Court of Appeal Confirms High Court Decision and Finds no Copyright Infringement in Software With Same Functionality
In SAS Institute Inc v World Programming Ltd  EWCA Civ 1482 (21 November 2013), the Court of Appeal of England and Wales upheld the High Court’s decision that copyright protects the form of expression of an intellectual creation, rather than the intellectual creation itself, and found that World Programming Ltd had not infringed SAS Institute Inc’s copyright in its software and manual by creating a program with the same functionality as SAS’s program.
SAS Institute Inc is a software company that developed an analytic software program for businesses called SAS System. The software is written in SAS language and is accompanied by a manual that explains how to use the software, but not the internal workings of the software. SAS also produces a cut- down version of the software as a learning tool (the Learning Edition).
World Programming Ltd (WPL) sought to develop software to compete with SAS System (WPS). WPL designed software that would emulate as much of the functionality of SAS System as possible by studying the SAS manuals and the Learning Edition. SAS sued WPL for copyright infringement on the following bases:
WPL copied a substantial part of the SAS manuals to create WPS, referred to in the judgment as the Manual to Program Claim
WPL had indirectly infringed the copyright in SAS System to create WPS (Program to Program Claim)
WPL had copied a substantial part of the SAS manuals to draft its manual to WPS (Manual to Manual Claim)
The use of SAS Learning Edition by WPL was in breach of WPL’s licence to use the software (SAS Learning Edition Claim)
At first instance, Arnold J referred a number of questions to the Court of Justice of the European Union (CJEU) concerning the interpretation of two key pieces of European copyright legislation, the Information Society Directive (2001/24/EC) and the Software Directive (91/250/EEC, now replaced by 2009/24/EC). At issue was the extent to which the functionality of a program may be copied and the materials that could be lawfully used to create that copy.
Arnold J rejected all the claims made by SAS, except that he found there had been limited copyright infringements in respect of the Manual to Manual Claim. After the CJEU reference, it was clear that the functionality of the software could not be protected. SAS appealed to varying degrees the findings of Arnold J in respect of each of the claims except the Program to ProgramClaim.
The Court of Appeal began with a review of the responses from the Advocate-General and the CJEU to the questions posed by Arnold J. The Court concluded that the outcome of the reference was that it was clear that copyright protects the form of expression of an intellectual creation, rather than the intellectual creation itself. Accordingly, in respect of the Manual to Program Claim, the Court held that Arnold J should not have focused on the factual background when reaching his conclusion. Instead, he should have found that the alleged copying was not copying of the form of expression of SAS’s intellectual creation and therefore could not be copyright infringement. Arnold J had, however, reached the right conclusion on the Manual to Program Claim and the appeal was dismissed.
Following the CJEU’s judgment that “in light of Directive 2001/29, the reproduction of... elements of the user manual for a computer program must be the same with respect to the creation of the user manual for a second program as it is with respect to the creation of the second program”, the Court of Appeal concluded that the Manual to Manual Claim must stand or fall with the Manual to Program Claim. Thus, on this analysis, the appeal against the failed aspects of the Manual to Manual Claim was also rejected. WPL had not appealed against Arnold J’s limited findings of copyright infringement arising from linguistic reproduction in the WPL manual. The fact that the manual had been written to describe the WPL program, which in turn had been created from observing the SAS program, meant, however, that the SAS copyright in the manual had not been infringed.
In respect of the Learning Edition Claim, Arnold J had found that WPL had breached two terms of the SAS licence. First, WPL had not restricted the use of the software to employees who had used SAS’s click-through mechanism for the licence to use the software. Second, WPL had used the Learning Edition outside the authorised purposes of the licence.
On the first issue, SAS’s claim had been rejected at first instance on the basis of Article 5(3) of the Software Directive, which permits a person who has the right to use a copy of a computer program to observe, study or test the functioning of the program. The Court of Appeal took the same view. With regard to the second issue, the Court considered that in light of the answer to the first question, WPL was not in breach of the contractual provision for allowing employees who had not entered into the SAS licence to use the software for purposes protected under Article 5(3).
The Court of Appeal agreed with the High Court, albeit in some instances on different reasoning. The dichotomy between ideas and expressions of those ideas is at the heart of many copyright disputes, and case law is constantly evolving the understanding of where the dividing line between the two should be set. Undoubtedly, the Court’s formulation that copyright protects “the form of expression of an intellectual creation” will be the subject of further consideration both in relation to software disputes and wider copyright claims.
Also of interest was the criticism leveled by the Court of Appeal at the CJEU. The CJEU had, rather than answering Arnold J’s questions as posed, expressed itself in a way that was described as “disappointingly compressed, if not obscure”. This led to a further hearing at first instance and a continuing debate as to whether all of the questions had in fact been answered.