How Software is Protected by Law

How Software is Protected by Law

By Josue Rosario

Software & IP

Intellectual property software or, software IP, is an important part of the software industry. The term refers to a computer code or software that is protected by law under the different types of intellectual property—serving as an asset to any company that applies and is granted the right of ownership over the software.

The competition pushing the innovation behind software is a driving force to file for protection over their programs, especially for start-up companies and larger entities in a competitive market. As technology advances, gadgets are invented daily to keep up with the high demand for new innovative technologies. In 2020 alone, 63% of patents issued were related to software inventions (Millien, 2021). Moreover, software patent eligibility is becoming more defined, making it easier to set future guidelines for applicants.

Protecting your software

Filing for intellectual property rights grants the user protection against different types of infringement, depending on the type of software developed and the scope of protection wanted. There are three types of IP rights that are relevant for protecting software: patents, copyrights, and trade secrets. Typically, applicants apply for either patents or copyright protection, in some cases they file for both copyright and patent protection. For example, one applicant might want to apply for copyrights over lines of code. The legal scope of copyrights only extends to the line code itself, not the functionality of the code, making the applicant susceptible to infringement from those who write a different code that has the same functionality. Trade secrets also offer protection for those looking to keep software out of the public domain. These ways of protecting software are relevant to software protection as follows:

·         Software patents: Protect the functional aspect of software that cannot be protected under the scope of copyright or trade secret. Software patents are utility patents that protect the function of systems, algorithms, user interfaces, program language translation, and data-compiling techniques. The downside of applying for a utility patent as legal protection for software is the lack of protection against specific lines of code, as these could be plagiarized for other purposes. Design patents are also available for software, but legal protection mainly extends to the user interface, for example, Google’s search bar interface or Apple’s iPhone interface.

·         Copyright: Copyright laws don’t protect much of the functionality of the software but instead extend to the form in which the software is developed i.e., the lines of code. Authors or developers of the code don’t need to file for copyrights, as protection arises automatically with the creation of an original work, but it is advisable to file for copyrights with the USPTO to enable the author to file a lawsuit. Copyrights also provided legal protection to certain aspects of the software's user interface.

·         Trade secrets: Trade secrets are frequently used for software protection, as most software codes are not disclosed to the public. There is no filing for trade secrets, and requirements for legal protection are less than other forms of IP protection. Trade secrets theoretically last forever, as long as the owner uses reasonable efforts to keep it a secret and if someone else doesn’t invent or discover it. However, they are subject to theft—to be protectable in any legal dispute the owner must present evidence that the secret is not known to the public and prove that efforts to keep it a secret were taken.

The global software market is valued at $583.47 billion as of 2022 with an estimated 11.5% constant growth for the next 10 years—meaning the usage of software and derivatives such as user interfaces and programs are at an all-time high. Many of the available software are protected under IP laws, giving exclusive rights to the owner and those who pay fees for usage of the software.

Licensing your software

 To avoid any legal disputes, licensing management systems are implemented. These help market-ready software to be distributed to those who are willing to pay the license cost and agree to the terms and conditions in exchange for the usage of the software in an authorized manner. Similar to a contract, licenses are agreements between the entity that created the software and its end user. Each license helps monitor how the software is used and allows the owner to track how it's being used, providing legal protection to both the developer and the user. Most software licenses are classified under proprietary or free and open source. For proprietary licensing, no code editing authority is given, meaning that no modification can be made, and most likely an operational license. Free and open-source licenses grant the user rights to reuse or modify the software code by providing the source code.

Significant `Ruling

The Alice Corp v. CLS (Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014)) case was decided by the United States Supreme Court in 2014. Similar to Mayo v Prometheus, the case marked a significant milestone in patentability claims in software and business methods. Alice's patent, related to currency trading, was challenged by CLS Bank for being an abstract idea and therefore not eligible for patent protection under Section 101 of the United States Patent Act. The Alice ruling created a two-part test to determine patent eligibility: first, whether the patent claims are directed toward an abstract idea, law of nature, or natural phenomenon; and second, whether the patent claims include an inventive concept that transforms the abstract idea into a patent-eligible application. This test has brought some clarity to patent eligibility evaluation in technology sectors where abstract concepts are often involved. The ruling has made it more challenging to obtain and enforce patents on vague, overly broad, or purely abstract ideas, and has forced innovators to focus on genuine inventions that have a tangible impact and promote technological progress.