Software Buyers Not Liable For Trade Secrets In Compiled Source Code

from the good-ruling dept

Thu, May 6th 2010 3:06pm — Mike Masnick

Mark B points us to an interesting and well-written ruling in a lawsuit where Silvaco Data Systems lost its argument that Intel and others could be found liable for violating Silvaco's trade secrets, because those companies purchased software from another company who had violated Silvaco's trade secrets.

The quick background is that another company -- Circuit Semantics Inc., (CSI) -- has apparently used trade secrets from Silvaco in creating its software. Silvaco won its lawsuit against Circuit Semantics, barring further sale of its code. Silvaco then sued buyers of CSI's code, including Intel, claiming that they, via CSI, had also violated Silvaco's trade secrets. The ruling against Silvaco is well argued and smashes Silvaco's argument -- noting the difference between the source code, which contained the trade secrets, and the compiled software, which Intel obtained. The judge points out how silly Silvaco's arguments are repeatedly, calling one of the main arguments "a smokescreen, a red herring, a straw man," and later saying of Silvaco's argument: "strained is too small a word to describe Silvaco's argument." You can read the full decision here:

Separately, this ruling is getting extra attention from some lawyers because of the judicial smackdown the judge made concerning the rather wasteful decision to include excess information in the filings:

Although this case was decided largely on the pleadings, it has somehow generated an appendix over 8000 pages in length. Seldom have so many trees died for so little. We see three causes for this wretched excess....

It then goes on to detail three different bad choices made by the lawyers which made the filings so ridiculously large. Basically, the lawyers seemed to throw in all sorts of things that weren't necessary, and which the judges could have easily been pointed to that information to retrieve on their own.

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Filed Under: compiled code, trade secrets
Companies: csi, intel, silvaco

21 Comments

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Jon Renaut (profile), 6 May 2010 @ 3:01pm

A little troubling
Does the ruling really hinge on compiled code vs source? Because that doesn't seem like the right distinction to make. Do we really want to put the liability on purchasers of software to make sure that the software they buy doesn't violate any patents?
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Anonymous Coward, 6 May 2010 @ 3:15pm

Re: A little troubling
Yeah it's bad enough that coders have to deal with that mess, let's not add more shit to the pile.
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Jon Renaut (profile), 6 May 2010 @ 3:21pm

Re: Re: A little troubling
It's not really about the coders - if we allow software patents, then coders are responsible for not violating them.

But this is about software that someone purchased, not that they wrote. The liability needs to stay with the person who wrote it, regardless of whether it's compiled pre-purchase.
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Secret Squirrel, 6 May 2010 @ 3:29pm

Re: Re: Re: A little troubling
I agree that software should not be patentable, but am a bit confused by your post. The article talks about trade secrets and your response is about patents. Do we know that their trade secrets were also patents? Sort of defeats the secret part.
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Jon Renaut (profile), 6 May 2010 @ 3:32pm

Re: Re: Re: Re: A little troubling
Oh, you're right, I didn't read carefully enough. But my point remains - the liability should be on those who stole the trade secrets, not those who purchased the resulting code.

The fact that the code was compiled vs not compiled shouldn't even enter the discussion.
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Anonymous Coward, 6 May 2010 @ 3:38pm

Re: Re: Re: A little troubling
"It's not really about the coders - if we allow software patents, then coders are responsible for not violating them."

So we're going to hold them responsible for patents they often won't know about?

Often times I find that you can't know of all the patents apply to your software, and that even if you're the first to think of a particular solution it's already covered by a number of overly broad patents. And you think this is a good system to have? Fuck you.
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Anonymous Coward, 6 May 2010 @ 3:44pm

"Seldom have so many trees died for so little."

The EPA ought to demand fines.
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:Lobo Santo (profile), 6 May 2010 @ 3:55pm

Re: Re: Re: Re: Re: A little troubling
"Oh, you're right, I didn't read carefully enough. But my point remains - the liability should be on those who stole the trade secrets, not those who purchased the resulting code."
You realize that creates an easily exploitable loop-hole, right?

Step by step:
1. Create 'dummy' company.
2. Dummy company steals some trade secrets, makes program(s) with said secrets.
3. Dummy company sells program(s) to you.
4. Your stolen trade secrets are now laundered!
...
(6. Profit.)
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Anonymous Coward, 6 May 2010 @ 4:11pm

Re: Re: Re: A little troubling
The thing is that it's always easy to simply put liability on developers and sellers of goods and services and restrict their behavior. This hides from consumers how much they are being harmed by retarded governmental laws. Putting restrictions directly on the consumer is hardly ever a good idea, it gets them to force the government to fix things by making them aware of the retarded laws in place that harm them. Nevertheless, restricting what sellers can and can't sell still harms the consumers very much, it just hides how much they're being harmed and why.

The united states corporations have pretty much mastered how to scam the consumer without letting them directly know how they are being scammed and making them think there is true competition. Our mainstream media never covers any of these issues and when you buy things at the store you are given the appearance of competition.

But in reality everything is monopolized. There maybe two different devices that play MP3's, one perhaps is an IPod and another is a Zune, so you are given the appearance of competition. But both cover some of the same patents and when these corporations cross license their patents they are essentially acting like a cartel, keeping out any new competitors, and the consumer is essentially stuck with monopoly prices. Or some company will charge another company a monopoly licensing fees to sell a product (ie: a patent lawsuit settlement or victory) and the consumer, thinking there is competition when they go to the store, indirectly pays monopoly prices at the mercy of the patent holder.

We are only given the appearance of competition, but in reality the system of patent cross licensing at the exclusion of newcomers works like a cartel. Companies either only cross license to the extent that it maximizes their collective monopoly rents of those involved in the licensing deals or they charge huge licensing fees to competitors who want to license a patent, fees that ultimately maximizes the monopoly rents of the patent holder.
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Jon Renaut (profile), 6 May 2010 @ 4:38pm

Re: Re: Re: Re: Re: Re: A little troubling
I'm not a lawyer, so I could be totally making this up, but I thought setting up a dummy company just to shield yourself from illegal activity was a way bigger deal than stealing someone's intellectual property.
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Jon Renaut (profile), 6 May 2010 @ 4:49pm

Re: Re: Re: Re: Re: Re: A little troubling
I'm not a lawyer, so I could be totally making this up, but I thought setting up a dummy company just to shield yourself from illegal activity was a way bigger deal than stealing someone's intellectual property.
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Anonymous Coward, 6 May 2010 @ 5:11pm

It doesn't matter whether you win or lose. The laywers still get paid!
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Anonymous Coward, 6 May 2010 @ 5:15pm

Re: Re: Re: Re: Re: Re: Re: A little troubling
not if you're Pfizer.
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bob, 6 May 2010 @ 7:41pm

BIOS Virgins
This made me thing back to the early PC computer days.
Before Patents on computer code, when progress was almost everyday in the PC software arena.
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Jose_X, 7 May 2010 @ 2:52pm

Re: Re: Re: Re: A little troubling
Software patenting is such a bad idea that, even if I had about 100 years to waste reading and understanding the scope of currently existing patents, I prefer to use my own noggin and at least feel comfort knowing of yet another example of the patent system accomplishing little to nothing positive and a whole lot negative.
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Jose_X, 7 May 2010 @ 3:53pm

Re: Re: Re: Re: Re: A little troubling
Let's assume it were possible to study patents well and "feel comfortable" you were not violating.

Since it obviously takes a lot of time, resources, and arguments to help convince a court one way or the other during a suit, and since no one can go through those costs and analysis on a per patent basis for all of your creations and all patents, it should be clear that groups can invest a whole lot of money and time building something very useful and desirable, and thinking they are safe, only to eventually (after a lot more money and time spent) find out it was all for a waste.

It should be obvious, then, that you really can't resolve if you are safe despite putting in a significant amount of work, time, and money trying.

So the option is to build nothing or at least no more than you are willing to have shut out from use at any point in time when a patent owner pops their head up.

[Why are we restricting the freedoms and creative output of so many people? And why are we blocking paths that will be revealed to many people, when there may not be many other viable paths and to give a single person exclusive control? Why restrictions? Two or more people can come up with and exploit the same idea at the same time and frequently in a very similar way (unlike is possible with most physical materials).]
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Slot Bonus Guy (profile), 9 May 2010 @ 8:20am

In Compiled Source Code
I thought the whole idea of compiling code was that you could not reverse engineer it. I guess that's why I'm not a prgrammer - what a tough and potentially BORING job (almost as bad as my old job - accounting). At lease I'm not a lawyer!
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ike, 27 May 2010 @ 10:21pm

Re: Re: Re: Re: Re: Re: A little troubling

You realize that creates an easily exploitable loop-hole, right?

Trials are for sorting out such details.
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Ex-employee, 4 Dec 2010 @ 10:57pm

HA!
If anyone deserved this loss, it's Pesic. Bar none, the most vile, dishonest, sue happy, waste of space I've ever encountered in my professional career. Pesic's penchant for greed and lawsuits is so out of control, this could not have happened to a more deserving guy.
All we ever heard was the 'BILLIONS' he was going to win and then how he was going to take over the world.
Wonder how many products he stole from other companies. As a witness, I saw plenty illegal shit going on.

Maybe this will shut Pesic up for a while, although somehow, I doubt it.
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Ex-employee, 4 Dec 2010 @ 10:58pm

HA!
If anyone deserved this loss, it's Pesic. Bar none, the most vile, dishonest, sue happy, waste of space I've ever encountered in my professional career. Pesic's penchant for greed and lawsuits is so out of control, this could not have happened to a more deserving guy.
All we ever heard was the 'BILLIONS' he was going to win and then how he was going to take over the world.
Wonder how many products he stole from other companies. As a witness, I saw plenty illegal shit going on.

Maybe this will shut Pesic up for a while, although somehow, I doubt it.
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To Ex-employee, 16 Aug 2011 @ 12:47pm

LOVE IT!!! From one ex to another!
I, too, was unfortunate enough to not only work there, but witness plenty of illegal, a- moral, and abusive shit this man heaped upon others. I am a lover and believer of Karma and this man (termed loosely), has karma by the boat load coming his way. If I had to hear "BILLONS" one more time, I thought I poke my own eye out! I could see the orgasmic gleam in his eye at the mere thought that he'd win. In his mind, it was a given and that's what makes this so great! I only wished I'd been there when they served him up a nice dose of reality!
Not to worry- he's already dreaming up more ways to illegally embezzle money from someone by abusing a court system he thinks belongs to him!
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