From Bloomberg:
TECH COMPANIES TO BIGGEST RIVALS: `SEE YOU IN COURT'
by Sam Zuckerman Bloomberg News Servi
Sep 22 1997 12:52AM CST, The Sacramento Bee
When Symantec Corp. allegedly found fragments of its computer code in arch-rival McAfee Associates'software this year, it sued for copyright infringement, setting off a brawl that kept Silicon Valley entertained all summer.
McAfee hit back with a $1 billion defamation suit against Cupertino-based Symantec. The software companies traded charges about crash-protection and anti-virus programs, with accusations of lying, theft and destruction of evidence served up almost daily.
The Symantec-McAfee dispute has been particularly nasty but not unprecedented. Increasingly, hardware and software companies are taking competitors to court, using intellectual property law to try to protect technology.
That's because courts are becoming more receptive to applying copyrights, patents and trade secrets to computer technology, experts say. The result is a young and fast-developing area of law. Symantec's suit against Santa Clara-based McAfee in federal court in California and a number of similar cases will determine how these traditional protections fit jealously guarded new technologies.
"What is copyrightable in software is not fully defined," said Alexander Johnson Jr., a lawyer in Portland, Ore. "These cases could help clarify the law."
Copyright protects expression rather than content -- the way things are said, not what is said. To win, Symantec will have to show McAfee used code substantially similar to its own, experts say, and prove the code is a unique form of expression.
Lots of other companies will be watching the outcome.
In the last year alone, electronic design software maker Cadence Design System Inc. of San Jose sued rival Avant! Corp. for allegedly pirating computer code. Santa Clara County authorities later charged Fremont-based Avant! with criminal theft of trade secrets, accusations the firm is fighting.
Maynard, Mass.-based Digital Equipment Corp. accused chip-maker Intel Corp. of patent infringement for allegedly using its technology in Intel Pentium processors. Santa Clara-based Intel countersued, demanding Digital return technical data it had supplied. And chip-making equipment manufacturer Applied Materials Inc. of Santa Clara traded patent infringement suits with San Jose-based Novellus Systems Inc.
About 100 technology industry intellectual property cases were filed in federal court in Northern California in 1996. That's up about 35 percent more than in 1986, said Devin Gensch, a University of Michigan law student researching technology industry litigation.
As recently as 1990, Cambridge, Mass.-based Lotus Development Corp. failed in its attempt to sue Scotts Valley-based Borland International Inc. for violating copyrights to its popular 1-2-3 spreadsheet program. An appeals court ruled that Borland had copied the function and operation of a spreadsheet -- things that couldn't be copyrighted.
"Had the Symantec-McAfee dispute taken place 15 years ago, there probably wouldn't have been a case," said Carey Heckman, co-director of the Stanford Law and Technology Policy Center. "Maybe there would just have been an angry exchange of letters."
The legal landscape began to change for technology companies with creation in the early 1980s of a federal tribunal for intellectual property disputes.
Hearing appeals from the U.S. Patent and Trademark Office, the Court of Appeals for the Federal Circuit significantly expanded patent protections for software.
In 1994, a special panel of the Patent Office refused to grant a patent to a group of Tektronix Inc. engineers who had developed software that controlled computer screen displays in a new way. The panel reasoned the program was essentially a mathematical formula ineligible for patent protection.
But the court noted that when loaded into a basic computer, the software created a kind of new "machine" eligible for protection under patent law.
Since that ruling, the patent office has become more likely to grant patents to software.
"Now they've come full circle," said William Fenwick, a Palo Alto lawyer who specializes in technology industry intellectual property law.
The fundamental economics of the computer industry are also behind the growing number of lawsuits, legal experts say.
In technology-based industries, a company's value is based less on its factories, plant and equipment than on its ideas and technical innovations.
"The market capitalization of this company is largely based on the value the marketplace puts on our computer code," said Cadence Design general counsel Smith McKeithen, explaining why his company sued Avant!.
It's also a lot easier to steal intellectual property than physical property. Many accusations crop up when companies hire rivals' technical experts. Avant!, for example, was founded by former Cadence employees.
"It's so easy to get access to information that may be the property of somebody else," Fenwick said. "Your intellectual capital walks out the door every night."
Although these disputes are often impassioned, frequently they end with one party agreeing to pay a licensing fee to the other. That's what happened earlier this year when Novellus agreed to pay Applied Materials $80 million to settle the claim it was using its competitor's patented chemical process for coating semiconductor wafers.
"Paying tribute is better than going to war," Heckman said.
Put it all together -- an accumulation of technology, a geometric increase in the value of the technology and the expansion of legal protections for the technology -- and suits sprout like mushrooms.
Still, there is a lingering perception that those who bring suit are the losers in the marketplace.
"A lot of people feel that those who can, innovate; those who can't, sue," said University of California law professor Robert Merges.
That, of course, isn't the way those who use the law to protect their technology see it.
(Copyright 1997) |
