Bloomberg News

SAP Asks Court to Cut Oracle’s $1.3 Billion Damage Award

July 13, 2011

(Updates with judge urging negotiations in 13th paragraph.)

July 13 (Bloomberg) -- SAP AG, the business-software maker ordered by a jury to pay $1.3 billion to Oracle Corp., told a judge the verdict was based on speculation about Oracle’s losses and should be cut to no more than $408 million.

A lawyer for SAP, Greg Lanier, said at a hearing today in federal court in Oakland, California, that during a trial last year Oracle overstated its losses from copyright infringement by an SAP unit. SAP asked U.S. District Judge Phyllis Hamilton to reduce the damage award or order a new trial because sustaining the verdict would be a miscarriage of justice. Hamilton didn’t rule today from the bench.

“I have not decided what I am going to do,” the judge said.

Hamilton cautioned lawyers on both sides not to read too much into a pretrial ruling denying SAP’s motion for summary judgment. “I didn’t say Oracle was entitled to such damages. It is still up to Oracle to present non-speculative evidence of damages.”

Oracle, based in Redwood City, California, won a lawsuit in November accusing SAP’s U.S.-based TomorrowNow software- maintenance unit of making hundreds of thousands of illegal downloads and several thousand copies of Oracle’s software to avoid paying licensing fees and to steal customers. The jury award was the largest ever for copyright infringement.

Oracle maintained at trial that its damages should represent the value of a hypothetical license that the unit would have had to pay for the software it infringed.

Fierce Competitors

Such a license would never have existed between two fierce competitors, so the damage award should have been based on profits Oracle lost and SAP gained as a result of the infringement, Walldorf, Germany-based SAP said in court filings. That number is from $28 million to $407.8 million, SAP said in the filings.

The damage award should stand, Oracle said in court filings.

Geoffrey Howard, an attorney for Oracle, argued today that SAP’s request to reduce the damages “would require the court to reverse itself on motions it has made repeatedly and require the court to weigh trial evidence” that was already decided by the jury.

If a new trial is ordered, Hamilton should allow Oracle to present evidence of its expected revenue from certain sales it would have made if not for the infringement, something she excluded from the case, Oracle said in filings. That would boost the hypothetical license value by another $500 million, the company said in the filings.

Willing to Negotiate?

At today’s hearing Hamilton asked the lawyers if they are willing to negotiate a settlement. Lawyers for both sides said they aren’t optimistic.

“It is not likely to be productive in the absence of a ruling,” Lanier said. Howard said there have been no settlement talks since the verdict.

Hamilton urged the lawyers to consider meeting with a magistrate judge for negotiations, saying it will take her some time to fashion a ruling.

The case is Oracle Corp. v SAP AG, 07-01658, U.S. District Court, Northern District of California (Oakland).

--Editors: Stephen Farr, Peter Blumberg

To contact the reporters about this story: Karen Gullo in San Francisco federal court at kgullo@bloomberg.net; Pamela MacLean at pmaclean@pacbell.net in San Francisco.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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