As Matt Schruers indicated in a DisCo post earlier this week, copyright holder representatives have filed amicus briefs in support of Oracle’s appeal of the fair use determination in the ongoing copyright infringement litigation between Oracle and Google. These briefs argued that the district court and the jury erred by applying fair use principles over-broadly. Nonetheless, several of the briefs correctly acknowledged the importance of the fair use right to free expression, creativity, and the proper operation of the copyright system.
The high profile IP dispute over Google’s reimplementation of the Oracle-owned Java API in Android software is headed back to a federal appeals court after a jury handed a unanimous loss to Oracle last summer. So what’s the issue this time?
Our Story Until Now
A quick refresher: the case began following Oracle’s 2010 acquisition of Sun, which held the copyrights to Java. Oracle sued Google on various IP claims later that year. The basis for the suit was that in developing Android, Google had created its own version of the programming language called Java, a toolset that programmers use to write code. In order to enable other developers to program on Android, Google employed the same names, organization, and functionality in Android as is used in the Java API (“application programming interface”) — the protocols by which software programs communicate.
In June 2012, following a jury trial, Judge William Alsup in the Northern District of California ruled that the Java API “packages” copied by Google were not copyrightable. According to Alsup’s holding, Android may have “replicated the overall name organization and functionality of 37 [out of 166] packages in the Java API.” However, these protocols — themselves only 3% of the 37 packages — did not qualify as copyrightable since to extend that protection would provide control over “all possible implementations of the taxonomy-like command structure” used by programmers to write code. (Fun fact: Judge Alsup taught himself Java for purposes of hearing the case.). MORE »
A while back I wrote about the European Commission’s competition investigation into the Android operating system (OS) and today’s mobile platform competition. The main argument of my previous post was that competition in the mobile economy is best conceived as competition between mobile ecosystems with Android and iOS being by far the two most popular which, in my opinion, stand in clear competition with each other. All mobile OSs have to serve and balance the interests of a variety of parties to keep them attractive (or even alive) — that is the nature of a multi-sided platform like a mobile OS. The ‘Apple factor’ should be part of the Commission’s investigation into Android at the stages of determining dominance as well as potential abuse. It is very hard to imagine that Google can act ‘independently’, in the competition law sense of the word, of Apple in the market for mobile OSs. In that sense the Commission’s market definition of licensable smart mobile operating systems, which leaves Apple’s iOS outside that market, appears peculiar (you can read more on that point in my previous post). MORE »
Many observers, including me, predicted that the 2014 decision of the U.S. Court of Appeals for the Federal Circuit (“CAFC”) in Oracle America v. Google would provoke a new wave of litigation concerning copyright and interoperability. In particular, we worried that the decision would encourage dominant vendors to bring copyright claims against competitors that replicated interface specifications for the purpose of interoperating with the dominant vendors’ products. We were right.
Sure enough, Oracle America has factored into at least four cases so far. One of these cases settled, one is on appeal, and the other two likely will be appealed in the near future. The latter two cases also involve patent claims, so appeals will be heard by the CAFC. (The CAFC has nearly exclusive appellate jurisdiction over cases with patent claims.) One can assume that the plaintiffs added the patent claims to ensure CAFC jurisdiction.
GDC v. Dolby Laboratories
This is the case that settled. Dolby Laboratories provides advanced motion picture theatre sound systems. GDC Technology develops software and hardware that interoperates with the Dolby systems. Dolby facilitated this interoperability by making its interface specifications available to GDC. It appears that Dolby stopped providing this information after it acquired Doremi, a media server manufacturer. Evidently, this acquisition made GDC a more direct competitor. Emboldened by the CAFC’s Oracle America decision, Dolby demanded that GDC stop using Dolby interface specifications to interoperate with Dolby products. Furthermore, Dolby insisted that GDC cease telling customers that GDC had the right to use this interfaces information to interoperate with Dolby products.MORE »
Imagine the scene: it is a sunny autumn afternoon and you are walking down your favourite shopping street kicking leaves to one side. Try guessing whether your fellow shoppers are out for a stroll, are off to browse in the shops or are heading intently to buy an item they have already identified online or during a previous stroll. The chances are that the people you see fall into all of these categories.
People are complicated. Consumer behaviour is complicated. Technological change throws even more variables into the mix.
It is worth bearing all this in mind when thinking about the European Commission statement of objections against Google in its ‘shopping’ case. The Commission asserts that Google’s general search engine prioritises its own services in a way that is anti-competitive and is able to harm consumer welfare. The key questions to my mind are (i) what is the reality of consumer behaviour online in finding goods, services and prices; (ii) what is the reality of investment in the EU in ecommerce and related activities; and, given this, (iii) even if Google wanted to, could it exert such influence over the market?
I have completed the third volume of a history of the global legal debate concerning copyright and competition in the software industry. The debate has centered on two related issues. First, does copyright protect the elements of computer programs necessary to achieve interoperability? Second, to the extent that those elements are unprotectable, can copyright law nevertheless prevent the copying incidental to uncovering those unprotectable elements?
The first volume, written with Masanobu Katoh, was published by Westview Press in 1995. You can download a copy of Interfaces on Trial: Intellectual Property and Interoperability on the Global Software Industry for free here.
The second volume, also written with Masanobu Katoh, was published by MIT Press in 2011. It covers the developments in this field between 1995 and 2010. You can download a copy of Interfaces on Trial 2.0 for free from: http://mitpress.mit.edu/band.
The third volume, Interfaces on Trial 3.0: Oracle America v. Google and Beyond, picks off where the Interfaces on Trial 2.0 left off, focusing in particular on the Oracle America v. Google litigation concerning Google’s copying of certain elements of the Java Application Program Interface (API). This litigation, initiated by Oracle in 2010, is still ongoing. However, there now is a break in the action as Oracle appeals the 2016 fair use jury verdict to the U.S. Court of Appeals for the Federal Circuit (CAFC). Because the CAFC may not issue a ruling until 2018, it made sense to me to release this volume now, and update it as the case progresses. You can download a copy here. Much of the volume’s description of the case’s twists and turns is based on blog posts I’ve written for the Disruptive Competition Project (most recently here).
After discussing Oracle America v. Google, Interfaces on Trial 3.0 reviews other U.S. judicial decisions touching on interoperability, mainly relating to section 1201 of the DMCA. The volume then examines the interoperability-related exemptions granted (and rejected) by the Librarian of Congress in the section 1201 rulemaking. Finally, the volume looks at international developments, most notably the Court of Justice of the European Union’s 2012 decision in SAS Institute v. World Programming.
Although I attempt to present these contentious issues in a balanced manner, the reader should be forewarned that I am hardly an objective observer in this debate. Rather, I have devoted significant time and energy over almost 30 years to advocating the views of interoperable developers. I believe that the triumph of interoperability will benefit both the information-technology industry and computer users around the world.
Yesterday, the district court in the Oracle America v. Google copyright litigation over the Android application program interfaces (APIs) denied Oracle’s motion for a new trial and renewed motion for judgment as a matter of law. The jury’s decision that fair use permitted Google’s copying of elements of the Java API in the Android API thus is ripe for review in the U.S. Court of Appeals for the Federal Circuit (CAFC).
The district court denied Oracle’s renewed motion for judgment as a matter of law in one sentence, “for the same reasons as its old one.” The court’s denial of Oracle’s earlier motion for judgment a matter of law is discussed here.
With respect to the motion for a new trial, the district court first responded to Oracle’s contention that it had abused its discretion by limiting the fair use trial to “Android as used in smartphones and tablets, postponing all other uses to later trials.” The court observed that the original trial in 2010 covered Android versions used in smartphones and tablets, and that these versions were within the scope of the appeal and the remand. Once it was back before the district court, Oracle had sought to broaden the case to include later versions of Android used on other devices, including laptops and desktops. Google, however, disputed whether the earlier finding of infringement applied to these later versions of Android. Thus, including them in the second trial would require Oracle proving that these versions, too, infringed its copyright in Java.
Further, the court found that the fair use analysis with respect to the laptop and desktop versions was distinct from that concerning the smartphone and tablet versions. Oracle argued that because the fourth fair use factor considered whether widespread conduct of the sort engaged in by the defendant would have an adverse impact on the market for the original, the potential harm to the laptop and desktop markets was relevant to the fair use determination. The court responded that
the concern with widespread use, however, is not whether uses distinct from the accused uses—each of which must be subject to distinct transformativeness analyses—might harm the market for the copyrighted works. Rather, the concern is whether a use of the same sort, if multiplied via use by others, would cause market harm, even though the actual use by the infringer caused only minimal harm.
The European Commission’s competition investigation into Google’s Android mobile operating system (OS) has unsurprisingly raised a lot of attention and commentary. It’s fair to say that so far most comments focused on the ‘abuse part’ of that investigation. That is the part which deals with the question whether certain provisions in the Mobile Application Distribution Agreement (MADA) relating to the bundling of Google apps and the anti-fragmentation agreement (AFA) constitute an abuse under Article 102 TFEU. In fact, the trade association I work for has addressed a letter to Commissioner Vestager explaining why the MADA and the AFA are key to the functioning of the Android ecosystem, spurring innovation and competition.
It goes without saying that readers who are more familiar with the details of competition law will know that the abuse part of any Article 102 investigation formally is the last step competition enforcers take (while arguably being the most interesting). Before one gets to the question of whether a company abused a dominant position, one has to find whether the company actually has a ‘dominant position’. After all, a company can only abuse a dominant position if it has one. This post will discuss this issue in the context of the Android investigation.
But first, let’s continue with competition law basics: how does one find ‘dominance’? Conceptually, a finding of dominance involves a two-stage assessment. First, one has to define the relevant market. While that definition can involve complex economic assessments, it is essentially a matter of substitutability. Where goods or services can be regarded as substitutes or interchangeable by the consumer, they are within the same product market. Second, competition authorities look at whether a given company has a ‘dominant position’ on the relevant market. For economists, companies with a dominant position are companies that have substantial market power. In the often recurring words of the Court of Justice of the EU (CJEU), a dominant position:
“relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers”. (Case 27/76 United Brands v Commission, para. 65)
Importantly, the Commission explains in its Guidance on Article 102 Enforcement Priorities that the notion of ‘independence’ “is related to the degree of competitive constraint exerted on the undertaking in question” and where competitive constraints are ineffective, the “undertaking’s decisions are largely insensitive to the actions and reactions of competitors, customers and, ultimately, consumers” (para. 10).
With this in mind, let’s turn to the ongoing Android investigation. To most people, competition experts and non-experts alike, one aspect of the Commission’s investigation stands out: the market definition. When the Commission announced the Statement of Objections (SO) it sent to Google, it held that the company has a market share of more than 90% in the market for licensable smart mobile operating systems. The word ‘licensable’ is key because it means that Apple’s iOS which powers all iPhones and iPads is outside the scope of the relevant market. So are iPhones really not competing with Android-powered smartphones? (Leaving aside the question of whether tablets should be included in the market definition for now).
Last week the European Commission issued a supplementary Statement of Objections (SSO) to Google. The SSO is intended to support the Commission’s preliminary finding that Google abused a dominant position in the market for general search services by systematically placing its own comparison shopping service at or near the top of its search results. It is the next step in an antitrust investigation which started in 2009 and comes in response to Google’s substantial reply to the Commission’s initial Statement of Objections (SO) from April 2015.
Commissioner Vestager stated that the SSO makes the case stronger by adding new evidence and data. While no one except the parties to the case has access to that new evidence, Vestager’s comments revealed that it relates to both the economic impact of Google’s alleged anti-competitive practice as well as to a clearer definition of markets in the e-commerce space.
Maybe the single most puzzling finding relates to the latter. Put as a short headline, Vestager stated that successful e-commerce companies like Amazon and eBay do not compete with Google Shopping. According to the Commission, merchant platforms compete in a different market than comparison shopping websites. In economic terms, it means that merchant platforms cannot be considered as substitutes for comparison shopping services. It is a curious finding given that there are thousands of merchants on online marketplaces which allow consumers to quickly compare products and prices. It strains credulity to think that consumers who would like to compare product prices would use a comparison shopping service and consciously refrain from comparing offers on other e-commerce websites such as Amazon. There are many routes to compare prices and products on the Internet, and they all clearly compete with one another for consumers’ attention and merchants’ product listings.
As predicted here two weeks ago when the jury found that Google’s use of Java declaring code in the Android operating system was a fair use, the presiding judge has rejected Oracle’s motion for a judgment as a matter of law. Oracle argued that no reasonable jury could find against it, but the judge ruled that based on the law of fair use and the trial record, a jury reasonably could have found for either side on the fair use issue. Because the district court’s 20 page order applying fair use jurisprudence to the facts of this case likely will be the focus of Oracle’s inevitable appeal, it is worth examining in some detail.
Before diving into a discussion of the four statutory fair use factors, the district court explained that the jury reasonably could have found that Google’s copying of the declaring code of 37 of the 166 packages of the Java Application Program Interface (API) was justified by the objective of “inter-system consistency.” The Java API contains a library of thousands of pre-written Java source code programs for common functions. Each program is called a method. Each method contains a line of declaring code that specifies the method’s name and defines acceptable inputs and output. The method then contains implementing code that carries out the function. The methods are organized into a hierarchy of classes and packages, referred to as the API’s structure sequence and organization (SSO). Oracle conceded that copyright did not protect the Java language. However, Oracle claimed, and the Federal Circuit found, that copyright protected the declaring code and the SSO. The question before the jury was whether fair use allowed Google to copy the declaring code and the SSO.