Oracle, SAP Lawsuit Heads To Court

charging its rival with corporate theft and fraud

The lawsuit revolved around SAP's TomorrowNow subsidiary, which offers outside, cut-rate maintenance services for Oracle's applications. Acquired by SAP in 2005 and operated as a quasi-autonomous entity, TomorrowNow allegedly downloaded, on its clients' behalf, Oracle support materials to which TomorrowNow's customers lacked licensed access rights. In early July, SAP filed a response to Oracle's lawsuit that admitted to the charges, in part: "Certain downloads took place that, in violation of [TomorrowNow] policies, may have erroneously exceeded the customer's right of access," SAP conceded. SAP has not said whether the violations were intentional or inadvertent.

With SAP admitting to some of Oracle's changes, the two sides remain at loggerheads over the significance of the violations. SAP, which claims no Oracle information ever crossed the "firewall" between TomorrowNow and SAP, wants Oracle to prove that it suffered harm from the improper downloads. Oracle wants to rummage around in SAP's files to find out how extensive SAP's downloading was and how widely the information was disseminated.

"The evidence of unauthorized downloading detailed in Oracle's First Amended Complaint is likely only the top of the iceberg," Oracle said in a filing earlier this week.

The discovery process is a major bone of contention between the two vendors. SAP, which plans to file for summary judgment, argues that the case is focused on "a few and relatively straightforward issues" that can be covered in a discovery period of several months. Oracle is seeking a more extensive discovery process lasting at least 18 months.

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SAP argued in its filing that the two sides should be compelled to participate in mediation, while Oracle says it does not want to discuss settlement until it has determined the extent of SAP's "illegal taking and misuse."

Oracle's lawsuit has already prompted changes at SAP. It named a new executive, former CFO Mark White, to serve as TomorrowNow's executive chairman and oversee the unit, and it has revamped its policies to permit downloading of Oracle materials only at client locations. Oracle grumbled about that change in its legal filing: "These course corrections have slowed the preservation negotiations and initial discovery process, but also speak to the merits of Oracle's underlying allegations."

Tuesday's case-management conference will take place before judge Martin Jenkins in the San Francisco branch of the U.S. District Court for the Northern District of California.