Oracle Corp. estimates that it has suffered damages of “at least a billion dollars” as a result of the actions of SAP’s TomorrowNow third-party support subsidiary, recent court filings indicate.
Meanwhile, SAP, the defendant in the federal corporate theft lawsuit, signaled in the same filing its intention to bring the practices of other third-party maintenance service providers into the suit as a way to limit damages it may be required to pay to Oracle.
Oracle’s estimate of $1 billion in damages represented the first time the company has formally quantified how much it expects SAP to pay as a result of its alleged misconduct. In a recent court filing, Oracle said, “It appears Oracle’s damages are, at a minimum, well into the several hundreds of millions of dollars and likely are at least a billion dollars.”
Oracle’s original lawsuit, filed March 22, 2007 in U.S. District Court, charged that beginning in late 2006 SAP and its TomorrowNow third-party maintenance subsidiary engaged in “corporate theft on a grand scale” by illegally downloading support material from Oracle’s Customer Connect Web site on behalf of SAP’s customers. The suit contends that the allegedly illegal downloads unfairly enabled SAP “to offer cut-rate support services to customers who use Oracle software, and to attempt to lure them to SAP’s applications software platform and away from Oracle’s.”
While Oracle has attempted to portray SAP’s actions as amounting to a massive corporate theft, SAP has insisted they amount to nothing more than isolated mistakes by a subsidiary, and that they have been corrected.
Oracle’s damages estimate appeared in a Joint Discovery filing made by SAP and Oracle in U.S. District Court in San Francisco. In the filing, SAP and Oracle dispute the extent of document discovery that should be required leading up to a trial in the case, which is set for Feb. 8, 2010. Oracle charges that SAP has dragged its feet in providing the documents it needs, while SAP says Oracle is asking for too much in terms of discovery documentation and scope. Although Judge Elizabeth D. Laporte was to have met with attorneys for the two sides yesterday, so far no official rulings have been made public.
In the most recent filings, SAP rejects Oracle’s $1 billion damage estimate. “Oracle speculates wildly about the amount of its damages ‘claim’ in this discovery report, even though more than a year after this case was filed, Oracle still refuses to identify with any precision the nature or amount of its alleged harm or even to provide the theory on which its damage claim is based,” SAP says.
Indeed, Oracle has yet to spell out the basis for its $1 billion damage estimate. In the recent court filing, however, SAP speculates that Oracle will rely on what it calls a “lost profits theory of damages” to make its claims. That theory, SAP speculates, would be based on the argument that SAP, through the TomorrowNow subsidiary, first used illegal downloads to attract Oracle customers — specifically PeopleSoft and JD Edwards customers — to TomorrowNow maintenance services and later convinced Oracle customers to move from Oracle to SAP applications as part of SAP’s Safe Passage program.
Oracle, in the Joint Discovery filings, says it has asked SAP for information such as contracts signed by former Oracle customers who switched to SAP and for SAP sales reports on customer wins, losses, and “at risk” accounts.
The latest court filings offer a hint of how SAP plans to defend against Oracle’s damages claims. Oracle, says SAP’s statement, “would like to make sweeping assertions that every customer that ever left Oracle for TomorrowNow represents legal damages to Oracle. Irrespective of liability, there is ample evidence that Oracle would have lost customers regardless of TomorrowNow’s activities and thus [SAP] did not cause the damages.”
In fact, SAP says in the filing, as part of its defense, it plans to seek discovery of documents pertaining to the “third-party maintenance market in general.” Citing third-party maintenance provider Rimini Street specifically, as well as unnamed providers, SAP suggests that Oracle “has approved of or acquiesced in similar activities by other third-party support vendors …”
SAP, in the court document, adds, “Evidence that Oracle lost business to other third-party support providers will be directly relevant to prevent Oracle from taking that misleading position. It is also relevant to determine whether Oracle would have lost some or all of those customers to some other support vendor regardless of whether TomorrowNow was in business.”
Judge Laporte has not yet ruled on whether SAP will be allowed to seek discovery on the third-party maintenance market generally. Officials at Rimini Street could not be reached for comment today, nor could officials from SAP or Oracle.
SAP and Oracle are asking Judge Laporte to rule on how many involved individuals Oracle can demand documents from as part of its trial preparation. Oracle has asked for a minimum of 209, while SAP originally asked for a limit of 115 and now is requesting 140. SAP has said permitting more than that would take too long and cost too much.
SAP, in court filings, said it has 50 lawyers “continually reviewing” Oracle document requests. Generating documents from as many as 165 involved individuals, SAP estimates, would cost it $16.5 million.