Whether you’re building a new app, writing source code for a platform, or developing proprietary algorithms, one question is critical from day one: how do you legally protect your software? While copyright protects most code by default, it may not always be sufficient — especially when dealing with core functionality, algorithms, or confidential processes. In some cases, patents or trade secrets may offer stronger or more appropriate forms of protection.

This article breaks down the key intellectual property (IP) options for software:

• What qualifies for copyright protection and who owns that rights;
• When software patents are possible (and when they’re not);
• How to use trade secrets to safeguard your competitive edge;
• What legal protections still apply to open source software.

By understanding the strengths and limits of each protection mechanism, you can choose the right IP strategy to secure your software, reduce risk, and protect your business interests before problems arise.

Copyright Protection for Software: What It Covers and What It Doesn’t

Understanding Copyright

Copyright remains the most fundamental and default form of legal protection for software code. Under international treaties and most national laws, including the Berne Convention, the EU, and U.S. copyright regimes, software is protected as a literary work – even though its function is technical.

When it is stated that “the software is protected by copyright,” it means that rights, such as the right to reproduce (copy) or distribute the source or object code to others, are exclusive to the author of that code. No one else can use the copyright-protected code without the author’s permission, subject to specific legislative exceptions.

By default, all rights in a copyright-protected code belong to the author. However, the author, at their sole discretion, may assign or transfer their IP rights to another person, or permit others to perform certain actions with that code, such as using, copying, incorporating it into their own software, or modifying it, which is typically done by issuing a licence.

When Copyright Applies Automatically?

Software is protected by copyright automatically from the moment of its creation, i.e. from the moment source code or object code is written and fixed in a tangible form. No additional formalities or actions are required. This means that as soon as the code or program (or any of its components) is written, it is protected by copyright. If the author chooses to make the program publicly available, for example, on the internet, that program is also protected by copyright, and it is prohibited to copy and use it for another project. The following principle applies to copyright protection: if there is no licence to permit specific uses, then all use of that software is prohibited.

Who Owns the Rights to Source Code?

The fact that copyright protection is granted to the author from the moment of code’s creation simplifies matters as no formalities are needed. However, this raises the question: who is the author that owns the intellectual property rights? Some intellectual property rights can be a truly valuable asset, and, for business, ensuring ownership by a designated person or entity is crucial.

Typically, if software is created by an individual developer without a formal relationship with a company that operates a project, the intellectual property rights are owned by the creator, i.e. the developer. If the developer creates the software in the course of employment, the rights usually vest in (belong to) the company, subject to an applicable employment agreement.

However, the situation would be different if the developer would be engaged as an independent contractor rather than an employee. In that case, the contractor retains ownership of the intellectual property unless the contract explicitly states otherwise. Therefore, it is crucial to distinguish between these two scenarios (employment and independent contracting), and to ensure that an appropriate agreement is in place transferring the rights to the client or company when needed.

What Code Can’t Be Protected by Copyright?

Ideas, procedures, methods of operation, or mathematical concepts as such cannot be protected by copyright. This means that when certain code represents a program’s method of operation, copyright protection is unavailable for that particular part of the code.

However, it can be challenging to determine which specific part of the code represents a method of operation and is therefore unprotectable, and which part of the code constitutes a person’s intellectual creation and is therefore protectable. This often leads to disputes.

A good illustration of this principle is programming languages. They are indeed software, but they are designed as functional tools and sets of rules to operate programs and systems. Many countries’ legal systems do not recognise them as creative expressions. For this reason, programming languages are generally not protected by copyright.

Open Source Software: Misconceptions and Legal Risks

Open source software refers to the software distributed with its source code freely available to the public. Additionally, truly open source licences must allow modifications of the code and its redistribution under the same or similar licence terms. Many well-known open source licences also require a modifier to acknowledge and credit the original author.

The primary feature of open source is undoubtedly its published source code, which is free to modify under certain conditions. It might seem that publicly available source code lacks any legal protection as anyone can reuse it. But it is not the case. Open source distribution does not interfere with the code ownership as the open source licence is only a grant of right to use that code, and the ownership is retained by the owner and remains intact.

While reuse definitely must be allowed under open source licences, such licences also impose specific conditions. For example, if the initial program is publicly available under the GNU General Public License v3.0, any modified version of code must also be publicly available under the same licence or any later version of it.

Failure to comply with the terms of the open source licence, such as attempting to not distribute software with an open source licence, is essentially a violation of the licence terms and can result in complications. This is because a key characteristic of the open source community, and the individuals who actively contribute to it, is their vigilance and preservation of rules within that community. Violating open source licence terms can carry both legal and reputational consequences – as was the case with Aerodrome, discussed further in our separate article: “Open source in Web3: Lessons from the Andre Cronje and Aerodrome Finance Case”.

It is important to note that publicly available code without an accompanying licence is not automatically free to use. By default, all rights remain with the author unless explicitly granted otherwise. In the absence of a licence, the use of the code is prohibited. The fact that source code is accessible online does not imply permission to use it, as legal rights are determined by the licence terms, not by availability. Therefore, always verify and store the applicable licence before using or incorporating third-party code into your product.

Patent Protection for Software: When It Works, and When It Doesn’t

Understanding Patents and How They Work

Patent protection is another domain within intellectual property law. A patent is an exclusive legal right granted by a national authority, confirmed by an official document or registration, that allows the inventor to prevent others from making, using, selling, or distributing the protected invention within that country’s jurisdiction for a limited period, typically 20 years. In exchange, the inventor must pay government fees and publicly disclose the details of the invention, enabling others to understand and build upon the innovation once the protection expires.

When Is It Worth Applying For a Patent For Software?

When applying for a patent, the detailed application explaining all invention specifics will be published for public review, allowing for potential objections if the same invention is already in use by another person. If the patent is granted, the publicly disclosed information is then protected from unauthorised use. However, if the patent application is refused, the situation becomes more complex, as the patent does not protect the invention, and the crucial information becomes public.

Furthermore, patent organisations typically refuse to grant patents for software unless specific conditions are met. For example, the European Patent Office grants patents only to computer programs that exhibit a “further technical effect” when executed on a computer. The European Patent Office, in its Guidelines for Examination (G-II, 3.6), states: “A ‘further technical effect’ is a technical effect going beyond the ‘normal’ physical interactions between the program (software) and the computer (hardware) on which it is run. The normal physical effects of running a program, e.g. the circulation of electrical currents in the computer, are not in themselves sufficient to confer technical character on a computer program.”

One example of patented software is Spectral Band Replication (SBR). SBR is an invention introduced in 1997 as an audio compression method that significantly reduces the file size of audio files without sacrificing quality. It achieves this by using a specific algorithm (software) that transmits only lower frequency data and uses it to reconstruct higher frequencies later. Unlike earlier compression techniques that compromised quality by cutting both high and low frequencies, SBR enables 30–50% more efficient compression without severely impacting sound quality. In my view, the ‘further technical effect’ in this case lies in the extent to which the software influences the audio files.

Trade Secrets and Software: Confidentiality as a Legal Safeguard

What Is a Trade Secret?

A trade secret is essentially intellectual property rights on confidential information which may be sold or licensed. Under most legal frameworks, information qualifies as a trade secret if it meets all three of the following conditions:

• It has commercial value specifically because it is secret,
• It is known only to a limited group of persons, and
• The rightful holder of the information has taken reasonable steps to keep it secret.

It is clear that trade secret protection necessitates certain formal measures, however, trade secrets protect all information regardless of whether it meets copyright or patent criteria. However, it is important to remember that trade secrets are effectively protected as long as they remain secret. If that information becomes public, trade secret protection will no longer apply, and the owner may have limited recourse.

Equally important is the requirement to demonstrate that adequate organisational and technical steps were taken to protect the secrecy of the information. Courts may refuse to recognise information as a trade secret if the holder failed to distinguish it from ordinary confidential information, or if no proper internal procedures, access controls, or formal markings were implemented.

When Trade Secrets Make Sense: Real-World Use Cases

In practice, trade secret protection can be the most suitable option in scenarios where public disclosure of information would undermine the value of that information. For example, proprietary algorithms, or optimisation techniques that are difficult to engineer but impossible or not worth to patent are often kept as trade secrets. Similarly, internal development processes, configurations, and client-specific customisations are typically better protected as trade secrets, especially when they give the company a competitive advantage but do not meet the “inventive step” criteria required for a patent.

Choosing the Right IP Strategy for Your Software Project

Selecting the most effective legal protection for software requires a strategic, context-specific approach. Copyright, patents, and trade secrets each offer different advantages, and their suitability depends on your project’s structure, and goals.

1. Assess the Nature and Purpose of Your Software

Start by evaluating what exactly you want to protect: is it the source code, the underlying algorithm, or business logic? If your goal is to protect the expression of code, copyright applies by default. If you’re protecting an algorithm with measurable technical effect, patent protection may be considered, assuming that innovation meets patentability requirements. For non-public, commercially valuable components, such as algorithms that do not meet patentability requirements or proprietary data handling processes, trade secrets may offer the best protection.

2. Don’t Assume One Mechanism Covers Everything

Each legal mechanism has limits. Copyright protects expression but not ideas or functionality. Patents are strong but hard to obtain and require public disclosure. Trade secrets require ongoing efforts but offer no further protection once the information is leaked. In many cases, the best IP strategy involves combining protections — for example, copyright for code in general, and trade secret or patent protection for proprietary algorithms.

3. Consider Your Team Structure and Ownership

IP rights depend not only on what is created, but by whom and under what legal relationship. Code written by employees is typically owned by the employer. But with contractors or external contributors, ownership must be explicitly assigned by contract. Without proper IP transfer clauses, your company may not actually own the software it paid to build — exposing the business to disputes, licensing issues, or investor scrutiny.

4. Account for Open Source Dependencies

If your software builds on or integrates open source components, it’s crucial to understand the licensing obligations those components carry. Violating the licence’s terms (e.g., failing to publish modified work under the same licence, if applicable) can expose you to reputational damages or even legal disputes. To avoid such consequences, it is advisable to conduct an audit of incorporated third-party code and the applicable licences, which our team can assist with.

5. Align IP Protection With Your Business Objectives

Ultimately, your IP strategy should support your business goals — whether that’s securing investment, enabling licensing, or preserving competitive advantage. For early-stage startups, securing basic copyright ownership by the designated entity may be sufficient. For more mature products or core technologies, layering protections may become essential.

Conclusion: Navigating Software Protection

Protecting software requires more than a general understanding of intellectual property – it demands thoughtful application of the right legal tools to the right aspects of your project. Copyright offers automatic protection but may not cover functional innovations. Patents can provide strong, enforceable rights but come with complexity and public disclosure. Trade secrets offer flexible protection for proprietary information – but only if confidentiality is maintained through clear internal controls.

There’s no one-size-fits-all solution. The most effective approach often involves a combination of protections, aligned with your business model, technical architecture, and risk profile. By planning early and understanding how each legal mechanism works, founders and developers can avoid common pitfalls and ensure their software is protected – not just in theory, but in practice.

Whether you are planning a new software project, app, or developing an existing one, our team at Aurum offers specialised legal advice tailored to your specific stage of development, technical setup, and compliance objectives. We help you navigate applicable intellectual property rights and legal risks to ensure your interests are protected from the outset.