Software is an anomaly in the traditional sphere of IP, and its problematic nature has been manifest in the confused findings of courts on both sides of the Atlantic. This article considers the reasons for the confusion, where things might have been done better, and how the law could develop considering the realities of the industry. Software protection at present favours the multinational corporations, while the interests of smaller companies and the Free and Open Source Software community are prejudiced greatly. The current regime is not fundamentally incompatible with software, however, and as such features of it could and should be retained in the creation of a sui generis IP right. Much of today's software industry is driven by the efforts of small enterprises and the Free and Open Source Software community. Their interests are not recognized in the current protection-biased framework, and as a result innovation is being stifled by the threat of litigation. IP law in this area is preventing the very thing it is designed to foster-enterprise and innovation.