Oracle, CedarCrestone settle lawsuit over third-party support

Oracle had alleged its former partner was providing PeopleSoft tax updates in an illegal manner

Oracle has settled a lawsuit it brought last year against a former partner it alleged was providing third-party support for its PeopleSoft application in an illegal fashion.

"Oracle America, Oracle International Corporation, and CedarCrestone, Inc. announce that they have amicably resolved the litigation between them," Oracle said in a brief statement on its website. "The terms of the settlement are confidential."

CedarCrestone had offered implementation services for various Oracle software products, as well as tax and regulatory updates for PeopleSoft. The latter appeals to customers that decide to go off vendor support and contract with a third party to save money, when they want to keep their systems up to date but have no need for the ongoing product updates provided under a vendor maintenance plan.

It wasn't clear whether CedarCrestone will continue offering tax and regulatory support for PeopleSoft; information suggesting as much wasn't readily apparent on its website Tuesday, and the company didn't immediately respond to a request for comment.

If the settlement's terms dictate that CedarCrestone stop offering the tax update service, it may not pose much of a financial hit to the company.

In an October blog post, CedarCrestone CEO Cal Yonker wrote that the litigation concerned less than 1 percent of CedarCrestone's business. "CedarCrestone isn't going anywhere," he added.

But support fees provide lucrative profit margins for software vendors such as Oracle, who undoubtedly don't want to see a major third-party market emerge.

Oracle's suit, filed in September, claimed that CedarCrestone used Oracle's own tax updates as a "starting point," and that CedarCrestone told customers it had developed them independently and wasn't in any violation of intellectual property.

CedarCrestone had previously denied any wrongdoing, saying that Oracle is waging an "unlawful and systematic attack" against the third-party support market, and that it holds a monopoly on support revenue.

It also made a number of counterclaims, alleging that Oracle was engaging in unfair competition by "unlawfully tying" the sale of tax and regulatory updates to software upgrades under a single support contract.

"Nothing in antitrust law or economics requires a firm to offer an a la carte menu of every conceivable component of its products and services just because a customer might occasionally wish to purchase some of them separately, or to supply them itself," Oracle said in a response filed in February.

The allegations against CedarCrestone bore some resemblance to those Oracle had lodged against former SAP subsidiary TomorrowNow and Rimini Street, two other third-party support providers. The case against Rimini Street is still ongoing.

Oracle has also sued a number of companies that provide third-party support for its Solaris OS, claiming they too are doing so in an illegal fashion.

While third-party support providers account for only a small percentage of the market, the swirl of litigation doesn't seem to be dissuading all customers from giving such services a try. Privately held Rimini Street has continuously reported steady growth even as the Oracle lawsuit progresses.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Tags IT managementOraclelegalservicessoftwareapplicationsit strategyintellectual propertyCivil lawsuitsCedarCrestone

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Chris Kanaracus

IDG News Service
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