protecting software innovations

Protecting Software
Innovations

HKUST Business School
2
Protecting Software via Patents,
Copyright, and Trade Secret
 Patents are ONE WAY to protect software
from being copied or replicated
 Protects FUNCTION patented, if granted
 Costly and difficult to get patent on software
 Copyright is a more common means of
protecting software innovation
 Easy to get copyright protection at low cost
 However, you still need cash to go to court.
 Trade Secrets are often useful as well.

3
Copyright versus Patents
 Patents are normally designed to protect
useful products and innovations
 Copyright is normally designed to protect
artistic expression that is not utilitarian
 Software is most notable exception; now
protected by copyright, but was not initially
 Required modifications to laws
 International treaties (WTO) cover software IP
 Evolving area of intellectual property laws

4
Requirements for Copyright
 Original work of authorship fixed in a tangible
medium of expression, including:
 Music, movies, books, art, software, CDs, statues,
restaurant menus, toy animals, cereal boxes
 Items excluded from copyright include:
 Manufactured goods, any idea or concept, most
useful things (other than software), methods of
operation, names, common phrases, facts, data.
 Protection is automatic and at zero cost in US
 Some countries outside the US require registration

5
Work Made for Hire
 Copyright may be owned by party for whom
work was created on a for hire basis
 Often applies to software code made for hire
 Maybe produced by employee or under several
types of contract relationship in which writing
states that creation is a “work made for hire”
 Author of copyrighted work can transfer
ownership by simple assignment of rights
 Programs created for hire are generally assigned

6
Problems with Assignment Rights
 Newspaper hired freelance journalists to
create stores for newspaper, and had rights
assigned to company for publication of stories
 Later, newspapers decided to publish articles
in non-print format online and in CD format
 Authors sued, claiming they only assigned
rights for publication in print to newspaper
 US Supreme Court agreed.
 Must specify rights in sale terms, with words like
“these rights apply to any known or future media.”

7
Useful Article Doctrine
 Copyright does not extend to the useful
application of an idea.
 Includes works of artistic craftsmanship insofar as
their form but not their mechanical or utilitarian
aspects are concerned
 If can not separate art from utility, courts will
deny protection for the entire work
 Lamp incorporating sculpture of woman at base
 Integrated circuit – art, but connected to utility
 Drawing is protected, circuit itself is not protected

8
Term of Protection
 Life of the author plus seventy years
 If made for hire, lesser of 95 years after first
publication or 120 years after creation
 This is longer life that used to apply, and
copyrights before 1998 were for shorter time
 Copyright life has been extended several times
 From 1909 to 1976, only lasted for 28 years, and
renewable for 28 years more if requested.
 From 1976 to 1998, was life plus 50 years

9
Idea versus Expression
 Ideas can not be copyrighted, nor can facts
 Only expression can be copyrighted
 However, substantial similarity concept of
copyright enforcement seems to go beyond
literal expression to the essence of the work
 What is difference between idea and essence?
 Judgment of court: copying of art or concepts?
 Requirement that original work form basis of copy

10
Exclusive Rights Granted
 Reproduction
 Derivative work
 Distribution
 Performance
 Display
 Digital transmission performance
 (last four limited to public exercise only)

11
LOTS of Exceptions to Rights
 Fair Use – the largest area of exceptions
 Right of use for promotion
 Record store can play selections to promote sales
of albums without violating copyright
 Right to make copy of program to maintain or
repair it, or for archival backup
 Otherwise, this would violation reproduction right
 Various special statutory limitations on rights

12
Copyright International Issues
 Laws for copyright are very similar worldwide
 Some differences in what is allowed “fair use”
 Some differences in penalties for violation
 Some differences in criminal code application
 HK Law versus USA laws
 Criminal act to sell ANY pirated goods in HK, but
not as easy to be subject to criminal law in USA
 Criminal act to USE any pirated software in any
form of business in Hong Kong (for firm and user)

13
Patent International Issues
 Patent laws increasingly similar worldwide
 Treaties bringing patent life to same length
 Treaties under WTO requiring similar treatments
 However, registration of patent still required
in every country, unlike with copyrights
 Registration process different in each country
 Costs of registration and process of registration
not same in each country, and may not be the
same for citizens versus non-citizens of country

14
UK / EU Patent Law Differences
 UK and EC patent law formally prohibits:
 Patent of computer software
 Patent of business process or methods
 Both are allowed as patents in USA
 However, differences are less than they seem
 Some patents in UK and EC have been granted
for software as “part of” a “technical innovation”
 Some patents for business process innovations
were granted which include “technical innovation”

15
Short Grace Period for Prior Use
 Patenting an invention in any country starts
the clock as a legal publication that creates
prior usage unless patented within short time
 Must patent in every country where you want
patent within one year of first patent being filed
 Some countries apply six months test
 Some countries have zero tolerance for
publication or patent in other countries prior to
application
 Simultaneous applications recommended

16
International Trademark Issues
 The only international Trademark laws that
exist are EU laws related to EU trademarks
 Similar in some ways to US federal trademarks
 Requirements for trademark registration are
not the same from country to country
 Protections under trademark differ as well
 Overlap with copyright laws, which are
internationally recognized (to protect brand)

17
Other Laws Worth Considering
 Personal Privacy Laws
 Why might these laws affect innovation?
 Contract laws (especially for eCommerce)
 eCommerce Registration and Trademarks
 When is Trademark on internet in commerce?
 UK requires direct efforts to market to UK
consumers, but US does not have this
requirement
 Trade Secret, Moral Rights, Design Rights
 Passing Off: Reputation, Goodwill, Custom

18
Personal Privacy Laws
 USA has relatively liberal privacy laws
 Medical information protected
 Video rental history protected
 Not much else is protected under US law
 Hong Kong has one of the most strict
personal privacy laws in the world
 Can not publish list of church members without
getting permission in writing of all members
 EU Privacy laws stronger than US laws

Individual Assignment
 Submit through LMES
 Due before 4pm on Monday (25 Feb)
19

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