September 2, 2011 12:23 am

Judge overturns $1.3bn award for Oracle

A US judge has overturned a $1.3bn jury award won earlier this year by Oracle against rival software company SAP and laid the ground for a new trial in the copyright infringement case.

Based on evidence presented at the trial, Oracle should have been entitled to collect damages of no more than $272m, according to the ruling by Judge Phyllis Hamilton in federal court in Oakland.

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The case stemmed from the unauthorised access gained by TomorrowNow, an SAP subsidiary in the US, to Oracle’s computer systems. The German software company admitted that its subsidiary had copied large amounts of software code it had not been entitled to, though it rejected Oracle’s large damages claim, leading to a trial earlier this year to assess the level of the payment.

The jury in the case sided with Oracle executives, including Larry Ellison, chief executive, who testified that SAP should meet the costs of a “hypothetical licence” for accessing the software. The damages should equal what Oracle would have been able to collect from selling a commercial licence covering the same software, the US company argued.

In a written judgment on Thursday, however, Judge Hamilton criticised Oracle’s executives for having given “self-serving testimony … regarding the price they claim they would have demanded in an admittedly fictional negotiation.”

She also said the Oracle camp had “proffered the speculative opinion of its damages expert, which was based on little more than guesses about the parties’ expectations.”

The rejection of the award was welcomed by SAP, which said it hoped the decision would quickly bring an “appropriate final resolution” of the case. The German company’s admission of wrongdoing by its subsidiary was a black eye for the company in the US.

Oracle said it would continue to push for the “full level of damages”, which it said had been based on “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.”

Rather than trying to assess the value of a hypothetical licence that TomorrowNow would have needed to access the Oracle software, Judge Hamilton said the jury should have based its award on the actual harm to Oracle from lost customers, which was unlikely to have topped $272m.

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