Ellison Blasts New HP CEO in Tangled Web over SAP Lawsuit

By Chris Preimesberger  |  Posted 2010-10-28

Ellison Blasts New HP CEO in Tangled Web over SAP Lawsuit

On the eve of the final skirmish in the legal war Oracle has been waging since 2007 with Germany-based databaser SAP, CEO Larry Ellison has been making some enterprise-size waves-and not just at his legal opponent.

Starting Monday at a courthouse in Oakland, Calif., Oracle and SAP will go before a judge and jury, who will decide how much SAP will be fined for one of its wholly-owned affiliates admittedly pilfering a lot of Oracle's enterprise support software and then essentially using it against Oracle for its own profit.

The amount of the fine could range from the tens of millions-which is what SAP thinks is appropriate-to $2.15 billion, which is an amount of damages Oracle says it suffered and SAP does not think appropriate.

Oracle based the $2.15 billion on its estimation of the value of the property SAP admitted stealing.

In March 2007, Oracle sued Texas-based SAP subsidiary TomorrowNow-which has been closed down-for stealing intellectual property by gaining unauthorized access to a customer-support Website and copying thousands of pages of software documentation and support software.

Oracle claimed that more than 8 million instances of its enterprise support software were stolen, stored on SAP's servers and used without its permission. It also charged that SAP/TomorrowNow deployed automated bots to carry out the bad deeds to help move customers from PeopleSoft (owned by Oracle) over to SAP.

Enterprise support software amounts to about half of Oracle's revenue, so this was no minor infraction.

SAP has acknowledged the illegal downloads took place but said the information never left TomorrowNow and that SAP never saw them. Oracle finds that very hard to believe.

There's more: Ellison also contends that the incoming CEO of Hewlett-Packard, Leo Apotheker, who was co-CEO of SAP when all this IP piracy was happening, knew all about the questionable goings-on, yet did nothing to prevent it for seven months.

Ellison contends that Apotheker was in effect the CEO at the time of the thefts and should testify under oath in this case, which would disrupt his first few weeks on the job at HP and could possibly expose him as a participant in the thievery, thus discrediting HP and its board for hiring him.

HP CEO out of the picture for now

eWEEK was told by a source familiar with the situation that Apotheker is out of the country touring HP locations, and thus cannot be subpoenaed to appear until he returns, although HP would not confirm or deny that to eWEEK. HP does not want him to have to testify for a number of reasons, its main one being that Apotheker doesn't need the distraction going into a huge new job. Fair enough.

SAP, a longtime partner of HP's, has said that TomorrowNow was essentially out of Apotheker's purview and that Apotheker wasn't CEO at the time of the misdeeds. SAP also charged Oct. 27 that Ellison is using the trial as part of his personal crusade against HP.

SAP's lawyers on Oct. 22 asked a federal judge to issue a gag order on Oracle's attorneys about all things related to the TomorrowNow lawsuit. The judge hadn't granted that as of Oct. 27.

No Gag Order, So Ellison Keeps Talking


Ellison isn't gagged. Late in the afternoon on Oct. 27, Oracle issued the following statement from its CEO:

"HP Chairman Ray Lane [who's also starting his new position on Monday] has taken the position that Leo Apotheker is innocent of wrongdoing because he didn't know anything about the stealing going on at SAP while Leo was CEO. The most basic facts of the case show this to be an absurd lie. Oracle sued SAP for stealing in March of 2007. Leo became CEO of SAP in April of 2008. Leo knew all about the stealing. In fact, Leo did not stop the stealing until 7 months after he became CEO. Why so long? We'd like to know. Ray Lane and the rest of the HP Board do not want anyone to know. That's the new HP Way with Ray in charge and Leo on the run. It's time to change the HP tagline from 'Invent' to 'Steal.'"

Knowing he has the SAP case in the bag, is Ellison merely trying to denigrate HP, his love-hate IT partner, and its new leader because the two companies now compete in the server and storage markets? Possibly, but it certainly goes deeper than that.
There is understandable frustration on Ellison's part in that SAP's subsidiary stole software and ultimately used it to take away business from Oracle. If Oracle or any other American company were to steal 8 million instances of software, for example, and use them to gain illicit profits, the Department of Justice would swoop in as quickly as one could say "plug and play."

This IP theft is relevant to the industry because all three of these companies-Oracle, SAP and HP-do a lot of business with, and against, each other. They can't continue to work together if one of them cannot be trusted.

A lot of other companies do a lot of business with those three Tier 1 IT enterprises. Who knows how far this spat could spider out?

Oracle's biggest database reseller? SAP, natch

SAP, ironically, is Oracle's biggest database reseller. That's correct. SAP has had a reseller agreement for years with Oracle to sell Oracle DB on its paper; when SAP sells a business application, it often comes with an Oracle runtime agreement.

You say you didn't know this? You're not the only one.

HP and Oracle have worked together for years to sell into large clients in government, defense, scientific and other high-end IT systems. Likewise, SAP and HP do a huge amount of business together also, primarily in Europe and Asia.

Yet these three squabble endlessly, like members of a family who can't live together-and can't kill each other.

It's a tangled web, to be sure. A soap opera writer couldn't make this stuff up.

Finally, there's this: Complicating all this is the fact that HP's former CEO, Mark Hurd, is now Oracle's co-president.

That in itself would be irony enough, but Ellison also went so far as to insult HP's board of directors (including new board chief Ray Lane, himself a former president of Oracle) for making a questionable personnel move by forcing a brilliant manager (Hurd) out of his job for what Ellison considers unimportant reasons (bad business conduct and a financial cover-up involving a former corporate event hostess).

Got that all straight? Keep an eye on this; there's more to come.

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