Decision Raises Questions About Ability to Protect Intellectual Property Through Contracts

A recent decision by the Northern District of Texas raises interesting questions about the ability of innovators to use contracts to enhance the protections they have under federal IP protections. In Versata Software Inc. et al. v. Infosys Technologies, Ltd., Case No. 10-00792-SS, the district court found that where a contract protects the same kind of interest that copyright protects, then the contract is voided. The court seemed unconcerned that the contract may have provided (and indeed, seemed to provide) enhanced protections over and above what the copyright act might provide. While this may not have really been the case (the filings were under seal), one can imagine a world where parties need or want greater IP protection in confidential situations. The district court seemed to believe that regardless of what the contract said, if it overlapped with an interest protected by the copyright act, then it was unenforceable as a contract action. The same would appear to be true for other federal protections: patent and trademark, specifically. The court did not find preemption for trade secret theft, however–further demonstrating the emerging dominance of trade secret as the IP protector of choice.

(Download Opinion Here).