SAP Offers $120M to Oracle in TomorrowNow Case

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The high profile software theft case between rivals Oracle and SAP is kicking into high gear — or at least high drama. An Oracle (NASDAQ: ORCL) spokesman confirmed Thursday that CEO Larry Ellison is scheduled to testify in the case this coming Monday.

The case involves TomorrowNow, a former subsidiary of SAP that offered third-party support for various Oracle applications. SAP ended up shutting down TomorrowNow after accusations the subsidiary illegally downloaded proprietary Oracle support software, a charge SAP has admitted to.

In the latest development, SAP reportedly has offered to pay Oracle $120 million for its legal expenses if it does not seek punitive damages in the long-running case, which has dragged on for over three years. An SAP spokesperson said he couldn’t confirm details or comment because the court sealed the motion at Oracle’s request. Oracle is seeking at least $2.3 billion in damages, according to Bloomberg.

“SAP is committed to compensating Oracle for the harm the limited operations of TomorrowNow actually caused. That compensation must be reasonable and it must be tethered to reality and the law,” the SAP spokesperson said.

“SAP’s latest effort to focus the trial does not change SAP’s position that it was not involved in TomorrowNow’s service operations and did not engage in any of the copying or downloading alleged in Oracle’s complaint. Oracle agrees. It told the Court on summary judgment, and the Court agreed, that liability for contributory copyright infringement does not require that SAP actually knew about the infringement. The Court ruled that contributory infringement could be proven simply by showing that SAP should have known of TN’s infringement and failed to stop it,” he added.

The other potential piece of drama in the case is whether former SAP co-CEO will testify in the case. Apotheker started as CEO of HP (NYSE: HPQ) this week and SAP has made numerous statements characterizing Apotheker’s supervision and involvement with TomorrowNow as minimal.

Oracle thinks otherwise and has subpoenaed Apotheker’s testimony; so far to no avail.

“Hewlett Packard has refused to accept service of a subpoena requiring Mr. Apotheker to testify about his role in SAP’s illegal conduct. Mr. Apotheker started work for HP on Monday, but it now appears that the HP Board of Directors has decided to keep him away from HP’s headquarters and outside the court’s jurisdiction. We will continue to try to serve him,” a spokesperson for Oracle said in an email sent to InternetNews.com.

The court has a sworn video-taped deposition Apotheker gave back in 2008 which HP said should be sufficient.

“Oracle had ample opportunity to question Leo during his sworn deposition in October 2008 and chose not to include him as a trial witness until he was named CEO of HP. Given Leo’s limited knowledge of and role in the matter, Oracle’s last-minute effort to require him to appear live at trial is no more than an effort to harass him and interfere with his duties and responsibilities as HP’s CEO,” the company said in a statement send to InternetNews.com.

Oracle’s former president, Charles Phillips is also testifying in the case today. Oracle reportedly is set to produce evidence tying Apotheker to TomorrowNow’s illicit actions.

The case is already proving to be a huge embarrassment to SAP and just how big a hit it is to its wallet remains to be seen. Though Oracle and SAP are bitter rivals, a significant part of SAP’s business is selling ERP and other applications that work with Oracle’s database software to enterprises. Also, Oracle’s aggressive pursuit of Apotheker promises to further chill the company’s relationship with long time ally HP.

Ellison was an early critic of HP’s move to dismiss CEO Mark Hurd, and later hired him as president of Oracle. Oracle also now competes directly with HP thanks to its blockbuster acquisition of Sun Microsystems that has transformed Oracle into a system’s supplier.

The case of Oracle vs. SAP AG (07-01658) is being tried in the U.S. District Court, Northern District of California in Oakland.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.