!122994  $25 million judgment over software trade secret theft

    A classic question is how to protect your software in the multi-billion
dollar software industry.  Patent, copyright or trade secret are the three
best ways to go.  However as Apple's loss to Microsoft shows, copyright is
difficult to apply the amorphous structure of software, and does little to
protect an innovative algorithm.
    Thus it comes down to trade secret or patents, with the latter seeming t
increasingly be preferred as the number of (non-novel,obvious) software patents
explodes.  Partly I suspect people might feel that trade secret theft is har
to prove, especially if a stolen algorithm appears as the executable o
someone else's program
    However a recent case shows that trade secret theft is prosecutable and
winnable for great stakes.

    A New England company, Vermont Microsystems, some time ago sued Autodesk,
claiming that a former employee for Vermont Microsystems had used secret
information obtained while at VM to then help Autodesk (as an employee) to
come out with new computer aided design software.

    Just this week, a US District Court judge awarded VM $25.5 million as 
reasonable royalty for the loss due to the theft, though VM was disappointed
that an injunction was not issued against Autodesk to stop their sales.
"It's basically a forced sale of technology", said Peter Reed, president of
VM.  The award was one of the largest trade secret thefts ever awarded.

    So it appears that trade secret protection is still viable.  This is of
growing interest on Wall Street, which for years has used trade secrets to
protect all of those fancy technical analysis trading programs to play the
markets.  From what I hear, Allapat sparked a lot of interest in patenting
on Wall Street to start considering patenting, and it will be interesting
to see how things change for the industry.
Greg Aharonian
Internet Patent News Service
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