Oracle America, Inc. v. Google Inc.

Filing 165

Letter from Google re precis requesting leave to file a Daubert or Other Motion. (Sabnis, Cheryl) (Filed on 6/6/2011) Modified on 6/8/2011 (wsn, COURT STAFF).

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King & Spalding LLP 1185 Avenue of the Americas New York, New York 10036-4003 (212) 556-2100 www June 6, 2011 The Honorable William Alsup U.S. District Court, Northern District of California 450 Golden Gate Avenue San Francisco, California 94102 Re: Oracle America, Inc. v. Google Inc., No. C 10-3561 WHA Dear Judge Alsup: In accordance with Your Honor’s February 9 and June 2 Orders, Google requests leave to file a Daubert or other motion directed at the damages report of Oracle’s expert Iain Cockburn. The Court’s November 19, 2010 Case Management Order recognized that an early damages report and early Daubert motion at this stage would substantially advance the case. The order provides that, after receiving Oracle’s opening damages report, Google “must file any Daubert or other motion directed at the methodology, reliability or other defect” within fourteen days. (Dkt. No. 56 at ¶ 9 (emphasis added)). This is consistent with the recent trend, by the Federal Circuit and other courts, to exclude under Daubert speculative and arbitrary damages testimony. See, e.g., Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011); Cornell Univ. v. Hewlett-Packard Co., 2008 WL 2222189, *1 (N.D.N.Y. 2008) (Rader, J.). Cockburn opines that Google, if found to infringe, would owe Oracle Contains Confidential and Highly Confidential - Attorneys’ Eyes Only Information 561618.01 The Honorable William Alsup June 6, 2011 Page 2 Cockburn’s legal errors are fundamental and disqualifying, and allowing him to testify about his conclusions to a jury would prejudice Google. Although he purports to be calculating a reasonable royalty, he fails to offer any meaningful analysis of the Georgia-Pacific factors that would require him to separate out and define the value of the patented technology to both Google and Oracle. This “methodology” bears no resemblance to anything authorized by the law or occurring in any real-world negotiations regarding any aspect of the Java technology. First, Cockburn has no basis for including all of Google’s revenue from Android phones into the base of his royalty calculation. The accused product here is the Android software platform, which Google does not sell (and Google does not receive any payment, fee, royalty, or other remuneration for its contributions to Android). Cockburn seems to be arguing that Google’s advertising revenue from, e.g., mobile searches on Android devices should be included in the royalty base as a convoyed sale, though he never articulates or supports this justification and ignores the applicable principles under Uniloc and other cases. In fact, the value of the Android software and of Google’s ads are entirely separate: the software allows for phones to function, whether or not the user is viewing ads; and Google’s ads are viewable on any software and are not uniquely enabled by Android. Cockburn’s analysis effectively seeks disgorgement of Google’s profits even though “[t]he determination of a reasonable royalty . . . is based not on the Contains Confidential and Highly Confidential - Attorneys’ Eyes Only Information 561618.01 The Honorable William Alsup June 6, 2011 Page 3 infringer’s profit, but on the royalty to which a willing licensor and a willing licensee would have agreed at the time the infringement began.” Radio Steel & Mfg. Co. v. MTD Prods., Inc., 788 F.2d 1554, 1557 (Fed. Cir. 1986). Second, Cockburn includes Oracle’s “lost profits and opportunities” in his purported royalty base. This is an obvious ploy to avoid the more demanding test for recovery of lost profits that Oracle cannot meet. See, e.g., Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978). Most audaciously, Cockburn tries to import into his royalty base the alleged harm Sun and Oracle would have suffered from so-called “fragmentation” of Java into myriad competing standards, opining that Oracle’s damages from the Android software includes theoretical downstream harm to a wholly different Oracle product. This is not a cognizable patent damages theory, and is unsupported by any precedent or analytical reasoning. Third, after improperly inflating the base of his royalty calculation, Cockburn proceeds to apply an unprecedented fifty percent royalty rate to that base through use of improper short-cuts. In contravention of long-settled precedent, he fails to tie his royalty rate to the value of the patented technology actually at issue in this case. See, e.g., Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1333 (Fed. Cir. 2009). He treats the patents and copyrights at issue as a single, indivisible unit, casually dismissing critical differences in the patents (such as the technologies they embody and expiration dates over a decade apart) by deeming them all “essential” to Java, without pointing to any facts that could justify that conclusion. Instead of satisfying the Lucent standard, he adopts a presumption that is contrary to Lucent, stating that there is “no clear economic basis” for apportioning the total value of Android into value attributable to the patents and copyrights in suit and any additional value added by Google. Under the case law, however, Contains Confidential and Highly Confidential - Attorneys’ Eyes Only Information 561618.01 The Honorable William Alsup June 6, 2011 Page 4 damages must be tied to “the claimed invention’s footprint in the market place.”, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010) (per curiam) (emphasis added). Cockburn similarly inflates his royalty rate by calculating Oracle’s loss based on the alleged value of Java as a whole, even though the patented features are only a small part of Java. Indeed, Oracle has conceded that the claimed invention of the ‘720 patent—the only patent discussed in Cockburn’s report— Fourth, Cockburn cavalierly asserts that infringement of a single claim of a single patent would result in the same award as infringement of all of the asserted claims. The ‘720 patent, for example, , it expires nearly eight years after every other patent-in-suit. But according to Cockburn, even if Google does not infringe the ‘720 patent, the damages should still run throughout its life, which extends to 2025. Cockburn therefore tacks years during which the onto his calculation for the eight ‘720 patent would be the sole remaining patent. All these basic legal errors are essential to Cockburn’s bottom-line conclusion of royalty base and a fifty percent royalty rate. Even without considering these errors, however, Cockburn’s 50% rate is no less arbitrary than the 25% “rule of thumb” methodology the Federal Circuit recently held cannot satisfy Daubert. See Uniloc, 632 F.3d at 1315. The critical question is “whether [Cockburn] has justified the application of a general theory to the facts of the case.” Id. at 1316. He has not. Contains Confidential and Highly Confidential - Attorneys’ Eyes Only Information 561618.01

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