SAP-Oracle Dispute Heats Up
Rivals SAP and Oracle are meeting in court today, for the first case-management conference in the long-running dispute over whether an SAP subsidiary wrongfully appropriated proprietary information belonging to Oracle. The parties have clearly stated their complaints and rebuttals, and have described how they foresee the future of this matter. A joint case management statement, released Aug. 28, makes clear that little has been resolved since the last round of documents were filed in June, when SAP acknowledged downloads took place that "may have erroneously exceeded the customer's right of access."
Accused by Oracle of "corporate theft on a grand scale," SAP -- specifically, parent company SAP AG; its U.S. division, SAP America; and its subsidiary, TomorrowNow -- are accused of various violations, including copyright infringement, breach of contract, intentional interference with prospective economic advantage, and unfair competition, as listed in the latest statement. While SAP has admitted that TomorrowNow engaged in inappropriate downloading of documents (and that the Daylight Savings Time solution on SAP's Web site is very similar to Oracle's, another of Oracle's claims) the German company maintains in its new filing that no Oracle documents were ever shared with SAP itself, and that no substantive damage was inflicted upon Oracle.
In the joint case management conference statement, SAP accuses Oracle of being "dramatic but inaccurate." SAP believes Oracle "ignores" three crucial circumstances surrounding the situation: that TomorrowNow had the right to "access Oracle's Customer Connection website" and download "support materials for the customers," that the "downloads were performed by TomorrowNow and not SAP America or SAP AG," and that none of the articles downloaded were leaked to SAP America or SAP AG. Therefore, according to SAP, the purpose of the trial is not on a "grand scale," on the contrary--SAP believes it's merely a "matter of contact interpretation" between TomorrowNow and Oracle.
Oracle response, as filed with the court, suggests that SAP should be held accountable for the actions of its subsidiary. In addition, Oracle says that while TomorrowNow is allowed to download support materials, in this situation the materials accessed were either irrelevant to the particular customer or were downloaded after the customer's support rights had expired. These disagreements, among others, are part of 21 facts and 10 legal issues still in dispute.
Furthermore, each side suggests an alternative path for future legal maneuvers: SAP believes the resolution should take no longer than a few months, given that that the issues are straightforward: Oracle has the numbers, exact customers, and documents that it is accusing SAP of illegally obtaining.
Oracle, on the other hand, believes it deserves to know the details of the entire situation -- such as when the first download occurred and how much SAP gained as a result -- and that the process will involve a thorough investigation requiring a great deal more time. The company claims that it does not yet have the exact calculation of damages despite SAP's assurances. Oracle told the court that the process would require at least 18 months to effectively target those at fault and evaluate the damages.
The documents in question were downloaded by employees of TomorrowNow in late December 2006 and Oracle initially filed suit in March 2007, later amending that filing in June. According to published reports, the TomorrowNow customers whose log-in identifications Oracle claims were allegedly abused include Metro Machine, Honeywell, Merck, OCE Technologies BV, and SPX.
Since June, little has been resolved between the two companies. Oracle claims in its court documents that, over the course of four consecutive days, SAP acquired more than 1,800 items per day for its customer support; according to a statement by Oracle, the average customer typically accesses 20 such items per month. This has also led Oracle to believe that although available records cover only the past several months, SAP and/or its subsidiaries may have been illegally downloading for years, perhaps ever since the German firm's 2005 acquisition of TomorrowNow. Subsequently, Oracle suspects that SAP had downloaded "over 10,000 copyrighted Software and Support Materials," according to an Oracle statement.
One TomorrowNow customer, a representative from Highland, Ill.-based Basler Electric Co., spoke exclusively to
CRM magazine, saying that, while aware of the lawsuit, his company has not suffered any ill effects because of the legal wrangling. In fact, Basler and TomorrowNow happened to have been in the midst of contract negotiations even as the publicity over the controversy built last December; Basler signed on with TomorrowNow' software support service despite the cloud of potential litigation. (In a July 2007 conference call, SAP chief executive officer Henning Kagermann emphasized that steps were being taken to ensure customer service for existing TomorrowNow clients.)
But Basler hardly relies on TomorrowNow for mission-critical initiatives, the Basler employee told
: "We don't do much with [TomorrowNow]; we use them kind of as a safety net.... We haven't had a whole lot of work with them." Yet, he imagines that even if Basler did work extensively with the service provider, the lawsuit still would play a minor role.
The impact for the industry as a whole may be just as insignificant, if one analyst's experience is any measure. "Frankly, I have not heard much talk about this one way, or another," says Bill Band, principal analyst at Forrester Research. "None of my clients are asking about it."
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