Clients and potential clients often mistakenly believe that software can’t be patented or that copyright is the only option. However, software is often eligible for multiple forms of intellectual property protection. Patents, copyrights and trade secrets each provide varying scopes of protection and enforcement, and a proper protection strategy should weigh the benefits of each. Patents are designed to protect inventions, copyrights to protect original works of authorship, and trade secrets to protect secret information which is economically viable. Determining which type(s) of intellectual property protection to pursue is just as important as determining whether to seek protection in the first place.
A U.S. patent provides a limited term to exclude others from making, using, selling, offering for sale, or importing any invention within the United States. The key question for patent subject matter eligibility in software-based inventions is whether the claimed invention is directed to a judicial exception, such as an abstract idea. Most frequently for software, the test for patent subject matter eligibility requires determining whether a patent’s claims are “directed to” an abstract idea, and, if so, asking whether the claims include additional limitations which amount to “significantly more” than the abstract idea.
With proper application drafting and prosecution, it’s possible to patent software-related inventions. A recent post on the IP Watchdog blog noted that the percentage of software-related patents issued now exceeds that of non-software-related patents. Furthermore, some of the largest recorded patent damage awards have been handed down in the last two years for infringement of software-based claims. For example, in 2016, Apple was ordered to pay $626 million in damages to VirnetX for infringing the claims of four patents for real- time communications (later reduced to $302 million). As noted by the Bilski Blog, the likelihood of a patent being invalidated for being directed to unpatentable subject matter has decreased from roughly 60 percent for patents issued through 2014 to 47 percent and 40 percent in 2015 and 2016, respectively. As such, software-based patents remain viable, and new patent applications drafted in accordance with the current test of subject matter eligibility have an increased likelihood of validity.
Copyrights protect original works of authorship fixed in a tangible medium. Copyright protection begins at the time the software or corresponding executable is stored on a tangible medium. Formal copyright registration is voluntary, although formal registration with the U.S. Copyright Office is necessary to advance a lawsuit for copyright infringement. Early copyright registration provides eligibility for statutory damages and attorneys’ fees for successful copyright owners in litigation, and if registered within five years of first publication provides evidence of copyright validity.
Software copyrights may protect against unauthorized reproduction or use of the software. However, because copyrights protect expressions rather than ideas, reverse engineering of copyrighted software is possible where the reverse engineering relates to the “idea,” rather than the specific code or set of instructions provided in the copyrighted software code. For example, where a competitor’s software product provides a same result as the copyrighted software but arrives at the result using a different series of operations, the competitor’s software product might be found not to infringe the copyrighted software. This may be troublesome in the context of software, where the same process may be coded in many different manners, using various operations or sequences of operations.
Computer software may be protected as a trade secret when (1) the owner of the software has taken reasonable measures to keep the software code secret; and (2) the software code derives independent economic value from not being known by another who would otherwise be able to obtain economic value from the disclosure or use of the software. Although there is no formal trade secret registration process or associated cost for maintaining software as a trade secret, there are requirements and costs associated with creating and implementing “reasonable measures” to maintain secrecy. Unlike patents and trademarks, there is no fixed term of protection for trade secrets. Instead, a trade secret remains protected so long as it is not publicly disclosed.
One or more sections of code may be designated as a trade secret, without requiring the entire code to be maintained as a trade secret. For example, an algorithm used in the software may be maintained as a trade secret. There are many famous trade secret algorithms, including Google’s search engine algorithm. If a section of code is intended to be protected as a trade secret, it is generally best to implement the code as a black box, preferably implemented by a server owned or managed by the trade secret owner.
Patents, copyrights and trade secrets are possible avenues for protecting software, each of which should be evaluated in determining the most effective solution. In many scenarios software is eligible for protection under multiple intellectual property regimes and a hybrid approach to intellectual property protection is ideal. However, each software element to be protected should be evaluated on a case-by-case basis to maximize possible protection while making the best use of legal resources.