Judge Orders Mediation in Oracle`s Suit Against SAP

A judge in U.S. District Court in San Francisco ruled that Oracle and SAP should try to settle charges of intellectual property theft and copyright infringement through mediation.

Oracle, however, says it wants no part of any mediation efforts and intends to file new claims against SAP and its TomorrowNow subsidiary.

The judge's order for mediation, a process known as Alternative Dispute Resolution, in which the parties in a lawsuit attempt to settle a case without a trial, came after Oracle and SAP met Feb. 12 in a pre-trial case management meeting at the courthouse.

Oracle initially filed suit last March claiming corporate intellectual property theft on a grand scale. Several months later, Oracle amended its charge to include allegations of code theft, copyright infringement and breach of contract claims. Oracle is again on the verge of amending its complaint against SAP, according to company spokesperson Debra Hellinger.

"As set forth in Oracle's current claims, it appears that SAP infringed Oracle's intellectual property on a daily basis over a course of many years, in ways that Oracle is only beginning to discover," said Hellinger in a statement.

"In addition, Oracle has uncovered a broader program of copyright infringement that is entirely different from the scheme alleged in the current complaint. Based on this evidence, Oracle will file an amended complaint that will include these new complaints."

An SAP spokesperson said that the company cannot comment on Oracle's expected actions.

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It's difficult to imagine what Oracle's new allegations might include if it entails actions over "many years"—that still involves TomorrowNow under the SAP umbrella. As a stand-alone company, TomorrowNow was founded in 1998 by Andrew Nelson (who resigned in November). In 2002 the company introduced third-party support for PeopleSoft enterprise applications.

By 2004 TomorrowNow supported all of PeopleSoft's current product versions and had added support for JD Edwards applications, which PeopleSoft had acquired. Then in 2005, after a tremendously acrimonious takeover battle, Oracle succeeded in acquiring PeopleSoft. Shortly after, in January 2005, SAP acquired TomorrowNow as what could only be seen as a defensive or retaliatory move against the ever-encroaching Oracle.

Shortly after SAP acquired TomorrowNow, Oracle's CEO Larry Ellison warned during a January 2005 call with press and analysts that SAP should watch its back—or, more specifically, its IP privileges as a third-party support provider of Oracle applications.

" SAP has every right to provide support for PeopleSoft applications as long as they don't violate our intellectual and contractual property rights," Ellison said, in measured tones. "It might make it awkward for them. That's our intellectual property, and they should be cautious."