SAS Institute Inc v. World Programming Limited The ECJ Reference And Potential Implications For Software Licensors

The proceedings between SAS Institute Inc ("SAS") and World Programming Limited, ("WPL") which led to an extensive judgment from Mr Justice Arnold in July 20101, have resulted in nine questions, principally relating to the interpretation of the Software Directive,2 being referred to the Court of Justice of the European Union ("ECJ").3

With the parties having now filed their written observations, the outcome of the reference may be anticipated later this year or early 2012.

The ECJ is expected to provide clarification not only on the scope of protection for computer programs in Europe, including whether "function" embodied in a literary work is expressly excluded from protection, but also the extent to which exceptions in Article 5(3) allow cloning of software.

The outcome of this latter aspect of the case will be of particular significance to the software licensing industry since the ECJ has been asked to consider whether, and if so to what extent, a competitor is entitled to observe, study and/or test another's software and to use the results to create replica, competing software. In the process the ECJ will almost certainly provide much-needed guidance on the extent to which software vendors will be able to limit the use of their software by contractual means.

Background Facts

SAS' analytics software, the SAS System, which has been developed over a period of some thirty-five years, comprises an integrated suite of programs which enables users to carry out various data-related processing activities.

The SAS System is licensed to customers to enable them to run business analytics application programs written in a highly sophisticated computer language known as the SAS Language.

WPL, perceiving a demand for alternative software on which to run SAS application programs, began developing rival software known as WPS in or about 2003.

WPS was developed by using SAS' highly detailed technical manuals and the learning edition of its SAS System (the SAS Learning Edition) as reference materials from which the essential features (or so-called "functionality") of the SAS System which identified and then replicated as closely as possible in WPS. Thus, the options and sub-options of each routine, their underlying formulae and algorithms, the way in which the procedures were combined and utilised within the SAS System, the default values, data file formats, and even the names allocated to the routines and procedures within the SAS System, were all gleaned from the SAS manuals and/or the SAS Learning Edition and then coded into WPS.

Two points should be noting from the outset however. First, WPL was not developing WPS to interoperate with the SAS System but rather to replace it. Second, there was no suggestion that WPL had ever had direct access to SAS' source code.

As a result of WPL's activities, SAS brought claims against WPL for literary copyright infringement and breach of licence.

Literary Copyright Claims in Brief

In terms of literary copyright, SAS made a number of claims, including that:

the use of the SAS manuals to create WPL's manual infringed literary copyright in the SAS manuals (the manual-to-manual claim); the use of the SAS manuals to create WPS infringed literary copyright in the SAS manuals (the manual-to-source code claim); the use of the SAS manuals to create WPS infringed literary copyright in various components of the SAS System software itself (the source code-to-source code claim). (This claim was based on the fact that notwithstanding WPL had no direct...