Tuesday, March 31, 2015

In post-Alice world, weaker software copyright would harm the U.S. economy: Oracle v. Google

The three branches of the U.S. government--legislative, executive, judiciary--have all become aware in recent years of the negative effects of overprotection of software-related intellectual property. When too much leverage is given to right holders (especially those whose patents are dubious), IP becomes a substitute for innovation, and a threat to true innovators. All three branches have taken initiatives to curb (software) patent abuse. The Supreme Court doesn't take initiatives per se because it just interprets the law, but it has heard more patent cases recently than in the past and almost all of the time its rulings have benefited defendants. This time around it appears that a Republican-led Congress will get things done; the Obama Administration, the future leader of Senate Democrats (Sen. Schumer from New York), Sen. McCaskill from Missouri and some other Democratic politicians will gladly support meaningful reform.

Concerns will continue to be expressed by certain stakeholders and their political allies. None of the reform measures discussed in Congress appears inherently overreaching to me. However, I want to make a point here that I believe the decision makers in the White House and the Department of Justice (and maybe even the Supreme Court) might consider:

With all that is going on in connection with software patents, this is the worst time one could pick for destabilizing the software copyright system. The good fight against overprotection, coupled with unnecessary uncertainty surrounding the IP regime that even the reasonable ones among the critics of software patentability support, could result in underprotection and, even before any decision is reached or (if a SCOTUS ruling raised even half as many questions as the Alice decision has) its effects become clearer, discourage investment in software innovation.

Sometime this spring (presumably), the Solicitor General of the United States, Donald Verrilli, will respond to the Supreme Court's request for input on whether Google's petition for a Supreme Court review of Oracle's appellate victory raises a question of law that it is in the public interest to address. With a little help from long-standing friends who orchestrated an amicus brief campaign, Google has apparently been able to position its petition as one that is not necessarily irrelevant, yet it has not convinced the court that this is a must-hear issue.

Different commentators have taken different perspectives on how much Google has accomplished so far, and -- surprise, surprise -- their opinions (including the one I expressed in January) are all consistent with who they believe to be right on the merits. The merits, of course, are not really a factor for the Supreme Court to consider at this stage. It's all about "to hear or not to hear."

We just don't know two very important things:

  1. To what extent has the Supreme Court analyzed Google's legal argument so far? (Circuit split etc.)

  2. What position will the government take? (The Supreme Court won't necessarily follow it anyway, but it wouldn't have asked if it didn't care.)

One can only speculate about the first question and make a more or less educated guess about the second point.

Everybody who is interested in software IP issues knows that non-technical people face particular difficulties in figuring them out. The Supreme Court can do this if necessary. But it doesn't have to make the related effort at the very beginning. So far it appears to feel that Google's (and its friends') claim that this is a key issue isn't facially implausible (a copyright expert has explained very well why there is no circuit split but Google can obviously afford lawyers who will make pretty much anything appear plausible at first sight). So the court decided to ask the administration for input to see whether those amici are really representative of the software industry (which they are not, but with Oracle's supporters having remained silent after the Federal Circuit ruling, that's easier for industry insiders than for a court to see).

The less time the Supreme Court spent time analyzing the details and intricacies of the underlying issue (because the amicus briefs suggested there could be an industry-wide concern), the less meaningful Google's achievement is. Considering how many cert petitions the SCOTUS has to decide on at any given point in time, one may or (as I do) may not believe that an incredibly deep analysis of such questions as whether declaring code is more or less functional than other program code has occurred so far.

As for the second question, I would be thoroughly surprised if the Department of Justice determined that Google's agenda in this context is in the interest of the United States. A week and a half ago I quoted from and linked to a Wall Street Journal article that highlighted the particularly close and cordial relationship between the Obama Administration and Google. But even friends can't ask for all sorts of favors. I absolutely cannot imagine that the DoJ would support Google's petition in the Android-Java copyright case. Whether one focuses on the broad scope of the petition (Google wants the SCOTUS to hold lots of software code, not just API-related declaring code, uncopyrightable) or on the narrower business objective of weakening copyright in API-related declaring code: what Google wants is terrible for the U.S. software industry, and bad for the U.S. economy at large given that software is such a key driver of growth.

Eight of the ten largest software companies according to Wikipedia are U.S. corporations. The only non-U.S. company among the top nine, SAP, is formally headquartered in Germany but has Silicon Valley operations that go far beond the role of a local subsidiary of the "sales, marketing and support" kind.

A different list, which I found on Investopedia, defines "software company" more broadly and includes, for example, IBM and Salesforce.com. On that top ten list, SAP is the only non-U.S. corporation.

Starting on page 4 of this PricewaterhouseCoopers publication, there's a list of the global 100 software leaders; an overwhelming majority of the companies on that list are from the U.S.

U.S. companies stand the most to lose from what Google is up to in the Oracle case, even if one focused only on APIs (which Google's proposed cert question doesn't). Who owns valuable APIs? It's hard to think of any non-U.S. company other than SAP that does. Of course, there are some key interfaces that do not belong to U.S. companies, but those are available on open source (or equivalent) terms, so everyone in the world is equally free to use them.

Generally, industry (segment) leaders are most likely to own valuable APIs. As Thomas Young has recently explained on his Copyright Culture blog, "[c]opyright law doctrines, such as scènes à faire, appear well suited to the task by delineating which expressions are copyrightable at the time of creation" but Google's proposed "focus on ex-post considerations, such as user familiarity, [would] undermine copyright's basic principles and threaten to penalize a copyright holder for creating a successful work that has achieved market saturation." The U.S. government cannot possibly want to penalize American companies for having succeeded in a key growth industry.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.

Share with other professionals via LinkedIn: