The report is unclear to me - it seems to say that Google was using a bit of the actual Java code to implement the API. In that case, the copyright issue would lie with the code rather than the API itself, which there would be strong defences over, concerning the natural way to pass information (I was involved in an international software copyright dispute in the 1970s - but there's a lot more law to deal with now, I admit).
As for Oracle - evil? Probably, just like pretty much any corporation of its size. Incompetent? You know how the current version of Java is [1.]8? And updates for earlier versions are no longer available? Well, my university's finance and student information systems are written by Oracle, in Java, and both were recently updated - they both will only run with Java [1.]6! We get privately issued security updates for it (the last public update was #45, we're currently at #94), but there is a currently ongoing argument about whether our licence entitles us to use them!