To recap: SAS developed its own SAS software programs, in the SAS language, for data processing and analysis, together with technical manuals. World Programming ('WP'), a competitor, predicted that there would be considerable market demand for competing software which could execute application programs written in the SAS language and accordingly penned its own software ('WPS') for that purpose. WP sought to emulate much of the functionality of the component's of the SAS programs in order to ensure that its applications worked the same way whether they ran on WPS and on SAS components. SAS sued for infringement of its copyright in pretty well everything it could think of.
After a thorough review of the law and the facts (and it's a brave man who says Arnold J is anything but thorough), Arnold J dismissed all SAS's copyright infringement claims except those relating to WP's reproduction of the SAS manuals through a process elegantly described as "linguistic reproduction".
While WP was a competitor of SAS, it was also curiously a licensee. This is because SAS developed a "learning edition" of its software in order to educate users as to its full functionality. The use of this learning edition governed by a contractual licence. After holding that WP had breached the licence by using the software for "non-production" purposes and by allowing use by employees who had not "clicked through" the licence and therefore fell outside the definition of "customer", Arnold J nonetheless referred a question to the CJEU as to whether WP's use of that edition was permitted by Article 5(3) of the Software Directive. By that provision
"The person having a right to use a copy of a computer program shall be entitled, without the authorisation of the right holder, to observe, study or test the functioning of the program in order to determine the ideas and principles which underlie any element of the program if he does so while performing any of the acts of loading, displaying, running, transmitting or storing the program which he is entitled to do".Said the CJEU, copyright in a computer program could not be infringed where, as here, the lawful acquirer of the licence did not have access to the source code but merely studied, observed or tested the program in order to reproduce its functionality in a second program. Arnold J accordingly held that, while use of the learning edition was restricted to specific employees who had entered into licence agreements, WP had still lawfully acquired the right to use the program. On that basis, Article 5(3) invalidated any term of the licence that restricted the manner in which that right could be enjoyed.
The Court of Appeal (Lord Justice Lewison, who delivered the judgment, together with Lords Justices Tomlinson and Vos) dismissed the appeal in its entirety. Why?
* In deciding whether the reproduction of elements described in the SAS manuals was a reproduction of the expression of the intellectual creation of the author of the user manual (this being the CJEU's Infopaq formulation), what was relevant was not the intellectual creation, but the expression of the intellectual creation of the author of the manual.
* The functionality of a computer program was not a form of expression (which was capable of being protected by copyright), but was more like an idea (which wasn't).
* For an infringement of copyright to exist, the allegedly infringing work had to represent the claimant's work in some real sense.
* It would be contrary to the policy of not only the Software Directive but also the InfoSoc Directive if SAS could secure copyright protection for the functionality of its program indirectly via its manual, which simply explained that functionality.
* Since the CJEU had unequivocally held that the fact that WP had used the learning edition for a purpose which was not permitted by the terms of the licence did not mean that it could not rely on Article 5(3) of the Software Directive, a contractual restriction was invalid to the extent that it prohibited the observation, study or testing of the functioning of the program in order to determine the ideas and principles underlying it.
* It was possible for the "customer" entering into the licence agreement to be a company and, being a licensed company, WP was entitled to use the learning edition and there was no restriction on the number of employees whom WP might authorise to observe, study and test the program.
This Kat notes the Court's reiteration at  of a rule of contractual construction that seems to him to have fallen a little out of favour in these days of bending over backwards to accommodate the real or imagined intention of the parties to a contract -- he's talking of the contra proferentem rule. As the Court said (and incidentally disagreeing with Arnold J who reached his conclusions without feeling the need to invoke it):
"... one cannot forget that the licence agreement is offered on a take-it-or-leave-it basis. The purchaser has only two choices: click on the "Yes" button or click on the "No" button. There is no room for negotiation. If there were any doubt about the meaning of the licence at this stage, in my judgment the application of the contra proferentem principle would tip the balance in WPL's favour".
|In the wrong blog ...?|
"Parturient montes, nascetur ridiculus mus".