HOW TO PROTECT INTELLECTUAL PROPERTY RIGHTS IN COMPUTER SOFTWARE

R. Mark Halligan, Esq.

mhallign @ execpc.com
© 1995 R. Mark Halligan, Esq.

The protection of computer software requires a careful review by intellectual property counsel because adequate protection often involves the law of trade secrets, copyrights and patent law. In addition, trademark issues must also be considered.

TRADE SECRET PROTECTION

Trade secret protection is an important means of protecting computer software. Coupled with copyright protection, this is often the most effective way to protect computer software. Computer programs are copyrightable works under U.S. copyright law. The Copyright Office now regularly issues registrations for computer programs. Both source code and object code can be registered although a "rule of doubt" registration will be issued for object code.

If the source code contains trade secret information, the Copyright Office protects this trade secret information by utilizing special deposit requirements.

Whenever possible, computer software should be protected under trade secrets law. If software is sold or licensed to another party, contracts should be used which require the receiving party to maintain the "trade secret" status of the software and not to disclose or use the software except in accordance with the express terms of the license or contract.

Do not sell the source code. At all times, access to the source code should be strictly limited to others on a "need-to-know" basis with an obligation of confidentiality.

COPYRIGHT PROTECTION

Only a single registration is necessary to cover both the computer program and the accompanying visual displays and audio portions. A copyright notice should be used because it eliminates the "innocent infringer" defense. Typical locations for the copyright notice are (1) the software itself so it shows up when the source code is printed, (2) on user display screens, (3) on the software storage medium (i.e., the floppy disk), (4) on the computer user manual and (5) on all printed output formats.

"Shrink wrap" licenses remain popular to characterize the transfer of possession of computer software as a "license" rather than a "sale." This provides advantages to the copyright owner and requires the purchaser to maintain the trade secret status of the software by prohibiting decompilation of the software.

Lawsuits for copyright infringement of computer software have been a quagmire. The reason for this relates to the type of protection afforded by copyright law. Copyright law only protects the "originality of expression" not "the underlying idea" or "function." Therefore, by definition, copyright protection alone is often inadequate to protect the commercial value of computer software.

Nevertheless, reverse engineering activities involving existing software should be carefully coordinated with intellectual property counsel. "Clean Room" methods have been developed to protect against copyright infringement actions involving decompilations of existing computer software.

PATENT PROTECTION

In Diamond v. Diehr, 450 U.S. 175 (1981), the United States Supreme Court opened the door to patent protection for computer software by holding that a process for curing synthetic rubber using a mathematical formula in a programmed digital computer was proper subject matter for a patent.

Patentability issues relating to computer software is a complex subject. Generally, software patent applications should be limited to inventions of significant commercial value. If the commercial life of the software is only a few years, patent protection may not make much sense because it will take at least two or three years for the software patent to issue. Further, the issuance of a patent will destroy the trade secret status of the software. Once a patent issues, the patented features of the invention will be in the public domain.

However, under certain circumstances, software patents are clearly the best way to protect computer software. For example, in 1994, Stac Electronics won a $120 million verdict when a jury found that Microsoft Corporation had infringed Stac's data compression software patents in the sale of 28 million copies of the MS-DOS Version 6.0 disc operating software. Subsequently, Microsoft agreed to pay $43 million and to buy $40 million in Stac stock to settle the dispute.

TRADEMARK PROTECTION

The Patent and Trademark Office has issued a special rule which permits filing a photograph of a computer screen as evidence of trademark use. U.S. Patent & Trademark Office, Trademark Manual of Examining Procedure § 905.04(d) (2d ed. 1993). This rule is necessary because purchasers of computer programs often do not see the computer trademarks until the "trademark" comes up "on the screen" after installation of the computer software.

If the software is being advertised as "compatible with" other trademarked hardware or software, the software must in fact be truly "compatible." Otherwise, problems may arise under Section 43(a) of the Lanham Act, 15 U.S.C. Section 1125(a), or state and common law unfair competition laws.

SOFTWARE PUBLISHERS ASSOCIATION

Software companies should belong to the Software Publishers Association (SPA), 1730 M Street, NW, Suite 700, Washington, D.C. 20036, (202) 452-1600. More than 1,100 companies belong to the SPA. The SPA enforces copyrights against the unauthorized copying of software and the proceeds from each lawsuit are used to fund future litigation. The SPA "antipiracy" hotline is 1-800-388-7478.

PRESS HERE FOR FURTHER INFORMATION

BACK TO HOME PAGE