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Oracle v. Google - Google Loses Lindholm Email Battle
Monday, October 24 2011 @ 02:20 PM EDT

Google has lost its battle to assert privilege over the Lindholm emails and to maintain them as confidential. In a thorough review of the facts and law, Judge Alsup found little support for Google's arguments that the email was, in fact, prepared at the request of in-house counsel and for their benefit. (546 [PDF; Text])

Both the magistrate and, now, Judge Alsup found “[n]othing in the content of the email indicates that Lindholm prepared it in anticipation of litigation or to further the provision of legal advice.” The only evidence Google gave to the contrary was the marking of the final email as privileged, and that is not enough under the law. The court is required to also consider the content, and here the content appears to not support the basic premise:

Attorney Work Product
Google Confidential

Hi Andy,

This is a short pre-read for the call at 12:30. In Dan’s earlier email we didn’t give you a lot of context, looking for the visceral reaction that we got.

What we’ve actually been asked to do (by Larry and Sergei) is to investigate what technical alternatives exist to Java for Android and Chrome. We’ve been over a bunch of these, and think they all suck. We conclude that we need to negotiate a license for Java under the terms we need.

That said, Alan Eustace said that the threat of moving off Java hit Safra Katz hard. We think there is value in the negotiation to put forward our most credible alternative, the goal being to get better terms and price for Java.

It looks to us that Obj-C provides the most credible alternative in this context, which should not be confused with us thinking we should make the change. What we’re looking for from you is the reasons why you hate this idea, whether you think it’s a nonstarter for negotiation purposes, and whether you think there’s anything we’ve missed in our understanding of the option.

-- Tim and Dan

While the email included at least one attorney among its email addressees, the content of the email itself was addressed to a non-attorney. The email doesn't address itself to legal advice and it never mentions the threat of or actual litigation.

So now Google will have to face this email as it is presented into evidence. The email by itself is likely not conclusive of willful infringement, but it will open the avenue for Oracle to explore just how early Google may have anticipated either a patent or copyright issue with respect to Java. Of course, whether willfulness ever comes into play is subject to underlying proof of actual infringement, but the existence of this email certainly makes the path a bit bumpy if Oracle is able to prove infringement.

Google also filed a supplemental brief in support of its motion to strike portions of the Cockburn damages report. (549 [PDF; Text]). Unfortunately, so much of the brief has been redacted it is difficult to really appreciate the full support that may exist for Google's arguments. However, Google does make some cogent arguments.

For one, Google argues that Dr. Cockburn either ignores or misunderstands the earlier discussions between Google and Sun and what was to be included in the proposed relationship:

Dr. Cockburn admits Google would have received many other things in exchange for that money beside the patents and copyrights at issue here—including a full license to thousands of Sun patents, the right to use numerous Sun copyrights (including Sun's copyrighted source code to its Java ME platform), the ability to stamp its products with Sun's JAVA trademark, and access to Sun's engineers and their many years of expertise in developing Java-based technologies. But Dr. Cockburn admits he has no specific information about anything Google would have received under the partnership other than the patents and copyrights at issue, and has made no attempt to value any of those other components. Because he has no sense of those other components or their values, he cannot "identify a reliable factual basis" for calculating the percentage of the whole attributable to the patents and copyrights.
Consequently, Google believes the value that Cockburn places on the asserted patents is far too high and has no basis in fact. This lack of factual basis (the same sort of argument we see Oracle asserting against Google's experts, see the Oracle motion below) resonates throughout the supplemental brief.

Likely the most important of the Google motions filed last Friday is Google's motion to set the date for notice of patent infringement as 2010. (552 [PDF; Text]) Of course, Oracle wants to set that date as early as possible (Oracle sets it as 2007) in order to recover past damages. Google's argument is that the notice didn't really arrive until Oracle actual threatened the lawsuit in 2010. Google's argument hinges on the fact that among the claims Oracle has chosen to assert are apparatus claims, and that Oracle has admitted those claims have been practiced in devices either produced by Oracle (remember, Sun-now-Oracle produces hardware) or Oracle's licenses. According to Google, the law requires actual notice in the form of patent marking where apparatus claims are practiced and where such claims are asserted even if their are method claims that do not require such marking. Success on this argument by Google could blunt much of any effect of the Lindholm emails being introduced because the past damages, which would constitute the base for calculating willful infringement damages, would be virtually non-existent.

The final Google filing last Friday was its motion to strike the Serwin "rebuttal" report that attacks reply reports of Google experts (Leonard and Cox) to the Cockburn damages report. (554 [PDF; Text]) The heart of this concern is that Oracle filed a report that Google was not anticipating according to the pre-trial orders, that the report was prepared by an individual who had not previously participated in preparing any of the damages reports, and, most importantly, that the report was not delivered to Google until after the deadline for setting final depositions of damages experts had occurred. Thus, Google was cut-off from questioning Dr. Serwin about his rebuttal.

Oracle's only material filing of the day is its motion to exclude portions of the Leonard and Cox damages reports submitted by Google. (558 [PDF; Text]) Oracle argues that the Leonard and Cox reports, rather than relying on documents that had been submitted as discovery responses and thus, allowing Oracle to question Leonard and Cox about the factual bases for their conclusions, relied to an overwhelming extent on interviews of Google technical employees who were not specifically identified as witnesses as to the subject of the interviews (although both such employees have been identified by Google as witnesses). The bottom line for Oracle is that Oracle has not had an adequate opportunity to depose the Google technical experts as to the "facts" upon which Leonard and Cox relied. Oracle argues, moreover, neither Leonard nor Cox has the technical background to form the conclusions they reached absent the technical information provided to them by the Google technical experts. Oracle advances a number of other arguments to attack the credibility of Leonard and Cox, but the heart of this motion goes to the factual bases for the conclusions drawn by Leonard and Cox.

Skip To Comments


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

Docket

546 – Filed and Effective: 10/20/2011
ORDER
Document Text: ORDER DENYING MOTION FOR RELIEF FROM NON-DISPOSITIVE PRETRIAL ORDER OF MAGISTRATE JUDGE, Order by Hon. William Alsup denying 441 Motion for Relief from Non-Dispositive Pretrial Order of Magistrate Judge.(whalc1, COURT STAFF) (Filed on 10/20/2011) (Entered: 10/20/2011)

547 – Filed and Effective: 10/20/2011
MOTION
Document Text: MOTION for leave to appear in Pro Hac Vice - Truman H. Fenton ( Filing fee $ 275, receipt number 34611066044) filed by Google Inc. (Attachments: # 1 Proposed Order)(wsn, COURT STAFF) (Filed on 10/20/2011) (Entered: 10/20/2011)

548 – Filed and Effective: 10/20/2011
Administrative Motion
Document Text: Administrative Motion to File Under Seal filed by Google Inc.. (Attachments: # 1 Declaration, # 2 Proposed Order)(Purcell, Daniel) (Filed on 10/20/2011) (Entered: 10/20/2011)

549 – Filed and Effective: 10/20/2011
Brief
Document Text: Brief re 494 MOTION in Limine No. 3 [SUPPLEMENTAL] filed by Google Inc. (Related document(s) 494 ) (Van Nest, Robert) (Filed on 10/20/2011) (Entered: 10/20/2011)

550 – Filed and Effective: 10/20/2011
Declaration
Document Text: Declaration of Daniel Purcell in Support of 549 Brief filed byGoogle Inc.. (Attachments: # 1 Exhibit Ex to D Purcell Decl ISO of Suppl Brief, # 2 Exhibit Ex to D Purcell Decl ISO of Suppl Brief, # 3 Exhibit Ex to D Purcell Decl ISO of Suppl Brief, # 4 Exhibit Ex to D Purcell Decl ISO of Suppl Brief, # 5 Exhibit Ex to D Purcell Decl ISO of Suppl Brief)(Related document(s) 549 ) (Van Nest, Robert) (Filed on 10/20/2011) (Entered: 10/20/2011))

551 – Filed and Effective: 10/21/2011
MOTION
Document Text: MOTION for leave to appear in Pro Hac Vice of Truman H. Fenton ( Filing fee $ 275, receipt number 34611066044.) filed by Google Inc.. (Attachments: # 1 Proposed Order)(Sabnis, Cheryl) (Filed on 10/21/2011) (Entered: 10/21/2011)

552 – Filed and Effective: 10/21/2011
MOTION
Document Text: MOTION for Summary Judgment (Partial) that Google is not Liable for Damages for Alleged Patent Infringement that Occurred before July 20, 2010 filed by Google Inc.. Responses due by 11/4/2011. Replies due by 11/14/2011. (Attachments: # 1 Declaration of Robert Van Nest, # 2 Exhibit A to Van Nest Declaration, # 3 Exhibit B to Van Nest Declaration, # 4 Exhibit C to Van Nest Declaration, # 5 Exhibit D to Van Nest Declaration, # 6 Exhibit E to Van Nest Declaration, # 7 Proposed Order)(Van Nest, Robert) (Filed on 10/21/2011) (Entered: 10/21/2011)

554 - Filed and Effective: 10/21/2011
MOTION
Document Text: MOTION to Strike DEFENDANT GOOGLE INC.'S NOTICE OF MOTION AND MOTION TO STRIKE TWO "REBUTTAL" DAMAGES REPORTS BY DR. KENNETH SERWIN filed by Google Inc.. Responses due by 10/28/2011. Replies due by 11/1/2011. (Attachments: # 1 Proposed Order)(Van Nest, Robert) (Filed on 10/21/2011) (Entered: 10/21/2011)

555 - Filed and Effective: 10/21/2011
Declaration
Document Text: Declaration of DANIEL PURCELL in Support of 554 MOTION to Strike DEFENDANT GOOGLE INC.'S NOTICE OF MOTION AND MOTION TO STRIKE TWO "REBUTTAL" DAMAGES REPORTS BY DR. KENNETH SERWIN filed by Google Inc. (Related document(s) 554 ) (Van Nest, Robert) (Filed on 10/21/2011) (Entered: 10/21/2011)

556 - Filed and Effective: 10/21/2011 -
NOTICE
Document Text: NOTICE by Google Inc. Re: Oracle America, Inc.'s Administrative Motions to File Under Seal (Dkt. Nos. 532 and 537) (Van Nest, Robert) (Filed on 10/21/2011) (Entered: 10/21/2011)

557 - Filed and Effective: 10/21/2011
Administrative Motion
Document Text: Administrative Motion to File Under Seal ORACLE AMERICA, INC.'S ADMINISTRATIVE MOTION TO FILE UNDER SEAL PORTIONS OF ORACLES MOTION TO EXCLUDE PORTIONS OF THE EXPERT REPORTS OF GREGORY K. LEONARD AND ALAN J. COX filed by Oracle America, Inc. (Holtzman, Steven) (Filed on 10/21/2011) (Entered: 10/21/2011)

558 - Filed and Effective: 10/21/2011
MOTION
Document Text: MOTION to Strike ORACLE AMERICA INC.S MOTION TO EXCLUDE PORTIONS OF THE EXPERT REPORTS OF GREGORY K. LEONARD AND ALAN J. COX - REDACTED filed by Oracle America, Inc.. Responses due by 10/28/2011. Replies due by 11/1/2011. (Attachments: # 1 Proposed Order)(Holtzman, Steven) (Filed on 10/21/2011) (Entered: 10/21/2011)

559 - Filed and Effective: 10/21/2011
Declaration
Declaration in Support of 558 MOTION to Strike ORACLE AMERICA INC.S MOTION TO EXCLUDE PORTIONS OF THE EXPERT REPORTS OF GREGORY K. LEONARD AND ALAN J. COX - REDACTED DECLARATION OF MEREDITH DEARBORN IN SUPPORT OF ORACLE AMERICA, INC.S MOTION TO EXCLUDE PORTIONS OF THE EXPERT REPORTS OF GREGORY K. LEONARD AND ALAN J. COX filed byOracle America, Inc.. (Attachments: # 1 Exhibit EXHIBITS 1-9)(Related document(s) 558 ) (Holtzman, Steven) (Filed on 10/21/2011) (Entered: 10/21/2011)

560 - Filed and Effective: 10/21/2011
Declaration
Document Text: Declaration of STEVEN M. SHUGAN in Support of 558 MOTION to Strike ORACLE AMERICA INC.S MOTION TO EXCLUDE PORTIONS OF THE EXPERT REPORTS OF GREGORY K. LEONARD AND ALAN J. COX - REDACTED filed byOracle America, Inc.. (Related document(s) 558 ) (Holtzman, Steven) (Filed on 10/21/2011) (Entered: 10/21/2011)


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

Documents

546

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA

ORACLE AMERICA, INC.,
Plaintiff,
v.
GOOGLE INC.,
Defendant.

No. C 10-03561 WHA

ORDER DENYING MOTION
FOR RELIEF FROM
NON-DISPOSITIVE
PRETRIAL ORDER OF
MAGISTRATE JUDGE

_______________________________

INTRODUCTION

In this patent and copyright infringement action involving features of Java and Android, defendant moves for relief from a non-dispositive pretrial order of a magistrate judge. For the reasons stated below, the motion is DENIED.

STATEMENT

The facts of this action have been set forth in previous orders (see Dkt. Nos. 137, 230, 433). In the weeks before this action was filed, lawyers for Oracle America, Inc. communicated with lawyers for Google Inc. about the alleged infringement. On July 20, 2011, Google Senior Counsel Ben Lee met with Oracle lawyers to discuss Oracle’s patent-infringement allegations (Lee Decl. ¶ 5). Ten days later, Google General Counsel Kent Walker convened a meeting to formulate a response to Oracle’s infringement claims. Attorney Lee attended the meeting, as did Google software engineer Tim Lindholm (Lee Decl. ¶ 7). A week later, Mr. Lindholm wrote the email that is the subject of the instant motion.

The final version of the email was sent at 11:05 a.m. on August 6, 2010. In addition to the final version, nine different drafts were saved automatically by Mr. Lindholm’s computer while he wrote the email between 11:01 and 11:05 that morning. The nine drafts saved during this four-minute period were stored by the computer without specific direction from Mr. Lindholm.

The “To:,” “Cc:,” and “Bcc:” fields of all the drafts were blank. The “To:” field of the final version listed Andy Rubin, who was the Google Vice President in charge of Android, and Attorney Lee. The “Cc:” field listed Dan Grove, who was another Google engineer, and Mr. Lindholm himself. The “Bcc:” field was blank. The final version of the email and the last draft also included two headings within the body of the email which were not present in any of the earlier drafts. These headings labeled the email as “Attorney Work Product” and “Google Confidential.”1

The “Subject:” field of the final version and all drafts of the email read, “Context for discussion: what we’re really trying to do.” The full text of the body of the final email that actually was sent read as follows:

____________________________

1 The final version of the email and all nine drafts were reviewed in camera. “The proper procedure for asserting the attorney-client privilege as to particular documents” is “to submit them in camera for the court’s inspection.” In re Horn, 976 F.2d 1314, 1318 (9th Cir. 1992).

2

Attorney Work Product
Google Confidential

Hi Andy,

This is a short pre-read for the call at 12:30. In Dan’s earlier email we didn’t give you a lot of context, looking for the visceral reaction that we got.

What we’ve actually been asked to do (by Larry and Sergei) is to investigate what technical alternatives exist to Java for Android and Chrome. We’ve been over a bunch of these, and think they all suck. We conclude that we need to negotiate a license for Java under the terms we need.

That said, Alan Eustace said that the threat of moving off Java hit Safra Katz hard. We think there is value in the negotiation to put forward our most credible alternative, the goal being to get better terms and price for Java.

It looks to us that Obj-C provides the most credible alternative in this context, which should not be confused with us thinking we should make the change. What we’re looking for from you is the reasons why you hate this idea, whether you think it’s a nonstarter for negotiation purposes, and whether you think there’s anything we’ve missed in our understanding of the option.

-- Tim and Dan

The nine sequential drafts show that Mr. Lindholm generally wrote the email from top to bottom, with the exception that the headings “Attorney Work Product” and “Google Confidential” were added in the last minute before the email was sent. There is no evidence that Attorney Lee — the only attorney who received the email — actually read it or responded to it, much less used it in constructing any legal advice.

Oracle filed this infringement action six days after Mr. Lindholm sent the email. During discovery, Google produced the first eight drafts of the email to Oracle. The ninth draft and the final version, however, were held back and listed on Google’s privilege log. Google explains that its electronic scanning mechanisms “did not catch those drafts before production” because those drafts did not contain the confidentiality or privilege headings and did not contain any addressees. Google did, however, designate the eight drafts it produced as “HIGHLY CONFIDENTIAL — ATTORNEYS’ EYES ONLY” pursuant to the protective order, which required restraint and care for such designations (Br. 5; Dkt. No. 66 at 5).

3

On July 21, 2011, Oracle referenced one of the email drafts at two different hearings — a discovery-dispute hearing before Magistrate Judge Ryu, and a Daubert hearing before the undersigned judge. Part of the email draft was read into the record at the latter hearing, and Google attorneys addressed its substance. They did not object to the email draft as privileged or confidential.

The night after those hearings, Google informed Oracle that the email draft constituted “Protected Material” under the protective order and requested that Oracle not make any further public disclosure of its content. The following evening, Google asserted that the email draft was “unintentionally produced privileged material” and clawed it back. A few hours later, Google notified Oracle that the reason the email draft had been clawed back was because it was “subject to the attorney-client privilege and/or work product doctrine.” Google then clawed back the other produced drafts for the same reason.2

The parties proceeded to litigate the matter of the Lindholm email and drafts. The undersigned judge denied Google’s request to file motions to seal and redact portions of the Daubert hearing transcript and Daubert order that referenced the email draft (Dkt. No. 255). After briefing, factual submissions, and a hearing, Magistrate Judge Ryu found that “Google has not demonstrated that the Lindholm Email falls within the ambit of attorney-client privilege or the work product doctrine.” Based on that finding, she ordered Google to produce or re-produce the final version and all nine drafts of the Lindholm email and to tender Mr. Lindholm for deposition (Dkt. No. 361 at 8–9).

Google’s instant motion challenges that order, which was issued on August 26, 2011. Contrary to the order, Google asserts that it did establish that the final version and all nine drafts of the Lindholm email were privileged. Google timely sought and received permission to file the instant motion for relief from Magistrate Judge Ryu’s August 26 order. This order follows full expedited briefing and a hearing.

______________________________

2 Google’s post-hearing claims of confidentiality and privilege were chronicled, with reference to the documentary record, in the August 26 order by Magistrate Judge Ryu (Dkt. No. 361 at 3). That aspect of the order is not challenged.

4

ANALYSIS

The district judge in a case must consider timely objections to any non-dispositive pretrial order of a magistrate judge and must “modify or set aside any part of the order that is clearly erroneous or is contrary to law.” FRCP 72(a). Thus, “[a] non-dispositive order entered by a magistrate must be deferred to unless it is ‘clearly erroneous or contrary to law.’” Grimes v. City and County of San Francisco, 951 F.2d 236, 241 (9th Cir. 1991). In contrast to dispositive matters, orders of a magistrate judge on non-dispositive matters “are not subject to de novo determination,” and “[t]he reviewing court may not simply substitute its judgment for that of the deciding court.” Ibid. Google cites no binding authority for its argument that legal conclusions (as opposed to factual findings) in a non-dispositive pretrial order of a magistrate judge are reviewed de novo (Reply Br. 2–3).3

Google asserts that Magistrate Judge Ryu’s August 26 order was clearly erroneous and contrary to law. It was not. The order set forth a detailed review of the email itself and the extrinsic evidence bearing on the question of privilege. Then, based on holistic consideration of all the intrinsic and extrinsic evidence, the order found that Google had failed “to meet its burden of demonstrating that the Lindholm Email constitutes a communication related to the purpose of obtaining legal advice from a legal advisor in his capacity as such.” In light of this factual finding, the order then found that the email and its drafts were not protected by the attorney-client privilege or the work-product doctrine (Dkt. No. 361 at 7–8). Google raises seven categories of objections to the order. Each category is addressed in turn below.

1. CONTENT OF THE EMAIL.

Having considered the full text of the email, the challenged order found that “[n]othing in the content of the email indicates that Lindholm prepared it in anticipation of litigation or to further the provision of legal advice” (Dkt. No. 361 at 5). Google asserts that this finding and the specific findings on which it was based were clearly erroneous and contrary to law.

__________________________

3 The parties’ briefs cite decisions by the United States Courts of Appeals for the Ninth Circuit and for the Federal Circuit, among other authorities. The Federal Circuit “applies the law of the regional circuit . . . with respect to questions of attorney-client privilege.” Fort James Corp. v. Solo Cup Co., 412 F.3d 1340, 1346 (Fed. Cir. 2005). Thus, Ninth Circuit case law controls here.

5

First, Google asserts that the content of the email “does indicate that it was prepared in anticipation of litigation and to further the provision of legal advice, because it includes the words ‘Attorney Work Product’ and ‘Google Confidential,’ was sent to the Google in-house lawyer assigned to supervise Lindholm’s investigation of facts related to Oracle’s claims, and concerned alternatives to the technology that Oracle then was claiming Google had infringed” (Br. 11). The challenged order considered and rejected all of those points.

Simply labeling a document as privileged and confidential or sending it to a lawyer does not automatically confer privilege. See, e.g., In re Chase Bank USA, N.A. “Check Loan” Contract Litigation, No. 09-md-2032, 2011 WL 3268091, at *4 (N.D. Cal. July 28, 2011) (Corley, M.J.) (“Merely labeling a communication as an ‘attorney-client privileged draft’ . . . or adding an attorney as a recipient are insufficient to confer privilege when the communication is not otherwise for the purpose of facilitating legal advice or services.”). Moreover, the technology mentioned in the email included both accused and non-accused products. The Google product Chrome was not mentioned at the meeting with Oracle’s lawyers and has played no role in this litigation (Dkt. No. 361 at 6). The finding that these aspects of the email did not support Google’s claim of privilege was not clearly erroneous or contrary to law.

Second, the challenged order noted that the email was “directed to Rubin, the Vice President of Android,” and not “to Walker or Lee, or indeed to any lawyer.” This statement analyzed the salutation of the email (Dkt. No. 361 at 5). Google argues that it was clearly erroneous because the email was “directed to” Attorney Lee in that Attorney Lee was listed in the “To:” field (Br. 11). Google’s critique takes the “directed to” statement out of context. The challenged order acknowledged elsewhere that Attorney Lee was included in the “To:” field. The statement at hand made a separate point concerning the salutation as evidence of the writer’s intent. The salutation of the final email addressed only a non-attorney. The attorney, at most, was a mere “To.” There was no evidence that he actually read or responded to the email, much less used it in constructing any legal advice. Again, merely adding an attorney as a recipient does not automatically confer privilege. See In re Chase Bank, 2011 WL 3268091, at *4.

6

Third, the challenged order noted that the email “expressly states that Page and Brin (and not the lawyers) instructed Lindholm and Grove to undertake the technological research discussed in the Email” (Dkt. No. 361 at 5). Google complains that the email did not expressly state that the lawyers did not direct the research (Br. 11). Google misreads the order. The parenthetical statement “and not the lawyers” emphasized that the email did not identify the lawyers as directing the research, but rather it identified other individuals as directing the research. This was true. Contrary to Google, the parenthetical did not imply that the email affirmatively stated that the lawyers did not direct the research. Google’s objection tortures the language.

The conclusion that “[n]othing in the content of the email indicates that Lindholm prepared it in anticipation of litigation or to further the provision of legal advice” was not clearly erroneous or contrary to law.

2. LACK OF REFERENCE TO LITIGATION AND FOCUS ON NON-LITIGATION MATTERS.

The challenged order noted that the email text “never mentions legal advice, lawyers, litigation, Oracle, or patent infringement; rather, it focuses on technological aspects of Chrome and Android, and the need to negotiate a license for Java.” This was true. After considering this observation in conjunction with other facts, the order found that “the Email appears to be a strategy discussion intended to address business negotiations regarding a Java license” (Dkt. No. 361 at 6). Google challenges these statements as clearly erroneous and contrary to law. They were not.

First, Google argues that the “conclusion that the Lindholm email ‘appears to be a strategy discussion’ about licensing negotiations rather than anything litigation-related is not supported by any factual evidence and rests on counterfactual speculation” (Br. 12). Not so. The challenged order cited copious record facts, including the text of the email itself, as suggesting that the email may have concerned a different matter. For example, the order noted that the email referenced Chrome, a Google product that was not mentioned at the meeting with Oracle’s lawyers and which has played no role in this litigation (Dkt. No. 361 at 6).

7

Second, Google argues that the challenged order “held, in substance, that a communication cannot be related to a corporate legal investigation if it fails to refer to litigation or to request legal assistance” (Br. 12). Again, not so. This interpretation grossly mischaracterizes the challenged order. No such requirement was articulated or implied. The lack of any reference to litigation was cited as only one of many factors contributing to the ultimate conclusion that the email was not privileged.

Neither the observation that the email lacked any reference to litigation nor the conclusion that it focused on non-litigation matters was clearly erroneous or contrary to law.

3. FIRST EVIDENTIARY GAP: LACK OF FOUNDATION FOR LEE DECLARATION STATEMENTS.

The challenged order found that “there are many basic gaps in the factual record that Google failed to fill, despite having had ample opportunity to do so.” It then cited three examples of such gaps. One example was that Attorney Lee, “who no longer works for Google, did not indicate [in his declaration] that he reviewed the Email and could competently represent that it was connected to work that he requested from Lindholm as part of the provision of legal advice he describes in his declaration” (Dkt. No. 361 at 5).

Google argues that this observation was clearly erroneous and contrary to law because Attorney Lee’s declaration stated, “On or about August 6, 2010, I received an email from Mr. Lindholm regarding the investigation Mr. Walker and I had asked him to conduct.” According to Google, a foundational statement that Attorney Lee actually read the email “is too obvious to require when the declarant declares that he received the email in question and describes what it was about” (Br. 9).

Personal knowledge is a required foundation for any factual testimony. FRE 602. Google does not cite any authority for a “too obvious” exception to this rule. Attorney Lee’s declaration did not state that he ever read the email or that he recalled the specific circumstances under which he received it (Dkt. No. 408-1). The finding that Attorney Lee’s declaration lacked adequate foundation showing that he could competently represent that the email was connected to work that he requested from Lindholm as part of the provision of legal advice was not clearly erroneous or contrary to law.

8

4. SECOND EVIDENTIARY GAP: FAILURE TO FORECLOSE THE POSSIBILITY THAT THE EMAIL CONCERNED A DIFFERENT, NON-PRIVILEGED MATTER.

Neither Lee nor Lindholm discusses whether, during the time period in question, they were communicating with each other solely about the legal advice they each describe. In other words, at that time, Lindholm may well have been communicating with Lee about other non-privileged matters, including the business of negotiating for a Java license. This is a simple and reasonable explanation for the Email that Google makes no effort to foreclose.
Google argues that this observation was clearly erroneous and contrary to law. Google identifies three bases for its objection.

First, Google asserts that “Mr. Lee and Mr. Lindholm expressly declared that Mr. Lindholm’s August 6, 2010 email addresses the investigation that Mr. Lee and Google General Counsel Kent Walker had asked Mr. Lindholm to undertake, under Lee’s direction, in response to Oracle’s infringement claims and in anticipation of Oracle’s threatened lawsuit” (Br. 9). As to Attorney Lee, the challenged order found that his statements about the email lacked foundation. This order already has found that that finding was not clearly erroneous or contrary to law. As to Mr. Lindholm, the cited portions of his declaration do not specifically tie the email to the particular investigation described, because they do not describe the purpose for which the email was sent (Dkt. No. 408-2).

Second, Google argues that “[t]here is no basis in the record or elsewhere for the Magistrate’s counterfactual speculation that Mr. Lindholm and Mr. Lee ‘may well have been’ communicating about something else” (Br. 9–10). Not so. As detailed throughout this order, the challenged order cited ample record support for the view that the email concerned some other, non-privileged matter.

Third, Google asserts that Mr. Lindholm’s reply declaration “specifically excluded the possibility that the email was about anything else” (Br. 10). Again, Google stretches Mr. Lindholm’s statements. The cited paragraph stated that the email was not intended “to give general business advice to anyone in connection with Android’s ongoing business operations,” but this statement did not foreclose the possibility that the email concerned something other than

9

an investigation for purposes of obtaining legal advice in preparation for this lawsuit (Dkt. No. 408-3 at ¶ 7).

In sum, the finding that Google failed to foreclose the reasonable possibility that the email concerned another, non-privileged matter was not clearly erroneous or contrary to law.

5. THIRD EVIDENTIARY GAP: FAILURE TO EXPLAIN PROMINENCE OF NON-LAWYERS.

The challenged order cited the following as a third example of a “basic gap[] in the factual record that Google failed to fill” (Dkt. No. 361 at 5):

[N]either Lee nor Lindholm states that [Andy] Rubin, [Larry] Page, and [Sergei] Brin were involved in the described efforts to formulate legal advice, nor do they attempt to explain why these individuals feature so prominently in the text of the Email. Lee and Lindholm easily could have supplied these basic foundational facts in their declarations without jeopardizing the asserted privilege.”
The challenged order noted that the salutation in the body of the email addressed only Andy Rubin, who was not a lawyer. Similarly, it noted that the email reported on an investigation requested by Google executives Larry Page and Sergei Brin, who also were not lawyers. The “gap” identified above refers to Google’s failure to explain why these individuals featured so prominently in an email supposedly sent for the purpose of obtaining legal advice.

Google asserts that this observation was clearly erroneous and contrary to law. Google is incorrect. First, Google argues that it is logical that Rubin, Page, and Brin would have been involved in an investigation of Oracle’s infringement claims. Google, however, does not cite any declaration or other evidence showing that they were involved in directing technical research by Google engineers for the purpose of obtaining legal advice in preparation for this lawsuit (Br. 10). On the contrary, Google’s declarations stated that the technical investigation of Oracle’s infringement claims was directed by Attorneys Lee and Walker, whereas the email referred to an investigation directed by Messrs. Page and Brin. This discrepancy was not explained.

Second, Google argues that Magistrate Judge Ryu “appears to have assumed that a legal investigation can be ordered or supervised either by top management, or by the company’s general counsel — but never by both” (Br. 10–11). The order, however, contained no such

10

statement and relied on no such logic. It merely observed that Google failed to address the discrepancy described above. That observation was not clearly erroneous or contrary to law.

6. ROLE OF ATTORNEY LEE AS IN-HOUSE COUNSEL.

The challenged order stated that Attorney Lee’s “role as in-house counsel warrants heightened scrutiny,” because in-house counsel may serve both business and legal functions. The order stated that a party attempting to demonstrate that an internal communication involving in-house counsel deserves privileged status must make a clear showing that the speaker made the communication for the purpose of obtaining or providing legal advice (Dkt. No. 361 at 7).

Google argues that this reasoning was clearly erroneous and contrary to law because the “clear showing” standard for in-house counsel has been rejected by our court of appeals. Not so. The challenged order cited a 2002 decision from this district court that applied the “clear showing” standard. Our court of appeals has yet to address that standard. It has been applied primarily by district courts following now-Justice Ginsburg’s opinion in In re Sealed Case, 737 F.3d 94, 99 (D.C. Cir. 1984). See, e.g., United States v. ChevronTexaco Corporation, 241 F. Supp. 2d 1065, 1076 (N.D. Cal. 2002) (Chesney, J.) (adopting report and recommendation of Brazil, M.J.).4

Google cites a 1996 decision from our court of appeals, which stated that in “determining the existence of a privilege,” no attempt is made to distinguish between inside and outside counsel. United States v. Rowe, 96 F.3d 1294, 1296 (9th Cir. 1996). Google takes this language out of context. The Rowe decision did not address the “clear showing” standard or any other standard for establishing privilege. Rather, the cited portion of Rowe found that attorneys conducting an internal investigation at their own law firm “were, effectively, in-house counsel” and therefore in an attorney-client relationship with their employer. The decision did not address

____________________________

4 In his prior career, the undersigned judge practiced in a large civil litigation firm for 25 years and had considerable experience with and exposure to the practice of company officers and employees routinely copying internal (and even external) counsel on all manner of business communications as an attempt to cloak a business message in privilege. Adding the name of a lawyer to a list of business recipients is exceedingly easy and is very often done without any intention that it be used to frame legal advice. For that reason, the rule adopted by now-Justice Ginsburg in In re Sealed Case makes considerable sense and addresses real-world practices. This experience is added for the benefit of the record and for any appellate review. It has not colored the outcome of this order save and except to reinforce the wisdom of the holding in In re Sealed Case.

11

the standard for determining whether the existence of an attorney-client privilege had been shown. Ibid. Requiring a clear showing of privilege in light of Attorney Lee’s role as in-house counsel was not clearly erroneous or contrary to law.

Google also argues that “the Magistrate failed to mention an important corollary of the ‘clear showing’ doctrine” — the existence of a rebuttable presumption that in-house counsel are “most often giving legal advice” (Br. 14). The challenged order, however, cited sufficient record evidence to rebut any such presumption in this instance. The fact that the challenged order did not explicitly reference this supposed presumption did not render it clearly erroneous or contrary to law.

7. REACTIONS OF GOOGLE LITIGATION COUNSEL.

The challenged order stated that “[t]he reactions of Google counsel when presented with the Lindholm Email in court reinforce the weaknesses of Google’s contention that the Email warrants attorney-client privilege” (Dkt. No. 361 at 6). Google objects to this statement as clearly erroneous and contrary to law. Google argues that the “surprised reaction of a lawyer confronted for the first time with an incomplete draft of a document that has been stripped of its most conspicuous intrinsic indicia of privilege is utterly irrelevant, especially in a case where literally millions of pages of documents have been produced” (Br. 14).

Google cites no evidence that its lawyers were surprised or unable to identify the Lindholm email when confronted with it at the July 21 hearings. Moreover, the challenged order did not rely on their reactions to show that privilege had been waived or did not apply. It simply observed that the reactions of Google’s lawyers were consistent with the interpretation of the email set forth in the order: “In other words, when stripped of the address header and boilerplate ‘Work Product’ text, even Google’s lead counsel, who is intimately familiar with the facts of this case, believed that the Email concerned business negotiations and could not identify it as a privileged document” (Dkt. No. 361 at 6–7). The reaction of Google’s lawyers was cited only as a further indication that the order’s assessment of the email based on other evidence was reasonable. This observation was not clearly erroneous or contrary to law.

12

8. UPJOHN AND GOOGLE’S REPLY BRIEF.

In addition to Google’s specific objections addressed above, Google argues that the result reached by the challenged order “guts Upjohn.” Google argues that the supposed errors in the order eviscerate the principle that “[c]orporate counsel need to be able to communicate freely with low-level employees in order to gather information, develop legal advice, and relay that advice to corporate decision-makers.” According to Google, “[t]hat is the premise of Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)” (Reply Br. 3). Google, however, did not cite the Upjohn decision to Magistrate Judge Ryu.

This order already found that the challenged order was not clearly erroneous or contrary to law in any specific respect. Additionally, the challenged order as a whole did not run afoul of Upjohn and its progeny, including the Admiral decision counsel cited at the hearing. See Admiral Ins. Co. v. U.S. Dist. Ct. for the Dist. of Ariz., 881 F.2d 1486 (9th Cir. 1989). True, corporate counsel need to be able to communicate freely with low-level employees for purposes of providing legal advice. But the privilege protecting such communications must be shown to apply before it can be invoked as to a particular document. The challenged order held that Google failed to meet its burden of showing that the Lindholm email was generated in a privileged scenario, whether of the type described in Upjohn or otherwise. The order did not narrow the scope of scenarios which, if proven, would give rise to privilege. Upjohn and Admiral addressed the scope of the attorney-client privilege, not the standard for proving its applicability in a particular case.

Google’s reply brief catalogues a number of supposed errors which, in its view, create conflict between the challenged order and Upjohn. Many of those supposed errors are simply fictions created by Google’s mischaracterization of the order. For example, this order already explained that the challenged order did not hold “that a communication is not privileged unless it expressly discusses litigation or legal advice” (Reply Br. 4). To the extent the reply brief repeats supposed errors that were set forth in Google’s opening brief, those issues already were addressed above. To the extent the reply brief identifies new supposed errors, those arguments are untimely

13

and need not be addressed. The parties’ arguments concerning waiver of privilege — which was not addressed in the challenged order — also need not be addressed.

* * *

Google has failed to identify any aspect of the challenged order that was clearly erroneous or contrary to law. Accordingly, Google’s motion for relief from the order is DENIED. The order by Magistrate Judge Ryu finding that Google failed to establish that the Lindholm email was protected by attorney-client privilege or work-product immunity was not clearly erroneous or contrary to law.

9. CONFIDENTIALITY.

In addition to disputing the privilege status of the Lindholm email and drafts, the parties also dispute the confidentiality status of those documents. Google designated the documents as “HIGHLY CONFIDENTIAL — ATTORNEYS’ EYES ONLY” under the stipulated protective order when it produced them to Oracle. Oracle then requested that Google re-designate the documents as only “CONFIDENTIAL,” a category providing lesser protection under the protective order. Google has filed a motion to retain its more restrictive confidentiality designation (Dkt. No. 513).

This order makes no comment on the merits of that pending motion. The parties are reminded, however, that confidentiality designations governing the litigants’ treatment of discovery materials do not entitle such materials to automatic protection when filed or used in court. The order adopting the stipulated protective order warned that filings will be sealed only by court order in accordance with the Ninth Circuit’s strict caution against sealing records (Dkt. No. 68).

Having considered the full text of the Lindholm email quoted herein and all related declaration testimony, this order finds that the Lindholm email does not contain any truly sealable material. Accordingly, this order will be filed in the public docket. The pendency of Google’s motion to retain its confidentiality designation is irrelevant to this determination.

14

CONCLUSION

For the reasons set forth above, defendant’s motion for relief from the August 26 non-dispositive pretrial order of Magistrate Judge Ryu is DENIED. The Lindholm email and drafts will not be treated as protected by attorney-client privilege or work-product immunity.

IT IS SO ORDERED.

Dated: October 20, 2011.

/s/William Alsup
WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

15


549

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

ORACLE AMERICA, INC.,
Plaintiff,
v.
GOOGLE INC.,
Defendant.

Case No. 3:10-cv-03561-WHA

GOOGLE'S SUPPLEMENTAL BRIEF IN
SUPPORT OF MOTION IN LIMINE NO. 3
TO EXCLUDE PORTIONS OF
COCKBURN REPORT ON DAMAGES

Judge: Hon. William Alsup

Date Comp. Filed: October 27, 2010

Trial Date: October 31, 2011

_______________________________

TABLE OF CONTENTS

Page

I. INTRODUCTION ...... 1

II. ARGUMENT ...... 2

A. The Court should strike Dr. Cockbum's entire reasonable royalty analysis,
because he admittedly has no information about the rights Google would have received under the
proposed Sun-Google partnership, which is the basis of his calculation ...... 2

B. The Court should strike Dr. Cockbum's upward adjustments to his patent-damages calculation,
because Dr, Cockburn admits it is a proxy for Oracle's lost profits and that it lacks a
reasonable factual foundation ...... 6

C. The Court should strike Dr. Cockbum's opinion regarding the value of a lost copyright license
with Google, because it ignores the governing legal standard and has no factual basis ...... 11

D. Dr. Cockbum's opinion fails to separate out patent damages on a claim by claim basis or
copyright damages among the different categories of allegedly infringed copyrighted
material ...... 14

E. Cockbum should not be permitted to prejudice the jury by presenting data about licenses for
noncomparable technologies or settlements of noncomparable litigation ...... 16

III. CONCLUSION ...... 17

i

TABLE OF AUTHORITIES

Page(s)

Federal Cases

Cream Records, Inc. v. Jos. Schlitz Brewing Co.
754 F.2d 826 (9th Cir. 1985) ...... 13, 14

Daubert v. Merrell Dow Pharms., Inc.
509 U.S. 579 (1993) ...... 1, 9, 10, 16

Georgia-Pacific Corp. v. United States Plywood Corp.
318 F. Supp. 1116(S.D.N.Y. 1970) ...... 7,9

Inc. v Checkpoint Sys. Inc.
249 F. Supp. 2d 622 (E.D. Pa. 2003), amended, 268 F. Supp. 2d 448 ...... 11

Jarvis v. K2, Inc.
486 F.3d 526 (9th Cir. 2007) ...... 11, 12, 13

Lucent Techs., Inc. v. Gateway, Inc.
580 F.3d 1301 (Fed. Cir. 2009) ...... 16

Mackie v. Rieser
296 F.3d 909 (9th Cir. 2002) ...... 12, 13

Medtronic, Inc. v. Boston Scientific Corp.
Civ. No. 99-1035 RHK/FLN, 2002 WL 34447587 (D. Minn. Aug. 8, 2002) ...... 2,5,6

Oracle USA, Inc. v. SAP AG
No. C07-1658 PJH, 2011 WL 3862074 (N.D. Cal. Sept. 1, 2011) ...... 12, 13

Panduit Corp. v. Stahlin Bros. Fibre Works, Inc.
575 F.2d 1152 (6th Cir. 1978) ...... 7, 9

Polar Bear Prods., Inc. v. Timex Corp.
384 F.3d 700 (9th Cir. 2004) ...... 12, 13

ResQNet.com, Inc. v. Lansa, Inc.
594 F.3d 860 (Fed. Cir. 2010) ...... 16

Rite-Hi te Corp. v. Kelley Co., Inc.
56 F.3d 1538 (Fed. Cir. 1995) ...... 7

Sid & Marty Krofft Television Prods., Inc. v. McDonald's Corp.
562 F.2d 1157 (9th Cir. 1977) ...... 11

TAS Distrib. Co. v. Cummins Engine Co.
491 F.3d 625 (7th Cir. 2007) ...... 11

TK-7 Corp. v. Estate of Barbouti
993 F.2d 722 (10th Cir. 1993) ...... 10, 11

Trademark Research Corp. v. Maxwell Online, Inc.
995 F.2d 326 (2d Cir. 1993) ...... 11

Zenith Elecs. Corp. v. WH-TV Broad. Corp.
395 F.3d 416 (7th Cir. 2005) ...... 10

ii

I. INTRODUCTION

As the Court directed in its September 27, 2011 order, Google submits this supplemental brief in support of its pending motion in limine to strike portions of the opinions that Oracle's damages expert Dr. Iain Cockburn seeks to offer, based on Dr. Cockburn's October 10, 2011 reply reports and his testimony at his October 17, 2011 deposition.

The defects with Dr. Cockburn's analysis are even clearer in light of his reply reports and deposition. First, his reasonable royalty analysis, both as to Oracle's patent and copyright claims, depends on his opinion that the patents-in-suit are worth 30% and the copyrights worth 15% of the value of the proposed Sun-Google partnership in 2006. Dr. Cockburn concedes that the partnership would have given Google many other items of great value—thousands of patents, numerous copyrights including source code, the JAVA trademark, and other technical know-how—but he has never made any effort to value any other component of the partnership and admits he couldn't do so if he had to. Having no sense of the whole, he has no basis to opine on the value of any of the parts. Second, Dr. Cockburn confirmed that his upward adjustment of his baseline patent royalty tacks on Sun's projected lost profits (which is legal error) and is based on a single, speculative internal Sun projection (which is not a sufficient factual basis for any opinion). Third, Dr. Cockburn conceded Oracle cannot seek a hypothetical copyright license, because Sun never would have licensed Google to use Sun's copyrighted material in the manner Sun alleges it has done here—to develop a purportedly competing, incompatible version of Sun's Java platform. Fourth, Dr. Cockburn has ignored the Court's directive to calculate separate damage amounts for the various patent claims or copyrighted materials. That makes his opinion useless to a jury that may find liability on some claims but not others. His revised analysis still is generalized, cursory, and geared only to putting the largest possible number before the jury.

Oracle devoted most of its opposition to Google's motion to erecting strawmen, working to justify positions taken by Dr. Cockburn that, although they are wrong, were not the bases of Google's Daubert motion—such as Dr. Cockburn's insistence on using Sun's opening negotiating bid of $100 million as his baseline, rather than Sun's subsequent offer of $28 million. But none of Oracle's responses to Google's actual challenges has any merit.

1

II. ARGUMENT

A. The Court should strike Dr. Cockburn's entire reasonable royalty analysis, because he admittedly has no information about the rights Google would have received under the proposed Sun-Google partnership, which is the basis of his calculation.

The foundation of Dr. Cockburn's reasonable royalty analysis—as to both the patents-in- suit and the asserted copyrights—is the 2006 negotiations between Sun and Google for a [REDACTED] Declaration of Daniel Purcell in Support of Google's Supplemental Brief ("Purcell Deck") Ex. A (Cockburn Dep.) at 77:20-78:3. Dr. Cockburn wrongly uses Sun's opening demand in February 2006 of about $100 million as his baseline, ignoring the parties' real-world negotiations over the following two months that, before negotiations broke down at the end of April, resulted in a final offer from Sun of $28 million. After setting the $100 million baseline, he assigns 30% of that total amount to the six patents-in-suit and a further 15% to the copyrights.

But for purposes of this motion, the problem is much more fundamental than whether the right starting point is $100 million, $28 million, or something else. Dr. Cockburn admits Google would have received many other things in exchange for that money beside the patents and copyrights at issue here—including a full license to thousands of Sun patents, the right to use numerous Sun copyrights (including Sun's copyrighted source code to its Java ME platform), the ability to stamp its products with Sun's JAVA trademark, and access to Sun's engineers and their many years of expertise in developing Java-based technologies. But Dr. Cockburn admits he has no specific information about anything Google would have received under the partnership other than the patents and copyrights at issue, and has made no attempt to value any of those other components. Because he has no sense of those other components or their values, he cannot "identify a reliable factual basis" for calculating the percentage of the whole attributable to the patents and copyrights. Medtronic, Inc. v. Boston Scientific Corp., Civ. No. 99-1035 RHK/FLN, 2002 WL 34447587, *12 (D. Minn. Aug. 8, 2002); see also id. at *11 (striking an expert's opinion that two patents-in-suit "accounted for virtually all of the $25 million" paid for a license to an intellectual property portfolio, despite the fact that he never "tried to determine the value to [the licensee] of any of the items in that portfolio other than the patents-in-suit").

2

Dr. Cockburn admitted each of these methodological failures in his deposition. First, he admitted that Google would have received, among other things, a broad intellectual property license in exchange for his $100 million starting point:

[REDACTED]
Purcell Decl. Ex. A (Cockbum Dep.) at 78:4-13. But Dr. Cockbum conceded he knew nothing about the Sun patents in the portfolio—how many there were, what they covered, or their potential value either to Sun or Google.

[REDACTED]
Id. 78:14-23, 78:25-79:9.

Second, Dr. Cockbum's answer was the same regarding the Sun copyrighted material that Google would have been permitted to use under the contemplated partnership. He understood Google would have received a broad copyright license, including to source code, but hadn't made any efforts to understand the scope of the copyrighted material or calculate its value.

3

[REDACTED]
Purcell Decl. Ex. A (Cockburn Dep.) at 79:14-80:13, 80:15. Dr. Cockburn specifically conceded that access to Sun's proprietary, copyrighted source code may have had substantial economic value to Google. Id. at 80:16-18, 80:20-22.

Third, Dr. Cockburn likewise knew that a contemplated partnership with Sun would have given Google rights to use Sun trademarks, including the JAVA mark—but again, he made no effort to understand the scope of the rights on the table or calculate the value of those rights.

[REDACTED]
Purcell Decl. Ex. A (Cockburn Dep.) at 81:21-82:5.

Fourth, Dr. Cockburn admitted that his baseline—the never-consummated deal between Sun and Google—would have delivered additional value to Google beyond just an intellectual

4

property license. Yet once again, he admitted that he did not fully understand what else Google would have gotten, and had not tried to value any non-license benefits or otherwise taken those benefits into account in his analysis.

[REDACTED]
Purcell Decl. Ex. A (Cockburn Dep.) at 84:7-85:5.

The bottom line is Dr. Cockburn simply has no idea what is included in his $100 million starting point. Despite knowing that his starting point included myriad items of value, he made no attempt to identify or account for any of those items. Having no knowledge of the whole, he lacks any logical or legal basis for calculating the value of any of the parts.

Oracle undoubtedly will protest that, unlike the expert in Medtronic, whose valuation of the patents in that case was based on "a gut feeling," Medtronic, 2002 WL 34447587, *7-*8, Dr. Cockburn purports to support his 30% valuation of the patents-in-suit and 15% apportionment of the copyrights with three performance-based studies. Google explained in detail in its trial brief why each of those studies is rigged and unreliable. Google Trial Br. [Dkt. No. 534] at 18-19.1

___________________________

1 Briefly, Oracle's employee-conducted, made-for-litigation benchmarking studies disabled far more than just the allegedly infringing functionality, leading to massive overstatement of the importance of that functionality to the performance of the Android software. Cockburn's own econometric study of second-hand eBay smartphone purchases evaluated an entirely different product market and ignores basic econometric concepts by failing to control for variable bias. And Oracle's commissioned consumer-preference study tested a cherry-picked list of smartphone features without first bothering to establish those features' importance to consumers, or whether there were other, more important features that also should be included—then simply assumed a one-to-one relationship between the relative importance of the tested features to one another and Android's market share. Google will show at trial that none of this is science.

5

But for purposes of this motion, and the logic of Medtronic, the studies make no difference. The studies purport to measure only the relevance of the allegedly patented and copyrighted features to device performance and consumer preferences. They have nothing to say about any of the other benefits that would have been conferred by the other aspects of a Sun-Google partnership. They do not address the value of the other Sun patents, Sun's proprietary and copyrighted source code, the Java trademark, or access to Sun engineers and their Java ME experience. They are not logical substitutes for the critical questions that Dr. Cockburn has failed even to ask.

With no means for calculating the percentage of his $100 million starting point that ought to be attributed to the patents and copyrights, Dr. Cockburn's entire reasonable royalty analysis, as to both the patents and copyrights, falls apart. Accordingly, this Court should exclude Dr. Cockburn's opinion as to the proper amount of a reasonable patent or copyright royalty.

B. The Court should strike Dr. Cockburn's upward adjustments to his patent-damages calculation, because Dr, Cockburn admits it is a proxy for Oracle's lost profits and that it lacks a reasonable factual foundation.

This Court should strike Dr. Cockburn's upward adjustment of Oracle's purported patent infringement royalty from $29.6 million (30% of his $100 million starting point) to $176 million2 for two reasons. First, it violated basic legal rules governing patent damages by smuggling Sun's purported lost profits into what is concededly a reasonable royalty calculation. Second, it lacked any reasonable factual foundation, because it was based on a single, speculative, internal Sun projection of revenue for a business line that did not exist. Dr. Cockburn did nothing to verify the foundation of the Sun projection, to the extent it had any. At his deposition, Dr. Cockburn admitted all of this.

First, Dr. Cockburn admitted the sole source of his nearly six-fold upward adjustment of patent damages is profits Sun allegedly lost the chance to earn because Google deployed the

___________________________

2 Dr. Cockburn's original report asserted an upward adjustment to $201.8 million, Oracle Opp'n at 3 (citing Cockburn Report If 47), but in his reply to the report of Google expert Dr. Gregory Leonard, he has revised the amount of patent damages downward to $176 million. Purcell Decl.") Ex. B (Cockburn Reply to Leonard) at Ex. 6.

6

Android platform. This is improper as a matter of law. There is a well-understood standard for seeking lost profits on a patent infringement claim, first adopted by the Sixth Circuit in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978), and adopted by the Federal Circuit thereafter. See, e.g., Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (citing Panduit, 575 F.2d at 1156) (noting that the Federal Circuit follows Panduit, which "requires that a patentee establish: (1) demand for the patented product; (2) absence of acceptable non-infringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of the profit it would have made."). Oracle hasn't pleaded a lost-profits claim here. Even if it had, Dr. Cockburn makes no attempt to address, much less satisfy, the four-part Panduit test. He admittedly calculates only a reasonable royalty. Although a patentee's likely lost profits is one factor that can be used to justify a reasonable royalty calculation, see Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970), Oracle may not simply boost the baseline royalty upward by the amount of its purported lost profits. Permitting that would make the Panduit requirements meaningless.

There can be no dispute that Dr. Cockburn increased his estimated reasonable royalty by the amount of Sun's purported lost profits. At deposition, Dr. Cockburn testified that, in adjusting his patent royalty upward from $29.6 million to $176 million, [REDACTED] Purcell Deck Ex. A (Cockburn Dep.) at 136:4-12. Dr. Cockburn admitted at deposition that he was unable to quantify the effect of either the litigation premium or fragmentation.3 Id. at 136:13-16, 137:20-138:16.

___________________________

3 The vagueness of Dr. Cockburn's opinions regarding "fragmentation" deserves close attention, particularly given Oracle's stated intention to use "fragmentation" to seek extraordinary injunctive relief effectively turning over the entire Android platform to Oracle. When asked how one could know whether fragmentation had caused economic harm to Oracle, Dr. Cockburn gave no indication that Oracle had any way of proving such harm at trial, other than through its usual alarmist rhetoric. [REDACTED] Purcell Decl. Ex. A (Cockburn Dep.) at 139:5-18 (emphasis added). The only actual data Dr. Cockburn relied on to support his claim that fragmentation had harmed Oracle had nothing to do with Oracle Financials—it was a calculation showing that Java developer message boards have recently been less active, in terms of new threads started, than Android developer message boards. Id. at Id. at 156:18-157-10.

7

Accordingly, Dr. Cockburn's [REDACTED] Id. at 176:12-16. But his method for calculating [REDACTED] was simply to add the amount Sun projected it would earn in profits from a partnership with Google. Dr. Cockburn admitted that the only basis for the bulk of his upward adjustment was a single [REDACTED]

[REDACTED]4
143:6-16 [REDACTED] Finally, when directly asked to identify specific evidence of harm to Oracle as a result of fragmentation, Dr. Cockburn had nothing to offer beyond Oracle's own ipse dixit.

[REDACTED]
___________________________

4 In his original report, Dr. Cockbum explained that, of the total $175.6 million upward royalty adjustment, $167.2 million (approximately 95.2% of the total adjustment) was based on Sun's lost profits, while a further $8.4 million (the remaining 4.8% of the adjustment) was based on the removal of the revenue-sharing cap. Oracle Opp'n at 3 (table) (citing Cockburn Report ¶ 47). In his reply report, Dr. Cockbum reduces the upward adjustment to $146.4 million. Purcell Decl. Ex. B (Cockburn Reply to Leonard) at Ex. 6 (giving total patent damages figure of $176 million, which is $146.4 million more than his $29.6 starting point). Dr. Cockburn no longer explains what portion of his revised upward adjustment is attributable to lost profits, but applying the same percentages as in his previous report, 95.2% of $146.4 million calculates to about $139.37 million in alleged lost profits tacked onto Dr. Cockburn's current royalty calculation.

8

[REDACTED]
Purcell Decl. Ex. A (Cockburn Dep.) at 177:6-20.

[REDACTED] Purcell Decl. Ex. C [REDACTED] And Dr. Cockburn admitted [REDACTED] Cockburn Report ¶ 39 (emphasis added). That is lost profits, plain and simple. Cockburn confirmed at deposition that he [REDACTED] Purcell Decl. Ex. A (Cockburn Dep.) at 194:1-8. It does not matter by what name Dr. Cockburn calls this adjustment; it is a straight importation of lost profits. That is barred by Panduit.

Oracle offers (and could offer) nothing in its opposition to Google's motion in limine to rehabilitate Dr. Cockburn's analysis. It claims Dr. Cockbum has just used Sun's lost profits as one of the Georgia-Pacific factors, but that is plainly wrong. Dr. Cockburn did not weigh the projected lost profits against other factors and conclude that, because Sun might have made profits from a partnership with Google, there should be upward pressure on the royalty; he increased the royalty by the amount of purported lost profits. Although Oracle argues that Dr. Cockburn also found other Georgia-Pacific factors would support an increase in his $29.6 million baseline, it cannot (and does not) argue that Dr. Cockburn used any of those factors as a basis for quantifying his upward adjustment. The sole basis of that quantification remains Sun's alleged lost profits. That is disqualifying legal error under Daubert.

Second, even apart from that legal error, Cockburn's patent royalty adjustment should be stricken because he lacks a reasonable factual basis for it. As just discussed, his only basis for quantifying at least $139.37 million of that adjustment is the Project Armstrong presentation. That document, created in late February or early March 2006, offers a tentative projection of

9

revenues Sun might have made, had it partnered with Google. Not only are there no underlying financial data backing up the financial projections in the presentation, the author of the presentation, in her cover email [REDACTED] Purcell Decl. Ex. D (Knopoff email) at OAGOOGLE0100166873 (emphases added).

Cockburn made several critical concessions at his deposition confirming how speculative this single presentation truly was [REDACTED]

Daubert makes clear that, to be admissible, expert testimony must "connote[ ] more than subjective belief or unsupported speculation." Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 590 (1993). The single Project Armstrong projection essentially defines "subjective belief and unsupported speculation." Courts regularly exclude expert testimony based on unverified revenue projections, particularly a litigant's self-serving, internal projections. See, e.g., Zenith Elecs. Corp. v. WH-TV Broad. Corp., 395 F.3d 416, 420 (7th Cir. 2005) (rejecting as basis for damages claim a party's "internal projections, which rest on its say-so rather than statistical analysis" and "represent hopes rather than the results of scientific analysis"); TK-7 Corp. v. Estate of Barbouti, 993 F.2d 722, 732-33 (10th Cir. 1993) (rejecting damages expert opinion that

10

"failed to demonstrate any basis for concluding that another individual's opinion on a subjective financial prediction was reliable"); ID Sec. Sys. Canada, Inc. v. Checkpoint Sys., Inc., 249 F. Supp. 2d 622, 695 (E.D. Pa. 2003), amended, 268 F. Supp. 2d 448 (rejecting damages expert's reliance on projection by plaintiff, who had incentive to inflate predicted financial success). And it is a basic principle of damages law that recovery of purported lost profits for new, unproven lines of business—like the development of a full stack would have been for Sun—is disfavored. See TAS Distrib. Co. v. Cummins Engine Co., 491 F.3d 625, 633 (7th Cir. 2007) ("as a general rule, expected profits of a new commercial business are considered too uncertain, specific and remote to permit recovery"); Trademark Research Corp. v. Maxwell Online, Inc., 995 F.2d 326, 332 (2d Cir. 1993) (where new business seeks lost profits, "a stricter standard is imposed for the obvious reason that there does not exist a reasonable basis of experience upon which to estimate lost profits with the requisite degree of reasonable certainty.").

Even if it were legally permissible for Oracle to recover lost profits through a reasonable royalty (and it is not), Sun's revenue projections are not a reasonable basis for any expert opinion. Because Dr. Cockburn relies on nothing else, his opinion is inadmissible.

C. The Court should strike Dr. Cockburn's opinion regarding the value of a lost copyright license with Google, because it ignores the governing legal standard and has no factual basis.

As Google previously argued, this Court should strike Cockburn's opinion regarding the value of a fair-market copyright license between Sun and Google for two reasons: his opinion ignores the legal standard for calculating the value of such a license and it has no basis in the record. In his reply report, Cockburn revised downward his estimated copyright-license amount from $102.6 million to [REDACTED] Purcell Decl. Ex. E (Cockburn Reply to Cox) ¶ 80.

First, as the Ninth Circuit has made clear, "where the infringer could have bargained with the copyright owner to purchase the right to use the work," a hypothetical license measurement looks at "what a willing buyer would have been reasonably required to pay to a willing seller for plaintiffs work." Jarvis v. K2, Inc., 486 F.3d 526, 533 (9th Cir. 2007) (quoting Sid & Marty Krofft Television Prods., Inc. v. McDonald's Corp., 562 F.2d 1157, 1174 (9th Cir. 1977)). To

11

prove its entitlement to hypothetical-license damages, a plaintiff is "required to show that, but for infringement, the parties would have agreed to license the use of the copyrighted works at issue." Oracle USA, Inc. v. SAP AG, No. C07-1658 PJH, 2011 WL 3862074, at *7 (N.D. Cal. Sept. 1, 2011) (emphasis added) (citing Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 711 (9th Cir. 2004)). Critically, in this case, where Google did in fact bargain with Sun over a license, the hypothetical license for "the use of the copyrighted works at issue" means a license for Google to use Oracle's copyrighted material as it allegedly did, by incorporating that material into a competing product in a manner that is incompatible with Java platform standards.

Oracle cannot satisfy this test here, because Dr. Cockburn cites no evidence (and no such evidence exists) that Oracle ever would have granted a license to a competitor for an allegedly incompatible implementation of Java. Determining the price of a hypothetical copyright license is an "objective, not a subjective" analysis, and courts must reject "[excessively speculative" claims. See Jarvis, 486 F.3d at 534; Polar Bear, 384 F.3d at 709; Mackie v. Rieser, 296 F.3d 909, 917 (9th Cir. 2002). Where it is clear the parties "would never have agreed to a license" in the real world, there is no basis for awarding actual damages based on the value of a hypothetical license. Oracle, 2011 WL 3862074, at *7.

During his deposition, Dr. Cockburn admitted that, during their real-world negotiations in 2006, neither Sun nor Google ever raised the possibility of licensing an incompatible implementation of Java, much less agreed to it. Dr. Cockburn also conceded, as he had to, that he was unaware of any instance where Sun had ever licensed an incompatible implementation of Java to a competitor, as Oracle is contending Google to be in this case.

[REDACTED]

12

[REDACTED]
Purcell Decl. Ex. A (Cockburn Dep.) at 237:24-238:1, 238:3-18, 240:2-5 & 7-12. That ends the Court's inquiry. Sun never would have granted the hypothetical license at issue here.

In its opposition, Oracle argues around this issue, pointing out that a subsequent opinion in the Oracle v. SAP case clarified that it is not necessarily the case, as a matter of law, that a plaintiff must present evidence of "actual licenses it entered into or would have entered into for the infringed works, and/or actual 'benchmark' licenses entered into by any party for comparable use of the infringed or comparable works." Oracle Opp'n at 8-9 (citing Oracle USA, Inc. v. SAP AG, No. C07-1658 PJH, at Dkt. 1088). This changes nothing. Oracle concededly has no evidence of comparable licenses, but the broader point is that it has no evidence of any kind that it ever would have granted Google the hypothetical license Cockburn envisions.

As the Oracle court also explained—and Oracle does not dispute here—the Ninth Circuit "has never upheld a hypothetical license award" without "actual proof that the plaintiff would have licensed the infringed work to the defendant or a third party for the specific use at issue and proof that the infringement caused the loss of that opportunity." Oracle, 2011 WL 3862074, at *8 (citing Polar Bear, 384 F.3d at 704, 709; Jarvis, 486 F.3d at 528, 533-34; Mackie, 296 F.3d at 913, 917; Cream Records, Inc. v. Jos. Schlitz Brewing Co., 754 F.2d 826, 827-28 (9th Cir. 1985)). Neither has the Ninth Circuit ever affirmed hypothetical-license damages in a case

13

involving competitors (who do not commonly license each other), as opposed to partners. See id. at *8 & n.2. There is no reason for this Court to do what the Ninth Circuit has never done.

Oracle also characterizes Google's argument as "baffling" because "Sun did in fact offer Google a license." Oracle Opp'n at 9 (emphasis in original). Oracle misunderstands Google's argument. Oracle must concede that Sun offered to license Google a platform that would have been fully compatible with Sun's Java standards and jointly controlled by Sun. That is 180 degrees from the hypothetical license here—an allegedly incompatible Java implementation that is fully controlled by Google. Sun never negotiated for that, and never would have done so.

Second, Dr. Cockburn's calculation of the hypothetical copyright license is inadmissible because it has no factual foundation. Like Dr. Cockburn's patent royalty adjustment, it relies only on the same speculative Sun projection of Project Armstrong revenue. Purcell Decl. Ex. C (Project Armstrong projection).5 Dr. Cockburn cannot reasonably base any upward adjustment on the Project Armstrong projection, for the reasons discussed above.

D. Dr. Cockburn's opinion fails to separate out patent damages on a claim by claim basis or copyright damages among the different categories of allegedly infringed copyrighted material.

Oracle concedes that Dr. Cockburn failed to separate out his patent damages calculation on a claim-by-claim basis, Oracle Opp'n at 16, as this Court's July 22, 2011 Order directed him to do. July 22, 2011 Order [Dkt. No. 230] at 7. Oracle just argues that this oversight doesn't matter. Oracle asserts in its brief that it has limited its trial case to certain asserted claims that "are basically representative of the claimed invention, and vary only as to their type." Of course, it cites nothing from Dr. Cockburn, any of its technical experts, or even any Oracle employees, to support that statement. Oracle has never explained through its experts exactly how the claims it plans to try fully represent the patents-in-suit or cover the valuable features disclosed by those

__________________________

5 Dr. Cockburn begins his calculation of the copyright license, as he did his hypothetical patent license, with a $100 million starting point. But after that his approach to copyright is different. In his patent calculation he had first attributed 30% of that total to the patents-in-suit before adjusting upward based on the Project Armstrong projection. In his copyright calculation, he does the reverse—first adjusting upward based on the Project Armstrong projection, then attributing 15% of the adjusted total to the copyrights. Purcell Decl. Ex. A (Cockburn Dep.) at 246:22-247:17. He never explains why he calculated his copyright license using the same inputs as, but a different order of operation from, the patent license.

14

patents. Dr. Cockburn has never considered the possibility that some of the asserted claims may be less valuable, or easier to design around, than other claims contained within that same patent. Indeed, neither he nor Oracle appears to have considered whether this might make a difference to the value of the hypothetical patent license.

Accordingly, because Cockburn has refused to apportion patent value among the asserted claims in his report, the Court should also preclude him from doing so at trial. Google renews its request that the Court instruct the jury that, because Oracle has no evidence of the value of individual patent claims, if the jury finds any asserted claim of any patent invalid or not infringed, it may assume that the rejected claim represented the full value of that patent, and thus that Oracle is entitled to no damages for infringement of other claims of that patent.

Similarly, the allegedly copyrighted material at issue here includes not only the "structure and arrangement" of 37 API packages (to the extent that merits copyright protection), but also a handful of lines of Android code that Oracle contends were literally copied. Oracle asserts that the APIs are critically important to Android, and Dr. Cockburn's copyright damages discussion focuses almost entirely on the APIs. For example, in his reply to Google's copyright damages expert, Dr. Cockburn mentions the literally copied code only in one paragraph, Purcell Decl. Ex. E (Cockburn Reply to Cox) ¶ 21, compared to dozens of mentions of the APIs. Dr. Cockburn asserts that this doesn't matter, [REDACTED] Id. But it is at least possible, if not probable, that portions of Oracle's copyright claim will be eliminated before trial, or that the jury will find that Google infringed some copyrights but not others. If the Court concludes that the "structure and arrangement" of the API packages is not copyrightable, or the jury concludes Google engaged in fair use of those packages, Oracle's copyright claim will be limited to a dozen code files. None of that code was either inventive or original, most of it was never implemented in Android, and all of it either has been removed from Android or will be in the next release of the Android software. If the alleged literal copying were the sole basis of copyright liability, there would be nothing in Dr. Cockburn's opinion to assist the jury in calculating copyright damages. The Court's July 22, 2011 order directed Dr. Cockburn to be specific about how much damages flow from the various

15

elements of Oracle's case, but Dr. Cockburn has never made any attempt to draw any distinction for damages purposes among the different categories of copyrighted material at issue here.

E. Cockburn should not be permitted to prejudice the jury by presenting data about licenses for noncomparable technologies or settlements of noncomparable litigation.

Finally, Oracle fails to address Google's argument explaining why Dr. Cockburn should be barred from referring to various licenses involving unrelated technology and parties—most obviously, a semiconductor license negotiated between Nokia and Qualcomm. That license involves two companies who are not parties and an entirely different technology than the one at issue here. Oracle does not dispute that the Federal Circuit generally condemns expert testimony about "licenses to technologies other than the patent in suit" as part of a reasonable royalty analysis. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010) (emphasis in original); see also Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1329 (Fed. Cir. 2009). Oracle doesn't engage with this argument at all. The Court should bar Dr. Cockburn from testifying about licenses for technologies other than those allegedly embodied by the patents-in-suit, or licenses involving neither Sun nor Google.

Instead, Oracle devotes most of its section on other licenses to a screed about the evils of so-called fragmentation and the Sun-Microsoft settlement. This argument is premised on the same error the Court condemned in its Daubert order: it asserts that both this action and the Microsoft case involved "the same technology (Java)." But this case is not about "Java." It is about specific, identified functionality in Google's Dalvik virtual machine that allegedly infringes Sun patents, and specific API packages and lines of code in Android that allegedly infringe Sun copyrights. In any event, Oracle doesn't dispute that the Sun-Microsoft case was about more than "fragmentation," or deny that Cockburn has failed to separate out the values of the various components of Sun's settlement with Microsoft. Again, this blase and broad-brush approach shows that Dr. Cockburn and Oracle are less interested in presenting relevant evidence to the jury than in causing prejudice to Google by flashing a nine-figure number. The Court should exclude any reference at trial to the Sun-Microsoft settlement.

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III. CONCLUSION

This Court should exclude Dr. Cockburn's testimony for all the reasons presented above.

Dated: October 20, 2011

Respectfully submitted,

KEKER & VAN NEST LLP

By: s/ Robert A. Van Nest
ROBERT A. VAN NEST
Attorneys for Defendant
GOOGLE INC.

17


552

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

ORACLE AMERICA, INC.,
Plaintiff,
v.
GOOGLE INC.,
Defendant.

Case No. 3:10-cv-03561-WHA

MOTION FOR PARTIAL SUMMARY
JUDGMENT THAT GOOGLE IS NOT
LIABLE FOR DAMAGES FOR
ALLEGED PATENT INFRINGEMENT
THAT OCCURRED BEFORE JULY 20,
2010

Hearing Date: ____ TBD
Time of Hearing: TBD
Judge: Hon. William Alsup

Date Comp. Filed: October 27, 2010
Trial Date: TBD

_______________________________

NOTICE OF MOTION AND MOTION. Notice is hereby given to plaintiff Oracle America, Inc. (“Oracle”) and to its attorneys of record that, at a time and on a date to be determined by the above-entitled Court, defendant Google Inc. (“Google”) will and hereby does move the Court for partial summary judgment that, with respect to patents RE 38,104; 5,966,702; 6,061,520; 7,426,720; and 6,192,476 (“the patents-at-issue”), Google is not liable to Oracle for any damages for any alleged infringement that occurred before July 20, 2010.

The hearing, if the Court orders one, will take place in Courtroom 9 on the Nineteenth Floor of the Courthouse at 450 Golden Gate Avenue, San Francisco, California. This motion is based upon this Notice of Motion and Motion, the accompanying Brief in Support of Motion, the accompanying Declaration of Robert A. Van Nest and exhibits thereto, all pleadings and papers on file in this action, and upon such other matters as may be presented to the Court at the time of the hearing.

STATEMENT OF RELIEF SOUGHT. Google seeks an order granting partial summary judgment that, with respect to the patents-at-issue, Google is not liable to Oracle for any damages for any alleged infringement that allegedly occurred before July 20, 2010.

BRIEF IN SUPPORT OF MOTION

I. INTRODUCTION AND ISSUE TO BE DECIDED

Patentees and their licensees who make, sell, offer to sell, or import a patented article must give the world constructive notice of the patent by marking the article with the patent number. If marking does not occur and constructive notice is therefore lacking, the patentee cannot obtain damages for alleged infringement that occurred before the date on which the patentee gave the alleged infringer actual and specific notice of the patentee’s infringement claims. See 35 U.S.C. § 287(a). The only relevant exception to this “marking” requirement arises where there is simply nothing to mark because the patentee only asserts infringement of a patent’s method or process claims (or the asserted patent only contains such claims).

Failure to mark sharply limits the damages available to Oracle in this case. Oracle’s revised expert report on damages, served on September 10, 2011, confirms that Oracle is seeking damages for patent infringement dating back to 2007—years before Oracle first gave Google

1

actual notice of the infringement claims at issue in this lawsuit. But damages for most of that period are unavailable as a matter of law because Oracle concededly failed to mark any articles that practice its asserted patents.

It is undisputed that:

  1. Oracle alleges that Google infringed apparatus claims in the patents-at-issue.
  2. Oracle has identified many products that, it contends, practice the asserted claims of the patents-at-issue.
  3. Oracle and its licensees never marked any articles that practice the patents-at-issue.
  4. Oracle first gave Google actual notice of Oracle’s specific infringement claims on July 20, 2010.
The issue for decision is whether these four undisputed facts compel the conclusion that, with respect to the patents-at-issue, Oracle cannot obtain damages for alleged infringement that occurred before July 20, 2010.

For reasons set forth below, the answer is, “yes,” and the Court therefore should grant this motion.

II. STATEMENT OF UNDISPUTED, MATERIAL FACTS

This motion turns on four undisputed facts.

  1. Oracle claims that Google infringed apparatus, system, and/or computer-readablemedium claims contained in the patents-at-issue.1
  2. Oracle has identified many “markable” products that, it contends, practice the asserted claims of the patents-at-issue. Among those products are multiple releases of its Java desktop, enterprise, mobile, and embedded-software platforms.2
  3. 3. Yet Oracle has admitted that it “is not aware of any device, system, or product

    ____________________________

    1 See accompanying Declaration of Robert A. Van Nest (“Van Nest Decl.”), Ex. A (Oracle America, Inc.’s Case Management Statement Selecting Claims for Trial (Doc. 471)).

    2 See Van Nest Decl., Ex. B (Oracle’s Second Supplemental Patent Local Rule 3-1 Disclosure at pp. 9-11).

    2

    expressly marked with the patent number of any of the Patents-in-Suit or Related Patents.”3

  4. Oracle first put Google on actual notice of its specific patent-infringement claims during a meeting at Google headquarters in Mountain View, California on July 20, 2010.4
  5. III. ARGUMENT

    A. Because Oracle and its licensees concededly failed to mark articles that practice the
    asserted claims, Oracle cannot obtain damages for patent infringement that
    occurred before July 20, 2010—the date on which Oracle first gave Google actual
    and specific notice of the patent-infringement claims asserted here.

    The four undisputed facts set forth above compel the conclusion that, with respect to the patents-at-issue, Oracle cannot recover damages for infringement that occurred before July 20, 2010.

    1. Oracle admits that it and its licensees never marked any articles that practice the patents-in-suit.
    Oracle cannot carry its trial burden of proving that it gave Google constructive notice of the patents-at-isssue through compliance with the federal marking-and-notice statute, 35 U.S.C. § 287(a). Oracle therefore cannot obtain any damages—whether related to apparatus or method claims—for alleged patent infringement that occurred before the date on which it gave Google actual and specific notice of the patent-infringement claims asserted in this lawsuit.

    The federal marking-and-notice statute, section 287(a), states in substance that patentees and their licensees who make, sell, offer to sell, or import a patented article can “give notice to the public” that the article is patented by marking the article (or, if that is impractical, its package) with the word “patent” or “pat.,” followed by the patent number.5

    ______________________________

    3 See Van Nest Decl., Ex. C (Oracle’s Response to Google’s Request for Production No. 4).

    4 See Van Nest Decl., Ex. D (Declaration of Benjamin Lee Concerning the August 6, 2010 Email and Drafts Thereof, Doc. 315, filed Aug. 17, 2011), ¶ 5 (“On or about July 20, 2010, I attended a meeting with attorneys for Oracle at Google’s office in Mountain View, California. At that meeting, Oracle claimed that Google was infringing on Oracle patents. Oracle threatened to sue Google over those patents.”); Van Nest Decl., Ex. E (Oracle’s Trial Brief (Doc. 536), pp. 18-19) (“The parties agree that Oracle presented the six Java-related patents to Google at a meeting on July 20, 2010.”).

    5 Section 287(a) states in full:

    Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or when, from the character of the article, this cannot be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

    3

    The result of failing to mark a patented article is that “no damages shall be recovered” in any patent-infringement suit “except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.” Id.

    Thus, “[s]ection 287(a) requires a party asserting infringement to either provide constructive notice (through marking) or actual notice in order to avail itself of damages.” American Med. Sys., Inc. v. Medical Eng’g Corp., 6 F.3d 1523, 1537 n.18 (Fed. Cir. 1993) (emphases added). “[A] party that does not mark a patented article is not entitled to damages for infringement prior to actual notice.” Crown Packaging Tech., Inc. v. Rexam Beverage Can Co., 559 F.3d 1308, 1316 (Fed. Cir. 2009). The patentee bears the burden of proving by a preponderance of evidence that it has complied with section 287(a). See Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1446 (Fed. Cir. 1998).

    “The marking statute serves three related purposes: 1) helping to avoid innocent infringement, . . . 2) encouraging patentees to give notice to the public that the article is patented, . . . and 3) aiding the public to identify whether an article is patented.” Nike, 138 F.3d at 1443 (citations omitted). Accordingly, the marking must be “substantially consistent and continuous,” in that “substantially all” of the patented products were marked. American Med. Sys., 6 F.3d at 1537-38. The marking requirement applies to software products, including ones (like the Java-

    4

    platform software) that are made available on websites;6 and it applies as well to products sold by the patentee’s licensees.7

    The marking requirement does not apply to method or process claims because, with an intangible method or process, “there is nothing to mark.” American Med. Sys., 6 F.3d at 1538- 39. But the marking requirement does apply where “both apparatus and method claims . . . [are] asserted and there [is] a physical device produced by the claimed method that [is] capable of being marked.” Id. at 1539 (emphasis added). In that situation, the patentee must mark the physical device as a precondition to recovering damages for any patent infringement—even method-claim infringement—that occurred before the actual-notice date. Id.; see also Crown Packaging, 559 F.3d at 1316-17.8

    The marking requirement applies here because, as to the patents-at-issue, Oracle is asserting apparatus, system, or computer-readable-medium claims whose embodiments include tangible objects that can be marked and therefore must be marked as a precondition for obtaining any patent-infringement damages.

    Oracle has identified many products that, it contends, practice the asserted claims of each of the patents-at-issue. Among those products are multiple releases of its Java desktop, enterprise, mobile, and embedded-software platforms.9 Although such articles are subject to the marking requirement, Oracle admits that it “is not aware of any device, system, or product expressly marked with the patent number of any of the Patents-in-Suit or Related Patents.”10

    ___________________________

    6 See Soverain Software LLC v. Amazon.com, Inc., 79 U.S.P.Q.2d 1208, 1212 (E.D. Tex. 2005); IMX Inc. v. LendingTree LLC, 79 U.S.P.Q.2d 1373, 1375-76 (D. Del. 2005); Northbrook Digital Corp. v. Browster, Inc., Case No. 06-4206, 2008 WL 4104695, at *4 (D. Minn. Aug. 26, 2008).

    7 See Amsted Indus. v. Buckeye Steel Castings Co., 24 F.3d 178, 185 (Fed. Cir 1994); Devices for Med., Inc. v. Boehl, 822 F.2d 1062, 1066 (Fed. Cir 1987).

    8 Because the ‘205 patent contains only method claims, this motion does not address damages for infringement of that patent. See State Contracting & Eng’g Corp. v. Condotte Am., Inc., 346 F.3d 1057, 1074 (Fed. Cir. 2003).

    9 See Van Nest Decl., Ex. B at pp. 9-11.

    10 See Van Nest Decl., Ex. C.

    5

    Oracle therefore cannot carry its trial burden of proving by a preponderance of evidence that it has complied with the marking-and-notice statute. See Nike, 138 F.3d at 1446. Accordingly, with respect to the patents-at-issue, Oracle cannot obtain any damages for infringement that occurred before the date on which it gave Google actual notice of the infringement claims asserted in this lawsuit.

    2. Oracle admits that it first gave Google actual and specific notice of specific infringement claims on July 20, 2010.
    In this case, it is undisputed that the date of actual notice is July 20, 2010. Because Oracle failed to mark, it can obtain no damages for alleged patent infringement that occurred before that date.

    For “actual notice” to occur under section 287(a), there “must be an affirmative act on the part of the patentee which informs the defendant of his infringement. . . . [N]otice must be of ‘the infringement,’ not merely notice of the patent’s existence or ownership. Actual notice requires the affirmative communication of a specific charge of infringement by a specific accused product or device.” Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994). “Thus, the correct approach to determining notice under section 287 must focus on the action of the patentee, not the knowledge of the infringer.” Lans v. Digital Equip. Corp., 252 F.3d 1320, 1327 (Fed. Cir. 2001) (internal brackets and quotation marks omitted).

    It is undisputed that July 20, 2010 is the date on which Oracle first made an “affirmative communication” to Google of “a specific charge of infringement by [the] specific accused product[s] or device[s].” Amsted Indus., 24 F.3d at 187. Former Google in-house lawyer Ben Lee has declared that, “[o]n or about July 20, 2010, I attended a meeting with attorneys for Oracle at Google’s office in Mountain View, California. At that meeting, Oracle claimed that Google was infringing on Oracle patents. Oracle threatened to sue Google over those patents.”11

    ____________________________

    11 Van Nest Decl., Ex. D, ¶ 5.

    6

    And Oracle’s Trial Brief “agree[s] that Oracle presented the six Java-related patents to Google at a meeting on July 20, 2010.”12

    Accordingly, with respect to the patents-at-issue, Oracle is barred from recovering damages for infringement that occurred before July 20, 2010, which is the undisputed earliest date of actual notice.13

    IV. CONCLUSION

    For all the reasons stated above, the Court should grant partial summary judgment that, with respect to patents RE 38,104; 5,966,702; 6,061,520; 7,426,720; and 6,192,476, Google is not liable to Oracle for damages for any alleged infringement that occurred before July 20, 2010.

    Dated: October 21, 2011

    Respectfully submitted,

    KEKER & VAN NEST LLP

    By: s/ Robert A. Van Nest
    ROBERT A. VAN NEST
    Attorneys for Defendant
    GOOGLE INC.

    ____________________________

    12 Van Nest Decl., Ex. E, pp. 18-19.

    13 Oracle may argue (as it did in opposing the précis) that this motion is premature because no jury has yet determined that Oracle or its licensees practice, or that Oracle has infringed, one of the non-method claims of the patents-at-issue. But Oracle itself has contended (1) that the claims are practiced (Van Nest Decl., Ex. B) and (2) that its apparatus, computer-readable-medium, and method claims “mirror” each other, contain essentially “identical limitations,” and are all necessarily infringed whenever Android software is loaded onto a phone and used. Van Nest Decl., Ex. A, p. 1. If those representations are correct, then this motion is no more premature than any other partial-summary-judgment motion addressing a damages issue. Such motions always presume a finding of liability, and this motion presumes no more than that.

    7


554

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

ORACLE AMERICA, INC.,
Plaintiff,
v.
GOOGLE INC.,
Defendant.

Case No. 3:10-cv-03561-WHA

DEFENDANT GOOGLE INC.’S NOTICE
OF MOTION AND MOTION TO STRIKE
TWO “REBUTTAL” DAMAGES
REPORTS BY DR. KENNETH SERWIN

Judge: Hon. William Alsup

Date Comp. Filed: October 27, 2010

_______________________________

PLEASE TAKE NOTICE THAT, at a time to be ordered by the Court, defendant Google Inc. (“Google”) will and hereby does move to strike the two “rebuttal” expert reports of Dr. Kenneth Serwin, served by Oracle on October 10, 2011. This motion is based on the following memorandum of points and authorities in support, the Declaration of Daniel Purcell (“Purcell Decl.”) and exhibits thereto, the entire record in this matter and on any such evidence as may be presented at a hearing on this motion.

I. INTRODUCTION

The Court should strike Dr. Serwin’s “rebuttal” expert reports, which purport to respond to the reports of Google’s damages experts Dr. Gregory Leonard and Dr. Alan Cox. This Court clearly set forth the governing procedures for serving expert reports, including damages expert reports, in two separate scheduling orders, and neither order makes any mention of “rebuttal” reports, much less authorizes either party to submit such reports with respect to an issue on which the submitting party bears the burden of proof from an expert who had never provided any opinions in the case. Both those orders plainly confine the parties to serving reply reports—in other words, responsive reports from experts who had previously served opening reports.1 And the conduct of this case shows that both parties understood the reply-report limitation in exactly that way. Never before in this case had either side attempted to serve a “rebuttal” report from a completely new expert who had not previously offered an opening report. Both sides had always confined themselves to replies from experts who had submitted opening reports.

Despite the Court’s clear guidance, Oracle commissioned Dr. Serwin, who had not served any opening report on any issue in the case, to prepare and serve two “rebuttal” reports. The Court should strike both reports under its orders. Moreover, contrary to Oracle’s suggestion in its opposition to Google’s précis letter, nothing in Federal Rule of Civil Procedure 26(a)(2)(D) creates a right to file a “rebuttal” report where a trial court has issued its own express scheduling orders, as this Court did not once but twice.

________________________

1 For the sake of clarity and consistency, this Brief uses the term “opening report” as a shorthand to refer to an expert’s initial report on a given issue. Google intends that term to encompass the terms “full expert report[ ]” [Dkt. 56 ¶ 8], “all of [Oracle’s] damages report” [Dkt. 56 ¶ 9], and “revised damages report” [Dkt. 230 at 15], as used in the Court’s scheduling orders.

1

II. BACKGROUND

The Court first set a complete schedule for expert discovery in a November 19, 2010 case management order. Dkt. 56. With respect to non-damages expert discovery, each party was obligated to serve “full expert reports under FRCP 26(a)(2) as to any issue on which a party has the burden of proof (‘opening reports’)” on July 29, 2011. Id. ¶ 8. Then, within 14 days, or August 12, 2011, the other party “must disclose any expert reports on the same issue (‘opposition reports’).” Id. Within seven days after that, the party with the burden of proof “must disclose any reply reports rebutting specific material in opposition reports.” Id. In that same November 19, 2010 order, the Court set a separate schedule for damages reports, requiring Oracle to “serve all of its damages report” on May 19, 2011. Id. ¶ 9. The Order then contemplated that Google would file a Daubert motion, to be heard on a normal 35-day track. Id. Once the Court resolved that motion, Google would be required to serve its “opposition report” 14 days later, with Oracle being entitled to serve “any reply” report seven days after Google’s opposition report. Id. ¶ 9. The November 19, 2010 order did not mention “rebuttal” reports, much less give any party permission to submit “rebuttal” reports from new experts, either with respect to damages issues specifically, id., or expert issues generally. Id. ¶ 9.

After Oracle served its opening damages report on May 20, 2011, Google filed a Daubert motion. The Court granted that motion in a July 22, 2011 order and set a new schedule for damages expert discovery. Dkt. 230. The Court ordered Oracle to submit its “revised damages report limited to the claims actually to be tried” 35 days before the final pretrial conference— September 12, 2011—and Google to serve “any responsive defense report” 14 days prior to the final pretrial conference—October 3, 2011. Id. at 15-16. This time, the Court did not mention even reply reports, let alone “rebuttal” reports.

With Oracle working on its revised damages report, the parties followed the Court’s order and completed expert discovery on patent and copyright liability issues. Both sides followed the November 19, 2010 order to the letter, serving opening reports on issues where they had the burden of proof—Oracle on its patent and copyright claims and Google on patent invalidity and its copyright affirmative defenses. Then, after the responding party served opposition reports,

2

the party bearing the burden of proof served reply reports from its original experts. Purcell Decl. ¶ 3. Neither Oracle nor Google ever attempted to serve any “rebuttal” report on a liability issue from any expert who had not previously served an opening report. Id. ¶ 5.2

On September 12, 2011, Oracle served its revised damages report—again prepared by Dr. Iain Cockburn, who had drafted the previous damages report stricken by the Court in its July 22, 2011 order. After receiving the Cockburn report, Google contacted Oracle about scheduling Dr. Cockburn’s deposition and discussed whether Oracle had a right to serve a damages reply report and, if Oracle contended it did, when that report would be due.

  • On September 13, 2011, Google asked Oracle if, notwithstanding the fact that the July 22, 2011 order did not mention reply reports, it was taking the position that it had the right to serve a reply report from Dr. Cockburn. Purcell Decl. Ex. A (September 13, 2011 email from Purcell to Holtzman). Google explained that, although it preferred to take Dr. Cockburn’s deposition before Google’s own expert’s report was due, it assumed Oracle would only produce Dr. Cockburn for deposition once, and thus would need to wait if Oracle intended to submit a reply report. Id. Google did not mention “rebuttal” reports.
  • Later that day, Oracle wrote back, reserving its right to submit a reply report. Purcell Decl. Ex. A (September 13, 2011 email from Holtzman to Purcell). Oracle did not raise the issue of “rebuttal” reports.
  • On September 14, 2011, Google responded, disagreeing that Oracle had the right to a reply, but asking Oracle when it believed any such reply would be due, given that the July 22, 2011 order did not mention replies or provide a deadline. Purcell Decl. Ex. A (September 14, 2011 email from Purcell to Holtzman). Google did not mention “rebuttal” reports.
  • Later that day, Oracle took the position that “the reply report” would be due seven days after Google’s opposition report. Purcell Decl. Ex. A (September 14, 2011 email from Holtzman to Purcell) (emphasis added). Again, Oracle did not raise the issue of “rebuttal” reports or mention more than one reply report.
  • On September 15, 2011, Google informed Oracle that, “on the reply report, we think you should go ahead and do one a week after our report,” and asked Oracle to make clear whether it would make Dr. Cockburn available for two depositions. Purcell Decl. Ex. A (September 15, 2011
______________________________

2 With respect to copyright issues, Oracle has the burden of proof on liability and Google has the burden on its affirmative defenses. Accordingly, both parties served three reports—opening, opposition, and reply—from their respective experts. Oracle’s expert reports from Dr. John Mitchell were entitled “opening report,” “report in opposition” and “reply report.” Google’s expert reports from Dr. Owen Astrachan were entitled “opening,” “rebuttal” and “reply” reports. Dr. Astrachan’s second report used the title “rebuttal report,” to distinguish it from his subsequent reply report, but it was in fact an opposition report in response to Dr. Mitchell’s opening report. Purcell Decl. ¶ 4.

3

    email from Purcell to Holtzman) (emphasis added). Google did not discuss the concept of, or any procedure regarding, “rebuttal” reports.

  • On September 16, 2011, Oracle thanked Google “for the clarification of your thinking about reply reports.” Oracle further told Google that “there should be only one deposition of Professor Cockburn,” because the Court “has made the one-deposition process clear.” Oracle took the position that Google “can decide whether to do it before your report is due or later.” Purcell Decl. Ex. B (September 16, 2011 email from Holtzman to Purcell). Oracle then unilaterally stated “we now understand that you will not object to our submission of damages reply/rebuttal reports, should we elect to submit any.” Id. (emphasis added). This was the first time Oracle had ever raised the issue of so-called “rebuttal” damages reports.
  • Later that day, Google replied, noting that, since Oracle was “not willing to produce [Dr. Cockburn] twice,” and was “reserv[ing] the right to submit a reply report, we have little practical choice but to wait and take his deposition.” Google made clear that “we expect that Dr. Cockburn will in fact submit a formal reply if he has any rebuttal opinions.” Purcell Decl. Ex. B (September 16, 2011 email from Purcell to Holtzman) (emphases added). Again, Google made no mention of “rebuttal” reports and did not waive any objections to any further Oracle damages reports or any reports from damages experts other than Dr. Cockburn.
Never during this meet-and-confer process did Oracle ever assert it had the right to serve a stand-alone “rebuttal” report from an expert who had never previously offered an opening expert report, or inform Google it was planning to do so. Purcell Decl. ¶ 9. As discussed above, neither Oracle nor Google had ever previously offered a rebuttal report on any issue in the case. Id. ¶ 5. Google never agreed that Oracle could serve “rebuttal” reports, either in response to Oracle’s counsel’s September 16, 2011 email or at any other time. Id. ¶ 9.

On October 10, 2011, Oracle served two reply reports by Dr. Cockburn—a 46-page reply report on patent damages and a 27-page reply report on copyright damages. That same day, Oracle also served two “rebuttal” damages reports from Dr. Kenneth Serwin, who had never previously submitted a report in this case. Purcell Decl. ¶ 2. Dr. Serwin’s “rebuttal” reports on the patent and copyright damages issues were 50 pages and 23 pages, respectively.

III. ARGUMENT

Twice in this case—first in its November 19, 2010 Case Management Order and again in its July 22, 2011 Daubert order—the Court has given the parties clear instructions on how to conduct expert discovery, including damages expert discovery. The November 19, 2010 order provides for an opening “damages report,” an “opposition report” by the opposing party, and a

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“reply.” Dkt. 56 ¶ 9. The July 22, 2011 order sets a schedule authorizing one “revised damages report” and one “responsive defense report.” Dkt. 230 at 15-16. Although the revised schedule did not provide for any “reply” report, Google is willing to accept Dr. Cockburn’s “reply” report, given the Court’s November 19, 2010 order and the parties’ typical practices in expert discovery throughout the case.

But what neither order provides for is the right to serve “rebuttal” reports from an expert who has not previously submitted an opening report—on damages or any other subject. The most sensible understanding of a “reply” report is a report, written by the original speaker, replying to the “opposition” [Dkt. 56 ¶ 9] or “responsive defense” [Dkt. 230 at 16] report of the other side. Indeed, throughout this lengthy and complicated case, both Oracle and Google have always behaved consistent with that understanding. Neither party ever has served a “rebuttal” report, on any issue, from any expert who had not previously submitted an opening report. Both parties have always confined themselves to serving reply reports from experts who submitted opening reports. Google has relied on the language in the Court’s order and the parties’ consistent practice and refrained from serving any “rebuttal” reports by experts who did not submit opening reports. Oracle’s service of the Serwin reports in addition to Dr. Cockburn’s two reply reports violates the parties’ consistent practices, in addition to finding no support in the Court’s previous orders. Moreover, Dr. Serwin is an economist, just like Dr. Cockburn, so there is no reason why Dr. Cockburn could not have performed the analysis in the Serwin reports.

In opposing Google’s précis letter requesting permission to file this motion, Oracle cited Federal Rule of Civil Procedure 26(a)(2)(D), which does not expressly prohibit rebuttal reports by experts who had not served opening reports. But nothing in Rule 26(a)(2)(D) provides an express right to new rebuttal experts, either—and in any event that rule “only governs in the absence of a scheduling order.” Hynix Semiconductor v. Rambus, No. CV- 00-20905 RMW, 2008 U.S. Dist. LEXIS 12195 at *17 (N.D. Cal. Feb. 3, 2008). In this case, the Court has issued not one but two detailed scheduling orders, which would override any default rule in Rule 26(a)(2)(D). In fact, even where a scheduling order is silent as to the parties’ entitlement to rebuttal experts, that scheduling order overrides

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Rule 26. “The critical question … is whether the court has spoken on the subject of expert disclosures generally, not whether it has specifically substituted its own deadlines for those proposed in” Rule 26(a)(2)(D). Int’l Bus. Machines Corp. v. Fasco Indus., Inc., C-93-20326 RPA, 1995 WL 115421 (N.D. Cal. Mar. 15, 1995). It would be “mistaken” to read into Rule 26(a)(2)(D) “a substantive right to supplement an initial witness disclosure with rebuttal experts.” Id. at *2.3

Accordingly, because Oracle had no basis for serving any “rebuttal” reports from experts who did not previously serve opening reports, Google respectfully requests that the Court strike Dr. Serwin’s two October 10, 2011 “rebuttal” reports on damages issues.

Dated: October 21, 2011

KEKER & VAN NEST LLP

By: s/ Robert A. Van Nest
ROBERT A. VAN NEST
Attorneys for Defendant
GOOGLE INC.

___________________________

3 Both Hynix and International Business Machines were decided before the 2010 amendments to the Federal Rules of Civil Procedure, which renumbered Rule 26(a)(2)(C) as Rule 26(a)(2)(D). When those cases refer to “Rule 26(a)(2)(C),” they are discussing the provision at issue here, the current Rule 26(a)(2)(D).

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558

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

ORACLE AMERICA, INC.,
Plaintiff,
v.
GOOGLE INC.,
Defendant.

Case No. CV 10-03561 WHA

ORACLE AMERICA INC.’S MOTION TO
EXCLUDE PORTIONS OF THE EXPERT
REPORTS OF GREGORY K. LEONARD
AND ALAN J. COX

Dept.: Courtroom 8, 19th Floor
Judge: Honorable William H. Alsup

_______________________________

TABLE OF CONTENTS

INTRODUCTION ...... 1

STANDARD OF REVIEW ...... 3

ARGUMENT ...... 4

I. Leonard’s and Cox’s Technical Opinions That Google Had “Good” And
“Multiple Acceptable And Effective Non-Infringing Alternatives” Do Not
Meet The Standards Established For Expert Testimony And Should Be
Stricken ...... 4

A. Leonard and Cox Are Not Qualified To Provide Technical
Opinions Concerning Google’s Non-Infringing Alternatives And Other Technical Matters ...... 4

B. Leonard’s and Cox’s Opinions Are Overwhelmingly Based On
Spoon-Fed Interview Statements By Google Employees ...... 6

C. The Interviews on Which Drs. Leonard and Cox Rely Are
Inconsistent With The Record Evidence ....... 8

D. Drs. Leonard and Cox Offer Opinions Unsupported By Any
Evidence At All ...... 9

II. Leonard And Cox Have No Experience, Skill, Or Qualifications That
Would Permit Them To Testify As To The Level Of Fragmentation Or
“Stagnation” In Java ...... 11

III. Leonard And Cox Offer Opinions Based On Incorrect Legal
Assumptions ...... 12

IV. Leonard Lacks The Knowledge And Expertise To Offer Any Opinions
Critical Of The Conjoint Survey ...... 13

CONCLUSION ...... 14

i

TABLE OF AUTHORITIES

CASES

AT&T Wireless Services of California LLC v. City of Carlsbad,
308 F.Supp.2d 1148 (S.D. Cal. 2003) ...... 12

Cabrera v. Cordis Corp., 134 F.3d 1418 (9th Cir. 1998) ...... 14

Carnegie Mellon Univ. v. Hoffmann-LaRoche, Inc.,
55 F.Supp.2d 1024 (N.D. Cal. 1999) ...... 14

Daubert v. Merrell Dow Pharmaceuticals, Inc.,
509 U.S. 578 (1993) ...... passim

DSU Medical Corp. v. JMS Co., Ltd.,
296 F.Supp.2d 1140 (N.D. Cal 2003) ....... 3

General Elec. Co. v. Joiner,
522 U.S. 136 (1997) ...... 10

Geo. M. Martin Co. v. Alliance Machine Systems Int’l, LLC,
2008 WL 2008638 (N.D. Cal. May 6, 2008) ...... 6

Integra Lifesciences, Ltd. v. Merck KGaA,
331 F.3d 860 (Fed. Cir. 2003) ...... 3

Kilgore v. Carson Pirie Holdings, Inc.,
2006 WL 3253490 (6th Cir.) ...... 11

Lust v. Merrell Dow Pharms., Inc.,
89 F.3d 594 (9th Cir. 1996) ...... 4

Matrix Motor Co. v. Toyota Jidosha Kabushiki Kaisha,
290 F. Supp. 2d 1083 (C.D. Cal. 2003) ...... 12

Nuveen,
262 Fed. Appx. at 824-25 ...... 11

Polar Bear Prods, Inc. v. Timex Corp.,
384 F.3d 700 (9th Cir. 2004) ...... 13

Rambus Inc. v. Hynix Semiconductor Inc.,
254 F.R.D. 597 (N.D. Cal. 2008) ...... 6

Riles,
298 F.3d at 1311 ...... 9

ii

Robinson v. G.D. Searle & Co.,
286 F. Supp. 2d 1216 (N.D. Cal. 2003) ...... 9

Southland Sod Farms v. Stover Seed Co.,
108 F.3d 1134 (9th Cir. 1997) ...... 13

Sundance, Inc. v. DeMonte Fabricating Ltd.,
550 F.3d 1356 (Fed. Cir. 2008) ...... 5

Therasense, Inc. v. Becton, Dickinson and Co.,
2008 WL 2323856 (N.D. Cal. May 22, 2008) ...... 2, 6, 8, 9

Uniloc USA, Inc. v. Microsoft Corp.,
632 F.3d 1292 (Fed. Cir. 2011) ...... 3, 8

Wal-Mart Stores, Inc. v. Qore, Inc.
2009 WL 279096 (N.D. Miss. Feb. 5, 2009) ......12

STATUTES

17 U.S.C. § 504(b) ...... 13

RULES

FED. R. EVID. 702 ...... passim

FED. R. EVID. 703 ...... 1, 3, 6, 11

FED. R. EVID. 401 ...... 1

FED. R. EVID. 402 ...... 1

FED. R. EVID. 403 ...... 1

iii

Plaintiff Oracle America, Inc. moves to strike significant portions of the expert reports of Dr. Gregory K. Leonard and Dr. Alan J. Cox, damages experts for Defendant Google, Inc. Those Reports, fail to meet the standards for expert opinion and testimony established by Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 578 (1993) and as set forth in Federal Rules of Evidence 401, 402, 403, 702, and 703.

INTRODUCTION

On October 3, 2011 Google served the damages expert reports of Professor Leonard (patent) and Professor Cox (copyright). (Declaration of Meredith Dearborn (“Dearborn Decl.”) at Ex. 1 (Leonard Report); Ex. 2 (Cox Report).) Dr. Cox’s report incorporates Dr. Leonard’s report in its entirety, and the two reports contain numerous passages that are identical. Dr. Leonard opines that Oracle is entitled to a reasonable royalty of $27.8 million for Google’s infringement of its patents. Using the same evidence, Dr. Cox opines that an appropriate award to Oracle for copyright infringement would be $6.2 million under the theory of lost fair market value license or $21.1 million based on purportedly comparable licenses that Sun had with Danger and handset manufacturers. Drs. Leonard and Cox reach these conclusions by adopting essentially the same framework for calculation of damages used by Oracle’s damages expert, Prof. Cockburn, but adjusting downward because, in their opinions, Google had non-infringing alternatives to the patented and copyrighted elements, and any injury to Sun and Java was actually lessened by Google’s infringement restoring order to a “highly fragmented” Java mobile platform. Neither of these “opinions” is admissible.

First, Drs. Leonard and Cox, both economists with no technical expertise, offer extensive opinions that Google had “multiple acceptable and effective non-infringing alternatives” to each of the Java patents and the copyrights in suit. (Leonard Report, 10-31, 74-78, 80; Cox Report, 23-27, 61.) These opinions purport to assess the technical and performance attributes of the asserted alternatives, not their business implications. In large measure, as discussed below, they are based on Drs. Leonard’s and Cox’s own say-so and last-minute interviews with Google employees. Even where they refer to Google’s technical experts, Drs. Leonard and Cox do not merely adopt the opinions of those experts; they go further to affirmatively assert that Oracle’s technical expert is wrong on technical matters. Neither Dr. Cox nor Dr. Leonard is competent to offer such opinions. Neither should be permitted to

1

testify about purported non-infringing alternatives or base any economic analysis on their purported assessment of the presence of such alternatives.

Second, Drs. Leonard and Cox fail to tie their damages opinions – including but not limited to their core opinions regarding supposed non-infringing alternatives – to the contemporaneous evidence or even the sworn testimony of witnesses. Instead, Drs. Leonard and Cox rely extensively on interviews with Google employees arranged only after Prof. Cockburn had submitted his amended damages report. Indeed, Dr. Leonard cites a grand total of 14 Google documents, compared to 66 citations to interviews. Dr. Cox cites only 18 Google documents (mostly the same ones Dr. Leonard cites) but 44 interview references.

Analyses based on spoon-fed “facts” are inherently unreliable. See Therasense, Inc. v. Becton, Dickinson and Co., 2008 WL 2323856, *1-3 (N.D. Cal. May 22, 2008) (Alsup, J.). But these opinions are doubly unreliable because many of the supposed “facts” Drs. Leonard and Cox glean from the interviews are contradicted by the contemporaneous record evidence. In many cases what the interviewees supposedly said contradicts documents those very witnesses wrote. On still other factual matters, Drs. Leonard and Cox cite to no evidence at all – they just say so. The failure to use reliable, contemporaneous evidence, and instead substitute ex post interview statements and the experts’ own invented facts render the reports unreliable and inconsistent with the standards of Daubert and the Rules of Evidence. Each and every proposition in the reports that rests solely on interview statements or ipse dixit should be stricken, and Drs. Leonard and Cox should be precluded from providing trial testimony regarding or based on such points.

Third, Drs. Leonard and Cox opine – based, yet again, on interviews and web searches – that Java was already “heavily fragmented” or “stagnant” before Google’s infringement began. Neither Dr. Leonard nor Dr. Cox applies any standard or metric, scientific or otherwise, to measure the level of supposed pre-existing fragmentation. Neither has any training, experience, or expertise that would allow him to testify competently as to the level of fragmentation in a software standard or the extent to which it is vital and dynamic, as opposed to “stagnant.” Consequently, their opinions regarding the supposed fragmentation of Java, and the impact of such fragmentation on any hypothetical negotiation between the parties or any Sun or Oracle lost profits, should be stricken and excluded at trial.

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Fourth, Drs. Leonard and Cox both offer opinions that are contrary to law. Dr. Leonard argues that Oracle’s patent damages should be reduced for failure to mitigate damages, despite the fact Google pled no such defense, and it has sought no jury instruction for such a defense. Dr. Cox opines that Google’s liability for infringer’s profits should be reduced if Google had non-infringing alternatives to the Java copyrights, contrary to the very principle of disgorgement.

Fifth, Dr. Leonard ventures beyond his expertise to critique the scientific analysis – a conjoint survey – conducted by Dr. Steven Shugan. Dr. Shugan is an expert in using surveys and sophisticated statistical methods to assess consumer preferences. Dr. Leonard is not. As explained in Dr. Shugan’s accompanying declaration, Dr. Leonard is unfamiliar with the relevant literature, cites articles for propositions they do not contain or actually reject, advocates methodologies that are novel and untested in place of the established and reliable techniques used by Dr. Shugan, and misapplies basic terms and concepts that would be familiar to anyone with actual expertise in the field. The entirety of Dr. Leonard’s report regarding conjoint analysis should be stricken. Dr. Leonard should be precluded from offering testimony regarding Dr. Shugan’s work, Dr. Cockburn’s reliance on it, or conjoint analysis more generally.

STANDARD OF REVIEW

A witness who is qualified as an expert by knowledge, skill, experience, training or education may testify in the form of an opinion or otherwise if the testimony is based on sufficient facts or data. See FED. R. EVID. 702. Expert opinion based on methodologies that are scientifically unreliable and on data upon which no reasonable expert would rely is inadmissible. See FED. R. EVID. 702, 703; see also DSU Medical Corp. v. JMS Co., Ltd., 296 F.Supp.2d 1140, 1156 (N.D. Cal 2003) (“There is a threshold issue of admissibility, however, requiring the Court to examine the connection between the opinion proffered and the reconstructed market data.”). A damages expert, in particular, must sufficiently “tie the expert testimony on damages to the facts of the case.” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1315 (Fed. Cir. 2011) (citing Daubert) (internal punctuation marks omitted); Integra Lifesciences, Ltd. v. Merck KGaA, 331 F.3d 860, 870 (Fed. Cir. 2003) (“although an exercise in approximation,” the hypothetical negotiation analysis “must be based on sound economic and factual predicates”); vacated on other grounds, 545 U.S. 193 (2005).

3

Because expert testimony can “be both powerful and misleading, the Supreme Court emphasized the “gatekeeping responsibility” federal judges have over the admission of expert testimony. Daubert, 509 U.S. at 595, 597. As the proponent of the expert, Google has the burden of proving admissibility. Lust v. Merrell Dow Pharms., Inc., 89 F.3d 594, 598 (9th Cir. 1996).

ARGUMENT

I. Leonard’s and Cox’s Technical Opinions That Google Had “Good” And “Multiple
Acceptable And Effective Non-Infringing Alternatives” Do Not Meet The Standards
Established For Expert Testimony And Should Be Stricken.

A core premise for both Dr. Leonard and Dr. Cox is that Google had good and acceptable noninfringing alternatives to the Java patents and copyrights in suit. Drs. Leonard and Cox have neither the qualifications nor the record support to proffer opinions on the technical subject of non-infringing alternatives. They base those opinions on their own unqualified assertions and undocumented interviews that occurred after Prof. Cockburn submitted his amended report.

A. Leonard and Cox Are Not Qualified To Provide Technical Opinions Concerning
Google’s Non-Infringing Alternatives And Other Technical Matters.
“A witness qualified as an expert by knowledge, skill, experience, training or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data . . . .” FED. R. EVID. 702. Drs. Leonard’s and Cox’s opinions that Google had “good” and “multiple acceptable and effective” non-infringing alternatives to the patents and copyrights in suit (Leonard Report, 10-31, 74-78, 80; Cox Report, 23-27, 61), and that Oracle’s technical expert, Dr. Mitchell, is wrong about alternatives (Leonard Report, 27-29), fail this test.

Dr. Leonard holds a Bachelor of Science in Applied Mathematics-Economics and a Doctorate in Economics. (Leonard Report, App’x A.) Dr. Cox holds a Masters degree in Economics and a Doctorate in Business Administration. (Cox Report, App’x A.) Neither has any experience with or training in computer science or other technical fields.

Nonetheless, Dr. Leonard offers extensive technical opinions, including that:

  • [REDACTED] Leonard Report, 11-13 (citing interviews and a blog, but no technical experts));
  • [REDACTED] (id.,13-19 (primarily citing “interviews” and only one Google-produced document));

4

  • [REDACTED] without Oracle’s patents (id.,20-24 (citing interviews in 20 out of 30 footnotes, and no Google documents)); and
  • [REDACTED] (id.,28).

Where Drs. Leonard and Cox occasionally cite to Google’s technical experts concerning noninfringing alternatives, their opinions extend beyond what they cite. For example, Dr. Leonard opines that C++ “would have had certain advantages” over choosing Java. (Id.,14.) However, only one of the purported advantages that Dr. Leonard lists is attributable to Google’s technical experts. (Id., 14 n.31.) Similarly, while Dr. Leonard cites to Google’s technical expert in opining that the functionality provided by the ’520 patent could have been removed (Id.,20 n.56, n.57, n.59), he has no citation to that expert for his conclusion that “Google could have not included this functionality without any performance loss for Android that was noticeable to end users” (id., 20). And in discussing the ’720 patent, Leonard cites to Google’s technical expert to state that “[i]t is trivial to remove this functionality,” but fails to cite to any technical expert for his opinion that a non-infringing alternative was the removal of the Zygote process that uses that functionality. (Id., 23.)

In all, his assessment of supposed non-infringing alternatives leads Dr. Leonard to conclude that “Google would not have been willing to pay much of a royalty to obtain a license to the patents-insuit.” (Id. 18.) Dr. Cox incorporates Dr. Leonard’s opinions into his report and also independently opines that Google could have used a programming language other than Java and hence relied upon different patents and copyrights. (Cox Report, 23.)

Neither Dr. Leonard nor Dr. Cox is “qualified as an expert” in computer science or programming, and neither can “assist the trier of fact to understand the evidence or to determine a fact in issue.” Sundance, Inc. v. DeMonte Fabricating Ltd., 550 F.3d 1356, 1364-65 (Fed. Cir. 2008) (“Allowing a patent law expert without any technical expertise to testify on the issues of infringement and validity amounts to nothing more than advocacy from the witness stand.”) Technical opinions proffered by either expert are unreliable and cannot be presented to the jury. To qualify as an expert on technical issues such as infringement or validity, a witness must be a person “of an ordinary skill in the art.”) Id. at 1361; see also Rambus Inc. v. Hynix Semiconductor Inc., 254 F.R.D. 597, 603-05 (N.D.

5

Cal. 2008) (expert with 33 years experience in electrical engineering and semiconductor design precluded from providing certain opinions about commercial success).

B. Leonard’s and Cox’s Opinions Are Overwhelmingly Based On Spoon-Fed Interview Statements By Google Employees
Rule of Evidence 703 permits an expert to offer opinion testimony based on materials of a type reasonably relied on by experts in a given field. In Therasense, this Court warned: “One of the worst abuses in civil litigation is the attempted spoon-feeding of client-prepared and lawyer-orchestrated ‘facts’ to a hired expert who then ‘relies’ on the information to express an opinion.” 2008 WL 2323856, at *1; see also Geo. M. Martin Co. v. Alliance Machine Systems Int’l, LLC, 2008 WL 2008638, at *1 (N.D. Cal. May 6, 2008) (Alsup, J.) (“Important factual points should not be proven through experts spoon-fed by wholly biased sources.”). Drs. Leonard and Cox are guilty of this abuse. Unable to find adequate support for their opinions in the reports and testimony of Google’s technical experts or in record evidence, they rely primarily on interviews with Google employees conducted the week prior to service of the Reports and after the conclusion of fact depositions. In over 25 pages of purported analysis regarding non-infringing alternatives (Leonard, 10-31, 74-78, 80), Dr. Leonard cites interviews with Google employees 56 times; he cites precisely 2 Google documents. Similarly, in over 5 pages of discussion (Cox Report, 23-27, 61), Dr. Cox cites interviews 24 times, and zero contemporaneous documents.

Such heavy reliance on interviews, to the near exclusion of the record evidence, eliminates the reliability of Drs. Leonard’s or Cox’s technical opinions that Google supposedly had non-infringing alternatives. Permitting such testimony would improperly allow Google to circumvent the hearsay rules by filtering supposed facts through experts, while simultaneously keeping the facts secret from the other side until after the close of discovery. Therasense, 2008 WL 2323856, at *1. That is precisely what Google has done. Over and over again, Google’s damages experts rely only on interviews for critical propositions. As just a few examples of many, Dr. Leonard:

  • cites only an interview with Android engineer Dan Bornstein to opine that [REDACTED] (Leonard, 12)

6

  • cites only interviews with Google employees Tim Bray and Brian Swetland for the double hearsay assertion that [REDACTED] (Id. at 14);
  • cites only interviews with Google employees Andy Rubin, Bornstein, and Swetland to opine that [REDACTED] (Id. at 18);
  • cites only interviews with Bray to opine that [REDACTED] (Id. at 26);
  • cites only an interview with Bornstein to opine that Google had [REDACTED] (Id. at 27);
  • cites only an interview with Rubin to opine that OEMs [REDACTED] Id. at 30.)

Similarly, Dr. Cox relies almost exclusively on interviews with Google employees for his opinion regarding non-infringing alternatives, citing to interviews 24 times, 14 of which serve as the sole source for his stated opinion. For example, Dr. Cox

  • cites only an interview with Bray to opine that the choice of the Java language has imposed [REDACTED] (Cox Report, 22-23);
  • cites only interviews with Bray and Swetland to opine that [REDACTED] (Id., 25);
  • cites only interviews with Rubin, Bornstein, and Swetland to opine [REDACTED] Id., 61.)

Opinions such as these – based on interview testimony without sufficient factual predicate – do not meet the established standard for expert testimony, are unreliable, and must be stricken.

7

C. The Interviews on Which Drs. Leonard and Cox Rely Are Inconsistent With The Record Evidence
Compounding the problem inherent in its experts’ extensive reliance on interviews, Google has refused to make available five of the seven interviewees even for limited two-hour depositions regarding the interviews, all of which took place well after the close of fact discovery. (Dearborn Decl. Ex. 3.)_ But even such depositions could not cure the defect in the Reports, because the spoon-fed “facts” culled from these interviews – in many cases the only evidence cited for critical propositions – contradict the record evidence, virtually all of which Drs. Leonard and Cox ignore. Consequently, Drs. Cox and Leonard fail to “sufficiently tie the expert testimony on damages to the facts of the case.” Uniloc, 632 F.3d at 1315.

The incurable problem with this practice occurs when the expert is permitted to regurgitate what he has been fed as though it were, contrary to fact, the product of his independent analysis of an objective record. As this Court has held, “no professional should reasonably rely on such a rigged and biased source of information for any materially important fact to his or her opinion.” Therasense, 2008 WL 2323856, at *2. Drs. Leonard and Cox have gone one step further, relying on the “rigged and biased source of information” to the exclusion of the record evidence. To list just a few examples:

  • Drs. Leonard and Cox opine that C++ was a viable alternative to the Java programming language, citing to interviews with Andy Rubin, Dan Bornstein, and Brian Swetland. (Leonard Report at 13; Cox Report at 24), But they ignore that in October 2005 [REDACTED] (Dearborn Decl. Ex. 4 (GOOGLE-01-00019527)), [REDACTED] (Dearborn Decl. Ex. 5 (GOOGLE-01-00019511)); [REDACTED] Dearborn Decl. Ex. 6 (GOOGLE-01-00075935).
  • Dr. Leonard states, citing to his interview of Andy Rubin, that in the late 2005 time frame, Google was considering both the native compiler approach and the virtual machine approach, and it was a close call for Google as to which direction to take (Leonard Report at 11), but he ignores documents that – as early as August 2005 – made clear that [REDACTED] (Dearborn Decl. Ex. 8 (GOOGLE-04-00055169).)

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  • Dr. Cox states that “From my conversations with Mr. Rubin and other Google employees, it is clear that they believe that it would have been as easy for Google to use other programming languages to develop the Android architecture and that there was a very large community of programmers able to write applications in those alternative languages” (Cox Report at 20), but completely ignores documents such as the October 2005 internal e-mail in which Mr. Rubin told Google co-founder and current CEO Mr. Page that [REDACTED] (Dearborn Decl. Ex. 4 (GOOGLE-01-00019527).)

The spoon-fed “facts” obtained during interviews conducted days prior to the service of the Reports which are contradicted by contemporaneous record evidence are not “sufficient facts or data” as required by Rule 702, nor do they form an adequate “factual predicate” as required by the Federal Circuit. See Riles, 298 F.3d at 1311; Therasense, 2008 WL 2323856, at *1-2; Robinson v. G.D. Searle & Co., 286 F. Supp. 2d 1216, 1221 (N.D. Cal. 2003) (expert’s testimony inadmissible when based on factual premise directly contradicted by evidence on the record).

Moreover, the “facts” on which Drs. Leonard and Cox rely as to non-infringing alternatives are materially important to their damages analyses. Dr. Leonard relies heavily on the alleged availability of non-infringing alternatives to Google in concluding that Sun’s bargaining position was weak and Google’s was strong (Leonard Report at 10, 44) and as a rationale for downward or neutral pressure from Georgia-Pacific factors 6, 7, 8, 9,11, 13 (id. at 68-71) in his patent damages analysis. Dr. Cox relies on alleged alternatives to conclude that copyright damages should be zero (Cox Report at 27, 61); to assert that the “‘element of profit’ that is attributable to the allegedly infringed API claim contained in the Android framework is very small or zero” (id. at 38); to explain why Google was unwilling to enter into a license with Sun (id.); to determine that Sun could not have prevented any losses by denying a license to Google (id. at 48); and as a significant factor in his hypothetical negotiation analysis (id. at 60-61).

Each aspect of the reports relying on assessments of non-infringing alternatives should be stricken and Drs. Leonard and Cox should be precluded from offering opinions at trial based on the conclusion that Google had non-infringing alternatives to the copyrights and patents in suit.

D. Drs. Leonard and Cox Offer Opinions Unsupported By Any Evidence At All
In many cases, Drs. Leonard and Cox cite no evidence at all for key propositions. For example, Dr. Leonard states that [REDACTED]

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[REDACTED] (Leonard Report at 12), that [REDACTED] (id. at 15), that [REDACTED] (id. at 25), and that smartphone manufacturers [REDACTED] (Id. at 30.) In each case, Dr. Leonard cites nothing in support of the proposition.

Such reliance on ipse dixit is impermissible. See General Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997) (“But nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert.”); Daubert, 509 U.S. at 590 (expert testimony must connote “more than subjective belief or unsupported speculation”). This is particularly true where the ipse dixit is not within the expert’s area of expertise, as with Dr. Leonard’s opinions about native compilers, attractiveness of programming languages, and the importance of application speed.

Many of Dr. Cox’s opinions suffer from the same defect. Without citation, he speculates that “it was not until handset manufacturers such as Motorola and Samsung decided to design and market Android handsets that Android became successful” (Cox Report at 26) and [REDACTED] (Id.) Without citation, he opines that the APIs at issue contribute a small part of the functionality of the Dalvik VM. Without citation, he states that [REDACTED] (Id. at 28). Without citation, he declares that [REDACTED] (Id.) Dr. Cox then uses this unsupported assertion to support his claim [REDACTED] and thus a [REDACTED] (Id. at 28) These unsupported, ipse dixit propositions render Dr. Cox’s analysis of supposed non-infringing alternatives unreliable and inadmissible.

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II. Leonard And Cox Have No Experience, Skill, Or Qualifications That Would Permit Them To Testify As To The Level Of Fragmentation Or “Stagnation” In Java.

In near-verbatim sections of their respective reports, Drs. Leonard and Cox each opine that Sun did not suffer significant losses from the deployment of Android because Java was already “stagnant” and “highly fragmented” at the time of Android’s launch (Leonard Report at 31-37; Cox Report at 43- 48). Drs. Leonard and Cox have no expertise that would allow them to offer these opinions. Fed. R. Evid. 702. Instead, they rely heavily on an interview with John Rizzo (Leonard Report at 35-36; Cox Report at 47), internet blog posts and random comments on internet bulletin boards (Leonard Report at 35-36; Cox Report at 44, 46-48), and “various online sources” (Leonard Report at 35; Cox Report at 47),1 but ignore record evidence, including Google documents that extol the virtues of Java technology based on its minimal fragmentation. For example, a document written by one of the interviewees himself in April 2006 made clear:

[REDACTED] (Dearborn Decl. Ex. 9 (GOOGLE-02-00111218).)
Similarly, Drs. Leonard and Cox completely ignore documents that show that Sun fought to ensure compatibility, including in the license agreement that was being negotiated between Sun and Google. (Dearborn Decl. Ex. 4 (GOOGLE-01-00019527 at 528) [REDACTED].)

In short, both Dr. Leonard and Dr. Cox fail to rely on facts or data customarily relied upon by experts in the field. FED. R. EVID. 703; Nuveen, 262 Fed. Appx. at 824-25; Kilgore v. Carson Pirie Holdings, Inc., 2006 WL 3253490, at *4 (6th Cir.) (internet article an unreliable basis for methodology where expert did not know on what methodology the article was based and conducted no independent research); Matrix Motor Co. v. Toyota Jidosha Kabushiki Kaisha, 290 F. Supp. 2d 1083, 1086 (C.D.

__________________________

1 Both also repeatedly cite a YouTube video of James Gosling speaking on November 17, 2010 – three months after this lawsuit was filed – and falsely refer to him as a “then Sun employee,” when he in fact he had left Sun seven months earlier. (Leonard Report, 35-36; Cox Report, 47-48).

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Cal. 2003) (expert reports “irrelevant” where they “merely recite hearsay statements, often verbatim, culled from a variety of Internet websites”).

Moreover, Drs. Leonard and Cox neither attempt to define “stagnant” or “fragmented” nor apply any methodology, scientific or otherwise, that would distinguish between “stagnant” and “dynamic” software platforms, or between “highly fragmented” and “minimally fragmented” ones. Expert opinions that neither employ nor can be evaluated against objective criteria do not meet the threshold standard of admissibility. AT&T Wireless Servs. of Cali. LLC v. City of Carlsbad, 308 F.Supp.2d 1148, 1157 (S.D. Cal. 2003); see also Daubert, 509 U.S. at 593 (“Ordinarily, a key question to be answered in determining whether a theory or technique is scientific knowledge that will assist the trier of fact will be whether it can be (and has been) tested.”). As one court held:

Daubert’s gatekeeping function is specifically designed to keep standardless testimony out of evidence. Majors opines on a variety of subjects, but he offers no guide as to where his conclusions came from or how one might judge the value of those conclusions. Operating in a standardless world allows Majors to get on the stand and make any assertion he chooses without regard for the truth. There is no way to judge those who operate without bounds. It is unfair to put a jury in the position of having to try.
Wal-Mart Stores, Inc. v. Qore, Inc., 2009 WL 279096, *2 (N.D. Miss. Feb. 5, 2009). Drs. Leonard’s and Cox’s standardless opinions on “stagnation” and “fragmentation” fare no better.

III. Leonard And Cox Offer Opinions Based On Incorrect Legal Assumptions. Prof. Cockburn made an upward adjustment to the starting point license to account for Sun’s expectation of revenue from providing implementations for a compatible Android. Dr. Leonard opines that this adjustment should be “zero” because Sun “could have mitigated” the loss of that opportunity (Leonard Report at 83; see also id. at 84 n.278.) But Google pleaded no mitigation defense and it has not offered any jury instruction on mitigation. Google should not be able to plead a defense it has never once raised by offering an opinion through its expert.

Dr. Cox’s discussion of infringer’s profits also rests on an error of law. Dr. Cox argues that infringer’s profits should be “very small or zero” because Google supposedly had non-infringing alternatives to the APIs and code files that it infringed. (Cox Report, 38). That is wrong. A prevailing plaintiff in a copyright case is entitled to recover the infringer’s profits attributable to the infringement,

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to the extent not captured by actual damages. 17 U.S.C. § 504(b). The defendant is not permitted to avoid disgorgement by arguing that it would have been able to earn those same profits without infringing. To allow such a result would undermine the purpose of infringer’s profits, which requires simple disgorgement in order “[t]o take away incentives for would-be infringers and to prevent the infringer from unfairly benefitting from a wrongful act.” Polar Bear Prods, Inc. v. Timex Corp., 384 F.3d 700, 708 (9th Cir. 2004) (citations and quotations omitted).

IV. Leonard Lacks The Knowledge And Expertise To Offer Any Opinions Critical Of The Conjoint Survey.

In analyzing apportionment, Oracle’s damages expert Prof. Cockburn worked with an expert in conjoint marketing surveys, Dr. Steven M. Shugan, to conduct a survey and assess the importance to consumers of the attributes provided by the patents and copyrights in suit. Dr. Leonard, offering absolutely no affirmative apportionment analysis of his own, tries to critique the conjoint analysis and claims that it cannot be used to calculate damages, but his attack shows only that he lacks the necessary expertise. Dr. Shugan, who actually is an expert in survey-based research methods and statistical analyses of their results, has submitted a declaration detailing the ways in which Dr. Leonard’s analysis is inexpert, incorrect, and unreliable. (Declaration of Steven M. Shugan (“Shugan Decl.”).)

Dr. Leonard begins with an inappropriate bias against survey-based research that cannot be reconciled with its proven and accepted use in courts, academia, and business. (Compare Leonard Report at 109 (characterizing survey-based methods as “controversial”) with Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1143 (9th Cir. 1997) (holding that “survey evidence should ordinarily be found sufficiently reliable under Daubert”).) Given his hostility toward survey-based research, it is perhaps unsurprising that he demonstrates little familiarity with its literature, methods, research, and principles. Specifically,

  • Dr. Leonard asserts that there are “established results in the literature demonstrating hypothetical bias in conjoint studies” (Leonard Report at 111 fn.340). In fact, there are not. The literature establishes that hypothetical bias is irrelevant with established consumer products, such as smartphones, and is a factor only in the context of abstract goods, such as environmental clean-up. (Shugan Decl. ¶¶ 10, 12.)
  • Dr. Leonard cites articles from the consumer behavior and psychological literature for propositions that they do not contain. (Id. ¶ 13).

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  • Dr. Leonard cites articles from the consumer behavior and psychological literature for propositions that they actually reject. (Id. ¶ 14.)
  • Dr. Leonard ignores the fact that even the articles that he himself cites recognize that conjoint analysis methods and related choice-based survey methods are routine, reliable, and based on years of research. (Id. ¶ 15.)
  • Dr. Leonard misinterprets the work of Prof. Min Ding on hypothetical bias as a critique of conjoint analysis and as indicating that Dr. Shugan’s research is inaccurate. In fact, Prof. Ding affirms the reliability of conjoint analysis. If Prof. Ding’s analyses were relevant, they would establish that Dr. Shugan’s conclusions are conservative. (Id. ¶¶ 16-19.)
  • Dr. Leonard’s challenge to the conjoint survey is based on his mistaken belief that the conjoint survey is a “stated preference survey.” It is not. Anyone with expertise in the field would know the difference between conjoint analysis and stated preference surveys, and would further know that the problems with stated preference surveys cited by Dr. Leonard do not apply to conjoint analysis. (Id. ¶¶ 20-21.)
  • Dr. Leonard incorrectly assumes that consumers will always choose a lower price if other attributes are held constant, despite extensive literature demonstrating that this is not so, and explaining why. (Id. ¶ 22.)
  • Dr. Leonard mischaracterizes standard robustness measures for conjoint analysis, such as U2 and hit rate, as “tests” for “hypothetical bias.” (Id. ¶ 24.)

In short, Dr. Leonard’s discussion of the conjoint analysis (1) “fails to understand or apply the basic principles that are accepted in the field of survey-based research” (Shugan Decl. ¶ 8); (2) “suffers from sufficient ambiguities, errors and misrepresentations that any submitted article based on that analysis would not survive a peer-review process of a scholarly journal” (id.); and (3) “reveal a fundamental lack of understanding of choice-based-conjoint or statistical analyses” (id. ¶ 25). See Daubert, 509 U.S. at 593-94 (emphasizing importance of peer review standards); Cabrera v. Cordis Corp., 134 F.3d 1418 (9th Cir. 1998) (expert testimony unreliable because it was specifically prepared for trial and had no support in medical literature); Carnegie Mellon Univ. v. Hoffmann-LaRoche, Inc., 55 F.Supp.2d 1024, 1032-33 (N.D. Cal. 1999) (exclusion of expert testimony upon finding that studies relied upon were not sufficient individually or in combination to support expert’s opinion).

CONCLUSION

For the aforementioned reasons, Oracle respectfully requests that the Court strike those portions of the Leonard and Cox reports relating to, and preclude Drs. Cox or Leonard from offering opinions as to (1) whether Google had acceptable non-infringing alternatives to the patents- and copyrights-in-suit; (2) whether Java was fragmented at the time of the hypothetical negotiation; (3) whether Android causes

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fragmentation of Java; (4) whether Prof. Shugan’s survey and conjoint analysis is unreliable; (5) the impact of mitigation on damages; (6) the effect on copyright infringer’s profits damages of the presence or absence of non-infringing alternatives; and (6) any matter that either Dr. Cox or Dr. Leonard learned only through an interview. A proposed order consistent with the foregoing is submitted herewith.

Dated: October 21, 2011

BOIES, SCHILLER & FLEXNER LLP

By: /s/ Steven C. Holtzman
Steven C. Holtzman

Attorneys for Plaintiff
ORACLE AMERICA, INC.

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