Oracle seeks new trial in IP suit against SAP

FRAMINGHAM, MASS. – Oracle’s plan to drag its legal fight against rival SAP’s defunct TomorrowNow subsidiary through a second trial is not surprising, analysts said Tuesday.

The company clearly wants to distract SAP by forcing it to go through another bruising battle in court, they said.

“SAP wanted to get this whole messy affair behind it as quickly as possible,” said Frank Scavo, president of Computer Economics, an IT research firm. “Right now, SAP has a lot of momentum, but if Oracle can keep the dispute alive it keeps SAP on the defensive.”

Oracle on Monday rejected a federal judge’s September ruling that had awarded it $272 million in damages in its IP infringement lawsuit against SAP.

Judge Phyllis Hamilton’s decision cut about $1 billion from the $1.3 billion in damages awarded by a jury hearing the suit in late 2010.

Hamilton said Oracle could either accept the damages she awarded or seek a new trial.

Oracle has claimed–and SAP has subsequently admitted — that the now-closed TomorrowNow subsidiary infringed on Oracle’s intellectual property and IPs when it delivered third-party support and maintenance services to Oracle customers.

Oracle in September had vowed to seek the $1.3 billion awarded by the jury. In the motion filed Monday U.S. District Court for the Northern District of California, Oracle formally rejected the $272 million award and said it had “no choice but to elect a new trial.”

Accepting Hamilton’s ruling would “force Oracle to risk waiving its right to appeal the Court’s decision on the motions for judgment as a matter of law and for a new trial,” the company said.

Scavo said Oracle’s motion for a new trail isn’t surprising. “Oracle’s continued pursuit of SAP is just one battle in the war against third-party support,” he noted.

Oracle has filed a similar lawsuit against Rimini Street, a provider of low-cost support services for users of enterprise software products from vendors such as Oracle, Siebel, PeopleSoft and SAP.

Rimini Street has claimed its services cost just half of what enterprises would otherwise need to pay Oracle, SAP and others for maintenance and support,

Oracle, which derives substantial revenues from such services, has claimed that Rimini and TomorrowNow are able to deliver the services only by illegally using Oracle software.

Scavo said the Rimini Street battle is more critical for Oracle than the TomorrowNow fight. “If that decision goes against Oracle, it essentially validates the legal basis for third-party support,” he said.

Paul Hamerman, an analyst at Forrester Research, said Oracle’s request for a new trial should have been expected given the significant difference between the jury’s damage award and the judge’s decision.

Also, he said “Oracle can afford to drag this out. The rivalry motivates Oracle to keep SAP on the defensive, and prolongs the agony for SAP, which just wants to put this case behind it,” he said.

IT executives should take note of Oracle’s actions and be careful when entering into contracts with third-party software service providers, Scavo added.

“Organizations that are currently looking at third-party maintenance should have their legal counsel take a careful look at the proposed contracts to ensure that their interests are adequately protected,” he said.

In a statement, SAP said it was “disappointed that Oracle has passed up yet another opportunity to resolve this case. We will continue to work to bring this case to a fair and reasonable end.”

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