Oracle case highlights IP neglect, say analysts

Court battle also illustrates how competitive and ruthless the software market is

Technology companies must learn lessons from the Oracle/SAP US copyright infringement trial and prioritise intellectual property, according to top analysts.

"This case has demonstrated that software companies need to become less naive and blasé about their approach to IP generally," said Thomas Otter, lead analyst on SAP at research firm Gartner.

"The software industry is premised on IP, yet many software companies, even quite sophisticated ones, haven't really tightened up their approach to IP in relation to how they treat other people's products and how their products are treated in the market.

"This case will make people sit up and realise they need to think more about their IP practice," Otter added.

A jury in Oakland, California yesterday ordered German software company SAP to pay its US rival Oracle $1.3bn in damages, one of the largest amounts ever awarded in a US copyright trial. The settlement was short of the $1.65bn claimed by Oracle, but significantly more than the $40m SAP, which admitted liability before the trial, said it should pay.

The case centred on the actions of SAP's now-defunct TomorrowNow maintenance and support division, which downloaded Oracle's software without permission.

Anthony Miller, managing director of industry analysts TechMarketView, said, "The lesson here, if there is one, is about taking care of IP."

In a statement, SAP said it may appeal the verdict.

Miller said, "If I were them I'd say enough's enough, let's pay the dosh and move on. Otherwise the case will always be the first thing they'll have to talk about with customers. They may end up paying a bit less on appeal, but is it really worth it?"

Gartner's Otter said he did not think that either company's reputation had been tarnished by the trial. "I'm not sure how much impact it has on the day-to-day reality of CIOs and IT people running their businesses," he said.

"It highlights to people who aren't in the software industry the significant levels of competition and the ruthless nature of the business. But I don't think it's made anyone fundamentally change their position on either vendor."

Theo Savvides, partner at law firm Osborne Clark, said UK software companies could learn lessons from the verdict. "We're seeing increasing levels of similar software copyright disputes in the UK. Although payouts in the US are traditionally higher, there is no reason for the UK courts not to award similar damages if the loss can be proven.

"The message for technology companies is clear. Tread with extreme caution - there is as much, if not more value in the ongoing maintenance and support of a piece of software as there is in its initial installation."