Oracle Corporation et al v. SAP AG et al

Filing 729

Declaration of Jason McDonell in Support of 728 MOTION in Limine Defendants' Motions in Limine Declaration of Jason McDonell in Support of Defendants' Motions in Limine filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P, # 17 Exhibit Q, # 18 Exhibit R, # 19 Exhibit S, # 20 Exhibit T, # 21 Exhibit U, # 22 Exhibit V, # 23 Exhibit W, # 24 Exhibit X, # 25 Exhibit Y, # 26 Exhibit Z, # 27 Exhibit AA, # 28 Exhibit BB, # 29 Exhibit CC)(Related document(s) 728 ) (Froyd, Jane) (Filed on 8/5/2010)

Oracle Corporation et al v. SAP AG et al

Doc. 729 Att. 1

EXHIBIT A

Dockets.Justia.com

ORACLE U S A , I N C . , ET AL

v.
S A P A G , ETAL

CASE N o . 0 7 - C V - 0 1 6 5 8

S U P P L E M E N T A L E X P E R T R E P O R T O F P A U L K. M E Y E R

T M FINANCIAL FORENSICS, L L e . FEBRUARY 23, 2010

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II.

Scope of Opinions/Summary of Damages 20. I understand that much of the software technology accessed, downloaded, copied, distributed, modified and/or used by SAP is protected by Oracle copyright registrations. I understand that SAP had direct access to Oracle products protected by intellectual property rights. I have determined damages and offer opinions on the fair market value of SAP's actual use of Oracle's intellectual property (copyrighted materials), Oracle's lost profits related to support contracts, SAP's infringer profits/unjust enrichment and Oracle's additional costs caused by SAP's alleged actions. I understand, as allowed by the Court, I may also be asked to compute or provide opinions related to prejudgment interest, attorney's fees and costs and punitive damages. Supporting analyses are described and provided throughout this Report. Table 1 presents a summary of my damages opinions.

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Table 1: Summary of Damages15 Fair Market Value of SAP's Infringement of Oracle's Copyrights 1. PeopleSoft/J.D. Edwards Fair Market Value16 2. Oracle Database Fair Market Value17 3. Siebel Fair Market Value18 4. Oracle's Lost Profits ­ During TomorrowNow Service Period 5. Oracle's Lost Profits ­ Through May 2015 6. SAP's Unjust Enrichment/Avoided Costs 7. SAP's Unjust Enrichment/Database License 8. Additional Oracle Costs: Investigation Costs19 Damages To Oracle's Data/Systems
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No less than $2.0 billion $55.6 million No less than $100 million $99.6 million

$349.0 million $1.1 to 3.5 billion $55.6 million $0.3 million Not quantified

Table 1 reflects the values for elements of damages which I have been asked to quantify to date. I have not included in the table my assessment for infringers profits which is presented in Section X. I may also be asked to provide opinions and/or quantify prejudgment interest, Oracle's attorney's fees and costs, and punitive damages. Elements in Table 1 represent different remedies for Oracle's allegations and certain elements may not be additive.
15 16 17 18 19

See Sections VI.A.D. and Table 8. See Section VII and components described in Tables 9, 10 and 10A. See Section VIII and Table 12. SCHEDULE 43.SU.

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121.

The residual value of $6.5 billion for goodwill301 includes value related to

the copyrighted materials in suit as they provide for the generation of support revenues from customers that will purchase PeopleSoft products after Oracle's acquisition date, as well as revenues from sales of other Oracle software to PeopleSoft customers.302 As addressed in section IV.B.3 of this Report, a primary benefit to SAP of supplanting Oracle in providing support for PeopleSoft and J.D. Edwards customers was SAP's ability to market and sell SAP software. As such, a portion of the goodwill Oracle recorded from the acquisition also reflects the value of SAP's use of Oracle's copyrighted materials in suit.

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302 I consider the value of the copyrighted materials in suit in terms of their ability to generate sales of other Oracle products not to quantify the lost profits associated with Oracle's lost crosssell and upsell opportunities to TomorrowNow support customers, but as considerations that would inform and be relevant to the fair market value of Defendants' use of the allegedly infringed materials. I understand from Oracle's counsel, Defendants specifically did not seek preclusion of this measure of Oracle's copyright damages in its Motion for Sanctions Pursuant to Fed. R. Civ. P. 37(c) and 16(f).

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a. Income Approach Applied To Oracle's Expected Losses 129. S&P's overall valuation of Oracle's PeopleSoft acquisition was measured

using a discounted cash flow model for revenues and profits from PeopleSoft's support customers lost to TomorrowNow and SAP (postOctober 2008), lost incremental license revenue (upsell) and related support, and lost new license revenue (crosssell) and related support. In modeling the incremental value of customers Oracle would expect to lose under a license to SAP, I have used various assumptions from the S&P valuation, including the size of the PeopleSoft customer base acquired, annual attrition rates, average annual maintenance fees, duration of the model to at least 2014, cost of sales and certain other expenses, and present value factors. I have also considered the terminal value of losing support customers, and incremental licenses and support as a result of licensing the copyrighted materials in suit to SAP.

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355.

For purposes of my analysis, I have calculated Oracle's lost profit

damages under two scenarios. In the first scenario, I have calculated lost profits of the Oracle organization as a whole. Under the second scenario, I have calculated Oracle's lost profits specific to the Oracle plaintiff entities in this case (i.e., Oracle's lost profits if it is found that its recovery of lost profits damages is limited by the structure of its corporate entities as a result of its various interentity license, cost sharing and other agreements).663

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D. 433.

Opinion: Summary of Oracle's Lost Profits As a result of the Defendants' alleged bad acts, it is my opinion that

Oracle has experienced lost profits on support revenue lost to TomorrowNow, as summarized in the following table.
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Table 16: Summary of Oracle's Lost Profits
During Tomorro wNow Service P e r i o d $99.6 million $92.7 million $349.0 million $318.2 million

Scenario 1: Total Losses to Oracle Based on Total Lost Support Revenue Excluding Sales of EnterpriseOne and Siebel in Europe

Through May 2015

Scenario 2: Losses by Plaintiff Entity Oracle USA Gross of Fees Paid to OIC Net of Fees Paid to OIC Oracle International Corporation Revenue Ultimately Received by OIC Including OTC and ORC Revenue Oracle EMEA Gross of Fees Paid to OTC Net of Fees Paid to OTC

$83.4 million $47.2 million $37.0 million $42.2 million $9.0 million $4.3 million

$276.9 million $156.9 million $121.1 million $153.8 million $41.0 million $14.1 million

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