Index: admin/launcher/src/main/java/com/sun/enterprise/admin/launcher/GFLauncher.java
===================================================================
--- admin/launcher/src/main/java/com/sun/enterprise/admin/launcher/GFLauncher.java	(revision 43636)
+++ admin/launcher/src/main/java/com/sun/enterprise/admin/launcher/GFLauncher.java	(working copy)
@@ -156,6 +156,7 @@
         info.setAdminAddresses(parser.getAdminAddresses());
         javaConfig = new JavaConfig(parser.getJavaConfig());
         setupProfilerAndJvmOptions(parser);
+        setupUpgradeSecurity();
         setupMonitoring(parser);
         sysPropsFromXml = parser.getSystemProperties();
         asenvProps.put(INSTANCE_ROOT_PROPERTY, getInfo().getInstanceRootDir().getPath());
@@ -666,6 +667,48 @@
         jvmOptions = new JvmOptions(rawJvmOptions);
     }
 
+    private void setupUpgradeSecurity() throws GFLauncherException {
+        // If this is an upgrade and the security manager is on,
+        // copy the current server.policy file to the domain
+        // before the upgrade.
+        if (info.isUpgrade() &&
+            jvmOptions.sysProps.containsKey("java.security.manager")) {
+
+            GFLauncherLogger.info(strings.get("copy_server_policy"));
+
+            StringBuilder sb = new StringBuilder(
+                info.installDir.getAbsolutePath());
+            sb.append(File.separator).append("lib");
+            sb.append(File.separator).append("templates");
+            sb.append(File.separator).append("server.policy");
+            File source = new File(sb.toString());
+            File target = new File(info.getConfigDir(), "server.policy");
+
+            // if there's already a utility for this, use it
+            FileInputStream from = null;
+            FileOutputStream to = null;
+            try {
+                from = new FileInputStream(source);
+                to = new FileOutputStream(target);
+                byte[] buffer = new byte[1024];
+                int bytesRead;
+                while ((bytesRead = from.read(buffer)) != -1) {
+                    to.write(buffer, 0, bytesRead); // write
+                }
+            } catch (IOException ex) {
+                // just in case
+                throw new GFLauncherException("copy_server_policy_error");
+            } finally {
+                try {
+                    from.close();
+                    to.close();
+                } catch (Exception e) {
+                    // they'll close soon enough
+                }
+            }
+        }
+    }
+
     private void setupMonitoring(MiniXmlParser parser) throws GFLauncherException {
         // As usual we have to be very careful.
 
Index: admin/launcher/src/main/java/com/sun/enterprise/admin/launcher/LocalStrings.properties
===================================================================
--- admin/launcher/src/main/java/com/sun/enterprise/admin/launcher/LocalStrings.properties	(revision 43636)
+++ admin/launcher/src/main/java/com/sun/enterprise/admin/launcher/LocalStrings.properties	(working copy)
@@ -80,4 +80,8 @@
 #'ssh' message from Sathyan Catari see IT 13862  October 19, 2010
 ssh=Attempting to start {0}.... Please look at the server log for more details.....
 
+# issue 11665
+copy_server_policy=Will copy newer server.policy file to domain before upgrading.
+copy_server_policy_error=Could not copy current server.policy file to domain's config directory. \
+You may need to turn off the security manager before upgrading.