SAP AG, the world's largest maker of business-management software, said it made "inappropriate" downloads of Oracle Corp code, responding to a lawsuit that claims the German company stole programs from its competitor.
"We regret very much that this occurred," SAP chief executive officer Henning Kagermann said on a conference call yesterday. "Even a single inappropriate download is unacceptable from my perspective."
The announcement marked a setback for SAP in its battle with Oracle in the US$56 billion market for software that manages tasks such as payroll and inventory. Oracle's March 22 lawsuit in San Francisco claimed SAP workers hacked into a Web site and stole software code on a "grand scale." Redwood City, California-based Oracle filed an amended complaint on June 1 to sue SAP for copyright infringement and breach of contract.
"It's very embarrassing for SAP, which has always been seen as a technology leader and also in issues such as compliance," said Ernst Konrad, the Munich-based head of equities at BayernInvest, which oversees US$35 billion including SAP shares. "The financial consequences are hard to judge at the moment."
Oracle claimed that SAP workers used the identities of Oracle customers and phony users to "gain access to Oracle's systems under false pretexts." Oracle also accused SAP of fraud and unfair competition, alleging that it copied thousands of copyrighted programs to undercut Oracle's software maintenance service.
SAP said its TomorrowNow unit, which provides software support to clients, was authorized to download materials from Oracle's Web site on behalf of TomorrowNow customers.
SAP acknowledged the unit made "some inappropriate" downloads of fixes and support documents. It rejected claims that they violated Oracle's intellectual property rights.
Shares of SAP fell US$0.08, or 0.2 percent, to 37.99 euros in Frankfurt yesterday. Oracle's stock rose US$0.21 to US$19.92 yesterday in NASDAQ Stock Market trading in New York.
SAP and Oracle offer software maintenance services for each other's products. Oracle's amended complaint alleged SAP improperly obtained software-support documentation from an Oracle Web site and that SAP's TomorrowNow unit violated copyright law by distributing the material to customers.
Kagermann said today he was "personally surprised" that Oracle didn't contact SAP "as soon as they felt something was wrong." The download of materials didn't cause "significant harm" to Oracle and Oracle's claims in its complaints "appear to be unfounded," Kagermann said.
SAP didn't have access to Oracle's intellectual property because "what was downloaded at TomorrowNow stayed in that subsidiary's separate systems," the German company said.
SAP said it will "fully cooperate" with the US Department of Justice, which requested documents from the company and Bryan, Texas-based TomorrowNow. Kagermann would not rule out a settlement with Oracle, saying "all options" are open.
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