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N o C 91/4 Official Journal of the European Communities 12. 4. 89

## II

_(Preparatory_ _Acts)_

# COMMISSION

Proposal for a Council Directive on the legal protection of computer programs

_COM(88)_ _816 final_ — _SYN_ _183_

_(Submitted_ _by the Commission_ _on 5 January_ _1989)_

(89/C 91/05)

Explanatory memorandum

CONTENTS

PART ONE: GENERAL Page

1. Introduction 5

2. The need for action 5

I. The nature of the intellectual property 5

II. Existing protection measures 6

III. Harmonization of protection measures 6

3. The type of intellectual property protection retained 6

I. Patents 6

II. Contract 6

III. Copyright 7

4. Relation to international conventions 8

5. The legal basis 8

PART TWO: PARTICULAR PROVISIONS

Object of protection 9

Authorship of program 9

Beneficiaries of protection 10

Restricted acts 10

Exceptions to the restricted acts 11

Secondary infringement 12

Term of protection 12

12. 4. 89 Official Journal of the European Communities N o C 91/5

PART ONE: GENERAL

1. Introduction

1.1. For the purposes of this proposal, the term 'computer
program' is used. This means a set of instructions the purpose of
which is to cause an information processing device, a computer,
to perform its functions. The program, together with the
supporting and preparatory design material which have made
possible the creation of the program, can also be called
'computer software'. All such material is intended to be covered
by the provisions of this proposal in so far as it can be demonstrated that, from the material in question, a form of program
has been or could be created. However, it is not thought
advisable to include a definition in the Directive to avoid it

becoming outdated. Where the material is of a nature such that
it could not lead to the creation of a program, for example, a
user manual accompanying a program, although the material
will not be protected as part of the computer program,
protection by copyright or other means may nevertheless apply.

1.2. Computer technology now plays a significant role in
almost every aspect of the social and economic life of the
Community, in fields as diverse as leisure, medicine, banking,
education, transport, commerce and industry. It follows that the
programs which are devised to cause the computer to perform
its functions occupy a place of growing importance alongside
the other more traditional expressions of the human intellect,
such as works of literature, art or music, or industrial designs
and inventions. The size and growth of the computer industry is
such that it's importance in the economy of the Community
cannot be over-emphasized.

1.3. It is essential to create a legal environment which will
afford a degree of protection against unauthorized reproduction
to the computer program which is at least comparable to that
given to works such as books, films, music recordings or
industrial designs, if research and investment in computer technology are to continue at a sufficient level to allow the
Community to keep pace with other industrialized countries. In
particular, as regards small and medium sized enterprises it is
important that their ability to create and market innovative
software is not significantly reduced by unauthorized reproductions of their products. Protection must therefore be strengthened and made uniform throughout the Community as much
in the interests of the specialized small and medium sized
software firms which can contribute so much to the future

success of the European software industry as in the interests of
the existing major producers.

Without such a legal environment, the intellectual effort and
financial resources employed to devise computer programs are
put at risk by the ease with which the program can be
reproduced, imitated or counterfeited. If the level of protection
given to computer programs in Member States should fall below
that accorded to programs created in other countries it is
evident that the work of European innovators in this fast
moving and highly competitive field will be easily appropriated
by predatory activities from outside the Community.

1.4. An adequate level of protection should therefore be
unequivocally enshrined in the laws of all Member States and
any difference which could affect the functioning of the
common market should be eliminated. Common principles are
not only necessary in order to promote the free circulation of
computer software within the Community without any
restrictions due to diverging intellectual property rules, but also
to create conditions in which industry can take advantage of the
single market. The current absence of such clear and congruent
legislative provisions in Member States concerning the rights
of authors of computer programs has thus prompted the
Commission to make this proposal to the Council.

2. The need for action

2.1. In establishing the need for action to harmonize
computer program protection, the Commission has had regard
for three factors: the nature of the intellectual property to be
protected, the protection measures existing at present in
Member States and the need to harmonize those protection
measures throughout the Community.

```
I. THE NATURE OF THE INTELLECTUAL PROPERTY

```

2.2. As far as the property right is concerned, a computer
program, in common with other works protected by intellectual
property legislation, is the result of a creative intellectual human
activity. While its mode of expression or fixation may still be
unfamiliar to many, the degree of creativity, skill and inventiveness required to devise a program make it no less deserving
of protection than other works protected by copyright. The fact
that computer programs have a utilitarian function does not
change this.

2.3. These elements of creativity, skill and inventiveness
manifest themselves in the way in which the program is
elaborated. The tasks to be performed by a computer program
need to be defined and an analysis of the possible ways to
achieve these results must be carried out. A selection has to be

made of the various solutions and the steps to achieve the end
result must be listed. The way in which these steps are expressed
gives the program its particular characteristics of speed, efficiency and even style. A program has a structure, with sections
and subsections, through which information flows. In common
with other literary works, the computer program also has an
underlying logic in the presentation of the various steps.

2.4. These steps, the algorithms, from which the program is
built up, should not be protected as such against unauthorized
reproduction. They are the equivalent of the words by which
the poet or the novelist creates his work of literature, or the
brush strokes of the artist or the musical scales of the composer.

2.5. As with literary works in general, protection can only be
envisaged for a computer program from the point at which the
selection and compilation of these elements indicate the creativity and skill of the author, and set his work apart from that of
other authors.

N o C 91/6 Official Journal of the European Communities 12. 4. 89

2.6. It is evident that the more simple and limited the
functions which the program requires the computer to perform,
the more simple the program will be. Similarities between
programs are thus inevitable where the tasks are similar and the
solutions limited in number. The steps by which the computer
will arrive at the completion of its task will also be similar, even
identical from one program to another^ where the task, the
solution and the steps required to achieve it are extremely
simple.

Provided that copying does not take place, a program maker
might, in theory, even produce an entire program which bears a
very great similarity to existing programs, where the tasks to be
performed are identical and the degree of complexity of operations is very low.

2.7. In practice, computer programs are rarely of such
simplicity that authors will arrive at totally identical programs,
independently of each other. On the other hand many
sub-routines which programmers habitually use in order to build
up programs are in themselves commonplace in the industry and
the originality of the program may lie in the selection and
compilation of these otherwise commonplace elements.

2.8. The success of the program in terms of its ability to
perform the task for which it is required will to a large extent be
conditioned by these choices made by the author of the
program at every step along the way. This success will manifest
itself in a program which is quicker, easier, more reliable, more
comprehensive, more productive to use than its predecessors or
its competitors.

II. EXISTING PROTECTION MEASURES

2.9. The following countries have explicitly recognized the
protection of computer programs by copyright: Australia,
Brazil, Chile, Dominican Republic, France, Federal Republic of
Germany, Hungary, India, Indonesia, Japan, Malaysia, Mexico,
Philippines, Republic of Korea, Singapore, Spain, Trinidad and
Tobago, Turkey, United Kingdom, United States of America.
Draft laws are also under consideration in a number of

countries to the same effect, including Denmark, Italy and the
Netherlands.

2.10. The analysis of the existing copyright legislation in the
Member States already reveals one major difference: the term of
protection ranges from 25 years from creation to 70 years after
the death of the author. Further divergences appear if the interpretation of the law by courts is taken into account. It is true
that so far courts have had only a limited number of opportunities to judge cases involving the protection of computer
programs, but as regards one basic condition for protection, the
originality criterion, diverging interpretations exist between
Member States, which result in a difference in the range of
computer programs which can be considered protected by
copyright. There is similar uncertainty as to the scope of
protection afforded to computer programs by copyright
protection.

III. HARMONIZATION OF PROTECTION MEASURES

2.11. Such differences in legislation can only be allowed to
remain if they do not affect the functioning of the internal
market. Intellectual property rights, which are by their very

nature territorial rights merit special attention to ensure that
they do not result in new barriers or perpetuate existing barriers
to intra-Community trade. Divergencies and uncertainty
concerning the scope of protection and the different duration of
exclusive rights may not only affect the free circulation of
computer programs in the Community but may also influence
the decision to establish new firms or commercial initiatives and

thus create a distortion of competition.

2.12. The aim of the present proposed Community action is
therefore to establish legal protection in those Member States
where it does not yet clearly exist and to ensure that the
protection in all Member States is based on common principles.
These principles can be summarized as follows:

— computer programs are protected as literary works by
exclusive rights under copyright,

— the person in whom the right arises is defined,

— the acts which require authorization of the right holder and
the acts which do not constitute an infringement are
determined,

— the term and the conditions for protection of the program
are defined.

3. The type of intellectual property protection retained

3.1. Although it has been clearly established that there is a
need for legal protection in this field and that divergences in
legislation in Member States could bring about a situation in
which the functioning of the internal market is adversely
affected, the question has been raised as to whether copyright is
the most appropriate mode of protection to choose. A number
of forms of legal protection exist and have been applied already
in practice to protect computer programs.

I. PATENTS

3.2. As regards patent protection, this possibility seems to be
limited in all Member States to those programs which form part
of a patentable invention having a technical character and which
meet the normal criteria for patentability. But even for the
limited group of computer programs which may satisfy most of
these conditions the requirement of an inventive step will lead,
in the case of a large majority of valuable computer programs,
to the conclusion that the conditions for patent protection are
not fulfilled. The inventive step may often pertain to the algorithms underlying the programs, which have normally to be
considered unpatentable, like any mathematical formulae,
principle or natural law. Therefore, patent protection can play a
limited role in the legal protection of computer programs, but
does not provide an adequate solution for the basic legal
protection of such works.

II. CONTRACT

3.3. As regards contract law, this is a valuable form of
protection in so far as individual contractual relations exist and
respect of the contract clauses can be controlled. Much of the

12. 4. 89 Official Journal of the European Communities No C 91/7

software put on the market today is subject to licence
agreements between right holder and user. Indeed, this is the
normal mode of commercialization for all but the most simple,
mass-produced software, such as games or standard business
packages. Such licence agreements allow right holders to
circumscribe the activities of users in respect of all the acts
connected with the use of the program. The user is free to
accept or reject the limitations on his activities which the
licensing contract proposes. However, in some areas, the
balance of power between producers and users of computer
programs may not permit the latter to negotiate equitable
contract conditions, due to the market strength of some
software suppliers. Therefore, it seems necessary to provide for
basic principles of protection which apply regardless of specific
contractual provisions. Nevertheless, individually negotiated
arrangements should be possible as long as they are not in
conflict with the applicable competition law.

3.4. Contract law alone does not provide efficient protection
against most forms of misappropriation. In particular, as regards
mass-marketed programs for personal computers and computer
games which do not need maintenance, contract law does not
provide an adequate means to prevent the copying and use of
computer programs by third persons. Nor is it entirely clear
whether the practice of so-called 'shrink-wrap licensing' where
use conditions are attached to a product which is, to all intents
and purposes 'sold' to the user, constitutes a valid licence in all
circumstances and in all jurisdictions.

3.5. It is therefore proposed that the granting and limitation
of exclusive rights in computer programs should reflect these
different modes of commercial exploitation, outright sale, and
licensing. Where 'sale', in the normal sense of the word occurs,
certain rights to use the program must be taken to pass to the
purchaser along with the physical copy of the program. Where
licensing takes place in the conventional sense by means of a
written contract signed by both parties, the rights to use the
program which has been provided will, with a limited number of
exceptions, remain circumscribed by contractual arrangements.
The choice remains open for the supplier then to decide on the
most appropriate form of commercialization for his product,
and for the user to manifest his preference for an outright
purchase or a licensing agreement.

III. COPYRIGHT

3.6. The overwheiming weight of evidence submitted to the
Commission during the consultation process which followed
publication of the Green Paper indicated that protection by
copyright is the most appropriate measure to adopt. Given the
trend towards copyright as the best available means to ensure
the international protection of programs not only among
Member States but among the major trading partners of the
Community, it is hardly surprising that so many commentators
on the Green Paper have indicated that harmonization of
copyright laws within the Community is now becoming a
priority. It is further believed that within the framework of
copyright, protection as a literary work is desirable. Copyright

can provide the solution of ensuring adequate protection against
misappropriation and, in particular, against unauthorized reproduction. Copyright has already in the past proved its capacity to
adapt to new technologies, such as films and broadcasts.
Copyright protection does not grant monopolies hindering independent development. Copyright protects only the expression
but not the underlying idea of a work. It does not therefore
block technical progress or deprive persons who independently
developed a computer program from enjoying the benefits of
their labour and investment.

3.7. Protection by copyright allows a clear balance to be
achieved between too little protection and over-protection. It
provides sufficient flexibility to permit a fair compromise
between the divergent interests of producers or suppliers on one
side and users of computer programs on the other. But the main
advantages of this type of intellectual property protection relate
to the fact that the protection covers only the individual
expression of the work and gives thus sufficient flexibility to
permit other authors to create similar or even identical
programs provided that they abstain from copying. This is
particularly important because the number of algorithms
available, on which computer programs are based, is
considerable, but not unlimited.

3.8. Some countries have introduced 'genre specific'
provisions in their copyright law to accommodate possible
differences between computer programs and other more traditional literary works. Such 'genre specific' provisions should be
kept to a minimum if the fuil benefit of the established
copyright protection granted under the Berne and Universal
Copyright Conventions is not to be overly diluted. Accordingly,
the present Directive seeks as far as possible to stay within the
common parameters of literary work protection as it exists
today in the Member States of the EC.

3.9. Computer program protection by means of copyright
raises two particular issues, that of standardization of aspects of
programs in the interests of greater inter-operability of
hardware and software, and that of availability of information
concerning the access protocols and interfaces which ensure
such inter-operability. Moves towards greater standardization of
products within the computer and telecommunications industries
are well under way, through the encouragement and initiatives
of both the Commission itself and the industries concerned.

Many aspects of computer hardware and software inter-operability are already governed by the International Standards
Organization's Open Standards initiative. In addition, the
existence of bodies such as X-Open indicates a willingness on
the part of industry to cede proprietary rights in some parts of
programs into the public domain in order to achieve greater
compatibility between systems. The provisions of this Directive
should contribute to the trend towards a greater use of standardization in so far as they determine with more legal certainty
what are the exclusive rights of the author of the program.

3.10. As regards the question of the protection of 'access
protocols and interfaces' themselves, the question was raised in
the Green Paper as to whether copyright protection should
apply to these parts of programs.

N o C 91/8 Official Journal of the European Communities 12. 4. 89

3.11. In order to produce inter-operative systems it is
necessary to replicate the ideas, rules or principles by which
interfaces between systems are specified, but not necessarily to
reproduce the code which implements them. Ideas, rules or
principles are not copyrightable subject matter. Such ideas, rules
or principles may be used by any programmer in the creation of
an independent implementation of them in an inter-operative

program.

3.12. Competitors are therefore free, once they establish
through independent analysis which ideas, rules or principles are
being used, to create their own implementation of the ideas,
rules or principles in order to make compatible products. They
may build on the identical idea, but may not use the same
expression as that of other protected programs. There is thus no
monopoly on the information itself, but only a protection of the
form of expression of that information.

3.13. If similarities in the code which implements the ideas,
rules or principles occur as between inter-operative programs,
due to the inevitability of certain forms of expression, where the
constraints of the interface are such that in the circumstances no

different implementation is possible, then no copyright
infringement will normally occur, because in these circumstances it is generally said that idea and expression have merged.

3.14. Although it is technically possible to decompile a
program in order to find out information concerning access
protocols and interfaces this is a lengthy, costly and inefficient
procedure. It is usually more efficient for the parties concerned
to agree on the terms under which the information will be made
available. Problems of access to information may have to be
addressed by other means which are outside the scope of this
Directive.

3.15. In view of the rapid evolution of the computer
industries the Commission will keep all these matters under
constant review.

4. Relation to international conventions

Copyright has the added advantage of affording a high level of
international protection to works so covered, through the
application of the Berne and Universal Copyright Conventions.
Although neither convention expressly mentions computer
programs among the works to be covered by copyright it is
generally understood that as new forms of intellectual property
are developed they will be encompassed by the conventions in
so far as the same kinds of creativity are involved in the elaboration of such new forms of work as for existing works. The
conclusion that computer programs are indeed literary 'works'
within the meaning of the Berne and Universal Copyright
Conventions leads to the assumption that where a Member State
grants protection under the Berne Convention it will apply the
principle of national treatment. Whatever the theoretical merits
of _'sui generis'_ legislation in this field might be, they are far
outweighed by the advantages of the existence of these international conventions.

5. Legal basis

5.1. In its White Paper on the completion of the internal
market, the Commission stated its intention to pay particular
attention to the introduction of a Community framework for
the legal protection of software and announced a proposal for a
Directive. The present proposal therefore forms part of the
Commission's program for the completion of the internal
market before 31 December 1992.

5.2. It follows from the approach of fixing basic common
principles that a Directive is the appropriate legal instrument to
harmonize the laws of the Member States as regards the legal
protection of computer programs.

5.3. Because differences in and uncertainties regarding the
legal protection of computer programs can have a negative
effect on the functioning of the common market in these
products, Article 100A is the appropriate legal basis for the
present proposal.

For the completion of the internal market before 31 December
1992, Article 100A, first paragraph, second sentence, provides
by way of derogation from Article 100:

'The Council shall, acting by a qualified majority on a proposal
from the Commission in cooperation with the European
Parliament and after consulting the Economic and Social
Committee, adopt the measures for the approximation of the
provisions laid down by law, regulation or administrative action
in Member States which have as their object the establishment
and functioning of the internal market'.

Article 8A, second paragraph, defines the internal market as
comprising 'an area without internal frontiers in which the free
movement of goods, persons, services and capital is ensured in
accordance with the provisions of this Treaty.'

5.4. The present proposal will favour the free circulation of
computer programs in so far as industry in those countries with
clear and established protection of computer programs is
currently in a more favourable position than that in countries
where protection is uncertain; such differences in legal
protection distort the conditions of establishment and of competition in Member States for firms which engage in activities
concerned with computer programs. This situation may affect
the growth of the Community software industry and the
operation of the internal market. In addition by harmonizing
the conditions under which the results of research and devel
opment in the computer program field are legally protected on a
uniform basis in the Member States, innovation and technical
progress throughout the Community will be encouraged.

5.5. In the preparation of this proposal the Commission has
taken into account the requirements of Article 8C of the EEC
Treaty and has concluded that no special provisions or derogations seem warranted or justified at this stage.

5.6. Likewise the Commission has studied the question of the
high level of health/safety/environmental and consumer
protection required by the terms of Article 100A (3) of the EEC
Treaty.

It has done so following consultation with the industrial and
social partners concerned, and in the light of an analysis of the
risks inherent in this area and of the current technical capabilities of European industry. The proposal takes full account of
these considerations in the light of the overall objectives of this
provision of the Treaty.

12. 4. 89 Official Journal of the European Communities N o C 91/9

PART TWO:

_Article 1_

Object of protection

1. The words 'computer program' are not defined for the
purposes of this Article. It has been recommended by experts in
the field that any definition in a directive of what constitutes a
program would of necessity become obsolete as future technology changes the nature of programs as they are known
today.

Given the present state of the art, the word 'program' should be
taken to encompass the expression in any form, language,
notation or code of a set of instructions, the purpose of which is
to cause a computer to execute a particular task or function.

The term should be taken to encompass all forms of program,
both humanly perceivable and machine readable, from which
the program which causes the machine to perform its function
has been or can be created.

Preparatory and design material such as flow charts or
descriptions of sequences of steps in plain language will be
included, as will embodiments of the program within the
hardware itself, either permanently or in removable form.
Material such as user manuals or maintenance manuals will not

be considered to be parts or manifestations of the program,
except that where substantial parts of the program are
reproduced therein, those extracts from the program will be
protected by copyright in the program independently from any
rights which may subsist in the manual or other documentation.

2. Member States shall be required to apply the same
provisions for the protection of computer programs as apply to
literary works. A program has all the characteristics of a literary
work, namely that it is the expression in language and in a
perceivable form from which it can be reproduced of an idea or
series of ideas, created by the expenditure of human skill and
labour. The fact that the language may be only comprehensible
to those skilled in the art, and that some manifestations of the
program may take forms which are not at all times
comprehensible to the human senses does not preclude
protection as a literary work, since other literary works may
also be embodied in carriers which require a mechanical device
to render them perceivable to the human mind.

In order to avoid legal uncertainty, computer programs must be
protected as literary works and not 'as if they were literary
works or 'assimilated to' literary works. Similarly they should
not be treated as a new and separate 'sub-category' of literary
work. Failure to accord the full protection given to literary
works generally in Member States could result in divergencies in
the nature and scope of protection and in uncertainties as to the
level of protection afforded to such works under the Berne and
Universal Copyright Conventions.

3. Copyright protects the expression of ideas but not the
ideas themselves. Therefore the protection given to computer
programs will extend to the program as a whole, and to its
constituent parts, in so far as they represent a sufficient degree
of creativity to qualify as 'works' in themselves. The only

PROVISIONS

criterion which should be applied to determine the eligibility for
protection is that of originality, that is, that the work has not
been copied. No other aesthetic or qualitative test should be
applied. Sub-routines and routines which go together to form
modules which in turn form programs may all qualify for
protection independently of the protection given to the program
as a whole, that is, as a compilation of such elements. The algorithms which go to make up the sub-routines are not normally
in themselves capable of receiving protection under copyright in
so far as they are similar in nature to mathematical formulae.
They may in exceptional circumstances attract patent protection.
Similarly, the ideas, principles, or logic which underlie the
program will not be copyrightable.

4. (a) Many algorithms and many sub-routines are
commonplace in the industry. They may have been
placed or have fallen into the public domain or they may
be _de facto_ standard routines or algorithms. Where a
program is composed wholly or in part of such
commonplace or unprotected algorithms and routines, it
should nevertheless be protected as a compilation,
provided that it is original in the abovementioned sense
and that the creator demonstrated skill and labour in the

creation of the compilation.

(b) An increasingly large number of programs are now
generated by using a computer. This means that program
A is used in order to create programs B, C and so on
with some degree of human intervention in order to
select the most appropriate means to achieve the
objective. Program A could in this repect be likened to a
literary work such as a dictionary which permits the
creation of other literary works. Although much of the
routine programming work is done by purely mechanical
means, human effort is still nevertheless a critical element
in the creative process. It is therefore proposed that in so
far as programs generated by such means fulfil the
criteria which would enable them to be categorized as
'original works' they should be protected in the same
way as programs created without the aid of such
machine generation processes.

_Article 2_

Authorship of program

1. In common with all literary works, the question of authorship of the program is to be resolved in favour of the natural
person or persons who have created the work. Although the
right to exercise exclusive rights may be assigned to another, the
author will retain at least the unalienable rights to claim
paternity of his work.

2. Copyright in a work created by a group of persons, which
is normally the case with the development of computer
programs, is to be exercised in common unless the persons
concerned contract otherwise.

3. Computer programs are frequently created by freelance
programmers working on particular projects on behalf of organ

N o C 91/10 Official Journal of the European Communities 12. 4. 89

izations which have commissioned a given program. In such
circumstances, unless the parties agree otherwise, it is normal
that the person or entity which causes the work to be created
should wish to retain the control over the exclusive rights in the
program, with the exception of the right to claim paternity of
the work mentioned in paragraph 2.1 above.

4. In circumstances where a programmer is employed to
create programs within a company or organization, the
employer will normally require that the exclusive rights in the
program should remain within his control, with the exception of
the right to claim paternity of the work, unless the parties agree
otherwise. In respect of the circumstances described in this
paragraph and in paragraph 2.3 above, it is the intention of this
Directive that a certain measure of harmonization of current

practice in Member States should be brought about. Nevertheless the freedom to negotiate contracts of employment and
terms for commissioned works must remain to a large extent a
subject for contractual negotiation between the parties.

In respect of other aspects of authors' moral rights such as the
right to maintain the integrity of the work, the nature of
computer programs is such that substantial modification and
re-utilization of parts of programs is constantly taking place and
the concept of integrity of the work is of much less relevance to
the author's interests than has traditionally been the case with
other literary works.

5. As indicated in 4 (b), a large number of works are now
generated by means of a computer program which serves as a
tool to generate new programs. The question arises as to
whether authorship of these programs generated by the first
computer program should reside with the creator of the first
program, or with the person who causes it to generate other
works. Since the first program is no different in its function
from any other tool used to create a work, such as an
instruction manual by means of which another work is created,
it would seem appropriate that the person who uses such a tool
to generate programs should be considered as the creator of
those programs. In practice, such a person may be the operator
of the computer, or the natural or legal persons who retain the
right to exercise the rights in programs which they have
commissioned or which have been created by their employees.
In these circumstances it is doubtful that a right to claim
paternity of the programs generated by a machine could be
upheld. The human input as regards the creation of machine
generated programs may be relatively modest, and will be
increasingly modest in future. Nevertheless, a human 'author' in
the widest sense is always present, and must have the right to
claim 'authorship' of the program.

_Article 3_

Beneficiaries of protection

1. Where the literary works of natural and legal persons are
currently protected by copyright in Member States either by
virtue of nationality or residence, in the case of natural persons,
or by having a real and effective presence in a Member State in
the case of legal persons, the same protection will apply for

computer programs. Where Member States afford protection on
the basis of first publication of a literary work in a Member
State, that criterion should also apply to computer programs.
Thus the rules of national treatment under the Berne

Convention will be applied to computer programs as to all other
literary works.

2. As mentioned above, computer programs are frequently
the creation of large teams of programmers, some of whom
would not be currently eligible for protection under the
residence, nationality or first publication criteria outlined in
paragraph 1 above. This anomaly can be removed by extending
the application of Articles 3 and 5 of the Berne Convention to
all authors where a work has been created jointly, provided that
at least one member of the group is able to establish a right to
protection. In this way, programmers from outside the
Community and in particular programmers from developing
countries who cooperate on joint projects with programmers
from Member States will not be unfairly disadvantaged.

_Article 4_

Restricted acts

1. (a) Under traditional copyright protection for literary works
the author's exclusive rights comprise the right to control
reproduction, adaptation and translation of his work.
The Berne Convention does not expressly give a right to
control the distribution of works but the exclusive rights
in respect of reproduction are in practice exercised in
most countries of the Berne Union to allow the author to

determine how his work shall be put on the market.

The right to control reproduction given in Article 4 (1)
(a) is fundamental to achieve adequate protection for
computer programs. Unlike other forms of literary work,
a computer program cannot serve its purpose unless it is
'reproduced'. This 'reproduction' should not be confused
with 'replication'. The program may be re-created in part
or in whole as part of the internal processes of the
computer which runs it. No second permanent copy of
the program is made during this process, although parts
of the program will be 'reproduced' and stored in other
parts of the memory of the computer during the
operation of the program. These temporary copying,
moving and storing operations may leave no trace once
the operation of the machine has terminated. Thus
'copying' in the traditional sense of producing a second
permanent version of an original does not normally take
place unless a 'back-up' copy of the program is made.
Nevertheless, where programs are licensed, reproduction
without authorization should be prohibited, principally
because all the acts which could be prejudicial to the
author's interests, namely, loading, viewing, running,
transmitting or storing the program cannot be performed
except by means of a reproduction of the program.

Loading of the program is to be considered a restricted
act in so far as it normally at the present time necessitates
reproduction of the program in part or in whole. In
future programs may be more often contained in media
which can be inserted physically into the computer, such
as chips, or may be an integral part of the hardware. In
these circumstances, reproduction of the program may

12. 4. 89 Official Journal of the European Communities No C 91/11

no longer be necessary in order to work on it. For the
present time, and in view of the risk of unauthorized
users entering and corrupting programs, it is felt that
loading should remain under the author's exclusive
control. Similarly, viewing, running, transmission and
storage of the program all involve reproduction and are
potentially damaging to the right holder's interests.
Computer programs are especially vulnerable not only to
copying by electronic means but also to unauthorized
adaptation, destruction or corruption, either for financial
gain or for political objectives. Computer programs
controlling banking, military or security operations must
be protected against attack by 'hacking' — that is
unauthorized entry into the system in order to remove,
add or change information contained within it. Such acts
of fraud or sabotage can only be controlled if authors
have wide and enforceable powers to protect programs
against reproduction.

(b) Adaptation of a literary work normally implies transformation of a given text such as a novel into another
literary 'genre' such as a play. Translation of a literary
work is normally done from one human language into
another. In the case of computer programs, whether the
act is a translation from humanly readable form into
machine readable form, or from one programming
language to another, or an adaptation of a program
designed to perform one task in order that it may
perform another, the term 'adaptation' best describes the
activities involved. It is therefore to be understood that

'adaptation' in this Directive includes 'translation'.

(c) Distribution of a computer program by means of sale or
licence is normally controlled by the author of the
program, either directly if he is also the producer of the
marketed product, or indirectly by assignment of his
right to a publisher or producer of programs. The
author's right is normally exhausted once the product has
been put on the market with his consent. This Directive
proposes that as regards the rental, leasing and licensing
of software, the distribution right should not be
exhausted by the first sale, leasing or licensing of the
program. This will enable the right holder to exercise
control over rental of products which have been
previously sold, leased or licensed and to have continued
control over the rental, leasing or licensing of products
which have been previously distributed by these means.
Once a product has been sold with the right holder's
consent he should no longer be able to exercise control
over subsequent sale, that is sale to third parties of
legally acquired programs. Likewise, as regards
importation for the purposes of sale, licensing, lease or
rental, once the program has been imported into the
Community with the author's consent, his right to
control subsequent importation will be exhausted.

It is essential to permit right holders to control the rental
of programs which have been sold or licensed if copying
of programs without authorization is to be prevented. It
is possible at present to rent a copy of a software
package at a nominal charge, to copy it at home using
relatively inexpensive material and to return it the
following day. It is clear that given the complexity of
most programs and the fact that they are used for a given
purpose rather than read for enjoyment, cheap,
short-term rental allows the home copier to save on the
cost of purchasing or leasing programs: as such, rental is
highly prejudicial to right holders' interests and should
be subject to the right to prohibition, with the limited
exceptions indicated in Article 5 below.

_Article 5_

Exceptions to the restricted acts

1. Where a program is sold to the public, it is normal that
certain rights to use the property thus acquired should apply.
These rights should of necessity include the right to use the
program without further express authorization from the right
holder. It should not be necessary to obtain the right holder's,
authorization in order to lend the program to a third party or to
use it on a given piece of apparatus or in a given location.
Similarly the acts of loading, viewing, running, transmission or
storage should be taken as not requiring express authorization
of the right holder provided that, particularly in the case of
transmission and storage, they are only carried out for the
purposes of using the program and do not result in a second
permanent replication of the program. Thus temporary or
permanent transmission to and storage by a second party of a
program legally acquired by a purchaser for his own use will
not fall within the exceptions to the restricted acts enumerated
in Article 4, whereas such acts of transmission and storage
performed by the purchaser temporarily for the purposes of
using the program himself will not require authorization by the
right holder. Similarly any form of reproduction other than that
required for use will not be permitted, in particular, the making
of a back-up copy or a copy for private use. Where a back-up
copy is necessary for the purposes of use of a program this is
normally expressly permitted by the right holder.

All reproduction should be controllable whether it is of part of
the program or of the entire program, in that a partial reproduction may be sufficient to cause considerable economic harm
to the author's interests, for example, by copying the protocol
and interface program elements of a given program.

As regards the Anglo-Saxon law concept of 'fair dealing' by
which reproduction of insubstantial parts of literary works is
permitted in certain circumstances, it is believed that in respect
of licensed programs, which constitutes the most common
method of commercialization at present, the parties are free to

No C 91/12 Official Journal of the European Communities 12. 4. 89

negotiate exceptions to the author's exclusive right to control
insubstantial reproduction of the program if circumstances
warrant such a derogation. In the case of programs which are
sold or made available by means other than a written license
agreement signed by both parties, the provisions which exist in
the copyright laws of Member States in relation to exceptions to
the exclusive rights of the author of a literary work should
continue to apply in the case of computer programs.

Where the current practice of 'shrink-wrap' licensing applies,
program producers impose conditions on the use of programs
which have been in reality 'sold' to the consumer. The
provisions of Articles 4 and 5 are intended to have as their
effect that where software is licensed in the normal sense of the

word, right holders will be able to exercise exclusive rights in
respect of all acts of reproduction and adaptation, the exact
provisions being the subject of contractual arrangements under
the terms of the licence. But where no written, signed licence
agreement is employed, as is the case with 'shrink-wrap' licences
(the customer being merely advised by means of instructions
contained within the packaging which surrounds the program
carrier of his rights in respect of his purchase) the provisions of
Article 5 (1) will allow the purchaser to assume the rights
described above. This is a necessary compromise between the
interests of suppliers and consumers of computer programs.
Article 4 of the Directive gives wide powers to right holders to
control the acts of reproduction, adaptation and distribution,
but these powers should not in fairness be used to circumscribe
the normal enjoyment of property by a person who legally
acquires a program by purchase. If program producers wish to
ensure the greater degree of control over the reproduction,
adaptation and distribution of their programs which the system
of licences permits, the would-be 'purchaser' of a program
should be required to read and sign a legally binding licence
agreement at the point of sale.

2. Adaptation and translation of programs are acts which the
licensee of sophisticated programs may frequently wish to do in
the course of normal use of the program. Many custom-made
computer programs have not stabilized when they are supplied
to end users; similarly many programs require correction in use
or adaptation to changes in user requirements. This correction
and adaptation work could in many instances be done by the
user. However the supplier has a number of reasons for wishing
to maintain his exclusive rights to control adaptation and translation. A guarantee and maintenance contract may attach to the
program which has been supplied and such guarantee and maintenance arrangements may be invalidated or rendered expensive
and impracticable if the licensee is able to constantly amend his
licensed program. The supplier will also frequently set the
licence rate to take into account the use which can be made of

the program, in terms of the number of users and the amount of
program which can be accessed. Such control is exercised by
means of copy protection and metering systems incorporated in
the program itself. If the user were able to adapt the program,
he would be at liberty to remove these control mechanisms.

Therefore any adaptation and translation which is done should
be subject to the right holder's control in the case of licensed
software and should be the subject of contractual arrangements
between supplier and user.

3. The exclusive right to control rental given in Article 4 (c)
is subject to a derogation in favour of one group of users for
whom special arrangements can and should be made. This is
non-profit making public libraries where members of the public
may go to use and to study computer programs. Libraries are
able to control the use made of such programs by means of
safeguards to prevent their duplication or their removal from
the premises. It is important, given the need to encourage
computer literacy in all sections of the Community, that
libraries are able to offer computer programs for study by the
public in the same way as they offer other literary works.

_Article 6_

Secondary infringement

1. In order to ensure that right holders may bring successful
actions against infringers of the exclusive rights given in Article
4, it is necessary to provide for the cases where infringing copies
have been put in circulation. The ease with which unauthorized
copies of programs can be transferred electronically from one
'host' computer to another, across national borders and without
trace, requires that the importation and possession of infringing
copies should also be actionable as should be all dealing with
infringing copies in the sense of selling, offering for sale,
receiving, transmitting and storing such copies.

2. Many programs are marketed with a technical protection
system which prevents or limits their unauthorized use or reproduction. If such systems are used by right holders to protect
their exclusive rights, it should not be legally possible to remove
or circumvent such systems without the authorization of the
right holder. The term 'deal with' should be taken in this
context to include sale, offer or advertise for sale, transmit,
store or receive such means to circumvent protection systems,
and to include also the communication of information as to the

means for circumvention or removal of protection systems.

_Article 7_

Term of protection

Although the term of protection for literary works is life of
author plus 50 years, attaching the term of protection to the life
of a human author might cause some hesitations in the light of
joint authorship of computer generated works and the length of
term which will result. These hesitations outweigh the benefits
of maintaining the classical 'literary work' term.

12. 4. 89 Official Journal of the European Communities No C 91/13

Proposal for a Council Directive on the legal protection of computer programs

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Economic Community, and in particular Article 100A
thereof,

Having regard to the proposal from the Commission,

In cooperation with the European Parliament,

Having regard to the opinion of the Economic and
Social Committee,

Whereas computer programs are at present not clearly
protected in all Member States by existing legislation and
such protection, where it exists, has different attributes;

Whereas the development of computer programs requires
the investment of considerable human, technical and
financial resources while computer programs can be
copied at a fraction of the cost needed to develop them
independently;

Whereas computer programs are playing an increasingly
important role in a broad range of industries and
computer program technology can accordingly be
considered as being of fundamental importance for the
Community's industrial development;

Whereas certain differences in the legal protection of
computer programs offered by the laws of the Member
States have direct and negative effects on the functioning
of the common market as regards computer programs
and such differences could well become greater as
Member States introduce new legislation on this subject;

Whereas existing differences having such effects need to
be removed and new ones prevented from arising, while
differences not adversely affecting the functioning of the
common market to a substantial degree need not be
removed or prevented from arising;

Whereas the Community's legal framework on the
protection of computer programs can accordingly in the
first instance be limited to establishing that Member
States should accord protection to computer programs
under copyright law as literary works and further in
establishing who and what should be protected, the
exclusive rights on which protected persons should be
able to rely in order to authorize or prohibit certain acts,
and for how long the protection should apply;

Whereas the function of a computer program is to
communicate and work with other components of a
computer system and with users;

Whereas for this purpose, a logical and, where appropriate, physical interconnection and interaction is
required to permit all elements of software and hardware
to work with other software and hardware and with

users in all the ways they are intended to function;
whereas the principles describing any such means of
interconnection and interaction are generally known as
'an interface'; whereas the specification of interfaces
constitutes ideas and principles which underlie the
program; whereas those ideas and principles are not
copyrightable subject matter;

Whereas the Community is fully committed to the
promotion of international standardization;

Whereas protection of computer programs under
copyright laws should be without prejudice to the
application in appropriate cases of other forms of
protection,

HAS ADOPTED THIS DIRECTIVE:

CHAPTER I

_Article 1_

Object of protection

1. Member States shall protect computer programs by
conferring exclusive rights in accordance with the
provisions of this Directive.

2. Exclusive rights shall be conferred by the provisions
of copyright laws. Protection shall be accorded to
computer programs as literary works.

3. Protection in accordance with this Directive shall

apply to the expression in any form of a computer
program but shall not extend to the ideas, principles,
logic, algorithms or programming languages underlying
the program. Where the specification of interfaces
constitutes ideas and principles which underlie the
program, those ideas and principles are not copyrightable
subject matter.

4. (a) A computer program shall not be protected unless
it satisfies the same conditions as regards its originality as apply to other literary works.

(b) Programs generated by means of a computer shall
be protected in so far as they satisfy the
conditions laid down in point (a).

No C 91/14 Official Journal of the European Communities 12. 4. 89

_Article 2_

Authorship of program

1. Subject to the following paragraphs, the author of a
computer program is the natural person or group of
natural persons who has created the program.

2. In respect of computer programs created by a
group of natural persons, the exclusive rights shall be
exercised in common unless otherwise provided by

contract.

3. Where a computer program is created under a
contract, the natural or legal person who commissioned
the program shall be entitled to exercise all rights in
respect of the program, unless otherwise provided by

contract.

4. Where a computer program is created in the course
of employment, the employer shall be entitled to exercise
all rights in respect of the program, unless otherwise
provided by contract.

5. In respect of programs which are generated by the
use of a computer program, the natural or legal person
who causes the generation of subsequent programs shall
be entitled to exercise all rights in respect of the
programs, unless otherwise provided by contract.

_Article 3_

Beneficiaries of protection

1. Protection shall be granted to all natural or legal
persons eligible under national copyright legislation as
applied to literary works.

2. In the case referred to in Article 2 (2) the computer
program shall be protected in favour of all authors if at
least one author is a beneficiary of protection in
accordance with paragraph 1 of this Article.

_Article 4_

Restricted acts

Subject to the provisions of Article 5, the exclusive rights
referred to in Article 1 shall include the right to do or to
authorize:

(a) the reproduction of a computer program by any
means and in any form, in part or in whole. In so far
as they necessitate a reproduction of the program in
part or in whole, loading, viewing, running, transmission or storage of the computer program shall be
considered restricted acts;

(b) the adaptation of a computer program;

(c) the distribution of a computer program by means of
sale, licensing, lease, rental and the importation for
these purposes. The right to control the distribution
of a program shall be exhausted in respect of its sale
and its importation following the first marketing of
the program by the right holder or with his consent.

_Article 5_

Exceptions to the restricted acts

1. Where a computer program has been sold or made
available to the public other than by a written licence
agreement signed by both parties, the acts enumerated in
Article 4 (a) and (b) shall not require the authorization
of the right holder, in so far as they are necessary for the
use of the program. Reproduction and adaptation of the
program other than for the purposes of its use shall
require the authorization of the right holder.

2. Where a computer program has been sold or made
available to the public by means other than a written
licence agreement signed by both parties, the exclusive
right of the right holder to authorize rental shall not be
exercised to prevent use of the program by the public in
non-profit making public libraries.

_Article 6_

Secondary infringement

1. It shall be an infringement of the author's exclusive
rights in the computer program to import, possess or
deal with an infringing copy of the program, knowing or
having reason to believe it to be an infringing copy of
the work.

2. It shall be an infringement of the author's exclusive
rights in the computer program to make, import, possess
or deal with articles intended specifically to facilitate the
removal or circumvention of any technical means which
may have been applied to protect a program.

_Article 7_

Term of protection

Protection shall be granted for 50 years from the date of
creation.

12. 4. 89 Official Journal of the European Communities No C 91/15

CHAPTER II

_Article 8_

Continued application of other legal provisions

1. The provisions of this Directive shall be without
prejudice to any legal provisions concerning patent
rights, trade marks, unfair competition, trade secrets or
the law of contract in so far as such provisions do not
conflict with the principles laid down in the present
Directive.

2. The provisions of this Directive are applicable also
in respect of works created prior to [date in Article 9].

CHAPTER III

_Article 9_

Final provisions

1. Member States shall bring into force the laws,
regulations or administrative provisions needed in order
to comply with this Directive by [date].

2. Member States shall ensure that they communicate
to the Commission the texts of the provisions of national
law which they adopt in the field covered by this
Directive.

_Article 10_

This Directive is addressed to the Member States.

No C 91/16 Official Journal of the European Communities 12. 4. 89

Commission conclusions decided on the occasion of the adoption of the Commission's proposal
for a Council Directive on the legal protection of computer programs

In adopting a proposal for a Council Directive on the legal protection of computer programs
the Commission approves the following policy guidelines. It affirms its conviction that
computer programs, given the intellectual effort and the financial investment which may be
necessary for their creation and the ease with which they can be copied, merit adequate legal
protection. Following a worldwide trend, the Commission proposes copyright as a suitable
legal basis for ensuring a balance between an effective level of protection and the interests of
users. Divergencies between the copyright statutes of the Member States as to the availability
and scope of the protection have caused the Commission to initiate the harmonization process
in view of the objective of completing the internal market.

Software is an industrial tool which is essential to the Community's economic development.
The grant of exclusive rights under copyright law will create incentives for software developers
to invest their intellectual and financial resources and thereby to promote technical progress in
the public interest. Technical progress and public welfare, however, are also ensured by a
system of indistorted competition, one of the principal goals of the Treaty. Exclusive
proprietary rights and free competition, while in principle designed to achieve the same
objective by different means, may conflict where a copyright owner is in a position to exercise
his statutory exclusive rights beyond their intended purpose. The exercise of exclusive copyrights will not prejudice the application of the competition rules and the imposition of effective
remedies in appropriate cases. Further, the Community commitment to international standardization in the fields of information technology and telecommunications must not be
compromised.

The relation between the Community's competition rules and copyright is governed by the
European Court's distinction between the existence and the exercise of the intellectual property
rights in question. Any arrangement or measure which goes beyond the existence of copyright
can be subject to control under the competition rules. This means that for example any attempt
to extend by contractual agreements or other arrangements the scope of protection to aspects
of the programs for which protection under copyright is not available, or the prohibition of any
act which is not reserved for the right owner may constitute an infringement of the competition
rules.

Moreover, companies in a dominant position must not abuse that position within the meaning
of Article 86 of the Treaty. For example, under certain circumstances the exercise of copyright
as to the aspects of a program, which other companies need to use in order to write compatible
programs, could amount to such an abuse. This could also be the case if a dominant company
tries to use its exclusive rights in one product to gain an unfair advantage in relation to one or
more products not covered by these rights.

Furthermore, the ability of a competing manufacturer to write an independent but compatible
program often depends on his possibility to have access to the target program or to certain
information relating to it. Access to information is not a matter of copyright law. Article 86
always applies where a dominant company abusively refuses access to such information or
restricts unreasonably such access.