Developing Software? Be Forewarned and Forearmed
February 16, 2010, Securities Industry News

A lawsuit filed in federal court on February 3 by software firm SFB Market Systems alleges that the seven US options exchanges and the Chicago-based Options Clearing Corp. “reverse engineered” SFB’s copyrighted software for managing options symbols. The suit also claims the defendants violated the terms of their licensing agreement with SFB and misappropriated certain trade secrets.

While none of the intellectual property attorneys contacted by Securities Industry News would comment on the merits of the case, they provided insights on best practices for protecting intellectual property such as the computer code now at issue. They also shed light on what licensees can and cannot do under the law.

Software developers need to recognize that having a copyright alone won’t protect the software developer entirely from “reverse engineering,” according to Daren Orzechowski, an intellectual property attorney with White & Case in New York.

And even if the software vendor can prove its client used some of the same code, the vendor still has to prove the client copied a portion of its software that was actually protectable under copyright law, says Orzechowski.

Copyrights provide a different type of protection than patents. It is the actual invention that is patented and a software developer need not prove that another party copied its code to have violated its patent. According to Orzechowski, the patent owner simply needs to show that the infringer was making, using, importing or selling the invention – the functional idea. That means getting a patent on a software product rather than a copyright.

Click here to read the full article.