By Nicole Rizzo Smith
In the world of technology
titans, SAP has landed itself on the naughty list this year. In a
copyright infringement action brought by Oracle against rival SAP for
stealing software and customers, a federal jury last month awarded
Oracle $1.3 billion, the largest copyright infringement award ever.
TomorrowNow, which provides technical support for software used by
large corporate data centers, admitted to copying a large library of
Oracle's software and customer manuals in an effort to boost its sales
to Oracle customers.
Oracle alleged that SAP
infringed 120 of its copyrights, and SAP admitted liability. Thus, the
only question before the jury was by what measure and how much should
Oracle be compensated.
The damages award could
have been measured by Oracle's lost profits from the defection of
customers to SAP, or by the fair market value of the license that SAP
would have had to pay to Oracle for using the software. The Northern
California jury took the latter course, and heard the parties' widely
divergent views of the value of such a license.
Oracle claimed a license
would have been worth as much as $3 billion over the lifetime of the
software. SAP argued that the value would have been between $28 to $40
million because only a few hundred Oracle customers actually were
persuaded to use the software.
The jury's verdict
ultimately came closer to Oracle's estimate, based on the scope,
duration and timing of the infringement. While it has apologized for
the infringement, SAP says it plans to appeal the award.
In addition to
dollars and cents, Oracle received a perhaps greater benefit from its
high-profile award: public shame of its top rival. Emails shown in
court and testimony from SAP's CEO made it clear that SAP executives
were aware of the infringement, precluding SAP from even contesting
Oracle reaped the
further benefit of embarrassing another rival, Hewlett-Packard. HP was
not involved in the case, but it had recently hired SAP's former chief
executive who oversaw the copyright infringement plan during his
tenure at SAP. Fortunately for HP, the chief executive did not testify
at trial because his travel schedule enabled him to elude service with
In the end, the
publicity for the extraordinary jury award represents a notable victory
for Oracle's image, and a lump of coal for SAP.
Nicole Rizzo Smith is a litigation associate and concentrates on complex
intellectual property and business litigation. Nicole's litigation
experience includes enforcing patents in the telecommunications field
and defending a leading pharmaceutical company against allegations of
patent infringement. Nicole also has experience in all aspects of
trademark prosecution and enforcement, and regularly provides
trademark advice to major pharmaceutical companies, colleges and
universities, technology companies, governmental entities, and other
clients in a wide variety of industries. Previously, Nicole was a
litigation associate at a major Boston law firm, where her practice
included complex business and securities litigation. Prior to practicing
law, Nicole worked as a political consultant and she is still
actively involved in politics.