Traditionally, IP rights for software was not quite a thing because their use and development were not as widespread as today. With the increased use and the high market value, competition is high, creating the need to safeguard creators’ ideas through IP rights registration.
One such way of safeguarding ideas in the software industry is patenting algorithms. This guide delves into software algorithm patents from the rewards, risks, and pitfalls, so keep reading if you are in the industry and looking for ways to safeguard your ideas.
Understanding Software Algorithms and Patents
Computer programs were not around when IP laws were designed, which meant they didn’t have many protections in the early stages of software development. Technically, algorithms are mathematical formulas not protected under IP laws.
It was only until the late 70s that the World Intellectual Property Office (WIPO) started looking into laws geared toward allowing for IP protections for computer programs, with patenting becoming possible in the mid-80s in the US and Canada.
The reasoning behind allowing algorithm patenting is that though they are mathematical formulas that are not patentable, they are used to perform specific tasks and solve problems. For a software algorithm to qualify for patenting, it must be a first in the world, non-obvious, and have practical use.
However, it is best to engage an IP lawyer within your region to help you patent your software algorithm. For example, a Canadian IP lawyer can help you understand the patent process basics in Canada and pass the eligibility criteria. Similarly, a US-based IP lawyer can help make the patent registration process less overwhelming.
Rewards of Algorithm Patenting
Exclusivity
Upon successful patent registration, you get exclusive rights to the algorithm for a specified time. In most jurisdictions, this time is 20 years from the registration date.
No entity can replicate your algorithms during the protection period unless under direct authorization from you. Any replication without authorization infringes on the inventor’s rights, and they have a right to sue and recover damages.
Exclusivity means you control the market, set a price, and have adequate time to recoup the cost of creating and making a profit.
Revenue Generation
Exclusivity is the main reason for securing patent rights for software algorithms, which means standing out from the competition.
However, there are situations where an inventor may find it more profitable to share their rights with other entities, thereby generating additional revenue besides what they get for the direct commercialization of their invention.
Inventors take different approaches to patent rights monetization, including partnerships, licensing agreements, and royalties.
Building Your Portfolio
As a software developer, your portfolio can be an excellent selling point. Often, new clients see projects you have worked on and how well they work before engaging.
While you could still include non-patented software algorithms in your portfolio, patented algorithms do a better job of enhancing your credibility as a developer, which can mean more partnerships.
Also, it puts you in a good light when seeking funding for expansion and seeking business partners.
Risks and Pitfalls
Changing Technologies
The software industry landscape changes quite fast, which means the most popular software in 2022, may not be as popular as in 2025.
Considering that patenting an invention can be relatively money intensive, it is important to make careful consideration of the expected longevity of usefulness of an invention to avoid putting money down the drain.
If you intend to use an IP expert who is almost a must-have, you can expect to part with anything from $11,000 to $20,000 per patent.
Exposing Trade Secrets
Registering a patent involves revealing all the information about your invention to the registering entity. While the divulged information remains protected during the patent period, it becomes public after expiry.
If you value keeping your algorithms secret for longer, patenting may not work to your advantage.
Final Words
Patenting your software algorithms is among the best ways of protecting your software invention. Like any good thing, patenting your algorithms also has downsides and risks, so you should weigh both before registering. Besides patenting, you can also consider other IP protections for your software business, such as copyrights, trademarks, and trade secrets.
