Oracle asks for its pound of flesh in unique SAP theft case

The company asked an appeals court to reinstate a $1.3 billion damages award against SAP

By , IDG News Service |  IT Management

Oracle has asked an appeals court to reinstate a US$1.3 billion jury award against SAP for what an Oracle lawyer on Tuesday called "the most massive and brazen copyright infringement in history."

A District Court judge overturned Oracle's award two years ago, calling it "grossly excessive," and instead granted it damages of $272 million. Oracle appealed, and on Tuesday lawyers for each side presented their cases to a three-judge panel at the Ninth Circuit Court of Appeals in San Francisco.

The case concerns a long-closed SAP subsidiary called TomorrowNow, which Oracle caught downloading masses of software and support materials -- around 5 terabytes -- from an Oracle-PeopleSoft website. SAP didn't contest the infringement, and the trial was to determine how much it should pay.

The jury based its award partly on how much SAP would have paid Oracle if the companies had sat down to negotiate a license. Such "hypothetical license" calculations are a common way to decide damages in infringement cases.

What makes the case novel is that Oracle has never licensed its support materials to another company, let alone a rival like SAP. As the German software vendor said in its appeals brief: "There was no licensing opportunity to lose, so no license fee (however measured) could properly be awarded as actual damages in this case."

That's one of the main questions the appeals court will have to answer: whether Oracle is entitled to collect an imagined license fee from SAP even though Oracle would never have agreed to license its software.

It must also decide if such a fee could ever be fairly calculated, given that there are no previous Oracle deals to compare it with. If not, SAP says Oracle should be able to collect only its lost profits, plus any profit SAP gained from the theft.

The panel of appeals court judges picked holes in both side's arguments Tuesday.

If Oracle has never licensed its support materials, the panel wanted to know, how could a jury objectively calculate their value?

Kathleen Sullivan, an attorney for Oracle, said the value can be seen in how much revenue SAP expected to generate from its purchase of TomorrowNow. A presentation to SAP's board, shown to the jury at trial, pegged that figure at close to $900 million.

That wasn't enough for Judge Susan Graber. "All that demonstrates is what they could have earned from it, which is different from the price of a license," she said.

Sullivan tried again, telling the judge TomorrowNow was a key part of SAP's "PeopleSoft attack strategy."

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