A United States federal judge has overruled a verdict awarding $1.3 billion to California-based software company Oracle for copyright infringement on the part of its rival SAP.
US District Judge Phyllis Hamilton described as “grossly excessive” the award that was handed down by jury decision last year in the lawsuit between two of the world’s largest software companies, ruling in favor of SAP’s motion to reject the verdict on the grounds that Oracle had only proven damages up to $272 million.
Hamilton described the additional $1 billion as “hypothetical license damages,” which Oracle could not claim the right to recover. “The verdict grossly exceeded the actual harm to Oracle,” Hamilton wrote in her order. "The $1.3 billion verdict is contrary to the weight of the evidence."
She added: “Rather than providing evidence of SAP's actual use of the copyrighted works, and objectively verifiable number of customers lost as a result, Oracle presented evidence of the purported value of the intellectual property as a whole.”
Hamilton said that if Oracle does not agree to the revised settlement there will have to be a new trial, which is likely to develop into a drawn-out dispute.
“Jury Got It Right”
The jury’s original decision fell last November after 11 days in court. Oracle brought the case against TomorrowNow, a subsidiary of SAP, saying it had illegally downloaded and made hundreds of thousands of copies of Oracle's software to steal customers and avoid paying licensing fees.
SAP admitted the theft of the software by TomorrowNow, which was closed down by the parent company in 2008.
Oracle spokesperson Deborah Hellinger said in an email that the company believed it had produced sufficient evidence of theft of intellectual property and misconduct on the part of SAP to justify the $1.3 billion award. “We believe the jury got it right, and we intend to pursue the full measure of damages that we believe are owed to Oracle,” Hellinger said.
Germany-based SAP and Oracle are two of the biggest competitors in business software, specializing in automated payroll, accounting and human resources solutions.
The jury’s settlement was based on a hypothetical license fee that SAP would have had to pay in order to access Oracle’s software. However, SAP said that such licenses do not exist between competitors, and as such, the damages should be based only on profits lost by Oracle and those earned by SAP as a direct result of the stolen software.
Oracle’s lawyers had estimated that the accumulative amount of profits lost and gained by the two companies amounted to nearly $409 million and $272 million. Judge Hamilton said Oracle’s evidence supported only the minimum amount and that the company had until the end of September to accept the ruling or file a new lawsuit.
Key Statistics – Global Software Market
- The global business software market will grow 8% through 2011, when it will be worth an estimated $270 billion. (source: Ovum Research)
- The systems infrastructure software market is expected to grow over 8% annually to 2015, with the applications software market growing an estimated 7% in the same period. (source: Ovum Research)
- Business software will grow an expected 7.5% annually to 2015, when it should reach an estimated value of $360 billion. (source: Ovum Research)
- The business software market in Western Europe is forecast to top $78 billion in 2011. (source: Gartner)