Decentralization is turning regulatory structures on their head, all while reverberating through the far corners of industry. New data structures (e.g., blockchains) are already changing the way we develop and conduct business. When using software that could potentially topple legacy institutions, developers will need to decide whether or not they want to ensure the long-term viability of their venture by specifically protecting their IP.
There are an ever-growing number of sub-projects (open source or otherwise) on public blockchains that use smart contracts for token issuances, biz process execution, dApp development, etc. With this growth, however, we may see instances in which a project’s IP is appropriated in a way that the creator did not intend, foresee, or authorize.
So, what legal recourse is available to developers to prevent their IP from becoming OPP (Other People’s Property)?
One avenue is US copyright law.
The recent Oracle litigation against Google is just one of many examples of larger, established tech and fintech companies attempting to cash in on the work of open source software developers. While the jury is still out as to whether Google v. Oracle’s impact on software outside of API development, it should make all folks more aware of the protections and limitation of US copyright law.
In short, copyright provides the legal mechanisms by which software may be modified, copied, tinkered with, and distributed. Importantly, both open source and proprietary software developers can use US copyright law to cheaply and effectively protect their interests. If used thoughtfully, copyright can provide better clarity and better developer control over the lifecycle of a software project while simultaneously disincentivizing frivolous lawsuits.
The following is the first part in a series of articles that will explore some of the basics concepts of US intellectual property law as it relates to software—copyrights, trade secrets, and patents.
When is a software copyright created?
Generally, a copyright is created the instant in which the expression is saved to a tangible medium. For software development, this means that the instant your code is saved to a file, a valid, enforceable copyright is created. With that initial copyright, the law steps in and provides the authors or assignees of that code with specific rights pertaining to the control, modification and distribution of their code.
What is a “derivative work”?
A derivative work includes the additions, changes, or other new material appearing for the first time in the work. It’s important to note that, in certain instances, copyright protections extend to “derivative work”. To be copyrightable however, a derivative work must incorporate some of the preexisting “work” and add new original copyrightable authorship to that work. A derivative work in software, for example, would include all later saved changes of your original source code. More importantly though, copyright protection would also be available to the binary executable version of your software (e.g. a library of object code). Accordingly, if someone copies your binary they can also be held liable for infringing on your copyright.
What is protected?
A software copyright grants the author or his/her assignee an exclusive legal right to control the manner and rules for copying, modifying, and distributing a piece of software. So, when a user inappropriately copies, modifies, or distributes copyrighted works without permission from the author/copyright holder, they can get themselves into hot water.
Copyright holders can however, license out their software which permits licensees to, among other things (depending on the license), copy and modify an author’s software. Some copyright holders impose certain conditions on licensees of their software wherein only if certain conditions are met, can a licensee copy, modify, or distribute the copyright holder’s copyright. Bottom line is that a copyright holder has significant control over how their software is used.
Should you register your software?
So, if you are creating copyrights automatically, why would you want to register your code with the United States Copyright Office (USCO)? You might say, well my project is open source so bring on all the hacking honchos–break it, modify it, tinker with it and distribute how you feel. Go for it.
I understand that. But just slowly put your refurbished ThinkPad X60 with Libreboot down before someone gets hurt and hear me out.
The first thing you should know is that copyright registration is cheap, like, uh real cheap. The filing fee ranges from 35 to 55 dollars, depending on the nature of the work. In the world of intellectual property protection, this is dollar store cheap folks.
And while you may want to speak to an attorney to understand how to “structure” your filing(s) and get a better understanding of the law specific to your case, you certainly don’t need an attorney to file. Here is an excellent guide to software copyright registration provided by the folks at the USCO.
Ok fine, it’s cheap. So, what? Why spend anything at all for additional copyright protection?
Well, let’s say you come up with that killer app(barf), killer contract, killer platform, etc. and you choose an open source development model for your project. Some entrenched software goliath or even some morally bankrupt private equity firm/patent troll with deep pockets might see a way to commercialize your work without abiding by the specific terms of your open source license.
What can you do if you haven’t filed a copyright and someone uses your IP without permission?
Let’s say JP Morgan Chase has been trolling GitHub for a few weeks looking for an elegant smart design to incorporate into some business process they have been working on in Juno. JPM stumbles upon your smart k that has a proprietary license attached to it(for arguments sake) and they incorporate it into their system.
First, you may try to reach out to them. You catch wind of this try to explain to JPM that this is a total dick move but there is a communication breakdown and they tell you in a polite way, to bugger off. Assume that you can definitively prove that they infringed on your code, what can you do?
You may feel like your only option is to sue the pantalones off them. You will most likely have to start by going to federal court to get an injunction to prevent them from misappropriating your work. But before you can even file your suit, you will be required to register your software to proceed and stop the infringement via a US federal court. Considering that it takes the US Copyright Office sometimes months to approve registrations, you may be sitting around for a while waiting for approval before you can even step into court and stand on your rights.
What are the benefits of registering your software?
While litigation is never the first tool any developer should use, assume that you can definitively prove that they infringed on your code, how can you prove monetary damages associated with the misappropriation of your work? Trust me, it’s going to be tough. Had you registered your software with the USCO, however, you’d be in a very different position. Registering your software makes more likely that the infringer will come to the bargaining table earlier because you’ll have leverage. What is that leverage you ask? For starters, you may be entitled to special statutory damages that include:
- Attorney’s fees and court costs;
- Special damages of up to $30,000 per infringement, all without having to demonstrate what kind of damage you suffered; and
- If the you can prove that an infringer has “willfully” infringed on your copyrighted software, you may be entitled to up to $150,000 per infringement.
I cannot emphasize enough the value of not having to prove “actual damages” and being able to recover attorney’s fees. Note though, that statutory damages are only available for works that were registered prior to infringement or within three months of publication. So, if you do not register often and early you may be barred from pleading these types of statutory damages and you will have the burden of proving actual money damages.
Other benefits of registering your work with the USCO is that registration may provide your licenses with increased copyright protection should you mindfully use licensing agreements that are designed as conditions precedent, (e.g., on the condition that the Licensee do X) as opposed to obligations (e.g., the Licensee agrees to do X). Suppose you want to ensure that any software you create will always be free to use in anyway and want to provide all downstream users the right to hack on, distribute, and modify it the lifespan of your copyright. Suppose further that you chose to use a GPLv3 license and you want to ensure that any derivative work of the gpl’d software “links” to (or pejoratively, “infects”) all downstream software and is therefore forced to be distributed under the GPL.
So, let’s say our friend JPM starts incorporating your GNU licensed work in some commercial offering, refuse to publish their code, and effectively make your work closed-source (unlikely but possible). The funny thing about GNU licenses is that there have been, to my knowledge, no decided court cases interpreting the GPL. Maybe JPM (or any other deep-pocket morally bankrupt PE/patent troll) wants to legally test the limits of GPL, and a Court gets the law wrong. Now you’re s.o.l. and the open source community must deal with ‘bad’ law for an indeterminate amount of time. If you had registered your software with the USCO, the legal certainty surrounding software copyrights would likely ensure that you didn’t have to step into a court in the first place. The point is that you can use copyright registration in conjunction with your open source project¹ to robustly ensure the long term viability of the open-source nature of the project.
In sum, registration may be just the kind of insurance policy that you need to make sure that potential infringers know that it’s a long way to the top if they want to misappropriate your work. Having your software registered never hurts and will make people think twice before haphazardly using your work without some licensing agreement worked out in the commercial setting and staying true to certain copyleft principles in an free-software setting. This legal recourse is available to both development models. If you have questions about whether your specific ideas and/or code are eligible for copyright registration you should consult with your attorney.
 It is important to highlight that for the most permissive open source licenses, such as the ‘MIT license’, copyright registration may not make sense because these types of permissive licenses place nearly no restrictions on the use, modification, or distribution of an authors code in a proprietary or opensource development model . For certain copyleft licenses (e.g, such as GPL), or Apache however, this point may be more salient.