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Cloud Computing Authors: Elizabeth White, Liz McMillan, Zakia Bouachraoui, Yeshim Deniz, Pat Romanski


Oracle Sues SAP for Theft

German Firm Charged with Bringing New Meaning to the Word 'Pretexting'

Oracle sued its great rival SAP in a federal court in San Francisco claiming that the German company broke into its computers and stole massive amounts of its customer support material, including copyrighted software updates, bug fixes, patches, custom solutions and instruction documents.

It calls it "corporate theft on a grand scale," labels it "willful and malicious," says it was meant to "injure Oracle's business and improve its own," and demands punitive damages.

And it wants a jury trial.

SAP had nothing to say. It was reviewing the suit.

The suit names SAP AG, SAP America and SAP TN, the old 37-man TomorrowNow support operation in Texas started by ex-PeopleSoft personnel, which became a wholly own SAP subsidiary in January 2005, the same month that Oracle finally closed on its hard-fought PeopleSoft acquisition.

The suit also names 50 John Does.

It is SAP TN that ripped it off, Oracle says, with the connivance of SAP AG and SAP America - which "directed this download scheme, ratified it and never disavowed it" - and points at one SAP TN employee, Wade Walden, as the person who did much of the downloading.

The suit says SAP TN gained unauthorized access to Oracle's password-protected Customer Connection support web site pretending to be Oracle users, copied Oracle's intellectual and contractual property and used it to woo away Oracle's support clients by offering them a 50% discount off of Oracle's rates, a first step in getting them to switch from Oracle to SAP applications.

Oracle's lawyers practically sputter they are so hard pressed to recite all the laws that have allegedly been broken but for starters they offer charges of fraud, copyright infringement, receipt of stolen property, wire fraud, RICO, unfair competition, interference with business relationships, trespass to chattels, conversion, unjust enrichment, conspiracy and aiding and abetting.

Apparently Oracle first started noticing something was amiss in late November when it experienced an unusually heavy amount of download activity on the password-protected customer support site for its PeopleSoft and JD Edwards product lines. It says it didn't in any way resemble the authorized limited access its support customers were entitled to.

For instance, Honeywell International, which had averaged around 20 downloads a month for three-and-a-half years, went to over 7,000 in less than two weeks after switching to SAP TN.

Oracle claims SAP employees used the log-in credentials of Oracle customers with expired or soon-to-expire support rights to ransack "every library in the Customer Connection support web site" for materials that customers like their foils Merck, Abbott Labs, Bear Stearns, OCE Technologies and Smithfield Foods were never even entitled to.

The login IDs were combined, it says, with phony user login information. In other words the user name, e-mail address and phone number didn't match the customer.

However, all of the customers whose IDs were appropriated had one thing in common: "they were, or were just about to become, new customers of SAP TN…whose sole purpose is to compete with Oracle" for PeopleSoft and JD Edwards support services.

Oracle claims the break-ins all track back to an IP address at SAP TN's home office in Bryan, Texas that is directly connected to SAP's computer network and says that "Oracle's server logs have recorded access through this same IP address by computers labeled with SAP identifiers using SAP IP addresses," offering as an example.

Oracle says it shut down access to that IP address and a "new address, also linked to SAP, sprouted up almost immediately and the unlawful access and downloading resumed."

It claims the multiple automated break-ins date at least to last September and continued into January and says it has so far identified more than 10,000 unauthorized downloads and the theft of internal support documents not even available to licensed authorized customers.

The suit claims that SAP used the Oracle materials to poach Oracle customers, used SAP AG as well as SAP TN sales people to run them off, and says that "Oracle also has concerns that SAP may have enhanced or improved its own software application offering using information gleaned from Oracle's software and support materials."

Oracle describes SAP TN as being key to SAP's defenses but says that SAP never appeared to put anything more that sales resources in SAP TN and that SAP TN didn't appear to have the development capability to meet the support commitments advertised for its so-called SAP-designed "Safe Passage" Oracle migration program "at any price, much less the 50% discount promoted by SAP."

It recalls that in October of 2005, a month after Oracle said it would acquire Siebel, "SAP announced it would extend its Safe Passage program to Siebel customers, including apparently instantaneous round-the-clock support from SAP TN - whose engineers at that time presumably had spent virtually no time to develop Siebel support software products….How SAP could offer instantaneous, round-the-clock Siebel code support within a few weeks of Oracle's acquisition announcement remained a mystery."

Even with an expanded staff of 150, Oracle confessed to wondering how a small company like SAP TN could develop and offer "customized ongoing tax and regulatory updates," "fixes for serious issues," "full upgrade script support" and "most remarkably, '30-minute response time, 24x7x365' on software programs for which it had no intellectual property rights" at "50 cents on the dollar, and purported to add full support for an entirely different product line - Siebel - with a wave of the hand. The economics, and the logic, simply did not add up," adding that "Oracle has now solved the puzzle. To stave off the mounting competitive threat from Oracle" - after SAP AG CEO Henning Kagermann conceded last July that SAP had lost 2% market share to Oracle - "SAP unlawfully accessed and copied Oracle's software and support materials."

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