Terix to pay Oracle $58M in settlement over Solaris support

It also can no longer distribute Solaris patches to its customers

Oracle CTO Larry Ellison speaks at the OpenWorld conference in San Francisco on Sept. 30.

Oracle CTO Larry Ellison speaks at the OpenWorld conference in San Francisco on Sept. 30.

Independent maintenance-support provider Terix must pay Oracle almost $58 million in damages following a stipulated judgment made Wednesday in a U.S. District Court.

Oracle sued Terix along with co-defendant Maintech back in 2013, alleging that the companies had "engaged in a deliberate scheme to misappropriate and distribute copyrighted, proprietary Oracle software code" while supporting customers using Oracle's Solaris operating system.

More specifically, Oracle wanted to stop the companies from obtaining Solaris patches from Oracle's customer support website and using them to offer service to their own customers. Also included in the suit were Sevanna Financial and West Coast Computer Exchange, two companies affiliated with Terix.

Terix filed a countersuit in April 2014 alleging unfair competition and violation of U.S. antitrust laws, charging that Oracle was pursuing "a deliberate policy of attempting to eliminate competition in the market for the maintenance and support of computer hardware running the Solaris operating system."

In March 2015, Terix filed a Motion for Sanctions against Oracle for allegedly destroying crucial defense evidence and refusing to allow Terix to inspect potential evidence.

Last month, however, Maintech was ordered to pay Oracle $14 million. Now, according to the settlement agreement under U.S. Magistrate Judge Paul S. Grewal in U.S. District Court for the Northern District of California, Terix will not only pay Oracle $57.7 million, but it will also be prohibited from providing its customers with updates, bug fixes, patches, media kits or other proprietary support materials for Oracle's Solaris operating system that haven't already been made public. It must also inform its customers of the ruling, and it must allow Oracle to perform an annual audit of its work relating to Oracle/Sun hardware for the next five years.

"Oracle filed this lawsuit to stop the illegal use of its proprietary and copyrighted Solaris software and related firmware, and that is exactly what the judgments entered against Terix, Maintech and their related companies achieved," said Dorian Daley, Oracle's general counsel, in a statement.

The judgment confirms "what Oracle has been telling customers for years -- that third-party maintenance firms have no rights to Solaris patches," Daley added.

Oracle is also involved in an ongoing legal battle with support provider Rimini Street. At stake in both cases are the considerable maintenance payments it still hopes to take in for its on-premises software, even as many companies transition toward the cloud and subscription-based software as a service instead.

Oracle acquired Solaris when it purchased Sun Microsystems in 2010.

Terix said in a statement it is "pleased" it reached a settlement agreement with Oracle that resolves "all claims and counterclaims between the parties." The company will continue to provide hardware support services for Sun products, it said.

There's little doubt, however, that third-party maintenance providers are now on notice, said Raymond Van Dyke, a technology and patent attorney based in Washington, DC.

"Whereas Sun freely distributed firmware and software updates to their customers and third-party maintenance providers alike, Oracle did not agree with this philosophy," Van Dyke said. "Oracle likely saw a substantial revenue source overlooked by Sun, and wanted to make a statement."

Moving forward, third-party maintenance providers need to tread carefully, Van Dyke added. "The various antitrust charges in the countersuit did not seem to change things, which does not bode well for Rimini Street."

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