Last Updated 16 Jun 2020

Competitor Stakeholders – Intellectual Property

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Business ethics comprise of a set of ethical rules and principles in the context of a corporate. They involve the various moral or ethical problems that can arise in a business setting. Ethical disputes over ownership of intellectual property arise because knowledge, intellect and skills are qualities whose ownership cannot be easily defined. It is not easy to ascertain whether the company, which trains, hones and develops an employee has a greater right to an idea or the employee himself has a greater right to the idea.

The case, Colin Rhodes at Jansen Chemical Inc., revolves around this ethical dilemma that is going on in the mind of Colin Rhodes, an expert, professional Chemical Engineer who is highly experienced and is into a new job. He is keen on making a quick ‘impact’ in the mind of his new boss, Laura Kraviston.

Having worked for fifteen long years at Rontech, Colin seems dissatisfied with the kind of professional growth he has achieved during his long tenure, both in terms of salary and position. Despite working with a lot of sincerity and commitment and achieving some brilliant results, Colin was deprived of the position of a Vice President twice. This event, coupled with a feeling of being an outsider in a ‘family owned’ enterprise made Colin frustrated and made him decide to look for a new job.

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Given the kind of caliber and experience Colin had, it didn’t take him long to grab a job with the competitor of Rontech, Jansen Chemical Inc. The new job promised him a better salary, a better position and a more professional work culture. He was happy and wanted to make a positive impact in the minds of the management as soon as possible, because of which he volunteered to make a report on a project to reduce manufacturing costs.

He was confident of removing the baffles in the reactors and leading a team to work on baffle placement because he had successfully dealt with an exactly similar situation at Rontech earlier. It is on completion of the report that he finds himself in a dilemma. He is reminded of business ethics and is confused whether to share the report with Laura or not.

The key moral principles in play are the ethical disputes over ownership of intellectual property and the conflicting interests of an employee and a company.

Colin had the knowledge and expertise of baffle placement, but this was something he had learnt due to his experience at Rontech. Since this knowledge can be termed as an intellectual property, Rontech had a greater right over it. However, since Rontech had not patented its systems, Colin was not legally bound to keep the knowledge privy. It was  only a question of his business ethics and this is what was causing a dilemma in his mind.

The other key moral principle in play is the conflicting interest of Colin as an individual and Rontech as his previous employer. Sharing of the knowledge of baffle placement with Laura was certainly going to be rewarding for Colin, but it would be against the interest of Rontech as its competitor would get advantage of a system that was put in place by them.

The rights involved are the personal rights of Colin Rhodes as a professionally qualified individual and the trade secret rights of his previous employer, Rontech.

A trade secret is defined as a formula, practice, process or a compilation of information used by a company to obtain some financial benefit and an advantage over its competitors. The baffle placement practice which led to a reduction in costs to Rontech is a trade secret right. However, since it was not patented, Colin can legally use the same knowledge at Jansen to achieve professional growth.

Personally, Colin as an individual has a right to grow professionally, to use his intellect and expertise to perform well and to mark an impression in the eyes of his new employer. However, in doing so, he has to share the knowledge he has gained out of his experience at Rontech.

Rontech as a company, has a right over its intellectual property and has a right to be privy with the technology and the systems used internally. However, this right of theirs is not legally safeguarded, as the systems are not patented there.

Although Colin is well aware of the systems not being patented at Rontech, he still is in a dilemma in passing on this technology to their competitor, which happens to be his new company, Jansen Chemicals. As a professional, he justifies his sharing of the intellectual property of Rontech with Jansen by giving the reason that they never patented it and that with the advent of Information Technology, the knowledge is easily available online.

The strategy from Colin’s point of view should be to first be sure about Rontech’s rights to Intellectual property and whether they have got patents for these rights or not. In case they have not got their Intellectual property patented, he can go ahead and share the report with Laura. Since Colin is an employee of Jansen now, he should have his loyalties towards them and make all possible efforts to use his knowledge and expertise to bring the manufacturing costs down. This sharing of his knowledge will immediately take him to a higher pedestal at his new company and will benefit both his company as well as him.

Colin Rhodes decision to go ahead and share the report with Laura is fair. As an individual, he has a right to use his intellect and knowledge to perform well and grow professionally. As far as his commitment towards his employer is concerned, he worked with full sincerity while he was working for Rontech. He not only gave his subordinates full freedom to innovate and improvise, but also worked very hard himself and raised the efficiency bar at his workplace. However, the rewards he got at Rontech were never commensurate with the amount of effort he had put in.

Now that Colin was an employee of Jansen and he knew exactly how the manufacturing costs could be brought down, it would be wrong on his part not to share this knowledge with his present employer. It certainly would be a fair decision to hand over the report to Laura, as Jansen would surely benefit out of the report. Also, since Rontech had not patented the intellectual property rights, it is even legally fair for Colin to share his report with Laura.

Rhodes should first check up thoroughly about the Intellectual property rights of Rontech and whether they have patented them or not. If they have been patented, he should not hand over the report or pass on the knowledge of baffle placement in writing to Laura, as he can land himself in trouble. However, if they are not patented, he must share the report on baffle placement with Laura and go ahead and help Jansen in building a team for the same so that the manufacturing costs can be brought down at the earliest.

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