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Edwards Wildman Client Advisory - SAS Disarmed by Uncertain EU Ruling in SAS Institute Inc v. World Programming Ltd
May 2012
Gareth Dickson, Akash Sachdeva
This morning, 2 May 2012, the Court of Justice of the European Union (CJEU) issued its decision in Case C-406/10 SAS Institute Inc. v World Programming Ltd regarding the scope of copyright protection for computer software under Directive 91/250/EEC (the Software Directive).
The CJEU has held that:
- a computer program's functionality, language and data formats are not protected by copyright under the Software Directive,(but may be under other legislation);
- a lawful user of a computer program may study, observe and test that program as long as he does not infringe the exclusive rights of the owner of the copyright in the program; and
- it is for the national court to determine whether the reproduction, in a manual or a program, of elements appearing in an earlier manual constitute the expression of the intellectual creation of the author of the earlier manual.
Background
The Claimant, SAS Institute Inc (SAS), developed a suite of integrated computer programs (the SAS System) that enabled users to carry out data processing and statistical analysis. The central component of the SAS System permitted users to write and run their own scripts in the SAS programming language for use on the SAS System, for so long as they maintained an SAS System license.
World Programming Ltd (WPL) created a competing programme called World Programming System (WPS). The admitted objective of WPS was to emulate the functionality of the SAS System so that SAS users could migrate their scripts (and with them their custom) to WPS. To achieve this goal, WPL had to understand how the SAS System worked; to run SAS scripts, WPL had to understand the SAS System's interfaces and read and write data in the SAS format.
SAS commenced proceedings against WPL in the High Court of England and Wales for copyright infringement. The High Court referred several questions to the CJEU regarding the scope of copyright protection under the Software Directive, all on the basis that WPL had neither seen nor copied the source code of SAS components nor its structural design, and had not decompiled the SAS System's object code. In particular, the High Court asked:
- whether the functionality of a computer program, its programming language and the format of its data files constitute a form of expression of a computer program, and may therefore be protected by copyright under the Software Directive;
- whether a licensed user of a computer program is entitled, without the authorisation of the owner of the copyright in that program, to observe, study or test the functioning of that program so as to determine the ideas and principles underlying its elements where use of the program for that purpose is not permitted by the licence; and
- whether the reproduction, in a computer program or a user manual for that program, of certain elements described in an earlier user manual constitutes an infringement of the copyright in the earlier manual.
The Judgment
The Court has this morning answered the High Court's questions as follows.
To be protected as a "computer program" under the Software Directive, the work at issue has to be an expression of the computer program which would enable it to be reproduced in different computer languages. This is consistent with the CJEU's previous ruling in Case C-393/09 Bezpečnostní softwarová asociace [2010] ECR I-0000). Since a program's functionality, its programming language and the format of its data files, are merely elements of a program as opposed to expressions that would enable it to be reproduced, they are outside the scope of protection afforded by the Software Directive.
The Court gave two important caveats to this distinction. First, the fact that WPL had not seen SAS's source code was relevant; the Court confirmed that the source and object codes which give expression to a program's elements can be protected by copyright. Second, the Court expressly points out that the SAS programming language and the format of its data files might well have copyright protection under a different Directive: the ruling is limited to whether these elements were "computer programs" under the Software Directive.
In relation to the second question, the Court acknowledged that a copyright holder's exclusive reproduction right is subject to certain exceptions. In particular, a lawful user of a program can study, observe and test the program while he is using it as permitted by his licence. The issue arose as to whether a licence could limit the purposes for which a licensee could use the program, and in particular whether it could prohibit a licensee from using a program for the purpose of studying, observing and testing its functionality.
The Court held that a user does not infringe the copyright in a program by studying, observing and testing it while carrying out any acts that are either permitted under his licence or are necessary to use the program but only "on condition that that person does not infringe the exclusive rights of the owner in that program". In other words, a user cannot infringe copyright as long as he does not infringe copyright. It remains to be seen how the High Court will deal with this circular aspect of the CJEU's judgment.
Finally, the Court held that because keywords, syntax, commands, options, defaults and iterations consist only of words, figures or mathematical concepts, they are not by themselves eligible for copyright protection. Their selection and the particular manner in which they are used within a manual or a program, however, may express the author's creativity in an original manner, and it will be for the High Court to determine whether their reproduction is the reproduction of the author's intellectual creation. In that respect, it does not matter whether the reproduction occurs in a manual or in a computer program.
Comment
The CJEU's ruling is a long way from the sort of judgment that would have brought some certainty to this complex and at times controversial area of law. Specifically, by indicating that those elements of a program which are not eligible for copyright protection under the Software Directive might be eligible under a different Directive, the Court has simply closed one door and unlocked another. The general direction of the Court's jurisprudence, however, appears to be that copyright protection will not be permitted in anything other than a program's lines of code.
The judgment also shows a potential misunderstanding of the law of copyright when the CJEU says, as the Advocate General had, that allowing copyright protection for functionality would permit IP owners to have a monopoly on ideas. While this may be true in the patent arena, it is plainly incorrect as regards copyright, where independent creation is a complete defence to a copyright infringement action.
The Court's circular answer to the second question is equally unhelpful, and their answer to the third question arguably does no more than confirm what was already understood to be the law on this point.
The case now returns to London, where the High Court has the interesting task of applying the CJEU's ruling to the dispute before it. A judgment is expected by the end of this year.
To read the ruling in full, please click here.
If you would like further information, please contact the Edwards Wildman lawyer responsible for your matters or the author linked above.
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