''Oracle Corp v. SAP AG'', No. 4:07-cv-01658, was a
case in which
Oracle
An oracle is a person or agency considered to provide wise and insightful counsel or prophetic predictions, most notably including precognition of the future, inspired by deities. As such, it is a form of divination.
Description
The word '' ...
sued
SAP
Sap is a fluid transported in xylem cells (vessel elements or tracheids) or phloem sieve tube elements of a plant. These cells transport water and nutrients throughout the plant.
Sap is distinct from latex, resin, or cell sap; it is a separa ...
, alleging that SAP had engaged in
copyright infringement
Copyright infringement (at times referred to as piracy) is the use of works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, s ...
by downloading thousands of copyrighted documents and programs from Oracle's Customer Connection website. SAP admitted that its subsidiary TomorrowNow had infringed Oracle's copyrights and a jury awarded Oracle record-high damages in the amount of $1.3 billion. Judge
Phyllis Hamilton
Phyllis Jean Hamilton (born 1952) is a Senior United States district judge of the United States District Court for the Northern District of California.
Education and career
Born in Jacksonville, Illinois, Hamilton received a Bachelor of Arts ...
later vacated the jury's verdict, which was based on the calculation of a hypothetical license, and granted SAP's motion for a new trial dependent on Oracle rejecting a
remittitur
In United States law, remittitur (Latin: "it is sent back") is a ruling by a judge (usually upon motion to reduce or throw out a jury verdict) lowering the amount of damages granted by a jury in a civil case. The term is sometimes used where a jud ...
of $272 million. In November 2014, an appeals court ruled for $356.7 million in damages, a decision which was accepted by both parties.
Background
TomorrowNow was a company based in Bryan, Texas, which specialized in offering third-party technical service and support for enterprise software systems, including systems from
PeopleSoft
PeopleSoft, Inc. is a company that provides human resource management systems (HRMS), Financial Management Solutions (FMS), supply chain management (SCM), customer relationship management (CRM), and enterprise performance management (EPM) softwar ...
and
JD Edwards
J.D. Edwards World Solution Company or JD Edwards, abbreviated JDE, was an enterprise resource planning (ERP) software company, whose namesake ERP system is still sold under ownership by Oracle Corporation. JDE's products included World for IB ...
. TomorrowNow was acquired by
SAP AG
Sap is a fluid transported in xylem cells (vessel elements or tracheids) or phloem sieve tube elements of a plant. These cells transport water and nutrients throughout the plant.
Sap is distinct from latex, resin, or cell sap; it is a sepa ...
in 2005 and became a wholly owned subsidiary of SAP.
PeopleSoft acquired JD Edwards in 2003 and then
Oracle Corporation
Oracle Corporation is an American multinational computer technology corporation headquartered in Austin, Texas. In 2020, Oracle was the third-largest software company in the world by revenue and market capitalization. The company sells da ...
acquired PeopleSoft in 2005.
On March 22, 2007, Oracle filed a complaint with the
accusing SAP and TomorrowNow of corporate theft on a "grand scale".
According to Oracle, TomorrowNow had downloaded thousands of documents and programs from Oracle's Customer Connection technical support website. Downloads were performed using credentials from Oracle customers whose support contract either already had or were about to expire. In addition, TomorrowNow had downloaded copyrighted support material for which the customers did not hold a license, and thus, were not authorized to access.
Initially, SAP admitted that TomorrowNow had accessed Oracle's software and support documentation using customers' credentials, but claimed they were entitled to do so as TomorrowNow had been contracted by those customers to provide third-party support for their Oracle products.
Later, Oracle and SAP agreed to limit the scope of the trial to solely the copyright infringement claim and the damages. SAP offered to admit that TomorrowNow had indeed infringed Oracle's copyrights, leaving the jury court to only determine the amount of damages.
On the issue of damages, the two parties presented calculations that were vastly different. SAP claimed that Oracle had not suffered any losses and SAP/TomorrowNow had gained no financial benefit (rather they had lost $90 million) from the infringement. According to SAP's calculation, the damages were between $28 million and $408.7 million. Oracle based their damages calculation on the hypothetical price it would have cost a customer to purchase all the software and support in order to legally access all the material downloaded by TomorrowNow, totaling $2 billion.
Court ruling
On November 23, 2010, the jury awarded Oracle damages in the amount of $1.3 billion.
This was the highest amount of damages ever awarded in a copyright infringement case. On July 13, 2011, SAP motioned for seeking
judgment as a matter of law
A motion for judgment as a matter of law (JMOL) is a Motion (legal), motion made by a party, during trial, claiming the opposing party has insufficient evidence to reasonably support its case. JMOL is also known as a directed verdict, which it ...
that actual damages should not be based on hypothetical licenses, and for a new trial for the amount of damages.
On September 1, 2011, U.S. District Judge
Phyllis Hamilton
Phyllis Jean Hamilton (born 1952) is a Senior United States district judge of the United States District Court for the Northern District of California.
Education and career
Born in Jacksonville, Illinois, Hamilton received a Bachelor of Arts ...
granted the judgment as a matter of law on the hypothetical license damages, and vacated the $1.3 billion award amount.
[ In her ruling Judge Hamilton stated:
SAP's motion for a new trial was granted, conditioned on Oracle rejecting a ]remittitur
In United States law, remittitur (Latin: "it is sent back") is a ruling by a judge (usually upon motion to reduce or throw out a jury verdict) lowering the amount of damages granted by a jury in a civil case. The term is sometimes used where a jud ...
of $272 million, the "maximum amount of lost profits and infringer's profits sustainable by the proof."
Judge Hamilton further stated:
Hypothetical licenses
In of the Copyright Act, it states that "the copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement". Since the actual damages must be the result of the infringement, the burden is on the copyright holder to prove the connection between the monetary amount and the infringement.[
Oracle was required to prove that the two parties would have agreed on the hypothetical license and license fees, but Oracle had no such evidence. Oracle did not provide facts on previous licensing history or practices. Oracle also failed to provide evidence on benchmark licenses, such as negotiated licenses for comparable works. There was no evidence that Oracle would have licensed to SAP or if the two parties would have ever agreed to any license, so the hypothetical lost license fees could not be the award damages. Hypothetical lost license fees can be used to calculate actual damages, but they do not imply automatic entitlement of damages. Actual proof is required for objective, non-speculative lost license price.][
]
Remittitur amount
During the jury trial, Paul Meyer, Oracle's damages expert, provided analysis that the hypothetical lost license fees were in the range from $881 million to $2.69 billion, and thus the jury verdict was for $1.3 billion. However, the "verdict grossly exceeded the actual harm to Oracle in the form of lost customers,"[ which was estimated by Mr. Meyer at either $408.7 million or $272 million, and estimated by SAP's damages expert at $28 million. The court rejected the $408.7 million figure from Mr. Meyer since it included "ongoing impact" through 2015, and that was not supported by the facts, since SAP ceased TomorrowNow's operations in 2008. The court also rejected the $28 million figure from SAP's expert, because it was based on inadmissible evidence. Therefore, the court set the remittitur at $272 million.][
]
See also
* ''Oracle v. Google
''Google LLC v. Oracle America, Inc.'', 593 U.S. ___ (2021), was a U.S. Supreme Court decision related to the nature of computer code and copyright law. The dispute centered on the use of parts of the Java programming language's application progr ...
''
References
{{reflist, 30em
External links
Oracle Corp v. SAP AG, No. 4:07-cv-01658 court docket
Oracle V. SAP: A Silicon Valley soap opera
from Eric Goldman
Eric Goldman (born April 15, 1968) is a law professor at Santa Clara University School of Law. He also co-directs the law school's High Tech Law Institute. and co-supervises the law school's Privacy Law Certificate.
Career overview
Goldman is ...
's blog
Oracle, SAP Duel Over Damages in Opening Arguments
United States District Court for the Northern District of California cases
United States copyright case law
2011 in United States case law
SAP SE
Oracle Corporation