Friday, July 15, 2011

Oracle wants Google CEO Larry Page to testify on Android acquisition and Java licensing talks

A new court filing, entered late on Thursday, contains diametrically opposed statements from Oracle and Google concerning Oracle's request for permission "to notice and take four additional depositions before the end of fact discovery on July 29, 2011." The four witnesses Oracle wants to depose are

  • Larry Page, co-founder of Google who recently became its CEO (replacing Eric Schmidt);

  • Dipchand Nishar, a fomer Google employee on whose LinkedIn profile Oracle spotted that he claims to have "[s]tarted and managed Google's mobile initiatives worldwide (2005-2007)";

  • Bob Lee, "former Google employee who was a Senior Software Engineer at Google who led the core library development for Android"; and

  • Tim Lindholm, "an Android software engineer who was previously employed by Sun Microsystems", where he "contributed to certain Java technology at issue in this lawsuit", and later "participated in the negotiations that took place between Sun and Google for a Java license".

Requests to interview CEOs of large corporations always draw a lot of interest. I must admit that the names of the other three witnesses listed above didn't ring a bell with me.

So the big question many people ask now is: will Oracle successfully obtain permission to interview Google's CEO? Or is the court more likely to agree with Google that others (such as Android boss Andy Rubin) are able to provide the same if not better information on those issues, and that this would be "an improper 'apex' deposition", which "would only serve Oracle's goal of harassing Google's most senior executive"?

Oracle's request comes late but could succeed anyway

I believe Oracle has a pretty good chance because the judge presiding over the case has shown -- in a notice filed on Tuesday -- an exceptionally strong interest in exactly the issues on which Mr. Page could testify. According to Oracle, he was involved in Java licensing talks, and Google doesn't appear to dispute the fact of his involvement.

In that Tuesday notice, Judge Alsup wrote that it "appears possible that early on Google recognized that it would infringe patents protecting at least part of Java, entered into negotiations with Sun [Microsystems] to obtain a license for use in Android, then abandoned the negotiations as too expensive, and pushed home with Android without any license at all." (I have uploaded the entire notice to Scribd.)

The judge wants Google to explain at a hearing next week whether that's the way things worked indeed (in my view, the common-sense answer is yes), and his notice indicates that in this scenario Google would face a tripling of the damages claims on the grounds of willful infringement. According to Google, the damages claims calculated by Oracle's expert are in the range between $1.4 billion and $6.1 billion, so the theoretical maximum amount would be three times the upper limit, or $18.3 billion, while according to Oracle, there's no range but only one amount: $2.6 billion (which, if tripled, would result in a total bill of $7.8 billion).

At this stage, Oracle's request requires the court to be flexible about a previous limit for the number of witnesses, which was just a soft limit anyway: the court indicated that the related limitation could be enlarged "after counsel have demonstrated that they will behave reasonably in the discovery [originally] authorized".

In order to further assess the legitimacy of Oracle's request to depose Larry Page, we have to look at the issues.

Damages and liability issues in light of licensing negotiations between Sun (later Oracle) and Google

The reasons Oracle cites for wanting to depose the four witnesses listed further above during the home stretch of fact discovery have a common element: some kind of close connection with the liability and damages issues in this case, though Oracle's wordings leave the door open to raise other issues as well.

I have reported in detail on the damages dispute, most recently on Google's reply to Oracle's opposition to Google's Daubert motion (a motion to throw out a damages report presented by an Oracle expert).

Larry Page could provide answers that relate to the base amount of those damages (because he can testify on the value Google saw in Android when it made the decision to acquire it) as well as the possible tripling of such damages due to willful infringement.

The latter part is the one that I believe the presiding judge is much more likely to be interested in than the former. Whatever expectations Google had when it acquired Android are just history and I can't imagine that any of the related answers would provide an extremely useful indication as to what a reasonable royalty rate or other components of the overall damages bill should be. But the willfulness angle is the really interesting one here.

Google argues that Andy Rubin "was the lead on Google's negotiations with Sun", but when two companies negotiate, it's not just about who leads the day-to-day part of the negotiation. What's even more important is what senior management wants the negotiators to achieve, and what concessions senior management authorizes. In this particular case, someone must have taken internal responsibility at Google for a decision to press on with Android even without a Java-related license from Oracle.

It appears that Oracle proposed a deposition of Larry Page on July 1. Yesterday's filing reflects a disagreement that the parties haven't been able to resolve, so they need the court to decide. In the meantime, Judge Alsup filed the notice I mentioned further above. While discovery disputes such as how many and which witnesses to depose are before Magistrate Judge Donna Ryu, Judge Alsup is still in charge and I think he may very well grant Oracle's request. Considering that huge amounts of damages are at issue, the difference between regular damages and triple damages due to willful infringement is more than large enough to justify some further discovery even at the highest level of the organizations involved.

Also, I see various indications that Judge Alsup wants the parties to settle this case before the end of the month. I believe he wants to put pressure on both parties. Letting their CEOs speak out on those negotiations would be a way to up that pressure.

Oracle is quite tough when it comes to CEO depositions. Reuters reported in November that Oracle hired private investigators to hunt down Leo Apotheker, former CEO of SAP (and then of HP). We'll see what they come up with this time around.

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