November 24, 2010

SAP Ordered To Pay Oracle $1.3 Billion

An American jury has ordered German software giant SAP to pay tech rival Oracle $1.3 billion in what could be the largest copyright-infringement penalty ever handed down.

SAP, who had admitted that one of their subsidiaries had illegally downloaded millions of the Redwood Shores, California-based tech corporation's password-protected files, told reporters that they were surprised and disappointed by the verdict, which came following less than an entire day's worth of deliberations. The company reportedly had set aside just $160 million to settle the damages, with three-fourths of that fund already having been used for legal fees.

Oracle attorneys have called the damages the most ever handed down for a copyright infringement case, according to Dan Levine of Reuters. SAP's admission of liability had allowed the case to be brought before a jury, and while the German software firm had insisted damages should be limited to no more than $40 million, Oracle had requested a minimum of $1.65 billion.

The subsidiary in question, TomorrowNow, reportedly obtained and copied Oracle software and other confidential information by posing as clients, Glenn Chapman of AFP reported on Wednesday. Chapman also noted that that they used a software tool identified as "Titan" to swipe patches, updates, fixes, and other programs intended for paying Oracle customers from their rival's website.

"We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary," Jim Dever, the head of media relations for SAP Americas, told reporters, including Chapman of AFP, in an emailed statement.

"This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation," he added, according to AP Technology Writer Jordan Robertson. "The mark of a leading company is the way it handles its mistakes. As stated in court, we regret the actions of TomorrowNow, we have accepted liability, and have been willing to fairly compensate Oracle. ... Our focus now is looking forward."

On the other hand, Geoffrey Howard, a member of Oracle's legal team, told Chapman that the U.S. software giant was "ecstatic" with the ruling. Howard added that the jury's verdict showed that they "recognized the value of the intellectual property stolen by SAP."

"SAP wanted to take responsibility," added fellow attorney David Boies. "They now have the opportunity to do that and move on."

Moving on might be difficult for SAP to do, though, according to some analysts.

"Even though SAP may appeal the judgment, the huge amount should be negative for the stock price and, will weaken SAP's position in the U.S.," Jacques Abramowicz, an analyst at Silvia Quandt research, told Reuters.

"SAP is truly on the run," added Santa Clara University School of Law professor Eric Goldman, noting that the verdict was one of the 10 or 20 largest in American legal history. "They have to climb an even steeper mountain."


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