Oracle Corporation et al v. SAP AG et al

Filing 814

Declaration of Tharan Gregory Lanier in Support of 813 Motion for Partial Summary Judgment (FILED PURSUANT TO D.I. 810) filed by SAP 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)(Related document(s) 810 ) (Froyd, Jane) (Filed on 8/27/2010) Modified on 8/27/2010 (vlk, COURT STAFF).

Oracle Corporation et al v. SAP AG et al

Doc. 814 Att. 1

EXHIBIT A

Dockets.Justia.com

ORACLE U S A , I c., ET A L

v.
SAP A G , ET AL

C A S E N o . 07-CV-01658

S U P P L E M E N T A L EXPERT R E P O R T O F PAUL K. MEYER

T M F I N A N C I A L F O R E N S I C S , LLC. FEBRUARY 23, 2010

~,t1~_/'-P A U L K . MEYER U

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II.

Scope of OpinionslSummary of Damages
20. I u n d e r s t a n d t h a t m u c h o f t h e s o f t w a r e t e c h n o l o g y accessed, d o w n l o a d e d ,

c o p i e d , d i s t r i b u t e d , m o d i f i e d a n d l o r u s e d b y S A P is p r o t e c t e d b y O r a c l e c o p y r i g h t r e g i s t r a t i o n s . I u n d e r s t a n d t h a t S A P h a d d i r e c t a c c e s s to O r a c l e p r o d u c t s p r o t e c t e d b y intellectual p r o p e r t y rights. I have determined

d a m a g e s a n d o f f e r o p i n i o n s o n t h e fair m a r k e t v a l u e o f S A P ' s a c t u a l u s e o f O r a c l e ' s intellectual p r o p e r t y ( c o p y r i g h t e d materials), O r a c l e ' s lost profits r e l a t e d to s u p p o r t c o n t r a c t s , S A P ' s i n f r i n g e r p r o f i t s / u n j u s t e n r i c h m e n t a n d
O r a c l e ' s a d d i t i o n a l c o s t s c a u s e d by S A P ' s a l l e g e d a c t i o n s . I u n d e r s t a n d , a s

a l l o w e d b y t h e C o u r t , I m a y a l s o b e a s k e d to c o m p u t e o r p r o v i d e o p i n i o n s r e l a t e d t o p r e - j u d g m e n t i n t e r e s t , a t t o r n e y ' s fees a n d c o s t s a n d p u n i t i v e
damages. Supporting analyses are described and provided throughout this

Report. Table 1 p r e s e n t s a s u m m a r y o f m y d a m a g e s o p i n i o n s .

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T a b l e 1: S u m m a r y o f D a m a g e s l ; Fair M a r k e t V a l u e of S A P ' s I n f r i n g e m e n t o f O r a c l e ' s C o p y r i g h t s
1. PeopleSoftlJ.D. E d w a r d s Fair M a r k e t Value 16

N o less t h a n $ 2 . 0 b i l l i o n $55.6 million N o less t h a n $ 1 0 0 m i l l i o n $99.6 million $349.0 million
$1.1 to 3.5 billion

2. Oracle D a t a b a s e Fair M a r k e t V a l u e l 7
3. Siebel Fair M a r k e t V a l u e 18

4. O r a c l e ' s Lost Profi ts - D u r i n g

T o m o r r o w N o w Service P e r i o d 5. O r a c l e ' s Lost Profits - T h r o u g h M a y 2015
6. S A P ' s U n j u s t E n r i c h m e n t / A v o i d e d C o s t s
7. S A P ' s U n j u s t E n r i c h m e n t / D a t a b a s e License

$55.6 million

8. A d d i t i o n a l Oracle Costs:

· I n v e s t i g a t i o n C o s t s 19 · D a m a g e s To O r a c l e ' s D a t a / S y s t e m s

$0.3 million N o t quantified

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13 T a b l e 1 refl<.'Cts t h e v a l u e s f o r e l e m e n t s o f d a m a g e s w h i c h I have!Je.C'n a s k e d t o q u a n t i f y to d a t e . I h a v e n o t i n d u d e d in t h e t a b l e m y a s s e s s m e n t for i n f r i n g e r s p r o f i t s w h i c h is p r e s e n t e d in S e c t i o n X. I m a y also be a s k e d t o p r o v i d e o p i n i o n s a n d / o r q u a n t i f y p r e - j u d g m e n t i n t e r e s t , O r a c l e ' s a t t o r n e y ' s fees a n d c o s t s , a n d p u n i t i v e d a m a g e s . E l e m e n t s i n T a b l e 1 r e p r e s e n t d i f f e r e n t r e m e d i e s for O r a c l e ' s a ! l e g a t i o n s a n d c e r t a i n c l e m e n t s m a y n o t b e a d d i t i v e .

16
17

See S e c t i o n s VI.A.-D. a n d T a b l e 8.

See S e c t i o n VII a n d c o m p o n e n t s d e s c r i b e d in T a b l e s 9 , 1 0 a n d lOA. See S e c t i o n VIII a n d T a b l e 12.

18

19 S C H E D U L E 4 3 . S U .

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8. D e f e n d a n t s ' I m p r o p e r B e h a v i o r O r i g i n a t e d i n t h e U n i t e d S t a t e s

72. In response to interrogatories, T o m o r r o w N o w indicated t h a t "Until recently, T o m o r r o w N o w c o n d u c t e d the d o w n l o a d s a n d s t o r e d the r e l e v a n t m a t e r i a l s o n its c o m p u t e r s . The d o w n l o a d s w e r e c o n d u c t e d by T o m o r r o w N o w ' s

e m p l o y e e s u s i n g certain l a p t o p a n d d e s k t o p c o m p u t e r s as well as d e d i c a t e d d o w n l o a d s e r v e r s located a t T o m o r r o w N o w ' s d a t a center in Bryan, Texas. T o m o r r o w o w t h e n t r a n s f e r r e d a n d s t o r e d d o w n l o a d e d materials o n certain file servers."198 Confirmation of this d o w n l o a d i n g activity to U.S.-based

s e r v e r s is also p r o v i d e d b y the analysis of Kevin M a n d i a with M a n d i a n t , c o m p u t e r forensic a n d security experts retained b y Oracle in this litigation. l99 73. As a result of all of the d o w n l o a d activity o c c u r r i n g a t the data c e n t e r i n Bryan, Texas, I u n d e r s t a n d copying, d i s t r i b u t i o n a n d u s e of the i m p r o p e r l y

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198

r k f e n e l a n t T o m o r r o w N o w , l n c : s E i g h t h A m e n e l e d ,mel Sl,Jpplemental R e s p o n w t o PI<lintiff O r i l d e C o r p o r a t i o n ' s F i r s t S e t o f I n t e r r o g a t o r i e s ( S e t O n e ) , D e c e m b e r 4 , 2 0 0 9 , p g s . 11-20, a t 12.

199 U i s c u s s i o n s w i t h K e v i n M a n d i a , M a n d i a n t ; F e b r u a r y 12, 2U10 S u p p l e m e n t a l Expert R e p o r t o f Kevin M a n d i a , p g . 34 (IP a d d r e s s e s w e r e r e g i s t e r e d to SAP TN in Bryan, Texas).

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accessed S o f t w a r e a n d S u p p o r t M a t e r i a l s o c c u r r e d o u t o f t h e Bryan, T e x a s location i n c l u d i n g d o m e s t i c a n d i n t e r n a t i o n a l d i s t r i b u t i o n o f O r a c l e ' s S o f t w a r e a n d S u p p o r t Materials.

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V.

Q u a n t i f i c a t i o n o f S A P ' s " V a l u e o f Use" o f O r a c l e ' s C o p y r i g h t e d P r o p e r t y Overview and Methodology A. Overview

91. 1 u n d e r s t a n d t h a t i n matters of c o p y r i g h t infringement, a plaintiff's available d a m a g e s r e m e d i e s i n c l u d e t h e p l a i n t i f f ' s a c t u a l d a m a g e s , a s well a s t h e d i s g o r g e m e n t of the i n f r i n g e r ' s profits, to the e x t e n t they a r e not taken i n t o a c c o u n t in the c o m p u t a t i o n of plaintiff's actual damages. In the alternative, the plaintiff m a y seek s t a t u t o r y damages.2.'iR A p l a i n t i f f ' s actual d a m a g e s

resulting from c o p y r i g h t i n f r i n g e m e n t can be m e a s u r e d in alternate ways: "Actual dtlmages are usutllly d e t e r m i n e d by the loss in the fair m a r k e t value of the copyright, m e a s u r e d b y the profits lost d u e to the i n f r i n g e m e n t o r b y t h e value of t h e u s e of t h e c o p y r i g h t e d w o r k to the infringer."259 O n e articulation of the " v a l u e of use" m e a s u r e of d a m a g e s is e x p l a i n e d as:

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:!5Il Nimmer a l l Copyrights, A u g u s t 2009, V o l u m e 4, C h a p t e r 14 u l n f r i n g e m e n t A c t i o n s - R e m e d i e s " , a t §14.01fA] a n d 14.01IB] (pgs. 14-5, 14-6 a n d 14-9).

259 See Polar Bear Prods. v. Timex Corp., 384 F.3d 700, 708 (9th Cir. 2 0 ( 4 ) ( q u o t i n g McRoberts Software, Inc. v. Media 100, IlIc., 329 F.3d 557, 566 (7th Cir. 2 ( 0 3 » . See also N i m m e r o n C o p y r i g h t s , at §14.02 (pgs. 14-13 a n d 14-20.1 t h r o u g h 14-

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"It a m o u n t s to a d e t e r m i n a t i o n o f w h a t a w i l l i n g b u y e r wou.ld h a v e

b e e n r e a s o n a b l y r e q u i r e d t o p a y t o a w i l l i n g s e l l e r for p l a i n t i f f ' s w o r k . T h a t is a d i f f e r e n t m e a s u r e t h a n t h e d e t e r m i n a t i o n o f d e f e n d a n t ' s a c t u a l p r o f i t s from t h e i n f r i n g e m e n t . A n a u t h o r m i g h t

license the use of his copyright either for a l u m p s u m based on the
r e a s o n a b l e v a l u e o f t h e w o r k o r for a r o y a l t y d e r i v e d f r o m t h e l i c e n s e e ' s p r o f i t s , o r for a c o m b i n a t i o n o f both."260
92. I u n d e r s t a n d t h a t c o u r t s , i n c l u d i n g t h e N i n t h C i r c u i t , h a v e h e l d t h a t t h e a c t u a l

d a m a g e s for t h e d e f e n d a n t ' s " v a l u e o f u s e " m a y b e d e t e r m i n e d o n t h e b a s i s o f a fair m a r k e t v a l u e license fee p a i d for u s e o f t h e p l a i n t i f f ' s w o r k . 261 I

u n d e r s t a n d t h a t t h e N i n t h C i r c u i t M o d e l Civil J u r y l n s t r u c t i o n o n a c t u a l d a m a g e s i n c o p y r i g h t i n f r i n g e m e n t m a t t e r s s t a t e s , " T h e r e d u c t i o n o f t h e fair m a r k e t v a l u e o f t h e c o p y r i g h t e d w o r k is t h e a m o u n t a w i l l i n g b u y e r w o u l d h a v e b e e n r e a s o n a b l y r e q u i r e d to p a y a w i l l i n g s e l l e r a t t h e t i m e o f t h e i n f r i n g e m e n t for t h e a c t u a l u s e m a d e b y t h e d e f e n d a n t of t h e p l a i n t i f f ' s work."262 A s n o t e d in Nimmer on Copyrights, t h e s i m i l a r i t i e s b e t w e e n t h e

31). See also Mackie
::60

th I ' . Rieser, 296 F . 3 d 909, 9 1 7 (9 C i t . 2002); Fra"k Music Corp. v. Mefro-Goldwyl/-Mayer, Inc., 772 F . 2 d 505, ( 9 t h Cir. 1 9 8 5 ) ; a n d Jarvis v. K2, Ille., 4 8 6 F.3d 526, 533 (9th Cir. 2007).

The d e c i s i o n o f t h e U.s. C o u r t o f A p p e a l s for t h e i n t h C i r c u i t a c k n o w l e d g e s , " T h i s s a m e d i s t i n c t i o n is r e c o g n i z e d in p a t e n t cases." Sid & Marty Kroft! Televisioll Prods., II/C. v. MeDollald's Corp., 562 F.2d 1157, (9 t h Cir. 1977).

Polar 8 m r Prods. v. Timex Corp., 384 F.3d 700, 708 (9'" Cir. 2(04); farois v. K2, Inc., 486 F.3d 526, 533 (9 th G r . 2007); Mackie v. Rieser, 296 F.3d 909, 917 (9'" Cir. 2002); Frallk Music Co'p. v. Metro-Goldwyl/-Mayer, 772 F.2d 505, (9 th Cir. 1985); a n d Sid & Marry Kroft! Television Prods., ll1c. v. McDol/a/d's CQrp., 562 F.2d 1157, (9'" Cir. 1977); J a n u a r y 28, 2010
:?61

O r d e r o f J u d g e H a m i l t o n , O r d e r D e n y i n g D e f e n d a n t s ' M o t i o n for P a r t i a l S u m m a r y J u d g m e n t , p g . 3. R e l e v a n t c a s e lilW milY refer to t h e stilndilrd o f m e i l s u r e m e n t ilS t h e "f<lir milrket villue" o r " m i l r k e t villue," w h i c h Ciln b e t e r m s o f a r t in t h e c o n t e x t o f v a l u a t i o n o f p a r t i c u l a r assets, a n d w i t h r e s p e c t to financial r e p o r t i n g . For p u r p o s e s o f m y a n a l y s i s , r e f e r e n c e s to " f a i r m a r k e t v a l u e " t h r o u g h o u t t h i s d e c l a r a t i o n r e f e r to t h e a m o u n t a t w h i c h p r o p e r t y w o u l d e x c h a n g e b e t w e e n a w i l l i n g b u y e r a n d w i l l i n g seller, in a n a r m ' s l e n g t h t r a n s a c t i o n , n e i t h e r b e i n g u n d e r c o m p u l s i o n , a n d e a c h h a v i n g r e a s o n a b l e k n o w l e d g e o f t h e r e l e v a n t facts. T h i s d e f i n i t i o n i s c o n s i s t e n t w i t h g u i d a n c e o f t h e A m e r i c a n I n s t i t u t e o f Certified. P u b l i c A c c O l m t a n t s ( A l C P A ) a n d r e l e v a n t t r e a t i s e s o n t h e v a l u a t i o n o f i n t e l l e c t u a l p r o p e r t y . See, e.g., t h e J u n e 2007AICPA S t a t e m e n t o n S t a n d a r d s for V a l u a t i o n S e r v i c e s N o . 1 , "VillU<ltion o f <I Rusiness, B u s i n e s s O w n e r s h i p I n t e r e s t , SeOlrity. o r l n t i l n g i b l e A s s e t " , pg_ 44; see also lutel/edllal Property, Valuatioll, Exploitation, and Illfringement Damages, b y G o r d o n V. S m i t h a n d Russell L. Parr. 2005 E d i t i o n , pg.
143.
2l.2

N i n t h C i r c u i t M o d e l Civil J u r y I n s t r u c t i o n 17.23 - C o p y r i g h t - D a m a g e s - A c t u a l D a m a g e s .

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Subject /0 Protective Order Highly Gmjidelltiall1lformatiolt - Attorneys' Eyes Only

"value o f use" t h e o r y o f c o p y r i g h t d a m a g e s a n d the r e a s o n a b l e royalty rule in p a t e n t l a w a r e a p p a r e n t . 26J B. Methodology

93. W h a t a willing b u y e r w o u l d h a v e p a i d a willing seller for u s e o f the i n f r i n g e d P e o p l e S o f t / j D . E d w a r d s , Siebel a n d O r a c l e D a t a b a s e c o p y r i g h t e d s o f t w a r e a n d s o f t w a r e s u p p o r t m a t e r i a l s ( " c o p y r i g h t e d m a t e r i a l s in s u i t " ) c a n b e d e t e r m i n e d b a s e d on a n a l y s e s i n d i c a t i n g the fair m a r k e t v a l u e o f t h e c o p y r i g h t e d m a t e r i a l s in s u i t to the p a r t i e s a t t h e time o f first i n f r i n g e m e n t . 1 h a v e d e t e r m i n e d w h a t O r a c l e , a s a w i l l i n g seller, w o u l d h a v e a c c e p t e d from SAP, as a willing b u y e r . I u n d e r s t a n d from J u d g e H a m i l t o n ' s J a n u a r y 28, 2010 r u l i n g D e n y i n g D e f e n d a n t s ' M o t i o n for P a r t i a l S u m m a r y J u d g m e n t , " O r a c l e i n the p r e s e n t instance is n o t r e q u i r e d to p r o v e t h a t i t w o u l d h a v e successfully n e g o t i a t e d a license w i t h SAP, n o r is i t p r e c l u d e d from seeking license d a m a g e s s i m p l y b e c a u s e it h a s n e v e r before licensed w h a t SAP infringed."26JA T h e c o p y r i g h t e d m a t e r i a l s in s u i t a r e s e t f o r t h in O r a c l e ' s F o u r t h A m e n d e d C o m p l a i n t a n d a r e also s u m m a r i z e d in O r a c l e ' s technical e x p e r t rep o rt s . 264 94. S A P ' s " v a l u e o f use" is m e a s u r e d as it i m p a c t s O r a c l e ' s c o n s o l i d a t e d o p e r a t i o n s a n d family o f entities, a l t h o u g h the s u c c e s s o r in i n t e r e s t to t h e r e l e v a n t c o p y r i g h t o w n e r s o r e x c l u s i v e l i c e n s e e s a t t h e t i m e o f t h e v a l u a t i o n is Oracle I n t e r n a t i o n a l C o r p o r a t i o n . In e n t e r i n g i n t o a license w i t h SAP, O r a c l e I n t e r n a t i o n a l C o r p o r a t i o n w o u l d act o n b e h a l f of its p r e d e c e s s o r s in interest,

:!lo3

Nimmer Oil COllyrigllls, a t §14.U2[Blll J (pgs. 14-22).

Z63A

J a n u a r y 28, 2010 O r d e r o f J u d g e Hamilton, O r d e r D e n y i n g D e f e n d a n t s ' Motion for Partial S u m m a r y J u d g m e n t , pg4

;$I

See O r a c l e USA, Inc. e t al v. S A P AG ct al, Fourth A m e n d c d C o m p l a i n t in C a s e No. 07-CV-Q1658 d a t e d A u g u s t 18, 2009, pgs. 6 a n d 51-55; N o v e m b e r 16, 2009 Expert Report o f Paul Pinto, pg. 2; February 12, 2010 S u p p l e m e n t a l
Expert Report o f Kevin Mandia, pgs. 10 a n d 98-99.

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affiliates, a n d u l t i m a t e p a r e n t a n d SEC Registrant, Oracle C o r p o r a t i o n .

J

u n d e r s t a n d this a p p r o a c h is c o n s i s t e n t w i t h the Union Carbide Chemicals and
Plastics Technologtj Corporation, et al., v Shell Oil Company et al., m a t t e r . 265

95. As a d d r e s s e d below, I h a v e d e t e r m i n e d S A P ' s " v a l u e o f u s e " o f t h e c o p y r i g h t e d m a t e r i a l s in s u i t b a s e d o n c o m m o n l y a c c e p t e d v a l u a t i o n m e t h o d o l o g i e s : the m a r k e t a p p r o a c h , i n c o m e a p p r o a d l a n d cost a p p r o a c h . I h a v e a l s o e v a l u a t e d r e l e v a n t financial, e c o n o m i c a n d o t h e r f a c t o r s , c o n s i s t e n t w i t h d e t e r m i n a t i o n o f t h e fair m a r k e t v a l u e u n d e r t h e f r a m e w o r k o f t h e wellk n o w n p a t e n t case, Georgia-Pacific Corp. v. U.S. Plywood Corp. ("Georgia-

Pacific"), for d e t e r m i n i n g the o u t c o m e of a hypothetical license negotiation for
the c o p y r i g h t e d m a t e r i a l s .
96. I h a v e e m p l o y e d these v a l u a t i o n m e t h o d o l o g i e s t h r o u g h o u t m y t w e n t y five y e a r s of e x p e r i e n c e in c o n s u l t i n g o n financial, a c c o u n t i n g , e c o n o m i c a n d d a m a g e s matters, a n d specifically as it relates to t h e v a l u a t i o n o f intellectual p r o p e r t y a n d r e l a t e d f i n a n c i a l d a m a g e s . I h a v e t e s t i f i e d a t trial, a r b i t r a t i o n a n d d e p o s i t i o n o n t h e d e t e r m i n a t i o n o f financial d a m a g e s u s i n g v a l u a t i o n t e c h n i q u e s i n c l u d i n g t h e d e t e r m i n a t i o n o f r e a s o n a b l e r o y a l t i e s in t h e c o n t e x t of a hypothetical negotiation based o n t h e e v a l u a t i o n of economic a n d o t h e r factors, i n c l u d i n g the Georgia-Pacific factors. I h a v e offered e x p e r t w i t n e s s

t e s t i m o n y o n the v a l u a t i o n of intellectual p r o p e r t y , i n c l u d i n g c o p y r i g h t e d w o r k s , a f t e r c o n s i d e r i n g a n d u s i n g t h e cost, m a r k e t a n d i n c o m e v a l u a t i o n approaches. I h a v e a n a l y z e d , a n d testified to, the d a m a g e s for c o p y r i g h t

265 UI/ioll Carbide Chemicals & Plastics Techllology Corp., et al., v. Shell Oil Compal/Y, et al., 425 F. 3 d 1366. Ullioll Carbide is a p a t e n t case w h e r e t h e federal c i r c u i t u p h e l d t h e d i s t r i c t c o u r t ' s a d m i s s i o n o f e v i d e n c e r e g a r d i n g t h e i m p a c t o f i n f r i n g e r ' s s a l e s o n t h e p a r e n t o f a h o l d i n g c o m p a n y t h a t h o l d s t h e title to t h e intclk.'Cl:ual p r o p e r t y . The federal circuit found " S i m p l y p u t , t h e h o l d i n g c o m p a n y w o u l d n o t e n t e r a n y n e g o t i a t i o n w i t h o u t c o n s i d e r i n g t h e c o m p e t i t i v e p o s i t i o n o f its c o r p o r a t e p a r e n t . "

P a g e 67 o f 281 Subject /0 Protective Order Highly Gmjidelltial II/formatioll - Altomeys' Eyes Dilly

infringement b a s e d o n the a b o v e d e s c r i b e d f r a m e w o r k o f a h y p o t h e t i c a l license n e g o t i a t i o n a s well a s u s i n g a c c e p t e d v a l u a t i o n m e t h o d o l o g i e s .

97. As previously explained in m y September 23, 2009 Declaration in S u p p o r t of
O r a c l e ' s O p p o s i t i o n to D e f e n d a n t s ' M o t i o n for Partial S u m m a r y J u d g m e n t

Regarding Plaintiffs' Hypothetical License Damages Claim, there a r e well established, widely accepted techniques for the valuation of intangible assets, including intellectual p r o p e r t y such a s the copyrighted materials in suit.
T h e s e t e c h n i q u e s i n c l u d e the m a r k e t a p p r o a c h , i n c o m e a p p r o a c h a n d cost a p p r o a c h . 266 98. T h e m a r k e t a p p r o a c h i n v o l v e s d e t e r m i n i n g the fair m a r k e t v a l u e o f intellectual p r o p e r t y b a s e d o n a c o m p a r i s o n to w h a t o t h e r s h a v e a g r e e d u p o n in a r m ' s - l e n g t h t r a n s a c t i o n s i n v o l v i n g s i m i l a r a s s e t s . 267 99. U s i n g the i n c o m e a p p r o a c h , the fair m a r k e t v a l u e o f t h e intellectual p r o p e r t y is d e t e r m i n e d b a s e d o n the v a l u e o f the f u t u r e e c o n o m i c benefits t h a t a r e e x p e c t e d to b e g e n e r a t e d by the asset. 268 A v a r i a t i o n o f the i n c o m e a p p r o a c h is

the relief-from-royalty approach, whereby intellectual property is valued based on the p r e s e n t value of the royalties that the p r o p e r t y o w n e r is relieved
from p a y i n g as a r e s u l t o f o w n i n g the asset. un

~ Illtelleclllal Property, Valualioll, Exploitatio/l, and Infri/lgement Damages, b y G o r d o n V. S m i t h a n d Russell L. Parr, 2005 Edition, pgs. 148-154.
"!&

illtellee/llal Property, Valuatioll, Exploitatioll, and Infringement Damages, by G o r d o n V. S m i t h a n d Russell L. Parr,

2005 Edition, pg. 169.

Z68llltelleclllal Property, Valuatio/l, Expfoitatio/l, and Illfri/lgement Damages, by G o r d o n V. S m i t h a n d Russell L. Parr,

2005 Edition, pg_ 185
Y>9llllelleclllal Pro,Jerly. Vall/alioll, Exploilatio/l, and Infringement Damages, by G o r d o n V. S m i t h a n d Russell L. Parr, 2005 Edition, pg. 194. I refer to the Relief-from-Royalty A p p r o a c h a n d the Income Appro.lch collectively as the "Income Approach."

P a g e 68 o f 281
Subject to Protective Order Highly Gmjidelltiall1lformatioll - Attorneys' Eyes Dilly

100.

T h e cost a p p r o a c h m e a s u r e s the m a r k e t v a l u e o f intellectual p r o p e r t y

b a s e d o n the cost t o replace the f u t u r e service c a p a b i l i t y o f the c o p y r i g h t e d asset. T h e C o s t A p p r o a c h d o e s n o t d i r e c t l y c o n s i d e r t h e f u t u r e e c o n o m i c benefi ts o f the assets. 270 101. In the v a l u a t i o n o f intellectual p r o p e r t y , it is c o m m o n t o c o n s i d e r a n a l y s i s

o f the fair m a r k e t v a l u e u n d e r m u l t i p l e v a l u a t i o n a p p r o a c h e s . 271 In litigation matters, i t is c o m m o n for p r a c t i t i o n e r s to v a l u e intellectual p r o p e r t y u s i n g a h y p o t h e t i c a l n e g o t i a t i o n c o n s i d e r i n g financial, e c o n o m i c a n d o t h e r factors a d d r e s s e d in Georgia-Pacific. As e x p l a i n e d in O r a c l e ' s O p p o s i t i o n to

Defendants' Motion for Partial S u m m a r y J u d g m e n t Regarding Plaintiffs' Hypothetical [Fair Market Value] License Damages, [ u n d e r s t a n d t h a t t h e

Georgia-Pacific hypothetical license methodology a n d factors mirror those u s e d
in c o p y r i g h t i n f r i n g e m e n t cases, i n c l u d i n g in the N i n t h Circuit. 272 102. For P e o p l e S o f t n . D . E d w a r d s a n d O r a c l e D a t a b a s e , w h e n u s e d in

c o n j u n c t i o n w i t h p r o v i d i n g s u p p o r t for PeopleSoft/J.D E d w a r d s c u s t o m e r s , the h y p o t h e t i c a l n e g o t i a t i o n for a license to O r a c l e ' s c o p y r i g h t e d m a t e r i a l s in s u i t w o u l d o c c u r a t o r a r o u n d t h e d a t e o f S A P ' s first i n f r i n g e m e n t , J a n u a r y 2005, w h e n SAP first a c q u i r e d T o m o r r o w N o w . For Siebel a n d O r a c l e

Database, w h e n u s e d in conjunction w i t h p r o v i d i n g s u p p o r t for Siebel customers, t h e hypothetical negotiation w o u l d occur a t o r a r o u n d t h e d a t e o f S A P ' s first i n f r i n g e m e n t , S e p t e m b e r 2006, w h e n T o m o r r o w N o w first

2'JO

JI/lel/eetllal Properly, Valuation, Exploilation, and Illfrillgemeni Damages, by G o r d o n V. S m i t h a n d I{ussell L. Parr,
Tllld/eell/al

2005 Edition, pg. 156.
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m Plaintiffs' O p p o s i t i o n to O c f e n d a n t s ' Motion for Partial S u m m a r y J u d g m e n t R e g a r d i n g Plaintiffs' Hypothetical
jFair Market Valuel License Damages, S e p t e m b e r 23,2009, pgs. 15-16.

P a g e 69 o f 281 Subject 10 Protective Order Highly Gmjidelltiall1lformatioll - Attorneys' Eyes Dilly

contracted to p r o v i d e Siebel service to a c u s t o m e r . 273 For all licenses the t e r m e n d d a t e is O c t o b e r 31, 2008. 274 103. B a s e d o n m y a n a l y s i s o f t h e r e l e v a n t factors, i n c l u d i n g c o n s i d e r a t i o n o f

the c i r c u m s t a n c e s c o n f r o n t i n g SAP p r i o r to a c q u i r i n g T o m o r r o w N o w in 2005,

I h a v e d e t e r m i n e d the a m o u n t that SAP - a s a willing b u y e r - w o u l d p a y Oracle, a n d that Oracle - as a willing seller - w o u l d accept from SAP in U,e form of a license fee to r e p r e s e n t SAP's " v a l u e of use" o f Oracle's P e o p l e S o f t related c o p y r i g h t e d m a t e r i a l s in suit. T o m o r r o w N o w n e e d e d access to O r a c l e D a t a b a s e in o r d e r to p r o v i d e s u p p o r t t o a p o r t i o n o f its PeopleSoftlJ.D. E d w a r d s c u s t o m e r base, w h i c h w a s r u n n i n g a p p l i c a t i o n s o n O r a c l e D a t a b a s e . I have also c o n s i d e r e d the v a l u e o f u s e o f Oracle D a t a b a s e c o p y r i g h t e d m a t e r i a l s in s u i t . S e p a r a t e l y , b a s e d o n m y a n a l y s i s o f t h e r e l e v a n t factors, i n c l u d i n g c o n s i d e r a t i o n o f the c i r c u m s t a n c e s c o n f r o n t i n g SAP p r i o r t o e x p a n d i n g T o m o r r o w N o w ' s s u p p o r t offerings to i n c l u d e Siebel p r o d u c t s , 1

h a v e d e t e r m i n e d t h e a m o u n t t h a t SAP - a s a w i l l i n g b u y e r - w o u l d p a y Oracle, a n d t h a t Oracle - as a willing seller - w o u l d accept from SAP in the
form o f a license fee to r e p r e s e n t S A P ' s " v a l u e o f u s e " for O r a c l e ' s Siebelrelated c o p y r i g h t e d m a t e r i a l s i n suit. 104. I u n d e r s t a n d t h e r e a r e l i m i t a t i o n s o n the fair m a r k e t v a l u e license

m e a s u r e of c o p y r i g h t a c t u a l d a m a g e s . I u n d e r s t a n d it m u s t relate to the fair m a r k e t v a l u e o f a l i c e n s e t h a t a l l o w s for S A P ' s a c t i o n s t h a t c o n s t i t u t e c o p y r i g h t i n f r i n g e m e n t a n d c a n n o t a l l o w for m o r e o r d i f f e r e n t i n f r i n g e m e n t

Z73TN-0RQ7717977,Sil;'Ix!I_Servkes.x1s. O n Septemlx>r 29,2006, T o m o r r o w N o w l;'nteroo i n t o a S u p p o r t Servi~ A g r e e m e n t w i t h i t s first Siebel c u s t o m e r , MKS, Inc.
V~

J undl;'rstand t h a t O r a c l e allegt.'S U e f e n d a n t s ' i n f r i n g i n g a c t i v i t y c o n t i n u e d u n t i l t h e c l o s i n g o f ' J ' o m o r r o w N o w ' s o p e r a t i o n s in O c t o b e r 2008 (See s e c t i o n IV,E o f t h i s Report).

P a g e 70 o f 281 Subject 10 Protective Order Highly Gmjidelltiall1lformatioll - Attorneys' Eyes Dilly

than actually o c c u r r e d . m A b u s i n e s s a u a n g e m e n t b e t w e e n the t w o c o m p a n i e s t h a t i n v o l v e d a license reflecting the full s p e c t r u m o f use o f the c o p y r i g h t e d a n d n o n - c o p y r i g h t e d m a t e r i a l s by D e f e n d a n t s , b e y o n d t h e a c t i o n s t h a t c o n s t i t u t e c o p y r i g h t i n f r i n g e m e n t in this matter, a n d w h i c h is i n d i f f e r e n t to w h e t h e r p a r t i c u l a r foreign O r a c l e s u b s i d i a r i e s a r e n a m e d p l a i n t i f f s o n t h e c a u s e o f action, w o u l d likely h a v e a h i g h e r v a l u e t h a n the fair m a r k e t v a l u e licenses d e t e r m i n e d herein. S o m e o f t h a t difference is captu.red b y O r a c l e ' s i n t e r f e r e n c e claims. 105. S A P ' s benefits from t h e ability to r e p r o d u c e , d i s s e m i n a t e o r m a k e

d e r i v a t i v e w o r k s o f t h e c o p y r i g h t e d m a t e r i a l s in s u i t i n c l u d e e n h a n c e d r e v e n u e s , i m p r o v e d m a r k e t position, e n h a n c e d c u s t o m e r retention, a v o i d e d c o s t s , a v o i d e d r i s k s a n d e a s e o f m a r k e t e n t r y . A d d i t i o n a l l y , SAP b e n e f i t s a s Oracle, its m o s t significant competitor, is n e g a t i v e l y i m p a c t e d by S A P ' s u s e o f O r a c l e ' s c o p y r i g h t e d m a t e r i a l s in s u i t . I h a v e d e t e r m i n e d t h e o v e r a l l fair

m a r k e t v a l u e o f these benefits to SAP. I u n d e r s t a n d t h a t the c o p y r i g h t e d m a t e r i a l s in s u i t a r e essential, a n d w i t h o u t a license to the Oracle c o p y r i g h t e d m a t e r i a l s in suit, SAP c o u l d n o t offer a level o f s u p p o r t services to O r a c l e ' s PeopleSoft,

J.D.

E d w a r d s , Siebel a n d O r a c l e D a t a b a s e c u s t o m e r s a s q u i c k l y a s

m E.g., Wall Data v. Los Allgeles COl/lily Sheriffs Dep't, 447 F.3d 769, 786-787 (9'" Cir. 2006). In a d d i t i o n , I u n d e r s t a n d that, for s t a n d i n g reasons, t h e h y p o t h e t i c a l license w o u l d n o t allow for t h e sale o f s o f t w a r e o r s u p p o r t services in EMEA (Europe, t h e M i d d l e East a n d Africa) for t h e J.D. E d w a r d s E n t e r p r i s c O n c v e r s i o n s 8.11 a n d e a r l i e r a n d Siebel v e r s i o n s 7.8 a n d e a r l i e r p r o d u c t lines. I u n d e r s t a n d t h a t J.D. E d w a r d s E u r o p e Ltd. a n d Siebel S y s t e m s Ireland H o l d i n g s Ltd. o w n e x c l u s i v e licenses to t h e r e l e v a n t c o p y r i g h t s for these p r o d u c t s in EMEA, a n d t h u s a r e t h e e n t i t i e s t h a t w o u l d h a v e legal s t a n d i n g to b r i n g claims for c o p y r i g h t i n f r i n g e m e n t related to those exclusive licenses. T h e s e a r e n o t n a m e d plaintiffs to O r a c l e ' s c o p y r i g h t i n f r i n g e m e n t claim, s o w h i l e d a m a g e o c c u r r e d to Oracle entities, I u n d e r s t a n d it m a y n o t b e recovered u n d e r t h e c o p y r i g h t i n f r i n g e m e n t claim in t h i s s u i t .

P a g e 71 o f 281 Subject 10 Protective Order Highly Gmjidelltiall1lformatioll - Attorneys' Eyes Dilly

S A P d e s i r e d , o r c o m p a r a b l e to t h e level o f s e r v i c e a n d a t t h e p r i c e p r o v i d e d b y T o m o I T o w N o w . 276

TEXT REMOVED - NOT RELEVANT TO MOTION

For p u r p o s e s o f t h i s R e p o r t , " l e v e l o f s e r v i c e " r e f e r s t o t h e d e p t h a n d b r e a d t h o f s u p p o r t s e r v i c c s o f f e r e d . O r a d e refers to s u p p o r t services generally by "levels" o f service. Colleen Kelly, O r a c l e ' s Senior Director o f Global Practices, defined s u p p o r t by level as, "First levc\ s u p p o r t typically involves r e s p o n d i n g to telephone, email o r webb a s e d r e q u e s t s for s u p p o r t , i n c i d e n t t r a c k i n g a n d resolving c u s t o m e r issues. Second levc\ s u p p o r t m a y i n c l u d e the s a m e s e r v i c e s p r o v i d e d i n first l e v e l o f s u p p o r t , b u t c o u l d i n v o l v e m o r e c o m p l e x i s s u e s , a n d m i g h t a l s o i n v o l v e t h e p a r t n e r h e l p i n g the c u s t o m e r create a n d m a n a g e a n i n c i d e n t r e q u e s t that is s e n t t o O r a c l e ' s s u p p o r t t e a m s e e k i n g O r a c l e ' s assist<mre." O r a c l e t h e n p r o v i d e s <m a d d i t i o n a l level o f s u p p o r t which p"'rtains to u s i n g Oracle's a p p l i c a t i o n s o f t w a r e a n d s u p p o r t materials in o r d e r to create fixes, patches o r u p d a t e s for customers. Declaration o f Colleen A . Kelly in S u p p o r t o f O r a c l e ' s O p p o s i t i o n to D e f e n d a n t s ' Motion to C o m p e l Discovery concerning T h i r d p a r t y S u p p o r t P r o v i d e d by O r a c l e ' s Partners, d a t e d J a n u a r y 23, 2009, pgs. 1-2. See also, SAP Presentation, J a n u a r y 1 7 , 2 0 0 7 SAP-OROO141563-66 ( Z i c m c n Exhibit 470), at 565 citing a G a r t n e r i n d u s t r y a n a l y s t s o p i n i o n that Systimc, a t h i r d - p a r t y p r o v i d e r o f s u p p o r t for SAP software, " c a n not b e s e e n a s a real a l t e r n a t i v e b e c a u s e w i t h o u t access to the SAP s o u r c e c o d e the w h o l e offering is m o r e o r less useless." O r a c l e e x p e r t Kevin M a n d i a c o n c l u d e d that T o m o r r o w N o w ' s e n t i r e b u s i n e s s m o d e l relied u p o n the alleged i n f r i n g e m e n t a n d m i s u s e o f O r a d e ' s Software n o d S u p p o r t Materials, a n d the u n a u t h o r i z e d d o w n l o a d i n g a n d c o p y i n g o f O r a c l e ' s intellectual p r o p e r t y [February 12, 2010 S u p p l e m e n t a l Expert Report o f Kevin Manrlia, pgs. , - 31_
:m;

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P a g e 72 o f 281
Subject 10 Protective Order
Highly COl/fidel/tial I"formatioll - Altomeys' Eyes D i l l y

TEXT REMOVED - NOT RELEVANT TO MOTION

3.
142.

Cost A p p r o a c h
T h e c o s t a p p r o a c h a t t e m p t s to m e a s u r e t h e f u t u r e b e n e f i t o f t h e

intellectual p r o p e r t y b y q u a n t i f y i n g t h e c o s t t o d e v e l o p a l t e r n a t i v e t e c h n o l o g y

o r replace the technology b e i n g v a l u e d . The u n d e r l y i n g a s s u m p t i o n is t h a t t h e
c o s t to b u y o r d e v e l o p a l t e r n a t i v e i n t e l l e c t u a l p r o p e r t y is c o m m e n s u r a t e w i t h

TEXT REMOVED - NOT RELEVANT TO MOTION

P a g e 95 o f 281

Subject 10 Protective Order H i g h l y COl/fidel/tial I"formatioll - Attorneys' Eyes D i l l y

the e c o n o m i c benefit, o r v a l u e , o f the intellectual p r o p e r t y .

In t h i s

circumstance, I h a v e c o n s i d e r e d the a c q u i s i t i o n cost to O r a c l e o f p u r c h a s i n g t h e s u b j e c t i n t e l l e c t u a l p r o p e r t y a s w e l l a s t h e i n v e s t m e n t in r e s e a r c h a n d d e v e l o p m e n t by O r a c l e in the c o p y r i g h t e d m a t e r i a l s in s u i t since the acquisition. I h a v e also c o n s i d e r e d the a m o u n t s PeopleSoft a n d }.D. E d w a r d s s p e n t o n research a n d d e v e l o p m e n t o f t h e i r intellectual p r o p e r t y ( w h i c h Oracle s u b s e q u e n t l y acquired), a n d the e s t i m a t e s o f O r a c l e ' s expert, Paul P i n t o , o n t h e c o s t s S A P w o u l d h a v e i n c u r r e d h a d it i n d e p e n d e n t l y d e v e l o p e d c e r t a i n o f t h e c o p y r i g h t e d m a t e r i a l s in s u i t . 143. [n t h e v a l u a t i o n o f i n t e l l e c t u a l p r o p e r t y , t h e c o s t a p p r o a c h p r e s e n t s

c e r t a i n l i m i t a t i o n s . For e x a m p l e , t h e c o s t a p p r o a c h d o e s n o t d i r e c t l y m e a s u r e t h e m a g n i t u d e o r e x p e c t e d d u r a t i o n o f t h e p o t e n t i a l f u t u r e benefit.
In

a d d i t i o n , the cost a p p r o a c h also d o e s n o t directly a c c o u n t for the risk associated w i t h receiving the p o t e n t i a l f u t u r e benefits (i.e., it is a s s u m e d t h a t the e x p e c t e d benefits justify the expense). While the c o s t to d e v e l o p o r replace intellectual p r o p e r t y m a y n o t reflect the full p o t e n t i a l f u t u r e benefits o f the r e s u l t i n g i n t e l l e c t u a l p r o p e r t y , it m a y s e r v e a s a r e a s o n a b l e n e s s c h e c k o n t h e v a l u a t i o n s d e r i v e d from t h e o t h e r a p p r o a c h e s .

TEXT REMOVED - NOT RELEVANT TO MOTION

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c. E s t i m a t e d Costs To Independently Create PeopleSoftIJ.D. E d w a r d s C o p y r i g h t e d M a t e r i a l s i n Suit 150. I u n d e r s t a n d t h a t O r a c l e ' s e x p e r t P a u l P i n t o w a s r e t a i n e d to e s t i m a t e t h e

costs t h a t D e f e n d a n t s w o u l d h a v e h a d to i n c u r to i n d e p e n d e n t l y d e v e l o p t h e O r a c l e c o p y r i g h t e d m a t e r i a l s in s u i t t h a t D e f e n d a n t s a l l e g e d l y i l l e g a l l y a c c e s s e d , c o p i e d a n d m i s u s e d . I u n d e r s t a n d t h a t Mr. P i n t o h a s c o n c l u d e d t h a t it w o u l d h a v e cost D e f e n d a n t s a p p r o x i m a t e l y $1.275 billion w i t h a r a n g e o f $936 million to $2.903 billion t o d e v e l o p 7 specific PeopleSoft a n d J.D. E d w a r d s s o f t w a r e a p p l i c a t i o n s . 348 151. A d d i t i o n a l l y , I u n d e r s t a n d that Me. P i n t o h a s c o n c l u d e d that. if it w e r e

possible to be c o m p l e t e d in t w o years, i t w o u l d take D e f e n d a n t s 2,374 a p p r o p r i a t e l y - t r a i n e d p e r s o n n e l to c o m p l e t e the d e v e l o p m e n t o f the 7 P e o p l e S o f t l ) . D . E d w a r d s s o f t w a r e a p p l i c a t i o n s h e a n a l y z e d . ' " As e x p l a i n e d in section IV.B.2 of t h i s Report, the timing o f S A P ' s offering o f T o m o r r o w N o w s u p p o r t services w a s critical to its overall s t r a t e g y t o d i s r u p t O r a c l e ' s b u s i n e s s a n d c o n v e r t O r a d e ' s PeopleSoft, J.D. E d w a r d s a n d Siebel c u s t o m e r b a s e o v e r
TEXT REMOVED - NOT RELEVANT TO MOTION
D i s c u s s i o n w i t h Paul P i n t o (Sylvan VI, Inc.); N o v e m b e r 16, 2009 Expert R e p o r t o f Paul Pinto, pg. 4 3 ($320 million f o r JOE E n t e r p r i s e O n e + $707 m i l l i o n for PC'OpleSoft + $248 m i l l i o n for JOE W o r l d - $1.275 billion. $221 m i l l i o n + $ 5 4 J m i l l i o n + 172 m i l l i o n = $936 m i l l i o n . $749 m i l l i o n + $1,573 m i l l i o n + 581 m i l l i o n = $2.903 billion).
3-13
J.I\I

D i s c u s s i o n w i t h Paul P i n t o (Sylvan VI. Inc.); N o v e m b e r 16, 2009 Expert R e p o r t o f P a u l Pinto, pgs. 42 a n d 44. 67,863 t o t a l p e r s o n m o n t h s effort, l e s s 10,890 Siebel p e r s o n m o n t h s , d i v i d e d b y 24 m o n t h s = 2,373.9. A c c o r d i n g t o Mr. P i n t o , A d e v e l o p m e n t c r f o r t o f t h i s s c o p e a n d c o m p l e x i t y w o u l d b e a n e x t r e m e l y l a r g e p r o j e c t , v e r y a g g r e s s i v e , a n d of h i g h - r i s k to b e p u r s u e d w i t h i n t h i s t i m e f r a m e . " [ N o v e m b e r 16, 2009 Expert R e p o r t o f Paul Pinto, p g . 71.
U

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to SAP (i.e., it w a s critical for SAP t o a n n o u n c e its offering o f s u p p o r t o n Oracle p r o d u c t s i m m e d i a t e l y following O r a c l e ' s a c q u i s i t i o n s o f PeopleSoft a n d Siebel).
I f faced w i t h a m u l t i - y e a r d e v e l o p m e n t t i m e f r a m e i n l i e u o f

using Oracle's copyrighted property, SAP may h a v e d e t e r m i n e d that offering
T o m o r r o w N o w s u p p o r t s e r v i c e s a s a n i n t e g r a l p a r t o f i t s Safe P a s s a g e p r o g r a m w a s n o t a n a t t r a c t i v e b u s i n e s s d e c i s i o n . T h e r e f o r e , SAP w o u l d l i k e l y be willing t o p a y m o r e t h a n the cost to i n d e p e n d e n t l y d e v e l o p the intellectual p r o p e r t y in o r d e r t o receive a t i m e to m a r k e t a d v a n t a g e a n d t o a v o i d the risk of unsuccessful d e v e l o p m e n t .

d. S u m m a r y : Fair M a r k e t V a l u e U s i n g Cost A p p r o a c h
152. In m y o p i n i o n , the cost a p p r o a c h w o u l d indicate a fair m a r k e t v a l u e o f

SAP's use of Oracle's copyrighted materials i n s u i t of no less than $936 million,
w i t h o t h e r c o n s i d e r a t i o n s i n d i c a t i n g t h a t d e v e l o p m e n t costs, a n d t h e r i s k s o f d e v e l o p m e n t f a i l u r e , w o u l d b e m u c h h i g h e r . I a m r e l y i n g o n Mr. P i n t o , w h o h a s e s t i m a t e d the costs to i n d e p e n d e n t l y d e v e l o p c e r t a i n s o f t w a r e a p p l i c a t i o n s t h a t w e r e accessed b y T o m o r r o w N o w a n d SAP.J50

TEXT REMOVED - NOT RELEVANT TO MOTION

:!SO

Uiscussions w i t h Paul Pinto; N o v e m b e r 16, 2009 Expert f{eport o f Paul Pinto (sec Mr. P i n t o ' s explanation o f his a s s i g n m e n t a n d s u m m a r y o f o p i n i o n s a t pgs. 1-2).

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3. C o s t A p p r o a c h 282. In this circumstance, 1 h a v e c o n s i d e r e d O r a c l e ' s cost to a c q u i r e subject

intellectual p r o p e r t y , a s well a s O r a c l e ' s i n v e s t m e n t i n r e s e a r c h a n d
development of the intellectual property since the acquisition. In addition, 1

h a v e c o n s i d e r e d a n e s t i m a t e o f t h e c o s t s SAP w o u l d h a v e i n c u r r e d t o a t t e m p t to i n d e p e n d e n t l y recreate the Siebel c o p y r i g h t e d m a t e r i a l s in suit. As

a d d r e s s e d a b o v e , the c o s t a p p r o a c h h a s l i m i t a t i o n s , a n d m a y u n d e r s t a t e t h e fair m a r k e t v a l u e b y n o t reflecting the full p o t e n t i a l f u t u r e benefits o f the
resulting intellecrual property. However, it may serve to assess the

r e a s o n a b l e n e s s o f t h e v a l u a t i o n s d e r i v e d from t h e o t h e r a p p r o a c h e s .
283. A s d i s c u s s e d a b o v e , O r a c l e a c q u i r e d S i e b e l f o r $6.1 b i l l i o n i n 2006. 579

Since 2006, O r a c l e h a s c o n t i n u e d to i n c u r d e v e l o p m e n t e x p e n s e s related t o Siebel p r o d u c t s , i n c l u d i n g d e v e l o p m e n t efforts p r i m a r i l y related to s u p p o r t o f existing p r o d u c t s , a n d d e v e l o p m e n t efforts p r i m a r i l y r e l a t e d to n e w p r o d u c t development. 284. For the p e r i o d M a r c h 2006 t h r o u g h A u g u s t 2008 (2.5 years), O r a c l e

personnel p r e p a r e d r e p o r t s identifying direct research a n d d e v e l o p m e n t e x p e n s e s b y p r o d u c t line, w i t h a l l o c a t i o n s o f a s s o c i a t e d o v e r h e a d . These

r e p o r t s p r o v i d e d e v e l o p m e n t e x p e n s e s for S i e b e l p r o d u c t s . O v e r t h i s p e r i o d , Oracle s p e n t $260 million o n Siebel p r o d u c t a p p l i c a t i o n s d e v e l o p m e n t . " " O n a v e r a g e , O r a c l e s p e n t a p p r o x i m a t e l y $104 million p e r y e a r d e v e l o p i n g Siebel S o f t w a r e a n d S u p p o r t Materials. 581

579
">110

O r a c l e C o r p o r a t i o n F o r m lo-K for the fiscal y e a r e n d e d M a y 31, 2006, pgs. 75-77.
See
SCHEDULE 10.

'181

$260 million / 2 . 5 y e a r s " $104 million p e r year.

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285.

A l t h o u g h O r a c l e ' s financial s y s t e m s h i s t o r i c a l l y h a v e n o t t r a c k e d

r e s e a r c h a n d d e v e l o p m e n t e m p l o y e e t i m e b y task, O r a c l e e m p l o y e e s h a v e a n a l y z e d t h e p e r c e n t a g e o f r e s o u r c e s O r a c l e d e v o t e s to m a i n t e n a n c e - r e l a t e d , a s o p p o s e d to n e w p r o d u c t - r e l a t e d , r e s e a r c h a n d d e v e l o p m e n t . 582 u n d e r s t a n d t h a t b a s e d o n t h e s e a n a l y s e s , O r a c l e h a s e s t i m a t e d t h a t 60-65% o f its r e s e a r c h a n d d e v e l o p m e n t e x p e n s e f o r i t s a p p l i c a t i o n s p r o d u c t s r e l a t e d t o s u p p o r t - r e l a t e d d e v e l o p m e n t efforts.583 T h e r e f o r e , for t h e p e r i o d o f J a n u a r y 2006 t h r o u g h S e p t e m b e r 2008, s u p p o r t - r e l a t e d r e s e a r c h a n d d e v e l o p m e n t e x p e n s e for Siebel p r o d u c t s w a s a p p r o x i m a t e l y $156 m i l l i o n to $169 million. 5lW H o w e v e r , g i v e n t h a t T o m o r r o w N o w c o p i e d O r a c l e ' s Siebel s u p p o r t m a t e r i a l s , a s well a s u n d e r l y i n g applications, s u c h a p p o r t i o n i n g o f research a n d d e v e l o p m e n t e x p e n s e b e t w e e n n e w p r o d u c t a n d s u p p o r t - r e l a t e d e f f o r t s is unnecessary. 286. For t h e n i n e m o n t h s e n d i n g S e p t e m b e r 30, 2005, Siebel r e c o r d e d p r o d u c t

d e v e l o p m e n t e x p e n s e o f $211.9 m i l l i o n . ' " 287. Assuming that SAP's improper actions allowed SAP to a v o i d

d e v e l o p m e n t e x p e n s e s f r o m a t l e a s t S e p t e m b e r 2006 t h r o u g h O c t o b e r 2008 (2.17 y e a r s ) , O r a c l e ' s d e v e l o p m e n t h i s t o r y w o u l d i n d i c a t e a fair m a r k e t v a l u e o f n o l e s s t h a n $225.7 m i l l i o n . T h i s c a l c u l a t i o n e x c l u d e s t h e c o s t s t o d e v e l o p t h e s o f t w a r e a n d s u p p o r t m a t e r i a l s a s t h e y e x i s t e d p r i o r t o S e p t e m b e r 2006.

">8!

Di!';cussion w i t h H o u m a n B e h a z a d i ( O r a c l e D i r e c t o r o f Busine!i!,; P l a n n i n g a n d Operation!';).

583

See, e.g., O r a c l e P r e s e n t a t i o n : " A p p l i c a t i o n s S t r a t e g y - N o v e m b e r 2oo7,"ORCLOO560527-566, at 533. F u s i o n r e s e a r c h a n d d e v e l o p m e n t e x p e n s e s are e x c l u d e d f r o m t h i s a n a l y s i s [ D i s c u s s i o n w i t h H o u m a n B c h a z a d i ( O r a c l e Director o f Business P l a n n i n g a n d Operations»).
$260 m i l l i o n " 6 0 % . , $156 million; $260 m i l l i o n " 6 5 % . , $169 m i l l i o n . Siebel S y s t e m s , Inc. F o r m 1 0 · Q for t h e q u a r t e r l y p e r i o d e n d e d S e p t e m b e r 30, 2005, p . 2.

-.sl

S85

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288.

O r a c l e ' s e x p e r t , P a u l Pinto, e s t i m a t e d t h e costs t h a t D e f e n d a n t s w o u l d

h a v e i n c u r r e d to i n d e p e n d e n t l y d e v e l o p c e r t a i n o f t h e S i e b e l c o p y r i g h t e d m a t e r i a l s i n s u i t . I u n d e r s t a n d t h a t o n e o f Mr. P i n t o ' s c o n c l u s i o n s a d d r e s s e s

a v o i d e d d e v e l o p m e n t costs of $198 million to $573 million. I u n d e r s t a n d t h a t
i f c o m p l e t e d i n a 1 t o 2 y e a r p e r i o d , t h i s e f f o r t w o u l d t a k e a p p r o x i m a t e l y 450

to 900 w e l l t r a i n e d r e s o u r c e s . 586

TEXT REMOVED - NOT RELEVANT TO MOTION

581>

2.17 y e a r s · $104 m i l l i o n . , $225.7 million. N o v e m b e r 16, 2001) Expert R e p o r t o f P a u l C. Pinto, pgs. 42-43. 10.1:\1)0 p e r s o n m o n t h s -+ 2 4 · 4 5 4 people; 10,890 p e r s o n m o n t h s -+ 12 '"' 908.

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IX.

Q u a n t i f i c a t i o n o f S A P ' s V a l u e of Use o f O r a c l e ' s C o p y r i g h t e d P r o p e r t y - Lost Profits
A. Overview

351.

Oracle's655 lost p r o f i t s r e s u l t i n g from S A P ' s alleged i n f r i n g e m e n t a n d u s e

o f O r a c l e ' s i n t e l l e c t u a l p r o p e r t y i n c l u d e l o s t p r o f i t s o n lost s u p p o r t r e v e n u e related to O r a c l e ' s PeopleSoft,

J.D.

E d w a r d s a n d Siebel p r o d u c t s t h a t w o u l d

h a v e b e e n s o l d t o c u s t o m e r s t h a t left to go t o T o m o r r o w N o w . 656 352. I u n d e r s t a n d t h a t a quantification o f actual d a m a g e s as r e p r e s e n t e d b y

O r a c l e ' s losses r e s u l t i n g from S A P ' s w r o n g f u l acts (i.e., O r a c l e ' s lost profits) is a r e m e d y o f d a m a g e s available for c e r t a i n o f O r a c l e ' s causes o f a c t i o n in t h i s

6M

In t h i s s e c t i o n o f t h e R e p o r t , " O r a c l e " r e f e r s t o b o t h t h e P l a i n t i f f e n t i t i e s c o l l e c t i v e l y , a n d t h e i r p r e d e c e s s o r s in

interest
~

P u r s u a n t t o the S e p t e m b e r 17, 2009 O r d e r o f Magistrate J u d g e Laporte g r a n t i n g D e f e n d a n t s ' Motion for Preclusion of Certain Damages Evidence, I u n d e r s t a n d that Oracle is precluded from seeking damages to which it

b e l i e v e s i t i s entitlNl., i n c l u d i n g l o s t p r o f i t s o n l o s t u p - s e l l o r c r o s s - s e l l o p p o r t u n i t i e s r e l a t e d t o t h e c u s t o m e r s t h a t c a n c e l l e d t h e i r O r a c l e s u p p o r t c o n t r a c t s to g o t o T o m o r r o w N o w ; l o s t p r o f i t s r e l a t e d to d i s c o u n t s t h a t O r a c l e p r o v i d e d t o c u s t o m e r s i n o r d e r t o c o m p e t e w i t h T o m o r r o w N o w ; a n d lost p r o f i t s a s s o c i a t e d w i t h O r a c l e ' s a d o p t i o n of its Lifetime S u p p o r t a n d A p p l i c a t i o n s U n l i m i t e d p r o g r a m s . A c c o r d i n g l y , I h a v e n o t q u a n t i f i e d t h o s e d a m a g e s in t h i s r e p o r t . I u n d e r s t a n d t h a t s h o u l d D e f e n d a n t s t a k e t h e position a t trial t h a t O r a c l e ' s c l a i m e d d a m a g e s a r e excessive, t h e j u r y m a y b e i n f o r m e d t h a t O r a c l e is n o t s e e k i n g all o f t h e d a m a g e s t o w h i c h it b e l i e v e s it is e n t i t l e d [ M a g i s t r a t e L a p o r t e ' s O r d e r G r a n t i n g D e f e n d a n t s ' M o t i o n for P r e d u s i o n o f C e r t a i n D a m a g e s E v i d e n c e P u r s u a n t to F e d e r a l R u l e s o f Civil P r o c e d u r e 37(c)(1) a n d 16(f), S e p t e m b e r 17, 2009; J u d g e H a m i l t o n ' s N o v e m b e r 2, 2009 O r d e r ] .

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suit. 657 The relevant Oracle plaintiff entities vary b y cause of action.

As

e x p l a i n e d b e l o w , I h a v e c a l c u l a t e d a n d o f f e r o p i n i o n s o n O r a c l e ' s lost p r o f i t s both in total, a n d b y plaintiff entity. 353. As i t relates to O r a c l e ' s c o p y r i g h t i n f r i n g e m e n t claim, a m e a s u r e m e n t o f

Oracle's lost profits m a y b e o n e a l t e r n a t i v e m e a s u r e of Oracle's "actual damages." H o w e v e r , b a s e d o n the facts of this case, a more a p p r o p r i a t e

m e a s u r e of d a m a g e s is S A P ' s "Value of Use" of the c o p y r i g h t e d materials in this suit, as d e t e r m i n e d in a hypothetical negotiation b e t w e e n Oracle a n d SAP a t t h a t t i m e a n d Wlder t h e c i r c u m s t a n c e s o f t h e a c t u a l i n f r i n g e m e n t . A t t h e time of my initial report, a motion w a s p e n d i n g before J u d g e H a m i l t o n in which D e f e n d a n t s h a d challenged Oracle's r i g h t to seek d a m a g e s b a s e d o n the Fair M a r k e t Value of Use. Therefore, I i n c l u d e d the following lost profits analysis as an affirmative opinion. As referenced a b o v e in m y discussion of the a l t e r n a t i v e Fair M a r k e t Value of Use analysis, J u d g e H a m i l t o n has n o w recognized Oracle's right to seek such d a m a g e s o n its c o p y r i g h t i n f r i n g e m e n t claim. I n light of t h a t ruling, I u n d e r s t a n d t h a t it is Oracle's position t h a t Oracle reserves the r i g h t to w i t h d r a w lost profits as an affirmative o p i n i o n o f its c o p y r i g h t damages, thereby m a k i n g D e f e n d a n t s ' rebuttal of s u c h an a n a l y s i s w i t h a n a l t e r n a t i v e m e a s u r e o f lost p r o f i t s urmecessary, i n a p p r o p r i a t e a n d t i m e - c o n s u m i n g a t trial. 354. I u n d e r s t a n d t h a t Oracle International C o r p o r a t i o n ( O l e ) , the c l a i m a n t in

Oracle's c o p y r i g h t i n f r i n g e m e n t cause of action, is t h e o w n e r o r exclusive

I u n d e r s t a n d t h a t lost p r o f i t s is a n a v a i l a b l e d a m a g e s r e m e d y u n d e r O r a c l e ' s c l a i m s o f c o p y r i g h t i n f r i n g e m e n t (as a n a l t e r n a t i v e m e a s u r e o f O r a c l e ' s a c t u a l d a m a g e s t o S A P ' s " V a l u e of Use" d i s c u s s e d in s e c t i o n V a b o v e ) , b r e a c h o f c o n t r a c t , interference, a n d C o m p u t e r F r a u d a n d A b u s e Act, a n d C o m p u t e r D a t a Access a n d F r a u d Act claims. O r a c l e ' s q u a n t i f i e d lost p r o f i t s d a m a g e s t h a t r e s u l t from t h e s e v a r i o u s c l a i m s a r e o v e r l a p p i n g , a s t h e y r e l a t e 10 lost s u p p o r t sales, a n d a p p e a r to b e for t h e s a m e s e t o f c u s t o m e r s .
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licensee o f t h e c o p y r i g h t e d m a t e r i a l s a t issue, e x c e p t t h a t O l e is n o t a n e x c l u s i v e licensee o f c e r t a i n J.D. E d w a r d s a n d Siebel intellectual p r o p e r t y in t h e EMEA ( E u r o p e , t h e M i d d l e East a n d Africa) region. 658 u n d e r s t a n d t h a t o w n e r s h i p o f PeopleSoft a n d Specifically, I

J.D. E d w a r d s intellectual

p r o p e r t y (with the exception o f certain E n t e r p r i s e O n e intellectual p r o p e r t y owned by

J.D. E d w a r d s E u r o p e Ltd.) w a s t r a n s f e r r e d to O I C o n M a r c h 1, J.D. E d w a r d s

2005. 659 I u n d e r s t a n d t h a t O I C is t h e o w n e r o f P e o p l e S o f t a n d

intellectual p r o p e r t y d e v e l o p e d a f t e r M a r c h 1, 2005 p u r s u a n t to t h e C o s t S h a r i n g a n d License A g r e e m e n t b e t w e e n O r a c l e C o r p o r a t i o n a n d O r a c l e T e c h n o l o g y C o r p o r a t i o n ( t h e " C o s t S h a r i n g Agreement").660 I u n d e r s t a n d

lIM

I u n d e r s t a n d t h a t J.D. E d w a r d s Europe, n o t OIC, is t h e exclusive licensee t o J.D. E d w a r d s E n t e r p r i s e O n e c o p y r i g h t e d materials, v e r s i o n s 8.11 a n d earlier, s o l d in the EMEA region. In a d d i t i o n , I u n d e r s t a n d t h a t Siebel S y s t e m s Irish H o l d i n g s Limited, n o t OIC, is t h e e x c l u s i v e licensee t o Siebel c o p y r i g h t e d m a t e r i a l s d e v e l o p e d p r i o r t o 2006 ( r e l a t e d to Siebel s o f t w a r e v e r s i o n s 7.8 a n d earlier) [ D e p o s i t i o n o f A n n Kishorc (Oracle Director o f Tax D e p a r t m e n t , M e r g e r s a n d Acquisitions), April 14, 2009, pgs. 74-76; Deposition o f A n n Kishore, S e p t e m b e r 25,2009, pgs. 519-524; Discussion w i t h A n n Kishorel. Therefore, a s it relates t o O r a c l e ' s c o p y r i g h t i n f r i n g e m e n t claim, for w h i c h O I C is t h e n a m e d plaintiff, I u n d e r s t a n d t h a t O r a c l e w o u l d n o t b e e n t i t l e d to r e c o v e r lost p r o f i t s for lost s a l e s in t h e EMEA region o f J.D. E d w a r d s E n t e r p r i s e O n e a n d Siebel v e r s i o n s 7.8 a n d earlier. H o w e v e r , I u n d e r s t a n d t h a t O r a c l e c a n cl aim t h e s e lost s u p p o r t p r o f i t s p u r s u a n t to O r a c l e ' s o t h e r claims. Based o n i n f o r m a t i o n p r o d u c e d b y D e f e n d a n t s , I u n d e r s t a n d t h a t all of T o m o r r o w N o w ' s Siebel c u s t o m e r s w e r e r e c e i v i n g s e r v i c e o n v e r s i o n s 7.8 a n d e a r l i e r (See TN-OR07717977, SiebeCScrviccs.xlsl. PeopleSoft/JDE LLC OIC Asset T r a n s f e r A g r e e m e n t d a t e d M a r c h 1, 2005, ORCL00043702-707, a t 702; JDE C o m p a n i e s OIC Asset T r a n s f e r A g r e e m e n t d a t e d March 1,2005, ORCL00043708-713, a t 708; Oracle IP Rights T r a n s f e r Clarification A g r e e m e n t d a t e d M a r c h 1, 2005, ORCL00525139-143, at 139-140; D e p o s i t i o n o f A n n K i s h o r e (Oracle Director o f Tax D e p a r t m e n t , M e r g e r s a n d Acquisitions), April 14, 2009, pgs. 73-76.
M9

C o s t S h a r i n g a n d L i c e n s e A g r e e m e n t b e t w e e n O r a c l e C o r p o r a t i o n (OC) a n d O r a c l e T e c h n o l o g y C o m p a n y (OTC) [ORCLOO160487-510, a t 497], w h i c h w a s a m e n d e d to a d d O r a c l e USA (OUSA) a s a m e m b e r to t h e a g r e e m e n t effective M a r c h 1, 2005 [ A d d i t i o n o f a P a r t i c i p a t i n g M e m b e r in t h e A m e n d e d a n d Restated C o s t S h a r i n g a n d License A g r e e m e n t , d a t e d M a r c h 1, 2005, ORCLOO182370-71I. I u n d e r s t a n d t h a t t h e a g r e e m e n t t h a t is c u r r e n t l y in force is t h e F o u r t h A m e n d e d a n d R e s t a t e d C o s t S h a r i n g A g r e e m e n t m a d e b y a n d a m o n g O C , O I C , OUSA, O T C a n d O C A P A C Research C o m p a n y (OCAPAC), effective J a n u a r y 5, 2009 [ORCL00578071-1171. A c c o r d i n g to A n n Kishore, Oracle Director o f Tax D e p a r t m e n t , M e r g e r s a n d Acquisitions, all r e l e v a n t p r o d u c t s a r e c o v e r e d b y t h e C o s t S h a r i n g A g r e e m e n t , e x c l u d i n g J.D. E d w a r d s W o r l d p r o d u c t s s o l d in t h e EMEA region [ D e p o s i t i o n o f A n n Kishore, S e p t e m b e r 25,2009, pgs. 265-266, 294-295 a n d 478-4791. While it is excludt.'d from t h e C o s t S h a r i n g A g r e e m e n t , c o p y r i g h t s related t o J.D. E d w a r d s World p r o d u c t s d e v e l o p e d a f t e r M a r c h 2005 a r e o w n e d by OIC p u r s u a n t t o t h e O r a c l e M a s t e r S e r v i c e s A g r e e m e n t [ M a s t e r Services A g r e e m e n t A m o n g t h e M e m b e r s o f t h e O r a c l e G r o u p , d a t e d J u n e 1. 2003, ORCL 00585342-369, a n d s u b s e q u e n t a m e n d m e n t s l . T o d d Adler, Oracle Senior C o r p o r a t e C o u n s e l , also testified t h a t all o f t h e l'oopleSoft a n d J.U. E d w a r d s c o p y r i g h t e d w o r k s listed in O r a c l e ' s T h i r d A m e n d e d C o m p l a i n t a r e o w n e d b y OIC [Deposition o f T o d d Adler, O c t o b e r 9, 2008, pgs. 36-371.
660

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Siebel Systems, Inc. p r o v i d e d OIC w i t h a n exclusive license t o its intellectual p r o p e r t y , i n c l u d i n g r i g h t s to e n f o r c e intellectual p r o p e r t y rights, effective M a r c h 1, 2006. 661 1 u n d e r s t a n d t h a t OIC is t h e o w n e r o f all Siebel intellectual p r o p e r t y d e v e l o p e d a f t e r March 1, 2006 p u r s u a n t to the i n c o r p o r a t i o n o f t h e t e r m s o f t h e Siebel C o s t S h a r i n g A g r e e m e n t i n t o t h e A m e n d e d a n d R e s t a t e d C o s t S h a r i n g a n d License A g r e e m e n t b e t w e e n O r a c l e C o r p o r a t i o n a n d O r a c l e T e d m o l o g y Corporation.
662

As the h o l d e r o f r i g h t s a n d i n t e r e s t in O r a c l e ' s

PeopleSoft, J.D. E d w a r d s a n d Siebel c o p y r i g h t e d materials in suit, I u n d e r s t a n d OIC h a s r i g h t s to enforce t h o s e c o p y r i g h t s a g a i n s t a n alleged i n f r i n g e r s u c h as SAP. 355. For p u r p o s e s o f m y a n a l y s i s , [ h a v e c a l c u l a t e d O r a c l e ' s l o s t p r o f i t

d a m a g e s u n d e r t w o scenarios. In t h e first scenario, I h a v e c a l c u l a t e d lost profits o f t h e Oracle o r g a n i z a t i o n as a w h o l e . U n d e r the s e c o n d scenario, I h a v e calculated O r a c l e ' s lost profits specific to the Oracle plaintiff e n t i t i e s i n this case (i.e., O r a c l e ' s lost profits i f it is f o u n d t h a t its recovery o f lost profits d a m a g e s is l i m i t e d b y the s t r u c t u r e o f its c o r p o r a t e e n t i t i e s as a r e s u l t o f its v a r i o u s inter-entity Hcense, cost s h a r i n g a n d o t h e r agreements).66J

661

I n t e r i m Siebel License A g r e e m e n t (Siebel I n t e l l c c t u a l P r o p e r t y ) , d a t e d M a r c h 1, 2006, ORCLOO524948-955, a t 950; A c k n o w l e d g e m e n t t o t h e I n t e r i m Siebel License A g r e e m e n t a n d I n t e r i m O r a c l e License A g r e e m e n t , d a t e d J u l y 10, 2009,ORCLOO525144-145.

- A m e n d m e n t t o A g r e e m e n t for S h a r i n g I n t a n g i b l e D e v e l o p m e n t C o s t s (Siebel S y s t e m s , Inc.), d a t e d M a r c h 1, 2006, ORCLOO524980-981; D e p o s i t i o n o f A n n Kishore ( O r a c l e D i r e c t o r o f Tax D e p a r t m e n t , M e r g e r s a n d Acquisitions), S e p t e m b e r 25, 2009, p g s . 523--524; D i s c u s s i o n w i t h A n n Kishore. I u n d e r s t a n d t h a t O r a c l e c o r p o r a t e e n t i t i e s , i n c l u d i n g t h e p l a i n t i f f s i n t h i s case, m a i n t a i n i n t e r - c n t i t y l i c e n s e , d i s t r i b u t i o n , c o s t s h a r i n g a n d o t h e r a g r e e m e n t s wh(>rcby v a r i o u s O r a c l e I(>gal e n t i t i e s a r c p r o v i d e d r i g h t s to s u b l i c e n s e a n d d i s t r i b u t e t h e i n t e l l e c t u a l p r o p e r t y o w n e d b y O I C o r l i c e n s e d to O I C t h r o u g h a n e x c l u s i v e l i c e n s e , i n e x c h a n g e for r o y a l t y p i l y m e n t s . In i l d d i t i o n , v i l r i o u s O r a c l e e n t i t i e s s h a r e in t h e re!>eilrch a n d d e v e l o p m e n t roMs i n c u m.>d t o d e v c l o p O r a c l e ' s s o f t w a r e p r o o u c t s a n d related i n t e l l c c t u a l p r o p e r t y [ D e p o s i t i o n of A n n K i s h o r e ( O r a c l e . D i r e c t o r o f Tax D e p a r t m e n t , M e r g e r s a n d A c q u i s i t i o n s ) , S e p t e m b e r 25, 2009, p g s . 311-3121. See, e.g., A m e n d m e n t T w o to t h e D i s t r i b u t i o n A g r e e m e n t b e t w e e n O r a c l e I n t e r n a t i o n a l C o r p o r a t i o n a n d O r a c l e C o r p o r a t i o n , d a t e d J u n e 1, 2004, ORCLOO385437-438; A c k n o w l e d g e m e n t t o t h e A m e n d e d a n d R e s t a t e d D i s t r i b u t i o n A g r e e m e n t , d a t e d M a r c h 1,
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TEXT REMOVED - NOT RELEVANT TO MOTION

2oo5,ORCL0U04374lJ-41 ( a c k n o w l e d g i n g the a s s i g n m e n t of Oracle C o r p o r a t i o n ' s r i g h t s to O r a c l e USA); f o u r t h A m e n d e d a n d Restated Cost S h a r i n g Agreement, d a t e d J a n u a r y 5, 2009, ORCLOOS78071-117, a t 087-092.

TEXT REMOVED - NOT RELEVANT TO MOTION

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Subject 10 Protective Order
Highly COl/fidel/tial I"formatioll - Attorneys' Eyes D i l l y

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ll.

O E M E A Lost S u p p o r t R e v e n u e

402.

u n d e r s t a n d t h a t OEMEA is a p r i n c i p a l in v a r i o u s commissionaire,

u n d i s c l o s e d agency a n d d i s t r i b u t o r a g r e e m e n t s w i t h o t h e r Oracle entities t h a t sell a n d service O r a c l e p r o d u c t s in the t e r r i t o r y of EMEA.7"6 In a d d i t i o n ,

OEMEA sells Oracle p r o d u c t s a n d services to c u s t o m e r s in Ireland.'47 T h e r e l e v a n t cancelled c o n t r a c t s o f Lost C u s t o m e r s in the EMEA region r e s i d e d in c o u n t r i e s w h e r e OEMEA o p e r a t e s t h r o u g h c o m m i s s i o n a i r e a n d u n d i s c l o s e d a g e n t relationships. 403. T h e OEMEA c o m m i s s i o n a i r e s a n d u n d i s c l o s e d a g e n t s sell O r a c l e

p r o d u c t s w i t h i n the country(ies) o f t h e i r d e s i g n a t e d t e r r i t o r y o n b e h a l f of, a n d for the a c c o u n t of, OEMEA (i.e., the r e v e n u e received from Oracle c u s t o m e r s

TEXT REMOVED - NOT RELEVANT TO MOTION
7-16 D e p o s i t i o n o f A n n K i s h o r e ( O r a c l e D i r e c t o r o f T a x D e p a r t m e n t , M e r g e r s a n d A c q u i s i t i o n s ) , A p r i l 14, 2009, p g . 1 3 9 ; D i S ( : \ l s s i o n w i t h C l a i r e S e b t i ( O r a d e S e n i o r DiT('<tor o f C o r p o r a l ( ' A ( : C f ) \ m t i n g )

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Subject