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Score: SAP – 0, Oracle – 1.3 Billion

By Andrea Ruth Grace Annechino

“Whatever money is, it's just a method of keeping score now. I mean, I certainly don't need more money.”
– Larry Ellison, CEO of Oracle Corporation

Larry Ellison may not need more money, but more he shall get - - loads more. By awarding Ellison’s Oracle Corporation $1.3 billion in damages from SAP, a federal jury set a new record for copyright infringement cases. The Oracle award easily takes the top spot, beating out the second by a factor of ten - - and the intellectual property in that case involved songs by The Material Girl, The King *and* The Godfather of Soul.

After SAP admitted liability, the only open question was how much it would pay for it. The jury was instructed to award Oracle actual damages in either the amount of the fair market value for the rights infringed or the amount of profits Oracle lost as a result of SAP’s swipe. Oracle fought for the former, claiming damages of up to $3 billion. SAP lobbied for the latter, aiming for $40 million, but the jury would have none of it - - according to the foreman, no jury members considered anything less than $500 million. Another juror explained: “It was the principle of the whole thing. If you take something from someone and use it, you have to pay.”

The view from SAP’s seat is bleak. The billion-topping award dwarfs the $160 million the company set aside for this litigation and constitutes one-third of their cash holding. Probably worse than the financial hit, though, is the potential impact of the reputation stain. SAP is now officially The Bad Guy, as well as the subject of a Department of Justice investigation that could raise the specter of criminal charges. This could make life rather difficult for its sales force when seeking new business or renewing existing contracts. The only glint of a PR bright spot for SAP is the chance that Oracle’s sharp tactics will reap a bit of sympathy for SAP. As for SAP’s legal options, the appeal process is available and the award may be reduced, although probably not by much.

One way or another, Mr. Ellison will be getting more.

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This page contains a single entry from the blog posted on November 25, 2010 8:43 AM.

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