Steven Tepp

On January 13, the U.S. Court of Appeals for the Federal Circuit (CAFC) will hear oral argument in SAS Institute, Inc. v. World Programming, Ltd., a copyright infringement suit with far-reaching consequences for American creativity. SAS is a North Carolina-based software company, well known for its highly successful analytics software. World Programming, Ltd (WPL) is a British software company that, by its own admission, set out to “clone” SAS’s creative and popular software. The litigation that followed has been lengthy and stretched from North Carolina to the U.K. and back. While WPL largely prevailed in its home court, the litigation in North Carolina resulted in a verdict that WPL engaged in fraud and unfair and deceptive trade practices. The litigation in North Carolina did not decide the copyright infringement issues, so SAS was forced to file a separate suit, this time in Texas. But the judge in that case made a critical error, which is now on appeal.

SAS Institute is a software company in North Carolina. Founded in 1976, it employs thousands of people in the United States and thousands more around the world. World Programming, Ltd. (WPL) is a British company that decided to build a clone of SAS’s popular analytics software and, as several courts have found, broke the law to do it. After a decade of litigation across two continents and an unpaid multi-million-dollar judgment, the parties are once again in court. This time, however, WPL’s arguments pose grave dangers to all owners of other copyrighted works. WPL did not try to compete with SAS by building a different or better product. Instead, it ordered copies of SAS’s products under the guise of an educational license, but with the true intent to reverse-engineer and copy key elements, including the selection and arrangement of its outputs, and even the manuals licensed users receive from SAS. The result is that WPL produced a clone, taking the exact same input and producing the exact same output that SAS does. Avoiding the years of investment and fine-tuning that SAS undertook to create its market-leading software, WPL undercut SAS’s price in the market and lured away SAS’s customers.

Google has admitted it copied over 11,000 lines of Oracle’s creative Java code to build its Android smartphone platform, that it makes commercial use of the code it copied, and that it uses the code for the same purpose as Oracle and those who license its products. Now, Google wants the Supreme Court to hold that this is fair use under American copyright law. Stripping away the diversions that Google and its amici offer the Court, these are the core facts which show how extreme Google’s invocation of fair use in this case truly is…. As the October 7 oral argument date nears in Google v. Oracle, I’d like to build on the fair use discussion by Washington, D.C. attorney Terry Campo published in August to further analyze Google’s claims of fair use to excuse its copying. The company’s claims aren’t just insufficient, they’re undermined by Google’s own arguments.

The Supreme Court is set to hear oral argument on October 7 from Oracle and Google in their long-running Java intellectual property case. The questions raised in Google v. Oracle go to the heart of the scope of copyright protection of all computer programs. I’ve already written about the flaws in Google’s primary argument, which tries to conflate the creative Java code it copied to make its Android mobile operating system more attractive to developers and speed it to market, with the function that code performs once run. Google’s second argument invokes a U.S. copyright law doctrine known as “merger,” which denies copyright to creative works if there’s only one or a very few ways to express a given idea. In those instances, the expression merges with the idea and as we know, ideas aren’t copyrightable. In this case, there are world-famous examples of platforms performing the same functionality as Java with different forms of expression, such as Apple’s and Microsoft’s. So, Google’s argument that it had no choice but to copy Java can only prevail if it can convince the Court to apply the merger doctrine with blinders on.

In two months, the Supreme Court will hear the oral argument in the long-running Google v. Oracle software copyright case. At issue is the availability of copyright protection for computer programs and in particular the copyright protection of code in Oracle’s Java platform, which Google admits it copied for its Android operating system without obtaining a license. Google also claims its commercial use of that code in competition with Oracle is protected under copyright law’s fair use doctrine, but that is a subject for another day. If adopted by the Supreme Court, Google’s arguments would undermine the Constitutional purposes and specific Congressional intent in enacting the Copyright Act, and along with them the fundamental incentives for new creative expression in software, a building block of so many consumer and industrial products. To better understand how, it helps to start at the beginning: Apple’s groundbreaking release of the iPhone.

In this age of polarization, it’s almost impossible to imagine Congress enacting bipartisan legislation that would benefit businesses, higher education, and consumers alike. But that is exactly what happened 40 years ago, and it is worth remembering. As has been outlined elsewhere on IPWatchdog in 1980, Democrat Senator Bayh and Republican Senator Dole wrote a bill that seemed simple, but changed the face of American innovation. Prior to the Bayh-Dole law, anyone who accepted government funding of their research had to give any resulting patent rights to the government. Superficially, that sounded fair – if taxpayer money paid for research, the taxpayer should get the benefits. But the reality was that no one benefitted. Few companies had any interest in investing the substantial resources necessary to transform an early invention into a product when the underlying patents were held and controlled exclusively by the government. And those inventions that were developed simply sat on the shelf in government offices with no plans to bring them to market. Senators Bayh and Dole recognized this problem and their bill allowed research institutions to keep possession of the patent rights their research produced.

Even if one disregards the categorical distinctions between over-ruling the ITC order and foreign compulsory licenses, there are differences in the specifics as well. For example, the Administration’s decision rested heavily on the fact that the patent being violated was part of an industry standard. A patent that is critical to an industry standard can convey market power (and possibly monopoly power) on that patent holder. The Administration focused on and justified its decision based on avoiding abuse of that market power. Patents on medicine are completely different. There is rigorous competition, new medicines can be invented to treat the same malady, and there is no need for the types of industry standards that are more common in electronics. But it is those health care patents that foreign governments are undermining.