Oracle Rejects Damages from SAP, Opts For TomorrowNow Retrial

Published: February 13, 2012

by Alex Woodie

Here we go again. Last week, Oracle--still hoppin' mad that a Federal judge reduced by more than $1 billion the damages awarded from its civil suit against SAP and its now-defunct TomorrowNow subsidiary--formally rejected the $272 million from SAP and requested that a new trial be granted in the case, which began nearly five years ago.

A jury awarded Oracle $1.3 billion in damages in November 2010, a figure that was appealed by SAP. The German software giant had admitted in late 2007 that TomorrowNow had acted inappropriately (it shut down the third-party support unit in 2008), and all the legal haggling over these years has been over how much SAP would pay Oracle. SAP insisted that the damages inflicted by TomorrowNow were between $28 million and $41 million, while Oracle argued that damages were between $288 million and $3 billion.

In September 2011, a judge in the Oakland Division of the Northern California District of U.S. District Court ruled that the $1.3 billion awarded to Oracle was "grossly excessive." Judge Phyllis Hamilton lowered the amount by more than $1 billion, and said that if Oracle didn't accept the lowered damages (the remittitur) of $272 million, she would suggest a new trial.

As expected, Oracle didn't take the money and instead opted for a retrial. Oracle explained its reasoning in a court filing last week:

"Oracle has no choice but to elect a new trial, as accepting the remittitur would force Oracle to risk waiving its right to appeal the Court's decision on the motions for judgment as a matter of law and for a new trial," Oracle's attorney states. "Oracle's objective is to obtain clarification of the law and, if it is right about what the law is and what the evidence supports in this case, to vindicate the verdict of the jury and Oracle's intellectual property rights as a copyright owner. Accepting the remittitur would be contrary to this objective."

Oracle says TomorrowNow violated its intellectual property rights by improperly downloading and distributing software patches and updates that Oracle put on its technical support website for PeopleSoft and JD Edwards customers. Oracle claimed that this "storehouse" of stolen code enabled TomorrowNow to offer technical support services at a fraction of the cost that Oracle charged.

Oracle based its damages on the amount that TomorrowNow's customers would have paid if they obtained the code and support from Oracle. This "hypothetical" calculation of damages will be a central element of the retrial, as the judge who overthrew the $1.3 billion said the jury didn't have enough evidence to grant Oracle such hypothetical licenses.

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