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Oracle Rivals Block Trade Secrets in Court

The U.S. Department of Defense and several IT companies supporting the Justice Department's lawsuit against Oracle to block its purchase of PeopleSoft have asked a federal judge this week to shelter their inside trade secrets.

The companies are responding to Judge Vaughn R. Walker ruling last week that Oracle's in-house attorneys should be granted access to "all" testimony submitted by the DoJ.

In court papers filed Monday, the DOD said it has "competitively sensitive information" that could give Oracle "an unfair advantage during the competitive procurement process or contract negotiations."

Likewise, Microsoft , SAP and niche software vendors such as Lawson Software and QAD also asked the U.S. District Court in San Francisco to block certain parts of their business technology and best practices from being entered as evidence. The government and seven states are looking to block Oracle's controversial $9.4 billion PeopleSoft bid.

Microsoft and the others are part of 33 different entities working with the Justice Department and supporting its case. The government's argument suggests that the number of firms offering a full array of enterprise resource planning (ERP) tools (Human Resource Management or Financial Management Services) is currently limited to three: German-owned SAP , Oracle and PeopleSoft and that a merger between Oracle and PeopleSoft would limit a customer's choices.

The Redmond, Wash.-based software giant has already cooperated with the DoJ in support of its case.

In a sworn statement filed this month, Microsoft said it has no such plans to enter the same business market as Oracle within the next two years. A Microsoft spokesperson told internetnews.com the company is seeking to prevent Oracle lawyers from viewing about 5 percent of about 19,000 to 20,000 pages submitted to the DoJ.

Oracle's defense is that it competes on the broader software market facing stiff competition from Microsoft , IBM and other mid-tier players.

As for the projected outcome of the trial, analysts like Forrester Research Director director Paul Hamerman said the DoJ's case is only one roadblock standing in the way of Oracle's goal.

"The odds are stacked against Oracle," he said. "The poison pill remains and PeopleSoft has created the liability around the customer assurance program. Then there are other issues."

Case in point: Oracle received a "statement of objections" from the European Commission (EC) last week, although the specifics of the complaint along with the EC's final decision are expected to be issued on or before May 11.

Adding to that, Institutional Shareholder Services (ISS), a proxy advisory firm, has come out in opposition to Oracle's takeover plans and recommended that stockholders vote for PeopleSoft's four director nominees. While the conclusion of both the DoJ's case and the EC's ruling would need to be resolved first, Rockville, Md.-based ISS said it believes "Oracle's initial threats of dropping support to PeopleSoft customers in a successful takeover scenario are legitimate concerns for PeopleSoft customers."

Yankee Group senior analyst Mike Dominy, who has been following Oracle's bid to take over PeopleSoft since the bid was announced last June, says with so many obstacles in the way, the DoJ case may never even get to a full trial.

"What they will need to do is settle out of court if this trail 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 their 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."

The trial is scheduled to begin on June 7. Both sides are scheduled to give updates in a March 19 phone conference. Lawyers are expected to be back in the courtroom April 16 to set additional pre-trial motion dates.



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