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Introduction:
Software developers are often paid in money or money’s
worth, such as by way of shareholding in companies, or
when Joint-Ventures are formed. Independent software
developers may be involved full time or part time in
such projects.
Businesses involving software developers on this basis
often feel that the ownership of the copyright in the
software developed must automatically pass to them who
pay the software developer to deliver the software.
However, it is not always the case and certain facts or
circumstances could lead to the software developer
owning the copyright in the software delivered, despite
having received payment.
Although the Copyright Act contains certain provisions
describing the authorship and ownership of copyright
relating to software, it is always recommended, to avoid
disputes, that clear written agreements are entered into
before software is developed by a non-full time employee
of the business which clearly states who will own the
copyright in all materials relating to the software.
The Supreme Court of Appeal sets out good guidelines in
the matter Haupt t/a Soft Copy v Brewer Marketing
Intelligence (Pty) Ltd and Others 2006 (4) SA 458 (SCA)
(hereafter referred to as “the Haupt case”). The Haupt
case is currently the leading South African case on this
subject and dealt with a number of important aspects
relating to the subsistence, ownership and infringement
of copyright in software.
The Haupt case:
In short, the facts of the matter relate to a software
developer, Coetzee, who first developed a computer
program known as the AMPS project (which could
manipulate and capture “All Media Products Survey” data)
for a business called Brewer’s Almanac, the directors of
which were Haupt and Christopher Brewer. This business
was an advertising agency which disseminated information
for use in the advertising industry.
On 31 July 1998, Haupt and Brewer parted ways. After
this date, Coetzee continued to develop the program for
Haupt who started trading as Soft Copy. The name of the
computer program changed to Data Explorer. Coetzee inter
alia developed and incorporated a “tree-preparer”
computer program. In the beginning of 1999, Coetzee
developed various database structures. In June 2000
Coetzee developed and added a further computer program
referred to as the “converter program”. Coetzee worked
full time for a period of 2 months for Haupt. Haupt paid
Coetzee R20 000 per month.
Thereafter, Coetzee left for the USA in 2000. On 26
March 2001, while still in the USA, Coetzee was
contacted via email by Brewer who had little contact
with Haupt in the meantime. Brewer proposed that Coetzee
allow them to use compiled data and parts of the source
code he developed for the Data Explorer program, to
enable them to write a new computer program, in turn for
a royalty payment. Coetzee and Brewer Marketing
Intelligence (Pty) Ltd entered into a written agreement
in July 2001. Brewer appointed a local developer, Hank
Bento, who developed its new program which became known
as the Brewer’s AMPS program. Bento conceded that he
made use of the source codes provided by Coetzee.
At that time, the latest AMPS data became available and
Coetzee had not yet converted this data for Haupt.
Brewer Marketing acquired this data, completed data and
question databases created by Coetzee. Coetzee converted
the data by using the “tree-preparer” program and
returned the conversions and the tree.txt file to Brewer
Marketing. Coetzee also supplied a number of other
relevant databases of AMPS data to Brewer Marketing.
Brewer Marketing marketed its Brewer’s AMPS program,
together with all the converted data and tree.txt.
files. Haupt’s program mailfunctioned due to the
presence of the Brewer program and Haupt became aware of
the copyright infringements.
After considering and discussing the various aspects,
the Supreme Court overturned the order by the High Court
and upheld the appeal. The Supreme Court ruled that,
based on the facts and evidence, copyright subsisted in
the Data Explorer computer program and that program was
owned by Haupt, and not the software developer. The
court further concluded that Haupt’s copyright in its
program was infringed and ordered that Brewer Marketing
and the other Respondents to deliver up all infringing
copies of the work to Haupt within 7 days and pay costs.
Definitions of “software” and “computer programs”:
The terms “software” and “computer programs” are often
used wrongly as synonyms in trade. This can cause
confusion and it is best that software agreements
contain clear definitions on these terms to avoid
disputes.
Section 2 of the South African Copyright Act lists all
the types of “works” which could be eligible for
copyright protection. The term “software” is not defined
or listed as a work eligible for copyright in the
Copyright Act, while the list of works eligible for
copyright protection include “computer programs”.
Generally, in trade then, the term “software” could
refer to a single product embodying a bundle of
different and separate types of works listed in Section
2 of the Copyright Act. For instance, a written brief to
a software developer, flow-charts, databases, and other
contents to be displayed, are separate categories of
copyright works which could become entwined with a
computer program. The computer program then serves as a
vehicle for these other works.
Prior to the Copyright Amendment Act, 1992, “computer
programs” were protected as a category of “literary
works”. In this regard, prior to 1992, the definition of
a “literary work” under the Copyright Act 63 of 1965
read “includes any written table or compilation”.
After the 1992, the Copyright Act currently defines a
“computer program” as “a set of instructions fixed or
stored in any manner and which, when used directly or
indirectly in a computer, directs its operation to bring
about a result”. The Supreme Court in the Haupt case
stated that a program could constitute a computer
program eligible for copyright, even if it produces
incorrect results.
In terms of the Copyright Act, “computer programs” are
therefore no longer a specie of “literary works” and
regarded as an independent category copyrighted works.
The Copyright Act now describes a literary work as a
work which “includes, irrespective of literary quality
and in whatever mode or form expressed, tables and
compilations, including tables and compilations of data
stored or embodied in a computer or a medium used in
conjunction with a computer, but not a computer
program.”
It appears from the Haupt matter that the High Court
(court a quo) did not distinguish between the computer
programs and the databases which were literary works.
The Supreme Court, correctly however distinguished
between these different types of copyrighted works. The
Supreme Court stated that the database structures do not
belong to Haupt, but to Coetzee who developed them.
These literary works were used by Haupt under a tacit
licence.
It further appears that the current definition for a
“computer program” in the Copyright Act is in conflict
and suggests a shift away from the definition of a
“computer program” in TRIPS which does not divorce
computer programs from literary works. There is
therefore a difference between the South African and
international handling of the protection of a computer
program.
Why does copyright apply to computer programs?
Considering the status of South African laws, copyright
protection still appears to be the most appropriate and
adequate protection for a computer program.
Generally, a “computer program” is not eligible for
patent protection as the Patents Act expressly prohibits
the registration of a patent for a computer program per
se. A computer program does not lend itself to patent
protection as, in practice, the source code is generally
not meant to be read by humans, it would be very
difficult measure the degree of inventiveness and
novelty aspects. In this regard, an invention must be
new in the world to be registrable as a patent.
Considering the nature of a computer program, it is
possible for a computer program to meet the criteria for
copyright protection contemplated in the Copyright Act.
In this regard, and in short, the main criteria to prove
subsistence of copyright is the following:
(a) The work must be a work listed in Section 2 of the
Copyright Act as work which is eligible for copyright
protection.
(b) The work must be reduced to material form. In this
regard, no real distinction is drawn between written and
works in electronic format.
(c) The work must be “original”. There is no definition
for the term “original” in the Copyright Act. The term
“original” does not mean that the work must be new or of
a high artistic or commercial standard. The test for
“originality” is usually low as it, in principle, means
that the work has not been copied from an existing
source and the creator must has spent/applied a
substantial degree of time, skills, money and/or effort
to develop the work.
(d) The creator must be a South African citizen, or a
citizen of any Berne Convention country, at the time of
creating the work, or the work must be first be
published in South Africa or any Berne convention
country.
In the Haupt case, the Supreme Court considered the
nature of the works and the definitions for “literary
works” and “computer programs” in the Copyright Act, and
made a distinction between the computer program and the
database structures as literary works. The Supreme Court
held that the computer program was original as the
converter program and the tree-preparer program no doubt
took substantial skill, judgement and labour to develop.
A benefit to software developers, if “computer programs”
are protected by copyright, is that the copyright term
is at least 30 years longer than the term in which a
patent is enforceable.
The possible downside of copyright protection for
computer programs, in my view, is that a computer
program is one of the categories of works which almost
cannot exist on its own. It creates the vehicle for
other works in which other authors and owners may have
rights, such as databases and artistic works and trade
marks. Copyright generally only protects “expressed
idea”.
Following the above, the term “software” in trade could
incorporate “literary” works” and “computer programs”
which when put together could be an expression of the
same idea in a single commercial product. In this
regard, if the protection of, for instance, a flow chart
setting out the design and concept as a literary work,
distinct from the computer program which it generates,
this may inter alia have serious consequences for the
owner of the computer program, as a high percentage of
the development cost and intellectual skill and labour
is often applied during the design of the flow chart of
the computer program.
Save for cinematograph films, it is not possible to
register copyrightable works such as computer programs
in South Africa. The copyright owner must prove its
rights by facts and evidence available, similar to how
one proves common law rights. These copyright litigation
matters are very costly, especially if matters are
referred to oral evidence, like in the Haupt matter.
Who is the owner of the computer program?
Ex lege, and in the absence of a written agreement
between the parties, the Copyright Act provides that
“the person who exercises control over the making of the
computer program” is the “author” of the computer
program. In the Haupt matter the Supreme Court looked at
dictionary definition for the word “control” and
considered certain facts relating to the working
relationship of the parties. In this regard, the courts
considered the following facts:
• Haupt instructed Coetzee to the end result that was to
be achieved. Coetzee did technical work and
improvements.
• All along, Coetzee was in constant contact with Haupt
and he accepted and executed detailed instructions from
Haupt. Coetzee submitted his work to Haupt, Haupt
approved and checked the work submitted.
• In the property section, Coetzee indicated that
Haupt’s business owned the copyright. The allegation
that Haupt was the copyright owner was never disputed.
• Haupt could, at any time, direct in which direction
the development should proceed, or could terminate
further development, if he so wished. Haupt was
therefore in a position of authority over Coetzee.
In the other facts of the case it is stated that for the
two relevant months after 31 July 1998 Coetzee worked
for Haupt on a full-time basis for a monthly salary of
R20 000.
The combination of all these aspects and facts led the
Supreme Court to conclude that Haupt was the copyright
owner of the computer program. The relevant factors and
facts will of course differ from case to case and again
clear written software agreements could assist in
avoiding disputes and costly litigation.
Ex lege ownership vs contractual ownership:
Parties may contractually agree on whether or not
copyright in the computer program will vest in the
developer or the commissioner. The Haupt case will have
no bearing on such contractual relationships.
Although perhaps a smaller percentage of developers,
there are still independent developers who develop
computer programs for businesses and not conclude
agreements. Ambiguity regarding ownership in such cases
is undesirable and may lead to disputes and costly legal
proceedings.
The Copyright Act further provides that copyright can
only be assigned in writing. In some instances, it may
be possible to rely on verbal agreements and conduct of
parties. However, always better to have certainty and
conclude written agreements.
Conclusion:
Copyright protection applies to software and, in the
absence of written agreements concluded, disputes often
arise between software developers and their
commissioners regarding the ownership of such copyright.
Software may involve a number of separate works eligible
for copyright protection, of which the computer program
is often the most critical and valuable aspect.
The South African Copyright Act describes the owner of a
computer program as the person exercising control over
the making of the computer program. However, different
interpretations can apply to the degree of “control”
envisaged and each case must be evaluated based on facts
and circumstances.
The Haupt case dealt with these copyright issues and
after considering all facts and circumstances, the
Supreme Court concluded that the copyright in the
computer program vests in the commissioner of the
software developments, namely Haupt.
The Haupt case was a very costly litigation matter and
could perhaps been avoided had the parties entered into
proper written agreements governing the ownership of the
copyright upfront.
Although the Copyright Act therefore includes some ex
lege protection in favour of commissioners of software
developments, it is best that parties discuss, negotiate
and agree on the essential terms of their working
relationship and ownership of copyright before
commencing the development of software products.
Emmie de Kock
16 January 2010 |
