Only a few years ago it was groundbreaking for a phone to have a full web browser. Now phone apps can call cars, order food, stream movies, play games, and connect unlimited music to smart speakers. Even non-tech companies have apps that service clients and potential customers. Software and apps are an important and valuable business asset and piece of intellectual property for businesses and programmers alike.
Just like an expensive purse, a business asset like software can be knocked off by competitors or those selling to competitors. Louis Vuitton is very quick with stamping out trademark infringement, but how can software be protected?
Can you patent software?
Patents are powerful intellectual property protections that give the rights owner exclusive rights in their invention typically for 20 years. It is like a superpower that prevents others from making, using, or selling the invention, or else risk paying triple damages. For instance, Dropbox patented a method for synchronizing a shared folder in 2009, a piece of intellectual property that has become very valuable and integral to their business. The result is Dropbox has carved out a piece of emerging tech, preventing other companies from taking the same path in dealing with shared folders.
There was a time when patents were great protection for software, before the Supreme Court drastically cut back on patentability in 2014’s Alice Corporation v. CLS Bank International. The Court called a party’s computer-implemented methods, or software, an abstract idea and therefore cannot be patented. Thanks ,in part, to the lack of any of an “abstract idea,” it is unclear how far and what types of software fall into the abstract idea category.
What does all that mean? For one, software-related patents are less likely to be granted by the United States Patent and Trademark Office. Second, the ruling has been used to invalidate other software patents. While patents were the top means of protecting software before 2014, the high cost and low odds of success means patents are rarely recommended.
Can you trademark software?
Trademarks protect names, logos, and slogans used to sell products and services. Notice you do not see the words “source code” anywhere in this list. Trademarks can cover the software’s name, the company’s name, and any slogans used in advertising. For instance, Take-Two Interactive Software, the parent company of Rockstar Games, trademarked the name of their video game Red Dead Redemption 2 to protect their intellectual property. In fact, they trademarked the name for the sequel before the first video game was released.
Trademark protection can be very valuable in removing infringement depending on where and how the software is knocked off. IP rights offer different tools to fight infringement and they apply differently in different situations. With a trademark may remove a knock off selling on Amazon Marketplace faster, but need a copyright to remove a pirated copy on a message board. Additionally, trademarks prevent a competitors from selling software under a similar name. However, if an infringer changes the logos and software name, trademarks can be powerless.
Can you copyright software?
Copyrights cover a wide range of creations, like movies, books, and music. And yes, software. Copyrights protect from copying source code, object code, and even some user interfaces. Copyright is great protection if the code gets in the wrong hands, either via improper access or use of a decompiler. Some programming companies will copyright each version of their software, but practically that may be unnecessary without major changes to the code. Think of code as the words of a book, and the copyrighted story is protected from knock offs.
Companies must ensure contributors have correctly transferred all IP rights in the software. It is common for programmers, including freelancers hired online, to retain rights in their code. They can repackage and resell that app hundreds of times. Why sell it once when they can sell the same program to your competitors? There is a statutory difference in ownership, depending on if the creator was an employee, an independent contractor, or an independent contractor who created a “work made for hire.” It is very important contract language sets forth ownership and what, if anything, the creator is allowed to do with the software.
Copyrights provide the best, cheapest, and fastest IP registration available. The biggest problem is novel ideas in the code can be reworked around copyright protection.
Can you protect software with trade secrets?
This is easily the most overlooked protection for software. Trade secrets are generally a secret competitive advantage that is typically protected via contract. While patents will last about 20 years and copyrights will last after the author’s death, trade secrets can live forever, if properly protected. There are state protections under the North Carolina Trade Secrets Protection Act, and federal protections under the Defend Trade Secrets Act.
Trade secret protection can be done by contract with any person who may see the code, including vendors, marketing partners, consultants, and freelance programmers. Almost anyone hired can easily blab away valuable business info, intentional or not, and it is not always who you may think. The software can be kept as a trade secret with things like nondisclosure and noncompete agreements, blocking access to code, and even redacting important sections on the copyright application.
What protection is right for your software or app?
An attorney may need to help with the answer. Infringement and knockoffs may differ depending on where in the marketplace the program exists, as a business-to-business app may be pirated in places a video game would not. Additionally, an attorney will help with a cost-benefit analysis regarding patentability, or simpler and cheaper options including trademark, copyright, and trade secret protection.
If you are considering protecting software and apps, contact our attorneys to learn more about your options. Spengler & Agans offers a flat-rate legal checkup for startups and business needing a broad, overall legal review of their business and business practices, including intellectual property issues.