How Noncompete Agreements Will Make Our Troops Less Safe
from the bad-news-for-everyone dept
Earlier this month, we wrote about the dangers of noncompete agreements and how they tend to slow innovation and hurt regions compared to those, such as California, that do not enforce noncompetes. Most of the research on noncompetes tends to compare Massachusetts, which enforces noncompetes, to California. And, in an unfortunate demonstration of the dangers of noncompetes, iRobot, a Massachusetts company has just forced a competitor completely out of business, and our troops may be less safe because of it. Many people know iRobot for the cute little Roomba vacuum cleaner robot, but the company's main line of business has always been selling robots to the military to help them locate and dispose of explosives. A new company sprang up recently, called Robotic FX, founded by a former iRobot employee. Robotic FX had just scored an army contract to make some similar robots. The competition would have been good for everyone. It would have pushed both companies to continue to innovate and make better, more efficient and more cost effective robots. Instead, iRobot sued and has forced Robotic FX completely out of business and banned its founder from working in the industry for five years. Here's a knowledgeable expert on robotics who can help make useful robots that will help keep our troops safer... and he's not allowed to work in the industry for five years. That doesn't seem like a good outcome for anyone... other than iRobot who can rest on its laurels rather than having to innovate in the face of competition. Update: Wanted to update this following some comments that suggest my summary was inaccurate. I apologize if it was not clear, so let me clarify here. The guy was accused of patent infringement and trade secret violations in what he was doing. That was the central part of the case. The "noncompete" wasn't specifically an agreement he signed, but it's a result of the lawsuit. I should have been clearer about the accusations of infringement, but I don't believe this changes the point of the post at all. It's still a case where a noncompete (created by the court, rather than as part of an employment agreement) is used to stifle competition. That there may have been patent infringement is somewhat meaningless to me, as should be clear from my other discussions on patents. Competition is competition -- and it would have driven better results, even if based on the same patents.
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Filed Under: noncompetes, robots
Companies: irobot, robotic fx
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If the tech is that good then
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Re: If the tech is that good then
Man that just doesn't seem a safe idea.
And man! There is a LOT wrong with the current system.
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you left out a part
Now, perhaps you have legitimate issue with trade secret law or patent law (or the courts' determination of fact), but all of that is different from claiming this to be a non-complete issue.
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Re: you left out a part
Are you saying that the charges of misuse of trade secrets and deliberately infringing on patents was based on the noncompete agreement? If not, I don't see how this is a noncompete issue, in spite of the fact that I think the overall point still stands that the result of this case could make our troops less safe,
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Re: you left out a part
Sorry. I have added an update to clarify.
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so here your non compete doesn't just harm innovation, it has the potential to benefit another country.
way to go...
if hes that good just bring him directly in as a DoD contractor and assign him where ever you want
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Non-Compete
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If its for military use, does that mean it should be legal? Should people working for Lockheed Martin be able to steal designs and start their own defense company up from lockheed martin's work?
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Non-competes
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I'm feeling a bit ripped off
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did he sign?
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Wow - Really Messed This Up
The Techdirt editors should correct this ASAP. Something that is so blatantly off the mark brings down the credibility of Techdirt. The guy stole trade secrets and intentionally infringed on patents. Patent system issues aside, this isn't about killing competition with a noncompete agreement, its about not letting competition be who can rape the innovator the hardest and fastest.
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Re: Wow - Really Messed This Up
I added an update. I disagree that it's "wrong." The point still stands. I'm sorry that I wasn't more clear in highlighting the key point, which was how the entire situation was anti-competitive.
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In other news...
That's right I'm talking to you Clinton, and your husband. We all know what you'll do to us again if given the chance.
Step up and take responsibility, not credit, for the malice and hatred brought on us by your former administration.
Oh sure, Bill could talk a good one, but we all know who was whispering to him in his sleep.
Let's see what you were known for;
Debauchery in the Military
Porn on the *you-name-it*
Deregulation leading to re-regulation
Failure as a home maker and booty shaker
So everyone that wants to see more goverment making more greedy laws, all from an east coast penthouse, support the damnocrats.
Paid for by;
Americans who buy stuff
Companies who buy laws
Politicians who buy votes
Hmmm, sure seems to be alot of easterner tags in the Ohio Valley lately.
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Several Inaccuracies
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Patent laws provide a temporary monopoly to an inventor (or a non-competition agreement as against the world, as you phrase it) in order to promote the progress of science by permitting the inventor alone to reap the rewards of his invention, thus "enabl[ing] firms to increase their expected profits from investments in research and development, thus fostering innovation that would not occur but for the prospect of a patent."
In the case you're talking about, a former employee both violated the patent laws and misappropriated trade secrets, and for these reasons, was driven out of business. Though this is anticompetitive in the short run, preservation of the patent system promotes competition in the long run.
At least, that's the most commonly offered justification - and I believe it, if only because the existence of our patent system has coincided with the rapid advancement of technology in America.
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Re:
Don't confuse correlation with causation. Take a look at the research of Levine & Boldrin, Moser, and Schiff and you'll begin to realize that there's almost no evidence that a patent system increases innovation. In fact, there's plenty of evidence to the contrary. A patent system does *consolidate* the lead of companies already leading in a space by giving them a way to protect that lead from competition.
But there's little evidence that it actually creates the incentives to create new innovations.
You can see Levine and Boldrin's book on the subject here: http://levine.sscnet.ucla.edu/general/intellectual/againstnew.htm
which points to plenty of additional evidence showing the lack of impact from patent systems on encouraging innovation and highlights many of the negative impacts from it.
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Re: Re:
I realized the weakness of the correlation statement that you responded to after I had posted it (i.e., once it was too late to remove).
Thank you for pointing me to the Levine & Boldrin book.
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Seems the definition of "competitive" or "competition" in the business world is "who can make it the cheapest" regardless of the validity of any patents or trade secrets.
We may not like the patent system around here on Techdirt, but it sure seems to me this is not one of those patents that everyone agrees should be thrown out or that litigation was rushed to beat a patent review that was going to invalidate the patent. Further, while there may be an argument that the inclusion of the "noncompete" in the settlement is overreaching by iRobot, it seems to me Robotic FX gave iRobot all the ammunition needed to shove this down Robotic FX's throat. Let's not forget this is a SETTLEMENT between the parties in litigation (after rulings that showed iRobot was going to spank FX) and that the only "court imposition" is the fact that the Court needs to approve it and it will then have the force of an injunction/judgment against FX.
I've read the summary, the cnet article, Mike's explanations AND the docs at xconomy.com (including the settlement papers signed by everyone but the judge) and the noncompete stuff is so minor compared to the real issues here, I agree the summary is so seriously misleading that I feel it is wrong.
Differing opinions I guess. Since so much of the Techdirt postings are good and quality work, this is just an anomaly in my book. Interesting reading even so - thanks for bringing it to our attention Mike!
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Article is wrong
When I read this article, I knew I had seen the case mentioned elsewhere. I found the link here: http://www.masslawblog.com/?p=141
The country suffers no harm, and the man gets what he deserved. I'm all for patent reform, and getting rid of non-competes, but the system worked EXACTLY like it was supposed to here.
If you read the PDF (linked at the bottom of the blog article), you'll see that the government had no problem with either companies robot, and the only reason Robotics FX won the contract was that their bid was lower: $285 million vs. $286 million.
I definitely feel like this article needs another update, at the very least the article title.
Thanks!
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Article is completely false - shame on you
Robotics FX's ability to actually fulfill the contract was extremely unlikely, as it appears to have been a shell company run out of the guy's father's basement. There is no loss of competition or innovation here.
Your update to the article doesn't help. The point of the non-compete wasn't to prevent competition but rather to prevent further theft of the iRobot IP. There was no competition to start with, since Robotic FX was founded solely on iRobot technology.
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