Some legal aspects of relations between software developers and their customers from CIS

In the process of financial and economic activity of legal entities and natural persons who are engaged in production and sale of software products, questions often arise connected with specifics of registration of transactions with foreign partners. Since the considerable part of contractual partners is in the post-Soviet countries, the business entities are especially interested in enterprises registered in the CIS.

Software products are a special kind of goods with which the operations are regulated by different normative legal acts, including those in the sphere of copyright. These nuances should be taken into consideration in relations with foreign partners, especially when buying and selling the software.

Sale of software products can be performed by legal entities, individual entrepreneurs, and also by natural persons who make such products unsystematically, i.e. d who not perform the entrepreneurial activity.

At present, two typical situation can be singled out that are connected with sale of software to the CIS-countries:
  • sale of software products made by other legal entity or natural person;
  • sale of the own software, for which the copyright belongs to a non-resident.
When selling a software product for which the rights belong to some other person, a Ukrainian enterprise most of all is a distributor and it acts based on the corresponding agreement in which the rights and duties of the parties are stipulated. In this case, a seller has a package of the required documents which confirm his right for sale of software on certain conditions (for example, sale for specific CIS-countries only), Sale is performed according to a contract with a foreign partner, with obligatory reference to the licensing or other agreement that confirms the rights of the Ukrainian party for sale of computer program.

In recent times, Ukrainian legal entities and natural persons often perform development of software products for customers from the CIS-countries. In this case, this refers to sale of the own products. The main point in these relations is in what way the question of copyright for the made software is regulated. Most of all, natural persons do not make any contract with the customer, and they sent a newly made computer program via Internet. Payment settlement with the maker is done as a rule through various payment systems, and with that, the banks require that it is obligatorily pointed out in the documents that the receipt of money is not connected with entrepreneurial activity. Accordingly, when the maker does not raise a question about copyright for the products made, he in fact passed it to a foreign partner. Otherwise, the software maker should fix his copyright in accordance with the law of Ukraine.

When business entities sell software products, a contract with a non-resident is a compulsory condition of legal validity of the deal. In this case, a domestic business entity should take care about setting copyright or proprietary rights for software. According to the Law of Ukraine “About copyright and related rights”, the rights for computer program belong to a natural person who made it (the author). The author may pass the proprietary rights for computer program to a legal entity or a natural person based on the author’s contract. The right of the author or of some other person (natural person or legal entity) for software products can be fixed in variety of ways. State registration of copyright, commercial depositing, and getting a patent for the ready software products belong to those ways.

It should be noted that the above-mentioned mechanism is considered based on the norms of the Ukrainian law, i.e. when a contract is concluded in the territory of Ukraine. When signing an agreement in the CIS-countries, the norms of the law of those countries concerning the copyright should be taken into consideration.
Publication date: 10/12/2014

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Name: Marina Losenko

Position: Associate

Education: National Aviation University

Knowledge of languages: Russian, Ukrainian

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