Oracle filed suit against SAP today in the Northern District of California alleging:
Oracle brings this lawsuit after discovering that SAP is engaged in systematic, illegal access to – and taking from – Oracle’s computerized customer support systems. Through this scheme, SAP has stolen thousands of proprietary, copyrighted software products and other confidential materials that Oracle developed to service its own support customers. SAP gained repeated and unauthorized access, in many cases by use of pretextual customer log-in credentials, to Oracle’s proprietary, password-protected customer support website. From that website, SAP has copied and swept thousands of Oracle software products and other proprietary and confidential materials onto its own servers. As a result, SAP has compiled an illegal library of Oracle’s copyrighted software code and other materials. This storehouse of stolen Oracle intellectual property enables SAP to offer cut rate support services to customers who use Oracle software, and to attempt to lure them to SAP’s applications software platform and away from Oracle’s. Through this Complaint, Oracle seeks to stop SAP’s illegal intrusions and theft, to prevent SAP from using the materials it has illegally acquired to compete with Oracle, and to recover damages and attorneys’ fees.
The complaint is surprisingly easy to read and a short [at least for legal filings] 41 pages and offers some very explicit allegations that largely revolve around alleged use of passwords to access and subsequently download large amounts of Oracle customer support and technical documentation. Although the lawsuit extends to SAP proper, most of the complaints appear to revolve around actions allegedly taken by SAP's 3rd-party maintenance subsidiary, TomorrowNow.
I can't and won't begin to comment on how this ultimately plays out; we haven't heard SAP's official response [and we might not as their stated corporate policy is to not comment on pending litigation] and we also have no sense of the magnitude of the requested damages. Not to mention legal affairs are clearly outside my bailiwick.
In any event, you can be sure this will make for some interesting press bites. We know that Ellison has never shied away from public barbs with his competitors, so surely he'll play up the "wounded Oracle" angle for as long as this litigation persists.
The much broader and more interesting question is what impact, if any, this will have on the 3rd party maintenance movement. While TomorrowNow isn't the only game in town (netCustomer, Rimini, SYSTIME to name a few); at the heart of Oracle's complaint is that TomorrowNow wouldn't have been able to successfully woo PeopleSoft and J.D. Edward's customers away for 50% discounts without this ill-gotten information.
When I profiled TomorrowNow after Sapphire last year, I asked...will the ends justify the means? But I never suspected that would be a prescient question that would ultimately be settled in court.
Several Irregulars have chimed in on this story, too.
- Between the Lines [Dan Farber & Larry Dignan]: Oracle Sues SAP
- Dennis Howlett: Oracle accuses SAP of "theft on a grand scale"
- Vinnie Mirchandani: A Sad Day for Enterprise Software
I would urge you to read Vinnie's brief but articulate take on this matter. Among all my friends and colleagues, he understands the customers' perspective; as he is on the front lines of customer maintenance negotiations every day.
Note: This is not a recommendation to buy or sell Oracle, SAP or any other security, but is merely a personal analysis to foster discussion for informational purposes only. At the time of this writing, I and/or funds I maintain discretionary control over, maintained a long equity position in SAP but did not maintain a position (long or short) in ORCL.
oracle sap lawsuit investing orcl legal erp applications maintenance tomorrownow woodrow enterprise+irregulars
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