Supreme Court moves to resolve copyright concerns
TLDR: The Supreme Court last week took up a copyright case and is hopefully poised to resolve issues about the copyrightability and permissible use of software interfaces next year. The case in question arose from a long-running dispute between Oracle and Google about one type of software interface—application programming interfaces, or APIs. Without the Supreme Court’s intervention, there is a risk that companies will copyright APIs or other interfaces, and then be able to prevent other companies from using them without paying for a license.
What’s Happening this Week: On Friday, the Supreme Court announced that it would consider a long-running copyright dispute between Oracle and Google. In 2010, Oracle sued Google for copyright infringement. A district court in California has twice ruled in Google’s favor—first holding that APIs are not eligible for copyright protection, and then holding that Google’s purported use of Oracle’s APIs was a fair use. However, an appeals court in D.C. overturned both of those decisions. Earlier this year, Google asked the Supreme Court to take up the question, and last week the Court agreed.
Why it Matters to Startups: Startups use APIs in software development to promote interoperability and reduce costs, but they also rely on certainty and consistency in the law. The Supreme Court’s upcoming decision will be important on both accounts.
APIs create interoperability and compatibility between computer programs, and startups benefit from using these interfaces in their development work. As we have explained elsewhere, “[t]he low cost of software development fostered by freely usable APIs has greatly benefited startups. Using preexisting APIs allows entrepreneurs to cheaply build software that can interoperate with larger systems, opening the software market to a broader pool of developers and leading to the creation of innovative new products.”
If APIs are eligible for copyright protection, that could have a chilling effect on innovation. Startups and software developers would have to obtain licenses to all the APIs they need, and could face the risk of litigation over any development projects involving APIs.
Second, the Oracle versus Google dispute has resulted in court decisions that open up uncertainty in the law. The appeals court in this case crafted new legal tests for applying copyright law to APIs which are inconsistent with the legal tests previously applied in California courts. We have described how this sort of split in legal authority “creates legal uncertainty that small companies are particularly ill-equipped to manage.” And that uncertainty and corresponding cost “in turn reduce[s] the investment that is critical to startup success.”
The Supreme Court’s decision to consider this case is good news for startups. At the very least, the Court’s decision should bring some certainty back to the law, clarifying what is and is not protected by copyright and what is and is not lawful use of APIs. In addition, the Supreme Court has the opportunity to reverse the decision that the use of APIs is copyright infringement.
On the Horizon.
The House Financial Services Committee’s Task Force on Financial Technology is planning to hold a hearing at 9 am tomorrow to discuss “the Role of Big Data in Financial Services.”
The House Small Business Subcommittee on Innovation and Workforce Development is holding a field hearing in Colorado this Friday at 11 am MT to examine “innovations in the school to small business pipeline.”
