IP Law Daily, COPYRIGHT—9th Cir.: Oracle-Rimini saga returned the Nevada District Court yet again, (Dec 17, 2024)

By Matthew Hersh, J.D.

The copyright infringement dispute, pending in one form or another since 2010, will continue.

A permanent injunction compelling software vendor Rimini to delete various software files and issue a press release correcting alleged misstatements would have to be vacated because of multiple legal errors in the district court’s analysis, the U.S. Court of Appeals for the Ninth Circuit has held. The court’s decision, which vacated an injunction in favor of competing software vendor Oracle, ensures that long-running litigation between the two computing giants would get yet another life at the trial court level (Oracle International Corp. v. Rimini Street, Inc., No. 23-16038 (9th Cir. Dec. 16, 2024)).

The lawsuit arises out of what the court of appeals aptly described as “a pitched copyright war” that has been “fought up and down all levels of the federal judiciary.” At issue is Rimini’s ability to service its clients who use Oracle’s software programs. In 2010, Oracle sued Rimini in the federal district court in Las Vegas, Nevada, for copyright infringement of four of its software products, claiming that Rimini had exceeded the bounds of its customers’ licenses with Oracle while doing its technical support. After a jury awarded $35.6 million in damages to Oracle in 2015, the district court entered a permanent injunction against Rimini, enjoining the company from infringing Oracle’s copyrights in the four products. Three years later, in 2018, the Ninth Circuit affirmed the judgment but remanded for the district court to reconsider the scope of the injunction. The district court entered a revised injunction later that same year, which the court of appeals largely affirmed in 2023.

After the finding of infringement, Rimini changed aspects of its business model and sought declaratory judgment that its revised process, called “Process 2.0,” did not infringe Oracle’s copyrights. Oracle counterclaimed for copyright infringement and violations of the Lanham Act, seeking more than one billion dollars in damages. After Oracle abandoned its claims for monetary relief on the eve of trial, the case proceeded to a bench trial solely on declaratory and equitable relief. The district court ruled in July 2023 that Rimini (1) created infringing derivative works, (2) violated Oracle’s PeopleSoft and Database licensing agreements, and (3) made several statements violating the Lanham Act. The district court then entered a permanent injunction against Rimini, ordering it to delete various software files and to correct certain public statements Rimini appealed the 2023 ruling, leading to this appeal.

Derivative works. The court of appeals vacated the district court’s ruling on derivative works. The district court held Rimini-written files and updates developed during the “Process 2.0” period were infringing derivative works because they “only interact[] and [are] useable with” Oracle software. But the mere interoperability of computer program with another does not make the latter a derivative work, the court of appeals found. “Both the text of the Copyright Act and our case law teach that derivative status does not turn on interoperability, even exclusive interoperability,” the court observed, “if the work doesn’t substantially incorporate the preexisting work’s copyrighted material.” To the contrary, the court noted, “a work is not derivative unless it has been substantially copied from the prior work.” Because the district court did not make a specific finding on whether there was substantial copying of Oracle’s code—either literally, or by incorporating the “total concept and feel” of that code—the decision would have to be vacated and remanded.

Ownership of a copy of the program. The court also vacated and remanded Rimini’s defense under Section 117 of the Copyright Act (17 U.S.C. § 117). Under that provision, the “owner” of a computer program can make another copy of that program for certain purposes, such as when it is an “essential step” in using the program. Rimini argued that because Oracle’s users owned the copy of the software that they were using, those users were protected under § 117—and Rimini could therefore step into their shoes and assert the same defense. The district court rejected the defense because it concluded that Oracle users were only licensees, not owners, of their copies. But the district court’s analysis was categorical and therefore incomplete, the court of appeals found. Determining whether someone is an owner rather than a licensee requires a careful assessment of factors such as whether the copyright owner specifies that a user is granted a license, whether the agreement “significantly restricts the user’s ability to transfer the software,” and “whether the agreement imposes notable use restrictions,” the court noted. The district court would have to redo its analysis under those factors, the court of appeals concluded.

Infringement of Database and PeopleSoft copyrights. The court of appeals also vacated the district court’s finding that Rimini infringed the copyright in Oracle’s Database and PeopleSoft programs. The finding of infringement of the Database copyright was vacated because it relied merely on the fact that Rimini maintained a copy of the Oracle Database on its computers. Nothing in the license agreement appeared to prohibit that, the court of appeals found. The district court also erred when it found that Rimini infringed on the PeopleSoft copyright by using automated tools and other technologies to update its users’ PeopleSoft client software. The district court’s ruling on these issues rested on its erroneous view of derivative works, the court of appeals reasoned—so these issues, too, would have to be reconsidered under the correct standard.

Lanham Act. Finally, the court of appeals issued a mixed ruling on Oracle’s Lanham Act claims. The district court ruled that Rimini made several statements that constituted false advertising under the Lanham Act. Rimini challenged the district court’s finding on only 12 of them. Some of the statements, the court of appeals found, were “mere puffery”—that is, mere statements in general “terms that one product is superior.” (An example of this category was: “Rimini provides more security as compared to Oracle.”) Other statements, such as “Once an Oracle ERP platform is stable, there is no real need for additional patches from Oracle,” while a “closer case,” the court noted, fell also into the category of “type of generalized boasting upon which no reasonable buyer would rely.” The district court would be reversed on these statements, the court found.

That left just one more statement on appeal: Rimini’s assertion that “Rimini offers ‘holistic security’ solutions for Oracle software for enterprises.” The district court determined that “holistic security” is a term of art within the world of software security that refers to “a comprehensive approach to security at all layers of a system, and includes security patching at the software level.” The critical fact here, the court of appeals found, was that Rimini itself acknowledged that it didn’t provide “source code-level protection.” That made the statement actionable, the court of appeals found. The district court got this one right.

Dissenting opinion. Circuit Judge Jay Bybee dissented on a narrow aspect of the Lanham Act ruling. One of the Rimini statements that the panel majority found to be “mere puffery” was the following: “Oracle’s [Critical Patch Updates] provide little or no value to customers and are no longer relevant.” In Judge Bybee’s view, that statement should have been actionable. “In this statement,” Judge Bybee noted, “Rimini says Oracle’s product provides ‘little or no value’ and is ‘no longer relevant.’ These are absolute characteristics and can be falsified,” Judge Bybee noted. “Oracle’s product is either valueless and irrelevant or not.”

The Case is No. 23-16038.

Judge: Bumatay, P.

Attorneys: Raechel K. Kummer (Morgan Lewis & Bockius LLP) for Oracle International Corp. and Oracle America, Inc. Mark A. Perry (Weil Gotshal & Manges LLP) for Rimini Street, Inc. and Seth Ravin.

Companies: Oracle International Corp.; Oracle America, Inc.; Rimini Street, Inc.

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