Oracle Corporation et al v. SAP AG et al

Filing 1092

RESPONSE (re 1089 MOTION for 1292(b) Certification for Interlocutory Review MOTION for 1292(b) Certification for Interlocutory Review ) Defendants' Opposition to Oracle's Motion for 1292(b) Certification for Interlocutory Review filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Proposed Order, # 2 Appendix Appendix of Unpublished Authorities)(Froyd, Jane) (Filed on 10/7/2011)

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Robert A. Mittelstaedt (SBN 060359)
Jason McDonell (SBN 115084)
Elaine Wallace (SBN 197882)
JONES DAY
555 California Street, 26th Floor
San Francisco, CA 94104
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
[e-mail]
Tharan Gregory Lanier (SBN 138784)
Jane L. Froyd (SBN 220776)
JONES DAY
1755 Embarcadero Road
Palo Alto, CA 94303
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
Scott W. Cowan (Admitted Pro Hac Vice)
Joshua L. Fuchs (Admitted Pro Hac Vice)
JONES DAY
717 Texas, Suite 3300
Houston, TX 77002
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
Attorneys for Defendants
SAP AG, SAP AMERICA, INC., and
TOMORROWNOW, INC.

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION

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ORACLE USA, INC., et al.,

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Plaintiffs,

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v.

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SAP AG, et al.,

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Defendants.

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Case No. 07-CV-1658 PJH (EDL)
DEFENDANTS’ OPPOSITION TO
ORACLE’S MOTION FOR 1292(b)
CERTIFICATION FOR
INTERLOCUTORY REVIEW
Date: N/A
Time: N/A
Courtroom: 3, 3rd Floor
Judge: Hon. Phyllis J. Hamilton

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DEFS.’ OPP. TO ORACLE’S MOT. FOR 1292(b)
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TABLE OF CONTENTS

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Page
I.
II.

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III.

INTRODUCTION .............................................................................................................. 1
ARGUMENT ...................................................................................................................... 2
A.
Standard for Certifying Interlocutory Appeal ......................................................... 2
B.
Oracle Does Not Seek to Certify a “Controlling Question of Law.” ...................... 3
C.
Oracle’s Proposed Questions Do Not Present a Substantial Ground for
Difference of Opinion ............................................................................................. 7
D.
Immediate Appeal Will Not Materially Advance Termination of the
Litigation ................................................................................................................. 9
CONCLUSION ................................................................................................................. 12

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TABLE OF AUTHORITIES

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Page(s)

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CASES

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Aggio v. Estate of Aggio,
No. C 04-4357 PJH, 2006 WL 149006 (N.D. Cal. Jan. 18, 2006).......................................... 12

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Ahrenholz v. Bd. of Trs. of Univ. of Ill.
219 F.3d 674 (7th Cir. 2000)..................................................................................................... 6
Barbaro v. United States ex rel. Fed. Bureau of Prisons,
05 Civ 6998 (DLC), 2008 U.S. Dist. LEXIS 123837 (S.D.N.Y. Feb. 21, 2008).................... 11
Brizzee v. Fred Meyer Stores, Inc.,
CV-04-1566-ST, 2007 U.S. Dist. LEXIS 99155 (D. Or. Dec. 10, 2007) ................. 2, 6, 10, 12
Brockmeyer v. May
361 F.3d 1222 (9th Cir. 2004)................................................................................................. 10
Casey v. Long Island R.R. Co.,
406 F.3d 142 (2d Cir. 2005) ...................................................................................................... 7
Couch v. Telescope Inc.,
611 F.3d 629 (9th Cir. 2010)................................................................................................. 7, 8
Exec. Software N. Am., Inc. v. U.S. Dist. Ct. for Cent. Dist. of Cal.,
24 F.3d 1545 (9th Cir. 1994)..................................................................................................... 2
Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc.,
772 F.2d 505 (9th Cir. 1985)..................................................................................................... 8
FTC v. Swish Mktg.,
No. C 09-03814 RS, 2010 U.S. Dist. LEXIS 47948 (N.D. Cal. Apr. 14, 2010)..................... 10

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Georgia-Pacific Corp. v. U.S. Plywood Corp.,
318 F. Supp. 1116 (S.D.N.Y. 1970) .......................................................................................... 9
Hulmes v. Honda Motor Co.,
936 F. Supp. 195 (D.N.J. 1996) ........................................................................................ 5, 6, 9
In re Bridgestone/Firestone, Inc., Tires Prods. Liab. Litig.
212 F. Supp. 2d 902 (S.D. Ind. 2002) ....................................................................................... 5

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In re Cement Antitrust Litig.,
673 F.2d 1020 (9th Cir. 1982)..................................................................................... 1, 2, 3, 10
Jarvis v. K2 Inc.
486 F.3d 526 (9th Cir. 2007)................................................................................................. 8, 9

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TABLE OF AUTHORITIES
(continued)
Page(s)
Keystone Tobacco Co. v. U.S. Tobacco Co.,
217 F.R.D. 235 (D.D.C. 2003) .................................................................................................. 6
Kraus v. Bd. of Cnty. Rd. Comm’rs for Cnty. of Kent,
364 F.2d 919 (6th Cir. 1996)............................................................................................. 10, 12
Mackie v. Rieser
296 F.3d 909 (9th Cir. 2002)..................................................................................................... 8
Mateo v. M/S Kiso,
805 F. Supp. 792 (N.D. Cal. 1992) ......................................................................................... 10
Matsunoki Group, Inc. v. Timberwork Or., Inc.,
No. C 08-04078 CW, 2011 U.S. Dist. LEXIS 33178 (N.D. Cal. Feb. 18, 2011) ................... 10
Mazzella v. Stineman,
472 F. Supp. 432 (E.D. Pa. 1979) ........................................................................................... 11
McCabe v. Basham,
No. 05-CV-73-LRR, 2008 U.S. Dist. LEXIS 81941 (N.D. Iowa Oct. 14, 2008) ..................... 7

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N. Carolina ex. rel. Long v. Alexander & Alexander Servs., Inc.,
685 F. Supp. 114 (E.D.N.C. 1988) ............................................................................................ 7
Polar Bear Prods., Inc. v. Timex Corp.
384 F.3d 700 (9th Cir. 2004)..................................................................................................... 8
Safeway Inc. v. Abbott Labs.,
No. C 07-05470 CW, 2010 U.S. Dist. LEXIS 61721 (N.D. Cal. June 1, 2010) ....................... 2

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Shurance v. Planning Control Int’l, Inc.,
839 F.2d 1347 (9th Cir. 1988)....................................................................................... 2, 10, 12
Silver Sage Partners, Ltd. v. City of Desert Hot Springs,
251 F.3d 814 (9th Cir. 2001)..................................................................................................... 7
Sonoda v. Amerisave Mortgage Corp.,
No. C-11-1803 EMC, 2011 U.S. Dist. LEXIS 100275 (N.D. Cal. Sept. 7, 2011).................. 10

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United States ex rel. Wilson v. Maxxam, Inc.,
No. C 06-7497 CW, 2009 U.S. Dist. LEXIS 14375 (N.D. Cal. Feb. 9, 2009) ....................... 11
United States v. Woodbury,
263 F.2d 784 (9th Cir. 1959)..................................................................................................... 2

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TABLE OF AUTHORITIES
(continued)

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Page(s)

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STATUTES

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17 U.S.C. § 504 ............................................................................................................................... 9

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28 U.S.C. § 1291 ............................................................................................................................. 2

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28 U.S.C. § 1292 ................................................................................................................. 1, 2, 6, 7

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35 U.S.C. § 284 ............................................................................................................................... 9

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I.

INTRODUCTION

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As Oracle admits, interlocutory appeal under 28 U.S.C. § 1292(b) is an exception to the

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rule against piecemeal appeals, “to be used only in exceptional situations in which allowing an

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interlocutory appeal would avoid protracted and expensive litigation.” In re Cement Antitrust

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Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). No such “exceptional situation” exists here, and

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granting Oracle’s motion only serves to unnecessarily prolong this case.

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The fundamental problem with Oracle’s motion is that despite the Court’s clarifying order,

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Oracle’s proposed questions for certification continue to mischaracterize the bases for the Court’s

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9/1/11 Order, requesting appellate review of issues on which the Court never ruled. These

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proposed questions all relate to whether certain categories of evidence are sufficient to support a

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“hypothetical” license-fee award and incorrectly presume that Oracle’s trial evidence was

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objective. But the Court did not, as Oracle’s questions suggest, rule that whole categories of

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evidence are per se insufficient to value license damages, or that objective value could be proved

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only by particular kinds of evidence. Rather, the Court found that Oracle failed to offer any

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evidence of lost licensing opportunities or any objective evidence to support a non-speculative

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license price, and then held that Oracle was not entitled to actual damages in the form of

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“hypothetical” license fees. Even if the Ninth Circuit ruled that certain categories of evidence can

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suffice to price a hypothetical license, this would not result in reversing any part of the Court’s

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9/1/11 Order. Instead, appellate answers about categories of evidence would be merely advisory.

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Thus, Oracle’s questions are not “controlling.” And if what Oracle really wants is for the Ninth

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Circuit to re-analyze whether the evidence Oracle offered at trial was objective, then these

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questions are not even “questions of law” that can be considered on interlocutory appeal.

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Moreover, no substantial grounds for difference of opinion exist as to the law governing

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Oracle’s proposed questions. Ninth Circuit law uniformly supports the Court’s rulings that

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license-fee-based damages for copyright infringement are available only upon proof of lost

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licensing opportunities and that objective evidence (including, but not limited to, evidence of

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“benchmark” transactions) must be offered to establish a license’s value. Oracle’s attempt to

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arguing the sufficiency of evidence presented at trial fails because the Court correctly applied

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controlling case law. Relying on inapposite patent law does not further Oracle’s argument.

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Ultimately, because interlocutory appeal will uselessly impede, rather than materially

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advance, termination of this long-running dispute, the Court should deny Oracle’s motion. Oracle

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must either accept the remittitur and end the case or elect a new trial. Given the much narrowed

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scope of a new trial, it should conclude far earlier than the proposed interlocutory appeal.

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II.

ARGUMENT

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A.

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28 U.S.C. § 1292(b) provides a limited exception to the rule that an appellate court should

Standard for Certifying Interlocutory Appeal.

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not review a district court ruling until entry of final judgment. 28 U.S.C. § 1291. The statute

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allows a district court to exercise discretion and certify a non-final order for immediate appeal if

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there is: (1) a “controlling question of law,” (2) on which there are “substantial grounds for

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difference of opinion,” and (3) resolution of which would “materially advance the ultimate

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termination of the litigation.” In re Cement, 673 F.2d at 1026. Because Section 1292(b)

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derogates from the usual final-judgment rule and runs contrary to the strong federal policy against

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piecemeal appeals, a district court must “strictly” construe the statute’s requirements and allow

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certification only “when exceptional circumstances warrant it.” Safeway Inc. v. Abbott Labs., No.

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C 07-05470 CW, 2010 U.S. Dist. LEXIS 61721, at *6 (N.D. Cal. June 1, 2010).

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Even if these three factors are met, a district court possesses unreviewable discretion to

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deny certification. See Exec. Software N. Am., Inc. v. U.S. Dist. Ct. for Cent. Dist. of Cal., 24

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F.3d 1545, 1550 (9th Cir. 1994) (stating that district court’s decision as to 1292(b) certification is

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“unreviewable”); Brizzee v. Fred Meyer Stores, Inc., CV-04-1566-ST, 2007 U.S. Dist. LEXIS

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99155, at *8 (D. Or. Dec. 10, 2007) (“Even when all three statutory criteria are satisfied, district

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court judges have ‘unfettered discretion’ to deny certification.”). And even if a district court

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grants certification, the court of appeals must exercise its own discretion to determine whether to

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permit the appeal. See Shurance v. Planning Control Int’l, Inc., 839 F.2d 1347, 1348 (9th Cir.

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1988); United States v. Woodbury, 263 F.2d 784, 788 (9th Cir. 1959).

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B.

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In offering what it claims to be “controlling questions” meriting certification, Oracle

Oracle Does Not Seek to Certify a “Controlling Question of Law.”

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ignores the Court’s actual post-judgment rulings and poses questions as to whether certain

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categories of evidence are sufficient to obtain “copyright damages based upon the amount a

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willing buyer would reasonably have had to pay a willing seller under a hypothetical license.”1

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Mot. at 1. A “question of law” is “controlling” only if resolving the question on interlocutory

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appeal “could materially affect the outcome of litigation in the district court.” In re Cement, 673

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F.2d at 1026. Oracle’s questions are not “controlling” because the Court’s grant of judgment as a

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matter of law and a new trial limited to lost profits and infringers’ profits (or remittitur) still will

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stand regardless of the Ninth Circuit’s answers. As a result, immediate appeal will not affect the

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outcome of the litigation, other than to needlessly delay it.

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Judgment as a Matter of Law (“JMOL”). The Court granted JMOL on two separate

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grounds—Oracle is not entitled to “hypothetical” license fees as actual damages because:

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(1) Oracle failed to prove that it actually lost any licensing opportunities,2 and (2) even if

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“hypothetical” license fees were recoverable absent proof of lost licensing opportunities, Oracle

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failed to offer any objective (let alone sufficient) evidence upon which to calculate a non-

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speculative license price.3 ECF No. 1081 at 10-15. Resolving Oracle’s proposed questions would

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not affect either basis for the Court’s grant of JMOL and thus do not qualify as “controlling.”

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First, Oracle’s questions do not address the first basis for the Court’s order—that, as a

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Oracle’s three proposed questions for certification are: “(1) Whether copyright damages
measured by the amount a willing buyer would have paid a willing seller for a hypothetical
license to the rights infringed are sufficiently established by evidence of: (a) the infringer’s
contemporaneous projections of the profits it would realize from use of the rights, (b) the
copyright owner’s contemporaneous evidence valuing the business it would lose if it licensed
those rights, and (c) reliable expert testimony as to the fair market value of a hypothetical license
to the rights, based upon that evidence. (2) Whether a jury’s assessment of the fair market value
of the rights infringed may be set aside as speculative when based upon such objective evidence.
(3) Whether a jury’s verdict falling within the reasonable range of hypothetical-license damages
established by such objective evidence, may be set aside as excessive.” Mot. at 1-2.
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The Court found that Oracle failed to offer any “evidence of the type on which plaintiffs
ordinarily rely to prove that they would have entered into such a license” and that the evidence
instead confirmed that Oracle “would not ever license to anyone.” ECF No. 1081 at 10-11, 14.
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The Court found that Oracle offered only subjective evidence in the form of “what
Oracle would have demanded” for a license. ECF 1081 at 11, 14.
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threshold matter, Oracle cannot recover actual damages for copyright infringement in the form of

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a “hypothetical” license because it failed to offer any evidence that it actually lost licensing

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opportunities. Instead, Oracle’s questions focus on whether certain categories of evidence may be

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“sufficient” to calculate an objective, non-speculative hypothetical license price, once entitlement

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to lost license fees is proven. See Mot. at 1-2. Thus, a ruling on Oracle’s questions would not

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affect the Court’s holding that Oracle is not entitled to recover actual damages in the form of

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“hypothetical” license fees for failure to establish lost licensing opportunities. The parties still

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would proceed to a new trial limited to lost profits and infringer’s profits.

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Contrary to Oracle’s suggestion, the Court’s 9/16/11 Order did not “clarify” that the sole

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basis for the Court’s grant of JMOL was Oracle’s failure to offer evidence sufficient to value the

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hypothetical license. See Mot. at 2, 13. The 9/16/11 Order addressed only the question that

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Oracle previously sought to certify for interlocutory appeal, which mischaracterized the basis for

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the Court’s second JMOL holding. The Court clarified that it did not hold that hypothetical

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license damages must be quantified through “evidence of actual licenses it entered into or would

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have entered into for the infringed works, and/or actual ‘benchmark’ licenses . . . .” ECF No.

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1088 at 2. Rather, it held that the evidence Oracle offered at trial was insufficient to “establish an

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objective, non-speculative license price,” having found that all of the evidence Oracle offered in

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support of calculating a “hypothetical” license price was subjective. Id. (stating that Oracle

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“failed to provide objective evidence of what a willing buyer would have paid” or any other

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objective “evidence sufficient to allow the jury to assess fair market value without undue

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speculation”). The Court did not purport to reiterate all the ways in which Oracle failed to prove

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its entitlement to a hypothetical license remedy, including Oracle’s failure, as a threshold matter,

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to offer evidence that it actually lost any licensing opportunities. As a result, there is no merit to

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Oracle’s claim that its questions “control” the Court’s grant of JMOL.

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Second, Oracle’s revised questions continue to mischaracterize the second basis for the

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Court’s grant of JMOL—that Oracle failed to offer any objective evidence sufficient to establish a

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non-speculative license price. The Court held that the particular evidence that Oracle presented at

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trial, in the form of “purported value of the intellectual property as a whole, . . . self-serving
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testimony from its executives regarding the price they claim they would have demanded in an

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admittedly fictional negotiation, and . . . the speculative opinion of its damages expert, which was

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based on little more than guesses about the parties’ expectations,” was insufficient to “establish an

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objective, non-speculative license price.” ECF No. 1081 at 11, 17. The Court did not, as Oracle’s

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proposed questions suggest, rule that whole categories of evidence are per se insufficient to value

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license damages or that “objective value could be proved only by particular kinds of evidence.”

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Mot. at 1, 5. Nor did the Court rule that an award based on certain categories of evidence or

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falling “within the reasonable range of hypothetical-license damages established” by these

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categories of evidence must be set aside as speculative and/or excessive. Id. at 2.

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Because Oracle’s proposed questions are not presented by this case, they are inappropriate

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to certify for interlocutory appeal. See Hulmes v. Honda Motor Co., 936 F. Supp. 195, 209

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(D.N.J. 1996) (denying certification where “Plaintiff has asked this court to certify for

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interlocutory appeal a question that it did not decide”); In re Bridgestone/Firestone, Inc., Tires

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Prods. Liab. Litig., 212 F. Supp. 2d 903, 907 (S.D. Ind. 2002) (denying certification where party

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“mischaracterize[d]” court’s ruling “[i]n an effort to make this issue a question of law”). A ruling

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by the Ninth Circuit that certain categories of evidence can suffice to price a hypothetical license

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would not alter the Court’s holding that the purely subjective evidence Oracle presented at trial

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failed to support a non-speculative license amount. Instead, this ruling would simply be an

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advisory opinion that, in the abstract, a copyright owner may support a non-speculative license-

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based damages amount with objective evidence falling into the categories Oracle lists. Thus,

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Oracle’s proposed questions are not “controlling”; they are purely academic.

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Further, Oracle’s arguments in support of its proposed questions demonstrate that these

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questions are not even “questions of law.” Although Oracle frames its questions in terms of

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abstract categories of evidence, Oracle devotes much of its brief to rearguing its specific trial

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evidence, including whether the evidence showed the parties’ “expectations” and whether

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Oracle’s damages expert, Paul Meyer, offered reliable trial testimony valuing a lost license fee.

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See Mot. at 10-17. If what Oracle actually seeks is appellate review of the Court’s finding that

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the evidence Oracle offered at trial was subjective, its proposed questions are not “questions of
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law.” Indeed, this appears to be Oracle’s ultimate objective, but it is well settled that under

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section 1292(b), a “question of law” means a “pure question of law,” “not a mixed question of

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law and fact or an application of law to a particular set of facts.” Brizzee, 2007 U.S. Dist. LEXIS

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99155, at *10-11; Keystone Tobacco Co. v. U.S. Tobacco Co., 217 F.R.D. 235, 238-39 (D.D.C.

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2003) (denying certification, as “crux of an issue decided by Court [was] fact-depend[e]nt” and

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appellate review “could only result in the court of appeals improperly wading into the factual

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pond of an ongoing matter”). Certification is appropriate only where a party seeks review of “an

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abstract legal issue,” Brizzee, 2007 U.S. Dist. LEXIS 99155, at *11, not simply a court’s

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“application of the governing law to the relevant facts of this case.” Hulmes, 936 F. Supp. at 210

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(“Section 1292(b) was not designed to secure appellate review of ‘factual matters’ or of the

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application of the acknowledged law to the facts of a particular case, matters which are within the

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sound discretion of the trial court.”); Ahrenholz v. Bd. of Trs. of Univ. of Ill., 219 F.3d 674, 676-

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77 (7th Cir. 2000). Analyzing whether Oracle’s evidence is objective or subjective requires the

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Ninth Circuit to undertake the same fact-intensive review that this Court carried out to evaluate

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the parties’ post-judgment motions. Questions requiring such analysis are not “questions of law”

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appropriate for interlocutory appeal.

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New Trial. Oracle’s proposed questions have even less bearing on the Court’s grant of a

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new trial, which rested on the Court’s discretionary determination that “the $1.3 billion verdict is

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contrary to the weight of the evidence.” ECF No. 1081 at 3-4, 17. After observing weeks of trial,

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the Court found that the damages award failed to reflect Defendants’ actual use of the works at

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issue, as required by Ninth Circuit law, and improperly was based on “evidence of the purported

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value of the intellectual property as a whole, . . . self-serving testimony from [Oracle] executives

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regarding the price they claim they would have demanded in an admitted fictional negotiation,

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and . . . the speculative opinion of [Oracle’s] damages expert, which was based on little more than

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guesses about the parties’ expectations.” Id. at 17. Such evidence not only was insufficient to

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support an award of actual damages, but also resulted in a verdict that “grossly exceeded the

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actual harm to Oracle in the form of lost customers.” Id. Just as with its rulings on JMOL, the

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Court’s new trial order would not be affected by the Ninth Circuit’s answers regarding what
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categories of evidence theoretically suffice to support an actual damages award. Further, because

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the Court’s new-trial order was an exercise of judicial discretion, reviewed on appeal with

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extreme deference, see Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814,

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818-19 (9th Cir. 2001), the low probability of reversal makes an immediate appeal extremely

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unlikely to advance the ultimate termination of the litigation. Such an appeal would not present a

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“controlling question of law,” but instead only a routine question of judicial discretion. See, e.g.,

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Casey v. Long Island R.R. Co., 406 F.3d 142, 147 (2d Cir. 2005) (holding that court’s grant of

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new trial based on finding that “a monetary verdict is not supported by the evidence but rather is

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so high as to shock the judicial conscience . . . is not a question of law as to which an immediate

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interlocutory appeal is appropriate under § 1292(b)”); McCabe v. Basham, No. 05-CV-73-LRR,

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2008 U.S. Dist. LEXIS 81941, at *4-5 (N.D. Iowa Oct. 14, 2008) (holding that because

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“excessiveness of a verdict is basically, and should be, a matter for the trial court which has had

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the benefit of hearing the testimony and of observing the demeanor of witnesses and which knows

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the community and its standards,” “court’s decision to order a partial new trial . . . on the issue of

15

damages is, by its very nature, a particularly poor candidate for interlocutory review”).

16

C.

17
18

Oracle’s Proposed Questions Do Not Present a Substantial Ground for
Difference of Opinion.

Oracle also fails to show that a substantial ground for difference of opinion exists as to the

19

law governing its proposed questions. To determine if a “substantial ground for difference of

20

opinion” exists under section 1292(b), “courts must examine to what extent the controlling law is

21

unclear.” Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010). Such grounds typically

22

exist only where “the circuits are in dispute on the question and the court of appeals of the circuit

23

has not spoken on the point, if complicated questions arise under foreign law, or if novel and

24

difficult questions of first impression are presented.” Id. “That settled law might be applied

25

differently does not establish a substantial ground for difference of opinion.” Id.; see also N.

26

Carolina ex. rel. Long v. Alexander & Alexander Servs., Inc., 685 F. Supp. 114, 116 (E.D.N.C.

27

1988) (denying request where party raised only “dispute with the application of facts to existing

28

and well-settled law”). “A party’s strong disagreement with the Court’s ruling is not sufficient
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2

for there to be a ‘substantial ground for difference.’” Couch, 611 F.3d at 633-34.
Here, there are no substantial grounds for difference of opinion; clear Ninth Circuit

3

precedent establishes (which Oracle acknowledges) that recovering lost license fees requires

4

offering objective evidence sufficient to calculate a non-speculative license price. See Jarvis v.

5

K2 Inc., 486 F.3d 526, 534 (9th Cir. 2007); Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700,

6

709 (9th Cir. 2004); Mackie v. Rieser, 296 F.3d 909, 917 (9th Cir. 2002); Mot. at 4. The Ninth

7

Circuit rejects license awards based only on subjective evidence. See Mackie, 296 F.3d at 917;

8

Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 513-14 (9th Cir. 1985)

9

(upholding refusal to award license damages where plaintiffs offered “no disinterested testimony”

10

in support of alleged damages). Applying this controlling law, the Court held that the subjective

11

evidence Oracle offered at trial could not support an “objective non-speculative license price.”

12

ECF No. 1081 at 11 (citing Jarvis, 486 F.3d at 534; Polar Bear, 384 F.3d at 709; Mackie, 296

13

F.3d at 917); see also ECF No. 1088 at 2. Having decided, on multiple grounds, that Oracle was

14

not entitled to recover actual damages in the form of a lost license fee, the Court then properly

15

determined that the $1.3 billion award grossly exceeded the only evidence of actual harm, in the

16

form of lost customers. ECF No. 1081 at 17. Oracle’s claim that the Court should have come to a

17

different conclusion in applying this “settled law . . . does not establish a substantial ground for

18

difference of opinion.” Couch, 611 F.3d at 633-34.

19

In an attempt to manufacture substantial grounds for difference of opinion, Oracle argues

20

that “the Court’s Orders incorrectly interpreted this body of law by requiring that this objective

21

value could be proved only by particular kinds of evidence”—namely, “prior actual license

22

transactions or ‘benchmark licenses’”—and cannot be proven through other categories of

23

evidence, including “the parties’ contemporaneous projections of defendants’ anticipated profits

24

or plaintiffs’ anticipated losses.” Mot. at 5-6. But as the Court explained in its 9/16/11 Order, it

25

did not hold as a matter of law that whole categories of evidence are necessary or insufficient to

26

establish an objective, non-speculative license price. See ECF No. 1088 at 2. Rather, the Court

27

found that none of the evidence (regardless of category) that Oracle offered at trial to support its

28

license fee calculation was objective, and thus held as a matter of law that Oracle failed to offer
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evidence sufficient to establish a non-speculative license price. See id. The Court also observed

2

that Oracle had not offered the usual “objective evidence of benchmark transactions, such as

3

licenses previously negotiated for comparable use of the infringed work, and benchmark licenses

4

for comparable use of comparable works,” ECF No. 1081 at 11, which is “one way” in the Ninth

5

Circuit to “establish an objective, non-speculative license price.” ECF No. 1088 at 2. Because

6

the Court’s 9/1/11 Order did not “restrict the scope of [the] objective evidence” adequate to

7

establish a non-speculative license price, Oracle’s claim that it “conflicts with precedent” fails.

8

Mot. at 4; see also Hulmes, 936 F. Supp. at 209 (denying certification where plaintiff

9

misconstrued order as not applying controlling law).

10

Oracle’s arguments premised on patent law also fail to create substantial grounds for

11

difference of opinion as to the correct legal standard in this copyright case. As this Court has

12

recognized, a reasonable royalty under patent law and a “hypothetical” license under copyright

13

law are different remedies. See, e.g., ECF No. 1081 at 12. Whereas the Patent Act requires that

14

damages be “in no event less than a reasonable royalty for the use made of the invention by the

15

infringer,” 35 U.S.C. § 284, the Copyright Act permits recovery of actual damages only upon

16

proof that the infringement caused the asserted loss. See 17 U.S.C. § 504(b). As a result, each

17

area of law developed its own rules for calculating its respective remedy. Courts apply the factors

18

from Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1119-20 (S.D.N.Y. 1970)

19

to determine the amount of a patent-law reasonable royalty, but apply the objectivity rule to price

20

a “hypothetical” license in copyright law. See Jarvis, 486 F.3d at 534. Oracle fails to identify a

21

single copyright case that does what it seeks to do here—import evidentiary standards from the

22

reasonable royalty context into the “hypothetical license fee” context.

23

D.

24

Oracle fails to show that an immediate appeal will materially advance the termination of

25

this litigation. An early appeal now would serve only to interrupt and prolong the district court

26

proceedings by years, and undoubtedly would be followed by additional appeals. By contrast,

27

denying interlocutory appeal and following the path set by the Court’s 9/1/11 Order will

28

materially advance ultimate termination of the litigation: Oracle may either (1) accept the
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CERTIFICATION FOR INTERLOCUTORY REVIEW
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Court’s remittitur (the quickest way to resolve the case), or (2) elect a new trial, which, given its

2

limited scope, could be concluded much earlier than an interlocutory appeal.

3

Whether an appeal “materially advances” termination of a litigation “is linked to whether

4

an issue of law is ‘controlling’ in that the Court should consider the effect of a reversal by the

5

Ninth Circuit on the management of the case.” Mateo v. M/S Kiso, 805 F. Supp. 792, 800-01

6

(N.D. Cal. 1992), abrogated on other grounds by Brockmeyer v. May, 361 F.3d 1222 (9th Cir.

7

2004). As Oracle acknowledges, a court should certify an interlocutory appeal only when doing

8

so “would avoid protracted and expensive litigation.” In re Cement, 673 F.2d at 1026. By

9

contrast, if an appeal “delay(s) resolution of the litigation, it should not be certified.” Matsunoki

10

Group, Inc. v. Timberwork Or., Inc., No. C 08-04078 CW, 2011 U.S. Dist. LEXIS 33178, at *5

11

(N.D. Cal. Feb. 18, 2011) (denying certification where trial would be done in approximately five

12

months); Sonoda v. Amerisave Mortgage Corp., No. C-11-1803 EMC, 2011 U.S. Dist. LEXIS

13

100275, at *6 (N.D. Cal. Sept. 7, 2011). Thus, if “interlocutory review would . . . carry with it a

14

greater risk for delay than its promise for ultimate savings of both time and resources,” denial of

15

certification is appropriate. FTC v. Swish Mktg., No. C 09-03814 RS, 2010 U.S. Dist. LEXIS

16

47948, at *6 (N.D. Cal. Apr. 14, 2010). Consistent with these principles, courts have denied

17

certification if trial in the district court likely would conclude before resolution of the appeal.

18

See Shurance, 839 F.2d at 1348 (refusing to hear certified interlocutory appeal in part because

19

appellate decision might come after scheduled trial date and thus delay resolution); Kraus v. Bd.

20

of Cnty. Rd. Comm’rs for Cnty. of Kent, 364 F.2d 919, 922 (6th Cir. 1996) (denying certification

21

where “only a few days would be required for a jury trial and final disposition of the case in the

22

district court . . . which would avoid a piecemeal appeal,” in contrast to the “many months” that

23

would pass before appeal on Sixth Circuit’s “congested docket”).

24

Similarly, given how “time-consuming and expensive” the appeals process is, courts have

25

found that certifying an interlocutory appeal will not materially advance termination of a

26

litigation if it would result in multiple appeals, as opposed to a single appeal that would result

27

from denying certification. Brizzee, 2007 U.S. Dist. LEXIS 99155, at *13-15 (holding that

28

certification would not materially advance litigation since it “will result in an appeal of a limited
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issue with the virtual assurance of a second appeal to the Ninth Circuit, followed by the

2

possibility of one or two trials”); see also United States ex rel. Wilson v. Maxxam, Inc., No. C

3

06-7497 CW, 2009 U.S. Dist. LEXIS 14375, at *34 (N.D. Cal. Feb. 9, 2009) (denying

4

certification where, “if the appeal were to fail, the termination of the litigation would be delayed,

5

and the Court of Appeals would be burdened with a second appeal”).

6

Oracle incorrectly argues that immediate appeal will materially advance the termination

7

of the litigation because “reversal of the Court’s decision . . . would avoid the ‘needless expense

8

and delay’ of re-trying the case.” Mot. at 18-19 (citation omitted). Not so. As explained above,

9

because the questions that Oracle seeks to certify for interlocutory appeal are not “controlling,”

10

resolving them in Oracle’s favor would not affect the holdings in the Court’s 9/1/11 Order and

11

would not avoid a new trial limited to lost profits and infringers’ profits. Instead, such an

12

appeal—to what is objectively the most congested court of appeals in the country—would result

13

only in the unnecessary delay of the inevitable new trial.4

14

Even if Oracle could avoid retrial by prevailing on appeal, certification still is not

15

warranted. Courts consistently hold that the extraordinary procedure of interlocutory appeal is

16

not justified simply because prevailing on appeal would avoid a second trial, as this “is true with

17

respect to virtually every case in which a trial court has made a legal ruling either before or during

18

trial that is reversed on appeal.” Barbaro v. United States ex rel. Fed. Bureau of Prisons, 05 Civ

19

6998 (DLC), 2008 U.S. Dist. LEXIS 123837, at *4 (S.D.N.Y. Feb. 21, 2008); Mazzella v.

20

Stineman, 472 F. Supp. 432, 436 (E.D. Pa. 1979) (“[T]he savings that would result from the

21

possible avoidance of an unnecessary [s]econd trial is not so significant as to warrant allowance

22

of an immediate appeal.”). Because the parties have already completed discovery and much of

23

the preparation required for a lost/infringers’ profits trial, the time and resources that would be

24

expended for retrial are minimal compared to those required for the first of what inevitably would

25

be several appeals. This case is distinguishable from exceptional cases in which early appeal was

26
27
28

4

The median time from notice of appeal to disposition in the Ninth Circuit is estimated at
16.3 months, the longest in all of the thirteen judicial circuits. See U.S. Courts of Appeals—
Median Time Intervals In Months In Cases Terminated After Hearing or Submission, by Circuit,
During the 12-Month Period Ending September 30, 2010, http://www.uscourts.gov/uscourts/
Statistics/JudicialBusiness/2010/appendices/B04Sep10.pdf (last checked Sept. 27, 2011).
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warranted to materially advance termination of the litigation. See, e.g., Aggio v. Estate of Aggio,

2

No. C 04-4357 PJH, 2006 WL 149006, at *2 (N.D. Cal. Jan. 18, 2006) (holding that interlocutory

3

appeal would materially advance termination of litigation because there remained “a significant

4

amount of work necessary to litigate the case to its conclusion, including trial preparation . . .”).

5

In light of the significant delay that interlocutory appeal would cause, the better approach

6

(assuming that Oracle rejects the remittitur) is to promptly proceed to the Court-ordered new trial.

7

Given its limited scope, this new trial should take no more than eight trial days (jury selection

8

through closing arguments) and, the Court’s calendar permitting, could be concluded soon—

9

certainly before any interlocutory appeal could be resolved. At the close of the trial, the parties

10

could appeal all issues at once, avoiding a piecemeal appeal and the delay inherent in serial

11

appeals. These circumstances compel denial of Oracle’s certification request. See Shurance, 839

12

F.2d at 1348 (refusing to hear interlocutory appeal where appellate decision might come after

13

scheduled trial date); Kraus, 364 F.2d at 922; Brizzee, 2007 U.S. Dist. LEXIS 99155, at *13-15.

14

III.

CONCLUSION

15

Oracle’s proposed questions for certification meet none of Section 1292(b)’s

16

requirements, and permitting interlocutory appeal only would prolong this already protracted

17

dispute. This is, and properly has always been, a case about alleged lost profits and infringers’

18

profits for copyright infringement. The appropriate next step is Oracle accepting the Court’s

19

remittitur or, if Oracle insists, a short, focused new trial. Oracle’s motion should be denied.

20

Dated: October 7, 2011

JONES DAY
By: /s/ Tharan Gregory Lanier
Tharan Gregory Lanier

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22

Counsel for Defendants
SAP AG, SAP AMERICA, INC., and
TOMORROWNOW, INC.

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