A SAP sucker: $1.3bn fine over Oracle data theft

German software group SAP has just been hammered with a whopping ten-figure fine for stealing data from Oracle. Ouch.

by James Taylor
Last Updated: 19 Aug 2013
They really know how to do punitive fines in the US. A Californian court has just ordered German software company SAP to stump up no less than $1.3bn to Oracle over a data theft row; apparently a SAP subsidiary stole a load of Oracle documents and software and then used it to poach more than 300 customers. SAP doesn't deny that it was in the wrong, but it does appear to think that the record fine levied is a bit excessive, to say the least. And who can blame it; even for a company of SAP's size, this is really going to sting. On the other hand, it does send out a pretty powerful message about the perils of corporate cheating...

The row concerned a SAP subsidiary called TomorrowNow, which (perhaps in a bid to get tomorrow's customers now) managed to get its hands on 'thousands of copies' of support documents and software from Oracle, apparently by posing as a client. To add insult to injury, according to Oracle, it then resold that software, plus related services, to some 358 of Oracle's own customers. Oracle sued for a massive $1.65bn in compensation - and although it hasn't done quite that well, the court has clearly come down on its side after the four-year legal battle. This fine would be a record for any copyright infringement case, and is equivalent to more than half of SAP's entire profits last year.

As you might expect, the German company says it's 'disappointed' and plans to appeal. It's not contesting liability - but it's clearly stunned by the size of the penalty. It had argued to the court that its penalty should be a relatively measly $40m, and it's only put aside around $160m to cover the cost of the legal battle. So if it is eventually forced to stump up the cash, it really will make a big hole in its balance sheet. However, we'll believe it when we see it - it's clearly planning to explore every legal avenue, so it's quite possible they'll settle on a lower sum. Either way, Oracle is unlikely to see a penny for a while yet.

Some will argue that it serves SAP right: its subsidiary cheated, and this sends out exactly the right message about the consequences thereof. On the other hand, this does seem a huge sum - it seems pretty unlikely that Oracle missed out on $1.3bn profits from 350-odd customers. And SAP argues that it's done everything possible since discovering the theft - it accepted liability, apologised, and offered to fully compensate Oracle for any losses. So does it still deserve a record fine for the actions of a rogue subsidiary?

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