Feb. 18 --The terms of some software licenses governing
Oracle enterprise software did not grant a third-party software services
provider either explicit or implicit licenses to make copies in order to serve
Oracle licensees, the U.S. District Court for the District of Nevada ruled Feb.
13 (Oracle USA, Inc. v. Rimini St., Inc., 2014 BL 39467, D. Nev.,
No. 2:10-cv-00106-LRH-PAL, 2/13/14).
Granting partial summary judgment
on some of the defendant's defenses, the court however allowed the third-party
service provider to seek application of the terms of the software license
between Oracle and its licensees, even though the service provider was not a
party to the license. With respect to some of the terms, the court found that
the contract did not grant explicit or implicit rights to the third party to
The ruling--being a mixed ruling at the summary judgment
stage and applying to specific contract terms--does not necessarily have
widespread implications in its interpretation of the licensing terms.
However, the fact that the defendant was able to seek the protection of the
contract in the first place seems to be a victory for software licensees who
want to outsource software services to a third-party competitor and do not
necessarily want to be limited to the services of the original software
hardware and software maker Oracle Corp. of Redwood City, Calif., was founded in
1977 as Software Development Laboratories by Lawrence J. Ellison. Today, it is
the world's second-largest software company and a leader in the field of
enterprise software--software related to the internal operations of an
organization, such as sales and personnel management--which it licenses to
business entities under numerous brand names, including PeopleSoft, J.D.
Edwards and Siebel. Oracle also offers support services for users of its
Rimini Street Inc. of Las Vegas was founded in 2005 by
Seth A. Ravin and it competes with Oracle in the software support market and
serves numerous clients who are licensees of Oracle software.
example, Oracle, periodically issues software updates for its products.
However, because of the critical role that the software plays in the operations
of its licensees, the updates cannot be incorporated without first being tested
and verified in an isolated computer environment to ensure that it operates
correctly. Both Oracle and Rimini Street offer such services to Oracle
Oracle alleged that in offering such services, Rimini Street
was making unauthorized copies of several Oracle computer programs. In 2010,
Oracle USA Inc., Oracle America Inc. and Oracle International Corp. sued Rimini
Street, alleging copyright infringement.
Rimini Street asserted several
defenses, arguing that Oracle had expressly and implicitly conveyed a license
for such copying. Oracle moved for summary judgment on these defenses.
In addressing these
arguments, Judge Larry R. Hicks examined licensing agreements between Oracle
and four licensees that were using Rimini Street's services: the municipal
government of the City of Flint, Mich., Pittsburgh Public Schools, Giant Cement
Co. of Harleyville, S.C. and Novell Inc. of Provo, Utah.
The court first
rejected Oracle's argument that Rimini Street could not claim to have an
explicit or implicit license to make copies of the software deriving from the
licensing agreements between Oracle and its licensees.
Oracle, its license authorized copies made only from the media--whether on
discs or through the Internet--that Oracle had conveyed to its licensees in
conjunction with their initial transactions. Rimini Street could not say for
sure what the source of its copies were when servicing any specific client.
They might have come from direct downloads from the Oracle website or from
copies coming from other sources. The court rejected Oracle's argument,
concluding that the right to install and use software conveyed by the licenses
was separate from the specific installation media conveyed with the
Oracle's initial argument is based on the flawed
assumption that the rights to use and install the licensed software are
restricted and tied solely to the specific software installation media
delivered by Oracle, and is in direct contention with the express language of
the City of Flint's license as well as federal copyright law. In the City of
Flint's license, Oracle granted the City Flint “a perpetual, non-exclusive,
non-transferable license to use the licensed Software.” …
“Software” is defined as
“any or any portion of the then commercially available global version(s) of the
binary computer software programs.” … Nowhere does the licensing agreement
require the City of Flint to install the licensed software from the specific
installation media provided by Oracle. Rather, the license grants the City of
Flint the right to install and use “version(s)” of the licensed software. This
is separate from, and in contrast to, a right to install and use only
the provided software installation media.
Harris v. Emus Records Corp., 734 F.2d 1329, 222 U.S.P.Q. 466 (9th Cir.
1984), the court said that federal copyright protection also applies only to
the licensed software, not to specific software installation media that might
hold such software at any particular time.
Turning to the specific contractual provisions, the court found
that with respect to the Flint license, Rimini Street did not have explicit
rights to make copies, because only the city government was authorized to make
such copies. Similarly, the court found that the Pittsburgh Public Schools
license also did not grant explicit authorization to Rimini Street.
court thus granted summary judgment in favor of Oracle on the explicit
authorization defense in these two instances.
However, with respect to
the Giant Cement license, the court found outstanding questions of material
fact that prevented summary judgment. Specifically, it was unresolved whether
Rimini Street had made copies for archival purposes or whether it had accessed
the source code of the software.
Finally, turning to the Novell license,
the court found that Novell was permitted to direct a third party such as
Rimini Street “to install the software for archival, emergency back-up, or
disaster recovery purposes.”
Rimini Street also argued that Oracle had
granted implicit authorization for it to make copies because “for years Oracle
shipped back-up copies of its customer's software installation media to
However, the court found that the licensees had
not told Oracle that this shipping destination was actually meant for Rimini
Street's support services, but only that the address had been a “secondary
offsite backup location.” Furthermore, the court found that there was evidence
that Rimini Street and the licensees had intentionally withheld this
information from Oracle so that it would not know that the backup copies were
being received by Rimini Street.
The court concluded that there was no
evidence in the record that Oracle had known that Rimini Street was using these
shipments nor that Oracle had otherwise encouraged Rimini to make copies of it.
The court thus granted summary judgment in favor of Oracle on Rimini Street's
implied license or consent of use defense.
Oracle was represented by
Dorian E. Daley of Oracle Corp., Redwood City, Calif. Rimini Street was
represented by Leslie A.S. Godfrey of Greenberg Traurig LLP, North Las
Text is available at http://www.bloomberglaw.com/public/document/Oracle_USA_Inc_et_al_v_Rimini_Street_Inc_et_al_Docket_No_210cv001.
To contact the reporter on this story: Anandashankar Mazumdar in Washington
To contact the editor
responsible for this story: Naresh Sritharan at email@example.com
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