Microsoft Software Licensing in Russia

Transcription

1 Natalia Nikitina Igor Kornev Microsoft Software Licensing in Russia 19 May 2009

2 Issues for discussion Intellectual Property and its license requirements in Russia generally Software license to Russian Clients Software license to Russian representative offices/branches of Foreign Clients Software license to Russian Subsidiaries (separate Russian legal entities) of Foreign Clients Other related licensing issues 19 мая 2009 г. 2

3 Purposes of the presentation Discuss: The particulars of Russian licensing rules Microsoft system of license agreements Required measures necessary to comply with Russian licensing rules while using Microsoft license agreements Proof of compliance with Russian license rules to controlling authorities 19 мая 2009 г. 3

4 Intellectual Property and its license requirements in Russia generally Russian law distinguishes an exclusive list of intellectual property ("IP") objects, e.g.: Copyright (literary works including software, works of art, etc.) Patentable objects (inventions, utility models and industrial designs) Trademarks, service marks, names of origin, commercial names Know-how Some of IP is subject to obligatory registration (e.g. trademarks or inventions). Other IP is recognized without such registration (e.g. rights to works of art). Software may be registered but it is also recognized and protected without such registration. The following main IP rights are distinguished by law: personal non-property rights which always belong to the author-individual; exclusive IP rights; other additional IP rights (e.g., author's access right to his/her works of art). 19 мая 2009 г. 4

5 Intellectual Property and its license requirements in Russia generally Exclusive IP rights provide the owner (an individual or a legal entity), with the following principal rights: to use the IP at the owner s discretion in any manner not prohibited under the law; to dispose of the IP, including by way of transfer, license, or pledge, and permit other persons to use or prohibit them from using the IP; and to enjoy protection from illegal use of IP by any third parties. 19 мая 2009 г. 5

6 Intellectual Property and its license requirements in Russia generally Software license agreement requirements: Licensed software should be specified; The parties to the license agreement shall be the licensor (the owner / possessor of the exclusive rights) and the licensee / sub-licensee (a specified entity/person which receives the right to use the intellectual property); The licensee is entitled to use the right only within the limits referred to in the license; rights which are not expressly referred to in the license agreement are considered to be not provided; Software may be licensed through an accession contract via a presumed agreement of the software purchaser who started using the purchased software under the standard license agreement, provided in the purchased software or on its cover. 19 мая 2009 г. 6

7 Intellectual Property and its license requirements in Russia generally Software license agreement requirements (continued): A compensated license agreement shall also contain the amount of remuneration or the method of calculation of the remuneration. It also means generally that royalties for the use of IP are paid from licensee to licensor; A software license agreement shall be concluded in writing; A license agreement shall contain a reference to the term of the agreement (if the parties wish to agree on a term that is not the statutory term of five years); If software is registered in the Russian Federation then general rules on the license of registered intellectual property shall apply: license agreements must be also registered; If the licensee, according to the license agreement, is entitled to sub-license software then the provisions of the sublicense agreement must satisfy the requirements applicable to license agreements; in particular, the scope of granted rights must not exceed the scope of rights granted under the license agreement. 19 мая 2009 г. 7

8 Documentary support of license Generally, the following documentation shall be collected to prove the proper license for Software: A license agreement which contains the provisions, and otherwise satisfies the requirements, as described above (see slides 6-7); If license agreements were executed on behalf of the licensee or licensor by a third party, proof that such third party had obtained the rights to act on their behalf (e.g., agency agreement, power of attorney, etc.). Proof that the software was in fact transferred to the licensee (e.g., act of acceptance / delivery note); Documentation reflecting compliance with applicable currency control regulations (e.g. passport of the transaction) and customs regulations of Russia (if applicable); Accounting documentation including documentation required for tax purposes and which confirms payments under the licensing agreement. 19 мая 2009 г. 8

9 Violations of software license and related risks License agreement does not meet the requirements described above: tax liability (e.g., penalties) and tax non-acceptance (non-acceptance of profit tax deductions for the amounts of royalties) Use of software without license (including the use of more software copies than allowed under the license) tax liability (e.g., penalties) and tax non-acceptance (non-acceptance of profit tax deductions for the amounts of royalties) liability for IP infringement under the Civil Code: compensation of losses for each case of violation; fine in the amount of from 10,000 RUB to 5,000,000 RUB or in the double amount of the payment due for a legitimate copy / use right of a legitimate copy; dissolution of a liable legal entity (in cases of multiple / gross violations). 19 мая 2009 г. 9

10 Software license to Russian Clients Definition: Russian Clients Russian legal entities which directly enter into agreements of standard contract package (MBSA, etc.) with Microsoft and simultaneously enter into agreement(s) with Russian Resellers (Russian legal entities). Contractual scheme applicable to Russian Clients: Russian Client is a direct party to agreements with Microsoft (MBSA and package of Licensing Enterprise Agreements / package of Licensing Select Agreements); Russian Reseller is directly referred to in agreements with Microsoft and signs / is entitled to sign it; Additionally Russian Resellers enter into special agreement (Rider) with Microsoft which enables them for Russian law purposes to transfer license (use rights) to software to Russian Clients. 19 мая 2009 г. 10

11 Software license to Russian Clients How to prove that the license has been provided Enter into agreements with Microsoft and Reseller; Maintain the required documentary proof (see slide 8); Present to controlling authorities the documentation including both agreement with Microsoft and the Reseller. Please note that: Both agreements (with Microsoft and Reseller) entered into by the Client constitute the single contractual license transfer instrument; Russian Client's agreement with Reseller is valid only if the Russian Client also enters into agreements with Microsoft; similarly a Russian Reseller is entitled to provide Software to Clients only if Clients enter into agreements with Microsoft; Number of installed software should correspond to the number established in agreements with Microsoft and Reseller. 19 мая 2009 г. 11

12 Software license to Russian representative offices/branches of Foreign Clients Definition: Representative office / branch of a Foreign Client is not a separate legal entity but a local office of a foreign legal entity opened and acting in Russia. Right are granted to a Foreign Client (including for its representative / branch office in Russia) through agreements with Microsoft and a Foreign Reseller (if applicable); As a general principle, agreements with Microsoft and a Foreign Reseller (if applicable) entered into by a Foreign Client are also automatically (unless specified otherwise in the agreement) applicable to the Foreign Client's representative/branch offices in Russia. Russian representative office / branch of a Foreign Client do not have to enter into separate agreements for Russia. Agreements with Microsoft and a Foreign Reseller (if applicable) must include all the required provisions applicable to license agreements under Russian law (see slides 6-7); 19 мая 2009 г. 12

13 Software license to Russian representative offices/branches of Foreign Clients How to prove that the license has been provided Representative office / branch is to maintain the required documentary proof (see slide 8); Present to controlling authorities the documentation including both agreement with Microsoft and the Reseller; Please note that: The number of licenses obtained from Microsoft and designated by a Foreign Client for the use by its Russian representative office / branch should be specified (e.g. in a Foreign Client's internal documentation such as internal orders, decisions on separation of the licensed software between the offices, etc.); Number of installed software should correspond to the number established in agreements with Microsoft and designated by a Foreign Client for the use by its Russian representative office / branch; As a possible option a Foreign Client may choose to enter into local enrollment agreement with Russian Reseller (through the selection of a local Reseller for the office in Russia) to obtain software for its Russian representative office / branch. 19 мая 2009 г. 13

14 Software license to Russian Subsidiaries of Foreign Clients Russian Subsidiary of a Foreign Legal entity for Russian law purposes is a separate legal entity: A Russian Subsidiary may not be represented by a parent company without an authorization (agreement or power of attorney); As a separate legal entity a Russian Subsidiary has to be a party to a license agreement to be able to use Software. 19 мая 2009 г. 14

15 Software license to Russian Subsidiaries of Foreign Clients How to prove that the license has been provided: Russian Subsidiary must be a party to Microsoft agreements and agreements with Foreign Resellers (Russian Subsidiary may issue a POA or enter into agency agreement with the Foreign Client); Russian Subsidiary is to maintain the required documentary proof (see slide 8); Provide to controlling authorities the documentation including both agreements with Microsoft and the Reseller. 19 мая 2009 г. 15

16 Software license to Russian Subsidiaries of Foreign Clients Please note that: It is important to ensure that a Russian Subsidiary is distinctively specified in Microsoft agreements (full legal name, address, individual taxpayer number, main state registration number). Otherwise Microsoft agreements may be considered unconcluded by the Russian Subsidiary; It is important that it is specified which and what number of Software the Russian Subsidiary is entitled to receive. 19 мая 2009 г. 16

17 Software license to Russian Subsidiaries of Foreign Clients Possible alternative options: To avoid ambiguity a Foreign Client may enter into a separate sub-license agreement with its Russian Subsidiary. In this case the agreement should satisfy the requirement to license agreements under Russian law; A Russian Subsidiary may enter into a separate agreement with a Russian Reseller. 19 мая 2009 г. 17

18 Other related licensing issues Proof of authenticity of the Software: Software received from a legitimate source shall have corresponding documentation / other proof of authenticity; If copies of the same Software which is licensed from Microsoft are legitimately acquired from third parties, then a separate documentation shall be provided if necessary to prove the rights to use it (e.g. invoices, contracts, acceptance acts, etc.); Installed software (e.g. if purchased along with hardware) shall have the same documentation to prove its authenticity. 19 мая 2009 г. 18

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