Companies often debate as to whether their software code should be treated as a trade secret or should be registered as a copyright. There are many variables to consider, but perhaps the most important is whether the company wants its source code to remain a secret. The Fifth Circuit Court of Appeals provided this recent breakdown of the intellectual property considerations for software code:

The different spheres of intellectual property protection can sometimes overlap. As the software code in this case illustrates, the same intellectual property can be protectable under the copyright laws or subject to trade secret protection. If the creator seeks the protection of the copyright laws, it obtains the exclusive right to make copies of the work for decades but must publicly register the work before enforcing that right through a lawsuit. 17 U.S.C. § 411(a). The creator might prefer to not publicly disclose the creation, in which case it can maintain the material as a trade secret if it takes reasonable measures to preserve secrecy. See generally, Stephen M. Dorvee, Protecting Trade Secrets Through Copyright, 1981 Duke L.J. 981, 982 (1981) (describing how copyright protection is limited compared to trade secret protection in that it only covers expression and not underlying ideas, and requires disclosure of the trade secret). Depending on the business situation, one of these tradeoffs will be preferable to the other.

GlobeRanger Corp. v. Software AG United States of Am., Inc., No. 15-10121, 2016 WL 4698270, at *3 (5th Cir. Sept. 7, 2016). The Court in GlobeRanger Corp. goes on to hold that the Copyright Act does not preempt a Texas common law misappropriation of trade secrets claims.  This means that for companies choosing to treat their software code as a trade secret, the Copyright Act will not serve as bar to enforcing their rights.

To read the full GlobeRanger opinion, click here: