Oracle gloats over SAP filing; reality may be different

Oracle is taking SAP's response to its lawsuit and running with it. In a statement, Oracle said:

"SAP CEO Henning Kagermann has now admitted to the repeated and illegal downloading of Oracle's intellectual property. Oracle filed suit to discover the magnitude of the illegal downloads and fully understand how SAP used Oracle's intellectual property in its business. To the extent requested, Oracle will cooperate with the Department of Justice investigation of SAP announced by the company in its press release," said Geoff Howard, Counsel for Oracle Corporation, Bingham McCutchen LLP.

Technically, Kagermann is acknowledging inappropriate downloads while trying to segment TomorrowNow as a distinct entity from SAP (see statement). If this gets to court--I doubt it will for reasons outlined below--it'll be very interesting to see how SAP's relationship with TomorrowNow is portrayed. On the surface, TomorrowNow is owned by SAP so whatever the subsidiary does reflects on SAP.

But since TomorrowNow (TN) provides support for Oracle software Kagermann noted that there are firewalls between TomorrowNow and SAP. If you buy that argument, SAP is saying there were inappropriate downloads, but the company never had access to them so Oracle's allegations are bunk. SAP is essentially arguing that TomorrowNow has little to do with SAP.

It's a tricky dance for the judge to sort out.

In the meantime, SAP's actual filing doesn't line up with Oracle's statement, which makes it sound like Kagermann repented and accepted all of Oracle's allegations--far from it. Some choice excerpts (we encourage you to read both the SAP and Oracle filings to line up the paragraphs and cut through the spin):

• This case is really about competition and a customer’s right to choose its software services providers. Oracle admits that third parties may provide services and support for Oracle products (including those products Oracle acquired through its acquisitions of PeopleSoft, JD Edwards (“JDE”) and Siebel) and admits that TN, as a third party service provider, has the right to access Customer Connection and download support materials on behalf of TN’s customers. Oracle’s complaint does not challenge the basic propriety of third party support, nor do its factual allegations support the inflammatory statements of paragraph 2. TN (not SAP America or SAP AG) conducted downloads on behalf of TN customers subject to policies intended to assure that TN downloaded only those materials that TN’s customers had access rights to during the time those rights were effective. As explained below, TN admits that certain downloads took place that, in violation of TN policies, may have erroneously exceeded the customer’s right of access. Oracle’s allegation that TN’s downloading conduct was “corporate theft” or involved SAP AG or SAP America is simply untrue. SAP AG, SAP America and TN respect IP rights, and have taken and are taking steps to assure that TN’s business is conducted in a manner befitting the high standards all three companies strive to uphold. TN’s customers recognize the value that TN has to offer. Oracle professes surprise and confusion about how TN can provide services more cost-effectively than Oracle. The answer is simple – TN does not force its service customers to pay artificially inflated prices for service to fund Oracle’s future acquisition and integration of products that customers do not want or need.
• Upon acquiring TN, SAP AG and SAP America put in place extensive policies to assure that no allegedly proprietary material of Oracle obtained by TN would ever reach SAP AG or SAP America. Defendants are unaware of any breach of these policies and believe that none has occurred.
• Oracle notably fails to provide the specific terms of or attach a copy of any, much less all, the agreements between Oracle and its customers, even though those agreements are the core of Oracle’s complaint and its effort to eliminate third party support for its products. Defendants note, as well, that publicly available licenses issued by Oracle and its acquired companies are neither identical nor substantially similar in form or content and do not bar third party support of Oracle products or services.

What’s the end game here? Notice how SAP is talking about Oracle licenses and how few of them are alike. It’s likely to be the same story with SAP licenses. That’s why this spat won’t make it to court. The dirty licensing laundry to be aired is too great on both sides. The last thing Oracle and SAP need is a bunch of customers asking, “Hey why’d that guy get a better deal than we did?”