Oracle, Google API Litigation Looms Over Open Banking’s Future

In technology, one key question is: “Build or buy?”

Another is: “Who owns the intellectual property?”

In an upcoming Supreme Court case, both questions may be front and center, intertwined, and tied to two juggernauts, with implications for any number of sectors – financial services included.

As has been reported, next month, the Supreme Court will hear arguments in a case captioned “Oracle v. Google.”

At the center of the suit is the ownership of application programming interfaces (APIs for short). The APIs let programs, perhaps with disparate functions, talk to one another, exchange data and offer up enhanced, centralized information and services to end users.

Oracle has alleged that Google has used Oracle’s APIs without permission and has committed copyright infringement. As reported by Fortune and other publications, the APIs are used with Java programming language, which in turn is used to build Google’s Android software. Oracle wants $9 billion in damages.

The fight has been wending its way through the legal system for a decade. But now it lands at the doorstep of the Supreme Court in an age where “open APIs” are taking root, as are critical tech components in endeavors such as open banking, and in the burgeoning marriages between traditional FIs and FinTechs.

APIs hold a special appeal, then, in helping construct the seamless experience that merchants and other stakeholders need to deliver to end users. Consider the fact that Visa bought Plaid last month in a $5.3 billion deal that, among other things, spotlights a unified API that connects FinTech apps with customers’ bank accounts. JPMorgan said earlier in February that FinTech firms must ink pacts that spell out the terms of how end-user financial data is used – offered up through APIs, of course.

At a surface level, APIs, if kept open or shared between stakeholders, let developers build new applications that are in turn used for innovation.

Drilling down into the case to be heard by the Supreme Court, and how we got here:

Oracle had filed a copyright infringement case that said Google had used Java APIs, and that it had “replicated” the code for 37 offerings that help perform various functions and connect databases. After various twists and turns through retrials and appeals – where, eventually, a U.S. Court of Appeals for the Federal Circuit ruled that Google’s use of the packages violated copyright and fair use – Google has petitioned the Supreme Court.

Google’s filing also has support briefs from companies such as IBM and Mozilla.

Copyrights in Focus

Google said in a blog post on its website last year that copyrights, as authorized by the U.S. Constitution, are meant to “promote the progress of science and useful arts, not to impede creativity or promote lock-in software platforms.”

Oracle, for its part, said in a statement provided to IEEE Spectrum that “while Google would prefer to live in a world unencumbered by intellectual property rights, in the real world, copyrights are an essential protection and incentive for innovation. Oracle offers several licensing options for Java. Ethical developers and businesses around the world continue to recognize the value of Java and take advantage of our licenses to drive innovation and profit. Unfortunately, Google opted to ignore standard industry licensing policies and build its business by stealing Oracle’s IP.”

The Ripple Effects

The outcome is seemingly binary. A ruling that determines Google is not infringing – and, by extension, that interoperability need not be permissioned, paid for or licensed – means the current state of working with APIs would likely continue.

Developers would not, in essence, have to shift their practices. A marked shift would likely introduce a layer of complexity in software and app development, not to mention costs (incurred, for example, in a licensing model).

The ripple effect would bleed into open banking efforts, where copyright could conceivably curtail, or at least delay, time to market for new products and services. The opening arguments before the Supreme Court will help to determine “who owns what” when it comes to APIs, and whether the status quo of open development reigns or a new road lies ahead.