Billions at stake in Google’s battle with Oracle

android apps
A jury is currently deliberating a landmark court case between Google and Oracle over Android’s use of Java APIs.

Here’s the $9 billion question: If a software company puts a free tool online, do developers need the company’s permission to use it?

A jury is currently deliberating that crucial point in a landmark court case between Google and Oracle.

The case focuses on 37 application programming interfaces that Google included in its Android operating system in 2009. APIs help different kinds of software communicate with one another.

The APIs that Google used were for Java, a ubiquitous computer programming language that belonged to Sun Microsystems at the time. Oracle bought Sun in 2010 and sued Google later that year. The two Silicon Valley titans have been duking it out in various courts ever since.

The Java APIs were open-source, free to use for anyone. Google did try to arrive at a deal with Sun to use the APIs, yet those deals fell apart and Google decided to use the APIs anyway. Oracle (ORCL, Tech30) claimed that Google violated its copyrights and patents by using the APIs in Android.

The case took some seriously strange twists and turns: A jury in 2012 ruled in Oracle’s favor. But District Judge William Alsup overruled the jury’s decision, giving a directed verdict that determined APIs could not be copyrighted. An appeals court overturned the judge’s ruling in 2014. Google appealed it to the Supreme Court, which declined to take up the case, leaving the appeals court ruling intact.

However, the ruling did not address Google’s claims that putting the Java APIs in Android constituted fair use. That’s a legal precedent that, in certain circumstances, can allow companies to use copyrighted content without the owner’s permission.

So the case has gone back to the district court for a jury to rule on the fair use issue.

Related: Google’s Android secrets revealed in court

Google (GOOGL, Tech30) is arguing that it transformed Java into something completely new and useful for its customers, so its actions should be protected under the fair use principle.

Oracle, on the other hand, claims that Google stole its property, using it to enrich itself to the tune of tens of billions of dollars. In court, Oracle claimed that Android has produced $31 billion in sales and $22 billion in profit since 2008, a number that Google disputes.

As a result, Oracle is seeking $9 billion in damages from Google.

Oracle claims that Java could have become the software of choice for smartphones had Google not used the APIs in Android. Oracle also argues that Google owes it licensing fees.

Judge Alsup, who is again overseeing the case, said that figure was “speculative,” since we can’t know whether Java would have taken a more prominent role in smartphones had Android not used the APIs. He said $8 billion may be more appropriate if the jury rules in Oracle’s favor.

The damages portion of the trial will come in a second phase — the jury is currently only deliberating whether to rule for Google or Oracle.

The case could result in the largest copyright verdict in U.S. history. The largest standing copyright verdict is $1.3 billion, awarded to Oracle when it sued rival SAP in 2010.

Beyond the potentially monumental damages that Google would have to pay, the ruling could also have broad consequences for the software industry.

“The niceties of copyright law have been overlooked for a decade in the software world,” said Chris Carani, a copyright litigator at law firm McAndrews Held Malloy. “If the jury rules for Oracle, developers are going to have to pay attention to copyright laws.”

If Oracle wins, companies are going to have to decide whether to strike a deal with API makers ahead of time or go it alone and write their own APIs. It’s an unwelcome choice between taking a hit to profit or interoperability.

Either company could appeal the decision, so the case likely won’t be over, no matter the outcome. With so much at stake, they’ll both try to fight to the bitter end.

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