Software Intellectual Property: What It Is & How to Protect It

What Is Software IP?

Software intellectual property, also known as software IP, is a computer code or program that is protected by law against copying, theft, or other use that is not permitted by the owner. Software IP belongs to the company that either created or purchased the rights to that code or software. Any unauthorized use of it by someone else is illegal.

Is Software an Intellectual Property?

Intellectual property is a type of intangible property created by the mind, such as inventions, works of art and literature, designs, names, or images. Software also fits into this category.

Intellectual property law recognizes 4 types of intellectual property that can be protected. Let’s take a look at these types and how they apply to software IP.

The 4 Types of Intellectual Property

1) Patents
A patent is the exclusive right to produce, use, and sell an invention. To qualify for a patent in the United States, you need to apply to the Patent Office and demonstrate that your invention is:

• Novel: No technology like it has yet been produced
• Useful: Your invention provides a clear and reasonably accessible benefit to the user
• Non-obvious: Your invention must have a component of innovation and can’t be the obvious next step in the development of an existing technology
• Patentable subject matter: Different countries have different criteria for what can and cannot be patented

Patents generally expire after a given period — usually 20 years. This gives the inventor a sufficient amount of time to fully benefit from the exclusive production and sale of their invention.

Software patents are extremely valuable for vendors because they can protect aspects of their product that other intellectual property laws cannot. However, patents can be difficult to obtain and the application process can drag out considerably. Furthermore, different countries have different approaches to the patentability of software.

You can read more about how to apply for and maintain patents on the United States Patent and Trademark Office website.

2) Copyright
In contrast to a patent, which protects the idea or concept of an invention, copyright protects the specific expression of that idea. It gives the owner the exclusive right to copy, modify, and distribute or sell those copies or modifications of the property to the public.

Software copyright could cover the specific code used in the program or elements in the user interface. Copyright is automatically obtained by the creation of the original work — unlike with patents, there’s no need to go through an application process. Copyright is usually applicable for the duration of the copyright owner’s life plus 50 years, or for 75 years from publication in the case where the software was created by the employee of a company. So practically speaking, if someone in your company comes up with a unique code for software that functions a certain way, that code is automatically protected under copyright law.

3) Trade secrets
A trade secret is a process, tool, mechanism, or formula that is not publicly available and is kept secret by its owner to maintain an edge over their competitors. In the shoemaker example above, the unique design of the shoe would fall under copyright, while the special way the shoemaker produces those shoes would be considered a trade secret because the competitor can’t discover it just by studying or taking apart the finished product.

Trade secrets can be protected by law as long as the owner makes reasonable effort to keep it a secret and no one else has discovered it independently. It’s illegal for someone to spy on your company and steal a trade secret, but if they figure it out by reverse engineering or by developing it themselves, it’s fair game.

4) Trademarks
A trademark is a symbol, phrase, name, or other type of expression used to distinguish a particular product or brand. Names of brands or products are often marked as trademarks using a trademark symbol: ™ for unregistered trademarks, and ® for registered ones.
What Kind of Intellectual Property is Software?

The software itself — the actual code — is copyrighted intellectual property, and it might also be considered a trade secret. The person or company who created it doesn’t need to register for a patent or trademark for its unauthorized use to be considered illegal. The concept of the software might also be protected by patent law if the creator has registered for a patent.

How to Protect Software Intellectual Property

It’s pretty easy for a shoemaker to protect his property: he locks up his store at the end of the day so no one can enter. But how does a software vendor protect the code they developed and ensure that no one steals their product or uses it in an unauthorized manner?

Your first layer of software intellectual property protection is doing your homework long before your product is released to the public:

• Hire a good lawyer or legal team to clarify exactly which rights you have and how best to protect them.
• File for patents and register trademarks where possible.
• Carefully screen employees and independent contractors and have them sign non-disclosure agreements before working with you. Intellectual property litigation experts R. Mark Halligan and Doug Haas wrote in 2010 that “employees are the foundation of an effective trade secret protection program.” (The Secret of Trade Secret Success, Forbes Magazine, Feb 19 2010)
• Store and work with your data on secure devices and follow all best practices for data security.

Once your technology is ready for distribution on the market, what you need to protect your software is a robust licensing management system.
How to Protect Software IP with Licensing Management

A license is what authorizes a customer to use your product legally.

When someone pays for the right to use an apartment, first they must sign a contract or agreement with the owner. Once that has been signed, the owner hands the renter or buyer a key they can use to access the property.

A software license is both the contract and the key. As a contract, it constitutes a software intellectual property agreement between the vendor and the user as to how the software will be used. As a key, it gives the user access to the software and allows them to use it according to the terms of the software intellectual property agreement.

You can’t steal an apartment very easily, but when it comes to software, copying the code or transferring the program to unauthorized devices or users can be very easy if it’s not well protected with a good licensing management system.

What Is the Technology That Protects the Intellectual Property Rights of Software?

Licensing management systems help protect intellectual property of software by issuing licenses to users that allow them to use the software only in an authorized manner. Each license helps control the use of the software so every use complies with the contract. A comprehensive licensing management system also allows the vendor to track how the licenses that have been purchased by each client are being used.

There are multiple models of licensing management that may be used for different types of software. The right strategy for how to protect software IP varies from company to company and from software to software, and may even involve multiple models for the same program.

In essence, license keys are a kind of code that enables the program to work according to the software intellectual property agreement. That code can be accessed using a physical electronic device — a dongle or USB key — or via software installed or downloaded to the device.

Models of Software License Intellectual Property Protection

Each model of license delivery has unique advantages and disadvantages:

Licensing hardware: Dongles or USB keys

This type of license application requires the user to plug a physical electronic device into the computer on which they intend to use the software. The code for the license is programmed into the hardware key and enables the device to access the software. The main advantage of this type of license is that it is very secure and doesn’t require reliance on the cloud or Internet access to activate the license. The main disadvantage is that it’s relatively rigid and non-customizable, and transferring the license requires the transfer of a physical object.

Software node locked, host locked, or single-use licenses

This type of license is similar to the former, except that the code to activate the software is delivered via software that is installed or downloaded to a specific device. The advantage is that no physical object is required, but the disadvantage is that the license only applies to a single computer or device, so it can’t be transferred.

Floating, network, or concurrent licenses

This type of license is also a code that is installed or downloaded to the device, but it can be shared among users on a network, or otherwise accessed on multiple devices. This model is an excellent solution if your company is trying to figure out how to protect intellectual property online. It can be especially cost-effective if a customer needs multiple users or devices to access the software, but not all at once.

If for example a company with 100 devices purchases a floating license that gives access for up to 10 users at once, the user who needs to access it sends a request for access to a central license server, and the server provides the license based on availability. When the user is done using the software, the license is “returned” to the central server and can then be transferred to a different user.

Named user, per-seat, or single-seat licenses

Another way of providing access to users from multiple devices is the named user or per-seat license: a license that can only be activated by a particular user who signs in with specific credentials. This is useful if a company knows that only specific employees will need to access this software. For example, if the company has a team of designers that work with Adobe Photoshop, you can purchase a per-seat license for that team.

License borrowing or offline licenses

This model allows a user to download a software license and use it without needing to connect to the central license server each time they log in, and then “return” the license once they no longer need to use it offline. This is especially useful for employees who are on the road or in the field and won’t have reliable Internet access. However, it may be expensive, since the company will have to pay for the license for the full duration of the period it’s been downloaded to the device.

Hybrid models

Many software vendors choose to offer a range or combination of different types of software licenses to best suit the needs of their clients. Many of the license models listed above can be mixed and matched. For example, a company may prefer per-seat licenses for a team of employees who need to access the software regularly, and a concurrent license for a different team that needs to access it only occasionally. Another company might prefer a cloud-based license for most of the team, and USB keys for certain employees who need more data security or who don’t have regular Internet access.

By providing a flexible licensing model, software vendors can attain high-quality software intellectual property protection while responding to clients’ varied needs.

Which Model Is Best for Your Company? How to Protect Software IP in the Optimal Way

The more a given software’s licensing model matches its customer’s needs, the better its software intellectual property protection will be. Clients who have a cost-effective and simple way to access the software are much more likely to use it legally and much less likely to try and find workarounds.

That’s why it’s so important to have a licensing management system that is not just secure but also provides flexibility. Thales’s Sentinel License Development Kit (LDK) could be just the solution your company is looking for. Sentinel LDK includes a wide range of out-of-the-box licensing and entitlement management features, providing software vendors with excellent intellectual property protection as well as maximizing revenues, simplifying operational processes, and enhancing the end-user experience.

Discover more about how Thales can help you protect your software IP.