Oracle Asks for $1.3 Billion Verdict Against SAP to Be Reinstated

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By Reuters | Updated: 14 May 2014 10:36 IST
A U.S. appeals court appeared skeptical on Tuesday about reinstating a $1.3 billion jury verdict won by Oracle Corp against SAP, in a case where the European software company admitted massive copyright infringement.

At a court hearing on Tuesday, two 9th U.S. Circuit Court of Appeals judges also suggested Oracle may deserve more than the roughly $300 million it had been assigned by a lower court.

A Northern California jury awarded Oracle $1.3 billion in 2010 over accusations that SAP AG subsidiary, TomorrowNow, wrongfully downloaded millions of Oracle files. SAP had acquired TomorrowNow as part of a strategy to provide software support to Oracle customers at lower rates than what Oracle charged, and eventually convince some of those companies to become SAP customers.

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The trial between the two enterprise software competitors was widely watched at the time, as top Oracle executives Larry Ellison and Safra Catz testified. However, U.S. District Judge Phyllis Hamilton in Oakland, California ruled that Oracle had proven actual damages of only $272 million.

Oracle has asked the 9th U.S. Circuit Court of Appeals to reverse that ruling.

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At a court hearing on Tuesday before a three-judge 9th Circuit panel, Oracle attorney Kathleen Sullivan said internal SAP documents showed SAP had expected about $900 million in new revenue by using TomorrowNow to poach Oracle customers. That, and other evidence, was sufficient for the jury to arrive at its $1.3 billion figure, Sullivan argued.

However, 9th Circuit Judge Susan Graber questioned whether those SAP revenue figures were objective evidence of the value of the copyrighted material.

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"It's hypothetical revenue information, which is not the same," Graber said.

"These may be pie in the sky dreaming," Judge William Fletcher added.

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The judges did not issue a formal ruling from the bench. SAP eventually shuttered TomorrowNow, which pleaded guilty to criminal copyright infringement and other charges.

SAP admitted liability for the downloads just prior to the 2010 trial, so the only issue in dispute was how much SAP would pay Oracle in damages. Oracle said that figure should be calculated based on what SAP would have paid Oracle had it licensed the materials, instead of downloading them without permission. Oracle estimated that amount in the billions.

In her lower court ruling, however, Hamilton decided Oracle is only entitled to profits it had lost as a result of the downloads, as well as any profits SAP gained. The judge calculated that amount at $272 million.

At the 9th Circuit hearing on Tuesday, Graber said $272 million "seems low," and Fletcher said it "seems to me wrong."

SAP attorney Tharan "Greg" Lanier defended the amount, though he acknowledged that Oracle presented evidence at trial that the profits calculation could come to $487 million.

The case in the 9th Circuit is Oracle Corp et al. vs. SAP AG et al., 12-16944.

© Thomson Reuters 2014

 

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Further reading: Apps, Internet, Oracle, SAP
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