By Jason Rantanen
Oracle America, Inc. v. Google LLC (Fed. Cir. 2018) Read opinion
Panel: O’Malley (author), Plager and Taranto*
This is a huge decision on multiple levels, and the latest exchange in the long-running battle between Oracle (the copyright owner) and Google (the alleged infringer). In the first appeal, the Federal Circuit rejected Google’s arguments that the Java “packages” at issue were unprotectable under copyright law. The court remanded the case for further proceedings on Google’s fair use defense. (15 U.S.C. § 107) On remand, the district court held a jury trial on that issue. The jury found in favor of fair use and the district judge denied Oracle’s motion for JMOL.
Oracle appealed and the Federal Circuit reversed, essentially going all-in on the issue of copyright infringement when it comes to software. First, fair use is a question that is largely addressed de novo by appellate courts, and second, when it comes to software, the court’s analysis all but says (expressly so!) that fair use can never apply. This opinion comes on the shoulders of the same panel’s previous opinion concluding that Oracle’s API packages meet the requirements for copyright protection. I see the court as going “all in” here both by its adoption of a nondeferential standard of review (keeping in mind that Ninth Circuit law is controlling), as well as the combination of its conclusions on protectability and inapplicability of fair use in this context.
Standard of Review
In a detailed discussion of the standards of review, the Federal Circuit concluded that, under Ninth Circuit case law:
- the jury role in determining whether fair use applies “is limited to determining disputed ‘historical facts’ not the inferences or conclusions to be drawn from those facts” (Slip Op. at 24); “[a]ll jury findings relating to fair use other than its implied findings of historical fact must, under governing Supreme Court and Ninth Circuit case law, be viewed as advisory only.” (id. at 26).
- we must assess all inferences to be drawn from the historical facts found by the jury
and the ultimate question of fair use de novo, because the Ninth Circuit has explicitly said we must do so.
This framework should be familiar: it’s essentially the same approach that the court takes in reviewing nonobviousness determination, a fact that did not escape the court’s notice. Slip Op. at 25, n. 4. Since the meat of the fair use analysis is in the inferences drawn from the historical facts and the balancing of all the factors, the functional result of this standard of review was that the court largely reviewed the fair use determination de novo.
Fair Use Analysis
Much will be written about the court’s fair use analysis; most of it more insightful than anything I can offer. The court’s analysis draws heavily on Ninth Circuit caselaw. Here’s the gist:
- Factor 1 (Purpose and character of the use): The Federal Circuit concluded that Google’s use was (a) Commercial; (b) Non-transformative. In addressing the “commercial” aspect, the court drew heavily on the reasoning of Harper & Row and Am. Geophysical Union, and barely mentioned Campbell. On the question of whether Google’s use was transformative, the court applied this requirement: “To be transformative, a secondary work must either alter the original with new expression, meaning, or message or serve a new purpose distinct from that of the original work.” Slip Op. at 31. There’s a lot of grist to grind here in the inevitable Supreme Court appeal. Bad faith didn’t play a role because (1) it’s one-directional, weighing only against a finding of fair use, and (2) there was no basis for disturbing the jury’s implicit finding of no bad faith.
- Factor 2 (Nature of the copyrighted work): The Federal Circuit concluded that this factor did weigh in favor of Google, but it was the only one that did. Here, while the Java API may have met the minimum requirements for copyright protection, “reasonable jurors could have concluded that functional considerations were both substantial and important.”
- Factor 3 (Amount and substantiality of the portion used): The Federal Circuit concluded that Google did not duplicate “the bare minimum of the 37 API packages, just enough to preserve inter-system consistency in usage,” thus copying only “only so much as was reasonably necessary.” Instead, the court concluded: “We disagree that such a conclusion would have been reasonable or sufficient on this record.” (Slip Op, at 46). Furthermore, “(e)ven assuming the jury accepted Google’s argument that it copied only a small portion of Java, no reasonable jury could conclude that what was copied was qualitatively insignificant, particularly when the material copied was important to the creation of the Android platform.” (Slip Op. at 47) (Is the court really saying that because the copied material was functionally important, therefore its copying was not fair use?)
- Factor 4 (Effect upon the potential market): Either the most important factor or an equally important factor; maybe we’ll get more clarity on this in a Supreme Court opinion in this case. This is basically the derivative/licensed market issue, which commentators can go in circles about. The short of it is that the Federal Circuit reversed the district judge, agreeing with Oracle that the market harm was “overwhelming.”
Balancing: applying its de novo standard, the Federal Circuit concluded that Google’s use was not fair use. “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.” (Slip Op. at 54).
All that said, the court concludes by refusing to say that fair use can never apply to software–although it’s statement simultaneously declines to cross that line while implying that’s what it’s reasoning leads to:
We do not conclude that a fair use defense could never be sustained in an action involving the copying of computer code. Indeed, the Ninth Circuit has made it clear that some such uses can be fair. See Sony, 203 F.3d at 608; Sega, 977 F.2d at 1527-28. We hold that, given the facts relating to the copying at issue here—which differ mate-rially from those at issue in Sony and Sega—Google’s copying and use of this particular code was not fair as a matter of law.
Stay tuned for the en banc petition–or perhaps direct request for certiorari.
*Note that this is the same panel as decided the earlier appeal in this case. See 13-1021.Opinion.5-7-2014.1