SAP To Pay Oracle $1.3bn For Copyright Infringement

With an award of $1.3 billion (£820 million), Oracle will be banking the largest US copyright infringement award on record. The money will come from long-time enterprise application rival SAP after a federal court jury concluded that to be fair restitution in a three-year old copyright infringement lawsuit.

In 2007, Oracle filed a claim that SAP, through an affiliate division, illegally downloaded more than eight million instances of its customer-support software and hundreds of thousands of pages of supporting documentation from one of its web sites, then used those tools to lure some 350 customers away from Oracle and over to SAP.

No Immediate Appeal

SAP took corporate responsibility for its affiliate’s actions in a court document filed on October 28 and officially apologised on November 16. There was no immediate indication that SAP would definitely appeal the decision.

“We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary,” SAP corporate spokesman Jim Dever told eWEEK in an email. “This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation.

“The mark of a leading company is the way it handles its mistakes. As stated in court, we regret the actions of TomorrowNow. We have accepted liability and have been willing to fairly compensate Oracle,” he said.

“Throughout this matter, our customers, employees and partners have stood by us and, for that, we are grateful,” he continued. “Our focus now is looking forward, helping our customers be best run businesses and extending our legacy of industry leadership well into the future.

“We thank the jury for its diligent service through this lengthy trial and the court for its supervision of this complex case,” Dever concluded.

Oracle president Safra Catz said in a statement to the press: “For more than three years, SAP stole thousands of copies of Oracle software and then resold that software and related services to Oracle’s own customers. 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. As a result, a United States federal court has ordered SAP to pay Oracle $1.3 billion. This is the largest amount ever awarded for software piracy.”

Regrettable decision in 2005

Germany-based SAP, the world’s largest maker and distributor of enterprise application software, certainly is regretting the 2005 acquisition of a now-defunct Texas-based affiliate, TomorrowNow, which performed the misdeeds that led to the lawsuit and jury decision.

SAP has already paid $120 million (£76 million) for court costs to Oracle and argued that another $40 million (£25 million) in restitution would constitute a fair amount. Oracle originally claimed in court documents that its lost assets were valued at $2.15 billion (£1.36 billion), although CEO Larry Ellison testified that $4 billion (£2.5 billion) was closer to the actual amount.

To confuse the issue even more, an Oracle damages expert, Paul Meyer, testified on November 9 that SAP should pay Oracle $1.66 billion (£1.1 billion) to settle the case.

In the end, the eight-person jury in California decided that $1.3 billion was the appropriate amount and delivered the verdict to presiding federal court Judge Phyllis Hamilton.

Background on the case

Two years after it was acquired by SAP in 2005, TomorrowNow was caught stealing Oracle’s intellectual property by gaining unauthorised access to a customer-support Oracle web site and downloading copyrighted instances of support software and thousands of pages of documentation. It then resold the software and documentation to Oracle customers and tried to convince them to switch to SAP.

In the original litigation, Oracle claimed that more than eight million instances of its enterprise support software worth $2.15 billion were stolen, stored on SAP’s servers and used without its permission.

It also charged that SAP/TomorrowNow deployed automated bots that used Oracle’s own software to lure customers with software installations from PeopleSoft,  JD Edwards and Siebel Systems (all now owned by Oracle) over to SAP.

Enterprise support software, which is what TomorrowNow illegally downloaded, amounts to about half of Oracle’s annual revenue.