Last week, SAP filed its much-anticipated response to Oracle’s lawsuit that accused the German company’s TomorrowNow subsidiary of stealing thousands of proprietary documents and software code from the Oracle Customer Connection web site. While the response admitted to some wrongdoing on TomorrowNow’s part, it also indicated that SAP will fight Oracle if it tries to ban TomorrowNow from accessing Customer Connection. That position could set the stage for a long and bitter legal battle between the two software giants.

In the 20-page document that it filed with the U.S. District Court, SAP admitted that some TomorrowNow employees made “inappropriate downloads” from Oracle’s site. At the same time, the company insisted that TomorrowNow has the right to download content from the site on behalf of its customers. In addition, SAP stated that any illegally downloaded content stayed on TomorrowNow’s systems and never found its way onto SAP’s servers.

Kagermann Confesses…Sort Of

On the same day that SAP filed its response with the U.S. District Court, corporate CEO Henning Kagermann spoke to the media about the legal fracas. In statements that artfully combined confession and defiance, Kagermann admitted that some of TommorowNow’s downloads from Oracle Customer Connection were beyond the scope of what the subsidiary needed to support its clients. To remedy the situation, Kagermann said that SAP will strengthen operational oversight of its wayward subsidiary by having TomorrowNow CEO Andrew Nelson report to Mark White, SAP Americas Chief Operating Officer. In addition, SAP will launch a training program for TomorrowNow employees to ensure that they follow proper download policies.

At the same time, Kagermann insisted that the vast majority of TomorrowNow’s downloads from Oracle Customer Connection were legitimate. In doing so, he indicated that SAP will protect its subsidiary’s ability to do what many third-party support providers do every day…download content from software vendor’s support sites on behalf of their customers. Kagermann also emphasized that the illegal content never flowed from TomorrowNow’s servers to SAP’s systems because of firewalls between the systems of the two organizations. This indicates that SAP will fight to limit any legal damage from the lawsuit to TomorrowNow.

Prognosis? The Lawyers Will Prosper

So…what is likely to happen from here? First off, it appears likely that both Oracle and SAP will hold off on making further public pronouncements until they meet in court on September 4. Shortly after that meeting, SAP is likely to propose an out-of-court settlement in which TomorrowNow would admit to some bad behavior, fire a few “renegade” employees, return some Oracle documents, and implement policies to prevent further abuses. SAP would love such a settlement because it would quickly and quietly put an end to the glare of negative publicity that the lawsuit is generating.

Will Oracle accept such a settlement? My money says no way. Oracle will want this lawsuit to grind on as long as possible, as doing so will make it increasingly unlikely that any JD Edwards or PeopleSoft customer will trust TomorrowNow for third-party support. That, in turn, will blunt SAP’s ability to win over such customers to its software via its “Safe Passage” initiative, as Safe Passage uses TomorrowNow to support customers on their Oracle software while they are migrating to SAP.

If I am right on this count, Oracle will likely insist in court that SAP confess to committing thefts that the German company will staunchly deny. That could lead to a lengthy investigation of each and every one of the thousands of downloads from Oracle’s sites to determine which ones were “inappropriate” and to find out whether they ever found their way onto SAP’s servers. During that investigation, Oracle and SAP would undoubtedly engage in endless maneuvers to paint each other as the unreasonable party in the whole dispute.

If events unfold as I am predicting, we should all brace ourselves for a drawn-out land war between Oracle and SAP in which neither party will ever claim a clear victory. In this battle, the only clear losers will be Oracle customers who have legitimate reasons to seek third-party support. For such customers, this battle of the software titans will create a world where options besides Oracle maintenance are fraught with much greater risk than in the past. That only goes to prove the truth of the old saying: When the elephants fight, it is the ants that get trampled.

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