With the recent lawsuit between Oracle and SAP yielding little other than a $1.3 billion judgment and a few interesting...
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bits of testimony, industry watchers say answers regarding third-party maintenance vendors will have to wait for another day. That day could come when -- or, more important, if -- Oracle’s case against Rimini Street ever goes to trial.
“We didn’t really have a ruling on the overall question of third-party maintenance vendors,” Josh Greenbaum, principal with Enterprise Applications Consulting, said about the recent verdict. “That’s still very much in the air.”
Oracle sued SAP in 2007, claiming that SAP’s then third-party maintenance vendor TomorrowNow had engaged in copyright infringement and illegal downloading of Oracle’s software while providing support for Oracle’s applications.SAP admitted to inappropriate downloads and shut the company down as soon as it found out what TomorrowNow was doing. As a result, the ensuing Oracle-SAP trial evolved into a much narrower legal battle over how much SAP should have to pay, and sideshows surrounding Oracle’s futile attempts to subpoena former SAP CEO Leo Apotheker.
Oracle later filed suit against Rimini Street, a different third-party maintenance provider formed by onetime TomorrowNow executive Seth Ravin. That suit alleges that the company’s business model is the same as TomorrowNow’s and that Rimini Street has been engaged in “massive theft” of Oracle’s intellectual property (IP). The Oracle-Rimini Street lawsuit is still in the discovery phase, and a trial date has not been set.
The issue of whether third-party service providers have a right to compete for a vendor’s maintenance revenue stream could have wide-reaching ramifications, given that many companies routinely outsource work to modify, integrate or otherwise fix a different vendor’s products, Greenbaum said.
“That’s why all of this starts to get very, very complicated,” Greenbaum said.
It will take someone to fight Oracle over the practice of third-party maintenance before these complex issues can be addressed, according to Hillard Sterling, a partner in the litigation practice group Freeborn & Peters, where he specializes in IP law.
“The business model issue became moot once SAP fessed up,” he said.
If Oracle’s lawsuit against Rimini Street goes to trial, that could become clear. Rimini Street has said its business model is different from TomorrowNow’s, and as a result, plans to fight Oracle.
At the top of the list of questions is whether software patches are considered new intellectual property, or fixes to something a company has bought and paid for, said Duncan Jones, senior analyst at Cambridge, Mass.-based Forrester Research Inc.
Suppose, Jones said, a customer obtains the necessary passwords and downloads a fix for a defect in the Oracle software she’s already purchased, even though she doesn’t have a maintenance agreement with Oracle directly. While Oracle may assert that the patches were downloaded illegally given the lack of a service contract, “don’t you, in fact, have an entitlement to those anyway?” Jones said.
The situation is similar to that of Toyota’s recent problems and the ensuing recall of their automobiles, Jones said. Imagine the carmaker telling customers that they had to have a pricey maintenance agreement in place in order to have their defective cars repaired.
“That wouldn’t have gone down very well with Toyota customers,” he said.
If those patches are indeed considered legal, there’s the issue of whether a third-party maintenance vendor has the right to download those patches on behalf of the customer.
“Are they, in fact, acting as the business?” Jones asked. “Or do they need separate licensing in some way and don’t have the rights as their client has?”
Although some have regarded the SAP and Rimini Street cases to be two different lawsuits, the two cases are largely the same at their core, according to Bob Igou, who covers software support providers for Stamford, Conn.-based Gartner Inc.
In the end, that trial too will come down to Oracle having to prove its case. If it’s successful on that front, the trial will once again come down to a question of damages, just as it did in Oracle’s case against SAP, rather than an exploration of the legality of the third-party business model.
“I don’t see it playing out any differently,” Igou said of Oracle’s case against Rimini Street. “I think it will be the same.”