Computer software is a valuable asset for companies. It can be a main product line or it can provide the technical backbone to run the company in an efficient and profitable manner. To keep a competitive edge, companies need to protect their software. But how?

Not too long ago, most companies relied on copyright law as their sole means for protecting software. Copyright is a legal device that provides the owner of the software exclusive rights over the work, such as the right to make copies, the right to distribute copies, the right to create derivative works (i.e., prepare new works based on the underlying work). Copyright automatically comes into existence the moment an author fixes his or her work in some tangible form, e.g., software code is written. Registration of a work with the U.S. Copyright Office is not required. However, prompt registration provides a number of important advantages. For example, registration makes your copyright a matter of public record and may provide you with the ability to collect statutory damages and attorney fees in the event of litigation. The Copyright Office provides a means to protect trade secrets in the software code by allowing the applicant to block out up to 50% of the software code submitted as deposit materials. The current term for copyright is the author's life plus an additional 70 years after the author's death. For works made for hire (e.g., those works created by employees), the duration of copyright will be 95 years from publication or 120 years from creation, whichever is shorter.

Proving infringement of copyright requires either proof of copying or proving that the infringer had access and the works are substantially similar. Generally, it is easy to prove infringement for pirated software code. However, if the accused infringer only copied the "ideas" in the software and not the "expression," there will be no infringement under copyright law.

Trademarks also provide some competitive advantage to those companies that sell software. If you can convince a potential customer to ask for your product by name, you will likely make the sale. Off the shelf products depend on name recognition, especially if competing products are priced the same. How does a customer choose between Typing Tutor and Mavis Beacon Teaches Typing? Probably through name recognition. Like copyright, trademarks do not require registration. Trademark rights are acquired through use under "common law." However, federal or state registration provide advantages and should be considered.

Trade secret protection for software is also available if the functionality of the software cannot be ascertained by reverse engineering. This is usually not a suitable form of protection for products sold to the public. However, software that is exclusively used internally may be adequately protected as a trade secret. In order for trade secret protection to be successful, the company must takes steps to maintain the "secret." Steps may include employment agreements requiring confidentiality as well as securing the physical plant and computers with restricted access including password protection, encryption, and other devices to help maintain the secret and prevent disclosure. However, once the secret has been disclosed, the protection is lost, including any competitive advantage the company may have had. The only remedy is an action for misappropriation of trade secrets if the secret was unlawfully taken and disclosed.

Software patents are a relatively new form of protection for software. Patents protect the "idea" behind the software, not just the "expression" that is protected by copyright. Usually, software patents are expressed as a form of functional steps providing a certain result, like the final share price in a mutual fund program. Therefore, patents may provide broader protection since any software that uses the claimed steps would infringe no matter what computer language it is written in. However, the Patent Office will require a complete disclosure of how to make and use the invention along with the best mode. This may provide your competitors with "infringement operating instructions." Therefore, patent owners must be diligent in policing their rights. Patent infringement does not require access or copying. Therefore, even an independent creator may be liable. Due to a backlog of cases, software patents usually take 2 - 3 years to issue and an infringer cannot be sued until the patent issues. However, pre-grant damages may be available after publication in the U.S. in certain instances. Patents last for 20 years from the filing date, which for most software should be sufficient.

With all of these forms of protection, the various advantages and disadvantages must be considered when formulating a protection program. Often, more than one form of protection may be sought, like copyrighting the software code and patenting the method behind the software code. By using multiple forms of protection, the owner may find that certain violations are easier to prove under one type of law or that the remedies are greater under another.