996 ("EEA"). According to the Department of Justice the commercial theft of trade secrets is described as
A defendant convicted for commercial theft of trade secrets can be imprisoned for up to 10 years and fined $250,000 or both. Organizations found guilty under the EEA can be fined can be fined up to $5 million.
Patents and trade secrets are mutually exclusive. The process of obtaining a patent requires public disclosure, while a requirement of a trade secret is that the owner keeps it confidential. A trade secret may become part of a patent but would then cease to be a trade secret. A patent confers a right. While theft of a trade secret is a crime, there is no right to the secret itself. Others are free to use another's trade secret, if they obtain it legally.
Employment agreements often include a covenant not to compete, non-disclosure agreements, assignment of rights to inventions and discovery while employed, non-disparagement clauses, confidentiality of proprietary information, and nonsolicitation of clients, suppliers and employees. Many of these clauses are really concerned with the post-employment period.
Since both Magma and Synopsys are headquartered in California, that state's labor laws are relevant. California Labor Code Section 2870 provides
A fourth area is the degree to which employers and employees understand these issues and the degree to which they act accordingly. When people begin to work for a new company, they are required to sign numerous documents which they may not have seen before related to benefits, sexual harassment, invention assignment and so on. The new hire has already quit the old job and may have incurred considerable obligations for moving expenses and living accommodations (rent, buy) and hence unlikely to baulk on signing. How thoroughly does the person understand his/her responsibilities?
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-- Jack Horgan, EDACafe.com Contributing Editor.
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