Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Oracle settles claims against Terix over Solaris licenses for $57.7M, (Jun 12, 2015)

By Linda O’Brien, J.D., LL.M.

A magistrate judge in the federal district court in San Jose, California has entered a stipulated judgment, resolving an action by computer server provider Oracle against Terix Computer Company, a third party provider of aftermarket support services, for copyright infringement of its Solaris operating system licenses. Under the stipulation, Terix will pay $57.7 million and will recover nothing on its Sherman Act, California Cartwright Act, and unfair competition counterclaims against Oracle (Oracle America, Inc. v. Terix Computer Company, Inc., June 10, 2015, Grewal, P.).

In 1992, Sun Microsystems, a provider of the computer servers, released its first version of Solaris, a UNIX-based operating system used to operate server, blade, storage, and related hardware systems. Sun regularly made available updates and firmware for Solaris at no or low cost and permitted third parties to provide support services. After Sun was acquired by Oracle in 2011, customers who wanted updates and firmware had to sign annual contracts for technical support services to be performed by Oracle.

Oracle sued third party service providers, Terix Computer Company, Maintech, Inc. and Volt Delta Resources, for copyright infringement of its updates and firmware in violation of its licenses, false advertising under the Lanham Act, and unfair competition under California’s Unfair Competition Law (UCL). The defendants responded by filing counterclaims for unlawful tying under the Sherman Act and California’s Cartwright Act, and false advertising under the Lanham Act, among other claims.

In January 2014, the court ruled that Oracle could maintain its false advertising claim without having to first litigate its copyright infringement claims in order to establish the deceptive element under the Lanham Act. In November 2014, the defendants’ tying counterclaims were allowed to proceed; however, the providers’ false advertising counterclaims were dismissed.

In the stipulated judgment, Terix has agreed to pay Oracle the amount of $57.7 million to resolve Oracle’s claims against Terix. Additionally, Terix is enjoined from selling or otherwise providing anyone with Oracle software or software support materials and must notify its current customers who receive Solaris support services on Oracle hardware. Terix will recover nothing on its Sherman Act, Cartwright Act, unfair competition, and other claims against Oracle. Finally, the parties will bear their costs and attorney’s fees and waive any rights to appeal the stipulated judgment.

The case is No. 5:13-cv-03385-PSG.

Attorneys: Christopher Benjamin Campbell (Latham & Watkins LLP), Geoffrey M. Howard (Morgan, Lewis & Bockius LLP), and Kyle Matthew Zipes (Bingham McCutchen) for Oracle America, Inc. and Oracle International Corp. Colin Geoffrey McCarthy (Robinson & Wood, Inc.) for Terix Computer Company, Inc. Valerie Margo Wagner (GCA Law Partners LLP) for Maintech Inc., and Volt Delta Resources LLC. John V. Picone, III (Hopkins & Carley) for Sevanna Financial, Inc., and West Coast Computer Exchange, Inc.

Companies: Oracle America, Inc.; Oracle International Corp.; Terix Computer Company, Inc.; Maintech Inc.; Volt Delta Resources LLC; Sevanna Financial, Inc.; West Coast Computer Exchange, Inc.

Cases: Antitrust CaliforniaNews