A large number of different agreements are being concluded within the IT sector, such as software licensing agreements, software development agreements, professional service agreements, SaaS/PaaS/IaaS agreements, etc. Although quite different, the common point of all these agreements is intellectual property, as one of the most important and indispensable issues when we talk about software. This is not surprising, since the software is a work of authorship, that is, the copyright protection of the software is generally accepted both in Serbia and in the world. However, for many years, the question of whether software can be patented creates a variety of controversies around the world, as we wrote in more detail in our blog about the legal protection of software.
This text focuses on software development agreements concluded between a developer (natural person or entrepreneur) and an IT company. Among other specifics, this type of agreement is characterized by a special emphasis on the issue of the moral rights of an author. Specifically, moral rights (the right to be recognized as the author of the work, to have the name indicated on each copy of the work, to publish the work, to oppose changes to the work by unauthorized persons, etc.) can have only a natural person as an author of the work (e.g., software), not legal entities. Legal entities, on the other hand, can have or acquire only economic rights of copyrights (the right to reproduce a work, to put copies of a work on the market, to broadcast, to lease, etc.).
Not just that; moral rights are additionally specific because they do not always share the fate of economic rights. For example, according to the law of the Republic of Serbia, the author cannot transfer his moral rights to other persons by an agreement, while some or all economic rights regarding his work of authorship can be assigned to another person. However, this is not the case in all countries, and that is an additional reason why caution is necessary, especially when concluding an agreement with foreign persons, and the applicable law is not the law of the Republic of Serbia. Let’s take the USA as an example: in the US law, there is a well-known legal institute “work made for hire”, according to which the entire transfer (of moral and property rights) is possible, provided that all the legal conditions are met. However, domestic law does not recognize this type of transfer, which may lead to difficulties in the practical execution of the US-governed agreements in Serbia.
Precisely due to these and other specifics of moral rights, as well as the importance of the first transfer of rights in the chain, in this text, we do not deal with software development agreements between two companies. Namely, the first transfer, from a natural person – the author of the software to a legal entity, is the most frequent and most important in practice, because if it is not conducted properly, and in the event the company does not secure the broadest range of rights for themself, the company may suffer serious, million-dollar lawsuits from clients from abroad, to whom the company previously incorrectly transferred the rights to which the company itself was not entitled to.
Imagine this as a virus, which can infect any of your subsequent contractual relationships with clients, if you have not properly resolved it first with the individual who developed the software.