IP PROTECTION IN THE DIGITAL AGE: SOFTWARE CHOICES THAT MATTER
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Software, in any form, plays a central role in a business’s operations and directly impacts efficiency and profitability. The choice of software is guided by its intended use and technical characteristics, which have significant legal implications. Companies need to be aware of these implications in order to make choices that truly fit their needs, especially when it comes to protecting their intellectual property rights.
Software, in any form, plays a central role in a business’s operations and directly impacts efficiency and profitability. The choice of software is guided by its intended use and technical characteristics, which have significant legal implications. Companies need to be aware of these implications in order to make choices that truly fit their needs, especially when it comes to protecting their intellectual property rights.
Ensuring intellectual property rights protection
Off-the-shelf software/custom software: Depending on their needs, companies can use different software models, such as off-the-shelf software (publicly available, ready-to-use software), custom software (a unique solution designed for a particular company or sector), or hybrid models (a basic software package that can be customized with specific developments). Intellectual property rights (IPR) ownership: To secure ownership of IPR, it is necessary to ensure that the contract contains a definition of what constitutes a specific development, and provisions allowing for a valid transfer of IPR (i.e., if the contract is subject to French law, an express assignment clause). Market practices generally involve the developer retaining ownership of the IPR and negotiations to assign the specific developments to the client. However, this can be arranged contractually in either direction and can be balanced by granting licenses to the non-owner party. Software development methodologies: When using custom software, particular attention should be paid to the chosen development methodology (i.e., agile, V-model, incremental). The idea is to choose a method that truly corresponds to the company or project in question (i.e., a project precisely defined upstream or still ongoing during development, development over short or long periods of time, predetermined framework or changing framework, etc.), in order to be able to comply as effectively as possible with the development process and avoid future disputes.
Ensuring intellectual property rights protection
Off-the-shelf software/custom software: Depending on their needs, companies can use different software models, such as off-the-shelf software (publicly available, ready-to-use software), custom software (a unique solution designed for a particular company or sector), or hybrid models (a basic software package that can be customized with specific developments). Intellectual property rights (IPR) ownership: To secure ownership of IPR, it is necessary to ensure that the contract contains a definition of what constitutes a specific development, and provisions allowing for a valid transfer of IPR (i.e., if the contract is subject to French law, an express assignment clause). Market practices generally involve the developer retaining ownership of the IPR and negotiations to assign the specific developments to the client. However, this can be arranged contractually in either direction and can be balanced by granting licenses to the non-owner party. Software development methodologies: When using custom software, particular attention should be paid to the chosen development methodology (i.e., agile, V-model, incremental). The idea is to choose a method that truly corresponds to the company or project in question (i.e., a project precisely defined upstream or still ongoing during development, development over short or long periods of time, predetermined framework or changing framework, etc.), in order to be able to comply as effectively as possible with the development process and avoid future disputes.
Making wise use of open-source software
Another area of attention concerns open-source software, components of which are very often integrated into other software. Compliance with the open-source license: An open-source license is a genuine license agreement that sets out specific rules, which vary from one type of license to another. It is important to ensure that the use of open-source software, or software that incorporates it, complies with the license (i.e., whether it may be used commercially or must be limited to private use). Failure to do so may result in contractual breach or infringement. Contaminated software brick: When integrating an open-source component into software, care should be taken to ensure that it does not ‘contaminate’ the software (i.e., when the terms of the license will spread to the entire software, and in particular to specific developments). In this case, the risk is a devaluation of the software and a loss of ownership of the IPR. Audit implementation: To mitigate this, companies should conduct regular audits to (i) identify open-source components, (ii) verify license compliance, (iii) ensure compatibility between licenses, and (iv) avoid the integration of contaminating elements.
Making wise use of open-source software
Another area of attention concerns open-source software, components of which are very often integrated into other software. Compliance with the open-source license: An open-source license is a genuine license agreement that sets out specific rules, which vary from one type of license to another. It is important to ensure that the use of open-source software, or software that incorporates it, complies with the license (i.e., whether it may be used commercially or must be limited to private use). Failure to do so may result in contractual breach or infringement. Contaminated software brick: When integrating an open-source component into software, care should be taken to ensure that it does not ‘contaminate’ the software (i.e., when the terms of the license will spread to the entire software, and in particular to specific developments). In this case, the risk is a devaluation of the software and a loss of ownership of the IPR. Audit implementation: To mitigate this, companies should conduct regular audits to (i) identify open-source components, (ii) verify license compliance, (iii) ensure compatibility between licenses, and (iv) avoid the integration of contaminating elements.
Licensing models and enforcement strategies
On-premise/cloud: The method of software deployment has legal and operational consequences. While cloud software (SaaS, PaaS, IaaS) offers a degree of flexibility (i.e., updates, feature additions, user additions or removals, online and without intervention), on-premises software provides a higher level of security. Data flow: In certain specific sectors, the fate of data is crucial (i.e., finance, healthcare). On-premise solutions will allow companies to retain control of their data, which will also ensure compliance with other legal obligations. Data Act enforcement: Before choosing a cloud-based or on-premise solution, it will also be necessary to consider the new cloud-related obligations imposed by the Data Act (most provisions came into force on September 12, 2025) and to adapt contracts accordingly. In particular, contracts will need to be amended to allow for easy and cost-free changes of cloud provider and to remove any clauses considered unfair by the Data Act.
“Before choosing a cloud-based or on-premise solution, it will also be necessary to consider the new cloud-related obligations imposed by the Data Act (most provisions came into force on September 12, 2025) and to adapt contracts accordingly”
Licensing models and enforcement strategies
On-premise/cloud: The method of software deployment has legal and operational consequences. While cloud software (SaaS, PaaS, IaaS) offers a degree of flexibility (i.e., updates, feature additions, user additions or removals, online and without intervention), on-premises software provides a higher level of security. Data flow: In certain specific sectors, the fate of data is crucial (i.e., finance, healthcare). On-premise solutions will allow companies to retain control of their data, which will also ensure compliance with other legal obligations. Data Act enforcement: Before choosing a cloud-based or on-premise solution, it will also be necessary to consider the new cloud-related obligations imposed by the Data Act (most provisions came into force on September 12, 2025) and to adapt contracts accordingly. In particular, contracts will need to be amended to allow for easy and cost-free changes of cloud provider and to remove any clauses considered unfair by the Data Act.
“Before choosing a cloud-based or on-premise solution, it will also be necessary to consider the new cloud-related obligations imposed by the Data Act (most provisions came into force on September 12, 2025) and to adapt contracts accordingly”
Key takeaways
Software is more than a tool; it is a valuable business asset. To maximize its potential, companies must carefully consider the type of solution, access method, and legal framework. Contracts play a central role in securing IPR, managing risks, and tailoring software solutions to specific business needs.
Key takeaways
Software is more than a tool; it is a valuable business asset. To maximize its potential, companies must carefully consider the type of solution, access method, and legal framework. Contracts play a central role in securing IPR, managing risks, and tailoring software solutions to specific business needs.
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© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.
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