European Directives are legal regulations that were formulated by the EU institutions for the purpose of promoting legislative harmonization between EU countries in a variety of subjects. Such directives may apply, sometimes in a manner that may not be stipulated, also on dealings and interactions between Israeli and European companies, and for this reason it is important to familiarize one’s self with them. In this article we chose to focus on the Computer Programs Directive which deals with the legal protection of computer programs, including End User Licensing Agreements (EULA).
European Directives are legal regulations created by the EU institutions for the purpose of promoting harmonized legislation among EU countries in a variety of topics, especially those affecting general market activity such as: commercial agents, information security, product safety, waste management etc.. While some European Directives may apply to selected countries only, in practice, the majority of directives typically apply to all EU member countries alike. Unlike “Regulations”, which automatically become part of the law in the separate countries, “Directives” define a set of objectives and schedules – and each country is free to decide on its own which legislative measures it wants to employ in order to meet the objectives within the prescribed time frame.
The Computer Programs Directive
One of the main directives which Israeli companies and business entities find themselves facing with on a regular basis is directive 2009/24/EC dealing with legal protection of computer programs (Computer Program directive). The computer program directive refers to both the abstract-discussion field dealing with the extent of copyrights held by software developers, and to the real-practical field dealing with the exact phrasing of agreements between software manufacturers and end users. As such, it includes precise specifications of restrictions and permits which may be included in End User Licensing Agreements (EULA).
One may find it interesting to know that within framework of the balances set forth by Programs Directive, there are several matters according to which the user’s right to legal use of program is absolute, and even include specification that contractual stipulations that are contrary to the matter at hand shall become null and void.
For example, computer program users are entitled to create a backup copy of the computer program they purchase, or test the performance of computer program in order to define the underlying ideas and principles of the program, whether by loading, running, displaying, transmitting or storing the program, and all without need of obtaining the permission of the computer program’s copyright owner.
Furthermore, computer program users are also entitled, under certain conditions, to engage in reverse engineering by de-compiling an existing program for the purpose of adapting it to new program which that developer is developing independently. The purpose of this exception is to allow components of different computer systems, which were produced by different manufacturers, to work together (i.e., to achieve interoperability). It is important to remember that according to the Directive, this is not an absolute right, but is rather subject, inter alia, to the following conditions: A) legal use of the program; B) The information required by the user in order to achieve interoperability is not available to him from past actions that have already been conducted; C) All undertakings are performed in relation to parts of the original program and are necessary for the purpose of achieving interoperability (Incidentally, this matter may be compared to Article 24(c) of the Copyright Act- 2008, which deals with copying of computer program or creation of derivative program from it by any person holding a licensed copy). In addition, this exception may not be used in any manner that may serve to harm the legitimate interests of the legal owner, or if it is inconsistent with definitions of reasonable use of the program. It goes without saying that such terms are open to more than one interpretation, and as such, may differ under different circumstances prevailing between one case or another.
Applicability of Directives
When it comes to dealings and interactions between two European companies, it is clear that the directives apply through the relevant local laws. However, how do they apply to dealings and interactions between an Israeli company and a European one? In this case, there is no straightforward solution and each case must be individually examined. Because the different manner by which any given Directive is applied in different countries, the matter depends on the specific circumstances of the dealings and on the country in which companies wish to operate.
For clarification purposes, we shall now present two contrasting cases. The first involving extension of the Directive’s applicability while the other involving a reduction thereof: The field of commercial agents has been subject to formulation of a directive stating that under certain conditions, manufacturers may be required to pay a “market development fee” to the agent. In this context, in German was decided to extend the Directive in such a manner that it would also apply to distributors, and not to agents only. By contrast, as an example illustrating the reduction in the applicability of a Directive, one may consider the Directives concerning the waste management, which provide “mitigating circumstances” to countries that were first to implement policies that regulate the matter before the publication of the actual Directive.
In summary, before carrying out any such activity, one should consult with a professional who is able to identify the relevant legal systems in each country in accordance with the relevant activity.
Another Directive with significant impact on Israeli business entities operating within the European market is the “Commercial Agents Directive” 86/653/EEC (mentioned above) that deals with agent agreements (and is often applied to distribution agreements as well), but this subject deserves more in-depth attention and will be separately dealt with in future.