by Dennis S. Deutsch, Esq.

Not every software developer has either the time nor the funds to register every software product it develops with the Copyright office of the Library of Congress. Besides, during the development state, the software product matures and changes so rapidly that copyright protection at this stage simply is not the best means of protecting a developer's intellectual property. In this scenario, it is best for the software developer to rely upon trade secret protection for software.

However, simply calling software a trade secret probably is not enough to obtain trade secret protection. In order to obtain trade secret protection, unlike copyrights or patents, where registration is an integral part of the process, there is no registration for trade secrets in the United States. Rather, whether software constitutes a trade secret is totally within the control of the developer and based exclusively upon his or her actions.

It is first necessary to understand what a trade secret is. The best way to understand this is to appreciate some of the factors in determining whether one's software is a trade secret. Some of those factors are set forth below.

The Extent to Which the Information is Known Outside of One's Own Business

It has been held that matters of public knowledge or general knowledge known in an industry cannot be appropriated by one and claimed as one's own trade secret. Sperry Rand Corp. v. Tectronix, Inc., 311 F. Supp. 910 (E.D. Pa. 1970).

The Extent to Which it is Known by Employees and Others Involved in the Business

When a trade secret is disclosed, even to an employee or licensee, a confidential relationship must exist between the claimant of the trade secret and the parties to whom it is disclosed. There is no implied confidentiality in a relationship between a licensor and licensee. Therefore, it is imperative that all such agreements contain sections dealing with confidentiality of proprietary information.

The Extent to Which Measures are Taken by the Holder of the Trade Secret to Guard the Secrecy of the Information

Various measures have been suggested in this regard. They include, but are not limited to the following:

The Value of the Information to the Holder of the Trade Secret and the Value of That Information to One's Competitor

The fact that some information may have been improperly taken by an employee or some other person does not necessarily mean that there has been a misappropriation of trade secrets which may give rise to a lawsuit. There must be real value to the information taken. It must both be valuable to the owner and be of value to the recipient. With respect to software the value to both is usually measured in terms of the time and money required to develop the software with and without the trade secret information.

The Ease or Difficulty by Which the Information Could be Properly Acquired or Duplicated

Again, the courts are not concerned with trivial complaints. If information is misappropriated but is easily created by anyone interested in developing the same or similar information, the courts will not enforce a claim for misappropriation of trade secrets.

In protecting your trade secrets, you are not required to religiously comply with each and every element of protection set forth in this article. However, if you are lax about protection of your proprietary software and other trade secrets, you can be certain you will have difficulty in obtaining protection when you complain to the courts.