Jury Decides SAP Will Pay Oracle $1.3B for Copyright Infringement

 
 
By Chris Preimesberger  |  Posted 2010-11-23 Email Print this article Print
 
 
 
 
 
 
 

UPDATED: The dollar amount is the largest U.S. copyright infringement award on record; an appeal may be forthcoming.

Oracle will be banking the largest U.S. copyright infringement award on record -- $1.3 billion -- from longtime enterprise application rival SAP after a federal court jury on Nov. 23 concluded that amount was fair restitution in a 3-year-old copyright infringement lawsuit.

Oracle, in its lawsuit filed in 2007, claimed that SAP -- through an affiliate division -- illegally downloaded more than 8 million instances of its customer-support software and hundreds of thousands of pages of supporting documentation from one of its Web sites, then used those tools to lure some 350 customers away from Oracle and over to SAP.

SAP took corporate responsibility for its affiliate's actions in a court document filed Oct. 28 and officially apologized on Nov. 16. There was no immediate indication that SAP would appeal the decision.

"We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary," SAP corporate spokesman Jim Dever told eWEEK via email.

"This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation.

"The mark of a leading company is the way it handles its mistakes. As stated in court, we regret the actions of TomorrowNow, we have accepted liability, and have been willing to fairly compensate Oracle.

"Throughout this matter, our customers, employees and partners have stood by us and, for that, we are grateful. Our focus now is looking forward, helping our customers be best run businesses, and extending our legacy of industry leadership well into the future.

"We thank the jury for its diligent service through this lengthy trial and the court for its supervision of this complex case."

Oracle President Safra Catz said in a statement to the press: "For more than three years, SAP stole thousands of copies of Oracle software and then resold that software and related services to Oracle's own customers. Right before the trial began, SAP admitted its guilt and liability; then the trial made it clear that SAP's most senior executives were aware of the illegal activity from the very beginning. As a result, a United States federal court has ordered SAP to pay Oracle $1.3 billion. This is the largest amount ever awarded for software piracy."

Regrettable decision in 2005

Germany-based SAP, the world's largest maker and distributor of enterprise application software, certainly is regretting the 2005 acquisition of a now-defunct Texas-based affiliate, TomorrowNow, which performed the misdeeds that led to the lawsuit and jury decision.

SAP already has paid $120 million for court costs to Oracle and argued that another $40 million in restitution would constitute a fair amount. Oracle originally claimed in court documents that its lost assets were valued at $2.15 billion, although CEO Larry Ellison testified that $4 billion was closer to the actual amount.

To confuse the issue even more, an Oracle damages expert, Paul Meyer, testified on Nov. 9 that SAP should pay Oracle $1.66 billion to settle the case.

In the end, the eight-person jury in Oakland, Calif., decided that $1.3 billion was the appropriate amount and delivered the verdict to presiding federal court Judge Phyllis Hamilton.

Background on the case

Two years after it was acquired by SAP in 2005, TomorrowNow was caught stealing Oracle's intellectual property by gaining unauthorized access to a customer-support Oracle Web site and downloading copyrighted instances of support software and thousands of pages of documentation. It then resold the software and documentation to Oracle customers and tried to convince them to switch to SAP.

In the original litigation, Oracle claimed that more than 8 million instances of its enterprise support software worth $2.15 billion were stolen, stored on SAP's servers and used without its permission.

It also charged that SAP/TomorrowNow deployed automated bots that used Oracle's own software to lure customers with software installations from PeopleSoft,  JD Edwards and Siebel Systems (all now owned by Oracle) over to SAP.

Enterprise support software, which is what TomorrowNow illegally downloaded, amounts to about half of Oracle's annual revenue.

Editor's note: This story has been updated with more detail and a statement from SAP.


 
 
 
 
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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