January 27, 2020

In August 2010, IT Development SAS granted a licence to Free Mobile SAS, a French mobile phone operator, in relation to its “ClickOnSite” software.

In June 2015, IT Development issued proceedings against Free Mobile in France for infringement of its copyright in the ClickOnSite software, claiming that Free Mobile had modified it in breach of Article 6 of the licence agreement, which provided that the licensee would not reproduce, directly or indirectly, the software, or decompile and/or carry out retro-engineering operations on it, or modify, correct, adapt, create second works or add, directly or indirectly, to that software.

The French court declared IT Development’s claims inadmissible since, under French law, there are two separate sets of rules relating to liability in IP matters: (i) tortious liability in the event of infringement of the author’s rights in the software; and (ii) contractual liability in the event of copyright infringement under contract. In this case, Free Mobile was alleged to have breached its contractual obligations, which provided a basis for a contractual liability claim, but not for the tortious act of copyright infringement.

IT Development appealed the decision. The French Court of Appeal asked the CJEU whether the IP Enforcement Directive (2004/48/EC) and the Software Directive (2009/24/EC) should be interpreted as meaning that the breach of a clause in a software licence relating to the IP rights of the owner of the copyright in that program falls within the concept of “infringement of IP rights”, within the meaning of the IP Enforcement Directive, and that, therefore, that owner should be able to benefit from the guarantees provided by that Directive, regardless of the liability regime applicable under national law.

The CJEU noted that under Article 4 of the Software Directive the exclusive rights of the software program owner include, subject to certain exceptions, the right to do or authorise the translation, adaptation, arrangement and any other alteration of a computer program. The prohibition on modifying the source code of a software package therefore falls within the copyright of a software program under the Software Directive, it said. Therefore, the owner’s rights in a software program are not dependent on whether or not the alleged infringement of those rights is a breach of a licence agreement.

As for the IP Enforcement Directive, the CJEU said that it was clear from Recitals 10 and 15 and Article 1 that it covers the measures, procedures and remedies necessary to ensure the enforcement of IP rights, including the rights covered by the Software Directive.

It was also clear from Article 2(1) of the IP Enforcement Directive that the Directive’s provisions apply to “any infringement of IP rights”. The use of the word “any” made it clear that the Directive should be interpreted as also covering infringements resulting from the breach of a contractual clause relating to the exploitation of an IP right, including that of an author of a software program.

This was confirmed, the CJEU said, by both the objectives of the IP Enforcement Directive (harmonisation of IP laws across Member States, effective protection especially in the information society, case law showing that the Directive is intended to govern both enforcement and infringement by providing effective remedies) and the context of Article 2(1) (under Article 4, any holder of IP rights is entitled to request the application of the measures, procedures and remedies referred to in the Directive with no limitations as to the origin, contractual or otherwise, of the infringement of those rights).

Therefore, the CJEU said, the infringement of a clause in a licence agreement for a software program concerning the IP rights of the owner of the copyright in that program falls within the concept of “infringement of IP rights” and that, consequently, the owner should be able to benefit from the guarantees provided for in the Directive.

However, the CJEU said, the IP Enforcement Directive does not set out the exact means of implementation of those guarantees, nor does it set out a specific liability regime in the event of infringement of those rights. Therefore, it is for national legislature to provide for the specific practical arrangements for protecting those rights and to define, in particular, the nature, whether contractual or tortious, of the action available to the rights holder for infringement of his IP rights against a licensee of a software program. In all cases, however, the requirements of the IP Enforcement Directive should be respected. (Case C-666/18 IT Development SAS v Free Mobile SAS EU:C:2019:1099 (18 December 2019) — to read the judgment in full, click here).