Friday, February 27, 2009

Protecting 50-State Database

Dear Rich: My company has developed a database tool that allows people to review different rules in all 50 U.S. states. We're about to show it to some outsiders who might want to license it. Should we patent it? What should we do to protect it? I'm so glad you asked. The short answers to your questions are "Maybe" and "a few things." 
It seems like there are two things you'd like to protect: a database of information; and a tool that organizes and/or searches that information. As for the tool, if it is novel software code, that code may be protected under copyright law (PDF). The code and software process may also be protected under patent law. You say you're going to show this tool to outsiders soon. You don't need to be concerned about copyright protection, since you have a copyright on the software regardless of whether you register it. As for patent protection, you can preserve your rights by filing a provisional patent application before you show it to outsiders. A patent attorney can advise you, or your can use Nolo's online provisional patent application filing system. In reality, the filing is unlikely to do that much good because your right to go after those who infringe the patent won't kick in until you get the patent (which is years away). But don't give up! There is a way to protect your database tool (and we'll talk about it in a moment). 
As for your database of information, the various rules in the 50 states are likely to be public domain. But what may be proprietary (and protected under copyright law) are: (a) any explanatory or additional language you add; and (b) your selection and organization of the 50-state rules. According to the experts, there are really only six ways to organize data: alphabet, time, number, catergory, location, or hierarchy. According to public domain expert Stephen Fishman, the first three methods are unlikely to be protected; the other three may be protected if you can demonstrate a degree of creativity in the selection. If you're getting the feeling that protecting your database under copyright law will be difficult, you're on the right track. About ten years ago there was a rallying cry for legislation to protect databases -- but nothing ever came of it. (You'd have a better chance of protecting your database in Europe.)
So what's a database owner to do? According to the Dear Rich staff, your best approach is to use contract and trade secrecy law. End users who access your database should agree to an End User Agreement (EULA) that prohibits pilfering the tools or proprietary information. For example, that's the approach that eBay successfully used against to protect its customer database. Contractors who work on your database should sign nondisclosure agreements. When showing your database and tools to outsiders, use a typical nondisclosure agreement (here's an example). Some outsiders may balk at signing NDAs, particularly if they're already working on something similar, but a laywer can tweak the agreement to satisfy everyone. And of course, if you do license it, your license should require EULAs for end users and an assurance that the licensee won't challenge your proprietary claims to the database and tool.