Oracle-SAP Lawsuit Shows Ugly Side of Enterprise Software

Includes: ORCL, SAP
by: Eric Savitz

Oracle (NYSE:ORCL) yesterday filed a lawsuit against SAP (NYSE:SAP) in U.S. Federal Court for the Northern District of California, alleging a massive scheme by SAP to illegally download copies of Oracle and documentation on a massive scale.

The suit is worth reading; if the allegations are true, it shows a truly ugly side to the enterprise software business.

“This case is about corporate theft on a grand scale,” the company said in the suit:

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.

Oracle’s complaint alleges that an SAP subsidiary called TomorrowNow made thousands of downloads from Oracle computers. The complaint notes that TomorrowNow, based in Bryan Texas, was acquired by SAP in January 2005. Oracle notes that TomorrowNow provides support service in competition with Oracle for software from PeopleSoft, Siebel and J.D. Edwards, all once-public companies that are now Oracle subsidiaries. The complaint notes that TomorrowNow was formed by former PeopleSoft employees.

Oracle alleges that its computers were accessed using expired and expiring passwords from current and former customers - and it names names, citing accounts held by Honeywell (NYSE:HON), Merck (NYSE:MRK), Abbott Labs (NYSE:ABT), Bears Stearns (NYSE:BSC) and the Texas Association of School Boards, among others. No customers were named as parties in the suit.

Oracle is seeking unspecific damages.

According to the Wall Street Journal, SAP had no immediate comment on the suit.

In after hours trading, Oracle was down 16 cents at $18.33; SAP was down 3 cents at $46.25.

ORCL vs. SAP 1-yr chart

orcl sap chart