October 29, 2010

In what Insurance & Technology sister brand InformationWeek calls a "shocking last-minute move," SAP has admitted contributory liability in a copyright infringement suit filed against it by Oracle.

The suit deals with SAP's acquisition of TomorrowNow, a company that provided PeopleSoft technical support. SAP bought the company in 2005, shortly after Oracle bought PeopleSoft itself. Oracle alleged that TomorrowNow infringed on its copyrights by downloading millions software and support material from Oracle servers — a practice it claimed continued even after SAP's bought the company.

SAP had previously only admitted vicarious liability; that is, that the alleged infringement occurred without its knowledge. It closed TomorrowNow in 2008, though most of the company's main executives had left by then. The new class of liability essentially amounts to an admission that SAP knew what TomorrowNow was doing.

The lawsuit had attracted increased attention recently after SAP's former CEO, Leo Apotheker, was named CEO of HP following Mark Hurd's departure. New York Times columnist Joe Nocera touched off a back-and forth with an October 8 column. Among his remarks:

More important, for a company that professes to be concerned with ethics — so concerned that it had to get rid of Mr. Hurd, with his piddling expense account problems — it is astonishing that it would find Mr. Apotheker’s lapses acceptable. He may not have been directly involved in this brazen theft of intellectual property, but it defies belief to say he didn’t know about it. And he did nothing to stop it until it was far too late. Apparently, the H.P. directors adhere to the highest ethical standards — but only when it’s convenient.

That, combined with Oracle CEO Larry Ellison saying that it's unlikely that HP "wants to risk Leo Apotheker testifying under oath as to why he allowed the theft of Oracle property to continue for 8 months after he was made sole CEO of SAP," are probably among the events that have caused SAP to change its tune. The company said it wants to avoid the trial for the suit, which is scheduled to start November 1, from turning into a "sideshow," it said in a statement.

However, the admission has spurred a request from Oracle to delay the trial's start so it can refine its strategy. Whether or not a late start will help SAP meet its goal of shortening and defusing the trial remains to be seen.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, ...