Software has an outsized role in the economy contributing over a trillion dollars to the value of the US gross domestic product. Proprietary software represents a significant portion of that value and can be among a business’s most valuable assets. However a company may use software — whether for its own internal purposes; with its customers, or product or service it licenses to third parties — giving software legal protection can give the company a competitive edge that may be lost without legal protection.
While there has been a decade-long debate in some circles over the respective merits of open source versus proprietary software, this series will gently skirt that debate and instead focus on the kinds of protections available to companies and people that own software.
Generally speaking, the rights that can protect software include: intellectual property (such as copyright, patents, and trade secrets), contractual obligations (e.g., confidentiality and use restrictions), non-IP statutes (such as the Computer Fraud and Abuse Act); and various common law tort claims (such as trespass to chattels). Each of these protections has unique advantages and drawbacks. Some forms are cumulative and others exclusive.
Choosing the right protections includes a number of considerations such as:
(1) how the software is designed to work;
(2) where the software sits within the owners business model (how it contributes to the owner’s ability to make money);
(3) how much money the owner wants to spend both procuring the IP and, if necessary, asserting the IP as protection;
(4) whether unprotected disclosure of any aspect of the software will materially diminish all or some of the value of the software; and
(5) realistically, how secret can the owner keep the valuable aspects of the software from third-party collaborators, clients, and/or competitors.
Before addressing these factors and the available factors in more detail, this series will next address the more fundamental question of what software is from a legal perspective.
Join me next week for part two.
David L. Cohen, P.C. – Kidon IP
123 West 93rd Street
New York, NY 10025