Software can involve all types of intellectual property and can represent years of hard work and investment, and its value can be significant. As a result, it is important to take steps to protect it. In this article, our intellectual property solicitors explain what steps you can take to protect your intellectual property rights in software.
Contents:
- What is software intellectual property?
- The benefits of protecting the intellectual property in software
- How can software be protected as intellectual property?
- Disputes over the ownership of intellectual property in software and how to avoid it
- What happens if your intellectual property rights are infringed?
- Summary
What is software intellectual property?
Software intellectual property, or software IP as it is commonly known, is a computer code or program that is protected by law against theft, copying and use that has not been authorised by the owner. The main intellectual property rights that are relevant to software and give particular protection to various elements of software are as follows
- Patents protect the way things work. In the UK, and in the European patent system of which the UK is a part, you simply can’t get a patent for software itself. A device controlled by software is another matter, and lots of patents are granted on this basis, but a pure software patent isn’t allowed. The technology that enables you to compress a file, for example, is subject to loads of patents, which give protection irrespective of the code used to give effect to the invention.
- If patent protection is hard to come by, relying on the law of confidential information (or trade secrets, which are just a sub-set of confidential information) becomes more important. Historically, software houses didn’t give away their source code but kept it secret, and took action to stop people decompiling software to get at it. The source code was their crown jewel, and they were not going to let anyone else have it. Times have changed, and so has the law, so source code is readily available now (sometimes with a hefty price tag). Trade secrets can, however, still be relevant in seeking to protect software.
- Copyright is the lifeblood of the software industry. Copyright law protects the expression of ideas, but not the ideas themselves. This means that copyright law can protect the source code of a software program, but not the underlying concepts or algorithms.
- Database right. Modular programming techniques mean that it can be appropriate to consider a program as a database, providing an additional layer of protection.
- Designs are usually concerned with the appearance of physical articles, but it’s long been accepted that an icon on a screen can be protected by a registered design.
The benefits of protecting the intellectual property in software
The traditional software distribution model is entirely based on licensing the intellectual property in the software – predominantly copyright. Open-source and free software challenge this approach, but the copyleft philosophy, which uses copyright not to restrict what can be done with software but to keep it free from restrictions, still relies on copyright law as its foundation and licensing as its distribution model. So intellectual property is not just the Crown Jewels in a software business’s asset portfolio, it’s the foundation on which the whole business is built.
How can software be protected as intellectual property?
Copyright
Copyright law treats software as a type of literary work. This isn’t as weird as it might seem – in fact, in the copyright universe it is completely logical. A literary work is anything that is written, spoken or sung, unless it’s a musical or dramatic work, and the legislation defines “writing” very broadly to include any form of notation or code. Computer programs are nothing if not code: there are other ways of looking at them, but they all consist of written code.
A program, especially if it is put together in a modular fashion, might also be a database or a compilation for copyright purposes. If it is, little changes regarding copyright because databases and compilations are also literary works – the most interesting thing is that database right might also apply, though this is far from certain and probably does not extend the owner’s rights significantly.
Copyright latches on to the code in which a program is written (and protection extends equally to object code and source code or any other written manifestation of the program), not to what a program does when it runs on a device. The owner of copyright has the exclusive right to do certain things, including reproducing the work, issuing copies to the public and communicating the work to the public. Anyone who, without your permission, performs one of these acts with your copyright program or a substantial part of it infringes your rights and you can sue them for damages and an injunction to stop them doing it again.
Copyright in computer programs can easily be abused to restrict competition. Copyright in an operating system, for a start, is a very powerful right as everyone else’s programs have to make use of interfaces in order to work with the OS, and in principle copyright stops them copying the interfaces. The law therefore specifically carves out space for interoperating programs to be created without infringing, allowing decompilation in some narrow situations. Before the right to decompile someone else’s program arises, though, one must show that it is necessary to do it in order to create an interoperating program: and if the copyright owner has made the source code available to developers (even on commercial terms) the law will not intervene to permit decompilation. Similar considerations apply to error-correction, and to back-up copies.
Although copyright protection is all about the code, it does go a little further. If it protected nothing more, it would be pretty useless because a copyist could write new code to achieve the same result, so the courts have recognised several times that copying the look and feel of the program can amount to copying a substantial part of the copyright work. It’s not easy, and copyright law takes care to protect not ideas (including, specifically, underlying ideas and principles, including those underlying software interfaces) but it can be done. Over and above that, it’s possible that the screen display or elements of it such as icons could be regarded as a copyright work (in this case, an artistic work) and receive protection in their own right.
Copyright in this sort of case lasts for the life of the creator plus 70 years – way beyond the commercial lifespan of a computer program. The creator, or as the law calls them author, of a copyright work is often not the owner of the copyright, which will normally pass to their employer or (if they are freelance) be claimed by the client. Beware, though, if you are engaging freelance programmers: the law does not automatically give you copyright in what they create for you, so you must include an assignment – and it has to be in writing, signed by the contractor – if you want the copyright. It’s also advisable to check that contracts of employment deal with any marginal cases, too, as you don’t want to be arguing about whether copyright in software created by an employed programmer at home, on their own computer, in the evening, is theirs or yours.
Patent
Can you patent software? Yes and no. The defining feature of a patentable invention is a technical effect, and granting patents for pure software inventions, however innovative they may be, would go against this basic principle. To drive home the point, the law states expressly that no patent can be granted for software as such, but those two words open the door to indirect protection for programs. An invention that has a technical advance may use software to achieve that technical advance.
Trade marks
Trade marks, which identify businesses and distinguish their products in the marketplace, are no less or more important to software companies than to other enterprises. While they don’t protect the actual code itself, what they do protect, in essence the brand, is a very important asset that demands as much attention as other intellectual property assets.
Although trade marks can be protected by the owner suing for passing off, it is always better to register them when possible – and if your business is international, you’ll find that most countries of the world only protect trade marks by registration, so you will need to make sure yours are fully protected at least in key markets. The cost of an individual application is relatively low – in the UK the application fee can be as low as £170, on top of which your lawyer will charge a few hundred pounds – but the need to make multiple applications to cover all the elements of your branding (company name or house brand both as a word and in logo form; possibly several product names and logos; slogans; icons; there are almost endless possibilities), in all the countries or regions (the EU being the most important) of interest, means the budget might have to be generous. Companies like Microsoft have huge trade mark portfolios, and significant teams of lawyers in-house and externally to look after them. But the cost of having your marketing efforts negated by someone else using a similar mark will be much more!
Registered designs
You can register designs for products, and for many years this has included computer icons, screensaver graphics, and graphical user interfaces. Your design would have to be new, and over and above that to have individual character – in other words, someone familiar with the field would say “I’ve never seen that before, and it’s different from anything in that field that I have seen.” Registration is cheap and easy, partly because applications are not examined (except for very basic formalities) – which means that your registered designs might be revoked if challenged: but for what you have to pay, that’s a risk worth taking. Most countries of the world (and the EU) have registered design systems, though not all will allow registrations of icons and the like.
Trade secrets
Software businesses, like other businesses too, have plenty of trade secrets, whether relating to their products or to day-to-day aspects of their business (such as customer lists). Confidential information of all sorts is routinely protected in commercial agreements, including licences of software and other IP products, in contracts of employment, and in freelance agreements. When someone wants to know about some internal business or technical matter, perhaps because they are interested in buying your business, a non-disclosure agreement will work.
Database rights
If a program is apt to be treated as a database (a collection of individual works, data or other materials, arranged in a systematic or methodical way and individually accessible by electronic or other means) then as well as copyright you might have protection from database right. In any case, the data on which your program works is likely to fall within that definition, so it is closely related to protection of software.
Disputes over the ownership of intellectual property in software and how to avoid it
When you use third party developers you must take care to ensure that any copyright in what they create is yours – or, alternatively, that your plans take full account of the fact that a third party owns some of it. Whether you are taking ownership of the copyright, or will just have a licence to use it (the developer might well want to be able to licence it to others too), getting the right documentation in place is crucial. Not only must your licence give you the right to use the software, and be clear about whether it is a sole, exclusive or non-exclusive licence, you should think about limitations. Should the developer be prevented from letting your competitors have a licence?
Founders usually bring some IP assets to the business when they set it up, but often at that early stage the need scrupulously document everything is overlooked in the excitement of doing other things. The new company can use the founder’s IP as long as the founder is prepared to allow it but once he or she moves on, what happens? Is the company going to have to pay royalties into the future to use those assets? If the founder is a director of the company, their duties as a director will usually override attempts to assert their ownership of the IP, but if they aren’t a director or if they have resigned there can be big problems. To avoid having to ask a judge to resolve them, avoid a dispute arising in the first place by commissioning a legal review and putting in place any necessary assignments to ensure the company owns the assets it will be using.
Employees are usually less of a problem, because the law is clear that any copyright they create in the course of their employment comes to the employer. They also have a duty of confidentiality to their employer. Both these matters should be addressed specifically in the contract of employment, to ensure that there are no grey areas in which the employee’s duties are unclear and steps are taken to prevent them from disclosing or using trade secrets after they leave. The extent to which the law will allow you to protect the company’s interests against ex-employees is a tricky matter, and professional advice and drafting is highly advisable and could save a lot of money in the long run.
What happens if your intellectual property rights are infringed?
Unlike many other forms of property, if someone uses your IP without permission you can’t take it away from them. Your only recourse is to go to court to get an injunction to tell them to stop, and to pay you damages (or account to you for any profit they made). In the right situation, it could be possible to go to arbitration instead, and mediation is always there as an alternative way to settle a dispute if the parties agree to it, but it’s the courts that have the power to impose a solution on the other party.
Our advice would always be to do whatever you reasonably can to stop disputes arising in the first place. Even the strongest case can fail in court. Fortunately, the technology that underlies the software you want to protect also offers solutions to the problem, enabling you to build security such as copy-protection and licence enforcement into the product. The best way to avoid disputes is to have strong IT security in the first place. People are less likely to abuse software that is closely guarded, and it is more likely to be considered a trade secret and respected as such.
Summary
Software is, at heart, an IP product. Protection comes principally from copyright law, but other IP rights are also important and a holistic approach to IP protection is as important in the software field as in other sectors. From ensuring that contractors’ copyright is made available to you on acceptable terms, to controlling what employees and ex-employees can and cannot do, to allowing customers to use your software on terms of your choosing – the software world is built on intellectual property and agreements, and you will want to be sure that you have the best advice on your company’s IP position and its standard documents.
