What are software usage rights?

Usage rights: definition and basics

Computer programs are protected under Sections 69a et seq. of the German Copyright Act (UrhG). The author is the person who creatively wrote the code, not the client. Copyright itself cannot be transferred in Germany; only usage rights can. They determine what the client may do with the software.

Protected acts include reproduction, adaptation and distribution (Section 69c UrhG). Anyone using software may do only what has been granted to them or what is necessary for its intended use. For employees, the rights to programs created in the course of their duties pass to the employer under Section 69b UrhG as a rule.

Types of usage rights

What counts is what the contract says. Where there are gaps, the purpose-transfer rule (Section 31(5) UrhG) applies: in case of doubt, rights are granted only to the extent the purpose of the contract requires. Anyone who does not want to rely on interpretation should regulate scope and duration expressly.

• Non-exclusive right: use permitted, the developer may grant the software to other customers
• Exclusive right: only the client may use it and grant rights to third parties
• Territorial and temporal: for example Germany-wide or worldwide, limited or unlimited in time
• Scope of use: internal use, redistribution, rental, adaptation and further development
• Source code: handed over only if expressly agreed
• Sublicensing to affiliated companies or customers

Real-world example: switching development partners

A supplier has an order management system custom-built. The contract regulates only price and scope of work, not the rights to the code. After some years, another provider is to develop the software further. The previous developer refuses to hand over the source code, and it is unclear whether the supplier may have third parties modify the software at all.

Had the contract included an unlimited usage right in time and territory with permission to modify, the handover of the source code with documentation and a rule on third-party components, the switch would have been possible without dispute. As it is, the supplier now negotiates after the fact, from a much weaker position.

Common mistakes, limits and special cases

Exclusive rights often pass only upon full payment; this is permissible and should be known. Third-party components such as libraries, frameworks, fonts or images come with their own license terms and cannot be freely passed on. Freelancers and subcontractors must also assign their rights to the developer, otherwise the chain of rights is broken.

For standard software and SaaS, by contrast, customers usually acquire only a non-exclusive, non-transferable right under the manufacturer’s terms. Under European Court of Justice case law, the resale of perpetual licenses is possible under narrow conditions, but license terms and subscription models often make it harder in practice.

What companies should look out for

Regulate in writing before the project starts: type of usage right, scope, duration, source code handover, further development by third parties and the point at which the rights pass. Ask for a list of the third-party components used, with their licenses. Nano Concepts helps to record these points in the contract and the project documentation. This article does not replace legal advice.