SAS Institute Inc. v. World Programming Limited

Filing 444

ORDER denying #415 Motion in Limine To Exclude Evidence of Damages on Plaintiff's Contract Claim - Signed by District Judge Louise Wood Flanagan on 09/04/2015. (Baker, C.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:10-CV-25-FL

SAS INSTITUTE, INC.,
Plaintiff,
v.
WORLD PROGRAMMING LIMITED,
Defendant.

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ORDER

This matter comes before the court on defendant’s motion to exclude evidence of damages
on plaintiff’s breach of contract claim, to be tried by jury beginning September 22, 2015. (DE 415).
The issues raised have been briefed fully, and the motion is ripe for ruling. For the reasons that
follow defendant’s motion is denied.
COURT’S DISCUSSION
Defendant argues the court should exclude evidence of plaintiff’s breach of contract claim
as irrelevant under Federal Rules of Evidence 401 and 402, because plaintiff’s claim is legally
unfounded under the doctrine of “copyright misuse.” Defendant contends that the restrictions in
plaintiff’s license agreement, which it is undisputed defendant breached, are invalid because the
license agreement is anti-competitive and restricts defendant’s ability to create its own copyrightable
material.1

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Plaintiff argues defendant’s motion in limine actually is an unpleaded affirmative defense and also that it is
irrelevant where there is no software-based copyright claim at issue in this case. The court need not reach these
arguments, because defendant’s argument fails on its own merits.

A copyright is misused when its holder attempts “to secure an exclusive right or limited
monopoly not granted by the Copyright Office and which . . . is contrary to the public policy to
grant.” Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 977 (4th Cir. 1990). Misuse may be
proved in two ways. First, use of a copyright to establish a monopoly in violation of the Clayton
Act is per se copyright misuse. Id. at 978. Second, a copyright also is misused where its holder
uses it in violation of public policy. See id. Use of a copyright violates public policy where the
holder attempts to restrict the ability of third parties by contract to independently implement the
ideas expressed by the holder’s copyrighted material. Id.
This case is easily distinguishable from Lasercomb and other similar cases, and thus
defendant’s motion is denied. See also, e.g., Video Pipeline, Inc. v. Buena Vista Home Entm't, Inc.,
342 F.3d 191, 204 06 (3d Cir. 2003), as amended (Sept. 19, 2003); A&MRecords, Inc. v. Napster,
Inc., 239 F.3d 1004, 1026–27 (9th Cir. 2001); Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d
772, 793 (5th Cir. 1999). The Lasercomb court declared invalid as a misuse of copyright an
agreement which “forbid[] the licensee [of the software at issue] to develop or assist in developing
any kind of [related] software [for a period of 100 years].” Lasercomb, 911 F.2d at 978. The court
held that provision invalid because it required the licensee to “forego utilization of the creative
abilities of all its officers, directors and employees” to produce a competing software product,
allowing the plaintiff to exploit its limited monopoly by curbing the influx of new, creative ideas
into the market place. See Lasercomb, 911 F.2d at 974–75, 978. The agreement at issue in this case,
by contrast, does not go so far as to preclude all software development in a particular area. Instead,
it allows licensees the opportunity to develop competing software, including software that
functionally mimics SAS LE, on the condition that the licensee not actively employee plaintiff’s

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copyrighted software product during the development stage. Accordingly, the doctrine of copyright
misuse does not bar plaintiff from collecting damages on its breach of contact claim.
CONCLUSION
Based on the foregoing, defendant’s motion to exclude all evidence of plaintiff’s breach of
contract claim, (DE 415), made pursuant to Federal Rules of Evidence 401 and 402 is DENIED.
SO ORDERED, this the 4th day of September, 2015.

_____________________________
LOUISE W. FLANAGAN
United States District Judge

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