Oracle America v. Google: The battle of the code

Guest post by Carlos Muñoz Ferrandis*

Introduction

Welcome to a clash of software titans, where Oracle achieved to defend its proprietary code (Java) from the unstoppable and ever-expanding dominion of the open source-based Google platform, Android. This decision, even if showing an incredibly interesting copyright case shaping the U.S. concept of the fair use, pushes us to go beyond and adopt an overall perspective of current market behaviours of tech giants in the software sector.

The story of the case could be divided in two parts. The first one, dealing with the copyrightability of 37 Application Programming Interfaces (API). The Federal Circuit in 2014, following Oracle’s appeal to a 2012 District Court decision, declared the declaring code and the API packages’ structure, sequence, and organization (SSO) copyrightable as a matter of law. And the second one, where the two software giants had opposing approaches on question of fair use. Oracle again appealed a District Court decision of 2016, where the court had found that there was fair use. This stage ended on the 27th of March 2018 when the Federal Circuit declared that Google’s use of the Java API packages was not fair use.

The “fair use” defence and its four factors

As stated by Justice O’Malley in this last decision of the Federal Circuit, the fair use defence in the U.S. “operates as a limited exception to the copyright holder’s exclusive rights and permits use of copyrighted work if it is “for purposes such as criticism, comment, news reporting, teaching . . ., scholarship, or research.” 17 U.S.C. § 107.” [p.16 parr.1]                                     

Factor 1: The purpose and character of the use

This factor has two components: (1) whether the use is commercial in nature, rather than for educational or public interest purposes; and (2) “whether the new work is transformative or simply supplants the original.”

Applied to the case, Google’s use of the APIs declaring code and SSO was found to have a highly commercial purpose as the main interest for Google was to integrate the packages within the Android platform to attract Java developers. Furthermore, as stated in the decision, “the fact that Android is free of charge does not make Google’s use of the Java API packages non-commercial. Giving customers “for free something they would ordinarily have to buy” can constitute commercial use.” [p.29 parr.3] (see A&M Records v. Napster).

Furthermore, the use was found non-transformative. Google based its defence in holding that the copyrighted material was integrated into a new context, the smartphone context. However, in words of Justice O’Malley, “because the Java SE was already being used in smartphones, Google did not ‘transform’ the copyrighted material into a new context.” [p.37 parr.1]

Factor 2: Nature of the copyrighted work

This second factor “calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied.” [p.42 parr.3]

In this case, even if software is protected under the auspices of copyright law there is a high expression of functionality within the code and SSO of the 37 APIs, leaving a thin – but existent – red line of copyright protection. The more the functional role of the code shadows its creativity, the less difficult will be to find a fair use in the copying of the code. The jury found this factor in favour of Google as there was a substantive predominance of functional character.

Factor 3: Amount and substantiality of the portion used

“The Ninth Circuit has explained that this third factor looks to the quantitative amount and qualitative value of the original work used in relation to the justification for its use. (…) The percentage of work copied is not dispositive where the portion copied was qualitatively significant.” [p.45 parr.2]

 The decision around the third factor was a neutral one. On one hand, it is right to state that even if the alleged infringer copied the whole work, it was necessary for its intended use. Google copied verbatim 11 500 lines of code which were, however, supposed to be qualitatively significant for the Android platform.

As held by the jury: “we find that the third factor is, at best, neutral in the fair use inquiry, and arguably weighs against such a finding.” [p.48 parr.1]

Factor 4: Effect upon the potential market

“This factor reflects the idea that fair use “is limited to copying by others which does not materially impair the marketability of the work which is copied.” Harper & Row, 471 U.S. at 566-67.” [p.48 parr.2]

The first point of discussion here was the existence of actual harm in a particular market where both firms were present. Notwithstanding Google’s efforts to convince the jury of the non-presence of Oracle in the mobile devices market, Oracle proved not only the print of its Java SE version within Blackberry, SavaJe, Danger, and Nokia devices but furthermore, also in the tablets market, as the software giant licensed Java SE to Amazon.

Hence, Android and Java were substitute products in the market, facing direct competition. Given this evidence, it was clear that Google’s copying of Oracle’s APIs had an effect in the market and produced a market harm to Oracle.

The simple fact that Google and Oracle were involved in negotiations for a potential licensing agreement covering the use of the Java SE shows that Oracle was foreseeing to enter this, at the time, new market within the mobile devices, the smartphone market, seeking to improve smartphones with increased processing capabilities. As stated: “Because the law recognizes and protects a copyright owner’s right to enter a “potential market,” this fact alone is sufficient to establish market impact.”[p.53 parr.2]

End of the tale, for the moment…

Finally, Judge O’Malley concluded that factors 1 and 4 weighed against a finding of fair use in favour of Google, and thus, Google’s use of the declaring code and SSO of the 37 API packages was not fair as a matter of law.

So, what’s next? Google could seek an en banc review by the Federal Circuit, and then as a “last ride” file a petition for a “writ of certiorari” before the Supreme Court. All in all, Google has a tough comeback in this match.

 

*Carlos Muñoz Ferrandis is an IP professional based in Paris. He holds an LL.M. – Magister Lvcentinvs – in Intellectual Property & Information Technology from the University of Alicante. carlosmunozferrandis@gmail.com

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