SAP ordered to pay Oracle $1.3bn in damages

The German software maker must hand over more than a billion dollars in damages to compensate its rival for TomorrowNow's unauthorised use of Oracle software and documents

SAP has been ordered to pay Oracle over a billion dollars in damages for copyright infringement by its former subsidiary TomorrowNow.

The case, filed in 2007 and concluded on Tuesday, centred on the unauthorised downloading of proprietary Oracle software by TomorrowNow, a third-party supplier of support to PeopleSoft customers.

At the end of the three-week trial in Oakland district court, California, the jury found in favour of Oracle. On Tuesday, Judge Phyllis Hamilton ordered SAP to pay $1.3bn (£823.5m) in damages — considerably more than the "tens of millions" the German business software maker admitted it was liable for prior to the start of the trial.

Leo Apotheker image

Oracle tried to subpoena former SAP boss Leo Apotheker, now head of HP. Photo credit: Dan Farber/CNET News

"For more than three years, SAP stole thousands of copies of Oracle software and then resold that software and related services to Oracle's own customers. Right before the trial began, SAP admitted its guilt and liability; then the trial made it clear that SAP's most senior executives were aware of the illegal activity from the very beginning," Oracle president Safra Catz said in a statement.

Oracle tried to subpoena former SAP chief Leo Apotheker, now chief executive officer of HP, to give testimony in the trial. However, Apotheker was on a global tour including Germany, Singapore and Japan, meaning that the subpoena was never successfully served in California. During the hunt, Oracle hired private investigators to track Apotheker down, according to Reuters.

SAP responded to the court damages order by expressing disappointment and vowing to "pursue all available options", including post-trial motions and appeals, if necessary.

"This will unfortunately be a prolonged process, and we continue to hope that the matter can be resolved appropriately without more years of litigation. The mark of a leading company is the way it handles its mistakes," SAP said in a statement.

On 15 November, SAP co-chief Bill McDermott formally apologised for the wrongdoings of TomorrowNow, which SAP purchased in 2005 and shut down in 2008, after the case was launched.

According to intellectual property experts Theo Savvides and Clare Robinson of Osborne Clark, the surprisingly large size of the payout reflects that the impact of TomorrowNow's infringement went beyond just the illegal appropriation of Oracle's software and paperwork.

"The stand-out level of damages in this case is down to the economics of software. There is value in the software, but equally in the ongoing maintenance and support of that software. In this case, SAP's purchase of a company that utilised Oracle software in order to provide ongoing support and maintenance of that software," the lawyers said in a statement.

Savvides and Robinson said that UK companies should brace for similar damage settlements being awarded if infringement or theft can be demonstrated.

"We're seeing increasing levels of similar software copyright disputes in the UK. Although payouts in the US are traditionally higher, there is no reason for the UK courts to not award similar damages if the loss can be proven. The message for technology companies is clear. Tread with extreme caution — there is as much, if not more, value in the ongoing maintenance and support of a piece of software as there is in its initial installation," they added.