Oracle Corporation et al v. SAP AG et al

Filing 1171

FINAL PRETRIAL ORDER. Signed by Judge Hamilton on 5/29/2012. (pjhlc1, COURT STAFF) (Filed on 5/29/2012)

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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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ORACLE INTERNATIONAL
CORPORATION,

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Plaintiff,

No. C 07-1658 PJH

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v.

FINAL PRETRIAL ORDER

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SAP AG, et al.,
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Defendants.
___________________________________/

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Pursuant to Rule 16(e) of the Federal Rules of Civil Procedure, this final pretrial
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order is hereby entered and shall control the course of the trial unless modified by a
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subsequent order. The joint pretrial statement of the parties is incorporated herein except
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as modified by the court's ruling on the pretrial motions and objections.
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I.

MOTIONS IN LIMINE

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1.

Plaintiff’s Motion in Limine No. 1 to exclude “customer behavior” testimony by

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SAP’s damages expert Stephen Clarke is DENIED. The court previously found Mr. Clarke
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sufficiently qualified to offer testimony in this area, and also found that most of plaintiff’s
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arguments went to either the weight of the opinions or to the actual merits of the opinions or
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conclusions.
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2.

Plaintiff’s Motion in Limine No. 2 to exclude testimony by SAP’s expert

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Stephen Clarke regarding his “market study” of third-party support material is DENIED.
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The court previously found Mr. Clarke qualified to offer testimony in this area, and to the
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extent plaintiff objects to the reliability of his conclusions, it may cross-examine on them.
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3.

Plaintiff’s Motion in Limine No. 3 to exclude what it believes to be inadmissible

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hearsay evidence is GRANTED in part and DENIED in part. With regard to the motion to
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exclude testimony by SAP’s expert Stephen Clarke based on hearsay evidence, the court

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will permit Mr. Clarke to testify as to his opinions formed even if based on hearsay, but will

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not permit him to testify as to particular out-of-court statements made by particular Oracle

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customers unless the statements fall within one of the hearsay exceptions. The same rule

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will apply with regard to the testimony of Oracle’s expert Paul Meyer. In addition, hearsay

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documents may be used during cross-examination by either side if the expert has at all

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considered them, even if he did not ultimately rely on them in forming his opinion and

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preparing his report.

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4.

Plaintiff’s Motion in Limine No. 4 to exclude testimony by SAP’s expert

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Stephen Clarke based on late-filed customer declarations is DENIED. The court previously

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allowed this testimony during the first trial, although the court also ruled then as it does now

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that the declarations themselves will not be admitted as evidence.

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5.

Plaintiff’s Motion in Limine No. 5 to exclude testimony by SAP’s expert

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Stephen Clarke regarding a calculation of infringer’s profits that includes a deduction of

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expenses from defendants’ revenues is DENIED. Plaintiff argues that because the

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infringement was willful, infringer’s profits should be equal to gross revenues, and that

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defendants should not be permitted to offset any of their gross revenues by subtracting

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expenses. However, the court finds no support for this proposition.

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The language of 17 U.S.C. § 504(b) does not support a rule that overhead expenses

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cannot be deducted from gross revenues to arrive at profits where the infringement was

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deliberate or willful. Section 504(b) provides that “[i]n establishing the infringer’s profits, the

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copyright owner is required to present proof only of the infringer’s gross revenue, and the

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infringer is required to prove his or her deductible expenses and the elements of profit

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attributable to factors other than the copyrighted work.”

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There is no mention of willful infringement in § 504(b) – only in § 504(c) – which

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relates to statutory damages. The language of § 504(c) shows that where Congress

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intended to punish willful infringement by authorizing different remedies depending on the

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defendant’s culpability, it clearly knew how to do so. Section 504(b) makes no distinction
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between willful and innocent infringers.
In addition, while the Ninth Circuit’s Model Instruction 17.27 may be considered a

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guide, the Ninth Circuit does not adopt the Model Instructions as authoritative statements of

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the law. Dang v. Cross 422 F.3d 800, 805 (9th Cir. 2005). Even less should a “Comment”

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to a Model Instruction be considered an authoritative statement of the law.

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Moreover, Model Instruction 17.27 is clearly labeled, “Copyright – Damages - Willful

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Infringement” under 17 U.S.C. § 504(c)(2), which relates to statutory damages which are

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not sought by plaintiff here. It is Model Instruction 17.24, “Copyright – Damages –

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Defendant’s Profits” which relates to the measure of damages under 17 U.S.C. § 504(b)

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which are sought by plaintiff here. Tellingly, there is no Model Instruction that sets forth the

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standard plaintiff urges the court to adopt.

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Nor does the Ninth Circuit’s decision in Kamar Int’l v. Russ Berrie and Co., 752 F.2d

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1326, 1331-31 (9th Cir. 1984), which is cited in the Comment to Model Instruction 17.27,

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clearly support the statement in the Comment that defendants’ expenses are generally

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“denied where the defendant’s infringement is willful or deliberate,” since the court in Kamar

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had previously determined that the defendant was not a willful infringer.

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To the extent that the parties dispute which categories of expenses can be deducted

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(assuming defendants meet their burden of proof), that is a matter for the court, not the

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jury, to decide.

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6.

Defendants’ Motion in Limine No. 1 to exclude evidence and argument

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regarding new claims relating to lost profits and infringer’s profits is GRANTED in part and

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DENIED in part. The motion to preclude plaintiffs from reversing their approach to

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deductible expenses in connection with the infringer’s profits claim is GRANTED, for the

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reasons set forth above with regard to plaintiff’s Motion in Limine No. 5.

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The motion to exclude testimony and other evidence regarding the calculation of

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ongoing support/maintenance revenues (after 2008) up to the time of trial, and regarding

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the increased profit margin percentage applicable to the added revenue, is DENIED. The

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court is not persuaded that judicial estoppel applies under these facts; and finds further that
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the supplemental or updated report of Oracle’s expert Paul Meyer is not untimely given that

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the bulk of the claimed damages were not incurred until after the discovery deadlines

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preceding the first trial. Thus, it would be unfair to disallow this evidence, subject to

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plaintiff’s establishing that the claimed damages flow from the pre-2008 infringement. In

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addition, however, both sides shall make their experts available before trial for further short

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depositions on this issue and there shall be full disclosure of the claimed damages and any

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defense thereto.

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Defendants’ Motion in Limine No. 2 to exclude evidence previously offered

solely to support excluded damages theories is DENIED in part and DEFERRED in part.

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The question whether plaintiff may offer evidence to support the theory of hypothetical

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license damages (including up-sell and cross-sell and saved development costs) has been

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resolved by the court, most recently in the ruling on plaintiff’s motion for clarification.

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Defendants have provided examples of evidence relating to “license factors,” “risk

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acceptance,” “expected financial gains,” and the “risk to plaintiffs’ investment.” However,

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because defendants have not sufficiently identified the particular items of evidence they

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seek to have excluded, and because plaintiff argues that some of the evidence may well be

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relevant to causation, the court is unable to rule on this part of the motion, and defers

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further consideration until the further conference to be held on June 8, 2012.

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8.

Defendants’ Motion in Limine No. 3 to exclude evidence and argument

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regarding TomorrowNow’s criminal conviction is GRANTED. Any evidence of willfulness

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that would be reflected by the guilty plea or conviction is irrelevant to any issue being tried

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in the case in light of defendants’ stipulation to liability. In addition, this evidence may not

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be used for impeachment purposes pursuant to Federal Rule of Evidence 609 to impeach

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the testimony of defendants’ witnesses, as it was the corporation TomorrowNow that pled

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guilty, not any of the individual executives employed by defendants SAP AG, SAP America,

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Inc., or TomorrowNow. The corporate conviction has no bearing on the credibility of any

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individual witness who may be employed by a defendant and no individual witness has

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been him or herself convicted, such that their own conviction might be employed for
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impeachment. Moreover, unlike the situation in Hickson Corp. v. Norfolk S. Ry. Co., 227

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F.Supp. 2d 903, 907 (E.D. Tenn. 2002), liability in this case has been conceded, and is

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therefore not an issue to be decided by the jury.

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9.

Defendants’ Motion in Limine No. 4 to prohibit plaintiff from referring during

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the trial to “theft” or “stealing” of software by defendants is GRANTED. Defendants have

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stipulated to liability for copyright infringement, and the jury will be so advised. Balancing

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the potential for prejudice and the value to plaintiff of characterizing defendants’ conduct as

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theft, the court concludes that the use of the words “theft” or “stealing” would be

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inflammatory and would likely be unduly prejudicial to defendants, and is furthermore

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unnecessary given defendants’ stipulation to liability. Moreover, the use of words

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associated with criminal conduct could potentially confuse the jury about the nature of this

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case and what they will be asked to find. Plaintiff may argue that defendants “copied,”

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“took,” or “used” the software “without authorization,” but may not characterize defendants’

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conduct as “theft” or “stealing.”

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II.

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DISCOVERY EXCERPTS
The parties shall meet and confer and submit a joint set of deposition transcripts as

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soon as possible, but no later than June 13, 2012 for the court’s ruling on objections.

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III.

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EXHIBITS
No limit will be set for the number of trial exhibits which need not be brought to the

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court until the commencement of trial. To the extent possible the court will rule on

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objections to certain exhibits at a further pretrial conference on June 8, 2012 at 9:00 a.m.

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The parties shall first meet and confer and shall try to confine their objections to categories

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or representative documents, as it is not likely that the court will have an opportunity to

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resolve each and every objection to each and every exhibit before trial. The parties may

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also submit further briefing on the two evidentiary issues discussed at the conference – the

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other portions of the At-Risk report not addressed during the first trial and the evidence

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defendants believe is irrelevant to the remaining theory of damages. Briefing should be

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complete no later than June 5, 2012.
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IV.

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VOIR DIRE
The parties have submitted a joint jury questionnaire in lieu of questions to be

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incorporated into the court’s general voir dire questions. The court agrees that the

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questionnaire will be more efficient and given that it incorporates most, if not all, of the

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standard questions, only follow up questions will be needed. The court will endeavor to

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have the questionnaires completed by the jury panel on Friday June 15, 2012, so that they

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may be reviewed over the weekend. The parties shall supply a joint witness list to

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comprise the missing attachment “A” to the questionnaire, no later than June 13, 2012.

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V.

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JURY INSTRUCTIONS
The parties shall meet and confer and submit a joint set of jury instructions revised

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to reflect the court’s rulings on the motions in limine, other pretrial motions and the

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discussion at the pretrial conference, no later than June 13, 2012.

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VI.

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VERDICT FORMS
The parties shall submit a revised joint verdict form, or if unable to agree, separate

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forms, no later than the first day of trial.

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VII.

TRIAL SCHEDULE AND TIME LIMITS

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Trial is scheduled to commence on Monday June 18, 2012. Plaintiff’s request for

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additional trial days is granted and three weeks instead of two weeks will be available for

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trial. The time will be divided equally between the two sides. As per the February 28, 2012

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pretrial order, should Mr. Boies’ trial in the Southern District of New York go forward on

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June 4, 2012, and should plaintiff not elect to go forward with the other lawyers assigned to

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this case, the June 18, 2012 date for trial will be vacated and this trial will trail, on four

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weeks’ notice, both the conclusion of the New York trial and the other trials on this court’s

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calendar. The parties are advised, however, that a three-week trial is significantly more

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difficult to find an opening for than is a one- or two-week trial.

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IT IS SO ORDERED.
Dated: May 29, 2012
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PHYLLIS J. HAMILTON
United States District Judge

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