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Oracle license would have cost SAP billions, Phillips says

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Former Oracle President Charles Phillips testified in court Thursday that he would have been "terrified" to learn SAP had gained access to Oracle's software and that SAP would have had to pay "at least 3 or 4 billion dollars" to license it.

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Oracle called Phillips as a witness on day three of the trial in its lawsuit against SAP, in which the German software vendor is accused of stealing Oracle software and support materials and using them to entice away Oracle customers.

Shai Agassi, a former SAP board member, also appeared Thursday in a video-taped deposition, and Oracle's lawyers complained they have been unable to subpoena former SAP executive Leo Apotheker, Hewlett-Packard's new CEO, apparently because he is out of the country.

"We've not been able to find him, but as soon as we do we'll let you know," an Oracle attorney told Judge Phyllis Hamilton, who is hearing the case at the U.S. District Court in Oakland, California. SAP says Apotheker is not relevant to the case and that Oracle is "harassing" him.

SAP has admitted to the software theft and the trial is about how much it should pay in damages. Oracle is seeking at least US$2 billion, partly for what it says SAP would have paid to license the software. SAP says it should pay only tens of millions of dollars, for the profits Oracle lost as a result of the theft.

Phillips was in the witness stand for about 90 minutes. His testimony was intended to show how threatened Oracle would have been if SAP had access to the software, and therefore how much it would have charged SAP to license it. The software includes the applications Oracle gained with its $11 billion PeopleSoft acquisition.

"How would selling a license like that affect you?" Donn Pickett, an attorney for Oracle, asked Phillips.

"I would have been terrified if my largest competitor had the exact same product I did and was three times my size. It would have been unthinkable," Phillips replied.

He asked Phillips how much SAP would have had to pay for such a license. "If I had to pay $11 billion up front [for the PeopleSoft software], I'd expect them to have to pay billions for it as well," Phillips said. Later he said Oracle could have charged "at least 3 or 4 billion dollars."

Phillips is now CEO of the applications vendor Infor. SAP attorney Greg Lanier began his cross-examination by suggesting Infor could be an acquisition target for Oracle -- perhaps implying that Phillips has a motive for providing testimony favorable to Oracle.

Lanier showed the court e-mails between Phillips and other Oracle executives that suggested Oracle did not see TomorrowNow as a big threat, and that customers were leaving Oracle not because of TomorrowNow but because they were unimpressed with Oracle's software road map.

"We bungled a demo last week and they're marching to SAP," Phillips wrote in an e-mail to Oracle CEO Larry Ellison, referring to a big Oracle customer at the time, Amgen.

The day began with a disagreement over some evidence Oracle wanted to show at trial -- a presentation prepared for SAP's board about the business case for buying TomorrowNow. It said SAP could expect to make $900 million in the first three years, from PeopleSoft customers who left Oracle for TomorrowNow.

SAP told Oracle via e-mail at midnight on Wednesday that it objected to the document, Pickett told the judge. Oracle said it is an indicator of what SAP would have been prepared to pay -- the "fair market value" -- for Oracle's software.

"It's the single most relevant document in the case for showing fair market value," Pickett protested. "To bring it up in an e-mail at midnight is completely untoward."

Hamilton allowed it to be shown to the jury.

Agassi, in his video deposition, was asked if Oracle and SAP were partners as well as competitors.

"Yes," he replied.

"How did that work?" Oracle's lawyer asked.

"Painfully," Agassi said.

Asked to explain he said, "A state of coopetition is always painful."

Under questioning, Agassi testified that SAP bought TomorrowNow with the hope of taking away Oracle maintenance revenues and customers. He was asked if he had expected Oracle to sue SAP over the acquisition.

"There's always a chance Oracle could sue," Agassi said. "Oracle can sue over the way we drip sandwich sauce over its lawn."

The trial continues Friday. Ellison is now expected to take the stand on Monday.


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