Chris Kanaracus at Computerworld alerted me, via email, to the news that Oracle filed has filed a lawsuit against Rimini Street, alleging massive theft of Oracle's intellectual property, in connection with Rimini Street's delivery of third-party maintenance services.
Chris was kind enough to send me a PDF of the actual complaint. A quick read reveals allegations similar to those Oracle made in its lawsuit two years ago against SAP in connection with SAP's now-discontinued TomorrowNow operation. For example, "massive theft of Oracle's software and related support materials through an illegal business model." I won't repeat them here. Read Chris's reporting for a summary of the lawsuit
As I wrote in response to Chris, I'm not a lawyer and cannot comment on the legal aspects of this case. But I do suspect it will have a chilling effect on others that are contemplating the delivery of third-party maintenance services, at least for now.
Having said that, however, I am told that Rimini Street has had top notch legal advisors from the beginning, and I expect that they've prepared for this contingency, both in terms of their internal procedures and their legal standing to do what they do. I do not expect them to roll over.A risk to Oracle
In fact, there may be a silver lining in this case for those of us who want to see a viable third-party maintenance industry. That is, this case is going to bring increased legal scrutiny of Oracle and other major software providers in terms of how they lock in customers to their maintenance and support programs. Oracle runs a risk in filing this lawsuit. If Oracle does not
prevail against Rimini Street, the case will strongly establish the legal basis for the third-party support industry.
I see an analogy in the court rulings that forced IBM to unbundle its software and hardware, creating the IBM-plug compatible mainframe industry in the 1970s, led by third-party hardware providers such as Amdahl, Fijitsu, and Hitachi. The unbundling created competition in the mainframe hardware market, the lack of which had led to inordinate profits in IBM's mainframe business.
Today, can anyone argue that Oracle (and SAP for that matter) earn excessive profits on their maintenance and support contracts? They have a 90% profit margin, by Oracle's own admission. The only reason that Oracle (and SAP) can do this is because there are a lack of alternative support providers. Is this not a case for antitrust action?
As I've written in the past, I don't need to go to my Lexus dealer for routine auto maintenance. There are a whole array of authorized third-party support organizations for the major automobile manufacturers. Why should enterprise software be any different?
I've written many posts in the past on this subject, only a few of which are listed in the Related Posts section below. To find the rest, use the search field on the right to search for "Rimini" or "TomorrowNow."Updates:
Shane Schick has a very good take on the lawsuit as well, "The vampires vs. Rimini Street."Helmut Gumbel
has a good post, making some of my same arguments, plus some others. Worth reading.Related postsNo recession for Rimini Street third-party maintenance businessRimini Street, SAP, and the future of third-party maintenanceRimini Street to provide third-party support for SAPLegal basis for third-party ERP support industry