In a landmark ruling, a 10-member jury has found no copyright violations of Oracle Corp.’s (ORCL - Free Report) Java APIs by Alphabet (GOOGL - Free Report) while developing its Android system.
Oracle sought $9.3 billion as compensation from Alphabet for unauthorized usage of Java APIs in its Android operating system. As per media reports, Oracle’s damage expert James Malackowski had claimed $8.8 billion as compensation for profits made by Google in addition to $475 million in damages. A booming smartphone market especially for Android run devices in the last few years is a contributing factor to the mammoth compensation demanded by Oracle.
The dispute has been going on for the past six years now. Oracle had first sued Alphabet, then Google. It claimed thatGoogle in order to take a leading position in the mobile market was scrambling to launch its operating system and therefore used Java unauthorized as it was a well-known script with a lot of programmers then. However, Google denied such allegations and maintained that the usage of Java APIs was protected under the “fair use” clause “which permits copying under limited circumstances.”
Java was developed in the early 1990s by Sun Microsystems, which was taken over by Oracle in 2010.
In May 2012, Alphabet had initially gained an edge as the Northern District of California Judge William Asylup ruled that APIs are not copyrightable. However, next year, a U.S. Court of Appeals for the Federal Circuit reversed the district court’s ruling, thereby bringing some relief for Oracle.But at the same time, it gave Alphabet a breather in the form of the “fair use” defense clause “which permits copying under limited circumstances.” In Oct 2014, Alphabet filed a petition in Supreme Court but SCOTUS turned it down and redirected it to a district court.
The ruling was welcomed by Silicon Valley as they apprehended that a decision in Oracle’s favour could prove detrimental to innovation since programmers use open source APIs across various interfaces for developing codes. Analysts observe that if Oracle had won, it would have been a very puzzling situation for developers as to which APIs can be accessed and which are off limits. Further, they added that it would have marred “software cooperation” and made the process expensive, the eventual burden of which would fall on consumers.
In an email, Google said "Today's verdict that Android makes fair use of Java APIs represents a win for the Android ecosystem, for the Java programming community, and for software developers who rely on open and free programming languages to build innovative consumer products."
However, Oracle is not willing to accept this decision. The company is planning to appeal against the verdict. Oracle general counsel Dorian Daley was quoted saying “Oracle brought this lawsuit to put a stop to Google’s illegal behavior. We believe there are numerous grounds for appeal."
At present, Alphabet carries a Zacks Rank #3 (Hold) whereas Oracle carries a Zacks Rank #4 (Sell). Better-ranked tech stocks include NetEase, Inc. (NTES - Free Report) and Facebook Inc (FB - Free Report) . Both sport a Zacks Rank #1 (Strong Buy).
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