A $79m copyright lawsuit that spiralled into a transatlantic tug of war between UK and US judges has taken its latest step – with an appeals court preventing an American firm diverting the revenues of a British software company.
Earlier this week the Court of Appeal in London made injunctions preventing SAS Institute Inc from legally enforcing US debt orders made against Brit biz World Programming Limited (WPL), following rulings by American judges.
The dispute between the two companies began in the late 2000s. One of SAS's products, imaginatively named the SAS System, was a statistical analysis software suite. WPL bought a licence for SAS System, observed how it worked and wrote its own competing suite. SAS then sued WPL in the UK, and, after running up and down the legal ladder right to the EU courts, lost.
Among other things, courts on the eastern side of the Atlantic ruled that software functionality (as opposed to code) cannot be copyrighted. They also struck down the part of SAS's End-User Licence Agreement (EULA), which said, in legalese, "thou shalt not use this software to figure out how to make a competing product" on the grounds that EU directives contradicted the SAS EULA.
SAS then filed the entire lawsuit again in the US courts in January 2010 to get a more favourable result, having "chosen to ignore", in the Court of Appeal's words, the subsequent UK judgment in WPL's favour for $5.4m.
EULAve to do better than that
A jury in North Carolina duly ruled in SAS's favour in 2015 on some of its claims (case 5:10-CV-25-FL - PDF), upholding the very EULA that the High Court in London ruled was null and void – and finding WPL had committed fraud. The British company was ordered to pay SAS a total of $79m in compensation as a result, made up by trebling around $26m in direct losses, which is something US law allows its courts to do.
However, a jubilant SAS went too far and applied to the High Court in London for an enforcement order letting it collect the $79m from WPL's worldwide revenues, including non-US customers. In effect, SAS wanted judges who ruled against it to let the US firm proceed in Britain as if it had won its failed 2010 London lawsuit against WPL.
This did not go down well, triggering years of what Court of Appeal judge Lord Justice Males described as "wrangling". WPL applied for an anti-suit injunction in London to stop SAS from helping itself to WPL's non-US revenues. SAS hit back by running to the US courts for an anti-anti-suit injunction (called an All Writs Action in US law).
US judges in the Fourth Circuit Court of Appeals, siding with SAS, described one of the UK rulings against the US software firm as an "affront" and accused WPL of having "shown a lack of respect for American courts and American law". On top of that, the American judges also hit out directly at their British counterparts, sniffing:
Comity is not advanced when a foreign country condones an action brought solely to interfere with a final U.S. judgment.
Even though a British High Court judge sitting in late 2019 declined to continue WPL's anti-suit injunction, which was initially granted as an interim thing until both sides could make full legal arguments about it, Britain's judiciary were not going to let these insults slide.
'Infringing the sovereignty of the United Kingdom'
Boiling the case down, the most recent hearing in Britain saw WPL appealing against the High Court's late 2019 decision. WPL argued for its anti-suit injunction to be restored; SAS said it should be left alone to continue collecting its dues in accordance with the US judgment in its favour.
Lord Justices Males, Flaux and Popplewell granted partial victory to WPL on Tuesday, quashing the original injunction but making new ones that prevented SAS from obtaining US court orders diverting revenues paid to WPL's UK bank accounts into its own coffers.
But that wasn't all; there was also the little matter of the US judicial insult from earlier. In its full 35-page judgment the Court of Appeal said:
It is the policy of the United States courts that damages for certain types of claim should be trebled and that judgments for trebled damages should be enforced; but it is the policy of the United Kingdom Parliament, enacted in primary legislation, that the non-compensatory element of such damages should be clawed back.
Just to hammer the point home, the British judges also accused the US court of "infringing the sovereignty of the United Kingdom" by making orders that let SAS legally help itself to payments made by WPL customers to WPL's UK bank accounts. The judges did, however, draw a sharp line between contracts subject to US law (i.e. between American customers and WPL's US operation, which SAS can garnish without the UK courts getting upset) and debts to WPL governed by English law.
SAS did win one small crumb from the British table, however: the Court of Appeal refused to find as a fact that SAS was trying to destroy WPL and force it out of business.
It seems likely that this is not the end of a copyright lawsuit that got seriously out of hand. ®