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Oracle vs. SAP lawsuit: Five questions answered

Get answers to some common questions about Oracle's lawsuit against SAP and its TomorrowNow third-party support division.


Oracle's lawsuit against SAP's TomorrowNow division has been making headlines since Oracle filed its complaint in March. Since then, Oracle amended the complaint and SAP responded, admitting to "inappropriate downloads" of Oracle materials but indicating that those downloads were limited to its TomorrowNow division.

In order to sort out some of the information, spoke with Hillard Sterling, an IT litigator with Freeborn & Peters LLP, a Chicago-based law firm, to answer five important questions about the lawsuit.

Table of Contents

Oracle vs. SAP lawsuit: Five questions answered
1. Will the lawsuit change the way third-party support providers do business?
2. SAP admitted to "inappropriate downloads" but insisted they were limited to its TomorrowNow division. Does this matter?
3. What is the approximate timeline for the lawsuit to conclude?
4. What is the most likely outcome?
5. Will Oracle keep the suit in the news?


Oracle vs. SAP lawsuit: Five questions answered

1. Will the lawsuit change the way third-party support providers do business?

SAP's purchase of TomorrowNow upped the ante in the hotly contested third-party support market. With margins for maintenance approaching 90%, it is not surprising to see Oracle protecting its turf.

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Check out some details of the lawsuit from the original news story

See why one utility switched to TomorrowNow for support

Sterling thinks the crux of the lawsuit is making sure third-party providers, not just TomorrowNow, play strictly by the book.

"Oracle sensed some specific evidence that there was some looseness in the way these providers were helping customers," Sterling said. "Oracle wants to both make sure that those providers play by the rules and make customers leery about wholeheartedly engaging these providers without careful thought about risk."

Although Sterling does not think the suit will change the way third-party support providers do business in a fundamental way, look for them to operate more cautiously.

"I think third-party maintenance providers will be much more careful about the way they secure intellectual property," he said. "They know that vendors are watching -- enhanced or unusual downloading will catch these vendors' attention."

2. SAP admitted to "inappropriate downloads" but insisted they were limited to its TomorrowNow division. Does this matter?

"SAP is trying to create a wall between it and TomorrowNow. SAP has both legal and business reasons for such distinction," Sterling said. "SAP clearly doesn't want to be held directly liable for infringement. If SAP didn't participate or knowingly assist TomorrowNow, it may be somewhat off the hook legally."

Since TomorrowNow is owned by SAP, there have been questions about whether it is important that the inappropriate activities were limited to that division.

"If SAP had zero involvement whatsoever it would be difficult to hold SAP liable," Sterling explained. "Under some infringement theory, the subsidiary would be liable, but they are separate corporate entities."

3. What is the approximate timeline for the lawsuit to conclude?

In short, it could be a while.

"Oracle is going to want to see substantiating information that will either confirm its suspicions or calm its fears," Sterling said, warning that there would be literally millions of documents and emails requested by each side as part of the discovery process.

"The discovery phase in a case like this would last anywhere between six months and a year," Sterling explained. "In a case with multiple players, witnesses, and layers of corporate actors, there's no way to get through discovery in less than six months."

4. What is the most likely outcome?

According to Sterling, cases like this hardly ever go to a full trial, so the issue is when Oracle will bend and agree to a settlement. This is unlikely to occur until after an intense discovery -- or fact-gathering -- period.

"Oracle probably wants to see what really was going on, before it would sit down and meaningfully discuss settlement," Sterling said. "Oracle wants to pull back the curtain and see a couple of things: First, what was SAP's involvement? Second, what was the depth and egregiousness of TomorrowNow's behavior?"

Oracle will seek all types of electronic information -- including reams of emails -- to see whether SAP can be tied to TomorrowNow's conduct, according to Sterling. But in the end, Sterling explained, this is not a case that will be decided by a judge or jury.

"There's going to be a settlement," Sterling said. "That's not an 'if' question, it's a 'when' question."

5. What should we expect going forward?

Followers of the trial should expect Oracle to continue to keep the trial in the news because there is little to no risk of a countersuit from SAP, according to Sterling.

"This is a great weapon for Oracle -- it's rare and beneficial when a company has a lawsuit that is only a sword and not a shield," he said. "Usually, counterclaims come flying back at a plaintiff. Here, however, Oracle has a unilateral set of claims that it can press ahead with, with little fear of boomerang counterclaims."

Partly because of this, Sterling expects some especially intense times ahead.

"We're going to see some aggressive discovery from both sides, especially from Oracle," he said. "It will get messy before it gets clean."


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