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.
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.”
SAP Not Without Fault
While it appears that Ellison is seeking SAP’s comeuppance, SAP isn’t without fault. Last July, after conducting its own internal investigation, SAP CEO Henning Kagermann admitted that TomorrowNow employees had indeed improperly downloaded Oracle documentation to TomorrowNow’s servers. But, said Kagermann, SAP had no knowledge of the documents.
In a prepared statement released July 3, Kagermann made several key points in SAP’s defense: that most of Oracle’s documents were downloaded properly; that SAP does not have access to the wrongfully downloaded documents (or any Oracle documentation); that TomorrowNow’s data is strictly confined behind a firewall (away from SAP’s eyes); and that SAP had proper downloading procedures in place that were not followed.
“Third-party support providers like TomorrowNow depend on their customers permitting the service provider access to their support documents, to provide support for those applications. Even Oracle admits to the appropriateness of this practice,” said Kagermann in the July 3 press conference.
“But even a single inappropriate download is unacceptable from my perspective. We regret very much that this occurred. I want to reassure our investors, customers, partners and employees that SAP takes any departure from the high standards we set for all our businesses very seriously, regardless of where it occurred or how confined it may be.”
Despite Kagermann’s statements, SAP has not seemed too rattled by Oracle’s claims of large-scale malfeasance. Prior to the first case management conference last September, SAP released this statement: “Oracle’s statement of -facts’ is dramatic but inaccurate. This case, in short, is about whether TomorrowNow exceeded its customers’ rights in downloading certain materials. That is not a matter of ‘corporate theft on a grand scale.'” On that note, SAP requested that the case be sent to mediation.
Oracle’s Hellinger suggested in Feb. 14’s statement that the case going to mediation should not be considered a win for SAP. “Most cases are referred to [Alternative Dispute Resolution], no date for mediation has been set, and we are not currently in settlement discussions [with SAP],” she said. “In fact, such discussions are premature.”