Sas Institute Inc. v World Programming Ltd

JurisdictionEngland & Wales
CourtChancery Division
JudgeThe Hon Mr Justice Arnold,Mr Justice Arnold
Judgment Date25 January 2013
Neutral Citation[2013] EWHC 69 (Ch)
Docket NumberCase No: HC09C03293
Date25 January 2013

[2013] EWHC 69 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Rolls Building

Fetter Lane, London, EC4A 1NL

Before:

The Hon Mr Justice Arnold

Case No: HC09C03293

Between:
Sas Institute Inc.
Claimant
and
World Programming Limited
Defendant

Michael Hicks and Guy Hollingworth (instructed by Bristows) for the Claimant

Martin Howe QC, Robert Onslow and Isabel Jamal (instructed by Speechly Bircham LLP) for the Defendant

Hearing dates: 14-15 January 2013

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

The Hon Mr Justice Arnold Mr Justice Arnold

Contents

Topic

Paragraphs

Introduction

1–4

My first judgment

5

The reference

6–7

The judgment of the CJEU

8–14

Questions 1–5

9–10

Questions 6 and 7

11–12

Questions 8 and 9

13–14

SAS Institute's claim that WPS infringes the copyrights in the SAS Components

15–48

SAS Language

17–35

SAS data file formats

36–41

Functionality

42

Reproduction of a substantial part

43–47

Conclusion

48

SAS Institute's claim that WPS infringes the copyrights in the SAS Manuals

49–54

SAS Institute's claims in respect of the Learning Edition

55–79

Use by more than one employee

58–63

Use for purposes beyond the scope of the licence

64–73

Use of the Learning Edition to generate zip code data

74–76

SAS Language

77–78

Conclusion

79

SAS Institute's claims that the WPS Manual and the WPS Guides infringe the copyrights in the SAS Manuals

80–81

Result

82

Introduction

1

The Claimant, SAS Institute Inc ("SAS Institute"), is a developer of analytical software known as SAS (referred to in these proceedings as "the SAS System"). The SAS System is an integrated set of programs which enables users to carry out a wide range of data processing and analysis tasks, and in particular statistical analysis. The core component of the SAS System is Base SAS, which enables users to write and run application programs (also known as "scripts") to manipulate data. Such applications are written in a language known as the SAS Language. The functionality of Base SAS may be extended by the use of additional components, including three which are relevant to these proceedings called SAS/ACCESS, SAS/GRAPH and SAS/STAT (the four components being collectively referred to as "the SAS Components"). The SAS System has been developed over a period of 35 years.

2

Over the years SAS Institute's customers have written, or had written on their behalf, thousands of application programs in the SAS Language. These can range from fairly short and simple programs to large and complex programs which involve many man years of effort to create. Prior to the events giving rise to this dispute, SAS Institute's customers had no alternative to continuing to license use of the necessary components in the SAS System in order to be able to run their existing SAS Language application programs, as well as to create new ones. While there are many other suppliers of analytical software which compete with SAS Institute, a customer who wanted to change over to another supplier's software would be faced with re-writing its existing application programs in a different language.

3

The Defendant, World Programming Ltd ("WPL"), perceived that there would be a market demand for alternative software which would be able to execute application programs written in the SAS Language. WPL therefore created a product called World Programming System or WPS to do this. In developing WPS, WPL sought to emulate much of the functionality of the SAS Components as closely as possible in the sense that, subject to only a few minor exceptions, it tried to ensure that the same inputs would produce the same outputs. This was so as to ensure that WPL's customers' application programs executed in the same manner when run on WPS as on the SAS Components. There is no suggestion that in doing so WPL had access to the source code of the SAS Components or that WPL has copied any of the text of the source code of the SAS Components or that WPL has copied any of the structural design of the source code of the SAS Components. Nevertheless, SAS Institute contends that WPL has both committed a series of infringements of copyright and acted in breach of contract in creating WPS and its accompanying documentation.

4

SAS Institute's principal claims are as follows:

i) A claim that WPL copied the manuals for the SAS System published by SAS Institute ("the SAS Manuals") when creating WPS and thereby infringed the copyright in the SAS Manuals.

ii) A claim that, by copying the SAS Manuals when creating WPS, WPL indirectly copied the programs comprising the SAS Components and thereby infringed the copyright in the SAS Components.

iii) A claim that WPL used a version of the SAS System known as the Learning Edition in contravention of the terms of its licences, and thereby both acted in breach of the relevant contracts and infringed the copyright in the Learning Edition.

iv) A claim that WPL infringed the copyright in the SAS Manuals in creating its own documentation, namely a manual ("the WPS Manual") and some "quick reference" guides ("the WPS Guides").

My first judgment

5

Following a trial in June 2010, I handed down judgment on 23 July 2010 ( [2010] EWHC 1829 (Ch), [2011] RPC 1; "my first judgment"). In my first judgment I found the facts (at [1]-[148]), set out the legal context (at [149]-[195]) and then considered each of SAS Institute's claims listed above (at [251]-[267], [196]-[250], [268]-[315] and [316]-[329] respectively). In the case of the fourth claim, I was able to conclude that WPL had infringed the copyrights in the SAS Manuals when creating the WPS Manual, but not when creating the WPS Guides. In the case of the other claims, I concluded that it was necessary to refer certain questions of interpretation of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs ("the Software Directive") (now codified as Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009) and of European Parliament and Council Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society ("the Information Society Directive") to the Court of Justice of the European Union for a preliminary ruling. I nevertheless expressed my provisional views both on the issues of law and on how the law should be applied to the facts that I had found. In this judgment I shall take the whole of my first judgment as read.

The reference

6

By order dated 28 July 2010 I referred the following questions to the CJEU:

" A. On the interpretation of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs and of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 (codified version):

1. Where a computer program ('the First Program') is protected by copyright as a literary work, is Article 1(2) to be interpreted as meaning that it is not an infringement of the copyright in the First Program for a competitor of the rightholder without access to the source code of the First Program, either directly or via a process such as decompilation of the object code, to create another program ('the Second Program') which replicates the functions of the First Program?

2. Is the answer to question 1 affected by any of the following factors:

(a) the nature and/or extent of the functionality of the First Program;

(b) the nature and/or extent of the skill, judgment and labour which has been expended by the author of the First Program in devising the functionality of the First Program;

(c) the level of detail to which the functionality of the First Program has been reproduced in the Second Program;

(d) if the source code for the Second Program reproduces aspects of the source code of the First Program to an extent which goes beyond that which was strictly necessary in order to produce the same functionality as the First Program?

3. Where the First Program interprets and executes application programs written by users of the First Program in a programming language devised by the author of the First Program which comprises keywords devised or selected by the author of the First Program and a syntax devised by the author of the First Program, is Article 1(2) to be interpreted as meaning that it is not an infringement of the copyright in the First Program for the Second Program to be written so as to interpret and execute such application programs using the same keywords and the same syntax?

4. Where the First Program reads from and writes to data files in a particular format devised by the author of the First Program, is Article 1(2) to be interpreted as meaning that it is not an infringement of the copyright in the First Program for the Second Program to be written so as to read from and write to data files in the same format?

5. Does it make any difference to the answer to questions 1, 3 and 4 if the author of the Second Program created the Second Program by:

(a) observing, studying and testing the functioning of the First Program; or

(b) reading a manual created and published by the author of the First Program which describes the functions of the First Program ('the Manual'); or

(c) both (a) and (b)?

6. Where a person has the right to use a copy of the First Program under a licence, is Article 5(3) to be interpret[ed] as meaning that the licensee is entitled, without the authorisation of the rightholder, to perform acts of loading, running and storing the program in order to observe, test or study the functioning of the First Program so as to determine the ideas and principles which...

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