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SAP Court Move Could Limit Oracle Evidence

By accepting liability, SAP seeks to focus a case that Oracle says leads straight to rival's boardroom.

Hoping to limit the issues in a pending court case brought by Oracle, SAP announced Thursday that it will accept liability for copyright infringement and downloading conduct by its former TomorrowNow support-services unit.

In a filing with the U.S. District Court in Northern California, SAP said it would accept financial responsibility for any judgment awarded against TomorrowNow. Oracle accused the unit of "corporate theft on a grand scale" in a lawsuit filed in March 2007.

SAP previously admitted that TomorrowNow wrongly downloaded documents. But Thursday's legal admission and acceptance of liability was described by technology and intellectual property attorney Julie Machal-Fulks as a common tactic to get the court to restrict what will be considered during the trial.

"SAP is trying to isolate the potential evidence that would be admitted in the case," said Machal-Fulks, a partner with Dallas-based Scott & Scott. "SAP was going to have a hard time overcoming the liability, so it's a smart move in that they are trying to get the court to focus on damages."

SAP has maintained it was not directly involved in TomorrowNow’s service operations and did not engage in any of the copying or downloading alleged. But Oracle expanded its case in July 2008 saying SAP senior executives knew that TomorrowNow acted illegally but chose to cover up the practice rather than stop it.

Oracle's wider allegations are that SAP "conspired to leverage the stolen Oracle intellectual property to entice customers to migrate to SAP software applications through SAP's 'Safe Passage' program."

If Oracle can prove its case, it could sue for statutory damages rather than actual damages.

"If Oracle can prove there were willful acts, statutory damages could reach $150,000 per work infringed," said Machal-Fulks.

Oracle alleges that TomorrowNow "copied and swept thousands of Oracle products and other proprietary and confidential materials into its own servers" using fake log-ins or credentials stolen from legitimate, high-profile Oracle customers such as Honeywell, Merck & Co., and others.

Oracle offered no comment on SAP's latest announcement. If the court limits the scope of the case, it might limit opportunities to introduce incriminating evidence. If Oracle settles before the trial, which is set to begin November 1, it would hint there was a lack of evidence of an SAP coverup.

The case also has implications for Oracle's lawsuit against Rimini Street. Oracle filed suit in January against the discount support-services provider, charging Rimini with stealing Oracle's software and intellectual property. So Oracle may have reason to hold out for a court victory to cite as a precedent.

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