Many organizations are at risk of failing an audit and violating their ULA with Oracle by engaging in “Proprietary Hosting” without realizing it.
What is Proprietary Hosting?
Proprietary Hosting is basically when an organization has a application, like a web application, that uses an Oracle database as a back end, and the application allows users who are not employees of the company to access the data, like employees of other companies, customers or prospects.
As per Oracle’s definition 3 major factors have to occur for this classification to be true:
- Company A develops a proprietary application in-house, which is commercially available to end users
- One-to-many hosting: Company A is hosting this application for the intended use by employees of at least two or more other companies (company B and C)
- Oracle technology (typically Oracle database, but could be also middleware, like Internet Application Server or WebLogic Server) is used as the technology program(s) supporting the application
Proprietary Application Hosting: Companies that own and develop a commercially available application that is available to multiple end users and operates with an embedded Oracle program. Companies who develop proprietary applications and embed Oracle technology as the database component within their applications are considered Proprietary Application Technology Hosting companies.
How is Proprietary Hosting usage licensed?
Proprietary Hosting is a type of limitation that can be negotiated with Oracle when purchasing your technology licenses that are going to be used in support of your Proprietary Applications.
It is a very specific and unusual limitation that is actually considered more valuable than other limitations and even more valuable than full use license.
You are not allowed to use your standard Full Use licenses to cover customer-facing Proprietary Hosting usage. The use of an Oracle Technology product, particularly one that has a processor metric is often inaccurately considered to support an unlimited number of users. However, Oracle considers the unlimited users under a processor metric to cover only users that are employees of the organization and not a third-party organization.
If my ULA is truly Unlimited, it should cover every kind of usage, including Proprietary Hosting rights, correct? Not exactly.
The “unlimited” aspect of ULA (Unlimited License Agreement) applies to “unlimited” license quantities while limiting or strictly defining other aspects. It is the right to use unlimited quantities of the limited/specific set of products for a limited/defined time period (usually 2-5 years) under the limited/defined terms of the agreement.
ULA’s Don’t Allow Proprietary Hosting
The standard terms of ULA contract DO NOT allow for Proprietary Hosting use of included programs. This specific type of usage is subject to negotiation with Oracle and is typically capped in some way not to exceed a certain percentage of your total usage under ULA or limited to specific products and specific license quantities.
Proprietary Hosting licenses will be also counted and reported to Oracle separately at the time of ULA Certification.
How do I know if Proprietary Hosting type of license is included in my Oracle Contract?
You cannot miss the specific terms and conditions for Proprietary Hosting in your ordering document, such as:
- Internet Hosting definition – a standard Oracle clause applicable to this type of license
- Limitation to specific Proprietary Application referencing a number of licenses in the order
- Proprietary Application Hosting Registration Form (PAHRF) that must be filled out by you and included with your ordering document
If any of those items are not in your ordering document, then your ULA contract may not cover any of your Proprietary Hosting license usage.
Can I use my ULA Proprietary Hosting licenses in the Cloud?
It depends. You can definitely use your Proprietary Hosting license with BYOL (Bring Your Own License) license model in OCI. You can also use these licenses as BYOL in the AWS Cloud. But you would still need to utilize Oracle’s specific licensing calculations that exist for each of those Cloud platforms. So, you may not have enough licenses to shift to an AWS platform as it may require a greater amount of licenses than an on-premise deployment would require. You may also not get sufficient license quantities from ULA Certification on AWS – depending on the specific language for calculating your final license counts at the end of ULA.
Oracle does not define or specifically allow any other forms of Proprietary Hosting license usage for any other Cloud providers.