Case Update: Oracle v SAP- Damages For Copyright Infringement

Author:Mr John O'Connor
Profession:Matheson Ormsby Prentice

This article previously appeared in Technology and Commercial Contracts Newsletter, November 2011.

A US District Court Judge has overturned the highest ever award for copyright infringement in US history. The $1.3 billion jury award in favour of Oracle against its competitor SAP was described by Judge Phyllis Hamilton as "grossly excessive" and as having no basis in law. The long-running legal battle between the two software giants began in 2007, when Oracle sued SAP for copyright infringement. It alleged that a subsidiary of SAP, TomorrowNow, had illegally accessed, downloaded and used Oracle's proprietary software code. Prior to the trial in November 2010, SAP accepted all liability, and so the only issue to be tried was the appropriate measure of damages. The $1.3 billion jury award was based on a "hypothetical licence fee" that SAP would have paid to Oracle had it lawfully licensed its software. The judge however rejected this measure of damages, as the evidence showed that Oracle "had never given any entity a licence to copy [its] application software...thus [it] could not reasonably claim that SAP's infringement diminished the licensing value of the infringed works." Oracle's own evidence at trial confirmed that it would never have granted such a licence to a competitor to allow it use its software; any such licence would have been "unique" and "unprecedented." Any claim for damages based on a lost licence fee would have to be supported by evidence of similar licensing practices in the...

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