SAS Wins Software Reverse Engineering Case on Contract Breach

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By Anandashankar Mazumdar

A U.K. software developer that reverse-engineered the SAS programming environment is liable for breach of contract for violating the licenses that came with SAS Institute Inc.’s statistical software, a federal appeals court ruled Oct. 24.

The breach of contract finding meant there was no reason to rule on SAS’ copyright infringement claims against World Programming Ltd., the U.S. Court of Appeals for the Fourth Circuit said ( SAS Institute, Inc. v. World Programming Ltd. , 4th Cir., No. 16-1808, 10/24/17 ).

The appeals court knocked out a federal district court’s conclusion that World Programming didn’t commit copyright infringement by using its licensed copies of SAS software to make its system capable of running programs written in the SAS programming language.

The loss of the lower court’s copyright ruling is a blow to developers who want the freedom to use some portions of copyright-protected software to create new products. Reverse engineering is legal in the U.S., but this case illustrates how it can still be barred as a result of a license.

The appeals court, affirming the trial court, rejected SAS’ request for an injunction against World Programming. It disagreed with SAS that it had no adequate remedy absent an injunction, noting that SAS has already won a $79 million judgment against World Programming.

Loss of Copyright Ruling

The SAS software suite is widely used for statistical analysis, business intelligence, and other functions. World Programming used its SAS software copies to create a product that could operate programs written for the SAS environment. This way, users who already knew how to program for SAS wouldn’t have to learn a new programming language to switch to the World Programming System.

Jonathan Band, a Washington-based copyright lawyer who drafted a friend-of-the-court brief supporting World Programming, told Bloomberg Law he was disappointed that the Fourth Circuit chose to vacate the copyright ruling.

“It could have left the district court’s infringement ruling stand undisturbed,” Band said in an e-mail message.

A similar case involving Google Inc. and Oracle Corp. is currently before the U.S. Court of Appeals for the Federal Circuit. Google copied portions of Oracle’s Java programming language to make it easy for application developers to write software for the Android mobile operating system.

The European Court of Justice and the U.K. High Court rejected SAS’ claims in 2012 and 2013, after finding that World Programming’s actions were allowed by the European Software Directive regardless of any licensing restrictions.

Band said that the different outcome in the European case illustrates the need for a provision that bars enforcement of contracts that purport to override legal rights.

“The EU recognized that there was little point in creating a reverse engineering exception if it could be rendered ineffective by a license term,” Band said.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at AMazumdar@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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