TomorrowNow Saga with SAP: Oracle Settles for Less, Reaches Out of Court Settlement

German company SAP has settled its long-standing copyright-infringement lawsuit with the other tech giant Oracle after reaching a deal to pay $359 million in damages with interest to the American company instead of the $1.3 billion awarded in 2010.

The contention arose when Oracle said SAP in 2007 through its now-defunct subsidiary, TomorrowNow, had illegally downloaded Oracle’s software to provide software support services to its customers. SAP later admitted its liability for TomorrowNow, which led to a court trial on damages amounting to $1.3 billion award.

The jury decision in 2010 was overruled by U.S. District Judge Phyllis Hamilton who gave Oracle the choice of a smaller award of $272 million or seeking a new trial. An appeals court reset the figure at $356.7 million.

“We are thrilled about this landmark recovery and extremely gratified that our efforts to protect innovation and our shareholder’s interests are duly rewarded,” said Dorian Daley, Oracle’s general counsel in a statement. “This sends a strong message to those who would prefer to cheat than compete fairly and legally.”

Under the settlement agreed upon, Oracle will get $356.7 million in damages and $2.5 million in interest, said its filing in the U.S. District Court for the Northern District of California, Oakland.

In addition, Oracle gets to keep the $120 million already paid to it by SAP towards lawyers’ fees for the trial. SAP has also expressed satisfaction at the settlement rather than a new trial by Oracle.

“We are also pleased that, overall, the Courts hearing this case ultimately accepted SAP’s arguments to limit Oracle’s excessive damages claims and that Oracle has finally chosen to end this matter,” said the company in a sttement.

Founded in 1998 by Andrew Nelson and Seth Ravin in 1998, TomorrowNow was providing software upgrades and technical service to PeopleSoft, that was taken over by Oracle later. In March 2002, the company moved into providing third-party maintenance and support service to companies licensing enterprise software.

In January 2005, TomorrowNow was purchased by SAP AG, a competitor of PeopleSoft bought by Oracle Corporation the same year, transferring the liability and legal wrangles to the respective new owners. In 2008 SAP closed TomorrowNow as Oracle filed a lawsuit and Andrew Nelson and other senior managers had already resigned in 2007.

In a trial that followed, TomorrowNow was found liable for copyright infringement in 2010 and SAP AG was ordered to pay $1.3 billion to Oracle but the sum was reduced to $272m on appeal. The final settlement came through as Oracle has agreed to a reduced amount instead of seeking a new trial.

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