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Tech execs fear legal reform in California could force them to forfeit their intellectual property. When news first surfaced last year that Ford Explorers equipped with faulty Firestone tires had a deadly habit of rolling over, the technology industry was still zipping along like one of those gleaming sports cars that Silicon Valley firms used to hand out as perks. A rubbernecking tech CEO might have tsk-tsked at the travails of two old-economy stalwarts. Who could have imagined then that tech might get caught in a legal pileup of its own? That’s what is taking shape in California, where horror stories like the Ford-Firestone disaster and the true-life toxic cover-up dramatized in the movie “Erin Brockovich” are driving tort-reform legislation through the state legislature. Two bills headed toward the governor’s desk would generally prohibit companies from concealing information about dangerous products and conditions discovered in litigation. Firestone, for instance, kept news of its defective tires under wraps for years by settling wrongful-death lawsuits out of court and insisting that those settlements remain confidential. Opposing a ban on such practices might seem a tough sell. But tech executives and their corporate allies argue that the legislation goes too far, jeopardizing the security of their proprietary secrets. Among tech firms, biotech companies, chipmakers and other hardware manufacturers could fare the worst under the two bills, which target product defect and environmental hazard litigation. The only companies that would escape the legislation’s reach would be those that don’t do business in the state — a rather small club. California is one of 13 states considering such legislation. “The trial lawyers,” says John Doerr, a partner at the Menlo Park, Calif.-based venture capital firm of Kleiner Perkins Caufield & Byers, “are attempting to rob the high-tech industry’s livelihood by threatening intellectual property rights.” In a May 29 letter to state lawmakers, a who’s who of tech execs — among them AOL Time Warner’s Steve Case, Cisco’s John Chambers and Hewlett-Packard’s Carly Fiorina — warned that “California’s leading innovators and employers would be forced to settle even the most frivolous lawsuits in lieu of risking the public disclosure of proprietary information.” Such a prediction “is all a smoke screen,” responds Consumer Attorneys of California President Bruce Broillet, who points out that the legislation protects trade secrets. “This isn’t about trade secrets. This is about their dirty little secrets,” he says. State Assemblyman Darrell Steinberg, sponsor of one of the bills, stresses that judges will decide what information to disclose. “We drafted this with protections to make sure that it’s not misused,” says Steinberg, a Democrat. Such assurances don’t satisfy Rick White, CEO of the Palo Alto, Calif.-based lobbying group TechNet. He maintains the legislation may allow “fishing expeditions” that could uncover potentially damaging information far removed from the original claim. White has met with Gov. Gray Davis about the legislation, but the Democratic governor has not taken a position on the bills. With the legislation expected to reach Davis in September, the fight is a test of tech’s clout as the economy slumps. Nearly 10 years have passed since Republican Gov. Pete Wilson vetoed similar legislation. But that was long before the Firestone debacle and long before “Erin Brockovich” star Julia Roberts won an Academy Award. Related Articles from The Industry Standard: Trademark Filings Hit a Digital Milestone InterTrust Says Patent Helps Its Case Against Microsoft Napster Is Denied a Rehearing Copyright � 2001 The Industry Standard

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