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Oracle and SAP to talk settlement in TomorrowNow case

Could Oracle and SAP settle the TomorrowNow lawsuit? Oracle was ordered yesterday to put a number on the damages by February.

A federal judge yesterday ordered Oracle to come up with a figure by February that will settle its lawsuit against SAP, according to documents filed in court.

After lawyers from the two parties talked over the phone, Judge Joseph C. Spero ordered Oracle to come up with a settlement sum by Feb. 13. SAP's counterproposal to settle the entire case is due Feb. 18, according to documents filed in United States District Court in San Francisco. The court will meet to discuss the proposals on Feb. 23.

Oracle filed the lawsuit in March 2007 against SAP's now-defunct third-party support subsidiary, TomorrowNow. Oracle is alleging that TomorrowNow illegally downloaded software and support materials from Oracle's password-protected computer systems and made thousands of copies of Oracle's underlying software applications on its computers.

In earlier filings, Oracle has claimed that SAP owes it as much as $1 billion in damages for TomorrowNow's impropriety.

For more on the Oracle-SAP lawsuit
Oracle alleges SAP wanted to expand illegal TomorrowNow operation

With no tomorrow for TomorrowNow, third-party support still in demand

SAP wouldn't say yesterday whether it's any closer to settling the case with Oracle, but maintained, as it has in the past, that it makes sense to do so.

"We can't speculate on the possibility of settlement but continue to believe that it makes sense for both parties to seek resolution," SAP spokeswoman Lindsey Held said yesterday.

Signs that the two parties are moving forward represent good news for customers, analysts said, because if a settlement is reached, Oracle and SAP will be able to focus more attention, and money, on their customers, who will also have a better sense of their options for third-party support.

"It's good to see Oracle and SAP are making progress -- it's in all customers' best interest that this is resolved so Oracle and SAP can focus their efforts on driving greater customer success -- and that customers have a clear view of what their third-party support options realistically are," Rebecca Wettemann, vice president of research at Boston-based Nucleus Research, wrote in an email. "Lawsuits like this take a lot of resources that now -- more than any time -- could be better spent on reducing cost and risk for customers."

This development in the case comes two weeks after it appeared that the case would grow, as Oracle filed more charges. Oracle's third amended complaint repeats the essential charge of its last complaint -- that SAP knew about TomorrowNow's illegal business model when it acquired the company in 2005. The complaint also alleges that SAP "was about to approve, or had already approved" support for Oracle's E-Business Suite and was considering support for Hyperion and Retek when Oracle sued TomorrowNow in March 2007.

TomorrowNow provided third-party support for Siebel, JD Edwards and PeopleSoft products, which are all owned by Oracle. Hyperion, a performance management software vendor, and retail software vendor Retek were later acquired by Oracle, and the E-Business Suite is an Oracle product.

Last week, SAP filed a motion to dismiss some of Oracle's charges, saying they didn't meet legal requirements for trial in the United States. There has been no ruling on that motion yet.

"Oracle has sought to make this case as large and complex as possible by expanding its claims beyond what the law allows," SAP said in a written statement. "SAP brought this motion to assure that the case focuses on the issues that are legally relevant and truly in dispute. This case should be brought to an appropriate resolution without undue delay."

TomorrowNow will cease operations at the end of next week.

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