Oracle Sues SAP Over 'Corporate Theft on a Grand Scale'

Published: March 28, 2007

by Timothy Prickett Morgan

Database and application software maker Oracle last week sued competitor in the application space, SAP, for what it called "corporate theft on a grand scale" in its complaint. The suit was launched in the U.S. District Court for the Northern District of California, in San Francisco. Oracle and SAP Americas are both Delaware corporations, and the California venue was chosen because of state laws against computer fraud.

According to the suit, Oracle is seeking a jury trial after it discovered that SAP took software products and other confidential materials related to the support of Oracle's products from its internal systems. "SAP gained repeated and unauthorized access, in many cases by use of pretextual customer log-in credentials, to Oracle's proprietary, password-protected customer support Web site. From that Web site, SAP has copied and swept thousands of Oracle software products and other proprietary and confidential materials onto its own servers. As a result, SAP has compiled an illegal library of Oracle's copyrighted code and other materials. This storehouse of stolen Oracle intellectual property enables SAP to offer cut-rate support services to customers who use Oracle software, and to attempt to lure them to SAP's applications software platform and away from Oracle's."

Oracle is seeking an injunction to stop the intrusions into its system and the theft of its materials and is asking its lawyers to seek to recovery damages and legal fees in the lawsuit. Oracle also wants the materials returned.

The problem appears to have come to light in November 2006, when Oracle noticed an unusual amount of download activity on the support site for its PeopleSoft and J.D. Edwards software suites. Oracle claims to have invested billions of dollars in the materials that are behind the Customer Connection site, which has patches and updates to software as well as instructions for customization and installation of these ERP suites.

Using one customer account, Oracle alleges that an SAP branch office in Texas (near SAP's TomorrowNow software support unit, which was founded by some ex-PeopleSoft employees) downloaded 1,800 items in one day, compared to a typical 20 items per month for this customer. SAP acquired TomorrowNow in January 2005. Oracle says that SAP did more than 10,000 illicit downloads from the Customer Connection site between September 2006 and January 2007.

Oracle's suit contends that the theft of this material by SAP is in violation of the Federal Computer Fraud and Abuse Act and the California Computer Data Access and Fraud Act; Oracle is also alleging unfair competition, intentional and negligent interference with prospective economic advantage and civil conspiracy.

An SAP spokesperson said that the company has received the complaint and is reviewing it. Ironically, the suit hits the same day that the executive board of SAP back in Walldorf, Germany, recommended that it raise the company's dividend by 27 percent to 0.46 euros per share, or about 560 million euros across all SAP shareholders.

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