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By | Gavin Clarke 16th October 2015 12:56

Down and out? Rimini's Oracle slap spells trouble – for Oracle

'Not a war on independents,' but independents should beware

Comment The odds of paying Oracle top dollar to keep updating your database or business software shortened this week, despite Oracle’s victory over Rimini Street.

Larry Ellison’s giant secured $50m in damages from Rimini in a case that has rattled on for five years.

$14m of that will be paid by Rimini’s charismatic chief executive, Seth Ravin, who was named in the suit by Oracle and who exerts great control over Rimini.

Oracle had blasted Rimini Street for “massive theft” of its IP through the act of downloading and modifying its JD Edwards, Siebel, PeopleSoft and Oracle software in the course of supporting these products owned by Oracle customers.

A US trial judge agreed this week that Rimini had infringed Oracle’s IP and Oracle was bullish. But after five years and God knows how much in legal fees, the result is pyrrhic: if Oracle wanted to squash Rimini Street out of existence, it failed – at least, for now.

Neither will the ruling tame the growth of those supporting Oracle’s software as Oracle may wish. The judge hearing the Oracle-Rimini case found Rimini guilty of 93 counts of infringement. But, that was on just JD Edwards and Siebel products.

Along the way, Oracle’s claims were pared back to the point that, in the court ruling, only in two of the four violations alleged by Oracle was Rimini found to be in the wrong.

Also, that $50m damages figure is almost 75 per cent less than what Oracle had originally sought for “fair-market” copyright damage. Oracle dropped its $210m claim in the summer, ahead of the September start-of-trial date, to streamline the case.

Translated, Oracle jettisoned the fiscal claim knowing that justifying it would have become a point of contention and distracted from the main objective. Not only is the result peanuts compared to the earlier, similar, TomorrowNow suit, but the latest case has failed to deliver a similar result.

In 2014 a court awarded Oracle $1.3bn from SAP, the former owners of TomorrowNow. Oracle had claimed “hundreds of thousands” of illegal downloads of its software were made by TomorrowNow.

Back at Rimini, the company was found to have acted illegally by having made copies of Oracle's code. Rimini reckons it’s now changed the practices that landed it in trouble.

“The court found that Rimini Street is liable for copyright infringement of certain Oracle products in relation to processes no longer in use at Rimini Street since 2014,” Rimini Street said in a statement. Further, the infringement was found to be legally "innocent" and not "wilful", with Oracle not having lost profits.

Normally, in such cases, the next phase is appeal or settlement is paid and we all move on.

It's not ending here, though

Oracle wants an injunction stopping Rimini Street operating and will now “aggressively pursue” its claims in a second lawsuit that covers “other misconduct” which it claims took place after the dates in this trial.

Oracle won’t let Rimini off the hook and wants a re-run of the TomorrowNow case. That company was wound up by SAP in 2008 after Oracle lodged its case the year before. The strategy seems to be to keep the firm locked up in ongoing litigation or to have it simply shut down legally – whichever comes sooner.

Continued litigation will drain the target company’s finances – it’ll be up to management to decide at what point they call it quits.

Litigation, however, will have a knock-on effect of perpetuating the uncertainty that’s existed over other firms which also support Oracle’s software. One of those is Spinnaker Support, who has made it clear it feels the Rimini case has cast a cloud over the third-party support market.

Spinnaker is at pains to point that it has not, and does not, copy the Oracle code to go about its business.

Oracle’s CEO Safra Catz has insisted the Rimini case has not been an assault on the third-party support market, but rather “about one third-party support vendor that violated our copyrights.”

But Oracle has brought others in the support market to heel through the courts – Terex and Mainsoft, who paid $58m and $14m respectively in damages and barred them from using Oracle’s Solaris patches.

“The judgment confirms what Oracle has been telling customers for years – that third-party maintenance firms have no rights to Solaris patches," Oracle’s legal chief said of Terex and Mainsoft at the time.

Money, money, money...

The stakes are high: 46 per cent – $18bn – of the money that the database giant actually made during its last fiscal year, as reported in May, came not from sales of new software and no, not from cloud, but from providing the kind of maintenance that firms like Rimini, Terex and Mainsoft are now offering – for a substantially cheaper price than Oracle.

Maintenance is the only thing of note growing at Oracle: sales of new software – 22 per cent of revenue, or $8bn – fell for the year by nine per cent. That had a knock-on effect, meaning the amount Oracle made from new software sales was down from 25 per cent of its total business from the year before.

Cloud is growing fast, in the 30 per cent year-on-year range, but still accounts for just four per cent of everything made last year. Maintenance is therefore critical to Oracle and third parties are challenging it by undercutting the firm.

Moreover, they are doing that and not bouncing along the bottom; they are getting fatter on it. Rimini and Spinnaker are growing by between 30 and 40 per cent a quarter.

With such easy pickings the appetite for new players to enter this market is hardly likely to dry up. Nor will the desire for customers to pay lower prices.

Customers are questioning the value they get for paying hundreds of thousands of dollars to Oracle or SAP for updates to their software, when the vendors’ priorities are no longer that software but new goals – the cloud.

Also, why pay for security patches when, in the case of Oracle, it can’t seem to do what it’s being paid for and stop security holes appearing in its software? This week Spinnaker was eager to make it clear that Rimini is just about Rimini, not about a whole market in a way that could see spook customers.

“It is important to note that the specific business practices of Rimini Street, surrounding unauthorized download and cross-use of materials in violation of customer license agreements, were the sole focus of this trial. The viability and legality of the third-party support industry were never in question,” Spinnaker said in a statement.

The Rimini judgment won’t cool the ardour of startups or their customers. It might not even kill Rimini – yet.

But destiny is not manifest and third parties must be on their game. They must be whiter than white in how they support Oracle’s software. The merest hint of anything that might be considered improper will make them the next Rimini. ®

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