Judge Tosses Oracle’s $1.3B SAP Award

German-based business software company SAP AG won a stunning reversal of the $1.3 billion jury verdict that Oracle had received in a November 2010 copyright-infringement trial.

U.S. District Judge Phyllis Hamilton, in Oakland, Calif., granted SAP’s motion to throw out the award, finding it “grossly excessive.” She ruled that SAP would deserve a new trial on damages, were Oracle to reject her decision to lower the award to $272 million.

SAP had admitted liability for the actions taken by its former subsidiary, TomorrowNow. The unit had provided lower-cost support for Oracle applications. But SAP had sharply criticized the size of the jury award.

In last year’s suit, software giant Oracle, based in Redwood City, Calif., had contended that SAP’s TomorrowNow software-maintenance unit made hundreds of thousands of illegal downloads and several thousand copies of Oracle’s software to avoid paying licensing fees and to steal customers. The $3.1-billion award was the largest ever for copyright infringement.

Oracle maintained at the trial that its damages should represent the value of a hypothetical license that the unit would have had to pay for the software it infringed.

Such a license would never have existed between two fierce competitors, so the damage award should have been based on profits Oracle lost and SAP gained as a result of the infringement, Walldorf, Germany-based SAP said in court filings. That number is from $28 million to $407.8 million, SAP said.

The case is Oracle Corp. v SAP AG, 07-01658, U.S. District Court, Northern District of California.