Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_13-cv-03385/USCOURTS-cand-3_13-cv-03385-25/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:101 Copyright Infringement

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Case No. 5:13-cv-03385-PSG

ORDER DENYING MOTION FOR SANCTIONS

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION

ORACLE AMERICA, INC., et al.

 Plaintiffs, 

 v. 

TERIX COMPUTER COMPANY, INC., et al.,

 Defendants.

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Case No. 5:13-cv-03385-PSG

ORDER DENYING MOTION FOR 

SANCTIONS

(Re: Docket No. 498)

Plaintiffs Oracle America, Inc. and Oracle International Corporation cry foul after learning 

in a deposition about two previously unidentified sources of discoverable information. Oracle now 

moves for sanctions against Defendants Terix Computer Company, Inc., Sevanna Financial, Inc. 

and West Coast Computer Exchange, Inc. Because the court is not persuaded that the sources were

unreasonably withheld or that the surrounding deposition testimony was deceptive, the motion is 

DENIED.

I.

In 1992, Sun Microsystems released its first version of Solaris.1 Solaris is a UNIX-based 

operating system designed and used to operate server, blade, storage and related hardware.2 This 

 

1 See Docket No. 269 at ¶ 10. The major releases of Solaris at issue are Solaris 7 (released 

November 1998), Solaris 8 (February 2000), Solaris 9 (May 2002), Solaris 10 (January 2005) and 

Solaris 11 (November 2011). See id. 

2 See id. at ¶¶ 10-12. 

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includes hardware that is critical for legal, regulatory or business reasons, and therefore requires 

extremely high support levels.3 It also includes less critical systems for test, development and 

back-up.

4

 Sun regularly made available updates and firmware for Solaris that enhanced 

performance or simply fixed bugs in the system.5 Sun routinely permitted its customers—as well 

as third-party support providers servicing them—to obtain Solaris updates and firmware promptly 

upon release at little or no cost.6

In 2011 after Sun was acquired by Oracle. Since at least that time, customers who want 

Solaris updates and firmware must sign an annual contract for technical support services to be 

performed by Oracle.7 No customer may purchase updates or firmware without these services.8 

Customers that sign a support agreement—either directly with Oracle or through a reseller 

authorized by Oracle—receive a Customer Support Identification number linked to the products 

covered by the agreement.9 The CSI number allows customers to create login credentials to access 

Oracle’s secure support website.10 Using these credentials, the customer may download Solaris 

updates and firmware for the hardware systems that are covered by the support agreement.11 The 

customer may not share or use its CSI number for the benefit of others or for the benefit of 

unsupported Oracle hardware—only customers who pay for and maintain an agreement with 

 

3 See id. at ¶ 14. 

4 See id. at ¶ 15. 

5 See id. at ¶ 25. 

6 See id. 

7 Oracle brands its support services as “Oracle Premier Support for Operating Systems” and 

“Oracle Premier Support for Systems.” See id. at ¶¶ 50-53. The difference between the two 

offerings is that only the latter includes hardware support services. See id. at ¶ 55. 

8 As a result of the new Oracle policy, 22% of all “SPARC” Solaris 8 Solaris Updates were 

supported by Sun before the acquisition, compared with 93% supported by Oracle a year later. The 

comparable figures of x86 Solaris 8, SPARC Solaris 9, x86 Solaris 9, SPARC Solaris 10, and x86 

Solaris 10 were 13%-97%, 18%-92%, 13%-95%, 14%-78% and 12%-74%, respectively. See

Docket No. 269 at ¶ 52. 

9 See Docket No. 249 at ¶ 7. 

10 See id. 

11 See id. 

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Oracle for the hardware at issue may download Solaris updates and firmware and only for their 

own internal business use on specified computers.12

Defendants offer their own support services for Solaris hardware.13 Each either contracts 

directly with customers to provide this support or indirectly as a subcontractor to another entity, 

such as its co-defendant.14 

Oracle filed this suit against Defendants for copyright infringement, fraud and other torts.15 

Among its defenses, Defendants maintain that they benefit from Oracle’s customer licenses. 

Defendants also counterclaimed, alleging antitrust violations, unfair competition and other torts.16 

As part of its discovery, Oracle deposed various defense witnesses, including Jason Joyce,17 Bernd 

Appleby,18 Lawrence Quinn19 and Atull Dhall.

20 The depositions focused on Defendants’ alleged 

cross-use of Solaris patches. Oracle specifically alleges that Defendants downloaded patches into a 

generic repository using the My Oracle Support credentials of one customer and distributed them to 

another. Each witness denied that Defendants maintained such a repository or that Defendants

engaged in any cross-use.

21

 

12 See id. 

13 See Docket No. 269 at ¶ 30. 

14 See id. 

15 See Docket No. 249 at 30-41. Oracle also brought claims against Maintech Incorporated and 

Volt Delta Resources LLC. Pursuant to stipulation, the court recently entered judgment on those 

claims. See Docket No. 614. 

16 See Docket No. 356-5 at 12-24. 

17 Jason Joyce is Terix’s Technical Services and Software Support Manager.

18 Bernd Appleby is Terix’s CEO. 

19 Lawrence Quinn is a Terix Executive Vice President. 

20 Atull Dhall is Terix’s corporate representative witness about the existence of repositories and 

cross-use.

21 See Docket No. 499-8 (“obtaining a patch under one credential and then giving it to a company 

that did not have a credential” would “violate the IP rules.”) (“just to be clear, we don’t store any 

patches in our possession. We don’t have a repository of patches that we go into.”) (“Whenever 

we do have a request for a patch, we always initiate the patch request using the active credentials of 

that particular customer. So we don’t have a repository of Solaris patches just laying around for 

distribution); Docket No. 499-5 (Defendants wanted to avoid patches being “misused in a way of 

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On January 13, 2015, Oracle deposed Joyce a second time. He was shown a document with 

notes on it, referring to Solaris 9 patches he had provided to customers from a “repo.”22 Joyce 

admitted that the term likely referred to a repository: “I don’t know why I said ‘repository.’ I most 

likely would have downloaded that [Solaris patch] just using the Summit credential.”23 Joyce also 

stated that he had created and used a generic Solaris repository to provide patches to customers at 

Appleby’s direction because he “was afraid that Oracle was going to turn off all patch access for 

Solaris 8 and 9, and [Defendants] just wanted to have a copy of those in case a customer ever 

needed it in the future.”24

During the same deposition, Joyce also referenced for the first time a laptop that he used to 

build custom Solaris patches for customers using patches he downloaded from MOS.25 Joyce 

testified he “had forgot[ten] [he] was even using” the laptop and that he had stopped using it in 

2012 or 2013.26 A preliminary review of the laptop, which was produced within a month, revealed 

that in fact Joyce used it almost weekly to sync it to his current laptop, review his MOS credential, 

access Oracle’s website and download patches. This use continued right up to one week before the 

first deposition.27

Convinced that Joyce previously lied about the existence of a patches repository and that 

Defendants intentionally withheld Joyce’s laptop, Oracle now moves for sanctions. 

 

distribution to . . . another customer because it’s specific to that customer, it’s specific to that 

customer’s credential, and it’s specific to that customer’s agency relationship with [Defendants] 

and their licensing rights.”) (“It’s our process that you would provide a patch only to the customer 

for whom you have a credential); Docket No. 499-3 (no repository “in place for a customer [was] 

used for another customer”). 

22 See Docket No. 501-15. 

23 Docket No. 499-9. 

24 Id.

25 Id. 

26 Id.

27 See Docket No. 563 at ¶¶ 10-16. 

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II.

This court has jurisdiction under 28 U.S.C. §§ 1331 and 1338. The parties further 

consented to magistrate judge jurisdiction under 28 U.S.C. §636(c) and Fed. R. Civ. P. 72(a). 

Under Fed. R. Civ. P. 37, “[i]f a party fails to provide information . . . as required by Rule 

26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a 

motion, at a hearing, or at trial, unless the failure was substantially justified or is harmless.”28 In 

addition to or in place of this sanction, the court also may order payment of attorney’s fees, inform 

the jury of the party’s failure, or direct that certain facts be taken as established by the jury, among 

others.29 “A court need not find bad faith before imposing sanctions for violations of Rule 37.”30

Where Rule 37 does not apply, the court nevertheless has additional discretion to respond to 

abusive litigation practices under its inherent authority.31 The policy underlying this power is “the 

need to preserve the integrity of the judicial process in order to retain confidence that the process 

works to uncover the truth. . . . The courts must protect the integrity of the judicial process because, 

‘[a]s soon as the process falters . . . the people are then justified in abandoning support for the 

system.’”32 Sanctions are available to the district courts “not merely to penalize those whose 

conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to 

 

28 Fed. R. Civ. P. 37(c). 

29 See Fed. R. Civ. P. 37(b)(2)(A)(i)-(iv), (c).

30 Oracle USA, Inc. v. SAP AG, Case No. 07-cv-01658, 2009 WL 3009059, at *2 (N.D. Cal. Sept. 

17, 2009) (citing Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 

2001)); see also Keithley v. The Home Store.com, Inc., Case No 03-cv-04447, 2008 WL 3833384, 

at *3 (N.D. Cal. Aug. 12, 2008) (“Sanctions for violations of Rule 37 . . . may be imposed for 

negligent conduct.”).

31 See Apple Inc. v. Samsung Elec. Co., Ltd., 881 F. Supp. 2d 1132, 1135-36 (N.D. Cal. 2012) 

(citing Shepherd v. Am. Broad. Co., Inc., 62 F.3d 1469, 1474 (D.C. Cir. 1995)). 

32 Pension Comm. of Univ. of Montreal Pension Plan v. Banc of Am. Sec., 685 F. Supp. 2d 456, 

465-66 (S.D.N.Y. 2010); Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 106-07 

(2d Cir. 2002) (“Even in the absence of a discovery order, a court may impose sanctions on a party 

for misconduct in discovery under its inherent power to manage its own affairs.”) (citation 

omitted); Keithley, 2008 WL 3833384, at *2 (“[S]anctions [also] are available under the Court’s 

inherent power if ‘preceded by a finding of bad faith, or conduct tantamount to bad faith,’ such as 

recklessness ‘combined with an additional factor such as frivolousness, harassment, or an improper 

purpose.’”) (quoting Fink v. Gomez, 239 F.3d 989, 994 (9th Cir. 2001)). 

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such conduct in the absence of such a deterrent.”33 Sanctions under a court’s inherent powers must 

always be exercised with restraint and be appropriate to the conduct that triggered the sanction.34

III.

Oracle asks this court to decide two issues: (1) whether Defendants should be sanctioned 

for withholding, concealing and repeatedly offering false testimony related to Defendants’ license 

defense and (2) what kinds of sanctions are appropriate to punish and deter Defendants’ purported 

discovery misconduct and mitigate the resulting prejudice to Oracle. As a threshold issue, Rule 37 

sanctions are not available here. Oracle concedes that Defendants’ conduct did not violate a court 

order, and because Defendants promptly produced the repository and laptop after Joyce’s 

testimony, the conduct did not implicate Defendants’ duties under Rule 26.35 This leaves the court 

to determine whether to issue sanctions under its inherent authority, which requires a finding of bad 

faith or conduct tantamount to bad faith.36 Upon careful review of the record, the court is not 

convinced that the alleged discovery misconduct was as nefarious as Oracle suggests. 

First, Oracle has not shown that in his later deposition Joyce intentionally misrepresented

the existence of the laptop. When initially confronted about the laptop, Joyce testified that he had 

forgotten that he was using it and could not remember the last time he actually used it.37 Joyce 

later declared that since “April or May 2013,” “[he] ha[d] periodically booted up [his] 

Supplemental Laptop in order to sync it with the SyncBack software. [H]e may have also used the 

Supplemental Laptop for work-related tasks.”38 As noted earlier, the forensic evidence confirms

 

33 Nat’l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976) (per curiam). 

34 See Apple Inc. v. Samsung Elec. Co., Ltd., 888 F. Supp. 2d 976, 987 (citing Chambers v. 

NASCO, Inc., 501 U.S. 32 (1991)).

35 See Fed. R. Civ. P. 26(a), (e). Oracle offers no proof Defendants knew its production was 

incomplete before the deposition. 

36 See Keithley, 2008 WL 3833384 at *2 (“[S]anctions are available under the Court’s inherent 

power if ‘preceded by a finding of bad faith, or conduct tantamount to bad faith,’ such as 

recklessness ‘combined with an additional factor such as frivolousness, harassment, or an improper 

purpose.’”) (quoting Fink, 239 F.3d at 994). 

37 See Docket No. 501-14 at 493:2-22. 

38 Docket No. 555-7 at ¶ 6. 

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that he used the laptop on an almost weekly basis up until the date of his deposition.39 While this 

may be a frustrating result, witnesses routinely forget information from several years ago for many 

reasons during the course of depositions. Joyce’s inconsistencies almost certainly expose

Defendants to a difficult cross-examination at trial, but they are not sanctionable. 

Second, while Oracle fashions a compelling and inconsistent string of testimony from 

Joyce and Terix executives about the repository, a careful read of the full deposition testimony of 

each individual shows little to suggest that Defendants’ employees intentionally lied. For example, 

Oracle contrasts Appleby’s denial of a patches repository—“just to be clear, we don’t store any 

patches in our possession. We don’t have a repository of patches that we go into. . . . Whenever we 

do have a request for a patch, we always initiate the patch request using the active credentials of 

that particular customer. So we don’t have a repository of patches just laying around for 

distribution”40—with Joyce’s testimony where he, too, initially insisted that there was no 

repository for systematic customer distribution but later admits that he had created a generic Solaris 

repository in 2011 full of publicly available patches at Appleby’s direction.41 But this alone is not 

problematic. There is a distinction between housing a repository of patches requiring a customer 

credential and a repository of publicly available patches.

Where Oracle thinks it corners Defendants—but ultimately fails—is in relation to one 

specific customer interaction where Joyce “got approval from Mr. Appleby to [use a repository to 

get a patch to send to the customer] because the customer was screaming.”42 In response to an 

inquiry about which repository Joyce used, he indicated that he probably did not use a repository,43

that he probably just used the Summit credential to download the patch44

 and that if he had 

 

39 See Docket No. 563 at ¶¶ 14-15. 

40 Docket No. 499-8 143:19-144:4. 

41 See Docket No. 501-14 at 518-26. 

42 Id. at 518-20. 

43 See id. 

44 See id. 

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retrieved anything from the repository, it would have been for versions of Solaris 8 and 9 for which 

a credential was not required anyway.45 The testimony undeniably shows a blanket denial by 

Appleby that any patches were ever stored and an explicit recitation by Joyce of an instance in 

which Appleby authorized at least use of publicly available patches from a repository. But it is not 

unusual for witnesses to contradict each other. Nor is it a situation where the same witness is asked 

“what color is the sky” and answers “blue” one day and “red” the next. Again, Oracle is welcome 

to test the bounds of these inconsistencies in front of a jury. But without clear evidence of bad 

faith, sanctions are inappropriate. 

Third, even if Oracle could show bad faith, Oracle can point to no real prejudice resulting 

from this late production. Defendants admit that they failed to produce these two data sources.46 

But as soon as Oracle asked for the repository and laptop, Defendants produced both sets of 

materials within a month.47 Oracle does allege loss of certain metadata resulting from the 

production. But this was not spoliation; indeed errors in production can occur no matter the timing 

of production. While the delay undoubtedly was inconvenient, any prejudice was minimal. 

Oracle argues that its ability to produce expert reports has been severely hampered, but 

Defendants point out that a substantial portion of the expert reports on cross-use rely on Oracle’s 

own data about which patches were downloaded by Defendants. While Oracle’s expert used 

Defendants’ spreadsheets to determine what patches went to which customers, a significant portion 

of this information was available in spreadsheets previously produced in December 2014.48 So the 

ultimate question is whether the delay of two months was unduly prejudicial. The case law teaches 

that where production failure is due to delay rather than destruction and where the delay does not 

impair Oracle’s ability to go to trial, sanctions are unwarranted.49

 

45 See id. He also testified that he did not recall populating the repository with patches that were 

not publicly available. Id. 

46 See Docket No. 555-5 at 6. 

47 See id. at 9-10. 

48 See Docket No. 564-14; Docket No. 562-7. 

49 See United States v. Kahaluu Const. Co., Inc., 857 F.2d 600, 604 (9th Cir. 1992) (finding that the 

prejudice inquiry looks to whether the non-moving party’s actions impaired the moving party’s 

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