1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANTS’ MOTIONS IN LIMINE Case No. 07-CV-1658 PJH (EDL) Robert A. Mittelstaedt (SBN 060359) Jason McDonell (SBN 115084) Elaine Wallace (SBN 197882) JONES DAY 555 California Street, 26th Floor San Francisco, CA 94104 Telephone: (415) 626-3939 Facsimile: (415) 875-5700 [email protected][email protected][email protected]Tharan Gregory Lanier (SBN 138784) Jane L. Froyd (SBN 220776) JONES DAY 1755 Embarcadero Road Palo Alto, CA 94303 Telephone: (650) 739-3939 Facsimile: (650) 739-3900 [email protected][email protected]Scott W. Cowan (Admitted Pro Hac Vice) Joshua L. Fuchs (Admitted Pro Hac Vice) JONES DAY 717 Texas, Suite 3300 Houston, TX 77002 Telephone: (832) 239-3939 Facsimile: (832) 239-3600 [email protected][email protected]Attorneys for Defendants SAP AG, SAP AMERICA, INC., and TOMORROWNOW, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION ORACLE USA, INC., et al., Plaintiffs, v. SAP AG, et al., Defendants. Case No. 07-CV-1658 PJH (EDL) DEFENDANTS’ MOTIONS IN LIMINE Date: May 24, 2012 Time: 2:30 p.m. Place: 3rd Floor, Courtroom 3 Judge: Hon. Phyllis J. Hamilton Case4:07-cv-01658-PJH Document1142 Filed04/26/12 Page1 of 27
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DEFENDANTS’ MOTIONS IN LIMINE Case No. 07-CV-1658 PJH (EDL)
Robert A. Mittelstaedt (SBN 060359)Jason McDonell (SBN 115084) Elaine Wallace (SBN 197882) JONES DAY 555 California Street, 26th Floor San Francisco, CA 94104 Telephone: (415) 626-3939 Facsimile: (415) 875-5700 [email protected][email protected][email protected] Tharan Gregory Lanier (SBN 138784) Jane L. Froyd (SBN 220776) JONES DAY 1755 Embarcadero Road Palo Alto, CA 94303 Telephone: (650) 739-3939 Facsimile: (650) 739-3900 [email protected][email protected] Scott W. Cowan (Admitted Pro Hac Vice) Joshua L. Fuchs (Admitted Pro Hac Vice) JONES DAY 717 Texas, Suite 3300 Houston, TX 77002 Telephone: (832) 239-3939 Facsimile: (832) 239-3600 [email protected][email protected]
Attorneys for Defendants SAP AG, SAP AMERICA, INC., and TOMORROWNOW, INC.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION
ORACLE USA, INC., et al.,
Plaintiffs,
v.
SAP AG, et al.,
Defendants.
Case No. 07-CV-1658 PJH (EDL)
DEFENDANTS’ MOTIONS IN LIMINE
Date: May 24, 2012 Time: 2:30 p.m. Place: 3rd Floor, Courtroom 3 Judge: Hon. Phyllis J. Hamilton
Case4:07-cv-01658-PJH Document1142 Filed04/26/12 Page1 of 27
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TABLE OF CONTENTS
Page
- i - DEFENDANTS’ MOTIONS IN LIMINE Case No. 07-CV-1658 PJH (EDL)
I. MOTION IN LIMINE NO. 1 TO EXCLUDE EVIDENCE AND ARGUMENT REGARDING NEW LOST PROFITS AND INFRINGER’S PROFITS CLAIMS .......... 1
A. Material Facts .......................................................................................................... 2
B. Rules 26 and 37 and This Court’s Scheduling Orders Require Excluding Oracle’s Untimely Damages Claims, Including the New Meyer Report ................ 5
2. All of Oracle’s New Disclosures Are Untimely ......................................... 6
3. Oracle’s Belated Disclosures Are Neither Substantially Justified Nor Harmless .............................................................................................. 7
4. Oracle May Not Circumvent Rule 26’s Disclosure Requirements by Mischaracterizing Its New Damages Claims as “Supplements.”................ 8
C. Judicial Estoppel Requires Precluding New Damages Claims ............................... 9
D. The Court Should Preclude Oracle from Reversing Its Approach to Deductible Expenses in an Attempt to Inflate the Infringer’s Profits Claim ........ 11
1. Oracle May Not Reverse Its Approach on Deducting Expenses .............. 11
2. Willful Infringers Are Not Barred from Deducting All Expenses ............ 12
E. The Court Should Preclude Oracle from Reneging on the Agreed Scope of Discovery—and Damages—to Inflate the Infringer’s Profits Claim .................... 15
II. MOTION IN LIMINE NO. 2 TO EXCLUDE EVIDENCE PREVIOUSLY OFFERED SOLELY TO SUPPORT EXCLUDED DAMAGES THEORIES ................ 16
III. MOTION IN LIMINE NO. 3 TO EXCLUDE EVIDENCE AND ARGUMENT REGARDING TOMORROWNOW’S CRIMINAL CONVICTION ............................... 18
A. Material Facts ........................................................................................................ 18
B. Argument .............................................................................................................. 18
IV. MOTION IN LIMINE NO. 4 TO PROHIBIT ORACLE FROM REFERRING TO “THEFT” OR “STEALING” OF SOFTWARE ............................................................... 21
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TABLE OF AUTHORITIES
Page(s)
- ii - DEFENDANTS’ MOTIONS IN LIMINE Case No. 07-CV-1658 PJH (EDL)
CASES
Beller v. United States, 221 F.R.D. 689 (D.N.M. 2003) ................................................................................................. 9
DAG Enters., Inc. v. Exxon Mobil Corp., 226 F.R.D. 95 (D.D.C. 2005) .................................................................................................... 9
Engquist v. Oregon Dep’t of Agriculture, 478 F.3d 985 (9th Cir. 2007) ................................................................................................... 19
Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991) ................................................................................................................ 21
Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505 (9th Cir. 1985) .............................................................................................. 12-14
Freeman v. Allstate Life Ins. Co., 253 F.3d 533 (9th Cir. 2001) ................................................................................................... 15
Hamil Am., Inc. v. GFI, 193 F.3d 92 (2d Cir. 1999), cert. denied, 528 U.S. 1160 (2000) ............................................ 13
Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778 (9th Cir. 2001) ................................................................................................... 10
Kamar Int’l, Inc. v. Russ Berrie & Co., 752 F.2d 1326 (9th Cir. 1984) ............................................................................................ 12-14
Lindner v. Meadow Gold Dairies, Inc., 249 F.R.D. 625 (D. Haw. 2008) ................................................................................................ 9
Luke v. Family Care & Urgent Med. Clinics, 323 Fed. App’x 496 (9th Cir. 2009) ...................................................................................... 6, 9
New Hampshire v. Maine, 532 U.S. 742 (2001) ................................................................................................................ 10
Sheldon v. Metro-Goldwyn-Mayer Corp., 106 F.2d 45 (2d Cir. 1939), aff’d, 309 U.S. 390 (1940) ......................................................... 13
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TABLE OF AUTHORITIES (continued)
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- iii - DEFENDANTS’ MOTIONS IN LIMINECase No. 07-CV-1658 PJH (EDL)
Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011) ............................................................................................... 17
United Nat’l Ins. Co. v. Spectrum Worldwide, Inc., 555 F.3d 772 (9th Cir. 2009) ................................................................................................... 10
United States v. 14.3 Acres of Land, No. 07cv886-AJB (NLS), 2011 WL 2414348 (S.D. Cal. June 10, 2011) ................................ 8
United States v. Bush, 58 F.3d 482 (9th Cir. 1995) ..................................................................................................... 19
United States v. Cabrera, 222 F.3d 590 (9th Cir. 2000) ................................................................................................... 21
United States v. Curtain, 489 F.3d 935 (9th Cir. 2007) ................................................................................................... 19
United States v. Gilbert, 57 F.3d 709 (9th Cir. 1995) ..................................................................................................... 20
United States v. Gonzalez-Flores, 418 F.3d 1093 (9th Cir. 2005) ................................................................................................. 19
United States v. Osazuwa, 564 F.3d 1169 (9th Cir. 2009) ................................................................................................. 20
United States v. Skillman, 922 F.2d 1370 (9th Cir. 1990) ................................................................................................. 19
United States v. Smith, 196 F.3d 1034 (9th Cir. 1999) ................................................................................................. 19
Fed. R. Civ. P. 26 .................................................................................................................... 6, 8, 9
Fed. R. Civ. P. 37 .............................................................................................................. 5, 6, 8, 15
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TABLE OF AUTHORITIES (continued)
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Fed. R. Evid. 402 .............................................................................................................. 14, 18, 19
Fed. R. Evid. 403 ................................................................................................................... passim
Fed. R. Evid. 609 .......................................................................................................................... 20
Fed. R. Evid. 802 .......................................................................................................................... 18
Fed. R. Evid. 803 .......................................................................................................................... 18
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- 1 -
DEFENDANTS’ MOTIONS IN LIMINECase No. 07-CV-1658 PJH (EDL)
Defendants move in limine to exclude evidence and argument related to Oracle’s new and
untimely damages claims in excess of and materially different from those Oracle disclosed during
the discovery period, presented at the first trial, and on which Defendants and this Court have
relied throughout this case. Defendants also ask this Court to exclude evidence and argument
solely related to damages theories no longer in the case, related to the TomorrowNow criminal
conviction, or that characterize acts of civil copyright infringement as “theft” or “stealing.”
I. MOTION IN LIMINE NO. 1 TO EXCLUDE EVIDENCE AND ARGUMENT REGARDING NEW LOST PROFITS AND INFRINGER’S PROFITS CLAIMS
This Court’s orders limit the issues for the new trial to Oracle’s remaining lost profits and
infringer’s profits claims. From the time of its damages expert Paul Meyer’s deposition in May
2010, through the first trial and the Court’s post-trial rulings (including the Court’s remittitur
calculation), Oracle consistently has maintained that its lost and infringer’s profits claims for
copyright damages total a combined maximum of $408.7 million. Now, Oracle wants to change
that claim and the methodology used to calculate it. In the past ten days, including the night
before the pretrial filings deadline, Oracle:
• Filed three motions seeking to revive damages claims that this Court struck;1
• Served a new expert report from Meyer, which increases his infringer’s profits
calculation by adopting a new and previously undisclosed projection methodology and
a new approach to deductible expenses;
• Provided yet another, even larger infringer’s profits claim based on a legal argument
about the effect of willful infringement on infringer’s profits claims (which argument
is also wrong as a matter of law); and
• Reneged on its own agreement to limit discovery and revenue calculations for
infringer’s profits to the “List of 86” customers on which both experts based their
damages calculations.
As a result, at the time of this filing, no one but Oracle knows what damages claim will be 1 Defendants will separately oppose Oracle’s three motions for reconsideration or “clarification” by May 1, 2012, as ordered by the Court. ECF No. 1126 (4/18/12 Order). This motion in limine focuses on Oracle’s changes to its profits claims.
Case4:07-cv-01658-PJH Document1142 Filed04/26/12 Page6 of 27
report, or opinion was required to have been disclosed during the discovery period. Rule 26(a)
requires a computation of each category of damages claimed and production of the documents on
which the computation is based. Fed. R. Civ. P. 26(a)(1)(A)(iii). If a party becomes aware that a
disclosure is incomplete, it must supplement “in a timely manner” or “as ordered by the Court.”
Fed. R. Civ. P. 26(e)(1). Expert reports, which are due “at the times and in the sequence that the
court orders,” Fed. R. Civ. P. 26(a)(2)(D), must “contain a complete statement of all opinions the
witness will express and the basis and reasons for them,” and the “data or other information
considered by the witness in forming the opinions.” Fed. R. Civ. P. 26(a)(2)(B).
Rule 37 forbids use of information or opinion not timely disclosed as Rule 26 requires,
unless the failure to disclose is substantially justified or harmless. Fed. R. Civ. P. 37(c)(1). Rule
37 sanctions are “self-executing” and “automatic,” designed to “provide a strong inducement for
disclosure of material.” Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106-07
(9th Cir. 2001) (quoting Fed. R. Civ. P. 37 advisory committee’s note (1993)) (holding that
failure to disclose expert report was not harmless where “Plaintiffs received [the] report one
month before they were to litigate a complex case”); Luke v. Family Care & Urgent Med. Clinics,
323 Fed. App’x 496, 499-500 (9th Cir. 2009). The non-moving party has the burden to show that
it meets one of the two exceptions to mandatory sanctions. Yeti by Molly, 259 F.3d at 1107.
2. All of Oracle’s New Disclosures Are Untimely.
Every one of Oracle’s latest damages calculations—whether in the form of expert opinion
or attorney argument—is untimely, by more than two years. The Court set December 4, 2009 as
the “Deadline to Supplement and/or Correct All Disclosures.” ECF No. 325 (6/11/09 Order) at 2.
Further, the Court-ordered “Deadline to Serve Expert Reports” was November 16, 2009. Id. At
the very latest, Oracle should have disclosed Meyer’s full opinions by the date of his May 2010
deposition.2 Nothing in the Court’s subsequent orders, including the Court’s latest scheduling
2 Although the Court’s December 22, 2009 Order set March 29, 2010 as the deadline to submit rebuttal reports, see ECF No. 586, the parties understood that Meyer would provide his rebuttal opinions to Clarke’s report at Meyer’s deposition. See, e.g., Lanier Decl. ¶¶ 10, 18, Ex. 10 (1/19/10 Email from H. House to J. McDonell); Ex. 18 (5/14/10 Meyer Tr.) at 675:16-9 (describing Exhibit 2020 as “a subsequent analysis I’ve done since receiving the rebuttal report of Mr. Clarke, and . . . it is my current opinion about infringer’s profits”).
Case4:07-cv-01658-PJH Document1142 Filed04/26/12 Page11 of 27
case, Sheldon v. Metro-Goldwyn-Mayer Corp., 106 F.2d 45, 51 (2d Cir. 1939), aff’d, 309 U.S.
390 (1940), to the effect that a “plagiarist may not charge for his labor.” Id. at 51. Having
determined that the defendant was not a willful infringer, however, it was unnecessary for the
Ninth Circuit to decide whether willful infringers are precluded from deducting overhead
expenses from gross revenues attributable to infringement. Nevertheless, the Ninth Circuit
expressed disagreement with the plaintiff’s interpretation of Sheldon, finding that the Second
Circuit’s decision “does . . . not disallow all overhead” expenses.3 Kamar, 752 F.2d at 1331.
As in Kamar, the Ninth Circuit in Frank Music also did not hold that willful infringers
may not deduct expenses in an infringer’s profits calculation. 772 F.2d at 515. Instead, in
affirming the district court’s finding that the infringement was not willful, the Ninth Circuit never
reached the issue of whether a willful infringer should be denied certain deductions. See id.
Although the Frank Music court noted in dicta that overhead expenses “may be deducted from
gross revenues to arrive at profits, at least where the infringement was not willful, conscious, or
deliberate,” this passing reference was not a holding of the case. Id. (citing Kamar, 752 F.2d at
1331). Further, the court’s reliance on Kamar in support of this comment was misplaced in any
event, as Kamar did not hold that a willful infringer cannot deduct expenses.
Although at least one court outside this Circuit has erroneously interpreted Frank Music as
holding that willful infringers may not deduct overhead expenses, see Saxon v. Blann, 968 F.2d
676, 681 (8th Cir. 1992), the only court in the Ninth Circuit ever to squarely address whether a
willful infringer is precluded from deducting certain expenses held that a willful infringer can
deduct overhead in calculating profits. ZZ Top, 70 F. Supp. at 1168. There, the district court
correctly observed that there is no statutory basis for denying a deduction of overhead costs as
punishment to a willful infringer, since: (1) Section 504(b) of the Copyright Act allows plaintiffs
3 An independent reading of Sheldon confirms that it did not hold that willful infringers are automatically precluded from deducting expenses in an infringer’s profits analysis. See 106 F.2d at 51, 54 (commenting that “plagiarist may not charge for his labor” in apportionment analysis, not deductible expenses analysis, and separately holding that defendant who had willfully infringed could deduct overhead expenses as long as they “assisted in the production of the infringement product”); cf. Hamil Am., Inc. v. GFI, 193 F.3d 92, 107 (2d Cir. 1999), cert. denied, 528 U.S. 1160 (2000) (Second Circuit confirming, post-Sheldon, that accused infringers, whether willful or not, may deduct expenses).
Case4:07-cv-01658-PJH Document1142 Filed04/26/12 Page18 of 27
how Oracle attempts to use the conviction, if it is admitted, the jury may try to punish Defendants
by increasing the damages award. Punishment is neither relevant nor proper in assessing civil
copyright damages. Further, by stipulation, Oracle relinquished its right to seek punitive damages
and should not be allowed to use the conviction to circumvent that voluntary decision.
Second, the conviction likely will confuse the jury as to how it relates to SAP. While
SAP AG and SAP America, Inc. agreed to take financial responsibility for TomorrowNow’s
actions, neither was indicted, charged, or found guilty of a criminal offense. If Oracle is allowed
to introduce and use the conviction in any way against SAP AG and SAP America, Inc., this will
improperly encourage the jury to assume that SAP AG and SAP America, Inc. pled guilty to a
crime as well; this is untrue and likely would improperly influence the jury’s deliberation.
Rule 609 Character Evidence. Rule 609 of the Federal Rules of Evidence does not
provide a basis for Oracle to offer evidence of TommorowNow’s conviction.4 Rule 609 provides
that a party may impeach a witness’s character for truthfulness with evidence that the witness was
convicted of a crime, “if the court can readily determine that establishing the elements of the
crime required proving—or the witness admitting—a dishonest act or false statement.” Fed. R.
Evid. 609. The plain language of Rule 609 applies only to a witness’s own conviction, and no
Ninth Circuit authority supports extending the rule to permit use of a corporate conviction to
impeach an individual. And Oracle should be prohibited from calling a TomorrowNow witness
for the sole purpose of attempting to expose the jury to the conviction. United States v. Gilbert,
57 F.3d 709, 711 (9th Cir. 1995) (holding that party cannot call witness with primary goal of 4 Even if the Court determines Rule 609 permits impeachment of any individual witness with TomorrowNow’s conviction, it should limit the way in which the conviction may be used, and require strict adherence to the rule, allowing only the barest of details absent exceptional circumstances. United States v. Osazuwa, 564 F.3d 1169, 1175 (9th Cir. 2009). Further, if it is allowed at all, such impeachment evidence should be permitted only if the witness was directly involved in the criminal activity leading to TomorrowNow’s conviction, as the policy underlying Rule 609 is to inform the jury about the character of the specific witness the jury is being asked to believe. Walden v. Georgia Pacific Corp., 126 F.3d 506, 523-24 (3d Cir. 1997) (affirming exclusion of corporation’s conviction as improper when used to impeach employee witnesses not directly involved in underlying actions that led to corporation’s conviction). Thus, to the extent that this Court finds that the conviction is admissible under Rule 609, at most, it could be used only to impeach former TomorrowNow employees (to the extent they are properly called to testify for other purposes) that downloaded or copied Oracle software without authorization or in excess of license grants between 2005 and 2007 (e.g., the subject matter of the criminal plea and related orders), and a limiting instruction should be issued.
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