Google infringed some of Oracle's copyrights on the Java programming language, a U.S. jury has found.
However the jury could not reach a decision on whether Google's actions constituted fair use and were legally allowed - crucial to determining damages.
If Google's use of the Java programming tools is determined to be fair, the company would not be liable for damages in connection with some of Oracle's copyrights.
"There wouldn't be damages, at least on this part, if their(Google's) use was determined to be fair," said Edward Naughton, partner of Brown Rudnick LLP in Boston who is not involved in the case.
"If the fair use defense was upheld, they wouldn't be liable. That's why from a dollars and cents standpoint it's a pretty important argument.
"I think it's frustratingly inconclusive and we'll have to wait and see how it all comes to a conclusion."
The partial verdict in the high stakes lawsuit, which focuses on Google's development of the Android mobile operating system, was read in a San Francisco federal courtroom.
The lawsuit, brought in August 2010, now moves on to the next phase: patent claims.
A third phase of the trial would decide damages.
After Monday's verdict, Google's lawyers challenged the key jury finding on Java copyrights and moved for a mistrial.
Google says it does not violate Oracle's patents and that Oracle cannot copyright certain parts of Java, an "open-source," or publicly available, software language.
The trial has featured testimony from Oracle Chief Executive Larry Ellison and Google CEO Larry Page.
Earlier in the case, estimates of potential damages against Google ran as high as $6.1 billion. But Google successfully narrowed Oracle's patent claims, so that the bulk of Google's exposure to damages now derives mostly from copyright claims.
Oracle is seeking roughly $1 billion in copyright damages.
The main questions in the case revolve around Google's use of APIs - application programming interfaces - or a set of tools through which developers utilize the Java software language, and whether they can be copyrighted like software code.
"We appreciate the jury's efforts, and know that fair use and infringement are two sides of the same coin," Google spokesman Jim Prosser said.
"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."
Oracle said in a statement that it welcomed the verdict and that "the overwhelming evidence" demonstrated that Google knew it needed a license for Java.
"Every major commercial enterprise - except Google - has a license for Java and maintains compatibility to run across all computing platforms," Oracle said.
Almost immediately after rendering the copyright verdict, the seven-woman, five-man jury began hearing opening statements on the patent issues.
The trial, which began in mid-April before U.S. District Judge William Alsup, is expected to last at least eight weeks.