SCOTUS ‘scares’ copyright owners with fair use expansion

The saga of Google v Oracle kept the IP world on tenterhooks for more than a decade—and this week’s SCOTUS ruling delivered a final unexpected twist—significantly expanding the scope of “fair use”.

The decision focused on whether software interfaces can be protected by copyright and, on Monday, the court concluded that Google’s use of its Oracle’s code was permitted under this doctrine.

Under US law, fair use permits limited use of copyrighted material without having to first acquire permission from the copyright owner.

According to Pamela Samuelson, professor of law and information at the University of California, Berkeley, the ruling reinforced the analytic approach the court took in Campbell v Acuff-Rose (1994), and, in doing so, dealt an unanticipated blow to Oracle and its cohorts.

‘Transformative’ gains weight

In Campbell, SCOTUS held that the goal of copyright is furthered by the creation of “transformative works” and that the “the more transformative the new work”, the less significant other factors will be, such as commercial considerations, that may weigh against a finding of fair use.

The decision gave a much broader interpretation to transformative purpose than Oracle and copyright industry amici thought it would, explained Samuelson. “As in Campbell, once a use is deemed transformative, courts should consider whether the amount taken was reasonable in light of the purpose.

“This conflict leaves copyright owners in a very tenuous situation.” Bob Zeidman

“The court ultimately decided that because of the functionality of the application programming interface (API) declarations, they have at best ‘thin’ protection from copyright law and a broad scope of fair use,” she said.

Rebecca Tushnet, professor of law at Harvard Law School, agreed that SCOTUS’ emphasis on transformativeness—as interpreted as giving new works to society—was vital.

“Because of the opinion's emphasis on the functional, structural nature of APIs, their copyrightability is less important than it would otherwise be because fair use is easier to find”, she said.

The fair use test for software has been expanded, echoed Michael Graif, partner at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, who predicted that a spate of future cases will be argued on the basis of a work’s transformative purpose and fair use.

“As a result of this decision, use of copyrighted software can be ‘transformative’ even if it is offered for the exact same purpose that the copyright holder intended. We can expect defendants in the future to argue that their copying encourages further creativity by others, consistent with the constitutional goal of copyright law to promote the progress of science and the useful arts,” said Graif.

The ruling bodes well for creatives, said James Grimmelmann, professor of law at Cornell University. “The opinion helps establish that where a community has developed around its participants' investment in a copyrighted work, that weighs in favour of fair use. So this is good news for fan-art communities, among others.”

Copyright owners’ ‘tenuous position’

But many predict the decision will create future upheaval and uncertainty for copyright owners. Bob Zeidman, president of Software Analysis and Forensic Engineering (SAFE), who served as an expert for Oracle during the case, argued that this expansion of fair use conflicts with the US Court of Appeals for the Federal Circuit's stance—holding that Google’s copying was not fair use.

There is a problem, he said, when SCOTUS regularly reverses the decisions of the Federal Circuit.

“This conflict leaves copyright holders in a very tenuous situation,” explained Zeidman. “The Supreme Court essentially decided that if a company copies code but provides it for free to software developers, and it gets accepted widely, then the copyright infringer is not held accountable.

“So, copyrights in software were already weak; now they are nonexistent.” Gene Quinn

“This is akin to saying that ‘if I steal your television and place it in the public square for all to enjoy, then my theft is excusable.’”

For Gene Quinn, patent attorney and founder of IP Watchdog, the decision is remarkable for implicitly overruling Harper & Row v Nation Enterprises (1985). In that ruling, SCOTUS held that public interest in learning about a historical figure's impressions of a historic event was held not to be sufficient to show fair use of material otherwise protected by copyright.

“Until Monday, taking even a small, but central portion that destroyed the copyright owners market was not a fair use. Now, fair use exists even where the copyright owners market has been completely destroyed and transferred to the party who intentionally copied,” he said.

This, he warned, will inflict long-lasting damage on the application of the doctrine of fair use. “There was really only protection for software against literal cut and paste copying and now that is a fair use thanks to the ruling earlier this week. So, copyrights in software were already weak; now they are nonexistent,” he said.

‘Scary’ future for copyright owners

Quinn further argued that how courts will interpret this decision could be “quite scary” for copyright owners.

“Google stood on the shoulders of Oracle to make many tens of billions of dollars, a fact recognised by SCOTUS, but that didn't matter at all in the fair use analysis. Nor did it matter that Google intentionally cut and pasted and then copied 11,500 lines because it was only a small part of the overall whole,” he contended.

“Is it now not copyright infringement to copy an entire article from the New York Times or Washington Post, for example? One could simply claim fair use and point out that what was taken was only a small fraction of the lines that were published that day, week, month, year or if you look at their online databases, not even a perceivable fraction of the total lines they have published since inception,” argued Quinn.

“There is nothing in the opinion that indicates that the court wants to disrupt long-established notions of derivative works markets.” Chris Buccafusco

Others strike a more cautionary note. “Justice Breyer explained that part of the transformativeness of Google’s use is that it creates opportunities for other creators to write programmes for a new environment,” noted Chris Buccafusco, director of the IP programme at Benjamin N. Cardozo School of Law, Yeshiva University.

In the context of paving the way for more creative reuses of media content, the court’s opinion could be read as sanctioning those as fair, he explained. But he added that such a  future judicial trajectory seemed unlikely.

“While that might be an appealing direction for copyright law to head, I’m doubtful that we’re going to find ourselves in such a world. There is nothing in the opinion that indicates that the court wants to disrupt long-established notions of derivative works markets.”

Consequently, he predicted that the decision is unlikely to lead to SCOTUS reversing the decision in Warhol v Goldsmith, in which the US Court of Appeals for the Federal Circuit held that Andy Warhol’s “Prince Series”, infringed a photographer’s copyright and did not qualify as fair use.

A setback for software rights

One thing that IP pundits agree upon, however, is that the ruling leaves the international software industry in a quandary over their rights in one of the world’s biggest markets.

“The judgment promotes interoperability and reuse over the rights of the software copyright  owner, at least in respect of APIs,” explained Rajvinder Jagdev, of counsel at Powell Gilbert in the UK.

“Ultimately, it will be much harder for API creators to prevent third parties from creating interoperable versions of their APIs in the US,” he added.

As Mintz’s Graif pointed out, while the declaring code of an API technically still has copyright protection after this decision, “enforcing that copyright will be difficult especially if the copier uses the API in a new technology”.

The decision effectively makes software uncopyrightable or at least very uncertain, agreed SAFE’s Zeidman. “At issue was the ‘declaring code,’ which was defined in the case as different than ‘implementing code’, but these are not technical terms or legal terms, and the court offered no useful definitions. So when a company releases interfaces to its code, they cannot be protected, but it’s not clear what other kinds of code can or cannot be protected.”

The landmark ruling, predicted Womble Bond Dickinson partner Brent Babcock, is set to  represent another judicial setback for IP rights in the software industry.

“The decision provides a road map for how a commercial enterprise can take and use thousands of lines of another’s computer code verbatim, and avoid all liability under the copyright laws.” Brent Babcock

“The decision provides a road map for how a commercial enterprise can take and use thousands of lines of another’s computer code verbatim, and avoid all liability under the copyright laws. It is also likely that other accused copyright infringers will endeavour to apply the Google v Oracle fair use analysis in the context of their copying of non-software media,” he said.

In the wake of this decision, software companies will have no choice but to keep their code and algorithms secret, predicted Quinn.

“This will hurt technological progress because patents and copyrights were intended to allow others to learn from and build upon new technologies by giving companies incentive to release their technologies to the world while giving them protection for limited time,” he said.

Choose patents over copyright?

According to Babcock, SCOTUS’ decision creates an “amorphous barrier” for protecting APIs using US copyright law, and computer software more generally. And this ambiguity will likely foster more disputes in an already highly litigious sector.

“Given the necessary interrelationship of virtually all of the code in a computer programme, future attempts to discern what is, or is not, inextricably bound up with (or inherently bound together with) will likely be fraught with considerable uncertainty, and hence a fertile ground for extensive litigation,” he said.

The decision, he added, will incentivise software developers to seek patent protection for their computer software creations rather than relying on copyright protection. This is despite the emergence of developments in patent subject matter eligibility law (Section 101) and written description law (Section 112) that have also constrained the availability of patent protection for computer software.

Given the emphasis on fair use that is likely to emanate from this week’s decision, inventors would be better placed to venture down the patent route, he argued. “To the extent a software developer can overcome those (admittedly also rather amorphous) barriers to IP protection under patent law, the fair use analysis in the copyright law can be avoided altogether,” concluded Babcock.

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