A three judges bench of the United States Court of Appeals, Fourth Circuit has rightly said that “the area of software copyrights is a murky one, and federal courts have struggled with it for decades”.
SAS Institute is a leading company, which developed a computer programming language for statistical analysis and other applications. World Programming Limited (WPL), a rival company, created a programming language known as the World Programming System (“WPS”) which upon execution would produce the same outputs as produced by SAS’ language.WPL is a major player in the UK market and a significant player in the west coast region of the United States.
The Dispute Between SAS and WPL is an unending one resulting in a clash of EU and American legal principles. This article decrypts the events in the timeline of the dispute and ponders upon the observations of courts in multiple jurisdictions with regards to the reproduction of the functions of an existing computer program without infringing its copyright. Further, we also delve into the opinion of different courts pertaining to the reference material, the developer may legally utilize for creating the program.
In or about 2010[1], a suit was instituted in the High Court of England and Wales before Justice Arnold by SAS against WPL alleging infringement of copyright of its programming language. It is vital to state that the EU Software Directive is enshrined in English law in the Copyright, Designs and Patents Act 1988. Therefore, a few legal questions were referred to the Court of Justice of the European Communities (CJEU). But the suit was dismissed and SAS filed an appeal in the Court of Appeal (Civil Division)[2].
Firstly, based on the ruling passed in Bezpečnostnísoftwarováasociace case[3], a programming language is not a subject of protection and cannot be designated as a ‘computer program’ since it is not a part of the source code or the object code. Nonetheless, the programming language would qualify for the protection of its copyright under a different category of work under the EU informative society directive.
It was also alleged that WPL had copied the SAS manuals for creating WPS. This issue can be looked at, from a simple example of the copyright in a book of recipes which would not be infringed by making a dish according to one of the recipes. It is vital to look at the ‘intellectual creation’ exerted in creating the manual and it cannot be brought on an equal footing with the ‘intellectual creation of the computer program. As described in the precedent set by Infopaq[4], the Article 2(5) and (8) of the Berne Convention, provides that the protection of subject-matters as artistic or literary works presupposes that they are intellectual creations. Therefore, the manual solely describes the functionality of the computer program, which affirmatively cannot be considered as an expression of the intellectual creation as copyright protects only the expression. Also, if copyright protection were extended to manuals, it would have created havoc by monopolizing ideas and hindered growth.
However, it was held that the creation of WPS Manual and WPS guides had narrowly infringed the copyright of the SAS manuals. Some elements of the WPS manual were a verbatim copy of the language used in the SAS manual. Therefore, WPS undertook to remove its manual and create a new one.
Further, WPS had procured a learning edition version of the SAS language through a license agreement for analyzing it. This act was not constituted as an act of infringement because Article 5(3) of the EU Council Directive [5] enabled WPL to observe, study and test the program. Hence they were not in breach of the agreement.
Besides the UK proceedings, SAS also filed lawsuits against WPL in the Eastern District of North Carolina. The U.S. suit also contained claims for copyright infringement and breach of the license agreement, but additionally asserted claims for fraudulent inducement, tortious interference with contract and tortious interference with prospective business advantage. It was held that WPL breached a license agreement for SAS software. The U.S. litigation was initially dismissed in March 2011, but it was reversed by the Court of Appeals for the Fourth Circuit in February 2012 and the case was remanded to the district court.
SAS filed a motion on April 14, 2014, for partial summary judgment on its claims for breach of contract and tortious interference with contract. The district court did not grant summary judgment on SAS’s claims for copyright infringement of the SAS manuals, breach of contract and fraudulent inducement[6]. SAS appealed the district court’s denial of injunctive relief and the district court’s copyright ruling[7].
At the Fourth Circuit Appeal Court, it was discussed that the United States Supreme Court is averse to granting injunctions, which would automatically determine that the copyright had been infringed. Further, it was evident that SAS was interested only in the injunction and not on the actual determination of the copyright infringement. Hence the claim of copyright infringement was rendered moot.[8]
However, it was ascertained that WPL was in breach of contract as WPL used the Learning Edition specifically to produce a competing product and a commercial product.
It was also adjudged here that the North Carolina public policy and E.U. public policy are in clear conflict. The UK litigation utilized the EU directive for resolving the contractual dispute, which was contrary to the US Laws which is more protective of the Intellectual Property and the sanctity of the contract.
On 8th December 2017, SAS sought to enforce the North Carolina Judgment in England. However, the enforcement proceedings failed on several grounds, one of them being that enforcement would be contrary to the important public policy, embodied in the Software Directive, of preventing the monopolisation of ideas and promoting competition and consumer welfare.
As the 4th Circuit Appeal Court on 24th October 2017 affirmed the breach of contract claim, SAS initiated enforcement proceedings of the North Carolina Judgment on 28th December 2017 in the State of California due to the large customer base of WPL in the state. SAS proposed a ‘Assignment and Turnover Order’ which directed WPL to turnover all the money, accounts, accounts receivable and deposits, which arose from the business conducted between WPL and customers with accounts receivable in the United States to SAS and the United States Marshal. Further, SAS had also reserved the right to pray for an extension of this judgment to the receivables in the United Kingdom.
On 19th December 2018, WPL filed an application for an interim anti-suit injunction in the English Court and Justice Robin Knowles granted the same. It prohibited SAS from seeking such orders or reliefs from any court in the United States.
Unfortunately, by an order of 27th September 2019 Justice Cockerill declined to continue an anti-suit injunction granted by Justice Robin Knowles at a hearing on 21st December 2018. She held that the proposed Orders were exorbitant but they did not require anything to be done by WPL in the English Court jurisdiction. However, she gave permission to appeal to WPL.
Upon the appeal being taken up, the anti-suit injunction was refused. Firstly, The injunction granted by Justice Robin Knowles prevented SAS from seeking an order for the assignment of debts due from WPL customers in the United States. Therefore, the English Court saw no reason in preventing SAS from enforcing judgments obtained under the American laws from an American Court against assets located within their jurisdictions. Any interference would have been against the doctrine of comity under private international laws.
Principle of comity has been described as a ‘two way street’. It would be unjustified for the English court to interfere with assets beyond its jurisdiction; likewise it would be unlawful for a foreign court to interfere with assets, which are under the purview of the English Courts. Therefore, it would be unreasonable to allow SAS to enforce an American Court’s judgment in the UK concerning assets located within UK.
In India, the principle of comity is enshrined under section 13 of the Code of Civil procedure. A Supreme Court bench comprising of Justice Dr. A.K. Sikri and Justice N.V. Ramana, in Alcon Electronics vs. Celem SA[9] decided that although section 44A refers to decrees passed in foreign courts, an interlocutory order of English Court also needs to be duly regarded for execution in India.
Section 52(1)(ac) of the Indian Copyright Act provides similar rights as the Article 5(3) of the EU directive for observation, study or test of the functioning of the computer programme in order to determine the ideas and principles which underline any elements of the programme. However it is broader in terms of the freedom of decompiling the software, such acts under the EU directive are limited to loading, displaying, running, transmitting or storing the program but the Indian laws have no such restrictions. However, this interpretation remains to be tested by the Indian Courts.
[1] [2010] EWHC 1829 (Ch, [2011] RPC 1
[2] [2013] EWCA Civ 1482
[3]Bezpečnostnĭsoftwarováasociace – Svazsoftwarovéochrany v Ministerstvokultury (Case C-393/09)
[4]Infopaq International A/S v DanskeDagbladesForening [2009] ECR I-6569
[5] 2009/24/EC
[6] SAS Institute Inc. v. World Programming Ltd. , 64 F.Supp.3d 755, 783 (E.D.N.C. 2014).
[7]Sas Inst., Inc. v. World Programming Ltd. 874 F.3d 370 (4th Cir. 2017)
[8] A claim is moot when “the parties lack a legally cognizable interest in the outcome.” City of Erie v. Pap’s A.M. , 529 U.S. 277, 287, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000)
[9]Alcon Electronics Pvt. Ltd. v. Celem S.A. of FOS 34320 Roujan, France, 2016 SCC OnLine SC 1444, decided on 09.12.2016
Well analysed. The law on subject pertaining to jurisdiction has a challenge in the digitised world, since the application of digites technology applies the world over, for this purpose law governing contracts in digitised world has needs a relook.
Very well explained. It would be interesting how the Indian courts would take it(if and when such a situation would arise).