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Doug Henschen
Doug Henschen
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Software Innovation At Stake in SAS Suit

Does World Programming's SAS clone infringe on copyrights? Pending court ruling could put tech investment in jeopardy.

There once were three tiny swine. One lived in a house made of tall grass stalks, one lived in a house made of brushwood and one lived in a house made of ceramic blocks.

You might think you know this story, but it's not the one you're thinking of. You see, under European law, stories and poems are no better protected than software. So I have every right to sell my little yarn, even if it bears a striking resemblance to the story of The Three Little Pigs.

In the software domain, World Programming Ltd. (WPL), a British software developer, has cited European law in its defense against a copyright infringement suit brought by SAS. You see, the Cary, NC-based analytics vendor has a problem with the fact that WPL's World Programming System (WPS) runs SAS code and SAS procedures while selling at a fraction of the cost of SAS software.

"European law provides that one can observe the operation and functioning of a computer program and develop interoperable or alternative solutions which perform the same function," declared WPL in sensational press releases alluding to its "David versus Goliath" battle against a giant "monopolist."

SAS sued in London High Court and in Raleigh, NC, last November. The case in the U.S. has yet to be heard, but the British court took up the matter at record speed at WPL's request. The trial concluded in early July, but the ruling issued in late July did not deliver a definitive outcome. The High Court slapped WPL's hand for copying a SAS user manual, but it referred the heart of the case -- the issue of software copyright infringement -- to the European Court of Justice (ECJ) in Brussels.

If the court finds WPL is not infringing, look out software industry. It would then appear that Britain's Autonomy has an unfair monopoly on Autonomy software, Germany's SAP has an unfair grip on SAP copyrights and that U.S.-titan IBM should really open up its patent portfolio for "observation."

Could it really be that European law turns a blind eye to cloning? WPL's attorney, Alexander Carter-Silk, says the law is much the same in Europe as it is the U.S. "Software is protected by copyright much like a literary work," he told me in an interview after last week's non-ruling. "What copyright stops is taking a program and using the same code, much the same as copying the words in a book or a poem."

Carter-Silk is the head of IP, Technology and Commercial at Speechly Bircham, a law firm reputed to know European law backwards and forwards. What European law does not protect, Carter-Silk says, is the function that software performs and how it performs that function. More specifically, Article 5 (3), an exclusion built into European law, says licensees can observe software to work out what it does and how it does it. So, say WPL and Carter-Silk, if you can use different code to carry out the same functions and yield the same results derived by another software package, you are protected under the law.

From SAS's perspective, an ECJ ruling in favor of WPL will mean that no software is safe. "If you can study somebody's software and their manuals in detail, smart programmers can figure out how everything works without having to put forth the intellectual effort or invest in the thousands of man-years it might take to develop that software from scratch," SAS General Counsel John Boswell told me last week.

Unfortunately, justice will not be swift. The one thing Carter-Silk and Boswell agreed upon is that it may be two to three years before the ECJ takes up the case. That's typical in U.S. and European courts, sad to say.

The only good news is that Justice Arnold of the London High Court clearly saw that this case would surely be appealed and sent to a higher court. Rather than subject both parties to the delay of going through the British equivalent of our Supreme Court, he sent the case directly to the ECJ, which is the highest authority on such matters.

It appears this is the first case that will force a detailed interpretation of Article 5(3). Let's hope the case is reviewed sooner rather than later and that the court finds in favor of protecting intellectual property.

Make no mistake. This is not a defense of high-priced software. SAS does not have a monopoly on analytics. You have a choice. There are lower-cost alternatives to SAS software, like open-source R, that also happen to be original.

In my opinion, an ECJ ruling in favor of WPL would mean that you don't need R&D and blood, sweat and tears to start a software company. You would just need creative coders who can artfully copy what others create.

If that's the law of the land, then what motivation is left for software innovation?

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