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Previously, Bernie got in trouble over his unlicensed use of software – See the video here.
Here is what he should have known to avoid legal problems.

How do you protect software?

Software is protected by copyright as a literary work. Copyright does not require registration as it automatically takes action from the moment of creation (however, in some countries, like the US, there are some benefits in registering your copyright).

Generally, copyright gives the software owner the rights to prevent others from:

  • Reproducing the work (copying)
  • Making derivative works based upon the work (new version of the software)
  • Distributing copies of the work to the public by sale or other means

In the EU, there are some important exceptions to the copyright owners’ rights:

  • Copies made necessarily by use are not infringing; and
  • Reproduction and translation (including de-compilation) necessary to make a computer program interoperable with another are permitted when performed by a person with the right to use the software.

Any contractual provisions contrary to these exceptions are of no effect.

Another option (but rarely used and less common) for software licensing is to patent it. In the EU there are no patents for software per se, but it may be possible to patent a “computer implemented invention”. To be able to do that, the software must have a “technical character” and a technical inventive step (must be a solution to a technical problem). For example, a software that controls an industrial process or the working of a piece of machinery, or that changes the internal functioning of the computer itself (e.g. memory organization, program execution control).

What does copyright actually protect in software?

In short: the source code, not the object code.

The source code is a set of instructions which is compiled into object code used in the relevant system to produce the desired result. In other words, it’s text, human readable and editable and uses a programming language like Java, Python, Ruby, SQL, C++.

The object code is the machine/ binary code (1s and 0s); is machine readable (not readable by humans).

It may be more valuable commercially for customers to obtain the source code as they can maintain, modify and develop software themselves. However, the owner of the software will in most cases only want to license the object code.

Thus, copyright protects the expression, not the idea underlying the expression; the code, not the algorithm behind the code.

Coming back to our sports entrepreneur Bernie: what did he do wrong here (watch the video again)?

  • He had a test licence, but he used the software far beyond this scope.
  • In fact, he modified the source code to make a derivative software, the “Hit Maker”, which he then commercialized, thus materially breaching the licence terms.

What could Bernie do to solve the situation?

Try to negotiate a new licence agreement with Brody, which allows him to create and sell derivative works i.e. a new or improved version of the software. However, Brody will probably want royalties or another form of compensation for agreeing to this or he may just say no.

Coming soon: Bernie gets his licence from Brody and learns how to commercialize the new software version.

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