The Federal Circuit’s recent decision in the long-running battle between Oracle and Google overturned a jury verdict of fair use and held as a matter of law that Google’s unauthorized copying and use in its Android platform of 37 of Oracle’s copyrighted Java application program interface (“API”) packages did not constitute “fair use.” Oracle Am., Inc. v. Google LLC, 2018 U.S. App. LEXIS 7794 (Fed. Cir., March 27, 2018). That decision drew immediate and pointed criticism. On the day after the decision came down, a Law 360 article entitled “5 Things To Know About The Oracle v. Google Ruling” led off with “Jury? We Don’t Need No Stinkin’ Jury.” See https://www.law360.com/ip/articles/1026915. The article characterized the decision as “a full-throated reconsideration of questions that had already been decided by jurors,” stating that “American courts are generally loath to overturn jury verdicts, but . . . the Federal Circuit spent pages explaining why it would do just that. The verdict was advisory only, the court said, and it would undertake a fully de novo review of ‘the ultimate question of fair use.’” However, the article does not discuss the court’s reasoning for doing so.
In this commentator’s view, the article’s criticism was misplaced, for a review of the court’s reasoning reveals that the standard of review the court used was soundly grounded in Supreme Court and Ninth Circuit law.
In deciding what standard of review to use, the Federal Circuit analyzed several subsidiary questions: what aspects of a fair use determination are legal or factual; is the ultimate question of fair use a legal inquiry subject to de novo review; what standard should be used for review of factual determinations; and “what, if any, aspects of the fair use determination are for the jury to decide.” Oracle, 2018 U.S. App. LEXIS 7794 at *23-24. Under established Supreme Court law, fair use is considered a “mixed question of law and fact.” Citing a recent Supreme Court case, U.S. Bank Nat’l Ass’n ex rel. CWCapital Asset Mgmt. LLC, 200 L. Ed. 2d 218 (2018) (review of a bankruptcy court decision), the Federal Circuit stated that “the [Supreme] Court made clear that an appellate court is to break mixed questions into their component parts and to review each under the appropriate standard of review.” Oracle, 2018 U.S. App. LEXIS 7794 at *24-25. This analysis involves three aspects: (1) “determining the legal standard governing the question posed and what types of historical facts are relevant to that standard” – “a purely legal question to be reviewed de novo on appeal;” (2) finding the relevant historical facts – which are “reviewable only for clear error;” and (3) “assessing whether the historical facts found satisfy the legal test governing the question to be answered,” which the Supreme Court said was a “mixed question.” Id. at*25. For a mixed question, and again relying on the U.S. Bank case, the court stated that “[w]here applying the law to the historical facts ‘involves developing auxiliary legal principles of use in other cases – appellate courts should typically review a decision de novo.’” Id. at *25-26. However, “where the mixed question requires immersion in case-specific issues that are so narrow as to ‘utterly resist generalization,’ the mixed question review is to be deferential.” Id. at *26.
The Federal Circuit went on to cite Supreme Court and Ninth Circuit cases holding that where the district court has found facts sufficient to evaluate each of the statutory fair use factors, an appellate court may reweigh the inferences to be drawn from the record and conclude as a matter of law that a challenged use does not qualify as a fair use. Id. at *27. The court stated that because “the historical facts in a fair use inquiry are generally few, generally similar from case to case, and rarely debated, resolution of what any set of facts means to the fair use determination definitely does not ‘resist generalization,’ [but rather] will help guide resolution of that question in all future cases.” Id. at *27-28 (citation omitted).
The Federal Circuit noted that the Supreme Court “has never clarified whether and to what extent the jury is to play a role in the fair use analysis.” Id. at *31. And although several circuits, including the Ninth Circuit, allow the question of fair use to go to a jury, the Ninth Circuit “has clarified . . . that the jury role in this context is limited to determining disputed ‘historical facts,’ not the inferences or conclusions to be drawn from those facts.” Id. at *31. Nonetheless, in the instant case “all aspects of Google’s fair use defense went to the jury with neither party arguing that it should not. Thus, the jury was asked not just what the historical facts were, but what the implications of those facts were for the fair use defense.” Id. at *33.
Because the verdict form did not ask the jury to provide detailed fact findings, the Federal Circuit assumed that the jury resolved all factual issues relating to the historical facts in favor of the verdict, and applied a “substantial evidence” test to its review of their implied findings of historical facts. Id. at *33-34. However, all other jury findings relating to fair use “must, under governing Supreme Court and Ninth Circuit case law, be viewed as advisory only.” Id. at *34. The court concluded, therefore, that “we must assess all inferences to be drawn from the historical facts found by the jury and the ultimate question of fair use de novo, because the Ninth Circuit has explicitly said we must do so.” Id. at *34.
In sum, the Federal Circuit’s de novo review in this case of the “ultimate question of fair use” was consistent with established principles of appellate review of jury verdicts.