SAP subsidiary speaks up on Oracle suit but doesn't say much

TomorrowNow reiterates parent company's vow to 'aggressively defend' against claims it stole app support materials

SAP AG's TomorrowNow Inc. subsidiary finally has commented publicly on the legal action it's facing from Oracle Corp., SAP's archrival in the business applications market. But what the third-party support unit had to say wasn't really anything new.

A statement posted Monday on TomorrowNow's Web site didn't directly address the charges of computer fraud, unfair competition, unjust enrichment and other violations that Oracle levied against the SAP unit in a surprise lawsuit (download PDF) filed March 22 in U.S. District Court in San Francisco. And the statement was essentially identical to one issued by SAP itself the day after the lawsuit was filed.

"We are still reviewing the matter, and until we have a chance to more fully understand the allegations, it would not be prudent to comment on the pending litigation other than to make it clear to our customers, prospects, investors, employees and partners that SAP will aggressively defend against the claims made by Oracle in the lawsuit," TomorrowNow said. The statement added that SAP as a whole "will remain focused on delivering products and services -- including those from TomorrowNow -- that ensure success for our clients."

The statement posted by TomorrowNow went on to note that the subsidiary has no plans to change the way it operates. "We are confident in the strength and value of our support services and in all aspects of our business model," the statement said.

Previously, TomorrowNow had directed all requests for comment to corporate officials at SAP, which acquired the Bryan, Texas-based support operation in January 2005. TomorrowNow offers support and maintenance services for PeopleSoft, J.D. Edwards and Siebel applications, all of which are now owned by Oracle via its acquisitions of PeopleSoft Inc. and Siebel Systems Inc.

Oracle's complaint lists SAP, SAP America Inc. and TomorrowNow as defendants, along with 50 unnamed individuals who Oracle says were SAP employees. The 44-page lawsuit alleges that one or more staffers at TomorrowNow -- which Oracle also refers to as SAP TN -- pretended to be Oracle customers and illegally accessed its support Web site for PeopleSoft and J.D. Edwards users.

The TomorrowNow workers downloaded "thousands of proprietary, copyrighted software products and other confidential materials" from the support site to SAP servers, Oracle claims. It alleges that TomorrowNow was compiling "an illegal library" of Oracle-owned content and using the information to offer cut-rate support services to Oracle customers, with a goal of eventually migrating them to SAP's applications.

Debate about Oracle's lawsuit has been intense. Some analysts think the case highlights issues regarding the viability of the third-party maintenance market. Oracle itself is a player in two areas of that market; it offers support for SAP's R/3 applications through a partnership announced last May with CMS Computers Ltd.'s Systime unit, and it unveiled an initiative called Unbreakable Linux last October to support users of Red Hat Inc.'s Enterprise Linux distribution.

SAP made its 2006 annual report publicly available last week, and the numbers listed for TomorrowNow indicate that the subsidiary was something of a poor performer among SAP's businesses. TomorrowNow's operations in the U.S., the U.K., Australia, the Netherlands and Singapore all reported net losses during 2006. In addition, the U.S. operation is the only one of the five that has positive equity, according to the annual report.

Copyright © 2007 IDG Communications, Inc.

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