Court orders Las Vegas company to pay Oracle $50 million in copyright case

By Daniel Rothberg

Published Wednesday, Oct. 14, 2015 | 11:58 a.m.

Updated Wednesday, Oct. 14, 2015 | 5:03 p.m.

After five years of legal wrangling, a Nevada federal court ordered Las Vegas-based software maintenance firm Rimini Street to pay Oracle a $50 million penalty for several issues involving copyright infringement.

Tuesday’s verdict from a Las Vegas jury, however, hardly ends the dispute between the competing firms.

Oracle, a Silicon Valley software giant, was seeking $245.9 million in damages. The company plans to continue its litigation with Rimini Street, seeking an injunction against the Las Vegas firm and responding to a second lawsuit that was filed by Rimini Street last year.

For now though, the verdict brings resolution to a lawsuit filed in 2010 when Oracle alleged that Rimini Street had committed “massive theft” while providing third-party maintenance to companies that use Oracle software. After a federal judge found last year that Rimini Street violated the copyrights of two Oracle products, executives at Rimini Street said they stopped the activity in question. Although a jury still had to determine Rimini Street’s liability involving two additional Oracle products, the case largely turned to damages.

Oracle wanted damages to be $245.9 million. Rimini Street said they should be $10 million.

After days of deliberation, the jury decided on a $50 million penalty for Rimini Street and held CEO Seth Ravin liable for $14 million. It also said Rimini Street had violated copyrights of two other Oracle products. But the jury made clear that Rimini Street had not willfully infringed, and the jury did not grant punitive damages.

Despite the damages, Rimini Street framed the decision as a positive step forward.

“We were pleased to finally get our day in court,” Ravin said Tuesday in a statement. "This case was about a good-faith license dispute regarding processes no longer in use.”

Officials at Oracle also called the verdict a win but disputed Rimini Street’s assertion that it no longer uses the practices that led to the infringement and said they plan to to pursue further legal recourse with an injunction.

“This case certainly was not about an honest dispute over licensing terms, as Rimini pretends,” Deborah Hellinger, Oracle’s vice president for corporate communications, said in a statement Wednesday morning. "It was about IP theft, pure and simple. Rimini and Seth Ravin got caught, and now they have to pay.”

A Rimini Street spokesperson called the injunction “meaningless” because it would apply to processes no longer in use.

The case centered around a key revenue source for Oracle.

Although Oracle is known for licensing its proprietary business management software to companies, the Silicon Valley giant makes a large majority of its software income off annual payments for maintenance and upgrades. For those additional services, Oracle is known to charge companies 22 percent of the original license price.

Third-party maintenance firms such as Rimini Street challenge this aspect of Oracle’s business model. Rimini Street is one of a few firms to offer Oracle licensees steeply discounted maintenance.

Throughout the trial, Rimini Street framed the case as a David-and-Goliath battle between Oracle and a small third-party vendor cutting into a share of one of its primary revenue sources: software maintenance. Oracle argued, however, that the case was not an assault on third-party maintenance but was limited to one company that it believed to have repeatedly violated the copyrights of several Oracle products.

Rimini Street infringed on Oracle’s intellectual property by using client software on its own computers, downloading Oracle material and using one client’s software to assist with maintenance for a different client.

Despite its complexities and five years of legal maneuvering, the case was closely watched by tech executives looking for cheaper maintenance options for their Oracle software. Some analysts predicted that if the case had gone strongly against Rimini Street, it could have damaged the company’s ability to attract future clients.

Before the verdict, Rimini Street executives said the suit was a bump in the road and wouldn't torpedo its business. On Tuesday, Rimini Street posted $30.8 million in revenue for the third quarter, an increase of 38 percent from the same period last year.