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SAP drops suits against Siebel

The business software maker says it has dropped two lawsuits against its rival that alleged Siebel was unfair in its hiring of SAP employees.

Business software maker SAP today said it has dropped two lawsuits against rival Siebel Systems that alleged Siebel was unfair in its hiring of SAP employees.

"Parties have mutually agreed to settle the litigation, and lawsuits were dismissed with prejudice," SAP said, declining to comment further on the matter.

San Mateo, Calif.-based Siebel declined to comment.

The SAP lawsuit against the leading front office software maker was filed in a Pennsylvania state court last November. SAP alleged that Siebel engaged in "predatory hiring practices directed at SAP and unfair competition designed to injure SAP's business and damage SAP's ability to compete with Siebel," according to a statement released at the time of the filing.

SAP alleged that Siebel unfairly hired 27 of its key employees, including the president of SAP, the company's senior vice president of Latin American sales, the vice president for corporate communications, and a host of others from the sales, product and technology units.

A federal lawsuit, filed last August by SAP, was directed at two former executives, alleging they "mentally" took trade secrets with them when they went to work for Siebel.

SAP's lawsuits came at a time when competition was heavily escalating among the No. 1 customer relationship software maker and rivals SAP and Oracle, which were all vying for a stake in the lucrative market as sales for their core enterprise resource planning software continued to dip.

Oracle, SAP and PeopleSoft have all been aggressively boosting their front office software strategies as the market for customer relationship software grows at a much faster rate than the overall market for enterprise resource planning software. Research firm International Data Corp. expects the worldwide market for CRM software will reach $11 billion in 2003.

Walldorf, Germany-based SAP has recently seen top management leave to join U.S.-based technology companies--known to offer hefty stock options to executive employees--such as Siebel. In January, John Milana, chief financial officer at SAP America, resigned, joining a list of senior executives who have left the company over the past year, including former SAP America presidents Jeremy Coote and Paul Wahl. Both Coote and Wahl have since joined Siebel.

As an effort to retain its employees, SAP recently approved a new stock program intended to provide its top executives with American-style options. As reported, the plan will make 6.25 million shares, or 6 percent of the company's capital, available to about 120,000 "top performers" and high-level executives, SAP said. A four-year vesting period is planned.