Oracle vs. Rimini Street each claim legal wins; Nuance abounds

Summary:Oracle gets a legal victory in a Nevada federal court, but so does Rimini Street. Customers need to read a judge's ruling and Rimini's workaround plans.

Rimini Street and Oracle can both claim victories after a federal judge ruled in favor of each party in their long-running court battle over the delivery of third-party support to customers.

The litigation, which began in January 2010, has been in U.S. District Court for the District of Nevada as federal judge Larry Hicks sorts through copyright issues as well as a crash course in enterprise resource planning.

In a nutshell, Hicks' ruling on Feb. 13, embedded below, ruled for Oracle on the issue of whether Rimini Street violated copyrights when it installed PeopleSoft on its systems to update and service customers. PeopleSoft licensing agreements didn't allow for that scenario.

However, Hicks ruled with Rimini Street on hosting J.D. Edwards and Siebel on its systems.

The split decision narrows the lawsuit and does give customers a way forward. For Rimini Street's part, the company said in a letter to customers that it will begin moving copies of Oracle's software to their systems to avoid the legal hubbub. Rimini said it would cover the migration costs as well as any penalties for Oracle for hosted systems that may have infringed on copyrights.

 

Oracle vs Rimini Feb 13 by Larry Dignan

Given that third party support wasn't an issue in the case, the key theme is that Rimini has to watch how it conducts business to steer clear of copyright issues. With an initial public offering looming, Rimini can't afford to have a lot of Oracle induced fear, uncertainty and doubt.

However, it's worth noting that Rimini has been racking up customers even with the Oracle litigation continuing.

In a statement, Oracle attorney David Boies said that Oracle looks forward "to holding Rimini Street and Seth Ravin accountable at trial for the damages caused by their misconduct." Ravin dueled with Oracle in its TomorrowNow lawsuit and lost.

Oracle neglected to mention that Hicks ruled in favor for Rimini on the way Siebel and J.D. Edwards was serviced.

What's an enterprise software buyer to do? Read Hicks' ruling as well as Rimini's plan outlined in the following letter to customers.

Dear Rimini Street Client:

Rimini Street is the leading global provider of independent enterprise software support services, and has continued its record global growth. Today, Rimini Street’s revenues are more than six-times larger than when litigation began with Oracle in January 2010.

We now have operations in the US, Canada, Brazil, UK, Germany, India, Australia and Japan, have more than 400 global colleagues, offer support for 7 Oracle product lines and nearly all SAP products, and have signed more than 700 clients to date – including more than 85 Fortune 500 and 16 Fortune Global 100 largest companies in the world.

Building on accelerating global demand for its services and strong operational performance, Rimini Street recently filed its registration statement with the US Securities and Exchange Commission for an Initial Public Offering. The filing followed the announced expansion of its Board of Directors and Executive Management Team with many well-known senior leaders in the IT sector. Rimini Street plans to trade its stock under the ticker symbol “RMNI”.

There have also been recent developments in Rimini Street’s long-running litigation with Oracle. We were pleased that the Court ruled on some important issues in the case, and made progress in moving the case forward by helping to narrow the issues that need to be decided by a jury in Las Vegas, Nevada.

Last week’s Court decisions were a victory for Rimini Street on some key issues. However, Oracle also prevailed on some issues (see detailed review of the Court’s rulings for Oracle below). Looking forward, much of the case remains yet unresolved and will be decided by a jury.

Rimini Street looks forward to our long-awaited and anticipated day in court, and we will continue to vigorously defend the lawsuit.

Oracle Litigation History

Oracle filed a lawsuit against Rimini Street in January 2010, alleging several complaints ranging from copyright infringement related to the process Rimini Street was using to support a portion of its PeopleSoft, JD Edwards and Siebel support clients to unfair competition by Rimini Street for selling support services for “too low a price.”

This case is NOT about the legality of independent enterprise software support. Oracle agrees that it is legal for third parties to offer independent enterprise software support to Oracle licensees, and Oracle licensees have a legal right to purchase Rimini Street support services instead of Oracle annual support services. Competitive motivations aside, this case is primarily about the specific processes Rimini Street used to support a portion of its clients.

Rimini Street responded to Oracle’s complaint and filed a counter lawsuit against Oracle in March 2010. The parties have spent the last four years preparing for trial, and we believe trial preparation will likely continue through 2014.

Background on Court’s Recent Rulings

Several of Oracle’s claims in the litigation filed in January 2010 relate specifically (and only) to PeopleSoft, JD Edwards and Siebel Support Services provided by Rimini Street where clients provided copies of their Oracle licensed software to Rimini Street for installation on Rimini Street servers for use as Development/Test Environment(s).

Between 2006 and 2012, PeopleSoft, JD Edwards and Siebel clients switching from Oracle to Rimini Street Support Services were given a choice of two (2) different models for hosting the required Development/Test Environment(s) of the software that Rimini Street needed to access in order to provide the contracted support:

Client-Hosted Environment: Required Development/Test Environment(s) hosted on client’s servers
Rimini-Hosted Environment: Required Development/Test Environment(s) hosted on Rimini Street’s servers

Only some portion of PeopleSoft, JD Edwards and Siebel clients over the years selected the Rimini-Hosted Environment model for providing Rimini Street access to their covered PeopleSoft licensed software.

Judge Rules on Rimini-Hosted Environments Question

In its Order, the Court analyzed two (2) representative Oracle (PeopleSoft) license agreements of Rimini Street PeopleSoft support service clients, as well as representative Oracle license agreements for Rimini Street JD Edwards and Siebel support service clients.

The Court ruled in favor of Rimini Street for JD Edwards and Siebel representative licenses.

However, with respect to PeopleSoft, the Court held that the representative licenses do not afford third parties permission to create or maintain copies of PeopleSoft software on servers not owned or under the control of the licensee because the contracts, in the Court’s interpretation, do not allow for any copies of the Oracle software to reside outside the “licensee’s premises.” Therefore, in legal terms, the Court found that Rimini Street “infringed Oracle’s copyrights” by possessing and copying Oracle’s licensed products onto its servers for some portion of PeopleSoft support clients.

It should be noted that PeopleSoft licenses evolved and varied materially over the years, and only a portion of clients who selected Rimini-Hosted Environments have the exact same license language reviewed by the Court in the representative licenses. The remaining license agreements have varying wording and terms.

While Rimini Street respectfully disagrees with the Court’s interpretation of the language in the representative Oracle licenses reviewed, Rimini Street respects the Court’s decision and will conform its practices in light of the Court’s ruling.

Rimini Street Began Migrating All Rimini-Hosted Environments to Client-Hosted Environments in 2013

In 2012, Rimini Street discontinued offering new clients the option of a Rimini-Hosted Environment, and only offered clients the Client-Hosted option. Rimini Street made this decision in order to achieve our next level of global infrastructure scaling, allowing Rimini Street to avoid the costs of extensive, costly global data center expansions to host a growing number of Rimini-Hosted Environments for clients.

Accordingly, in January 2013, Rimini Street began a project to migrate all existing PeopleSoft, JD Edwards and Siebel Rimini-Hosted Environments to Client-Hosted Environments and discontinue the use of all Rimini-Hosted Environments. We are continuing this migration, which conforms to the Court’s recent ruling.

In the ruling, the Court also noted that the representative licenses allow clients to “provide access to and use of the Software only to those third parties that: (i) provide services to [licensee] concerning [licensee] use of the Software; (ii) have a need to use and access the Software; and (iii) have agreed to substantially similar non-disclosure obligations . . . as those contained herein.” Rimini Street easily meets all of these license requirements.

No Client Service Interruptions

The Court’s recent rulings do not cause any interruptions to any service for any product lines, and we remain focused as always on delivering the highest value and ultra-responsive support to our clients.

Rimini Street has already completed all JD Edwards and Siebel client migrations from Rimini-Hosted Environments, and will work with the PeopleSoft clients who need to complete the migration of their Rimini-Hosted Environments to Client-Hosted Environments.

As you would expect from Rimini Street as a trusted business partner, Rimini Street will cover all reasonable costs associated with the migration of all Rimini-Hosted Environments to Client-Hosted Environments and pay, in accordance with our contract indemnity provisions, compensation ultimately awarded by the Court to Oracle, if any, for Rimini-Hosted Environments found to be infringing.

Rimini Street will continue to lead the independent enterprise software maintenance market with innovative new services, more global expansion, and additional software product lines. As important developments occur with the Oracle case, we will keep you informed.

Thank you for the business, partnership and trust as your selected mission-critical support service provider. At any time should you have questions, please do not hesitate to contact me or any member of the Rimini Street executive team. We are always available to you via phone or email.

Sincerely,
Seth Ravin
Chief Executive Officer &
Chairman of the Board

Topics: CXO, Enterprise Software, Oracle

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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