The legal protection of software as a trade secret

Which elements of software can be protected by copyright? What is a trade secret? These are just some of the questions that Simón Valverde, Partner of Arias Law, and Andy Ramos, Counsel of Intellectual Property and Technology at Pérez-Llorca, analysed in the joint webinar organised by the two firms.

Simón Valverde began his presentation by explaining the boom in technological innovation and the software industry in Central America. The partner noted that it has experienced continuous growth over the last few years and that it currently represents a significant percentage of the GDP of the Central American economies. In this context, Valverde emphasised that computer programs have become key applications for the technological sector and have proprietary content that can be exported to other parts of the world, leading to a greater need to ensure their ownership.

How can software be protected by copyright?

Simón Valverde explained that, in most countries, software is protected by copyright since it is considered, by legal fiction, an artistic work. The partner indicated the different elements which make up a computer program and the possible protection of each one: preparatory documentation, technical and user manuals, source code, object code or machine code, programming language, graphic interface, principles and ideas on which it is based, functionalities, methodologies, systems and brands.

Valverde also noted that, although it is not an essential requirement, it is important to register a piece of software as this process makes it possible to prove the existence of the work, ensure the ownership of rights and, subsequently, register dispositions such as assignments and charges. The only requirement for this registration is for the work to have been expressed materially, that is to say it is not simply an idea. Regarding the ownership and the duration of copyright, Valverde noted that in general, the intellectual property rights to a piece of software, which is considered to be a collective work, correspond to the natural or legal person who directed or coordinated the work for a period of 70 years following its release.

Lastly, the partner explained the capabilities of copyright protection for a computer program. Firstly, the software cannot be reproduced without the owner’s authorisation, nor is it permitted to generate derivative works, and should an infraction be detected, in most countries civil and criminal liability would apply. In terms of limitations, Valverde stated that it should be noted that copyright does not protect the idea itself, only the expression of the idea, as a similar work expressed in a different way would not constitute an infraction and underlying ideas are not protected by this law, although they may be protected by Law 1/2019, on Trade Secrets.

What is a trade secret?

Andy Ramos analysed the protection of a piece of software as a trade secret, defining this term, in line with the law, as any piece of commercial, technological, scientific, industrial, financial or organisational information or knowledge meeting specific requirements.

In order for something to be considered a trade secret, the Pérez-Llorca Counsel noted that the information must be a secret, that is to say it cannot be known in its entirety, nor should it be easily accessible; it has to have economic value, and it must be subject to reasonable measures to keep it secret. Regarding the characteristics of trade secrets, Ramos indicated that they can be transmissible, they can be subject to co-ownership between several natural or legal persons, and they can be licensed.

How can a piece of software be protected as a trade secret?

Lastly, and to conclude the meeting, Andy Ramos explained which elements of a piece of software can be protected as a trade secret, such as the technical and preparatory documents, the ideas and principles, the development methods, the source code and the road map of the software’s evolution. He also noted that it is important to bear in mind that a computer program can be protected both by copyright and as a trade secret, although the company must have a strategy to achieve this objective.

In terms of how to protect these elements of a piece of software as a trade secret, Ramos explained that, firstly, one must correctly identify which information or data is liable to being secret and, secondly, adopt reasonable measures to protect said information, such as signing confidentiality agreements, adopting physical and logistical protection measures or pursuing possible infractions. In relation to the confidentiality agreements, the Counsel highlighted some fundamental elements that must be present in these contracts, such as the correct identification of the trade secret, the list of prohibited conduct, the establishment of security measures and the unlimited duration of the trade secret, as this will last as long as the owner manages to keep it a secret.