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SAP admission of liability highlights Oracle third-party support issues

Oracle/Rimini Street lawsuit will be a real test of legality of third-party services

August 6, 2010 09:35 PM ET

Computerworld - SAP AG's admission of some liability in a lawsuit brought against it by Oracle Corp. over third-party support services will likely speed resolution of the dispute between the two companies.

However, it really is a second similar lawsuit that Oracle filed earlier this year against another third-party service provider, which could prove more meaningful for Oracle customers, analysts said.

SAP agreed on Wednesday to assume liability for copyright theft claims made against it by Oracle.

The charges relate to a now defunct SAP subsidiary called TomorrowNow, which provided third-party support services to Oracle customers at about 50% of the cost that the vendor charged for it.

In its lawsuit, Oracle accused TomorrowNow of illegally downloading Oracle updates and maintenance tools in providing its third-party support.

In January, Oracle filed a somewhat similar lawsuit against Rimini Street, another third-party service provider that has managed to snag a growing number of Oracle and SAP customers largely by virtue of the fact that its prices are about half that of the enterprise vendors.

Oracle has accused Rimini Street of "massive theft" of Oracle software and support materials.

The lawsuits are viewed by many as somewhat cynical attempts by Oracle to protect its lucrative software maintenance revenues against outsiders.

Oracle, like other major vendors of enterprise software, including SAP, derives a major portion of its revenues from application support and maintenance services. Customers who don't sign up for the services are precluded from receiving any further software updates or patches from the company.

SAP's admission of liability will likely resolve its dispute with Oracle quicker, said Frank Scavo, managing partner of the IT consulting firm Strativa.

But the real test of Oracle's ability to prevent other companies from providing maintenance and support services for its software is the Rimini lawsuit, Scavo said.



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