Oracle vs Google – The merry-go-round: final edition.

The Supreme court puts the issue partially to bed.

  • A 10-year titanic struggle comes to an end with Google triumphing over Oracle in a case that will set a precedent for where the value really lies in software and who owns it and who can monetise it.
  • This is not a new fight as Oracle has been seeking $9bn in copyright infringement damages from Google for more than 10 years.
  • The case centres around Google’s use of Java when it created Android and the situation is not straight forward because Java is open source meaning that anyone can use it for free.
  • However, while the software is available for free, the APIs (application programming interfaces) by which developers access the software are not, and following Java’s acquisition by Oracle, they came under its ownership.
  • It is Google’s use of these that Oracle called into question.
  • 37 Java APIs lay at the heart of this dispute which make up less than 0.1% of the Android software that runs on billions of devices of which the majority are Google ecosystem devices.
  • However, Oracle owns the copyright on these 37 APIs and claimed that Google simply copied them rather than make its own versions to work in conjunction with the open-source Java code.
  • Google’s position was that its use of the APIs transformed the software into something new which counts as “fair use” because it is far more than merely copying.
  • First time around, the jury found that Google had violated Oracle’s copyrights but was deadlocked as to whether or not it constituted “fair use”.
  • Second time around, the jury found that Google’s use of Oracle’s APIs fitted the definition of fair use meaning that it did not have to pay Oracle anything for copyright infringement.
  • However, the way that the judge instructed the jury gave Oracle a fairly straightforward route to appeal which it won which subsequently led to the case being heard by the supreme court.
  • This was not a simple case by any stretch of the imagination and there were strong arguments in both directions.
    • For Oracle. Google has a history of copying code line for line from the open-source community and I believe that much of Android Auto and automotive was built this way.
    • Google did not seem to be denying that it copied the APIs but it categorically states that it did so legally.
    • This immediately put Google on the back foot as it was not really denying Oracle’s accusation and was left defending its actions.
    • For Google. For seven years prior to the launch of Android, many companies tried and failed to create a viable operating system for a smartphone using Java.
    • Google’s success in doing so strongly indicates that it fundamentally changed the nature of the Java code to make it work properly on mobile thereby, in all likelihood, fulfilling the requirements of “fair use”.
    • Furthermore, I think that Oracle’s allegation that Google copied Java APIs wilfully for monetary gain is baseless.
    • Google used Java as the starting point for Android because of Andy Rubin, the creator of Android.
    • Andy Rubin’s previous company, Danger, created a data-centric device called the Sidekick that was based on Java.
    • Consequently, when he came to Google with the mission to create Android, Java was the natural starting point.
    • Engineers do not tend to think about copyright or patents when they create something, they just focus on making the best product that they can which is what I am certain happened in this case.
  • The Supreme Court’s final ruling on this takes a slightly different line.
  • It has taken the wider value created by the ecosystem into account in its decision to find in favour of Google.
  • This means that the Supreme Court has decided that a lot of the value that Oracle is claiming is attached to its APIs was in fact created by the developers who used those APIs rather than the APIs themselves and therefore access to them should not be restricted.
  • In effect, the Supreme Court (6-2 vote) agrees that Google’s actions constituted fair use and should not attract any royalties.
  • This is good news for developers and companies that use open-source software but there is a catch.
  • The Supreme Court did not make a ruling on whether APIs are covered by copyright meaning that this fight could be played out many times again in the future.
  • However, this ruling and the precedent that it sets will enable future cases to be settled in a single case with a judge making the decision and issuing a summary judgement rather than a jury trial.
  • This will make it easier for smaller companies to defend their position when it comes to the use of APIs although not as easy as it would have been had the Supreme Court definitely made a clear ruling on the status of APIs.
  • I suspect that the reason for this is that the status of APIs will vary on a case-by-case basis meaning that each case will need to be decided on its merits.
  • The strong arguments for each side make clear that is almost impossible to make a blanket riling that covers all cases.
  • Developers are the net beneficiary from this ruling, but it will not be plain sailing and so there well may be more cases of this nature to come.

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.