As the AP has it, the jury has decided against Google on Oracle’s copyright claim, but has reached an impasse on some key questions. There’s obviously more to this story as it develops. I’ll be updating as soon as I know more.

Update: The jury sided in part with Oracle, ruling that the Android mobile operating system infringes on some Java copyrights. However, it was deadlocked over the question of whether that use constituted “fair use,” and was therefore protected. This impasse appears to be the basis for a mistrial motion that Google lawyers say they intend to file.

Oracle has not prevailed on every point and, in fact, it’s looking like a messy victory. The jury found code in two files to be infringing, and that some elements of Android application programming interfaces or APIs were similar to Oracle’s Java APIs.

Attorneys for Google told Judge William Alsup that they intend to file a motion for a mistrial because of the impasse over the “fair use” question. Alsup told both sides to be prepared to argue that motion, which will come later.

A few other things are coming up: Judge Alsup still has to rule on whether APIs can be copyrighted as a matter of law. Jurors were instructed to deliberate, assuming that they could be copyrighted.

There is a clear finding that Google has infringed on nine lines of code. This came in Question 3A, concerning something called RangeCheck in Java. They decided that Google hadn’t infringed on two other blocks of code. With the jury out of the room, Judge Alsup said that there is “zero finding of copyright liability” on anything other than the nine lines.

That’s good for Google, because Oracle’s own expert at trial said they’re not worth much. An Oracle attorney suggested that the company should receive a share of Google’s profits on top of regular damages. Judge Alsup rejected that as “bordering on the ridiculous.”

From Google:

“We appreciate the jury’s efforts, and know that fair use and infringement are two sides of the same coin. The core issue is whether the APIs here are copyrightable, and that’s for the court to decide. We expect to prevail on this issue and Oracle’s other claims.”

And here’s Oracle’s statement:

“Oracle, the nine million Java developers, and the entire Java community thank the jury for their verdict in this phase of the case. The overwhelming evidence demonstrated that Google knew it needed a license and that its unauthorized fork of Java in Android shattered Java’s central write once run anywhere principle. Every major commercial enterprise — except Google — has a license for Java and maintains compatibility to run across all computing platforms.”

For reference, I’ve embedded the questionnaire that the jurors were required to fill out:

Jury Questions

Judge William Alsup is starting to talk about opening arguments for phase two of the trial, which will focus on patents. A third phase, assuming Oracle prevails, will focus on determining damages.

There was a false alarm late Friday when CNET and Bloomberg News reported that a partial verdict had been reached, when in fact it hadn’t. This happened after it became relatively clear that jurors were stuck and unable to agree on all four questions they have been tasked with answering.

Jurors have been asked to decide if Google’s use of 37 sections of Java source code — which Oracle owns, having acquired Sun Microsystems in 2010 — constitutes copyright infringement; or if, as Google argues, the copied sections are so insignificant as to amount to “no big deal.”

Oracle sued Google in 2010, after closing the Sun deal. Google stands accused of using some parts of Java to create Android without having first obtained the relevant licenses — first from Sun, then from Oracle — that, among other things, required compatibility with other flavors of Java.

SAP apparently has other plans. Having won in December a small victory over the amount of interest it will have to pay, today SAP said it plans to argue that it shouldn’t have to pay quite as much to Oracle.

In a statement, it called the judge’s order a “procedural matter,” and said it plans to make post-trial motions challenging the amount the jury awarded. If not successful, it may appeal, the company said. Its full statement is below.

“Today the Court entered judgment in the Oracle v. SAP/TomorrowNow litigation, which is a procedural matter that occurs after a jury verdict. As stated before, we have accepted liability for the actions of TomorrowNow and have been willing to fairly compensate Oracle, but we believe that the amount awarded by the jury is disproportionate and wrong. Once the judgment is entered, SAP is permitted to challenge the jury’s award by way of “post-trial motions,” which are made to the trial judge. SAP will file these motions in the coming weeks asking the Court to reduce the amount of damages awarded or to order a new trial. We look forward to the Court’s resolution of the issues we will raise in our post-trial motions. Depending on the outcome of the post-trial motion process, SAP may also consider an appeal.”

Oracle, on the other hand, was happy to take another victory lap. “We are very pleased that the court’s final judgment for $1.3 billion, plus the court-awarded interest and the $120 million SAP paid during trial to settle additional charges, confirms the jury’s verdict against SAP for its massive intentional copyright infringement,” Oracle said in an emailed statement.

PREVIOUSLY:

• Oracle to SAP: You Owe Us Another $212 Million
• Oracle-SAP Verdict: SAP Owes Oracle $1.3 Billion
• Oracle-SAP: Closing Statements Followed by Closing Insults
• Oracle-SAP Case Closes With $1.67 Billion Difference of Opinion
• LOLCatz: Safra on The Stand Again in Oracle-SAP Trial
• Plattner and White No-Shows at Oracle-SAP Trial
• Damages Expert to SAP: You Owe Me $14 Million and Oracle Four Times That
• Oracle, SAP and the Apotheker Sideshow
• Better Late: SAP Co-CEO Apologizes for Oracle IP Theft
• SAP Co-CEO Expected to Testify in Oracle Trial Today
• HP to Oracle: Leave Léo Alone
• Oracle Still Hoping to Snag HP’s Apotheker for SAP Trial
• HP CEO to Oracle: Here’s Looking at You, Kid–Suntory Time!
• Ellison to Self: Damn, Damn. I Knew I Should Have Said $4.5 Billion
• SAP Attorney: Board Knew TomorrowNow Was Infringing at Time of Acquisition
• Oracle Co-President on SAP’s Damages Offer: “It’s Crazy”
• Oracle Enlists Process Servers, Not PIs, to Find HP CEO
• Oracle-SAP Trial: Ellison Swaps Katana for Poison Darts
• Objection: Mr. Ellison Is Referring to the Defendant as “Choleric of Temper” Again
• Oracle Lands Early Shots in SAP Trial
• Your Honor, We Object to Mr. Ellison’s Repeated Use of the Term “Slimy Weasels”
• Oracle to HP CEO: Chicken!
• Oracle Vs. SAP: We Got a Right to Pick a Little Fight–Bonanza!
• SAP’s Tab in Oracle Case: $120 Million and Counting
• Gag Order Denied in Oracle, SAP Trial
• Ellison Taunts HP CEO a Second Time
• SAP to Ellison: Save the Drama for Your Mama
• Ellison to HP CEO: “Warrior, Come Out to Plaaeeay!
• SAP: Please Gag Oracle
• HP Scandal Sucks in New York Times Columnist Over Conflict of Interest
• Welch to HP Board: You Don’t Know Jack!
• Insiders Criticize Ellison For HP CEO Slam
• Was Apotheker HP’s First Choice of CEO?
• HP Names Ex-SAP Chief Apotheker as CEO

Great news for the open-source community and for the long-suffering Novell (NOVL), which has been battling SCO for quite some time now.

“Novell is very pleased with the jury’s decision confirming Novell’s ownership of the Unix copyrights, which SCO had asserted to own in its attack on Linux,” the company said in a statement. “Novell remains committed to promoting Linux, including by defending Linux on the intellectual property front.”

Which is great, because SCO, while obviously struck low by today’s verdict, evidently intends to forge on with its suit against IBM (IBM), which it also claims misappropriated Unix and built it into Linux. Former U.S. District Judge Edward Cahn, the trustee for SCO’s bankruptcy, told the Salt Lake Tribune that the jury decision will not dissuade it from pursuing its lawsuit against Big Blue. Said Cahn: “The copyright claims are gone, but we have other claims based on contracts.”

Astonishing. As I wrote of SCO back in 2004:

“There’s a scene at the end of Martin Scorsese’s remake of ‘Cape Fear’ in which villain Max Cady, having been shot, stabbed, burned and beaten, continues to threaten his victims even as he’s drowning, handcuffed to a sinking houseboat. I think of that scene every time I read that SCO has filed another motion in its ill-starred copyright infringement suits.”

Two days after winning a $105.75 million jury verdict against the software giant, VirnetX has filed a new complaint claiming Windows 7 and Windows Server 2008 R2 infringe those patents as well. Those products hadn’t yet been released when VirnetX first went after Microsoft, so the company is now circling back, hoping to collect damages for their alleged infringement.

“This is a tactical and procedural post-trial action to ensure and protect our property rights as we proceed to final resolution with Microsoft,” Kendall Larsen, VirnetX president and CEO, wrote in a March 18 statement.

Microsoft (MSFT) has vowed to appeal the first verdict, which it described as “legally and factually unsupported,” and took a similarly dim view of the latest VirnetX assault. “Microsoft respects intellectual property, and we believe our products do not infringe the patents involved,” Microsoft flack Kevin Kutz told the Seattle Post Intelligencer. “Moreover, we believe those patents are invalid. We will challenge VirnetX’s claims.”

To that end, the company has petitioned the U.S. Patent and Trademark Office to re-examine the VirnetX patents, evidently with some success. In a preliminary review, the USPTO has found all but one of the VirnetX claims invalid. This doesn’t necessarily mean they’ll be rejected, but for Microsoft, it’s a step in the right direction.

That’s not the $242 million VirnetX sought when it first sued in 2007, but it’s a substantial sum–and it could increase. If Microsoft’s infringement is found to be willful, the damage award could be tripled.

Microsoft (MSFT), which views VirnetX’s patents as dross and the company itself as a patent troll, said it will challenge the court’s decision. “We respect others’ intellectual property, and we believe the evidence demonstrated that we do not infringe and the patents are invalid,” Microsoft spokesman Kevin Kutz said in a statement. “We believe the award of damages is legally and factually unsupported, so we will ask the court to overturn the verdict.”

And the industry will no doubt be rooting for the software giant to succeed. Because if Microsoft is vulnerable to an action like this, then presumably, other companies using VPN technology are as well.

“Any time you can successfully enforce a patent against a behemoth like Microsoft, it opens the door for more lawsuits,” patent attorney Cole Stuart told Nick Eaton at the Seattle Post Intelligencer, which has been doing a great job covering the case. “It’s called ‘rolling up the industry.’ If it’s a technology Microsoft uses, it’s likely other companies use it.”

In China, the search giant is battling hackers and the government, who may be one and the same. In Europe, the company is being hauled in front of an antitrust review. And Italy? Total disaster.

Yesterday, an Italian court convicted three Google (GOOG) executives of privacy violations in a case that stems from a clip uploaded to Google Video in 2006. The executives, who include former CFO George Reyes, have been sentenced to six-month prison sentences.

And that verdict follows a December ruling whereby an Italian court found the company guilty of copyright violations on YouTube, the video site it bought in 2006. Mediaset, the broadcaster that brought the suit–and which is controlled by Prime Minister Silvio Berlusconi–is looking for more than $730 million in damages.

Google has responded to the video convictions with an outraged blog post. Note that the language is more forceful than the company used to describe its China problem. But also note that the company isn’t threatening to pull out of Italy altogether. Maybe it should.

Serious threat to the web in Italy
2/24/2010 01:57:00 AM
In late 2006, students at a school in Turin, Italy filmed and then uploaded a video to Google Video that showed them bullying an autistic schoolmate. The video was totally reprehensible and we took it down within hours of being notified by the Italian police. We also worked with the local police to help identify the person responsible for uploading it and she was subsequently sentenced to 10 months community service by a court in Turin, as were several other classmates who were also involved. In these rare but unpleasant cases, that’s where our involvement would normally end.

But in this instance, a public prosecutor in Milan decided to indict four Google employees–David Drummond, Arvind Desikan, Peter Fleischer and George Reyes (who left the company in 2008). The charges brought against them were criminal defamation and a failure to comply with the Italian privacy code. To be clear, none of the four Googlers charged had anything to do with this video. They did not appear in it, film it, upload it or review it. None of them know the people involved or were even aware of the video’s existence until after it was removed.

Nevertheless, a judge in Milan today convicted 3 of the 4 defendants–David Drummond, Peter Fleischer and George Reyes–for failure to comply with the Italian privacy code. All 4 were found not guilty of criminal defamation. In essence this ruling means that employees of hosting platforms like Google Video are criminally responsible for content that users upload. We will appeal this astonishing decision because the Google employees on trial had nothing to do with the video in question. Throughout this long process, they have displayed admirable grace and fortitude. It is outrageous that they have been subjected to a trial at all.

But we are deeply troubled by this conviction for another equally important reason. It attacks the very principles of freedom on which the Internet is built. Common sense dictates that only the person who films and uploads a video to a hosting platform could take the steps necessary to protect the privacy and obtain the consent of the people they are filming. European Union law was drafted specifically to give hosting providers a safe harbor from liability so long as they remove illegal content once they are notified of its existence. The belief, rightly in our opinion, was that a notice and take down regime of this kind would help creativity flourish and support free speech while protecting personal privacy. If that principle is swept aside and sites like Blogger, YouTube and indeed every social network and any community bulletin board, are held responsible for vetting every single piece of content that is uploaded to them–every piece of text, every photo, every file, every video–then the Web as we know it will cease to exist, and many of the economic, social, political and technological benefits it brings could disappear.

These are important points of principle, which is why we and our employees will vigorously appeal this decision.

Posted by Matt Sucherman, VP and Deputy General Counsel–Europe, Middle East and Africa