Google v. Oracle Supreme Court Showdown

Google and Oracle clearly are technological heavy weights, and I’d say from a name recognition standpoint, this case is only rivaled by the recent Apple v. Samsung patent appeal. Just like any prize fight the stakes for each side are high. After listening to the oral arguments, I believe the parties and the justices referenced the billions of dollars spent on software platform development by Oracle and its competitors Apple and Microsoft no less than 20 times.

My fear is that these sums of money will distract the Court from the critical balance at stake in this case. Namely, following the gutting of the patent protection available for software under the Supreme Court’s Alice decision, copyright became a more important form of intellectual property protection for software. The Court’s decision in Google v. Oracle could potentially disrupt copyright protection for software to an equal extent making software developers vulnerable to copying and without leverage to support license fees.

From the start of argument, both Google and Oracle landed solid blows to each other’s arguments, but the Court quickly began focusing on two issues:

1) Can copyright protection can be applied to Oracle’s declaring code under the merger doctrine?

2) What is the proper standard of review for fair use?

Since the balance of protection for software hinges on the first issue, I have focused on it in this CueCards™ blog post.

Balancing Copyrights and Patents for Software:

Google has asked the court to exclude Oracle’s java “declaring” code from copyright protection under the theories that this code is merely a method of operation or is inextricably tied to computer function under the merger doctrine. The declaring code is described as programming shortcut language that triggers additional code, described as implementing code, within Java software. Google distinguished the two types of code conceding that its arguments would not apply to the implementing code. In particular, Google argued that the declaring code is purely functional, and copyright protection cannot extend to it under the merger doctrine. If it wanted to protect the function of the declaring code, Oracle should have sought a patent.

The merger doctrine prevents copyright from extending to creative expression that is inextricably tied to a function such that the public cannot perform the function without using the creative expression. In making the merger argument, Google criticized Oracle’s position of seeking exclusivity for the declaring code is tantamount to giving Google a patent over the functions performed by the computer when the code is executed. Indeed, Google often suggested that Oracle should have obtained patent protection if it wanted to obtain exclusivity for its declaring code. With the backdrop of Alice, this argument effectively forces the Supreme Court to define the balance between patent and copyright protection for software.

In 2014, the Supreme Court’s Alice decision held that software in and of itself cannot be the subject of a patent. Following this decision, significant numbers of software patents were found invalid in court or before the Patent office. This decision forced companies seeking patent protection to look beyond software to patent the interaction of software and hardware or transformative software implementations. Practically speaking in addition to foreclosing patent protection for certain types of software, the new legal paradigm created by Alice added extraordinary cost to the process of obtaining software patents. Without a clear standard, conflicting lower court and appeals court decisions created uncertainty at the patent office resulting in extended arguments by patent attorneys during examination and the appeals process. In addition to thousands of dollars in filing fees for each application, the attorney fees required to prepare and shepherd a software patent application quickly approached six figures before reaching appeals. As a result, patent protection became viable for limited software applications and available only to those companies that could justify the expense.

By contrast, copyright’s lower filing costs and simplified review process makes it accessible to individual programmers, small businesses, start-ups and global technology giants. Comparing filing fees alone, the copyright filing fee is less than $50. While software copyright applications are more involved than most copyright applications and often incur substantive review, the costs are a fraction of the cost for a software patent. When considering the scope of rights available under both patent and copyright law, you certainly get what you pay for. Patent rights offer the possibility of excluding others from creating the same computer functions regardless of the particular code used. Copyright rights are limited to the particular software code and substantially similar copies.

If we view the Supreme Court’s Alice decision as showing disfavor for patents covering pure software, by default the more preferred protection is copyright. From a policy perspective, this tipping of the scales toward copyright makes protection more accessible to a wider range of developers while also providing much more narrowly defined rights. The limit on copyright’s exclusive rights gives competitors and future developers greater certainty if they choose to design around existing software. The creation of exclusive rights, through copyright, incentivizes development of new software with the ability to exclude others and/or charge license fees.

Google offers a competing policy argument that removing copyright protection for certain types of code, like Oracle’s declaring code, fosters creativity through efficiency. In essence, if software tools or shortcuts, like Oracle’s declaring code, cannot be held exclusively, others can build code faster with free access to these tools. I will admit that this policy argument is seductive, but it undermines the basic incentive of rewarding originality and creativity under the Copyright Act. As a consequence, it removes significant leverage behind license agreements that provide the financial incentive for creation of these tools. While the Court notes that Oracle, Microsoft and Apple invested billions in developing their competing software platforms, the decision that Google seeks would apply to software developers of all sizes and economic fortitudes. Presumably, this decision will have a disproportionate effect on smaller businesses that do not have market leverage or access to alternative protections, like patents, to garner license fees.

The Supreme Court’s Consideration:

While both sides received questions about the method of operation theory and the procedural question of what is the appropriate standard of review for fair use, the central issue appeared to be whether Oracle’s declaring software is incapable of copyright protection under the merger doctrine.

During the argument, the justices asked several questions to determine how Google distinguished declaring code from implementing code. They also posed several hypotheticals to each side to flesh out what is purely functional expression including references to the QWERTY keyboard, restaurant menus and recipe books. It is clear from these hypotheticals that the Court is struggling with how to apply Google’s interpretation of the merger doctrine. The competing merger doctrine position proffered by the Chief Justice was whether merger exists only when there are no alternative forms of expression that could be used or developed to achieve the same function.

While the Court has not decided the scope of copyright protection as it relates to software, its decision in Star Athletica v. Varsity Brands suggests that it is willing to uphold copyright protection when the expression can exist independently of a useful article. By extension, if Oracle is successful in demonstrating that its expression of the declaring code is not inextricably tied to the function of the computer, the Court may find in its favor. Reading the tea leaves, I believe that the court will apply the merger doctrine to Oracle’s software. The greater uncertainty is which test will the Court adopt.

A test taking a broader view of copyright protection that preserves rights when there are viable alternative ways of developing code to achieve the same function provides more certainty when alternatives already exist. Foreclosing copyright based on practical difficulties or expense, as suggested by Google, would seem to make it more difficult to draw a clear line and invites intense factual findings that will vary based on the types of developers involved in each case. What is impractical or inefficient for Google is vastly different than an individual programmer or small start-up.

While companies, like Oracle, that rely on license income from software tools, will be holding their collective breath in anticipation of a decision, IP professionals will be hard at work creating alternate strategies to protect software for either outcome. Immediate strategies may include attempts to preserve future tools, like the declaring code, as trade secrets, or wrap them in contractual protection that imposes heavy consequences for misuse of the code.

Stay tuned for updates on the Court’s decision, and don’t hesitate to reach out with questions about this post or software protection strategies.