SAP will not contest liability of TomorrowNow in Oracle lawsuit

In a turn of affairs, SAP announced this week that it would not contest the liability of TomorrowNow for downloading proprietary, copyrighted software products and other confidential materials used by Oracle’s support organization.

In 2007, Oracle filed a lawsuit against TomorrowNow, a now defunct SAP subsidiary that offered maintenance and support services for Oracle software at a much lower cost than that provided by Oracle. SAP had said then that it will aggressively defend the claims made in the lawsuit.

On Thursday, SAP said that it will accept financial responsibility for any judgment awarded against TomorrowNow, despite the fact that SAP was not involved in TomorrowNow’s service operations and did not engage in any of the copying or downloading alleged in Oracle’s complaint.

Importantly, SAP said it will continue to present arguments and evidence demonstrating that Oracle’s damages claims in this matter are vastly overstated.

“By accepting responsibility for TomorrowNow’s actions, SAP is taking a decisive move to focus the issues in the case. We acknowledged three years ago that TomorrowNow made mistakes, and we took direct action to address Oracle’s concerns, including shutting down the company nearly two years ago,” said SAP CFO Werner Brandt.

“SAP is committed to compensating Oracle for the harm the limited operations of TomorrowNow actually caused. Oracle’s unreasonable damages claims are an unproductive distraction as we work to find a fair resolution in this case.”

Enterprise software vendors derive a large part of their revenues from maintenance and support services, so isn’t surprising that Oracle is sparing no effort to protect its cash cow.

The software giant also filed a similar suit against Rimini Street, another third-party support vendor which supports both SAP and Oracle applications.

The market for third-party software support is a viable one, especially since most enterprise apps rarely require frequent maintenance and upgrades. The outcomes of these two lawsuits would determine if this market will flourish in future. Systems integrators who have been keen to enter the market but are wary of jeopardizing their relationships with software makers will be watching this space.