According to a recent ruling by the California Supreme Court, organisations may be able to sue Oracle for up to treble damages and attorneys’ fees under California Penal Code 496. That got your attention didn’t it?!
The new California Supreme Court ruling makes it clear that civil litigants in certain cases involving a “theft of money or property” may be able to sue Oracle under California Penal Code 496. As summarised in a blog by Pam Fulmer of Tactical Law, “Customers of Oracle who believe they have been victimized by predatory software audits, VMware overreaches or NetSuite SuiteSuccess failures may have a new tool in their toolbox to combat Oracle and certain of its alleged unfair trade practices... It is a powerful potential weapon that should be assessed by every company contemplating suing Oracle for damages caused by predatory audits or failed ERP implementations.“
The prospect of being able to sue Oracle for predatory audits will sound appealing to many who have faced the misery of an Oracle audit. According to the ruling, California Penal Code 496 can apply to a broad range of business disputes when property has been obtained in any manner constituting theft. So, when does an audit become theft? The Supreme Court cautioned that “not all commercial or consumer disputes alleging that a defendant obtained money or property through fraud, misrepresentation, or breach of a contractual promise will amount to a theft. To prove theft, a plaintiff must establish criminal intent on the part of the defendant beyond mere proof of nonperformance or actual falsity. . . . This requirement prevents ordinary commercial defaults from being transformed into a theft.” Siry, 13 Cal. 5th at 361-362.
“innocent” or “inadvertent” misrepresentations or unfulfilled promises would not qualify as theft under Section 496. Pam suggested one particular scenario that might qualify, but stressed that this has not yet been tested in a court of law. “For example, if you are a business that suffered through a predatory audit by Oracle and paid money or entered into an expensive ULA based on Oracle’s non-contractual VMware argument, could that qualify as a theft under the statute? Perhaps, but the claim has not yet been tested in a court of law in a case involving an Oracle software audit. But certainly, companies in disputes with Oracle arising out of software audits should seriously consider the claim in evaluating their legal strategies.”
This is a powerful potential weapon that should be assessed by every company contemplating suing Oracle for damages caused by predatory audits or failed ERP implementations. If this has piqued your interest, be sure to read Pam’s full blog post on this here: Oracle Blog.
This is a great example of the potential for crossover between the ITAM & Legal disciplines – particularly when it comes to audits. Talking to your legal team regularly and keeping each other abreast of news and happenings on both sides can only be a positive thing.
Also, while we’re talking about Oracle above – this legal scenario isn’t limited just to Big Red. No, there is the potential for this to apply to audits from any software publisher. An organization willing to pro-actively launch a suit against a software publisher for this is probably quite unlikely…but it may be a useful point to raise during pre/post audit discussions.
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