Channel Marker

Mar 26 2007   8:15PM GMT

SAP VARs at risk from lawsuit

Yuval Shavit Profile: YuvalShavit

Although Oracle’s lawsuit against SAP is directed against the German-based software giant, SAP’s channel partners could also be held culpable for any role they may have had for using software and documentation that turns out to have been illegally obtained, according to one lawyer specializing in intellectual property law.

Systems integrators (SIs) and consulting firms that provide support for Oracle products should prepare for any potential legal action by documenting what they did and didn’t know about the origins of materials given to them by SAP, according to Tucker Griffith, partner at McCormick, Paulding & Huber LLP.

Those partners are at risk if Oracle is “going on a theory that this was stolen material — and I’m pretty sure they are going on that theory — and if they’re going on the theory that some of the stuff was trade-secret protected,” Griffith said. “If you [the VAR] had reason to suspect it was stolen, or suspect it came from illegal means and illegal sources, then you might have some culpability.”

It would also be prudent for partners whose contracts with SAP do not include an indemnity clause to negotiate with the company to get one, he said. Indemnity clauses, in which one company insures another against lawsuits, can be written with generic language or be specific enough to, for example, specify whether the party offering indemnity will also cover court fees, he said.

Those partners who find themselves needing to negotiate for indemnity may have some leverage, though. Partners can point to the bad press the suit may generate for SAP and hint that they would consider migrating to other vendors if SAP does not earn their loyalty, Griffith said.

The lawsuit against SAP alleges that TomorrowNow, a provider of third-party Oracle support that SAP acquired in 2005, used Oracle customers’ login information to access Oracle’s support site. There, according to the 44-page complaint Oracle filed last week, TomorrowNow downloaded thousands of materials — software and documentation — which it then used to undercut Oracle’s own support.

But players at TomorrowNow, and SAP may have not thought they were doing anything wrong, Griffith said. They did not appear to try to cover up their tracks — the logins were traced back to computers in Bryan, Tex. where TomorrowNow is located — and Oracle did not take steps to prevent bulk downloads like those it accuses TomorrowNow of making.

“The defense would be well: we thought there was nothing wrong, because if we thought there was something wrong about it, we would have made it less obvious, less blatant,” Griffith said.

Oracle and SAP have continued to remain mostly silent about the suit, although SAP did issue a press release Friday saying that it will “aggressively defend against the claims made by Oracle.”

-Yuval Shavit

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