It's deja vu all over again for Oracle in a copyright violation case.
A Nevada-based federal judge has ruled that IT services provider Rimini Street infringed copyrights on Oracle’s PeopleSoft enterprise resource planning (ERP) software while it was providing third-party support to Oracle customers for less than what Oracle's service division charges.
The Feb. 13 judgment by Judge Larry Hicks of the U.S. District Court for the District of Nevada specified that when Rimini Street installed unlicensed copies of PeopleSoft on its systems so it could create software updates for customers, it violated Oracle copyrights.
Two Service Companies, Same Founder
Las Vegas-based Rimini Street is an independent provider of enterprise software support services for Siebel, PeopleSoft, JD Edwards, Oracle E-Business Suite, Oracle Database, Hyperion, Oracle Retail, SAP and BusinessObjects licensees. The company claims to be one of few vendors that can provide high-end software support for far less cost than what customers pay vendors in annual maintenance fees.
Here's where the legal rewind comes in: Rimini Street was founded by the same man who was a principal in a similar copyright infringement case involving Oracle and PeopleSoft several years ago. Rimini Street CEO Seth Ravin co-founded TomorrowNow, a now-defunct SAP division that also provided lower-cost support to Oracle customers.
SAP, which bought Texas-based TomorrowNow in 2005, admitted liability for actions by TomorrowNow employees following a five-year court battle. Oracle won a $426 million judgment in August 2012, but the financial result is still not finalized.
Ravin and Rimini Street have resurrected TomorrowNow's "corrupt" business model under another name, Oracle alleged in court documents.
The Feb. 13 federal court decision was based upon examination of software license agreements from two Rimini Street customers who also use PeopleSoft: The city of Flint, Mich., and the school district of Pittsburgh, Pa.
Judge Finds Two Other Use Cases Defensible
Hicks did rule in favor of Rimini Street in two other use cases involving the Novell network software company and Giant Cement. In a separate judgment, Hicks said copies of Oracle’s J.D. Edwards and Siebel software made for those customers did not break copyright regulations.
In its defense, Rimini Street testified that Oracle knew not only that it was providing support to Oracle customers but also that Rimini Street was creating the copies for its own systems. Rimini argued that because Oracle continued to ship the back-ups, this implied consent, and therefore there could be no copyright infringement. But Hicks decided that argument was not supported by the evidence.
"Rimini admits that the purpose behind the obfuscated shipping requests was to allow Rimini to create development environments to service Rimini's customers without Oracle’s knowledge," Hicks wrote.
Oracle first brought the case against Rimini in 2010, alleging that the company had undertaken massive theft of the PeopleSoft software using an illegal business model.
2005 Case Was Similar
In 2005, TomorrowNow was caught stealing Oracle's intellectual property by gaining unauthorized access to a customer-support Oracle Website and downloading copyrighted instances of support software and thousands of pages of documentation. It then resold the software and documentation to Oracle customers and tried to persuade them to switch to SAP.
After protracted litigation, SAP finally decided to settle the five-year-long dispute with Oracle for $306 million. However, the German software maker had already paid Oracle $120 million for legal fees. The final total is still tied up in negotiation, with SAP arguing that the final amount should be net of the $120 million already tendered -- not the $426 million Oracle wants.
Rimini Street is expected to appeal the decision.