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- Table of Contents -

Introduction to the online version

Chapter 1 – The Commission and Its Recommendations

Chapter 2 – The Establishment, Mandate, and Activities of the Commission

Chapter 3 – Computers and Copyright

Chapter 4 – Machine Reproduction – Photocopying

Chapter 5 – Summary

Appendix A – Summary of the Legislative History of Computer-Related Issues and the Photocopy Issue

Appendix B – Public Law 93-573 and Public Law 95-146

Appendix C – Commissioners

Appendix D – Staff

Appendix E – Lists of Witnesses

Appendix F – Alphabetical Listing of Persons Appearing before the Commission

Appendix G – Transcripts of Commission Meetings

Appendix H – Summaries of Commission-Sponsored Studies

- Economics of Property Rights as Applied to Computer Software and Data Bases

- Legal Protection of Computer Software, An Industrial Survey

- Costs of Owning, Borrowing, and Disposing of Periodical Publications

- An Analysis of Computer and Photocopying Issues from the Point of View of the General Public and the Ultimate Consumer

- Survey of Publisher Practices and Current Attitudes on Authorized Journal Article Copying and Licensing

- Library Photocopying in the United States, with Implications for the Development of a Royalty Payment Mechanism

Appendix I – Bibliography

Appendix J – Selected Provisions of the Copyright Act of 1976 and Copyright Office Regulations

Full table of contents

PDF version of the report

Picture of commissioners and staff

Final Report of the National Commission on New Technology Uses of Copyrighted Works

Appendix H – Summaries of Commission-Sponsored Studies

REPORT TITLE: Legal Protection of Computer Software, An Industrial Survey

CONTRACTOR: Harbridge House, Inc.

AUTHORS: Richard I. Miller, Clarence O'N. Brown, Francis ). Kelley, Deborah C. Notman,and Michael A. Walker

NTIS ORDER NO.: PB 283 876


In 1973, Harbridge House conducted a small-scale survey of the computer software industry as part of a more comprehensive project on law and technological innovation sponsored by the National Science Foundation. The survey showed that software firms relied primarily on trade secret licenses and confidential disclosure clauses to secure proprietary products. The respondents saw protection as most significant for general business and financial programs but, as a rule, knew of no instances in which fear of inade­quate legal protection had led a company to forego developing an innovative program. The survey sponsored by CONTU updates and ex­pands the work performed in 1973.

The Survey

The primary aim of the survey was to obtain descriptions of firms in the software industry with respect to kinds of products and services offered, size, age, ownership, and amount of investment in research and development. The next set of questions concerned what sort of legal methods had been used to protect propri­etary products, what particular products were most in need of protection, how satisfactory the legal methods employed had proved, and in what ways marketing practices might change due to legal revisions.

As in 1973, the Association of Data Process­ing Service Organizations (ADAPSO) offered its help in the distribution of questionnaires. More than three hundred companies belonging to ADAPSO received questionnaires, of which more than one hundred responded. In addition, ten other companies responded to a shortened form of the questionnaire published in Computerworld,a weekly trade newspaper.


Character of Firms

The typical responding software firm was in­dependently owned, young, and small. Founded within the last ten years, it employed fewer than one hundred people, had annual sales under $5 million, and spent about $100,000 a year on research and development. The most common lines of business included consulting, contract programming, developing software packages, and managing data center operations. These firms showed a certain tendency toward special­ization in one sort of product or service. A {Page 127 }typical firm developed internally ten to twenty-five computer programs a year and a similar number for specific customers.

Legal Protection

The Harbridge House survey, as tabulated, showed that many of the firms surveyed were not greatly concerned with legal protection of software; many chose not to answer the question on preferred mode of legal protection. Those who did answer displayed a strong preference for contractual restraint through trade secrecy over either patent or copyright. There was a clearly discernible difference, however, in re­spondents' attitudes with respect to the distinc­tion between general business or financial pro-grams and engineering, scientific, or systems programs. The former were felt to be in some need of protection, the latter were not.

Only a small minority (4 percent) of re­spondents reported having abandoned the de­velopment of a program for lack of protection. The 1 5 percent who indicated that their market­ing practices might change if legal protection improved tended to be larger companies. On the other hand, 76 percent said that the Copyright Act of 1976 would have no effect on their cur-rent scheme of marketing, and a mere one percent called for further legal protection.

To a certain degree, then, the 1977 results agree with the 1973 results, particularly in the predominant use of trade secrecy. Many of the respondents in the second survey, however, seemed willing to rely largely on their tech­nological resourcefulness or the uniqueness of their products to maintain their competitive position.

Next section: Costs of Owning, Borrowing, and Disposing of Periodical Publications