Software Copyrights: Limited Protection... And If It's Not In Writing, You May Not Own It Anyway!

by Michael A. Lechter

In my last article, I addressed some of the problems posed by illegal software copying and reviewed a basic taxonomy of pirates: internal copiers; conventional pirates; sophisticated copiers; and reverse engineers. Internal copiers and conventional pirates copy software products in their totality. By using trademarks and copyrights strategically, developers can generally head off these types of competitors. In this article, I will discuss copyright protection of software.

What Is Copyrightable?

Copyright protection is available for all aspects of a software product that can be categorized as 'original works of authorship.' Copyright protection secures the exclusive right to exploit the work for the author — to reproduce, distribute copies, prepare derivative works from, or publicly perform or display audiovisual aspects of the work. Copyright protection is essentially automatic; it goes into effect as soon as a work is placed in tangible form. It also enjoys a relatively long duration, typically lasting at least 75 years for commercial software.

However, copyrights provide a relatively limited scope of protection. Ideas, methods, systems, mathematical principles, formulas, and equations are expressly not copyrightable, and 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 the idea. Copyright protection does not prevent a person from studying a copyrighted program, taking the ideas expressed in that program, and writing his or her own program based on those ideas. Additionally, copyrights provide no protection against independent development; they apply 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 considered a copyright infringement. Since internal copiers and conventional pirates typically copy software products in totality, copyright protection typically applies. However, the expression-versus-idea dichotomy gives rise to some particularly interesting questions when we try to apply copyright protection to software aspects 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 — the code itself and the audiovisual aspects only. Because of this, copyright protection is typically not effective against sophisticated copiers and reverse engineering.

Registering Copyrights Is Essential, Too

Certain practical issues associated with relying on copyright protection for software also arise. For example, the copyright statute gives the rightful owner (purchaser) of a copy of a program certain rights with respect to use and copying — one reason why the software industry goes to great lengths to license, rather than sell copies of, software to end-users. In addition, while copyright protection is essentially automatic, registration of a copyright is a prerequisite to an infringement suit, and registration prior to the commencement of an infringement is a prerequisite for such remedies as statutory damages and attorneys’ fees.

In the software industry, delaying registration of a copyright until an infringement arises is prevalent. Software developers put off registration primarily to avoid having to address questions that may compromise the trade secret status of the software. This strategy tends to delay enforcement, sometimes precluding applicability of copyright protection where time is of the essence, and more importantly, limits the available remedies. Attorneys’ fees and statutory damages are generally not available if infringement takes place prior to registration.

Who Owns the Copyright?

With respect to the ownership of copyrights, the law 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 — and not the company — will own the copyright to the work, 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 in only 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 if 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 any of the work-for-hire categories. Rather, the categories most relevant to software are contributions to a collective work; supplemental works; and audiovisual works. On the other hand, any copyright can be assigned, as long as the assignment is made in writing.

In most commercial contexts, the distinction between owning a copyright as author of a work for hire and assignee of the copyright is of little practical significance. However, any assignment by an individual (non-corporate) author is subject to a right of termination; the author (or the author’s representatives) can terminate the assignment during a five-year period, beginning at the earlier of 35 years after publication or 40 years from the date of the agreement. If a work qualifies as a work for hire, the company is deemed to be the author and therefore the copyright owner, and there is no right of termination.

In any event, from the company’s perspective, any time 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 limited in scope, can be valuable for protecting software, particularly when the copyright is used as part of an overall protection strategy. But when a company engages consultants, written agreements are the only way for the company to be sure it gets what it bargains for.

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Michael A. Lechter, Esq. is an international intellectual property expert who consults on complex litigation related to patents, trade secrets, copyrights, licensing, trademarks and technology issues. He is counsel to the international law firm Squire, Sanders & Dempsey, LLP., and is best-selling author of “Protecting Your #1 Asset: Creating Fortunes from Your Ideas” (click here to go to Today’s Engineer book review). You can contact him at www.mlechter.com.