Oracle and SAP Avoid a Retrial, Go Directly to Appeal, in the Other “Tech Trial of the Century”

by Lee Gesmer on September 4, 2012

Now that the patent trial of the century is on pause for a bit (Apple v. Samsung), it’s time to catch up on the other tech trial of the century, Oracle v. SAP.  Yes, it’s difficult to keep track of all these tech trials of the century.  I hope that 80 years from now the world remembers that we had the tech trials of the century back in 2010 and 2012.*

*Oh, I almost forgot the other (the third) tech trial of the century, the copyright/patent trial between Oracle and Google earlier this year.  There may even be other tech trials of the century I have forgotten that were tried back in the early years of the century. My memory for this type of thing cuts out after a few years.

Seriously, for those who may have forgotten, in 2010 Oracle won a $1.3 billion copyright infringement judgment against SAP, reportedly the largest copyright judgment ever.  There was much hullaballo over the size of this verdict, until the trial judge threw a wet towel over the case, ordering remittitur, reducing the judgment by over $1 billion, and giving Oracle the choice of accepting a paltry $272 million or retrying its case.  Oracle elected to retry the case, and the second trial was scheduled to begin in late August.

However, neither side really wanted to retry the case, and they figured out a way around. In early August Oracle and SAP entered into a stipulation that would allow the parties to avoid a retrial and permit Oracle to appeal the district court remittitur order.

The stipulation (which was accepted by the court, which was probably more eager to avoid another trial of the century than the parties) works like this:

  • The district court entered final judgment.  This opens the way for Oracle to appeal the court’s remittitur decision (and any other issues that are the proper subject of appeal) to the 9th Circuit. Procedurally, Oracle could not appeal until final judgment was entered.
  • Judgment was entered in favor of Oracle in the amount of $306 million.  However, Oracle may not enforce the judgment until all appeals are concluded.  The $306 million appears to be a negotiated amount, and probably reflects some past and future interest on the $272 million; however, we don’t know exactly where this number comes from.
  • This is a pretty good deal for Oracle, which has a floor and upside potential. If a second trial occurs (after remand from the 9th Circuit, for example), and Oracle’s verdict is less than $306 million, SAP will still have to pay $306 million.  That’s the floor.  If the 9th Circuit reinstates the $1.3 billion Oracle can recover that from SAP.  That’s the upside.
  • The judgment also includes the $120 million in attorney’s fees that Oracle has already been paid (in other words, it awards these retroactively, and acknowledges that they have been paid).

Why would SAP agree to this deal? Likely, it thinks its chances of obtaining a verdict below $300 million at a second trial are poor.  Add to this the costs of that trial (which could include additional attorney’s fees incurred by Oracle), and it’s not worth the risk and uncertainty. SAP is hoping the 9th Circuit will dispose of the case by upholding the trial court’s ruling that Oracle failed to prove damages based on a “hypothetical license fee,” leave the $306 million in place (Oracle’s lost profit damages), and that will be the end of it.

Of course, if the 9th Circuit remands for a retrial, watch out – we may be looking at another “trial of the century.”

Oracle/SAP Stipulation

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