20140529 Aspects of Software Licensing_Pearse Ryan

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Overview of Software Licensing and what as a technology companiy you need to be aware of.

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20140529 Aspects of Software Licensing_Pearse Ryan

  1. 1. Irish Software Innovation Network Aspects of Software Licensing 29/05/2014 Pearse Ryan Arthur Cox 12925566.1
  2. 2. Overview: • What is Software (from a legal perspective)? • Recent developments in the law’s view of Software • Software as “Goods” - Implications 2
  3. 3. What is Software (from a legal perspective)? • A creature of: – Intellectual Property Law (mainly copyright) – Contract (mainly licensing) • Conflict between IP law and EU Competition law – IP rights – protect creator/right holders and use without consent = infringement of IPR – Competition law – fundamental freedoms – Longstanding conflict between the two played out in CJEU (ECJ) decisions – Court reluctant to allow IPR stifle competition • Underlying question: – Software is a creature of IP law – But with reference to “sales” law – is it a good or a service? – The good/service distinction is key 3
  4. 4. What is Software (from a legal perspective)? • Goods v Services – Sale of Goods legislation distinction • Software licence v sale • Software licence to Business (B2B) v Consumer (B2C) • The distinction between above has played out over time • Current position – Courts evolving towards software as good – Brings with it application of EU law on sale of goods 4
  5. 5. Recent Developments in Laws View of Software UsedSoft v Oracle (CJEU-2011) • German case – referred to CJEU • Copyright v Competition law Q • Overall – in circumstances of rightholder grant of perpetual licence in downloaded software cannot use copyright to prevent licence redistribution onwards to third party • Effectively licensee as reseller - secondary market in used software • Oracle sued UsedSoft in German – facilitated licensee resale of software – market/forum • The previous position - Holders of copyright in computer programs can prevent licencees from redistributing/reselling – software licence is personal and breach of copyright/breach of contract to reproduct in this way 5
  6. 6. Recent Developments in Laws View of Software • BUT – exceptions under 2009 Software Directive: – c/r owner cannot prevent redistribution of s/w “sold” within EU – principle of exhaustion of rights – “lawful acquirer” of a program does not require rightholder permission to reproduce c/p when technically necessary to run the c/p as intended (e.g. load and run) • Oracle s/w licences were personal and non-transferable • Oracle sued UsedSoft for c/r infringement – UsedSoft argued Oracle rights exhausted – referred to CJEU • Q: is copy of c/p ‘sold’ when free download accompanied by a permanent licence for a fee and Q can c/r holder prevent redistribution • Held: downloaded s/w is ‘sold’ when terms of download i.e. the licence agreement is “… intended to make the copy usable by the customer, permanently, in return for payment of a fee designed to enable the copyright holder to obtain renumeration corresponding to the economic value of the copy of the work of which it is the proprietor” – this is the language of sale of goods rather than IP 6
  7. 7. Recent Developments in Laws View of Software SAS Institute Inc v World Programming Inc (CJEU-2012) • Overall Q: status of functionality in computer program – allegations of wp copying of SAS s/w • Facts: SAS developed enterprise type c/p in proprietary language (the SAS System) - based on Base SAS, which allows user write and run own programs within overall SAS System – proprietary language ties in customers and difficult to migrate away – WP developed rival system (the WPL System) which mimics SAS System – allowed users use Base SAS programs within the WPL System rather than SAS System without need to rewrite all programs in non SAS language • SAS alleged copyright infringement – UK HC referred to CJEU • Accepted that WPL studied SAS s/w in creating WPL System but no proof of access to SAS source code – study of a properly licenced copy of s/w • Q: breach of c/r in copying functionality based on independent study and not copying source code or object code? 7
  8. 8. Recent Developments in Laws View of Software • SAS argued – copyright breach/breach of licence in misuse of licenced s/w – use outside scope of licence grant • Q referred to CJEU: – Are functionality of c/p, the programming language and format of data files all forms of expression and protected by copyright? – Can licensee observe/study/test licenced s/w to determine underlying ideas/principles? – Is reproduction in c/p x y2 of functionality described in user manual for c/p ABC a breach of c/r in user manual? • Held: source code and object code = expression of c/p – Functionality, programming language and data file format not forms of expression protected by c/r. Wish is to avoid monopoly on ideas – Overall: so long as no copying of existing c/r expression can create similar c/p – copying of source code or object code is c/r infringement – court did allow for protection by c/r of languages and data file formats where authors own intellectual creation – but high standard 8
  9. 9. Recent Developments in Laws View of Software • Licensor – cannot prevent licensee from observing, studying and testing functionality of c/p – but licence cannot copy the object code/source code • Decision – no protection over functionality and promotes competition • For Licensors – literal copying of code not allowed and manuals/related materials can have c/r protection where themselves sufficiently unique (intellectual creation) 9
  10. 10. Software as “Goods” - Implications • Overall – case law moving towards recognising software as potentially goods • Evolving area but trend emerging • Legal Implications: – Traditionally IT industry view that s/w not goods and licence contracts drafted on this basis; – Sales Law • Goods attract higher requirements burden than only other recognised class of supply – “Services” • Applicable law – SOGSAS – case law 10
  11. 11. Software as “Goods” - Implications • Agency Law – risk of application of commercial agency regime to sales channel » What is commercial agency » What is scope of risk? • Overall – status of software is evolving/changing towards categorisation as “good” rather than service and licensors need to be aware 11
  12. 12. Pearse.ryan@arthurcox.com Thank you for your time today. 29/05/2014

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