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. 3

EXHIBIT C

Dockets.Justia.com

PAUL K. MEYER May 12, 2010 HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
Page 1
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION ORACLE CORPORATION, a Delaware corporation, ORACLE USA, INC., a Colorado corporation, and ORACLE INTERNATIONAL CORPORATION, a California corporation, ) ) ) ) ) ) ) ) Plaintiffs, ) ) vs. ) No. 07-CV-1658 (PJH) ) SAP AG, a German ) corporation, SAP AMERICA, ) INC., a Delaware ) corporation, TOMORROWNOW, ) INC., a Texas corporation, ) and DOES 1-50, inclusive, ) ) Defendants. ) ________________________________)

VIDEOTAPED DEPOSITION OF PAUL K. MEYER _________________________________ VOLUME 1; PAGES 1 - 331 WEDNESDAY, MAY 12, 2010

HIGHLY REPORTED BY:

CONFIDENTIAL - ATTORNEYS' EYES ONLY HOLLY THUMAN, CSR No. 6834, RMR, CRR (1-427362)

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MR. McDONELL:

Q.

Have you read the

report of Mr. Brian Sommer? A. I have just glanced through it at a very,

very high level. Q. that way? A. More from the perspective of timing. And why did you choose to review it in

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Q. A.

What do you mean by that? I understood that -- my understanding was

that Mr. Clarke was -- one of his assignments was to look at the opinions that I had and the backup for those opinions and come to his opinions. And

so that was my first task when the reports were received over a month ago. And then there were

other reports, obviously, that came in, and I know Mr. Sommer supplied a report that at some level provides information about my work, but I have not really gotten to his findings at this point in time. Q. Have you developed any responses to

Mr. Sommer's report? A. Q. No, not at this point in time. Do you understand that it is offered as a

rebuttal of your report? A. sense. I would say I understand that in a general I believe he tries to take on overall

enterprise application marketing and selling issues and apply it to some of my findings. And from that

perspective, in a general sense, I don't feel like I'm -- that where he comes out in his opinions are going to have impact on my opinions. But I -- as I

said, I will need to caveat that I have not really

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studied it and gone through where it actually is meant to apply to what we've come up with in our work. Q. When you say that you don't feel that his

opinions are going to have an impact on your opinions, what do you mean by that? A. Well, from the standpoint of my assignment

and my valuation work and damage work and focusing on the relationship of SAP and Oracle, both in January 2005 and going forward, there are certainly background issues about the enterprise market that may be helpful to one to understand. But from my perspective, what is really driving the valuation and the damages is how these two companies were interacting with each other, and so that's where my focus was. Obviously, I need to read Mr. Sommer's report in detail and interface with what he says with my opinions, and at some point I'll get to that. But from my perspective, the real focus in this case should be on these two large entities, and what their business records say about their focus and intents, since 2004, late in the year. Q. Would you agree that in the course of your

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work, it's important to understand the behavior of customers in this enterprise software market; you know, specifically customers of Oracle and SAP? A. I understand your question. I would say

only in a general sense. Q. Would you agree that it's important to

understand what customers take into consideration when making enterprise software purchase decisions? A. See, when you phrase that question in a

sort of a generic customer, I'm not certain that that inquiry is going to be that helpful to the court in these circumstances, so -Q. A. Do you -Let me finish. Because of the large

volume of information that relates to the acquisition of PeopleSoft by Oracle, and then SAP's senior management and Executive Board management response to that acquisition. So I would focus the issues there. And

issues that relate to in a general sense why a customer may choose to buy software or not I think will be a lot less important. And I think that Mr. Sommer at some level addresses those issues, and I'll have to refer to it when I get to his report and see how it

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interfaces with my findings to really address that. Q. So you just testified that in your view,

why a customer chooses to buy is less important than other factors. relevant factor? MS. HOUSE: testimony. THE WITNESS: MS. HOUSE: THE WITNESS: It would really -Incomplete question. It would really depend on Objection. Misstates his But do you agree that it is a

how it's applied, and that's more where I've come out. I need to study what he says and see how he That's

tries to use it in contrast to my findings.

sort of where I'm at right now with his analysis. MR. McDONELL: Q. Have you prepared any

notes of your initial preliminary reactions to Mr. Sommer's report?

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MR. McDONELL: A.

Q.

Mr. Meyer --

Excuse me, let me offer one thing, and

maybe just out of an abundance of caution, with the

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question you asked about Mr. Sommer. I don't have any sort of direct rebuttal points about his analysis and his opinions. I And

thought at the break about the question again.

to the extent that in Mr. Clarke's report, as I've made some notations in there as I've gone through that report, there may be references where Mr. Clarke has made to inputs from Mr. Sommer. to the extent that that comes up, there is that interface. And so I want the record to be complete that I've seen Mr. -- some Mr. Sommer inputs through Mr. Clarke. And so if we get to that point And

in the next couple of days, I just want the record clear on that. Thank you.

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Q.

Do you believe that as a result of the

events giving rise to this case, there was any damage done to Oracle's goodwill? A. Well, that's a very complicated

discussion, because you can talk about accounting goodwill, and what I'm dealing with really is not accounting goodwill. I'm dealing with paying a

premium for access to the customers protected by copyrights at PeopleSoft. And so in January 2005, if the extent of the copying and illegal activities of SAP/TomorrowNow was known to the public at that point in time, at the same time that Oracle had closed on a transaction for $11 billion, if the extent of that was known to the public, there would have been I believe a tremendous impact on Oracle publicly.

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It just turned out that although Safe Passage was announced by SAP/TomorrowNow, it wasn't described that it was going to be carried out in a manner that's now been potentially found to be illegal. And so that's the difference. But at that

point in time, if you knew the scope of the illegal activities around the downloading and copying and creation of environments and cross-use, there would have been a tremendous impact. And Oracle had just

spent 11 billion dollars in cash on buying PeopleSoft. Q. So is it your understanding that the

activities of the defendants in this case harmed Oracle's ability to make upsell and cross-sells of its products? A. Ultimately what I believe happened in

January of 2005 is that S&P -- SAP had a plan to make cross-sell and upsell to Oracle's customers by using TomorrowNow, and that would be basically the other side of the losses to Oracle. Q. Okay. Please try to listen carefully to

my question. Do you believe that the activities of the defendants in this case harmed the goodwill value

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of Oracle? MS. HOUSE: THE WITNESS: Vague as to time. If you're asking that

outside the -- I need to know the basis, sort of with the parameters that you're asking about, because we're not talking about so much accounting goodwill writeoff. We're talking about basically

the value paid for PeopleSoft and what you thought you were getting versus what happened with SAP/Tomorrow Now. I need more of a context. Q. Okay. So the context

MR. McDONELL: is this:

I think you've said that you believe that the defendants in this case have done damage to Oracle. A. Q. Is that right? That's correct. And as part of that damage, that they've

damaged Oracle's ability to make upsales and cross-sales of its product. A. Q. That's correct. And you've also indicated that a large

portion of the recorded goodwill arising from Oracle's acquisition of PeopleSoft was that ability to make upsales and cross-sales of products. that right? Is

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A. Q.

That's correct. Okay. So is it your belief that in that

context, the activities of the defendants did substantial harm to Oracle's goodwill? MS. HOUSE: THE WITNESS: Same objection. I believe I already answered

this, that it's my opinion that Oracle would not have paid 11 billion dollars for PeopleSoft in January 2005 if it knew the extent of SAP/TomorrowNow's plans to compete by using software that they did not have rights to. Because Oracle disclosed a deal where they were coming into 10,000 customer relationships, and at the same time, you have SAP planning to compete for 2,000, 3,000, 4,000 of those customers, using the property that Oracle just acquired. So that's the impact that happens at the time of the transaction. MR. McDONELL: Q. Okay. So I think what

you're saying is that in your opinion, the activities of defendants did harm Oracle's goodwill, because it harmed Oracle's ability to make upsales and cross-sales. MS. HOUSE: THE WITNESS: Is that correct?

Misstates his testimony. I think if you take things

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to January 2005, and to the -MR. McDONELL: Q. Why? Don't do that.

I'm not asking you to do that. A. Because that's where you are. That's what

I focused on. 2005. Q.

I'm valuing a license in January of

Put all that aside.

No valuing the

license, no nothing.

Just answer my question.

Is it your belief that the activities of the defendants damaged the value of Oracle's goodwill? MS. HOUSE: Vague as to time. Q. At any time.

MR. McDONELL: A.

I have two levels to respond. Certainly in January 2005, I believe that

the premium paid for PeopleSoft was impacted by the transaction that SAP entered into with TomorrowNow and their planning. that. And after January 2005, I've not really contemplated the question. my analysis. I haven't had to to do There's no question about

And so I know Oracle has done all it

can to maximize the value from PeopleSoft, and I haven't really had to go out and contemplate what's been the exact impact downstream.

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I know that January 2005, if we corral that point in time, there is an impact of the accused activities in this case on Oracle when they acquired PeopleSoft. Q. So as you sit here today, you don't know

if the activities of the defendants actually harmed Oracle's ability to cross-sell and upsell its products. A. Is that true? That's not the case. My understanding is You asked

that those activities did harm Oracle.

me do I have an opinion about that, do I have to quantify that, and I haven't had to do that. I certainly looked at the lost profits on the customers, I looked at the infringer's profits, I looked at d