Category Archives: Software

If a patent can’t cover an “abstract idea,” can it be a trade secret?

Should I patent my invention or keep it a trade secret?  QuestionInventors often ask me this question.  And after a recent court decision and USPTO actions that raise the bar for patenting software inventions, the question is becoming even more important for software developers who want to protect their IP.

In Alice Corporation Pty Ltd. v. CLS Bank Int’l, the Supreme Court made it clear that “abstract ideas” are not eligible subject matter for patent protection. The decision, as well USPTO Preliminary Examination Instructions that followed the decision, suggest that inventive concepts such as algorithms, financial business methods and methods of organizing human activity are not, in themselves, patentable unless claimed with additional elements that make the claim cover significantly more than just the abstract idea.

So, does this mean that it’s better to keep certain inventions as a trade secret? Will trade secret law protect abstract ideas in a way that patent law can’t?

In most cases, probably not. Several state court decisions suggest that a trade secret needs to be described in an enabling manner in order for the owner to enforce trade secret rights against others.

For example,the Court of Appeal for the State of California recently held that in California, a “trade secrets plaintiff must, prior to commencing discovery, ‘identify the trade secret with reasonable particularity.’” New Castle Beverage, Inc. v. Spicy Beer Mix, Inc., (Cal. App. 6/17/2014).  In that case, the complaint described the trade secret as a “process of applying a secret solution to the inner and outer surfaces adjacent the lip of a beverage cup to permit a first mixture of spices to adhere to those surfaces.” The court found this description to be too vague.  Also, the lower (trial) court expressed a concern that if it were to grant a preliminary injunction, the court would have difficulty determining whether the defendant was violating the injunction.

This means that when deciding whether to patent a process or keep it trade secret, the inventor should work with his or her attorney to assess which area of law provides the best protection, not which regime is easier to use. In both situations, the inventor should identify and document a complete description of the process.  This description needs to include more than just the general idea itself, it needs to explain how the idea is implemented as technology.

So, if the question is “can I protect it,” patent law and trade secret law will often lead to similar answers.  Neither area of law is likely to help an inventor who either can’t or won’t fully describe the process in a way that enables a reader to make and use the process, and that allows a court to determine when an infringer is using the process.

[Image credit:  Copyright: <a href='http://www.123rf.com/profile_anatolymas'>anatolymas / 123RF Stock Photo</a>]

Do contractors help develop your software? Read this if you plan to sell or license it to others.

A recent decision from the United States District Court for the District of California could, if upheld, significantly limit companies’ ability to transfer its proprietary software unless the company has obtained an assignment from each and every developer.

In a decision published November 5, 2012 in Amaretto Ranch Breedables LLC v. Ozimals Inc., Ozimals argued that Amaretto Ranch infringed its copyright in software used in connection with the online virtual reality site Second Life. Amaretto Ranch filed a declaratory judgment action and argued that it could not infringe because Ozimals did not own the software. Three developers created the software, but only two of them had executed assignments in favor of Ozimals.

The court agreed with Amaretto Ranch’s argument and held that in order to transfer a copyright, all authors must agree to the assignment.  Otherwise, the attempted assignment is merely a non-exclusive license. Continue reading

Looks Like Tetris? Video Game Clones and Copyright Law

According to a recent study by Flurry Analytics, in the first two months of 2012 over 50% of all user app sessions on Android and iOS mobile devices involved video games.   GamesIndustry International recently reported that by 2017 global revenue from video game software is expected to grow to $70 billion by 2017.   With significant money and consumer interest in play, it’s not surprising that software developers are rushing to feed the gaming frenzy.  In some cases, game developers may be inspired by the world’s most successful mobile gaming apps like Tetris, Angry Birds, Bejeweled and many others.

However, a recent court decision warns that game developers must recognize that the difference between “inspiration” and “copying” may be subtle.  Falling into the wrong category can result in significant consequences.   Continue reading

The importance of including algorithms in software patents

The U.S. Court of Appeals for the Federal Circuit recently issued its second decision in the past month in which it found a software patent to be invalid for failure to disclose an algorithm that the software uses to perform its function.  In each case, the patents’ claims involved “means plus function” language such as the phrases “control means” and “access means”.
Continue reading

Addressing privacy and security risks in cloud computing service contracts

As more businesses store and share data via third-party “cloud computing services”, privacy risks and Federal Trade Commission enforcement actions have also increased.  Many companies’ standard vendor services contracts are woefully inadequate to address these risks.  When contracting for cloud computing services, the contract should specifically describe data handling practices, security breach notification procedures, and data return requirements when the contract ends.

My colleagues Sharon Klein and Tabitha Sullivan recently wrote an article that includes tips and traps to consider when negotiating or drafting a cloud computing services contract.  As they note in the article:

The scope of the cloud computing services will impact the respective responsibilities of the vendor and the customer.  This contractual clarity is especially important given that most cloud computing vendors believe security of data is the customer’s responsibility, not theirs. . . .  The [customer's] contracting department should work closely with the IT department to identify the company’s specific requirements and incorporate appropriate provisions to ensure the company’s needs are met.

To view the full article on the Pepper Hamilton website, click here.

Open source software: when is it really “free”?

Free and open source software (FOSS) offers a free, time-saving solution to many software developers.  However, “free” does not always mean “without cost”.   As my colleague David Wormser wrote in a recent article:

[S]ometimes even “royalty free” can be too expensive.  FOSS almost invariably comes with strings attached. . . . Depending on the FOSS and the developer’s plans for it, complying with the applicable license may be relatively easy and painless.  But, if it a developer wants to avoid potentially serious consequences, it needs to take a systematic approach to managing the FOSS opportunity.

The legal challenges flow from the terms of the license agreements themselves. The license agreements are essential to the developer’s legal ability to use FOSS code. . . . Each license imposes a specific set of requirements and limitations on developers wanting to modify and/or redistribute the FOSS in question. Unfortunately, from the developer’s point of view, complying with the license can be complicated, particularly when the developer intends to use in a single software product FOSS from a variety of sources.

For Dave’s full article and recommendations on how best to manage the use of open source software in your company, click here.

Software Patent Statistics

Philip Brooks’ Patent Infringement Updates recently posted some useful statistics about the USPTO’s issuance of software patents, along with how frequently courts have declared software patents invalid over the last few years.  Interesting nuggets from the stats include:

The USPTO granted 752 software patents in 2006 — far more than in any other year.  However, in 2006, the U.S. Supreme Court began to question whether the USPTO was going to too far when granting software patents, as shown by Justice Breyer’s dissenting opinion in LabCorp v. Metabolite, Inc.  and Justice Kennedy’s concurring opinion in eBay, Inc. v. MercExchange, L.L.C.    

After all of this, the USPTO also began to more aggressively reject claims directed to software, and the number of software patents granted dipped to 707 in 2007.   The number held steady at 707 in 2008.