SAS v Worldwide

In August 2010 Mr Justice Arnold sitting in the High Court, stayed proceedings in the above case and referred a set of 8 questions concerning the nature and extent of copyright protection in software to the European Court of Justice which has now handed down its preliminary ruling in the case.

 The claimant in the original case had developed and marketed a very successful software system for use in data analysis. It consisted of core software packages to which users could link scripts written by themselves. The defendant produced a competing system which (essentially if it were to stand a chance of being commercially successful) was functionally compatible with the claimant’s system. This it was alleged by the claimant was unlawful

 The claimant’s case was essentially threefold and was reflected in the questions posed to the European Court. First that the defendant's software infringed copyright in the SAS system, second that in analysing the operation of the system, the defendants had breached the terms of a licence associated with a copy of the SAS software which they had acquired and, third, that the defendant had, by producing their own user manuals, infringed copyright in the claimant’s manuals and also thereby indirectly infringed copyright in their software. . Although Mr Justice Arnold had posed a set of 8 quite detailed questions to the European Court, it's answer focused on these 3 more general issues.

The Scope of Copyright Protection

Subsequent to the decision in the case of Navitaire v Easyjet the view has been widely held that copyright does not protect the look and feel of software. It would have been a major surprise had the European Court ruled in favour of the claimants on this point. It did not. The was no evidence that the defendant had enjoyed any form of access to the source code of the claimant’s system. It had observed to manner in which it functioned and produced its own software to replicate its features and functionality.

 Following its own judgment in the case of  Bezpečnostní softwarová asociace  the Court, following the opinion of the Advocate General, ruled that

 39      On the basis of those considerations, it must be stated that, with regard to the elements of a computer program which are the subject of Questions 1 to 5, neither the functionality of a computer program nor the programming language and the format of data files used in a computer program in order to exploit certain of its functions constitute a form of expression of that program for the purposes of Article 1(2) of Directive 91/250.

40      As the Advocate General states in point 57 of his Opinion, to accept that the functionality of a computer program can be protected by copyright would amount to making it possible to monopolise ideas, to the detriment of technological progress and industrial development.

 It now seems clear beyond doubt that whilst the particular expressions used in producing software will be protected, the underlying ideas and principles will not be. As the European Court concluded this section of the judgment:

 46      Consequently, the answer to Questions 1 to 5 is that Article 1(2) of Directive 91/250 must be interpreted as meaning that neither the functionality of a computer program nor the programming language and the format of data files used in a computer program in order to exploit certain of its functions constitute a form of expression of that program and, as such, are not protected by copyright in computer programs for the purposes of that directive.

Licence Restrictions

 The second point at issue concerned the validity of a software licence which accompanied a copy of the claimants's software which the defendant had lawfully acquired and used in order to study the operation of the software. Purchasers were presented with the following screen displays

 "Important: Please carefully read the terms and conditions of this License Agreement ('Agreement') before clicking on the 'Yes' button. By clicking on the 'Yes' button, the individual licensing the Software ('Customer') agrees to these terms, and SAS Institute Inc ('SAS') will authorize Customer to use the SAS Learning Edition Software ('Software') in accordance with the terms and conditions of this Agreement. If Customer does not agree to all of the terms of this Agreement, click on the 'No' button and return the Software to the supplier from whom Customer obtained it. Customer will receive a refund of licence fees applicable to and paid by Customer for this Software, if any, provided Customer returns the full Software package with proof of purchase within thirty (30) days of date of purchase or the supplier's return period, whichever is the longer.

1. Licence Grant

1.1 In exchange for Customer's payment of all applicable fees and compliance with all of the terms and conditions of this Agreement, SAS hereby grants Customer a[n individual] nonassignable, nontransferable and nonexclusive license to use the Software on one (1) workstation at a time, for Customer's [own self-training] non-production purposes only. Concurrent usage or use on a network is not authorized.

1.2 Customer may not use the Software in any outsourcing, facilities management or service bureau arrangement or any data or information technology management operation by or for third parties. … Customer may not distribute the Software to any third party in modified or unmodified form.

…

2. Intellectual Property Rights

The Software is copyrighted. ... Customer may not reverse assemble, reverse engineer, or decompile the Software or otherwise attempt to recreate the Source Code, except to the extent applicable laws specifically prohibit such restriction….

 That seems reasonably clear.  Article 5(3) of the European Software Directive provides, however, that:

 The person having a right to use a copy of a computer  program shall be entitled, without the authorisation of the right­holder, to observe, study or test the functioning of the program  in order to determine the ideas and principles which underlie any element of the program if he does so while performing any  of the acts of loading, displaying, running, transmitting or  storing the program which he is entitled to do.

 This is a very obscure formulation. In the High Court, Mr Justice Arnold described it

 It is also common ground that the drafting of Article 5(3) of the Software Directive is less than pellucid in its clarity. As Professor Blocher observes in Walter and von Lewinski (eds), European Copyright Law: A Commentary (OUP, 2010) at §5.5.43:

“Like the previous one, this paragraph is also not drafted satisfactorily. Taken literally, it essentially states a pleonasm, namely, that the person having a right to use a copy of a computer program shall be entitled to do all the acts he is entitled to do.”

 The Court of Justice was less critical of the draftsmanship and identified a clear meaning to the provision  (which was not included in the UKs implementation of the Directive).   Article 5(3) it was held had to be interpreted as meaning that a copyright owner could not use contractual techniques to restrict a user’s right to determine ‘the ideas and principles which underlie all the elements of the program’.  Such terms will be null and void.

Copyright in Manuals

 Anyone walking into one of the fast diminishing number of High Street bookshops will almost inevitably be faced with shelf upon shelf of third party manuals offering advice and instruction as to the best way to utilize software packages. Producers such as Apple and Microsoft seem almost to pride themselves on offering little in the way of printed instructions for their products.

 The situation between the parties in the present case is, of course, somewhat different in that the defendants were seeking to compete at the software level rather than simply providing an add on product.

 With functional works such as instruction manuals there is a clear link between the manual and the underpinning product. Any software instructional manual must

 66      In the present case, the keywords, syntax, commands and combinations of commands, options, defaults and iterations consist of words, figures or mathematical concepts which, considered in isolation, are not, as such, an intellectual creation of the author of the computer program.

67      It is only through the choice, sequence and combination of those words, figures or mathematical concepts that the author may express his creativity in an original manner and achieve a result, namely the user manual for the computer program, which is an intellectual creation (see, to that effect, Infopaq International, paragraph 45).

68      It is for the national court to ascertain whether the reproduction of those elements constitutes the reproduction of the expression of the intellectual creation of the author of the user manual for the computer program at issue in the main proceedings.

A somewhat similar situation arose in the case of Elanco v. Mandops. ([1979] FSR 46) .Here the plaintiff had invented and patented a herbicide. When the period of  patent protection expired the defendant produced a competing version of the product. This was perfectly legitimate but it was claimed that they had copied the instructions accompanying the product  concerning the manner in which the product was to be applied and the optimum doses. The plaintiff had expended considerable effort in determining the best method to use the product and developed a set of instructions. The defendant initially produced what was seen as a blatant copy of these. Following complaints from the plaintiff, the instructions were rewritten twice and at the stage of legal proceedings had few literal similarities although the data relating to dosage and application was the same. Almost all the data was available from other sources but the Court of Appeal granted an injunction preventing the use  of the defendant’s instructions. The basis lay essentially in the fact that the first version had been copied.

 There has to be a measure of caution in reading too much into Elanco. It was concerned with an application prior to trial – and frustratingly the trial does not seem to have occurred, presumably the parties settled out of court. One issue which the Court of Appeal indicated would require to be settled at trial was whether there was sufficient intellectual creativity in the plaintiff’s leaflet to allow it to qualify for copyright protection.

 It will be interesting to see how this issue is determined when the case returns to the High Court. It does seem to me that there may be an issue whether the defendant’s user manual drew too heavily on that produced by the claimants but it is hard to see how this could impact on the software itself.