SAP AG must pay Oracle Corp $1.3 billion for software theft in a jury verdict that could be the largest for copyright infringement.
The award, the largest for copyright infringement, comes as big technology companies, including Apple, Google and Motorola, have increasingly resorted to the courts to resolve patent and intellectual property disputes instead of quietly working out a deal. Rarely, however, do the lawsuits go to court or attract the attention this dispute did.
The decision, by a district court jury in Oakland California, drew a gasp from the courtroom and prompted hugs and handshakes among Oracle?s legal team, which has pursued the case for years.
Jurors mulled a verdict that at first ranged from $519 million to $3 billion, said the jury foreman, who declined to give his name. The panel decided on an award that represented the fair market value of the license SAP should have negotiated with Oracle rather than trying to estimate Oracle?s lost profits from infringement, he said.
The panel looked at ?the scope, the duration and the timing? of TomorrowNow?s conduct, the foreman said. The $1.3 billion, which was less than the $1.7 billion Oracle?s expert had recommended, took into account all the elements of damages to Oracle that had occurred, he said.
The damages dwarfed SAP?s own estimate of the damages. Oracle?s shares rose 1.5% in after-hours trade, while SAP?s US-listed stock slid 1.4%.
Europe?s top software maker, which said it was disappointed by the verdict, could now try to get the dollar amount knocked down by the trial judge, or pursue an appeal.
?We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary,? SAP said in a statement in response to the verdict.
SAP has acknowledged that its TomorrowNow subsidiary had wrongfully downloaded millions of Oracle?s files. With the admission of liability, the issue before the jury was how much was owed in damages. SAP said no more $40 million while Oracle sought at least $1.65 billion.
Attorneys for the top US software company called the verdict the largest for a copyright infringement case.
While SAP could appeal, Oracle attorney David Boies said, that would raise the possibility of a retrial. ?If I were SAP, and I?m not, but if I were SAP, I?m not sure I would want to have another trial,? Boies said.
The three-week courtroom drama, which captivated Silicon Valley, featured testimony from such top executives as Oracle CEO Ellison ? whom SAP?s lawyers accused of plucking damages numbers ?out of the air? ? and president Safra Catz.
SAP co-CEO Bill McDermott also took the stand and apologised to Oracle for the events surrounding TomorrowNow. ?Home run!? Eric Goldman, an associate professor at the Santa Clara University School of Law, wrote in an email. He expected SAP to appeal what he called one of the 10 or 20 largest-jury verdicts in US legal history. ?I would expect there to be lots more shenanigans. but now SAP is truly on the run. They have to climb an even steeper mountain.?
Testimony in the trial wrapped up last week without a hoped-for appearance by former SAP chief and current Hewlett-Packard CEO Leo Apotheker.
During the trial, Oracle linked Apotheker to the operations of TomorrowNow. But it did not appear to produce evidence to prove he knew of the theft. ?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,? Catz said in a statement. ?The trial made it clear that SAP?s most senior executives were aware of the illegal activity from the very beginning.?
Ellison has publicly charged Apotheker with overseeing an ?industrial espionage scheme? to steal Oracle software. But both SAP and HP characterised the Apotheker issue as a sideshow and said Oracle offered no proof to back up its allegations.
Oracle?s arguments about the importance of protecting intellectual property appeared to carry weight with the jury. Juror Joe Bangay, who works as an auto body technician, said the group did not focus on the star CEOs during their deliberations. ?Their information was helpful, but basically I was figuring on the property that was stolen,? said Bangay, 57.
The US government is also conducting a criminal investigation into the events surrounding TomorrowNow but has not disclosed details. SAP said it had been cooperating with department of justice investigators.
?They didn?t split the baby, did they? It?s a big number and they decided fast,? said Patrick Walravens at JMP Securities. ?If you step back, I think it would?ve been difficult for any jury to deal with the fact that one company broke into another company?s computer systems and just took so much stuff.? ?The jury had a choice of either using the fair market value of the licence, or using a loss-profit calculation, and the fair market valuation tended to lead you to larger numbers, so that?s obviously the direction they decided to go.?
