I

You are a professor planing to apply for a research grant when you are asked to serve on the committee that will evaluate grant applications. What can you do? You will have a conflict of interest if you serve on the panel, so either you must refuse to serve or not submit your own proposal. If you're the only one who can serve (in which case your university and its plan to up-grade its research program, are both in big trouble), you might consider withdrawing your application. Otherwise, suggest someone else.

II

VP Jackson has a plan, but it won't work. You'll serve on the committee but won't evaluate your own proposal. But there is still a conflict of interest since the award is competitive. A person with a proposal might talk and vote against the competition in order to improve his own chances. Even if not, it might seem that way to those who lose.

III

You allow the VP to talk you into serving and you get a fellowship. The question is whether the losing professors should demand, and are entitled to, a review of the committee's decisions. I think they are and they should; the review process ought to be done again. However opening up the process from scratch would be unfair to all the other professors who were awarded grants. So the university is going to have to find a way out of VP Jackson's mistake without taking away the awards from the other winners. This may wind up costing some money, since the fellowships are worth $6000. Lack of ethics can be expensive.

This is one of the few cases where the specific legal provisions governing the matters at issue are of primary importance in clarifying and resolving the problems. In the case of software, some basic points about copyright law, and some related matters concerning software licensing, are vital to understanding the case, and to distinguishing it from other cases of ownership or rights as they apply to employees. Therefore these legal provisions will be spelled out as an integral part of this commentary.

1

Copyright in software is treated under current U.S. law as being essentially similar to copyright in any literary or creative work. In all these cases, one acquires initial ownership of the copyright simply by being the author of the work in question. (Several persons may jointly author a work and so jointly hold copyright to it.) The government (through the Copyright Office, Library of Congress) does provide a Registration of Copyright mechanism. This does not create ownership, but instead officially acknowledges that it already exists. Typically one submits a manuscript, whether of a novel, movie script or source code for a program, as evidence of one's authorship/copyright.

Authorship as discussed above is subject to the following important qualification. The author of a work might prepare it as a "Work Made for Hire" (defined as a work prepared by an employee within the scope of his/her employment), and explicitly state this on the Copyright Registration form. In this case, the copyright statute provides that the employer rather than the employee is considered as the author (and hence as the copyright holder). However, it is important to note that, in the absence of any such explicit acknowledgement by an author that the work was "Made for Hire", the normal assumption would be that the actual author/s hold copyright to the work, unless other substantive evidence could be produced to prove that it was "Work Made for Hire".

In the current case, we are explicitly told that Derek was never asked by the small computer firm to sign an agreement that software designed during his employment there becomes the property of the company. If he signed no such agreement, nor (as we may consequently assume) specified that his work was a "Work Made for Hire" in any copyright registration application, then legally he would have a strong presumptive case that he was (and still is) the copyright owner of the software in question. (The possible complication that he was the primary, but not the only, contributor to the software will be considered later.)

It might be objected that in most cases of employer-employee relations, if one works for someone then they own the products of one's labor. This is broadly true, but creative works falling under the copyright laws work differently. A familiar example in higher education is the fact that professors retain copyright in their books or papers even if they were hired to carry out such creative research.

In the present case, the fact that Derek was indeed working for a computer firm while preparing the program etc. is not sufficient to establish copyright ownership by the firm. For in the case of software copyrights, there are other rights or permissions to use the software which the firm will have acquired as a result of Derek's activities, which are fully adequate for their business purposes and which justify their hiring and compensating of Derek for his work. They get broadly what they want, but it is rights and permissions to use the software which they get, rather than ownership of it. (Recall that they could have had ownership too, but neglected or elected not to take the necessary legal steps to secure it.) Here is a brief discussion of rights and licensing in relation to copyright, to help clarify these matters.

2

Everyone is familiar to some degree with literary and movie rights, for example that a producer may have to pay a novelist a large sum to get the movie rights to a book. These rights give the movie producer the right to produce a film version of the novel, but do not in any way transfer the copyright (or ownership) of the novel to the producer. Similar considerations apply to software too: acquiring the right to make certain uses of software does not transfer its ownership. Derek's firm acquired rights to use his software system for customer services in virtue of his being employed by them to produce the software, but the firm does not thereby acquire property rights in the software.

More distant still from ownership considerations are issues about licensing. Almost all actual software contracts involve some kind of software licensing, in which the copyright owner gives permission to one or more licensees to make certain kinds of use of the software. Though an exclusive license is possible, most licenses are of a non-exclusive kind, so that many different licensees could make similar uses of the software without violation of their contracts. Clearly in such cases there is no question of any transference of ownership in the legal arrangements.

3

In the present case we are given no specific information about what rights or licensing arrangements were in force between Derek and his original small computer firm, but these can be reasonably inferred from the conduct of the parties. Minimally his firm needed from Derek a perpetual, non-exclusive license to use and modify his source code for the software. Then they could use the software indefinitely, and modify it at any time in the future as changes became desirable. However, unless there was a written contract in existence (signed by the firm and Derek) in which Derek granted the firm an exclusive license to use the software, Derek is free at any time to license the same software (whether or not he chooses to make changes in it) to anyone else, and under any terms he wishes.

The implications for the present case are clear. Derek as the copyright holder can use or modify his software for use in his new larger computer firm in any way he pleases, with or without discussing it with his former employer. What is more, his new employer cannot claim ownership of the software, because it was developed prior to Derek's current employment rather than as part of his current design work.

However, Derek would certainly be wise to come to some explicit agreement with his new firm about how he would allow them to use the software. In effect, the new firm wants Derek to produce a customized version of the software for them, and he could agree to do this as part of his regular compensation, while also negotiating a monthly or yearly licensing fee in return for granting them appropriate rights to use the software. Or to simplify things, Derek might be tempted to sell them the package outright for a suitable compensation, in which case there would be an actual transference of ownership of the package.

4

We are told that Derek was a "primary contributor" in the original development of the software. This suggests the possibility that he may jointly hold the copyright to the software with one or more other designers. How would this affect the case? Generally, joint ownership allows each owner to exercise all rights of ownership, except for those whose exercise would materially affect the rights of the remaining owners. (Commonplace examples include such matters as joint ownership of a home or bank account.) In the present case, this means that Derek is free to grant non-exclusive licenses to use the software to anyone (but not to everyone), since other joint owners would not be thereby prevented from exercising similar rights. On the other hand, Derek should refrain from attempting to grant an exclusive license, or from attempting to sell the software outright, because both of these actions would materially affect the interests of any other joint owners.

Does Derek have any moral obligation to contact his former employer, or his co-workers there, before exercising his legal rights as detailed above? First, it is prudent for anyone in business to stay on good terms with both present and former associates. In the interests both of common courtesy and of safeguarding his own career, Derek would be well advised to explain his actions and his view of the case to anyone who might otherwise resent or be annoyed by them, including his former associates and friends.

Second, if there are indeed co-authors from his previous firm whom Derek could contact, he should do so. A basic principle of legal ethics, assumed in contract law, is that parties who enter into a contract or agreement are thereby obligated to make a good-faith effort to carry out the terms of the contract, both explicit and implicit. Co-authorship, as with other forms of joint ownership, could appropriately be viewed as requiring that one should keep co-authors informed of one's actions with respect to the joint property, even if this is not explicitly spelled out in a written agreement between the co-authors.

I

This is a debate over who owns a software system, the company or the designer. Horace says the system is 'really' the property of the company, but Derek, the designer, claims to possess certain property rights in it. My contribution to the ensuing discussion would be to say: "Gentlemen. Questions of property are determined by law, not philosophy. It is true that some philosophers, such as Locke and Nozick, think there's such a thing as property apart from law; but this opinion is untenable, as no rational criteria can be provided by which 'natural' property can be determined. (For instance, Locke says that I own anything with which I 'mix my labor'; but what is that? If I build a fence around a forest, does that mean I own the entire forest? Or only the land under the fence? Or the fence itself and nothing else? And if I own the fence, do you have a right to climb over the fence to get into the forest?) Whether the system is or is not the property of the previous employer depends on what the law says. It's not a moral question whether Derek or his prior employer have legal control over the work Derek did there. This may or may not depend on any agreement Derek signed, or didn't sign. So Derek should consult his, or the company's, lawyer and determine what his rights are.

Derek's arguments are feeble rationalizations for his desire to fiddle with the software he invented. He'd be more honest to say, 'Look, if I had signed my rights away, my hands would be tied. But I never did, and the previous company didn't seem to care. So now I'm free as a bird to do what I want with this system. That's my understanding of my legal rights, and I intend to exercise them fully. If I'm wrong, they can sue me.'"

II

As the case develops, things go farther than intended and now Derek's new employer not only wants him to make greater use of the software system than he initially thought would be right, but claim to own it themselves. Derek has gotten himself into a moral pickle and he wants someone to rescue him from it. He signed an agreement with his new company that his work belongs to them. He then revised the work he did for the first company, half-thinking that he really shouldn't; and now he regrets that the new company claims that the whole thing is theirs! It's really to late for him to conclude that the old company is being treated badly, since he's the one who made it happen. The only remedy here is for the first company to sue the new employer and have the court determine the legal property rights.

III

Should Horace, Derek's friend, tell the old company that Derek is using the software? Why not? There are no secrets involved in this, unless Horace is under a pledge of confidentiality, which wasn't stated. The smaller company needs to know that their systems are at risk unless they secure legal title to them; it's surprising that they have never been told this before by their lawyers! (Maybe they need new lawyers).

The general problem area raised by this case is ownership and use of technical knowledge. One question might be phrased, "What is the right of the individual engineer to specific items of technical knowledge which he/she came to possess because of and while in the employ of a firm?" However, there are additional, more broadly ranging, questions such as, "How, through communicating or (mis)using technical knowledge gained in a previous employment, might an engineer cause a current employer considerable trouble and expense?" and "To what extent is an engineer responsible for the firm's use of his/her technical knowledge?" Particular cases dealing with intellectual property, as in the present instance, are often complicated by a number of legal considerations. In any event, Derek would be well-advised to seek the counsel of his firm's lawyers before proceeding and to urge his superiors to do the same.

There are at least two major gaps in the case description that must be filled before concrete, detailed advice could be given to Derek. One is the matter of ownership, and the particular type of ownership, of the innovative software system. The other is whether Derek's new firm has a license to use the original software system. Regarding the first, the case description does not explicitly state--but strongly suggests--that the software system belongs to Derek's former firm. It is said to be the commercial "Lifeblood" of the firm, Derek and other developed it while employed by the firm (presumably as past of their jobs), and Horace's remark "That system is really the property of your previous employer" is not challenged but apparently accepted by Derek. The fact that Derek did not sign an explicit agreement with his former employer may be immaterial. The former employer might have a company policy governing ownership. [My university has a detailed policy governing the ownership of patents and copyrights developed by university employees. No employee "signs" the policy and it went into effect, valid from its adoption date, years after I first joined the university faculty.] Then, too, there are legal precedents regarding design work done by employees while under hire to do such work. Derek's assumption that his helping to design the system gives him some sort of "right" to use it or change it may be dangerously flawed. It is remotely possible that Derek had and retains some sort of ownership right in the system, but there is nothing positive in the case description to suggest so.

There is also the question of Derek's current firm's license to use the software system, for they obviously do not own the original version. The case description suggests that the current firm has not purchased a license to use the original system, but wants Derek to replicate the whole system, with a few modifications, for extensive company use and (claimed) ownership. Such a move would seem to be a violation of copyright by the firm. It is not clear that Derek himself has a license to use the system--he may be "pirating" it. There are situations in which a company buys a license to use a software system and, as part of the purchase, also buys access to and use of the "source code" for the system, legally permitting the company to modify the system for its own needs. If this were the case--but there is nothing of the sort stated or implied in the description--there would be no problem in introducing the modification and the firm is fortunate to have a person with Derek's experience. (There may still be a problem with "owning" the modified system.) More commonly, the license to use a system prohibits the licensee from modifying the system (which would at least void the warranty) or distributing it to other parties; the software supplier retains the right to service, updates, or otherwise control modifications in the system. The user's rights and their limits are usually spelled out in legal detail in the purchase agreement and warranty.

As both Derek and his new employers could be exposed to a major lawsuit, Derek should insist that his superiors obtain legal counsel before the situation develops further. Derek may already be guilty of using proprietary information.

[Perhaps a few background remarks are in order here concerning the topics of patents and copyrights, trade secrets, and agreements that might be signed regarding maintenance of confidentiality or other intellectual property rights. The United States Constitution, Article I, Section 8, Clause 8. There the Constitution provides that "Congress shall have the power . . . to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." The United States was one of the first countries to develop a patent and copyright system. Since the country was founded at the beginning of the modern industrial revolution, there was a concern on the part of the Constitution writers that creative individuals be protected and encouraged in their efforts to develop inventions or to produce artistically. The federal Patent Act grants a limited monopoly to a patent-holding inventor that gives him a 17-year right to exclude others from using, making, or selling his invention in the United States. Once a patent is applied for, it becomes a form of personal property; it may be bought, sold, traded, leased, licensed for the use of others, and so on. Not every invention is patentable; it has to meet certain standards, usually standards of novelty, utility, inventiveness, and what is sometimes called subject matter, that is, there are certain things which cannot be patented, such as mathematical formulas or managerial techniques, whereas other things--such as actual devices, designs for processes, and chemical formulas--may be patented. A copyright is similar to a patent in that it grants an exclusive right to the holder to publish, sell, etc., plays, music, textbooks, photographs, and other such material. The extent of protection is usually for longer for a copyright than for a patent. To infringe a copyright or to manufacture illegally, say, a patented device would be grounds for a lawsuit by the owner of the patent or the copyright against those who violated the right.

There is another category of protected information usually called "confidential information," "proprietary information," or more commonly "trade secrets." For a variety of reasons, companies may prefer to use the trade secret route to protect information, designs, formulas, and possibly even computer programs developed within their firms. One reason is the expense associated with patenting. Another reason has to do with the fact that a patented or copyrighted item becomes a matter of public record and hence is publicly accessible. While at the time of this writing there is no national trade secret law, there are a number of statutes on the books of various states and a large number of court decisions protecting the rights of a firm to maintain its own trade secrets. Companies have successfully sued each other for trade secret theft. (Surely they were never parties in signing any ownership agreement!) One process by which trade secret theft sometimes occurs is the hiring of an employee from another firm and then putting that employee in a position to use specialized knowledge obtained from the previous firm. A trade secret can be any specific piece of information--a list of customers, a mathematical formula, a chemical formula, a process design, and so on--that gives the company holding it a competitive advantage in the marketplace and has been identified or treated by the company as confidential. Generalized skills that an employee may pick up on the job, such as a skill in using certain programming techniques or a skill in the conducting some type of chemical analysis, would not be regarded as trade secrets but rather as general knowledge that becomes part of the employee's overall ability.

In order to help the company in protecting trade secrets (an activity that is extremely important in more technological firms) as well as in alerting employees to policies governing patents and copyrights, employees are often requested to read and sign an employment agreement. These agreements explain the company's policy regarding patents, copyrights, and trade secrets and usually call attention to the employee's obligation to continue to maintain confidentiality indefinitely, not just during the time of employments with the company.]

Let us suppose that the company, at Derek's insistence, does carry out negotiations with the smaller company producing the original software. Derek's ethical commitments to his previous and his current employers would not be violated. He will have kept faith with his previous employer, and he cannot be charged with knowingly doing anything to damage his current employer. His current firm may be able to work out some kind of relationship with the previous employer and possibly even come to a business arrangement for the marketing of the adaptation for even more commercial profit.

On the other hand, let us suppose that the company does not talk with the supplier of the software and insists on going ahead with or without Derek in making the adaptations company-wide. Let us also suppose, as is likely to be the case, that at least someone in Derek's previous company finds out about the new use of the software system. Derek's new employer, as well as possibly Derek himself, could be confronted by a lawsuit having to do with the infringement of copyright. Even if the lawsuit is not successful, the legal action could prove costly for Derek's employer. It certainly might besmirch his reputation, both within the company and outside of it. Derek should at least do what he can to urge his superiors to seek legal advice in this matter. His professional responsibilities to his current employer as well as to his previous employer would call for no less. If his superiors are too pig-headed to seek and listen to legal counsel on this matter, Derek would probably be better off working for a more enlightened firm--at least one that would not ask him to act illegally.

Darnell, Inc. claims to have a strong commitment to affirmative action, and now it appears that a woman, Catherine, is about to get a promotion. Judy has reservations about Catherine's ability to do the job. If Darnell really has the strong commitment to affirmative action it claims to have, Judy should have no problem expressing her reservations to an appropriate superior. A strong commitment means that women who can do the job are the ones who will get promoted, and not 'pretty faces' who will eventually fail. Therefore Judy's problem is how to go about making her reservations about Catherine effective.

She might consider these strategies. 1. Talk to Catherine herself and ask her to withdraw her candidacy for the reasons given. Perhaps she risks losing her friend. On the other hand, maybe Catherine has her own doubts about her ability to fill the position she's in line for. Judy's frank discussion might help her do the job better if she gets it; or maybe Catherine will be able to put Judy's fears at rest. 2. Talk to other women in the company, first to see if they also have reservations about Catherine's impending promotion; and second, if they do, to organize opposition and make it known to the appropriate superior. All the women at Darnell have a stake in this promotion, evidently. If the other women don't share Judy's fears, maybe she should drop it (she could be wrong about Catherine); if they're afraid to act on their fears, Judy might reconsider whether 'affirmative action' is worth fighting for.

Under situation (b), Judy hears male engineers deriding women. The remark she overhears from the male engineers could indicate that Darnell's commitment to AA is more verbal than real. Judy should try to determine this by discussing what may be prevalent male opinion, with higher management, and seeing what they say. If the promotion of Catherine turns out to be a set-up, designed to discredit the affirmative action program, then Judy will have a real problem on her hands.

It might be a god idea for Judy to talk to some other male engineer whom she trusts, maybe Tom Evans. Tom may very well know more about the attitudes of the male engineers, and of the company officials, than Judy does. If she trusts him, he might be a good person to talk this problem over with before she does anything. She may get a better perspective on the real attitudes of people at Darnell, and advice from an experienced person.

In (c), Tom Evans rather than Judy hears the male engineers talking. Should he do something? It depends. If someone such as Judy asks him if he knows anything helpful, perhaps he might. But obviously he isn't gong to come running to Judy--"Guess what I heard"--unless he has reason to know that the Catherine promotion is bothering her. Should he do anything else? This depends on how he feels about affirmative action. He might make it his business to talk to the engineers at some point and try to correct their negative attitude; or if he feels strongly enough, he might talk to management about their (management's) problem. He takes a certain risk obviously but if he does this tactfully he might come out ahead.

In (d), there are no special problems since both hear the conversation together. If Judy trusts Tom she can rely on him for advice and support.

If Judy's assessment of Catherine's prospects as Chief Engineer in Quality Control are correct, the long-range consequences of Catherine's not getting the job are probably better than the long-range consequences of Catherine's getting the job. If she fails and has to be removed, her promotion will not increase the number of women in senior management. In addition, her failure will reduce the chances of other women being promoted to senior positions in the future.

This still leaves open the question of what Judy should do. Presumably she is not directly involved in the promotion decision, and she may not even be asked for her opinion about the promotion. Thus she will have to go out of her way to make any effort to affect the decision process. What obligation does she have to do this?

Generally speaking, our obligation to prevent an unfortunate consequence (especially where it does not involve the loss of life) is weaker than our obligation not to directly participate in wrongdoing. Our obligation to do what we can to prevent environmental damage in the rain forests of Brazil is not as strong as our obligation not to engage directly in environmental pollution ourselves. On the other hand, we do have some obligation to try to prevent unfortunate consequences when we are in a position to do so, especially if there is relatively little cost to ourselves. In this case, the primary cost could be the damage to the friendship between Judy and Catherine. If suggestions to those in a position to make the decision about Catherine's promotion could be made discretely, this might be avoided. But Judy would still have to wrestle with the fact that she has undermined Catherine's chances for promotion without her knowledge. This knowledge would almost inevitably limit Judy's ability to relate to Catherine in an open and honest way, even if Catherine never knows the reason for the difference in Judy's relation to her.

Judy might decide to simply tell Catherine that she has suggested that Catherine is not the person for the promotion at this time. This would probably damage the relationship in the short run, but it might provide the basis of a stronger and more honest relationship in the future. This option would have the advantage of satisfying more moral demands: it would prevent potentially serious damage to the cause of gender equality at Darnell and it would preserve a healthy, honest friendship between Catherine and Judy.

An honest and informed commitment to the cause of gender equality might require that both Judy and Tom express their partial agreement with the male engineers who believe that Catherine is not qualified for the promotion. They could say that, even though they support gender equality, they agree that Catherine is not the right person for the promotion. Catherine would probably eventually hear about this conversation. But if Judy and Tom told Catherine of their position, this would not be a problem.

The "glass ceiling" is a common phenomenon in organizations today. In many organizations, there are significant numbers of women at the lower managerial levels, but few women at the more senior managerial levels. There are even fewer women at the most senior managerial levels and on boards of directors. Darnell, Inc. may have a strong commitment to affirmative action, but the glass ceiling is firmly in place. There are some signs that this situation may be changing, however.

Catherine Morris is in line for a promotion at Darnell. Her coworker, Judy Hanson, does not believe she can handle the promotion. Judy fears that Catherine's failure might set back the cause of promotion for women. In other words, if the first woman manager fails, then women will never be promoted again. Judy is making several assumptions in this case. Let's examine them one at a time.

First, Judy has assumed that Catherine is incompetent as a manager. We do not know what evidence she has for this decision. She knows Catherine "rather well," but she works in a different area of the company. It is her opinion that Catherine does not have "strong leadership qualities or the kinds of organizational skills that will be needed." Somehow, though, Catherine has become a leading candidate for promotion. Perhaps someone else in the company has recognized qualities in Catherine that Judy does not see. Perhaps someone in authority has decided that Catherine has the ability to become an effective leader if given the chance. Judy's opinion may not be the best one to consider in this situation. Nevertheless, Judy may be right. Catherine may not be a very good leader.

The second assumption Judy is making in this case is that if Catherine fails no other woman will ever get promoted. This is a common perception of organizational tokens (people who are in the minority in their jobs--like female engineers or male nurses). The organizational token is taken to stand for everyone who is like them. People assume that the token's behavior is an indication of how all people who are like the token behave. This is an unfair judgment. Catherine is Catherine. She is not all women. If she fails, she fails as herself, not as a representative of all women who ever worked for Darnell. Judy should not promote this view. She should be working to get others to see Catherine for herself, not as a symbol of all women who aspire to higher management positions at Darnell. She has an excellent opportunity to express this view when she overhears the engineers express doubts about Catherine. Without downgrading Catherine, she could make it clear that Catherine's success or failure is her own and not a reflection of the competencies of all women at Darnell.

The final assumption that Judy makes is that Catherine will not have any support in her new position. Catherine is seen as the woman who has to make it on her own. Perhaps she will find a mentor to help her through difficult times. Perhaps other workers will help her develop her leadership abilities. Perhaps there are training seminars that she will be able to attend to develop any management skills she may lack. If Darnell is truly committed to affirmative action, they must help employees develop the skills they need to succeed in their new positions.

Although this case may appear to be about the ethical responsibility of one employee to support another employee, it is really about an organization's ethical responsibility to support the employees it chooses to promote. Darnell will not have an ethical affirmative action policy if it merely promotes women or any other group of people without providing the support they need to do their new jobs effectively.

Judy Hanson and Catherine Morris work in different areas at Darnell; so it may be that Judy doesn't recognize Catherine's leadership qualities and organizational skills as well as those who are considering her for the promotion. As a social friend, Judy may have seen a different side of Catherine's personality and, as a result, not seen the side that displays the qualifications for a Chief Engineer. Sometimes one doesn't recognize qualities in a good friend that one would see in people that one didn't know as well. "Familiarity breeds comtempt" goes the proverb. When someone that you know well does something extraordinary, it can come as a surprise.

It is also possible that Judy shares the same prejudice against women in leadership positions that many men in the company apparently have and that pervade the general culture. Unconsciously, she may also be jealous of Catherine for being the first woman to be promoted to that high a level in the company. Judy should certainly do some soul-searching before she does anything except provide support, encouragement, and congratulations.

How would Judy feel if she were the one who was being considered for promotion, and Catherine had serious doubts about Judy's being the one for the job? Would she like it if Catherine expressed those feelings to others in the company, thus working against her promotion? Would she like it if Catherine even expressed those doubts to Judy, which would not increase her self-confidence at a critical time. With friends like that, who would need enemies?

If Judy's friend Tom were being considered for the position, would Judy even think of doing anything in regard to his promotion in a different area of the company, even if she felt that he didn't have the strong leadership qualities or the organizational skills needed. She would have hoped him the best. So she will hope Catherine the best.

After all, what is going to happen if Catherine doesn't do well in the job? Will it really take its toll on other women at Darnell, or will it have broken the ice for women's promotions with the result that women be considered for other promotions. Once there is a woman in a senior position, the company may feel that it has to promote another to compensate, in case Catherine is demoted. And Catherine may rise to the occasion and do well. Judy should certainly do nothing to prevent her from having the chance.

Suppose, however, that Judy believes that Catherine's promotion is a deliberate effort to discredit Affirmative Action. She believes that management is deliberately putting a woman in a position over her head in order to counteract the pressure from the women in the company that some of them be promoted to senior positions. Management wants Catherine to fail in order to quiet the women's criticism. What then? Should Judy try to organize a women's caucus to come up with a unified reaction to the promotion?

Suppose, further, that the women in Quality Control, which is Catherine's department, do not think that Catherine is qualified and they think that another woman in the department is the person for the job? They come to Judy and ask her to help them persuade Catherine to turn down the promotion in favor of the other woman. Should Judy agree?

If Judy overhears male engineers remarking that Catherine will never be able to handle the job and that this will show how foolish, and potentially harmful, affirmative action is, the easiest thing to do would be to pretend that she hasn't heard. But the men are engaged in politically significant conversation, and, if Judy believes in Affirmative Action, she would be negligent if there is anything she can say which would help to rebut the conclusion to which the men are coming. Even if she doesn't believe that Catherine's promotion is wise, and even if she does believe that it will be taken as evidence that women don't make good leaders, she might be able to think of something appropriate to say to the men to defend Affirmative Action.

Whether to say something to the men might depend upon the atmosphere in the company. If Affirmative Action is official policy, genuinely supported by upper management, or it is at least generally given lip service, and the men would be embarrassed by having been overheard in such a conversation, she might make a point of letting them know that she had heard. If, on the other hand, women were admitted into positions very grudgingly and with a lot of hostility, she might simply be making life difficult for herself without helping any.

Whether to say anything might also depend upon Judy's personality. If she is the sort of person who can make a sarcastic remark, which will make people think twice but not really angry, she might say, "Every male who's been promoted has been able to handle the job; so all we have to do is promote a male--is that right?"

Tom Evans, overhearing the conversation, might be able to join it in a serious way more easily than Judy. The fact that he overheard it would probably not put the men on the defensive. He could point out that whether she could handle it or not remained to be seen. It's a difficult job and lots of men in the department or company are not as good candidates as she. Give her a chance or find someone better qualified, but judge her by her abilities, not by her gender.

If they overhear the conversation together, they might each make the kind of remarks indicated.

The above are assuming that Judy and Tom both favor Affirmative Action. Judy and Tom may not agree or may not know that they agree. These situations have to be played out in the specific context. Here, as often in ethics, there may be no general rules that apply. Judy and Tom may simply have to do what seems most appropriate, given a sensitivity to the effects of what they might do or say.

The main focus of this case is a deceptive business practice and an engineer's responsibilities with respect to it. ABC has just signed a contract worth at least $375,000 with XYZ. We do not know the basis of the contract, but it was probably a bid on specifications developed by XYZ. Again, we do not know whether the materials to be used in the parts manufactured by ABC were detailed in the contract. It is conceivable the contract could have merely called for dimensions, strength requirements, and the like, without dictating the particular alloys that should be employed. If ABC did not make any contractual agreements regarding specific alloys and the newly discovered alloy meets all of the specifications, then there does not seem to be a problem in this case, and the company deserves come credit for its inventiveness. In particular, Christine Carsten might deserve a bonus for helping the company make an additional 24 percent profit.

Let us assume, however, as seems more reasonable in the case, that a particular metal was specified. While the less-expensive alloy has generally the same properties, it is demonstrably inferior in certain respects, and without question it is a different metal than was originally agreed to in the contract. By failing to inform XYZ of the alternative alloy and possibly renegotiating the contract, Christine's firm is, from a moral point of view, engaged in deception motivated by the prospect of selfish gain. From a legal point of view, ABC is probably involved in fraud and deceptive nondisclosure. Deceptive nondisclosure here involves the failure to tell the client about some important fact regarding composition of the product. Fraud, of course, is a misrepresentation of material fact that leads another to take some action to that party's detriment, in this case, XYZ paying more money for a part than is justified. We should not assume that ABC would lose in a business sense by disclosing to XYZ the possibility of the new alloy with a lessened production cost. XYZ may be favorable toward the lower production cost and less concerned about the long-term durability of the part. Having already won the contract on the basis of a different alloy, it is probably the case that ABC's production cost might be less than its competitors' no matter what alloy is used. Renegotiating the contract with XYZ may lead to even more profit than ABC expected originally. Furthermore, in XYZ's eyes, ABC comes off as an inventive, progressive group that might be looked upon with favor in future contract negotiations.

By contrast, if ABC does not inform its client of the alloy change and the misrepresentation is discovered, ABC might find itself sued for the total cost of this contract. There is also the possibility of lost contracts and lessened reputation in the future. If one of the slightly inferior parts is related to some kind of product liability case, ABC could be responsible for still more damages. Even if no court actions occur, the possible discovery of the use of the alloy will certainly not rest well in future relationships between ABC and XYZ. Christine's suggestion that XYZ will not discover the change of alloy is not likely to be true. While XYZ would probably not undertake expensive unprompted testing of the material, it is not unreasonable to suppose that something could prompt them to do the testing. Even if ABC kept the alternative alloy secret for a year or two, XYZ might eventually learn the information through, say, a disgruntled employee of ABC or through one of ABC's competitors. Looked at in terms of consequences, ABC's nondisclosure is exceedingly risky behavior, whereas disclosure and possible renegotiation of the contract would bring favorable results. Aside from consequences, ABC has both a legal and a moral duty not to engage in deception in contracts. Vernon Waller's opinion that failing to disclose the new alloy to XYZ is "good business" is simply wrong.

What should Christine Carsten do? It is likely that there are many more people at ABC involved with this parts order than Vernon Waller and Christine Carsten. Another engineer, John Richards, is mentioned later. While Vernon Waller authorized the sales agreement with XYZ, it is not clear from the story that he has final authority regarding any changes in that agreement. At the very least, Christine should insist on a meeting of all engineering and management people at ABC who have key roles regarding this project. It is unlikely that the others attending such a meeting will unanimously concur with Vernon Waller. If they do, Christine would be well-advised to look for employment elsewhere, because her ethical and professional standards will likely be tested again in the future.

If Christine has had any experience in projects such as this, she knows that at the end of the project she is required to sign off on the report verifying the contractual compliance in the production process. Should her falsification of the report or falsification by any other registered engineer become known to the appropriate officials, registration might be revoked, at least for a period of time. While disciplinary practices differ among the states and in Canada, revocation is certainly a possibility. The widely used educational film The Truesteel Affair, a film made in Canada but circulated through the National Society of Professional Engineers in this country, details the consequences of a professional engineer falsifying a report on the fabrication of some construction steel. One of the messages in that film is that the engineer involved should have sought advice from his fellow engineers, especially from the officers of his local professional society. If the events in our case move to the point that Christine is asked to sign an inaccurate report, she would be well-advised to follow that same advice. This warning also applies to Christine's fellow engineer John Richards. John's signing the verification report, however, does not let Christine off the hook. She still knows of and has been party to the deception, and, furthermore, she knows that a fellow engineer signed a deceptive report. She may have a professional obligation to report John Richards' actions. She should at least do what she can to inform John Richards of the seriousness of the situation and to bring home to him her reservations about the type of action he has been asked to do.

Is the price really right? Morally and legally, the price seems far too high for Christine Carsten. It is also likely to be too high for John Richards and others at the ABC company.

I

Christine should talk with Vernon. There are two different issues that are raised by Vernon's not passing along either the savings in cost of production or the information that the custom made parts are to be made with a different material than XYZ's engineers had originally thought would be necessary.

First, as Christine points out in her original conversation with Vernon, "In most cases the performance will be virtually the same--although some parts might not last quite as long." It is unclear whether there are two problems here, or only one. Christine may be saying both that some of the parts will have a shorter lifetime than they would were they made of the other alloy and that for some of the parts, or--and this is also unclear--for some of the features of the parts, the performance will not be the same as it would be for those made with the other alloy. Either all the parts will be used in the same way, but the failure rate will be higher in general (perhaps because the parts are not as strong now), or, perhaps, some of the parts will be used in ways different from other parts, and they will not perform as well as ones made with the other alloy would perform. In short, the parts will be of lesser quality than those ordered, and that diminution in quality will manifest itself either in a shorter lifespan for some of the parts or in decreased performance for some of the parts, or both.

In either event, ABC will be getting an inferior product for its money. One way to come to understand whether anything moral is at issue is to ask whether a change will cause any harm, and ABC will be harmed because it will have to purchase new parts sooner than otherwise, and that will cost them more money, and/or because it will have an inferior product produced with these parts because the performance with them will be inferior to what would have been the performance expected of the part made with the other alloy. So ABC will be harmed by changing the composition of the parts, and anytime harm occurs because of one's actions, one needs to assess whether one ought to act in that way.

One ought not to cause harm unnecessarily, and so one needs a good reason for causing it. Physicians have a good reason to cause pain to patients by inoculating them because the patients are benefited in the long term by being immune from diseases that would cause them more harm. So the question is whether XYZ has a good reason for causing harm to ABC. The answer is that it has a reason, namely, increased profits, but that is not a good reason for causing harm. Christine is right when she thinks that "the customer isn't getting what was promised." If I promise someone something, and then substitute something else, I have broken my promise, and we thus have two harms here--the harm that comes from breaking one's promise and the harm that comes from causing ABC to spend more in the long run for the custom made parts.

The harm that comes from breaking one's promise may seem a minor harm, but think of what might happen were ABC to discover that the reason the parts it ordered have a shorter lifespan than it thought they would have is that XYZ has substituted something different from what ABC thought it ordered. Not only would ABC have the basis for a legal suit, presumably--if the order originally included specifications for the alloy to be used--but it also would no longer have any reason to trust XYZ to deliver what was promised. Everything ordered would have to be checked, that would increase ABC's costs, and it might decide that the increased costs of doing business with XYZ were not worth it and might take its business elsewhere. Breaking one's promises often does not cost one much: if no one finds out, and one generally keeps one's promises, then no one will be the wiser. But when one is found out, the cost are usually so high as to outweigh any advantage one may have had from breaking the promise to begin with. So Vernon risks losing ABC as a customer should ABC ever find out that the parts they ordered are not exactly what they got.

But I mentioned that there were two different issues raised by Vernon's actions. The second is perhaps somewhat more problematic because it raises the question, "What is a fair profit?" Is one entitled to charge whatever the market will bear, or should one pass along any savings to one's customers and charge only what gives one a decent profit for one's work? We may bring out the issue more clearly by supposing that XYC's suppliers find a new source for the alloy originally thought necessary and that the price to XYZ is significantly lower than what XYZ had calculated it would be in determining that the final price should be $75 per part. Does XYZ have an obligation to pass onto ABC the savings from their discovery? Suppose that the savings are not, say, $2 per item, but $35 per item. Whereas before XYZ was making a profit of, say, $20 for every $75 item sold, now it is making a profit of $55 for every item. Does it make a difference how much of a profit XYC is making?

This question raises issues that take us far beyond this case, but we can say a few things about it. One is that discovering that one can purchase something at a cheaper price is itself not without cost: one has to hunt in catalogues, presumably, talk to suppliers, make new arrangements, cancel old ones, and so on. So XYZ has incurred some costs in lowering its costs, and it should be entitled to recoup those costs. It thus is not obligated to pass on to ABC all of its savings in purchasing the alloy at a lower cost.

But should, again, ABC ever become aware that XYZ made a profit of $55 on every $75 item--and one must realize that, among others, salespersons talk--then XYZ will get a reputation for gouging. That is, they will become known as a company that will make as much money as they can whenever they can. This will have its effects on their business, for instance. Companies will bargain that much the harder to lower the price, thinking that XYZ will be making enough profit even with a lower price, and XYZ will find itself having to mark up items in order to have a bargaining position. It will thus price itself out of the market for some potential customers, who will see the price and not realize that XYZ is willing to bargain. But even those who bargain with XYZ and come up with a contract will be left not being completely sure that they came up with a good contract. They will still wonder if, perhaps, XYZ has not still made a big profit and will hunt around for other suppliers. So XYZ will perhaps lose customers, who will feel no loyalty to a supplier who will gouge when it can.

So, by all means, Christine ought to talk further with Vernon. He is taking a short-sighted view--take the profits upfront and do not worry about the potential long-term consequences--and is causing harm to ABC when that is wrong.

II

If Christine's entire further conversation with Vernon is as reported and all he says is, effectively, that he is just doing good business, then she ought to press the point further. He presumably thinks he is doing "good business" because he is making more money for the company from this contract than he would if he passed along the savings to ABC, but he is making more money only because he is supplying a different product to ABC than was originally contracted for. Whether the contract itself specifies the content of the part or not, it was presumably presumed by both during the negotiations that a particular alloy would be used. Or, to put the point perhaps less contentiously, XYZ presumed it, and ABC would have no reason for thinking any other alloy would be used. It is not good business to cheat a customer, and that is effectively what Vernon is doing.

He is also assuming, without evidence, that ABC will be a satisfied customer. But if the parts are not as long-lived as it thought they would be, and if there is a higher rate of failure in some functions than it would there would be, ABC may well not be a satisfied customer and may look elsewhere for a supplier next time. It is not good business to encourage customers to go elsewhere the next time they have to purchase parts.

III

If the original contract specifies that the parts are made from the alloy originally chosen, then Christine cannot sign a report "verifying that the specifications for the part have been met." They have not been met, and it is her professional obligation to make sure that what is produced is what was contracted for.

In addition, if the original contract is as indicated, then it is probable that Vernon knew that all along. He is thus not just taking advantage of a loophole in the contract by substituting one alloy for another when the contact did not make it clear what was necessary, but clearly breaking the contract in order to increase the profits to the company. So, whereas one might just think him slightly sleazy in trying to wring as much money as he can from the contract, now one must think him criminal in not only breaking the contract himself, but also urging someone else in the firm to do the same--and to cover for him. For if Christine signs the report, Vernon can always claim, in his defense should things come to that, that he just took the word of the engineer here, that she is the professional who ought to know about such matters, and that he is just the salesperson, or whatever, and certainly not professionally competent to make such judgments.

So Christine cannot sign the report. That would break a contract with XYZ, and it would open her to the legal repercussions if XYZ should find out and sue, as they would be entitled to do.

IV

If Vernon is able to get another engineer to sign the report, Christine is in an awkward position because now, should she act further, she will not only get Vernon, but also a fellow engineer in trouble.

But she has an obligation to take the matter higher if for no other reason than that the company may be sued by XYZ. It is not enough morally just to act within the law, but it is always a mistake not to act within the law. One pays in so many ways--monetarily, by having to pay damages as well as for the original difference in costs, and politically, as it were, by being presented publicly as a company willing to cheat its clients for extra profit.

That a fellow engineer may well be harmed is unfortunate, but if he had a good reason for signing the report, despite the discrepancy, he will give it, and if he did not, it is not up to Christine to protect him when the company as a whole may be harmed by his and Vernon's actions. One is not obligated to protect a fellow profession from his or her own mistakes, and the obligation is especially weakened when others may be harmed by those mistakes. Christine now only has to be concerned about the harm being done to XYZ, but also the harm that may be done to ABC.

In addition, she may be harmed, knowing all this, and yet not acting. We are sometimes in the unfortunate position of coming to know something that necessitates our acting when we would prefer not acting. Seeing a parent abuse a child, for instance, creates a prima facie obligation to do something, and one must at least consider what one ought to do in such a case, perhaps investigating whether the abuse is longstanding or not. Here the harm is clear, and that Christine is no longer in the chain of authorization for its occurrence is not important. What matters now is that she knows it. To prevent harm she must act.