Oracle vs. Rimini Street: Court Ruling a Partial Victory For Oracle and Rimini Street

UpperEdge has been coveriBoxing Glovesng the Oracle vs. Rimini Street case for some time now .  As a result, we have had the opportunity to discuss the possible impact a ruling in either direction could have on the third party support market with many different companies evaluating this option.  Typically, these are companies that expect to be on the same release for quite some time and are not satisfied with the maintenance and support they are receiving from the software provider, especially in light of the exorbitant maintenance fees charged (often 22% of the maintenance base).

Before going into the February 13th ruling made by U.S. District Court Judge, Larry Hicks, and the potential implications to the market, it is important to highlight some of the key events that have lead us to where we are today.  It all began when Oracle filed a lawsuit against Rimini Street back in January 2010.  There were many complaints and allegations associated with this lawsuit that covered a wide spectrum of legal issues from copyright infringement to unfair competition by Rimini Street for providing support services for a price alleged to be too low.  Many of the claims made by Oracle were specific to PeopleSoft, JD Edwards and Siebel support services where Rimini Street was provided copies of the licensed software, by the Oracle customer, for installation on Rimini Street servers for use as Development/Test environments.  Rimini Street quickly responded by filing a counter lawsuit against Oracle in March of 2010.  During the four years that have since passed, both parties have been preparing for trial which is most likely not going to take place until 2015.  In preparing, Oracle has gone as far as subpoenaing former Oracle support customers in the hopes of gathering incriminating information.

As for the recent ruling, in summary, the District Court of Nevada ruled that in two (City of Flint and Pittsburgh Public Schools) of the four Oracle customer license agreements under consideration, Rimini Street did violate Oracle’s copyrights.  In essence, the court ruled that the representative PeopleSoft license agreements did not provide any third party (e.g. Rimini Street) the right to create or maintain copies of the PeopleSoft software on third party servers.  Specifically, the Court interpreted the relevant language within these two license agreements to not allow for any copies of the software to reside outside the customer’s premises.  With the regard to the remaining two (Giant Cement and Novell) license agreements under consideration, the Court ruled in Rimini Street’s favor (denying Oracle’s request for summary judgment), even though Rimini Street provided substantially the same support services to Giant Cement and Novell as was provided to the City of Flint and the Pittsburgh Public Schools,.  A key determining factor was that the Giant Cement (JD Edwards) and Novell (Siebel) license agreements contained less restrictive terms as to how and where the Oracle customer could use the software.  With Giant Cement’s JD Edwards license agreement, the Court made it clear there was no issue with Rimini Street possessing the software.  The Court did mention there are still questions of material fact as to whether the license agreement provided Rimini Street the ability to access the source code.  In terms of Novell’s Siebel agreement, the Court determined that, although there are still questions regarding whether Rimini Street is permitted to do anything with the software, the license does allow Rimini Street to copy the software.

Since the ruling, Rimini Street has noted that only a portion of Rimini Street clients who selected Rimini-Hosted environments have the exact same license language that was reviewed by the Court in the representative licenses and that, although Rimini Street respectfully disagrees with the Court’s interpretation of the language, Rimini Street respects the Court’s decision and will conform its practices in light of the Court’s ruling.   One of Rimini Street’s biggest rivals in the third party support space, Spinnaker Support, also commented after the ruling.  Spinnaker Support made it a point to mention that the improper actions outlined in the ruling cannot be found in Spinnaker Support’s practices.   Matt Stava, CEO of Spinnaker Support went on to say, “Spinnaker Support faces no such litigation due to its commitment to protecting the intellectual property rights of all parties involved in a third-party maintenance relationship.”

Rimini Street also noted that in 2012, it had discontinued offering new clients the option of a Rimini-Hosted environment, and now only offers clients a Client-Hosted option.   Rimini Street said the decision to do this was made at the time in order to achieve their next level of global infrastructure scaling which would allow Rimini Street to avoid the costs of extensive, costly global data center expansions.  It turns out that this move away from maintaining copies of Oracle customer’s software on Rimini Street servers also addressed the court ruling.  In addition, Rimini Street pointed out that in January of 2013, Rimini Street began a project to migrate all existing PeopleSoft, JD Edwards and Siebel Rimini-Hosted environments to Client-Hosted environments and effectively discontinue the use of all Rimini-Hosted environments.  This migration will once again ensure Rimini Street’s practices will conform to the Court’s ruling.  In fact, Rimini Street has confirmed they have already completed all JD Edwards and Siebel client migrations and will work with their PeopleSoft clients who still need to complete the migration.  Rimini Street has agreed to cover all reasonable costs associated with these migrations and pay, in accordance with Rimini Street’s contract indemnity provisions, compensation ultimately awarded by the Court to Oracle (if any) for Rimini-Hosted environments found to be infringing.

Clearly, both Oracle and Rimini Street received partial victories as a result of this ruling, but since the rulings are tied to four (4) specific license agreements and a rigid interpretation of whether a third party had the ability to copy and maintain the associated Oracle software outside the Oracle customer’s premises, it is not fair to say by any means that the war has been won. As Rimini Street was quick to point out, and we would agree, the recent decision in no way prevents Oracle customers from seeking the services of third party maintenance and/or support providers like Rimini Street or Spinnaker Support.   In terms of the larger more industry wide implications and the sustainability of third party support options, we are left waiting for further developments once the case goes to trial.  Unfortunately, this may take another year and we will not know if any legal precedent regarding third party support services has been set until the trial is resolved.

Although we are left waiting for a decision on the Oracle vs. Rimini Street case, companies should take heed from the recent ruling and ensure all their software license agreements include explicit rights to third party maintenance and support.

We will continue to keep a close eye on this important case given its outcome could validate or restrict options within the third party support market.

We welcome your comments and perspective on how the Oracle vs. Rimini Street case has progressed to date and how it may be decided.  Please feel free to leave a comment or contact me directly at [email protected].

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