United States: How To Understand Oracle's Use Of Its Partitioning Policy For Virtualization

Last Updated: September 14 2017
Article by Christopher Barnett

Oracle's "Technology" software products (such as its WebLogic and Database programs) are very popular products. Unfortunately, as we have explained numerous times here, Oracle's license agreements and compliance practices entail numerous pitfalls for unwary users of those products. Being caught in one of those pitfalls can result in substantial, unforeseen expenses following an audit by Oracle's License Management Services (LMS) division.

Oracle's Partitioning Policy

One of the biggest sources of exposure during Oracle LMS audits arises from a "policy" document published on Oracle's website, titled "Oracle Partitioning Policy | Topic: Server/Hardware Partitioning" (the "Partitioning Policy"), which is available at:

http://www.oracle.com/us/corporate/pricing/partitioning-070609.pdf

The Partitioning Policy purports to elaborate upon Oracle's standard licensing obligations, to require that all physical processor cores on all hosts in certain virtualization environments must be licensed for an Oracle product that is used anywhere within those environments. The document states:

"Unless explicitly stated elsewhere in this document, soft partitioning (including features/ functionality of any technologies listed as examples above) is not permitted as a means to determine or limit the number of software licenses required for any given server or cluster of servers."

(emphasis added)

Notably included among the list of "soft partitioning" technologies is VMware, which currently is likely the most widely used virtualization technology. Oracle's LMS teams would have you believe that the language above requires that a cluster of virtualization hosts within a VMware vCenter must be fully licensed for any Oracle Technology products running anywhere within that cluster (even if, for example, affinity rules have been implemented to limit a particular VM to a single host within the cluster).

Many companies that have been audited by Oracle LMS know that aggressive application of the Partitioning Policy can be truly problematic, often resulting in crippling, multi-million dollar audit settlement demands. But what, if anything, gives Oracle the right to surprise its customers in that way? More importantly, what can audited companies do to challenge the use of the policy?

The Partitioning Policy Is Not Part of the Oracle License Agreement

Let's start with a review of the actual contract terms.

The first point to keep in mind is the fact that companies purchasing Oracle licenses typically do so subject to the terms of Oracle's Master Agreement (which then is incorporated in one or more Ordering Documents), and the current Master Agreement ("OMA") nowhere expressly incorporates the Partitioning Policy. While Oracle's license agreements and Ordering Documents typically do incorporate by reference certain supplemental or ancillary policies (such as Oracle's technical support policies, which are explicitly referenced), they do not reference the Partitioning Policy. Furthermore, there is nothing in the OMA or most Ordering Documents that would allow Oracle to unilaterally amend the parties' agreements merely by publishing a policy on its website.

Schedule P of the OMA governs use of Oracle programs, and it includes the following basic license grant:

"Upon Oracle's acceptance of Your order, You have the non-exclusive, non-assignable, royalty free, perpetual (unless otherwise specified in the order), limited right to use the Programs and receive any Program-related Service Offerings You ordered solely for Your internal business operations and subject to the terms of the Master Agreement, including the definitions and rules set forth in the order and the Program Documentation."

"Program Documentation" is defined as:

...the Program user manual and Program installation manuals. Program Documentation may be delivered with the Programs. You may access the documentation online at http://oracle.com/documentation.

Browsing to that URL currently will result in being redirected to the Oracle Help Center at: http://docs.oracle.com. It is possible that the Partitioning Policy exists somewhere within the forest of manuals and administrative guides available at that site, but it is not easy to find, if it does. A search for "partitioning" in connection with Database products at that page does not appear to yield the Partitioning Policy within the first few pages of the 10,160 search results.

Beyond that basic license grant, Schedule P includes the following definition that is commonly relevant to usage of Oracle's Technology programs:

"Processor: shall be defined as all processors where the Oracle Programs are installed and/or running."

(emphasis added)

"Installed and/or running" is not defined terminology within the OMA. However, it also is not ambiguous language in need of a definition, at least with regard to identifying physical hardware systems where software is deployed. IT professionals generally know what it means to install or run software on a physical hardware system. If Oracle had used ambiguous terminology in the Processor definition or elsewhere within the OMA's licensing rules – such as, for example: "all systems where the Oracle Programs are deployed" – then we really would need to look to other sources of guidance (such as a Partitioning Policy) to understand the parties' intent in agreeing to those terms. However, that is not the case here.

Schedule P also provides a number of program-specific rules for calculating the number of Processor licenses required for licensed servers. However, the basic definition above represents the default licensing rule for all use cases, and none of the identified use cases mentions the Partitioning Policy.

Finally, a separate section of Schedule P is titled: "Licensing Rules for Oracle Technology Programs and Oracle Business Intelligence Applications". That would seem to be a natural place to find important licensing information related to hardware partitioning, but – yet again – the Partitioning Policy is nowhere found or referenced within that section.

What we have, then, is a license agreement incorporating reasonably clear and unambiguous language regarding how to count the number of licenses required for certain products that does not expressly or impliedly incorporate the Partitioning Policy.

Potential Value of the Partitioning Policy

At best, the Partitioning Policy might be interpreted as Oracle's statement regarding certain virtualization technologies that will not result in further inquiry regarding processors where Oracle Programs are "installed and/or running" – a kind of safe harbor for the Oracle-approved "hard partitioning" technologies. Licensees using "soft partitioning" technologies like VMware reasonably could expect for LMS to investigate whether those programs ever have run on unlicensed hosts within a vCenter (and those licensees would be well advised to periodically gather system logs, screenshots or other documentation demonstrating that the Oracle VMs really have been running where they are supposed to be running).

However, the mere fact that Oracle unilaterally has identified VMware to be a "soft partitioning" technology does not, by itself, give Oracle LMS the right to assume that all processors within a vCenter have been used to install and/or run those programs. Unfortunately, that is the very assumption that Oracle LMS often makes during audits of companies using Oracle programs within VMware environments

Conclusion

Companies facing audits by Oracle LMS need to keep all of the above in mind during the investigation and settlement/resolution phase of the engagement. Requests for detailed information pertaining to virtualization environments where Oracle programs never have been deployed should be resisted. If Oracle proposes audit findings that purport to reflect program usage on systems where those programs never have run, the audited company should object to those findings early and often. Companies should work closely with legal counsel throughout the audit process to ensure both that their rights are protected and that Oracle is not seeking enforce audit findings that are not supported by the terms of the applicable license agreements.

A final note: Business leaders considering (or perhaps re-considering) their companies' investments in Oracle programs may review the terms of the current OMA by doing the following:

(1) Browse to Oracle's online storefront, currently at:

https://shop.oracle.com/

(2) Find a Technology product like Database Standard Edition 2, and add a quantity to the shopping cart.

(3) Click on the shopping cart icon and begin the checkout process. This step will require you to create a free Oracle store ID login and password. It also typically will entail entering a credit card number, but we will not actually be completing a transaction as part of this process.

(4) Complete the checkout steps until you reach the "Terms and Conditions" section. At that stage, the system will display a copy of the OMA as well as a link to download a PDF of the agreement. Click that link, save the PDF for later review, and then close the browser window to discontinue the checkout process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Christopher Barnett
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions