INTELLECTUAL PROPERTY AND THE LEGAL PROTECTION OF ALGORITHMS

Abstract

This article delves into the intricacies of intellectual property (IP) law, with a particular focus on the legal protections available for algorithms. It starts by offering an in-depth overview of the concept of intellectual property, detailing its various forms, including patents, trademarks, trade secrets, and copyright protections. The importance of algorithms in the digital age is then explored, highlighting their role in technological innovation and business growth. The article examines different methods of protecting algorithms, such as patenting, copyrighting, and trade secret protection, and discusses the specific requirements and limitations of each approach. It also addresses the challenges inherent in protecting algorithms under current IP laws, including issues related to digital piracy, international enforcement, and the potential stifling of innovation. Ethical and moral considerations, such as the impact of biased algorithms and the accountability of creators, are also considered. The article concludes by looking at the regulatory framework in India, noting the exclusion of algorithms from patent protection and the emphasis on trade secrets and copyright. It underscores the importance of international cooperation in IP law to ensure effective and consistent protection for innovators globally.

Keywords

Intellectual Property (IP), Algorithms, Patents, Trade secrets, copyright, legal protection, Indian Law.

Introduction

In the digital age, intellectual property (IP) law is essential for protecting the creations and innovations that drive technological progress. As the global economy becomes increasingly reliant on technology, the significance of algorithms has soared, embedding themselves into the fabric of modern life. From powering search engines and social media platforms to enabling complex financial transactions and medical diagnoses, algorithms are indispensable tools that underpin much of today’s technological advancements and business operations. However, their unique nature and critical importance bring forth numerous challenges and considerations in the realm of intellectual property protection.

This article delves into the complexities of intellectual property (IP) law, with a particular emphasis on the different legal protections that can be applied to safeguard algorithms. It aims to provide a comprehensive understanding of intellectual property, outlining its various forms, including patents, trademarks, trade secrets, and copyright. By exploring the role of algorithms in technological innovation and business growth, the article underscores their importance in the digital era. Different methods of protecting algorithms—such as patenting, copyrighting, and trade secret protection—are examined in detail, highlighting the specific requirements and limitations of each approach.

Moreover, the article addresses the inherent challenges in protecting algorithms under current IP laws. These challenges include issues related to digital piracy, international enforcement, and the potential stifling of innovation due to overly stringent protections. Ethical and moral considerations are also explored, particularly the impact of biased algorithms and the accountability of creators. The regulatory framework in India is scrutinized, noting the exclusion of algorithms from patent protection and the emphasis on trade secrets and copyright. The importance of international cooperation in IP law to ensure effective and consistent protection for innovators globally is emphasized as a crucial aspect of fostering a dynamic and competitive global marketplace.

By providing a nuanced understanding of the various facets of IP law as it pertains to algorithms, this article aims to equip readers with the knowledge necessary to navigate the complexities of legal protection in the digital age. It also seeks to foster a dialogue on balancing robust IP protections with ethical standards and responsible innovation, ensuring that the rapid advancements in technology benefit society as a whole.

Intellectual Property Law: An Overview

The term ‘Intellectual Property’ refers to a defined set of intangible products of human activity. The World Intellectual Property Organization broadly defines intellectual property as the legal rights which result from intellectual activity in the industrial, scientific, literary and artistic fields. Fundamentally, intellectual property law aims to protect creators and producers of intellectual goods and services by granting them specific, legally enforceable, temporary rights to control the use of their creations[1]. In this sense, Intellectual property laws mainly acknowledge the unique rights of creators to prevent others from using their creations.

The dominant types of intellectual property rights include Patents, Trademarks, Trade secrets, and Copyright. A patent safeguards inventions, a trademark identifies the owner or origin of products and services, and copyright protects literary, artistic, and scientific works[2], and a trade secret is a property right on confidential information that may be sold or licensed[3].

Intellectual Property necessarily requires protection in order to ensure its prosperity. The justification for the protection of Intellectual Property rights may vary in each case. Generally speaking, Intellectual Property rights are typically protected for economic purposes, such as securing transactions and the growth of businesses, encouraging innovation and creativity, and ensuring fair competition as a primary purpose for the protection of Intellectual Property. Besides economic purposes, there are moral justifications for protecting Intellectual property; as the effort and creativity of creators must be recognized, fairness and justice must be ensured, and cultural and social values must be preserved.

Algorithms as Intellectual Property

What is an Algorithm?

As Professor Jeff Erickson defined it in his book ‘Algorithms’, An Algorithm is an explicit, precise, unambiguous, mechanically executable sequence of elementary instructions, usually intended to accomplish a specific purpose[4].In straightforward terms, an algorithm is a specific procedure designed to solve a particular problem. Algorithms are fundamental to modern technology, influencing everything from web searches to artificial intelligence. Due to their precision and effectiveness, algorithms are extensively utilized in a wide range of applications. In the data analysis and machine learning field, algorithms play a vital role in finding patterns in big datasets and forecasts outcomes. Algorithms are also utilized to safeguard data storage and communication by using encryption and decryption techniques. Additionally, algorithms help users find the most relevant information online, as well as index and retrieve pertinent data[5].

What is the Rationale for Protecting Algorithms?

As previously discussed, Algorithms have become the backbone of the digital world and a major part of our daily lives. They are also a valuable tool for fostering the growth of businesses. Because of the expansion of digital trade and e-commerce, more areas of the economy are being digitized. This technological advancement is making it more critical for businesses to protect their innovations and maintain a competitive edge[6].

Intellectual Property protection significantly acts as security for creators, guaranteeing that efforts would be acknowledged as their own and ensuring that they would be financially rewarded for their investment in time and money. Algorithms, as any other beneficial innovation, the protection of which is a crucial concern. Often regarded as the core driver of the growth mechanism for companies with a strong technological potential, innovative Algorithms face risks of industrial espionage, copying, and piracy[7]. Algorithms can also be made commercially profitable by licensing their use to third parties. Additionally, in cases of infringement by third parties, the rightful owner is entitled to raise an action against such unauthorized use of his creation. For all the reasons mentioned, the protection of Algorithms constitutes a major factor in the growth of businesses and a great incentive that makes the creative process worthwhile for innovators.

Methods of Protection

Various types of legal protection can be conferred upon a specific Algorithm. Taking into account that an Algorithm in each individual case must meet certain requirements before being eligible for such protection, and these requirements vary from one jurisdiction to another.

Patenting Algorithms

According to the USPTO, Algorithms must be evaluated under certain criteria in order to be considered eligible for patentability. First, the patentable Algorithm must have a practical application as it should provide some tangible benefit or solve a particular problem. Second, it must be novel and non-obvious; that it must be creative and inventive. Third, it must demonstrate a real-world impact. Finally, it must not be purely abstract or of a mathematical nature[8]. The landmark US Supreme Court precedent ruled that abstract ideas implemented using a computer were not eligible for a patent unless the patent adds something extra that embodies an innovative concept[9]. An instance of a patented Algorithm would be Google’s original PageRank Algorithm on the grounds that it was a specific method that produced a new and useful result[10]. Securing a patent provides the owner with exclusive rights to utilize and commercialize the invention.

Copyrighting Algorithms

Copyright protects the specific written expression or the code of an Algorithm but does not extend to protecting the underlying idea or the Algorithm itself. Under the United States Copyright Act, Algorithms in their abstract form cannot be eligible for copyright protection, as the law explicitly states that ideas, procedures, processes, systems, methods of operation, concepts, principles, or discoveries are not eligible for copyright protection. Nevertheless, the specific implementation of an algorithm in computer software can be protected under copyright law, as it constitutes an original work of authorship[11]. In this sense, copyright protection does not cover Algorithms themselves, as they must implemented into a sort of computer software or documentation to be protected. This means others can develop different codes presenting the same idea of a protected algorithm without infringing copyright.

Protection by Trade Secrets

When mathematical formulas themselves are not patentable, or when there is a certain algorithm that is not proven to be useful, trade secrets may be the suitable method to protect Algorithms. However, For information to be considered a trade secret, it must derive commercial value from its secrecy, be known only to a restricted group of individuals, and be safeguarded by reasonable efforts from the owner to keep it confidential, such as implementing confidentiality agreements with employees and business partners[12].

Trade Secrets Vis-à-vis Patents

Unlike other forms of intellectual property, trade secrets do not provide their holders with an absolute monopoly over proprietary information. Instead, they offer protection against misappropriation through different legal measures such as the Defend Trade Secrets Act (DTSA) or the Uniform Trade Secrets Act (UTSA) in the US, which provide a private civil cause of action. Other types of IP are rather harder to enforce with respect to Algorithms and AI technologies. In the process of obtaining a patent for example, even if an owner or licensee can navigate the challenge of abstract ideas, the lengthy process of securing IP protections often allows technology to advance beyond the patent before it is even granted, on the other hand, protection by trade secrets takes immediate effect. Moreover, to obtain a patent, a requirement of disclosure must be satisfied, which makes it ineffective for the owner of the particular Algorithm who is not in favor of its dissemination[13]. Protection by trade secrets, on the other hand, might be deficient to some extent; if a protected algorithm was independently discovered or reverse-engineered, the trade secret protection is lost[14].

Challenges Facing the Protection of Algorithms

Protecting algorithms under Intellectual Property laws presents numerous challenges due to the unique nature of algorithms and existing legal frameworks. Firstly, there is a difficulty in defining and describing algorithms in legal terms, whether they are functional or merely abstract ideas that would not be eligible for protection under certain IP laws[15]. Secondly, digital piracy constitutes a major challenge in regulating and enforcing IP rights. detecting and proving infringement, especially in complex technological contexts, requires significant effort and resources. Thirdly, intellectual property laws differ significantly across countries, leading to inconsistent protection levels and complicating international enforcement[16]. Ultimately, excessively stringent IP protections can hinder innovation by restricting others from building upon existing work. On the other hand, insufficient protection can deter investment in new technologies[17].

Ethical and Moral considerations

Protecting algorithms under intellectual property laws involves several ethical and moral considerations. As granting IP protections can create monopolies, allowing companies to control essential technologies, this might raise ethical considerations regarding how companies use their monopolistic power, as they should avoid exploitative practices and consider the broader impact on society and the economy[18]. Furthermore, algorithms are human constructs, in that they are created, trained, and applied by humans, which implies that human reasoning and decision-making may have a bearing on algorithms and their application. Accordingly, algorithms can perpetuate biases if not designed and tested carefully. Protecting biased algorithms without addressing their flaws can lead to ethical issues like hiring, lending, and law enforcement. An important consideration is that creators are held accountable for the impact of their algorithms. This includes considering societal implications of how algorithms are deployed and used[19].

Regulating Protection in India

Indian law allows software programs and algorithms to be protected by either copyright or trade secrets, but not patents. Authors must choose between copyright protection and trade secret protection; once a work is protected under one, it cannot be protected under the other. Algorithms are explicitly excluded from patent protection under Indian Patent law[20]. Furthermore, Indian law regulates competition in digital markets under Competition Act (2002). This Act regulates the practice of technological firms and prohibits anti-competition agreements. In 2021, the Indian government has developed tech-regulatory measures as a solution to eliminate algorithmic harms by using automatic tools to regulate online content[21].

Conclusion

In conclusion, the field of intellectual property law plays a crucial role in safeguarding the creations and innovations of individuals and organizations, including the increasingly significant area of algorithms. Algorithms, as fundamental components of modern technology and business innovation, face unique challenges and opportunities in terms of legal protection. While patents, copyrights, and trade secrets offer varying degrees of protection, each method requires careful consideration of its applicability and limitations in different jurisdictions.

Ethical considerations are vital, particularly in dealing with issues of bias, fairness, and the wider societal implications of algorithm deployment. As algorithms continue to evolve and integrate into more aspects of daily life, balancing robust intellectual property protections with responsible innovation and ethical standards remains a critical imperative for legislators, businesses, and society at large.

In navigating these complexities, international cooperation and harmonization of intellectual property laws are essential to ensure consistent and effective protections for innovators while fostering a dynamic and competitive global marketplace.

References

WIPO, WIPO INTELLECTUAL PROPERTY HANDBOOK 4 (2^nd ed. 2004).
JEFF ERICKSON, ALGORITHMS 1 (Jeff Erickson 2019).
Alice Corporation Pty. Ltd. v. CLS Bank Intern., (2014) SC 573 US 208
Matt Sammon, The importance of Intellectual Property, SONDER&CLAY (July 5, 2024, 06:40 PM), https://www.sonderandclay.com/ip-advice/the-importance-of-intellectual-property-protection/
WIPO, https://www.wipo.int/tradesecrets/en/tradesecrets_faqs.html (last visited July 5, 2024).
Soni Upadhyay, What Is An Algorithm? Definition, Types, Characteristics, SIMPLILEARN (Jun 26, 2024), https://www.simplilearn.com/tutorials/data-structure-tutorial/what-is-an-algorithm
How to protect Algorithms that enhance business, ABOU NAJA INTELLECTUAL PROPERTY (July 5, 2024, 11:00 PM), https://abounaja.com/blogs/protection-of-algorithms
GIDE 255, https://www.gide255.com/best_practice/quelle-protection-juridique-de-lalgorithme-place-au-coeur-de-lia/?lang=en (last visited July 6, 12:22 AM)
CYPRIS, https://www.cypris.ai/insights/can-you-patent-an-algorithm-eligibility-strategies (last visited July 6, 2024).
BOLD PATENTS, https://boldip.com/patenting-an-algorithm/ (last visited July 6, 2024)
Unraveling the Mystery: Can Algorithms Be Copyrighted and How it Affects the Tech World, LOCALHOST (July 6, 2024, 03:53 AM), https://locall.host/can-an-algorithm-be-copyrighted/
FISHER PHILLIPS, https://www.fisherphillips.com/en/news-insights/trade-secret-laws-protect-algorithm-based-intellectual-property.html (last visited July 7,2024)
Frank A.DeCosta III, Intellectual Property Protection for Artificial Intelligence, FINNEGAN (August 30, 2017), https://www.finnegan.com/en/insights/articles/intellectual-property-protection-for-artificial-intelligence.html
Umme Sutarwala, Best Practices to Protect Algorithms as Intellectual Property, ENTERPRISE TALK (Apr. 6, 2021), https://www.enterprisetalk.com/featured/best-practices-to-protect-algorithms-as-intellectual-property/
Jenneke Gerards, the Fundamental Rights challenges of Algorithms, SAGE JOURNALS (July 2, 2019), https://journals.sagepub.com/doi/full/10.1177/0924051919861773
Shawaiz Nisar, Algorithms And Intellectual Property— The Complexity In Protection, IIPRD (Feb 16, 2022), https://iiprd.wordpress.com/2022/02/16/algorithms-and-intellectual-property-the-complexity-in-protection/
Archana Sivasubramanian, Regulating Algorithms in India, CPRINDIA (July 2021), https://www.cprindia.org/system/tdf/working_papers/Working%20paper_Regulating%20Algorithms_2%20Sep._re%2005.pdf?file=1&type=node&id=10022&force=1

[1] WIPO, WIPO INTELLECTUAL PROPERTY HANDBOOK 4 (2^nd ed. 2004).

[2] Matt Sammon, The importance of Intellectual Property, SONDER&CLAY (July 5, 2024, 06:40 PM), https://www.sonderandclay.com/ip-advice/the-importance-of-intellectual-property-protection/

[3] WIPO, https://www.wipo.int/tradesecrets/en/tradesecrets_faqs.html, (last visited July 5, 2024).

[4] JEFF ERICKSON, ALGORITHMS 1 (Jeff Erickson 2019).

[5] Soni Upadhyay, What Is An Algorithm? Definition, Types, Characteristics, SIMPLILEARN (Jun 26, 2024), https://www.simplilearn.com/tutorials/data-structure-tutorial/what-is-an-algorithm

[6] How to protect Algorithms that enhance business, ABOU NAJA INTELLECTUAL PROPERTY (July 5, 2024, 11:00 PM), https://abounaja.com/blogs/protection-of-algorithms

[7] GIDE 255, https://www.gide255.com/best_practice/quelle-protection-juridique-de-lalgorithme-place-au-coeur-de-lia/?lang=en (last visited July 6, 12:22 AM)

[8] CYPRIS, https://www.cypris.ai/insights/can-you-patent-an-algorithm-eligibility-strategies (last visited July 6, 2024).

[9] Alice Corporation Pty. Ltd. v. CLS Bank Intern., (2014) SC 573 US 208

[10] BOLD PATENTS, https://boldip.com/patenting-an-algorithm/ (last visited July 6, 2024)

[11] Unraveling the Mystery: Can Algorithms Be Copyrighted and How it Affects the Tech World, LOCALHOST (July 6, 2024, 03:53 AM), https://locall.host/can-an-algorithm-be-copyrighted/

[12] Supra note 3.

[13] FISHER PHILLIPS, https://www.fisherphillips.com/en/news-insights/trade-secret-laws-protect-algorithm-based-intellectual-property.html (last visited July 7,2024)

[14] Frank A.DeCosta III, Intellectual Property Protection for Artificial Intelligence, FINNEGAN (August 30, 2017), https://www.finnegan.com/en/insights/articles/intellectual-property-protection-for-artificial-intelligence.html

[15] Id.

[16] Id.

[17] Umme Sutarwala, Best Practices to Protect Algorithms as Intellectual Property, ENTERPRISE TALK (Apr. 6, 2021), https://www.enterprisetalk.com/featured/best-practices-to-protect-algorithms-as-intellectual-property/

[18] Id.

[19] Jenneke Gerards, the Fundamental Rights challenges of Algorithms, SAGE JOURNALS (July 2, 2019), https://journals.sagepub.com/doi/full/10.1177/0924051919861773

[20] Shawaiz Nisar, Algorithms And Intellectual Property— The Complexity In Protection, IIPRD (Feb 16, 2022), https://iiprd.wordpress.com/2022/02/16/algorithms-and-intellectual-property-the-complexity-in-protection/

[21] Archana Sivasubramanian, Regulating Algorithms in India, CPRINDIA (July 2021), https://www.cprindia.org/system/tdf/working_papers/Working%20paper_Regulating%20Algorithms_2%20Sep._re%2005.pdf?file=1&type=node&id=10022&force=1

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