Judge Orders Mediation For Oracle, SAP

The lawsuit brought by Oracle against SAP and that company’s TomorrowNow subsidiary is headed for mediation. The San Francisco U.S. District Court judge held a meeting with lawyers for both companies Tuesday and ruled the case needs to move to mediation.

“We think this direction is appropriate, as it makes sense for the parties to seek a resolution,” an SAP spokesperson told InternetNews.com.

She said the mediation, or “Alternative Dispute Resolution” as it’s also called, hasn’t been scheduled yet. It’s also not clear who will act as mediator.

The ruling — a fairly common step in legal disputes — may come as a relief to SAP. If the mediation results in a settlement, it may avoid a protracted legal process.

[cob:Related_Articles]Had the case gone to trial, the case was not scheduled to hit the court until February 2009.

However, Oracle said last week in a court filing that it might amend its filed complaint, alleging what its attorneys are calling “a broader program of copyright infringement” by SAP beyond the scope of allegations it has already made against its archrival’s TomorrowNow subsidiary.

“Virtually all discovery sought and received thus far has centered on Oracle’s current allegations,” the filing said.

But now, Oracle maintains it has uncovered additional proof of infringement.

“As set forth in Oracle’s current claims, it appears that SAP infringed Oracle’s intellectual property on a daily basis over a course of many years, in ways that Oracle is only beginning to discover,” Oracle spokesperson Deborah Hellinger told InternetNews.com in an e-mail.

Consequently, Oracle’s plans to file an amended complaint will include these new claims against SAP.

Hellinger also confirmed that the two companies have not begun settlement negotiations.

From the start, Oracle has tried to frame the case as “corporate theft on a grand scale” by SAP and not, as the German company has countered, far less-serious actions limited to its subsidiary.

Last summer, in his first formal response
to the suit
, SAP CEO Henning Kagermann conceded TomorrowNow engaged in “inappropriate” downloads of Oracle support materials but insisted his company did not access Oracle’s intellectual property.

The trouble began after SAP acquired
in 2005, an enterprise service-and-support company based in Bryan, Texas.

SAP then introduced what it called a “safe-passage program” to persuade organizations to migrate to its MySAP enterprise resource planning software and NetWeaver platform.

Under this program, companies pay a maintenance fee of 17 percent of the original price of their PeopleSoft and J.D. Edwards software licenses, not only undercutting Oracle’s standard rate of 22 percent but also priming the pump for future SAP applications down the road.

[cob:Special_Report]Oracle claimed that in late 2006, the company discovered some TomorrowNow employees were downloading Oracle customer files for the purpose of taking away some of its lucrative services business.

In its complaint, Oracle says SAP stole intellectual property and violated the Federal Computer Fraud and Abuse Act as well as the California Computer Data Access and Fraud Act.

In November SAP announced that TomorrowNow
CEO Andrew Nelson
and a handful of senior executives at the firm had resigned and that the company was considering a number of strategic options, including the possible sale of the subsidiary it acquired in 2005.

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