German software giant SAP has agreed to pay Oracle $359 million to settle a longstanding copyright battle, according to court documents.
"We are thrilled about this landmark recovery and extremely gratified that our efforts to protect innovation and our shareholders' interests are duly rewarded," Oracle's general counsel Dorian Daley said in a statement. "This sends a strong message to those who would prefer to cheat than compete fairly and legally."
For its part, SAP said it was pleased that the courts "ultimately accepted SAP's arguments to limit Oracle's excessive damages claims and that Oracle has finally chosen to end this matter."
SAP Subsidiary's Unauthorized Downloads
The lawsuit stemmed from SAP's purchase of Texas-based TomorrowNow in 2005 for $10 million, which it then established as a subsidiary. Shortly before the TomorrowNow purchase Oracle had acquired PeopleSoft, a key competitor to SAP. TomorrowNow provided third-party support for Oracle and other products.
In 2007, Oracle sued SAP because of "unusually heavy download activity" for more than a year on Oracle's Customer Connection Web site. Using a password, Oracle customers with support contracts could download what the company described as "a wide variety of copyrighted, proprietary software programs and other support materials."
However, Oracle said it began to notice that many of the downloads came from SAP by users who didn't have support contracts. Oracle said SAP, through TomorrowNow, tried to support Oracle's programs at a reduced price by illegally downloading the applications and support materials for free.
Disagreement over Damages
After Oracle filed its lawsuit, SAP admitted that its employees were illegally downloading Oracle files. The sticking point, however, was that the companies could not agree on damages.
SAP had been seeking a fine of approximately $40 million, while Oracle was looking for $3 billion. Eventually, SAP accepted liability for TomorrowNow's actions, resulting in a trial on damages. A jury awarded Oracle $1.3 billion in 2010, which was ultimately overruled by U.S. District Judge Phyllis Hamilton. Saying the jury had overreached, the judge said Oracle could accept a smaller award of $272 million or opt for a new trial. An appeals court revised the damages figure to $356.7 million.
SAP's illegal downloads of Oracle files also led to criminal charges, but those claims will also be dropped because in 2011 SAP reached an agreement to pay just north of $20 million to settle the criminal case brought against its TomorrowNow subsidiary.
Under the settlement, Oracle will receive $356.7 million in damages and $2.5 million in post-judgment interest, according to a filing Thursday in the U.S. District Court for the Northern District of California, Oakland division. Additionally, the court said Oracle can keep the $120 million already paid to it by SAP toward lawyers' fees and other court costs.