Is the distribution of the programme for an electronic computing machine the disposal of the right or a way of the use?

I would like to begin my article with the definition of the programme for an electronic computing machine specified in the Civil Code of the Russian Federation.

In accordance with Article 1261 of the Civil Code of the Russian Federation (hereinafter referred to as the C.C.R.F., the Code), The programme for an electronic computing machine is a set of the data and commands, represented in an objective form, which are designated to ensure the operation of electronic computing machines and other computer devices in order to obtain a certain result, including the preparatory materials obtained in the course of the development of the programme for an electronic computing machine and the audiovisual images generated by it.

According to Paragraph 1 of Article 1259 of the C.C.R.F., the programmes for electronic computing machines shall relate to the subject matters of the copyright. At the same time, the copyrights to all kinds of the programmes for electronic computing machines (including to operating systems and software solutions), which can be expressed in any language and in any form, including a source text and an object code, shall be protected in the same way as the copyrights to literary works (Article 1261 of the C.C.R.F.).

Similarly, the programmes for electronic computing machines are protected in international treaties.

Thus, in accordance with Article 10 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (Marrakesh, April 15, 1994) computer programmes, both a source text and an object code shall be protected as literary works in accordance with the Berne Convention (1971).

According to Article 4 of the Treaty of the World Intellectual Property Organization on the Copyright, adopted by the Diplomatic Conference on Certain Issues of the Copyright and Related Rights in Geneva on December 20, 1996, computer programmes shall be protected as literary works in the sense of Article 2 of the Berne Convention. Such protection shall be extended to the computer programmes, regardless of the way or form of their expression.

In accordance with Paragraph 1 of Article 1229 of the C.C.R.F., “a citizen or a legal entity possessing an exclusive right to the result of intellectual activity or the means of individualization (a right holder) shall be entitled to use such result or such means at his own discretion in any way that does not contradict to the law. The right holder may dispose of the exclusive right to the result of intellectual activity or to the means of individualization (Article 1233), unless otherwise is stipulated by this Code.

Since this article deals with the issue of whether the distribution of the programme for an electronic computing machine is the disposal of the right or a way of the use of the work, I would offer to define what the legislator refers to the ways of the disposal of the exclusive right to the programme for an electronic computing machine and what the use of the programme for an electronic computing machine is.

Paragraph 1 of Article 1270 of the C.C.R.F stipulates that the author of the work or other right holder has an exclusive right to use the work in accordance with Article 1229 of this Code in any form and in any way that does not contradict to the law (an exclusive right to the work), including in the ways specified in Paragraph 2 of this Article.

The most frequent ways of the use of the programmes for electronic computing machines defined in Paragraph 2 of Article 1270 of the C.C.R.F. shall be:

– reproducing the work, that is, the production of one or more copies of the work or its part in any material form, including in the form of sound recording or video recording, the production in three dimensions of one or more copies of a two-dimensional work and in two dimensions of one or more copies of a three-dimensional work. In this case, recording the work to an electronic media, including recording to the memory of an electronic computing machine is also considered to be a reproduction (Subparagraph 1);

– distributing the work by way of selling or otherwise alienating its original or copies (Subparagraph 2);

– translating or other reprocessing the work. Reprocessing (a modification) of the programme for an electronic computing machine or the database shall mean any changes made to them, including the translation of such programme or such database from one language to another language, with the exception of adaptation, that is, the changes made solely for the purpose of the operation of the programme for an electronic computing machine or the database on the user specific technical means or under the control of the user specific programmes (Subparagraph 9).

– making the work available to the public in such a way that any person can get access to the work from any place and at any time by his own choice (making available to the public (Subparagraph 11).

However, the norm of Article 1270 of the C.C.R.F. does not contain an exhaustive list of the ways of the use of the work and it indicates that the use of the work, including the one that entails the violation of the rights of the right holder, can be exercised not only in the forms listed in this norm, but also in other ways.

At this stage, I would like to state that it is defined by the legislator that the distribution of the work by way of selling or otherwise alienating its original or copies shall relate to the ways of the use.

In principle, it would be possible to finish at that, believing that the answer to the issue raised in the article has been found, however, before finishing, I would offer to consider the issue on what the disposal of the exclusive right is.

Article 1233 of the C.C.R.F. speaks of the disposal of the exclusive right. Thus, in accordance with Paragraph 1 of the said Article, the right holder may dispose of his exclusive right to the result of intellectual activity or to the means of individualization in any way that does not contradict to the law and essence of such exclusive right, including by alienating it under an agreement to another person (an agreement on the alienation of an exclusive right) or by granting to another person the right to use the relevant result of intellectual activity or the means of individualization within the scope established by the agreement (a license agreement). The conclusion of the license agreement does not entail the transfer of the exclusive right to the licensee.

Thus, it follows from the said norm that the Code recognizes that any agreement on granting the right of the use of the results of intellectual activity or the means of individualization shall be the disposal of the exclusive right.

However, in addition to the agreement on the alienation of an exclusive right (Article 1234 of the C.C.R.F.) and a license agreement (Articles 1235-1239 of the C.C.R.F.), which are indicated directly in Part Four of the Code, the disposal of an exclusive right may be exercised, in particular, within a pledge agreement (Paragraph 3 of Chapter 23 of the C.C.R.F.), the agreements on the sale of an enterprise (Paragraph 8 of Chapter 30 of the C.C.R.F.), the agreement on the lease of enterprises (Paragraph 5 of Chapter 34 of the C.C.R.F.), an agency agreement (Chapter 52 of the C.C.R.F.), property trust agreements (Chapter 53 of the C.C.R.F.) and commercial concession agreements (Chapter 54 of the C.C.R.F.), which are settled in Parts 1 and 2 of the C.C.R.F.

The sophisticated reader, having read the article up to this point, will probably think that the author has raised the issue in the title of the article in vain, since the article could have been called simply: “The ways of the disposal of the right to the programme for an electronic computing machine. The ways of the use of the programme for an electronic computing machine.”

However, it is not all that simple as it seems at the first glance, and here is why.

In accordance with Paragraph 5 of Article 1286 of the C.C.R.F., a license agreement with a user on granting him a simple (non-exclusive) license to the use of the programme for an electronic computing machine can be concluded by a simplified procedure as an adhesion agreement, the conditions of which can be set out electronically (for example at the web-site of the information and telecommunications network “Internet”). The commencement of the user’s use of the programme for an electronic computing machine, as it is stipulated by the specified conditions, means his consent to conclude the agreement. In this case, the written form of the agreement is considered to be complied with.

The license agreement concluded by a simplified procedure shall be gratuitous, unless otherwise is stipulated by the agreement.

In the everyday life, such kind of the license agreement is called a “shrink wrap license.”

It is just in the above norm that there is a thing, which consists in the following.

As we have managed to sort it out that the distribution of the copies of the programme for an electronic computing machine in accordance with Subparagraph 2 of Paragraph 2 of Article 1270 of the C.C.R.F. is a way of the use of this subject matter of the copyright.

Meanwhile, in accordance with Article 1233 of the C.C.R.F., granting to another person the right of the use of the relevant result of intellectual activity or the means of individualization within the scope established by the agreement (a license agreement) shall be a way of the disposal of the exclusive right.

As we see, Paragraph 5 of Article 1286 of the C.C.R.F. speaks just of a license agreement between the right holder and the user of the programme for an electronic computing machine on granting the latter a simple (non-exclusive) license to use the programme for an electronic computing machine, and the license agreement, in turn, is a way of the disposal of the exclusive right.

Thus, in my opinion, the legal collision arises here due to the fact that, on the one hand, by virtue of a direct indication of the law, the distribution of the copies of the work, which also include the copies of the programme for an electronic computing machine by way of selling or otherwise alienating, relates to the ways of the use, on the other hand, the distribution of the copies of the programme for an electronic computing machine is, in fact, accompanied by the conclusion of the license agreement, which relates to one of the ways of the disposal of the exclusive right.

At the same time, the legal approach that the distribution of the copies of the programme for an electronic computing machine is a way of the use of the work was reflected in Resolution of the Intellectual Property Court in case No. A53-938/2016 of August 21, 2017, in which the court indicated: “In addition, the distribution of the work by way of selling or otherwise alienating its original or copies shall relate to the ways of the use.”

At the same time, I shall respectfully disagree with the conclusion of the Intellectual Property Court set out in its Resolution of August 21, 2017 in case No. A53-938/2016, due to the following.

According to Paragraph 1 of Article 209 of the C.C.R.F., the owner shall possess the rights of ownership, use and disposal of his property.

By virtue of Article 1226 of the C.C.R.F., the intellectual rights, which include the exclusive right being a proprietary right, and, in the cases stipulated by the this Code, also personal non-proprietary rights and other rights (droit de suite, a right of access and others) shall be recognized as the rights to the results of intellectual activity and the means of individualization equated to them (the results of intellectual activity and the means of individualization).

The use is utilization, an application, the use of the things in accordance with their designation. The right to use means that the user has received from the owner or administrator of the thing, the subject matter the right to use them during a certain period and under the conditions established by the owner-administrator or the owner-proprietor. (Raizberg B.A., Lozovsky L.S., Starodubtseva Y.B. “Contemporary Economic Dictionary. – 6th ed., rev. and enlarged. - M.” (INFRA-M, 2011).

The disposal of property – the authority of the owner, which consists in the possibility of a transfer, a sale, a lease, an independent use of property. (Raizberg B.A., Lozovsky L.S., Starodubtseva Y.B. “Contemporary Economic Dictionary. – 6th ed., rev. and enlarged. - M.” (INFRA-M, 2011).

I believe that the license agreement is similar to the traditional property lease agreement; concluding the license agreement, the right holder does not deprive himself of possessing the right, he transfers to another person only the authority to use the result of intellectual activity.

In my opinion, the analysis of the norms of the law set out in Articles 209, 1226, 1233, 1286 of the C.C.R.F. allows to conclude that the distribution of the copies of the programme for an electronic computing machine is a way of the disposal of the right, and not a way of the use of the work.

At the same time, I do not exclude the fact that not all readers will share my opinion, in connection with which it would be interesting to hear the arguments in defense of the opinion that the distribution of the copies of the programme for an electronic computing machine is a way of the use of the work.