Federal Circuit Summaries

Before O’Malley, Plager and Toranto. Appeal from the U.S. District Court for the Northern District of California, Judge William H. Alsup.

Summary: Historical findings of fact relevant to copyright fair use can be resolved by a jury, but the district court must resolve all inferences drawn from those facts and the ultimate conclusion of fair use.

Oracle alleged that Google infringed Oracle’s copyrights by copying verbatim some of Oracle’s code in Google’s Android operating system. The jury determined Google’s use constituted fair use and the district court denied Oracle’s motions for JMOL and a new trial. Oracle appealed to the Federal Circuit.

The Federal Circuit first addressed the standard of review and whether the district court properly allowed the jury to consider the issue of fair use. While the Supreme Court recently held that fair use is a mixed question of fact and law, it did not explain what portions of the inquiry were factual or legal. The Federal Circuit held that the ultimate conclusion is a legal question, but historical facts (such as the origin and history of the copyrighted work) can be resolved by the jury, at least in the Ninth Circuit. Thus, the Federal Circuit reviewed the jury’s implied findings on historical facts for substantial evidence. The Federal Circuit reviewed inferences drawn from those facts and the ultimate conclusion de novo.

The Federal Circuit applied the four-factor test for fair use by considering (1) the purpose and character of use, (2) the nature of the copyrighted work, (3) the amount and substantiality of the portion used, and (4) market harm. The Federal Circuit focused on the first and the fourth factors. Specifically, the Federal Circuit found that Google’s use was overwhelmingly commercial, even though Google gives away Android for free and makes its money on advertisements. The Federal Circuit also rejected Google’s argument that its use was transformative because it copied only some of Oracle’s code and wrote some of its own code. The Federal Circuit also found overwhelming evidence of actual and potential harm because Google and Oracle compete in the same product markets. Thus, the Federal Circuit concluded that Google’s use of Oracle’s code was not fair as a matter of law and remanded for a trial on damages.