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October 2012

Keeping Information Confidential

In 2003 the National Institute for Engineering Ethics developed a video entitled Incident at Morales. Supported by funding from the National Science Foundation and contributions from numerous engineering societies and professionals, the video and the instructional materials that accompany it are designed to facilitate discussions on a number of challenging ethical issues. While the particular case study involves a chemical engineer, the ethical challenges detailed in the video are applicable to engineers in all areas of practice. This month we highlight one of the many ethical issues depicted in Incident at Morales. Here the contributions of the late Jimmy H. Smith, Ph.D., P.E., F.ASCE, whose professional accomplishments demonstrated his lifelong commitment to the advancement of engineering ethics and education, must be acknowledged. During his tenure as the director of the National Institute for Engineering Ethics and his years at the Murdough Center for Engineering Professionalism, both of which are based at Texas Tech University, Smith was instrumental in the creation of the videos Incident at Morales and Henry’s Daughters and numerous other educational programs in ethics.

Situation:

Phaust Chemical is a manufacturer of paint removers in the U.S. marketplace, and its primary product, Old Stripper, is the leading paint remover in the market. Upon learning that its principal competitor, Chemitoil, is planning to roll out a new nontoxic paint remover, Phaust fears that this product will capture a significant portion of the market. It scrambles to create a similar product of its own and opts to build a new chemical plant for producing it rather than expand its existing plant.

Phaust’s vice president of engineering reviews a number of candidates for the job of designing the plant automation system. One of the applicants is Fred Martinez, a chemical engineer and licensed professional engineer whose previous work includes serving as a consultant for Chemitoil. After learning that Martinez had worked on the plant design for Chemitoil’s new product and that Chemitoil had not required Martinez to sign a nondisclosure or similar contractual agreement, Phaust’s vice president immediately offers Martinez the job.

On beginning his work for Phaust, Martinez receives a series of preliminary reports on the new project from his supervisor, who presses him for information on whether the process described is similar to what he designed at his previous job. The supervisor emphasizes the need for Phaust to bring its competing product to market as swiftly as possible and notes that “people might want to know whether we’re starting from scratch” or whether Martinez’s experience is going to help Phaust “get ahead.”

Question:

What are Martinez’s ethical obligations with respect to information related to his former client, Chemitoil?

Decision:

In the course of their professional engagements, engineers are often granted access to confidential information concerning a client or employer. This information can take the form of, for example, product formulas and processes, confidential business and marketing plans, or financial information. When an engineer receives such information, ASCE’s Code of Ethics imposes an ethical obligation on him or her to protect the client’s or employer’s interests in preserving this information.

Canon 4 of the Code of Ethics states in part that engineers are to “act in professional matters for each employer or client as faithful agents or trustees.” Moreover, category (f) in the guidelines to practice for this canon reads as follows: “Engineers shall not use confidential information coming to them in the course of their assignments as a means of making personal profit if such action is adverse to the interests of their clients, employers, or the public.”

Even though canon 4 does not explicitly mention former employers or clients, it is essential for engineers to understand that the ethical obligation embodied in the canon continues even after the termination of an employment or contractual relationship. If an engineer obtains confidential information from an employer or client and later uses it to the detriment of that employer or client, it is irrelevant from an ethics standpoint that the engineer terminated the professional relationship before acting to the detriment of the employer or client.

Accordingly, while Martinez has a personal interest as well as an ethical obligation to serve his current employer to the best of his ability, this by no means negates his ethical obligations to his previous client. In order to be a “faithful agent” to both Phaust and his former client, Martinez must take care to separate his general knowledge and experience from the details of his past engagement. For example, Martinez’s experience may have given him a better understanding of various chemicals or processes involved in the production of paint removers, and he is entitled to apply this knowledge in designing an efficient process for his new employers. However, he may not give Phaust details about Chemitoil’s product or about that manufacturer’s design, knowledge that could enable Phaust to prepare a competitive response to the new product before that product is made publicly available. In this respect, Martinez’s obligations are also reflected in canon 5, which prohibits him from enabling his employer to “compete unfairly with others.”

Although canon 4 focuses on the potential harm to an engineer’s client or employer, it is interesting to note that other applicable codes of conduct are even stricter. For example, the National Council of Examiners for Engineering and Surveying’s Model Rules of Professional Conduct, which serve as the basis for many state licensing board codes of conduct, read as follows: “Engineers shall not reveal facts, data, or information without the prior consent of the client or employer except as authorized or required by law or this Code.” If Martinez were licensed in a state that had adopted these rules, he could be subject to disciplinary action for disclosing facts or data about Chemitoil’s products even if it could not be established that the disclosure caused harm to his former client.

As a practical matter, it should be noted that an engineer may be called to account for disclosing proprietary information even if he or she did not sign a noncompete or nondisclosure agreement. An engineer who uses information about a proprietary product or plan for his or her commercial benefit may be subject to civil litigation for trade secret misappropriation. And since most U.S. states and jurisdictions have adopted some type of unfair competition law, it may be possible for an injured party to seek relief through injunctions as well as the payment of damages.

Finally, it should also be observed that an engineer’s obligations with regard to confidentiality may be countered by a superseding ethical obligation. If the confidential information involves a potential violation of the obligation set forth in canon 1 to “hold paramount the safety, health, and welfare of the public,” an engineer may in fact have an ethical obligation to share this information with the appropriate authorities and to provide them with any necessary assistance.

For additional information about the video Incident at Morales and related ethics educational programs, visit the National Institute for Engineering Ethics website, www.niee.org. —TARA HOKE

Members who have an ethics question or would like to file a complaint with the Committee on Professional Conduct may call ASCE’s hotline at (703) 295-6061 or (800) 548-ASCE (2723), extension 6061. The attorneys staffing this line can provide advice on how to handle an ethics issue or file a complaint. Please note that individual facts and circumstances vary from case to case, that some details may have been altered for purposes of illustration or confidentiality, and that the general summary information contained in these case studies is not to be construed as a precedent binding upon the Society.

Tara Hoke is ASCE’s assistant general counsel and a contributing editor to Civil Engineering.

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