After a week of deliberation by the jury, it has ruled in favor of Oracle (NASDAQ:ORCL) in the Android lawsuit against Google (NASDAQ:GOOG).  The victory however is partial as the jury is undecided if the infringement was protected by rules governing “fair use” of the copyrights. This lawsuit is likely to head into retrial as Google has already asked the judge to declare a mistrial. 
Oracle had claimed damages to the tune of $2.6 billion, but the jury’s decision prompted the judge to rule that it was now entitles only to statutory damages, expected to be less that $100,000. Oracle had rejected the $2.8 million settlement claiming it to be too low, covering only patents infringed and not the copyrights pertaining to the Java code used in the Android OS. ((Oracle Rejects Googles Settlement Offer, Search Engine Watch))
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Upside Potential for Oracle
In a scenario where Oracle won in the possible retrial, it could be looking at a large settlement windfall anywhere from $1.4 billion to $6.1 billion if we a royalty fee based on sales were imposed. More importantly, it could have bargaining power while negotiating the Java licensing contact with Google. While we don’t have a view on the legal merits of this case, we believe that Oracle is shooting for some sort of revenue share or royalty fee structure as Android is gaining a lot of traction and adding about 700,000 new users a day.
This scenario could add upside of 8 to 10 percent to our current $38 Trefis price estimate for Oracle. ((Motorola Patent License to Cost Apple 2.25% of revenues, Androidandme.com))Notes:
- Verdict First Step To Deciding Android’s Future, www.sfgate.com May 8, 2012 [↩]
- With Jury Not In Agreement On Oracle Vs Google Case, Google Moves For Mistrial, www.thedroidguy.com, May 7,2012 [↩]