Computer programmes have become a common part of our everyday lives. In contrast to their mass use, however, there is sometimes relatively little public awareness of the legal regulation relating to their distribution or use. Software companies very often use the original Anglo-American “licences” when distributing their products, or their Czech, often unprofessional translations, the application of which in the environment of a different legal culture may be very problematic (by the term “software” we understand here a computer programme and its documentation).

The interpretation in this article is given from the perspective of Czech law and deals with legal relations to which the provisions of Act No. 121/2000 Coll., on Copyright, Rights Related to Copyright and on Amendment of Certain Acts (the Copyright Act) (autorský zákon) can be applied. An obligatory legal relationship (contract) is governed by Czech law particularly in those cases where it is an obligatory legal relationship between two (or more) domestic entities or in a situation where the contracting parties have chosen the application of Czech law.

A computer programme is a copyright work protected by the Copyright Act if it fulfils the condition set out in Section 2(2) of the Copyright Act: “A computer programme shall also be considered a work if it is original in the sense that it is the author’s own intellectual creation.” Where the above condition of originality is fulfilled (in practice almost always), a computer programme is protected as a literary work - see Section 65(1) of the Copyright Act: “A computer programme, regardless of the form of its expression, including preparatory design materials, shall be protected as a literary work.” Conversely, “ideas and principles which underlie any element of a computer programme, including those which underlie its interconnection with another programme” are not protected.

Copyright and Exercise of Economic Rights Personal and economic rights to a computer programme belong to the author, i.e. the natural person who created the computer programme - the programmer. Of course, joint authorship of software is not excluded either, if the conditions of Section 8 of the Copyright Act are fulfilled; in such case the copyright belongs “to all joint authors jointly and severally”. From the above it therefore follows that the author of a computer programme can never be a legal person and for this reason it also cannot have personal rights to a computer programme (personal copyright - see Sections 10 and 11 of the Copyright Act). On the other hand, however, a legal person may of course be an exerciser of economic rights (see below), particularly in the case where the software is a so-called employee work. An employee work is considered pursuant to Section 58(1) of the Copyright Act to be software which “the author created in fulfilment of his obligations arising from an employment or service relationship with the employer or from an employment relationship between a cooperative and its member…” and furthermore “computer programmes and databases…shall be considered employee works even if they were created on commission; the commissioning party shall in such case be considered the employer”. That it is an employee work is important particularly with regard to the fact that “…the employer exercises in its own name and on its own account the author’s economic rights to the work…” (Section 58(1) of the Copyright Act). In this case it is therefore the employer (or commissioning party) who is entitled to grant a licence to the software in full scope.

The parties concerned may deviate from this regulation of employee works, for example in such a manner that the employment contract stipulates that the copyright to the software continues to be exercised by the author (joint authors) and by means of a licence agreement grants the employer authorisation to exercise the right to use the software (licence). This agreement is more advantageous for the employee particularly in that after termination of the licence agreement, he exercises the economic rights to the software again in unlimited scope. In this connection it is appropriate to mention that the employer may, in the case of an employee work, assign the exercise of economic rights to a third party with the author’s consent (Section 58(1)). The granting of a licence must always be distinguished from the above-mentioned situation where the employer or another person becomes an exerciser of economic rights by operation of law.

Authorisation to Exercise the Right to Use the Work (Licence) Here we already encounter the right of the author or exerciser of economic rights - to grant authorisation to exercise the right to use the software (licence) to third parties by means of a licence agreement pursuant to Section 46 et seq. of the Copyright Act. In this connection it is appropriate to recall that for the granting of a licence to software, the regulation of the licence agreement in the Commercial Code in Section 508 et seq. cannot be used, since this relates only to objects of so-called industrial intellectual property. For the creation of authorisation to exercise the right to use software (licence), it is therefore necessary that a valid conclusion of a contract takes place as a bilateral (or multilateral) legal act. In practice this prerequisite necessary for lawful use of software often remains unfulfilled, particularly with mass-distributed software, whether the software is offered in the form of a boxed product or distributed via the internet. Consent to the use of software cannot be granted in any other manner than by means of a licence agreement - see Article 12(1) of the Copyright Act. Unlike some other works (e.g. audiovisual, verbal), use pursuant to the Copyright Act is also considered to be the use of a computer programme for personal needs (Section 30(1) of the Copyright Act). Therefore, for example, a licence cannot be granted by a unilateral expression of will whereby, for example, an author would offer his own software to an indefinite circle of visitors to his website. Likewise, under Czech law one cannot renounce copyright by a unilateral (or other) expression of will (cf. for example the issue of so-called free software). (Part of the theory takes the view that, given the problematic application of the Copyright Act in practice in the area of so-called freeware or free software, it is possible for the granting of a licence to occur also by two unilateral legal acts. We do not share this view due to its conflict with the statutory text, and this conflict cannot in our opinion be removed by any method of interpretation of a legal norm. We further do not share the stated view having regard to the necessary requirement of legal certainty for individual entities in relation to their rights and obligations.)

For the valid conclusion of a contract it is necessary to fulfil the requirements laid down by the Civil Code for the process of concluding contracts. It is therefore essential that one party makes an offer (an addressed proposal to conclude a contract) and the other party accepts this offer in full, with the proviso that this acceptance by the other party must be delivered back to the first party - see the provision of Section 43c(2) of the Civil Code: “Timely acceptance of a proposal becomes effective at the moment when the expression of agreement with the content of the proposal reaches the proposer.” In the mentioned case of distribution of software via the author’s website, the proposal to conclude a licence agreement is not the author’s own statement that anyone may use his software (lack of addressability of such a proposal), but rather the proposal of the contract is only an act of the potential user delivered to the author, in which he expresses interest in using the software. The contract is concluded at the moment when the author’s consent to this use reaches the proposer. The only exception to the above is the institute of a public proposal to conclude a contract pursuant to Section 276 et seq. of the Commercial Code, see the provision of Section 280 of the Commercial Code: “If the public proposal expressly so provides, the contract is concluded with all persons who accepted the public proposal within the period specified therein.” This variant is relevant only for businesspersons on condition that the conclusion of the licence agreement relates to their business activity. In this connection it is appropriate to mention that the law of the party concluding the contract must always be applied to the process of concluding a contract. And therefore the statutory prerequisites of Czech law for concluding contracts must be observed from the perspective of domestic persons even in the case where the subsequently concluded licence agreement is governed by another legal order.

Opinions of some authors also appear who, upon fulfilment of certain prerequisites, derive lawful use of software from the very wording of Section 66 of the Copyright Act (i.e. without concluding a licence agreement). From the phrase “authorised user” they deduce an analogy to authorised possession. This view, given the completely different purpose of this statutory provision and the completely different character of copyright, we consider very debatable.

A certain deviation from the contractual perspective is also represented by the regulation of so-called school works pursuant to Section 35(3) of the Copyright Act, i.e. software created “by a pupil or student in fulfilment of school or study obligations arising from his legal relationship to a school or educational establishment”. Since “the school or educational establishment has under ordinary conditions the right to conclude a licence agreement on the use of a school work” (Section 60(1) of the Copyright Act), which is a certain form of contracting obligation on the part of the student.

The creation of a licence must in no case be confused with the transfer of ownership to the tangible data carrier on which the software is recorded. Ownership of the tangible data carrier is independent of the exercise of the right to use the software. If a certain person is, for example, the owner of a CD-ROM on which a computer programme is stored, this does not of course mean that this person is also authorised to use the computer programme. Likewise, software installed on another person’s computer may be lawfully used.

The licence agreement must be concluded in written form only in the case where an exclusive licence is granted to the acquirer, see Section 46(4) of the Copyright Act: “The agreement requires written form if the licence is granted as exclusive.” “In the case of an exclusive licence, the author must not grant a licence to a third party and is obliged, unless otherwise agreed, to refrain himself from exercising the right to use the work in the manner for which he granted the licence” (Section 47(2) of the Copyright Act). The use of an exclusive licence does not logically come much into consideration in the case of mass-distributed software; on the contrary, however, it may be very practical in cases of creating software “to measure”. A suitable example may be a situation where a businessperson who orders certain software and pays all costs associated with its development wants to use this software exclusively for his needs and it is therefore not in his interest for the person who created the software to distribute it further, for example to his direct competitors.

By means of a licence agreement the author (exerciser of economic rights) grants the acquirer “authorisation to exercise the right to use the work (licence) for individual methods or for all methods of use, in limited or unlimited scope…” (Section 46(1) of the Copyright Act). The scope and method of use of software is the most crucial part of the entire agreement, therefore appropriate attention should be paid to it by the parties to the contract. Here the acquirer’s rights regarding the possibility of copying the software, the number of computers on which the software may be installed, the duration of the licence, the issue of making source codes accessible, etc. should be regulated. In the case of mass-distributed software, the scope and method of use of software is as a rule determined by the business policy of the businessperson (provider). Individual methods of use are listed by way of example in Section 12(4) of the Copyright Act. The methods and scope of use should always be expressly determined with regard to the legal certainty of the parties to the contract. If this does not happen, a presumption applies: “that the licence was granted for such methods of use and to such scope as is necessary to achieve the purpose of the contract” (Section 50(2) of the Copyright Act). Moreover, this presumption is further elaborated in Section 50(3) of the Copyright Act, which states inter alia that “unless the contract provides otherwise or does not follow from its purpose, it is presumed that the territorial scope of the licence is limited to the territory of the Czech Republic, the temporal scope of the licence is limited to the period customary for the given type of work and method of use, but not for a period longer than one year from the granting of the licence…”

In connection with the scope and methods of use of software, it is necessary to recall also the special regulation for computer programmes in Section 66(1) of the Copyright Act, which lists examples of the method of use of software by the authorised user which do not constitute interference with copyright. This regulation in favour of the authorised user is mandatory (except for letter a)) and in the case where the parties regulate these relations in the licence agreement differently from the statutory provisions, this part of the contract is invalid. Among these rights of the authorised user arising directly from the Act we find inter alia also the possibility to make “a back-up copy of the computer programme if this is necessary for its use”. The making of such a copy of a computer programme must, however, be distinguished from the making of a copy for personal needs of other works pursuant to the provision of Section 30(1)(a) of the Copyright Act, which does not apply to computer programmes.

The legal regulation is based on the principle of payment for the licence agreement; this principle does not, however, apply without exception, since the parties may expressly agree that the licence is granted to the acquirer gratuitously (Section 49(1) and 49(2) of the Copyright Act). The amount of remuneration may also be agreed depending on the revenues from the exploitation of the licence. In relation to the author’s remuneration, the provision of Section 49(6) of the Copyright Act cannot be omitted: “If the remuneration is not determined depending on the revenues from the exploitation of the licence and is so low that it is in obvious disproportion to the profit from the exploitation of the licence and to the significance of the work for achieving such profit, the author has the right to appropriate additional remuneration, unless otherwise agreed.”

In the case where it is expressly agreed so in the licence agreement, the acquirer may grant sub-licences, i.e. conclude contracts with other persons on the granting of authorisation to exercise the right to use the software. The legal regulation of the licence agreement in Sections 46 to 56 of the Copyright Act shall apply to sub-licences by analogy.

In the case where the Copyright Act does not contain direct regulation, it is appropriate to pay attention to whether the licence agreement is a commercial obligatory relationship and is therefore governed by Part Three of the Commercial Code or whether the regulation of the Civil Code applies. In the case of an agreement that the obligatory legal relationship is governed by the Commercial Code pursuant to Section 262 of the Commercial Code, it is necessary to bear in mind the fact that if “such agreement tends to worsen the legal position of a party to the contract who is not a businessperson, it is invalid” (Section 262(1) of the Commercial Code). Likewise, regulation concerning consumer contracts cannot be contractually excluded.

Finally, one cannot forget the situation where the software provided does not have the characteristics agreed in the contract - the software has defects. For this case it is appropriate that the software be specified as precisely as possible in the licence agreement, with the recommendation that this extensive specification be part of the contract in the form of an annex. In the case where a warranty has been agreed (unilaterally provided) for the software provided, the legal relations are governed primarily by this warranty. On the contrary, cases may be contentious where a warranty for the software was not provided or where the warranty does not cover certain situations in asserting liability for defects; this issue, however, far exceeds the scope of this article.

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