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SAP, Oracle battle in courtroom preliminaries

SAP wants case narrowed to TomorrowNow's conduct, asks for mediator; Oracle says scope of case requires full investigation.

Oracle and SAP took fresh jabs at each other, as both prepare for a case management court hearing next week over Oracle's allegations that an SAP subsidiary pilfered its proprietary software and support documents.

SAP, Oracle's biggest rival in the enterprise software business, is calling on the U.S. District Court in San Francisco to keep the case narrowed to TomorrowNow, the subsidiary that SAP has acknowledged improperly downloaded Oracle software and support materials. SAP says it is trying reduce the need for Oracle to embark on extensive document searches and depositions relating to the case, according to case-management documents filed Tuesday night.

Case-management documents were filed by both companies and are required for the hearing, which is scheduled for September 4.

In its filing, SAP says that TomorrowNow did not share any of its rival's support and maintenance information with SAP or its SAP America operations.

SAP also called for the appointment of a mediator, saying a mediator's services could lead to a settlement or at least help the parties agree on the size of Oracle's damages claim or the scope or timing of the discovery process.

Oracle, however, alleges that SAP and its SAP America operations did in fact benefit from the information downloaded by TomorrowNow, a third-party support and maintenance company for Oracle's PeopleSoft and J.D. Edwards enterprise applications. As a result, Oracle says in its filing, it wants to extend its discovery process--which includes taking depositions and conducting document searches--beyond TomorrowNow to SAP.

At the case-management hearing, the parties will outline the scope of their case and a judge will set a schedule for such things as when discovery is due and a possible trial date.

SAP states in its filing that a "prompt resolution of the case is in the best interests of all concerned," while Oracle says it's "premature to discuss settlement until it can determine the extent of SAP's illegal taking and misuse of Oracle's intellectual property."

In its filing, Oracle also says that Andrew Nelson, TomorrowNow's chief executive and founder, defended TomorrowNow's downloading practices as "legal" and "appropriate."

Oracle further alleges that "the highest day of SAP downloading occurred a week after Oracle filed its complaint. Subsequently, however, SAP stopped all downloads and has now revealed that it has revamped its policies to permit downloading only at its customer locations, with a TomorrowNow employee to 'facilitate' the downloads. These course corrections have slowed the preservation negotiations and initial discovery process, but also speak to the merits of Oracle's underlying allegations."

Oracle says in its lawsuit that in late 2006 it discovered more than 10,000 copyrighted software and support materials had been illegally obtained by TomorrowNow. SAP in July acknowledged that some software and support materials downloaded by its TomorrowNow operations on behalf of its customers who held Oracle contracts went beyond the scope of those licenses.

SAP, in its case-management statement, argues that "Oracle's statement of facts is dramatic but inaccurate--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."

The two parties also are at odds on the length of time needed to conduct the discovery process. SAP alleges that Oracle "overstates the complexity of the case" and proposes that the initial discovery phase can be conducted in several months, while Oracle is proposing 18 months at a minimum, citing the need to go beyond TomorrowNow's operations, based in Texas, and engage in international discovery. SAP is based in Germany.

Oracle is asking the court for preliminary and permanent injunctive relief, return of stolen property and impoundment, or destruction, of all infringing material. The software maker did not state the amount it seeks in damages.

Reuters contributed to this story.