Rights to Code in IT: Civil and Criminal Courts | Guide

Double Whammy: How IT Conflicts Over Code Rights Lead to Civil and Criminal Courts

When a technical co-founder leaves the company, a conflict over rights to the source code can instantly escalate from an internal dispute into a legal battle on two fronts. A real case shows: simultaneous consideration of the dispute in the Intellectual Property Court and criminal court puts the company in a trap of procedural paradoxes. We break down the mechanics of conflicts where code becomes both an asset and evidence.

How IT Disputes Over Code Rights Arise

Typical scenario: three co-founders — business, operations, development. Five years of work, tens of millions of rubles invested in a corporate platform with backend, analytics, and mobile app. The pattern suddenly breaks when the technical co-founder leaves, and months later registers the software in Rospatent under his own name. For the company, this is theft of intellectual property; for the ex-partner, it's securing copyrights.

Key legal issue — service work under Art. 1295 of the Civil Code of the RF. Exclusive rights belong to the employer if the code was created within job duties. But what if:

• The employment contract lacks an IP section
• Job description phrases duties as "managing the technical function"
• No orders to start developing specific modules
• No author's remuneration was paid (the business share was considered sufficient compensation)

These gaps create room for dispute: whose code is it really? The legal collision worsens due to technical actions — after leaving, the ex-partner changes server accesses and transfers data. The company loses control over infrastructure: invoices aren't issued, reporting drops, and some functionality gets blocked.

From Civil Claim to Criminal Case: Point of No Return

The company files a claim in the Intellectual Property Court demanding invalidation of the registration and prohibition of software use. In parallel, it turns to law enforcement over the infrastructure blockage. Result: a criminal case is initiated under Art. 146.3 of the Criminal Code (illegal use of copyrights with damage >1 million rubles) and Art. 159.6 of the Criminal Code (fraud in the sphere of computer information).

The investigation seizes servers as physical evidence and appoints computer-technical expertise. The experts' conclusion states a high code match percentage — a level matching "derivative work," not independent development. However, expert findings aren't a verdict: the defense can challenge them, and the court can reassess.

Critical twist: The Intellectual Property Court suspends civil proceedings until the criminal verdict takes effect. Basis — para. 1 part 1 Art. 143 of the APC of the RF. The court justifies the suspension with three factors:

• Physical inaccessibility of the source code (servers seized by investigators)
• Parallel review of the same issue in the criminal process
• Potential preclusive effect after the verdict enters into force

Procedural trap: the civil claim is "frozen" for one to three years — the duration of the criminal process. The company loses the chance for quick rights restoration via civil court, even though it could have delivered a swift resolution.

Why Two Court Tracks Work Against the Company

Strategic mistake — launching criminal and civil processes simultaneously. The criminal track provides investigative tools (seizures, expertise) but blocks the civil protection mechanism. If the company had stuck to the Intellectual Property Court, it could have:

• Appointed independent technical expertise
• Resolved the dispute on the merits in 6-12 months
• Issued an injunction against code use

But criminal prosecution, even if successfully initiated, creates a paradox: the more vigorous the investigation, the longer the civil claim stays in limbo. Meanwhile, cases under Art. 146 of the Criminal Code are often dropped due to the "civil-law nature of the dispute" — especially if arbitration is already underway. Risk: two years of court costs with no guaranteed outcome.

Critical Vulnerabilities in Rights Documentation

Case analysis shows: 80% of lost disputes stem from a weak documentary base. Fatal for the employer:

• Lack of explicit statement on the service nature of development in the employment contract
• Vague wording in job descriptions ("provides technical support" instead of "develops module X")
• No project launch orders listing goals and deadlines
• Ignoring author's remuneration — Art. 1295 of the Civil Code of the RF requires payment, even with a business share

For the ex-partner, the stumbling block is Rospatent registration. The procedure is declarative, not constitutive of rights. A registry entry doesn't override the service nature of the software if evidence exists:

• Commit history in the corporate repository
• Payroll and tax documents
• Correspondence on work tasks

Key Takeaways

• Document code rights from day one. Clearly state in the employment contract that everything created as part of the job is service work. Add a development launch order listing modules.
• Don't skimp on author's remuneration. Even with a business share, pay a fixed amount for intellectual labor — it bolsters court positions.
• Isolate accesses immediately upon employee exit. Change passwords and transfer data before signing the dismissal.
• Avoid simultaneous criminal and civil processes. Settle the dispute via the Intellectual Property Court first — it's faster and offers more control over expertise.

Code conflicts are rarely settled "by fairness" — they're won with documents. As long as undocumented work lives in the repository, the company risks losing not just the asset but business control. Legal review of the code base before hiring a tech lead isn't a luxury — it's essential for any IT startup.

— Editorial Team