Oracle Corporation et al v. SAP AG et al

Filing 557

Transcript of Proceedings held on November 24, 2009, before Judge Elizabeth D. Laporte. Court Reporter/Transcriber Joan Marie Columbini, Telephone number 415-255-6842. 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 2/22/2010. (Columbini, Joan) (Filed on 11/25/2009)

Oracle Corporation et al v. SAP AG et al

Doc. 557

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PAGES 1 - 22 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BEFORE THE HONORABLE ELIZABETH D. LAPORTE ORACLE, USA, INC., ET AL, ) ) PLAINTIFFS, ) ) VS. ) NO. C 07-1658 PJH (EDL) ) SAP AG, ET AL., ) ) SAN FRANCISCO, CALIFORNIA DEFENDANTS. ) TUESDAY ___________________________________) NOVEMBER 24, 2009 TRANSCRIPT OF PROCEEDINGS APPEARANCES: FOR PLAINTIFFS BY: BINGHAM, MCCUTCHEN, LLP THREE EMBARCADERO CENTER SAN FRANCISCO, CALIFORNIA AMY K. DONNELLY, ESQUIRE BREE HAAN, ESQUIRE ORACLE 500 ORACLE PARKWAY REDWOOD SHORES, CALIFORNIA JENNIFER GLOSS, ESQUIRE

94111

94065

BY:

FOR DEFENDANTS

BY:

JONES DAY 555 CALIFORNIA STREET 26TH FLOOR SAN FRANCISCO, CALIFORNIA 94104 JASON MCDONELL, ESQUIRE JACQUELINE LEE, ESQUIRE PATRICK R. DELAHUNTY, ESQUIRE

REPORTED BY:

JOAN MARIE COLUMBINI, CSR 5435, RPR
OFFICIAL REPORTER - US DISTRICT COURT

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842
Dockets.Justia.com

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

PROCEEDINGS; TUESDAY, NOVEMBER 24, 2009

THE CLERK:

CALLING CIVIL 07-1658, ORACLE U.S.A.

INCORPORATED VERSUS SAP AG. COUNSEL, PLEASE STATE YOUR APPEARANCES FOR THE

MS. DONNELLY:

AMY DONNELLY FROM BINGHAM MCCUTCHEN

FOR PLAINTIFFS, YOUR HONOR. THE COURT: A NEW FACE, I BELIEVE? YES.

MS. DONNELLY:

AND WITH ME IS BREE HAAN FROM BINGHAM MCCUTCHEN AND JENNIFER GLOSS FROM ORACLE. MR. MCDONELL: JASON MCDONELL, JACQUELINE LEE, AND

PATRICK DELAHUNTY FOR DEFENDANTS FROM JONES DAY, YOUR HONOR. GOOD MORNING. THE COURT: ALL RIGHT. GOOD MORNING. WHERE ARE YOU ON THE ISSUE OF INFORMATION

RESPONSIVE TO THE FIRST TARGETED REQUEST RELATING TO THE INFRINGER'S PROFITS MEASURE OF DAMAGES? MID-NEGOTIATION, I THINK, IN THE BRIEFS. MR. MCDONELL: YES. I CAN SPEAK TO THAT. THAT WAS KIND OF

AS I UNDERSTAND IT, YOUR HONOR, THE SPECIFIC REQUEST THERE FROM PLAINTIFFS WAS THAT DEFENDANTS -- WELL, ACTUALLY, THERE ARE TWO PARTS TO IT -- THAT DEFENDANTS PRODUCE FINANCIAL STATEMENTS, MEANING INCOME STATEMENTS AND RELATED TRIAL BALANCES JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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FOR THE ENTITIES -- WITH RESPECT TO, YOU KNOW, SAP ENTITIES, VARIOUS SUBSIDIARY CORPORATIONS, FROM WHICH DEFENDANTS MIGHT LOOK TO THOSE FINANCIAL STATEMENTS TO PROVE THE DEDUCTIBLE COSTS. THOSE FINANCIAL STATEMENTS FOR, I THINK, 19 ENTITIES

HAVE BEEN PRODUCED. I WILL TELL YOU IT TURNS OUT THERE'S TWO STRAGGLER COMPANIES THAT WILL BE PRODUCED VERY SHORTLY, IN THE NEXT FEW DAYS. I DON'T ANTICIPATE THAT'S AN ISSUE BETWEEN THE PARTIES. MS. DONNELLY: I WOULD AGREE WITH THAT. WE'VE HAD A

CHANCE TO REVIEW THE DATA THAT SAP PRODUCED SEVERAL DAYS BEFORE THE REPLY BRIEF IN GREATER DETAIL. AND, IN LIGHT OF THE

SUPPLEMENTAL PRODUCTION, I THINK WE SHOULD HAVE WHAT WE NEED BASED UPON WHAT WE'VE REVIEWED THUS FAR. NOW, IF THERE'S ANOTHER SUPPLEMENTAL PRODUCTION AT A LATER TIME FROM DEFENDANTS RELATED TO COST DATA, WE'LL HAVE TO EXAMINE AT THAT TIME WHETHER THAT SHOULD HAVE BEEN INCLUDED WITH THIS EARLIER PRODUCTION. THE COURT: AS FAR AS THE ISSUE YOU ARE PRESENTING

HERE, THAT'S BEEN RESOLVED? MS. DONNELLY: THE COURT: YES, YOUR HONOR. GOOD.

OKAY.

THEN I THINK THE NEXT INTERROGATORY IS INTERROGATORY 69. MR. MCDONELL: THE COURT: YOUR HONOR --

YES, GO AHEAD.

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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MR. MCDONELL:

I APOLOGIZE FOR INTERRUPTING, BUT LET

ME GO BACK TO -- THERE WAS A SECOND COMPONENT TO THE INFRINGER'S PROFIT MOTION, WHICH WAS THE CATCHALL REQUEST, WHICH WAS A REQUEST FROM PLAINTIFFS THAT DEFENDANTS PRODUCE ALL OFFSETTING COST INFORMATION THAT DEFENDANTS MIGHT EVER OFFER IN RESPONSE TO THE PLAINTIFF'S CLAIM FOR INFRINGER'S PROFITS. AS TO THAT

CATCHALL, WHICH, BY THE WAY, IS BASED ON A DOCUMENT REQUEST THAT REQUESTS ALL DOCUMENTS YOU MIGHT EVER USE IN A TRIAL, WHICH WE THOUGHT WAS AN IMPROPER FORM, BUT AS TO THAT -THE COURT: I'M GLAD YOU ARE NOT ASKING ME TO COUNT

HOW MANY INTERROGATORIES THERE WERE. MS. DONNELLY: BUT AS TO THAT INTERPRETATION OF THAT

REQUEST WHERE THEY ARE NOW CONTENDING THAT DEFENDANTS MUST PRODUCE ANY INFORMATION DEFENDANTS MIGHT EVER OFFER AS OFFSETTING COSTS TO INFRINGER'S PROFITS CLAIM, OUR POSITION HAS BEEN, TO THE EXTENT PLAINTIFFS HAVE ASKED FOR SPECIFIC INFORMATION IN DISCOVERY THAT RELATES TO THE OFFSETTING COSTS, WE HAVE MADE GOOD FAITH EFFORTS, AND ARE CONTINUING TO DO SO, TO PRODUCE THAT IDENTIFIABLE INFORMATION. BUT AS TO THIS CATCHALL, WE BELIEVE WE'RE ENTITLED TO MORE FLEXIBILITY, BECAUSE THE DETAILS OF THE INFRINGER'S PROFITS CLAIM WERE ONLY MADE KNOWN ONE WEEK AGO WHEN PLAINTIFF SERVED THEIR DAMAGES EXPERT'S REPORT, A 450-PAGE REPORT WITH BOXES FULL OF SUPPORTING INFORMATION. DIGEST THAT. JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842 WE NEED TIME TO FULLY UNDERSTAND AND

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IT MAY OR MAY NOT BE THAT OUR EXPERTS AND OUR TEAM WILL DISCOVER OTHER OFFSETTING INFORMATION THAT WOULD BE APPROPRIATE THAT WE JUST HAVEN'T REASONABLY BEEN ABLE TO PINPOINT AND PRODUCE AT THIS POINT. THE COURT: ALL RIGHT. YOUR HONOR. OBVIOUSLY, THE END OF

MS. DONNELLY:

FACT DISCOVERY IS FAST APPROACHING, AND DEFENDANTS HAVE HAD A LONG OPPORTUNITY TO PRODUCE COST DATA THAT THEY MAY USE TO COUNTER ORACLE'S INFRINGER'S PROFITS MEASURE OF DAMAGES. OUR

POSITION IS DEFENDANTS SHOULD PRODUCE THAT INFORMATION, OR SHOULD HAVE ALREADY PRODUCED THE INFORMATION, THAT THEY MAY BE RELYING ON IN PROVING THEIR COSTS TO BE DEDUCTED FROM THE INFRINGER'S PROFITS. THE COURT: IT SEEMS TO ME YOU ARE BOTH TRYING TO SET AND I'M NOT GOING

UP A MOTION IN LIMINE EXCLUSION, ET CETERA. TO GIVE ANY ADVISORY OPINIONS. ACTUALLY RESOLVE. INTERROGATORY 69. IS THAT STILL AN ISSUE? MS. DONNELLY: THE COURT: YES, YOUR HONOR.

LET'S GO TO SOMETHING I CAN

THAT'S WHERE I WAS HEADING WITH

IT SEEMS TO ME IT'S REALLY -- THE ISSUE

IS, I HOPE IT IS, STRAIGHTFORWARD THAT THE PLAINTIFFS SEEMINGLY LEGITIMATELY WANT THE DEFENDANTS TO CONFIRM THEY DON'T DO THIS, THEY DON'T CONDUCT ANY ANALYSES, FORMAL OR INFORMAL, FOR ASSIGNING, PREDICTING OR CALCULATING EXPECTED VALUE PER JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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CUSTOMER, SUCH AS PROJECTING CROSS-SELL OR UP-SELL. I THINK 69, THE INTERROGATORY, IS BROAD. IT'S NOT I

JUST A VALUATION AT THE TIME THE NEW CUSTOMER'S ESTABLISHED. DON'T THINK DEFENDANTS ARE SAYING THAT'S WHAT THEY THINK IT'S ASKING FOR. MR. MCDONELL:

YES, THE QUESTION HERE IS, WHAT IS THE

"THIS" THAT WE'RE SHOOTING AT, YOUR HONOR? WE READ THE INTERROGATORY. THERE WAS SOME CONTEXT TO

IT, BECAUSE ELSEWHERE IN THE CASE THERE HAD BEEN DISCUSSION ABOUT ORACLE MODELS FOR DOING VARIOUS THINGS. WE READ THE

INTERROGATORY AS CALLING FOR SOME KIND OF ROUTINIZED STANDARD MODELS OR, YOU KNOW, APPROACHES TO VALUING A CUSTOMER. SO A CLASSIC EXAMPLE WOULD BE, IS THERE AN ALGORITHM WHERE YOU TAKE A CUSTOMER'S SPECIFIC DATA POINTS, PLUG IT IN, AND OUT COMES, YOU KNOW, IN OUR EXPERIENCE, IF YOU HAVE A CUSTOMER WITH THESE DATA POINTS, THAT CUSTOMER IS WORTH "X" DOLLARS TO THE CORPORATION. AND I'M NOT SAYING THAT'S THE ONLY THING WE LOOKED FOR, BUT IT WAS THINGS OF THAT ILK THAT WE LOOKED FOR TO SEE IF THERE WAS SOME KIND OF MODELING OR STANDARD FORM, ROUTINIZED PROJECTING THE COMPANY DID TO TRY TO PRODUCE SOMETHING LIKE THE PRESENT VALUE OF A GIVEN CUSTOMER OR A TYPE OF CUSTOMER. LOOKED FOR THAT. I'M VERY CONFIDENT WE DID A REASONABLY WE

THOROUGH SEARCH AND DID NOT FIND SOMETHING IN THE DISCOVERY PERIOD OF THAT ILK. JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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THE CONCERN I HAVE IS HERE IN THE REPLY BRIEF, IT IS MORPHING INTO SOMETHING MUCH BROADER WHERE THE PLAINTIFFS ARE NOW ASKING FOR, IN EFFECT -- AND I'M QUOTING -- "FORMAL OR INFORMAL EXPECTED VALUE OF A CUSTOMER, SUCH AS PREDICTING A CROSS-SELL OR UP-SELL OPPORTUNITY." IF WHAT THEY'RE ASKING FOR ABOUT THERE IS INFORMAL THINGS THAT HAPPENED IN A COMPANY THIS SIZE, THERE IS NO DOUBT THERE ARE SALESPERSONS AT THE COMPANY SOMEWHERE WHO SPEND THEIR DAYS WONDERING WHAT THEY MIGHT SELL THEIR CUSTOMERS. THE COURT: WELL, I WOULD NOT READ THIS AS

ENCOMPASSING, FOR EXAMPLE, PROJECTING A PARTICULAR CROSS-SELL OR UP-SELL OPPORTUNITY AT A POINT IN TIME, YOU KNOW, TOMORROW, I THINK, OR NEXT YEAR. I THINK IT HAS TO BE LIFE CYCLE; IN OTHER SO SOMETHING --

WORDS, LIFE CYCLE PREDICTIONS OF A CUSTOMER. THAT BY ITS NATURE IS MORE FORMAL, I SUPPOSE. MR. MCDONELL: THE COURT: CERTAINLY -MR. MCDONELL: THE COURT: YES.

IN OTHER WORDS, IT'S MORE COMPLICATED

AND AGAIN, WE'RE TALKING ABOUT --

SO I THINK I READ THE INTERROGATORY TO

TALK ABOUT THE PROJECTED VALUE OF A CUSTOMER OVER ITS LIFE CYCLE. IS THAT CORRECT? MS. DONNELLY: YES, YOUR HONOR.

AND WE WANT TO BE CLEAR THAT -- WHILE WE CERTAINLY JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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DON'T EXPECT DEFENDANTS TO GO THROUGH EVERY INDIVIDUAL IN THE SALES DEPARTMENT'S DAILY COMMUNICATIONS, WE DO EXPECT A MORE COMPREHENSIVE ANSWER BASED ON, FOR EXAMPLE, AN INFORMAL PRESENTATION TO THE BOARD OF DIRECTORS THAT LAID OUT THE VALUATION PER CUSTOMER. THAT -THE COURT: I WOULD THINK ANYTHING DONE TO THE BOARD PERHAPS THAT WASN'T A ROUTINIZED MODEL

OF DIRECTORS RISES TO A SUFFICIENTLY HIGH LEVEL THAT IF IT -EVEN IF IT'S ONE OFF, IF IT'S PROJECTING LIFE CYCLE OF CUSTOMERS, THAT WOULD PROBABLY BE WITHIN IT. MR. MCDONELL: NEEDLE IN A HAYSTACK -THE COURT: RIGHT, AND I DON'T --- ISSUE. OKAY. BUT MY CONCERN HERE IS THE

MR. MCDONELL: THE COURT:

YES. ARE WE LOOKING FOR SOMETHING THAT IS A

MR. MCDONELL:

STANDARD FORM, OR ARE WE LOOKING FOR ONE PARTICULAR CUSTOMER AT ONE POINT IN TIME WHERE SOMEONE SITS DOWN AND SAYS, HEY, THIS IS A GOOD CUSTOMER, FUTURE IS BRIGHT, MAYBE WE'LL SELL THEM THESE TYPES OF THINGS? THE COURT: I DON'T -- WELL, I THINK WE ARE NOT

LOOKING FOR A ONE TIME ONLY, ONE PARTICULAR CUSTOMER THING, ARE WE? MS. DONNELLY: THE COURT: NO, YOUR HONOR. I THINK --

IT'S GOT TO BE SOMETHING THAT'S MORE

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GENERALIZABLE AND GENERALIZED. MS. DONNELLY: AND I THINK LOOKING AT WHAT THIS

INTERROGATORY IS RELEVANT TO INFORMS THAT. WE WANT TO USE THIS INFORMATION TO SHOW THE VALUE THAT THE CUSTOMERS WOULD HAVE TO SAP AFTER THEY RECEIVED THIS FAIR MARKET VALUE LICENSE TO ORACLE. INTERROGATORY GETS AT. SO THAT'S WHAT THIS

THAT'S THE TYPE OF INFORMATION WE'RE

LOOKING TO OBTAIN THROUGH DEFENDANT'S ANSWER. WE'RE ONLY ASKING FOR REASONABLE EFFORTS. CERTAINLY DON'T NEED A NEEDLE-IN-A-HAYSTACK APPROACH. WE ALL WE

WANT IS AN ANSWER THAT PROVIDES CERTAINLY MORE THAN WHAT THEY PROVIDED THUS FAR, WHICH IS ONLY A STATEMENT THAT THEY HAVE NO VALUATIONS AT THE TIME A NEW CUSTOMER CONTRACTS WITH SAP. WE

WOULD LIKE A REASONABLE EFFORT TO ASCERTAIN ANY OTHER VALUATIONS THAT ARE PROVIDED THROUGHOUT THE LIFE CYCLE OF THAT CUSTOMER. THE COURT: LANGUAGE RIGHT NOW. WELL, I GUESS -- I CAN'T FORMULATE THE

I THINK -- I HOPE THAT I'VE GIVEN YOU AS

MUCH GUIDANCE -- I THINK YOU SHOULD PREPARE -- EITHER DO A FURTHER SEARCH IF YOU HADN'T AND YOU THINK YOU SHOULD BASED ON WHAT I SAID, OR PREPARE A DECLARATION -- I THINK IT'S NOT LIMITED, BUT I DON'T THINK YOU'RE SAYING IT'S LIMITED, TO A PROJECTION WHEN YOU FIRST GET THE CUSTOMER. MR. MCDONELL: ISSUES. THE COURT: SO THAT SHOULD BE CLARIFIED. WE ARE NOT, AND THERE ARE SEMANTICS

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I THINK IT HAS TO BE SOMETHING THAT'S MORE GENERALIZED THAN ANY ONE-OFF EFFORT WITH RESPECT TO A SITUATION REGARDING A PARTICULAR CUSTOMER. IT HAS TO BE A METHODOLOGY HOWEVER, IT DOESN'T HAVE TO

THAT'S USED MORE WIDELY THAN THAT.

BE LIMITED TO A, YOU KNOW, A HIGHLY FORMAL MODEL THAT'S USED ALL THE TIME. MR. MCDONELL: THE COURT: YES.

SO IT DOESN'T HAVE TO BE AN EXACT REPLICA

OR MIRROR IMAGE OF WHAT ORACLE HAPPENS TO DO, BUT IT HAS TO BE SOMEWHAT ANALOGOUS IN THAT IT HAS TO BE A MORE GENERALIZED APPROACH AND IT HAS TO BE A PROJECTION. IT HAS TO BE A

PROJECTION OVER A LIFE CYCLE, NOT JUST, YOU KNOW, NEXT WEEK I CAN DO SO AND SO, OR, I'LL MEET MY SALES QUOTA THIS PARTICULAR WAY. IS THAT ENOUGH GUIDANCE? MR. MCDONELL: HELPFUL, YOUR HONOR. MS. DONNELLY: THE COURT: YES, YOUR HONOR. NOW LET'S GET TO 147, THE HAS THAT GUIDANCE IS CLEAR AND VERY

ALL RIGHT.

HIGHEST VALUE LICENSES WITH INDEPENDENT THIRD PARTIES. ANYTHING CHANGED ON THAT? MR. MCDONELL: NO, YOUR HONOR.

THAT IS SUBMITTED,

THE COURT:

OKAY.

WELL, IT SEEMS TO ME THERE, IN

GENERAL, I WOULD AGREE WITH ORACLE, BUT I HAVE SOME JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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RESERVATIONS. ONE, I WANT TO HEAR WHAT THE PLAINTIFFS HAVE TO SAY ABOUT THE TIMEFRAME. DOES SEEM IT HAS TO BE RELEVANT TO THE I

TIME OF INFRINGEMENT, OR AT LEAST THAT'S THE MOST RELEVANT. THINK YOU HAVE A SECONDARY ARGUMENT, TO THE EXTENT THEY'RE

SAYING, WE'D NEVER PAY ANY REAL MONEY FOR SOMETHING AT ANY TIME, WOULD POTENTIALLY -- BUT I KIND OF THINK THERE SHOULD BE A TIMEFRAME. THEN, TO THE EXTENT THAT -- I THINK MOST OF THE ARGUMENTS THAT THE DEFENDANT IS MAKING GO TO ADMISSIBILITY OR EVEN, YOU KNOW, DEBUNKING THE EXPERT'S OPINION SAYING, THIS ISN'T SIMILAR ENOUGH, ET CETERA, AND THAT THAT'S NOT REALLY A DISCOVERY ISSUE. BUT I THINK PERHAPS, AT LEAST BROADLY, IT GIVEN THEY'RE DIRECT COMPETITORS, I THINK

SHOULD BE LIMITED.

THAT, GENERALLY SPEAKING, EVERYTHING IS PRETTY MUCH LIKELY TO BE SUFFICIENTLY RELEVANT TO AT LEAST PASS THE MINIMUM THRESHOLD FOR DISCOVERY. LICENSES. MR. MCDONELL: THE COURT: YOUR HONOR, MAY -BUT MAYBE IT SHOULD AT LEAST BE LIMITED TO SOFTWARE

YES. MAY I SPEAK TO THAT? IT SEEMS LIKE

MR. MCDONELL: YOU'VE -THE COURT:

ALL RIGHT. -- SHOWN YOUR INCLINATIONS HERE.

MR. MCDONELL: THE COURT:

RIGHT.

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MR. MCDONELL:

THIS IS A WILD SWING IN THE DARK,

WHICH, YOUR HONOR, IN OUR VIEW, DOESN'T EVEN PURPORT TO MEET THE RELEVANT STANDARD. THE STANDARD THEY'RE APPLYING IS, GIVE US

THE BIGGEST DOLLARS; WE DON'T CARE WHERE THEY COME FROM, WE JUST WANT THE BIGGEST DOLLARS. THAT CAN'T POSSIBLY BE VIEWED AS

REASONABLY TAILORED TO A SUBJECT MATTER AND A SCOPE. THE COURT: NORMALLY, IT MIGHT HAVE, BUT IN THIS

CONTEXT WHERE THEY'RE DIRECT COMPETITORS AND THEY BASICALLY -AS I UNDERSTAND IT, YOU KNOW, THIS IS GOING TO BE -- THE CORE TECHNOLOGY IS GOING TO BE RELEVANT BECAUSE WE'RE TALKING ABOUT COMPETING PRODUCTS. MR. MCDONELL: TECHNOLOGY. BUT THEY'RE NOT TALKING ABOUT THE CORE

THE CORE TECHNOLOGY THAT ONE MIGHT REASONABLY THINK

ABOUT HERE WOULD BE WHAT WOULD IT COST TO GET THE TYPE OF LICENSE THAT THE PLAINTIFFS CLAIM WOULD BE APPROPRIATE FOR A COMPANY LIKE DEFENDANT TOMORROWNOW TO HAVE OBTAINED IN ORDER TO DO THE TYPES OF THINGS PLAINTIFFS CLAIM THEY SHOULDN'T HAVE DONE. THE COURT: JUST A MINUTE.

I GUESS MY QUESTION TO YOU IS, YOU KNOW, SO THEN WHAT'S THE BIG DEAL? SO THEY GET IT. THEY CAN'T INTRODUCE IT,

THEN, IF IT'S REALLY NOT RELEVANT. MR. MCDONELL: THE COURT: LET ME MAKE TWO POINTS.

IN OTHER WORDS, THEY, I THINK, IN FACT --

YOU KNOW, YOU'RE AFRAID -- REALLY, YOU'RE MORE AFRAID IT WILL JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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SHOW SOME BIG NUMBERS THAT CAN'T -- THAT JUDGE HAMILTON WILL SAY IS SUFFICIENTLY RELEVANT THE EXPERTS CAN FIGHT ABOUT IT AND -MR. MCDONELL: THE BURDEN I'M CONCERNED ABOUT HERE

IS, A CASE OF THIS MAGNITUDE, EACH ONE OF THESE DECISIONS ALONG THE WAY HAS AN ENORMOUS RIPPLE EFFECT, A TAILWIND. IF SAP IS REQUIRED TO PRODUCE THESE IRRELEVANT LICENSES, ORACLE WILL CERTAINLY TRY TO MAKE AN ARGUMENT THAT THEY'RE RELEVANT. WE WILL THEN -- BOTH SIDES WILL BE PUT TO THE I CAN'T

ENORMOUS TASK OF TRYING TO PUT ALL THAT IN CONTEXT.

IMAGINE HOW MANY HUNDRED HOURS ARE GOING TO BE DEVOTED TO TRYING TO ARGUE OVER THE RELEVANCE OR OVER THE LACK OF RELEVANCE WHEN THEY HAVEN'T EVEN ARTICULATED THE RELEVANCE AT THIS STAGE. THE COURT: ALL RIGHT. I THINK IF THERE ARE SOME

BROAD REASONABLE LIMITS, AS OPPOSED TO SOME LENGTHY, LENGTHY DESCRIPTION OF SIMILAR TO TOMORROWNOW, THIS, THAT, AND THE OTHER THING, I WILL CONSIDER THEM. MR. MCDONELL: THE COURT: LET ME --

I AM GOING TO GRANT SOMETHING. LET ME SURFACE ONE IDEA. OKAY. WHAT ELSE?

MR. MCDONELL: THE COURT:

SOFTWARE, YES.

MR. MCDONELL:

THE IDEA THAT PART OF THE REQUEST IS

TO GET THREE HIGHEST LICENSES OF SOFTWARE -- IT'S NOT EVEN SOFTWARE. I WISH IT WERE THAT SIMPLE. IT'S INTELLECTUAL

PROPERTY -- INTELLECTUAL PROPERTY INTO SAP, THAT'S A BLIND SHOT IN THE DARK. JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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THERE IS NO THEORY BY WHICH ONE COULD SAY THAT THE SOFTWARE THAT SAP MIGHT LICENSE IN FROM UNKNOWN THIRD PARTIES IS POSSIBLY A REASONABLE BENCHMARK FOR WHAT ORACLE SOFTWARE WOULD SELL FOR. THE COURT: OKAY. BUT ISN'T THAT -- THAT'S THE ISSUE

OF, IF YOU ARE MAKING A CLAIM, WELL, WE NEVER PAY THAT MUCH MONEY, BUT YOU HAVE PAID IT. MR. MCDONELL: OKAY. FIRST OF ALL, WE HAVE NEVER --

THAT WAS NOT THE ARGUMENT WE MADE ON OUR PARTIAL SUMMARY JUDGMENT MOTION, WHICH, BY THE WAY, IS ARGUED AND SUBMITTED. THE COURT: I UNDERSTAND. AND I'M NOT GOING TO REARGUE THAT

MR. MCDONELL:

BECAUSE IT WAS WELL ENOUGH THE FIRST TIME THROUGH. THE COURT: ONE JUDGE IS ENOUGH ON THAT. EXACTLY.

MR. MCDONELL:

BUT THE FUNDAMENTAL PROPOSITION ON THAT MOTION WAS THAT THESE PARTIES WOULD NOT HAVE ENTERED A LICENSE FOR THAT -OF THAT TYPE AT THAT TIME, PERIOD. IT WAS NOT THE POSITION OF

SAP THAT IT NEVER WOULD HAVE PAID A LOT OF MONEY FOR SOMETHING ANYWHERE EVER. THE ARGUMENT IS COMPLETELY CIRCULAR. WHERE THEY SAY,

OKAY, WE DON'T HAVE TO SHOW THAT THE LICENSES WE ARE SEEKING DISCOVERY OF ARE COMPARABLE IN SOME WAY, WE'LL JUST SAY THAT THERE'S -- THEY COST A LOT OF MONEY, AND THEN WE'LL BACK INTO THEIR BEING COMPARABLE AFTER THE FACT. THE REASONING IS

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COMPLETELY CIRCULAR. THE COURT:

I DON'T THINK IT GOES ANYWHERE. GOT IT. YOUR HONOR, THE REQUEST WAS NARROWLY

MS. DONNELLY:

TAILORED TO GET AT THE INFORMATION THAT WOULD BE MOST RELEVANT TO OUR CASE MOVING FORWARD AND THAT WE ALSO THOUGHT WOULD BE MOST REASONABLE FOR DEFENDANTS TO COLLECT AND PROVIDE, AND SO LET ME SPEAK TO YOU A LITTLE BIT OF SOME OF THE ISSUES THAT HAVE BEEN COVERED HERE. FIRST OF ALL, REGARDING THE TIMEFRAME ISSUE WHICH YOU RAISED, WHILE THE LICENSE BETWEEN THE PARTIES WOULD HAVE TAKEN PLACE IN 2005, ORACLE BELIEVES THAT THE LICENSE AGREEMENTS FROM THE LAST FIVE YEARS COULD STILL BE RELEVANT IN THAT THEY COULD GO TO THE STATE OF MIND OF THE PARTIES IN ENTERING INTO THAT NEGOTIATION IN THAT IT DOES SHOW WHAT SAP MIGHT HAVE PAID FOR OR HOW THEY WOULD HAVE APPROACHED AN INTELLECTUAL PROPERTY LICENSE. THE COURT: YOU'RE ASKING FOR? MS. DONNELLY: SO WE'RE ASKING FOR THE THREE HIGHEST SO WHICH TIME PERIOD ARE YOU SAYING

VALUE LICENSES FOR INTELLECTUAL PROPERTY OUT AND IN FROM THE LAST FIVE YEARS. NOW, YOUR HONOR -THE COURT: I DON'T SEE HOW -- SO THE LAST FIVE YEARS

MEANING 2004 TO 2009; IS THAT WHAT YOU'RE -MS. DONNELLY: THE COURT: AND YOUR HONOR --

AND THE HYPOTHETICAL LICENSE WAS IN 2005?

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MS. DONNELLY:

AND, YOUR HONOR, WE WOULD CERTAINLY BE

WILLING TO CONSIDER A REQUEST FROM DEFENDANTS TO LIMIT THEIR LICENSES TO THE HIGHEST VALUE LICENSES AS OF THE TIME OF THE FAIR MARKET VALUE OR HYPOTHETICAL LICENSE AT ISSUE HERE. HOWEVER, OUR VIEW IS THAT IT WOULD BE -- IT WOULD FACILITATE THE PROCESS FOR DEFENDANTS IN COLLECTING AND PROVIDING THIS INFORMATION IF THEY COULD LOOK AT -- RATHER THAN TRYING TO GO BACK IN TIME AND DEDUCE EXACTLY WHAT THE HIGHEST VALUE LICENSES WERE AT THAT TIME, IF THEY CAN LOOK BACK AND PROVIDE A MORE COMPREHENSIVE ANSWER THAT'S BASED ON THE KNOWLEDGE THEY HAVE TODAY. THE COURT: OKAY. WHICH TIME PERIOD DO YOU PREFER?

MR. MCDONELL:

I DON'T HAVE A PREFERENCE, YOUR HONOR.

I DON'T FIND ANY OF IT TO BE RELEVANT, AND I THINK THAT THE ISSUE THAT THEY'RE PRESENTING -THE COURT: WELL, THE BURDENSOME --- APPEARS TO BE -- YOUR HONOR, THAT

MR. MCDONELL:

WOULD -- PERHAPS, SINCE YOU'RE INCLINED TO RULE IN THEIR FAVOR ANYWAY, PERHAPS THAT WOULD BE A MATTER FOR COUNSEL TO DISCUSS WHEN WE DIG IN AND DO THE ANALYSIS. THE COURT: OKAY. ALL RIGHT. LET'S PUT APART -- SO

I WOULD BE OPEN TO A REASONABLE TIME LIMITATION TO THE RELEVANT PERIOD OF THE HYPOTHETICAL LICENSE. TWO-YEAR WINDOW, OR SOMETHING. THAT TO YOU. JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842 MAYBE THAT'S LIKE A

I'M NOT -- I'M GOING TO LEAVE

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NOW, WHAT ABOUT THE NATURE -- I WOULD BE INCLINED TO PUT SOME MORE SPECIFICITY ON IT, BUT NOT IN EXCRUCIATING DETAIL, SO THAT IT HAS SOME BIGGER CHANCE OF BEING COMPARABLE. MS. DONNELLY: YES, YOUR HONOR. WE WOULD ACCEPT THE

HIGHEST VALUE SOFTWARE LICENSES FROM THE RELEVANT TIME PERIOD. THE COURT: AND WHY ISN'T IT JUST LICENSING OUT? I

MEAN, THE ISSUE IS THE VALUE OF ORACLE.

YOU'RE TRYING TO PROVE

THE VALUE OF AN ORACLE LICENSE IN A HYPOTHETICAL NEGOTIATION, AND YOU'RE SAYING THEIR PRODUCTS ARE SIMILAR BECAUSE YOU'RE COMPETITORS, AND, SO, THE VALUE OF WHAT THEY CHARGE WOULD BE APPROPRIATE. BUT WHAT THEY BUY FROM SOMEBODY ELSE BY ITS NATURE

IS SOMETHING THEY CAN'T DO THEMSELVES. MS. DONNELLY: YES, YOUR HONOR, BUT IT WOULD ALSO

SPEAK TO DEFENDANT'S POSITION AND PREVIOUS DECISIONS RELATING TO THEIR OWN LICENSING OF OTHER PARTY'S INTELLECTUAL PROPERTY. AT ISSUE HERE IN THIS CASE IS A FAIR MARKET VALUE BETWEEN THE PARTIES WHERE SAP WOULD BE LICENSING ANOTHER PARTY'S INTELLECTUAL PROPERTY. THEREFORE, THE LICENSES WHERE SAP IS

BOTH LICENSING ANOTHER PARTY'S INTELLECTUAL PROPERTY, AS WELL AS LICENSING ITS OWN INTELLECTUAL PROPERTY, COULD BOTH BE USED AND POTENTIALLY RELEVANT IN TRIAL TO THE ISSUE OF THE FAIR MARKET VALUE PRESENTED BY ORACLE AS A MEASURE OF DAMAGES. MR. MCDONELL: THE COURT: I'M SORRY.

I SUPPOSE THERE MIGHT BE -- I DON'T KNOW I SUPPOSE IF

WHAT KIND OF SOFTWARE LICENSING SAP GETS INTO.

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IT'S JUST FOR STUFF FOR RUNNING ITS OWN BUSINESS THAT HAS NOTHING TO DO WITH THIS FIELD OF PRODUCTS, THAT WOULD BE COMPLETELY IRRELEVANT. MR. MCDONELL: THE ANSWER COUNSEL GAVE, WITH ALL DUE WHAT SHE'S SAYING IS, WE DON'T KNOW

RESPECT, WAS A NON-ANSWER.

WHAT THIRD PARTY -- WHAT INDEPENDENT THIRD PARTY SOFTWARE MIGHT BE PURCHASED, BUT IF IT'S FOR A LOT OF MONEY, THEN WE'RE INTERESTED IN IT. THAT DOESN'T GO TO THE HEART OF THIS SO IT'S A NON-STARTER ON THE TECHNOLOGY. THEY MIGHT LICENSE THINGS TO RUN THEIR

COMPARABILITY ISSUE. THE COURT:

BUSINESS, LIKE STORAGE CAPACITY, OR SOMETHING LIKE THAT THAT HAS ABSOLUTELY NOTHING TO DO WITH THIS. MR. MCDONELL: I THINK THAT'S IRRELEVANT.

LET ME GO TO THE OTHER ISSUE OF WHAT WHAT THEY'RE UN- --

TYPE OF SOFTWARE SHOULD WE BE FOCUSED ON.

OVERTLY TRYING TO DO IS FIND SOME KIND OF COUNTERPART FOR THE ORACLE PRODUCTS THAT WERE SUPPORTED BY TOMORROWNOW. SO THE

NATURAL THING WOULD BE TO LIMIT IT TO SAP SOFTWARE LICENSES OUT OF ENTERPRISE SOFTWARE, GENERALLY IN THE SAME FIELD OF THE JD EDWARDS, PEOPLESOFT, AND SIEBEL PRODUCT LINES. MS. DONNELLY: YOUR HONOR, HOW MUCH DEFENDANTS HAVE

PAID FOR OTHER PARTIES' SOFTWARE, REGARDLESS OF ITS SIMILARITY TO PEOPLESOFT, JDE, OR SIEBEL PRODUCT LINES CAN BE RELEVANT TO HOW MUCH THEY PAY FOR THE INTELLECTUAL PROPERTY HERE. THE COURT: WHY? BECAUSE --

MS. DONNELLY:

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THE COURT:

I MEAN, IF IT'S WILDLY DIFFERENT

INTELLECTUAL PROPERTY, IT WOULDN'T BE RELEVANT. MS. DONNELLY: THE COURT: I THINK, FOR EXAMPLE, IF THE --

I MEAN, LET'S SAY THEY HAVE -- YOU KNOW, I GUESS

YOU GUYS SHOULD BE SUPPLYING ME WITH THESE EXAMPLES. YOU SHOULD.

I SUPPOSE ANY LARGE COMPANY COULD, SAY, LICENSE

SECURITY SOFTWARE; IT WOULD HAVE NOTHING TO DO WITH ANY OF THIS, AND THEY MIGHT PAY A LOT OF MONEY, OR THEY MIGHT LICENSE SOFTWARE, YOU KNOW, JUST -- YOU KNOW, YOU HAVE TO COME UP WITH -MR. MCDONELL: THERE WERE SOME EXAMPLES UNDER SEAL IN

ONE OF THE DECLARATIONS THAT WAS FILED ON THIS MOTION THAT I WOULD RATHER NOT TALK ABOUT IN A PUBLIC RECORD. BUT THERE WERE

NAME BRAND COMPANIES THAT ARE NOT SAP, ORACLE-TYPE CUSTOMERS, COMPANIES. THERE ARE OTHER TYPES OF COMPANIES. THE COURT: RIGHT. SO I THINK IT HAS TO BE MORE

HOWEVER, I DON'T WANT TO GET INTO EXCRUCIATING DETAIL.

I'M LEAVING THAT -- THAT I THINK IS UP TO ALL OF YOU. SO I GUESS THE -- OKAY. WHAT ELSE WERE YOU GOING TO

MS. DONNELLY:

IT LOOKS LIKE THE LAST REMAINING

ISSUE -- IT SOUNDS LIKE THE PARTIES WILL FURTHER CONFER ABOUT THE SPECIFICS OF THE TIMEFRAME AND OFFER SOME REASONABLE LIMITATION, ALTHOUGH NOT NECESSARILY IN ORACLE'S POSITION TO THE LEVEL OF DETAIL THAT MR. MCDONELL HAS SUGGESTED, TO THE EXTENT JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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OF THE LICENSES THAT WOULD BE AT ISSUE. THE COURT: I MEAN, I THINK IT COULD BE A LICENSE --

I DON'T THINK IT'S SO MUCH LICENSE OUT OR IN, ALTHOUGH OUT THERE'S A BIGGER CHANCE THAT IT'S RELEVANT THAN IN, BUT IF IT'S IN, IF IT WERE IN THE FIELD, I SUPPOSE I WOULD BE FINE. I JUST

WOULD BE SURPRISED IF THAT HAPPENED, BUT THEN I DON'T KNOW ENOUGH ABOUT IT TO KNOW. MR. MCDONELL: SO THE FOCUS I'M TAKING AWAY IS THE THERE WILL BE TIMEFRAME

LIMITATIONS WILL BE TO SOFTWARE. LIMITATIONS.

AND, GENERALLY SPEAKING, IT SHOULD BE THE TYPE OF

SOFTWARE THAT'S AT ISSUE IN THE CASE. THE COURT: RIGHT, BUT IN. WHICH IS THE ENTERPRISE SOFTWARE,

MR. MCDONELL:

PEOPLESOFT, JD EDWARDS AND SIEBEL. THE COURT: I MIGHT DEFINE -- I'M NOT NECESSARILY MAYBE IT SHOULD BE, MAYBE IT BUT THAT

AGREEING IT SHOULD BE THAT NARROW.

SHOULDN'T BE, BECAUSE I HAVEN'T HEARD THE HASHING OUT. IS THE NATURE I HAVE IN MIND.

I MEAN, THAT IS THE POINT OF IT,

BUT THERE MIGHT BE SOME REASON WHY THAT FORMULATION IS TOO NARROW; I DON'T KNOW. MS. DONNELLY: YES, YOUR HONOR.

THE INTELLECTUAL PROPERTY THE DEFENDANTS WOULD BE LICENSING UNDER THE FAIR MARKET VALUE LICENSE HERE IS A VERY BROAD SCOPE OF INTELLECTUAL PROPERTY, AND THE LICENSES RELATED TO OTHER SOFTWARE BESIDES ENTERPRISE APPLICATION SOFTWARE MIGHT JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842

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PROVIDE AN EXAMPLE OF WHERE DEFENDANTS HAVE LICENSED A SIMILAR SCOPE OF SOFTWARE OR A SIMILAR VOLUME AT ISSUE. THE COURT: I JUST CAN'T DO IT. I LEAN MORE TOWARDS, SINCE IT'S SUCH A NARROW NUMBER, AND IT'S THEIR PROBLEM IF THEY END UP WITH SOMETHING THAT'S REALLY TRULY IRRELEVANT, THAT I THINK THE RISK IS MORE ON THEM. SO THAT'S ONE REASON I'M GOING THIS ROUTE. I THINK THAT'S THE MOST ADVICE I CAN GIVE YOU. THERE ANYTHING ELSE? MS. DONNELLY: YES, YOUR HONOR. WE JUST WANT TO IS OKAY. AND I'M NOT GOING PARSE THAT OUT.

CLARIFY EXACTLY -- SINCE WE ARE BEFORE YOU NOW, WE WANT TO CLARIFY EXACTLY WHAT WOULD BE INVOLVED IN THE PRODUCTION OF THOSE MATERIALS. WE JUST WANT TO BE SPECIFIC THAT IT SHOULD BE

THE LICENSE ITSELF. DEFENDANTS DO NOT HAVE TO PRODUCE EVERY SINGLE PIECE OF PAPER THAT'S EVER BEEN ASSOCIATED WITH SOME OF THESE LICENSES; HOWEVER, WE DO EXPECT THEY WOULD PRODUCE ANY ATTACHMENTS OR APPENDICES OR AMENDMENTS THAT MAKE MATERIAL CHANGES TO THE LICENSE. AND WE ALSO REQUEST THAT, IN THE EVENT THAT SOME OF THESE LICENSES ARE ROYALTY-BASED LICENSES RATHER THAN FLAT FEE LICENSES, THAT DEFENDANTS PROVIDE SOME LEVEL OF DETAIL THAT ALLOWS US TO UNDERSTAND THE TOTAL VALUE OF PAYMENTS MADE DURING THE RELEVANT PERIOD. SO THAT MIGHT BE INVOICES. THAT MIGHT BE

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A ROYALTY AUDIT.

WE'RE FLEXIBLE ABOUT WHAT FORM THAT TAKES.

AND WE WOULD EVEN ACCEPT A VERY BRIEF DECLARATION STATING APPROXIMATELY THE PAYMENTS THAT WOULD HAVE BEEN PAID OR RECEIVED PURSUANT TO THAT LICENSE. MR. MCDONELL: THAT'S A REQUEST THAT'S NOT BEEN MADE

BEFORE AND WAS NOT A SUBJECT OF THIS MOTION. THE COURT: THAT. I AGREE. I CAN'T RULE ON THE FLY LIKE THE

YOU WILL HAVE TO MEET AND CONFER AND DISCUSS IT.

CONCEPT OUGHT TO BE SUFFICIENT TO SHOW. MS. DONNELLY: MR. MCDONELL: THE CLERK: UNDERSTOOD, YOUR HONOR. HAPPY HOLIDAYS TO ONE AND ALL.

COURT IS IN RECESS.

(PROCEEDINGS ADJOURNED.)

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CERTIFICATE OF REPORTER I, JOAN MARIE COLUMBINI, OFFICIAL REPORTER FOR THE UNITED STATES COURT, NORTHERN DISTRICT OF CALIFORNIA, HEREBY CERTIFY THAT THE FOREGOING PROCEEDINGS IN C 07-1658 PJH (EDL), ORACLE 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.

________________________________________ JOAN MARIE COLUMBINI, CSR 5435, RPR WEDNESDAY, NOVEMBER 25, 2009

JOAN MARIE COLUMBINI, CSR, RPR OFFICIAL COURT REPORTER - U.S. DISTRICT COURT 415-255-6842