Oracle vs. SAP: A Special Episode Of Law & Order?

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Includes: ORCL, SAP
by: SoundView Technology Group

Barring a last-minute overnight settlement, the Oracle (NYSE:ORCL) vs. SAP (NYSE:SAP) law suit concerning the shadowy third-party software maintenance market and copyright infringement went to court Wednesday morning June 6, 2007, in San Francisco. Based on my years of watching Law & Order, I was betting this petty case would get quietly settled out of court on July 3 or December 24. But based on Oracle’s amended complaint, filed at midnight June 1, this is going to be more like the Florida election “hanging chad” case than any episode of Law & Order.

And like the hanging chads, the allegedly missing Oracle/PeopleSoft/JDE maintenance manuals may end up in the Supreme Court if you are to believe the PR spin from both sides (I predict that, unlike with the Law & Order district attorney, Larry Ellison won’t end up running for president).

The case is already on its third judge, because SAP declined to deal with a magistrate and the next judge assigned recuse herself. The third judge set a case management conference for August 7, blowing one of my key dates out of the water. All of which means this could go on for a while.

Oracle is going to court to ask that SAP be ordered to preserve the evidence of its wrongdoing. That’s all the June 6 court date is about. Oracle has enlisted Kevin Mandia as an expert witness to point out the obvious: Disks get erased in the normal course of business. SAP’s “internal investigation” might even inadvertently cause a problem—wink wink.

SAP seems indignant about the charges (pending that “internal investigation”), not to mention the implications that it might destroy evidence. SAP implies (according to Oracle filings) that Oracle is on a fishing expedition—wink wink.

So just as a reminder, what is this all about?

Primarily, Oracle says SAP went on its (actually PeopleSoft’s) Customer Connect web site using the login/password of new SAP/former Oracle customers and took copyrighted material. Misusing (such as plagiarizing) copyrighted material is bad but reading it isn’t, especially if you have the login/password. Users and vendors I have talked to say this sort of thing is common. When IT users switch maintenance vendors they typically still have a valid contract with the previous maintenance vendor during some cut-over period. If the contract had ended, it is unclear why Oracle did not shut off its former customers.

Oracle’s amended complaint leads with the copyright infringement charge among its 10 allegations, whereas the initial complaint filed in March did not claim copyright infringement among its 11 allegations. That appears to me to be a bit of backing off from the original complaint that led with fraud allegations but to be clear, the use of the word “whereas” in the previous sentence is the extent of my legal expertise.

Nefarious things such as unjust enrichment and doing something that sounds obscene to chattels are still in the complaint. Really nasty charges like aiding and abetting and conspiracy have been dropped. One thing I didn’t understand—Any lawyers out there who can help us out? —is that in Oracle’s copyright infringement claim listing copyright registration dates, all the dates listed were after the original lawsuit was filed.

So I’m back to where I was in March. I wonder how widespread this bailout by JDE and PeopleSoft users is.

Oracle says the alleged theft occurred not back when the acquisition was pending in 2003/2004 (when, theoretically, the users being “acquired” were rightly concerned about Oracle’s intentions) but just a few months ago (when we’ve been told the acquired users were all happy as can be with the acquisition). The list of customers in the complaint reads like one of Oracle’s quarterly “new customer” press releases. Merck (NYSE:MRK) and Honeywell (NYSE:HON) are called out specifically in terms of showing pre-2006/2007 patterns and comparing them with the last few months, and Yazaki has been added.

Disclosure: I have no position in either Oracle or SAP.

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