Oracle 2010 Annual Report Download - page 206

LEGAL PROCEEDINGS
LEGAL PROCEEDINGS
(USD $)
12 Months Ended
05/31/2011
LEGAL PROCEEDINGS 18. LEGAL PROCEEDINGS
EpicRealm/Parallel Networks Intellectual Property Litigation
On June 30, 2006, we filed a declaratory judgment action against EpicRealm Licensing, LP (“EpicRealm”) in the United States
District Court, District of Delaware, seeking a judicial declaration of noninfringement and
invalidity of U.S. Patent Nos. 5,894,554 (the ‘554 Patent) and 6,415,335B1 (the ‘335 Patent). We filed the lawsuit following the
resolution of an indemnification claim by one of our customers related to EpicRealm’s assertion of the ‘554 Patent and ‘335 Patent
against the customer in a patent infringement case in the United States District Court for the Eastern District of Texas.
On April 13, 2007, EpicRealm filed an Answer and Counterclaim in which it: (1) denies our noninfringement and invalidity
allegations; (2) alleges that we have willfully infringed, and are willfully infringing, the ‘554 Patent and ‘335 Patent; and (3) requests
a permanent injunction, an award of unspecified money damages, interest, attorneys’ fees, and costs. On May 7, 2007, we filed an
Answer to EpicRealm’s infringement counterclaim, denying EpicRealm’s infringement allegations and asserting affirmative
defenses. In August 2007, the patents-in-suit were sold to Parallel Networks, LLC, which thereafter substituted in as the defendant in
place of EpicRealm.
The parties have completed discovery and filed briefing on claim construction and summary judgment motions. A Markman hearing
and oral argument on summary judgment motions were held October 3, 2008. A court-ordered mediation was held on October 8,
2008, which did not result in a settlement. On December 4, 2008, the court issued an order granting summary judgment that our Web
Cache, Internet Application Server, and RAC Database do not infringe the patents. The court also denied our motion for summary
judgment that the patents are invalid, and denied in part and granted in part Parallel Networks’ motion for summary judgment that
certain prior art references do not invalidate the patents through anticipation. Trial was scheduled to begin on January 12, 2009, on
issues of invalidity and inequitable conduct. On December 23, 2008, the parties reached an agreement allowing Parallel Networks to
immediately appeal the court’s summary judgment order and preserving Oracle’s invalidity and inequitable conduct claims in the
event that the matter is remanded for trial at a later time. On January 23, 2009, Parallel Networks filed a notice of appeal. A
court-ordered mediation was held on June 1, 2009, which did not result in a settlement. The appellate court heard oral argument on
December 10, 2009 after full briefing. On April 28, 2010, the Federal Circuit issued a decision vacating the district court’s grant of
summary judgment of noninfringement in Oracle’s favor and remanding the case to the district court for further proceedings. On
May 28, 2010, Oracle filed a Petition for Rehearing with the Federal Circuit which was denied on June 11, 2010. Trial was set to
begin on May 16, 2011. On May 13, 2011, however, the parties reached agreement on a settlement agreement and patent license
agreement. All claims in the matter were dismissed, with prejudice, on May 16, 2011.
SAP Intellectual Property Litigation
On March 22, 2007, Oracle Corporation, Oracle USA, Inc. and Oracle International Corporation (collectively, Oracle) filed a
complaint in the United States District Court for the Northern District of California against SAP AG, its wholly owned subsidiary,
SAP America, Inc., and its wholly owned subsidiary, TomorrowNow, Inc., (collectively, the SAP Defendants) alleging violations of
the Federal Computer Fraud and Abuse Act and the California Computer Data Access and Fraud Act, civil conspiracy, trespass,
conversion, violation of the California Unfair Business Practices Act, and intentional and negligent interference with prospective
economic advantage. Oracle alleged that SAP unlawfully accessed Oracle’s Customer Connection support website and improperly
took and used Oracle’s intellectual property, including software code and knowledge management solutions.
On June 1, 2007, Oracle filed its First Amended Complaint, adding claims for infringement of the federal Copyright Act and breach
of contract, and dropping the conversion and separately pled conspiracy claims. On July 2, 2007, the SAP Defendants filed their
Answer and Affirmative Defenses, acknowledging that TomorrowNow had made some “inappropriate downloads” and otherwise
denying the claims alleged in the First Amended Complaint.
Based on information obtained during discovery, Oracle amended its complaint several times. Oracle filed its operative complaint,
Oracle’s Fourth Amended Complaint, on August 18, 2009. The SAP Defendants filed an Answer on August 26, 2009.
On August 26, 2009, the SAP Defendants filed an early motion for summary judgment directed to Oracle’s damages theory. After
full briefing, the motion was heard on October 28, 2009. By order dated January 28, 2010, SAP’s motion for partial summary
judgment was denied.
On March 3, 2010, the SAP Defendants and Oracle each filed a motion for partial summary judgment. After receiving briefing and
hearing oral argument, the court issued an order on August 17, 2010, granting in part and denying in part each of these motions.
Regarding Oracle’s motion, the court granted partial summary judgment regarding certain copyright infringement, Federal Computer
Fraud and Abuse Act, and California Computer Data Access and Fraud Act claims against TomorrowNow. The court also granted
partial summary judgment regarding certain vicarious copyright infringement claims against SAP AG. Regarding the SAP
Defendants’ motion, the court found that Oracle EMEA Ltd. could not pursue claims in California. The court further held that Oracle
could not recover, as a measure of damages, “saved development costs” (that is, the amount the SAP Defendants would have had to
pay to independently develop the software at issue).
On September 13, 2010, the court approved a stipulation by the parties. Pursuant to the stipulation, TomorrowNow stipulated to all
liability on all claims asserted against it in this action, and preserved no defenses as to that liability. TomorrowNow retained
defenses as to damages. Under the stipulation, SAP AG and SAP America, Inc. stipulated to vicarious liability on the copyright
claims against TomorrowNow. SAP AG and SAP America, Inc. retained all defenses related to damages.
Trial commenced November 1, 2010. On November 2, 2010, the court approved a stipulation by the parties, pursuant to which SAP
AG and SAP America, Inc. stipulated to liability for contributory infringement of 120 of Oracle’s copyrights. The trial proceeded to
determine the amount of damages the SAP Defendants should pay to Oracle. Following trial, the jury awarded Oracle the sum of
$1.3 billion. The court entered judgment for that amount and for pre-judgment interest on February 3, 2011. The amount has not
been received and has not been recorded as a benefit to our results of operations. On February 23, 2011, the SAP Defendants filed a
motion for judgment as a matter of law and for new trial, arguing, among other things, that the jury should not have considered the
fair market value measure of damages and that Oracle’s evidence was insufficient. Oracle filed a conditional motion for new trial on
the same day, arguing that if the court chose to grant the SAP Defendants’ motion for new trial, certain erroneous trial rulings should
also be remedied. The motions are currently set to be heard on July 13, 2011.
On June 9, 2011, the court entered a stipulated order, requiring SAP to post an appeal bond in the amount of approximately $1.3
billion by June 23, 2011. SAP posted a bond in this amount, and in a June 22, 2011 order, the court approved the bond.
Derivative Litigation and Related Action
Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research℠