Draggers Drawn

Draggers Drawn

With the trial of TomorrowNow set to begin on Nov 1, it will be interesting to see the developments over the next few days.

In its Aug 5, 2010 statement, SAP said it “would not contest” the liability of TomorrowNow for copyright infringement and downloading conduct of its subsidiary TomorrowNow (of Oracle software). SAP said “By accepting responsibility for TomorrowNow’s actions, SAP is taking a decisive move to focus the issues in the case.” SAP is willing to pay reasonable compensation to Oracle for this. The issue at stake is what reasonable compensation is. SAP statement states “Oracle’s unreasonable damages claims are an unproductive distraction as we work to find a fair resolution in this case.”

HP got itself involved indirectly in this battle on 30 Sep 2010 it appointed SAP’s ex-CEO Leo Apothekar as its CEO (as a successor to Mark Hurd) effective as of Nov 1. Mark Hurd has himself been appointed as CEO of Oracle recently. HP has taken a while to decide on its CEO choice and has faced some criticism in the market for not appointing a CEO internally. HP had to do some explaining for their decision.

Then comes Larry Elison’s burst of energy criticising HP for the appointment. Chairman Ray Lane had to step in and defend the decision and offer support for Leo.

Leo’s name appears on the witness list to the TomorrowNow case, which could indirectly drag HP board into an unnecessary controversy. Any censure of Leo’s role in the TN affair will place HP in a quandary; possibly might put it in a search for another CEO.

The rumor of HP quest for a software partner to match Oracle entry into hardware (with Oracle acquisition of Sun) has fueled rumors of Leo’s appointment being the first step in a “merger” between HP and SAP.

While SAP maintains that its subsidiary may have committed improprieties, SAP itself did not, claiming it only bought TomorrowNow to “provide a choice to customers frightened by Oracle’s acquisition of PeopleSoft and J.D. Edwards.” Oracle alleges that SAP executives were told about TomorrowNow’s illegal operation and ignored warnings that Oracle could sue them because SAP wanted to win market share.

U.S. District Court Judge Phyllis Hamilton has sided with SAP in the software maker’s push to limit the scope of potential damages in Oracle’s high-profile lawsuit against the company.

In a non-related battle, Oracle is drawing draggers on third-party support providers like Rimini Street.  Rimini Street provides enterprise software support to customers of ERP systems and e-business suite. On 11th Sep 2009 Rimini Street (that hitherto provided support to customers of Peoplesoft, Oracle, JDEdwards, Siebel) expanded its support for SAP products. According to a statement released by Rimini Street “Rimini Street is already working with an extensive number of SAP licensees who are seeking an alternative support program that delivers a better value than expensive SAP Enterprise Support…..” SAP has since announced a delay in support fees increase till 2015 (instead of 2012) KPIs are met. Rimini Street promises to support SAP R/3 releases for which SAP support is no longer available. This will provide “ongoing value and a strong, calculable return on investment to SAP licensees”.

Oracle has filed a lawsuit against Rimini Street in Jan 2010 alleging Rimini Street has been engaged in “massive theft of Oracle’s software and related support materials through an illegal business model.” Rimini Street has filed a suit against Oracle by presenting counterclaims alleging copyright misuse, defamation, disparagement, trade libel, and unfair competition and vehemently denying Oracle’s false accusations.

Despite all this saber-rattling war cries, Rimini Street announced on 20th Sep 2010 an expansion in its offering to cover Oracle e-Business Suite products (it already covers Oracle ERP).

How the decision in Oracle-SAP lawsuit will shape the market for third party support providers remains to be seen. Will the judgment in that lawsuit affect the decision in Rimini lawsuit?

Update 29/10/2010: SAP has admitted contributory liability to speed up the case.

Update 16/11/2010:  The case now hinges on how much SAP will have to pay Oracle. A hilarious though long opinion piece here.

Update 24/11/2010: Jury has awarded $1.3b to Oracle. SAP intends to appeal against the verdict. The amount is much larger than they estimated; other than that I do not see what else they could appeal against (having admitted liability in this case).

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