From the monthly archives:

September 2011

Oracle v SAP

by Charlie Rothbart on 5 September 2011

Back in November 2010, Oracle succeeded in its copyright infringement lawsuit against SAP in Oakland, CA. The decision was not exactly significant, as SAP admitted liability for infringing Oracle’s copyrighted software with its TomorrowNow initiative, which had been shut down in 2008 as a result of the lawsuit.

SAP’s TomorrowNow had a program which allowed for the automation of software downloads from Oracle’s customer-service websites, which, according to some of the evidence heard at trial, even once caused Oracle’s computer systems to crash.

The Californian jury awarded Oracle a whopping $1.3 billion in damages after an 11 day trial, which according to Bloomberg was not only the largest award ever given for copyright infringement and the largest given by any US jury in 2010, but also equal to the Q4 net income of SAP.

Excessive?

Many would say it was, and that most IP infringement awards generally are, and it would seem that U.S. District Judge Phyllis Hamilton has reached the same conclusion as those on the less-dramatic side of the damages line, saying that “The verdict grossly exceeded the actual harm to Oracle” and the award was “contrary to the weight of the evidence, and was grossly excessive.”

I tend to agree with Judge  Hamilton. (And I will do my best to refrain from making any comments about the pragmatism of her decision being anything to do with the fact that she’s a ‘she’… although it may well deserve a small mention?)

The reason for Judge Hamilton’s decision to reduce the maximum figure SAP has to pay to $272 million makes a lot of sense. It was found that the previous award was not proportionate to the actual damage to Oracle, and that based on the evidence, Oracle was seeking damages for lost licensing royalties. In reality, though, would Oracle have ever granted SAP a licence had it asked for one, bearing in mind that SAP is one of its biggest competitors in business-management software?

I’ll leave that as a rhetorical question. It suffices to say that Oracle has never really been known for its philanthropic nature, but then again it would have to be a strategic decision to license core business to a competitor, so one could easily forgive Oracle in these circumstances for not doing so (in the theoretical world where SAP actually approached Oracle seeking a licence). But it follows naturally that SAP should not have to pay damages based on a hypothetical licence.

Oracle now has until the end of September to accept Judge Hamilton’s ruling. Whether this will this mark the beginning of a more pragmatic and realistic approach by the courts to infringement damages, only time will tell, but the significant reduction by Judge Hamilton from the original award of $1.3 billion to a maximum of $272 million is a good step in the right direction.

 

 

 

 

 

 

 

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