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Oracle vows to continue IP theft suit against SAP

Says it will reject federal judge's compromise plan; 'jury got it right' with $1.3B judgment

September 1, 2011 05:54 PM ET

Computerworld - A defiant Oracle Thursday vowed to continue its legal battle against rival SAP after a federal judge in California threw out the $1.3 billion judgment the company had won against SAP late last year.

In a statement released shortly after the verdict, Oracle said it intends to "pursue the full measure of damages" it believes SAP owes it for the theft of its intellectual property.

"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 IP stolen," Oracle said, "We believe the jury got it right."

In a development not entirely unexpected, U.S District Court Judge Phyllis Hamilton in Oakland, Calif., today upheld SAP's request that the court lower the $1.3 billion in damages that a jury late last year ordered it to pay Oracle.

In announcing the decision, Hamilton called the jury award "grossly excessive" and asked that Oracle either accept a lower $272 million payment or submit to a new trial.

In a statement, SAP said it welcomed today's decision. "We are very gratified with the Court's decision," the company said. "We believed the jury's verdict was wrong and are pleased at the significant reduction in damages."

Oracle's lawsuit against SAP stems from the actions of a now-defunct SAP subsidiary called TomorrowNow, which provided third-party support services to Oracle customers.

Oracle claimed that TomorrowNow infringed on and stole Oracle's intellectual property. The database vendor had initially sought $4 billion in damages. The jury's $1.3 billion award was the largest ever in an IP theft case.

SAP initially insisted that it knew nothing about the IP theft. However, after close to three and a half years of litigation, SAP announced that it would not contest Oracle's claim for contributory infringement.

SAP later admitted that some of its executives may have known about TomorrowNow's illegal activitities.

So while the outcome of the case was never in doubt, the size of the jury's award surprised many.

"My belief all along was that $1.3 billion was excessive because it was based on the license value of the Oracle software that was downloaded" by TomorrowNow, said Paul Hamerman, an analyst at Forrester Research. "My belief was that the damages should have been more reflective of the contract value of the support engagements" TomorrowNow had with Oracle customers. Hamerman added, though, that it's unclear how Judge Hamilton arrived at the $272 million figure.

Hamerman said that he expects that Oracle will continue to fight for the original verdict for as long as it can.

"I think they will go to trial again and drag this out a bit further," he said. "Oracle is a tough customer in court, and they are willing to spend the money to litigate" -- especially if it can keep SAP on the defensive, he said. "I think it would be prudent for them to take the award the judge has handed them."

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