NY Times
The dispute between the software giants Oracle and SAP, in one of the most closely watched court cases in Silicon Valley history, is not over whether SAP engaged in a copyright infringement scheme, but over how much damage was done to Oracle.
SAP has already admitted that it infringed on Oracle’s copyrights and has conceded liability. At issue in a jury trial that began on Tuesday in Federal District Court is how much money SAP will pay in damages. Oracle has argued for $2 billion, and SAP has countered that tens of millions of dollars would be enough. It has set aside $160 million to cover the cost.
For most people in the technology industry, though, the trial is a forum for Lawrence J. Ellison, Oracle’s outspoken chief executive, to go after Léo Apotheker, SAP’s former chief executive and now chief executive of Hewlett-Packard. H.P. had been a close partner of Oracle’s, but in recent months the companies have become rivals.
In the weeks before the trial, Mr. Ellison publicly castigated Mr. Apotheker for overseeing the infringement. He also criticized H.P. for hiring Mr. Apotheker, who succeeded Mark V. Hurd. Mr. Hurd was hired by Oracle as co-president after he resigned from H.P. over an ethics question.
The opening arguments in the trial, which is expected to last four weeks, highlighted the cutthroat business tactics of competitors in the business software industry.
Jo-Ellen Pozner, a professor of management and organization at University of California, Berkeley, said that Mr. Ellison was using the trial to sully the image of his rivals. She likened his attacks to a negative campaign advertisement, calling them nasty but memorable in the minds of potential customers.
“He’s killing two birds with one stone,” Ms. Pozner said.
Geoffrey Howard, a Bingham McCutchen lawyer representing Oracle, told Judge Phyllis J. Hamilton, an eight-person jury and a packed courtroom that SAP executives had been well aware of the theft carried out against his client, and that, in fact, they had encouraged it. He painted a picture of a company so fearful of Oracle’s growing power that it chose to purloin its software in an effort to steal its customers.
“The scope is vast,” Mr. Howard said. He also quoted from a 2005 e-mail written by Mr. Apotheker that said, “We need to inflict some pain on Oracle.”
SAP’s lawyer, Robert A. Mittelstaedt of Jones Day, was contrite about the copyright infringement, telling the jury that SAP admits “that it did something wrong.” But he minimized its scope by saying that other than some lost profits and lost customers, Oracle suffered little damage.
“They want a windfall,” Mr. Mittelstaedt said. “They want a bonanza that is all out of proportion to the harm.”
The theft stems from SAP’s acquisition in 2005 of TomorrowNow, a company that provided technical support to some of Oracle’s customers. TomorrowNow routinely downloaded copies of Oracle’s software and maintenance manuals onto its computers and distributed some of those copies to clients — all without paying Oracle.
One of the biggest questions about the trial is whether Mr. Apotheker will testify in person. Oracle’s lawyer was vague on the matter, leaving the door open to his appearing in a video deposition.
Mr. Ellison has suggested that Mr. Apotheker, who started work at H.P. on Monday, is trying to dodge an appearance by staying outside the country. H.P. declined to comment on Mr. Apotheker’s whereabouts.
Ray Lane, H.P.’s chairman, defended Mr. Apotheker’s integrity in a statement last week. He emphasized that Mr. Apotheker had known little about the infringement, and he called Mr. Ellison’s criticism merely an effort to harass Mr. Apotheker and “interfere with his duties.”
At the trial, each side produced e-mails and internal documents that shed an unflattering light on the other.
Oracle’s lawyer showed an e-mail in which an SAP executive had warned Shai Agassi, then SAP’s president, of the potential copyright liability of acquiring TomorrowNow. John Ritchie, a TomorrowNow employee, offered another blow in a video deposition by saying that his superior had ignored his concerns about copyright infringement and went so far as to tell him never to write anything down.
SAP’s lawyer countered with e-mails in which Juan Jones, an Oracle employee, had referred to Toyota, an Oracle customer, with an expletive and boasted of refusing it a lower price on software. The lawyer said the contents had showed that Oracle’s poor service led to some customer defections and that SAP should not be held liable for those.
Indeed, Oracle claimed that SAP had been trying to steal thousands of customers it provided support to, pointing to an internal SAP presentation. But SAP responded that despite its rosy projections, the company lured only 358 of Oracle’s 9,000 or 10,000 support business customers, and that many of them would have left anyway.
SAP has already admitted that it infringed on Oracle’s copyrights and has conceded liability. At issue in a jury trial that began on Tuesday in Federal District Court is how much money SAP will pay in damages. Oracle has argued for $2 billion, and SAP has countered that tens of millions of dollars would be enough. It has set aside $160 million to cover the cost.
For most people in the technology industry, though, the trial is a forum for Lawrence J. Ellison, Oracle’s outspoken chief executive, to go after Léo Apotheker, SAP’s former chief executive and now chief executive of Hewlett-Packard. H.P. had been a close partner of Oracle’s, but in recent months the companies have become rivals.
In the weeks before the trial, Mr. Ellison publicly castigated Mr. Apotheker for overseeing the infringement. He also criticized H.P. for hiring Mr. Apotheker, who succeeded Mark V. Hurd. Mr. Hurd was hired by Oracle as co-president after he resigned from H.P. over an ethics question.
The opening arguments in the trial, which is expected to last four weeks, highlighted the cutthroat business tactics of competitors in the business software industry.
Jo-Ellen Pozner, a professor of management and organization at University of California, Berkeley, said that Mr. Ellison was using the trial to sully the image of his rivals. She likened his attacks to a negative campaign advertisement, calling them nasty but memorable in the minds of potential customers.
“He’s killing two birds with one stone,” Ms. Pozner said.
Geoffrey Howard, a Bingham McCutchen lawyer representing Oracle, told Judge Phyllis J. Hamilton, an eight-person jury and a packed courtroom that SAP executives had been well aware of the theft carried out against his client, and that, in fact, they had encouraged it. He painted a picture of a company so fearful of Oracle’s growing power that it chose to purloin its software in an effort to steal its customers.
“The scope is vast,” Mr. Howard said. He also quoted from a 2005 e-mail written by Mr. Apotheker that said, “We need to inflict some pain on Oracle.”
SAP’s lawyer, Robert A. Mittelstaedt of Jones Day, was contrite about the copyright infringement, telling the jury that SAP admits “that it did something wrong.” But he minimized its scope by saying that other than some lost profits and lost customers, Oracle suffered little damage.
“They want a windfall,” Mr. Mittelstaedt said. “They want a bonanza that is all out of proportion to the harm.”
The theft stems from SAP’s acquisition in 2005 of TomorrowNow, a company that provided technical support to some of Oracle’s customers. TomorrowNow routinely downloaded copies of Oracle’s software and maintenance manuals onto its computers and distributed some of those copies to clients — all without paying Oracle.
One of the biggest questions about the trial is whether Mr. Apotheker will testify in person. Oracle’s lawyer was vague on the matter, leaving the door open to his appearing in a video deposition.
Mr. Ellison has suggested that Mr. Apotheker, who started work at H.P. on Monday, is trying to dodge an appearance by staying outside the country. H.P. declined to comment on Mr. Apotheker’s whereabouts.
Ray Lane, H.P.’s chairman, defended Mr. Apotheker’s integrity in a statement last week. He emphasized that Mr. Apotheker had known little about the infringement, and he called Mr. Ellison’s criticism merely an effort to harass Mr. Apotheker and “interfere with his duties.”
At the trial, each side produced e-mails and internal documents that shed an unflattering light on the other.
Oracle’s lawyer showed an e-mail in which an SAP executive had warned Shai Agassi, then SAP’s president, of the potential copyright liability of acquiring TomorrowNow. John Ritchie, a TomorrowNow employee, offered another blow in a video deposition by saying that his superior had ignored his concerns about copyright infringement and went so far as to tell him never to write anything down.
SAP’s lawyer countered with e-mails in which Juan Jones, an Oracle employee, had referred to Toyota, an Oracle customer, with an expletive and boasted of refusing it a lower price on software. The lawyer said the contents had showed that Oracle’s poor service led to some customer defections and that SAP should not be held liable for those.
Indeed, Oracle claimed that SAP had been trying to steal thousands of customers it provided support to, pointing to an internal SAP presentation. But SAP responded that despite its rosy projections, the company lured only 358 of Oracle’s 9,000 or 10,000 support business customers, and that many of them would have left anyway.
