Oracle and SAP are standing by their legal positions in the wake of a federal judge’s stunning rejection of the $1.3-billion copyright-infringement verdict that a jury gave Oracle against SAP last November. Oracle indicated that it will appeal to try to restore the original award amount.
In her Thursday ruling in Oakland, Calif., District Judge Phyllis Hamilton granted SAP’s motion to throw out the verdict, setting the amount of damages due to Oracle at $272 million, and saying that SAP should get a new trial for damages if Oracle rejects that amount.
The $1.3 billion figure “grossly exceeded the actual harm to Oracle,” Hamilton ruled, and “was contrary to the weight of the evidence.”
Oracle also was involved this past week in another high-profile legal dispute, in which it accuses Hewlett-Packard of intellectual-property theft.
“There was voluminous evidence regarding the massive scope of the theft, clear involvement of SAP management in the misconduct and the tremendous value of the IP stolen,” Deborah Hellinger, a spokeswoman for Oracle, said. “We believe the jury got it right and we intend to pursue the full measure of damages that we believe are owed to Oracle.”
Jim Dever, an spokesman for Walldorf, Germany-based SAP, however, said, “We are very gratified with the court’s decision,” adding, “We believe the jury’s verdict was wrong and are pleased at the significant reduction in damages.”
Bloomberg reported that the November jury award was a record for copyright infringement. Oracle had accused SAP’s TomorrowNow software-maintenance unit of making hundreds of thousands of illegal downloads and several thousand copies of Oracle’s software. Oracle said SAP’s aim was allegedly to avoid paying licensing fees and to steal customers.
Texas-based TomorrowNow — which offered technical support and software fixes for customers of companies Oracle acquired, including PeopleSoft Inc. — made thousands of duplicates of copyrighted software by accessing electronic material from Oracle’s customer support websites, Oracle lawyers said at trial. And Oracle CEO Larry Ellison told the jury that SAP might have paid $4 billion to license Oracle’s software, and could have taken several thousand customers from its PeopleSoft unit through its access to Oracle copyrights.
SAP attorneys, however, had said that TomorrowNow had attracted 358 customers out of about 3,000 potential customers, and said only 86 of them bought products from SAP. A small portion of those customers converted to SAP software because of the infringement, SAP attorneys told the jury.
SAP didn’t contest some liability for infringement by TomorrowNow, which the company closed in 2008. But the award was based by jurors on what they saw as the value of a hypothetical license that SAP would have needed to use Oracle’s software.
A license would never have existed between two rivals, who compete in the market for programs that businesses use to automate payroll, human resources, accounting and other tasks. Thus, SAP’s position was that the damage award should have been based on profit that Oracle lost, and SAP gained, because of any infringement — an amount it figured at $28 million to $408.7 million.
The initial $1.3 billion verdict led SAP to make a provision of 933 million euros, or 586 million euros after tax, for the fourth quarter. SAP spokesman Guenter Gaugler said today the company is reviewing provisions on a quarterly basis.
Hamilton had ruled that the instructions to the jury should have been based on evidence, and not speculation. “Oracle’s suggestion, that upon proof of infringement, copyright plaintiffs are automatically entitled to seek ‘hypothetical’ license damages because they are presumed to have suffered harm in the form of lost license fees, has no support in the law,” she ruled.