knowledge & insights

Rimini Street v. Oracle: “Re-Use” of “Know-How” May Be on Trial

Rimini Street and Oracle Corporation have been engaged in bitter, high-stakes and multi-jurisdictional litigation since 2010. While following the twists and turns of this no-holds-barred brawl is no mean feat, the core of the dispute is relatively straightforward: Rimini provides third party support for Oracle (and other) ERP customers, and Oracle very much wants to keep those revenue streams for itself. We are soon to find out if Oracle’s ambitions are a bridge too far or the beginning of an era where Oracle’s market reach wildly expands.

From these divergent and conflicting intentions of the two parties have sprung two separate litigations – typically dubbed Rimini I and Rimini II, extensive awards (and retractions) of monetary damages (including a detour to the United States Supreme Court in order to clarify that "full costs" to a prevailing party in a copyright infringement claim is limited to taxable costs defined by the Fee Act of 1853), and equitable relief (including a 2018 permanent injunction that Oracle successfully alleged was breached at the beginning of 2022).

Rimini’s appeal was just heard by the 9th Circuit earlier this month.

Both parties boast an ongoing tally of wins and losses on their respective webpages (Oracle aggregates its musing on the Rimini litigations here, and Rimini has issued numerous positive press releases, such as here, here, here and here). From time to time, one news source or another will attempt to summarize the proceedings to date (see, e.g., Forbes, updated in 2019; CIO, updated in January 2022; etc.), but it’s hard to shake the impression that a cloud of frustration has slowed the financial press’s ability to cover the matter.

For this reason, it’s easy to have missed that just this past December, Rimini and Oracle completed a bench trial in Rimini II in Nevada District Court before Chief Judge Miranda M. Du. (Rimini Street, Inc. v. Oracle International Corporation, Case No. 2:14-cv-01699.) Even those that knew of the trial would be forgiven for assuming that it was business as usual, with the two enemies once again seeking maximum infliction of damage. Barely a word was written about the fact that on October 14, 2022, during court proceedings, Oracle announced that it intended to withdraw its monetary claims and solely pursue equitable relief in a bench trial. [Dkt. 1416.] And, on October 18, 2022, it filed a stipulation to that effect. [Dkt. 1418.]

Considering Oracle’s success in obtaining monetary damages in this matter (not to mention Oracle’s winning the highest copyright damages award in history in its brawl with SAP), walking away from another potentially big monetary award is not something you’d expect from Oracle. Of course, any savvy litigant keeps a keen eye on when to let go of failing claims and whether a particular matter is better suited for a judge or jury. As such, this could simply be a matter of Oracle cutting its perceived losses and focusing on what it sees as its strongest claims – those seeking equitable relief.

But this begs the question – just what equitable relief is Oracle seeking?

Oracle Seeks to Enjoin the “Re-Use” of “Know-How”

On September 30, 2021, Oracle and Rimini filed a joint Pretrial Order. [Dkt. 1309.] In Rimini’s introduction, it alleges:

Many of Oracle’s allegations in Rimini II purport to focus on so-called “cross-use,” but Oracle has now radically expanded that term to encompass the re-use of know-how. Oracle claims that any use by Rimini of one client’s software to fix that client’s particular problem is unlawful if it happens to “benefit” any other party, for example, by Rimini gaining knowledge and experience that then can be applied to fixing the same or similar problems for other clients. Oracle’s theory, if adopted, would prevent a breathtaking amount of legitimate conduct. [3:17-25.]

“Breathtaking” is correct. If Oracle were to obtain an injunction forbidding application of “knowledge and experience” when providing third party consulting services, the world of intellectual capital will be stood on its head. And, in the resulting landscape, Oracle would have complete control over the dissemination of information regarding its dubious licensing and auditing practices.

Fortunately, Rimini was quick to point out that the court had previously rejected this theory:

In its September 14, 2020 Order on the parties’ motions for summary judgment, the Court rejected Oracle’s expanded “cross-use” theory, holding that it is “generally not cross use for a Rimini engineer to create an update file for Client A exclusively using Client A’s software and then create the same update file for Client B exclusively using Client B’s software” or to “memorize and replicate the work” Rimini performed for a particular client. ECF No. 1253 at 87 (internal quotation marks omitted). The Court also acknowledged that work product created entirely by Rimini and not incorporating Oracle intellectual property does not constitute a derivative work. Id. at 50 (quoting Micro Star v. FormGen Inc., 154 F.3d 1107, 1110 (9th Cir. 1998)). [3:18-4:5.]

Nonetheless, this has not stopped Oracle from asserting this position in trial. As Rimini stated in its trial brief this past November:

Oracle takes the position that the practice of developing an update for a first client and then re-using Rimini’s work product (whether it be knowledge, notes documenting knowledge, or Rimini code not containing any Oracle expression), is “prototyping” and that it violates Oracle’s licenses. Oracle claims that if Rimini gains “specific knowledge” of how to solve a problem by working in Client A’s software, then if Rimini re-uses that knowledge to solve the same problem for Client B, Rimini has “cross-used” Client A’s software by using it to support both Clients A and B. That is because, according to Oracle, Client B “benefited” from Rimini’s use of Client A’s software when Rimini solved the problem for Client A. Oracle claims that Rimini benefits from this “prototyping” by being able to develop updates for Clients B, C, D, etc., faster than it developed the update for Client A. For Oracle to call this “cross-use,” it is not necessary that any Oracle code be copied from Client A to Client B, or even that any or all of the clients receive identical solutions. [Dkt. No. 1444, 12:14-25.]

In its pretrial brief, Oracle does not appear to dispute this. Rather, Oracle appears to be arguing that volume and automation make a crucial distinction:

Far beyond using the knowledge and experience gained from developing the fix once for one customer to develop it again for other customers, Rimini uses several software tools to automate cross-use of Rimini fixes and updates to Oracle software such that the development of an update in one client’s environment can be automatically and instantaneously shared with dozens of other customers.  Sometimes, Rimini automatically shares an infringing update with over a hundred customers. [Dkt No. 1448, 7:4-9.]

Oracle also continues to push the theory that know-how is “prototyping” and any resulting work product is “derivative”:

In addition to proving that Rimini infringes Oracle’s copyrights by copying JDE source code, Oracle will show that Rimini engaged in infringing cross-use of JDE software, using select customer environments as prototype environments and then distributing those updates to other customers. Moreover, Rimini’s JDE updates constitute derivative works and thus are prohibited by nearly all JDE software licenses and infringe Oracle’s copyrights. [Dkt No. 1448, 14:18-22.]

What’s Next for Rimini and Oracle?

Evidence has closed, and the parties’ Proposed Findings of Fact and Conclusions of Law are due on February 23, 2023. [Dkt. No. 1522.] Sometime thereafter, the Court will rule. In the interim, we will review the post-trial briefs when filed on February 23rd and report back regarding just how Oracle has framed this argument considering the evidence admitted.

To say the least, we have our fingers crossed that Judge Du will demonstrate the same common sense that was demonstrated in September of 2020 and slap down Oracle’s vast overreach. Stay tuned.

Published on February 16, 2023

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