Theft of electronics I.P. to start rival electronics company.

[ocset]

Hi,
My friend owns an electronics company that designs some electronics, but imports most of it in direct from China (into UK and Europe).
His Ops Director recently left the company, and set up his own rival electronics company, importing stuff from the same Chinese designer/manufacturer that My freind uses.
The ops director has basically stolen the Chinese contact details and started up a rival business.
Does my friend have  legal grounds to sue? (in UK)
Because its basically theft of I.P.
Sorry to speak of UK, but this could happen in any country

[PyroDan]

What have you been smoking? and where do I get some.

[ataradov]

Oh, the infamous friend again. Really, what if your/his problem?

Also, sounds like he was reselling Chinese junk. Now someone else does the same. I see no problem here.

[Andy Watson]

Unless the Chineese manufacturer is making products to a specific contract covered by some sort of NDA I don't think contact details constitute IP.

[nctnico]

Unless the Chineese manufacturer is making products to a specific contract covered by some sort of NDA I don't think contact details constitute IP.

Indeed.

@treez: your friend should have put a good non-compete in to place with his employees. Without that you can't do anything against these kind of situations.

[rstofer]

@treez: your friend should have put a good non-compete in to place with his employees. Without that you can't do anything against these kind of situations.

And they don't hold up in the US.  I can work anywhere I want.  I can't steal real IP but if I happen to know how something works, well, I am pretty much free to use it.

https://www.lexology.com/library/detail.aspx?g=193109da-d1f1-4684-a37a-ebe45c4ed5a1

I can't use legitimate trade secrets and this arguably includes customer lists but, really, everybody making anything already knows who buys these things so it's hard to claim 'trade secret' for customers.  How much they bought, how much they paid, that kind of thing is probably a trade secret.  But not the customer list or phone numbers.  After all, everybody goes to the same seminars - it's called social networking and that's one way to find a better job.

Know how - what I learn on the job - can not be protected.  If it is not eligible to be considered a trade secret, it can't be limited.

Post employment contracts may limit such dissemination but, unless there is MONEY attached to a post employment contract, why sign up?  At the working level, there are no employment contracts in the US.  Maybe company officers are under contract but I don't swim in that pond.

A list of suppliers?  Probably common knowledge in the industry. As long as the devices from China aren't protected by local patent or IP laws (and they won't be if they were designed in China) then nothing is going to prevent the Chinese from selling their stuff to anybody they want.  Besides, they have trade delegations promoting all the popular manufacturers.

[amyk]

Does that company happen to produce LED drivers...?

[nctnico]

@treez: your friend should have put a good non-compete in to place with his employees. Without that you can't do anything against these kind of situations.

And they don't hold up in the US.  I can work anywhere I want.  I can't steal real IP but if I happen to know how something works, well, I am pretty much free to use it.

The article you linked to explicitely mentions non-compete agreements being the solution. However the article seems to have been written from a position where a non-compete wasn't in place and thus it focusses mostly on damage control. IMHO it is utterly stupid to have no non-compete agreement in place with (at least) the employees which deal with customers. Over here is it common for every employee to have a non-compete agreement as part of their contract.

[SiliconWizard]

"Theft" of supplier contacts is not theft of IP.
Your list of suppliers may or may not be considered confidential - if it's stated in no contract, there's nothing you can do.

Theft of a customers' database may be another story. But apart from that, from your description it all comes down to a matter of the existence of a non-compete clause in this guy's contract. And frankly, if a key manager in any company doesn't have a non-compete clause, well... this company is probably fucked up in some way.

[nctnico]

Agreed. And I want to add that putting a valid non-compete in place requires help from a specialised lawyer!

[SiliconWizard]

A good reason why some companies don't add that kind of clause is that they can be costly. I think in most countries they have to be assiociated with financial compensation when the person leaves the company. Some companies just don't want to have to shell out more money when someone leaves and they think they'll find a way to sue the person anyway, even without the clause, and spend the same amount on a lawsuit if it ever arises. Stupid management, but I've seen it a couple times.

[hans]

Also, it can be quite hard to write and enforce such ruling.

In particular if your trade is quite generic, for example you're a backend webdeveloper for eCommerce or a PCB design engineer. Can a company really ban you from working at another place for a certain period or radius? That's ridiculous. You're not going to unlearn how to write backends or design PCBs if you leave. Similarly, I think it's quite hard to ban an employee not to stay in contact with your suppliers or customers.

Secondly attempt to define theft. I'm not a lawyer by any means, but if I imagine IP theft then I think we're talking about source documents, such as source code, schematic designs and PCB layouts. For example, if you attempt to "clone" a product from a competitor by reusing the production molds/stencils/etc. for your own supply chain.

However, if you reproduce these source documents yourself through reverse engineering, that may be considered unethical and on the edge of legality, but very hard to proof that it's an actual IP theft or copyright violation (patents is a different story). I've heard stories about this being done for some mass consumer products at multinational companies.

[ebclr]

This happens every day, Chinese is like a prostitute , if you have money deal is made, Forget about

[nctnico]

Also, it can be quite hard to write and enforce such ruling.

In particular if your trade is quite generic, for example you're a backend webdeveloper for eCommerce or a PCB design engineer. Can a company really ban you from working at another place for a certain period or radius? That's ridiculous. You're not going to unlearn how to write backends or design PCBs if you leave. Similarly, I think it's quite hard to ban an employee not to stay in contact with your suppliers or customers.

When it comes to dealing with customers the rulings in the NL often favour the former employer in case someone decides to poach customers and there is a non-compete in place. As -for example- an electronics designer you might be limited to not working for the direct competitor for a certain period of time.

[donotdespisethesnake]

Does my friend have  legal grounds to sue? (in UK)

Absolutely none. 

Next.

[Red Squirrel]

Actually I was thinking about that, say a company like Apple outsources to China, and China makes a rip off version, would it constitute IP violation to then, make a rip off of the rip off?  You're technically not ripping off the Apple one.   Could be an interesting way around IP laws if there is a tech in a certain product you want to use, just see if a chinese rip off also has the same tech and your defence could be that you used China's tech.  Don't know if it would hold in court though...

[soldar]

Does my friend have  legal grounds to sue? (in UK)

The correct answer is that he should consult with a lawyer licensed in his jurisdiction. Any advice you get here is worth exactly what you pay for it or maybe less than that.

[Zero999]

Actually I was thinking about that, say a company like Apple outsources to China, and China makes a rip off version, would it constitute IP violation to then, make a rip off of the rip off?  You're technically not ripping off the Apple one.   Could be an interesting way around IP laws if there is a tech in a certain product you want to use, just see if a chinese rip off also has the same tech and your defence could be that you used China's tech.  Don't know if it would hold in court though...

I would think it would still be considered a breach of copyright/patent/trademark or whatever.

The trouble is companies can't protect every single aspect of their designs and this wouldn't be good for the economy if they could. In some respects patents and copyright laws are too strong, but that's another debate.

[Red Squirrel]

Actually I was thinking about that, say a company like Apple outsources to China, and China makes a rip off version, would it constitute IP violation to then, make a rip off of the rip off?  You're technically not ripping off the Apple one.   Could be an interesting way around IP laws if there is a tech in a certain product you want to use, just see if a chinese rip off also has the same tech and your defence could be that you used China's tech.  Don't know if it would hold in court though...

I would think it would still be considered a breach of copyright/patent/trademark or whatever.

The trouble is companies can't protect every single aspect of their designs and this wouldn't be good for the economy if they could. In some respects patents and copyright laws are too strong, but that's another debate.

Yeah true now that I think of it does not matter where you got the design from, you could have even gotten it from your head, if it happens to be patented it's still breach.  And yes I agree the laws are too strong.  Copyright, patents, even trademarks, all of it, is way too strong.  I get the reasoning for the laws and they need to exist, but they should not be as strong as they currently are.

[rstofer]

In California, where all the magic really happens, non-compete clauses are unenforceable.  See paragraph 4

https://en.wikipedia.org/wiki/Non-compete_clause

In other jurisdictions, there has to be a 'consideration' (like money) and the clause has to be time limited and location specific.

There have been HUGE lawsuits in Silicon Valley over companies agreeing to non-compete by deciding not to raid each other's employees.  Non-poaching they called it.  Cost them nearly a half billion dollars:

http://fortune.com/2015/09/03/koh-anti-poach-order/

Employment contracts in the US are exceedingly rare.  Most states are like California - employment at will.  The employer can fire the employee for any reason or no reason at all.  OTOH, the employee can walk out for any reason or no reason at all.  In Silicon Valley you change jobs by driving in the wrong driveway in the morning.  If you know anything at all, you'll be hired in a heartbeat.

This topic is really pretty complicated and is going to depend on location.  There's a lot of case law in the US, some good, some bad.

Do you know why Silicon Valley companies seldom patent anything?  Because they would have to disclose how it works or the process for creating it.  The disclosure would give the competitors a leg up while the life cycle of the product might be quite short.

One company I worked for manufactured electrical products.  We weren't allowed to have competitor's literature in our office even if we got it at a trade show or it was a commercial catalog.  No supplier's coffee mugs, hats or other trinkets either.  If the word "Proprietary" showed up anywhere in a document, we were to dispose of the item immediately.  We shouldn't have gotten it in the first place.  Pretty strict!

[Mickster]

Let's see when Dave or Simon gets fed up with this thread.

I'll bet 250 salvaged MLCC capacitors (any size/value) that Simon gets there first. 

[EEVblog]

Reminds me of those cheap Maynou electronic loads on ebay.
Maynou was found by a former Itech engineer who left the company and took with him the technical documentation of the Itech line of products.

[EEVblog]

What have you been smoking? and where do I get some.

Sorry but I don't understand the reference and hostility in this thread. Does Treez some history here I'm not aware of?

[Red Squirrel]

In California, where all the magic really happens, non-compete clauses are unenforceable.  See paragraph 4

Wow that's one thing California does right!  I always found those clauses were pure BS.  My workplace actually has a clause that ANYTHING you create even on your own time, they own.  I've never actually heard of any instance of them enforcing it, but it's there.   I imagine it's reserved for very specific cases that cause a conflict of interest or something.

[EEVblog]

Hi,
My friend owns an electronics company that designs some electronics, but imports most of it in direct from China (into UK and Europe).
His Ops Director recently left the company, and set up his own rival electronics company, importing stuff from the same Chinese designer/manufacturer that My freind uses.
The ops director has basically stolen the Chinese contact details and started up a rival business.
Does my friend have  legal grounds to sue? (in UK)
Because its basically theft of I.P.
Sorry to speak of UK, but this could happen in any country

Supplier lists are not IP. Anyone can find the same supplier and contact details.
You can sue for anything and the lawyers will happily take your money, but you won't win.