Oracle USA, Inc. v. Rimini Street, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ORACLE USA, INC., a Colorado Nos. 16-16832

corporation; ORACLE AMERICA, INC., 16-16905

a Delaware corporation; ORACLE

INTERNATIONAL CORPORATION, a D.C. No.

California corporation, 2:10-cv-00106-

Plaintiffs-Appellees, LRH-VCF

v.

OPINION

RIMINI STREET, INC., a Nevada

corporation; SETH RAVIN, an

individual,

Defendants-Appellants.

Appeals from the United States District Court

for the District of Nevada

Larry R. Hicks, District Judge, Presiding

Argued and Submitted July 13, 2017

San Francisco, California

Filed January 8, 2018

2 ORACLE USA V. RIMINI STREET

Before: Susan P. Graber and Michelle T. Friedland, Circuit

Judges, and Jeremy D. Fogel, * District Judge.

Opinion by Judge Fogel

SUMMARY **

Copyright

The panel affirmed in part, reversed in part, and vacated

in part the district court’s judgment after a jury trial in favor

of Oracle USA, Inc., on its copyright infringement and

California and Nevada state law claims against Rimini

Street, Inc., a provider of third-party support for Oracle’s

enterprise software, and Seth Ravin, Rimini’s CEO.

Oracle licenses its software and also sells its licensees

maintenance contracts. The maintenance work includes

software updates. In order to compete effectively with

Oracle’s direct maintenance services, Rimini needed to

provide software updates to its customers. With Oracle’s

knowledge, Rimini copied Oracle’s copyrighted software in

order to provide the updates. Rimini obtained software from

Oracle’s website with automated downloading tools in direct

contravention of the terms of the website.

The panel affirmed the district court’s partial summary

judgment and partial judgment after trial on Oracle’s claims

*

The Honorable Jeremy D. Fogel, United States District Judge for

the Northern District of California, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

ORACLE USA V. RIMINI STREET 3

that Rimini infringed its copyright by copying under the

license of one customer for work performed for other

existing customers or for unknown or future customers,

rather than restricting such copying to work for that

particular customer. The panel concluded that Rimini’s

activities were not permissible under the terms of the

licenses Oracle granted to its customers. The panel rejected

Rimini’s argument that holding it accountable for its alleged

conduct would condone misuse of Oracle’s copyright.

The panel reversed the district court’s judgment after

trial with respect to Oracle’s claims under the California

Comprehensive Data Access and Fraud Act, the Nevada

Computer Crimes Law, and California’s Unfair Competition

Law. The panel held that taking data from a website, using

a method prohibited by the applicable terms of use, when the

taking itself generally is permitted, does not violate the

CDAFA or the NCCL. Accordingly, Rimini did not violate

these computer abuse statutes by using automated tools to

take data in direct contravention of Oracle’s terms of use.

Because the district court granted judgment in favor of

Oracle on Oracle’s Unfair Competition Law claim based on

its finding that Rimini violated the CDAFA, the panel

reversed the district court’s determination that Rimini

violated California’s Unfair Competition Law.

The panel reduced the district court’s award of damages

by the amount based on Rimini’s alleged violation of the

CDAFA and NCCL. The panel affirmed the district court’s

award of prejudgment interest on the copyright claims.

The panel reversed the district court’s permanent

injunction based on alleged violations of the CDAFA. The

panel vacated the district court’s permanent injunction based

on copyright infringement because the district court assessed

the relevant factors by reference to both the copyright and

4 ORACLE USA V. RIMINI STREET

the CDAFA claims, without considering separately the

propriety of issuing an injunction as to the copyright claims

alone.

The panel reversed the district court’s judgment with

respect to Ravin’s liability for attorneys’ fees. As to Rimini,

the panel vacated the fee award and remanded for

reconsideration in light of Oracle’s more limited success at

litigation in view of the panel’s conclusion that there was no

violation of the state computer laws.

The panel reduced the district court’s award of taxable

costs and affirmed its award of non-taxable costs.

COUNSEL

Mark A. Perry (argued) and Jeremy M. Christiansen, Gibson

Dunn & Crutcher LLP, Washington, D.C.; Blaine H.

Evanson, Joseph A. Gorman, and Joseph C. Hansen, Gibson

Dunn & Crutcher LLP, Los Angeles, California; for

Defendants-Appellants.

Paul D. Clement (argued), Erin E. Murphy, and Matthew D.

Rowen, Kirkland & Ellis LLP, Washington, D.C.; William

A. Isaacson and Karen L. Dunn, Boies Schiller & Flexner

LLP, Washington, D.C.; Thomas S. Hixson and John A.

Polito, Morgan Lewis & Bockius LLP, San Francisco,

California; David B. Salmons, Morgan Lewis & Bockius

LLP, Washington, D.C.; for Plaintiffs-Appellees.

Jamie Williams and Aileen Nguyen, San Francisco,

California, as and for Amicus Curiae Electronic Frontier

Foundation.

ORACLE USA V. RIMINI STREET 5

OPINION

FOGEL, District Judge:

Oracle USA, Inc. and related entities (collectively,

“Oracle”) licenses its proprietary enterprise software for a

substantial one-time payment. Oracle also sells its licensees

maintenance contracts for the software that are renewed on

an annual basis. The maintenance work includes software

updates, which Oracle makes available to purchasers of the

contracts through its support website.

At all relevant times, Rimini Street, Inc. (“Rimini’)

provided third-party support for Oracle’s enterprise

software, in lawful competition with Oracle’s direct

maintenance services. But in order to compete effectively,

Rimini also needed to provide software updates to its

customers. 1 Creating these software updates inherently

required copying Oracle’s copyrighted software, which,

unless allowed by license, would be copyright infringement.

With Oracle’s knowledge, Rimini in fact did copy the

software to provide the updates. At least from late 2006 to

early 2007, Rimini obtained software from Oracle’s website

with automated downloading tools in direct contravention of

the terms of use of the website.

Oracle filed suit against Rimini and Rimini’s CEO, Seth

Ravin (“Ravin”), in the District of Nevada in 2010. After

lengthy and sometimes contentious discovery and motion

1

All of Rimini’s customers pertinent to this dispute were licensees

of Oracle’s software, but not all licensees of Oracle’s software are

Rimini’s customers. To avoid confusion, we will use the word

“customers” to refer to the subset of Oracle’s licensees who did contract

or might contract with Rimini for the maintenance of Oracle’s software.

6 ORACLE USA V. RIMINI STREET

practice, the district court granted partial summary judgment

to Oracle on certain aspects of Oracle’s copyright

infringement claim, and a jury found in favor of Oracle on

others after trial. The jury also found against both Rimini and

Ravin with respect to Oracle’s claims under the California

Comprehensive Data Access and Fraud Act (“CDAFA”) and

the Nevada Computer Crimes Law (“NCCL”) (collectively,

the “state computer laws”). Based on the jury’s

determination with respect to the CDAFA claim, the district

court entered judgment against Rimini and Ravin under

California’s Unfair Competition Law (“UCL”). The jury

awarded damages in the sum of $50,027,000 which, when

prejudgment interest, attorneys’ fees and costs were added,

resulted in a total monetary judgment of $124,291,396.82.

The district court also issued an extensive permanent

injunction. Rimini subsequently filed this timely appeal. The

Electronic Frontier Foundation (“EFF”) has filed an amicus

brief with respect to the state computer law claims.

The first principal dispute in this case is whether Rimini

copied Oracle’s software in a manner that infringed Oracle’s

copyright. It is undisputed that Rimini used Oracle’s

software to develop and test updates for its customers and

that the software licenses, with certain restrictions, permitted

Oracle’s licensees to hire Rimini to perform such work for

them. There are numerous subtleties involved but, at the

highest level of generality, Rimini’s alleged copyright

infringement included copying under the license of one

customer for work for other existing customers or for

unknown or future customers, rather than restricting such

copying to work for that particular customer. The second

principal dispute is whether Rimini and Ravin violated

applicable state laws intended to prevent computer-based

fraud by flouting Oracle’s restrictions against the use of

automated tools to download software from its website. We

ORACLE USA V. RIMINI STREET 7

also consider the appropriateness of the remedies awarded

by the district court.

As explained below, we affirm the judgment with respect

to the copyright infringement claims. We also affirm the

remedies with respect to those claims, except that we vacate

the injunction and the award of attorneys’ fees and remand

for reconsideration in light of this opinion. We modify the

district court’s award of taxable costs as the parties have

agreed. We reverse the judgment with respect to Oracle’s

claims under the state computer laws and the UCL.

Copyright Infringement Claims

The Software in Suit 2

Four software products are at issue: J.D. Edwards,

Siebel, PeopleSoft, and Database. The products are related,

but they do not perform identical functions. As the district

court explained:

Oracle’s Enterprise Software platforms have

both an installed database component and an

installed application component. The

database component provides a foundation

for the application software which then uses,

stores, and retrieves data in the database for

use across an entire organization. Oracle’s

Enterprise Software application programs—

including its PeopleSoft, J.D. Edwards, and

Siebel-branded products—are run on

2

The district court specifically distinguished between Oracle’s

copyright in software and Oracle’s copyright in the software

documentation. Rimini does not appeal the jury’s determination that

Rimini infringed the documentation copyright.

8 ORACLE USA V. RIMINI STREET

Oracle’s Relational Database Management

Software (“Oracle Database”) as the database

component for the programs.

Oracle USA, Inc. v. Rimini St., Inc., 6 F. Supp. 3d 1108, 1113

(D. Nev. 2014) (“Oracle II”). J.D. Edwards, Siebel, and

PeopleSoft were acquired by Oracle from other companies,

while Oracle developed Database internally.

Because of this history and because of the technical

differences among them, the licensing terms of the four

products are not identical. We first address J.D. Edwards and

Siebel. We next turn to PeopleSoft and, finally, to Database.

J.D. Edwards and Siebel

Oracle’s claims as to the J.D. Edwards and Siebel

software were submitted to the jury. Rimini appeals the

district court’s denial of its motion for judgment as a matter

of law following the jury’s verdict. “We review de novo the

district court’s denial of a motion for judgment as a matter

of law. A renewed motion for judgment as a matter of law is

properly granted only ‘if the evidence, construed in the light

most favorable to the nonmoving party, permits only one

reasonable conclusion, and that conclusion is contrary to the

jury’s verdict.” Castro v. Cty. of Los Angeles, 833 F.3d

1060, 1066 (9th Cir. 2016) (en banc) (citations omitted)

(quoting Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002))

(internal quotation mark omitted), cert. denied, 137 S. Ct.

831 (2017). “A jury’s verdict must be upheld if it is

supported by substantial evidence, which is evidence

adequate to support the jury’s conclusion, even if it is also

possible to draw a contrary conclusion.” Id. (quoting Pavao,

307 F.3d at 918) (internal quotation marks omitted).

ORACLE USA V. RIMINI STREET 9

Rimini challenges the jury’s finding of copyright

infringement with respect to these products on two grounds.

First, it argues that its activities were permissible under the

terms of the licenses Oracle granted to its customers.

Second, it contends that holding it accountable for its alleged

conduct would condone copyright misuse. Neither of these

arguments is persuasive.

1. Express License Defense

As will be explained in further detail, there is no dispute

that, absent an applicable license, Rimini’s accused acts

violated the exclusive right Oracle enjoys as owner of the

software copyright to copy or to modify the software. Rimini

asserts as an affirmative defense that its accused acts were

expressly licensed.

The Supreme Court has explained the express license

defense as follows:

“Anyone who violates any of the exclusive

rights of the copyright owner,” that is, anyone

who trespasses into his exclusive domain by

using or authorizing the use of the

copyrighted work in one of the five ways set

forth in the statute, “is an infringer of the

copyright.” Conversely, anyone who is

authorized by the copyright owner to use the

copyrighted work in a way specified in the

statute . . . is not an infringer of the copyright

with respect to such use.”

Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S.

417, 433 (1984) (quoting 17 U.S.C. § 501(a)). Thus, “[t]he

existence of a license creates an affirmative defense to a

claim of copyright infringement.” Worldwide Church of God

10 ORACLE USA V. RIMINI STREET

v. Phila. Church of God, Inc., 227 F.3d 1110, 1114 (9th Cir.

2000). However, “[w]hen a licensee exceeds the scope of the

license granted by the copyright holder, the licensee is liable

for infringement.” LGS Architects, Inc. v. Concordia Homes

of Nev., 434 F.3d 1150, 1156 (9th Cir. 2006).

As Rimini itself did not have a license to copy or to

modify from Oracle, the success of Rimini’s affirmative

defense turns on whether Rimini’s accused acts came within

the scope of licenses held by its customers.

a) Software Licenses

The pertinent provisions of the J.D. Edwards and Siebel

licenses are excerpted below:

Software License Language

J.D. “Customer shall not, or cause anyone else

Edwards to . . . (iii) copy the Documentation or

Software except to the extent necessary for

Customer’s archival needs and to support

the Users.”

Siebel “Customer” may “reproduce, exactly as

provided by [Oracle], a reasonable number

of copies of the Programs and the Ancillary

Programs solely for archive or emergency

back-up purposes or disaster recovery and

related testing.”

Like the language of the licenses themselves, the district

court’s constructions of the two licenses when instructing the

jury were similar.

The district court told the jury that it was permissible for

Rimini, as a third-party, to make copies of the Oracle

software to support its customers by archiving, backup, and

ORACLE USA V. RIMINI STREET 11

related testing. At the same time, the district court instructed

that the licenses “do[] not mean that a third party like Rimini

Street is authorized to make copies of the . . . software

application . . . to use the customer’s software . . . to support

other customers.”

b) Accused Acts

(1) Background

Work produced by humans is rarely if ever perfect, and

computer software is no exception. Even casual users of

computers are familiar with regular software patches and

updates intended to correct glitches and to modify software

in light of changing circumstances.

However, unlike the off-the-shelf consumer software

used by individuals in everyday life, enterprise software

employed by large organizations is customized around the

organizations’ specific needs. While producers of consumer

software generally design updates around standard use cases

and make them available for end users to download and

install directly, updates to enterprise software must be tested

and modified to fit with bespoke customizations before

being put to actual use.

This testing process requires the creation of

“development environments.” A “development

environment,” sometimes called a “sandbox,” is distinct

from a “production environment,” which is the “live”

version of the software that members of the enterprise

ultimately deploy. As the district court explained:

In order to develop and test software updates

for Enterprise Software, support service

providers ... create development

12 ORACLE USA V. RIMINI STREET

environments of the software. A

development environment is a software

environment that contains a copy of the

software program which is then modified to

develop and test software updates. Given the

critical nature of Enterprise Software

programs, updates to the software must be

fully tested and verified in a development

environment before they are provided to a

customer.

Oracle USA, Inc. v. Rimini St., Inc., 6 F. Supp. 3d 1086, 1092

n.4 (D. Nev. 2014) (“Oracle I”).

In other words, the very work of maintaining customized

software requires copying the software, which without a

license to do so is a violation of the exclusive right of the

copyright owner. Here, it is undisputed that the licenses

generally permit Oracle’s licensees to maintain the software

and make development environments for themselves.

However, some licensees of the software, lacking either the

capability or the interest, opt to outsource the work of

maintenance to others, such as Rimini or even Oracle itself.

(2) “Direct Use” and “Cross Use”

Oracle alleges that Rimini engaged in two distinct types

of copyright infringement with respect to J.D. Edwards and

Siebel. The first has to do with the way it created

development environments, under color of a license held by

these particular, identifiable customers of Rimini, for that

specific customer. We refer to this as “direct use.”

ORACLE USA V. RIMINI STREET 13

The second is “cross use.” 3 “Cross use,” generally

speaking, is the creation of development environments,

under color of a license of one customer, to support other

customers. There are numerous forms of “cross use.” In its

narrowest form, “cross use” is the making of development

environments, under color of a license held by one

identifiable customer of Rimini, for another identifiable

customer of Rimini that also holds a license. It also may

include the creation of development environments under a

given license for other customers of Rimini that may

themselves hold licenses or even for licensees who have yet

to become customers of Rimini. Rimini claims that “cross

use” is not infringement, arguing that it may create

environments without restriction because any organization

that might hire Rimini to service its software would itself

have a license to create development environments. Rimini’s

counsel explained at oral argument that “cross use” enabled

it to reduce expense by reusing work it had done for one

customer in providing service to others.

c) Analysis

Rimini argues on appeal that the jury instructions were

erroneous because they suggested that certain direct uses and

cross uses were prohibited while Rimini believes they were

permitted.

With respect to “direct use,” we may dispose quickly of

Rimini’s claim that the district court construed “direct use”

out of the licenses. Rimini successfully persuaded the district

3

Rimini offered this description of its “cross use” in its closing

statement to the jury: “If we have multiple clients with the exact same

release, the same rights, we would come up with one fix and then apply

it to other customers that had the exact same rights. That’s the cross-use,

the reusing of updates that you’ve heard about in this case.”

14 ORACLE USA V. RIMINI STREET

court to include the language, “to support the customer’s

use,” in its jury instruction about the J.D. Edwards license.

The instruction concerning Siebel told the jury specifically

that Rimini could hold copies of the Siebel software

application “solely for customer’s archive or emergency

back-up purposes or disaster recovery and related testing.”

Rimini did not object to that instruction at trial, and, contrary

to Rimini’s arguments on appeal, those instructions treated

these forms of direct use as permitted.

Rimini also argues, however, that the instructions should

have approved expressly of other forms of direct use. The

district court had no reason or need to instruct the jury that

the licenses permitted other types of direct use, because, as

the district court’s order shows, Rimini had represented that

the only forms of direct use it engaged in were those allowed

by the instruction:

Rimini has proffered evidence that the

development environments associated with

[specific Siebel licensee] are used

exclusively for archival and back-up

purposes, and related testing, as directly

contemplated by [the license].

Oracle I, 6 F. Supp. 3d at 1105 n.20; see also id. at 1103

(similar findings concerning J.D. Edwards). Had Rimini

wanted a broader construction, Rimini should have said so

in district court. Having failed to do that, Rimini cannot

complain that the jury found that Rimini’s direct use with

respect to J.D. Edwards and Siebel exceeded the scope of the

licenses.

With respect to “cross use,” Rimini’s assertion—made

for the first time in its reply brief to us—that “cross use” is

a contractual rather than a copyright issue is not properly

ORACLE USA V. RIMINI STREET 15

before us. The principal case on which Rimini relies, MDY

Industries, LLC v. Blizzard Entertainment, Inc., 629 F.3d

928 (9th Cir. 2011), was not cited in Rimini’s opening brief,

and “on appeal, arguments not raised by a party in its

opening brief are deemed waived,” Smith v. Marsh, 194 F.3d

1045, 1052 (9th Cir. 1999). 4

As to the substance of its position, Rimini argues that,

contrary to the jury instructions, the licenses in fact permit

“cross use.” It observes that: 1) each of Rimini’s customers

had its own license; 2) each license permits copies to be

made for archival and support purposes; 3) the licenses

authorize the customers to outsource the archival and

support work to third parties; and 4) such archival and

support work includes the creation of development

environments. Rimini dismisses evidence showing that it

created development environments for future customers

using the license of an existing customer on the basis that

future customers presumably would have licenses that would

permit them to hire Rimini to create development

environments.

Oracle properly responds that each of the licenses at

issue here “pointedly limits copying and use to supporting

the ‘Licensee.’” The licenses do not authorize Rimini to

“develop products Rimini could sell for Rimini’s financial

gain.” Any work that Rimini performs under color of a

license held by a customer for other existing customers

cannot be considered work in support of that particular

4

Even if we were to consider the applicability of MDY Industries,

that case teaches specifically the distinction between “conditions,” “the

breach of which constitute copyright infringement,” and “covenants,”

“the breach of which is actionable only under contract law.” 629 F.3d at

939. Rimini has offered no analysis as to which terms of the licenses at

issue are “conditions” and which are “covenants.”

16 ORACLE USA V. RIMINI STREET

customer. The same logic applies to work Rimini performs

for unknown, future customers. The licensees may hire a

third party such as Rimini to maintain their software for

them, but nothing in the licenses permits them to grant a non-

party to the license a general right to copy proprietary

software.

2. Copyright Misuse

We turn next to the question of copyright misuse, which

Rimini asserts as a defense. The copyright misuse doctrine

prevents holders of copyrights “from leveraging their limited

monopoly to allow them control of areas outside the

monopoly.” Apple Inc. v. Psystar Corp., 658 F.3d 1150,

1157 (9th Cir. 2011). (quoting A&M Records v. Napster,

Inc., 239 F.3d 1004, 1026 (9th Cir. 2001)) (internal quotation

marks omitted). To that end, while it “does prevent copyright

holders from using the conditions to stifle competition,”

“[t]he copyright misuse doctrine does not prohibit using

conditions to control use of copyrighted material.” Id. at

1159. Accordingly, the doctrine is to be “applied . . .

sparingly”; specifically, it operates when copyright holders

attempt to impose license agreements that would “prevent[]

. . . licensee[s] from using any other competing product.” Id.

at 1157 (emphasis added).

Rimini claims that holding it liable for copyright

infringement would condone misuse of Oracle’s copyright.

In Rimini’s view, the district court’s pretrial construction of

the licensing terms, as embodied in the jury instructions,

“would foreclose competition in the aftermarket for third-

party maintenance” because it would limit copies made by

third parties to those made only for archival and emergency

backup purposes and because the software could not be

serviced simply by making exact copies. Oracle counters

that the licenses “plainly do not preclude third parties from

ORACLE USA V. RIMINI STREET 17

developing competing software or providing competing

support services,” but instead “require third parties to do so

in ways that do not disregard Oracle’s exclusive rights under

copyright law.”

We agree with Oracle. The district court did not construe

the licenses to permit only archival and emergency backup

purposes. For example, the jury instructions as to J.D.

Edwards stated specifically:

If you find that the copies of the J.D. Edwards

software application . . . housed on Rimini

Street’s servers were used solely for the

customer’s archival needs and to support the

customer’s use, then that use is authorized by

the J.D. Edwards software license agreement

....

The district court gave similar instructions as to Siebel.

(“[Y]ou are informed that the court has ruled as a matter of

law that the Siebel software license agreements authorized

. . . Rimini Street to make a reasonable number of copies . . .

solely for the customer’s archive or emergency back-up

purposes or disaster recovery and related testing.”

(emphasis added)). These constructions would not preclude

Rimini from creating development environments for a

licensee for various purposes after that licensee has become

a customer of Rimini.

The only remaining question is whether it would be

copyright misuse to forbid Rimini from creating

development environments for licensees before they have

become customers or, in other words, whether it would

contravene the policy of the Copyright Act to allow Oracle,

as a copyright holder, to have a head start in making copies.

The Supreme Court has held that “the right of first

18 ORACLE USA V. RIMINI STREET

publication” is “an important marketable subsidiary right.”

Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S.

539, 549 (1985). Just as a copyright holder has the “right of

first publication,” it also must enjoy the right of “first copy.”

Giving a head start to Oracle in creating development

environments is entirely consistent with the Supreme

Court’s teaching in Harper.

PeopleSoft

The district court granted summary judgment on

Oracle’s copyright claim with respect to PeopleSoft. “This

Court reviews a district court’s grant of summary judgment

de novo. The Court must ‘determine whether, viewing the

evidence in the light most favorable to the nonmoving party,

there are any genuine issues of material fact and whether the

district court correctly applied the relevant substantive

law.’” Mitchell v. Washington, 818 F.3d 436, 441–42 (9th

Cir. 2016) (quoting Lopez v. Smith, 203 F.3d 1122, 1131 (9th

Cir. 2000) (en banc)).

Rimini again asserts an express license defense and

contends that it would be copyright misuse to hold it liable

for infringement. Again, its arguments are without merit.

1. Express License Defense

The PeopleSoft license is similar to its J.D. Edwards and

Siebel counterparts, but it contains an additional limitation

about “[the licensee’s] facilities”:

ORACLE USA V. RIMINI STREET 19

Software License Language

PeopleSoft 5 “Licensee may . . . make a reasonable

number of copies of the Software, solely

for: (i) use in accordance with the terms

set forth herein . . . ; (ii) archive or

emergency back-up purposes; and/or

(iii) disaster recovery testing purposes[.]”

“PeopleSoft grants Licensee a . . . license

to use the licensed Software, solely for

Licensee’s internal data processing

operations at its facilities[.]”

Based on this limitation, the district court construed the

PeopleSoft license more restrictively than the J.D. Edwards

and Siebel licenses. Specifically, it stated that “[the

PeopleSoft license] expressly limits copying the licensed

software to only the [licensee’s] facilities.” Oracle I, 6 F.

Supp. at 1097 (emphasis omitted).

Because of the difference in the construction of the

pertinent licenses, the nature of Oracle’s claim concerning

PeopleSoft is somewhat different in character from those

concerning J.D. Edwards and Siebel. Specifically, the

accused act concerning PeopleSoft is the creation of

development environments, whether for “direct use” or

“cross use,” on Rimini’s own computers, as opposed to the

licensees’ computers. Rimini describes this practice as “local

5

Two different PeopleSoft licenses are at issue here, one belonging

to the City of Flint and the other to the Pittsburgh Public Schools. The

district court concluded that the two licenses have “similar” language.

Oracle I, 6 F. Supp. 3d at 1100. On appeal, the parties make no

distinction between the two licenses; the language discussed here is

drawn from the license held by the City of Flint.

20 ORACLE USA V. RIMINI STREET

hosting,” a term that we adopt in this opinion. Rimini asserts

that it does this to avoid transmission delays.

In the words of the district court, “it is undisputed that

Rimini made copies of the licensed software at its own

facilities and outside the control of the [customers].” Id. at

1101 (emphasis added). The district court concluded that the

PeopleSoft licenses of Rimini’s customers “do[] not

authorize Rimini’s off-site copies of the licensed software,”

and therefore granted summary judgment to Oracle on the

copyright infringement claims as to PeopleSoft. Id. at 1097.

On appeal, Rimini contends that “[a licensee’s]

facilities” can span Rimini’s own servers. In its words:

Sophisticated companies like Oracle’s

customers (and Rimini’s clients) do not keep

all their servers on the actual premises of their

principal place of business . . . . They may

own some, lease others, and contract with

third parties for still more capacity. All are

encompassed within the plain meaning of

“facilities.”

We agree with Oracle that “facilities under the control of

a third party” could not qualify as “the licensee’s facilities.”

It was not only sensible but also necessary for the district

court to read a requirement of “control” into the definition of

“[a licensee’s] facilities.” The record supports the district

court’s conclusion that the Rimini servers where the copying

took place were “outside the control of the [customers].” Id.

ORACLE USA V. RIMINI STREET 21

at 1101. Indeed, Rimini made no showing that its customers

had even constructive control of the servers. 6

2. Copyright Misuse

As just explained, the district court concluded that

Rimini infringed the PeopleSoft copyright by “local

hosting,” that is, by maintaining copies of PeopleSoft on its

own computers as opposed to its customers’ computers.

Oracle I, 6 F. Supp. 3d at 1097. Rimini offers no argument

as to why a restriction on the location of copies would stifle

competition and run afoul of the copyright misuse doctrine.

Id. Rimini’s inability to “local host” may result in

inconvenience and expense on its part, but that restriction on

its conduct does not amount to copyright misuse. Indeed, at

oral argument, Rimini admitted that the restriction against

“local hosting” was one it could overcome.

Database

The district court also granted summary judgment for

Oracle on the Database copyright infringement claim. It was

undisputed that Rimini copied Oracle’s copyright protected

software when it built development, or non-production,

environments for a number of Rimini customers using

Oracle Database.

Rimini’s arguments on appeal with respect to Database

are the same as those with respect to the other software at

issue, except that here Rimini contends that its acts in fact

were authorized by the Oracle License and Service

Agreements (“OLSAs”). Oracle properly points out that

6

Because we address the question of infringement as to PeopleSoft

on the narrow ground of “local hosting,” we do not decide whether

“direct use” or “cross use” was permitted by the PeopleSoft license.

22 ORACLE USA V. RIMINI STREET

Rimini has waived this point because it has failed to

challenge the district court’s legal conclusion that Rimini

was not entitled to assert the OLSAs as a defense.

Accordingly, we affirm the district court’s determination of

copyright infringement as to Database.

State Computer Law Claims

The CDAFA and the NCCL

The CDAFA is California’s computer abuse law. It

states, in relevant part, that:

any person who commits any of the following

acts is guilty of a public offense:

....

(2) Knowingly accesses and without

permission takes, copies, or makes use of any

data from a computer, computer system, or

computer network, or takes or copies any

supporting documentation, whether existing

or residing internal or external to a computer,

computer system, or computer network.

(3) Knowingly and without permission uses

or causes to be used computer services.

CAL. PENAL CODE § 502(c). It provides a cause of action to

“the owner or lessee of the computer, computer system,

computer network, computer program, or data who suffers

damage or loss by reason of a violation.” Id. § 502(e)(1).

The NCCL is Nevada’s counterpart to the CDAFA. In

relevant part, it provides that “a person who knowingly,

ORACLE USA V. RIMINI STREET 23

willfully and without authorization: (a) Modifies;

(b) Damages; (c) Destroys; (d) Discloses; (e) Uses;

(f) Transfers; (g) Conceals; (h) Takes; (i) Retains possession

of; (j) Copies; (k) Obtains or attempts to obtain access to,

permits access to or causes to be accessed; or (l) Enters data,

a program or any supporting documents which exist inside

or outside a computer, system or network” or “who

knowingly, willfully and without authorization:

(a) Destroys; (b) Damages; (c) Takes; (d) Alters;

(e) Transfers; (f) Discloses; (g) Conceals; (h) Copies;

(i) Uses; (j) Retains possession of; or (k) Obtains or attempts

to obtain access to, permits access to or causes to be

accessed, a computer, system or network” is guilty of a

misdemeanor. NEV. REV. STAT. § 205.4761(1), (3). The

NCCL also provides a civil cause of action to “[a]ny victim

of [such a misdemeanor].” Id. § 205.511(1).

Accused Acts

The ultimate question as to whether Rimini and Ravin

(referred to collectively in this section as “Rimini”) violated

the state computer laws by downloading content from

Oracle’s website was submitted to the jury, which found in

favor of Oracle. In denying Rimini’s renewed motion for

judgment as a matter of law, the district court observed that

Oracle had for some time “encouraged its customers to use

automated downloading tools as a means to obtain” large

numbers of customer support files in a timely manner.

Oracle USA, Inc. v. Rimini St., Inc., 191 F. Supp. 3d 1134,

1139 (D. Nev. 2016) (“Oracle III”). Rimini had been doing

just that when, “in response to an increased volume of mass

downloads through the use of automated tools, and other

server and database pressures, Oracle America changed its

website’s Terms of Use to specifically prohibit the use of

‘any software routines commonly known as robots, spiders,

24 ORACLE USA V. RIMINI STREET

scrapers, or any other automated means to access [the site]

or any other Oracle accounts, systems or networks,” a

change which “prohibited the use of previously allowed

automated downloading tools.” Id. at 1139–40 (alteration in

original). The evidence showed that, in response, Rimini

stopped using automatic downloading tools for about a year

but then “began reusing automated tools on the website in

violation of the Terms of Use (terms which it had to

specifically agree to when logging on to the website) in order

to download full libraries of support documents and files for

entire software products lines—each involving hundreds of

thousands of different files.” Id. at 1140.

Positions of the Parties

Rimini and EFF contend that the statutory language

“without permission” should not be read in a way that

criminalizes violation of a website’s terms of use. As EFF

puts it, “[n]either statute . . . applies to bare violations of a

website’s terms of use—such as when a computer user has

permission and authorization to access and use the computer

or data at issue, but simply accesses or uses the information

in a manner the website owner does not like.”

Oracle, on the other hand, urges us to read the state

statutes as not requiring unauthorized access for a violation,

which appears to be how the district court construed them.

See id. at 1143–44 (holding that Rimini’s “claim that they

had permission from their clients to access Oracle[’s] . . .

website is irrelevant” under the state statutes).

Analysis

We review the denial of Rimini’s motion for judgment

as a matter of law de novo. Castro v. Cty. of Los Angeles,

833 F.3d 1060, 1066 (9th Cir. 2016) (en banc).

ORACLE USA V. RIMINI STREET 25

The district court treated the two statutes as essentially

identical, and for purposes of this appeal, we will take the

CDAFA as representative. As the district court observed,

“[w]hile the case law on the NCCL is limited, the statute

covers the same conduct as the CDAFA and the same legal

reasoning should apply.” Oracle III, 191 F. Supp. 3d at 1144.

The parties appear to agree with this approach; indeed, their

arguments about liability do not differentiate between the

two statutory schemes.

Here, there is no question that Rimini “t[ook]” and

“m[ade] use of” “data.” See Oracle III, 191 F. Supp. 3d at

1143 (“Nor do defendants contest that they took and

subsequently used data from the website . . . .”). Nor is there

any dispute that Oracle permitted some degree of access and

taking from its website. Id. at 1139–40. (“[Oracle America]

owns and operates a website that . . . contains millions of

technical support files . . . . [T]his online database was

accessible through a website that required both the

customer’s unique [login] and acceptance of the website’s

specific Terms of Use.” (footnote omitted)). The central

issue here is whether, by using automated tools to take data

in direct contravention of Oracle’s terms of use, Rimini

violated the statutes.

We hold that taking data using a method prohibited by

the applicable terms of use, when the taking itself generally

is permitted, does not violate the CDAFA. Because the same

reasoning applies to the NCCL claim, we reverse the

judgment as to both claims.

Oracle obviously disapproved of the method—

automated downloading—by which Rimini took Oracle’s

proprietary information. But the key to the state statutes is

whether Rimini was authorized in the first instance to take

and use the information that it downloaded. See United

26 ORACLE USA V. RIMINI STREET

States v. Christensen, 828 F.3d 763, 789 (9th Cir. 2015)

(emphasis added) (“A plain reading of the [CDAFA]

demonstrates that its focus is on unauthorized taking or use

of information.”).

Because it indisputably had such authorization, at least

at the time it took the data in the first instance, Rimini did

not violate the state statutes. This result is consistent with

our decision in Facebook, Inc. v. Power Ventures, Inc.,

844 F.3d 1058, 1069 (9th Cir. 2016), cert. denied, 138 S. Ct.

313 (2017) (affirming the district court’s holding that the

defendant violated the CDAFA on the ground that the

defendant “without permission took, copied, and made use

of [the downloaded] data” (emphasis added)).

Violation of California’s Unfair Competition Law

A violation of California’s UCL occurs where there is a

predicate offense, one of which is a violation of the CDAFA.

CAL. BUS. & PROF. CODE § 17200. The district court granted

judgment in favor of Oracle on its UCL claim based on its

finding that Rimini and Ravin had violated the CDAFA.

Because we reverse as to the CDAFA claim, we also reverse

the district court’s determination that Rimini and Ravin

violated the UCL.

Damages 7

The jury awarded a total of $14,427,000 to two Oracle

subsidiaries based on Rimini’s alleged violation of the

CDAFA and NCCL. Because we have concluded that

7

Rimini does not challenge the amount of the jury’s award of

$35,600,000 in damages for copyright infringement.

ORACLE USA V. RIMINI STREET 27

Rimini did not violate those laws, we reduce damages by this

amount.

Prejudgment Interest

We review a district court’s decision to award

prejudgment interest for abuse of discretion. Barnard v.

Theobald, 721 F.3d 1069, 1075 (9th Cir. 2013). We also

review the rate used by the district court to calculate the

prejudgment interest for abuse of discretion. Blankenship v.

Liberty Life Assurance Co. of Bos., 486 F.3d 620, 628 (9th

Cir. 2007).

The district court awarded $22,491,636.16 in

prejudgment interest on the copyright claims and

$5,279,060.12 in prejudgment interest on the NCCL claims.

Because we have concluded that Rimini did not violate the

NCCL, we reverse as to the latter amount. For the reasons

discussed below, we affirm as to the former.

We have held that “[g]enerally, ‘the interest rate

prescribed for post-judgment interest under 28 U.S.C.

§ 1961 is appropriate for fixing the rate of pre-judgment

interest unless the trial judge finds, on substantial evidence,

that the equities of that particular case require a different

rate.’” Blankenship, 486 F.3d at 628 (quoting Grosz-

Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1164

(9th Cir. 2001)).

The district court calculated its award of $22,491,636.16

based upon the Treasury rate on the date infringement began,

that is, 5.07% in October 2006, rather than on the “starting

point” set forth in 28 U.S.C. § 1961, that is, 0.61% in

October 2016. The district court explained its deviation from

the normal rate, which resulted in a difference of

approximately $20,000,000, as follows:

28 ORACLE USA V. RIMINI STREET

[T]he court finds that there is good cause to

set the prejudgment interest rate at the

Treasury rate on the date infringement began,

rather than at the time of judgment. The court

makes this finding because of the nature of

the jury’s award of hypothetical license

damages. As the jury awarded damages to

Oracle in an amount it would have received

from Rimini for licensing Oracle’s software

at the time it began infringing Oracle’s

copyrights in late 2006, the court finds that

this is the relevant time period for

prejudgment interest. After this date, when

Rimini began infringing Oracle’s copyrights,

Oracle lost out on the licensing fees it would

have received, absent infringement. It is not

equitable in the court’s view to allow

defendants to reap a windfall by the lower

interest rates that are now available simply

because they engaged in discovery delays

and other litigation tactics (addressed more

thoroughly in Oracle’s motion for attorneys’

fees) that kept this action in litigation for

several years. Therefore, the court shall . . .

set the appropriate rate for prejudgment

interest under the Copyright Act as the

weekly average one-year constant maturity

Treasury yield at the start of the

infringement.

Despite these specific findings, Rimini asserts that the

district court failed to make the “exceptional case”

determination that would permit it to depart from the

presumptive rate set forth in 28 U.S.C. § 1961. It contends

that the district court may not set the interest rate based on a

ORACLE USA V. RIMINI STREET 29

defendant’s bad behavior, citing our holding in Dishman v.

UNUM Life Insurance Co. of America for the proposition

that, “[a]lthough a defendant’s bad faith conduct may

influence whether a court awards prejudgment interest, it

should not influence the rate of the interest.” 269 F.3d 974,

988 (9th Cir. 2001). Rimini also asserts that the 0.61%

adequately represents market rates and fully compensates

Oracle’s loss.

It is true that “prejudgment interest is an element of

compensation, not a penalty.” Barnard, 721 F.3d at 1078.

Rimini is correct that it would have been improper for the

district court to set a higher rate based on Rimini’s litigation

conduct alone. But considering the district court’s analysis

in its totality, it is apparent that the rate was based primarily

on the jury’s award of copyright damages based on a

hypothetical license, making it appropriate to approximate

the licensing fees that Oracle “lost out on” and “would have

received, absent infringement” by using the Treasury rate on

the date of infringement.

The district court made an extensive and detailed record

throughout many years of complex and contentious

litigation. Its understandable frustration with Rimini’s

litigation conduct is apparent in some of the orders now

before us. However, there is ample evidence in the record to

support the court’s award of prejudgment interest at the

Treasury rate on the date infringement began. We find no

abuse of discretion.

Injunctive Relief

As to [a] permanent injunction, we review the

legal conclusions de novo, the factual

findings for clear error, and the decision to

grant a permanent injunction, as well as its

30 ORACLE USA V. RIMINI STREET

scope, for an abuse of discretion. To review

for abuse of discretion, “we first look to

whether the trial court identified and applied

the correct legal rule . . . [then] to whether the

trial court’s resolution of the motion resulted

from a factual finding that was illogical,

implausible, or without support in inferences

that may be drawn from the facts in the

record.”

Columbia Pictures Indus., Inc. v. Fung, 710 F.3d 1020, 1030

(9th Cir. 2013) (quoting United States v. Hinkson, 585 F.3d

1247, 1263 (9th Cir. 2009) (en banc)).

The district court entered permanent injunctions against

Rimini based on copyright infringement and against Rimini

and Ravin based on alleged violations of the CDAFA. 8 We

stayed both injunctions pending resolution of this appeal.

In view of our conclusion that there was no violation of

the state computer laws, we reverse as to the CDAFA

injunction. As explained below, we vacate the copyright

injunction and remand for reconsideration in light of our

opinion.

The Supreme Court established a four-factor test that

must be applied before a district court may grant a permanent

injunction. eBay, Inc. v. MercExchange, L.L.C., 547 U.S.

388, 391 (2006). Here, the district court assessed the four

factors by reference to both the copyright and the CDAFA

claims, without considering separately the propriety of

8

The injunction entered by the district court is clearly divided into

separate portions. We therefore treat the injunction as if there were two

separate injunctions.

ORACLE USA V. RIMINI STREET 31

issuing an injunction as to the copyright claims alone. For

example, the court concluded that Rimini’s “violations of

state computer access statutes” contributed to an “irreparable

injury” to Oracle’s business reputation and goodwill.

Based on the record before us, we do not know how the

district court would weigh the eBay factors with respect to

the copyright claims alone. We express no view on the

propriety or scope of any injunctive relief, which are matters

committed to the district court’s discretion in the first

instance.

Fees

“We review the award of fees and costs for abuse of

discretion, but will overturn it if it is based on an erroneous

determination of law.” Durham v. Lockheed Martin Corp.,

445 F.3d 1247, 1250 (9th Cir. 2006).

The district court awarded $28,502,246.40 in attorneys’

fees to Oracle. It concluded that this award was appropriate

under the fee-shifting provisions of the Copyright Act and

the state computer laws. Although Ravin was not found

liable for copyright infringement, the district court decided

that Ravin was, along with Rimini, “severally and equally”

liable for the award because he had violated the state

computer statutes.

In view of our conclusion that there was no violation of

the state computer laws, we reverse the judgment with

respect to Ravin’s liability for fees. As to Rimini, we vacate

the fee award and remand for reconsideration in light of

Oracle’s more limited success at litigation.

Costs

32 ORACLE USA V. RIMINI STREET

Taxable Costs

The district court awarded Oracle $4,950,566.70 in

taxable costs. Rimini originally asked us to reduce this award

by approximately $1,700,000, contending that Oracle only

requested roughly $3,200,000 in taxable costs in the district

court. Oracle conceded that approximately $1,500,000 in

non-taxable costs improperly was counted as taxable. About

$200,000 remains in dispute.

The district court’s cost award apparently was based on

the following chart it received from Oracle:

The district court evidently read the wrong column when it

awarded $4,950,566.70 in taxable costs. Given the parties’

agreement that Oracle is entitled to about $3,200,000 in

taxable costs, the remaining dispute involves $192,999.70 in

deposition costs. Because Rimini’s briefs articulate no basis

for our doing so, we do not disturb the district court’s

inclusion of these expenses in the taxable cost award. We

thus reduce the award to $3,435,281.25.

Non-taxable Costs

Title 17 U.S.C. § 505 provides:

In any civil action under [the Copyright Act],

the court in its discretion may allow the

ORACLE USA V. RIMINI STREET 33

recovery of full costs by or against any party

other than the United States or an officer

thereof. Except as otherwise provided by this

title, the court may also award a reasonable

attorney’s fee to the prevailing party as part

of the costs.

By contrast, 28 U.S.C. § 1920 identifies only six categories

of costs that are taxable against the losing party.

In Twentieth Century Fox v. Entertainment Distribution,

we held that, because 17 U.S.C. § 505 permits the award of

full costs, the award of costs under § 505 is not limited to the

categories of costs described in 28 U.S.C. § 1920. 429 F.3d

869, 885 (9th Cir. 2005). Here, relying expressly on

Twentieth Century Fox, the district court awarded Oracle

$12,774,550.26 in non-taxable costs.

Rimini contends that Twentieth Century Fox has been

abrogated by Marx v. General Revenue Corp., 568 U.S. 371

(2013), and that, accordingly, the district court erred. We

disagree.

We are bound by our precedent unless the theory or

reasoning of the decision is “clearly irreconcilable” with a

higher intervening authority, such as a decision by the

Supreme Court. Miller v. Gammie, 335 F.3d 889, 899–900

(9th Cir. 2003) (en banc). Our decision in Twentieth Century

Fox concerned the relationship between 17 U.S.C. § 505 and

28 U.S.C. § 1920. The Supreme Court’s decision in Marx

concerned neither statute. Instead, the Court held that

15 U.S.C. § 1692k(a)(3) is not contrary to the costs

provision in Federal Rule of Civil Procedure 54(d)(1).

Nothing in Marx is clearly irreconcilable with Twentieth

Century Fox.

34 ORACLE USA V. RIMINI STREET

The parties shall bear their own costs on appeal.

AFFIRMED in Part, REVERSED in Part,

VACATED and REMANDED in Part.