Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-03561/USCOURTS-cand-3_10-cv-03561-393/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ORACLE AMERICA, INC.,

Plaintiff,

 v.

GOOGLE INC.,

Defendant. /

No. C 10-03561 WHA

MEMORANDUM OPINION RE

GOOGLE’S MOTION IN LIMINE

NO. 4 CONCERNING DR. ADAM

JAFFE

INTRODUCTION

In this copyright infringement action, the final pretrial order largely DENIED defendant

Google Inc.’s motion to exclude the testimony of plaintiff Oracle America, Inc.’s fair use

expert. The only portion of Jaffe’s testimony excluded is testimony that relied on evidence

related to Android Auto, Android Wear, Android TV, and Brillo, addressed in detail in a

separate memorandum (Dkt. No. 1781). This memorandum explains the reasoning behind the

denial of Google’s motion as to the remaining testimony.

STATEMENT

This action concerns defendant Google Inc.’s use of the declaring code and structure,

sequence, and organization of 37 API packages from Java 2 Standard Edition Version 1.4 and

Version 5.0 in its operating system for mobile devices, Android. Google’s use has already been

found to infringe plaintiff Oracle America, Inc.’s copyrights in Java SE 1.4 and 5.0, subject

only to Google’s defense of fair use.

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Oracle offers Dr. Adam Jaffe, an economist, as an expert on topics related to Google’s

fair use defense. In his report, Jaffe conducted a two-part analysis of the market effect of

Google’s alleged infringement. Specifically, he considered: (1) the harm to Oracle’s actual and

potential markets for Java in various device categories (including harm to the Java developer

community) and (2) the harm that would occur if copying like Google’s became widespread. 

Jaffe did not evaluate the effect of Android on the market for Java 2 SE 1.5 or 5.0 in their

primary market, namely, desktop computers. Jaffe also did not compare the current valuation of

the copyrighted work as a whole to its valuation absent Google’s alleged infringement. Rather,

Jaffe’s theory of market harm rested on the sum of the harms that Oracle allegedly suffered in

various markets in which it has licensed or may potentially license derivatives of the

copyrighted works.

Jaffe analyzed the effect that Android had on Oracle’s efforts to license alleged

derivatives in each of over a dozen markets: “mobile phones; tablets; e-readers; wearables;

automotive; Internet of Things; VOIP phones; Blu-Ray; televisions and set-top boxes; gaming;

GPS systems; vending machines; printers; household appliances; cameras; payment terminals

and point of sale systems” (Jaffe Rpt. ¶ 328). Jaffe described these markets as “product markets

for which Java would have been an appropriate application platform solution” (id. ¶ 320). Jaffe

then reviewed Oracle’s opportunities for licensing derivatives of the copyrighted works in each

market and attributed specific missed opportunities to competition with Android.

Jaffe’s primary focus was on the effect of Android on Oracle’s efforts to license the

copyrighted works or derivatives thereof in the market for mobile phones. He first discussed

Java Micro Edition, an alleged derivative of the copyrighted works. Java ME included ten of

the 166 API packages in the copyrighted work and a low-footprint Java Virtual Machine to

enable Java developers to write applications for devices with limited computing resources. 

Jaffe also considered Oracle’s licenses for Java in smartphones made by RIM (Blackberry) and

Nokia (Symbian), although he did not specify the scope of the licenses or how the licensees

actually used Java in their products. He then assessed the scope of the harm to the market for

Java based on the loss in market share suffered by each of Oracle’s licensees, Oracle’s resulting

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revenue loss and missed licensing opportunities, and forecasts of harm in the market for lowcost “feature phones” based on Google’s intent to enter that market (id. ¶¶ 330–337, 340–47). 

Jaffe’s evaluation of Oracle’s losses in other product markets followed the same pattern. 

He discussed early efforts by Oracle (or its predecessor, Sun Microsystems, Inc.) to develop

each market and its subsequent failed licensing opportunities, which he generally attributed to

competition with Android or an implementation thereof.

Google moves to exclude Jaffe’s testimony regarding the alleged market harm. The

parties fully briefed this motion in limine, and the Court held five hearings totaling more than

twenty hours of oral argument on several motions in limine, including this one.

ANALYSIS

District courts are charged as the gatekeepers who evaluate the admissibility of expert

opinion testimony. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999). Rule 702 of the

Federal Rules of Evidence permits a court to admit expert testimony that is (1) based upon

sufficient facts or data, (2) the product of reliable principles and methods, and (3) delivered by a

witness who has applied the principles and methods reliably to the facts of the case. The

admissibility of expert testimony turns on “whether expert testimony proffered in the case is

sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute.” 

Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 591 (1993). The proponent of expert

testimony has the burden of demonstrating its admissibility. Lust v. Merrell Dow Pharms., Inc.,

89 F.3d 594, 598 (9th Cir. 1996).

Here, Google seeks to exclude Jaffe’s testimony on the issue of the harm to the market

for the copyrighted works, which relates to the fourth fair use factor. 17 U.S.C. 107(4). 

Specifically, Google contends that Jaffe defines the “market” too broadly, and that he fails to

trace any alleged harm specifically to the infringement.

1. MARKET DEFINITION.

Google contends that Jaffe improperly considered the effect of Android on Oracle’s

potential market for and value of the Java platform, without narrowing his focus on the market

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for the particular asserted copyrighted works. Google also argues that Jaffe improperly

considered markets that Oracle was unlikely to develop.

A. Harm to the Java Platform.

In Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 568 (1985), the

Supreme Court clearly stated that consideration of the fourth fair use factor “must take account

not only of harm to the original but also of harm to the market for derivative works.” 

Both sides agree that harm to the market for derivative works may be considered under

the fourth fair use factor, but Google contends that Jaffe improperly considered the market for

the “Java platform” as opposed to the particular works at issue. Jaffe made clear, however, that

his discussion of the Java platform addressed Java SE 1.4 and 5.0, and derivatives thereof. 

Google only copied the declaring code and SSO from 37 Java API packages, but Jaffe

considered licensing efforts without regard to which API packages from Java SE 1.4 or 5.0

drove demand. The jury may nevertheless find that Google’s unlicensed use superseded

Oracle’s efforts to license the entire copyrighted work, as well as subsets and derivatives of it,

even to the extent those subsets and derivatives included API packages that Google did not

copy. Thus, Jaffe’s discussion of the Java platform does not warrant exclusion of his testimony.

B. Potential Markets.

Google also contends that Jaffe considered product markets in which Oracle’s potential

entrance is too speculative.

The Court of Appeals for the Second Circuit has recognized that there is a “danger of

circularity” in defining the market under the fourth factor to include the loss of potential

licensing revenue. See Ringgold v. Black Entertainment TV, Inc., 126 F.3d 70, 81 (2d Cir.

1997). That is, an accused infringer can always be considered a “potential licensee,” inasmuch

as the accused infringer might have sought a license for its use of the copyrighted material. The

accused infringer’s failure to obtain a license, therefore, will support a finding that the copyright

owner lost potential licensing revenue in the market for the very kind of work accused of

infringement, which would weigh against fair use under the fourth factor. But fair use asks

whether the accused infringer needed a license for its use in the first place. Thus, consideration

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of harm to the potential market to license works like accused infringer’s begs the question of

fair use. To avoid defining the market under the fourth factor so broadly as to swallow the rule

of fair use, the Second Circuit held that “only traditional, reasonable, or likely to be developed

markets” may be considered under the fourth fair use factor. Id. at 81. 

Our court of appeals has not expressly addressed the so-called “danger of circularity,”

but it adopted the rule that the fourth factor considers only “traditional, reasonable, or likely to

be developed markets” for the copyrighted works. Seltzer v. Green Day, Inc., 725 F.3d 1170,

1179 (9th Cir. 2013) (citing Ringgold, 126 F.3d at 81). 

Each of Jaffe’s market analyses included a discussion of some real world effort by

Oracle or Sun to develop that market. Although some examples were short-lived or ill-fated, a

reasonable jury could nevertheless find each market “traditional, reasonable, or likely to be

developed . . . .” Ibid. Thus, Jaffe’s consideration of those markets is not properly excluded at

the threshold.

Google also notes that Jaffe made no attempt “to construct a specific scenario or

description of what the market would have looked like in the absence of the infringing

behavior” (Jaffe Dep. at 107). That failure goes to the weight of Jaffe’s opinion, and Google

may raise that issue on cross-examination. 

The jury will be instructed to consider the harm to the broader potential market for

products that feature independent elements in addition to the copyrighted material only insofar

as those product markets shed light on the licensing or market value of the copyrighted work

(and derivatives thereof). Oracle must be permitted to present the full story of its lost

opportunities, and Jaffe’s conclusions regarding Oracle’s various failures and lost opportunities

for licensing the copyrighted works and derivatives thereof in the wake of Android’s release

will be helpful to the jury, even if Google disputes whether those opportunities could have been

realized absent infringement.

2. ATTRIBUTION TO THE INFRINGEMENT.

Jaffe did not trace any example of market harm specifically to the alleged infringement. 

Rather, he only considered market harm due to Android’s entry into each market he considered. 

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Google contends that Jaffe’s failure to trace his market harm opinions to its specific use of the

declaring code and SSO of 37 APIs is insufficient to establish market harm under the fourth fair

use factor. Specifically, it notes that the fourth fair use factor considers “the effect of the use

upon the potential market for or value of the copyrighted work.” 17 U.S.C. 107(4) (emphasis

added). Thus, Google argues, Jaffe may not offer testimony regarding harm attributable to

Android in general.

Google is correct that the fourth factor focuses on the effect of the infringement on the

market for the copyrighted work, but it is incorrect that Jaffe’s conclusions must be excluded on

that basis. 

In Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510, 1523 (9th Cir. 1992), as

amended (Jan. 6, 1993), our court of appeals considered a video game developer’s copying of

another’s game in order to reverse engineer the game to access functional elements necessary to

create an entirely new game. There, our court of appeals first considered the market effect of

the work as a whole, and then attributed any harm to the market for the original to the

competitive effect of the transformative elements of the work.

Similarly, in Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 592–94 (1994), the

Supreme Court directed the lower court to consider on remand whether the accused work

specifically affected the market for rap derivatives of “Oh, Pretty Woman.” It further noted,

“[o]f course, the only harm to derivatives that need concern us, as discussed above, is the harm

of market substitution. The fact that a parody may impair the market for derivative uses by the

very effectiveness of its critical commentary is no more relevant under copyright than the like

threat to the original market.” Id. at 593. 

Campbell and Sega demonstrate that the only market harm to consider in the fair use

analysis is that which is attributable to the harm of market substitution, and not the

transformative elements of the work; however, Google’s motion to limit Jaffe’s testimony

because he failed to trace the proffered harm to the infringement begs the question of the extent

to which Google’s use was transformative. It will be helpful for the jury to have the full story

of the alleged market harm and to evaluate the extent of that harm in light of its findings on the

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remaining fair use factors. As the Supreme Court noted in Campbell, 510 U.S. at 590 n.21,

“[m]arket harm is a matter of degree, and the importance of this factor will vary, not only with

the amount of harm, but also with the relative strength of the showing on the other factors.”

Thus, Google’s arguments that Jaffe’s proffered market harm is due either to exogenous

market changes or due to Google’s alleged transformative incorporation of the 37 APIs into a

smartphone platform should be directed to the jury. 

CONCLUSION

Google’s motion to exclude Jaffe’s testimony regarding market harm is largely DENIED. 

Jaffe’s testimony is excluded only to the extent it relies on Android Auto, Android Wear,

Android TV, and Brillo, for reasons stated in the memorandum opinion addressing those

products.

Dated: May 5, 2016. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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