RealTime IT News

Judge: Oracle Can See Competitors' Info

SAN FRANCISCO -- UPDATED: A federal judge today opened the door for Oracle's lawyers to view sensitive company information from PeopleSoft and other third-party competitors such as Microsoft .

In a pre-trial hearing at the U.S. District Court here, Judge Vaughn R. Walker denied the U.S. Department of Justice's request for a two-tiered system for Oracle's attorneys. The motion would have prevented Oracle's lawyers from seeing trade secrets the government has collected as part of its case to block Oracle's controversial $9.4 billion PeopleSoft bid.

DoJ lead attorney Bruce McDonald said the system was needed to protect sensitive company information from Pleasanton, Calif.-based PeopleSoft, as well as some 33 other third-party partners and Oracle competitors as part of its case.

"Some are Oracle competitors, some are competitors in the mid-market, some are customers of and suppliers to Oracle," McDonald said. "They have expressed concern that the information could be used in judicial proceedings and they want to make sure that the information does not go into Oracle's inner council."

Microsoft was not identified directly as one of the 33 companies contacted by the Justice Department, but the Redmond, Wash.-based software giant has reportedly cooperated with the DoJ in support of its case. McDonald said the sensitive information could be available to Oracle lawyers as early as the end of the week.

Judge Walker set a trial date of June 7 and instructed both sides to give updates in a March 19 phone conference. Lawyers are expected to be back in the courtroom on April 16 to set additional pre-trial motion dates. The trial date gives each side about 60 days for discovery and to compile a witness list.

At trial, each side would have as much as eight days to present evidence. One issue still being hotly debated is Oracle's "Discount Forms", which the company uses in selling software and services. Judge Walker asked Oracle to supply all forms filed from Jan. 1, 2002 to the present.

McDonald argued that the "Discount Forms" would help establish a pattern of business practices with Oracle.

Oracle lead attorney Dan Wall complained that the DoJ has a six-month lead in gathering evidence. He said the DoJ's case is ambiguous at best and that it is time to "fish or cut bait," before the trial, which is slated to start on June 7th.

"The scope of what they are asking will pick up thousands and thousands and thousands of these forms for what they call the mid-market companies, which is not relevant to the case," Wall said.

Judge Walker, siding with the Justice Department, said he didn't "know the volume of the forms or the logistical problems in getting them together, but they should produce admissible evidence."

Oracle's legal strategy is to prove that its hostile play for PeopleSoft is not anti-competitive, as the DoJ alleges. Central to its case is the premise that the applications market for large businesses includes more than just the big three of German giant SAP , Oracle and PeopleSoft.

Oracle prompted the litigation after the DoJ said it opposed Oracle's latest offer for rival PeopleSoft. The DoJ filed suit to block the deal February 27. Oracle has vowed to challenge the DoJ's suit at trial. Judge Walker said if there is an appeal, it should be expedited directly to the Supreme Court given the nature of the case.

Yankee Group senior analyst Mike Dominy who has been following Oracle's bid to take over PeopleSoft since the acquisition was announced last June observed that the case may never even get to a full trial.

"What they will need to do is settle out of court if this trial looks like it will take a long time to resolve," Dominy told internetnews.com "I believe that Oracle has had multiple contingency plans well before the DoJ made its ruling. If Oracle stumbles at all on their revenue, they will get pressure from shareholders. Given the assets of Oracle, they can keep this suit with the Justice Department going for a while, but it is messy and it is a distraction."

Oracle is expected to report its third-quarter financial statements Thursday after the market closes. Analysts expect the company to report earnings of 12-cents per share.