SAP got a big break; Oracle would have banked the largest U.S. intellectual property infringement award on record -- $1.3 billion -- if the original judgment had stood.
Off the top, $20 million
doesn't sound like a relatively light penalty for losing a major international
copyright infringement case, but rest assured, German software maker SAP was
glad to agree to that figure on Sept. 14. It could have been much, much worse.
On Sept. 1, a federal court
judge in Oakland, Calif.,
threw out a jury's $1.3 billion punishment
determination against SAP and its former U.S.-based affiliate, TomorrowNow, for
admitted copyright infringement against longtime rival Oracle.
Two weeks later, SAP
announced that it has reached agreement with the U.S. attorney's office in San
Francisco to resolve the case for that relatively modest $20 million.
Oracle would have banked the
largest U.S. intellectual property infringement award on record if the original
judgment had stood. The jury on Nov. 23, 2010, had
concluded that $1.3 billion
was fair restitution in the 4-year-old copyright-infringement lawsuit brought
by Oracle.
As part of the agreement,
SAP-representing the long-defunct TomorrowNow-pled guilty to 11 counts of
violations of the U.S. Computer Fraud & Abuse Act and one count of criminal
copyright infringement, and will pay the fine of $20 million to the Redwood City, Calif.-based enterprise software and hardware maker.
SAP, in a statement to the
press, said: "The business operations of TomorrowNow, Inc. were
discontinued in 2008. No other SAP entity, including SAP AG or SAP America,
will face charges arising out of the office's investigation. The plea
agreement was approved by the U.S. District Court today. We believe that the
resolution of this investigation is fair. We are pleased to have come to an
appropriate conclusion of this process."
Oracle, as one might imagine,
was not pleased.
"Oracle has spent the
last four years uncovering SAP's massive copyright theft, and SAP finally
pleaded guilty in federal court to criminal charges for its illegal
scheme," was all Oracle would tell
eWEEK
on the record about the decision.
Oracle, in its lawsuit filed
in 2007, charged that SAP-through 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.
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 reached by jury consensus was
announced a week later. SAP subsequently filed an appeal, with Judge Phyllis Hamilton's
resulting decision throwing out the fine amount coming a full nine months
later.
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 Website
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 persuade 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.
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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
