Late last year a copyright infringement case between two software titans, Oracle and SAP, hit headlines around the world when the jury in the case awarded an eye-watering US$1.3 billion in damages against SAP.  The case, Oracle Corp. v SAP AG, 2010 WL 334446 (N.D. Cal 2009), centred around a SAP subsidiary (TomorrowNow) which used a software tool to copy huge amounts of software and confidential material from Oracle.  SAP admitted to the infringement and the only issue at trial was the amount of damages that Oracle should be awarded.  The jury took the view that Oracle was entitled to the total amount of licence fees that Oracle would have charged SAP had SAP not infringed the software and had legitimately licensed it instead and that this came to US$1.3 billion.  Unsurprisingly, SAP appealed.

The US Copyright Act allows recovery of either statutory damages or "actual damages suffered by the copyright owner as a result of the infringement" plus "any profits that the infringer made that are attributable to the infringement and are not already included in the damages suffered".  The appeal court held that in situations where the infringer (SAP) could have bargained with the copyright owner (Oracle) to purchase the right to use the material in question, actual damages are the amount that a willing buyer would have reasonably required to pay a willing seller for the material.  The problem was that Oracle had never granted a licence of the material to anyone and no comparable licences that could be used as a benchmark exist.  It therefore lacked objective evidence of actual damages.

In the end, the appeal court called the US$1.3 billion award "grossly excessive" and found, on the evidence, that the maximum amount of actual damages that could be supported was US$272 million.  Don't expect that to be the end of the clash between these two titans.  This case is likely to take many more twists and turns as it makes its way through various levels of appeal.