SAP Prepares Response to Oracle Lawsuit

By Renee Boucher Ferguson  |  Posted 2007-07-02 Email Print this article Print
 
 
 
 
 
 
 

Bitter feelings between the two rivals have been fueled by claims of patent infringement and corporate theft.

SAP is getting ready to fire back at rival Oracle, the last salvo in a bitter competition that was most recently fueled when Oracle filed a lawsuit.

SAP officials said in a statement that they will respond to Oracle's lawsuit through two press conferences on July 3. The first is scheduled for 2 a.m. EST, the second at 11 a.m. EST.

The legal wrangling officially started in March when Oracle, of Redwood Shores, Calif., filed a complaint against SAP claiming "corporate theft on a grand scale." Oracle alleged that SAP, through its third-party support organization, TomorrowNow, hacked into Oracle's applications support systems and illegally downloaded secret product information. In June, Oracle added copyright infringement and breach of contract claims to the suit.

SAP has denied any wrongdoing and has yet to respond legally to Oracle's claims.

The roots of the down-on-the-ground grappling between SAP, of Waldorff, Germany, and Oracle run deep. While steadfast partners on the database front—a majority of SAP's customers run their software on Oracle's database technology—the relationship soured when Oracle embarked on a hostile takeover bid for PeopleSoft, the world's second largest business applications developer, in 2004. When Oracle succeeded and acquired PeopleSoft in late 2005 after a bitter battle, SAP acquired TomorrowNow, which provides support for Oracle's applications (not only PeopleSoft, but also JD Edwards and Siebel, which Oracle also acquired).

With the TomorrowNow acquisition, SAP started its "Safe Passage" program that provides third-party support for Oracle applications, at about 50 cents on the dollar.

As soon as SAP acquired TomorrowNow, the gloves between the two companies really came off. Oracle CEO Larry Ellison vowed to get even.

During an analyst day event in January 2005, Ellison put forth a stern warning to SAP regarding TomorrowNow: "SAP has every right to provide support for PeopleSoft applications as long as they don't violate our intellectual and contractual property rights. It might make it awkward for them. That's our intellectual property."

David O'Connell, an analyst with IT research firm Nucleus, said that Oracle may have something with its suit against SAP.

SAP says it will aggressively defend against Oracle's claims. Click here to read more.

"There is a great deal of somewhat damning specificity in Oracle's claim; [the suit names ] servers and passwords that were used at the address in Texas where TomorrowNow is located. SAP has a real challenge to respond to that specificity," O'Connell said.

He added that SAP's delay in responding to Oracle's suit has hurt the company.

"This hurts in a lot of ways," O'Connell said. "When a company alleges something with such a great deal of specificity, for SAP to take so long to respond is crazy. They look like a deer in the headlights."

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