Interest conflict when start a new company?

[Sally Wan]

Illinois

My friend is trying to start a company with another gentlemen. The company will provide equity trading service for US equities. My friend is a software engineer in a stock trading software company which has two partners using his company's software. His new company would establish an interface to one of the partners trading engine, and my friend is planning to write the interfaced using his knowledge in his current position.
Does his plan for the new company has the interest conflict problem? If he doesn't quit his current job, is it illigal to develop the interface? Will he get into legal trouble with his current employer or the partner?
Please advise. Thanks lot.

Sally

 

[hexeliebe]

My friend is trying to start a company with another gentlemen. The company will provide equity trading service for US equities. My friend is a software engineer in a stock trading software company which has two partners using his company's software. His new company would establish an interface to one of the partners trading engine, and my friend is planning to write the interfaced using his knowledge in his current position.

Does his plan for the new company has the interest conflict problem? If he doesn't quit his current job, is it illigal to develop the interface? Will he get into legal trouble with his current employer or the partner?
Please advise. Thanks lot.

My Response:

Your 'friend' is an employee fo the stock trading software company. Therefore, anything he designed, has access to or otherwise had a hand in developing for his employer is considered 'work product' and is owned by the employer company, regardless of whether it is a corporation, partnership or DBA.

As for his plans to write an interface to the trading engine, unless he has specific authority to do so, he would be in violation. He could very easily be fired from his current position and be sued for copyright infringement.

As for conflict of interest, yes, the current employer could make a strong case for such a suit, especially if permission is not obtained beforehand. Also, a strong case of thieft of service could also be made.

What I would strongly advise in this situation is for your 'friend' to sit down with the partner ( the senior partner or both is it is a 50/50 relationship) to obtain written permission to access the trading engine. Develope the interface on his/her own time and document everything.

Also, the partners may ask for a licensing fee to access the trading engine which is totally legal and would protect your 'friend' in the event the company is ever sold.