A US federal judge threw out a “grossly excessive” $1.3 billion verdict that Oracle won against SAP in a landmark intellectual property case, possibly setting the stage for another showdown between the two technology companies.
Last year, Oracle won a huge court victory against SAP, one of its main competitors in database and enterprise services: a jury slapped a $1.3 billion fine on SAP for stealing software and customer support materials from an Oracle password-protected website. At the time, it was one of the largest penalties ever imposed for software piracy?but no more: Judge Phyllis Hamilton in the US District Court in Oakland has overturned the fine.
The decision comes as a surprising twist to a 4-year-old case that’s has seen lows and highs. There will be a new trial if Oracle Corp. formally rejects a lower $272 million award.
While Thursday’s ruling was a victory for SAP AG, a German maker of business software, it is not necessarily as much of a setback for Oracle, which stands to humiliate SAP again even if it can’t secure the higher award.
If the second trial is anything like last year’s, more high-wire theatrics is expected from Oracle’s outspoken CEO, Larry Ellison, who has pilloried SAP for its amateurish theft of software and customer-support documents from password-protected Oracle websites.
BIGGEST SOFTWARE THEFT VERDICT
The case centered on the actions of a now-defunct SAP subsidiary, TomorrowNow, which fraudulently logged into a password-protected Oracle customer support site and repeatedly downloaded massive amounts of software and customer support documents. SAP admitted to TomorrowNow?s actions, but argued to the court that Oracle?s claims of damages were severely overblown.
Oracle is the leading maker of database software, which helps companies organise and manage their information. Its aggressive expansion into business applications has forced SAP in a defensive position, once a leader in that space.
Oracle argued that the stolen information helped SAP steal customers by offering similar services at cheaper prices. SAP argued that TomorrowNow wasn’t that great at stealing customers with the information anyway and should have to pay only $40 million for accounts that SAP did manage to lure away.
The jury ultimately awarded Oracle more than 30 times that amount after a three-week trial last November. It was one of the biggest verdicts in a case involving software-related theft and showed how severely jurors were willing to punish corporations for intellectual-property theft from rivals.
Oracle can now choose whether to accept the lower award of $272 million or proceed with a new trial before a different jury. The $272 million amount was based on an earlier estimate from an Oracle expert on what profit Oracle lost and SAP gained.
Oracle has already scored repeated public relations wins because of the case.
However,?SAP said it was very gratified with Thursday’s decision.
“We believe the jury’s verdict was wrong and are pleased at the significant reduction in damages,” the company said in a statement. “We hope the court’s action will help drive this matter to a final resolution.”
Oracle said it plans to fight for the full amount it was awarded.
“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 (intellectual property) stolen,” Oracle said. “We believe the jury got it right and we intend to pursue the full measure of damages that we believe are owed to Oracle.”
Sources: Cbsnews, Digitaltrends