Good Morning Silicon Valley

German business apps giant SAP may want to rethink its intent to “aggressively defend” itself against charges of industrial espionage from U.S. rival Oracle. After Oracle filed suit in March claiming that its subsidiary TomorrowNow, repeatedly illegally accessed Oracle’s customer service and support site, SAP did a little in-house investigating while issuing its denials. Today, SAP CEO Henning Kagermann humbly admitted that TomorrowNow had indeed committed some “inappropriate downloads” of Oracle patches and support documents, but maintained that SAP itself never had access to Oracle’s intellectual property and that Oracle “wasn’t significantly harmed.” “Even a single inappropriate download is unacceptable from my perspective,” said Kagermann in a statement. “We regret very much that this occurred.”

While it continues to dispute many of the points in Oracle’s lawsuit, Kagermann said SAP is keeping its settlement options open. In fact, Kagermann sounded positively wounded that Oracle took the legal route in the first place. ‘I personally was surprised and disappointed that Oracle had not chosen to talk directly to me as soon as they felt something was wrong,” he said in a conference call today. ‘We are strong competitors but we are also parties within the industry which has an established working practice of addressing matters of concern first between the companies rather than going directly to the court.”

Cyberlaw professor Eric Goldman says SAP’s admission leaves only a few open questions:

“1) How big of a check will SAP/TN write to Oracle?
“2) After checks are written and injunctions are issued, will TN survive this lawsuit? Or, will SAP “burn” its limited liability subsidiary to insulate the larger enterprise?
“3) Will this lawsuit degrade SAP’s ability to position itself as an ethical competitor?
“4) Will anyone be going to jail?”