A 'Trade Secret' Can Defeat Piracy

Last issue, we addressed the problems posed by illegal software copying, and came up with a basic taxonomy of pirates: The internal copier or conventional pirate, most visible and most handily stopped by patents and copyrights; the sophisticated copier; and the reverse engineer.

Trade secret protection may provide relief from the sophisticated copier.

While the law varies from state to state, trade secrets generally comprise any knowledge or information that provides a competitive advantage and is not readily available from public information or through other proper means.

For software, trade secret protection may exist for aspects of a program that are not available through public information or from aspects of the program itself that are available to the public.

To maintain trade secret status, an obligation of confidentiality (for example, precluding decompilation or analysis of the software or disclosing materials relating the software to others) must be imposed on each person that has access to the software. This obligation is typically imposed through signed confidentiality or license agreements.

The primary drawback of trade secrets is their fragility. In the absence of an agreement, trade secret laws do not prohibit the sophisticated copier from dissecting a legally obtained copy of the software to establish how it works, and copying the underlying concepts and secrets.

Unfortunately, the sophisticated copier and the reverse engineer seldom operate under a confidentiality agreement. The requirement of an obligation of confidentiality also renders trade secret protection of dubious applicability to mass-marketed software products.

Attempts have been made to impose an obligation of confidentiality through "shrink-wrap" or "box-top" licenses, but the legal efficacy of such devices is questionable. Patents, on the other hand, provide excellent protection, giving the owner the right to prevent anyone from using, making or selling the the patented software without the owner's authorization. This powerful tool protects against independent development by competitors, reverse engineering, and simple copying.

However, patents on software inventions can be expensive and take time to obtain. A patent application normally requires at least a year -- and often much more -- to make its way through the patent and trademark office.

Further, the patent laws require full disclosure of the details of the inventive concept, and many companies are loathe to disclose their technology to the public and competitors.

In any event, for full protection of software, a patent is the only completely effective method of maintaining control over the concepts and techniques.

Although the delays and costs associated with patents limit their practicability for some software, patents represent the best prospect for protecting truly novel and valuable software concepts.

Infotech and the Law is a new column that will appear regularly in Washington Technology during the coming weeks. Its authors are from the high-tech law firm Meyer Hendricks Victor Osborn and Maledon, which is based in Phoenix, Ariz.

Michael A. Lechter is an attorney with the firm and is also an electrical engineer.