Protecting Your Software Intellectual Property

You would not drive your brand-new car without carrying valid car insurance; so why would you spend countless hours designing and developing software algorithms and source code without obtaining the proper protections afforded by intellectual property law? 

What is Intellectual Property? 

Intellectual property is an intangible asset most commonly protected by law vis-a-vis patents, trademarks, copyrights, and/or trade secrets. Below are some of the important Intellectual Property categories that software developers might consider: 

Utility Patents

Software development companies that create useful, novel, and non-obvious products and processes may be able to file for utility patents. As a general matter, a patent provides inventors with the exclusive rights to their patented inventions to ensure that the inventor can recoup his investment in and benefit from such a patent with reduced competition. Novelty and non-obviousness are central to obtaining a patent under federal law but are difficult to define and even more challenging to demonstrate in a tangible manner. In 2013, federal law created a first-inventor-to-file system where a patent to an invention is granted to the first inventor to file an application. Consulting an attorney as soon as possible in this race-to-the-moon development process will better protect your company’s investments before competitors can undermine them.

Trademarks:

A software development company may find it crucial to apply for a trademark, including its Internet domain name. Trademarks are used to identify and distinguish the particular source or origin of goods and services in a relevant marketplace. 

If a company has a trademark on a domain name, it can seek recourse from parties whose domain name infringes their trademark. Seeking the skill of counsel is crucial because applications for federal trademark registrations can be filed on two bases: 1) actual use of the trademark in commerce or 2) a bona fide intent to use the trademark in connection with the goods or services even though actual use has not yet taken place. As there are various ways to maintain the validity of a trademark (using the trademark continuously for at least 5 years or renewing the registration every 10 years), an attorney versed in trademark law can help you determine the best strategy to approach registering a trademark.

Copyrights

A software development company should consult an attorney before relying on copyright as a sole source of Intellectual Property protection. Once the author of an original expression of ideas (e.g. computer software code either in source code or object code) publishes that expression of ideas in a fixed medium, the author automatically becomes the owner of the copyright. Although copyright does not have to be registered nor published to be valid, there are several major issues that must be resolved. First, copyrights only protect the original expressions of ideas from unauthorized copying, not the ideas or concepts being expressed (but a patent or a trade secret may protect such ideas or concepts). 

Second, employers must ensure that any computer programs, created by their employees or any outside contractors, are “work made for hire.” This means that the copyright ownership vests with the company, not with the employee or contractor. Lastly, a company may not want to register its copyright: registration requires a deposit of source code with limitations on the owner’s ability to block out portions containing trade secrets. Thus, an attorney can walk you through the benefits and pitfalls of whether an unregistered or registered copyright, or one in conjunction with a patent, will provide sufficient protection.

Trade Secrets:

Unlike the above types of intellectual property protections, there is no official registration process for trade secrets. Relying on trade secrets can be risky business without the guidance of an attorney. Trade secrets are secured and maintained solely by the owner, who must take reasonable steps to preserve the secrecy of the information. This means that companies, as employers, must ensure that their employees and independent contractors, along with any third parties that have a need to use or review the information, have signed the appropriate nondisclosure and confidentiality agreements. 

Trade secrets are a double-edged sword for computer source code. Although computer source code can be protected as a trade secret, it can also be protected by copyright and embody a patentable invention. But the trade secret may be lost if a public disclosure of source code is made in connection with the registration of the copyright. The trade secret may also be lost upon the issuance of a patent on the software program. Given the intricacies of each type of intellectual property protection and their propensity to overlap, an attorney can assist in determining the most effective method of protecting your company’s intellectual property assets.

Technology Licensing and Nondisclosure Agreements:

Once you have obtained a patent or trademark for products such as software algorithms and source code, you can license your product to others, whether on an exclusive or non-exclusive basis. As the major asset of software development companies is their confidential information, an attorney is necessary to ensure that the company’s intellectual property is protected from copycats and theft. An attorney can ensure that all your employees, independent contractors, prospective buyers, and anyone else with access to your intellectual property have signed iron-clad confidentiality agreements, in addition to drafting internal information technology (IT) and communications systems policies that govern the use of such confidential information. In fact, our attorneys can serve as in-house counsel to your company, working closely with your IT department to ensure there is a uniform, companywide information management and protection program. 

The seasoned attorneys at Parsus LLP can determine which legal protections and strategies that your company should pursue. We understand the needs of software development companies, from startups to more established companies, and appreciate that intellectual property is the lifeblood of companies. Contact us for a consultation regarding your intellectual property needs at https://parsuslaw.com/contact/.

Legal Disclaimer: The information in this article is provided for general informational and educational purposes only.  It is not intended to be legal advice and does not create an attorney-client relationship.