) lost an appeal to reinstate its claims amounting to $1.3 billion
against rival SAP SE (
) on grounds of patent infringement. This new ruling may reopen a
seven-year old dispute between the two companies.
It began in 2007 when Oracle sued SAP alleging that a Texas-based
subsidiary of the latter called Tomorrow Now had illegally
downloaded millions of copyrighted documents and programs from
Oracle's customer connection website.
Consequently, in 2010, a jury awarded Oracle $1.3 billion in
damages based on the value of a hypothetical license that SAP would
have negotiated for using Oracle's copyrighted software.
However, SAP retaliated by moving to court and claimed that damage
claims should not be based on hypothetical licenses but on facts.
In 2011, U.S. District Judge Phyllis Hamilton rejected the previous
claim and settled the amount at $272 million.
Oracle appealed against this ruling at the 9th Circuit Court of
Appeals in order to restore the original $1.3 billion jury verdict.
The Court of Appeals in turn concluded that the damage claim
calculated by the trial judge was too low and provided Oracle with
Oracle could recover $356 million from SAP in the form of damages
for copyright infringement or move to court again for a second
We believe that such lawsuits take a long time to reach settlement
and out-of-court settlements are common.
Meanwhile, in another long-drawn legal battle with Hewlett-Packard
) over software for Itanium, the date for the next hearing got
delayed for an indefinite period.
We believe that Oracle, being a late entrant to the cloud computing
field, will pursue strategic acquisitions to combat intensifying
competition from the likes of IBM (
) and Red Hat Technologies (
). This, in turn will improve its market share and help the company
in registering robust top-line growth going forward.
Moreover, the speedy adoption of engineered systems and cloud
suites will drive top-line growth, going ahead. Moreover, Oracle's
strategy of providing end-to-end solutions will further attract new
customers in the long run.
Currently, Oracle has a Zacks Rank #3 (Hold).
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