Protecode CEO Mahshad Koohgoli (Darren Brown, OBJ)

Ottawa-based Protecode Inc. has announced its first product, a software development tool which detects and identifies the different types of code going into a piece of new software.

The company, which was founded last year and was named one of the OBJ's Startups to Watch 2008, said today that it has launched the first automated preventive intellectual property (IP) management solution, a plugin which logs the origins and licensing information associated with any external content that goes into a software project.

"As you develop a piece of software, typically developers bring in code from libraries, commercial code they have purchased, open-source content and their own code, as well as the company's previous code and content from contractors as well. At the end of the day when the project is completed, it's very difficult to say what has got into the project as there isn't usually a record of all the pieces and the IP licensing," Protecode CEO Mahshad Koohgoli told the OBJ in an interview.

"Protecoding means automatically creating records of all external content that gets into the product ... trying to identify its copyright and licensing, and making an up-to-date record of its ownership attributes."

Mr. Koohgoli said identifying those licensing attributes has become increasingly important with the popularity of open-source code and development outsourcing, as well as with the tightening of corporate governance rules and the question of IP indemnity.

"Open source is growing, and it's wonderful, but it's not free," he said. "There are always licensing terms that are often difficult to interpret, and people are always looking for ways to manage its usage."

He said Protecode's new product is unique because most IP management tools on the market are corrective solutions which only come into use after developers have finished their software projects and are performing due diligence, meaning that the experts are going through a whole pile of code and documentation at the end of a project, instead of logging and identifying the content as it goes into the project to make sure that it's "clean."

And while it's too early to say how large the market for IP management solutions would be, whether they're preventive or corrective, Mr. Koohgoli speculated that it could be in the "multiples of billions."

"In hardware equipment it's very common to have a bill of materials, an approved vendor list and an approved component list, but there's nothing like that for software up to now," he said. "It's just good practice and part of a quality software development process to record the pieces that go into a product and it's amazing that nobody has addressed this."

Analysts agree there is a market for some kind of a software code management tool, although opinions vary on the value of preventive versus corrective solutions.

"Any tool that allows software to be developed with clear pedigree records would assist open-source contributors and adopters tremendously," said IP Communications Insights partner Jon Arnold in a statement.

Meanwhile, Laurent Lachal of Ovum Ltd. said Protecode certainly has opportunities available to it in a market he estimates is worth "at least hundreds of millions worldwide," but says the company may need to focus on niche markets and on educating users about the benefits of the solution.

"More and more companies need that kind of security, and there's a complexity in hunting code from different sources. That need isn't met by many companies, so there's definitely an opportunity to create a niche," said Mr. Lachal. "However, the challenge for Protecode is that people aren't aware that they should (identify code) ... Protecode talks about how they are preventive rather than corrective, but in the end, I'm not sure that a lot of companies will understand the difference."

Nonetheless, Mr. Lachal said the company has a good chance of doing well and growing if it manages its resources properly and targets specific segments such as software vendors, as they seem to be doing, rather than trying to be all things for everyone.

"Personally, I think it could be taken over by (corrective solution providers) Black Duck or Palamida ... it's a good investment area," he added. "If Protecode educates its audience, it's got a good chance."