Last month, the Federal Circuit issued its opinion in SAS Institute, Inc. v. World Programming Limited, a copyright case we have been following because it attracted several amicus briefs. In this case, SAS Institute appealed a decision by the Eastern District of Texas to dismiss claims of copyright infringement by World Programming. SAS contended the district court incorrectly analyzed copyrightability and incorrectly excluded witness testimony. In an opinion authored by Judge Reyna and joined by Judge Wallach, the Federal Circuit affirmed the district court’s holding. Notably, Judge Newman dissented. This is our opinion summary
Judge Reyna presented the facts of the case:
On July 18, 2018, SAS filed suit against WPL in the district court for the Eastern District of Texas. The complaint alleged a number of claims, including copyright infringement of the SAS System and SAS user manuals. This appeal, however, is limited to three issues. First, SAS argues that the district court’s copyrightability determination is erroneous as a matter of law. Next, SAS asserts that the district court abused its discretion in its use of a ‘special hearing’ to determine copyrightability. Finally, SAS argues that the district court abused its discretion when it rejected SAS’s expert report. As shown below, the resolution of the three issues rests on the question of copyrightability.
After presenting the facts of the case, Judge Reyna first addressed the U.S. Constitution and the Copyright Act. He explained that for computer programs the determination of copyrightability “often involves assessing which input and output formats of a computer program are copyrightable, and which are not.” He went on to explain that with computer programs “it becomes ‘more difficult’ to distinguish between unprotectible ideas, processes, methods or functions, on the one hand, and copyrightable expression, on the other.”
He then addressed each issue presented in the appeal.
First, regarding SAS’s claim to entitlement to copyright protection, Judge Reyna concluded that the district court applied an established analytic framework in applying the abstraction-filtration-comparison test. He agreed with the district court that SAS “established a required threshold of protectability,” and that in response WPL established “at least a substantial portion of the allegedly infringed elements of the SAS System are not protectable by copyright.” Judge Reyna then explained that “SAS failed to rebut WPL’s assertion and did not otherwise provide evidence in relation to the ‘filtration’ step under the three-part test.” Moreover, “SAS did not show that its program was eligible for protection at any level of
abstraction.”
Next, Judge Reyna turned to the second issue. He rejected the argument that the copyrightability hearing was “inconsistent with” Federal Rules of Civil Procedure 52 and 56. He explained that the hearing “took the form of a pre-trial conference,” which he said is a procedure “well-supported by the Federal Rules of Civil Procedure and within the district courts’ discretion to manage pre-trial matters under Fifth Circuit case law.” Furthermore, in this hearing, Judge Reyna indicated, “the district court correctly found that a jury would be unable to conduct a proper infringement analysis” because “SAS failed to provide evidence on which of the challenged elements of the SAS System were copyrightable.”
Finally, Judge Reyna addressed the third issue regarding the exclusion of expert testimony. He explained that expert reports that are unreliable or unhelpful to the jury may be excluded under Federal Rule of Evidence 702(a). He discussed how the district court “insisted that SAS identify its infringement theory with specificity” and how nevertheless “SAS’s expert either refused or was unable to assist the court in clarifying” the theory with specificity. Therefore, he concluded, the district court did not abuse its discretion that “the expert opinion amounted to no more than theoretical speculation.”
In conclusion, the majority held that the “district court correctly determined as a matter of law that SAS failed to establish that the elements it asserted to have been infringed were copyrightable expressions.” As a result, the court affirmed the district court’s judgment.
As mentioned, Judge Newman dissented from the court’s ruling. She noted that “SAS has several registered copyrights” and indicated the court’s holding “that these software programs are not copyrightable . . . is a far-reaching change.” Her dissent explored in detail why she believed the district court and majority’s ruling “contravenes the Copyright Act and departs from the long-established precedent and practice of copyrightability of computer programs.” She summed up her view this way:
The panel majority does not discuss the selection, combination, and arrangement of the program elements, although this is a foundation of software copyrightability, as illustrated in precedent, policy, and public understanding. Nor does the panel majority resolve the issues raised with respect to the burden of proof. The legal and policy premises of copyrightability of computer programs have heretofore been settled; there is no cause for judicial initiative to disrupt this important area of commercial and societal interest. I respectfully dissent.