SAS wins $79m judgment after finessing comity and collateral estoppel

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A $79 million judgment for SAS Institute earlier this month was based on the company’s federal copyright claim and various state-law claims,[1] but it also depended less directly on comity and several other principles of international law.

SAS is the world’s largest privately held software company and one of North Carolina’s largest private-sector employers.[2] These help make it a frequent litigant in the Eastern District of North Carolina, which includes its headquarters in Cary.[3] As is common in SAS’s intellectual property actions, the defendant on the losing end of the recent judgment is based overseas, near Southampton, England.[4]

SAS first sued World Programming Ltd. in September 2009 in the United Kingdom, alleging copyright infringement and breach of licensing agreement.[5] While the U.K. action was pending, SAS sued World Programming in the Eastern District with the federal copyright claim and state-law claims for breach of contract, fraudulent inducement, tortious interference with prospective economic advantage, and unfair and deceptive trade practices.[6] The U.S. action went through several rounds of procedural wrangling, including a trip to the Fourth Circuit on grounds of forum non conveniens, before progressing to summary judgment in October 2014.[7] Meanwhile, in January 2013, the U.K. Court ruled for World Programming on most of SAS’s claims.[8]

In short, SAS’s U.S. claims were based on allegations that World Programming reverse-engineered portions of SAS Learning Edition, a simplified product, copied portions of the underlying code, and also copied portions of SAS user manuals.[9] The claim of fraudulent inducement was based on SAS’s allegation that World Programming had misrepresented its intentions in obtaining a license to the software.[10]

In competing motions for summary judgment last year, the two sides argued the effect of the U.K. ruling on nearly every one of SAS’s claims.[11] Judge Flanagan granted SAS summary judgment on its breach-of-contract claim, citing the very ruling that had dismissed a similar claim in the U.K. court.[12] That court had found that the defendant’s actions fell outside the scope of the contract but nevertheless held that the relevant portions of the contract were void under E.U. law.[13] Citing the principals of collateral estoppel and comity, under which a court recognizes a foreign court's judgment as long as it's based on near-identical law and doesn't run afoul of local public policy, Judge Flanagan accepted the U.K. court’s factual findings and its construction of the contract yet rejected its ultimate conclusion as based on inapplicable law.[14] The two parties’ license agreements had specified U.S. federal law and North Carolina law, which don't depend on EU rulings, for resolution of any disputes.[15] That left little for the jury to determine earlier this month other than to calculate SAS’s damages at $26,376,635.[16]

Judge Flanagan used similar reasoning in rejecting World Programming’s argument that the U.K. court’s ruling on SAS’s copyright claim was entitled to preclusive effect under the doctrines of comity and collateral estoppel, as that was similarly based on E.U. law.[17] Nonetheless, she went on to grant the defendant partial summary judgment under U.S. copyright law, holding that it could not have infringed on SAS’s software copyrights, while leaving the jury to decide whether it had infringed on SAS’s copyright in its user manuals.[18] She furthermore granted the defendant’s motion for summary judgment on SAS’s claim of tortious interference and denied the motion as to fraudulent inducement and unfair and deceptive trade practices.[19]

The jury decided all those issues in SAS’s favor earlier this month.[20] Under North Carolina’s Unfair and Deceptive Trade Practices law, the actual damages of $26,376,635 are tripled to $79.1 million.[21]


[1] Jeff Jeffrey, SAS scores $79.1 million verdict in lawsuit against British software firm, Triangle Bus. J. (Oct. 14, 2015), http://www.bizjournals.com/triangle/news/2015/10/14/sas-scores-79-1-million-verdict-in-lawsuit-against.html [http://perma.cc/Z99N-CB67]; see SAS Inst. v. World Programming Ltd., 5:10-CV-25-FL (E.D.N.C. Oct. 9, 2015) (Jury verdict form).

[2] See, e.g., SAS Inst. v. World Programming Ltd. , 64 F. Supp. 3d 755, 761 (E.D.N.C. 2014) (citing declaration of Pat Brown, SAS Deputy General Counsel) (granting in part and denying in part plaintiff’s motion for partial summary judgment and granting in part and denying in part defendant’s motion for summary judgment); Cameron Snipes, The List: The Triangle's largest employers, Triangle Bus. J. (July 29, 2013), http://www.bizjournals.com/triangle/news/2013/07/29/triangle-areas-largest-employers.html [http://perma.cc/D57A-EW93].

[3] See, e.g., SAS Inst. v. World Programming, 64 F. Supp. 3d 755; SAS Inst. v. SAS Groupe, 5:12-CV-00494 (E.D.N.C. Oct. 7, 2013) (granting default judgment in trademark action); SAS Inst. v. Akin Gump Strauss Hauer & Feld, LLP, 5:10-CV-101-H, 2011 WL 1104101 (E.D.N.C. Mar. 22, 2011) (denying defendants’ motion to dismiss); SAS Inst. v. Corporate Information Partners et al, 5:02-CV-458-BO (E.D.N.C. Jan. 29, 2003) (consent judgment requiring defendants to destroy copyrighted materials in their possession).

[4] See SAS Inst. v. World Programming Ltd., 5:10-CV-25-FL ¶ 3 (E.D.N.C. Jan. 19, 2010) (Complaint).

[5] See SAS Inst. v. World Programming, 64 F. Supp. 3d at 759–60.

[6] SAS Inst. v. World Programming, 5:10-CV-25-FL (Jan. 19, 2010) (Complaint); SAS Inst. v. World Programming Ltd., 5:10-CV-25-FL (Aug. 14, 2013) (First Amended Complaint).

[7] SAS Inst. v. World Programming, 64 F. Supp. 3d at 760–61; SAS Inst. v. World Programming, 468 Fed. App’x 264 (4th Cir. 2012).

[8] See SAS Inst. v. World Programming, 64 F. Supp. 3d. at 761; see also Press Release, World Programming, Final Judgment Dismisses SAS Claims on WPS (Jan. 25, 2013), available at http://www.teamwpc.co.uk/press/final_judgment_dismisses_sas_claims_on_wps.

[9] See, e.g., SAS Inst. v. World Programming, 64 F. Supp. 3d at 759–67.

[10] SAS Inst. v. World Programming, 64 F. Supp. 3d at 781–82.

[11] SAS Inst. v. World Programming, 64 F. Supp. 3d at 767–81.

[12] SAS Inst. v. World Programming, 64 F. Supp. 3d at 769–74.

[13] SAS Institute v World Programming , [2013] R.P.C. 17, at 424–37, available at http://www.bailii.org/ew/cases/EWHC/Ch/2013/69.html [http://perma.cc/JF4J-E7TZ] (citing Case C-406/10, SAS Inst. v. World Programming, http://curia.europa.eu/juris/document/document.jsf?docid=122362&doclang=EN [http://perma.cc/UE5S-PTRH], and Council Directive 91/250, arts. 1(2) and 5(3), 1991 O.J. (L 122) P. 42–46 (EC)).

[14] SAS Inst. v. World Programming, 64 F. Supp. 3d at 768–74 (citing, e.g., Hilton v. Guyot, 159 U.S. 113, 163–64 (1895); Pony Express Records v. Springsteen, 163 F. Supp. 2d 465, 473 (D.N.J. 2001)).

[15] SAS Inst. v. World Programming, 64 F. Supp. 3d at 765–74.

[16] See SAS Inst. v. World Programming Ltd., 5:10-CV-25-FL (E.D.N.C. Oct. 9, 2015) (Jury verdict form).

[17] SAS Inst. v. World Programming, 64 F. Supp. 3d at 774–75 (citing Computer Associates v. Altai, Inc., 126 F.3d 365, 371 (2d Cir. 1997).

[18] SAS Inst. v. World Programming, 64 F. Supp. 3d at 775–79.

[19] SAS Inst. v. World Programming, 64 F. Supp. 3d at 780–82.

[20] See SAS Inst. v. World Programming Ltd., 5:10-CV-25-FL (E.D.N.C. Oct. 9, 2015) (Jury verdict form); see SAS Inst. v. World Programming Ltd., 5:10-CV-25-FL (E.D.N.C. Oct. 16, 2015) (Judgment); Jeffrey, supra note 1.

[21] See N.C. Gen. Stat. § 75.16; Jeffrey, supra note 1.


Posted by Christopher R. Bagley (Chris) on Sun. October 25, 2015 3:33 PM
Categories: Conflict of Laws, European Union, Intellectual property, United Kingdom, United States

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