Oracle Corp. v. Sap Ag
765 F.3d 1081
| 9th Cir. | 2014Background
- Oracle sued SAP after TomorrowNow (acquired by SAP) systematically downloaded millions of Oracle/PeopleSoft/J.D. Edwards/Siebel files; SAP stipulated liability and the first trial was limited to damages.
- Oracle’s damages theory at trial was primarily a hypothetical-license valuation; the jury awarded $1.3 billion as the fair-market value of a license covering the infringements.
- SAP moved for JMOL and a new trial; the district court granted JMOL, concluding Oracle’s evidence was too speculative to establish an objective hypothetical-license price, and conditioned a new trial on Oracle’s rejection of a $272 million remittitur based on lost profits and infringer’s profits.
- Oracle rejected the remittitur; parties later stipulated to a $306 million judgment to accelerate appeal; Oracle appealed multiple rulings.
- The Ninth Circuit affirmed JMOL and the grant of a new trial and upheld the district court’s bar of hypothetical-license damages at any second trial, but held the remittitur amount was set too low and remanded to require offering a $356.7 million remittitur or a new trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a copyright owner must prove it would have granted a license to recover hypothetical-license damages | Oracle: Not required; hypothetical-license measures fair market value regardless of seller’s willingness | SAP: Plaintiff must show it would have granted a license or cannot claim lost licensing fees | Court: No such prerequisite; unwillingness to license does not bar hypothetical-license damages |
| Whether the jury’s $1.3B hypothetical-license award was based on undue speculation | Oracle: Evidence of massive downloads, SAP projections, Oracle acquisition prices, and expert analysis supported fair market value | SAP: Evidence was too speculative and failed to establish an objective market range | Court: Evidence was insufficiently objective; JMOL proper because award rested on undue speculation |
| Proper remittitur amount under lost-profits and infringer’s-profits theory | Oracle: Expert provided a higher, sustainable $408.7M figure (including $120.7M lost profits through 2015) | SAP/District Court: $272M (lower lost-profits and infringer-profits estimates) is maximum sustainable amount | Court: Agreed $236M for infringer’s profits but held district court erred choosing $36M lost profits; remand to offer $356.7M remittitur or new trial |
| Whether Oracle may pursue hypothetical-license damages at a second trial after JMOL/new-trial order | Oracle: District court changed rules post-trial and should allow another opportunity to try to prove it | SAP: District court properly limited retrial to lost-profits/infringer’s-profits given prior JMOL | Court: Affirmed district court’s bar on presenting hypothetical-license damages at any second trial |
Key Cases Cited
- D & S Redi-Mix v. Sierra Redi-Mix & Contracting Co., 692 F.2d 1245 (9th Cir. 1982) (remittitur must be the maximum amount sustainable by the proof)
- Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700 (9th Cir. 2004) (hypothetical-license damages permissible where market-value evidence limits speculation)
- Wall Data Inc. v. L.A. County Sheriff’s Dep’t, 447 F.3d 769 (9th Cir. 2006) (affirming hypothetical-license award within range supported by pricing benchmarks)
- Jarvis v. K2 Inc., 486 F.3d 526 (9th Cir. 2007) (upholding objective-market-analysis method using multiple benchmarks)
- Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505 (9th Cir. 1985) (discussion of actual damages and treatment of infringer overhead in profits calculation)
- On Davis v. The Gap, Inc., 246 F.3d 152 (2d Cir. 2001) (hypothetical-license damages may represent owner’s failure to obtain market-value fee even if owner would not have willingly licensed)
- McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557 (7th Cir. 2003) (hypothetical-license damages must not be based on undue speculation)