Case of Vermont Microsystems Inc. vs. Autodesk

 

Sudeep Sarkar

Computer Science and Engineering

University of South Florida

sarkar@csee.usf.edu

 

Goals for the activity: The activity is built so as to foster the ability to think alone, to discuss in a group, to write coherently, and to present cogently.

Abstract: The assignment is built around the trade secret violation case involving Vermont Microsystems Inc. (VMI), and Autodesk. Autodesk produces the very popular AutoCAD software. Vermont Microsystems Inc. (VMI) produces graphics related hardware and software that significantly (10 times) speeds up AutoCAD. From 1989 to 1991 Otto Berkes worked with VMI on the display software which involved "display list drivers" and a "special triangle shading algorithm". In 1991 Otto Berkes left VMI and joined Autodesk. In 1992, Autodesk released a Windows version of AutoCAD which incorporated the idea of "display list drivers" and the "special triangle shading" algorithm. VMI sued Autodesk for trade secret violation and won. This module develops three active learning scenarios around this case. The discussions are facilitated by three worksheets constructed around the facts of the case, a hypothetical scenario around the case, and ethical considerations about the case.

Materials needs: The students need a copies of article(s) listed below that discuss this incident or have access to search engines (e.g. LEXIS/NEXIS).

Reference Articles:

  1. For the Second Circuit Nos. 652, 653, 654 - August Term 1995, Vermont Microsystems vs. Autodesk, http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-circuit/test3/95-7279.html, accessed on Aug. 5, 1998, (11 pages). [Note added 2001/03/18: This link appears to be bad. A summary exists at http://www.halligan-tradesecrets.com/200.html]
  2. Reasonable royalty award appropriate, but amount was error, 2nd Cir. rules," Mealey's Litigation Reports: Intellectual Property, Section on Trade Secrets, vol. 6, no. 13, April 1, 1998. (Can be accessed via LEXIS/NEXIS) [See also earlier reports "Hiring Competitors' Empoyees: A Trade Secrets Perspective; Simple Rules of Thumb Can Be Misleading" and "Calculation of Damage Award Ruled Improper in Software Misappropriation Case"]
  3. "Learning from litigation: Trade secret misappropriation," R. D. Rachlin, Communications of the ACM, vol. 38, no. 11, pp. 15-17, Nov. 1995.
  4. Letters to the editor, The Institute, IEEE-USA Publication, Aug. 1998. (This contains opinions about a new federal law in the US that would make theft of trade secrets a federal crime.)

Procedure:

We will divide the class into groups and ask each group to work on Worksheet 1, which discusses a hypothetical scenario built around the actual case. After the breakup session, we will summarize and synthesize the group responses. Following this activity we will distribute Worksheet 2 and the newspaper articles [2] that discuss the VMI and Autodesk case. The groups should complete the worksheet and be ready to discuss this special case. At the end of the class we will handout the Institute Letters to the Editor [4] and Worksheet 3. The worksheet explores the ethical ramifications of the case. This worksheet should be handed in at the begionning of the next class

Time required:

One clas period.

Author Contact Information: Sudeep Sarkar, Computer Science and Engineering, University of South Florida, Tampa, FL 33620-5399, sarkar@csee.usf.edu

Date: 6 August, 1998; updated 18 March 2001.


Worksheet 1: (A hypothetical scenario)

Person Temp joined Company A and started working on a software product. As a part of his assignments. he developed a unique data structure and associated algorithms which significantly enhanced the performance of the main product of the company. After two years, Temp left Company A to join Company B which is a competitor of Company A. Within a year, Company B markets a product with similar data structures and algorithmic architecture as that of Company. A.

 

1. Do you think there is a possibility of an Unethical conduct involved in this scenario?

 

 

 

2. What are the options available to Company A?

 

 

 

3. What questions would you ask that would change your response to the first item above?

 

 

 

4. Would it be okay for Temp to use the data structure and algorithm (that he developed for Company A) in a product for a non-competing company?

 

 


Worksheet 2: (VMI vs. Autodesk Case Specifics)

 

Read the news report entitled, "Reasonable royalty award appropriate, but amount was error, 2nd Cir. rules", consult your textbook, and answer the following questions.

 

1. Identify the stake-holders (persons and organizations affected) in the case.

 

 

 

2. What is a trade secret? How does it differ from patents or copyrights?

 

 

 

3. What is an Invention and Non-disclosure Agreement?

 

 

 

4. What are the two contended trade secrets in this case?

 

 

 

5. What did VMI do to protect its trade secret?

 

 

 

6. What did Autodesk do not to violate any trade secrets?

 

 

 

7. How did Autodesk come to know about the trade secrets?

 

 

 

8. What was the final ruling in the case?

 

 

 

9. Can you find out where Otto Berkes is working now?

 

 

 


Worksheet 3: (Ethical considerations)

 

Read the Letters to the editor, The Institute, IEEE-USA Publication, Aug. 1998. Based on these opinions. your knowledge about the VMI versus Autodesk case, and your judgment discuss the following.

 

1. According to you, was Otto Berkes acting unethically?

 

 

 

2. According to the IEEE and ACM code of ethics was Otto Berkes' actions Unethical?

 

 

3. Did Autodesk act unethically? Give reasons.

 

 

4. What alternative action(s) could the (managers at) Autodesk have taken?

 

 

5. What do you think was Otto Berkes motivation for acting in the manner that he did?

 

 

 


Last updated 98/08/12
© Sudeep Sarkar, 1998.

Prepared during the NSF Workshop on Teaching Ethics and Computing, University of South Florida, August 1998, NSF Grant No. DUE 95-52792