This week on IP Matters, it’s all about Oracle’s victory against Google at the United States Court of Appeal for the Federal Circuit in March 2018. Since 2010, this copyright-infringement case has refused to go away!

Both Oracle and Google hardly need introduction! But just for the record …

Oracle is a computer technology corporation that offers cloud applications, enterprise-software products, platforms, services, and systems for businesses. Founded 1977, Oracle combines hardware and software to offer IT solutions to customers in over 145 countries.

Google is (now) a limited liability company that specializes in internet-related products and services. Google is a subsidiary of Alphabet, the holding company. Founded in 1998, Google is now the third most valuable brand in the world worth $121 billion in 2018, behind Apple and Amazon.

Oracle sued Google for allegedly infringing on Oracle’s copyrights and patents in Oracle’s Java application programming interface (API).

According to Oracle, Google’s use of 37 packages of Oracle’s API in Google’s Android operating system was unauthorized, thus infringing Oracle’s copyrights and patents. Google’s defence was that the copying was fair use.

At the first trial before the United States District Court for the Northern District of California, the jury found that Google infringed Oracle’s copyrights in the Java Standard Edition platform. But the question of whether Google’s copying was fair use could not be decided on. In 2012, the District Court found that there was no infringement because the API packages in question were not copyrightable. Google won the case.

Oracle was dissatisfied with the judgment. It appealed to the United States District Court of Appeals for the Federal Circuit. The Appeal Court reversed the decision in 2014. It held that the declaring code and the structure, sequence, and organization (SSO) of the Java API packages are copyrightable. The case was then remanded to the lower court on the unresolved question of Google’s defense of fair use.

At the end of the second jury trial and the District Court’s judgment in 2016, Google won again. Oracle appealed against the judgment, while Google cross-appealed. The Appeal Court declared that Google’s use of the Java API packages was not fair use, thus amounts to copyright infringement. It remanded the case to the lower court for trial on damages.

Oracle owns and licenses JAVA code and SSO. Google failed to get a license before copying 11,500 lines of Oracle’s Java code.

Java platform is a software used to write and run programs in the Java programming language. With Java, programmers can write programs that run on different types of computer hardware without having to rewrite these programs each time they need to write the program for each different type of computer hardware. Oracle didn’t develop Java platforms. Sun Microsystems, Inc (Sun) did in the 1990s. But when Oracle purchased Sun in 2010, Oracle became the new owners of Java platform.

According to Oracle, it licensed Java in 700 million PCs by 2005. For mobile devices, it licensed Java 2 Standard Edition. This was a lucrative market to Oracle.

When Google acquired Android, Inc in 2005 as a software platform for mobile devices, Google needed Sun’s Java platform. Sun preferred to license the Java platform to Google and have Google adapt it for mobile use. But Google wanted mobile-device manufacturers to be able to use the APIs in Android not only for free but also give the manufacturers the freedom to modify the code. Talks failed.

To “quickly develop a platform that would attract Java developers to build apps for Android”, Google decided to do Java its own way—”Google copied verbatim the declaring code of the 37 Java API packages—11,500 lines of Oracle’s copyrighted code. Google also copied the SSO of the Java API packages. Google then wrote its own implementing code”. If Google ever got into trouble, it had a plan—plead the defense of fair use.

When indeed Google got into trouble with Oracle in 2010 over the unauthorized use of Oracle’s Java codes, Google relied on fair use as defense.

Fair use is a body of exceptions in copyright law which allows a person legally copy another person’s copyrighted work without amounting to copyright infringement. In the United States, whether a particular act of copying amounts to fair use is determined on a case-by-case basis. Under United States copyright law, there are four nonexclusive factors to be considered:

1. “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;”
2. “the nature of the copyrighted work;”
3. “the amount and substantiality of the portion used in relation to the copyrighted work as a whole;” and
4. “the effect of the use upon the potential market for or value of the copyrighted work.

Oracle argues that each of the four statutory factors above is against Google in this case.

As captured by the Appeal Court judgment, Oracle’s position was that:

1. the purpose and character of Google’s use was purely for commercial purposes;
2. the nature of Oracle’s Java work is highly creative;
3. Google copied 11,330 more lines of code than necessary to write in a Java language-based program; and
4. Oracle’s customers stopped licensing Java SE and switched to Android because Google provided free access to it.

Google counters Oracle’s argument, says all 4 factors for determining fair use favour Google.

1. On the purpose and character of Google’s use, Google counters that since it gives Android away for free under an open-source license, Android has non-commercial purposes. According to Google, its revenue flows from advertisements on the Android platform, not from commercializing Android;
2. On the nature of Oracle’s work, Google counters that Oracle’s Java work is merely functional and not creative;
3. On the amount and substantiality of work, Google countered that it only copied a small portion of Java, thus not substantial to constitute copyright infringement; and
4. On the effect of the use of the copied Java codes by Google on Oracle’s potential market, Google argued that its use did no harm to Oracle because Java SE and Android did not compete in the same market. According to Google, ‘Oracle: (1) was not a device maker; and (2) had not yet built its own smartphone platform.”

The Appeal Court disagreed with Google and entered judgment in favour of Oracle.

On each of the four factors for determining fair use, the Appeal Court held as follows:

1. Google’s use of the copied work in Android is commercial and consequently not fair use since giving customers “for free something they would ordinarily have to buy” can constitute commercial use;
2. Though there is some level of creativity in the API packages in question, the functional aspects of the work are substantial, thus on this point alone, Google’s act amounts to fair use;
3. Google’s copying of Oracle’s Java codes is substantial, thus amounting to copyright infringement. The Appeal Court reasoned that since Google copied 11,500 lines of code—11,330 more lines than necessary to write in Java—when Google only needed 170 lines of code, this is not fair use;
4. Google’s use of Java codes it copied to develop Android without Oracle’s due authorization harmed Oracle’s actual and potential market for Java platforms, thus defeating the defense of fair use.

If the Appeal Court’s decision stands, it will greatly impact on the global software industry. This is because of the parties involved and the software program that is subject matter of the dispute. Pricing in the smartphone industry will certainly be affected.

Four Points You Should Take Away from Oracle’s Case.

1. Codes used in writing software programs are protected by copyright, if they are original and are products of sufficient effort. Though Google implemented its own codes on Java program to enable it develop Android platform, the amount of Java codes Google had copied before implementing its own code was considered too substantial to be original. This is why even Google’s argument throughout the case so far is not that it didn’t in fact copy Java codes, but that it did so in a fair manner. Though it failed Google at the Appeal Court, this defense is known as fair use. 
2. Fair use is not a blanket excuse to copyright infringement, but a qualified exception to copyright control. Fair use has fast become alibi to stealing a copyright owner’s work, especially on the Internet. This is wrong. Fair use does not work that way. You don’t use another person’s copyrighted work commercially and turn around to plead fair use. You don’t harm a copyright owner’s actual or potential market and turn around to plead fair use. You don’t copy another person’s copyrighted work substantially and turn around to plead fair use. Fair use is not an ass, at least not completely.
3. Fair use is similar to fair dealing but they are not exactly the same. In Nigeria and most common law jurisdictions such as Australia, UK, etc, it’s ‘fair dealing’. Fair dealing, just like fair use, constitutes an exception to copyright. The difference is that while fair dealing is largely statutory, fair use is judge-made law and a US-court creation. Therefore, fair dealing is relatively rigid, compared to fair use. This is because fair use is largely a body of judge-made principles that apply differently in different circumstances, and the judicial acid tests keep adding new elements in its cylinder as the turf gets tougher. Fair use applies in Oracle’s case.
4. Copyright protects codes in software programs, while patents protect new and inventive functional or technical features of software programs. This is why in 2010, Oracle’s suit against Google was both for copyright and patent infringement. Oracle wanted $9 billion in damages.

Three Lessons You Need to Take Away from this Dispute, Particularly If You Are into Software and Technology Business

1. Not every code out there is open source. Oracle has made available to the public open-source version of its Java programs. But the version Google used is Oracle’s license version, Java Second Edition, which required any person who wishes to use it to get license. Google failed to get license and got its hands dirty in the process. Don’t get your hands dirty with substantially copied codes for your business. Get necessary license. If you must copy, be sure it’s really fair-use copying, not unfair to the copyright owner who must have applied sufficient effort in writing the codes.
2. No one will sue you for copying open-source codes but don’t forget to observe any restrictions that may apply. All (or at least most) open-source software or codes require that you acknowledge source. Others may restrict use to noncommercial use only. Always ensure your IT team is cautious about what they copy for use in your commercial projects.
3. In IP business, potential market—not only actual market—is of great value and can be worth billions of dollars. One big reason the Appeal Court gave Oracle judgment is that the Court considered how Google’s Android platform has harmed Oracle’s potential market. Oracle could have made billions of dollars in licensing its Java Second Edition program to smartphone manufacturers. Though its actual market was desktop manufacturers, smartphone manufacturers was Oracle’s potential market. Because the District Court focused on Oracle’s actual market, it understandably concluded that since Google’s Android platform was exclusively for smartphones, there was no way it could have harmed Oracle’s actual market. But with its eyes on Oracle’s potential market involving derivative works, the Appeal Court had overturned the lower court’s decision. Indeed, Google would have been Oracle’s biggest smartphone customer if Google had not walked away from a licensing deal for Java platform. Android has generated over $42 billion in revenue from advertising on the platform. Many of Oracle’s customers even switched to Android, leading to what Oracle described as “devastating” to its licensing strategy.

IP Matters, it’s never too early because IP matters to business and development, any day.