Oracle Corporation et al v. SAP AG et al

Filing 1155

Declaration of Thai Le in Support of 1154 Opposition/Response to Motion In Limine filed byOracle International Corporation. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P, # 17 Exhibit Q, # 18 Exhibit R, # 19 Exhibit S, # 20 Exhibit T, # 21 Exhibit U, # 22 Exhibit V, # 23 Exhibit W, # 24 Exhibit X, # 25 Exhibit Y, # 26 Exhibit Z)(Related document(s) 1154 ) (Howard, Geoffrey) (Filed on 5/10/2012)

EXHIBIT I

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]

Page 254

Page 256

1

ONE CONCRETE FACT ABOUT THE VALUE OF IT. YOU DON'T HEAR A

1

NO, THEY CAME UP WITH A PHRASE -- THEY ATTACHED IT TO THEIR

2

MENTION OF A NUMBER, YOU DON'T HEAR MENTION OF A VALUATION.

2

PURPORTED STIPULATION: REASONABLY SHOULD HAVE KNOWN. THAT'S

3

NOT YOUR HONOR'S RULING. THAT'S NOT THE NINTH CIRCUIT MODEL

3

THE SECOND POINT IS EXACTLY WHAT YOUR HONOR

INSTRUCTION.

4

FORESHADOWED IN OUR CONFERENCE LAST WEEK, THAT PLAINTIFFS WOULD 4

5

TAKE THIS TOO FAR. IT MAY BE THAT YOUR HONOR NEEDS TO SEE THE

5

THE COURT: IT IS KNEW OR SHOULD HAVE KNOWN.

6

OPENING AND SEE WHAT THEY DO TO UNDERSTAND THIS, TO APPRECIATE

6

MR. PICKETT: IT'S KNOW OR HAD REASON TO KNOW.

7

IT. OF THESE 81 SLIDES, 79 OF THEM RELATE TO SAP STATE OF

7

THE COURT: HAD REASON TO KNOW.

8

MIND, WHEN SAP STATE OF MIND IS NOT A DISPUTED ISSUE IN THIS

8

MR. LANIER: TO KNOW OF SOMEONE ELSE'S CONDUCT --

9

CASE.

9

10

SO IT MAY JUST BE THAT WE ARE ALERTING YOUR HONOR TO

THE COURT: LOOK, I AM GOING TO GIVE A LOT OF LEEWAY

10

TO BOTH SIDES TO TRY THE CASE AS LONG AS YOU DON'T RUN AFOUL OF
ANY OF MY PRETRIAL RULINGS.

11

A VERY SIGNIFICANT ISSUE HERE BECAUSE THEY WILL BE TAKING THIS

11

12

TOO FAR.

12

13

THIRDLY, THEIR PRESENTATION OF IT FOR AN OPENING

WE TALKED ABOUT THIS LAST WEEK. I THINK THAT ORACLE

13

IS ENTITLED TO USE SOME OF THIS EVIDENCE IN ARGUMENT FOR

14

STATEMENT IS EXTRAORDINARILY ARGUMENTATIVE. THEY ARE GOING TO

14

CONTEXT. MOREOVER, I TOTALLY AGREE THAT THERE IS NO PREJUDICE

15

SAY THAT SAP'S CHOICE TO STEAL, WHEN WHAT WE HAVE STIPULATED TO

15

TO SAP GIVEN THAT SAP HAS NOW STIPULATED TO LIABILITY.

16

IS COPYRIGHT INFRINGEMENT, AN ACTION THAT HAS NO INTENT ELEMENT

16

17

AT ALL REQUIRED, OR IT CAN BE PROVEN WITHOUT PROVING INTENT AS

17

MR. MITTELSTAEDT USED THE WORD "WRONGFUL CONDUCT". THEY DID

18

YOUR HONOR DETERMINED ON SUMMARY JUDGMENT.

18

THIS WRONG. WHAT I AM CONCERNED ABOUT, THOUGH, IS THE JURY

19

BEING CONFUSED ABOUT WHETHER OR NOT THERE WAS CRIMINAL CONDUCT.

19

SO WHAT SAP STIPULATED TO WAS THAT VICARIOUS

THE JURY HAS ALREADY BEEN TOLD THAT -- I THINK

I THINK THAT THAT IS VERY IMPORTANT GIVEN WHAT I

20

LIABILITY OWNERSHIP CONTROL; NO STATE OF MIND. IT STIPULATED

20

21

TO CONTRIBUTORY LIABILITY. UNDER YOUR HONOR'S RULING ON

21

KEEP READING IN THE NEWSPAPERS THAT THAT IS CLEAR THROUGHOUT

22

SUMMARY JUDGMENT, THEY SHOULD HAVE KNOWN, THEY DIDN'T STOP IT.

22

THE COURSE OF THIS TRIAL. AND I THINK THAT'S PROBABLY WHAT YOU

23

THIS IS NOT A CASE OF INTENTIONAL CONDUCT AS FAR AS SAP GOES.

23

WERE SPEAKING TO WITH REGARD TO MY USE OF THE WORD "VIOLATION".

24

THERE'S ACTUALLY NO DISPUTES IN THIS CASE FOR TRIAL ABOUT

24

AND I THINK FROM SOME OF THE THINGS THAT WE READ AND HEARD FROM

25

INTENT.

25

THE JURORS THAT THAT'S SOMETHING WE NEED TO BE CONCERNED ABOUT.

Page 255
1

MY ONLY CONCERN IN THIS IS THE USE OF THE WORD

2

STEALING, THE CHOICE TO VIOLATE THE LAW, ALL OF THAT TALKS

2

"THEFT". THIS IS NOT A THEFT CASE. THIS IS AN INFRINGEMENT

3

ABOUT AN ISSUE THAT IS NO LONGER IN DISPUTE. THAT'S

3

CASE. THE WORDS ARE TERMS OF ART. AND I AGREE THAT THAT'S

4

FUNDAMENTALLY OUR ISSUE. IT DOES IT IN A HIGHLY ARGUABLE WAY.

4

MORE ARGUMENTATIVE THAN ACCURATE.

5

IT MIGHT BE APPROPRIATE FOR CLOSING IF THERE'S EVIDENCE, IT'S

5

6

NOT APPROPRIATE FOR OPENING.

6

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

7

BUT OTHERWISE, I AGREE WITH THE THREE CATEGORIES. I THINK YOU

8

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

1

7

THIS ENTIRE PRESENTATION CHARACTERIZING IT AS

Page 257

MR. PICKETT: FIRST OF ALL, AS TO INTENT, LET'S GET

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

8

THAT ONE TEED UP NOW. YOUR HONOR ISSUED AN ORDER ON THIS. YOU

9

SAID AN ELEMENT WAS KNOWLEDGE OR HAD REASON TO KNOW. AND THAT 9

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

10

IS THE SCIENTER ELEMENT THAT WE ARE RELYING ON. AND WE, I

10

VALUATED AND PROVIDE SOME CONTEXT. AND I THINK THAT THAT'S --

11

THINK, ARE FREE TO --

11

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

12

BE.

12
13
14
15
16
17

THE COURT: IS KNOWLEDGE AND HAVING REASON TO KNOW
TANTAMOUNT TO INTENT TO STEAL?

13

MR. LANIER: WE UNDERSTAND, YOUR HONOR.

MR. PICKETT: YES. IT'S KNOWING INFRINGEMENT.

14

THE COURT: TAKE THE WORD "THEFT" OUT AND I'M FINE

THE COURT: IS IT THE SAME AS INTENTIONAL THEFT?

15

AND HAVE YOU INDEED USED THAT CHARACTERIZATION OF THEFT?
MR. PICKETT: I THINK -- PROBABLY. IT IS CERTAINLY

16

WITH WHAT YOU'RE DOING.
MR. LANIER: THE SECOND OBJECTION WE HAD TO WHAT

17

THEY PRESENTED, AND AGAIN, IT MIGHT MATTER MORE IF THEY PRESENT

18

A WORD I USE WHEN I TALK ABOUT THE CASE BECAUSE IF YOU

18

WITNESSES SUCH AS THEIR EXPERT PAUL PINTO, ET CETERA. AGAIN,

19

KNOWINGLY TAKE SOMEONE'S PROPERTY AND YOU HAVE THE SCIENTER

19

IT SEEMS CLEAR WE HAVEN'T HEARD IT YET, BUT IT SEEMS CLEAR THEY

20

ELEMENT IN THERE, IT STRIKES ME THAT IT IS NOT ONLY A UNLAWFUL

20

INTEND TO PRESENT EVIDENCE ABOUT DEVELOPMENT COSTS AND COSTS

21

TAKE, IT'S AN UNLAWFUL KNOWING TAKING WHICH EQUATES TO STEALING 21

THAT WERE AVOIDED, AN ISSUE THAT WE THINK YOUR HONOR'S RULINGS

22

SOMEONE'S PROPERTY, THEFT OF SOMEONE'S PROPERTY.

22

NOW REPEATEDLY HAVE PRETTY WELL FORECLOSED. WE DON'T THINK WE

23

NEED TO HEAR THE EXPERT ON SAY DEVELOPMENT COSTS OR OUR TWO

23

IT IS, IN A COLLOQUIALLY WAY, I THINK EXACTLY WHAT'S

24

GOING ON. WHEN THEY SAY THERE IS NO INTENT ELEMENT, YOUR HONOR 24

25

HAS ALREADY RULED ON THIS. THERE IS INTENT. THEY WANT TO SAY,

25

RESPONSIVE EXPERTS. THEY SHOULDN'T BE IN THIS CASE.
THE COURT: IT'S NOT PART OF THE CASE.

65 (Pages 254 to 257)

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]

Page 313
A P P E A R A N C E S (CONT'D.)

(PROCEEDINGS ON PAGES 297 THROUGH 312 ARE UNDER SEAL.

1
2

FOR DEFENDANTS:
JONES DAY
SILICON VALLEY OFFICE
1755 EMBARCADERO ROAD
PALO ALTO, CALIFORNIA 94303
BY: THARAN GREGORY LANIER,
JACQUELINE LEE, ATTORNEYS AT LAW

THE UNSEALED TRANSCRIPT RESUMES ON PAGE 313.)

3

*

4

6

*

ALL RIGHT. GOOD MORNING, LADIES AND GENTLEMEN OF THE
JURY.
PLEASE BE SEATED.

10

(OFF-THE-RECORD DISCUSSION.)

11

JONES DAY
717 TEXAS, SUITE 3300
HOUSTON, TEXAS 77002-2712
BY: SCOTT W. COWAN, ATTORNEY AT LAW

*

THE COURT: ALL RIGHT. BE SEATED.

8
9

*

OF THE JURY IN OPEN COURT:)

7

JONES DAY
555 CALIFORNIA STREET, 26TH FLOOR
SAN FRANCISCO, CALIFORNIA 94104
BY: ROBERT A. MITTELSTAEDT,
JASON MCDONELL, ATTORNEYS AT LAW

*

(THE FOLLOWING PROCEEDINGS WERE HEARD IN THE PRESENCE

5

THE COURT: ALL RIGHT. WE'RE READY TO BEGIN OUR

12
13

FIRST DAY OF TRIAL THIS MORNING. AND NOW THAT YOU ARE THE JURY

14

IN THE CASE, IT IS MY DUTY TO INSTRUCT YOU ON THE LAW.
THERE ARE PRELIMINARY INSTRUCTIONS THAT I AM ABOUT TO

15

ALSO PRESENT: CHRISTOPHER H. GILLESPIE
MICHAEL A. PHARO
ALAN RUFFIER
DAVID SCHLAIFER

16

GIVE YOU THAT YOU WILL NEED IN ORDER TO BE ABLE TO APPRECIATE

17

THE EVIDENCE THAT YOU'RE GOING TO BE RECEIVING OVER THE NEXT

18

COUPLE OF DAYS.
NOW YOU MUST NOT INFER FROM THE INSTRUCTIONS OR FROM

19

--O0O--

20

ANYTHING THAT I MIGHT SAY OR DURING THE COURSE OF THE TRIAL AS

21

INDICATING THAT I HAVE AN OPINION REGARDING THE EVIDENCE OR WHAT

22

YOUR VERDICT SHOULD BE.
IT IS YOUR DUTY TO FIND THE FACTS FROM ALL OF THE

23

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

24

EVIDENCE IN THE CASE, AND TO THOSE FACTS, YOU WILL APPLY THE LAW

25

AS I GIVE IT TO YOU. YOU MUST FOLLOW THE LAW AS I GIVE IT TO

Page 314
INDEX

1
2

329

2
384

OR SYMPATHY. THAT MEANS THAT YOU MUST DECIDE THE CASE SOLELY ON

4

OPENING STATEMENT BY MR. HOWARD
OPENING STATEMENT BY MR. MITTELSTAEDT

INFLUENCED BY PERSONAL LIKES, OR DISLIKES, OPINIONS, PREJUDICES,

3

THE EVIDENCE BEFORE YOU. YOU WILL RECALL THAT YESTERDAY, YOU

5

PAGE VOL.

YOU, WHETHER YOU AGREE WITH IT OR NOT. AND YOU MUST NOT BE

TOOK AN OATH TO DO EXACTLY THAT.

PLAINTIFFS' WITNESSES
PAGE VOL.
RANSOM, BUFFY
DIRECT EXAMINATION BY MR. HOWARD
420 2
CROSS-EXAMINATION BY MR. COWAN
433 2
REDIRECT EXAMINATION BY MR. HOWARD
442 2

AND IN FOLLOWING MY INSTRUCTIONS, YOU MUST FOLLOW ALL

7

2

6

OF THEM AND NOT SINGLE OUT SOME AND IGNORE OTHERS. THEY ARE ALL

8

EQUALLY IMPORTANT.
NOW, TO HELP YOU FOLLOW THE EVIDENCE, I WILL GIVE YOU

9
10

A BRIEF SUMMARY OF WHO THE PARTIES ARE AND WHAT THEIR POSITIONS

11

ARE.

12

AS I EXPLAINED YESTERDAY, THERE ARE THREE PLAINTIFFS,

VIDEO DEPOSITION OF JOHNN RITCHIE
(TRANSCRIPT EXCERPT APPENDED)

445
474

2
2

ORACLE U.S.A., INCORPORATED, WHICH I REFER TO AS "ORACLE

14

U.S.A."; ORACLE INTERNATIONAL CORPORATION, WHICH WE WILL REFER

15

SCREVEN, EDWARD
DIRECT EXAMINATION BY MR. HOWARD

13

TO AS "ORACLE INTERNATIONAL"; AND SIEBEL SYSTEMS, INCORPORATED,

16

WHICH WE WILL REFER TO AS "SIEBEL SYSTEMS."

17

TOGETHER, THESE THREE ENTITIES COLLECTIVELY WILL BE

18

EXHIBITS
PLAINTIFFS' EXHIBITS W/DRAWN
545-4
443 2
2115-1
459 2
4813
463 2

19

IDEN

EVID VOL.

REFERRED TO AS EITHER "ORACLE" OR "THE PLAINTIFFS." THERE ARE
THREE DEFENDANTS IN THIS CASE. SAP AG, WHICH WILL BE REFERRED

20

TO BY THAT NAME; SAP AMERICA, INCORPORATED, WHICH I WILL REFER

21

TO AS "SAP AMERICA"; AND TOMORROWNOW, INCORPORATED, WHICH I WILL

22

REFER TO AS SIMPLY "TOMORROWNOW."

23
24

--O0O-RAYNEE H. MERCADO, CSR, RMR, CRR, FCRR, CCRR [phone] 25

COLLECTIVELY, THESE DEFENDANTS WILL BE REFERRED TO AS
EITHER DEFENDANTS OR "SAP" -- WILL COLLECTIVELY BE REFERRED TO
SIMPLY AS "DEFENDANTS."

2 (Pages 2 to 314)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

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]

Page 528

Page 530

1

OF BUSINESS, THEY STAY WITH YOU.

1

MONEY IS COMING INTO US EVERY YEAR. AND YOU TAKE THAT MONEY,

2

Q. LET'S GO TO THE SECOND REASON THAT YOU LISTED TO THE

2

AND THAT'S WHAT YOU USE TO PUT IN RESEARCH AND DEVELOPMENT TO

3

INVESTORS AND ANALYSTS, "LARGER APPLICATIONS, R&D BUDGET AND

3

FIGURE OUT WAYS TO MAKE THE PRODUCT BETTER.

4

ACCELERATED INNOVATION." WHAT DID YOU MEAN BY THAT?

4

5

A. SO THESE CUSTOMERS ARE PAYING YOU EACH YEAR TO MAINTAIN THE

5

HOW THE PRODUCTS GET BETTER.

6

SOFTWARE AND INVEST IN IT. SO LIKE I SAID EARLIER, THE MORE

6

Q. FIFTH REASON, "ACCRETIVE TRANSACTION FROM OPERATIONS TO

7

CUSTOMERS YOU HAVE, THAT MEANS MORE MONEY COMING IN BECAUSE

7

ORACLE'S SHAREHOLDERS." WHAT DOES THAT MEAN?

8

THEY'RE PAYING ON A EITHER -- YEARLY BASIS.

8

A. SO WHAT THE "ACCRETIVE" MEANS, IN THIS CONTEXT ANYWAY, IS

9

THAT THERE ARE SOME ACQUISITIONS THAT ON DAY ONE WHEN YOU BUY

9

NORMALLY YOU TAKE THAT, AND THAT'S WHAT YOU USE TO

SO LONG AS THAT'S IMPROVING AND INCREASING, THAT'S

10

IMPROVE THE PRODUCT. SO THE MORE CUSTOMERS YOU HAVE, THE BIGGER 10

THEM, BECAUSE YOU'RE LOSING MONEY, THEY ACTUALLY YOU MAKE LESS

11

R & D BUDGET YOU CAN HAVE, THE MORE DEVELOPERS YOU CAN HAVE.

MONEY OVERALL. AND THEY ARE WHAT'S CALL DILUTIVE TO YOUR

12

THE MORE DEVELOPERS, THE MORE INNOVATION. SO THAT'S ANOTHER WAY 12

13

TO CATCH UP WITH A LARGE COMPETITOR IF YOU HAVE MORE MONEY

13

14

COMING IN TO PUT IN RESEARCH AND DEVELOPMENT. BECAUSE OF ALL

14

15

THOSE CUSTOMERS, YOU CAN THINK OF THINGS AND FUND DEVELOPMENT IN 15

RECURRING REVENUE, ON DAY ONE, WE ACTUALLY MAKE MONEY WITH THIS

16

A WAY YOU COULDN'T BEFORE.

16

COMPANY. THEY ADD TO OUR EARNINGS. SO THE NUMBER YOU REPORT TO

17

Q. THIRD REASON FOR THE PEOPLESOFT ACQUISITION STRONGER,

17

THE PUBLIC, TO YOUR SHAREHOLDERS, WILL BE HIGHER NOW ON DAY ONE.

18

"COMPETITIVE POSITIONING." WHAT DID YOU MEAN BY THAT?

18

SO IT'S ACCRETIVE TO YOUR EARNINGS, ADDS TO YOUR EARNINGS, AND,

19

A. WELL, WHEN THESE CUSTOMERS ARE MAKING A DECISION ON A

19

YOU KNOW, INVESTORS AND RATING AGENCIES LIKE TO SEE THAT.

20

SOFTWARE PARTNER TO PUT IN A NEW FINANCIAL ACCOUNTING SYSTEM,

20

21

FOR INSTANCE, OR MANUFACTURING SYSTEM, THIS IS A CAREER BET.

21

BUYING IT, BUT YOU'RE ACTUALLY GOING TO MAKE LESS MONEY FOR THE

22

YOU DON'T PUT THESE SYSTEMS IN AND CHANGE YOUR MIND SIX MONTHS

22

FIRST YEAR OR TWO. THEY DON'T LIKE THAT.

23

LATER. IT MAY TAKE YOU TWO TO THREE YEARS TO GET THEM FULLY

23

Q. NOT SO MUCH?

24

INSTALLED, AND THEN YOU WILL BE LIVING WITH THAT SOFTWARE

24

A. NOT SO MUCH.

25

PARTNER FOR THE NEXT 15, 20 YEARS.

25

Q. THEN FINALLY, "LOW-RISK ACQUISITION BASED ON PLANNED

11

EARNINGS.
BUT THIS ONE WAS ACCRETIVE, WHICH MEANS BECAUSE IT
PROFITABLE AND BECAUSE IT'S A LARGE CUSTOMER BASE WITH ALL THAT

THEY DON'T LIKE ACQUISITIONS WHERE, OKAY. YOU'RE

Page 529
1

SO YOU WANT TO MAKE SURE THAT THEY'RE LARGE; THEY

Page 531
1

INTEGRATION." WHAT'S THAT LAST REASON MEAN?

2

HAVE A LOT OF CUSTOMERS; FUNDING THE DEVELOPMENT, AS I MENTIONED

2

A. WELL, WE THOUGHT WE HAD PLANNED THIS OUT VERY WELL. WE

3

BEFORE; THEY'RE GOING TO BE IN THE BUSINESS FOR A VERY LONG TIME

3

UNDERSTOOD THE COMPANY. THEY WERE RIGHT DOWN THE STREET FROM

4

AND NOT THINKING ABOUT GETTING OUT OF IT BECAUSE, YOU KNOW, IT'S

4

US. WE HAD COMPETED WITH THEM FOR YEARS. WE HIRED MANY

5

NOT WORKING FOR THEM.

5

EMPLOYEES OVER THE YEARS AND BECAUSE OF ALL THAT RECURRING

6

REVENUE, BECAUSE THEY'VE ALREADY BEEN SUCCESSFUL, THEY WERE

6

SO HAVING MORE CUSTOMERS MAKES YOU ACTUALLY MORE

7

COMPETITIVE BECAUSE PEOPLE NOW ARE HAVE COMFORT THAT YOU WILL BE 7

ALREADY HAD 10,000 CUSTOMERS, YOU HAD ALL THOSE 10,000 CUSTOMERS

8

THERE IN 20 YEARS.

8

PAYING YOU EVERY YEAR, IT'S NOT LIKE BUYING SOMETHING UNKNOWN

9

Q. AND YOUR COMPETITION AT THE TIME?

9

WITH NO REVENUE COMING IN.

10

A. WELL, THE COMPETITION WAS MUCH LARGER. THERE WAS NO

10

11

QUESTION ABOUT SAP'S STAYING POWER AND COMMITMENT TO THE

11

DOING OR COULD HAVE DONE, RATHER, THIS WAS LOW RISK, AND WE WERE

12

BUSINESS. THAT WAS THEIR BUSINESS. AND THEY HAD, YOU KNOW,

12

TRYING TO ADDRESS PEOPLE'S CONCERN ABOUT THIS WILD NEW STRATEGY

13

THOUSANDS AND THOUSANDS OF CUSTOMERS. SO WE WOULD SOMETIMES

13

AT THE TIME. IT LOOKED A LITTLE SCARY TO PEOPLE. WE SAID,

14

LOSE TO SAP BECAUSE THEY WERE VIEWED AS THE SAFE DECISION

14

WELL, LOOK THE REVENUE'S COMING IN ON A ANNUAL BASIS. THESE ARE

15

BECAUSE THEY HAVE THE MOST CUSTOMERS. THEY BEEN DOING THIS A

15

SUBSCRIPTIONS, SO IT WAS LOWER RISK IN OUR MIND.

16

LONG TIME.

16

Q. WHEN YOU AND MS. CATZ MADE THIS PRESENTATION IN

17

JANUARY 2005, DID YOU KNOW THAT SAP AND TOMORROWNOW WERE

17

THERE'S NO ONE JUST GOING TO CATCH THEM. SO IF YOU

SO WE THOUGHT RELATIVE TO OTHER THINGS WE HAD BEEN

18

WERE A CONSERVATIVE DECISION-MAKER, YOU DIDN'T WANT TO TAKE ANY

18

DOWNLOADING AND INFRINGING AND USING COPIES OF PEOPLESOFT

19

RISK, THEY WERE THE SAFE PURCHASE AT THAT TIME.

19

SOFTWARE WITHOUT AUTHORIZATION?

20

Q. NOW, MR. PHILLIPS, THE FOURTH REASON ON YOUR SLIDE, "MORE

20

A. I DID NOT, NO.

21

HIGH-MARGIN RECURRING REVENUE." CAN YOU EXPLAIN TO THE JURY

21

Q. NOW, LET ME ASK YOU TO GO BACK TO THE ASSUMPTION. LET'S SAY

22

WHAT YOU MEANT BY THAT?

22

YOU HAD TO SELL A LICENSE TO SAP IN JANUARY 2005 TO ALLOW THEM

23

A. WELL, THE SUPPORT REVENUE IS PROFITABLE REVENUE, AND YOU

23

ACCESS TO THE PEOPLESOFT SOFTWARE, THE -- FOR MAINTENANCE.

24

TAKE THAT SUPPORT DOLLARS THAT THEY'RE PAYING EACH YEAR. IT'S

24

25

KIND OF LIKE A -- ALMOST LIKE A MAGAZINE SUBSCRIPTION. THAT

25

HOW WOULD THAT AFFECT THE REASONS THAT YOU'D GIVEN
THE FINANCIAL ANALYSTS AND THE INVESTORS? HOW WOULD THAT

12 (Pages 528 to 531)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

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]

Page 851

Page 853

1

MAKING ABOUT, YOU KNOW -- ABOUT ALL SORTS OF THINGS, INCLUDING

1

BY MS. HOUSE:

2

OBVIOUSLY, THE TOP LINE IS ALL ABOUT CUSTOMERS. THAT -- THAT'S

2

Q. NOW, MOVING TO THE NEXT PAGE OF THE MODEL. IT SAYS AT THE

3

WHAT THOSE 9,000-TYPE NUMBERS ARE.

3

TOP "MAINTENANCE REVENUE BUILDUP."

4

BY MS. HOUSE:

4

CAN YOU SHOW -- THERE YOU GO.

5

Q. OKAY. AND DID YOU BELIEVE THAT THE ASSUMPTIONS THAT YOU

5

(EXHIBIT DISPLAYED ON SCREEN.)

6

USED IN THIS MODEL WERE REASONABLE?

6

7

A. OH, YEAH. I MEAN, I BELIEVED THEY WERE CONSERVATIVE. WE

7

THE MODEL IS DOING?

8

WENT REALLY -- WE REALLY TRIED TO MAKE THEM CONSERVATIVE BECAUSE

8

A. OKAY.

9

WE COULD NOT -- I MEAN, WE KNEW WE WERE PAYING 11.1 BILLION.

9

AND CAN YOU EXPLAIN TO THE JURY WHAT THIS SECTION OF

THIS SECTION SORT OF FEEDS OFF THE LINE WE WERE

10

WE NEEDED TO KNOW WE WERE GOING TO BE ABLE TO PAY FOR

10

TALKING ABOUT JUST NOW. AND THIS IS HOW YOU FIGURE OUT HOW

11

IT, AND WE DIDN'T WANT TO HAVE NUMBERS WHERE THEY WERE HOPEFUL

11

MUCH MAINTENANCE, THIS IS THE SUPPORT, THE RENEWALS, THE

12

OR SOMETHING LIKE THAT. THAT WOULDN'T MAKE SENSE BECAUSE THEN

12

SUBSCRIPTIONS, YOU CAN USE ALL THESE DIFFERENT WORDS, BUT THIS

13

WE MIGHT BE DISAPPOINTED AND PAYING WAY TOO MUCH FOR PEOPLESOFT. 13

IS HOW YOU BUILD UP AND FIGURE OUT THE DOLLARS AND CENTS

14

Q. AND HOW MUCH TIME WAS SPENT IN MAKING -- IN TWEAKING THIS

NUMBERS THAT COME FROM THE CUSTOMER NUMBERS.

15

MODEL MAKING SURE THAT IT WAS SOMETHING YOU FELT WAS REASONABLE?15

Q. NOW, AS YOU WERE DOING THIS MODELING, YOU WERE -- DID YOU

16

A. I KNOW IT SOUNDS NUTS, BUT I WOULD SAY THOUSANDS OF HOURS.

16

HAVE ANY ASSUMPTIONS ABOUT THE CUSTOMERS STAYING WITH YOU? HOW

17

WHEN YOU ADD UP ALL OF US, LITERALLY THOUSANDS OF HOURS.

17

LONG THEY WOULD STAY?

18

Q. NOW, ON THE FIRST PAGE, YOU HAD MENTIONED THE REFERENCE TO

18

A. YEAH. I MEAN, THE MODEL HAS US LOSING LIKE .8 A QUARTER,

19

CUSTOMERS. THERE'S A LINE THAT SAYS "INSTALLED CUSTOMER BASE"

19

SOMETHING LIKE THAT. SO BASICALLY GETTING MOST OF THE

20

AND THEN THERE'S A NUMBER, 9,920.

20

CUSTOMERS. AND, YOU KNOW, WE WANTED TO HAVE A NUMBER IN THERE

21

THAT WOULD SHOW THAT, YOU KNOW, THAT GAVE US A LOT OF ROOM IF

22

WE WERE TO LOSE A LITTLE BIT MORE THAN THAT. BUT WE WERE

21
22

WHAT IS THAT?
(EXHIBIT PUBLISHED TO JURY.)

14

23

THE WITNESS: THAT'S ACTUALLY THE -- THE NUMBER OF

23

EXPECTING TO KEEP MOST OF THE CUSTOMERS. I THINK WHAT WE WERE

24

CUSTOMERS. THE "BOP" MEANS "BEGINNING OF PERIOD." SO THAT'S

24

EXPECTING, I THINK IT MIGHT BE EVEN ON THE PREVIOUS PAGE, IS

25

9,920 CUSTOMERS. THAT'S WHAT WE BELIEVED TO BE THE PEOPLESOFT

25

LIKE LOSING MAYBE THREE PERCENT, SOMETHING LIKE THAT.

Page 852
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

CUSTOMER BASE AT THAT POINT.
SO LET'S SAY 10,000 ALMOST.
(CONTINUED NEXT PAGE, NOTHING OMITTED.)

Page 854
1

Q. NOW, WHAT IS ORACLE'S EXPERIENCE WITH A LIFETIME OF ITS

2

RELATIONSHIP WITH A CUSTOMER?

3

A. WELL, THE REALITY IS THAT UNLESS A CUSTOMER GOES OUT OF

4

BUSINESS OR MERGES THEIR SYSTEM OUT OF EXISTENCE, OR SOMETHING

5

LIKE THAT, THEY STAY WITH US FOR REALLY ALMOST, I WOULD SAY

6

FOREVER, BUT DOZENS OF YEARS.

7

I MEAN, I BET YOU WE STILL HAVE OUR ORIGINAL

8

CUSTOMERS FROM ORACLE DATABASE VERSION FIVE AND WE ARE ON 11G

9

RIGHT NOW. SO THEY STAY REALLY FOREVER.

10

Q. AND WAS THAT ONE OF THE ATTRACTIONS OF THE DEAL?

11

A. YEAH, OF COURSE. HAVING A CUSTOMER BASE THAT RENEWS

12

SUPPORT AND THAT STAYS WITH YOU OVER TIME IS A HUGE VALUE.

13

Q. WHAT ROLE DO YOU UNDERSTAND SUPPORT PLAYS IN KEEPING A

14

CUSTOMER?

15

A. IF YOU DO A GOOD JOB SUPPORTING A CUSTOMER, YOU HAVE THEM

16

FOREVER. THEY ARE VERY HAPPY. THEY DO A LOT OF THINGS INCLUDE

17

BUY OTHER THINGS.

18

Q. AND GIVEN ORACLE'S REAL WORLD EXPERIENCE WITH CUSTOMER

19

RETENTION, IS A TEN-YEAR RELATIONSHIP WITH A SUPPORT CUSTOMER A

20

REASONABLE ASSUMPTION?

21

A. OH, YEAH. TEN YEARS IS CONSERVATIVE.

22

Q. WE HAVE SEEN FROM SAP BOARD TESTIFY, FOR INSTANCE FROM

23

MR. SHAI AGASSI, THAT SAP THOUGHT THAT THE PEOPLESOFT

24

MAINTENANCE CUSTOMERS WHOSE CONTRACTS ORACLE ACQUIRED, HE

25

THOUGHT THEY WERE IN PLAY DUE TO THIS WHAT THEY CALL FEAR,

26 (Pages 851 to 854)
Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 935
1
2

SOLUTIONS."

Page 937
1

SO THAT'S THEIR TOP ANALYSIS. IT GOES ON AND SAYS,

NEGOTIATION BETWEEN ORACLE AND SAP FOR THE PEOPLESOFT SOFTWARE

2

AND SUPPORT MATERIALS, HOW THAT WOULD COME OUT?

3

"INTERNAL PRESSURE AT SAP IS HIGH TO TAKE ON ORACLE IN RESPONSE

3

A. I WOULD GO TO THE NEXT PHASE OF MY ANALYSIS. I'VE ALREADY

4

TO PUBLIC PROVOCATION FROM ORACLE."

4

SORT OF DESCRIBED THE SCOPE AND NEED AND TIMING AND

5

COMPETITION. NOW I FOCUS ON THINGS THAT START TAKING US DOWN

5

SO, ONCE AGAIN, THIS IS RECOGNITION AT THE EXECUTIVE

6

BOARD AT SAP THAT THE MARKET IS CHANGING AND ORACLE IS BECOMING 6

7

A MUCH BIGGER COMPETITOR.

7

THE PATH OF THE VALUE.

8

Q. WHEN SAP SAYS "ORACLE IS POSITIONING ITSELF TO

8

ARE THOSE KEY FACTORS AND CONSIDERATIONS AT A HIGH LEVEL, SOME

9

AGGRESSIVELY CHALLENGE SAP," WAS THAT SOMETHING NEW FOR SAP?

9

OF MY FEEDBACK ON THAT.

I HAVE A CHART THAT LAYS OUT FOR SAP WHAT I BELIEVE

10

A. NO. IN THE SENSE OF TWO REASONS. ONE, ENTERPRISE, SAP

10

11

WAS ALWAYS THE DOMINANT. THEY WERE AROUND 60 PERCENT OF THE

11

Q. YOU HAVE GOT THE TABLE NEGOTIATING, YOU'VE GOT ORACLE ON

12

MARKET. EVERYBODY ELSE WAS ABOUT TEN PERCENT. SO, IN THAT

12

ONE SIDE, YOU'VE GOT SAP ON THE OTHER, AND THE DATE JANUARY 19,

13

MARKET, IT WAS A BIG CHANGE FOR SAP.

13

2005.

14

IF YOU GO FROM EVERYBODY BEING AROUND 10 PERCENT NOW

14

(SLIDE DISPLAYED ON SCREEN.)

WHAT ARE THE NEGOTIATION FACTORS YOU ARE CONSIDERING

SOMEONE IS CLOSE TO 25, IT'S A BIG COMPETITOR, BUT IT'S ALSO A

15

IN YOUR ANALYSIS OF THEM?

NEW COMPETITOR BECAUSE IT'S ORACLE AND PEOPLESOFT. ORACLE HAS

16

A. THERE ARE THREE OVERALL CATEGORIES. I WILL GO THROUGH

17

A BIG PLATFORM WITH ITS OTHER PRODUCTS. AND SO THIS WAS REALLY

17

THESE.

18

SAP RECOGNIZING THAT AND SAYING WE NEED TO RESPOND.

18

19

Q. BY TAKING ON ORACLE?

19

"SAP'S GOALS FOR THE NEW OFFERING." WE WILL TALK ABOUT, AT

20

A. THAT'S CORRECT.

20

LENGTH ABOUT THE GOALS AND IN THIS CASE, WHAT I CALL THE DEMAND

21

Q. ALL RIGHT.

21

FOR THE SOFTWARE, WHAT IT DOES FOR YOU.

15
16

22
23
24
25

LET'S GO TO -- LET ME ASK ONE LAST QUESTION BEFORE

FIRST OFF, THERE'S A CATEGORY ONE. IT'S CALLED

WE KNOW THAT ORACLE AND SAP THEY ARE ONE AND TWO,
THEY'RE FIERCE COMPETITORS, HOW WOULD THAT HAVE IMPACTED THE

SECONDLY, A VERY IMPORTANT POINT IN A NEGOTIATION IS

23

WE GET TO THE SPECIFIC NEGOTIATION.

22

NOW SAP'S EXPECTED IMPACT ON ORACLE, HOW THEY THINK THEY ARE

24

GOING TO IMPACT ORACLE. AND YOU WILL SEE THERE THAT I

25

MENTIONED AGAIN THE $11 BILLION TRANSACTION WITH PEOPLESOFT AND

Page 936

Page 938
TAKING CUSTOMERS AWAY FROM ORACLE.

1

LICENSE NEGOTIATION AND WHAT THE PRICE OF THE LICENSE WOULD

1

2

HAVE BEEN?

2

3

A. IT'S A VERY BIG ISSUE BECAUSE OF BEING DIRECT COMPETITORS.

3

THE FACT THAT IF SAP INCREASES REVENUE, THEN ORACLE'S REVENUES

4

WHENEVER THERE IS A LICENSE BETWEEN COMPETITORS, THE

4

ARE IMPACTED.

AND ALSO I MENTIONED THIS CONCEPT A MOMENT AGO ABOUT

THEN LASTLY I DO A LOT OF FINANCIAL CALCULATIONS.

5

PARTY THAT TAKES THE LICENSE IS NOW GOING TO COMPETE HEAD TO

5

6

HEAD. AND IF THEY ARE SUCCESSFUL, THEY ARE TAKING A CUSTOMER

6

7

AWAY FROM THE GROUP THAT LICENSED IT OUT, THE LICENSOR.

7

SO THE FIRST ITEM THERE, I THINK YOU HAVE HEARD THIS

8

SO WHEN IT IS HEAD TO HEAD, IT'S NEVER WIN-WIN.

8

ALREADY IN THE TRIAL, THAT SAP EXPECTED TO HAVE REVENUES OF

9

$897 MILLION IN THE FIRST THREE YEARS OF THIS PROGRAM THAT WAS

9

SOMEONE IS GOING TO LOSE SOMETHING BECAUSE YOU MAY GET PAID A

THIS IS CALLED SAP'S EXPECTED FINANCIAL GAINS.

GOING TO USE ORACLE'S SOFTWARE.

10

ROYALTY AMOUNT, BUT YOU ARE GOING TO LOSE A CUSTOMER. AND

10

11

CUSTOMERS IN THE SOFTWARE BUSINESS WHERE THERE'S LICENSE AND

11

12

ONGOING MAINTENANCE, IT'S HUGE TO BE INSTALLED IN THAT COMPANY 12

EXECUTIVE BOARD MEMBERS. AND THE WORD YOU SEE A LOT IS

13

LONG-TERM RELATIONSHIPS MS. CATZ MENTIONED THIS MORNING, THEY 13

CONVERTED OR CONVERSION. AND THAT'S MOVING A CUSTOMER FROM

14

CAN BE THERE FOR DECADES.

14

PEOPLESOFT OVER TO FIRST TOMORROWNOW, AND THEN HOPEFULLY FROM

15

SAP'S PERSPECTIVE, TO THE SAP APPLICATION. AND THAT

15

SO, HEAD-TO-HEAD COMPETITION MEANS YOU NEED TO

THERE'S MANY SOURCES OF PROJECTIONS THAT INCLUDE THE

INFORMATION SAYS BETWEEN 2,000 AND 6,000 CUSTOMERS.

16

CHARGE A LOT MORE, AND AS I MENTIONED A WHILE BACK, UP FRONT TO 16

17

MAKE CERTAIN THAT YOU ARE NOT INVITING THE FOX INTO THE HEN

17

AND THEN I HAVE RUN SOME CALCULATIONS. I WILL WALK

18

HOUSE.

18

YOU THROUGH, IF NOT TODAY, TOMORROW, WHICH TO SAY BASICALLY

19

Q. THANK YOU, MR. MEYER.

19

FROM MY ANALYSIS OF SAP'S EXPECTED GAINS, THEY ARE GOING TO

20

MAKE BETWEEN $881 MILLION UP TO $2.7 BILLION IF THEY TAKE THIS

20

WE HAVE TALKED ABOUT WHAT THE LICENSE WOULD COVER,

21

WE HAVE TALKED ABOUT THE TIMING OF THE LICENSE, SAP'S NEED FOR

21

LICENSE. THAT'S WHERE THEY GET VALUE FROM -- THEY GET VALUE IN

22

THE LICENSE, THE SIGNIFICANCE OF THE LEGAL RISK THAT SAP

22

THE WAY OF SOFTWARE, IT ALLOWS THEM TO GO OUT AND COMPETE FOR

23

ACKNOWLEDGED, AND THE FACT THEY ARE COMPETITORS.

23

CUSTOMERS, AND THEY WILL PAY THESE AMOUNTS TO BE ABLE TO HAVE

24

THAT OPPORTUNITY.

25

Q. THAT'S THE TOTAL VALUE, NOT JUST THE FIRST THREE YEARS?

24
25

WITH ALL OF THAT AS BACKGROUND, HOW DO WE GO ABOUT
MEASURING WHAT THE RESULT, THE ACTUAL RESULT OF A LICENSED

47 (Pages 935 to 938)
Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 943
1

THEN IT SAYS, "AND FOR POTENTIALLY UPGRADING TO MY

Page 945
(PROCEEDINGS HELD OUTSIDE THE PRESENCE OF THE JURY.)

1

2

SAP BS." THIS IS THE FIRST TIME I SEE THAT THEY SAY WE WANT TO

3

GO OUT AND BE ABLE TO OFFER THIS MAINTENANCE.

3

THE COURT: ALL RIGHT, MR. MEYER. THANK YOU. YOU

2

CAN STEP DOWN AS WELL.

4

THE WITNESS: THANK YOU.

THINKING ABOUT HOW TO RESPOND TO ORACLE CLOSING ON ITS DEAL

5

THE COURT: ANYTHING, COUNSEL, BEFORE WE ADJOURN?

WITH PEOPLESOFT. THAT DEAL IS GOING TO CLOSE IN JANUARY OF

6

MR. LANIER: I DON'T THINK SO ON OUR END.

7

2005, AND THE EXECUTIVE BOARD IS COMMISSIONING THIS NEW

7

8

BUSINESS OFFERING.

8

4
5
6

9

AND THIS IS AROUND THE SAME TIME WHEN THEY ARE

AND THEN AT THE BOTTOM, IT IS REALLY IMPORTANT. IT

THE COURT: ALL RIGHT. WE WILL SEE YOU IN THE
MORNING.
THE CLERK: JUDGE?

9

THE COURT: YES.

10

SAYS, BOTTOM RIGHT-HAND SIDE. WE ARE TALKING ABOUT, ONCE

11

AGAIN, THE OFFERING OF MAINTENANCE ON PEOPLESOFT BECAUSE THAT'S 11

12

CRITICAL TO SAFE PASSAGE AND GETTING THE REVENUE. IT SAYS,

12

WE CAN DO THAT NOW OR WE CAN DO IT IN THE MORNING. WHATEVER

13

"SAFE PASSAGE FEATURES THREE FUNDAMENTAL ELEMENTS." THEN THE

13

YOU PREFER.

14

FIRST ELEMENT THERE, NUMBER ONE, "MAINTENANCE OF PEOPLESOFT AND 14

15

J.D. EDWARDS APPLICATIONS."

16

10

15

MR. HOWARD: WE DO HAVE SOME EVIDENCE TO MOVE IN.

THE COURT: EVIDENCE THAT'S ALREADY BEEN STIPULATED
TO?

16

IT ALL STARTS WITH NUMBER ONE, WHICH IS

MR. HOWARD: YES. IT'S FROM THE OPENING.

17

TOMORROWNOW'S USING THE SOFTWARE THAT'S IN THIS CASE THAT HAS

17

THE COURT: NICHOLE CAN TAKE IT DOWN.

18

BEEN INFRINGED.

18

MR. HOWARD: VERY WELL. THANK YOU, YOUR HONOR.

19

Q. SO YOU START WITH MAINTENANCE, AND THEN THE GOAL IS TO

19

MR. LANIER: THANK YOU, YOUR HONOR.

20

UPGRADE A CUSTOMER TO MY SAP. WHAT IS MY SAP?

20

21

A. THAT'S THE ENTERPRISE APPLICATIONS. SO THAT'S SAP'S

21

22

VERSION. THERE IS A FINANCIAL, HUMAN RESOURCE, AND ACCOUNTING.

22

23

THESE ARE APPLICATIONS THAT RUN THE BUSINESS' SOFTWARE. AND

23

24

THAT'S SAP'S COMPETING PRODUCT WITH PEOPLESOFT AND J.D. EDWARDS 24

25

AND ORACLE'S OWN INTERNAL APPLICATION SOFTWARE.

(PROCEEDINGS CONCLUDED AT 1:32 P.M.)

25

Page 944

Page 946

1

Q. SO LET ME SEE IF I UNDERSTAND THIS. THEY ARE NOT JUST

2

GOING AFTER THE MAINTENANCE REVENUES, THEY WANT THESE CUSTOMERS 2

3

TO SWITCH OVER TO MY SAP SOFTWARE APPLICATIONS, RIGHT?

3

4

A. RIGHT. THE GOAL WAS TO BUY LICENSE, ULTIMATELY AN

4

WE, RAYNEE H. MERCADO AND DIANE E. SKILLMAN, OFFICIAL

5

APPLICATION SOFTWARE LICENSE FOR MY SAP. AND THE WAY TO DO IT,

5

REPORTERS FOR THE UNITED STATES COURT, NORTHERN DISTRICT OF

6

THE VEHICLE TO DO IT WAS TO FIRST PROVIDE MAINTENANCE ON

6

CALIFORNIA, HEREBY CERTIFY THAT THE FOREGOING PROCEEDINGS IN

7

PEOPLESOFT AND THEN CONVERT THAT CUSTOMER TO THE PRODUCT OF

7

C07-01658PJH, ORACLE USA, INC., ET AL. V. SAP AG, ET AL., WERE

8

SAP, WHICH IS MY SAP, AND TAKE A LICENSE ON THAT. AND THEN

8

REPORTED BY US ON, MONDAY, NOVEMBER 8, 2010, CERTIFIED

9

THEY WOULD EARN LICENSE THERE AND MORE MAINTENANCE.

9

SHORTHAND REPORTERS, AND WERE THEREAFTER TRANSCRIBED UNDER OUR

1

CERTIFICATE OF REPORTER

10

Q. MORE MAINTENANCE ON THE MY SAP?

10

DIRECTION INTO TYPEWRITING; THAT THE FOREGOING IS A FULL,

11

A. THAT'S CORRECT.

11

COMPLETE AND TRUE RECORD OF SAID PROCEEDINGS AS BOUND BY US AT

12

Q. FOR HOW LONG?

12

THE TIME OF FILING.

13

A. IT COULD GO ON FOR DECADES.

13

14

Q. ALL RIGHT.

THE VALIDITY OF THE REPORTER'S CERTIFICATION OF

14

SAID TRANSCRIPT MAY BE VOID UPON DISASSEMBLY AND/OR REMOVAL

15

THE COURT: WE ARE --

15

FROM THE COURT FILE.

16

MR. PICKETT: WHY DON'T WE STOP HERE. SOUNDS LIKE A

16

17
18

GOOD PLACE TO STOP.
THE COURT: LADIES AND GENTLEMEN OF THE JURY, THANK

17
18

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

19

YOU FOR YOUR TIME AND ATTENTION TODAY. YOU ARE EXCUSED UNTIL

19

20

TOMORROW MORNING AT 8:30. PLEASE KEEP IN MIND THE INSTRUCTIONS

20

___________________________________

21

THAT I HAVE GIVEN YOU FROM TIME TO TIME, NOT TO COMMUNICATE

21

DIANE E. SKILLMAN, CSR, RPR, FCRR

22

ABOUT THE CASE EVEN AMONGST YOURSELVES, NOT TO DO ANY

22

23

INDEPENDENT RESEARCH ABOUT THE CASE, AND TO AVOID ANY MEDIA

23

24

COVERAGE ABOUT THE CASE.

24

25

THANK YOU.

TUESDAY, NOVEMBER 9, 2010

25

49 (Pages 943 to 946)
Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

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]

Page 1020

Page 1022

1

LAUNCH SAFE PASSAGE AND TO MAKE THE PROJECTIONS AND TO GO TO THE 1

PROFIT NUMBER. AND THEN THE INFRINGER (SIC) PROFIT'S NUMBER IS

2

MARKET WITH ITS PLANS TO IMPACT ORACLE.

2

$288 MILLION. AND THAT REFLECTS NOT ALL THE CUSTOMERS THAT --

3

Q. ALL RIGHT. AND I THINK THERE IS A SLIDE WITH SOME BULLET

3

THAT WERE SAP CUSTOMERS AND ALSO TOMORROWNOW CUSTOMERS BUT A

4

POINTS ON THAT.

4

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

5

288 MILLION.

5

DOES THIS EXPLAIN WHY THE METHOD SAP IS ARGUING FOR
IS NOT ADEQUATE?

6

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

A. IT PROVIDES SOME OF THAT SUMMARY. AS I MENTIONED, ONE,

7

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

8

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

8

SORT OF EXIST ABOUT THE ROLE OF TOMORROWNOW IN CONVERTING THOSE

9

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

9

CUSTOMERS TO SAP.

6
7

AND SO IF I LOOK AT THE IMPACT OF THOSE THREE

10

THE COPYRIGHTED WORKS. AND, OBVIOUSLY, LOST PROFITS DOES NOT

10

11

MEASURE THE TOTAL IMPACT ON ORACLE, WHICH I MENTIONED.

11

CUSTOMERS, I THINK THE NUMBER WOULD BE 236 MILLION. SO MY

12

INFRINGER PROFIT'S (SIC) NUMBERS, 288 MILLION, AND THEN RANGES
DOWN TO 236 MILLION DEPENDING ON THESE THREE CUSTOMERS.

12

IT ALSO DOES NOT CAPTURE ALL THE ACKNOWLEDGED

13

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

13

14

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

14

15

WITH SAFE PASSAGE. AND IT'S -- THE NEXT POINT, IT DOES NOT

15

CALCULATIONS.

16

MEASURE ANY VALUE BEYOND LOST CUSTOMER REVENUES AND PROFITS,

16

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

17

WHICH IS A BIG PROBLEM WITH THE APPROACH.

17

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

18

A. I THINK IT'S 408,000,408.

18

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

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

19

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

19

Q. BUT DOES THAT FULLY COMPENSATE ORACLE IN THIS CASE?

20

SAP'S EXECUTES THE PROPERTY. IT'S NOT THE VALUE OF THOSE

20

A. NO, IT WOULD NOT. IT WOULD NOT COMPENSATE FOR THE VALUE OF

21

COPYRIGHTED WORKS. AND A LOT OF PROPERTY YOU SAW THEM ON MY

21

INTELLECTUAL PROPERTY.

22

SCOPE SCHEDULE, IT DOESN'T VALUE THAT.

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

23

AND THEN -- ONE REASON I DID A LOST-PROFITS

24

CALCULATION WAS THERE WERE SOME OTHER CLAIMS IN THE CASE, AND

24

LICENSE APPROACH AT THE 1.5 BILLION.

25

THEY WERE NON-COPYRIGHT. AND THAT WAS ONE OF THE -- THAT WAS

25

Q. SO THAT'S THE ANALYSIS YOU DID WITH THE 1.5 BILLION OR MORE,

Page 1021

Page 1023

1

THE WAY YOU HAD TO MEASURE THOSE -- THOSE REMEDIES.

1

AT LEAST 1.5 BILLION?

2

Q. SO LET ME SEE IF I HAVE THIS RIGHT. YOUR METHOD VALUES THE

2

A. ALL RIGHT. SO THAT'S THE PEOPLESOFT LICENSE.

3

PROPERTY THAT SAP TOOK?

3

Q. NOW, THERE ARE TWO OTHER LICENSES, BUT WE CAN GET THROUGH

4

A. THAT'S CORRECT.

4

THEM A LOT MORE QUICKLY, I THINK. LET'S GO TO THE SIEBEL

5

Q. AND DOES THEIR METHOD DO THAT?

5

LICENSE. HAVE YOU ALSO ANALYZED HOW A NEGOTIATIONS FOR A

6

A. NO IT DOES NOT.

6

LICENSE FOR THE SIEBEL SOFTWARE WOULD GO?

7

Q. THEIR METHOD VALUES WHAT THEY ULTIMATELY DID WITH THAT

7

A. YES.

8

PROPERTY; IS THAT FAIR?

8

Q. AND WHAT WAS YOUR CONCLUSION FOR THE VALUE OF THE PROPERTY

9

A. THAT'S CORRECT.

9

THAT -- THE SIEBEL PROPERTY THAT SAP TOOK?

10

Q. AND THAT'S NOT APPROPRIATE IN YOUR VIEW?

10

A. IT'S AT LEAST $100 MILLION.

11

A. THAT'S CORRECT.

11

Q. AT LEAST 100 MILLION?

12

Q. ALL RIGHT. LET ME ASK YOU THIS: DID YOU LOOK AT -- DID YOU

12

A. THAT'S RIGHT.

13

LOOK AT CALCULATING IT UNDER THE WRONG METHOD, THE LOST

13

Q. WHAT APPROACH DID YOU USE TO CALCULATE THAT FAIR MARKET

14

PROFITS/INFRINGERS' PROFITS METHOD?

14

VALUE?

15

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

15

A. IT WAS THE SAME APPROACH I USED WITH PEOPLESOFT, SET UP THE

16

Q. AND WHY DID YOU DO THOSE CALCULATIONS?

16

SAME STRUCTURE, SAME NEGOTIATING STRUCTURE.

17

A. WELL, THERE WAS TWO REASONS. ONE, I WANTED TO KNOW WHAT THE 17

Q. AND WE HAD SET THE STAGE YESTERDAY FOR THE PEOPLESOFT

18

RESULT WAS IN TERMS OF WHAT WERE THE LOST PROFITS AND WHAT WERE 18

LICENSE. AND I ASKED YOU ABOUT THE SCOPE OF THE LICENSE THAT

19

THE INFRINGERS' PROFITS. AND, SECONDLY, I MENTIONED A MOMENT

19

WOULD BE NEEDED. WHAT WILL IT COVER IN TERMS OF THE SIEBEL --

20

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

20

WELL, THEN PEOPLESOFT, BUT NOW WE'RE TURNING TO SIEBEL, THE

21

ONE COULD MEASURE. THAT WAS -- THE METHOD WAS LOST PROFITS.

21

TIMING OF THE LICENSE, SAP'S NEED FOR THE SOFTWARE, THEIR

22

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

22

KNOWLEDGE OF LEGAL RISKS, AND THE FACTS THEY WERE COMPETITORS.

23

PROFITS.

23

24

Q. AND WHAT WERE THE RESULTS?

24

SIEBEL NEGOTIATION?

25

A. THE LOST PROFIT NUMBER IS $120 MILLION. THAT'S THE LOST

25

A. YES, SO THE SAME STRUCTURE, SAME FACTORS, OBVIOUSLY

ARE THOSE FACTORS SIMILAR FOR YOUR ANALYSIS OF THE

20 (Pages 1020 to 1023)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

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]

Page 1637
1
2
3
4

Page 1639

ALREADY PROVIDED YOU?

A. YES.
Q. AND THE OTHER WAS THE COMBINATION OR SUM OF LOST PROFITS

3

AND INFRINGER PROFITS, CORRECT?

4

THE COURT: CAN YOU TELL ME WHAT INFORMATION HE HAS

1
2

MR. BOIES: HE JUST RAISED IT IN HIS TESTIMONY. I
DIDN'T ASK HIM ABOUT IT.

A. YES.
Q. OKAY.

5

(PAUSE IN THE PROCEEDINGS.)

5

6

MR. BOIES: YOUR HONOR, WOULD THIS BE A CONVENIENT

6

7

NOW TALKING ABOUT THE SUM OF THE LOST PROFITS AND

7

TIME TO TAKE THE SECOND BREAK?

THE INFRINGER PROFITS, ONE OF THE APPROACHES TO DAMAGES,

8

THE COURT: NO. WE HAVE ANOTHER HALF HOUR.

8

CORRECT.

9

MR. BOIES: WE WILL FIND IT.

9

A. CORRECT.
Q. WHAT IS THAT NUMBER AS YOU CURRENTLY CALCULATE IT?

10

BY MR. BOIES:

11

Q. JUST FOR CLARIFICATION, THIS WAS THE C.V. ATTACHED TO YOUR 11

A. $28,036,720.

12

EXPERT REPORT?

12

Q. OKAY.

13

A. I DON'T KNOW.

13

14

10

NOW THAT NUMBER, AGAIN, STAYING WITH LOST PROFITS

(PAUSE IN THE PROCEEDINGS.)

14

AND INFRINGER PROFITS, WHAT WAS THAT NUMBER THAT YOU ESTIMATED

THE COURT: MR. BOIES, I WOULD SUGGEST YOU CONTINUE

15

WHEN YOU PUT IN YOUR FIRST REPORT?

16

AND SOMEBODY WILL FIND IT AND YOU CAN COME BACK TO THAT.

16

A. MAY I LOOK AT A COPY OF MY REPORT?

17

MR. BOIES: HAVE WE HANDED OUT THESE BOOKS YET?

17

Q. CERTAINLY. CERTAINLY IF THAT WILL HELP YOU.

18

YOUR HONOR, MAY WE HAND OUT THE VOLUMES OF OUR

18

THE WITNESS: MAY I STAND UP TO GET IT, YOUR HONOR?

19

THE COURT: SURE.

15

19

BOOKS?

(PAUSE IN THE PROCEEDINGS.)

20

THE COURT: SURE.

20

21

MR. BOIES: THAT INCLUDES HIS EXPERT REPORT.

21

BY MR. BOIES:

22

THE COURT: I DON'T REALLY WANT ALL OF THAT.

22

Q. THE DATE OF YOUR FIRST REPORT WAS MARCH 26TH OF THIS YEAR,

23

MR. BOIES: I APOLOGIZE FOR THE VOLUME, YOUR HONOR.

23

CORRECT?

24

THE COURT: ALL RIGHT. WHY DON'T YOU CONTINUE AND

24

A. CORRECT.

25

SOMEONE WILL LOOK FOR US.

25

YOU KNOW, I DON'T HAVE MY MARCH REPORT. I AM AFRAID

Page 1638
1

MR. BOIES: WE WILL FIND THAT.

Page 1640
1

I ONLY HAVE MY MAY REPORT.

2

BY MR. BOIES:

2

Q. LET ME ASK YOU, DO YOU HAVE UP THERE THE TWO VOLUMES THAT

3

Q. WHILE WE HAVE YOUR EXPERT REPORT HERE, MR. CLARKE, YOU

3

WE HAVE FOR YOUR EXAMINATION?

4

HAVE SUBMITTED A SERIES OF EXPERT REPORTS AND SUPPLEMENTS,

4

5

CORRECT?

5

6

A. YES.

6

THE COURT: DID YOU PROVIDE THEM?

7

Q. IN DOING SO, YOU HAVE CONSISTENTLY REVISED THE DAMAGES

7

MR. BOIES: I THINK WE PUT THEM UP THERE.

8

THAT YOU HAVE ASSERTED; IS THAT CORRECT?

8

THE WITNESS: IS THAT THIS (INDICATING)?

9

A. YES.

9

DO YOU HAVE THOSE UP THERE?
A. I DON'T BELIEVE --

MR. BOIES: NO. I THINK THAT MAY BE YOUR COUNSEL'S

10

Q. AND WITH RESPECT TO THE INFRINGER PROFITS AND LOST PROFITS

11

NUMBER, THAT'S ONE OF YOUR CALCULATIONS OF DAMAGES, CORRECT? 11

12

A. YES.

12

13

Q. THE CURRENT NUMBER THAT YOU ARE ASSERTING IS WHAT, SIR?

13

THE COURT: SURE.

14

A. WE JUST HAD THAT UP ON THE SCREEN.

14

MR. BOIES: COULD I APPROACH JUST TO SEE IF I CAN

15

Q. DO YOU REMEMBER IT?

15

16

A. FOR INFRINGERS' PROFITS ONLY?

16

THE COURT: YES.

17

Q. NO. YOU COMBINED INFRINGER PROFITS AND LOST PROFITS

17

(PAUSE IN THE PROCEEDINGS.)

18

TOGETHER, RIGHT?

18

19

A. WELL, AT CERTAIN POINTS I COMBINE THEM. SOMETIMES THEY

19

PARTICULAR ONE OF THESE BINDERS?

20

WERE SEPARATE.

20

BY MR. BOIES:

21

Q. DO YOU REMEMBER TELLING COUNSEL FOR SAP THAT THERE WERE 21

Q. YES. LOOK AT TAB 12. THAT'S YOUR MARCH 26TH REPORT; IS

22

TWO ALTERNATIVE DAMAGE APPROACHES?

22

THAT CORRECT?

23

A. YES, I DO.

23

A. YES.

24

Q. AND ONE OF THOSE WAS THE FAIR MARKET VALUE LICENSE,

24

Q. OKAY. AND LOOK AT PAGE 294 AND SEE IF THAT HELPS YOU.

25

CORRECT?

25

10

VOLUME.
WE HAVE ANOTHER COPY. IF WE CAN APPROACH, YOUR
HONOR?

FIND IT UP THERE, YOUR HONOR?

THE WITNESS: DID YOU WANT ME TO LOOK AT A

MR. BOIES: YOUR HONOR, MAY I APPROACH THE BOARD?

33 (Pages 1637 to 1640)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 1641
1

A. 33.9 MILLION.

2

BY MR. BOIES:

2

Q. THAT'S FOR THE SAME GROUP OF PLAINTIFFS; IS THAT RIGHT?

3

Q. AND THE FIRST REPORT WAS MARCH 26TH, RIGHT?

3

A. NO.

4

A. CORRECT.

4

Q. THIS IS JUST THE OIC PLAINTIFFS?

5

Q. THIS IS ALL THIS YEAR. AND WHAT DID YOU ESTIMATE THE LOST

5

A. NO.

6

PROFITS AND INFRINGER PROFITS TO BE?

6

Q. WHAT'S YOUR PLAINTIFFS FOR THESE?

7

A. I NEED GUIDANCE FROM THE COURT OR FROM YOU ABOUT WHEN YOU

7

A. THAT IS INCLUDING OUSA.

8

SAY "THE LOST PROFITS", ARE WE TALKING ABOUT JUST FOR OIC, JUST

8

Q. WHAT?

9

THE ONE PLAINTIFF LEFT IN THE CASE? BECAUSE I HAVE A BUNCH OF

9

A. OUSA.

1

THE COURT: YES.

Page 1643

10

PLAINTIFFS IN HERE.

10

Q. INCLUDES OUSA?

11

Q. YES.

11

A. CORRECT.

12

A. JUST OIC, 17.3 MILLION AND PROBABLY ABOUT 95 PERCENT OF

12

Q. WHICH PLAINTIFFS ARE DROPPED OUT?

13

7.7 MILLION.

13

A. THE PLAINTIFFS THAT WERE RELATED TO THE OEMEA.

14

Q. DO YOU HAVE AN ACTUAL NUMBER?

14

Q. AND THEN ON NOVEMBER 14TH YOU PUT IN ANOTHER ONE, RIGHT?

15

A. NO.

15

16

Q. IN THE REPORT?

16

A. YEAH. OKAY. I WILL TAKE YOUR WORD FOR IT.

17

A. WELL, I HAVE GOT A NUMBER FOR A BUNCH OF PLAINTIFFS. YOU

17

Q. WELL, YOU DO REMEMBER JUST GIVING US A NEW DAMAGE

18

ASKED ME JUST FOR OIC THOUGH.

18

STATEMENT TWO DAYS AGO, RIGHT?

19

Q. WHAT WAS YOUR TOTAL NUMBER?

19

A. I DID.

20

A. 38 MILLION.

20

Q. OKAY. AND THAT ONE WAS YOUR $28 MILLION, RIGHT?

21

Q. 38 MILLION.

21

A. I DON'T REMEMBER THE NUMBER.

22

OKAY. THEN YOU PUT IN A SUPPLEMENT REPORT ON

22

THAT IS JUST TWO DAYS AGO.

IS IT IN A TAB HERE?

23

MAY 7TH, CORRECT?

23

24

A. CORRECT.

24

Q. NOW, ALL OF THOSE DAMAGE CALCULATIONS EXCLUDE, IN TERMS OF

YES, 28 MILLION.

25

Q. AND WHAT WAS YOUR ESTIMATE THEN?

25

INFRINGING PROFITS AND LOST PROFITS, A NUMBER OF CUSTOMERS THAT

Page 1642

Page 1644

A. AGAIN, FOR ALL OF THE PLAINTIFFS?

1

TOMORROWNOW HAD, CORRECT?

Q. YES.

2

A. CORRECT.

A. 36.4 MILLION.

3

Q. NOW, IN TERMS OF INFRINGER PROFITS, HOW MANY CUSTOMERS ARE

4

Q. NOW JUST TO BE CLEAR, THAT'S FOR THE SAME GROUP OF

4

INCLUDED IN YOUR NOVEMBER 14 NUMBER?

5

PLAINTIFFS AS THE 38 MILLION, RIGHT?

5

A. FOUR ON THE SAP SIDE.

6

A. CORRECT.

6

Q. FOUR ON THE SAP SIDE.

7

Q. THEN YOU PUT IN ANOTHER EXPERT REPORT ON JUNE 4, CORRECT?

7

A. I WOULD HAVE TO DO SOME WORK TO FIND HOW MANY WERE IN THE

8

A. I DON'T REMEMBER THE DATES.

8

TOMORROWNOW SIDE.

9

Q. HOW ABOUT JUNE 21, DO YOU REMEMBER THAT ONE?

9

Q. OKAY. WHAT WOULD YOU HAVE TO DO?
A. I WOULD HAVE TO GET MY BINDER OUT.

1
2
3

10

A. NO. I DON'T REMEMBER THE DATES. I AM SORRY.

10

11

Q. ALL RIGHT. LOOK AT TAB 5.

11

I SEEM TO HAVE LOST THE BINDER.

12

DO YOU HAVE THAT?

12

THE COURT: WHICH ONE ARE YOU LOOKING FOR?

13

A. I DO.

13

14

Q. WHAT IS THE NUMBER THERE?

14

15

A. FOR THE SAME GROUP FOR LOST PROFITS AND INFRINGERS'

15

16

PROFITS?

16

17

Q. RIGHT.

17

18

A. 35.3 MILLION.

18

MR. MITTELSTAEDT: YES.

19

Q. NOW YOU PUT A REPORT IN ON OCTOBER 19TH, CORRECT?

19

THE COURT: WHICH ONE?

20

A. I AM SORRY, I JUST DON'T REMEMBER DATES.

20

WHY DON'T YOU --

21

Q. LOOK AT TAB 6.

21

THE WITNESS: YOUR HONOR, I FOUND IT.

22

A. OKAY.

22

23

Q. DO YOU HAVE IT?

23

24

A. I DO.

24

MR. BOIES: I THINK SO, YOUR HONOR.

25

Q. WHAT'S THE NUMBER?

25

THE WITNESS: I AM SORRY. I HAVE LOST TRACK OF THE

THE WITNESS: THE ONE WITH MY SLIDES IN IT, YOUR
HONOR.
DID SOMEONE TAKE IT AWAY?
THE COURT: MR. MITTELSTAEDT, DO YOU HAVE -- IS ONE
OF THE THREE VOLUMES THAT YOU GAVE ME THIS MORNING, DOES ONE --

THE COURT: OKAY. I THINK THERE ARE PROBABLY MORE
BINDERS HERE --

34 (Pages 1641 to 1644)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 1645

Page 1647

1

QUESTION. WAS THAT THE INFRINGERS' PROFITS FOR TOMORROWNOW?

1

2

BY MR. BOIES:

2

A. I WILL HAVE TO CHECK.

3

Q. YES. YOU HAVE -- YOU TOLD ME THAT THERE WERE TWO

3

Q. IN OTHER WORDS, WHAT IS ON NOVEMBER 14TH ARE THE THREE

4

CUSTOMERS THAT YOU INCLUDED FOR INFRINGER PROFITS FOR SAP,

4

THAT WERE ON MAY 7TH PLUS ONE MORE?

5

CORRECT?

5

A. I AM SORRY, I THOUGHT YOU WERE REFERRING BACK TO MARCH.

YES.

6

MR. MITTELSTAEDT: I THINK HE SAID FOUR.

6

SO THE THREE IS ONE LESS THAN THE FOUR AND THE THREE WERE IN

7

THE COURT: HE DID.

7

THE FOUR.

8

MR. BOIES: FOUR.

8

9

THE WITNESS: YOU WANT TO KNOW HOW MANY IT IS FOR

9

FOUR?
Q. YES.

SO IS YOUR QUESTION NOW, ARE THE THREE PART OF THOSE

10

TOMORROW --

10

11

BY MR. BOIES:

11

THE QUESTION WAS, ARE THE THREE THAT YOU SAID WERE

12

Q. FOR TOMORROWNOW.

12

INFRINGING PROFIT CUSTOMERS FROM SAP ON MAY 7TH, ALL INCLUDED

13

A. I HAVE TO GO TO MY OTHER BINDERS FOR THAT.

13

IN THE FOUR THAT YOU SAY WERE IN YOUR NOVEMBER 14TH REPORT?

14

I AM LOSING THE BATTLE OF THE BINDERS.

14

A. NO.

15

(WITNESS REVIEWING BINDER.)

15

Q. OKAY. NOW, ON JUNE 21ST, HOW MANY DID YOU HAVE?

16

IT LOOKS LIKE 199 IF I COUNTED THEM ACCURATELY.

16

A. DO YOU HAVE A REFERENCE FOR ME BECAUSE I DON'T REMEMBER

17

HOW MANY CUSTOMERS.

18

Q. I DON'T HAVE A REFERENCE ON THAT ONE.

19

A. THEN I CAN'T ANSWER THAT I AM AFRAID.

20

Q. ALTHOUGH I BELIEVE IT WAS TWO.

17

Q. 199. OKAY.
LET ME TAKE THOSE TWO GROUPS OF CUSTOMERS ONE AT A

18
19
20

TIME.
WHEN YOU PUT IN YOUR MARCH 26TH REPORT, HOW MANY

21

CUSTOMERS DID YOU INCLUDE AS INFRINGING PROFITS CUSTOMERS FOR 21

22

SAP? THAT IS, HOW MANY SAP CUSTOMERS DID YOU SAY ORACLE WAS 22

NOVEMBER 14TH, CORRECT?

YOU DO KNOW THAT YOU ADDED TWO NEW ONES ON

23

ENTITLED TO INFRINGER PROFITS ON IT?

23

A. CORRECT.

24

A. YOU KNOW --

24

Q. AND SO OCTOBER 19TH THERE WOULD HAVE BEEN TWO, RIGHT?

25

Q. YOU SAY THERE WERE FOUR DOWN ON NOVEMBER 14TH, RIGHT?

25

A. YES.

Page 1646
1
2
3

Page 1648

A. YEP.

1

Q. AND, WE'LL, IN THE INTEREST OF TIME, WE WILL SKIP

Q. SO THIS TIME THERE ARE FOUR.

2

JUNE 21ST.

HOW MANY DID YOU SAY BACK ON MARCH -- THERE WERE ON

NOW WITH RESPECT TO THE CUSTOMERS THAT YOU EXCLUDED,

3

4

MARCH 26TH?

4

THE LAST CUSTOMER I THINK THAT YOU TALKED ABOUT WITH COUNSEL

5

A. I DON'T HAVE THAT INFORMATION HANDY. I AM HAPPY TO GO

5

FOR SAP WAS ABITIBI; IS THAT RIGHT?

6

FIND IT. YOU PROBABLY KNOW IT.

6

A. ABITIBI.

7

Q. LET ME ASK YOU TO LOOK AT TAB 12.

7

Q. AND ABITIBI WAS ONE THAT YOU EXCLUDED BECAUSE THERE WAS AN

8

A. THAT IS WHERE I AM.

8

ORACLE E-MAIL THAT TALKED ABOUT THEM LOOKING AT OTHER

9

Q. PAGE 247. OKAY?

9

ALTERNATIVES.

10

A. OKAY.

10

11

Q. CAN YOU TELL ME FROM THAT?

11

A. YES.

12

A. FOUR.

12

Q. AND WHEN WAS THAT ORACLE E-MAIL?

13

Q. NOW, ARE THEY THE SAME FOUR?

13

A. I WOULD HAVE TO GET IT. I DON'T REMEMBER.

14

A. NO, I DON'T THINK THEY ARE.

14

15

Q. THEY ARE NOT THE SAME FOUR?

15

16

A. CORRECT.

16

17

Q. OKAY. LET ME GO TO THE MAY 7TH REPORT.

17

18
19
20

AND I AM NOW GOING TO ASK YOU TO LOOK AT TAB 1 OF
PAGE 247.
AND IF MY NOTES ARE RIGHT, THAT WILL ENABLE YOU TO

18
19
20

DO YOU RECALL THAT?

MR. BOIES: MAYBE COUNSEL CAN PUT IT BACK UP ON THE
SCREEN?
MR. MITTELSTAEDT: DO YOU REMEMBER WHICH SLIDE IT
WAS?
MR. BOIES: 46?
(SLIDE DISPLAYED ON SCREEN.)
BY MR. BOIES:

21

TELL ME HOW MANY SAP INFRINGING CUSTOMERS YOU ESTIMATED ON 21

22

MAY 7TH.

22

23

A. THREE.

23

24

Q. AND WERE THE THREE THAT YOU ESTIMATED ON MAY 7TH ALSO ALL 24

Q. NOW, EVENTUALLY ABITIBI WENT TO TOMORROWNOW, CORRECT?

25

INCLUDED IN THE FOUR THAT YOU ESTIMATED ON NOVEMBER 14TH?

A. CORRECT.

25

Q. NOW THIS WAS AN ORACLE E-MAIL, APRIL 11TH, 2005.
DO YOU SEE THAT?
A. I DO.

35 (Pages 1645 to 1648)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 1721

Page 1723

1

Q. APPROXIMATELY.

1

TOMORROWNOW'S ACTUAL REVENUES AND A 50 PERCENT ROYALTY RATE

2

A. I HAVE NO IDEA.

2

APPLIED TO WHAT YOU REFER TO AS SAP PROFIT FROM ITS LICENSE

3

Q. MORE THAN 5,000, SIR?

3

SALES WHICH RELATED TO TOMORROWNOW, CORRECT?

4

A. THE -- THE BEST IT'S DESCRIBED AS A SELECT FEW.

4

A. I WOULDN'T DESCRIBE THEM AS "RELATED TO TOMORROWNOW." I

5

Q. THE BEST ARE. BUT WHAT I'M ASKING YOU IS HOW MANY

5

THINK THAT'S -- THAT'S A STATEMENT THAT'S MUCH TOO -- TOO

6

PEOPLESOFT PARTNERS WERE THERE? APPROXIMATELY?

6

REFINED TO APPLY TO THE FACTS OF THIS CASE.

7

A. YOU KNOW, THAT'S NOT INFORMATION THAT I'VE BEEN GIVEN BY

7

Q. TOO REFINED?

8

ORACLE IN THE CONTEXT OF THIS CASE, SO I HAVE NO IDEA

8

A. YES. YOU'RE TARGETING THAT TO TOMORROWNOW, AND I THINK I

9

WHATSOEVER.

9

TESTIFIED MORE THAN ONCE THAT THE ONLY REASON THESE CUSTOMERS

10

Q. IS THAT INFORMATION THAT YOU'VE EVER ASKED FOR ORACLE IN

10

ARE STILL IN THE SAP SIDE OF THE EQUATION IS THAT THEY DIDN'T

11

THIS CASE?

11

DOCUMENT WHY THEY LEFT, SO I DON'T HAVE THE INFORMATION TO TAKE

12

A. NO.

12

THEM OUT. BUT WHEN I TOOK OUT 82 OF 86, IT SEEMED TO ME THAT IT

13

Q. OKAY.

13

WAS ONLY BECAUSE I DIDN'T HAVE THE DOCUMENTATION FOR THE OTHER 4

14

A. WOULDN'T BE RELEVANT TO ME.

14

THAT THEY WEREN'T EXCLUDED AS WELL.

15

Q. NOW, IS THERE ANYTHING ABOUT BEING A PEOPLESOFT PARTNER THAT

15

16

YOU THINK MEANS THAT THE COMPANY IS OFFERING MAINTENANCE SERVICE 16

AS A RESULT OF TOMORROWNOW. I'VE ASSUMED THAT FOR THE SIMPLE

17

FOR PEOPLESOFT CUSTOMERS IN COMPETITION WITH ORACLE?

17

REASON THAT I ASSUMED THE INFRINGEMENT OCCURRED AND UNLESS I

18

A. I DON'T -- I DON'T DRAW THAT ANALOGY, THAT CONCLUSION, NO.

18

FIND A COMPELLING REASON TO EXCLUDE A CUSTOMER, THEY'RE STILL IN

19

Q. OKAY. LET'S GO TO 2007, PEOPLESOFT SOLUTION OF THE YEAR.

19

THERE.

20

WAS THAT SOLUTION OF THE YEAR THAT THEY GOT THE AWARD FOR -- DID

20

Q. SO LET ME BE SURE I UNDERSTAND WHAT YOU'RE SAYING. FIRST OF

21

THAT HAVE ANYTHING TO DO WITH PROVIDING MAINTENANCE FOR

21

ALL, YOU REFER TO 86 CUSTOMERS.

22

PEOPLESOFT CUSTOMERS IN COMPETITION WITH ORACLE?

22

A. YES.

23

A. I DON'T KNOW.

23

Q. NOW, THOSE 86 CUSTOMERS WERE 86 CUSTOMERS THAT WERE

24

Q. OKAY. LET'S GO TO 2008, PEOPLESOFT SOLUTION OF THE YEAR.

24

IDENTIFIED BY THE DEFENDANT SAP, CORRECT?

25

DID THAT SOLUTION HAVE ANYTHING TO DO WITH PROVIDING MAINTENANCE 25

SO I THINK IT'S GOING TOO FAR TO SAY THAT THE 4 AROSE

A. CORRECT.

Page 1722

Page 1724

1

TO PEOPLESOFT CUSTOMERS?

1

Q. AND THOSE 86 CUSTOMERS WERE CUSTOMERS THAT THE DEFENDANT

2

A. I DON'T KNOW.

2

SAID WERE CUSTOMERS THAT EITHER BOUGHT SAP PRODUCTS

3

Q. HOW ABOUT THE -- NEXT-TO-LAST THING THAT'S LISTED HERE, THE

3

SIMULTANEOUSLY WITH ACQUIRING TOMORROWNOW MAINTENANCE SERVICES

4

2008 SOA AND INTEGRATION SOLUTION.

4

OR BOUGHT SAP PRODUCTS AND SERVICES AFTER BECOMING A TOMORROWNOW

5

CUSTOMER, CORRECT?

5

DO YOU SEE THAT?

6

A. I DO.

6

A. YES, THERE WERE SOME SALES OF SOMETHING, WHATEVER THAT WAS,

7

Q. WHAT DOES "SOA" MEAN?

7

AT SAP AFTER THE TOMORROWNOW START DATE, YES.

8

A. I DON'T KNOW.

8

Q. NOW, THE DEFENDANTS ALSO IDENTIFIED ANOTHER SEVEN CUSTOMERS

9

Q. DID YOU EVER TRY TO FIND OUT?

9

THAT THEY SAID THEY WEREN'T SURE ABOUT WHETHER THEY MET THOSE

10

A. NO.

11

Q. DOES THAT HAVE ANYTHING TO DO WITH PROVIDING MAINTENANCE TO 11

A. I -- I DON'T REMEMBER ANOTHER SEVEN. I JUST HAVE A LIST OF

12

PEOPLESOFT CUSTOMERS?

12

86 CUSTOMERS.

13

A. IF I KNEW WHAT IT WAS, I MIGHT BE ABLE TO ANSWER BETTER, BUT

13

Q. WHO GAVE YOU THAT LIST?

14

I'M SORRY, I DON'T.

14

A. SAP AND THEIR COUNSEL.

15

Q. OKAY. AND LAST, THE 2008 ORACLE EXCELLENCE AWARD, DO YOU

15

Q. LET ME ASK YOU TO LOOK AT PLAINTIFFS' TRIAL EXHIBIT 735

16

SEE THAT?

16

(SIC), WHICH IS BEHIND TAB 65 IN YOUR BOOKS THAT YOU HAVE.

17

A. I DO.

17

18

Q. DOES THAT HAVE ANYTHING TO DO WITH PROVIDING MAINTENANCE

18

19

SERVICE TO ORACLE OR PEOPLESOFT CUSTOMERS?

19

MR. MITTELSTAEDT: REDACTED VERSION?

20

A. I'VE NO IDEA.

20

MR. BOISE: YES. 7035 -- 7035.

21

Q. OKAY.

21

MR. MITTELSTAEDT: NO OBJECTION.

22

THE COURT: ALL RIGHT. IT MAY BE ADMITTED.

22

NOW, LET ME TURN TO YOUR GENERAL APPROACH TO WHAT YOU

10

PARAMETERS, CORRECT?

AND I WOULD OFFER PLAINTIFFS' EXHIBIT 735 (SIC), I
THINK, WITHOUT OBJECTION.

23

REFER TO AS THE -- YOUR CALCULATION OF A FAIR MARKET VALUE

23

(PLAINTIFFS' EXHIBIT 7035

24

ROYALTY. YOU HAVE A PROPOSED FAIR MARKET VALUE ROYALTY THAT

24

RECEIVED IN EVIDENCE)

25

CONSISTS OF A 50 PERCENT ROYALTY RATE APPLIED TO ALL OF

25

(EXHIBIT PUBLISHED TO JURY.)

8 (Pages 1721 to 1724)
Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

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]

Page 2026

Page 2028

1

ON TIME. ARE THERE ANY PROBLEMS WITH THE DEMONSTRATIVE

1

REPRESENTED THE UNIVERSE OF DAMAGES. THE PROBLEM IS THAT WHEN

2

EXHIBITS?

2

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

3

MR. LANIER: VERY BRIEFLY, YOUR HONOR, ON OUR END,

3

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

4

JUST THREE MAJOR ISSUES. ONE IS WE OBJECT -- AND I'M DOING THIS

4

ALL KNOW, INCOMPLETE. AND THAT'S THE ONLY POINT WE'RE MAKING.

5

FOR THE RECORD. WE OBJECT TO THE CONTINUED SLIDES AND ARGUMENT 5

6

WITH RESPECT TO WILLINGNESS TO INFRINGE AS EVIDENCE OF

6

7

VALUATION. WE'VE MADE THAT OBJECTION BEFORE, YOUR HONOR HAS

7

8

RULED. WE'D LIKE TO PRESERVE THAT OBJECTION.

8

9

SECOND THING, A VARIETY OF SLIDES USE THE WORDS

9

THE COURT: WHAT IS THE LANGUAGE THAT IS OFFENSIVE?
IS IT THAT THE LIST OF 86 WAS CHOSEN BY SAP'S COUNSEL.
MR. LANIER: THAT'S CORRECT, YOUR HONOR.
THE COURT: ALL RIGHT. WHAT EVIDENCE IS THERE IN THE
RECORD THAT IT WAS CHOSEN BY COUNSEL AS OPPOSED TO BY SAP?

10

"THEFT" AND "STOLE," THINGS LIKE THAT. YOUR HONOR HAD GIVEN

10

11

GUIDANCE ABOUT THAT WITH RESPECT TO THE OPENING. THIS IS NOT A

11

12

CRIMINAL CASE. IT'S NOT A THEFT CASE. WE OBJECT TO THOSE

12

THE COURT: BUT JONES DAY DIDN'T DECIDE ON THE NUMBER

13

SLIDES AS WELL. WE DON'T THINK THOSE TERMS ARE APPROPRIATE IN

13

OF CUSTOMERS. IF THEY DID, THERE CERTAINLY HAS BEEN NO EVIDENCE

14

THIS CASE.

14

THAT IT WAS THE LAW FIRM THAT MADE THE DECISION.

MR. BOIES: IT COMES FROM THE LETTER ITSELF, WHICH
WAS WRITTEN BY JONES DAY. NOW, IF --

AND THEN THE THIRD MAJOR ISSUE HAS TO DO WITH THE

15

MR. BOIES: YOUR HONOR, COULD I HAVE JUST A MOMENT TO

SO-CALLED LIST OF 86, THE CHARACTERIZATION THAT THE LIST WAS

16

SEE -- IT ACTUALLY DOESN'T MATTER THAT MUCH TO ME WHETHER IT'S

17

CHOSEN BY COUNSEL. IT WAS ACTUALLY CHOSEN AS A RESULT OF A

17

COUNSEL OR SAP THAT MADE THE DECISION. I JUST WANT TO SEE

18

JUDICIALLY SUPERVISED PROCESS SUPERVISED BY MAGISTRATE JUDGE

18

WHETHER I CAN CHANGE MY CHART.

19

LAPORTE. THERE'S NO EVIDENCE THAT THE LIST OF 86 CUSTOMERS WAS

19

20

ACTUALLY CHOSEN BY COUNSEL. THAT'S WHO MR. CLARKE GOT IT FROM, 20

ANY OF THE CONDUCT AT ISSUE IN THIS CASE TO THE LAW FIRM

21

BUT THAT'S A DIFFERENT THING.

REPRESENTING SAP. THERE'S BEEN NO EVIDENCE OF THAT.

15
16

22

21

SO THE CHARACTERIZATION THAT THIS LIST OF 86

THE COURT: WELL, I WOULDN'T APPROVE YOU ATTRIBUTING

SO -- SO IF, INDEED, IT WAS -- SAP GENERATED THE

22

23

CUSTOMERS THAT BOTH EXPERTS STARTED FROM TO DETERMINE

23

LIST, YOU CAN REFER TO SAP, BUT NOT TO SAP'S COUNSEL. I MEAN,

24

INFRINGER'S PROFITS, WE THINK, IS INAPPROPRIATE TO SAY IT WAS

24

WHY IS THAT A PROBLEM?

25

CHOSEN BY SAP'S COUNSEL.

25

MR. BOIES: WELL, YOUR HONOR, THE REASON IT'S A

Page 2027

Page 2029

1

THOSE ARE OUR THREE MAJOR OBJECTIONS.

1

PROBLEM IS BECAUSE THE LETTER WAS WRITTEN BY SAP'S COUNSEL. WE

2

THE COURT: OKAY.

2

THOUGHT WE HAD A RIGHT TO RELY ON THAT. WE'VE PREPARED OUR

MR. BOIES: THE COURT HAS OUR VIEW AND HAS ALREADY

3

CHARTS THAT WAY. SO I MEAN, THAT'S WHY IT'S A PROBLEM.

3
4

RULED ON THE FIRST OBJECTION.

THE COURT: CAN YOU SHOW ME WHAT THE LETTER LOOKS

4

5

WITH RESPECT TO THE SECOND OBJECTION, THERE ARE ABOUT

5

6

HALF A DOZEN CHARTS THAT USE A WORD LIKE "THEFT" OR "GUILT."

6

MR. LANIER: YOUR HONOR, INTERROGATORY RESPONSES ARE

7

WHATEVER MAY BE TRUE AT THE OPENING STATEMENT, THAT IS NOT AN

7

SIGNED BY LAWYERS. THAT DOESN'T MAKE THEM LAWYERS' RESPONSES.

8

ARGUMENT. IT IS CERTAINLY, WE BELIEVE, PERMISSIBLE TO ARGUE ON

8

THEY'RE THE COMPANY'S RESPONSES. IT'S THE SAME THING.

9

THE RECORD THAT HAS BEEN MADE THAT THIS STUFF WAS STOLEN,

9

10
11

THAT -- THAT PEOPLE TOOK IT ILLEGALLY.
ONE OF THE OBJECTIONS THEY HAVE IS EVEN TO REFERRING

10
11

LIKE?

THE COURT: ALL RIGHT.
MR. LANIER: COMMUNICATING INFORMATION AND MAKING THE
CHOICE.

12

TO SAP AS THE GUILTY PARTY, WHICH IS SOMETHING THAT IS USED IN

12

THE COURT: DOES ANYBODY --

13

CIVIL CONTEXT ALL THE TIME.

13

CAN YOU SHOW ME THE LETTER?

14

THE -- THE POINT OF THIS IS WHEN THEY TAKE ON A RISK,

14

MR. LANIER: AND MR. MITTELSTAEDT POINTS OUT TO ME

15

IT'S IMPORTANT TO KNOW THE NATURE OF THE RISK THAT THEY ARE

15

THAT, IN FACT, THE EVIDENCE THAT'S IN THE RECORD -- THE EXHIBIT

16

TAKING ON. AND THEY ARE TAKING ON THE RISK OF BEING FOUND TO

16

THAT'S IN THE RECORD WAS BY AGREEMENT OF COUNSEL. THE FACT THAT

17

HAVE STOLEN COPYRIGHTS. AND THAT IS SOMETHING THAT WE THINK IS 17

IT CAME FROM COUNSEL, THE LAWYERS' NAMES WERE, IN FACT, REDACTED

18

DIRECTLY RELEVANT TO THE DAMAGES ISSUES THAT ARE HERE.

18

OUT. SO THAT'S EXACTLY NOT THE POINT. THE EXHIBIT THAT'S IN

19

THE RECORD, WHICH IS EXHIBIT -- OH, BOY.

19

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

20

FORTH HOW THE 86 WERE SELECTED IS IN EVIDENCE. THAT CAME IN AS

21

EVIDENCE WITHOUT OBJECTION. IT IS SOMETHING THAT WAS DONE BASED 21

7035.

22

ON THE INFORMATION PROVIDED BY SAP COUNSEL. THE LETTER STATES

22

THE COURT: OKAY. 7035.

23

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

23

MR. LANIER: 7035.

24

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

24

THE COURT: AND THE LAWYERS NAMES ARE REDACTED?

25

MR. LANIER: YEP. AND THE FIRM NAME AND ALL THAT.

25

THERE WAS NEVER A STIPULATION THAT THOSE 86 CUSTOMERS

20

GOT TO GET MY GLASSES.

3 (Pages 2026 to 2029)
Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 2030
1

THAT WAS BY AGREEMENT OF COUNSEL.

Page 2032
1

THE COURT: AND IS THAT THE COWLITZ COUNTY -MR. HOWARD: ONE OF THEM IS THE COWLITZ COUNTY. THE

2

I HAVE A DEMONSTRATIVE THAT HAS IT ON IT. IN FACT,

2

3

HERE'S A COPY OF THE EXHIBIT. IT JUST DOESN'T HAVE THE EXHIBIT

3

OTHER IS EXHIBIT A9329. I CAN PUT IT UP ON THE BOARD.

4

STAMP ON IT.

4

MR. MITTELSTAEDT: CAN I SEE WHICH ONE --

5
6
7
8
9
10
11
12
13

5

MR. BOIES: NO, YOUR HONOR. WE DID NOT MENTION JONES
DAY. WE MENTIONED SAP COUNSEL. I --

WE DON'T INTEND TO OFFER THEM TO THE TRUTH. WE UNDERSTAND THE

7

MR. BOIES?

MR. LANIER: AND, YOUR HONOR, WHILE WE'RE DOING THAT,

6

(PAUSE IN THE PROCEEDINGS.)
THE COURT: OKAY. IS THERE SOMETHING ELSE,

COURT'S RULING ADMITTING THEM FOR THE LIMITED PURPOSE, AND

8

THAT'S THE ONLY PURPOSE FOR WHICH THEY'D BE DISCUSSED.

9

FOR EXAMPLE, IT'S APPROPRIATE TO SAY HERE'S SOMETHING

MR. BOIES: MAY WE HAVE ABOUT TEN MINUTES TO TRY TO
CHANGE THE SLIDES?

10

THE EXPERT RELIED ON AS YOU'RE THINKING ABOUT HOW TO VALUE

11

THE COURT: YOU CAN ATTRIBUTE IT TO SAP, NOT TO THE
LAWYERS.

MR. MEYER'S OPINION, FOR EXAMPLE. THAT'S THE PURPOSE FOR WHICH

12

WE'D OFFER THEM.

13

MR. MITTELSTAEDT: I'M NOT GOING TO USE THE COWLITZ
COUNTY ONE.

14

THE COURT: OKAY.

14

15

NOW, WITH REGARD, THEN, TO THE -- THERE WERE THREE

15

THE COURT: AT ALL.

16

OBJECTIONS THAT YOU RAISE. WITH REGARD TO THE FIRST ONE, I'VE

16

MR. MITTELSTAEDT: IN CLOSING.

17

ALREADY RULED ON THAT. THE EVIDENCE HAS ALREADY COME IN. SO,

17

MR. HOWARD: CAN WE PUT UP SLIDE 42.

18

OBVIOUSLY, I'M NOT GOING TO CHANGE MY VIEW ON THAT NOW.

18

(DEMONSTRATIVE PUBLISHED TO COURT.)
MR. HOWARD: THIS IS -- THIS IS THE OTHER ONE, YOUR

19

WITH REGARD TO THE CHARACTERIZATION OF COPYRIGHT

19

20

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

20

HONOR. AND THAT JUST DOES NOT APPEAR TO US TO BE OFFERED TO

21

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

21

DISCUSS RELIANCE. THAT APPEARS TO US TO BE OFFERED FOR THE

22

TRIAL. YOU'VE BEEN VERY GOOD. YOU HAVEN'T -- NONE OF THE

22

TRUTH OF ITS CONTENTS.

23

WITNESSES HAVE USED THAT LANGUAGE. IN MY VIEW, THAT LANGUAGE IS 23

THE COURT: WHAT IS THIS?

24

INFLAMMATORY, UNNECESSARY.

24

MR. HOWARD: THIS IS AN EMAIL FROM MR. MACKEY AND

25

PERHAPS COUNSEL CAN EXPLAIN HOW THEY INTEND TO USE IT.

25

THIS IS A COPYRIGHT CASE. "COPYRIGHT INFRINGEMENT"

Page 2031

Page 2033

1

IS A TERM OF ART THAT IS WHAT HAS BEEN STIPULATED TO. AND NO,

1

MR. MITTELSTAEDT: I'M GOING TO USE THIS TO CRITICIZE

2

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

2

MR. MEYERS (SIC) FOR NOT CONSIDERING THIS DOCUMENT AND NOT

3

"STEALING."

3

GIVING IT ENOUGH WEIGHT IN HIS OPINION. SO IT'S NOT FOR THE

4

TRUTH OF THE MATTER IT'S TO SHOW THAT HE DID NOT CONDUCT A

4

THROUGHOUT THE COURSE OF THE TRIAL, WITNESSES HAVE

PROPER EXAMINATION.

5

USED LANGUAGE SUCH AS "TAKING OUR SOFTWARE," AND, OBVIOUSLY, YOU 5

6

CAN CONTINUE TO USE THAT. BUT KEEP IN MIND THE BASIS FOR MY

6

THE COURT: OKAY. ALL RIGHT.

7

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

7

MR. HOWARD: IF IT'S CLEAR.

8

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

8

THE COURT: THAT'S FINE.

9

CRIMINAL UNDERTONES HERE. BUT ADDITIONALLY, IT WAS ON THE BASIS

9

10

OF MY DETERMINATION THAT THE LANGUAGE IS JUST INFLAMMATORY.

10

11

IT'S NOT NECESSARY.

11

MR. HOWARD: CLEAR IN THE ARGUMENT, YOUR HONOR, THAT
IS FINE.
AND COULD YOU PUT UP 43, PLEASE.
(DEMONSTRATIVE PUBLISHED TO JURY.)

12

SO THAT OBJECTION IS SUSTAINED.

12

13

AND I'VE ALREADY INDICATED WITH REGARD TO THE LAST

13

MR. HOWARD: NOW, THE LAST CATEGORY OF OBJECTION,

14

YOUR HONOR, IS TWO SLIDES WHERE THE IMPRESSION THAT'S BEING

15

GIVEN IS THAT THIS INFORMATION APPEARS IN THE SLIDE, WHICH IT

16

DOES NOT. THESE NUMBERS ARE NOWHERE IN THIS DOCUMENT. AND
SO -- WE DON'T EVEN KNOW WHERE THE NUMBERS CAME FROM.

14
15
16

ONE, SAP CAN BE REFERRED TO BUT NOT ITS COUNSEL.
ALL RIGHT. WERE THERE ANY OTHER OBJECTIONS TO
DEMONSTRATIVES?

17

MR. LANIER: IT'S FINE FROM US, YOUR HONOR.

17

18

THE COURT: FROM YOU ALL?

18

MR. MITTELSTAEDT: IT'S --

MR. HOWARD: YES, YOUR HONOR. THERE'S -- THERE'S

19

THE COURT: WAIT. WHICH -- THE CIRCLED NUMBERS?

19

MR. HOWARD: THE ROW, THE ENTIRE ROW WHERE IT SAYS

20

ONLY A COUPLE ON OUR SIDE. THERE'S TWO EXHIBITS. THEY'RE SLIDE

20

21

42 AND THEY'RE SLIDE 74 WHICH SHOW EVIDENCE -- WHICH HAS ONLY

21

22

BEEN ADMITTED FOR A LIMITED PURPOSE RELATED TO THE EXPERTS'

22

THE COURT: YEAH.

23

RELIANCE AND NOT FOR THE TRUTH.

23

MR. HOWARD: CAN YOUR HONOR SEE IT WITH COUNSEL

24
25

APPEARS TO US THAT IT'S BEING IN THE SLIDE DECK FOR
THE TRUTH OF THE CONTENTS OF THE DOCUMENT. WE OBJECT TO THAT.

24
25

"CUSTOMERS."

STANDING THERE?
THE COURT: NO, I CAN SEE IT.

4 (Pages 2030 to 2033)
Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 2094

Page 2096

1

BUSINESS RELATIONSHIPS. THAT WAS PART OF THE PURPOSE OF DOING

1

ABOUT THESE NUMBERS THAT --

2

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

2

AND LET'S GO TO 204.

3

JUST LOOKING AT THE MAINTENANCE REVENUE.

3

4

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

(DEMONSTRATIVE PUBLISHED TO JURY.)
MR. BOIES: THIS IS PLAINTIFFS' EXHIBIT 37. OVER THE

4

5

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

5

LONG TERM, SAP RECOGNIZED THAT EVERY DOLLAR OF TOMORROWNOW

6

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

6

STAND-ALONE REVENUE IN 2005 REPRESENTED $18 MILLION -- OR $18 --

7

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

7

EVERY $1 REPRESENTS 18 -- EVERY MILLION DOLLARS REPRESENTS

8

PROFITS.

8

$18 MILLION OF ORIGINALLY EXPECTED ORACLE REVENUE.

9
10
11
12

FIRST, INFRINGER PROFITS ARE THE PROFITS THAT THEY
MAKE. AND IF YOU GO TO 287 --

10

(DEMONSTRATIVE PUBLISHED TO JURY.)

SO IT HAS THIS MULTIPLIER EFFECT, AND THE MULTIPLIER

9

EFFECT WORKED BOTH WAYS. IT WORKED TO HURT ORACLE AND HELP SAP.

11

MR. BOIES: -- MR. MEYER CAME UP WITH AN ESTIMATE OF

(DEMONSTRATIVE PUBLISHED TO JURY.)

12

MR. BOIES: GO TO 288, WHICH IS EXHIBIT 373.

13

$288 MILLION FOR INFRINGER PROFITS. AND HE SAID THAT'S

13

14

INCOMPLETE. HE SAID IT'S MORE THAN THAT, BUT I CAN'T TELL YOU

14

SAP'S LICENSE REVENUE PIPELINE. SO WHEN YOU LOOK AT THE

15

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

15

REVENUES OF TOMORROWNOW, YOU'VE GOT TO TAKE INTO ACCOUNT THE

16

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

16

FACT THAT IT HAS THIS MULTIPLYING EFFECT, THAT EVERY DOLLAR THAT

17

NOT ALL AVAILABLE.

17

TOMORROWNOW GETS HURTS ORACLE MUCH MORE THAN A DOLLAR AND HELPS

18

SAP MUCH MORE THAN A DOLLAR.

18
19
20
21
22

BUT WHAT WE KNOW IS WE KNOW IT'S SUBSTANTIALLY ABOVE
$288 MILLION. NOW, HOW DO WE KNOW THAT?

$1 OF TOMORROWNOW STAND-ALONE REVENUE EQUALS $10 OF

SO IF YOU SIMPLY LOOK AT SAP'S AND TOMORROWNOW'S

19

AND LET ME GO TO PAGE 110.

20
21

(DEMONSTRATIVE PUBLISHED TO JURY.)
MR. BOIES: YOU REMEMBER I DREW ON -- ON THE BOARD

REVENUE FROM THOSE CUSTOMERS, MAINTENANCE REVENUES FROM THOSE
CUSTOMERS, THAT GREATLY UNDERSTATES THE VALUE OF WHAT'S GOING

22

ON, FOR BOTH SAP AND FOR ORACLE.

23

OVER HERE A -- WHEN I WAS EXAMINING MR. CLARKE, I TALKED ABOUT

24

HOW SAP HAD IDENTIFIED 86 CUSTOMERS WHERE SAP HAD REVENUE AFTER 24

WANT TO DO THAT REALITY TESTING BASED ON WHAT PEOPLE KNEW AT THE

25

THE CUSTOMERS BECAME A TOMORROWNOW CUSTOMER. AND THAT WAS

TIME.

NOW, IF YOU WANTED TO DO SOME REALITY TESTING, YOU

23

25

Page 2095

Page 2097

1

$885 MILLION. AND THEY HAD ONGOING -- WHAT SAP CALLED ONGOING

1

2

REVENUES. THAT MEANS THAT THEY WERE REVENUES THAT STARTED

2

3

BEFORE, BUT CONTINUED AFTER -- AND HE CONCLUDED THEY OUGHT TO BE

3

MR. BOIES: THIS IS A CONFERENCE CALL, JANUARY 19TH,

4

SUBTRACTED. THAT CAME UP WITH $689 MILLION.

4

THE DAY OF THE HYPOTHETICAL NEGOTIATION. THIS IS WHAT

5

MR. AGASSI, THE SAP BOARD MEMBER, SAYS: HE'S ASKED ABOUT THE

5

NOW, THERE ARE TWO ISSUES. FIRST, HE SAYS, WELL, NOT

AND LET'S GO TO 225. THIS IS PLAINTIFFS' EXHIBIT 23.
(DEMONSTRATIVE PUBLISHED TO JURY.)

6

ALL 86 CUSTOMERS REALLY WENT TO SAP BECAUSE OF TOMORROWNOW EVEN 6

VALUES. SAYS IF YOU WANT TO LOOK AT IT FROM A FINANCIALS

7

THOUGH THEY WENT TO SAP AFTER TOMORROWNOW. AND THE QUESTION IS

7

PERSPECTIVE, THE RATIONALE IS MORE AROUND THE VALUE THAT THESE

8

HOW DO YOU FIGURE THAT OUT. AND THAT'S ONE OF THE PROBLEMS WITH

8

CUSTOMERS REPRESENT AS POTENTIAL FUTURE CUSTOMERS OF SAP.

9

USING THIS APPROACH, IS IT'S HARD TO FIGURE THAT OUT.

9

AND THE CUSTOMERS OF -- PEOPLESOFT CUSTOMERS. AND HE

10

THE SECOND THING IS HE SAYS, WELL, THAT'S NOT ALL

10

GOES ON. AND THIS IS MR. AGASSI'S WORDS AT THE TIME. AND IT'S

11

PROFIT. AND IT'S TRUE IT'S NOT ALL PROFIT. BUT HOW MUCH OF IT

11

THE VALUE WAS ESTIMATED BY ORACLE RIGHTLY OR WRONGLY AS

12

IS PROFIT IN TERMS OF THE INFRINGER'S PROFIT? IT'S THEIR BURDEN

12

$10 BILLION.

13

TO PROVE AND THEY SIMPLY HAVE NOT CARRIED THAT BURDEN.

13

WE BELIEVE THAT THIS CUSTOMER BASE IS NOT NECESSARILY

14

THEY HAVEN'T BEGUN TO COME FORWARD WITH EVIDENCE,

14

CAPTIVE (SIC) BY ORACLE. I THINK THIS CUSTOMER BASE HAS TO MAKE

15

ACTUAL EVIDENCE OF WHAT THE COST OF SERVING THESE ADDITIONAL

15

A CHOICE RIGHT NOW. AND THE REASON THEY HAD TO MAKE A CHOICE

16

CUSTOMERS WERE.

16

RIGHT NOW WAS BECAUSE OF TOMORROWNOW. BECAUSE WITHOUT

17

TOMORROWNOW, YOU'VE SEEN THEY HAD NO MAINTENANCE OFFERING.
MR. CLARKE TESTIFIED THAT SAP ON ITS OWN COULD NEVER

17

SO YOU STARTED WITH $689 MILLION, CONCEDED REVENUES

18

ON JUST THESE 86 CUSTOMERS -- THAT'S JUST 86 CUSTOMERS. THESE

18

19

ARE 86 ACTUAL CUSTOMERS. THAT SAYS $689 MILLION OF ACTUAL

19

HAVE COME UP WITH A SOFTWARE NECESSARY TO SERVICE ORACLE

20

REVENUE FROM ACTUAL CUSTOMERS. BECAUSE IN INFRINGER'S PROFITS,

20

CUSTOMERS. THEY COULD NOT HAVE DONE IT ON THEIR OWN. ALSO

21

YOU ARE LOOKING AT WHAT HAPPENS AFTER THE FACT. HOW MUCH OF

21

TESTIFIED THAT TOMORROWNOW COULDN'T HAVE DONE IT LEGALLY. BUT

22

THAT IS INFRINGER PROFITS?

22

THEY NEEDED TOMORROWNOW, THEY NEEDED THESE INFRINGING COPIES IN

23

SINCE THEY HAVE THE BURDEN, IT'S THAT AMOUNTS MINUS

23

ORDER TO COMPETE. THEY COULD ONLY GIVE THESE CUSTOMERS WORTH

24

WHATEVER THEY SHOW YOU THE RIGHT EVIDENCE IS FOR THEIR COST.

24

$10 BILLION A CHOICE THROUGH THE INFRINGEMENT, AND THAT SHOWS

25

YOU THE VALUE OF THE INFRINGEMENT.

25

I WANTED YOU TO KEEP IN MIND WHEN YOU'RE THINKING

20 (Pages 2094 to 2097)
Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 2178

Page 2180

1

LET ME GO TO 244.

1

2

(SLIDE DISPLAYED ON SCREEN.)

2

EXAMPLES SO THAT YOU UNDERSTOOD HOW THE DIFFERENT WITNESSES

THIS IS THE SAME DOCUMENT, PLAINTIFFS' EXHIBIT 37,

IN FACT, WHAT WE DID WAS WE TOOK YOU THROUGH ENOUGH

3

WERE APPROACHING THE ISSUE. FOR EXAMPLE, TAKE MR. CLARKE. AND

4

FROM ANDREW NELSON. AND MR. CLARKE SAYS HAS NO FINANCIAL

4

TAKE THE EXAMPLE OF NATIONAL FOODS. 113.

5

EFFECT WHATSOEVER. AND YET THE DOCUMENT WAS WRITTEN BY

5

6

TOMORROWNOW'S FOUNDER AND CEO WHO WAS ALSO AN SAP AMERICA VICE 6

7

PRESIDENT AT THE TIME. IT WAS SENT TO MR. APOTHEKER AND

7

GOOD IDEA OF HOW FLAWED MR. CLARKE'S ANALYSIS IS. HE EXCLUDES

8

OTHERS. AND MAYBE MOST IMPORTANT OF ALL, NO ONE EVER DISAGREED

8

NATIONAL FOODS BECAUSE HE SAYS THERE IS NO EVIDENCE THAT WHAT

9

WITH NELSON'S ANALYSIS. IN FACT, OTHER ANALYSES CONFIRMED

9

SAP GOT WAS RELATED TO TOMORROWNOW. NO EVIDENCE.

3

10
11

NELSON'S ANALYSIS, AND WE CITE PLAINTIFFS' EXHIBIT 373.
THIS IS VERY IMPORTANT, LADIES AND GENTLEMEN,

10

(SLIDE DISPLAYED ON SCREEN.)
AND THIS IS IMPORTANT BECAUSE IT GIVES YOU AN IDEA,

WELL, IF THERE WAS NO EVIDENCE YOU COULD LOOK AT IT

11

ONE OF TWO WAYS. DO I LEAVE THEM IN BECAUSE THERE IS NO

12

BECAUSE I ASK YOU TO LOOK AT THE EVIDENCE. I ASK YOU TO LOOK

12

EVIDENCE ON IT OR DO I TAKE THEM OUT BECAUSE THERE'S NO

13

AT WHAT IS ACTUALLY SAID, WHAT THE WITNESSES ACTUALLY SAID, NOT

13

EVIDENCE? BUT YOU DON'T HAVE TO REACH THAT ISSUE BECAUSE THERE

14

WHAT COUNSEL SAYS THEY SAY. LOOK AT WHAT THE DOCUMENTS

14

IS EVIDENCE.

15

ACTUALLY SAY, NOT WHAT COUNSEL SUGGESTS THEY MIGHT SAY. LOOK

15

16

AT THE ACTUAL DOCUMENTS THAT ARE INVOLVED.

16

ABLE TO GIVE SUBSTANTIAL TEETH TO THE SAP LICENSE BID. ALSO,

LOOK AT PLAINTIFFS' EXHIBIT 7027. TOMORROWNOW WAS

17

LET ME GIVE YOU ANOTHER ONE.

17

ORACLE MOUNTED AN INTENSE CAMPAIGN TO MAINTAIN THIS CLIENT,

18

COUNSEL TALKED TO YOU ABOUT INFRINGER PROFITS AND

18

HOWEVER THE JOINT SAP AND TOMORROWNOW OFFERING WAS SIMPLY TOO

19

CUSTOMERS. AND HE SAID, WELL, MR. MEYER AGREES THAT SOME OF

19

STRONG.

20

THESE 86 CUSTOMERS SHOULDN'T BE THERE. HE SAYS MR. MEYER

20

THOSE ARE SAP'S STATEMENTS. THAT'S WHAT SAP IS

21

AGREES ON ABOUT 20, 23 OF THOSE CUSTOMERS.

21

SAYING AT THE TIME IS THE REASON THEY GOT THIS CUSTOMER.

22

WHAT HE DIDN'T TELL YOU IS WHAT MR. MEYER SAYS IS

22

BUT MR. CLARKE WOULD IGNORE IT EVEN IN THE FACE OF

23

THAT CALCULATION, THIS CALCULATION IS NOT THE BEST WAY TO LOOK

23

24

AT DAMAGES BECAUSE IT IS NOT COMPLETE. HE COULD NOT COMPLETE

24

LET'S GO TO 114.

25

IT WITH THE DATA THAT WAS AVAILABLE. NOBODY COULD COMPLETE IT

25

BUT THERE'S EVEN MORE THAN THAT EXHIBIT.

THAT EVIDENCE.

Page 2179
1
2

WITH THE DATA THAT WAS AVAILABLE.
THAT'S WHY HE SAID THAT THE RIGHT WAY TO LOOK AT IT

Page 2181
1
2

THE TECHNOLOGY DOES NOT SEEM TO BE WORKING, BUT
MAYBE THE ELMO WILL. DO IT THE OLD FASHION WAY.

3

IS THE FAIR MARKET VALUE LICENSE THAT THE COURT IS GOING TO

3

4

INSTRUCT YOU ABOUT. IT WAS NOT TO FOLLOW THIS APPROACH.

4

(SLIDE DISPLAYED ON ELMO.)

5

IF YOU DID FOLLOW THIS APPROACH, YOU STILL GET A

5

SAFE PASSAGE. HE TESTIFIED THAT TOMORROWNOW'S SUPPORT OFFERING

THIS IS MR. HURST, THEIR CORPORATE REPRESENTATIVE ON

6

NUMBER THAT'S HUNDREDS OF MILLIONS OF DOLLARS HIGHER THAN THE

6

WAS INSTRUMENTAL IN ACHIEVEMENT OF THIS CUSTOMER WIN.

7

NUMBER THAT THEY SUGGEST.

7

NOW THAT'S THE EVIDENCE. THAT'S THE EVIDENCE IN THE

8
9

BECAUSE ONE OF THE THINGS THAT THE COURT WILL
INSTRUCT YOU IS THAT ON INFRINGER PROFITS, THEY HAVE THE BURDEN

8
9

FACE OF WHICH MR. CLARKE STILL EXCLUDES NATIONAL FOODS.
NOW, HE ALSO EXCLUDED PEPSI, AND YOU HEARD COUNSEL

10

OF PROOF, NOT ASSERTION, NOT SAYING, WELL, THE COST OF

10

PUT UP SOME TESTIMONY FROM PEPSI. YOU WILL RECALL THAT PEPSI

11

50 PERCENT. THAT'S NOT PROOF, THAT IS NOT EVIDENCE. THEY HAVE

11

TESTIFIED THAT THEY WOULD NOT HAVE LEFT ORACLE IF THEY HAD

12

THE BURDEN OF PROVING WHAT THEIR COSTS ARE. IF THEY DON'T,

12

KNOWN THAT TOMORROWNOW WAS INFRINGING. AND YET MR. CLARKE

13

THEN UNDER THE LAW YOU AWARD THE TOTAL AMOUNT OF THE REVENUE. 13

14

AND THE JUDGE IS GOING TO GIVE YOU INSTRUCTIONS ON THAT ISSUE.

15

SO I ASK YOU TO LOOK AT THE ACTUAL EVIDENCE THAT YOU

14
15

EXCLUDES THEM. THEY EXCLUDE THEM FROM THE DAMAGE CALCULATION.
IT'S THOSE KINDS OF EXCLUSIONS THAT SHOW TWO THINGS.
FIRST, IT SHOWS HOW UNRELIABLE THIS APPROACH TO DAMAGES IS.

16

HAVE AND COMPARE THE EVIDENCE THAT YOU HAVE WITH THE ARGUMENTS16

THAT IS HOW UNRELIABLE THE APPROACH OF LOOKING AT THESE KIND OF

17

THAT THEY ARE MAKING, AND THEN LOOK AT IT ALL IN THE CONTEXT OF

17

DECISIONS ON LOST PROFITS AND LOST CUSTOMERS.

18

WHAT THE JUDGE IS GOING TO INSTRUCT YOU THE LAW IS AND THE

18

19

RULES THAT YOU HAVE TO FOLLOW.

19

CALCULATING LOST PROFITS OR INFRINGERS' PROFITS THAT DO NOT

THAT'S NOT ALWAYS SO. SOMETIMES YOU HAVE WAYS OF

20

NOW, WITH RESPECT TO THESE CUSTOMERS, THERE WAS AN

20

DEPEND ON SUBJECTIVE DETERMINATION. WHY DID A CUSTOMER LEAVE?

21

INTERESTING SUGGESTION THAT BECAUSE I HAD NOT CROSS-EXAMINED

21

WHY DID A CUSTOMER GO TO SAP? WHY DID A CUSTOMER TAKE THIS

22

MR. MEYER (SIC) ABOUT ALL 358 CUSTOMERS, SOMEHOW WE HAD

22

PRODUCT FROM SAP?

23

CONCEDED MR. MEYER -- MR. CLARKE WAS RIGHT ABOUT THOSE. OF

23

24

COURSE COUNSEL DIDN'T CROSS-EXAMINE MR. MEYER ABOUT THOSE 358

24

THAT ARE NECESSARY TO MAKE FOR A LOST PROFITS OR AN INFRINGER

25

EITHER.

25

PROFIT ANALYSIS, OR RUNNING ROYALTY ANALYSIS, WHICH IS THE SAME

WHEN YOU HAVE THOSE KIND OF SUBJECTIVE JUDGMENTS

41 (Pages 2178 to 2181)
Raynee H. Mercado, CSR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR