We’re past the point when brick-and-mortar businesses believed that their tangible assets held most of their value. Most of a company’s value these days is found in its intellectual property. If we look at the 500 largest companies in the US, the total value of these companies consisted of 87 percent intellectual property and just 13 percent tangible assets in 2015, according to an Ocean Tomo report.
Losing rights to intellectual property can mean the end for an early stage tech startup. Tech companies often acquire legal protections such as patents and secured trademarks before they release a product to market, but their developers have access to their software before the product itself is released.
How can IT companies protect intellectual property?
Intellectual property for IT companies can take various forms:
Depending on the nature of the software product, what is considered intellectual property can be found in databases or embedded in code. To come up with the most efficient strategy for protecting your project’s intellectual property (IP), you should answer two main questions:
1. What does your IP consist of?
2. How is your IP protected legally?
In the world of software development, we mostly talk about three types of intellectual property: copyrights, trade secrets, and patents.
What is the difference between copyrights, patents, and trade secrets, and how do these three types of IP apply to IT products?
A copyright is what you need to protect the way your software solves a certain problem. A copyright doesn’t protect the idea behind your product, but rather the way this idea is implemented in software. Copyright protection best of all applies to source code, object code, and user interfaces.
A patent protects the idea behind a particular product, but not the execution of the idea in the form of code. Patents often protect software architecture and proprietary algorithms. Another factor that companies should consider before settling on their IP protection strategy is cost. Applying for a patent is highly complex and often a costly process, which means that it might be prohibitive for smaller tech companies with limited budgets. Companies that deem it worth the effort tend to hire law firms that specialize in patent law to navigate all the complexities of patent acquisition.
Trade secrets have to do with proprietary information that a software development company discovers and works with; trade secrets do not require publication and can be maintained indefinitely until they are discovered by another company on the market. Imagine that a tech startup develops a business architecture that is optimal for its product. Such business architecture will be the company’s trade secret until somebody else, who is working in the same market, discovers on their own the same exact way to do the same exact thing.
Protecting source code and making sure that general information about business ideas, together with all proprietary algorithms won’t be disclosed to third parties, are the two biggest concerns most clients voice when they come to Yalantis.
That’s why in this article we want to focus on two types of intellectual property – copyrights and trade secrets – since they are most applicable to our clients’ needs in terms of IP protection.
How copyrights apply to source code and how to protect your source code.
There are two major aspects of protecting source code:
Product owners have to make sure that source code is their intellectual property and not a developer’s.
Product owners have to make sure that all the details about the technical side of their product are considered confidential.
How does copyright protection apply to source code? Creating source code is a creative process, which means that the result of such work can be protected by copyright law as code can be seen as an original work of authorship. At the same time, nobody would argue that creating code often involves hundreds of smaller tasks that are repetitive and cannot be classified as unique, and thus are not protected by copyright.
This seeming contradiction is often resolved by the so-called “merger doctrine”: whenever it’s understood that there are a limited number of ways a task can be completed, developers or product owners are prohibited from using copyright to prevent others from using the same methods in their work.
How can you acquire copyright protection for your source code?
A copyright is the only type of intellectual property protection that is acquired automatically whenever source code is written or a program is compiled.
It’s possible, however, to protect your code from other companies’ making unauthorized copies, but to do so you need to apply for a certificate of registration of a copyrightable work from the United States Copyright Office. The duration of a particular copyright will vary, but at minimum they last 70 years from the date of creation of the product they protect. It’s important to remember that though an application for a copyright may be completed online, the processing of this application will take about four months.
Sometimes, a company decides to release parts of a product’s source code as open source data; other times, they maintain all of it as a trade secret. Either way, copyright protection can be applied to all code. As a part of the copyright application process, you as the owner of the product are able to designate certain parts of source code as your company’s trade secrets, whereas other parts can be available within open source libraries.
If you want to find out how you can file copyright registrations for your source code, check out copyright registration for computer programs guidelines.
How is your code protected at Yalantis?
In terms of authorship, Yalantis follows legal best practices defined by Estonian laws and by European Union laws on IP protection, in particular the Directive on the legal protection of computer programs.
This directive, also known as the Software directive, states that if a computer program is created by an employee in the execution of his or her duties or following the instructions given by his or her employer, the employer has exclusive rights to the software program that is created. This means that throughout all work with Yalantis, you remain the sole owner of your app’s source code and user interfaces.
Nondisclosure and confidentiality agreements as ways of protecting trade secrets. On top of protecting their source code, many clients we work with focus on the business logic of their projects, and when they come to us for implementation, they ask questions about protection of trade secrets.
A trade secret is a very wide notion that encompasses anything from a new, more efficient way to run your business to a unique app architecture.
The easiest way to protect your trade secrets is to sign a non-disclosure agreement. A well-drafted NDA or confidentiality agreement will mean that you don’t have to worry about entrusting information about your project to a team of developers. Compared to the protection you can achieve by utility patents, trade secrets are cheaper and do not have expiration dates.
How does Yalantis protect your intellectual property?
Our company is compliant with Estonian copyright laws and with EU regulations in regards to intellectual property protection.
We always sign non-disclosure agreements. We either provide a customizable template or work with your lawyer to draft an agreement that is perfectly tailored to your business needs.
At Yalantis we provide our clients with an NDA template that can be adjusted based on their individual needs and requirements. NDA agreements can be signed at the very initial stage of cooperation, which means that you don’t have to worry about disclosing any technical details to us before we are bound legally to keep all this information strictly confidential.