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SAP Pays Oracle $306 Million To Avoid New Trial

SAP seeks resolution to copyright infringement case, but Oracle can still appeal judge's decision to knock down $1.3 billion jury award.
SAP has agreed to pay Oracle $306 million in the copyright-infringement lawsuit over its since-closed TomorrowNow unit downloading and copying Oracle software and documentation.

It's a change in direction for the case, as Oracle had originally sought a new trial after a federal judge knocked down a $1.3 billion jury verdict handed down in 2010. Reducing the award to $272 million, Judge Phyllis Hamilton, of U.S. District Court for Northern California, said the jury's award was "contrary to the weight of the evidence and grossly excessive."

The companies agreed on the new damage figure "to save time and expense of a new trial," lawyers for Oracle and SAP said in a filing in federal court in Oakland, Calif. The new trial was set to begin later this month, but in a statement issued by Oracle Thursday it said that by agreeing to damages it could immediately take the original verdict to the Ninth Circuit Court of Appeals, asking it to reinstate higher damages.

[ Want more on Oracle's other big legal case? Read Oracle Loses HP Itanium Court Battle. ]

Oracle has lost a string of recent court battles, including a ruling this week in which a judge found that Oracle is contractually bound to support HP Itanium servers. In May, a jury found that Google had infringed some of Oracle's copyrighted Java APIs, though not to the extent that Oracle had hoped. Jurors were unable to agree on whether Google's use of Java in its Android operating system was permissible fair use. Google has asked a judge to declare a mistrial, which would bring a new round in that legal battle.

With the HP and Google cases, as well as a pending lawsuit against support provider Rimini Street, on Oracle's hands, it would make sense for the company to take the more expedient and less expensive path of an appeal rather than a new trial in the SAP case.

SAP accepted liability for the infringement by TomorrowNow unit even before the trial began, yet Oracle went ahead 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. Oracle filed the suit against SAP in 2007.

In a statement issued Thursday on the new $306 million damage agreement, SAP said "this case has gone on long enough. Although we believe that $306M is more than the appropriate damages amount, we agreed to this in an effort to bring this case to a reasonable resolution."

The terms of the new agreement are lopsided. SAP won't have to pay damages until after all appeals have been resolved, but if Oracle wins a judgment that's less than $306 million, SAP 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 has set aside 227 million euros ($277 million) on its balance sheet to resolve the litigation.

The new agreement must be approved by Judge Hamilton, the same judge who knocked down Oracle's $1.3 billion jury verdict.