Oracle lawsuit against Rimini Street engulfs other third party maintenance firms

Three other providers of third party software maintenance have been drawn into the legal battle between Oracle and Rimini Street, a company that provides support for Oracle applications, according to a document filed late last month in US District Court for the District of Nevada.


Three other providers of third party software maintenance have been drawn into the legal battle between Oracle and Rimini Street, a company that provides support for Oracle applications, according to a document filed late last month in US District Court for the District of Nevada.

Rimini Street CEO Seth Ravin was a co-founder of TomorrowNow, the former SAP subsidiary at the heart of Oracle's corporate theft suit against SAP, which ultimately resulted in a $1.3 billion (£790 million) jury award against SAP last year. Oracle sued SAP in 2007, alleging TomorrowNow workers illegally downloaded Oracle software and support materials. SAP accepted liability for TomorrowNow's actions but considers the award's size to be unfair

Oracle sued Rimini Street in January 2010, alleging that Ravin duplicated TomorrowNow's "corrupt business model" at Rimini Street. But Ravin has maintained that Rimini Street acts within its customers' rights under their software licences.

Third party scrutiny

Now, the litigation may be poised to have a broader impact on the third party maintenance market.

Since January 25, Oracle has issued subpoenas to Rimini Street competitors Spinnaker Support, CedarCrestone and netCustomer, according to the March 25 case management statement. Rimini Street did the same soon after Oracle's actions, it adds.

Oracle had not heard from netCustomer as of the filing and "is negotiating with Spinnaker Support and CedarCrestone with respect to their objections," it states.

Spinnaker provides support for Oracle's JD Edwards software, while CedarCrestone offers it for PeopleSoft. NetCustomer has support services for PeopleSoft, JD Edwards and Siebel.

Both Oracle and SAP subpoenaed CedarCrestone during their legal case, seeking to find out details of its business model. And in 2008, Oracle subpoenaed Spinnaker, which had hired some ex-TomorrowNow workers.

Now, both Oracle and Rimini are asking for general information about dealings Spinnaker may have had with the other, said Matt Stava, co-founder and managing principal, in an interview Wednesday. "But quite honestly, there's nothing there."

Strategic moves

Stava said he did not know why Oracle hasn't made the same types of legal moves against Spinnaker as it has with Rimini Street. But Spinnaker has a wide range of offerings, including a consulting organisation that does upgrades, he said.

"Many of our customers still pay Oracle and still pay us for a broader set of support," he said. For example, Spinnaker staffers have taken over support chores for companies that are moving off Oracle software and onto SAP, but want to ensure a smooth transition while the original team gets retrained for the new system, he said.

CedarCrestone's website lists a number of services besides support, including implementations, and also identifies the company as an Oracle Platinum Partner. Services named on netCustomer's site include development work, such as customisations and integration, as well as maintenance and support.

Rimini's standard offering includes around-the-clock support, tax and regulatory updates, "installation and upgrade process support," and fixes for documentation and customisations, among other features.

Cedar Crestone and netCustomer could not immediately be reached for comment on Wednesday. Nor could Oracle.

"At this point, we are simply gathering data from other third party providers to be used in a variety of ways in our litigation," said Dave Rowe, Rimini Street's senior vice president of global marketing and alliances.

More time needed

Oracle is seeking more time for pre-trial discovery activities, according to the filing. While "the parties have worked well together to address their respective concerns and to stage discovery in a sensible manner... this process has revealed that much more needs to be done, and the parties have not made the progress necessary," it states.

But Rimini Street disagreed, saying Oracle is "dragging its feet" on its own discovery obligations and that plenty of time remains on the current schedule "for the parties to reasonably explore the full merits of the dispute."

"Oracle has five months remaining and virtually limitless resources," Rimini Street added. "It should use those time and resources to meet the Court's schedule, rather than using those time and resources to justify abandoning it."

Rimini Street's reference to Oracle's "limitless resources" may allude to a key underlying concern for the company, which remains tiny compared to Oracle. In a previous interview, Rimini Street's Ravin said that the company was well-prepared and funded to battle Oracle in court. But it's not clear how much Rimini Street could add to its legal war chest if the litigation drags on longer than expected or grows more complex.

Financial concern

Money, substantial amounts of it, lies at the heart of the dispute.

Vendors like Oracle covet maintenance revenue, which is paid annually by customers, as it provides steady income even when new software sales are hard to find. In return, customers receive product support, patches and upgrades.

Rimini Street and its peers court customers running older but stable software releases, who have little desire to endure the pain and cost an upgrade typically entails, and therefore can do without vendor support. The company says customers will save at least 50 percent off their vendor maintenance bills.

Despite the litigation's increasing scope, it has apparently not harmed Rimini Street's growth. The company announced record first quarter results on Monday, with $7.5 million in revenue. It now has more than 400 clients, including 11 Global 100 and 38 Fortune 500 companies, according to a statement.

Overall, the case presents high stakes for the software industry and its customers, according to one observer.

"Someone in the government, or the industry needs to agree on what's the right balance between IP rights and customer rights. Otherwise it's going to be one-sided in the favour of the vendors," said analyst Ray Wang, CEO of Constellation Research. "This case is beyond Oracle. The fate of third party maintenance is resting on this case."

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