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Oracle America, Inc. v. Terix Computer Company, Inc.

United States District Court, N.D. California, San Jose Division

May 5, 2015

ORACLE AMERICA, INC., et al. Plaintiffs,
v.
TERIX COMPUTER COMPANY, INC., et al., Defendants.

ORDER GRANTING MOTION FOR PARTIAL SUMMARY JUDGMENT (Re: Docket No. 396)

PAUL GREWAL, District Judge.

Plaintiffs Oracle America, Inc. and Oracle International Corporation move for partial summary judgment of Defendants Terix Computer Company, Inc., Maintech Incorporated, Volt Delta Resources, Sevanna Financial, Inc. and West Coast Computer Exchange, Inc.'s express and implied license defenses. Because the court finds no disputed issues of material fact on these defenses, and that Oracle is entitled to judgment as a matter of law, Oracle's motion is GRANTED.

I.

A copyright owner holds the exclusive right "to authorize" each right enumerated in the Copyright Act, [1] including the right to license. Anyone holding a valid license has an affirmative defense to an owner's claim for copyright infringement. A defendant asserting a license defense has the initial burden of identifying any license provision that puts it in the clear. If it does so, the owner may overcome the defense by showing that the defendant's conduct exceeded the scope of the provision in question.[2] "[C]opyright licenses are assumed to prohibit any use not authorized."[3]

In 1992, Sun Microsystems released its first version of Solaris.[4] Solaris is a UNIX-based operating system designed and used to operate server, blade, storage and related hardware.[5] This includes hardware that is critical for legal, regulatory or business reasons, and therefore requires extremely high support levels.[6] It also includes less critical systems for test, development and back-up.[7] Sun regularly made available updates and firmware for Solaris that enhanced performance or simply fixed bugs in the system.[8] Solaris updates and firmware are copyrighted, and their use is controlled by express license.

Different licenses govern the use of different versions of Solaris at issue in this case. Sun's Binary Code License Agreement, an integrated written contract covering Solaris versions 7, 8 and 9, provides the customer a "License to Use" the software as follows:

Sun grants to you a non-exclusive and non-transferable license for the internal use only of the accompanying software and documentation and any error corrections provided by Sun (collectively "Software") for the number of users and the class of computer hardware for which the corresponding fee has been paid.[9] With Solaris 10, released in 2005, Sun changed the license structure to a two-part form: a

Software License Agreement and accompanying Entitlement.[10] The SLA provides:

Subject to the terms of your Entitlement, Sun Grants you a nonexclusive, nontransferable limited license to use Software for its Permitted Use for the license term. * * * The terms and conditions of this Agreement will apply to any Software updates provided to you at Sun's discretion, that replace and/or supplement the original Software, unless such update contains a separate license.[11]

Each customer's Entitlement is "the collective set of applicable documents authorized by Sun evidencing your obligation to pay associated fees (if any) for the license, associated Services, and the authorized scope of use of Software under this Agreement."[12] The firmware at issue is licensed separately pursuant to the SLA and an accompanying firmware Entitlement.[13]

Sun's Common Development and Distribution License[14] enables the "open source community" to download Beta versions of Solaris source code from opensolaris.org and, in accordance with the CDDL's terms, use, modify and distribute it (among other things).[15] The purpose is "to encourage developers to create new applications that run on [Solaris], so that when those applications are commercialized, they will drive additional licensing of" Solaris.[16]

Sun was acquired by Oracle in 2011. Since at least that time, customers who want Solaris updates and firmware must sign an annual contract for technical support services to be performed by Oracle.[17] No customer may purchase updates or firmware without these services.[18] Customers that sign a support agreement-either directly with Oracle or through a reseller authorized by Oracle-receive a Customer Support Identification number linked to the products covered by the agreement.[19] The CSI number allows customers to create login credentials to access Oracle's secure support website.[20] Using these credentials, the customer may download Solaris updates and firmware for the hardware systems that are covered by the support agreement.[21] The customer may not share or use its CSI number for the benefit of others or for the benefit of unsupported Oracle hardware-only customers who pay for and maintain an agreement with Oracle for the hardware at issue may download Solaris updates and firmware and only for their own internal business use on specified computers.[22]

Defendants offer their own support services for Solaris hardware.[23] Each either contracts directly with customers to provide this support or indirectly as a subcontractor to another entity, such as its co-defendant.[24]

Oracle filed this suit against Defendants for copyright infringement, fraud and other torts, [25] and Defendants promptly counterclaimed, alleging antitrust violations, unfair competition and other torts.[26] Defendants also pleaded a variety of affirmative defenses to Oracle's claims, including affirmative defenses of express and implied license. Terix's license defense relies on its customers' license rights.[27] According to Terix, "with the purchase of a Sun server or downloading of the Solaris 7, 8 or 9 operating system, and pursuant to the accompanying BCL, purchasing Customers received perpetual license rights both to their obtained version of Solaris 7, ...


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