European software giant SAP has been ordered by a Californian court to pay $1.3bn in damages to its US rival Oracle.
The US District Court in Oakland, California, found that TomorrowNow had knowingly infringed Oracle’s intellectual property. Oracle, the second-biggest maker of business software, sued SAP in 2007 claiming its US-based unit made hundreds of thousands of illegal downloads and several thousand copies of Oracle’s software to avoid paying licensing fees and steal customers. SAP accepted that it was liable for the infringement by TomorrowNow, which it acquired in 2005 and closed in 2008.
The award far exceeds SAP’s estimate of the compensation owed Oracle, but fell short of the Oracle demands. It sought at least $1.65 billion in damages, while SAP sought to limit damages to $40 million.
Theo Savvides & Clare Robinson, IP partners in Osborne Clarke’s technology practice commented:
‘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 & 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 fuelled the high payout, with losses stacking up on a year on year basis and also providing SAP with the opportunity to “poach” customers from Oracle’s platform to SAP’s platform on a long term basis.
We are 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 & support of a piece of software as there is in its initial installation.’
The case reference is Oracle Corp. v. SAP AG, 07-01658, U.S. District Court, Northern District of California (Oakland).
