Oracle Corporation et al v. SAP AG et al

Filing 848

Memorandum in Opposition re 764 MOTION No. 2: to exclude testimony of Defendants' Expert Brian Sommer Defendants' Opposition to Plaintiffs' Motion No. 2 to Exclude Testimony of Defendants' Expert Brian Sommer filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Proposed Order)(McDonell, Jason) (Filed on 9/9/2010)

Oracle Corporation et al v. SAP AG et al

Doc. 848

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Robert A. Mittelstaedt (SBN 060359) Jason McDonell (SBN 115084) Elaine Wallace (SBN 197882) JONES DAY 555 California Street, 26th Floor San Francisco, CA 94104 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] [e-mail] Tharan Gregory Lanier (SBN 138784) Jane L. Froyd (SBN 220776) JONES DAY 1755 Embarcadero Road Palo Alto, CA 94303 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] Scott W. Cowan (Admitted Pro Hac Vice) Joshua L. Fuchs (Admitted Pro Hac Vice) JONES DAY 717 Texas, Suite 3300 Houston, TX 77002 Telephone: [phone] Facsimile: [phone] [e-mail] [e-mail] Attorneys for Defendants SAP AG, SAP AMERICA, INC., and TOMORROWNOW, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION ORACLE USA, INC., et al., Plaintiffs, v. SAP AG, et al., Defendants. Case No. 07-CV-1658 PJH (EDL) DEFENDANTS' OPPOSITION TO PLAINTIFFS' MOTION NO. 2 TO EXCLUDE TESTIMONY OF DEFENDANTS EXPERT BRIAN SOMMER Date: September 30, 2010 Time: 2:30 p.m. Courtroom: 3, 3rd Floor Judge: Hon. Phyllis J. Hamilton
DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

CHI-1769604v4

Dockets.Justia.com

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TABLE OF CONTENTS Page INTRODUCTION .............................................................................................................. 1 SUMMARY OF SOMMER'S OPINIONS AND REPORT .............................................. 3 LEGAL STANDARD......................................................................................................... 4 ARGUMENT ...................................................................................................................... 5 A. Sommer Is Well Qualified to Render His Rebuttal Opinions. ................................ 6 B. Sommer's Rebuttal Opinions are Relevant and Will Assist the Trier of Fact ........ 9 C. Sommer's Rebuttal Opinions are Reliable............................................................ 11 1. Sommer's Rebuttal Opinions Rest On Sufficient Facts And Data. .......... 12 2. Internet Sources Do Not Render Sommer's Opinion Unreliable.............. 14 3. Sommer's Experience And Training Reliably Supports His Rebuttal Opinions. ................................................................................................... 14 D. Sommer's Rebuttal Opinions are Procedurally Proper ......................................... 16 1. Sommer's Opinions Are Within The Proper Scope Of Rebuttal. ............. 17 2. Sommer's Rebuttal Opinions Are Timely ................................................ 18 CONCLUSION ................................................................................................................. 19

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DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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TABLE OF AUTHORITIES

Page Benedict v. United States, 822 F.2d 1426 (6th Cir. 1987)................................................................................................. 17 Boim v. Holy Land Found. for Relief & Dev., 549 F.3d 685 (7th Cir. 2008)................................................................................................... 14 Brill v. Marandola, 540 F. Supp. 2d 563 (E.D. Pa. 2008) ...................................................................................... 13 Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311 (9th Cir. 1995)..................................................................................................... 9 Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) ............................................................................................................ 5, 11 Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998 (9th Cir. 2004)............................................................................................ passim In re REMEC Inc. Sec. Litig., 702 F.Supp. 2d 1202 (S.D. Cal. 2010) .................................................................................... 17 Jinro Am., Inc. v. Secure Invs., Inc., 266 F.3d 993 (9th Cir. 2001)................................................................................................... 10 JMJ Enters. v. Via Veneto Italian Ice, Inc., No. Civ. A. 97-CV-0652, 1998 WL 175888 (E.D. Pa. Apr. 15, 1998) .................................. 13 Kennedy v. Collagen Corp., 161 F.3d 1226 (9th Cir. 1998)................................................................................................. 13 Kumho Tire Co., Ltd., et al. v. Carmichael et al., 526 U.S. at 156 (1999) ..................................................................................................... passim Larson v. Trowbridge, 153 F.3d 368 (7th Cir. 1998)..................................................................................................... 9 MMI Realty Servs., Inc. v. Westchester Surplus Lines Ins. Co., No. 07-00466 BMK, 2009 WL 649894 (D. Haw. Mar. 10, 2009) ......................................... 17 Nebraska Plastics, Inc. v. Holland Colors Ams., Inc., 408 F.3d 410 (8th Cir. 2005)................................................................................................... 10
DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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TABLE OF AUTHORITIES (continued) Page On Davis v. The Gap, Inc., 246 F.3d 152 (2d Cir. 2001).................................................................................................... 11 Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700 (9th Cir. 2004)................................................................................................... 11 Semerdjian v. McDougal Littell, 641 F. Supp. 2d 233 (S.D.N.Y. 2009)..................................................................................... 14 Thomas v. Newton Int'l Enters., 42 F.3d 1266 (9th Cir. 1994)................................................................................................. 5, 9 Thornton v. J Jargon Co., 580 F. Supp. 2d 1261 (M.D. Fla. 2008) .................................................................................. 11 Trout v. Milton S. Hershey Med. Ctr., 576 F. Supp. 2d 673 (M.D. Pa. 2008) ..................................................................................... 10 United States v. Brooks, 610 F.3d 1186 (9th Cir. 2010)................................................................................................... 9 United States v. Hankey, 203 F.3d 1160 (9th Cir. 2000)................................................................................................. 12 United States v. Rahm, 993 F.2d 1405 (9th Cir. 1993)................................................................................................. 11 United States v. Walker, 217 Fed. Appx. 714 (9th Cir. 2007) ........................................................................................ 10 RULES Fed. R. Evid. 702.................................................................................................................................... passim 703........................................................................................................................................... 14

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I.

INTRODUCTION Through their damages expert, Paul Meyer, Plaintiffs seek $2.15 billion in damages based

primarily on the assumptions that: (1) the reason Plaintiffs' former customers switched to TomorrowNow's support services must have been because those services were less expensive, and (2) those customers would have remained with Plaintiffs for support and software if TomorrowNow had not offered less-expensive support. See Declaration of Jason McDonell in support of Defendants' Opposition to Plaintiffs' Motion No. 2 to Exclude Expert Testimony of Brian Sommer ("McDonell Decl.") ¶ 1, Ex. 1 (Meyer Report) at ¶¶ 232, 233, 361, 370. Meyer further assumes that many customers were alerted to this lower price point and wooed to TomorrowNow and SAP through a marketing program called Safe Passage. See McDonell Decl. ¶ 1, Ex. 1 (Meyer Report) at ¶ 65. Meyer's assumptions are flawed. As Defendants' rebuttal expert, Brian Sommer details (in a rebuttal report supported by over 750 references) how customers in the enterprise resource planning ("ERP") industry, like the ones at issue in this case, are not so simply motivated. See McDonell Decl. ¶ 2, Ex. 2 (Sommer Report) at 3-4 (summary of opinions). As Sommer explains, choosing a company's ERP software and support services is a critical business decision involving substantial capital, numerous considerations that vary from company to company, and an extended and individualized decision-making process. See id. In his extensive experience, the decision to move to a new ERP vendor generally is not affected much by the vendor's marketing programs. See id. Moreover, it is common for businesses to independently re-evaluate their ERP support options and pursue alternative support options such as self-support and support provided by other third-party vendors. See id. In contrast to Meyer's "assume causation and then calculate damages" approach, Defendants' damages expert, Stephen Clarke, conducted a customer by customer analysis of why certain customers would have ceased using Oracle's support services even if TomorrowNow had never existed. See McDonell Decl. 3, Ex. 3 (Clarke Report) at 209-10, 217-18. The industry insights offered with Sommer's rebuttal opinions will provide the jury with the context to further assess Plaintiffs' damages theory, as well as Clarke's rebuttal, in this highly technical case. -1DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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Plaintiffs' criticisms are fourfold. First, Plaintiffs claim that Sommer is not qualified to offer some of his opinions about the ERP industry. This argument fails to adequately consider Sommer's extensive qualifications, including: (a) working in the ERP industry for nearly 30 years on both the buyer's and the seller's side (McDonell Decl. ¶ 2, Ex. 2 (Sommer Report) at App. A; Declaration of Brian Sommer ("Sommer Decl.") ¶ 2); (b) directly participating in dozens of buyers' decisions to purchase ERP software (Sommer Decl. ¶¶ 18-23, 26, 29, 30 and 65); (c) publishing and speaking extensively on various topics concerning the industry (id. ¶¶ 33-35, 37-41); and (d) making his living in substantial part by using his extensive experience and industry insight to advise sellers of ERP software and support services who hope to better reach their target markets. Id. ¶¶ 42-58. Moreover, Plaintiffs implicitly concede that Sommer has extensive expertise in the ERP industry--and in particular, the support aspect of that industry--because they do not challenge the admissibility of the first third of his report. Second, Plaintiffs incorrectly assert that Sommer's opinions are irrelevant and do not "fit" the facts of this case because they concern the industry at issue instead of the specific customers, parties, and products at issue. This argument is contrary to extensive precedent and common sense. The nuances of the ERP market are not common knowledge, and the jury is not required to evaluate Meyer's damages theory in a vacuum. Although the realities of the ERP industry may be inconvenient for Plaintiffs, they are relevant to Plaintiffs' astronomical damages claim. Third, Plaintiffs' claims that Sommer's opinions are not sufficiently reliable do not survive scrutiny. For example, Plaintiffs argue that Sommer's opinions lack a sufficient factual basis. That argument ignores not only the hundreds of documents which Sommer considered in forming his opinions, but also the voluminous precedent that authorizes an expert such as Sommer to testify on the basis of his extensive experience. And Plaintiffs' implication that Sommer's report is per se unreliable because it is based in part on internet sources should be disregarded. Time and again, courts have rejected that argument. This court should as well. Finally, Plaintiffs assert Sommer's opinions are not proper rebuttal opinions. That claim rings hollow. Meyer's report asks the jury to indulge in large assumptions about the ERP -2DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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industry. Sommer's report directly contradicts and undermines those assumptions by supplying important information that Meyer's analysis omits. That is precisely the province of a rebuttal report. In sum, Sommer's opinions comply with this Court's orders and meets the admissibility requirements of the Federal Rules of Evidence. Oracle asks this Court both to muzzle an expert who can explain the realities of the ERP industry and, in so doing, to limit the jury's understanding of the business it will be tasked with considering. There is no basis in fact or law for the Court to accept that invitation. II. SUMMARY OF SOMMER'S OPINIONS AND REPORT Defendants engaged Sommer to review and evaluate a portion of the expert report of Paul Meyer. See McDonell Decl. ¶ 2, Ex. 2 (Sommer Report) at 1. Oracle's damages expert, Meyer, assumes that Plaintiffs' support customers who switched to TomorrowNow made that decision primarily based on TomorrowNow's lower price. See McDonell Decl. ¶ 1, Ex. 1 (Meyer Report) at ¶¶ 361, 370, 440. Meyer further assumes that those support customers would have continued using Oracle support if they had not gone to TomorrowNow and that many of them were wooed to TomorrowNow and SAP by Defendants' "Safe Passage" marketing program. McDonell Decl. ¶ 1, Ex. 1 (Meyer Report) ¶¶ 65, 370. Sommer rebuts Meyer's description of the ERP industry and his assumptions about ERP customers' decision making process. More specifically, Sommer explains: This rebuttal report, in response to the Meyer Report, covers the general dynamics of the ERP software industry and market including: (1) how companies market, sell and support such software; and (2) the factors that explain how and why customers make decisions to buy, maintain and replace ERP application software and support services. The Meyer Report failed to adequately define the class of software in question, the state of the market for that software and related support and the relationship between software vendors (companies that create and sell ERP application software), their customers and third-party support

providers (companies that provide support services for application software sold by ERP software vendors). Thus, this rebuttal report provides substantial context that the Meyer Report should have, but did not provide. -3DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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McDonell Decl. ¶ 2, Ex. 2 (Sommer Report) at 3-4. Sommer continues, "[t]his rebuttal report identifies the general factors that should be considered in determining how and why customers make ERP purchasing decisions, which is necessary to place into context the alleged damages claimed in the Meyer Report." Id. Sommer then identifies six aspects of the ERP industry that Meyer fails to adequately consider: (1) (2) (3) (4) (5) (6) Software customers do not select their future ERP software vendor simply because of a lower-cost support offering on their existing ERP software; At some point in a customer's relationship with its ERP software vendor, the customer will evaluate its support options; Competitive switching marketing programs are not unusual in the ERP industry and generally do not produce significant gains, especially among well known competitors with large market shares; ERP vendors' one-size-fits-all approach to support creates incentives for customers to consider alternative support solutions; ERP software license and support contracts tend to charge customers ever-greater sums of money regardless of the direction of the customer's business; and Corporate acquisitions and consolidations in the ERP industry frequently result in fear, uncertainty, and doubt in the minds of customers and can cause customers to question their long-term commitment to using a vendor's software and support.

Id. Sommer did not opine on the reason that any particular customer in this case switched support services from Plaintiffs to TomorrowNow, and he does not proffer an opinion regarding the appropriate damages figure in this case. See McDonell Decl. ¶ 7, Ex. 7 (Sommer Tr.) at 89:917; 121:13-18.1 Sommer's rebuttal opinions are offered to explain the context of Plaintiffs' alleged damages that Meyer failed to offer, and by so doing, assist the jury's understanding of the ERP industry at issue. III. LEGAL STANDARD Rule 702 permits experts qualified by "knowledge, skill, experience, expertise, training, or education" to testify "in the form of an opinion or otherwise" based on "scientific, technical, or other specialized knowledge" if that knowledge will "assist the trier of fact to understand the evidence or to determine a fact in issue. " See Fed. R. Evid. 702. To make this determination, the Clarke--Defendants' damages expert--considered, inter alia, the voluminous record in this case to perform a customer-by-customer damages analysis. -4DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL) 1

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Court must apply a three-part test: (1) Is the proffered expert qualified to testify in the area on which he is opining based on his knowledge, skill, experience, training, or education (qualification requirement)?; (2) Is the proffered expert testimony based on reliable scientific or specialized knowledge that is reliably applied to the facts of this case (reliability requirement)?; and (3) Will the proffered expert testimony assist the trier of fact in understanding the evidence or determining a fact in issue (relevancy requirement)? See Fed. R. Evid. 702; Daubert·v.·Merrell·Dow·Pharms.,·Inc., 509 U.S. 579 at 592-93 (1993). The 2000 Advisory Committee Notes to Rule 702 emphasize that "Nothing in this amendment is intended to suggest that experience alone--or experience in conjunction with other knowledge, skill, training or education--may not provide a sufficient foundation for expert testimony. " Fed. R. Evid. 702, Advisory Committee's Notes (2000). The Committee continued, "To the contrary, the text of Rule 702 expressly contemplates that an expert may be qualified on the basis of experience. In certain fields, experience is the predominant, if not sole, basis for a great deal of reliable expert testimony." Id.; see also Kumho Tire Co., Ltd., et al. v. Carmichael et al., 526 U.S. at 156 (1999) ("No one denies that an expert might draw a conclusion from a set of observations based on extensive and specialized experience."). In Thomas v. Newton Int'l Enters., for example, the Ninth Circuit affirmed the decision to qualify a longshoreman with 29 years of experience as an expert on the custom and practice in that industry. 42 F.3d 1266, 1269 (9th Cir. 1994). IV. ARGUMENT Oracle has not challenged the admissibility of the first portion of Sommer's report.2 Instead, Oracle challenges some of Sommer's individual rebuttal opinions, claiming they are not relevant, not reliable, procedurally infirm, or that Sommer is unqualified to give them. As set forth below, however, a proper examination reveals that Sommer has extensive experience, applies that experience reliably to this case, and renders procedurally proper opinions that are relevant to this dispute. In sum, Sommer's opinions meet the admissibility requirements of Rule Plaintiffs did not challenge the sections entitled "Overview of the ERP Industry" and "The nature of an ERP software and support sale," which are contained on pages 4-24 of the report. -5DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL) 2

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702. A. Sommer Is Well Qualified to Render His Rebuttal Opinions.

Sommer's "extensive and specialized experience" is sufficient to qualify him as an expert. Kumho Tire, 526 U.S. at 156. He has worked in the ERP industry for approximately 30 years, in various capacities, all of which gave him an understanding of how ERP software and support services are bought, the decision process companies go through in selecting new ERP software and support services, why companies change their ERP software and support services, the costs behind such decisions, and the value companies expect to receive from the software and the timing of such decisions. See Sommer Decl. ¶ 2, 20. Sommer's first involvement in the ERP industry began in 1981 at Andersen Consulting, where he provided ERP related consulting services to oil and gas companies. See id. ¶ 3. For the next eight years, he consulted extensively on ERP implementation and software evaluation projects. See id. ¶¶ 4-10. In 1988, Sommer was promoted to the head of Andersen Consulting's Software Intelligence Unit, which was responsible for: developing in-depth computer based training for Andersen Consulting personnel worldwide on popular large ERP application software products, providing in-depth product reviews on a variety of application software products in use or being considered by Andersen Consulting clients, advising clients and consulting teams on the best or most appropriate ERP solutions for a given client; and maintaining relationships with major ERP vendors and their top executives. See id. ¶¶ 10-11. Sommer was in charge of that unit for almost a decade. See id. ¶ 11. He created and led several projects to develop new ERP software practice aids. See id. ¶¶ 12-15. He and his team created a compendia of hundreds of functions and features present in dozens of major finance and human resources ERP software products. See id. In the course of developing these compendia, Sommer personally contacted top executives at leading ERP application software companies, including Oracle, PeopleSoft, and SAP. He and his team visited the headquarters of these companies to perform in-depth reviews of the specific ERP modules marketed by these vendors. See id. Sommer's team then produced several hundred-page product assessments that were -6DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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frequently used by Andersen Consulting executives to sell ERP software selection projects and by Andersen Consulting software implementation personnel to complete ERP software evaluations for clients. See id. Sommer's team also developed practice aids for mainframe financial software, financial software for the DEC VAX and AS/400 platform, human resource applications software, life insurance software and other software product areas. See id. While running the Software Intelligence Unit, Sommer was also tasked with producing six major trade shows for an audience of approximately 500 or more top client executives. See id. ¶ 17. The trade shows were titled "The Finance and Human Resources Software Spectacular, " and were aimed at top executives in major corporations globally to help them decide which ERP solutions they should consider for their short list of new application software technology. Id. Sommer also chaired panels with CEOs of major ERP software companies that were of interest to ERP software and support buyers. See id. Dave Duffield, then the CEO of PeopleSoft (now owned by Oracle), and Hasso Plattner, currently the Chairman of the Supervisory Board of SAP, both participated. See id. All of these experiences made Sommer a particularly valuable resource to clients who sought to purchase ERP software and support services. During his time in Andersen's Software Intelligence Unit, Sommer gained extensive experience in advising and assisting many companies making ERP software purchases. See id. ¶¶ 17-26. He made hundreds of trips to clients worldwide to assist them in the ERP software selection process. Id. He had extensive discussions with a variety of clients regarding their selection of ERP software and support services. See id. ¶¶ 27-29. Among the topics he discussed with these clients were support-related concerns. See id. ¶¶ 27-28. Indeed, PeopleSoft believed so strongly in Sommer's insights into the factors affecting ERP software purchasing decisions that CEO Dave Duffield invited Sommer to present a sales training keynote address for the PeopleSoft sales organization in 1999. See id. ¶ 25. In 1999, Sommer moved from Andersen Consulting to a startup company called IQ4Hire. See id. ¶ 42. That company assisted ERP software and support buyers in finding the best project team to implement their solution from thousands of potential service providers. See id. Investors -7DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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in IQ4Hire included: Ken Ross (of Ross Systems and Pillar (now part of Oracle)), Ray Lane (former Oracle COO) and Dave Duffield of PeopleSoft. After spending over 20 years advising buyers of ERP software, in 2001, Sommer moved to the seller's side of the ERP software market. He founded his own consulting firm, TechVentive, which advises software companies on better ways to succeed in the marketplace. See id. ¶ 43-44. Sommer now makes his living by using his significant experience with how buyers behave toward, think about, and approach ERP software, in order to assist sellers of ERP software and support services to sell more of their products and services. See id. Sommer's opinions about ERP-related software and support are highly valued in his industry. He is a heavily published ERP software market experts in the field. For example, he wrote four articles for Optimize magazine and often co-authors academic articles on the subject of ERP software. See id. ¶¶ 62, 64. He was recently quoted in a magazine regarding his experience with ERP support services. See id. ¶ 63. He is also a sought-after speaker, having spoken at numerous trade conferences, university, and marketing groups. See id. ¶¶ 33-41. Among these conferences is the Sapience conference, which specifically focuses on third party support and maintenance issues. See id. ¶ 36. These engagements, as well as the various trade show events that he regularly attends, continue to expand Sommer's knowledge of the ERP software industry and keep his existing knowledge current. Id. Indeed, Sommer is paid to author an industry blog whose target audience is providers of ERP software and support services. See id. ¶¶ 59-61. Sommer's experience in the ERP industry is unassailable. Plaintiffs' claims that Sommer lacks the experience to opine about what motivates ERP software buyers during their purchase decision is belied by the fact that Sommer is paid by ERP software vendors to provide them with his extensive expertise on many of the same topics that are the subject of his report, and by the fact that he is frequently invited to speak on such topics. And Sommer's interaction with hundreds of ERP software customers who are actually making software purchase decisions provides him with more than enough qualifications to determine what influences their purchasing decisions and whether ERP software marketing programs have an impact on such purchasers. Moreover, Plaintiffs implicitly concede that Sommer has extensive expertise in the ERP industry -8DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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because they do not challenge the admissibility of the first third of his report. Sommer's experience qualifies him to issue his rebuttal opinions to Meyer's report. See Thomas, 42 F.3d at 1269. B. Sommer's Rebuttal Opinions are Relevant and Will Assist the Trier of Fact

Contrary to Plaintiffs' claims, Sommer's rebuttal opinions will assist the trier of fact. Plaintiffs are wrong in repeatedly asserting that Sommer's opinions are useless because they describe the industry at issue in this case, as opposed to the specific industry participants or specific parties and products involved in the case. D.I. 764 (Sommer Mot.) at 8, 12-13, 16-19, 22, 24. Sommer's rebuttal opinions "logically advance[s] a material aspect of the proposing party's case." See Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311, 1315 (9th Cir. 1995). They provide a general overview of the ERP industry that Meyer's opinions should have, but admittedly do not. See D.I. 764 (Sommer Mot.) at 14 ("Meyer did not offer general opinions on what non-specific EAS (sic) customers care about or catalog purported support options generally."). Instead, as Sommer points out, Meyer makes erroneous assumptions in a vacuum and encourages the fact finder to do the same. See McDonell Decl. ¶ 2, Ex. 2 (Sommer Report) at 3-4. Sommer's knowledge of the highly complex and technical ERP industry will thus assist the jury by providing appropriate context to weigh the validity of the assumptions underlying Meyer's damages calculations. See United States v. Brooks, 610 F.3d 1186, 1195-96 (9th Cir. 2010) (detective's testimony properly admitted where it placed other witness's testimony into context and could help jury assess witness credibility); Larson v. Trowbridge, 153 F.3d 368, 376 (7th Cir. 1998) (expert testimony regarding police training appropriately admitted to give context to officer's actions at issue in the case). Sommer's rebuttal opinions also "logically advance" Clarke's rebuttal opinion damages calculations, which do not indulge in the same assumptions as Meyer's calculation. The "fit" of Sommer's testimony to this case is undeniable. Indeed, the Federal Rules of Evidence specifically envision the type of testimony Sommer plans to offer. The 2000 Advisory Committee Notes to Rule 702 state: [I]t might also be important in some cases for an expert to -9DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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educate the fact finder about general principles, without ever attempting to apply these principles to the specific facts of the case. For example, experts might instruct the fact finder on the principles of thermodynamics, or bloodclotting, or on how financial markets respond to corporate reports, without ever knowing about or trying to tie their testimony into the facts of the case. The amendment does not alter the venerable practice of using expert testimony to educate the fact finder on general principles. Fed. R. Evid. 702, Advisory Committee's Notes (2000) (emphasis added). None of the cases that Plaintiffs cite come close to challenging the "venerable practice of using expert testimony to educate the fact finder on general principles." Id. For example, in Jinro Am., Inc. v. Secure Invs., Inc., the majority excluded an expert's testimony about the purported proclivities of Korean businessmen because the expert did not have sufficient experience with Korean culture or business and because his testimony amounted to a prejudicial stereotype of Koreans (including the plaintiff) as corrupt. 266 F.3d 993, 1005-09 (9th Cir. 2001). Judge Wallace, in a concurrence, noted that the expert should also have been excluded because "[n]o serious effort was made at trial, or in any brief on appeal, to link [the expert's] generalized testimony about Korean businessmen and the Korean financial and regulatory landscape to [the plaintiff] or the particular transaction at issue here. " Id. at 1011. The holding of Jinro is obviously not applicable here, and the case's non-binding concurrence is clearly against the weight of the authority. The other cases that Oracle cites are similarly distinguishable. In those cases, the proffered testimony did not address any fact actually relevant to a dispute in the case. See United States v. Walker, 217 Fed. Appx. 714 (9th Cir. 2007) (defense expert's proposed testimony regarding interrogation practices not at issue in the case was irrelevant and unreliable); Trout v. Milton S. Hershey Med. Ctr., 576 F. Supp. 2d 673 (M.D. Pa. 2008) (doctor's testimony about a variety of abstract medical risks from various amputation-related procedures and conditions that plaintiff never showed were associated with his own post-amputation treatment); Nebraska Plastics, Inc. v. Holland Colors Ams., Inc., 408 F.3d 410, 41 (8th Cir. 2005) (rejecting expert testimony that relied on assumptions as to future damages that were contradicted by all record evidence). - 10 DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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Thus, contrary to Plaintiffs' position, Rule 702 does not require Sommer to advance an opinion specific to every customer, every product, or every party to this litigation. Rather, he need only hold a rebuttal opinion on the areas of the case where he intends to assist the jury-- here, critical industry information that Meyer inappropriately failed to consider. See United States v. Rahm, 993 F.2d 1405, 1411 (9th Cir. 1993) ("Thus, not every expert need express, nor even hold, an opinion with regard to the issues involved in a trial."). Plaintiffs also assert Sommer's opinions on how ERP customers make decisions about purchases of ERP software relies on the wrong legal standard. See D.I. 764 (Sommer Mot.) at 2425. By comparison, Meyer assumed that so long as low cost support was a "factor" in a customer's decision to switch from Oracle to SAP software, SAP would be required to disgorge any profits it gained from the customer's switch. Id. at 24 (citing Meyer Report and Transcript). Sommer responded that lower-cost support services would not "trigger" a customer to switch software. Id. (citing Sommer Report and Transcript). Plaintiffs claim that Sommer's "trigger" standard is legally incorrect and that his opinion should be excluded on that basis. But in fact, it is Meyer's opinion and Plaintiffs' understanding that are incorrect. The Ninth Circuit requires a causal nexus between the infringement and disgorged profits, Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 711-14 (9th Cir. 2004), while the Second Circuit merely requires that the "infringing" activity and profits be "reasonably related. " On Davis v. The Gap, Inc., 246 F.3d 152, 160 (2d Cir. 2001); see also Thornton v. J Jargon Co., 580 F. Supp. 2d 1261, 1279 (M.D. Fla. 2008) (noting difference between Ninth and Second Circuit causation standards for disgorgement). Sommer's testimony hews to the relevant Ninth Circuit standard and should be admitted. And in any event, Sommer does not purport to instruct the jury on the nuances of copyright law. The jury will be perfectly capable of applying Sommer's testimony to whatever jury instruction on damages it will receive from this Court. C. Sommer's Rebuttal Opinions are Reliable

Plaintiffs' argument that various of Sommer's rebuttal opinions are unreliable is equally wrong. Rule 702 is intended to codify the reliability standards from the Supreme Court's Daubert and Kumho Tire decisions. Those standards continue to apply to experience-based - 11 DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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opinions like Sommer's, expressly permitting these opinions. Kumho Tire 526 U.S. at 156 ("no one denies that an expert might draw a conclusion from a set of observations based on extensive and specialized experience."). As the Advisory Committee Notes to the 2000 Amendment explain: Nothing in this amendment is intended to suggest that experience alone--or experience in conjunction with other knowledge, skill, training or education--may not provide a sufficient foundation for expert testimony. To the contrary, the text of Rule 702 expressly contemplates that an expert may be qualified on the basis of experience. In certain fields, experience is the predominant, if not sole, basis for a great deal of reliable expert testimony. Fed. R. Evid. 702 , Advisory Committee's Notes (2000) (emphasis added). Experience-based testimony is admissible so long as the witness can explain how his or her experience leads to the conclusions reached, why his or her experience is a sufficient basis for the opinions, and how his or her experience is reliably applied to the facts. Id. The Ninth Circuit notes "the Daubert factors (peer review, publication, potential error rate, etc.) simply are not applicable to [non-scientific] testimony, whose reliability depends heavily on the knowledge and experience of the expert, rather than the methodology or theory behind it. " Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1017 (9th Cir. 2004); (citing United States v. Hankey, 203 F.3d 1160, 1169 (9th Cir. 2000)). Instead, courts are permitted to conclude that a witness's "experience, training, and education provid[e] a sufficient foundation of reliability for his testimony. " Hangarter, 373 F.3d at 1018 (affirming admission of insurance industry expert where expert had 20 years of experience in industry as consultant and employee). 1. Sommer's Rebuttal Opinions Rest On Sufficient Facts And Data.

One of Plaintiffs' principal attacks on the reliability of Sommer's rebuttal opinions is that they are not "supported by sufficient facts or data" to pass muster under Rule 702. Plaintiffs attack Sommer's rebuttal opinions on customer behavior, third-party support, self-support, and switching programs as unreliable because, in forming those rebuttal opinions, Sommer did not review customer specific or third party vendor specific information in this case. See D.I. 764 (Sommer Mot.) at 7-11, 16-19, 21-22. Plaintiffs further claim that this customer information - 12 DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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"contradicts" Sommer's rebuttal opinions to such a degree that they simply cannot be reliable. But Sommer does not purport to provide a customer by customer analysis, and his opinions are consistent with the full record in this case.3 Again, Plaintiffs' criticism boils down to a complaint that Sommer rendered an industry-specific rebuttal opinion instead of the customer specific analysis that Clarke undertook. If Sommer did not think he needed customer-specific information to render his rebuttal opinions, then he is not required to review it. "Experts are expected to make inferences and state opinions and they are granted wide latitude in determining what data is needed to reach a conclusion." Brill v. Marandola, 540 F. Supp. 2d 563, 568 (E.D. Pa. 2008) (quoting JMJ Enters. v. Via Veneto Italian Ice, Inc., No. Civ. A. 97-CV-0652, 1998 WL 175888 at *6 (E.D. Pa. Apr. 15, 1998)). When the threshold for admissibility is met, differences in the experts' opinion simply go to the weight of the testimony and not the admissibility. See generally, e.g., Kennedy v. Collagen Corp., 161 F.3d 1226, 1230-31 (9th Cir. 1998). Plaintiffs' argument that Sommer does not have sufficient factual basis stems from their flawed assumption that his opinion should address the specific customers/transactions at issue here. That is not the case, as shown above. His opinion properly covers general information about the ERP industry relevant to this case. His factual basis is the voluminous material he reviewed and his extensive knowledge and experience in the industry, which clearly meet the threshold admissibility requirement. The Ninth Circuit rejected an argument similar to Plaintiffs' in Hangarter. In that case, the Ninth Circuit affirmed the district court's admission of testimony from an expert on the insurance industry. The Ninth Circuit noted that defendants had questioned the expert's "selection of documents to review" and argued that the issue went to the "reliability of his `methodology' as an expert." Hangarter, 373 F.3d at 1017 n.14. The Ninth Circuit agreed with the district court, however, that the expert's analysis was actually "dependent upon the witness's knowledge of, and experience within, the insurance industry." Id. Accordingly, the "questions regarding the nature of [the expert's] evidence went more to the `weight' of his testimony--an For example, Clarke's report summarizes the voluminous record evidence that confirms that many of the customers in this case acted exactly as Sommer's rebuttal opinions would predict they would. - 13 DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL) 3

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issue properly explored during direct and cross-examination." Id. 2. Internet Sources Do Not Render Sommer's Opinion Unreliable.

Plaintiffs challenge Sommer's rebuttal opinions about the third party support market and switching programs by arguing that they are unreliable to the extent they depend on sources from the internet. See D.I. (764) (Sommer Mot.) at 7-8, 11-12, 17-18. This argument fails for two reasons. First, internet sources can form the basis for reliable expert opinions, if experts in the field typically rely on such information. See Fed. R. Evid. 703; Boim v. Holy Land Found. for Relief & Dev., 549 F.3d 685, 702-04 (7th Cir. 2008) (allowing terrorism expert to use postings from websites associated with Hamas as the basis for testimony that Hamas was responsible for plaintiffs' son's death); Semerdjian v. McDougal Littell, 641 F. Supp. 2d 233, 243 (S.D.N.Y. 2009) (finding copyright expert's testimony that rested in part on the website pages from distributors of copyright images reliable). Experts within the ERP industry rely upon the internet to gather and disseminate information about the industry. Sommer Decl. ¶ 61. Thus, Sommer's sources are not inherently unreliable simply because they came from the internet. Second, Plaintiffs do not attempt to explain why the particular internet sources that Sommer reviewed are inherently unreliable, or why members of his industry would not typically rely on them. In fact, the internet sources Mr. Sommer relied upon have indicia of reliability, as the internet is likely the primary medium through which sophisticated, technology-based companies like those in the ERP support industry communicate with their customers. Indeed, with respect to internet sources, Plaintiffs seem to place a higher burden on Sommer--who has extensive background knowledge of the industry about which he opines--than their own expert, Meyer. Both Sommer and Meyer rely on internet sources. See McDonell Decl. ¶ 1, Ex. 1 (Meyer Report) at ¶ 368 fn. 695 citing ORCLX-NAV-000020 (McDonell Decl. ¶ 8, Ex. 8) and 369 fn. 700 citing ORCLX-NAV-000054 (McDonell Decl. ¶ 9, Ex. 9). Plaintiffs, however, freely offer Meyer's report (with its reliance on internet sources) while insisting that Sommer's report is invalid unless he "independently verified" each and every source. D.I. 764 (Sommer Mot.) at 18. 3. Sommer's Experience And Training Reliably Supports His Rebuttal Opinions. - 14 DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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Finally, Plaintiffs argue that Sommer's decades of experience in the ERP software industry do not support certain of his rebuttal opinions. In fact, Sommer's experience and training provide him with more than enough background knowledge to reliably render the opinions he offers. See Hangarter, 373 F.3d at 1018 (experience and training can provide sufficient foundation of reliability for expert testimony). ERP Software Purchasing Decisions. Sommer is paid by sophisticated business entities to provide them with his insights regarding customers' decisions to purchase ERP software. Yet Oracle claims that he cannot reliably render similar opinions to the Court in this case. See D.I. 764 (Sommer Mot.) at 23-25. Plaintiffs are wrong. Sommer has spent most of his career directly assisting ERP software buyers to choose the best vendor and software for their business. See Sommer Decl. ¶¶ 17-29, 65. It is crucial to his continuing viability as a consultant, author, and blogger that he remains thoroughly familiar with market drivers for ERP software and support services. See id. ¶¶ 43-44, 61, 62, 64. Indeed, even today, he continues to meet with the chief information officers of large companies to discuss their ERP software needs. See id. ¶¶ 17-28, 65. Sommer's opinion is thus well-supported by his significant, on-point experience in the ERP software industry. Switching Programs and Safe Passage. Plaintiffs further argue that even if Sommer knows what motivates buyers, he cannot reliably use that experience to opine about what does not motivate buyers. See D.I. 764 (Sommer Mot.) at 17-23. As discussed above, Sommer has extensive experience in the various factors that cause a company to choose its ERP software and support services vendor. See Sommer Decl., ¶¶ 17-29, 65. A necessary corollary of that experience is that he also has relevant experience supporting his rebuttal opinions as to what does not motivate them. In his hundreds of discussions with ERP software and support services buyers over the course of his nearly 30-year career, Sommer has not observed switching programs as being a significant factor in their software or support services choice. McDonell Decl. ¶ 2, Ex. 2 (Sommer Report) at 48-55. Sommer has observed several such programs fail and researched them to confirm his understanding. Id. He has also observed that, due to the significant capital investment in ERP software, customers are typically most concerned with the software's - 15 DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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functionality, not the relatively minimal price difference between vendors. See id. at 56. That experience amply supports his rebuttal opinions about the effectiveness of switching programs generally and Safe Passage specifically. Third-Party Support Options and Nature of Third Party Support Market. Plaintiffs also claim that Sommer has no reliable basis on which to opine about the third party support market. See D.I. 764 (Sommer Mot.) at 10-17. Sommer is paid, as a consultant, author, and blogger, to have in-depth knowledge of the ERP software industry. See Sommer Decl. ¶¶ 43-44, 62, 64. His experience includes both how his own clients use third-party support options and self-support, as well as speaking directly with third-party support vendors at trade shows and conferences. See id. ¶¶ 17-29, 36, 60, 65. His knowledge and experience directly support his rebuttal opinions on this issue. After-Market Support Decisions. Finally, Plaintiffs claim that Sommer cannot reliably testify regarding third-party support options and what might motivate a company's choice. See D.I. 764 (Sommer Mot.) at 6-10. Over the course of his career, Sommer frequently met with top executives to discuss the manner in which the client's current ERP software and support products were not meeting their needs and the reasons why those customers wanted to switch software or vendors. See Sommer Decl. ¶¶ 17-28. He needed to be familiar with after-market support options to, for example, properly advise clients regarding whether to renew their current support agreements before switching software. Id. Sommer's extensive technological knowledge of ERP software also provides him with a basis to opine that some companies use software that is so heavily modified that self-support is almost necessary. See Sommer Decl. ¶¶ 6-9; McDonell Decl. ¶ 2, Ex. 2 at 43. Moreover, Sommer has kept abreast of the after-market support market at conferences, trade shows, and as part of his authorship of an industry blog. See Sommer Decl. ¶¶ 36, 59-61. Such research, which Sommer either relied upon or considered in his report, is consistent with his opinions regarding support services decision making. See McDonell Decl. ¶¶ 10, 11, Exs. 10, 11 (articles). Sommer understands, and can reliably opine upon, customers' after market support decisions. D. Sommer's Rebuttal Opinions are Procedurally Proper - 16 DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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1.

Sommer's Opinions Are Within The Proper Scope Of Rebuttal.

Plaintiffs' complain that portions of Sommer's opinions are not proper rebuttal to Meyer's expert report. See D.I. 764 (Sommer Mot.) at 14-15. Plaintiffs argue that because "Meyer did not offer general opinions on what non-specific [ERP] customers care about or catalog purported support options generally," Sommer cannot discuss these topics either. Id. at 14. But Oracle is missing the forest for the trees. It is precisely because Meyer does not address these topics--instead assuming that no customer would switch from Oracle support services absent the alleged infringement--that Sommer's testimony on these topics is not only rebuttal, but necessary for the jury to understand the infirmities of Meyer's assumptions. Without understanding how ERP support customers choose their software and support provider, their options for support, and non-price-related reasons why they might choose to switch from Oracle, the jury is only getting half of the story from Meyer. Thus, Sommer's opinions are squarely within the realm of proper rebuttal. See Benedict v. United States, 822 F.2d 1426, 1428-29 (6th Cir. 1987) (rebuttal testimony proper where it "served the permissible rebuttal function of counteracting the testimony of the opposing expert witness"); In re REMEC Inc. Sec. Litig., 702 F.Supp. 2d 1202, 1220 (S.D. Cal. 2010) (rebuttal testimony proper where it "contradicts [the defense expert's] opinion on the same subject matter"); MMI Realty Servs., Inc. v. Westchester Surplus Lines Ins. Co., No. 07-00466 BMK, 2009 WL 649894, at *2 (D. Haw. Mar. 10, 2009) (holding that the rebuttal expert's discussion of categories and guidelines not found in affirmative report were proper to refute affirmative expert's overall analysis). Plaintiffs' procedural arguments ring hollow in light of the history of this litigation. Plaintiffs had the opportunity to contradict all of Sommer's rebuttal opinions when--at Plaintiffs' insistence--the parties' experts could provide sur-rebuttal opinion at their depositions. See McDonell Decl. ¶ 4, Ex. 4. At his deposition, however, Meyer could not refute a single fact or opinion in Sommer's report, despite repeated invitations by Defendants' counsel to do so. See id. ¶¶ 5-6, Ex. 5 (5/12/10 Meyer Tr.) at 37:21-22, 37:19-41:17, 38:18-39:3, 39:17-20, 56:23-57:15; Ex. 6 (5/14/10 Meyer Tr.) at 828:11-22, 829:12-831:8, 856:25-857:18, 934:13-19. Indeed, he had not even bothered to read it. See id. ¶ 6, Ex. 6 (5/14/10 Meyer Tr.) at 828:11-22. - 17 DEFS.' OPP. TO PLS.' MOT. NO. 2 TO EXCLUDE EXPERT TESTIMONY OF BRIAN SOMMER Case No. 07-CV-1658 PJH (EDL)

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2.

Sommer's Rebuttal Opinions Are Timely

Plaintiffs complain about a purported "late opinion" regarding the reasonableness of SAP's aspirations for the success of its Safe Passage program, but their complaint is based on a misunderstanding of the testimony that Defendants intend to offer through Sommer. D.I. (Sommer Mot.) 764 at 19-22. Plaintiffs portray the "new opinion" as some sort of scheme that Sommer hatched with Defendants' attorneys during the lunch hour of his deposition. The reality is far less interesting (and, if one actually reads the deposition transcript, infinitely more tedious). During Sommer's deposition, he repeatedly reiterated that his opinions about Safe Passage were included in his report. See McDonell Decl. ¶ 7, Ex. 7 (Sommer Tr.) at 157:21-25 ("I just don't know any other way to answer it other than the way I've answered it before. I have three main opinions about Safe Passage, and they're right here in these pages in the report."). Indeed, Sommer's opinions about Safe Passage are clearly articulated in his report. For example, a large section of his report (containing the opinions that Oracle seeks to exclude) is titled, "Safe Passage was an ineffectual ERP sales strategy." McDonell Decl. ¶ 2, Ex. 2 (Sommer Report) at 50-52. Additionally, Sommer criticized Meyer's mere recitation of the goals of Safe Passage and his failure to evaluate them. Id. Thus, Sommer's criticisms of Meyer's opinion regarding Safe Passage are that it was an ineffectual way, for three different reasons, to sell ERP software and support services, and Meyer should have critically examined SAP's goals regarding it. Id. Apparently unhappy with that response and opinion, Plaintiffs' counsel asked, in varying forms, whether Sommer was opining that it would have been unreasonable for SAP to have a goal to convert 50% of the PeopleSoft/JD Edwards customers. See McDonell Decl. ¶7, Ex. 7 (Sommer Tr.) at 130:14-159:2, 183:6-189:25. While Sommer responded that such a purported goal would be unreasonable, that does mean that he has a "new opinion." Id. at 183:6-189:25. Rather, he was simply responding to Plaintiffs' counsel's questioning. Although Sommer will testify that marketing programs generally, and Safe Passage specifically, are not particularly effective in the industry, Defendants will not offer his testimony regarding the 50% issue. Thus, this argument is moot.

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V.

CONCLUSION For the reasons stated above, the Court should deny Plaintiffs' motion.

Dated: September 9, 2010

JONES DAY By: /s/ Jason McDonell Jason McDonell Counsel for Defendants SAP AG, SAP AMERICA, INC., and TN, INC.

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