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The company logo is shown at the headquarters of Oracle Corporation in Redwood City, California February 2, 2010.
Credit: Reuters/Robert Galbraith
By Dan Levine
SAN FRANCISCO |
Fri Apr 13, 2012 7:36am EDT
SAN FRANCISCO (Reuters) - Oracle Corp is set to go to trial next week against Google Inc in a high-stakes dispute over smartphone technology, the biggest case in what is shaping up to be an intense year in court for the enterprise software giant.
Jury selection is set for Monday in San Francisco federal court. Oracle claims Google's Android operating system tramples on its intellectual property rights to the Java programming language. Google says it doesn't violate Oracle's patents, and that Oracle cannot copyright certain parts of Java.
The case is the first of four big tech trials involving Oracle scheduled for the next few months - three in Northern California, and one in Nevada.
The others include one set for the end of May against Hewlett-Packard over the Itanium microprocessor, a retrial against SAP AG in June over alleged copyright infringement, and another copyright case against smaller competitor Rimini Street expected later in the year.
Fighting so many court battles back-to-back could be distracting for Oracle Chief Executive Larry Ellison and other top executives, not to mention costly, as legal fees pile up.
Yet, observers say it's not surprising that Oracle would be so aggressive in court, pointing to Ellison's reputation as unyielding. He once sued the city of San Jose -- and won -- when it tried to impose a curfew on his private jet.
And while risky, Oracle's strategy could pay off if it succeeds in winning damages at trial, particularly in the Google case given the growing market for Android-powered devices.
"The real question is, does Oracle get a piece of Android, or not?" said Tyler Ochoa, a copyright professor at Santa Clara Law in Silicon Valley. "The money is so large we can see why they are willing to spend a lot of money fighting over it."
An Oracle spokeswoman declined to comment about how the multiple trials impact top management.
Oracle sued Google in August 2010 over seven patents for Java, which Oracle acquired when it bought Sun Microsystems. Early on, damages estimates ran as high as $6.1 billion. But Google has narrowed Oracle's claims so that only two patents remain, reducing the possible damages that could be awarded.
Oracle is seeking roughly $1 billion in copyright damages. On the two patents, it rejected Google's $2.8 million settlement offer, plus 0.5 percent of Android revenue on one patent until it expires this December and 0.015 percent on a second patent until it expires in April 2018.
In October, Google said its mobile business was generating revenue at an annual run rate of $2.5 billion, but that includes revenue from ads Google serves on Android devices as well as on Apple's iPhone.
The settlement talks reached an impasse, a magistrate judge who is a mediator in the case recently said, though a last-minute deal is always a possibility.
For the Google and SAP cases, Oracle tapped David Boies, a famous litigator who represented Al Gore in the 2000 presidential recount. Oracle is also represented against Google by Michael Jacobs, a key figure in the smartphone patent wars as Apple's lead lawyer against Samsung.
Jacobs will deliver opening statements on Monday, said sources with knowledge of the situation.
Boies had sought to postpone the SAP trial so it wouldn't interfere with the Google case, but the judge refused.
Google, meanwhile, recruited well-known San Francisco litigator Robert Van Nest to deliver opening statements, people familiar with the matter said. Google had unsuccessfully tried to move the Oracle trial due to Van Nest's scheduling conflicts.
The Google trial before U.S. District Judge William Alsup is scheduled for three phases: copyright liability, patent claims, and damages.
Oracle's best chance of winning big damages stem from its copyright allegations, though Google argues that the structure of so-called "interface specifications" -- which define how programmers interact with software platforms -- are not protected by copyright.
Oracle is seeking an injunction not to shut Android down, Boies said, but to force Google to pay for a license and make Android compatible with the rest of Java. Google spokesman Jim Prosser said Oracle's claims are without merit.
Pretrial rulings on copyright have been largely favorable to Oracle, said Santa Clara Law's Ochoa. But the law is murky on how copyright protections apply to software, he said, giving Google a good chance to reverse any damaging verdict on appeal.
The Google case may be the biggest on Oracle's busy court docket, but it's not the only one. HP sued Oracle in a California state court for breach of contract after Oracle decided to discontinue support for the Itanium microprocessor.
Oracle countersued, and a hearing is scheduled for early May on requests from both sides to resolve the case in their favor before trial.
The Oracle/SAP case, in Oakland federal court, will rehash earlier allegations in the years-long dispute. Oracle has leveled similar accusations against Rimini Street in a Reno, Nevada federal court.
Oracle says Rimini provides cut rate support for some Oracle software by improperly copying its files. Rimini denies Oracle's claims, saying its business practices are entirely legal. No formal trial date has been set, though most trial preparations are scheduled to be completed by August.
Oracle won a $1.3 billion verdict against SAP in 2010 over accusations SAP unit TomorrowNow wrongfully downloaded Oracle files. U.S. District Judge Phyllis Hamilton later slashed the verdict to $272 million, prompting Oracle to seek the retrial.
The first SAP/Oracle trial captivated the technology world, and featured testimony from Ellison and Oracle President Safra Catz. Both Ellison and Catz were also called to participate in settlement talks in the Google case.
While companies need to consider employee distraction when fighting any court case, the downsides for Oracle in the SAP case aren't steep, said Constance Bagley, an expert in litigation risk at Yale School of Management.
That's because SAP has admitted liability for the TomorrowNow downloads, so the retrial is about damages. Also, SAP has agreed to pay Oracle $120 million in attorneys fees.
Much less is settled in next week's Google trial, where Google is contesting both liability and damages. "If I were Ellison I would care a lot more about Oracle/Google than Oracle/SAP," Bagley said.
(Editing by Martha Graybow and Muralikumar Anantharaman)
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