And the difference between this and the MS Java case is...what exactly? Because the only difference I can see is Google pulled a name out of their ass, which means all MSFT had to do was call it "MS Coffee" and it would have all been golden.
The difference is trademarks. Microsoft called their unauthorized implementation Java(tm). You don't get to do that without passing Sun's certification process. MS never implemented the entire Java specification. They modified some parts and left others out (embrace and extend). So someone who wrote a Java program against the Sun JDK and brought it to the MS platform would potentially see it fail out of the box. Due to these issues Sun used it's trademark to sue for relief from having its brand damaged.
This is different from unauthorized implementations that did not claim to be official Java products. Indeed, prior to Sun open sourcing the HotSpot JVM, there were quite a few open source unofficial implementations: e.g. GNU Kaffe, Apache Harmony, GCJ, etc. Claiming ownership over interfaces/API is a new and treacherous behavior that came along with Oracle.
And what if somebody was to do this to Linux? After all they have access to the code, should be easy enough to just rip it off and take it proprietary by following the Google model, what would the difference be? None at all.
None. Linus owns the Linux trademark in many countries. Assuming someone didn't copy the source code and just re-implemented the APIs, it would be totally kosher as long as you didn't call it "Linux". How do you think Linux was allowed to exist in the first place? It's just an unauthorized implementation of a bunch of POSIX APIs, but because Linus didn't call his kernel a UNIX(tm) system or claim POSIX(tm) compliance, he didn't run afoul of trademark law.