You and a friend just spent a year developing some software. How can you protect your investment?? This section covers six legal instruments -- trademark, contract law, disclosure agreement, trade secret, patent and copyright -- that could be used.

1. Trademark - exclusive use of a symbol to identify goods or services. For example, MacDonald's Arches. Label a trademark by ^(TM) as in Unix^(TM). Must apply to Patent and Trademark office and convince them the symbol has not already been trademarked.

Can lose trademark status by common usage, e. g., as happened to Kleenex.

Can not trademark an entire program. Only its name, e. g., Lotus 1-2-3. Rather useless to protect software.

Unfortunately, the U. S. Trademark and Patent Office is relatively naive when it comes to software. Therefore, companies in the computer business must be aware of greedy individuals who will try to trademark a commonly used technical term or algorithm name. For example, in September 1995, an individual asked for and received a trademark on the text symbol "Linux operating system." He then promptly turned around and demanded high fees for the use of the name on company products. Five companies brought suit against him in the U. S. Trademark Trial and Appeals Board in November 1996 and showed "prior use" of the name. The dispute over ownership of the trademark was resolved in August, 1997. The trademark was turned over to Linus Torvalds, original developer of Linux. (Ref.: Linux Journal, Nov. 1997, page 12)

2. Contract Law - Party A takes out a contract with party B. For example, party A agrees not to copy diskettes other than for backup. Legally binding, but not to a third party outside the binding parties.

Used to protect software designed for one company. If the software is publicly distributed, not too useful for protection.

3. Disclosure Agreement - a type of contract where party A agrees not to talk or write about a presentation or product. Used by companies to present new releases or products to preferred customers.

Not very secure for software as many customers don't take the agreement seriously. Easy for information to leak.

Sometimes used as a sales gimmick. "The information must be important if we must sign disclosure agreement."

4. Trade Secret - also called Proprietary information. Computer programs have qualified as trade secrets. The information must be keep secret from all except those bound by contract. Otherwise, once the secret is disclosed, trade secret status is lost for ever.

Hard to keep software a secret - can't lock it up in a vault. One approach is to ship only run units (object code) to customers. However, people have disassemblers to reverse engineer the program.

One problem with a trade secret is that it is a all or none instrument. As soon as one individual spills the beans, you no longer have a trade secret and you lose the right of protection. The same problem exists for contracts and disclosure agreements. There is no legal distinction possible between mildly sensitive secrets and very sensitive secrets.

Easy to loose trade secrets at technical meetings and symposia.

"Trade secrecy is the most effective mechanism we have to protect software." (stated 1981)

5. Patents - In the US Constitution to protect inventors. You must file with Patent Office and they do an investigation. The patent must be original ("no prior art") and not an obvious extension. Must be an object, e. g., a mouse trap or a process, e. g., the Hall process for manufacturing aluminum. If patent granted, the inventor has exclusive right to make, use or sell the object or process for 17 years. Also he or she is required to disclose the information.

What is software? An object or a process? Can't patent an idea, e. g., second law of thermodynamics. You must patent an implementation of an idea.

In 1978, Supreme Court ruled that math formulas and computer programs can not be patented, BUT .....

In March 1981, Supreme Court ruled "that an industrial process based on the use of a computer may be eligible for a patent even if the computer program is the only new step in the process." The test case was Federal Mogul Corporation's process to cure synthetic rubber. The process used a computer to make repeated calculations utilizing data from a data acquisition computer (for speed). The Patent Office turned down the patent saying "The only thing really novel about it is the use of a computer for repeated calculations of the curing time." After the Court of "Custom and Patents" appeals, the case went to the Federal Supreme Court. The Supreme Court, in a 5 to 4 decision, ruled "A Patent application can not be denied simply because it uses a mathematical formula, computer program or digital computer." This is a good example of the legal process through the courts.

After the first software patent in 1981, the Patent Office has had a growing tendency to issue more patents on software. Since there exist "no prior art" in the Patent Office's records (Remember software was not patented until 1981 and, therefore, no records.), almost any concept of software can be patented. In 1994, IBM won a patent on finite state machines, which we teach in our first course, CS203. This lack coupled with the U. S. Patent Office's lack of understanding of the software issues created confusion and madness! In the first WEEK of January, 1995, the U. S. Patent and Trademark Office issued 125 software patents. They were expected to issue 10, 000 software patents in the two years, 1995 and 1997 because of backlogs. Critics call it "The Great Patent Plaque" and argue to abolish all software patents.

With such madness, software developers must worry about patent infringement when they write software but are given very little help in deciding what is or is not infringement.

Web sites for information:

http://www.needlepatent.com/artgjk1.htm

http://www.bitlaw.com/internet/patent.html

As a spin off phenomenon, large companies like Intel, Microsoft and Texas Instruments use the threat of patent litigation as a marketing tactic. They sue smaller companies and tie up the chief executive officers in court for days in hopes of hindering the smaller company's ability to bring a product to market.

Patent on LZW compression used in GIF images developed by Compuserve. Owner tried to collect a fee for each use.

6. Copyright - In the US Constitution for protection of writings by an author. Works must be literary, artistic or musical works. 1977 Law gave exclusive rights to the author or his/her assignee for the right to copy, publish, broadcast, translate the work or other adaptation, display or performance.

Must be embodied in tangible form. Can't copyright ideas, only works, e. g., books, tapes, records.

How to copyright? You can register with the government but registration is not required. Just place Copyright or ©, name and date on title page and the work is copyrighted. Making a copy (with or without aid of machine) without your permission is a copyright infringement. You can sue for maximum of lost market value.

In 1980, the Computer Software Copyright Act considers software copyrightable as literary work. Specifically, you can copyright "source code."

In 1981, a court ruled that a program in ROM was not copyrightable. Court ruled not a writing. But isn't a program in ROM semantically equivalent representation of source code???? Let us study the test case: 1982 Data Cash Systems vs. JS &A. In 1978, JS&A began marketing a chess computer with a ROM identical to the CompuChess ROM. Data Cash System charged JS&A with copyright infringement. At trial, the court ruled that a ROM cannot be copyrighted.

"In its object phase, the computer program is a mechanical device which is engaged in the computer to become an essential part of the mechanical process. . . . Mechanical devices which cannot qualify as pictorial, graphical, or sculptural work are not writings and may not obtain coyright protection."

Basically, some courts have come to the conclusion that object code represents a mechanical device, not an expression, and thus is not a proper subject for copyright. Other courts have held that both object and source code are properly copyrightable, "because the object code is the encryption of the copyrighted source code." (e. g., 1984 Apple Computer Vs. Franklin Computer Corp.)

Since 1984, the courts have defined "copy" as "material objects . . . in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced . . . either directly or with the aid of a machine or device." For example, under old law (prior to 1980), the Supreme Court had ruled an unauthorized seller of piano rolls (punched paper input program for a player piano) had not made a "copy," because a copy must be " a written or printed record of intelligible notation." Prior to 1980, one could place a unauthorized copyrighted dictionary for a spellchecker in ROM and get away with it. Today, that is not possible.

In 1982, the courts ruled one can copyright images in video games . One can copyright "attract mode" - similar to a copyrighting a movie. But not the "play mode" of the game. In the "Concept and Feel" case Atari's Pacman against Munchkin, the issue of similarity was raised in computer games. The law states they can not be "substantially similar" which is very subjective.

In another Atari case: a video game Meteors appeared similar to their Asteroid video game and Atari sued for copyright infringement. The court ruled not substantially similar and noted:

"[It] is not enough to observe that there are a great number of similarities in expression between the two games. It is necessary to determine whether the similar forms of expression are forms of expression that simply cannot be avoided in any version of the basic idea of a videogame involving spacerocks."

This ruling has the essence of the issue.

In early 1990's "Look and Feel" on Graphical User Interfaces (GUIs) was a hot litigation issue. Apple suing Microsoft and HP -- can't use Apple's "Trash Can." Xerox suing Apple. Lotus suing Paperback Software and Mosaic Software. VisiCalc sues Lotus. Isn't this counterproductive to standardizing interfaces??

Copyleft - Richard Stallman and GNU project.

II. Concerns for the Software Developer/Software Entrepreneur

1. Tax Laws- e.g., can write off manufacturing cost for donations. Useless for software - cost of disk copy. How do you depreciate an operating system?

2. Intellectual property rights - Who owns what?

3. Privacy of individuals, especially with data bases where information on individuals is stored, e. g., medical database.

4. Crime/security- secure messages/transactions, digital signatures

5. Malicious software - viruses, trojan horses, worms. How to combat if they occur? How to avoid them?

Spamming of unwanted email messages. How to deal with it?

6. Export restrictions. Case Study: Encryption - Pretty Good Security.

7. Software warranties

8. Maintenance Contracts - hardware and software

9. Service contracts

III. Employer/Employee Considerations

1. Keep a good written record in case of litigation.

"The writing that engineers and scientists do can be legally crucial, ... . Your writing constitutes part of the legal record of a project and might end up as evidence in litigation. Thus, part of your job responsibility as an engineer or scientist is to make your writing precise and to keep accurate records of what you've written."

Above quote from Woolston, D. C., P. A. Robinson, and G. Kutzback, Effective Writing Strategies for Engineers and Scientists, Lewis Publishers, Inc., 1988, p. 151.

Mathes and Stevenson in their Designing Technical Reports: Writing for Audiences in Organizations, Second Edition, Macmillian, 1991, pp. 455-469, present six basic precepts that engineers and scientists need to observe in order to protect their readers, their company, and themselves in the legal context. These precepts are as follows:

a. Don't assume confidentiality.

b. Write so that your documents can continue to function effectively for years.

c. Don't promise what your company can't deliver.

d. Write adequate instructions.

e. Warn your readers of dangers.

f. Be accurate and complete.

These basic precepts apply to all your written documents - letters, memoranda, laboratory notebooks, project notebook as well as technical reports. You never know what might be used in litigation.

2. Ethics in the workplace. Whistle blowing by employee after viewing illegal or unethical activity.

3. Liability for software "failure." Torts the legal concepts of negligence and computer malpractice.

4. Certification of software professionals.

5. Employee email. Who can read it?? Worry about disclosure of Trade secrets.

6. Employees must sign agreement on first day.

7. Postemployment restrictions for software authors.

Can require employee to sign "restriction agreement" on the last day.

IV. Techniques to Get Around Intellectual Property

1. Rewrite code with same function

Case study - GNU project. Richard M. Stallman "The GNU Manifesto"

2. Make "significant" change in look and feel case

3. Re-engineering - disassemblers.

4. Clean room

5. Show prior use in court to remove competitor's right of trademark or patent.

6. Make contract with patent holder.

7. Pay for license to use the information in a Patent.

V. Bibliography

1. Galler, Bernard A., Software and Intellectual Property Protection: Copyright and Patent Issues for Computer and Legal Professionals, Quorum Books, 1995. Good reading, a small book only 202 pages. Current. - 1995. In BU library as KF3024.C6 G35 1995.

2. Neitzke, Frederick William, A Software Law Primer, Van Nostrand Reinhold Co., 1984. In BU library KF3024.C6N44 1984. Very good reading, a small book - only 157 pages. Somewhat out of date.

3. Smedinghoff, Thomas J., The legal Guide to Developing, Protecting and Marketing Software, Wiley and Sons, 1986. Good but out of date - 1986. In BU library as KF 3024 C6S58 1986.

4. Maggs, Peter B., et al., Computer Law: Cases - Comments - Questions, West Publishing, 1992. A technical book for legal professional. In BU library as KF390.5.C6 M34 1992.