Ellison Testifies He Was 'Deeply Worried' About SAP Stealing Oracle Customers

By Chris Preimesberger  |  Posted 2010-11-08 Print this article Print

UPDATED: Oracle CEO tells federal judge in a packed courtroom that he was worried about his company "bleeding customers" because of the illegal actions of an SAP acquisition.

OAKLAND, Calif. -- Apparently, German enterprise application maker SAP AG is a much more formidable competitor than Oracle CEO and co-founder Larry Ellison has ever had to admit in the past.

Ellison, testifying for the first time in the punishment phase of a copyright infringement trial that started Nov. 1, told Federal Court Judge Shirley Hamilton and a packed courtroom Nov. 8 that he was "deeply worried" about his company "bleeding customers" because of SAP's 2005 acquisition of an American company that specialized in luring customers away from competitors.

On numerous occasions over the last few years, Ellison has downplayed SAP's technology, denigrating it as "software that runs on 20-year-old code that can't handle workloads on modern servers."

The court case, originated by an Oracle lawsuit first brought in 2007, is to determine how much SAP will be fined for the actions of a former wholly owned affiliate, TomorrowNow.

SAP has admitted that TomorrowNow illegally downloaded a substantial amount of Oracle's enterprise support software and product documentation and then used it against Oracle for SAP's profit.

Oracle is officially seeking $2.15 billion in business restitution from SAP, which begs to differ with that figure. The Germany-based software maker believes that the Oracle demand is vastly inflated and that a settlement in the neighborhood of $40 million is a fairer amount.

Ellison told Judge Hamilton and an eight-person jury that SAP -- through the deeds of its subsidiary -- actually cost Oracle as much as $4 billion.

SAP has insisted that TomorrowNow acted on its own volition, that the corporation did not know about or condone the IP piracy, and that SAP stopped the pirating as soon as it found out about it.

Ellison maintains focus

Ellison kept his testimony focused on the loss of business by his company and avoided personal commentary on any actions involving SAP executives, whom Ellison has previously accused as being knowledgeable about the illegalities and complicit in the actions of TomorrowNow.

One of those executives is new Hewlett-Packard CEO Leo Apotheker, a former CEO of SAP who was one of the company's three top executives when the TomorrowNow software piracy occurred.

Oracle tried to have Apotheker subpoenaed to testify in the trial but HP nixed the request. HP says its policy is not to reveal the whereabouts of its executives; it is believed that Apotheker is out of the country.

Ellison also told the judge and jury that SAP is indeed a power in the industry -- Oracle's largest in the enterprise application sector -- and that "if they had access to all of our intellectual property, all of our engineering, they could make a very credible offer to all of our customers," he said.

Ellison, under persistent questioning by SAP attorney Tharon Lanier of the Jones Day law firm, wouldn't give a specific number of customers lost to SAP for several minutes before finally admitting that "about 350" customers were lost due to TomorrowNow's actions.

Lanier had to ask Ellison the question several times in order to obtain the answer. Ellison finally declared: "I do not tend to write those sorts of things down."

Ellison also told Lanier and the court that he could produce no Oracle e-mails or other documents proving that Ellison or other Oracle executives thought they would lose a much higher number of customers from the SAP actions.

Oracle Co-President Safra Catz was to testify following Ellison on Nov. 8.

SAP Director of Global Communications Saswato Das told eWEEK via e-mail that "Mr. Ellison's testimony was anticlimatic given his statements these past weeks.

"Important to the defense, he acknowledged losing only 350 customers to TN, far below his own estimates of 20 to 30 percent of PeopleSoft that could be lost.  This case should be about the actual damages caused by the limited operations of TomorrowNow," Das wrote.

Editor's note: This was updated to include more detail about the testimony and a reaction from the SAP corporate spokesman.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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