On the New Year there was news on the Runet that Rambler Group announced the violation of its rights – as their ex-employee Igor Sysoev created a web server Nginx while working in the company, its development should be considered as works made for hire. How legitimate is this accusation? And is it possible to have such cases in Belarus? Nadezhda Hadanovich, attorney at Stepanovsky, Papakul & Partners Attorneys at Law, head of IT/IP, and Oksana Puchkovskaya, attorney at Stepanovsky, Papakul & Partners Attorneys at Law, share their opinions.
– The news that Rambler Group made claims against the developers of Nginx shaken the whole Runet. The developer’s office is undergoing searches and a criminal case has been initiated under Part 3 of Article 146 of the Russian Criminal Code (violation of copyright and allied rights).
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It is known that Igor Sysoev developed the Ngnix web-server in the early 2000s when he worked as a system administrator in Rambler (Russian Federation). The server development, he said, took place in his spare time. In spring 2019, Igor Sysoev and Maxim Konovalov’s company Ngnix, Inc. was bought by the American corporation F5 Networks for $ 670 million.
The Rambler Group’s position is based on the fact, that, in their opinion, the exclusive rights to Ngnix belong to the Rambler Group since the creator of the technology, Igor Sysoev, was engaged in server development while working for Rambler in the early 2000s. So, let us try to understand this high-profile case and try it on the Belarusian realities.
WHETHER OR NOT CRIMINAL LIABILITY IS POSSIBLE
Belarusian and Russian legislation is quite similar, both in criminal and civil law. To understand this case, it is necessary to analyze it in various aspects, ranging from criminal liability for copyright violations to issues related to the regulation of the creation of works made for hire.
Computer program is a copyright object, which is protected as a literary work by the Copyright Treaty of the World Intellectual Property Organization (adopted in 1996), to which both Russia and Belarus are contractual parties. In particular, the source code of a computer program itself, is written by a person in a certain language or programming languages. This person is the author of such program.
Let us immediately consider the most sensitive point: the reality of criminal responsibility. Yes, it is real, and yes, there are corresponding crimes in both Russian and Belarusian legislation.
Part 3 of Article 146 of Criminal Code of the Russian Federation, under which criminal proceedings were initiated, is worded as follows: «Illegal use of objects of copyright or related rights, as well as the acquisition, storage, transportation of counterfeit copies of works or phonograms for sales purposes, in particular, on especially large scale, shall be punishable with obligatory works for up to five (5) years or imprisonment for up to six (6) years with a fine of up to five hundred thousand (500,000) rubles or at the rate of the convicted person’s salary or other income for a period of up to three (3) years or without it». In our opinion the especially large scale will be a gualifying feature in this case, i.e. the reason for initiation of proceedings under Part 3 of Article 146 of the Criminal Code of the Russian Federation as Rambler estimated the damage caused to it at 51.4 million rubles.
What is illegal use? Any use without the consent of the copyright holder. A particularly large size is seen if the cost of copies of works or phonograms or the cost of rights to use objects of copyright exceeds one million rubles (about $ 16 000).
The Belarusian Criminal Code has a similar article – pp. 3 of Article 201 of the Criminal Code “Violation of copyright, related rights and industrial property rights”. Unlawful distribution or other unlawful use of objects of copyright, allied rights or objects of industrial property right, causing damage on a large scale, is a criminal offence. Such violation is punishable by a fine, or arrest or restriction of liberty for up to five (5) years, or deprivation of liberty for the same period (up to 5 years).
The Belarusian Criminal Code has a similar article – Part 3 of Article 201 of the Criminal Code “Violation of copyright, related rights and industrial property rights”. Unlawful distribution or other unlawful use of objects of copyright, allied rights or objects of industrial property right, causing damage on a large scale, is a criminal offence. Such violation is punishable by a fine, or arrest or restriction of liberty for up to five (5) years, or deprivation of liberty for the same period (up to 5 years).
A large scale is the amount of income (loss) in the amount of five hundred (500) and more times the size of the base value established on the day of the crime (currently 1 base value = 27 BYN, that is, it is about $ 6350).
There is an important difference between Belarusian and Russian criminal legislation. In Russia, Part 3 of Article 146 of the Criminal Code belongs to the category of grave crimes (grave crimes are intentional acts for which the maximum penalty provided by the Criminal Code does not exceed ten (10) years of imprisonment). Under the Belarusian Criminal Code, Part 3 of Article 201 is a less serious offence (less serious offences include intentional crimes for which the law prescribes a maximum penalty of deprivation of liberty for a period not exceeding six (6) years).
What does the category of crime have an impact on? The answer is the statute of limitations on criminal responsibility. In the case of Rambler Group, the most important point is the date from which the rights, according to the company, were violated. From the publicly available information it follows that the violation is dated 2004, that is, it was committed 15 years ago. The statute of limitations in this case under Russian legislation is 10 years. What does the statute of limitations mean? A person shall be exempt from criminal liability if the statute of limitations for criminal liability has expired from the day the crime was committed. However, it seems that the position of Rambler is precise that the crime was continuing and started in 2004, while the program was used illegally for a long period of time starting from 2004 (the same year is the date of creation of the program, based on publicly available data).
In Belarus, the statute of limitations for less serious crimes, which include an act under Part 3 of Article 201 of the Criminal Code, is 5 years.
An informed reader may object – but the Nginx source code is open. Accordingly, it can be used free of charge under the BSD-license. It means that copies of this code have no cost, and the license is free. Where is the violation from then? The violation (one of its aspects) is just in the fact that, according to Rambler, the very fact of distribution of Nginx source code under such an open license is a violation, because it was not agreed with Rambler as a valid right holder. That is, an unidentified person, without the right holder’s knowledge, placed the source code of the proprietary program (proprietary software) in the public domain under the BSD license, for which such person had no authority. The actual copyright holder could have disposed of the rights to the software in a different way. In this case, the violation is any action not coordinated with the actual copyright holder, who can both permit and prohibit any third party to use any copyright object belonging to him. Only the person who actually owns the rights to this source code can upload the source code in open source under an open license.
WHO OWNS THE RIGHTS?
Now let us move on to the most interesting question: who will be the actual rights holder in such a situation? Are the claims that the work is made for hire, that is, owned by the employer, justified?
Let us consider this situation if it had occurred in Belarus and from the point of view of our Belarusian realities.
If a system administrator has developed software in his spare time, but at his workplace and during working hours – who owns the rights to this development? From the point of view of the Belarusian legislation, the work made for hire is a work of science, literature, art (its part that has an independent meaning), created by the author (we should separately note that the author can only be a natural person) by the duty assignment of the employer or in the order of performing the duties stipulated by the employment contract. That is only in these two cases.
Now we shall address to the Uniform Qualification Reference Book of Positions of Employees (UQRB) and we shall see, what enters or what can enter into a range of job duties of the system administrator, which Igor Sysoev was at the moment of development.
There is such a position in UQRB as a network administrator or a system administrator. If you review his job duties carefully, you will see that software development is not included there. As a consequence, it is impossible for an employer to prove that the software created by a system administrator is made for hire simply because he was employed by this employer during the creation of such software, in our opinion.
It is extremely unlikely that a service duty assignment for the development of any program could have come to the system administrator, as it is simply not his sphere of competence. For such tasks, the company should have programmers-engineers (programmers), whose sphere of competence and job duties just include program development, which is directly stated in the UQRB.
As a matter of fact, in order to give a system administrator a duty assignment to develop a program, it is necessary to transfer it from a position of “system administrator” to a position of “engineer-programmer (programmer)” or to change its key employment terms and to include additional duties on development of computer programs.
Such transfer is regulated by Article 30 of the Labor Code and is recognized as an assignment by the employer to an employee to work in another profession, specialty, qualification, position (except for changes in the name of the profession, position in accordance with the law) as compared to those stipulated in the employment contract. It should be noted that as a general rule, a transfer is allowed only with the employee’s written consent with the conclusion of a new employment agreement (contract).
Changes in key employment terms are regulated by Article 32 of the Labour Code, which requires reasonable economic, production or organizational reasons. In this case, the introduction of additional duties is also fixed by documentary – new job description and other HR documents. The date of introduction of new job duties shall also be documented by the employer.
If all these conditions are not met – in the Belarusian reality it is highly unlikely that something that was created even during working hours and at the workplace by the system administrator of the company can be considered as a work made for hire.
Software development is an activity outside of its professional competence. In order to obtain rights to such work created by a “non-core” employee, the employer will have to conclude a separate civil law contract with him/her – an exclusive right assignment contract, which will clearly define the rights to which object are assigned by its author and on what conditions (for a fee or free of charge).
Let us summarize: yes, such cases are also possible in Belarus. Moreover, given the pace of development of the IT business and the growth in the number of IT companies in the country, we expect that in 2020 there will be more such contentious situations, as the cost of development and software companies is millions of dollars with relatively low costs for the development itself. And where there is a lot of money, there are serious disputes.
