RealTime IT News

Court Papers: Oracle Wants PeopleSoft Outed

According to court documents filed late Tuesday, Oracle tried to publicly reveal its rival's corporate secrets. This despite the fact that Oracle's lawyers did not use the documents during its recent defense against the U.S. Department of Justice (DoJ).

The DoJ is seeking to block Oracle from proceeding with its $7.7 billion takeover bid for PeopleSoft . District Court Judge Vaughn R. Walker is expected to file his opinion either by the end of the month or in early September. A hearing is scheduled for August 13 in San Francisco to finalize requests by third-party companies to keep their corporate secrets secure. Insiders suggest this court date indicates the judge is preparing a draft of his opinion, which can only be based on publicly available information.

As part of a previous pre-trial agreement, only Oracle's and the DoJ's legal teams have been privy to documents that contain detailed data on customers, competitive bids, contracts, pricing details, budgets and product information. The third parties include Oracle rivals like Microsoft and IBM, as well as customers like Ford Motor Company and Bank of America.

At the start of the trial, Judge Walker noted that Oracle, the DoJ and some third parties significantly "over-designated" documents as confidential without the proper procedure. Several times during the trial Judge Walker said he would seek to keep as many submissions as open as possible.

As of press-time, some 64 exhibits and one small portion of the trial transcript remain under seal. Many of the documents were submitted following conversations among the court-appointed mediator -- former U.S. District Judge Charles Legge -- and the third parties.

"By keeping this material sealed, this harm will not occur; the other interests articulated by the third parties and oracle will be fulfilled; and the public's ability to monitor the judicial system will not be impeded because of the substantial volume of material relating to this case that remains available to the public," Claude Scott, lead attorney for the government, said in his 34-page brief.

A spokesperson for Oracle declined to comment on the reasons for asking for only PeopleSoft's sealed documents other than the fact that it "failed to demonstrate any 'compelling reasons' to overcome the strong presumption in favor of public access to court records."

Oracle's lawyers are asking the court to submit in full five pieces of evidence (P2368, P2369, D5937, D6023, D6076).

But Gary Reback, an attorney and litigation specialist hired by PeopleSoft, said Oracle's motives are merely self-serving.

"It's a little weird that the trial is over, they haven't used them in the case and they are still asking for the evidence to be revealed," Reback told internetnews.com.

Reback said the topper was that out of the 15 or so companies seeking court protection, Oracle only asked for PeopleSoft's discount information to be made public.

"There were two or three documents that Oracle's legal team said they wanted revealed after they failed to bring [PeopleSoft CEO] Craig Conway to the stand," Reback said. "They didn't even have a witness. When the judge asked them about it, they said, 'Maybe we will use it with [Haas School of Business professor and market expert] David Teece.' But these documents would be a competitive advantage that Oracle's sales people could use in closing accounts."

So just how damaging could the information be? Already, some juicy tidbits of information have been revealed in court. The biggest being secret merger talks between Microsoft and SAP . Microsoft acknowledged that it initiated preliminary discussions with SAP late last year but has since dropped the issue.

Oracle itself was not immune to the disclosures. Testimony from top brass revealed sales tactics including the practice of undercutting PeopleSoft's offers to customers to "lowball the price to nowhere."

In a separate filing Tuesday, several news organizations, including the Associated Press, Los Angeles Times and the San Francisco Chronicle, again stepped up efforts to admit more evidence as public record.

Lessons for the Enterprise

There are many lessons for companies using or considering enterprise application software.

Forrester Research analyst Paul Hamerman suggests customers move forward with their PeopleSoft upgrades and maintenance renewals since his firm does not expect support to be directly impacted by the outcome of the trial.

"Already customers have benefited because there have been substantial discounts offered," Hamerman told internetnews.com. "If PeopleSoft loses the case, they would be in a difficult area to close contracts. Potentially there would be more discounts."

Hamerman also suggests customers proceed with caution as some PeopleSoft licenses may be negotiated while the court's decision is pending or during an appeal. He also recommends clients press PeopleSoft for the maximum time allowed under PeopleSoft's Customer Assurance Program protection on new license deals -- a minimum of two years.

"PeopleSoft has been offering two-to-five times license fee refunds as an insurance policy in the event of a takeover, to be paid by Oracle," Hamerman said. "Clients, however, should recognize the inherent risks of making a commitment at this time and should weigh potentially adverse scenarios related to the company and product lives.