There are three traditional forms of intellectual property protection for software being; copyrights, trade secrets, and patents. This paper explores the advantages and disadvantages of each form, and suggests ways to maximize software intellectual property protection with the current system.
As opposed to patent law, copyright does not require novelty, but only originality, which is the chief advantage of copyright, being the ease with which it can be obtained. In fact registration is not even required, but highly recommended for evidence purposes if a later infringement occurs. Copyright has been the most used method in intellectual property law for software protection and lends itself well to mass marketed commercially available software because it is easy to obtain and has broadly enforceable rights. The United States Congress has strongly supported copyright as the preferred intellectual property protection mechanism for software, acting through the Congressional Commission on New Technological uses of Copyright (CONTU). In the international arena, through the 1994 General Agreement on Tariffs and Trade (GATT) in which article 10(1) provides that computer programs “whether in source or object code, shall be protected as literary works under the Berne Convention” enforces the use of copyright as the preferred method of protecting software.
The European Union (EU) created a directive on computer programs numbered (91/250) released in May 1991 that brought software under “literary works” protection for member countries, however, the (EU) is relatively unsettled on patent protection for software.
This puts the preferred method of software protection under copyright for most of the industrialized world and in the United States there is more case history concerning copyright protection for software than any other form of intellectual property.
Copyrighting of software began in the United States in 1964, and has produced a significant amount of case history mostly concerning to what extent software is protected by copyright. The major issue in copyright is the idea / expression distinction, wherein only the expression in legally protected, which weakens the copyright protection of software. With commercial software continually gaining significance in the marketplace, starting in the 1990’s a strong interest by software owners for better protection than copyright provided, which caused a renewed interest in patenting of software or possibly a new form of intellectual property protection for software, which could accommodate the unique aspects of software being; its dynamic nature, having fast paced technological changes, being highly incremental, and producing a multitude of different outputs.
Copyright Statutory Basis
Under the Constitution the basis for copyright comes from Article 1, Section 8. Clause 8, which states in part “…secure for limited times for authors…exclusive rights to their writings”. This is currently codified as the 1976 Copyright Act under title 17 sections 101 through 810 and 1001 through 1010 of the U.S. Code. The Act defines copyright subject matter, rights of the author in that matter, and limitations on use of the exclusive copyright rights. Also life of copyright terms, infringement actions, and remedies are spelled out under the act.
Section 102 defines copyright, which has a very broad scope, with the main requirement being originality. The legal protection only extends to an expression of an idea, with the underlying idea not being protected. As an example in a song, only that exact song is copyrighted not the story, thoughts, or events that the song is about. This is why copyright works so well for songs, motion pictures, and art where the idea / expression dichotomy is clearly separable.
In contrast where the idea / expression dichotomy is not as clear, as in the case of software, copyright protection is difficult. Software has an expression which is the program, but that expression also performs multiple functions and requires data inputs.
Section 106 of the Act defines what the copyright owner can do with their copyrighted material, being to reproduce, to make derivative works, to distribute, to perform, to display publicly, and to transmit (broadcast).
Section 107 defines the limitations upon the authors exclusive rights, what is termed “Fair use”, what this means is that if the use of your copyright by others falls within one of the exceptions it is legal. These exceptions are educational use, non-profits, parody, and satire. Other factors considered for infringement, are what portion of the copyright was infringed, the strength of the copyright with fiction based copyrights being high and fact based copyrights being lower, and the amount of invasion into the copyrights owner’s commercial market from the infringer.
Section 302 defines the life of a copyright, with is normally the last surviving author’s life plus 70 years, or in the case of a corporate author 95 years from publication or 120 years from creation whichever occurs first.
Section 401 defines the “Notice” required being the familiar circle “c” © with author’s name, the year the item was created and adding “All Rights Reserved”. Notice is important as an infringer could claim as a defense that the infringement was “innocent” with the infringer claiming to be unaware of a copyright’s existence. Although federal copyright registration is not mandatory, it is required prior to litigation on the copyright and should be done prior to publication.
Sections 504 to 506 define remedies, which include injunctions, damages, fines, and imprisonment for willful infringement.
Application of copyright to software
In 1879 the idea / expression concept was shown, even though not in software but as a book that was copyrighted that contained some special accounting forms for a system of bookkeeping. Another individual developed a simpler system achieving the same result who was held not to infringe the original accounting forms as the copyright did not extend to the “use” of the forms.
Later applications of copyright to software up through the 1980’s defined the software copyright as a flowchart, source or object code, in words, and in any media such as disc, tape, paper, or a semiconductor chip as long as it was original and expressive. Later the scope of copyright protection for software was refined in the early 1990’s taking into account the problem of separating the idea / expression dichotomy of software known as the “merger” doctrine of copyright. This essentially allows for multiple copyrights of an idea if there are multiple ways to express the idea, with the objective of limiting a copyright owner’s monopoly.
What this means is that only the source and object code of the program are copyrighted and not the operating system, macro’s, flowcharting, and all non-literal aspects of the program. This is codified in the Copyright Act section 102 (b) that states, “…copyright protection does not extend to any process, system, method of operation, concept, principal, or discovery…”. Any systems, commands, or methods that are used universally cannot be copyrighted, such as the commands, “Quit”, “Print”, “Stop”, “Play”, “Record”, “Rewind”, etc. which if copyrighted would interfere with the efficiency of commercial use of software. However, software display screens have been copyrighted, being considered the same as motion pictures as an expression.
Trade secrets for software
Please see the “Trade Secrets” article of this Website for information on the use of trade secrets for software protection.
Patents for software
Patents have been used for software, although to a much lesser extent than either copyright or trade secret. The reasons for this are that there was a predisposition against the use of patents for software as the statutory classes for patents are for machines, articles or manufacture (products), processes, and composition of matter, all of which tend towards tangible or physical items, not necessarily a set of computer code instructions in a program. In addition to this, mathematical formulas have never been patentable which are close cousins to programs. In the early 1970’s a patent was denied for a program that converted binary code decimals to pure binary numbers that aided in programming digital computers, this plus the long patent prosecution process that can take many years with the novelty, utility, and non-obviousness requirements hardly fits the fast technological pace of software.
Of course patents do have a number of desirable features compared to copyright and trade secret with the broader scope of coverage that prohibits an infringer from making, using, selling, offering to sell, or importing the patented item. Software owners cannot use trade secret well for commercial mass marketed software, and are dissatisfied with the narrow protection of copyright, and thus turn to patent protection as an alternative. The push for software patents resulted in the 1996 United States Patent and Trademark Office (USPTO) issuing of “Examination Guidelines for Computer Related Inventions". This document gave instructions to patent examiners on how to evaluate software for patentability against the traditional requirements of novelty, utility, and non-obviousness, this represented a dramatic turnaround from the USPTO practice of restricting software patents for the past 30 years and will be interesting to see the long term effect of giving software stronger legal protection.
Patent statutory requirements
Constitutionally based in Article 1, Section 8, Clause 8 “To promote the progress of science and useful arts by giving authors exclusive rights for limited times…”. This was first codified by Thomas Jefferson in 1790 as a patent statute, and is currently codified under title 35 of the United States Code in Sections 1 through 376. The patent code covers conditions for patentability, infringement issues, infringer defenses, and remedies.
Section 101 covers statutory classes of items patentable, being machines, articles of manufacture (products), processes, and compositions of matter.
Sections 102 and 103 cover conditions for patentability, being novelty (no conflicting prior art, invention must truly be new), utility (invention must be useful to society), and non-obviousness (new invention must not be obvious to one skilled in the art). Also covered are rules for multiple patentees on the same technology (the race to the patent office).
Section 112 covers the “specification” (general description of the new invention) and “claims” (that specify the actual boundaries of the patent holders property rights) of the patent. During the patent’s prosecution a tug of war can go on between the USPTO examiner and the patentee as the USPTO wants to narrow the patents coverage and the patentee wants to broaden the patents coverage.
Section 154 specifies the term of the patent at 20 years from the file date.
Section 271 covers the elements to assert for an infringement being, intent (the actual act of infringement is not required) to make, use, sell, offer to sell, or import the patented product.
Sections 281 through 285 cover remedies, which are injunctions and money damages.
Section 282 covers infringer defenses, which besides the factual issues surrounding whether infringement actually occurred or not, include attacking validity of the patent itself (by uncovering defects in prosecution), and asserting antitrust violations. There is some risk in bringing an infringement action by the patent owner in that the patent itself can come under attack, but also all the patent owners’ actions surrounding the patent, such as antitrust and licensing procedures. Infringing defendants have enjoyed some success in challenging a patent’s validity as a patent is evaluated in 20/20 hindsight with a high degree of scrutiny, whereas the initial patent prosecution allowed about 18 hours of examiner time to fully evaluate the patentability of the invention.
On antitrust, a patentee must be careful to who is licensed on a given technology for being at the risk of creating an inadvertent monopoly that could be exposed.
Finally Section 286 covers the statute of limitations for bringing an infringement action which is 6 years from the infringement to qualify for damages as a remedy, wherein after 6 years the patentee can sue only for an injunction.
Patent Software Application
As previously stated, the patenting of software was historically shunned as Section 101 of the Patent Act regarded all mathematical equations to be laws of nature and should be freely used by everyone. To allow one to patent these laws of nature would restrict the use of these basic tools and would risk chilling the advancement of technology. The conventional wisdom was that a computer program was close to a mathematical equation and thus basically unpatentable. In 1968 USPTO examination guidelines on the patentability of Computer-Related Inventions flatly denied patentability of programs.
In the early 1970’s several patents were denied to programs, one a binary conversion program that helped digital computers work and the other one a program that calculated an alarm limit to protect a formula, that program had no inputs or information about the formula. This was an example of the “mental steps” doctrine which is unpatentable the same as a mathematical formula.
Also in the early 1970’s, the Presidents Commission on the Patent System recommended that programs be excluded from patentability, principally because the USPTO was unable to deal with the “new” technology, further reinforcing the USPTO’s position that only tangible physical items be patented, i.e. computers patentable but not software. In addition, in the early 1970’s Congress was encouraging use of copyright for software through the Congressional Commission on New Technological uses of Copyright (CONTU).
All of these indicators seemed to make for an inertia pushing software away from patents and toward copyrights. The early 1980’s witnessed a turning point in this trend when a program was patented that controlled the temperature of a rubber curing process, but did not contain any technology for the process of curing the rubber itself.
The main point in this case was that a patent was issued for a program that contained a mathematical formula, with the justification for patentability based on the fact that the program allowed for an improvement in the rubber curing process and was considered patentable under section 101 of the Patent Act as a “New and Useful Process”.
This opened the floodgates on patenting of software on programs that manipulated oscilloscope data, data displays, and data structures embedded in a memory chip, and led to the 1996 revision of the USPTO Examination guidelines to specifically accommodate software.
The guidelines focus not on the unpatentable mathematical algorithms as before on software, but upon the inventive aspects of the program, looking to what the program does as a patentable “process” claim, or related to computer memory as a patentable “product” claim, thus leaning toward a bias of patentability, as opposed to the prior bias toward non-patentability by focusing on the mathematical process.
The European Patent Office (EPO) similarly looks favorably upon the patenting of programs if the program generates a patentable “technical effect” that can be an improvement of a process or a technical contribution to the known art, however, currently the EPO is not settled on the question of patentability of software.
Are the traditional intellectual property protections of copyright, trade secret, and patent unsuitable for modern technologies? Software change is fast paced with many incremental changes, and multiple outputs. Some proposals have been made for new custom forms of intellectual property for software, but only the Semiconductor Chip Protection Act of 1984 have made it through Congress. Some foreign countries, notably Japan have considered special legislation for intellectual property protection for software, but have faced pressure from international community for using copyright protection for software.
Software is unique as it is expensive and time consuming to develop, while it is very easy and fast to duplicate and mass produce, making pirating a simple task. One precaution that could be taken is to add hidden tracers in the software code that an infringer may not pickup on but could be used for evidence at a future date. From a public policy perspective, a software developer should be motivated to create new software with the confidence of adequate legal protections.
Copyright, trade secret, and patent all have their respective advantages and disadvantages, and because there is not a new form of intellectual property on the horizon, an optimal mix of these three traditional forms of protection is the best strategy currently.
The following is a summary of the three forms of intellectual property protection as applied to software.
Copyright fails to focus upon what is important in a program, being the function that it provides to a user, copyright does not protect function, and does protect text, which is invisible to the user. It’s the program function that needs to be protected for the software developer to have a limited monopoly.
Trade Secret due to its allowance of reverse engineering is not adequate for mass marketed software as no real protection exists, trade secret is really best for privately created and used software, such as software created by a company for internal use only.
Patents have had a historical focus on the process, method, or structure of a product not on the end result of a function, such as a machine that is patented wherein the structure is what is patented not the result of the machines function. This is opposed to what a program does where structure is irrelevant and the end result is all-important.
Combining copyright, trade secret, and patent protection for software
It is always wise to consider all forms of intellectual property protection for any invention to maximize the protection available.
As a rough suggestion the following is given:
Copyright for mass marketed low value software
Trade Secret for privately created and used software
Patent for mass marketed high value software
As an example, a patent for software commands embedded in the semiconductor chip as a product, a trade secret for the in-house flowcharting method to develop code, and copyright the source code to make the chip function.
Of course the increased legal protection comes at a price, having a higher administrative burden to make extra registrations, applications, and to maintain the trade secret.
What this comes down to is that an economic trade off always exists between the costs of additional intellectual property protection versus the potential value of the protection in the future. It cannot be over emphasized that this economic trade off is very dynamic with changes in technology and the law that necessitates constant updating of the intellectual property portfolio to attempt to keep this tradeoff as close to an optimum point as possible.