Oracle filed suit against SAP this past Spring, after the company discovered TN was accessing Oracle databases with former customer passwords and downloading proprietary information. TN used that information to provide the same level of service Oracle provided, at half the price.

SAP is defending its subsidiary by saying that TN customers authorized them to download files on their behalf, a defense Eric Goldman calls the "proxy defense" that’s doomed to fail.

"Oracle can control the manner and means by which people access its servers," writes Goldman, "so even if it permits its customers to access the site, that permission isn’t automatically extensible to third parties acting on the customers’ behalf. Indeed, Oracle expressly precluded such behavior in some cases."

SAP has been noticeably compliant with most of the claims even as it defends itself in court against the charges. The company set up a website about the lawsuit where those following the case can get information.

Though he wished he somebody’d called him before filing a lawsuit, Henning Kagermann, CEO, SAP AG, made his apologies. “Even a single inappropriate download is unacceptable from my perspective. We regret very much that this occurred,” he said.

“I want to reassure our investors, customers, partners and employees that SAP takes any departure from the high standards we set for all of our businesses very seriously, regardless of where it occurred or how confined it may be.

"When I learned what happened, I promptly took action to strengthen operational oversight at TomorrowNow while assuring that we maintain excellent service for TomorrowNow’s customers going forward.”

It may not turn out that well for them, though. TN is losing business already, SAP’s most likely going to have to write out a pretty big check to Oracle, and there’s a good possibility some suits are going to find themselves in jail.

It’s an interesting strategy put forth by in advance of its Sapphire ’06 Orlando conference. The plan could be enough to give Oracle’s top man Larry Ellison an upset tummy, provided a traditional Japanese of miso soup, sugared eggs, and natto with rice doesn’t accomplish that for him.

SAP plans to slash prices on Siebel application support offered by its TomorrowNow subsidiary, said a report in the Wall Street Journal. Oracle acquired Siebel last year, and earns hundreds of thousands of dollars on high-margin support contracts for its software products.

When Sapphire ’06 kicks off next week, SAP should talk more about the decision to add reduced cost Siebel support to the options it offers for PeopleSoft and JD Edwards products. Oracle owns the latter two firms as well.

Oracle has put a brave face on the threat. An Oracle executive cited in the article dismissed the SAP challenge as one that would cater to an “extreme niche.” Oracle possesses more expertise on its products and better source code access.

The numbers could be hard to ignore for customers, though. Olin Corp saw its $200,000 PeopleSoft support contract drop to $100,000 to $125,000 when it switched to TomorrowNow.

The support initiative looks like another facet of SAP’s aspirations for greater growth. BusinessWeek noted how company co-founder Hasso Plattner wants the company’s market capitalization doubled, to over $110 billion, by the year 2010.

SAP will put about $380 million in incentives out there for managers and certain employees as part of “If you have outrageous goals, then probably you can achieve outrageous things,” he said in that report.

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David Utter is a staff writer for WebProNews covering technology and business.