Disputes With Oracle Over Java SE Licensing Proliferate

By Pam Fulmer

On January 23, 2023 Oracle changed how it licenses Java SE moving away from named user plus and processor metrics and instead transitioning to an employee metric based on the total number of full and part time employees and contractors of a company.  You can read more about the changes here.  For many companies the prices for licensing Java exploded with the new metric as all employees need to be licensed rather than just the ones using Java.  

We have received reports that for many months prior to the price change the Oracle Java sales team had been reaching out aggressively to companies about licensing Java.  As part of Oracle’s approach, the Java team requested detailed information about a company’s IT environment, including its virtual environment. Reportedly Oracle sales sought information about servers, even ones that were not running Java and where no Java software was installed.  Many companies innocently provided the information not understanding that Oracle likely did not have a legal or contractual basis to demand such information.  We have discussed this previously here.  Often companies would seek to place an order for the number of Java licenses they believed that they needed based on where Java software was installed and/or running.  But in some cases, the Oracle sales team apparently refused to provide an Ordering Document for the requested licenses, if the Oracle customer refused to capitulate to Oracle’s inflated licensing demands.  In our opinion, Oracle may have run into some headwinds when demanding information about the entire virtual environment even where no Oracle software was installed from at least some of its targets.  Perhaps that is what ultimately triggered Oracle to change its licensing to the employee metric so that it could claim exorbitant licensing fees without all of the complexities around Oracle’s non-contractual arguments around the use of VMware.  We just can’t be sure.

But for those customers who wanted to purchase the Java licenses and Oracle declined to sell the licenses unless the company provided the confidential information that Oracle demanded or paid the higher (and baseless) licensing fee demands, what about them?  Oracle essentially forced these companies into being non-compliant when it refused to sell the requested licenses.  In our opinion, Oracle should have sold the licenses and if it really believed that the company was inadequately licensed, it could have issued an audit notice and made its formal audit findings.  Then the Oracle customer would have had the protections of the Oracle audit clause and would have had an orderly process for pushing back on Oracle’s assertions and demonstrating that the customer was actually compliant.  Importantly, the Oracle customer also would have only needed to purchase licenses for its actual usage of Java, and not for its entire employee population.  But that is not what Oracle did in some cases.  We believe Oracle's actions may have damaged these companies, which are now faced with licensing Java on a total employee basis, which can be very expensive.  Additionally, where Java SE is important to the business of the company, Oracle's actions may have caused uncertainty and cast a cloud over the business.

If you are a company that was approached by the Oracle Java sales team and Oracle requested information about your IT environment even where no Java software was installed and/or running, we would like to talk to you.  If you purchased Java licenses not based on where the software was installed and/or running but were instead misled by Oracle’s assertions and believe that you paid more than was required, we would like to talk to you as well.  Finally, if Oracle refused to sell you Java licenses that you requested, and now you are facing either actual or potential demands by Oracle to license all of your employees and contractors we would also like to discuss your situation.

We advise companies on licensing Java and in related disputes with Oracle concerning the licensing of Java, including disputes arising out of Java software audits.