CJEU rules on interpretation of IP Enforcement and Software Directives

January 15, 2020

The Court of Justice of the European Union has ruled on the interpretation of the IP Enforcement Directive (2004/48) and the Software Directive (2009/24) in IT Development SAS v Free Mobile SAS (Case C-666/18).

A software licensor brought court proceedings in France against its mobile phone operator licensee for infringement of copyright. This was because the licensee had modified the software’s source code in breach of the licence. 

The French court referred the issue to the Court of Justice of the European Union. It asked if a software licensee’s non-compliance with the terms of a software licence agreement (a) constitute an infringement (under the Enforcement Directive) of a right of the author of the software or (b) if it may comply with a separate system of legal rules, such as the system of rules on contractual liability.

The court ruled that the Enforcement Directive and the Software Directive mean that the breach of a clause in a licence agreement for a computer program relating to the intellectual property rights of the owner of the copyright of that program falls within the concept of ‘infringement of intellectual property rights’ under the Enforcement Directive. As a result, that owner must be able to benefit from the guarantees it provides, regardless of the liability regime that applies under national law.

The referring court listed several possible forms of breach of a software licence agreement. These included the fact that a software licensee does not respect the expiry of a trial period, exceeding the number of authorised users or another unit of measurement, such as processors which can be used to execute the instructions of the software, or to modify the source code of the software when the license reserves this right to initial holder. The last was at issue in this case. 

Member states are required, under Article 1 of the Software Directive, to protect computer programs by copyright as literary works. The prohibition on modifying the source code of a software package falls within the copyright of a computer program for which the Software Directive provides protection. 

The Software Directive did not mean that protecting the rights of the owner of the copyright of a computer program depended on whether the alleged infringement of those rights was a breach of a licence agreement. 

However, under Article 2(1) of the Enforcement Directive, it applied to “any infringement of intellectual property rights” which meant that it covered infringements resulting from the breach of a contractual clause about the exploitation of an IP right, including that of an author of a computer program. This view was backed up by the case law.

With regard to the context of Article 2(1) of the Enforcement Directive, Article 4 provides that any holder of intellectual property rights is entitled to request the application of the measures, procedures and remedies referred to in that Directive, in accordance with the provisions of the applicable law. The opportunity to make such a request is not subject to any limitation as to the origin, contractual or otherwise, of the infringement of those rights.

The Enforcement Directive aimed to establish measures, procedures and remedies for holders of IP rights, including the copyright of computer programs provided for in the Software Directive.  However, it did not set out the exact way in which those guarantees could be implemented. In addition, it did not set out the application of a specific liability regime if rights were infringed those rights. Consequently the national legislature was free to provide for the specific practical arrangements to protect those rights and to define the nature, whether contractual or tortious, of the action available to the rights-holder, if their IP rights are infringed, against a licensee of a computer program.

The measures, procedures and remedies necessary to ensure the enforcement of intellectual property rights must be fair and equitable and must not be unnecessarily complicated or costly, or entail unreasonable time limits or unwarranted delays. They must also be effective, proportionate and dissuasive and be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. 

It appeared to the court that in the light of the factors considered in the judgment, and subject to verification by the referring court, that an interpretation of national law in conformity with the requirements of the Enforcement Directive and the Software Directive was possible in this case.