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EGME-401 Engineering Economics and Professionalism Department of Mechanical Engineering

Fall 2015

Honesty

Webster’s Definition Fairness and straightforwardness

of conduct.

Adherence to the facts.

Honest Free from fraud or deception

Truthful

How Important is “Honesty” to Industry?

Ethics Officers Association (EOA)

 Lets Examine EOA MEMBER FIRMS:

 354 Total EOA Current Members

 from Fortune 500 list of companies

 $1,000/year membership dues

 148 Engineering Firms

 CEO’s actively involved

 Reflects reality of the business world

Reasons for the EOA: Given by Senior Administrators

 Value of the “Ethical Image” to:

 Customers, Clients

 Public “good will”

 Learn from each others experiences

 Ethical Hot-lines, Ethical Ombudsmen

 Ethical Training Courses

 Decrease in employee turnover rates

 Difficulty in recruiting the “Best Students” without an in place Ethical Program.

What Firms are EOA Members?

 Allied Signal, Inc.

 Aluminum Co. of America

 AmeriSteel

 Avery Dennison

 Bell Atlantic

 BellSouth

 Boeing

 Cablevision Systems Corp

 Caltex Petroleum Corporation

 Carrier Corporation

 Chrysler Corporation

 Coors Brewing Co.

 Eastman Kodak

 Florida Power Corporation

 Lockheed Martin

 General Dynamics

 General Motors

 Hughes Electronics Corp.

 Institute of Electrical and Electronics Engineers

 Motorola

 Philips Petroleum

 Raytheon Company

 Sandia Nat’l Laboratories

 Sara Lee Corporation

 Sears, Roebuck an Co.

 ServiceMaster Company

 Texaco, Inc.

 Textron, Inc.

 TRW Inc.

Sample business ethics policy and agreement for domestic consultants

 When acting on behalf of X, Consultant and its employees and agents shall comply with all applicable legal requirements and the highest ethical standards of the United States and each foreign country in which business is conducted.

 No payment on behalf of X shall be approved without adequate supporting documentation, or made with the intention or understanding that any part of such payment is to be used for any purpose other than that described by the documents supporting the payment.

Note: X is being used instead of the company’s real name.

Forms of dishonesty  Lying

 Deliberate deception

 Withholding information

 Failure to seek out the truth

Why is dishonesty wrong?  Respect for persons—

 Actions are wrong if they violate the moral agency of individuals

 If an individual is not given full or correct information, he/she is unable to make fully informed decisions, thus his/her autonomy is infringed

Why is dishonesty wrong?  Utilitarian perspective—

 Actions are wrong that do not maximize utility for the audience considered. In projects that can impact the health, safety, and welfare of the public, this would be the most significant component of the “utility” being considered.

 If an engineer is dishonest in his interactions with others about issues that are the basis of engineering design decisions, it is reasonable to assume that this could lead to an increased risk to the public, or a reduction in utility.

Honesty in research

 Plagiarism- use of others’ intellectual property without

permission or credit

Short quotes OK Not Long passages

with attribution OK without attribution

Honesty in research (cont’d.)

Trimming: smoothing irregularities in data

Cooking: disregarding data points that don’t fit the theory

Honesty in research (cont’d.)

Forging - inventing data

(John Darsee Case)

A Harvard Medical School graduate working on tenure

at Emory College published papers using forged data.

“I had too much to do, too little time to do it in, and

was greatly fatigued mentally and almost childlike

emotionally. I had not taken a vacation, sick day, or

even a day off from work for six years. I had put

myself on a track that I hoped would allow me to

have a wonderful academic job, and I know I had

worked very hard for it.”

Failure to inform the public

In 1972, McDonnell Douglas subcontracted Convair to

design and build a cargo door latch for the DC-10. A

pressure test caused the cargo door to blow out, buckling the

passenger floor, and severing critical hydraulic and electrical

lines. The design was modified, but flaws remained. An

emergency landing was required in Detroit, but no injuries

resulted. Dan Applegate, Convair engineer, notified his

managers about the design flaws, but the information was

suppressed to avoid financial penalties and litigation. In

1974, just as Applegate had predicted, 346 people died in

Paris due to a DC-10 cargo hatch blowing open.

Integrity and Client-

Professional Confidentiality

Two ways to abuse client- professional confidentiality  Release of confidential information when not

warranted

 Failure to release confidential information when public interests (health, safety, welfare) demand it.

Confidentiality in other professions...  Medicine--physicians are required to report evidence

of child abuse and gunshot wounds.

 Law--ABA says that lawyers “may” report confidential information when there is a threat of “imminent death or substantial bodily harm”.

Some ethical canons addressing limits of confidentiality

 NSPE: 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.

 Hold paramount the safety, health and welfare of the public.

 If engineers' judgment is overruled under circumstances that endanger life or property, they shall notify their employer or client and such other authority as may be appropriate.

Some ethical canons addressing limits of confidentiality

 NSPE: Engineers having knowledge of any alleged violation of this Code shall report thereon to appropriate professional bodies and, when relevant, also to public authorities, and cooperate with the proper authorities in furnishing such information or assistance as may be required.

 (the ASCE Code has a similar clause)

Some ethical canons addressing limits of confidentiality

 TX SBPE: The engineer may reveal confidences and private information only with a fully informed client's or employer's consent, or when required by law or court order; or when those confidences, if left undisclosed, would constitute a threat to the health, safety or welfare of the public.

 LA PELS: does not address this...

Intellectual Property  Intellectual Property is property that results from

mental labor...

 Patents,

 ServiceMarks and Trademarks (®,™),

 Copyright (©), and

 Trade Secrets

 ...are common ways in which intellectual property can be protected.

Intellectual Property  To illustrate the importance of intellectual property,

consider the software business.

 Microsoft, a relatively young company, dealing almost exclusively in software, is among the all-time leaders, worldwide, for profitability.

Patents

 A patent is issued by government, allowing the owner to exclude others from using or selling the described invention for 20 years from the date of filing.

 puncture-proof tire

 Patent law encourages inventors to disseminate knowledge, rather than to keep it secret.

Patents  To obtain a patent, the invention must be new, useful,

and not obvious. (99% of applications fail the “not obvious” requirement)

 Patents can be utility (provisional or nonprovisional), plant, or design.

 Provisional patents offer temporary protection, provides filing date, gives 1 year to file papers.

 Less than 10% of patents reach marketplace.

 A patent can cost approximately $25,000-$30,000, mostly in legal fees.

Types of Patents

 In general terms, a “utility patent” protects the way an article is used and works, while a “design patent” protects the way an article looks.

 A utility patent can be either provisional or nonprovisional.

 A plant patent can be used to protect a developed variety of plant.

 Maroon carrots were developed and patented by Texas A&M

Things that can be patented:

 Processes (incl. some software)  Process for removing pollutants from the soil

 Machines  An automatic windshield washer speed control

 “Manufactures” (a physical device, but not a machine)  Adjustable fit inline skate

 Compositions of matter  Low fogging thermoplastic elastomer composition

 Improvements of the above

Patents by Universities

 The Bayh-Dole act of 1980 allowed universities to patent inventions resulting from government funded research studies. Previously, the US Government owned such IP, and often this hindered bringing the inventions to market. When exclusive licenses could not be acquired, manufacturers were hesitant to make the investment necessary to produce and sell the developed work products.

 Many valuable inventions have since been licensed by TAMU and other universities.

Patents by Universities-- examples  A hepatitis B vaccine was patented by University of

California, resulting in $60 million in royalties paid to UCal.

 In addition to royalties paid to A&M, the ET2000 Guardrail has saved an estimated 1200 deaths or severe injuries in 47 states. Annual societal savings are estimated at $540 million.

Trademarks

 A Trademark is either a word, phrase, symbol or design, or combination of words, phrases, symbols or designs, which identifies and distinguishes the source of the goods or services of one party from those of others.

 Coca-Cola®, Casio® registered trademarks

 TaknosysTM - unregistered trademark

 Serves as a symbol of quality.

Trademarks

 The name Gatorade is trademarked by the University of Florida. This trademark has earned U. Fla. $15 million.

Service mark

 A service mark is the same as a trademark except that it identifies and distinguishes the source of a service rather than a product. Normally, a trademark for goods appears on the product or on its packaging, while a service mark appears in advertising for the services.

Trade dress

 Trade dress is a distinctive, nonfunctional feature which distinguishes one merchant's or manufacturer's goods or services from those of another. The trade dress of a product involves the “total image” and can include the color of the packaging, the configuration of goods, etc... Even the theme of a restaurant may be considered trade dress. (Note the appearance of the “McDowell’s” hamburger restaurant in the Eddie Murphy movie, “Coming to America”.)

Protection offered by trademarks...

 Trademarks must be defended. When the owner of a trademark/service mark/trade dress learns that his trademark is being infringed upon, he must bring a lawsuit to protect the trademark.

Trademarks sometimes conflict and must be defended...  Exxon’s Tiger recently clashed with Kellogg’s Tony

the Tiger in court. Exxon had used their Tiger for 30 years, but when Exxon began marketing food products with their Tiger, Kellogg claimed infringement of their Tony the Tiger trademark.

 A federal judge recently ruled against Kellogg, saying they had waited too long to make this claim.

 Kellogg is appealing the ruling.

Copyrights

 Copyright© - rights to creative products (e.g. books, pictures, graphics, sculpture, music, movies, computer programs) are retained by the author for 50 years after his/her death.

 Gone With the Wind

 Star Wars

 Copyrights protect the form of expression of the ideas, but not the ideas themselves.

Copyrights

 Copyrights provide protection for the lifetime of the author, plus 75 years.

 You should provide notice, ie., “©2001, Texas A&M University, All rights reserved” that you intend to defend your copyright.

 Can register copyright for $20.00, but registration is not required

 Sometimes copyrights are applied to the modularity of software

Trade Secrets  Trade Secret--a formula, customer list, or compilation

of information, … used in business to gain advantage over competitors who do not possess the trade secret.  Example: formula for Coca-Cola

 Must not be in public domain, and secrecy must be protected.

 The Economic Espionage Act of 1996 made theft of trade secrets a federal crime.

 There is no protection against loss of trade secrets by accident or reverse engineering.

 Engineers who change employers should be aware that some information they have had access to might be protected as a trade secret.

Conflicts of Interest Definitions:

… a conf lict between the private interests and the official responsibilities of a person in a position of trust (as a government or corporate official)

 Webster's Ninth Collegiate Dictionary

..… a conf lict of interest arises when employees at any level have private interests that are substantial enough to interfere with their job duties; that is, when their private interests lead them, or might reasonably be expected to lead them, to make decisions or act in ways that are detrimental to their employer’s interests.

 W.M. Shaw and V. Barry

Moral Issues in Business

Conflicts of interest

More generally…

A person has a conflict of interest when he/she serves in two (or more) roles and the interests of each role clash, or potentially clash.

Conflicts of interest

Example

 John is a purchasing agent for JayCo. For the past 100 years, John’s family has owned a company that makes bolts. JayCo needs to purchase 100,000 bolts. Does John have a conf lict of interest?

Note 1:

“A Conflict of Interest” is not...

 Conf licting Interest

 A student likes to play soccer and football; he cannot decide which of his interests he likes better.

 Conf licting Obligation

 An engineer is designing an automobile. He has an obligation to the public to make it safe, but he also has an obligation to his employer that the automobile be profitable.

Types of Conflicts of Interest

Actual

Potential

Appearance

Actual conflict of interest--Example

 John is a purchasing agent for JayCo. For the past 100 years, John’s family has owned a company that makes bolts. JayCo needs to purchase 100,000 bolts. If JayCo purchases the bolts, the value of John’s stock in the family business will increase by 20%. Does John have a conf lict of interest?

Potential conflict of interest--Example

 John is a purchasing agent for JayCo. For the past 100 years, his fiancee's family has owned a company that makes bolts. JayCo needs to purchase 100,000 bolts. If John marries his fiancee, he stands to gain financially if JayCo purchases the bolts from his fiancee’s company. Does John have a conflict of interest?

 John is a purchasing agent for JayCo. For the past 100 years, John’s family has owned a company that makes bolts. Ten years ago, John had a fight with his family and has not spoken to them since. John owns no stock in the bolt company. JayCo needs to purchase 100,000 bolts. Does John have a conf lict of interest?

Apparent conflict of interest--Example

Why does a conflict of interest matter?

 Engineers are hired for their expertise.

 Their judgment must be reliable.

 The client/employer must trust the engineer to make correct, unbiased decisions.

 Actual and potential conf licts of interest can cause biased decisions; apparent conf licts of interest can damage the trust.

What To Do About a Conflict of Interest...

 Disclose: “Boss, I want you to know my family owns a bolt company that will bid on the upcoming procurement.”

 Recuse: “Boss, please do not assign me to the bolt procurement, because I have a conf lict of interest. I will be happy to work on other projects.”