Protecting Your Software Intellectual Property

Bidhan Baruah

December 20, 2023

Software IP is protected by law.

Your custom software is part of your business’s intellectual property (IP). 

That means the law protects you should anyone copy, steal, or otherwise use the software code without your permission. 

That protection applies whether you created the software in-house, had a custom software development company build it for you, or purchased the rights to the software. 

Whichever applies, the fact remains that unauthorized use of your software is illegal.

This article provides a background on software IP and looks at ways to protect your IP. However, the information contained in this article is provided for informational purposes only and should not be construed as legal advice on any subject matter. You should not act or refrain from acting based on the content in this article without seeking legal or other professional advice. This article contains general information and may not reflect current legal developments or address your particular situation. Taazaa Inc. disclaims all liability for actions you take or fail to take based on any content in this article.

Yes, Software Is Intellectual Property

Intellectual property (IP) refers to creations of the mind, essentially your intangible assets. It encompasses a wide range of things, including software. 

  • Inventions: New devices, processes, and products protected by patents.
  • Literary and artistic works: Books, music, paintings, sculptures, movies, and software protected by copyright.
  • Designs: The unique appearance of a product or its packaging is protected by industrial design rights.
  • Symbols, names, and images used in commerce: Trademarks that distinguish a company’s goods or services from others.
  • Secret knowledge or information: Trade secrets, such as a company’s manufacturing process or customer list.

Anything original and non-obvious that you create can be considered intellectual property.

Why is IP important?

IP rights give you exclusive control over your custom software. It prevents others from copying or using your product without your permission. This protection helps you reap the highest profit from your work by ensuring you’re the only entity that can license or sell your IP to others, earning royalties or fees.

Protecting your unique ideas helps you maintain a competitive advantage in your market or industry. It also lets you control the quality and reputation of your work, ensuring that your applications are used as intended and not misrepresented.

The Four Types of Intellectual Property

Intellectual property law recognizes four types of intellectual property that can be protected. Let’s look at these types and how they apply to software IP.

Patents

A patent grants you the exclusive right to produce, use, and sell a unique product or invention. Patents grant exclusive rights for a limited period (usually 20 years).

Not all software is patentable. The invention must be novel (new), non-obvious (inventive, not just a predictable improvement), and solve a technical problem using technical means. Abstract ideas and mental processes aren’t patentable. Software that simply automates routine tasks or implements well-known algorithms probably won’t qualify for a patent, either.

When applying for a software patent, focus on the technical solution. Your patent application should clearly explain how the software solves a technical problem using specific technical features. Think algorithms, data structures, and interactions with hardware.

If you’re thinking about patenting your software, do your research. Learn about the patent process and the specific requirements for software patents. Your application should clearly describe your software product and how it meets the patentability requirements.

Software patents can be difficult to acquire, and the application process can take forever. If you plan on selling your product in more than one country, be aware that different countries have varying approaches to software patents. A patent attorney can help you determine whether your software is patentable and guide you through the application process.

The United States Patent and Trademark Office has more information on obtaining a software patent.

Copyright

Copyright is the most common way to protect software in most countries. Unlike patents, you get basic copyright protection without registering for it. In fact, copyright for software happens automatically the moment you write the code or compile it into an executable program. 

Copyright protects your source code, including the specific arrangement and sequence of commands and statements. It also covers the user interface, graphical elements like icons and menus, and the software’s overall structure, organization, and sequence.

Any original literary or artistic expressions within the software, such as documentation or embedded graphics, are also protected by copyright.

However, copyright does have some limitations:

  • It doesn’t protect ideas, concepts, algorithms, or functionalities. Others can reimplement them in different ways without infringing your copyright.
  • It doesn’t protect short phrases or sequences of code, only the original and substantial expression of your ideas.
  • Fair use exceptions allow limited copying for purposes like criticism, commentary, news reporting, teaching, and research.

Overall, copyright provides a solid and automatic layer of protection for your software. It helps deter casual copying and gives you legal grounds to take action against infringement.

You can register your copyright with the relevant government agency for additional legal protection and more straightforward evidence in court cases. You can also use license agreements to restrict how others can use your copyrighted software, even beyond the limitations of copyright law.

Copyright usually lasts until the copyright owner’s death, plus 50 years. If an employee of a company created the software, it lasts for 75 years from publication. 

Trade Secrets

Trade secrets offer a distinct and powerful way to protect certain aspects of software IP. While patents and copyrights provide well-defined legal protection, trade secrets rely on maintaining information confidentiality. 

In a software context, “trade secrets” include things like:

  • Specific algorithms or formulas: The “secret sauce” of your software that gives it an edge in performance or functionality can be a trade secret if it isn’t publicly known or easily reverse-engineered.
  • Source code that isn’t copyrighted: If you haven’t registered your code for copyright, certain portions deemed non-expressive or functional might still be protected as trade secrets.
  • Implementation details: The specific way your software interacts with hardware, interfaces with third-party applications, or optimizes resources can be valuable know-how.
  • Customer data and business strategies: If your software relies on unique data analysis or leverages confidential business strategies, these can be trade secrets, too.

Trade secrets can protect non-patentable or non-copyrightable aspects of your software, offering broader protection than other IP rights. Unlike patents with limited terms, trade secrets can be protected for as long as they remain confidential. There’s also no formal registration process.

There are some drawbacks to this approach, however. Proving someone misappropriated your trade secret requires establishing its confidentiality. Leaks or accidental disclosures can compromise your trade secret protection. Unlike patents and copyrights, enforcing trade secrets involves complex litigation and may not provide the same level of damages.

A combination of trade secrets, patents, and copyrights often offers the most comprehensive protection for your software IP. While certain functionalities can be patented, the specific implementation details can be kept as trade secrets. Meanwhile, copyright covers the overall expression of your code, while trade secrets can shield the underlying logic and algorithms.

Trademarks

Along with patents, copyrights, and trade secrets, trademarks also protect software IP. Trademarks protect the identifiable elements that distinguish your software from others, fostering brand recognition and consumer trust.

Essentially, anything that uniquely identifies a product or service and sets it apart from others can be considered a trademark:

  • Unique brand or product names, slogans, or taglines 
  • Symbols and logos 
  • Distinctive sounds or music 
  • Packaging and design

A trademark symbol indicates trademarks: ™ for unregistered trademarks and ® for registered trademarks.

How to Protect Software Intellectual Property

Long before you release your software product, determine the measures you’ll need to protect your IP. Engage a lawyer or legal team that specializes in IP law and can tell you which rights you have and the best ways to protect them.

If applicable, file for patents and register trademarks as early as possible. 

Have your legal team draw up strong non-disclosure agreements (NDAs), then have each employee and contractor sign them before doing any work for you. 

Although it sounds like something out of a movie, devices containing IP get stolen too often in the real world. Make sure any device containing your data is highly secure, and educate your team about the importance of IP protection and best practices for handling sensitive information.

The Role of Licensing

Licenses act as legal contracts between the software creator (licensor) and the user (licensee), defining the permitted uses of the software. As such, they offer another layer of protection for your software IP.

Your software license agreement defines how a user is allowed to use your product. Licenses limit the functionalities and features the user can access to prevent unauthorized modification or exploitation of the software.

Licenses also stipulate whether users can share or distribute the software and, if so, under what conditions. This controls the spread of unauthorized copies and protects against piracy.

Software licenses often specify the number of users or installations allowed, preventing the potential loss of revenue. For example, if a user buys a single copy of your software and installs it on the devices of hundreds of employees in their business, you’ve lost a substantial amount of revenue. 

Licenses provide a legal foundation for pursuing action against such infringements, allowing the licensor to seek damages or injunctions against unauthorized use. Many licenses are tied to digital rights management (DRM) technologies that restrict access based on license keys or activation requirements, making it harder to bypass usage limitations.

Licenses and DRM solutions cannot entirely prevent all forms of infringement, especially in cases of skilled hackers or motivated individuals. However, they offer a strong starting point for legal recourse and deter many potential infringers.

Different types of licenses offer varying levels of protection and control. Open-source licenses, for example, are more permissive, while proprietary licenses grant exclusive rights to the licensee.

Other Ways to Protect Your IP

While copyrights, patents, trade secrets, trademarks, and licensing offer a solid foundation for protecting software IP, they aren’t the only game in town. Here is an overview of some additional ways to bolster the security of your intellectual property.

Obfuscation: Scramble your code using techniques like renaming variables and functions, making it harder to reverse engineer and understand the underlying logic.

Encryption: Secure sensitive data and functionalities within the software with encryption algorithms, safeguarding them from unauthorized access.

Tamper detection: Implement mechanisms that detect when the software has been modified or tampered with, potentially triggering alerts or disabling functionality.

Version control: Utilize version control systems to track changes made to the codebase, allowing for easy rollbacks and identification of potential leaks.

Watermarking: Embed hidden identifiers within the software to trace its origin and ownership in case of infringement.

IP Protection Is Like an Ogre

Like ogres—and onions, cakes, and parfaits—the strongest IP protection has layers.

Combining legal rights with technical safeguards and organizational practices creates a multi-layered defense against infringement, ultimately ensuring the value and exclusivity of your software assets.