SAS Institute Inc. v World Programming Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Cockerill DBE,Cockerill J |
| Judgment Date | 25 September 2019 |
| Neutral Citation | [2019] EWHC 2481 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2017-000749 |
| Date | 25 September 2019 |
[2019] EWHC 2481 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Cockerill
Case No: CL-2017-000749
Ms Monica Carss-Frisk QC and Mr Andrew Scott (instructed by Macfarlanes LLP) for the Claimant
Mr Thomas Raphael QC, Miss Josephine Davies and Mr John Bethell (instructed by Keystone Law LLP) for the Defendant
Hearing dates: 16 th and 17 th May 2019
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.
This is an application by WPL (World Programming Limited) to continue an injunction granted to WPL without notice by Robin Knowles J just before Christmas 2018. It arises out of the judgment which I gave in this matter on 13 December 2018, reference number [2018] EWHC 3452 (Comm) (“the Enforcement Judgment”).
In that judgment I refused SAS's (SAS Institute Inc.) application to enforce in this jurisdiction a judgment of the US Court. I did so on multiple grounds, namely that given the rather peculiar facts of this case:
i) Previous proceedings here gave rise to a res judicata estoppel which precluded enforcement or rendered it abusive, holding that the two new spins were dependent on the breach of contract claim, and could and should have been brought in the English litigation;
ii) Enforcement of the judgment would be contrary to public policy as enshrined in the Software Directive or contrary to the Protection of Trading Interests Act (“PTIA”);
iii) WPL had a counterclaim under section 6 of the PTIA for payment of sums equivalent to 2/3rds of any past and future recoveries by SAS under its UDTPA Claim (defined below) and that this cross-liability is on a pari passu basis, i.e. that any recovery by SAS of sums attributable to the multiple damages judgment at large triggers a liability to pay WPL a sum equivalent to 2/3rds of the amount recovered.
In the light of this judgment and events in the US litigation, WPL sought an anti-suit injunction. It was not possible for me to hear that application and Robin Knowles J stepped in. Having heard from WPL he made an order (“the Injunction”) which included the following features:
i) SAS was restrained from further pursuing certain proceedings in the US Courts seeking what are known as assignment orders and turnover orders (as explained further below);
ii) SAS was restrained from seeking such relief in any other court of the USA;
iii) SAS was restrained from pursuing any process in the US for relief of similar nature to assignment or turnover orders or “[r]elief which imposes (or purports to impose) requirement or requirements on WPL to assign or transfer to SAS any assets and/or receivables of WPL and/or any debts owed to WPL and/or any assets, receivables or debts that may in the future be owed to WPL”;
iv) SAS was restrained from taking further steps in the existing US proceedings, and ordered to “take all reasonable steps to procure… a stay or stays of” the extant motions;
v) SAS was ordered to “take all reasonable steps to procure that the orders foreshadowed by and/or contemplated in (i) the Indicative Assignment Order Ruling and (ii) the Indicative Turnover Order Ruling, or any similar orders, shall not be made between the date of this order and the Return Date”;
vi) SAS was restrained from pursuing anti-anti-suit processes before the US Courts (i.e. processes which “prevent or restrain, or seek to prevent or restrain” WPL from pursuing its “Anti-Suit Injunction Application” or “any related application before this Court, and/or this action” or “any further application or claim before this Court for anti-suit injunction relief or related relief, or damages or compensation)… and from pursuing materially the same acts, or acts having materially the same effect”.
The order was made in anticipation that it would only be in place on an ex parte basis for a matter of weeks – at the time of the hearing before Robin Knowles J it was anticipated that the matter could come back inter partes on 18 January 2019. In the event that did not prove possible, and matters so arranged themselves (given the events in the litigation more broadly) that it was not until late May that a date was fixed. During that time, at the instance of the Court in the USA, the parties had attempted mediation without success.
It is fair to say that the order is not a common order. It is plain to me that its grant has been regarded as a startling and unwelcome action by the US Court. It is a matter of regret in the light of the ties of comity which lie between this Court and the Courts of the United Sates, that the nature of the application and the time pressure under which it was brought meant that Robin Knowles J was not able to give a reasoned judgment, explaining the jurisprudence which underpinned his decision, and that it has then not been possible for the matter to be fully argued at an earlier date.
Before me the parties have argued with great skill the question of whether I can or should continue the injunction. The central question has been whether what the US Court proposes to do is an interference in matters which fall within this Court's jurisdiction such that I should continue the injunction; or whether in the light of fuller consideration, including as to the law, the extent of the proposed action and issues of comity, I should refuse to do so.
I should add that there was also an application to discharge the injunction on the basis that there had been a failure to give full and frank disclosure at the without notice hearing. I will deal with the points raised at the close of this judgment, but for present purposes I can say that these arguments were (rightly) not strongly pressed by Ms Carss-Frisk QC on behalf of SAS.
The Facts
The facts in this case present themselves in three chapters: the English Liability Proceedings, the US Liability Proceedings and the Enforcement Proceedings (in the UK and the US).
Chapter 1: The English Liability Proceedings
In the beginning SAS sued WPL in England for copyright infringement by WPL and for breach of contract, alleging that WPL used the SAS “Learning Edition” software in breach of its “click-through” licence terms. Both claims were eventually rejected by Arnold J in judgments of 2010 and 2013, (the “English Liability Judgments”), but not before the matter had gone to the European Court.
A key conclusion of the English Liability Judgments was that the contractual claim was defeated by the Software Directive (enshrined in English law in the Copyright, Designs and Patents Act 1988) which permitted WPL's conduct and overrode the contractual terms to the extent they stated to the contrary.
Chapter 2: The US Liability Proceedings
Slightly overlapping with this, in January 2010 SAS brought proceedings in its home court, the District Court for the Eastern District of North Carolina (the “EDNC”). Those proceedings were themselves somewhat complicated. The claims brought involved copyright infringement, breach of contract/fraudulent inducement to contract, tortious interference and a statutory claim for contravention of the North Carolina Unfair and Deceitful Trade Practices Act (“the UDTPA Claim”), which was itself based on the fraud claim.
There was a forum conveniens/lis pendens challenge by WPL in early 2011 succeeded but was set aside on appeal. WPL then withdrew its objections and filed a formal “Consent to Jurisdiction” in 2012. The reasoning behind this appears to have been in part commercial in that, as WPL's counsel told the US Court, in order to deal commercially in the US WPL could not sensibly resist the jurisdiction of the US Courts. Or to put it another way, as Mr Raphael did in submissions, if WPL were doing business in the US, there would almost inevitably be jurisdiction. There was no attempt by WPL to injunct SAS from pursuing the US Proceedings.
Jurisdiction having been established, the parties then proceeded to fight the case. A point which SAS repeatedly emphasised both in the English enforcement hearing and in this hearing before me was that WPL chose to engage meaningfully in the US Proceedings. SAS succeeded on arguments that the English Liability Judgments did not prevent the claim being litigated in the US, so that the matter proceeded to trial.
By way of summary judgment in September 2014 SAS failed on copyright infringement but WPL was found liable for breach of the click-through licence, contrary to the English Liability Judgments. There was then a 14-day jury trial in September and October 2015 at which SAS succeeded on claims for fraud (“the Fraud Claim”) and/or the UDTPA Claim. There were subsequent post-trial motions. Compensatory damages were set by a jury at some $26m for each of the breach of contract, fraud and UDTPA heads of claim; and the award in respect of the UDTPA Claim was trebled to some $79m.
The US Judgment was first handed down on 16 October 2015 and an amended version followed on 15 July 2016. An appeal was lodged. On 24 October 2017 the US Court of Appeals for the Fourth Circuit affirmed the US Liability Judgment. A petition to the US Supreme Court for certiorari was dismissed. During the course of the appeals process WPL lodged US$4.3 million as security as the price of a stay of execution.
Thus far direct enforcement in the US has been limited to this sum and an amount of US$1,131,799.65 was paid by WPL pursuant to an order made on 15 February 2019.
Chapter 3: The Enforcement Proceedings (in the UK and the US) The English Enforcement Proceedings
SAS sought to enforce its US Judgment in England, by commencing this...
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