IP Law Daily Oracle fails to overturn jury’s fair use verdict in Google’s favor
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Thursday, June 9, 2016

Oracle fails to overturn jury’s fair use verdict in Google’s favor

By Cheryl Beise, J.D.

Substantial evidence presented at trial supported a jury’s verdict that Google’s use of the declaring code and their structure, sequence, and organization from Oracle’s Java Application Programming Interface (API) packages in developing its Android operating system constituted a fair use under the Copyright Act, according to the federal district court in San Francisco. Oracle’s motions for judgment as a matter of law (JMOL) based erroneous jury instructions and insufficient evidence were denied (Oracle America, Inc. v. Google Inc., June 8, 2016, Alsup, W.).

On May 26, following a month-long trial, a unanimous jury found that Google’s use of the declaring lines of code and their structure, sequence, and organization (SSO) of 37 API packages from Java 2 Standard Edition Versions 1.4 and 1.5 constituted a "fair use" under the Copyright Act. Oracle moved for JMOL.

In an earlier phase of the case, another jury found that Google had infringed compilable code for the 37 Java API packages, but it was deadlocked on whether Google had established fair use. Following that trial, the district court granted Google’s motion for JMOL, based on the court’s determination that the SSO of Java’s APIs constituted a non-copyrightable "method of operation" within the meaning of Section 102(b) of the Copyright Act. The Federal Circuit reversed on copyrightability, ordered reinstatement of the jury’s infringement verdict, and remanded the case for consideration of Google’s fair use defense.

Section 107 lists four nonexclusive factors in determining fair use: (1) the purpose and character of the use, including whether such use is of a commercial nature; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion of the work used; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

Propriety of Google’s conduct. Although the Federal Circuit omitted any reference to the "propriety of the defendant’s conduct" (good faith versus bad faith) as a consideration in determining fair use, Oracle insisted on remand that the jury be told that it could consider bad faith by Google as a subfactor under the first factor. Despite its reservations about whether "propriety of the use" is a cognizable consideration in any fair use inquiry, the court acquiesced, but also allowed Google to prove good faith, including evidence of customary practice in the programmer community of freely re-implementing API libraries by duplicating declaring code and their SSO. The jury could have concluded that Google acted on a good faith belief that a license from Oracle was only needed from Oracle for use of the implementing code (which Google did not use).

Factor one-—purpose and character of the use. The court explained that the jury could reasonably have found that Google’s (1) selection of 37 out of 166 Java API packages (designed and used for desktop and laptop computers), (2) re-implemented with new implementing code adapted to the constrained operating environment of mobile smartphone devices with small batteries, and (3) combined with brand new methods, classes, and packages written by Google for the mobile smartphone platform—was "transformative," i.e., constituted a fresh context giving new expression, meaning, or message to the duplicated code.

Factor two—nature of the copyrighted work. Based on the evidence the jury could reasonably have found that, while the declaring code and SSO were creative enough to qualify for copyright protection, functional considerations predominated in their design, and thus factor two was not a strong factor in favor of Oracle after all.

Factor three—amount of work used. There also was sufficient evidence to support a finding that Google duplicated only the bare minimum of the 37 API packages, just a tiny fraction of the copyrighted works, and only so much as was reasonably necessary for a transformative use and to preserve inter-system consistency in usage, namely, the declarations and their SSO only.

Factor four—impact on the market for the work. The jury could reasonably have found that use of the declaring lines of code (including their SSO) in Android caused no harm to the market for the copyrighted works, which were for desktop and laptop computers. There also was evidence that Java ME already was declining in revenue before the release of Android. At Oracle’s request, the court adopted a jury instruction stating: "Since the doctrine of fair use is an equitable rule of reason, no generally accepted definition is possible, and each case raising the question must be decided on its own facts." In applying an "equitable rule of reason," the jury reasonably have could given weight to the fact that cross-system confusion would have resulted had Google scrambled the SSO and specification, as Oracle suggestion.

Oracle’s Rule 50 motions were denied in their entirety.

The case is No. 3:10-cv-03561-WHA.

Attorneys: Annette L. Hurst (Orrick, Herrington & Sutcliffe LLP) and Alanna Rutherford (Boies, Schiller, Flexner LLP) for Oracle America, Inc. Donald Frederick Zimmer, Jr. (King & Spalding LLP) and Robert Addy Van Nest (Keker & Van Nest LLP) for Google Inc.

Companies: Oracle America, Inc.; Google Inc.

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