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Oracle amends SAP TomorrowNow suit

Oracle broadens allegations against rival SAP and third-party outsourcing maintenance and support company TomorrowNow.

Oracle upped the ante in its lawsuit against rival SAP on Monday, claiming in an amended complaint that SAP's CEO and other top executives were aware of alleged illegal downloading of proprietary software and documents before, during, and after its acquisition of third-party support and maintenance company TomorrowNow.

The amended complaint broadens the allegations raised by Oracle in its initial lawsuit in March 2007. In that initial lawsuit, Oracle alleged that its enterprise software applications rival acquired TomorrowNow (TN) to not only woo away its PeopleSoft customers who needed maintenance and support, but to also use those customers' contracts with Oracle to access its proprietary support software and documents beyond what those customers' contracts allowed.

After conducting depositions and gathering documents in the case, Oracle alleges SAP CEO Henning Kagermann and SAP's top executive team, otherwise known as the executive board of directors, knowingly made the acquisition of TomorrowNow without having confirmed that TomorrowNow was not infringing on Oracle's intellectual property rights, according to the amended lawsuit.

The amended lawsuit further alleges:

The pre-deal negotiations with SAP TN reveal the breadth of SAP AG's knowledge - and its lack of concern - about SAP TN's thefts. Based on repeated warnings about how SAP TN's business model likely relied on illegal use of Oracle software, SAP America and SAP AG asked for "a representation regarding the infringement of PeopleSoft's intellectual property rights...that...would survive indefinitely...(and) would not be subject to any basket or cap on indemnity."

But SAP TN's two shareholders, Seth Ravin and Andrew Nelson, refused to make any representation that SAP TN had respected PeopleSoft's (soon to be Oracle's) intellectual property rights. Instead, Ravin reminded SAP of "discussions that were had regarding the increased likelihood of SAP being the subject of a lawsuit as a result of the very public and very aggressive move to offer alternative support to Oracle/PeopleSoft clients."

...In the end, the "appropriate compromise" was that SAP TN offered no assurances whatsoever that it had respected Oracle's intellectual property rights, and instead gave an indemnity from Ravin and Nelson, totaling $2 million to cover costs relating to SAP TN's violations of Oracle's intellectual property.

But a spokesman for SAP contends: "This amended complaint beats many of the allegations of Oracle's amended complaint filed last year. These are strictly allegations and have not been proved. We will have a filing by September 11, in response to this recent amended complaint."

He added that SAP "will not litigate the case in the press."

After SAP completed its acquisition of TomorrowNow, attorneys for SAP AG and SAP America allegedly told SAP TomorrowNow in 2005 to cease downloading Oracle support materials and combining them with TomorrowNow technologies in master "libraries." Instead, SAP TomorrowNow was instructed to create specific folders to house the downloads for each new customer. But allegedly no instructions were provided on how to separate the existing combined Oracle and TomorrowNow materials in the co-mingled libraries.

The case is set to go to trial in the U.S. District Court for the Northern District of California in February 2010.