The U.S. Supreme Court will hear arguments Wednesday in a copyright infringement suit charging Google, now Alphabet Inc. (NASDAQ: GOOGL), with failing properly to license the Java programming language from its new owner, Oracle Inc. (NYSE: ORCL). The lawsuit was filed in August 2010, just eight months after Oracle’s $7.4 acquisition of Sun Microsystems, developer of Java, was completed.
Oracle sued Google for patent and copyright infringement, seeking an injunction that would prevent Google from distributing more copies of Android and ordering the destruction of copies it had already distributed. Oracle also sought statutory and treble damages. In all, the minimum award would have totaled around $8 billion.
Google offered to pay about $2.8 billion to settle the case in 2012, but Oracle rejected the offer, even though several of the company’s charges against Google already had been dismissed. The offer was contingent on a favorable ruling for Oracle on the remaining issues and future payments on two more patents. Google won this round when a federal jury rejected Oracle’s claim.
In 2014, the federal appeals court reversed the district court’s ruling, and the next year, the U.S. Supreme Court refused to hear Google’s appeal.
Back in district court in 2016, a jury rejected Oracle’s claim, which Oracle appealed in the following year.
In 2018, the federal appeals court reversed that ruling for the second time and sent the case back to the district court to determine damages.
If the Supreme Court rules in Oracle’s favor, the case will be remanded to the lower court to determine damages. The $8 billion demand of 10 years ago certainly will not be enough.
The Trump administration has backed Oracle in this fight. In February, the Solicitor General filed a brief with the Supreme Court saying the Department of Justice found Google’s fair use arguments “unpersuasive.”
The Obama administration also took Oracle’s side in 2016. With the current congressional interest in breaking up Alphabet and other tech giants, now may not be the best time for Alphabet to be getting a decision.
Aside from the financial impact, if Google loses, calls will get louder for the search engine giant to pay content owners for appearing in search results. Google already has agreed to pay some 200 publications more than $1 billion over the next three years to license news results. That number could get a lot bigger.
As of Tuesday’s closing bell, Alphabet had a market cap of $988 billion and, as of June 30, $121 billion in cash. Oracle’s market cap is around $180 billion, and its cash hoard totals around $43 billion.
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