For over a decade, one simple rule of thumb has predicted the outcome of most Supreme Court cases that affect intellectual property rights: just select the outcome that promotes the interests of technology platforms. Wrapped in the “Information wants to be free” flag, technology platforms have repeatedly convinced the court that robust enforcement of IP rights is bad for consumers and innovators. This is the Silicon Valley equivalent of “What is good for GM is good for America”.
Indeed, there is good reason to believe that the Court’s continued dilution of intellectual property rights not good for america.
The court’s decision in last week Google versus Oracle shows a fondness for supporting technology platform-driven policies on weak intellectual property. The court applied fair use doctrine to protect Google from liability for copying over 11,000 lines of code from Oracle’s proprietary Java programming language. The bottom line: Google owes nothing to the first mover in a sequence of innovations that led to the dominance of Android in the smartphone operating system market. It is puzzling how this result can be considered fair.
The main purpose of an IP right is simple: it provides a profit incentive to attract investment in the development of intangible assets that are otherwise often reproducible without compensation. It does this by issuing a property right that allows the market to set a price for these assets. The undisputed facts of Oracle versus Google Tell a tale of upside-down copyright law that exonerates blatant and profitable injuries from court injunctions.
It is undisputed that Sun Microsystems (the predecessor of Oracle) offered Google a license to use Java in the development of the Android operating system. It is undisputed that Google instead copied certain Java programming interfaces to facilitate programmer adoption, even though it was technically feasible to create an operating system without it. There’s no dispute that Android, published royalty-free by Google, has supported a digital ecosystem that has generated billions of dollars in revenue for Google from ads, apps, and other services.
The court declined to examine whether Google acted in bad faith. It is difficult, however, to find a better example of an infringer who, as a 1918 court ruling put it, “seeks to reap where it has not sown”. However, it could be argued that Google’s actions have brought public benefits that warrant fair use. While Oracle / Sun has licensed Java for certain applications for a royalty, Google has always licensed Android without a license, and its widespread adoption has spawned a wealth of value-added services. Therefore, it may appear that Oracle’s copyright limitation on Java is in the public interest.
This conclusion is based on a well-known, but often wrong, compromise between enforcing IP rights on the one hand and maintaining access for users and future innovators on the other.
First, a robust ecosystem could still have evolved even if Google had agreed to pay a license fee, as Amazon and Samsung chose, or how Apple and Microsoft decided to forego Java code. Microsoft Windows was released to end users on a positive license fee basis, but the Windows-based PC ecosystem still flourished, expanding access to computing power once reserved for governments and large corporations.
Second, Google’s success in free funding for Android only shows that weak IP environments are hospitable to giveaway business models where a free service drives user adoption, which in turn supports a paid service. However, a weak IP environment is not hospitable to other business models that monetize innovation more directly through licenses and other IP-dependent transactions. As a result, fair use hinders the ability of competitive forces to converge on the best mix of business models for a given technology or content market.
The “Take, Giveaway and Litigate” strategy is not unique either to Google or to the circumstances of this case. Technology platforms have implemented this approach in a wide range of digital markets, from software to books to images and music. Under the legal umbrella of doctrines such as fair use, the slogan “Information will be free” has been transformed into a business strategy to leverage the IP assets of others, use those assets to launch seed platforms, and generate income through complementary services in which the platform has a competitive advantage. While the normalization of violations is in the private interests of certain platforms, it is not clear whether it is in the public interest.
Everyone likes getting free stuff. The devaluation of IP rights based on judgments such as Google v. oracle likely to discourage investment by (and in) the inventors, artists and entrepreneurs who are the bedrock of a robust innovation economy. It is time to reconsider whether the current trajectory of weak IP policy is on the right track.
Jonathan M. Barnett is the Torrey H. Webb Professor of Law at the University of Southern California, Gould School of Law and author of “Innovators, Businesses, and Markets: The Organizational Logic of Intellectual Property (Oxford University Press 2021).”
