Oracle Files Suit Against SAP

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Greenbaum says SAP took pains to prevent unauthorized access to Oracle property, physically separating TomorrowNow employees from other workers. "There's always been the intention by SAP and TomorrowNow to avoid exactly this type of situation," he says. "Everybody at SAP and TomorrowNow always believed that Oracle would be watching for this kind of activity. So it kind of beggars belief to think that anyone would be stupid enough to go ahead and actually do it."

Following the Trail

Oracle says that's precisely what happened. It alleges that an SAP staffer logged onto Oracle's tech support system by posing as a Honeywell employee in January, then downloaded more than 7,000 support files in less than two weeks—most of them in four days. In late 2006, users purporting to work for J.D. Edwards customer Merck accessed Oracle's system to download more than 9,000 files—more than 5,000 of which didn't relate to software Merck had licensed. Oracle says it traced the downloads to SAP computers using Internet Protocol addresses, and adds that illegal downloads occurred on behalf of companies including Bear Stearns (BSC), Caterpillar (CAT), and Smithfield Foods (SFD). Oracle declined to comment on the suit.

As the case proceeds, a key question will likely be whether TomorrowNow employees acted legally on behalf of customers by downloading the files. TomorrowNow typically recommends that new customers download all of the bug-fixes and other software updates they're entitled to, whether they intend to use them or not, Greenbaum says. But Oracle says SAP's activities fall outside those contractual bounds, alleging that users downloaded files after contracts had ended, and for products they hadn't licensed. Steve Bauer, a spokesman for SAP, says a main issue is whether the tech support materials were downloaded by an SAP employee or a customer. "That's at the crux of this," he says. He declined to elaborate.

SAP is the No. 1 supplier of corporate software used for managing inventory, payroll, and manufacturing schedules, but Oracle is gaining share amid an acquisition spree (see BusinessWeek.com, 3/21/07, "Oracle: Beating Indigestion"). It's now looking to take some ground through the legal arena as well.

Ricadela is a writer for BusinessWeek.com in Silicon Valley.