Integral to the day to day functioning of many businesses, software should be treated as a valuable asset.
If a business utilises software that has been created for it or by those who are employed by it, that business will, understandably, expect to own all such intellectual property rights as may exist. In addition, the business will likely expect to be able to use any such rights to prevent unauthorised third parties from using their software.
In many instances, those entirely understandable assumptions will be correct. However, much will depend on the rights sought to be claimed, the circumstances in which those rights were created and what steps, if any, have been taken to protect those rights.
This is the second in a series of blogs concerning the intellectual property rights that may subsist in or be used to protect software; this time, we are focusing on copyright. Our earlier blog, outlining how the law of confidence can be relied upon can be found here.
Software as a copyright work
When we think about software, we tend to see it as the end result e.g. what we see when we use a particular application or platform. Because of this, it would be tempting to assume that the purpose or concept of software would perhaps be protected by copyright.
However, such an assumption would be incorrect; functionality of software does not qualify for protection.
This is because, at its most basic level, copyright protects the way that an idea is expressed, not the idea itself.
Applied to software, this means that we have to consider a program’s constituent elements when assessing how copyright would apply – for example, source and object code, databases and graphical user interface – as well as its architecture (e.g. structure, organisation and sequencing) and any preparatory materials that lead to its development.
All of these elements may qualify as protectable copyright works, under the Copyright, Designs and Patents Act 1988.
If copyright subsists, the owner of that copyright can prevent third parties from copying those elements, either as a whole or a substantial part thereof.
Crucially, what will be considered to be a substantial part is not determined by quantity of the work taken, when compared with the software as a whole or even the element protected, but rather the importance of what has been copied. Unauthorised reproduction of a relatively small part of code may still result in a successful copyright claim, allowing the owner of the copyright to obtain an injunction to prevent its unauthorised reproduction, as well as claim financial compensation for past reproduction.
But who owns it?
So far, so promising – copyright subsists on creation of the work in question (e.g. the code), so does not require registration. Therefore, there are no formality or legal costs associated with obtaining the right. Provided that the work is original, copyright will subsist automatically.
However, a common issue that we see is that businesses do not always ensure that they own that copyright.
Where the copyright work has been created by an employee, in the course of their employment, there is a presumption that any copyright created will belong to the business. However, this is only a presumption and can be displaced – it can also lead to tricky questions as to what was the ‘ordinary course’ of that employee’s employment.
If a business has commissioned a third party to create software then it will likely assume that it owns any intellectual property rights created. Unfortunately, this would be incorrect – absent an express assignment of those rights by the third party, the copyright will be theirs, leaving them free to supply the exact same software that your business has paid for, to your competitor. There are arguments that can be deployed in the business’s favour (for example, claims to equitable assignments or exclusive licences) but such arguments are costly and their success very much dependant on the circumstances of the case.
In both circumstances, these issues and disputes can be avoided by the inclusion of an appropriate clause in an employment or development contract.
Is there anything else I should do?
Put simply, yes – there are a number of practical and low cost steps that you can take to help prevent your copyright being infringed and/or put you in a strong position to defend your rights, should an infringement occur:
- Limit access to the proprietary elements of the software – after all, if it cannot be accessed, it cannot be copied. This will not always be possible but consider, for example, limiting employee and third party access to any source code repository;
- Keep clear records of who created what and when and keep copies of all changes (e.g. in a version control system);
- Make it clear that you claim ownership of the copyright in the software – e.g. use a copyright notice ‘pop up’ when the software loads;
- If you licence the software, make sure that the rights granted are specified and that it is clear that ownership remains with your business;
- Take swift action against anyone who infringes your rights – once proprietary code has been taken, an injunction to prevent further dissemination and use can be essential to protect the competitive advantage that the software gives your business.
How can Nelsons help?
If you have any queries regarding the subjects discussed in this article, please contact either Emma Ward or Kristina Ford in our expert Dispute Resolution team, who specialise in contentious intellectual property matters.