Judgement on software copyright will drive innovation

The European Court of Justice has concluded that the functions performed by software applications – from drawing a box to performing complex statistical analyses – cannot be protected by copyright, opening the way for competitors to launch products that carry out the same tasks as existing programs without infringing intellectual property rights.

“To accept that the functionality of a computer program can be protected by copyright would amount to making it possible to monopolise ideas, to the detriment of technological progress and industrial development,” the Court said.

In effect, this gives the green light to reverse engineering of computer programs to produce look-alike versions. The ruling also opens the way for greater interoperability between computer systems, because software producers can use their understanding of functionality to ensure applications can be integrated with, and work alongside, existing products.

“The decision should assist innovation in the software and ICT sector as developers can reverse engineer functions or concepts from competitors and improve them, or integrate them with other technologies,” said Guy Wilmot, an intellectual property expert at the law firm Russell-Cooke in London.

The Court of Justice made the judgement in a case bought by the US software company SAS Institute against the UK company World Programming Ltd, which SAS said had mimicked the functionality of its business intelligence product, SAS System. World Programming’s rival product is so alike that customised applications written for SAS System will run on World Programming’s system.

But the Court said that while the EU Directive on the legal protection of computer programs provides copyright protection to the “expression” of an idea or principle, the idea or principle itself cannot be protected.

The term “expression” in this case refers to the source code or object code in which the idea or principle is embodied.

World Programming avoided infringing SAS’s rights because it did not use SAS’s source code. “It was only by means of observing, studying and testing the behaviour of SAS Institute’s program that World Programming reproduced the functionality of that program,” the Court said.Furthermore, the Court ruled that anyone buying software can study it to work out the ideas and principles which underlie it, saying, “any contractual provisions contrary to that right are null and void.”

The case was referred to the European Court of Justice by the UK for advice on the interpretation of the Directive (91/250/EEC) on the legal protection of computer programs, and will now be passed back to the High Court in London for final adjudication.

Wilmot said the “much anticipated” decision means companies with established software products, “will be at much greater risk of upstart competitors copying functionality.”

It also widens the intellectual property gap between the US, where software can be protected by patents, and Europe where it is very difficult to get patent coverage for software products. “One risk of this decision is that in an increasingly international software and app market, established businesses will try and protect their software by obtaining US patents, which might restrict competition even in Europe - as most European developers will not be interested in developing software they can’t sell in the world’s biggest software market,” Wilmot said.

The industry body, the European Committee for Interoperable Systems, whose members include members include IBM, Corel, Kolab Systems, Opera, Oracle, RealNetworks, and Red Hat., says giving copyright protection to software functions would seriously undermine innovation in Europe. Full interoperability, “is an essential condition for open, dynamic competition,” it says.