Do you own your software?

In the 1970s and 1980s, there was a lot of debate on whether computer software should be protected by the patent system, the copyright system, or a sui generis system.?

Following these debates, it was decided that computer programs should be protected by copyright, whilst apparatus using computer software or software-related inventions should be protected by patent.

World Intellectual Property Organisation?(WIPO) which?is the global forum agency of the?United Nations, with 193 member states,?for?intellectual property?(IP) services, policy, information and cooperation, states there is clear protection of software copyright. And it is?formality-free,?which means that protection does not depend on compliance with any formalities such as registration or deposit of copies.

PROTECTION OF SOFTWARE UNDER THE WIPO COPYRIGHT TREATY?(WCT)

Article 4 of the WCT states that 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. In an agreed statement it also clarifies that the scope of protection for computer programs under Article 4 of this Treaty?is consistent with the?Berne Convention.

Source code is the main asset of software engineers and digital firms; it's what they do for a living and what they are paid for. But, after the code is developed,?who owns it??

Copyright ownership determines the ability of the developers to use the code created on multiple projects which will yield the same result.??Sometimes it has taken years for the developer to create it, who relies on it to earn his company dividends?from future endeavours.?

SO,?WHO?IS?THE?OWNER??

The most important?form of intellectual property law applicable to software is copyright law.

Both source code and object code can be protected under copyright law. Generally speaking, the authors (or developers) of a piece of software own the copyright to the code from the moment it becomes fixed in a tangible form.?No filings, registrations, or notices are required.

In Bahrain, copyright is mainly recognised and protected under the Copyright Law No. 22 of 2006 as amended by Law No. 5 of 2014 (?Copyright Law?). In addition, Bahrain is a party to the Berne Convention which sets out basic principles including "national treatment" and the "automatic" protection of copyright works.

Under the Copyright, Designs and Patents Act 1988 (?UK Law?), copyright is a property right that arises automatically on the creation of original work in a tangible form, so when it is written copyright protects it automatically attributing it to the author.?

Although the law clearly states that the creator/author of the software is the legal owner of it, however, there are few circumstances that might divest the ownership elsewhere. For example, if the software was created in due course of employment where the employee was hired to create it and is being remunerated for it. Or, if an independent contractor is hired to develop the software and he assigns the copyright ownership to the company who has hired him.

For?the?purposes?of?copyright?law,?the software?is?frequently?considered?a?literary?work.?

To prove that a developer holds copyright, he must show that copyright exists in the work and that he owns it on the balance of probabilities.

However, what happens in the case where no mention of the ownership is present in the contract and it is ambiguous who owns it?

DEFAULT POSITION – COPYRIGHT?

In today's commercial software development contracts, the contracting party who will own the copyright is frequently specified explicitly. The default position of ownership is for the author or their employer, as the case may be, to be the first owner of copyright unless otherwise declared in writing.?

THE AUTHOR?

The person or organization who generates a work is referred to as the author. The author of a computer-generated literary or creative work is the person who makes all the arrangements necessary for the work's development or develops himself.

Under the copyright law in main jurisdictions around the world,?the creator of the original expression in a work is its author. The author is also the owner of copyright unless there is a written agreement by which the author assigns the copyright to another person or entity.

ASSIGNMENT AND LICENSE?

A copyright assignment is when the copyright holder transfers ownership of the copyright to another person or organization.

A license is?the transfer of interest in copyright. In a license, the right to use a copyright is given to another party with some restrictions on such usage.

COPYRIGHT'S FIRST OWNER?

The author or creator of a written or artistic work is the first proprietor of any copyright in that work.?

If the task is done by an employee in the course of their job, this rule does not apply.

In this instance, the employer is the first owner, except if there exists any agreement between the employer and the employee to the contrary.?

In cases of contested ownership, courts determine whether the employee was employed under a contract of service (employment contract) or a contract for service (freelance agreement/independent contractor).

COMMISSIONED WORK – WHO OWNS IT?

Commissioned work is defined as work created under a service contract in which the contractor owns the work. If a work is created as a?“Work for Hire,”?the employer is considered the legal author, and therefore owns the copyright in the work.?

“Work made for hire” is a doctrine created by U.S. Copyright Law. Generally, the person who creates a work is considered its “author” and the automatic owner of copyright in that work. However, under the work made for hire doctrine, your employer or the company that has commissioned your work, not you, is considered the author and automatic copyright owner of your work.?

This is a crucial question for freelancers to answer because, as independent contractors, they are regarded the owners of copyright in the software, unless there is an implicit/ explicit provision that changes this.

Who is the Owner of Commissioned Work??

The fact that a contractor has been hired to develop software does not?always?imply that he owns it. Copyright may be owned by the entity contracting the development.

When a customer has hired an independent contractor to develop software specifically for him, but the contract fails to state unequivocally who owns it then the court will look at the circumstances instead of blindly ascertaining that the ownership belonged to the author – the contractor in this case. The court will extrapolate from the circumstances and these are a few of the things which will be looked at and they will work heavily in favour of the customer:

·??????The software was created from scratch solely for the customer for his unique project.

·??????The contractor was paid an ample amount for its creation.

·??????It was implied in communication that the ownership shall vest with the customer.

·??????The contractor was being directed by the customer on how and what specifics to include in the software.

Therefore, these implicit conditions may displace the default rule but things do tend to get complicated in such a scenario nonetheless.?

NO WRITTEN CONTRACT OR NO EXPRESS TERMS – IMPLIED LICENCES

Implied Licences are those that exist because there is no written contract or express terms.?

When a freelancer is hired to produce software for a specific purpose and is paid for it, the law will almost always suggest a term allowing the paying party to use the program as part of the engagement.

The breadth of the license (or right to use the code) will be determined by the arrangement's "business efficacy" - that is, its commercial objective.?

To put it another way, the customer will be able to use the software for the purposes agreed upon between the parties at the time the engagement was signed - not afterwards.

The amount the customer pays the freelancer will play a role — for example, if the developer agreed to do the work for a cheaper fee, the license will be narrower (and the usage will be more limited) than if the customer paid the full commercial rate.?

The license may be limited to that purpose if the work is supplied knowing that it will be used for a certain purpose.

In?Clearsprings Management Ltd v Businesslinx Ltd (2006)?it was held?where a self-employed person or freelance worker has been engaged to write a computer program and there is no explicit agreement as to the ownership of the copyright, the copyright will vest with the original software designer and not the company. The fact that a client has paid for the software is not enough to give them authorship of the copyright.?

Well, the rights a company will have are very limited. The company paying for the computer program will of course be able to use the software, even though they do?not own?the copyright in it.

This case addresses the question of what happens where there is no agreement that exists as to who shall own the copyright of a software programme. It was held that the contractor is the legal owner of all copyright existing in the software that he created in the absence of any explicit arrangement to the contrary.

CONCLUSION

The owner of copyright has the exclusive right to copy their work, adapt it and issue copies of it to the public. So, if your developer owns the copyright in your software, you could be infringing his/her copyright by doing any of these acts. This could lead to a legal claim for breach of copyright, which can harm your business both financially and reputationally, as well as causing disruption in your business.?

If you are looking for investment, also bear in mind that your investor will want you to own all the copyright in your software (partly to avoid a developer coming out of the blue with a legal claim as mentioned above).

In a nutshell, it is always advisable to make clear in the contract who owns the software and any rights attached to it must be stated explicitly. If you leave it to chance then you may incur unnecessary losses and a lot of frustration while trying to prove otherwise and a long haul battle dragged in court might ensue.

It does not take much to get proper legal counsel to draft a contract so your company and project are well-protected.?

Software ownership is not a difficult area, but there are a number of traps for the unwary.?If you have questions about your software copyright, don’t hesitate to contact us.

This article is only intended as an overview and should not replace seeking appropriate legal advice relating to the ownership of software.?

(Bushra Asif works as a Legal Manager at The Legal Chamber of Sadeq Alderazi)