Legal regulations on employees copying company software source codes

In information technology, software source code is one of a company’s most valuable intellectual assets. However, in practice, many employees copy or use the company’s source codes without authorization, leading to disputes over ownership, economic loss, and legal risks. Therefore, understanding how to address employees copying software source codes under Vietnamese law is a crucial issue for both employers and employees. 

I. Current situation regarding employees copying company software source codes 

In today’s fast-developing information technology (IT) industry, software source codes represent a highly valuable intellectual property asset of enterprises. Nevertheless, many companies face situations in which employees copy, use, or transfer source codes externally without the employer’s consent.

Common situations include:

• Copying source codes for developing personal or external software projects: Some employees copy source codes to develop personal projects or supply them to another company either during or after employment, causing direct financial loss and reputational damage.
• Copying for study or experimentation: Some employees copy codes for research or learning purposes. However, without express consent, such actions still constitute an infringement of the company’s intellectual property rights.
• Lacking access and backup control: Many companies fail to implement strict access and backup management policies for source codes, resulting in unauthorized copying, leakage, or use; especially, when employees leave or information technology (IT) departments undergo personnel changes.
• Arising legal disputes over ownership and compensation: When disputes arise, it is often difficult to determine the extent of copying and damages, and ownership rights, leading to prolonged and costly litigation and reputational harm.

II. Definition of employees copying company software source codes 

Unauthorized copying of company software source codes by employees is a sensitive and increasingly common issue in software development enterprises. Understanding the definition and elements of such conduct helps identify legal obligations and minimize dispute risks.

1. What does employee copying company software source code mean?

Employee copying company software source code refers to an employee or individual involved in software development within the scope of work or employment contract, copies, stores, uses or transfers the source code without the written consent of the enterprise.

Such matters may occur during or after employment. The copied source codes can be all or part of software that have been developed, are being developed, or are under testing.

2. How to distinguish between lawful and unlawful source code copying?

To determine the legality of copying, the following factors must be considered: 

• Origin of the software:
  + If it is developed within assigned duties or using company resources, copying without consent is prohibited.
  + If it is developed independently outside working hours and without company resources, the employee may retain usage rights.
• Purpose of use:
  + Lawful: Copying for internal learning or testing with company permission.
  + Unlawful: Copying for sale, transfer, competitive development, or any purpose harmful to the company.
• Authorization from the company:
  + Copying authorized in writing is lawful.
  + Unauthorized copying violates intellectual property ownership and confidentiality obligations.
• Agreements in labor contracts or software development contracts:
  + Employment or development contracts specifying ownership, usage rights, and confidentiality obligations determine the legality of copying.

Thus, whether copying is lawful depends on origin, purpose, authorization, and legal agreements between the parties.

III. Legal provisions governing employees copying company software source codes 

Software source codes are protected intellectual property under Vietnamese law. Unauthorized copying by employees can result in severe economic and reputational losses. Knowing the applicable laws helps companies establish a solid legal basis for enforcement.

1. Governing legal instruments:

• Intellectual Property Law 2005 (as amended in 2009, 2019, 2022):
  + Article 39: Ownership of assets (including software) created under assigned duties or with company resources belongs to the employer.
  + Article 22: Copyright protection for computer programs and databases, recognizing source and object code as literary works.
  + Articles 19 and 20: Copyright, personal rights and property rights in software works.
• Labour Code 2019:
  + Clause 2, Article 21: Employers may enter written agreements with employees regarding content and duration of protection of trade secrets, technology secrets, and rights, and compensation for violations.
  + Article 125: Dismissal for disclosure of business or technological secrets or infringement of intellectual property rights.
  + Article 129: Employees who cause property damage shall compensate the employer under law or internal regulations.
• Civil Code 2015:
  + Articles 360–362: Compensation for damage caused by breach of civil obligations, applicable when unauthorized copying causes loss to the company.

2. Possible legal actions against source code copying:

Depending on the severity and damage, employees may take: 

• Disciplinary (Article 124 of the Labor Code 2019):
  + Reprimand;
  + Extension of salary increase period (up to six months);
  + Demotion;
  + Dismissal (specifically for disclosing trade or technology secrets, or infringing IP rights).
• Civil liability:
  + Compensation for material and moral damages (Article 360 of Civil Code 2015);
  + Request for stopping infringement (Article 198 of Intellectual Property 2015);
  + Liquidation of ownership or transfer of the right to use the software according to the agreement;
  + Request of the Court to resolve the dispute if the parties cannot reach an agreement.
• Criminal liability:
  + Under Article 225 of the Penal Code 2015, unauthorized copying or distribution of copyrighted works (including software) may constitute the crime of copyright infringement.

Thus, Vietnamese law provides a multi-tiered enforcement mechanism from internal discipline to civil and criminal measures depending on the gravity of the violation.

IV. Common legal questions regarding employee copying of company software source codes 

1. What should a company do upon discovering an employee has copied source code for personal use?

The company should:

• Verify the extent, purpose, and damage;
• Order the employee to immediately cease and return all copies;
• Issue a written notice identifying the violation;
• Apply disciplinary measures (warning, dismissal, or contract termination);
• File a civil or arbitration claim if damages are significant or infringement is evident.

2. If the employee claims to be the creator, how can the company prove ownership?

Ownership can be established by:

• Employment or development contracts: Showing the software was created as part of assigned duties;
• Project documents: Including commit logs, work records, internal emails, or project notes;
• Use of company resources: Involving servers, computers, or software libraries;
• Copyright registration: Official registration as a conclusive proof of ownership.

3. If an employee copies code to develop a competing product, is it considered unfair competition?

Under Article 45 of the Competition Law 2018, using confidential business information without authorization constitutes unfair competition. Unauthorized use of a company’s source code to create a competing product is a clear violation.

4. Is copying for learning purposes without commercial use punishable?

If solely for personal learning or research and not disclosed or commercially exploited, it may not constitute a violation.

However, employees must not disclose or use the code outside company permission. Companies should issue clear internal policies regulating such use to prevent disputes.

V. Legal advisory services related to employees copying of company software source codes

Handling unauthorized source code copying involves complex interactions between Intellectual Property Law, Labor Law, Civil Law, and Competition Law. Enterprises should seek professional legal assistance to:

• Draft employment contracts, confidentiality, and software ownership agreements;
• Handle disputes, initiate arbitration, or litigation;
• Register software copyrights and implement Intellectual Property protection policies;
• Establish preventive and monitoring measures to safeguard proprietary assets.

If your business is facing issues involving employees copying company software source codes, contact NPLAW for timely support to minimize risks and prevent further loss.