Oracle v Google
The federal circuit ruling (27 March) on copyright grounds in this long-standing dispute over Oracle’s JAVA platform and Google’s use of Java APIs in its Android phone operating system has been criticized by several copyright-skeptic scholars as a step backwards in fair use analysis (not to mention the underlying foundational question of Java API copyrightability in the first place). Some have even suggested that the federal circuit, created to be an exclusive appeals court for patent cases, is out of its depth in copyright. For more pro-copyright scholars and advocates, however, the CAFC fair use analysis correctly emphasizes the fourth factor, impact on the market, not inconsistent with the recent 2nd Circuit TVEyes decision. Probably not surprisingly, I tend to the latter camp, while acknowledging that the entire case (more than 8 years long) has been convoluted and confusing, including some core questions on what issues are matters of law and which are matters of fact.
The March 2018 decision is not about software copyrightability—that decision was already made in the CAFC’s 2014 decision, after which the district court was instructed to evaluate the fair use defense (which Google won). The CAFC however was not satisfied with the district court and jury verdicts and process, and determined that Google’s use was not fair as a matter of law. There might be a question here about facts vs law, and the role of the jury in such cases, but in my view the CAFC’s fair use analysis is not in and of itself remarkable or clearly flawed.
The decision and the case are controversial because of the foundational question of software copyrightability, and the role of copyright in an API infrastructure. After all, APIs usually involve entities creating code and then offering unaffiliated developers those methods to access that code to develop further applications. Some have suggested that the entire world of APIs will now be subject to a chilling effect. But has Oracle/Java been unclear about what kinds of developments and applications they support with free API access and which they want to consider with commercial considerations? As noted below, I think Oracle has been explicit about what uses require licenses and which do not.
Professor Samuelson has already criticized the court’s 2014 prior decision (as noted this case has meandered across many sub-decisions) for its reliance on the 3rd circuit’s 1996 Whelan “structure, sequence and organization” or SSO type of analysis for software products. In her 2015 article “Functionality and Expression in Computer Programs: Refining the Tests for Software Copyright Infringement” , Samuelson described the SSO test as one of four approaches among the circuits—with the SSO (3rd circuit) approach being essentially a merger analysis—where the underlying expression is protectable if there is more than one way of performing the function—while noting that the SSO approach is “now mostly discredited,” and suggesting that the court’s outright merger analysis was also overly simplistic. Samuelson argues that the other circuits take a more sophisticated and more appropriate “filtering” approach (Altai, 2nd circuit, et al.) by analyzing whether some copying of the original software was required for “interoperability,” and that courts in future decisions would be better served by using these other filtration tests.
Although I have not re-read all of these cases recently, it is easy to understand why the Whelan test would be easier to meet, and therefore offer more copyright protection to more software modules. Does this rise to the level of judicial error? These methods for testing software copyrightability are all about functionality—and perhaps even idea/expression dichotomy. In my view, there is error only if the Whelan test would provide protection for something that is intrinsically utilitarian, and the notion that there are at least multiple methods of skinning the Java API cat, and the fact that the copyrightable elements found by the CAFC in Java are not about appearance, format or underlying algorithms, suggests that there is no clear fundamental error. There may be better tests, and there may be a statutory question about whether more or less copyright protection should be afforded software, but those questions do not rise to the level of judicial error. More protection might mean more permission-seeking, licensing arrangements (commercial or O/S), and less assumptions made about copying APIs—in my view this is not a bad policy result.
With respect to Oracle’s Java APIs, the 28 March decision noted that Oracle provides the programming language itself free and available for use without permission, but had “devised a licensing scheme to attract programmers while simultaneously commercializing the platform,” part of its “write once, run anywhere” approach. Consequently, if entities wanted to use the Java APIs to create a competing platform or in new devices, which would clearly include Google’s Android platform, Oracle would want to license such activities on a commercial basis. The parties were unable to reach agreement on licensing terms, and Google decided to take the risk that Oracle would not enforce or that a court would find Google’s use non-infringing. It is in this sense that allegations of bad faith were made, although I do not think the bad faith narrative impacted the final decision.
To me, then—the fundamental question is: shouldn’t a copyright holder be able to make exactly those kinds of commercial determinations — a strategy to be partly “open” (wanting to attract programmers) while being more commercial when it comes to completing platforms and products? Why shouldn’t Google/Android have to share more revenue from a very successful platform built at least in part on Java?
Once the foundational copyrightability question is accepted (however reluctantly by some), the question then is the step-by-step 4-factor fair use analysis, where the CAFC in the recent decision found that Google had little in its fair use arguments, and had even perhaps conceded some points. In my view the analysis is straight-forward, and the court does not seem to suffer markedly from any patent-law myopia
Turning to the first factor, the purpose of the use (where the question of “transformative” use is often discussed), the court found that Google’s use was not transformative as the copy’s purpose was the same as the original’s, and the smartphone environment was not a new context. The court also found that Google had a clearly commercial purpose, notwithstanding that Google does not charge for the Android license—reaching back to Napster and finding that even free copies can constitute commercial use, and that Google derives substantial revenue from related advertising.
The second factor analysis relied much on assumptions about a jury’s possible views on the creative aspect of writing software, but then discounted the overall impact of this factor. Perhaps the court felt it was not necessary in any event given its strong views on the first and fourth factors.
On the amount of the work used for the third factor, there is no dispute that Google copied the entirety of the 37 APIs in question—but Google argued that since it actually only used portions of the works, this should be viewed in its favor, citing Kelly v Ariba Soft. The CAFC however asserted that Kelly should be viewed in more limited fashion, as being applicable only when a transformative use was first found, and noted that Google’s copying of more than was required also weighed against a fair use finding (although the decision later describes this factor as somewhat neutral in its overall weighing of the factors).
Finally in the effect on the market, the court was not impressed with Google’s argument that Oracle was not making smartphones or developing a smartphone platform (so no market harm), noting that potential markets for derivative works are still highly relevant (this might seem to be critical of the Google Books decision, where nascent markets were not given much credence—although the smartphone market might have been further along than an archival e-book market). The Oracle record also showed the impact of Android products in Oracle’s negotiations with Amazon, and the CAFC found the Oracle-Google negotiations also highly relevant. The court also seemed to find Oracle’s strategy of being “partly open” and “partly commercial” when it comes to competing platforms, as described above, a clear and reasonable market approach.
The matter now goes back to the district court for assessment of damages, and the street press has those damages at billions of dollars.