SAP has failed to have a copyright infringement and antitrust lawsuit lodged against it by Teradata thrown out.
Teradata claimed the German giant disingenuously entered into a joint venture to steal trade secrets, and then exploited its position in the ERP market to lock customers into SAP products.
In its motion to dismiss, filed on 31 August in a California court, SAP said the claims were "factually groundless" and that Teradata was only bringing the case in the US because it had "fallen behind" the competition.
It said the American firm had failed to explain what trade secrets were stolen, that it didn't properly state claims in its antitrust allegations, and that the statute of limitations on various claims, including copyright, had expired.
However, Judge William Orrick of the Northern District court of California last week (PDF) denied this motion on all grounds but those of trade secrets violations.
"I agree with SAP that Teradata must describe its trade secrets with greater specificity to demonstrate that they are not generally known in the trade or by those who are skilled in the trade," he said in a 12 December order.
"None of SAP's other challenges to the pleadings has merit."
Take it to the Bridge
Teradata's case centres on a joint venture entered into with SAP during 2009 called the Bridge Project.
It alleged that SAP used trade secrets and proprietary techniques it learned during that time to build its data platform HANA, then canned the project just two months after launching the competing product in 2010.
After that, SAP is said to have attempted to edge Teradata out of the market by ensuring that SAP ERP customers would have to ditch the US firm for data warehousing.
It did this by allegedly "forcing its customers to adopt HANA in exchange for upgrading their ERP Applications", launching S/4HANA, a new ERP system that can only run on HANA, and stopping support for its other ERP applications by 2025, according to the claim.
Teradata told to be more specific about trade secrets
The judge's decision (PDF) mostly found that Teradata could proceed with its claims, with just the count of misappropriation of trade secrets being dismissed, on the basis that Teradata hadn't been specific enough.
"Teradata's alleged trade secret information is too broad and vague," said Orrick. These were described as specific ways to optimise data with Teradata's massively parallel processing technology, but the judge said they were "indistinguishable" from claims made in other, unrelated cases.
"Even the most specific allegation that the trade secret information included an optimization process for 'certain Open SQL queries' suffers the same flaw."
At the moment, he said, there are no allegations that say "what the proprietary information regarding optimization was, or how or why it is proprietary besides simply being labeled a trade secret by Teradata".
However, Orrick said Teradata had made plausible allegations that there had been misappropriation by improper means.
Antitrust, copyright claims are in
The judge rebuffed SAP's attempt to dismiss the motion based on the fact the alleged misappropriation happened in 2010.
SAP argued that if Teradata was really concerned, it should have investigated as soon as HANA was launched in 2010. Filing suit eight years later exceeds both statutory time limits and those set out in the Bridge Project's terms, it said.
But Orrick noted that Teradata had already said its suspicions weren't aroused then because HANA didn't perform as well as its own product, and that it was alerted to the problems by a 2015 article in German paper Der Spiegel.
"Perhaps if the product performed similarly to Teradata's it would have raised suspicions, but that is not alleged in the [original complaint]," Orrick said.
"Its trade secret claim did not accrue until it discovered the infringement in September 2015."
Similarly, Orrick rejected SAP's motion to dismiss the claims of copyright infringement on the basis of time limits, saying the statute of limitations here begins to run "when one has knowledge of a violation or is chargeable with such knowledge".
Finally, SAP's bid to throw out antitrust allegations – in which Teradata claimed the German software giant had unlawfully tied its products together, and that it attempted to monopolise the market – also failed.
SAP said S/4HANA was an integrated product, rather than one it tied to HANA, and that it was an improvement on its previous ERP products, which it argued is allowed under antitrust laws.
However, Orrick noted that case law says design changes that lead to improvements are only tolerated if the business doesn't leverage its monopoly power in some other way when introducing the product.
Concluding, he said Teradata's complaint "satisfies its burden to plead tied products", has alleged coercion – for instance, the end of support by 2025 – and had alleged SAP has market power in the relevant market for top-tier enterprise customers.
The judge gave Teradata 10 days to submit an amended complaint that addresses the gaps set out in the decision. ®