Google may have to pay Oracle more than $8bn in code-use case

Java shortcuts to develop Android went too far and were a violation of Oracle’s copyrights, US court rules

FILE - In this March 20, 2012, file photo, a plane flies over Oracle headquarters in Redwood City, Calif. On Tuesday, March 27, 2018, a federal appeals court overturned a decision in a long-running legal battle over whether Google infringed on Oracle's Java programming language to build its hugely popular mobile operating system, Android. (AP Photo/Paul Sakuma, File)

Google could owe Oracle billions of dollars for using Oracle-owned Java programming code in its Android operating system on mobile devices, an appeals court said, as the years-long feud between the two software giants draws to a close.

Google's use of Java shortcuts to develop Android went too far and was a violation of Oracle's copyrights, the US Court of Appeals for the Federal Circuit ruled on Tuesday. The case - first filed in 2010 - was remanded to a federal court in California to determine how much the Alphabet unit should pay. Oracle had been seeking $8.8 billion, although that number could grow. Google expressed disappointment and said it is considering its next steps in the case.

The dispute, which could have far-reaching implications for the entire software industry, has divided Silicon Valley for years between those who develop the code that makes software steps function and those who develop software programs and say their “fair use” of the code is an exception to copyright law.

“It’s a momentous decision on the issue of fair use,” said lawyer Mark Schonfeld of Burns & Levinson in Boston, who has been following the case and is not involved. “It is very, very important for the software industry. I think it’s going to go to the Supreme Court because the federal circuit has made a very controversial decision.”

At issue are pre-written directions known as application program interfaces, or APIs, which can work across different types of devices and provide the instructions for things like connecting to the internet or accessing certain types of files. By using the APIs, programmers do not have to write code from scratch to implement every function in their software or change it for every type of device.

“The federal circuit’s opinion upholds fundamental principles of copyright law and makes clear that Google violated the law,” Oracle general counsel Dorian Daley said. “This decision protects creators and consumers from the unlawful abuse of their rights.”

Google and its supporters contend that the ruling, if left to stand, would harm development of new software programs and lead to higher costs for consumers.

“We are disappointed the court reversed the jury finding that Java is open and free for everyone,” Google said. “This type of ruling will make apps and online services more expensive for users.”

Oracle said its APIs are freely available to those who want to build applications for computers and mobile devices, but draws the line at anyone who wants to use them for a competing platform or to embed them in an electronic device.

“The fact that Android is free of charge does not make Google’s use of the Java API packages noncommercial,” the three-judge federal circuit panel in Washington ruled, noting that Android had generated more than $42bn in revenue from advertising. It also said that Google had not made any alteration of the copyrighted material.

The damages are likely to be hotly contested, with Oracle wanting more than the $8.8bn it sought at the trial, and Google arguing the value is minimal, said lawyer Ping Hu, who heads the intellectual property group at Mirick O’Connell in Boston. The could mean more public information on how Google profits off an operating system that it offers for free.

The decision “is a major win for Oracle, but it’s not the end of the war,” he said.

Oracle claims Google was in such a rush in the mid-2000s to create an operating system for mobile devices that the company used key parts of copyrighted Java technology without paying royalties. Google, which gets the bulk of its profit from selling advertisements connected to search results, faced an “existential threat” because its search wasn’t optimised for mobile devices, according to Oracle.

Google countered that Oracle was just jealous because it did what Oracle could not - develop an operating system for mobile devices that was free and wildly popular. Google said it used a minuscule percentage of Oracle’s code, only enough to enable programmers to write applications for Android in the Java language.

A federal jury in California agreed with Google in 2016, saying Google’s actions were a “fair use” that was exempt from copyright law. Tuesday’s federal circuit opinion reverses that verdict.

“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,” the appeals court ruled.

Google is likely to ask that either the three-judge panel reconsider its decision, or have the issue go before all active judges of the court. The losing party could then ask the Supreme Court to take the case, which Google supporters are calling for.

The Supreme Court had earlier declined to review a closely watched 2014 decision in which the federal circuit said the APIs were entitled to copyright protection. That ruling, along with Tuesday’s decision, “run counter to decades of software industry practice,” according to Meredith Rose, policy counsel at Public Knowledge. The group submitted legal arguments supporting Google.

It “could have devastating effects on the competitiveness, openness, and development of the technology industry,” Ms Rose said. “This could lead to higher prices, fewer choices, and worse products for consumers.”

Java was created by Sun Microsystems in the 1990s, and some have accused Oracle of violating Sun’s pledge to ensure that Java is widely available. Oracle bought Sun in January 2010 for $7.4bn and sued Google fewer than eight months later.

Part of Google’s defence focused on the idea that Java was developed for desktop computers, while Android was created for phones and other mobile devices. Oracle sought to extend the case to desktops, where Android is now available, but the trial judge said he wanted to keep the case narrowly focused.