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SAP to Pay $1.3B to Oracle for Software Piracy

Source: WSJ

Posted on 24 Nov 2010

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A federal jury ruled Tuesday that SAP AG must pay $1.3 billion to rival Oracle Corp for copyright infringement.

The verdict by the eight-person jury was reached the verdict a day after it adjourned to deliberate. The companies presented closing arguments Monday in U.S. District Court in Oakland, Calif.

Oracle Co-President Safra Catz said "this is the largest amount ever awarded for software piracy."

SAP said it was disappointed by the decision and would "pursue all available options, including post-trial motions and appeal if necessary."

If upheld, the verdict would stand among the largest awards for a case involving intellectual property. The largest to date was a $1.67 billion judgment in a 2009 patent case against Abbott Laboratories, according to Lex Machina Inc., a company that operates a database of cases. Abbott has appealed the verdict and a decision is pending.

One attorney specializing in intellectual-property law said the size of the jury award was surprising. "To my recollection that's the largest copyright verdict ever," said Colby Springer, a partner at Carr & Ferrell, adding that damages in patent cases tend to be higher than in copyright cases. "The number is just astronomical…They'll clearly contest that the wrong model was used."

David Boies, a high-profile litigator representing Oracle, on Monday argued that SAP owed the Redwood Shores, Calif., company between $288 million and $3 billion, while Robert Mittelstaedt, an attorney representing SAP, said the Walldorf, Germany, concern should pay between $28 million and $41 million.

The verdict came in the fourth week of a trial to determine how much SAP should pay Oracle for copyright infringement by a discontinued business unit called TomorrowNow, the culmination of a lawsuit Oracle first brought in March 2007.
SAP had admitted liability for TomorrowNow's actions. The unit, which provided software maintenance and support to Oracle customers, downloaded

Oracle software and documents, infringing on 120 copyrights.
Over the course of the trial, some top Oracle and SAP executives took the stand, including Oracle CEO Larry Ellison and SAP Co-CEO Bill McDermott.

"This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation," an SAP spokesman said.

Peter Goldmacher, an analyst at Cowen & Co., said the verdict doesn't change "the fundamental dynamics of its business prospects" but could slow down dealmaking for SAP, which had €2.83 billion ($3.86 billion) in cash as of Sept. 30.