RealTime IT News

Trade Secrets Barred from Oracle's Servers

A federal judge Friday ruled that the U.S. Department of Defense and several IT companies must let lawyers for Oracle view their trade secrets, but only under certain conditions.

During a pretrial hearing at the U.S. District Court in San Francisco, Judge Vaughn Walker said that Oracle's two in-house lawyers should not be "handicapped" in viewing the evidence presented by the Department of Justice. The government and seven states are looking to block Oracle's unsolicited $9.4 billion bid for rival PeopleSoft .

Representatives with the Department of Defense and Fidelity Employer Services -- both premier customers of Oracle's -- as well as rivals like Microsoft , SAP , Siebel Systems, Sungard Bi-Tech and niche software vendors such as Lawson Software and QAD have asked the court to block certain parts of their business technology and best practices from being entered as evidence. The documents could contain detailed data on customers, competitive bids on contracts, pricing details, budgets and product information.

To prevent suspicion from Oracle's rivals, Judge Walker ruled that the documents would need to be stored on a non-Oracle server and remain on each company's individual servers. The Judge said Oracle's lawyers would need to be supplied with special, secure and restricted access to the filings.

SAP said it wants to hold back about 5 percent of the 81,000 documents it has handed over to the DoJ. Earlier this week, Microsoft filed paperwork requesting similar protections, saying about 1,000 of its files are too sensitive for even Oracle's lawyers to view.

Microsoft and the others are among 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. Oracle's defense identifies the Redwood Shores, Calif.-based software vendor as a competitor in the broader software market, facing stiff competition in the mid-tier sector from Microsoft, IBM and others.

Judge Walker gave the third parties until the end of business on Monday, March 22 to deliver their evidence to the courts. A source close to the proceedings said the third parties are expected to appeal.

The Judge also held back on an official ruling but opened the door for the case filed by the seven states to be ruled separately from the one filed by the DoJ. The court also turned down a request to bring in additional technical advisors for the case, opting instead to hold a tutorial to define Oracle's place in the "product landscape."

During a keynote speech in Germany Friday, PeopleSoft president and CEO Craig Conway said it is difficult to fully assess the delayed sales and lost revenue created by Oracle's unsolicited tender offer.

"As I talk with customers, their concerns about Oracle's unsolicited offer appear to be lessening following recent actions by antitrust regulators. However, it is too early to assess whether this will result in any positive impact in the short term," Conway said.

Its quest for PeopleSoft is taking its toll on Oracle, too. The company filed papers with the SEC this week saying it has now spent more than $48.4 million in the last ten months pursuing the deal.

"Given the assets of Oracle, they can keep this trial going for awhile, but it's really up to Oracle investors to say. Trials are messy and a distraction," Yankee Group senior analyst Mike Dominy told internetnews.com in a recent interview.

Dominy said recent SEC filings that show a nearly 20 percent slip in PeopleSoft's license revenue also aid Oracle's pursuit.

The trial is scheduled to begin on June 7. Lawyers are expected to be back in the courtroom April 16 to settle additional pre-trial motions.