LEGAL CONSEQUENCES FOR COMPANIESON SOFTWARE COPYRIGHT INFRINGEMENT BY EMPLOYEES

A. Introduction

Software can be defined as a collection of instructions (computer programs) that, when executed, provide various desired features, functions, and performance (Pressman, 2012). Software is generally used to control hardware, perform calculations, interact with other basic software (such as operating systems and programming languages), and more (Rusydi, 2022).

Software is part of Intellectual Property Rights (“IPR“) and is protected by legal instruments both globally and nationally in Indonesia. In international scope, legal protection for software is regulated in the Berne Convention for the Protection of Literary and Artistic Works and the World Intellectual Property Organization (“WIPO“) Copyright Treaty. These two conventions have been ratified in Indonesia and are enforced through the following legal regulations:

1. Presidential Decree No. 18 of 1997 concerning the Ratification of the Berne Convention for the Protection of Literary and Artistic Works;
2. Presidential Decree No. 19 of 1997 concerning the Ratification of the WIPO Copyright Treaty.

In a few countries, legal protection for software is provided in the form of patents, such as the United States and Japan. However, in Indonesia, legal protection for software is regulated by Law Number 28 of 2014 on Copyrights (hereinafter referred to as the “Copyright Law“). Legal protection for software in Indonesia is further regulated in Letter S Article 40 of the Copyright Law related to protected creations, which include, among others, a computer programs.

The definition of a computer program, according to the Copyright Law, is a set of instructions expressed in the form of language, code, schemes, or in any form intended for the computer to work to perform certain functions or to achieve certain results¹. In other words, computer programs, commonly referred to as software, are one of the creations protected by the Copyright Law in Indonesia. Despite the legal protection for software being implemented in Indonesia, in reality, based on the analysis of data and policies in the field of intellectual property, Indonesia is currently under international scrutiny for the widespread illegal use of software. This is in line with the excerpt from the 2023 Special 301 Report, as follows:

“Stakeholders have raised concerns over Indonesia’s Copyright Law, including with respect to the circumvention of technological protection measures, and have urged Indonesia to consider revisions to the Copyright Law. Online piracy through piracy devices and applications is a concern, and unauthorized camcording and unlicensed use of software remain problematic” (United States Trade Representative, 2023). 

Therefore, due to the above, this article is made to provide further information and discussion regarding the legal consequences of copyright infringement of software, particularly for companies.

B. Discussion

Protection of Software by Indonesian Law

Article 1 point (1) of the Copyright Law outlines that copyright is an exclusive right for the creator or copyright holder to publish or reproduce their creation, which arises automatically (declaratively) after acreation is born without prejudice to the restrictions under the applicable laws and regulations. The development of protection for computer software or computer programs began with the Berne Convention (1971). Computer programs are classified as Literary Works under the Berne Convention due to the coding process by the creator, which requires not only sufficient knowledge of programming techniques and languages but also patience in writing these codes, resulting in source code in the form of text that can only be understood by experts. Therefore, computer programs are protected by copyright, not patents².

Proof of copyright protection for software is found in Article 40 paragraph (1) of the Copyright Law, which states that protected creations include those in the fields of science, art, and literature, among others, computer programs, and others. The validity period of copyright for computer programs is regulated in Article 59 paragraph (1) of the Copyright Law, which is valid for 50 (fifty) years from the first publication. Furthermore, software is regulated in the Copyright Law, namely in Article 11 paragraph (2) regarding economic rights, Article 45 paragraphs (1) and (2) regarding the use of copies of computer programs, Article 46 paragraph (2) regarding the destruction of copies or adaptations of computer programs, and Article 113 regarding criminal sanctions.

Although software protection is regulated by the Copyright Law, it does not rule out the possibility that software can obtain a patent. Software can have copyright when it is created and published, and it can have a patent if it meets the requirements stipulated in Law Number 13 of 2016 concerning Patents (hereinafter referred to as the “Patent Law“). This refers to the Explanation of Article 4 letter d of Law Number 13 of 2016 concerning Patents, which states that computer programs can be registered for a patent if they have characteristics with technical effects and functions to solve problems, whether tangible or intangible. An example of software registered with a patent is “Scenario Reproduction Methods, Simulation Devices, Simulation Systems, and Computer-Readable Storage Media” by CRSC Research & Design Institute Group Co., Ltd³.

Company Liability For Software Infringement By Employees

Software license infringement by a company or its employees constitute an infringement of both the moral and economic rights of the software creator. The legal consequences of such infringements, impacting both the moral and economic rights of the software creator lead to civil and criminal liabilities⁴. According to Article 9 paragraph (1), letter a, letter b, letter e, and/or letter g of the Copyright Law, the forms of actions that are prohibited or constitute copyright infringement of software include:

1. The publication of the creation;
2. The reproduction of the creation in any form;
3. The distribution of the creation or its copies; and
4. The announcement of the creation.

In cases of copyright infringement, these four actions are carried out without the permission of the software owner as the creator. However, the Copyright Law also stipulates an exception for the reproduction of a single copy, even without the creator’s permission, as stated in Article 45 of the Copyright Law:

“The reproduction of one (1) copy or adaptation of a computer program by a legitimate user can be done without the permission of the creator or copyright holder if the copy is used for:Research and development of the computer program; and

Archival or backup purposes for a legally obtained computer program to prevent loss, damage, or inoperability.

If the use of the computer program has ended, the copy or adaptation of the computer program must be destroyed.”

According to the provisions of the above article, the reproduction of software without the creator’s permission that is allowed under the Copyright Law is the reproduction of legally obtained software to prevent loss, damage, or inoperability. The condition is that the reproduction can only be made in one copy, and if the use of the software has ended, the copy or adaptation of the software must be destroyed.

Aside from the purposes mentioned in Article 45 paragraph (1), software that has been announced cannot be reproduced for personal purposes (in one copy and without the creator’s or copyright holder’s permission), and therefore must obtain permission from the creator or copyright holder first. Furthermore, if a creation is acknowledged or the source is recognized, and its use is limited to non-commercial activities such as social activities, activities related to education and science, research, and development, such use cannot be considered copyright infringement as long as these activities do not harm the creator’s legitimate interests. This refers to the provisions of Article 25 of the Copyright Law.

In this writing, software copyright infringement by company employees typically involves the unauthorized reproduction of software by installing unlicensed software, commonly known as pirated software. For such actions, according to the Copyright Law, the forms of sanctions and the company’s responsibilities regarding such infringements can be distinguished into two aspects as follows:

1. Civil Law Aspects

In civil law, if there is damage caused to a third party due to the actions of an employee/laborer within the scope of their employment, the company is responsible for compensating such damage. This refers to the following legal provisions according to Article 1367 paragraph (1) of the Indonesian Civil Code (KUHPerdata), it is stated that:

“A person is not only responsible for the damage caused by their own actions, but also for the damage caused by the actions of those for whom they are responsible or by goods under their supervision.”

The foregoing provisions apply the principle of “respondeat superior”, which means that a superior is responsible for the actions of a subordinate, as long as it is carried out within the scope of assigned work duties and results in harm to another party⁵. This principle is also known as the doctrine of vicarious liability, which means indirect responsibility or responsibility for the actions of another person⁶.

Furthermore, the issue of vicarious liability is also explained in Article 1367 paragraph (3) of the Indonesian Civil Code, which states: “Employers and those who appoint others to represent their business are responsible for the damage caused by their servants or subordinates in carrying out the tasks assigned to them.” The article mentions that one of the parties that can be held accountable is an employer. To meet the criteria of “an employer who can be held responsible for the actions of their subordinates,” the subordinate relationship between the employer and the subordinate must be proven, and the subordinate’s fault must be related to their job responsibilities. In the case of software infringement by an employee, based on the doctrine of vicarious liability referred to inArticle 1367 of the Indonesian Civil Code, the company as the employer can be held accountable for the copyright infringement committed by the employee, provided that the employment relationship between the company and the employee can be proven, and the software infringement is related to the employee’s job responsibilities.

In the event of such software copyright infringement, the copyright holder may file a lawsuit for damages against the relevant company. Filing a civil lawsuit does not eliminate the software creator’s right to initiate criminal proceedings. In this context, the Commercial Court has exclusive jurisdiction over copyright disputes, according to Chapter 19 Article 95 paragraph 1 of the Copyright Law. However, before taking the criminal case to the Commercial Court, if the parties are known to be in Indonesia, they must first undergo a mediation process. Additionally, the only legal recourse against a decision of the Commercial Court is an appeal.

1. Criminal Aspects

In addition to civil consequences, the Copyright Law also stipulates criminal provisions for copyright infringement of software. The criminal provisions for the illegal use of software licenses are regulated in Paragraphs 3 and 4 of Article 113 of the Copyright Law, which state as follows:

1. “Any person who, without rights and/or without permission from the creator or copyright holder, violates the creator’s economic rights as referred to in Article 9 paragraph (1) letters a, b, e, and/or g for commercial use shall be subject to imprisonment for up to 4 (four) years and/or a maximum fine of Rp1,000,000,000.00 (one billion rupiahs).”

2. “Any person who meets the elements as referred to in paragraph (3) committed in the form of piracy shall be subject to imprisonment for up to 10 (ten) years and/or a maximum fine of Rp 4,000,000,000.00 (four billion rupiahs).”

Based on the above provisions, copyright infringement claims can also be pursued criminally. Unauthorized software use is considered an act of piracy under the Copyright Law. According to Article 1 Number 23 of the Copyright Law, piracy is defined as the illegal duplication of creations and/or related rights products and the wide distribution of duplicated items to obtain economic benefits. Initially, copyright violations were considered a delict, but they were later changed to a delict complaint as per Article 120 of the Copyright Law. Thus, criminal proceedings for software violations can only be initiated if the aggrieved software owner files a complaint with the police.

In addition to referring to the provisions of the Copyright Law, in the case of criminal acts of copyright infringement by employees of a company, the company can also be held criminally liable. M. Yahya Harahap, in his book “Limited Liability Company Law,” explains that there is an opinion that every individual who acts to control and carry out company activities for the company’s purposes and interests, then: (1) The actions and awareness of the directors or employees become the actions and awareness of the company; (2) The criminal liability attached to the individual automatically becomes the company’s criminal responsibility (Harahap, 2009, p. 145).

The imposition of criminal penalties on corporations can refer to the Supreme Court Regulation Number 13 of 2016 concerning Procedures for Handling Criminal Cases by Corporations (“Perma 13/2016”). According to Article 4 paragraph (2) of Perma 13/2016, a judge can assess the corporation’s fault based on the following parameters:

1. The corporation can obtain profits or benefits from the criminal act, or the criminal act was committed for the corporation’s interests;
2. The corporation allowed the criminal act to occur; or
3. The corporation did not take the necessary steps to prevent, mitigate the impact, and ensure compliance with applicable laws to avoid the criminal act.

In this context, a judge can impose penalties on the corporation, its management, or both the corporation and its management⁷.

Case Study Of Software Violation By A Company’S Employee

In cases where a company avoids responsibility for software violations within its environment, it can face legal consequences. An example where a company was sanctioned by the court for software violations on its employees’ laptops is Supreme Court Decision No. 670K/Pdt.Sus-HKI/2022 between a manufacturing company located in Central Java (“Defendant“) and Siemens Industry Software Inc (“Plaintiff“). In this case, the court ruled against the Defendant for the unauthorized use of NX6.0 and NX8.0 software owned by the Plaintiff, which was found on the company’s employees’ computers. Furthermore, the Supreme Court rejected the Defendant’s appeal.

The Defendant is a company operating in the mold and dies manufacturing industry. It was discovered that Siemens Industry Software Inc.’s NX6.0 and NX8.0 software were used within the Defendant’s company without a proper license. After communication between both parties and an inspection of the Defendant’s company, it was found that Siemens Industry Software Inc.’s software was used without a license on the company’s and/or its employees’ laptops.

To resolve the issue, Siemens Industry Software Inc, as the software owner, attempted to settle the matter amicably with the Defendant before taking legal action. This aligns with Article 95 of the Copyright Law, which stipulates that parties can engage in negotiations to resolve software violation issues before filing a legal claim. However, the Defendant chose not to address or take responsibility for the violation, leading to an unsuccessful settlement. Consequently, Siemens Industry Software Inc filed a lawsuit for damages against the Defendant at the Commercial Court located in Semarang.

In the ruling on this case, the Panel of Judges declared that the Defendant had violated Siemens Industry Software Inc.’s economic rights by using the NX6.0 and NX8.0 computer programs for its commercial purposes without the proper authorization or license from Siemens Industry Software Inc, the copyright holder. The Panel of Judges also ordered the Defendant to pay material damages to Siemens Industry Software Inc amounting to IDR 1,577,631,103.62 (one billion five hundred seventy-seven million six hundred thirty-one thousand one hundred three point sixty-two rupiah) and to cover the legal costs of the trial.

1. Conclusion

Software is a collection of instructions that perform specific functions on hardware devices. In Indonesia, software is classified under Intellectual Property Rights (IPR) and protected by Law Number 28 of 2014 concerning Copyright. Legal protection for software in Indonesia encompasses various creations, including computer programs, which are protected for 50 years from their first publication. This protection also covers the economic and moral rights of creators, violations of which can lead to legal consequences both civilly and criminally.

Infringement of software copyright often occur in the form of unauthorized use or reproduction, known in Indonesia as piracy. In cases where violations are committed by employees, companies can be held accountable under the doctrine of vicarious liability or indirect liability. in civil law frameworks, companies are responsible for damages resulting from violations committed by their employees, in accordance with Article 1367 of the Civil Code. Furthermore, criminally, copyright violations can result in imprisonment and/or fines under Article 113 of the Copyright Law.

The case study of Siemens Industry Software Inc above illustrates that companies can be punished for copyright violations of software committed by their employees. The Defendant / or infringer was ordered to pay material damages for using software without an official license, highlighting the importance of compliance with copyright law within corporate environments.

REFERENCE

Law and regulation
Indonesia Civil Code
Law Number: 28 of 2014 on Copyrights.
Law Number 13 of 2016 concerning Patents
Supreme Court Regulation Number 13 of 2016 concerning Procedures for Handling Criminal Cases by Corporations

Judgement
Supreme Court Decision No. 670K/Pdt.Sus-HKI/2022 dated January 18, 2022.

Book, Journal, Report
Harahap, M. Y. (2009). “Hukum Perseroan Terbatas”. Jakarta: Sinar Grafika.
Muhammad Djumhana, 2006, Perkembangan Doktrin Dan Teori Perlindungan Hak Kekayaan Intelektual, PT. Citra Aditya Bakti Bandung.
Pressman, Roger S. (2012). “Rekayasa Perangkat Lunak – Buku Satu”. Yogyakarta: Penerbit ANDI.
United States Trade Representative. (2023). “2023 Special 301 Report”. Washington, DC: Office of the United States Trade Representative.
Rusydi, Muhammad Taufik. (2022). “Perlindungan Hukum Terhadap Pencipta Perangkat Lunak Komputer”. Jurnal Fundamental Justice Volume 3 Nomor 2 September 2022 ISSN:2721-7671. Universitas Surakarta, Indonesia.

Website
Asril, Fitri Astari. (2022, November 17). The Intellectual Property Protection on Software in Indonesia. https://aco-law.com/articles/the-intellectual-property-protection-on-software-in-indonesia/ 
Hasanudin, S.H., M.H.,. (2016, 23 Mei). Penerapan Pertanggungjawaban Korporasi dalam Hukum Pidana. https://pn-tilamuta.go.id/2016/05/23/penerapan-pertanggungjawaban-korporasi-dalam-hukum-pidana/

1.  Article 1 Number 9 Law Number: 28 of 2014 on Copyrights. ↩︎
2. Rahma, Siti, (n.d), Perlindungan Hukum Pemegang Hak Cipta Terhadap Kejahatan Pembajakan Software Komputer Menurut Undang –Undang Nomor 28 Tahun 2014 Tentang Hak Cipta, Journal of Juridische Analyse ISSN 2830-6023, Universitas Pasir Pengaraian, hlm. 68-82.
   ↩︎
3. Fitri Astari. (2022, November 17). The Intellectual Property Protection on Software in Indonesia. https://aco-law.com/articles/the-intellectual-property-protection-on-software-in-indonesia/ accessed on July 15, 2024 at 16.00 WIB.
   ↩︎
4. Article 95 Law Number: 28 of 2014 on Copyrights. ↩︎
5. Hasanudin, S.H., M.H.,. (2016, 23 Mei). Penerapan Pertanggungjawaban Korporasi dalam Hukum Pidana. https://pn-tilamuta.go.id/2016/05/23/penerapan-pertanggungjawaban-korporasi-dalam-hukum-pidana/ accessed on July 16, 2024 at 16.30 WIB. ↩︎
6.  Ibid. ↩︎
7.  Article 23 Point 1 Supreme Court Regulation Number 13 of 2016 on Procedures for Handling Criminal Cases by Corporations. ↩︎