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Some Aspects of Agreement of Author's Order for Software

March 26, 2018

Currently, due to an unusually rapid spread of IT technologies, in various areas there is an increasing need to create unique software that would meet the needs of a particular company, taking into account all specific features of its activities; this is especially true for various online stores and Internet services. In this situation, the services of third party IT companies or “freelancers” are often used, but assuming that as a result of the creation of unique software, only the Customer will have all property rights. But, in the vast majority of cases, there are fears that as a result of creating software, unscrupulous Developers can replicate the created product in an unmodified or slightly modified form.

What points should be taken into account, and what aspects should the special attention be paid to, when preparing an agreement basis with the Developer of the software product?

The software means a set of various data and commands that are necessary for the operation of electronic computing machines for the purposes of obtaining a certain result.

The software or the programme code (hereinafter referred to as the SW), according to the current regulations of the Civil Code, is a subject-matter of copyright, and the same rules shall be applied to it as to literary creations (see Articles 1260-1261 of the Civil Code of the Russian Federation).  Thus, the subject of the agreement of the author's order is not the result of carrying out any works, but the creation of an intellectual product.

Prior to the conclusion of the software development agreement, the parties should set out in the most detailed manner the basic terms and conditions, and requirements for the future programme, therefore, the Customer must provide the Developer with the performance specification, where the characteristics of the future product are clearly described. The more detailed they are, the less chances of appearing inconsistencies and disagreements as the result.

The element of the subject of the agreement will be the creation of a programme code and its algorithms, as well as various software components that will be a software product. The created programme code must fully comply with the terms and conditions of the performance specifications provided by the Customer. The performance specifications are an integral part of the agreement, which should be further detailed in the agreement. In the performance specifications it is necessary to define the requirements to the result of the works as clearly as possible – the requirements to the functionality, the ways of implementing the programme, etc. Otherwise, there is a risk of obtaining a result in which the works will be performed formally; however, the Customer’s desired result is not achieved. It should be taken into account that when creating a complex system, which often consists of several stages with intermediate approvals and acceptance of parts of the functional, the Customer's requirements to the final product may change during the course of carrying out the works, what also should be recorded and reflected in additional agreements.

Also, the fundamental condition of the subject of the agreement of the author's order will be a further transfer of the created rights; the Developer will be able to alienate fully the exclusive rights to the created software product, or to transfer temporarily the property (exclusive) rights.

Thus, according to paragraph 2 of Article 1288 of the Civil Code of the Russian Federation: “The agreement of the author's order may provide for the alienation to the customer of the exclusive right to a work that must be created by the author, or the grant to the customer of the right to use this work within the framework ofthe agreement.”

However, the acquisition of the exclusive rights to the created software product, and as a consequence, the acquisition of the ability to prohibit other persons, including the Developer, the use of it also has some aspects.

The most careful attention should be paid to the above aspects, when preparing the agreement. In particular, it is possible to provide that:

Simultaneously with the software product, the Developer provides the Customer with preparatory, technical, accompanying and methodological documentation for the software product.

All alienable exclusive rights to the software created by the Developer within the framework of this agreement, as well as its constituent parts and their elements, as well as other rights to the results of the use of the agreement that are not protected results of intellectual activity, shall belong to the Customer.

It is necessary to understand that at the conclusion of the agreement of the author's order, not only the software itself is acquired, but the accompanying subject-matters are acquired as well, such as: the documentation, additional materials and programmes, etc., which can be independent subject-matters of copyright, and without introducing this aspect it is possible to face difficulties in the further use of the programme.

In addition to the analyzed terms and conditions, the agreement of the author's order has a number of other nuances associated with the specifics of creating a complex and unique product. Therefore when concluding the agreement, the professional lawyer’s assistance will help to sort out all its features.

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Author of article

Natalya Nazarova

Natalya Nazarova

Agreement’s Lawyer