The Oracle vs. TomorrowNow/SAP Courtroom Drama Goes on as Scheduled

November 1, 2010 Timothy Prickett Morgan

The fight continues between the lawyers handling rivals Oracle and SAP in the TomorrowNow lawsuit as well as the PR people at these two companies and Hewlett-Packard, which has hired former SAP CEO Leo Apotheker to be its new CEO.

The TomorrowNow trial, the result of a lawsuit filed in March 2007 by Oracle in the wake of SAP’s acquisition of the provider of third party maintenance on PeopleSoft, Siebel, and JDE software suites, was almost delayed last week, but the judge handling the case in the U.S. District Court for the Northern District of California in San Francisco was having none of that.

It all started in the wake of Apotheker taking the CEO job at HP. Oracle added Apotheker to the list of witnesses it wanted to call during the trial. Apotheker, who has crossed swords with and thrown barbs at Oracle CEO Larry Ellison, who was a top executive at SAP when the company bought TomorrowNow and was co-CEO when it was shut down after SAP agreed that TomorrowNow was behaving illegally in providing third party support for products that were acquired by Oracle. The funny bit is that Apotheker went on a world tour of SAP sites and visited customers and has not yet entered the United States, where he can be subpoenaed.

Knowing this TomorrowNow trial is going to be a media circus, SAP, according to a report in the Wall Street Journal, asked the US District Court on October 23 to put a gag order on the lawyers to keep them from yapping about the trial as it is proceeding.

This, of course, played right into Ellison’s PR-savvy hands.

“HP chairman Ray Lane has taken the position that Leo Apotheker is innocent of wrongdoing because he didn’t know anything about the stealing going on at SAP while Leo was CEO,” Ellison said in a statement on October 27. “The most basic facts of the case show this to be an absurd lie. Oracle sued SAP for stealing in March of 2007. Leo became CEO of SAP in April of 2008. Leo knew all about the stealing. In fact, Leo did not stop the stealing until 7 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’.”

Can you tell that Lane used to be president at Oracle? (Lane quit in a huff more than a decade ago before Ellison went on his acquisition tear with Oracle.)

A few days later, in a filing ahead of the trial, SAP said it would no longer contest Oracle’s claims that SAP’s executives knew about copyright infringement relating to support patches as well as the illegal downloading of documents from Oracle support systems. (This is called a contributory infringement claim in the lawsuit.) SAP said it was not contesting this claim because it didn’t want to give Oracle a chance to rake SAP executives over the coals. The impression you get from the filings is that SAP wants the jury to simply assess what the damages are, pay the bill, and move on. And SAP is clearly expecting the jury to award less than the $2 billion that Oracle is asking for. SAP has set aside $160 million to cover costs of the trial and damages and has said the damage was on the order of tens of millions of dollars, not billions.

And so Oracle then released this statement, which your grade-schooler would call two for flinching:

“SAP management has insisted for three and a half years of litigation that it knew nothing about SAP’s own massive theft of Oracle’s intellectual property,” said spokesperson Deborah Hellinger. “Today, SAP has finally confessed it knew about the theft all along. The evidence at trial will show that the SAP board of directors valued Oracle’s copyrighted software so highly, they were willing to steal it rather than compete fairly.”

In the meantime, SAP reported it financial results for the third quarter ended in September, with software revenues up 25 percent to €656, with software support revenues up 19.7 percent to €2.32 billion; overall revenues rose by 19.7 percent to just over €3 billion. Net income for the software giant was €501 million, up 12 percent compared to last year. SAP had €2.82 billion in cash and equivalents as it exited the quarter, and it may need a chunk of that to get Oracle to shut up and move on.

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