Businesses Play Serious Hide-and-Seek With Pending Technology
Businesses Play Serious Hide-and-Seek With Pending Technology
JOYA L. WESLEY
Apr. 24, 1990
MILWAUKEE (AP) _ When Johnson Controls Inc. sought to hide development of a $20 million next-generation building automation system, it started a diversion campaign to dupe a leading competitor, Honeywell Inc.
Johnson Controls took a slight modification of an existing product and promoted it in a flashy advertising campaign.
The tactic bought the company time to finalize its new building automation system, which integrates computers and other digital technology to control heating, security and other functions in buildings.
The Johnson Controls diversion is an example of how companies often take extraordinary measures to protect their concepts, blueprints and experiments. Alarms, guards, padlocks and patent attorneys tell only part of the story.
There's also a chess-game, cloak-and-dagger side to it as well, with weapons that range from phony publicity to secret codes aimed at throwing the other guy off your scent.
Estimating how much those efforts cost is difficult.
''I don't think it's a budgetary thing.'' said Ronald J. Caffrey, vice president for marketing at Johnson's controls group. ''You can't put up an electronic security fence. It's more of a people thing.''
Mike Bernaden, an advertising executive who devised Johnson Control's diversion campaign, is a veteran in the trade secrets field. He regularly scrutinizes visitors' name tags at at trade shows and eliminates from Johnson Control mailing lists any competitors posing as customers.
''Anytime you go to a trade show or are involved in any communication activity, there's a certain recognition of your competition and their attempts to get information,'' Bernaden said.
Milwaukee-based Johnson Controls spent three years and $20 million developing the new Metasys automation system, which was given the code name Loba, after the 19th century Russian mathematician Nikolai Lobachevski.
Although the company used the code and made all suppliers, customers and employees swear to secrecy, Johnson Controls still sensed Honeywell had learned a major development was in the works, Bernaden said.
Johnson Controls mulled introducing Metasys earlier than planned, but didn't want to risk imperfections. So Bernaden developed what he called a ''grand strategy'' to create a smokescreen.
He took the slightly modified product, called it Lobo for Logical Option for Building Systems, and used a splashy news release complete with helium balloons to promote it.
The diversion received thorough coverage in trade publications, distracted Honeywell and gave Johnson Controls time to finish fine-tuning the Metasys system before it was unveiled at an Atlanta trade show in February.
Martin A. McDevitt, an analyst with the Milwaukee firm Cleary Gull Reiland McDevitt & Collopy, said Metasys probably would give its creator a larger share of the $2 billion-a-year building controls market. Johnson Controls and Honeywell now each control about 30 percent of the market.
Code names, confidentiality and clearance systems are among the more obvious trade secret tactics. But some companies won't even talk about how they throw off their competitors.
''For very obvious reasons, we, as a matter of practice, don't discuss security and security methods,'' said George Jameson, a spokesman for General Electric Co. in Fairfield, Conn.
Sometimes trade-secret paranoia reaches levels that embarrasses the companies themselves. In October 1987 for example, Eastman Kodak Co. protested the enrollment of a student from Kodak's arch-rival Fuji Photo Film Corp. at the University of Rochester's business school. Many of the student's classmates would have been Kodak employees enrolled at the school.
Kodak's behavior caused an academic uproar. The company apologized and withdrew its objection, but by then the Fuji employee had decided to enroll elsewhere.
Many companies have ethics codes forbidding employees from actively trying to uncover competitors' trade secrets.
Honeywell officials said its ethics policy kept it from snooping in Johnson Controls' business during the Metasys affair, although they knew something was developing.
''We actively instruct employees to treat competitive information as the property of others, not to be solicited by Honeywell employees,'' said Paul Towne, Honeywell's director of corporate ethics.
Ronald J. Caffrey, vice president for marketing at Johnson's Controls, said fragments of information often slip out - and it's not unethical to hear them.
''Vendor salespeople like to make you think that their product is being used by all kinds of important companies,'' Caffrey said. ''It's a fairly common thing to listen to vendors and just try to piece together intelligence.''
But it would be unethical to devise a scheme to uncover information, he said.
Much information slips out because companies must walk a fine line between openness with customers and silence with competitors, Caffrey said.
Customers want to know developments in technology so they don't have to worry about buying an obsolete product. That requires public relations departments to be careful in releasing information.
Protecting technology also can become a matter of national security for companies working on defense projects, so the government requires clearance systems through which to filter information.
Employees are given different levels of clearance on a ''need-to-know'' basis. Government officials conduct extensive background checks before granting higher levels of clearance.
''They ask everybody you ever knew if you're a decent human,'' said Gregory A. Martin, a doctoral candidate studying electrical engineering at the Georgia Institute of Technology.
For commercial technology, patents play a more important role in protection.
''Companies are very aggressive in getting patents and they do so early on,'' said Samuel R. Williamson, a patent attorney for Bell Laboratories in New Jersey. ''To wait might mean that someone else files first.''
Minneapolis-based Cray Research Inc. has a less aggressive approach to protection and patenting, said David Frasch, corporate secretary and technology counsel.
The supercomputer manufacturer's attorneys work closely with its engineers to keep abreast of what needs to be protected and what needs to be shared with customers, suppliers and other companies.
''Our philosophy is to identify what's meaningful and is important to protect and not bag every invention that comes along,'' Frasch said.
End adv for Monday April 23