Hardware partners beware, lock your warehouses or get sued. Oracle filed a suit against Multis on Nov. 9 at U.S. District Court for Northern District of California, for breach of contract under which they were liable for losses, if they failed to secure the partner's hardware.
California-based Multis, a company that provides re-manufacturing, re-marketing and recycling best practices, to offer customers a new way to strategically manage the reuse and redeployment of their product had entered into a contract with Sun Microsystems to recycle and market its old hardware under its Sun Remanufactured Systems Program.
The contract made Multis accountable for any loss contingent to failure on its part to meet Sun's security guidelines. The security stipulations required Multis to place closed circuit cameras (CCTV), alarm systems and security films.
However, glaring patches in Multis security arrangements were exposed when their warehouse in Union City, California, was burgled in July 2009. The burglars scooted with 36 disk drives and 4 CPU modules. An investigation by a security firm resulted in Multis making certain security enhancements.
But the enhancements were not sufficient enough to deflect another burglary, which took place in April. Burglars escaped with a booty of 1,450 memory modules costing $61,500. The bandits broke in through a window and used clippers to cut the cage to lay their hands on hardware.
The resultant investigation revealed that Multis had not adequately implemented the security measures inked out in the first investigation. Multis was advised to beef up security measures which included adding steel bars to secure windows.
However, another burglary was launched in May and the investigation revealed that Multis had not placed steel bars. Thieves took away $267,244 worth of memory modules.
Multis was also found short of obtaining an insurance to cover the losses. Oracle's lawsuit demands $328,742 in damages from the hardware partner.
Multis, which is also a partner to HP, was on good terms with Sun Microsystems as revealed in a quotes by Jean Marc Chialkowski on Multis website, which stated: Multis has followed Sun's requirements of expanding in new geographies providing us with substantial cost savings and acted as a real team member to help Sun achieving its stated business objectives. We look forward to continuing to rely on their professionalism to expand our business.
However, Multis is now dealing with Oracle CEO Larry Ellison, after Oracle acquired Sun Microsystems. Oracle has been on a lawsuit binge with Google, SAP and HP in the firing range. Though with Multis, Oracle has a strong case. It also reveals Oracle's stance to keep the lawsuit juggernaut rolling whether it means competitors or business partners.
With Oracle demanding $4 billion from SAP for intellectual property infringement, the sum demanded from Multis seems paltry. Under Jonathan Schwartz Sun's revenue had declined from $3.2 billion to $2.6 billion in the third quarter of 2009 prior to acquisition by Oracle.
Since Oracle took over Sun Larry Ellison has been looking for ways to make it profitable and thus Oracle's strategy just does not include hardware sale but also has focused on garnering revenues from Sun Microsystems Java platform. Also Oracle shut down OpenSolaris, stating that it will be made accessible post-delivery of the commercial Solaris. Oracle has been coming hard on open-source platforms like OpenOffice which was recently forked by its developers who were concerned about its future under Oracle. Oracle also hiked the price of MySQL. All of this reveals Oracle's efforts to harness Sun Microsystem's assets much to the dismay of open-source communities.
Thus Larry's sword will come upon every Sun asset and partner as Oracle attempts to monetize on Sun Microsystem's assets, whether big or small.