Opinion ID: 4258388
Heading Depth: 2
Heading Rank: 3

Heading: Applying the Fair Use Factors

Text: Factor 1: The Purpose and Character of the Use The first factor in the fair use inquiry involves “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” 17 U.S.C. § 107(1). This factor has two primary components: (1) whether the use is commercial in nature, rather than for educational or public interest purposes; and (2) “whether the new work is transformative or simply supplants the original.” Wall Data, 447 F.3d at 778 (citing Campbell, 510 U.S. at 579). As explained below, the first is a question of fact and the second is a question of law. As Oracle points out, moreover, courts sometimes also consider whether the historical facts support the conclusion that the infringer acted in bad faith. See Harper & Row, 471 U.S. at 562. We ad- dress each component in turn. 28 ORACLE AMERICA, INC. v. GOOGLE LLC
Analysis of the first factor requires inquiry into the commercial nature of the use. Use of the copyrighted work that is commercial “tends to weigh against a finding of fair use.” Harper & Row, 471 U.S. at 562. Courts have recognized, however, that, “[s]ince many, if not most, secondary users seek at least some measure of commercial gain from their use, unduly emphasizing the commercial motivation of a copier will lead to an overly restrictive view of fair use.” Am. Geophysical Union v. Texaco, Inc., 60 F.3d 913, 921 (2d Cir. 1994); see also Infinity Broad. Corp. v. Kirkwood, 150 F.3d 104, 109 (2d Cir. 1998) (“[N]otwithstanding its mention in the text of the statute, commerciality has only limited usefulness to a fair use inquiry; most secondary uses of copyrighted material, including nearly all of the uses listed in the statutory preamble, are commercial.”). Accordingly, although the statute requires us to consider the “commercial nature” of the work, “the degree to which the new user exploits the copyright for commercial gain—as opposed to incidental use as part of a commercial enterprise—affects the weight we afford commercial nature as a factor.” Elvis Presley Enters., Inc. v. Passport Video, 349 F.3d 622, 627 (9th Cir. 2003). “[I]t is undisputed that Google’s use of the declaring code and SSO from 37 Java API packages served commercial purposes.” Order Denying JMOL, 2016 WL 3181206, at . Although the jury was instructed that commercial use weighed against fair use, the district court explained that the jury “could reasonably have found that Google’s decision to make Android available open source and free for all to use had non-commercial purposes as well (such as the general interest in sharing software innovation).” Id. On appeal, Oracle argues that Android is “hugely profitable” and that “Google reaps billions from exploiting ORACLE AMERICA, INC. v. GOOGLE LLC 29 Java in Android.” Appellant Br. 29. As such, Oracle maintains that no reasonable jury could have found Android anything but “overwhelmingly commercial.” Id. 5 Google responds that: (1) because it gives Android away for free under an open source license the jury could have concluded that Android has non-commercial purposes; and (2) the jury could have reasonably found that Google’s revenue flows from the advertisements on its search engine which preexisted Android. Neither argument has merit. First, the fact that Android is free of charge does not make Google’s use of the Java API packages non- commercial. Giving customers “for free something they would ordinarily have to buy” can constitute commercial use. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1015 (9th Cir. 2001) (finding that “repeated and exploitative copying of copyrighted works, even if the copies are not offered for sale, may constitute a commercial use”). That Google might also have non-commercial motives is 5 Oracle also argues that Google conceded that its use was “entirely commercial” during oral argument to this court in the first appeal. Order Denying JMOL, 2016 WL 3181206, at  (“Q: But for purpose and character, though, you don’t dispute that it was entirely a commercial purpose. A: No.”). The district court treated this colloquy as a judicial admission that Google’s use was “commercial.” Id. (noting that the word “entirely” was “part of the give and take” of oral argument). The court therefore instructed the jury that Google’s use was commercial, but that it was up to the jury to determine the extent of the commerciality. Id. at . Oracle does not challenge the district court’s jury instructions on appeal. In any event, as the district court noted, “even a wholly commercial use may still constitute fair use.” Id. at  (citing Campbell, 510 U.S. at 585). 30 ORACLE AMERICA, INC. v. GOOGLE LLC irrelevant as a matter of law. As the Supreme Court made clear when The Nation magazine published excerpts from Harper & Row’s book, partly for the purpose of providing the public newsworthy information, the question “is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.” Harper & Row, 471 U.S. at 562. Second, although Google maintains that its revenue flows from advertisements, not from Android, commerciality does not depend on how Google earns its money. Indeed, “[d]irect economic benefit is not required to demonstrate a commercial use.” A&M Records, 239 F.3d at 1015. We find, therefore, that, to the extent we must assume the jury found Google’s use of the API packages to be anything other than overwhelmingly commercial, that conclusion finds no substantial evidentiary support in the record. Accordingly, Google’s commercial use of the API packages weighs against a finding of fair use.
Although the Copyright Act does not use the word “transformative,” the Supreme Court has stated that the “central purpose” of the first fair use factor is to determine “whether and to what extent the new work is transformative.” Campbell, 510 U.S. at 579. Transformative works “lie at the heart of the fair use doctrine’s guarantee of breathing space within the confines of copyright, and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.” Id. (internal citation omitted). A use is “transformative” if it “adds something new, with a further purpose or different character, altering the first with new expression, meaning or message.” Id. The critical question is “whether the new work merely supersede[s] the objects of the original creation . . . or instead ORACLE AMERICA, INC. v. GOOGLE LLC 31 adds something new.” Id. (citations and internal quotation marks omitted). This inquiry “may be guided by the examples given in the preamble to § 107, looking to whether the use is for criticism, or comment, or news reporting, and the like.” Id. at 578-79. “The Supreme Court has recognized that parodic works, like other works that comment and criticize, are by their nature often sufficiently transformative to fit clearly under the fair use exception.” Mattel Inc. v. Walking Mountain Prods., 353 F.3d 792, 800 (9th Cir. 2003) (citing Campbell, 510 U.S. at 579). “Although transformation is a key factor in fair use, whether a work is transformative is a often highly contentious topic.” Seltzer, 725 F.3d at 1176. Indeed, a “leading treatise on this topic has lamented the frequent misuse of the transformation test, complaining that it has become a conclusory label which is ‘all things to all people.’” Id. (quoting Melville B. Nimmer & David Nimmer, 4 Nimmer on Copyright § 13.05[A][1][b], 13168-70 (2011)). To be transformative, a secondary work must either alter the original with new expression, meaning, or message or serve a new purpose distinct from that of the original work. Campbell, 510 U.S. at 579; Elvis Presley Enters., 349 F.3d at 629. Where the use “is for the same intrinsic purpose as [the copyright holder’s] . . . such use seriously weakens a claimed fair use.” Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1117 (9th Cir. 2000) (quoting Weissmann v. Freeman, 868 F.2d 1313, 1324 (2d Cir. 1989)). Although “transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works.” Campbell, 510 U.S. at 579 (citation and footnote omitted). As such, “the more transformative the new work, the less will be the significance of other factors, like commercialism, that may 32 ORACLE AMERICA, INC. v. GOOGLE LLC weigh against a finding of fair use.” Id. Importantly, in the Ninth Circuit, whether a work is transformative is a question of law. See Mattel, 353 F.3d at 801 (explaining that parody—a well-established species of transformative use—“is a question of law, not a matter of public majority opinion”); see also Fox News Network, LLC v. TVEyes, Inc., No. 15-3885, 2018 WL 1057178, at -4 (2d Cir. Feb. 27, 2018) (reassessing whether the use in question was transformative and deciding it was as a matter of law). In denying JMOL, the district court explained that “of course, the copied declarations serve the same function in both works, for by definition, declaring code in the Java programming language serves the [same] specific definitional purposes.” Order Denying JMOL, 2016 WL 3181206, at . The court concluded, however, that the 6 jury could reasonably have found that Google’s selection of some, but not all, of the Java API packages—“with new 6 According to the district court, if this fact were sufficient to defeat fair use, “it would be impossible ever to duplicate declaring code as fair use and presumably the Federal Circuit would have disallowed this factor on the first appeal rather than remanding for a jury trial.” Id. But in our prior decision, we remanded in part because Google represented to this court that there were disputes of fact regarding how Android was used and whether the APIs Google copied served the same function in Android and Java. Oracle, 750 F.3d at 1376. Without the benefit of briefs exploring the record on these issues, and Google’s later agreement with respect to these facts, we concluded that we could not say that there were no material facts in dispute. Id. As explained previously, however, those facts are no longer in dispute. The only question that remains regarding transformative use is whether, on the now undisputed facts, Google’s use of the APIs was, in fact, transformative. ORACLE AMERICA, INC. v. GOOGLE LLC 33 implementing code adapted to the constrained operating environment of mobile smartphone devices,” together with new “methods, classes, and packages written by Google for the mobile smartphone platform”—constituted “a fresh context giving new expression, meaning, or message to the duplicated code.” Id. at . On appeal, Oracle argues that Google’s use was not transformative because it did not alter the APIs with “new expression, meaning, or message.” Appellant Br. 29 (quoting Campbell, 510 U.S. at 579). Because Google concedes that it uses the API packages for the same purpose, Oracle maintains that it was unreasonable for either the jury or the court to find that Google sufficiently transformed the APIs to overcome its highly commercial use. Google responds that a reasonable jury could have concluded that Google used a small portion of the Java API packages to create a new work in a new context— “Android, a platform for smartphones, not desktops and servers.” Cross-Appellant Br. 37. Google argues that, although the declarations and SSO may perform the same functions in Android and Java, the jury could reasonably find that they have different purposes because the “point of Android was to create a groundbreaking platform for smartphones.” Id. at 39. Google’s arguments are without merit. As explained below, Google’s use of the API packages is not transformative as a matter of law because: (1) it does not fit within the uses listed in the preamble to § 107; (2) the purpose of the API packages in Android is the same as the purpose of the packages in the Java platform; (3) Google made no alteration to the expressive content or message of the copyrighted material; and (4) smartphones were not a new context. First, though not dispositive, we turn to the examples given in the preamble to § 107, “looking to whether the 34 ORACLE AMERICA, INC. v. GOOGLE LLC use is for criticism, or comment, or news reporting, and the like.” Campbell, 510 U.S. at 578-79. Google’s use of the Java API packages does not fit within the statutory categories, and Google does not suggest otherwise. Instead, Google cites Sony Computer Entertainment, Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000), for the proposition that the “Ninth Circuit has held other types of uses—specifically including uses of computer code—to be fair.” Cross-Appellant Br. 41. In Sony, the court found that the defendant’s reverse engineering and intermediate copying of Sony’s copyrighted software system “was a fair use for the purpose of gaining access to the unprotected elements of Sony’s software.” 203 F.3d at 602. The court explained that Sony’s software program contained unprotected functional elements and that the defendant could only access those elements through reverse engineering. Id. at 603. The defendant used that information to create a software program that let consumers play games designed for Sony’s PlayStation console on their computers. The court found that the defendant’s use was only “modestly transformative” where: (1) the defendant created “a wholly new product” with “entirely new . . . code,” and (2) the intermediate copying was performed to “produce a product that would be compatible.” Id. at 60607. As Oracle points out, even the “modest” level of transformation at issue in Sony is more transformative than what Google did here: copy code verbatim to attract programmers to Google’s “new and incompatible platform.” Appellant Response Br. 21. It is undisputed that the API packages “serve the same function in both works.” Order Denying JMOL, 2016 WL 3181206, at . And, as Oracle explains, the historical facts relevant to transformative use are also undisputed: what declaring code is, what it does in Java and in Android, how the audience of computer developers perceives it, how much Google took and added, what the added code does, and why Google used the declaring code ORACLE AMERICA, INC. v. GOOGLE LLC 35 and SSO. Indeed, Google conceded that “including the declarations (and their associated SSO) was for the benefit of developers, who—familiar with the Java programming language—had certain expectations regarding the language’s APIs.” Google’s Opp. to Oracle’s Rule 50(a) Motion for JMOL at 20, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. May 21, 2016), ECF No. 1935. The fact that Google created exact copies of the declaring code and SSO and used those copies for the same purpose as the original material “seriously weakens [the] claimed fair use.” See Wall Data, 447 F.3d at 778 (finding that, where the “Sheriff’s Department created exact copies of RUMBA’s software . . . [and] put those copies to the identical purpose as the original software,” the use was not transformative); see also Campbell, 510 U.S. at 580 (noting that where the alleged infringer merely seeks “to avoid the drudgery in working up something fresh,” any “claim to fairness . . . diminishes accordingly”). Google argues that Android is transformative because Google selectively used the declarations and SSO of only 37 of the 166 Java SE API packages and wrote its own implementing code. But taking only select passages of a copyrighted work is, by itself, not transformative. See L.A. News Serv. v. CBS Broad., Inc., 305 F.3d 924, 938-39 (9th Cir. 2002) (“Merely plucking the most visually arresting excerpt from LANS’s nine minutes of footage cannot be said to have added anything new.”). While, as discussed below, the volume of work copied is relevant to the fair use inquiry generally, thought must be given to the quality and importance of the copied material, not just to its relative quantity vis-à-vis the overall work. See Campbell, 510 U.S. at 586-87. To hold otherwise would mean that verbatim copying could qualify as fair use as long as the plagiarist stops short of taking the entire work. That approach is inconsistent with settled law and is particularly troubling where, as here, the portion copied is qualitatively significant. See Harper & Row, 471 U.S. 36 ORACLE AMERICA, INC. v. GOOGLE LLC at 569 (finding that verbatim copying of 300 words from a manuscript of more than 200,000 words was not a fair use); see also Folsom v. Marsh, 9 F. Cas. 342, 345 (C.C.D. Mass 1841) (Story, J.) (“There must be real, substantial condensation of the materials, and intellectual labor and judgment bestowed thereon; and not merely the facile use of the scissors; or extracts of the essential parts, constituting the chief value of the original work.”). That Google wrote its own implementing code is irrelevant to the question of whether use of the APIs was transformative. As we noted in the prior appeal, “no plagiarist can excuse the wrong by showing how much of his work he did not pirate.” Oracle, 750 F.3d at 1375 (quoting Harper & Row, 471 U.S. at 565). The relevant question is whether Google altered “the expressive content or message of the original work” that it copied—not whether it rewrote the portions it did not copy. See Seltzer, 725 F.3d at 1177 (explaining that a work is not transformative where the user “makes no alteration to the expressive content or message of the original work”). That said, even where the allegedly infringing work “makes few physical changes to the original or fails to comment on the original,” it will “typically [be] viewed as transformative as long as new expressive content or message is apparent.” Id. Here, however, there is no suggestion that the new implementing code somehow changed the expression or message of the declaring code. While Google’s use could have been transformative if it had copied the APIs for some other purpose—such as teaching how to design an API—merely copying the material and moving it from one platform to another without alteration is not transformative. Google’s primary argument on appeal is that Android is transformative because Google incorporated the declarations and SSO of the 37 API packages into a new context—smartphones. But the record showed that Java SE APIs were in smartphones before Android entered the ORACLE AMERICA, INC. v. GOOGLE LLC 37 market. Specifically, Oracle presented evidence that Java SE was in SavaJe mobile phones and that Oracle licensed Java SE to other smartphone manufacturers, including Danger and Nokia. Because the Java SE was already being used in smartphones, Google did not “transform” the copyrighted material into a new context and no reasonable jury could conclude otherwise. 7 In any event, moving material to a new context is not transformative in and of itself—even if it is a “sharply different context.” TCA Television Corp. v. McCollum, 839 F.3d 168, 181-83 (2d Cir. 2016) (finding that use “at some length, almost verbatim,” of the copyrighted comedy routine “Who’s on First?” in a dramatic play was not transformative where the play neither “imbued the Routine with any new expression, meaning, or message,” nor added “any new dramatic purpose”). As previously explained, a use becomes transformative only if it serves a different purpose or alters the “expression, meaning, or message” of the original work. Kelly, 336 F.3d at 818. As such, “[c]ourts have been reluctant to find fair use when an original work is merely retransmitted in a different medium.” A&M Records, 239 F.3d at 1015. Accordingly, although a change of format may be “useful,” it “is not technically a transformation.” Infinity Broad., 150 F.3d at 108 n.2 (finding that retransmitting copyrighted radio transmissions over telephone lines was not transformative because there was no new expression, meaning, or message). 7 Because we conclude that smartphones were not a new context, we need not address the argument, made by Oracle and certain amici, that the district court’s order excluding evidence of Google’s use of Android in multiple other circumstances—including laptops—tainted the jury’s and the court’s ability to fairly assess the character of the use. 38 ORACLE AMERICA, INC. v. GOOGLE LLC The Ninth Circuit has stated that “[a] use is considered transformative only where a defendant changes a plaintiff’s copyrighted work or uses the plaintiff’s copyrighted work in a different context such that the plaintiff’s work is transformed into a new creation.” Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007) (quoting Wall Data, 447 F.3d at 778). In Perfect 10, for example, the court found Google’s use of thumbnail versions of copyrighted images “highly transformative” because, “[a]lthough an image may have been created originally to serve an entertainment, aesthetic, or informative function, a search engine transforms the image into a pointer directing a user to a source of information.” Id. Although the court discussed the change in context (moving the copyrighted images into the electronic reference tool), it emphasized that Google used the images “in a new context to serve a different purpose.” Id. In reaching this conclusion, the court reiterated that “even making an exact copy of a work may be transformative so long as the copy serves a different function than the original work.” Id. (citing Kelly, 336 F.3d at 818-19). It is clear, therefore, that the change in context alone was not dispositive in Perfect 10; rather, the change in context facilitated the change in purpose, which made the use transformative. To some extent, any use of copyrighted work takes place in a slightly different context than the original. And of course, there is no bright line identifying when a use becomes transformative. But where, as here, the copying is verbatim, for an identical function and purpose, and there are no changes to the expressive content or message, a mere change in format (e.g., from desktop and laptop computers to smartphones and tablets) is insuffiORACLE AMERICA, INC. v. GOOGLE LLC 39 cient as a matter of law to qualify as a transformative use. 8
In evaluating the “purpose and character” factor, the Ninth Circuit applies “the general rule that a party claiming fair use must act in a manner generally compatible with principles of good faith and fair dealing.” Perfect 10, 508 F.3d at 1164 n.8 (citing Harper & Row, 471 U.S. at 562-63). In part, this is based on the fact that, in Harper & Row, the Supreme Court expressly stated that “[f]air use presupposes ‘good faith’ and ‘fair dealing.’” 471 U.S. at 562 (citation omitted). It is also in part true because, as the Ninth Circuit has said, one who acts in bad faith should be barred from invoking the equitable defense of fair use. Fisher, 794 F.2d at 436 (calling the principle of considering the alleged infringer’s “bad conduct” as a “bar [to] his use of the equitable defense of fair use” a sound one). 9 8 As some amici note, to hold otherwise could en- croach upon the copyright holder’s right to “prepare derivative works based upon the copyrighted work.” 17 U.S.C. § 106(2); see Br. of Amicus Curiae N.Y. Intell. Prop. L. Ass’n at 17-20. 9 As the district court recognized, there is some debate about whether good or bad faith should remain relevant to the factor one inquiry. Order Denying JMOL, 2016 WL 3181206, at  (“[T]here is a respectable view that good or bad faith should no longer be a consideration after the Supreme Court’s decision in Campbell.”); see also Hon. Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1128 (1990) (“Whether the secondary use is within the protection of the [fair use] doctrine depends on factors pertinent to the objectives of the 40 ORACLE AMERICA, INC. v. GOOGLE LLC Consistent with this authority, and at Oracle’s request, the district court instructed the jury that it could consider whether Google acted in bad faith (or not) as part of its assessment of the first fair use factor. Order Denying JMOL, 2016 WL 3181206, at . And, because Oracle was permitted to introduce evidence that Google acted in bad faith, the court permitted Google to try to prove its good faith. Id. At trial, Oracle introduced evidence suggesting that “Google felt it needed to copy the Java API as an accelerant to bring Android to the market quicker” and knew that it needed a license to use Java. Id. For its part, Google presented evidence that it believed that the declaring code and SSO were “free to use and re-implement, both as a matter of developer practice and because the availability of independent implementations of the Java API enhanced the popularity of the Java programming language, which Sun promoted as free for all to use.” Id. at . Given this conflicting evidence, the district court copyright law and not on the morality or motives of either the secondary user or the copyright-owning plaintiff.”). In Campbell, the Supreme Court expressed skepticism about “the weight one might place on the alleged infringer’s state of mind.” Campbell, 510 U.S. at 585 n.18. But the Ninth Circuit has not repudiated its view that “‘the propriety of the defendant’s conduct’ is relevant to the character of the use at least to the extent that it may knowingly have exploited a purloined work for free that could have been obtained for a fee.” L.A. News Serv. v. KCAL-TV Channel 9, 108 F.3d 1119, 1122 (9th Cir. 1997) (quoting Harper & Row, 471 U.S. at 562). For that reason, and because we conclude in any event that the jury must have found that Google did not act in bad faith, we address that question and the parties’ arguments relating thereto. ORACLE AMERICA, INC. v. GOOGLE LLC 41 found that the jury could reasonably have concluded that “Google’s use of parts of the Java API as an accelerant was undertaken based on a good faith belief that at least the declaring code and SSO were free to use (which it did use), while a license was necessary for the implementing code (which it did not use).” Id. On appeal, Oracle argues that there was ample evi- dence that Google intentionally copied Oracle’s copyrighted work and knew that it needed a license to use Java. Google responds that the jury heard sufficient evidence of Google’s good faith based on industry custom and was entitled to credit that evidence. But, while bad faith may weigh against fair use, a copyist’s good faith cannot weigh in favor of fair use. Indeed, the Ninth Circuit has expressly recognized that “the innocent intent of the defendant constitutes no defense to liability.” Monge, 688 F.3d at 1170 (quoting 4 Melville B. Nimmer & David Nimmer, Nimmer on Copy- right § 13.08[B][1] (Matthew Bender rev. ed. 2011)). If it were clear, accordingly, that the jury found fair use solely or even largely because it approved of Google’s motives even if they were in bad faith, we would find such a conclusion improper. Because evidence of Google’s good faith was relevant to rebut evidence of its bad faith, however, and there is no objection to the instructions to the jury on this or any other point, we must assume that the jury simply did not find the evidence of Google’s bad faith persuasive. 10 We note, moreover, that merely “being 10 The jury was instructed that, “[i]n evaluating the extent to which Google acted in good faith or not, you may take into account, together with all other circumstances, the extent to which Google relied upon or contravened any recognized practices in the industry concerning reimplementation of API libraries.” Order Denying JMOL, 42 ORACLE AMERICA, INC. v. GOOGLE LLC denied permission to use a work does not weigh against a finding of fair use.” Campbell, 510 U.S. at 585 n.18 (“If the use is otherwise fair, then no permission need be sought or granted.”). Ultimately, we find that, even assuming the jury was unpersuaded that Google acted in bad faith, the highly commercial and non-transformative nature of the use strongly support the conclusion that the first factor weighs against a finding of fair use. Factor 2: Nature of the Copyrighted Work The second factor—the nature of the copyrighted work—“calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied.” Campbell, 510 U.S. at 586. This factor “turns on whether the work is informational or creative.” Worldwide Church of God, 227 F.3d at 1118; see also Harper & Row, 471 U.S. at 563 (“The law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy.”). Creative expression “falls within the core of the copyright’s protective purposes.” Campbell, 510 U.S. at 586. Although “software products are not purely creative works,” it is well established that copyright law protects computer software. Wall Data, 447 F.3d at 780 (citing Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510, 1519 (9th Cir. 1992) (“[T]he 1980 amendments to the Copyright Act unambiguously extended copyright protection to computer programs.”)). Here, the district court found that the jury could have concluded that the process of designing APIs was “highly creative” and “thus at the core of copyright’s protection” or 2016 WL 3181206, at  n.2. Oracle has not challenged this instruction on appeal. ORACLE AMERICA, INC. v. GOOGLE LLC 43 it could “reasonably have gone the other way and concluded that the declaring code was not highly creative.” Order Denying JMOL, 2016 WL 3181206, at . While the jury heard testimony from Google’s own expert that API design is “an art, not a science,” other witnesses emphasized the functional role of the declaring code and the SSO and minimized the creative aspects. Id. Accordingly, the district court concluded that the “jury could reasonably have found that, while the declaring code and SSO were creative enough to qualify for copyright protection, functional considerations predominated in their design.” Id. On appeal, Oracle emphasizes that designing the APIs was a highly creative process and that the organization of the packages was not mandated by function. Indeed, this court has already held that the declaring code and the SSO of the 37 API packages at issue were sufficiently creative and original to qualify for copyright protection. Oracle, 750 F.3d at 1356. According to Oracle, the district court erred in assuming that, because the APIs have a “functional role,” they cannot be creative. As Google points out, however, all we found in the first appeal was that the declarations and SSO were sufficiently creative to provide the “minimal degree of creativity,” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991), that is required for copyrightability. We also recognized that a reasonable jury could find that “the functional aspects of the packages” are “relevant to Google’s fair use defense.” Oracle, 750 F.3d at 1369, 137677. On remand, Oracle stipulated that some of the declarations were necessary to use the Java language and presented no evidence explaining how the jury could distinguish the functionality and creativity of those declarations from the others. Google maintains that it presented evidence that the declarations and SSO were functional and the jury was entitled to credit that evidence. 44 ORACLE AMERICA, INC. v. GOOGLE LLC Although it is clear that the 37 API packages at issue involved some level of creativity—and no reasonable juror could disagree with that conclusion—reasonable jurors could have concluded that functional considerations were both substantial and important. Based on that assumed factual finding, we conclude that factor two favors a finding of fair use. The Ninth Circuit has recognized, however, that this second factor “typically has not been terribly significant in the overall fair use balancing.” Dr. Seuss Enters., L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1402 (9th Cir. 1997) (finding that the “creativity, imagination and originality embodied in The Cat in the Hat and its central character tilts the scale against fair use”); Mattel, 353 F.3d at 803 (similar). Other circuits agree. Fox News Network, 2018 WL 1057178, at  (“This factor ‘has rarely played a significant role in the determination of a fair use dispute,’ and it plays no significant role here.” (quoting Authors Guild v. Google, Inc., 804 F.3d 202, 220 (2d Cir. 2015))). We note, moreover, that allowing this one factor to dictate a conclusion of fair use in all cases involving copying of software could effectively negate Congress’s express declaration—continuing unchanged for some forty years—that software is copyrightable. Accordingly, though the jury’s assumed view of the nature of the copyrighted work weighs in favor of finding fair use, it has less significance to the overall analysis. Factor 3: Amount and Substantiality of the Portion Used The third factor focuses on the “amount and substantiality of the portion used in . . . the context of the copyrighted work, not the infringing work.” Oracle, 750 F.3d at 1375. Indeed, the statutory language makes clear that “a taking may not be excused merely because it is insubstantial with respect to the infringing work.” Harper & Row, 471 U.S. at 565. “[T]he fact that a substantial portion of the infringing work was copied verbatim [from ORACLE AMERICA, INC. v. GOOGLE LLC 45 the original work] is evidence of the qualitative value of the copied material, both to the originator and to the plagiarist who seeks to profit from marketing someone else’s copyrighted expression.” Id. Thus, while “wholesale copying does not preclude fair use per se, copying an entire work militates against a finding of fair use.” Worldwide Church of God, 227 F.3d at 1118 (citation and quotation marks omitted). But, there is no relevance to the opposite—i.e., adding substantial content to the copyrighted work is not evidence that what was copied was insubstantial or unimportant. The inquiry under this third factor “is a flexible one, rather than a simple determination of the percentage of the copyrighted work used.” Monge, 688 F.3d at 1179. The Ninth Circuit has explained that this third factor looks to the quantitative amount and qualitative value of the original work used in relation to the justification for its use. Seltzer, 725 F.3d at 1178. The percentage of work copied is not dispositive where the portion copied was qualitatively significant. Harper & Row, 471 U.S. at 566 (“In view of the expressive value of the excerpts and their key role in the infringing work, we cannot agree with the Second Circuit that the ‘magazine took a meager, indeed an infinitesimal amount of Ford’s original language.’” (citation omitted)). Google is correct that the Ninth Circuit has said that, “this factor will not weigh against an alleged infringer, even when he copies the whole work, if he takes no more than is necessary for his intended use.” Id. (citing Kelly v. Arriba Soft Corp., 336 F.3d 811, 820-21 (9th Cir. 2003)). But the Ninth Circuit has only said that is true where the intended use was a transformative one, because the “extent of permissible copying varies with the purpose and character of the use.” Id. (quoting Campbell, 510 U.S. at 586-87). Here, we have found that Google’s use was not transformative and Google has conceded both that it could have written its own APIs and that the purpose of its copying was to make 46 ORACLE AMERICA, INC. v. GOOGLE LLC Android attractive to programmers. “Necessary” in the context of the cases upon which Google relies does not simply mean easier. In assessing factor three, the district court explained that the “jury could reasonably have found that Google duplicated the bare minimum of the 37 API packages, just enough to preserve inter-system consistency in usage, namely the declarations and their SSO only, and did not copy any of the implementing code,” such that Google “copied only so much as was reasonably necessary.” Order Denying JMOL, 2016 WL 3181206, at . In reaching this conclusion, the court noted that the jury could have found that the number of lines of code Google duplicated was a “tiny fraction of one percent of the copyrighted works (and even less of Android, for that matter).” Id. We disagree that such a conclusion would have been reasonable or sufficient on this record. On remand, the parties stipulated that only 170 lines of code were necessary to write in the Java language. It is undisputed, however, that Google copied 11,500 lines of code—11,330 more lines than necessary to write in Java. That Google copied more than necessary weighs against fair use. See Monge, 688 F.3d at 1179 (finding that, where the copyist “used far more than was necessary” of the original work, “this factor weighs against fair use”). And, although Google emphasizes that it used a small percentage of Java (11,500 lines of declarations out of roughly 2.86 million lines of code in the Java SE libraries), it copied the SSO for the 37 API packages in its entirety. The district court emphasized Google’s desire to “preserve inter-system consistency” to “avoid confusion among Java programmers as between the Java system and the Android system.” Order Denying JMOL, 2016 WL 3181206, at -11. As we noted in the prior appeal, however, Google did not seek to foster any “inter-system ORACLE AMERICA, INC. v. GOOGLE LLC 47 consistency” between its platform and Oracle’s Java platform. Oracle, 750 F.3d at 1371. And Google does not rely on any interoperability arguments in this appeal. 11 Google sought “to capitalize on the fact that software developers were already trained and experienced in using the Java API packages at issue.” Id. But there is no inherent right to copy in order to capitalize on the popularity of the copyrighted work or to meet the expectations of intended customers. Taking those aspects of the copyrighted material that were familiar to software developers to create a similar work designed to be popular with those same developers is not fair use. See Dr. Seuss Enters., 109 F.3d at 1401 (copying the most famous and well recognized aspects of a work “to get attention” or “to avoid the drudgery in working up something fresh” is not a fair use (quoting Campbell, 510 U.S. at 580)). Even assuming the jury accepted Google’s argument that it copied only a small portion of Java, no reasonable jury could conclude that what was copied was qualitatively insignificant, particularly when the material copied was important to the creation of the Android platform. Google conceded as much when it explained to the jury the importance of the APIs to the developers it wished to attract. See Tr. of Proceedings held on 5/16/16 at 106:8- 11 In the prior appeal, we noted that “Google’s competitive desire to achieve commercial ‘interoperability’ . . . may be relevant to a fair use analysis.” Oracle, 750 F.3d at 1376-77. But, although several amici in this appeal discuss interoperability concerns, Google has abandoned the arguments it once made about interoperability. This change in course is not surprising given the unrebutted evidence that Google specifically designed Android to be incompatible with the Java platform and not allow for interoperability with Java programs. Id. at 1371. 48 ORACLE AMERICA, INC. v. GOOGLE LLC 14, Oracle Am., Inc. Google Inc., No. 3:10-cv-3561 (N.D. Cal. May 20, 2016), ECF No. 1930; Id. at 134:6-11. Indeed, Google’s own expert conceded that “it was a sound business practice for Google to leverage the existing community of developers, minimizing the amount of new material and maximizing existing knowledge,” even though Google also conceded that it could have written the APIs differently to achieve the same functions. Id. at 144:5-10. For these reasons, we find that the third factor is, at best, neutral in the fair use inquiry, and arguably weighs against such a finding. Factor 4: Effect Upon the Potential Market The fourth and final factor focuses on “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107(4). This factor reflects the idea that fair use “is limited to copying by others which does not materially impair the marketability of the work which is copied.” Harper & Row, 471 U.S. at 566-67. It requires that courts “consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also whether unrestricted and widespread conduct of the sort engaged in by the defendant . . . would result in a substantially adverse impact on the potential market for the original.” Campbell, 510 U.S. at 590 (citation and quotation marks omitted). The Supreme Court once said that factor four is “undoubtedly the single most important element of fair use.” Harper & Row, 471 U.S. at 566. In its subsequent opinion in Campbell, however, the Court emphasized that none of the four factors can be viewed in isolation and that “[a]ll are to be explored, and the results weighed together, in light of the purposes of copyright.” 510 U.S. at 578; see also Infinity Broad., 150 F.3d at 110 (“Historically, the fourth factor has been seen as central to fair use analysis, although the Supreme Court appears to have backed away from this position.” (internal citation omitted)). The ORACLE AMERICA, INC. v. GOOGLE LLC 49 Court has also explained that “[m]arket harm is a matter of degree, and the importance of this factor will vary, not only with the amount of harm, but also with the relative strength of the showing on the other factors.” Campbell, 510 U.S. at 590 n.21. The Ninth Circuit recently indicated that likely market harm can be presumed where a use is “commercial and not transformative.” Disney Enters., Inc. v. VidAngel, Inc., 869 F.3d 848, 861 (9th Cir. 2017) (citing Leadsinger, 512 F.3d at 531, for the proposition that, where a use “was commercial and not transformative, it was not error to presume likely market harm”). That presumption allegedly traces back to Sony Corp. of America v. University City Studios, Inc., 464 U.S. 417, 451 (1984), where the Supreme Court stated that, “[i]f the intended use is for commercial gain, that likelihood [of future harm] may be presumed. But if it is for a noncommercial purpose, the likelihood must be demonstrated.” The Supreme Court has since clarified that market impact, “no less than the other three [factors], may be addressed only through a ‘sensitive balancing of interests’” and that earlier interpretations of Sony to the contrary were incorrect. Campbell, 510 U.S. at 590 n.21 (quoting Sony, 464 U.S. at 455 n.40); 12 see also Monge, 688 F.3d at 1181 (cautioning against overemphasis on a presumption of market harm after Campbell). On this point, we must apply clear Supreme Court precedent rather than the more recent Ninth Circuit’s statements to the contrary. 12 The Court noted, however, that “what Sony said simply makes common sense: when a commercial use amounts to mere duplication of the entirety of an original, it clearly ‘supersede[s] the objects,’ of the original and serves as a market replacement for it, making it likely that cognizable market harm to the original will occur.” Id. at 591. 50 ORACLE AMERICA, INC. v. GOOGLE LLC In evaluating the fourth factor, courts consider not only harm to the actual or potential market for the copyrighted work, but also harm to the “market for potential derivative uses,” including “those that creators of original works would in general develop or license others to develop.” Campbell, 510 U.S. at 592; see also A&M Records, 239 F.3d at 1017 (“[L]ack of harm to an established market cannot deprive the copyright holder of the right to develop alternative markets for the works.”). A court can therefore consider the challenged use’s “impact on potential licensing revenues for traditional, reasonable, or likely to be developed markets.” Swatch Grp. Mgmt. Servs. Ltd. v. Bloomberg L.P., 756 F.3d 73, 91 (2d Cir. 2014) (citation omitted); see also Seltzer, 725 F.3d at 1179 (“This factor also considers any impact on ‘traditional, reasonable, or likely to be developed markets.’” (citation omitted)). Also relevant to the inquiry is the fact that a copyright holder has the exclusive right to determine “when, ‘whether and in what form to release’” the copyrighted work into new markets, whether on its own or via a licensing agreement. Monge, 688 F.3d at 1182 (quoting Harper & Row, 471 U.S. at 553). Indeed, the Ninth Circuit has recognized that “[e]ven an author who had disavowed any intention to publish his work during his lifetime” was entitled to copyright protection because: (1) “the relevant consideration was the ‘potential market’” and (2) “he has the right to change his mind.” Worldwide Church, 227 F.3d at 1119 (citing Salinger v. Random House, Inc., 811 F.2d 90, 99 (2d Cir. 1987)); see also Micro Star v. Formgen Inc., 154 F.3d 1107, 1113 (9th Cir. 1998) (noting that only the copyright holder “has the right to enter that market; whether it chooses to do so is entirely its business”). Here, the district court concluded that the jury “could reasonably have found that use of the declaring lines of code (including their SSO) in Android caused no harm to ORACLE AMERICA, INC. v. GOOGLE LLC 51 the market for the copyrighted works, which were for desktop and laptop computers.” Order Denying JMOL, 2016 WL 3181206, at . In reaching this conclusion, the district court noted that, before Android was released, Sun made all of the Java API packages available for free and open source under the name OpenJDK, subject only to the terms of a general public license. Id. According to the district court, the jury could have concluded that “Android’s impact on the market for the copyrighted works paralleled what Sun already expected via its OpenJDK.” Id. On appeal, Oracle argues that the evidence of actual and potential harm stemming from Google’s copying was “overwhelming,” and that the district court erred as a matter of law in concluding otherwise. Appellant Br. 52. We agree. First, with respect to actual market harm, the evidence showed that Java SE had been used for years in mobile devices, including early smartphones, prior to Android’s release. Specifically, the jury heard testimony that Java SE was already in smartphones, including Blackberry, SavaJe, Danger, and Nokia. That Android competed directly with Java SE in the market for mobile devices is sufficient to undercut Google’s market harm arguments. With respect to tablets, the evidence showed that Oracle licensed Java SE for the Amazon Kindle. After Android’s release, however, Amazon was faced with two competing options—Java SE and Android—and selected Android. 13 The jury also heard evidence that 13 Google submits that the jury could have discounted this evidence because the Java SE APIs were available for free through OpenJDK. But Amazon moved from Java to Android—not to OpenJDK. And the evidence of record makes clear that device manufacturers did not view 52 ORACLE AMERICA, INC. v. GOOGLE LLC Amazon later used the fact that Android was free to negotiate a steep discount to use Java SE in its newer e- reader. In other words, the record contained substantial evidence that Android was used as a substitute for Java SE and had a direct market impact. Given this evidence of actual market harm, no reasonable jury could have concluded that there was no market harm to Oracle from Google’s copying. Even if there were a dispute about whether Oracle was licensing Java SE in smartphones at the time Android launched, moreover, “fair use focuses on potential, not just actual, market harm.” Monge, 688 F.3d at 1181. Accordingly, although the district court focused exclusively on the market it found that Oracle had already entered—desktops and laptops—it should have considered how Google’s copying affected potential markets Oracle might enter or derivative works it might create or license others to create. See Campbell, 510 U.S. at 590. Licensing Java SE for smartphones with increased processing capabilities was one such potential new market. And the fact that Oracle and Google engaged in lengthy licensing negotiations demonstrates that Oracle was attempting to license its work for mobile devices, including smartphones. 14 Smartphones were, therefore, a “tradi- OpenJDK as a commercially viable alternative to using Java SE because any improvement to the packages in OpenJDK had to be given away for free to the Java community. 14 Of course, the fact that those negotiations were not successful does not factor into the analysis. Campbell, 510 U.S. at 585 n.18 (“If the use is otherwise fair, then no permission need be sought or granted. Thus, being denied permission to use a work does not weigh against a finding of fair use.”). Such evidence was only relevant to show Oracle’s interest in the potential market for smartphones. ORACLE AMERICA, INC. v. GOOGLE LLC 53 tional, reasonable, or likely to be developed market.” See Swatch Grp., 756 F.3d at 91; see also Seltzer, 725 F.3d at 1179. Google argues that a reasonable jury could have concluded that Java SE and Android did not compete in the same market because Oracle: (1) was not a device maker; and (2) had not yet built its own smartphone platform. Neither argument has merit. That Oracle never built a smartphone device is irrelevant because potential markets include licensing others to develop derivative works. See Campbell, 510 U.S. at 592. The fact that Oracle had not yet developed a smartphone platform is likewise irrelevant as a matter of law because, as Oracle submits, a market is a potential market even where the copyright owner has no immediate plans to enter it or is unsuccessful in doing so. See Worldwide Church, 227 F.3d at 1119; Micro Star, 154 F.3d at 1113. Even assuming a reasonable jury could have found no current market harm, the undisputed evidence showed, at a minimum, that Oracle intended to license Java SE in smartphones; there was no evidence in the record to support any contrary conclusion. Because the law recognizes and protects a copyright owner’s right to enter a “potential market,” this fact alone is sufficient to establish market impact. Given the record evidence of actual and potential harm, we conclude that “unrestricted and widespread conduct of the sort engaged in by” Google would result in “a substantially adverse impact on the potential market for the original” and its derivatives. See Campbell, 510 U.S. at 590 (citation and quotation marks omitted). Accordingly, the fourth factor weighs heavily in favor of Oracle. Balancing the Four Factors Having undertaken a case-specific analysis of all four factors, we must weigh the factors together “in light of the purposes of copyright.” Campbell, 510 U.S. at 578. We 54 ORACLE AMERICA, INC. v. GOOGLE LLC conclude that allowing Google to commercially exploit Oracle’s work will not advance the purposes of copyright in this case. Although Google could have furthered copyright’s goals of promoting creative expression and innovation by developing its own APIs, or by licensing Oracle’s APIs for use in developing a new platform, it chose to copy Oracle’s creative efforts instead. There is nothing fair about taking a copyrighted work verbatim and using it for the same purpose and function as the original in a competing platform. Even if we ignore the record evidence and assume that Oracle was not already licensing Java SE in the smartphone context, smartphones were undoubtedly a potential market. Android’s release effectively replaced Java SE as the supplier of Oracle’s copyrighted works and prevented Oracle from participating in developing markets. This superseding use is inherently unfair. On this record, factors one and four weigh heavily against a finding of fair use, while factor two weighs in favor of such a finding and factor three is, at best, neutral. Weighing these factors together, we conclude that Google’s use of the declaring code and SSO of the 37 API packages was not fair as a matter of law. We do not conclude that a fair use defense could never be sustained in an action involving the copying of computer code. Indeed, the Ninth Circuit has made it clear that some such uses can be fair. See Sony, 203 F.3d at 608; Sega, 977 F.2d at 1527-28. We hold that, given the facts relating to the copying at issue here—which differ materially from those at issue in Sony and Sega—Google’s copying and use of this particular code was not fair as a matter of law.