R "Ray" Wang
R "Ray" WangNews Analysis: Rimini Street Countersues Oracle
Rimini Street Counter Suit Focuses On Ensuring Customer Rights To Third Party Maintenance (3PM)
On March 29th, 2010, Rimini Street sued Oracle for "counterclaims alleging copyright misuse, defamation, disparagement, trade libel, and unfair competition". The lawsuit was filed as a counter to Oracle's February 26th, 2010 suit of Rimini Street for Intellectual Property (IP) theft. While Oracle's issue at hand was whether or not Rimini Street violated IP rights, the underlying issue focuses on third party maintenance rights. Statements in the press release highlight the following:
- Rimini Street is Oracle's primary competition for annual support services. The third party maintenance leader now boasts 160 employees and a $150M sales backlog. The release stated a 270 percent year-over-year growth from 2008.
Point of View (POV): Rimini Street has recently won some large maintenance deals from Oracle. By supporting Oracle's Siebel, PeopleSoft, and JD Edwards customers with value based options, it's inevitable that Oracle would face direct competition. However, Oracle's 95% dominant market share leaves plenty of room for Rimini Street to grow and convince customers to switch. Other competitors such as Spinnaker, netCustomer, and some stealthy system integrators have chipped into Oracle's lucrative maintenance business.
- Oracle has a long history of trying to stifle Rimini Street competition. The lawsuit and press release discusses a series of actions taken by Oracle starting in September 2005 with hostile correspondence. Other actions noted discuss interference with client work in June 2007 and June 2008. The current lawsuit adds to the list of complaints from Rimini Street about Oracle.
POV: Rimini Street apparently reached out to Oracle on numerous occasions to discuss how they could work with a third party auditor to confirm Rimini Street's compliance with Oracle's procedures. If Oracle has not responded as Rimini Street states, it points to one data point that Oracle may not be interested in a resolution. Because maintenance is such a big part of Oracle and other vendor's revenues, there's great incentive to keep third party providers away from this market.
Oracle and Rimini Street Have An Opportunity To Create A Win-Win-Win for Customers-Software Publishers-3PM Vendors
As more and more customers wise up to the maintenance issue and lack of 3PM rights, Oracle and other vendors need to clearly define the rules as to how 3PM can be provided. The ground rules need to be established on how IP can be protected and customers not be trapped by maintenance. Rimini Street's original proposal to have an independent auditor certify policies and practices is a great first step. Oracle should respond. Should the court find Rimini Street has taken IP, then it will be more than the vendor's credibility that's in jeopardy. If Oracle succeeds in this lawsuit, they gain some momentum in trying to block third party maintenance. Hopefully, Rimini Street has played by the rules in respecting IP.
The Bottom Line For Users - Users And User Groups Must Band Together To Guarantee 3PM Rights. Don’t Take These For Granted!
(Because this is such a fundamental user rights issue, here's the repost of The Bottom Line from the February 22nd, 2010 post. )
Although the latest surveys show a 17 point increase in the belief that 3PM is a right, this right is under fire by big vendors such as Oracle who have taken legal actions against 3PM providers for improperly (i.e. TomorrowNow) and allegedly (i.e. Rimini Street) violating intellectual property rights. If providers have violated such laws, Oracle rightfully should defend its positions and those providers be punished. However, there’s a lot of money at stake. For most vendors, maintenance represents 50% to 80% of their revenue stream. Consequently, users and user groups have a responsibility to:
- Demand that their contracts include provisions that protect their right to 3PM
- Require vendors to work out rules on how 3PM providers can deliver services without violating software IP provisions
- Seek anti-trust class action with the US DOJ (i.e. Christine A. Varney) and the EU Competition (i.e. Joaquín Almunia) against software vendors who hinder 3PM providers from providing services
- Lobby regulatory authorities to open up third party maintenance as a condition for all future M&A approvals.
Users and user groups must vigorously defend their positions in contracts and legal action or lose this right. Failure will result in a continued software maintenance monopoly. Success will ensure market competition and renewed innovation. Attention: Oracle User Group leadership and Quest leadership your members need your help!
Your POV
Should you have rights to Third Party Maintenance (3PM) ? Do you feel its okay for your vendor to prevent you from access? What's a fair amount to pay for maintenance? Add your comments to the discussion or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.
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Related resources and links
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