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Oregon Must Face Lawsuit From Oracle

PORTLAND, Ore. (CN) - Oregon will have to face a lawsuit from Oracle, which accused it of violating copyrighted software code in setting up the state's failed health insurance exchange, a federal judge ruled.

The state claimed immunity in the lawsuit from Oracle, the technology contractor for the Cover Oregon health insurance exchange. The exchange was a failure despite $305 million in federal funding. Its website was never fully operational.

The copyright claim is part of lengthy litigation between the state and parties responsible for the health exchange debacle.

Oracle sued Oregon in 2014 for $23 million in unpaid fees and the state filed its own claim against Oracle for breach of contract several weeks later.

Part of Oracle's claims alleged infringement of its software code.

The state sought dismissal for sovereign immunity.

But U.S. District Judge Anna Brown on Wednesday found "sufficiently clear and unambiguous waiver of Oregon's Eleventh Amendment immunity as to Oracle's copyright-infringement claims."

Brown said Assistant Attorney General McDonald, who signed the license service agreement with Oracle, "had either actual or apparent authority to waive Oregon's Eleventh Amendment immunity" by signing the various contracts.

The Legislature passed Senate Bill 1 in March to dissolve Cover Oregon and transfer its functions and duties to the Department of Consumer and Business Services (DCBS).

DCBS also filed a motion for dismissal from the copyright claims.

However, "The transfer of Cover Oregon's rights, obligations, and liabilities in Senate Bill 1 did not transfer Cover Oregon's lack of Eleventh Amendment immunity," Brown wrote.

Oracle also asked Brown to rule on the constitutionality of Senate Bill 1, but Brown declined, saying a ruling wasn't necessary to decide whether the copyright claims can go forward.

The state has until Dec. 7 to appeal.

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