On this chilly day before Thanksgiving, Oracle Corporation got a holiday present when a federal jury in Oakland awarded the company $1.3 billion in damages for its copyright infringement suit against German software giant SAP AG. The case focused on the intentional copying and use of Oracle’s software by TomorrowNow, a former division of SAP. TomorrowNow offered maintenance services and support software for customers of companies Oracle had acquired. Turns out in order to perform those services; TomorrowNow had downloaded, without Oracle’s permission, Oracle software – a clear and unambiguous copyright infringement.
Oracle sued, and before trial began, SAP admitted the copying and liability for infringement, which left only the amount of damages as the focus of the trial. Oracle sought $2.3 billion, SAP claimed the award should be limited to 40 million. So it appears the jury compromised and awarded damages in the middle of the range at issue.
Some commentators are concerned that this verdict, the largest in 2010 and, according to the San Francisco Chronicle story about the case, the 23rd largest verdict of all time, may have a chilling effect on companies seeking to develop new innovations in software, because of concern about being sued for infringement.
I’m dubious about that concern. This was, from all accounts, an egregious, indefensible case of blatant infringement. Companies that engage in this kind of conduct, when caught in the act, should indeed be concerned that they will be tagged with a big judgment against them. However, many jurisdictions allow for intermediate copying to occur as a company develops new products, provided the copied software is not used in any way in the product ultimately developed. Even in those jurisdictions that preclude intermediate copying, a fair use defense may still aid a defendant.
Given the nature of the conduct of SAP in this case, while the award sets a record, its importance as precedent is more likely to be limited.