Oracle America, Inc. v. Google Inc.

Filing 182

Letter from Google counsel Scott T. Weingaertner dated June 6, 2011 requesting leave to file Daubert or other motion (unredacted), filed pursuant to Order Denying Motion To File Precis Under Seal entered June 16, 2011. (Baber, Bruce) (Filed on 6/17/2011)

King & Spalding LLP
1185 Avenue of the Americas
New York, New York 10036-4003
[phone]
www.kslaw.com

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 between 1.4 and
6.1 billion dollars -- a breathtaking figure that is out of proportion to any meaningful measure of
the intellectual property at issue. Even the low end of Cockburn’s range is over 10 times the
amount that Sun Microsystems, Inc. made each year for the entirety of its Java licensing program
and 20 times what Sun made for Java-based mobile licensing. Cockburn’s theory is neatly
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tailored to enable Oracle to finance nearly all of its multi-billion dollar acquisition of Sun, even
though the asserted patents and copyrights accounted for only a fraction of the value of Sun.
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. Instead, he simply adds all of Google’s revenue from advertising on all Android
devices world-wide to the purported harm to Sun’s and Oracle’s business from lost profits and
alleged “fragmentation” of the Java standard, and then proposes awarding Oracle half of that
total amount (i.e., a 50% royalty rate). 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
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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,

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damages must be tied to “the claimed invention’s footprint in the market place.” ResQNet.com,
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—is only a small piece of Java that is not even included in every
Java ME sale and is given away as a free add-on. There is simply no basis to conclude that such
a feature without any real commercial value could constitute “a substantial portion of the value”
of Java (or Android, for that matter), let alone its entire value. Lucent, 580 F.3d at 1332.
Fourth, Cockburn cavalierly asserts that infringement of a single claim of a single patent
would result in the same multi-billion dollar award as infringement of all of the asserted claims.
The ‘720 patent, for example, not only has a demonstrated commercial value of zero dollars, 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 billions of dollars onto his calculation for the eight
years during which the valueless ‘720 patent would be the sole remaining patent.
All these basic legal errors are essential to Cockburn’s bottom-line conclusion of a multibillion dollar 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.

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