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Oracle America, Inc. v. Google LLC

United States Court of Appeals, Federal Circuit

March 27, 2018

ORACLE AMERICA, INC., Plaintiff-Appellant
GOOGLE LLC, Defendant-Cross-Appellant

          Appeals from the United States District Court for the Northern District of California in No. 3:10-cv-03561-WHA, Judge William H. Alsup.

          E. Joshua Rosenkranz, Orrick, Herrington & Sutcliffe LLP, New York, NY, argued for plaintiff-appellant. Also represented by Peter A. Bicks, Matthew Lee Bush, Andrew D. Silverman, Lisa Simpson; Melanie L. Bostwick, Kelsi Brown Corkran, Mark S. Davies, Jeremy Peterman, Washington, DC; Annette Louise Hurst, San Francisco, CA; Dale M. Cendali, Joshua L. Simmons, Kirkland & Ellis LLP, New York, NY; Ruchika Agrawal, Dorian Estelle Daley, Deborah Kay Miller, Matthew Sarboraria, Oracle America, Inc., Redwood Shores, CA.

          Daryl Joseffer, King & Spalding LLP, Washington, DC, argued for defendant-cross-appellant. Also represented by Bruce William Baber, Atlanta, GA; Christa M. Anderson, Steven A. Hirsch, Michael Soonuk Kwun, Reid P. Mullen, Robert A. Van Nest, Keker, Van Nest & Peters LLP, San Francisco, CA; Renny F. Hwang, Google LLC, Mountain View, CA.

          Kenneth L. Doroshow, Jenner & Block LLP, Washington, DC, for amicus curiae The Copyright Alliance. Also represented by Erica Lauren Ross.

          Daniel J. Brooks, Scarola Malone & Zubatov LLP, New York, NY, for amicus curiae New York Intellectual Property Law Association. Also represented by Charles R. Macedo, Amster Rothstein & Ebenstein LLP, New York, NY; Annemarie Hassett, NYU School of Law, New York, NY.

          Jared Bobrow, Weil, Gotshal & Manges LLP, Redwood Shores, CA, for amici curiae Eugene H. Spafford, Zhi Ding, Adam Porter, Ken Castleman. Also represented by Amanda Branch, Aaron Y. Huang.

          Steven Thomas Cottreau, Clifford Chance Rogers & Wells LLP, Washington, DC, for amici curiae Scott McNealy, Brian Sutphin.

          Marc Robert Lewis, Lewis & Llewellyn LLP, San Francisco, CA, for amicus curiae Ralph Oman. Also represented by Evangeline Zimmerman Burbidge.

          Robert H. Rotstein, Mitchell, Silberberg & Knupp, LLP, Los Angeles, CA, for amici curiae Motion Picture Association of America, Inc., Independent Film & Television Alliance. Also represented by J. Matthew Williams, Washington, DC.

          Duncan W. Crabtree-Ireland, SAG-AFTRA, Los Angeles, CA, for amicus curiae Screen Actors Guild - American Federation of Television and Radio Artists.

          William M. Jay, Goodwin Procter LLP, Washington, DC, for amici curiae Recording Industry Association of America, Association of American Publishers. Also represented by Andrew Kim. Recording Industry Association of America also represented by George M. Borkowski, Mitchell, Silberberg & Knupp, LLP, Los Angeles, CA.

          Rebecca Murphy Thompson, Competitive Carriers Association, Washington, DC, for amicus curiae Competitive Carriers Association.

          Antigone Gabriella Peyton, Protorae Law PLLC, Tysons, VA, for amici curiae Sandra Aistars, Matthew Barblan, Jon A. Baumgarten, Stephen Carlisle, Jon M. Garon, Hugh Hansen, Devlin Hartline, Jiarui Liu, Adam Mossoff, Raymond T. Nimmer, Eric Priest, Sean M. O'Connor, Mark F. Schultz.

          Lindsay Warren Bowen, Cowan, DeBaets, Abrahams & Sheppard LLP, New York, NY, for amici curiae PACA, Digital Media Licensing Association, Inc., Graphic Artists Guild, National Press Photographers Association, North American Nature Photography Association, American Society of Media Photographers, Inc., American Photographic Artists, Professional Photographers of America. Also represented by Scott J. Sholder.

          Richard L. Rainey, Covington & Burling LLP, Washington, DC, for amicus curiae BSA | The Software Alliance. Also represented by Peter Andrew Swanson.

          Jonathan Band, Jonathan Band PLLC, Washington, DC, for amicus curiae Computer & Communications Industry Association. Also represented by Matthew Schruers, Computer & Communications Industry Association, Washington, DC.

          Michael Barclay, Electronic Frontier Foundation, San Francisco, CA, for amici curiae Electronic Frontier Foundation, Public Knowledge. Also represented by Mitchell L. Stoltz.

          Marcia Hofmann, Zeitgeist Law PC, San Francisco, CA, for amicus curiae Mozilla Corporation.

          Richard M. Brunell, American Antitrust Institute, Washington, DC, for amicus curiae American Antitrust Institute. Also represented by Shubha Ghosh, Syracuse University College of Law, Syracuse, NY.

          Jeffrey A. Lamken, MoloLamken LLP, Washington, DC, for amici curiae Microsoft Corp., Red Hat, Inc., Hewlett Packard Enterprise Company. Also represented by Rayiner Hashem, Michael Gregory Pattillo, Jr.; Lisa Wang Bohl, Chicago, IL.

          Jason Michael Schultz, NYU School of Law, New York, NY, for amici curiae Timothy K. Armstrong, Cark D. Asay, Shyamkrishna Balganesh, Ann Bartow, Oren Bracha, Annemarie Bridy, Dan L. Burk, Michael A. Carrier, Michael W. Carroll, Andrew Chin, Julie E. Cohen, Kevin Collins, Rebecca Curtin, Ben Depoorter, Roger Allan Ford, Brian L. Frye, Jim Gibson, Eric Goldman, James Grimmelmann, Peter Jaszi, Yvette Joy Liebesman, Jessica Litman, Brian J. Love, Michael J. Madison, Mark. P. McKenna, Joseph Scott Miller, Deirdre K. Mulligan, Tyler T. Ochoa, Aaron Perzanowski, Victoria F. Phillips, Arti K. Rai, Jerome H. Reichman, Michael Rustad, Matthew Sag, Pamela Samuelson, Jessica Sibley, Joshua David Sarnoff, Lea Shaver, Christopher Jon Sprigman, Katherine J. Strandburg, Rebecca Tushnet, Jennifer M. Urban.

          Phillip R. Malone, Stanford Law School, Stanford, CA, for amici curiae Harold Abelson, Tom Ball, Brian Behlendorf, Gordon Bell, Jon Bentley, Matthew Bishop, Joshua Bloch, Dan Boneh, Gilad Bracha, Eric Brewer, Frederick Brooks, Rick Cattell, Vinton G. Cerf, William Cook, Mark Davis, Miguel de Icaza, Jeffrey Dean, L. Peter Deutsch, Whitfield Diffie, David L. Dill, Lester Earnest, Brendan Eich, Dawson Engler, Martin Fowler, Neal Gafter, Robert Harper, John Hennessy, Tom Jennings, Alan Kay, Brian Kernighan, David Klausner, Ray Kurzweil, Kin Lane, Ed Lazowska, Doug Lea, Bob Lee, Sheng Liang, Barbara Liskov, Paul Menchini, Andrew W. Moore, James H. Morris, Peter Norvig, Martin Odersky, Tim Paterson, David Patterson, Alex Payne, Tim Peierls, Simon Phipps, Bill Pugh, Ronald L. Rivest, Curtis Schroeder, Robert Sedgewick, Mary Shaw, Barbara Simons, Dave Snigier, Alfred Z. Spector, Bjarne Stroustrup, Gerald Jay Sussman, Ivan E. Sutherland, Andrew Tanenbaum, Brad Templeton, Ken Thompson, Michael Tiemann, Linus Torvalds, Andrew Tridgell, Jeffrey Ullman, Andries Van Dam, Guido Van Rossum, John Villasenor, Jan Vitek, Philip Wadler, James H. Waldo, Daniel S. Wallach, Peter J. Weinberger, Steve Wozniak, Frank Yellin. Also represented by Jeffrey Theodore Pearlman.

          Mark A. Lemley, Durie Tangri LLP, San Francisco, CA, for amici curiae Engine Advocacy, The App Developers Alliance, GitHub, Inc. Also represented by Joseph Gratz, Clement Roberts.

          Before O'Malley, Plager, and Taranto, Circuit Judges.


         This copyright case returns to us after a second jury trial, this one focusing on the defense of fair use. Oracle America, Inc. ("Oracle") filed suit against Google Inc. ("Google")[1] in the United States District Court for the Northern District of California, alleging that Google's unauthorized use of 37 packages of Oracle's Java application programming interface ("API packages") in its Android operating system infringed Oracle's patents and copyrights.

         At the first trial, the jury found that Google infringed Oracle's copyrights in the Java Standard Edition platform, but deadlocked on the question of whether Google's copying was a fair use.[2] After the verdict, however, the district court found that the API packages were not copyrightable as a matter of law and entered judgment for Google. Oracle Am., Inc. v. Google Inc., 872 F.Supp.2d 974 (N.D. Cal. 2012). Oracle appealed that determination to this court, and we reversed, finding that declaring code and the structure, sequence, and organization ("SSO") of the Java API packages are entitled to copyright protection. Oracle Am., Inc. v. Google Inc., 750 F.3d 1339, 1348 (Fed. Cir. 2014). We remanded with instructions to reinstate the jury's infringement verdict and for further proceedings on Google's fair use defense and, if appropriate, on damages. Id. at 1381.

         Google subsequently filed a petition for certiorari on the copyrightability determination. The Supreme Court called for the views of the Solicitor General, who expressed agreement with our determination and recommended denying review. The Supreme Court denied certiorari in 2015. Google Inc. v. Oracle Am., Inc., 135 S.Ct. 2887 (2015) (Mem.).

         At the second jury trial, Google prevailed on its fair use defense. After the jury verdict, the district court denied Oracle's motion for judgment as a matter of law ("JMOL") and entered final judgment in favor of Google. Oracle Am., Inc. v. Google Inc., No. C 10-03561, 2016 WL 3181206 (N.D. Cal. June 8, 2016) ("Order Denying JMOL"); Final Judgment, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. June 8, 2016), ECF No. 1989. Oracle filed a renewed motion for JMOL and separately moved for a new trial. The district court denied both motions in a single order. Oracle Am., Inc. v. Google Inc., No. C 10-03561, 2016 WL 5393938 (N.D. Cal. Sept. 27, 2016) ("Order Denying Renewed JMOL/New Trial"). Consistent with these determinations, no damages verdict was rendered.

         Oracle now appeals from the district court's final judgment and its decisions denying Oracle's motions for JMOL and motion for a new trial. Google cross-appeals from the final judgment purportedly to "preserv[e] its claim that the declarations/SSO are not protected by copyright law, " but advances no argument for why this court can or should revisit our prior decision on copyrightability. Cross-Appellant Br. 83.

         Because we conclude that Google's use of the Java API packages was not fair as a matter of law, we reverse the district court's decisions denying Oracle's motions for JMOL and remand for a trial on damages. We also dismiss Google's cross-appeal.

         I. Background

         A. The Technology

         Oracle's predecessor, Sun Microsystems, Inc. ("Sun"), developed the Java platform for computer programming in the 1990s, and Oracle purchased Sun in 2010. The Java platform is software used to write and run programs in the Java programming language. It allows programmers to write programs that "run on different types of computer hardware without having to rewrite them for each different type." Oracle, 750 F.3d at 1348. With Java, programmers can "write once, run anywhere." Id.

         The Java 2 Standard Edition ("Java SE") of the platform includes, among other things, the Java Virtual Machine and the Java Application Programming Interface ("API"). The Java API is a collection of "pre-written Java source code programs for common and more advanced computer functions." Order Denying JMOL, 2016 WL 3181206, at *3. These APIs "allow programmers to use the pre-written code to build certain functions into their own programs rather than write their own code to perform those functions from scratch. They are shortcuts." Oracle, 750 F.3d at 1349. The pre-written programs are organized into packages, classes, and methods. Specifically, an API package is a collection of classes and each class contains methods and other elements. "Each method performs a specific function, sparing a programmer the need to write Java code from scratch to perform that function." Order Denying JMOL, 2016 WL 3181206, at *3.

         To include a particular function in a program, the programmer invokes the Java "declaring code." As the district court explained, the declaring code is the line or lines of source code that "declares or defines (i) the method name and (ii) the input(s) and their type as expected by the method and the type of any outputs." Id. at *4. After the declaring code, each method includes "implementing code, " which takes the input(s) and gives the computer step-by-step instructions to carry out the declared function.

         By 2008, Java SE included 166 API packages divided into 3, 000 classes containing more than 30, 000 methods. At issue in this appeal are 37 API packages from Java SE Version 1.4 and Version 5.0. We have already concluded that the declaring code and the SSO of the 37 Java API packages at issue are entitled to copyright protection. Oracle, 750 F.3d at 1348.

         The Java programming language itself is free and available for use without permission. At this stage, it is undisputed that, to write in the Java programming language, "62 classes (and some of their methods), spread across three packages within the Java API library, must be used. Otherwise the language itself will fail." Order Denying JMOL, 2016 WL 3181206, at *5. It is also undisputed that anyone using the Java programming language can write their own library of pre-written programs to carry out various functions.

         Although Oracle makes the Java platform freely available to programmers building applications ("apps"), it devised a licensing scheme to attract programmers while simultaneously commercializing the platform. In relevant part, Oracle charges a licensing fee to those who want to use the APIs in a competing platform or embed them in an electronic device. To preserve the "write once, run anywhere" philosophy, Oracle imposes strict compatibility requirements on licensees. Oracle, 750 F.3d at 1350. Oracle also made available without charge under an open source license a version of Java called "Open-JDK." Order Denying JMOL, 2016 WL 3181206, at *10. Oracle maintains, however, that OpenJDK came with an important catch: any company that improved on the packages in OpenJDK had to "'give away those changes for free' to the Java community." Appellant Br. 53.

         The evidence showed that Oracle licensed Java in 700 million PCs by 2005. Although Oracle never successfully developed its own smartphone platform using Java, it licensed Java SE for mobile devices. According to Oracle, the "mobile device market was particularly lucrative, " and "Java quickly became the leading platform for developing and running apps on mobile phones." Appellant Br. 9.

         B. Google's Android Platform

         In 2005, Google acquired Android, Inc. as part of a plan to develop a software platform for mobile devices. That same year, Google and Sun began discussing the possibility of Google taking a license to use and adapt the Java platform for mobile devices. Oracle, 750 F.3d at 1350. The parties were unable to reach an agreement, in part because Google wanted device manufacturers to be able to use Oracle's APIs in Android for free with no limits on modifying the code, which would jeopardize the "write once, run anywhere" philosophy.

         The jury heard evidence that Google wanted to move quickly to develop a platform that would attract Java developers to build apps for Android. The Android team had been working on creating its own APIs, but was unable to do so successfully. After negotiations between the parties reached an impasse, Google elected to "[d]o Java anyway and defend [its] decision, perhaps making enemies along the way." Order Denying JMOL, 2016 WL 3181206, at *6. It is undisputed that Google copied verbatim the declaring code of the 37 Java API packages- 11, 500 lines of Oracle's copyrighted code. It also copied the SSO of the Java API packages. Google then wrote its own implementing code.

         Google announced its Android software platform for mobile devices in 2007, and the first Android phones went on sale the following year. Google provides the Android platform free of charge to smartphone manufacturers and publishes the source code for use without charge under an open source license. Although Google does not directly charge its users, Android has generated over $42 billion in revenue from advertising. Oracle explains that Android was "devastating" to its licensing strategy and that many of its customers switched to Android. Appellant Br. 15. Even customers who stayed with Oracle cited Android as a reason to demand discounts. The jury heard evidence that Amazon, which had entered into a license to use Java for its Kindle tablet device, switched to Android for the subsequently released Kindle Fire and then used the existence of Android to leverage a steep discount from Oracle on the next generation Kindle.

         C. Remand Proceedings

         In the first appeal, we held that the declaring code and the SSO of the 37 API packages are entitled to copyright protection and ordered the district court to reinstate the jury's infringement finding. Oracle, 750 F.3d at 1381. We also considered Oracle's argument that it was entitled to judgment as a matter of law on Google's fair use defense. Although we found that Oracle's position was "not without force, " and that Google was overstating what could be fair use under the law, we found that the record evidence regarding the relevant fair use factors was insufficiently developed for us to resolve the issue on appeal. Oracle, 750 F.3d at 1376. In doing so, we pointed to sharp disputes between the parties, both legal and factual, including whether Google's use was transformative, whether "functional aspects of the package" and Google's "desire to achieve commercial 'interoperability'" weighed in favor of the second and third factors, and whether Android caused market harm to Oracle. Id. at 1376-77. We concluded that "due respect for the limit of our appellate function" required remand. Id. at 1376.

         During the pendency of the first appeal, Google's Android business expanded significantly. Android gained new users and developers, and Google "released modified implementations and derivatives of Android for use in numerous device categories, including wearable devices with small screens (Android Wear), dashboard interfaces in cars (Android Auto), television sets (Android TV), and everyday devices with Internet connectivity." Oracle Am., Inc. v. Google Inc., No. C10-03561, 2016 WL 1743111, at *1 (N.D. Cal. May 2, 2016) ("Order on Motion in Limine").

         When the case returned to the district court, Oracle filed a supplemental complaint adding allegations of market harm and damages resulting from new versions of Android released since the original complaint. Specifically, Oracle alleged that Google had launched new versions of Android for phones and tablets and had expanded Android into new device categories. Id. Google did not oppose the supplemental complaint, and the district court granted Oracle's motion to file it. But when Oracle served expert reports that addressed versions of Java SE that were not at issue in the first trial, Google moved to strike those reports. Id.

         When the parties were unable to agree on the scope of the retrial, the district court limited it to: (1) the two versions of Java SE that Oracle asserted in the first trial; and (2) released versions of Android used in smartphones and tablets "which Google . . . agreed would be subject to the prior jury's adverse finding of infringement and which Oracle identified in its supplemental complaint." Id. The court explained that Oracle retained the right to sue Google for infringement with respect to the other versions and implementations of Android in a separate trial or proceeding. Order re: Google's Motion to Strike at 2, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. Feb. 5, 2016), ECF No. 1479. The court also granted Google's motion in limine to exclude all evidence of the new Android products.

         The district court bifurcated the issue of fair use from willfulness and monetary remedies, and the trial on fair use began on May 10, 2016. After roughly one week of evidence and several days of deliberations, the jury found that Google's use of the declaring lines of code and the SSO of the 37 API packages constituted fair use.

         Oracle moved for JMOL, which the district court denied. At the outset, the court noted that Oracle stipulated before the jury "that it was fair to use the 62 'necessary' classes given that the Java programming language itself was free and open to use without a license." Order Denying JMOL, 2016 WL 3181206, at *5. "That the 62 'necessary' classes reside without any identification as such within the Java API library (rather than reside within the programming language), " the court explained, "supports Google's contention that the Java API library is simply an extension of the programming language itself and helps explain why some view the Java API declarations as free and open for use as the programming language itself." Id. Because Android and Java both "presupposed the Java programming language in the first place, " the court noted that a jury reasonably could have found that it "was better for both to share the same SSO insofar as they offered the same functionalities, thus maintaining usage consistency across systems and avoiding cross-system confusion." Id. at *6.

         The district court then considered each of the four statutory fair use factors. As to factor one-the purpose and character of the use-the court concluded that a reasonable jury could have found that, although Google's use was commercial, it was transformative because Google integrated only selected elements for mobile smartphones and added its own implementing code. Id. at *7-9. With respect to factor two-the nature of the copyrighted work-the district court found that a reasonable jury could have concluded that, "while the declaring code and SSO were creative enough to qualify for copyright protection, " they were not "highly creative, " and that "functional considerations predominated in their design." Id. at *10.

         As to factor three-the amount and substantiality of the portion used-the court concluded that a reasonable jury could have found that "Google copied only so much as was reasonably necessary for a transformative use, " and that the number of lines duplicated was minimal. Id. Finally, as to factor four-market harm-the court concluded that the jury "could reasonably have found that use of the declaring lines of code (including their SSO) in Android caused no harm to the market for the copyrighted works, which were for desktop and laptop computers." Id. The court determined that, on the record presented, the jury could have found for either side and that the jury was "reasonably within the record in finding fair use." Id. at *11.

         Oracle subsequently renewed its motion for JMOL and separately moved for a new trial challenging several of the court's discretionary decisions at trial. The district court denied both motions in a single order. With respect to JMOL, the court simply stated that it denied Oracle's renewed motion for the same reasons it denied the original motion. With respect to the motion for a new trial, the court rejected Oracle's argument that the court abused its discretion by limiting the evidence at trial to Google's use of Android in smartphones and tablets.

         The court also rejected Oracle's allegation that Google engaged in discovery misconduct by withholding evidence during discovery relating to Google's App Runtime for Chrome ("ARC"), which enabled laptops and desktops running Google's computer operating system to run certain Android applications. Order Denying Renewed JMOL/New Trial, 2016 WL 5393938, at *5. The court found that Google had produced relevant documents during ...

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