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November 24, 2010

SAP fined $1.3bn for nicking Oracle IP while ICO levies first big UK fines

Data misuse just gets more expensive every day. Today alone, such mistakes have cost some parties literally millions and millions of dollars and pounds


SAP has been fined a whopping $1.3bn after a Californian jury found the company had indeed stolen some of the intellectual property of its deadly rival Oracle – in US terms reportedly the largest jury award of 2010, the largest ever for copyright infringement and the 23rd-largest of all time for any jury award.

The Walldorf giant had admitted the theft by staff at a now closed subsidiary it had acquired, TomorrowNow, but had been trying to fend off the worst by trying limit the size of the damages to a mere $40m, its co-CEO going on the record and apologising and paying up front $120m worth of the litigant’s legal fees.

All, it turned out, to no avail, though it did at least manage to avoid the embarrassment of its former head Leo Apotheker, now over at HP, of course, having to take the stand, despite repeated attempts by ‘Orrible head Larry Ellison.

Admittedly, Oracle had been pushing for a much bigger payout, $2bn. But it will still feel this has been a complete victory and will no doubt takes this turn in the battle between the two companies as evidence of its evident moral superiority.

SAP is gamely talking about an appeal, even if it means years of legal effort. But the damage has been done, for all its composure in saying in a press statement that it feels, "The mark of a leading company is the way it handles its mistakes. As stated in court, we regret the actions of TN, we have accepted liability, and have been willing to fairly compensate Oracle."

Why so big a hit? "The stand out level of damages in this case is down to the economics of software," argues a lawyer, Theo Savvides & Clare Robinson, IP partners in Osborne Clarke’s technology practice. "There is value in the software, but equally in the ongoing maintenance & support of that software. In this case, SAP’s purchase of a company that used Oracle software in order to provide ongoing support and maintenance of that software fuelled the high payout, with losses stacking up on a year on year basis and also providing SAP with the opportunity to ‘poach’ customers from Oracle’s platform to SAP’s platform on a long term basis."

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And on the same day, on our side of the pond, it had to happen eventually – and now it has: two organisations, a private sector consultancy called A4e and Hertfordshire County Council, have won the very, very unfavourable honour of being the first bodies to be substantially fined under the ICO’s new powers.

In both cases, hits of £100,000 were deemed appropriate for carelessness with user data – in the one case, quite shockingly so, with details of child sex abuse cases twice being sent by Herts council staff to the wrong fax addresses, in one case a barristers’ office totally off the case and in another, appallingly, to an ordinary punter.

The two cases are just jaw-dropping. A billion quid fine for stealing IP? Paedo case raw pain arriving unannounced in your fax drawer?
Information security looks increasingly like being the Achilles Heel of ICT. When will we get a grip on this? And whose problem is it? If not yours as CIO, then who the Hell will take the responsibility when your firm’s name is in the papers tomorrow?

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