SAP Admits It Should Have Known It Was Infringing on Oracle Copyright

Enterprise software giant SAP acknowledged Thursday it should have known that its third-party outsourcing maintenance company TomorrowNow was infringing on rival Oracle's copyrights. SAP's (SAP) concession handed Oracle (ORCL) a partial win as the parties gear up for their trial Monday on Oracle's three-year-old copyright infringement lawsuit.

The legal battle between the two software giants centers on Oracle's claims that TomorrowNow was taking the maintenance contracts that its former customers owned and using their access codes to gain access to more information and material than was allowed under those contracts. Previously, SAP's stance was that it wasn't liable for Oracle's contributory infringement claim, which in essence said the German software maker "should have known" what TomorrowNow was up to when SAP acquired the company in 2006.

"Unfortunately, that sole remaining liability issue is threatening to overwhelm the case and to turn the upcoming trial into a media circus, focused not on the issues actually in dispute but on the obsession of Oracle and its founder, Larry Ellison, with Hewlett Packard and whoever may be its CEO," attorney Tharan Lanier, who is representing Oracle in this case, stated in a letter to the court.

As as a result, SAP told the judge it no longer plans to contest Oracle's contributory copyright infringement claim when the trial begins.

But the Battle Goes On

"SAP management has insisted for three and a half years of litigation that it knew nothing about SAP's own massive theft of Oracle's intellectual property. Today, SAP has finally confessed it knew about the theft all along. The evidence at trial will show that the SAP board of directors valued Oracle's copyrighted software so highly, they were willing to steal it rather than compete fairly," Deborah Hellinger, an Oracle spokeswoman, said in a statement.

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However, Chris Liedtke, an SAP spokesman, said the software maker is not acknowledging it knew, nor was an active participant, in SAP TomorrowNow's copyright infringement of Oracle's software. He added SAP is now saying it won't contend it holds liability in that it should have known what its former subsidiary was up to when it made the acquisition. SAP has since closed its SAP TomorrowNow subsidiary.

In August, the court dealt Oracle a blow regarding its allegations that SAP and SAP America had directed SAP TomorrowNow to access Oracle's support systems, according to court documents. The judge denied Oracle's request issue a summary judgment regarding that portion of the contributory infringement claim.

When the trial kicks off Monday in a U.S. District Court in Northern California, the trial will provide each party 30 hours to present their side of the case. SAP's attorney, in his letter, states pulling the contributory copyright infringement claim out of the mix of arguments to be heard "will not affect damages by one penny."

SAP has established a reserve of $160 million to cover costs relating to the Oracle trial and the closure of TomorrowNow, while Oracle is seeking $2 billion in damages relating to the case, according to a Wall Street Journalreport.