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The newsletter of the Innovation and SMEs Programme





January 2002




Case Study
Soft competition

    Software patenting and the proposed Community Patent are high on the agenda for Europe's high-tech multinationals.

The Commission has recently published a succinct guide for SME developers, 'Your Software and how to protect it', outlining the benefits, costs and risks of formal and informal software protection. It can be downloaded from /innovation-smes/src/studies.htm


hales employs 65,000 people in 30 countries. Active in the aerospace, military and information technology sectors, it invests heavily in research and development - much of it in 'dual use technologies' with applications in all three sectors.

Hard to soft

"Our business is systems engineering," says Christian Nguyen van Yen, vice-president of intellectual property. "Software has become key to the performance of our systems, and now accounts for 50% of our R&D workforce. Our patenting momentum is increasingly shifting from hardware to software."

The uncertainty over software patentability in Europe is an obstacle that he would dearly like to see removed. "Our algorithm patents cover functions which are protected per se , however they are implemented. But we have not patented software as such, despite the potential for a wide variety of inventions in this field."

He cites the example of middleware - software that sits between a computer's operating system and an application program. Middleware is very useful in the struggle to maximise reusability and thus contain the soaring costs of software. For Thales, it plays a crucial role in its mission-critical real-time systems, whether for air-traffic control or banking security. "This is why we stress the need for Europe to move forward in software patenting," he says.

The situation also has some very practical implications for IP practice within Thales, and not just for their IP experts. "Our engineers have been taught that software is not patentable," he says. "So they have been unaware of the growing opportunities for software-related patents. We need to develop awareness in our inventors so that they know not only that software is patentable but also how to patent it." In particular, he encourages Thales' software engineers to monitor the patent literature as a source of ideas for new inventions, as hardware engineers have for many years.


Nguyen van Yen has no doubts that the Community Patent should be made a reality as soon as possible. The tangle of national and European patent systems imposes too high a cost on Europe's inventors, he argues. "One effect is that European companies are under-protecting their intellectual assets compared with the US."

His own calculations highlight the difference. Allowing for the different sizes of the markets for Thales' products, the protection bought by an average Thales patent maintained for ten years costs € 1,500 for every 1% of the market in Europe - but only € 380 in the US. "The bulk of the costs go on patent-office and professional fees," he says. Now add the disproportionate cost of asserting IP rights in Europe's many national courts, and the gap widens to a crevasse.

He takes heart from the recent London Agreement, however. As long as a patent granted by the EPO is in, or is translated into, English, German or French, the ten European signatories will accept its validity without requiring further translations. "That is a big step in the right direction," he says.