The software industry remains intellectually and creatively fertile, providing a rich opportunity for innovation and monetary success. Statistically speaking, almost a quarter of all tech innovations come from the United States, which shows how dynamic and forward-thinking our software industry is.
Developing inventive software is just the beginning. It’s equally important to protect it, ensuring proper ownership and effective monetization. That’s where software intellectual property laws come into play.
🔑 Key Takeaways:
- Patents provide the most robust and comprehensive legal protections, making them the most valuable form of software IP.
- When you pay to license a piece of software, you agree to use it in certain ways that do not run afoul of the owner’s wishes.
- Some lawyers only offer consultation on intellectual property rights and not litigation. Be practical and look for someone who can do both.
- If you don’t make reasonable efforts to guard your trade secrets, your legal protections may become null and void in the eyes of the court.
What is Software IP?
Most succinctly, software IP denotes any computer code or program protected by law against theft, copying, or unauthorized use.
The rights to software IP belong either to the company that created the program or to the company that purchased those rights from the original owner. Anyone else who uses the program or code without authorization runs afoul of software IP laws.
Moreover, intellectual property rights have four types crucial to software, which you’ll learn in the next section.
Types of Intellectual Property
Intellectual property rights encourage innovations that contribute to economic growth, including artwork, inventions, and technology. This explains why such rights can be far more valuable than a company’s physical assets.
The law also recognizes four basic types of IP. All of which can offer utility and protection to software development companies. Here is a quick summary of each software IP type:
1. Patents
As of 2015, there are about 10.6 million active patents. Holding one gives you sole legal authority to produce, use, or sell an invention.
To obtain a patent, you must apply to the United States Patent Office, demonstrating that your invention is:
- Novel: No technology has yet been produced.
- Useful: It provides an obvious benefit to the end user.
- Non-obvious: You’ve developed something innovative, not just iterated on a previously existing technology.
Generally speaking, a patent expires after 20 years. During those 20 years, however, the software patent owners can benefit from the exclusive rights to produce and sell their technology.
Patents provide the most robust and comprehensive legal protections, making them the most valuable form of software IP. However, due to the complexities of IP law, they can also be the most challenging to obtain.
| 📝 Note: It typically takes one year to process a patent application. The time from filing to approval may take time, depending on the circumstances. Sometimes, the process can last six years for poorly drafted claims. This is why it’s important to include detailed written specifications of your invention. |
2. Copyrights
If a patent protects the idea or concept behind an invention, a copyright protects one specific expression. In other words, holding a copyright gives you the sole right to copy, modify, distribute, or sell copies of the invention to the public.
For software copyrights, you have coverage for a specific piece of code used to make the program or for unique aspects of the design interface.
One of the benefits of copyrights is that they are easy to obtain. The original creation of a piece of software automatically generates copyright protections without needing a lengthy or laborious application process.
Generally, copyright protections last for the entire lifespan of the copyright holder, then another 50 years after their death; that number increases to 75 years when a whole company or team holds the copyright.
| 💡 Did You Know? Some types of material are unqualified for copyright protection because they are either protected by a different IP or considered inappropriate for protection. Unprotected works include: |
3. Trademarks
Another type of software IP is the trademark. A trademark may refer to any phrase, symbol, name, or other expression to signify a particular brand or product. You may see trademarked properties denoted by either a ™ (for unregistered trademarks) or an ® (for registered ones).
Note that a piece of software (the actual code) is considered copyrighted intellectual property, meaning the creator does not need to register a trademark or even a patent to safeguard against unauthorized use.
A trademark may be necessary to protect a specific name or logo used to promote that software or distinguish it from similar products.
| 📝 Note: If the lawyer finds problems with your application, they’ll send you a letter, which you must respond to to keep your application active. |
4. Trade Secrets
Software companies may wish to protect their trade secrets, which refer to any process, tool, or formula not commonly available to the public.
A company can enjoy legal protections for its trade secrets if it makes plausible efforts to protect them. If somebody spies on you or hacks your secure database to steal a trade secret, that would be considered illegal.
However, if somebody reverse-engineers and determines your trade secret solely on their own, that’s fair game.
| 📝 Note: Startups must protect their trade secrets to retain their success. Failure to do so can lead to a lack of growth and can cause a loss of market share and future revenue streams. |
How to Protect Your Software Intellectual Property
Beyond simply knowing about the different types of software IP, companies can take a few methods to ensure their intellectual property rights are properly preserved:
Using Licensing Management System
A license is what allows customers to use your software legally, without overstepping your own rights as the software’s owner or creator.
You can almost think of this like renting an apartment. The landlord owns the property, but when you sign a lease, you earn the right to use that property without overriding the landlord’s ultimate interest.
When you pay to license a piece of software, you agree to use it in certain ways that do not run afoul of the owner’s wishes.
A licensing management system may issue licenses to users, allowing them to use your software in an approved and authorized way.
There are several licensing management systems for software companies to consider, such as:
- Single-use licenses: These are installed or downloaded to a specific device.
- Floating licenses: These allow users to use the authorized software across multiple devices or for an entire company or team to use it freely within their internal network.
| ✅ Pro Tip: Make sure to leverage technology and expertise to cope with the complexity of software license models. It’s crucial to seek expert advice and support to help you navigate software license management’s legal, contractual, and technical aspects. |
Hiring a Good Lawyer at a Law Firm
It is always helpful for software companies to enlist legal aid. Experienced IP attorneys can help to identify which forms of software intellectual property your company has, what it needs to apply for, and how best to protect your IP.
Additionally, an IP lawyer can provide counsel should your rights ever be infringed upon, directing you on how to seek proper compensation.
| ✅ Pro Tip: Some lawyers only offer consultation on intellectual property rights and not litigation. Be practical and look for someone who can do both. Litigation lawyers inform you of potential defenses the other side may try to use. They are equipped to identify the causes of legal issues and prepare cases for trial. |
Appropriately Filing for Software IP Rights
While some software IP provisions, including copyrights, are automatic, you may need to go through the application process for a patent or a trademark. You’ll need to determine whether the IP belongs to an individual or a company.
It often makes sense to form a limited liability company or LLC. One of the great benefits of the LLC is that it creates a clear distinction between the business entity and the business owner.
The upshot is that your personal assets are protected if a creditor or a lawsuit is directed against your business. You won’t have to worry about a business lawsuit jeopardizing your family’s monetary assets, home, or other valuable properties.
| ✅ Pro Tip: To maintain these personal liability protections, you must separate business and personal assets. This might mean entrusting your software intellectual property to the LLC instead of keeping it under your own name. |
While establishing an LLC is relatively easy from an administrative standpoint, it still helps to seek the best LLC services, ensuring you’re filing the right documents and establishing the right legal safeguards.
Developing Confidentiality Contracts
It’s easy for those with intimate knowledge of your software business to steal trade secrets and other software IPs, including disgruntled former employees, vendors, and contractors.
One way to prevent this is to put confidentiality agreements in place with everyone who works with you, including employees and partners.
A skilled IP attorney can guide confidentiality contracts, including source code licenses and IP assignment agreements. The latter is especially relevant for developers who work on your software.
Implementing IP Security Protocols
To protect your intellectual property from theft, it’s essential to establish the right digital security protocols. Some examples include:
- Securing your network and being strict about your BYOD (bring your own device) policies.
- Providing routine employee training about the importance of cybersecurity.
- Working with an IT contractor to implement the necessary firewalls, encryption, and other key protections.
- Having secure data backups and a robust disaster recovery plan.
| 📝 Note: Remember that if you don’t make reasonable efforts to guard your trade secrets, your legal protections may become null and void in the eyes of the court. |
Bottom Line
When you work in software, you naturally feel proud of your creative work and excited by the prospects of monetizing your technological creations.
Software intellectual property protections are key to ensuring you can use your software as you see fit without being undermined by unauthorized users or outright theft.
Ensure you know about the different forms of software IP and about the steps you can take to preserve them. With any specific questions or concerns, don’t hesitate to seek counsel from an experienced software IP law firm.
FAQs
Is software patentable or copyrighted?
Most software is launched under copyright licenses; no extra protection under patent law is utilized.
What type of property is software?
Under most circumstances, software is classified as an intangible asset due to its non-physical nature.
What software cannot be patented?
The software must not be merely an algorithm but a technical invention to be granted a patent. Business methods, mathematical methods, computer programs, and algorithms are not patentable inventions.
Amanda E. Clark is a contributing writer to LLC University. She is a graduate of Eastern Michigan University and holds degrees in Journalism, Political Science, and English. She became a professional writer in 2008 and has led marketing and advertising initiatives for several Fortune 500 companies. She has appeared as a subject matter expert on panels about content and social media marketing. She regularly leads seminars and training sessions on trends and tactics in professional writing.