By Pam Fulmer and David Woodard
Oracle announced on Sept 14, 2021 that Java 17 and future versions of Java are now free again. In this blog, Pam Fulmer, Partner at Tactical Law Group, and David Woodard, Executive License Consultant at OpsCompass/House of Brick, discuss the technical and legal implications of this announcement.
[David]: This announcement often gets misinterpreted as “all Java is now free again”, which is definitely not the case. You need to understand the technical and contractual aspects of this announcement to see if, and how, you may be able to use Java 17+ at no cost.
[Pam]: The announcement indicates that Java 17 and later are free under the new "Oracle No-Fee Terms and Conditions" (NFTC) license which allows for “running the Program for Your own personal use or internal business operations".
However, the first paragraph of that agreement states:
Your use of this Program is governed by the No-Fee Terms and Conditions set forth below, unless you have received this Program (alone or as part of another Oracle product) under an Oracle license agreement (including but not limited to the Oracle Master Agreement), in which case your use of this Program is governed solely by such license agreement with Oracle.
Thus, according to its terms, the NFTC would not apply if an Oracle customer already has an Oracle Master Agreement (“OMA”) in place, which contains a Java subscription. This might lead Oracle customers who already have an OMA with a Java subscription to consider terminating the OMA if they want to use the “free” version of Java 17. That of course requires a review of the termination provision of the OMA. Paragraph 6 of the General Terms of the OMA governs termination as it pertains to Oracle programs. However, the clause does not provide for a termination for convenience, for either of the contracting parties. Instead, only a termination for cause due to a material breach that is not cured within 30-days is included in the provision. Therefore, Oracle customers who try to terminate their OMA in order to get the “free” Java 17 may well face pushback from Oracle. However, there may be potential arguments under California law that Oracle customers may be able to use should Oracle claim that the agreement cannot be terminated except for cause.
[David]: If you cannot use Java 17 for free because you have an existing OMA, you appear to have two choices: 1) continue to pay for a Java subscription and use Java 17 under that OMA, or 2) attempt to terminate your OMA, which might give rise to a dispute with Oracle. However, assuming that Oracle would not claim an Oracle customer is in breach for terminating the OMA, the Oracle customer would still need to upgrade all current paid subscription versions of Java to Java 17 to use Java 17 for free.
The older versions/updates of Java that did not require a subscription would continue to be free for the Oracle customer to use. But, versions/updates that are currently obtained under the OMA subscription would need to be upgraded to Java 17 to eliminate the subscription and to use Java for free. This could be quite an undertaking from a technical perspective, with possible code changes, and extensive regression testing. In this case “free” may have a significant cost for you.
A Long Term Support (LTS) version of a product has a specified period of time where it will be supported by the vendor. Thus, customers know that by using an LTS version, they will not be surprised by support ending abruptly at the vendor’s whim. Usually, the support periods for LTS versions will overlap, which gives the customer time to upgrade from one supported version to another.
Oracle has updated the release cadence for Long Term Support (LTS) versions of Java to every two years, and the odd numbered versions (17,19, etc) will be the LTS versions. Updates for a given LTS release will be available until one year after the next LTS release date thus giving customers one year of overlap to get upgraded to the next LTS version. Oracle will continue updating some older LTS releases, but you will need to get a subscription to use those updates. The even numbered versions will only be supported for a short time, and often are used by customers to try out new features in non-production environments
[Pam]: Oracle updated the Java Frequently Asked Questions (“FAQ”) to state:
Oracle will use the NFTC for JDK 17 and later releases. LTS releases, such as JDK 17, will receive updates under this license for one year after the release of the subsequent LTS. After the free use license period, Oracle intends to use the OTN License, the same currently used for Java 8 and 11 LTS releases, for subsequent updates.
So, if you are still running an older version of Java 17, for example, that falls under the Oracle Technology Network License Agreement for Oracle Java SE, it does not allow for production use of Java. If you wanted to keep using that older version, or want to update it if Oracle releases new updates for that version, you will need a subscription.
(This appears to mean, per the NFTC first paragraph, that Oracle customers would need a subscription for all Java versions, even newer versions like 19, 20, 21, etc., which would normally be free)
[David]: So, if you find yourself unable to upgrade off of Java 17 (or later as newer LTS’s roll out), then you are looking at now having to get a Java subscription for your entire Java estate once again. So, the decision to move into the free Java NFTC ecosystem should include a realistic assessment of your team’s capabilities to get upgraded to the newer Java version in a timely manner and stay updated.
Conclusion: Unless Oracle comes out and states that you can have free Java 17+ and older subscriptions under an OMA and the new NFTC in use at the same time, the first paragraph of the brand new NFTC would seems to indicate otherwise.
By Pam Fulmer
We are going to focus a few blog posts on Oracle and its subsidiary NetSuite, Inc. (“NetSuite”) and some of the litigation that has been brought against these two companies by their unhappy customers. NetSuite was one of the first cloud-based companies in the market, and Oracle acquired the company in 2016.
NetSuite started out focusing on financial and accounting systems, then it branched out into Enterprise Resource Planning (“ERP”) and Customer Resource Management (“CRM”) software and eCommerce. NetSuite provides its customers with a subscription-based service and essentially claims that its customers can manage all their key financial and business processes in one solution. NetSuite claims that it is the #1 Cloud ERP Business Software Solution and according to its website that:
“NetSuite ERP is an all-in-one cloud business management solution that helps organizations operate more effectively by automating core processes and providing real-time visibility into operational and financial performance. With a single, integrated suite of applications for managing accounting, order processing, inventory management, production, supply chain and warehouse operations, NetSuite ERP gives companies clear visibility into their data and tighter control over their businesses.”
NetSuite customers have filed lawsuits against the company often alleging that NetSuite over promises and under delivers. Even before Oracle acquired NetSuite, the company had already been sued by customers claiming that NetSuite failed to deliver a functioning ERP product. In 2014 the Kentwool Company filed suit in South Carolina against NetSuite asserting claims for breach of contract, breach of express and implied warranties, fraud, fraud in the inducement, negligent misrepresentation and breach of South Carolina’s unfair business practices act, among other claims. Kentwool sought to rescind the contract based on fraud in the inducement. NetSuite moved to transfer the case to the Northern District of California due to the venue provision in the Netscape agreement. That motion was granted and the case was transferred to Judge Jon Tigar in the Northern District.
According to the Complaint, NetSuite represented that it would integrate all of Kentwool’s “manufacturing, inventory, purchasing, financial, sales and shipping processes” and that the software would include certain advanced features and that any implementation problems would be fixed by NetSuite. Kentwool also contended that NetSuite knew that its software could not do these things when it wrongfully induced Kentwool to enter into the contract. Plaintiffs in other lawsuits filed against NetSuite and Oracle arising out of failed ERP implementations have made similar allegations. We will get into some of those other cases in future blog posts. But for now, we want to focus on some of NetSuite’s key defenses, and common mistakes that NetSuite customers make when asserting fraud-based claims.
NetSuite contracts contain integration clauses. In the subscription agreement at issue in the Kentwool case, that clause provided that:
“This Agreement, including all exhibits and/or Estimate/OrderForms, shall constitute the entire understanding between Customer and NetSuite and is intended to be the final and entire expression of their agreement. The parties expressly disclaim any reliance on any and all prior discussions, emails, RFP’s and/or agreements between the parties. There are no other verbal agreements, representations, warranties[,] undertakings or other agreements between the parties.”
NetSuite, invoking the parol evidence rule, argued that this clause precluded Kentwool from introducing any evidence that varied, altered or added any terms that were not part of the integrated contract, such as representations made by NetSuite during pre-contractual sales and negotiation discussions. The court rejected those arguments and found that the parol evidence rule did not bar such evidence, because the Plaintiff asserted fraud-based claims, including fraud in the inducement and sought to rescind the contract. Having passed this first hurdle, Kentwool ran into another legal buzz saw—the failure to plead fraud with particularity.
Federal Rule of Civil Procedure (“FRCP”) 9(b) requires a heightened pleading standard for pleading fraud claims. To satisfy FRCP 9(b), a litigant must identify the who, what, when, where, and how of the alleged fraud such that defendants have notice of the particular misconduct alleged and can defend against it. What does this mean in practice? It means that NetSuite customers who claim fraud must get really specific. Was the fraudulent statement made in a phone call, an email or in a meeting? If the fraudulent claim was made in a meeting or on a call, courts will want to know the date of the meeting, and even the time. Where was the meeting? Who was at the meeting and who from NetSuite made the exact statement at isssue? What was the exact statement? Why was the statement false? All too often litigants are unable to make such a detailed showing because they fail to make an adequate record when they are engaged in pre-contractual discussions with Oracle/NetSuite. And that is a huge mistake.
It is an understatement to say that much can go wrong in the implementation of an ERP contract. So, Oracle/NetSuite customers must go into negotiations prepared to make the licensor get really granular on exactly what they are promising. Every time you have a meeting with or get on a phone call with NetSuite pre-contract, you would be well advised to take detailed notes of the meeting, including the date and time, and who attended. Save any emails. You also need to include the exact representations of NetSuite on which you are relying and the identity of the person who made the representation. Press NetSuite for specific information. Ask them to detail the existing capabilities of their software, and what capabilities they will need to customize for you. Write it all down, and send records of these communications to your legal department for safekeeping and use in the event of a dispute down the road. Be proactive.
The Kentwool court found the following allegations contained in the Complaint insufficient to plead fraud with the required particularity, and dismissed those causes of action with leave to amend:
“Prior to Kentwool entering into the Agreement with NetSuite, NetSuite represented to Kentwool that the Software would integrate the management of Kentwool’s manufacturing, inventory, purchasing, financial, sales and shipping processes, specifically including providing visibility and management of blended products through the manufacturing process. NetSuite further represented to Kentwool that the Software functionality would include, among others, advanced financials, item management, production planning, manufacturing control, cost control, lot and serial control, multi-division/multi-site solutions, and order management. During the implementation process NetSuite represented to Kentwool that it would, and did, correct the problems experienced by Plaintiff so that the Software would perform as originally represented to Kentwool. NetSuite also represented to Kentwool that complete implementation would be achieved on or around October 1, 2013.”
This example shows how detailed and granular any fraud-based claims must be pled to survive a motion to dismiss. So, give your lawyers the tools they need in case of any dispute down the line. Make a detailed record of what your needs are, and what NetSuite/Oracle promised it could do. If you can get NetSuite to set forth in writing what they are agreeing to deliver, do so. If they won’t put it in writing, then you need to record it yourself by taking good notes. For Zoom or Teams meetings you can ask NetSuite if you can record the conversation. It is doubtful that they will agree, but it never hurts to ask. If you do decide to record, you need to ensure that you are complying with the applicable law relating to the proper notice required for the recordation of conversations and meetings, in your particular jurisdiction.
Once you successfully can provide the granular details of what was promised, you will have another hurdle to overcome. Was it an actual misrepresentation of fact or mere puffery, which is not actionable? We will discuss hurdle number 2 in our next blog post, and what constitutes a material misrepresentation of fact in the context of a NetSuite related lawsuit. We will provide a few concrete examples, which a judge found to be mere non-actionable puffery, and not a false statement of fact. We think you will find this context very helpful in preparing to negotiate your ERP license agreement.
Tactical Law is an IP and litigation boutique law firm located in the San Francisco Bay area. We assist our clients to negotiate and document ERP and other licensing agreements. We also assist our clients in resolving disputes that might arise during ERP implementation, or if informal resolution is impossible, we assist our clients to litigate such disputes in courtrooms and in arbitration forums around the nation.
By Pam Fulmer
In December of 2021, Oracle announced its acquisition of healthcare giant, Cerner Corporation. The acquisition is Oracle’s largest to date, and will provide a big boost to Oracle in the healthcare and specifically the Electronic Medical Records (“EMR”) market once the deal closes, most likely in 2022. Current Cerner customers are well advised to break out their Cerner license agreements and take steps now to analyze how Oracle may bring its aggressive software audit playbook to the interpretation of Cerner contracts.
According to press reports, Cerner will apparently remain a free-standing business unit within Oracle, but it would not be a surprise to anyone if Oracle’s notorious audit arm LMS (now known as GLAS) becomes involved in software audits of Cerner customers. As Oracle seeks to grow its cloud business, it is our opinion that Oracle may seek to use aggressive software audits to get Cerner customers out of Cerner paper and into Oracle agreements, such as Oracle’s Unlimited License Agreements with its pernicious annual maintenance & support obligations that can never be reduced. We also anticipate that Oracle may use software audits to push Cerner customers to the Oracle cloud, as it seeks to catch up with AWS and other cloud providers.
Current Cerner customers should consider seeking the help of legal counsel and technical experts familiar with Oracle’s audit playbook, to ensure that they are compliant with their existing license agreements. Even if Cerner licensees believe that they are compliant, they would be well served to seek professional advice as to how Oracle might interpret certain Cerner contractual provisions, and begin developing strategies to mitigate such assertions.
Cerner customers have some lead time now, which they should use to prepare their software audit defenses, well before the inevitable Oracle audit notice is issued.
Tactical Law is a boutique law firm located in the San Francisco Bay Area. We are very familiar with Oracle's aggressive software audit tactics, and we assist our clients in pushing back on overreaching Oracle audit assertions.
By Tactical Law Attorneys and From Time to Time Their Guests