| High Tech's Ethics | ||||
High technology is a difficult ethical area. Much information technology was only invented in the last few decades and it sometimes seems as if existing laws and ethics are having a difficult time keeping up. Issues of privacy and free speech often lead to disagreement. Copyrights and patents are also contentious, and this case study examines a particular patent issue in depth. Cadence Design Systems (NYSE CDN) manufactures software that automates computer chip design. It is a successful company with 1996 sales up 36% to $750 million. This kind of software usually takes many years to design. So Cadence CEO Joe Costello was suspicious when Avant!, a company formed by ex-Cadence employees in 1991, managed to bring out its (similar) products with incredible rapidity and success. He has spent some $10 million in legal fees so far following his hunch. Costello was not without opposition. His board refused to support him; his customers told him he was dragging the industry into disrepute. Wall Street investment companies, which had steered Avant! through a $1 billion flotation, also pressurized him. But Costello's persistence paid off. A combined state and FBI investigation produced apparent evidence of employee theft from Cadence for many years. As a result, Avant! CEO Gerry Hsu and six other Avant! (and ex-Cadence) employees were indicted in April 1996 by Santa Clara, California, county prosecutors. Felony charges of theft and conspiracy allege that several of Avant!'s products were pirated from Cadence-developed software. The issues between Cadence and Avant! demonstrate the difficulty of applying ethics in business dealings. Venture capitalists, who pour millions of dollars into start-ups, are eager for quick development of new ideas. Quite often, a software company’s only tangible assets are locked in the heads of its employees. In the fast-moving world of computers, however, asking employees to refrain from working for a competitor for several months so as to reduce the chances of intellectual theft is not always feasible. Most companies try to ensure that employees never have to debate this issue by making nondisclosure agreements a condition of employment. Unfortunately, these contracts are difficult to enforce. Should employees feel loyalty to a company that employs them? Costello says he is “shocked” at how little loyalty his employees had to his company. Another interesting aspect of this case is the number of people willing to deal with Avant! In the circumstances, Costello was amazed to find that his ex-customers seemed quite willing to purchase software that, he explained to them, had been stolen from him. Some observers say that Cadence is merely worried about the success of Avant!, which they say has excellent products and is well-managed. Talented engineers with sought after skills will, they say, always change jobs. For its part, Avant! is countersuing Cadence in a civil action and intends to defend its employees against the criminal charges. This is a very interesting and complex case. Further information on Avant! and Cadence can be found at the following references A general article on the issues: http://technoculture.mira.net.au/hypermail/0035.html Cadence's web site: Avant!'s web site: Background to the case: http://www.eedesign.com/NewsReleases/ An article about both sides of the case: http://www.herring.com/mag/issue33/avant.html An investor who lost money because of the dispute: http://www.herring.com/mag/issue36/stock.html Cadence CEO Joe Costello speaks out on the issue: |
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