Supreme Court Ruling in Google v. Oracle a Win for Startups
TLDR: A Supreme Court decision yesterday means that startups and developers should be able to continue to use software interfaces, known as application programming interfaces (APIs), without facing liability for copyright infringement. Startups and developers routinely rely on APIs to create interoperability and compatibility between computer programs, and they had long understood APIs to be exempt from copyright protection. But a yearslong lawsuit between Oracle and Google put that understanding—and the use of APIs—at risk. Now, the Supreme Court has held that using APIs is a fair use under the law, and its reasoning should permit entrepreneurs to continue using APIs when developing innovative products and services.
What’s Happening This Week: The U.S. Supreme Court yesterday ruled in favor of Google in its long-running dispute with Oracle over the permissible use of APIs. The Court’s decision, which found that the use of APIs constitutes fair use, is a victory for startups and software developers looking to affordably build products and services that can connect or communicate with other programs or systems.
The case began more than a decade ago, when Oracle first sued Google for patent and copyright infringement, and it ultimately centered on accusations that Google infringed copyright by reimplementing Java APIs. While a California district court twice ruled in Google’s favor, a D.C. appeals court overturned both decisions before the Supreme Court weighed in. The Court, in a 6-2 ruling, assumed—without deciding—that APIs may be eligible for copyright protection, but went on to hold that Google’s reimplementation of Java APIs constituted fair use and was therefore not copyright infringement. Practically speaking, this decision should apply so that other companies beyond Google can continue using APIs to develop new technology without facing the constant threat of copyright liability.
Why it Matters to Startups: While the Google v. Oracle case may have seemed to some like an expensive fight between two big tech companies, the issues at stake were much broader. Indeed, had the Supreme Court agreed with Oracle, startups and smaller developers would have stood to lose the most. Startups and technology companies rely on APIs to reduce costs and promote interoperability. And as Engine highlighted in a statement shortly after the Court’s ruling was announced, “[w]ith confirmation that such use [of APIs] is fair, startups can more affordably build software without incurring steep licensing costs and facing the constant risk of litigation.”
Startups, in particular, have a unique need for APIs and interoperability to make products and services that can connect with and work on existing systems. APIs are like listings on a restaurant’s menu—where the restaurant offers hashbrowns and, when you order it, they know what to bring you. This approach is much easier than expecting customers to provide detailed recipes to chefs, and entrepreneurs starting new restaurants will want to invoke familiar listings to get orders correct. The same goes for tech startups. The use of APIs and other software interfaces has lowered barriers to entry for new startups, reduced development costs, and spurred competition across the technology industry.
Against that backdrop, the Supreme Court took a very balanced approach, seeking to embody copyright’s “practical objectives” and protect against the law being used to hinder innovation or subsequent creativity. The Court noted how Google’s use of Java APIs—overall a very small amount of code—was done to create a new product in a way that would be useful to other programmers looking to further develop other programs. Bringing this lens to the case allowed the Court to correctly apply the law in a way that promotes startup innovation.
Extending copyright liability to the use of APIs—as Oracle argued for in the case—would have allowed companies to block the use of APIs or make it prohibitively expensive. That would, in turn, chill startup growth. Entrepreneurs would be forced to obtain licenses for all of the software interfaces that they might need and to withstand the threat of substantial litigation. Indeed, since most startups, tech companies, and developers had long treated APIs as exempt from copyright protections, an adverse ruling in this case would have exposed many companies to immediate, new litigation risks. As we previously noted in a Morning Consult op-ed, “If 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.” This scenario would have also made it more difficult for new companies to launch, since startups would be forced to ask their larger competitors for permission to make new products. And larger companies would be better positioned to pay the licensing fees required to develop new products, providing them with more of a competitive edge over less financially-equipped companies.
The Court did not rule on whether APIs are copyrightable, instead resolving the case on the more fact-bound basis of fair use. Engine and many others had urged the Court to find that APIs are not even copyrightable, which would have set a clearer precedent for use of APIs and avoidance of litigation. But the Court’s detailed fair use opinion focuses on API reimplementation in a way that should apply broadly to allow the use of APIs. As such, the decision provides some much-needed certainty and relief to the startup community that depends on APIs to create products and services that can be readily accessed by all types of users.
On the Horizon.
New America is holding a webinar tomorrow at 11:30 a.m. to discuss digital equity and connectivity across the world.
The Financial Times and Tanger Med are holding a webinar at 11 a.m. ET on Thursday to discuss the importance of locating a global hub for industry, logistics, and fulfillment.
The Information Technology & Innovation Foundation is holding a webinar at 10 a.m. on Friday to discuss the House antitrust subcommittee’s Report on Competition in the Digital Markets.
