Oracle Corp. v. SAP AG

Oracle Corp v. SAP AG, No. 4:07-cv-01658, was a United States District Court for the Northern District of California case in which Oracle sued SAP, alleging that SAP had engaged in copyright infringement by downloading thousands of copyrighted documents and programs from Oracle's Customer Connection website. SAP admitted that its subsidiary TomorrowNow had infringed Oracle's copyrights and a jury awarded Oracle record-high damages in the amount of $1.3 billion. Judge Phyllis Hamilton later vacated the jury's verdict, which was based on the calculation of a hypothetical license, and granted SAP's motion for a new trial dependent on Oracle rejecting a remittitur of $272 million. In November 2014, an appeals court ruled for $356.7 million in damages, a decision which was accepted by both parties.[1]

Background

TomorrowNow was a company based in Bryan, Texas, which specialized in offering third-party technical service and support for enterprise software systems, including systems from PeopleSoft and JD Edwards. TomorrowNow was acquired by SAP AG in 2005 and became a wholly owned subsidiary of SAP.[2]

Court ruling

On November 23, 2010, the jury awarded Oracle damages in the amount of $1.3 billion.[12] This was the highest amount of damages ever awarded in a copyright infringement case.[13] On July 13, 2011, SAP motioned for seeking judgment as a matter of law that actual damages should not be based on hypothetical licenses, and for a new trial for the amount of damages.[14] On September 1, 2011, U.S. District Judge Phyllis Hamilton granted the judgment as a matter of law on the hypothetical license damages, and vacated the $1.3 billion award amount. In her ruling Judge Hamilton stated:

"Oracle's suggestion – that upon proof of infringement, copyright plaintiffs are automatically entitled to seek 'hypothetical' license damages because they are presumed to have suffered harm in the form of lost license fees – has no support in the law.'"

SAP's motion for a new trial was granted, conditioned on Oracle rejecting a remittitur of $272 million, the "maximum amount of lost profits and infringer's profits sustainable by the proof."[15]

Judge Hamilton further stated:

"Determining a hypothetical license price requires an 'objective, not a subjective' analysis, and '[e]xcessively speculative' claims must be rejected.'[15]"

Hypothetical licenses

In of the Copyright Act, it states that "the copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement". Since the actual damages must be the result of the infringement, the burden is on the copyright holder to prove the connection between the monetary amount and the infringement.[15]

Oracle was required to prove that the two parties would have agreed on the hypothetical license and license fees, but Oracle had no such evidence. Oracle did not provide facts on previous licensing history or practices. Oracle also failed to provide evidence on benchmark licenses, such as negotiated licenses for comparable works. There was no evidence that Oracle would have licensed to SAP or if the two parties would have ever agreed to any license, so the hypothetical lost license fees could not be the award damages. Hypothetical lost license fees can be used to calculate actual damages, but they do not imply automatic entitlement of damages. Actual proof is required for objective, non-speculative lost license price.[15]

Remittitur amount

During the jury trial, Paul Meyer, Oracle's damages expert, provided analysis that the hypothetical lost license fees were in the range from $881 million to $2.69 billion, and thus the jury verdict was for $1.3 billion. However, the "verdict grossly exceeded the actual harm to Oracle in the form of lost customers,"

court	United States District Court for the Northern District of California
imagesize	150
full name	Oracle Corp., et al v. SAP AG
date decided	September 1, 2011
docket	4:07-cv-01658
judge	Phyllis J. Hamilton Magistrate Judge Edward M. Chen
keywords	Copyright infringement

Oracle Corp. v. SAP AG

Background

Court ruling

Hypothetical licenses

Remittitur amount

See also

External links

References