Oracle Corporation et al v. SAP AG et al

Filing 853

Declaration of Elaine Wallace in Support of 851 Memorandum in Opposition, Declaration of Elaine Wallace In Support Of Defendants' Opposition To Plaintiffs' Motion No. 1 To Exclude Expert Testimony Of Stephen K. Clarke filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36)(Related document(s) 851 ) (McDonell, Jason) (Filed on 9/9/2010)

Oracle Corporation et al v. SAP AG et al

Doc. 853 Att. 2

EXHIBIT 2

Dockets.Justia.com

PAUL K. MEYER May 12, 2010 HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
Page 1
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION ORACLE CORPORATION, a Delaware corporation, ORACLE USA, INC., a Colorado corporation, and ORACLE INTERNATIONAL CORPORATION, a California corporation, ) ) ) ) ) ) ) ) Plaintiffs, ) ) vs. ) No. 07-CV-1658 (PJH) ) SAP AG, a German ) corporation, SAP AMERICA, ) INC., a Delaware ) corporation, TOMORROWNOW, ) INC., a Texas corporation, ) and DOES 1-50, inclusive, ) ) Defendants. ) ________________________________)

VIDEOTAPED DEPOSITION OF PAUL K. MEYER _________________________________ VOLUME 1; PAGES 1 - 331 WEDNESDAY, MAY 12, 2010

HIGHLY REPORTED BY:

CONFIDENTIAL - ATTORNEYS' EYES ONLY HOLLY THUMAN, CSR No. 6834, RMR, CRR (1-427362)

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15 16 17 18 19 20 21 22 23 24 25

Q.

Why wouldn't a combination of a lost

profits remedy and a disgorgement remedy measure the impact on Oracle in this case? A. From my perspective, it -- it would not be

appropriate, in these circumstances, because of the very particular facts of December and January. And

I don't have the information prior to December of 2004, but to have a circumstance where the two major competitors in a marketplace aligned side by side, and the smaller entity, Oracle, is making an acquisition in a -- in the enterprise market now to

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become more competitive with SAP, and in that process, at the same time, SAP is making business plans and acquiring resources and dedicating significant senior management to thinking along the lines of, we need now to impact Oracle's 11 billion dollar acquisition, we need to now take advantage of this situation and team up with an entity to allow us to take the next 2 or 3 years and provide this link, this service link, to then move customers off of PeopleSoft systems and enterprise systems and JDE onto the SAP platform. And because of the timing, and because of the -how quickly the TomorrowNow entity was identified, negotiated with, the deal was agreed upon, and then the announcement of the deal -- and to me, the phone call with Mr. Agassi is very -- on January 19th, I believe, is very indicative of how this was done, in a very large way to economically set back Oracle, and what it has spent of 11 billion dollars of shareholder cash. And so from my perspective, we'll never know the total impact of the planning and the orchestration and execution of SAP/Tomorrow Now's Safe Passage program. quantify that. We never will be able to

Because once it happens and there's

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a dissemination of this information about Safe Passage out to thousands of customers, and there's sales calls and there's technical calls and there's follow-up emails, and there's always things that go on, you never really fully understand the total impact about why a customer is not returning phone calls or they're not going down a certain way of upgrading, or they're not changing their service program, and Oracle will never know that. And so in many respects, after this all, from my perspective, was developed by SAP, you'll never know the true impact on Oracle. And so to

try to say that that's just measured by the customers and the lost profits, or to look at the subset of the 86 customers that remain in the infringer's profits, just don't get you there economically based on the facts of this case. And that's just how I see it from the financial perspective. MR. McDONELL: Change tape. Going off the record,

THE VIDEO OPERATOR: the time now is 12:51. of Tape 2.

This also is the conclusion

(Lunch recess from 12:51 p.m. to 1:49 p.m.)

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--o0o-AFTERNOON SESSION THE VIDEO OPERATOR: The time now is 1:49, This also Please

we are back on the videotape record.

marks the beginning of Tape 3 of Meyer. continue. MR. McDONELL: Q.

Mr. Meyer, I'm going to

start with a request of you, because we at least for now have limited time for this deposition, I've noticed that some of your answers have been quite lengthy, and, at least in my view, included information that was not necessarily responsive to the request. Could I ask you to try to listen to my questions and respond to them concisely, but completely? A. Q. I'll do my best. Okay. And I want to let you know that if

there's a pattern from this point on in which we think that your answers are going beyond the question and taking up a lot of time, we might very well have to ask the Court for additional time with you, and we prefer not to do that. MS. HOUSE: Understood?

I'm going to object, Jason. You ask a

That's completely uncalled you.

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question, he's entitled to give you a full answer. You are here 3 days, which is unprecedented. There's no way you're getting additional time, so maybe you ought to ask your questions and focus on what really matters. MR. McDONELL: Q. Okay. Mr. Meyer,

before the break, you testified that in your view the value-of-use measure damages was better than looking at lost profits and infringer's profits combined. A. Q. Do you recall that? In these circumstances, that's correct. Now, I want you to tell me as precisely as

you can why a lost-profits measure of damages in this case is not sufficient to identify the lost profits experienced by Oracle. MS. HOUSE: answered. Objection. Asked and

You say you want to continue, and yet

you go back to the same stuff that we've already done. And object to the word "sufficient." Calls for a legal conclusion. THE WITNESS: I gave you a complete answer

before the break, and I can repeat that answer, and I went into I think a lot of detail about the impact on Oracle due to the Safe Passage program,

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which from my perspective was driven by TomorrowNow, and it's well documented, the motivations of that program. And because of that, we will never know the total impact on Oracle, having spent 11 billion dollars to acquire PeopleSoft, and the very next day this program is launched. joint customers. And there's 4,000

So 4,000 of the 9,920 customers That means that SAP and

were joint customers.

PeopleSoft share that customer. And it was the intention of SAP to convert those customers, not just for service, but, more importantly, for the cross- and upsell. And we will never know the total impact of that, because you cannot undo what happened. MR. McDONELL: know the impact -MS. HOUSE: Don't interrupt him. He Q. Okay. If you'll never

wasn't done with his answer. MR. McDONELL: Well, I'm not going to just

let him go on forever when he's not really responding to the question. MS. HOUSE: characterization. MR. McDONELL: Q. My question for you is I object to that

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this, sir:

Do you believe that Oracle has

experienced lost profits as a result of the alleged actions in this cause that cannot be measured through a lost profits analysis? A. Q. I don't follow that question. Do you believe -- let me state it again. You know what lost profits are. A. Q. Yes. And you know what the -- what you contend Correct?

to be the alleged actions in this case that you are assuming caused damage. A. Q. Yes. Is it your position that Oracle Correct?

experienced lost profits as a result of the alleged actions that cannot be quantified through a lost-profits measure? A. It's my position that there's many

financial impacts on Oracle that cannot be quantified. We've done our best to quantify the

damages caused by TomorrowNow, and we've been through that. And those damages have been --

obviously impacted Oracle and the companies it acquired and those service revenues and other implications. And we've dealt with the issue of

the infringer's gains, but we will not totally know

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the total impact on Oracle because of how closely aligned the two parties were in the marketplace and the timing of this transaction with TomorrowNow. Q. Okay. What lost profits do you believe

Oracle experienced that you cannot measure with a lost profits analysis? MS. HOUSE: Objection. Q. Vague.

MR. McDONELL: A.

Are there any, sir?

You say what -- I said, I quantified the Are you asking

lost profits due to TomorrowNow. about something other than that? Q. So let me move on.

So you have quantified the lost profits that you believe Oracle experienced as a result of the alleged actions. A. Right?

That were caused by the TomorrowNow

servicing, I've quantified that. Q. Have you also quantified the infringer's

profits to the defendants in this case? A. As best as can be done in the

circumstances, being that the 86 customers were identified by SAP. And we've worked with that

data, we've responded to Mr. Clarke's analysis at a preliminary level, but we have a calculation of those infringer profits now, we have that

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information, so we have addressed that. Q. Okay. Are there any infringer's profits

that you believe are attributable to the alleged actions in this case that you have not been able to measure? A. And see, when you get into those

situations, we don't have visibility into every specific relationship at SAP across the 4,000 customers. There's 4,000 joint customers, as Mr. Agassi informed the market on January 19th, 2005. And the intention, and he says in that phone And we

call, was to convert all of those 4,000.

don't have visibility into every single situation that involves those customers to see if those customers -- how they would have related to Oracle in some other fashion. We just don't have that

information, and it's not something we can quantify. Q. So if you can't quantify it, then you'd

have to speculate, wouldn't you, to know -- to determine whether or not there are such effects. Isn't that right? A. No, it's not speculation. You're not

listening -- let me finish.

You cut me off all

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day. We know, particularly in January 2005, the senior management at SAP have gone out and chronicled, of the 9,920 customers at PeopleSoft, they believed that 4,000 are joint customers. they can basically go in with this TomorrowNow vehicle and do tremendous economic transition with having this Safe Passage program. And we don't have visibility into all 4,000 customers to see what else would have happened to Oracle when we know Oracle just went out and spent 11 billion dollars acquiring basically 10,000 customer accounts that were protected by intellectual property and had no idea that they would be seeing in the next day a tremendous impact, not just on their potential revenues, the ability to invest in future R&D, but impacts on also the ability to keep the JDE and PeopleSoft employees, you know, busy and productive, because there's a disruption that occurs. And that's not quantifiable. And that's And

what I mentioned was the reason why the fair market value of the license was a much better measure. That's why I said it.

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Q.

Okay.

If the damage you just referred to

is unquantifiable, then what makes you think that using a license, a hypothetical license approach for it, is going to quantify it without speculation? A. You can do that, because you can look at

the financial and economic licensing parameters that I've been -- examined in detail, you can do that in January of 2005, and you can match it up with the infringing activities. And I've been provided the scope of the infringement. I get to look at that in January

2005, match it up to those financial and economic projections and plans at that point in time, and you can do that analysis. That's what I've been

doing for 20 years, when I've analyzed intellectual property value. That's a much more focused and

defined thing that you can do in analysis than trying to understand all these other impacts. So you asked what my opinions were on the best form of damages, actual damages, and I gave it to you. I gave it to you as clearly as I can, and

you don't like the answer, and you just want to argue about it. Q. Okay. How does that measure of this

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hypothetical license for these effects that you say are unquantifiable, how does it measure the actual damage to Oracle? A. What it does, it allows to you look at the Oracle has made the

other economic side of it. investment.

And the investment in the company like

PeopleSoft is not really an investment at all in tangible assets. In fact, almost 90 percent of

their assets are intangible assets, because it's a company that's built on intellectual property, built on licensing, and built on servicing. So when you go out and spend those kinds of resources, 11 billion dollars to buy a company like that, you're basically saying, I'm going to pay well over the value of the intangible assets, the hard assets, because I understand how this business works. And Oracle was very successful in

understanding the model of licensing and having great licenses on great software, and how then to keep customers safe and comfortable through the servicing model. That's what they did do, and that's what -- they invested 11 billion dollars doing that. And that expenditure was impacted

significantly in January 2005.

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And so that's why you have to look at it at that point in time. That's the real analysis,

and we have metrics to do it at that point in time. Q. So you have measured the alleged lost

profits relating to the 358 TomorrowNow customers. Correct? A. Q. That's been measured. You've also measured the alleged

infringer's profits relating both to those -- well, relating to those customers as well. A. correct. Q. A. Q. Which is the up to 86 of those customers? The 86 list, that's correct. So I'm going to ask you one more time. What lost profits do you contend that Oracle experienced that you were unable to measure? MS. HOUSE: times. THE WITNESS: answer on that already. MR. McDONELL: you one more time. What infringer's profits do you contend you've been unable to answer? Q. Okay. I'm going to ask I believe I provided my best Asked and answered now three Correct?

To a subset of those customers, that's

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MS. HOUSE:

Same thing.

Now asked and

answered now multiple times, Jason. THE WITNESS: I mentioned a moment ago on

the infringer's profits, we don't have visibility into the 4,000 joint customer accounts to understand fully all the benefits that have been realized by SAP. information. We just don't have that

It would be SAP and all those

customers and how they relate to SAP and how they related to PeopleSoft or JDE. That's just a whole 'nother part of SAP's business, so that's beyond what we have.

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MR. McDONELL:

Q.

Okay.

Why do you think

the hypothetical license approach is the best? A. Because basically, in Factor 15, you get

to look back at what you did in the first 14 factors or 13 factors, and you get to also address market and income and cost in those approaches and techniques in the entire analysis. And so in some respects, you get the benefits of all that to figure out the value of the copyrighted materials that are in suit here.

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