Judge Reduces Oracle’s $1.3 Billion Award by 80 Percent

SAN FRANCISCO (CN) - Oracle USA was not entitled to a $1.3 billion jury award for damages from a German software company, the largest award ever in a copyright case, a federal judge ruled. The judge told Oracle to accept $272 million or she will grant a new trial for damages.

Oracle sued SAP AG in 2007, claiming its American unit made thousands of illegal downloads and copies of Oracle software to duck licensing fees and steal customers. SAP sought a new trial after a jury in November 2010 found the company guilty of stealing Oracle's copyrighted data. The $1.3 billion "hypothetical license" damages award was the largest ever in a copyright case.

Before the 11-day trial, SAP had admitted to liability on all claims that had not been dismissed; the jury had to decide only the damages.

SAP claimed that Oracle was not entitled to actual damages, and that the award was "unduly speculative" and "grossly excessive."

Alternatively, SAP asked the court to reduce the damages from $1.3 billion to no more than $408.7 million, or to grant a new trial.

SAP said Oracle's attorney "encouraged the jury to speculate" on the amount of damages.

"Rather than offering objective evidence to assist the jury in determining a fair market value for the license that even Oracle admitted its expert could not quantify, Oracle's counsel invited the jury in his closing argument to engage in guesswork and simply pick a number between $1.66 billion and $3 billion," U.S. District Judge Phyllis Hamilton wrote.

Hamilton said that SAP's motion for a new trial must be granted.

"(T)o establish its entitlement to recover hypothetical license damages, Oracle was required to show that, but for infringement, the parties would have agreed to license the use of the copyrighted works at issue," Hamilton wrote.

"However, Oracle offered no evidence of the type on which plaintiffs ordinarily rely to prove that they would have entered into such a license."

Oracle also was required to prove that it actually lost licensing fees as a result of SAP's infringement, which it did not prove at trial.

"Rather than providing evidence of SAP's actual use of the copyrighted works, and objectively verifiable number of customers lost as a result, Oracle presented evidence of the purported value of the intellectual property as a whole, elicited self-serving testimony from its executives regarding the price they claim they would have demanded in an admittedly fictional negotiation, and proffered the speculative opinion of its damages expert, which was based on little more than guesses about the parties' expectations," Hamilton wrote.

She found that based on the court record, $272 million was the maximum damages based on lost profits and profits made by SAP's infringement.

If Oracle does not accept those reduced damages, the court will order a new trial to determine the actual amount.

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