Events Nov 22, 2019

How can innovations and inventions, particularly for software, be protected? Can patents be filed for software? How can you protect your own intellectual property when employees or subcontractors helped to develop it? The Partech Shaker held a panel of three experts to tackle these fundamental questions: Ghislain Demonda, European Patent Attorney and Toulouse Team Manager for Ipsilon Group, a tier-one intellectual property law firm; Adrien Oksman, Boks President and Co-founder, a connected solutions provider for the last meter delivery of parcels at home; and Karen Noël, Partech General Partner Legal and Operations.



Can a patent be filed for software?

“Legislation stipulates (French IP code, Article L611-10, paragraph 2) that because software programs are not considered, as such, to be inventions, they are not, therefore, protected by law", said Ghislain Demonda, from Ipsilon. "However, patents may be filed for inventions comprising software programs. For instance, a quick search on Google Patent patent database shows the following results for software patents: Twitter hits over 1,182 patents, Uber hits 1,200 patents while Facebook hits over 10,000. In terms of intellectual property law, only computer-implemented inventions can be protected by patents. The act of writing software code has to be distinguished from its functionality: patents protect the functionality of software code when they are executed by a computer.”



Adrien Oksman, Boks President and Co-founder, turned to Ipsilon for support:

“The rise in e-commerce means that home deliveries are increasing this is getting a bigger and bigger issue when no one is home to collect the delivery”, said Adrien Oksman. Our job is to equip as many homes as possible with scalable parcel collection systems, at very low cost and with no installation works, to solve this last meter delivery problem.

We needed to come up with a completely independent, easy-to-install, inexpensive system which would enable any delivery company to drop off a home-delivery parcel and which did not need electricity nor internet connection. We created a parcel box (the Boks) which is completely autonomous, running on battery, and connected through a Bluetooth canal with the end-user’s smartphone: a single-use code is created by our app when a customer makes a purchase. The delivery company then uses the code to open the Boks, with no internet connection, simply via Bluetooth.

This is the very software that we wanted to patent: we wanted to asynchronously generate a code in the Cloud which would also be stored on the hardware of the receptacle (the Boks itself). Our patent application is still under review by the French patent office and we are waiting for our patent to be granted soon.”



For Karen Noël, Partech General Partner, the software patenting process is misunderstood. “As investors, we do not often come across companies who broach the matter in this way. Moreover, when it comes to patent applications, founders file patents in their company's name. It's a good start to software protection, but it isn't enough. Most founders think that their companies own their software developments, but legislation stipulates that the copyright belongs to the person who creates software codes or who develops an idea. The status of founder does not create legal ties which enable the transmission of corporate rights – a point which is overlooked in 95% of cases. That is why we help companies draw up contracts which guarantee ownership transfer to the company and which secure the future; this is a very important point in the event of a takeover or initial public offering.”



=> Question: The Boks patent application was registered under the company's name but Adrien is the inventor: is this an obstacle for investors?

Karen Noël: “This is very frequent, and we never invest without requesting that the rights are transferred to the company. But every situation is different and if the invention is linked to the founder's own skills, a specific fee must be paid for the vesting of the founder's rights. We are increasingly coming across contracts which include a right transfer fee in the fee founders pay to fully secure the situation.

It's the same for subcontractors and employees: whilst French legislation states that assignments belong to a company, we advise founders to reinforce employment contracts, for staff who code, to provide for full vesting of rights in your company."

Ghislain Demonda: “Intellectual property rights ownership (copyrights, patents, trademarks) is based on the following article: (French IP code, Article L611-6, paragraph 2) "intellectual property ownership belongs to the inventor or his successor in title". Paying subcontractors does not guarantee a right transfer. Founders must be very careful. Clauses like this also need to be included in trainee internship contracts.”



=> Question: Is it true that patents are registered for concepts which already exist?

Ghislain Demonda: “No invention exists without reusing pre-existing elements and there are very few significant groundbreaking inventions. Usually, patents are used to protect the application of an existing concept to a new technological field.”


=> Question: How much does a patent cost?

Ghislain Demonda: “The price for drafting a patent application depends on the invention itself and can vary from €5,000 to €10,000. After that, the patent application is prosecuted to evolve to a patent and the fees can increase to €30,000-€50,000, depending on the geographical coverage of interest. However, start-ups should keep in mind that intellectual property rights are not liabilities; they are future investments and they help to attract investors and protect you from competition.”


=> Question: Can filing a patent expose a company's competitive edge to others?

Ghislain Demonda: “Yes, but if you don't file a patent and a competitor copies the invention without you knowing that it is being used, you won't be able to defend yourself. Filing a patent gives you legal rights with which to defend yourself.”


=> Question: What happens if a founder creates a brand and commissions a graphic designer to create the company logo?

Karen Noël: “Registering your trademark does not mean that you will be protected from an ownership claim after you have registered your trademark. Just because your trademark is registered at the Intellectual property national office does not mean that the graphic designer will not be able to claim a share of ownership and therefore a fee when your company raises funds.”



=> Question: Can anything be included in the clauses?

Karen Noël: “Yes, it all boils down to setting payment levels. We recommend that founders who are often corporate officers (not employees) draw up a contract which stipulates that the fee they pay themselves covers all inventions so that there is compensation for work continuity. This type of clause is usually enough for your employees unless they created a key invention for your company. In which case, we recommend you pay an invention bonus.”

Ghislain Demonda: “I would also add that rights may not be transferred for a future invention. For service providers, a contract for the transfer of copyright is usually signed at the end of each invention. If you reveal your invention to the public before you file your patent, you will not be protected: you have to file your invention before you post it on a blog, for instance.


=> Question: Why should start-ups protect their intellectual property?

For the following reasons (by order of importance)

- Stimulate the future acquisition of the start-up

- Contribute to fund-raising

- Increase visibility in respect to partners (when partners work with large companies - to prevent them from developing the product alone, using your technology)

- Dissuade legal proceedings

- Prevent competitors from copying you

- Create revenue from granted licenses

- Defend your rights against a competitor

The last three points apply mainly to large groups.

“As investors, we draw up contracts and clauses to guarantee that intellectual property, in the broadest terms, belongs to the company in question”, says Karen Noël. Intellectual property protection is vital to Partech.”


=> Question: What use is a patent if you must wait a minimum of three years before it is granted?

Ghislain Demonda: “In France, it takes around 28 months to grant a patent, but your rights take effect as soon as you file for a patent. You cannot begin legal proceedings until the patent has been granted but any action taken during this time by a competitor is considered in a law suit to determine damages.”


=> Question: Which country should you register your patent in if your app is to be used on an international level?

Ghislain Demonda: “An intellectual property right has a geographical scope. Some patents offer protection in several countries, such as the European patent which covers 44 countries. On the long run, a European patent can cost €50,000.”


=> Question: How many patents end up in a legal case?

Ghislain Demonda: “In total, 5%. 1% of which go to court and the others are resolved through a financial transaction.”



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