(Reuters) - Business software maker SAP agreed to pay rival Oracle Corp $306 million in damages over copyright infringement allegations against a SAP unit, avoiding a new trial.

The proposed agreement requires court approval, and would clear the way for Oracle to ask the 9th U.S. Circuit Court of Appeals to restore a $1.3 billion jury award in this case, according to a joint filing with a federal court in Oakland, California on Thursday.

The companies agreed to the $306 million "to save the time and expense of this new trial, and to expedite the resolution of the appeal," lawyers for Oracle and SAP said in the filing.

A Northern California jury determined in 2010 that Oracle should be paid $1.3 billion over accusations SAP subsidiary TomorrowNow wrongfully downloaded millions of Oracle files.

However, U.S. District Judge Phyllis Hamilton last year discarded the jury verdict and said Oracle could accept a $272 million award, or opt for a new trial against SAP.

The proposed agreement also confirms that Oracle should recover $120 million for legal bills, a sum that has already been paid.

"SAP believes this case has gone on long enough," a spokesman said in an email.

"Although we believe that $306 million is more than the appropriate damages amount, we agreed to this in an effort to bring this case to a reasonable resolution," he added.

The case is Oracle USA Inc et al v. SAP AG et al, U.S. District Court, Northern District of California, No. 07-01658

(Reporting By Nicola Leske and Jonathan Stempel; editing by Carol Bishopric)