SAS Institute v. S&H Computer Systems

Citation
SAS Inst., Inc. v. S&H Computer Sys., Inc., 605 F. Supp. 816, 225 U.S.P.Q. (BNA) 916 (M.D. Tenn. 1985) (full-text)

Factual Background
Plaintiff SAS Institute, Inc. (SAS) is a North Carolina corporation that markets a computer program for performing statistical analysis under the registered trademark “SAS.” SAS operated only on IBM computers, and IBM-compatible computers offered by several other companies. SAS owned a copyright in the work. S&H Computer Systems, Inc. (S&H) and SAS entered into a contract under which S&H obtained a license to use the SAS software. S&H prepared a computer software package for performing statistical analysis that was allegedly copied and derived from SAS’s copyrighted software.

Trial Court Proceedings
SAS brought an action against S&H for copyright infringement, breach of contract, and fraud. S&H brought an action against plaintiff, seeking declaratory judgment with respect to the copyright infringement and breach of contract claims. S&H also sought recovery against SAS on a claim for breach of a separate contract]].

The trial court found in favor of SAS in both actions. The court found that SAS's copyright was valid and fully protectable. The court also found that S&H did not comply with its legal duty of [[good faith and fair dealing]] in the contract. The trial court stated that

"although it may be true, as S&H argues in its trial brief, that it “has never agreed, impliedly or expressly, not to produce a piece of statistical software designed to operate on VAX Computers,” it did agree as a matter of law not to use proprietary SAS materials in the process, as it did. S&H's conduct cannot be said to comply with its legal duty of good faith and fair dealing."

The court concluded by stating that

"S&H's argument that it can cure its infringement by simple excision is flatly inconsistent with the statute. The argument essentially is that S&H can misappropriate every internal and external feature of a building, can then cure any impropriety by changing the tint of the windows and the color of the siding. The argument must be rejected."