Legal Briefing

High Court refers questions to ECJ in ‘software clone’ case

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TMT | 01 November 2010

In SAS Institute Inc v World Programming Ltd [2010], the High Court had to consider whether the production of software that emulates the functionality of an earlier software program, but without there being any copying of the source code, amounts to copyright infringement. Following its judgment in July 2010, the High Court has referred several questions to the European Court of Justice (ECJ) concerning interpretation of the Software Directive (Council Directive 91/250/EEC) and the Information Society Directive (European Parliament and Council Directive 2001/29/EC). The decision of the ECJ is probably a couple of years away but it will provide much-needed clarity on various key issues relating to so-called ‘software clones’ or ‘drop-in replacement’ programs.


SAS, a leading developer of analytical software, brought copyright infringement proceedings against World Programming Ltd (WPL) relating to WPL’s ‘World Programming System’ (WPS), which sought to emulate the functionality of components of SAS’s data processing and analysis system, ie as a drop-in replacement for SAS’s components. While WPL admitted that its programmers had studied SAS manuals and had used them as sources of information, WPL did not have access to the source code of the SAS components and had not sought either to copy any of the text or structural design of the source code, or to decompile the object code.

The proceedings were dealt with on an expedited basis before Arnold J, who gave his judgment on 23 July 2010. While he concluded that various matters of interpretation under the Software Directive and the Information Society Directive were not acte clair, and therefore required referral to the ECJ, he did form his own provisional views as to whether WPL had infringed SAS’s copyright.

key findings

Arnold J reviewed, in detail, the legislative history (at domestic, European and international levels), as well as several earlier cases that had considered this legislation.

In particular, Arnold J reviewed Pumfrey J’s judgment in Navitaire Inc v Easyjet Airline Co & anor [2004], where Pumfrey J had considered the correct interpretation of Article 1(2) of the Software Directive. This provides that:

‘Protection… shall apply to the expression in any form of a computer program. Ideas and principles which underlie any element of a computer program, including those which underlie its interfaces, are not protected by copyright… ’

Pumfrey J had concluded that Article 1(2) should be interpreted to mean that, under the Software Directive, copyright does not protect programming languages, interfaces or the functionality of a computer program (his finding on functionality was subsequently upheld by the Court of Appeal in Nova Productions Ltd v Mazooma Games Ltd & ors [2007]). While Arnold J felt that, in respect of each of these areas, the law was not acte clair and that a reference to the ECJ was therefore required, he did indicate his provisional view that Pumfrey J’s analysis was correct, the key question being ‘the nature of the skill and labour’. Copyright in a computer program protects the skill, judgment and labour in devising the form of expression of the program, ie its design and source code. Accordingly, Arnold J concluded, in his view:

‘The functionality of a computer program falls on the wrong side of the line drawn by Article 1(2) of the Software Directive… ’

Assuming that this interpretation is correct, the fact that WPS replicates a large part of the functionality of the SAS components would not lead to a finding of copyright infringement, where WPL did not reproduce any of the design of the SAS components or the actual source code. Similarly, where WPS reproduces elements of the SAS programming language and certain interfaces, this would not, on this interpretation of Article 1(2), lead to a finding of copyright infringement.

A further issue before the High Court concerned SAS’s claim that WPL had infringed copyright in its manuals (being literary works to which the Software Directive does not apply) by reproducing substantial parts of those manuals in the source code of WPS. Again, while Arnold J considered the issue not to be acte clair, requiring a referral to the ECJ on interpretation of the Information Society Directive, his provisional view was that it would similarly not be infringement of the copyright in a manual describing the functions of a computer program, to use the manual as a specification of the functions that are to be replicated and, to that extent, to reproduce the manual in the source code of the new program. Again, it was a question of the kind of skill, judgment and labour involved.

A third issue before the High Court concerned WPL’s use of the ‘SAS Learning Edition’ program, which was subject to a ‘click-through’ licence. The licence provided that the licensee must use the Learning Edition only for ‘non-production purposes’, from which SAS excluded any commercial use. Arnold J agreed that WPL’s use of the Learning Edition went beyond the scope of the licence. However, he went on to consider whether WPL would have a defence under Article 5(3) of the Software Directive. This provides that a person having a right to use a copy of a computer program shall be entitled, without the rightholder’s authorisation, 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.’

Again, Arnold J identified this as an issue where clarification from the ECJ was required, as it was ‘attended by considerable difficulty’. However, his provisional view was that, if a licence permits a licensee to perform acts of loading, running and storing the program when using it for the particular purpose permitted by the licence, it should likewise be permitted to perform those acts to observe, test or study the functioning of the program to determine the ideas and principles that underlie any element of the program. As the provisions of Article 5(3) could not be overridden by contract, this would mean that the terms in the licence for the Learning Edition, which made it an infringement for the user to observe, study or test the Learning Edition to determine the ideas and principles that underlie any element of the program, were null and void.

Finally, Arnold J found that WPL had infringed copyright in parts of the relevant SAS manuals by substantially reproducing them in the WPL manual.

What happens next?

Interestingly, both sides have issued press releases claiming victory. Arnold J’s clear provisional view is that WPL has not, except in the case of the WPL manual (which WPL has indicated it is amending), infringed SAS’s copyright. However, the final resolution of SAS will depend on the response of the ECJ to the very detailed questions referred to it. This response will be some time away and so, for the time being, despite Arnold J’s clear views, there remains some uncertainty as to the correct approach to be adopted in such cases.