throbber
UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NORTH CAROLINA
`WESTERN DIVISION
`No. <0 1° t I'.jlD
`
`COMPLAINT
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`SAS INSTITUTE INC.,
`
`Plaintiff,
`
`v.
`
`WORLD PROGRAMMING LIMITED
`
`Defendant.
`
`Summary of the Action
`1.
`This is an action by SAS Institute Inc. (“SAS”), a North Carolina-based software
`company, against World Programming Limited (“WPL”), an English company which competes
`with SAS. As more fully described below, WPL has engaged in a series of unfair and deceptive
`acts designed to unfairly compete with SAS by appropriating to itself the long-standing efforts of
`SAS in creating the market for business intelligence software and convincing SAS users
`worldwide to license WPL’s software in place of SAS. WPL has done this by, among other
`things, misrepresenting itself to SAS as a “financial services” company rather than a software
`competitor in order to obtain access to SAS proprietary information, violating a license
`agreement with SAS by using certain SAS software for its own impermissible commercial
`purposes, violating SAS’s copyrights, touting the ability of WPL’s knock-off software to
`“emulate” key features of SAS’s software, and targeting SAS’s customer base developed over
`years at great effort and expense on the part of SAS. Indeed, WPL’s only market for its software
`are the existing customers of SAS which already use SAS software under licenses with SAS.
`SAS is seeking injunctive relief and ultimately damages (including treble and punitive damages)
`and other relief from WPL for (1) copyright infringement, (2) breach of a license agreement (or,
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`alternatively, tortious interference with contract), (4) tortious interference with prospective
`economic advantage and (5) unfair and deceptive trade practices/unfair competition. i
`
`The Parties
`
`2.
`
`Plaintiff SAS is a corporation organized under the laws of the State of North
`
`Carolina with its principal place of business in Cary, North Carolina. SAS has been in business
`
`for over thirty years and during that time has become the world’s largest privately-held software
`
`company. As more fully described below, SAS is considered the world leader in business
`
`intelligence software and services primarily offered through an integrated range of software
`
`products which are known as the “SAS System.”
`
`3.
`
`Defendant WPL is a private limited company incorporated under the laws of
`
`England and Wales with its registered office address listed as Worsley Lodge, Common Hill,
`
`Braishfield, Romsey S051 OQF. WPL was incorporated in 1998 under the name Management
`
`Technologies Limited and thereafter changed its name on at least two occasions, adopting its
`
`current name in 2006.
`
`Jurisdiction and Venue
`
`4.
`
`This Court has subject matter jurisdiction of this action under 28 U.S.C. §
`
`1338(a), as an action arising under an Act of Congress relating to copyrights, 17 U.S.C. §§ 101,
`
`et seq.\ as an action arising under 28 U.S.C. § 1338(b), as an action arising under an Act of
`
`Congress relating to copyrights joined with a claim for unfair competition; and this Court’s
`
`supplemental jurisdiction. This Court has personal jurisdiction over WPL under 17 U.S.C. §
`
`1 SAS earlier instituted an action against WPL in the courts of the United Kingdom for WPL’s violations
`of the laws of the United Kingdom and, potentially, the laws of other European Union countries.
`
`2
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`501, as well as the North Carolina long-arm statute, N.C.G.S. § 1-75.4, based on facts more fully
`
`described below.
`
`5.
`
`Venue is proper in this District under 28 U.S.C. § 1391(b) as a substantial part of
`
`the acts giving rise to the allegations of this Complaint occurred in this District and based on
`
`WPL’s agreement to venue as more fully described below.
`
`The Business of SAS
`
`The SAS System
`
`6.
`
`The SAS System enables users to perform a variety of tasks primarily relating to
`
`data access, data management, data analysis (including statistical analysis) and data presentation.
`
`It consists of a number of software components which users can install separately. The core
`
`component of the SAS System is known as “Base SAS.” The other components of the SAS
`
`System require the use of Base SAS and provide a user with additional capabilities.
`
`7.
`
`Users cause the SAS System to access data and then to manage and analyze such
`
`data and to present or provide results by issuing instructions to the SAS System. Those
`
`instructions are typically provided by a user in the form of a text file containing the required
`
`instructions and are generally referred to as “SAS Programs.”
`
`8.
`
`SAS Programs are written in a programming language developed by SAS and
`
`known as the “SAS Language.” Instructions which call software routines included in the SAS
`
`System and which perform specific predetermined tasks are known as “SAS Procedures.” Thus,
`
`Base SAS allows users to develop and run SAS Programs.
`
`9.
`
`SAS also publishes for the benefit of its users a wide range of reference materials
`
`in both electronic and printed form (“SAS Manuals”). Those publications describe the features
`
`of the SAS System and provide instructions and assistance to users of the SAS System.
`
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`10.
`
`SAS Manuals also provide readers with a detailed description of aspects of SAS
`
`System including a detailed description of the instructions which form part of the SAS Language
`
`and SAS Procedures.
`
`Licensing of the SAS System
`
`11.
`
`Customers of the SAS System are required to enter into a license agreement with
`
`SAS. While the terms and conditions of SAS’s license agreements have varied from time to
`
`time, such agreements are generally in the form of a Master License Agreement (“SAS MLA”),
`
`which among other things:
`
`a.
`
`restricts the use of the licensed SAS System software to the Customer’s
`
`employees and on site contractors while doing work solely for the Customer;
`
`b.
`
`prohibits the Customer from (i) using the licensed SAS System software for the
`
`benefit of other persons in exchange for compensation (ii) using the licensed SAS System
`
`software for provision of data services, outsourcing or similar arrangements or to process data of
`
`other persons and (iii) allowing any unauthorized user to edit, modify or otherwise access the
`
`SAS System software and thereby prohibit the Customer from using the SAS System for
`
`purposes other than the business of the Customer; and
`
`c.
`
`agrees that North Carolina law will govern.
`
`SAS Learning Edition Software
`
`12.
`
`In order to enable individuals to leam how to use the SAS System without
`
`entering into a full SAS MLA, SAS has developed certain software which is known as the SAS
`
`Learning Edition.
`
`13.
`
`The SAS Learning Edition includes versions of Base SAS and certain other
`
`components of the SAS System including SAS/GRAPH (procedures for graphing capabilities),
`
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`S AS/ST AT (procedures for providing statistical information such as analysis of variance,
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`regression, multivariate analysis, and categorical data analysis), SAS/QC (quality improvement
`
`tools) and SAS/ETS (procedures for econometric and time series analysis). The components of
`
`the SAS System which are included in the SAS Learning Edition are restricted as to the quantity
`
`of data which can be processed.
`
`14.
`
`The SAS Learning Edition also includes a selection of SAS Manuals in printed
`
`and electronic form.
`
`Licensing of SAS Learning Edition Software
`
`15.
`
`Before an individual is entitled to use the SAS Learning Edition software, that
`
`individual is required to accept the terms of a license agreement (the “LE License Agreement”).
`
`Clause 1.1 of the LE License Agreement provides:
`
`1.1
`
`In exchange for Customer’s payment of all applicable fees and
`
`compliance with the terms of this Agreement, SAS hereby grants
`
`Customer a nonassignable, nontransferrable and nonexclusive
`
`license to use the Software on one (1) workstation at a time, for
`
`Customer’s non-production purposes only. Concurrent usage or
`
`use on a network is not authorized.
`
`16. Clause 1.2 of the LE License Agreement provides:
`
`1.2
`
`Customer may not use the Software in any outsourcing, facilities
`
`management or service bureau arrangement or any data or
`
`information technology management operation by or for third
`
`parties.
`
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`17.
`
`Clause 9 of the LE License Agreement provides that it is governed by and
`
`construed in accordance with the laws of the State of North Carolina.
`
`18.
`
`Thus, the LE License Agreement permits a user to install and run the SAS
`
`Learning Edition for the sole purpose of learning how to use the SAS System.
`
`The Business of WPL
`
`The Market for SAS Software and WPL’s World Programming System
`
`19.
`
`SAS faces a number of well-known and established competitors in the market for
`
`business intelligence software which compete with SAS by offering their own independently
`
`developed competitive software. Unlike those other competitors, however, WPL has developed
`
`certain software known as the World Programming System (hereafter “WPS”) which relies on
`
`targeting only current long-standing SAS customers which have SAS Programs that they use to
`
`access, manage and present data in the unique manner performed by the SAS Software. WPL
`
`seeks to convince those SAS customers to continue to use the SAS Programs they already use,
`
`but to divert their license fees paid to SAS to WPL as license fees for WPS. WPL continues to
`
`develop WPS which it has begun to market both inside and outside the United States, including.
`
`on information and belief, in the State of North Carolina.
`
`20.
`
`The purpose of WPS is to provide current or potential users of the SAS System
`
`with software which reproduces - or “emulates” as WPL’s marketing materials put it - critical
`
`aspects of the SAS System. As WPL has continued to develop WPS, the aspects of the SAS
`
`System which WPS reproduces have been extended. WPS is therefore intended as a replacement
`
`for the SAS System which is suitable for persons who use or expect to use some, but not all, of
`
`the features of the SAS System. In essence, WPL competes against SAS in the market for SAS
`
`customers by using what amounts to SAS Software licensed as its own product, WPS.
`
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`21.
`
`According to WPL’s own Web site, the current version of WPS offered by WPL
`
`is its Version 2.4. The WPL Web site states that Version 2.4 provides the functions of SAS
`
`listed in certain spreadsheets (the “WPS Spreadsheets”) as follows:
`
`Spreadsheet
`
`WP S -Graphing-Quick-
`Ref.xls
`
`List of functions of SAS contained
`within WPS
`WPS-Core-Quick-Ref.xls A quick reference list of all the base
`language elements supported in the WPS
`Core module.
`A quick reference list of the graph and
`chart language elements supported in the
`WPS Graphing module.______________
`A quick reference list of the statistical
`analysis language items supported in the
`WPS Statistics module.
`A quick reference list of all the library
`engines supported by individual add-on
`WPS Engine modules._______________
`
`WPS-Statistics-Quick-
`Ref.xls
`
`WPS-Engines-Quick-
`Ref.xls
`
`22.
`
`WPL’s reference manual entitled “WPS-Reference-for-Language-Elements.pdf’
`
`(the “WPS Manual”) contains a detailed description of the syntax of all the instructions to the
`
`SAS System which, it states, will also be followed in the same way by version 2.4 of WPS. WPL
`
`also claims that WPS will allow a user to read and write data in certain file formats devised by
`
`SAS and known as SAS versions 6, 7, 8 and 9 Data Set Files and SAS Transport Files (“SAS
`
`File Formats”). Thus, a SAS Program which contains only instructions which are supported by
`
`WPS will be interpreted by WPS so as to access, manage, analyze and present data in the same
`
`way as if the SAS Program were interpreted by the SAS System software.
`
`WPL’s Efforts to Appropriate to Itself the Market and Customers Created by SAS
`
`23.
`
`In 2008, WPL placed an order through a reseller of SAS seeking to license the
`
`SAS System. In that regard, an employee of WPL executed a SAS MLA and related software
`
`supplemental to that master license agreement.
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`24.
`
`When SAS inquired of WPL as to why it was seeking to license the software, SAS
`
`was informed that WPL wanted to license the software in order to check SAS syntax. Not
`
`satisfied with that response, SAS refused to accept WPL’s order or countersign the SAS MLA
`
`executed by WPL.
`
`25.
`
`Thereafter, on information and belief, WPL acquired a copy of the SAS Learning
`
`Edition software and agreed to the terms of the LE License Agreement with SAS.
`
`26.
`
`Earlier, in 2006, a WPL vice president, who represented the company as being in
`
`the “Financial Services” business rather than a software company intending to compete with
`
`SAS, registered on the SAS Web site in a manner designed to permit WPL to view, download,
`
`copy and print certain information proprietary to SAS, including certain SAS Manuals. That
`
`representation was made despite the contractual requirement that information provided in the
`
`registration process be accurate and complete.
`
`27.
`
`The terms of use accepted by WPL in connection with its registration on SAS’s
`
`Web site explicitly stated that the Web site was controlled by SAS from its offices in Cary, North
`
`Carolina and that all matters “relating to [WPL’s] access to, or use of, this Web site shall be
`
`governed by U.S. federal law or the laws of the State of North Carolina.” Those terms of use
`
`also stated that “[a]ny legal action or proceeding relating to [WPL’s] access to or use of, this
`
`Web site shall be instituted in a state or federal court in Raleigh or Wake County, North
`
`Carolina.” Both parties to the terms of use (i.e. WPL and SAS), moreover, agreed that
`
`jurisdiction and venue in those courts was proper.
`
`28.
`
`The terms of use further explicitly stated that materials accessed from SAS’s Web
`
`site were to be used solely for non-commercial purposes and that they could not be modified so
`
`as to pass themselves off as WPL’s own.
`
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`29.
`
`In order to create its WPS Software, WPL must have studied SAS Manuals (or
`
`documents copied from SAS Manuals) in order to understand, among other things:
`
`a.
`
`b.
`
`c.
`
`the name of each relevant SAS instruction which WPL intended to replicate in its
`
`WPS software;
`
`the syntax to be used to invoke such instruction in the SAS System;
`
`the operations which each such instruction performs; and
`
`d. the SAS File Formats.
`
`30. In creating that WPS Software, moreover, WPL has used one or more copies of
`
`the SAS System (including one or more copies of the SAS Learning Edition) in order to ascertain
`
`the manner in which the SAS System functions and in order to perform benchmarking tests on
`
`the SAS System for the purposes of developing and thereafter marketing its WPS Software.
`
`31.
`
`In addition, WPL has created its WPS Manual and certain WPS spreadsheets by
`
`copying substantial parts of the SAS Manuals.
`
`32.
`
`In marketing WPS, WPL touts its ability “to emulate the behavior of the SAS
`
`System to a sufficient degree that the WPS implementation can replace the SAS System
`
`implementation for many applications” by “identically replicating the behavior of the SAS
`
`System” with respect to the data inputs (including SAS data source structures and the complete
`
`SAS Language) accepted by WPS and the outputs produced by WPS. WPL claims that its
`
`software emulates such SAS components as Base SAS, SAS/GRAPH, SAS/STAT and various
`
`other SAS/ACCESS products.
`
`33.
`
`In order to provide reassurances to its target customers - namely the current
`
`customers of SAS - WPL claims in its marketing materials to have conducted benchmark testing
`
`of its “WPS emulator” against the SAS System by executing the “two systems side-by-side
`
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`across a suite of test programs” that broadly compared a breadth of system inputs and controls
`
`with outputs produced by the two systems.
`
`Such benchmarking could not have been
`
`accomplished other than by violating the prohibitions contained in its LE License Agreement
`
`with SAS or by convincing an individual or company which has entered into a SAS MLA to
`
`violate the prohibitions in that agreement.
`
`34.
`
`WPL’s marketing of WPS, in addition to touting the ability of WPS to “emulate”
`
`the SAS System, is primarily if not entirely directed at current SAS licensees, by seeking to
`
`persuade those SAS customers to license WPS instead of the SAS System. Thus, WPL seeks to
`
`arrogate to itself a market created by, as well as specific customers of, SAS obtained through the
`
`unfair acts described above.
`
`The Copyrighted Materials
`
`35.
`
`The SAS System contains a number of computer programs whose source code
`
`contains copyrightable subject matter under the laws of the United States. The SAS System also
`
`contains a structure, sequence and organization in the form of its syntax, calls, commands and
`
`procedures. SAS is the sole owner of all right, title and interest, including copyright, in both its
`
`source code and its structure, sequence and organization.
`
`36.
`
`SAS has complied in all respects with the Copyright Act of 1976, 17 U.S.C. §§
`
`101 ct seq., and all other laws governing copyright, and received from the Register of Copyrights
`
`certificates of registration, dated and identified as follows:
`
`a.
`
`The SAS System, Release 8.2, dated October 20, 2004, Registration No.
`
`TX0006059105; and
`
`b.
`
`SAS Learning Edition 4.1, dated September 16, 2009, Registration No.
`
`TX0006973239.
`
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`37.
`
`The SAS Manuals also contains copyrightable subject matter under the laws of the
`
`United States of which SAS is the sole owner of all right, title and interest, including copyright.
`
`38.
`
`With respect to those manuals, SAS has also complied in all respects with the
`
`Copyright Act of 1976, 17 U.S.C. §§ 101 et seq., and all other laws governing copyright, and
`
`received from the Register of Copyrights certificates of registration, dated and identified as
`
`indicated on Exhibit A attached hereto.
`
`39.
`
`The foregoing materials - both software and manuals - are referred to herein as
`
`the “SAS Copyrighted Materials.”
`
`40.
`
`WPL has been using SAS’s Copyrighted Materials without license or
`
`authorization and in direct competition with SAS. At a minimum, WPL’s use and reproduction
`
`of SAS Learning Edition and other SAS Programs without a license or outside the scope of a
`
`license constitutes an infringement of the SAS Copyrighted Materials.
`
`41.
`
`By causing WPS to reproduce the operations, syntax and command structures of
`
`the SAS System, WPL has infringed the SAS Copyrighted Materials. WPL’s copying of one or
`
`more of the SAS Manuals listed in Exhibit A hereto similarly constitutes infringement. WPL,
`
`moreover, has been unjustly enriched by its copying and use of the SAS Copyrighted Materials.
`
`42.
`
`On information and belief, WPL may continue its course of conduct of wrongful
`
`use and infringement upon SAS’s Copyrighted Materials. As a direct and proximate result of
`
`WPL’s acts alleged above, SAS has already suffered irreparable harm and has sustained lost
`
`profits. SAS has no adequate remedy at law to redress all of its injuries WPL has caused and
`
`continues to cause by its conduct. SAS will continue to suffer irreparable harm and to sustain
`
`lost profits until WPL’s actions alleged above are enjoined by this Court.
`
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`COUNT I
`Copyright Infringement - SAS System
`17U.S.C. §§ 101 etseq.
`
`43.
`
`The allegations contained in paragraphs 1 through 42 are realleged as if fully set
`
`forth herein.
`
`44.
`
`WPL has infringed SAS’s copyright in that portion of the Copyrighted Materials
`
`represented by the SAS System and SAS Learning Edition by reproducing, copying and using
`
`copyrighted aspects of the SAS System and SAS Learning Edition without authorization.
`
`45.
`
`WPL has also infringed SAS’s copyright in that portion of the Copyrighted
`
`Materials represented by the SAS System and SAS Learning Edition by causing WPS to
`
`reproduce the operations, syntax and command structures of the SAS System and SAS Learning
`
`Edition.
`
`COUNT II
`Copyright Infringement - SAS Manuals
`17U.S.C. §§ 101 etseq.
`The allegations contained in paragraphs 1 through 45 are realleged as if fully set
`
`46.
`forth herein.
`47.
`WPL has infringed SAS’s copyright in that portion of the Copyrighted Materials
`represented by the SAS Manuals, by reproducing, copying and using those copyrighted manuals
`without authorization.
`
`COUNT III
`Breach of Learning Edition License Agreement
`The allegations contained in paragraphs 1 through 47 are realleged as if fully set
`
`48.
`forth herein.
`49.
`WPL, by entering into the LE License Agreement agreed, among other things not
`to use SAS’s Learning Edition Software for its own commercial purposes.
`
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`50. WPL, by its actions described above, has failed to comply with the terms of the
`
`LE License Agreement.
`
`51.
`
`As a result of the breaches of LE License Agreement, SAS has been damaged in
`
`an amount to be determined at trial but reasonably believed to be in excess of $75,000.
`
`COUNT IIIA (Alternative)
`Tortious Interference with Contract
`
`52.
`
`The allegations contained in paragraphs 1 through 51 are realleged as if fully set
`
`forth herein.
`
`53.
`
`Alternatively, or in addition to breaching the LE License Agreement as described
`
`above, WPL, in order to engage in development and benchmark testing, on information and
`
`belief, convinced an individual or company which has entered into a SAS MLA to violate the
`
`prohibitions in that agreement.
`
`54.
`
`WPL knew or should have known about the existence of a valid license agreement
`
`or agreements between SAS and its customer(s) which would have prevented the SAS System to
`
`be used for development and benchmark testing of WPS.
`
`55.
`
`WPL, on information and belief, has thus intentionally interfered with such
`
`license agreement or agreements and has induced and encouraged one or more SAS licensees,
`
`without justification, to breach the SAS MLA.
`
`56.
`
`As a result of WPL’s intentional interference with those contractual relations,
`
`SAS has suffered damages in an amount to be determined at trial but reasonably believed to be in
`
`excess of $75,000.
`
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`COUNT IV
`Tortious Interference with Prospective Economic Advantage
`The allegations contained in paragraphs 1 through 56 are realleged as if fully set
`
`57.
`
`forth herein.
`
`58.
`As described above, SAS has long-standing customers which license its software
`in order to run SAS Programs. WPL, in connection with its conduct described herein, has
`targeted those customers which comprise its sole market for WPS.
`59.
`WPL, in its marketing efforts for WPS, has induced SAS customers not to renew
`their licenses with SAS but instead to license its competing WPS product in order to continue to
`run SAS Programs. But for the intentional interference of WPL, those customers would renew
`their license agreements with SAS.
`60.
`As described herein, WPL has undertaken these efforts without justification.
`61.
`As a result of WPL’s intentional interference with SAS’s prospective economic
`advantage, SAS has suffered damages in an amount to be determined at trial but reasonably
`believed to be in excess of $75,000.
`
`COUNT V
`Unfair and Deceptive Trade Practices/Unfair Competition
`N.C.G.S. § 75-1.1
`The allegations contained in paragraphs 1 through 61 are realleged as if fully set
`
`62.
`
`forth herein.
`63.
`The actions of WPL as described above (separate and apart from any copyright
`violations) constitute unfair and deceptive practices and unfair competition affecting commerce
`and causing injury to the business and property of SAS in violation of N.C.G.S. § 75-1.1.
`64. As a result of WPL’s foregoing conduct, SAS has suffered actual damages.
`REQUEST FOR RELIEF
`WHEREFORE, SAS Institute Inc. respectfully requests:
`A.
`That this Court enter judgment in favor of SAS and against WPL on each of
`SAS’s claims;
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`B.
`
`C.
`
`D.
`
`That this Court award SAS the damages it proves at trial, reasonably believed to
`be in excess of $75,000, plus interest, against WPL;
`
`That this Court treble the damages of SAS pursuant to N.C.G.S. §75-16;
`
`That this Court enter judgment for punitive damages against WPL in an amount to
`
`be determined at trial on SAS’s claim for tortious interference with contract and
`tortious interference with prospective economic advantage;
`
`E.
`
`That this Court grant SAS an equitable accounting of WPL’s profits and award
`
`SAS judgment for its damages, statutory damages or WPL’s profits, whichever
`
`are greater, arising or derived from WPL’s unlawful actions and that the Court
`
`require WPL to disgorge all amounts earned as a result of their illegal activities;
`That this Court restrain and enjoin, temporarily and preliminarily during the
`
`F.
`
`pendency of this action, and permanently thereafter, WPL and any of is officers,
`
`directors, agents, servants, employees and attorneys, and all persons in active
`
`concert or participation with any of them, who receive actual notice of the Court’s
`
`order by personal service or otherwise, from committing any act that infringes
`SAS’s rights in its copyrighted materials’
`
`That SAS recover from WPL the costs and expenses incurred in this action,
`including attorney’s fees, pursuant to N.C.G.S. § 75-16.1, or other applicable law;
`That there be a jury trial of all issues so triable; and
`
`That SAS be granted such other and further relief as may be just and proper.
`
`G.
`
`H.
`
`I.
`
`This the 19th day of January, 2009.
`
`/s/ Pressly M Millen
`Burley B. Mitchell, Jr.
`State Bar No. 3040
`Pressly M. Millen
`State Bar No. 16178
`
`15
`
`SAS Institute Inc.
`EXHIBIT 2004
`Page 15 of 16
`
`

`

`OF COUNSEL:
`
`Womble Carlyle Sandridge & Rice,
`a Professional Limited Liability Company
`150 Fayetteville Street
`Suite 2100
`Post Office Box 831
`Raleigh, North Carolina 21602
`(919) 755-2100
`(919) 755-6067 (facsimile)
`
`Attorneys for Plaintiff
`SAS Institute Inc.
`
`WCSR 4282057v2
`
`16
`
`SAS Institute Inc.
`EXHIBIT 2004
`Page 16 of 16
`
`

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