SAS Institute Inc v World Programming Ltd

The Claimant, SAS Institute Inc (“SAS Institute”), is a developer of analytical software known as SAS (referred to in these proceedings as “the SAS System”). The SAS System is an integrated set of programs which enables users to carry out a wide range of data processing and analysis tasks, and in particular statistical analysis. The core component of the SAS System is Base SAS, which enables users to write and run application programs (also known as “scripts”) to manipulate data. Such applications are written in a language known as the SAS Language. The functionality of Base SAS may be extended by the use of additional components, including three which are relevant to these proceedings called SAS/ACCESS, SAS/GRAPH and SAS/STAT (the four components being collectively referred to as “the SAS Components”). The SAS System has been developed over a period of 35 years.

Over the years SAS Institute’s customers have written, or had written on their behalf, thousands of application programs in the SAS Language. These can range from fairly short and simple programs to large and complex programs which involve many man years of effort to create. Prior to the events giving rise to this dispute, SAS Institute’s customers had no alternative to continuing to license use of the necessary components in the SAS System in order to be able to run their existing SAS Language application programs, as well as to create new ones. While there are many other suppliers of analytical software which compete with SAS Institute, a customer who wanted to change over to another supplier’s software would be faced with re-writing its existing application programs in a different language.

The Defendant, World Programming Ltd (“WPL”), perceived that there would be a market demand for alternative software which would be able to execute application programs written in the SAS Language. WPL therefore created a product called World Programming System or WPS to do this. In developing WPS, WPL sought to emulate much of the functionality of the SAS Components as closely as possible in the sense that, subject to only a few minor exceptions, it tried to ensure that the same inputs would produce the same outputs. This was so as to ensure that WPL’s customers’ application programs executed in the same manner when run on WPS as on the SAS Components. There is no suggestion that in doing so WPL had access to the source code of the SAS Components or that WPL has copied any of the text of the source code of the SAS Components or that WPL has copied any of the structural design of the source code of the SAS Components. Nevertheless, SAS Institute contends that WPL has both committed a series of infringements of copyright and acted in breach of contract in creating WPS and its accompanying documentation.

SAS Institute’s principal claims are as follows:

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.

By order dated 28 July 2010 I referred the following questions to the CJEU:

“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?”

On 18 November 2010 I refused an application by SAS Institute for the wording of the questions to be amended in a number of respects for the reasons given in a judgment dated 22 November 2010 ([2010] EWHC 3012 (Ch), [2011] FSR 12).

On 29 November 2011 Advocate General Bot delivered his Opinion on the questions referred ([2012] ECDR 1) and on 2 May 2012 the CJEU gave its judgment in Case C-406/10 ([2012] ECR I-0000, [2012] ECDR 22).

The Court dealt with these questions together. It interpreted this court as asking “in essence, whether Article 1(2) of [the Software Directive] must be interpreted as meaning that the functionality of a computer program and 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 may, as such, be protected by copyright in computer programs for the purposes of that directive”: see [29].

Having referred to recital (14), Article 1(1) and 1(2) of the Software Directive, Article 2 of the WIPO Copyright Treaty and Articles 9(2) and 10(1) of TRIPS, the Court went on:

“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 Bezpečnostní 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 (Bezpečnostní 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 (Bezpečnostní 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 Bezpečnostní 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.”

The Court dealt with these questions together. It interpreted this court as asking “in essence, whether Article 5(3) of [the Software Directive] 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 in that program, to observe, study or test the functioning of that program in order 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 with a purpose that goes beyond the framework established by the licence.”: see [47].

The Court answered these questions as follows:

“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.”

The Court dealt with these questions together. It interpreted this court as asking “in essence, whether Article 2(a) of [the Information Society Directive] 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 constitutes an infringement of that right in the latter manual”: see [63].

It answered these questions as follows:

“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.”

In my first judgment I concluded, in summary, as follows:

In my judgment, the CJEU’s answer to Questions 1-5 amounts to an endorsement of Pumfrey J’s interpretation of Article 1(2) of the Software Directive. In short, copyright in a computer program does not protect either the programming language in which it is written or its interfaces (specifically, its data file formats) or its functionality from being copied. Indeed, counsel for SAS Institute did not submit to the contrary. He nevertheless argued that the Court’s judgment required me to reconsider the provisional conclusions reached in my first judgment for a number of reasons which I will address in turn.

Counsel for SAS Institute pointed out that the CJEU had held at [45] that its conclusion that neither the functionality of a computer program nor the programming language nor the data file formats constituted a form of expression of the computer program for the purposes of Article 1(2) of the Software Directive “cannot affect the possibility that [the SAS Language and SAS data file formats] might be protected, as works, by copyright under [the Information Society Directive] if they are their author’s own intellectual creation”. He argued, in summary, that the SAS Language was a work that was its authors’ own intellectual creation, albeit that it was fixed in the form of the SAS Components (and the SAS Manuals), and accordingly the SAS Language was protectable under the Information Society Directive even if it was not a protectable aspect of the SAS Components under the Software Directive. I do not accept this argument for the following reasons.

The CJEU referred at [45] to its judgment in Case C-393/09 Bezpečnostní softwarová asociace – Svaz softwarové ochrany v Ministerstvo kultury [2010] ECR I-13971 (“BSA”). In that case, the Nejvyšší správní soud (the Czech Supreme Administrative Court) had asked whether the graphic user interface (GUI) of a computer program was part of the expression of that computer program for the purposes of Article 1(2) of the Software Directive, and hence protected by the copyright in the program. The CJEU answered that question in the negative at [28]-[42].

The Court went on, however, as follows:

“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.”

As counsel for WPL submitted, that conclusion was not surprising. It is entirely consistent with the conclusion of Pumfrey J in Navitaire at [95]-[99] that, even though the interfaces of OpenRes could not be protected by the copyright in OpenRes as a computer program, nevertheless certain of its GUI screens were protected as copyright artistic works. That approach was followed by Kitchin J (as he then was) and the Court of Appeal in Nova.

Turning to the CJEU’s judgment in the present case, counsel for WPL submitted, and I agree, that in [45] the CJEU was merely being careful, consistently with BSA, to make it clear that it was not excluding the possibility that the SAS Language might be protected as a work in its own right. In other words, it was simply identifying that as being a separate question. It was not purporting to answer that question, which was not before it.

Counsel for WPL argued that this was not an issue which arose in the present case. It would only have arisen if SAS Institute had pleaded and proved that the SAS Language was a distinct work which satisfied the necessary criteria for subsistence of copyright. SAS Institute had not pleaded the SAS Language as a distinct copyright work, however. Rather, the pleaded copyright works upon which it had relied were the SAS Components (and the SAS Manuals). SAS Institute’s case was that the SAS Language was (or, to be more precise, the main elements of the SAS Language were) a protectable aspect of the SAS Components. It was not open to SAS Institute to rely upon the SAS Language as a copyright work in its own right without an amendment to its Particulars of Claim, and no such amendment should be permitted at this late stage of the proceedings since it would raise new factual and legal issues for investigation.

Counsel for SAS Institute argued that it was not necessary for SAS Institute to plead reliance upon the SAS Language as a distinct copyright work, since it had pleaded the fixations in which it was embodied, namely the SAS Components (and the SAS Manuals), and it had alleged reproduction by WPL of the relevant aspects. In the alternative, if permission to amend was required, he submitted that permission should be granted since the only issue which would be raised by the amendment was a legal one which the CJEU had answered. The proposed amendments are set out in a draft Re-Re-Re-Amended Particulars of Claim served by SAS Institute.

In my judgment, it is necessary for SAS Institute to plead reliance upon the SAS Language as a distinct copyright work if it wishes to advance such a case. At all times prior to the judgment of the CJEU, SAS Institute’s case was that the copyright works it relied upon were the SAS Components and the SAS Manuals. There was no suggestion that it relied upon the SAS Language as being a copyright work in its own right. The question whether the SAS Language is a copyright work in its own right raises distinct factual and legal issues from the questions of whether the SAS Components and the SAS Manuals are copyright works, which WPL admitted.

As to whether SAS Institute should be given permission to amend its Particulars of Claim to raise this contention now, guidance as to the correct approach to late applications to amend statements of case was given by the Court of Appeal in Swain-Mason v Mills & Reeve LLP [2011] EWCA Civ 14, [2011] 1 WLR 2735 at [68]-[72]. This is summarised in the statement of Lloyd LJ at [72] that:

“… 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.”

In my judgment it would not be justified to permit SAS Institute to amend its Particulars of Claim at this late stage. There has already been a trial, a judgment of mine finding the facts and a judgment of the CJEU ruling upon the key legal issues. Although, as counsel for SAS Institute pointed out, in L'Oréal SA v Bellure NV [2010] EWCA Civ 535, [2010] RPC 2 the Court of Appeal stated obiter that it would if necessary have permitted an amendment by the claimant at the same procedural stage, it did so because the amendment in question raised a pure issue of law and because in effect it was responsive to a point which the Court of Appeal had permitted the defendant to raise after trial. In the present case, I agree with counsel for WPL that the proposed amendment would raise new factual and legal issues of considerable difficulty. These would include the following.

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 (2^nd ed, Oxford University Press, 2007), pp. 505-508, 1205-1208; Goldstein and Hugenholtz, International Copyright: Principles, Law and Practice (3^rd 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.

Two points can be disposed of with relatively little difficulty. The first is that, as counsel for WPL pointed out, SAS Institute’s draft amendments do not specify what type of work SAS Institute contends the SAS Language to be. I do not regard that as a fatal objection to the allowability of the amendment. In any event, I find it difficult to conceive that, if it is a work, it can be anything other than a literary work. The real question is whether it is a work at all.

The second point is that, as was common ground between counsel, it is important to distinguish between the putative work on the one hand and any particular fixation of the work on the other hand. The United Kingdom, in common with many other countries, takes advantage of Article 2(2) of the Berne Convention and requires fixation as a condition precedent to the subsistence of copyright: see section 3(2) of the 1988 Act. In principle, the technical means by which fixation is achieved is irrelevant. Thus, as discussed above, an artistic work may be fixed in the source code of a computer program. But the fixation must not be confused with the work. A printed book is a fixation which may embody a variety of works, for example a literary work (the text) and a series of artistic works (illustrations). These different works are likely to have different authors, and hence different owners and terms of copyright. Thus the fact that one can identify a fixation is a necessary, but not a sufficient, condition for the subsistence of copyright.

Counsel for WPL submitted that the proposition that a programming language such as the SAS Language could be a work was a novel one which required factual investigation as well as legal analysis. I agree. An issue which was considered at trial, in particular in the expert evidence, was whether the SAS Language was a programming language at all. Having considered the evidence, I concluded that it was: see my first judgment at [47]-[56]. That evidence sheds some light on the question presently under consideration. Thus WPL’s expert Dr Worden explained in his report that it was necessary to distinguish between a language, including a programming language such as the SAS Language, and instances of it. He also explained there are two main aspects of a language: its syntax and its semantics.

Nevertheless, I am confident that further evidence relevant to the present issue could usefully have been adduced by the parties. I briefly described in my first judgment at [46] the manner in which the SAS System executes scripts written in the SAS Language. This is not a matter which was investigated in any detail at the trial, however. Nor was there any detailed consideration of the relationship between the SAS Language and the SAS Components other than Base SAS. Still less was there investigation of the history of the SAS Language: when, how and by whom it was created and when, how and to what extent it has evolved from its origins.

As an illustration of this point, counsel for WPL submitted that the SAS Language could be regarded as an abstraction from the SAS Components in a similar way as the plot of a novel can be regarded as an abstraction from the novel. Even leaving aside my general scepticism about the appropriateness of this kind of analogy when dealing with computer software (see my first judgment at [234]), I am not at all sure that the submission is factually accurate. My present understanding is that the SAS Components implement scripts written in the SAS Language. Accordingly, it is possible to deduce aspects of the SAS Language from observing the operation of the SAS Components. It does not follow that the SAS Language is an abstraction from the SAS Components. It may perhaps be more accurate to regard it as an abstraction from the SAS Manuals, but I am not sure about that either.

Based on the evidence which was adduced at trial, and my general understanding of the position, my provisional view is that a programming language such as the SAS Language is not capable of being a work. A dictionary and a grammar are works which describe a language. Such works record, and thereby fix, the elements of the language they describe: the meanings of its words and its syntax. It does not follow that the language is a work. Rather, the language is the material from which works (including dictionaries and grammars) may be created. The evolutionary or organic aspect of language can be left on one side for the moment, since it is clear that it is possible to create a language from scratch. Even when a language is created from scratch, however, what it amounts to is a system of rules for the generation and recognition of meaningful statements. Programming languages such as the SAS Language are no different in this respect.

Counsel for SAS Institute argued that the SAS Language was an intellectual creation, and therefore it was a work. In my view that is a non sequitur. As counsel for WPL pointed out, there are many intellectual creations which are not works, such as scientific theories: see Ricketson and Ginsburg at pp. 406-407. An article or book describing a scientific theory is a literary work, but for the reasons explained above that is beside the point when it comes to the question of whether the scientific theory per se is a work. I would add that treating the scientific theory as a distinct work protectable by copyright would undermine the exclusion of the theory from protection by the copyright in the article or book mandated by Article 9(2) of TRIPS and Article 2 of the WIPO Copyright Treaty (as to which, see my first judgment at [204]-[205]).

A second issue is whether, assuming that a programming language is in principle capable of being a work, the SAS Language as it exists now is a work. Although, as I have said, the matter was not properly investigated at trial, it is my understanding that the SAS Language has evolved considerably since its origins. Rather as new words and syntactical constructions enter human languages over time, so too new features have been added to the SAS Language over time. This was not planned and there was no overall design. In those circumstances, it is doubtful whether the SAS Language would qualify as a compilation: see my first judgment at [261]. Whether it could be argued to be a (literary) work of some other type is a question upon which it is not necessary for me to express any view.

The position in relation to the SAS data file formats is similar to that in respect of the SAS Language. Again, counsel for SAS Institute sought to argue that the SAS data file formats were independent copyright works, relying upon the judgment of the CJEU at [45]. Again, counsel for WPL objected that no such case had been pleaded by SAS Institute, and it was too late for SAS Institute to seek to raise such a case now. As counsel for WPL pointed out, the position in relation to the SAS data file formats is, if anything, even worse than that in relation to the SAS Language, since the draft amendments proposed by SAS Institute still do not plead any case in relation to the data file formats.

In my judgment SAS Institute cannot advance a case that the SAS data file formats are distinct copyright works without pleading it. Even leaving aside the point that no such amendment has yet been formulated, it would not be justified to give SAS Institute permission to amend at this late stage. As with the SAS Language, this would require difficult new factual and legal issues to be investigated.

There was relatively little evidence about the SAS data file formats at trial. To the best of my recollection, the only format that was addressed in the evidence at trial was SAS7BDAT (see my first judgment at [128]-[129]). I do not even know what other formats, if any, SAS Institute claims that WPL has copied.

The question of whether a data file format such as SAS7BDAT is a work is not straightforward for similar reasons to those that I have given in relation to the SAS Language.

Even if it is a work, SAS Institute’s claim in respect of the data file formats raises rather more acutely the question of fixation. For the reasons given in my first judgment at [32] and [128]-[129], it has not been established that SAS7BDAT is fixed in the SAS Components. It is not clear to me that it is fixed in any of the SAS Manuals either.

This claim also raises the question of originality, and in particular whether a data file format is an intellectual creation. For this purpose, elements “differentiated only by their technical function” must be disregarded: see BSA at [47] (quoted in paragraph 19 above) and [50]. What is required is something on which the author has stamped his “personal touch” through the creative choices he has made: see Case C-145/10 Painer v Standard Verlags GmbH [2011] ECR I-0000, [2012] ECDR 6 at [89]-[92] and Case C-604/10 Football Dataco Ltd v Yahoo! UK Ltd [2012] ECR I-0000, [2012] Bus LR 1753 at [38]-[39]. It is open to evidence and argument as to whether data file formats such as SAS7BDAT satisfy this requirement.

Counsel for SAS Institute argued that in answering Questions 1-5 the CJEU had adopted a different, and rather narrower, definition of the “functionality” of a computer than I had adopted when posing those questions. I do not propose to go into the details of this argument. It suffices to say that I regard it as completely unsustainable, for two main reasons. First, although the Court reformulated Questions 1-5 at [29], in doing so it continued to use the word “functionality”. There is nothing in this section of the judgment to suggest that it meant something different. Nor does the cross-reference at [40] to the Advocate General’s Opinion show this, since there is nothing to show that the Advocate General adopted a different meaning. Secondly, in Question 2 I asked whether the answer to Question 1 was affected by (a) the nature and/or extent of the functionality of the First Program or (c) the level of detail to which the functionality has been reproduced in the Second Program. It is clear from the Court’s ruling that the answer is not affected by these factors.

Counsel for SAS Institute argued that the answer given by the CJEU to Questions 8-9 showed that I had applied the wrong test for reproduction of a substantial part in my first judgment at [249]. The correct approach, he submitted, was simply to ask whether the part reproduced constituted the expression of the intellectual creation of the author. I do not accept this argument.

I considered the test for reproduction of a substantial part in my first judgment at [239]-[244]. I held at [244] that it was clear from the judgment of the CJEU in Infopaq at [31]-[48] that:

“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.”

It is clear from subsequent judgments of the CJEU that this is indeed the correct test: see in particular BSA at [45]-[46] and [56]-[57], Joined Cases C-403/08 and C-429/08 Football Association Premier League Ltd v QC Leisure [2011] ECR I-0000 at [154]-[156] and the judgment in the present case at [65].

Counsel for SAS Institute did not take issue with this test, but argued that I had misapplied it at [249] because it was impermissible to dissect what had been reproduced into protectable and non-protectable parts. I disagree. It is clear from the CJEU’s answer to Questions 1-5 that neither the functionality nor the programming language nor the data file formats of a computer program constitute a form of expression of that program, and hence they are not protected by the copyright in the program. Accordingly, in applying the Infopaq test, those elements must be disregarded. There can only be a reproduction of a substantial part of the computer program if the defendant has reproduced something that represents the expression of the intellectual creation of the author of the program.

Counsel for SAS Institute relied upon the CJEU’s answer to Questions 8 and 9, and in particular the passage at [66]-[67], as supporting his argument. As I understand that passage, however, all the Court is saying is that it is possible to create a protectable form of expression using elements which in themselves are not protectable. That is not a controversial proposition. I shall return to this point below.

I therefore conclude that WPL has not infringed SAS Institute’s copyrights in the SAS Components by producing WPS.

In my first judgment I concluded, in summary, as follows:

Again, counsel for SAS Institute submitted that the judgment of the CJEU required me to reconsider these provisional conclusions. In part, he relied on essentially the same arguments with regards to the SAS Language and functionality that I have considered above.

In addition, he argued that the Court’s answer to Questions 8-9 showed that Pumfrey J’s approach to the interpretation of Article 1(2) of the Software Directive could not be applied to Article 2(1) of the Information Society Directive. Rather, it was necessary for this court to consider the various similarities between WPS and the SAS Manuals relied upon by SAS Institute, in particular the similarities in (i) formulae, (ii) keywords, (iii) default values, (iv) comments and (v) optimisations, and decide whether, in reproducing these in WPS, WPL had reproduced the expression of the intellectual creation of the authors of the SAS Manuals.

Counsel for SAS Institute particularly relied on [66]-[67] of the Court’s judgment as supporting this argument. I do not agree that those paragraphs lead to the conclusion for which he contended, however. The Court starts at [65] with the basic proposition that elements of a work may only enjoy protection under Article 2(a) if they amount to the expression of the author’s intellectual creation. Next, it says at [66] that the keywords, syntax, options, defaults and iterations consist of words, figures or mathematical concepts which are not, as such, an intellectual creation. In other words, they are “ideas, procedures, methods of operation or mathematical concepts”, to use the language of Article 9(2) of TRIPS and Article 2 of the WIPO Copyright Treaty. Next, it says at [67] that it is only through the choice, sequence and combination of such words, figures and mathematical concepts that the author can make an intellectual creation. As I have already remarked, it is not a controversial proposition to say that a protectable form of expression may be created through the combination of elements which in themselves are not protectable. In this respect, the Court was essentially repeating what it had said in Infopaq at [45]-[46]. The question remains, however, whether WPL has reproduced the expression of the intellectual creation of the authors of the SAS Manuals.

I remain of the view that, for the reasons I gave in my first judgment, the answer to this question is no. In so far as counsel for SAS Institute argued that WPL had reproduced compilations of (i) formulae, (ii) keywords, (iii) default values, (iv) comments and (v) optimisations from the SAS Manuals, I would repeat the answers I gave at [260]-[261], and in particular the first one. The authors of the SAS Manuals did not create such compilations, the authors of the SAS System did.

I therefore conclude that WPL has not infringed SAS Institute’s copyright in the SAS Manuals by producing or testing WPS.

In my first judgment I concluded, in summary, as follows:

It is important to note that SAS Institute alleged that WPL had acted in breach of the licence terms in two distinct ways. First, SAS Institute alleged that more than one employee of WPL had used copies of the Learning Edition purchased by WPL at least prior to March 2009. Secondly, SAS Institute alleged that WPL had used the Learning Edition for purposes which extended beyond the scope of the licence. I upheld both of these complaints, the first at [280]-[283] and [288] and the second at [284]-[286] and [289]-[290].

It should also be noted that Question 6 focused upon the second allegation, and the first was not mentioned in the summary of the judgment which was included in the order for reference. I do not recall why this was, but I presume that it was because at that time I did not regard the first allegation as adding materially to the second allegation when it came to the interpretation of Article 5(3). Be that as it may, counsel for SAS Institute has now presented arguments which require them to be considered separately.

As I noted in my first judgment, it is common ground that WPL purchased copies of the Learning Edition which were used by its employees. It is also common ground that WPL was the contracting party in respect of the licences granted by SAS Institute for the use of those copies. Nevertheless, SAS Institute contended, and I accepted, that on the true construction of the licence terms, the licence only extended to use by the Customer, that is to say, the individual employee who clicked on the “yes” button when installing the Learning Edition. Accordingly, use of the same copy of the Learning Edition by other employees, albeit on the same computer, was outside the scope of the licence.

Counsel for SAS Institute pointed out that the CJEU’s answer to Questions 6 and 7 referred to what “a person who has obtained a copy of a computer program under a licence” was entitled to do by virtue of Article 5(3). He submitted that this did not include either (i) employees other than the Customer or (ii) WPL in so far as WPL made automated use of the Learning Edition. I do not accept this argument for the following reasons.

As counsel for SAS Institute accepted, WPL is a legal person. As he also accepted, it obtained copies of the Learning Edition. It did so under licences. It is true that the licences were entered into by particular employees acting as agents for WPL. It is also true that the licences restricted the use of those copies of the Learning Edition to those specific employees. It also true that other employees of WPL used those copies in contravention of that restriction and that WPL is vicariously liable for such use. None of that detracts from the fact that WPL obtained copies of the Learning Edition under licence.

It follows that, by virtue of Article 5(3), WPL was entitled without SAS Institute’s consent to observe, study and test the functioning of the Learning Edition in order to determine its underlying ideas and principles. In my judgment it does not matter whether it exercised that right by the “licensed” employees or the “unlicensed” employees, leaving aside for the moment the fact that the “licensed” employees committed acts extending beyond the scope of the licence. Article 9(1) renders null and void any contractual restrictions contrary to Article 5(3). In my view this includes a contractual restriction on the employees by whom a legal person in the position of WPL can exercise the right under Article 5(3).

To put what is much the same point in a slightly different way, I consider that it makes no difference to the issue with regard to Article 5(3) whether WPL’s acts fell outside the scope of the licence because (i) the copies of the Learning Edition it purchased were used by “unlicensed” employees or (ii) the “licensed” employees used the copies of the Learning Edition for purposes which were not permitted by the terms of the licences. Either way, WPL acting by its employees used the Learning Edition in ways which fell outside the scope of the licences.

The position is no different in respect of any automated use of the Learning Edition by WPL, although I do not accept that there was any such use.

Counsel for SAS Institute submitted, and I agree, that neither the CJEU’s answer to Questions 6-7 nor its reasoning was very clear. He submitted, however, that, properly understood, the correct conclusion was that WPL was not protected by Article 5(3) because it had used the Learning Edition in a manner which fell outside the scope of the licences. Counsel for WPL made the opposite submission. It is therefore necessary to consider the Court’s reasoning with some care.

It is important to note that the Court begins at [48] by recording that WPL performed acts which fell outside the scope of the licence and that the Court states at [49] that it follows that this court “raises the question whether the purpose of the study or observation has an effect on whether the person who obtained the licence may invoke” Article 5(3).

The Court then observes at [50]-[53] that Article 5(3) entitles a licensee to observe, study or test the functioning of a computer program in order to determine its underlying ideas and principles, that this is consistent with Article 1(2) and that provisions to the contrary are null and void by virtue of Article 9(1).

So far, the judgment is perfectly clear. The difficulty lies in understanding the passage at [54]-[61] where the Court discusses, first, the requirement of Article 5(3) that the licensee determines the ideas and principles “while performing any of the acts of loading, displaying, running, transmitting or storing the programme which he is entitled to do” and, secondly, the proviso to Article 5(3) stated in the 18^th recital (recital [19] in the numbering in my first judgment).

The Court begins at [55] by saying that the determination of the ideas and principles “may be carried out within the framework of the acts permitted by the licence”. While this might at first blush be taken to suggest that it may not be done outside the scope of the licence, I think that counsel for WPL was right to submit that the better view is that the acts referred to are the acts of loading, displaying, running, transmitting or storing the program referred to in the preceding paragraph.

The Court then notes at [56] the proviso stated in the 18^th recital, namely that “these acts do not infringe the copyright in the program”. At [57] it says that the acts in question are those referred to in Article 4(a) and (b). It also notes that these are referred to in Article 5(1), and it goes on in [58] to note the 17^th recital (although not the somewhat different terms of Article 5(2)). Again, this seems to me to support the view that the acts referred to are the acts of loading, displaying, running, transmitting or storing (and to that extent reproduction of) the program.

The Court concludes at [59] that the copyright owner cannot prevent the licensee from determining the ideas and principles underlying the program where the licensee carries out “acts which that licence permits him to perform and the acts of loading and running necessary for the use of the program”, provided that the licensee does not infringe the owner’s rights. Again, it seems to me that the “acts” referred to first are the acts of loading, displaying, running, transmitting or storing the program.

In my view it is also significant that the Court does not say in [54]-[59] that the licensee’s entitlement is affected by the purpose for which it carries out the acts of loading, displaying, running, transmitting or storing the program, and in particular whether that is a licensed purpose or an unlicensed purpose. Consistently with the reading of those paragraphs that I have suggested above, this indicates that the answer to the question posed at [49] is no.

With regard to the condition that the licensee does not infringe the copyright owner’s rights, the Court draws attention at [60] to Article 6(2)(c), which provides that information obtained through decompilation may not be used to develop a computer program substantially similar in its expression or for any other infringing act. It goes on to say in [61] that it “must therefore be held that” the copyright in a computer program is not 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 … but merely studied, observed and tested that program in order to reproduce its functionality in a second program”. In other words, the Court appears to be saying that the condition which the Court has read into Article 5(3) in the light of the 18^th recital should be interpreted as having the same effect as Article 6(2)(c). Certainly, the Court is clearly stating that WPL complied with the condition.

Accordingly, I conclude that WPL did not lose the protection of Article 5(3) due to the fact that it performed acts which fell outside the scope of the licence.

In my first judgment I expressed the provisional view that Article 5(3) protected the various ways in which WPL had used the Learning Edition listed in [289] “except perhaps the last”: see [315]. Counsel for WPL submitted that, despite the hesitation expressed there, I should conclude that WPL’s use of the Learning Edition to generate zip code data was covered by Article 5(3).

As counsel for WPL submitted, the position on the evidence with regard to this act is as follows:

Counsel for WPL submitted that, by doing this, WPL had not gone beyond ascertaining the SAS Components’ method of operation and then creating its own program. There was no claim by SAS Institute that either the complete list of zip codes or the set of non-standard zip codes were copyright works in their own right. Nor was there any basis on which the court could conclude that, in writing the relevant part of WPL, WPS had reproduced the expression of the intellectual creation of the author(s) of the relevant part of the SAS Components. I accept this submission.

Counsel for SAS Institute submitted that, by running the Learning Edition, WPL had reproduced the SAS Language and that this was an infringement of the copyright in the SAS Language to which Article 5(3) was not a defence.

This argument is only open to SAS Institute if it is entitled to rely on the SAS Language as a distinct copyright work in its own right. I have concluded that that is not the case. In any event, I do not accept that it has been established that WPL reproduced the SAS Language by running the Learning Edition.

I therefore conclude that WPL’s use of the Learning Edition was within Article 5(3), and to the extent that such use was contrary to the licence terms they are null and void by virtue of Article 9(1), with the result that none of WPL’s acts complained of was a breach of contract or an infringement of copyright.

In my first judgment I concluded, in summary, as follows:

Counsel for SAS Institute submitted that these conclusions had to be reconsidered in the light of the CJEU’s judgment, and that I should now conclude that the WPS Manual infringed to a greater extent than I had previously concluded and that the WPS Guides infringed. In support of this submission he relied on a number of the arguments I have already considered above, in particular the arguments regarding the SAS Language, functionality and the passage at [66]-[67] of the CJEU’s judgment. I do not accept that any of these arguments leads to the conclusion that the WPL Manual infringes to a greater extent than I previously considered or that the WPS Guides infringe.

For the reasons given above, I dismiss all of SAS Institute’s claims except for its claim in respect of the WPS Manual. That claim succeeds to the extent indicated in my first judgment, but no further.