Options for Protecting Software IP

As with other types of inventions, protecting software intellectual property is an important business consideration. Traditionally, intellectual property protection for software has been acquired through copyright protection, patent protection, or a combination of the two. Each strategy has its own benefits and drawbacks.

Patent protection is the intellectual property protection coveted by most inventors and has been gaining popularity amongst software developers because it provides the right to exclude others from making, using, selling, offering to sell, and importing the invention. Patent laws also protect against reverse engineering and independent creation.

These added protections come at a price; inventions are subject to a much higher level of scrutiny before a patent is granted. Patent eligibility requires that inventions must be new (novel), useful, nonobvious, of eligible subject matter, and properly disclosed. To qualify as eligible subject matter, software patents have often been categorized as process patents, machine patents, or both. An advantage to patent protection is that its exclusive rights are effective from issuance of the patent until the date twenty years from the filing date.

A disadvantage to patent protection is that it can be extremely costly. The average cost of obtaining a U.S. patent is roughly $15,000-$25,000, due mostly to attorney’s fees. Another disadvantage is that a patent provides only the “right to exclude others” and does not afford the inventor the right to make, use, or sell his or her own invention. For example, if Tom patents a software improvement that uses a method patented by Joe, Tom would need to obtain a license from Joe before he makes, uses, or sells his own patented invention. If there is a “patent minefield,” numerous patents similar to what the inventor wants to patent, the cost of obtaining the patent, licensing, and cross-licensing could be more expensive than the profits from a very limited patent.

More and more software programmers are finding patents to be the protection of choice, but this might be changing soon.The Supreme Court recently announced that it will review Alice Corporation Pty. Ltd. v. CLS Bank International (read more here), directly addressing patentability of software. Although the Court could issue a narrow ruling limited to the facts of case, it could also take the chance to set bright right rules, and at the vary least, provide some structured guidance for handling software patent cases.

Copyright protection grants the software developer the exclusive right to reproduce, adapt, publicly distribute, perform, and display the work. Registration usually costs $35 or $65 depending on the method of registration, whether it be online or by mail. Aside from cost, advantages of copyright protection include the lengthy term of protection, duration of author’s life plus seventy years, the ease of gaining protection, and the international standardization of copyright protection, which allows easier enforcement internationally. One disadvantage to copyright protection is that the software is considered a “literary work” and thus is only protected if it is verbatim plagiarized. Non-literal infringement is judged by a “substantial similarity” standard comparing the two works. As can be imagined, it is sometimes difficult for judges to understand the highly technical program language similarities.