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A Guide to Business Ethics
We proposed the idea as an 'open standard'. We are a tiny company and we needed companies to adopt our proposal, the more the merrier. If we only charged for it no-one would use it and the idea would die. As our visitor yesterday told us, 'it is actually a really clever idea'.
As an open standard it means anyone can use the idea without paying us a penny. Whilst this may seem rather stupid it is a way that companies could be encouraged to use the idea and put it in their products. The important thing is not all companies can do this. Just publishing the details doesn't mean you can just copy it without having some effort on your behalf. Luckily most companies these days have got rid of the clever engineers and just have also-ran engineers that copy application notes from manufacturers. This was not an application note, just a how to do it guide.
At the end of last year we were told of a Chinese company who had apparently incorporated our idea into their product. In fact they had taken a product to an exhibition in Beijing, advertising it as their own. OK, that is the risk of the open standard approach. The good news is we were getting enquiries because of this company's initiative, exactly what we wanted.
But there was a catch, they had trademarked our name for the idea. And they had applied for a patent for it, (even though, in my view, it could not be patented as the ideas it was based on were old hat, some as much as 70 years old). The company that told us of this said they wanted to fight the patent application as they were a big competitor of their's and they wanted to use the idea. I met with their engineers and helped draft an objection. The patent seemed nonsense to me and would be easy to have rejected, but this is China, and after all, Apple had a patent granted for a rounded rectangle.
A couple of weeks ago we were contacted by a US company. Via the patent infringing company they had found us and wanted to make an integrated circuit out of our idea, just what was needed to open up the market; can we meet they asked. On the telephone they talked of exclusive rights to the idea which made sense to them but less sense to us. But maybe it was an opportunity. We sell the design for $20k. But for exclusive rights we would sell it for many times that and we could add a percentage for every IC sold. This could be our breakthrough.
The US company was new but the two people visiting, diverting their flights from Taipei and Tokyo to come to us, had taken two companies to NASDAQ. The last of these, as we were later found out, was sold to another US company for $455M; they were multi-millionaires, and they had already raised $5.3M for this new company. They had been successes and in all likelihood would be again. And they wanted our idea.
Their flights were late, the last one arriving late by more than 2 hours. We stopped for something to eat in Saraburi before taking them to our hotel and chatted a little, but it had already gone midnight. Nothing of substance was said, but that actually made Ploy and I confused. We agreed we would be aggressive tomorrow, their only day with us, as we didn't want this to drag on and finally come to nothing. They were talking of me flying to see them in the US but why, we wondered, they were here now, lets get the basics thrashed out tomorrow.
We picked them up from the hotel at 9a.m. They were late. We wanted it to be earlier. They flew back early Sunday so we were going to take them to Bangkok in the evening to avoid a 3a.m. start so we wanted to get on with it. They obviously didn't.
We brought them to our workshop, the niceties were done quickly, drinks provided, and immediately their chief engineer, dripping with PhDs, wanted me to demonstrate our products. Well, OK, I had set up the demos but wanted to start talking first. They had promised to give us a presentation of their new company and bit of their personal backgrounds, after all they wanted something from us too, this was not a normal customer/supplier relationship, more of a partnership; they already had my resume and all the company information is on our website, (their company has no website yet). But I proceeded with the demos.
Everything I said the engineer challenged. Everything I told him he countered he had already done that and done it better. If I told him something was blue he told me that blue was not good and green was better. He had used green. I lost patience with him. He was talking crap. It was like talking to marketing at Philips. You are wrong I said. What you saying makes no sense. I detailed my argument a little more but the gist was, you are talking bullshit and you may get away with it with some, but not with me. I do not suffer idiots. He did not back down. The CEO even seemed confused by my claims, as he had a degree in mathematics so was not an idiot, and it was clear the engineer was on the backfoot by now.
Finally we sat down. 'What do you want from us', Ploy asked. She had listened on to technical bun fight and without understanding details knows me well enough to sense I distrusted this man and therefore their whole intentions. 'We don't need your help', the CEO told us, 'we can just copy your design'. (I don't think they could, the changes the engineer proposed were nonsense but that is another matter). 'But you are the inventors and we are an ethical company, we didn't just want to steal your design'. The next thirty minutes went around in circles, everything as clear as mud. Ploy did not get her question answered.
'I still don't understand', I said. We had booked lunch and it was already near that time and we were no further into understanding their purpose. ' We want you to come to the US and help us file our own patent for your idea, and also help us fight the Chinese company's application'. 'Why would I do that', I said. 'You want me to help you overturn one patent, something another company are already doing, just so that you can file a patent so we still cannot sell OUR idea to other customers'. Yes, that was what they wanted. No can do I said. It was beyond the time of our lunch by now and I was ready to just pack them on a bus and send them off.
But they backed down and asked what we wanted. I said I at least wanted them to buy our design, for $20k, that would be an ethical thing to do if that is what they wanted to be. If they wanted it to be exclusive then they would have to pay more. If they they didn't make it exclusive I can sell the design to others, after all I was already talking to biggest security manufacturer in China, (the biggest market for this idea), and also others. OK, what do you want then. $140k I said and you have exclusive rights. OK they said.
Strange thing ethics. It took a while to disseminate what happened that day. For all their bravado they need us to fight this patent. If the patent gets filed they cannot sell their product. So they made a diffuse starting offer, pay for me as a contractor to help them fight the patent, go in at the bottom. They obviously expected me to accept. Just a tin pot company they thought, they need the money - they will accept. Not only that we will pay for their trip to the US, that would be exciting for them. A small misjudgment. I worked for a US company just a few kilometres from where they were, I had no reason to find a trip there exotic. Secondly, yes we need money, but I don't need to sell out to people who disparage my idea by saying they could do it themselves only better. Fuck off and do it better then. Or just Fuck Off.
The speed with which they accepted my offer was surprising. It is not a trivial sum for us anyway. They went further, we can give you stock options too, our last company the shares were floated at $18 each (from a stock option price of $0.10 each). We expect this time they will be higher. From nothing to stock options, how strange.
We had lunch where the engineer challenged the fact the weather was hot, (it was about 40degC in an outdoor restaurant), and that the food was spicy, (we ordered a couple of dishes that were moderately spicy, the rest were mild - by the end of meal we could have filled a small reservoir by ringing out the engineers shirt and emptying his nose). They commented disapprovingly I ordered a beer. They complained about the ice in their drinks because they didn't know if the ice was 'pure'. I ordered another beer.
Ploy drove them to the hotel in Bangkok, she helped them check in and ordered a taxi for them in the morning. We had a coffee, (and I had another beer), whilst we summed up our meeting. We watched them have a barely credible conversation about paying for the pre-booked taxi. It was 1400 baht if they booked it to their room or 1000 baht if they paid cash. They had no cash as they had not exchanged any money yet, (we paid for everything), but it was 6p.m., they had never been to Bangkok, (or Thailand), before. They were at Soi 11 on Sukhumvit in the centre of Bangkok. Surely you would go out and look around, buy something for your wife... We left them and drove home.
Will they pay - we have no idea. They repeatedly said, we are an ethical company, we want to reward you, the inventor. But only the minimum we need to get what we want it appears. If I do nothing they can still do this - so they say - so I have no leverage to them. I can send the information I have to help them fight the China patent or I can not send it. $140k would be very nice. The share options a $500k retirement fund. Or it could be just more bullshit.
We will carry on with our lives and wait and see what happens. We have had this happen too many times to us. But one good thing has come out it. If they can make a $450M company with that engineer, just imagine what we should be able to do. And lunch was good.
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