Transfer Pricing Associates

Google vs. Oracle, Batter Up!

post Monday May 7, 2012


Google and Oracle are revving up for what reporters have termed the “World Series of Intellectual Property Cases”.  Jurors are deciding this week on whether Google Inc. stole Oracle Inc.’s Java technology and infringed copyrights when building Android software which is currently used in more than 300 million phones.

In 2010, Oracle acquired ownership of the Java platform when it bought Sun Microsystems.  Shortly after the acquisition, Oracle sued Google for $1 billion claiming copyright and patent infringement over Google’s use of Java software (that allegedly belongs to Sun Microsystems/Oracle) when building its Android phones.  The case finally came to court on April 16, and the past two weeks saw testimony from the CEOs of Oracle, Google, and Sun Microsystems. 

The U.S. District Judge presiding over the case in San Francisco, William Alsup, sent the jurors home May 4 and ordered them to return May 7 for more deliberations that will hopefully land at a unanimous decision.  The jurors are being asked to decide whether Google’s use of Java qualifies as a copyright infringement and if the infringement qualified as “fair use”.  This would mean that Google’s use of the Java software added something new or functional that is in the public interest.  If Google’s use of the software is classified as “fair use”, Google will not be held liable for copyright damages.

The implications of the case is that the decision would have a bearing on whether a company can copyright an application programming interface (API), which is essentially a way of talking to a piece of software.  Oracle claims that Google infringed its copyrights by mimicking 37 Java APIs in building Android.

As Judge Alsup gave his final instructions to the jury, he once again defined the boundaries of copyright protection, outlining that a copyright protects the “expression of ideas” but not procedures, processes, systems, methods of operation, concepts, principles, or discoveries.  Judge Alsup also stated that Oracle’s copyrights cover the “structure, sequence, and organization” of the actual software code that underpins the Java platform, a detail that may have a bearing on the jury’s decision.

As the software industry has one of the highest R&D/Sales ratios of any industry, patent and copyright filings are an integral part of business to protect new innovations.  Unfortunately for these software companies, protecting software innovations can be very nitpicky and hard to enforce.  Compare for example, the pharmaceutical company, Pfizer, whose multi-billion drug Viagra, is protected through just a single patent and Microsoft, whose software feature, the positioning and/or movement of a cursor, is protected by 14 different patents.  So, rather than producing and patenting more broad innovations like the word processor or spreadsheet, software companies these days are instead choosing to make a race to patenting every trivial extension of already existing software, sending patent filings for the industry through the roof.  With this trend, there is obviously speculation over whether or not these low-value patents present a challenge to innovation and competition by essentially creating a monopoly over a certain software function or feature.  There can also be a lot of claims disputes if similar software emerges at the same time, due to the fact that a software patent does not a universally accepted definition and so software companies must file and register a patent in every country in which the company wishes to have the patent enforced. 

The Google vs. Oracle case is a prime example of how difficult innovating and protecting innovations in the software industry can be.  The coming week may have a large effect on how copyright protections are undertaken in the future.  So here, in the last inning of the game, we will see which company will win the pennant.


[Sources: Bloomberg & Wired Enterprise]

Image courtesy of Meawpong3405

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