Software Development Outsourcing Hub

How to Protect Software Intellectual Property: Best Practices

February 26, 2024
Intellectual property theft today is more prevalent and sophisticated than ever. During COVID-19 alone, software piracy spiked by 20-30% around the world. 

IP theft has become especially common within our global digital landscape. Sharing information and building products is happening virtually across borders. In turn, this enables bad actors to find back doors to access and copy confidential data. 

That’s why you should know to protect software intellectual property when outsourcing. Safeguard your winning software IP in the long term with our expert-backed insights.

What Is Intellectual Property?

Intellectual property (IP) covers any asset based on “original human thought.” These creations are considered innovative and non-tangible. After meeting the criteria, the owner maintains exclusive rights to its use. 

When it comes to IT intellectual property, these assets are typically protected by IP:

  • Software programs
  • Lines of code
  • Product functions
  • Designs
  • Content
  • Artwork
  • Product names

Most often, software IP is safeguarded through a copyright and/or patent. Having one means that you can stop others from stealing or copying your innovations. As a result, this gives your company a competitive edge in the market.

Of course, obtaining IP protections can be a tricky process. You must prove that your asset is truly original and non-obvious to experts in the field. This process can take years and thousands of dollars to get right.

Why Protecting Intellectual Property Is Business-Critical

To reap the full benefits of your products, IP is crucial. Having exclusive ownership of your innovative software will enable you to:

  • Gain a competitive advantage
  • Guarantee revenue from an original product
  • Build customer loyalty
  • Foster ongoing innovation at your company
  • Mitigate business risks

Specifically, IP protections are business-critical due to the high investment in making products. The last thing you want is to sink money into a new innovation that other companies then rip off and sell on their own. 

Expert Tips on How to Protect Software Intellectual Property

Safeguarding your IP involves securing it at every critical juncture during development. As you prepare to outsource, learn how to protect software intellectual property. Cover all your bases with our expert tips below.

1. File Paperwork for Copyrights and Patents ASAP

First of all, protect your original products through officially filing the relevant paperwork. Doing so will give you a stronger legal basis to defend and enforce your IP rights. The two most common filings for software assets are copyrights and patents. 


Copyright protects the specific expression of an idea. In the case of innovative software, you can copyright your source code. Other assets may qualify as well, such as product names, artwork, content, etc. 

Keep in mind, however, that copyright doesn’t protect your software’s function. So, another business could write their own original code to fulfill the same function. That said, the biggest benefit of copyright is that somebody can’t copy/plagiarize your code.

  • Copyright lasts for the life of the creator/owner plus another 50 years.
  • Extensive U.S. copyright treaties means that it’s upheld in many other countries. 
  • Copyright is necessary to sue for infringement or send cease and desist letters. 


Patents are an important way to safeguard your software IP. Holding a patent gives you exclusive rights to manufacture and license it. 

Unlike copyright, a patent protects your software’s function. (For example, Amazon has a patent for its famous “1-Click” order button.) In this case, another business can’t create original code to fulfill the same function. 

To qualify, your software must have a unique, valuable feature or design in the market. Ultimately, patentability criteria are quite rigorous. You must show that the asset is non-obvious to experts in the field. 

  • Patents last for 20 years. 
  • U.S.-filed patents are only applicable domestically. (You’ll have to file the same patent in every specific country you wish to do business.)
  • The process to prove “patentability” is more thorough, lengthy and costly than copyright. 

Other Types of IP Protections

Other types of IP protections are available, though less common for software products. Even so, you should be aware of these potential outlets in case they apply to your business scenario:

  • Trademarks. Protect any branding elements that exclusively identify or relate to your business. This includes names, phrases, logos, designs and sounds. (Think of McDonald’s “golden arches.”) 
  • Trade secrets. Protect confidential information that adds significant competitive value to the company. (Often this entails in-house data, devices or processes.) To qualify, you must have top-level protocols to secure this info internally. 

2. Consider Location-Based Pitfalls of Your IT Partner

Outsourcing is an excellent option for building your software product. Yet, you should do your due diligence by finding an IT partner in an IP-protected country. 

IP varies according to the location where you build and sell your product. Every country’s protections are unique (see top rankings here). You’ll need to research what sort of protections your partner’s location offers. 

In case you’re based in the European Union, it’s often best to choose an IT partner also located there. After all, IP protections are powerful and consistent within EU countries. 

Not sure which are the best countries to outsource software development? Get a full overview in our expert guide

3. Guarantee Your IT Partner Has Top Security Protocols 

Knowing how to protect software intellectual property involves having best-in-class protocols. Ask your IT partner about key areas, such as: 

  • Security monitoring
  • Access controls
  • Cloud management
  • Confidentiality encryption
  • Data backups
  • Cybersecurity audits

In addition, be sure they’re using anti-reverse engineering techniques for your code. This will prevent bad actors from recreating and copying your code to their liking.

4. Sign Confidentiality Agreements with Employees, Partners & Contractors

Once you’ve chosen your partner, stop any leaks from staff, partners and contractors.

The best way to do so is to have all relevant staff and partners sign confidentiality agreements. The most common type is a Non-Disclosure Agreement (NDA). You may also have them sign a Proprietary Information Agreement (PIA). 

For independent contractors, you should also require an IP Assignment Agreement. This specifies that all work completed for the project is the exclusive right of the company. With it, developers won't be able to copy your code and share or repurpose it for a competitor. 

Having all this paperwork in place is essential to double-verify your IP’s security. 

5. Handle Source Code Licenses With Care

Licensing management is another key element of locking down your software IP. In essence, source code licenses protect your IP from unauthorized tampering or sharing.

Source code licenses grant users the free reign to utilize it under specific terms. You can prevent leaks by having airtight user agreements and source code escrow. After all, you don’t want users to be able to reverse-engineer or plagiarize your code. 

6. Check All Contracts With a Legal Professional

As you master how to protect software intellectual property, don’t skimp on contracts. Protecting your IP involves a lot of contracts, licenses and agreements. Hire a professional to help you draft these agreements. 

Often businesses will shortcut this process by downloading templates or repurposing old contracts. Usually it’s best to work with a legal professional to create specific, thorough language. It should also be customized for each type of document. 

For more info, check out our guide to software contract best practices here!

7. Educate Your Staff on IP Awareness

Surprisingly enough, 88% of data breaches are due to human error. Reduce the risk of mistakes by your staff and partners by taking the time to educate them on cyber safety. 

Host regular IP awareness training to encourage them to secure company assets. To establish airtight processes, you’ll want to cover:

  • Password best practices
  • Comprehensive access controls
  • Multi-factor authentication
  • Limits on file sharing
  • Personal device policies

Reinforce these protocols often so that your staff are well-versed on how to protect IP in the long run.

Understanding Software Patenting Challenges

Software patents can give your business a market advantage. However, the patent process isn’t necessarily easy to navigate. Some of the challenges of obtaining a software patent include:

  • Meeting rigorous patentability criteria. Patent applications must show that the asset is original and non-obvious to experts. Unlike copyright, the criteria is higher and must show an “innovative step."
  • Undergoing a lengthy process. Getting a patent can take up to two years to complete, so you’ll want to submit yours as soon as possible. 
  • Incurring costs of up to $5,000. In addition to application fees, you may need a lawyer to help streamline the process.
  • Navigating unclear paths to patent success. The patent process isn’t known for being straightforward. This is especially the case for a new technology with little precedent. 
  • Obtaining patent applications for each country you plan to do business. A U.S.-based patent is only applicable domestically. You’ll have to undertake this process separately for each of your business locations. 

Even so, the patent process can be well worth it, as it protects your exclusive right to the IP for up to 20 years. Protected, innovative products are often the driving factor for business success. 

How to Protect Software Intellectual Property With Netcorp

Shielding your software IP from bad actors and leaks is vital to your business. With our expert tips, you now know how to protect software intellectual property. Just be sure to cover all aspects of IP so that you can easily enforce your rights, if needed.

For high-level IP protections, team up with the right IT outsourcing partner. At Netcorp, we utilize strong IP protocols to guarantee security and confidentiality. In addition, our developers meet top standards for ethical, transparent collaboration. Contact us to learn how we build high-caliber products and protect your IP.

Paavo Pauklin
Executive Board Member

Paavo Pauklin is a renowned consultant and thought leader in software development outsourcing with a decade of experience. Authoring dozens of insightful blog posts and the guidebook "How to Succeed with Software Development Outsourcing," he is a frequent speaker at industry conferences. Paavo hosts two influential video podcasts: “Everybody needs developers” and “Tech explained to managers in 3 minutes.” Through his extensive training sessions with organizations such as the Finnish Association of Software Companies and Estonian IT Companies Association, he's helped numerous businesses strategize, train internal teams, and find dependable outsourcing partners. His expertise offers a reliable compass for anyone navigating the world of software outsourcing.

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