SAP, Oracle Ready to Square Off

SAP seeks speedy discovery and mediation; Oracle seeks an 18-month discovery process and 2009 trial. In a joint statement filed Aug. 28 by SAP and Oracle—a requirement for the upcoming Sept. 4 case management conference to kick off Oracle's legal claims against SAP—both companies make their initial arguments to the United States District Court, Northern District of California, San Francisco Division.

Not surprisingly, SAP is seeking a speedy resolution to what surely has become a public relations thorn in its side. Equally predictable is Oracle's desire to draw its case out through a lengthy discovery process and 2009 jury trial.

What's a bit more explosive are Oracle's seemingly new claims that SAP has been stealing from Oracle for years—and that it will take at least 18 months of discovery, at least 69 customer witnesses and dozens of depositions around the globe to prove it.

Oracle filed suit against SAP on March 22, alleging that SAP, through its subsidiary TomorrowNow, which provides third-party support for Oracle applications, illegally downloaded support material. In a June 4 amendment Oracle added copyright infringement and breach of contract claims that include allegations that SAP hacked into Oracle's computer systems to steal documentation and code.

Both companies are seeking a jury trial to decide the case. SAP, in its part of the statement, is looking for two considerations: A speedy resolution to Oracle's suit against SAP—that is, one unhampered by a lengthy discovery process—and the commencement in the next couple of months of court-ordered mediation by a retired or acting Magistrate Judge.

Oracle, on the other hand, is seeking the court's approval for an in-depth discovery process leading up to a 2009 trial. Oracle's extended timeline is based on the claim that the scope of SAP's crimes far surpasses the amended complaint that SAP knowingly hacked into Oracle's systems to steal confidential product documentation.

"The evidence of unauthorized downloading detailed in Oracle's First Amended Complaint is likely only the tip of the iceberg. Oracle's best records cover only a period of a few months, but SAP's own public statements suggest that SAP downloaded Oracle's intellectual property over a period of years," read the Aug. 28 joint statement. "If true, the actual scope of SAP's unauthorized taking may exceed by many times the numbers reflected in the First Amended Complaint. Oracle expects difficulty in determining the actual scope of SAP's misconduct, in part because SAP did not have a policy of preserving the records of its access to, and taking from, Oracle's computer systems."

In its part of the joint statement, SAP said Oracle's dramatic statement is inaccurate.

"[Oracle's statement] ignores that TomorrowNow, on behalf of its customers, had a right to access Oracle's Customer Connection Web site and to download support materials for the customers," SAP's statement said. "It ignores that the downloads were performed by TomorrowNow, not SAP America or SAP AG. It ignores that none of the support materials downloaded by TomorrowNow were provided to SAP America or SAP AG. This case, in short, is about whether TomorrowNow exceeded its customers' rights in downloading certain materials. That is not a matter of 'corporate theft on a grand scale,' as Oracle says in its complaint, but a matter of contract interpretation."

In a July 3 press conference, Henning Kagermann, CEO for SAP, based in Walldorf, Germany, responded publicly to Oracle's claims and admitted that TomorrowNow inappropriately downloaded "some" Oracle files, but said the scope of the wrongdoing is not close to what Oracle claims in its more than 150 allegations against SAP. Kagermann also asserted that SAP had no knowledge of TomorrowNow's misdeeds, and, more importantly, no access to Oracle documentation or code.

As such, SAP is seeking "prompt resolution" of the case through the Court's ADR, or Alternative Dispute Resolution process.

ADR processes are defined in the Administrative Appeals Tribunal Act of 1975 as "procedures and services for the resolutions of disputes" that include alternatives to normal court proceedings leading up to a trial. Alternatives can include conferences, mediation, neutral evaluation, case appraisal and conciliation. ADR does not include arbitration or court procedures and services—nor does it do away with the need for a trial. As a general principle, all disputes are potentially suitable for referral to ADR, and the majority wind up in mediation.

In its joint statement to the court, SAP said it believes the San Francisco court's ADR process would be a "useful forum for Oracle to identify and quantify its alleged harm so that discovery, motions and trial can be appropriately focused."

Oracle has its own timeline in mind. In the joint statement, Oracle, based in Redwood Shores, Calif., proposed, "due to the complexity and scope of the issues that includes at least 69 customer witnesses and dozens of depositions around the world," an 18-month discovery period followed by a jury trial in the latter half of 2009, as Oracle's trial council will be otherwise occupied in a separate trial in Delaware scheduled to begin in April 2009.

Author: Renee Boucher Ferguson