Software Copyrights: Get It in Writing

Trade secret protection of software and patent protection of software were discussed in the last two issues. A third form of protection, copyrights, also can provide somewhat more limited, yet valuable, protection for a software product.

Copyright protection is essentially automatic (it arises as soon as a work is placed in tangible form) and is of relatively long duration (typically 75 years for commercial software).

However, a copyright provides a relatively limited scope of protection. Ideas, methods, systems, mathematical principles, formulas, and equations are expressly not copyrightable; copyright protection is not available for functional aspects of the program. A copyright protects only the form of expression of an idea, not the substance of an idea. Copyright protection does not prevent a person from studying a copyrighted program, taking the ideas expressed in the program, and writing his or her own program based on those ideas.

And, copyright provides no protection against independent development -- it applies only to instances of actual copying of copyrightable aspects of the program.

It is now generally settled that literal aspects of computer programs are copyrightable subject matter. Making unauthorized copies of program code is likely to be a copyright infringement. However, the expression vs. idea dichotomy gives rise to some particularly interesting questions when attempts are made to apply copyright protection to aspects of computer software other than the literal code. The law is still very much in flux, but the clear trend is to restrict copyright protection of computer programs to literal aspects, i.e., the code and audiovisual aspects.

Various practical issues also arise in connection with the use of copyright protection for software. While copyright protection is essentially automatic under the statute, registration of a copyright is a prerequisite to an infringement suit, and registration prior to the commencement of an infringement is a prerequisite for statutory damages and attorneys' fees. These provisions of the copyright law tend to create practical problems for the software industry.

Primarily to avoid questions as to the trade secret status of the software, the practice of delaying registration of a copyright until an infringement situation arises is prevalent in the software industry.

This tends to delay filing of copyright actions and, more importantly, limits the available remedies; attorneys' fees and statutory damages are generally not available if infringement commences prior to registration.

Further, registration is not instantaneous; realistically, obtaining a registration takes up to a week or more, even when using the special expedited handling procedures available at the Copyright Office. This precludes applicability of copyright in many circumstances where time is of essence.

The law with respect to the ownership of copyrights is not intuitive, and is often a trap for the unwary. In general, the author of a work is the owner of the copyright to the work. Absent a written agreement expressly assigning the copyrights to the company, an independent contractor or consultant who participates in the development of the software, and not the company, will own the copyright to the work. This is true even though the company pays the consultant to develop the software. Anyone for whom the company does not withhold taxes and social security is considered an independent contractor.

A company can obtain ownership of a copyright only in two ways: if the work qualifies as a work for hire, or by transfer (assignment) of the copyright.

Software qualifies as a work for hire only if it is developed by employees within the scope of employment, or it falls in certain categories of works, and there is a written agreement specially commissioning the work and expressly stating that it is a work for hire. Much commercial software, however, does not fit in any of the work for hire categories; the categories most relevant to software are contributions to a collective work, supplemental works, and audiovisual works.In any event, from the company's perspective, anytime non-employees are involved with software development, a written agreement is imperative. The agreement should specify that the software will be a work for hire to the extent permitted under the law and also expressly assign the copyright (and perhaps all intellectual property interests) in the software to the company.

Copyright protection, albeit of limited scope, can be a valuable tool in the protection of software, particularly when used as part of an overall protection strategy. When a company engages consultants, written agreements are the only way to be sure it gets what it bargains for.

Michael A. Lechter, a member of the law firm of Meyer, Hendricks,Victor, Osborn &amp Maledon in Phoenix, Ariz., can be e-mailed at malechte@mhvom.attmail.com Sharon K. Coleman is also a patent attorney at the firm.