Software Copyrights in Europe

Under the current directive 2009/24/EU on the legal protection of computer programs (Software Directive), member states shall protect computer programs by copyrights as literary works within the meaning of the Berne Convention. Copyright protection applies to expression of the program in any form (including both source code and object code), but does not extend to ideas and principles underlying the program or its interfaces.¹⁰⁷ The distinction illustrates the traditional idea/expression dichotomy of

102 Merges & Duffy 2013 at 57. Millard at 429.

103 Act on Ensuring Evidence in Cases concerning Intellectual Property Rights (2000/344).

104 Articles 10 and 42-46 of the TRIPS Agreement. Levin at 76. Lemley, Menell, et. al. at 459-460. 1 Raymond Nimmer §5:35 at 5-35 – 5-54. Millard at 429.

105 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society. 1 Raymond Nimmer §5:36 at 5-54 – 5-59. Harenko, Niiranen, et. al. at 220.

106 Article 4 of the WIPO Copyright Treaty. 1 Raymond Nimmer §5:12 at 5-22. Millard at 430.

107 Article 1(2) of the Software Directive.

copyright.¹⁰⁸ CJEU has clarified that functionality and programming language of computer programs or format of the data files are not within the copyright-eligible subject matter.¹⁰⁹

The Software Directive requires for subsistence of copyright protection only that the computer program is original, i.e. the author's own intellectual creation.¹¹⁰ The author, in turn, means the natural person or a group of natural persons who created the program (read: software developers), or the legal person designated as right holder by national law.¹¹¹ The exclusive rights of a copyright holder of a computer program include (1) reproduction (copying); (2) adaptation (modification); and (3) distribution of the computer program to the public.¹¹² However, authorized licensees are permitted to reproduce and modify the program (including correct errors) if such acts are necessary for using the program for its intended purpose. While said acts may be prohibited under a software license agreement, users can always take a back-up copy, if it is necessary for using the program.¹¹³ Lawful users may also observe, study or test the functioning of the program in order to determine the ideas and principles underlying its elements. The said acts must, however, be carried out in connection with ordinary loading, displaying running, transmitting or storing of the program.¹¹⁴ Decompilation of the computer program, i.e. reverse engineering the machine readable object code to human readable form, is allowed under certain conditions and only to achieve interoperability of the program with other computer programs.¹¹⁵

Finland has implemented the Software Directive in the Copyright Act of Finland.

Computer programs are protected by copyright as literary works under the Copyright

108 Mylly, U-M 2005 at 237.

109 SAS Institute Inc. v. World Programming Ltd. (C-406/10) 2012 E.C.R. 0000.

110 Article 1 of the Software Directive. Bainbridge at 82-85. Mylly, U-M 2005 at 237. Millard at 242.

111 Article 2 of the Software Directive.

112 Article 4 of the Software Directive. UsedSoft GmbH v. Oracle International Corp. (C-128/11) 2012 E.C.R. 0000 (UsedSoft v. Oracle).

113 Articles 5(1) and 5(2) of the Software Directive.

114 Articles 5(3) of the Software Directive. Mylly, U-M 2005 at 239-243.

115 Article 6 of the Software Directive. See also Recitals 11 of the Software Directive.

Act.¹¹⁶ If the threshold for copyright protection is met, i.e. the work is an independent and original work of the author, copyright protects the literal expression of the computer program, but does not extend to ideas or technical solutions embodied by the program.¹¹⁷ Despite that a copy of a work is created when the work is embodied on a fixed medium, the Copyright Act of Finland – unlike the US Copyright Act – does not require that the work is fixed in any tangible media in order for the copyright to subsist.

Copyright does neither have to be registered.¹¹⁸ Copyright holder of a computer program has the exclusive rights to copy, modify and distribute the program.¹¹⁹ Further, copyright is in force until 70 years has lapsed from the death of the (last) author.¹²⁰ However, due to rapid product development cycle and time to market, computer programs often become obsolete in a relatively short period of time. Thus, the statutory copyright term appears excessively long for computer programs.¹²¹

There is one particular feature in the Finnish Copyright Act originating from the Berne Convention, which is absent in the US Copyright Act: Under the former, authors of copyrighted works hold also moral rights in the work in addition to economic rights.

Moral rights mean in a nutshell: (1) the right to be named as author of the work; and (2) the prohibition to alter the work or make it available to public in a manner, which violates the author's literary or artistic reputation or individuality. Moral rights are in force as long as the economic rights in the copyrighted work. Moral rights cannot be transferred, but they may be waived to some extent.¹²² The concept of moral rights should be taken into account in contract drafting, specifically in clauses regarding assignment of copyrighted works, which seems hard for US lawyers to understand.

116 §1.2 of the Copyright Act of Finland.

117 Harenko, Niiranen, et. al. at 13, 15-16, 219. Välimäki 2015 at 15-26. Välimäki 2006 at 17-27. Oesch, Pihlajamaa, et. al. at 87-88.

118 Harenko, Niiranen, et. al. at 30-31. Välimäki 2015 at 16.

119 §2 of the Copyright Act of Finland. KKO 1999:115. Harenko, Niiranen, et. al. at 20-21, 71. Välimäki 2015 at 15. Välimäki 2006 at 35-45.

120 §43 of the Copyright Act of Finland.

121 Oesch, Pihlajamaa, et. al. at 88. Välimäki 2015 at 13-15. See also Komiteanmietintö 1987:8 at 180-181.

122 §3 of the Copyright Act of Finland. Harenko, Niiranen, et. al. at 55-56. Haarmann at 86-88. See also Komiteanmietintö 1987:8 at 178-180.

Moral rights in computer programs are not, however, the subject of litigation: There appears to be no established practice in Finland to name individual authors in the copyright notices in addition to corporations, to whom the economic rights of copyright in computer programs are directly transferred by operation of law in employment context.¹²³ There is neither any case law in Finland on breach of moral rights in computer programs. Some scholars have expressly noted in line with the industry practice that failure to mention author of the program does not violate the established good practices of the software industry. Thus, it does not constitute breach of the author's moral rights – unless the parties had expressly agreed that the author should be credited. The outcome could, however, be different in FOSS context where one corner stone of FOSS licensing is to give and be given credit where the credit is due.¹²⁴

As mandated by the Software Directive, the Copyright Act of Finland includes a few specific provisions concerning only computer programs. Some provisions were added into the Copyright Act in order to balance the rights of copyright holders and users.¹²⁵ A legal acquirer of a computer program is entitled, unless otherwise agreed, to copy and modify (including correcting errors) the program as necessary for use of the program for its intended purpose.¹²⁶ This provision is not mandatory law and copyright holder often retains the said rights in the respective proprietary license.¹²⁷ As a curiosity, the rights to copy and modify the program are by definition always granted to FOSS users under all FOSS licenses.

Despite the foregoing, copyright holders are not allowed to limit licensees' right under the Copyright Act to take a back-up copy of the program, if it is necessary for use of the program. Right holders may not restrict either the licensees' right to observe, study and test functioning of the program to determine the ideas and principles underlying its elements, provided however, that the said acts are committed in ordinary use of the

123 §40 b of the Copyright Act of Finland.

124 Harenko, Niiranen, et. al. at 49. On moral rights in the context of software and FOSS in particular, see Välimäki 2006 at 33-35, 128 and 191. Välimäki 2009 at 32-33. See also Millard at 490.

125 Harenko, Niiranen, et. al. at 225.

126 §25j.1 of the Copyright Act of Finland.

127 Harenko, Niiranen, et. al. at 227.

program.¹²⁸ Those rights are based on mandatory provisions of law and may not be limited by contractual provisions.¹²⁹ On the other hand, the right to take a few copies for private use of the copyrighted work does not extend to computer programs.¹³⁰ Finally, the general exception of the Copyright Act of Finland, under which a user is not restricted from producing a temporary copy of the program incidentally as part of the technological process of using the program lawfully, does not apply to computer programs.¹³¹

The Copyright Act of Finland permits a lawful user of the program to reproduce the code and translate its form to obtain information for the purpose of achieving interoperability of independently created program with other programs, if the said information has not otherwise been readily available. Exercise of those rights is limited only to the extent required for achieving the interoperability, and using the information for the purpose of developing an infringing computer program is specifically prohibited.¹³² Further, if the copyright holder provides the user with interface information, reverse engineering may be prohibited in the respective proprietary license.

The outcome in both scenarios is, though, that the user will either receive required interface information directly from the copyright holder, or alternatively, by decompiling the program him or herself. The rationale is to prevent loss of investments used in developing new, independent (yet non-infringing) computer programs, which could turn out futile, if the programs would not be compatible with other programs.¹³³ Another mechanism to balance exclusive rights of copyright holders is the exhaustion doctrine codified in the Copyright Act. However, exhaustion of copyrights based on first sale of the copyrighted work within the European Economic Area (EEA) does not

128 §25j.2 and §25j.3 of the Copyright Act of Finland.

129 Harenko, Niiranen, et. al. at 228 and 230.

130 §12.4 of the Copyright Act of Finland. See Haarmann at 99-100 on exhaustion of copyrights in copies of computer programs.

131 §11a of the Copyright Act of Finland.

132 §25 k of the Copyright Act of Finland. See also the amendment in §3.3(7) of the Patent Act of Finland, under which the exclusive right based on patent does not cover the acts under Articles 5 and 6 of the Software Directive. HE 45/2015 at 50-51 and 94.

133 Harenko, Niiranen, et. al. at 232-238.

apply to making a copy of the computer program available for public by lending.¹³⁴ Exhaustion of rights in computer programs will be discussed in more detail in Section 4 (FOSS and Patent Exhaustion).

As already shortly referred above in Section 2.1.1 (Emergence of Copyright Protection for Computer Programs), if a computer program and a work directly associated with it have been created in the scope of duties within employment, the copyright in the said program and the related work will automatically transfer from the employee to the employer by operation of law upon creation of the work.¹³⁵ The objective is to ease functioning of software industry: software products are often developed by many software developers as part of industrial processes where it may be hard to keep track on each individual developer's contributions to the program. Therefore, the development process may be different compared to production of other copyrighted works, considering also that there is no US law type of work for hire – concept in Finland.¹³⁶ Without §40b, transfer of copyrights in computer programs should be separately agreed between each employed software developer and employer. This could burden the chain of copyright contracting between employees and employers, and consequently also between employers and their business partners in various transactions. While the provision does not expressly state whether the assignment of copyright is exclusive and assigned rights are transferable by the employer, in light of the wording in the first software directive 91/250/EEC, the copyrights subject to transfer have been argued to cover all economic rights in the program, including also right to freely modify and reassign the rights, thus covering also the exclusive rights, which under §28 of the Copyright Act would be reserved to the author in the absence of an explicit grant to that effect in the assignment instrument. However, this interpretation is not confirmed in the case law. Further, it is important to note that the transferred rights include, not only rights in the software code, but also rights in work directly associated with it, such as

134 §19 of the Copyright Act of Finland. See also Välimäki 2009 at 43-46.

135 §40 b of the Copyright Act of Finland. Levin at 131-132.

136 1 Raymond Nimmer §5:23 at 5-33 – 5-34.

documentation of the computer program. Therefore, the scope of transferred rights by operation of law under §40b of the Copyright Act is fairly broad.¹³⁷

When it comes to remedies, willful or grossly negligent copyright infringement may be punished by fines as a copyright violation under the Copyright Act. If the copyright infringement was committed for profit and causing considerable detriment to the copyright holder, the act may be punished by fines or imprisonment for up to two years as a copyright offence under the Penal Code. Taking a few private copies of the computer program does not, however, constitute criminal liability for copyright violation, provided that the copy of the program had already been published or sold with the author's consent. The act may still result in civil liability for compensating for the unlawful act.¹³⁸ Court may prohibit the infringer to repeat the alleged copyright infringement. Infringer is also liable for reasonable compensation to the copyright holder (whether or not the act was negligent). In case of willful or negligent copyright infringement, or in case of a copyright offence under the Penal Code, the copyright infringer may, in addition to the reasonable compensation, be also liable for paying the right holder damages for any other loss.¹³⁹ Liability for any other loss may cover also indirect losses, including, for example, lost revenue. Breach of copyright license may also constitute breach of contract.¹⁴⁰ In civil matters the correct forum is the market court in Helsinki,¹⁴¹ where civil proceedings are carried out in accordance with the Act on Proceedings at the Market Court.¹⁴² In criminal proceedings the forum is a district court.¹⁴³

137 Harenko, Niiranen, et. al. at 342-344.

138 §56a of the Copyright Act of Finland. 49:1 of the Penal Code of Finland (1889/39; as amended).

139 §§56g and 57 of the Copyright Act of Finland.

140 Harenko, Niiranen, et. al. at 488 and 494.

141 §1 Act on the Market Court (99/2013).

142 The Act on Proceedings at the Market Court (100/2013).

143 The Act on Proceedings in Criminal Matters (689/1997).