Oracle v Rimini Street: the damages game takes a turn in Rimini's favor

Profile picture for user gonzodaddy By Den Howlett July 16, 2015
Oracle surprised me by dropping a key part of their damages claim against Rimini Street but we're far from seeing the end of this saga.

In a court filing in the District of Nevada, Oracle appears to have dropped a key part of its claim for damages arising out of alleged copyright infringement against Rimini Street. While this does not settle the matter - the trial is still scheduled to start in September - it takes a large chunk of change off the table.

From the filing:

Rimini also challenges Dean’s application of income method and hypothetical license negotiation analyses to quantify the fair market value of the copyrighted PeopleSoft, J.D.Edwards, and Siebel materials that Rimini has infringed. Mot. 5:15-23. To streamline the issues for trial, Oracle has elected not to present these two damage opinions at trial (with the exception of Oracle Database damages discussed below).

The court filing then goes on to discuss at great length its arguments for including expert Dean's testimony and calculations.

Unsurprisingly, Rimini Street can barely conceal its glee at what it sees as a victory. From the blurbs:

Oracle has suffered yet another significant setback in its decade long fight against competition and in the company’s nearly six year litigation against leading global independent software support provider Rimini Street.

In a recent Court filing, in response to challenges raised by Rimini Street, Oracle abandoned its biggest damages theory of copyright infringement for its PeopleSoft, JD Edwards and Siebel-branded software products based on fair market value, measured by hypothetical license or income approach, to “streamline” the issues for trial.

Accordingly, Oracle has withdrawn the $210 million damages associated with its fair market value theory. Oracle’s primary remaining copyright damages theory in the case is for lost profits, where Rimini Street asserts Oracle’s theory is without merit due to a complete lack of proof of causation.

The numbers quoted in the filing for loss of profit are substantial but Rimini Street believes that even if it loses the main infringement case, its maximum exposure is of the order of $9 million. That would be before legal fees which in cases like this can easily run $200 million. Given that Rimini Street set aside an amount for legal defense that is an order of magnitude higher than the claimed outcome figure, it is easy to see how this modern day David and Goliath battle was meant to play out.

For its part, Oracle makes no mention of this in a recent statement where it noted that:

On July 9, 2015, a federal court dismissed Rimini Street and Seth Ravin’s claim that Oracle engaged in “copyright misuse” through its software licenses.

In this lawsuit -- the second of two cases between Oracle and Rimini -- Oracle alleges that Rimini infringed Oracle’s copyrights in “the latest chapter in the long saga of Rimini’s” infringement, “masterminded by its CEO Seth Ravin.” The Court dismissed Rimini’s defense of copyright misuse, in which Rimini alleged “that Oracle is using its software licenses to unlawfully leverage a monopoly in the support services market.” As the Court did in the first case between Oracle and Rimini Street, the Court held that “Rimini Street fails to allege any conduct that could constitute copyright misuse.”

The outcome of this long awaited lawsuit remains front and center for people like me. Rimini Street has doggedly pursued a business strategy that starts from the premise that enterprise software maintenance at 22% of license fee can be slashed yet still offer a good profit when conducted through third party maintenance providers like itself, rather than the software authors.

Its initial target has been legacy Oracle customers who are in 'steady state' but more recently has expanded offerings to demonstrate its chops as a value add to those same customers. While the concentration of effort has been on building business against the Oracle user base, it also pursues SAP customers.

An indication of its momentum comes from its latest fiscal reporting where Rimini Street disclosed having won an Oracle customer with a contract value of $6.5 million in first year fees along with continued healthy growth, well into double digits. On my math that deal is the equivalent to a software buy north of $65 million.

UPDATE: Following the publication of this story, we were sent the following statement from Oracle's Deborah Hellinger:

"Rimini Street's increasingly desperate attempts to re-characterize the status and the facts of the case is done to hide the fact that that it has suffered significant losses in the litigation, both previously and now running up to trial. Rimini trumpets as a "significant setback" the fact that Oracle has chosen not to proceed with a $210 million "fair market value" theory of damages, but Rimini deliberately neglects to mention that Oracle continues to pursue damages of $209 million, and Rimini's recent attempt to exclude Oracle's $209 million damages theory was rejected by the Court. Further Oracle has already obtained two summary judgment rulings against Rimini, with the Court finding that Rimini has infringed Oracle's copyrights. It seems clear to us that Rimini Street and Seth Ravin are waging a PR campaign in an attempt to calm their customers and prospects with misleading information so that they can continue to sell services in a manner that infringes Oracle's intellectual property. Oracle intends at trial to end Rimini's illegal conduct and recover substantial damages for that conduct."

Pick the bones out of that!!

Disclosure: Rimini Street, Oracle and SAP are all premier partners at time of writing.