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November 5, 2010

SAP hands Oracle $120m – and more could follow

The court case involving Oracle and SAP kicked off this week. Gary Flood takes a look at the early shots


Just when you thought the world of enterprise software had gone back to being safe and boring, us devoted followers of the red-blooded capitalistic soap opera that is Oracle vs SAP have been charmed and delighted that a very nasty trial opened this week for alleged copyright infringement that has already cost the latter SAP a cool $120m in the former’s court costs and lawyers fees – before the issue of damages is even decided.

Which are… more than $2bn in damages for alleged copyright infringement.

The torrid tale started unfolding in March 2007, when Oracle launched the suit, accusing its Teutonic rival of hacking into its computer network and stealing vital product information. Oracle in fact claimed the German firm was guilty of "corporate theft on a grand scale" by gaining illegal access to one of its customer support websites, specifically when staff at TomorrowNow, a firm bought by SAP in 2005, accessed ‘Orrible’s to allegedly illegally download a wide range of copyrighted software and other material. (The software was part of the Peoplesoft business that was Ellison had Borg-ishly assimilated two years previously.)

That July, Walldorf admitted TomorrowNow had carried out "inappropriate downloads" of documents from its rival Oracle, but said it had not accessed the material, changes had now been made to TomorrowNow’s management and it was, you know, upset and sorry.

Alas, as no-one’s womenfolk had been taken as concubines or anyone paraded in chains down Oracle Way as a result of this backdown, Oracle’s lawyers were ordered to start their engines, and three years later we’re all before the Beak.

Indeed, SAP tried to stop the process as late as last week with a last-minute concession that it "materially contributed" to repeated misuse of Oracle’s IP by TomorrowNow (which it’s since shut down by the way). So SAP’s consistent denials that executives of the main company knew about all this and allowed them to continue were withdrawn. If it thought that got it clear, the move backfired; the judge decided that even after admitting that, SAP will still have to clarify its own role in all this.

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That witness list may of course include former SAP chief Léo Apotheker, recently named CEO of Hewlett-Packard; Oracle put his name on a list, which may make his first week in the job (he started Monday) a bit distracting.

In fact – Ellison’s been quite vicious about all this. He’s quoted in the US press as saying no less than this about Apotheker and his new (competitive) outfit: "HP chairman Ray Lane has taken the position that Léo Apotheker is innocent of wrongdoing because he didn’t know anything about the stealing going on at SAP while Léo was CEO. The most basic facts of the case show this to be an absurd lie… Léo knew all about the stealing. In fact, Léo did not stop the stealing until seven months after he became CEO. Why so long? We’d like to know… Ray Lane and the rest of the HP Board do not want anyone to know. That’s the new HP Way with Ray in charge and Leo on the run. It’s time to change the HP tagline from ‘Invent’ to ‘Steal’."

Ouch. Well, can you blame him – it’s too good a PR opportunity to resist as HP, SAP and Oracle increasingly square up.

Will SAP have to pay the full $2bn? Will Apotheker have to iron an extra shirt for his court appearance? Will Larry stop being uncouth? Let’s see what the next few days bring.

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