Oracle Corporation et al v. SAP AG et al

Filing 677

Memorandum in Opposition re 640 MOTION for Partial Summary Judgment Defendants' Notice of Motion and Motion For Partial Summary Judgment filed byOracle EMEA Limited, Oracle International Corporation, Oracle USA Inc., Siebel Systems, Inc.. (House, Holly) (Filed on 3/31/2010)

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BINGHAM McCUTCHEN LLP DONN P. PICKETT (SBN 72257) GEOFFREY M. HOWARD (SBN 157468) HOLLY A. HOUSE (SBN 136045) ZACHARY J. ALINDER (SBN 209009) BREE HANN (SBN 215695) Three Embarcadero Center San Francisco, CA 94111-4067 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] [e-mail] [e-mail] [e-mail] DORIAN DALEY (SBN 129049) JENNIFER GLOSS (SBN 154227) 500 Oracle Parkway, M/S 5op7 Redwood City, CA 94070 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] Attorneys for Plaintiffs ORACLE USA, INC., ORACLE INTERNATIONAL CORPORATION, ORACLE EMEA LIMITED, AND SIEBEL SYSTEMS, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION ORACLE USA, INC., et al., v. Plaintiffs, CASE NO. 07-CV-01658 PJH (EDL) ORACLE'S OPPOSITION TO DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT Date: Time: Place: Judge: May 5, 2010 9:00 am 3rd Floor, Courtroom 3 Hon. Phyllis J. Hamilton

SAP AG, et al., Defendants.

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TABLE OF CONTENTS Pages INTRODUCTION ............................................................................................................ 1 LEGAL STANDARD FOR SAP'S MSJ........................................................................... 2 OEMEA'S CLAIMS ARE PROPERLY BEFORE THIS COURT .................................. 2 A. Admissions In SAP's Answer Defeat SAP's Objections to OEMEA's California Claims ................................................................................................... 3 B. OEMEA's Claims Are Not "Wholly Extraterritorial" ........................................... 4 C. The Law Allows Out-Of-State Parties Like OEMEA To Seek Relief For Harm Partly Occurring In, Or Emanating From, California .................................. 6 D. OEMEA's Inclusion In The Case Fully Comports With Due Process .................. 7 ORACLE DOES NOT SEEK THE LOST PROFITS THAT SAP ASKS THE COURT TO BAR .............................................................................................................. 9 ORACLE MAY PURSUE "SAVED DEVELOPMENT COSTS" UNDER ITS UNJUST ENRICHMENT CLAIM AND DOES NOT SEEK THEM UNDER OTHERS .......................................................................................................................... 12 A. "Saved Development Costs" Are A Proper Damages Measure For Oracle's Unjust Enrichment/Restitution Claim .................................................. 12 B. Oracle Seeks No Saved Development Cost Damages Under Its Other State Law Claims .......................................................................................................... 14 ORACLE MAY INCLUDE SAVED R&D COSTS IN ITS FAIR MARKET LICENSE MEASURE OF COPYRIGHT DAMAGES .................................................. 14 A. SAP Improperly Seeks Reconsideration Of The Court's January 28, 2010 Order ................................................................................................................... 14 1. The Court Has Already Rejected SAP's Argument That The R&D Costs It Saved Cannot Be Introduced Into Evidence .............................. 15 2. SAP Did Not Satisfy Civil Local Rule 7-9's Prerequisites for Reconsideration of the "Saved Costs" Question ..................................... 16 B. SAP Is Wrong That Its Saved R&D Costs Cannot Be Considered ..................... 17 ORACLE HAS DISCLOSED ALL ITS TRESPASS TO CHATTELS AND CDAFA DAMAGES, WHICH INCLUDE LOST PROFITS ......................................... 20 A. Oracle Has Quantified All the Damages That It Seeks And Which Are Final For Its Trespass To Chattels And CDAFA Claims .................................... 21 B. SAP Does Not Carry Its Burden Of Proving Undue Prejudice ........................... 22 C. Lost Profits Are Recoverable Under Oracle's CDAFA Claim ............................ 23 CONCLUSION ................................................................................................................ 25

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TABLE OF AUTHORITIES Pages

Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975) ................................................................................................................ 12 Arabian v. Sony Elec. Inc., No. 05-CV-1741, 2007 U.S. Dist. LEXIS 12715 (S.D. Cal. Feb. 22, 2007) ............................ 8 Barco N.V. v. Tech. Props. Ltd., No. 08-5398, 2010 WL 604673 (N.D. Cal. Feb. 19, 2010) .................................................... 14 Bourns, Inc. v. Raychem Corp., 331 F.3d 704 (9th Cir. 2003)................................................................................................... 14 Burnett v. Al Baraka Inv. & Dev. Corp., 274 F. Supp. 2d 86 (D. D.C. 2003) ........................................................................................... 7 Bus. Trends Analysts, Inc. v. Freedonia Group, Inc., 887 F.2d 399 (2d Cir. 1989).................................................................................................... 19 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) .................................................................................................................. 2 Churchill Village LLC v. Gen. Elec. Co., 169 F. Supp. 2d 1119 (N.D. Cal. 2000) .................................................................................... 8 County of Tuolomne v. Sonora Cmty. Hosp., 236 F.3d 1148 (9th Cir. 2001)................................................................................................... 2 Craigslist, Inc. v. Naturemarket, Inc., No. 08-5065 PJH, 2010 U.S. Dist. LEXIS 19992 (N.D. Cal. Jan. 28, 2010) ............. 21, 22, 25 On Davis v. The Gap, 246 F.3d 152 (2nd Cir. 2001).................................................................................................. 19 Del Mar Seafoods, Inc. v. Cohen, No. 07-2952, 2007 U.S. Dist. LEXIS 98610 (N.D. Cal. Aug. 27, 2007) ............................... 17 Deltak, Inc. v. Advanced Sys., Inc., 767 F.2d 357 (7th Cir. 1985)................................................................................................... 19 Fernandez v. Taser Int'l, Inc., No. 06-4371, 2008 WL 4775779 (N.D. Cal. Oct. 27, 2008) .................................................. 11 Florida v. Tenet Healthcare Corp., 420 F. Supp. 2d 1288 (S.D. Fla. 2005) ..................................................................................... 6 ii
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TABLE OF AUTHORITIES (continued)

Pages

Hanger Prosthetics & Orthotics, Inc. v. Capstone Orthopedic, Inc., 556 F. Supp. 2d 1122 (E.D. Cal. 2008)................................................................................... 22 Hertz Corp. v. Friend, No. 08-1107, 2010 WL 605601 (U.S. Feb. 23, 2010) .............................................................. 8 Hsieh v. Peake, No. 06-5281-PJH, 2008 U.S. Dist. LEXIS 23649 (N.D. Cal. Mar. 25, 2008)........................ 22 Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359 (Fed. Cir. 2008)......................................................................................... 10, 12 Meridian Project Sys., Inc., v. Hardin Constr. Co., LLC, 404 F. Supp. 2d 1214 (E.D. Cal. 2005)..................................................................................... 7 Network Appliance, Inc. v. Bluearc Corp., No. 03-5665, 2005 U.S. Dist. LEXIS 16726 (N.D. Cal. June 27, 2005) ................................ 23 Optistreams, Inc. v. Gahan, No. 05-117 REC, 2006 WL 829113 (E.D. Cal. Mar. 28, 2006) ............................................. 21 Paulsen v. CNF Inc., 559 F.3d 1061 (9th Cir. 2009)................................................................................................... 9 Phillips Petroleum v. Shutts, 472 U.S. 797 (1985) .................................................................................................................. 8 Preiser v. Newkirk, 422 U.S. 395 (1975) ................................................................................................................ 11 Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538 (Fed. Cir. 1995)................................................................................................. 12 Roesgen v. Am. Home Prods. Corp., 719 F.2d 319 (9th Cir. 1983)..................................................................................................... 8 SEB, A.A. v. Montgomery Ward & Co., Inc., 412 F. Supp. 2d 336 (S.D.N.Y. 2006)..................................................................................... 10 Sid & Marty Krofft Television Prods., Inc. v. McDonald's Corp., 562 F.2d 1157 (9th Cir. 1977)................................................................................................. 19 Smith v. Cardinal Logistics Management Corp., No. 07-2104, 2008 WL 4156364 (N.D. Cal. Sept. 5, 2008) ..................................................... 7

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TABLE OF AUTHORITIES (continued)

Pages

Solid Host, NL v. Namecheap, Inc., 652 F. Supp. 2d 1092 (C.D. Cal. 2009) .................................................................................... 6 Speyer v. Avis Rent a Car Sys., Inc., 415 F. Supp. 2d 1090 (S.D. Cal. 2005) ................................................................................. 7, 8 Sun Microsystems Inc. v. Hynix Semiconductor Inc., 608 F. Supp. 2d 1166 (N.D. Cal. 2009) .................................................................................. 11 Telex Corp. v. Int'l Bus. Mach. Corp., 510 F.2d 894 (10th Cir. 1975)................................................................................................. 14 Tidenberg v. Bidz.com, No. 08-5553, 2009 U.S. Dist. LEXIS 21916 (C.D. Cal., Mar. 4, 2009) ................................... 8 Union Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005), rev'd on other grounds by Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348 (Fed. Cir. 2009) (en banc) ....................................... 9, 12 United States v. Alpine Land & Reservoir Co., 887 F.2d 207 (9th Cir. 1989)................................................................................................... 14 United States v. Beardslee, No. 94-0186, 2008 U.S. Dist. LEXIS 105667 (N.D. Cal. Dec. 2, 2008) ................................ 17 Wendt v. Host Int'l, Inc., 125 F.3d 806 (9th Cir. 1997)................................................................................................... 23 Wyatt Tech. Corp. v. Smithson, No. 05-1309, 2006 WL 5668246 (C.D. Cal. Aug. 14, 2006), aff'd in part, rev'd in part by 345 Fed. Appx. 236 (9th Cir. 2009) ........................................................................... 25 STATE CASES Ajaxo, Inc. v. E*Trade Group, Inc., 135 Cal. App. 4th 21 (2005) ............................................................................................. 13, 14 Cal. Fed. Bank v. Matreyek, 8 Cal. App. 4th 125 (1992) ..................................................................................................... 13 Coast Oyster v. Perluss, 218 Cal. App. 2d 492 (1963)............................................................................................. 23, 24 Diamond Multimedia Sys., Inc. v. Superior Court, 19 Cal. 4th 1036 (1999) ........................................................................................................ 6, 7 iv
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TABLE OF AUTHORITIES (continued)

Pages

Fibreboard Paper Prods. Corp. v. East Bay Union of Machinists, 227 Cal. App. 2d 675 (1964)................................................................................................... 25 Ghirardo v. Antonioli, 14 Cal. 4th 39 (1996) .............................................................................................................. 13 Guy v. IASCO¸ No. B168339, 2004 WL 1354300 (Cal. Ct. App. June 17, 2004)............................................. 7 Hassan v. Mercy Am. River Hosp., 31 Cal. 4th 709 (2003) ............................................................................................................ 24 Hurtado v. Superior Court, 11 Cal. 3d 574 (1974) ........................................................................................................... 8, 9 Intel Corp. v. Hamidi, 30 Cal. 4th 1342 (2003) .......................................................................................................... 20 Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95 (2006) ................................................................................................................ 6 Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723 (2000) ................................................................................................... 13 Muller v. Auto Club of S., 61 Cal. Cap. App. 4th 431 (1998) ........................................................................................... 23 Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214 (1999) ................................................................................................. 6, 7 Ornelas v. Randolph, 4 Cal. 4th 1095 (1993) ............................................................................................................ 24 Pitney-Bowes, Inc. v. State Dept. of Food and Agric., 108 Cal. App. 3d 307 (1980)................................................................................................... 23 FEDERAL STATUTES 28 U.S.C. § 1367 ......................................................................................................................... 1, 3 28 U.S.C. § 1391 ............................................................................................................................. 3 STATE STATUTES Cal. Civ. Code § 3333 ................................................................................................................... 25 v

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TABLE OF AUTHORITIES (continued)

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Cal. Penal Code § 502....................................................................................................... 21, 23, 24 RULES Civil Local Rule 3-4........................................................................................................................ 7 Civil Local Rule 7-9............................................................................................................ 1, 15, 16 Fed. R. Civ. P. 37 .................................................................................................................... 22, 23 Fed. R. Civ. P. 56 ............................................................................................................................ 2 OTHER AUTHORITIES 4 Nimmer on Copyright (Matthew Bender Rev. Ed.) at § 14.02[B][1] at 14-21 .......................... 20 California Bill Analysis, Senate Floor, 1999-2000 Regular Session, Assembly Bill 2232, dated June 20, 2000................................................................................................................. 24 California Bill Analysis, Senate Floor, 1999-2000 Regular Session, Assembly Bill 2727, dated August 7, 2000 .............................................................................................................. 24 California Bill Analysis, Assembly Floor, 1999-2000 Regular Session, Assembly Bill 2727, dated August 7, 2000 .................................................................................................... 24 California Bill Analysis, Senate Floor, 1999-2000 Regular Session, Assembly Bill 2727, dated August 25, 2000 ............................................................................................................ 25 Financial Accounting Standards Board Accounting Standards Codification Topic 820............. 20 Gordon V. Smith & Russell L. Parr, Intellectual Property, Valuation, Exploitation, and Infringement Damages (2005) .......................................................................................... 18, 20 Ninth Circuit Model Civil Jury Instruction 17.23 (Copyright Damages - Actual Damages) (2007) ...................................................................................................................................... 19 Tomlin, Jonathan, Mars v. Coin Acceptors and the "Hypothetical Negotiation" Approach to Reasonable Royalty Calculations," (August 5, 2008)......................................................... 12

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I.

INTRODUCTION Defendants' ("SAP's") latest motion for partial summary judgment ("MSJ") does not

disavow liability for any of TomorrowNow, Inc.'s ("SAP TN's") massive unauthorized downloading and copying of Oracle's copyrighted applications and related support materials, or for SAP AG's and SAP America, Inc.'s knowledge, control and complicity. Instead SAP asks the Court ­ yet again ­ to endorse ways to shield SAP from paying Oracle in full for what SAP took and the damage it caused. SAP's arguments either fail under the law and facts, are a rehash of arguments already lost, or seek relief where there is no dispute. Contrary to SAP's first argument, plaintiff Oracle EMEA Ltd.'s ("OEMEA") claims have more than sufficient connections to California to allow OEMEA to bring its claims as a pendent party under 28 U.S.C. § 1367. Indeed, in its Answer, SAP already admitted that all plaintiffs' claims "derive from a common nucleus of operative facts," that "a substantial part of the events giving rise to the dispute occurred in this district," and to numerous relevant California-based activities. SAP's second argument seeks an improper advisory opinion barring the Oracle plaintiffs from pursuing lost profits damages that they do not seek. SAP's third argument ­ that Oracle cannot recover the billions in research and development ("R&D") costs or licensing costs SAP avoided having to incur by using Oracle's software and related support materials ­ is flat wrong: unjust enrichment envisions and endorses having SAP repay Oracle for the benefits SAP unjustly retained, and one of the largest and most valuable benefits SAP received was immediate and free access and use of vast quantities of Oracle software and support materials, that SAP never had to develop itself. SAP's fourth argument violates Civil Local Rule 7-9 by improperly rearguing ­ without Court permission or proper justification ­ that the value to SAP of avoiding R&D costs is not relevant to the fair market value ("FMV") of Oracle's hypothetical license damages model for SAP's copyright infringement. The Court called this "one of the two main issues" of SAP's prior damages summary judgment motion ("1st MSJ") and denied the motion in full. The Court held that "Oracle should be permitted to present evidence regarding the fair market value of the copyrights that SAP allegedly infringed, including expert testimony based on established 1
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valuation methodology." Dkt No. 628 ("Order on 1st MSJ") at 5:5-7. That evidence includes the billions in development costs that SAP did not have to spend. As Oracle previously established, nothing in Ninth Circuit law ­ or any other credible authority ­ precludes the jury's consideration of such relevant evidence, and established valuation methodology endorses incorporating such evidence into the FMV analysis. SAP's final argument is a non-issue. SAP argues that Oracle should be restricted from seeking undisclosed damages for its Trespass to Chattels and Computer Data Access and Fraud Act ("CDAFA") claims. Oracle did disclose those damages. Moreover, its damages expert has exhaustively detailed the lost profits calculations and the investigation costs Oracle seeks to recover under these and other claims. SAP cannot claim surprise or prejudice. Finally, SAP is simply wrong that Oracle cannot seek the lost profits it has disclosed under the CDAFA; the language of the remedies provision and the legislative history confirm the availability of broad compensatory damages. SAP's efforts to further pare down its monetary exposure for the harm Defendants have caused Oracle should be denied in full. II. LEGAL STANDARD FOR SAP'S MSJ As the moving party, SAP bears the burden of proving "that there is no genuine issue as to any material fact and that [it] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In making this determination, the Court must view the evidence in the light most favorable to Oracle, the nonmoving party. County of Tuolomne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001). III. OEMEA'S CLAIMS ARE PROPERLY BEFORE THIS COURT Plaintiffs OEMEA, Oracle USA, Inc. (now known as Oracle America, Inc.) and Oracle International Corporation ("OIC") bring four California law claims against Defendants: intentional and negligent interference with customer relationships, and unfair competition and unjust enrichment (also brought by plaintiff Siebel Systems, Inc.). Declaration of Holly House ("House Decl."), ¶ 2, Ex. 1 (Fourth Amended Complaint ("FAC")) ¶¶ 190-217, 224-26. In its Answer, SAP admitted that OEMEA is a proper plaintiff and that its California law claims 2
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should be tried with those of the other Oracle plaintiffs under the doctrine of supplemental jurisdiction over pendent claims and parties. Id. ¶ 2, Exs. 1, 2 (FAC, Answer to FAC ("Answer")) ¶47. This admission contradicts SAP's about-face assertion that OEMEA's California claims are improper because they are purportedly "wholly extraterritorial" and that pursuing them thus violates due process. MSJ at III. SAP's argument is also based on inapplicable and misapplied law, and contradicted by substantial evidence of California connections.1 A. Admissions In SAP's Answer Defeat SAP's Objections to OEMEA's California Claims

Oracle pleads supplemental jurisdiction over OEMEA and its state law claims under 28 U.S.C. § 1367. House Decl., ¶ 2, Ex. 1 (FAC) ¶ 47 ("This Court has supplemental subject matter jurisdiction over the pendent state law claims and parties under 28 U.S.C. § 1367, because these claims are so related to Oracle's claims under federal law that they form part of the same case or controversy and derive from a common nucleus of operative facts.") (emphasis added). SAP twice unconditionally admitted these allegations. See Dkt Nos. 182, 225 ¶ 47; House Decl., ¶ 2, Ex. 2 (Answer) ¶ 47. SAP also twice admitted: "Venue in this district is appropriate, pursuant to 28 U.S.C. § 1391, because a substantial part of the events giving rise to the dispute occurred in this district, a substantial part of the property that is the subject of the action is situated in this district, and the Court has personal jurisdiction over each of the parties as alleged throughout this Complaint." See Dkt Nos. 182, 225 ¶ 48; House Decl., ¶ 2, Exs. 1, 2 ¶ 48. Further, SAP repeatedly admitted to numerous relevant California activities. See Dkt Nos. 182, 225 ¶¶ 43, 103; House Decl., ¶ 2, Exs. 1, 2 ¶¶ 43, 106. SAP cannot claim now that OEMEA's claims are unique and do not derive from common relevant facts involving the very same California claims brought by the other Oracle plaintiffs. In addition, SAP did not plead any affirmative defenses challenging the propriety of OEMEA's California claims, which further
1

The Court should not confuse OEMEA's standing with that of dismissed plaintiff J.D, Edwards Europe ("JDEE"). The basis for JDEE's dismissal was extraterritorial copyright infringement. See Dkt. No. 224 at 6:1-6 (holding that infringement of JDEE's "right to distribute extraterritorially" does not give rise to a "claim of copyright infringement"). OEMEA does not assert a copyright claim, so there is no similar issue with OEMEA. 3
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discredits SAP's current argument. Id. ¶ 2, Ex. 2 (Answer) at 24-26. In its MSJ, SAP never mentions its prior admissions or its failure to plead any challenges to OEMEA's California law claims. Its Answer alone should defeat SAP's argument that OEMEA's California law claims are improper and unconstitutional. B. OEMEA's Claims Are Not "Wholly Extraterritorial"

SAP's argument against OEMEA's California claims rest on SAP's assertion that OEMEA's claims are "wholly extraterritorial." MSJ at III.A&B. The evidence SAP cites in support of this argument is irrelevant in light of the facts it ignores, which are dispositive. A comparison of each side's evidence follows. SAP's Evidence: SAP first notes OEMEA is an Irish company with a sales territory and customers outside of the United States. MSJ at 4-5. But, as explained in Section III.C below, OEMEA's nationality and sales territory do not transform OEMEA's claims into extraterritorial claims. SAP also claims, without support, that it is "undisputed" that OEMEA bases its claims "on alleged TN support and marketing activities that took place outside of California." MSJ at 5:8-9. Below, Oracle shows not only myriad marketing and support activities emanating from California, but scores of other California connections as well. SAP then asserts, again without support, that SAP TN's "marketing to European customers occurred in Europe." MSJ at 5:12. To the contrary, Oracle shows below the significant SAP TN and SAP marketing and sales efforts in California aimed at exploiting SAP TN's corrupt support model to win OMEA customers. Finally, SAP notes that, in opposing SAP's Rule 12(b)(6) motion to dismiss JDEE, Oracle cited the fact that the software environments SAP TN used to support customers were stored on Texas servers. MSJ at 5:11-20. Under the law cited in Section III.C below, that Texas connection does not negate the many California connections. Moreover, SAP cannot deny that the environments on those very servers were built in part using downloads accessed and taken through Oracle's California computer systems. See House Decl., ¶ 22 & cited Exs. Oracle's Evidence: As SAP admits, all Oracle plaintiffs' claims derive from "a common nucleus of operative facts." Id., ¶ 2 & Exs. 1, 2 (FAC, Answer) ¶ 47. The same unlawful and 4
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disruptive actions by SAP also triggered OEMEA's customer losses, which actions will be proved by much of the same evidence as that used to prove the other plaintiffs' claims. Much of the critical activity occurred in California: · Agassi. Then SAP AG board member and head of product development, Shai Agassi, a California resident, hatched the plan to acquire SAP TN, and designed its anti-Oracle business model going forward. House Decl., ¶ 7 & cited Exs. Indeed, when SAP announced its acquisition of SAP TN, Agassi likened the impact on Oracle to "a bomb going off on the eleventh floor [i.e., the executive suite at Oracle's Redwood Shores, CA headquarters]." Id., ¶ 8 & cited Exs. Zepecki. Pre-acquisition, Agassi also charged SAP Vice President of Products and former PeopleSoft VP, John Zepecki, a California resident, with assessing issues with TN's service delivery method. Zepecki then communicated its likely illegality to members of the SAP board. Id., ¶¶ 9-10 & cited Exs.; Oracle's MSJ at 14:11-20. SAP's Legal Advice. From due diligence until the wind-down of SAP TN, SAP's legal advice about the actions ­ and inactions ­ of all Defendants came from their Palo Alto based lawyers. House Decl., ¶ 11 & cited Exs; Oracle MSJ at 14:2728, 15:1-4. In addition, many of SAP TN's customer support agreements were reviewed, negotiated, and approved by Defendants' corporate counsel, Chris Faye and Scott Trainor, who performed much of this work from SAP corporate offices located in California. House Decl., ¶ 12 & cited Exs. These included the contracts of at least one OEMEA customer. Id. SAP TN California Employee Acts. For years, SAP TN employees ­ including its founder, head of sales and other high ranking employees ­ committed wrongful acts of interference against OEMEA working from offices located in California. Id., ¶ 13 & cited Exs. This is not surprising because much of SAP TN's employee base came from PeopleSoft, headquartered in Pleasanton. Id., ¶ 14 & cited Exs. SAP's Safe Passage Program. SAP's Safe Passage program (including SAP TN's pivotal part of same) was conceived, implemented, and managed by SAP's employees located in California. Id., ¶ 15 & cited Exs. SAP TN was the "cornerstone" of Safe Passage, which was designed to wrongfully interfere with Oracle's customer relationships, and SAP's Palo Alto marketers worked with SAP TN's California employees on Safe Passage. Id., ¶ 16 & cited Exs. Europe Outreach. Safe Passage included specific efforts to use SAP TN to lure customers located in Europe (i.e., OEMEA's customers). Id., ¶ 17 & cited Exs. Indeed, expanding SAP TN's geographic abilities to compete with Oracle in Europe was one of SAP's first priorities. Id., ¶ 18 & cited Exs. SAP's California-based Safe Passage group fielded many of SAP TN's marketing queries about Europe. Id., ¶ 19 & cited Exs. SAP's OEMEA Customer Efforts. In addition, all Defendants participated in sales and marketing activities which targeted OEMEA's customers ­ much of which emanated from employees located in California. Id., ¶ 20 & cited Exs. 5

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Board and Other Meetings. Each of the three Defendants had meetings in California during the relevant period, and SAP TN's business model, its role in Safe Passage and its expansion into Europe were discussed at some of those. Id., ¶ 21 & cited Exs. Systems Location. Over the relevant period, SAP TN repeatedly accessed PeopleSoft's and then Oracle's computer systems located in California to use massive amounts of Oracle proprietary software support materials to lure away, and ultimately provide discounted support to, OEMEA customers. See Oracle's MSJ at Section IV; House Decl., ¶ 22 & cited Exs.

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On its own admissions and the above facts, SAP cannot show that OEMEA's California claims result in improper application of California law to solely extraterritorial activity. C. The Law Allows Out-Of-State Parties Like OEMEA To Seek Relief For Harm Partly Occurring In, Or Emanating From, California

Anyone who has suffered harm "from unlawful acts or omissions in California may recover damages [in California] from the person at fault." Diamond Multimedia Sys., Inc. v. Superior Court, 19 Cal. 4th 1036, 1059 (1999) (citing Cal. Civ. Code § 3281). SAP cites the "`presumption against California law being given extraterritorial effect'" but acknowledges it arises only "`when the wrongful act as well as the injury occurred outside California.'" MSJ at 2:27-28 (quoting Arabian v. Sony Elec. Inc., No. 05-CV-1741, 2007 U.S. Dist. LEXIS 12715, at *30 (S.D. Cal. Feb. 22, 2007)). Even where, as here, relevant conduct outside of California also occurs, California law still applies where there are adequate California connections, a proposition affirmed by each case SAP cites. MSJ at 3:4-19; see also Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95, 119-20 (2006) (applying California privacy law to surreptitious tapings where only one participant to call in California and taping initiated out-of-state); Solid Host, NL v. Namecheap, Inc., 652 F. Supp. 2d 1092, 1122 n.67 (C.D. Cal. 2009) (denying motion to dismiss nonresident's California Unfair Competition Law ("UCL") claim because complaint alleged conduct occurred in California); Florida v. Tenet Healthcare Corp., 420 F. Supp. 2d 1288, 1311 (S.D. Fla. 2005) (denying motion to dismiss Florida resident's California UCL claim because defendant devised, implemented, and directed scheme in and from California).2 SAP's cases also recognize that adequate California connections end the debate. See, e.g., Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214, 224-25 (1999) (California "state statutory remedies may be invoked by out-of-state parties when they are harmed by 6
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SAP's intimation that OEMEA's Irish nationality decides the issue also is incorrect. MSJ at 4:14-17. SAP's only cited case did not dismiss the Canadian plaintiff's claim based on its nationality but because "the specific misconduct identified . . . occurred in Chicago, Illinois clearly outside the purview of the UCL." Meridian Project Sys., Inc., v. Hardin Constr. Co., LLC, 404 F. Supp. 2d 1214, 1225 (E.D. Cal. 2005); see also Burnett v. Al Baraka Inv. & Dev. Corp., 274 F. Supp. 2d 86, 98-99 (D. D.C. 2003) (foreign national plaintiffs' claims allowed under 28 U.S.C. § 1367 because their claims "are unquestionably so related to those of the other [U.S.] plaintiffs as to form part of the same case or controversy"). D. OEMEA's Inclusion in the Case Fully Comports With Due Process

SAP's due process argument also fails. SAP correctly cites the test: California "`must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.'" MSJ at 6:7-9 (quoting Arabian, 2007 U.S. Dist. LEXIS 12715, at *31). However, SAP cannot show that test is not satisfied, for four reasons. First, SAP's due process complaints all rest on SAP's assertion that "OEMEA's claims are not based on injuries or conduct that occurred in California." MSJ at 6:15-17. As shown above, that is not true. See Section III.B. Second, non-residents such as OEMEA are permitted a right of action under California UCL law (and the related California common law claims OEMEA presses) because California has a "clear and substantial interest in preventing fraudulent practices in this state," and in "extending state-created remedies to out-of-state parties harmed by wrongful conduct occurring in California." Diamond Multimedia, 19 Cal. 4th at 1059-64. None of SAP's inapposite class wrongful conduct occurring in California."). As a fallback, SAP argues that any California acts "must give the claim more than a superficial connection to the state." MSJ at 3:20-21. SAP's authorities are off-point in light of the substantial connections described below. Moreover, in Speyer v. Avis Rent a Car Sys., Inc., 415 F. Supp. 2d 1090, 1099 (S.D. Cal. 2005) a putative class of California residents was not allowed to pursue California claims where, unlike here, defendants' injurious conduct (charging fees) occurred outside California. Guy v. IASCO¸ No. B168339, 2004 WL 1354300 (Cal. Ct. App. June 17, 2004), cannot be cited under Civil L.R. 34(e); see also Smith v. Cardinal Logistics Mgmt. Corp., No. 07-2104, 2008 WL 4156364, at *6 n.5 (N.D. Cal. Sept. 5, 2008). The facts also differ: Guy rejected application of California employment law where most plaintiffs received their paychecks outside California, never paid California taxes, and performed 90% of their work outside California. 2004 WL 1354300, at *2. 7
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action authorities undercuts this rule.3 Third, SAP does not carry its burden of showing that Defendants and OEMEA did not have a reasonable expectation that California law would govern OEMEA's claims. Cf. Roesgen v. Am. Home Prods. Corp., 719 F.2d 319, 321 (9th Cir. 1983) (California Supreme "[C]ourt w[ould] decline to apply California law when the facts indicate that the parties' only reasonable expectations were that the law of a foreign state would apply."). Both SAP (which contemplated suit by Oracle in connection with its acquisition of SAP TN) and OEMEA (as an Oracle subsidiary) would reasonably expect that the Oracle parent company headquartered in California would control this litigation. House Decl., ¶ 23 & cited Exs. Cf. Hertz Corp. v. Friend, No. 081107, 2010 WL 605601, at *11 (U.S. Feb. 23, 2010) (holding that jurisdictional phrase "principal place of business" means the place where the corporation's high level officers direct, control, and coordinate the corporation's activities). Among other indicators, SAP knew: Oracle is headquartered in California; PeopleSoft (whose customers were the targets of Safe Passage) was headquartered in California; SAP TN was comprised of many California-based former PeopleSoft employees; many SAP employees relevant to the success of SAP's plans to hurt Oracle through SAP TN (including its then board member, Shai Agassi, its legal team, and its Apollo Safe Passage team) were in California. House Decl. ¶ 24 & cited Exs. SAP can claim no surprise at being sued by OEMEA (or any other Oracle plaintiff) here and under California law. Finally, SAP cannot say what law would better apply to OEMEA's claims rather than California law, and does not attempt to meet the requirements for applying any alternative choice of law, which is its burden. Hurtado v. Superior Court, 11 Cal. 3d 574, 581 (1974) ("[G]enerally speaking the forum will apply its own rule of decision unless a party litigant timely invokes the SAP principally relies on class action decisions wrestling with a lack of California conduct and class-specific problems not at issue here. MSJ at III.C. Phillips Petroleum v. Shutts, 472 U.S. 797, 805 (1985) involved a defendant's concern over the binding impact of case resolution on absent plaintiff class members. Arabian, 2007 U.S. Dist. LEXIS 12715, at *28-30, concerns the irrelevant "predominance of common claims" requirement standard under Fed R. Civ P. 23(b)(3). Speyer, 415 F. Supp. 2d at 1096-99 was a putative class action where no injurious acts occurred in California. Tidenberg v. Bidz.com, No. 08-5553, 2009 U.S. Dist. LEXIS 21916, at *12-13 (C.D. Cal., Mar. 4, 2009) is a class action case concerning the standing of a non-resident plaintiff asserting a UCL claim where, unlike here, the named plaintiff did not allege any relevant California acts by defendants. In Churchill Village LLC v. Gen. Elec. Co., 169 F. Supp. 2d 1119, 1127 (N.D. Cal. 2000), plaintiffs argued for an injunction against out-of-state activity. 8
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law of a foreign state. In such event he must demonstrate that the latter rule of decision will further the interest of the foreign state and therefore that it is an appropriate one for the forum to apply to the case before it.").4 Given California's legitimate interest in OEMEA's pursuit of California claims based on the case facts, SAP could not have shown another jurisdiction's interests trumped California's. Cf. Hurtado, 11 Cal. 3d at 580-87 (choosing California's unlimited damages approach in action for wrongful death of Mexican national in California because Mexico's law was to protect its residents for actions occurring in Mexico and Mexico would have no interest in denying full recovery to its citizens harmed in California). OEMEA's claims should be adjudicated here with the other Oracle plaintiffs' claims under the same law and based on the same nucleus of common facts. IV. ORACLE DOES NOT SEEK THE LOST PROFITS THAT SAP ASKS THE COURT TO BAR SAP's request to exclude certain lost profits seeks an improper and overbroad advisory opinion. MSJ at 6-10. SAP does not dispute it caused the harm. Instead it relies on corporate technicalities to argue for exclusion of certain lost profits Oracle does not seek and for overbroad relief as to Oracle's alternative copyright FMV damages measure.5 What Oracle's Damages Expert Calculated and Why. Because it has been harmed by SAP in many ways, Oracle has many claims, with varying permissible measures of damages. Among the measures of damages Oracle is entitled to seek under its plaintiffs' various claims are its lost support profits.6 Contrary to SAP's assertions, Oracle seeks only lost support profits to California generally applies a three-step "governmental interest" analysis to choice-of-law questions. Paulsen v. CNF Inc., 559 F.3d 1061, 1080 (9th Cir. 2009). Only if the defendant shows that more than one jurisdiction has a legitimate interest in the dispute does the court then identify and apply the law of the state whose interest would be the more impaired if its law were not applied. See id. Because SAP addresses only Oracle's lost profits damages (MSJ at 6-8), SAP's Proposed Order on this part of its MSJ is too broadly phrased: "Plaintiffs may not recover damages of nonparties, including nonparty related companies." Dkt No. 640 at 1:8-9. Oracle may consider the economic impact on affiliated corporate entities in calculating its alternative FMV hypothetical license model for its copyright damages. Union Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co., 425 F.3d 1366, 1377-78 (Fed. Cir. 2005), rev'd on other grounds by Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348 (Fed. Cir. 2009) (en banc). Oracle's lost profits measure of damages is limited to lost support profits by virtue of Magistrate Laporte's Rule 37 Order. Dkt Nos. 482, 532. Oracle's lost support profits can be 9
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which each plaintiff is legally entitled. Oracle's copyright lost support profits are restricted to those of the lone plaintiff with copyright standing, OIC, and those that "inexorably flow" to OIC. House Decl., ¶ 2 & Ex. 1 (FAC) ¶¶ 154-167; see also Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1367 (Fed. Cir. 2008). For lost profits damages under Oracle's non-copyright claims, each Oracle plaintiff seeks only its specific lost profits. Declaration of Tharan Gregory Lanier in Support of MSJ ("Lanier Decl."), Ex. A at ¶ 355. Oracle also does not seek to avoid its corporate structure. To the contrary, its structure required that Oracle's damages expert trace certain lost support revenues booked initially through non-plaintiff Oracle subsidiaries, so that he could then determine the portion of those revenues that would have flowed to Oracle plaintiffs. House Decl. ¶ 26, Ex. 3 (Damages Report) ¶ 398. Oracle provided the "lost profits [measurement] specific to the Oracle plaintiff entities in this case" based on only those revenues that would have flowed to each Oracle plaintiff had the historical contractual customer relationships SAP disrupted been maintained. Id.7 Oracle's expert's inclusion of the "organization as a whole" lost support profits calculation is not because Oracle seeks all of them. Oracle does not dispute that some of those revenues and profits do not flow to Oracle's named plaintiffs and Oracle does not claim such lost profits. The "organization as a whole" lost support profits scenario simply shows the difference between the lost support profits that are claimed as damages to each relevant Oracle plaintiff versus the larger lost support profits Oracle Corporation suffered due to SAP's actions. House Decl., ¶ 26 Ex. 3 (Damages Report) at 256 tbl. 16. For OIC, that difference is significant. Like recovered under its claims for copyright infringement, intentional and/or negligent interference with prospective economic advantage, violations of the Computer Fraud and Abuse Act ("CFAA") and CDAFA, and breach of contract. Oracle's other damages and models include: copyright hypothetical license models, copyright infringer's profits, unjust enrichment/restitution, certain investigation costs, attorneys fees and punitive damages. Lanier Decl. Ex. A at 15. SAP does not challenge any specific apportionment of Oracle's damages in its MSJ nor provide any means to do so. Even if it had, such a request would be improper given that SAP's damages expert just issued his report, no expert depositions have been taken, and apportionment of damages between plaintiffs and causes of action would be a highly fact-specific inquiry. House Decl. ¶ 25; see, e.g., Mars, 527 F.3d at 1366-67; see also SEB, A.A. v. Montgomery Ward & Co., Inc., 412 F. Supp. 2d 336, 348 (S.D.N.Y. 2006) (citing Mars and denying summary judgment because "the amount of damages is a question of fact . . . for the jury to determine"). 10
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the other lost profits Oracle cannot seek as a result of Magistrate Laporte's Rule 37 order (from discounts, lost applications cross-sales and up-sales), this difference is relevant to undermine SAP's inevitable intimation to the jury that Oracle's FMV license is inflated. See MSJ at 1:2022 (arguing to Court that Oracle seeks "billions in damages" though SAP paid only $10 million for SAP TN, and served "no more than 3% of Plaintiffs' software maintenance customers."); see also House Decl., ¶ 26, Ex. 3 (Damages Report) at 131 n.436. Under this Court's previous order, Oracle conditionally may reference lost profits damages that it is not allowed to claim. See Dkt No. 532 at 1:27-2:4 (anticipating potential Oracle jury instruction to avoid jury misimpression of scope of Oracle's lost profits damages). The full computation of Oracle's lost support profits without regard to corporate formalities brings Oracle's actual lost profits damages request into similar perspective. That Oracle Corporation is impacted by SAP's copyright infringement in excess of plaintiff OIC's lost profits alone also is a relevant consideration for Oracle's FMV license amount. See n.5 above. Advisory Opinions Are Improper. SAP cannot seek summary judgment regarding a theory of lost profits damages that Oracle has not asserted. See, e.g., Preiser v. Newkirk, 422 U.S. 395, 401 (1975) (A federal court's "judgments must resolve a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.") (quotations omitted); cf. Sun Microsystems Inc. v. Hynix Semiconductor Inc., 608 F. Supp. 2d 1166, 1206 (N.D. Cal. 2009) (declining, on summary judgment, to "conclusively decide [the] legal impropriety" of a theory of liability that "defendants presuppose[d]" was being asserted by plaintiffs).8 SAP's Patent Cases Limiting Lost Profits on Technicalities Support Oracle's FMV License Damages. According to the patent cases SAP cites, Oracle cannot seek the
8

Alternatively SAP's request should be rejected as an improper motion in limine ("MIL"). Per the Case Management Order, such motions are due in August (Dkt No. 325), and are limited in number and length. Dkt No. 84 at Section B.3.c. Until damages expert discovery is done, any damages MIL also is premature. See Fernandez v. Taser Int'l, Inc., No. 06-4371, 2008 WL 4775779, at *3 (N.D. Cal. Oct. 27, 2008) (MIL is premature where expert has not been deposed because purpose of expert's evidence and testimony is unclear). 11
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"organization as a whole" lost profits that SAP caused by its pervasive global infringement. Intentional, sophisticated infringers like SAP benefit from these loopholes and leverage these technicalities in modern complex, international corporate structures, to create a damages shield. See MSJ at 7-8. This result goes against the public policy that damages should fully compensate the victim and fully punish the wrongdoer. See, e.g., Albemarle Paper Co. v. Moody, 422 U.S. 405, 418-19 (1975); Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1585 (Fed. Cir. 1995) (dissent) ("The legal insulation of a wrongdoer from responsibility for its acts is rare in the law, requiring sound basis in public policy."). The same body of law provides a solution to this injustice. Precisely because of potential shortfalls of a lost profits remedy in a case like this, Oracle's FMV license is the most appropriate measure of its copyright infringement damages. Cf. Union Carbide, 425 F.3d at 1377-78 (allowing consideration of economic impact on corporate affiliates in calculating FMV license). Indeed, interpreting the Mars case that SAP cites, a colleague of SAP's damages expert at Law and Economics Consulting Group opined: "Consistent with Mars v. Coin Acceptors and other recent decisions, in some cases it is only possible to fully compensate the patent holder by allowing a royalty that exceeds both the expected profits of the infringer and its estimated costs of avoiding infringement." House Decl., ¶ 27, Ex. at 4-5. This is particularly true where, as here, defendants argue "it is reasonable to expect that no license agreement between a patent holder and an infringer would have been reached from the negotiation typically contemplated in reasonable royalty analysis." Id. at 4; see also 1st MSJ [Dkt No. 447] at II.B. & II.C; cf. Section VI.B. below (re inadequacy of copyright infringers' profits damages where, as here, infringer claims never to have made profit). These concepts can and should inform the eventual jury instructions on Oracle's infringement damages. V. ORACLE MAY PURSUE "SAVED DEVELOPMENT COSTS" UNDER ITS UNJUST ENRICHMENT CLAIM AND DOES NOT SEEK THEM UNDER OTHERS A. "Saved Development Costs" Are A Proper Damages Measure For Oracle's Unjust Enrichment/Restitution Claim

Oracle's unjust enrichment/restitution claim against SAP requires only that Oracle prove 12
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that SAP received and unjustly retained a "benefit" at the expense of Oracle. Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000). California courts interpret the term "benefit" to "denote[] any form of advantage." Ghirardo v. Antonioli, 14 Cal. 4th 39, 51 (1996) (quotations omitted). SAP's unjust access to, retention, and use of Oracle's extremely valuable software and support materials and the competitive advantages it gave are discussed in detail in Oracle's discovery responses and quantified in Oracle's expert report. See, e.g., House Decl., ¶¶ 28, 31, Ex. 9 (Discovery Responses) and Ex. 3 (Damages Report) ¶¶ 144-148; Lanier Decl., Ex. A ¶¶ 142-43, 150-52, 282-88. The only issue for purposes of SAP's MSJ is whether the development costs SAP avoided are available to Oracle as unjust enrichment damages as a matter of law. The case law confirms they are. "[A] benefit is conferred not only when one adds to the property of another, but also when one saves the other from expense or loss." Ghirardo, 14 Cal. 4th at 51; see also Cal. Fed. Bank v. Matreyek, 8 Cal. App. 4th 125, 132 (1992) ("For a benefit to be conferred, it is not essential that money be paid directly to the recipient by the party seeking restitution."). This flatly contradicts SAP's unsupported claim that because Oracle did not "literally confer `saved development costs' upon Defendants," Oracle may not recover them under its unjust enrichment/restitution claim. MSJ at 16:26-27. Ajaxo, Inc. v. E*Trade Group, Inc., 135 Cal. App. 4th 21 (2005) illustrates the point. In Ajaxo, E*Trade breached a nondisclosure agreement with a vendor by giving trade secret information to the vendor's competitor. Id. at 57. E*Trade then contracted with the competitor who used the trade secret information, saving E*Trade technology development costs and the cost E*Trade proposed to give the first vendor for its technology. Id. On appeal, the court upheld an award of damages that included the saved development costs based on a theory of unjust enrichment/restitution. Id. at 55-57. The court ruled that the purpose of unjust enrichment/restitution "is to require the wrongdoer to restore what he has received" and therefore, restitution required E*Trade to return to the vendor the "value" or "benefit" that it received. Id. at 56 (quotation omitted). The court also held that saved development costs provided evidence of unjust enrichment on the vendor's claim for misappropriation of trade 13
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secrets ­ a claim quite analogous to SAP's misconduct here. Id. at 63; see also Bourns, Inc. v. Raychem Corp., 331 F.3d 704, 709-10 (9th Cir. 2003) (affirming an award of saved development costs under a theory of unjust enrichment where the defendant was found to have misappropriated trade secrets); accord Telex Corp. v. Int'l Bus. Mach. Corp., 510 F.2d 894, 93132 (10th Cir. 1975) (saved development costs awarded under unjust enrichment theory for trade secret misappropriation). SAP neglects to cite any of this relevant and controlling California law or any contrary law (and Oracle is aware of none). The development costs SAP saved are available as a measure of Oracle's unjust enrichment damages and SAP's MSJ seeking a contrary ruling should be denied. B. Oracle Seeks No Saved Development Cost Damages Under Its Other State Law Claims

SAP spends much of its MSJ seeking additional advisory opinions from the Court on whether "saved development costs" are a proper measure of damages for Oracle's other California law claims. MSJ at 11-16. This is another "straw person" argument because Oracle never sought "saved development costs" as a measure of damages for its CFAA, CDAFA, Trespass, Breach of Contract, Interference, or Unfair Competition claims. See, e.g., Lanier Decl., Ex. A ¶¶ 447-49 and Ex. J. Again, SAP's request for the Court to issue an advisory opinion on a matter not in dispute between the parties is improper and should be denied. See, e.g., United States v. Alpine Land & Reservoir Co., 887 F.2d 207, 214 (9th Cir. 1989) ("[C]ourts should not render advisory opinions upon issues which are not pressed before the court, precisely framed and necessary for decision."); Barco N.V. v. Tech. Props. Ltd., No. 08-5398, 2010 WL 604673, at *2 (N.D. Cal. Feb. 19, 2010) (refusing to issue an advisory opinion on party's potential claim for attorneys' fees where party has not yet made such a claim). VI. ORACLE MAY INCLUDE SAVED R&D COSTS IN ITS FAIR MARKET LICENSE MEASURE OF COPYRIGHT DAMAGES A. SAP Improperly Seeks Reconsideration Of The Court's January 28, 2010 Order Defendants previously moved for summary judgment on the question of whether "saved 14
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development costs" are relevant to Oracle's FMV measure of actual copyright damages. The Court denied that motion. Now, Defendants ask the Court to reconsider the question in this second MSJ. MSJ at V.B ("Plaintiffs' Actual Damages for Copyright Infringement Cannot Include SAP's `Saved Development Costs' Because This Theory Is Inconsistent with the Copyright Act and Ninth Circuit Precedent"). Both the request ­ and SAP's method of seeking it ­ are improper under Civil Local Rule 7-9. 1. The Court Has Already Rejected SAP's Argument That The R&D Costs It Saved Cannot Be Introduced Into Evidence

In SAP's prior damages-related MSJ seeking to bar Oracle's FMV license copyright infringement damages, SAP included the exact same argument, citing the exact same reasons and authorities. 1st MSJ [Dkt No. 447] at III.D ("Plaintiffs Are Not Entitled to A Hypothetical License Based on `Saved Acquisition Costs Because this Theory Is Inconsistent with the Copyright Act and Ninth Circuit Precedent"). In response, Oracle explained why "The Value SAP Gained and the Costs It Saved By Misappropriating Oracle's Copyrights Are Also Proper Measures of Oracle's Actual Damages." Dkt No. 483 at 9:17-14:2. In its October 7, 2009 reply, SAP responded that "Saved Acquisition Costs Are Not Permitted Under the Copyright Act and Ninth Circuit Precedent." Dkt No. 504 at V. This argument was not missed by the Court, which defined this as one of the "two main issues" raised in SAP's last damages summary judgment motion. House Decl., ¶, Ex. (Transcript of 1st MSJ hearing) at 5:7-25. Counsel also argued the issue at the hearing and answered the Court's questions on it. Id. at 10:14-12:21; 18:18-19:13; see also id. at 44:6-11 (Court tells Oracle's counsel no need to argue the saved acquisition costs issue). The Court then ruled and found that: Oracle should be permitted to present evidence regarding the fair market value of the copyrights that SAP allegedly infringed, including expert testimony based on established valuation methodology. The question is not what Oracle would have charged for a license, "but what is the fair market value." On Davis [v. The Gap, 246 F.3d 152, 166 (2nd Cir. 2001)], quoted in Jarvis [v. K2, Inc., 486 F.3d 526, 534 (9th Cir. 2007)]. So long as "the amount is not based on `undue speculation,'" the jury can consider evidence regarding a hypothetical lost license fee. Polar 15
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Bear [Prods. Inc. v. Timex Corp., 384 F.3d 700,709 (9th Cir. 2004)] (citation and quotation omitted). Order on 1st MSJ [Dkt No. 628] at 5:5-11. Defendants make the same argument again in this motion. MSJ at V.B. Defendants justify this solely by claiming the "Court did not address whether such saved costs are a permissible measure of a hypothetical license" in its Order. MSJ at 17:5-7. In fact, the Court's ruling that Oracle could "present evidence regarding the fair market value of the copyrights that SAP allegedly infringed" (Order on 1st MSJ at 5) did just that. Oracle's opposition brief and the declaration of Oracle's damages expert, Paul Meyer, explained to the Court how Mr. Meyer was intending to establish the FMV of the Oracle copyrights SAP had infringed and confirmed how his methodology comported with traditional valuation methodologies. Dkt No. 483 at II.F.1; Dkt No. 487 ¶¶ 1-5, 11-14, 17. Mr. Meyer provided an extensive list of the evidence he had considered at that point and explained its relevance to the fair market valuation. Dkt No. 487 ¶¶ 19-48. Included in that evidence was "the cost and time that SAP would have had to incur to independently develop the copyrighted materials at issue, if possible, and the risks associated with unsuccessful efforts." Id. ¶ 39(6); see also Opp. [Dkt No. 483] at 17:20-18:4 (listing as FMV inputs the amounts Oracle, PeopleSoft, JDE and Siebel spent on relevant R&D to develop the infringed software and support materials and also the R&D costs SAP avoided). Mr. Meyer noted that "[t]his information is further evidence of the fair market value to SAP of licenses for what it did not develop itself" and that he would "incorporate the opinion testimony of Oracle technical experts [on avoided R&D costs] in forming [his] opinions, as appropriate." Dkt No. 487 ¶ 46. There is no basis on this record for SAP to conclude that the Court did not already consider and reject SAP's request that Oracle's damages expert and the jury should be precluded from considering this obviously relevant evidence. 2. SAP Did Not Satisfy Civil Local Rule 7-9's Prerequisites for Reconsideration of the "Saved Costs" Question

Civil Local Rule 7-9(a) states: "No party may notice a motion for reconsideration without first obtaining leave of Court to file the motion." SAP failed to do so and its argument 16
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should not be reconsidered. United States v. Beardslee, No. 94-0186, 2008 U.S. Dist. LEXIS 105667, at *3 (N.D. Cal. Dec. 2, 2008) (a "failure [to seek leave to file a motion for reconsideration] alone is sufficient for the Court to deny [a] motion for reconsideration"). Even if it had moved for leave, SAP could not justify it. The three potential bases for leave to file a motion for reconsideration are: "(1) That at the time of the motion for leave, a material difference in fact or law exists from that which was presented to the Court before entry of the interlocutory order for which reconsideration is sought[]" [and proof that SAP] "in the exercise of reasonable diligence . . . did not know such fact or law at the time of the interlocutory order; or (2) The emergence of new material facts or a change of law occurring after the time of such order; or (3) A manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court before such interlocutory order." Civ. L.R. 7-9(b)(1)-(3). The closest SAP comes to any of these prerequisites is its erroneous assertion that the "Court did not address whether such saved costs are a permissible measure of a hypothetical license" in its Order. MSJ at 17:5-7. On the record above, SAP cannot show any manifest failure by the Court. Cf. Del Mar Seafoods, Inc. v. Cohen, No. 07-2952, 2007 U.S. Dist. LEXIS 98610, at *3 (N.D. Cal. Aug. 27, 2007) ("To the extent [facts] were not discussed to plaintiff's satisfaction in the [Court's] order, that does not demonstrate a `manifest failure by the Court to consider' those facts.").9 B. SAP Is Wrong That Its Saved R&D Costs Cannot Be Considered

Though SAP has not requested, and the Court has not ordered, a further response from Oracle, in an excess of caution, Oracle again addresses its right to reference SAP's saved development costs. SAP's Saved Costs Are Relevant to the Ninth Circuit "Value of Use" Test. The R&D
9

In addition, even had SAP received permission to make its reconsideration request, its reargument would be sanctionable. "No motion for leave to file a motion for reconsideration may repeat any oral or written argument made by the applying party in support of or in opposition to the interlocutory order which the party now seeks to have reconsidered. Any party who violates this restriction shall be subject to appropriate sanctions." Civ. L.R. 7-9(c). 17
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costs SAP saved by using Oracle's software and support materials are directly relevant to the FMV of Oracle's hypothetical license damages. The Court and the Ninth Circuit have recognized this measure is available to Oracle. See Order on 1st MSJ [Dkt No. 628] at 3:6-13 (citing Polar Bear, 384 F.3d at 708, Abend v. MCA, Inc., 863 F.2d 1465, 1479 (9th Cir. 1988), and Jarvis, 486 F.3d at 534 as showing that Ninth Circuit endorses an objective "value of use" measure for actual copyright damages). Oracle expert, Paul Pinto, who provides a conservative quantification of the costs SAP saved, explains the obvious relevance: The cost of development of the underlying body of applications including the time and technical and litigation risks associated with such development would, in my opinion, and based on my experience, significantly factor into a decision by a potential licensee whether to license a product from the original developer, as well as factoring into the reasonable amount to be paid for that license . . . . [O]ver my career as an outsourcing advisor and software company executive, I have been involved in hundreds of license negotiations, from the perspective of both the buyer and the seller of products. In negotiating the price of licenses, I would regularly consider the avoided costs, including saved