Suki owned a small software development business that designed and sold software for business purposes.

Her
company, Suki’s Enterprises, was well known for its application programs using various database systems such
as SQL Server and Oracle. Her company’s competitive advantage was that rather than just using the standard
programming tools provided by the database vendors, her programmers would frequently develop special
programs at a very low level which could dramatically increase the efficiency of the overall database and the
programs which used it. The code which John had just shown her had the potential of revolutionizing her
business. John was working on an application for a customer that required a lot of sorting of the records in the
database. He had been concerned that the subroutines that were available in the “standard” programming
environment he was using did not sort the database records as efficiently as he wanted. In this application, which
involved tens of millions of records, he was looking for something that could sort records very quickly. In order
to have the application run as efficiently as possible, John had rewritten some key subroutines.
Although normally a programmer would just use the standard subroutines for the reads, writes and
sorts in the database, John had provided routines of his own. Written in basic machine language through an old-
style programming technique known as assembler code, John had achieved almost incredible improvements in
efficiency. For example, while it would take the standard sub-routine 186 seconds to sort his test database of
10 million records, his newly written sub-routines could do the same task in only 14 seconds!
He had been able to achieve this dramatic increase in efficiency by thinking outside the box of normal
programming. Although most modern database systems would use something called binary sort techniques,
John had reverted to a method that had fallen out of favour long ago known as bubble sorting. Through a unique
modification that he had devised, he had been able to use the old-style method to achieve the dramatic
improvements in efficiency.
At the same time that John had been doing his work on the programming routines, he had also been
thinking about a name that could be used to describe the new routines. He had devised the name ADASORT
being a crude contraction of advanced sorting. Despite its simplicity, the name seemed to stick. John had been
referring to his work as the ADASORT ROUTINES and the name was being used by the other programmers in the
company.
Suki was now trying to determine what steps, if any, should be taken around the intellectual property
(IP) related to the ADASORT ROUTINES.
Only last week she had been at her local Chamber of Commerce for a workshop on the importance of
IP to businesses. The speakers had presented an almost bewildering array of information on IP. What Suki did
remember of the workshop could be summed up in the following points: IP could have significant value if it was
properly protected It was always important to determine who owned any specific innovation Computer
programs could be protected by copyrights and may be protected by patents or trade secrets Patents could be
very expensive to obtain but copyrights were almost automatic Trade-marks could also protect the name of the
software in the marketplace. She had to admit that she had been a little confused and, at the time, wasn’t sure
how anything she learned at the workshop would apply to her business. Now she wished she had taken better
notes of the information that she had received. She did remember that there was some good resource material
available for someone like her on the Canadian Intellectual Property Office’s website at www.cipo.ic.gc.ca. She
reviewed the Guides on Patents, Trade-marks, Copyrights and some additional information on trade-secrets she
found in CIPO’s IP Toolkit.
These were a good starting point to understanding some of the issues. One point was really bothering
her: who owned the ADASORT ROUTINES? She wasn’t sure if it was her company or the client company that
they were writing the routines for. She also wondered if John had any ownership rights.
When Suki went to review the agreement her company had with the client, she found that, as part of
the negotiations for the contract, the client’s lawyer had inserted the following clause into the contract which
she had agreed to: The client shall have the right to use and modify the software system provided by Suki’s
Enterprises for any purposes without any further payment. Suki’s Enterprises shall provide the source code for
the software system to the client and the client may make any modifications to the source code provided that
Suki’s Enterprises has no liability for any such modifications. Suki remembered that this clause had been
important for the client’s lawyer although she hadn’t really worried about it. Now she was wondering if she
should have paid more attention to the issue. Suki also wondered if John would have any ownership rights.
Although John had been an excellent lead programmer, he hadn’t really taken any interest in assuming a
management role over the other programmers.
In fact, his own work habits made him difficult to manage: although he worked 10 and 12 hour days,
he would work those hours when he chose to, sometimes coming in after the other employees left and working
through the night. Because his work had been excellent, Suki had always overlooked these habits and considered
them to be the cost of keeping John motivated. In addition to his work habits, Suki had a more significant concern
about John. Three months ago, Suki’s lawyer had suggested that she get all of her employees to sign an
employment agreement that required them to keep information confidential and ensuring that Suki’s
Enterprises would own all of the work they did for the company. Although most employees signed the
agreement without even reading it, John did not. It wasn’t because he disagreed with it; rather John thought he
could use the occasion to pressure Suki for a raise. John said he would sign the agreement when Suki raised his
salary by 40%.
The issue of the raise was a little contentious for Suki. Although she had considered increasing John’s
salary at the annual review period which wouldn’t occur for another five months, she had only considered an
amount of about 25%. She would be able to justify this amount easily based on John’s productivity and the client
billings that he was able to generate; she might even have been convinced to increase it by the 40% he wanted.
But what really concerned Suki was John’s attitude. When they had discussed the matter, he was pretty rude
about it and suggested that if she didn’t give him the raise, he might find someplace else to work. She had let
the matter lie since it was first discussed and John hadn’t raised it again. However, without a contract, Suki
wondered who owned the ADASORT ROUTINES — John or her company?
Another important question that Suki was considering was: what was the IP relating to the ADASORT
ROUTINES? And should she worry about taking steps to register any of this IP?
In considering the answers, Suki tried to work out the information that she had received at the
workshop. She considered that the actual code could be considered to be a trade secret. However, she wondered
if the client’s rights to receive the source code would affect this. Moving to patent protection, she remembered
that computer software could sometimes be protected by patents. What she especially recalled from the
workshop was that a patent application could cost up to $10,000 in legal fees to start with and then there would
be additional fees depending on which countries she decided to obtain a patent in. On the issue of copyright,
Suki remembered that copyright protection was automatic for written works which could include computer
software. The protection was for a long period of time and didn’t require registration although at times it was a
good idea to register the copyright. Finally, Suki wondered about trade-marks. She considered a comment that
one of the presenters made at the workshop that trade-marks could become quite valuable and that they have
an easy registration process. Some trademarks like Coca-Cola® and Microsoft® could have values in the hundreds
of millions if not billions of dollars! Was the ADASORT ROUTINES trademark worth anything? There are a number
of questions Suki needs to answer.
Discussion Questions:
● Which form of intellectual property should she pursue for the new software routines?
● Should she focus on trade secrets, patents or copyrights?
● Does Suki have to worry about the fact that others in the company know about John’s new
software routines?
● Who owns the rights to any future IP associated with ADASORT ROUTINES? Will it be Suki’s
Enterprises, John, the client or someone else? If it isn’t Suki’s Enterprises, what should she do?
● Should Suki do anything to protect the IP behind the name ADASORT ROUTINES?
● If so, how can this benefit her business? What type(s) of protection should she seek?
● What would you advise Suki to do?