Google v. Oracle XII : SCOTUS Should Not Remand on Fair Use Review
As mentioned in my last Google v. Oracle post, the Supreme Court devoted considerable attention during oral argument to addressing the standard applied by the Federal Circuit when it determined as a matter of law that Google’s copying of Oracle’s code was not fair use. Google maintains that the Federal Circuit failed to show proper deference to a jury decision, and I discussed the constitutional and historical aspects of this argument in an earlier post. Oracle’s response argues that the Federal Circuit performed essentially the same function on appeal that courts perform all the time at summary judgment, where the vast majority of fair use cases are decided.
The reason why so much fair use jurisprudence occurs at summary judgment is simply a practical reality of litigation. When a party moves for summary judgment—for instance, a defendant who presents a fair use defense to an infringement claim—the court must assume that the facts favor the non-moving party and then consider whether there is any genuine dispute as to a material fact and whether the moving party is entitled to judgment as a matter of law. Once a court rules as to whether (or not) a fair use defense will survive, that decision is so important to the legal positions of the two sides it is often the end of the case.
Google asserts that the Federal Circuit erred when it decided the fair use question. Indeed, several amici in support of Google argued that overturning the jury in this instance was a misstep under the rules of civil procedure and a violation of the Seventh Amendment. Counsel for Oracle, Joshua Rosenkranz, noted at oral argument that Google went so far as to assert that “only a jury can balance the [fair use] factors.” Assuming Oracle’s characterization of Google’s argument is accurate, Google is simply incorrect. Obviously, fair use is a matter that may be considered exclusively by the courts, since most of the time, it is. As the Federal Circuit opinion in this case states:
“The fair use question entails … a primarily legal exercise. It requires a court to assess the inferences to be drawn from the historical facts found in light of the legal standards outlined in the statute and relevant case law and to determine what conclusion those inferences dictate….the exercise of assessing whether a use is fair in one case will help guide resolution in all future cases.”
The Supreme Court may consider whether remanding to the Federal Circuit for review “under a more deferential standard [of review],” as Justice Gorsuch put it, would have a deleterious effect on future summary judgment proceedings. And I may be over-speculating here, but remand seems unlikely. If the Court finds that the Federal Circuit correctly applied its fair use analysis and solely weighed questions of law, then any lingering matters regarding deference—if they are found to exist at all—do not seem compelling enough to delay the Court from ruling on both the review standard and the fair use finding. After all, this case is already more than ten years old.
No Reasonable Jury…
According to Oracle, the Federal Circuit correctly applied the “no reasonable jury” standard in deciding fair use as a matter of law. Does this mean the jury was unreasonable? No. It means fair use, to put it in technical terms, is a pain in the butt. Professional creators struggle with it; attorneys struggle with it; and courts struggle with it. And the trickiest aspect of fair use is acquiring a sensitivity to the interdependence of the four factors, which, unsurprisingly, a jury is unlikely to possess.
What the Federal Circuit determined was that the jury resolved disputes of historical fact in favor of the verdict (and this was reviewed with deference), but that the jury arrived at incorrect legal inferences drawn from those facts (and this was reviewed de novo). Thus, the appellate court found that, even deferring to the fact finding, Google’s copying was not fair use.
I suspect the Supreme Court will not find that the Federal Circuit applied the wrong standard, unless there is some arcane bit of civ pro flaw in the mix that eludes me and the litigants. The appellate court followed Ninth Circuit precedent (because that is where the parties would have filed had there not originally been a patent claim in the suit), and it seems to have very clearly articulated how it separated questions of fact from questions of law before proceeding with an in-depth fair use analysis. And the review considered the same questions of law judges consider on summary judgment, where fair use is so often decided. For these reasons, I imagine the Supreme Court will not remand but will instead rule on the fair use analysis itself and either agree or disagree with the Federal Circuit’s findings.
Separating the Factual from the Legal in Fair Use
Under factor one (the purpose and character of the use), the Federal Circuit correctly separates the factual question of a use with a commercial purpose from the legal implication of a use with a commercial purpose. The opinion notes that Google’s commercial intent here is undisputed (how could it be when Android is worth billions?) and that the jury was instructed that commerciality generally weighs against fair use as a matter of law. The court then correctly identifies transformativeness as a legal question and spends nearly six pages explaining why Google’s use of the Java code superseded the purpose of Oracle’s original work and was, therefore, “not transformative as a matter of law.”
Under factor two (the nature of the work), the analysis is generally dominated by separating factual works, which are more often subject to fair use, from expressive works, which are less often subject to fair use. Acknowledging that computer code can be complicated because it is an expressive work of a highly functional nature, the Federal Circuit sensibly held that the jury could have decided that the functionality favored fair use under factor two, but that the factor itself did not weigh heavily overall. This opinion should be little surprise to Google and several of its amici, as they have made precisely the same argument in cases involving the use of expressive books and photographs.
The more that a single factor teeters on the centerline, the more determinative the other factors become. But to reiterate the broader point, there appears to be nothing novel about the Federal Circuit’s approach to separating the factual from the legal and opining solely on the legal under factor two.
Factor three (the amount and substantiality of the portion used) tricks a lot of people. A user might copy a fraction of a work and be justly found guilty of infringement because the third factor is a qualitative analysis that asks whether a user has copied the “heart” of the work. Alternatively, a user might copy a whole work and have the use fall within the fair use exception. This is not to say that the fair use analysis is capricious—rather, this is one case where we really see the interdependence of the four factors.
Google argued that it only copied the bare minimum of what it needed to achieve its purpose, and it further adds that it used only a fraction of all Java code. But this ignores the Federal Circuit’s finding that the parties did not dispute that only 170 lines of code were necessary to “write in the Java language.” Thus, the appeals court found it significant that Google copied 11,330 more lines of code than it needed. Further, the Federal Circuit opined that “no reasonable jury could conclude what was copied was qualitatively insignificant, particularly when the material copied was important to the creation of the Android platform.”
Related to this consideration, note that although the word “purpose” is not stated in the third factor, Google’s defense and the Federal Circuit’s reference to how much code Google “needed to” copy demonstrates how the third prong consideration is influenced by the first factor finding. Purpose is highly determinative of fair use. For example, in Campbell v. Acuff-Rose, the Supreme Court made clear that 2 Live Crew’s intent to parody “Oh, Pretty Woman” allowed a very liberal taking of the “heart” of the original material.
Every user has a purpose, and juries can be tripped up when that purpose results in something new and significant like a mobile operating system that attains Android’s market share. But it is important not to be distracted by the fact that Android is a big deal because this market reality does not tell us whether Google made a transformative use of Oracle’s code as a matter of law. And if transformativeness does not exist under factor one, then copying what may seem like a small portion of a work is more likely to tilt away from a finding of fair use under factor three. Ultimately, the Federal Circuit found that the third factor was either a tie or weighed against fair use.
Under the fourth factor (effect on the actual or potential market for the original work), if factor one weighs against fair use—especially with a commercial use—then odds are that the effect upon the potential market for the original author will be considered harmful. Further, under the fourth prong, the courts assume that upon a finding of fair use that the use in question will be repeated by other users. Thus, courts take an expansive view of “potential” market harm in the factor four analysis.
Here, the Federal Circuit held that the jury drew incorrect inferences about potential market harm and held that no reasonable jury could have imagined that no actual or potential market harm would fall upon Oracle’s protected work. It rejected Google’s arguments that Oracle 1) is not a device maker; and 2) had not yet built its own smartphone platform. To the untrained juror, these two points seek to emphasize Google as innovator using a work to exploit a market the original author never intended to enter, but the appellate court rightly observes that these facts are irrelevant as a matter of law under factor four.
The problem with Google’s arguments here is that they both clearly ignore that a copyright owner has a right to the potential market for lawful derivative works. One does not say to an illustrator that because she has never been a comic book producer, she is denied the exclusive right to license her imagery for a graphic novel. One also does not say to the sculptor that if another party makes tea cozies out of her designs, she’s out of luck because she did not think of doing so first. These would be errors of law, both with regard to fair use factor four and Section 106(2) of the Copyright Act, which provides the exclusive right to prepare derivative works.
So, based on my rereading of the Federal Circuit fair use opinion, it appears to have properly and extensively separated the factual and legal considerations in Google v. Oracle, considered the legal questions de novo, and correctly found as a matter of law that under the historical facts, no reasonable jury could have found fair use. I will be very surprised if the Supreme Court does not agree with the appellate court’s analysis and, therefore, even more surprised if they find any complaint about the standard of review compelling enough to remand.Follow IOM on social media: