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Strategies For Protecting Software Intellectual Property

Why is software a special case in protecting intellectual property?

Protecting intellectual property (IP) in software presents some unique issues. Businesses are used to thinking in terms of copyright and patent, but conditions in the industry demand some additional considerations. For example, programmers frequently change jobs as they are wooed away by other companies’ better offers. What happens when they leave? A programmer knows the algorithms, and may be tempted to use what he or she knows for another company. Programmers are also often hired on a temporary basis, as contractors. If they develop software while working for a company, questions may arise as regarding the true ownership of the source code. Further, many companies enter into co-development partnerships. When the project is finished, who will own the end products or their parts? Does such a project involve trade secrets? If so, what procedures are in place to prevent programmers from accidentally disclosing trade secrets in their joint efforts?

What does a comprehensive IP protection strategy entail?

A comprehensive IP protection strategy requires education of executives, key employees, and attorneys, conducting an IP audit (reviewed on a regular basis, preferably annually), designing an IP protection strategy based on the audit, and implementing it.

What kind of information must be shared between the attorneys and key employees?

Education is a reciprocal process. In order to design an IP protection strategy, an attorney must have in-depth knowledge of the company’s procedures that may put its IP at risk. Executives and key employees should be educated and provided with documentation on general IP principles. This will help them to identify which of the company’s activities put its IP at risk. In turn, the executives and employees should familiarize the attorney with the company’s basic operating procedures.

What is an IP audit?

An IP audit identifies the risks that expose the company to the danger of its IP being appropriated, or attacks on its IP by other companies. It assesses many factors including IP applications and registrations, terms of existing license agreements, distribution agreements, co-development agreements, employment arrangements (particularly those of persons essential to the development and maintenance of the software), potentially lapsed patents, and company procedures in place to prevent, for example, accidental disclosure of trade secrets.

Designing an IP protection strategy first involves generating a document containing specific recommendations. These recommendations may include making appropriate IP filings for patents and copyrights, filing for industrial design registrations of the user interface, and registering trademarks in key markets. It may also require working out nondisclosure and non-competition agreements with employees, standardizing software licensing and distribution agreements, and developing a host of internal procedures. For example, these might include procedures to prevent accidental trade secret disclosure by logging confidential materials or storing source code where access is restricted to certain developers.

Most importantly, the strategy recommendations should not be considered an impediment to developers’ work. A good developer is, by nature, a good hacker. If strategies would require a great deal of work or cause annoyance and delay in performing their daily jobs (for example, having multiple passwords every time developers need to get on-line, access code, compile, etc.), developers will quickly circumvent the strategies.

How can an IP protection strategy be used effectively?

Implementing the IP protection strategy requires effectively communicating it to all employees. It will usually require dissemination of the policies and presentations. It is important to let employees know why certain measures are being taken. Development is an art that requires judgment and teamwork. If a developer understands the basics of IP protection and the reason for various protections, he or she will be able to make good decisions and know when to bring up problems to management.

DON’T FORGET: Your strategy will require regular review (annual is preferable) monitoring and timely updates as needs change in order for it to remain effective.

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