Savvy Companies Monitor Online Auction Sites To Be Sure Their Technology Is Not Improperly Listed For Sale

The many online auction sites have become a forum for parties to buy and sell just about anything imaginable, including software, hardware and other technology products. Typically, parties who purchase technology products through online auction sites are not contractually restricted from reverse engineering the purchased product technology. In light of these realities, savvy companies now routinely monitor the many online auction sites to confirm that their own software, hardware, and other proprietary technology is not being improperly listed for sale. In one recent instance, an overnight delivery company lost a customer's server that was being shipped. After the server was found by the delivery company, the delivery company turned the server over to a liquidator. While monitoring the online auction sites, the company that had shipped the server discovered that the liquidator had listed the server (containing proprietary software) for sale on an online auction site. In another instance, a company lost track of proprietary hardware in the mid-1990s when it was in a rapid growth mode. The hardware eventually turned up almost a decade later for sale on eBay. The company discovered this by routinely monitoring that site for listing of its technology.

There are several practical things you may want to consider to protect your company's proprietary technology if you find it up for auction:

• Establish an internal procedure to regularly monitor online auction sites for your proprietary technology. This might be a search that you regularly run to check whether your proprietary technology is being offered for sale. To the extent available, use RSS (real simple syndication) feeds to alert you if your crown jewels are listed for sale.
• It can be counterproductive to immediately trigger a legal response if you find your company's proprietary technology listed for sale in an online auction. A legal response may motivate the seller to pull the item from the auction, and you may then lose visibility as to its whereabouts. If you do not believe the seller has the right to convey what is offered, another effective approach is to gently telephone the seller and communicate your position. Frequently, this approach must include an offer to defray any sunk costs the seller may have incurred and to pay the costs of shipping the items back to you.
• If you are unable to negotiate a business solution with a seller, one of the most cost-effective responses is often to bid on the item yourself (or have an employee bid). You might overpay for an item the seller has no right to sell, but that can be an inexpensive way to avoid a legal fight.
• Sometimes, a legal response is the only practical alternative if you want to keep your proprietary technology out of a competitor's possession. Additional Information This Update is only intended to provide general information and suggestions as to how to deal with online auction sites.