Jingle All the Way…To the Tune of $1.3 Billion: Oracle Wins Largest-Ever Copyright Infringement Award

 

By Nicole Rizzo Smith

 

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n the world of technology titans, SAP has landed itself on the naughty list this year.  In a copyright infringement action brought by Oracle against rival SAP for stealing software and customers, a federal jury last month awarded Oracle $1.3 billion, the largest copyright infringement award ever. 

SAP’s subsidiary, TomorrowNow, which provides technical support for software used by large corporate data centers, admitted to copying a large library of Oracle’s software and customer manuals in an effort to boost its sales to Oracle customers.

Oracle alleged that SAP infringed 120 of its copyrights, and SAP admitted liability.  Thus, the only question before the jury was by what measure and how much  should Oracle be compensated.

The damages award could have been measured by Oracle’s lost profits from the defection of customers to SAP, or by the fair market value of the license that SAP would have had to pay to Oracle for using the software.  The Northern California jury took the latter course, and heard the parties’ widely divergent views of the value of such a license.

Oracle claimed a license would have been worth as much as $3 billion over the lifetime of the software.  SAP argued that the value would have been between $28 to $40 million because only a few hundred Oracle customers actually were persuaded to use the software.

The jury’s verdict ultimately came closer to Oracle’s estimate, based on the scope, duration and timing of the infringement.  While it has apologized for the infringement, SAP says it plans to appeal the award.

In addition to dollars and cents, Oracle received a perhaps greater benefit from its high-profile award: public shame of its top rival.  Emails shown in court and testimony from SAP’s CEO made it clear that SAP executives were aware of the infringement, precluding SAP from even contesting liability. 

Oracle reaped the further benefit of embarrassing another rival, Hewlett-Packard.  HP was not involved in the case, but it had recently hired SAP’s former chief executive who oversaw the copyright infringement plan during his tenure at SAP.  Fortunately for HP, the chief executive did not testify at trial because his travel schedule enabled him to elude service with a subpoena.

In the end, the publicity for the extraordinary jury award represents a notable victory for Oracle’s image, and a lump of coal for SAP.