Facts

Plaintiff Infinity Resources, Inc. ("Infinity"), an online seller of CDs and DVDs, entered into a detailed, written contract to purchase e-commerce software called iStore ("iStore"), from Defendant Oracle Corporation ("Oracle"), and separately, entered into a written contract with an independent software implementation firm, TUSC, to implement iStore to meet Infinity's requirements.

PLAINTIFF'S CONTENTIONS:
Infinity contended that Oracle fraudulently induced it to purchase Oracle's iStore and related software by falsely representing that it was suitable for Infinity's business needs. Infinity also alleged that Oracle fraudulently concealed material information about iStore's suitability for Infinity, architecture and track record. As a result of Oracle's misrepresentations and concealment, Infinity was induced to purchase iStore and additional Oracle software. Infinity spent more than two years attempting to implement Oracle's software, without success. Because Oracle's software could not be implemented to fit Infinity's needs, and because the failed implementation ran on for several years, Infinity was damaged in an amount exceeding $10,000,000.

Infinity was first contacted by Oracle in response to Infinity's Request for Proposal ("RFP") for e-commerce software in June, 2003. In its RFP, and in other communications with Oracle, Infinity stated that it required a fixed price for the entire project - software and implementation - both of which had to fit within Infinity's budget. Oracle's written response to the RFP stated, "To meet the needs addressed in your RFP for the new web site Oracle offers iStore." Oracle responded to the detailed portion of the RFP by stating that iStore could, with reasonable and cost-justified modifications, perform each and every function required by Infinity. Oracle also demonstrated iStore in a manner that appeared to show that iStore could meet Infinity's needs.

Based on Oracle's representations, Infinity purchased iStore in August 2003 and additional Oracle software in April 2004.

Infinity alleged that Oracle concealed that many of the necessary modifications were unprecedented, extraordinary, and, particularly given its knowledge of Infinity's budget, completely unfeasible. Oracle told Infinity that Oracle's software could efficiently interface with Infinity's existing software, but did not disclose that it knew that the number and nature of the interfaces made iStore unsuitable for Infinity unless it also bought additional (and expensive) Oracle software. Lastly, Oracle showed Infinity an iStore demonstration using some of Infinity's product images and descriptions, but did not disclose that Infinity would have to manually link the images and descriptions for each of its nearly 200,000 products, and that updates to Infinity's inventory would have to be entered manually.

Infinity never implemented iStore. Within a short time, the first implementer, TUSC, an Oracle Certified Partner and Oracle "Titan" award winner, asked Infinity to agree to a new price for the implementation that was several hundred thousand dollars higher than its original contract, and was an estimate, not fixed. TUSC and Infinity could not agree to terms, and amicably parted ways. Infinity then spent another two years working with a second implementer, Cyberworks Media Group, but because of iStore's fundamental incompatibility with Infinity's existing systems, Cyberworks could not implement iStore either.

Finally, Infinity met with Oracle Consulting, who made several proposals. However, none of these proposals was for a fixed price, and none of them disclosed the fundamental incompatibility of iStore for Infinity's business needs. Because Oracle Consulting did not make a fixed price bid, even though Infinity specifically asked for one, Infinity concluded that Oracle's prior statements that iStore could satisfy Infinity's needs were false.

DEFENDANT'S CONTENTIONS:
Oracle contended that Infinity never implemented iStore, and laid blame for this on Oracle, even though Infinity never gave Oracle the chance to implement the software, despite asking for and receiving four separate implementation proposals from Oracle over a two-year period. Further, Infinity did not implement iStore because Infinity refused to pay the higher than expected implementation fees that TUSC and then Oracle quoted, not because of any misstatements by Oracle about iStore's features and functions or any problems with the software itself. TUSC, which Infinity retained first to implement iStore, did not complete the implementation because when it told Infinity it would cost more than TUSC originally estimated, Infinity fired TUSC and sought a cheaper solution.

After Oracle provided an implementation estimate that Infinity also found too high, Infinity hired another firm, Cyberworks, which could not complete the implementation at the unrealistically low price it estimated, in large part because it had limited prior experience in Oracle software implementations, and because, like TUSC before it, Cyberworks underestimated the work it would take to implement iStore to meet Infinity's requirements, which necessitated extensive modifications to the software's functionality.

Although Infinity approached Oracle on four separate occasions from March 2004 to April 2006 for bids to implement iStore, Infinity never accepted any of those bids, finding each too expensive despite the fact that Oracle proposed ways of reducing the scope of the project so that Infinity could use iStore and the other Oracle software that it had acquired.

Oracle confirmed time after time that it could implement iStore but, due solely to cost, Infinity refused to let Oracle do so. The only evidence on the issue of whether iStore could be implemented to meet Infinity's needs was that it could – based on Oracle and TUSC's proposals.

Infinity claimed that it had been fraudulently induced to purchase Oracle software, but the evidence showed that Infinity knew that it had contracted with Oracle to license iStore, and separately with TUSC to implement iStore, and that Infinity knew that iStore would require extensive customizations to meet its needs. Infinity witnesses – including its chief executive officer and chief information officer, who were principally responsible for negotiating the Oracle and TUSC contracts – testified that they understood that they were separately contracting for the software license and related technical support services from Oracle and for the software implementation from TUSC. They admitted that Oracle did not tell Infinity that TUSC could implement iStore for any particular price and that they never asked Oracle to do so. They admitted that they didn't ask Oracle to bid on the implementation before they purchased iStore and that they didn't ask Oracle to verify TUSC's bid. They also admitted that they knew that iStore would have to be heavily customized to meet their requirements.

Infinity was told that iStore would need to be customized to satisfy its requirements, and did not prove that the software could not have been so customized. After Infinity fired TUSC, in March, 2004, and on three additional occasions over the next two years, Infinity asked Oracle for proposals to implement iStore. Each time, Oracle consultants prepared bids after expending significant resources to understand Infinity's new requirements and told Infinity that the software could be implemented for Infinity. Oracle's iStore product has been successfully implemented many times for other customers. Infinity presented no evidence to the contrary.

Result

Verdict in favor of Oracle. The jury found that Oracle concealed material information from Infinity (as shown by their finding on the special verdict), and that Oracle intended to deceive Infinity by doing so. However, the jury also found that Infinity's reliance on Oracle's deception was not reasonable under the circumstances. The jury also found that Oracle had not breached its contract with Infinity and that there was no breach of warranty. Thus, the jury returned a verdict for Oracle.

Other Information

FILING DATE: Aug. 25, 2006.

Length

21 days