Oracle Corporation et al v. SAP AG et al

Filing 223

Transcript of Proceedings held on 11/26/08, before Judge Phyllis J. Hamilton. Court Reporter/Transcriber Christine Triska, Telephone number [phone]. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerks Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction.After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. Release of Transcript Restriction set for 3/9/2009. (djc, COURT STAFF) (Filed on 12/10/2008)

Oracle Corporation et al v. SAP AG et al

Doc. 223

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BEFORE THE HONORABLE PHYLLIS J. HAMILTON, JUDGE ) ) Plaintiffs, ) ) v. ) ) ) SAP AG et al., ) Defendants. ) ______________________________) ORACLE USA, INC., et al.,

NO. 07-CV-01658 PJH

San Francisco, California Wednesday, November 26, 2008

TRANSCRIPT OF PROCEEDINGS APPEARANCES: For Plaintiffs BY: Bingham McCutchen LLP Three Embarcadero Center San Francisco, CA 94111-4067 GEOFFREY M. HOWARD Attorney at Law JOHN POLITO Attorney at Law ANTHONY FALZONE Attorney at Law Jones Day Silicon Valley Office 1755 Embarcadero Road Palo Alto, CA 94303 THARAN GREGORY LANIER Attorney at Law

For Defendants

BY:

Reported By:

CHRISTINE TRISKA, CSR, RPR Pro-Tem Reporter

Dockets.Justia.com

2

1 Wednesday, November 26, 2008 2 3 4 PROCEEDINGS THE CLERK: Calling Civil Case 07 dash 1658, Oracle et 9:20 A.M.

5 al. versus SAP AG, et al. 6 7 8 9 10 MR. HOWARD: THE COURT: MR. HOWARD: Good morning, your Honor. Good morning. Your appearance.

I was waiting for my colleague.

Jeff Howard on behalf of Oracle, your Honor. MR. LANIER: Good morning, your Honor. Gregory Lanier

11 of Jones Day for the Defendants. 12 THE COURT: Good morning. All right. This matter is

13 on for hearing on the motion to dismiss filed by SAP. 14 I do have some questions. I guess the way that

15 we'll do it is we'll start first with the copyright 16 infringement allegations and then perhaps -- then the 17 preemption argument. Those are the more difficult of the The breach of contract and So let's

18 issues, I think, that are raised.

19 the unjust enrichment are not terribly problematic. 20 start first, then, with the copyright infringement 21 allegations. 22

I'm a little unclear about the appropriate way to It's purportedly brought under both The arguments aren't entirely clear

23 analyze this motion.

24 12(b)(1) and 12(b)(6).

25 to me why it should be viewed as -- I mean the result could

3

1 very well be different depending upon the standard the Court 2 imposes. It's not entirely clear to me that it's appropriate

3 to look at the merits at this particular stage. 4 But I think the more troubling aspect of the case is

5 it's not -- the Complaint isn't very clear, and it's not clear 6 to me whether or not either of the two organizations, entities 7 that are at issue in this portion of the motion, that's JDEE and 8 OSC, whether or not they were either owners -- actual owners of 9 copyrights that are asserted or exclusive licensees of the 10 copyrights. And even though you've kind of made different

11 arguments, it seems to me the ownership issue comes into play 12 with respect to either one of these entities. 13 So whether or not we look at the extraterritorial

14 activity of JDEE or the standard or capacity of OSC, it seems 15 to me that the Complaint isn't entirely clear. 16 What's not clear is -- because there are multiple

17 plaintiffs and multiple defendants it's not clear to me which 18 plaintiffs are asserting which claims against which particular 19 Defendants. 20 Are all the plaintiffs asserting all the claims

21 against all the defendants, and do they all have equivalent 22 status? That's not clear at all. So that's a difficulty I'm

23 having with the copyright issue. 24 MR. LANIER: Your Honor, then, if I may, first

25 touching on the ownership question and then circling back,

4

1 because it gets to the question of whether this is a 12(b)(1) or 2 12(b)(6) and whether it even matters at this stage, it's 3 important to look at the two different parties, JDEE and OSC, 4 separately, because they were in a different position. 5 why we split our motion as to them. 6 OSC is not now and never has been an owner or That's

7 exclusive licensee of any of the copyrights at issue. 8 There's no dispute about that fact. 9 It is not now an exclusive licensee. It is not now an owner. It has never been an So the

10 owner and it has never been an exclusive licensee. 11 only -- so from our perspective that ends it. 12

17 U.S.C. 501(b) makes it very clear that only the Then there's a

13 owner or exclusive licensee may bring suit.

14 related question of, if I'm the owner today may I reach back 15 and assert claims based on conduct that occurred before I 16 became an owner? 17 That's a different issue.

They are trying to conflate these issues for But the core point as to

18 reasons I'll explain in a moment.

19 OSC is that it is now not and never has been an owner, and 20 there's no dispute about that. In fact, the allegations in

21 Plaintiffs' Complaint are that OSC is a successor-in-interest 22 to parties that have been owners. That's, then, where the

23 issue comes about potentially reaching back. 24 What Plaintiffs allege, and as a matter of fact we

25 don't disagree with them, is that OSC is a successor-in-interest

5

1 to some of the corporations that were collapsed together to form 2 the current Oracle Corporation. 3 One brief word of background, your Honor. You may

4 recall that though this is Oracle versus SAP, the software 5 that's at issue here was developed by other companies, for 6 the most part PeopleSoft and JD Edwards. Oracle acquired

7 those companies in early 2005 around the time that SAP 8 acquired the TomorrowNow company. Over the years,

9 principally in 2005, Oracle then took steps to organize its 10 corporate ownership together. 11 Nothing untoward about that. 12 mergers and acquisitions. 13 OSC is the result of transferring non-IP assets -- no So OSC is a result of that. That is normal in the course of

14 intellectual property -- but assets to form what's now called 15 OSC. And how it became Oracle Corporation to OSC I don't think

16 matters for purposes of this motion. 17 But the core point for OSC and why it's a 12(b)(6)

18 motion is that it is not now and never has been an owner or 19 exclusive licensee of any copyright interests. 20 perspective it simply does not have standing. 21 Plaintiffs argue that because it is a So from our

22 successor-in-interest -- I'm sorry, your Honor. 23 24 question. 25 MR. LANIER: Standing for -- copyright standing is THE COURT: Standing is more a jurisdictional

6

1 typically treated as an issue to be resolved on 12(b)(6), your 2 Honor. All the cases that we put before your Honor treat That's why there's a

3 copyright standing as a 12(b)(6) issue.

4 little bit different issue with JDEE, where it's a question of 5 JDEE purports to be an exclusive licensee, and it's a question 6 of where its rights exist. That's typically treated as a

7 jurisdiction question, whereas copyright standing is to be 8 treated under 12(b)(6). 9 for resolution. 10 11 THE COURT: MR. LANIER: More as an element of the claim. Exactly right, your Honor. It's an And the parties agree the issue is ripe

12 element of 17 U.S.C. 501(b), an owner or exclusive licensee may 13 bring suit -- only an owner or exclusive licensee. 14 So what Oracle does in its opposition to the motion

15 on OSC is to say, "Well, it's a successor-in-interest, 16 therefore it acquired the right to sue for past infringement 17 when it acquired all these other assets, and as a result it 18 can sue." 19 The response to that, your Honor, is -- in addition to

20 the cases that are in our papers -- is 17 U.S.C. 501(b) -- only 21 an owner or exclusive licensee may initiate suit. 22 there in the statute. It's very clear. It's right

Oracle Systems

23 Corporation, OSC is not an owner or exclusive licensee. 24 So the question of whether it could reach back to

25 file suit based on pre-existing infringement is irrelevant,

7

1 because it can't file suit for copyright infringement. 2 doesn't have standing. 3

It

It's important to note that Oracle International

4 Corporation -5 THE COURT: But as the successor-in-interest didn't it

6 acquire such standing? 7 8 MR. LANIER: It did not, your Honor, for two reasons.

Before the creation -- or the transfer or the

9 creation of the current OSC -- and it had a different name at 10 the time -- all of the intellectual property rights of the 11 pre-existing companies were transferred to Oracle 12 International Corporation, OIC. That's one of the named We are not challenging

13 Plaintiffs on the copyright claim.

14 its standing or the Court's subject matter jurisdiction on 15 its claims. OIC remains in the case. OIC took transfer of

16 all the IP interests of the companies that then became OSC. 17 What's missing is an express assignment of the No one received that

18 right to sue for past causes of action. 19 assignment. 20 your Honor. 21 THE COURT:

And here's the -- two of the cases -- I'm sorry,

Why is it critical that that kind of

22 express assignment have been made? 23 MR. LANIER: Because the law of this circuit as

24 applied in this district in the Co-opportunities case, relying 25 on the De Silva case, makes it very clear that there cannot be a

8

1 suit for infringement prior to the time one takes ownership or 2 becomes an exclusive licensee of an express, written assignment. 3 The reason for that is in the statute, your Honor,

4 because the statute U.S.C. 17 501 (b) not only says that only 5 an owner or exclusive licensee may file a suit, it says may 6 file suit for infringement that occurred while it was an 7 owner. So the law is -- again the Co-opportunities and De

8 Silva cases are the key cases, and they are in our papers -9 requires an express assignment. 10 Now, part of the confusion may be that something is There is no express assignment of the right to

11 missing here.

12 sue for past infringement to Oracle International Corp., OIC. 13 That's the party that we don't challenge its standing at this 14 point. It's in the case. It owns the copyrights today. It

15 didn't receive an assignment for the right to sue for past 16 infringement. 17 moment. JDDE did not -- we'll turn to JDDE in a So we don't know if anyone received an

OSC did not.

18 assignment for the right to sue for past infringement, but 19 OSC did not. 20 Plaintiffs' opposition concedes that point and

21 argues that it got the assignment by virtue -- by operation 22 of law by virtue of acquiring the companies that had held 23 that right. And again, your Honor, I would point to the

24 Co-opportunities and De Silva cases that expressly hold even 25 in the case of what they called a quote, "family", closed

9

1 quote of companies that the assignment must be expressed and 2 it must be in writing. 3 So OSC doesn't have standing.

But your Honor, from our perspective all of that --

4 that argument is irrelevant, because 17 U.S.C. 501(b) says 5 only an owner or exclusive licensee may initiate a suit, and 6 there is no dispute or complaint -- the allegations of the 7 Complaint are crystal clear: 8 exclusive licensee. 9 entities. 10 So that's the issue with OSC. It's typically treated OSC is not a current owner or

It is a successor-in-interest to such

11 on 12(b)(6).

There's no dispute about that in this case, and It's a matter of standing as an

12 that's how the case is treated. 13 element of the claim. 14 15 Honor. 16 17 THE COURT: MR. LANIER: Sure.

The JDDE issue -- I'm prepared to turn to that, your

Thank you.

JDEE is slightly different,

18 and that's because JDEE is a party to a contract, which we put 19 on the record before your Honor. 20 Declaration. 21 JDEE is an exclusive licensee today, at present. It's Exhibit One to the Lanier

22 And that's in -- you'll see paragraph 6.2 of Lanier 23 Exhibit One, and that's the -- I've forgotten the name. 24 think it's a research and cooperation agreement. 25 Exhibit One, paragraph 6.2. I

But Lanier

10

1

But it's worth -- I'll draw your Honor's attention

2 to one specific provision to that paragraph to point out, as 3 we point out in our papers, that JDEE has a right -- has an 4 exclusive -- and then there are a variety of other words -5 license in the countries set forth in Exhibit A. And

6 Exhibit A provides that JDEE has its exclusive right in the 7 countries that are colloquially called EMEA, Europe, Middle 8 East and Africa. 9 It does not have any rights in the United States. Its rights are as set

10 There's no dispute about that fact. 11 forth in paragraph 6.2. 12

It's also, if your Honor is going to study this a

13 little after, worth looking at paragraphs 6.1.1 and 6.1.2 of 14 that same agreement, Lanier Exhibit One. And those

15 specifically provide that the reason for this structure -16 6.1.1 makes it very clear that the reason for the structure 17 is in order to assure enforcement of intellectual property 18 rights. 19 mind. 20 So now here's what's not disputed, and then we get to What's not disputed is that JDEE is a party to this So the parties to this agreement had this issue in

21 the fight.

22 agreement, and it has the exclusive license set forth in 6.2, 23 and that exclusive license gives it limited rights but exclusive 24 rights in EMEA, outside the United States. 25 Now, why it is a question of jurisdiction as

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1 opposed to standing, your Honor, is because JDEE has an 2 exclusive license. So it meets -- on the surface of it it

3 meets the first -- the first element is 17 U.S.C. Section 501 4 (b). 5 It is an owner or exclusive licensee today. The point, though, is that JDEE does not have any And it's important to make a

6 rights in the United States. 7 distinction here.

This -- our argument is not that if you hold Let's say just

8 the U.S. rights -- and let's take a scenario.

9 hypothetically for argument JDEE held U.S. rights, and I 10 import -- I copy some of its software and I export it to France. 11 Our argument is not that that action is beyond the There are other challenges to

12 jurisdiction of this Court. 13 the damage claim.

That is not our argument, because in that They have a right that's They can come before I want this

14 scenario JDEE has U.S. rights.

15 recognized under the U.S. copyright.

16 your Honor and say, "I've got a complaint.

17 relief," and then we can argue over the damages and 18 everything else, whether it's copyrightable and all that 19 stuff. 20 21 States. This is different. JDEE has no rights in the United

Therefore, as the Allarcom and L.A. News cases -- it's

22 useful to contrast, compare those two cases -- make clear it 23 has -- its rights cannot be infringed in the United States. If

24 its rights cannot be infringed in the United States no active 25 infringement can be completed in the United States, its claims

12

1 are beyond the reach of this Court.

It's an issue of

2 extraterritoriality, which as the Silver and Sybersounds cases 3 make it clear, there's 80 years of jurisprudence, the Copyright 4 Act does not apply extraterritorially. 5 And it's worth for a moment touching on the Allarcom

6 and L.A. News cases that are -- again, that are in our papers, 7 your Honor. Both of those -- they give you the opposite sides They get to the same principle.

8 of the same story. 9

In L.A. News the plaintiff there had rights --

10 worldwide rights, therefore they had rights within the United 11 States. And somebody took some videotapes -- copyrighted

12 videotapes and exported them, and they said, "We've got a 13 copyright complaint." 14 extraterritorial. The defendants said, "No. That's Your

You sent it out of the country.

15 damages happened there."

And there the court said, "Well,

16 no, because they had rights in the United States." 17 The question was not the locus of the conduct. That's the issue -- U.S. It

18 was the locus of the rights. 19 rights. 20 21 Allarcom -THE COURT:

The copyrights, though, are U.S.

22 copyrights. 23 24 25 MR. LANIER: THE COURT: MR. LANIER: Correct. There's no dispute about that. Absolutely right.

13

1

THE COURT:

And the agreement permits JDEE to

2 distribute outside of the United States. 3 MR. LANIER: The agreement -- there's two points -There's two points to follow up on on

4 you're absolutely right. 5 that vein. 6

The agreement doesn't just say, "I give you, JDEE, It says, "I give you the rights to all

7 U.S. copyrights."

8 this intellectual property" -- it could be patent rights, 9 trademark rights, know-how, et cetera, et cetera. 10 a variety of intellectual property rights. So it gets

And JDEE is

11 conferred one and only one right, which is the right to 12 distribute and to make some changes to distribute in EMEA, 13 outside the United States. 14 So yes, your Honor, there's no question that for

15 purposes of this case we are talking about matters that they 16 claim to be covered by the U.S. copyrights. 17 fights about that later for this motion. 18 at issue. 19 But the question is not, where did the conduct There will be

U.S. copyrights are

20 occur, which is why all of the pages and pages about who shot 21 John and who did what where is irrelevant to this motion. 22 It's not where the conduct occurred. 23 motion where the harm occurred. It's not even for this

It's where the rights exist. It may not come

24 And JDEE has no rights in the United States. 25 before this Court on a copyright claim.

14

1

And a final note, your Honor, I mentioned that the Is it 12(b)(6)? Is it

2 issue about, is this 12(b)(1)? 3 jurisdictional or is it not? 4

From our perspective two things are important: They concede the

The

5 first is that the issue doesn't matter. 6 issue is ripe.

It's ready for resolution.

The only impact

7 it might have on the Court's ruling is whether you consider 8 all of that other evidence, which is irrelevant on the merits 9 anyway. 10 But the other point is that it is verbally treated The Arbaugh

11 as a question of subject matter jurisdiction.

12 case dealt with Title VII issues, where the number of 13 employees of the companies -- I'm sure your Honor is 14 familiar -- the number of employees of the company is an 15 aspect of the claim. 16 And in that case the Supreme Court and Justice

17 Ginsburg held that that issue was not a question of 18 jurisdiction. It was a question -- or it was not a question It was a question of the element of the

19 of jurisdiction. 20 claim. 21

And critically the procedural posture was very In Arbaugh, this issue was coming up after a jury

22 different.

23 verdict where a 12(b)(6) motion would have been too late 24 anyway. 25 So it really mattered what the outcome was there. Here, though, all the cases treat territoriality as

15

1 a question of jurisdiction, rights or rights under the 2 Copyright Act, and even cases subsequent to Arbaugh, cases 3 decided the same year but subsequent to Arbaugh in this 4 district, the Williams case, for example, treat the question 5 of territoriality as a question of jurisdiction. 6 arises under 12(b)(1). 7 Regardless, your Honor, from our perspective again, It is We So it

8 it doesn't matter whether it's 12(b)(1) or 12(b)(6). 9 ripe and appropriate for resolution on this motion.

10 brought one motion that asserted theories up -- two different 11 theories under 12, but separated it out as to the two 12 different parts. 13 THE COURT: All right. So you're essentially relying

14 on 12(b)(6) for OSC and 12(b)(1) for JDEE? 15 16 17 18 MR. LANIER: THE COURT: MR. HOWARD: That's correct, your Honor. All right. Your response?

Good morning, your Honor.

Let me start with the question that you started

19 with, which is why the three Plaintiffs, and then I'll 20 respond to Mr. Lanier. 21 it. 22 A plaintiff has standing if it is the owner or the OIC is the owner, and so it is a proper I think Mr. Lanier actually covered

23 exclusive licensee. 24 plaintiff.

It exclusively licensed certain of its copyrights

25 to JDEE, and so as the exclusive licensee, JDEE is also a

16

1 proper copyright plaintiff.

And there's been no challenge to

2 JDEE's standing before the Court. 3 OSC -- and I'm going to start with OSC because

4 Mr. Lanier did -- OSC has standing as the successor-in-interest 5 to owners of accrued, preexisting claims for copyright 6 infringement. In their papers and here today there is looseness

7 with which Section 501 is being described. 8 What 501 says is that, "An owner or exclusive licensee

9 may" -- and now I'm quoting -- "institute an action for 10 infringement of that particular right committed while he or she 11 is the owner of it." 12 So OSC's predecessors-in-interest -- there's three

13 companies -- were owners of a right under a copyright between 14 2002 and 2005. 15 We have alleged that those rights held by those

16 entities were infringed during that time period, in other 17 words, in the language of 501 while they were the owners of 18 it. 19 THE COURT: But clearly not while OSC was an owner,

20 because they succeeded in interest after the copyright alleged 21 infringement occurred. 22 MR. HOWARD: Exactly right. So there's no dispute

23 that there was a claim for copyright infringement that was held 24 by the predecessors-in-interest right up until 2005; right? 25 Then what happens in 2005 is that those

17

1 predecessors-in-interest transfer their ownership in the 2 copyrights to OIC, but they do not transfer their ownership of 3 the claims that had arisen and which had given them standing in 4 the pre-2005 time period. 5 THE COURT: Would they still have standing under that

6 agreement? 7 argument.

I mean, either -- I don't quite understand your Either they retain the express right to sue, in which

8 case they would no longer be owners as of the date this suit was 9 filed, or they transferred it and OSC would be the owner. 10 I don't see how all three could possibly be in the

11 same position. 12 MR. HOWARD: Well, in fact -- well, no. The cases

13 distinguish -- and Mr. Nimmer distinguishes in his treatise 14 between the ownership of the right and the ability to bring a 15 claim for infringement of the right while the entity owned it. 16 And so, for example, the Silvers case, Ninth

17 Circuit case, distinguishes between the conveyance of a 18 copyright and the conveyance of a right to recover for 19 infringement of that copyright. 20 That case approvingly cites the ABKCO case, and the

21 language of that case is "that the assignor," which in this 22 case are the predecessors-in-interest to OSC: 23 24 25 -- "the assignor retains the right to bring actions accruing during its ownership of the right even if the actions

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1 2 3 4

are brought subsequent to assignment." That's a quote. So -THE COURT: So if the assignor retains the rights, how

5 does that qualify OSC as a successor-in-interest in having the 6 same rights? 7 standing. 8 MR. HOWARD: So let me then, please, get to that I don't understand how both can be in the same

9 point, because I wanted to first establish that -- and I don't 10 think there's any dispute about it -- that the 11 predecessor-in-interest retained the right to sue even after 12 they transferred the copyrights to OIC. 13 So we're now in March 2005. OIC holds the

14 copyrights, and the predecessors-in-interest have retained 15 the right to sue. The only question then to your Honor's

16 question is -- the only question is what happened to that 17 right to sue when the predecessors-in-interest merge into OSC 18 and cease to exist? 19 air? 20 That's what Mr. Lanier is suggesting; that there is Does the claim just evaporate into thin

21 a claim for infringement, that there is an infringer, and 22 that there is an action that can be brought, and that simply 23 by the result of merger that claim just evaporates into thin 24 air and suddenly nobody has it. 25 THE COURT: Do you disagree that it has to be

19

1 expressly transferred or retained? 2 3 MR. HOWARD: Yes and no. Let me explain that.

I agree that it has to be expressly transferred when Mr. Lanier cited the In the Co-opportunities

4 the transferor continues to exist.

5 Co-opportunities case to your Honor.

6 case the ownership was transferred but not the right to sue. 7 Judge Patel then allowed the assignor subsequently three years 8 later to make a second assignment solely of the right to sue, 9 and then the assignee was held to have the ability to bring that 10 preexisting claim. 11 The crucial difference there and the crucial

12 difference in the De Silva case that was also cited to your 13 Honor is that somebody was there to make that second 14 assignment. 15 Here there is no prior entity. They have -- the

16 agreements that have been provided to your Court say they have 17 ceased to exist. So everything that is about them, everything

18 that they have has been merged into OSC. 19 And it would defeat justice for sure -- and it

20 certainly isn't part of merger law -- that the claims that 21 ABKCO and Co-opportunities and Silvers and Nimmer and 22 everybody say, the claims that still existed because they had 23 accrued at the time that those entities owned the copyrights, 24 it would defeat justice to say that they just disappeared. 25 Of course they don't. They continue with the person who

20

1 succeeds to those entities. 2 3 So it's not a case -THE COURT: And what do -- which of the cases

4 specifically says that? 5 MR. HOWARD: Your Honor, no case has been cited to you

6 by either side where the transferring entity has ceased to 7 exist. 8 But that is the dispositive factual difference. If it is true that the assignor retains the right And the

9 to sue, then there's -- then that right is there.

10 distinction between Co-opportunities and De Silva, where 11 somebody is there, a corporation or a sole proprietor is 12 there who can sign the caption and bring the claim into you 13 for resolution, the difference between those cases and this 14 one is that now nobody has that if it's not OSC. And of

15 course it has to be OSC because they've acquired everything. 16 THE COURT: Such result could have been avoided

17 obviously by having express conveyance at the time of the 18 merger; correct? 19 MR. HOWARD: I suppose that if we wanted to put

20 ourselves back into the Co-opportunities time period we could 21 have done that, but it's different. 22 that because a merger is everything. There is no reason to do There's no question as There is no

23 there is when the transferor continues to exist. 24 question that something has been retained. 25 retained.

Nothing has been

In a merger nothing gets left by the wayside because

21

1 everything that is held by that entity passes through to the 2 successor-in-interest. 3 The same can't be said for the cases where that Then the

4 entity or sole proprietor continues to exist.

5 question has to be asked: Did they actually transfer the 6 right to sue in addition to the copyright? 7 8 9 THE COURT: All right. Let's move on.

Did you want to respond? MR. LANIER: All of that still doesn't matter because "The legal or beneficial owner of an

10 17 U.S.C. 501(b) says:

11 exclusive right under a copyright," and it goes from there. 12 So the person that may come before your Honor and

13 seek redress under the copyright laws must be a legal or 14 beneficial owner. There is no question that at the present

15 time OSC is neither a legal or beneficial owner of an 16 exclusive right. 17 licensee. 18 All of the cases that permit someone to reach back It's not the owner. It's not the exclusive

19 and say, "I have the right to sue for past infringement," 20 involves someone who's an owner or exclusive licensee. 21 reason the law permits that is because I might own the 22 copyrights -- I might exclusively license them to your Honor. 23 Either of us could sue my colleague over there. 24 question is who gets to sue for the old stuff? Then the That's The

25 where -- that's where you might have -- that's why you need

22

1 to do these assignments. 2 But in this circumstance the dispositive fact

3 that's admitted in the Complaint itself is that OSC is not 4 the legal or beneficial owner at the present time. 5 not have standing, period. 6 7 thing? 8 If that -- that statement ignores Nimmer, which Nimmer says: "Absent retroactive grant to the infringer only the grantor, not the grantee, has standing to sue for pre-grant infringement." So it just isn't the case that you have to MR. HOWARD: Your Honor, may I just say one other It does

9 cites ABKCO. 10 11 12 13 14

15 currently at the time you bring your suit be the owner of the 16 copyright. 17 clear. Nimmer is clear, ABKCO is clear, and Silvers is

You can bring a claim if you were the owner, in the

18 words of 501, "at the time it accrued." 19 Here when the merger into OSC happened nobody knew

20 about these claims. 21 22 23 THE COURT: MR. HOWARD: Okay. All right. We need to move on.

So I'll address the JDEE issue next. JDEE has a U.S. right.

Your Honor's exactly right.

24 It is a U.S. copyright that has been exclusively licensed to it, 25 and that is a U.S. right. It's not a European right; it's a

23

1 U.S. right. 2 The question, then, is not what the geographic scope

3 of that right is -- and it's much broader than what Mr. Lanier 4 said. He said there's only one and only one right, which is That's not so. The right is to modify, develop,

5 distribution.

6 reproduce, make, have made, sell -- all of the rights that go 7 with the U.S. copyright. 8 The law is very clear. It is not the geographic It

9 scope of that right.

It is the location of the conduct.

10 is the location where the regulated conduct occurs. 11 Mr. Lanier has overruled the Ninth Circuit's

12 affirmance of your Honor in the Blazevska case, where you held 13 that it's the location of the conduct that matters when you're 14 looking at the extraterritorial bar to a statute. 15 Here we have alleged the conduct that violates the That

16 U.S. right and the scope of the license I just read.

17 conduct was copying in the United States, in Texas, of U.S. 18 rights that were exclusively licensed to JDEE, and then the 19 exploitation of that infringing act into JDEE's territory. 20 And if there was any doubt about it under

21 Blazevska, under Massey on which your Honor also relied in 22 that decision, as we pointed out in our opposition, and which 23 got no response in the reply and no response now, the 24 Congress has just amended the Copyright Act, and it has made 25 clear in Section 602 that the exportation of infringement is

24

1 actionable in the United States. 2 have alleged here. 3

And that is all that we

There was copying that infringed JDEE's rights -It was exported into Europe, where JDEE That conduct that

4 their U.S. rights.

5 has the exclusive license to distribute.

6 we have alleged is infringing occurred in the United States, 7 and it is actionable, and I don't think there can be any 8 question about that. 9 If your Honor would like me to address the 12(b)(1)

10 versus 12(b)(6) issue I'm certainly happy to do that as well. 11 It was brought under 12(b)(1). It's not brought under 12(b)(6).

12 It is not properly brought under 12(b)(1), which I think is 13 sufficient at this point to deny the motion. 14 The Arbaugh case sets forth -- the U.S. Supreme That's the language of

15 Court sets forth a bright line rule. 16 the Supreme Court.

And the bright line rule is that unless

17 Congress in a federal statute has specifically made 18 extraterritoriality a jurisdictional issue, then it's not. 19 It is a criteria, an element of the claim that's properly 20 treated under 12(b)(6). 21 12(b)(1). 22 The Litecubes case, which is a federal circuit So the motion is not proper under

23 case, applies Arbaugh to the Copyright Act and properly so, 24 because the Copyright Act, as did the Title VII in Arbaugh 25 does not have that statement of Congressional intent.

25

1

Mr. Lanier refers to the Williams case, which was

2 Judge Breyer's affirmance of Magistrate James's report, and 3 in that case I just wanted to point out to your Honor there's 4 no mention at all of Arbaugh, and in fact the reference by 5 Judge Breyer to Judge James occurred prior to the Arbaugh 6 decision. Judge James issued her OSC prior to the Arbaugh

7 decision, and I think it's fairly clear from the decision 8 that neither the parties nor the court were considering 9 Arbaugh at the time of that decision. 10 THE COURT: All right. All right. I We need to move along to the

11 preemption argument. 12

I'm a little unclear about what's in dispute.

13 mean, it seems to me that the -- I mean, the Defendants' 14 argument is that the state claims for the most part are 15 preempted by the Copyright Act. 16 There is a statement, however, in each of the

17 various different arguments that to the extent that each 18 claim relies upon the Copyright Acts, that they are 19 preempted, but to the extent that there are other 20 allegations, and the other allegations are kind of these 21 misrepresentation, fraud, deceit claims, that there isn't. 22 So it seems to me you all are in agreement. 23 I am not sure that I can articulate, because I'm

24 not sure you all have articulated exactly what the something 25 extra is with respect to each of the claims.

26

1 2

MR. LANIER:

Thank you, your Honor.

I think we are in agreement -- and it's important

3 to start there and then to point out why -- if we are in 4 agreement why do we even need to have this motion? 5 thought probably crossed your Honor's mind. 6 We are in agreement -- parties agree that to the That

7 extent the various state law claims are based on conduct of 8 acts of alleged copyright infringement they are preempted by 9 the copyright laws. 10 11 THE COURT: MR. LANIER: Right. Now, as all of the decisions before your

12 Honor have pointed out -- well, one other point we're in 13 agreement on -- in fact, they are so much in agreement on it 14 that in the Third Amended Complaint Plaintiffs tell you that 15 they actually carved those allegations out of those various 16 different claims. 17 'Cause if you look at the incorporation paragraph

18 at the beginning of every state law cause of action where it 19 says, "We rely on these paragraphs," they chop out the 20 allegation, the specific paragraphs that assert the cause of 21 action for copyright infringement. So they are so much in

22 agreement with us that they say they did it. 23 The problem, and why we had to bring the motion, is

24 that isn't actually what happened, because each and every one 25 of the state law claims is based on paragraphs that allege

27

1 acts of copyright infringement, even if they are not 2 expressly based on the claim of copyright infringement. 3 Let me just give your Honor a couple of examples.

4 Paragraph 19, which is incorporated into every one of the 5 state law claims, alleges illegal downloading and illegal 6 copying. Paragraph 101, which is incorporated into every one

7 of the state law claims, further describes illegal 8 downloading. Paragraph 114, which is incorporated in one of Paragraph 118 of the Third

9 them says "thousands of copies."

10 Amended Complaint, which is also incorporated into those 11 state law claims -- it's the basis of those claims -- talks 12 about impermissible copying and the creation of derivative 13 works. 14 So each and every one of the state law claims is

15 based on acts of alleged copyright infringement and is 16 preempted. 17 Now, why this issue is always tricky and troublesome

18 is because you can't just rely on broad labels -- preempted, 19 therefore the whole claim goes. You have to, unfortunately,

20 look at the specific conduct alleged. 21 Every case that has been put in front of your Honor Do they allege that

22 dives down into, what facts do they allege? 23 you copied? Okay. That's preempted.

Do you allege that they

24 did something that is not protected by the copyright laws? 25 That's not preempted.

28

1

And in our reply brief we try to do some of that

2 work for your Honor by -- your Honor may recall in our reply 3 brief we've actually taken the allegations that they relied 4 on in their various state law claims and done 5 strike-throughs, and we think this stuff is covered by the 6 copyright laws. So I won't repeat all that here. It's in

7 our reply brief, your Honor. 8 The important point is this: Labels don't decide They

9 the issue.

They agreed with us on all of these points.

10 agreed that you need to go claim by claim, conduct by conduct 11 and decide, is this preempted or not? Because as your Honor

12 knows, a state law claim could attack a broad swath of 13 activity. 14 Fundamentally this case is about two things: It's

15 about whether TomorrowNow was properly on those Plaintiffs' 16 computers, and there's a variety of claims in the case not at 17 issue here -- Computer Fraud and Abuse Act, California CDAC, 18 trespass to chattels -- that aren't at issue here. 19 The other thing that this case is about is What was done with the software that

20 copyright infringement.

21 shouldn't have been done? 22 Those claims are covered by the Copyright Act and We've tried in our reply brief to say, Their biggest argument in We don't say -- we say not

23 they are prohibited.

24 "This stuff is prohibited."

25 response is to say, "well, use."

29

1 only that you copied and created derivative works and 2 distributed, which are all rights unequivocally covered by 3 the Copyright Act, but you also "used" the software. 4 different. 5 That's

That's not preempted by the copyright laws.

That's wrong for two reasons, your Honor, and the In Altera

6 Altera case, which is in the papers, is key here.

7 the Ninth Circuit considered the preemption argument 8 involving software, and the Ninth Circuit actually found no 9 preemption. 10 But it's important to look at why it did.

In Altera what the Ninth Circuit did is said you

11 have to make this distinction -- distinguish between copying 12 the software. That's an act of copyright infringement. If I

13 make a copy and I give it your Honor, that's an act of 14 copyright infringement if I don't have permission to do it. 15 But if I take the software and I run the software to

16 run my business -- I take some PeopleSoft financials and I run 17 my business based on that and I don't pay for it, that's not 18 covered by the copyright laws -- my copying, my distribution, my 19 derivative works are. 20 So in Altera what the Ninth Circuit distinguished

21 between was copying or other copyright-related activities 22 with the software and use of its output. 23 claims are not preempted. 24 Those types of

They are legitimately different.

But everything -- and again we touched upon this in

25 our reply papers, your Honor -- everything that Plaintiffs

30

1 say is extra and different is one of two things:

It's either

2 access to computers -- and we do not claim that those claims 3 are preempted by the copyright laws. 4 never has been -- or it's a use. 5 therefore it's different." That's not our motion,

And they say, "It's use,

But you have to look behind the

6 label of "use" just like the Ninth Circuit did in Altera and 7 say, what does use mean? And if use is copying, if it's

8 creating a derivative work, if it's distributing, or the 9 other rights protected by the copyright laws then that's 10 preempted. 11 So it's unfortunately a preemption issue that this

12 many state law claims creates an incredible amount of work 13 for the Court. We've tried to do some of that in our reply

14 paragraphs with a strike-through. 15 The core point is that it's a fact-specific And in view of the

16 analysis, not a label-specific analysis.

17 Court's time -- and I know you have another matter -- I can 18 stop here, and I could of course go on. 19 20 THE COURT: MR. HOWARD: All right. Thank you, your Honor. I certainly agree We'll stop here.

21 that it's a fact-specific analysis, and that's why this simply 22 isn't proper in a 12(b)(6) motion. 23 Your Honor made some remarks when we first appeared But let me say

24 before you about the length of our Complaint.

25 that even the length of our Complaint can't begin to capture

31

1 what happened over several years where software is being used 2 every single day by many different people. 3 4 occurred. Our allegations are summaries of conduct that And in some of those -- in some of those -- and

5 they are -- and that conduct occurs pursuant to hundreds of 6 different customer license agreements, some of them with 7 varying terms that affect how that software can be used. 8 So what -- really what the Defendants are asking you

9 to do is to give an advisory opinion, or to grant summary 10 judgment based on facts that differ according to the day, 11 according to the person, according to the year, according to the 12 software, and according to the license agreement. And I just

13 don't think that is the thing that the Court should be doing now 14 on a 12(b)(6) motion. 15 And the reason that's critical is that there are

16 instances, as we have alleged, where software was copied or 17 distributed or derivative works were made. Those are the

18 things that Section 106 reserves exclusively to the Copyright 19 Act. 20 But the law is clear that where there are contractual

21 restrictions that restrict the use of that software, or where 22 there has been a misrepresentation that is used in the course of 23 unfair competition or used in the course of interference, then 24 that is not preempted by the Copyright Act. 25 And so in each of these instances with each of

32

1 these allegations both are true.

And we will prove that both

2 are true depending on the day, depending on the year, 3 depending on the release of the software, depending on the 4 license agreement at issue. 5 And we have -- specifically with respect to the

6 interference claim we have pointed you to many cases where 7 there is a copyright allegation, and there is use of that 8 same copied software in ways that are not contemplated as a 9 specific restriction under 106, and where those claims are 10 allowed to proceed. 11 They are routinely allowed to proceed.

And so let me conclude by positing sort of two In Scenario One, there is a copy which is

12 different scenarios.

13 made, and its a violation of 106, and that copy is then used in 14 ways that violate the applicable license agreements, which is 15 what the National Car Rental case said was improper, what the 16 ProCD case said was improper, what Meridian, Summit -- all of 17 these cases say: You can't do it if it's a right that's

18 separate and apart from a private contractual right, separate 19 and apart from the rights under 106. 20 But there is a whole other category -- there's a

21 second category of claims where that copy that I used as my 22 predicate, that copy is not a violation of 106. So simply the

23 word "copy" doesn't mean anything, because it may be a licensed 24 copy. 25 And we've even said in our Complaint that there

33

1 were instances where the access to Customer Connection may 2 have been properly within the scope of the customers' 3 agreement, or the copy may, depending on the license 4 agreement -- may have been properly offered -- not a 106 5 violation, but then just as in the National Car Rental case, 6 just as in the Summit case, you take that copy and you use 7 it. And that use is an interference, and it gives rise to

8 inducement of breach as in Altera, and breach as in National 9 Car Rental and Summit and Meridian and all of those other 10 cases. 11 So depending on the factual scenario those all

12 should be allowed to proceed. 13 14 contract. 15 The difficulty that I have with this, it seems to THE COURT: All right. Let's move onto the breach of

16 me that this is the essence of the lawsuit about whether or 17 not the clickwrap agreements are binding agreements between 18 your client and Oracle or whether they only apply to 19 customers. That seems to me to be the heart of the

20 agreement, and it's -- I'm very reluctant on a 12(b)(6) 21 motion to grant the relief that you're seeking. 22 23 MR. LANIER: May I, your Honor? This is -- this

We agree with you completely.

24 issue, this breach of contract gets to the crux of the case, 25 and it points out the central tension that affects every

34

1 aspect of their pleading and conduct of the discovery of this 2 case, because Plaintiffs are, to be cliche, trying to have 3 their cake and eat it too. 4 They are trying to say, "You can get on our systems That's really what

5 but you can't get on our systems." 6 they're saying there.

And I would draw your Honor's

7 attention again with limited time to look at page 21 of their 8 opposition brief, lines 23 to 24, and that's really 9 instructive of the problem. And that's where they say: The

10 Defendants accepted the agreement by clicking an "I agree" 11 but then promptly violated it by accessing the website. 12 It can't be both. If you can click "I agree," if

13 you're an intended offeree who can accept this contract and 14 get on the website, then you can't properly violate it by 15 getting on the website. 16 17 that. And to address your Honor's concern, we understand And I hate to say this on behalf of my clients, but If our clients didn't belong to the It's pled in this case. There's a There's a

18 there's a remedy.

19 website there's a remedy. 20 CFAA claim.

There's a CDAC claim.

21 trespass-to-chattels claim.

Congress and the state of

22 California have gone to a lot of trouble to figure out, what 23 are the remedies that are available if people get on their 24 computers without the right to be there? 25 are in this case. And those claims

Now, we have other issues with them.

35

1 We'll talk about damages -- not leaving them without those 2 remedies, though. 3 But the key point is, they chose a person to assert It's fundamentally at

4 a claim for breach of contract.

5 tension with their entire case, and those contracts, if your 6 Honor reads them -- and I draw the Court's attention -- they 7 are all attached to the Lanier Declaration -- each and every 8 one specifically contemplates an ongoing relationship with 9 Oracle -- each and every one of them. 10 11 them. And we put language in our papers -- I could reread I won't do it. They are in front of the Court --

12 every one of those contracts says, "You, the customer" -- but 13 it's not just those words. 14 THE COURT: Let's not rely on labels.

But is it really just a matter of clicking

15 and getting on?

Isn't it the use to which the software is put

16 that's at issue and not just the accessing of it? 17 MR. LANIER: Exactly. And that's why we have to get

18 back to the use, your Honor. 19 The use. What's the use? Is it downloading it?

20 It's a copy.

Is it taking that copy and giving it to someone That's a copy -- that's a

21 who doesn't have a right to it? 22 copyright infringement.

Is it tweaking that software,

23 modifying it in some way so then I can give it to someone 24 else? 25 That's creating a derivative work. It's a copy.

So the non-preempted things that could be the

36

1 subject of the breach of contract claim all relate to access 2 to computers -- all of them. 3 And again, there are claims specifically in the

4 case for that, but fundamentally it's important to 5 remember -- these are not contracts we came up with. These

6 aren't contracts that resulted from TomorrowNow and Oracle 7 sitting down and coming up with some agreement, and we're now 8 saying, "Ah-ha, there's a technicality. 9 We can't get on."

TomorrowNow got to those computers in the course of Every one of those

10 providing service to its customers.

11 agreements -- every one of them says, "We have another 12 agreement with you. Your use is in furtherance of our Don't do

13 continuing relationship subject to that agreement. 14 things that violate that agreement." 15 16 and them. 17 offeree.

There is no further agreement between TomorrowNow So the point is, TomorrowNow is not the intended If somebody reached those agreements it was the But that

18 people who gave TomorrowNow permission to go there.

19 doesn't mean they're without a remedy if the access was 20 improper. 21 22 They've pled their argument. THE COURT: MR. HOWARD: That's all I have.

I think that's a pretty good argument. Your Honor, their breach of contract

23 claim relates to one agreement. 24 THE COURT: Well, I'd like to you respond to counsel's

25 argument that what Oracle is attempting to do is to have it both

37

1 ways.

Either you have permission, because you're a party to the

2 contractual agreement, in which case using the software wouldn't 3 be a breach of contract although it might be something else, or 4 you are not a party to the agreement, in which case you have 5 something other than a breach of contract. 6 MR. HOWARD: Sure. I'd be happy to address that. And

7 again it gets back to the idea that there is a wide variety of 8 factual scenarios that are at issue here. 9 We say in the Complaint that in some instances under

10 some license agreements that customers have with Oracle 11 Defendants could go onto Customer Connection, the website, and 12 download things. 13 When they do that they agree to use those downloads And in fact they agree not to cross-use

14 in a particular way.

15 them for other customers other than the one whose credentials 16 were used to download these particular items. 17 So simply accessing in that situation simply creates a

18 contract which then can be breached down the road, and which was 19 breached down the road by the cross-use of those materials in 20 support, for example, of other customers. 21 22 Let me give you a very concrete example. THE COURT: Just so I understand, in some instances

23 the accessing is not a breach of any kind of contractual 24 agreement, and, in fact, is a permissible act on the part of the 25 Defendant.

38

1

MR. HOWARD:

We say that in the Complaint.

That's

2 right, your Honor. 3 THE COURT: But under some other instances they are

4 not permitted to do so? 5 MR. HOWARD: Exactly right, your Honor. And so the

6 access to the website -- and please keep in mind, your Honor, 7 that the materials available to download from the website are 8 only one component of the software that's at issue in the case. 9 They are the support materials -- the patches and the bug fixes 10 and the documentation for the ongoing support of the underlying 11 software. 12 They also copied the underlying software not by

13 going onto the website but by acquiring it from their clients 14 and putting it up on their systems. So we're talking about

15 just these downloads now and the contract that governs the 16 access to and use of those downloads. 17 So they have a client. Let's say it's Merck. Merck

18 is issued a password credential to get onto the website by 19 Oracle. Merck gives that password credential to defendants. So Merck

20 Merck has a license to Software A but not Software B.

21 is entitled to -- and they give the password depending on the 22 license agreement to defendants -- defendants may be entitled to 23 go onto the website with that credential, take their patches for 24 Software A but not Software B; right? 25 So when they go on and they download both for

39

1 Software A and for Software B, both are true.

They are there

2 properly -- under this hypothetical and for purposes of this 3 argument properly to download for A. They are not there --

4 they do not have permission, they do not have access, and 5 they have breached immediately the access agreement to 6 download for Software B. 7 8 files. They did this repeatedly to the tune of 8 million Some of those files were downloaded using credentials Millions of them were

9 for which the customer was licensed.

10 downloaded using credentials for which the customer was not 11 licensed. 12 13 patches. Now, we have Software A patches and Software B They are all put on the local computer at the

14 defendant's place of business, and they have one thing in 15 common: Both are subject to the contractual use restrictions

16 that were agreed to when they were downloaded, which is they 17 will not be -- among other things, they will not be used to 18 support other customers. 19 Both were used to support other customers. So

20 regardless of whether there was permission to download the 21 patches for Software A, the breach now, then, occurs 22 subsequently when those are used to go support a customer 23 that's not Merck. And so at that point the agreement that "I

24 will only use this for the customer whose credentials I was 25 using" is breached.

40

1

Now -- so there's different ways this breach occurs.

2 And in the Software B case, where the download is of -- in the 3 first instance, in breach of the terms of use materials for 4 which that customer is not licensed California law, code says 5 that if in bad faith you know that you don't have that 6 permission you are directly liable. 7 principal. 8 You are liable as a

And that's exactly what he have alleged. Okay. All right. And lastly, the unjust

THE COURT:

9 enrichment. 10 MR. LANIER: Your Honor, may I have one sentence on

11 that breach of contract? 12 Look behind the word "use," because all of the

13 things that Mr. Howard alleges are -- these are the other 14 things that were then later the breach of contract are 15 copying: cross-use is copying, providing it to someone else 16 and using it for someone else -- it's a copy. 17 software. 18 It's copying. The only non-preempted claims that could be subject This is

19 to breach of contract are access claims for which there's a 20 remedy, but nothing else, your Honor. 21 MR. HOWARD: That just isn't true, your Honor. We've

22 alleged research, training -23 24 THE COURT: All right. I don't want to hear anymore. Unjust enrichment. I'm not so sure

25 there's any real dispute.

You both agree that unjust

41

1 enrichment is not necessarily a separate cause of action. 2 It's really a theory of recovery. 3 Clearly, the -- Oracle's entitled to plead both

4 contract and unjust enrichment, which is synonymous with 5 restitution as an alternative theory. I don't believe

6 there's any dispute that Oracle could not prevail or at least 7 could not recover under both theories. Either there's

8 contract and tort, or there is unjust enrichment restitution, 9 but there's not both. 10 11 Is there any dispute to that? MR. LANIER: There's no dispute as to anything your But I would draw your That's the core

12 Honor just said.

We agree with all that.

13 Honor's attention later to paragraph 220. 14 paragraph on the unjust enrichment claim. 15

So what paragraph 220 establishes is that Oracle They've not pled That's what

16 has not pled in the alternative. 17 alternatively.

They've pled cumulatively.

18 they've done here.

They have pled that based on breach of

19 the agreements, based on interference, based on a trespass, 20 based on computer fraud, based on our legal claims we get 21 this additional remedy. And they most clearly here do not

22 plead in the alternative, as an alternative to a claim for 23 breach of contract, as an alternative to a tort claim. 24 25 THE COURT: MR. HOWARD: That can be cured relatively easily. Yeah, your Honor, I'm not even sure --

42

1 this is a standard form of pleading.

You're not -- there is

2 a -- they have said that the contract is unenforceable, and so 3 in that instance the unjust enrichment claim stands in its 4 stead. 5 To your Honor's question, I think there is an The

6 agreement that nobody's entitled to double recovery. 7 question is whether the theory -8 THE COURT:

Recovery under both a straight theory of

9 breach of contract and unjust enrichment. 10 11 12 MR. HOWARD: THE COURT: MR. HOWARD: For the same acts. For the same acts. For the same acts. So there may be acts

13 for which -- you know, they've said they're going to challenge a 14 whole bunch of things. There may be acts for which your Honor

15 decides there is no contract or tort recovery, but we will still 16 have an unjust enrichment recovery. 17 MR. LANIER: We agree with that.

And we agree with your Honor, this could

18 be -- this can be cured -- this is one that can be cured by 19 amendment, but this is not alternative pleading. 20 cumulative pleading. This is

As they pled they are seeking an That can be cured

21 additional remedy, not an alternative remedy. 22 by amendment. 23 MR. HOWARD:

Your Honor, I'm not sure that there is a

24 rule that says you have to say that it's in the alternative, and 25 I'm not sure that it necessarily is the case that it's only in

43

1 the alternative where we've alleged, as we are allowed to, that 2 there's the receipt of a benefit and there's the unjust 3 enrichment of the benefit. 4 That is -- in many ways there are alternative

5 theories that run through his Complaint as there are in any 6 other, and it depends on how the case proceeds whether and 7 which of those is going to proceed at trial. 8 But I think to say that it's purely an alternative But if that's the

9 at this point -- it's not necessary.

10 Court's view I don't think it needs to be expressly stated in 11 the Complaint. 12 THE COURT: I'll decide. I kind of think that you I'm not sure I

13 haven't really clearly pled restitution.

14 understand this particular claim in its entirety, but I'll take 15 another look at it. I'll spend a little more time on the case

16 before we issue anything. 17 The difficulty -- I think that you've made some The real difficulty is that so many of

18 very good arguments.

19 the arguments go to the heart of the dispute, and I'm not 20 sure that I'm comfortable at this juncture of the case -- it 21 seems more appropriate that some of the arguments you've 22 raised should be raised on a dispositive position, although 23 you all have submitted a lot of evidence on the 12(b)(1) 24 issues so there probably is sufficient evidence on a couple 25 of those.

44

1

But one of the other difficulties is, as was just

2 raised by counsel in the discussion on the breach of 3 contract, and that is that there are so many variations. 4 5 follow. The Complaint is dense and very difficult to I mean, you all have been living with this case for

6 years, and you probably know all the various different 7 permutations. So I'm not sure that I understand -- well, I'm

8 sure I don't understand every way in which Oracle is alleging 9 that the agreements were abused and all the other various 10 ways in which they are arguing their intellectual property 11 was violated by a whole host of conduct. 12 act -- one contract, one act. 13 So I'm not sure that I understand it all enough to It's not just one

14 give you the kind of relief you're seeking on all of these, 15 although I think there are a couple I can easily resolve -- a 16 couple of issues that can be resolved. 17 In any event, though, I'll take the matter under

18 submission. 19 20 Honor. 21 22 23 24 25 MR. HOWARD: MR. LANIER: Happy Thanksgiving. Thank you. Your Honor. MR. LANIER: Very well. Happy Thanksgiving, your

(End time: 10:22 a.m.)

CERTIFICATE OF REPORTER I, CHRISTINE TRISKA, Pro-Tem Reporter for the United States Court, Northern District of California, hereby certify that the foregoing proceedings in 07-CV-01658 PJH, Oracle Corporation et al., v. SAP AG et al., were reported by me, a certified shorthand reporter, and were thereafter transcribed under my direction into typewriting; that the foregoing is a full, complete and true record of said proceedings as bound by me 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.

____________/S/ CHRISTINE TRISKA______________ Christine Triska, CSR 12826, RPR Tuesday, December 9th, 2008