Court of Bologna, decision no. 96/2020: the software developed by the self-employed belongs to the employer

With decision (no. 96/2020), published last January 15, the Court of Bologna found that software developed by an external contractor was  owned by the committing company and acknowledged in favour of the company the right to be compensated for damages arising from the contractor’s failure to deliver the source code at the end of the relationship. A brief summary of the case is provided below.

In 2012, the company Sacmi Cooperativa Meccanici Imola had entered into a contract with an external contractor (i.e. self-employed) concerning the development of software aimed at supporting and developing the business activities of all the companies within the Sacmi Group. Article 4 of the contract stated that Sacmi would have been the exclusive owner of “all intellectual and/or industrial property rights relating to any results deriving from, or in any case connected to, the performance of the Services”. However, at the end of the relationship, the contractor had only handed over the object code to the company, while he had refused to transfer the source code considering it to be owned by him.

Therefore, in order to obtain the source code, Sacmi  sued the former contractor, asking also to be compensated for damages deriving from the unavailability of the source code, quantified as Euro 150,000 in  light of the amount that the company had to pay out to several computer technicians involved in dealing with all the problems related to the software, as well as to the internal staff for the manual entry of the data that otherwise would have been acquired by the software itself. According to Sacmi, in fact, since the software – which constitutes a “work” within the meaning of copyright law – had been developed within the scope of the assignment given to the contractor, all rights of the work belonged to the company, also pursuant to Article 4 of the contract itself.

Before the Judge, the former contractor instead held that the authorship of the source code and the related economic exploitation rights belonged to him as the ‘author’ of the work, by virtue of the general principle set out in Article 12 of Law no. 633/1941 (Copyright Law). In other words, since the work had been developed in the context of a self-employment relationship, the special rule set out in Article 12-bis of Copyright Law – according to which the exclusive right of economic exploitation of  software developed by an employee “in the performance of his work tasks or on the instructions given by the employer” belongs to the employer/committer – could not apply. In any case, according to the defendant, Article 4 of the aforementioned contract provided that Sacmi would only have been transferred  the results in “machine language” (i.e. the object code, which had in fact been handed over unlike the source code); always according to the defendant, this interpretation was also confirmed by the amount of the remuneration, proportionate to the inventive activity but not to the transfer of the rights of the work, and by the consultancy nature of the collaboration. Finally, as for the damages, the defendant argued that Sacmi could have solved the encountered problems differently and, in any case, requested the set-off of any sums awarded to Sacmi on account of damages with the contractor’s credit deriving from the inventive activity carried out (approximately 30,000 EUR).

With the decision commented upon here, the Court of Bologna partially granted the plaintiff’s requests, underlining that the contract entered into between the parties concerned the development of a creative work protected by copyright law, i.e. software (without distinction between object and source code). The Judge then recalled that, as a general rule, the rights of economic exploitation of a work belong to the relevant author pursuant to Article 12 of the Copyright Law, in the same way as the rights on an invention belong to the relevant inventor pursuant to Article 63 of the Intellectual Property Code. However, these rules are derogated by, respectively, the aforementioned Article 12-bis of the Copyright Law and Article 64 of the Intellectual Property Code, which (similarly) provides that, when the contract specifically concerns an inventive activity, specifically remunerated as such, the employer owns the exploitation rights of the invention. Basically, Articles 12-bis of the Copyright Law and 64 of the Industrial Property Code introduce exceptions to the general rule of author/inventor’s ownership by providing that, if the work/invention is created in the context of an employment relationship, the related economic rights belong to the employer.

Nevertheless, the Judge pointed out that the present case clearly concerned a self-employment relationship and that in similar previous cases the Italian courts had sometimes applied by analogy the provisions on employee’s inventions, while in other cases the employer had been deemed the owner of the rights as a consequence of the work contract entered into between the parties: in other words, the employer had become the owner of the work by commissioning it. According to the Judge, this interpretation was confirmed by labour laws: in fact, the (now repealed) provisions on project-based contracts (Article 64 of Biagi Law) made express reference to Article 12-bis of Copyright Law, while, currently, article 4 of the Jobs Act (Law no. 81/2017) – although not applicable to the case at hand ratione temporis – provides that the rights of economic exploitation of creative works and inventions resulting from the performance of a contract belong, according to the general rule, to the self-employed, but not in the event that the inventive activity is the specific subject of the contract and is specifically remunerated as such, in which case the ownership belongs to the employer.

In conclusion, the Court of Bologna affirmed the following general principle: “in the event of a creative/inventive activity carried out by a self-employed worker, as a general rule, the rights of the economic use of the invention/work belong to the employer, if the subject of the contract is the inventive/creative activity and unless otherwise agreed. Therefore, the defendant’s opposing  interpretation, according to which the software created by the self-employed, not expressly governed by Copyright Law, follows the general rule and is originally and exclusively owned by the author (Article 12 of Copyright Law) unless otherwise agreed, is not acceptable”.

The Judge therefore found the software to be owned by Sacmi, given in fact that the object of the contract was the creative activity of the contractor and the parties had agreed that the employer would have been the exclusive owner of all the intellectual property rights. In this context, nothing in the contract limited the scope of Article 4 to the object code, excluding the source code, as claimed by the defendant.

Lastly, the Judge found the alleged damages deriving from the unavailability of the source codes to be presumptively proven. However, taking into account the difficulty of their quantification, the Judge calculated the damages on an equitable basis, finding that they amounted to a sum corresponding to the credit claimed by the defendant. The Judge therefore compensated in full the relevant credits of the parties.