TRADE SECRETS AND CONFLICTS OF INTERESTPRIVACYCASE STUDY

Presented by –Group 3

WARM UP-THE AGGRESSIVE AD AGENCY

Microsoft required aggressive Advertisement campaigns for which it invited ad agencies.

It had LOTUS as its major competitors. A new Ad agency-RGS&H pitched in and

tempted Microsoft by saying that-“It is intimately acquainted with Lotus’ plans to

deal with excel.”

WHAT IS A TRADE SECRET?

A Trade secret may consist of any formula,pattern,device or compilation of information which is used in one’s business and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.

SIX FACTORS TO DETERMINE WHETHER AN INFORMATION IS A TRADE SECRET OR NOT?

•The extent to which it is known outside a business.•The extent it is known internally in a business.

•The extent of measures taken to guard the secrecy.•The value of information.

•The amount of money and time spent in developing the information.•The ease/difficulty by which can be acquired or duplicated by others.

ARGUMENTS FOR TRADE SECRET PROTECTION

Trade secret

As intellectual

property

Confidentiali

ty

Allows fair

competition

TRADE SECRET AS PROPERTY

Regarded as Intellectual Property. Question of ownership-The Wexler case. Lockean view- “We own the results of our

own labor”.

FAIR COMPETITION

Associated Press Case. Competitive disadvantage-When an

information developed by one firm by spending time and resources is used by other firms without cose.

NON - COMPETITION AGREEMENTS

“A Women in Georgia signed a contract with an employment agency in which she agreed not to work in any

capacity for a period of one year ”

CONFIDENTIALITY

Employees who disclose trade secrets violate confidentiality policy.

Employer-Employee relations.

COMPETITOR INTELLIGENCE GATHERING

A Systematic collection and analysis of competitor intelligence.

In ethical limits.

THE UNETHICAL METHODS OF GATHERING COMPETITOR INTELLIGENCE

Theft of informatio

n

Misrepresentation

Improper Influence

Covert Surveillanc

e

CONFLICT OF INTEREST

Conflict of Interest occurs when a personal interest comes into conflict with an obligation to serve the interest of another.

CONFLICT OF INTEREST IN ENRON

CFO Andrew S. Fastow’s Dual

Role•Bargaining partnership deals with companies in which he had a stake and stood to gain from negotiating favorable terms

SOME DISTINCTIONS

•When personal interest leads a person to act against the interest of an employer•When there is a possibility of not fulfilling an obligation but the person has not yet done so

Actual & Potential

•When a person’s interest comes into conflict with the interest of another•When a person is obligated to act in the interest of two different people who have conflicting interest

Personal & Impersonal

Individual & Organization

al

KINDS OF CONFLICT OF INTEREST

Kinds

Violation of Confidenti

ality

Biased Judgment

Misuse of Position

Direct Competitio

n

MANAGING CONFLICT OF INTEREST

Managing

Objectives

Avoidance

DisclosureCompetitionRules &

PoliciesIndependent Judgment

Structural Changes

THE CONFLICT OF AN INSURANCE BROKER Ashton & Ashton-an insurance brokerage firm.

A world class museum in the USA-served for years by Haverford insurance company.

At the expiration of its insurance policy-Ashton & Ashton approached four comparable insurance companies with premiums ranging from $90,000-$110,000.

Fifth proposal sent by a small financially shaky insurance company-Reliable-annual premium $60,000.

Museum always chose the lowest bid for any service without any regard for quality.

Dilemma-Reliable Bid vs. Reputable Insurance Provider.

PROCTER & GAMBLE GOES DUMPSTER DIVING 

Mr John Pepper-Chairman, P&G-found instances of dumpster diving within the organization i.e. obtained information about Unilever, its competitor, through questionable means.

P&G often resorted to “competitive analysis”.

This dumpster diving violated the company’s own code of ethics and policies.

In April 2001, Pepper fired 3 executives overseeing the entire process of obtaining unsolicited information in order to reconstruct its image.

Also disclosed the matter to Unilever, even made a promise of not using any information gained.

P&G had in effect blown the whistle on itself.

PSYCHOLOGICAL TESTING AT DAYTON HUDSON Answer the Questions true or false

I feel sure there is only one religion

My soul sometimes leaves my body

I believe in the second coming of Christ

I wish I were not bothered about thoughts of sex

I am very strongly attracted by members of my own sex

I have never indulged in any unusual sex practices

In April 1989,Sibi Soroka answered these

questions and hired as a store security officer in a target store in California

Afterwards feeling “humiliated and embarrassed” at having to reveal innermost beliefs she along with two rejected job applicants charged the store with invasion of privacy.

Dayton Hudson defended the use of “Psychscreen “ – a combination of tests to select applicants for the post of police officers, prison guards, air traffic controllers and so on.

The completed Psychscreen test is interpreted by Psychologists and rates an applicant on five traits emotional stability, interpersonal style, addiction potential ,dependability and rule following behavior.

Dayton Hudson does not receive answers to any such questions.

It said that questions on religion and sex though not job related ,evaluate and interpret psychological traits related to the job.

But it admitted in court having not conducted studies to Pshychscreen as a reliable predictor of Performance of a Security Officer.

FORD MOTOR COMPANY SURVEY Ford Motor set up a “Sociological Department”

in order to make sure that workers were leading a “clean ,sober and industrious life.”

They visited the employees’ living quarters to see whether they were neat and helpful, and they interviewed wives and acquaintances about handling of finance, church attendance, daily diet, drinking habits, and a host of other matters

Workers who failed to live up to expectations were fired.

Employees today would barely intrude so much into private lives as Henry Ford. Amongst the tools available today are

Drug tests Paper and Pencil Tests for assessing honesty and other

personality traits Extensive computer networks for storing and retrieving

information. Sophisticated telecommunication systems and

concealed cameras and microphones for supervising employees work activities.

EMPLOYEE PRIVACY

Work Place Monitoring Supervisor can eavesdrop telephone

Conversations of Employees Hidden cameras and microphones can be

used to observe workers without their knowledge.

Remote Sharing Desktop Electronic Systems for Financial Transaction

and Cash Transfers under Scanner Medical Sessions and Camps

CONSUMER PRIVACY Grocery shop Ids, ATMs in company take all

your data in their Sheets

Main purpose is to identify characteristics of potential customers by age,income,life style, or other measures.

Then a mailing list is made to target people at low cost. Such Targeted selling known as Direct mailing is beneficial to customers as it gives huge offers.

ISSUES IN CONSUMER PRIVACY Primary use Secondary use of information which is

Provided by us Can be sorted to some extent by asking

people to opt out from the mailing group.

MEANING AND VALUE OF PRIVACY

•Definition elusive

•Because of different nature of situations under which claims of privacy are made• •Not one notion of privacy , can be culture specific

•The members of the Privacy protection study commission were unable to agree on one definition after two years of study

HISTORY•As a legal concept developed in the late 19th century

•First discussion in an article in 1890 by Samuel warren and Louis Brandeis in the Harvard law review

•Was slow to gain acceptance but eventually lead to changes in the law structure (new York )

•Not until 1965 that right to privacy became a continuously protected right according to the supreme court

ARGUMENTS FOR AND AGAINST

Why is privacy valued and believed to be a right?

The mere desire does not entail this right Nor does it tell us the extent of it

UTILITARIAN ARGUMENTS

Appeals to consequences of the breach of privacy

Inaccurate or incomplete information can cause harm

Can be used for making important personnel decisions

Past record and information can be misused for groundless accusations

Constant monitoring at work can affect job satisfaction ,sense of dignity and self worth of workers

PRIVACY AND IDENTITY

• Privacy enables us to relax in public settings and release pent-up emotions

• Reflect on experiences as they occur and is essential for mental well-being

• Lack can lead to mental stress or even breakdown

• Promotes high degree of individuality and freedom of action

OBJECTIONS FOR THIS THEORY

• The unproved assumption that more harm than good will result from amassing information about employees

• Considers only the harmful effects as consequences

• Some positives also there- protection from employee theft reducing false accusations

• Ignores the moral implications of breach of privacy

KANTIAN ARGUMENTS

Based on the themes of autonomy and respect for persons

Emphasizes on the immorality of secretly observing employees even if it brings no harm

“ covert observation.. Is objectionable because it deliberately deceives a person about his world ,thwarting… his attempts to make a rational choice. One cannot be said to respect a man .. If one knowingly and deliberately alters his conditions of action, concealing the fact from him “

- Stanley I. Benn

THEORY STATES

Violates the respect for persons Prevents a person from making a rational

choice as an autonomous being A person loses control over how one is

perceived – Hyman gross Unable to alter any misconceptions Trust and intimate relations build up on

sharing information about others but this would be hampered if everything already known- Charles Freid

ARGUMENTS AGAINST Jeffrey Rieman argues that it is too strong an

argument to say one can be deceived and be deprived of free choice if they are watched unknowingly

Intimate relations can be formed even without the sharing of information

ROLE OF PRIVACY IN SOCIALIZATION Social conditioning determines sense of privacy

Different cultures and societies have different ideas of what belongs to the private sphere of a person

The personality of a person is determined by his/ her socialization while growing up

privacy is an essential part of the complex social practice by means of which the social group recognizes – and communicates to the individual – that his existence is his own . And this is a condition of personhood .

- Jeffrey h. Reiman

BOTH

Point to a key insight : that privacy is important in some way to dignity and well being

Even though it has become a necessary luxury it is an important part of a persons existence

PRIVACY OF EMPLOYEE RECORDS

Given the importance of privacy there are issues involved when it comes to organizations’ policies

The kind of information that is collected The use to which it is put The persons within the company that have

access to the information The disclosure of the information to persons

outside the company The means used to gain information The steps taken to ensure accuracy and

completeness of the same The access that employees have to information

about themselves

JUSTIFYING The intent of gathering information should be

legitimate

The information should be used for the very intent only

Only the needed information should be collected

The information is not leaked to persons without authority

PURPOSE should specify the conditions necessary to

run operations Involves conditions for employment’

supervise work related behavior, administer health benefits etc.

Necessary for complying with legal requirements

like taxes , social security, discrimination , health and security , and the like

Contractual employee-employer relation for an informed decision

Free of force and fraud, voluntary consent Union contracts against aberrations

DISCLOSURE TO OTHERS

The passing on of personal information to outside parties can be objectionable without consent as

the employer had a certain purpose to gather it

But the other party may not have a similar purpose

The employer does not own the data of the employees unlike other forms of property

Can be used inappropriately

MEANS USED TO GATHER INFORMATION

The means to gather information need to be

Transparent non- intrusive – polygraph , pretext

interviews should be justified Should not reveal more than what is needed Should not violate the dignity of the person Should not be secretive (no control on own

appearance)

ACCURACY, COMPLETENESS AND ACCESS Information is used for critical decision making

Should be accurate and complete

To avoid unfair treatment and wrong decisions

Employees should have access to information

about themselves so that they can challenge false claims and protect themselves

Polygraphic tests and other laboratory tests are highly unreliable and can result in false positives and misconceptions

OBJECTIONS TO INFORMATION PROCUREMENT VIA INTERNET

Information by “covert” means

Annoyance of Ads

Inhibits Autonomy when profile is fit into a particular mould

Impedes Equality by discriminating

PRINCIPLES FOR PROTECTING PRIVACY

Notice/Awareness

• Privacy policy that is prominently displayed,avoid “Blinking twelve”

Choice/Content• Mechanism calling for opt-in or

opt-out,choice of degree of divulsion & restrict usage

Access/ Participation

• Opportunity to contest accuracy or completeness of data.

Integrity/Security

• Steps taken in event of breach of security( eg misappropriation)

Enforcement/ Redress

• Contracting with an org that monitors & certifies info practices of websites.

IMPLEMENTING INTERNET PRIVACY

Implementing Internet Privacy

Principal Parties

Govt. Regulation

Self-Regulation

Vehicles Employed

Formal

Certification

Regulation

Material

Private Enhancing Tech

Cookie Management Software

FACT SHEET ON THE EUROPEAN UNION PRIVACY DIRECTIVE What is the EU Privacy Directive?

European Union Privacy Directive, also known as the EU Data Protection Directive, took effect on October 25, 1998. By this date, all fifteen EU member states were required to enact comprehensive privacy legislation requiring organizations to implement personal data policies to include:

a) Transparency

b) Purpose Limitation

c) Data Quality

d) Data Transfers

e) Special Protection for Sensitive Data: Racial /ethnic origin, health

AGENCIES UNDERPINNING INTERNET PRIVACY Dept of Health Education & Welfare

Instituted in 1972,”Fair Information Practices”

OECD Instituted in 1980

European Union Privacy Directive by EU Oct1998,binds member & non member states

Federal Trade Commission

Online Privacy Alliance Industry Associations Initiative

Electronic Privacy Information Centre Public Interest Group

f) Government Authority: Each EU member state must create an independent public authority to supervise personal data protection.

g) Data Controllers: Appoint registered "data controller" responsible for all data processing.

h) Individual Redress: A data subject must have the right to:

(1) access information about himself;(2) correct or block inaccuracies;(3) object to information’s use.

Companies being investigated include Ford, Hilton International, Mariott International, Microsoft, United Airlines and others.

CONCLUDING REMARKS Lawrence Lessigs concerns disorting Equality

&Autonomy don`t involve privacy per se.

Intrusion into private lives is done by psychological tests & hidden cameras too.

Trade off between Privacy & Convenience/Material Gain

Calls for coordinated effort involving multiple parties

THE ALLEGATION

March 7,2001, During the annual chairman’s review at HLL ,N. Jayaraman of Corporate Watch,an NGO alleged that there was disposal of mercury contaminated waste along with broken thermometers and ground glass from HLL’s thermometer plant.

THE FACTS….

Initially HLL denied all allegations claiming it had a 100% export oriented unit from which no raw materials or finished goods could leave without prior permission

However on clarification with the unit manager the allegations were found to be true

HLL decided to suspended operations and conduct a comprehensive audit and investigation

WHAT THE NGO’S HAD TO SAY… Scrap meant for industrial users was found in a

scrap yard in munjikal area of kodaikanal and HLL had no knowledge of it

These sales were illegal under Indian law

Mercury turns into vapour at ambient temperatures and inhaling the same can cause serious injury and disorders of nervous system and kidneys

Any waste containing more than 50 mg/kg of mercury is hazardous

1 gram of mercury deposited annually could contaminate a lake spread over 25 acres also making its fish unfit for consumption

Criticism of HLL’s casual attitude towards worker safety

Preliminary survey conducted by CHC showed there were many people with gum and skin allergy appearing to be caused by mercury

THEREFORE THE FOLLOWING DEMANDS WERE MADE:

Stop use of mercury in thermometer and ensure livelihood of the workers

Clean up the dumpsite To conduct a full investigation into the intent

and extent of mercury pollution within factory premises and surroundings

To conduct full investigation of workers involved and ex-workers

Compensation for damage done to workers, community and environment

NORMS AND PRACTICES @ THE PLANT!• The plant was a export oriented unit with strict controls

and systems.

• The glass scrap containing residual mercury was treated.

• Scrap which was sold contained only1.04% mercury.

• Elaborate procedures to eliminate mercury from the factory

• Health of the workers was monitored continuously1. Measure mercury level in urine every month, as per

WHO standard.2. Comprehensive annual clinical examination.3. Statutory inspections and health assessment by

factories inspectorate of government.

HLL’S RESPONSE…• Suspended operations of the factory on 8th march.• The process was audited by HLL and Tamil Nadu State

Authorities.• Those responsible were identified and subjected to

disciplinary actions.• URS Dames Moore(URS) to conduct a detailed

Environmental audit.• P.N.Vishwanathan(Retd.) director grade scientist,

industrial toxicology research centre to study the environmental and health aspects.

• On the insistence of Greenpeace and TNPCBinducted Tom Van Teunenbroek of TNO-MEP to conduct environmental and health audit.

• All three of them found no evidence to show any ecological or human risk involved.

AT THE END….. On May 28-29.2001,HLL announced permanent

closure of the mercury Thermometer manufacturing factory at Kodai in

Tamil Nadu. The deputy chief inspector of factories,

Government Of Tamil Nadu announced that the employees were in sound health conditions.

HLL persuaded Indian and the US governments to permit export of waste to US based Bethlehem Apparatus Inc. For receipt and recovery of the mercury from the waste.

The employees were deployed to another HLL factory in Kandala,Gujrat or given Ex-gratia payment. All 130 employees opted for VRS.

HLL proposed remediation of soil in line with Dutch intervention standard of 10 ppm mercury.

Thank You