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Oracle v. Google - And Oracle responds on the Cockburn Damages Report and the Lindholm email
Friday, September 23 2011 @ 11:05 AM EDT

Yesterday we discussed the Google requests to suppress portions of the revised Cockburn Damages Report submitted by Oracle and to preserve the Attorney's Eyes Only status of the Lindholm emails. Now Oracle has responded to each of those requests.

Cockburn Damages Report

Oracle submitted a letter asking that Google's request to file a "Daubert" motion with respect to the Cockburn Damages Report be denied. 452 [PDF] This letter is interesting because, for what appears to be the first time, Oracle is ratcheting back what others (and Google) have interpreted as damages claims running to more than $6 billion. Oracle says Google (and for that matter, others) is misinterpreting the numbers Dr. Cockburn is providing, particularly with respect to copyright. Based on this letter one can deduce that the maximum past damages for both copyright and patent infringement that Oracle is seeking is, at the high end, no more than $1 billion, and in all likelihood it would be something less. Much of this reduction appears to be on the patent side of the equation, where the table in the letter shows total damages of no more than $202 million under the License Method of determining damages. Keep in mind that Oracle has the right to (and, in fact, does) provide multiple bases for determining damages.



As Oracle points out, Google has focused on the Google gross revenue numbers that Dr. Cockburn identified as forming the basis for determining copyright damages, not the actual damages. As Oracle also points out, Google has the right (and burden) of showing that the damages base is, in fact, lower than this amount.

The statute provides: “[T]he copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove deductible expenses and the elements of profit attributable to factors other than the copyrighted work.” 17 U.S.C § 504(b).
What Oracle has not responded to in this letter are Google's assertions that Dr. Cockburn did not comply with the Order governing the damages report in several respects:
He fails to “take into account the varying expiration dates of the asserted patent claims,” as this Court ordered. Order at 11. He also ignores the law and the Order, id. at 6-7, opining that future damages should be based on a hypothetical negotiation after the jury verdict.

Fourth, Cockburn ignores this Court’s Order by omitting a claim-by-claim analysis of the date of first infringement, or apportioning patent damages accordingly. Order at 7.

Whether that is enough to persuade the judge to allow Google's proposed Daubert motion remains to be seen.

One other point. Oracle makes clear that it will be pushing for injunctive relief if, for no other reason, than to increase the likely value of any go-forward license to Google.

Oracle intends to strenuously pursue injunctive relief to resolve the key issue in this case: whether Google can use Oracle’s intellectual property to create an incompatible clone of Java and thereby undermine Oracle’s and many others’ investments in “write once, run anywhere.”


Lindholm Emails

The fight to which Oracle addresses this letter 453 [PDF] is not with Google's motion for relief from Magistrate Ryu's order finding the emails to be non-privileged, it is with Google's separate request to file a motion to preserve the Lindholm emails as Attorney's Eyes Only under the protective order (See 449 [PDF]).

There is a certain Alice in Wonderland aspect about this argument. The Lindholm emails have been made public, in fact widely so. Whether that was done rightfully, as argued by Oracle

Google waived any claim to confidentiality by failing to object when Oracle, consistent with the Protective Order, stated that it was about to disclose Google’s confidential information at two July 21, 2011 hearings; when the Court stated, “[i]f Google has a memo in their file saying, we are about to willfully infringe, there is no way I’m going to keep that secret from the public or the investing public,” (7/21/2011 Daubert Hearing at 19:10-12); when Oracle quoted from the Documents at the two July 21 hearings; and when the Court read portions of the Lindholm Documents into public record and subsequently quoted them in its Daubert Order. In fact, not only did Google’s counsel not object when given the opportunity to do so, but Google’s counsel waived any objection by arguing the substance of the Lindholm Documents at both hearings.

. . .

Oracle’s counsel stated clearly and on the record that he did not wish to disclose Google’s confidential documents in open court. The Court expressly authorized him to do so. (7/21/2011 Daubert Hearing at 19:14.) Google made no objection.

or wrongfully, as Google asserts
Finally, it is no answer for Oracle to say that the Lindholm emails should lose their AEO designation because they were discussed publicly in court and subsequently in the media. That was not Google’s doing. As Google has mentioned repeatedly, Oracle was able to discuss one of the Lindholm emails during the July 21, 2011 hearings only because it violated the protective order by failing to give Google the required prior notice that it planned to use that email at those hearings. Had Oracle given the proper notice, Google would have had the opportunity to investigate and to inform Oracle that the email was inadvertently produced prior to the hearing, thus avoiding the disclosure and ensuing media coverage. For Oracle to use the inevitable result of its protective order violation to justify full public disclosure is unreasonable.
is for the court to determine. To this point the court has certainly allowed the emails to be discussed. And it is a bit hard to imagine that this genie can be stuffed back into the bottle. One thing we believe is certain here: Boies Schiller's hands are not entirely clean when it comes to how the emails became public. The emails are widely known publicly now because Boies Schiller made them widely known.



*************

Docket

452 – Filed and Effective: 09/22/2011
Letter
Document Text: Letter from Steven C. Holtzman Oracle's Response to Google's Letter Precis. (Holtzman, Steven) (Filed on 9/22/2011) (Entered: 09/22/2011)

453 – Filed and Effective: 09/22/2011
Letter
Document Text: Letter from Alanna Rutherford Oracle's Response to Google's Letter Precis. (Rutherford, Alanna) (Filed on 9/22/2011) (Entered: 09/22/2011)


**************

Documents

452

Boies, Schiller & Flexner LLP letterhead

September 22, 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:

Google’s request to file a Daubert motion rests on mischaracterizations of Prof. Cockburn’s report, this Court’s orders, and the law of damages. It should be denied.

Following both Georgia-Pacific and the Court’s guidance, Prof. Cockburn offers the following damages estimates:

Google’s complaint about the amount of damages mistakenly focuses on the gross revenues in the infringer’s-profits figure. This is a complaint about the copyright statute, not Prof. Cockburn. The statute provides: “[T]he copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove deductible expenses and the elements of profit attributable to factors other than the copyrighted work.” 17 U.S.C § 504(b). Prof. Cockburn properly follows this approach, noting that if Google argues that Android gross revenues are attributable to other factors, he may be asked to respond. Google thus mischaracterizes both the $823.9 million figure and the “$1.2 billion for future unjust enrichment damages for 2012 alone.” Although the latter figure certainly illustrates some of the enormous profits enabled by Google’s infringement, it is not part of Prof. Cockburn’s damages estimates.

Google’s complaints about Prof. Cockburn’s hypothetical-license analyses are meritless.

First, Google asserts that a copyright hypothetical license should be limited to the terms of the “starting point” because the parties (so Google says) would not have negotiated an incompatible license. Google is wrong. Adding what Sun expected to earn from a compatible

The Honorable William Alsup
September 22, 2011
Page 2 of 3

Android, but lost when Google infringed the copyrights and fragmented Java, is consistent with Ninth Circuit law, Polar Bear Prods., Inc. v. Timex Corp.Oracle USA, Inc. v. SAP AG, No. C07-1658 PJH, at Dkt. No. 1088, and Georgia-Pacific. Google’s “one price fits all” approach reverts to the “Soviet-style negotiation” that the Court has already rejected.

Contrary to Google’s claim that the upward adjustment “has no record support” and is based on a “single . . . Sun presentation,” the adjustment is supported by a wealth of evidence, including Google documents contemplating that Sun would provide a commercial implementation of Android. Both economics and Georgia-Pacific support accounting for expected convoyed sales that the infringing implementation eliminated. Google says “there is no evidence Sun would have been able to establish a viable business to exploit Android” and “it never did so in reality,” but the first is false and the second is a tautology: the reason Sun never did so was that the incompatibility of Android eliminated the business case.

As Prof. Cockburn explains, using the Sun business model presentation to quantify the adjustment is conservative because both Google documents and other Sun documents show that the model’s projections omit significant revenue streams that Sun anticipated would “dwarf” what that model included. Google complains that the adjustment fails under the Panduit lostprofits test, but the Panduit factors do not apply to hypothetical-license analysis. To the contrary, the Georgia-Pacific analysis “depends” on “the anticipated amount of profits that the prospective licensor reasonably thinks he would lose.” 318 F.Supp. 1116, 1121 (S.D.N.Y. 1970).

Google’s accusation that the upward adjustment involves “double counting” is false for the same reason. The “starting point” license included a royalty (to replace losses to Sun’s Java ME licensing business) and an opportunity for Sun to earn revenue on top of Android. Because the infringement eliminated both, it is not double counting to account for both in the hypothetical royalty – the former in the “starting point” amount, the latter in the upward adjustment.

Second, Google complains about Prof. Cockburn’s opinion that 30% of the “starting point” and the upward adjustment should be apportioned to the seven patents-in-suit. Prof.

The Honorable William Alsup
September 22, 2011
Page 3 of 3

Cockburn’s apportionment analysis rests on technical benchmarking analyses, contemporaneous Google evidence about the importance of speed and memory, and two separate analyses of actual consumer demand for the precise functionality the patents-in-suit provide. Google’s précis neither mentions nor critiques any of that analysis. It just asserts that the result – 30% of the starting point – must be too high. Google’s ipse dixit is not grounds for a Daubert motion.

Third, Google complains that Prof. Cockburn does not “provide a firm calculation of future damages.” The Court directed that past and future royalties not be mixed by advancing royalties in a lump-sum payment. Prof. Cockburn complied. Oracle intends to strenuously pursue injunctive relief to resolve the key issue in this case: whether Google can use Oracle’s intellectual property to create an incompatible clone of Java and thereby undermine Oracle’s and many others’ investments in “write once, run anywhere.” If future royalties are applied, it is well established that they should be based on a separate, post-verdict assessment. See, e.g., Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1314-15 (Fed. Cir. 2007); Boston Scientific Corp. v. Johnson & Johnson, No. C 02-0790 SI, 2009 WL 975424 (N.D. Cal. Apr. 9, 2009).

Fourth, Google summarily complains that Prof. Cockburn does not provide a “claim-byclaim analysis of the date of first infringement.” In fact, Prof. Cockburn notes that the dates of first infringement for each patent range from mid-2006 to mid-2007, and adopts the earliest date (most favorable to Google) as the date of the hypothetical negotiation. Selecting a different date anywhere in that range would have zero effect on the royalty calculation.

When Google complained about Prof. Cockburn’s report last week, the Court responded: “[I]f you want to bring a motion to knock [Oracle’s new damages study] out, that should be one of your motions in limine.” (9/15/2011 Tr. at 67:3-7.) Google’s month-in-advance request to file a Daubert motion addressing predicted rebuttal opinions that have not even been offered is a calculated attempt to evade the Court’s limit on the number of its in limine motions. None of its current arguments warrant an additional Daubert motion.

Sincerely,

/s/ Steven C. Holtzman


453

Boies, Schiller & Flexner LLP letterhead

September 22, 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:

After thrice refusing to meet and confer about the issue, Google asks the Court to permit it to designate the Lindholm Documents as “Highly Confidential – Attorneys’ Eyes Only”, despite the fact that the Documents have been read in open court; despite the fact that whole paragraphs of the Document have been reprinted in the press; and, significantly, despite the fact that the Lindholm Documents simply do not meet the criteria for such protection.

As Google acknowledges, “the purpose of the AEO designation is to shield from public disclosure material that is not privileged, but which nonetheless ‘would create a substantial risk of serious harm that could not be avoided by less restrictive means’ if disclosed publicly.” (Dkt. No. 449 at 2.) The Lindholm Documents do not fall into that category. Although Google claims for the first time that the Lindholm Documents are “competitively sensitive” and somehow reveal Google’s litigation strategy (id. at 1–2), this argument mischaracterizes the Documents. The Documents on their face make no mention of litigation. The Documents also do not reveal any current sensitive business information. What the documents do reveal is a disclosure of a strategy, which has already been made public, and which has no bearing on any matter other than this lawsuit. Indeed, the only party that had any interest in the substance of the Lindholm Documents is Oracle, and Oracle has the Documents through discovery.

Moreover, the AEO designation serves no practical purpose, as the substance of the Documents has already been published by the Court in its Orders and in three hearing records. Google waived any claim to confidentiality by failing to object when Oracle, consistent with the Protective Order, stated that it was about to disclose Google’s confidential information at two

Honorable William Alsup
September 22, 2011
Page 2 of 3

July 21, 2011 hearings; when the Court stated, “[i]f Google has a memo in their file saying, we are about to willfully infringe, there is no way I’m going to keep that secret from the public or the investing public,” (7/21/2011 Daubert Hearing at 19:10-12); when Oracle quoted from the Documents at the two July 21 hearings; and when the Court read portions of the Lindholm Documents into public record and subsequently quoted them in its Daubert Order. In fact, not only did Google’s counsel not object when given the opportunity to do so, but Google’s counsel waived any objection by arguing the substance of the Lindholm Documents at both hearings. The Court has three times denied Google’s subsequent requests to seal and redact portions of the public transcript and Order which reference the substance of the Lindholm Documents. (Dkt. Nos. 255, 271, 355.)

Google’s repeated attempts to escape responsibility for its failure to object by alleging that Oracle failed to comply with the Protective Order are meritless. Oracle’s counsel stated clearly and on the record that he did not wish to disclose Google’s confidential documents in open court. The Court expressly authorized him to do so. (7/21/2011 Daubert Hearing at 19:14.) Google made no objection.

Google mistakenly asserts that Oracle has not accepted Google’s invitation to engage in a voice-to-voice meet and confer. In fact, it is Google that has consistently refused to accept Oracle’s invitation. Oracle asked Google to meet and confer regarding the confidentiality designations for several deposition transcripts and the Lindholm Documents. The King & Spalding team that initially engaged in these discussions stated that Google’s other law firm, Keker & Van Nest, would handle Oracle’s request regarding the Lindholm Documents. Mr. Daniel Purcell, who was identified as the Keker & Van Nest partner responsible for the discussion, did not attend the call. Oracle confirmed its position on the Lindholm Documents in writing to Mr. Weingartner on that same day. After several follow-ups, Mr. Purcell asked Oracle to again set forth its position in writing; Oracle complied, and informed Mr. Purcell that Oracle’s counsel would be available for a meet-and-confer at his convenience. Rather than participating

Honorable William Alsup
September 22, 2011
Page 3 of 3

in such a meet and confer, or even responding to Oracle’s offer, Google, without once speaking to any of Oracle’s counsel, declared that “we’re at an impasse,” and filed Google’s précis.

Finally, as noted in the correspondence with Mr. Purcell, while Oracle believes that the Lindholm Documents are public and should receive no confidentiality designation, Oracle proposed that as a compromise, pending the resolution of yet another Google attempt to classify the Documents as privileged, that the Lindholm Documents should be labeled Confidential instead of Highly Confidential. The distinction is important. Our client, like millions around the world, has read about the Lindholm Documents in the press; yet Oracle’s counsel is currently prohibited from discussing with, much less showing, Oracle executives the Documents themselves. Oracle has also requested that the “PRIVILEGED & CONFIDENTIAL” footer, which Google added to each of the recently reproduced Lindholm Documents, be removed, to avoid misleading the jury should those documents be shown at trial. Rather than discussing these compromises, Google bypassed every required procedure, refused to meet and confer, and filed its letter précis.

In sum, Google’s précis is an empty effort to squeeze these Documents into the mold of a “trade secret” or other “extremely sensitive” information to support its efforts to maintain AEO designation. Oracle respectfully requests that the Court decline Google’s invitation to entertain its meritless motion.

Respectfully submitted,

/s/ Alanna Rutherford



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