SAS Institute Inc v World Programming Ltd

Copyright in a computer program does not protect its functionality, programming language or data-file formats from being copied as such. Those matters are not forms of expression of the program under Article 1(2) of the Software Directive. A substantial part is reproduced only where the defendant reproduces the expression of the author’s intellectual creation; unprotectable elements must be disregarded.

A lawful licensee may observe, study and test software to determine its underlying ideas and principles while performing permitted acts of loading, running or storing. Contractual restrictions contrary to that right are void under Article 9(1), provided the copyright owner’s exclusive rights are not infringed.

SAS Institute claimed that World Programming Ltd (“WPL”) infringed copyright and breached licence terms by developing alternative software capable of executing programs written in the SAS Language, by using the SAS Learning Edition, and by producing documentation resembling the SAS Manuals.

Following the earlier judgment, the court referred questions concerning the Software Directive and the Information Society Directive to the CJEU. The CJEU gave its judgment in Case C-406/10. This judgment applied that ruling to the remaining claims, including whether WPL had copied protected expression, whether its use of the Learning Edition fell within Article 5(3), and whether its WPS Manual and WPS Guides infringed copyright.

1. Copyright in the SAS Components. The CJEU’s answer to Questions 1–5 endorsed the interpretation adopted in Navitaire Inc v easyJet Airline Co Ltd [2004] EWHC 1725 (Ch). Copyright in a computer program does not protect its functionality, programming language, interfaces or data-file formats from copying. The distinction remains between unprotected ideas, methods of operation and functionality and protected expression.

2. The test for reproduction of a substantial part is whether what has been reproduced represents the expression of the author’s intellectual creation. Functionality, programming language and data-file formats are not forms of expression of the computer program and must therefore be disregarded. WPL had not reproduced protected expression in producing WPS. The claim concerning the SAS Components was dismissed.

3. SAS Institute could not introduce a new case that the SAS Language or SAS data-file formats were distinct copyright works without pleading that case. The proposed amendment was refused because it was made after trial and would raise substantial new factual and legal issues. The court applied the approach in Swain-Mason v Mills & Reeve LLP [2011] EWCA Civ 14.

4. Learning Edition. Article 5(3) protected WPL’s observation, study and testing of the Learning Edition to determine its underlying ideas and principles. That protection applied whether WPL acted through employees who accepted the licences, other employees or automated processes. The fact that some acts fell outside the licence’s stated purposes did not remove the protection. Article 9(1) rendered contractual restrictions contrary to Article 5(3) void.

5. The condition was that WPL did not infringe SAS Institute’s exclusive rights. WPL had no access to the source code and had merely studied, observed and tested the program to reproduce its functionality. Its use of the Learning Edition, including generating zip-code data, was within Article 5(3). The related claims for breach of contract and copyright infringement were dismissed.

6. SAS Manuals. WPL had not infringed copyright in the SAS Manuals by producing or testing WPS. The claim concerning the WPS Manual succeeded only to the extent established in the earlier judgment. The claim concerning the WPS Guides failed. All SAS Institute’s claims were dismissed except the claim concerning the WPS Manual, which succeeded to that limited extent.

The judgment followed the court’s earlier decision after a reference to the CJEU for a preliminary ruling. The judgment states that the CJEU gave judgment in Case C-406/10 on 2 May 2012. No separate appellate history is stated.