Oracle Corporation et al v. SAP AG et al

Filing 816

Defendants' Notice of Cross Motion, Cross Motion for Partial Summary Judgment, and Opposition to 649 Plaintiffs' Motion for Partial Summary Judgment (FILED PURSUANT TO D.I. 810) filed by SAP AG, SAP America Inc, Tomorrownow Inc. (Froyd, Jane) (Filed on 8/27/2010) Modified on 8/30/2010 (vlk, COURT STAFF).

Oracle Corporation et al v. SAP AG et al

Doc. 816

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Robert A. Mittelstaedt (SBN 060359) Jason McDonell (SBN 115084) Elaine Wallace (SBN 197882) JONES DAY 555 California Street, 26th Floor San Francisco, CA 94104 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] [e-mail] Tharan Gregory Lanier (SBN 138784) Jane L. Froyd (SBN 220776) JONES DAY 1755 Embarcadero Road Palo Alto, CA 94303 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] Scott W. Cowan (Admitted Pro Hac Vice) Joshua L. Fuchs (Admitted Pro Hac Vice) JONES DAY 717 Texas, Suite 3300 Houston, TX 77002 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] Attorneys for Defendants SAP AG, SAP AMERICA, INC., and TOMORROWNOW, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION ORACLE USA, INC., et al., Plaintiffs, v. SAP AG, et al., Defendants. Case No. 07-CV-1658 PJH (EDL) DEFENDANTS' NOTICE OF CROSS MOTION, CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT, AND OPPOSITION TO PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT Date: May 5, 2010, Time: 9:00 a.m. Courtroom: 3, 3rd Floor Judge: Hon. Phyllis J. Hamilton
FILED PURSUANT TO D.I. 810
SVI-79319v1 DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

Dockets.Justia.com

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. III. I. II.

TABLE OF CONTENTS Page INTRODUCTION AND SUMMARY OF ARGUMENT ................................................. 1 OIC DOES NOT HAVE STANDING TO SUE FOR PRE-MARCH 1, 2005 INFRINGEMENT OF THE PEOPLESOFT AND JDE COPYRIGHTS........................... 2 A. OIC Did Not Own the PeopleSoft and JDE Copyrights Before March 1, 2005......................................................................................................................... 2 B. OIC Never Received a Valid Transfer of the Right to Sue for Pre-March 1, 2005 Infringement of the PeopleSoft and JDE Copyrights..................................... 3 COPYRIGHT ISSUES RAISED IN PLAINTIFFS' MOTION ......................................... 4 A. SAP Is Not Liable for Contributory Copyright Infringement................................. 4 1. Plaintiffs Misstate the Legal Standard for Contributory Infringement................................................................................................ 5 2. Plaintiffs Have Not Adduced Sufficient Evidence to Prove Contributory Infringement of the HRMS Registrations ............................. 7 3. Plaintiffs Have Not Adduced Sufficient Evidence to Prove Contributory Infringement of the Database Registrations .......................... 7 B. Plaintiffs Are Not Entitled to Summary Judgment Dismissing Defendants' Second and Third Affirmative Defenses Relating to Licensed Use ....................... 9 1. To Establish Infringement, a Plaintiff Must Prove Copying Beyond the Scope of an Applicable License ............................................................ 9 2. Plaintiffs Offer No Evidence that Alleged Copying of Registered Works Beyond the Six Identified in the Motion Exceeded the Scope of the Licenses Governing Their Use........................................................ 10 C. A Ruling Regarding the Copyright Registrations Asserted in Plaintiffs' Motion Should Not Serve as a Template for Litigating the Rest of this Case ...... 11 CFAA AND CDAFA ISSUES RAISED IN PLAINTIFFS' MOTION ........................... 14 A. Plaintiffs Are Not Entitled to Summary Judgment for Their CFAA Claims Arising under 18 U.S.C. §§ 1030(a)(5)(A)(i)-(iii) ................................................ 14 1. Plaintiffs Have Not Established the Required "Damage."........................ 14 a. There Is No Evidence that TN's Downloading Caused "Damage" to Plaintiffs' Servers.................................................... 15 b. "Skewed" Customer Feedback Is Not Cognizable "Damage."..................................................................................... 16 c. "Impairment" to the Confidentiality of Plaintiffs' Materials Is Not Cognizable "Damage."....................................................... 17 d. Plaintiffs Have Admitted that There Is No Evidence of Damage to Oracle's Systems ........................................................ 18 2. Plaintiffs Have Not Established "Intent to Damage" as Required under 18 U.S.C. § 1030(a)(5)(A)(i) .......................................................... 19 B. SAP Is Not Indirectly Liable under the CFAA or the CDAFA for TN's Allegedly Wrongful Conduct................................................................................ 20 -iDEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

SVI-79319v1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
SVI-79319v1

TABLE OF CONTENTS (continued) Page To Prove Indirect Liability under the CFAA, a Plaintiff Must Show that the Defendant Directed the Violator's Wrongful Acts ...................... 20 2. Plaintiffs Fail to Present Evidence that SAP Directed TN's Access ........ 23 3. Plaintiffs Have Neither Raised SAP's Liability under the CDAFA, Nor Shown that SAP Directed TN's Wrongful Acts ................................ 24 CONCLUSION ................................................................................................................. 25 1.

V.

- ii -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
SVI-79319v1

TABLE OF AUTHORITIES Page(s) Cases A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001).............................................................................................. 6, 8, 9 Binary Semantics Ltd. v. Minitab, Inc., No. 4:07-CV-1750, 2008 U.S. Dist. LEXIS 28602 (M.D. Pa. Mar. 20, 2008), vacated in part on other grounds, 2008 U.S. Dist. LEXIS 36575 (M.D. Pa. May 1, 2008) ............................................................................................................ 22 Bourne v. Walt Disney Co., 68 F.3d 621 (2d Cir. 1995)........................................................................................................... 9 Bowoto v. Chevron Texaco Corp., 312 F. Supp. 2d 1229 (N.D. Cal. 2004) ............................................................................... 22, 23 Calence, LLC v. Dimension Data Holdings, No. C06-0262RSM, 2007 U.S. Dist. LEXIS 38043 (W.D. Wash. May 24, 2007).................................................................................... 20, 21, 23, 24 Cassetica Software, Inc. v. Computer Sci. Corp., No. 09 C 0003, 2009 U.S. Dist. LEXIS 51589 (N.D. Ill. June 18, 2009).................................. 18 Charles Schwab & Co. v. Carter, No. 04 C 7071, 2005 U.S. Dist. LEXIS 21348 (N.D. Ill. Sept. 27, 2005)................................. 22 Condux Int'l, Inc. v. Haugum, No. 08-4824 ADM/JSM, 2008 U.S. Dist. LEXIS 100949 (D. Minn. Dec. 15, 2008)... 16, 17, 18 Cont'l Group, Inc. v. KW Prop. Mgmt., LLC, 622 F. Supp. 2d 1357 (S.D. Fla. 2009) ...................................................................................... 18 Co-opportunities, Inc. v. Nat'l Broad. Co., 510 F. Supp. 43 (N.D. Cal. 1981) ............................................................................................ 3, 4 Creative Computing v. Getloaded.com LLC, 386 F.3d 930 (9th Cir. 2004).......................................................................................... 14, 16, 17 Czech v. Wall St. on Demand, Inc., No. 09-180 (DWF/RLE), 2009 U.S. Dist. LEXIS 114125 (D. Minn. Dec. 8, 2009) ................ 19 Davenport v. Bd. of Tr. of State Ctr. Cmty. Coll. Dist., 654 F. Supp. 2d 1073 (E.D. Cal. 2009)...................................................................................... 15 De Silva Constr. Corp. v. Herrald, 213 F. Supp. 184 (M.D. Fla. 1962) .......................................................................................... 3, 4 Demetriades v. Kaufmann, 690 F. Supp. 289 (S.D.N.Y. 1988)............................................................................................... 7 Doe v. Dartmouth-Hitchcock Med. Ctr., Civil No. 00-100-M, 2001 U.S. Dist. LEXIS 10704 (D.N.H. July 19, 2001) ..................... 20, 21 Dong Ah Tire & Rubber Co. v. Glasforms, Inc., No. 06-3359, 2009 U.S. Dist. LEXIS 30610 (N.D. Cal. Apr. 9, 2009) ............................... 20, 22 eBay Inc. v. Digital Point Solutions, Inc., 608 F. Supp. 2d 1156 (N.D. Cal. 2009) ..................................................................................... 14
DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

- iii -

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

TABLE OF AUTHORITIES (continued) Page(s) Ed Brawley, Inc. v. Gaffney, 399 F. Supp. 115 (N.D. Cal. 1975) .............................................................................................. 3 Ellison v. Robertson, 357 F.3d 1072 (9th Cir. 2004).................................................................................................. 5, 6 Flast v. Cohen, 392 U.S. 83 (1968)....................................................................................................................... 9 Flotsam of Cal., Inc. v. Huntington Beach Conf. & Visitors Bureau, No. C 06-7028 MMC, 2008 WL 144693 (N.D. Cal. Jan. 10, 2008) ........................................... 9 Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996).......................................................................................................... 6 Garelli Wong & Assocs., Inc. v. Nichols, 551 F. Supp. 2d 704 (N.D. Ill. 2008) ......................................................................................... 18 Garland-Sash v. Lewis, No. 05 Civ. 6827 (WHP), 2007 U.S. Dist. LEXIS 20909 (S.D.N.Y. Mar. 26, 2007), aff'd in part, vacated in part, and remanded on other grounds, 348 Fed. Appx. 639 (2d Cir. 2009) .......................................................................... 21, 22, 23, 24 Hanger Prosthetics & Orthotics, Inc. v. Capstone Orthopedic, Inc., 556 F. Supp. 2d 1122 (E.D. Cal. 2008)................................................................................ 14, 16 Kalow & Springnut, LLP v. Commence Corp., No. 07-3442 (FLW), 2008 U.S. Dist. LEXIS 48036 (D.N.J. June 23, 2008)...................... 19, 20 Lanard Toys Ltd. v. Novelty Inc., 511 F. Supp. 2d 1020 (C.D. Cal. 2007) ....................................................................................... 3 LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009)............................................................................................. passim Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005)..................................................................................................................... 6 Mintel Int'l Group, Ltd. v. Neergheen, No. 08-cv-3939, 2010 U.S. Dist. LEXIS 2323 (N.D. Ill. Jan. 12, 2010)................................... 17 Netbula, LLC v. Bindview Dev. Corp., 516 F. Supp. 2d 1137 (N.D. Cal. 2007) ................................................................................. 9, 11 Nexans Wires S.A. v. Sark-USA, Inc., 319 F. Supp. 2d 468 (S.D.N.Y. 2004), aff'd, 166 Fed. Appx. 559 (2d Cir. 2006) .................... 22 NLFC, Inc. v. Devcom Mid-America, Inc., No. 93 C 0609, 1993 U.S. Dist. LEXIS 16459 (N.D. Ill. Nov. 16, 1993) ....................... 9, 10, 11 Ortega v. Oakland, No. C07-02659 JCS, 2008 WL 4532550 (N.D. Cal. Oct. 8, 2008) ........................................... 15 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007).............................................................................................. 6, 8, 9 Perfect 10, Inc. v. Visa Int'l Serv. Ass'n, 494 F.3d 788 (9th Cir. 2007)................................................................................................ 5, 6, 7 Rano v. Sipa Press, Inc., 987 F.2d 580 (9th Cir. 1993)........................................................................................................ 9
SVI-79319v1

- iv -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
SVI-79319v1

TABLE OF AUTHORITIES (continued) Page(s) RealNetworks, Inc. v. DVD Copy Control Ass'n, 641 F. Supp. 2d 913 (N.D. Cal. 2009) ......................................................................................... 9 Religious Tech. Ctr. v. Netcom On-Line Commc'n Servs., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995) ........................................................................................ 6, 7 Republic of Nicar. v. Standard Fruit Co., 937 F.2d 469 (9th Cir. 1991)...................................................................................................... 24 Resdev, LLC v. Lot Builders Ass'n, No. 6:04-cv-1374-Orl-31DAB, 2005 U.S. Dist. LEXIS 19099 (M.D. Fla. Aug. 10, 2005).......................................................................................................... 18 Shamrock Foods Co. v. Gast, 535 F. Supp. 2d 962 (D. Ariz. 2008).......................................................................................... 21 Shurgard Storage Ctrs., Inc. v. Safeguard Self Storage, Inc., 119 F. Supp. 2d 1121 (W.D. Wash. 2000)........................................................................... 17, 18 Sun Microsys. Inc. v. Hynix Semiconductor Inc., 622 F. Supp. 2d 890 (N.D. Cal. 2009) ....................................................................... 5, 22, 23, 24 Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137 (9th Cir. 2008)...................................................................................................... 2 U.S. v. Nosal, No. C 08-0237 MHP, 2010 U.S. Dist. LEXIS 24359 (N.D. Cal. Jan. 5, 2010)......................... 14 U.S. v. Shea, 493 F.3d 1110 (9th Cir. 2007).............................................................................................. 14, 17 ViChip Corp. v. Lee, 438 F. Supp. 2d 1087 (N.D. Cal. 2006) ............................................................................... 14, 17 Statutes 17 U.S.C. § 501 ................................................................................................................................ 2 18 U.S.C. § 1030 ..................................................................................................................... passim Cal. Penal Code § 502.............................................................................................................. 14, 24 Rules and Other Authorities Federal Rule of Civil Procedure 26................................................................................................ 15 Federal Rules of Evidence 602 ...................................................................................................... 15 Federal Rules of Evidence 701 ...................................................................................................... 15 Federal Rules of Evidence 702 ...................................................................................................... 15 Restatement (Third) of Agency, § 1:01 ......................................................................................... 22 S. Rep. No. 104-357, at 11 (1996) ................................................................................................. 18 Violent Crime Control and Law Enforcement Act of 1994, Pub. L. No. 103-322................................................................................................................... 20

-v-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I.

NOTICE OF CROSS MOTION PLEASE TAKE NOTICE THAT on May 5, 2010 at 9:00 a.m., or as soon thereafter as this matter may be heard by the Honorable Phyllis J. Hamilton, 1301 Clay Street, Oakland, California, Courtroom 3, Defendants SAP AG, SAP America, Inc. (together, "SAP") and TomorrowNow, Inc. ("TN," and with SAP, "Defendants") will bring this cross motion for partial summary judgment ("Cross Motion"), pursuant to Federal Rule of Civil Procedure 56(c) and Civil Local Rules 7-2­7-5 and 56-1, against Plaintiffs Oracle USA, Inc. ("OUSA"), Oracle International Corp. ("OIC"), Oracle EMEA Ltd. ("OEMEA"), and Siebel Systems, Inc. (together, "Plaintiffs"). This Cross Motion is based on the Memorandum of Points and Authorities herein, the Declaration of Tharan Gregory Lanier, and exhibits attached thereto. RELIEF REQUESTED IN CROSS MOTION Summary judgment for Defendants dismissing OIC's claims for pre-March 1, 2005 copyright infringement of PeopleSoft and J.D. Edwards ("JDE") copyright registrations. CROSS MOTION AND OPPOSITION INTRODUCTION AND SUMMARY OF ARGUMENT Plaintiffs seek billions of dollars in damages based on conduct by a company--TN--that never turned a profit and that Plaintiffs publicly proclaimed did them no harm. They try to take a shortcut, arguing that their Rule 56 motion, which does not address the majority of the allegations in their 75-page complaint, is a "template" to adjudicate the rest of their allegations. Yet, not only does Plaintiffs' Motion address only six of the 120 copyright registrations in this case, most of TN's conduct at issue occurred before SAP acquired TN. As limited as it is, Plaintiffs' Motion should be substantially denied for four reasons. SAP did not direct or induce TN's specific service conduct and thus is not contributorily liable for TN's alleged copyright infringement or indirectly liable for TN's alleged CFAA and CDAFA violations. Defendants' second and third affirmative defenses should not be dismissed because Plaintiffs do not prove that TN's accused conduct was unauthorized by the hundreds of relevant customer licenses. TN is not directly liable under CFAA subsections (a)(5)(A)(i)-(iii) because its conduct did not damage Plaintiffs' computer systems. And OIC does not have the right to sue for
SVI-79319v1

-1-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

alleged pre-March 1, 2005 infringement of PeopleSoft and JDE registrations because the right to sue for past causes of action was not properly transferred to OIC. As set forth below, on these issues Plaintiffs' Motion should be denied and Defendants' Cross Motion should be granted. II. OIC DOES NOT HAVE STANDING TO SUE FOR PRE-MARCH 1, 2005 INFRINGEMENT OF THE PEOPLESOFT AND JDE COPYRIGHTS Indisputably, OIC did not own the PeopleSoft or JDE copyrights before March 1, 2005. Nor did an entity capable of transferring the right to sue for pre-March 1, 2005 infringement of these copyrights transfer that right to OIC. Thus, OIC may not sue for pre-March 1, 2005 infringement of the PeopleSoft or JDE copyright registrations asserted in Plaintiffs' complaint. Contrary to Plaintiffs' claim, the attempt by former plaintiff OSC to retroactively transfer the right to sue for pre-March 1, 2005 infringement was ineffective because OSC did not possess that right and thus could not transfer it. As the Court recognized in dismissing OSC, the PeopleSoft and JDE entities that owned the copyrights before March 1, 2005 did not expressly transfer their copyright claims to OIC or OSC before they merged into OSC. See D.I. 224 (12/15/08 Order) at 7. Thus, neither OSC nor OIC obtained the right to sue for pre-March 1, 2005 infringement from the now-dissolved companies. Accordingly, OIC lacks standing to pursue claims for pre-March 1, 2005 infringement of the PeopleSoft and JDE copyrights. For these reasons, Plaintiffs' Motion with respect to those claims should be denied and Defendants' Cross Motion should be granted. A. OIC Did Not Own the PeopleSoft and JDE Copyrights Before March 1, 2005.

Under the Copyright Act, only the "legal or beneficial owner of an exclusive right under a copyright is entitled . . . to institute an action for any infringement of that right while he or she is the owner of it." 17 U.S.C. § 501(b); see also Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1144 (9th Cir. 2008). Before March 1, 2005, certain PeopleSoft and JDE entities, not OIC, owned the PeopleSoft and JDE registrations. See D.I. 201 (Opp. to Mot. to Dismiss) at 9. As a result, the right to sue for pre-March 1, 2005 infringement of these registrations accrued to those PeopleSoft and JDE entities, not to OIC. Thus, OIC may sue for pre-March 1, 2005 infringement only if it received a valid transfer of the right to pursue those claims.
SVI-79319v1

-2-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

B.

OIC Never Received a Valid Transfer of the Right to Sue for Pre-March 1, 2005 Infringement of the PeopleSoft and JDE Copyrights.

Although accrued causes of action for copyright infringement are transferable, even Plaintiffs concede that "existing claims for infringement do not automatically transfer with the copyrights that gave rise to those claims." D.I. 201 (Opp. to Mot. to Dismiss) at 8. To assign existing copyright claims, a conveyance must be express. See Co-opportunities, Inc. v. Nat'l Broad. Co., 510 F. Supp. 43, 46 (N.D. Cal. 1981) (holding that the "usual assignment of a copyright does not include an assignment of existing causes of action" absent an express assignment); Ed Brawley, Inc. v. Gaffney, 399 F. Supp. 115, 116 (N.D. Cal. 1975) (noting that "[u]nless the transfer agreement expressly provides otherwise," a copyright transfer does not include the right to sue on past infringements). This rule applies even in a merger context. See Co-opportunities, 510 F. Supp. at 46; Lanard Toys Ltd. v. Novelty Inc., 511 F. Supp. 2d 1020, 1033 (C.D. Cal. 2007); De Silva Constr. Corp. v. Herrald, 213 F. Supp. 184, 193 (M.D. Fla. 1962); D.I. 224 (12/15/08 Order) at 7. Thus, accrued copyright claims do not transfer simply "through merger." D.I. 201 (Opp. to Mot. to Dismiss) at 10. The parties agree that the PeopleSoft and JDE entities that owned the copyrights before March 1, 2005 did not directly transfer their accrued copyright infringement claims to OIC, and there is no evidence that the right to sue for pre-March 1, 2005 infringement was ever properly transferred to OIC. On March 1, 2005, these PeopleSoft and JDE entities transferred the copyrights to OIC, after which they merged with and into OSC (then known as Oracle Corp.). See D.I. 201 (Opp. to Mot. to Dismiss) at 9; Declaration of Tharan Gregory Lanier in Support of Defendants' Cross Motion and Opposition to Plaintiffs' Motion for Partial Summary Judgment ("Lanier Decl.") ¶¶ 1-3, Exs. 1-31. But these transfer agreements "did not transfer existing claims" to OIC. Instead, any pre-existing claims for infringement remained with the PeopleSoft and JDE entities to which the claims accrued. See D.I. 201 (Opp. to Mot. to Dismiss) at 9-10. OIC claims that it received the right to sue for pre-March 1, 2005 infringement by virtue January 31, 2006 Oracle/Ozark Contribution, Assignment and Assumption Agreement; March 1, 2005 PeopleSoft/JDE LLC OIC Asset Transfer Agreement; and March 1, 2005 OIC Asset Transfer Agreement.
SVI-79319v1 1

-3-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

of the July 10, 2009 Oracle IP Rights Transfer Clarification Agreement. This agreement, drafted years after the litigation and long after the Court's rulings, purports to retroactively transfer "the right to sue for or otherwise enforce past, present and future infringement claims with respect to the IP Assets" (including the PeopleSoft and JDE copyrights at issue). D.I. 654 at §§ 1.1(a)-(b). But OSC never had the right to sue for those claims in the first place. As this Court found, none of the Oracle inter-company agreements "establish that the right to sue for copyright infringement was expressly transferred to OSC as a consequence of the various mergers." D.I. 224 (12/15/08 Order) at 7. Absent this express transfer, OSC, like OIC, never obtained the right to sue for preMarch 1, 2005 infringement. See Co-opportunities, 510 F. Supp. at 45-46 (holding plaintiff lacked standing to sue for earlier-occurring infringement because its predecessor company did not make a "specific assignment of accrued causes of action," despite having transferred "his various copyrights . . . to plaintiff in exchange for stock in the new corporation"); De Silva, 213 F. Supp. at 192 (finding plaintiff lacked standing to sue for copyright infringement that occurred when its predecessor corporation owned the copyrights at the time of infringement but never expressly granted plaintiff "any right to sue for infringements antedating the assignment"). Thus, OSC's attempt to transfer to OIC the right to sue for pre-March 1, 2005 infringement of PeopleSoft and JDE copyrights is futile. Equally futile is OSC's attempt to transfer claims for pre-March 1, 2005 infringement on behalf of the acquired PeopleSoft and JDE entities, which Plaintiffs acknowledge no longer exist. See Lanier Decl. ¶ 28, Ex. 28 (11/26/08 Hr'g Tr.) at 18:13-19, 19:15-17. In short, because the undisputed facts show that OIC did not receive the right to sue for pre-March 1, 2005 infringement of any of the asserted PeopleSoft or JDE copyright registrations, Plaintiffs' Motion for summary judgment with respect to OIC's claims for pre-March 1, 2005 infringement of the three PeopleSoft HRMS registrations should be denied, and Defendants' Cross-Motion for summary judgment of non-infringement based on any conduct regarding all asserted PeopleSoft and JDE registrations should be granted. III. COPYRIGHT ISSUES RAISED IN PLAINTIFFS' MOTION A. SAP Is Not Liable for Contributory Copyright Infringement.

Plaintiffs seek summary judgment for direct and vicarious copyright infringement of six
SVI-79319v1

-4-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

of 120 asserted registrations.2 Because the allegedly infringing conduct is at the margins and does not address anywhere near the full scope of Plaintiffs' claims, this Opposition does not contest that TN is directly liable for its conduct occurring after March 1, 2005 that is specifically addressed in Plaintiffs' Motion or that SAP is vicariously liable (because SAP ultimately owned, and therefore arguably controlled, TN) for this specific TN conduct.3 However, because SAP did not induce, cause, or materially contribute to TN's alleged infringement, SAP is not liable for contributory copyright infringement, and Plaintiffs' Motion should be denied to that extent. Plaintiffs' motion for summary judgment on contributory copyright infringement is legally and factually incorrect. First, Plaintiffs misstate the law by asserting that "inaction, combined with specific knowledge," is the proper test for contributory infringement. D.I. 649 (Pls.' Mot.) at 13. But inaction is insufficient. A defendant must take affirmative steps to "induce[], cause[], or materially contribute[] to the infringing conduct" to be liable for contributory copyright infringement. Perfect 10, Inc. v. Visa Int'l Serv. Ass'n, 494 F.3d 788, 795 (9th Cir. 2007) (quoting Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004)). Second, Plaintiffs fail to present sufficient evidence of contributory infringement. They have not shown that SAP took any affirmative steps to induce, cause, or materially contribute to the alleged infringement of the HRMS registrations. Nor do they establish knowledge of or the requisite contribution to alleged infringement of the Oracle database registrations. Viewing the facts in the light most favorable to SAP, summary judgment should be denied. See Sun Microsys. Inc. v. Hynix Semiconductor Inc., 622 F. Supp. 2d 890, 896 (N.D. Cal. 2009) ("The court must view the facts in the light most favorable to the non-moving party and give it the benefit of all reasonable inferences to be drawn from those facts."). 1. Plaintiffs Misstate the Legal Standard for Contributory Infringement.

Contributory liability is established where the defendant: "(1) has knowledge of a third These six copyright registrations are: HRMS 7.0 (TX 4-792-577), HRMS 7.5 (TX 4792-575), HRMS 8, Service Pack 1 (TX 5-501-312), Database 8.1.6 (TX 5-222-106), Database 9i, Release.2 (TX 5-673-282), and Database 10g, Release.2 (TX 6-942-003). 3 As addressed above, Defendants do contest liability with respect to alleged infringement occurring before March 1, 2005. SAP also contests vicarious and contributory liability with respect to alleged infringement occurring before it acquired TN on January 19, 2005.
SVI-79319v1 2

-5-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

party's infringing activity, and (2) `induces, causes, or materially contributes to the infringing conduct.'" Visa Int'l, 494 F.3d at 795 (quoting Ellison, 357 F.3d at 1076); see also Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996) ("Contributory infringement . . . imposes liability where one person knowingly contributes to the infringing conduct of another."). Plaintiffs do not dispute that "specific knowledge" is required, but they mistakenly assert that "inaction" satisfies the second element of this test. D.I. 649 (Pls.' Mot.) at 13. The second element of contributory infringement requires specific, affirmative steps that actively "contribute[] to" infringement. Fonovisa, 76 F.3d at 264; see, e.g., Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1170 (9th Cir. 2007) ("Liability . . . may be predicated on actively encouraging (or inducing) infringement through specific acts . . . .") (quoting MetroGoldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 942 (2005) (Ginsburg, J., concurring)). One does not induce, cause, or materially contribute to infringement through mere inaction. See, e.g., Grokster, 545 U.S. at 936-37 (noting that "inducement" involves "active steps taken to encourage direct infringement") (citation omitted). Rather, a defendant must "knowingly take-steps that are substantially certain to result in direct infringement," Amazon.com, 508 F.3d at 1171, and "[s]uch participation must be substantial." Religious Tech. Ctr. v. Netcom On-Line Commc'n Servs., Inc., 907 F. Supp. 1361, 1375 (N.D. Cal. 1995). Indeed, this is what distinguishes "contributory" liability from mere vicarious liability. Plaintiffs misread Amazon.com and Napster to suggest that "inaction" or the "knowing failure to prevent infringing actions" is sufficient to establish contributory infringement. D.I. 649 (Pls.' Mot.) at 13. These cases hold only that a defendant may be liable for taking affirmative steps to facilitate infringement where it has specific knowledge, yet fails to stop facilitating infringement. See Amazon.com, 508 F.3d at 1172; see also A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001) (holding that liability may be imposed where Napster "provides the site and facilities for direct infringement," has "actual knowledge that specific infringing material is available using its system," and yet "fail[s] to remove the material" from its system). That is not "inaction," but rather continued action despite knowledge of infringement. See Amazon.com, 508 F.3d at 1172.
SVI-79319v1

-6-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

2.

Plaintiffs Have Not Adduced Sufficient Evidence to Prove Contributory Infringement of the HRMS Registrations.

Plaintiffs are not entitled to summary judgment with respect to the three PeopleSoft HRMS registrations because they have not shown that SAP took any affirmative steps to further the alleged infringement. See Visa Int'l, 494 F.3d at 795. Plaintiffs assert only that SAP "did nothing to ensure the removal of [Oracle] software" from TN's computers. D.I. 649 (Pls.' Mot.) at 15. This is far from the affirmative steps to "induce[], cause[], or materially contribute[] to the infringing conduct" required to prove contributory infringement. Visa Int'l, 494 F.3d at 795. Plaintiffs simply do not assert any facts suggesting that SAP caused or materially contributed to the allegedly infringing conduct. Indeed, Plaintiffs' evidence shows quite the opposite--SAP took action against potential infringement by issuing a directive to remove software from TN computers. See D.I. 649 (Pls.' Mot.) at 14. It is irrelevant that SAP's in-house counsel advised TN about intellectual property and advised the SAP Board on issues regarding TN. See D.I. 649 (Pls.' Mot.) at 14-15. Plaintiffs present no evidence that SAP's in-house counsel took any steps to facilitate the purported infringement. Providing advice on intellectual property does not establish any link to infringement, much less "[s]ubstantial participation" in infringement. See Religious Tech., 907 F. Supp. at 1375 (citing Demetriades v. Kaufmann, 690 F. Supp. 289, 294 (S.D.N.Y. 1988)). 3. Plaintiffs Have Not Adduced Sufficient Evidence to Prove Contributory Infringement of the Database Registrations.

Summary judgment on the database registrations should be denied because the evidence neither establishes that SAP knew of the alleged infringement, nor shows that SAP took any affirmative action to further the alleged infringement. The three pieces of evidence cited by Plaintiffs are insufficient to establish SAP's "specific knowledge" of the alleged infringement. First, Plaintiffs argue that Werner Brandt "conceded it was `obvious' at the time of the acquisition that `TomorrowNow was running its copies of PeopleSoft and JDE software in conjunction with a database of some kind.'" D.I. 649 (Pls.' Mot.) at 15. But TN's use of "a database of some kind" does not suggest that TN was violating a copyright, much less a copyright belonging to Oracle
SVI-79319v1

-7-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

(versus another database provider such as Microsoft or IBM). The mere possibility of infringement is insufficient--specific knowledge is required. See Napster, 239 F.3d at 1021. Second, Plaintiffs note that TN requested that SAP "`purchase Oracle database licenses for environments where [TN] develop[s] [its] customer[s'] deliverables' and as `a critical need to support [its] customers running PeopleSoft on Oracle.'" D.I. 649 (Pls.' Mot.) at 15. Plaintiffs fail to explain why the mere request for a license suggests that TN may have been using Oracle databases without a license. TN's matter-of-fact purchase requests indicated only that certain licenses would enable TN to better support its customers. See, e.g., D.I. 657 (Alinder Decl.) ¶ 46, Ex. 75 ("We need to purchase these licenses for environments where we develop our customer[s'] deliverables. Specifically, we would like to purchase Oracle Standard Edition for a 4 CPU machine running AIX and a 4 CPU machine running Windows."). Finally, Plaintiffs infer that SAP America COO Mark White knew that TN was allegedly infringing because "[a]fter Oracle sued, Baugh told White that [] TN was using Oracle's Database software only pursuant to a Development License." D.I. 649 (Pls.' Mot.) at 15. But the cited testimony does not support this inference. The testimony of William Thomas shows only that White "learned that [TN] had a development license," but "it wasn't a major priority for [White] at the time." D.I. 657 (Alinder Decl.) ¶ 3, Ex. 33 at 14. Despite repeated questioning, Thomas never suggested that White "thought the development license was [in]adequate" for TN's use. Id. at 14-15. In fact, Thomas testified exactly the opposite, concluding that White "may have thought . . . it was fine to run under a development license, and that's why it was never an issue." Id. at 15. John Baugh similarly testified. See D.I. 657 (Alinder Decl.) ¶ 3, Ex. 7 at 202, 204 (noting that Baugh "mentioned" in a meeting with White that "we . . . needed to look into getting another Oracle database license" and that "we needed to look into our current license"). As to the second element for contributory infringement, Plaintiffs allege only that SAP did not investigate whether TN used Oracle database software and did not purchase licenses. See D.I. 649 (Pls.' Mot.) at 15. But inaction is insufficient to show that SAP induced, caused, or materially contributed to infringement. See Amazon.com, 508 F.3d at 1170 ("Liability . . . may be predicated on actively encouraging (or inducing) infringement through specific acts . . . .").
SVI-79319v1

-8-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Unlike in Amazon.com and Napster, Plaintiffs do not allege that SAP failed to cease actions facilitating infringement. See, e.g., Amazon.com, 508 F.3d at 1172 (contributory liability proper where a defendant "continues to provide access to infringing works"). Indeed, Plaintiffs do not allege that SAP took any actions to facilitate infringement. B. Plaintiffs Are Not Entitled to Summary Judgment Dismissing Defendants' Second and Third Affirmative Defenses Relating to Licensed Use.

Although Plaintiffs moved for summary judgment of infringement as to only six registrations and specific conduct associated therewith, they appear to seek dismissal of Defendants' license defense as to all asserted registrations and all allegedly improper conduct.4 See D.I. 649 (Pls.' Mot.) at 11, 13; D.I. 649-1 ([Proposed] Order Granting Pls.' Mot.) at 2. But summary judgment is appropriate only if Plaintiffs show that particular conduct exceeded the scope of the relevant customer licenses. Because Plaintiffs do not carry their burden to prove that all of TN's accused conduct was unauthorized under the relevant customer licenses, Plaintiffs' request to dismiss the second and third affirmative defenses in their entirety should be denied. 1. To Establish Infringement, a Plaintiff Must Prove Copying Beyond the Scope of an Applicable License.

A valid copyright license is an affirmative defense to infringement. See Rano v. Sipa Press, Inc., 987 F.2d 580, 585 (9th Cir. 1993); Bourne v. Walt Disney Co., 68 F.3d 621, 631 (2d Cir. 1995). Once a defendant identifies a relevant license, the copyright owner must prove that the copying was unauthorized. See Bourne, 68 F.3d at 631; RealNetworks, Inc. v. DVD Copy Control Ass'n, 641 F. Supp. 2d 913, 945 (N.D. Cal. 2009). Failure to show that a defendant's conduct exceeded the license grant will result in a finding of non-infringement. See Netbula, LLC v. Bindview Dev. Corp., 516 F. Supp. 2d 1137, 1151-53 (N.D. Cal. 2007); NLFC, Inc. v. Devcom Mid-America, Inc., No. 93 C 0609, 1993 U.S. Dist. LEXIS 16459, at *23-25 (N.D. Ill. Nov. 16, 1993) (granting summary judgment where a defendant software service provider asserted that its Defendants now withdraw their copyright misuse affirmative defense and have not asserted a fair use defense. To the extent that Plaintiffs seek summary judgment on either defense, this request should be denied as improperly seeking an advisory opinion. See Flast v. Cohen, 392 U.S. 83, 96 (1968); Flotsam of Cal., Inc. v. Huntington Beach Conf. & Visitors Bureau, No. C 067028 MMC, 2008 WL 144693, at *1 (N.D. Cal. Jan. 10, 2008).
SVI-79319v1 4

-9-

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

conduct was licensed by its customers' agreements with plaintiff, and plaintiff failed to show that defendant's conduct exceeded the scope of the licenses). 2. Plaintiffs Offer No Evidence that Alleged Copying of Registered Works Beyond the Six Identified in the Motion Exceeded the Scope of the Licenses Governing Their Use.

Plaintiffs do not dispute that TN's access to and use of its customers' Oracle software and support materials is governed by those customers' license agreements with Oracle. See D.I. 418 (Fourth Amended Complaint ("FAC")) at ¶ 53 ("Licensees may designate third parties to help maintain Oracle's software, but only subject to the terms of the relevant license agreement between the licensee and Oracle."); D.I. 437 (Answer and Affirmative Defenses) at Affirmative Defenses ¶¶ 2-3; Lanier Decl. ¶ 9, Ex. 9 (Fifth Supp. Responses to TN's First Set of Interrogs., Second Supp. Response to Interrog. No. 10) at 64-65. Thus, to the extent that Plaintiffs seek summary judgment on Defendants' entire license defense, Plaintiffs must prove that all of TN's accused conduct exceeded the scope of the various customer agreements governing that conduct. See NLFC, 1993 U.S. Dist. LEXIS 16459, at *23-25. Plaintiffs do not meet this burden. First, Plaintiffs' reliance on case law stating that copyright licenses generally are not transferable is inapposite. See D.I. 649 (Pls.' Mot.) at 12. As Plaintiffs acknowledge, TN had authority to access its customers' Oracle software and support materials not in virtue of any purported transfer, but in virtue of TN's status as an agent. See D.I. 418 (FAC) ¶ 53; see also D.I. 201 (Opp. to Mot. to Dismiss) at 22 (describing Defendants as agents of their customers). Second, Plaintiffs describe only limited conduct as having exceeded the scope of specific customer agreements. See D.I. 649 (Pls.' Mot.) at 8-9, 11-13. Although Defendants elect not to assert their license-based defenses as to the limited and specific conduct associated with the particular registrations identified in Plaintiffs' Motion, Plaintiffs cannot rely upon the three licenses described therein to prove that conduct not addressed in their Motion exceeded the scope of licenses not submitted to the Court. This is because each of Oracle's licenses with its "[s]everal hundred thousand customers" is "unique." Lanier Decl. ¶ 14, Ex. 14 (11/12/09 Allison Tr.) at 20:10-11, 40:8-13. Oracle and its acquired companies (PeopleSoft, JDE, and Siebel) each
SVI-79319v1

- 10 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

have a different standard form license, which changed over time. See id. at 48:19-50:2 (testifying that agreements from PeopleSoft, JDE, and Siebel vary by customer with respect to terms like "the rules governing third party access to software" and "the customer's rights to make modifications to software"). Customers often negotiate a wide variety of exceptions or revisions to the standard terms. See id. at 20:20-21:1, 41:8-24. Because customers generally re-negotiate the terms of their agreements at renewal, a single customer may have numerious different agreements over time, with different terms, that govern its right to use Oracle software and support materials. See id. at 44:15-45:10, 47:5-18. Because each customer agreement is unique, Plaintiffs may not simply rely on the terms of a few select agreements to establish that all relevant customer agreements prohibit all of TN's accused conduct. Instead, Plaintiffs must prove the alleged impropriety on a conduct-by-conduct, customer-by-customer, and license-by-license basis, as Plaintiffs' corporate representative acknowledged. See id. at 51:18-53:10. The uniqueness of the customer agreements governing access to and use of Oracle software and support materials creates a genuine dispute of material fact whether TN's alleged improper conduct, not addressed in Plaintiffs' Motion, was licensed. Thus, to the extent that Plaintiffs seek to dismiss Defendants' second and third affirmative defenses in their entirety, their request should be denied as overbroad and unsupported. See Netbula, 516 F. Supp. 2d at 1151-53; NLFC, 1993 U.S. Dist. LEXIS 16459, at *23-25. C. A Ruling Regarding the Copyright Registrations Asserted in Plaintiffs' Motion Should Not Serve as a Template for Litigating the Rest of this Case.

In their Motion, Plaintiffs argue that specific conduct by TN constitutes copyright infringement of six registrations and that a ruling on this alleged infringement should serve as a "template" for litigating Plaintiffs' remaining infringement allegations. D.I. 649 (Pls.' Mot.) at 2. This is despite Plaintiffs' admission that their Motion addresses but "a tiny fraction" of the infringement alleged in their complaint. Id. In fact, the majority of the conduct described in Plaintiffs' Motion relates only to TN's early PeopleSoft retrofit support model, which materially differs from TN's later critical support model. Because the remaining infringement allegations relate to entirely different copyright registrations, software lines, and support activities for a
SVI-79319v1

- 11 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

variety of different customers, each with their own unique license agreements, a ruling on Plaintiffs' Motion cannot serve as a template for litigating the rest of this case. In 2002, TN began offering maintenance support services for PeopleSoft software under an "extended support" or "retrofit" model. See Lanier Decl. ¶¶ 23, 26, Ex. 26 (5/21/09 Ravin Tr.) at 19:2-20:6; Ex. 23 (2/26/09 A. Nelson Tr.) at 63:3-65:7. The purpose of the retrofit model was to maintain retired PeopleSoft software releases. See Lanier Decl. ¶ 23, Ex. 23 (2/26/09 A. Nelson Tr.) at 63:17-64:9. Under this model, TN's customers continued to pay maintenance fees to PeopleSoft, entitling them to receive PeopleSoft updates and fixes for supported releases. Id. at 72:2-24, 84:19-86:25. As the customer's agent, TN used these updates to understand what changes had been made by PeopleSoft and then used that information to adapt updates for its customers' older PeopleSoft releases. See Lanier Decl. ¶ 4, Ex. 4 (TN-OR00646511­513). To create the retrofit updates, TN installed onto its computers copies of PeopleSoft software from CDs obtained from its customers; used those copies, referred to as "environments," to determine what updates were required; and then developed and tested those updates. See id.; D.I. 657 (Alinder Decl.) ¶ 3, Ex. 12 (4/1/08 and 4/2/08 Hyde Tr.) at 116:14-117:21. Plaintiffs' Motion focuses on TN's use of environments in the retrofit model. Specifically, the Motion relies on evidence that TN likely copied one set of customer CDs (from either WGL or Safeway) to build the PeopleSoft HRMS 7.02, 7.51, and 8 SP1 environments that were used to support retrofit customers generally. See, e.g., D.I. 657 (Alinder Decl.) ¶ 3, Ex. 12 (4/1/08 and 4/2/08 Hyde Tr.) at 54:25-55:14; Ex. 14 (5/12/09 Hyde Tr.) at 27:5-37:8, 42:20-43:11; Ex. 21 (2/26/09 A. Nelson Tr.) at 87:3-88:1; Ex. 23 (12/6/07 S. Nelson Tr.) at 134:9-24. Plaintiffs also cite evidence that TN used this same set of CDs to build environments for customers other than the customer from whom the CDs were obtained. See D.I. 649 (Pls.' Mot.) at 6-8. Despite Plaintiffs' suggestion to the contrary, TN's use of environments in the retrofit support model is not characteristic of TN's support activities over time and for different product lines. In 2004, TN began moving away from the retrofit model and started offering what TN referred to as "critical support" services. See Lanier Decl. ¶¶ 23, 25, Ex. 23 (2/26/09 A. Nelson Tr.) at 91:4-92:6; Ex. 25 (4/18/08 S. Nelson Tr.) at 282:14-24. Unlike retrofit support customers,
SVI-79319v1

- 12 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

critical support customers generally did not have active maintenance agreements with software providers, so TN supplied independently developed updates, without regard to the updates provided by the software providers. See Lanier Decl. ¶¶ 5, 24, 25, Ex. 25 (4/18/08 S. Nelson Tr.) at 279:25-283:23; Ex. 24 (12/6/07 S. Nelson Tr.) at 221:10-222:16; Ex. 5 (Pls.' Ex. 23). Since TN did not need to adapt updates to customers' earlier releases, TN built and used environments in fundamentally different ways than it previously had. Most significantly, after a short transition period in which early critical support environments were built using retrofit environments, TN made it a "general practice to build an environment on each customer's behalf using that customer's PeopleSoft application files," rather than to build environments designed to support multiple customers at once, as in the retrofit model. Lanier Decl. ¶¶ 10, 15, Ex. 10 (TN's Third Amended and Supp. Response to Oracle USA, Inc.'s Second Set of Interrogs., Second Supp. Response to Interrog. No. 14) at 28; Ex. 15 (2/6/08 Baugh Tr.) at 68:5-18; see also D.I. 657 (Alinder Decl.) ¶ 3, Ex. 12 (4/1/08 and 4/2/08 Hyde Tr.) at 138:11-139:3. Because the retrofit support activities addressed in Plaintiffs' Motion did not occur as a matter of course in the critical support model, they cannot serve as a template to litigate critical support activities. Further, the retrofit support activities described in Plaintiffs' Motion are not "similar" to support for other software lines. D.I. 649 (Pls.' Mot.) at 2. Unlike the way it generally supported PeopleSoft customers, TN serviced most JDE and Siebel customers remotely, in each customer's environment that was located at the customer's facility. See Lanier Decl. ¶¶ 8, 17, 21, 22, Ex. 21 (10/30/07 Kreutz Tr.) at 80:8-81:25; Ex. 22 (2/19/08 Kreutz Tr.) 62:15-63:17, 106:11-24; Ex. 17 (9/17/09 Garafola and Tanner Tr.) at 15:21-19:2; Ex. 8 (Pls.' Ex. 1623). Because TN's use of environments in the retrofit model is not characteristic of TN's support for JDE and Siebel products, this Court should not adopt Plaintiffs' template approach. Finally, a ruling on the three database registrations addressed in Plaintiffs' Motion also should not serve as template for litigating this case. Because TN did not support Oracle database software, but simply used it as a component for some of the environments maintained on behalf of TN's customers, a ruling on TN's use of the database software cannot "streamline" analysis of TN's accused support activities. D.I. 649 (Pls.' Mot.) at 2; see also D.I. 657 (Alinder Decl.) ¶ 3,
SVI-79319v1

- 13 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Ex. 7 (12/3/09 Baugh Tr.) at 172:10-173:6; Ex. 33 (12/4/09 Thomas Tr.) at 6:16-21. IV. CFAA AND CDAFA ISSUES RAISED IN PLAINTIFFS' MOTION A. Plaintiffs Are Not Entitled to Summary Judgment for Their CFAA Claims Arising under 18 U.S.C. §§ 1030(a)(5)(A)(i)-(iii).

Plaintiffs are not entitled to summary judgment on their 18 U.S.C. §§ 1030(a)(5)(A)(i)(iii) claims because there is no evidence that Plaintiffs' computers suffered "damage."5 Plaintiffs also are not entitled to summary judgment on their 18 U.S.C. § 1030(a)(5)(A)(i) claim because they do not establish that TN possessed the requisite intent to damage Plaintiffs' computers. 1. Plaintiffs Have Not Established the Required "Damage."

To state a claim under any 18 U.S.C. § 1030(a)(5)(A) subsection, a plaintiff must show that defendant's actions caused cognizable "damage" to the accessed computers. See 18 U.S.C. § 1030(a)(5)(A)(i)-(iii) (2007); Hanger Prosthetics & Orthotics, Inc. v. Capstone Orthopedic, Inc., 556 F. Supp. 2d 1122, 1133 (E.D. Cal. 2008). "Damage" is "any impairment to the integrity or availability of data, a program, a system, or information." 18 U.S.C. § 1030(e)(8) (2007). It requires more than a showing that the defendant copied data from the plaintiff's website; rather, a plaintiff must establish that the defendant's activities impaired the "integrity" or the "availability" of plaintiff's data or systems, such that some existing data was corrupted or deleted or the servers crashed. See, e.g., U.S. v. Shea, 493 F.3d 1110, 1113 (9th Cir. 2007) (upholding criminal conviction under (a)(5) where defendant "corrupted" existing data by deleting Social Security numbers and replacing values with random figures); Creative Computing v. Getloaded.com LLC, 386 F.3d 930, 934-35 (9th Cir. 2004); ViChip Corp. v. Lee, 438 F. Supp. 2d 1087, 1100 (N.D. Cal. 2006) (Hamilton, J.) (finding "damage" where defendant deleted existing files). Defendants elect not to contest TN's liability for the specific (and marginal) examples of conduct Plaintiffs allege in their Motion violate 18 U.S.C. § 1030(a)(2)(c) and Cal. Penal Code § 502(c)(7). Defendants do not concede, however, that every act of "access and use beyond those set forth in a user agreement constitute[s] unauthorized use under the CFAA." D.I. 649 (Pls.' Mot.) at 21 (citing eBay Inc. v. Digital Point Solutions, Inc., 608 F. Supp. 2d 1156, 1164 (N.D. Cal. 2009)). Access is not "without authorization" under the CFAA where a user has limited access but acted beyond those limitations. See LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1133 (9th Cir. 2009). And access to computer systems in violation of terms of use does not always "exceed authorized access." U.S. v. Nosal, No. C 08-0237 MHP, 2010 U.S. Dist. LEXIS 24359, at *15-17 (N.D. Cal. Jan. 5, 2010).
SVI-79319v1 5

- 14 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Here, Plaintiffs attempt to establish "damage" in three ways, none of which is successful. First, Plaintiffs allege that TN's use of Titan impaired customers' ability to log onto Plaintiffs' computer systems; however, Plaintiffs rely only on speculation to support this claim. Second and third, Plaintiffs allege that TN "skewed customer support data" and that TN's alleged access to and use of downloaded support materials impaired the integrity and confidentiality of Plaintiffs' data. But neither constitutes cognizable "damage." And Plaintiffs' own corporate representative admits that there is no evidence that Plaintiffs' systems were impaired by TN's alleged conduct. a. There Is No Evidence that TN's Downloading Caused "Damage" to Plaintiffs' Servers.

Plaintiffs' allegation that TN's use of Titan impaired customers' ability to log onto Plaintiffs' customer support websites relies entirely on speculation. First, Plaintiffs attempt to demonstrate server impairment through deposition testimony from John Ritchie, a TN employee without first-hand knowledge of the condition of Plaintiffs' servers at the time of TN's access.6 See D.I. 649 (Pls.' Mot.) at 18-20, 24; Lanier Decl. ¶ 27, Ex. 27 (12/2/09 Ritchie Tr.) at 166:19167:11. Although Ritchie supposed that TN's access caused Plaintiffs' servers to reject his logon attempts or to disconnect his access, he admitted that he "can't rule out" various other reasons for the break in connection. Id. at 169:21-170:22, 205:16-25. Ultimately, his testimony that TN's activities "crashed" or otherwise impaired the servers amounts to nothing more than speculation about what might have happened, which is insufficient grounds for summary judgment. See Ortega v. Oakland, No. C07-02659 JCS, 2008 WL 4532550, at *12 (N.D. Cal. Oct. 8, 2008) (finding no fact dispute where the only evidence was a witness' speculation); Davenport v. Bd. of Tr. of State Ctr. Cmty. Coll. Dist., 654 F. Supp. 2d 1073, 1101 (E.D. Cal. 2009). Second, Plaintiffs attempt to bolster Ritchie's insufficient, speculative testimony by relying on the equally speculative--and inadmissible--declaration of Uwe Koehler.7 In his Defendants object to portions of Mr. Ritchie's testimony as inadmissible under Federal Rules of Evidence 602 and 701. See Section E of Defendants' Objections to Evidence Filed in Support of Plaintiffs' Motion For Partial Summary Judgment ("Defendants' Objections"). 7 Defendants object to paragraph 4 of Mr. Koehler's Declaration as inadmissible under Federal Rules of Evidence 602, 701, 702 and Federal Rule of Civil Procedure 26(a)(2)(A) and 37(c). See Section C of Defendants' Objections.
SVI-79319v1 6

- 15 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

declaration, Koehler states that it was "very likely" that TN caused slowdowns or other latency issues. D.I. 649 (Pls.' Mot.) at 24; D.I. 652 (Koehler Decl.) ¶ 4. However, as Mr. Koehler acknowledged in his deposition, he is not a bandwidth usage expert, and his conclusion that TN may have caused a slowdown of Plaintiffs' computers was "just what I believe." Lanier Decl. ¶ 20, Ex. 20 (12/5/08 Koehler Tr.) at 56:2-16, 60:11-61:9. As noted above, such speculation is not enough to ground summary judgment. In fact, Mr. Koehler's conclusory statements in his declaration are at odds with his admission as Plaintiffs' corporate representative that he and Plaintiffs are unaware of any actual slowdowns, disruptions in service, crashes, or other impairments that affected the functioning of their computer systems. Id. at 40:9-41:16; see also Lanier Decl. ¶ 18, Ex. 18 (10/15/09 Kees Tr.) at 203:7-206:7. b. "Skewed" Customer Feedback Is Not Cognizable "Damage."

Plaintiffs also contend that TN caused "damage" by "skewing" customer feedback by clicking "no" in response to prompts on Plaintiffs' website, and by providing false customer information upon log in (D.I. 649 (Pls.' Mot.) at 24); however, this alleged conduct does not result in cognizable "damage" under the CFAA. Courts in the Ninth Circuit have interpreted "damage" to require actual deletion or alteration to the code or files. See, e.g., Creative Computing, 386 F.3d at 934-35 (describing "impairment" of data in terms of "corruptions of data" or a "corrupted byte"); Hanger Prosthetics & Orthotics, Inc., 556 F. Supp. 2d at 1133 (granting defendants' motion for summary judgment where there was no admissible evidence of "mass deletions" or "alterations" to show "damage"). Indeed, because the statute defines "damage" as an "impairment to the integrity or availability" of data or a computer, courts have found that "the complained of activity must have an effect on the binary coding used to create, store, and access computerized representations of information." Condux Int'l, Inc. v. Haugum, No. 08-4824 ADM/JSM, 2008 U.S. Dist. LEXIS 100949, at *23 (D. Minn. Dec. 15, 2008). Here, Plaintiffs do not seek to redress a deletion of files or corruption of underlying data, but to expand the definition of "damage" beyond its ordinary and accepted meaning to include the collection of data alleged to be "skewed." Such results do not establish "damage." Plaintiffs fail to adduce any evidence that receiving these "clicks" or other customer information affected "the
SVI-79319v1

- 16 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

binary coding used to create, store, and access computerized representations of information." Id. And Plaintiffs admit that no "alteration or modification" of data results from providing false feedback or clicking "no" in response to prompts asking whether a fix was helpful "because [the data] was created at the time." Lanier Decl. ¶ 20, Ex. 20 (12/5/08 Koehler Tr.) at 42:20-22. Plaintiffs acknowledge that Customer Connection was specifically designed so that outside users could not alter any data contained therein. Id. at 37:11-24. As the Ninth Circuit noted, "[t]he Supreme Court has long warned against interpreting criminal statutes in surprising and novel ways that impose unexpected burdens on defendants." Brekka, 581 F.3d at 1134 (holding where there is ambiguity in the CFAA, ambiguity should be construed in favor of the defendant, even in the civil context). In the absence of any impairment to the existing data on Plaintiffs' computers, it would be unprecedented to ground liability under the CFAA on merely clicking a checkbox on a website or entering an incorrect address into an address field, which is something Plaintiffs admit any user could do. See Lanier Decl. ¶ 20, Ex. 20 (12/5/08 Koehler Tr.) at 46:13-47:22. c. "Impairment" to the Confidentiality of Plaintiffs' Materials Is Not Cognizable "Damage."

Plaintiffs also allege that TN impaired the integrity and confidentiality of Plaintiffs' data by "accessing" and "using" the confidential information on their support websites. Such conduct does not result in "damage" under the CFAA, and Plaintiffs' reliance on the outdated and criticized Shurgard is misplaced. See D.I. 649 (Pls.' Mot.) at 24 (citing Shurgard Storage Ctrs., Inc. v. Safeguard Self Storage, Inc., 119 F. Supp. 2d 1121, 1126 (W.D. Wash. 2000)). As a preliminary matter, accessing and using confidential information obtained from a computer does not result in corruption or deletion of existing data, which is typically required to show "damage" under the CFAA (and which Plaintiffs have not alleged in their Motion). See, e.g., U.S. v. Shea, 493 F.3d at 1113; ViChip, 438 F. Supp. 2d at 1100; Creative Computing, 386 F.3d at 934-35. Indeed, courts have made clear that mere copying of data from a website and "use" of that data does not constitute "damage" under the CFAA. See, e.g., Mintel Int'l Group, Ltd. v. Neergheen, No. 08-cv-3939, 2010 U.S. Dist. LEXIS 2323, at *31-32 (N.D. Ill. Jan. 12, 2010) (holding that copying, e-mailing, or printing electronic files from a computer database does
SVI-79319v1

- 17 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

not constitute "damage"); Cont'l Group, Inc. v. KW Prop. Mgmt., LLC, 622 F. Supp. 2d 1357, 1371 (S.D. Fla. 2009) ("[B]ased upon the plain language of the statute . . . the data must be impaired and not merely copied."); Cassetica Software, Inc. v. Computer Sci. Corp., No. 09 C 0003, 2009 U.S. Dist. LEXIS 51589, at *9-11 (N.D. Ill. June 18, 2009) (holding that improperly downloading a computer program from a website did not constitute "damage"). Furthermore, Plaintiffs' reliance on Shurgard is inappropriate. In Shurgard, the court held that a former employee who had forwarded plaintiff employer's information to a competitor caused "damage." See 119 F. Supp. 2d at 1123, 1127. However, the court based its finding of "damage" on an earlier version of the CFAA, which defined "damage" as including the term "loss" to cover situations, as in Shurgard, in which "neither the computer nor its information is damaged." Id. at 1126 (citing S. Rep. No. 104-357, at 11 (1996)); see also 18 U.S.C. § 1030(e)(8)(A) (2000) (stating that "the term `damage' means any impairment to the integrity or availability of data, a program, a system, or information, that . . . causes loss aggregating at least $5,000 in value during any 1-year period to one or more individuals . . ."). Congress has since amended the statute to separately define "damage" and "loss," such that "damage" may presumably be shown only where the computer or its information is damaged. Compare 18 U.S.C. § 1030(e)(8) (2000) with 18 U.S.C. § 1030(e)(8), (e)(11) (2007). Since this amendment, courts have expressly rejected Shurgard's overbroad interpretation of the term "damage." See Condux Int'l, 2008 U.S. Dist. LEXIS 100949, at *23; Resdev, LLC v. Lot Builders Ass'n, No. 6:04-cv-1374-Orl-31DAB, 2005 U.S. Dist. LEXIS 19099, at *13 (M.D. Fla. Aug. 10, 2005); Garelli Wong & Assocs., Inc. v. Nichols, 551 F. Supp. 2d 704, 710 (N.D. Ill. 2008). Because the Ninth Circuit favors narrow construction of the CFAA, Shurgard's expansive interpretation of "damage" to include distribution of downloaded materials should be rejected in favor of the generally accepted reading that mere copying or use of materials does not impair the "integrity" of--and thus does not "damage"--data under the CFAA. See Brekka, 581 F.3d at 1134. d. Plaintiffs Have Admitted that There Is No Evidence of Damage to Oracle's Systems.

Finally, Plaintiffs' own admissions confirm that they cannot prove that TN's activities
SVI-79319v1

- 18 -

DEFS' NOTICE OF CROSS MOTION, CROSS MOTION, AND OPPOSITION Case No. 07-CV-1658 PJH (EDL)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

caused the requisite "impairment to the integrity or availability" of Plaintiffs' systems