Who owns the exclusive property rights to a work product (computer program). Changes in connection with the Association Agreement between the European Union and Ukraine

The question of defining the copyright for a work essay is very relevant, since many work
products, in particular in the field of IT technologies, are created as service works.
In this situation there are two subjects of legal relations that have legal grounds to be
authors – the employee and the employer, as well as different approaches in the legislation of
Ukraine to regulate this issue.
In addition, the recent entry into force of the provisions of the Association Agreement
between Ukraine and the EU, which introduces some innovations in the legal regulation of
copyright property rights to a work, emphasizes the need for an analysis of the above issues.
So, let's try to sort it out.
First of all, it is necessary to clarify the notion of service work and the legal grounds for
the emergence of intellectual property rights for a work.
The Law of Ukraine "On Copyright and Related Rights" dated 23.12.1993 discloses the
meaning of the term "service". In particular, an official work is created by an employee (author)
during performance of his official duties, which corresponds to an official job or an employment
contract between an employee and an employer.
From this definition we can see that the basis for the creation of a service must be an
employment contract between the employer and the employee; the presence of the relevant official
duties and the corresponding official task for the creation of a service as an object of intellectual
property.
The aforementioned law also gives a clear explanation of the terms "official duties" and
"official task". Therefore, the employee's duties are those duties that must be specified in the
employment contract and / or job descriptions, and the official tasks are certain instructions from
the employer to the employee for the performance of the task.
The situation usually looks different in practical way. An employment contract is
concluded often in oral form and the worker is actually allowed to work without clearly defined
service tasks and official duties. Therefore, the creation of any work that is the subject of
intellectual property rights, as a result of such an employee's work, will also be considered as the
creation of a service. However, this approach, as noted above, can generate many negative
consequences.
That’s why, our recommendation to the employer, is to be responsive to all the legal
nuances of the registration of labor relations with the employee and the definition of the official
duties and tasks in the contract.
The next question to consider is the ownership of intellectual property rights to a work
product: only to the employee, only to the employer, or to two entities at the same time?
Let's start with a special law regulating this relationship, namely the Law of Ukraine "On
Copyright and Related Rights." According to this Law, the exclusive property rights to a work are
owned by the employer, unless another approach is established by the agreements between the
employer and the employee.
However, the Civil Code of Ukraine in Part 2 of Art. 429 determines that proprietary
intellectual property rights to a work are owned by the employee who created this work and the
employer jointly.
So, we have two opposing rules. In order to resolve this collision of legislative acts, the
Plenum of the Supreme Court of Ukraine in paragraph 24 of the Resolution "On the Application by
the Courts of Legislation in the Case of the Protection of Copyright and Related Rights" of June 4,
2010, paragraph 24, clarified this matter, namely : An employee and employer have common rights
to use a service and obtain a certificate of registration of copyright to it.
According to this, the Supreme Court of Ukraine explained that the employee and the
employer have common copyright property rights to the work and applied the norm of the Civil
Code of Ukraine, which is newer in comparison with the norm of the Law «On Copyright and
Related Rights».
In addition, 01.09.2017, the Association Agreement with the European Union came into
force on September 16, 2014. This Agreement in Part 4 of Art. Section 181, section 9, contains
provisions on the ownership of property rights, namely: "If a computer program is created by a
hired employee in the performance of his employment duties or in accordance with the instructions
of the employer, then the employer shall have all the exclusive property rights to the computer
generated program, unless otherwise provided by the contract. ".
The Constitution of Ukraine in Article 9 stipulates that international treaties, the consent to
which the Verkhovna Rada of Ukraine has obligated, is part of the national legislation of Ukraine.
And therefore, since the Association Agreement between Ukraine and the European Union
establishes rules other than those contained in the Ukrainian legislation on copyright and related
rights, the rules of the above-mentioned Agreement, namely, the exclusive property rights to the
work, belong to the employer.
In conclusion, it is unclear what kind of legislation on the regulation of the ownership of
exclusive property rights to official works will be applied by Ukrainian courts, but in our own
opinion the relevant provisions of the Association Agreement between Ukraine and the European
Union have the highest legal force.]]>

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A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. No norms about the continuation of legal force of permission are set (we are expecting amendments or explanations from the Ministry of Digital transformation of Ukraine). Notably that non-residents must pay a far greater sum, than domestic companies. The Ukrainian legislator obviously encourages an internal market, getting rid of a strong foreign presence (that, in fact, coincide with modern politics of the state on the whole). Together with an application, the following documents must be prepared: The access code to the copy of the Statute of the company (or the foundation agreement) kept in an electronic file in the database of the Unified State Register of Enterprises and Organizations (USREO);  Funding sources of the statutory capital (where the money are taken from);  confirmation of the actual injection of money;  information about beneficiaries (special attention must be paid to business reputation);  the information about the director and founders;  the check about payment of state fee;  the internal regulations, in accordance with which ones, the privacy policy rules are regulated. In the terms of volume of necessary documentation of licensing is very alike with complete registration of legal entity. It is understood that the state wants the severe adjusting of activity of organizations that will engage in virtual assets. Is it already possible to get a license? The adoption of the law by the parliament is a significant step forward in adjusting and legal market of virtual assets creation in Ukraine. However, the new rules haven`t come into effect yet - their term of introduction depends on making amendments in the Internal Revenue Code. It is yet unknown, when a legislator will decide to enter the renewed system of taxation for such assets. Being "IT-hub" and territory, where cryptocurrency enjoys large popularity, the question of taxes must be decided maximally safely. Despite the presence of obvious gaps in interpretation, a new law on virtual assets gives the official narrative of what takes place and that, how the legal relationships related to cryptocurrency will be regulated. It is to be hoped that in the nearest time the Ministry of digital information will give out the detailed explanations concerning debatable norms.
20/01/2022

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