Oracle on Friday filed papers to appeal the outcome of the five-year-old court case involving copyright infringement by SAP's since-closed TomorrowNow services business. If Oracle wins in the Ninth Circuit Court of Appeals, SAP could end up owing Oracle as much as $1 billion over and above a $306 million settlement already in place.
It's not the verdict in the 2007 case that's in question; it's the award. SAP admitted that TomorrowNow had illegally downloaded and copied Oracle software and documentation even before the trial began. Eschewing an out-of-court settlement, Oracle pressed on with the case, bringing SAP executives to the stand and detailing the extent of TomorrowNow efforts to copy Oracle support materials. In testimony, SAP executives said a lack of oversight of TomorrowNow, a unit acquired in 2005, had allowed the illegal practices to continue.
After embarrassing SAP in court, Oracle won the case and the jury determined in 2010 that SAP should pay $1.3 billion. Then last September, Judge Phyllis Hamilton, of the U.S. District Court for Northern California, threw out the jury's award, calling it "contrary to the weight of the evidence and grossly excessive." She reduced the award to $272 million.
Outraged, Oracle sought a new trail rather than accept the judge's decision, but it changed course last month by reaching a settlement in the original case in which SAP would pay Oracle $306 million. Both sides issued statements saying the settlement would avoid the time and expense of a new trial. But the agreement that left the door open for Oracle to appeal, and it vowed it would.
[ Want more on Oracle's legal tangles? Read Oracle Loses HP Itanium Court Battle. ]
Under the terms of the settlement SAP won't have to pay Oracle damages until after its appeal has been resolved (so it won't have to set aside additional funds at this time). But if Oracle wins a judgment that's less than $306 million (as was the $272 million award prescribed by Judge Hamilton), SAP has agreed to pay the difference. SAP has already paid Oracle $120 million in legal fees in the case, so it will pay a minimum of $426 million to Oracle.
SAP had set aside 227 million euros ($277 million) on its balance sheet to resolve the litigation. An SAP spokesperson told InformationWeek that SAP "will provide updates on provision activity in our quarterly financial reporting, at the appropriate time in the legal process." An appeal could take as long as two years, according to SAP.
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