A recent decision by the Federal District Court for the Eastern District of New York reinforces that owners of trade secret computer programs should carefully approach copyright registration in order to maintain both copyright and trade secret protection. This includes being conscious of copyright regulations allowing the partial and redacted registration of computer code with the Copyright Office.
In a recent manifestation of this principle, Capricorn Management Systems accused GEICO of misappropriating Capricorn’s trade secret source code for medical billing software. Last week, the court granted GEICO’s motion for summary judgment, holding that the code was not entitled to trade secret protection, in part because it was registered, unredacted, with the U.S. Copyright Office, and was therefore publicly available.
Over the years, plaintiffs have argued that because the Copyright Office restricts access to deposited materials, registration does not preclude secrecy. Courts have consistently rejected this argument as inaccurate. Although the Copyright Office does restrict certain reproductions of deposited material (see 37 C.F.R. § 201.2(d)(2)), the same restrictions do not apply to access and inspection of those materials. 17 U.S.C. § 705(b) (“articles deposited in connection with completed copyright registrations . . . shall be open to public inspection”); 37 C.F.R. § 201.2(b)(1) (providing for the inspection and copying of records relating to a registration or a recorded document). Unredacted material in copyright registrations is therefore generally considered publicly available for the purposes of trade secret analysis.
Capricorn argued that its copyright registrations did not waive trade secret protection because only portions of its code were registered, and those portions alone would not permit operation of the entire computer program. The court found this argument unavailing because the registered portions of code included the asserted trade secrets.
Importantly, Capricorn had not availed itself of the right to register its source code in limited and/or redacted form. As the court pointed out, copyright regulations allow owners of trade secret computer programs to submit only portions of their code, or to submit code with the trade secret portions “blocked-out.” 37 C.F.R. § 202.20(c)(2)(vii)(A)(2). The rules for such limited or redacted registrations, as well as other guidelines for the copyright registration of computer programs, are set out in the Copyright Office’s Circular 61, “Copyright Registration of Computer Programs.”
The GEICO decision is a useful reminder of best practices for copyright registration of computer code, and also more generally that trade secret owners should always ensure that disclosures to third parties will not destroy their information’s status as a trade secret. The case is Capricorn Mgm’t Sys., Inc. v. Gov’t Emps. Ins. Co. et al., 15-CV-2926 (DRH) (SIL) (E.D.N.Y.).