Open source software, patents, and trade secrets each offer different ways to protect information relating to software. Open source licenses make source code available and allow free distribution but also allow others to modify the code. Patents protect specific inventions for a limited time but require describing the invention publicly. Trade secrets have indefinite protection as long as information is kept secret, but lose protection if the secret becomes public. Combining these approaches poses challenges, as open source and trade secrets in particular seem contradictory. Companies must carefully manage what software is shared openly versus kept proprietary through internal policies and legal agreements.

1. Open Source Software, IP and trade
secrets: an impossible marriage?
Fenna Douwenga

2. Contents
1) Open Source Software (OSS) licenses
2) Software Patents
3) Trade Secrets on software
Three contradicting ways to deal with the fact that information wants to be
free
Photographs in this presentation were made available by Pexels.com and Pixabay.com under Creative Commons Zero (CC0)
license

3. Open Source Software and OSS
licenses
The principles
• Source code is made
available;
• Free distribution of the
software;
• Right to amend the source
code;
• Based on copyright.

4. Relevant facts relating to OSS licenses
• Many types of OSS licenses within the copyleft and permissive license spectrum, but
around 50% are GPL licenses;
• US law is most commonly used;
• ~85% of companies and their developers use OSS;
• Convergence of OSS and proprietary software is more and more common;
• GPLv3 forbids invoking patents by contributors of the OSS against the OSS licensed
under GPLv3 (article 11, 3rd paragraph), also any patent license to one member of the
community, is granted for all recipients of the covered work (article 11, 5th paragraph);
• GPL v3 does not include a specific reference to trade secrets;
• Limitations of OSS licenses only apply after distribution.

5. Patents
The principles
• Description of invention is
made available;
• Monopoly for limited period
of time;
• Distribution of the software
and right to amend only with
permission of the patent
holder.

6. Patentability of software?
Definition of Patentable Invention:
1) New;
2) Inventive step;
3) Industrially applicable.
However, programs for computers as such shall not be patentable (Article 52(2) European Patent Convention).
What does that mean? The invention must be more than the "normal" physical interaction between a program and
computer.
Difficult to obtain a software patent?
When infringed?

7. Value of patent system for software
Artificial Intelligence makes automated code
creation possible. The processes which
patents protect, as opposed to the source
code that copyright protects, are therefore
becoming more important
Attract investors
Use as a shield, as leverage and to your own
liking

8. Trade Secret
The principles
• Invention or source code is
kept a secret;
• Monopoly to use for unlimited
period of time until becomes
public knowledge.

9. What does new trade secret protection entail?
Article 2 Directive 2016/943 of 8 June 2016 and article 1 Law
on the Protection of Trade Secrets (Wet bescherming
bedrijfsgeheimen)
a) it is secret in the sense that it is not, as a body or in the precise
configuration and assembly of its components, generally known
among or readily accessible to persons within the circles that
normally deal with the kind of information in question;
b)commercial value because it is secret;
c) it has been subject to reasonable steps under the circumstances, by
the person lawfully in control of the information, to keep it secret."
Implementation Deadline: 9 June 2018
Limits? (Article 3 of both the Directive and the Dutch Law)
• Reverse engineering, except between two parties;
• Independent discovery;
• Exercise of the right of workers or workers' representatives to
information and consultation in accordance with Union law and
national laws and practices;
• Honest commercial practices.
• In theory: could last forever.

10. What can be a trade secret?
No interpretation guidelines were given, so we depend on the
CJEU;
Most important: take reasonable steps to keep it a secret, so:
• Confidentiality agreements, non-compete and fines;
• Define trade secrets internally;
• Digital protection;
• No paper trail;
• The bigger the company, the bigger the burden;
• The more professional the party, the more professional the
steps should be.

11. Infringement and enforcement
Infringement (article 2, 4 Directive; article 1 Dutch law)
• Infringer: any person who new or ought, under the circumstances, to have known that
he has unlawfully acquired, used or disclosed a trade secret;
• Infringing goods: goods, design, characteristics, functioning, production process or
marketing which significantly benefits from trade secrets unlawfully acquired, used or
disclosed.
Slide 11

12. Value of trade secrets for software
• Jump start;
• Attract investors;
• Broader applicability and protection in more
countries than patents;
• Cheaper than patent.

13. OSS Patent Trade Secret
Sharing knowhow Yes, source code Yes, invention No
Enriching public
domain
Yes, immediately Yes, after 20 years No
Costs Investment
Investment, filing and
renewal costs
Investment
Protects
Source code via
copyright
Computer
implemented
invention
Anything related to
software, as long as it
is kept secret and not
reverse engineereable
Combination with
other rights on
intertwined
(derivative)
software?
Copyleft: no, unless
not distributed then in
combination with TS
and patent;
Permissable: yes, with
patent, non-OS
copyright and TS
Distributed: yes, with
TS, non-OS copyright
and with permissible
OSS;
Not distributed: also
with copyleft OSS
Distributed: yes, with
patent, non-OS
copyright and with
permissible OSS;
Not distributed: also
with copyleft OSS
Combination with
other rights on
same product with
non-intertwined
software?
Yes Yes Yes
Compare chart

14. The marriages
Possible marriages Impossible marriage

15. But even possible marriages are hard work…
Internal policy:
• What software is not and will never be for distribution? What
to do when in doubt?;
• Inventory of trade secrets, patents and open source
developments;
• Screen permissive and copyleft OSS licenses of OSS meant for
distribution;
• Decide if you want to obtain patents to protect yourself;
Head out of the sand:
• Awareness training;
• Developers and legal should be partners;

16. But even possible marriages are hard work…
Confidentiality and non-compete with penalty for:
• Persons hired for development of software not meant for
distribution;
• Employees who work with OSS, patent and/or trade secret
development within company;
Warranties from suppliers:
• Warranty from that no third party IP rights or trade secrets are
infringed;
• Warranty that no copyleft OSS is used if meant for distribution
and in combination with trade secret and/or patent;
Read OSS license with special attention to:
• Fragmentation of such licenses;
• Lack of applicable law, but often drafted from a US law
perspective;
• Guarantees are not always included;
• What will you be using the OSS for?

17. twobirds.com
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open to inspection at that address.
Thank you
Fenna Douwenga
Fenna.douwenga@twobirds.com
+31 6 5271 4898