Directive 2009/24/EC (the “Software Directive”) is the European Union instrument that requires Member States to protect computer programs by copyright. It is the codified version of Council Directive 91/250/EEC of 1991, which it repeals, and it was adopted on 2009-04-23.[1] The Directive does two things that matter for software licensing. It defines what the rightholder may control, such as copying, adapting and distributing a program. It also lists acts that a lawful user may perform without the rightholder’s permission, and it declares some licence terms that restrict those acts to be null and void.[1]
Because it is a directive, it binds Member States through their national copyright laws, so the exact wording and remedies differ by country. This article describes the Directive’s text and the way the Court of Justice of the European Union (CJEU) has interpreted it.
What is protected
Member States must protect computer programs by copyright as literary works within the meaning of the Berne Convention, and “computer programs” includes their preparatory design material.[1] Protection applies to the expression in any form of a computer program. Ideas and principles that underlie any element of a program, including those that underlie its interfaces, are not protected by copyright under the Directive.[1] A program is protected if it is the author’s own intellectual creation, and no other criteria, such as qualitative or aesthetic merit, are applied.[1]
The recitals add that, to the extent logic, algorithms and programming languages comprise ideas and principles, those are not protected, while the expression of those ideas and principles is.[1] The Directive treats the employer as exclusively entitled to the economic rights in a program created by an employee in the execution of his duties or on the employer’s instructions, unless the contract provides otherwise.[1]
The CJEU has confirmed that source code and object code are forms of expression of a program and are protected. It has held that a graphic user interface is not a form of expression of the program under the Directive, because it does not enable reproduction of the program.[2]
Article 4: restricted acts
Subject to Articles 5 and 6, the rightholder has the exclusive right to do or to authorise three groups of acts:[1]
- Reproduction. The permanent or temporary reproduction of a program by any means, in part or in whole. Where loading, displaying, running, transmission or storage of the program necessitates reproduction, those acts are subject to the rightholder’s authorisation.
- Alteration. The translation, adaptation, arrangement and any other alteration of a program, and the reproduction of the results.
- Distribution. Any form of distribution to the public, including rental, of the original program or copies of it.
Article 4(2) provides that the first sale in the European Union of a copy of a program by the rightholder, or with the rightholder’s consent, exhausts the distribution right within the Union for that copy, except for the right to control further rental.[1]
Article 5: exceptions for lawful users
Article 5 sets out three exceptions. They differ in how far a contract can override them.[1]
| Provision | Exception | Can a contract exclude it? |
|---|---|---|
| Article 5(1) | Acts of reproduction and alteration that are necessary for the use of the program by the lawful acquirer in accordance with its intended purpose, including error correction | “In the absence of specific contractual provisions”; the recitals state that loading, running and error correction may not be prohibited by contract |
| Article 5(2) | Making a back-up copy by a person having a right to use the program, in so far as necessary for that use | No: a contract may not prevent it |
| Article 5(3) | Observing, studying or testing the functioning of the program to determine its underlying ideas and principles, while performing acts of loading, displaying, running, transmitting or storing that the person is entitled to do | No: contrary terms are null and void under Article 8 |
The recitals explain Article 5(1): the acts of loading and running necessary for the use of a lawfully acquired copy, and the correction of its errors, may not be prohibited by contract. In the absence of specific contractual provisions, including when a copy has been sold, any other act necessary for the use of the copy may be performed by a lawful acquirer in accordance with its intended purpose.[1]
Article 6: decompilation for interoperability
Article 6 allows reproduction of the code and translation of its form, without the rightholder’s authorisation, where those acts are indispensable to obtain the information necessary to achieve the interoperability of an independently created computer program with other programs. All of the following conditions must be met:[1]
- The acts are performed by the licensee or another person having a right to use a copy of the program, or on their behalf by a person authorised to do so.
- The information necessary for interoperability has not previously been readily available to those persons.
- The acts are confined to the parts of the original program necessary to achieve interoperability.
The Directive then limits what may be done with the information obtained. It may not be used for goals other than the interoperability of the independently created program, given to others except when necessary for that interoperability, or used for the development, production or marketing of a program substantially similar in its expression, or for any other act that infringes copyright.[1] Article 6 may not be interpreted so as to unreasonably prejudice the rightholder’s legitimate interests or conflict with a normal exploitation of the program.[1]
The recitals define interoperability as the ability to exchange information and mutually to use the information that has been exchanged, and say that the exception is meant to make it possible to connect all components of a computer system, including those of different manufacturers.[1] They also state that the Directive is without prejudice to competition rules where a dominant supplier refuses to make information necessary for interoperability available.[1]
Article 7: technical protection measures
Member States must provide appropriate remedies against putting into circulation, or possessing for commercial purposes, a copy of a program known or believed to be infringing. They must also provide remedies against putting into circulation, or commercially possessing, any means whose sole intended purpose is to facilitate the unauthorised removal or circumvention of a technical device applied to protect a program.[1]
Article 8: other law and null and void terms
The first paragraph of Article 8 says that the Directive does not affect other legal provisions, such as those on patents, trade marks, unfair competition, trade secrets, semiconductor protection or the law of contract. The second paragraph provides that “any contractual provisions contrary to Article 6 or to the exceptions provided for in Article 5(2) and (3) shall be null and void.”[1] The provision was Article 9 of Directive 91/250, and the CJEU cites it under that number in its 2012 judgments on the earlier text.[2]
In practice this means that a clause in an end-user licence agreement forbidding decompilation, back-up copies or observation and testing of a program cannot be enforced to the extent it conflicts with those provisions, as Article 8 reads.[1] Article 5(1) is not on the list, so a contract may regulate the acts it covers, subject to the recital that loading, running and error correction may not be prohibited. Clean-room design discusses a vendor reverse-engineering clause that refers to local law on decompilation.
How the CJEU has applied it
SAS Institute v World Programming (C-406/10)
In SAS Institute v World Programming, decided by the Grand Chamber on 2012-05-02, SAS Institute argued that a competitor infringed copyright by building a program that emulated the SAS System so that users’ scripts would run on it. The competitor had not had access to the source code of the SAS components and had not decompiled the object code.[2] The Court held:
- Neither the functionality of a computer program, nor the programming language, nor the data file format used to exploit its functions, is a form of expression protected by copyright under the Directive. The Court said that protecting functionality would make it possible to monopolise ideas, to the detriment of technological progress and industrial development.[2]
- Copying part of the source or object code relating to those elements would be liable to constitute partial reproduction under Article 4(a).[2]
- A person with a licensed copy may observe, study or test the program to determine its underlying ideas and principles, when carrying out acts covered by the licence and the acts of loading and running necessary for its use, and provided the person does not infringe the rightholder’s exclusive rights. The rightholder cannot prevent this by relying on the licence agreement, and the Court referred to the nullity rule for Article 5(2) and (3).[2]
The Court added that the language and file format might still be protected as works under the Information Society Directive (2001/29/EC) if they are their author’s own intellectual creation, and that reproducing elements of a user manual can infringe the manual’s copyright if it reproduces the author’s expression.[2] For the case history and later UK and US proceedings, see SAS Institute v. World Programming.
UsedSoft v Oracle (C-128/11)
UsedSoft v Oracle, decided on 2012-07-03, concerned a reseller of used Oracle licences whose customers downloaded the program from Oracle’s website. The Grand Chamber held that the distribution right in a copy of a program is exhausted under Article 4(2) if the rightholder has authorised its download, even free of charge, and has also conferred, for a fee intended to give the rightholder remuneration corresponding to the copy’s economic value, a right to use that copy for an unlimited period.[3] The Court treated the download and the licence agreement as an indivisible whole that amounts to a “sale”.[3]
The Court also held that a second acquirer of the licence, and any later acquirer, can rely on exhaustion and is a “lawful acquirer” under Article 5(1), so it may download the copy and benefit from the reproduction right in that provision. It added limits: an original acquirer who resells must make its own copy unusable at the time of resale, and a customer may not split a licence covering more users than needed and resell only part of it.[3] The Court noted that exhaustion extends to the copy as corrected and updated under a maintenance agreement, but not to the maintenance agreement itself as a service.[3] See UsedSoft v. Oracle for the resale case law that followed.
Relationship to licence terms
The Directive sets a floor that licence terms cannot lower in the areas Article 8 names, and it leaves the rest to contract and to other law, including trade secrets and competition law.[1] Three practical points follow from the text and the two judgments:
- A licence cannot, in the Union, extend the rightholder’s monopoly to the functionality of a program, its programming language or its data formats by contract alone as far as copyright is concerned, but other legal grounds such as confidentiality obligations remain available.[1][2]
- Terms that prohibit transfer of a perpetual, paid-up copy do not defeat exhaustion under Article 4(2) as the CJEU read it in UsedSoft, which applies to copies sold in the Union.[3]
- The decompilation right in Article 6 is narrow. It is limited to interoperability, to the necessary parts of the program, and to information that was not readily available, and the output may not be used to build a substantially similar program.[1]
For a general introduction to licence agreements see Software license.