(Reuters) – Germany’s SAP AG has agreed to pay $120 million to Oracle Corp in return for a promise by the U.S. company not to seek punitive damages in its suit against SAP for software theft, according to sources familiar with the agreement.
The legal drama in the case, which has captivated Silicon Valley, further heightened when Hewlett-Packard Co refused a subpoena for Leo Apotheker, its new chief executive and a former CEO of SAP, to testify in the case.
The sources spoke on condition of anonymity because the judge in the case has ordered both sides to keep the matter quiet.
SAP, which reported profit just shy of $1 billion in its most recent quarter, has admitted fault in the three and one-half year case, accepted liability and shut down its TomorrowNow subsidiary, which improperly downloaded millions of files from Oracle’s customer service website.
The two companies are still fighting over the compensatory damages that SAP will have to pay, anywhere from tens of millions to billions of dollars. The trial began this week.
Compensatory damages are awarded for specific losses, while punitive damages punish a defendant for wrongdoing.
The agreement needs final approval by U.S. District Judge Phyllis Hamilton in Oakland, California, according to the sources.
Dechert partner Chris Scott Graham said $120 million is a big amount for legal fees, but he noted that a junior lawyer at a big firm working full time can bill $1 million a year.
"It’s an unfortunate truth about really big cases. They tend to add up really fast," said Graham, who is not involved in the case.
By taking punitive damages off the table, SAP could further narrow the range of evidence presented to the jury, Graham said. Regardless, Oracle might have been able to seek attorneys’ fees at the close of trial because SAP already admitted liability in the case, he said.
"Might as well make an offer up front and try to reduce the claims," he said.