What impact does the latest Rimini Street injunction have on customers?

iStock
iStock

The third party support provider was hit with a damning injunction regarding its Oracle business last week, so what impact does it have on customers?

Share

Last week Judge Larry Hicks of the Nevada District Court issued a 'permanent' injunction against Rimini Street in its ongoing legal battle with enterprise software vendor Oracle, but this isn't the end of the story.

Rimini Street's business model is to offer support services for enterprise software from vendors like Oracle, SAP and Salesforce at a cut price.

Judge Larry Hicks issued the latest injunction on 16 August, stating: "Rimini Street shall not reproduce, prepare derivative works from, or distribute PeopleSoft, J.D. Edwards, or Siebel software or documentation in any way unless both of the following conditions are met:

"a. Rimini Street shall not reproduce, prepare derivative works from, or distribute PeopleSoft, J.D. Edwards, or Siebel software or documentation unless solely in connection with work for a specific customer that holds a valid, written license agreement for the particular PeopleSoft, J.D. Edwards, or Siebel software and documentation authorising Rimini Street’s specific conduct; and

"b. Rimini Street shall not reproduce, prepare derivative works from, or distribute PeopleSoft, J.D. Edwards, or Siebel software or documentation unless such conduct is consistent with the remaining terms of this order."

Judge Hicks' verdict also reverses a 9th Circuit Court of Appeals Court judgement from back in January where, according to Rimini Street: "The Court of Appeals reversed certain awards made in Oracle’s favour during and after our 2015 trial, and vacated others, including an injunction that had already been stayed by the appellate court."

This decision comes back to the original case against Rimini Street, which was opened in 2010. Here Oracle filed charges against Rimini Street after claiming it had 'cloned' Oracle software for customers and hosted Oracle software on its own servers.

In October 2015 Rimini Street was fined for improperly downloading and using Oracle's copyrighted software, in what was deemed "innocent copyright" meaning that the jury found Rimini Street to be innocent of knowingly infringing any copyright laws. 

What does this mean for Rimini Street customers?

This latest injunction decision may read like a death knell for the support company, which made $246 million (£190 million) in revenue last quarter, but the injunction focuses again on copyright infringement and is not an indictment of its core business model.

In its most recent statement on the case, Rimini Street reiterates this innocence, stating: "The facts clearly show that Oracle failed in almost all of its claims and ultimately was only awarded approximately 10% of the amount of damages it sought at trial, and the award came in the form of a "fair market license" for "innocent" infringement. The jury found no lost profits for Oracle and no lost clients resulting from the "innocent" infringement."

Rimini Street continues to argue that customers should have the freedom to choose who to purchase their support from.

Oracle is naturally inclined to throw legal clout behind this case as support revenue accounts for a massive share of the company's overall revenues, with combined cloud services and licence support revenue bringing in $6.8 billion (£5.2 billion) in its latest set of financial results.

Oracle claims that this business model "has been built entirely on unlawful conduct, and Rimini's executives have repeatedly lied to cover up their company's illegal acts," Dorian Daley, Oracle's executive vice president and general counsel said in a strongly worded statement following Judge Larry Hicks' verdict.

"Rimini, which admits that it is the subject of an ongoing federal criminal investigation, has proven itself to be disreputable, and it seems very clear that it will not stop its unlawful conduct until a Court orders it to stop. Oracle is grateful that today the Federal Court in Nevada did just that," she added.

The strong words here show just how bitter this court battle has become over the past eight years. Rimini Street bit its tongue immediately in the aftermath, issuing a simple statement saying that it would appeal the decision.

Then, on Wednesday 22 August it issued a further statement "regarding Oracle v. Rimini Street, which was filed in 2010, went to trial in 2015, and has been in the appeals stage since 2016". In it, Rimini Street reiterated that its third-party support "is offered in lawful competition with Oracle’s direct maintenance services".

The statement reads: "As was the case with the previous injunction issued in 2016 that was vacated by the Court of Appeals in January 2018, the renewed injunction does not limit any sale of service for any Oracle products or restrict service deliverables Rimini Street provides its clients, but rather defines the manner in which Rimini Street may continue to provide support services for certain Oracle product lines.

"However, compliance with the injunction will increase the amount of labor required for Rimini Street to complete its support deliverables for some clients, thereby costing the Company between $1 million and $4 million per year. For that reason and others, the Company has sought a stay of the injunction pending appeal."

Furthermore Rimini Street will continue to seek a refund on its 2016 attorney fees regarding this case.

In the same statement the vendor said: "Rimini Street moved to (once again) appeal the flawed, renewed injunction. In addition, Rimini Street will also (once again) seek a refund of the $28.5 million attorneys' fees award that had already been paid by Rimini in 2016, and that was remanded for further consideration by the Court of Appeals in light of Oracle’s "more limited success" in the litigation."

So, what does that mean? Simply put, this injunction, despite being labelled 'permanent' by the court, will again be appealed by Rimini Street. It also does not stop the company from offering its core Oracle support service, rather it will make life a little bit more difficult for staff to deliver this service.

So customers should not be too concerned by the ongoing litigation, unless of course Rimini Street is forced to up its prices as a result of the increased labour it says is required to comply with the new injunction.

A spokesperson for the vendor got in touch with Computerworld UK to clarify that: "Rimini Street will absorb the increased costs resulting from compliance with the flawed injunction and does not plan to pass this cost on to clients in the form of higher prices."

"Recommended For You"

SAP fails in bid to dismiss parts of Oracle lawsuit Oracle files lawsuit over unofficial Sun Solaris OS support services