SAP has admitted that its TomorrowNow (TN) subsidiary downloaded unauthorized "fixes and support documents" from Oracle's web site but claims there was a Chinese Wall between SAP and TN that prevented SAP from having access to Oracle's IP as Oracle contends.

SAP made the admission in court papers filed right before the Fourth of July holiday last week and in conference calls between SAP CEO Henning Kagerman and the press.

During one call Kagerman, who regrets "even a single inappropriate download," claimed Oracle wasn't "significantly harmed."

The 20-page court filing was SAP's first formal response to the March 22 federal suit that Oracle lodged charging the German company with "corporate theft on a grand scale" involving scads of material.

SAP contends that kind of talk is just Oracle "rhetoric and hyperbole."

Astonishingly nobody in the press, even on a slow news week, asked SAP exactly how many illegal downloads it has uncovered so far and actually SAP only describes its admitted illegal downloads as "downloads" in the court papers, never as "fixes," a word ripe with IP that appears only in its press release.

SAP also disclosed that the Justice Department is investigating Oracle's charges and has asked SAP corporate and TN for "certain documents."

As a corrective, SAP has moved SAP America COO and former CFO Mark White into TN as executive chairman to clean up the problem. TN CEO Andrew Nelson, who Kagerman claimed was unaware of any "inappropriate downloads," is now reporting to White.

When asked if heads would roll, Kagerman said there could be "personal consequences" for whomever was responsible for the downloads. White will do any firing.

SAP also confessed that "certain portions of TN's PeopleSoft Daylight Savings Time solution are substantially similar and in some instances identical to Oracle's DST solution." Oracle claimed it was copied wholesale.

Kagerman said that after Oracle filed suit - without speaking to him first, a fact that he's miffed over - he started a still-uncompleted internal investigation of Oracle's specific charges and found out that TN had been downloading material from Oracle that customers like Honeywell, Merck, OCE, Yazaki and SPX weren't entitled to as Oracle charged.

Apparently SAP hasn't looked to see if TN was in the habit of illegally downloading Oracle material before its acquisition in 2005 right after Oracle acquired PeopleSoft, the beginning of a three-year $25 billion acquisition tear to make Oracle a more effective competitor against SAP. TomorrowNow sells support for PeopleSoft, JD Edwards and Siebel, all Oracle acquisitions.

When asked if SAP would settle the suit, Kagerman said a case management conference was scheduled for September 4 and that "sometimes" the court urges litigants to settle. Otherwise there have been no settlement talks.

SAP currently claims that "a number" of Oracle's allegations "appear to be unfounded."

Oracle claims that the only reason TN was able to undercut its support prices - and run off 500 of its customers - was because it was ripping it off using dummy phone numbers and fake e-mail addresses. SAP claims that Oracle's prices were "artificially inflated" to pay for its acquisition spree and the "integration of products that customers do not want or need."

Oracle is seeking punitive damages, an injunction and the return of its property.

SAP says TomorrowNow will continue to download permissible Oracle material and continue to try to move customers off of Oracle via SAP's so-called Safe Passage plan.

SAP has created a separate web site dedicated to the suit at www.tnlawsuit.com.