The story of Cisco filing a lawsuit against Network Edge Authentication Topology (NEAT) has filtered through the AV industry for the last few weeks, but with much less disdain for its existence than that of ClearOne versus Shure. What’s interesting to note is the fundamental difference between the two—one is a suit over trade secrets, while the other is actually several suits (and even a countersuit) over patents. What’s the difference?
Patents Versus Trade Secrets
Patent law in the United States can be a particularly complicated thing. The principle behind someone being able to file a patent is that they make a social contract with the public. For the time and energy that they put into creating a novel and non-obvious new work, they get an effective monopoly over the ability to control its production, licensing and sale for 20 years—essentially allowing them to control the profits over their creation for a period of time. By filing a patent, though, a person is instantly publicizing its existence. It’s here that we see the difference between the two legal battles.
A trade secret’s baseline principle is exactly as it is stated—it is a secret. You cannot patent a trade secret because the minute you do, it becomes public knowledge and is therefore no longer a secret. That doesn’t mean that trade secrets aren’t protected, however. Consider the formula for Coca-Cola. That isn’t patented; it’s a trade secret. You could also likely say the same for the 11 herbs and spices of Kentucky Fried Chicken. Just because someone could reverse-engineer the formula does not destroy the trade secret.
You Can’t Take It With You
This is a common issue in Silicon Valley as engineers and employees bounce from one tech company to another. People are hired to work on products. They create and develop technology. They also learn how not to create technology. In the end, something gets built. Those employees have learned something. That information is stored in their brains and, depending on their employment agreement, they could be free to walk out of that building any time with the information that is stored in their heads. The issue is whether sharing that learned information with their next company is something that would be considered a misappropriation of the trade secret.
In the Cisco case, though, the claim is that the offense is much more egregious. It isn’t just someone walking out of the office with information in their head; the claim is that someone downloaded more than 3,000 files with proprietary information. This speaks to a certain amount of ignorance by engineers about employment contracts and the law.
Part of any employment contract—or at least something that absolutely should be part of any employment contract—is a stipulation of ownership of intellectual property. Some companies will overreach and make this clause as broad as possible to include anything that you create in or out of the office, on your personal time or company time. But focusing on the work that’s actually being done for the company suits this analysis. Under common employment agreements, developing and creating something while in the employ of a company will likely mean that that thing will be owned by the company.
We saw a similar issue in the case between Waymo and Uber last year when an engineer took files about lidar (an acronym of light detection and ranging) technology for self-driving cars with him when he changed companies. The companies reached a settlement, but there is still pending criminal litigation against the engineer.
What’s Next?
The AV industry is no stranger to patent suits. We’ve seen Crestron and Extron duke it out in the past. The Shure and ClearOne battle has seen many public comments about AV professionals never using either of those brands again.
Trade secret claims, though, seem a little less common for our industry. We often discuss how much history of our industry is based on field experience and the need to share that oral history. In theory, some of those discussions could include trade secrets for an integration firm. I find it unlikely that we’ll suddenly start seeing a lot of trade secret cases, but as technicians move from one company to another, it’s interesting to note that the culture of sharing learned information that could be first discovered by one of your techs could be revealing a trade secret.
Protecting an organization means ensuring that there is a strong, enforceable employment agreement about what that individual should keep secret during their employment and after they leave. Protecting yourself as an individual means not just signing that agreement but really understanding what you’re agreeing to. Take the time, read it, and ask questions if you don’t understand what it means. You could create something in your time there, something of great value, and it would be good to know if you or the company owns it and whether you can take it with you as you continue on in your AV career.
