In our last two posts on Virginia trade secret protection, we discussed maintaining a trade secret in Virginia and later enforcing a trade secret after theft or misappropriation. In this post, we discuss whether a business can protect software as a trade secret in Virginia.
As discussed in our post about general trade secret protection, a trade secret is any confidential business information that (1) by virtue of its secrecy has value and (2) is subject to reasonable means to maintain its confidentiality. Both the Virginia Uniform Trade Secret Act and the federal Defend Trade Secrets Act protect trade secrets from misappropriation in Virginia.
Trade secret theft, or misappropriation, is a serious breach that may irreparably harm your business. When a Virginia trade secret attorney assesses whether someone has misappropriated a trade secret, the attorney will pay careful attention to the means used by a company to keep the trade secret from disclosure. For software, this could include examining whether the code base is private or public, and if it is public, determining the extent a member of the public can reverse engineering an executable or object level computer file into human readable code or even computer readable assembly language.
Software can be a trade secret in Virginia if the software developer or owner uses particular techniques to protect the software from public disclosure. The most obvious circumstance is where the software and its code is kept private, used in a factory or in some internal process unseen by the general public. Like any other kind of trade secret in Virginia, a business can protect such software by imposing nondisclosure agreements upon its employees and independent contractors, restrict access to materials on a need to know basis, place passwords on secret information, and impose physical barriers to access.
Software kept private and software provided publicly can both have trade secret protection. For software provided privately–for instance, in a factory or other publicly inaccessible workplace–ordinary measures to protect the software as any other confidential information will suffice. Good nondisclosure agreements, impediments to physical and electronic access, and need-to-know requirements are must haves to preserve this kind of software as a trade secret in Virginia. For software provided publicly, the developer must take additional measures to attempt to protect the software as a trade secret, and depending on the nature of the software, there will be varying degrees or likelihood of protection. For instance, software by which the user can completely determine by use how the software works will never be subject to trade secret protection, since it is subject to easy reverse engineering. For the same reason, software which has some complex or unknown algorithm may not be subject to trade secret protection if the underlying code is accessible and can be de-compiled into something human readable.
Code that is encrypted may be subject to trade secret protection, however. This would include object code or other high level language elements of the software, or low level assembly or machine language. Software on programmable chips can also be encrypted. This step, coupled with a sound method of decryption and a licensing agreement that forbids breaking the encryption may demonstrate the sufficient reasonable means necessary to protect software as a trade secret in Virginia. It may also prove a cheaper alternative to a patent, and one with an unlimited life if its secrecy is preserved.
When picking a strategy of intellectual property protection for your software, do not overlook the potential value of trade secret law in Virginia. While a Virginia trade secret lawyer should help you consider a proper strategy and whether trade secretion protection for your software is possible, if it is it may prove cheaper and more valuable than the alternative of United States patent protection. Discuss these matters further with a licensed Virginia attorney to determine whether this kind of trade secret protection is right for you and your business.