Oracle vs. SAP update: Catz does partial recovery but can't make up for Ellison

Posted by ROB ENDERLE

Safra Catz took the stand after Larry Ellison this evening and appears to have done a vastly better job of being a convincing witness.  



However, here too the issue will likely be the jury that likely has a relatively low average income and the huge numbers being tossed about without context.   

So, let’s do a quick summary and update. This analysis follows an earlier initial piece on TG Daily about Larry Ellison’s testimony.

Catz on the Stand

Catz played the role of expert witness in that she lectured the jury on critical areas of the trial they probably didn’t understand with regard to investment banking and software licensing.



The licensing is important because it grounded the $2.3B Oracle wants (Larry is using a larger $4B number in his testimony) as a settlement because it is the Oracle estimate of what Oracle would have charged had SAP asked for a license. 



Those attending thought she did a masterful job.

However, her main point appeared to be that accepting $40M from SAP in damages would reward them for bad behavior and the Jury with a likely low average income may not agree at all that $40M is an inadequate number given Oracle has so far failed to prove any actual damages. 



In context, $1M is a lot of money to folks like this and large awards are reserved for behavior where one side is vastly wealthier and more powerful than the other and behaves very badly. 


In this instance, Oracle is the bigger player and appears to have already benefited the most from what SAP did. So, a high judgment needs a lot of justification and Oracle hasn’t reached that bar yet. 


SAP’s Likely Response

It should be fairly easy for SAP to create a metaphor the jury would understand. What I’d do, were it me, would be tell the following story.  Let’s say you have two sons and one takes the other kid's used VW without permission, drives and fixes it up with new wheels, tires and attractive paint and then is forced to return it. 



The son that owns the car asked for $2,000 in compensation because that is what he would have charged had the other son asked him to rent him the car and won’t accept anything less. 



As a parent, you’d certainly say "be happy you got a better car back" and let it go - knowing the first would have never rented the car in the first place and the other son never would have paid $2,000, but lost everything he put into the car himself and learned a lesson.    


If they keep the metaphor simple and grounded it in the facts of the case the jury should see that the Oracle claim is excessive and the risk is they might not even grant the $40M because they might feel that the Oracle folks, who have been lecturing them, thought they were stupid.

Wrapping Up:

Testimony is often like a relay race and it is really hard to win one if the runner before you doesn’t do a good job. Larry dug a pretty deep hole and while Safra presented herself better and did likely improve the perception of Oracle for the Jury she didn’t make up for the fact there isn’t any real evidence to support their $2.3B claim.

The inconsistencies in the claim aren’t helping Oracle’s case either and make the numbers seem even more artificial. Oracle needs to connect with the Jury and show pain in line with the judgment they are seeking and create a credible justification for that judgment. 



They don’t appear to have done this yet. This suggests the outcome is still trending towards SAP for the judgment.

Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently, he provides his services to most of the major technology and media companies. The opinions expressed in this commentary are solely those of the writer.