The Paris Court of Appeal has just ruled on a key legal issue for software publishers, concluding that failure to comply with the terms of a software licence falls under the rules of contractual liability and not those of tort liability applicable to infringement, as set out in Article L335-3 of the French Intellectual Property Code (Ruling of 19 March 2021 - Pôle 5 - chamber 2, no. 19/17493).

This ruling is in line with previous decisions by the specialised intellectual property chambers of the Paris Court of Appeal.

Already in 2016, the 1st chamber of Pôle 5 had punished the publisher, on the grounds of contractual liability, for bad faith and unfairness, by accusing it of having taken advantage of its right of audit to put pressure on its client by unduly demanding regularisations of software licences concerning the use of software supplied by the publisher and not included in the scope of the licence (Judgement of 10 May 2016 - Pôle 5 - chamber 1, no. 14/25055).

In 2018, the Paris Court of Appeal also asked the CJEU to rule on this thorny issue in a preliminary ruling (Judgment of 16 October 2018 - Pôle 5 - Chamber 1, no. 17/02679). The CJEU did not give a ruling, considering that it could only rule on the facts of the case, which related to changes made to the source codes. It pointed out that the holder of the intellectual property rights in the software benefited from the provisions of Directive 2004/48/EC on the enforcement of intellectual property rights, regardless of the liability regime applicable under national law (CJEU, No. C-666/18, Judgment of the Court, IT Development SAS v Free Mobile SAS). The case was not pursued, as the parties withdrew their appeal.

The practical consequences are significant:

• The publisher will have to prove the fault of its customer and the prejudice she has suffered, whereas in counterfeiting cases, good or bad faith is irrelevant and the prejudice does not have to be proven.
• The license metrics will be based on the license contract and not on the day of the audit.
• The price of additional licences to be settled will be that agreed in the contract and not the public price.
• The Commercial Courts may declare themselves competent without referring to the Courts specialising in intellectual property.
• Counterfeit seizures will not be authorised.

It should be remembered that the Aix-en-Provence Court of Appeal also took a more favourable view of licensees by ruling, in the tort of infringement, that the calculation of the loss for the payment of additional royalties should be based on the contractual price and not on the public price, which would have increased the amount of the loss (Ruling of 5 March 2020, Chamber 3-1, 5 March 2020, no. 17/15324).