Oracle Corporation et al v. SAP AG et al

Filing 1206

Declaration of Nargues Motamed in Support of 1202 Statement Joint Statement in Support of Evidentiary Issues filed byOracle International Corporation. (Attachments: # 1 Exhibit A-0059, # 2 Exhibit A-6329-1, # 3 Exhibit A-0367, # 4 Exhibit A-5042, # 5 Exhibit A-5997, # 6 Exhibit A-6042-1, # 7 Exhibit A-6205-1, # 8 Exhibit A-5193, # 9 Exhibit A-5995, # 10 Exhibit A-5058, # 11 Exhibit A-5002-1, # 12 Exhibit A, # 13 Exhibit B, # 14 Exhibit C, # 15 Exhibit D, # 16 Exhibit E, # 17 Exhibit F, # 18 Exhibit G, # 19 Exhibit H, # 20 Exhibit I, # 21 Exhibit J, # 22 Exhibit K, # 23 Exhibit L, # 24 Exhibit M, # 25 Exhibit N, # 26 Exhibit PTX 0008, # 27 Exhibit PTX 0014, # 28 Exhibit PTX 0161, # 29 Exhibit O, # 30 Exhibit P, # 31 Exhibit Q, # 32 Exhibit R, # 33 Exhibit PTX 4809, # 34 Exhibit PTX 4819, # 35 Exhibit PTX 0012, # 36 Exhibit PTX 0024, # 37 Exhibit PTX 0960, # 38 Exhibit PTX 7028, # 39 Exhibit S, # 40 Exhibit T, # 41 Exhibit U, # 42 Exhibit V, # 43 Exhibit W, # 44 Exhibit PTX 8040, # 45 Exhibit PTX 2582, # 46 Exhibit X, # 47 Exhibit Y, # 48 Exhibit PTX 8112, # 49 Exhibit PTX 8111, # 50 Exhibit PTX 8108)(Related document(s) 1202 ) (Howard, Geoffrey) (Filed on 8/2/2012)

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 383

Page 385

1

VALUE OF THAT ADMITTED INFRINGING SOFTWARE IS IN THE BILLIONS OF

1

TOMORROWNOW, SAP SHOULD HAVE MADE SURE THAT TOMORROWNOW WAS

2

DOLLARS.

2

COMPLYING WITH THE COPYRIGHTS AND SHOULD HAVE MADE SURE THAT IT

3

THANK YOU VERY MUCH FOR YOUR ATTENTION.

3

WAS DOING WHAT WAS RIGHT. SAP SHOULD HAVE SUPERVISED

4

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

4

TOMORROWNOW MUCH MORE CLOSELY.

5

LADIES AND GENTLEMEN, WE'RE GOING TO TAKE OUR FIRST

5

6
7
8
9

SAP'S BOARD TOLD TOMORROWNOW NOT TO DOWNLOAD

RECESS OF THE MORNING BEFORE WE HEAR FROM THE DEFENSE. YOU'RE

6

MATERIALS ONTO THEIR OWN COMPUTERS BUT TO HAVE THEM DOWNLOADED

EXCUSED FOR 15 MINUTES.

7

ONTO THE CUSTOMER'S COMPUTER. THAT WAS A DIRECTIVE THAT WAS

8

GIVEN BY THE BOARD. BUT IT WAS NOT FOLLOWED THROUGH ON, AND

9

TOMORROWNOW DID NOT COMPLY WITH IT.

(RECESS TAKEN AT 10:29 A.M.)
(PROCEEDINGS RESUMED AT 10:48 A.M.)

THE OTHER THING SAP DID WRONG WAS IT SHOULD HAVE SHUT

10

THE CLERK: PLEASE BE SEATED AND COME TO ORDER.

10

11

(THE FOLLOWING PROCEEDINGS WERE HEARD IN THE PRESENCE

11

DOWN TOMORROWNOW FASTER THAN IT DID. AND WE ADMIT ALL OF THAT.

12

AND MORE IMPORTANT, WE ACKNOWLEDGE RESPONSIBILITY FOR IT.

12

OF THE JURY:)

AND WE CONTINUE TO STAND READY TO PAY ORACLE THE

13

THE COURT: OKAY. MR. MITTELSTAEDT?

13

14

MR. MITTELSTAEDT: YES, YOUR HONOR.

14

COMPENSATION THAT IT IS ENTITLED TO FOR THE HARM THAT WAS CAUSED

15

TO IT, COMPENSATION THEY'RE ENTITLED TO UNDER THE LAW. AND THAT

16

COMPENSATION IS FOR THE REVENUES THEY LOST, THE PROFITS THEY

17

LOST IF CUSTOMERS WENT TO TOMORROWNOW (SIC) BECAUSE OF

18

TOMORROWNOW.

OPENING STATEMENT

15
16
17
18

MR. MITTELSTAEDT: IF IT PLEASE THE COURT, LADIES AND
GENTLEMEN OF THE JURY. GOOD MORNING.
IN MOST CIVIL CASES, THE JURY HAS TWO THINGS TO

THE OTHER COMPENSATION THEY'RE ENTITLED TO ARE THE

19

DECIDE, DID THE DEFENDANT DO SOMETHING WRONG AND IF SO, HOW MUCH 19

20

SHOULD THE DEFENDANT PAY THE PLAINTIFF. THIS CASE IS DIFFERENT.

20

PROFITS THAT SAP GAINED BY SELLING SOFTWARE -- SAP'S OWN

21

IT'S DIFFERENT BECAUSE TOMORROWNOW AND SAP ADMIT THEY DID

21

SOFTWARE. THIS IS NOT SOFTWARE THAT WAS ORACLE'S BUT SELLING

22

SOMETHING WRONG, AND I WANT TO TELL YOU WHAT IT IS.

22

SAP'S SOFTWARE TO CUSTOMERS THAT CAME TO SAP ONLY BECAUSE OF

23

TOMORROWNOW. AND I'LL EXPLAIN THOSE TWO CATEGORIES AS WE GO ON

24

THIS MORNING.

23

FIRST, LET ME SAY THAT, JUST TO SET THE BACKGROUND,

24

WHEN ORACLE SELLS SOFTWARE TO A CUSTOMER, THAT CUSTOMER HAS A

25

RIGHT TO DOWNLOAD CERTAIN MATERIALS FROM ORACLE'S WEBSITE. WHAT 25

WHAT YOU WILL HEAR, THOUGH, IS ORACLE WANTS MUCH MORE

Page 384

Page 386

1

THE CUSTOMER CAN DO WITH THOSE MATERIALS DEPENDS ON THE TERMS OF

1

THAN THAT. IN ADDITION TO A LONG PUBLIC TRIAL WHERE THEY TROT

2

THE CONTRACT, THE LICENSE BETWEEN ORACLE AND THE CUSTOMER.

2

OUT EVIDENCE OF THINGS WE'VE ALREADY ADMITTED TO, THEY WANT A

3

WINDFALL. THEY WANT A BONANZA THAT IS OUT OF ALL PROPORTION TO

3

UNDER MOST OF THOSE LICENSES, THE CUSTOMER CAN

4

DOWNLOAD THE MATERIALS TO ITS OWN COMPUTER, AND IT CAN USE THOSE

4

THE HARM THAT THEY SUFFERED. AND IN A NUTSHELL, THAT'S WHAT

5

MATERIALS TO WORK ON IT AND CAN HAVE A THIRD PARTY LIKE

5

THIS CASE IS ABOUT.

6

TOMORROWNOW HELP IT WORK ON THOSE MATERIALS, HELP IT USE THOSE

6

THE ONE STUBBORN FACT THAT IS GOING TO BE IMPORTANT

7

MATERIALS.

7

THROUGHOUT THIS CASE IS THAT OF THE 9- OR 10,000 CUSTOMERS THAT

8

PEOPLESOFT HAVE -- HAD THAT YOU HEARD ABOUT, THE NUMBER OF THOSE

9

CUSTOMERS WHOEVER WENT TO TOMORROWNOW IS ONLY 358. AND I SAY

8
9

IF THAT'S ALL THAT HAD HAPPENED HERE, IT WOULD HAVE
BEEN OKAY. BUT TOMORROWNOW DID MORE. ONE OF THE THINGS IT DID

10

WAS IT DOWNLOADED MATERIALS THAT THE CUSTOMER WAS ENTITLED TO,

10

THAT'S A STUBBORN FACT BECAUSE NOBODY CAN DISPUTE IT, AND IT

11

BUT DOWNLOADED THEM NOT TO THE CUSTOMER'S COMPUTER BUT TO

11

MEANS THAT DESPITE THE PLANS AND THE HOPES AND THE EXPECTATIONS

12

TOMORROWNOW'S OWN COMPUTER. AND UNDER THE LICENSES, IT WASN'T

12

OR THE HYPE THAT ANYBODY HAD OF ALL THOSE 9-, 10,000 CUSTOMERS

13

SUPPOSED TO DO THAT.

13

FROM PEOPLESOFT, ONLY 358 EVER WENT TO TOMORROWNOW. AND SO WHEN

14

TOMORROWNOW ALSO USED THOSE MATERIALS -- USED THE

14

WE START LOOKING AT THE HARM THAT WAS CAUSED TO ORACLE, WE START

15

MATERIALS TO SERVICE OTHER CLIENTS, CLIENTS THAT HAD A RIGHT TO

15

WITH THAT 358.

16

DOWNLOAD THE MATERIALS, BUT TOMORROWNOW JUST DOWNLOADED THEM ALL 16

17

FOR ONE CUSTOMER AND THEN USED THEM FOR OTHERS. AND TOMORROWNOW

17

THE EVIDENCE WILL SHOW THE COMPENSATION THAT ORACLE IS ENTITLED

18

ALSO DOWNLOADED MORE MATERIALS THAN A CUSTOMER WAS ENTITLED TO

18

TO IS IN THE MILLIONS, THE TENS OF MILLIONS. IT'S NOT IN THE

19

DOWNLOAD.

19

BILLIONS.

20
21

TOMORROWNOW ADMITS ALL OF THAT. THAT WAS WRONG. IT
WAS COPYRIGHT INFRINGEMENT.

20

THAT, IN A NUTSHELL, IS WHAT THIS CASE IS ABOUT. AND

OKAY. BEFORE I GO FURTHER AND TELL YOU HOW THE

21

EVIDENCE IS GOING TO SHOW ALL OF THAT, LET ME MAKE SOME
INTRODUCTIONS.

22

FOR SAP'S PART, SAP'S CONDUCT ALSO FELL SHORT OF WHAT

22

23

IT SHOULD HAVE BEEN. FIRST OF ALL, SAP SHOULD NOT HAVE BOUGHT

23

24

TOMORROWNOW WITHOUT MAKING SURE THAT TOMORROWNOW WAS COMPLYING 24

MR. MCDERMOTT IS ONE OF TWO CHIEF EXECUTIVE OFFICERS OF --

25

WITH ORACLE'S COPYRIGHTS. AND HAVING MADE THE MISTAKE OF BUYING

C.E.O.'S OF SAP AG. HE WAS GIVEN THAT POSITION IN FEBRUARY OF

25

FIRST LET ME START WITH BILL MCDERMOTT.

20 (Pages 383 to 386)
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 7
PAGES 1188 - 1420
OAKLAND, CALIFORNIA
FRIDAY, NOVEMBER 12, 2010

TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS:
BY:

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

BY:

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

(APPEARANCES CONTINUED NEXT PAGE)

REPORTED BY:

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

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

Page 1209

Page 1211

1

RESPONSIBILITIES. CERTAINLY NOT THE SCOPE OF HIS

1

2

RESPONSIBILITIES IN FEBRUARY 2007 WITH RESPECT TO THE TOPICS OF

2

3

THIS EMAIL. IT JUST ISN'T THAT SIMPLE TO GET IN.

3

4

THE COURT: WELL, THERE'S A -- CERTAINLY THERE'S A

4

EMPLOYMENT. SCOPE OF HIS AUTHORITY.
MR. PICKETT: I'M SORRY. SCOPE OF HIS AGENCY,
AUTHORITY.
THE COURT: BUT ALL -- WELL, LET'S LOOK AT THE
STATEMENTS THAT MR. MITTELSTAEDT SPECIFICALLY REFERRED TO.

5

LIMITED SHOWING THAT HAS TO BE MADE. IT CAN BE SIMPLE IF IT HAS

5

6

BEEN ESTABLISHED --

6

WOULD THOSE BE? IS THERE SOME SUGGESTION THAT THEY

7

(SIMULTANEOUS COLLOQUY.)

7

WOULD NOT BE WITHIN THE SCOPE OF HIS AUTHORITY AS THE CHIEF OF

8

MR. PICKETT: IT'S FOUNDATION, RIGHT.

8

SUPPORT?

9

THE COURT: EXACTLY. AND IF, INDEED, THERE HAS BEEN

9

(PAUSE IN THE PROCEEDINGS.)
THE COURT: OKAY. I'M GOING TO ALLOW THIS ONE IN.

10

IN THE RECORD -- I'M NOT AWARE THAT THERE'S BEEN SUCH A

11

FOUNDATION. AND, IN FACT, YOU DO NEED TO HAVE SUCH A FOUNDATION 11

MR. PICKETT: ALL RIGHT.

12

BEFORE I CAN ADMIT IT AS AN ADMISSION.

12

THE COURT: I'M GOING TO ALLOW THIS ONE IN.

13

MR. PICKETT: OVER OBJECTION, OBVIOUSLY.

13

I DON'T SEE IT AS A BUSINESS RECORD, THOUGH. I MEAN,

10

14

IS THIS EMAIL -- IS IT -- DOES IT EXCERPT SOME SORT OF A REPORT

14

I HAVE ONE OTHER ISSUE RELATED TO THIS.

15

THAT IS ITSELF A BUSINESS RECORD?

15

THE COURT: OKAY.

16

MR. MITTELSTAEDT: I THINK THAT GOES BACK TO WHAT HIS

16

MR. PICKETT: BECAUSE THE DOOR HAS BEEN OPENED, WE

17

POSITION IS AND WHETHER THIS IS WITHIN THE SCOPE OF WHAT HE'S

17

THINK INAPPROPRIATELY, TO THIS TYPE OF HEARSAY EVIDENCE ON

18

DOING. BUT IF HE'S WRITING SOMETHING THAT'S WITHIN THE SCOPE OF

18

TUESDAY, WE DO HAVE ONE DOCUMENT WE WOULD LIKE TO USE WITH

19

WHAT HE'S DOING AND HE'S -- HE'S EXPRESSING FACTS BASED ON WHAT

19

MR. MEYER, WHICH IS AN ORACLE DOCUMENT WHICH REFUTES THE STATE

20

HE KNOWS, SEEMS TO ME THAT IS A BUSINESS RECORD.

20

OF MIND THAT THEY ATTEMPT TO SHOW WITH THESE DOCUMENTS.
IN OTHER WORDS, IT'S A DOCUMENT THAT SHOWS THAT THEY

21

MR. LANIER: AND, YOUR HONOR, I'D REFER THE COURT --

21

22

AND WE CAN PROVIDE A COPY OF IT FOR YOUR HONOR, TO PAGES --

22

ARE VERY CONCERNED ABOUT TOMORROWNOW AND DESPITE THE FACT THEY

23

PAGE 780 -- 779 AND 780 OF THE TRANSCRIPT. IT'S THE TESTIMONY

23

DON'T KNOW ABOUT THE IP --

24

OF MR. ELLISON. AND I ASKED MR. ELLISON,

24

THE COURT: WHAT KIND OF DOCUMENT IS IT?

25

MR. PICKETT: I CAN SHOW IT TO YOU. IT'S

25

"AND THE ATTENDEES TO THIS MEETING ARE LISTED,

Page 1210
1

BUT YOU SEE ONE OF THEM IS MR. ROTTLER, DON'T YOU?"

Page 1212
1

EXHIBIT 432. IT'S ANOTHER EMAIL.

2

MR. ELLISON SAID, "I DO."

2

THE COURT: IT'S ONE OF YOUR EXHIBITS, 432?

3

"Q. AND AT THE TIME, WHAT WAS HIS JOB, DO

3

MR. PICKETT: YES.

4

THE COURT: OKAY. LET ME TAKE A LOOK AT IT.

4
5
6

YOU REMEMBER, JANUARY 2005?"
"HE WAS IN CHARGE OF ALL SUPPORT."
SO THAT'S IN JANUARY 2005. I DON'T KNOW THAT WE'VE

5
6

7

ESTABLISHED THAT AS OF FEBRUARY 2007, BUT THAT WAS THE TESTIMONY 7

8
9
10

(PAUSE IN THE PROCEEDINGS.)
THE COURT: I DON'T HAVE IT IN THE MEYER'S BINDER.
IS THERE ANOTHER PLACE I FIND IT?

FROM MR. ELLISON AS OF SOME OF THE DOCUMENTS WE GOT IN THROUGH

8

(PAUSE IN THE PROCEEDINGS.)

MR. ELLISON.

9

MR. PICKETT: HERE'S A COPY. IT'S --

THE COURT: THAT'S CLOSER. THAT'S CLOSER. WE JUST

10

(PAUSE IN THE PROCEEDINGS.)

11

DON'T HAVE IT AS OF 2007, ALTHOUGH THERE'S A FAIR INFERENCE THAT

11

MR. PICKETT: NOW, UNLIKE THE PRIOR DOCUMENT, THIS IS

12

CAN BE RAISED THAT HE'S GOT THE SAME POSITION.

12

A DOCUMENT MR. MEYER RELIED ON. AND MR. ALLBRITTEN IS THE --

13

MR. PICKETT: SO ANY EMPLOYEE'S EMAIL IS IN?

13

AWKWARD SAYING -- HE IS THE HEAD OF SUPPORT FOR PEOPLESOFT IN

14

THE COURT: IT'S NOT ANY EMPLOYEE'S. IT'S AN AGENT.

14

PARTICULAR AT ORACLE.

15

THERE HAS TO BE A RELATIONSHIP, OBVIOUSLY, AND IT CAN'T BE ANY

15

16

JUST LOWER-LEVEL EMPLOYEE. BUT THIS, AS I UNDERSTAND IT, IS A

16

17

DIRECT REPORT TO THE CHIEF EXECUTIVE OFFICER. WHY WOULDN'T HE

17

18

BE AN AGENT?

18

THE COURT: IT'S THE SAME PARTY.

19

MR. PICKETT: IT IS DIFFERENT.
THE COURT: IT IS DIFFERENT, BUT I'M GOING TO ALLOW

19

(OFF-THE-RECORD DISCUSSION.)

THE COURT: OKAY. OKAY.
MR. MITTELSTAEDT: AND OUR POSITION IS IT'S DIFFERENT
WHEN THE --

20

THE COURT: WHY WOULDN'T --

20

21

MR. PICKETT: HE CERTAINLY IS AN OFFICER. I'M NOT

21

IT -- SINCE I ALLOWED THREE IN ON A MUCH THINNER BASIS FOR THE

22

DISPUTING THAT. ALTHOUGH, WHAT I AM DISPUTING IS THAT ALL OF

22

DEFENSE THE OTHER DAY, I'M GOING TO ALLOW THE PLAINTIFF TO GET A

23

THE STATEMENTS IN HERE ARE WITHIN THE SCOPE OF HIS EMPLOYMENT.

23

SIMILAR NUMBER IN THAT OTHERWISE ARE --

24

THERE ARE A BUNCH OF STATEMENTS --

24

MR. PICKETT: TWO LEFT OR THREE -- WELL, TWO LEFT.

25

THE COURT: THREE. TWO MORE.

25

THE COURT: WELL, IT'S NOT WITHIN THE SCOPE OF HIS

7 (Pages 1209 to 1212)
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 8
PAGES 1421 - 1511
OAKLAND, CALIFORNIA
MONDAY, NOVEMBER 15, 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 1466

Page 1468

1

A. OF COURSE.

1

Q. DIFFERENTLY TOPIC. AS C.E.O. OF SAP, ARE YOU GENERALLY

2

Q. YOU MENTIONED A WINDOW OF OPPORTUNITY THAT WAS THERE FOR

2

FAMILIAR WITH THE -- THE FACT THAT SAP HAS LICENSES, AND

3

SAFE HARBOR. WAS THAT THE SAME WINDOW OF OPPORTUNITY FOR SAFE

3

DIFFERENT SORTS OF INTELLECTUAL PROPERTY AGREEMENTS WITH OTHER

4

PASSAGE?

4

COMPANIES?

5

A. YES, I THINK SO, BECAUSE, AGAIN, AT THAT TIME, YOU HAVE TO

5

A. YES.

6

THINK LIKE THE CUSTOMER THINKS DURING THE SITUATION WHERE THEIR

6

Q. DO SOME OF THOSE COMPANIES INCLUDE THROUGH COMPETITORS OF

7

WORLD HAS BEEN TURNED UPSIDE-DOWN. AND WHEN THEIR WORLD'S

7

SAP?

8

TURNED UPSIDE-DOWN, THEY'RE THEN IN THE INVESTIGATION MODE ON

8

A. YES.

9

WHAT THEIR OPTIONS ARE. AND TO THE EXTENT THAT WE COULD CREATE

9

Q. AS YOU UNDERSTAND IT, DOES SAP TYPICALLY ENTER INTO THOSE

10

CONFIDENCE IN SAP AND DOUBT ABOUT THE COMPETITION, THAT WAS GOOD 10

AGREEMENTS BASED ON AN UPFRONT, LUMP-SUM PAYMENT?

11

FOR SOFTWARE SALES.

11

A. NEVER.

12

Q. YOU MENTIONED THE WORLD BEING TURNED UPSIDE-DOWN. I'M

12

Q. TYPICALLY HOW ARE PAYMENT ARRANGEMENTS MADE IN GENERAL? I'M

13

GUESSING I KNOW WHAT YOU MEAN, BUT WOULD YOU JUST CLARIFY FOR

13

NOT ASKING YOU ABOUT ANY PARTICULAR ONE.

14

THE JURY WHAT THAT IS?

14

A. WELL, TYPICALLY, IT'S A RUNNING ROYALTY. SO AS WE HAVE

15

A. SURE. IF A CUSTOMER INVESTED IN PEOPLESOFT AND JDE AND HAD

15

SUCCESS WITH CUSTOMERS IN THE MARKETPLACE, THERE IS A

16

THOSE SYSTEMS, LIKED THOSE SYSTEMS, LIKED THE PEOPLE THEY WERE

16

REVENUE-SHARING MODEL BETWEEN ONE COMPANY AND ANOTHER COMPANY.

17

DEALING WITH, WHEN THEY REALIZED THAT THEY WERE UNCERTAIN WHAT 17

AND AS CUSTOMERS ARE CONVINCED THAT THE VALUE IS THERE, BOTH

18

ORACLE'S INTENTIONS MIGHT BE, THEY THEN WERE IN A SITUATION OF

18

SIDES WIN.

19

EXPLORING THEIR OPTIONS, YOU KNOW, WHAT MIGHT ORACLE DO. WILL

19

Q. DIFFERENT TOPIC.

20

THEY CONTINUE THE MAINTENANCE? WILL THEY FORCE ME OFF OF

20

YOU KNOW, YOU COULD INFER FROM WHAT YOU WERE SAYING

21

MAINTENANCE AND FORCE ME TO UPGRADE TO A NEW SYSTEM?

21

THAT IT MIGHT HAVE BEEN A MISTAKE TO BUY TOMORROWNOW. DO YOU

22

AND THEN SAP, SINCE SAP WAS A WELL-RESPECTED BRAND IN

22

THINK IT WAS?

23

THE INDUSTRY, WAS RIGHT OUT THERE IN THE MEDIA SAYING, "WE HAVE

23

A. YES, I DO.

24

A GREAT SYSTEM, WE THINK WE HAVE A BETTER SYSTEM THAN THEY DO.

24

Q. WHY?

25

WHILE YOU'RE CONSIDERING YOUR OPTIONS, PLEASE CONSIDER THIS."

25

A. WELL, THE FACT THAT WE'RE ALL HERE IN THE FIRST PLACE MAKES

1

IT VERY CLEAR TO ME THAT IT WAS A MISTAKE. AND IT'S OBVIOUS

Page 1467
1

AND THE SAFE HARBOR PROGRAM WAS, IN ADDITION TO

Page 1469

2

PROVING THAT WE'RE BETTER, WE'LL ALSO GIVE YOU A VERY COMPELLING

2

THAT THEY WERE DOING THINGS THAT NEEDED MUCH CLOSER SCRUTINY.

3

FINANCIAL OFFER TO TRADE IN YOUR OLD LICENSES FOR NEW ONES.

3

AND ANYTHING THAT HARMS THE BRAND AND THE REPUTATION OF OUR

4

Q. I'M GOING TO TAKE A RISK, AND I'M GOING TO CHALLENGE YOU ON

4

COMPANY, I TAKE VERY SERIOUSLY, AND I'M SORRY FOR THAT. SO I

5

SOMETHING HERE. YOU KNOW, WE SWITCHED FROM WINDOWS COMPUTER TO 5

6

APPLE COMPUTERS NOT TOO LONG AGO AT OUR HOUSE.

6

MR. LANIER: THANK YOU, SIR.

7

A. SURE.

7

THE WITNESS: THANK YOU.

8

Q. AND WE SURVIVED THROUGH THAT. IS IT REALLY THAT BIG A DEAL

8

MR. LANIER: PASS THE WITNESS, YOUR HONOR.

9

TO SWITCH THE ERP SYSTEM AT A COMPANY?

9

THE COURT: ALL RIGHT.

THINK IT WAS A MISTAKE. YES.

10

A. IT REALLY IS A BIG DEAL.

10

11

Q. WHY?

11

12

A. WELL, YOU -- IF YOU THINK OF IT AS A PLUMBING IN A HOUSE,

12

BY MR. BOIES:

13

YOU'RE ESSENTIALLY REWIRING ALL THE PLUMBING IN THE HOUSE, AND

13

Q. GOOD MORNING, MR. MCDERMOTT.

14

THAT'S A BIG DEAL. SHEETROCK HAS TO COME OFF. PEOPLE HAVE TO

14

A. GOOD MORNING, MR. BOIES.

15

PUT NEW PIPES INTO TWO-BY-FOURS, AND THEY HAVE TO DO THAT

15

Q. WE HAVEN'T MET, BUT WE KNOW WHO EACH OTHER ARE?

16

THROUGHOUT THE WHOLE ENTERPRISE. IT'S A BIG COMMITMENT. AND

16

A. YES, SIR. I NOTICED YOU WENT TO NORTHWESTERN AT ONE POINT

17

CUSTOMERS WILL ONLY MAKE THAT COMMITMENT IF THEY SEE THE

17

IN YOUR CAREER AS WELL.

18

BUSINESS RATIONALE IS ROCK SOLID AND THE GAIN FAR OUTWEIGHS THE

18

Q. YES. I WAS BORN IN LOUISVILLE, ILLINOIS.

19

DIFFICULTY OF CHANGE, SO IT'S A BIG CONVERSATION.

19

A. I WENT TO NORTHWESTERN BUSINESS SCHOOL.

20

Q. IS MAINTENANCE AND SAVING MONEY ON MAINTENANCE A

20

Q. WELL, GOOD. IT'S A FINE SCHOOL. LITTLE COLD IN THE

21

SUFFICIENTLY COMPELLING BUSINESS RATIONALE IN YOUR EXPERIENCE

21

WINTERTIME.

22

WITH CUSTOMERS?

22

A. YES, INDEED.

23

A. ABSOLUTELY NOT.

23

Q. WHEN DID YOU FIRST BECOME AWARE THAT SAP HAD ENGAGED IN

24

Q. JUST A COUPLE MORE QUESTIONS, MR. MCDERMOTT.

24

CONTRIBUTORY COPYRIGHT INFRINGEMENT OF ORACLE'S SOFTWARE?

25

A. SURE.

25

A. WHEN THE ORACLE LAWSUIT WAS ANNOUNCED.

CROSS-EXAMINATION?
CROSS-EXAMINATION

13 (Pages 1466 to 1469)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

1473

1475
Q. WELL, LET ME JUST SEE IF I UNDERSTAND WHAT YOU'RE SAYING.

1

Q. SO IT'S YOUR TESTIMONY THAT YOUR RESPONSIBILITY ON THE

1

2

EXECUTIVE BOARD WAS SIMPLY LIMITED TO SALES AND YOU DIDN'T HAVE

2

3

ANY RESPONSIBILITY FOR ANYTHING ELSE; IS THAT TRUE?

3

A. YES.

4

A. YES.

4

Q. ALL RIGHT.

5

Q. SO IT WOULD BE YOUR TESTIMONY THAT YOU DIDN'T HAVE ANY

5

6

RESPONSIBILITY AT ALL FOR TOMORROWNOW UNTIL YOU BECAME C.E.O.?

6

TO DO THE THINGS THAT WERE WRONG, CORRECT?

7

A. YES.

7

A. YES.

8

Q. AND BY THAT TIME, TOMORROWNOW HAD BEEN SHUT DOWN?

8

Q. AND YOU NOW KNOW WHO THOSE PEOPLE WERE THAT DID THE THINGS

9

A. YES.

9

THAT WERE WRONG, CORRECT?

YOU UNDERSTAND THAT SAP WAS WRONG?

NOW, AND SAP OBVIOUSLY IS PEOPLE, AND SO SOMEBODY HAD

10

Q. NOW, YOU RECOGNIZE THAT SAP WAS WRONG TO HAVE INFRINGED ON

10

A. THAT'S CORRECT.

11

ORACLE'S COPYRIGHTS, CORRECT?

11

Q. AND WHAT I'M ASKING YOU IS, YOU HAVE NOT DONE ANYTHING TO

12

A. YES, I DO.

12

DISCIPLINE ANY OF THOSE PEOPLE YET, BUT YOU PLAN TO DO SOMETHING

13

Q. NOW, WHEN YOU BECAME C.E.O., DID YOU DISCIPLINE ANYBODY FOR

13

TO DISCIPLINE THOSE PEOPLE?

14

THAT?

14

A. WHAT I AM AWARE OF AT THIS TIME IS THAT THE TOMORROWNOW

15

A. I DID NOT.

15

SUBSIDIARY ACTED INAPPROPRIATELY, AND I AM ALSO AWARE THAT SAP

16

Q. OKAY. THE PEOPLE WHO HAD BEEN INVOLVED WERE STILL AT SAP,

16

TOOK DISCIPLINARY ACTIONS THERE. I AM NOT AWARE OF PEOPLE

17

CORRECT?

17

WITHIN SAP AT THIS TIME THAT HAVE DONE SOMETHING THAT IS

18

A. THE PEOPLE THAT INVOLVED -- INVOLVED, YES.

18

PARTICULARLY WRONG.

19

Q. AND WERE ANY OF THE SAP OFFICERS OR DIRECTORS EVER

19

20

DISCIPLINED IN ANY WAY FOR WHAT HAPPENED?

20

ORACLE, SHOULD IT COME TO OUR ATTENTION THAT PEOPLE IN SAP DID

21

A. NOT THAT I AM AWARE OF, SIR.

21

THE WRONG THING, WE'LL STAND UP TO IT, JUST LIKE WE STOOD UP TO

22

Q. DID YOU THINK THEY SHOULD HAVE BEEN?

22

THE RESOLUTION WITH ORACLE.

23

A. AT THIS STAGE OF THE SITUATION, WE WERE FOCUSED ON

23

Q. SIR, ARE YOU SAYING THAT YOU THINK THE ONLY PEOPLE WHO DID

24

CORRECTING THE SITUATION AND COMING UP WITH A RESOLUTION WITH

24

ANYTHING WRONG WERE AT TOMORROWNOW?

25

ORACLE.

25

A. NO, I'M SAYING THAT --

WE HAVE FOCUSED ON THE RESOLUTION OF THE MATTER WITH

1474

1476

Q. BUT IN ADDITION TO COMING UP WITH A RESOLUTION AT ORACLE,

1

Q. OKAY. OKAY. THAT'S --

DIDN'T YOU WANT, AS A MATTER OF RUNNING THE COMPANY THAT YOU

2

A. OKAY.

3

WERE NOW THE CO-C.E.O. FOR, TO BE SURE THIS NEVER HAPPENED

3

Q. SOME OF THE PEOPLE WHO DID THINGS WRONG WERE AT SAP,

4

AGAIN?

4

CORRECT?

5

A. YES.

5

A. MANAGEMENT SHOULD HAVE DONE A MUCH BETTER JOB OF MANAGING

6

Q. AND TO DO THAT, DIDN'T YOU THINK YOU HAD TO SEND A MESSAGE

6

TOMORROWNOW, CORRECT.

7

TO EMPLOYEES THAT THIS WAS UNACCEPTABLE CONDUCT?

7

Q. AND, INDEED, YOU WERE ON THE EXECUTIVE BOARD -- IN FACT, YOU

8

A. I BELIEVE THAT WE ENTERED INTO THE TOMORROWNOW ACQUISITION

8

WERE THE CO-C.E.O. WHEN SAP ADMITTED THE CONTRIBUTORY

9

TOO QUICKLY WITHOUT THE RIGHT DUE DILIGENCE. AND I BELIEVE WHEN

9

INFRINGEMENT, CORRECT, SIR?

1
2

10

YOU MAKE MOVES ON PERSONNEL, IT SHOULD BE QUITE THOUGHTFUL AND

10

A. CORRECT.

11

WELL -- WELL PLANNED OUT.

11

Q. AND SO YOU KNOW FROM PERSONAL EXPERIENCE THAT SAP ITSELF --

12

NOT TOMORROWNOW, BUT SAP ITSELF DID SOMETHING WRONG, CORRECT?

AND MY INVOLVEMENT AT THAT POINT WAS REALLY IN

12
13

DEALING WITH ONE SITUATION AT A TIME. AND IT'S BEEN FOCUSED ON

13

A. YES.

14

THE RESOLUTION WITH ORACLE. THAT'S NOT TO SAY THAT THERE

14

Q. OKAY. NOW, FOCUSING ON SAP ITSELF, NOT TOMORROWNOW, SAP

15

WOULDN'T BE FURTHER INVOLVEMENT OF SAP IN LOOKING INTO THE

15

ITSELF, IN GERMANY.

16

EMPLOYEES THAT MAY OR MAY NOT HAVE HAD A HAND IN SOMETHING TO DO

16

A. UM-HMM.

17

WITH TOMORROWNOW 'CAUSE THAT, I'M SURE, WILL BE FORTHCOMING AS

17

Q. WHAT HAVE YOU DONE, IF ANYTHING, TO DISCIPLINE THE PEOPLE

18

WELL.

18

THAT WERE THERE THAT DID SOMETHING WRONG?

19

Q. LET ME SEE IF I UNDERSTAND WHAT YOU'RE SAYING. ARE YOU

19

A. WE HAVE -- I PERSONALLY HAVE NOT TAKEN ANY DISCIPLINARY

20

SAYING THAT YOU PLAN TO DISCIPLINE SOME OF THE SAP EMPLOYEES

20

ACTION WITH THOSE PEOPLE AT THIS TIME.

21

THAT WERE RESPONSIBLE FOR TOMORROWNOW BUT YOU JUST HAVEN'T

21

Q. OKAY. DO YOU PLAN TO?

22

GOTTEN TO IT YET?

22

A. I PLAN ON MAKING SURE THAT THIS WHOLE SCENARIO IS EVALUATED

23

A. I'M SAYING I'M UNAWARE AT THIS TIME THAT THIS IS AN ISSUE,

23

THOUGHTFULLY AND IN GREAT DETAIL.

24

BUT I WILL TELL YOU THAT IF SUCH AN ISSUE EXISTS, IT WILL BE

24

Q. THIS CASE WAS BROUGHT IN 2007, CORRECT?

25

DEALT WITH ONCE WE GET THROUGH THIS PHASE OF THE PROCESS.

25

A. CORRECT.

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

1477
1
2

Q. IT'S NOW ALMOST THE END OF 2010, RIGHT?
HOW LONG DOES IT TAKE TO EVALUATE WHETHER IT'S

1479
1

AT THE SAME TIME?

2

A. I WILL GRANT YOU THAT, YES.
Q. OKAY.

3

APPROPRIATE TO DISCIPLINE PEOPLE FOR COMMITTING THIS COPYRIGHT

3

4

INFRINGEMENT?

4

5

MR. LANIER: OBJECTION, YOUR HONOR. IT'S BEEN GOING

NOW, I RAISE THIS NEXT LINE BECAUSE OF -- YOU WEREN'T

5

HERE AT DURING THE OPENING STATEMENTS, WERE YOU, SIR?

6

ON A WHILE. IT'S NOT RELEVANT. HE'S ARGUING WITH HIM AT THIS

6

A. YES, I WAS.

7

POINT, AND I'M AFRAID HE'S GETTING INTO THE GROUND COVERED BY

7

Q. YOU WERE?

8

THE ATTORNEY-CLIENT PRIVILEGE AS WELL.

8

A. YES.

9

Q. OKAY. WELL, YOU HEARD YOUR COUNSEL SAY THAT SAP WANTED TO

9

THE COURT: ALL RIGHT. WE'LL MAKE SURE THAT THAT

10

DOESN'T HAPPEN. I'M GOING TO OVERRULE THAT OBJECTION, BUT BE

10

TAKE RESPONSIBILITY FOR WHAT HAD HAPPENED?

11

CAREFUL WITH REGARD TO THAT ISSUE.

11

A. YES.

12

Q. NOW, AS PART OF THAT, HAS SAP EVER APOLOGIZED TO ORACLE FOR

12

THE WITNESS: COULD YOU PLEASE RESTATE THE QUESTION.

13

BY MR. BOIES:

13

TAKING ITS SOFTWARE?

14

Q. CERTAINLY. AND I WANT TO MAKE CLEAR THAT I'M NOT ASKING FOR

14

A. I AM NOT AWARE OF AN APOLOGY.

15

ATTORNEY-CLIENT DISCUSSIONS. I'M ASKING FOR WHAT WAS DONE AS A

15

Q. WOULD YOU LIKE TO DO THAT NOW, SIR?

16

BUSINESS MATTER AT THE BOARD.

16

A. I WOULD. YES, I AM. I AM SORRY TO ORACLE.

17

A. UH-HUH.

17

Q. OKAY. AND I APPRECIATE THAT. BECAUSE I THINK IT'S

18

Q. AND WHAT I'M ASKING IS YOU'VE SAID THAT PEOPLE AT SAP DID

18

IMPORTANT --

19

THINGS WRONG AND YOU MAY DISCIPLINE THEM SOMETIME IN THE FUTURE,

19

A. UM-HMM.

20

CORRECT?

20

Q. -- THAT THAT SORT OF THING HAPPEN.

21

A. YES.

21

A. I AGREE WITH YOU.

22

Q. AND WHAT I'M ASKING IS TO PUT IT BLUNTLY AND I DON'T MEAN

22

Q. OKAY. NOW, LET ME TURN TO --

23

THIS IN ANY KIND OF A RUDE WAY, BUT WHAT'S TAKING SO LONG?

23

24

A. FIRST, YOU HAVE TO UNDERSTAND, AS I KNOW YOU DO, THAT

24

GET BY US. WE'RE OVERDUE FOR OUR FIRST BREAK OF THE MORNING, SO

25

THERE'S AN EXECUTIVE BOARD AND A SUPERVISORY BOARD OF SAP. TO

25

MAYBE THIS WOULD BE A GOOD TIME.

THE COURT: MR. BOIES, EXCUSE ME. I'VE LET THE TIME

1478

1480

1

THE EXTENT THAT SOMETHING WAS DONE IN AN INAPPROPRIATE WAY, THE

1

MR. BOIES: THANK YOU.

2

SUPERVISORY BOARD WILL HAVE TO BE A PART OF THE DECISION-MAKING

2

THE COURT: ALL RIGHT.

3

PROCESS.

3

4

OUR ATTENTION HAS BEEN FOCUSED ON THE RESOLUTION OF

4

5

THE CASE WITH ORACLE. IT IS ENTIRELY POSSIBLE -- AND I DON'T

5

6

THINK IT'S APPROPRIATE FOR ME TO HAVE TO DISCUSS TODAY MY

6

7

PERSONNEL MATTERS IN THE COMPANY -- THAT FURTHER ACTION, SHOULD

7

8

IT BE NECESSARY, WOULD BE TAKEN. IT JUST HASN'T BEEN TAKEN YET.

8

9

THAT'S IT.

9

LADIES AND GENTLEMEN OF THE JURY, YOU'RE EXCUSED FOR
15 MINUTES.
(RECESS TAKEN AT 10:24 A.M.)
(PROCEEDINGS RESUMED AT 10:43 A.M.)
THE CLERK: PLEASE BE SEATED AND COME TO ORDER.
(THE FOLLOWING PROCEEDINGS WERE HEARD IN THE PRESENCE
OF THE JURY:)

10

Q. ARE YOU SUGGESTING THAT THERE'S SOMETHING ABOUT THE ONGOING

10

11

RESOLUTION OF THE CASE THAT PREVENTS YOU FROM TAKING

11

12

DISCIPLINARY ACTION?

12

Q. I'M GOING TO BEGIN BY OFFERING WITHOUT OBJECTION CERTAIN

13

A. NO, I'M NOT SUGGESTING THAT.

13

DOCUMENTS THAT I'LL BE USING. THOSE ARE PLAINTIFFS' EXHIBITS

14

Q. OKAY.

14

117, 146, 148, 185, 197, 227, 231, 332, 333, 443, 462, 671,

15

A. I'M SUGGESTING THAT IT'S A MATTER OF PRIORITIES, AND

15

1236, 1662, 4836, 4850, AND 4024.

16

ABSOLUTELY THE PRIORITY IN THIS INTERIM TIME -- I BECAME

16

17

CO-C.E.O. IN FEBRUARY -- HAS BEEN ON STEPPING UP AND DOING THE

17

DEFENDANTS' EXHIBIT. A424 (SIC) AND ALSO A148, WHICH IS A

18

RIGHT THING AND RESOLVING THE MATTER WITH ORACLE. TO THE EXTENT

18

DEFENDANTS' EXHIBIT AS WELL?

19

THAT FURTHER PERSONNEL ACTIONS ARE APPROPRIATE, THEY WILL BE

19

20

TAKEN.

20

21

Q. WOULD YOU GRANT ME THIS AND MAYBE WE CAN STOP THIS LINE OF

21

MR. LANIER: NO OBJECTION.

22

QUESTION?

22

THE COURT: ALL RIGHT.

23

A. ALL RIGHT.

23

(PLAINTIFFS' EXHIBITS 117, 146, 148,

24

Q. WOULD YOU GRANT ME THAT YOU COULD HAVE DONE BOTH. YOU COULD

24

185, 197, 227, 231, 332, 333, 443,

25

HAVE PURSUED A RESOLUTION WITH ORACLE AND DISCIPLINED THE PEOPLE

25

462, 671, 1236, 1662, 4836, 4850

THE COURT: ALL RIGHT. CONTINUE.
MR. BOIES: THANK YOU, YOUR HONOR.

THAT'S -- I'M SORRY, IT'S A4 -- 4024. THAT'S A

THE COURT: ALL RIGHT. YOU INDICATE NO OBJECTION TO
ANY OF THESE.

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

Page 1510
1
2
3

THE COURT: ALL RIGHT. I WILL TAKE A LOOK AND
DECIDE IF I WANT TO REVISIT IT OR NOT.
MY UNDERSTANDING WAS YOU WERE RAISING A DIFFERENT

4

GROUND THAN YOU RAISED BEFORE. I HAVEN'T HAD A CHANCE TO READ

5

IT, BUT IT APPEARS TO ME THAT YOU ARE NOW ARGUING THAT THE

6

APPROPRIATE HEARSAY EXCEPTION WOULD BE FOR ADOPTIVE ADMISSIONS?

7
8
9
10
11
12
13

MR. LANIER: THAT'S CORRECT, YOUR HONOR.
THE COURT: WHICH IS NOT SOMETHING YOU ARGUED
BEFORE; IS THAT THE POSITION YOU ARE TAKING?
MR. LANIER: YES, YOUR HONOR.
THE COURT: YOU CERTAINLY COULD HAVE ARGUED IT
BEFORE.
MR. LANIER: YOUR HONOR'S RULING THAT WE HADN'T

14

ARTICULATED A BASIS ON WHICH IT WAS ADMISSIBLE OR AN EXCEPTION

15

THAT WAS APPLICABLE, PEOPLE WENT BACK AND THOUGHT ABOUT IT AND

16

CAME UP WITH THAT ONE.

17
18
19
20

NOT TO BE UNFAIR TO THEM, WE HAVE GIVEN YOU OUR
POSITION IN WRITING.
THE COURT: RIGHT. JUST GIVE ME A BRIEF FIRST THING
IN THE MORNING AND I WILL TAKE A LOOK AT IT AND DECIDE.

21

MR. HOWARD: THAT IS WHAT WE WILL DO.

22

THE COURT: ALL RIGHT. WE ARE ADJOURNED.

23

MR. LANIER: THANK YOU.

24

MR. HOWARD: THANK YOU.

25

(PROCEEDINGS ADJOURNED AT 1:28 P.M.)

Page 2010
CERTIFICATE OF REPORTER
WE, RAYNEE H. MERCADO AND DIANE E. SKILLMAN, OFFICIAL
REPORTERS FOR THE UNITED STATES COURT, NORTHERN DISTRICT OF
CALIFORNIA, HEREBY CERTIFY THAT THE FOREGOING PROCEEDINGS IN
C07-01658PJH, ORACLE USA, INC., ET AL. V. SAP AG, ET AL., WERE
REPORTED BY US ON, MONDAY, NOVEMBER 15, 2010, CERTIFIED
SHORTHAND REPORTERS, AND WERE THEREAFTER TRANSCRIBED UNDER OUR
DIRECTION INTO TYPEWRITING; THAT THE FOREGOING IS A FULL,
COMPLETE AND TRUE RECORD OF SAID PROCEEDINGS AS BOUND BY US AT
THE TIME OF FILING.
THE VALIDITY OF THE REPORTER'S CERTIFICATION OF
SAID TRANSCRIPT MAY BE VOID UPON DISASSEMBLY AND/OR REMOVAL
FROM THE COURT FILE.

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

___________________________________
DIANE E. SKILLMAN, CSR, RPR, FCRR

TUESDAY, NOVEMBER 16,

24 (Pages 1510 to 2010)
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 1525

Page 1527

1

SOME OF THEM PURPORT TO INSTRUCT THE JURY AS TO WHAT THE LAW IS 1

THAT CHANGES HIS DOLLAR AMOUNT. I THINK IT'S APPROPRIATE AT THE

2

IN TERMS OF GEORGIA PACIFIC FACTORS. SOME OF THEM PURPORT

LAST MINUTE, IF THEY WANT TO CHANGE THEIR MIND, THEY CAN CHANGE

3

INACCURATELY, IN OUR VIEW, TO TRY TO SUMMARIZE WHAT OUR EXPERT 3

4

SAID.

4

OBVIOUSLY, THE JURY HAS HEARD OUR EXPERT. IT'S UP TO

5

2

THEIR MIND.
MR. CLARKE HAS CHANGED HIS MIND ON TWO CUSTOMERS, AND

5

UNLIKE MR. MEYER, WE HAVE SUBMITTED A REVISED SCHEDULE TO THE

6

THE JURY TO DETERMINE WHAT OUR EXPERT SAID, NOT FOR HIM TO

6

PLAINTIFFS TO PUT THEM ON NOTICE SO THEY DON'T HEAR ABOUT IT FOR

7

SUMMARIZE IT.

7

THE FIRST TIME ON THE STAND. SO IT INCREASES THE DAMAGES.

THE COURT: ALL RIGHT. SO HOW WOULD YOU LIKE TO

8
9

HANDLE THIS, MR. BOIES? DO YOU WANT TO MAKE AN OBJECTION ON A

8

I'M HAPPY TO GO WITH THE LOWER DAMAGE AMOUNT. BUT IF

9

MR. BOIES IS GOING TO GET UP AND CROSS-EXAMINE HIM AND SAY, WHY

10

SLIDE-BY-SLIDE BASIS OF WHAT -- I MEAN, HERE WE ARE. IT'S 8:30

10

DID YOU INCLUDE THESE, MR. CLARKE SHOULD BE ABLE TO SAY, WELL,

11

IN THE MORNING. YOU'RE TALKING ABOUT SOMETHING THAT WAS

11

ACTUALLY, I'VE CHANGED MY MIND, AND NOW I'M -- INSTEAD OF

12

PRODUCED LAST NIGHT. WHAT IS IT THAT YOU WANT ME TO DO ABOUT

12

EXCLUDING THEM, I'M INCLUDING THEM.

13

IT?

13

THE COURT: HE CAN SAY WHATEVER IS THE TRUTH. HE CAN

14

MR. BOIES: YOUR HONOR, GIVEN THE FACT OF THE TIME, I

14

SAY WHATEVER HE WANTS. I WOULDN'T RULE THAT HE COULDN'T SAY

15

THINK PROBABLY THE BEST THING TO DO IS TO GIVE THE COURT THE

15

WHATEVER --

16

DIFFERENT VERSIONS OF THE SLIDES THAT THEY'VE PRODUCED SO THAT

16

17

YOU HAVE THEM, AND THEN AS THEY GET TO THEM -- AND I DON'T KNOW 17

18

WHEN THEY'RE GOING TO GET TO THEM -- THE ONES THAT THEY GET TO

18

19

AFTER THE FIRST BREAK, OBVIOUSLY, WE CAN DEAL WITH AT THAT

19

20

POINT.

20

21

BUT WITH RESPECT TO THE ONES THAT THEY GET TO NOW,

21

22

I'LL HAVE TO SIMPLY RISE, AND THE COURT WILL LOOK AT IT AND --

22

23

AND MAKE A DECISION.

23

24

THE COURT: I DON'T QUITE UNDERSTAND WHY ARE THERE

25

ARE CHANGES BEING MADE TO THE SLIDES AT THIS LAST DATE.

24
25

MR. BOIES: NO, NOBODY'S SAYING THAT HE CAN'T ANSWER
QUESTIONS -(SIMULTANEOUS COLLOQUY.)
THE COURT: HOLD ON. HOLD ON.
THE ONLY WAY TO HANDLE THIS IS ON A SLIDE-BY-SLIDE
BASIS. I NEED TO SEE THEM, AND YOU CAN MAKE YOUR ARGUMENTS.
STPHAOT: THANK YOU, YOUR HONOR.
THE COURT: OKAY. AND IF WE HAVE TO DO IT IN FRONT
OF THE JURY, WE'LL DO IT IN FRONT OF THE JURY.
MR. BOIES: AND THE ONLY THING I WOULD ADD, THEY KEEP

Page 1526
1

MR. McDONELL: THE PRIMARY CHANGE COUNSEL REFERRED TO

Page 1528
1

SAYING "TWO CUSTOMERS." THAT'S -- THEY'VE DOUBLED THE NUMBER OF
CUSTOMERS. IN OTHER WORDS, THEY'VE GONE FROM TWO TO FOUR.

2

WAS THE RESULT OF MR. CLARKE'S INTENSIVE PRETRIAL PREPARATION

2

3

WHERE HE WENT BACK AND LOOKED AT ALL THE MATERIAL THAT HE'S

3

4

WORKED WITH AND TOOK INTO CONSIDERATION INFORMATION MR. MEYER 4

5

TESTIFIED ABOUT HERE IN THIS COURTROOM.

THE COURT: ALL RIGHT.
WITH REGARD TO THE MOTION THAT WAS BRIEFED YESTERDAY

5

BY THE DEFENDANTS, ESSENTIALLY THE REQUEST THAT THE COURT

6

AND THEN THE DOLLAR CHANGE THAT HE'S REFERRING TO IS

6

RECONSIDER THE AT-RISK REPORT CUSTOMER COMMENTS, I'M PREPARED TO

7

MR. CLARKE DECIDED THAT WITH RESPECT TO TWO CUSTOMERS, HE WAS

7

RULE ON THAT.

8

GOING TO INCLUDE THEM IN HIS CALCULATION OF INFRINGER'S PROFITS

8

MR. MCDONELL YOU PRESENTED THAT, DID YOU NOT?

9

DAMAGES WHERE HE HAD PREVIOUSLY EXCLUDED THEM, AND THAT WAS

9

MR. McDONELL: YES, YOUR HONOR.

10

SIMPLY BASED ON A CONTINUING AND INTENSIVE REVIEW OF THE

10

11

INFORMATION THAT HE'S BASING HIS OPINION ON IN THE RAMP-UP TO

11

I READ YOUR BRIEF. I DID NOT READ THE VOLUMINOUS DOCUMENTS THAT

12

TRIAL.

12

YOU ALL SUBMITTED BECAUSE I DIDN'T HAVE AN OPPORTUNITY TO DO SO.

13

IT'S HARD TO IMAGINE ANY PREJUDICE WHEN WHAT THIS --

13

THE COURT: OKAY. ALL RIGHT. I'VE READ YOUR BRIEF;

AND AT THIS TIME, I'M GOING TO DENY YOUR REQUEST.

14

THE EFFECT OF THIS IS IT HAS INCREASED THE DAMAGES THAT

14

I'M NOT GOING TO ALLOW IT IN. I RULED PRIOR TO TRIAL THAT YOU

15

MR. CLARKE IS TESTIFYING TO.

15

HAD NOT CITED AN EXCEPTION TO THE HEARSAY RULE THAT I FOUND

16

PERSUASIVE. I LOOKED AT THE ADDITIONAL ONE CASE THAT YOU CITED,
AND IT DOESN'T CHANGE MY VIEW.

16

THE COURT: HMM. WE'LL DO IT -- WE'LL HAVE TO HANDLE

17

IT ON A INDIVIDUAL BASIS. YOU CAN OBJECT TO EVERY SINGLE ONE OF

17

18

THEM IF YOU WISH.

18

19

MR. McDONELL: AND, YOUR HONOR, JUST TO PREVIEW,

I THINK ORACLE'S POSITION IS -- IS THE CORRECT ONE.

19

THEY WEREN'T -- THESE CUSTOMER COMMENTS WEREN'T ADOPTED BY

20

THESE SLIDES ARE DEMONSTRATIVE, OPINION. THEY ARE NOT INTENDED

20

ORACLE. IN FACT, TO THE EXTENT THAT SOME OF THE COMMENTS WERE

21

TO BE THE EVIDENCE.

21

COMPLAINTS, IT WOULD BE ODD TO FIND THAT ORACLE ADOPTED THEM AS

22

THEIR OWN.

22
23
24
25

MR. MITTELSTAEDT: YOUR HONOR, COULD I JUST ADD THIS
SO WE DON'T HAVE TO CONFUSE THIS IN FRONT OF THE JURY?
WHEN MR. MEYER TESTIFIED, HE TESTIFIED THAT HE WAS

23

SO, THEREFORE, THE CUSTOMER COMMENTS STILL, IN MY

24

VIEW, ARE HEARSAY, AND THEY'RE NOT SUFFICIENTLY RELIABLE TO

CHANGING HIS MIND ON THREE CUSTOMERS. WE DIDN'T OBJECT TO THAT. 25

WARRANT ADMISSION UNDER THE RESIDUAL HEARSAY EXCEPTION.

5 (Pages 1525 to 1528)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR

Page 1529

Page 1531

1

SO YOUR REQUEST IS DENIED.

1

Q. AND HOW LONG DID YOU SERVE IN THE AIR FORCE AFTER COLLEGE?

2

MR. HOWARD: THANK YOU, YOUR HONOR.

2

A. AFTER COLLEGE, IT WAS ABOUT TWO MORE YEARS.

3

THE COURT: OKAY. LET'S BRING THE JURY.

3

Q. AND AFTER THE AIR FORCE, WHAT DID YOU DO?

4

(THE FOLLOWING PROCEEDINGS WERE HEARD IN THE PRESENCE

4

A. I BECAME -- I WENT FROM THE SUBLIME TO THE RIDICULOUS. I --

5

I BECAME A CHARTERED ACCOUNTANT IN LONDON.

6

Q. AND WOULD YOU DESCRIBE TO US THE PROCESS OF BECOMING A

5
6

OF THE JURY:)
THE COURT: ALL RIGHT. GOOD MORNING, LADIES AND

7

CHARTERED ACCOUNTANT, AND ACTUALLY TELL US WHAT THAT IS, TOO.

8

COUNSEL, EVERYONE, BE SEATED.

8

A. YES. THE -- A CHARTERED ACCOUNTANT IS A LOT LIKE A C.P.A.

9

MR. MITTELSTAEDT, CALL YOUR NEXT WITNESS.

9

IT'S A SOMEWHAT MORE INTERNATIONAL QUALIFICATION. AND IT'S VERY

7

GENTLEMEN.

10

MR. MITTELSTAEDT: YES, YOUR HONOR.

10

DIFFICULT TO BECOME ONE. AND IT'S A THREE-YEAR TRAINING WHERE

11

GOOD MORNING.

11

YOU'RE -- WE CALLED IT ARTICLED, SO YOU'RE -- YOU HAVE A LEADER

12

THE COURT: GOOD MORNING.

12

WHO IS RESPONSIBLE FOR TAKING YOU THROUGH YOUR CAREER AND

13

MR. MITTELSTAEDT: THE DEFENDANTS CALL MR. STEPHEN

13

TEACHING YOU HOW TO BE AN ACCOUNTANT.

14

Q. AND DURING THAT PERIOD, WHAT KIND OF WORK WERE YOU DOING?

15

A. MY MAIN ROLE WAS TO -- AT FIRST TO DO ACCOUNTING FOR SMALLER

16

COMPANIES. I WOULD TRAVEL AROUND LONDON AND SHOW UP FOR A DAY

17

OR TWO HOURS AND DO THEIR ACCOUNTING. AND AT THE SAME TIME, I

18

WAS LEARNING TO DO AUDIT WORK. SO LATER, ONCE I FIGURED OUT THE

14

CLARKE.
(PAUSE IN THE PROCEEDINGS.)

15
16
17

THE CLERK: PLEASE STEP UP HERE. RAISE YOUR RIGHT
HAND.
STEPHEN K. CLARKE,

18
19

CALLED AS A WITNESS FOR THE DEFENDANTS, HAVING BEEN DULY SWORN, 19

ACCOUNTING, I STARTED TO DO AUDITING, TRAVELING AROUND FROM ONE

20

TESTIFIED AS FOLLOWS:

20

COMPANY TO ANOTHER TO SEE WHETHER THE BOOKS WERE BEING PROPERLY

21

THE CLERK: PLEASE STATE YOUR FULL NAME AND SPELL

21

KEPT.

22

YOUR LAST NAME FOR THE RECORD AND SPEAK CLEARLY INTO THE

22

Q. OKAY. AND WHAT WAS YOUR NEXT JOB?

23

MICROPHONE.

23

A. AFTER -- AFTER I BECAME A CHARTED ACCOUNTANT AND FULLY

24

QUALIFIED, I JOINED A SMALL AIRLINE IN -- JUST NORTH OF LONDON

25

AT STANSTED AIRPORT AND, AND I WAS THEIR CONTROLLER -- IT'S WHAT

24

THE WITNESS: MY NAME IS STEPHEN CLARKE, C-L-A-R-K-E.

25

Page 1530
DIRECT EXAMINATION

1

Page 1532
1

WE WOULD CALL THE CONTROLLER IN THE UNITED STATES.

2

BY MR. MITTELSTAEDT:

2

Q. YOUR NEXT JOB?

3

Q. MR. CLARKE, GOOD MORNING. WHAT IS YOUR ROLE IN THIS CASE?

3

A. MY NEXT JOB WAS WITH 20TH CENTURY FOX. I ALWAYS WANTED TO

4

A. IT WAS TO CALCULATE THE DAMAGES THAT ORACLE HAD SUFFERED AS 4

WORK IN A FOREIGN COUNTRY, SO I STARTED APPLYING TO FOREIGN

5

A RESULT OF COPYRIGHT INFRINGEMENT AND ALSO TO LOOK AT

5

COMPANIES AND GOT A JOB WITH 20TH CENTURY FOX. AND THEY MOVED

6

MR. MEYER'S ANALYSIS OF THAT SAME ISSUE AND COMMENT ON IT AS I

6

ME TO THE UNITED STATES IN 1980.

7

SAW FIT.

7

Q. WHAT KIND OF WORK WERE YOU DOING FOR 20TH CENTURY FOX?

8

Q. BEFORE WE GET INTO THAT, LET'S GET SOME BACKGROUND ON YOU.

8

A. I DID PREDOMINANTLY AUDIT WORK AGAIN, BUT VERY MUCH OF AN

9

COULD YOU TELL THE JURY WHEN AND WHERE YOU WERE BORN?

9

INTERNATIONAL NATURE. I TRAVELED TO MANY COUNTRIES TO SEE

10

A. I WAS BORN IN A SMALL TOWN CALLED WIGAN NEAR MANCHESTER IN

10

WHETHER SOMEONE WAS STEALING FROM THE COMPANY, AND THEY USUALLY

11

ENGLAND. THE -- DID YOU JUST SAY WHEN, TOO?

11

WERE.

12

Q. YES.

12

13

A. 1950.

13

14

Q. AND WOULD YOU TELL US ABOUT YOUR EDUCATION BRIEFLY, PLEASE. 14

AND THE LICENSE AGREEMENTS TO COMPUTE HOW MUCH THE DIRECTORS AND

15

A. I STARTED HIGH SCHOOL IN THAT -- IN THAT LITTLE TOWN IN

15

THE STARS SHOULD BE PAID FOR THEIR -- THEIR WORK ON THE -- ON

16

1961. WE START WHEN WE'RE 11 YEARS OLD IN ENGLAND IN HIGH

16

THE SHOWS.

17

SCHOOL. I GRADUATED FROM THERE IN '69 AND WENT TO MANCHESTER

17

Q. AND WHEN DID YOU GET INTO THE CONSULTING BUSINESS?

18

UNIVERSITY, AND AT THE SAME TIME I WAS AT MANCHESTER, I ALSO

18

A. THAT WAS 1984 OR SO. MAYBE '85.

19

JOINED THE ROYAL AIR FORCE. SO STRAIGHT OUT OF HIGH SCHOOL, I

19

Q. OKAY. AND CAN YOU TELL US WHAT KIND OF CONSULTING YOU DID

20

JOINED THE ROYAL AIR FORCE, SO I WENT THE COLLEGE WHILE I WAS IN

20

AT THE START?

21

THE ROYAL AIR FORCE AS A PILOT.

21

A. YES, WHEN I FIRST STARTED CONSULTING, I WAS PREDOMINANTLY

22

Q. AND AFTER COLLEGE, WHAT DID YOU DO?

22

HELPING COMPANIES IMPROVE THEIR OPERATIONS, JUST TRYING TO MAKE

23

A. I THEN WENT TO THE EQUIVALENT OF THE U.S. AIR FORCE ACADEMY.

23

THEM RUN BETTER, MORE EFFICIENTLY, MAKE MORE PROFIT, AND

24

IT'S CALLED THE ROYAL AIR FORCE COLLEGE CRANWELL LEARNED TO BE 24

ADVISING THEM, IN MANY CASES, ON THEIR SYSTEMS, THEIR ACCOUNTING

25

AN OFFICER IN THE ROYAL AIR FORCE.

SYSTEMS AND COMPUTER SYSTEMS.

25

AND IN THE PROCESS OF DOING THAT WORK, I OFTEN HAD TO
APPROVE ROYALTY PAYMENTS, SO I WAS WORKING WITH THE CONTRACTS

6 (Pages 1529 to 1532)
Raynee H. Mercado, CSR, RMR, CRR, FCRR & Diane E. Skillman, CSR, RPR, FCRR