Compliance features of creating IT products as part of IT projects
Domestic judicial practice shows how strongly compliance features within the implementation of IT projects influence the process of creating IT products. For example, how making changes to an already created information system (hereinafter referred to as IS) can lead to a conflict between interested parties, how external circumstances can cause refusal to fulfill the terms of a contract, how improper execution of transaction covenants can cause early termination of an IT project, etc.
Moreover, thanks to judicial practice, it becomes possible to determine the amount of material damage that was incurred due to non-compliance with compliance features during the creation of IT products. As an example, the damage that was received from the occurrence of 192 compliance risks. This number of risks is due to the volume of court decisions identified during the analysis of the business activities of 495 IT entities of the Tomsk region (OKVED code 62). At the time of the analysis, the total material losses in these IT entities amounted to more than 53 million rubles. (RUB 53,221,137.00), and the damage caused by the occurrence of one compliance risk is RUB 277 thousand. (RUB 277,193.42).
T. Merna and F. Al-Thani note in their works that the onset of compliance risks is a fairly rare event, but the materialization of even one can cause unacceptable damage. This statement is confirmed in domestic judicial practice. For example, as a result of the proceedings in case No. A81-9472/2019, the IT entity received damages equal to 1.7 million rubles, case No. A67-1623/2017 the damage amounted to 2.8 million rubles, case no. A40-248300/21-5-1672 – 2 million rubles, case no. A40-32033/19-47-287 – 15.8 million rubles. etc.
It would seem that compliance with the theoretical foundations of IT project management, enshrined in numerous international standards and bodies of knowledge of project management, such as ISO, PRINCE2®, PMBOK® Guide, etc., should eliminate the problems described above. However, an analysis of judicial practice has shown that civil disputes continue to arise in IT projects between interested parties. The low effectiveness of international bodies of knowledge in terms of compliance with the norms of current legislation can be explained by their exclusively advisory nature for business entities engaged in the development of computer software and the provision of consulting services in this area, as well as by not taking into account domestic compliance features of creating IT products in the territory RF.
Compliance features of creating IT products
Let us consider the compliance features of the creation of IT products as part of the implementation of IT projects, identified during the analysis of the business activities of 495 IT entities of the Tomsk region (OKVED code 62).
1. An IT project is a civil transaction. An analysis of judicial practice and business activities of IT entities in the Tomsk region showed that these entities, as a rule, enter into contract agreements with interested parties (Ch. 37 Civil Code of the Russian Federation) and contracts for paid services (Ch. 39 Civil Code of the Russian Federation).
Based on the above, it is logical to assume that an IT project, in addition to the classical project interpretation, should be represented as a civil law transaction, where one party is an IT entity (contractor, performer, supplier) who creates an IT product to order, and the other party is the customer who accepts the results of the work performed and pays for them.
Taking as a basis the statement that “an IT project is a civil transaction” and “an IT product is the result of intellectual activity and an object of copyright”, it seems possible to clarify the definition of the concept “IT product”. In particular, under An IT product should be understood as an object that can be an IT service or a result of intellectual activity (RIA), presented in the form of program code and obtained at the end of a sprint, a phase of the life cycle of an IT project and (or) a contract..
A refined definition of the concept “IT product” allows us to systematize the concepts of objects created within sprints, phases of the life cycle of an IT project and (or) contracts. The proposed systematization presents an “IT product” as an object that consists of two parts – an IT service and a RID (computer program). Such quantification is due to the compliance feature under consideration, where, within the framework of the contract, the IT entity is obliged to provide an IT service or create RIA. In the case of a mixed contract, an IT entity can create RIA at one stage, and at another provide an IT service, for example, conduct user training or provide technical support for an IT product. It is also worth noting that according to Art. 1 261 Civil Code of the Russian Federation RID is software (computer software, program code). Considering the fact that software, software, hardware and software, software product, software product, software product of an automated system, automated system, information system and IT result are a set of programs, we can conclude that the “program” will aggregating concept. An example of systematization of objects created within sprints, IT project life cycle phases and (or) contracts is presented in Figure 1.
Among the main advantages of systematizing the concepts of objects created within sprints, IT project life cycle phases and (or) contracts, it should be noted that the quality of project documentation is improved, the “picture of expectations” of stakeholders is clarified, as well as the revalorization of covenants. In addition, by clarifying the concept of “IT product,” it is possible to formulate other compliance features.
2. The transfer of ownership and exclusive rights to an IT product is carried out at the “end of the IT project” phase of the life cycle. By virtue of Art. Art. 702, 720 And 1 296 Civil Code of the Russian Federationduring acceptance, the contractor (performer, supplier) must transfer to the customer ownership and exclusive rights to the IT product created to order with the signing of the corresponding act (Art. 1 286 Civil Code of the Russian Federation). Based on the requirements of current legislation, the basic project plan must necessarily include the “completion of the IT project” phase of the life cycle, where the necessary operations for accepting completed design work will be conscientiously performed (Art. 720 Civil Code of the Russian Federation).
As an example of the implementation of this compliance feature in practice, case no. A67-7409/2013where the IT organization asked the court to recover 1.8 million rubles from the customer. During the trial, it was established that the IT organization conscientiously fulfilled the obligations stipulated by the contract, which was confirmed by signed test reports, created IT products and certificates of work performed.
3. The transfer of ownership and exclusive right to an IT product from the copyright holder to the acquirer of the right requires documentary support. Failure to comply with the documented procedure for the transfer of ownership and exclusive rights to an IT product created to order can cause significant material damage to the interested parties of the IT project. An illustrative example of a violation of this compliance feature is case no. A40-81328/2011where the IT organization asked the court to prohibit the use of the HIST DoCoMo program and to recover damages in the form of lost profits in the amount of 124.2 million rubles. Also worth mentioning is case no. 2-38/2019 (2-4158/2018) ~ M-608/2018where the programmer was paid 20.2 million rubles. for illegally reproducing and providing commercial access to his eLearning Metadata Manager program. In case no. 02-4545/2017∼M-3463/2017 the programmer demanded a royalty in the amount of 100 thousand rubles. from your former employer. In case no. 2-1564/15 the employer asked the court to recognize that he is the copyright holder of the exclusive right to an IT product created by his former employees. In case no. A40-202764/18-110-1552 the employer demanded that its former programmers stop using the IT product and collect compensation from them in the amount of 5 million rubles.
An analysis of court decisions showed that the cause of such problems was a violation of the documented procedure for the transfer of ownership and exclusive rights to IT products from copyright holders to acquirers of rights. This means that eliminating such problems is only possible if the compliance feature in question is correctly implemented.
According to the norms of current legislation, methods of disposing of the exclusive right to an IT product can be divided into two groups, (a) when the IT product has already been created and (b) when the IT product has not yet been created (Fig. 2). Let's consider these methods in more detail.
a) Methods for disposing of exclusive rights when an IT product has already been created. If an IT product is created, then in accordance with Art. 1 233 Civil Code of the Russian Federationthe legislator establishes two ways to dispose of the exclusive right to a given work – alienation of the exclusive right and granting acquirers the right to use the exclusive right within the limits established by the license agreement.
Agreement on alienation of exclusive rights. The main parties to the relationship are the copyright holder and the acquirer of the right, where the author (copyright holder) transfers his exclusive right to the IT product in full to the acquirer of the right (Art. 1 285 Civil Code of the Russian Federation).
From the moment the contract comes into force, the previous copyright holder loses the right to use the IT product (Art. 1 270 Civil Code of the Russian Federation), and the acquirer of the right becomes the sole owner of the entire exclusive right and can further dispose of it at his own discretion (Art. 1 281 Civil Code of the Russian Federation).
The essential terms of this transaction are the subject of the agreement and the amount of remuneration, and the rules for determining remuneration provided for Art. 424 Civil Code of the Russian Federation for this type of trace, do not apply. It follows that the amount of remuneration, its form and payment procedure must be clearly defined in the covenants of the transaction. Moreover, if the IT product was previously registered with the Federal Service for Intellectual Property (hereinafter referred to as Rospatent), then when describing the subject of the contract it is necessary to indicate the number of the registration certificate.
An agreement on the alienation of the exclusive right to an IT product is concluded in writing (Art. 1 234 Civil Code of the Russian Federation). If this condition is not met, the transaction is considered invalid, and the exclusive right is not transferred to the acquirer of the right.
License agreement. The transaction for granting a license to use an IT product is regulated by Art. Art. 1 235, 1 236 And 1 286 Civil Code of the Russian Federation. The parties to the transaction are the licensor and the licensee. The license gives the licensee the right to use the IT product, but retains the exclusive rights of the licensor. The scope of rights granted to the licensee under the license is entrusted for a certain period, extends to a certain territory and is transferred for a fee, which can be paid one-time or periodically.
According to requirements Art. 1 286 Civil Code of the Russian Federationthe form of the license agreement must be in writing. If this requirement is not met, the transaction will be considered not concluded.
The legislator distinguishes two types of licensing agreements – an agreement on the provision of a non-exclusive (simple) license, when the licensor retains the right to issue licenses to third parties, and an agreement on the provision of an exclusive license, when the licensor does not issue licenses to third parties during the term of the agreement.
b) Methods for disposing of an exclusive right when an IT product has not yet been created. An analysis of judicial practice has shown that IT products, as a rule, are created during the execution of a work contract, an author's order agreement, or as part of an employment contract.
Contract agreement. The parties to this relationship are the contractor, who undertakes to perform the work as instructed by the customer, and the customer accepts the result of the work performed and pays for it (Art. 702 Civil Code of the Russian Federation).
The essential terms of the contract are the subject of the contract, as well as the start and end dates of the work (Art. 708 Civil Code of the Russian Federation). This circumstance places all IT projects in the group of high-risk transactions, since any emergency situation will have a negative impact on the deadlines approved by the stakeholders. This statement is confirmed by the results of The Standish Group International, which show that the average deviation from the planned duration in IT projects when unexpected problems occur is 89%.
According to Art. 1 296 Civil Code of the Russian Federation The exclusive right belongs to the customer from the moment the parties to the transaction sign the relevant act. Moreover, the contractor has the right to use the created program for his own needs under the terms of a non-exclusive (simple) license during the entire period of validity of the exclusive right. However, if the contract stipulates that the exclusive right belongs to the contractor, then the customer has the right to use the IT product created to order only for his own needs under the terms of a non-exclusive (simple) license during the entire period of validity of the exclusive right.
Author's order agreement. Due to the norms of current legislation, the contract is concluded directly with the author (individual), for example, a freelancer (free-lance). An author's order agreement is characterized by the absence of a presumption of transfer of the exclusive right to the created object to the customer (Art. 1 288 Civil Code of the Russian Federation). Obviously, such a legal distribution of legal relations cannot be of interest to the customer, since he will not fully own the created program. To solve this problem, it is recommended that a separate provision in the contract include a covenant for the alienation of the exclusive right.
Employment contract. Another way to obtain exclusive rights is to create an IT product under an employment contract. In this case, the program code will be developed by the employee on the basis of a job assignment or as part of his job duties. Let us note that the combination of labor and civil relations between an employee and an employer forms the following compliance feature.
4. The process of creating an IT product by employees of an IT entity must be carried out within the framework of their job responsibilities or job assignments. It should be noted that the development of an IT product by employees has an important nuance that many employers do not pay attention to. In particular, if an employer began to use an IT product created by a programmer, transferred exclusive rights to this program to another entity, or decided to keep it secret, then the programmer will have the right to receive additional remuneration (Art. 1 295 Civil Code of the Russian Federation), which is not included in the salary or bonus part. Moreover, if a dispute arises between the employer and the programmer, the amount of remuneration will be determined by the court.
To eliminate such problems, employers are recommended to enter into special agreements with programmers and set an agreed upon amount of remuneration.
Conclusion
Thus, an analysis of the activities of 495 IT entities of the Tomsk region made it possible to discover that an IT project must be considered as a civil transaction, where one party is an IT entity (contractor, performer, supplier), who creates an IT product to order, and the other party is the customer, who accepts the result of the work performed and pays for it. It was also established that the transfer of ownership and exclusive rights must be carried out at the “end of the IT project” phase of the life cycle, where this transition must be accompanied by documentation. Another compliance feature of creating an IT product as part of an IT project is the mandatory creation of program code as part of the job responsibilities of the employees of the IT entity or a job assignment.
Due to the fact that an IT product is the result of intellectual activity and an object of copyright, the definition of the concept “IT product” has been clarified. In particular, an IT product should be understood as an object that can be an IT service or the result of intellectual activity, presented in the form of program code and obtained at the end of a sprint, a phase of the life cycle of an IT project and (or) a contract. The clarified concept emphasizes the importance of compliance features, where the IT entity is required to distribute, manage and transfer ownership (Art. 209 Civil Code of the Russian Federation) and exclusive right between interested parties (Art. Art. 1 225, 1 259 Civil Code of the Russian Federation), as well as document the authors who own personal non-property rights. Moreover, clarifying the concept of “IT product” made it possible to systematize the concepts of objects created within sprints, phases of the life cycle of IT projects and (or) contracts. Among the main advantages of systematization, it should be noted that the quality of project documentation is improved, the “picture of expectations” of stakeholders is clarified, as well as the revalorization of covenants.
It is important to note that in addition to compliance features, IT entities also need to take into account the technological features of creating IT products. For example, IT entities are often faced with a choice of which concept for creating IT products to adhere to. Either this should be the concept of waterfall or the concept of flexible creation of IT products (Agile). The choice of the IT project life cycle model will subsequently depend on the choice of concept. If it is Waferfall, then the V-model or waterfall model can be chosen as the model, if Agile is the B.V. Boehm life cycle model or an iterative model.
When the concept is defined, the IT subject may again be faced with a choice related to the technology for creating IT products (XP, RUP, AUP, RAD, DSDM, SCRUM, etc.). The IT subject determines the choice of a particular technology independently based on the uncertainty and variability of functional, user and business requirements, the quality of management decisions made, the management styles used, the availability of resources, the organization of cross-communication between stakeholders, as well as the degree of knowledge of the theoretical basis.
