Oracle SAP Lawsuit Verdict Overturned: Judge Rules Against $1.3 Billion Penalty

SAN FRANCISCO — A federal judge on Thursday threw out a "grossly excessive" $1.3 billion verdict that Oracle won against SAP in a landmark intellectual property case, possibly setting the stage for another circus-like showdown between the two technology companies.

The decision was a surprising twist in a 4-year-old case that's been filled with them. There will be a new trial if Oracle Corp. formally rejects a lower $272 million award, which it has indicated it will do.

While Thursday's ruling was a victory for SAP AG, a German maker of business software, it's not necessarily as much of a setback for Oracle, which stands to humiliate SAP again even if it can't secure the higher award.

If the second trial is anything like last year's, expect more high-wire theatrics from Oracle's outspoken CEO, Larry Ellison, who has pilloried SAP for its amateurish theft of software and customer-support documents from password-protected Oracle websites. SAP has admitted that a now-shuttered subsidiary, TomorrowNow, committed the offense.

Oracle is the leading maker of database software, which helps companies organize their information. Its aggressive expansion into business applications has forced Oracle into a faceoff with SAP, the leader in that space.

Oracle argued that the stolen information helped SAP steal customers by offering similar services at cheaper prices. SAP argued that TomorrowNow wasn't that great at stealing customers with the information anyway and should have to pay only $40 million for accounts that SAP did manage to lure away.

The jury ultimately awarded Oracle more than 30 times that amount after a three-week trial last November. It was one of the largest verdicts in a case involving software-related theft and showed how severely jurors were willing to punish corporations for intellectual-property theft from rivals.

Although the amount was less than what Oracle asked for, it was far more than what SAP had budgeted. SAP had set aside $160 million to pay anticipated damages and had already spent $120 million of that in payments to Oracle's lawyers. The punishment amounted to more than half of SAP's total profit in the prior year.

Thursday's decision by Judge Phyllis Hamilton in in U.S. District Court in Oakland, Calif., is a major victory for SAP. She said the size of the penalty was "contrary to the weight of the evidence, and was grossly excessive."

Oracle can now choose whether to accept the lower award of $272 million or proceed with a new trial before a different jury. The $272 million amount was based on an earlier estimate from an Oracle expert on what profit Oracle lost and SAP gained.

Whatever happens, Oracle has already scored repeated public relations wins because of the case.

The case gave Ellison a platform to taunt another foe, former SAP CEO Leo Apotheker, who is now CEO of Hewlett-Packard Co. Oracle is increasingly battling HP in the market for computer servers, straining a decades-long technology partnership.

Oracle, which is based in Redwood Shores, Calif., tried to summon Apotheker to testify at the trial, and the company pushed the image of a "Where's Waldo?"-type manhunt involving private investigators and a vanished executive. Apotheker wasn't spotted within the jurisdiction of the Oakland court in time, and he didn't appear.

HP, based in Palo Alto, continually skirted questions about Apotheker's whereabouts at the time, presumably because there was little to be gained in allowing him to testify. HP accused Oracle of harassing its new executive and said Oracle had ample time to question Apotheker in an earlier deposition.

SAP said it was very gratified with Thursday's decision.

"We believed the jury's verdict was wrong and are pleased at the significant reduction in damages," the company said in a statement. "We hope the court's action will help drive this matter to a final resolution."

Oracle said it plans to fight for the full amount it was awarded.

"There was voluminous evidence regarding the massive scope of the theft, clear involvement of SAP management in the misconduct and the tremendous value of the (intellectual property) stolen," Oracle said. "We believe the jury got it right and we intend to pursue the full measure of damages that we believe are owed to Oracle."

Oracle's stock fell 23 cents, or 0.8 percent, to close Thursday at $27.84. SAP's stock fell 75 cents, or 1.4 percent, to $53.76.

Comments

[Mustangallee]

01:06 AM on 09/03/2011

So really, we don't need jurys!

[arnprince]

12:09 AM on 09/03/2011

Once upon a time in this world, "intellect" was what kept you alive longer than the rest of the people. THAT was the reward. To hell with "intellectual property rights!" The lightning rod - a very simple invention that changed the world from one of "holy crap, here comes another thunder storm, I hope to hell the barn makes it" to one in which all grounded structures are safe from Zeus' bolts - all COURTESY of one Mr. Benjamin Franklin, who after inventing the lightning rod, and having it patented, gave it as a FREE gift to the world. His vision that something so world changing could, and should not be used for profit, meets the highest standards - moral, economic, ethical, or otherwise. Oh for a world in which those with great ideas believed in themselves enough to not require monetary remuneration to prove their worth! Of course, this would also require a world in which those who benefit from great ideas lived with gratitude for them.

[natal plum]

09:16 PM on 09/02/2011

System works like it is supposed to. Absurdly excessive verdict get tossed. Like the McDonald's lady that was awarded a zillion dollars for the cup in her crotch - it was reduced to about $200,000.00 by the judge - AS IT DAMN WELL SHOULD HAVE BEEN.

[steves1709]

11:01 PM on 09/02/2011

Agreed. Even an Oracle exec / witness said the reduced award was what Oracle lost and SAP gained. Sounds fair. Besides, SAP had to pay Oracle's lawyer fees. Well said - fanned.

[2tru4u2c]

07:04 AM on 09/03/2011

What do you mean it was reduced by $200k-- It was reduced by over $1billion. That's a reduction of over 78%. When will we learn that activist judges only damage the greatest legal system in the world.

[natal plum]

07:23 AM on 09/03/2011

Read my post. I was talking about a different case - the McDonald's case where the old woman at the drive through was trying to drink coffee and she spilled it on her lap. She sued claiming McDonalds coffee was too hot. The idiotic jury awarded an absurd amout something in the millions - she only had superficial burns. The well reasoned and learned judge reduced the verdict as was withing his power to do.

Same as this case. In the SAP case it wasn't an "activist judge" whatever you seem to think that term connotes. It was a well respected, learned jurist who did exactly what makes this the greatest legal system in the world. He property reduced the excessive verdict. If you had ANY familiarity with the federal legal system you'd know that federal judges are granted broad discretionary power to reduce or throw out excessive verdicts granted by (idiotic activist) juries. System worked in this case exactly as it should have.

[mayabelle1107]

08:39 PM on 09/02/2011

Is this the same judge that ruled trillions of dollars into the hands of fat hollywood morons like rob reiner in defence of their anti-smoking rituals...

[wschwanki]

06:24 PM on 09/02/2011

They are all greedy S.O.B.'s and they deserve each other.

[charpist5]

05:07 PM on 09/02/2011

As always,the big winners are the lawyers.

[cseper]

12:08 PM on 09/02/2011

Why have a costly trial when a judge can overturb the verdict? It doesn't make any sense.

[tjdwill01]

01:41 PM on 09/02/2011

It's a common occurrence for liberal justices to "rule from the bench" carrying out their liberal agenda from the bench.

[hrrpa47]

06:38 PM on 09/02/2011

It is more profitable for law firms for judges to do so. Judges are lawyers and as such they may need a job when they retire or their terms run out. It pays for judges to be beneficial to law firms.

[tumbler snapper]

07:02 PM on 09/02/2011

Nonsense. Federal judges have a lifetime appointment.

[ManwithaParachute]

07:51 AM on 09/02/2011

Burn SAP to the ground, PLEASE!

Since when is corporate espionage so little of a concern? SAP expects the business to modify itself to fit their software....because SAP is all stolen intellectual property and they do not know how to make it better unless they steal some more.

[jeffhome8]

05:20 AM on 09/02/2011

tying up judges and resourses bring theives and killers and terrorists into court let the already rich wait for their turn in court

[Don Ludahl]

03:57 AM on 09/02/2011

Two greedy dogs fighting for their god money.

[mdog002]

02:25 AM on 09/02/2011

Whoops!! "Ok, jury what is you verdict?"..."ah, your honor $1.3 Billion"...."Ok jurors, you are excused and thank you for your service"..."ah, the court vacates the jury's decision and award"....Wow, where was this judge in the Casey Anthony trial...."Ok, jury have you reached a verdict""..."yes you honor, NOT GUILTY of murdering and throwing her child away in a Hefty bag in a swamp"..."Ok, jurors, you are excused and thank you for your service"...."ah, the court vacates the jury's verdict and sentences the acused to suck gas in the gas chamber until dead"....Hmmmm, it is all starting to make sense NOW

[natal plum]

09:48 AM on 09/02/2011

Security. One of the inmates broke into the counselor's office and is playing on the computer again.

[keglera22]

02:51 AM on 09/03/2011

You don't know the difference between criminal and civil law...pick up a law book and learn something before you shoot your teeny bopper mouth.

[mikemiloserdoff]

02:25 AM on 09/02/2011

Anything more than $100 given to a Larry Ellison organization is excessive !
The pot is calling the kettle black !
People who live in glass houses don't throw stones !

[mpcham4011]

01:23 AM on 09/02/2011

Wow $1.3 billion. I think that is more than Wall Street, was told to pay for crashing the economy. And the $272 million dollars is probably more than Rupert Murdoch & Co. will have to pay for ransacking through everybodies cell phone records.

[mdog002]

02:26 AM on 09/02/2011

Rupert didn't do anything

[Let ItFly10]

12:49 AM on 09/02/2011

WHAT DID THIS JUDGE get in return?

[mdog002]

02:27 AM on 09/02/2011

27 virgins??

[JAVA VB]

12:18 AM on 09/02/2011

Today it is not big business that we have to fear, it is big government.

[johntoinvent]

05:51 AM on 09/02/2011

Really, check out how much pollution business creates.

[fanetiks]

10:07 AM on 09/02/2011

Big banking crashed the economy.