Legal issues associated with the resale of original copies of computer programmes are not very frequently discussed in practice in this country. By contrast, in Germany, for example, cases associated with this issue have already been repeatedly resolved by the courts (including issues connected with so-called OEM software). In this context, it is interesting that in the Czech Republic, criminal complaints are being intensively filed by certain large software companies against persons who offer “used software”. In our opinion, unjustifiably.

For an assessment of this issue from the perspective of Czech law, it is necessary to address the institute of the so-called exhaustion of rights to a reproduction of a computer programme (abroad this institute is referred to as the so-called first sale doctrine or exhaustion doctrine), which we addressed in more detail in a previous article, in connection with electronic books. Just as with electronic books, in the case of software it will depend on the method of distribution of its reproductions (copies). This article is devoted to cases where a computer programme is distributed on a tangible data carrier (pre-installed on hardware, stored on CD-ROM) and not to cases where a computer programme is distributed via the internet.

In this area two basic questions may arise. Is the owner of an original carrier (with software) entitled to further sell or donate that carrier? Is the purchaser (or donee) entitled to use (install and operate) the software stored on that carrier? In our opinion, where the statutory requirements are satisfied, the answer to both these questions is affirmative.

Possibility of selling a copy of software

The provision of Section 14(1) of the Copyright Act (autorský zákon) defines what is meant by distribution of the original or a reproduction of a work (this also applies to computer programmes): “Distribution of the original or a reproduction of a work means making the work available in tangible form by sale or other transfer of ownership of the original or of a reproduction of the work, including offering them for that purpose.” Distribution thus only occurs in cases where there is a transfer of ownership, that is, in cases where a copy of a work (computer programme) is sold (or, for example, donated, exchanged) together with a tangible carrier. In cases where a computer programme is distributed without direct connection to a carrier (for example, via the internet), this does not constitute distribution in the above sense, but rather communication of the work to the public pursuant to the provision of Section 18 of the Copyright Act.

From our perspective, the most important provision is Section 14(2) of the Copyright Act, which directly follows on from the above-mentioned Section 14(1) of the Copyright Act and provides: “By the first sale or other first transfer of ownership of the original or of a reproduction of a work in tangible form, which was effected by the author or with his consent in the territory of a Member State of the European Communities or another contracting party to the Agreement on the European Economic Area, the author’s right to distribution in relation to such original or reproduction of the work is exhausted for the territory of the European Communities and other contracting parties to the Agreement on the European Economic Area; the right to rental of the work and the right to lending of the work remain unaffected.” It follows from this provision that if, with the consent of the rights holder (software company), there is a first sale of a reproduction of a work on a tangible carrier, the rights holder is no longer entitled to regulate further distribution of such reproduction.

In the area of computer programmes, this legislation follows on from the provision of Article 4(2) of the Council Directive on the legal protection of computer programmes (91/250/EEC), which provides: “The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rental of the program or a copy thereof.” In our opinion, therefore, for all reproductions which are distributed together with their tangible carrier (on which they are stored), there should be exhaustion of the right to distribution of the work pursuant to the provision of Section 14(2) of the Copyright Act. This means that other persons may further offer and sell these distributed original reproductions, which was also confirmed in the judgment of the European Court of Justice in Levob Verzekeringen BV and OV Bank NV v Staatssecretaris van Financiën (in particular paragraphs 43-45 of that judgment).

Rights of the acquirer of a copy

Unlike most copyright works, copyright law does not permit so-called free use of computer programmes – that is, making a reproduction for the personal needs of a natural person not carrying on business. Reproduction of a computer programme is also considered to include making a reproduction if it is necessary for loading and storing the computer programme in the memory of a computer, as well as for its display, operation and transmission (Section 66(2) of the Copyright Act). Use of a computer programme, even for the personal needs of a natural person, is therefore only possible on the basis of a contract (licence or sub-licence agreement) or in cases expressly provided by law. In the case of reproductions in respect of which the right to distribution has been exhausted in the above sense, only use of the computer programme on the basis of law comes into consideration (see below). If ownership of a carrier with a reproduction of a computer programme is lawfully transferred to another person, that person is no longer in a contractual relationship with the rights holder (software company) and therefore the conditions of the licence agreement (the relationship between the first acquirer of the reproduction and the rights holder) do not apply to them either, including substantive restrictions set out in OEM licence conditions and the like. As mentioned, this person (the second and subsequent acquirers) is entitled to use the computer programme directly on the basis of law, specifically on the basis of the provision of Section 66(1) of the Copyright Act.

The provision of Section 66(1) of the Copyright Act provides that “the author’s right is not infringed by a lawful user of a reproduction of a computer programme if he reproduces, translates, processes, adapts or otherwise alters the computer programme, where this is necessary for the use of a lawfully acquired reproduction of the computer programme, if he does so during loading and operation of the computer programme…” This provision thus gives the lawful user of a reproduction of a computer programme (including a person to whom ownership of the reproduction is duly transferred) the possibility of using that computer programme, including the possibility of making a permanent copy from that reproduction (installation) and making temporary copies in the computer’s operating memory (see also Section 66(6) of the Copyright Act).

However, this situation is to a certain extent absurd. As already mentioned, a subsequent acquirer of a reproduction of a computer programme is no longer bound by contractual arrangements vis-à-vis the rights holder in the computer programme. His legal position could be more advantageous than the legal position of the first acquirer of the reproduction of the computer programme was. This situation should be corrected to a certain extent legislatively by the substantive aspect (the so-called three-step test) pursuant to the provision of Section 29(1) of the Copyright Act. Nevertheless, it is clear that this substantive corrective is relatively vague, whilst the authorisation of the second and possibly subsequent acquirer to use the computer programme is expressly enshrined.

In our opinion, the legislative situation in this area is relatively unambiguous (both at national and Union level). A different interpretation would necessarily mean an absurd situation where it would not be possible to resell any devices which contain software, or to resell computer games. It is therefore only possible to be surprised at the current practices of certain large software companies which file criminal complaints against entities which engage in the resale of original carriers and attempt to intimidate these persons in other ways as well. Although these are economically powerful companies, they apparently avoid the standard resolution of a potential dispute (that is, resolution by private law means) and transfer the costs associated with the enforcement of their interests to the state.

This text was translated from Czech to English using an AI translator.