SCO's action against IBM over disputed Unix code highlights the
grey area of software as intellectual property. So how do you guard
the rights to systems you develop? Protect your firm's intellectual
property
The multibillion-dollar lawsuit brought by SCO against IBM, and in
particular the allegation that IBM violated SCO's intellectual
property rights, has highlighted the need for companies to review
how well their own intellectual property rights are
protected.
SCO has said it will act on what it alleges are breaches of its
rights, and the snowball effect is likely to be considerable, so
what preventive steps should companies consider?
It is generally accepted that computer software should be protected
as intellectual property. Although this is good news for software
manufacturers and IT directors concerned about protecting software
developed in-house, there is little or no consensus as to how much
protection should be afforded or how it should be achieved.
Traditionally, computer programs have been protected as works of
literary copyright. This has been, and still is, invaluable in
protecting against piracy or "bit-to-bit" copying of the source
code. Copyright protection under UK law arises automatically and,
as such, it is important that IT directors accurately record
details of software developments - who developed them, when and
where - if they are to assert copyright and benefit from its
protection.
What copyright cannot protect is ideas, and many who devise new
programs want to protect not only their precise expression, but
also something of their functionality. In many cases, the
underlying ideas are effectively protected as trade secrets.
However this can, arguably, stifle innovation.
Patents can protect innovative ideas and principles. They confer a
20-year monopoly in return for disclosure of the underlying
concept, thereby affording more effective protection than is
available through a combination of copyright and
confidentiality.
Patents, which have to be published, are particularly attractive
for software ideas that would be easy for competitors to copy once
the software itself is in the public domain. The obligation to
disclose would have little impact.
Patents and copyright will provide safeguards but of equal
importance is the ability to enforce those rights and achieve as
much protection as possible. It is prudent, therefore, to secure
contractual protection.
Close co-operation with the human resources department is
imperative to ensure that provisions in contracts of employment
adequately underpin intellectual property rights.
It is vital to include specific clauses in employees' contracts of
employment confirming that the employee is under a duty to disclose
to the company any ideas or inventions they originate.
Similarly, you should include a provision making it clear to the
employee exactly where they stand regarding materials created
during the course of their employment as copyright in design works
will also be important.
Typical clauses would state that any trademarks, registered
designs, design rights, copyright, database and other intellectual
property rights (subject to the Patent Act 1977) created during
employment or the use of materials, tools or knowledge made
available through their employment, will become the exclusive
property of the employer.
These specific clauses may be supported by a general
confidentiality clause protecting trade secrets from being divulged
for the benefit of a competitor, either during the employment or
after its termination.
The assertion of intellectual property rights should be clearly
stated in contracts with third parties such as suppliers,
contractors and sub-contractors.
The patenting of computer programs has been hotly contested in
Europe, although the practice is widespread in the US. Although UK
law specifically states that computer programs are not patentable,
the exclusion is circumvented by claiming protection for a clear
technical advancement in the program.
Of 30,000 patent applications received by the UK Patent Office each
year, 15% relate to computer-implemented inventions. Now, the
European Patent Office (EPO) has issued guidelines which state that
software can be inventive and patentable if it displays a further
technical effect.
A new draft European directive also states that computer-related
programs are patentable. When a program goes further than producing
normal physical interactions between the software and the hardware,
it can be patented.
The new guidelines and directive, however, merely set out what was
decided as long ago as 1986 under Vicom Systems' application, where
a technical advance involved a substantial increase in processing
speed. The ruling states, "Decisive is what technical contribution
the invention makes to the known art."
The requirement for the software to produce a technical advance
cannot, however, be ignored and in IBM/Document Abstracting and
Retrieving (1990) the EPO rejected a patent application for a
computer system which automatically abstracted and stored documents
on the basis that the invention was of a purely intellectual and
not a technical nature.
Examples of software patents granted by the UK Patent Office
include:
- Editing and de-bugging a computer program
- Processing techniques to achieve increased speed of execution
of software
- Improving the efficiency and speed of execution of application
programs
- Computerised billing systems for use on, for example, a
telecoms network.
The Copyright, Designs and Patents Act 1988 determines ownership
of copyright and design works created by an employee. The first
owner of copyright will usually be the employer if the employee
created the work during the course of their employment.
The Patents Act 1977 determines ownership of patents. An invention
made by an employee will belong to the employer if it was made
during the course of the employee's duties and is a reasonably
expected result of those duties. Ownership will also fall to the
employer if the employee's duties are such that they have a special
obligation to further the interests of the employer.
Where the employer is not the owner of the invention, an employee
may pursue their own application for a patent and any performance
of or work on the invention will not infringe any copyright or
design right that the employer may have in related models or
documents.
Ian Tranter and Patricia Jones are partners at law firm
Hammonds