IP Law Daily, COPYRIGHT—Fed. Cir.: Software developers beware: General allegations of ‘creativity’ not enough to protect non-literal elements of code, (Apr 6, 2023)

By Matthew Hersh, J.D.

Where non-protectible elements of the code are identified, the developer was obligated to show that what remained was expression and not merely ideas.

A software developer failed to show that its suite of software could meet the threshold for copyrightability merely by asserting that the nonliteral elements of its code were “creative,” a three-judge panel of the U.S. Court of Appeals for the Federal Circuit has held. But the court’s opinion, which affirmed the district court’s grant of summary judgment in favor of a competing software developer, drew a sharp dissent from one of the panel members (SAS Institute, Inc. v. World Programming Ltd., April 6, 2023, Reyna, J.).

The parties in the lawsuit are North Carolina-based SAS Institute, and UK-based World Programming Ltd. The two companies, each of which offer a suite of suite of programs for the management and analysis of data, have been longtime adversaries in both the markets as well as the courts on both sides of the Atlantic. Their legal disputes, according to the court of appeals, have taken place in the courts of the United Kingdom and the European Union, federal district courts of Texas and North Carolina, and the federal appellate courts of the Fourth Circuit and now, the Federal Circuit.

The present lawsuit was filed by the U.S. company in the federal district for the Eastern District of Texas. After several initial skirmishes, the court held a hearing to determine whether the company’s software was protected by copyright. The trial court found that it was not, leading to this appeal.

Copyrightability. The court of appeals agreed with the district court. The U.S. company did not allege that the UK company purloined the literal wording of its code, but rather “nonliteral” elements such as its architecture, structure, sequence, organization, or the like. In a case like this, courts typically follow three steps. First, they “abstract” the program into its constituent structural parts, separating these elements of the program that are protectible as expression or unpredictable as ideas (for example, because they are common themes in computer programing, represent the only way that a program with that purpose may be written, or the like). Second, they filter out the unprotectible elements in order to get to the core of what is protectible in the program. Third, they compare what is left with the allegedly infringing software to determine whether it was copied. Did the trial court carry out this “abstraction-filtration-comparison” process correctly? The court of appeals said it did.

The fundamental shortcomings of the U.S. company’s approach, the court held, was that it simply failed to come up with evidence that the “filtration” process left anything protectible beyond. The UK company’s expert identified a number of different aspects of the code that was unprotectible, such open-source elements; elements borrowed from other programmers, well-known and conventional display elements, and the like. With that evidence in the record, the court of appeals noted, it was incumbent upon the U.S. company to come forward with evidence that what was remaining could, in fact, be protectible—either because those elements of the program were in fact protectible or because there were other elements of the program that rose above the level of mere idea to constitute original expression. But the software developer simply failed to do that, the court noted, instead simply asserting that its works were “creative” and that it had provided “repeated evidence of factual copying.” That would not do it, the court of appeals noted.

Dissent. Judge Newman dissented from the panel majority. In her view, the panel had taken too narrow a view toward the U.S. software company’s burden to showing copyrightability. To be sure, Judge Newman noted, certain aspects of the code were indeed too generic to be protected as expression. But that did not mean those elements should be discarded completely in the “filtration” step, Judge Newman argued. Rather, she noted, copyrighted works such as software “have a certain synergy in that the sum of their unprotected elements” may be a protectible whole.” Thus, Judge Newman concluded, the district court and the panel majority applied the wrong test.

The Case is No. 21-1542.

Attorneys: Dale M. Cendali (Kirkland & Ellis LLP) for SAS Institute, Inc. Jeffrey A. Lamken (Mololamken LLP) for World Programming Ltd.

Companies: SAS Institute, Inc.; World Programming Ltd.

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