A recent case in the English High Court – SAS Institute v World Programming – has confirmed what the software industry has known for some time: that copying the functionality of a computer program does not constitute copyright infringement in the UK. The outcome, however, saw the English High Court referring several fundamental questions about the extent of copyright protection for software to the European Court of Justice (ECJ). When the ECJ’s answers arrive, they could significantly change the way in which software companies produce, protect and market their products across the entire European market.

Background to the case

In the SAS Institute case, the English High Court was asked to consider whether software created by World Programming infringed SAS Institute’s copyright in its analytical software and manuals.

The case concerned the ‘non-literal’ copying of SAS’s software that occurred when World Programming created a program that mimicked the performance of SAS’s software. The court ruled in its preliminary finding that World Programming had not infringed SAS’s copyright in its analytical software.

So far, so good; the judgment is consistent with previous UK decisions by holding that it is not copyright infringement merely to copy the functionality of another computer program. However, the Court was also of the opinion that SAS’s claims raised a number of important issues on the interpretation of the EU Software Directive and the EU Information Society Directive. Since the Court has referred these issues for clarification, the ECJ must now rule on a number of important and complicated questions as to the nature of copyright protection for computer programs, programming languages and interfaces.

The law as it stands

Various international treaties and pieces of European legislation provide that computer programs are to be protected by copyright as literary works; for example, article 10(1) of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), article 4 of the WIPO Copyright Treaty and article 1(1) of the EU Software Directive. However, it is equally a fundamental principle of copyright law that ideas, procedures, methods of operation or mathematical concepts as such are not protected. The EU Software Directive specifically provides that copyright protection applies to the ‘expression in any form of a computer program’, but that the ‘ideas and principles which underlie any element of a computer program, including those which underlie its interfaces, are not protected by copyright’ (article 1(2)). 

Previous decisions by the English courts have held that copyright in computer programs does not extend to:
(i) programming languages
(ii) interfaces; or
(iii) the functionality of a computer program.

However, in SAS Institute, the English High Court failed to reach a final conclusion as to:
(i) the extent to which copyright protects ideas, procedures, methods of operation and mathematical concepts as distinct from expressions of those ideas, procedures, methods of operation and mathematical concepts
(ii) the extent to which copyright protects the functionality and interfaces of computer programs and the programming languages in which they are expressed; and
(iii) the test to be applied to determine what amounts to a reproduction of a substantial part
 
Following a detailed review of the legislative history behind the EU Software Directive, the EU Information Society Directive and previous rulings, the court was of the preliminary view that:
(i) programming languages were not protected by copyright under the EU Software Directive because the distinction between a computer program and its language is consistent with the distinction between expressions and ideas, procedures, methods of operation and mathematical formula. In reaching this view, the court accepted that there is room for debate on how broadly the concept of a programming language should be interpreted
(ii) interfaces are not protected by copyright under the EU Software Directive; and
(iii) it is not, without more, an infringement of copyright in a computer program to create a new computer program with the same functionality

With respect to these questions, however, the English High Court had doubts as to whether its conclusions correctly applied the EU Software Directive and the EU Information Society Directive. These doubts explain why the Court felt that a reference to the ECJ was required to resolve the issues raised by the case. Although the exact wording of the questions has yet to be agreed, the questions to be referred to the ECJ are likely to concern the nature and scope of copyright protection for software and the extent of certain exclusions from protection.

What happens next?

Software developers can take comfort from the fact that, in reaching its preliminary conclusion that World Programming did not infringe SAS’s copyright in its analytical software, the English High Court has not departed from previous English decisions dealing with this point. Nonetheless, the reference to the ECJ will provide much needed clarity on important aspects of the EU Software Directive and the EU Information Society Directive that deal with the extent to which computer software is eligible for copyright protection.

If the ECJ agrees with the court’s interpretation (by finding that only a certain types of computer software and programming are eligible for copyright protection), the decision could result in greater competition in the software industry. But it could also pose significant risks to the market shares of, and fees charged by, established software providers by opening the door for competitors to launch competing products emulating the functionality of existing software products.

The good news for software companies is that, in its ruling, the English High Court accepted that copyright protection: (a) is not limited to the text of the source code of a computer program; and (b) extends to protecting the design of the computer program (ie its structure, sequence and organisation). It found there to be a distinction between protecting the design of a computer program and protecting its functionality, and said that the key question in determining whether a computer program is entitled to copyright protection is the nature of the skill, judgement and labour involved. In other words, copyright in a computer program should protect the skill, judgement and labour in devising the form of expression of the computer program; ie its design and source code.

Even if the ECJ agrees with the interpretation adopted by the English High Court, it should be noted that the current approach of the English courts does not give carte blanche to software developers to copy the functionality or ‘look and feel’ of a computer program. The copyright protection that is afforded to other forms of works (for example, the protection afforded to graphic works) may restrict what competitors can do to launch a competing product.


Alistair Maughan is a partner and Deirdre Moynihan is an associate in the London office of Morrison & Foerster LLP