Ouch!
A three year legal action between giant enterprise software rivals Oracle and SAP has come to conclusion with a jury ordering SAP to pay Oracle $1.3 billion in damages for illegally downloading Oracle software.
On one level this is just a simple industrial espionage case, but recent developments have brought more than a touch of the soap opera to it. The downloading was actually carried-out by a company called TomorrowNow, which SAP acquired in direct response to Oracle's acquisition of human resource management software giant PeopleSoft, which was announced at the end of 2004.
TomorrowNow was founded by former PeopleSoft exec s, and specialised in maintaining PeopleSoft systems more cheaply than the company itself. SAP bought the company in order to gain that capacity, as maintenance is a very lucrative aspect to enterprise software business.
The problem was that TomorrowNow was illegally downloading software from PeopleSoft's customer support sites in order to help it provide this service, and it allegedly kept doing so after it was acquired by SAP, something the German outfit subsequently admitted. So the culmination of the legal case in a trial by jury was not to establish culpability, but to determine the damages SAP must pay.
This is where it gets tasty. Oracle is insisting that SAP's senior management, many of which are still at the company, were fully cognisant of this illegal behaviour when they acquired TomorrowNow and, at the very least, didn't do enough to stop it after the acquisition.
"For more than three years, SAP stole thousands of copies of Oracle software and then resold that software and related services to Oracle's own customers," said Oracle president Safra Catz. "Right before the trial began, SAP admitted its guilt and liability; then the trial made it clear that SAPs most senior executives were aware of the illegal activity from the very beginning. As a result, a United States Federal Court has ordered SAP to pay Oracle $1.3 billion. This is the largest amount ever awarded for software piracy."
"We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary," said SAP in a statement. "This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation. The mark of a leading company is the way it handles its mistakes. As stated in court, we regret the actions of TomorrowNow, we have accepted liability, and have been willing to fairly compensate Oracle."
The twist concerns one of SAP's most senior execs at the time of the illegal behaviour - one Leo Apotheker. Oracle was very keen for him to take the stand during the case but he was curiously absent from the state of California throughout the trial. Why curiously? Well he just happens to be the newly appointed CEO of Palo Alto based Hewlett Packard, with which Oracle is increasingly in conflict.
