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
Employment agreements and individual rights
Many have raised concerns regarding current patent law and United States Patent and Trademark Office USPTO practices and policies. For example, patent examiners have insufficient breath and depth of knowledge as well as insufficient time and resources to exhaustively investigate all prior art. They rely on the information provided by the applicant plus a search of the patent database. A patent once approved is assumed valid. It takes a considerable amount of time and money to contest a patent. Many simply pay license fees as a shorter, less costly and less risky alternative. The most frequent grounds for contesting patents are based upon prior art or that the claims asserted are too 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.
In order to be patentable the invention must be new, useful, and non-obvious. The US uses a first-to-invent system while Europeans use a first-to-file system. Under the US system a person is not entitled to a patent if the invention was "known or used by others in this country, or was patented or described in a printed publication in this or a foreign country" before the date of invention by the applicant for the patent. Further, a patent is barred if "the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States." Note 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) Whoever, with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will injure any owner of that trade secret, knowingly --
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. "Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: