The World's Greatest (Licensing) Podcast
The World's Greatest (Licensing) Podcast is a technology-focused podcast hosted by Craig Guarente, President and Founder of Palisade Compliance. From software licensing to emerging innovation, we bring together leading experts to give you the most up-to-date knowledge and expertise around what's happening with technology vendors around the world.
The World's Greatest (Licensing) Podcast
Inside the SAP–Teradata Legal Battle and What it Means for Enterprise Databases
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In this episode we revisit SAP and Teradata's legal battle that began in 2018. The Bridge Project, SAP and Teradata's joint venture designed to bridge SAP's ERP with Teradata's analytics database, is the foundation of the lawsuit.
The original complaint, filed by Teradata, accused SAP of trade secret misappropriation, copyright infringement, and antitrust violations. Both companies filed appeals in ensuing years. In October 2025, the US Supreme Court rejected a request for a hearing by SAP, allowing Teradata's suit to move ahead.
This case has the potential to move to trial in 2026. We'll be covering the case as it develops, as well as the resulting precedent that will influence ERP migrations and data migrations. Stay tuned to find out if this case heads to trial this year or settles out of court.
Setting The Stakes And Players
SPEAKER_01Hey good morning, everybody, and welcome to the world's greatest licensing podcast. And we actually have a licensing uh session today, legal slash licensing, uh, little blast from the past. Uh, we want to talk about a lawsuit that was filed in 2018, um, where Teradata is sh is suing SAP. And I'm joined by Palisades' very own Ed Hayburn.
SPEAKER_02Ed, welcome to the show again. Thank you, Craig. I'm excited to be back. Are you really excited? I I actually am. I I I love this. Uh obviously, you're the expert on the um on the technical details, so I think we're gonna learn a lot today. Uh, but I absolutely love the interplay between the technology and the law.
SPEAKER_01Well, there's a lot of it here. Um, this is an interesting case uh for so many reasons, and I was something that I had not paid attention to because it didn't really directly impact Oracle. And now that we're doing a lot of things beyond Oracle, um, you know, it does impact what our clients are facing. And interesting enough, um, a lot of this is happening because of Oracle. So and and their dominant position in the database market and their relationship with SAP. Um, so let's just uh dive into uh maybe a little bit of the background of the case. And I'm just gonna share my screen here so you know we can uh look at look at the same thing here. This is the this is the complaint that was filed. Um, you can see terror data suing SAP. And this is actually the second amended complaint. They filed one complaint, then they amended it, and this is the second one. And we didn't go back and check, you know, what was the difference from the original. Uh, so we're just working off of the the latest and greatest.
SPEAKER_02And the second amended complaint was filed before SAP uh answered. So there's really no moment of what the other complaint said. That the second amended complaint could have changed everything, and that's the one that's gonna control in this case.
SPEAKER_01Yeah, so we're gonna today's conversation. We're gonna we're gonna talk about this complaint and we're gonna talk about SAP's complaint, and then we're gonna leave you all with a cliffhanger because it went, you know, there there was a ruling, and um, but we're not gonna tell you what that is. So you have to don't Google it, don't ruin everything for yourself. If you're gonna listen to this, stick around.
Rewinding To 2008: Tech Context
SPEAKER_02So it may pop up in the news, so maybe you know our listeners should just not watch the news until we get around.
ERP, Databases, And Warehouses 101
SPEAKER_01And you know what? The thing, um the the reason we're talking about this now is this um uh is gonna hit uh a trial in 2026. So unless they settle, um, this is gonna go to trial in 2026. So um let's talk a little bit about um what happened with Teradata and SAP. So uh Teradata is uh we're turning back the clock a little bit. So this this was filed in 2018, uh, but a lot of the things that happened here happened in 2008, 2009. So, you know, we're going back 17 years, and it's interesting. Um, if you read this, you know, a lot of the things that we talk about today, like AI just in in its current form, integration didn't exist back then. And, you know, this is um, you know, a lot of what uh uh SAP and Teradata were working on were, you know, complex uh questions, getting answers from complex questions, uh, you know, to to uh to to pull data out and and do analysis. So I'm wondering how much of this, you know, from a technical perspective is still actually uh relevant. But having said that, um, SAP is in the business of ERP software. Um, you know, you do your billing, you do your invoicing, you do your, you know, uh production. It's all runs through an SAP application. Uh that application 60% market share, whatever their market share is or was at the time. Um, and that information all sits in a database. And um, interesting enough, back in 2008, uh it probably sat in an Oracle database. And uh, but Oracle databases, relational databases are really good at, you know, answering easy questions, like how many times do we send a bill here? How many times do we do an invoice there? Um, so it's it's it's structured data. Um, but what happens is companies take that data and then they put it in a data warehouse to do really complex analysis. You know, how many times did we send an invoice to this customer, to this type of customer whose business is based in Germany? And how many times do we have to, you know, send out this product when the weather was bad in Germany? You know, things like that. You just can't pull out of a database uh simply. So that's where companies like Teradata would come in. They would do complex analysis. So companies, they run SAP, data sits in an Oracle database, but then they want to pull the data out and analyze it uh using more sophisticated tools. And that's sort of the technical background, you know, turning back the clock uh many years. And then SAP uh and Teradata uh come together because uh, and it depends on who you believe here, uh, SAP, you know, courted TerraData and said, hey, we want, you know, a lot of people use our who use our stuff use your stuff. So we want to bridge the gap between our applications and your data warehouse. And um, you know, if we if if you ask one party, they they said the other party was trying to get this relationship going, and the other one says no, it was them. Um so they created this project called the Bridge Project to bridge the gap between the SAP application and the Teradata database, data warehouse.
The Bridge Project Is Born
SPEAKER_02You know, Craig, I thought this was particularly interesting for a couple of reasons. One, it's hard to uh not stress enough um the power in the market share that SAP has and had at that time. Uh uh, but then also that SAP didn't have the technical expertise that Teradata um had developed. And then the third thing is in this industry, uh, you know, people are constantly looking for partnerships uh so that they can tackle large problems, but maybe ones that they couldn't handle on their own. So I'm surprised that this issue doesn't come up more because the stage is just set for this type of problem.
SPEAKER_01Well, I think it it it it does come up, and you know, obviously since since 2008, there have been a lot of uh MA activity and companies merging and divesting and forming joint ventures, and now new companies coming up like ChatGPT, you know, didn't exist and Grok and all those things to you know maybe uh do some of this work uh on the edges at least. But um, but yeah, I mean this this uh even you know the the analysis that I sort of the the scene that I sat, you've got three big players, right? You've got SAP, who is really good at creating the applications, and then you've got all the data sitting potentially in an Oracle database, and then you want people, they have to pull that data out and do an analysis uh somewhere else. I mean, I look at, you know, we at Palisade, we've got a CRM vendor. So we log into their system and we put our customer data in there. That sits in a database, which is not owned by that CRM vendor, you know, it's somebody else's database. And then what do we do? You know, we take that out, we might run it in Excel, right? We do this analysis in Excel. So we are, you know, a little microcosm uh as a big company would be where they're running in all these different, but they might have contracts with all those companies, right? They have an SAP contract and an Aura contract and uh Teradata contract. Uh, and and I think it's getting more complex. And and um now you throw everything in the cloud, and everybody wants your data so they can create their large language models.
SPEAKER_02And the this complaint doesn't even touch on um who's using the data. It's it's just uh the ability to access the data and how it was.
SPEAKER_01And I have to say, when I read the Terror data complaint, the one we're looking at here, I just kept thinking, how stupid are you? Like, how do you let another company in and you know, that's sort of my initial gut reaction, like, you know, you deserve what you got, sort of thing. And then I read the SAP response. I was like, What's the victim blame in? SAP, you suck now. Like, I I I had no sympathy for either party when I read their complaint and their response. I was like, You're an idiot and you suck. It's like it was just my initial reaction, uh sort of sort of in on the inside of this world uh for a little while. Um, and I don't know, you we were talking the other day, and you're saying how companies try to, you know, create sympathy sometimes with with the judges when they pull these things together. And that that sort of gets people annoyed in the legal field. Uh well, it got me a l annoyed in the non-legal field for sure.
SPEAKER_02Yeah. I I wonder if Teradata assumed that this bridge project would lead to either a merger or acquisition.
Alleged Misuse And Relationship Fallout
SPEAKER_01Oh, that's a good question. I mean, they were spun off by NCR before, so they're sort of newly formed at the time. So let's get into the bridge project. So the the the allegation is we hey, we did this bridge bridge project together, and this is you know, Teradata, and they're saying we gave you access to everything. We, you know, even though we protect all of our IP, we you have signed non-disclosure agreements, we've got confidentiality, we've got all these protections. You have to accept when you use our software, you know, you're always clicking I accept on different license terms and things like that. Uh, so we were really did everything right and we protected all of our data. Um, not only do we protect our data, but then we helped you. Like you kept not SAP, you were not able to figure things out. We gave you access to these things called orange books, which is like our secrets are in there. And um, we answered your questions in emails. We told you how to write your uh application in a way that would be able to analyze data. So you were having technical problems and you were coming to us, and we were helping solve all those problems for you. So your applications were getting better and better. And um, you know, it took us all a while, but we finally got one big customer to do this. I think it was called Teradata Foundation. We finally created this product called Teradata Foundation, and uh we got one customer in place, and we were ready to and we invested millions and millions and millions of dollars into this stuff, and um, you know, help helping you sort of build this out. And then once we got that customer, and then once we announced, then you SAP uh terminated our relationship and launched your own semi-equivalent product again, using Teradata's uh position. It wasn't as good as ours, you know, it was kind of crappy, but you're not gonna concede that, right? Right, yeah, yeah. But you but you uh you you launched your own product, so you took all of our trade secrets, uh, we got a client together, proof of concept, it worked, and then what do you do? You terminate our relationship and then you launch your own product, which is kind of a shitty thing to do.
SPEAKER_02Yeah, when when I was reading it, it it there's so much of a parallel to like a dating relationship, and um, you know, Teradata, you know, is putting their whole heart into the relationship, and then they actually have a baby, and then SAP just walks out on them.
SPEAKER_00Right.
SPEAKER_01Right. Exactly, exactly, and they take the baby with them too. Yeah. Um, so but that's not like, okay, so there's some bad stuff legally there, uh, according to Teradata, that uh you we had IP and you took our IP, right? We we protected it with our contracts, um, but then you you took our stuff and you put it in your products, right? You're sort of developing, but that's not the end of the the bad behavior that uh Teradata alleges that SAP did. But I guess that's bad enough, right? Like even if that was it, like according to Teradata, they would still have a claim, right? Like that's that's if you assume everything Teradata says is accurate and and and reflects reality, that's bad, right? You can't just take their data and use it in RIP and use it in your own.
SPEAKER_02Right. Yeah, it to me it's it's three different cases combined in one. You know, it's it's the misappropriation of the trade data, trade secrets, um, and then the copyright claim, and then um the um uh monopoly uh Sherman Act violations.
SPEAKER_01Yeah, so I think for for the listeners, that's probably the big one for the users of technology is is how then allegedly SAP took this um ill-gotten booty from uh the the um the uh the the the fruit of the poison tree. I don't know. I know we're not using that correctly. I'm throwing all the yeah, yeah. Yes. Um excited utterance. That's true. I'm gonna use that.
SPEAKER_02I bet there were some excited utterances when uh Teradata found out what was going on.
SPEAKER_01Yeah, so um, so then it gets, and I think this is where uh a lot of the users of this technology and and any technology, um, they'll say, okay, so then what SAP did next, according to Teradata, is not only did they take our stuff, but now then they launched their own product, which is which is bad enough, HANA. And then um, so it was an alternative to some of these other databases, whether that's Oracle or um or SQL Server or DB2, but also is is a Teradata, they did a couple of things. They said, number one, if you're gonna go to S4 HANA, you you have to use S4 HANA meaning the latest version of SAP's products, uh, you have to use their database. So you're basically precluding um the usage of other databases. And for me, this was interesting because I remember you know being at Oracle when we I have my red hat on now, when we acquired Sieble, PeopleSoft, JD Edwards, you know, all those products used to run on a multiple databases, right? And really still can. So then what do you do as an Oracle? Well, this really can only run on Oracle now, right? So this behavior from SAP, I was like, oh, this is a blast from the past. Yeah, been there, done that, sort of different flavors of that, maybe not exactly as SAP did it, but uh, you know, when you acquire technology, you want to make sure that it only supports your vision of that technology and not somebody else's. So um, so they they they sort of uh they prevented, according to her data, they prevented you from using these alternative databases, uh, but then even prevented the exporting of the data to do the anal. So you you took our stuff, then you created a uh a competing product which was inferior to ours, and then you forced people to use your product, and then you prevented people from using our product. Like it's sort of all of those things together, is the really bad part when you talk about the the antitrust. So, what are the elements? Like, what does Teradata need to prove to show, or at least uh you know, to get to court saying that uh SAP uh was violating antitrust? Like, what are the elements of that?
Trade Secrets And Copyright Claims
Sherman Act: Tying And Monopoly
SPEAKER_02Well, the uh so let's break it down into you know the individual claims. So count one and count two um are the individual um misappropriation of the trade secrets. And um count one uh there is the federal statute, which is Defend Trade Secrets Act, it's 18 USC 1836. Um and uh but both of the counts are are very similar. Uh the second count is the California version, and it's the California Uniform Trade Secrets Act, which is the California Code uh 3426. Um and they're almost identical, it's it's just their reach is a little bit different. So it's you had these trade secrets, you had an agreement to share them with somebody, and then that person used those trade secrets in a um uh unfair uh way that that violated the uh individual agreement. Uh but the the difference is the Defend Trade Secrets Act, which is the federal legislation, reaches across the entire country. It's it's not just limited uh to California. Whereas the California Act um seems to have a little bit more uh teeth, uh, but it's it's just limited to California. And let me just take a look. Okay, so under the federal statute, um a federal statute was enacted in 2016, the Defend Trade Secrets Act, uh, and they created a civil cause of action, which is the right to sue for trade secret misappropriations, and it applies nationwide. So that's why it's attractive to uh big companies uh because this this data, you know, clearly this conflict is not confined to California, even though the companies may have done um their business there, it's uh nationwide, uh, just because of how the technology is used. Uh and it allows uh plaintiffs to sue in federal court without requiring diversity. And diversity is something we had talked about the the last time where a citizen of one state sues a citizen of another state. Uh and you need either diversity or you you need a federal statute to be able to file suit in in a federal court. And this is the statute that that opens the door to the federal court and let teradata come in. Uh, what what is interesting is just because you're suing in federal court, you don't have to abandon your state court claims. So that allows Cal that allows teradata to come in and say we're we're suing under the federal statute. And by the way, we're also suing under the uh California. California statute, the California Uniform Trade Secrets Act, which is a little bit different. It only applies to the facts that that relate to California. And typically, typically companies will file both, both California and the federal statute together. And the um the relief that uh and and we could probably we'll probably talk about the relief a little bit more in depth later on, um, but um the relief is a little bit different. Uh for example, the federal statute uh allows for exemplary damages up to two times for willful and malicious misappropriation. So we're we're talking about uh damages in the amount of billions, and then when you double them, um, you know, to give them not only the compensatory damages, the money that maybe pterodata lost, but also you double double it, uh, although they don't call it punitive, it's essentially a punitive damage claim um by by calling it exemplary. So it it you know, one statute really ratchetes up the um the amount of money that that's in play. And the California statute seems to give a little bit more um protection under injunctive relief. Uh a lot of times in uh these cases you can't get uh injunctive relief to stop. Injunctive relief is when you're asking the court to, um, in this case, Teradata is asking the court to prohibit uh SAP from uh limiting its uh customers to to using an SAP uh database. Um I don't know how that would work out uh practically, uh considering how the software is written. Um but typically with injunctive relief, if the if you if you can ultimately uh resolve the case with money damages, if it's just a matter of teradata lost money uh because of the of what SAP did, they won't give injunctive relief. Uh, but if the harm's going to be so bad that injunctive relief uh that money damages isn't sufficient, well, then the court can can come in and prohibit SAP from doing the things uh that that it's done. Um, but that's not something that gets resolved when you file the complaint. There, there's a couple of steps. There's a you know preliminary part where the court says, well, do we need to do this immediately until we sort of can sort out the facts? And then um in the complaint, they ask uh the court for a permanent injunction to prohibit SAP from continuing to do this in in the future. So one is during the pendency of the case, and then the second part uh is um at the conclusion uh of the case. Uh what was interesting, why I said this seems like three different cases, uh, in addition to the trade secrets, which in and of itself could be enough, uh, there's also a copyright infringement case where um I think what Terradata is going to argue when it gets to trial is this was our code, and they essentially used our code uh to develop their product HANA. Um and then the the um fourth and fifth counts relate to the Sherman Act, and the Sherman Act is uh the uh it's a federal statute that deals with a company's um uh uh with with with a defendant uh trying to monopolize uh a certain market. And there are two different aspects to that claim. Account for Tara Data talks about SAP tying uh a product. So they they argue that uh SAP had a market share with these uh ERPs, um, and then tied uh having that market share tied the database product, which in their case was HANA, uh, to the use of their ERP. So it's it's a tying uh claim is is whenever you're using your uh position in the market uh to create a monopoly. Well, not necessarily a monopoly here, but uh using your position in the market um to then tie it with another product that you may not have in the market, may not have the uh market um leverage um in that. Um but um and the other typical example to to make it simpler for people, uh the typical example that they give you in law school is if you um if you manufacture brooms and you have a market share and you control sort of the the broom market, and um another company makes a dustpan and a lot of people make dustpans, and then you decide, well, I'm gonna package every broom that you buy, I'm gonna package uh the dustpan with the broom. And then it seems like, well, that that seems fair. You're essentially giving it away for free. Uh, but the dustpan makers are saying, well, wait a minute, we were selling this product and you've used your leverage because everybody that that uh you know buys a broom needs a dustpan, and now you're it's anti-competitive because eventually what will happen is the dustpan makers will go out of business, and then the company making the brooms will start selling the dustpans and not giving it away for free. But then the last count um alleges is is I it's probably the most difficult to prove, but um it's arguing that SAP was trying to create a monopoly. Um, and I think it's hard because I I think there's just a lot of vendors, a lot of ERP um uh companies out there. And I think it's probably gonna be hard to say that they were creating a uh monopoly. Uh and I think we're gonna see later on um sort of how that plays out with expert testimony.
Why Did It Take A Decade
SPEAKER_01But so those are I'm sorry, the um the the the the cases and and you're right, I think when it comes to you know it how you define the market, right? So it's as a monopoly on enterprise data warehouse uh solutions for SAP. Like, yeah, they probably are trying to create an a monopoly, but is it a monopoly in the whole market of data data warehouse? No, because SAP doesn't control all the data in the world. So there's definitely but I was you know, one of the things that you and I spoke about the other day is just the length of time this thing has taken. You know, this these uh some of these things happened in in 2009, um 2008, and here we are almost in 2026, and we're still talking about them. But um you know, so if I'm Teradata and I have this bridge bridge product and it is terminated by the other side, and they immediately launch another product, I'm not waiting years and years and years to do something about that. So in reading the complaint, and and we didn't really do the justice to all the facts that Teradata alleges, but one of the things they say is, hey, we read it in the newspaper. There was an article in Der Spiegel, in Der Spiegel, where uh they they they had an internal auditor who who did a deep dive, again, according to Teradata, in into the internal development of Hauna. And uh, and and their expert, the SAP experts, had was deeply troubled and said that there was uh misappropriation of um of Teradata's IP within SAP. And um, and then he was fired. Amazing after bringing that claim. He was fired. So, and and then even then, that was 2015, and then this thing wasn't filed for another three years after that. So this thing was filed, you know, 10 years after some of these actions took place. And like, why would it take so long? Like, I would think it would be 10 minutes, not 10 years.
SPEAKER_02I I I think there's a couple of reasons. One, it I mean, they read the article, but then they had to do their investigation. And this is is so there, there are so many moving parts to the relationship between these two parties. It probably took the the combat, it probably took Teradata a while to sort of really get their hands on it. And then when they gave it to the lawyer, the lawyers had to do their due diligence and do their investigation uh before they file a complaint. There are a lot of facts in this complaint. It wasn't like they, you know, they had them on day one.
SAP’s Defense And Counterclaims
SPEAKER_01Yeah, and and for me, you know, I mentioned um earlier that when I read this complaint, I was just getting more and more annoyed at Teradata for you know, just the sort of lack, it appearance of a lack of awareness, right? I think you know immediately that that thing, that bridge uh agreement has been terminated, the bridge project. And then when I look at this, uh, I can't find it right here, but there are public statements and announcements. Like SAP was not quiet about the fact that they were developing S. They they're their CEO took stage or their you know, executives took the stage at various conferences and said, We're doing this. Like this is this was not a secret, right? You think just those two things together, somebody would have said something uh within Teradata is like you know what? They just we've been working with them for years, they just terminated that and they uh have this other product. Maybe it was um, you know, again, looking at uh this complaint and then even the the the uh response to it, um maybe they were just overconfident, right? You know, that the first version of the product wasn't very good, right? Didn't have any customers, they just didn't generate any revenue. So maybe Teradata was like, well, as when it fails, then we'll be there to pick up the pieces. But it didn't fail. Again, uh if you ask SAP, it's like because we made a great product. If you ask Teradata, it's like, no, because you forced people to use it. Uh so they started to you know generate billions of SAP. It started to generate billions of dollars uh from their database, HANA, and you know, and the next version S4 HANA with the application. So uh and and you know, forcing through migrations.
SPEAKER_02Um so I'm just but wait, I I what I also thought was interesting is the SAP employees that were working on the bridge project project got moved over to the um to the HANA project. I mean, that should have been a red flag.
SPEAKER_01They got or they were working at the same time, right? Even that by through information and belief, we think right. You had you know, Bob was working on the super secret bridge bridge product, but he was also working on HANA. So, you know, that is uh problematic. And then again, um, you know, as as that project took off, people left Teradata to go work for SAP. But SAP is like, well, you you even then you know, fast forward, SAP makes some counterclaims against uh teradata, which we'll get into in a minute. Um, but that's really where, you know, I think the um you know the the crux of this case is, right? You there was a lot of sharing of data. Uh, you screwed us, you took our product, you developed your own thing, and then you locked us out, right? You sort of that was like the the the the the the kick in the gut is like not only did you take our stuff, but then you locked us out of the market through your contracts and your licensing and your support policies. And again, this is stuff that I think resonates beyond uh SAP and Teradata. If you are buying technology uh in any form, you know that uh people will use uh licensing and contracting uh to lock you into the next version, to move to their database or now in today's world to their cloud product or or what have you. So it's all about how to lock in. Um and and this is just uh another way allegedly that a company uh uses their contracts and and market position to to lock folks in. So it's uh it I highly recommend folks just read, you know, the the complaint here, just because you're like, I could see that. Yeah, I could see that.
SPEAKER_02Or maybe wait for the net Netflix uh series on this next year. The most that's how salacious it is.
SPEAKER_01The um the lowest rated Netflix series ever, Teradata versus SAP.
SPEAKER_02I think they could zhuzh it up, put you know, to catch a monopolist or something, to make a monopolist.
SPEAKER_01Oh, that's funny. Anything else we want to talk about before we get into then what SAP said uh in response?
SPEAKER_02I I think that that lays everything. Um I mean the the ultimate analysis. Oh, uh the one thing I did want to point out, um, it did take them a long time to to, you know, over a decade to actually bring these uh claims. But then from 2018 to 2025, I went back and looked at the docket because that's still an extraordinary amount of time for a case to reside in federal court. And uh what I saw uh was that every time a small issue came up, they had to file a motion for permission to file the issues under seal. Under seal is it's not on the public docket, so you or I couldn't see it. Um, and I assume it was because the you know they were sharing proprietary information uh as part of the court case that they didn't want the public to know. They didn't want yet another person stealing their information. Uh and the same way was with SAP. So a lot of this stuff was them filing, getting permission to get it, file it under seal, then filing the motion, and that whole discovery process just took years and years.
Discovery, Secrecy, And Code Review
SPEAKER_01I mean, it's amazing, and and it's and it continues, right? I I with without jumping to the end, I'm I'm just gonna, you know, have my crystal ball here and and say this is not going to a jury. I'm just someone's gonna settle this somewhere, but I would love for it to go to a jury. I'd love to uh to to see this play out more. But let's talk about now the um the response. So uh you file a complaint, Teradata files a complaint. Uh now SAP has can respond to that complaint. And and this is this is their response. For me, the interesting thing was there wasn't much in here where SAP said we we didn't do that. Right. It was more, hey, you failed to prove this, you failed to prove that, you failed to show this. There's some some legal things around the edges, and also we and and here I think the interesting thing for me, uh looking at the technology was SAP is like, we've been developing our own stuff for years and years and years. We didn't need your little product, we didn't need your little foundation product. We have our own, we've been doing this stuff for and we have our own patents, and not only that, you took our patents. Like, you know, screw you. You think we took your stuff? No, you took our stuff. So uh they filed uh counterclaims against um against Teradata. Uh, but tell me a little bit about sort of SAP's response in terms of uh more on the legal side, you know, the failure to prove certain things or looking at different testimony, and sort of what did they say to the court when when you evaluate Teradata's stuff, court? Um, here's how we want you to think of it.
Experts, Daubert, And Appeals
SPEAKER_02So one of the ways that uh SAP attacked this, um, and it's something that's going to come out later in the in the case, is uh you it's not it's not sufficient enough just to allege that uh a company had uh a market share and that they were using that market share in um you know in an uh anti-competitive competitive way. You need experts, uh, and you and um and the experts are the one that that sort of define the market share. Uh and the market share in uh at least in the for the antitrust, the Sherman claims, it it's everything. So if you define the market share as uh this particular type of um database, uh then it's easy to show that SAP had a market share um over that, and uh anything that they did could be perceived as uh trying to use monopoly power or anti-umpetitive things to um with respect to Teradata's um uh product. Um but if you define if you define the market share, if you let's say you, and this is sort of uh hyperbole, but if you just define the market as all software products out there, and SAP is just really a small player in the entire software industry, well, you know then the it they couldn't be subject to the claims under the Sherman Act because they they never had the market share, they couldn't have used their competitive powers. So, you know, uh SAP is coming with a you know pretty solid defense uh by saying one, you know, they were developing the product themselves, and that um you know they they didn't have the type of market share uh that uh in the way that Teradata um defined it. Uh and then that's a pretty solid way to attack it. And I assume that Teradata must have known, and I guess if we go through the depositions, that SAP was continuing to try to develop its own product um simultaneously. And I think that that happens a lot. And I just sort of get the just the gut feeling that Teradata just thought there was going to be an acquisition or a merger.
SPEAKER_01Um when it comes to market share and sort of looking at this, and or I'm sorry, when it comes to uh Teradata's uh knowledge of what SAP was doing, that's another thing that like of course they're going to try to create this product. Like they their their whole business is is dependent on their applications running on other databases, so which puts uh SAP uh you know in a bad spot, which again is is why they they did this. Uh all the problems lead back to Oracle problem, I'm telling you. SAP did this because they everybody was using Oracle's database, and Oracle and SAP are bitter enemies. So it all boils back to Oracle, uh, which for me is is interesting here. But um, you know, some of the some of the claims that or defenses, and I'm and I I have to go back and read through this. SAP is like, well, you didn't really protect your IP that much. You didn't you didn't really, you know, you you just this this stuff isn't that confidential. Everybody knows this stuff, or or or what have you. Um did SAP say um, like one of the claims that that that Teradated made was like, hey, you had people working on this project and your own project that. The same time. Did SAP deny that? Did they just say no that never happened? Or did they just not talk about that?
SPEAKER_02I don't know if it's laid out in their in their answer.
SPEAKER_01I don't think it is. That's what got me annoyed when I was reading, you know. Again, I was annoyed at at Terror Data when I read their complaint. I'm like, oh my gosh, how could you do that? Like, and I know it's 2020 hindsight vision here. Like, of course, they like, you know, put yourself in their position at the time. Maybe you would think differently. Uh, but looking back on it now, you're like, duh, of course. Um, but then when I read SAPs, that I think that was the other thing that annoyed me with SAP is like you didn't deny it. Like they said, hey, you did these five bad things, and then SAP said, Yeah, but uh they never even responded to some of those bad things. Yeah, it wasn't really that bad.
Why The Outcome Matters To Everyone
SPEAKER_02It's like you're right, but at this stage, they're they're just sort of uh admitting or denying, you know, overall, you know, legal allegations, uh, and that's something that's gonna come out in a deposition. It'll probably be an important part, it was probably an important part of the motions for summary judgment toward the end of end of the case.
SPEAKER_01Yeah, it probably would need to go through um, because there was a lot of this response that you know, we we deny paragraph four, we we agree on part. So probably if I went paragraph by paragraph, you know, maybe there would be uh some things in there. But again, you know, here's another thing that uh just stuck out at me, and obviously, you know, and I'm sure this happens all the time. SB's like, but you waited way too long to do this. Like, you know, come on, guys. I mean, this is stuff that's 10 years old, uh, you know, 18, 19 years old now. Uh, but uh, at least when they, you know, did this complaint, it's like, hey, this stuff is 10 years old, and now you're bringing this. I mean, um there is a statute of limitations on some of this stuff, isn't there?
SPEAKER_02There is, but um I I don't know if that was argued. I didn't look, I didn't see any motions. Uh I didn't see any motions dismissed based on the statute of limitations. Uh, but you know, typically um, you know, there's either a four or six year, um, depending on the on the state law, the federal law, there's a four or six year.
SPEAKER_01It says three years under this one uh statute. You have a three uh to to bring that. But I'm wondering then if if if uh Terrogated could just say, well, you're still using our stuff. I mean, it's a it hasn't gone away. It's not like you did one bad thing eight years ago and that now that it's done. It's you're continuing to infringe our IP and copyright and yada yada yada.
SPEAKER_02Yeah, if it was a one-off, you know, and um and then they weren't using the product for 10 years, then my guess is they would lose on the statute of limitations issue. Right, right, right, right.
SPEAKER_01Um so so SAP uh you know files this response, right? And then what's the next step? They have oral arguments before the court, right? And you you actually listen to those.
SPEAKER_02Well, uh actually the the oral argument um that I listened to uh was from um the the Ninth Circuit, and it was well, we're sort of getting to what happened in this case.
SPEAKER_01So you're right, I'm jumping ahead here. So SAP files their response, and then what's the next step? What happens now?
SPEAKER_02So then um then there's uh uh a series of discovery. Well, actually, what what happens in between uh when the second complaint was filed and when the answer was filed, there are a series of motions to dismiss. And you can see that uh SAP is setting them up here with bringing up the statute of limitations, saying that the um they didn't really protect their IP. Because if SAP was successful in in saying that the underlying agreement um that related to that bridge product, if the if the parties didn't specifically say they couldn't use uh the shared information in a in another venture, well then that would totally cut out um you know the the first three claims that uh Teradata has for uh misappropriating their trade secret. So that's uh you know that's essentially a contract claim.
SPEAKER_01And um the the that so SAP goes in and they say they respond and say, listen, Teradata's crazy, they didn't meet all these standards. Your honors, we want you to dismiss this case.
Tease For Part Two And Closing
SPEAKER_02Right. And and typically it's this general argument that they fail to state a claim uh upon which relief can be granted, and they're saying because you know there's uh this criteria for this statute and this criteria for that statute, and they haven't appropriately pled or showed that there's sufficient information that we violated that, and as a result, it should be dismissed. Um, but but ultimately the case survives that stage. So then um that's when SAP um answers the Second Amendment complaint. Then what takes so long is you know, the discovery is comprised of interrogatories, these written questions that go back and forth, a demand for production of documents where they say, you know, we want documents to fit into all these categories. And some of it may relate, I assume a lot of it relates to the underlying code. Because at some point, you know, experts would have to look at the code to see how similar the code is. And if they're completely different, it's gonna be hard for them to connect the trade secret. So someone needs to make the connection between the agreement, the trade secrets that were shared, and the ultimate code that uh SAP employed in in HANA. Um, but SAP SAP doesn't want to hand over their code without any kind of protection because they don't want what they did to Teradata to happen to them or anybody else. So they don't want any of this to be public. Quite frankly, neither of these parties want any of this to be public. That's probably why this doesn't happen as much as it does. Uh so they go through all of these steps where where every time an issue comes up, you know, they request that it be filed under seal, they they file the information under seal, and then there are a series of depositions. Um and uh I'm not sure how far, you know, because the the the main issue that comes up, um I'm not sure how far you want to go with this, but the main issue that comes up is Teradata has an expert, uh, and that that expert, you know, explains what the market share is and um and then how uh limiting uh how SAP use that market share to sort of ice out Teradata. And then SAP argues that that expert doesn't meet the standards of what a federal court will accept um uh as an expert, which they call the Daubert or Daubert um standard. And the district court in in this case said that the expert um conclusions didn't didn't meet the standards under Daubert and uh ended up precluding that expert from testifying, which then triggered uh an appeal to the Ninth Circuit Court of Appeals. And that was actually the uh argument that I watched was the Ninth Circuit Court of Appeals.
SPEAKER_01Got it. So let's I think we can at least sort of end this progression, we can uh you know save that for for episode two. Um so we'll leave it as the both parties have filed, there's been motions, and there's gonna be a ruling by the court on, you know, does this thing proceed, does it not proceed? Um, and you know, why is this important? Yeah, if you're using Teradata or you're using S4 HANA, uh, it's gonna be important to you. But this is important for the broader industry, right? Our big tech, and as we get fewer and fewer, these bigger technology companies, as they merge and acquire and sort of get more market dominance, or their products get stickier because now you're in the cloud somewhere and it's even harder to move away from an SAP database or whatever. Um, these are issues that we're all going to face, right? So, how the courts rule here, uh, if this goes through, uh through, you know, a trial and a jury and a verdict and an appeal, and it sort of makes its way, this will uh determine how these really big companies, whether it's Oracle or Salesforce or Red Hat or Broadcom is you know in the news these days, with what they've done with VMware and Oracle with Java, uh, this is gonna impact all of us in terms of uh this is a this is a big case. Um, and I'd love to see it go all the way through, but we will have to wait on that.
SPEAKER_02Oh, I definitely agree with you. It's gonna be interesting.
SPEAKER_01All right, Eddie, thank you very much for joining us today and leading the discussion. And um, we'll be back next week with uh part two of Teradata and SAP. And thanks everyone. If you like this podcast, you know, share it, tell your friends, subscribe, promote it. Um, and uh, we will see you next time on the world's greatest licensing podcast. Take care.
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