Longtime customers dramatically reduced the amount of licensing revenue they paid to use Oracle products after Google stole its copyrighted software to enter the smartphone market, Oracle's co-chief executive Safra Catz told jurors on Tuesday.
In a trial at San Francisco federal court, Oracle Corp (ORCL.N) has claimed Google's Android smartphone operating system violated its copyright on parts of Java, a development platform. Alphabet Inc's (GOOGL.O) Google unit said it should be able to use Java without paying a fee under the fair-use provision of copyright law.
Oracle acquired Sun in 2010 and sued Google after negotiations over its use of Java broke down. The jury was deadlocked in a trial in 2012, and if the current jury rules against Google on fair use, then it would consider Oracle's request for $9 billion in damages.
The case has been closely watched by software developers who fear an Oracle victory could spur more software copyright lawsuits.
In court on Tuesday, Catz said the decision by Google to distribute Android for free to phone manufacturers like Samsung undercut traditional licensing revenue those manufacturers paid for Java.
"It had a very negative impact," Catz said.
Samsung, for instance, reduced payments from about $40 million to about $1 million, Catz said.
Amazon had traditionally used Java to develop its Kindle reader, Catz said, but switched to Android for the Fire. When Amazon was developing a new reader, the Paperwhite, Catz said Oracle was forced to offer a 97.5 percent discount to entice Amazon to use Java.
Google has attempted to portray itself as a true innovator and claims Oracle only turned to the courts because it could not succeed in the market. Under questioning from a Google attorney, Catz acknowledged that Oracle had considered developing its own phone but did not pursue the project.
Jurors viewed an internal Oracle memo on its phone project, which concluded that Oracle had "very limited internal expertise to make smart decisions."
Oracle has argued that Google violated basic moral principles by using elements of Java without a license. During her testimony, Catz said she encountered Google general counsel Kent Walker at a bat mitzvah in 2012.
According to Catz, Walker approached her and said: "You know Safra, Google is a really special company and the old rules don't apply to us."
"And I immediately said: thou shalt not steal, it's an oldie but it's a goodie," Catz said.
(Reporting by Dan Levine; Editing by Andrew Hay)