by CIO Staff

Oracle Sues SAP for ‘Corporate Theft’

Mar 23, 20075 mins
Enterprise Applications

Oracle took its bitter rivalry with business applications vendor SAP up another notch, filing suit Thursday against SAP for alleged violations of U.S. fraud legislation, unfair competition and civil conspiracy.

“This case is about corporate theft on a grand scale,” the lawsuit contends. Oracle alleges it has discovered that SAP is “engaged in systematic, illegal access” to Oracle’s computerized customer support systems.

Oracle filed the lawsuit against SAP, its SAP America division and its TomorrowNow subsidiary in U.S. Federal District Court in the Northern District of California. Details of the complaint can be found here. TomorrowNow provides third-party maintenance and support in large part for Oracle applications drawn from its PeopleSoft, Siebel and JD Edwards product families. Oracle is also filing the suit against 50 unnamed individuals that it claims were employees of SAP and whose identities the vendor hopes to determine during the course of the lawsuit.

In the suit, the database, applications and middleware vendor alleges that SAP violated the Federal Computer Fraud and Abuse Act and California Computer Data Access and Fraud Act. Oracle also charges SAP with intentional and negligent interference with prospective economic advantage, unfair competition and civil conspiracy. The vendor demands a jury trial and is seeking both damages and injunctive relief. Through the complaint, Oracle seeks to stop SAP’s illegal intrusions into its computer systems 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 lawsuit states.

“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,” the lawsuit states.

The suit points to a period of unusually heavy download activity from Oracle’s Customer Connection user support website for its PeopleSoft and JD Edwards applications in late November and December 2006. The site contains Oracle copyright material including software updates, bug fixes and patches. Customers paying Oracle for support log into the site with their passwords and download the software they require. Instead of genuine users, the suit alleges SAP employees used the log-in credentials of Oracle customers whose support rights had already expired or were about to expire in a few days’ time. Those staffers then allegedly copied Oracle’s software and support materials.

Through that access, SAP ended up with “an illegal library of Oracle’s copyright software code,” the complaint said. Using that information, SAP offered cut-rate support services to Oracle customers in the hopes of eventually migrating them over to use SAP’s rival applications.

An SAP spokesman said the company had no comment on the lawsuit, as its attorneys are examining it. SAP will issue a comment later in the week, he added.

In total, Oracle claims to have found more than 10,000 unauthorized downloads of its software and support materials from its customer support site. The vendor alleges that the illegal downloads originated from an IP address in Bryan, Texas, an SAP America branch office location and home to SAP’s wholly owned TomorrowNow subsidiary. That IP address connects directly to SAP’s computer network, the lawsuit said. When Oracle shut down that particular IP address, another one linked to SAP appeared, and the unlawful access and downloading continued.

In its complaint, Oracle listed unlicensed downloads allegedly linked to TomorrowNow on behalf of customers including Honeywell International, Merck and OCE-Technologies.

SAP acquired TomorrowNow in January 2005. It was previously an independent software support company founded by former PeopleSoft staff. Part of Oracle’s suit relates to the role it says TomorrowNow played as part of SAP’s Safe Passage program designed to move Oracle users over to SAP applications.

In a recent interview with IDG News Service, Andrew Nelson, CEO of TomorrowNow, described his company’s relationship with SAP: “We’re not independent, but we are vendor-neutral,” he said. If TomorrowNow customers said they didn’t want to hear from SAP under its Safe Passage program, then that wish could be written into their support contract, he added. Nelson also said that TomorrowNow supports something over 1 percent of Oracle customers. He also confirmed that his company is now offering third-party support for midmarket vendor Infor’s Baan applications and may look to support other applications from both Oracle and Infor.

David Dobrin, founder and president of B2B Analysts in Cambridge, Mass., said he does not think anyone at TomorrowNow’s management did anything wrong.

“I don’t see this as TomorrowNow’s management trying to cross some line or cheat or steal,” he said. “The most likely thing is some rogue employees were doing something they thought was legitimate, and maybe it was and maybe it wasn’t, but Oracle decided it wasn’t and is filing suit against SAP.”

Dobrin said that Oracle likely sued SAP even though TomorrowNow acts independently of its parent company because “they get a lot more publicity, and SAP has deeper pockets.” However, he said from his experience in talking with executives from SAP and TomorrowNow, the companies do try to keep their businesses separate to avoid a conflict of interest. “[This situation] has nothing to do with SAP,” Dobrin said.

Oracle representatives have not yet responded to a request for additional comment on the lawsuit.

-China Martens, IDG News Service (Boston Bureau)

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