Partial Transfer of a Copyright Article: A Lease
If less than all of the benefits and burdens associated with a copyrighted article have passed to the transferee, the Software Regulations treat the transaction as a lease. Copyright articles can be leased as well as sold. Computer programs do not involve the risk of physical deterioration or physical destruction but they do have the risk of technological obsolescence. If this risk is assumed by the transferee, generally through a transaction in which the transferee makes a single payment in return for the right to use the program copy in perpetuity, then the transferee has assumed the risk of obsolescence and should be treated as the owner of the program copy.
However, if the transferee instead makes periodic payment and can cease its use of the program when it chooses, then the transferee has not assumed the relevant benefits and burdens of ownership and the transaction should be considered a lease.
Next (Final Post includes Bonus) – Part 8 – Lease and Rental Source of Income
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