Judge Throws Out $1.3B Award Against SAP in Oracle Copyright Case

By Chris Preimesberger  |  Posted 2011-09-01 Print this article Print

Oracle would have banked the largest U.S. intellectual property infringement award on record if the $1.3 billion judgment had stood. The jury on Nov. 23, 2010, had concluded that amount was fair restitution in a 3-year-old copyright infringement lawsuit.

An eight-person jury, supervised by Oakland-based federal Judge Phyllis Hamilton in November 2010, had its wishes overturned Sept. 1 when, upon appeal, Hamilton threw out the jury's $1.3 billion punishment determination against German software maker SAP for admitted copyright infringement against longtime rival Oracle.

Oracle would have banked the largest U.S. copyright infringement award on record if the $1.3 billion judgment had stood. The jury on Nov. 23, 2010, had concluded that amount was fair restitution in a 3-year-old copyright infringement lawsuit.

Ironically, the same judge also ruled in December 2010 that SAP also would have to pay an extra $16.5 million -- above and beyond the $1.3 billion -- to Oracle in prejudgment interest on the penalty. That award also was overturned.

Oracle, in its lawsuit filed in 2007, charged that SAP-through a now-defunct U.S.-based affiliate division called TomorrowNow-illegally downloaded more than 8 million instances of its customer-support software and hundreds of thousands of pages of supporting documentation from one of Oracle's Websites, then used those tools to lure some 350 customers away from Oracle and over to SAP.

Oracle claimed that the stolen documents enabled SAP to entice customers into buying similar services at lower prices from SAP. The German company argued that since TomorrowNow only lured a few hundred customers, it should have to pay only $40 million to cover those accounts.

The jury, in awarding Oracle massively more than $40 million after a three-week trial, illustrated how much they were willing to punish a corporation for intellectual-property theft. But Hamilton called the penalty "grossly excessive" and said the size of the penalty was "contrary to the weight of the evidence."

Award Now Could be $272 Million

Oracle can now choose whether to accept a lower award of $272 million or file for a new trial before a different jury. The $272 million amount emanated from an earlier estimate from an Oracle expert on what profit Oracle lost and SAP gained.

SAP took corporate responsibility for its affiliate's actions in a court document filed Oct. 28, 2010, and officially apologized on Nov. 16.  The $1.3 billion judgment was announced a week later. SAP subsequently filed an appeal, with Hamilton's resulting decision coming a full nine months later.

"We are very gratified with the court's decision," SAP told the press through Global Communications Director James Dever. "We believed the jury's verdict was wrong and are pleased at the significant reduction in damages. We hope the court's action will help drive this matter to a final resolution. We are hopeful that this ruling will move the case toward an appropriate final resolution."

Oracle was not pleased by the news and said it will fight for the full amount it was originally awarded.

"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 [intellectual property] stolen," 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."

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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