Oracle Corporation et al v. SAP AG et al

Filing 544

Declaration of Tharan Gregory Lanier in Support of 543 MOTION for Partial Summary Judgment Defendants' Notice of Motion and Motion For Partial Summary Judgment Regarding Plaintiffs' Hypothetical License Damages Claim [UNREDACTED VERSION OF D.I. 431] MOTION for Partial Summary Judgment Defendants' Notice of Motion and Motion For Partial Summary Judgment Regarding Plaintiffs' Hypothetical License Damages Claim [UNREDACTED VERSION OF D.I. 431] DECLARATION OF THARAN GREGORY LANIER ISO DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING PLAINTIFFS' HYPOTHETICAL LICENSE DAMAGES CLAIM [UNREDACTED VERSION OF D.I. 433] filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K)(Related document(s) 543 ) (Froyd, Jane) (Filed on 11/5/2009)

Oracle Corporation et al v. SAP AG et al

Doc. 544 Att. 2

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LARRY ELLISON May 5, 2009 HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
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But there could be -- you know, if there are -- is a special circumstance, again, based on the size of the -- amount of business they're doing with us, or there was some situation, let's say there was a difficult -- our consultants -- there were some product problems, or there was something that caused -- you know, caused us to underdeliver to the customer and we were trying to make it up to the customer, that can happen. But again, it's usually not the remedy we seek. Very rarely do we discount maintenance. MR. LANIER: Q. Who makes the decisions in

those ad hoc situations? A. Q. A. level. On -To give a discount on maintenance? Safra Catz. And it has to go to that

I mean, it cannot be done by anyone else in

the organization but her. Q. Are you ever involved in those specific

decisions? A. Sometimes she consults me, but that's her If she's uncertain as to what she wants

discretion.

to do, she'll use me as a sounding board, but it's her decision. Q. Let's change topics a bit.

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We talked early on about whether Oracle ever went to SAP or not. Let's forget how people

end up talking, but talk about what might have been the outcomes had a certain conversation occurred. Had SAP come to Oracle in January of 2005 and said, here's what TomorrowNow is going to do, we want a license for them to do that, who would have had the decision-making -- putting aside what the decision would have been, who would have made that decision? A. Q. Me. Had SAP come to you in January of 2005 and

said, all right, we -- here's what TomorrowNow does, we'd like a license, would you have given them a license? A. Never say never. How much? It would be

very expensive.

But I mean, if they really wanted

to do that, and they wanted to get all of our -- you know, they wanted to get all of our support updates and be able to -- basically have all of our IP, to make the IP equally accessible to their team and our team, and then we compete basically on service quality and price, for all of our products or just PeopleSoft products, or -Q. PeopleSoft, JDE, and let's throw Siebel in

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at the moment. A. Those three. Hypothetically,

theoretically, we would certainly discuss the license. I think it would be so prohibitively -- it

would be so expensive that I'd be -- I don't -- you know, that I don't know if they would do it, but -it would be a very expensive license. We're

basically transferring all of our -- again, I just want to be clear what the license would include. It would include everything we're currently doing. So regulatory updates, bug fixes. I'm not

sure exactly response -- the detailed -- new versions, all of those things, and perhaps crisis response, special behavior and crisis response, which I think they'd want also, would be the license. In other words, that's how we run our We can't retask our

support organization.

engineering team if there's a crisis in the field to address this issue and if they want to compete on equal footing given all of the IP. But let's say just ignoring the crisis response, just the IP, just all of the code. Yeah,

if they wanted to do that, we would have talked about a license agreement. Q. And do you have -- as you sit here today,

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do you have any idea of how you would go about for yourself thinking about what the appropriate price was? MR. HOWARD: clarification, Greg. Your question was January 2005. MR. LANIER: MR. HOWARD: Where are you in time? MR. LANIER: MR. HOWARD: MR. LANIER: a moment. I'm in January 2005. Okay. Q. So let's forget Siebel for Yes. Then you threw Siebel in. Again, let me ask for a

I don't want these to be confusing,

so I'll -- January 2055. A. Q. PeopleSoft, JDE. SAP comes to you and says, we want a

license to do those things you described for PeopleSoft and JDE. decision. A. Q. Right? Yeah. As you sit here today, do you have any idea You're the one who makes the

in mind how you would go about thinking, what's the price I'm going to ask for? A. Q. Yes. What's your idea?

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A.

So the thought process is, we're moving all They've got a license to the All of it. They are the So

of our IP.

PeopleSoft/JD Edwards IP.

number one applications company in the world.

they already have a bit of an advantage, because they're the market leader, and we're -- you know, we're number two. If they have all of the IP, and you get the new versions, they're a bigger applications company than we are to start with, they would win a majority of the business, I think. They would get -- they

would get maybe the vast majority of PeopleSoft and JD Edwards, being in that position. So let's say we were -- they were going to win relative to our market positions, maybe they were at least twice as big, maybe three times as big as we are. But let's say they're 70 percent and So let's say it's

we're 30 percent of the market.

split that they win 70 percent of the JD Edwards and PeopleSoft customers, we win 30 percent, is how it all plays out. Market share is just not changed. I think

I'm not sure if that's what would happen. they'd win more.

But let's say that's -- I'm just giving you the thought process. So they're buying about 70

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percent of what we just bought.

So you could say --

so you could argue then it's 70 percent of what we paid. But I would argue it's even more than that, because I think we paid -- you know, we thought it was worth more than we paid, or we wouldn't have paid that much. Right?

So we paid in excess of 10 billion dollars. You know, 70 percent is, you know, 7 billion. And

then it's worth a little bit more than that, so 8 billion? Q. Is it in any way rational to you to believe

that SAP would pay 8 billion for a license to run a company it paid $10 million to buy? A. Q. A. Say one more time. Is it -I think you said billion and million, and

I'm not sure you -Q. A. Q. And I meant to. All right. Say it again.

Is it in any way rational to you to believe

that SAP would pay, say, $8 billion for a license to operate a company that it paid 10 million to buy? A. saying. It would be buying -- oh, I see what you're I mean, would they buy it to operate

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TomorrowNow. Well, this is a very different situation. They're not -- you know, not clear they need TomorrowNow. You know, they -- they would be --

they would be buying -- my view is they would end up with 70 percent of those customers, at least. would -- you got to give me more details. Would there be a non -- could they hire our people, could they hire the PeopleSoft people? There's more information I need. But I would think that I could then walk into any PeopleSoft customer, you know, say, okay, we're SAP, we'll give you the new versions of -we'll give you everything Oracle will give you, but you're getting it from us, we have rights to all of this stuff, you're getting it from us, you get new versions, you get bug fixes, regulatory updates. you get everything Oracle can provide, plus, everything SAP can provide. So Oracle can only provide what Oracle can provide. We can provide what Oracle can provide So They

plus what we provide. So I think that would put them in a position to win -- you know, make a pretty persuasive argument to customers that they should be

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contracting with SAP and not contracting with Oracle to get their PeopleSoft support and product updates. Q. So if Mr. Plattner had called you up and

said -- or Mr. Kagermann, whoever you like, one of the senior folks over there had called you up and said, we'll pay $8 billion for 70 percent of your customers, would you have said yes? A. Q. A. Q. A. Probably not. Now, let's change the -But if they -Oh, sorry. Go ahead, please.

-- said 30 billion -- you know, at some

price -- I suppose there's some price I would say, yeah, sure. Q. So now let's change the hypothetical It's --

scenario slightly. A.

By the way, because I think if they had

done that, we would have been saying good-bye to the applications business forever. I mean, we might as

well -- if we're going to do that, we might as well say, okay, we're exiting this business, and let's get rid of all of it, so let's talk about the rest. I'll tell you what. For a few extra We If

billion, we'll just give you the whole deal.

don't even want to be in this business any more.

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they made us a -- you know, an attractive enough offer. It would be a big number. But at a certain

point -- you get these tipping points where they just become so large that it's very hard for us to compete with them at all. Q. Sure. In January of 2005, your state of

mind was that Oracle wanted to be in the applications business. A. Q. Yes. So now, let's change the hypothetical a It's just TomorrowNow; SAP hasn't Right?

little bit. bought them. A. Q. thing. Yep.

Just TomorrowNow doing its TomorrowNow

And TomorrowNow says, we want a license to do all those things that we do. First question is, who would have made that decision? A. Q. Me. Okay. How would you have figured out what

you would have charged TomorrowNow? A. I don't think we would have entertained --

we don't think TomorrowNow could have paid us what we would have wanted. I don't think we would have

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thought about it very long.

They didn't have the

wherewithal to pay for such a license. Q. The -- now let's talk about Siebel.

Obviously, at some point during the overall period of time we've been talking about, Oracle acquired Siebel. A. Q. Correct? Yes. And I take it you're aware that at some

point during that same period of time, TomorrowNow started providing some level of service for Siebel customers. Are you aware of that generally? A. Q. Yes. Do you have any sense as you sit here

today, putting aside whatever lawyers may have told you and learned in the litigation, how many customers TomorrowNow provided Siebel service for? A. Q. No. I don't know.

So now let's be hypothetical again. It's -- I think it's September 2006.

Forgive me if I've got the date wrong, so I'll just say, Oracle has bought Siebel, SAP has announced that Safe Passage includes Siebel, and now Mr. Plattner or Mr. Kagermann calls you up again and says, we'd like to get a license to do all of that

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stuff for Siebel. Would it still have been you who made the decision? A. Q. Yes. And would you have applied any different

methodology or thought process to figuring out what price to ask? A. Well, I have to -- you have to -- I have to

ask a clarification. Had they -- had they already bought the PeopleSoft/JD Edwards license, we never would have bought Siebel. occur. So now, a different hypothetical, if after we bought Siebel, they came and said, would you sell us a Siebel/JD Edwards/PeopleSoft license, that's a hypothetical that could have occurred. Q. So then let's make that our hypothetical. If Mr. Plattner or Mr. Kagermann had called you up and said, we want a license to do all those things we do for PeopleSoft, JDE and Siebel -- still would have been you making the decision, of course? A. Q. Definitely, yes. Would you have applied the same thought So it's a hypothetical that couldn't

process and methodology to figuring out a price?

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A. Q.

Yes. Would the same sort of considerations you

described apply to the decision when you add in Siebel as opposed to the decision you talked about earlier when it was just PeopleSoft and JDE? A. Q. A. Q. Yes. Was the acquisition of Siebel a success? I believe so. Was it impaired in any way by the

activities of TomorrowNow? A. Q. A. Yes. How was it impaired? Again, I think -- in three ways. No

different -- really no different than PeopleSoft/JD Edwards. They won some customers away from us to do the support. They won competitive deals where, you

know -- you know, against us, and sometimes where we really didn't get to participate, because SAP took the position that Oracle was overcharging for support and companies shouldn't do business with us because we were not a -- we were not an ethical vendor, because we overcharged people. And thirdly, just overall reputational damage.

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doesn't happen very often, but this case, it's great. Q. How -- I'm sorry, I didn't mean to

interrupt. A. Q. No, no. How would you determine whether it exceeds

or fails to meet your goals? A. An increase -- an improvement in our In other words, It's

won/lost rate in the marketplace.

if it sells very well, it will meet my goals.

all great and good that we think as it comes out of engineering, it looks great, the user interface is good and performance is good and it's reliable. the ultimate litmus test is its success in the market. Q. As of the acquisition of PeopleSoft by But

Oracle, who -- other than SAP, who were Oracle's competitors in the applications marketplace? A. We have -- there are lots of them, and I

mean, there are specific competitors in banking, there are specific competitors in telecommunications and utilities. I mean, it's a highly fragmented

market, so we have lots and lots of competitors. Our largest competitor is SAP. Q. Can you rule out the effect of other

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