Oracle sues Rimini Street for intellectual property theft
- 27 January, 2010 08:33
Oracle has filed a lawsuit against third-party maintenance provider Rimini Street and its CEO Seth Ravin, alleging the parties have been engaged in "massive theft of Oracle's software and related support materials through an illegal business model," according to documents filed Monday in U.S. District Court for the District of Nevada.
Rimini Street, which provides support for SAP and Oracle applications, promises that customers will save at least 50 percent off their vendor-provided support bills. Going to a third-party provider means customers no longer receive product upgrades. But Rimini Street caters to companies with stable legacy systems, and therefore no desire for support at vendor prices, as well as ones that are not planning further software investments in the immediate future.
The company "typically logs on to Oracle's password protected Technical Support websites using a customer credential, then downloads Software and Support Materials in excess of the customer's authorization under its license agreement," according to Oracle's complaint.
Ravin was the co-founder of TomorrowNow, a company and one-time SAP subsidiary that provided lower-cost support to Oracle customers. He left TomorrowNow after its sale to SAP in 2005. Oracle sued SAP in 2007, alleging that TomorrowNow workers had illegally downloaded materials from its support systems. That suit is still ongoing.
"The corrupt business model Ravin helped to create continues in full force at Rimini Street," the complaint states. "Oracle brings this lawsuit to stop it once and for all."
Rimini Street's alleged wrongdoing threatens to "cause irreparable harm to Oracle, its many employees, customers, shareholders and the industry at large," it adds.
The suit alleges copyright infringement, fraud, breach of contract, unfair competition, unjust enrichment and other malfeasance by Rimini Street, and calls for injunctions and assorted damages against the company.
The complaint also disparages Rimini's abilities.
"Rimini Street does not have the development capability to meet the support commitments it advertises at any price, much less the 50 per cent discount it promotes. It certainly has not matched Oracle's investment in development resources, or even come close to it."
In an interview Tuesday, Ravin characterized Rimini Street as a pioneering firm battling to give customers choice, and said the company would mount a vigorous defense.
"If this is the way we have to go forward in opening the [support] market, we're prepared to battle for it," he said.
Vendors such as Oracle covet their maintenance revenue streams, which provide healthy profits in a time of slowing software license sales.
Rimini Street is apparently managing to siphon off some of Oracle's support business. Its revenue nearly tripled in 2009, according to a statement released Tuesday by the privately held company. Specific revenue totals were not disclosed. Rimini Street claims to have Fortune 500 companies among its customers.
"I'm not surprised Oracle would feel it needed to take some kind of action to protect against customer defection and slow that process," Ravin said.
He declined to respond in detail to the suit's allegations but said, "we do what our customers ask, within their license rights."
The case could have varied impacts on the industry, according to one industry observer.
"I would suspect it would have a chilling effect on others that are contemplating the delivery of third-party maintenance services, at least for now," said Frank Scavo, managing partner of the IT consulting firm Strativa and author of the Enterprise System Spectator blog, via e-mail.
But Scavo has heard that Rimini Street's legal team is top notch, and the company has likely prepared for such a contingency from the start, he added. If Rimini Street prevails against Oracle, "it will strongly establish the legal basis for the third-party support industry," Scavo said. "Oracle has to understand this risk that it runs in taking Rimini Street to court."