Oracle Corporation et al v. SAP AG et al

Filing 780

MOTION Defendants' Notice of Motion and Motion to Partially Exclude Testimony of Kevin Mandia and Daniel Levy filed by SAP AG, SAP America Inc, Tomorrownow Inc. Motion Hearing set for 9/30/2010 02:30 PM in Courtroom 3, 3rd Floor, Oakland. (Attachments: # 1 Proposed Order)(Froyd, Jane) (Filed on 8/19/2010)

Oracle Corporation et al v. SAP AG et al

Doc. 780 Att. 1

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Robert A. Mittelstaedt (SBN 060359) Jason McDonell (SBN 115084) Elaine Wallace (SBN 197882) JONES DAY 555 California Street, 26th Floor San Francisco, CA 94104 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] [e-mail] Tharan Gregory Lanier (SBN 138784) Jane L. Froyd (SBN 220776) JONES DAY 1755 Embarcadero Road Palo Alto, CA 94303 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] Scott W. Cowan (Admitted Pro Hac Vice) Joshua L. Fuchs (Admitted Pro Hac Vice) JONES DAY 717 Texas, Suite 3300 Houston, TX 77002 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] Attorneys for Defendants SAP AG, SAP AMERICA, INC., and TOMORROWNOW, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION ORACLE USA, INC., et al., Plaintiffs, v. SAP AG, et al., Defendants. Case No. 07-CV-1658 PJH (EDL) [PROPOSED] ORDER GRANTING DEFENDANTS' MOTION TO PARTIALLY EXCLUDE TESTIMONY OF KEVIN MANDIA AND DANIEL LEVY

[PROPOSED] ORDER GRANTING DEFS.' MOTION TO PARTIALLY EXCLUDE MANDIA AND LEVY Case No. 07-CV-1658 PJH (EDL)

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Having considered Defendants' Motion to Partially Exclude Expert Testimony of Kevin Mandia and Daniel Levy, the supporting Declaration of Scott Cowan, and exhibits thereto, which were filed with the Court on August 19, 2010: IT IS HEREBY ORDERED THAT: Defendants' motion is GRANTED. DISCUSSION Defendants seek to exclude portions of the proffered expert opinions of Kevin Mandia and Dr. Daniel Levy from trial. Rule 702 of the Federal Rules of Evidence "permits experts qualified by `knowledge, experience, skill, expertise, training, or education' to testify `in the form of an opinion or otherwise' based on `scientific, technical, or other specialized knowledge' if that knowledge will `assist the trier of fact to understand the evidence or to determine a fact in issue.'" Salinas v. Amteck of Ky, Inc., 682 F. Supp. 2d 1022, 1029 (N.D. Cal. 2010) (Hamilton, J.). The Court serves as the "gatekeeper" in excluding expert testimony that fails to clear the threshold hurdles of relevance and reliability. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993); see also Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999). "This entails a preliminary assessment of whether the reasoning or methodology is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue." Daubert, 409 U.S. at 592-93. The proponent of expert testimony bears the burden of establishing "by a preponderance of the evidence that the admissibility requirements are met." Salinas, 682 F. Supp. 2d at 1029. To determine the admissibility of expert opinions, the Court must apply a three-part test: (1) Is the proffered expert qualified to testify in the area on which he is opining based on his knowledge, skill, experience, training, or education (qualification requirement)?; (2) Is the proffered expert testimony based on reliable scientific or specialized knowledge that is reliably applied to the facts of this case (reliability requirement)?; and (3) Will the proffered expert testimony assist the trier of fact in understanding the evidence or determining a fact in issue (relevancy requirement)? See Fed. R. Evid. 702; Daubert, 509 U.S. at 592-93. Additionally, the Court must evaluate the proposed evidence under Rule 403, which requires that evidence be excluded where its probative value is substantially outweighed by the
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risk of unfair prejudice, confusion of the issues, and potential to mislead to the jury. See Fed. R. Evid. 403; see Daubert, 409 U.S. at 595. Rule 702: Qualifications. Here, with regard to qualifications, Mandia is a forensic computer scientist whose expertise is in data collections and computer hacking; Levy is an economist. Neither is qualified to offer any opinions on claimed copyright infringement, license agreements or terms of use, or violations of any other law in this case. Moreover, neither is qualified to opine that Oracle's registered works contain creative expression, or that the material that was allegedly copied was protected by the asserted copyright registrations. As neither has any level of expertise to opine on claims of infringement, including whether a particular activity was licensed or the result of "contamination" or "cross-use," the Court prohibits both experts from testifying regarding these, or similar, opinions at trial. Rule 702: Reliability and Relevancy. Moreover, with regard to reliability and relevancy, both Mandia and Levy improperly seek to offer opinions regarding claimed copyright protection and infringement, as well as opinions regarding legality (or illegality) of accused conduct, where: (1) no work was done to support these opinions, and the opinions are connected to the existing data only by the ipse dixit of Mandia, on which Levy in turn relies; or (2) the opinions are based solely on the assumptions, opinions, and out-of-court statements of counsel and certain Oracle employees who were not disclosed as testifying expert witnesses and whose methods and procedures, if any, are unknown. With regard to (1) above, the Court specifically finds that Mandia performed no work to support his opinions that: (a) TomorrowNow's conduct implicated all 120 asserted copyrights (indeed, Mandia's report fails to even reference 55 of these registrations); (b) Oracle's registered works contain creative expression; (c) TomorrowNow's conduct implicated expression that was protected by Oracle's registered works; and (d) TomorrowNow's conduct breached license agreements and/or terms of use. Likewise, Levy did not conduct any code comparisons, did not review any Oracle copyright registrations, and did not review any license agreements or terms of use. Further, Levy admits that he did independently verify that TomorrowNow fixes were, in his words, "contaminated." With regard to (2) above, both Mandia and Levy adopt wholesale the
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opinions of Oracle employees who were never disclosed as testifying experts, as well as the opinions of other expert witnesses, without evaluating the bases for or methodologies used to derive those opinions. Simply re-stating another witnesses' proposition is insufficient to qualify as admissible expert opinion under Rule 702. See In re Polypropylene Carpet Antitrust Litig., 93 F. Supp. 2d 1348, 1357 (N.D. Ga. 2000). The Court, therefore, will not allow Mandia or Levy to opine on issues of infringement, "contamination," "cross-use," "breach [of any] other laws," and/or creative/protected expression because these portions of Mandia and Levy's testimony are both unreliable and irrelevant. Rule 403: Unfair Prejudice, Jury Confusion, and Misleading. Additionally, Rules 403 and 703 justify exclusion of Mandia and Levy's opinions on the ultimate issue of copyright infringement, as well as the fact question of whether creative/protected expression exists in the materials allegedly copied. Courts in this Circuit rely upon Rule 403 to exclude experts who have not performed a reliable or relevant analysis. See, e.g., United States v. Hoac, 990 F.2d 1099, 1103 (9th Cir. 1993). Moreover, while Rule 703 provides that otherwise inadmissible testimony may be admissible as the basis for an expert's opinion if its probative value in assisting the jury to evaluate the expert's opinion substantially outweighs its prejudicial effect, courts exclude such testimony where it may mislead or confuse the jury. See, e.g., United States v. 87.98 Acres, 530 F.3d 899, 906 (9th Cir. 2008) (affirming a district court's decision to exclude an expert's testimony under Rules 403 and 703 because "the testimony would invite inferences" that were unsupported by the evidence). Here, Mandia and Levy's opinions on issues of copyright infringement and legality (including their conclusions regarding the scope of copyright protection and whether certain conduct was improper or constituted infringement) comprise improper and unfairly prejudicial legal opinion. See Nationwide Transp. Fin. v. Cass Info. Sys., Inc., 523 F.3d 1051, 1058 (9th Cir. 2008) (affirming district court's exclusion of improper expert legal opinion that repeatedly characterized defendant's conduct as "wrongful" or "intentional" under the law); United States v. Brodie, 858 F.2d 492, 497 (9th Cir. 1988) (affirming exclusion of improper expert legal opinion under Rule 403 as "not only superfluous but mischievous"), overruled on other grounds, United
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States v. Morales, 108 F.3d 1031 (9th Cir. 1997); SEC v. Leslie, No. C 07-3444, 2010 U.S. Dist. LEXIS 76826, at *25-27, 30 (N.D. Cal. July 29, 2010) (excluding under Rule 403 portions of expert opinion on "legal concepts, the legal interpretation of case law and statutes, [and] whether specific conduct was fraudulent, intentional, or misleading in the legal sense," noting that the risk of undue prejudice from expert's use of legal terms "would substantially outweigh its minimal probative value"). Additionally, to permit Mandia and Levy, imbued with all the mystique inherent in the title "expert," to testify regarding subjects on which they have no applicable expertise and conclusions they undertook no independent analysis to verify is unfairly prejudicial to Defendants, confusing to the jury, and misleading. Thus, the Court also excludes Mandia and Levy's opinions on the ultimate issue of copyright infringement, as well as the fact question of whether creative/protected expression exists in the materials allegedly copied, as improper under Rules 403 and 703. CONCLUSION For the reasons stated above, pursuant to Rules 702 and 403 of the Federal Rules of Evidence, the Court precludes Mandia from offering at trial any testimony, opinion, or portion of an opinion: (1) claiming copyright infringement, breach of a license agreement or terms of use, or violation of any other law, including, but not limited to, his specific claims that TomorrowNow acted "improperly" in accessing Oracle websites, systems, or downloads or "inappropriately" in using customer credentials; (2) that Oracle's registered works at issue in this case contain creative expression; (3) that any of the materials TomorrowNow allegedly copied, downloaded, modified, distributed, or used contained any such materials that were protected by the copyrights Oracle asserts in this action; (4) relating to any of the 55 copyrights that he failed to address in his report, a list of which is attached as Exhibit A to this Order; (5) on information, opinions or assumptions provided to Mandia by counsel, Oracle employees, and disclosed expert witnesses, Levy and Plaintiffs' law professor expert
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Douglas G. Lichtman, for which Mandia did no independent analysis; and/or (6) that "contamination" or "cross-use" occurred. Additionally, the Court precludes Levy at trial from offering any testimony, opinion, or portion of an opinion: (1) claiming copyright infringement or breaches of any other law, including, but not limited to, his specific claims that TomorrowNow "infringed Oracle copyrights," "breached other laws," and/or that "copyright infringement" occurred; (2) on information, opinions or assumptions provided to Levy by counsel and Mandia, for which he did no independent analysis; and/or (3) that "contamination," "cross-use," and/or "impermissible cross-use" occurred.

IT IS SO ORDERED.

DATED: ________________________

By: Hon. Phyllis J. Hamilton

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EXHIBIT A The Court precludes Mr. Mandia from referencing, or offering any opinions, related to the following copyright registrations: Title of Work Shop Floor Control program EDI Interface (6) program Configuration Management program Master Production Scheduling program Capacity Requirements Planning program WorldCASE Development Environment program Equipment Management (5) program General Ledger & Basic Financial program Enterprise Facility Planning program Accounts Receivable program Warehouse Management program Inventory Management program Sales Order Processing/Sales Analysis program Purchase Order Processing program Product Data Management program Financial Reporting (FASTR) program WorldCASE Foundation Environment (3) program Accounts Payable program Financial Modeling, Budgeting & Allocations program Initial release of JD Edwards EnterpriseOne 8.0 Cumulative Update 1 for JD Edwards EnterpriseOne 8.0 Initial release of JD Edwards EnterpriseOne 8.9 Initial release of JD Edwards EnterpriseOne 8.10 Cumulative Update 2 for JD Edwards EnterpriseOne 8.10 Initial release of JD Edwards EnterpriseOne 8.11 Initial release of JD Edwards EnterpriseOne 8.11 SP1 Cumulative Update 1 for JD Edwards EnterpriseOne 8.11 SP1 Initial release of JD Edwards EnterpriseOne 8.12 Cumulative Update 1 for JD Edwards EnterpriseOne 8.12 PeopleSoft Benefits Administration 7.50 PeopleSoft Benefits Administration 7.0 PeopleSoft Payroll Interface 7.50 PeopleSoft Pension Administration 7 PeopleSoft Pension Administration 7.50 PeopleSoft Payroll 7 PeopleSoft Payroll Interface 7 PeopleSoft Human Resources 7 PeopleSoft Human Resources 7.50 PeopleSoft Payroll 7.50 PeopleSoft Payroll Interface 7 Higher Education PeopleSoft Time and Labor 7 PeopleSoft Time and Labor 7.0 PeopleSoft Time and Labor 7.50 Siebel 8.0 Initial Release and Documentation
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Date of Registration March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 March 7, 1995 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 June 14, 1999 June 15, 1999 June 21, 1999 June 21, 1999 June 21, 1999 June 22, 1999 June 22, 1999 June 28, 1999 June 28, 1999 June 28, 1999 June 28, 1999 June 28, 1999 June 28, 1999 June 28, 1999 June 29, 2009

Registration Number TXu 619-303 TXu 619-304 TXu 619-305 TXu 619-306 TXu 619-307 TXu 619-308 TXu 619-309 TXu 619-310 TXu 619-311 TXu 619-312 TXu 619-313 TXu 619-314 TXu 619-315 TXu 619-316 TXu 619-317 TXu 619-318 TXu 619-319 TXu 619-320 TXu 619-321 TX 6-541-050 TX 6-541-034 TX 6-541-049 TX 6-541-038 TX 6-541-032 TX 6-541-028 TX 6-541-040 TX 6-541-039 TX 6-541-041 TX 6-541-042 TX 5-072-090 TX 4-258-824 TX 3-772-292 TX 3-772-290 TX 3-772-291 TX 4-501-140 TX 4-501-138 TX 4-994-865 TX 5-013-123 TX 5-013-125 TX 5-013-124 TX 5-013-128 TX 4-994-866 TX 4-994-867 TX 6-942-000

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Title of Work Siebel 8.1.1 Initial Release and Documentation Current development environment for JD Edwards EnterpriseOne Xe Current development environment for JD Edwards EnterpriseOne 8.0 Current development environment for JD Edwards EnterpriseOne 8.9 Current development environment for JD Edwards EnterpriseOne 8.10 Current development environment for JD Edwards EnterpriseOne 8.11 Current development environment for JD Edwards EnterpriseOne 8.11 SP1 Current development environment for JD Edwards EnterpriseOne 8.12 Current development environment for JD Edwards World A7.3 Current development environment for JD Edwards World A8.1 Initial release of JD Edwards World A9.1

Date of Registration June 29, 2009 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 April 26, 2007 May 1, 2007 April 26, 2007

Registration Number TX 6-942-001 TXu1-345-109 TXu1-345-111 TXu1-345-112 TXu1-345-113 TXu1-345-114 TXu1-345-115 TXu1-346-350 TXu1-345-110 TX 6-545-422 TX 6-541-030

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