SAS Institute Inc v World Programming Ltd ('WPL')* (Tomlinson, Lewison & Vos LJJ; [2013] EWCA Civ 1482; 21.11.13)

The Court of Appeal (Lewison LJ giving the lead judgment) dismissed SAS's appeal and upheld Arnold J's finding (reported in CIPA Journal, February 2013) that WPL had not infringed the copyright in SAS's analytical software systems ('SAS's Software') by studying the Learning Edition of the SAS Software and the SAS manual for the SAS Software when creating WPL's own, competing, product.

The dispute between SAS and WPL related to a computer program created by WPL. The program emulated the functionality of SAS's software, which enabled users to execute application software which was written in SAS specific coding language. SAS claimed that in doing so, WPL had infringed the copyright in the manual for its software and thereby indirectly also the copyright in the software itself (the 'Manual to Program Claim'). SAS further argued that the copyright in the manual was infringed by WPL creating a manual for its own program (the 'Manual to Manual Claim' which was the only one to be successful). Finally, SAS alleged that in observing, studying and testing its learning edition software to create its program, WPL had acted contrary to the terms of the licence for use thereof (the 'Learning Edition Claim').

Manual to Program Claim

When considering whether the content of the SAS manual had been copied by WPL in the WPL software, Lewison LJ held that copyright infringement only occurred if (i) it was the intellectual creation of the author of that work which was copied (i.e. the author of the SAS manual, not the author of the underlying SAS Software source code which was explained in the SAS manual); and (ii) the expression of that intellectual creation was copied, not the intellectual creation itself.

Lewison LJ found that both Council Directive 91/250EEC (the 'Software Directive') and Council Directive 2001/29/EC (the 'Information Society Directive') incorporated the underlying principle from the Berne Convention that it was the form of expression rather than the underlying idea which was protected. Whether applying the Software Directive or the Information Society Directive, the functionality of the SAS Software was not protected given that the functionality was the idea and the source code was the expression of it. In circumstances where WPL did not have access to SAS's source code, SAS could not try to obtain protection in the functionality of the SAS Software by claiming copyright in the SAS manual which merely explained and detailed that functionality (and which did not contain the source code itself). As such there was no copying of the SAS manual's author's expression of the intellectual creation in WPL's software program.

Manual to Manual Claim

Arnold J's finding that WPL infringed the excerpts of the SAS manual which WPL reproduced in WPL's manual was not appealed by WPL. However, SAS appealed Arnold J's finding that the elements of the WPL manual which were not direct reproductions of the SAS manual did not infringe SAS's copyright. Given that the Manual to Program Claim failed, Lewison LJ found that this element of the appeal must also fail. Referring to the judgment of Pumfrey J in Navitaire Inc v easyJet Airline Co Ltd [2004] EWHC 1725 (Ch), he held that where the SAS manual was used by WPL to ascertain the functionality of SAS's Software (which was not protected by copyright)

and that functionality was then independently explained in WPL's manual (i.e. without direct reproduction of the SAS manual), there was no copyright infringement of the SAS manual.

The Learning Edition Claim

The Court of Appeal upheld Arnold J's finding that by testing the Learning Edition of the SAS Software in order to more fully understand the functionality of the SAS Software, WPL did not infringe the copyright in SAS's Learning Edition.

Lewison LJ dismissed SAS's contentions that (i) only WPL's employees who actually clicked through on the licence agreement were entitled to use the Learning Edition; and (ii) they were only entitled to use it for the limited purpose permitted by the licence agreement.

Despite the fact that only a human could click to accept the terms of the licence for the Learning Edition, that did not mean that only that individual person was licensed to use the Learning Edition. Lewison LJ found that an individual could be acting as an agent for a company which would in fact be the licence holder. In addition, there was language in the Learning Edition licence which implied that the licensee could be a legal entity and not merely an individual, for example the customer was referred to as 'it' and as the entity which had paid for the Learning Edition. In such circumstances, SAS could not assert that WPL did not have a licence to use the Learning Edition, or that the licence was limited only to the employees of WPL who clicked through to accept the terms of the licence.

In addition, given that the terms of the licence were presented by SAS on a 'take it or leave it' basis, Lewison LJ concluded that the contra proferentem principle applied, which would also 'tip the balance' in favour of granting WPL a licence to use SAS's Learning Edition.

Given that WPL was a licensee of the Learning Edition, Lewison LJ held that pursuant to Article 5(3) of the Software Directive, WPL was entitled to use SAS's Learning Edition in the manner that it did, despite that use being outside the terms of the Learning Edition licence agreement – i.e. once WPL was permitted to do certain acts under the Learning Edition licence, WPL was entitled under Article 5(3) to do those acts for the purpose of observing, studying or testing the functioning of the program in order to determine the ideas and principles which underlay any element of the program. WPL did not therefore infringe the copyright in SAS's Learning Edition, nor was WPL impermissibly acting outside the terms of the Learning Edition licence.