Got Intellectual Property? Part V: Software Development

Check out the previous article in Mary's series on IP here.

Software development can be an Intellectual Property (IP) minefield, whether the code is written by employees, founders, or contracted out to independent companies.  The usual challenges of first identifying any IP to ensure proper protection and avoid IP loss are compounded by a high risk for accidental infringement. Unfortunately ignorance is not a defense against infringement.

Companies have to be careful not to jump to the lowest cost development solution without asking questions about who owns what code plus who has the rights to copy what code and ultimately include it in a product for sale.  Often technical illiteracy can exacerbate discussions when choosing a development solution.

Patents are not the only form of IP Protection

A startup in the United States developed a proprietary software platform, decided not to seek patent protection, and proclaimed that therefore they did not have any IP to protect.  To illustrate, this company will be called Peach with a picture of a peach as a logo and the Pit Software Application.  

Patents are just one category of IP protection and this startup had some of the other three types of IP: Trademark or Servicemark, Copyright, and Trade Secrets. 

The United States Patent and Trademark Office (USPTO) Trademark definition:

… a brand name….any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.[i] (emphasis added)

Specifically, the Peach and Pit names and logos can potentially be trademarked as the company develops their software and services. Before any marketing materials or domain names are reserved, the Peach name and logos should be fully researched to see if someone else is already using them in the same industry. 

The United States Copyright Office (USCO) defines copyright as: 

…a form of protection grounded in the U.S. Constitution and granted by law for original works of authorship fixed in a tangible medium of expression.[ii}  (emphasis added).  

Although copyright was attained when the company wrote the blog or created the Peach website, if Peach wants to pursue any infringement by others, the copyright must be registered. Copyright can also be registered for trademarked Peach & Pit names and logos.

When registering copyright, the original work is disclosed. Thus filing for copyright on Peach’s software code may require full public disclosure of all the lines of code.  Consider whether there is anything in the code that should be a secret and therefore remain unpublished. 

Deciding whether to patent the Pit software or keep the code as a trade secret is a decision that needs professional advice.

The time to seek that legal advice is at inception, not after the coding project kicks off.  Remember a trade secret can only be protected if it is kept secret.

There should be an App for that!

A common phrase heard frequently and many startups are jumping to develop either mobile apps or software applications.  All require code to be licensed or written or a combination of both. 

Like many other business processes, it is all about timing and starting with the end in mind.  If the goal is to create an application from scratch without relying on any other pre-existing code, then an original work will be the end result.  The code can then be protected depending on ownership.

Who owns the Code?

Using our Peach example, if the developers who created the Pit software platform were Peach employees, the code most likely belongs to Peach because the developers were hired as employees to create this original work.  It is still good business practice to clearly outline in an employee agreement that all work done by the employee and the resulting IP are Peach’s property.

If Peach would have instead hired developers on contract or hired an outside software development firm to write code, the code does not automatically become Peach’s property. In the US, the agreement must specifically state that Peach owns the code and all the rights to the code at the end of the contract.  

Unfortunately, the lack of these important contract provisions can leave a company having to pay a licensing or royalty fee to the developers to use the very code they paid to develop because the full rights to own that code were not in the contract. A great example of why investing in proper legal contracts at the very beginning of a project can save you headaches and money down the road. Taking it one step further, the same applies to brand items such as logos, advertising copy, and photos developed by others. (Part VI on this topic next month).

Open Source Code or Code from others

Regardless of whether employees or contractors are writing the code, any use of plugins, gems, snippets of code from others, open source code and so on may negatively impact the ownership rights to your application. 

If the company’s goal is to create proprietary software, it is critical that any code developed by outsiders is legitimately included.  Often the most common challenge is to ensure that any copyright is honored.

An example below contains the notices in the programming language Ruby under the MIT license as shown on the Open Source Initiative.

The MIT License (MIT)

Copyright (c) <year> <copyright holders>

Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the "Software"), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, and to permit persons to whom the Software is furnished to do so, subject to the following conditions:

The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software.

THE SOFTWARE IS PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. IN NO EVENT SHALL THE AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY CLAIM, DAMAGES OR OTHER LIABILITY, WHETHER IN AN ACTION OF CONTRACT, TORT OR OTHERWISE, ARISING FROM, OUT OF OR IN CONNECTION WITH THE SOFTWARE OR THE USE OR OTHER DEALINGS IN THE SOFTWARE.[iii] (Emphasis added) 

The Ruby terms of use lists specific requests that all the above copyright and permission notices are copied over when using the code. 

It is therefore very important to check those terms of use first to make sure that the proper copyright attribution is given and that you are not stealing or infringing on someone else’s code.  Remember, ignorance is not a defense!

[i] http://www.uspto.gov/trademarks/index.jsp
[iii[ http://opensource.org/licenses/mit-license.php

 

This article was written by Mary Juetten, founder of Traklight.com a site that provides inventors, creators, and small businesses with the online tools to identify and protect their intellectual property. Traklight® products include the IP Vault®, which enables users to time-stamp and store files to prove dates of creation, invention, and publication plus now collaborate in the multi-user version. Visit www.traklight.com and take the IP Risk Quiz to assess the risk of losing your IP. Use ID your IP®, the Traklight questionnaire and receive a Report that identifies potential IP, educates, and provides an action plan including strategic IP business tips.

Disclaimer:  This article is intended to be general information and nothing in this article constitutes legal advice. Please consult with an attorney before making any intellectual property decisions.

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