Oracle broadens allegations against SAP

Oracle contends that SAP knew TomorrowNow's business model was "illegal" when it bought the company

Oracle filed on Monday an amended complaint in its ongoing lawsuit against SAP, charging that top executives bought SAP's TomorrowNow subsidiary even while knowing it had an "illegal" business model.

Oracle filed suit against SAP and TomorrowNow last year, charging that employees from TomorrowNow, which provides third-party support for Oracle applications, illegally downloaded data from an Oracle support Web site and used it to go after Oracle's customers. SAP announced last week that it plans to close TomorrowNow by the end of October after trying unsuccessfully to find a buyer.

SAP has said TomorrowNow was authorized to download materials from Oracle's Web site on behalf of TomorrowNow's customers but also acknowledged that "some inappropriate downloads of fixes and support documents occurred at TomorrowNow." But this information remained in TomorrowNow's systems, and SAP did not gain access to Oracle's intellectual property, according to SAP.

Oracle's amended complaint, in contrast, claims that SAP, eager to take support revenue away from Oracle as the company prepared to acquire PeopleSoft, bought TomorrowNow knowing full well that it could lead to legal entanglements.

By Jan. 7, 2005, SAP AG executive board members, including Henning Kagermann and Shai Agassi, "received a highly confidential document: the 'business case' for SAP AG's purchase of TomorrowNow," the complaint states. "The presentation made clear that TomorrowNow did not operate legally. It detailed how TomorrowNow relied on 'non-production' copies of PeopleSoft software for its 'access to PeopleSoft system.'

"Under the heading 'Threats,' the board was warned that 'Access rights to the PeopleSoft software is very likely to be challenged by Oracle and past operating issues [of TomorrowNow] may be a serious liability if Oracle challenges,'" it adds.

SAP's board "ignored these warnings and embraced TomorrowNow's illegal business model" because it couldn't resist the deal's business potential, and because the company believed Oracle would not file suit, the complaint alleges. SAP bought TomorrowNow in February 2005.

Oracle's filing also paints SAP's TomorrowNow purchase as "one element of a larger scheme by SAP to steal and misuse Oracle's intellectual property."

In addition, the amended complaint declared as false Kagermann's contention that SAP employees did not gain access to Oracle's intellectual property.

According to the filing, SAP workers "accessed SAP TN's systems through a special link on SAP TN's website;" TomorrowNow employees "accessed SAP AG and SAP America's systems through 'SAPnet,' an internal network through which SAP AG provided assistance to SAP TN's illegal development efforts;" and "SAP TN, SAP America and SAP AG employees routinely e-mailed content and intellectual property among themselves."

An SAP spokesman, Saswato Das, would only comment briefly on the filing Monday, saying the company will answer the claims later this year.

"This amended complaint repeats many of the themes and allegations in Oracle's amended complaint filed in 2007," Das said, adding that SAP will file an answer to the amended complaint by the Sept. 11 court deadline for doing that. "Our legal team is working to respond prior to that deadline.... Ultimately it is the court and legal system that will determine the facts and remedies in this case."

The lawsuit is being heard in the U.S. District Court for the Northern District of California.

Copyright © 2008 IDG Communications, Inc.

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