Oracle Changes Course in SAP Case, Opts for Appeal Over Retrial

September 10, 2012 Alex Woodie

Oracle is moving ahead with an appeal of a district court’s 2011 decision to reduce paid damages by $1 billion in its patent infringement and corporate theft case against SAP and its defunct TomorrowNow third-party ERP maintenance operation. As part of that legal maneuvering, Oracle entered into a $306 million settlement agreement with SAP in early August, and then promptly appealed it.

It would seem strange, at first glance, to plan to appeal a settlement before actually signing the settlement agreement. But nothing moves linearly in the legal world, and this little case of “yes I do, no I don’t” was apparently was the quickest, surest, and above all cheapest way for Oracle to get the suit into the hands of the Ninth Circuit Court of Appeals in San Francisco, California.

Larry Ellison and company are still sore at the U.S. District Court for the Northern District of California, where Judge Phyllis Hamilton a year ago threw out the $1.3 billion in damages that a jury had awarded to Oracle back in November 2010, calling it “grossly excessive” (which is not a compliment to Oracle) and lowering the damage number that SAP should pay Oracle to $272 million.

In February, Oracle rejected the $272 million and soon thereafter asked for a new trial. It had originally argued that SAP and TomorrowNow had caused upward of $3 billion in damages by illegally downloading support data from an Oracle website (a claim that it later lowered to about $2 billion). SAP, which years ago admitted that it stole data, argued the damages are more like $28 million to $41 million. Exactly how the damages should be computed is what this case is now all about.

Instead of paying its lawyers to make its case all over again, Oracle has wisely ditched its call for a new trial, and instead is focusing on an appeal of something very specific: Judge Hamilton’s reduction in damages. Both Oracle and SAP stipulated to the move, which will save both firms legal fees and speed up the suit’s path toward a hearing in front the appellate court.

So if $272 million is a non-starter, and $306 million opens the door, what’s the magic number for Oracle? (Or, if we’re playing Legal Jeopardy, maybe the proper answer is, “What’s the down payment for the Hawaiian island of Lanai, Alex?”)

Nobody outside of Redwood Shores knows for sure. For now, $426 million will do. That is how much SAP has paid to Oracle, and it includes the $306 million payment SAP made to Oracle this August, as well as the $120 million in attorney’s fees that SAP paid to Oracle just before the jury trial started in 2010.

Undoubtedly, attorneys for both sides are still playing “what’s my number?” But if no middle ground is found, they can always leave it to the appeals court, which both companies seem to want. Perhaps the two sides are tiring of the case, which will enter its seventh year next spring.