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Rimini Street slapped with ban in Oracle copyright dispute
Big Red awarded $30m legal fees as judge slams support biz's 'significant litigation misconduct'
Oracle has won a permanent injunction against Rimini Street, banning it from controversial support practices that have been ruled a violation of copyright laws.
The injunction (PDF), issued yesterday, means that the Nevada-based support biz can’t reproduce, prepare derivative works from, or distribute any of Oracle’s software to others, nor access source code for that software for testing or development.
Big Red was also awarded almost $30m in attorneys' fees in the latest stage of an increasingly bitter eight-year battle with Rimini Street and its CEO, Seth Ravin.
It began when Oracle filed a lawsuit in the US District Court in Nevada claiming Rimini had engaged in "massive theft" of its software and support materials, via illegal access to Big Red's technical support websites.
It alleged that the firm had cloned copyright-protected software programs onto its own computer systems – without its own licences – in order to provide support to customers who had licensed them.
In 2015, a jury ruled in Oracle’s favour, saying Rimini had violated copyright laws on 93 of the database giant’s products, as well as breaching California and Nevada computer access statutes.
The firm was ordered to pay $50m damages to Oracle, which then issued a series of post-trial motions, which were granted in September 2016. These included motions for a permanent ban, a prejudgment interest and attorneys’ fees, adding $46.2m on to the bill. A further fine of $27.7m was tacked on a month later.
As is the way with such legal wranglings, Rimini Street appealed, and in January this year, the Ninth Circuit Court of Appeals knocked $50m off Oracle’s winnings after reversing the jury’s verdict on the state law computer access claims.
It also vacated the court’s issuance of a permanent injunction and the award of attorney’s fees, saying that the lower court would need to assess them solely on the copyright infringement – rather than also on the (now-reversed) computer access claims.
Oracle then filed renewed motions for an injunction and attorneys' fees, and it is those that the Nevada District Court has this week granted, with the judge Larry Hicks issuing a strongly worded judgement (PDF) in Oracle’s favour.
'A sea change in defence'
In particular, he referred to Rimini Street’s “significant litigation misconduct in this action”. This saw the firm ignore preservation orders in the early stages of the case, while CEO Ravin changed his story just as the case came to trial, five-and-a-half years after it began.
Initially, Ravin said there had been no conduct that could be considered copyright infringement – and specifically that Rimini didn't cross-use the copyrighted software, and only certain versions were used for archival purposes and disaster-related testing.
However, at trial, Ravin said that Rimini had engaged in such conduct but had done so innocently.
“This was a direct and major alteration, effectively a sea change, in Rimini Street’s copyright defense throughout the litigation to that time and needlessly caused extensive investigation, discovery and expense to Oracle," Hicks said.
“As a result, Oracle was forced to spend substantially more time and resources to establish copyright infringement than should have been necessary."
Hicks added that it was “undisputed" that Rimini had "ignored their preservation obligations and destroyed evidence prior to trial" that included a computer directory that contained Oracle software the firm had used for multiple customers.
As a result, Hicks granted $28.5m in attorneys' fees to Oracle – Rimini has said the cash, which had been held in escrow, would be released to the database giant.
'Irreparable damage to Oracle's rep'
In setting out his reasons for granting the permanent ban, Hicks said Rimini Street’s infringement of the 93 copyright registrations had “irreparably injured Oracle’s business reputation and goodwill” and disproportionately benefitted the support firm.
Rimini’s “conscious disregard” for Oracle’s copyrighted software had allowed it to build up its business from a new and unknown company to one with increasing market share and rapid growth, Hicks said.
“Rimini Street would not have achieved its current market share and exceptional revenue growth without its infringing conduct.”
The firm last week reported its fiftieth consecutive quarter of growth, with a 20 per cent boost to revenues and plans for "aggressive" sales tactics.
Hicks' judgement stated that the firm had only been able to offer the cut-price costs it did because it didn’t have to “expend significant resources in time and money in developing its own competing software”.
At the same time, these reductions – often as much as half the price of Oracle's – “created the impression that Oracle was overcharging for support and eroded the bonds and trust that Oracle has with its customers”.
Rimini Street has argued that it no longer engages in the conduct that the courts have ruled infringements, but Hicks said this wasn’t a basis to deny an injunction.
He added that, since the firm has insisted that its business model isn’t based on prior infringing conduct, an injunction against future infringement “would not harm the public’s access to competitive after-license software support services”.
The terms of the injunction (PDF) state that Rimini cannot reproduce, prepare derivative works from, or distribute various Oracle software unless it meets specific conditions.
First, activities must be solely in connection with work for a specific customer that holds a valid, written licence for that particular software and documentation authorising Rimini Street’s specific conduct.
Second, Rimini’s conduct must meet specific terms set out for each of PeopleSoft, J.D. Edwards or Siebel software, and for Oracle’s database software. For instance, it cannot distribute the software or any derivatives to others; and can’t access or copy source code for development and testing of software updates.
Another day, another appeal for Rimini
Rimini Street said it plans to seek a stay on the injunction pending an appeal – which it can add to its other appeal in the Supreme Court, which is asking for a ruling on whether non-taxable costs can be awarded as damages.
Oracle has argued that Rimini Street's "egregious" litigation behaviour – as detailed by Hicks in this ruling – justifies the award of non-taxable costs.
Unsurprisingly, Big Red celebrated the injunction, issuing the following triumphant canned statement from exec veep Dorian Daley:
“As the Court's Order today makes clear, Rimini Street's business has been built entirely on unlawful conduct, and Rimini's executives have repeatedly lied to cover up their company's illegal acts.
"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." ®