Understanding the basics of the case

Copyright law allows the creator of an original work to claim almost exclusive rights to its reproduction and use. The key word here is “almost.” The scope of copyright is limited, in part, due to a doctrine called “fair use.” Fair use prescribes certain exceptions for copyrighted works to be reproduced without permission or payment. There are four considerations when determining what qualifies as fair use, which are outlined in §107 of the Copyright Act:

(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.

(The crux of legal debate in most cases falls under criteria 1 and 4.)

These criteria usually allow the reproduction of copyrighted work for purposes such as criticism, education, news reporting, and research. The fair use doctrine has developed a reputation of complexity, so much so that the Second Circuit describes fair use as “the most troublesome doctrine in the whole law of copyright” Dellar v. Samuel Goldwyn, Inc., 104 F.2d 661 (2d Cir. 1939).

In addition to the criteria listed above, fair use also contemplates something known as “transformative use.” The principle of transformative use has expanded the scope of the fair use doctrine by allowing secondary parties to subvert statutory criteria upon transformation of the original work. In 1990, the Harvard Law Review introduced transformative use, stating that copyright does not “confer on authors the absolute ownership of their creations. It is designed rather to stimulate activity and progress in the arts for the intellectual enrichment of the public.” To some scholars, the addition of this exception is thought to be too lenient on infringers, shifting the doctrine away from its original purpose.

Background of the case

So how does all of this relate to Oracle v. Google? For starters, transformative use is central in the case of Oracle v. Google, 886 F.3d 1179 (Fed. Cir. 2018),  which has legal scholars considering that courts should put the “fair” back in fair use.  Technology conglomerate Google, which has recently been reorganized into Alphabet, Inc., is facing $8.8 billion in damages for appropriating a software application programming interface (API) that uses Java programming language. Google argued the affirmative defense, stating the appropriation should be considered fair use.

Disputes began six years ago when Google’s Android team was creating their new smartphone. The Mountain View company wanted to license the copyrighted Java platform software from developer Oracle to create its Android mobile operating system. When licensing negotiations fell through, Google copied verbatim 11,500 lines of Oracle’s code, including 37 Java API packages. Google then used the proprietary information to write their own version to implement their Android OS. Although OS service for end-users is free, Google has since grossed over $42 billion in revenue from related advertising and integrating their other services.

Litigation commenced in 2012 when Oracle sued Google for copyright infringement. An initial district court found that APIs were not copyrightable, but the Federal Circuit reversed the ruling in 2014 demanding a new trial. Once the Supreme Court denied certiorari in 2015, a second jury trial determined that Google’s use of the Java API’s was covered under the fair use defense the following year. Oracle appealed, and in March of this year, the courts once against faced the question of whether Google’s use of Oracle’s Java code, adapted for their operating system, was fair use. This time the Federal Circuit said “no.”

The court’s analysis focused on §107 and transformative use. The preamble to §107 reads that use is fair “for criticism, or comment, or news reporting, and the like” and the court decided that Google’s use of Oracle’s code did not “fit within the statutory categories.” The court also focused on the fourth factor; “potential market value”. Google used the proprietary information to enter the smartphone market, and although Oracle itself doesn’t produce smartphones, the court determined that the company “had the right to enter that market; whether it chooses to do so is entirely its business.” Additionally, Oracle had already licensed its Java software to others in the market, which provides “evidence of actual market harm.” The revenue that Google grossed was dependent, in part, on Oracle’s code, and should have been a licensing agreement between the two companies.

The court’s transformative use analysis yielded the ruling that Google’s use of Oracle’s code served the same purpose in its original work as in Google’s code for smartphones. Accordingly, the court held that “a mere change in format (e.g., from desktop and laptop computers to smartphones and tablets) is insufficient as a matter of law to qualify as a transformative use.” Google has since tried to appeal the decision but has been unsuccessful.

The outcomes of this case have implications for shaping the future of the tech-space. Many have debated if the most recent ruling in Oracle v. Google has set a necessary standard or handicapped the future of the industry. According to Chief Economist, Dr. George S. Ford, Google’s interpretation of fair use has historically been an open-ended one, “completely divorced from Section 107’s preamble.” The court put an end to the broad interpretation of the fair use doctrine in this case, which in Ford’s view, reimposed reasonable standards to the marketplace. Conversely, technology advocates hold that this ruling will make software increasingly costly and difficult to integrate across products, since rewriting and developing code is expensive and time-consuming.

Where does the case stand now?

In 2013, the Electronic Frontier Foundation filed an amicus brief on behalf of many computer scientists asking the Federal Circuit to uphold the ruling that APIs are not copyrightable material. Oracle was successful as the Federal Circuit reversed the decision. In May of 2016 a jury found in favor of Google, that their use of Java’s API was in fact fair use. However, in the following year, the Federal Circuit again reversed the district court’s decision yet again. As expected, Google then filed a petition to rehear the case but was denied. Enter the Supreme Court. In January 2019, Google petitioned the Supreme Court to hear the case and review these decision reversals and was granted by November. The case was originally scheduled to be done by June, with many briefs and action filed earlier this year. However, now due to the Covid-19 pandemic, the oral argument have been postponed till October. Expect the Supreme Court to make a decision by the end of the year.