05:42 PM

Oracle Accuses SAP Execs Of Illegal Cover Up

Oracle claims SAP senior executives knew the business model of SAP-owned TomorrowNow was illegal and even had a name for its cover-up: "Project Blue."

Oracle on Monday claimed SAP senior executives knew the company's TomorrowNow subsidiary acted illegally in downloading Oracle software and documents, but chose to cover up the practice rather than stop it.

Oracle made the allegations in its second amended complaint against SAP, which was filed in U.S. District Court in Northern California. The original lawsuit filed in 2007 accuses SAP of "corporate theft on a grand scale" because of document downloads by TomorrowNow employees. TomorrowNow, which SAP bought in 2005, provided support for Oracle and other business applications.

Oracle's latest filing ads a new twist to the legal battle. Along with its previous allegations, Oracle now says SAP senior executives knew the business model of SAP-owned TomorrowNow was illegal, but rather than change it, "conspired to leverage the stolen Oracle intellectual property to entice customers to migrate to SAP software applications through SAP's 'Safe Passage' program."

In addition, SAP executives further conspired "to cover up the fundamental illegality of that program." In confidential internal presentations, SAP even had a name for its cover-up, "Project Blue," Oracle said. Versions of Project Blue presentations were prepared for the SAP executive board of directors as early as June 2005, according to Oracle.

SAP could not be reached for comment. However, a spokesman for the business applications maker told MarketWatch that the company could file a formal response to the latest allegations in September. "We'd prefer to conduct our discussion through the legal system," the spokesman told the financial news site.

The original lawsuit claimed TomorrowNow employees "copied and swept thousands of Oracle products and other proprietary and confidential materials into its own servers" using fake logins or credentials stolen from Oracle customers such as Bear Stearns, Honeywell, and Merck. The documents allowed SAP "to offer cut-rate support services to customers who use Oracle software, and to attempt to lure them to SAP's applications software," Oracle charged. Oracle later amended its suit to include copyright and breach-of-contract claims.

Oracle has said in court filings that it may pursue damages exceeding $1 billion. The trial is set for Feb. 2010.

SAP acknowledged it bought TomorrowNow in part to lure Oracle customers but said the downloaded materials were not seen by anyone within SAP. Instead, the documents and code were obtained on behalf of TomorrowNow customers and not for competitive purposes.

SAP this month said it plans to shut down TomorrowNow by Oct. 31 and to move its more than 225 customers to other service providers.

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