Supreme Court Case on Interoperability Will Have Significant Ramifications for Startups
TLDR: The U.S. Supreme Court will hear argument this week in the almost decade-long dispute between Google and Oracle over the permissible use of software interfaces—known as application programming interfaces (APIs). Startups and developers rely on APIs as a fundamental tool for developing new software and enabling interoperability. Oracle is asking the Court to upset a long-held understanding that APIs cannot be subject to copyright infringement claims. And a ruling in Oracle’s favor would expose U.S. startups and software developers to sizable new risks, generate more litigation, and increase barriers to startup growth and innovation.
What’s Happening This Week: The Supreme Court is scheduled to hear oral argument tomorrow in Google v. Oracle, a long-running dispute between the two tech giants over the permissible use of APIs. The case began almost a decade ago, when Oracle first sued Google for patent and copyright infringement. (A jury concluded that Google did not infringe Oracle’s patents, a decision Oracle did not appeal.) With patent claims resolved in Google’s favor, Oracle pivoted the suit to focus only on copyright and APIs. APIs are critical tools which allow for interoperability between computer programs, allowing products and services to communicate with each other.
Although a California district court twice ruled in favor of Google, a D.C. appeals court overturned both rulings in widely-criticized decisions, prompting Google to petition the Supreme Court to review the case.
Why it Matters to Startups: A ruling in Oracle’s favor would extend copyright protections to APIs, chilling startup innovation and growth. Startups rely on APIs to make their products accessible across a range of platforms, devices, and services. These fundamental tools have reduced costs, lowered barriers to entry for new tech startups, and opened doors to new competitors. Extending copyright protections to APIs would expose existing startups to new lawsuits, create hurdles for future companies and development projects, and ultimately make it harder for startups to operate.
First, startups and developers had long treated APIs as copyright-ineligible. If that is no longer true then many companies could face new litigation risks. As we recently noted in an op-ed for Morning Consult, “[i]f APIs were eligible for copyright protection, and using them were not a permissible fair use, then every startup would suddenly be at risk of multiple lawsuits because they built their software using what they understood to be unprotectable APIs.”
Second, many nascent startups already operating on bootstrap budgets would be forced to either forego interoperability, or seek out and pay for individual licenses to every software interface they might conceivably need. Startups have a unique need for interoperability, because it allows their new products to connect to existing systems. But the time-consuming and costly process of negotiating multiple licenses would limit their ability to effectively grow and scale.
Ultimately, a ruling in Oracle’s favor would also make it more difficult for startups to launch and compete against more established companies. Larger, more established companies are in a better position to obtain API licenses (or litigate over disputed uses), or decide to skip the interoperability they enable. Indeed, if APIs were eligible for copyright protection, then startups would be at a significant disadvantage because they would be asking competitors for permission to make compatible products.
Another feature of this case is the potential extension of copyright protection to functional elements, which further opens up uncertainty in the law about where the lines around copyright protection (versus patent protection) are drawn. Copyright law is not supposed to cover functionality. As we argued in an amicus brief submitted to the Supreme Court earlier this year, extending copyright protections to APIs “represents an end-run around the carefully constructed requirements and limitations of patent law.” If companies are permitted to pursue future copyright cases over functional software components, it will make it harder for any company—including a startup—to predict whether and when they could be accused of copyright infringement.
The Supreme Court’s ruling in this case will be critically important for the startup community. If the Court rules that APIs are not copyrightable, then startups and other firms can continue to use these software interfaces to promote interoperability across a variety of services and devices. A ruling in Oracle’s favor, however, is likely to chill startup growth and innovation by forcing platforms to take on substantial new costs and legal risks. We hope that the Supreme Court will ultimately rule that APIs are not the subject of copyright protection, thereby providing startups with the clarity they need about the permissible use of APIs.
On the Horizon.
ChIPs DC—a nonprofit organization that advances women in technology, law, and policy—is holding a free virtual workshop, “Startup Law 101: Negotiating to “Yes” - Techniques for Entrepreneurs and Tips from Legal Pros,” at noon PT tomorrow.
