16 April 2021
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The recent ruling in Google v. Oracle has altered the definition of “fair use” when it comes to functional works such as code. While the use of existing creative works must still be transformative in order to avoid violating copyright laws, it will now be much easier to claim fair use when building on existing functional creations. JMBM’s Entertainment Litigation Chair Jeff Goldman explains the case below and discusses its potential impact on the hotel industry.
How does the Supreme Court’s Google v. Oracle case
impact the hotel industry (beyond software)?
Jeff Goldman, Chair, JMBM’s Entertainment Litigation Group
It was hyped as the “copyright case of the century.” Justice Clarence Thomas, in his dissent, frets that the majority “transforms the definition of ‘transformative’” use into nothing more than “a use that will help others ‘create new products’” — a “new definition” that “eviscerates copyright.” Google LLC v. Oracle America, Inc., dissent at 16-17. As an example of what might now be considered a “fair use,” Justice Thomas cites a “movie studio that converts a book into a film without permission[.]” Id. at 17.
Justice Thomas’s concern may be an overstatement. Whatever the repercussions of Google v. Oracle for the software industry, read in context, any attempt to apply its fair use analysis to works that are more creative than functional — like movies, books, and music — ought to fall flat. Nevertheless, various types of copyrighted works important to hotel operators may well be affected by the Court’s fair use analysis.
Copyright law basics
First, briefly, some background. Copyright law protects original “expression” that is fixed in some tangible medium (e.g., paper, film) but not “the ‘ideas’ that lay behind” that expression. Google at 13. The difference between an “idea,” and the “expression” of that idea, is often a difficult line to draw. One concept used to distinguish between idea and expression is that works, or parts of them, that are largely functional or utilitarian are closer to mere “ideas” than to protectable “expression.” Works — including computer code — that are purely functional or utilitarian are considered noncopyrightable ideas, rather than copyrightable expression. See RJ Control Consultants, Inc. v. Multiject, LLC, 981 F.3d 446, 457-58 (6th Cir. 2020). On the other hand, the threshold for copyrighrability is low; to be copyrightable, a work need only “possess some creative spark, ‘no matter how crude, humble or obvious’ it might be.” Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 345 (1991) (quoting Professor Nimmer).
A copyright owner’s exclusive power over a copyrighted work is also subject to various limitations, including that “a copyright holder cannot prevent another person from making a ‘fair use’ of copyrighted material.” Google at 13, citing 17 U.S.C. § 107. Among the factors courts consider in the fair use analysis is how much the new work “transforms” the original work — a concept that courts have had trouble applying with any degree of consistency and predictability.
The Google case
The Google case centered on the protectability, and Google’s use, of a type of largely functional computer code called “declaring code.” The easy way for the Supreme Court to decide the case would have been to simply rule that Oracle’s “declaring code” was not copyrightable — as Google argued, and the district judge agreed (a ruling the Federal Circuit reversed). But it was clear from oral argument that the Court was having none of that.
Yet it was equally clear that the Court, perhaps justifiably humble about its ability to truly understand complex software technicalities, was unwilling to find the opposite either — that “declaring code” was necessarily copyrightable. After all, the two lower courts in the case had come to diametrically opposite conclusions on this point.
So the Court bypassed what many believed would be the central issue decided in Google, by focusing solely on the affirmative defense of fair use — a flexible, equitable judge-made doctrine (before being codified in § 107). In the specific context of this case, Google merely took 11,500 lines of largely utilitarian code — just 0.4 percent of Oracle’s Java code as a whole — and added to it “millions of lines” of new and original expression. Google at 3. The public benefits of Google’s Android operating system outweighed Oracle’s right to prevent Google from marketing its new and original expression by monopolizing its declaring code. In this specific context, such a “lock would interfere with, not further, copyright’s basic creativity objectives.” Google at 34. Unlike a bright-line rule about the copyrightability or not of “declaring code,” the majority’s reliance on fair use to decide the case will likely yield different, fact-specific results in every future case, even cases involving declaring code.
Justice Thomas’s dissent
In his dissent, Justice Thomas seizes on the majority’s unwillingness to confront head-on the copyrightability of declaring code, arguing that “[t]he court wrongly sidesteps the principal question that we were asked to answer: Is declaring code protected by copyright? I would hold that it is.” Google dissent at 4. Justice Thomas goes on to conclude that “[t]he only apparent reason” for this “sidestep” is “because the majority cannot square its fundamentally flawed fair-use analysis with a finding that declaring code is copyrightable.” Id. at 4, 19. He argues that if declaring code is copyrightable, the majority’s opinion cannot be reconciled with any precedent because “we have never found fair use for copying that reaches into the tens of billions of dollars and wrecks the copyright holder’s market.” Id. at 15-16. He cites the traditional standard that “copying the ‘heart’ or ‘focal points’ of a work weighs against fair use,” and notes that “Google does not dispute the Federal Circuit’s conclusion that it copied the heart or focal points of Oracle’s work.” Id. at 17-18.
I am pretty sure if you asked Google, it would very much dispute that it copied the “heart” of Java — either qualitatively or quantitatively. More on that later. Further, the fair use finding in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984) (the Betamax case), arguably threatened to allow as fair “copying that reache[d] into the tens of billions of dollars and wreck[ed] the copyright holder[s’] market.” But still, Justice Thomas does persuasively hit the mark with his scathing criticisms of the majority’s analysis of “market effects” — arguably “the single most important element of fair use[” among the four nonexclusive statutory fair use factors. Google dissent at 11, quoting Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 566 (1985). It does appear that in an effort to find that every “fair use” factor favored Google — which was not even necessary to reach their conclusion — the majority went a bit off the rails.
For example, Justice Thomas makes a solid point that in minimizing Oracle’s practical ability to enter the smartphone market itself, the majority fails to accord sufficient weight to Oracle’s ability to license its code to others in that market. “A book author need not be able to personally convert a book into a film so long as he can license someone else to do so. That Oracle could have licensed its code for use in Android is undisputed.” Google dissent at 13. Moreover, the majority’s discussion of “lock-in effects” is hardly persuasive in a case where the copyright owner, Oracle, had a minuscule fraction of the market power of the defendant, Google, and where everyone seems to agree that Google could have pretty easily written its own declaring code if it had wanted to.
The meaning of a copyrighted work’s “heart”
But beyond that, Justice Thomas’s criticism of the thrust of the majority’s fair use analysis is a bridge too far. The majority probably should have ended its market effects analysis with the observation that “a potential loss of revenue [for the copyright owner] is not the whole story. We here must consider not just the amount but also the source of the loss.” Id. at 30. This would have kept the focus where it should have been — on the thin copyrightability (if any at all) of Oracle’s declaring code, and the corresponding wide berth given to those, including Google, who wish to use it to help create something else truly new, different, and beneficial to society. That is, the “source” of Oracle’s “loss” was its inability to monopolize something — declaring code — that was largely functional and not especially prized by copyright law in the first place.
But Justice Thomas’ reliance on the “heart/focal point” doctrine also omits an important and often overlooked aspect of that doctrine: that the proper inquiry is (or at least should be) whether the defendant used the “heart” of the most copyrightable elements of the copyright holder’s work, not just the “heart” of the work as a whole. The majority in Google relies heavily, and properly, on this distinction.
Even if one considers the declaring code to be the “heart” of Oracle’s overall “work” — in the sense that it may well be, as Justice Thomas asserts, “what attracted programmers to the Java platform and why Google was so interested in that code,” Google dissent at 18 — it is certainly not the “heart” of the most copyrightable elements or aspects of that overall work. Declaring code may well be a functional prerequisite to unlocking the creative and original aspects of a computing system as a whole. But this does not make it the “heart” of what is copyrightable about such a system any more than the functional computer code used to unlock the ability to stream a song is the “heart” of the song’s copyright.
As it is described by the majority, at least, declaring code appears to be more utilitarian than the rest of the code comprising Oracle’s Java system. “[C]opyright’s protection may be stronger where the copyrighted material … serves an artistic rather than a utilitarian function.” Google at 15. That Oracle may have spent a lot of time and resources to create its declaring code does not make that code the “heart” of what is copyrightable about Java, any more than the “sweat of the brow” expended in compiling names, addresses, and phone numbers makes a phone book copyrightable. See Feist (“white pages” were not copyrightable despite tremendous effort required to compile them).
Contrary to Justice Thomas’ view, it was not necessary for the majority to find that declaring code is uncopyrightable per se in order to reach its conclusion. It needed only to conclude that the “thin” veneer of copyright protection typically attaching to such code, see Feist, 499 U.S. at 349, or at least the declaring code used in Java, makes it far easier for a user such as Google to “fairly” use that code to create something new, different, and highly beneficial to the public. Far easier, at least, than a movie studio adapting a book — the originality of which is at the core of what copyright protects — without permission.
Google’s impact on the “fair use” of copyrights in the hotel industry
This conclusion need not, and should not, bleed into any analysis of fair use in the context of more traditionally creative type of works like books and movies. But there are various copyright issues that recur in the hotel industry that may be affected by the Google case. Most obviously, of course, it may now be easier for one to claim a “fair use” of the functional declaring code that likely underlies many hotel chain’s computerized reservation systems – so long as the code is used to create a new reservation system that has new and different qualities that are useful to the traveling public. As Justice Thomas notes, before Google, “transformative” use tended to require that the new work be of an entirely different nature than the work it copied. Not so after Google.
Architectural copyrights, including those that apply to the interior design of hotels as well as their outer construction, could also be affected. Architectural works, much like computer code, have traditionally been viewed as among the least “copyrightable” types of copyrightable works. They are copyrightable under the right circumstances, but the protection accorded those copyrights are “thin” compared to more traditional creative works such as music and photographs. Applying the logic and analytical framework of Google, it may now be even easier for new construction to mimic elements – both interior and exterior – of existing buildings, provided the new construction can point to utilitarian or functional reasons for the similarities.
Remember, the linchpin of the majority’s fair use analysis is that courts “must consider not just the amount but also the source of the loss.” Google at 30 (emphasis added). In the case of declaring code, the “source of the loss” is the inability to exclude Google from using largely functional and barely protectable (if at all) declaring code. The same will likely be true in most cases involving architectural elements, so long as the new construction adds something new and innovative that has value to the hotel’s employees or guests.
Thus, even though the majority opinion in Google emphasizes that “we have not changed the nature of” fair use and “do not overturn or modify our earlier cases involving fair use — cases, for example, that involve “knockoff” products, journalistic writings, and parodies,” Google at 35, the impact of the case will only be fully realized in the years to come, as lower courts grapple with the Supreme Court’s first attempt to tackle “functional” copyrights in many generations.
Jeffrey Goldman is Chair of JMBM’s Entertainment Litigation practice. He has litigated hundreds of music cases involving more than 30 Billboard #1 records, more than 30 Grammy Award winners, and more than 30 members of the Rock & Roll Hall of Fame. He has also litigated cases against the world’s largest airline, search engine, toy company, e-commerce retailer, and electronics retailer, as well as against some of the world’s largest drug companies, beer companies, automakers, and entertainment conglomerates.
His cases have figured prominently in the development of modern intellectual property and entertainment law, resulting in more than 150 reported judicial decisions, which have been cited in thousands of other reported decisions. Contact Jeff Goldman at 310.785.5386 or JGoldman@jmbm.com.
This is Jim Butler, author of www.HotelLawBlog.com and founding partner of JMBM and JMBM’s Global Hospitality Group®. We provide business and legal advice to hotel owners, developers, independent operators and investors. This advice covers critical hotel issues such as hotel purchase, sale, development, financing, franchise, management, ADA, and IP matters. We also have compelling experience in hotel litigation, union avoidance and union negotiations, and cybersecurity & data privacy.
JMBM’s Global Hospitality Group® has helped clients around the world with more than 4,300 hospitality properties worth more than $104.7 billion. Contact me at +1-310-201-3526 or email@example.com to discuss how we can help.