Oracle vs. Google: Decision Expected Shortly

Within the next week, the U.S. Supreme Court could come to a decision in Oracle Corporation ORCL vs. Google Inc GOOG, in which the former sued the latter for royalties stemming from Google's use of APIs. A May 9, 2014 decision by the United States Court of Appeals for the Federal Circuit sided with Oracle, meaning that if the Supreme Court declines to hear the case, that decision stands. Conversely, if the Supreme Court takes up the case, it means that at least four justices thought the decision was worthy of review.

The origin of this case started with a suit that was first decided in May 2012, when a jury found that Google did not infringe on Oracle's patents and a judge said that the APIs used were not copyrightable. The Federal Circuit decision reversed the prior judge's ruling.

Upon Google's appeal, the U.S. Supreme Court also sought input from the Solicitor General. In that opinion, the Solicitor General recommended that Google's petition should be denied, effectively supporting Oracle's position.

According to a research note from Patrick Walravens at JMP Securities, a decision in favor of Oracle would mean that Oracle can "demand a royalty from Google for each mobile device sold using the Android platform." Additionally, it could "potentially" complicate the "API economy with a new set of legal concerns."

JMP Securities has a Market Perform rating on Oracle. Year to date, Oracle has drastically underperformed Google, falling 8.3 percent compared with gains of 2.5 percent in Google.