Rimini To Pay Oracle For Copyright Infringement, Damages
October 26, 2015 Alex Woodie
Rimini Street this month was ordered to pay Oracle $52.8 million in penalties for infringing on its copyrights for JD Edwards, PeopleSoft, Siebel, and Oracle database software. Despite that, the third-party provider of maintenance and support claimed a moral victory over Oracle, and praised the court for essentially declaring its business model legal.
After years of legal wrangling, the jury finally heard arguments from both companies in Oracle v. Rimini Street during a trial that started in late September and continued into early October. The jury was asked to determine whether Rimini had violated Oracle’s copyrights while servicing the ERP, CRM, and database systems of its customers, and if so, what the punishment ought to be.
The jury found that Rimini, indeed, had violated Oracle’s copyrights and violated the software agreements that accompany each copy of the JD Edwards, PeopleSoft, Siebel, and Oracle database packages. However, the jury rejected Oracle’s claim that Rimini’s copyright infringement was “willful” and instead found the infringement was “innocent.” It also found that Rimini was guilty neither “contributory infringement” nor “vicarious infringement,” which are higher levels of copyright infringement that ostensibly would have carried heavier punishments.
The jury elected to award damages based on the fair market value of the software that Rimini had infringed upon, rather than the profits Oracle lost as a result of the activity. It ordered Rimini to pay Oracle $35.6 million to compensate for the fair market loss of the violated software licenses. It also ordered Rimini to pay $30,000 in statutory damages each for each of 93 copyrighted pieces of work, or $2.79 million.
Additionally, the jury found Rimini violated the California Computer Data Access and Fraud Act, which carried another $8.827 million in damages to Oracle America Inc and another $5.6 million to Oracle International Corp.
Notably, the jury rejected Oracle’s claim for punitive damages against Rimini and is CEO Seth Ravin. Oracle failed to prove that Ravin “engaged in malice, oppression, or fraud” in such a way that punitive damages were warranted, the jury verdict said. The jury also rejected Oracle’s tort claim for illegal business conduct, which would have included inducing breach of contract and interfering with Oracle’s business relationships.
All in all, Ravin, who is personally responsible for $5.6 million in damages, sounded upbeat about the verdict.
“With the trial behind us, and with additional clarity for the industry regarding permitted support processes, Rimini Street is moving forward as the leading, global independent enterprise software support provider,” he stated in a press release. “We remain focused on providing excellent service to clients, expanding worldwide service capabilities, and innovating the independent support marketplace.”
Rimini claimed the trial was a victory for customers of third-party support. “Detailed testimony and evidence provided by Oracle executives and witnesses in the trial confirmed that third-party support is lawful for Oracle licensees to purchase,” the company stated in a press release.
Rimini said the evidence presented at trial supported “several important principles” that underlie Rimini Street’s third-party offerings, including:
However, the third-party support business would likely have continued regardless of the outcome in court. According to Oracle co-CEO Safra Catz and other executives, the case against Rimini was not intended to put all third-party support providers on trial. “This suit is about one third-party support vendor that violated our copyrights,” Catz testified during the trial, according to a story in the Wall Street Journal‘s CIO Report. “This is about Rimini Street.”
Matt Stava, the CEO of Spinnaker Support, Rimini’s primary competitor in the third-party support business, said it is “business as usual” for Spinnaker. “For us, the innocence or guilt of any single competitor is immaterial.”
The trial ends a suit that Oracle filed in United States District Court in Las Vegas, Nevada more than five years ago. In February 2014, a judge issued a partial ruling that found that Rimini had violated six Oracle copyrights for the PeopleSoft ERP system. The jury trial was held to decide whether Rimini also infringed on the copyrights for the other Oracle software and, if so, to set damages.
There’s a possibility that Rimini could be hit with more fees. Oracle apparently plans to ask the court for post-trial injunctive relief and restitution for attorney’s fees, which will be decided in the coming weeks.
Meanwhile, there are still two more lawsuits between these parties. While Rimini has maintained the entire time that it never violated any Oracle copyrights, it did nevertheless change its internal business processes in July 2014 to make absolutely sure that it wasn’t violating them. Instead of installing a copy of its customer’s software on Rimini-hosted servers to build a development and test environment for the customers, Rimini moved to a “remote access connection service model,” which the company was betting would lower its risk of copyright violations.
Rimini did this because, during the Oracle v. Rimini lawsuit, Oracle was openly weighing the option of suing Rimini again for any continuing copyright violations that it discovered after the lawsuit started in January 2010. Rimini essentially decided to preemptively strike by filing a separate lawsuit against Oracle in October 2014 to get the court to declare that it was no longer violating Oracle copyrights. Oracle countersued Rimini in this case. The suits are the discovery phase, with no trial date set yet, Rimini says.