Student of Institute of Jurisprudence and Psychology of
Lviv Polytechnic National University
Candidate of Juridical Sciences (Ph. D.),
lecturer at the Department of administrative and informational law of
Lviv Polytechnic National University
Characteristic Of Program Code Transfer as an Object of Intellectual Property Law in The Context of it Business Development in Ukraine
The urgency of writing the article is due primarily to the development of IT business in Ukraine. Over the last few years, Ukraine remains one of the leading IT service providers in the world. The exporting IT sector of the Ukrainian economy is developing dynamically. The pace of development of this sector is higher than in other sectors. According to a study by experts of the IT Ukraine Association and the Office of Effective Regulation (BRDO) in the first half of 2018, information technology services overtook pipeline transport and became the second largest service export industry - more than 20% of all services exported .
The information technology market attracts companies of different sizes and different fields of work. Today, it is one of those industries that is developing at an extremely fast pace and will remain relevant for an even longer period. It is important in this aspect to understand that the products that this market creates are sufficiently different from the usual business. Therefore, the legal side of the business is significantly different from the usual one that lawyers meet in the course of their business.
For the most part, IT companies' job is to develop software for their own needs (product companies) or custom software (outsourcing companies). At the same time, in accordance with the specifics of the industry and in general of each company separately, the question arises as to whether intellectual property rights belong to the respective software. After all, in the ordinary form of work "Company-employee", the issue of the specifics of the transfer of intellectual property rights is solved quite simply, about the scheme "Customer-Company-FOP" may be difficult.
In accordance with Article 4 of the World Intellectual Property Organization Treaty on Copyright, adopted by the Diplomatic Conference on 20 December 1996, computer programs are protected as literary works within the meaning of Article 2 of the Berne Convention. Such protection applies to computer programs, regardless of the manner or form of their expression .
On this basis, it can be argued that software code that is part of a computer program is protected under international law for the protection of intellectual property as a copyright object. This thesis is also supported by Article 10 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, which states that computer programs in source or object code are protected as literary works under the Berne Convention (1971) . In general, the same provisions are found in the legislation of most states that have ratified the Berne Convention for the Protection of Literary and Artistic Works.
Ukrainian law defines computer programs solely as copyright. Art. 8 of the Law of Ukraine "On Copyright and Related Rights" defines computer programs as a separate object of copyright. Art. 18 of this Law, in full accordance with the international conventions to which Ukraine is a party, stipulates that computer programs are protected as literary works, regardless of the manner or form of expression of the programs . However, Part 3 of Art. 6 of the Law of Ukraine "On Protection of Rights to Inventions and Utility Models" of December 15, 1993, with the following changes and additions, determines that computer programs cannot be protected under this law. On the other hand, paragraph 3 of Art. 8 of the Copyright Act states that the legal protection provided by this law extends only to the form of expression of the work and does not extend to any ideas, theories, principles, methods, procedures, processes, systems, methods, concepts, discoveries, even if expressed. , described, explained, illustrated in the work . This means that in Ukraine only forms of expression of programs (in essence, source and object codes) are protected, and their structures, algorithms, and ideas underlying the programs are not protected and can be freely used by third parties.
Because a computer program is a copyright object, it must, therefore, meet the criteria that are critical to the attribution of a particular entity to copyright. The High Commercial Court of Ukraine, in paragraph 25 of the Plenum Resolution of October 17, 2012 “On Some Issues of the Practice of Settlement of Disputes Relating to the Protection of Intellectual Property Rights”, states that when deciding whether a particular result is subject to copyright, the court should take into account: the object of legal protection is only the result created by creative work; unless otherwise stated, the result of intellectual activity is considered to be a creative work; legal protection as a copyright object should be a work expressed in an objective form, not its content .
However, it should be understood that the approach to defining code as an object of copyright, in fact, is a bit inconsistent with the things available. The program code, as the text itself, has no value, because its essence lies down in the use and application of certain algorithms. In view of this, it can be argued that the issue of code protection has not yet been fully addressed and needs more modern legal regulation.
An interesting opinion was expressed by Petrenko S. A., who claims that by its purpose a computer program manages an electronic computing device, and therefore from the standpoint of patent law it can be recognized as a process (method) or a new application of a known process. Legal protection as an invention (utility model) can only be obtained by technical solutions, the use of which leads to a technical result. A computer program (as such) without the use together with hardware or an out-of-the-box solution cannot produce a technical result, and therefore cannot be recognized as a technical solution and obtain legal protection as an invention (utility model) .
However, given that software code is protected as a copyright object, it should be considered under the legal regulation of the copyright institute. V. Dmitryshyn provides a good justification for this choice of protection. The scientist claims that the highest level of protection in the mass production of programs can give only the recognition of computer programs object of protection as a result of creative activity, which is a copyright object. In explaining his statement, the author makes several arguments, among which: the source text of a computer program has the features of a written literary work (similarity with a literary work is supplemented by the fact that the text of a computer program can be written in different programming languages - Assembly, C, Java, Pascal, Basic, etc., as well as any literary work - in Ukrainian, Russian, English or other languages); algorithms, methods, ideas, theories, formulas used in the development of a computer program, give it the features of scientific work, that is, sectoral affiliation to the objects of copyright; audio-visual displays, animations, and graphics created by a computer program have the features of music (with text and without text), audio-visual, works of fine art, works made in ways similar to photography, works of art, which also gives grounds to refer them to works in the field of art [8, p. 26].
The most interesting, in our opinion, issue in working with the IT industry for lawyers is the practice of transferring program code rights. It should be understood that, in essence, the model of the work is to create by the developer some copyright for his company that sells the object to the customer. The scheme is quite simple, but due to the specific nature of the IT business, it is complicated by many questions.
It is worth paying attention to the specificity of the ownership of intellectual property rights to the object created by the employee at the place of work. In accordance with Article 429 of the Civil Code of Ukraine, personal non-proprietary intellectual property rights to an object created in connection with the performance of an employment contract belong to the employee who created the object. As for property rights, they belong to the employee who created the object and the legal or natural person where or in which he works, jointly, unless otherwise specified in the contract . It is interesting to look at the fact that according to Article 16 of the Law of Ukraine "On Copyright and Related Rights" the non-proprietary right to a work of work belongs to its author, but the exclusive property right belongs to the employer unless otherwise provided by the employment contract (contract) and (or) civil agreement between the author and the employer . For a long time in Ukraine, this conflict remained unsolved, and often scholars argued about which regulatory act, in this case, would have greater legal force. Fortunately, the Plenum of the Supreme Court of Ukraine in the Resolution on the Application of the Laws of the Law “On Copyright and Related Rights” by the Courts of 4 June 2010 No. 5 in paragraph 24 clarified this issue. The Court argues that the provision of the Civil Code of Ukraine is newer than that of the Law, and therefore the Civil Code of Ukraine was applied in this case. On the one hand, this has made some points in this conflict, but on the other, it should not be forgotten that the Supreme Court of Ukraine Resolutions are not a source of law in Ukraine. In practice, a rather ambiguous situation is emerging and the courts in Ukraine are still addressing this issue differently. For example, the Court of Appeal of the City of Kyiv in the Case of Recognition of a Certificate of Registration of a Copyright for a Work Invalid from 05/04/2016 refers to the rule of the Law of Ukraine "On Copyright and Related Rights" as a special rule of legal regulation of these relations and applies it . It is interesting in this case to refer to the Association Agreement with the European Union of 16 September 2014, which entered into force on 1 September 2017. In this Agreement, Chapter 9 is entirely devoted to the regulation of some intellectual property issues. In Part 4 of Art. 181 of Section 9 of the Agreement is a provision for the exclusive ownership of intellectual property rights, and it is clearly stated that the rights to a computer program created by a hired employee belong to the employer. In this regard, it can be argued that the conflict that over many years has led to disputes between scientists and the courts was resolved by the Association Agreement with the EU is true only in the context of software development .
It is important to keep in mind that due to the specific nature of the IT business, companies often do not hire software developers under an employment contract. Instead, such individuals are open to the form of an individual entrepreneur. According to Art. 430 of the Civil Code of Ukraine personal non-proprietary intellectual property rights to the custom-made object belong to the creator of the object. Also, in the cases provided for by law, individual personal non-proprietary intellectual property rights in such an object may belong to the customer. As for property rights, in such a law the legislator has established that they belong to the creator of this object and the customer jointly unless otherwise stipulated by the contract. The “unless otherwise stipulated in the contract” part plays an important role here, since software contracts are usually concluded with a service contract, and custom IPR provisions are applied to transfer intellectual property rights, which are property rights. belong to the customer and not to the executor in accordance with Article 1112 of the Civil Code of Ukraine. Another model of the organization of work is the application of the rules of the agreement on the transfer of exclusive property rights of intellectual property under the terms of Article 1113 of the Civil Code of Ukraine. In this situation with property rights, everything is clear. In fact, the individual entrepreneur creates a custom copyrighted item and passes it on to the contracting entity . The company also transfers the finished object to the final customer. In any case, if the contract is concluded between two parties who are located and carry out their activity in the territory of Ukraine, an important list of property rights that are transferred. After all, if one of the rights of the contract is not specified, it can be argued that such property right has not been transferred.
The practice of the work of lawyers with non-property intellectual property rights is interesting for the study. Personal non-proprietary intellectual property rights belong to the creator of the intellectual property object. According to Part 1 of Art. 438 of the Civil Code of Ukraine, personal non-property rights belong to the author. As a general rule, an individual cannot waive personal non-property rights, nor can he be deprived of these rights (Part 3 of Article 269 of the Civil Code of Ukraine) .
According to scientist G. Yarega, the issue of the inalienability of personal non-property intellectual property rights is debatable in the science of law. The scientific literature substantiates the need to distinguish between personal non-property rights and non-property intellectual property rights. The personal non-proprietary rights of the creators should be attributed only to those rights which cannot be alienated under any circumstances, since this would break the link between the author and the created object, namely: the rights to be recognized as the creator and the rights to the name. Other non-proprietary intellectual property rights undoubtedly also belong to the creators, but by their will, under the contracts, such rights could be alienated or, in the cases provided by law, belong to other persons .
Considering the issue of non-inviolability of non-proprietary intellectual property rights in the context of the work of IT business, it is necessary to pay attention to the rights stipulated by the Law of Ukraine "On Copyright and Related Rights", as the author's right to claim recognition of his authorship by duly indicating the author's name on the work and his copies, and for any public use of the work, if practicable . This right may create some obstacles for the end-user of the code. It is clear that developers, who usually work as an individual entrepreneur, do not require recognition of their authorship by specifying the author's name on the work, but one should not reject this right simply because such a requirement is not usually made. After all, it should be understood that it is difficult, but possible, to implement such a requirement in practice. A customer who will release a finished software product to the developer list can theoretically list the entire list of people who have been involved in writing the software. However, it is clear that he does not need it and only complicates many issues. In order to avoid such situations, lawyers often prescribe in a service agreement a provision that prohibits the author of an intellectual property object when publicly using a work of mention of his name, and he as the author of the work wants to remain anonymous. This provision in the treaties corresponds to paragraph 2 of Part 1 of Art. 14 of the Law of Ukraine "On Copyright and Related Rights", under which the author of the work has the right to forbid the public mention of his name in the public use if he as the author of the work wishes to remain anonymous. The lawfulness of the use of such a provision can be debated, but in the end, the party that reads and signs the agreement agrees to the conditions laid down in it.
Conclusions. Therefore, program code and computer software, despite their incomplete performance, are protected as copyright. This is confirmed by both international acts and the Law of Ukraine on Copyright and Related Rights. Since IT companies work primarily with individual entrepreneurs, the issue of contractual regulation of intellectual property rights remains a pressing issue. However, it should be understood that the IT industry typically operates under a master services agreement and licensing agreements. The issue of transferring rights from a subject in Ukraine, where there is a division of property and non-property rights, to another entity, for example, in the United States where there is no such division, remains relevant. Concerning non-proprietary intellectual property rights, practicing lawyers have found an interesting approach and have stipulated in the agreements the author's waiver of such rights.
In general, the issue of the transfer and comprehensive protection of intellectual property rights for IT products requires further and in-depth research, as well as the identification of new regulatory approaches.
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