15 May 2020CopyrightRory O'Neill

English court steps in to defend UK sovereignty

The  English Court of Appeal has blocked a US software company from looking to enforce a California court’s order against a UK rival, on the grounds that it infringed British sovereignty.

The judgment, issued Tuesday, May 12, is the latest in a long-running, multi-jurisdiction dispute, partly over copyright and the programming underpinning the SAS analytics software suite.

UK-based  World Programming (WPL) was ordered by a US court to pay $79 million to North Carolina software developer  SAS Institute, which developed and sells the system, for fraud and breach of contract.

But the English Court of Appeal has blocked SAS from recovering those damages from WPL’s revenues originating in the UK, where the courts rejected SAS’ legal claims.

The SAS system allows users to develop and run applications written in the SAS programming language. WPL looked to develop alternative software that could run applications written in the same language, and accessed a version of the SAS system in order to emulate the technology.

SAS sued in the US and the UK on the grounds that this was in breach of the licence agreement, which effectively prohibited customers from using the software to develop a competing product.

SAS was successful in the US litigation, but not in the UK, where the courts ruled that the licence agreement was null under EU law. According to Richard Arnold, then judge of the English High Court, the EU Software Directive permits a licensee to study and test the ideas underlying a licensed computer program, which are not protected by copyright.

But the US District Court for the District of North Carolina ordered WPL to pay $79 million to SAS in damages, a judgment that was upheld by the US Court of Appeals for the Fourth Circuit.

Sovereignty and comity

SAS has recovered just $8.2 million of this award to date, and sought enforcement orders in both US and UK courts. At a California district court, SAS obtained an enforcement order allowing it to recover damages from WPL’s global revenues.

But again the jurisdictions diverged, with the UK court ruling that the previously voided contract terms were fundamental to SAS’ proposed enforcement order.

WPL also obtained an anti-suit injunction in the UK, which blocked SAS from collecting the damages from WPL’s non-US revenues.

This was criticised by the Fourth Circuit as being against the principle of comity; respect from international courts towards those in other countries.

“Comity is not advanced when a foreign country condones an action brought solely to interfere with a final US judgment,” said the Fourth Circuit.

But in this week’s judgment, the English Court of Appeal said the US judgment amounted to an infringement of British sovereignty. The court also granted WPL a final anti-suit injunction blocking SAS from collecting the damages from WPL’s UK customers.

This prohibits any order for WPL to assign debts owed to the UK company by its customers there, over to SAS.

Comity, the English court said in response to the Fourth Circuit, is a “two-way street”, adding: “This need for mutual respect means that comity requires a recognition of the territorial limits of each court’s enforcement jurisdiction.”

“The proposed orders are exorbitant in that they affect property situated in this country over which the California court does not have subject matter jurisdiction, thereby infringing the sovereignty of the UK,” said the ruling.

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