Judge Cuts Oracle Claims Down to Size
The bitter war between Oracle and SAP took a new turn Thursday when a judge sliced up the $1.3 billion in damages for copyright infringement previously award to the former. The latest ruling sets the new amount SAP must pay Oracle at just $272 million. SAP will be granted a new trial if Oracle decides to reject that amount -- and Oracle might opt to do just that.
09/02/11 10:18 AM PT
SAP won a battle in its war with Oracle Thursday when a judge overturned the US$1.3 billion sum SAP was previously ordered to pay Oracle in a copyright infringement suit.
The dispute regarded SAP's TomorrowNow software maintenance unit, which was accused of skirting licensing fees by downloading hundreds of thousands of copies of Oracle software. Oracle claimed it was an effort to steal customers.
After an 11-day trial last November, a jury found SAP guilty of massive theft and infringement and ordered the company to pay Oracle $1.3 billion in damages, the highest fine ever for a copyright infringement claim.
SAP admitted to wrongdoing and even choked out an apology to Oracle, so the dispute now is purely financial. SAP felt the payout was too high and sought to overturn the decision. Thursday, a judge agreed and set the new amount to $272 million.
"We agree with the court's statement that 'the verdict grossly exceeded the actual harm to Oracle,'" Andy Kendzie, a spokesperson for SAP media relations, told CRM Buyer.
The judge ruled that based on the evidence presented in the trial, Oracle's damages were nowhere near $1.3 billion, and that SAP would be granted a new trial if Oracle decided not to accept the new payment.
"We believed the jury's verdict was wrong and are pleased with the significant reduction in damages. We hope the court's action will help drive this matter to a final resolution," said Kendzie.
Oracle did not reply to CRM Buyer's request for comment.
Not Handing It Over Yet
Oracle has already made it clear it's not interested in this resolution. The company still believes the theft was large-scale enough to warrant at least $1 billion and plans on fighting the decision.
"Financially, there is nothing really to be concerned about, but I think the decision is disappointing from Oracle's point of view. This is a case that has been under consideration for several years. I definitely think they will test the judge's decision," Rafael Garcia, analyst at Morningstar, told CRM Buyer.
It's a case that's gotten uglier over the years, and Oracle may have little to lose by attempting another round.
"They have strong arguments, and the jury agreed with them once. It's just a matter of more time," said Garcia.
Intellectual property and copyright cases are plaguing the tech industry lately, though this one did stand out for its sky-high initial payout. Business will continue as usual for both sides, albeit with perhaps a little more anger and distraction.
"This kind of dispute is fairly common in the tech industry. At this point, Oracle is already engaged in at least three of these types of lawsuit. It's part of the business part of the industry, but it doesn't necessarily change anything about the company," said Garcia.
Things Get Personal
Bitter rivals even before the lawsuit, SAP and Oracle added fuel to the fire with the TomorrowNow dispute. The trial was full of biting remarks, forced apologies and intense power struggles.
Outside parties took sides as well. In early 2010, while Oracle and SAP were locked in a battle for enterprise supremacy and SAP had been announcing a decline in revenues, then-CEO Leo Apotheker, who had been in charge during the TomorrowNow era, resigned.
Bill McDermott took over, but Oracle was adamant that Apotheker was to testify during the trial. HP hired Apotheker as CEO after he left SAP and vehemently opposed Oracle's efforts to put Apotheker on the stand.
Meanwhile, the man that Apotheker had been hired to replace, former HP CEO Mark Hurd, quickly found employment at Oracle after leaving HP under a cloud of scandal.
"These were longterm rivals, and this escalated the situation. I would say that Oracle's stand and the way they have handled the case also reflect the personality of [Oracle CEO] Larry Ellison. He's a very controversial and smart man, and companies tend to mimic the personalities of their leader," Garcia said.
What's already been a messy court case is only likely to get more bitter and complicated as it continues.
"Business is always personal, and I think that both companies have been engaged in this tit-for-tat for a while," said Garcia.