SAP acknowledges inappropriate downloads by TomorrowNow in response to Oracle suit

SAP responded to rival Oracle's lawsuit tonight (at 8:00 AM in SAP's Walldorf, Germany headquarters), just ahead of the July 2 PST filing deadline. In the filing (pdf), SAP said that its TomorrowNow business unit inappropriately downloaded some Oracle software, but SAP had no access to the "inappropriately" downloaded code. The U.S. Department of Justice has requested documents from SAP and TomorrowNow (see SAP statement).

"We believe that SAP did not have access to materials downloaded by TomorrowNow," he said. He noted that TomorrowNow, SAP's unit that provides support to Oracle's PeopleSoft and J.D. Edwards customers, made some inappropriate downloads.

Oracle customers share passwords with TomorrowNow employees, providing them with access to Oracle information. "TomorrowNow had clear prodedures in place [for downloads] but they were not followed in all cases," Kagermann said, but he did not specify the inappropriate downloads.

Regarding, the statement that SAP employees did not have access to the inappropriate downloads, Kagermann said that a firewall exists between TomorrowNow and SAP, and that TomorrowNow employees have no input into SAP's support and products.

Kagermann was asked about resolving the Oracle suit out of court, but didn't want to speculate on dispute resolution methods.

Changes are being made in TomorrowNow's management as a way to address any shortcomings in governance. SAP America Chief Operating Officer and former Chief Financial Officer Mark White was appointed TomorrowNow’s Executive Chairman to manage TomorrowNow's operations. TomorrowNow's CEO Andrew Nelson, will report to White. Kagermann noted that TomorrowNow could continue with downloads from Oracle as long as appropriate procedures are followed.

Oracle is claiming that individuals from SAP hacked in an Oracle Web site and company stole a large ration of software code. In the latest amended complaint, filed on June 1, Oracle sued SAP for breach of contract and copyright infringement, alleging that TomorrowNow violated copyright law by distributing Oracle material to its customers.

In the complaint Oracle alleged:

"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."

Following is SAP's July 2 press release response along with a link to the July 2 legal filing:

In the answer, SAP said TomorrowNow was authorized to download materials from Oracle’s Web site on behalf of TomorrowNow customers. At the same time, SAP acknowledged that some inappropriate downloads of fixes and support documents occurred at TomorrowNow. Importantly, SAP affirmed that what was downloaded at TomorrowNow stayed in that subsidiary’s separate systems. SAP did not have access to Oracle intellectual property via TomorrowNow.

The United States Department of Justice has requested that SAP and TomorrowNow provide certain documents. SAP and Tomorrow Now intend to fully cooperate with the request.

“Even a single inappropriate download is unacceptable from my perspective. We regret very much that this occurred,” said Henning Kagermann, CEO, SAP AG. “I want to reassure our investors, customers, partners and employees that SAP takes any departure from the high standards we set for all of our businesses very seriously, regardless of where it occurred or how confined it may be. When I learned what happened, I promptly took action to strengthen operational oversight at TomorrowNow while assuring that we maintain excellent service for TomorrowNow’s customers going forward.”

SAP Did Not Have Access to Oracle Materials through TomorrowNow

SAP stated that it did not have access to Oracle materials downloaded by TomorrowNow. SAP explained that it intentionally created a business structure that maintained a firewall between TomorrowNow and SAP and that it was satisfied that SAP AG or SAP America did not access Oracle intellectual property via TomorrowNow.

Most Materials Downloaded Appropriately by TomorrowNow

TomorrowNow often downloads support materials for and on behalf of its customers, who have chosen to seek third-party support for their legacy Oracle applications. Third-party maintenance providers like TomorrowNow depend on their customers – in this instance, companies who use Oracle-provided software – permitting the service provider access to support materials, through the customer’s password, to provide support and service for those customers’ Oracle applications. SAP acknowledged that some inappropriate downloads occurred at TomorrowNow.

Changes Announced at TomorrowNow

In addition to announcing its filing with the Court, SAP also announced that it has instituted changes in TomorrowNow’s operational management to ensure compliance with appropriate business practices. These steps include:

• Appointment of SAP America Chief Operating Officer and former Chief Financial Officer Mark White as TomorrowNow’s Executive Chairman to manage TomorrowNow operations, including compliance programs. Andrew Nelson, TomorrowNow’s CEO, will report to Mark White; • Enforcement of existing procedures and new policies; • Renewed training for TomorrowNow employees to assure understanding of the policies and procedures.

SAP Launches Web Site for TomorrowNow Lawsuit

SAP announced a Web site that provides complete and immediate information regarding this suit. Located at www.tnlawsuit.com, the Web site includes Court filings, a timeline, SAP and TomorrowNow statements and announcements regarding the case, and background information.