In a surprise ruling, a US court late last week overturned an earlier $1.3-billion copyright infringement case awarded to Oracle against German business software maker SAP, calling it ''grossly excessive.''

In the keenly watched four year-old case, US District Judge Phyllis Hamilton in Oakland, California, reduced the award to $272 million and granted SAP's motion for a new trial to set damages if Oracle rejects the new verdict.

''The verdict grossly exceeded the actual harm to Oracle,'' said Hamilton in her order. The jury verdict ''was contrary to the weight of the evidence, and was grossly excessive.''

The ruling is the latest chapter in a case that dates to 2007, when Oracle sued TomorrowNow, an American subsidiary of SAP, for corporate theft, alleging it illegally downloaded masses of Oracle customer service materials and passed those documents to SAP (See: Oracle sues SAP for ''theft'' of corporate information) 

Oracle had claimed that staff at TomorrowNow had accessed Oracle's computer network and illegally downloaded and assembled a storehouse of stolen Oracle intellectual property comprising copyrighted software and other material.

Oracle and SAP - fierce rivals in the business software segment - have been battling for years for supremacy in the lucrative enterprise software market that is estimated at $60 billion.

SAP had acquired TomorrowNow in 2005 (closed in 2008), which analysts said was aimed at countering Oracle's acquisition of PeopleSoft, a deal that saw Oracle forge ahead of SAP in the business applications market.

SAP initially denied liability, but shortly before the trial started it admitted that TomorrowNow had illicitly downloaded data from Oracle so as to offer support services, that resulted in a trial to determine the scale of damages SAP should pay.

TomorrowNow cornered 358 Oracle's customers but only 86 of them bought Oracle's software from SAP.

Although Oracle was seeking $4 billion in damages, in November 2010, a jury ordered Walldorf, Germany-based SAP to make a payment of $1.3 billion to Oracle in one of the largest verdicts in a case involving copyright infringement and $120 million in attorney fees (See: SAP ordered to pay Oracle $1.3 billion for software piracy).

The new $272-million verdict doled out by Hamilton is based on an estimate on the amount of profit Oracle had lost as a result of SAP's actions. In the 2010 verdict, jurors based their award on the value of a hypothetical license that SAP would have paid Oracle to use its software.

In its argument, SAP said that such a license would never have existed between two companies as they are fierce competitors, so the award should have been based on profit that Oracle lost and SAP gained as a result of the infringement.

Hamilton told the jury that a damage award must be based on evidence, not speculation or hypothesis. Oracle's own expert had estimated that that Oracle's lost between $408.7 million and $272 million in profits due to the theft.

Following the verdict, SAP said in a statement, ''We believed the jury's verdict was wrong and are pleased at the significant reduction in damages… we hope the court's action will help drive this matter to a final resolution.''

Oracle, which throughout the four-year trial period repeatedly humiliated SAP over software theft, said that it plans to fight for the full amount it was awarded.