SAS Institute Inc v World Programming Ltd

Copyright protects the expression of an author’s intellectual creation, not ideas, functionality, methods of operation, programming language or data-file formats. A competitor does not infringe copyright in a software manual merely by using it to discover and reproduce program functionality, provided that it does not reproduce protected textual expression.

Under Council Directive 91/250/EEC, a lawful acquirer entitled to load, run or otherwise use a program may observe, study and test it to identify its underlying ideas and principles, even if that purpose falls outside a contractual purpose restriction. Contrary contractual restrictions are void to that extent.

SAS Institute Inc developed analytical software, associated manuals and a lower-cost Learning Edition. World Programming Ltd developed competing software capable of executing programs written in the SAS language. It used the manuals and Learning Edition to emulate the SAS System’s functionality.

Arnold J’s first judgment, [2010] EWHC 1829 (Ch), referred questions on the Software Directive to the Court of Justice. Following the Court of Justice’s ruling in Case C-406/10 [2012] RPC 31, Arnold J gave judgment at [2013] EWHC 69 (Ch). He dismissed the principal claims, while finding limited textual copying in the manual-to-manual claim.

SAS appealed the dismissals of the manual-to-program, remaining manual-to-manual and Learning Edition claims. The central issues were the scope of copyright protection for software functionality described in manuals and the effect of the statutory right to observe, study and test licensed software.

1. Appeal dismissed. Lewison LJ, with whom Tomlinson and Vos LJJ agreed, held that the judge’s order was correct despite errors in parts of his reasoning.

2. Copyright under the Software Directive and the Information Society Directive protects the expression of an author’s intellectual creation. It does not protect the functionality of a computer program, including what it does and how it responds to inputs. Nor does it protect the ideas, procedures, methods of operation and mathematical concepts described in a software manual. The same boundary between idea and expression applies under both Directives.

3. WPL’s use of the SAS Manuals as a functional specification for writing WPS did not reproduce the protected expression of the manuals. WPS executed the described statistical operations rather than reproducing their description. It was immaterial whether the program was created before, after or alongside the manual. The judge had wrongly focused on which authors created particular compilations and had also wrongly suggested that growth by accretion prevented the SAS System being an intellectual creation. Neither error affected the result.

4. The remaining manual-to-manual claim failed to the same extent. A later manual may describe a non-infringing competing program without copying the protected expression of an earlier manual. The judge’s unchallenged finding of limited linguistic copying remained effective. The case-management order did not require the whole WPS manual to be treated as infringing merely because some representative examples established copying.

5. Article 5(3) permitted WPL, as lawful acquirer, to observe, study and test the Learning Edition while carrying out acts it was entitled to perform, in order to identify underlying ideas and principles. It could do so even though that purpose was outside the contractual limitation to non-production use. Article 9(1) rendered a contrary purpose restriction void to that extent.

6. On the licence’s proper construction, WPL was the customer and licensee. It could authorise employees to use the Learning Edition one at a time on one workstation. The licence did not confine use to the individual employee who clicked acceptance. The claim therefore also failed on that independent contractual basis.

• Court of Appeal (Civil Division): Appeal dismissed: [2013] EWCA Civ 1482 .
• High Court, Chancery Division: Following the Court of Justice’s preliminary ruling, Arnold J dismissed the principal claims but found limited manual-to-manual copyright infringement: [2013] EWHC 69 (Ch) .
• Court of Justice of the European Union: Answered questions referred from the High Court concerning Council Directive 91/250/EEC: Case C-406/10 [2012] RPC 31.
• High Court, Chancery Division: Arnold J tried the action and made the reference: [2010] EWHC 1829 (Ch) .