Last week the final judgment was entered by United States District Court Judge William Alsup in favor of Google following a jury trial in its long running legal battle with Oracle over Google’s use of bits of the JAVA programming language in Google’s Android smartphones. With a single check mark on a verdict form, the jury in Oracle America Inc. v. Google Inc. (United States District Court for the Northern District of California, Case No. C 10-03561 WHA) found that Google’s use of certain JAVA components was “fair use.”

For six long years Google and Oracle had locked horns, including an earlier trial and trip up to the United States Supreme Court. Oracle, the owner of the JAVA programming language developed by Sun Microsystems, sought more than $9 billion dollars in damages, claiming that internet giant Google’s mobile smartphone operating system, Android, infringed portions of JAVA.

Oracle’s copyright claims included the contention that the Android operating system improperly utilized the structure, sequence and organization of certain components of the JAVA programming code known as “APIs,” essentially modular chunks of software that serve as the interface to certain program libraries implementing different software functions. Use of such publicly available APIs, short for “application programming interface,” is common place in the software industry. On this issue, the question for the jury was whether or not the use of JAVA’s APIs by Google amount to fair use under the law.

It has been observed that the use of APIs is arguably not particularly transformative, an important consideration in deciding fair use (for a broad primer on the boundaries and rules of fair use under copyright law, see my earlier postings Google’s Effort to Digitize Millions of Books is Fair Use and Using “Borrowed” Images in Your Blog). On the other hand, the open source nature of JAVA and the functionality of APIs — standardized code modules designed to function as interfaces with other code — arguably mitigate in favor of a finding of fair use. The jury agreed and vindicated Google’s position that it was fairly building on industry standards and open source protocols.

Of course, the battle will rage on in the appellate courts when Oracle likely appeals. Followers of IP law may be treated to more musings on the law of fair use by Ninth Circuit or even the United States Supreme Court.  Stay tuned.

I previously wrote about two wage-fixing class actions, where some of the largest high-tech and Hollywood companies conspired not to hire one another’s employees to keep wages low.  Google, Apple, Intel and Adobe attempted to settle the high-tech class action for $324 million, but the Court found the amount too low.  They ultimately settled for $415 million.

Meanwhile, the Hollywood wage-fixing case against Pixar, Dreamworks, Disney, LucasFilm and other studios continued to move towards trial when the Court denied the studios’ motion to dismiss.

Initial evidence indicated that Sony was clean; it had rebuffed the other studios’ efforts to recruit Sony into the “gentlemen’s agreement” not to hire one another’s employees. But apparently there was sufficient evidence against Sony that it decided to settle. Sony, which has given us such animated classics as the Smurf franchise, Cloudy with a Chance of Meatballs, and Hotel Transylvania, agreed to pay $13 million to settle its portion of the wage-fixing claims and further agreed to cooperate with Plaintiffs in their action against the other studios.

It will be interesting to see whether Sony’s settlement will inspire the other studio defendants to cut their losses and settle or fight on.

In a recent decision handed down by the United States Court of Appeals for the Second Circuit, the court found that Google’s scanning of copyrighted books as part of its Library Project amounted to “fair use” and did not violate federal copyright law.

In The Authors Guild, et al. v. Google, Inc., Google was sued by a group of authors who alleged it violated their copyrights by making digital copies of their works. As part of the project, the plaintiff authors’ copyrighted books had been scanned without their permission by Google. The Authors Guild, et al. v. Google, Inc. (2d Cir. Oct. 16, 2015) No. 13-4829-CV, 2015 WL 6079426, at *2. Google then made them available for search by internet users who could access a “snippet” view through Google’s service.  This was done as part of Google’s Library Project, in which Google partnered with major research libraries to scan selected works from their collections.  Since 2004, Google has scanned more than 20 million books.  Some of those books are works in the public domain.  However, many are copyrighted.  Google’s service allows a copyright holder to exclude the work from “snippet” views by request.

After a proposed settlement was rejected by the federal district court, Google brought a motion for summary judgment on its fair use defense. In 2013, the federal district court granted Google’s motion, finding that Google’s project constituted fair use. In its recent decision, the Second Circuit upheld that ruling.

What is Fair Use?

The doctrine of fair use allows unauthorized copying of otherwise copyrighted works for certain limited purposes. The modern fair use doctrine is codified in Section 107 of the Copyright Act of 1976.  17 U.S.C. § 107.  The statute provides that “fair use” for purposes such as “criticism, comment, news reporting, teaching … scholarship, or research” is not an infringement of copyright.  The statute contains a list of various factors to be considered in determining if any given use is a protected fair use. Those factors include the “purpose and character of the use,” “the nature of the copyrighted work,” “the amount and substantiality of the portion used,” and the impact on the “the potential market for or value” of the copyrighted work.

The purpose and character of the purported fair use will weigh in favor of a finding of fair use where there is a “transformative use” that “communicates something new and different from the original or expands its utility…”  Authors Guild, supra, at *7.  In this case, the Court concluded that the making of a digital copy of copyrighted works to allow the sort of advanced search capabilities allowed by Google’s Library Project amounted to “a highly transformative purpose.”  Authors Guild, supra, at *8.

The Court observed that providing “tiny snippets” for view was designed to permit a researcher just enough context around a search term to evaluate whether the work was of relevance or not without “revealing so much as to threaten the author’s copyright interests.”  Authors Guild, supra, at *10. Interestingly, the court noted that it saw no reason to conclude that “Google’s overall profit motivation should prevail as a reason for denying fair use” in light of what the court viewed as a “highly convincing transformative purpose.”  Authors Guild, supra, at *11.

What Does the Decision Mean for Authors?

Authors or copyright holders with concerns about having portions of their works available for view through the Google’s Library Project should consider initiating the opt out procedure.  However, for many, the exposure and ease of search provided by Google’s service will outweigh any concerns over a “snippet” view available in the context of making the work searchable for online users.

As discussed in my initial blog post on the topic, Google, Apple, Intel and Adobe stand accused of conspiring not to poach one another’s employees in order to keep wages down. And as discussed in my update, the Court rejected a proposed $324 million settlement as too low.

At the earlier hearing, one of the plaintiff’s objected and the Court agreed that the settlement was too low. At the most recent hearing there was no objection and the Court appeared to approve the settlement. However, there is still disagreement among the various plaintiffs and their respective counsel regarding allocation of the settlement. While it appears that the size of the pie has been decided, there question of how big the pieces will be is on the table.

The lessons for the defendants are (1) don’t conspire with your competitors not to poach one another’s employees and (2) don’t be dumb enough to refer to such conspiracies in writing.

Sure, there are lots of viral YouTube videos.  There’s Katy Perry’s left shark, the owls dance off  and of course the kitten sup-purr bowl, but it might surprise you to learn that YouTube removed a video for being too popular.

That’s right, YouTube removed a music video of “Luv Ya Luv Ya Luv Ya” (“Luv Ya³”) by the alternative rock group Rasta Rock Opera, claiming it had become too popular through nefarious means.  A search for the video now results in the YouTube equivalent of  Microsoft’s blue screen of death.

YouTube alleged that Rasta Rock Opera’s distributor, Song Fi, gamed the music video’s “view count” by using robots or spiders (sounds like a David Bowie song) to ring up more views more quickly than was humanly possible.

Song Fi denied gaming the system and sued YouTube, and its parent Google, in the Federal Court for the District of Columbia.  Song Fi later amended its suit, adding a six year old who appeared in the music video, N.G.B., as a named plaintiff.  N.G.B. and his musical posse alleged breach of contract, libel, tortious interference with business relationships.  Plaintiffs’ Complaint alleges that YouTube discriminates against small, independent artists, while allowing major music labels to use spiders and robots to inflate view counts for “artists” like Psy (Gangnam Style) and Justin Bieber.  Plaintiffs sought a preliminary injunction ordering YouTube to restore Luv Ya³ along with its prior view count of over 23,000 views.  YouTube responded with motions to dismiss or to transfer the case to the Federal Court in Northern California.  The D.C. Court granted YouTube’s motion to transfer pursuant to the venue selection clause on YouTube’s terms of use, but denied, without prejudice, Plaintiffs’ motion for a preliminary injunction and YouTube’s motion to dismiss.

While not ruling on the merits of Plaintiffs’ claims, the D.C. Court showed some sympathy to Plaintiffs’ libel claim regarding YouTube’s posting that “[t]his video has been removed because its content violated YouTube’s Terms of Service.” While recognizing that YouTube’s terms of use prohibit the use of spiders and robots, the Court stated that “it seems to me that [false counts] are not content.”   In fact, the Court told the YouTube attorney she thought he should “take this back to your client and your client should rewrite the contract.”  If the California court agrees, YouTube may not be able to hide behind its current terms of use.

Of course, N.G.B. and the other Plaintiffs may have already won, as they stand to gain as much or more notoriety by suing YouTube/Google and having bloggers blog about it, as they do by posting music videos featuring six year olds.

When you think of a monopoly you probably think of Rich Uncle Pennybags or oil tycoon John D. Rockefeller, but maybe you should think of Princess Elsa from Frozen or the iPhone 6 instead.  The largest Hollywood animation studios and leading Silicon Valley giants stand accused of wage-fixing in violation of the Sherman Antitrust Act. While nobody has proven he was the primary architect of these schemes, Steve Jobs of Pixar/Apple appears to be the common denominator between these two industries.

The Sherman Antitrust Act prohibits business activities that are deemed anti-competitive, including agreements that unreasonably restrain competition affecting interstate commerce. The prototypical case involves price fixing, where various competitors conspire not to compete so they can keep their prices high. In a 2012 case where LCD screen manufacturers conspired to fix prices world-wide, Hitachi, Sharp, Samsung, Toshiba, LG and AU Optronics collectively agreed to pay more than $1.1 billion to settle antitrust claims.

Unlike the typical restraint of trade cases, these Hollywood and Silicon Valley cases involve wage-fixing, not price-fixing. These two industries stand accused of colluding with their competitors not to hire each other’s employees, thereby driving down wages.

The Hollywood class action lawsuit, amended last week, alleges that most of the major animation studios entered secret agreements not to hire one another’s employees. The lawsuit alleges that Pixar, Lucasfilm, DreamWorks Animation, The Walt Disney Company, Sony Pictures, Blue Sky Studios [maker of Rio and Ice Age films], and ImageMovers, LLC, entered into agreements, some of which date back to the 1980’s, “not to actively recruit employees from each other…” While allegations in a complaint should generally be taken with a grain of salt, the studios’ own written documents may prove impossible to explain away. For example in 2005, Pixar’s VP of Human Resources wrote: “With regards to ILM, Sony, Blue Sky, etc., …we have a gentlemen’s agreement not to directly solicit/poach from their employee pool.” In 2007, after Disney acquired Pixar, a Pixar executive wrote a memo to his Disney colleague about “a serious problem brewing” in that Robert Zemeckis [director and creator of Back to the Future and Polar Express] “has hired several people away from Dreamworks at a substantial salary increase” and that the Northern California studios has “avoided wars” by “conscientiously avoiding raiding each other.” Steve Jobs owned the majority share of Pixar prior to the merger.

Meanwhile, in Silicon Valley there are two class actions alleging that Apple, Google, Dell, IBM, eBay, Microsoft, Comcast, Clear Channel, DreamWorks, Oracle, Sun Microsystems and others conspired not to recruit each other’s employees to keep wages down. Similar to the Hollywood case, defendants may find it difficult to overcome their own damning documents. In a Google memo titled “Special Agreement Hiring Policy,” the Google executive listed four Google competitors and explains that they will not “pursue manager level and above candidates for Product, Sales or G&A [General and Administrative] roles –even if they have applied to Google.” Steve Jobs was running Apple during the wage-fixing scheme. The parties in the larger Silicon Valley case reached a settlement of $324 million, but one of the plaintiffs objected that the amount was too low, given that the estimated lost wages was $3 billion and if defendants lose, those damages could be trebled to $9 billion. The Federal District judge agreed and rejected the settlement. The defendants asked the Ninth Circuit to reverse the judge’s decision and have her removed from the case. The parties have filed their initial briefs with the Ninth Circuit

The laws are clear: 1) you cannot conspire with a competitor to fix prices; 2) you cannot conspire with a competitor to fix wages, and 3) you cannot conspire with a competitor not to solicit/hire each other’s workers. These are obvious restraints of trade. But the shocking thing is how arrogant or just plain dumb the defendants were in memorializing their conspiracy in writing. With all the smoking guns, it’s clear the defendants failed to heed Google’s Eric Schmidt’s request that “I would prefer that [Google] do it verbally since I don’t want to create a paper trail over which we can be sued later?” These sophisticated companies committed the same sort of rookie mistake as the Billionaire Boys Club members, who mistakenly left a detailed “to do” list for committing the murder (“tape mouth, handcuff …kill dog”) at the murder site. That smoking gun helped secure their convictions. Similarly, in the wage-fixing class actions, the defendants’ smoking guns are likely to prove insurmountable. Having been caught red handed, the only likely remaining question is how much money the defendants will ultimately have to pay to their employees and the employees’ attorneys. Unfortunately for defendants, it won’t be Monopoly money.

In another installment of “Google does WHAT?!?,” the Supreme Court on June 30 rejected the Silicon Valley giant’s bid to stop a lawsuit accusing the search company of wiretapping. You read that right. Wiretapping.

You know those cool Google Street View cars that drive around taking pictures that allow you to look at your house on Google Maps? Well, it turns out that those Street View cars weren’t only looking at your house, they were also looking into your house, or, more specifically, the information available over your home Wi-Fi network. Google’s argument that it was simply listening to your home radio station fell flat in the Ninth Circuit, and the Supreme Court has now refused to grant certiorari to review the appeals court’s decision.

How Street View Collected Data

The Google wiretapping suit focuses on the Street View cars’ previous practice of collecting information from unprotected Wi-Fi networks as they drove by snapping photographs for Google Maps. As they were rolling through a neighborhood, the cars would record the GPS coordinates of wireless routers and save data transmitted over any network it detected that was not password-protected. The connections only lasted for a split-second each, but that is enough time to download around 25 or more emails and/or other data, including passwords, images, and other personal information. Moreover, if you happened to be transmitting data from a password-protected site as the Street View-mobile drove by, the information from that site, too, would potentially be recorded, unless the site was encrypted. In sum, if you needed another reason to password protect your home Wi-Fi network, here it is.

For Google’s part, it claims that the Street View data mining described above was the result of a rogue programmer (though this assertion has been challenged by regulators in the U.S. and abroad) and that the company never put the information obtained to commercial use.

Google’s Legal Argument:  It’s Just a Radio!

When consumers first filed their class action suit against Google, the company moved to dismiss the lawsuit, claiming that its conduct did not constitute wiretapping. Citing a statute applicable to radio communications, Google claimed that the Wi-Fi communications that it recorded were “electronic communications” that were “readily accessible to the general public.” District Court Judge James Ware, Chief Judge of the Northern District of California, denied Google’s motion in June of 2011.

Last September, the Ninth Circuit Court of Appeals unanimously affirmed Judge Ware’s decision in a strongly-worded opinion. Discussing the term “radio communication,” the Court stated that “Google’s proposed definition is in tension with how Congress — and virtually everyone else — uses the phrase.” A “radio communication,” said the court, does not include “sending an e-mail or viewing a bank statement while connected to a Wi-Fi network.”

Following the Ninth Circuit’s ruling, Google petitioned the Supreme Court for a writ of certiorari. On Monday, the Court denied Google’s petition without comment (as is the Court’s usual practice in denying such petitions).

Data Privacy in the Supreme Court

Despite the absence of any comment from the Supreme Court, its decision to leave the Ninth Circuit’s ruling undisturbed is significant, particularly in light of the Court’s unanimous decision last week Riley v. California, which held that the police must obtain warrants before searching the cell phones of individuals whom they arrest. The Riley decision reveals a surprising sensitivity from the Court regarding the data privacy concerns raised by modern technology.

In Riley, the Court rejected the government’s analogizing the search of a cell phone’s contents to the warrantless search of the contents of a cigarette pack found on an arrestee’s person, which the Court condoned in United States v. Robinson. The Court reasoned that “Cell phones differ in both a quantitative and a qualitative sense from other objects that might be kept on an arrestee’s person. . . Before cell phones, a search of a person was limited by physical realities and tended as a general matter to constitute only a narrow intrusion on privacy. . . But the possible intrusion on privacy is not physically limited in the same way when it comes to cell phones.” Both the aggregation of different types of media and the sheer storage capacity of modern cell phones set the devices apart from a privacy perspective. “The sum of an individual’s private life can be reconstructed through a thousand photographs labeled with dates, locations, and descriptions; the same cannot be said of a photograph or two of loved ones tucked into a wallet.” An individual’s interests, medical condition, and travel history, among other things, can be traced through a search of their phone’s contents, said the Court.

Given the Court’s refusal in Riley to fall back on arcane pre-digital conceptions of Fourth Amendment privacy rights, its decision to allow the Google wiretapping case to proceed is unsurprising. Lending any credence whatsoever to the argument that mining data from private home Wi-Fi networks is akin to listening to “radio communications” would be entirely discordant from a Court that acknowledges that “the sum of an individual’s private life” can be contained in a single application on your cell phone.