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Oracle broadens allegations against SAP over support info downloads

Amended lawsuit claims SAP execs knew that third-party support unit 'did not operate legally'

By Chris Kanaracus
July 28, 2008 12:00 PM ET

IDG News Service - Oracle Corp. on Monday broadened its fraud and unfair-competition lawsuit against SAP AG, charging in an amended complaint that top executives at SAP bought third-party support vendor TomorrowNow Inc. even though they knew it had an "illegal" business model.

Oracle sued SAP last year, charging that employees at TomorrowNow, which provides support for Oracle's business applications, had illegally downloaded data from an Oracle support Web site for use in servicing customers.

SAP — which announced last week that it plans to close TomorrowNow — has said that the support subsidiary was authorized to download materials from Oracle's Web site on behalf of customers.

But SAP also has acknowledged that "some inappropriate downloads of fixes and support documents occurred," although it claims that the information remained in TomorrowNow's systems and that workers at SAP itself didn't gain access to Oracle's intellectual property as a result of the downloads.

In contrast, Oracle's amended complaint (download PDF) contends that SAP, eager to take support revenue away from Oracle as the latter company prepared to acquire ERP vendor PeopleSoft Inc., bought TomorrowNow in early 2005 knowing full well that the acquisition could lead to legal entanglements.

Oracle said earlier this year that it planned to expand its lawsuit to include charges that SAP officials were aware of what was happening at TomorrowNow. In the amended complaint, Oracle claimed that before approving the acquisition of TomorrowNow, SAP executive board members, including then-CEO and now co-CEO Henning Kagermann, "received a highly confidential document" outlining the business case for the deal.

"The presentation made clear that TomorrowNow did not operate legally," Oracle said in the new complaint, adding that the document "detailed how TomorrowNow relied on 'non-production' copies of PeopleSoft software." And, according to Oracle, the SAP board members were warned in a section headed "Threats" that TomorrowNow's rights to access the PeopleSoft software were "very likely to be challenged by Oracle" — potentially posing "a serious liability" to SAP.

Oracle claimed that SAP's board "ignored these warnings and embraced TomorrowNow's illegal business model" because it couldn't resist the business potential of the third-party support market, and because it didn't think Oracle would file suit over the deal.

The amended complaint, which was filed in U.S. District Court in San Francisco, also paints the TomorrowNow purchase as "one element of a larger scheme by SAP to steal and misuse Oracle's intellectual property."

In addition, the new filing declares as false Kagermann's contention that SAP employees outside of TomorrowNow didn't gain access to Oracle's intellectual property as a result of the downloads. According to Oracle, SAP workers could access TomorrowNow's systems "through a special link" on the support unit's Web site, while TomorrowNow employees could access SAP systems through an internal network called SAPnet. Employees at SAP and TomorrowNow "routinely e-mailed content and intellectual property among themselves," Oracle added.

SAP spokesman Saswato Das would comment only briefly on the filing of the amended complaint, saying that it "repeats many of the themes and allegations" made in an initial amendment of the lawsuit last year.

Das added that SAP will file a response to the latest complaint by a Sept. 11 deadline for doing so. "Ultimately, it is the court and legal system that will determine the facts and remedies in this case," he said.

Reprinted with permission from Story copyright 2014 International Data Group. All rights reserved.
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