Oracle Corporation et al v. SAP AG et al

Filing 1093

REPLY (re 1089 MOTION for 1292(b) Certification for Interlocutory Review MOTION for 1292(b) Certification for Interlocutory Review ) filed byOracle International Corporation. (Howard, Geoffrey) (Filed on 10/14/2011)

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BINGHAM MCCUTCHEN LLP
DONN P. PICKETT (SBN 72257)
GEOFFREY M. HOWARD (SBN 157468)
ZACHARY J. ALINDER (SBN 209009)
BREE HANN (SBN 215695)
Three Embarcadero Center
San Francisco, CA 94111-4067
Telephone: [phone]
Facsimile: 415.393.2286
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
BOIES, SCHILLER & FLEXNER LLP
DAVID BOIES (Admitted Pro Hac Vice)
333 Main Street
Armonk, NY 10504
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
STEVEN C. HOLTZMAN (SBN 144177)
FRED NORTON (SBN 224725)
1999 Harrison St., Suite 900
Oakland, CA 94612
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
DORIAN DALEY (SBN 129049)
JENNIFER GLOSS (SBN 154227)
500 Oracle Parkway, M/S 5op7
Redwood City, CA 94070
Telephone: [phone]
Facsimile: 650.506.7144
[e-mail]
[e-mail]
Attorneys for Plaintiffs Oracle USA, Inc., et
al.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION
ORACLE USA, INC., et al.,
No. 07-CV-01658 PJH (EDL)
ORACLE’S REPLY IN SUPPORT OF
Plaintiffs,
MOTION FOR 1292(b) CERTIFICATION FOR
v.
INTERLOCUTORY REVIEW
Date: N/A
SAP AG, et al.,
Time: N/A
Place: 3rd Floor, Courtroom 3
Defendants.
Judge: Hon. Phyllis J. Hamilton

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Case No. 07-CV-01658 PJH (EDL)

ORACLE’S REPLY SUPPORTING MOTION FOR 1292(b) CERTIFICATION OF ORDER

TABLE OF CONTENTS

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Page

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I.
II.

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III.

INTRODUCTION ............................................................................................................. 1
ARGUMENT ..................................................................................................................... 2
A.
The Post-Trial Order Poses Controlling Questions Of Law .................................. 2
B.
There Are Substantial Grounds For Difference Of Opinion.................................. 5
1.
Whether There Is Sufficient Objective Evidence As A Matter Of
Law To Establish The Amount A Willing Buyer Would Have Paid
A Willing Seller ......................................................................................... 5
a.
Objective Evidence ........................................................................ 5
b.
Sufficient Evidence ........................................................................ 7
2.
Speculative Evidence ................................................................................. 9
3.
Whether The Jury’s Verdict, Falling Within The Reasonable
Range Of Hypothetical-License Damages Established By The
Evidence, May Be Set Aside As Excessive ............................................... 9
C.
Certification Would Materially Advance The Termination Of The
Litigation .............................................................................................................. 10
CONCLUSION ................................................................................................................ 12

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TABLE OF AUTHORITIES

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Page

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3

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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Barbaro v. United States ex rel. Fed. Bureau of Prisons,
05 Civ 6998 (DLC), 2008 WL 474135 (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) ...............................11
F.D.I.C. v. Anders,
CIV. S-87-430EJG/PAN, 1991 WL 442874 (E.D. Cal. July 2, 1991) ...................................11
F.T.C. v. Swish Mktg.,
No. C 09-03814 RS, 2010 WL 1526483 (N.D. Cal. Apr. 14, 2010) ......................................10
Finjan, Inc. v. Secure Computing Corp.,
626 F.3d 1197 (Fed. Cir. 2010).................................................................................................8
Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc.,
772 F.2d 505 (9th Cir. 1985).............................................................................................5, 6, 8
Georgia-Pacific Corp. v. United States Plywood Corp.,
318 F. Supp. 1116 (S.D.N.Y. 1970), modified and aff’d, 446 F.2d 295 (2d Cir. 1971) ...........7
Interactive Pictures Corp. v. Infinite Pictures, Inc.,
274 F.3d 1371 (Fed. Cir. 2001).................................................................................................7
Jarvis v. K2 Inc.,
486 F.3d 526 (9th Cir. 2007).........................................................................................6, 7, 8, 9

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Kraus v. Bd. of Cnty. Rd. Comm’rs for Cnty. of Kent,
364 F.2d 919 (6th Cir. 1996)...................................................................................................11
Lavender v. Kurn,
327 U.S. 645 (1946) ..................................................................................................................9
Mackie v. Rieser,
296 F.3d 909 (9th Cir. 2002).....................................................................................................6

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Mateo v. M/S Kiso,
805 F. Supp. 792 (N.D. Cal. 1992) abrogated on other grounds by Brockmeyer v.
May, 361 F.3d 1222 (9th Cir. 2004) .......................................................................................11

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TABLE OF AUTHORITIES
(continued)
Page

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Matsunoki Group, Inc. v. Timberwork Oregon, Inc.,
No. C 08-04078 CW, 2011 WL 940218 (N.D. Cal. Feb. 18, 2011) .......................................12
Mazzella v. Stineman,
472 F. Supp. 432 (E.D. Pa. 1979) ...........................................................................................11
On Davis v. The Gap, Inc.,
246 F.3d 152 (2d Cir. 2001)......................................................................................................8
Polar Bear v. Timex Corp.,
384 F.3d 700 (9th Cir. 2004).................................................................................................6, 7
Rite-Hite Corp. v. Kelley Co.,
56 F.3d 1538 (Fed. Cir. 1995)...............................................................................................8, 9
Runge v. Lee,
441 F.2d 579 (9th Cir. 1971).................................................................................................5, 6
Shurance v. Planning Control Int’l., Inc.,
839 F.2d 1347 (9th Cir. 1988).................................................................................................11

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Sid & Marty Krofft Television Corp. v. McDonald’s Corp.,
562 F.2d 1157 (9th Cir. 1977)...................................................................................................8
Silver Sage Partners, Ltd. v. City of Desert Hot Springs,
251 F.3d 814 (9th Cir. 2001)...............................................................................................4, 10
Snellman v. Ricoh Co.,
862 F.2d 283 (Fed. Cir. 1988)...............................................................................................7, 8

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Sonoda v. Amerisave Mort’g. Corp.,
No. C-11-1803 EMC, 2011 WL 3957436 (N.D. Cal. Sept. 7, 2011) .....................................11
Steering Comm. v. United States,
6 F.3d 572 (9th Cir. 1993).....................................................................................................2, 3
Tortu v. Las Vegas Metro. Police Dept.,
556 F.3d 1075 (9th Cir. 2009)...................................................................................................4

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TWM Mfg. Co., Inc. v. Dura Corp.,
789 F.2d 895 (Fed. Cir. 1986)...................................................................................................8
United States ex rel. Wilson v. Maxxam, Inc.,
No. C 06-7497 CW, 2009 WL 322934 (N.D. Cal. Feb. 9, 2009) ...........................................12

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TABLE OF AUTHORITIES
(continued)
Page

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United States v. 4.0 Acres of Land,
175 F.3d 1133 (9th Cir. 1999).............................................................................................4, 10
United States v. Begay,
___ F.3d ___, 2011 WL 94566 (9th Cir. 2011) (en banc) ........................................................9
United States v. State of Wash.,
969 F.2d 752 (9th Cir. 1992).....................................................................................................2
Universal Pictures Co. v. Harold Lloyd Corp.,
162 F.2d 354 (9th Cir. 1947).................................................................................................5, 6
William Inglis & Sons Baking Co. v. ITT Cont’l Baking Co., Inc.,
668 F.2d 1014 (9th Cir. 1981).................................................................................................12

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I.
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INTRODUCTION
SAP’s opposition concedes Oracle’s description of its damages evidence but

argues that Oracle is not entitled to dispute the legal sufficiency of that evidence on interlocutory
appeal because it does not raise reviewable questions of law. That is incorrect. The questions
Oracle asks the Court to certify relate to three legal disputes that should be decided by the Ninth
Circuit: (1) whether the evidence that Oracle introduced is legally sufficient to support
hypothetical-license damages; (2) whether the Court may set the verdict aside as speculative
even though it is logically supported by such evidence; and (3) whether the Court may grant a
new trial even though the verdict falls squarely in the range set by such evidence. Ninth Circuit
law clearly permits § 1292(b) review of such questions even if they, in part, involve “mixed
question[s] of law and fact.”
Moreover, if Oracle is correct about the answers to these questions, then the
JMOL and new trial orders must be reversed, which makes the questions controlling.
In addition, there are substantial grounds for disagreement about the answers to
these questions. While SAP asserts that Oracle’s evidence is insufficiently “objective,” it fails to
cite a single case that imposes or defines that requirement. And no case imposes any
requirement that hypothetical-license damages be proved by evidence of “benchmark” licenses,
“actual” licenses or “lost licensing opportunities.” The law requires Oracle only to establish an
objective market value of the rights SAP infringed. Many cases allow hypothetical-license
damages based on just the sort of evidence Oracle introduced. SAP’s unsupported insistence that
Oracle’s evidence – most of which comes from SAP itself – is insufficiently “objective” only
emphasizes the need for clear answers to the controlling questions Oracle identified.
The Ninth Circuit will decide these issues. The only question here is when: on
interlocutory appeal, or on appeal after a new trial and final judgment. For two reasons, it should
decide them now. First, if Oracle appeals now and wins, a second trial can be avoided. Second,
even if the Ninth Circuit affirms the grant of a new trial, it is far better to clarify the Ninth
Circuit’s requirements for hypothetical-license damages to conform the new trial to those

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requirements. Otherwise, we risk a third trial. The Court should grant the motion for

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certification.

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II.

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ARGUMENT
A.

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The Post-Trial Order Poses Controlling Questions Of Law
The three questions Oracle identified do not just affect the outcome of the

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litigation, they control it. Together, they determine whether the $1.3 billion judgment must stand

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or fall, whether the Court may order a new trial and, if so, whether that new trial may be limited

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to lost profits and infringer’s profits. (Mot. 3). SAP incorrectly argues these questions are not

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“controlling” or not questions “of law” at all. (Opp. 3:8-10; 5:22-23).

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“Pure Questions of Law.” SAP argues that certification demands “pure

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questions of law.” It then labels the controlling questions here as “mixed questions” not

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appropriate for certification. (Opp. 5:22-6:16). Not so. Under Ninth Circuit law, where an order

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involves at least one pure question of law, interlocutory appeal is appropriate to review both the

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question of law and the application of law to the facts of the case, including “mixed question[s]

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of law and fact.” Steering Comm. v. United States, 6 F.3d 572, 574-76 (9th Cir. 1993)

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(permitting § 1292(b) on “both the standard of care . . . and the application of that standard to the

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facts of this case.”); see also United States v. State of Wash., 969 F.2d 752, 753-54 (9th Cir.

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1992) (permitting § 1292(b) appeal on issue of treaty interpretation, “a mixed question of law

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and fact”).

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Here, Oracle’s motion raises several pure questions addressing the legal standard

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for copyright damages: the meaning of “objective analysis” as required by case law, including

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whether it refers to the kind of evidence used to prove hypothetical-license damages (as the

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Court held) or the measure of damages (objective market value of a license rather than an

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owner’s subjective feeling as to value) (Mot. 4-6); whether the Georgia-Pacific factors govern

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valuation of hypothetical licenses in copyright (Mot. 9); and whether a district court has

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authority to grant a new trial on damages even though the verdict falls within the range set by

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admissible evidence (Mot. 16-18). The only mixed questions of law are whether, once these

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legal questions are resolved, evidence of the infringer’s contemporaneous business plans,
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projections and anticipated profits from the infringement and plaintiff’s contemporaneous

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valuation of the business are legally sufficient evidence (Mot. 6-9); and whether a verdict may be

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overturned as speculative even though it logically follows from the evidence before the jury.

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(Mot. 13-16). Given “the presence of a pure legal question,” the Ninth Circuit can “resolve all

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questions material to the order.” Steering Comm., 6 F.3d at 576.

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JMOL. SAP urges that the Court granted JMOL on two grounds supposedly not

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addressed by Oracle’s questions: (1) that Oracle “failed to prove that it actually lost any

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licensing opportunities;” and (2) that Oracle “failed to offer any objective . . . evidence upon

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which to calculate a non-speculative license price.” (Opp. 3:14-17). However, the first ground

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was expressly not a basis for JMOL. (Clarification Order 2:8-12) (“The court did not hold as a

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matter of law . . . that [hypothetical-license damages] are available only if the copyright owner

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provides evidence of actual licenses it . . . would have entered into for the infringed works.”).1

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The second ground was the basis for the Court’s grant of JMOL (Clarification

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Order 2:19-21), but Oracle’s questions squarely implicate the correctness of that holding.

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Question No. 1 asks whether Oracle’s objective evidence is legally sufficient. (Mot. 1:21-26).

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In support of that question, Oracle’s certification motion details substantial ground for difference

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of opinion “as to whether there [is] sufficient objective evidence” to establish hypothetical-

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license damages. (Mot. 4:17-21) (emphasis added). Oracle’s motion further details how the

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Court’s orders “restrict[] the scope of that objective evidence in a manner that conflicts with

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precedent” (Mot. 4:20-6:17), and cites numerous cases holding that evidence like that which

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Oracle introduced is sufficient to prove hypothetical-license damages. (Mot. 6:11-12:21).

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New Trial. SAP claims that the legal questions framed by Oracle’s certification

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motion will not affect the grant of a new trial because the Court exercised nearly unreviewable

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discretion. (Opp. 6:17-7:15). That is incorrect. If Oracle’s evidence is legally sufficient to

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Had the Court held that Oracle was required to prove lost licensing opportunities, that
question would warrant certification for the reasons laid out in Oracle’s original certification
motion. (See 9/12/11 Motion for Certification at 1) (Docket No. 1085) (requesting certification
of whether hypothetical-license damages require evidence of “actual licenses [plaintiff] entered
into or would have entered into for the infringed works”).

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support hypothetical-license damages (Question No. 1), then the verdict is in the middle of the

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range supported by the evidence, and Oracle’s motion asks for review (Question No. 3) on the

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ground that the Court does not have discretion to grant a new trial on damages when the verdict

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falls squarely within that range. Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251

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F.3d 814, 825 (9th Cir. 2001); United States v. 4.0 Acres of Land, 175 F.3d 1133, 1143 (9th Cir.

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1999); (Mot. 16-17).

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Moreover, if Oracle’s evidence is legally sufficient to support hypothetical-license

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damages, then the grant of a new trial was error to the extent it found that Oracle failed to

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provide an “objectively verifiable number of customers lost” (Question No. 1) or determined that

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the $1.3 billion award grossly exceeded actual harm in the form of lost customers (Question

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No. 3). If Oracle introduced sufficient evidence to support hypothetical-license damages, Oracle

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did not need to prove that it lost customers as a result of the infringement. (Mot. 17:17-18:3).

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Hence, if the Court erred in holding the hypothetical-license evidence insufficient, then the grant

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of a new trial predicated on that error must be reversed. Tortu v. Las Vegas Metro. Police Dept.,

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556 F.3d 1075, 1086-87 (9th Cir. 2009) (grant of new trial reversed where based on legal error as

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to scope of recoverable damages).

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The questions for certification also affect whether a new trial was properly

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granted based on the Court’s rejection of Oracle’s expert’s opinion as “speculative,” and based

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on “guesses about the parties’ expectations.” (Post-Trial Order 17:13-14). Question No. 1 asks

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whether a copyright owner may prove hypothetical-license damages by showing what the parties

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would have demanded or paid for a license in a negotiation, based on the parties’ actual expected

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profits and losses and resulting expert opinion. Oracle’s motion cites numerous cases allowing

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calculation of each side’s price in the hypothetical negotiation based on contemporaneous

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evidence of each side’s expectations of profit, the very evidence Oracle’s expert relied upon.

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(See Mot. 6:11-9:3) (discussing cases).

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The answer to Question No. 1 will also determine whether the Court was correct

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to reject as “self-serving” the testimony from Oracle’s executives. (Post-Trial Order 17:11-12).

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No other principle of copyright law precludes copyright owners from testifying about value. To
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the contrary, a copyright owner’s testimony can be adequate support for valuing copyright

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damages under the hypothetical-license measure. Frank Music Corp. v. Metro-Goldwyn-Mayer,

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Inc., 772 F.2d 505, 514 n.8 (9th Cir. 1985); Runge v. Lee, 441 F.2d 579, 582 (9th Cir. 1971);

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Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354, 369 (9th Cir. 1947); p. 6 below.

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And, in any event, Oracle provided extensive evidence of SAP’s contemporaneous expectation of

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profits from infringing. (Mot. 10:6-16, 11:24-12:15).

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B.

There Are Substantial Grounds For Difference Of Opinion

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Oracle’s motion details substantial grounds for difference of opinion as to each of

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the three controlling questions based on decisions of the Ninth Circuit and other circuit decisions

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the Ninth Circuit has adopted. (Mot. 3-16). SAP’s response only confirms the grounds for

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substantial disagreement about all three.

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1.

Whether There Is Sufficient Objective Evidence As A
Matter Of Law To Establish The Amount A Willing
Buyer Would Have Paid A Willing Seller

SAP does not dispute that Oracle presented evidence of (a) SAP’s

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contemporaneous projection of profits it expected to realize from the rights it infringed, (b)

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Oracle’s contemporaneous valuation of the business that it would lose if it licensed those rights

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to SAP, and (c) reliable expert testimony assessing the fair market value of a hypothetical license

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based on the above. (Mot. 9-12). It disputes only the legal sufficiency of that evidence, and

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whether it supports the jury’s hypothetical-license award as a matter of law.

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In answering that legal question, this Court held the “evidence provided by Oracle

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was not sufficient to support an award of hypothetical-license damages because it failed to

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provide objective evidence of what a willing buyer would have paid, and because it failed to

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

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speculation.” (Clarification Order 2:19-22). Oracle’s motion cites extensive case law showing

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substantial grounds to conclude that this ruling is incorrect as a matter of law.

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a.

Objective Evidence

Hypothetical-license damages rest on objective market value – that is, the license
fee that the owner and infringer would have agreed to in a hypothetical negotiation – and not
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merely the price the copyright owner subjectively would demand. Jarvis v. K2 Inc., 486 F.3d

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526, 533 (9th Cir. 2007). This objective fair market value requirement, however, does not

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impose any specific evidentiary method of proving market value. On the contrary, the case law

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shows a wide array of approaches suffice, including consideration of the credible testimony of

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the copyright holder. (See Mot. 4-6).

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SAP misreads this line of cases as requiring that the fair market value evidence

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must be objective, not the resulting value established by the evidence. (Opp. 1:15, 3:16-17, 4:16-

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17, 4:26-27, 8:26-28). It insists the Court’s JMOL was correct because “none of the evidence . . .

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that Oracle offered at trial to support its license fee was objective.” (Opp. 8:26-9:1) (emphasis

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altered). But SAP cites no legal authority that requires “objective evidence.” One of SAP’s

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cases (Opp. 8:6-10) holds merely that “market value” is the measure of damages and the owner’s

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subjective “hurt feelings” are not a proper measure of damages, and nowhere require “objective

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evidence.” Mackie v. Rieser, 296 F.3d 909, 917 (9th Cir. 2002); (see Mot. 5:1-6). SAP’s other

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case, Frank Music, did not require “objective evidence” of value, either. To the contrary, it

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acknowledged that “[c]redible testimony by the [copyright] owner . . . regarding its value can

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provide an adequate evidentiary basis for an award of damages.” 772 F.2d at 514 n.8 (quoting

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Runge, 441 F.2d at 582); see also Runge, 441 F.2d at 582 (affirming copyright damages based on

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the owner’s testimony as to the work’s value); Universal Pictures Co., 162 F.2d at 369 (affirming

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copyright damages based partly on owner’s testimony as to the work’s value, and holding such

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testimony adequate).2

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Oracle’s evidence goes directly to this market value.

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Even if the Ninth Circuit did require “objective evidence,” Oracle’s evidence

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meets that requirement. In Polar Bear v. Timex Corp., 384 F.3d 700 (9th Cir. 2004), the court

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affirmed a hypothetical-license award based entirely on the amount of money the copyright

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In Frank Music, the owner’s testimony was rejected not as a matter of law, but because
the factfinder chose to disbelieve it. 772 F.2d at 513. The Ninth Circuit was “obliged to sustain
this finding unless we conclude it is clearly erroneous,” and held that the district court’s finding
that plaintiffs “failed to establish any damages” was “not clearly erroneous.” Id. at 513.

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owner unsuccessfully requested in return for a license, even though the offer was rejected and

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there was no evidence any willing buyer would attach any similar value to that license. Id. at

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709. Here, Oracle presented extensive evidence of the value SAP itself attached to the rights

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infringed. That was in addition to Oracle’s own investment-backed valuation, at the time, of the

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business it would have expected to lose by licensing. This evidence is far more objective and

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reliable than the copyright owner’s unilateral demand held sufficient in Polar Bear.

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b.

Sufficient Evidence

At various points in this case, SAP has insisted that Oracle cannot recover

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hypothetical-license damages unless it (1) proves the loss of actual licensing opportunities; (2)

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presents evidence of benchmark licenses for the rights infringed; and (3) introduces “objective

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evidence” of the value of those rights. The Ninth Circuit imposes none of those requirements.

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The law only demands evidence sufficient to establish the fair market value of the rights

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infringed. See Jarvis, 486 F.3d at 534 (market value was objective because it “avoid[ed]

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references to what [plaintiff] thought he should have earned or wished he had charged”); Polar

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Bear, 384 F.3d at 709 (proposed license fee supported fair market value where “[n]othing

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suggests that the fee was contrived or artificially inflated”).

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Because estimating expected gains and losses is the way businesses make

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decisions and measure value, each party’s valuation of the rights at the time of infringement, is

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reliable, probative and direct evidence. Georgia-Pacific, and the legion of cases that follow its

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framework, embodies that common sense conclusion. In case after case, courts uphold damage

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awards based on evidence of each party’s contemporaneous business expectations – precisely the

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type of evidence Oracle presented here. See Georgia-Pacific Corp. v. United States Plywood

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Corp., 318 F. Supp. 1116, 1130-31 (S.D.N.Y. 1970) (court relied on defendant’s “profit

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expectations” to determine amount defendant would have paid for license), modified and aff’d,

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446 F.2d 295 (2d Cir. 1971); Interactive Pictures Corp. v. Infinite Pictures, Inc., 274 F.3d 1371,

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1384 (Fed. Cir. 2001) (jury permissibly relied on infringer’s contemporaneous business plan to

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determine “infringer’s expected sales,” the very information that “would have been available to

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[defendant] at the time of the hypothetical negotiation”); Snellman v. Ricoh Co., 862 F.2d 283,
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289 (Fed. Cir. 1988) (similar); TWM Mfg. Co., Inc. v. Dura Corp., 789 F.2d 895, 900 (Fed. Cir.

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1986) (similar); Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1209-12 (Fed. Cir.

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2010) (affirming that jury had “reasonable basis” to conclude that defendants’ anticipated profits

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from infringing provided defendants’ likely stance in “hypothetical negotiation” over license);

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Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1576-78 (Fed. Cir. 1995) (affirming district court’s

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finding of hypothetical-license damages based on plaintiff’s expected profits).

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SAP distinguishes these cases solely because they involve patents, not copyrights.

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(Opp. 9:10-22). But SAP cannot now credibly claim that Georgia-Pacific does not apply. In

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jury instruction argument, SAP’s lawyer told the Court that “Georgia-Pacific is appropriate” in

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copyright cases. (Tr. 1982:1-24). SAP’s expert Clarke repeatedly told the jury that he used the

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“Georgia-Pacific factors” to value a hypothetical license. (Tr. 1566:22-24 [“Q. Did you consider

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the Georgia-Pacific factors in reaching your opinion? A. I did.”]); (Tr. 1573:10-11 [“Q. Okay.

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Putting all those Georgia-Pacific factors together, you came up with a royalty for

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TomorrowNow, correct? A. Correct.”]); (Tr. 1574:25-1575:11 [Clarke arrived at opinion “using

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the Georgia-Pacific factors”]). SAP’s repeated acknowledgement that Georgia-Pacific applies

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by itself admits that there are strong grounds to think that Georgia-Pacific applies.

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Those admissions aside, SAP’s newfound basis for rejecting Georgia-Pacific is

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unpersuasive. SAP seeks to distinguish the “reasonable royalty” allowed by the Patent Act from

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the “actual damages” allowed by the Copyright Act. (Opp. 9:13-16). But “actual damages”

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under the Copyright Act include a hypothetical license fee: “what a willing buyer would have

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been reasonably required to pay to a willing seller for plaintiffs’ work.” Jarvis, 486 F.3d at 533

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(quoting Frank Music, 772 F.2d at 512); Frank Music, 772 F.2d at 512; Sid & Marty Krofft

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Television Corp. v. McDonald’s Corp., 562 F.2d 1157, 1174 (9th Cir. 1977); On Davis v. The

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Gap, Inc., 246 F.3d 152, 165-69 (2d Cir. 2001). Patent reasonable royalties seek to determine

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the same thing. Rite-Hite Corp., 56 F.3d at 1576 (a “reasonable royalty” is a “hypothetical . . .

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calculated as if the parties negotiated at arm’s length as a willing licensor and a willing licensee

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on the date when the infringement began.”). SAP also urges that hypothetical-license damages

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in copyright are governed by an “objectivity rule” (Opp. 9:17-20), but that just means that they
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seek objectively to determine what a reasonable willing buyer and seller would have negotiated.

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Jarvis, 486 F.3d at 534. Again, patent reasonable royalties seek to determine the same thing.

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Rite-Hite Corp., 56 F.3d at 1576 (willing buyer and willing seller are assumed to have

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“negotiated at arm’s length”).

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Whether Georgia-Pacific applies or not, SAP’s contention boils down to the

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suggestion that evidence of each party’s contemporaneous valuation of the rights infringed,

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based on the actual gains and losses each party to the transaction would expect in the market

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place, is insufficient as a matter of law to establish the market value of the rights infringed. That

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assertion is subject to substantial disagreement on the law of the Ninth Circuit and as a matter of

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simple business logic.

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2.

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There are also substantial grounds to disagree about whether Oracle’s evidence

Speculative Evidence

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left the jury to speculate about fair market value. Evidence is not speculative if a “chain of

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logic” leads from the evidence to the finding. United States v. Begay, ___ F.3d ___, 2011 WL

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94566, at *5 (9th Cir. 2011) (en banc) (internal citation omitted). “Only when there is a

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complete absence of probative facts to support the conclusion” is a finding speculative.

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Lavender v. Kurn, 327 U.S. 645, 653 (1946). Damages determinations receive even wider

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latitude. (Mot. 14:11-28). SAP’s brief does not dispute – or even address – this law. It does not

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dispute the “chain of logic” that leads directly from the evidence to the $1.3 billion verdict.

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(Mot. 15:1-24). It does not argue a “complete absence of probative facts” to support the $1.3

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billion verdict, nor could it.

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SAP’s silence concerning the Court’s speculativeness conclusion tacitly concedes
there are substantial grounds for disagreement on it.
3.

Whether The Jury’s Verdict, Falling Within The
Reasonable Range Of Hypothetical-License Damages
Established By The Evidence, May Be Set Aside As
Excessive

SAP also stands silent on the third question – whether the Court had discretion to
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deem the verdict excessive and grant a new trial. (Mot. 16-18). When the jury’s damage award
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falls within the fair range of the evidence, a district court does not have discretion to grant a new

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trial. Silver Sage, 251 F.3d at 820-21 & n.6, 825; 4.0 Acres of Land, 175 F.3d at 1143; (Mot.

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16:10-17:7). SAP’s brief does not take issue with these cases. It cites Silver Sage generally to

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say that a new-trial grant is reviewed deferentially, but omits that Silver Sage reversed the grant

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of a new trial – precisely because the verdict had been in the fair range of the evidence. (Opp.

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7:1-4).

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Further, the reason the Court granted the new-trial motion goes right back to

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Question No.1, the sufficiency of the evidence. The Court found the verdict grossly excessive

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compared to Oracle’s actual loss of customers. (Post-Trial Order 17:8-18, 20:12). That ruling

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depends on whether the JMOL was correct. If Oracle presented evidence sufficient to support a

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hypothetical-license award, then its recovery was not limited to damages for loss of customers

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and there would be no necessary connection between its actual loss of customers and its

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damages. (Mot. 17:17-18:3). If there was sufficient evidence of hypothetical-license damages,

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the verdict fell squarely in the range set by the evidence. The new-trial order is inextricably

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bound up with both Question No.1 and No.3. Again, SAP has no response.

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C.

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Certification Would Materially Advance The Termination Of
The Litigation
Certification would speed resolution of this case. If the Ninth Circuit agrees with

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Oracle on the legal questions, then it would restore the original judgment with no need for a
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second trial. If the Ninth Circuit reverses JMOL but affirms the new trial, the new trial can
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conform to the Ninth Circuit’s requirements for hypothetical-license damages. If the Court does
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not certify, there is a very real risk that the limits on the new trial will turn out to be erroneous,
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requiring a third trial. (Mot. 18:20-19:21). In any outcome, certification avoids at least one
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trial.
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This is not a situation where the appeal of a pre-trial order may be mooted by later
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proceedings, as in many of SAP’s cases. See (Opp. 11:15-22); F.T.C. v. Swish Mktg., No. C 0926
03814 RS, 2010 WL 1526483, at *4 (N.D. Cal. Apr. 14, 2010) (declining to certify pre-trial
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order regarding remedies where it is “possible to resolve the matter at the liability phase without
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ever reaching the remedy”); Barbaro v. United States ex rel. Fed. Bureau of Prisons, 05 Civ

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6998 (DLC), 2008 WL 474135, at *2 (S.D.N.Y. Feb. 21, 2008) (declining to certify pre-trial

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order where “outcomes during the litigation of the remaining claims [may] render . . . [the issue]

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moot”); Mazzella v. Stineman, 472 F. Supp. 432, 435-36 (E.D. Pa. 1979) (declining to certify

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pre-trial order regarding venue). This case went to verdict. The Court’s post-trial orders suggest

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it will not permit an award of more than a fraction of that amount. Thus, subsequent events

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could not moot Oracle’s appeal.3

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SAP contends that a second trial will take less time than a Ninth Circuit appeal.

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(Opp. 12:5-9). This argument misses the point for the reasons given above: a second trial only

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delays the inevitable appeal and opens the real prospect of a third trial. (Mot. 19:5-16).

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Consequently, it is quite likely that going forward with a scheduled trial “would delay the case

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longer than if the interlocutory appeal were decided prior to trial.” F.D.I.C. v. Anders, CIV. S-

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87-430EJG/PAN, 1991 WL 442874, at *3 (E.D. Cal. July 2, 1991) (certifying order to

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interlocutory appeal even though Ninth Circuit “with its docket crowded . . . may not be in a

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position to decide this interlocutory appeal prior to the scheduled trial date”).

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The cases cited by SAP do not involve the risk of a third trial. In those cases, the

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interlocutory appeal would not determine the substantive standard governing plaintiffs’ claims.

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See Kraus v. Bd. of Cnty. Rd. Comm’rs for Cnty. of Kent, 364 F.2d 919, 921, 922 (6th Cir. 1996)

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(where summary judgment was denied on applicability of statutory notice, interlocutory appeal

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would not have changed substantive standard governing wrongful death claim; no risk of third

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SAP goes even further off point in citing cases where certification was denied because
the appeal would not appreciably affect the trial. See, e.g., Shurance v. Planning Control Int’l.,
Inc., 839 F.2d 1347, 1348 (9th Cir. 1988) (reversal of order regarding disqualification of counsel
would not affect outcome of litigation); Sonoda v. Amerisave Mort’g. Corp., No. C-11-1803
EMC, 2011 WL 3957436, at *1 (N.D. Cal. Sept. 7, 2011) (similar); Mateo v. M/S Kiso, 805 F.
Supp. 792, 800-01 (N.D. Cal. 1992), abrogated on other grounds by Brockmeyer v. May, 361
F.3d 1222 (9th Cir. 2004) (similar); see also Brizzee v. Fred Meyer Stores, Inc., CV-04-1566-ST,
2007 U.S. Dist. LEXIS 99155, at *13-16 (D. Or. Dec. 10, 2007) (reversal on “limited” issue may
not resolve all issues for trial). As detailed in the Motion (Mot. 18:27-19:16) and the text above,
appeal now would drastically affect the new trial. A successful appeal would either eliminate the
second trial altogether or determine the availability and requirements for hypothetical-license
damages.

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trial); Matsunoki Group, Inc. v. Timberwork Oregon, Inc., No. C 08-04078 CW, 2011 WL

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940218, at *1, 3 (N.D. Cal. Feb. 18, 2011) (where relief was granted from summary judgment

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based on newly discovered evidence, interlocutory appeal would not have changed substantive

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standard governing copyright and trademark claims; no risk of third trial); United States ex rel.

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Wilson v. Maxxam, Inc., No. C 06-7497 CW, 2009 WL 322934, at *11-12 (N.D. Cal. Feb. 9,

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2009) (where judgment on the pleadings was denied on applicability of immunity doctrine,

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interlocutory appeal would not have changed substantive standard governing fraud claims; no

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risk of third trial).4

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Here, certification might avert a second trial, or even a third by providing clear

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and “explicit[]” guidance on the proper scope of damages. (Post-Trial Order 12:1). Either way,

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an interlocutory appeal will facilitate the efficient and speedier resolution of this litigation by

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clarifying the controlling legal issues. See, e.g., William Inglis & Sons Baking Co. v. ITT Cont’l

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Baking Co., Inc., 668 F.2d 1014, 1036-39 (9th Cir. 1981) (on interlocutory appeal, reversing

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grant of judgment notwithstanding verdict, affirming grant of new trial, and providing explicit

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interpretation of governing case law).

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III.

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CONCLUSION
The Court should certify its Post-Trial Order, even as clarified in the Clarification

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Order, for interlocutory appeal.

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DATED: September 23, 2011

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Bingham McCutchen LLP
By:

/s/ Geoffrey M. Howard
Geoffrey M. Howard
Attorneys for Plaintiffs Oracle USA, Inc., et al.

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SAP should not have cited Aggio v. Estate of Aggio, No. C 04-4357 PJH, 2006 WL
149006, at *2 (N.D. Cal. Jan. 18, 2006), which is marked “Not for Citation.” Aggio supports
certification here anyway. There, the Court ruled that certification would materially advance the
underlying litigation even though discovery had already closed and all that remained was a
summary judgment motion and trial preparation. Likewise, pre-trial motions and trial
preparation here necessitate “a significant amount of work” that could be mooted by an
interlocutory appeal.

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Case No. 07-CV-01658 PJH (EDL)

ORACLE’S REPLY SUPPORTING MOTION FOR 1292(b) CERTIFICATION OF ORDER