"We ended up giving a 97.5% discount because our competition was free."
SAN FRANCISCO—Oracle CEO Safra Catz testified in federal court today that Oracle spends "hundreds of millions" of dollars promoting and supporting Java, and that investment was at risk because of Google and Android.

It's the seventh day of the Oracle v. Google trial, a legal dispute that began when Oracle sued Google for copyright infringement in 2010. In 2012, a judge ruled that APIs can't be copyrighted at all, but an appeals court disagreed. Now Oracle may seek up to $9 billion in damages, while Google is arguing that its use of the 37 APIs constitutes "fair use."

"What's the significance of intellectual property protection to Oracle?" attorney Annette Hurst asked Catz.

"Our whole business is based on the ideas and work that come out of programmers and employees’ heads and that they type into computer code," said Catz, speaking slowly and turning to look at the jury. "We spend $5.5 billion a year on research and development. It's very hard to build it, but it's very easy to just make a copy. Intellectual property rights is what protects those brilliant ideas. If it wasn't for that, we wouldn't have any way of stopping people from just taking stuff."

Then Catz expanded on a line of testimony, which she began yesterday, saying that Android has "forked the whole community, meaning, split it into two." It has violated the "write once, run anywhere" promise of Java, she said.

"Once you write it on Android, you can’t run it on anything but Android," Catz said. "If you write it in Java, you can’t run it on Android."

“Our competition was free”

Catz also testified that Oracle's Java licensing business was hurt by Android. Customers that used to buy licenses for Java, including Samsung, ZTE, Motorola, and others, don't buy licenses from Oracle anymore. "They don't take a license from us anymore, because they use Android, which is free," she said.

Licensing contracts that used to be $40 million deals are now $1 million deals, Catz said. She gave the example of Amazon, which was formerly a customer but chose to go with Android for the Kindle Fire. When Amazon came out with its popular mid-range Kindle, the Paperwhite, the e-reader company chose to license Java only after Oracle offered a massive discount.

"In order to compete, we ended up giving a 97.5% discount for the Paperwhite," she said, "because our competition was free."

As for the mobile licensing business, since the launch of Android it's performed "very, very poorly," Catz said.

Catz concluded her testimony with an anecdote about running into Google General Counsel Kent Walker at a social function. "I was at a bat mitzvah," Catz said. "Kent Walker, their [Google's] general counsel, came up to me and said, 'You know Safra, Google is a really special company, and the old rules don't apply to us. I immediately said—'Thou shalt not steal!' It's an oldie but a goodie."

On cross-examination, Google lawyer Christa Anderson had Catz read parts of Sun's SEC statements, noting that the company had licensed out "significant elements" of its IP, including Java technology, as open source, which "could reduce the competitive advantage" derived from it.

"Oracle knew that when it acquired sun, right?" Anderson asked.

"Yes," Catz acknowledged.

Anderson also showed internal documents indicating that Oracle didn't have the know-how to build its own phone.

"That’s correct, we decided that we could not build a physical phone," she said.

Catz was off the stand shortly before 9:00am Pacific time. Oracle is continuing to present its case throughout this week. Google presented its case first; it has the burden of proof, since its defense is limited to "fair use."

More from the Oracle v. Google trial:

• Read the Ars Technica explainer on the trial's significance
• Jury selection took place on Monday, May 9
• Opening statements by Oracle and Google on May 10
• Ex-Google CEO Eric Schmidt said no license was needed
• Ex-Sun CEO Jonathan Schwartz said he had no problem with Android
• Android chief Andy Rubin testified on Thursday May 12
• Top Android programmer Dan Bornstein testified on May 13 and May 16
• Oracle CEO Safra Catz began her testimony Monday, May 16