IP Law Daily After remand, Oracle again obtains fees, injunction over software support provider’s copying
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Wednesday, August 15, 2018

After remand, Oracle again obtains fees, injunction over software support provider’s copying

By Thomas Long, J.D.

Computer software developer and manufacturer Oracle was entitled to an award of over $28.5 million in attorney fees incurred in its successful pursuit of copyright infringement claims against Rimini Street, Inc., a provider of software support services that made unauthorized copies of Oracle’s enterprise software products, the federal district court in Las Vegas has decided. The court granted the fee award despite the fact that the U.S. Court of Appeals in San Francisco had reversed the court’s judgment of liability with respect to Oracle’s claims under the California Comprehensive Data Access and Fraud Act, the Nevada Computer Crimes Law, and California’s Unfair Competition Law. Oracle also was entitled to permanent injunctive relief (Oracle USA, Inc. v. Rimini Street, Inc., August 14, 2018, Hicks, L.).

Oracle USA, Inc. and related entities (collectively, "Oracle") owned or held exclusive licenses for certain PeopleSoft, J.D. Edwards, and Siebel-branded enterprise software products. Oracle did not sell the software outright to end users; instead, it licensed the use of the software to customers through software licensing agreements. Oracle also provided customer support services to customers through separate contracts. Rimini Street provided similar software support services to customers licensing Oracle’s enterprise software programs. It competed directly with Oracle to provide these services.

Oracle filed suit against Rimini, alleging that Rimini copied several of Oracle’s copyright-protected programs onto its own systems in order to provide support services to customers. Oracle alleged causes of action for, among other things, copyright infringement. The copyright infringement claim arose from Rimini’s copying of Oracle software in the course of providing support services to four customers: the City of Flint, Michigan; the school district of Pittsburgh, Pennsylvania; Giant Cement Holding, Inc.; and Novell, Inc. Each customer was a licensee of at least one of Oracle’s copyright-protected enterprise software programs, but purchased contracted for support services from Rimini.

After a trial, a jury returned a verdict finding that Rimini Street infringed 93 of Oracle’s software products. The jury also found that Rimini Street and its principal violated the California and Nevada computer access statutes. The jury awarded Oracle $35.6 million for Rimini Street’s copyright infringement and approximately $14.4 million for the state-law violations. Oracle sought and obtained a permanent injunction and an award of attorney fees. Rimini Street appealed to the Ninth Circuit, which affirmed the district court’s and jury’s findings related to Oracle’s claim of copyright infringement against Rimini Street for all 93 copyright registrations at issue, as well as the jury’s $35.6 million judgment against Rimini Street for its infringement and the court’s award of approximately $22.5 million in prejudgment interest against Rimini Street. However, the Ninth Circuit reversed the jury’s verdict against defendants Rimini Street and Ravin on Oracle’s state law claims and the jury’s $14.4 million associated judgment on those claims. The Ninth Circuit vacated the district court’s issuance of a permanent injunction and the award of attorney fees and remanded for the limited purpose of determining whether the court would again issue a permanent injunction and an award of attorney fees based solely on Rimini Street’s copyright infringement.

Permanent injunction. In the court’s view, the limited nature of the Ninth Circuit’s opinion and remand did not undercut the basis for, or the court’s prior analysis on, issuing a permanent injunction against Rimini Street to restrain future copyright infringement. The remand required the district court only to reevaluate the injunction factors solely under the Copyright Act and without reference to the reversed state-law claims; the Ninth Circuit’s decision did not preclude the district court from entering any injunction in this case. The Ninth Circuit specifically stated that it expressed no view on the propriety or scope of injunctive relief with respect to the copyright claims when viewed alone, and that these issues were in the district court’s discretion.

With this in mind, the district court reexamined the relevant factors considered by courts in determining whether to issue a permanent injunction in a copyright infringement action: (1) irreparable harm; (2) the inadequacy of monetary damages for the infringement; (3) whether the balance of hardships weighs in the copyright holder’s favor; and (4) whether the public interest would be served by a permanent injunction. With respect to the first factor, the court found, as it had done previously, that Rimini Street’s infringement of 93 copyright registrations over four Oracle software product lines irreparably injured Oracle’s business reputation and goodwill. The parties were in directly competition in the market for providing after-license software support services to customers that licensed Oracle’s copyrighted software. Direct competition between a copyright holder and a proven copyright infringer had consistently supported the issuance of a permanent injunction, the court explained. In addition, Rimini Street’s conscious disregard for Oracle’s copyrights enabled Rimini Street to expand its business and to offer cut-rate prices. Rimini Street could not have achieved its current market share without its infringing conduct. Monetary damages would be inadequate to redress the infringement, the court said. Oracle had suffered lost market share and erosion of goodwill; these were intangible injuries that were difficult to quantify and compensate monetarily. Moreover, the infringement damages in this case were uniquely complex and difficult to determine. There was no mathematically efficient way for the jury to determine Oracle’s damages. The court also noted that Oracle had the fundamental right under copyright law to exclude others from taking and distributing its copyrighted works. The balance of hardships tipped in Oracle’s favor, particularly since Rimini Street did not have a legitimate business purpose for continuing to infringe. An injunction would serve the public interest and would not harm the public’s access to competitive software support services because Rimini Street had represented to the court that its current business model would not based on its prior infringing conduct. Accordingly, the district court again granted Oracle’s request for a permanent injunction.

Attorney fees. The court also repeated its prior determination that Oracle was entitled to an award of attorney fees under Section 505 of the Copyright Act. First, the court agreed with Oracle’s contention that, despite the Ninth Circuit’s reversal on the state-law claims, the degree of success it achieved on its copyright infringement claim established that this action was not frivolous and that the claim warranted reissuing an award of attorney fees. The litigation was primarily focused on the copyright infringement allegations against Rimini Street. Oracle successfully defeated Rimini Street’s counterclaims, including a counterclaim for copyright misuse. Oracle also defeated 11 affirmative defenses, including defenses for invalid copyright registrations, express license, consent of use, copyright misuse, implied license, statute of limitations, and fair use. At trial, Oracle prevailed on its infringement claims and recovered $35.6 million in damages. Therefore, in the court’s view, the degree to which Oracle prevailed in the case weighed in favor of awarding fees. Moreover, Rimini Street’s position that it did not engage in copyright infringement was not objectively reasonable, the court said. That position was based on a clear misreading of Oracle’s software licensing agreements and a conscious disregard for its copyrights. Because Rimini Street maintained this unreasonable position throughout the prolonged litigation, Oracle was forced to incur unnecessary legal costs. In addition, Rimini Street engaged in litigation misconduct, including the destruction of evidence. This misconduct was only minimally related to the state-law claims and primarily related to the copyright claims. The need to make Oracle whole, the need for deterrence against Rimini Street and other entities, and the purpose of the Copyright Act also favored awarding fees. Accordingly, the court decided to reissue an award of attorney fees to Oracle under the Copyright Act. The court saw no basis to reduce the amount of the award previously granted—approximately $28.5 million—because that award was based on reasonable rates and a reasonable expenditure of time by Oracle’s counsel. To the extent that the attorneys spent time on the state-law claims, in the court’s view, fees for those services were recoverable because they involved a common core or facts or related legal theories to the copyright infringement claims.

This case is No. 2:10-cv-00106-LRH-VCF.

Attorneys: Beko O. Reblitz-Richardson (Boies, Schiller & Flexner LLP) for Oracle USA, Inc., Oracle International Corp. and Oracle America, Inc. Blaine H. Evanson (Gibson Dunn & Crutcher LLP) and Joel D. Henriod (Lewis Roca Rothgerber Christie LLP) for Rimini Street, Inc.

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

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