Oracle Victory in Copyright Case Has Seeds for a Google Appeal

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By Tony Dutra

A federal appeals court decision that Alphabet Inc.'s Google infringed Oracle America Inc. copyrights when it wrote its Android mobile operating system contains grist for a potential Google appeal to the U.S. Supreme Court.

The case revolves around on whether Google’s copying of a portion of Oracle’s Java software code for its Android operating system was a fair use of copyrighted material. A San Francisco jury and judge ruled in Google’s favor, but the U.S. Court of Appeals for the Federal Circuit reversed March 27, in a victory for Oracle.

The appeals court’s rejection of several lower court factual findings, which may conflict with its own rulings on deference to jury judgments in patent cases, could form the basis for Google’s petition for high court review.

The court “had no qualms about assessing and reassessing evidence and arguments that were made to the jury,” J. Michael Keyes, an intellectual property attorney at Dorsey & Whitney in Seattle, told Bloomberg Law.

Mark A. Lemley, professor of law at Stanford University, said that the Federal Circuit’s standard for reviewing fair use was proper, but that it didn’t match the court’s standard for reviewing a patent law issue that also combines facts and legal conclusions. The nation’s only patent appeals court “created a conflict with its own patent obviousness jurisprudence, which allows juries leeway to decide the ultimate question of obviousness,” Lemley said.

Google said in a statement that it is disappointed in the Federal Circuit ruling and is weighing its options.

Ninth and Federal Circuits in Sync?

An appeal of copyright decisions by the California court would normally go to the U.S. Court of Appeals for the Ninth Circuit. But Silicon Valley-based Oracle had originally also accused Google of patent infringement. That gave Oracle the option to avoid its—and Google’s—home court and bring its appeal to the Washington, D.C.-based Federal Circuit.

The Federal Circuit said in its decision that it was applying Ninth Circuit copyright law, including standards for reviewing district court judgments. It acknowledged that the Ninth Circuit endorses jury trials in the fair-use analysis, but said the analysis was “a primarily legal exercise.” The court relied on a March 5 Supreme Court ruling in a non-copyright case, U.S. Bank N.A. v. Vill. at Lakeridge, LLC, which gave a framework for deciding and reviewing “mixed” questions of fact and law. The Federal Circuit used that framework in deciding it would show deference to a jury’s findings only for “historical facts.”

The appeals court identified eight historical facts and said that Google and Oracle agreed on four of them, such as how much Google had copied. Of the four other historical facts, the jury wasn’t asked to comment on them specifically, on a special verdict form. The Federal Circuit inferred what the jury had found and deferred on two points—that Google did not act in bad faith and that Java code copyright protection was weak—that, ultimately, had little weight in its fair-use determination.

The Federal Circuit reversed the implied jury findings that Google didn’t use the Java code for commercial purposes—it did not charge users or developers—and that there was no harm to Oracle’s market in Google’s use. Both were determining factors in the court’s decision to reverse.

If an appeals court can overturn implied findings with such ease, Keyes said, copyright case litigants should demand that juries be required to make more explicit findings of fact.

“This should definitely inform how trial counsel presents evidence to the jury and what questions should be presented to them on the special verdict form,” Keyes said. “The Federal Circuit had no qualms about diving in, looking at the evidence, and coming to a different legal conclusion on the central issue that was at the heart of the retrial.”

Google’s Options for Supreme Court Review

The Federal Circuit held that “porting” a work from computers to mobile phones was not transformative and that copying even a small amount of code is not necessarily “qualitatively insignificant.” Giving no deference to a jury on those issues has “numerous implications,” Keyes said.

If it stands, the opinion is a “hugely important development” for litigants fighting fair-use battles, particularly in software copyright cases, he said.

The Supreme Court previously rejected Google’s appeal on whether Java code should be copyrightable at all, despite a disagreement between the Federal Circuit and the district court—which claimed adherence to Ninth Circuit law—on that issue. Attorneys didn’t agree on whether the Federal Circuit’s March 27 views on fair use are so different from the Ninth Circuit’s to warrant the Supreme Court’s attention this time.

“The opinion likely does not create a true circuit split for purposes of U.S. Supreme Court review,” said Stephanie Sivinski, a member of Haynes and Boone’s copyright practice group, referring to instances when different appeals courts reach different conclusions on a legal question.

But Lemley said that the ruling conflicts with Ninth Circuit law on two factors of the fair-use analysis, whether Google’s use was “transformative” and what the market effect was on Oracle’s commercial potential. Google also retained the right to petition the Supreme Court to consider again the copyrightability of the Java code, he noted.

“I think all three of those issues have a real prospect of Supreme Court review,” Lemley said, adding in the conflict with Federal Circuit patent law on obviousness.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bloomberglaw.com

To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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