SAP Raises the White Flag to Oracle
Can SAP finally put its $100 million mistake—TomorrowNow--behind them? That depends on how Larry Ellison is feeling.
"Uncle!"
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That is, essentially, what SAP executives cried out to Oracle yesterday, amid their years-long legal drama over SAP's now-shuttled TomorrowNow subsidiary. (If you're not up to speed on the entire legal saga, start here.)
In pre-trial court documents filed on Aug. 5, in the U.S. District Court of Northern California, SAP states that (minus all the high-price legalese) enough is enough.
SAP is seeking to do something that it hasn't been able to do since 2007: Put this $100 million mistake behind them. SAP paid $10 million for TomorrowNow's third-party ERP support business in 2005, and during its existence as an SAP subsidiary, TN lost $90 million. (And that doesn't include the legal bills SAP's paid since 2007, when Oracle launched its suit.)
In the most recent filing, SAP boldly laid down its sword at the feet of the aggressor: SAP (again) admitted to TomorrowNow's mistakes; acknowledged the Oracle illegal downloads and copyright infringement by TN; and stated that since they were responsible for TN's actions, they were willing to pay for those errors.
End of story? "The Trial's Off!" Not quite.
Now is when things will get really interesting. Because if there's ever going to be any settlement, then it all now hangs on "damages"—Cash Money, Folks!—and the whim of Oracle CEO Larry Ellison.
For several years, Ellison & Co. have enjoyed their time in the positive spotlight of this case—they had always claimed they had been wronged by TN (and SAP) and the law was on their side. So was time. Oracle never appeared in any great hurry to settle this case.
And you'll recall that Oracle recently retained the services of legendary litigator David Boies, who must have some type of nickname in legal circles such as "The Hammer" or "The Closer." (BTW: In the unlikely scenario that Oracle decides to settle with SAP, they might want to keep Boies on retainer for that other "billion-dollar" lawsuit in their midst—ya know, the one levied against them by the U.S. government for alleged overcharging.)
As to the damages, Oracle has always sought a figure in the neighborhood of a billion dollars. (Think Dr. Evil saying: "One BILLION DOLLARS!!") SAP has argued that those claims are "vastly overstated." (Think Scott Evil saying: "Why does he ALWAYS DO THAT?!)
And that's the chief reason this is heading toward a trial date in November.
With this most recent move, SAP might be hoping that the Trial of the New Century (for high-tech universe, anyway) will not take place. Don't bet on it. This is Larry Ellison we're talking about, who operates with about as much unpredictability as any CEO ever has.
In the court of public opinion, though, SAP's recent olive branch is a shrewd PR tactic that might resonate with investors, customers and industry watchers, who realize that this lawsuit is now a colossal waste of time and money. And recognize that SAP is acting with some good faith to end the ordeal.
But, really, only one opinion matters. Larry?
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