The Federal Circuit Must Correct Texas Court’s Misapplication of Copyright Law in SAS Institute Appeal

Editor’s note: the author submitted an amicus brief supporting SAS Institute in this case.

SAS Institute is a software company in North Carolina. Founded in 1976, it employs thousands of people in the United States and thousands more around the world. World Programming, Ltd. (WPL) is a British company that decided to build a clone of SAS’s popular analytics software and, as several courts have found, broke the law to do it. After a decade of litigation across two continents and an unpaid multi-million-dollar judgment, the parties are once again in court. This time, however, WPL’s arguments pose grave dangers to all owners of other copyrighted works.

WPL did not try to compete with SAS by building a different or better product. Instead, it ordered copies of SAS’s products under the guise of an educational license, but with the true intent to reverse-engineer and copy key elements, including the selection and arrangement of its outputs, and even the manuals licensed users receive from SAS. The result is that WPL produced a clone, taking the exact same input and producing the exact same output that SAS does. Avoiding the years of investment and fine-tuning that SAS undertook to create its market-leading software, WPL undercut SAS’s price in the market and lured away SAS’s customers.

A Mixed Bag from the Courts

In 2009, SAS sued WPL in Britain, where it won a limited judgment that WPL infringed on SAS’s copyrights in the manuals that accompany its software. But many WPL customers are in the United States, so SAS sued here, too. In litigation in federal court in North Carolina, the court held that WPL breached its license with SAS, fraudulently induced SAS to provide materials WPL intended to copy and engaged in unfair and deceptive trade practices. That resulted in a jury award of over $79 million for SAS. In 2017, the U.S. Court of Appeals for the Fourth Circuit affirmed the ruling. But the story was far from over.

When SAS sought to enforce part of the judgment in England, the English High Court declined to recognize it, and even purported to forbid SAS from filing suit to collect it in the United States. In response to WPL’s evasions, SAS sought and obtained an injunction to prohibit WPL from licensing its software to new customers in the U.S. On appeal, the Fourth Circuit again affirmed for SAS, stating: “WPL cannot participate in the U.S. market, violate U.S. law, and expect to avoid the consequences of its conduct.” To date, however, WPL has paid only a tiny fraction of what it owes.

The case in North Carolina did not resolve SAS’s copyright infringement claims, so SAS brought a copyright suit in Texas district court. The Copyright Office granted registrations for SAS’s computer programs, certifying they are protected under American copyright law. Nonetheless, WPL claimed what it copied was not protected by copyright law, and the district court accepted those assertions with virtually no analysis. Instead, the court essentially ignored the copyright registrations and required SAS to explain why its software was immune from a grab-bag of doctrines WPL raised and re-prove the copyrightability of its works. This would be like telling a homeowner that the deed to their property was all well and good, but now they need to prove that what they own really is a house. And when the court wasn’t satisfied with SAS’s answer, it dismissed the case.

Big Implications for Copyright Owners

SAS rightly appealed, and the case will be heard by the U.S. Court of Appeals for the Federal Circuit, which has jurisdiction because the complaint included patent claims. Because the district court got the law so completely wrong, I co-authored an amicus brief to the Federal Circuit. If the district court’s approach is upheld, it would undermine the fundamental purposes of copyright registration and would leave copyright owners—especially the many creators who operate independently as small businesses—in an untenable position when they try to enforce their rights against infringers.

For the sake of creators and copyright owners across the country, as well as SAS, the Federal Circuit should reverse the district court’s misapplication of copyright law and allow the infringement suit to go forward. It is long past time that WPL be held accountable.

Image Source: Deposit Photos
Author: AndreyPopov
Image ID: 211210396