Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Judge Throws Out $1.3 Billion Judgment Against SAP as “Grossly Excessive”

A judge in Oakland has overturned a $1.3 billion judgment against software company SAP that had earlier been awarded to rival Oracle in a copyright infringement lawsuit.

Calling the award “grossly excessive,” U.S. District Court Judge Phyllis Hamilton granted an SAP request to throw out the award and ruled that SAP should get a new trial for damages unless Oracle accepts her decision to lower the award to $272 million (see the text of the decision below.)

“At trial, Oracle presented no evidence, and did not argue, that it was entitled to a hypothetical license fee because it lost an opportunity to license the works to third parties for the same use. … Thus, Oracle could not reasonably claim that SAP’s infringement diminished the licensing value of the infringed works,” Hamilton wrote in her decision.

Hamilton said that Oracle never proved that it lost enough business to justify a $1.3 billion judgment. “Rather than providing evidence of SAP’s actual use of the copyrighted works, and objectively verifiable number of customers lost as a result, Oracle presented evidence of the purported value of the intellectual property as a whole, elicited self-serving testimony from its executives regarding the price they claim they would have demanded in an admittedly fictional negotiation, and proffered the speculative opinion of its damages expert, which was based on little more than guesses about the parties’ expectations,” she wrote. “At the same time, Oracle urged the jury to disregard evidence of Oracle’s actual customer losses resulting from infringement. Thus, the verdict grossly exceeded the actual harm to Oracle in the form of lost customers.”

Oracle had won the award in November after accusing SAP’s now-shuttered TomorrowNow unit of copying its software without paying appropriate licensing fees. It had been the largest judgment ever in a copyright infringement case.

Lawyers for Oracle had argued that the company’s damages should be tied to the value of a hypothetical license that TomorrowNow would have had to pay for the software had it been properly licensed. For its part, SAP had argued that as competitors, damages should have been calculated based on profits lost by Oracle and gained by SAP as a result of the infringement and as such is in a much lower range than what Oracle argued for.

The case has caused a lot of personal enmity between Oracle and SAP, as well as with Hewlett-Packard’s new CEO, Léo Apotheker, the former co-CEO of SAP. Apotheker’s apparent absence from HP’s headquarters in Palo Alto, Calif., when he first started his job caused some snickers as Oracle proved unable to find him in order to serve him with a subpoena.

Of course the leftover mishegas has a lot to do with the mounting anger apparent in the Oracle-HP litigation over Oracle’s decision to stop supporting Intel’s Itanium chip. As one commenter put it the other day, its not so much about the chip: It’s personal.

Update: SAP just issued a statement: “We are very gratified with the Court’s decision. We believed the jury’s verdict was wrong and are pleased at the significant reduction in damages. We hope the Court’s action will help drive this matter to a final resolution. We are hopeful that this ruling will move the case toward an appropriate final resolution.”

And here’s a statement from Oracle: “There was voluminous evidence regarding the massive scope of the theft, clear involvement of SAP management in the misconduct and the tremendous value of the IP stolen. We believe the jury got it right and we intend to pursue the full measure of damages that we believe are owed to Oracle.”


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