TRADE SECRETS AND CONFLICTS OF INTEREST

PRIVACY
CASE 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

Allows fair
competition

Confide As
intellectual
ntiality property
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 Misrepresenta Improper Covert

information tion Influence Surveillance
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

Actual & ●
When personal interest leads a person to act against
the interest of an employer
When there is a possibility of not fulfilling an
Potential
●

obligation but the person has not yet done so

Personal & ●
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
Impersonal
●

different people who have conflicting interest

Individual &
Organizational
KINDS OF CONFLICT OF
INTEREST

Kinds

Direct Violation of
Competition Confidentiality

Misuse of Biased
Position Judgment
MANAGING CONFLICT OF
INTEREST
Managin
g
Structural
Changes

Independent
Objectives
Judgment

Rules &
Avoidance
Policies

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

A worldclass 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.

Fifthproposal 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

•Firstdiscussion 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
Privacy policy that is prominently displayed,avoid “Blinking
Notice/Awareness
●

twelve”

Mechanism calling for opt-in or opt-out,choice of degree of

Choice/Content
●

divulsion & restrict usage

Access/ Participation ●
Opportunity to contest accuracy or completeness of data.

Steps taken in event of breach of security( eg

Integrity/Security
●

misappropriation)

Enforcement/ ●
Contracting with an org that monitors & certifies info
practices of websites.
Redress
IMPLEMENTING INTERNET
PRIVACY

Implementing Internet
Privacy

Principal Vehicles
Parties Employed
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 continuously

1. 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 TNPCBinducted 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