Electronic Design

Don't Get Ensnared In Design's Legal Issues

How can designers protect their company's intellectual property, and what is their role in product liability?

Like it or not, legal issues permeate every aspect of our working lives. Design engineers sitting in their cubicles are no exception. They face IP protection, patent disputes, product liability, damage to the environment, and other serious challenges.

Designers are no longer uninterested bystanders when it comes to these issues. Cases like these, and others, have become part of the job. But where do designers fit into the equation? What is their role, and their liability, if any, in the legal issues that often beset their companies and the industry?

Industry designers got a big lesson in product liability about 30 years ago when TV set manufacturers decided they needed a competitive edge, something new that would attract consumers to their latest models. They came up with "instant-on." You simply touched the set's "on" button and you had a picture instantly.

To make this work, however, the set's circuitry had to get at least five watts all the time. In other words, these TV sets were never really "off." That worked fine for a while, until a few of them caught fire. One actually burned down a house in the middle of the night, killing its inhabitants. The lawsuit that followed resulted in the manufacturer settling out of court.

Today, more than 10 years after the safety of cellular phones was questioned when a Florida woman died from brain cancer, wireless handsets still represent what may be the biggest product liability issue in the world in terms of their impact on both manufacturers and consumers.

Research in this smoldering subject has accumulated for years. One University of Washington bioengineering professor found 172 studies of cell-phone-generated RF radiation, with about half finding some potential for health risk. Now, the federal government has finally decided to step in with its own multimillion-dollar investigation into the potential toxic and cancer-causing effects of wireless phones. The study could have immediate and certainly long-range impact on designers and their employers.

Several federal agencies will be involved in determining what will be studied, including the National Toxicology Program of the National Institute of Environmental Health Sciences, which is part of the National Institutes of Health, along with input from the Federal Drug Administration and the National Institute of Standards and Technology (NIST). The study follows the 1994 and 2001 government agency reports on cell-phone safety, both generated by the U.S. General Accounting Office. Each report recommended additional research.

Calls for more research have also spread to the newest "next big thing," IEEE 802.11-based wireless local-area networks. This follows on the heels of the publicity created by the parents of a Chicago-area girl who claim that the school board has failed to address their concerns about the potentially hazardous effects of the school's Wi-Fi system.

Perhaps the newest wrinkle in product liability involves digital cell phones with integrated still and video cameras. It's a personal privacy issue that's getting lots of attention. In fact, it has reached the point where Korea's Ministry of Information and Communications says it will require the country's cell-phone manufacturers to design all camera and camcorder-equipped mobile handsets so that they make a loud beeping or buzzing sound when they're used to take pictures. (Ironically, Samsung Electronics and LG Electronics have banned visitors to their facilities from carrying camera-equipped phones to prevent corporate espionage.)

On a much broader scale, with more people depending on wireless rather than wireline communications, leaders in Congress are threatening to force—by legislation, if necessary—wireless carriers to spend more billions of dollars to upgrade their networks. Their concern follows the cell-phone failures during the power blackout in August throughout much of the U.S. northeast and parts of the midwest. From the consumers' point of view, the problem was twofold: The system simply couldn't handle all of the traffic during the power outage, and people couldn't recharge their phones during the blackout.

The industry also is feeling pressure to get more active with the Bush Administration's National Strategy for Secure Cyberspace. Introduced in 2002, top U.S. Department of Homeland Security officials recently threatened industry companies and trade associations with new legislation if they did not voluntarily comply with their national cyberspace plan.

Security is another design issue fraught with legal aspects. Information-technology (IT) executives have been reviewing the security threat created by employees connecting their personal wireless handheld devices to corporate networks. Mobile-equipment manufacturers may not be directly liable for security breaches. However, there's some heat on these companies to fix the problem by eliminating unsecured, employee-owned handheld devices that leave corporate networks vulnerable to data theft, code attacks, and unauthorized access.

On a smaller scale, designers now must respond to a new Federal Communications Commission (FCC) requirement calling for wireless-phone manufacturers and service providers to make digital wireless phones accessible to people who use hearing aids.

Intellectual property (IP) may be the biggest concern today among designers and their companies. IP issues usually fall into the three areas: who owns the IP, patent protection, and infringement risk, which means, "Does the designers' work infringe on a third party, and if so, who's liable?"

Most engineers are required to sign a pre-assignment agreement when they join a company, assigning all of the "inventor's" work and ideas to the company. In fact, according to legal experts, this can be enforced even without a contract (see "Intellectual Property: What's Mine Is Yours," Electronic Design, Aug. 4, 2003, p. 41). This might get fuzzy when it involves work conducted outside the scope of employment. For example, you may be dabbling in an area that's not part of the company's core business or markets, or it may not use company resources.

"This issue comes up all the time, mostly with subcontractors or independent contractors, or from people who approach companies with an idea and then think the company stole their idea," says Randy J. Pritzker, a partner with Wolf, Greenfield & Sacks P.C., a law firm specializing in IP.

Infringement risk is a particularly huge issue for small and startup companies, whose entire business is based on a single product or service idea. Quite simply, if the product or service infringes on another company, it could put them out of business.

"A lot of small and startup companies don't even consider this," says the Boston-based IP lawyer. "They don't believe that what they're designing might infringe on others. We're constantly counseling our clients about this."

When independent contractors are hired by a company and given specific parameters for the design of a product, the company is usually at risk if the product infringes on existing product designs. But it almost never becomes an issue until the company actually starts selling the product.

Designers employed by a company are usually shielded from any product liability, such as in the case of a faulty product. And, many companies expect their designers to conduct patent and other literature searches to avoid infringement challenges. But others, especially large companies, don't do searches, according to Pritzker, because "if there is an infringement risk, they would rather not know about it. They would prefer to deal with it when, and if, it comes up."

In fact, it is not a legal requirement to conduct a search when filing, or before filing, a patent application. But it's not a bad idea to do a search to determine if what you have is patentable. "Engineers are the best sources of information," says Pritzker. "They know what's out there." As a result, he says that larger companies with significant patent portfolios usually don't do searches. "They just rely on the inventor's knowledge of what's out there."

But bad things can happen. Engineers often put technical data, including information on competitors' products and technology ranging from spec sheets and application notes to magazine ads, in their files for reference. "If their company is sued in five years on a patent infringement, and the designers are forced to open their files, they and the company are going to be embarrassed, and the company may be angry with its designers," Pritzker says. His suggestion is to bring any potential infringement issues to management's attention before work on a design begins.

With software patents now being fairly well established in terms of validity, companies that farm out their software development usually make sure they own the copyrights to any developments. But challenges are still fairly common, especially if the software is successful.

Given the success of recent legal actions against Microsoft, the U.S. Association of Patent Law Firms is projecting a big jump in high-tech, particularly software-related, patent-infringement suits. In June, Microsoft, which pours billions of dollars into research and development, hired a former top patent lawyer at IBM as its corporate vice president and deputy general counsel for IP. Last month, it eased its policies on IP licensing, a move seen as an effort to generate good will with regulators and its customers.

Another important area for designers is the environment. Industry companies anticipate new legislation and regulations requiring them to design for the environment as they begin to comply with the concerns of environmentalists and government agencies.

PCs and cell phones are at the top of the hit list. In October, the Cellular Telecommunications & Internet Association (CTIA) approved a new initiative to promote environmentally sound recycling of wireless products. The plan carries some urgency: More than 80 million wireless phones are sold in North America each year, and consumers purchase new cell phones about every 18 months. Plus, all analog phones will be phased out of service by 2008. The CTIA's guidelines call for manufacturers to, among other things, adhere to Environmental Protection Agency (EPA) regulations for managing end-of-life electronics.

Are wireless devices being designed with the environment in mind? The CTIA says that's increasingly the case. The latest wireless devices currently weigh about 79 g, or 42% less than most earlier models. In addition to weight, wireless phone designers are focusing on recyclability. For instance, fewer wireless devices have cables containing lead and cadmium and PVC from decorative parts of the wireless device.

Nokia is particularly proactive in this area, phasing out certain materials used in its products. The environmental aspects in its product creation process have been reduced to the company's Material Data Form, essentially a list that includes material choices as well as data on recyclability, packaging, and energy saving.

"The components of a cellular phone are inert and perfectly harmless in normal use, but some may have to be given special consideration to enable proper end-of-life treatment," Minna E. Lindholm, Nokia's technology manager of Environmental Management, told the International Symposium on Electronics and Environment in Boston earlier this year.

Nokia also controls the use of different materials with its specially developed Nokia Substance List, which helps inform its suppliers about prohibited or harmful materials and substances. Lindholm says that Nokia is looking for ways to reuse and recycle materials at every stage of the product lifecycle.

"By having a grasp of the average material content in a cellular phone, it is easier to create trends and define future targets towards more eco-efficient products," adds Lindholm. But it's not so easy. Cranfield University in the U.K. researched the use of ecodesign software tools for industrial designers. In the university's findings, many designers complained that the tools available didn't show them how to actually do ecodesigns. Several designers surveyed said that ecodesign checklists were often too general and misguiding, if not simply overwhelming.

One tool, "A Designers Guide To Eco-Conscious Design Of Electrical And Electronic Equipment," was developed in Denmark specifically for electronics by the Institute for Product Development, the Danish Toxicology Center, and GN-Teknik. In fact, Europe is well ahead of the U.S. in meeting its legal obligations in ecodesign and in developing environmental rules for its high-tech industries. In one example, a directive passed this year by the European Union requires cell-phone makers and other electronics OEMs to eliminate brominated flame retardants from new products by mid-2006.

Other ongoing legal issues will keep designers busy for years. Some aren't likely to ever disappear. One is reverse engineering, which engineers use to help them design competing products (but products that may not be substantially similar to theirs) and to make their designs interoperate with other products. This is an important and neverending element of the IP battle.

Some products are designed to secure their proprietary IP from reverse engineering. However, the IEEE-USA, the Institute of Electrical and Electronics Engineers' Washington D.C.-based unit that lobbies for IEEE members' career and public-policy interests, came out in strong support of the lawful reverse engineering of computer programs as fundamental to the development of programs and software-related technologies.

Glenn Tenney, chair of the IEEE-USA IP Committee, says that protecting reverse engineering is important. "The U.S. economy and our competitiveness internationally hinges upon the careful and closely negotiated balance that Congress built in federal IP law," he explains.

Then there are technologies with much more focused concerns, like text-to-speech. Who is liable if someone calls a bank or doctor's office and accesses your personal information? Today, call centers use safeguards designed into the system, such as PIN numbers, passwords, and questions (such as "What's your mother's maiden name?"). Tomorrow, designers may be able to protect their company's customers with the use of voice prints that will allow call centers to actually recognize a voice, especially if they threaten to sue.

Need More Information?
Cellular Telecommunications
& Internet Association


Cranfield University

Environmental Protection


European Union

Federal Communications


Federal Drug Administration


Institute of Electrical
& Electronics Engineers


Korean Ministry of Information
and Communications


LG Electronics

Microsoft Corp.

National Institute of
Environmental Health Sciences


National Institutes of Health


Samsung Electronics

U.S. Association of Patent Law Firms

U.S. Department of Homeland Security

U.S. General Accounting Office

U.S. Patent and Trademark Office

Wolf, Greenfield & Sacks P.C.

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