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Latest Federal Circuit Court Cases, 4/2/18

April 2, 2018

Overview

Oracle America, Inc. v. Google LLC, Appeal No. 2017-1118, -1202 (Fed. Cir. 2018)

In an appeal from a jury trial, the Federal Circuit reversed the District Court’s decision denying Oracle’s motion for JMOL and remanded for a trial on damages.  This was the second appeal to the Federal Circuit in this case, and is a rare instance in which our Case of the Week commentary focuses on copyright, as opposed to patent law.  The case was originally both a copyright and patent case, but the patent issues have long since been resolved, and only the copyright issues remain outstanding.  Given the public interest in the case, its $1 billion damages claim, and the relevance to parallel issues in patent law from some of the Court’s decision, we chose this as our Case of the Week this week.

The case stems from Google’s copying of 37 packages of Java application programming interface (“API”) for use in its Android platform.  Google largely wrote new code when developing Android, having been unable to negotiate a license with Oracle for use of Java on terms that it desired.  Specifically, Google wrote its own implementations for the functions in the Java API that were key to mobile devices, but copied certain “declaring code” from Java.  As explained in the first appeal, “Google believed Java application programmers would want to find the same 37 sets of functionalities in the new Android system callable by the same names as used in Java.”

In the first case, the Court concluded that the 37 API packages were entitled to copyright protection, but remanded for consideration of whether Google’s copying constituted fair use.  On remand, a jury was tasked with determining whether Google had proven its affirmative defense of fair use.  The jury found that it had, and Oracle appealed. 

Before considering the four non-exclusive fair use factors codified in 17 U.S.C. § 107, the Court first addressed the standard of review for fair use, which is a mixed question of law and fact.  The Court identified three components of the inquiry: (1) whether the ultimate question of fair use is a legal inquiry, (2) what standard is used to determine factual issues, and (3) what aspects of fair use are proper for the jury to consider.   After reviewing relevant Supreme Court and Ninth Circuit precedent, the Court set out the standard for review as follows:

…whether the court applied the correct legal standard to the fair use inquiry is a question we review de novo, whether the findings relating to any relevant historical facts were correct are questions which we review with deference, and whether the use at issue is ultimately a fair one is something we also review de novo.

With respect to the jury, the Court noted that the Supreme Court had not previously clarified the jury’s role in determining whether there has been fair use.  Relying on Ninth Circuit law, the Court held that a jury may determine disputed historical facts (i.e. the “who did what, where, and when”), but that a jury has no role in applying inferences or conclusions to be drawn from those facts.  Therefore, while the jury can resolve historical findings of fact, it is up to the District Court to resolve all inferences from those facts as well as to make the final determination of whether there has been fair use.  The Court also noted that most facts in the fair use context are undisputed, minimizing any prospective role for the jury in a fair use determination.

Given that the historical facts in this case were undisputed, the Federal Circuit treated the jury’s findings as merely advisory, and assessed the fair use defense based on de novo review.

Factor 1: The Purpose and Character of the Use:  The Court found in favor of Oracle, holding  “…the highly commercial and non-transformative nature of the use strongly support the conclusion that the first factor weighs against a finding of fair use.”  The Court arrived at this conclusion notwithstanding that Google derives its revenue from advertisements and provides Android for free. 

Factor 2: Nature of the Copyrighted Work:  While the Court resolved this issue in Google’s favor, it also found that it was not significant to the overall analysis.

Factor 3: Amount and Substantiality of the Portion Used:  The Court found that this factor was neutral at best.  The Court noted that while only 170 lines were necessary to copy, it was undisputed that Google copied an additional 11,330 lines of code.  The Court found that this fact weighed against fair use.  The Court also criticized Google’s argument that it used only 11,500 lines out of 2.86 million lines of Java code, because Google had in fact “copied the SSO for the 37 API packages in its entirety.”

Factor 4: Effect Upon the Potential Market:  The Court found that the fourth factor weighed heavily in Oracle’s favor.  In particular, the Court found there was evidence of actual and potential harm to Oracle.

Finally, the Court weighed all four factors together “in light of the purposes of copyright.”  It concluded that “[t]here is nothing fair about taking a copyrighted work verbatim and using it for the same purpose and function as the original in a competing platform.”  Consequently, it found that Google’s use of 37 Java API packages was not fair use and remanded for a trial on damages.

Opinion found here

ALSO THIS WEEK 

In re Brandt, Appeal No. 2016-2601 (Fed. Cir 2018)

In a patent applicant’s appeal from the Patent Trial and Appeal Board (PTAB), the Court affirmed the PTAB’s and the examiner's obviousness rejections of claims based on an abutting range or a slightly overlapping range.  Distinguishing its prior decision in In re Patel, 566 F. App’x 1005 (Fed. Cir. 2014), the Court found that in this case, a skilled artisan would not have found a meaningful difference between the claimed and prior art ranges, and the examiner properly found prima facie obviousness.  Because the applicant submitted no evidence of criticality or unexpected results as to the claimed range to rebut the prima facie case, and rejecting the applicant’s “teaching away” argument, the Court affirmed the obviousness rejection.

Opinion found here

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