IP: Chinese Wall? What Chinese Wall?!?

[Dave Farber <farber@cis.upenn.edu>]

[ For those of you who don't know John, he is an old (not age) and 
experienced professional in our field djf]


>Date: Sun, 14 May 2000 19:04:21 -0700 (PDT)
>From: John Wharton <jwharton@netcom.com>
>To: farber@cis.upenn.edu
>Subject: Chinese Wall?  What Chinese Wall?!?
>
>Dave--
>
>I had to chuckle at Microsoft's response to the DoJ's proposed antitrust
>remedies; I wonder if anyone else noticed one delicious irony?
>
>For years Microsoft has claimed there's a "Chinese Wall" separating
>the operating-systems division from the applications-software division.
>This is an intellectual-property firewall that supposedly makes sure
>different groups within Microsoft don't have an unfair advantage over
>outside competition by having access to unpublished interfaces or
>unannounced product plans.  It also means different divisions can't
>collude in developing new products, Microsoft has said, and reassures
>other software companies they can share confidential information with
>one branch of the company without worrying that their trade secrets
>might be learned by a competing branch.
>
>It doesn't always work that way.  In his book "Startup", Jerry Kaplan
>tells how GO Corp. fell victim to the Chinese Wall gambit in 1989:
>Microsoft had approached GO, saying it wanted to develop apps to run
>under GO's new PenPoint operating system, but needed to know more about
>how PenPoint worked.  GO agreed to share the requested information with
>Microsoft's applications group only after it signed an NDA assuring
>Kaplan that he "needn't worry about GO's confidential information
>jumping from the applications group to the operating systems group"
>[Kaplan's words].
>
>Some months later Kaplan was shocked to discover that the very people
>he'd been dealing with actually worked on the development team for
>PenWindows, Microsoft's competing OS, and had used GO's proprietary
>information to clone the GO prototype.  The apps-development story had
>been a ruse, Kaplan concluded, to let Microsoft "rip off" the GO design.
>
>(See pp. 63-67, 101-102, 105-106, and 174-178 in the hard-bound edition
>of "Startup" for Kaplan's account of these dealings and excerpts from
>the non-disclosure agreements Microsoft violated.)
>
>(Sound familiar?  In 1980, Digital Research engineers shared design
>details of its CP/M-86 OS with Microsoft after MS said it was porting
>its compilers and applications suites to run on CP/M-86.  In truth, the
>MS engineers Digital Research worked with were using the information to
>make sure MS-DOS capabilities would more closely match CP/M-86.)
>
>====
>
>So now the DoJ has proposed that Microsoft be split in two to make sure
>future apps products will not in fact be able to take unfair advantage
>of knowledge of OS products and vice versa.  In effect, the DoJ asked
>Judge Jackson to plug the holes and make the Chinese Wall more solid.
>
>And how does Microsoft react to enforcing a policy the company says had
>been in effect all along?  It screams bloody murder, claims there's no
>way the company can survive, much less continue to 'innovate', unless
>communications channels between the divisions remain wide open!
>
>"These proposals would block us from doing new product work," Gates has
>said.  "Microsoft could never have developed Windows under these rules.
>We couldn't have developed Windows because without the great work of the
>Office team and the Windows team, it never would have come together."
>(see the NYT, 4/29, pp.B1 & B5)
>
>So much for the Chinese Wall theory!
>
>And so much for any claims that Microsoft's control of the OS market
>played no role in advancing its interests in the applications arena.
>
>(I laughed out loud to read that.  Perhaps the brightest moment to come
>of this case since Microsoft attorneys tried to discredit an Intel VP
>during cross-examination and managed only to embarrass themselves!  :-)
>
>   --john wharton