Ninth Circuit Issues Important Decision On Software Licensing Practices And Web Scraping

Author:Mr Jeffrey Neuburger
Profession:Proskauer Rose LLP
 
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Earlier this month, the Ninth Circuit issued a noteworthy ruling in a dispute between an enterprise software licensor and a third-party support provider.  The case is particularly important as it addresses the common practice of using automated means to download information (in this case, software) from websites in contravention of website terms and conditions.  Also, the case examines and interprets fairly "standard" software licensing language in light of evolving business practices in the software industry. (Oracle USA, Inc. v. Rimini Street, Inc., No. 16-16832 (9th Cir. Jan. 8, 2018)).

Background

The procedural history of this long-running dispute is complicated.  In brief, Oracle USA, Inc. ("Oracle") develops and licenses certain enterprise software, and also offers maintenance contracts to its licensees.  As part of maintenance services, it offers software updates, available on Oracle's support website. Rimini Street, Inc. ("Rimini") is a company that provides third-party, after-license software support services to Oracle licensees, competing directly with Oracle to provide these services.

The case involved Oracle's challenge to Rimini's practice of downloading software from Oracle's support site onto Rimini's own computer systems under color of a license held by an Oracle licensee (and Rimini customer). Rimini used the files to provide software support services to that particular licensee, as well as to other present and future Rimini customers. In its lawsuit, Oracle brought a lawsuit alleging a kitchen sink of claims, including copyright infringement, as well as state law claims including breach of contract, unfair competition, trespass, and violations of the California Computer Data Access and Fraud Act (CDAFA) and the Nevada Computer Crimes Law (NCCL) (the "Oracle Suit"). By the time the case was submitted to the jury, a number of ancillary claims were abandoned, and the jury only considered copyright infringement, inducement of breach of contract, intentional interference with business relations, and violations of the CDADA and the NCCL.  The jury found in favor of Oracle on the principal claims and granted a multimillion dollar judgment in Oracle's favor. The court denied Rimini's post-trial motions to reverse the jury verdict as a matter of law - it held that Rimini's use of Oracle software was copyright infringement and that Rimini's use of automated tools to download Oracle's software in contravention of Oracle's terms of service violated the CDAFA and the NCCL.  Rimini appealed. The issues on appeal were limited, as the final award was based upon damages and attorney's fees and costs stemming from copyright infringement and violations of the California and Nevada laws.

On appeal, the Ninth Circuit upheld the finding of copyright infringement, but reversed the lower court's ruling as to liability under the CDAFA and NCCL and reduced the damage award, remanding the case to reduce the judgment even further, as well as to reconsider the injunctive relief against Rimini. (The issues related to the damage award, as well as a number of other issues such as copyright misuse, are beyond the scope of this blog post.)

However, this is not the only action pending between the parties.  Prior to trial, Rimini revised its support processes in an attempt to conform to the lower court's pre-trial orders, where the court had summarily adjudicated that Rimini was liable for infringement because some of the licenses at issue "unambiguously" prohibited Rimini's former support practices.  However, over Rimini's objection, the jury trial was limited to processes Rimini used prior to February 2014 (thereby excluding any evidence of its "new support model").  In October 2014, about a year before the trial, Rimini filed a separate action in...

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