Oracle v Google – Success for Oracle, Java APIs can have copyright protection

On Friday the US Court of Appeals for the Federal Circuit issued its much awaited decision in the Oracle v Google case. The case concerned copyright in APIs (Application Programming Interfaces) written by Oracle in the Java programming language. The APIs were licensed by Oracle and used by software developers in apps for smartphones, PCs and other devices.

Oracle discovered that Google was using 37 of its APIs without permission and filed a lawsuit claiming that Google’s Android mobile operating system infringed Oracle’s patents and copyrights. The jury in the original case found no patent infringement (which was not challenged on appeal) and found that Google had infringed Oracle’s copyright in the 37 Java packages but deadlocked on the issue of Google’s ‘fair use’ defence. However, the District Court denied Oracle’s motion for judgment as a matter of law (“JMOL”) and, following further consideration, ruled in favour of Google (except in respect of a specific computer routine known as “rangeCheck” and eight decompiled security files) finding that of the 37 Java API packages at issue, “97 percent of the Android lines were new from Google and the remaining…..elements replicated by Google were free for all to use under the Copyright Act.”

Both Google and Oracle appealed and at the end of last week the Court of Appeals reversed the decision of the District Court and held that the declaring code and the structure, sequence, and organisation of the 37 API packages were entitled to copyright protection. In coming to this decision, the Court considered whether the work was original (originality being a fundamental requirement for copyright protection) and whether the APIs constituted ideas or the expression of an idea. Under both US and EU law, copyright protection is not available for a mere idea but is available for the ‘expression’ of an idea.

In this case Oracle claimed copyright protection with respect to both: (1) the literal elements of its API packages (being the lines of source code); and (2) the non-literal elements (being the structure, sequence, and organization of each of the API packages). Both parties agreed that the APIs met the originality requirement. However, they disagreed upon whether they were an expression of an idea or just an idea itself. The Court found in Oracle’s favour in respect of both elements, finding that that the non-literal elements of the APIs were more than a mere idea and that Oracle had made a choice in how to express those ideas noting that “there were myriad ways in which the API packages could have been organized”.

The US decision has created an even greater divergence of US and EU copyright law. In 2012, the Court of Justice of the EU ruled that whilst source code itself can be afforded copyright protection, APIs and other functional characteristics (such as data formats and function names) cannot be. In reaching this finding the Court stated that “to accept that the functionality of a computer program can be protected by copyright would amount to making it possible to monopolise ideas, to the detriment of technological progress and industrial development”. For software businesses looking to operate on a global scale, this divide is not good news.

This isn’t the end of the story. The Court of Appeals has referred the case back to the District Court for further consideration of Google’s ‘fair use’ defence and even after the ‘fair use’ issue has been decided, it is likely that the case will be subject to further appeals.

Apple v Google (v the rest): how important are “ecosystems”?

Apple iCloud

Image credit: Apple.

Interesting post on FT Alphaville about disagreements among analysts over Apple’s prospects for the final quarter of 2012 and first half of 2013. According to Citi, signs of increased pressure on Apple include:

  • Apple’s hardware suppliers reporting cuts in orders.
  • Cannibalisation of iPad 4 sales by the iPad Mini, with iPad Mini sales expected to outnumber those for the (more profitable) iPad 4 by at least two to one by Q2 2013.
  • Increased competition (and price-sensitivity) in the tablet market generally.
  • Growing customer preferences for the larger screen sizes offered by competitors such as Samsung.

Against that, Morgan Stanley predicts that iPhone 5 sales in the December quarter could exceed 50 million units, and argues that Samsung’s phone sales are mostly coming at the expense of other Android phone manufacturers.

But what I found particularly interesting from FT Alphaville’s post was Citi’s discussion on Apple’s “ecosystem”: the idea that Apple can lock in its customers by providing an integrated, Apple-only web of services and products that make it hard from people to switch to another manufacturer without losing content or functionality that they have come to value. Citi’s conclusion is that this isn’t currently valued by customers as much as Apple might hope:

In general consumers are indifferent with regard to having a common operating system across devices with 54% indicating that it is “Not Important.” Moreover, only 14% of respondents indicated that a common ecosystem was “Very Important.” Across iPad owners, the ecosystem is more important but only marginally so, with respondents that valued a common ecosystem up to 53% and 21% believing it is“Very Important.”

I suspect, though, that ecosystems are valued by those who are already integrated into one. If you own an Android phone and an iPad, the Apple/iTunes ecosystem probably doesn’t matter to you a great deal. But if you own an iPhone, iPad and Apple TV, and have bought dozens of movies or TV series on iTunes, then it probably matters a lot more to you that your next gadget fits into that world.

Conversely, I’m currently awaiting delivery of my first Android phone, to replace my iPhone – partly for the larger screen (to pick up on one of Citi’s other points), but mostly because I’ve found the iPhone to be playing less nicely than it used to with the Google ecosystem, which I’m more locked into than Apple/iTunes. That may not be a universal experience, but it’s far from unique.

Google Maps for iOS iconOn a wider scale, the Apple Maps debacle demonstrates the risks to a brand’s reputation when something goes wrong, not with the product itself, but with a valued part of the product’s ecosystem. Ten million iOS users downloaded the new Google Maps app in the first two days after its release last week – how many more have had their relationship with Apple’s ecosystem weakened, maybe even enough to tempt them to look elsewhere next time?

As I wrote last year, the battle between the “big four” consumer digital brands – Google, Apple, Facebook and Amazon – isn’t over mere hardware or individual services. It’s a battle between competing business models, built around competing ecosystems. While only a minority of customers may have noticed yet that this is happening, I expect that those four giants will continue to build their future plans around this trend.

Google Drive vs Dropbox: who owns your stuff?

Who owns the data you store on Google’s new cloud-based storage service (and so-called “Dropbox-killer”), Google Drive?

Following the announcement of Google Drive, a number of people suggested that (unlike Dropbox) Google’s terms and conditions give it “ownership” of the data you store on the service. However, these claims are confusing two separate issues: ownership, and scope of licence.

Google’s terms are, in fact, explicit on the ownership of users’ content (a point that seems to have been overlooked by some of its critics):

Some of our Services allow you to submit content. You retain ownership of any intellectual property rights that you hold in that content. In short, what belongs to you stays yours.

Users do give Google a very wide-ranging licence in respect of that content:

When you upload or otherwise submit content to our Services, you give Google (and those we work with) a worldwide licence to use, host, store, reproduce, modify, create derivative works (such as those resulting from translations, adaptations or other changes that we make so that your content works better with our Services), communicate, publish, publicly perform, publicly display and distribute such content.

But even this is not completely unrestricted:

The rights that you grant in this licence are for the limited purpose of operating, promoting and improving our Services, and to develop new ones.

Anyone with a Google account has already given Google this licence in respect of other services. In some cases, such as Gmail, this licence will cover a lot of material that they would no doubt consider highly sensitive, and certainly not something they would want Google to “communicate, publish, publicly perform, publicly display and distribute”. Google Drive is likely to hold equally sensitive information that currently sits on users’ hard drives.

Google’s licence terms have been compared with those of Dropbox, who have had their own problems over their ownership and licensing terms in the past, but whose terms and conditions now state that:

You retain full ownership to your stuff. We don’t claim any ownership to any of it. These Terms do not grant us any rights to your stuff or intellectual property except for the limited rights that are needed to run the Services, as explained below.

We may need your permission to do things you ask us to do with your stuff, for example, hosting your files, or sharing them at your direction. This includes product features visible to you, for example, image thumbnails or document previews. It also includes design choices we make to technically administer our Services, for example, how we redundantly backup data to keep it safe. You give us the permissions we need to do those things solely to provide the Services.

In practice, the scope of this licence is probably not vastly different from the one in Google’s terms, but it reads more reassuringly for customers, emphasising throughout the “limited” nature of these rights, which are “solely” to provide the services.

What can other web-based, consumer-facing businesses learn from this?

  1. Don’t neglect the legal terms when launching a new product. Yes, I know, I would say that – but Google’s error appears to have been to launch a new product without considering how its existing legal terms would apply (or be perceived to apply) to a product that gives them access to a lot of data previously unavailable to them.
  2. People are highly sensitive about content ownership and licensing – and rightly so, though often I find people (even in a business setting) focus too much on “ownership” and not enough on “scope of use”, which in practice is usually more important. As we’ve seen, Google’s terms are actually clear on ownership of data, but their licensing terms are phrased in such a way that leads many to consider that in practice Google is as good as claiming ownership anyway.
  3. Legalese can backfire. The problem with Google’s terms is that they are phrased in a very “legalistic” way. Lawyers may be able to pick the bones out of verbiage like “use, host, store, reproduce, modify, create derivative works, communicate, publish, publicly perform, publicly display and distribute”, but many users just read this as “all your content are belong to us”. Dropbox learned the hard way that saying simply, in plain English, what you need and intend to do, making it clear that you understand the potential concerns, is the only way to get customers to trust you. It will be interesting to see how Google responds to this same message from customers.

Battle of the business models

Wired magazine has a fascinating interview with Jeff Bezos, CEO of Amazon, to coincide with the first shipping of the Kindle Fire, Amazon’s rival to the iPad.

What the interview highlights is the way the internet (at least in the English-speaking world) is increasingly concentrating into four “ecosystems” – Google, Apple, Facebook and Amazon – with each of these having a distinctive business model:

  • Apple’s model is hardware-centric. The content it sells through iTunes and the App Store is a means to an end, the end being to sell its highly profitable, premium-priced devices such as the iPhone, iPad and Mac. Its lower-priced devices such as Apple TV and the iPod Touch serve the same end, operating (as I can testify from personal experience!) as a “gateway drug” to the more expensive models by ensuring people buy into the ecosystem.
  • Amazon’s model is content-centric. This is the polar opposite to Apple: Amazon makes money from selling content, and it therefore keeps its device prices at rock-bottom in order to draw people into its content ecosystem. In his interview with Wired, Bezos doesn’t rule out literally giving away the Kindle in future.
  • Google’s model is data-centric. Its mission statement is “to organize the world’s information and make it universally accessible and useful” – not least to make it useful to its advertisers. Hence Google generally gives away its products for free, whether that’s services like Gmail and Picasa for consumers, or the Android operating system for mobile phone developers and networks. The products are aimed at encouraging people to put more and more of their information into Google’s servers.
  • Facebook’s model is social-centric (sorry!). Like Google, its aim is to collect as much data as possible about people so that it can then sell advertising. However, it comes at this at a different angle from Google, building out from people’s social relationships – highly valuable information that is donated to it by its 800m users.

It remains to be seen which of these models will win out or how they will coexist. However, a couple of questions come out of this.

First, you’ll notice that the above list makes no mention of Twitter. Twitter may be a hugely popular service, but it’s a long way from constituting an ecosystem or dominant business model to compete with Apple, Amazon, Google and Facebook. It’s something that people use, not somewhere that people live.

Second, what does this mean for smaller companies seeking to make money online? Increasingly the routes to do so lie through one or more of those ecosystems: through developing apps for Apple, Android or Facebook, through ensuring a strong presence on Google, through having content available through Amazon. This provides people with a lot of opportunities – just see how the App Store can make software available to tens of millions of potential customers – but also reflects something of a reduction in the “free for all” that has driven innovation online to date.

Something of that concern for a reduction in freewheeling innovation can be seen in Bezos’ criticism of the software and business method patents that helped Amazon in the past, but which he now clearly sees as more of a threat:

For many years, I have thought that software patents should either be eliminated or dramatically shortened. It’s impossible to measure the toll they’ve had on the software industry, but on balance, it has been negative.

Whatever your view on software patents, they are certainly playing a central role in the concentration of internet business into a small number of ecosystems, between which fierce battles rage in patent courts around the world. Again, it remains to be seen what effect this will have on innovation for smaller companies.

Death of the domain name?

Interesting article on plans for forthcoming releases of the Google Chrome and Mozilla Firefox browsers to “deemphasise” the address bar, so that the URL of the page you’re viewing is not visible in normal browsing.

As the report puts it:

Google’s motivation to reduce your dependence on the URL bar is clear, since the company would rather that you think of using the web the same way you use your iPhone or Android device.

As Google sees it, the Web isn’t a collection of sites such as nytimes.com, mail.google.com or Facebook.com. Instead these are all software applications called The New York Times, Gmail, and Facebook that happen to live online instead of on the desktop.

From an online safety point of view, this has pros and cons. Critics will argue that hiding the URL will make life easier for scammers to direct people to phony sites. Against that, the linked report suggests that removing human error (typing the wrong address) will reduce some opportunities for scam sites.

I remember suggesting at an event some years ago that search would ultimately displace URLs/domain names as the main means by which people navigated the web. It’s taken longer than I thought, but it does now seem to be happening: I’ve noticed a number of offline advertisements in recent months (such as billboards and magazine ads) that invite people to search for a keyword rather than giving the advertiser’s website address.

Add to that this new trend to treat websites as apps, and it may well be that the URL is on its way towards becoming a purely technical feature working in the background.

Google’s “superphone”: who’s in control?

The Google Nexus One “superphone” has been attracting a great deal of media coverage since its launch last week – though the coverage has turned sour for Google today, with widespread reports of customer dissatisfaction as early adopters receive their new purchases.

Most complaints relate to technical problems (such as getting the phone connected to a 3G network) or to the availability (or otherwise) of discounted deals. A further layer of “meta-complaints” then quickly sprang up as people expressed their dissatisfaction with how Google had handled their original complaints. However, the complaint that caught my eye was the seemingly more minor one of the 190 MB limit on installed applications.

The Nexus One’s storage capacity can be expanded to 32 GB using a Micro SD card. However, at present applications have to be installed on the phone’s internal memory of 512 MB. In practice the amount of space available is reported at only 190 MB. Google explained at the Nexus One launch event that this is to “protect [software developers] from piracy”, and that they are working on other means to achieve this through encryption.

The point is that it is Google that has imposed this restriction, not the customer who buys the device. If I buy a netbook – a concept seen by some as threatened by the rise of the smartphone – I can install any software I like on it and use the hardware as I choose. (Indeed, the netbook on which I’m typing this has an entirely different operating system from the one with which it was supplied). If I buy a smartphone, I’m subject to whatever restrictions the manufacturer and/or network operator decide to impose on it (a point made eloquently by Jeff Atwood in this post).

This highlights a wider problem as we move into an era of mobile technology and cloud computing: who’s in control? As computers move into our pockets and our software and data move out into the cloud, we gain a great deal in convenience, but we may be losing out on control. At the very least, we need to make sure we understand the trade-offs we’re making, whether as individuals or businesses.

Google Dashboard: full disclosure?

This morning, Google has launched Google Dashboard, a “privacy dashboard” intended to help users see what information Google holds about them across its various services.

Google is able to track a huge proportion of its account-holders’ online activities. Google has my personal emails (27,473 conversations since 2004), my personal contacts’ details, a full history of my web searches and of much of my web browsing. It knows what videos I’ve watched on YouTube, and what RSS feeds I’ve read through Google Reader.

It’s useful to have this summary of the different ways in which Google knows about us. That said, does this really tell us what Google knows? As any company in the data management business can confirm, the power of personal data comes not from the raw information, but from the ability to analyse that information in order to identify patterns of behaviour and so on.

So a criticism that could be made of Google Dashboard is that it is an example of “informing to conceal”. We are given apparently comprehensive details of the information Google possesses about us. But the real privacy concerns – not to mention the commercial value to Google of the information – comes from what they are able to deduce about us from this information: and that, not surprisingly, they are keeping to themselves.