Disclosure Traps for Software
Developing software can be a lengthy process involving large numbers of individuals, sometimes from different organizations. Often, it will not be apparent until relatively late in the development process whether patent protection is available or desirable. However, if prompt steps are not taken, the very possibility of obtaining patent protection may be lost.
For example, alpha and beta testing of a software product are routinely conducted before commercial release to assess technical and commercial viability. Unfortunately, disclosures of the software product that can occur during testing may result in the loss of potential patent rights. Accordingly, strategies that allow for necessary pre-release testing while also safeguarding potential patent rights should be considered.
Disclosure Bars in the United States
The United States represents one of the larger consumer markets and is a prime jurisdiction in which patent protection is typically sought. Under United States patent law, a person cannot patent an invention that has been “published”, “on sale”, or in “public use” more than one year before filing a patent application in the United States. “Publication” of the invention in any country is potentially destructive and publication is not necessarily limited to printed material. “Public use” occurs when an inventor uses or allows another person to use the invention in the United States without limitation, restriction or obligation of secrecy to the inventor.
To determine whether the “on sale” bar is triggered, the United States Supreme Court has created a two part test: 1) the product must be the subject of a commercial offer for sale in the United States; and 2) the invention should be ready for patenting (e.g. a prototype is available).
A “use” of an invention that is solely for
experimental purposes may fall under an exception to the United States “on sale” and “public use” bars. In EZ Dock Inc. v. Shafer Systems, Inc.i the Court identified 13 factors that were relevant to determining whether a “use” was either a commercial “use” (i.e. a bar) or an experimental “use” (i.e. not a bar). Factors most applicable to software patents include the amount of control the inventor retained over the experiment; the length of the test period; whether payment was made; whether there was a secrecy obligation; whether records of the experiment were kept; and, whether the inventor continually monitored the invention during testingii.
Canada and Europe
While disclosure bars in the United States are an important consideration, Canadian software owners also tend to seek concurrent protection in Canada and Europe. Accordingly, potential traps in these jurisdictions should also be considered. Unlike the United States, Canada and Europe do not have an “on-sale” bar.
However, Canada requires filing of a patent application in Canada within one year from the date of the first “enabling” public disclosure of the invention. An “enabling public disclosure” occurs when a person skilled in the art would reasonably be able to build the invention using the disclosure at issue along with existing knowledge in the art. Such a disclosure i) can be made by either the applicant or someone who obtained knowledge directly or indirectly from the applicant, and ii) may occur in any country.
In Baker Petrolite Corp. v. Canwell-Enviro Industries Ltd.iii, the Canadian Federal Court of Appeal established that an enabling disclosure of an invention to even one member of the public destroys the secrecy of the invention. Applying the reasoning from Baker Petrolite to software, if use of a software product is unrestricted when released and the software invention at issue is capable of being recovered through reverse engineering, then the software invention will be considered to have lost its novelty 12 months after such unrestricted useiv.
In contrast, Europe has an absolute novelty requirement for patentability. That is, an enabling non-confidential disclosure of the invention anywhere in the world prior to filing a first, priority patent application will usually destroy the possibility of obtaining valid patent rights in Europe.
Strategies for Disclosing Software
Given the jurisprudence, how should inventors avoid potential disclosure traps and preserve patent rights? Generally, a patent application should be filed prior to any public software release. Where software is undergoing pre-release alpha testing, the number of potential test users should be limited and all alpha test users should execute appropriate written confidential agreements. In the case of pre-release beta testing, written confidential agreements should be executed by all beta test users; however, since beta testing typically involves a larger pool of users, it may not be practical or feasible.
Typically, commercial software is distributed in a compiled form only (i.e. object code) which, unlike source code, cannot as easily be decompiled or reverse engineered in a meaningful way. However, while object code can in some instances practically prevent a user from learning the specifics of embedded functionality within the software, there is still a possibility that object code could be decompiled to recover the source code.
For these reasons, techniques such as code obfuscation can provide an additional layer of protection against disclosure. Code obfuscation can be performed on source code, object code, or both, to impede reverse engineering. The technique makes software code very difficult for a person to read and understand while remaining interpretable by compiler software.
Alongside measures to prevent an enabling non-confidential disclosure of the invention, the United States “on sale” bar must still be borne in mind. Even though a software invention is successfully maintained as a trade secret due to encryption such as code obfuscation,
confidentiality arrangements, and the like, a single “sale” or “offer for sale” of the software product to a customer in the United States more than a year prior to the filing of a patent application in the United States will nonetheless trigger the “on-sale” bar to obtaining valid patent rights in the United States.
The provision of alpha or beta versions of a software product should be carefully controlled to ensure that an “offer for sale” does not occur. For example, providing beta test users with a coupon offering a discount on the soon-to-be released version may trigger the bar. Sale of a software product under a software license that places restrictions on use of the software product may, in some cases, not be considered to be “a sale” of the inventive product. However, there is current United States case law that indicates that “shrink wrap” software licenses that simply place restrictions on copying and distribution are equivalent to sale of the productv.
In Canada and Europe, a “sale” or “public use” that does not provide an enabling disclosure of the invention at issue will not invalidate a patent. However, this does not diminish the importance of maintaining the secrecy of the software invention prior to filing a patent application. As mentioned, the opportunity to obtain valid patent rights will be lost if use of the software product is unrestricted and a person skilled in the art could arrive at the invention through existing knowledge in the art. Controlled use via a licensing agreement in these situations can assist in avoiding such a disclosure trap.
Conclusion
As developers are well aware, creating a unique and successful commercial software product is a long and arduous task. Although it may be difficult to anticipate early on whether patent protection is warranted, prudent disclosure strategies should be adopted to preserve opportunities for patent protection and to ensure that innovative software developers are rewarded for their work.
Prepared by Isis E. Caulder and Alim Lalani
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i EZ Dock Inc. v. Shafer Systems, Inc., 276 F.3d. 1347 (2002).
ii Ibid. at part 1.
iii Baker Petrolite Corp. v. Canwell-Enviro Industries Ltd., [2003] 1 F.C. 49 (C.A.).
iv Ibid. at para. 42.
v Group One, Ltd. v. Hallmark Cards, Inc., 254 F. 3d. 1041, 59 USPQ2d 1121 (Fed. Cir. 2001).
We are pleased to announce that the following associates will join our Software/High Technology Practice Group in September
Alex Anishchenko B.A.Sc. (Elec. Eng.), MBA, J.D.
Alex was both a summer student and an articling student with Bereskin & Parr and will join the Toronto office following his call to the bar in July. Alex holds a B.A.Sc. in electrical engineering, an MBA, and a law degree all from the University of Toronto. Alex will advise clients in matters relating to patents, with a focus on electronics, photonics, computer related technology and business methods.
Stephanie Reid B.Sc. (Physics), LL.B.
Stephanie was an articling student with Bereskin & Parr and will join the Toronto office following her call to the bar in July. Stephanie holds a B.Sc. in physics from McGill University and a law degree from the University of British Columbia. Stephanie’s practice will focus on mechanical and high technology patents, including software, electromagnetics devices, nuclear technology, solid state technology, spectrometry, and optics.
Signe Silver B.Sc., M.Sc. (Math & Comp. Sci.), J.D.
Signe will join the Toronto office following her call to the bar in July. Signe holds an honours B.Sc. in Computer Science and Statistics from Queen’s University, a Master of Mathematics in Computer Science from the University of Waterloo, and a law degree from the University of Toronto. Signe’s practice will focus on matters relating to high technology patents with an emphasis on computer software technology.
Speaking of IP...
Neil Henderson of Bereskin & Parr moderated a panel session entitled The Patent Life Cycle, at The New Intellectual Property Economy, a one-day seminar which took place in Toronto on June 16.
James Anglehart and Stephen Beney of Bereskin & Parr will participate in Understanding Patents: An Introductory Course, hosted by The Intellectual Property Institute of Canada (IPIC) and McGill University from July 31 – August 4.
Isis Caulder and Neil Henderson of Bereskin & Parr will be attending the annual meeting of the American Intellectual Property Law Association (AIPLA) which will take place October 19 – 21, in Washington, D.C.
Bereskin & Parr is a proud sponsor of the 10th Annual IT.CAN conference, which takes place October 26-27, in Toronto. If you are planning to attend, visit our Guide to Toronto at www.bereskinparr.com/toronto for information to help you plan your trip.
Isis Caulder of Bereskin & Parr will speak on IP Due Diligence at Conducting Effective Corporate Due Diligence, a continuing education seminar hosted by Osgoode Hall Law School on November 2.
