SAS Institute Inc v World Programming Ltd

The functionality of a computer program, programming languages and data-file formats are ideas and are not protectable as copyrightable expression; consequently reproducing a program's functionality (even by working from its user manual) does not, without more, reproduce the expression of the manual and therefore does not infringe copyright. Separately, Article 5(3) of the Software Directive permits a lawful acquirer to observe, study and test a licensed program to determine the ideas and principles underlying it, notwithstanding contractual restrictions to the contrary.

The appellant challenged findings of Arnold J following a trial and referrals to the Court of Justice of the European Union about the extent to which a competitor may lawfully reproduce the functions of existing software and use related manuals and a licensed learning edition. The issues included (i) whether reproducing functionality or programming-language elements described in a manual infringes copyright in the manual or the program, (ii) whether a program created by reference to a manual copies the expression of that manual (the "Manual to Program" claim), (iii) whether reproducing manual text in a competitor's manual infringes copyright (the "Manual to Manual" claim), and (iv) whether use of the Learning Edition exceeded licence terms or was permitted by the Software Directive (Article 5(3)). The action had been tried by Arnold J ([2010] EWHC 1829 (Ch); [2013] EWHC 69 (Ch)) and the CJEU gave guidance (Case C-406/10). The Court of Appeal dismissed the appeal and upheld the judge's overall outcome, but clarified legal reasoning on originality, substantial part and Article 5(3).

1. Outcome: The appeal is dismissed. The court endorsed the judge's ultimate conclusions while differing on some reasoning.
2. The court applied the CJEU's guidance that the functionality of a computer program, programming languages and data-file formats constitute ideas (or the equivalent of ideas) and are not forms of expression for the purposes of copyright; protecting such functionality would permit monopolisation of ideas and impede innovation. The court treated the CJEU reasoning in Case C-406/10 as authoritative and applied its approach to the issues in the appeal. (See paras 39–51, 61–64.)
3. Copyright protects the expression of an author's intellectual creation. Following Infopaq and related CJEU authorities, a part of a work is protected only if it contains elements expressing the author's intellectual creation; the assessment is qualitative. Consequently, reproducing the functionality of a program (even if described in manuals) is not, without more, reproducing the expression of the manual. The Manual to Program claim therefore fails because what WPL reproduced was not the form of expression of the manuals' intellectual creation. (See paras 29–38, 62–81.)
4. Where a manual does contain linguistic or textual expression taken verbatim or closely paraphrased, such copying may infringe. The judge's limited findings that certain passages of the WPS Manual reproduced substantial parts of the SAS Manuals stand and are not challenged on appeal. Thus the Manual to Manual claim succeeded only to the limited extent the judge found literal linguistic copying. (See paras 82–86.)
5. Article 5(3) of the Software Directive entitles the lawful acquirer of a copy of a program to observe, study and test the program to determine the ideas and principles underlying it when doing acts of loading, running, etc. Contractual provisions contrary to Article 5(3) are null and void under Article 9(1). The court read the CJEU's answer as permitting observation/testing for the purpose of reproducing functionality even where the licence otherwise restricted permitted purposes. Thus WPL's use of the Learning Edition for such observation/testing was protected by Article 5(3). (See paras 93–102.)
6. On contractual construction, the licences ("click-wrap" terms) were construed in commercial context: the purchaser paying for the product is the contractual customer and, on the facts, WPL as purchaser was a lawful acquirer. The court concluded that the licence did not prevent the corporate licensee from authorising employees to observe, study and test the program one workstation at a time; contra proferentem and other interpretative points supported this construction. As a result, WPL was a lawful acquirer for Article 5(3) purposes. (See paras 103–109.)
7. Practical orders: the court dismissed the appeal in its entirety and left in place Arnold J's findings on the limited textual copying and the related costs and remedial consequences determined below. (See paras 111–113.)

• Court of Appeal (Civil Division) — Appeal from Mr Justice Arnold's judgment in the High Court, Chancery Division; Court of Appeal dismissed the appeal and affirmed the judge's ultimate orders. ([2013] EWCA Civ 1482)
• High Court, Chancery Division — Trial before Arnold J, initial judgment [2010] EWHC 1829 (Ch); referral to the CJEU and subsequent judgment [2013] EWHC 69 (Ch).
• Court of Justice of the European Union — Reference answered in Case C-406/10 (opinion and judgment), relied upon by the national courts for interpretation of the Software Directive and the Information Society Directive.