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On September 12, the conclusions of the Advocate-General of the European Court of Justice (ECJ) on IT Development SAS v Free Mobile SAS (Case C-666/18) were published, discussing whether certain breaches of a software license constitute copyright infringement, in the terms of Directive 2009/24/EC on computer programs, or they should only be considered breach of contract.
The dispute is is not without legal relevance since, as one might expect, different consideration leads to different procedural regimes and may have different consequences or systems of reparation for the defendants. Furthermore, there are currently disparate approaches among the jurisdictions of some Member States that consider that acumulating both actions is possible (the Netherlands, Germany and the United Kingdom), and others such as France and Belgium that, as we will see, prohibit accumulation and establish an order of prevalence.
The dispute arose in 2015, as a result of an action brought before the Regional Court of Paris [Tribunal de Grande Instance de Paris] by IT Development against the mobile telephony operator Free Mobile for infringement of copyright (contrefaçon) in the “ClickOnSite” software package, after having modified the software source code, thus breaching the provisions of the agreement.
In 2017, the case was dismissed in first instance because the Regional Court of Paris declared that the action of the claimant should be based on the infringement of the terms of the agreement (liability ex contractu) and not, as it was, on liability for copyright infringement (liability ex delicto). Under French copyright law, when parties are bound by a valid agreement and the loss suffered by one is the result of the other not performing its contractual obligations, tortious liability is discarded in favor of contractual liability, based on the principle of non-cumulation of liability.
In view of this dismissal, IT Development filed an appeal before the Paris Court of Appeals, insisting on its claims but also requesting the right to receive compensation for breach of contract. On that basis, the Court of Appeals referred the following essential question to the ECJ for a preliminary ruling:
Does a software licensee’s non-compliance with the terms of a software license agreement constitute: (i) an infringement of the intellectual property rights of the author of the software under article 4 of Directive 2009/24/EC of April 23, 2009, or (ii) can it be subject to a different system of legal rules, such as the system of rules on contractual liability under ordinary law?
The Advocate-General considered that in the case at hand, the controversy over the legal basis could only be considered contractual since all the breaches, e.g., the expiration of the trial period, surpassing the number of authorized users or even modifying the source code of the program in breach of the terms of the agreement, were contractual in nature.
However, it considered that under the hypothesis that the conduct of the licensee may be simultaneously classified as breach of contract and copyright infringement, Directive 2004/48/EC on the enforcement of intellectual property rights, does not impose a specific liability regime. The scope of application of the Directive includes the protection of the holder of the program within the scope of contractual relations and with regard to the relations between the rightholder and third parties. Therefore, the response to the question raised is that it is for the national legislature of the Member States to determine.
What article 3 of that Directive does require is that the measures, procedures and remedies that Member States adopt to enforce intellectual property rights must be fair, equitable, proportionate and dissuasive, not pointlessly complex and burdensome, and not entail unreasonable time limits or unwarranted delays.
Finally, the Advocate-General considered that the system followed by French Law should not necessarily be considered contrary to the principles of equivalence and effectiveness since, while it may be considered that liability ex delicto provides greater protection in terms of the rights of recovery, what matters is not which option will better protect the rights of the author, but whether the option that is available makes the author’s defense excessively difficult.
We will wait to see whether the ECJ ultimately issues a judgment as proposed by the Advocate-General.
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