Consider the Bingo scenario where by PPOS copies BOS and sells it for cheaper. PPOS is able to do that because its development costs were lower. It also seems unfair that PPOS used BOS without paying. What is the solution to this problem? A simple one is to give Bingo legal exclusive right to its software – the problem is then limited to copyright and patent law. This is indeed what happened in the past.

There are currently three mechanisms to deal with scenarios like Bingo: copyright, trade secrecy and patent.

Copyright is a form of ownership which excludes others, for a limited amount of time, from copying without permission. Only expression of an idea, and not the idea, can be copyrighted. There is often a fine distinction between the two. In computing, both source and object codes are thought of as ‘literary works’ and are copyrightable because they are expressions of ideas.

However, there are problematic issues which arise in computing field and not (as much) in others. It is relatively simple to make minor change to a piece of software – making it into a new application. Does this mean that copyright only apply to the old version or just part of the new version that contains the old code? Are copyright owner required to reapply every time a new piece of code is added? This has lead to many course cases. It has been suggested that the literary analogy is not suitable for dealing with software copyright.

Laws governing trade secrecy vary from country to country. The central idea is to grant companies the right to keep certain kinds of information secret (e.g. a secret recipe), with the aim of allowing them to keep a competitive edge. The laws were not designed with computer technology in mind.

In order for a piece of information to be considered trade secret, it be possible to show that:

Trace secrecy laws can be applied to software. This is usually done using non-disclosure clauses. Employees sign an agreement that they will not reveal secrets learnt at work even after they have left. There is often ambiguity here because the agreement does not apply to generic information in the area. Another application of this law is via licensing agreements. Software is licensed out and not sold – only the object code, and not the source code, is given to the user. The software company can do all the modification to suit the client and still retain control. The source code is in effect a trade secret.

In Bingo’s case, trade secrecy would have helped. Non-disclosure agreements would prevent employee from giving away important secrets even after they left. However, this might only be useful during development; once BOS is released, it is more difficult to control. General principles are there for everyone to see (and copied) – BOS is trying to sell or licence the software, something just can not be hidden. However, specific behind-the-scene methods of doing something can still be made a secret. Generally, trade secrecy works for specialised bespoke software but is poor for general purpose software.

This is potentially the strongest form of protection because a patent:

The main aim of the patents is not only to ensure inventor, but to advance useful arts and science as well. This will foster inventions and encourage others to learn from and build on inventions. It also promotes disclosure of inventions and assures that ideas already in the public domain remain there.

However, it must be noted that patent does not guarantee financial success. This is only achieved if the product is accepted by the market. Additionally one can not patent an abstract idea, an algorithm or a scientific principle.

To qualify for patent protection, the object in question must satisfy the following criteria:

In the 1970s, there was great reluctance in granting patent on software on the basis of:

Both fears have since been overcome. After the US court case of Diamond versus Diehr was settled in 1981, many patents have been granted on software. However, there is still concern that patents must not be granted for building blocks of science and technology.