Oracle Wins Copyright Case With SAP, and $1.3 Billion Damages

The award, the largest ever for copyright infringement, comes as big technology companies, including Apple, Google and Motorola, have increasingly resorted to the courts to resolve patent and intellectual property disputes instead of quietly working out a deal. Rarely, however, do the lawsuits go to court or attract the attention this dispute did.

“This is pretty dramatic,” said Robert P. Merges, a technology law professor at University of California, Berkeley. He said it sent a loud message to companies to pay attention to any signs of copyright infringement. “It’s a game-ending home run type of result. It will tell people ‘Hey, we need to be careful.’ ”

The case, tried in United States District Court in Oakland, Calif., had been closely watched in Silicon Valley not only for the amount of money involved but also for the personalities and companies behind the disputes. On one side was Lawrence J. Ellison, the pugnacious chief executive of Oracle and the third-richest man in America, and on the other side were the executives of SAP, who had admitted making illicit copies of Oracle’s software and manuals while insisting that the theft really didn’t cause much damage.

The dispute was not over the deed, but over how big the damages were. Mr. Ellison, known as one of the best salesmen in Silicon Valley, told the jury that Oracle was owed billions. SAP countered that he was exaggerating and damages were no more than $41 million. The eight-person jury settled on damages closer to Mr. Ellison’s number.

Oracle meant to use the public case as an attempt to also sully SAP, its top rival. But it also used the occasion to embarrass another rival, Hewlett-Packard. H.P. had hired Léo Apotheker, SAP’s former chief executive, as its chief executive in September. Mr. Ellison said in public statements that Mr. Apotheker oversaw the vast copyright infringement plan while heading SAP. Hewlett-Packard was not involved in the matter, but Mr. Ellison’s hiring of H.P.’s former chief executive, Mark V. Hurd, to serve as Oracle’s co-president also added frisson to the rivalry.

Mr. Apotheker did not testify at the trial because Oracle’s lawyers were unable to find him to serve him with a subpoena. Mr. Apotheker said Monday in a conference call with securities analysts that he had been traveling around the world visiting H.P. facilities.

Saswato Das, a spokesman for SAP, said in a statement: “We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary. This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation.”

Safra A. Catz, Oracle’s co-president, said, “Right before the trial began, SAP admitted its guilt and liability; then the trial made it clear that SAP’s most senior executives were aware of the illegal activity from the very beginning.”

Roland Vogl, executive director of the program in law, science and technology at Stanford University, said that while there are lots of copyright disputes, sparring companies often settle before going in front of a jury, often settling in pretrial motions. “Only a very, very small number of cases get litigated to the very end,” he said. That these companies did not probably had a lot to do with the longtime animus between them, he said. “Those two companies have notoriously been feuding over so many years.”

During the three-week trial, the two sides argued over how much Oracle would have charged SAP to legally license the software and other items it stole. Oracle claimed in the suit, filed in 2007, that a license would have been worth as much as $2 billion over the life time of the software. SAP, which apologized for the infringement during the trial, said that the damages were closer to $40 million because it had persuaded only a few hundred of Oracle’s customers to defect. Oracle’s lawyers cited $1.6 billion in damages in closing arguments Monday.

E-mail shown in court highlighted that SAP executives ignored warnings of copyright infringement. E-mail from Oracle executives highlighted their aggressive business tactics and a disdain for some of their own customers, one of which an executive referred to with an expletive.

SAP’s copyright infringement took place at its TomorrowNow subsidiary, which handled technical support for software running in the data centers of large corporations. The subsidiary, now closed, illicitly copied a large library of Oracle’s software and customer manuals.

Rebecca Wettemann, an analyst at Nucleus Research, said that the amount Oracle was awarded in the case may seem like a bonanza to most people. But to Oracle, the award will not substantially change its fortunes.

Still, she said that it created a major victory for Oracle in terms of image.

“This is about making SAP pay with publicity — publicity that’s likely to give Oracle a one-up in the sales cycle for years to come,” Ms. Wettemann said. “Customers are going to be asking, ‘Do you buy from a thought leader or from someone who steal ideas?’ ”

Matt Richtel contributed reporting.

via nytimes.com