(ORACLE AM., INC. V. GOOGLE LLC
No. 2017-1118, 2017-1202, 2018 WL 1473875 (Fed. Cir. Mar. 27, 2018)
by Nancy Wolff, DMLA Counsel
Last week the U.S. Court of Appeals for the Federal Circuit reversed the U.S. District Court for the Northern District of Californiaâs ruling of fair use in Oracle America, Inc. v. Google LLC, and held that a verbatim and non-transformative taking in the presence of an actual or potential licensing market fatally undermined the defense. Oracle had sued Google for copyright infringement, alleging that Google had unlawfully used 37 packages of Oracleâs Java application programming interface â âpre-written Java source code programsâ that serve as shortcuts for various computer functions to save programming time â in its Android-powered devices. Google copied verbatim 11,500 lines of Oracleâs copyrighted computer code as well as the structure, sequence, and organizing of the packages. After a second jury trial on fair use, Google prevailed on its fair use defense, and Oracle appealed after the district court rejected its post-trial motion for judgment as a matter of law.
The Federal Circuit disagreed with the district courtâs assessment, and analyzed each of the four fair use factors in 17 U.S.C. 107. In particular, under the first factor (nature and purpose of the use), the court held that Googleâs use of Oracleâs code was both commercial and not âtransformativeâ because the purpose of the software packages in Googleâs Android operating system was the same as the purpose of the package in Oracleâs Java platform; Google did not change the expressive content or message of the code; and use of the code in smartphones as opposed to other computer hardware did not constitute ânew context.â As many courts do, the Federal Circuit did not pay much heed to the second factor (nature of the copyrighted work), but emphasized under the third factor (amount of the work used), that the taking at issue here was more than was defensible. For instance, there was no dispute that only 170 lines of code were needed to write in Java programming language, but Google copied 11,500 lines.
The court spent considerable time discussing the fourth factor (effect on the potential market), focusing on harm to actual markets for the copyrighted work, as well as the market for potential and derivative uses. The court noted that the record clearly showed actual market harm in that Oracleâs copyrighted works had already been used in mobile devices, that Google directly competed with Oracle using Oracleâs own code, and that the existence of the free Android operating system caused significant damage to Oracleâs negotiating position with third parties like Amazon. The district court also had failed to consider potential market harm, including licensing Java âfor smartphones with increased processing capabilitiesâ; importantly, the court observed that just because Oracle had never built its own smartphone device was irrelevant âbecause potential markets include licensing others to develop derivative works.â Because factors one and four weighed heavily against fair use (factor two weighed in favor, and factor three was likely against), the Federal Circuit reversed and remanded for a trial on damages.
Even in industries unrelated to computers, mobile devices, software, and source code, the courtâs broad pronouncement that â[t]here is nothing fair about taking a copyrighted work verbatim and using it for the same purpose and function as the original in a competing platformâ is both powerful and beneficial to creators and licensors of copyrighted content. DMLAâs amicus brief with the support of the coalition of Visual Artistsâ and one of many amicus briefs in this hotly contested caseâ helped explain to the court of appeals the importance of licensing markets in fair use cases in general. Ultimately DMLA supported the winning argument and contributed to the creation of appellate-level precedent that will help image licensors everywhere in responding to many infringement claims, as it turns on harm to the licensing market.