Copyright strategy for startups: Open source versus copyright
Software and data as copyright for technology and biotech startups
For a technology start-up, software is the most common type of work that is copyrighted. In the case of software, copyright typically protects the source code, object code, external elements such as the graphical user interface (GUI), pictures, graphics, music and text against unauthorized copying and distribution.
In Canada, the Copyright Act classifies software as a literary work. Therefore, it is protected for the life of the author plus 50 years after his or her death.
A biotechnology company can also benefit from copyright because it protects certain compilations of data. The Copyright Act is specific regarding the level of originality required to protect a compilation.
In general, if skill is used to select and arrange the data, it is covered by copyright. Remember, it is not the factual data itself that is copyrightable, but rather, its expression. Copyright also comes into play when publishing papers in journals and presenting data in talks at conferences.
Who owns the copyright?
It is very important for companies to realize that copyright generally belongs to the author and not the company. This is the case even when the author is working on contract or volunteer basis.
Startups should ensure they have a signed agreement assigning the copyright to the company prior to the start of any work. It is also important to include a clause in that agreement that waives any “moral rights” to the work. Failure to do so could result in the company not actually owning the software as it would belong to the programmer.
Others with an interest in copyright
Typically, universities and research centres (such as hospitals and government-funded organizations) have agreements in place with their staff, and even students, stating that the author will own the copyright but the institution has a non-exclusive irrevocable licence.
It is always a good idea to contact your institution’s technology transfer office and disclose your work before trying to license or assign it.
Open source and copyright
Many forms of open source exist, but they all advocate one main tenet: the freedom to use, copy, distribute and modify.
It does not, however, usually include the freedom to distribute without acknowledging the author or supplying a complete copy of the original work. Some open-source licenses even restrict the ability to include it in for-profit products.
For start-ups, there are two main issues to consider with regard to open source:
- Integration of open-source material into their own work
- Releasing their work under an open-source licence
Companies need to decide early on if they want to include open source in their own work product.
If they do, they must abide by that particular open-source licence, and this could potentially prevent the company from ever selling its product. Companies must therefore include contractual clauses regarding the use of open-source material with all employees and contractors.
Many startups decide to release their own products under open-source licences. The most common rationale is that the publicity achieved trumps the security of being unknown. In addition, most start-ups do not have the money required to actually sue someone who infringes their work. For more information, visit the website of the Open Source Initiative.
Making money from copyright
Copyright can be either assigned (similar to selling) or licensed. A licensing agreement is a contract between the author (licensor) and someone else (licensee) in exchange for compensation (usually money).
Typically, the licensee pays a recurring fee, called a royalty, to the licensor every time the work is sold or used.
The intellectual property rights of a particular work are generally divisible by territory (for example, city, province/state, country), term (length of time), medium (for example, radio, television, Internet), market sector, and scope. Thus, a licensor can license his or her work to many different licensees at the same time depending on the breakdown of these terms.
Startups can do their own licensing but it is often more advantageous to engage a lawyer, publishing house, a collective management society or technology transfer office. Royalty rates vary greatly depending on the type of work, so use an expert in that particular field to negotiate the licence agreement. For some forms of work, theCopyright Actitself governs who administers and collects royalties (that is, the collective management mechanism).
Note: The information in this article is for general informational purposes only. It is not legal advice.
Copyright Act (R.S., 1985, c. C-42). Retrieved December 9, 2009 from http://www.canlii.org/en/ca/laws/stat/rsc-1985-c-c-42/latest/rsc-1985-c-c-42.html
Canadian Intellectual Property Office. (2005, January). Copyright. Retrieved December 9, 2009 from http://www.cipo.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/h_wr00001.html?OpenDocument
World Intellectual Property Organization. (n.d.). Copyright and Related Rights. Retrieved December 9, 2009 from http://www.wipo.int/about-ip/en/copyright.html
Open Source Initiative. (n.d.) Retrieved December 15, 2009 from http://www.opensource.org/