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SAP Admits Wrongdoing in Oracle Suit

UPDATED: SAP conceded today that its subsidiary, TomorrowNow (TN), engaged in "inappropriate" downloads of Oracle support materials. But SAP CEO Henning Kagermann insisted his company did not access Oracle's intellectual property.

In its first formal response to a March lawsuit filed by Oracle accusing SAP of "massive theft," the German software giant said TomorrowNow was authorized to download materials from Oracle's Web site on behalf of TomorrowNow customers.

"At the same time, SAP acknowledges that some inappropriate downloads of fixes and support documents occurred at TomorrowNow," SAP said in a press statement accompanying its legal response.

Kagerman told reporters on a teleconference, "TomorrowNow made some inappropriate downloads and I regret that very much. SAP did not have access to the TomorrowNow downloads."

Citing the pending Oracle litigation, Kagerman declined to discuss the nature of the downloads, although he said the "majority" of the more than 150 complaints in the lawsuit were "unfounded." He also said he was "surprised and disappointed" that Oracle did not personally contact him when it discovered the downloads.

Kagerman also acknowledged that the U.S. Department of Justice (DoJ) has requested documents related to Oracle's charges. "They asked for certain SAP internal documents and that is all so far," he said, adding the company would fully cooperate with the DoJ.

In addition, SAP provided details of a shakeup in its senior management ranks of the TomorrowNow subsidiary. They include the appointment of SAP America Chief Operating Officer and former Chief Financial Officer Mark White as TomorrowNow's executive chairman to manage TomorrowNow operations, including compliance programs. Andrew Nelson, TomorrowNow's CEO, will report to White.

"I asked Mark White to do whatever is appropriate," Kagerman said. An internal investigation of the unauthorized downloads has begun, he said, to get "as much clarity as possible." Kagerman said Nelson was unaware of the downloads. However, he added he would "not exclude any personal consequences [for those who downloaded the files]."

Kagerman also said SAP would move quickly to enforce both existing procedures and new policies, as well as renew training for TomorrowNow employees to assure understanding of those policies and procedures.

In a statement, Geoff Howard, a lawyer for Oracle, used language more blunt than SAP's to react to the revelations, noting that Kagermann "has now admitted to the repeated and illegal downloading of Oracle's intellectual property."

Oracle said it filed the lawsuit in order to discover "the magnitude of the illegal downloads and fully understand how SAP used Oracle's intellectual property in its business. To the extent requested, Oracle will cooperate with the Department of Justice investigation of SAP announced by the company in its press release."

In the lawsuit, Oracle accuses SAP of corporate theft "on a grand scale" via "systematic, illegal access" to its computer support systems. According to the 44-page complaint, which was updated in June, employees of TomorrowNow downloaded thousands of mission-critical items from Oracle's knowledge bases by using the passwords of former and current Oracle customers.

"Through this scheme, SAP has stolen thousands of proprietary, copyrighted software products and other confidential materials that Oracle developed to service its own support customers," the complaint said.

Through the downloads, Oracle said in its complaint, "SAP has compiled an illegal library of Oracle's copyrighted software code and other materials. This storehouse of stolen Oracle intellectual property enables SAP to offer cut rate support services to customers who use Oracle software, and to attempt to lure them to SAP's applications software platform and away from Oracle's."

SAP is providing full details of its reply to Oracle's suit at www.tnlawsuit.com. The site includes court filings, a timeline, SAP and TomorrowNow statements and nnouncements regarding the case.