Mastering Vendor Selection and Partnership Management
Final Presentation-1.pptx
1. The IBM – Fujitsu
Dispute
AMRESH SAURAV(22DR0045)
RESHAV DEY (21MB0045)
ROMI (22DR0193)
NITYA (22DR0154)
KULSUM (22DR0105)
SANATNU(22DR0212)
2. IBM
Largest computer company.
Dominated business for more than 2
decades .
Sold Mainframe system which
accounted for 80% revenues and 2/3
Profit.
$30 Billion in R&D and 10000 patents.
Mid 1980 Shifted from large CPU to
Network Computers.
Fujitsu
3rd big computer company.
Major SC, Cellular telephony & laptop
seller.
Also its mainframe system accounted
for 60% of its profit.
Success factor : Management talent,
Mfg. Skills, a booming National
economy.
3. Role of Japanese Govt.
• Raised tariff of import from 15% to 20%
• MITI secured basic patent from IBM
• Govt. Supported led to growth of
1. low interest loans
2. Tax benefits
3. Loan Guarantee
4. Subsidies for high risk joint R&D effort
• MITI granted $200m loan for VLIC development
4. THE Dispute
• 1982 IBM charged Fujitsu with creating and selling programs that violated
IBM IPR’s.
• Describes novel Arbitration Agreement
• Whether in Past Fujitsu violated IBM IPR?
• Fujitsu could have access to certain IBM programming material in Future?
Background factors:
• Difference between USA & Japanese IPR laws
• Japanese copying unfairly technology from overseas.
5. IBM
IBM’s dominance in the 1970s and 80s in manufacturing mainframe computers
Main focus was on manufacturing and R&D
System 360 and System 370 – IBM’s successful products
Competitors like GE and RCA were out the market
“IBM is not the competition, it’s the environment”
In 1983 IBM filed civil suit on Hitachi for stealing the technology
FUD psychological approach on customers
7. Fujitsu
Japan’s largest computer manufacturer in 1980s
Limited influence outside Japan
Revenue and profit margin lesser than IBM
Alliance with Amdahl Corp. for making mainframe computers
Overseas expansion through alliance with other companies
Surpassed sales of IBM Japan in 1986
Even though Fujitsu was an “underdog” in the global market as compared to IBM
In 1986 IBM alleged Fujitsu of copyright infringement which affected its sales
8. INTELLECTUAL PROPERTY RIGHTS
Intellectual Property is the property that consists of an abstract and
nonphysical object.
Unlike physical objects, intellectual property is non exclusive.
One person’s use of intellectual property does not exclude other
peoples simultaneous use of that property.
9. FUD, or fear, uncertainty, and doubt, was
exploited by IBM.
ACCORDING TO SEVERAL OF IBM'S RIVALS, THE COMPANY USED
FUD TO SWAY CLIENTS AWAY FROM CHOOSING OTHER MAINFRAME
VENDORS.
THEOREM CAN SUPPORT: 2+2=4
THE UNIVERSALISM PRINCIPLE OF KANT ACTING IMPROPERLY IS
WRONG AND WILL BECOME UNIVERSAL.
10. Related case…
AIDS IN AFRICA, GLAXOSMITHKLINE, AND BRISTOL-MYERS SQUIBB
WE HAVE LOOKED AT CASES WHERE BRISTOL-MYERS SQUIBB COPIED AND
CREATED COMBINATION MEDICATIONS FOR THE TREATMENT OF AIDS.
GIVEN THE SEVERITY OF THE PROBLEM—MANY PEOPLE WERE ACTUALLY
DYING AS A RESULT OF IT—HUMANS CAN SAY THAT COPYING THE MEDICINE'S
CHEMICAL COMBINATION TO OBTAIN IT AT A REDUCED COST WAS STILL
LEGITIMATE. HOWEVER, IN OUR CURRENT SITUATION, IBM-FUJITSU CASE
SERIOUSNESS IS NOT SIMILAR.
11. Breach of contract by Silicon Valley Consultant
of IBM Technology (Hitachi Case)
HERE, THEY HAVE EXPLICITLY BROKEN THE SOCIAL
CONTRACT BECAUSE A HITACHI ENGINEER WHO PAID
$500,000 TO A SILICON VALLEY CONSULTANT WAS
ACTUALLY EMPLOYED BY IBM AND THE FBI.
12. Japan’s working culture
JAPANESE CULTURE CONSISTS MAINLY OF IMITATION.
THEY HAVE BEEN COPYING, LEARNING FROM, AND CHANGING
THINGS FOR A VERY LONG TIME. THEY DON'T HAVE ANY
PARTICULAR RULES REGARDING IT.
COST-BENEFIT ANALYSIS BEFORE
DUPLICATING THE CODE FOR THE IBM OPERATING SYSTEM.
13. Why and how do the Japanese imitate?
In their prototypes X system of the brain, imitation, grasping and
reproducing is ingrained as a cultural practise that ethically justifies
copying and imitating in order to make something accessible at a
low cost for everyone to use.
14. Fair Justice to IBM(Retributive justice)
As we can see, IBM has made significant research and development investments
in order to dominate the mainframe market.
They question whether it is acceptable that anyone can plagiarise their research
and sell it for a far lesser price.
They should get Retributive justice.
15. IBM-FUJITSU dispute in light of Lockean view
Lockean right : “right to liberty and right to private property”.
According to John Lock if you are mixing your labor with
something and creating something it is yours ,it is your private
property.
IBM’s view:
It had created the operating system software for mainframe
computer and invested the money needed to develop it, so it was
IBMS’s private property and no one else had a right to use it
without IBM’s authorization.
IBM’s position was based on the Lockean view.
16. Utilitarian view
In Utilitarian view private ownership of intellectual property
provides a necessary incentive for people to work hard at generating
new intellectual creations.
It takes a lot of hard work for a company like IBM to create an
operating system software.
If the company like IBM do not get the reward of their creation
(copyright, patent) or any other monetary benefit from it then the
incentives of these companies to research or create new software's or
technologies would die, and that will harm the society at large.
17. Marxian view
Marx view supports the stand of Japanese company FUJITSU in this
dispute:
Marxist or Socialist position supports the collective or common
ownership of intellectual property. Like Marx, many modern critics
of private ownership of intellectual property claim that intellectual
creativity does not require the financial incentives of a private
property system.
Before the modern period of history, the stories, poems, songs and
information that people created were all considered to become
common property that anyone had a right to copy or use.
Common good of society will be better served if intellectual
property is treated as public or communal property i.e., freely
available for others to use to develop new intellectual products or
otherwise produce benefits for society.
18. Comparison with the other cases
Abbott drug case:;
The American company Abbott pharmaceutical
developed the drug to cure HIV AIDS disease that
copied Indian pharmaceutical company Cipla.
19. Ethical Relativism:
Legal protection for intellectual property between the US and Japan differs.
There are no ethical standards that are true absolutely.
Different societies have different moral beliefs.
Lets see it on different intellectual property.
Copyrights:
U.S law gave protection to the works created on or after January 1,1978,for the
life of the author , plus 50yrs after the authors death.
Japan formerly protected the work for only 20 yrs from the date of granting of the
copyrights ; but in 1985 it adopted provision like those of the US.
20. Cont...
PATENTS:
Japan gave priority to the first of competing patent applicants to file an
application for the patent on technology. The US granted the patent to the
first to invest.
TRADE SECRETS:
US defines trade secrets as any “formula, pattern, device, or compilation of
information used in business and which gives him an opportunity to obtain
an advantage over competitors who do not know or use it.”
Japan did not identity any such trade secrets by statute, but it did protect
trade secrets covered by contract.
21. Cont...
New forms of property—such as patents —have been developed that seem
to actually conflict with free trade, since they restrict the free flow of the
formulas and knowledge that constitute these new forms of “intellectual
property.”-against globalization.
To protect the domestic Japanese business from globalization ,the
government provided low-interest, tax benefits, loans guarantees etc.
FUJITSU and HITACHI were charged with entering the mainframe
business:- This is totally against the globalization as in the competitive
market any firms can enter or exit the market.
In the case we also see that there is INTENTIONAL DISCRIMINATION
was done by the IBM to the FUJITSU as the charges puts by the IBM
intentional to downpour the images of the FUJITSU.
22. Relation with Ivan Boesky Case Study
Boesky was sentenced to 3 years in prison and paid a penalty of $100 million for
illegally profiting from insider information.
According to court records, Boesky paid David Levine, a friend who worked
inside a firm that arranged mergers and acquisitions, to provide him with
information about companies that were about to be purchased by another party
(usually a corporation) for much more than the current price of their stock on the
stock market.
Buying and selling stock on the basis of insider information at the time was legal
in many countries (e.g., Italy, Switzerland, Hong Kong). Many economists argue
that the economic benefits of the practice (it tends to make the price of a
company’s stock reflect the true value of the company) outweigh its harms (it
tends to discourage non insiders from participating in the stock market).
Nevertheless, the practice is illegal in the United States due to its perceived
unfairness and its potential to harm the stock market
23. Cont...
IBM’s case against Hitachi
‘Sting’ operation devised by IBM and FBI
End result was payment of $500,000 by Hitachi to a Silicon Valley Consultant for
IBM technology
