Final countdown:
Worldwide
perspective
2
• International study conducted
• Summer 2011
• ROWAN LEGAL, s.r.o.
• Argentina, Austria, Canada – Ontario,
Canada, Colombia, Czech Republic,
Denmark, France, Germany, Hong Kong,
Hungary, Italy, Japan, Luxemburg, New
Zealand, Poland, Russia, Singapore,
Slovakia, United Kingdom, United States
3 Q1
• What is the legal definition of software?
Which category of objects of rights and
obligations does software belong to?
• CZ
– neither the Copyright Act nor the applicable
European law provide an explicit definition of
software and therefore the general definition of
work applies
– “other property values” - subject to legal
relationships, as provided by the Act No. 40/1964
Sb. Civil Code
4 Q1
• no jurisdiction - an actual legal definition
of 'software' does exist.
• the word 'software' has not been used
within a the respective legal orders at all
• Why?
• Berne Convention / World Copyright
Treaty
5 WCT
• Computer programs are protected as
literary works within the meaning of
Article 2 of the Berne Convention. Such
protection applies to computer programs,
whatever may be the mode or form of
their expression
6 Berne
• (1) The expression “literary and artistic
works” shall include every production in
the literary, scientific and artistic domain,
whatever may be the mode or form of its
expression, such as…
7 Q1
• Colombia, Japan, Slovakia
– (i) expression in any form of
– (ii) instructions
– (iii) given to a computer
– (iv) to cause it to execute a particular task.
8 Q1
• DB - collection of data meeting certain
criteria
• 'a collection of independent works, data
or other materials arranged in a
systematic or methodical way‘
– Article 1(2) of Directive 96/9/EC of the European
Parliament and of the Council of 11 March 1996 on
the legal protection of databases
9 Q1
• All the countries the study treats protect
computer programs with copyright
protection.
• Often a trade secret protection
• Canada, Japan and United States
– patentable subject matter
• All EU Member countries
– Specifically excluded (Art. 52(3) EPC)
10 Q2
• What conditions must be met for software
to be protected by law?
• CZ
• unique outcome of a creative activity
expressed in any objectively perceivable
manner) OR
• statutory exception - author’s original
intellectual creation
11 Q2
• WORLD
• As a rule computer programs are
protected as literary works within the
meaning of the Berne Convention
• possible to protect software by means of
contractual law, e.g. non-competition
clauses or confidentiality agreements,
and means belonging to the areas of
unfair competition and antitrust law.
12 Q2
• trade secret protection computer program
has to meet general conditions
– (i) usefulness in trade or business,
– (ii) not being a subject of general knowledge within
a particular business,
– (iii) entailment of economic value
– (iv) being subject to reasonable efforts to retain the
status of (ii)
13
• trade secret protection computer program
has to meet general conditions
– (i) usefulness in trade or business,
– (ii) not being a subject of general knowledge within
a particular business,
– (iii) entailment of economic value
– (iv) being subject to reasonable efforts to retain the
status of (ii)
14
• United States - scope of patentable
subject matter
• 'any new and useful process, machine,
manufacture, or composition of matter, or
any new and useful improvement thereof‘
• Section 101 of the US Patent Act.
• In re Diehr; In re Abele; In re Alappat; In re
Bilski
15
• United States - scope of patentable
subject matter
• 'any new and useful process, machine,
manufacture, or composition of matter, or
any new and useful improvement thereof‘
• Section 101 of the US Patent Act.
• In re Diehr; In re Abele; In re Alappat; In re
Bilski
16
• Database - copyright protection if it meets
requirements to be considered a work
• 'by reason of the selection or arrangement
of their contents constitute the author's
own intellectual creation' in the European
Union. - Article 3(1)
• 'qualitatively and/or quantitatively a
substantial investment in either the
obtaining, verification or presentation of
the contents'‘ – Article 7(1)
17 Q3
• What rights related to software are protected by
law?
• Who is the original “bearer” of these rights in
the case of ordered work that is provided by an
individual author?
• Who is the original "bearer" of these rights in
the case of ordered work provided by a software
house?
• Who is the original "bearer" of these rights in
the case of software programmed by an
employee (i.e. can a company represent the
original author/bearer of the rights to the
software, or can it only bear derivative rights?)?
18
• CZ
• Personal (moral) rights
– right to decide about making a work public, the right to
claim authorship, the right to the inviolability of a work,
especially the right to grant consent to any alteration of,
or other intervention into the work etc.; and
• Economic rights
– right to use the work (the right to reproduce (copy) a
work, the right to distribute, rent or lend an original or
copies of a work, the right to grant authorisation to any
person to exercise the right etc.)
19
• Remain with author
• Cannot be waived / transferred
20
• WORLD
• 'moral' and 'economic‘
• Hong Kong
– no moral rights are granted to the authors of
software
• New Zealand
– a right to claim authorship and to prevent
derogatory treatment of the work do not relate to
software
21
• trade secret
– the respective right holder is entitled to prohibit any
competitor to benefit
• unfair competition
– a standard bulk of rights and obligations arises
between the competitors at software market and no
special regulations apply
• patent protection / software monopolies
– prohibit everyone within the jurisdictions for which a
patent has been registered to incorporate the
computer program in their own software or
hardware
22
• original 'bearer' – the creator
– France, Italy or Japan – sign the rights right away
• United States
– Copyright - rights are automatically assigned to the
one who has ordered the software - rare example
• original 'bearer' of the rights arising of a
patent is the inventor
23 Q4
• Are such rights transferable? Are there
any limitations to such transfer?
• CZ
– none of the rights is transferable as such
– Derivative rights may be assigned to a third
person by the employer with no restrictions but the
consent of the author/employee.
24
• Transfer recorded in written form
– United Kingdom, Poland or Thailand
• Transfer of certain moral rights is usually
limited
• almost all the European Union Member States or
Japan
• A right to claim authorship cannot be
transferred
– Russia
25
• WORLD
– it is possible for an author or a copyright holder to
transfer the rights
– certain limitations have to be respected in most
jurisdictions
– often related to the moral rights
– transfer a right to execute some of the rights or all
of them
26 Q5
• Are there any other ways (apart from the
transfer of the rights) of providing a third
person with these rights or their
derivates? Can the original author impose
his own limitations on users? Is the
author obliged to publish his/her work?
Under what circumstances?
27
• CZ
• License agreement
28 Terminology
Licensor
(Software Rights holder)
End user
Licensee
LICENSE (US)
LICENCE (UK)
GRANTS
(verb „to LICENSE“)
LICENSE FEE
http://www.fordesigner.com/maps/3823-0.htm
29
• ALL THE JURISDICTIONS
– possible to provide third parties with non-exclusive
or exclusive license to agree upon bundle of rights
to a copyrighted work
• Patents
– a license to utilize a computer program protected
with a patent may be granted.
30
• Tangible media distribution
– rights to a copy of software are often transferred by
a means of sale, rental or lease.
– first sale doctrine (USA) or exhaustion principle
(Europe)
– within both areas - copyright and patent law
• Software as a service
– contracts > as regards their mutual rights to
software and rights and obligations to each other
31
• Limitations
– As long as it does not contravene statutory
provisions (antitrust, consumer protection)
• IN NO JURISDICTION
– an obligation to publish a work
32 Q6
• Are source/object codes considered to be a
part of a work of software?
• How is a derivative work (localisations,
compilations of source code, decompilations
of object code) assessed by law (i.e. is it
deemed to be a part of the original work or a
new work, are they connected in any way)?
33
• CZ
– irrespective of the form in which it is expressed and
including the preparatory design material, shall be
protected as a literary work.
– if a modification of a piece of software (i.e.
localization, graphic changes to the interface) is
sufficiently creative > new work, rights still protected
– the compilation of a source code is not considered
to be a modification
34
• Hong Kong
– the position of object code is rather unclear while source
code is considered to be expression falling within the
scope of copyright protection.
• Compilation
– act of making a copy which is the exclusive right of a
copyright holder.
• Decompilation
– creation of derivative work which is subject to copyright
holder's permission.
– In most of the jurisdiction third persons have right to
decompile software in order to study its functioning and
to ensure interoperability
35 Q7
• Changes and modifications of the
software – are the rights of the author
with respect to the integrity of software
protected? Are there any statutory
licenses enabling the software to be
changed and modified by the user?
– (i.e. may a user modify or decompile software, if it
is necessary to preserve its functionality by virtue of
law; or only if source code is provided; or only upon
an explicit license)?
36
• CZ
• author of the software has the
undisputable right to protect the integrity
of the software
• user (lawful acquirer) of the software
needs an explicit (contractual) license to
change or modify the software
37 Exceptions
– a. alters the computer program for the sake of its
utilisation in compliance with its purpose, including
the correction of program errors
– b. makes a back-up copy of a computer program,
if necessary for its utilization;
– c. examines studies or tests the functionality of
the program in order to identify the ideas and
principles underlying any element of the program;
– d. reproduces the code or translates its form, if
such reproduction or translation is necessary to
obtain the information needed to achieve the
interoperability of an independently created
computer program with other programs.
38
• WORLD
• Moral right of integrity – Art. 6 Berne
Convention
– any unauthorized distortion, alternation, adaptation
or modification is prohibited and constitutes a
copyright infringement
• France - author-centric jurisdiction
– affect the author’s reputation and/or honour in a
negative way
39
• Statutory exemptions / only by authorized
user
• a BACK-UP COPY- limited and cannot be
used for any other purpose except for the
foreseen and regulated one
– EU, this exemption cannot be contracted out and any
provisions to the contrary are null and void
– DRM
– Austria - the lawful acquirer/user is not allowed to
“break” the technical protection
– United States – circumvention legal
• Security testing, cryptography
• Subject to revison - jailbreaking
40
• PROPER FUNCTIONING OF THE SOFTWARE
AND ERROR CORRECTION (“debugging’’)
– Colombian - user is entitled to modify the computer
program when it is absolutely necessary for the use of
the program
– Japan – user allowed to adapt the program "if and to the
extent deemed necessary for his own exploitation"
– New Zealand – if necessary for the lawful use and an
error-free copy of the program is not reasonably
available
– Singapore and United States – adaptation OK “created
as an essential step in the utilization of the computer
program in conjunction with a machine and that it is
used in no other manner”
41
• Member states of the EU
– could be (and often is) contracted out in the license
agreements (e.g. Italy, France).
– Art 5 Software Directive
42
• FUNCTIONALITY
– right to examine study or test its functionality
– determine the underlying ideas and principles,
albeit under restricted conditions.
– in the member states of the EU, this right cannot
be contracted out.
• “may not be interpreted in such a way as
to allow its application to be used in a
manner which unreasonably prejudices
the rightholder's legitimate interests or
conflicts with a normal exploitation of the
computer program”.
43
• Hong Kong
– no moral rights regarding software, the right to
integrity could be therefore protected only
contractually (either in an assignment or a license).
The lawful user of the respective copy is still
entitled to make a back-up copy the software.
• Argentina
– does not permit any modifications or changes to the
software at; however it is customary regulate this
issue in the license agreements.
44 Q8
• How are collective works regulated and
how is the employee, as an author, treated
by the law?
45
• CZ
– person who ordered the work (e.g. a client ordering
specific software) shall be considered as being an
employer in such case
– collective works
• works that are created by more than one author on
the initiative and under the management of a
natural person or a legal person, and are made
public under those persons’ name, provided that
the contributions involved in such works are not
capable of being independently used
– employee works even when they have been
created to an order
46
• WORLD
• Collective work
– France, Czech Republic and Slovakia
• work of joint authorship
– Germany, Hong Kong, Japan, United Kingdom
– all of the co-authors own and exploit the rights
jointly and severally
47
• work created during the course of
employment
– In all jurisdiction – special attention
• employer is
– owner/holder of any copyright > Argentina,
Canada, Denmark, Hong Kong, Luxembourg,
New Zealand, Poland. Singapore, United
Kingdom and USA (“work for hire”).
– has the exclusive right to exploit the economic
rights > Austria, Czech Republic, Germany,
Slovakia.
48
• Thailand – the employee (sic!) is regarded
as the sole bearer of copyright under the
condition that the employer is entitled to
publish/communicate the created work in
accordance with the purpose of employment.
• Hungary - the employee must be obligated
expressly to create software as part of his/her
employment relationship. Otherwise the
employer cannot acquire any rights over the
work even if it was created during the working
hours of the employee.
49
• Moral rights (if recognized)
– Japan, both moral and economic rights belong to
the employer (even a legal person)
– CZ/SK – legal presumption of agreement –
exploitation possible
• Possibility to modify
– Austria, Czech Republic, Italy, Germany, Japan,
Luxembourg, and Slovakia
50
• “beyond the reasonable expectation”
exploitation
– (Hong Kong, Czech Republic)
• protection of the employee against the
non-utilization of his creation
– Russia - if the employer does not start exploiting
the copyrights within three years period after he
obtained them, the right to works belongs to the
author.
– Czech Republic - standard-term license from the
employer if he is not exploiting the work sufficiently
51 Q9
• Liability for damages and product liability
on the part of an author. Is it possible to
limit or exclude liability for damages
and/or product liability with respect to
software? If so, is it regulated by general
law or a special, software-focused,
framework?
52
• Czech Commercial Code, quality
guarantees have to be agreed upon;
– otherwise the author is only responsible for the
defects that existed at the moment the work was
handed over.
• The parties
– the exclusion of product liability OR
– stipulation of quality guarantees for a period
determined by the parties (there is no minimum
length of warranty period).
53 Commercial Code
• Compensation of damages
– whoever breaches a duty arising from a contractual
relationship is obliged to provide compensation for
the damages caused to the other party
• Exclusion
– The parties are also not entitled to waive their rights
to damages prior to the breach of an obligation and
thus exclude their liability for damages
• actual damages and loss of profit
• objective criteria – fault does not matter
54 Civil Code
• complete exclusion of product liability is
not allowed by virtue of the Czech Civil
Code
• two-year statutory guarantee
• subjective criteria
• Cannot be contracted out
55 WORLD
• NOWHERE
– special, software-focused framework regarding the
exclusion/limitation of liability for damages
– general provisions of private law (Civil and/or
Commercial Law) applicable
• Limiting clauses
• France
– the limitations basically annulling the author’s
fundamental obligations arising from the contract found
void by the courts.
56
• Hong Kong
– excluding causes are enforceable as long as they
are fair and reasonable
• Russia
– original author cannot be held liable for damages or
product liability if he has sold the computer program
to the “holder of the rights”
57
• Consumer protection
– Austria in the B2C (business-to-customer) relations
the liability for personal injury may not be limited
– Japan - clauses that exempt the business operator
from liability for damages are invalid
• Product liability (disputed)
– if YES then cannot be excluded by contract (e.g.
Austria, Denmark, Hungary, Italy, Thailand,
Russia)
58
• Goods
– Hong Kong, Thailand
– New Zealand – some warranties could be
contracted out
• contra proferentem rule always
– ambiguous terms are interpreted to the contrary of
the party that introduced them in the contract.
59 Q10
• How are IT related disputes usually
resolved? What is the prevailing (plus
what is the recommended) body to solve
such disputes? How long does it take?
60
• CZ
• Arbitration Court attached to Economic
Chamber of the Czech Republic and the
Agricultural Chamber of the Czech
Republic
• 3-5 months
61
• WORLD
– common courts
– alternative dispute resolution (” i.e. mediation, a
combination of mediation and arbitration, or solely
arbitration).
– The common civil courts prevailing bodies to solve
software-related disputes in Austria, Czech
Republic, Denmark, , Germany, Hungary, Italy,
Luxemburg, New Zealand, Poland and Slovakia
– X
62 Special bodies
• Copyright Tribunal in Hong Kong
• Intellectual Property High Court in Japan,
The Patent Chamber in Russia
• Intellectual Property Office of Singapore
• Intellectual Property and International
Trade Court in Thailand
63
• arbitration is prevailingly acknowledged
as being more suited for the complex
software-related disputes
• Canada and Hong Kong as have
incorporated the UNCITRAL Model Law on
International Commercial arbitration into their
national legislation
64 Q11
• In total, what is the average time period
from the presentation of a formal petition
(to an arbitral/judicial or similar first
instance body) until the award of an
enforceable decision?
• CZ
– one or two years, even in case of a small claim
dispute – civil
– Arbitration couple of months
65
• WORLD
– general approach and conduct of the parties (a
strongly adversarial approach will cause significant
delay in any type of dispute resolution),
– size and complexity of the issue,
– quantity of evidence submitted by the parties,
– number of scheduled meetings/hearing days.
• in Slovakia to hear even a small IT case
before a court could take up three to five
years.