The fact that software takes the form of an intangible functionary doesn’t mean that it is immune from thievery. In fact, the massive potential for profit that software has in our modern world makes it a prime target for hackers, blackmailers, and opportunistic IP thieves.
In fact, intangible assets, such as software, comprise about 80% of the S&P 500’s total market value. Considering the incredible money to be made in monopolizing one’s control over their software and their ideas, it’s no wonder that countries such as China are trying to steal the bulk of that intellectual property.
Which Form Intellectual Property Covers Software?
There are four primary kinds of intellectual property that can be registered with the United States Patent and Trademark Office: patents, copyrights, trademarks, and trade secrets. The question of which one of these covers software is a tricky one.
Software comes in the form of written code and programming as well as the form of a functional physical product that runs on that code. This means that software is split into two of these categories: patents and copyrights.
The physical aspect of the code (that is, the full-bodied program) must be registered with a patent, whereas the literal code itself must be registered with a copyright.
Because of this awkward distinction, it becomes possible for interesting circumstances to arise in which one person owns the copyright of a given software while another person owns the patent.
What this means legally is that only the person with the copyright would be able to reproduce, modify, or distribute the code and only the person with the patent would be able to manufacture the productive face of the total program.
The Need For IP Registration
According to J.D. Houvener, a New York Patent Attorney, “Whether or not a firm registers its software with the USPTO can make or break that company’s future profitability.” This is largely due to the benefits and costs associated with IP registration.
The primary benefit that a firm stands to gain from registering its software as its official intellectual property is the government-backed monopoly that comes with patents and copyrights.
A patent or a copyright enables the owner of the idea to use government force to prevent anybody else from using that idea, regardless of whether or not the other person or business can use it better, more efficiently, or at a lower price.
This monopoly enables the owner of the intellectual property to become the only person capable of selling it, strictly limiting supply and arbitrarily increasing prices and profits.
Refraining from properly registering your intellectual property, on the other hand, leaves your firm open to competition. Unless your firm has been incorporated or otherwise had its loss potential mitigated by the government, this means that your business remains at the mercy of the free market.
Any Tom, Dick, or Harry could come along and steal your idea for their own company. This severely impacts your ability to profit off the sale of your software past the initial reception period.
The Challenges of Patenting Software
The various difficulties associated with patenting software tend to align with the general challenges of securing patents or copyrights in general.
The biggest challenge is knowing where to begin. The second biggest challenge is, well, everything after that. Simply put, if you don’t hire a patent attorney, you will likely burn a hole in your bank account, waste countless hours filling out paperwork, and still be denied by the USPTO.
While patent attorneys can sometimes cost upwards of $200 an hour, you need to understand how much money you could potentially save by shelling out the extra money. While this sounds nonsensical (how can you save money by shelling out extra money?), it very much rings true.
Consider this: What is the value of a $10,000 application fee if you’re denied? You’ll have to file again, potentially doubling or even tripling your costs. However, if you spend $2,000 on an attorney who lowers that $10,000 fee to $8,000, you still only spend $10,000 but your chances of approval become much, much greater.
The Patent Process
By now, you’re hopefully wondering how to patent an idea. Unfortunately, the patent process is far from a simple one. It often requires countless forms, thousands of dollars in fees, and more than 20 months to secure a patent.
That’s why the first step is always to secure a patent attorney.
Once you have your attorney, you’ll begin by adjudicating whether or not your idea passes the following requirements:
It is non-obvious, meaning that it isn’t the obvious “next step” in an existing patent.
It has objective utility.
It is original.
It has not yet been disclosed to the public.
The first and fourth requirements are often the most difficult to satisfy because of the vague nature of “non-obvious” as well as the tendency for inventors to become excited about their inventions and blab on social media to their followers.
At the end of the day, patents take time and time takes money. However, the benefits (namely that of turning your idea into a government-sponsored monopoly insulated from free market competition) of patenting and copyrighting your software can ensure that you are reimbursed in the long run.
By securing patents and copyrights for your software, you are protected from the negative side effects of going patent-free and stand to make back all of the money you lose in the lengthy and arduous patent process.
Of course, this all depends on the merit and marketability of your programs and software. When it all comes down to it, the number of patents and copyrights you own doesn’t mean a thing if none of those ideas are profitable.
So get to inventing and hopefully I’ll see your name next time I’m scrolling through Google Patent Search.
Written by Tori Lutz, a recent graduate from Florida State University and current student at Columbia University.