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Jury orders HPE to pay $30 million to Oracle for copyright infringement

HP directly infringed on copyrights of Oracle’s software Solaris, found an eight-person jury in a California federal court.

OAKLAND, Calif. (CN) — A federal court jury ruled in favor of Oracle on Tuesday in a lawsuit alleging Hewlett Packard Enterprise interfered with the tech corporation’s copyrighted software and contracts.

The verdict comes after weeks of deliberation between the companies, following a yearslong fight over HP Enterprise’s alleged infringement of Oracle’s software. A jury of eight told the court they found that HP Enterprise directly and vicariously infringed on Oracle’s copyrighted material and intentionally interfered with Oracle’s contracts and prospective economic advantage.

The jury also demanded that HP Enterprise pay Oracle for damages totaling $30 million for infringement with a $24 million claim proposed for interference, which were significantly lower than Oracle’s requested award of $128 million.

The trial has been underway in Oakland before U.S. Northern District Judge Jon. S Tigar since May 24, after the U.S. Supreme Court refused to touch a $3 billion verdict against Oracle in HP Enterprise’s favor in another lawsuit. Oracle first sued HP Enterprise in 2016, claiming the company sold patches for Oracle’s server security software, Solaris, to customers who did not have Oracle support contracts.

Oracle’s counsel alleged that HP Enterprise knew about its business partner Terix offering customers unauthorized Solaris patches, and about Terix’s court loss to Oracle for these violations, which cost it nearly $58 million. Oracle attorney Christoper Yates also argued that HP Enterprise engaged in direct infringement of Oracle’s copyrights by installing Solaris updates on customers’ servers and by doing so encroached on Oracle’s business with customers.

HP Enterprise won a judgment in this case in 2019, but the Ninth Circuit Court of Appeals reversed the district court’s summary judgment ruling in August 2020, paving the way for a jury trial. Judge Tigar sided with Oracle in June last year by denying HP Enterprise’s motion for summary judgment and granting Oracle’s.

The case explored grounds for copyright infringement, intentional interference with contracts and unfair competition, with Oracle’s side arguing the Ninth Circuit reaffirmed the broad protections which copyrighted software and all copies enjoy. Proceedings were often contentious on the ground of evidence submitted, with heavy focus on whether patches were placed on servers that had a support contract and why, and whether customers knew if they could be violating Oracle’s service agreement. HP Enterprise’s attorney posited that Oracle did not have evidence of copyright infringement committed by the defendant.

Oracle’s senior vice president of global business practices Ellen Eder was a crucial witness for defining if customers could know if their servers were being patched legitimately. Eder said if a customer downloaded a patch and applied it to an unsupported server, or just saved it to a drive, they did violate Oracle’s copyright policy.

However, she added if customers did not know which server a patch would be applied to, “That’s not a violation at the time of download” because Oracle might know a customer is downloading a patch in violation of copyright and support policies.

The trial saw many objections from both parties about evidence submitted. On June 6, when Oracle sent new evidence of more than 250 patches to replace old files submitted as evidence years ago, HP said there was not enough time to properly review and confirm all new files as legitimate.

Tigar did not accept HP Enterprise’s objection and allowed the evidence to be used, although he asked for more clarity about all evidence submitted.

“I am sympathetic to Oracle’s position, as I have indicated on the record before, but I was not able to write something that I felt was a fair, non-confusing and objective summary of the pre-trial discovery activity,” he said in court. “We have enough issues at play in this trial without my increasingly unnecessary opportunities for error.”

HP also attempted on June 9 to prevent Oracle's rebuttal of the defense’s statements on Monday, arguing that the other company “failed to disclose a witness as required under the parties’ stipulation and because Oracle agreed to send the jury home, despite having enough time left in the day to start and complete its rebuttal case.”

In their closing presentation, Oracle’s legal counsel Latham & Watkins argued that because Terix officials pleaded guilty to felonies for selling Oracle’s copyrighted work, HP Enterprise knew about those violations involving customers the two companies shared. They said HP Enterprise recommended customers to Terix for acquiring patches and knew Terix’s methods were potentially illegal, using statements from HP’s John Gunther and Richard Simms that the company was aware that Oracle required customers to purchase a support contract for each server needing Solaris updates.

They asked for about $128 million in damages on the grounds that HP Enterprise hurt Oracle’s relationships and prospects for support contracts with customers.

HP Enterprise’s defense counsel Jeffrey Thomas, of Gibson, Dunn & Crutcher LLP, filed a motion Monday calling for a judgement against Oracle, on the grounds that the company had no evidence HP Enterprise delivered patches on unsupported servers or “knew or should have known it infringed" on Oracle's copyrights. He wrote that Oracle failed to prove Terix committed direct infringement and provide evidence that HP had “both a legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so.”

Thomas also argued that “Oracle caused widespread confusion after it acquired Sun and locked down access to patches, with many customers independently concluding they were entitled under their license agreements with Oracle.”

“HP Enterprise could not have known or had reason to know its conduct infringed Oracle’s copyrights before then,” he added.

After the verdict, Oracle’s attorneys said they were “thrilled” the jury ruled affirming “that for years, Hewlett Packard Enterprise knowingly engaged in unlawful activity with a criminal enterprise — Terix — to directly interfere with and damage Oracle through the repeated theft of its critical copyrighted Solaris patches and firmware updates.”

Oracle’s counsel said the jury’s decision helps reinforce copyright protections “to protect companies worldwide from the rampant theft or intellectual property.”

Thomas and other legal counsel for HP Enterprise were not available to comment on the jury verdict Tuesday.

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