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The $9 Billion Verdict: Alphabet Beats Oracle Again (but They Aren't Done Yet)

By Anders Bylund - May 28, 2016 at 1:00PM

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The database giant wanted to grab up to $9 billion of Google's Android revenues, but another jury disagreed. Next up: another appeal.

Oracle (ORCL 4.54%) wanted to hit Alphabet (GOOG 5.20%) (GOOGL 5.11%) with as much as $9 billion in fines and damages, because Alphabet's Google group used core concepts from Oracle's Java programming language. The database giant thought it deserved a cut of Android's success.

It's a long-running saga, and probably nowhere near completion. But another verdict is in, and Oracle is walking away empty-handed this time.

After two weeks of evidence and witness presentations, followed by three days of jury deliberations, a federal jury in the Northern District of California handed down a unanimous "not guilty" verdict on Thursday. More specifically, the jury had been asked whether Google's use of Java programming methods in Android falls under the "fair use" portion of copyright law, and the jurors agreed that it does.

This was the second jury trial in this legal proceeding. The first trial ended in Oracle's favor by establishing that so-called API concepts could be copyrighted, but only after a verdict in Google's favor was overturned by a Court of Appeals decision. The Supreme Court was asked to take a look, but turned the case away.

So here we are, at what likely will become the first leg in another multi-year journey. The second trial started the same way as the first, which is a clear victory for Google. Oracle is sure to appeal this verdict, and off we go to the Court of Appeals again.

Who should worry about this court case, anyhow?

Interest in this case is not strictly limited to Oracle and Alphabet/Google/Android. The final outcome here could redraw the limits of how software development is done, especially when it involves concepts of public domain and open source. The Java platform's code has been shared under an open-source license, and parallel versions of the language have been developed by organizations and companies not related to Oracle or original inventor Sun Microsystems.

Oracle argued that none of that mattered because the company held copyright to the programming interfaces used by Java programmers everywhere. Google disagreed, noting that the final verdict was good news for the software development world, in general.

"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," a Google spokesperson said to reporters from Ars Technica.

Red Hat (RHT) CEO Jim Whitehurst, for one, would like to see the end of this long-running case. Oracle's interpretation of programming interface copyrights is putting a cloud of uncertainty over the entire software-development market, with particularly heavy thunderclouds over the open-source community, where Red Hat is a leading name.

"The ambiguity makes it very, very difficult to understand what you can and can't use, and so hopefully we will get some answers out of this," he said in a phone interview with the Fool earlier this week. "Oracle's view is certainly bad for Java, in general."

What's next?

Alphabet is off the hook for now, but it's only a matter of time before Oracle takes this conflict to the next level of legal analysis. We might still get a Supreme Court verdict out of this, but that endpoint would still be years away.

Pull up a chair, grab some popcorn. I'll bring the salt and soda.

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Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,359.50 (5.11%) $114.66
Oracle Corporation Stock Quote
Oracle Corporation
ORCL
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Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
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Red Hat, Inc. Stock Quote
Red Hat, Inc.
RHT

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