I wrote a software package for an employer and now have left them. 
I would like to write a competing product and need to know if I have
to start from scratch or if I change a percentage of the code does
that satisfy the law. (if this is the case what percentage?)
By the way, the original product was not copyrighted in any way.  That
just made for a good title :)
Please quote specific examples of similar cases and provide references.

I suggest that if the 'look and feel' are different, you should be OK.

The case of the 'reverse engineering' of the IBM BIOS for the first PC
is also interesting. Here, new code was written from an analysis of
the functions, and that was OK.

Of course, many of the ideas that we now know and love in our GUI's
were pioneered by Xerox; lifted by Apple for the Macintosh; and then
borrowed by Microsoft for Windows.

The original work that you performed for the company would almost
certainly be classified as "work for hire," and would be copyright
protected, the copyright being vested in the company. Copyright in the
US and other countries is automatic upon creation. Additionally, your
contract with the company probably contained a non-competition clause,
precluding you from entering into any activity that could be construed
as competing with the company for a specific term.

hlabadie-ga

I am sure that hlabadie is correct BUT ...

Will your previous employer have jurisdiction if your code is
(ostensibly) produced by a third party from some other country?

There's often a way round these things.

Of course, I would not condone any such pretence.

hlabadie-ga and probonopublic-ga,

There has never been any kind of non-agreement with the original
company.  There was also never any kind of agreement that clarified
ownership of work produced.

I can easily create a new look and feel and the product actually needs
this.  How can I be sure this is enough to keep out of trouble?

I believe that there has to be an example out there that I can quote
where a decision has already been made.  If I had such an example I
would probably take a more aggressive approach and let the other
company know that they do not have a leg to stand on and I could then
move faster.

I am looking for this example.  Thanks

It's very very sketchy if you ask me.  Given that the program  you
wrote is the property of the company, I question whether you could
even change the required amount of the program to qualify for
exemption from copyright infringement.  The question would be, how did
you legally obtain the source code for the program in the first place?
 I don't believe you are entitled to take the source code with you, so
to speak.

This of course would depend on your contract, but with the little
information I have, I would not think that what you are proposing is
without serious risk.

The law is clear on the subject. A "work made for hire" is owned by
the employer, and the employer is considered the "author" for the
purposes of copyright. Simply making a few changes in the work would
not be sufficient to have the work considered new. "Look and feel"
cases are very difficult to assert. That is, the program can be
copyrighted, but the "look and feel" cannot. Both Apple and Lotus lost
when trying to assert such protection.

Title 17 US Code
http://www4.law.cornell.edu/uscode/17/101.html


A ''work made for hire'' is -

(1)

a work prepared by an employee within the scope of his or her employment; or

(2)

a work specially ordered or commissioned for use as a contribution to
a collective work, as a part of a motion picture or other audiovisual
work, as a translation, as a supplementary work, as a compilation, as
an instructional text, as a test, as answer material for a test, or as
an atlas, if the parties expressly agree in a written instrument
signed by them that the work shall be considered a work made for hire.
For the purpose of the foregoing sentence, a ''supplementary work'' is
a work prepared for publication as a secondary adjunct to a work by
another author for the purpose of introducing, concluding,
illustrating, explaining, revising, commenting upon, or assisting in
the use of the other work, such as forewords, afterwords, pictorial
illustrations, maps, charts, tables, editorial notes, musical
arrangements, answer material for tests, bibliographies, appendixes,
and indexes, and an ''instructional text'' is a literary, pictorial,
or graphic work prepared for publication and with the purpose of use
in systematic instructional activities.

In determining whether any work is eligible to be considered a work
made for hire under paragraph (2), neither the amendment contained in
section 1011(d) of the Intellectual Property and Communications
Omnibus Reform Act of 1999, as enacted by section 1000(a)(9) of Public
Law 106-113, nor the deletion of the words added by that amendment -

(A)

shall be considered or otherwise given any legal significance, or

(B)

shall be interpreted to indicate congressional approval or disapproval
of, or acquiescence in, any judicial determination,

by the courts or the Copyright Office. Paragraph (2) shall be
interpreted as if both section 2(a)(1) of the Work Made For Hire and
Copyright Corrections Act of 2000 and section 1011(d) of the
Intellectual Property and Communications Omnibus Reform Act of 1999,
as enacted by section 1000(a)(9) of Public Law 106-113, were never
enacted, and without regard to any inaction or awareness by the
Congress at any time of any judicial determinations.


Works Made for Hire Under the Copyright Act
http://www.keytlaw.com/Copyrights/wfhire.htm

"The general rule is that the person who creates a work is the author
of that work.  However, there is an exception to that principle.  The
copyright law defines a category of works called ?works made for
hire.?  If a work is ?made for hire,? the employer, and not the
employee, is considered the author.  The employer may be a firm, an
organization, or an individual.

The concept of a work made for hire is derived from the Copyright Act
and court decisions.
Definition of Work for Hire

Section 101 of the Copyright Act defines a ?work made for hire? as:

(1)  a work prepared by an employee within the scope of his or her employment; or

(2)  a work specially ordered or commissioned for use as a
contribution to a collective work:"
[...]
"How to Determine if A Work Is Made For Hire

Whether or not a particular work is made for hire is determined by the
relationship between the parties.  This determination may be
difficult, because the statutory definition of a work made for hire is
complex and not always easily applied.  That definition was the focus
of a 1989 Supreme Court decision (Community for Creative Non-Violence
v. Reid, 490 U.S. 730,  1989).  The court held that to determine
whether a work is made for hire, one must first ascertain whether the
work was prepared by (1) an employee or (2) an independent contractor.

If a work is created by an employee, part 1 of the statutory
definition applies, and generally the work would be considered a work
made for hire.  IMPORTANT:  The term ?employee? here is not really the
same as the common understanding of the term; for copyright purposes,
it means an employee under the general common law of agency.

If a work is created by an independent contractor (that is, someone
who is not an employee under the general common law of agency), then
the work is a specially ordered or commissioned work, and part 2 of
the statutory definition applies.  Such a work can be a work made for
hire only if both of the following conditions are met:"

hlabadie-ga

So, if we're agreed that you were an actual employee and not an
independent contractor, hlabadie-ga is 100% correct that the employer
owns the copyright to the code.  Many have commented on this.  What
has not been addressed is the mechanism for dealing with this problem,
from a copyright law perspective.  You are certainly free to reverse
engineer the code you wrote and strip away all the protectible,
copyrightable expressions contained in the code and reduce it down to
its basic, unprotectible idea (what is it that the software does?). 
You may then add new, independent layers of creative expression that
are different from the code you write before, and if that new code is
objectively different--at least 80% new and different content, you
likely have not committed copyright infringement even if your code and
the employer's code "do" the same thing when run.  In classic software
copyright cases, the court lays plaintiff's and defendant's source
code side by side and looks for "substantial similarity."  As long as
your new source is not substantially similar to the old employer's
source (that you wrote, ironically), you should be OK.  Many times
programmers will bury identifiable text peculiar to them in their
source code so that it is easier to prove infringement.  They?ll add
an inconsequential code string somewhere in 1,000 pages of source that
says, ?Mary had a little lamb,? or whatever, and then if that string
appears in the defendant?s code, that?s prima facie evidence of
copying.

It's not a good idea to be aggressive, however strong you feel about
your own position.

Nothing is ever for sure in this world.

Also, you need to assess the strength of your previous employer's
position and feeling.

The may hugely resent your behaviour and, if they have more money than
you (which seems likely) or if they feel threatened, they may wish to
hurt you badly.

Whatever you do, don't assume that because there is a case out there
somewhere that appears to favour you that it will necessarily work out
the same.

Take care!