In a 6-2 opinion by Justice Stephen Breyer, the court said that Google's use of 11,000 lines of code -- copied without permission from Oracle's Java program -- to create the Android smartphone operating system -- constitutes fair use as a matter of law and does not require compensation.
"We assume, for argument’s sake, that the material was copyrightable. But we hold that the copying here at issue nonetheless constituted a fair use. Hence, Google’s copying did not violate the copyright law," Breyer wrote.
The decision reversed a lower court ruling in favor of Oracle, which had sought $9 billion in damages from Google for copyright infringement.
The stakes in the case -- dubbed the "copyright case of the century" -- are significant for both companies, the software industry and everyday American investors. Millions of Americans' 401k retirement savings plans include investments in Google.
Experts have said a decision in favor of Google, allowing the copying of code as "fair use," could facilitate more rapid development of new consumer products and technological innovation -- essentially allowing companies to build on each other.
But there could be a downside: Some start-up companies fear the decision could harm their ability to turn a profit if giants like Google can swoop in and copy without compensation.
Justice Clarence Thomas, in a dissent joined by Justice Samuel Alito, blasted the decision as "anything but fair."
"Oracle spent years developing a programming library that successfully attracted software developers, thus enhancing the value of Oracle’s products. Google sought a license to use the library in Android, the operating system it was developing for mobile phones. But when the companies could not agree on terms, Google simply copied verbatim 11,500 lines of code from the library," Thomas wrote.
"By copying Oracle’s work, Google decimated Oracle’s market and created a mobile operating system now in over 2.5 billion actively used devices, earning tens of billions of dollars every year. If these effects on Oracle’s potential market favor Google, something is very wrong with our fair use analysis," he wrote.
Justice Amy Coney Barrett did not participate in the decision as she was confirmed to the bench after the case was argued.
"The Supreme Court’s clear ruling is a victory for consumers, interoperability, and computer science," Kent Walker, Google's senior vice president of global affairs, said in a statement. "The decision gives legal certainty to the next generation of developers whose new products and services will benefit consumers."
“The Google platform just got bigger and market power greater," Dorian Daley, Oracle's executive vice president and general counsel, said in response. "The barriers to entry higher and the ability to compete lower. They stole Java and spent a decade litigating as only a monopolist can. This behavior is exactly why regulatory authorities around the world and in the United States are examining Google's business practices."