So yes software is covered and is considerd a literary work no different then a book.
While factual, this is not correct in the sense that you meant it. Software is largely unique in that it can be covered both by patents and by copyright. As a software engineer and someone who has dealt with software licensing issues on several occasions, the distinction generally is:
Patents cover inventions and processes. You can patent an algorithm, an abstract recipe for how to execute some specific task on a computer. For instance, Adobe holds gazillions of patents on efficient ways to compute such-and-such graphical effect. Microsoft holds lots for way to do various operating systems things.
Copyright covers a particular expression of a creative work. The legal justification for this as regards to software is that the code for a program can be viewed as a creative work by the programmer, and thus subject to copyright just like a book is. However, just as two authors can write books about young boys who discover they are wizards and go off to a magical school in a castle, so can two programmers write programs that compute the same graphical effect without infringing each other's copyright, so long as no actual copying was involved.
Again, generally speaking, a patent is broader, in that it protects an idea independent of any one particular expression of it. Copyright protects only one expression (muddled by derivative works). On the flipside, copyright is automatic and free, where as patents cost money, require registration, and require evidence that the patented idea is, in fact, original.
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Of course, nothing is ever cut and dry in law. I'm not extremely familiar with the details of this instance, but it undoubtedly lies in-between. My analysis:
It seems very unlikely to me that WotC holds relevant patents, so I'll dismiss that possibility.
Copyright infringement, in this case, does not seem cut and dry. If there was a significant amount of verbatim copying of text (not just math), then infringement would be pretty clear. However, with only similar text or just mathematical content, the picture gets much less clear. Mathematical content is generally harder to claim copyright on, since its expression is generally not considered creative, though one could argue that the choice of what formulas to use is. Plus , of course, the fact that mechanics are not copyrightable. Either way, that one wouldn't be clear cut.
Were it to actually come to a court case in such a situation, WotC would have to argue that, even in the absence direct copying, the sheet still comprised a derivative work. This gets muddy really fast, especially when you run into counter-arguments because for something essentially of a mathematical nature, there may not BE enough room for creative expression for a suitably dis-similar expression to exist. (i.e. how many different ways are there to write the recipe for a PB&J?)