Software - overviewIntellectual property rights in software

Computer programs are originally written in eye-readable source code which must be converted to object code before a computer can read or execute the program. The source code is protected by literary copyright. In addition, there may be other forms of protection, including design rights and database rights in a segment or configuration of the software.

Under s1 of the Copyright Designs and Patents Act 1988 (CDPA) a literary work includes:

The EC Software Directive 91/250/EEC was implemented into law in the UK by the Copyright (Computer Programs) Regulations 1992 (SI 1992/3233). Jacob LJ has commented that the UK Legislation, in rewording of the Directive, created separate copyright in the preparatory design work and another in the computer program itself.

Computer-generated works may also be protected by copyright. Under s9(3) of the CDPA, the author of the computer-generated work is the person who undertakes the necessary arrangements for its creation.

Screen graphics such as the screen frames of a computer game or screen formats of a graphical user interface (GUI) may be protected as artistic copyright.

Software contracts

The ownership of intellectual property rights in software, and the balancing of risk and reward between the supplier and customer, is at the heart of all software contracts. Crucial in drafting or negotiating a software contract is whether it is tackled from the perspective of the software supplier or the customer. IT contracts are fertile ground for software disputes so particular care is required to ensure key terms are properly addressed.

Software licence

A typical software licence will cover:

Click wrap and shrink wrap licence

Click-wrap licences are the electronic version of shrink-wrap licences usually found outside the plastic wallet or box when buying off the shelf software. The shrink-wrap licence will provide that opening the package or using the software will constitute acceptance of the licence terms. Whether this properly constitutes acceptance is debateable. The shrink-wrap licence may be combined with a click-wrap licence appearing on the front screen of the program, requiring the user to scroll through the licence terms and click the on-screen 'I Accept' option signifying consent to the terms before proceeding further.

Software support

A software support agreement may be a stand alone agreement or combined with the software licence. Unless the supplier is providing general support for the customer’s IT systems, it is essential to identify precisely which software and equipment is supported and to specify what is within and what is excluded from the support services. A supplier may spend many hours trying to resolve a reported fault only to find that the problem is nothing to do with its software.

Support agreements may not only cover fault resolution but also the provision of a help desk, training, updates and enhancements. There may be a service level agreement (SLA) setting out categories of errors, response, resolution times, escalation procedures and service level credits should the level of service fall short of these requirements

Software development agreement

Software development agreements begin with the recognition of a need for a technology solution to a business problem. A feasibility study may be followed by a functional/business specification and a technical specification. The danger of a 'project creep' outside the original project scope is ever present.

A key issue is the ownership of the intellectual property rights in the developed software. Under the CPDA, software developed by an employee of the company in the course of employment will be owned by the company but copyright in software created by an independent consultant will be owned by the consultant unless assigned in writing.

Escrow agreement

The typical escrow arrangement is a tripartite agreement between the software owner, its licensee and the escrow agent, under which the owner places the source code with the escrow agent and agrees it may be released on the happening of certain events including if the owner: