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Software ownership: copyright and patenting

Enterprises develop their own software, but don't realise that they thereby possess assets which can be turned into a revenue stream; but the thorny question of ownership must first be ratified, explains E&T.

Properly protecting intellectual property (IP) in the form of software is complex, and the question of whether a piece of software can be truly patented has a colourful and controversial history. To further complicate matters, the growing popularity of open-source solutions has upturned many long-established IP practices, while software remains an asset that is a potential source of revenue.

Organisations have traditionally relied on copyright and patents as legal tools for the protection of their owned software - and for many companies, an IP-oriented strategy remains the preferred way to commercialise their products.

Open-source software is software available in source code form for which the source code, and certain other rights normally reserved for copyright holders, are provided under a software license that permits users to study, change, and improve it. When the model was first mooted, many saw it as a potential threat to established software/revenue models. Now that open-source is part of the mainstream, far from being perceived as a threat to income streams, it is recognised by many businesses as a commercial opportunity.

The differentiation between copyright and patents is a good starting point. Patents and copyright can both be used to protect software, but the protection each provides is fundamentally different. Copyright subsists automatically in source-code when it is created, but the protection it provides is perforce limited. It is a protection against copying of the source code or object code, and typically provides no protection against the taking of functionality or ideas which are implemented by the code.

FIn contrast, patents are intended to protect functionality - an idea itself, an invention, rather than the specific realisation of it - and thus where available can provide considerably broader protection. Obtaining the benefit of patent protection does, however, require software owners to invest time and money in filing and prosecuting a patent application.

Commercially, in this respect, it is necessary to consider whether the value of patent protection justifies the time and cost that will be incurred in obtaining that protection. Businesses in technology industries have a long history of developing technologies and then protecting those technologies using IP law. The propensity to file patent applications has, however, historically varied between industry sectors and between countries. For instance, while patents have formed an important part of the intellectual property of telecoms companies worldwide, US application software developers have made much greater use of the patent system than their European counterparts who have often (and sometimes wrongly) believed that copyright will automatically provide the protection they need.

Telecoms patents

Mobile telecoms is one sector in which patents have long been important. This is underlined by high-profile clashes in recent years, involving the likes of Nokia, Motorola, RIM (the Blackberry vendor) and Visto. Of course, in a sector such as telecoms, standards are naturally important. Many standards are built around numerous patents, the licensing of which is regulated to be available to all on fair, reasonable and non-discriminatory (FRAND) terms.

Given that many different and often competing parties will typically own patents that are essential to a particular standard, the number of essential patents a party holds can significantly affect its negotiating 'muscle' when looking to license essential technology that it does not own. As a result, the existence of standards in certain sectors has encouraged companies to favour patent-based IP strategies, in the hope that they will have more patents to bring to that all-important negotiating table.

While previously software companies have relied upon copyright, and in some cases chosen to also seek patent protection for the functionality of their software, the increasing popularity of open source provides more options as well as, potentially, more pitfalls.

The principal aim of open-source is a laudable one: the developer community works together in such a way that each developer makes their source code available to others for further development, on the condition that the source code of those further developments is also made available to the community on the same terms.

As such, the community as a whole benefits from their collective work in development of software. There is a lot more to the open-source ethos, and it is reasonable to suggest that open-source sometimes means different things to different interests; also, standard definitions change over time as markets evolve.

'Open-source for common good' is a common mantra. The open-source model brings a number of inherent benefits to software development. It provides a vast, free pool of creative talent, whereby anyone can bring their time and expertise to bear on improving the code to an extent and at a pace that more 'closed' systems with their limited pool of employed developers are often unable to replicate. Central to any software business strategy must be the ability to keep up with the industry's phenomenal pace of change.

Open-source strategies are inherently conducive to meeting that need; indeed, Symbian - the vendor behind Symbian OX, the most popular operating system for the mobile phone industry - is a case in point. Its move earlier this year to make its operating system available on open-source terms could allow its pace of development to accelerate, thereby increasing take-up of telephones which use its operating system.

While receptive to the benefits of open-source, major corporates understandably want to protect their investment in research and development. Large corporates often adopt some sort of hybrid strategy, aiming to balance the best of open-source approaches with the benefits provided by copyright and patents.

An example is the 'open-core' model, where a value-added 'bells-and-whistles' proprietary version of a product is typically offered alongside a 'lite' open-source version. Part of the logic here is that increased take-up of the core software, due to the public licence, will feed through into additional potential customers for the add-ons. The approach aims to retain the benefits of open-source while doubling it up into a sales tool.

While use of an open-source strategy might well make commercial sense, it is most important to understand exactly what is being given away. This will be determined by the licence terms under which the software is provided. While many licences are referred to as 'open source', they are not all the same, nor are they all equal. Open-source licences generally provide the developer community with the right to modify and distribute the code (notwithstanding patents or copyright, and assuming that the modifications are distributed on the same terms), but there might be useful 'get-outs' in some licences.

For example, Symbian has chosen the Eclipse public licence. This allows modules for use with licensed software to be made available on other, potentially non-open-source, terms: thus, the developer is free to develop a module for use with the Symbian operating system, which it can then license under normal commercial terms. If there are patentable developments within that module, patent rights could be used to limit use of that module; and it would seem that Symbian has used a licence that provides flexibility for the future should the company want to take a different path: a path that allows Symbian to develop proprietary modules, which it need not share on open-source terms, while still benefiting from open-source development of its core platform.

Mark Kenrick is chartered patent attorney at Marks and Clerk - www.marks-clerk.com

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