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Oracle v. Google - More Arguments with Respect to the Cockburn Damages Report
Wednesday, December 21 2011 @ 01:45 PM EST

On December 6, Judge Alsup issued a tentative order with respect to Google's third motion in limine seeking to exclude portions of Dr. Cockburn's (Oracle expert) damages report. (642 [PDF; Text]) In that tentative report Judge Alsup had largely sided with Google. However, Judge Alsup gave each party the opportunity to weigh in on the tentative order, and they have now done so.

Not surprisingly, Oracle takes great exception to the tentative order, especially four of the sections of the order that were in favor of Google (4, 5, 7, and 8). (652 [PDF; Text]) To recap, those sections covered:

4. APPORTIONMENT OF THE STARTING VALUE AND UPWARD ADJUSTMENT.

5. CLAIM-BY-CLAIM INSTEAD OF PATENT-BY-PATENT ANALYSIS.

7. INADEQUATE CALCULATION OF FUTURE DAMAGES.

8. REFERRING TO LICENSES INVOLVING UNRELATED TECHNOLOGY AND PARTIES.

With respect to Point 4, the court found that Dr. Cockburn had not sufficiently documented his allocation of value between the IP at issue in this case and all of the other IP that was included in the Sun/Google negotiations in 2006. Further, the court found Dr. Cockburn still relying on a "total value" approach, an approach the court made clear it would not tolerate.

The Oracle response is confusing, at best. Oracle states:

As Prof. Cockburn emphasizes, using the patents’ and copyrights’ relative contribution to Android to allocate the value of the 2006 bundle is appropriate because the value of Android is equal to or greater than the value of the bundle. Google provides no basis to conclude it could be less; Google’s experts contend it is much more. This is why Prof. Cockburn’s apportionment analysis is reasonable and conservative. If the value of Android is equal to or greater than the value of the 2006 license bundle, then the calculation of the patents’ and copyrights’ relative contribution to Android necessarily understates their relative contribution to the bundle.
But that argument strikes me as irrelevant. Point 4 was looking at the alleged $100 million value of the 2006 discussions and establishing what portion of that $100 million related to the technology at issue in this case in order to provide a starting point for the valuation. So the relevant metric relates totally to the valuation of the Sun patent and copyright portfolio and has nothing to do with the value of Android. Is Oracle purposely trying to confuse the issue here?

With respect to Point 5 the court sided with Google that Dr. Cockburn had failed to establish the actual value of each of the asserted claims, instead valuing the entire patents which include numerous unasserted claims. Google and the court reasoned that some portion of each patent's value has to be allocated to unasserted claims. The proposed remedy was to allow no valuation of a patent to be claimed if Google could establish that at least one asserted claim of that patent was not infringed.

Oracle claims there is no case law to support this position and that to the extent that Google infringes even one claim of a patent they owe damages based on the entire value of the patent. If Oracle has a strong position here, it most likely lies in the fact that it only limited the asserted claims at the court's insistence, not as an admission that the roughly 100 claims Oracle is not asserting aren't relevant.

Point 7 of the tentative order found that Dr. Cockburn failed to adequately project future damages because he did not look beyond 2012 and the fact that some of the asserted claims would be expiring over time. Oracle believes this to be inconsistent with holdings of the Federal Circuit. Oracle believes the court's tentative order here is premature and that the issue of future damages should be left for a post-trial hearing.

Finally, Point 8 of the tentative order found that the other Sun licenses and negotiations to which Dr. Cockburn referred were noncomparable. Oracle disagrees, at least with respect to the 2004 Sun/Microsoft license.

Not surprisingly, Google thinks the tentative order is just fine and should be made final. (651 [PDF; Text]) Google reaffirms its argument with respect to Point 4 that Dr. Cockburn pulled the percentages out of thin air. On Points 5 and 7, Google points back to the court's rejection of Dr. Cockburn's original report in which the court already took exception to Dr. Cockburn's failure to allocate value by claim rather than by patent and to adjust future damages for expiring claims/patents. Google argues that Oracle/Dr. Cockburn simply ignored the earlier instruction and that, if Oracle objected, they should have raised the objection after the court's rejection of the original Cockburn report, not now. Finally, Google argues that it is too late and would be unfair to allow Cockburn to now rehabilitate his report. In fairness to Oracle and Dr. Cockburn, they aren't so much asking for a re-do as a reconsideration of the tentative order. In any case, as Google points in the last page of its filing, other courts have rejected damages expert reports and testimony when it is irrelevant or unsupported.

The parties also filed joint statements on the status of various matters impacting the trial (649 [PDF; Text]) and on the issue of patent marking (653 [PDF; Text]). The pretrial update is pretty mundane and doesn't have any particular surprises. Oracle still wants the trial to start in late January, but, given the respective calendars of the court and the attorneys representing the parties, there simply doesn't appear to be enough time for a trial until June or July, as Google points out.

In the patent marking statement the parties appear to be largely in agreement regarding process. Where they differ is on timetable for Oracle to provide source code citations and/or other documentation supporting Oracle’s contentions that the Oracle Products practice the asserted claims. Oracle has asked for a week more than Google would allow in order to address that point. Google argues that Oracle should not need that additional week, and that giving Oracle that week reduces Google's time for preparing a response by a full week. Given that the Oracle timetable is artificially tight because of Oracle's proposed January 21 trial start date and given that such a start date is likely impractical, the court and the parties should be able to resolve this.


Skip To Comments


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

Docket

648 - Filed and Effective: 12/15/2011
Declaration
Document Text: Declaration of Reid Mullen in Support of 507 Joint Administrative Motion to File Under Seal, 510 Declaration in Support (Revised) filed by Google Inc. (Attachments: # 1 Proposed Order)(Related document(s) 507 , 510 ) (Mullen, Reid) (Filed on 12/15/2011) (Entered: 12/15/2011)

649 - Filed and Effective: 12/19/2011
Joint Pretrial Conference Statement
Document Text: Pretrial Conference Statement by Oracle America, Inc. Second Supplemental Joint Pretrial Conference Statement. (Jacobs, Michael) (Filed on 12/19/2011) (Entered: 12/19/2011)

650 - Filed and Effective: 12/20/2011
NOTICE
Document Text: NOTICE REGARDING JUROR HARDSHIP QUESTIONNAIRE. Signed by Judge Alsup on December 20, 2011. (Attachments: # 1 Appendix Hardship Questionnaire)(whalc1, COURT STAFF) (Filed on 12/20/2011) (Entered: 12/20/2011)

651 - Filed and Effective: 12/20/2011
Response
Document Text: Response re 642 Order, GOOGLE'S RESPONSE TO THE COURT'S DECEMBER 6, 2011 TENTATIVE ORDER STRIKING PORTIONS OF DR. COCKBURN'S REVISED DAMAGES REPORT byGoogle Inc. (Van Nest, Robert) (Filed on 12/20/2011) (Entered: 12/20/2011)

652 - Filed and Effective: 12/20/2011
RESPONSE
Document Text: RESPONSE to re 642 Order, PLAINTIFFS RESPONSE TO TENTATIVE ORDER ON GOOGLE'S MOTION IN LIMINE NO. 3 TO EXCLUDE PORTIONS OF COCKBURN REPORT ON DAMAGES by Oracle America, Inc. (Holtzman, Steven) (Filed on 12/20/2011) (Entered: 12/20/2011)

653 - Filed and Effective: 12/20/2011 -
Statement
Document Text: Statement re 641 Order Joint Statement Regarding Supplemental Order Regarding Patenting Marking by Oracle America, Inc.. (Muino, Daniel) (Filed on 12/20/2011) (Entered: 12/20/2011)


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

Documents

649

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 (DMR)

SECOND SUPPLEMENTAL JOINT
PRETRIAL CONFERENCE
STATEMENT

Date: December 21, 2011
Time: 8:00 a.m.
Dept.: Courtroom 9, 19th Floor
Judge: Honorable William H. Alsup

Pursuant to the Court’s November 14, 2011 order, Oracle America, Inc. and Google Inc. jointly submit this supplemental statement setting forth a proposed agenda for the pretrial conference on December 21, 2011.

1. Discussion of Court’s Trial Plan
The parties previously submitted their positions regarding the Court’s plan to divide the trial into three phases. (See 11/18/11 Oracle’s Critique of Court’s Proposed Trial Plan, Dkt. 627; 11/18/11 Google’s Response to Proposed Trial Plan, Dkt. 628.)

Oracle’s Further Statement: Oracle reiterates its opposition to bifurcating or trifurcating the upcoming trial. Even while advocating for a trifurcated trial, Google acknowledges that the witness testimony and other evidence will overlap to a considerable degree between the proposed phases. Indeed, Google asks the Court for permission to videotape and replay witness testimony in subsequent phases to avoid burdening witnesses with multiple appearances. Google’s suggestion only emphasizes the impracticality of phasing the presentation of evidence in this case. If the trial is trifurcated, there will be no way to avoid repetition of testimony, whether by calling witnesses multiple times or through some other means. A single presentation of evidence would eliminate such repetition.

Google’s Further Statement: Google reiterates its support for the Court’s trifurcation procedure. Google further believes resolution of the trial plan is essential before addressing trial scheduling and time limits. Resolving the trial plan may also, if necessary, allow the Court to defer until a later date: (a) at least some of the pending motions in limine (e.g., those seeking to exclude patent-related evidence, which is not relevant to Phase 1); (b) supplemental claim construction; (c) the marking issues; and (d) the procedure for color-coded handouts.

2. Discussion of Trial Date
The parties previously set forth their positions regarding the trial date and provided a list of existing trial commitments of lead counsel. (See 12/7/11 Supp. Joint Pretrial Conference Stmt., Dkt. 644 at 4-5.)

Oracle’s Further Statement: Oracle reiterates its request for a trial date as early as possible following the submission of Dr. Kearl’s report on January 19, 2012. The continued

1

migration of device manufacturers and application developers from Java to Android is causing irreparable harm to the Java platform that monetary damages alone cannot rectify. Android’s growth in the mobile device market has been exponential, steadily diminishing Java’s share. For instance, Amazon’s newly-released Kindle Fire tablet is based on Android, while prior versions of the Kindle were Java-based. Android has been gaining in other areas as well, with Androidbased set-top boxes and even televisions appearing this year. These are markets where Java has traditionally been strong but is now losing ground to Android. The longer Android is allowed to continue fragmenting the Java ecosystem, the more serious the harm to Java becomes, and the more difficult it is to try to unwind. Oracle suffers harm in the form of lost licensing opportunities for its existing Java platform products, and the enterprise-wide harm from fragmentation of Java, which reduces the “write once, run anywhere” capability that has historically provided Java such great value.

Google argues that Oracle cannot be irreparably harmed by Android because it has no competing mobile platform of its own. This is wrong in at least two respects. First, Oracle’s predecessor, Sun Microsystems, had a Java-based mobile platform that it was forced to abandon because of Android. When Google incorporated Java technology into Android and offered it for free, Sun’s mobile platform stood little chance. So long as Google continues to offer the Java technology for free, Oracle cannot grow a fee-based mobile platform.

Second, as noted above, Android’s growth is not limited to smartphone products. Manufacturers of set-top boxes, tablets, and numerous other small-form-factor devices that previously licensed Oracle’s Java products, are adopting Android to replace Java ME and other Oracle Java products. In essence, every day, Oracle is being forced to compete against its own patented and copyrighted Java technology, that Google offers at zero cost to customers.

Google also argues that Java is actually thriving, since there are now 2.5 million more Java developers since Oracle filed its complaint. What Google fails to mention is that many of the new Java developers are writing applications for the Android platform, not for licensed Java implementations. The rise of Android has increased the number of Java developers, but because Android is unlicensed and incompatible with the Java platform, Oracle has not benefited. Instead,

2

Oracle is being irreparably harmed by the rapidly increasing penetration of Android and the escalating fragmentation of the Java ecosystem it has caused.

Google’s internal documents show Google deliberately made the choice to infringe, gambling by pushing forward with Android without a license, even though it knew one was required. That gamble increasingly pays off the longer trial is delayed—particularly if trial is postponed a further seven months as Google requests. The parties’ pre-trial filings were submitted months ago. Oracle proposes that this case go to trial on January 20 or 23, 2012.

Google’s Further Statement: Like Oracle, Google has no interest in delaying resolution of this case any longer than necessary. Nor has Google done anything to delay the case. Indeed, Google was prepared to try this case beginning in late October, at the original trial setting. And Google is prepared to try the case at the earliest time available for the Court, the parties, and counsel. That trial date ultimately depends on how long the trial is scheduled to last.

Even applying Oracle’s requested times, the Court would need 4-5 weeks to try this matter. Oracle seeks at least 28-30 hours of testimony per side—making this at least a 15-20 day trial assuming separate openings, closings, and jury instructions for each proposed phase. On top of that, the Court needs to budget adequate time for jury deliberations for each phase. Google believes the parties will actually need close to 45 hours per side for trial—particularly if the patent phase remains in its current posture (i.e., 26 claims from 6 unrelated patents)—such that the time needed for trial is even longer. Thus, the prior commitments of the Court and trial counsel preclude starting trial in late January 2012. Given those commitments and the possibility of a trial totaling 5-6 weeks, it may be difficult to conduct trial before July 2012.

In any event, Oracle’s claim of irreparable harm is incorrect, and does not require starting trial in January 2012. First, Oracle has no competing mobile platform in the market, such that there is no product that is being irreparably harmed. Second, Oracle’s recent public statements regarding Java belie any suggestion of irreparable harm from Android. For example, Oracle’s recent Java Facts and Figures suggest that Java is thriving:

3

Java Facts and Figures

  • 97% of enterprise destops run Java
  • 1 billion Java downloads each year
  • 9 million developers worldwide
  • #1 rogramming language (TIOBE Programming Community Index)
  • More than 3 billion devices are powered by Java technology
https://emeapressoffice.oracle.com/Press-Releases/Oracle-Continues-to-Move-Java-Forward-and- Details-Java-SE-8-Roadmap-23ce.aspx (last visited December 17, 2012). Notably, the Java developer figure has grown by 2.5 million since Oracle filed its Complaint in this matter. (See Compl. ¶ 9.) Oracle contends that many of these developers are writing for Android, with no benefit to Oracle. But this is inconsistent with the fact that Oracle touts these figures. In fact, Android does benefit Oracle by broadening the number of developers using the Java programming language, which Oracle concedes is not protected. Third, Oracle elected not to move for a preliminary injunction, which suggests a lack of irreparable harm from Google’s continued distribution of Android.

In sum, Google also proposes trying this case as early as possible. That trial date will depend on resolving the format and length of trial, in combination with any scheduling issues for the Court, the parties, and counsel. At a minimum, those factors rule out starting trial in January.

3. Time Limits for Opening Statement, Witness Examination, Closing Argument
Oracle’s Statement: As set forth previously, Oracle requests a minimum of 28-30 hours per side for direct and cross examination. Oracle proposes 1 hour per side for opening statements, and 2 hours per side for closing arguments.

Google’s Statement: Based on the Court’s tentative trial plan, Google requests a minimum of 15 hours per side for direct and cross examination for each phase of trial. Also based on the Court’s tentative trial plan, Google proposes an opening statement of 45 minutes and closing argument of 1.5 hours per side for each of the three trial phases. At least this much time is necessary for Phase 1, which will introduce the parties and the numerous copyright issues. And since Oracle continues to assert 26 claims from six unrelated patents, the parties will need at least

4

that much time for Phase 2. The same goes for Phase 3, which is set to cover both damages and willfulness.

4. Oral Argument on Selected Motions in Limine
At the Court’s request, the parties selected the following four motions in limine for oral argument at the pretrial conference (see 12/7/11 Supp. Joint Pretrial Conference Stmt., Dkt. 644 at 1):

  • Oracle’s Motion in Limine No. 1 to Exclude Evidence or Argument Regarding Patent Reexaminations. (Motion, Dkt. 498; Opposition, Dkt. 498-1.)
  • Oracle’s Motion in Limine No. 4 to Exclude Evidence or Argument Regarding Oracle’s Past Actions with Application Programming Interfaces. (Motion, Dkt. 501; Opposition, Dkt. 501-1.)
  • Google’s Motion in Limine No. 1 to Exclude Lindholm E-mail and Drafts Thereof. (Motion, Dkt. 492; Opposition, Dkt. 492-1.)
  • Google’s Motion in Limine No. 3 to Exclude Portions of Cockburn Report on Damages. (Motion, Dkt. 494; Opposition, Dkt. 494-1.)
For the Court’s convenience, the other motions in limine filed by the parties are listed below:

  • Oracle’s Motion in Limine No. 2 to Exclude Evidence or Argument That Google Relied on Legal Advice in Making Its Decisions to Develop and Release Android. (Motion, Dkt. 499; Opposition, Dkt. 499-1.)
  • Oracle’s Motion in Limine No. 3 to Preclude Google from Offering Evidence or Argument That Third-Party OEMs Changed Infringing Components of Android. (Motion, Dkt. 500; Opposition, Dkt. 500-1.)
  • Oracle’s Motion in Limine No. 5 to Exclude Evidence and Contrary to Statements in Tim Lindholm’s August 6, 2010 E-mail. (Motion, Dkt. 502; Opposition, Dkt. 502-1.)
  • Google’s Motion in Limine No. 2 to Exclude Alleged Performance Benefits of Android With the Accused Functionality. (Motion, Dkt. 493; Opposition, Dkt. 493-1.)
  • Google’s Motion in Limine No. 4 to Exclude Portions of Goldberg Report Discussing Commercial Success. (Motion, Dkt. 495; Opposition, Dkt. 495-1.)
  • Google’s Motion in Limine No. 5 to Exclude Evidence Obtained from Motorola Mobility, Inc. (Motion, Dkt. 496; Opposition, Dkt. 496-1.)

5

5. Status of Re-Examinations and Writ Petition
The parties previously set forth the status of the re-examination proceedings before the U.S. Patent and Trademark Office. (See 12/7/11 Supp. Joint Pretrial Conference Stmt., Dkt. 644 at 1-3.) The parties also previously set forth the status of Google’s petition for a writ of mandamus before the U.S. Court of Appeals for the Federal Circuit. (See id. at 3-4.) The status of both the USPTO and Federal Circuit proceedings has not changed since the parties’ prior submission to the Court.

6. Procedure for Equitable Defenses
Google is asserting laches, equitable estoppel, waiver, and implied license as defenses to Oracle’s patent and copyright claims. Google has requested that the Court allow the jury to render an advisory verdict on these equitable defenses. Oracle opposes this request. The respective positions of the parties on this issue are set forth in the trial briefs (see Oracle Brief, Dkt. 536 at 26-27; Google Brief, Dkt. 534 at 24-25.)

7. Procedure for Submitting Evidence Regarding Oracle’s Requested Injunctive Relief
Oracle seeks injunctive relief against Google, an equitable remedy to be decided by the Court. Google opposes this request. The parties seek the Court’s guidance regarding whether evidence relating to the propriety and extent of injunctive relief must all be presented during the jury trial, or whether the Court intends to hold a post-trial hearing during which such evidence may be presented.

8. Procedure for Voir Dire
The parties have submitted proposed questions for use in the voir dire process. (Dkt. 520.) The parties believe that a juror questionnaire would improve the speed and efficiency of the voir dire process. The parties will bring a proposed questionnaire to the pretrial conference for the Court’s consideration.

9. Procedure Regarding Patent Marking Issues
Pursuant to the Court’s December 6, 2011 order (Dkt. 641), the parties will provide a joint submission on December 20, 2011, regarding the procedure for addressing the Oracle and Sun

6

products that the parties contend practice the asserted patent claims and whether and when they were marked.

10. Supplemental Claim Construction
The parties have submitted their proposed constructions of three additional claim terms. (Dkt. 637.) The parties have also filed their respective objections to the other party’s proposed constructions. (Dkt. 645, 647.) The parties will be prepared to address these issues at the pretrial conference if the Court desires.

11. Procedure for Joint Color-Coded Handouts
Pursuant to the Court’s orders, the parties submitted joint color-coded handouts highlighting disputed elements in the asserted patent claims; i.e., elements that Google contends are missing from the accused products and elements that Oracle contends are missing from the proferred prior art. (Dkt. 633.) The parties seek guidance on how these handouts should be used at trial.

7

Dated: December 19, 2011

MORRISON & FOERSTER LLP

By: /s/ Michael A. Jacobs

MORRISON & FOERSTER LLP
MICHAEL A. JACOBS (Bar No. 111664)
[email]
KENNETH A. KUWAYTI (Bar No. 145384)
[email]
MARC DAVID PETERS (Bar No. 211725)
[email]
DANIEL P. MUINO (Bar No. 209624)
[email address telephone fax]

BOIES, SCHILLER & FLEXNER LLP
DAVID BOIES (Admitted Pro Hac Vice)
[email address telephone fax]
STEVEN C. HOLTZMAN (Bar No. 144177)
[email address telephone fax]

ORACLE CORPORATION
DORIAN DALEY (Bar No. 129049)
[email]
DEBORAH K. MILLER (Bar No. 95527)
[email]
MATTHEW M. SARBORARIA (Bar No. 211600)
[email address telephone fax]

Attorneys for Plaintiff
ORACLE AMERICA, INC.

8

Dated: December 19, 2011

KEKER & VAN NEST, LLP

By: /s/ Robert A. Van Nest

ROBERT A. VAN NEST (SBN 84065)
[email]
CHRISTA M. ANDERSON (SBN184325)
[email]
DANIEL PURCELL (SBN 191424)
[email address telephone fax]

SCOTT T. WEINGAERTNER (Pro Hac Vice)
[email]
ROBERT F. PERRY
[email]
BRUCE W. BABER (Pro Hac Vice)
[email address telephone fax]

DONALD F. ZIMMER, JR. (SBN 112279)
[email]
CHERYL A. SABNIS (SBN 224323)
[email]
KING & SPALDING LLP
[address telephone fax]

GREENBERG TRAURIG, LLP
IAN C. BALLON (SBN 141819)
[email]
HEATHER MEEKER (SBN 172148)
[email address telephone fax]

Attorneys for Defendant
GOOGLE INC.

9

ATTESTATION

I, Michael A. Jacobs, am the ECF User whose ID and password are being used to file this SECOND SUPPLEMENTAL JOINT PRETRIAL CONFERENCE STATEMENT. In compliance with General Order 45, X.B., I hereby attest that Robert A. Van Nest has concurred in this filing.

/s/ Michael A. Jacobs

10


651

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 RESPONSE TO THE
COURT’S DECEMBER 6, 2011
TENTATIVE ORDER STRIKING
PORTIONS OF DR. COCKBURN’S
REVISED DAMAGES REPORT

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

On July 22, 2011, this Court struck the vast majority of Oracle’s damages expert Dr. Iain Cockburn’s initial expert report, for deliberately “overreach[ing] in multiple ways—each and every overreach compounding damages ever higher into the billions—evidently with the goal of seeing how much it could get away with, a ‘free bite,’ as it were.” July 22, 2011 Order [Dkt. No. 230] at 15. Although the Court gave Oracle and Dr. Cockburn a second chance to bring their damages analysis into line with reality and federal law, the Court also explained in plain English the consequences Oracle would face if it and Dr. Cockburn overreached again:

Please be forewarned: the next bite will be for keeps. If the next and final report fails to measure up in any substantial and unseverable way, including ways this order did not have time to reach, then it may be excluded altogether without leave to try yet again.
Id. (emphases added).

At the same time it issued its express warning to Oracle, the Court took an additional and unusual measure to safeguard against distorted presentations on damages issues. On July 5, 2011, the Court announced its tentative intention to retain a court-appointed damages expert to testify to the jury on damages issues, under Federal Rule of Evidence 706. On August 30, 2011, the Court retained Dr. James Kearl as its Rule 706 expert. On November 9, 2011, the Court entered a further order explaining that appointing an independent damages expert was necessary because of “the parties’ extremely divergent views on damages and the unusual complexity of the damages aspect of this case.” Nov. 9, 2011 Order [Dkt. No. 610] at 3.

The writing on the wall was unmistakable, but Oracle failed to read it. On September 12, 2011, Oracle served Dr. Cockburn’s revised damages report. If the second report was less objectionable than the first, it was only superficially so. Dr. Cockburn still ignored governing damages law and filled his analysis with unsupportable logical leaps designed to maximize Oracle’s recovery. Google filed a second Daubert motion, and, on December 6, 2011, the Court entered a tentative order that again struck most of Dr. Cockburn’s report. Specifically, the Court:

  • Struck Dr. Cockburn’s arbitrary opinion apportioning to the patents-in-suit 30% of the value of Sun’s $100 million demand to Google and assigning to the copyrights at issue 15% of the value of that demand, despite having failed to understand or account for the full panoply of things Google would have received had it accepted Sun’s demand. Dec. 6, 2011 Order [Dkt. No. 642] at 9.

1

  • Barred Dr. Cockburn from offering any testimony on a reasonable royalty, either as to patent or copyright damages, because of his failure to apportion the value of the patents and copyrights at issue. Id.
  • Precluded Dr, Cockburn from apportioning the value of Oracle’s patents among the asserted claims of those patents—something Dr. Cockburn has never attempted to do in either iteration of his report. Id. at 10.
  • Ruled that, because Dr. Cockburn had never valued the handful of code files that Oracle alleged Google to have literally copied, he may not offer damages testimony on those files at trial. Id. at 10-11.
  • Struck Dr. Cockburn’s testimony on future damages, which failed to show “how future damages would be adjusted if certain patents expired or were designed around.” Id. at 11.
  • Excluded evidence of certain licenses and settlements of litigation between Sun and Microsoft, along with any testimony from Dr. Cockburn (or, presumably, any other Oracle witness) about that evidence. Id. at 12-13.
Google agrees with the Court’s order in all of these respects and respectfully requests that the Court make each of these rulings final. For the same reasons Google offered in its motion in limine, each of the above rulings is logically and legally correct, and is also consistent with the direction the Court had previously given to Oracle and Dr. Cockburn in its July 22, 2011 order.

Further, to the extent Oracle asks the Court to give Dr. Cockburn a third chance to create a viable damages analysis, there are four primary reasons why the Court should refuse.

First and most obviously, the Court could not have been clearer in its July 22, 2011 order that Oracle’s “next [report] will be for keeps,” driving the point home further by referring to Dr. Cockburn’s “next and final” report. July 22, 2011 Order [Dkt. No. 230] at 15 (emphasis added). The Court even raised the possibility that, if Dr. Cockburn committed errors in that final report that were significant enough that they tainted the full report “in any substantial and unseverable way,” the Court might even strike the entire report and preclude any testimony by Dr. Cockburn at trial. Id. (emphases added). Google asks the Court to follow through with its earlier order and impose the consequences it told Oracle it would.

Second, Oracle does not deserve a third bite at the apple, because Dr. Cockburn’s second report ignored the explicit direction set forth in this Court’s July 22, 2011 order and—like his stricken first report—did so with the obvious intent of maximizing Oracle’s damages recovery. In his first report, Dr. Cockburn assumed that the patents and copyrights at issue in this case

2

contributed 100% of the value of Sun’s Java-related businesses and intellectual property, without any basis or analysis of the myriad other components of “Java.” The Court rejected that approach. July 22, 2011 Order [Dkt. No. 230] at 5-6. Dr. Cockburn’s second report used the superficially more reasonable starting point of 30% of Sun’s $100 million opening demand during partnership negotiations with Google, but that $30 million number was still pulled out of thin air. Even though he conceded that $100 million also would have bought Google a license to “potentially thousands of patents, copyrights, trademark, and access to Sun engineers,” in addition to compensating Sun for substantial lost revenue, Dec. 6, 2011 Order [Dkt. No. 642] at 7-8, he admittedly made no attempt to value (or even learn the extent of) any of these other components. In other words, Dr. Cockburn made the exact same mistake the second time around. Instead of actually calculating the value of the intellectual property at issue, he used as a proxy some undefined, larger collection of intellectual property, in order to expand the range of Oracle’s potential damages.

Similarly, this Court was very clear in its July 22, 2011 order that Dr. Cockburn’s second report needed to be specific about how much damages flow from the various elements of Oracle’s case—including by calculating damages for each asserted patent claim. July 22, 2011 Order [Dkt. No. 230] at 7. Despite this warning, Dr. Cockburn failed to offer any patent damages analysis at the claim level or any opinion about copyright damages purportedly resulting from Google’s alleged literal copying of code files. Dr. Cockburn deliberately chose to focus on larger figures for patent-by-patent damages and copyright damages relating to the “structure and arrangement” of Sun’s application programming interfaces. And, even though the Court made clear that “any projection of future damages must take into account the varying expiration dates of the asserted patents,” id. at 11, Dr. Cockburn calculated only an aggregate future-damages amount. Every time he had the chance, Dr. Cockburn ignored the Court’s clear instructions in favor of shortcuts designed to put a bigger number on the board.

Oracle received and read the July 22, 2011 order. It made no effort to object to or ask the Court to reconsider or clarify any aspect of that order. Particularly because its and Dr. Cockburn’s failure to follow that order uniformly resulted in larger asserted damages numbers,

3

the Court should assume Oracle again made a deliberate choice to “see[ ] how much it could get away with.” July 22, 2011 Order [Dkt. No. 230] at 15. In this circumstance, two bites at the apple is enough.

Third, permitting Dr. Cockburn a third try to draft a viable damages report would impose significant burdens on Google and its experts. If Dr. Cockburn is permitted to start over, that would effectively force a re-do of the entire expert discovery process from square one. If Dr. Cockburn is permitted to draft an entirely new damages report, Google must be allowed the chance to redraft its own responsive damages reports. After all reports—presumably including new rebuttal reports from Dr. Cockburn—are served, both Google and Oracle would be entitled to take further depositions of each other’s experts on the new reports. Google would be forced to commit a substantial amount of time and money because of Oracle’s inability to follow the rules.

Allowing Dr. Cockburn a do-over now would also impose additional costs on the Court’s appointed expert Dr. Kearl—and consequently on Google, which is sharing the cost of Dr. Kearl’s work. Dr. Kearl’s report is now due in mid-January, with his deposition to follow shortly thereafter. But part of Dr. Kearl’s assignment is to critique both Oracle’s and Google’s damages reports, so Dr. Kearl presumably is currently preparing an analysis based in part on Dr. Cockburn’s untenable current report. If Dr. Cockburn were permitted to start over, Dr. Kearl would be forced to start over as well and conduct a new analysis of the further revised Cockburn report, before the parties could take Dr. Kearl’s deposition.

Fourth, when the Court announced its intention to retain an independent damages expert, it candidly informed the parties that it was doing so, among other reasons, as a check on the parties’ litigation instincts, to ensure that reasonable damages testimony was presented to the jury. July 27, 2011 Order [Dkt. No. 236] at 2 (“This assistance will be particularly useful because both sides have taken such extreme and unreasonable positions regarding damages in this action.”). Dr. Kearl’s presence at trial will ensure that the jury hears damages opinions from a neutral third party, in addition to testimony from Google’s experts. Even though Oracle has only itself to blame for any prejudice it might face if Dr. Cockburn’s testimony were limited (as it should be), Dr. Kearl’s presence should significantly mitigate that prejudice.

4

Given all the above facts, it is well within this Court’s discretion to strike the majority of Dr. Cockburn’s opinions and testimony. Other courts have similarly precluded expert damages testimony in intellectual property cases based on expert reports plagued by extensive overreaching or unsupported by relevant and reliable evidence. See, e.g., Rolls-Royce PLC v. United Technologies Corp., No. 1:10cv457 (LMB/JFA), 2011 WL 1740143, *9 (E.D. Va. May 4, 2011) (precluding much of plaintiff’s damages-related evidence or argument at trial where plaintiffs’ expert had more than ten months to develop “a concrete and economically sound damages theory,” but served a report based on “misstatements of the law, a lack of sound evidence, and unsupported economic assumptions”); IP Innovation L.L.C. v. Red Hat, Inc., 705 F. Supp. 2d 687, 691 (E.D. Tex. 2010) (precluding plaintiff’s damages expert from testifying at trial or otherwise presenting his opinions because expert’s report relied on irrelevant and unreliable evidence and failed to account for the economic realities of the claimed component as part of a larger system).

In Cornell Univ. v. Hewlett-Packard Co., 609 F. Supp. 2d 279, 283-90 (N.D.N.Y. 2009), the court interrupted trial to conduct a Daubert hearing on plaintiff’s damages expert’s theory, ultimately striking that theory as legally insufficient. But the court gave the plaintiff a chance to correct its overreach and offer a legally sufficient basis for damages. The plaintiff and its expert spurned that chance, with the expert making the deliberate decision to “cling to his excluded opinion.” Id. at 288. The court had little choice but to grant judgment as a matter of law for the defendant. Here, Oracle and Dr. Cockburn made the same decision to ignore the unambiguous direction in this Court’s July 22, 2011 order. The Court should affirm its tentative December 6, 2011 order and limit Dr. Cockburn’s trial testimony as set forth therein.

Dated: December 20, 2011

Respectfully submitted,

KEKER & VAN NEST LLP

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

5


652

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

PLAINTIFF’S RESPONSE TO
TENTATIVE ORDER ON GOOGLE’S
MOTION IN LIMINE NO. 3 TO
EXCLUDE PORTIONS OF COCKBURN
REPORT ON DAMAGES

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

I. INTRODUCTION

This brief addresses Parts 4, 5, 7 and 8 of the December 6, 2011 tentative order (Dkt. 642).

Part 4 of the tentative order finds that “Dr. Cockburn had a reliable basis for valuing the patents and copyright-in-suit’s relative contribution to the success of Android.” (Tentative Ord. at 8.) But it faults Prof. Cockburn for using this relative contribution to inform his apportionment of the 2006 license bundle. The tentative order reasons that the value of Android might not be equivalent to the value of the 2006 license bundle, and suggests that Dr. Cockburn consequently may not be permitted to opine on a reasonable royalty derived from a hypothetical negotiation. (Id. at 9.)

Prof. Cockburn faithfully sought to follow the Court’s July 22, 2011 Order. He did so reliably and in a scientific manner. The reasonable royalty analysis in this case is complex, and the tentative order notes the absence of case law to guide the analysis. Oracle thus appreciates the opportunity to further explain Prof. Cockburn’s approach, especially given the serious potential remedy and the fact that Google did not brief the calculation issue that the tentative order identifies.

As Prof. Cockburn emphasizes, using the patents’ and copyrights’ relative contribution to Android to allocate the value of the 2006 bundle is appropriate because the value of Android is equal to or greater than the value of the bundle. Google provides no basis to conclude it could be less; Google’s experts contend it is much more. This is why Prof. Cockburn’s apportionment analysis is reasonable and conservative. If the value of Android is equal to or greater than the value of the 2006 license bundle, then the calculation of the patents’ and copyrights’ relative contribution to Android necessarily understates their relative contribution to the bundle.

No case, including Medtronic, the unpublished opinion cited in the tentative order, has required a plaintiff to directly value components of a bundle that are not in suit. Such an analysis would ignore the complementary relationship among components and focus the jury on an immense collection of components, costs, and benefits not at issue. Indeed, in a recent article, Google’s damages expert argues that trying to directly apportion the value of all the components of a bundle is economically unsound. Prof. Cockburn’s use of the value of Android as a substitute for that endeavor is a reliable, conservative approach.

Even if the Court were to preclude use of the relative contribution to Android to allocate the

Page 1

value of the bundle, Prof. Cockburn’s full analysis provides ample basis for testimony regarding a reasonable royalty. Prof. Cockburn’s apportionment opinion is based on far more than his calculations, including the measure of that relative contribution, which the tentative order finds reliable, and other extensive record evidence. He should be permitted to explain his analysis and conclusions at trial, subject to cross examination by Google, the testimony of Google’s experts, and Dr. Kearl’s testimony.

Oracle also disagrees with Part 5 of the tentative order. Oracle is not aware of any case requiring damages to be calculated on a claim-by-claim basis. The hypothetical negotiation should reflect that parties negotiate licenses for patents, not claims of patents. Moreover, the record, including Google’s experts’ own analysis, does not support the conclusion that the overlapping claims at issue in each patent have different values. Google’s proposed remedy―to instruct the jury that it may assume the entire value of the patent is attributable to any claim it finds has not been infringed―is contrary to the facts and the law. If Google infringes any claim, Oracle is entitled to damages.

Part 7 of the tentative ruling should be reconsidered in view of holdings of the Federal Circuit and this District that any future royalty is an equitable matter that should be assessed after trial in connection with a request for a permanent injunction, based on a new hypothetical negotiation that occurs after a finding of liability. In any event, Prof. Cockburn complied with the Court’s directions, by omitting any lump sum that combines past and future damages and providing both the framework and the data necessary to project future damages should such a calculation be required at trial.

Finally, Part 8 of the tentative ruling should be reconsidered in view of Prof. Cockburn’s anticipated testimony about the Sun/Microsoft agreement because he segregates out the antitrust component of that license. That license addressed Microsoft’s fragmentation of the Java platform similar to Android’s fragmentation of Java here. The testimony is relevant and should be permitted.

II. ARGUMENT

A. Apportionment Analysis

1. Using The Relative Contribution Of The Patents And Copyrights In Suit To Android
Is A Reasonable Basis For Apportionment
Based on the Court’s “strong” suggestion to calculate the reasonable royalty starting from the $100 million value proposed for the 2006 license bundle and adjusting downward for apportionment

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(see Dkt. 230 at 14), Prof. Cockburn recognized that he had to estimate what portion of that offer (and the upward adjustment) was attributable to the patents and copyrights in suit. This could be stated as:

Value of Patents and Copyrights in Suit To Google
------------------------------------------------------------------------------------------------
Value of (Patents- and Copyrights-In-Suit + All Other Java Bundle Components) To Google

Using performance, econometric, and conjoint studies, Prof. Cockburn directly measured the numerator of this equation, and the tentative order finds that measurement reliable. (Tentative Ord. at 8 (“Dr. Cockburn had a reliable basis for valuing the patents and copyright-in-suit’s relative contribution to the success of Android.”).) However, Prof. Cockburn also recognized that the denominator of the equation is difficult to measure reliably because Google did not adopt the full bundle, because the bundle includes numerous complex components, and because synergies among the components make simple addition undesirable as a method of valuation. (Cockburn Report ¶¶ 246–51.) Thus, instead of trying to determine the denominator with false precision, Prof. Cockburn used a denominator he could be certain was greater than the value of the bundle to Google: the value of Android over Google’s next best alternative for generating mobile advertising revenue. (See id. ¶¶ 264–67; 272 n.327.) Thus, Prof, Cockburn calculated his apportionment percentage as:

Value of Patents and Copyrights in Suit To Google
------------------------------------------------------------------------------------------------
Value of (Patents- and Copyrights-in-Suit + All Other Android Components) To Google

As the tentative order finds, this calculation would be a complete answer to apportionment if the royalty base consisted of some measure of the infringer’s profits. (Tentative Ord. at 8–9.) This is because the apportionment inquiry focuses on “the portion of the realizable profit that should be credited to the invention as distinguished from non-patented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer.” Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970) (Factor 13). Prof. Cockburn applied the calculation to the bundle to adhere to the Court’s previous suggestion that the reasonable royalty be based on the adjusted value of the 2006 license bundle rather than Google’s profits from Android.

As Prof. Cockburn emphasized, the value of All Other Android Components To Google is greater than or equal to the value of All Other Java Bundle Components To Google. (See Cockburn Report ¶ 272 n. 327.) Google has pointed to nothing suggesting it could be less. Indeed, Google’s

Page 3

experts argue that Android’s value to Google is largely, if not entirely, the result of Google’s own contributions, not the result of the bundle of Java technologies and intellectual property it considered licensing in 2006. (Leonard Report at 6–8, 17.) It is not necessary to directly value each component of the bundle or the full bundle to reach the reasonable conclusion that the value of Android is greater than or equal to the value of the bundle to Google.

Based on this conclusion, Prof. Cockburn’s apportionment calculation cannot overstate the apportionment percentage in Oracle’s favor. Using contribution to Android’s success would be a reasonable basis for valuation in a licensing negotiation and is economically valid. The tentative order notes that Prof. Cockburn “admitted” the value of Android could be more than the value of the 2006 license bundle. (Tentative Ord. at 8.) But this is not a damaging “admission”; it is an important affirmative conclusion that confirms a conservative measure of apportionment. Similarly, the tentative order’s statement that “the value of Android could have been more or less” than the value of the 2006 license bundle to Google is inconsistent with both Prof. Cockburn’s analysis and the evidence. (Id.) It would be inappropriate to strike Prof. Cockburn’s methodology based on a factual conclusion that the incremental value of Android “could have” been more or less than the value of the bundle, particularly where neither Google’s motion nor Google’s experts anywhere challenges that denominator.1 Prof. Cockburn’s application of sound methodology to fact should be “tested by the adversary process— competing expert testimony and active cross-examination—rather than excluded from jurors’ scrutiny for fear that they will not grasp its complexities or satisfactorily weigh its inadequacies.” Ruiz-Troche v. Pepsi Cola of Puerto Rico Bottling Co., 161 F.3d 77, 85 (1st Cir. 1998).

2. Requiring Prof. Cockburn To Value The Elements Of The 2006 License Bundle That
Are Not In Suit Is Not Supported By Law Or Economics
Prof. Cockburn’s report states his opinion that the value of Android is greater than or equal to

__________________________________

1 Google’s argument is limited to the conclusory (and false) proposition that “[h]aving no knowledge of the whole, [Prof. Cockburn] lacks any logical or legal basis for calculating the value of any of the parts.” (Google Supp. Br. at 5–6.) As the tentative order finds, Prof. Cockburn does have a reliable basis for calculating the value of the relevant parts. Google has raised no challenge to the use of this value—the relative contribution of the patents and copyrights in suit—as the basis for apportionment of the value of the bundle, based on the logical conclusion that the value of the bundle could not exceed the value of Android. A district court has no “independent mandate” to exclude evidence where the parties have asserted no objection. Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009), cert. denied, 130 S. Ct. 3324 (2010).

Page 4

the value of the 2006 license bundle; Google had the opportunity to probe the factual basis for that opinion when it took his deposition. Instead, as demonstrated by Google’s brief (Google Supp. Br. at 3–5), Google chose to simply ask him questions about individual valuation of components of the bundle that are not in suit. Neither Google nor the tentative order points to any authority that requires an expert to value components not in suit. Medtronic, the only authority cited, did make reference to “determin[ing] the value to Medtronic of any of the items in that portfolio other than the patents-insuit,” but this dictum cannot reasonably be read as imposing such a requirement. Nothing in the facts or reasoning of Medtronic suggests that the decision turned on whether the expert valued components of the portfolio other than the patents-in-suit. Instead, the decision rested on the fact that the expert had cited the entire acquisition price of a larger portfolio, which included the patents in-suit, and then concluded, based on his “impression” or “gut feeling,” that the patents-in-suit constituted the “overwhelming percentage” of the value of the portfolio. The court found that no evidence supported the expert’s opinion that all of the value of the portfolio was attributable to the patents. Medtronic, Inc. v. Boston Scientific Corp., No. 99-1035, 2002 WL 34447587, at *6–12 (D. Minn. Aug. 8, 2002). Nothing in the holding of Medtronic requires direct valuation of components not in suit. To the contrary, in Finjan Inc. v. Secure Computing Corp., the Federal Circuit held that an expert can opine, and a jury can find, that patents-in-suit provided a “substantial fraction” of the value of an accused product, without making any effort to value other technology incorporated into that product. 626 F.3d 1197, 1211 (Fed. Cir. 2010).

Holding that Prof. Cockburn had to directly value the full bundle or the components of the bundle not in suit would ignore an important economic reality: a technology portfolio cannot be apportioned simply by treating the portfolio as the sum of its parts, because those various parts may be complementary, redundant or synergistic. Prof. Cockburn explained this in detail in his report (see Cockburn Report ¶¶ 246–51), and Google’s patent damages expert, Dr. Leonard, concurs:

When the combined use of two or more assets is worth more than their individual use, there is no unique way to apportion the overall value of the product among the assets. Unless a particular apportionment scheme was specified by legislation, substantial legal ambiguity would be created, and courts, juries, and parties would bear a heavy litigation burden. Moreover, any mechanical rule to apportion the synergies among the various assets needed to create the synergies would be arbitrary.
(Bailey, Leonard & Lopez, “Apportionment Treats The Symptom, Not The Disease,” Law360, Dec. 9,

Page 5

2011, http://www.law360.com/ip/articles/289544 (“Law360 Article”).) As discussed above, Prof. Cockburn found a reliable, conservative way around this problem, permitting him to undertake the analysis suggested by the Court in its July Order. There is no basis on which to exclude his approach.

3. Beyond Application of The Apportionment Calculation, Prof. Cockburn’s Report
Provides A Sufficient And Reliable Basis For An Opinion Regarding Apportionment
And Reasonable Royalty Damages
Prof. Cockburn calculated the value of the patents and copyrights in suit to Google in terms of incremental advertising revenue that Google has earned from Android, without factoring in expected, rapidly growing future revenues and strategic benefits Google obtains (and expected in 2006) from Android. The calculation itself, which the tentative order finds reliable (Tentative Ord. at 8), is a standalone, conservative measure of at least one portion of damages that could proceed completely independent of any concern about applying that valuation to the 2006 license bundle. As Dr. Leonard wrote this month: “Under a sound economic approach, the dollar amount of the reasonable royalty award should reflect the incremental dollar value of the patented technology to the defendant as compared to the next best alternative.” (Law360 Article; see also R. Higgins & D. Martin, “The Economics Of The Entire Market Value Rule: As Applied to Complex Products” at p. 5 (2011), http://ssrn.com/abstract=1961276 (“An efficient royalty is equal to the marginal contribution of specific IP to the net value of the product or component whose creation the IP enables.”).) Preventing Prof. Cockburn from testifying at all as to a reasonable royalty would be a draconian remedy when reliable analyses he has already conducted permit him to do exactly that.2

In addition to the quantitative analysis, Prof. Cockburn supports his apportionment opinion with an extensive discussion of contemporaneous record evidence and economic considerations, explaining why the patents and copyrights in suit represent significant portions of the value of the portfolio. (See, e.g., Cockburn Report ¶¶ 26, 252–63.) The contemporaneous documents and deposition testimony show that the speed and memory provided by the patents-in-suit and the access to application

______________________________

2 If the Court disagrees with Oracle’s position, it would be relatively simple for Prof. Cockburn to revise his calculation based on his determination of the relative contribution to Android and the other Georgia Pacific factors he has already analyzed, and he should be given the chance to do so. Relying on the Court’s ruling that “Counsel will be given an opportunity to submit statements” on the question of whether Dr. Cockburn should be given an opportunity to revise his calculations if the tentative ruling is upheld (Tentative Ord. at 9), Oracle does not address that issue here.

Page 6

developers provided by the copyrights-in-suit were extraordinarily important to Android, that Android was extraordinarily valuable to Google, and that the advertising revenues to which Prof. Cockburn’s calculations are limited were just a fraction of that extraordinary value. And Prof. Cockburn expressly discusses Prof. Mitchell’s conclusion that developing an operating system using Java but without the patented functionality would have resulted in a “crippled” operating platform. (Id. ¶ 253.)

All of this evidence—not just the use of his calculation of the relative contribution of the patents- and copyrights-in-suit to inform allocation of the 2006 bundle—permits Prof. Cockburn to offer an expert opinion as to the incremental value of the patents and copyrights to Google, whether expressed as a percentage of the adjusted 2006 license bundle or a percentage of the value of Android.3 The calculation corroborates rather than constitutes this opinion. (Id. ¶ 31.) As the tentative order observes, the Federal Circuit has held that “based on internal documents calling the patented features important, the jury could infer that a substantial fraction of the accused products’ profits stemmed from the patented invention.” (Tentative Ord. at 9, citing Finjan, 626 F.3d at 1208–11.) Prof. Cockburn’s multifaceted analysis permits a similar inference here. Accordingly, even if the Court confirms the tentative ruling as to Prof. Cockburn’s use of relative contribution to the value of Android to apportion the value of the 2006 bundle, there is no basis for excluding his apportionment or reasonable royalty opinion as a whole.

B. Claim-By-Claim Patent Damages Analysis
Imposing a claim-by-claim patent damages requirement is unjustified by law. Neither Google nor the tentative order cites any case that has required analysis of damages at the claim level. There is good reason why the law imposes no such requirement: the hypothetical license negotiation should conform to how parties would license in the real world. Parties do not negotiate for patent rights on a claim-by-claim basis. But because Prof. Cockburn has not undertaken such an analysis, the tentative order proposes adopting Google’s remedy that the jury “be instructed that if they find any asserted claim not infringed, they may assume that the non-infringed claim represented the full value of that

______________________________

3 There is no rule that damages cannot exceed the value of the 2006 license bundle. Spectralytics, Inc. v. Cordis Corp., 650 F. Supp. 2d 900, 910–11 (D. Minn. 2009), aff’d in part, rev’d in nonpertinent part, 649 F.3d 1336, 1346 (Fed. Cir. 2011) (rejecting argument that reasonable-royalty award should be capped at purchase price of portfolio). The qualitative evidence here shows that damages should not be so capped.

Page 7

patent.” (Tentative Ord. at 10).4 Google’s proposed remedy is contrary to law. Oracle is entitled to damages if the jury finds Google infringed any claim of the patents.

Google’s proposed remedy is also contrary to the facts. There is no basis in the record for concluding that any of the claims of the patents are more valuable than others, let alone provide all of the value. The claims of each patent are interrelated and overlapping, and are often infringed in exactly the same way. (See, e.g., Mitchell Report ¶¶ 301–02, 307, 310, 312–18 (describing how Google infringes all claims at issue in ’104 patent in the same manner)). Oracle’s technical expert has opined that there are no practical workarounds for these patents at all, and Google’s experts have not opined that any claim of a given patent would be easier to work around than others. Indeed, Google has offered only lawyer’s speculation, not evidence, that one claim of a given patent might be more valuable than another. In the absence of such evidence, it is irrelevant that the jury might find only some claims of a patent to be infringed or that the PTO may reject some claims.

The tentative order suggests that claim-by-claim analysis is “necessary to get the correct timeline to calculate past damages,” but in this case, there is no material dispute between the parties as to the date of the hypothetical negotiation. Consistent with the facts and the Court’s prior holding that infringement often begins before commercial release (Dkt. 230 at 7), Prof. Cockburn concluded that the hypothetical negotiation would have occurred in 2006. The vast majority of the royalty would have been paid based on Android’s revenues after its October 2008 commercial release. For each patent, Google’s experts also assume a hypothetical negotiation at or prior to Android’s commercial release, and make no adjustments to Prof. Cockburn’s damages calculations based on dates of first infringement. (See, e.g., Leonard Report at 9–10.) Thus, the hypothetical negotiation—for all claims of all patents—would occur prior to any event that could affect the timeline for past damages, and a claim-by-claim breakdown is unnecessary.

Finally, because the Court has previously required Oracle to reduce the number of claims it may try, and because the Court has indicated that the dropped claims must be “forsaken” both in this and in any subsequent actions (see Dkt. 131; Dkt. 458), assigning damages to particular claims rather than to

_____________________________

4 Oracle did not understand the Court’s prior order to require claim-by-claim damages analysis. The order referred to such analysis only as to computing the date of first infringement. (Dkt. No. 230 at 7.)

Page 8

patents threatens Oracle’s due-process rights if there are any difference in the value of claims. Further, Oracle could lose valuable rights if the Court instructs the jury that, if just one claim is not infringed, the entire patent is valueless, in the absence of any evidence, much less any finding, that the value of the claims varies. If the Court does require claim-by-claim analysis, it should give Prof. Cockburn the opportunity to provide that analysis, or explain why such an analysis would make no difference here.

C. Future Damages
The Court’s prior Daubert order directed Prof. Cockburn not to include a lump sum combining past and future damages. He complied.

Future royalties, if any, are determined under 35 U.S.C. § 283 (injunctive relief), not 35 U.S.C. § 284 (damages). An ongoing royalty is properly a matter for the court, not the jury. Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1316 (Fed. Cir. 2007); Boston Scientific Corp. v. Johnson & Johnson, No. C 02-0790-SI, 2008 WL 5054955, at *3–4 (N.D. Cal. Nov. 25, 2008). Moreover, the Federal Circuit has held that in most cases where a permanent injunction is not warranted, the court should allow parties to negotiate a license before imposing an ongoing royalty. See Paice, 504 F.3d at 1313–15. The appropriate procedure is a post-trial hearing in which the court considers evidence based on a hypothetical negotiation as of the date of the jury verdict. See Amado v. Microsoft Corp., 517 F.3d 1353, 1361–62 (Fed. Cir. 2008) (remanding case for lower court to “take into account the change in the parties’ bargaining positions, and the resulting change in economic circumstances, resulting from the determination of liability”); Boston Scientific, 2008 WL 5054955, at *3–5 (court set evidentiary hearing, with new expert testimony, after finding that “the hypothetical negotiation for post-judgment royalties should occur on the date of the verdict, when the determination of liability altered the parties’ bargaining positions”). If the Court permits Prof. Cockburn to testify at such a hearing, Oracle has no objection to Part 7 of the tentative order.

But if the Court, contrary to these precedents, determines that the jury should consider future damages, Prof. Cockburn has provided what is needed, setting forth a royalty calculation consisting of a 10% revenue share and an annual fee proportionate to Android distribution. (Cockburn Report Exs. 18, 25.) Determining the projected value of both simply requires choosing a set of market projections of Android ad revenue and units, several sets of which Prof. Cockburn has disclosed. (Cockburn Report

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App’x F at F-37–38.) It is simple math to apply the formula going forward. There is no reason to preclude Prof. Cockburn from converting his damages formula into dollar figures or offering the opinion that it would be appropriate for Google to make running or periodic payments consistent with the royalty formula as applied until the date each patent expires.

D. Other Licenses
Oracle requests reconsideration of the tentative order’s analysis of the Sun-Microsoft agreement. The order recognizes the 2001 action resulted in separate settlements relating to antitrust and patent issues, but would exclude the patent license because “[t]his second settlement was about more than fragmentation, patent, and copyright infringement. That litigation featured antitrust issues.” (Tentative Ord. at 10.) But as the tentative order also notes, the patent issues were specifically separated out and separately valued in the 2004 agreement, which allocated $900 million to the patent issues and $700 million to the antitrust issues. Prof. Cockburn does not discuss or rely on the antitrust portion. There will be no “bleed” from the antitrust settlement into the patent settlement.

Prof. Cockburn does not use the Sun-Microsoft agreement to quantify the damages in this case. Rather, he uses it as a check on the damages calculation and as background to help place the value of fragmentation in perspective. Google paints fragmentation of Java as a non-issue. The Sun/Microsoft agreement belies that claim. The lawsuit involved a situation similar to this one, where a dominant market player fragmented Java by deliberately incorporating a similar, but incompatible version into its operating system. In the case of Microsoft it was Windows; here it is Android. The harm to Sun/Oracle is very much the same. Excluding the agreement will allow Google to misleadingly minimize the impact of fragmentation on Java and the value the parties would have attributed to it. Prof. Cockburn should be allowed to testify regarding the patent portion of the Microsoft agreement.

Dated: December 20, 2011

DAVID BOIES
STEVEN C. HOLTZMAN
ALANNA RUTHERFORD
BOIES, SCHILLER & FLEXNER LLP

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

Attorneys for Plaintiff ORACLE AMERICA, INC.

Page 10


653

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

JOINT STATEMENT REGARDING
SUPPLEMENTAL ORDER
REGARDING PATENTING
MARKING

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

Pursuant to the Court’s December 6, 2011 Supplemental Order Regarding Patenting Marking (Dkt. No. 641), Google and Oracle met-and-conferred in person regarding a procedure and timetable regarding the marking issues, as directed by the Court. In do doing, the parties agreed to a procedure for identifying products that practice the asserted patents (or not). In light of the parties’ differing positions on the issue of trial timing, however, the parties were unable to reach agreement on the timetable. The parties set forth their procedural agreement and respective positions as to the timetable as follows:

Agreement Regarding Procedure
  1. Oracle will provide to Google an identification, for each of the 26 asserted claims, of each Oracle product, Oracle-licensed product, Sun product, or Sun-licensed product (“Oracle Products”) that practice or have practiced the claim. Oracle will also identify the fact witnesses who possess information supporting Oracle’s contentions that the Oracle Products practice or have practiced the asserted claims.
  2. Oracle will provide source code citations and/or other documentation supporting Oracle’s contentions that the Oracle Products practice the asserted claims. Oracle will also provide a summary of any witness testimony they intend to elicit at trial from the witnesses disclosed in Step 1.
  3. Google will respond to Oracle and identify any other Oracle Products that Google contends practiced any of the 26 asserted claims during the alleged damages period and identify any products in Oracle’s identification that Google contends do not practice the identified claims. Google’s response will specify which Oracle Products it contends do (or do not) practice the asserted claims, and why.
  4. Following Google’s response, the parties will meet-and-confer regarding their disclosures with the aim of preparing a stipulation of which Oracle Products practice the asserted claims. The parties will jointly submit to the Court a list of the Oracle Products that they stipulate practice the asserted claims, which shall have the effect of establishing that fact for all purposes at trial, and a list of those Oracle Products for which there is a genuine dispute between the parties

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    as to whether they practiced the asserted claims, along with brief explanations of the basis for each party’s contention.

Oracle’s Timetable Statement
Oracle proposes the following deadlines for the steps outlined above:

  1. December 23, 2011.
  2. December 30, 2011.
  3. January 6, 2012.
  4. January 13, 2012.
Oracle and Google are in agreement on all of the dates except for Step 2, the identification of source code citations and/or other documentation supporting Oracle’s contentions. For Step 2, Oracle’s engineers are double-checking the source code for the Oracle Products to confirm the precise portions that practice the asserted claim. They will need until December 30, 2011, to complete that process.

Google’s Timetable Statement
Google proposes the following deadlines for the steps outlined above:

  1. December 23, 2011.
  2. December 23, 2011.
  3. January 6, 2012 (or two weeks later).
  4. January 13, 2012 (or one week later).

Google notes that this timetable is necessary if, as Oracle advocates, the trial begins on January 20, 2012. If the Court sets trial for a later date, Google is amenable to a later timetable, with Step 3 of the agreed-upon procedure to occur two weeks after Step 2, and Step 4 to occur to 1 week after Step 3.

The primary difference between the parties’ proposed schedules is when Oracle must satisfy Step 2. Google believes December 30, 2011, is too late, particularly since Oracle has had since before it filed this lawsuit to determine whether its own products practice the asserted patents. In fact, Google’s proposed timeline gives Oracle three more days than Oracle would have had under the timetable originally set by the Court. Second, Oracle’s proposed procedure

2

has the effect of taking away a week for Google’s response. In the parties’ meet and confer, Oracle had originally proposed and agreed to having Steps 1 and 2 occur as a single step, with Google having at least two weeks to respond. Reversing course, Oracle now proposes separating the disclosure into two sub-steps one week apart, with the actual substantive identification of supporting evidence take place on the later date. In doing so, Oracle takes away one week of Google’s time to evaluate the evidence underlying Oracle’s contentions. Not only is this unfair, it threatens to render the procedure ineffective, making it impossible for Google to reach any stipulation. And while Oracle may be willing to give Google this additional week, the timeline then runs right into Oracle’s proposed January 20, 2012 trial date.

In short, in order to be ready for a trial beginning in late January, the timetable for addressing the marking issues must be more aggressive, such that these issues can be resolved at least one week before trial. This is particularly important if, as Oracle argues, the Court conducts a single consolidated trial on all issues, where these issues would impact opening statements.

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Dated: December 20, 2011

MORRISON & FOERSTER LLP

By: /s/ Daniel P. Muino
DANIEL P. MUINO

MORRISON & FOERSTER LLP
MICHAEL A. JACOBS (Bar No. 111664)
[email]
MARC DAVID PETERS (Bar No. 211725)
[email]
DANIEL P. MUINO (Bar No. 209624)
[email address telephone fax]

BOIES, SCHILLER & FLEXNER LLP
DAVID BOIES (Admitted Pro Hac Vice)
[email address telephone fax]
STEVEN C. HOLTZMAN (Bar No. 144177)
[email address telephone fax]

ORACLE CORPORATION
DORIAN DALEY (Bar No. 129049)
[email]
DEBORAH K. MILLER (Bar No. 95527)
[email]
MATTHEW M. SARBORARIA (Bar No. 211600)
[email address telephone fax]

Attorneys for Plaintiff
ORACLE AMERICA, INC.

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Dated: December 20, 2011

KING & SPALDING LLP

By: /s/ Matthias Kamber
MATTHIAS KAMBER

SCOTT T. WEINGAERTNER (Pro Hac Vice)
[email]
ROBERT F. PERRY
[email]
BRUCE W. BABER (Pro Hac Vice)
[email address telephone fax]

DONALD F. ZIMMER, JR. (SBN 112279)
[email]
CHERYL A. SABNIS (SBN 224323)
[email]
KING & SPALDING LLP
[address telephone fax]

GREENBERG TRAURIG, LLP
IAN C. BALLON (SBN 141819)
[email]
HEATHER MEEKER (SBN 172148)
[email address telephone fax]

KEKER & VAN NEST LLP
ROBERT A. VAN NEST (SBN 84065)
[email]
CHRISTA M. ANDERSON (SBN184325)
[email]
DANIEL PURCELL (SBN 191424)
[email address telephone fax]

Attorneys for Defendant
GOOGLE INC.

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ATTESTATION

I, Daniel P. Muino, am the ECF User whose ID and password are being used to file this JOINT STATEMENT REGARDING SUPPLEMENTAL ORDER REGARDING PATENTING MARKING. In compliance with General Order 45, X.B., I hereby attest that Mattias Kamber has concurred in this filing.

Date: December 20, 2011

/s/ Daniel P. Muino
DANIEL P. MUINO

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