Oracle Corporation et al v. SAP AG et al

Filing 1143

Declaration of Tharan Gregory Lanier in Support of 1142 MOTION in Limine Defendants' Motions in Limine filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20)(Related document(s) 1142 ) (Froyd, Jane) (Filed on 4/26/2012)

EXHIBIT 18

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

NO. C 07-01658 PJH

PAGES 1 - 296
OAKLAND, CALIFORNIA
MONDAY, NOVEMBER 1, 2010

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MUCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
STEVEN C. HOLTZMAN, ATTORNEY AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

8f319c19-708f-4538-8f96-b9dac31aabed

Page 257
1

MY ONLY CONCERN IN THIS IS THE USE OF THE WORD

2

"THEFT".

3

CASE.

4

MORE ARGUMENTATIVE THAN ACCURATE.

5

THIS IS NOT A THEFT CASE.

THE WORDS ARE TERMS OF ART.

THIS IS AN INFRINGEMENT
AND I AGREE THAT THAT'S

SO, I AM GOING TO -- I DON'T WANT YOU TO USE THE

6

WORD "THEFT" THROUGHOUT THE COURSE OF THE OPENING STATEMENT.

7

BUT OTHERWISE, I AGREE WITH THE THREE CATEGORIES.

8

CAN PUT ON SOME EVIDENCE AS LONG AS IT GOES TO THE QUESTIONS

9

THAT YOU'VE RAISED WITH RESPECT TO HOW THE DAMAGES ARE TO BE

I THINK YOU

10

VALUATED AND PROVIDE SOME CONTEXT.

11

SAP'S IN THAT POSITION AND THAT'S HOW IT IS GOING TO HAVE TO

12

BE.

13

MR. LANIER:

14

THE COURT:

15

AND I THINK THAT THAT'S --

WE UNDERSTAND, YOUR HONOR.
TAKE THE WORD "THEFT" OUT AND I'M FINE

WITH WHAT YOU'RE DOING.

TEXT REMOVED - NOT RELEVANT

8f319c19-708f-4538-8f96-b9dac31aabed

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

NO. C 07-01658 PJH
JURY TRIAL
VOLUME 2
PAGES 297 - 479
OAKLAND, CALIFORNIA
TUESDAY, NOVEMBER 2, 2010

(PAGES 297 THROUGH 312 ARE UNDER SEAL AND BOUND SEPARATELY)

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MUCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
STEVEN C. HOLTZMAN, ATTORNEY AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

ef4aebc0-d821-42e8-b4c2-a9398968bc70

Page 339

TEXT REMOVED - NOT RELEVANT

20
21

(DEMONSTRATIVE PUBLISHED TO JURY.)
MR. HOWARD:

WE TALKED ABOUT THE MAINTENANCE SUPPORT

22

FEES THAT CUSTOMERS PAY.

23

IMPORTANT BECAUSE THAT'S HOW ORACLE DEVELOPS THE SUPPORT FOR THE

24

PRODUCTS AND BUILDS THE NEXT VERSION OF THE SOFTWARE.

25

NOT A SMALL NUMBER.

AND I TOLD YOU THAT MAINTENANCE WAS

AND IT'S

ORACLE INVESTS BILLIONS OF DOLLARS EVERY

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

ef4aebc0-d821-42e8-b4c2-a9398968bc70

Page 340
1

YEAR INTO ITS PRODUCTS, BILLIONS OF DOLLARS EVERY YEAR INTO

2

DEVELOPING ITS SOFTWARE.

3

AMOUNT, $3.3 BILLION THIS YEAR, $4 BILLION IN THE NEXT FISCAL

4

YEAR.

AND YOU CAN SEE THAT IT INCREASES THAT

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

ef4aebc0-d821-42e8-b4c2-a9398968bc70

Page 341

TEXT REMOVED - NOT RELEVANT

6

MR. HOWARD:

I TOLD YOU THAT ORACLE WAS QUITE A BIT

7

SMALLER THAN SAP IN 2004 IN ENTERPRISE APPLICATION SOFTWARE.

8

ORACLE HAD TRIED, AND THE EVIDENCE WILL SHOW, THAT ORACLE HAD

9

TRIED TO CATCH UP.

AND IT DECIDED THAT ONE OF THE WAYS THAT IT

10

COULD BE MORE COMPETITIVE WITH SAP WAS TO BUY PEOPLESOFT.

11

IT DID THAT, SAP, WHICH HAD LONG BEEN THE DOMINANT PLAYER IN

12

THAT MARKET, FELT VERY THREATENED.

13

WHEN

ORACLE -- THE EVIDENCE WILL SHOW THAT ORACLE'S

14

PURCHASE OF PEOPLESOFT WAS A RISK, AND IT WAS A VERY BIG

15

DECISION FOR ORACLE.

16

EVEN TO THIS DAY, YOU'LL HEAR THE LARGEST ACQUISITION THAT

17

ORACLE HAS EVER MADE, AND THEY'VE MADE A FEW.

18

THEY PAID OVER $11 BILLION FOR PEOPLESOFT.

PEOPLESOFT AT THE TIME WAS A COMPANY WITH ALMOST

19

$3 BILLION IN ANNUAL REVENUES.

20

IMPORTANT -- PEOPLESOFT HAD ALMOST 10,000 CUSTOMERS.

21

EVIDENCE WILL SHOW THAT THESE CUSTOMERS -- AND I'VE TALKED ABOUT

22

THE MAINTENANCE FEES THAT THESE CUSTOMERS PAY, SO WHAT ORACLE IS

23

GETTING FOR ITS $11 BILLION IN PART IS THE 10,000 CUSTOMERS THAT

24

PEOPLESOFT HAS, ALL OF THOSE CUSTOMERS PAYING MAINTENANCE FEES,

25

ALL OF THOSE MAINTENANCE FEES ABLE TO BE USED TO PAY FOR THE

AND -- AND THIS IS VERY
AND THE

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

ef4aebc0-d821-42e8-b4c2-a9398968bc70

Page 342
1

TRANSACTION, TO PAY FOR THE DEAL, AND TO INVEST IN NEW PRODUCT.

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

ef4aebc0-d821-42e8-b4c2-a9398968bc70

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

JURY TRIAL
NO. C 07-01658 PJH

PAGES 480 - 640
OAKLAND, CALIFORNIA
THURSDAY, NOVEMBER 4, 2010

(PAGES 485 THROUGH 491 ARE UNDER SEAL AND BOUND SEPARATELY)
TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MUCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
STEVEN C. HOLTZMAN, ATTORNEY AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR
88ee2e49-3169-4370-8a69-037d69c1111e

Page 502

TEXT REMOVED - NOT RELEVANT

9

THE COURT:

I MEAN, I -- I DON'T MEAN TO SAY I BOUGHT

10

THE ARGUMENT, BUT I WAS PERSUADED THE -- BY YOUR ARGUMENT THAT,

11

INDEED, IT'S RELEVANT.

12

PARTICULARLY GIVEN THAT LIABILITY'S NO LONGER AT ISSUE IN THE

13

CASE.

14

BUT AT SOME POINT, IT BECOMES CUMULATIVE

SO I'M NOT GOING TO ALLOW YOU TO JUST HAMMER ON IT

15

OVER AND OVER AGAIN.

16

DATES OF KNOWLEDGE AND THE TIME FRAME.

17

ME LIKE YOU NEED FOUR BOARD MEMBERS, I THINK IS WHAT YOU

18

REFERRED TO THE OTHER DAY, TO DO THAT.

I UNDERSTAND YOU NEED TO ESTABLISH THE
BUT IT DOESN'T SEEM TO

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR
88ee2e49-3169-4370-8a69-037d69c1111e

Page 522

TEXT REMOVED - NOT RELEVANT

20

Q.

21

PEOPLESOFT, HOW MUCH DID YOU PAY FOR PEOPLESOFT?

22

A.

NOW, THE -- THE ACQUISITION OF ORACLE'S ACQUISITION OF

I PAID JUST OVER 11 BILLION.

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR
88ee2e49-3169-4370-8a69-037d69c1111e

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

JURY TRIAL
NO. C 07-01658 PJH
VOLUME 5
PAGES 754 - 946
OAKLAND, CALIFORNIA
MONDAY, NOVEMBER 8, 2010

TRANSCRIPT OF PROCEEDINGS

APPEARANCES:
FOR PLAINTIFFS:
BY:

BY:

BINGHAM MUCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW
BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
DAVID BOIES,
STEVEN C. HOLTZMAN, ATTORNEYS AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258
DIANE E. SKILLMAN, CSR NO. 4909
RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

5aa486af-96d5-4092-b078-2f276d575630

Page 846

TEXT REMOVED - NOT RELEVANT

12

Q.

13

MODEL FOR THE PEOPLESOFT AND SIEBEL ACQUISITIONS.

ALL RIGHT.

14

LET'S TALK SPECIFICALLY ABOUT ORACLE'S FINANCIAL

AGAIN, WHY DID ORACLE HAVE THOSE PROJECTIONS

15

PREPARED?

16

A.

17

FROM THE BOARD OF DIRECTORS TO SPEND 11 -- ACTUALLY MORE THAN

18

$11 BILLION AND TO TAKE ON ALL THE LIABILITIES THAT COME WITH

19

PEOPLESOFT AND THE ASSETS.

20
21

WHAT ARE THEY USED FOR?

WELL, THESE PROJECTIONS ARE THE BASIS FOR ASKING PERMISSION

SO THOSE MODELS ARE LITERALLY THE KEY JUSTIFICATION
TO SPEND $11.1 BILLION.

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

5aa486af-96d5-4092-b078-2f276d575630

Page 867

TEXT REMOVED - NOT RELEVANT

5

Q.

6

STANDS READY TO PAY ORACLE $40 MILLION AS COMPENSATION FOR THE

7

INFRINGEMENT IT HAS NOW ADMITTED TO.

8
9

NOW SAP'S COUNSEL IN HIS OPENING STATEMENT SAID THAT SAP

WHY HAVEN'T YOU TAKEN THAT OFFER?
A.

TAKING $40 MILLION FROM SAP, SAP PAYING US $40 MILLION IS

10

A REWARD FOR THEIR BAD BEHAVIOR, FRANKLY.

11

PEOPLE WHO SAY THEY ARE TAKING RESPONSIBILITY FOR EVERYTHING

12

THEY DID, THIS IS EXACTLY THE OPPOSITE OF THAT.

13

IT ACTUALLY, FOR

THIS IS LIKE TAKING SOMEONE'S WATCH AND HOCKING IT.

14

SAY IT'S A $2,000 WATCH, AND HOCKING IT FOR $20, AND THEN

15

OFFERING TO GIVE US $20.

IT'S CRAZY.

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

5aa486af-96d5-4092-b078-2f276d575630

Page 910

TEXT REMOVED - NOT RELEVANT

5

Q.

WHY WOULD THEY PAY THE LICENSE FEE UP FRONT?

6

A.

THERE IS A WIDE VARIETY OF REASONS AND HERE'S A LONG LIST.

7

SOME OF THESE I BELIEVE MR. ELLISON AND MS. CATZ

8

MENTIONED THIS MORNING.

9

UP FRONT, IT REALLY BALANCES AN IMPORTANT ISSUE IN THIS CASE.

FIRST ONE IS VERY IMPORTANT.

IF IT'S

10

IN THAT -- THE TIMING IN THIS CASE IS MAYBE THE MOST IMPORTANT

11

ISSUE.

12

ORACLE SPENT $11 BILLION TO ACQUIRE PEOPLESOFT IN

13

JANUARY 2005, AND IT PAID IT UP FRONT.

14

RISK OF EXECUTING ON THAT PLAN.

15

ORACLE COULDN'T GO BACK AND GET THAT $11 BILLION BACK FROM

16

PEOPLESOFT SHAREHOLDERS.

17

THE RISKS ON EXECUTING ON THAT PLAN WAS ON ORACLE.

18

AND THEN IT TOOK ON THE

AND IF IT DIDN'T GO WELL,

THAT'S JUST THE WAY IT WORKS.

SO ALL

SO FROM MY PERSPECTIVE, WE ARE GOING TO HAVE TO

19

BALANCE THAT.

20

INCLUDES THE FAIR MARKET VALUE OF THE SOFTWARE THAT WAS

21

ACQUIRED THAT'S NOW IN THIS LAWSUIT.

22

SOFTWARE AND WE SHOULD USE THAT TRANSACTION TO ALLOW FOR THIS

23

UPFRONT PAYMENT.

WE HAVE A TRANSACTION AT THAT POINT THAT

SO ORACLE PAID FOR THE

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

5aa486af-96d5-4092-b078-2f276d575630

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

JURY TRIAL
NO. C 07-01658 PJH
VOLUME 6
PAGES 947 - 1187
OAKLAND, CALIFORNIA
TUESDAY, NOVEMBER 9, 2010

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MUCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
DAVID BOIES,
STEVEN C. HOLTZMAN, ATTORNEYS AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258
DIANE E. SKILLMAN, CSR NO. 4909

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1017

TEXT REMOVED - NOT RELEVANT

21

Q.

22

NEGOTIATED LICENSE FRAMEWORK; IS THAT RIGHT?

23

A.

THAT'S CORRECT.

24

Q.

AND YOU UNDERSTAND THAT SAP IS A PROPONENT OF A DIFFERENT

25

MEASURE OF DAMAGES IN THIS CASE, RIGHT?

NOW, ALL OF THE TESTIMONY GIVEN HAS BEEN BASED ON THE

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1018
1

A.

THAT'S CORRECT.

2

Q.

WHAT IS THAT MEASURE?

3

A.

I BELIEVE IT'S SAP'S OPINION THAT THE DAMAGES SHOULD BE

4

MEASURED JUST BASED ON THE NUMBER OF CUSTOMERS THAT ORACLE

5

LOST -- ULTIMATELY LOST, AND THEN THERE'S -- THERE'S A

6

CALCULATION THEY DO OF, I THINK, TWO CUSTOMERS WHERE THEY CALL

7

THAT INFRINGERS' GAINS.

8

GAINS.

9

Q.

SO IT'S LOST CUSTOMERS AND INFRINGERS'

AND THAT'S LOOKING AT IT FROM THE PERSPECTIVE OF JANUARY 19,

10

2005 --

11

A.

THAT'S CORRECT.

12

Q.

-- WHEN THEY STARTED INFRINGE?

13

A.

THAT'S CORRECT.

14

Q.

AND THEN GOING FORWARD IN TIME, WHEN YOU DO A LOST

15

PROFITS/INFRINGERS' PROFITS CALCULATION?

16

A.

17

IN TIME WHEN TOMORROWNOW CEASED OPERATIONS.

18

LOOKING AT WHETHER THERE'S ALSO FUTURE IMPACT, FROM SAP'S

19

PERSPECTIVE, THEY DON'T LOOK AT FUTURE IMPACT.

20

OCTOBER 2008.

21

Q.

22

SAP IS ARGUING FOR?

23

A.

24

WAY TO VALUE THE SOFTWARE AND THE SOFTWARE MATERIALS THAT WERE

25

TAKEN, THAT PROPERTY OF ORACLE, IS THE FAIR MARKET VALUE OF THE

BASICALLY, IT WOULD BE FROM JANUARY 2005 THROUGH THE POINT
AND THEN ALSO

THEY STOP AT

DO YOU AGREE WITH THE METHODOLOGY OF MEASURING DAMAGES THAT

FROM MY PERSPECTIVE, IN THESE CIRCUMSTANCES, THE -- THE ONLY

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1019
1

LICENSE IN THESE CIRCUMSTANCES.

2

Q.

WHY IS THAT?

3

A.

THERE'S -- ONE, IT GIVES YOU A CHANCE TO ACTUALLY VALUE THE

4

COPYRIGHTED PROPERTY.

5

PUT IT INTO PERSPECTIVE OF WHAT -- WHAT YOU WOULD PAY FOR THAT

6

AND HOW ONE WOULD USE IT AT THE TIME OF THAT NEGOTIATION.

7

YOU CAN LOOK AT THE PROPERTY TAKEN AND

IT ALLOWS YOU TO VALUE THE IMPORTANCE OF THE SOFTWARE

8

THAT'S USED BY TOMORROWNOW IN THE SAFE PASSAGE PROGRAM.

9

ACTUALLY CAN INSERT THAT SOFTWARE, AS THE MANAGEMENT OF SAP, DID

YOU

10

INTO THAT PROGRAM AND PUT A VALUE ON THAT AND DETERMINE THAT

11

VALUE WITH THE LICENSE.

12

IT ALSO ALLOWS YOU TO PUT A VALUE ON THE -- THE

13

BENEFITS TO SAP WHEN THEY HAVE THE SOFTWARE, CAN GO OUT AND

14

HAVE -- THEY'RE IMPROVED CUSTOMER RELATIONSHIPS AT SAP.

15

WHEN THEY DON'T CONVERT A CUSTOMER, THEY HAVE ADDITIONAL

16

RESOURCES THAT THEY DIDN'T HAVE WITHOUT HAVING THE LICENSE.

17

CAN PUT A VALUE ON THAT.

18

EVEN

YOU

AND IT CERTAINLY IS THE ONLY WAY -- IT'S THE ONLY WAY

19

IN THIS CASE TO PUT A VALUE ON THE IMPACT TO ORACLE OF THE

20

PEOPLESOFT ACQUISITION.

21

ANY WAY THAT THE LOST PROFITS APPROACH PUTS A VALUE ON THE

22

IMPACT OF ORACLE OF SPENDING $11 BILLION ON PEOPLESOFT.

ORACLE PAID $11 BILLION AND THERE'S NOT

23

AND THEN IT ALLOWS ORACLE TO BE BASICALLY PAID FOR

24

THE VALUE OF ITS PROPERTY AT -- AT THE POINT IN TIME WHEN SAP

25

LAUNCHED THE PROGRAM AND -- AND HAD THE PROPERTY OF ORACLE TO

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1020
1

LAUNCH SAFE PASSAGE AND TO MAKE THE PROJECTIONS AND TO GO TO THE

2

MARKET WITH ITS PLANS TO IMPACT ORACLE.

3

Q.

4

POINTS ON THAT.

5

ALL RIGHT.

AND I THINK THERE IS A SLIDE WITH SOME BULLET

DOES THIS EXPLAIN WHY THE METHOD SAP IS ARGUING FOR

6

IS NOT ADEQUATE?

7

A.

8

THERE'S NO WAY THAT THE LOST PROFITS AND THE -- I GUESS THEY

9

CALL THEM INFRINGERS' PROFITS, MEASURES THE FULL MARKET VALUE OF

IT PROVIDES SOME OF THAT SUMMARY.

AS I MENTIONED, ONE,

10

THE COPYRIGHTED WORKS.

11

MEASURE THE TOTAL IMPACT ON ORACLE, WHICH I MENTIONED.

12

AND, OBVIOUSLY, LOST PROFITS DOES NOT

IT ALSO DOES NOT CAPTURE ALL THE ACKNOWLEDGED

13

BENEFITS THAT WE'VE SEEN IN THE RECORDS OF THE INFRINGEMENT, SO

14

ALL THE PLANS AND -- AND MANAGEMENT FOCUS OF SAP'S MANAGEMENT

15

WITH SAFE PASSAGE.

16

MEASURE ANY VALUE BEYOND LOST CUSTOMER REVENUES AND PROFITS,

17

WHICH IS A BIG PROBLEM WITH THE APPROACH.

18

AND IT'S -- THE NEXT POINT, IT DOES NOT

AND THIRD POINT, IT'S DEPENDENT ON SAP'S EXECUTION.

19

AND SO THEY'VE TAKEN THE PROPERTY SO IT -- IT'S DEPENDENT ON HOW

20

SAP'S EXECUTES THE PROPERTY.

21

COPYRIGHTED WORKS.

22

SCOPE SCHEDULE, IT DOESN'T VALUE THAT.

IT'S NOT THE VALUE OF THOSE

AND A LOT OF PROPERTY YOU SAW THEM ON MY

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1021

TEXT REMOVED - NOT RELEVANT

12

Q.

13

LOOK AT CALCULATING IT UNDER THE WRONG METHOD, THE LOST

14

PROFITS/INFRINGERS' PROFITS METHOD?

15

A.

I DID A CALCULATION OF LOST PROFITS; THAT'S CORRECT.

16

Q.

AND WHY DID YOU DO THOSE CALCULATIONS?

17

A.

WELL, THERE WAS TWO REASONS.

18

RESULT WAS IN TERMS OF WHAT WERE THE LOST PROFITS AND WHAT WERE

19

THE INFRINGERS' PROFITS.

20

AGO, FOR SOME OTHER CAUSE OF ACTION, IT WAS THE ONLY WAY THAT

21

ONE COULD MEASURE.

22

AND SO I'VE DONE A CALCULATION OF LOST PROFITS IN THE INFRINGER

23

PROFITS.

24

Q.

AND WHAT WERE THE RESULTS?

25

A.

THE LOST PROFIT NUMBER IS $120 MILLION.

ALL RIGHT.

LET ME ASK YOU THIS:

DID YOU LOOK AT -- DID YOU

ONE, I WANTED TO KNOW WHAT THE

AND, SECONDLY, I MENTIONED A MOMENT

THAT WAS -- THE METHOD WAS LOST PROFITS.

THAT'S THE LOST

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1022
1

PROFIT NUMBER.

2

$288 MILLION.

3

THAT WERE SAP CUSTOMERS AND ALSO TOMORROWNOW CUSTOMERS BUT A

4

SUBSET, SO I THINK IT'S ABOUT 60-SOME CUSTOMERS ARE IN THE

5

288 MILLION.

6

AND THEN THE INFRINGER (SIC) PROFIT'S NUMBER IS
AND THAT REFLECTS NOT ALL THE CUSTOMERS THAT --

AND THEN THERE'S THREE CUSTOMERS, I THINK IN THAT

7

GROUP OF THE 288,000,000 WHERE THERE'S SOME ISSUES STILL THAT

8

SORT OF EXIST ABOUT THE ROLE OF TOMORROWNOW IN CONVERTING THOSE

9

CUSTOMERS TO SAP.

10

AND SO IF I LOOK AT THE IMPACT OF THOSE THREE

11

CUSTOMERS, I THINK THE NUMBER WOULD BE 236 MILLION.

12

INFRINGER PROFIT'S (SIC) NUMBERS, 288 MILLION, AND THEN RANGES

13

DOWN TO 236 MILLION DEPENDING ON THESE THREE CUSTOMERS.

14

AND SO THAT'S WHERE I'VE COME OUT WITH THOSE

SO MY

15

CALCULATIONS.

16

Q.

17

MILLION IN INFRINGER'S PROFITS, WHAT DO WE GET?

18

A.

I THINK IT'S 408,000,408.

19

Q.

BUT DOES THAT FULLY COMPENSATE ORACLE IN THIS CASE?

20

A.

NO, IT WOULD NOT.

21

INTELLECTUAL PROPERTY.

22

Q.

WHAT COMPENSATES ORACLE FOR THE VALUE OF WHAT SAP TOOK?

23

A.

THE ONLY WAY TO DO IT IS THE FAIR MARKET VALUE OF THE

24

LICENSE APPROACH AT THE 1.5 BILLION.

SO IF I COMBINE THE 120 MILLION IN LOST PROFITS WITH THE 288

IT WOULD NOT COMPENSATE FOR THE VALUE OF

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1053

TEXT REMOVED - NOT RELEVANT

25

Q.

OKAY.

SO THE TWO ASPECTS OF THE FIRST METHOD ARE ORACLE'S

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1054
1

LOST SUPPORT PROFITS, RIGHT?

2

A.

ON LOST PROFITS.

3

Q.

YES.

4

A.

YEAH, THAT WAS ONE PIECE.

TEXT REMOVED - NOT RELEVANT

16

BY MR. MITTELSTAEDT:

17

Q.

18

RIGHT?

19

A.

THAT'S ONE CALCULATION.

20

Q.

AND THOSE ARE THE ORACLE CUSTOMERS WHO LEFT ORACLE BECAUSE

21

OF TOMORROWNOW AND OBTAINED MAINTENANCE OR SUPPORT SERVICES FROM

22

TOMORROWNOW?

23

A.

THAT'S CORRECT.

24

Q.

AND THE OTHER PART OF THIS CALCULATION ARE THE PROFITS THAT

25

SAP GAINED FROM CUSTOMERS WHO LEFT ORACLE AND BOUGHT SOFTWARE

OKAY.

SO ONE ASPECT OF IT IS ORACLE'S LOST SUPPORT PROFITS,

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1055
1

FROM SAP AS A RESULT OF TOMORROWNOW'S INFRINGEMENT, CORRECT?

2

A.

THAT'S CORRECT.

3

Q.

AND WE CALL THOSE -- LET'S JUST CALL THOSE SOFTWARE PROFITS

4

OF SAP.

5

MR. CLARKE BEING SAP'S EXPERT.

6

YOU'D --

AND THEN I'LL PUT "MEYER," "M," AND "CLARKE,"
AND LET'S FOCUS ON THE --

7

YOU CALCULATED SUPPORT PROFITS FOR TWO TIME PERIODS,

8

THE TOMORROWNOW TIME PERIOD AND THEN A LONGER TIME OUT TO 2015;

9

IS THAT CORRECT?

10

A.

RIGHT, TO REFLECT THE ONGOING IMPACT.

11

Q.

AND THE -- LET'S TAKE YOUR NUMBER FOR THE TOMORROWNOW

12

PERIOD.

13

A.

14

$36 MILLION.

15

Q.

YOUR NUMBER?

16

A.

RIGHT.

17

Q.

OKAY.

18

A.

NO.

19

PLAINTIFF LEFT IN THE CASE, SO IT'S 36.

20

Q.

AND MR. CLARKE CAME UP WITH ABOUT THE SAME NUMBER, RIGHT?

21

A.

I DON'T THINK THAT'S CORRECT.

22

NUMBER -- I HAVE MY WORK PAPERS -- IS, LIKE, 19 MILLION.

23

Q.

24

32 MILLION.

25

A.

THAT NUMBER WAS WHAT, IF YOU RECALL?

I BELIEVE FOR THE PLAINTIFF IN THE ACTION RIGHT NOW,

36 MILLION THROUGH TOMORROWNOW PERIOD, RIGHT?
WASN'T IT ACTUALLY ABOUT 82 MILLION?

I THINK ALL WE'RE TALKING ABOUT NOW IS OIC IS THE ONLY

OKAY.

OKAY.

I THINK HIS COMPARABLE

YOU SAY 19 MILLION, I'M GOING TO PUT ABOUT

THAT WOULD NOT BE CORRECT, THOUGH.

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1056
1

Q.

OKAY.

2

A.

SO HIS NUMBER -- IF WE'RE TALKING ABOUT THE PLAINTIFF, AS I

3

UNDERSTAND IT THAT'S STILL IN THE LAWSUIT, HIS NUMBER IS 19

4

MILLION, AND MY NUMBER'S 36 MILLION THROUGH OCTOBER 2008 AND

5

121 MILLION THROUGH 2015.

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1057
TEXT REMOVED - NOT RELEVANT

5

OKAY.

LET'S COME DOWN TO THE SOFTWARE PROFITS OF SAP

6

AS A RESULT OF THE INFRINGEMENT.

7

COME UP WITH THERE?

8

A.

9

288 MILLION.

I MENTIONED TWO NUMBERS TODAY.

WHAT -- WHAT NUMBER DO YOU

I BELIEVE I MENTIONED

AND I MENTIONED, I THINK, 236.

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1058
1

BY MR. MITTELSTAEDT:

2

Q.

3

OKAY.
SO YOUR TOTAL, YOUR TOTAL FOR THOSE TWO CATEGORIES

4

RANGES FROM WHAT, A LOW OF ABOUT IT 272 TO A HIGH OF ABOUT

5

400 MILLION; IS THAT RIGHT?

6

A.

IT WAS 400 OR 408, BUT WHATEVER.

IT'S CLOSE ENOUGH.

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1064

TEXT REMOVED - NOT RELEVANT

13

Q.

14

ONE WAY THROUGH THE END OF TOMORROWNOW AND THEN A SEPARATE

15

CALCULATION FOR OUT THROUGH 2015, CORRECT?

16

A.

17

YEARS IN FOR THE BROKEN SERVICE.

18

Q.

19

PERIOD AND THEN YOU EXTENDED THAT OUT UNTIL 2015, CORRECT?

20

A.

21

AND I'VE ALREADY DESCRIBED THAT.

22

Q.

23

RIGHT?

24

A.

25

TOMORROWNOW TIME FRAME AND ONE GOES FROM OCTOBER 2008 ON

SIR, YOU ACTUALLY DID THAT CALCULATION TWO WAYS.

IT'S THE SAME CALCULATION.

YOU DID IT TWO WAYS.

YOU DID

YOU JUST ADD THE ADDITIONAL

YOU DID IT DURING THE TOMORROWNOW

I DON'T UNDERSTAND YOUR QUESTION.

I HAVE TWO CALCULATIONS

ONE CALCULATION GOES FOR THE TOMORROWNOW TIME PERIOD,

ONE CALCULATION HAS A SUBTOTAL BASICALLY OF THE

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

Page 1065
1

THROUGH, I THINK IT'S MAY OF 2015.

2

Q.

3

36 MILLION IS FOR THE TOMORROWNOW TIME PERIOD, THOSE THREE OR

4

SO YEARS, CORRECT?

5

A.

I WOULD AGREE WITH THAT.

6

Q.

THANK YOU.

WHETHER YOU CALL IT A SUBTOTAL OR A SEPARATE WAY, YOUR

7

AND MR. CLARKE USED THAT SAME TIME PERIOD, CORRECT?

8

A.

9

FRAME.

WELL, MR. CLARKE'S ENTIRE CALCULATION IS FOR THAT TIME
I AGREE WITH THAT.

10

Q.

MR.

11

A.

I DON'T FOLLOW YOUR QUESTION.

12

CLARKE USED THAT SAME TIME PERIOD, CORRECT?

HE CUT IT OFF IN OCTOBER 2008.

13

Q.

AS YOU DID IN THIS FIRST CALCULATION, CORRECT?

14

A.

IN ONE OF THE CALCULATIONS AS PART OF MY PRESENTATION, I

15

SHOW A CUTTING OFF AT THAT POINT IN TIME.

16

Q.

17

OKAY.
NOW LET'S GO TO THE SOFTWARE PROFITS OF SAP.

THAT'S

18

ALSO REFERRED TO AS INFRINGERS' PROFITS, CORRECT?

19

A.

20

MADE FROM USING, IN THIS CASE, THE SOFTWARE OF TOMORROWNOW OR

21

OF PEOPLESOFT.

22

Q.

AND HOW MANY CUSTOMERS IS YOUR 288 MILLION BASED ON?

23

A.

I BELIEVE IT'S ABOUT 66.

24
25

THAT'S RIGHT.

THAT'S THE PROFITS THAT THE INFRINGERS HAD

LET ME CHECK THAT FOR YOU.

I THINK THERE WERE 86 TOTAL, AND I EXCLUDED 20, SO
THERE'S 66 CUSTOMERS IN THE INFRINGERS' PROFIT CALCULATION.

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

6534035e-488d-419b-a89d-bac0b0258f87

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

JURY TRIAL
NO. C 07-01658 PJH
VOLUME 7
PAGES 1188 - 1420
OAKLAND, CALIFORNIA
FRIDAY, NOVEMBER 12, 2010

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MUCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
DAVID BOIES,
STEVEN C. HOLTZMAN, ATTORNEYS AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258
DIANE E. SKILLMAN, CSR NO. 4909

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

26d3e825-e0fc-447f-987f-8e38dc183faa

Page 1307

TEXT REMOVED - NOT RELEVANT

11

Q.

12

CALCULATION, THE SOFTWARE COMPANIES, THE -- THE CUSTOMERS WHO

13

LEFT ORACLE FOR SAP TO BUY SOFTWARE FROM SAP.

14

YOUR LOST PROFITS OR INFRINGERS'-PROFITS ANALYSIS A NUMBER OF

15

CUSTOMERS THERE, DIDN'T YOU?

16

A.

WE'RE TALKING NOW THE -- THE GAINS FROM OTHER SAP SALES.

17

Q.

YES.

18

A.

YES, I HAD SOME EXCLUSIONS.

19

Q.

AND YOU STARTED WITH ABOUT 86 CUSTOMERS, AND YOU REMOVED

20

ABOUT 20 CUSTOMERS.

21

A.

YES, I'M AT 66.

22

Q.

OKAY.

23

OF THOSE CUSTOMERS TO SAP COULD NOT BE ATTRIBUTED TO

24

TOMORROWNOW'S INFRINGEMENT, CORRECT?

25

A.

OKAY.

LET'S GO TO THE -- FINALLY, TO THE OTHER PART OF THE

YOU EXCLUDED FROM

AND THAT'S BECAUSE YOU CONCLUDED THAT ORACLE'S LOSS

IN A GENERAL SENSE.

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

26d3e825-e0fc-447f-987f-8e38dc183faa

Page 1309

TEXT REMOVED - NOT RELEVANT

19

Q.

OKAY.

20

NOW, AT THE END OF YOUR ANALYSIS OF THE INFRINGERS'

21

PROFITS, CUSTOMERS WHO LEFT ORACLE FOR SAP TO BUY SOFTWARE, YOUR

22

OPINION WAS THAT YOUR NUMBER WAS ABOUT $288 MILLION IN PROFITS,

23

CORRECT?

24

A.

THAT'S CORRECT.

25

Q.

AND YOUR OPINION WAS THAT THAT $288 MILLION WAS A REASONABLE

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

26d3e825-e0fc-447f-987f-8e38dc183faa

Page 1310
1

CALCULATION OF THE VALUE THAT SAP RECEIVED FROM THE ALLEGED

2

INFRINGEMENT, CORRECT?

3

A.

WHAT THAT AMOUNT IS, IT'S --

4

Q.

SIR --

5

A.

TOMORROWNOW WAS ONE FACTOR IN SAP MAKING THE $288 MILLION.

6

THAT'S WHAT IT IS.

TEXT REMOVED - NOT RELEVANT

18

Q.

19

THIS YEAR.

20

QUESTION -- THIS IS FROM YOUR DEPOSITION, SIR, MAY 13 OF

"OKAY.

SO THE $288 MILLION OF INFRINGERS'

21

PROFITS THAT YOU CALCULATED, IS IT YOUR POSITION THAT

22

BUT FOR THE ACTIVITIES OF TOMORROWNOW, SAP WOULD NOT

23

HAVE RECEIVED ANY OF THOSE PROFITS?

24
25

"A.

IT IS MY POSITION THAT THE $288 MILLION

IS A CALCULATION OF BENEFITS THAT SAP RECEIVED

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

26d3e825-e0fc-447f-987f-8e38dc183faa

Page 1311
1

FROM THE ALLEGED INFRINGEMENT.

2

PERSPECTIVE, I HAVE LOOKED AT THOSE CUSTOMERS

3

AND DETERMINED THAT THE 288 MILLION IS A

4

REASONABLE CALCULATION OF THAT VALUE."

5

NOW, SIR --

6

A.

7

AND FROM MY

EXACTLY WHAT I JUST SAID.

I'LL STAND BY THAT TESTIMONY.

I'LL STAND BY THAT.

THAT'S

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

26d3e825-e0fc-447f-987f-8e38dc183faa

Page 1315

TEXT REMOVED - NOT RELEVANT

12

Q.

AND HOW ABOUT THE INFRINGERS' PROFITS?

13

A.

THAT NUMBER WAS 288 MILLION, WAS MY UPPER BOUND.

14

THERE'S THREE CUSTOMERS I MENTIONED TO MR. MITTELSTAEDT THAT

15

TAKES IT DOWN TO 236 ON THE LOWER END OF THAT.

AND THEN

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

26d3e825-e0fc-447f-987f-8e38dc183faa

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

JURY TRIAL
NO. C 07-01658 PJH
VOLUME 9
PAGES 1512 - 1695
OAKLAND, CALIFORNIA
TUESDAY, NOVEMBER 16, 2010

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
DAVID BOIES,
STEVEN C. HOLTZMAN, ATTORNEYS AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258
DIANE E. SKILLMAN, CSR NO. 4909

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

cee31611-03a0-413a-a8ed-ca4c321dc01a

Page 1631

TEXT REMOVED - NOT RELEVANT

20

Q.

21

MR. CLARKE, LET ME JUST STOP YOU FOR A MINUTE.
THE END DATE FOR THIS CALCULATION IS, I AM NOT SURE

22

IF YOU SAID IT, IT'S THE SAME END DATE THAT MR. MEYER USES?

23

A.

24

SURE THAT'S THE DATE WE USED.

25

Q.

ACTUALLY, I THINK THIS IS MORE LIKE 12/31/08.

I AM PRETTY

IN ANY EVENT, THE TWO OF YOU, YOU AND MR. MEYER, HAVE

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

cee31611-03a0-413a-a8ed-ca4c321dc01a

Page 1632
1

CALCULATED THE INFRINGERS' PROFITS FOR THE SAME TIME PERIOD?

2

A.

3

MONTHS LONGER, THAT'S ALL.

YES.

WE BOTH USE THE SAME TIME PERIOD.

IT'S JUST THREE

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

cee31611-03a0-413a-a8ed-ca4c321dc01a

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

JURY TRIAL
NO. C 07-01658 PJH
VOLUME 10
PAGES 1696 - 1879
OAKLAND, CALIFORNIA
THURSDAY, NOVEMBER 18, 2010

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
DAVID BOIES,
STEVEN C. HOLTZMAN, ATTORNEYS AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258
DIANE E. SKILLMAN, CSR NO. 4909

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

9bf78bca-2814-4f8c-93d0-595ef6167f63

Page 1821
1

Q.

2

PROFITS THAT SAP OWES ORACLE?

3

A.

4

WERE NOT RELATED TO THE INFRINGEMENT, FOR EXAMPLE, THE -- MY

5

POSTER CHILD, MY FIRST ONE WAS THE ENGELHARD ACQUISITION BY

6

BASF.

7

INFRINGEMENT.

8

YOU HAVE TO GO TO SAP, THAT'S WHAT WE RUN THE ENTIRE COMPANY

9

ON.

WHY DIDN'T YOU USE ALL 86 IN THE CALCULATION OF THE

BECAUSE IF I COULD FIND REASONS FOR THEM GOING TO SAP THAT

CLEARLY THAT CHANGE DIDN'T OCCUR AS A RESULT OF THE

10

THEY WENT TO SAP BECAUSE THEIR NEW OWNER SAID

SO, FOR THE WHOLE HOST OF REASONS THAT WE TALKED

11

EARLIER, ABOUT EARLIER, THERE WERE, THERE WERE STATEMENTS MADE

12

AND THERE WERE CLEAR RATIONALES AND REASONS FOR WHY THESE

13

COMPANIES WENT TO SAP THAT WERE NOT RELATED TO THE

14

INFRINGEMENT.

15

SO THAT'S WHY I EXCLUDED THEM.

THEY WOULD HAVE GONE

16

TO THEIR -- TO SAP ANYWAY ABSENT THE INFRINGEMENT.

17

Q.

18

ABOUT WHY YOU USED THE 50 PERCENT PROFIT MARGIN IN CALCULATING

19

THIS.

YOU WERE ASKED A LOT OF QUESTIONS DAY BEFORE YESTERDAY

20

DO YOU REMEMBER THAT?

21

A.

I DO.

22

Q.

WHAT FIGURE DID MR. MEYER USE IN HIS SIMILAR CALCULATION?

23

A.

50 PERCENT.

24

Q.

AND WHAT TIME PERIOD DID HE USE AS THE CUTOFF?

25

A.

FOR INFRINGERS' PROFITS NOW?

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

9bf78bca-2814-4f8c-93d0-595ef6167f63

Page 1822
1

Q.

YES.

2

A.

SAME AS ME, 12/31/08.

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

9bf78bca-2814-4f8c-93d0-595ef6167f63

Page 1853

TEXT REMOVED - NOT RELEVANT

5

Q.

6

86 CUSTOMERS GIVEN TO YOU BY JONES DAY OR PREPARED -- PREPARED

7

BY DEFENDANT AND GIVEN TO YOU BY EITHER JONES DAY OR SOMEBODY

8

THAT LISTED THOSE 86 CUSTOMERS?

9

A.

SOMETHING IN ADDITION TO THE LIST?

10

Q.

YES.

11

A.

I HAD EXTRACTS FROM THEIR ACCOUNTING SYSTEMS THAT RELATED

12

TO THE 86.

13

REVENUES FOR THE DIFFERENT LINES OF BUSINESS OVER THE WHOLE

14

PERIOD THAT WE ARE REFERRING TO.

DO YOU HAVE ANYTHING IN THAT BINDER OTHER THAN THE LIST OF

SO THAT WASN'T JUST A LIST.

THERE WAS ALL THE

TEXT REMOVED - NOT RELEVANT

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

9bf78bca-2814-4f8c-93d0-595ef6167f63

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

JURY TRIAL
NO. C 07-01658 PJH
VOLUME 12
PAGES 2021 - 2230
OAKLAND, CALIFORNIA
MONDAY, NOVEMBER 22, 2010

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
DAVID BOIES,
STEVEN C. HOLTZMAN, ATTORNEYS AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258
DIANE E. SKILLMAN, CSR NO. 4909

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]

Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

4f0da915-c98f-44a3-8b36-ea1a0524702d

Page 2027

TEXT REMOVED - NOT RELEVANT

19

NOW, WITH RESPECT TO THE 86, THE LETTER THAT SETS

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FORTH HOW THE 86 WERE SELECTED IS IN EVIDENCE.

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EVIDENCE WITHOUT OBJECTION.

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ON THE INFORMATION PROVIDED BY SAP COUNSEL.

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THE ISSUES, AND WE ARE REALLY JUST REFERRING TO THE ISSUES THAT

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ARE STATED IN THAT LETTER BY JONES DAY THAT IS IN EVIDENCE.

25

THAT CAME IN AS

IT IS SOMETHING THAT WAS DONE BASED
THE LETTER STATES

THERE WAS NEVER A STIPULATION THAT THOSE 86 CUSTOMERS

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REPRESENTED THE UNIVERSE OF DAMAGES.

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YOU USE EITHER LOST PROFITS OR INFRINGER'S PROFITS OR RUNNING

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ROYALTY, YOU'RE DEALING WITH A UNIVERSE OF CUSTOMERS THAT IS, WE

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ALL KNOW, INCOMPLETE.

THE PROBLEM IS THAT WHEN

AND THAT'S THE ONLY POINT WE'RE MAKING.

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THE COURT:

YOU CAN ATTRIBUTE IT TO SAP, NOT TO THE

LAWYERS.

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WITH REGARD TO THE CHARACTERIZATION OF COPYRIGHT

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INFRINGEMENT AS THEFT OR STEALING, I INDICATED TO YOU ALL FOR

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OPENINGS THAT YOU COULDN'T USE IT THROUGHOUT THE COURSE OF THE

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TRIAL.

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WITNESSES HAVE USED THAT LANGUAGE.

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INFLAMMATORY, UNNECESSARY.

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YOU'VE BEEN VERY GOOD.

YOU HAVEN'T -- NONE OF THE

THIS IS A COPYRIGHT CASE.

IN MY VIEW, THAT LANGUAGE IS

"COPYRIGHT INFRINGEMENT"

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IS A TERM OF ART THAT IS WHAT HAS BEEN STIPULATED TO.

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YOU MAY NOT USE THE LANGUAGE -- WORDS SUCH AS "THEFT" OR

3

"STEALING."

4

AND NO,

THROUGHOUT THE COURSE OF THE TRIAL, WITNESSES HAVE

5

USED LANGUAGE SUCH AS "TAKING OUR SOFTWARE," AND, OBVIOUSLY, YOU

6

CAN CONTINUE TO USE THAT.

7

RULING WAS TWO-FOLD, NOT JUST THAT I DID NOT WANT THE JURY TO BE

8

MISLED INTO THINKING THAT THERE WERE ANY KIND OF CRIMINAL --

9

CRIMINAL UNDERTONES HERE.

BUT KEEP IN MIND THE BASIS FOR MY

BUT ADDITIONALLY, IT WAS ON THE BASIS

10

OF MY DETERMINATION THAT THE LANGUAGE IS JUST INFLAMMATORY.

11

IT'S NOT NECESSARY.

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8
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NOW, IF WE GO TO 83, REMEMBER MR. PHILLIPS
TESTIFYING?
(DEMONSTRATIVE PUBLISHED TO JURY.)
MR. BOIES:

TESTIFIED IF HE PAYS SOMEBODY $11 BILLION

11

AND HIS COMPETITOR WANTS IT, HE EXPECTS THEM TO PAY BILLIONS OF

12

DOLLARS FOR IT AS WELL.

AND WITH SIEBEL THE SAME THING.

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NOW, LET ME SPEND A MOMENT ON -- ON LOST PROFITS

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AND -- AND WHY LOST PROFITS DOESN'T INCLUDE ALL THAT NEEDS TO BE

15

INCLUDED IN TERMS OF THE LOSS.

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MARKET VALUE LICENSE AS OPPOSED TO LOST PROFITS.

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UNDERSTAND.

18

AND WHY WE'RE SEEKING FAIR
I WANT YOU TO

102?

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(DEMONSTRATIVE PUBLISHED TO JURY.)

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MR. BOIES:

FIRST, LOST PROFITS DOES NOT CONSIDER THE

21

RISK ASSOCIATED WITH ORACLE'S SIGNIFICANT INVESTMENTS IN

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PEOPLESOFT.

23

THE VALUE OF THE IP TAKEN, BASED ON THE EXPECTATIONS OF THE

24

PARTY AT THE TIME, WHICH IS THE LEGAL STANDARD.

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PROFITS ARE INCONSISTENT WITH SAP'S INTENT TO DISRUPT ORACLE'S

SECOND, LOST PROFITS DOES NOT APPROPRIATELY MEASURE

THIRD, LOST

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BUSINESS RELATIONSHIPS.

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IT.

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JUST LOOKING AT THE MAINTENANCE REVENUE.

THAT WAS PART OF THE PURPOSE OF DOING

AND FOURTH, IT DOES NOT FULLY COMPENSATE ORACLE BASED ON --

4

NOW, I ALSO WANT TO TALK JUST FOR A MOMENT ABOUT

5

SOMETHING CALLED INFRINGER'S PROFITS, WHICH YOU MAY OR MAY NOT

6

GET TO DEPENDING ON HOW YOU ANSWER SOME OF THE OTHER QUESTIONS

7

ON THE JURY -- BUT I DO WANT TO TALK TO YOU ABOUT INFRINGER'S

8

PROFITS.

9
10

FIRST, INFRINGER PROFITS ARE THE PROFITS THAT THEY
MAKE.

AND IF YOU GO TO 287 --

11

(DEMONSTRATIVE PUBLISHED TO JURY.)

12

MR. BOIES:

-- MR. MEYER CAME UP WITH AN ESTIMATE OF

13

$288 MILLION FOR INFRINGER PROFITS.

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INCOMPLETE.

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HOW MUCH MORE THAN THAT 'CAUSE I DON'T HAVE THE DATA.

16

OF THE PROBLEMS WITH THE INFRINGER'S PROFITS IS THAT THE DATA IS

17

NOT ALL AVAILABLE.

AND HE SAID THAT'S

HE SAID IT'S MORE THAN THAT, BUT I CAN'T TELL YOU
AND ONE

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AND IF YOU THINK ABOUT IT, IN COMMON SENSE TERMS, IF

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SOMEBODY GOES IN AND STEALS A GAME FROM BEST BUY, AND LET'S SAY

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BEST BUY HAS A LOT OF THOSE GAMES, SO THEY DON'T REALLY LOSE

22

ANY CUSTOMERS OVER IT BECAUSE THEY HAVE EXCESS INVENTORY, AND

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LET'S SAY THE PERSON NEVER USES THE GAME, BESIDES PARENTS WON'T

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LET THEM USE THE GAME, WHATEVER REASON, DOESN'T USE THE GAME,

25

DOES THAT MEAN HE DOESN'T OWE ANYTHING FOR THAT GAME THAT WAS

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TAKEN?
YOU CAN'T HAVE THAT KIND OF RULE ABOUT THINGS THAT

3

PEOPLE ESSENTIALLY TAKE.

4

THEN GO BACK IN AND SAY, WELL, WE DIDN'T MAKE AS MUCH AS WE

5

THOUGHT WE GAINED, YOU DIDN'T LOSE AS MUCH AS YOU THOUGHT YOU

6

WOULD LOSE, THEREFORE, WE DON'T HAVE TO PAY YOU WHAT IT WOULD

7

HAVE COST US TO LICENSE THAT SOFTWARE AT THE TIME.

8
9

YOU DON'T HAVE A RIGHT TO TAKE AND

NOT ONLY IS THAT NOT FAIR, BUT THAT SENDS UP EVERY
WRONG INCENTIVE FOR HOW WE WANT PEOPLE, AND PARTICULARLY LARGE

10

CORPORATIONS TO BEHAVE AND CONDUCT THEIR BUSINESSES.

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ALSO SOMETHING THAT UNDERMINES THE VERY FOUNDATIONS OF THE

12

SOFTWARE BUSINESS.

IT IS

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THE COURT:

ALL RIGHT.

"WE HAVE A QUESTION FROM THE

6

JURY, AND IT READS AS FOLLOWS:

7

CHART OF HOW MR. MEYER AND MR. CLARKE CALCULATED ALL OF THEIR

8

FAIR MARKET VALUE OR LOST PROFIT AMOUNTS."

WE WANT TO HAVE A BREAKDOWN OR

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4f0da915-c98f-44a3-8b36-ea1a0524702d

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE
ORACLE CORPORATION, ET AL.

)
)
PLAINTIFFS,
)
)
VS.
)
)
SAP AG, ET AL.,
)
)
DEFENDANTS.
)
____________________________)

JURY TRIAL
NO. C 07-01658 PJH
VOLUME 13
PAGES 2231 - 2267
OAKLAND, CALIFORNIA
TUESDAY, NOVEMBER 23, 2010

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

BINGHAM MCCUTCHEN LLP
THREE EMBARCADERO CENTER
SAN FRANCISCO, CALIFORNIA 94111-4607
ZACHARY J. ALINDER,
HOLLY A. HOUSE,
GEOFFREY M. HOWARD,
DONN P. PICKETT, ATTORNEYS AT LAW

BY:

BOIES, SCHILLER & FLEXNER LLP
1999 HARRISON STREET, SUITE 900
OAKLAND, CALIFORNIA 94612
DAVID BOIES,
STEVEN C. HOLTZMAN, ATTORNEYS AT LAW

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

RAYNEE H. MERCADO, CSR NO. 8258
DIANE E. SKILLMAN, CSR NO. 4909

Raynee H. Mercado, CSR, RMR, CRR, FCRR, CCRR [phone]

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8

THE COURT:

9

COUNSEL?

10

OKAY.

ALL RIGHT.

I SEE THAT YOU WERE ABLE TO COME UP WITH A

DEMONSTRATIVE THAT YOU HAVE JOINTLY PARTICIPATED IN.

11

MR. LANIER:

12

THE COURT:

YES, YOUR HONOR.

13

TO ME.

14

JURY?

15

OKAY.

AND IT SEEMS FINE -- IT SEEMS FINE

MARKED IN SOME FASHION.

16

IS THERE ANY REASON WHY WE CAN'T JUST GIVE IT TO THE
WE JUST HAVE TO, FOR THE RECORD, MAKE SURE THAT IT'S

MR. LANIER:

AND WE JUST -- WE DON'T OBJECT TO GIVING

17

IT DIRECTLY TO THE JURY IN RESPONSE TO THEIR QUESTION, AND WE'RE

18

HAPPY TO CALL IT JOINT TRIAL EXHIBIT --

19
20
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THE COURT:

JOINT TRIAL EXHIBIT 1.

HOW'S THAT?

(OFF-THE-RECORD DISCUSSION.)
MR. LANIER:

WE HAVE A JTX1.

I THINK WE'RE UP TO

JTX6, SO THIS WOULD BE 7?

23

MR. HOLTZMAN:

24

MR. HOWARD:

6.

25

MR. LANIER:

JOINT TRIAL EXHIBIT 6.

I THINK THIS IS 6.

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THE COURT:

2

MAYBE YOU CAN JUST PUT A LITTLE STICKER ON IT.

3
4
5

JOINT TRIAL EXHIBIT 6.
I

DON'T SEE THAT IT NEEDS ANY ELABORATION.
NICHOLE WILL JUST TAKE IT TO THEM, AND THEY CAN
CONTINUE WITH THEIR WORK.

6

MR. LANIER:

7

THE COURT:

8

MR. HOWARD:

9

THE COURT:

10

MR. LANIER:

11

THE COURT:

WE AGREE, YOUR HONOR.
OKAY.
VERY WELL.
OKAY.

GOOD.

THANK YOU, YOUR HONOR.
ALL RIGHT.

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2267
1
2
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CERTIFICATE OF REPORTER
I, RAYNEE H. MERCADO, OFFICIAL REPORTER FOR THE UNITED

5

STATES COURT, NORTHERN DISTRICT OF CALIFORNIA, HEREBY CERTIFY

6

THAT THE FOREGOING PROCEEDINGS IN C07-01658PJH, ORACLE USA,

7

INC, ET AL. V. SAP AG, ET AL., WERE REPORTED BY ME, A CERTIFIED

8

SHORTHAND REPORTER, ON TUESDAY, NOVEMBER 23, 2010, AND WERE

9

THEREAFTER TRANSCRIBED UNDER MY DIRECTION INTO TYPEWRITING;

10

THAT THE FOREGOING IS A FULL, COMPLETE AND TRUE RECORD OF SAID

11

PROCEEDINGS AS BOUND BY ME AT THE TIME OF FILING.

12

THE VALIDITY OF THE REPORTER'S CERTIFICATION OF SAID

13

TRANSCRIPT MAY BE VOID UPON DISASSEMBLY AND/OR REMOVAL FROM THE

14

COURT FILE.

15
16

___________________________________

17

RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR

18

TUESDAY, NOVEMBER 23, 2010

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RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone]