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Conflict of interest?



12:39 am on Mar 19, 2005 (gmt 0)

10+ Year Member

Self posted disclaimer: I am seeking the advice of others before I seek legal advice (which will be hopefully next month.) I am trying to do as much research as possible, so I may be prepared when the time comes. Your opinions and advice are gladly welcome, and just to let you know, I am in no way seeking legal council from you guys, just maybe a litle of what you know about the matter ;0)


My wife and I have been working on a Software/Database/Tracking/system for the last 3 years. This line is for a very specific market. Now to give you an idea how specific this market is, there are 2 major companies nation-wide who have a total customer base of probable 20,000. The price of this product is extremely high, due to the fact that when sold it usually will include SQL Server licenses or Oracle licenses depending on the customers current setup. We are almost finished (within a year) and my wife's concerns are growing that her current employer (for who she developes similar databases, and maintains a large one built by one of the other two cometitors) might claim they own the rights to this new system, because without her job, she would have no knowledge of this very specific product line.

My Question:

If I learn Photoshop at my current job, and in turn sell custom graphics built on my OWN time on the side, can my employer claim rights to the images? Most likely, if I was off-the-clock and used no company resources to build these graphics, I'd say no...

My wife however holds the arguement that the fact that she has gained knowledge of a very specific field, even though we built it on our own time, built it in a different language and it has different structure than the other two companies, means nothing. Because without having hands-on on this other system, she would not have the means to create such a system. She is also worried, because current federal laws require certain aspects of the program to be set up a specified way. You cannot sell this program without first getting it certified by the gov't, so this limits how different the programs can look. The will look relatively the same on the exterior, but what makes them run will be totally different. So that is another concern, some of the forms can be construed as "having been copied". Can this have an affect legally? The front-end forms looking similar? I mean the nomencalture of specific items on these forms is a MUST. And so is the order in which they are filled... So this I am unsure of also.

Next issue: A part of her company policy defines Conflict of Interest this way: "Conflict of interest comes into effect when one's actions include the use of company resources to one's personal gain."

Now one "interpretation" of this could be:

"She used herself, her knowledge (Which is a company resource, by the way) gained by the company for personal gain."

I don't know if my concerns will make any sense to all of you out there at WW, but your input is sure appreciated :0) Thanks!

-- Zak


1:06 am on Mar 19, 2005 (gmt 0)

WebmasterWorld Administrator incredibill is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month

Your first mistake was not finding out if this is legal before wasting 3 years of your life building it.

Considering your wife only learned about this industry segment on the job and then you built something to possibly compete with her employer doesn't sound promising whatsoever.

Did she sign a non-compete or non-disclosure agreement for this job?
If the answer is yes you're most likely out of business.

Does the database you built compete directly with her company or is it something different? If the data is something completely different and wouldn't impact her company's revenue you're probably in better shape.

If you start selling it while your wife is still employed at that company it could be an even bigger fiasco.

I would definitely seek legal advice as I think you're on thin ice already.


12:27 pm on Mar 21, 2005 (gmt 0)

10+ Year Member

She actually works for a company that uses this software. They did not build it, they purchased it for a pretty hefty sum. This is where I am thinking it might be o.k.

1) Her company only owns a lease to the software they are using. It works on a contractual basis. Once you stop paying your monthly contract fee, the software no longer belongs to you.

2) If we were to finish this out, the only thing that could happen is for her employer to benefit from it. Since they don’t own the software they are using, nor are they in the “software business”, us breaking into the market would only do one thing as far as my perspective sees it ... And that is providing another option for them to use. They are using a system that is somewhat unstable in certain aspects, lacks compatibility with others, and serves absolutely no self-help options for the end user. Sometimes they’ve gone months without a part of their system operating fully. One time in particular almost put them back in the stone-age. But like I said there is only one other competitor, and they’re even worse. So of course the “Support Contract” we’ve come up with is phenomenally better as this is the main complaint amongst users of the other software.

The part that we are worried about, (her in particular) is her agency trying to claim they own the rights to the software, even though their services have nothing to do with the software business. You could compare her current job to supporting the database for a shipping and receiving company. So the company she works for has no ties to the software industry whatsoever, and they have no interest in it. However I wouldn’t put it past them to claim that she couldn’t have built this software without the knowledge gained by their employment, therefor they own it ... Just to save a buck.

So we literally will not be competing with her employer, as they will lose no revenue, resources, personnel, materials, etc. They only thing they may lose eventually if it takes off is an employee.

-- Zak


12:51 pm on Mar 21, 2005 (gmt 0)

10+ Year Member

1) Get in contact with a lawyer.

However I think you are fine.

If I learn every street in NY because I was a cabby, could I then NEVER use that information to run a limo compnay? Of course you could!


5:26 pm on Mar 21, 2005 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

I don't see how this is any different than if she learned how to use Microsoft Excel at one company and then used that knowledge on her own time to build applications with it. It is not their software.


5:32 pm on Mar 21, 2005 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

I don't see how this is any different than if she learned how to use Microsoft Excel at one company and then used that knowledge on her own time to build applications with it. It is not their software.

But if she learned how to produce spreadsheet software at the company, and then went off and produced her own, competing, spreadsheet software, Microsoft might have a complaint. She learned how a product works and how it is used while at her job, and is now producing a competing product. I don't know that her employer would have a problem, but the software supplier might. I doubt they licensed the software to the company in order to allow the company (or a free-lance employee) to produce a directly-competing product.

I would definitely talk to a lawyer, after asking for copies of any paperwork she signed or is subject to as a condition of her employment. There may be something in the licensing agreement between the software producer and her employer or in her employment contract that prevents her from doing what she's trying.



5:43 pm on Mar 21, 2005 (gmt 0)

10+ Year Member

Get in contact with a lawyer.

I am, I just wanted to research a little before I did... If you read my first post, I said that ;0)


Now there's a point of view I never thought of.. :0) Never thought about p'ing those guys off. Just the place she works.. Very very interesting thought. hmmm..

Thanks for all your replies!

-- Zak


6:16 pm on Mar 21, 2005 (gmt 0)

10+ Year Member

What she signed is critical. A lot of places have legalese in the employment contract that specifies exactly when software is owned by the company, etc.

As for "she learned it there" that in and of itself won't matter. Your wife has a right to work, and to use her skills and abilities that she has learned in her career to get work. Courts take a very dim view of contracts that purport to limit someone's ability to earn a living, even were there a "non compete" clause in her employment contract, or some such, a court would likely throw it out on the grounds that it limited her right to work. Talk to a lawyer, but I would not think this will be your problem.

The big worry here is whether her employment contract assigns copyright to her employer, and under what conditions it would do so. You need copies of her employment contract, and her company's HR manual, etc., and you need to take those to an IP lawyer and see whether the company can claim that she has produced is a "work for hire" that they own on the basis of intellectual property agreements between them and your wife.


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