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Jury tells SAP to pay Oracle $1.3B

SAP AG, the German software giant with its Americas headquarters in Newtown Square, must pay $1.3 billion to Oracle Corp. for copyright infringement by a now-defunct software maintenance unit, a federal jury in California decided Tuesday.

SAP AG, the German software giant with its Americas headquarters in Newtown Square, must pay $1.3 billion to Oracle Corp. for copyright infringement by a now-defunct software maintenance unit, a federal jury in California decided Tuesday.

The verdict is the largest jury award of 2010, according to Bloomberg data. It is the largest ever for copyright infringement and the 23d-largest of all time for any jury award, according to Bloomberg data.

The jury awarded the damages after an 11-day trial in Oakland, Calif. Deliberations lasted less than a full day.

SAP, with 53,000 employees at the end of 2009, is the world's largest maker of business application software. Oracle, the second-biggest, sued Walldorf, Germany-based SAP in 2007 claiming the U.S.-based unit made hundreds of thousands of illegal downloads and several thousand copies of Oracle's software to avoid paying licensing fees and steal customers.

"We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary," Bill Wohl, SAP spokesman, said outside the courtroom. "This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation."

Geoffrey Howard, an attorney for Redwood City, Calif.-based Oracle, said before the verdict that the breadth of the illegal downloading was "unprecedented" in the software industry.

"The underlying theme of the case came down to damages," David Boies, another Oracle attorney, said after the verdict. "The facts of damages proven by the contemporaneous record of both companies was quite clear."

SAP didn't contest that it was liable for the infringement by its TomorrowNow unit, which it acquired in 2005 and closed in 2008. SAP lawyers told the jury at trial that Oracle's estimate that it was owed at least $1.7 billion for the infringement was grossly exaggerated. SAP said it owed about $40 million.

The jury, in U.S. District Court in the Northern District of California, sided with Oracle's argument that the value of the stolen intellectual property was vast, and that enforcing copyrights is vital to maintaining a healthy technology industry and funding innovation.

The thrust of SAP's defense was that it should only pay for money it made from the 358 customers it gained with the stolen data.

The largest jury verdict in a copyright-infringement case previously was $136 million awarded by a Los Angeles jury in 2002 in a Recording Industry Association of America lawsuit against Media Group Inc. for copying and distributing 1,500 songs by artists including Elvis Presley, Madonna, and James Brown, according to Bloomberg data.

The verdict came after markets closed, and SAP American depositary receipts fell in extended trading after closing at $48.69, down 71 cents, or 1.4 percent, on the New York Stock Exchange. Each ADR represents one ordinary share. Oracle gained in extended trading, after closing at $27.19, down 86 cents, or 3.1 percent on the Nasdaq market.

Both companies used the trial as a dramatic stage for acting out their long-standing, bitter rivalry. Oracle and SAP are two of the world's biggest suppliers of commercial software, which businesses use to manage their supply chains, payroll, and other critical operations.

Oracle chief executive officer Larry Ellison also seized the opportunity to publicly bait another competitor, Hewlett-Packard, about its own chief executive's role in the case as a former top official at SAP.

HP's Leo Apotheker never testified in the trial, though Ellison issued a series of news releases taunting him and HP for avoiding a summons.

But jurors heard from a parade of other top executives and financial experts: Ellison and several lieutenants described the copyright violations as a major threat to their multibillion-dollar business - and to a software industry that values intellectual property as its most important commodity. SAP co-CEO Bill McDermott apologized in court for the wrongdoing, while insisting the damage was relatively small.