Docket Nos. 2017-1118, -1202
O’MALLEY, PLAGER, TARANTO
March 27, 2018
Brief summary: FC panel concluded “Google’s copying and use of” Oracle’ Java code in its Android platform “was not fair as a matter of law”, and reversed and remanded the DC’s denial of Oracle’s motions for JMOL and a new trial on damages.
Summary: This opinion describes an ongoing fued between Google and Oracle regarding whether Google’s use of Oracle’s Java Application Programming Interface (API) packages (developed by Oracle’s predecessor Sun Microsystems), covered by Oracle’s patents and copyrights, in Google’s Android platform was fair use. When first in front of the DC, the jury found Google infringed Oracle’s copyrights but “deadlocked” on fair use. But the DC subsequently “found that the API packages were not copyrightable…and entered judgment for Google.” An FC panel reversed and remanded “for further proceedings on Google’s fair use defense” (Oracle, FC 2014). Google petitioned for certiorari but was denied (Google, US 2015). “Google prevailed on its fair use defense” at the second jury trial and the DC denied Oracle’s motions for JMOL and a new trial. Oracle’s appeal is addressed in this opinion. Google cross-appealed “purportedly to ‘preserv[e] its claim that the declarations/SSO” (structure, sequence, and organization of Java API packages) “are not protected by copyright law,’ but advances no argument for why this court can or should revisit our prior decision on copyrightability.” The FC opinion explains that “Oracle makes the Java platform freely available to programmers building applications (‘apps’)” but also “devised a licensing scheme to attract programmers while simultaneously commercializing the platform” (“charges a licensing fee to those who want to use the APIs in a competing platform or embed them in an electronic device”; it also required “any company that improved on the packages in OpenJDK” (a version of Java) “had to ‘give away those changes for free’ to the Java community”; “[t]he evidence showed” licenses “in 700 million PCs by 2005”). This opinion also explains that “[i]t is undisputed that Google copied verbatim the declaring code of the 37 Java API packages-11,500 lines of Oracles copyrighted codes”, “copied the SSO of the Java API packages”, and “then wrote its own implementing code” for its Android phones which “generated over $42 billion in revenue from advertising” (with no direct charge to users). Oracle explained “that Android was ‘devastating’ to its licensing strategy” and that “[e]ven customers who stayed” (including Amazon for the Kindle) “cited Android as a reason to demand discounts.” Thus, while “[i]t is undisputed that Google copied Oracle’s declaring code and SSO for the 37 API packages verbatim”, the question considered here “is whether that copying was fair” under § 107 of the 1976 Copyright Act (“a limited exception…if it is ‘for purposes such as criticism, comment, news reporting, teaching…, scholarship, or research” after considering four “nonexclusive factors” (“the results weighed together, in light of the purposes of copyright”); Harper & Row, US 1985; Campbell, US 1994). The FC panel reviewed “whether the court applied the correct legal standard to the fair use question” and “whether the use at issue is ultimately a fair one” de novo, and “whether the findings relating to any historical facts are correct…with deference” (under Ninth Circuit law where applicable).
The first § 107 “nonexclusive factor”, the purpose and character of the use, “has two primary components: (1) whether the use is commercial in nature” (FC panel’s answer: yes (e.g., “the fact that Android is free of charge does not make Google’s use…non-commercial”)); and (2) ‘whether the new work is transformative or simply supplants the original” (“must either alter the original with new expression, meaning, or message or serve a new purpose distinct from that of the original”, “not absolutely necessary”; FC panel’s answer: “Google’s arguments are not without merit” but its “use…is not transformative” (e.g., “[i]t is undisputed that the API packages ‘serve the same function in both works’…taking only select passages of a copyrighted work is, by itself, not transformative…[t]hat Google wrote its own implementing code is irrelevant…moving material to a new context is not transformative…[t]o some extent, any use of copyrighted work takes place in a slightly different context than the original”, and “there is no bright line”)). Another factor considered was the “purpose and character” factor (“fair use presupposes ‘good faith’ and ‘fair dealing’” (Harper & Row), of which the jury was unpersuaded and no different conclusion was reached here. However, the FC panel concluded that “the first factor weighs against a finding of fair use.”
The second § 107 “nonexclusive factor”, “the nature of the copyrighted work”, “turns on whether the work is informative or creative” (“[a]lthough ‘software products are not purely creative works,’ it is well established that copyright law protects computer software”). The FC concluded, e.g,. that “reasonable jurors could have concluded that functional considerations” of Google’s 37 API packages “were sufficiently creative to provide the ‘minimal level of creativity’…that is required for copyrightability” (Feist Publn’s, US 1991), and “that factor two favors a finding of fair use.”
The third § 107 “nonexclusive factor”, the “amount and substantiality of the portion used in…the context of the copyrighted work, not the infringing work” (“a taking may not be excused merely because it is insubstantial with respect to the infringing work” (Harper & Row); “copying an entire work militates against a finding of fair use” and “adding substantial content to the copyrighted work is not evidence that what was copied was insubstantial or unimportant”; a flexible inquiry, not “a simple determination of the percentage of the copyright work used”). The FC opinion explained that “Google copied…11,300 more lines than necessary to write in Java” (“it copied the SSO for the 37 API packages in its entirety”), weighing “against fair use” (“no reasonable jury could conclude what was copied was qualitatively insignificant”).
The “fourth and final” § 107 “nonexclusive factor”, “the effect of the use upon the potential market for or value of the copyrighted work”, considers “whether unrestricted and widespread conduct of the sort engaged by the defendant…would result in a substantially adverse impact on the potential market for the original” (Harper & Row, Campbell; “court can…consider the challenged use’s ‘impact on potential licensing revenues’” (Swatch, 2d Cir. 2014)). The FC panel explained that the DC “should have considered how Google’s copying affected potential markets Oracle might enter or derivative works it might create or license for others to create”, and “Oracle and Google engaged in lengthy licensing negotiations”, and concluded “the fourth factor weighs heavily in favor of Oracle”.
Thus, the FC concluded “Google’s copying and use of this particular code was not fair as a matter of law.” It also concluded that its “earlier copyrightability decision was consistent with Congress’s repeated directives on the issue.”