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These five terms are often used interchangeably while they each possess very different meanings.  This post will define what each of these terms mean and provide an overview how they can be utilized in the software consulting world.  Since this article is written by a lawyer, a couple of disclaimers are in order: (1) This article is designed to provide an overview of intellectual property rights in software consulting and is not intended to provide legal advice whatsoever.  (2) Please consult a licensed attorney if you or your company wish to pursue protection for your ideas, products or software. Now that we have that out of the way, let's cover some basics.

IP Basics

According to the U.S. Patent and Trademark Office (USPTO), a federal agency under the U.S. Department of Commerce, intellectual property “is the ownership of a dream, an idea, an improvement, an emotion that we can touch, see, hear and feel.”  The term intellectual property corresponds to the body of law that includes protections for these concepts.  Patents, copyrights, trade secrets and trademarks are all forms of intellectual property, which provide these protections.  Patents, copyrights and trade secrets can be used to protect the technology itself, while trademarks protect the names and symbols used to distinguish a product in the marketplace.  The bottom line is that all of the aforementioned concepts are ways to protect intellectual property from unauthorized use.  See article by Eric C. Freibrun, Esq.

A patent, once granted to an inventor by the U.S. Government, “excludes others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States” for 20 years, in exchange for public disclosure of the invention when the patent is granted.  Public disclosure of the information increases the amount of technical knowledge available to the public.  The exclusion of others using the patent is considered a reward for the time and effort expended in creating the invention. (See Freibrun article).  This flow chart describes the process to obtain a patent through the USPTO.

Next, copyright is a form of protection granted by law for both published and unpublished original material.  While a patent protects inventions and discoveries from unauthorized use, copyrights protects original works of authorship, including writings, computer software and works of art.  Work is protectable the moment it is created and fixed in a tangible form.  Registering the work is completely voluntary but in order to bring an action for copyright infringement, the work must be registered with the U.S. Copyright Office. Copyright law provides protection against copying another’s work, but it does not protect against someone else independently creating the work.  Fine line, yes.  To learn more about the copyright registration process, visit www.copyright.gov. Furthermore, copyright protection is available even when a patent application has been filed.  Importantly, in a case of infringement, it is questionable whether courts will grant relief when an injured party is relying on copyright law versus patent law. See discussion by Deepak Malhotra, Esq.

Trademarks, on the other hand, do not protect technology per se, but protect words, names, symbols, sounds, or colors that distinguish goods and services.  Trademarks can also refer to service marks.  Trademarks can be registered with the USPTO, but registration is not required.  Use of a mark in commerce (in more than one state) without registration can establish rights to a mark, but there are a number of advantages to registration.  Advantages of registering, according to the USPTO, include public notice of the mark’s ownership, legal presumption of ownership nationwide, exclusive right to use the mark on or in connection with the goods/services listed in the registration, and the right to use ®, the federal registration symbol.  Trademarks can be renewed forever as long as they are being used in business.  For more information on the application process to register a trademark, visit the USPTO website.

Meanwhile, a trade secret is defined by the U.S. Code as information, which derives independent economic value, is not generally ascertainable by the public, and reasonable measures have been taken to keep the information a secret.  Trade secrets do not have the same legal protections as patents and copyrights as there are no means to register them. In fact, the protections provided for trade secrets are generally through contract law.  For example, if parties enter into a general services agreement where one party is expected to provide services for another, and the work requires either party to release information considered a trade secret of the company, the contracting parties can incorporate language into their service agreement acknowledging that trades secrets will be revealed throughout the course of the agreement.  Both parties also generally agree not to disclose the trade secret to any party outside of the agreement.  The trade secret can be upheld in an action for theft if the owner can prove reasonable steps were taken to protect the secret and the information is not reasonably ascertainable to the public.

Applicability to Software Industry

Historically, neither copyright nor patent laws appeared to give much credence to software and the ideas surrounding it.  Software, as one author put it, “was too functional for copyright, too close to a collection of algorithms and ideas for patent.” See article by Arti Rai, Esq.  However, over time, the importance of both copyright and patent protections for software gained traction by the U.S. Congress, the courts and the USPTO and is now fully recognized in law.  While various forms of intellectual property rights over software have been present for some time, the tech boom resulted in entrepreneurs and software startup owners to explore ways to protect their ideas and products.

Software patents can be important economic tools in business.  Patents can be obtained for ideas, systems, methods, algorithms, and functions embodied in a software product: editing functions, user-interface features, compiling techniques, operating system techniques, program algorithms, menu arrangements, display presentations or arrangements, and program language translation methods (See Freibrun article).  Owning a patent requires tech companies to invest substantial time and money in the process; thus, it is axiomatic that those who own patents are serious about the growth of their company.  And, owning a patent is one way a startup can appear attractive to investors with deep pockets.

Software patents are not without debate however.  There are many experts who strongly believe software should not be among the list of things eligible for patent protection.  The analogy goes like this – novelists are not expected to hire patent lawyers so why should computer programmers?  See article by Timothy Lee in Forbes Magazine. Because creating software is essentially similar to drawing a picture or writing a book, isn’t patenting software just a curb on a programmer’s freedom of expression? Furthermore, when there is a remedy available under the U.S. Copyright Act, why does software need patent protection?  Some software engineers have gone as far as to say that the “patent system actually hinders innovation” because instead encouraging ideas, the patent system is broken as it is stirring with patent infringement. In fact, companies have sold their patents to companies who are not necessarily interested in using the patent itself, but are purchasing the patent to file lawsuits – and win big - against other companies for patent infringement.  For an example on the war on patents in the high-tech industry, see “When Patent’s Attack, as originally aired on This American Life.

Copyright is a popular method of protecting computer software.  The holder of a copyright sells the user a license to use the software.  The user (licensee) is allowed to use the software, under the terms and conditions set by the license, but never owns it.  Many features of software, such as code and the ideas and concepts reflected in it, can be protected as trade secrets. This protection lasts as long as the protected element retains its trade secret status.  Computer algorithms are a perfect example.  Unlike patents, trade secret protection will not extend to elements of software that are readily ascertainable by lawful means, such as reverse engineering or independent development (See Freibrun article).  As such, it is important to determine whether the information your company is maintaining as a trade secret should be protected by additional means, such as a copyright or a patent. Famous trademarks in software include Windows, Apple and Java.  As one scholar has noted, “when carefully selected and protected, and through effective marketing, trademarks can become badges of quality, expertise and reputation.” See publication by Lawrence Rosen, Esq.  Thus, a company name, logo or a brand may gain the protections of trademark law without going through the process of filing a patent or a copyright.

Whether your company is big or small, a start up or a business that has been thriving for decades, it is important to give the concepts of this post some thought.  As you continue to grow, your ideas and concepts should count and should be protected against unauthorized use.