MoneyWatch Tech

Oracle's SAP Lawsuit Problem: You Only Get Money for Real Damages

By Erik Sherman

Updated on: November 9, 2010 / 8:55 AM EST / MoneyWatch

Oracle (ORCL) CEO Larry Ellison took the stand in the company's copyright suit against SAP (SAP). Apparently he was far more reserved than you might have expected from the spittle-flecked invective he has hurled not just toward SAP, but also Hewlett-Packard (HPQ), as HP's new CEO, Leo Apotheker, is the former head of SAP.

There's just one problem. Courts don't work like a reality television show and there are fairly strict rules about how they can proceed in a lawsuit. And it may be that for all the outrage and dismay that Oracle has worked hard to project, the damages that it will win from SAP may not wind up being all that large.

That Oracle will get damages is in no doubt: SAP has already admitted that its acquisition, TomorrowNow, did infringe Oracle's copyright. Given no argument about the underlying facts or guilt, the focus is on damages, and how much Oracle can get the court to order SAP to pay.

In an Ellison fantasy, the award is so high that it permanently cripples SAP and leaves Oracle as the main purveyor of enterprise-type software without the inconvenience of an acquisition and convincing regulators that, yes, the world really would be better off with an Oracle near-monopoly. Given the current example of MySQL, which Oracle acquired with Sun Microsystems, it's a question whether regulators would believe any promise.

Ellison pegged the value of the stolen software at $4 billion. But in court, it's not enough to claim some number. You have to back up your assertions, and that's where things will likely break badly for Ellison and Oracle. Although Ellison said that the episode had endangered as much as 20 to 30 percent of Oracle's PeopleSoft customer base and 10 percent of those that came with Seibel Systems, when a cross-examining attorney pressed, Ellison admitted that the company had lost only 350 customers. He tried to suggest that the potential losses were far greater, but big deal. Potential means that Oracle didn't lose the customers. Divide that $4 billion price tag he mentioned and each customer would have had to be worth more than $11.4 million on average. No way Ellison gets his Christmas present.

That said, Oracle does benefit indirectly in its war against HP as it reputedly has process servers trying to chase down Apotheker to hand him a subpoena. HP manages to look even more like a group of clowns and its incoming CEO is distracted. A tactically smart move on Oracle's part ... well, if you consider trying to hound one of the biggest resellers of your software to be a sage business decision.

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