[1] In a case where the author’s property right of a derivative work is transferred without a separate expression of intent to transfer the author’s property right of the original work, whether the author’s property right of the original work is naturally transferred (negative), and in a case where the assignee’s right to produce a derivative work is included in the author’s property right of the derivative work acquired by the assignee and the exercise of the right to produce a derivative work is accompanied by the use of the original work, whether the transferee should take over the author’s property right of the original work together with the author’s property right of the original work or obtain permission for the use of the original work (affirmative)

[2] The case holding that in a case where Company A entered into a new warehouse management consignment agreement with Company B to receive a revised program to operate a new warehouse management program from “DB2” database management system, and Company B developed a new program using the existing program in accordance with the development consignment agreement, and provided Company A with a new program, and Company A produced and sold a separate program converting Company B’s operating environment into “DB2” using the new program into “DB2,” and Company A produced and sold a separate program using the new program to “DB2,” the production and sale of the program does not constitute an act infringing upon Company B’s property rights on the existing program, which is an original work, since the production and sale of a new program transferred by Company B is included in the right to author’s property rights on the existing program

[1] Since a derivative work is a work separate from the original work, if the author’s property right of a derivative work based on a certain work is transferred, the author’s property right of the original work shall not be transferred as a matter of course on the ground that the original is included in the derivative work if there is no express intention of transfer regarding the author’s property right of the original work. In addition, in a case where the assignee’s property right of a derivative work acquired by the assignee includes the right of production of a derivative work as to the derivative work, the assignee shall take over the author’s property right of the original work from the copyright of the original work or obtain permission for the use of the original work if the exercise of the right of production of a derivative work is accompanied by the use of the original work. Meanwhile, in a case where the author’s property right of a derivative work as to the original work and the derivative work transfers the author’s property right of a derivative work, whether the expression of intent of transfer includes the permission for the use of the original work is an issue of interpretation of transfer contract, the motive and background of the contract, the purpose of the parties to achieve, transaction practices, etc.

[2] In a case where Company A entered into a new warehouse management consignment agreement with Company B to receive a revised program to operate a new warehouse management program that can operate in the database management system of “DB2” database management system, and Company B developed a new program using the existing program pursuant to the development consignment agreement, and provided Company A with a new program, and Company A produced and sold a separate program using the new program to “DB2” to “DB2” while supplying the warehouse management system to Company C using the new program, the case holding that Company A’s act of infringing upon Company A’s author’s property right to the existing program is also deemed as a transfer of author’s property right to the original program. However, Company A’s property right to the new program converted into the existing program is also deemed as a transfer of author’s property right to the existing program, and thus, Company A’s property right to the original work is also deemed as an act of infringing upon Company A’s right to create and sell the existing program, and thus, Company A’s act of infringing upon the existing program’s property right to the original work.

[1] Articles 5, 22, 45, and 46 of the Copyright Act; Article 105 of the Civil Act / [2] Articles 5, 22, 45, and 46 of the Copyright Act; Article 105 of the Civil Act

Loscve Co., Ltd. (Law Firm Cho & Lee, et al., Counsel for the defendant-appellant)

Samsung SDR Co., Ltd. and two others (Bae, Kim & Lee LLC, Attorneys Kang Yong-tae et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2013Na2032 decided December 12, 2013

All appeals are dismissed. The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

A. The lower court acknowledged the following facts based on the admitted evidence.

(1) On January 5, 2004, EXENT Co., Ltd. (hereinafter “EXE”) entered into a program development consignment agreement (hereinafter “instant development consignment agreement”) with the Plaintiff on the content that the Plaintiff would develop and supply the “EXEline” (hereinafter “instant program”) a warehouse management program, for a cost of KRW 50 million. Article 7 of the agreement provides that “A (EXE) shall revert to A (EE) all rights to the output of the service performance result submitted by B” (hereinafter “instant development consignment agreement”).

(2) Under the instant development consignment agreement, on February 26, 2004, the Plaintiff provided the instant program, which is a output that completed development to EXE, as well as its source code.

B. Based on such findings, the lower court determined that the Plaintiff should interpret the instant development consignment agreement as an agreement to transfer to EXE the author’s property right to the instant program, on the grounds that there are no special circumstances to see the Plaintiff as a person engaged in EXE’s work, such as the Plaintiff and EXE, who entered into the instant development consignment agreement, and agreed that all rights to the instant program, which is a program included in development outcomes, belong to EXE.

Examining the reasoning of the judgment below in light of the relevant legal principles and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles or incomplete hearing.

2. As to the grounds of appeal Nos. 2 and 3

A. Since a derivative work is a work separate from the original work, if the author’s property right of a derivative work based on a certain work is transferred, the author’s property right of the original work is not transferred as a matter of course on the ground that the original is included in the derivative work. In addition, if the author’s property right of a derivative work acquired by the transferee includes the right to create a derivative work with respect to the derivative work, the transferee should take over the author’s property right of the original work from the copyright of the original work or obtain permission for the use of the original work. Meanwhile, if the author’s property right of the derivative work and the author’s property right of the derivative work transfer transfers the author’s property right of the derivative work, whether the expression of intention of transfer includes the content, motive and circumstance of the contract, the purpose of the contract to be achieved by the parties, transaction practices, etc., and should be reasonably interpreted in accordance with logical and empirical rules by comprehensively examining the contents of the contract, the purpose of the contract, the purpose of the transaction, etc.

B. Review of the reasoning of the lower judgment and the record reveals the following circumstances.

(1) The instant development consignment agreement states that all rights to the instant program belongs to EXE (Article 7). In the event of the modification of the instant program, there is no provision stating that the Plaintiff’s separate permission should be obtained or the right to exploit the instant program is limited within a certain scope.

(2) For the purpose of running the business of supplying the so-called “ASP” method, which provides users with a program installed in the server provided by the Korea ASM corporation and access to the server through the Internet and other networks, EXE entered into the instant development consignment agreement with the Plaintiff to receive the instant program produced and supplied by the Plaintiff, which revised the LogCCCCB program (hereinafter “RogCCB”) to be operated in the “DB2,” which is the database management system of the IM company, to enable users to use the program.

(3) EXE supplied a warehouse management program to its customers, not by itself using the warehouse management program such as the instant program. From the time of the conclusion of the instant development consignment agreement, it was necessary to secure the right to appropriately revise the instant program in response to changes in the future use environment, etc., and the Plaintiff seems to have been well aware of such circumstances.

(4) In accordance with the instant development consignment agreement, the Plaintiff developed the instant program using the LogicCCBB, which he had previously possessed, and thereafter rendered E-E on February 26, 2004 the so-called “E”-based source code as well as the so-called “Eacle”-based source code corresponding thereto. Such offering of E-E-E’s source code may result in the Plaintiff’s conversion of the operating environment of the instant program into “Eacle” like LogicCCBB at any time.

(5) Around August 2004, EXE converted the operating environment of the instant program based on DB2 into an Lao and supplied the instant program to the Nana World in the process of supplying the warehouse management system to the Nana World using the instant program received from the Plaintiff, and then did not raise any objection thereto even though the Plaintiff was well aware of such fact.

C. We examine the above circumstances in light of the legal principles as seen earlier.

Since derivative work is a work separate from the original work, even if the author’s property right to the instant program was transferred to EXE pursuant to the development consignment agreement of this case, it is difficult to view that the author’s property right to the instant program was directly transferred to EXE, and there is no other circumstance to deem that the Plaintiff expressed to EXE an intention to transfer the author’s property right to NACB through the development consignment agreement of this case.

However, as the author’s property right to the instant program is transferred to EXE, it may be deemed that the right to remodel the instant program or the right to produce derivative works has also been transferred. In light of the aforementioned circumstances, it is reasonable to deem that EXE has the Plaintiff’s permission on the use of LogicCBB, the original work, even in a case where EX starts up the instant program by converting EXE into “E” to “E”, and there is no special circumstance to deem that EXE is limited to the scope of the right to exploit the instant program. Therefore, the production and sale of EXE’s program using the instant program is included in the right to reproduce the instant program transferred by the Plaintiff, and it does not constitute an act of infringing the Plaintiff’s property right to LogicCBBB.

D. The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the interpretation of a contract, presumption of transfer of the right to exploit a work, scope of the protection of derivative works, protection of original works, and incomplete deliberation, etc., which affected the conclusion of

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)