The admission means SAP will likely be liable for big damages--and possible further investigation--in the suit filed against it by Oracle, which alleged that the SAP-acquired TomorrowNow operation improperly accessed Oracle code.

Fritz Nelson, Vice President, Editorial Director InformationWeek Business Technology Network

October 28, 2010

3 Min Read

In a shocking last-minute move, SAP has admitted contributory liability in a court filing posted Thursday in the case Oracle has brought against it for copyright infringement involving its now-defunct TomorrowNow acquisition.

Earlier this year, SAP admitted only vicarious liability, meaning it admitted wrongdoing on TomorrowNow's part, but not its own, claiming TomorrowNow's illegal practices didn't occur with SAP's knowledge or involvement, as Oracle had claimed and upon which it had based hefty damage requests.

This new information could delay the Oracle vs. SAP trial, which has been scheduled to start Monday, Nov. 1, as late as Thursday, November 4 at the behest of Oracle. The venue for the trial is an Oakland courthouse of the U.S. District Court for the Northern District of California.

The SAP admission is also likely to increase the scope of damages a jury will award Oracle. Observers believe those damages could potentially be closer to the billions Oracle is seeking, rather than the roughly $40 million, which SAP has been hoping for.

It could spur action by the U.S. Justice Dept, which some industry observers have said is closely watching the case. In fact, the DOJ could act beyond potentially prosecuting TomorrowNow employees involved in the scheme, possibly touching SAP executives, including incoming HP CEO Leo Apotheker.

Earlier Thursday afternoon, Oracle released the following statement: "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. 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."

SAP Court Letter

The official word from SAP’s attorneys came in a letter written to the court: "It makes good sense to eliminate the issue now, because whether SAP is contributory liable or not does not affect damages at trial at all, and keeping the issue in the case would only satisfy Plaintiffs’ desire to turn the upcoming trial into a sideshow, focused on people and companies who are not even parties to this dispute."

In other words, SAP is seeking to keep the personal attack drama to minimum, if not altogether eliminating it.

The letter also states that eliminating this issue should shorten the length of the trial. Oracle has asked for a delay in the trial because it says that this new acquiescence changes both its strategy and the contents of its opening statement. No word yet from the court on whether a delay will be granted. SAP is pushing to keep the trial’s start date.

SAP acquired TomorrowNow, a company providing third-party support for PeopleSoft (hence, Oracle) applications, in 2005, almost immediately after Oracle acquired PeopleSoft. Oracle’s lawsuit alleges that TomorrowNow infringed on Oracle copyrights through a vast scheme of downloading millions of files (some software, some support material) from Oracle servers, and that the practice continued even after the acquisition despite SAP knowledge of these acts.

SAP acquired TomorrowNow in hopes of providing a doorway for wary PeopleSoft customers to come to SAP. SAP shut down TomorrowNow in 2008, and earlier this year admitted to the illegal practices.

About the Author(s)

Fritz Nelson

Vice President, Editorial Director InformationWeek Business Technology Network

Fritz Nelson is a former senior VP and editorial director of the InformationWeek Business Technology Network.

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