A Web-site Development: How to Choose a Correct Form of Agreement in Belarus and Russia

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A Web-site Development: How to Choose a Correct Form of Agreement in Belarus and Russia

There is a long lasting discussion concerning a correct form of the agreement that should be concluded between a client and a web-site developer. Unfortunately, neither Belarusian nor Russian legislation and judicial practice are able to give a clear answer to that question. It should be noted that Belarusian judicial practice does not generally pays too much attention to that issue and Belarusian courts are very seldom try to consider legal nature of agreements connected with web-sites development in the process of relevant disputes resolution, while Russian courts considering such disputes are generally starting from the consideration of legal nature of such agreements and understanding of certain norms of civil legislation that should apply to such legal relations. However, despite wide judicial practice in Russia, there is still no certain legal position on that issue. Let is try to figure out why it is all not so simple as it seems like at first.

What Is the Web-Site from Legal Point of View

Currently it is possible to find a numerous definitions of term ‘web-site’. If we will try to figure out a legal meaning of such term the current analysis makes it possible to come to the following, sometimes very controversial, conclusions. There is an opinion that web-site is a computer program, on its essence, taking into account the elements of computer programming in the process of its development; alternative point of view says that taking into account web-site’s structure and operation mechanisms, it could be considered as a database; and finally, the third opinion says that web-site is a composite work.

Any of the above opinions may be correct and even proven, however there is an obvious fact that, despite your own dedication to one of the above opinions, a web-site is a copyrighted work., i.e. an object of intellectual property. Russian legislation directly mentions an ‘internet-site’ among the other types of composite works protected by copyright in Article 1260 of the Civil Code. The term ‘Internet Site’ is defined in Russian legislation as follows:

Internet Site – a set of programs for computers and other information contained in an information system access to which is provided through the information and telecommunication Internet network by domain names and/or network addresses that allow to identify sites in Internet (Article 2 (13) of the Federal Law “On Information, Information Technologies and Information Protection” of July 27, 2006).

Taking in account that a web-site is defined as a set of computer programs, the web-site itself is a computer program. Or not? Good question, is not is?

Anyway, as noted above, it is obvious that the web-site is an object of intellectual property (a copyrighted work).

The situation with Belarusian legislation is more complicated. If we would consider the web-site as computer program or database, it is obvious that according to Belarusian law it should be also considered as a copyrighted work, however the definition of ‘composite work’ differs from the same in Russian legislation that makes us unable to clearly consider that web-site is a composite work, in that case everything depends on the methods of proof.

Despite the above, both Russian and Belarusian legislation makes it logical to conclude that the web-site is a copyrighted work and there is a special type of agreement is prescribed by Russian and Belarusian legislation: an agreement on development and use of copyrighted work (in Belarus) set by Article 46 of the Law of the Republic of Belarus “On Copyright and Related Rights” of May 17, 2011 No. 262-Z (as amended); an agreement of copyrighted order (in Russia), Article 1288 of the Civil Code of Russian Federation.

But it is all not so simple. The problem is that only the author could be a contractor to such type of agreement, while under Russian and Belarusian law only a person (physical person) could be the author. It is not a problem at all if the agreement is to be concluded with a physical person (freelancer) who will be a web-side developer, but what should we do if the agreement is to be concluded with a legal entity which would be a web-site developer, taking into account that basically legal entity cannot be a party to such type of agreement being an author?

And here we come to the dilemma on the choice of a correct type of agreement for such situation: agreement on fee-based services (“FBS”) or work and labour agreement (“WLA”).

FBS vs. WLA

First of all, we should understand how the process of web-site development may be legally considered in terms of FBS and WLA. Both in Russian and Belarusian legislation the main differences between FBS and WLA appear as follows:

– in case of FBS a contractor should make certain activities under the appointment of a client (Article 733 of the Civil Code of the Republic of Belarus and Article 779 of the Civil Code of Russian Federation);

– in case of WLA despite the process of making certain activities, a contractor should present to a client the result of activities performed by the contractor (Article 656 of the Civil Code of the Republic of Belarus and Article 702 of the Civil Code of Russian Federation).

Thus, WLAs should be concluded aimed at production or processing of a material object with transfer of the result to the client.

The list of works made under WLAs described in the legislation is not exhaustive. Thus, we believe that at the result of the contractor’s activity under the WLA the entire sense and meaning of such agreement is aimed at obtaining of a certain result of such activity and the result itself has a crucial value for the client, thus such activity should be considered as WLA.  Otherwise, if the essence of legal relations between the parties is aimed at the process of making of certain kind of activity by the contractor under the client’s appointment and it is impossible to consider the material result of such king of activity, such relations should be governed by the legal rules applicable to FBS, e.g. the translators services where the process itself makes the difference, but not the material result of such activity which is very unlikely could have any material form (e.g. if we are talking about the process of oral translation in the course of business negotiations or simultaneous interpretation).

In vast majority of cases connected with a web-site development the client does not care of the process or the way of the web-site development itself, the way of development – to develop a unique web-site or make it under a web-site’s template – yes, this make a difference for the client, as the way of web-site development is directly connected with the contractor’s (developer’s) fee, however the process itself makes absolutely no difference. The client does not care of the process of web-site development, the only thing having a significant importance for the client is the result, e.g. the client intends to obtain this very web-site, within the terms negotiated between the parties and pay for it the same price that is stipulated in the agreement. Does not it all sound familiar to you? Yes – these are the mandatory terms of WLA stipulated by Russian and Belarussian legislation.

Nevertheless, we believe that you should not think of such a complex product as a web-site just through a single concept of legal agreement. The web-site development agreement should also include provisions connected with the transfer of copyrighted works created by the virtue of the web-site development process. If such agreement aimed at the transfer of the exclusive right in full there should be the mandatory terms of the copyright assignment agreement stipulated in such an agreement, while if the agreement is aimed at the partial transfer of IP rights, there should be the mandatory terms of the license stipulated in such agreement. Moreover, such agreement may be aimed at fee-based services as well, e.g. if the consultations for the client are required. Hence, the WLA legal requirements should apply to the works connected with the web-site development, but all other aspects of such agreement should be governed by the relevant rules of law. Taking into account the above, the agreement of web-site development concluded with a legal entity (on the side of developer), but not physical person, should be considered as a hybrid agreement and its separate parts would be governed by the legal ruled specially prescribed by the respective legal relations (such as IP license, assignment, FBS, etc.).

Unfortunately, judicial practice on the subject is not so certain as the above indicated conclusions. As for Belarus, the courts are not generally analyse the legal nature of the web-site development agreement and judicial decisions are quite controversial and it is almost impossible to predict a decision of a Belarusian court trying to consider legal nature of such agreement. There is a quite different situation in Russia. The courts are very often analyse legal nature of such kind of agreements, however, Russian judicial authorities are very different in their decisions.  Sometimes a court of primary jurisdiction may take a decision that the web-site development agreement is WLA (we share this opinion by choosing between FBS and WLA), but at the same time the appeals instance makes a decision that such agreement is FBS as such agreement does not aimed at production or processing of a material object with transfer of the result to the client, but the court is completely not aware of the fact that the scope of works prescribed by legislation for WLA is not exhaustive and should not be isolated within production or processing of a material object.  At the same time, some Russian courts are coming to the conclusion that if the client is not interested in the process of the web-site development and the result is the only thing that matters, and the contractor shares the same point of view, the court comes to the conclusion that the parties intention was aimed at the conclusion of WLA.

Hence, the works on the web-site development itself should be governed by the legislation applicable to WLA. At the same time, taking into account a complex nature of the web-site development works, such agreement would have a hybrid character and the other rules of law would apply to some parts of such agreement, e.g. intellectual property, FBS, etc.

Andrew Usov

LLM, Co-Founder of UPH Global, LLC

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