Recently, we have increasingly had to provide legal assistance during searches conducted as part of the investigation of crimes related to the use of unlicensed software.
In our experience, very few people are aware of the risks and responsibilities involved in committing such offences. Therefore, we have prepared for you answers to the most common questions regarding responsibility for the use of unlicensed software.
Current legislation provides for three types of liability: administrative, criminal, and civil. Let’s consider each of them in turn.
Article 51-2 of the Code of Ukraine on Administrative Offenses (“Infringement of rights to the object of intellectual property rights”), among other things, provides for responsibility for the illegal use of a computer program that is the object of intellectual property rights.
The commission of such an offense entails the imposition of a fine from ten to two hundred tax-free minimum incomes of citizens with the confiscation of illegally manufactured products and equipment and materials intended for their manufacture.
In this case, the non-taxable minimum income of citizens (NMDH) is UAH 17. Thus, the above-mentioned article provides for the imposition of a fine in the amount of 170 hryvnias. up to UAH 3400.
The offense is considered administrative if the amount of damage caused to the right holder does not exceed twenty or more times the tax-free minimum income of citizens.
However, for the purposes of qualification and delimitation of administrative and criminal liability, not the usual NMDH in the amount of UAH 17, but a tax social benefit (50% of the subsistence minimum for able-bodied citizens) is used.
Yes, in accordance with Clause 5 of Subsection 1 of Chapter XX of the Tax Code of Ukraine, for the norms of administrative and criminal legislation in terms of the qualification of administrative or criminal offenses, the amount of the non-taxable minimum is set at the level of the tax social benefit determined by Sub-Clause 169.1.1 of Clause 169.1 of Article 169 of Chapter IV of this Code for the relevant year.
According to subsection 169.1.1 of clause 169.1 of article 169 of chapter IV of the Tax Code of Ukraine, the tax social benefit is equal to 50 percent of the amount of the subsistence minimum for an able-bodied person (calculated per month), established by law on January 1 of the reporting tax year.
According to Article 7 of the Law of Ukraine “On the State Budget for 2019”, from January 1, 2019, the subsistence minimum for an able-bodied person is UAH 1,921 per month.
In view of the listed legal norms, we calculate the tax social benefit, which is equal to UAH 960 50 kopecks. (50% of the subsistence minimum for an able-bodied person).
Therefore, if the amount of damage caused to the right holder does not exceed UAH 19,210. (960 hryvnias 50 kopecks * 20 = 19,210 hryvnias), the offense is considered administrative. If the amount of damage exceeds this amount, then criminal liability arises.
Part 1 of Article 176 of the Criminal Code of Ukraine, among other things, provides for liability for illegal reproduction and distribution of computer programs and databases, if this has caused significant material damage.
The damage is significant if it exceeds twenty or more times the tax-free minimum income of citizens, i.e., as mentioned above, it is more than UAH 19,210.
The commission of this criminal offense is punishable by a fine of two hundred to one thousand non-taxable minimum incomes of citizens (from UAH 3,400 to UAH 17,000) or correctional labor for a term of up to two years, or imprisonment for the same term.
Part 2 of Article 176 of the Criminal Code of Ukraine provides for additional qualifying features of the crime described above, in particular the same actions, if they are committed repeatedly, or with a prior conspiracy by a group of persons, or cause material damage in a large amount, are punishable by a fine from one thousand to two thousands of tax-free minimum incomes of citizens (from UAH 17,000 to UAH 34,000) or correctional labor for a term of up to two years, or imprisonment for a term of two to five years.
It is worth noting that if the unlicensed software was installed on more than one computer, which is usually the case, there is every reason to assert the fact of repeated commission of the crime. And as a result, there are grounds for applying the responsibility provided for in Part 2 of Art. 176 of the Criminal Code of Ukraine.
Part 3 of Article 176 of the Criminal Code of Ukraine also provides for additional qualifying features, namely: the actions provided for in parts one or two of this article were committed by an official using his official position or by an organized group, or if they caused material damage in a particularly large amount.
These actions are punishable by a fine of two thousand to three thousand non-taxable minimum incomes of citizens (from UAH 34,000 to UAH 51,000) or imprisonment for a period of three to six years, with deprivation of the right to hold certain positions or engage in a certain activity for a period of up to three years or without it.
We would like to draw special attention to such a qualifying feature as the commission of a crime by an official using his official position. If the computers on which unlicensed security was installed belonged to a legal entity, then, according to the general rule, the manager of this legal entity will bear responsibility as an official under Part 3 of Art. 176 of the Criminal Code of Ukraine.
In order to minimize these risks for himself, the head of the legal entity can by his order appoint a person from among the employees responsible for the maintenance of the relevant computer equipment. Also, a legal entity can conclude a contract with another business entity for the provision of computer equipment maintenance services.
There are a number of other legal schemes that allow you to protect a legal entity and its manager from liability for the use of unlicensed software, but they should be considered in a separate article.
Article 52 of the Law of Ukraine “On Copyright and Related Rights”, among others, provides for the right of the subject of copyright to apply to the court for damages (material damage), including lost profits, or recovery of income received by the infringer as a result violation of his copyright or payment of compensations.
In particular, in accordance with point “d” part 2 of Art. 52 of the Law of Ukraine “On Copyright and Related Rights”, the court has the right to make a decision or resolution on the payment of compensation, which is determined by the court as a lump sum based on such elements as doubled, and in the case of intentional infringement – as tripled the amount of remuneration or commission payments , which would be paid if the infringer applied for permission to use the contested copyright or related rights instead of compensation for damages or collection of income.
In addition, Part 3 of Art. 52 “On copyright and related rights” stipulates that the court may decide to impose a fine on the violator in the amount of 10 percent of the amount awarded by the court in favor of the plaintiff. The amount of fines is transferred to the State Budget of Ukraine in accordance with the established procedure.
In view of the responsibility described above, we can come to the following conclusions:
Attorney Taras Seniv