How to Protect Software with IP

In many ventures, software drives tremendous value. Software protection only delivers value when ownership is clear and documented. Well-protected software assets create competitive advantages, enable licensing revenue and improve investor confidence.

Ventures can protect software through layered IP strategies that combine multiple mechanisms for stronger protection.

1. Industrial designs for visual elements in software

Industrial designs protect visual elements, like design elements in a graphical user interface. These rights require registration with an IP office and usually last at 15 years. They prevent others from using a design that creates the same overall impression, even if created independently.

2. Copyright original code in software

Copyright protects original code, for at least 50 years depending on the country. While protection is automatic, registration can provide benefits like receiving higher damages if code is used without permission. These rights protect against copying but not against another developer building something similar on their own.

3. Patents for technical solutions in software

Patents protect new technical solutions in software, like algorithms or software system architecture. They need to be registered with an IP office and usually last up to 20 years. Patents, like those that protect Amazon’s Elastic Cloud Computer and Google’s MapReduce, keep others from making, using, or selling an invention.

4. Trade secrets for search algorithms and encryption methods

Trade secrets protect confidential information like search algorithms and encryption methods. Protection can last as long as the information remains secret, and a venture takes reasonable steps to keep it that way. Trade secrets protect against step but offer no help if someone else develops a similar solution on their own.

5. Fingerprinting for copyrights and trademarks in code

Besides IP right protection, some ventures may add nonfunctional comments, or fingerprints, into their codes to demonstrate that it was developed originally. The code can also contain a venture’s trademark to reinforce its ownership and originality.

IP Strategy in software licensing and ownership

Software affects the IP strategy of a venture in different ways, depending on how it was initially integrated into its products and services:

• Develop original code: some ventures may have in-house software developers or may hire an external contractor. Make sure IP is assigned to the venture via contract (for example via employment agreement or software development agreement).
• In-license software: other ventures may license custom-made software or off-the-shelf software. Make sure to get a commercial license before going to market, and for the source code in case it is custom-made.
• Open source: ventures and developers may use Free and Open-Source Software (FOSS) available under specific licenses. Depending on the Open-Source license used, determine if the venture is free to use, modify and distribute the work commercially.

6 Ways to Strategically Manage Software IP Portfolio

1. Maintain trade secrets: regularly updating confidentiality protocols and employment agreements.
2. IP portfolio management: make sure maintenance fees are paid, and applications for new improvements filed.
3. Open-source compliance: establish clear policies for open-source usage, both internally with employees and externally with suppliers and developers to protect any innovation.
4. License opportunities: identify potential licensing partners for the components available on the market.
5. Build a data room: keep comprehensive IP records for investor due diligence and potential acquisitions.
6. Cross-licensing partnerships: explore mutual licensing agreements with complementary technology companies.

Protecting software through a well-structured IP strategy is essential for ventures looking to maximize the value of their digital assets. By combining multiple layers of protection, including industrial designs, copyright, patents, trade secrets, and fingerprinting, ventures can build a robust defense around their software.