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Mars court filings reveal extent of Oracle licence probe

Court documents have revealed just how far Oracle will go to extract cash from some of its larger customers

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Papers from the Superior Court of California County of San Francisco reveal that confectionary company Mars disclosed hundreds of thousands of documents during a software audit conducted by software supplier Oracle. 

The software licence dispute could have materially damaged the business of confectionary company Mars.

On 16 December 2015, Oracle and Mars agreed not to proceed with the licensing dispute going to court, but many of the documents leading up to the filing for dismissal are available in the public domain.

The case highlights the approach Oracle‘s Licence Management Service (LMS) took to audit Mars.

The dispute began with a licence review, but quickly escalated. Oracle conducted a full-scale audit discovery process to determine how many servers at Mars ran VMware vSphere 5.5 or above.

As Computer Weekly previously reported, Oracle has often tried to force customers to buy an Oracle licence for every physical server on which vSphere is installed, due to the Live Migration facility in vSphere 5.5, which enables virtual machines to seamlessly move across servers.

According to court filings at the Superior Court of California County of San Francisco from May 13 2015 to September 2 2015 Mars provided Oracle with 233,089 pages of documents to assist in the auditing of Oracle software.

Mars stated that Oracle was unwilling to “come to a mutually agreeable process” for completing an audit. Oracle then sent Mars a letter stating Mars had materially breached its licence agreement by unreasonable delay and refused to permit Oracle’s licence review.

However, Mars stated that it assembled and produced information ”reasonably necessary to audit Mars’ use of Oracle’s software”.

Mars said it responded to demands outside the scope of the audit. On 21 August 2015, Oracle asserted that, as Mars was using VMware version 5.1 or higher, it needed to know how many vSphere servers were running at the company.

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VMware smoking gun

According to industry experts, this was the true intention of Oracle’s software use discovery process. They say Oracle wanted Mars to license all additional servers that were not already licensed to run Oracle.

Oracle defines software use in a way that could affect other organisations where an Oracle component is used in a larger system.

The software maker laid out in black and white its definition of a user for the purpose of user-base licensing in Agile, its product lifecycle management tool. The software company wrote: “The use of records created by Agile is use of Agile software.” According to Oracle, employees working with data that has been exported out of Agile and imported into other software programs are using Oracle’s proprietary analytical, configuration, organisational and management tools in the Agile program.

In a blog post reflecting on the court filings, Dave Welch, CTO and chief evangelist at House of Brick Technologies, wrote: “The one thing about this action that makes me cringe is that any Oracle customer under audit might be on record as having provided Oracle 233,089 pages of documents in support of an audit. A customer’s overhead in providing all those pages would very likely directly violate Oracle’s contractual obligation to not unreasonably interfere with the licensee’s normal business operations.”

In November 2015 analyst Gartner urged CIOs to advise their IT procurement people to clearly define licence usage rights and be aware of terms and policies – such as limits based on core-based or virtualisation licensing.

In the past many organisations avoided the risk of virtualising Oracle using VMware vSphere by limiting Oracle to physical hardware.

Public disclosure reveals audit process

When Computer Weekly spoke to IT lawyer Judica Krikke in 2015 about Oracle’s virtualisation licencing policy, she recommended IT departments not to take Oracle’s word for granted, advising them instead to "do your investigation, measure usage and challenge the audit".

Oracle and Mars settled out of court. Welch said he would have liked to see Oracle’s arguments scrutinised by a court of law. He wrote: “Oracle appears interested in trying to see if it can get any more money out of any of its Oracle on VMware customers. It also appears to want to do that without a court’s evaluation.”

Risking Oracle

Earlier in January 2016, Oracle announced plans to hire a sales team of 1,400 in Europe – to “help customers respond to the digital imperative and make their businesses future proof”.

Given this recruitment drive, many organisations can expect a call from Oracle in the coming months, leaving CIOs reflecting on whether they are prepared to sign a supplier with a track record of targeting existing customers to generate revenue.

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Thanks, Cliff.

You wrote:

"The dispute began with a licence review, but quickly escalated."

Oracle initiated the activity with a "license review" notice that invoked privileges per the contract's audit clause. This was an audit from the beginning, not something else that "escalated" into an audit.

Dave
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