Oracle Corporation et al v. SAP AG et al

Filing 793

Declaration of Chad Russell in Support of 790 Memorandum in Opposition, to Defendants' Motions in Limine filed byOracle EMEA Limited, Oracle International Corporation, Oracle USA Inc., Siebel Systems, 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, # 30 Exhibit DD, # 31 Exhibit EE, # 32 Exhibit FF, # 33 Exhibit GG, # 34 Exhibit HH, # 35 Exhibit II, # 36 Exhibit JJ, # 37 Exhibit KK, # 38 Exhibit LL, # 39 Exhibit MM, # 40 Exhibit NN, # 41 Exhibit OO, # 42 Exhibit PP, # 43 Exhibit QQ, # 44 Exhibit RR, # 45 Exhibit SS, # 46 Exhibit TT)(Related document(s) 790 ) (Howard, Geoffrey) (Filed on 8/19/2010)

Oracle Corporation et al v. SAP AG et al

Doc. 793 Att. 21

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Expert Report o f Stephen K. Clarke Oracle USA, Inc., et al v. SAP AG, et al

tangential link with economic (or legal) causation. T h e criteria were established as a result o f an agreement related to Targeted Search Request N u m b e r I and are not an admission by Defendants as to liability. The agreed criteria were clarified in a letter from Mr. McDonell to Mr. Geoffrey Howard, Ms. Holly House and Mr. Z a c h a t y Alinder (attorneys for Oracle) dated ovember 3. 2009. The letter makes clear that the List o f 86 provided to Oracle was nothing more than " . . . the agreed upon subset o f so-called ' S a f e Passage' SAP customers who had simultaneous T o m o r r o w N o w purchases o r were existing TomorrowNow customers at the time they made a new SAP purchase during the relevant time period (Januaty 1 , 2 0 0 5 through October 3 1 , 2 0 0 8 ) . " I f a customer satisfied the inclusion criteria, it was added to the list o f customers responsive to Targeted Search Request N u m b e r I. T h e list ultimately had 86 customers on it and became known as the List o f 86. Clearly, nothing in the criteria suggests Defendants were admitting that inclusion on the List o f 86 established legal or economic causation for the listed customers. I t was inappropriate, therefore, for Mr. M e y e r to interpret the criteria as an SAP admission o f liability for the List o f 86 (as he appears to have done). The List o f 86 provided information to Plaintiffs that might be relevant to their discovery in the case. I understand that for disgorgement in a copyright case the p l a i n t i f f s burden is to prove that there was a reasonable probability that the revenues and profits accused were generated as a result o f the alleged infringement. Mr. Meyer wrongly assumed that simply being on the List o f 86 was sufficient to prove causation and excluded only the few customers that came to his attention as having purchased SAP products or services for reasons other than the Alleged Actions. The fact that a customer is on the List o f 86 indicates only that it made SAP purchases during the time it was at TomorrowNow. I t says nothing about the reasons why the customer made the S A P purchases. The proper analysis for Mr. Meyer to have made would have been to identify the reasons a customer on the List o f 86 bought o r licensed SAP products and services during the relevant period and use the information to identify the customers that did so as a result o f the Alleged Actions. He failed to do so. Mr. M e y e r ' s fundamental assumption, therefore, is inappropriate and the entire premise underlying his disgorgement analysis is flawed. 10.1.2. D e c i s i o n t o M i g r a t e t o S A P W a s N o t D u e t o T o m o r r o w N o w The decision to migrate to SAP is one o f enormous consequence for the customer,1024 typically involving millions o f dollars worth o f license fees, training costs, consulting fees, hardware and middleware costs, and includes all the attendant internal turmoil and disruption related to the transition from one vendor to another, a process that can span several years. Such decisions are entered into only after careful study o f the costs and benefits to the company o f making the switch and a proper evaluation o f the alternatives. Such study usually involves specialist consultants to assist in specifying the system requirements, identifying responsive systems, and helping with the implementation process.

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Mr. S o m m e r , who is an expert in this precise area, confirmed that such decisions are significant events that usually need approval from multiple executives within the company and often from the full board. Therefore, the idea that a c u s t o m e r would go through this arduous, lengthy, and costly process as a result o f T o m o r r o w o w ' s involvement is speculative. T h e assumption Mr. Meyer made (i.e. that being on the List o f 86 is sufficient to prove the onomic causation to ter) s h o l ' support a damages claim) is contradicted by the facts as m y analysis (describe 10.1.3. D e c i s i o n t o M o v e t o S A P W a s M a d e A f t e r P r o d u c t E v a l u a t i o n

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Mr. S o m m e r ' s report indicates that the c h o i c e o f an ERP provider is a decision a com pan 01 a f t e r e v a l u a t i n g the available alternatives. T h e ERP evaluation process requires i } . . C-{)'" investment o f time and once the pu rch ase decision is made, the c o m p a n y is then face , t - l / investing even more time and money to implement a new system. Such decisions a r e no V A ~ b e c a u s e T o m o r r o w o w c o u l d p r o v i d e s u p p o r t a t a p r i c e l o w e r than O r a c l e , w h i c 0......... fundamental a s s u m p t i o n o f M r . M e y e r ' s a n a l y s i s and t h e e v i d e n c e s h o w s T o m o r r o w N o w drive sales o f products and services at S A P , which is a n o t h e r fundamental assumption und, Mr. M e y e r ' s analysis. The time and e f f o r t s p e n t on d u e diligence when exploring future t o K . t ' systems m a k e s the idea that a c u s t o m e r would e v a l u a t e the available ERP v e n d o r s ' p r o d u c t offerings and select SAP as its application license v e n d o r as a result o f T o m o r r o w N o w involvement is speculative and neither O r a c l e nor Mr. M e y e r have provided any p r o o f that their assumptions are appropriate. 10.1.4. C u s t o m e r s L e f t O r a c l e f o r S A P W i t h o u t G o i n g t o T o m o r r o w N o w A c c o r d i n g to Mr. Meyer, T o m o r r o w N o w w a s the sole reason an Oracle c u s t o m e r decided to buy products o r services from SAP. However, his assumption is contradicted by the facts. There w e r e approximately 853 Safe Passage c u s t o m e r s by the end o f the first quarter o f 2008 (the latest date for which I have reported data).1025 N o t all o f the Safe Passage customers represented replacements o f Oracle ERP systems. In addition, I understand that S A P ' s account e x e c u t i v e s inflated the Safe Passage numbers and that it was never c o m p l e t e l y c l e a r what defined a S a f e Passage' deal' . However, the report (which is the best a v a i l a b l e information) states that there were 853 S a f e P a s s a g e Initiative deals i n c l u d i n g 625 S A P d e a l s a n d 228 s t a n d a l o n e T o m o r r o w o w c u s t o m e r s (i.e., no S A P product involved). T h e r e f o r e , it was reported'026 that at least 228 c u s t o m e r s terminated Oracle support and went to T o m o r r o w N o w without going to SAP for products o r 1027 services; and at most 78 o f the 625 S A P c u s t o m e r s w e n t to T o m o r r o w N o w for support. T h e a s s u m p t i o n Mr. Meyer is m a k i n g in his analysis is that T o m o r r o w N o w drove customers to c a n c e l O r a c l e s u p p o r t and b e c a u s e o f T o m o r r o w N o w ' s i n v o l v e m e n t t h e y b e c a m e S A P l i c e n s e d customers.

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"Oracle Factsheet - Q I 2008." SAP-OR00098932-933, at -933. A s s u m i n g the quoted d a t a are accurate, w h i c h is doubtful. TomolTowNow only ever had 358 customers. I f 228 o f those were stand alone Safe Passage deals and TomorrowNow had 52 customers when SAP bought the company, at most 78 customers could be SAP Safe Passage customers (358 - 228 - 52 = 78).
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Expert Report o f Stephen K. Clarke Oracle USA, Inc., et al v. SAP AG, et al

have moved to SAP as a result o f the Alleged Actions. Mr. Meyer excluded 17 customers,1030 ·' . . . for which evidence indicates that t h e y may have decided to switch to SAP before engaging TomorrowNow.,,1031 I c o n c u r with Mr. M e y e r ' s rationale o f his exclusion o f the 17 customers. I reviewed the evidence related to the remaining 69 customers 1032 Mr. Meyer did not exclude and applied the parameters he defined. Based on my review, Mr. Meyer should have excluded an additional 17 customers (in addition to the 17 he excluded) because they de, 3 5 8 - 7 11 SAP before engaging T o m o r r o w N o w as shown in A p p e n d i x E-2.

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T h e period o f potential D i s g o r g e m e n t d a m a g e s ( i . e . , 2 0 0 5 t h r o u g h 2 0 0 activity in corporate transactions. Acquisitions were across industries an \ d..- ~.{ ' . ~ ' ' 1 included acquisitions o f Oracle c u s t o m e r s by SAP customers and (pre: A ' - " ' ( ' . . . .....)... ~ When the parent company mandated t h a t t h e i r newly acquired subsidiary run un m e s a m e software as the rest o f the com an , the subsidia had no choice but t o accede to the mandate.

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related to the Alleged Actions. I added a customer to this Exclusion Pool i f the products supported by T o m o r r o w N o w were the products that were mandated to standardize on SAP. Based on the above criterion, I excluded the customers i? Appendix E-2.

10.2.3. C o m p e t i t o r E v a l u a t i o n
From time to time companies reassess their ERP systems. For example, the company m a y believe the existing system can no longer support the c o m p a n y ' s level o f activity, o r the company has accounting, operations o r control needs that the existing system cannot provide. Whatever the reason, when the company decides to upgrade their systems o r migrate to a n e w system, they frequently engage in a competitive evaluation o f potential vendors for the required software. A customer was included in this Exclusion Pool i f the product line o r products supported by T o m o r r o w N o w were the products that the customer was evaluating and replacing. I f the customer in question (i.e., from the List o f 86) engaged in a competitive evaluation, the Alleged Actions were not the cause o f the change in ERP vendor. Based on the above criterion, I excluded the customers in Appendix E-2.

10.2.4. S t a n d a r d i z a t i o n
From time to time, major corporations take steps to rationalize their operations, a process that is particularly important for customers with diverse operations (whether the diversity is the result
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o f geographical differences, operational a n d / o r functional differences, o r the result o f acquisitions that have never been fully integrated). One solution (among others) is to replace all diverse systems and standardize on one ERP system which occurs when the company selects an ERP vendor and implements the selected ERP solution across the entire company. As Mr. S o m m e r indicated, c o m p a n i e s p u r s u e t h i s p a t h o n l y a f t e r e x t e n s i v e a n a l y s i s o f t h e a v a i l a b l e options. Customers are added to this pool i f they had multiple product lines (either Oracle only o r Oracle and Non-Oracle) and they were standardizing on an SAP solution. The standardization decision would not have been made as a result o f the Alleged Actions. Based on the above criterion, I excluded the customers in Appendix E-2.

10.2.5. Specific Functionality
As the record shows, both Oracle and SAP release upgrades to existing software and sometimes create entirely new software in order to keep up with customer demand for particular functionalities. Customers also need their software to perform very specific functions based on the needs o f their industry and the needs may change over time. I f the required functionality is not found at their current vendor or within their current software, the customer will likely look elsewhere until they find a vendor to supply the needed functionality. Often a customer could only achieve the desired functionality within their current product line by upgrading, and the upgrade process alone, because it can be such an extensive process, particularly for highly customized environments, causes customers to re-evaluate their software options. For example, Mr. Hurst testified: A customer that would be more likely to make the move to SAP would be a customer that is at a point in time where t h e y ' r e - t h e y ' r e forced to do some sort o f an upgrade o f their current applications. So i t ' s not enough that their current applications are supported; they need more than what they can do. So i f t h e y ' r e forced to upgrade, they would be at a point where they would [sic] looking to be making a decision. t O l l I excluded customers i f they had stated their need for specific functionality and resear£hed ERP vendors to find it. Because the customer needed the specific functionality in order to conduct business, it is inappropriate for Mr. Meyer to assume that subsequent purchases were caused by the Alleged Actions. Based on the above criterion, I excluded the customers in Appendix £ - 2 .

t10.2.6. Product Extensions!
Many o f the customers on the List o f 86 had made the decision to purchase products o r services from SAP prior to receiving support services from TomorrowNow which, therefore, could not have been the causal link between the customer and its SAP purchases. These customers may have extended their existing SAP s o f t w a r e ' s functionality (e.g., by adding payroll to an existing
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11.2.8. P a r e n t M a n d a t e Parent companies may mandate that their subsidiaries change their ERP systems to a new system. Such a change leads to the subsidiary canceling support on their current system at some point. Accordingly, i f the parent company mandated that the subsidiary stop paying support, O r a c l e ' s loss was not the result o f the Alleged Actions. Based on the above criterion, I excluded the customers in Appendix E-3. 11.2,9, Service G a p

Mr. Meyer determined that a four y e a r period between the cessation o f Oracle support and the start o f support at T o m o r r o w N o w was enough o f a gap to exclude the customer from his Lost Profits damage analysis. 1057 I agree with his principle but the time line is too long. Logically, a f t e r a customer has s e l f supported o r run without support for six months or more, their termination o f Oracle support could not be t.he result o f the Alleged Actions. Mr. Sommer indicated that a customer running without support for six months must have terminated Oracle support for reasons unrelated to the Alleged Actions. Therefore, I excluded the customers in Appendix)5." 11.2.10. No A c c u s e d C o n d u c t - L o s t P r o f i t s

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I understand that Oracle engaged Kevin Mandia to evaluate the "means and methods by which [TomorrowNow] accessed and downloaded from O r a c l e ' s customer support websites, as well the nature and extent o f [TomorrowNow's] customers" and that he generally reached the following conclusions:

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Oracle even outlined the type o f customer that would find third-party support appealing in the "at-risk" customer profile: low call volume, highly customized, old release, limited sales opportunity/activity in account and an overall lack o f relationship with Oracle. 1058 As Oracle admits, there are customers that would consider third-party support a possible and appealing alternative to Oracle support. In order to provide a well-rounded illustration o f the c u s t o m e r ' s experience at Oracle, I have included some sources that reference product lines that customers did not have supported by TomorrowNow. 11.3.1. B u d g e t C o n s t r a i n t I included customers in the " B u d g e t constraint" pool i f they had recent budget restrictions o r parent/management mandated decreases in IT spending. Because support fees are often a large part o f the c u s t o m e r ' s IT budget, they tend to be scrutinized closely when a company has financial d i f f i c u l t i e s . This pool is different from the " C o s t " pool to the extent budget constraints may p l a y a role in a support termination even though the customer would like to retain the services. When the termination is the result o f a parent mandate to cut costs o r financial difficulties at the company itself, the customer has no choice but to comply. I f support costs are one avenue for achieving the required reductions, then from time to time the company will take that avenue and terminate support. Sometimes, budget constraints alone are enough to cause a customer to terminate support with a vendor. I listed the customers that met this criterion in Appendix E-4. 11.3.2. C o s t I included customers in the " C o s t " pool i f they cited cost as a factor that caused them to terminate Oracle support o r they were displeased with the costs associated with Oracle support. A customer that had cost as a primary concern would find the reduced support prices o f thirdparty v e n d o r s a p p e a l i n g . Support for a c u s t o m e r ' s Oracle system is expensive. A customer that may have spent millions o f dollars to license a new Oracle system and millions more to train its people on the system, are then faced with annual support fees that are a b o u t 2 2 % o f the license cost to support the system. As such, the customer effectively pays for the system twice over the course o f j u s t a few years. Inevitably, the c u s t o m e r ' s management questions the value o f what they are gelling for the annual support fees. The desire to cut costs (especially in difficult economic times) may be overwhelming and a prime focus o f such cost cUlling, as Mr. Sommer indicated, is the support budget. The desire to cut costs may become even greater when the customer is: on an old o r stable release; has competent in-house s t a f f who can deal with most problems without outside assistance; is experiencing financial difficulties, and so on.

1058

"PeopleSoft/JDE ' A t Risk' Update." August 16, 2006; ORCL00087649-660, at -654. "Maintenance At Risk Analysis: PeopleSoft/J.D. Edwards Customer Base." June 10, 2005; ORCL00I30679-690, at -688690. "NAS Customer Escalation Report." May 27th, 2005; ORCL00I38470-475, at -470. Oracle email from Rick Cummins to Michael J. Lochead. March 23, 2005. Re: Pepay Option; ORCLOO I 72564-566, a l 565.

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Based on the evidence produced in this case, O r a c l e ' s answer to most customer requests for support price cuts has been to deny the cut. They try to instill fear o f a systemic failure into the customer by telling them o f all the catastrophes t h a t may befall them i f they terminate support and also point out that coming back to Oracle support will be even more expensive ( m o r e about reinstatement fees below). Accordingly, the customer is in a bind - it cannot terminate support without incurring risk but does not w a n t to (or simply cannot afford to) write the check each y e a r to pay for support. Sometimes, the c u s t o m e r will resort to alternative providers o f support i n c l u d i n g t h i r d - p a r t y s u p p o r t o r s e l f s u p p o r t o r a c o m b i n a t i o n o f t h o s e two. W h i l e p r i c e a l o n e will not usually be enough to c a u s e the c u s t o m e r to terminate support, taken in combination with o t h e r factors, it may result in a support termination. I listed the customers that met this criterion in Appendix E-4.

11.3.3. Customized
J included customers in this pool i f a n y o f their applications had been significantly customized. Mr. S o m m e r confirmed that c u s t o m e r s with highly customized software sometimes d e v e l o p problems that are less amenable to the standard solutions the E R P vendor provides. Based on the Oracle email traffic, highl{g customized customers were difficult to support and were at high risk for terminating support. 1O 9 The availability o f a dedicated support individual which was o n e o f the services T o m o r r o w N o w provided w o u l d appeal to these customers because it would allow them to receive the personalized s u p p o r t that Oracle struggled to provide. J am aware that T o m o r r o w N o w did not guarantee support for customized software, only that they would do t h e i r best to support it. I listed the customers t h a t met this criterion in Appendix E-4.

11.3.4. Did Not R e t u r n to O r a c l e

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Once T o m o r r o w N o w closed its doors on O c t o b e r 31, 2008,1060 its customers may still have needed support for their Oracle software (usually the need was dependent on the product line t h a t w a s being supported). The fact that most customers did not go back to Oracle when they had the chance to d o so suggests they would have left Oracle regardless o f TomorrowNow. As Mr. M e y e r stated t h a t 74 customers reinstated, relicensed or never left Oracle,I061 I concluded that the remaining 2 8 4 customers did not return to Oracle. I listed the customers that met this criterion in A p p e n d i x D. 11.3.5. D i s l i k e s F u s i o n
I included customers in this pool i f they did not see a future for O r a c l e ' s Fusion in t h e i r company. Many customers and industry analysts expressed their view that Fusion would not be released when anticircated o r t h a t it would ineffectively combine all o f the product lines t h a t Oracle had acquired. 062 Such worries a p p e a r to have been justified because Fusion was behind
1059

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" N A S Customer Escalation Report." May 27th. 2005; O R C L 0 0 I 3 8 4 7 0 - 4 7 5 , at -470. Oracle email from Rick Cummins to Michael J. Lochead. March 23, 2005. Re: Pepay Option; ORCLOO I 72564-566, at -565. " T o m o r r o w N o w Operations Wind Down: Final Report." O c t o b e r 3 1 , 2 0 0 8 ; TN-OR0352387 1-924. M e y e r S c h e d u l e 33.SU. " M a r k e t p l a c e C o m m u n i c a t i o n s : I n f l u e n c e U p t a k e ; " S A P - O R 0 0 0 6 0 0 9 2 - 4 2 8 , V a r i o u s l o c a t i o n s w i t h i n the document. " F R O M THE ANALYSTS: Saluting the Siebel supernova; Summing up the postmortems on O r a c l e ' s latest acquisition." S A P - O R 0 0 0 4 4 0 5 2 - 0 8 1 , at -072. Maynard, Billy and Yvonne Genovese.

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14.4,2, S A P S a f e P a s s a g e
Mr. Meyer addresses S A P ' s Safe passage program by quoting an SAP d o c u m e n t that states, " S A P builds credibility and loyalty with the customer by providing immediate savings,'·1139 via Tomorrow ow. Mr. M e y e r fails to highlight the fact that for most o f the Safe Passage customers, T o m o r r o w N o w was not a factor in the c u s t o m e r ' s decision to migrate some o r all o f its software to SAP. Mr. M e y e r appears not to have d o n e sufficient analysis to determine the c u s t o m e r ' s rationale for buying products o r services from SAP while they were supported at TomorrowNow. However, as previously stated, and as indicated by Mr. S o m m e r , no rational customer would migrate their ERP systems to SAP as a result o f modest savings during a b r i e f p e r i o d o f s u p p o r t by T o m o r r o w o w .

14.4,3, T h i r d - P a r t y A l t e r n a t i v e s
Mr. Meyer addresses third-party support alternatives by stating that S A P ' s acquIsition made T o m o r r o w N o w a viable option for Oracle customers. I 140 He quotes Juergen R o t t l e r ' s reference to T o m o r r o w N o w a s " . . . the o n e perceived, you know, credible alternative to o u r own [Oracle] support offering.,,1141 However, there is nothing wrong with buying a business to legitimize it. There were other third-party support offerings in the market as I discuss elsewhere in this report. Mr. M e y e r ' s reliance on Mr. R o t t l e r ' s statement is inappropriate. Though Mr. Meyer argues that T o m o r r o w N o w was the only credible third-party option available to PeopleSoft, J.D.Edwards, and Siebel customers, he acknowledges that there were o t h e r thirdp a r t y v e n d o r s a v a i l a b l e ( e . g . , C o n e x u s P a r t n e r s , C H 2 M H I L L , V e r s y t e c , a n d Klee Associates).1142 Mr. M e y e r claims that the o t h e r third-party providers could not provide the same level o f support as TomorrowNow, because they did not have the access to O r a c l e ' s intellectual property that was allegedly necessary to provide the support services. The evidence is clear that there are alternative ways Oracle customers can support their application software. They can self-support, go with a consulting finn on an as-needed basis, o r use a n y o n e o f a group o f o t h e r third-party vendors, including netCustomer and CedarCrestone. 1143 T h e s e companies can deliver support for O r a c l e ' s products and have d o n e so for years, and their existence provides choice for O r a c l e ' s customers.

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October 2008 shutdown o f Tomorrow ow." It is unclear what Mr. Meyer is trying to prove with this footnote; presumably that SAP and Tomorrow 'ow continued to earn revenues after September 2007. If so, this issue is not being disputed. Meyer Report, page 227, paragraph 361. Meyer Report, page 228, paragraph 363. Meyer Report. page 226, paragraph 361. Juergen Rottler deposition dated May 1 3 , 2 0 0 9 , page 43. Meyer Report, page 229, paragraph 365. 1 checked the netCustomer website on March 21, 20 I 0 and found that the finn provides support for a wide range o f Oracle products including former PeopleSoft, JD.Edwards and Siebel systems. In addition, netCustorner offers "75% savings in day-la-day technical operations" with a "24 x 7" global support center to support PeopleSoft customers around the world. "David Hare, former SVP, Support Services, Oracle/PeopleSoft" and current netCustomer Board member is quoted as saying, " . . . netCustomer offers an innovative service, focusing on high-end support"." netCustomer. "Testimonials." <http://netCustomer. com/testimon ials.asp>.

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Mr. Meyer also discusses the c u s t o m e r ' s willingness to return to Oracle support o n c e their relationship with T o m o r r o w N o w ended. 1144 Mr. Meyer states that according to c u s t o m e r s (it is unclear how many Mr. M e y e r is referencing), o n c e support expenses have been reduced by going to a third-party SUgport vendor, it is difficult to increase the budget to previous levels in subsequent y e a r s . " 5 However, Mr. M e y e r fails to identify a causal link between the third-party vendor pricing and a c u s t o m e r ' s willingness to return to Oracle. A c u s t o m e r may c h o o s e not to return to Oracle for several reasons, including the quality o f the support they received from Oracle in the past, availability o f o t h e r third-party vendors, a decision to migrate to a n o t h e r ERP vendor, and internal politics (e.g., the CIO had a previous relationship with a n o t h e r vendor) to name j u s t a few. In addition, it is clear that economic forces drove certain customers a w a y from Oracle support e v e n a f t e r T o m o r r o w N o w c e a s e d o p e r a t i o n s . E v i d e n c e s u g g e s t s s o m e d o u b t a b o u t w h e t h e r the third-party support vendors are even in the s a m e market as O r a c l e ' s support offering. It is quite likely that there is sufficient difference between the price o f O r a c l e ' s support and the price o f support from third-party vendors that they are not the same market. Further evidence that there really a r e t w o m a r k e t s f o r s o f t w a r e s u p p o r t w a s p r o v i d e d w h e n T o m o r r o w N o w c e a s e d operations and most T o m o r r o w N o w customers chose to go somewhere o t h e r than Oracle for support. The fact that numerous customers stayed with third-party vendors o r s e l f supported rather than return to Oracle lends credibility to the argument that absent T o m o r r o w N o w these customers would have left Oracle anyway, which means damages would be zero for these customers. The evidence shows that 252 o f the 341 J 146 (or 73.9%) customers that had support for either PeopleSoft or l D . E d w a r d s applications started TomorrowNow support on o r after August I, 2005, which is more than six months after O r a c l e ' s acquisition o f PeopleSoft. 1147 Therefore, the vast majority o f the PeopleSoft and J.D.Edwards customers left Oracle a f t e r experiencing O r a c l e ' s support offering. In fact, the T o m o r r o w N o w support start dates for the 252 customers occurred in the following periods: J 148 · · · · 38 from August I to December 31, 2005 129 in 2006 64 in 2007 21 in 2008

The evidence that Mr. M e y e r has provided is insufficient to support his assertions. Mr. Meyer and Oracle acknowledge that there were o t h e r third-party support providers in addition to TomorrowNow, and the M e y e r Report lists several o f them. However, Mr. M e y e r claims that
1144 1145 1146 1147 1148

Mr. Meyer's statement may be aimed at a more generalized set o f third-party support providers.
M e y e r Report, pages 2 3 2 - 2 3 3 , p a r a g r a p h 370. A p p e n d i x K-3. A p p e n d i x K-3. A p p e n d i x K-3.

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14.5.1.7 L o s t O K I 3 C u s t o m e r s . Mr. Meyer uses the OKI3 reports and SAP and TomorrowNow data to perform the following analysis by customer for the Lost OKI3 Customers J t 7 6 · · Identify the support contracts related to PeopleSoft, l D . E d w a r d s , and Siebel Identify the relevant cancelled PeopleSoft, J.D.Edwards, and Siebel contracts based on:
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Mr. Meyer makes several unreasonable assumptions in identifying the cancelled support contracts at issue and the amounts o f those contracts. Using the same data and methodology, I corrected the schedules by incorporating more reasonable assumptions. I. 25 customers (27 contracts) had gaps o f six months o r more between the end o f their Oracle support and the beginning o f TomorrowNow support. These customers should be excluded from lost profits damages because TomorrowNow did not cause these customers to cancel with Oracle. 1I77

2. Customers that cancelled contracts that were not later supported by T o m o r r o w N o w should be excluded from lost profits damages because T o m o r r o w N o w did not cause the customer to close out the contracts.( t78 I also corrected the following two errors because Mr. Meyer: I. Incorporates an incorrect Tomorrow o w support end date for a number o f customers. A review o f the SAS database and other documentation yields correct inforrnation. 1179

2. Includes customer contracts that were cancelled after the T o m o r r o w N o w support end date l180
1176 ll77
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M e y e r R e p o r t , p a g e s 2 3 8 - 2 3 9 : p a r a g r a p h 3 8 0 . S e e s u m m a r y o n S c h e d u l e 3 1 . S U o f t h e M e y e r Report. A p p e n d i x W-19. O r a c l e ' s customers often had more than one contract for Oracle support. When T o m o r r o w N o w look o v e r support, the c u s t o m e r would only pay for support on the required elements. The c u s t o m e r could terminate all support on one Oracle contract without affecting continued support on its o t h e r contracts. Appendix W19. Appendix K-2.

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