World Programming Ltd. (UK software company) purchased software from SAS Institute, Inc. (North Carolina company) under a click-wrap agreement and even clicked “I agree”. This SAS license prohibited reverse engineering, limited the use of the software “non-production purposes” and stated that North Carolina law applies. World Programming admits that is knew of a prohibition of reverse engineering. World Programming then studied and learned how SAS operates and began offering competing software to SAS that could run programs written in the SAS language. SAS sued in the United Kingdom for copyright infringement and breach of contract (e.g. no reverse engineering). The UK courts held that ““copyright in a computer program does not protect” either “programming languages,” such as the SAS language, or “the functionality of the program”. It is noteworthy that World Programming did not have access to the source code. The UK ruled against SAS on the copyright claim. The UK counts then held that “none of [World Programming] acts complained of was a breach of contract” because World Programming’s study of the SAS software was lawful despite any clickwrap license purportedly barring such conduct. The provision against reverse engineering in the UK/EU laws “observation and study is lawful, and contractual terms restricting such acts are null and void.”

In response, SAS brought another lawsuit in North Carolina and won on the contract claim. The US lawsuit also included a fraudulent inducement and unfair trade practices under North Carolina law. The North Carolina jury found World Programming liable and awarding SAS $80 million in damages. World Programming applied and the 4th Circuit affirmed and sated that the UK case did not prevent the win in North Carolina.

World Programming has asked the US Supreme Court to hear the case.

So, what’s the lesson. When drafting software license agreements, especially those that have international use, one size does not fit all. The software license should be drafted to include the laws of the jurisdictions where you have customers. Also, when litigating internationally, perhaps SAS should not have agreed that while SAS’s license stated that it was to be “governed by the laws of the state of North Carolina and the USA,” SAS should not have agreed “that there was no difference between those laws and English law.”