Can Algorithms Be Protected as IP?

If you’re a business owner or developer, you likely know that algorithms are among the most valuable assets you can own, and if you’ve developed a proprietary system, software process, or computational method, you are most likely wondering whether that algorithm can actually be protected under intellectual property law. Continue reading and reach out to Lemler IP to speak with a knowledgeable Louisiana intellectual property lawyer to learn more about algorithm protection and what steps you should take to safeguard your work going forward. Here are some of the questions you may have:

What Types of Intellectual Property Protection Can Apply to Algorithms?

There are several different forms of intellectual property protection that may apply to an algorithm, and in many cases, businesses will rely on more than one form of protection at the same time. The right strategy will often depend on whether the algorithm is public-facing, confidential, integrated into software, or tied to a larger technological process. Some of the most common forms of intellectual property protection for algorithms are as follows:

• Trade secrets: Many algorithms are protected as trade secrets rather than patents. This generally means that the owner keeps the algorithm confidential and limits who can access it. In many cases, companies will also require employees, contractors, and third parties to sign confidentiality agreements.
• Copyright protection: Copyright law may protect the source code or written software associated with an algorithm (provided your developers did not rely on open-source frameworks that restrict proprietary ownership). However, it is important to understand that copyright protection usually does not extend to the underlying idea, formula, or method itself.
• Patent protection: Certain algorithms may qualify for patent protection if they are sufficiently unique and tied to a specific technological improvement or process.
• Licensing agreements and contracts: Businesses frequently use licensing agreements, employment contracts, and non-disclosure agreements to prevent unauthorized disclosure or use of proprietary systems.
• A warning about AI-generated algorithms: As artificial intelligence coding tools become more popular, it is critical to know that U.S. law currently requires human authorship and inventorship. If an AI generated your algorithm entirely on its own, you may face significant hurdles in claiming copyright or patent protection over it.

Can an Algorithm Be Patented?

Patent law is often one of the more complicated areas of intellectual property law, especially when software and algorithms are involved. Simply put, not every algorithm can qualify for patent protection. Generally speaking, an algorithm may have a stronger chance of being patented if it:

• Solves a specific technological problem
• Improves computer functionality or system efficiency
• Produces a concrete technical result
• Is considered novel and non-obvious when compared to existing technology

That being said, certain things, such as abstract ideas, mathematical formulas standing alone (such as an algorithm simply written out on a whiteboard), and generalized business methods may face significant hurdles during the patent application process.

Should a Business Keep an Algorithm Secret Instead?

In many situations, businesses decide that trade secret protection is the better option. Unlike patents, trade secrets do not expire after a set number of years. However, there is an important catch. Once the secrecy is lost, the protection may disappear as well. Consider the risk of reverse engineering as trade secret law does not protect you if a competitor independently creates the same algorithm or reverse-engineers it. If your algorithm can be easily deduced by observing how your public-facing software operates, relying on trade secrets may be risky, and patent protection may be the safer route. Businesses commonly rely on trade secret protection for the following:

• Recommendation systems
• Artificial intelligence training methods
• Pricing and forecasting models
• Customer analytics tools
• Internal automation software

Naturally, maintaining trade secret protection requires businesses to actively protect sensitive information at all times, which may include limiting employee access, securing digital systems, using confidentiality agreements, and ensuring information is safely and properly shared internally and externally.

If you have additional questions or would like to speak with a knowledgeable attorney about your situation, please don’t hesitate to contact Lemler IP today.