IP Protection for Algorithms
Once an esoteric set of mathematical problem-solving rules, algorithms are no longer restricted to the realm of computer science. Whether it be in the background on social media, running bus schedules and traffic light patterns, or bringing AI to life, they touch nearly everything we do.
For many companies, algorithms are their lifeblood, and increasingly so. In 2022, 63.5% of patents issued were software related, versus just 26.5% in 1991 and 51.7% in 2016.
Yet, patenting algorithms (and software) remains notoriously difficult. Many computer transactions in algorithms are considered “abstract ideas” that would fail to qualify for patent protection, unless used in a specific and novel way that creates a notable result, like Google’s original search and sorting engine.
This, of course, can be a high bar. We see many companies shying away from patents for their algorithms. The difficulty in obtaining patent protection is compounded by the fact that the content of patent applications will be made public, and exposing that IP without guaranteed patent protection is not for the faint of heart. Patent applications can sometimes take so long that the algorithm is obsolete by the time the patent is secured.
An artist’s depiction of Artificial Intelligence, which uses algorithms as its building block.
So what set of rules do we adopt to solve for the problem that arises when your algorithm is not right for patent protection? For that, we turn to Trade Secrets and Copyright.
Copyright is a good alternative. We usually see copyrights on creative things, like books, photographs and paintings. In legal terms, Copyright covers “fixed works in a tangible medium,” but they do not cover ideas, procedures and processes. So, while the algorithm itself, being a mathematical method, does not qualify for copyright protection, its source code will - once you put the algorithm in writing, it becomes fixed in a tangible medium. An application for copyright registration can include only parts of the algorithm, so the entirety of it can remain confidential.
Trade Secret, on the other hand, is a great alternative. Trade secrets are a type of unofficial intellectual property that can offer substantial protection over “miscellaneous” unregistrable intellectual property - things like formulas, proprietary information and customer contact lists. KFC and Coca-Cola have trade secret protection over their recipes, famously keeping them in high-security vaults.
To qualify for trade secret protection, 1) the subject matter has to be information, 2) the secrecy of which is valuable to the company, and 3) the company has to take reasonable efforts to keep it a secret. Because there is not a registration for trade secrets, it is important to maintain these three requirement. The biggest dispute will usually end up being whether the efforts to keep it a secret were reasonable, so companies would need to take extra steps, like bolstering their security infrastructure and requiring non-disclosure agreements for all employees and vendors who come in contact with the secret information. the measures you take will be highly dependent on the size and type of company.