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IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION



Michael Hicks and Guy Hollingworth (instructed by Bristows) for the Claimant Martin Howe QC, Robert Onslow and Isabel Jamal (instructed by Speechly Bircham LLP) for the Defendant Hearing dates: 14-15 January 2013 ____________________

MR JUSTICE ARNOLD :

Contents

Topic Paras Introduction 1-4 My first judgment 5 The reference 6-7 The judgment of the CJEU 8-14 Questions 1-5 9-10 Questions 6 and 7 11-12 Questions 8 and 9 13-14 SAS Institute's claim that WPS infringes the copyrights in the SAS Components 15-48 SAS Language 17-35 SAS data file formats 36-41 Functionality 42 Reproduction of a substantial part 43-47 Conclusion 48 SAS Institute's claim that WPS infringes the copyrights in the SAS Manuals 49-54 SAS Institute's claims in respect of the Learning Edition 55-79 Use by more than one employee 58-63 Use for purposes beyond the scope of the licence 64-73 Use of the Learning Edition to generate zip code data 74-76 SAS Language 77-78 Conclusion 79 SAS Institute's claims that the WPS Manual and the WPS Guides infringe the copyrights in the SAS Manuals 80-81 Result 82

Introduction

i) A claim that WPL copied the manuals for the SAS System published by SAS Institute ("the SAS Manuals") when creating WPS and thereby infringed the copyright in the SAS Manuals. ii) A claim that, by copying the SAS Manuals when creating WPS, WPL indirectly copied the programs comprising the SAS Components and thereby infringed the copyright in the SAS Components. iii) A claim that WPL used a version of the SAS System known as the Learning Edition in contravention of the terms of its licences, and thereby both acted in breach of the relevant contracts and infringed the copyright in the Learning Edition. iv) A claim that WPL infringed the copyright in the SAS Manuals in creating its own documentation, namely a manual ("the WPS Manual") and some "quick reference" guides ("the WPS Guides").

My first judgment

Following a trial in June 2010, I handed down judgment on 23 July 2010 ([2010] EWHC 1829 (Ch), [2011] RPC 1; "my first judgment"). In my first judgment I found the facts (at [1]-[148]), set out the legal context (at [149]-[195]) and then considered each of SAS Institute's claims listed above (at [251]-[267], [196]-[250], [268]-[315] and [316]-[329] respectively). In the case of the fourth claim, I was able to conclude that WPL had infringed the copyrights in the SAS Manuals when creating the WPS Manual, but not when creating the WPS Guides. In the case of the other claims, I concluded that it was necessary to refer certain questions of interpretation of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs ("the Software Directive") (now codified as Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009) and of European Parliament and Council Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society ("the Information Society Directive") to the Court of Justice of the European Union for a preliminary ruling. I nevertheless expressed my provisional views both on the issues of law and on how the law should be applied to the facts that I had found. In this judgment I shall take the whole of my first judgment as read.

The reference

" A. On the interpretation of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs and of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 (codified version):

1. Where a computer program ('the First Program') is protected by copyright as a literary work, is Article 1(2) to be interpreted as meaning that it is not an infringement of the copyright in the First Program for a competitor of the rightholder without access to the source code of the First Program, either directly or via a process such as decompilation of the object code, to create another program ('the Second Program') which replicates the functions of the First Program?

2. Is the answer to question 1 affected by any of the following factors:

(a) the nature and/or extent of the functionality of the First Program;

(b) the nature and/or extent of the skill, judgment and labour which has been expended by the author of the First Program in devising the functionality of the First Program;

(c) the level of detail to which the functionality of the First Program has been reproduced in the Second Program;

(d) if the source code for the Second Program reproduces aspects of the source code of the First Program to an extent which goes beyond that which was strictly necessary in order to produce the same functionality as the First Program?

3. Where the First Program interprets and executes application programs written by users of the First Program in a programming language devised by the author of the First Program which comprises keywords devised or selected by the author of the First Program and a syntax devised by the author of the First Program, is Article 1(2) to be interpreted as meaning that it is not an infringement of the copyright in the First Program for the Second Program to be written so as to interpret and execute such application programs using the same keywords and the same syntax?

4. Where the First Program reads from and writes to data files in a particular format devised by the author of the First Program, is Article 1(2) to be interpreted as meaning that it is not an infringement of the copyright in the First Program for the Second Program to be written so as to read from and write to data files in the same format?

5. Does it make any difference to the answer to questions 1, 3 and 4 if the author of the Second Program created the Second Program by:

(a) observing, studying and testing the functioning of the First Program; or

(b) reading a manual created and published by the author of the First Program which describes the functions of the First Program ('the Manual'); or

(c) both (a) and (b)?

6. Where a person has the right to use a copy of the First Program under a licence, is Article 5(3) to be interpret[ed] as meaning that the licensee is entitled, without the authorisation of the rightholder, to perform acts of loading, running and storing the program in order to observe, test or study the functioning of the First Program so as to determine the ideas and principles which underlie any element of the program, if the licence permits the licensee to perform acts of loading, running and storing the First Program when using it for the particular purpose permitted by the licence, but the acts done in order to observe, study or test the First Program extend outside the scope of the purpose permitted by the licence?

7. Is Article 5(3) to be interpreted as meaning that acts of observing, testing or studying of the functioning of the First Program are to be regarded as being done in order to determine the ideas or principles which underlie any element of the First Program where they are done:

(a) to ascertain the way in which the First Program functions, in particular details which are not described in the Manual, for the purpose of writing the Second Program in the manner referred to in question 1 above;

(b) to ascertain how the First Program interprets and executes statements written in the programming language which it interprets and executes (see question 3 above);

(c) to ascertain the formats of data files which are written to or read by the First Program (see question 4 above);

(d) to compare the performance of the Second Program with the First Program for the purpose of investigating reasons why their performances differ and to improve the performance of the Second Program;

(e) to conduct parallel tests of the First Program and the Second Program in order to compare their outputs in the course of developing the Second Program, in particular by running the same test scripts through both the First Program and the Second Program;

(f) to ascertain the output of the log file generated by the First Program in order to produce a log file which is identical or similar in appearance;

(g) to cause the First Program to output data (in fact, data correlating zip codes to States of the USA) for the purpose of ascertaining whether or not it corresponds with official databases of such data, and if it does not so correspond, to program the Second Program so that it will respond in the same way as the First Program to the same input data.

B. On the interpretation of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society:

8. Where the Manual is protected by copyright as a literary work, is Article 2(a) to be interpreted as meaning that it is an infringement of the copyright in the Manual for the author of the Second Program to reproduce or substantially reproduce in the Second Program any of the following matters described in the Manual:

(a) the selection of statistical operations which have been implemented in the First Program;.

(b) the mathematical formulae used in the Manual to describe those operations;

(c) the particular commands or combinations of commands by which those operations may be invoked;

(d) the options which the author of the First Program has provide[d] in respect of various commands;

(e) the keywords and syntax recognised by the First Program;.

(f) the defaults which the author of the First Program has chosen to implement in the event that a particular command or option is not specified by the user;

(g) the number of iterations which the First Program will perform in certain circumstances?

9. Is Article 2(a) to be interpreted as meaning that it is an infringement of the copyright in the Manual for the author of the Second Program to reproduce or substantially reproduce in a manual describing the Second Program the keywords and syntax recognised by the First Program?"

The judgment of the CJEU

Questions 1-5

"35. In a judgment delivered after the reference for a preliminary ruling had been lodged in the present case, the Court interpreted Article 1(2) of Directive 91/250 as meaning that the object of the protection conferred by that directive is the expression in any form of a computer program, such as the source code and the object code, which permits reproduction in different computer languages (judgment of 22 December 2010 in Case C-393/09 Bezpecnostní softwarová asociace [2010] ECR I-0000, paragraph 35).

36. In accordance with the second phrase of the seventh recital in the preamble to Directive 91/250, the term 'computer program' also includes preparatory design work leading to the development of a computer program, provided that the nature of the preparatory work is such that a computer program can result from it at a later stage.

37. Thus, the object of protection under Directive 91/250 includes the forms of expression of a computer program and the preparatory design work capable of leading, respectively, to the reproduction or the subsequent creation of such a program (Bezpecnostní softwarová asociace, paragraph 37).

38. From this the Court concluded that the source code and the object code of a computer program are forms of expression thereof which, consequently, are entitled to be protected by copyright as computer programs, by virtue of Article 1(2) of Directive 91/250. On the other hand, as regards the graphic user interface, the Court held that such an interface does not enable the reproduction of the computer program, but merely constitutes one element of that program by means of which users make use of the features of that program (Bezpecnostní softwarová asociace, paragraphs 34 and 41).

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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.

41. Moreover, point 3.7 of the explanatory memorandum to the Proposal for Directive 91/250 [COM(88) 816] states that the main advantage of protecting computer programs by copyright is that such protection covers only the individual expression of the work and thus leaves other authors the desired latitude to create similar or even identical programs provided that they refrain from copying.

42. With respect to the programming language and the format of data files used in a computer program to interpret and execute application programs written by users and to read and write data in a specific format of data files, these are elements of that program by means of which users exploit certain functions of that program.

43. In that context, it should be made clear that, if a third party were to procure the part of the source code or the object code relating to the programming language or to the format of data files used in a computer program, and if that party were to create, with the aid of that code, similar elements in its own computer program, that conduct would be liable to constitute partial reproduction within the meaning of Article 4(a) of Directive 91/250.

44. As is, however, apparent from the order for reference, WPL did not have access to the source code of SAS Institute's program and did not carry out any decompilation of the object code of that program. By means of observing, studying and testing the behaviour of SAS Institute's program, WPL reproduced the functionality of that program by using the same programming language and the same format of data files.

45. The Court also points out that the finding made in paragraph 39 of the present judgment cannot affect the possibility that the SAS language and the format of SAS Institute's data files might be protected, as works, by copyright under Directive 2001/29 if they are their author's own intellectual creation (see Bezpecnostní softwarová asociace, paragraphs 44 to 46).

46. Consequently, the answer to Questions 1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."

Questions 6 and 7

"48. In the main proceedings, it is apparent from the order for reference that WPL lawfully purchased copies of the Learning Edition of SAS Institute's program, which were supplied under a "click-through" licence which required the purchaser to accept the terms of the licence before being permitted to access the software. The terms of that licence restricted the licence to non-production purposes. According to the national court, WPL used the various copies of the Learning Edition of SAS Institute's program to perform acts which fall outside the scope of the licence in question.

49. Consequently, the national court raises the question as to whether the purpose of the study or observation of the functioning of a computer program has an effect on whether the person who has obtained the licence may invoke the exception set out in Article 5(3) of Directive 91/250 .

50. The Court observes that, from the wording of that provision, it is clear, first, that a licensee is entitled to observe, study or test the functioning of a computer program in order to determine the ideas and principles which underlie any element of the program.

51. In this respect, Article 5(3) of Directive 91/250 seeks to ensure that the ideas and principles which underlie any element of a computer program are not protected by the owner of the copyright by means of a licensing agreement.

52. That provision is therefore consistent with the basic principle laid down in Article 1(2) of Directive 91/250, pursuant to which protection in accordance with that directive applies to the expression in any form of a computer program and ideas and principles which underlie any element of a computer program are not protected by copyright under that directive.

53. Article 9(1) of Directive 91/250 adds, moreover, that any contractual provisions contrary to the exceptions provided for in Article 5(2) and (3) of that directive are null and void.

54. Secondly, under Article 5(3) of Directive 91/250, a licensee is entitled to determine the ideas and principles which underlie any element of the computer program if he does so while performing any of the acts of loading, displaying, running, transmitting or storing that program which he is entitled to do.

55. It follows that the determination of those ideas and principles may be carried out within the framework of the acts permitted by the licence.

56. In addition, the 18th recital in the preamble to Directive 91/250 states that a person having a right to use a computer program should not be prevented from performing acts necessary to observe, study or test the functioning of the program, provided that these acts do not infringe the copyright in that program.

57. As the Advocate General states in point 95 of his Opinion, the acts in question are those referred to in Article 4(a) and (b) of Directive 91/250, which sets out the exclusive rights of the rightholder to do or to authorise, and those referred to in Article 5(1) thereof, relating to the acts necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, including for error correction.

58. In that latter regard, the 17th recital in the preamble to Directive 91/250 states that the acts of loading and running necessary for that use may not be prohibited by contract.

59. Consequently, the owner of the copyright in a computer program may not prevent, by relying on the licensing agreement, the person who has obtained that licence from determining the ideas and principles which underlie all the elements of that program in the case where that person carries out acts which that licence permits him to perform and the acts of loading and running necessary for the use of the computer program, and on condition that that person does not infringe the exclusive rights of the owner in that program.

60. As regards that latter condition, Article 6(2)(c) of Directive 91/250 relating to decompilation states that decompilation does not permit the information obtained through its application to be used for the development, production or marketing of a computer program substantially similar in its expression, or for any other act which infringes copyright.

61. It must therefore be held that the copyright in a computer program cannot be infringed where, as in the present case, the lawful acquirer of the licence did not have access to the source code of the computer program to which that licence relates, but merely studied, observed and tested that program in order to reproduce its functionality in a second program.

62. In those circumstances, the answer to Questions 6 and 7 is that Article 5(3) of Directive 91/250 must be interpreted as meaning that a person who has obtained a copy of a computer program under a licence is entitled, without the authorisation of the owner of the copyright, to observe, study or test the functioning of that program so as to determine the ideas and principles which underlie any element of the program, in the case where that person carries out acts covered by that licence and acts of loading and running necessary for the use of the computer program, and on condition that that person does not infringe the exclusive rights of the owner of the copyright in that program."

Questions 8 and 9

"64. It is apparent from the order for reference that the user manual for SAS Institute's computer program is a protected literary work for the purposes of Directive 2001/29.

65. The Court has already held that the various parts of a work enjoy protection under Article 2(a) of Directive 2001/29, provided that they contain some of the elements which are the expression of the intellectual creation of the author of the work (Case C-5/08 Infopaq International [2009] ECR I-6569, paragraph 39).

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.

69. In this respect, the examination, in the light of Directive 2001/29, of the reproduction of those elements of the user manual for a computer program must be the same with respect to the creation of the user manual for a second program as it is with respect to the creation of that second program.

70. Consequently, in the light of the foregoing considerations, the answer to Questions 8 and 9 is that Article 2(a) of Directive 2001/29 must be interpreted as meaning that the reproduction, in a computer program or a user manual for that program, of certain elements described in the user manual for another computer program protected by copyright is capable of constituting an infringement of the copyright in the latter manual ifthis being a matter for the national court to ascertainthat reproduction constitutes the expression of the intellectual creation of the author of the user manual for the computer program protected by copyright."

SAS Institute's claim that WPS infringes the copyrights in the SAS Components

i) Although I was not persuaded that Pumfrey J was wrong to conclude in Navitaire Inc v easyJet Airline Co Ltd [2004] EWHC 1725 (Ch), [2006] RPC 3 that, on the true interpretation of Article 1(2) of the Software Directive, copyright in computer programs does not protect programming languages from being copied, I considered that this was a question on which guidance from the CJEU was required: see [211]-[218]. ii) Although I was not persuaded that Pumfrey J was wrong to conclude in Navitaire that, on the true interpretation of Article 1(2) of the Software Directive, copyright in computer programs does not protect interfaces from being copied where this can be achieved without decompiling the object code, I considered that this was also a question on which guidance from the CJEU was required: see [219]-[227]. iii) Although I was not persuaded that Pumfrey J was wrong to conclude in Navitaire that, on the true interpretation of Article 1(2) of the Software Directive, copyright in computer programs does not protect the functionality of the programs from being copied, and although his decision on that point was upheld by the Court of Appeal in Nova Productions Ltd v Mazooma Games Ltd [2007] EWCA Civ 25, [2007] RPC 25, I considered that this was also a question on which guidance from the CJEU was required: see [228]-[238]. iv) On the assumption that Pumfrey J's interpretation of Article 1(2) of the Software Directive was correct, I held that WPL had not infringed SAS Institute's copyrights in the SAS Components by producing WPS: see [245]-[250]. In particular, I held that, although WPS reproduced elements of the SAS Language, that did not constitute an infringement of the copyrights in the SAS Components because the SAS Language was a programming language ([247]). I also held that, although WPS was able to read and write files in SAS7BDAT data file format, that did not constitute an infringement of the copyrights in the SAS Components for two reasons: first, that data file format was an interface and therefore unprotected by the copyrights in the SAS Components; and secondly, there was no evidence that WPS reproduced any part of the SAS source code in that respect ([248]).

SAS Language

"43. Nevertheless, even if the national court has limited its question to the interpretation of Article 1(2) of Directive 91/250, such a situation does not prevent the Court from providing the national court with all the elements of interpretation of European Union law which may enable it to rule on the case before it, whether or not reference is made thereto in the question referred (see, to that effect, Case C-392/05 Alevizos [2007] ECR I-3505, paragraph 64 and the case-law cited).

44. In that regard, it is appropriate to ascertain whether the graphic user interface of a computer program can be protected by the ordinary law of copyright by virtue of Directive 2001/29.

45. The Court has held that copyright within the meaning of Directive 2001/29 is liable to apply only in relation to a subject-matter which is original in the sense that it is its author's own intellectual creation (see, to that effect, with regard to Article 2(a) of Directive 2001/29, Infopaq International, paragraphs 33 to 37).

46. Consequently, the graphic user interface can, as a work, be protected by copyright if it is its author's own intellectual creation.

47. It is for the national court to ascertain whether that is the case in the dispute before it.

48. When making that assessment, the national court must take account, inter alia, of the specific arrangement or configuration of all the components which form part of the graphic user interface in order to determine which meet the criterion of originality. In that regard, that criterion cannot be met by components of the graphic user interface which are differentiated only by their technical function."

" the court is and should be less ready to allow a very late amendment than it used to be in former times, and a heavy onus lies on a party seeking to make a very late amendment to justify it, as regards his own position, that of the other parties to the litigation, and that of other litigants in other cases before the court."

First, can a programming language such as the SAS Language be a work at all? In the light of a number of recent judgments of the CJEU, it may be arguable that it is not a fatal objection to a claim that copyright subsists in a particular work that the work is not one of the kinds of work listed in section 1(1)(a) of the Copyright, Designs and Patents 1988 and defined elsewhere in that Act. Nevertheless, it remains clear that the putative copyright work must be a literary or artistic work within the meaning of Article 2(1) of the Berne Convention: see Case C-5/08 Infopaq International A/S v Danske Dagblades Forening [2009] ECR I-6569 at [32]-[37]. While the definition of "literary and artistic works" in Article 2(1) is expansive and open-ended, it is not unlimited. For example, it is conventionally understood not to include sound recordings or broadcasts: see Ricketson and Ginsburg, International Copyright and Neighbouring Rights: The Berne Convention and Beyond (2nd ed, Oxford University Press, 2007), pp. 505-508, 1205-1208; Goldstein and Hugenholtz, International Copyright: Principles, Law and Practice (3rd ed, Oxford University Press, 2012), pp. 106, 158, 188-191; and Ficsor, Guide to the Copyright and Related Rights Treaties Administered by WIPO (WIPO, 2003), p. 27. (The 1988 Act confers "copyright" on such subject matter, but as I have explained elsewhere, the right granted is a right in the signal and not in the content, and thus in effect is a neighbouring or related right.) As I explained in my first judgment at [197], it is now settled that a computer program is a literary work within Article 2(1), but it does not necessarily follow that a programming language is such a work.

SAS data file formats

Functionality

Reproduction of a substantial part

"there will only be reproduction of a substantial part of a literary work where what has been reproduced represents the expression of the intellectual creation of the author of that literary work."

Conclusion

SAS Institute's claim that WPS infringes the copyrights in the SAS Manuals

i) I considered that the reasoning which supported Pumfrey J's interpretation of Article 1(2) of the Software Directive also applies to Article 2(a) of the Information Society Directive, but again this is a question on which guidance from the ECJ was required: see [251]-[256]. ii) On the assumption that Article 2(a) of the Information Society Directive was to be interpreted in the same manner as Article 1(2) of the Software Directive, WPL had not infringed SAS Institute's copyrights in the SAS Manuals by producing or testing WPS: see [255] and [257]-[261].

SAS Institute's claims in respect of the Learning Edition

i) WPL's use of the SAS Learning Edition fell outside the scope of the terms of the relevant licences: see [276]-[290]. ii) The interpretation of Article 5(3) of the Software Directive was another question on which guidance from the CJEU was required: see [291]-[311] and [314]. iii) On the interpretation of Article 5(3) which I favoured, WPL's use of the Learning Edition was within Article 5(3), and to the extent that the licence terms prevented this they were null and void, with the result that none of WPL's acts complained of was a breach of contract or an infringement of copyright except perhaps one: see [313]-[315] above.

Use by more than one employee

Use for purposes beyond the scope of the licence

Use of the Learning Edition to generate zip code data

i) WPL had generated a table of zip code zones and the states to which they corresponded by running a short script through the Learning Edition. ii) There was no evidence as to how or in what form the zip code data was stored in the SAS Components. Nor was there any evidence as to who had compiled that data or from what source(s). iii) The vast majority of the data obtained by WPL's program could not "belong" to SAS Institute because it corresponded to the official list of valid US zip codes published by the US Postal Service. The table produced by the Learning Edition was a "superset" of those zip codes, such that certain zip codes were treated as corresponding to a particular state even when they had not been officially allocated by the US Postal Service. iv) What WPL did was to write WPS in such a way that, if a customer ran a program in WPS which involved processing zip codes, then WPS would be able to recognise not only the public domain zip codes, but also the other zip codes recognised by the SAS Components, so as to be able to produce the same output as the SAS Components.

SAS Language

Conclusion

SAS Institute's claims that the WPS Manual and the WPS Guides infringe the copyrights in the SAS Manuals

i) WPL had infringed the copyrights in the SAS Manuals by substantially reproducing them in the WPL Manual: see [317]-[319]. ii) WPL had not infringed the copyrights in the SAS Manuals by producing the WPS Guides: see [320]-[329].