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Oracle Licensee Litigation Update: Oracle vs Envisage is About to Settle

When we recently shared a blog post about Oracle vs Envisage, we promised that we would keep you informed of important developments as that matter unfolded. Here we are, scarcely a week later, reporting that the matter is likely … going away. 

Recap of the Oracle vs Envisage Matter.

To recap, on May 11, 2021, The Norton Law Firm filed a complaint on behalf of Oracle in the Northern District of California against Envisage Technologies – an Oracle Database licensee – for copyright infringement. This suit marked the first time in memory that Oracle filed a complaint against a database customer in a public litigation.

As we discussed in our earlier blog post, the allegations of Oracle vs Envisage suggested that the suit might be an anomaly with little impact on the typical Oracle licensee. For example, there was no indication that Oracle had audited Envisage’s usage; Oracle alleged that Envisage had ceased communications entirely (never a good idea when dealing with any vendor, much less Oracle); and, finally, the alleged deployments were through Amazon Web Services (“AWS”), not on premises. However, when The Norton Law Firm filed a companion suit on behalf of Oracle against NEC Corporation less than two months later, it was easy to suspect that a coordinated campaign was underway.

A Conditional Settlement is Reached.

Then, on August 11, 2021 (two months to the day after Oracle filed the matter), the parties submitted a “Notice of Conditional Settlement; Joint Stipulation and [Proposed] Order to Vacate Case Deadlines.” [Docket No. 23.] The preamble of this filing stated that the parties “have agreed to settle the above-captioned matter, subject to the completion of certain conditions.” It was then represented that “Plaintiffs will request dismissal of the entire action upon satisfaction of the conditions,” which the parties expected “to be completed within 10 days of the filing of this notice and stipulation.” The parties requested that “all case deadlines and hearings, including the deadline for the case management statement due August 12, 2021, and the August 13, 2021, case management conference, be vacated.” Notably, this was filed the day before the CMC was due. 

The next day, Chief Magistrate Judge Joseph C. Spero signed the stipulation and continued the CMC to September 17, 2021. [Docket No. 24.] We anticipate that the matter will be dismissed in advance of the continued hearing.

What Does it Mean?

Naturally, the terms of any settlement will be entirely confidential and, therefore, belong wholly to the realm of speculation. Predicated on our firm belief that Oracle is consciously sending a message to the market by initiating lawsuits against its licensees, we are left to wonder what exactly the message is? 

The Envisage matter is set to be dismissed prior to any substantive rulings. Can one speculate that Oracle is reluctant to have its licensing tactics aired (and potentially adjudicated) in a public filing? It is possible that Envisage sized up the cost and burden of a dispute with Oracle and simply decided that the easiest way out was to pay nuisance licensing fees – much in the same fashion as copious Oracle licensees have done to resolve audits over the last several years. It is also entirely possible that Oracle is satisfied with the optics of the strong message it sent to the market – i.e., that it is now willing to sue its licensees – and was happy to settle for a nuisance fee knowing that the terms of an NDA would prevent any settlement from diminishing the market impact of the initial filing.  

Unfortunately, the tea leaves are insufficient to fully decipher. Perhaps Oracle’s campaign to sue its licensees will fizzle out quickly and licensees can anticipate that a lawsuit from Oracle is nothing more than a brief phase in resolving license disputes. Alternately, Oracle v. NEC Corporation (or any other matter yet to be filed) will have legs and demonstrate that Oracle is not afraid to dive deep into discovery in order to resolve licensing disputes.

Because we believe this is a critical juncture for Oracle licensees, we will continue to post as these (and other) matters develop.  As usual, stay tuned.

Published on 8/13/2021

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