Copyright in information technology and marketing on the Internet

Transcription

1 Copyright in information technology and marketing on the Internet by Peter Danowsky Alexandra Persson

2 TABLE OF CONTENTS 2 1 WHAT IS COPYRIGHT? 2 THE LEGAL FRAMEWORK 2.1 International regulations 2.2 EC Directives Directives on copyright protection Protection of computer programs and databases Protection of topographies of semiconductor products Directive on electronic commerce 2.3 National framework 3 FURTHER ON THE NATIONAL REGULATIONS 3.1 How is copyright obtained? 3.2 Authorship and ownership 3.3 Exclusive rights Economic rights Moral rights 3.4 Limitations and exceptions to copyright 3.5 Duration of copyright 3.6 Neighbouring rights 3.7 Transfer of rights 3.8 Obligations as to technological measures 3.9 Protection of computer programs Copyright or patent? Further on the copyright protection of computer programs Limitations with regard to the exclusive rights Escrow of source code

3 3 4 CONTRACTUAL RELATIONS 4.1 Employer/employee 4.2 Work for hire 4.3 Licensor/licensee 4.4 Some general considerations regarding transfer of rights 5 FILE SHARING 6 INTERNET SERVICE PROVIDERS AND COPYRIGHT 7 CONCLUDING REMARKS AND CHECKLIST 8 MARKETING ON THE INTERNET 8.1 In General 8.2 EC Directive on good marketing practice 8.3 Search engines, marketing and copyright

4 1 WHAT IS COPYRIGHT? 4 Copyright is the legal term describing rights given to creators for their literary and artistic works. This includes literary works such as novels, plays, newspapers, computer programs, databases, films and musical compositions; and artistic works such as paintings, drawings, photographs and architecture. Alongside these copyright-protected works, the copyright legal framework also provides protection for certain neighbouring rights. These rights are similar, although often more limited and of shorter duration. Performing artists, broadcasting organizations and producers of sound recordings are covered by these rights. Copyright-protected works are generally the result of creative skills and significant labour and investments. Consequently, incentives in the form of recognition and fair economic reward as well as protection against unauthorized use, copying and piracy are crucial for the future continuation and development of copyright. The protection of copyright is probably essential to encourage future creativity and development of new material which will benefit society in general. The recent years development of information technology, and in particular digital technology and the Internet, has had a considerable effect on copyright given that the new technology enables us to use and exploit copyright-protected works in new and more efficient ways. This development has introduced new difficulties in enforcing copyright and prompted reinterpretation of old regulations. To some extent even the copyright law's philosophic basis has been challenged. Taken as a whole, legislators across the world have been pushed to revise and amend the copyright legal framework in order to strengthen the protection in response to the technological development. Even so, the legal framework for copyright and its related rights is today much-disputed and constantly challenged in many quarters. This chapter aims to provide a short introduction to the legal aspects of copyright with special emphasis on copyright and copyright issues of concern and interest for those involved in information technology. 2 THE LEGAL FRAMEWORK 2.1 International regulations Since as far back as the 19 th century, copyright has been subject to extensive international cooperation and treaties. The Berne Convention of is one of the oldest international 1 The Berne Convention for the Protection of Literary and Artistic Works of 1886.

5 treaties governing copyright protection. The convention rests on basic principles and contains a series of provisions determining the minimum protection to be granted. The convention provides, for example, a list of rights enjoyed by authors, such as the right to authorize or prohibit reproduction, public communication and adaptation of copyrighted works. The convention has been amended on a regular basis and is considered one of the major existing international treaties in the field of intellectual property. One important feature of the Berne Convention is its special provisions regarding developing countries which want to make use of the rights. 5 In 1996 two treaties were concluded by the international community with the purpose of updating and supplementing the already existing treaties on copyright and related rights, primarily in order to respond to the developments in technology and in the marketplace. The WIPO Copyright Treaty, WCT, regulates the protection for authors of literary and artistic works, whilst the WIPO Performances and Phonograms Treaty, WPPT, regulates the protection for certain neighbouring rights. The agreements grant, for example, rights with respect to distribution activities and computer programs. They also aim to protect against unauthorized Internet use and to protect the technological measures that are used on products containing copyright-protected works. In addition hereto, the so called TRIPS Agreement 2 constitutes an important complementary regulation. The TRIPS Agreement has been in force since 1995 and is administered by the WTO, the World Trade Organization. This requires all WTO members, with few exceptions, to adapt their laws to the minimum standards laid down in the agreement. The agreement provides global minimum standards for protecting and enforcing nearly all forms of intellectual property rights. Regarding copyright, it requires all WTO members to comply with the substantive provisions of the Berne Convention. Further, it ensures that computer programs shall be protected as literary works and lays down on what basis databases shall be protected by copyright. The agreement also lays down important additions to existing international rules on rental rights. For example, it requires authors of computer programs and producers of sound recordings to be given the right to authorize or prohibit the commercial rental of their works to the public. 2.2 EC Directives Within the European Union, there has throughout the years been significant harmonization of substantive copyright law to reduce barriers to trade and to adjust the legal framework to new forms of exploitation. A common legal ground is considered crucial with respect to the 2 Trade Related Aspects of Intellectual Property Rights.

6 rules on the enforcement of rights, i.e. sanctions and remedies regarding copyright infringements, and the overall access to justice Directives on copyright protection There are several directives regulating the protection of copyright. One of the most significant directives is the so called Infosoc-directive, 2001/29/EC 3. It covers the legal protection of copyright and related rights, with particular emphasis on the information society. The directive is based on principles and rules already lay down in previous directives. It develops these principles and rules and places them in the context of the information society. For example, the directive further harmonizes the author s right to communication to the public, reproduction rights and distribution rights. It also provides an exhaustive list of exceptions and limitations to the rights of reproduction and communication. Most of these are non-mandatory and therefore finally accorded at national level. However, one of the exceptions is mandatory. It provides an exception to the right of reproduction in respect of certain acts of temporary reproductions which are integral and essential to a technological process. The exception applies if the purpose is to enable a work to be lawfully used or just transmitted in a network between third parties by an intermediary provided that the reproduction has no separate economic significance. The Infosoc-directive also states that right holders should have the possibility of applying for an injunction against an intermediary whose services are being used by a third party to infringe the right holder s intellectual property right. In order for all member states to have a similar set of measures, procedures and remedies available for right holders to defend their intellectual property rights, the Enforcementdirective, 2004/48/EC 4, was adopted. The objective of the Enforcement-directive is to harmonize the legislative systems within the internal market in order to ensure a high, equivalent and homogeneous level of protection of intellectual property rights. The directive states that all member states shall provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by the directive. Those measures, procedures and remedies shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. The directive covers provisional and precautionary measures, injunctions, evidence and measures for preserving evidence. The scope of the directive is wide in order to encompass all intellectual property rights covered by community provisions in this field. 3 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. 4 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights.

7 7 Directive 2006/116/EC 5 regulates the level of protection of copyright and related rights. It lays down not only the terms of the protection as such but also certain implementing arrangements, such as the date from which each term of protection should be calculated. The directive states that the term of protection for copyright should be harmonized at 70 years after the death of the author or 70 years after the work is lawfully made available to the public, and for related rights at 50 years after the event which sets the term running Protection of computer programs and databases According to the directive on computer programs, 91/250/EC 6, all member states shall protect computer programs under copyright law as literary works. The directive establishes who and what shall be protected and for how long. It should be noted that the copyright protection covers only the expression of the computer program, not the ideas and principles that underlie the elements of the computer program, including those that underlie its interfaces. In accordance with this principle, algorithms, logic and programming language are not covered by the protection to the extent they comprise ideas and principles. The objective of the directive is to harmonize the member states' legislation regarding the protection of computer programs in order to create a legal environment which will afford a degree of security against unauthorized reproduction of such programs. In conformity with the protection of computer programs, databases are also protected under copyright law. This is stated in the database-directive, 96/9/EC 7. The directive applies to the structure and arrangement of contents of databases, so called "original" databases. It protects collections, so called compilations, of works, data and other materials that are arranged, stored and accessed by both electronic and non-electronic means. The term database can include both collections of works and collections of other materials that are systematically or methodically arranged and that can be individually accessed. In this context the directive states that the only criteria used to determine whether a database shall be protected by copyright is that the selection or the arrangement of the content of the database is an effect of the author s own intellectual creation. Consequently, the copyright protection covers only the selection and the arrangement of the content, not the content as such. In order to protect those databases that do not meet the criteria for copyright protection mentioned above, the directive has also established an exclusive 'sui generis' right for database producers to protect their investment of time, money and effort rather than the sole 5 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights. 6 Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs. 7 Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases.

8 intellectual creation. This protection falls under the neighbouring rights and is generally referred to as "non-original" databases. 8 While the copyright protection grants the creator of a database a group of exclusive rights regarding reproduction, alteration and distribution the neighbouring rights grant a right to prevent unauthorised extractions and reutilization of content and the right to prohibit acts that unreasonably prejudice the legitimate interests of the proprietor of the rights Protection of topographies of semiconductor products Developments of semiconductors require a considerable amount of investment while the topographies of such products can be copied at a fraction of the cost needed to develop them independently. The directive on semiconductor topographies, 87/54/EC 8, recognises this and harmonizes the basic principles governing the legal protection of original topographies of semiconductor products. The directive lays down certain basic principles specifying who and what shall be protected, the exclusive rights on which protected persons shall be able to authorize or prohibit certain acts, exceptions to these rights and for how long the protection lasts. Other matters, such as whether registration or deposit is required as a condition for protection and other general conditions for licenses, are left to the member states to regulate in national law Directive on electronic commerce The directive on electronic commerce 9 aims to create a legal framework to ensure the free movement of information society services. Information society service means any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of such services. Even though the directive principally regulates a wide range of economic activities that take place on-line, e.g. commercial communications and formation of online contracts, the directive should be mentioned here since it also deals with the liability arising from the copyright infringements of intermediary service providers, in particular hosting services. The directive exonerates intermediary service providers from liability where they have played a passive role in transmitting information from a third party. The directive also exempts web-hosting providers from liability for illegal content transmitted over their servers, if they are unaware of the illegal nature of the content and immediately block access to such content once they become aware of the same. 8 Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor products. 9 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market.

9 9 2.3 National framework While in some countries the provisions of the above-mentioned treaties can be directly applied as law, in general copyright and related rights are provided in the national legislation of each country. The above-mentioned international conventions and treaties oblige the associated countries to provide a minimum level of copyright protection laid down in the treaties. Likewise is the case with the EC directives. Due to that, most countries, in particular within in the European Union, have national copyright regulations that are quite similar. In section 3, the content of these national copyright laws will be further illustrated. In this context, it shall also be mentioned that there is no such thing as an international copyright that will automatically protect an author s work throughout the entire world. Protection against unauthorized use in a particular country depends on the national laws of that country. However, most countries do offer protection to foreign works under certain conditions, and these conditions have been greatly simplified by the aforesaid international copyright treaties and conventions. An underlying idea is the principle of reciprocity, i.e. foreign and national right holders are treated equally. 3 FURTHER ON THE NATIONAL REGULATIONS 3.1 How is copyright obtained? According to the Berne Convention and several other international conventions, literary and artistic works shall be protected without any formal procedure in the countries party to the conventions. In all European Union countries, copyright protection emerges at the same moment as a work is created. Hence, no registration or other formality is needed in order for a work to be protected under copyright law. However, while registration is not needed to exercise copyright, some jurisdictions have established national copyright offices and national laws that allow registration of works for the purposes of, for example, identifying and distinguishing titles of works. In some countries, registration can also serve as evidence in a court of law in disputes relating to copyright. For example, in the United States, the copyright regulation provides several inducements and advantages to encourage copyright owners to register a copyright even though registration is not a requirement for protection as such. A registration may serve as prima facie evidence of a valid copyright and enable the copyright holder to seek statutory damages and attorney's fees. If the registration is done after the infringement, only actual damages and lost profits may be sought.

10 10 Since copyright itself does not depend on any official formalisation the copyright symbol,, does not have a legal function within the European Union. However, in many countries, Great Britain for example, it is recommended to mark a work with the copyright symbol, the name of the copyright owner and the year of publication, in order to let others know when the term of protection started and hence whether it is still covered by copyright. In the United States the copyright symbol has historically served as an important copyright notice. After the U.S. became a member of the Berne Convention it is no longer formally required to use the copyright symbol, though most copyright owners continue to use the notice. Literary and artistic work is deemed to include every original work of authorship, irrespective of its literary or artistic merit. The only criterion used to determine whether or not a work shall obtain copyright protection is that it must be the result of the author s own personal intellectual creativity. In this context, it should be stressed that copyright protection extends only to the personal way in which the author has expressed the content. The protection does not cover the content as such. Consequently, copyright law protects only the right holder against those who copy or otherwise take and use the form in which the original work was expressed by the author. If a work is not unique in the sense that two persons could, independently of each other, express the same ideas, facts, circumstances, etc. contained in the work in the same way, the work will not be protected. This does not exclude, however, that two individuals could create original works, independently of each other. Then both of them will obtain copyrights. 3.2 Authorship and ownership The owner of copyright is generally the person who creates the work, the so called author. Should a work be produced by a collaboration of two or more authors, in which the contribution of each author is not distinct from that of the other authors, it is a work of joint authorship. In a joint authorship the authors can only exploit the work together. Certain national laws provide that when a work is created by an author who is employed for the purpose of creating the specific work, the employer is the owner of the copyright in the work, not the author. As mentioned below, however, the moral rights always belong to the individual who creates the work. An author may choose to transfer the copyright, or aspects of it, to a third party. In such a case the third party will become the right holder. The transfer of rights is further illustrated under Exclusive rights

11 11 Copyright protection grants two types of rights to the author in respect of his or her work. These are called economic rights and moral rights. Both these rights are exclusive, i.e. only the author or his or her successor in title is authorized to carry out any of the acts covered by the rights. The rights apply whether or not the work is in its original form or in an altered manner, such as translated or adapted, another literary or artistic form or in another technical manner Economic rights The economic rights enable the author to control the use of his or her work in a number of ways. The author can prohibit or authorize the work s reproduction in various forms, its distribution of copies, its public performance, its broadcasting or other communications to the public, its translation into other languages and its adaptation. The right to prevent others from making copies of the work without authorization, i.e. the right to reproduction, is the most basic right in copyright legislation. The other rights are recognized in order to ensure that the right of reproduction is respected. The author also holds an exclusive right to authorize others to use the work on agreed terms, see more under 3.6. However, it should be stressed that there are a number of limitations on these economic rights, as is mentioned further below. In recent years, questions on the scope of the economic rights have arisen as a result of the technological development, in particular digital technology and the development of interactive communications. In this regard the WIPO Copyright Treatment, WCT, clarifies in Article 8 that the right to make a work available to the public in such a way that members of the public can access the work from a place and at a time individually chosen by them, shall be covered by the economic rights. Most national laws have implemented this statute as a part of the right of communication to the public, although some have chosen to do so as a part of the right to distribution. Since the rights are vested with the right holders, there seem to be little, if any, practical differences in these approaches Moral rights The economic rights just mentioned aim at giving the author the possibility to make commercial gain from the exploitation of his or her work. The moral rights, on the other hand, protect the personal and reputational right rather than the purely monetary value of a work. The basic moral rights comprise the right of the author to be named as such and identified as the author in the context of any use of the work, which is sometimes called the right of paternity. Further, the moral rights encompass the right to object to any change in the work or to its being made available to the public in a form or in a context that is

12 derogatory to the literary or artistic reputation or individuality of the author, the so called right of integrity. 12 It is worth noting that the moral rights in principle can not be transferred or assigned. The right is accorded to an original creator. Thus, even when for example a film producer or a publisher owns the economic rights in a work it is only the individual creator who has a moral interest at stake. The author can with binding effect waive his or her moral rights, at least in relation to uses which are limited to their character and scope. 3.4 Limitations and exceptions to copyright The expression limitations and exceptions to copyright refers to situations in which the exclusive economic rights granted to authors or their assignees under copyright law do not apply. Hence, regarding certain acts of exploitation, authorization from the right holder is not needed. It should be noted that when a work may be used in accordance with these exceptions, the moral rights of the author must nevertheless be observed. There are several examples of limitations of general interest, such as the right to quote copyright-protected works in accordance with proper usage, provided that the source of the quotation is mentioned. Other examples include use of works for teaching purposes and use of works for the purpose of news reporting. The traditional limitation presented in most copyright regulations that allow individuals to make single copies of works for private, personal and non-commercial use is, these days, the subject of debate. Now that digital technology has made it possible to produce high-quality unauthorized copies of works, indistinguishable from the source, it substitutes the purchase of authorized copies. Hence, the ease and quality of individual copying has led some countries to narrow the scope of such exceptions of the right holder s exclusivity to control the copying of the work. Some countries, for example, have adopted provisions that prohibit copies of computer programs and databases in digital form, for private use. Special limitations in relation to the information society and in particular computer programs are illustrated under In addition to the above-mentioned limitations set out in most national laws, the laws of some countries also recognize the concept known as fair use or fair dealing. The United States is one such example. Fair use allows limited uses of copyright-protected material without requiring authorization from the right holder. However, in order for the use to be legal, factors such as the nature of the used work, the amount of the used work in relation to the work as a whole and the likely effect of the use on the potential commercial value of the work have to be taken into account.

13 Duration of copyright Typically, intellectual property rights, e.g. patents, are protected only for a limited period of time. Once the term of protection has expired, the work may be used freely. The same applies to copyright. Copyright protection does not last indefinitely. The copyright legislation provides for a period of time during which the rights of the copyright holder exists. The period of duration begins from the moment when the work is created, or as in some countries, when the work has been expressed in a tangible form. Within the European Union, the term of copyright lasts from the moment when the work is created, for the lifetime of the author and for 70 years after his or her death. For joint authorships the copyright duration is linked to the death of the last surviving author. If, for any reason, the author is unknown or generally known under a pseudonym, the copyright subsists until the end of the seventieth year after the year in which the work was lawfully made public. 3.6 Neighbouring rights As mentioned in the introduction, alongside the copyright-protected works, the copyright legal framework also provides protection for certain neighbouring rights. 10 These rights are of shorter duration than ordinary copyright-protected works. Generally, the neighbouring rights protection lasts for 50 years after the event that sets the term running. There is no single definition on what constitutes a neighbouring right. Hence, these rights may vary in scope from country to country. The Berne Convention provides that performers, phonogram producers and broadcasting organizations shall be protected as neighbouring rights. Hence, countries bound by this convention shall protect these categories of beneficiaries. In the European Union, film producers and database creators shall also be protected under this branch of the law. The protection of performing artists, such as actors, singers, musicians and other persons who perform literary or musical works, is perhaps the most unified right of the related rights. It is not difficult to accept that a performer has an intellectual input on his or her performance, beyond that of the author of the work. The protection granted to performing artists includes the exclusive rights to prevent a broadcast or communication to the public of his or her performance, unless this is made from a legally published recording of the performance. It also includes the exclusive right to prevent a recording of his or her performance and the reproduction of such a recording. 10 The term related rights can also be used to describe these rights.

14 14 The producer of a phonogram, which is the person who makes the recording rather than the person who performs it, has a right to prevent both direct and indirect reproductions of recordings. In the European Union, the same right also applies to those who produce recordings of moving images. Once a phonogram has been published, neither the producer nor the performing artist can prevent it from being broadcasted. However, fair remuneration to both the producer and the performing artist must be paid. This may be based on either a license agreed between the parties or imposed by law. Broadcasting organizations such as radio and TV organizations are recognized as right holders because of their role in making works available to the public and in light of their interest in controlling the transmission of their broadcasts. Consequently, broadcasting organizations are provided the right to authorize or prohibit re-broadcasting, fixation and reproduction of their broadcasts. In the European Union, producers of catalogues or other compilations which contain a large amount of information or which are the result of a significant investment shall also enjoy protection under the neighbouring rights. This protection is particularly important for databases that do not meet the criteria for copyright protection, e.g. those that lack the element of systematical or methodical arrangement. The neighbouring rights protection covers, for instance, the right to prevent extraction and reutilization of the whole or of a substantial part of the contents of the database. Unlike other neighbouring rights, the protection for databases lasts only for fifteen years from the completion of the database, that is to say the point at which the criterion of substantial investment is fulfilled or from the date at which the database is made available to the public, whichever is the later. Under some national laws, additional rights are granted. In a growing number of countries, performers and producers of phonograms are granted a right of rental in respect of phonograms. Some countries also grant specific rights over cable transmissions. Finally, it should be mentioned that just like copyright, most national laws contain limitations on the related rights. Some countries even allow the same kind of limitations on related rights as for the copyright. For example, the limitations can be in relation to teaching, scientific research, private use and for reporting on current events. 3.7 Transfer of rights Like any other property, a copyright, or aspects of it, can be transferred from the original author to a third party. The ability to transfer some or all of those rights to a third party is even one of the primary benefits of being the owner of a copyright.

15 15 A transfer of copyright is usually either in the form of an assignment or in the form of a license. An assignment of copyright can be compared with the sale of personal property. The original author assigns its copyright to a third party and can no longer exercise control over how the third party uses the work. In such a situation, the author s moral right can not be transferred as a whole. However, in some countries, the moral right may be waived in relation to uses that are limited to their character and scope. A license is an agreement where the author maintains its ownership of the rights, but authorizes a third party to carry out certain acts that are covered by the economic rights. A license is often limited to a specific period of time and for a specific purpose. A license may be exclusive, i.e. the copyright owner agrees not to authorize any other party to carry out the licensed acts, or non-exclusive, which means that the copyright owner may authorize others to carry out the same acts. A licence does not generally convey the right to authorize others to carry out acts covered by the license. Licensing may take the form of a collective administration of rights. Under a collective administration of rights, authors and other right holders grant exclusive licenses to a single entity that acts on their behalf to grant authorization, to collect and distribute remuneration and to prevent and detect infringements. The collective administration of rights assists, for example, artists to make sure that mass uses and public uses take place on the basis of authorization only. Normally, transfer of a copyright is made by contract. As a general rule, the contract shall clearly specify the transferred right and the transferred powers. Regarding transfer of copyright in certain specific cases, special legal provision may have to be applied. Such may be the case for example regarding publishing contracts and film contracts. A right holder may also choose to abandon his or her right to exercise the copyright, either wholly or partially. A right holder may, for example, post copyright-protected material on the Internet and leave it free for anybody to use. In fact, some organisations and projects have even made it to their business model to make right holders abandon their copyright and leave their work free for others to use but with the condition that the users adhere to special terms in a license. One such example is the General Public License, GPL, and the Open source movement which has specialized in creating computer programs. 3.8 Obligations as to technological measures Encryption and various other measures are frequently used by copyright holders to protect a work from being used without permission. However, circumvention and manipulation of

16 16 such measures are frequent. The Infosoc-directive contains provisions seeking to protect technological measures, technology devices and other components that are designed to restrict or prevent certain acts which are not authorised by the right holder. Consequently, all member states must provide adequate legal protection in this regard. The protection may be civil, criminal or a mix of the two. The member states must also provide adequate legal protection regarding manufacture, import, sale, lease or possession of such circumventing devices. Digital rights management information is similarly protected in the directive. It should be noted though, that technological measures are only protected if they are effective, i.e. they have been successfully implemented. A simple password is considered to be effective enough, irrespective of the ease with which it may be cracked. Further, a copyright holder who protects his or her work by technological measures must allow reproduction that is permitted under the regular limitations to copyright protection, e.g. within the scope of private use. 3.9 Protection of computer programs Copyright or patent? In the 1970s and 1980s there were extensive discussions on whether the patent system, the copyright system, or a sui generis system, should provide protection for computer programs. These discussions resulted in the generally accepted principle that computer programs shall be protected by copyright, whereas apparatus using computer software or software-related inventions shall be protected by patent. Copyright law and patent law provide different types of protection for intellectual property rights. Whereas copyright is a right given to a creator for his or her literary and artistic works, patent is an exclusive right granted for an invention, which is a product or a process that provides a new way of doing something or offers a new technical solution to a problem. As opposed to copyright, patent is generally granted only after completing an examination procedure by a government agency. Copyright protection of computer software is established in most countries and harmonized by international treaties and EC directives. The law relating to the patentability of software is however still not harmonized internationally; some countries have embraced the patentability of computer software and others have adopted approaches that recognize inventions assisted by computer software as protectable under patent law.

17 17 Within the European Union, the European Patent Office, EPO, and national patent offices have issued several patents for inventions involving software since the European Patent Convention, EPC, came into force in the late 1970s. Article 52, EPC, excludes programs for computers from patentability to the extent that a patent application relates to a computer program as such. This has been deemed to imply that any invention which makes a nonobvious technical contribution or solves a technical problem in a non-obvious way is patentable, even if that technical problem is solved by running a computer program. In the United States, patents have been granted to what may be referred to as software patents since the early 1970s. The recent expansion of the Internet and electronic commerce has even led to many patents being applied and granted for business methods implemented in software. This is not, however, thus far possible within the European Union Further on the copyright protection of computer programs As mentioned under , the directive on computer programs 11 states that, within the European Union, computer programs shall be protected under copyright law as literary works. Like all other copyright-protected works, a computer program shall be protected if it is original in the sense that it is the author's own intellectual creation. No other criteria shall be applied to determine its eligibility for protection. This results in most computer programs being copyright-protected, but the scope of the protection might be limited. Copyright protection of a computer program covers only the expression of the program, not the ideas, facts or principles that underlie the elements of the computer program, including those that underlie its interfaces. The expression of a computer program includes elements such as the literal code, i.e. the source code and the object code, as well as the preparatory design material. Whether the protection of the copyright extends beyond the literal code to look and feel and structure, sequence and organization is uncertain. In various court cases, judges have been struggling with the distinction between "expression" and "idea" in computer programs. To date, however, the legal position remains unsettled. The term look and feel is used in descriptions of products to signify the experience a person has using a product and the main features of its appearance and interfaces. Look and feel applies to different types of products. Regarding computer programs and software design, look and feel is used in respect of graphical user interfaces. It comprises aspects of the program s design, including elements such as colours, shapes, layout and typefaces (the "look"), as well as the behaviour of elements such as buttons, boxes and menus (the "feel"). Look and feel in computer programs serves two general purposes. First, it provides branding, helping to identify a set of products from one company. Second, it increases ease 11 Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs.

18 of use since users will become familiar with how one product functions and can translate the experience to other products with the same look and feel. 18 Apple Computer has tried to assert copyright over their look and feel in reference to their Mac OS operating system. 12 The firm tried, with some success, to block other software developers from creating software which had a similar look and feel. Apple argued that it had a copyright claim on the look and feel of its software, and even went so far as to sue Microsoft and Hewlett Packard, alleging that the Windows operating system was illegally copying look and feel to which Apple had the copyright. Although provoking an intense reaction in the software community, the expected landmark ruling never happened. The issues were instead resolved by a license that Apple granted Microsoft for Windows. The case of Whelan Associates, Inc v. Jaslow Dental Laboratory, 13 dealt with the question whether copyright encompasses a program s source and object code only, or whether copying the structure, sequence or organization of a program also might amount to an infringement. The Court found that Ms. Whelan had spent a tremendous amount of time studying Jaslow s Lab, organizing the modules and subroutines for the Dentalab program and working out the data arrangements. A comparatively small amount of time was spent on coding the Dentalab program. Consequently, the court found that copyright protection of computer programs may extend beyond the program s literal code to their structure, sequence, and organization. Shortly after the ruling, the Court's analysis was criticized by the Second Circuit Court of Appeal, for showing a flawed understanding of a computer program's method of operation. 14 Mainly, the criticism was based on the fact that the Court made the assumption that there was only one idea in a computer s program, whereas in reality, a program consists of a number of ideas, expressed in various subroutines. Even though the Circuit Court concurred with the lower court s conclusion that copyright can be infringed even if no literal code is copied, the Court introduced a three-step test to help solve these types of cases. The three-step test aims to determine the similarity of two computer programs. The process first describes the two programs at various levels of abstraction, then, at each stage, filters out the elements that are not subject to copyright. Finally, it compares the results. Nowadays, most courts try to follow this procedure, even though it can be complex and highly subjective Limitations with regard to the exclusive rights Like all other copyright-protected works, copyright on a computer program grants the right holder an exclusive economic and moral right to the computer program. However, within 12 See Apple Computer Inc. v. Microsoft Corporation, 35 F.3d 1435, 9 th Cir See Whelan Associates, Inc. v. Jaslow Dental Laboratory, Inc. 479 U.S (1987). 14 See Computer Associates International v. Altai, Inc. 982 F.2d 693 (2d Cir. 1992).

19 the European Union, there are certain limitations in respect of these rights, regarding certain uses. 19 The making of a back-up copy by a person who has the right to use a computer program may not be prevented by contract, insofar as it is necessary for that use. This so called right to observation is stated in the directive on computer programs, Article 5. The person that has a right to use a copy of a computer program shall be entitled, without the authorization of the right holder, to observe, study or test the functioning of the program in order to determine the ideas and principles which underlie its elements. This can only be done while performing acts of loading, displaying, running, transmitting or storing and on the condition that he is entitled to do so. Further, the directive on computer programs also explicitly provides for a right to decompile a computer program, a limitation that is much-disputed. Article 6 permits decompilation if a number of conditions are met. First, the decompiler must have a license to use the program to be decompiled. Second, decompilation must be necessary to achieve interoperability with a target program or other programs. The necessity must be proven by the decompiler. And third, the decompilation process must, if possible, be confined to the parts of the target program relevant to interoperability. The purpose of this limitation is primarily to provide an incentive for developers to document and disclose all information that is requested to obtain interoperability with other projects Escrow of source code The use of computer software presupposes that the user can control the functionality of the software and avoid the risk of costly interruptions in the use of the technology. However, to be able to control the functions of the software, access to the software s source code will be needed. Due to the risk of unauthorized use, software developers are often reluctant to reveal the source code to the software end-users. Instead, source code escrow is often used as a business model. Source code escrow protects both the rights of the software end-users and the valuable, proprietary technology of the software developers. Typically, an escrow agreement is of importance when a software developer is retained for a specific project. The client then has a special interest in securing the use of the software he has paid for. Placing source code in escrow is most commonly used if the software is business-critical, costly, or if there is an absolute need to protect against interruptions in order to enable the software to go forward. Escrow of source code originates from the United States and was introduced about 20 years ago. In the past, software escrow was merely the physical storage of the source code in a vault. These days, however, the escrow is a bit more advanced. Typically, a physical copy of the source code of the software is deposited into an account held by a neutral third party, a

20 so called escrow agent. The escrowed technology is stored in a media vault facility. Since the technology may degrade over time, the escrow agent usually offers an environment which protects both the integrity of the technology as well as provides security and protection of the critical intellectual property. 20 The highly valuable, and thus often secret, source code is released by the agent to either party only upon specific terms stated in the escrow agreement, executed between the parties. The escrow agreement should define the deposit materials to be escrowed and the explicit terms upon which the source code can be released. Such terms may be failure to maintain the application, transfer of ownership of the intellectual property right, or the liquidation of the owner of the source code. The arrangement of escrow provides the software end-users the assurance of access to verified source code and associated documentation. Through this arrangement, source code can also be analysed to ensure a high level of confidentiality. Further, in accordance with the agreed frequency, active follow-up of deposits of updates and new releases can be safeguarded. 4 CONTRACTUAL RELATIONS 4.1 Employer/employee Copyright is often created in the course of employment. The employee is assigned to create a computer program, newspaper articles, etc. For this he receives salary and other benefits. Generally in such relations the employer obtains the right to use all results from the work done by the employee, regardless of whether the result is copyrightable or not. In some jurisdictions there are limitations regarding the right of the employer to use the result. Such a limitation could be that the result may only be used within the natural and foreseeable scope of the employer s enterprise. It is possible to regulate all issues regarding the use of an employee s copyrightable work in an employment agreement. Such agreement could be individual and/or collective. 4.2 Work for hire A work that results in something copyrightable, such as a computer program, is often ordered or commissioned. Here, the commissioner or the purchaser gives a specific assignment to a person or a group of persons, often a company, aiming at a specific result. The purchaser also may provide specific documents, experience and resources as a contribution to the result and in order to enhance the work performed by the commissioned

21 21 party. In such relations it is customary that the issues regarding the use of the copyrightable material are regulated in a rather comprehensive way. Such regulations could contain the context in which the commissioner, the purchaser, may use the work, exclusivity, the right to amend the result, etc. 4.3 Licensor/licensee Instead of transferring rights, a licence is often used as a tool for regulating the authorized use of a copyright-protected work. Such licensees can be extremely elaborate or very simple. An example of a very simple license is when the right to use a standard computer program is obtained. The license, which typically is unlimited in time, gives the licensee the right to use the computer program on a specific computer, in a network, etc. The license does not permit any other commercial use of the computer program or its being made available in any form or fashion. 4.4 Some general considerations regarding transfer of rights One initial issue is the subject matter of the transfer, i.e. finding out what the technology is and what part of it is needed for the purchaser. A second issue is to regulate the scope of the rights to be obtained. Here you identify territorial boundaries as well as restrictions in time and technology. Not least important is the fee for using the work in question. Coupled with that is how the fee will be paid. The purchaser will want to be sure that he really receives all the rights expressed by the vendor/licensor. This could include warranties as to the originality and that the vendor really has all necessary rights as well as undertakings regarding future releases and new versions. It is clear that agreements in this field can be complicated. 5 FILE SHARING Internet technology is under rapid development. Over the past few years we can see that the file sharing technology dramatically has changed the way copyright-protected materials, including digital music, videos, software and images can be exploited and distributed. File sharing allows people worldwide to share, i.e. to upload and download, files and data over the Internet. It allows perfect copies and easy distribution. At low cost and on a large scale,