SAS INSTITUTE, INC. v. WORLD PROGRAMMING LIMITED
US Court of Appeals for the Fourth Circuit, Wilkinson, Oct. 24, 2017,
Res Judicata – Copyright and contract dispute was not precluded by a United Kingdom decision on a similar issue between the parties
Facts:
SAS sells data analysis and business analytics software.
WPL wanted to make software compatible with SAS programs, and so it obtained several copies of the SAS software. After analyzing the software, WPL modified its own software to be compatible with programs written for SAS.
In 2009, SAS filed suit against WPL in the United Kingdom for copyright infringement and breach of license agreement.
The UK High Court found that under the EU Software Directive, “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” are copyright protected, and that “a licensee is entitled…to determine the ideas and principles which underlie any element of the program” if he does so while he “carries out acts covered by that license and acts of loading and running necessary for use of the computer program.”
However, the UK court found that copyright infringement could exist for reproduction of elements in the user manual.
In 2010, SAS filed suit against WPL in North Carolina for copyright infringement, breach of license agreement, and various claims under North Carolina law.
WPL moved to dismiss the case, arguing that it was already decided by the UK court. This was denied by the trial judge.
The case proceeded to trial and SAS was awarded $26,376,635 in damages which was trebled under North Carolina’s Unfair and Deceptive Trade Practices Act. Total damages then totaled just under $80 million.
SAS also sought an injunction against WPL, which was denied.
Res Judicata – Requires:
(1) a final judgment on the merits in a prior suit;
(2) an identity of the cause of action in both the earlier and the later suit; and
(3) an identity of parties or their privies in the two suits.
Res Judicata – Ultimately, it depends on whether the party has “previously had a fair shot with respect to the claims”
Res Judicata – A decision from a foreign court is not entitled to preclusive effect, particularly where the foreign court’s determination involves different policy than the domestic court
From the Case: Because the UK Court applied UK law and policy and because the US suit involved US law and policy, and because these policies are different, the case was not barred by RJ. US law is more protective of intellectual property and NC law is more protective of the “sanctity of contract.”
Contracts – North Carolina courts “do not find ambiguity in contractual language simply because the parties dispute its meaning.” Look to definitions, then common use.
Reverse Engineering – Definition- Reverse engineering involves analyzing a system to identify its components and their interrelationships, generally in order to create a similar product. Does not require examination of source code.
Injunction – To obtain an injunction, a party must show:
(1) that it has suffered an irreparable injury;
(2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury;
(3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
(4) that the public interest would not be disserved by a permanent injunction.
From the Case: In light of the fact that damages were awarded prospectively and likely could not be recovered if an injunction was put into place, injunction against WPL was properly denied. Given the denial, the parties can come to a new agreement.
From the Case: To hold that the possessor of a $79 million judgment has received an inadequate remedy would be astonishing in the absence of firm evidence of that judgment’s illusory character, which was not presented here.