## Facts

- SAS Institute, Inc. developed and licensed the “SAS System” and a limited “SAS Learning Edition” distributed under a restrictive license agreement.
- The Learning Edition license limited use to non-production purposes (e.g., training/learning) and prohibited reverse engineering and other misuse.
- World Programming Ltd. developed the World Programming System (WPS), a competing product designed to run programs written in the SAS language.
- Unable to obtain a full SAS System license, WPL purchased multiple copies of the Learning Edition through a third-party retailer and assented to the Learning Edition license terms during installation and use.
- WPL used the Learning Edition to compare outputs and iteratively modify WPS until WPS matched the Learning Edition’s outputs (including treating the Learning Edition output as a “golden result” for testing).
- SAS sued in federal court asserting, among other claims, breach of the Learning Edition license.
- A jury found WPL breached the license and awarded SAS consequential damages tied to competitive harm and lost revenues.
- After the verdict, WPL moved to alter or limit the consequential damages award, arguing that the Uniform Commercial Code (UCC) and/or contractual limitations barred such damages.

## Issues

1. Whether the Learning Edition transaction should be treated as a sale of goods governed by UCC Article 2, such that UCC damages limitations would bar or restrict consequential damages.
2. Whether the Learning Edition license’s terms limited or excluded consequential damages for WPL’s breach.
3. Whether the jury’s consequential damages award was legally recoverable under North Carolina contract law given the nature of the breach and foreseeability of harm.

## Decision

- The court denied WPL’s post-trial request to set aside or limit the jury’s consequential damages award.
- The court concluded the Learning Edition arrangement was a restricted software license in which title did not transfer, not a UCC-governed sale of goods.
- Because the UCC did not govern in the manner WPL urged, the UCC did not bar the consequential damages awarded for breach of the license restrictions.
- The court treated the damages as recoverable under the parties’ agreement and applicable contract-law principles given the competitive use and resulting harm found by the jury.

## Legal Principles

- A restricted software license that retains title in the licensor and grants limited use rights is generally analyzed as a license transaction rather than a sale of goods for UCC Article 2 purposes.
- UCC Article 2 consequential-damages limitations do not automatically apply to bar damages for breach of a copyrighted software license where title does not transfer and the parties’ relationship is defined by license restrictions.
- Consequential damages may be recoverable for breach of license restrictions when the harm (including competitive injury and lost revenues) is a foreseeable result of using the licensed software beyond authorized purposes.
- Post-verdict relief from a damages award is inappropriate where the movant’s legal theory (e.g., UCC preclusion) does not apply to the transaction as characterized by the contract and the record supports foreseeability and causation findings reflected in the verdict.

## Conclusion

The court upheld the jury’s consequential damages award for breach of a restricted software license, rejecting the argument that UCC Article 2 barred recovery because the Learning Edition arrangement was a license retaining title and imposing enforceable limits on use rather than a sale of goods.


SAS Inst., Inc. v. World Programming Ltd., No. 5:10-CV-25-FL, 2016 WL 3435196 (E.D.N.C. June 2016)