Oracle Corporation et al v. SAP AG et al

Filing 1145

MOTION in Limine filed by Oracle International Corporation. Motion Hearing set for 5/24/2012 02:30 PM in Courtroom 3, 3rd Floor, Oakland before Hon. Phyllis J. Hamilton. Responses due by 5/10/2012. Replies due by 5/17/2012. (Attachments: # 1 Proposed Order Granting Plaintiff's Motions In Limine)(Howard, Geoffrey) (Filed on 4/26/2012)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

BINGHAM MCCUTCHEN LLP
DONN P. PICKETT (SBN 72257)
GEOFFREY M. HOWARD (SBN 157468)
BREE HANN (SBN 215695)
Three Embarcadero Center
San Francisco, CA 94111-4067
Telephone: [phone]
Facsimile: 415.393.2286
[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 Plaintiff Oracle International Corp.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION

20
21
22

ORACLE USA, INC., et al.,
Plaintiffs,

23

v.

24

SAP AG, et al.,

25

Defendants.

No. 07-CV-01658 PJH (EDL)
PLAINTIFF’S MOTIONS IN LIMINE
Date: May 24, 2012
Time: 2:30 p.m.
Place: 3rd Floor, Courtroom 3
Hon. Phyllis J. Hamilton

26

PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

TABLE OF CONTENTS

1

Page

2
3

I.

4
5
6
7
8
9

II.

10
11
12
III.
13
14
15
16

IV.

17
18
19

V.

MOTION NO. 1: CLARKE’S LACK OF EXPERTISE IN CUSTOMER
BEHAVIOR ....................................................................................................................... 2
A.
An Expert Must Be Qualified In the Subject Area of His Opinion ....................... 2
B.
Clarke’s Expertise and Opinion ............................................................................. 3
C.
Oracle’s Objection to Clarke’s Testimony At the November 2010 Trial .............. 4
D.
The Court Should Exclude Clarke’s Causation Testimony From The New
Trial ........................................................................................................................ 5
1.
Clarke Lacks Expertise To Opine on Customer Behavior ......................... 5
2.
Clarke Employs An Invented And Unreliable “Methodology” ................. 6
MOTION NO. 2: CLARKE’S THIRD PARTY MARKET “STUDY” IS
MERELY A SUMMARY OF INADMISSIBLE EVIDENCE AND IS BEYOND
CLARKE’S EXPERTISE .................................................................................................. 7
A.
Clarke’s Internet-Based Market Opinion ............................................................... 7
B.
The Court Should Exclude Clarke’s Market “Study” ............................................ 8
MOTION NO. 3: THE COURT SHOULD NOT ALLOW SAP TO PRESENT
HEARSAY THROUGH EXPERTS (EITHER CLARKE OR MEYER) ....................... 10
A.
SAP May Not Put In Inadmissible Evidence Through Clarke............................. 10
B.
SAP Cannot Introduce Hearsay Evidence Through Meyer on CrossExamination Upon Which Meyer Did Not Rely.................................................. 11
MOTION NO. 4: TO EXCLUDE RELIANCE ON LATE-PRODUCED
CUSTOMER DECLARATIONS .................................................................................... 12
A.
SAP’s Late Production of Customer Declarations............................................... 12
B.
The Court Should Not Permit Clarke To Rely On The Late Produced
Documents ........................................................................................................... 13
MOTION NO. 5: TO EXCLUDE TESTIMONY ABOUT INFRINGERS’
PROFITS THAT INCLUDES IMPROPER EXPENSE DEDUCTIONS ....................... 14

20
21
22
23
24
25
26
i
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

TABLE OF AUTHORITIES

2

Page(s)

3

CASES

4

Bobb v. Modern Products, Inc.,
648 F.2d 1051 (5th Cir. 1981), overruled on other grounds by Gautreaux v. Scurlock Marine,
Inc., 107 F.3d 331 (5th Cir. 1997) .......................................................................................... 14

5
6
7
8

Daubert v. Merrell Dow Pharm., Inc.,
43 F.3d 1311 (9th Cir. 1995)................................................................................................. 5, 9
Daubert v. Merrell Dow Pharm. Inc.,
509 U.S. 579 (1993) .............................................................................................................. 4, 5

9
10
11
12
13

Dominguez v. Four Winds Int’l Corp.,
CIV. 08CV388 L LSP, 2009 WL 1444347 (S.D. Cal. May 22, 2009) ................................... 12
In re Hanford Nuclear Reservation Litig.,
534 F.3d 986 (9th Cir. 2008)................................................................................................... 14
Kilgore v. Carson Pirie Holdings, Inc.,
No. 05-6035, 2006 WL 3253490 (6th Cir. 2006) ................................................................... 12

14
15
16
17
18

Maionchi v. Union Pacific Corp.,
No. 03-cv-647, 2007 WL 2022027 (N.D. Cal. July 9, 2007).................................................. 15
Matrix Motor Co. v. Toyota Jidosha Kabushiki Kaisha,
290 F. Supp. 2d 1083 (C.D. Cal. 2003) .................................................................................. 11
Perry v. Schwarzenegger,
No. 09-2292, 2010 WL 3025614 (N.D. Cal. Aug. 4, 2010) ................................................... 12

19
20
21
22
23
24
25

Ralston v. Smith & Nephew Richards, Inc.,
275 F.3d 965 (10th Cir. 2001)................................................................................................... 5
Rambus, Inc. v. Hynix Semiconductor, Inc.,
254 F.R.D. 597 (N.D. Cal. 2008) ...................................................................................... 5, 8, 9
Salinas v. Amteck of Ky, Inc.,
682 F. Supp. 2d 1022 (N.D. Cal. 2010) (Hamilton, J.) ............................................................. 4
Therasense, Inc. v. Becton, Dickinson and Co. ., C 04-02123 WHA, 2008 WL 2323856, at *2
(N.D. Cal. May 22, 2008) ................................................................................................. 12, 13

26
ii
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1
2
3
4
5
6
7
8
9

U.S. v. Mejia,
545 F.3d 179 (2d Cir. 2008).................................................................................................... 12
United States v. Chang,
207 F.3d 1169 (9th Cir. 2000)............................................................................................... 5, 8
USA v. TomorrowNow, Inc.,
No. 4:11-cr-642 ....................................................................................................................... 16
Wheeling Pittsburgh Steel Corp. v. Beelman River Terminals, Inc.,
254 F.3d 706 (8th Cir. 2001)..................................................................................................... 8
STATUTES
17 U.S.C. § 504(b) ........................................................................................................................ 16

10

FEDERAL RULES

11

Fed. R. Evid. 104(a) ........................................................................................................................ 4

12

Fed. R. Evid. 702 ........................................................................................................................ 4, 5

13

Fed. R. Evid. 703 .............................................................................................................. 12, 13, 14

14

Fed. R. Civ. P. 26(a)(2)(B)............................................................................................................ 15

15

Fed. R. Civ. P. 37 .................................................................................................................... 14, 15

16
17
18
19
20
21
22
23
24
25
26
iii
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

NOTICE OF MOTION AND MOTION

2

PLEASE TAKE NOTICE THAT on May 24, 2012, at 2:30 p.m., in the United

3

States District Court, Northern District of California, Oakland Division, located at 1301 Clay

4

Street, Oakland, California, Courtroom 3, 3rd Floor, before the Hon. Phyllis J. Hamilton,

5

Plaintiff Oracle International Corp. (“Oracle”) will move in limine to exclude from trial the items

6

listed below and described more fully in the attached memorandum of points and authorities.

7

This motion is based on this notice of motion and motion, the accompanying memorandum of

8

points and authorities, the accompanying declaration of Nitin Jindal, and such other matters as

9

may be presented to the Court at the time of the hearing.

10

RELIEF SOUGHT

11
12

1. The Court should exclude “customer behavior” testimony by SAP’s
damages expert, Stephen Clarke, because he lacks any qualifications to give those opinions.

13

2. The Court should exclude testimony by Clarke regarding his purported

14

“market study” of the third-party support market because he lacks any qualification to give that

15

opinion.

16
17
18
19
20
21

3. The Court should exclude otherwise inadmissible evidence that SAP may
attempt to admit through experts.
4. The Court should exclude Clarke’s reliance on five customer declarations
that SAP produced after the discovery and expert report cut offs.
5. The Court should exclude Clarke’s infringer’s profit margin measurements
that support a deduction of costs from defendants’ infringers’ revenues.

22
23
24
25
26
1
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

MEMORANDUM OF POINTS AND AUTHORITIES

2

Oracle’s motions in limine Nos. 1-4 below seek to exclude four categories of

3

evidence that Oracle believes the Court erroneously admitted at the November 2010 trial, over

4

Oracle’s objections. The Court made its in-trial rulings without the benefit of additional briefing,

5

which Oracle provides here. Oracle’s motion in limine No. 5 seeks to exclude evidence of cost

6

deductions from SAP’s infringing revenues, to which SAP, as a willful infringer, is not entitled.

7

I.

8

MOTION NO. 1: CLARKE’S LACK OF EXPERTISE IN
CUSTOMER BEHAVIOR

9

Oracle moves to exclude the “behavioral” opinions of SAP’s damages expert,

10

Stephen Clarke (which are based on, and used to transmit, the hearsay evidence referenced

11

below). Clarke is unqualified to provide any testimony about “how customers made the

12

[purchasing] decisions they made.” Jindal Decl., Ex. A (Trial Tr.) at 400:1-10. This is an

13

important issue – what SAP claims this case is “all about.” Id. SAP, however, has never

14

proffered or qualified Clarke as a “causation” expert, much less as an expert on ERP customer

15

decision-making, a “behavioral” issue he admittedly has no qualifications to address. Jindal

16

Decl., Ex. A (Trial Tr.) at 1538:1-2. At the first trial, the Court appeared to recognize the

17

problem with Clarke’s causation testimony, but nevertheless allowed it. Admitting this opinion

18

at the first trial was an abuse of discretion; it should be excluded on retrial. 1

19

A.

20

An Expert Must Be Qualified In the Subject Area of His Opinion
The proponent of expert testimony must show that it meets Rule 702’s

21

admissibility standards, including “preliminary question about whether a witness is qualified,”

22

by a “preponderance of proof.” Fed. R. Evid. 104(a); Fed. R. Evid. 702 advisory committee’s

23

note (2000 amendment); Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579, 592 n.10 (1993);

24

1

25

This motion only seeks to exclude Clarke’s causation testimony, and does not extend to other
aspects of his opinions. For example, this motion does not seek to exclude Clarke’s
measurement of relevant revenues or other subjects within his accounting expertise.

26
2
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

see also Salinas v. Amteck of Ky, Inc., 682 F. Supp. 2d 1022, 1029 (N.D. Cal. 2010) (Hamilton,

2

J.). The Court must employ a two-step inquiry: first, determine whether the expert is qualified

3

by “knowledge, skill, experience, training, or education,” and second, if so, determine whether

4

the proffered opinion is “reliable” under Daubert. See Fed. R. Evid. 702; Ralston v. Smith &

5

Nephew Richards, Inc., 275 F.3d 965, 969 (10th Cir. 2001).

6

Expertise in one subject does not somehow override a lack of qualifications for an

7

unrelated subject. See, e.g., United States v. Chang, 207 F.3d 1169, 1172-73 (9th Cir. 2000)

8

(affirming the preclusion of an “extremely qualified” international finance expert from testifying

9

as to the identification of counterfeit securities because “he did not testify as to any training or

10

experience, practical or otherwise” on that specific issue); Rambus, Inc. v. Hynix Semiconductor,

11

Inc., 254 F.R.D. 597, 603-05 (N.D. Cal. 2008) (finding testimony of electrical engineer on

12

“commercial success” inadmissible because he had no marketing or business training in

13

commercial aspects of claimed invention).

14

Even if the Court finds the expert qualified, where he does not rely on pre-

15

litigation research or peer review, he must “point to some objective source – a learned treatise,

16

the policy statement of a professional association, a published article in a reputable scientific

17

journal or the like – to show that [he has] followed the scientific method as practiced by (at least)

18

a recognized minority of the scientists in their field.” Daubert v. Merrell Dow Pharm., Inc., 43

19

F.3d 1311, 1317-19 (9th Cir. 1995).

20
21

B.

Clarke’s Expertise and Opinion
Clarke is a CPA with some economics training. Jindal Decl., Ex. A (Trial Tr.)

22

at 1531:3-1533:13, 1534:2-1535:4. He “do[es]n’t hold [him]self out as an expert in ERP

23

software” or its buyers’ decision-making, and has no prior experience or knowledge of the

24

aftermarket support industry for such software. Dkt. 783, ¶ 7, Ex. B (Clarke Depo.) at 83:8-13,

25

84:11-17. Despite his admitted lack of expertise, Clarke will seek to testify about “a behavioral

26

issue, why [customers] do what they did,” as an essential input to his damages analysis. Jindal
3
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

Decl., Ex. A (Trial Tr.) at 1538:1-2.

2

To form those opinions, Clarke devised so-called “exclusion categories” and

3

assigned customers to them. He based both steps solely on his own “judgment call[s].” Dkt.

4

783, ¶ 7, Ex. B (Clarke Depo.) at 666:3-20. To make those calls, Clarke interpreted (mostly

5

inadmissible) customer emails and other evidence to draw conclusions about why customers left

6

Oracle and purchased SAP products. Jindal Decl., Ex. A (Trial Tr.) at 1589:17-1590:11. Clarke

7

then followed a process that he invented, as a novel approach, just for this case. It is not found in

8

any publication or subject to any peer review and does not track any known scientific or other

9

methodology. He excluded customers from his damages calculations if he assigned to them

10

certain invented “customer-specific exclusion criteria” (which result in the automatic exclusion

11

of the customer from damages) and/or “joint exclusion criteria” (whereby he excludes customers

12

from damages if they have a combination of (a) either of two specific attributes, and (b) at least

13

one of another group of exclusion criteria). Dkt. 919, ¶ 6, Ex. A (Clarke Report) at 213-217,

14

221-235; Dkt. 783, ¶ 7, Ex. B (Clarke Depo.) at 661:3-662:2 (confirming automatic exclusion

15

criteria), 739:20-740:16 (confirming “joint exclusion criteria” formula is “A or B plus at least

16

one of Cs”).

17

Clarke’s made-up “methodology,” his assignment of customers to causation

18

categories, and his choice of which categories (or combination of categories) warrant automatic

19

exclusion do not reflect the judgment of any party (who know the customers best), his own

20

expertise (he has none), or anyone else’s.

21
22

C.

Oracle’s Objection to Clarke’s Testimony At the November 2010
Trial

23

Oracle objected to Clarke’s proffered opinions at the November 2010 trial

24

because Clarke lacked the expertise to opine on customer behavior and because Clarke’s

25

transmission of hearsay to the jury was an inadmissible and improper attempt to usurp its role.

26

Jindal Decl., Ex. A (Trial. Tr.) at 1589:17-20; 1591:12-17. SAP argued that Clarke and his staff
4
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

reviewed statements from customers (mostly inadmissible hearsay) and, from them, “reached an

2

opinion on which customers would have left, which ones are within the causation pool, and

3

reached an opinion on that.” Id., at 1590:1-11. Oracle pointed out that Clarke’s invented and

4

untested methodology did not solve, or even address, the problem because the subject matter of

5

his judgment calls was still “way beyond his expertise.” Id. at 1592:20-1593:12.

6

The Court focused on whether Clarke actually did complete his causation

7

analysis, not whether he was qualified to do so. Id. at 1592:25 (“But he came to that

8

conclusion.”); see also id. at 1591:18-19 (“Except that he has made the determination that a

9

sizable number of customers would have left [Oracle] for other reasons.”). The Court did not

10

expressly determine that Clarke and his method met the standards to provide expert testimony

11

regarding customer behavior. But the Court nevertheless allowed Clarke to “testify as to his

12

conclusions that [customers] would have gone,” and to “go one step further than that and say that

13

he concluded that they would have left from [Oracle for] other reasons.” Id. at 1593:13-1594:10.

14

On Oracle’s hearsay and qualifications objection, the Court ruled that Clarke

15

could discuss the limited customer evidence that was in the record. Id. at 1593:13-18. 2 For

16

evidence not in the record, the Court did not permit Clarke to “testify as to the reasons” why he

17

concluded customers left Oracle. Id. at 1593:18-19. Having ruled that “the actual reasons can’t

18

come through his mouth,” id. at 1591:25-1592:2, the Court nevertheless allowed Clarke to

19

describe them in detail. Clarke testified to his exclusion “pools” of customer behavior and listed

20

the customers that fell into each. Id. at 1598:1-1608:6; 1612:22-1613:1; 1621:19-1630:21.

21

Clarke compounded the problem by vouching for his own novel methodology and criticizing the

22

lack of a behavioral analysis by Meyer. Id. at 1551:12-16.

23
24
25

2

As discussed below, see Motion in Limine No. 3, the Court later recognized that customer
evidence that an expert considered but did not rely on is inadmissible hearsay.

26
5
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

D.

2
3
4
5
6

The Court Should Exclude Clarke’s Causation Testimony From The
New Trial
The Court should exclude Clarke’s causation testimony for two reasons. First, he

lacks any expertise to discuss customer “behavior” issues. This failure is fatal, and infects every
aspect of his causation opinions. Second, Clarke’s methodology, which he invented, is nothing
more than a novel, unproven and unreliable series of “judgment calls” without any scientific
basis.

7

1.

8

Clarke’s causation opinion fails Rule 702’s baseline admissibility requirement.

9

SAP has never proffered or qualified Clarke as a “causation” expert, much less as an expert on

10

ERP customer decision-making, a “behavioral” issue he has no qualifications to address. Jindal

11

Decl., Ex. A (Trial Tr.) at 1538:1-2. Clarke’s expertise in one subject – accounting – does not

12

somehow override a lack of qualifications in these ERP customer “behavioral” issues. See, e.g.,

13

Chang, 207 F.3d at 1172-73; Rambus, at 603-05.

Clarke Lacks Expertise To Opine on Customer Behavior

14

Clarke’s process for arriving at his conclusions does not cure this failure; nor does

15

limiting Clarke’s testimony to his conclusions. The processes and conclusions that resulted from

16

Clare’s lack of expertise in consumer behavior are the problem. The Court should not permit

17

Clarke to discuss his invented exclusion categories, his judgments about the relevance of each

18

category, his assignment of customers to these categories, or any determinations of why

19

customers made certain decisions.

20

Clarke has no more expertise than the jury to evaluate the evidence regarding

21

customer behavior. As a result, it would be an abuse of discretion to allow Clarke to testify on

22

these topics. Wheeling Pittsburgh Steel Corp. v. Beelman River Terminals, Inc., 254 F.3d 706,

23

714-15 (8th Cir. 2001) (abuse of discretion to allow expert “eminently qualified” in flood risk

24

management to testify about safe warehousing practices).

25
26
6
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

2.

Clarke Employs An Invented And Unreliable “Methodology”

2

Even if Clarke were qualified (he is not), his invented causation “methodology”

3

does not meet Rule 702’s “reliability” requirement for admissible expert analysis. Clarke can

4

cite no treatise (or anything else) that supports his “exclusion criteria” methodology, nor has

5

Clarke ever before employed his “joint exclusion criteria” formula. He literally made up the

6

whole process for this case. Dkt. 783, ¶ 7, Ex. B (Clarke Depo.) at 663:11-19 (Clarke’s

7

exclusion criteria are not identified in any publication, but are groupings based on Clarke’s

8

judgment calls), 636:19-637:3, 641:4-22 (Clarke cannot identify any treatise that specifies the

9

use of his exclusion methodology), 647:3-10.

10

The unreliability of Clarke’s causation analysis is further confirmed by the fact

11

that it did not work. For example, he recognized that many customers who stayed with Oracle

12

support would have been presumed to have left under his exclusion criteria formula. Id. at

13

679:17-25 (customers that never left Oracle exhibited the same characteristics that would have

14

put them in one or more of Clarke’s exclusions pools), 681:14-24 (“Q: Right. Would you agree

15

that Oracle had some customers who would fit one or more of your automatic exclusion pools,

16

but nonetheless, in the real world, never left? A: As I say, I don’t remember if that fact pattern

17

arose. But it wouldn’t surprise me if it did.”). Clarke did not test his assumptions of the

18

characteristics that indicate a customer would have left Oracle regardless of infringement against

19

customers who actually stayed with Oracle support. Id. at 680:11-681:1 (“If they didn’t leave

20

Oracle, I really didn’t spend any time studying them.”).
The Court should not allow Clarke’s testimony based on this untested,

21
22

unrecognized, unscientific, and unreliable “methodology.” See, e.g., Daubert, 43 F.3d at 1318-

23

19.

24
25

For these reasons, the Court should not allow Clarke to offer his unqualified and
unreliable customer causation testimony.

26
7
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

II.

2

MOTION NO. 2: CLARKE’S THIRD PARTY MARKET “STUDY” IS MERELY
A SUMMARY OF INADMISSIBLE EVIDENCE AND IS BEYOND CLARKE’S
EXPERTISE

3

For similar reasons relating to Clarke’s lack of expertise in the third party

4

software support market and his failure to apply any reliable methodology, Oracle moves to

5

exclude any testimony by Clarke regarding his third party market “study.”

6
7

A.

Clarke’s Internet-Based Market Opinion
Based on some Internet browsing, Clarke purports to provide expert analysis of

8

the existence and technical viability of “reasonably similar product offerings” to SAP TN

9

support. Dkt. 919, ¶ 6, Ex. A (Clarke Report) at 141. He uses his study to conclude that a

10

“vibrant market” existed for third party support of the products at issue. Id. at 142; Dkt. 783, ¶ 7,

11

Ex. B (Clarke Depo.) at 526:20-527:21; 528:5-16. From that, he concludes that SAP TN

12

customers would have left Oracle even without TN. Jindal Decl., Ex. A (Trial Tr.) at 1571:1-

13

1573:9; Dkt. 919, ¶ 6, Ex. A (Clarke Report) at 192 (“In a world absent TomorrowNow, the

14

majority of its customers would likely have sought out support services from one of the other

15

vendors that existed in the marketplace.”).

16
17
18
19
20
21
22
23
24
25
26
8
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1
2

To present this opinion at the first trial, SAP published the following
demonstrative to the jury.

3
4
5
6
7
8
9
10
11
12
13
14
15
16

Over Oracle’s objections, the Court permitted Clarke to use this demonstrative to discuss the

17

listed companies and the supposed role of each in the third party support market. Jindal Decl.,

18

Ex. A (Trial Tr.) at 1570:3-1573:9. For example, he testified:

19

The green bits, the greeny [sic], khaki-colored stuff is JD Edwards;
the purple is PeopleSoft. And what this is trying to show is a time
line of the companies that were offering third-party support in any
particular year. So if you look on the left-hand side of any of those
rows, that is when . . . that vendor came into the marketplace . . . .
And they offered service for JD Edwards – that’s what these green
ones are here. And the reason [K]lee stops right there is they went
out of business at that point. The others are all still in business.

20
21
22
23
24
25
26

Id. at 1571:7-1571:23.
B.

The Court Should Exclude Clarke’s Market “Study”
The Court should not permit Clarke to repeat that testimony in the second trial.
9
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

First, Clarke lacks expertise to conduct or report on a “market study” because Clarke admits he

2

knows nothing about ERP software or competition among third party ERP vendors. See pp. 2-3

3

above. On this basis alone, the Court should exclude his commentary about what these

4

companies do, how they compete, or which of them occupy which position and in what market.

5

Second, in devising his supposed market analysis, Clarke did not apply any

6

acceptable market study methodology. His purported third party vendors “market study” is

7

nothing more than a cherry-picked collection of untested information he found on the Internet

8

when he wrote his report, none of which was admitted prior to his trial testimony. 3 Dkt. 783

9

(Clarke Depo.) at 581:13-23. Clarke’s “methodology” was no methodology at all -- scientific or

10

otherwise. It consisted of comparing the words on other vendors’ website materials to those used

11

to describe SAP TN’s service offering, and then opining that the service offerings from third

12

party vendors and/or self service are viable substitutes for SAP TN. His only claimed

13

“expertise” to reach his conclusions is his ability to read words on the computer screen:
Q: What expertise do you have of ERP vendor product offerings
that would allow you to provide expert opinion on the reasonable
similarity of product offerings?
A: I don't -- I don't believe I need that expertise to do what's being
referenced here. These are statements made by these vendors
themselves, and for the most part, the terminology and vocabulary
they use to describe their services is similar if not identical one to
the other. So I'm able to read what they say about themselves, and
I've incorporated that into my analysis.
Q: What analysis did you perform to determine that the firms had
reasonably similar product offerings?
A: I read what they said they were offering . . . .

14
15
16
17
18
19
20
21

Dkt. 783, ¶ 7, Ex. B (Clarke Depo.) at 548:19-549:14.

22
23
24
25

Even if Clarke had the technical or market knowledge to undertake a meaningful
3

Unless the underlying evidence is admitted at a new trial, and it should not be, any testimony
about Clarke’s analysis should be excluded as inadmissible hearsay. Matrix Motor Co. v. Toyota
Jidosha Kabushiki Kaisha, 290 F. Supp. 2d 1083, 1086 (C.D. Cal. 2003) (expert reports
“irrelevant” where they “merely recite hearsay statements, often verbatim, culled from a variety
of Internet websites”).

26
10
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

comparison (which he does not), proper analysis of the support market for the Oracle

2

applications at issue would require investigation into what the marketing materials really meant,

3

whether vendors actually provided relevant services, where and when they were offered, for

4

which products, and at what level of competitiveness. Clarke did no such testing. Instead, he

5

accepted other vendors’ website marketing claims at face value. Id. (Clarke Depo.) at 550:4-21

6

(did not verify what specific products vendors supported); 581:24-582:4 (did not confirm any

7

vendors’ assertions with actual customers); 602:9-605:3 (assumed website representation of

8

vendor’s offering in March 2010 was indicative of what offered during relevant period).

9

Regurgitation of untested website statements is not allowable expert testimony

10

and does not assist the jury, particularly where Clarke has no experience in the industry on which

11

he purports to opine. See Perry v. Schwarzenegger, No. 09-2292, 2010 WL 3025614, at *22

12

(N.D. Cal. Aug. 4, 2010) (“[M]ere recitation of text in evidence does not assist the court in

13

understanding the evidence because reading, as much as hearing, ‘is within the ability and

14

experience of the trier of fact.’”) (quoting Beech Aircraft Corp v United States, 51 F3d 834, 842

15

(9th Cir .1995)); Kilgore v. Carson Pirie Holdings, Inc., No. 05-6035, 2006 WL 3253490, at *4

16

(6th Cir. 2006) (Internet article is unreliable basis for methodology where expert did not know on

17

what research or methodology the article was based and conducted no independent research).

18
19
20
21

The Court should also exclude Clarke’s “market study” opinions.
III.

MOTION NO. 3: THE COURT SHOULD NOT ALLOW SAP TO
PRESENT HEARSAY THROUGH EXPERTS (EITHER CLARKE
OR MEYER)
SAP improperly introduced two forms of inadmissible hearsay in the last trial.

22

First, it used Clarke as a “conduit” to transmit hearsay evidence supposedly underlying his

23

“exclusion criteria” opinions. Second, through its cross-examination of Meyer, SAP introduced

24

hearsay evidence on which Meyer did not rely, in violation of Rule 703. The Court should

25

exclude both forms of evidence from the second trial.

26
11
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

A.

SAP May Not Put In Inadmissible Evidence Through Clarke
An “expert may not [] simply transmit [] hearsay to the jury.” U.S. v. Mejia, 545

2
3

F.3d 179, 197 (2d Cir. 2008); Dominguez v. Four Winds Int’l Corp., CIV. 08CV388 L LSP, 2009

4

WL 1444347, at *1 (S.D. Cal. May 22, 2009) (granting a motion in limine to preclude an expert

5

from “testifying as to the details of any hearsay upon which he bases his opinion”). Instead, the

6

“correct way to proceed is for a foundational witness to testify firsthand at trial to the

7

foundational fact or test and to be cross-examined. Then the expert can offer his or her opinion

8

on the assumption that the foundational fact is accepted by the jury.” Therasense, Inc. v. Becton,

9

Dickinson and Co. ., C 04-02123 WHA, 2008 WL 2323856, at *2 (N.D. Cal. May 22, 2008). 4
In the first trial, SAP and Clarke failed to follow these rules. For example, Clarke

10
11

testified that he assigned customers to his “Service Evaluation” exclusion pool if “the company

12

was out looking at other vendors.” Jindal Decl., Ex. A (Trial Tr.) at 1599:18-19. SAP then

13

showed the jury the customers Clarke assigned to this exclusion pool on the basis that they were

14

“out looking.” Id. at 1603:6-9. That was improper. As the Court originally noted, the “reasons”

15

customers were allegedly “out looking at other vendors” – a central causation issue – should not

16

come in as hearsay through Clarke. Id. at 1591:25-1592:2. SAP offered no proper foundational

17

witness to establish those supposed facts, and the probative value of Clarke’s uninformed

18

hearsay does not substantially outweigh the prejudice to Oracle from admitting it. Therefore, the

19

admission of Clarke’s “reasons” violates Rule 703. Therasense, Inc., 2008 WL 2323856 at *2.
At the next trial, the Court should not allow SAP to fill evidentiary gaps with

20
21
22
23
24
25

4

When an expert does “base[] an opinion” on inadmissible facts or data, Rule 703 establishes a
balancing test for whether the Court may allow that evidence. The Court may allow disclosure
of such relied-upon facts or data if “the court determines that their probative value in assisting
the jury to evaluate the expert’s opinion substantially outweighs their prejudicial effect.” Id. “If
the otherwise inadmissible information is admitted under this balancing test, the trial judge must
give a limiting instruction upon request, informing the jury that the underlying information must
not be used for substantive purposes.” Fed. R. Evid. 703, advisory committee note (2000
Amendment).

26
12
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

hearsay evidence in the guise of expert testimony, particularly in support of an opinion which

2

Clarke has no expertise to provide (See Motion in Limine No. 1, above).

3

B.

4

SAP Cannot Introduce Hearsay Evidence Through Meyer on CrossExamination Upon Which Meyer Did Not Rely
SAP also offered hearsay into evidence in the first trial during its cross-

5
examination of Meyer. SAP argued that it could do so because Meyer had merely considered the
6
hearsay statements, even if he had not relied on them and they formed no basis for his opinions.
7
On three occasions, the Court admitted the evidence over Oracle’s objection. Jindal Decl., Ex. A
8
(Trial Tr.) at 1143:24-1145:24, 1151:20-1152:16, 1156:20-1157:14. Subsequently, the Court
9
corrected itself and held that Meyer’s simply having seen a document did not render it
10
admissible. Id. at 1163:13-22. After further oral argument, the Court stated – correctly – that an
11
expert “has to rely upon it in order for it to be used to evaluate his” expert opinion. Id. at
12
1169:16-17 (emphasis supplied); see In re Hanford Nuclear Reservation Litig., 534 F.3d 986,
13
1012 (9th Cir. 2008) (inadmissible hearsay cannot be admitted even as impeachment evidence
14
“unless the testifying expert based his opinion on the hearsay”), see also Bobb v. Modern
15
Products, Inc., 648 F.2d 1051, 1055-56 (5th Cir. 1981) (counsel could not use otherwise
16
inadmissible hearsay “to attempt to impeach the plaintiff's witness” where the expert “did not
17
state that he had relied on the report, even though he had admitted that he had seen it. Until
18
defendant established that plaintiff had relied on the report of the other doctor, it was improper
19
for the defendant to read from that report in cross-examining plaintiff's witness.”), overruled on
20

other grounds by Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331 (5th Cir. 1997). 5

21
Oracle asks the Court to enforce this correct articulation of the rule regarding the
22
23
24
25

5

The balancing test under Rule 703 comes into play only when the expert “based his opinion on
the hearsay” sought to be admitted. In re Hanford, 534 F.3d at 1012 (emphasis supplied); see
also Fed. R. Evid. 703 advisory committee’s note (2000 Amend.) (“Rule 703 has been amended
to emphasize that when an expert reasonably relies on inadmissible information to form an
opinion or inference, the underlying information is not admissible simply because the opinion or
inference is admitted.”).

26
13
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

admissibility of evidence relied on by an expert during the upcoming trial. See In re Hanford,

2

534 F.3d at 1012.

3

IV.

4

MOTION NO. 4: TO EXCLUDE RELIANCE ON LATE-PRODUCED
CUSTOMER DECLARATIONS
Oracle moves under Fed. R. Civ. P. 37 to exclude reliance on five customer

5
declarations that SAP produced after discovery and after the deadline for serving SAP’s damages
6
report. At the November 2010 trial, the Court allowed Clarke to reduce his damages estimate by
7
several millions of dollars in reliance on these inadmissible customer declarations. Jindal Decl.,
8
Ex. A (Trial Tr.) at 1523:-23-24. Oracle respectfully contends he should not be allowed to do so.
9
10

A.

SAP’s Late Production of Customer Declarations
SAP first identified SAP TN’s customers in a discovery response on July 26,

11
2007. Dkt. 783, ¶ 22. During the two and a half years of discovery, the parties used that list to
12
identify customers to contact, obtain declarations from, and depose. On April 6, 2010 – five
13
months after the close of discovery, and after the March 26, 2010 due date for SAP’s expert
14
rebuttal reports – SAP served a customer declaration by email (Standard Register Co.). Id., ¶ 23.
15
On April 9, 2010 Oracle objected to this declaration as untimely, citing SAP’s own December 7,
16
2009 assertion that customer statements obtained after an expert due date “do not provide a basis
17
for supplementation since there was nothing to prevent [a party] from obtaining them before.”
18
Dkt. 783, ¶ 23, Exs. Q, R.
19
Thereafter, SAP produced four more customer declarations, two on May 7, 2010
20
(Amstel Rail and NewPage Corp.), one on May 10, 2010 (Rotkappchen) and one on August 4,
21
2010 (Haworth, Inc, ). Dkt. 783, ¶¶ 24-26. At his June 8, 2010 deposition, Clarke testified that
22
he supplemented his expert report to reduce his measure of Oracle’s damages in reliance on the
23
late produced customer declarations received to that point. Dkt. 783, ¶ 7, Ex. B (Clarke Depo.)
24
at 28:23-30:6. He provided a third supplement to his expert report on August 4, 2010 relying on
25
the last declaration. Dkt. 783, ¶ 26. At his deposition, Clarke confirmed that “the customers at
26
14
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

issue have been known for quite some time.” Dkt. 783, ¶ 7, Ex. B (Clarke Depo.) at 27:24-25.

2

B.

3

The Court Should Not Permit Clarke To Rely On The Late
Produced Documents
Rule 26(a)(2)(B) requires that an expert report “contain a complete statement of

4
all the opinions to be expressed and the basis and reasons therefore,” as well as “the data and
5
other information considered by the witness in forming the opinions.” Failure to satisfy this rule
6
precludes use of this information under Rule 37 unless the failure is substantially justified or
7
harmless. SAP’s failure is neither.
8
SAP cannot justify Clarke’s reliance on these declarations that were served after
9
Clarke’s report. Dkt. 783, ¶ 23, Exhibit R. To the contrary, SAP admitted that untimely
10
declarations “do not provide a basis for supplementation.” Clarke’s reliance on the late
11
production to contest damages prejudices Oracle, which could not test the declarations with
12
discovery. Under the “wide latitude [for] imposing sanctions under Rule 37(c)(1)” for expert
13
disclosure failures, Maionchi v. Union Pacific Corp., No. 03-cv-647, 2007 WL 2022027, at *1
14
(N.D. Cal. July 9, 2007), Oracle asks that the Court exclude Clarke’s opinions offered in reliance
15
on these untimely customer declarations.
16
17
18

V.

MOTION NO. 5: TO EXCLUDE TESTIMONY ABOUT INFRINGERS’ PROFITS
THAT INCLUDES IMPROPER EXPENSE DEDUCTIONS
Oracle is entitled to recover infringers’ profits in addition to its actual damages.

19

See 17 U.S.C. § 504(b). Infringers’ profits are typically measured by identifying all gross

20

revenue associated with infringement, and deducting expenses. See id.; Ninth Circuit Manual of

21

Model Jury Instructions, Instruction 17.24. It is the plaintiff’s burden to identify relevant

22

revenues, and defendant’s burden to prove deductible expenses. 17 U.S.C. § 504(b). But where

23

a defendant willfully infringes, it loses the right to deduct those expenses from its infringers’

24

revenues. See Ninth Circuit Manual of Model Jury Instructions, Comment to Instruction 17.27

25

(“Generally, deductions of defendant’s expenses are denied where the defendant’s infringement

26

is willful or deliberate.”) (citing Kamar Int’l, Inc. v. Russ Berrie & Co., 752 F.2d 1326, 1331-32
15
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)

1

(9th Cir.1984); Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 515 (9th Cir.

2

1985)).

3

In pleading guilty to criminal copyright infringement, TN conceded that it

4

“willfully infringed the copyrights of Oracle’s copyrighted works . . . for the purpose of

5

commercial advantage and private financial gain.” USA v. TomorrowNow, Inc., No. 4:11-cr-642,

6

Plea Agreement, Dkt. No. 13 at 5:13-15. In stipulating to liability, SAP AG and SAP America

7

admitted they “intentionally and materially contributed” to the criminal violations

8

TomorrowNow committed. Jindal Decl., Ex. A (Trial Tr.) at 1448:12-21. In light of these

9

admissions, it is now clear that Clarke may not continue to reduce his damages figure by

10

deducting expenses that defendants’ willful infringement disallows. See Jindal Decl., Ex. B

11

(Clarke Report) at 241; see generally id. at 239-50. Yet, he does. Specifically, he calculated

12

SAP’s profits by starting with a revenue figure and applying a profit margin based on his

13

estimate of expenses, including overhead and direct and indirect costs, related to that revenue.

14

See id. at241, 246-47. He performed a similar calculation of TomorrowNow’s profits. See id. at

15

250. (Meyer also measured a profit margin, for the sake of consistency, but Oracle will seek

16

only the gross revenue number calculated by Meyer at trial.)

17

Clarke’s calculations regarding infringers’ profits expressly include deductions

18

for expenses that defendants’ willful infringement precludes him from making. As a result, the

19

Court should exclude Clarke’s testimony as to those deductions, or any infringer’s profits

20

opinions derived from them, from evidence.

21

DATED: April 26, 2012

Bingham McCutchen LLP

22
23
24
25

By:

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

26
16
PLAINTIFF’S MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL)