Those damages would apply if Google were found to infringe on the two remaining patents in the case (the others having been withdrawn after the USPTO found them to be invalid). Google was offering, if Android is found to be infringing, to pay a percentage of Android royalties to Oracle until the patents expire. Based on the numbers generated by the court-appointed expert they offered to pay Oracle 0.5% for one patent, and 0.015% for another (or 0.065% if Oracle won on both patents). Google also offered to pay an additional $2.8 million in past damages.
Oracle rejected the agreement, but probably not because the numbers are too low; while Oracle does make mention of expecting higher payments, they specifically cited the “possibility of winning an injunction against Android.” Oracle has at various times claimed billions of dollars in damages, but no serious analyst feels they can win such a huge settlement at this time. Instead, Oracle is hoping to win an injunction – a court mandated cease and desist request. If Oracle could secure a “stop ship” order on Android, their leverage over Google would be immense, allowing them to extort command the type of huge cash payout that they are unlikely to win in court.
Oracle's ability to secure an injunction on Android will largely rise and fall on their copyright claims; with only two patents remaining (and serious question as to whether they can prove infringement) Oracle needs to win big on the copyright case or go home. Yet theor hopes for an injunction would probably require them to win everything, and being able to "skip" the damages portion of the patent lawsuit may make it less likely that they could secure one.
Both sides will get a chance to go home on April 9th, as the court has ordered Google and Oracle to conduct settlement negotiations to see if they can avoid going to trial. If either side is unsure about their legal prospects, this would be an ideal time to save some face and cut a deal.
source: Reuters via The Verge