United States: Software Unfiltered: The Shifting Burdens In Computer Software Copyrightability

The Federal Circuit weighed in on the test, and burdens, for showing copyrightability of "nonliteral elements" of computer software in its SAS Inst. v. World Programming Ltd decision.¹ The Court affirmed a lower court ruling that SAS failed to establish copyrightability of its computer software's claimed elements after World Programing Limited ("WPL") successfully established that a substantial portion of the allegedly infringed elements are not protectable by copyright, shifting the burden back to SAS. The decision, authored by Judge Reyna with a dissent from Judge Newman, further held that, after this burden shift, SAS failed to provide evidence that individual elements of its software programming could survive an abstraction-filtration-comparison analysis as adopted in the Second, Fifth, and Tenth Circuits.

I. The District Court: SAS Failed to Address the Abstraction-Filtration-Comparison Test After WPL Successfully Shifted the Burden

The lower court decision arose from the Eastern District of Texas, where SAS accused WPL of infringing the copyright in the "nonliteral elements" of its software, as well as other claims that were not relevant on appeal. "Nonliteral elements" are those elements that are not written in code, including for example the "program architecture, structure, sequence and organization, operational modules, and user interface." After both parties moved for summary judgment on the nonliteral copyright infringement claims, the district court held a "copyrightability hearing" to allow the parties to argue the issue of copyrightability with supplemental briefing.

The district court applied the abstraction-filtration-comparison analysis of copyrightability. Under this framework, a court first breaks down a work to its various sub-elements to individually determine the copyrightability of those elements ("abstraction"). It then removes any sub-elements that it determines are not eligible for copyright protection ("filtration"). The remaining, protected, elements are compared against the allegedly infringing software ("comparison") to make an infringement determination. Here, the district court ruled that SAS failed to provide, during the filtration step, evidence of the copyrightability of any individual element of its software.

Noting that there was no clear guidance in the Fifth Circuit as to the burden of proof for the "filtration" step, the district court adopted the Eleventh Circuit's burden shifting framework. Under this framework, once the copyright holder satisfies its initial burden of copyrightability (such as through presentation of valid copyright registrations), the burden first shifts to the alleged infringer to identify and substantiate the "species of unprotectability" as to why the work is not subject to copyright protection. Then, if met, the burden shifts back to the copyright holder to establish what precise portions of the work are copyrightable.

Here, the district court ruled that SAS met its initial threshold burden, and that WPL, the alleged infringer, met its prima facie burden of showing multiple sub-elements should not be eligible for copyright protection. It then concluded that SAS had not met its shifted burden to establish what specific portions were eligible. Specifically, rather than engage with the filtration analysis, SAS relied on its copyright registration (the evidence for its initial threshold burden), and arguments that the SAS system was "creative." The court ruled that this reliance on "creativity" of the arrangement of the system failed to meaningfully engage with the test or show the individual copyrightability of any elements of the SAS system.

II. The Majority Opinion: The Federal Circuit Accepts the Shifting Framework and that SAS Failed to Engage with It

On appeal, SAS challenged the burden shifting abstraction-filtration-analysis framework. The Federal Circuit, however, upheld it as keeping with established precedent. The Federal Circuit noted that evidence of a valid registration does not mean that every element of the work (such as the non-literal elements at issue here) is protectable. Rather, the registration creates a "rebuttable" presumption of copyrightability. The Federal Circuit found the framework adopted by the district court correctly required the copyright holder to respond to proof of uncopyrightability advanced by the defendant by identifying what specific elements of its own work are entitled to copyright. That SAS either "failed or refused to do so" proved dispositive.

III. The Dissent: Judge Newman Contends the Majority Decision Rejects the Copyrightability of Nonliteral Elements.

Judge Newman, in dissent, offered an alternative interpretation of the case. By her reasoning, precedent already protects the claims made by SAS for copyrightability. Specifically, this case originated in the Fifth Circuit, and in Eng'g Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335, 1341 (5th Cir. 1994) the Fifth Circuit had opined on the copyrightability of "nonliteral" elements of computer software programs generally. Judge Newman contended this previous ruling should have categorically answered the "copyrightability" question for SAS's claim without further analysis. Judge Newman argued that, rather than simply finding SAS failed to meet its burden, the majority reached an extension on the Supreme Court's decision in Google LLC v. Oracle America, Inc., 141 S. Ct. 1183 (2021), which ruled that Google's use of Oracle's Java API naming conventions constituted fair use of Oracle's copyrighted materials. There, the Supreme Court did not reach the copyrightability question, leaving open the baseline question of whether the Java API naming conventions were copyrightable in the first place. Judge Newman contends that the SAS decision incorrectly says they are not.

According to Judge Newman, "[t]he existence of possible infringement defenses based on the extent of copying does not negate copyrightability of the work." Her analysis suggests the burden-shifting paradigm used by the majority where a copyright holder must prove the copyrightability of individual elements rather than relying on the selection or arrangement of elements, analogous to the precedential Supreme Court ruling in Feist, is inappropriate. This dissent would require that copyrightability and infringement be separate analyses, and the framework used by the majority calls that approach into question. Under Judge Newman's dissent, SAS would seemingly have proven copyrightability when it showed a valid copyright for its software under a selection and arrangement of literal and non-literal elements.

The majority addressed Judge Newman's dissent in its opinion, specifically finding "a key step prior to engaging in an infringement analysis is to determine which elements of the asserted material are copyrightable," also citing Eng'g Dynamics, Inc. v. Structural Software, Inc. which held "[t]o establish copyright infringement, a plaintiff must prove ownership of a valid copyright and copying of constituent elements of the work that are copyrightable.". Under the majority's formulation of copyrightability analysis, a copyrightability analysis for claims of non-literal software infringement is not a one-step process, and instead involves an extra step to prove not only whether a copyright is held, but whether the underlying work is entitled to copyright protection.

IV. Future Implications: The Shifting Burdens of Shifting Burdens

An open question is the applicability of this decision on future software copyright infringement actions involving claims of non-literal copying. It is possible the decision will represent primarily a procedural ruling that centers on the district court's use of a "Copyrightability Hearing" during pre-trial procedure and the evidence proffered by a plaintiff's expert for copyrightability. But the majority's decision in this case will likely reinforce a burden-shifting scheme in copyright infringement actions, where a copyright holder should be prepared to substantiate the copyrightability of specific elements of its copyright.

The case is SAS Inst. v. World Programming Ltd., — F.4th — (Fed. Cir. 2023).

Footnote

1. Typically, copyright actions are appealed to the regional circuit court of appeals, here the Fifth Circuit. This decision was appealed to the Federal Circuit instead because the plaintiff included patent infringement claims in its complaint. Even though the plaintiff appealed on only copyright issues, this granted jurisdiction to the Federal Circuit under 28 U.S.C. § 1295(a)(1).

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