People talk a lot within the information technology business about “intellectual property rights.” But what are they? How do they apply to software technology? Why do you have to protect them? How does one protect them?
Intellectual property rights are the foundation of the software industry. The term refers to a variety of intangible rights of ownership in an asset, such as a software program. Each “right” is itself an asset, a slice of the ownership pie. The law provides different methods for shielding these rights of ownership based on their type.
There are essentially four varieties of property rights relevant to software: patents, copyrights, trade secrets, and trademarks. Each affords a different form of legal protection. Patents, copyrights, and trade secrets are used to protect the technology itself. Trademarks do not protect technology but rather the names or symbols used to distinguish a product in the marketplace.
A patent is a twenty-year exclusive monopoly on the right to create, use, and sell a qualifying invention. This legal monopoly is considered a reward for the time and energy expended in creating the invention. In return, the invention must be described well to the government agency, which publishes the information, thus increasing the amount of technical knowledge available to the public.
Software patents can be extremely powerful economic tools. They can protect features of a program that cannot be protected under the copyright or trade secret law. For example, patents can be obtained for ideas, systems, methods, algorithms, and functions embodied in a software product: editing functions, user-interface features, compiling techniques, software package techniques, program algorithms, menu arrangements, display presentations or arrangements, and program language translation methods.
Penalties are stiff and include triple damages. Once a patent for an invention is granted, subsequent “independent” (i.e., without access to the patented technology) development of the invention by another inventor is still considered infringement.
While a patent can protect the novel ideas embodied in a software program, a copyright cannot. Copyright protection extends to the actual form in which an idea is expressed. In the case of software, copyright law would protect the source and computer code, as well as certain unique original elements of the computer program.
As discussed in last month’s issue, the owner of a copyrighted software program has certain exclusive rights (with some exceptions): the right to copy the software, create derivative or modified versions of it, and distribute copies to the public by license, sale, or otherwise. Anyone exercising any of these exclusive rights without the permission of the copyright owner is an infringer and subject to liability for damages or statutory fines.
The right to control duplication protects the owner of copyrighted software against the competition that might result from verbatim copying of the program’s code. Copyright law also protects against indirect copying, such as an unauthorized translation of the code into a different programming language.
Copyright protection arises automatically upon the creation of an explicit work of authorship. There is no need to “apply” for copyright or register the copyrighted work for protection to exist. Generally, the duration of a copyright is the author’s life plus fifty years. In the case of software created by an employee in the course of their employment, the resulting “work made for hire” would be protected by copyright law for seventy-five years from publication.
In contrast with patents, independent development of a copyrighted work is a defense to an allegation of infringement. Imagine, though, how unlikely it would be for the same thousands of lines of code to be created independently by one not engaged in unauthorized copying.
A trade secret can theoretically last forever — for as long as its owner uses reasonable efforts to keep it secret and someone else does not independently create or “discover” it.
Many features of the software, such as code and the ideas and concepts reflected in it, can be protected as trade secrets. This protection lasts as long as the protected element remains secret. Unlike patents, trade secret protection does not cover elements of software that are readily ascertainable by legal means, such as reverse engineering or independent development.
Trade secrets are not subject to infringement like patents and copyrights, but they are vulnerable to theft. Their position as a protectable property right will be upheld if the owner can prove that the secret was not generally known and that reasonable steps were taken to preserve its secrecy.
Maximizing the value of a software asset depends critically on understanding the nature of the property rights involved and the best ways to use the available types of legal protection to safeguard those rights.