October 29, 2010, 5:00 PM — The last month has seen a blur of activity in Oracle's corporate theft lawsuit against SAP, which goes to trial in a California district court on Monday morning. SAP has conceded some misdeeds, Oracle has made a meal of it in the press, and HP has somehow been dragged into the kerfuffle. Here's what you need to know to understand what's going on with Oracle, SAP, HP and that now defunct company called TomorrowNow.
What's this trial all about then?
It's about a company SAP bought five years ago called TomorrowNow. It provided third-party maintenance and support services to PeopleSoft and JD Edwards customers.
Third-party maintenance and support. Apps vendors like Oracle and SAP charge about 20 percent of their software license fees each year for services. That includes essentials like security patches and bug fixes, but also big upgrades to newer applications. Some customers don't want the new applications, they'd rather stick with the software they have. So they go to a third-party provider that charges less than the big vendors and just takes care of the essentials.
Gotcha, so what did SAP do again?
It bought TomorrowNow just after Oracle finished its acquisitions of PeopleSoft and JD Edwards. Maintenance fees are a huge chunk of a software company's profits, so providing low-cost services to Oracle customers could have been a good way for SAP to get at its main rival. It also hoped to switch some of those Oracle customers over to SAP applications instead.
How did that work out for it?
Terribly. TomorrowNow lost US$90 million while it was part of SAP. Worse, it looks like that TomorrowNow was probably cheating like mad. Instead of going to Oracle's support site and downloading only the patches and bug fixes its customers were entitled to, it downloaded all the Oracle software it could get its hands on. Oracle says TomorrowNow had a whole bank of servers skimming its computers automatically for Oracle software.
So what did Oracle do?
It did what any red-blooded American company would do and sued the pants off SAP. It eventually filed 10 claims including copyright infringement, breach of contract, unlawful computer access and unfair competition. It also says it found out that TomorrowNow was stealing whole Oracle applications as well as just bug fixes and support materials.
What does it want from SAP?
Moolah, lots of it. Oracle says it's entitled to around $2 billion in damages. A big chunk of that is for profits it says it would have made if SAP hadn't used the TomorrowNow services to win away its customers.
What does SAP say?