AFAIK, fair use in the textual world means things like quoting limited excerpts for discussion in other writings, use in satire, etc. Writing a new application with arbitrary and unlimited dependency on the API (which is the desired use of the API, after all,) is not clearly "fair use;" it's use for which the API "owner" could reasonably expect payment. The economic value to the API user is well-understood.

An API "owner" could claim that the API was published for technical evaluation only, but to use the implementation, or even to create one's own fresh implementation, requires permission under the copyright. It would be calamitous for the industry, but the argument seems to align with the law.

A Seattle Times list of legal actions between Intel & AMD shows cross-licensing deals dating to 1976. So Google's passing on a licensing agreement doesn't bode well... :(

The worst possible effect of API copyright would be to make interfaces legally inseparable from implementations. Especially for widely-used APIs, such as Java on Android, this would impose enormous costs on application writers, as they would have to write compatibility layers between their business logic and whatever forked "Java" distro they wanted to run on. Yet it's not clear to me that embedding calls to a copyrighted API constitutes fair use. Why didn't Intel bring a case like this against AMD when AMD "copied" the Intel x86 instruction set (a hardware API) and behaviors? Because AMD built its own implementation of the architecture. That principle should continue to stand.

As an earlier comment cogently observes, the API IS the intellectual property, dating back through Java, the x86 CPU market and plug-compatible mainframes. The Court has to decide whether APIs are copyrightable expressions of creative works (lawyers, please comment.) I hope they're not, but fear they are.