Oracle's $1.3 Billion Victory Over SAP Quashed By Judge - InformationWeek
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04:57 PM

Oracle's $1.3 Billion Victory Over SAP Quashed By Judge

Larry Ellison's company has option to take lesser award of $272 million--or proceed to a new trial.

A judge on Thursday threw out a jury's verdict that SAP pay Oracle $1.3 billion in damages to resolve a copyright infringement lawsuit, in which Oracle had claimed its German rival stole proprietary information in order to provide cut rate, third-party support services to Oracle's business customers.

In her ruling, Judge Phyllis Hamilton, of U.S. District Court for Northern California, said the jury's award, handed down last November, was "contrary to the weight of the evidence and grossly excessive." The judge said she would order a new trial unless Oracle accepts a reduced award of $272 million.

She gave the company until Sept. 30 to decide whether it will accept the lower amount.

In a statement, Oracle officials did not sound inclined to accept the lesser award--and hinted that they may appeal to the Supreme Court of California.

"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," the company said in a statement.

For its part, SAP, not surprisingly, welcomed the ruling. "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," SAP said in its own statement.

At least one legal expert who has been following the case was not surprised by Hamilton's ruling. "The damages in the case have been guess-work since day one," said Eric Goldman, director of the High Tech Law Institute at Santa Clara University. "Oracle's lawyers did a very good sales job to the jury, but they couldn't provide any supporting data to back up their numbers."

Hamilton apparently agreed with SAP's claim that Oracle did not prove that it suffered revenue losses as a result of the infringement, and that Oracle also failed to produce evidence that supported its claims as to how much the intellectual property at issue was worth.

Oracle originally sued SAP in March, 2007, claiming that its TomorrowNow tech services unit "copied and swept thousands of Oracle products and other proprietary and confidential materials into its own servers" using fake log-ins or credentials stolen from legitimate, high-profile Oracle customers such as Honeywell, Merck & Co., Bear Stearns, and others.

Oracle claimed TomorrowNow used the information to establish a business supporting Oracle products such as PeopleSoft, JD Edwards, and Siebel software, thus depriving Oracle of potential support sales of its own. Oracle charged that its investigation into huge traffic spikes on its support servers led to computers with IP addresses originating from within SAP TomorrowNow's Bryan, Texas, offices.

The companies reportedly reached a partial settlement in November, under which SAP agreed to pay about $120 million to Oracle.

In its most recent quarter, SAP stole market share from Oracle. Many enterprise customers seem to be hedging their bets as SAP and Oracle fight for strategy supremacy.

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