We at Tactical Law see signs that Oracle may be getting even more aggressive with its soft audits of Java, and we believe that 2024 may usher in more formal audits of Java as Oracle seeks to push customers into the total employee licensing metric that it announced in early 2023. As many commentators have noted, this metric can exponentially increase the licensing fees for those companies using Java. For example, Mr.
There may be a potential legal argument, however, that could cause a court to find this definition and any contract in which it is incorporated as invalid for being indefinite. This is because buried in the licensing definition itself may be a defect that could potentially be exploited against Oracle. Oracle's definition of "employee" is breathtakingly broad: Employee "is defined as (i) all of Your full-time, part-time, temporary employees, and (ii) all of the full-time employees, part-time employees and temporary employees of Your agents, contractors, outsourcers, and consultants that support Your internal business operations. The quantity of the licenses required is determined by the number of Employees and not just the actual number of employees that use the Programs." In trying to sweep in every possible contractor or consultant into its definition, Oracle may have created a problem for itself; an argument could be made that the contract is indefinite. For example, there could be litigation over what constitutes a contractor, outsourcer, or consultant in this context and what does it mean that they support a company's "internal business operations"? Would a company need to count contract meal preparation services that provide the meals for the company cafeteria? Are these folks supporting a company's internal business operations by feeding the employees so they can stay on campus and be even more productive? And, do you need to count every employee or contractor of the catering company, or only the ones that are on the corporate campus serving up the food? What about the grounds keepers that are mowing the lawn on the company grounds or pruning the trees on the corporate campus? Would these contract employees be included and are they supporting the company's internal business operations? It is not very clear. I don't anticipate that Oracle will get too into the weeds of these details when they license the Java initially. But what about three years into the Java subscription when the company is under audit, and Oracle might be able to use a large non-compliance gap to extract a new Java subscription? Would Oracle then take the position that the company had failed to disclose all of the contractors, outsourcers, etc., and needs to pay to cover a huge non-compliance gap? Would Oracle actually do this? I'll let those of you out there who have experienced an Oracle software audit opine on the answer to that question.
Most Oracle license agreements are governed by
We are looking into these and other legal issues involving Java licensing. If you have a dispute with Oracle involving Java, we may be able to help.
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