If you read my blog on the History of Software Patents, you’ll see that the pendulum has swung from “anything under the sun made by man” being eligible for patent protection, according to the Supreme Court in Diamond v Chakrabarty in 1980 to the current two step Alice v CLS analysis where even a device with two image sensors, two lenses, analog-to-digital converting circuitry, an image memory, and a digital image processor was considered to be too abstract to be eligible for patent protection in Yu v Apple.

It has become much harder to patent software, even though software inventions are one of the most common types of inventions.  A large percentage of patent applications that are filed are for software.  Many AI and crypto inventions are software-based.  Patents on these inventions are at risk of being invalidated under Alice v CLS even after a rigorous, expensive, and contentious process in the U.S. Patent and Trademark Office.

If you are a small company that does not have a 100k budget for a portfolio of patents (this is why you need more than one patent), let alone 2.5+ million dollars to enforce each patent, what can you do?

Inventions Capable of Trade Secret Protection

Formulas

Formulas, such as the percentages of components for chemicals or pharmaceuticals, are ideal candidates for trade secret protection. The quintessential example of a trade secret is the formula for Coca-Cola, which cannot be replicated without precise knowledge of the recipe.

Software

A tech company’s proprietary code, algorithms, or user interface could potentially constitute a trade secret, particularly if not easily reverse engineered. The Google algorithm for ranking search results – often tweaked but never fully disclosed – has been considered to be a trade secret.

Business Strategies

The strategies a business uses to attract and retain customers, such as marketing plans, advertising strategies, or distribution methods, are very difficult to patent with valid utility patents but can be considered trade secrets. Amazon’s recommendation algorithm, which suggests products to users, is considered a trade secret.

Supplier and Client Databases

Relationships with suppliers and clients are valuable for businesses but not patentable. Lists containing information about suppliers, manufacturers, or distributors, along with client lists, are treated as trade secrets.

Manufacturing Processes

Any manufacturing process that is unique could be treated as a trade secret.

Trade Secret Protection As An Alternative to Utility Patents

The first thing to do is consider whether trade secret protection is at all viable.  If you have an invention that is not easily reverse engineered, consider trade secret protection.  Not all patent attorneys will rush to recommend trade secret protection, because it does not generate much in the way of legal fees.  A trade secret is something that has economic value, is not generally know to the public, and is reasonably protected.

All that is required to keep something a trade secret is taking reasonable means to protect the secret.  This means physical security measures, such as safes and secure servers, and legal measures like non-disclosure agreements (NDAs) with employees and partners. More particularly, this means having physical security at your premises (e.g., written security practices, a visitor protocol including sign-in sheet and visitor badge, video surveillance, employee badges, locked restricted areas (or safe with limited numbers of people having the combination) where the secret is protected, after hours security, logs of facility access, inventory of documents including intellectual property, shredding of documents containing secrets, debriefing of employees travelling overseas, watermarks and tracking of important documents, suspicious behavior reporting, employee termination process, employee manuals and employment agreements requiring confidentiality, prohibition of mobile phones in sensitive areas).  If you have visited any corporate building, you have likely seen such security practices.    This also means taking cyber security measures.  This also means monitoring for potential internal spies–disgruntled employees, employees with poor performance histories, remote workers you haven’t met in person (North Koreans have posed as American remote workers and apparently do excellent work because a team will do the job of a single person), undisclosed or excessive foreign travel, unusual night and weekend work, unexplained wealth, excessive time surfing the Internet, foreign IP traffic, posting of sensitive information on social media, remote access after termination, sending encrypted emails.  It is also important to have an incident response plan.  What should happen in the event of an intrusion, including identification of what has been stolen, whether to isolate or shut down part of the network, a process to archive security activity, a reporting system, a plan to file civil actions, and an employee termination procedure.  Frequent backups can be useful ammunition against ransomware attacks.  The company can restore a previous unencrypted version from archive.

Some things simply aren’t ideally protected using trade secret law.  These include inventions that are publicly known, easily reverse engineered or that are web-based products for which the code can easily be inspected in a browser.

If trade secret protection isn’t available, and patent protection isn’t in the budget, you should first always consider filing as a provisional patent application.  That gives you a year to decide whether there is sufficient value to file full regular patent applications in the U.S. and abroad.  You can always decide to abandon your provisional applications, and the information in the provisional patent application will not be published in that event.

Trademarks, Design Patents, and Copyright Applications for Software Inventions

For all inventions, you should consider trademark applications on the name of the product.  This can be more than one application if you use the mark with a logo and/or in a special font.

Beyond provisional patent applications, for a software-based invention, you can consider design patents on the interface, trademark applications on icons, and copyright applications on artwork or code.  A copyright lawsuit is much less expensive than a patent lawsuit as the issues are easier for a judge to understand.

Design patents and copyright applications can also be considered for other types of inventions if there is an artistic aspect.  Copyright protection does not protect against independent invention, however.  A design patent will protect against independent invention by someone else but only covers external ornamental features.

These are imperfect solutions for an imperfect world.  Those who pushed the American Invents Act unfortunately pushed many small inventors out of the patent game.  Not everyone has the budget to obtain and enforce a patent portfolio.  Other forms of IP are always worth considering, however, and many are quite affordable.

This is Part 4 in a 4 part article.  Read Part 1, Part 2, or Part 3.