Are IT creations designed by IT consultants considered as original works in the light of the law of the Belgian Code of Economic Law?
Typical original works include:
- Software architecture in its look & feel
- The user interface design;
- Documentation related to the created software;
- Softwares created for the end-users (co-authorship)
- Applications design ;
- Architecture and design of information systems;
- Design and development of component architecture and building blocks;
Let’s have a look at the Belgian favorable tax & legal regime for IP/IT.
Author’s rights specific legal & tax regimes
The main interest of qualifying work as “original” in light of the Belgian Code of Economic Law is the protection offered by author’s rights to forbid the utilization by a third person of the original pieces of work.
A law of 16 July 2008 published in the Belgian Official Gazette of 30 July 2008 and entered into force on 1 January 2008, reformed taxation of copyright and related rights, which now enjoys a way more favorable regime.
The aim of the new legal provisions is to group all the incomes resulting from the sale or license rights of the copyright and neighboring rights under one qualification and thus characterize them as movable incomes subject to a withholding tax of 15%, in so far as they do not exceed the amount of 62.090 euros (incomes of 2020, tax year 2021).
Beyond that amount, copyrights may either remain characterized as movable incomes or become professional incomes. In this latter case, they are added to any other professional incomes and subject to the progressive tax rates of the individual income tax.
In addition, lump-sum expenses or costs may be deducted from gross royalty incomes: 50% for the first bracket of 16,560€ and 25% for the next bracket ranging from € 16,561 to € 33,110€, with a maximum of € 12,417 (tax year 2021 – income 2020).
Article 17, §1, 5 ° of the Belgian Income Tax Code (hereinafter ” ITC”) refers to “income derived from the sale or concession of copyright and neighboring rights, as well as legal and compulsory licenses, subject to the law of 30 June 1994 on copyright and related rights or similar provisions of foreign law. ”
It is therefore necessary to analyze the Belgian Code of Economic Law (where the law of 1994 has been now incorporated, after its deletion) to determine whether the works fall into the category of original works thereby benefiting from a favorable tax regime.
Furthermore, the main interest of seeing one’s author’s rights qualified as such is to single them out and be able to defend their existence and protection if it occurs that a third person decides to have legal pretentions over the works’ use.
The concept of work
The Belgian Code of Economic Law defines copyright as the right of the author of a scientific, literary or artistic work to reproduce or authorize the reproduction, in any manner and in any form whatsoever, whether direct or indirect, temporary or permanent, in whole or in part (Art.XI.165).
Copyright protects scientific, literary and artistic works. The legislation does not define these concepts but provides an illustrative list. This is essentially all the productions in the literary, scientific and artistic field, regardless the mode or form of expression.
It is therefore through to the doctrine and case law that the concept of original work has been defined.
The doctrine and case law attach two conditions in order to protect the copyright of a work:
- It must be original ; and
- Fixed in a materialized – physical – support.
It is unanimously accepted that for a work to be protected, it must bear an original character (see: A. BERENBOOM, Le nouveau droit d’auteur, Bruxelles, Larcier, 2008; et, parmi d’autres, Cass., 26 janvier 2012, AM 2012, 4, 336), that is to say, be marked with the imprint of its author.
Therefore, the author must enjoy sufficient leeway: “without freedom to create, that is to say, to choose all or part of elements of the work, no original creation.” The work wills by definition not bear “the imprint of the author’s character” if the author was entirely determined by external constraints (M. BUYDENS, La protection de la quasi-création, Bruxelles 1993).
The work may only, according to the doctrine and case law, be protected if the author has materialized its creation in some form directly or indirectly observable by others.
Ideas, unmaterialized, are not copyrightable (see BERENBOOM, Le nouveau droit d’auteur, Bruxelles, 1995, n° 828; M. BUYDENS, La protection de la quasi-création, Bruxelles, 1993; VAN HECKE et GOTZEN, “Overzicht van rechtspraak – industriele eigendom, auteursrecht 1975-1990”, TPR, 1990, 1792 ; Bruxelles, 26.3.2001, RG 1999/RG/110, A&M, 2001, 367).
The transcript of an idea in written form fulfills this condition.
Methods, patterns, styles and techniques are not covered by copyright as such (Civ. Bruxelles, 26.1.1998, A&M, 1998, 234; Bruxelles, 16.11.1960, Pas., 1961, II, 287; BERENBOOM, o.c., n° 833; BUYDENS, o.c., p. 263; en France: Cass. fr., 29.11.1960, RIDA, 27/1960, 112; Cass. fr., 18.10.1977, RIDA, avril 1978, 114; Civ. Marseille, 11.4.1957, Dall.,. 1957, 369).
Nevertheless, the copyright’s scope of protection can be extended to the combination of original elements (not: Civ. Bruxelles, 29 mai 1997, Ing.Cons., 1997, 207).
It is therefore necessary to examine how, whether and in which cases case law has attributed or may attribute the qualification of original works to creations as described in the introduction.
When is an IT work “original”?
- General principles
The originality is, as explained above, a jurisprudential construction.
According to the Court of Cassation, an original work is an “intellectual creation specific to its author” (Cass., 26 janvier 2012, AM, 2012, 4, 336). The work must be “marked with the seal of the personality of its author” (A. BERENBOOM, Le nouveau droit d’auteur, Bruxelles, Larcier, p. 30).
This view was adopted by the European Court of Justice in its Infopaq judgment (ECJ, 5 July 2009, C-5/08). According to the Court, “copyright is only likely to apply in relation to an object that is original in the sense that it is an intellectual creation specific to its author. The author must “express his creative spirit in an original way”, that is, express his personality through the work.
Taken in context, this definition of originality is reflected in the idea that “copyright protection of a work, even if the originality of the work is limited only to the choice or disposition of the elements that make up the work. The choice, even random, must be personal, in other words, it must be unexpected or not obvious, or at least express a personal vision, without being completely arbitrary” (N. GODIN, L’originalité comme condition de protection en droit d’auteur).
The author’s personality can be manifested by the choices he makes in the configuration of the work rather than by the arbitrariness of his imagination (A. STROWEL, J.P. TRIAILLE, Le droit d’auteur, du logiciel au multimédia, droit belge, droit européen, droit comparé, ed. 1997, Bruylant, pp. 150- 151).
It is thus in the configuration of the formations that it is advisable to seek originality.
The copyright protection of software was regulated by a law of 30 June 1994 transposing into Belgian law the European directive of 14 May 1991 on the legal protection of computer programs.
Its article 2 provided that: “A computer program is protected if it is original, in the sense that it is an intellectual creation of its author. No other criteria apply to determine whether it is eligible for copyright protection”.
It went on to state that: “The protection afforded by this Act applies to any form of expression of a computer program. The ideas and principles underlying any element of a computer program, including those underlying its interfaces, are not protected by copyright.
This law has been repealed and it is Book XI of the Economic Law Code that now includes databases and softwares in protected works:
Title 6. – Computer programs
Art. XI.294. In accordance with Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, computer programs, including preparatory design material, are protected by copyright and treated as literary works within the meaning of the Berne Convention
Art. XI.295. A computer program is protected if it is original, in the sense that it is an intellectual creation of its author. No other criteria apply to determine whether it is eligible for copyright protection. The protection granted by this Title shall apply to any form of expression of a computer program. The ideas and principles underlying any element of a computer program, including those underlying its interfaces, are not protected by copyright.
Protection, therefore, remains dual: as a program and as a database.
The Belgian legislator, hampered by this lack of explicit wording of the originality criterion, transposed the European provision by stating that a computer program enjoys copyright protection “if it is original in the sense that it is the intellectual creation of its author“.
The criterion of originality for computer programs must be applied in the same way as that applied to other artistic creations. However, the technical specifications of the computer program must still be taken into account.
Indeed, the notion of originality of a computer program must imply that the work belongs exclusively to the author and is personal to him (A. Strowel, J.P. Triaille, “Le droit d’auteur, du logiciel au multimédia, droit belge, droit européen, droit comparé”, 1997, Bruylant, pp. 150-151).
On the other hand, this work must represent the expression of the author’s personality, both in “the arbitrariness of the author’s imagination projected into the work” and in “the choices made by the author to configure the work“.
There are no other conditions for the protection of the software. Thus, it is not necessary that the computer program presents a certain novelty. Moreover, no formal requirement, such as a deposit, is required since copyright does not require any particular formality to be acquired. However, a repository can be very useful to prove the prior art of the computer program or for access to source code.
To the extent that copyright protects the shaping of an idea and not the idea, the Computer Programs Act itself recalls that the protection granted to computer programs concerns the form of expression and not the idea.
The opinion of the Belgian administration
What is protected by copyright in software?
Copyright covers computer programs in their various aspects: source code, object code, aesthetic elements, interfaces, preparatory material, program structure, etc.
Copyright applies to the source code as well as to the object code. It is therefore not permitted to make copies of all or part of the software without express permission.
It is therefore not enough to change a few lines of code to avoid copyright problems.
The software architecture
The software architecture, structure and organization are also protected, as well as the routines or parameter lists.
The simple adoption of the architecture of one software for another software is thus likely to constitute a counterfeit.
Preparatory hardware and software under development
Copyright does not only protect software code. It also protects all design work (to the extent that it is likely to result in a computer program at a later date). Thus, schematics, flow charts describing all or part of the software architecture, flow diagrams, etc. are protected.
Consequently, copying the structure of one software program into another software program is likely to constitute an infringement, even if their codes are different. This also implies that software that is already formatted, whose architecture is sufficiently advanced, is already protected even if the code has not yet been written.
The look and feel
All elements that are part of user interfaces, such as icons, appearances, menu screens, sounds, are also protected by copyright.
In conclusion, we have seen that the condition of originality is fairly easily met because the courts and tribunals are very undemanding in this respect.
Thus, a utilitarian work (preparatory documents in the software design process, for example) may be considered original if it can be considered that its form would have been different if it had been made by someone other than its author.
In view of the above, the choice of structure, the style, and the organization of ideas show in most IT work enough originality in order to qualify the elements as works in the light of the Belgian Code of Economic Law and thus pay their authors accordingly under the Belgian favorable tax (and social security) regime.