What Is Oracle ESL License -Oracle Embedded Software License?

The Oracle ESL License (Oracle Embedded Software License)

• A highly restrictive license for Independent Software Vendors (ISVs) embedding Oracle software in their applications.
• ISVs can package and resell the license with their solutions or applications.
• Usage is strictly limited to the specific application package and prohibits direct user access to Oracle programs.
• Offers two license models: standard Oracle licensing metrics with a 90% discount or a royalty-based model.
• Oracle ESL licenses are excluded from Oracle end-customer audits, with the focus instead on the ISV.

Oracle’s Embedded Software License (ESL) is a special licensing model that allows software vendors to include Oracle technology (like a database or middleware) inside their products and sell it as a bundled solution to customers.

In simple terms, an ESL lets an Independent Software Vendor (ISV) package Oracle software with their application, but with very strict rules on how that Oracle software can be used.

This guide explains ESL, compares it to other Oracle licenses, and outlines its implications for businesses, whether you are a buyer evaluating a vendor’s solution or an ISV offering one.

What is Oracle’s Embedded Software License (ESL)?

An Oracle Embedded Software License (ESL) is a highly restrictive Oracle license that an ISV (Oracle partner) can use to embed Oracle software into the ISV’s application.

The end customer buying the ISV’s product gets an Oracle license, but it can only be used within that specific application.

The Oracle software (an Oracle Database or Oracle middleware) cannot be used standalone or for any purpose outside the vendor’s solution. Essentially, the Oracle component becomes an invisible, behind-the-scenes part of the product.

Key characteristics of Oracle’s ESL:

No Oracle Support Requirement: Unlike traditional Oracle licenses, an ESL does not require the purchase of Oracle’s support services annually.

Oracle technical support is typically not offered for ESL deployments; instead, the ISV is responsible for supporting the Oracle component as part of the overall solution.

Oracle Partner Required: The ISV must be a member of the Oracle PartnerNetwork (OPN) and sign an ESL distribution agreement to resell Oracle software.

Oracle effectively authorizes the partner to sublicense its technology as part of the ISV’s product.

“Embedded” Use Only:

The Oracle software is licensed only for use within the ISV’s application. End users cannot access the Oracle software directly – it’s locked down to work exclusively through the ISV’s application interface.

Common for Databases & Middleware:

The most frequently embedded Oracle product is the Oracle Database, often with specific database options enabled. Oracle middleware (like WebLogic Server) and even Oracle Java can also be provided under ESL for use inside an application.

Major Discount for ISVs: Oracle offers ISVs a 90% discount off the standard price list for products licensed under ESL, making it economically feasible.

This huge discount reflects the heavy usage restrictions. It enables the ISV to bundle Oracle tech into their solution at low cost (or to pay Oracle a small royalty on each sale).

A notable difference between Oracle ESL, Oracle Full Use, and Oracle ASFU is that Oracle technical support is not required for Oracle ESL licenses.

How Does ESL Licensing Work in Practice?

Illustration: In an ESL scenario, Oracle provides a specialized license to an ISV (software vendor). The ISV integrates Oracle software (e.g., a database) into its application and sells the combined solution to an end customer. The end customer uses Oracle’s technology indirectly through the vendor’s application and has no direct access to the Oracle software or Oracle support.

To obtain an ESL license, an ISV enters into an agreement with Oracle as an OPN partner specifically for embedding Oracle software.

Here’s the flow in a typical ESL arrangement:

• Oracle and ISV Agreement: The ISV signs an embedded licensing agreement with Oracle, which often includes an Application Package Registration Form (APRF) that describes the ISV’s application and how Oracle software will be integrated. Oracle then allows the ISV to sublicense the Oracle technology for that application. Oracle either charges the ISV a heavily discounted fee per unit or takes a royalty cut of the ISV’s sales.
• ISV Bundles Oracle in Its Solution: The ISV includes Oracle software as part of its product installation. For example, the ISV’s installer might silently install an Oracle Database in the background, configured automatically with the application. The Oracle software becomes part of the ISV’s product – the end user might not even realize an Oracle database is running under the hood, aside from notices in documentation.
• ISV Sells to End Customer: The end customer purchases the ISV’s application (which includes the Oracle license). The customer typically owns the Oracle ESL license entitlement as part of the purchase, but with the understanding that it’s restricted to use with the ISV’s application.
• End Customer Uses the Solution: The customer uses the application normally. Any interaction with the Oracle database or middleware is only through the application. The customer cannot directly log in to the Oracle Database, install Oracle software elsewhere, or use it for any purpose other than its intended use. These actions would violate the license.
• Support Provided by ISV: If the Oracle component needs patching or troubleshooting, the customer contacts the ISV, not Oracle. The ISV may have its support arrangement with Oracle as a partner, but from the end user’s perspective, all support is handled by the ISV.

ESL licensing models: Oracle offers two ways the ISV can license the embedded software:

• Standard Metric Licensing: The ISV licenses the Oracle software using standard metrics, such as Named User Plus (NUP) or Processor counts, at a special 90% discounted rate. In this model, the ISV may internally track the number of end users or processors deployed, ensuring each customer remains compliant. Still, the end customer isn’t directly involved in Oracle licensing.
• Royalty-Based Licensing: Instead of counting users or CPUs, the ISV can pay Oracle a royalty fee, typically around 10% of the ISV’s license revenue for their solution. For example, if the ISV sells its software (with embedded Oracle) for $100,000, Oracle would get $10,000. In this model, the ISV doesn’t need to monitor Oracle usage metrics; compliance is based on reporting revenue. This can simplify things for both the ISV and the customer, as usage scaling is built into the royalty.

Both approaches enforce the same usage restrictions; they’re just different commercial models.

Smaller ISVs or those with variable user counts might prefer the percentage-of-revenue model. In contrast, others might opt for the traditional per-user or per-processor licensing with a big discount.

ESL Restrictions and Limitations

Oracle’s ESL has strict limitations to ensure the Oracle software is truly embedded and not used as a general-purpose tool.

These restrictions are typically outlined in the contract and are essential for both the ISV and the customer to understand.

The key limitations include:

• Tied to a Specific Application: The Oracle software can only be used in conjunction with the ISV’s application, as defined in the agreement. It cannot be used with any other application or stand-alone. If the customer has other systems, they cannot point those at the embedded Oracle Database, for example.
• Silent, Integrated Installation: The Oracle software must be installed as an integral part of the application, often in silent mode with pre-set configuration. End users should not be able to install or configure the Oracle component separately. In practice, this means the ISV’s installer handles the database setup in the background without user intervention.
• No Direct User Access: End users cannot access the Oracle software or its administration directly. All interaction must happen through the ISV’s application interface. For instance, the customer’s IT staff should not log into the Oracle database using SQL tools; they may not even have the necessary credentials. They use the application’s features to do any data work, and the application, in turn, communicates with Oracle behind the scenes.
• ISV-Only Administration: Administrative tasks for the Oracle software (such as starting/stopping the database, performing backups, and managing users) must be performed through the ISV’s application or by the ISV’s team. The end customer cannot independently administer the Oracle database or middleware. This ensures the ISV retains control over configuring and maintaining the Oracle component.
• No Unauthorized Changes: The end customer cannot modify or extend the Oracle portion outside what the ISV’s application allows. This means not applying patches or upgrades to the Oracle software, creating new database schemas or users by the customer, and no custom modifications to the Oracle setup. Only the ISV (as the solution provider) may update or patch the Oracle software, usually by delivering a new application version that includes the updated Oracle components.
• No Third-Party Use or Tools: The embedded Oracle software cannot be used by third-party tools or applications outside the ISV solution. For example, the customer can’t directly connect a separate reporting tool to the embedded Oracle Database unless the ISV’s application provides an API or mechanism. Even software asset management (SAM) tools are generally prevented from directly inventorying or managing the Oracle component since it’s considered part of the ISV application, not a standalone Oracle installation under the customer’s control.
• Non-Transferable & No Upgrade Path: An ESL license is effectively locked to the specific use case. It cannot be converted to a full-use Oracle license at a later time. If a customer ever wanted to use the Oracle software independently, they would have to purchase a new standard license from Oracle. ESL licenses also cannot be rolled into Oracle Enterprise Agreements, such as an Unlimited License Agreement (ULA); they remain separate. In short, there’s no direct upgrade or migration path from an ESL to more open usage; a fresh license would be needed if requirements change.

Why these restrictions? Oracle imposes these rules to protect its intellectual property and ensure the embedded license isn’t misused as a loophole to get cheap Oracle software. Essentially, Oracle treats an ESL like an OEM license – the value to Oracle is realized only through the ISV’s application. The upside is a low cost to the ISV, but the trade-off is Oracle tightly controls how the software is utilized.

Benefits of Using an ESL License

Despite the restrictions, ESL licensing offers significant benefits for certain scenarios, especially from the perspective of the ISV (and often benefiting the end customer as well):

• Massive Cost Savings for ISVs: Oracle’s ~90% discount on technology licenses under ESL means an ISV can include a world-class database or middleware in their product at a fraction of the normal cost. This can make the ISV’s solution more affordable or increase their profit margin. It also lowers the barrier for smaller software companies to leverage Oracle technology in their offerings.
• All-in-One Solution for Customers: From a buyer’s perspective, ESL enables ISVs to deliver a complete, turnkey solution. The customer doesn’t have to procure an Oracle license separately—it’s bundled, simplifying procurement and deployment. The solution works out of the box with the necessary database or middleware embedded and configured.
• Simplified Sales and Deployment: ISVs can market their product as a single SKU that “includes required database.” This simplifies sales because customers deal only with the ISV, not multiple vendors. The customer isn’t burdened with understanding Oracle licensing intricacies for that component – it’s handled as part of the product. For the ISV’s sales team, the conversation is about the value of the solution, not about Oracle licensing.
• Royalty Model Flexibility: If the ISV uses a royalty-based ESL, they don’t need to worry about counting users or CPUs for each deployment. This can be especially useful for cloud or SaaS providers—they can scale users freely and just share a portion of revenue with Oracle rather than constantly adjusting license counts. It also means the customer isn’t directly limited by a specific number of user licenses for the Oracle component; they must abide by the usage terms of the ISV’s product.
• Focused Support & Expertise: Customers benefit from one-stop support since the ISV supports the Oracle component. The ISV’s support team will specialize in how Oracle is used within that application. Customers don’t have to coordinate between Oracle’s and the application vendor’s support—the ISV handles the full stack.
• Integrated Performance Tuning: With Oracle embedded, the ISV can optimize the database or middleware settings for their application’s workload. This often leads to better performance and reliability for the end user, compared to a scenario where the customer might have to configure a generic database. The ISV essentially becomes the database admin on behalf of the customer, potentially delivering a more tailored and stable system.

Of course, these benefits come with responsibilities. The ISV must be capable of managing and supporting Oracle technology, as the customer relies on the ISV’s competence in this area.

But when done right, ESL can create a win-win: a stronger product powered by Oracle, delivered at a lower cost.

Real-World Examples of ESL in Action

To make the ESL concept more concrete, let’s look at a couple of simplified real-world scenarios where an Oracle Embedded Software License might be used:

1. Healthcare Software with an Embedded Oracle Database: Imagine a software vendor (ISV) develops a hospital management system that helps run a hospital’s daily operations (patient records, appointments, billing, etc.). This application needs a robust database, so the ISV embeds an Oracle Database under an ESL. The hospital (end customer) purchases the solution and utilizes Oracle Database as part of it. All patient data is stored in the Oracle Database. Still, hospital staff interact only through the vendor’s software interface – they view patient records and run reports in the application, rather than querying the Oracle database directly. The ISV’s application automatically handles all database interactions, maintenance, and backups. Hospital IT cannot use the Oracle Database separately for other hospital systems; it’s exclusively licensed for the ISV’s software. This provides the hospital with a high-performance database system without requiring separate management or licensing – it’s all included in the solution.
2. E-Commerce Platform using Oracle Middleware: A retail technology ISV creates a turnkey e-commerce platform for online stores. The platform uses Oracle WebLogic Server (an enterprise Java application server) embedded via an ESL to handle high web traffic and transaction processing. Online retailers (the customers) license this e-commerce platform from the ISV to run their websites. The Oracle WebLogic component is invisible to them; they deploy the ISV’s solution on their servers, and the ISV’s installer sets up WebLogic in the background. Store administrators use the platform’s dashboards to manage products and orders. They don’t configure WebLogic directly – all that is pre-built by the ISV. Oracle WebLogic is only running to support the ISV’s e-commerce software. If the retailer also has a custom website, they cannot use the embedded WebLogic; it’s restricted to the packaged e-commerce solution. This ESL arrangement ensures the retailer gets a robust, Oracle-powered infrastructure for their online store without needing Oracle expertise.

These examples demonstrate how ESL enables Oracle technology to be delivered as part of a broader solution in healthcare, retail, and numerous other industries.

From banking software to manufacturing systems, any case where an ISV wants to “embed” a database or middleware could be a candidate for an Oracle ESL.

Differences Between Oracle ESL, ASFU, and Full Use Licenses

Oracle’s Embedded License is just one licensing model among several.

If you’re evaluating Oracle licensing (as a customer or an ISV), it helps to understand how ESL differs from other common Oracle license types:

Oracle offers multiple license models for its software. The three main categories relevant to ISVs and their customers are Embedded Software License (ESL), Application-Specific Full Use (ASFU), and Full Use licenses. Each type varies in flexibility, restrictions, and support obligations.

• Embedded Software License (ESL): Restrictions: The most restrictive model. Oracle software can only be used within a designated application and nowhere else. The end user cannot access the Oracle software directly, and the ISV handles all support. Cost: ESL offers the deepest discounts (approximately 90% off list price) or a royalty model, making it cost-effective for bundling. Who’s it for: ISVs who want to bundle Oracle seamlessly into their product and customers who prefer an all-in-one solution without managing a separate Oracle license. (Must be an OPN partner to use this model.)
• Application-Specific Full Use (ASFU): Restrictions: This is somewhat between ESL and a full license. An ISV sells an ASFU license for use with a specific application (like ESL), but it’s less restrictive than ESL. The end customer, being the license owner, typically has more direct control over the Oracle software than under ESL. However, the Oracle software is still only legally usable for the specified application – you can’t use an ASFU-licensed database for a different application. Support: Oracle technical support is usually required (or at least offered) for ASFU licenses, meaning the customer (or ISV on their behalf) pays Oracle’s support fees. The ISV may provide first-line support, but Oracle support is also available, as it’s a standard Oracle license with an application-use restriction. Cost: ASFU licenses often come with a discount, though smaller than ESL (commonly around 40-50% off list price, depending on Oracle’s agreement with the ISV). Who’s it for: ISVs and customers who need Oracle integrated with a specific solution but want a bit more flexibility – for example, the customer’s DBAs might manage the database, or the solution might be complex enough that Oracle’s direct support is needed. (OPN membership and agreements are also required for ISVs to sell ASFU.)
• Full Use License: Restrictions: A Full Use license is the standard Oracle license most end customers purchase directly from Oracle or its resellers. It is fully flexible – you can use the Oracle software for any application or purpose, with no usage restrictions beyond Oracle’s general license terms. Support: Purchasing annual Oracle support is expected (and recommended) to get updates and help; Oracle provides full support to the end customer. Cost: No special discounts by default (aside from typical volume or negotiated discounts). The pricing is based on Oracle’s standard price list per processor or user. This is the most expensive option per license, but it comes with maximum freedom. Who’s it for: End customers who want to use Oracle technology independently, or ISVs who decide not to use the specialized programs. Full Use licenses are also what an ISV’s customer would need if, for example, they wanted to use Oracle outside the ISV’s app or if the ISV doesn’t provide an embedded/ASFU option.

OPN and Partner Licensing: ESL and ASFU are available only to Oracle Partner Network members. They are part of Oracle’s programs for ISVs/OEMs. A partner must sign specific agreements with Oracle to distribute Oracle licenses in these forms.

On the other hand, full-use licenses can be sold by Oracle or any authorized reseller (partners can resell full-use licenses, too, but those licenses then behave like normal ones for the end customer).

From the end customer’s perspective, ESL and ASFU licenses are often invisible—they just see that the ISV solution “includes Oracle technology.” However, knowing which model is being used under the hood is useful because it affects support and determines what you can/cannot do with the Oracle software.

Support and Audit Considerations

Adopting an ESL-based solution changes some aspects of support and compliance compared to a standard Oracle license.

Here are important considerations:

Support & Maintenance Responsibilities

With an ESL, Oracle’s support team is not part of the picture for the end customer. Oracle does not provide direct support to customers for ESL-licensed products.

Instead, the ISV is fully responsible for supporting the Oracle software within their solution.

• Support for End Customers: If you’re a customer and you encounter an issue or need a patch for the Oracle component (say, a database patch for a bug or security fix), you will contact the ISV’s support, just as you would for the rest of the application. The ISV, in turn, might coordinate with Oracle (since, as a partner, they may have their support channels or contacts), but from your standpoint, Oracle is not directly involved. The ISV must include Oracle-related support in their support contract with you. You should not be expected to purchase an Oracle support contract separately (and in fact, you usually cannot for an ESL license).
• ISV’s Obligations: The ISV should stay up-to-date with Oracle patches and updates, incorporating them into their product updates. They are also responsible for ensuring the Oracle software remains compliant and properly licensed within your usage. Many ISVs with ESL licenses do not maintain active Oracle support contracts for those licenses to cut costs, but they may rely on Oracle’s publicly available updates or partner resources. As a customer, you may want to ask how the ISV plans to handle critical Oracle updates (like security patches for the database) to be sure they will deliver timely fixes.
• No Direct Oracle Patches by Customer: Remember, as the end user, you cannot download patches from Oracle for the embedded software, because you’re not registered as an Oracle customer for that license. Any necessary updates must be submitted through the ISV. This means you depend somewhat on the ISV’s release cycle for important updates. It’s worth discussing this in an SLA (Service Level Agreement) – e.g., if Oracle releases a security patch for a severe vulnerability, how quickly will the ISV test and provide it to you?

Compliance and Audits

One notable upside of ESL licensing is simplified license compliance for the end customer, but it shifts responsibility elsewhere:

• Oracle Will Not Audit End Customers (For ESL usage): Oracle’s contracts do not allow Oracle to audit end customers for embedded licenses. In other words, if all you have is an Oracle ESL with a vendor’s product, Oracle’s license audit teams shouldn’t knock on your door about it. Oracle instead retains the right to audit the ISV that provided the ESL. The ISV is the one who entered into the contract with Oracle, so Oracle will ensure the ISV is adhering to the terms (i.e., only distributing within agreed-upon applications, reporting royalties correctly, etc.).
• Customer’s Responsibility: Even though Oracle won’t audit you directly for that ESL, you (the customer) are still contractually bound (usually via your agreement with the ISV) to use the Oracle software only as permitted. If you misuse it (for example, by finding a way to access the Oracle database directly and hook up another application), you could breach your contract with the ISV. The ISV, in turn, would violate its Oracle agreement if it were to allow it. Therefore, internal compliance remains important: treat the embedded Oracle component as off-limits outside the application, as if it were not even there.
• Asset Management: For those managing software assets in an organization, ESL licenses can be a blind spot. Traditional SAM tools may flag an Oracle database installation on a server and raise a compliance alarm if they fail to detect a matching Oracle license. It’s crucial to document ESL deployments in your internal records. If a license management tool is used, you may need to annotate that the Oracle software is covered under an embedded license via [Vendor Name]’s application. This avoids confusion during internal audits or software reviews.
• Virtualization and Environment: An ESL Oracle database must adhere to the same technical requirements as a standard Oracle database regarding its execution environment. For example, Oracle’s partitioning policies (for VMware or other virtualization) still apply, potentially meaning the ISV’s solution might need to be deployed in a way that limits where that Oracle software runs. However, if the ESL operates on a royalty model, the ISV may not be concerned about counting processors, which can simplify matters in virtual environments. This is a nuanced area – if the ISV’s application will run in a virtualized data center or cloud, ensure the ISV has accounted for Oracle’s policies so that you don’t inadvertently violate them. Generally, the ISV should include guidance such as “you must license Oracle on all hosts X, Y, Z if using VMware,” if applicable, or choose a royalty model to avoid this complexity.
• End-of-Life or Transition: Consider what happens if you stop using the ISV’s application or the vendor goes out of business. ESL licenses are not transferable to other uses, so you can’t repurpose that Oracle database for something else. Suppose you might need continued access to data in an Oracle DB after ending the vendor relationship. In that case, you’d likely have to acquire a full Oracle license for that data and migrate it. Legal teams should ensure clarity on data ownership and develop a strategy for such an event (e.g., the vendor might assist in migrating your data out of the Oracle database to a format or another database that you can use without Oracle).

Practical Tips and Recommendations

Finally, here are some practical tips for different stakeholders when dealing with Oracle ESL licenses in business situations:

• For Buyers (End Customers): If you’re purchasing a software solution that includes an Oracle ESL:
  • Confirm the License Inclusion: Ensure your contract or purchase order explicitly states that the necessary Oracle software license is included in the product. You shouldn’t have to buy Oracle licenses separately for the solution.
  • Understand Support Terms: Clarify that the vendor will provide all needed support for the Oracle component. Get details on how updates and patches to the Oracle software will be delivered. You don’t want surprises if a database issue arises – it should be clear that the vendor handles it.
  • Use it as Intended: Ensure your IT staff knows that the Oracle database or middleware included with the product will only be used with that product. They should treat it like a black box. This will prevent any accidental license violations (for example, someone thinking, “Oh, there’s an Oracle database here, maybe we can also run some custom reports on it with our tools” – that’s not allowed unless done through the vendor’s application).
  • Document the Arrangement: Record your Oracle ESL via the vendor. Suppose your company undergoes a software audit (internally or by a third party). In that case, you can show that the Oracle instances running under that application are licensed through the vendor’s ESL agreement. This will prevent confusion in compliance audits.
  • Plan for Vendor Dependence: Recognize that you rely on the vendor for Oracle-related fixes. Evaluate the vendor’s track record and capabilities. Suppose the Oracle component is mission-critical for you. In that case, you might consider adding contract clauses regarding timely patching (for example, the vendor must deliver critical Oracle security patches within X days of Oracle’s release).
• For ISVs or Solution Vendors: If you’re an ISV considering an ESL to embed Oracle in your product:
  • Design Within Oracle’s Rules: From the outset, structure your application to conform to all ESL requirements – automatic silent installation, no user-accessible Oracle tools, all admin via your UI, etc. (Oracle will expect to see this in how your product works). This not only keeps you compliant but also ensures a smoother user experience (the user won’t even feel the presence of Oracle).
  • Leverage Oracle Partner Resources: Joining OPN is mandatory, but also beneficial. Oracle provides partners with guidance and, in some cases, technical assistance for ESL/ASFU solutions. Utilize these resources to your advantage, ensuring you license the Oracle component correctly (by selecting the appropriate metrics or royalty model) and optimize performance.
  • Negotiate Broad License Terms: When drawing up the ESL agreement with Oracle, keep the usage description broad (within your application’s scope). For example, avoid overly narrow definitions of what your application does. If your product evolves with new modules or features that use Oracle, you don’t want to renegotiate the agreement each time. Including any anticipated use cases of the Oracle software in the initial contract’s scope is wise.
  • Support Infrastructure: Establish a support plan for the Oracle component of your solution. This may involve training your support engineers on Oracle, maintaining a test environment with the Oracle software, and determining whether an Oracle support contract is necessary in the background. Some ISVs choose not to pay Oracle for support to save costs, but remember that your customers will still expect you to resolve Oracle-related issues. Oracle offers partners the option to receive limited support services, even for ESL/ASFU licenses (e.g., partners can have their support personnel log in to Oracle’s knowledge base).
  • Pricing Strategy: Factor the Oracle license cost (even at 90% off or royalties) into your pricing model. ESL can be a selling point, giving customers a high-end database as part of your solution. Ensure your sales team can effectively articulate that value. Conversely, ensure you remain compliant with Oracle’s reporting (if royalty) or ordering (if standard metrics) so that unexpected costs don’t hit you. For instance, if your agreement is per processor and a large client deploys your software across multiple servers, have a plan in place to procure the necessary Oracle licenses and charge the client accordingly.
• For Legal and Compliance Teams: Whether on the customer side reviewing a purchase, or the ISV side drafting agreements.
  • Check the Fine Print: If you’re reviewing a contract for a solution with an embedded Oracle license, ensure the allowed usage of Oracle software is clearly described. It should match the business’s intent. For example, it should specify the Oracle programs included and that they’re only for use with the vendor’s application. On the ISV side, verify that the Oracle ESL agreement’s terms (in the OPN contract) are mirrored correctly in your customer-facing terms, so you’re not over-promising something that would break your Oracle license.
  • Liability for Non-Compliance: Determine who is liable if the end customer uses the Oracle software improperly. Many ISVs include clauses in their EULAs that prohibit customers from using the embedded database outside the application, among other restrictions. If a violation happens, Oracle would pursue the ISV (since they audit the ISV), but the ISV will want recourse to the customer if the customer’s actions caused it. Align these responsibilities in the contracts.
  • Audit Rights: Oracle does not audit the customer for ESL; however, the ISV may want to audit the customer’s application usage to ensure compliance with the embedded license restrictions. As a customer, check if there’s an audit clause from the vendor and understand its scope (Oracle may require it for the ISV to have this ability). As an ISV, consider adding a right-to-audit clause narrowly focused on the Oracle usage, if Oracle pushes for it, so you can demonstrate control in case Oracle asks.
  • Exit Strategy: Include what happens if the customer stops using the software or the ISV-client relationship ends. For instance, must the customer certify the deletion of the Oracle software? Can the customer continue to use the Oracle component in some way? Generally, with ESL, once you stop using the ISV’s app, you have no right to use Oracle. Ensure the customer understands that. If you’re the customer, you might want a clause about data retrieval – e.g., the vendor will assist in exporting your data from the Oracle database in a readable format upon termination, since you won’t be licensed to run the Oracle DB yourself.

By following these tips, all parties can avoid common pitfalls and misunderstandings related to Oracle embedded licenses.

Communication between vendor and customer about the nature of the license is key—it shouldn’t be an arcane detail only discovered later, but rather an upfront aspect of the solution offering that everyone is aware of.

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