Oracle reversal of Google defense win expected to reach high court

In a sweeping win for Oracle Corp. that could have a dramatic impact on the software industry unless overturned on appeal, a federal appellate court on Tuesday wiped out Alphabet Inc.-owned Google's defense victory in a copyright infringement trial worth nearly $9 billion in damages.

A three-judge panel of the U.S. Court of Appeals for the Federal Circuit ruled that Google's use of some of Oracle's Java programming code in its Android mobile operating system was not protected as fair use under copyright law. Oracle America Inc. v. Google LLC, 2017-1118 (Fed. Cir., filed March 26, 2018).

A San Francisco federal jury ruled in Google's favor in 2016, concluding that Google's use of 37 application programming interfaces, known as APIs, was fair use. U.S. District Judge William Alsup affirmed the decision.

But the Federal Circuit panel ruled that the jury got it wrong, and that Google infringed Oracle's copyright as a matter of law.

"Although Google could have furthered copyright's goals of promoting creative expression and innovation by developing its own APIs, or by licensing Oracle's APIs for use in developing a new platform, it chose to copy Oracle's creative efforts instead," Federal Circuit Judge Kathleen O'Malley wrote for the panel.

"There is nothing fair about taking a copyrighted work verbatim and using it for the same purpose and function as the original in a competing platform," in this case by using them in a smartphone, O'Malley added.

The Federal Circuit sent the case back to Alsup to determine "the appropriate vehicle for consideration of infringement allegations regarding additional uses of Android," she wrote.

This is the second time the Federal Circuit has reversed a jury verdict and Alsup ruling in favor of Google.

"The Federal Circuit's opinion upholds fundamental principles of copyright law and makes clear that Google violated the law," said Oracle General Counsel Dorian Daley in a prepared statement. "This decision protects creators and consumers from the unlawful abuse of their rights."

"We are disappointed the court reversed the jury finding that Java is open and free for everyone," Google said in a statement.

Legal observers said the impact of the ruling, if upheld, would go beyond its effect on Alphabet and Oracle.

"Even copying a small amount of code (a few dozen packets) of a much larger work can't be considered 'too small' to be dismissed," J. Michael Keyes, a partner at Dorsey & Whitney LLP, wrote in an email. "The court held that no reasonable jury could have considered the copying 'qualitatively insignificant.'"

"That's a pretty bold statement for an appellate court to pronounce, which means future litigants need to focus like a laser on how important the copied portion was relative to the greater whole," he added.

Pamela Samuelson, a professor at the UC Berkeley School of Law and the UC Berkeley School of Information, said that the biggest implication of the ruling is that it will now be more difficult for companies that want to use parts or all of another firm's APIs to do so in independent written code without infringing copyright.

She also said Google will likely ask the Federal Circuit to rehear the case en banc. If that fails, Google could petition for review by the U.S. Supreme Court.

Mark Lemley, a Stanford Law School professor and partner at Durie Tangri LLP, said in an email that he expects the case to reach the Supreme Court.

Keyes said Google's argument hinged on the use of the technology as transformative.

"One of the key arguments Google made was that using the API packets for cellphones was 'transformative' for purposes of fair use," Keyes said in an email. "The appellate court rejected that. What this means is that simply porting the work (even a small portion of it) to a new platform or medium doesn't mean you are transforming the underlying work."

Lemley said that although the decision upends a substantial amount of fair use law, "perhaps most interesting for patent lawyers, the Federal Circuit spends nine pages on the standard of review, concluding that because fair use is a mixed question of law and fact it should review the jury's decision de novo, treating the jury verdict as advisory except when it relates to specific subsidiary factual findings."

E. Joshua Rosenkranz of Orrick, Herrington & Sutcliffe LLP argued for Oracle on appeal. Daryl Jossefer of King & Spalding LLP argued for Google. Orrick attorneys represented Oracle at the second trial. Robert A. Van Nest and attorneys with Keker, Van Nest & Peters LLP represented Google at both trials.