Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-03561/USCOURTS-cand-3_10-cv-03561-277/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

ORDER DENYING ORACLE’S

MOTION TO DISQUALIFY

RULE 706 EXPERT

INTRODUCTION

In this copyright-infringement action involving an operating system for mobile devices,

the Court appointed an expert under Rule 706, who, before the trial herein, testified in a

separate case involving different parties. Although that litigation involved the same operating

system, he gave no opinion on the operating system and testified only on issues uninvolved in

the instant case. Based thereon, plaintiff moves to disqualify the Rule 706 expert from

participating in this case. For the reasons stated below, plaintiff’s motion is DENIED.

STATEMENT

Plaintiff Oracle America, Inc., acquired copyrights in the programming platform known

as Java. Defendant Google Inc. used Java to compose its Android operating system used in

mobile devices. Using the Java language itself violated nothing, all agree, and 95 percent or

more of Android constituted an original work by Google. The remaining five percent has

become the issue. The United States Court of Appeals for the Federal Circuit held that the

remaining five percent infringed Oracle’s copyright in the structure, sequence, and organization

of the Java Application Programming Interface, reversing a decision by this Court that had held

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 The copyright appeal herein was taken to the Federal Circuit rather than the Ninth Circuit because

the appeal included subsidiary patent issues which were then abandoned after the appeal was docketed.

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 A tentative order clarifying Dr. Kearl’s assignment in light of the remand and the abandonment of the

patent issues will follow shortly after this order issues. The parties and Dr. Kearl shall have an opportunity to

comment on that tentative order.

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the Java structure, sequence, and organization constituted a non-copyrightable “method of

operation” within the meaning of Section 102(b) of the Copyright Act. The Federal Circuit

remanded the case for further proceedings on Google’s fair use defense (and, Google contends,

its equitable defenses) as well as Oracle’s remedies, including injunctive relief and damages,

which could amount to multiple billions of dollars because Oracle now claims additional

damages based on the period since the first trial.1

 

Early on, the Court appointed an expert pursuant to Rule 706 “to testify before the jury

at trial . . . and not [to serve] as a confidential advisor to the judge” regarding the issues of

damages (for copyright and patent claims). A memorandum order detailed the need fo a Rule

706 expert (Dkt. No. 610 at 3): “[I]n light of the parties’ extremely divergent views on damages

and the unusual complexity of the damages aspect of this case, an independent economic expert

was needed to aid the jury.” After considering the recommendations of the parties, the Court

selected Dr. James Kearl of Brigham Young University as the Rule 706 expert (Dkt. No. 374).

As required by Rule 706, an order described Dr. Kearl’s assignment — “to provide an

independent professional analysis and view to inform the jury, in the event liability is found, on

the issue of damages on the claims asserted in this action” (Dkt. No. 413 at 1). That order also

detailed, inter alia, the procedure for Dr. Kearl to review the relevant materials in the record,

scheduled time for Dr. Kearl to prepare a report, provided that the parties could depose Dr.

Kearl, and addressed Dr. Kearl’s compensation for his work (ibid.).2

Dr. Kearl then produced an expert report (which will eventually be updated in light of

intervening events). This case has not yet proceeded to the damages phase, so Dr. Kearl has not

yet testified herein. Now that the case is back from the Federal Circuit, the parties intend to

conduct a new round of damages studies, and the new schedule for the exchange of the parties’

expert reports includes time for a new Rule 706 expert report, for a deposition of the Rule 706

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expert, and for party rebuttals to the Rule 706 expert’s report. Dr. Kearl has also recently been

asked to comment on any Daubert motions that the parties file.

***

The present disqualification motion pertains to Dr. Kearl’s role as an expert in a separate

action involving different parties, a role he took on after accepting the Rule 706 appointment in

the instant case. In 2012, Apple Inc. commenced a patent-infringement action against Samsung

Electronics Co., Ltd. (and other Samsung entities). Apple Inc. v. Samsung Electronics Co., Ltd.,

No. 12-00630 (Judge Lucy H. Koh). Neither Apple nor any Samsung entity is a party in the

instant action, and neither Oracle nor Google was a party in Apple v. Samsung. In that action,

Apple claimed that certain software features in Samsung’s mobile devices, which implemented

a version of Google’s Android operating system, infringed Apple’s patents. Apple sought over

two billion dollars in damages from Samsung. For its part, Samsung asserted counterclaims

against Apple arising from Apple’s implementation of certain features in its own devices, which

ran Apple’s iOS operating system. Samsung sought six million dollars in damages. 

Due to the Android connection, Google agreed to defend and indemnify Samsung as to

certain aspects of its defense against Apple’s affirmative claims but never agreed to pay (and

did not pay) for any aspect of Samsung’s affirmative case against Apple (Bicks Decl., Exh. 2). 

Both Google and Samsung retained counsel from the law firm of Quinn Emanuel Urquhart &

Sullivan LLP throughout Apple v. Samsung, and Google filed briefs in that case in response to

certain third-party discovery issues. (Keker & Van Nest LLP, the law firm that represents

Google in our case, had zero role in Apple v. Samsung.)

Samsung’s counsel retained Dr. Kearl to serve as an expert economist “solely to value

specific features of Apple products” and to evaluate the royalties Apple would have paid to

Samsung for a hypothetical license of the Samsung’s asserted patents (Kearl Decl. ¶ 2). (Again,

Apple products, at all material times, used an operating system different from Android.) 

Neither side asserted any copyright-infringement claims. Dr. Kearl did not discuss Android or

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 The Court has reviewed the full transcript of Dr. Kearl’s trial testimony (Dkt. Nos. 1311-10,

1311-11). He made no mention of Android or Google with the exception of the brief reference to his role in this

matter. Additionally, to rule on this motion, the Court asked Dr. Kearl to produce an unredacted copy of his

report and testimony in Apple v. Samsung to the parties herein (Dkt. No. 1322). The parties herein, the parties

in Apple v. Samsung, and Dr. Kearl entered into a protective agreement, and counsel for Samsung produced an

unredacted copy of Dr. Kearl’s report and his trial and deposition testimony to Oracle and Google. Oracle has

only submitted ten pages of the report in support of its motion, and no mention of Android or Google appears in

those pages. Oracle has not submitted any of Dr. Kearl’s deposition testimony. The Court is confident that

Oracle would have called attention to any reference to Android or Google in Dr. Kearl’s report or his deposition

testimony. Accordingly, this order can safely conclude that Dr. Kearl made no reference to Android or Google

in his report or his testimony, with the exception of a brief reference to his role in this matter.

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Google in any of his work. With the exception of a brief explanation of his role in the instant

matter, Dr. Kearl did not discuss Android or Google in his testimony in Apple v. Samsung.

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In their opening statement in Apple v. Samsung, counsel for Samsung contended that

Apple’s case was “an attack at Android” and that Google’s engineers “don’t need to copy

Apple” (Bicks Decl., Exh. 1 at 359, 370). They further stated that Apple had proposed “absurd”

damages calculations (id. at 377). Finally, referencing Samsung’s affirmative claim, counsel

explained that they would “show [the jury] how properly to calculate a royalty” and referenced

the Samsung patents, Apple’s infringement theory, and Dr. Kearl’s methodology (id. at 412). 

During Apple’s cross-examination, Dr. Kearl acknowledged (as he had in his report)

that he used the price that Apple actually charged customers in its App Store ($0.99) for an

accused feature (Facetime) in his calculation of the royalty Apple would have paid in a

hypothetical license for Samsung’s patent covering that feature, even though “the value that

[Apple] users placed on Facetime is likely higher, and likely many times higher” than the actual

amount paid by purchasers (Hurst Decl., Exh. 8, 1926, 2673–74).

At closing argument, counsel for Apple contended that Samsung had pursued its lowervalued counterclaims merely in an attempt to downsize Apple’s damages claim (Bicks Decl.,

Exh. 4 at 3350):

You also now know that [Samsung] hired four experts, Dr.

Schonfeld, Dr. Rao, Mr. Parulski, and Dr. Kearl, who in total were

paid over $5 million — again, without what the lawyers have been

paid — to pursue a $6 million claim.

Does that make sense? Only in one circumstance, if you’re trying

to devalue patents, all patents.

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And this was an intentional strategy. As Dr. Kearl testified during

his quick testimony on damages, he used a $0.99 upgrade for

Facetime in his analysis.

But on cross-examination, he agreed that the actual value of

Facetime was many, many times higher.

Why would you use — why would you use an artificially low

number? Only one reason. They’re the plaintiff. Only one reason. 

To devalue, to cheapen, to convince you that the patents are not

worth much.

Dr. Kearl now states, “I did not intentionally lower my damages estimates. I offered a

well-supported and reasonable estimate of the reasonable royalties in light of the objective

evidence of the value of the accused features and the availability of non-infringing substitutes”

(Kearl Decl. ¶ 9).

Oracle moves to disqualify Dr. Kearl as biased in favor of Google. In any event, Oracle

further contends that a Rule 706 expert is no longer necessary. Dr. Kearl, through his counsel,

has filed a declaration explaining his work in Apple v. Samsung, although he stated he did not

believe it appropriate to oppose Oracle’s motion, inasmuch as he does not have an adversarial

position vis-a-vis either party in this action. Google filed a response brief arguing that the

Oracle’s motion should be denied, although at oral argument on this motion counsel stated,

“[o]ur position has always been that the Rule 706 expert decision is up to the Court. And we’re

willing to live with what the Court decides” (Dkt. No. 1382 at 19). This order follows full

briefing and oral argument.

ANALYSIS

Rule 706 provides, in pertinent part: 

(a) Appointment Process. On a party’s motion or on its own, the

court may order the parties to show cause why expert witnesses

should not be appointed and may ask the parties to submit

nominations. The court may appoint any expert that the parties

agree on and any of its own choosing. But the court may only

appoint someone who consents to act.

(b) Expert’s Role. The court must inform the expert of the expert’s

duties. The court may do so in writing and have a copy filed with

the clerk or may do so orally at a conference in which parties have

an opportunity to participate. The expert:

(1) must advise the parties of any findings the expert makes;

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(2) may be deposed by any party;

(3) may be called to testify by the court or any party; and

(4) may be cross-examined by any party, including the party

that called the expert.

1. DR. KEARL’S ROLE IN APPLE V. SAMSUNG

DOES NOT UNDERMINE HIS NEUTRALITY HERE.

Rule 706 itself does not address the independence or neutrality of a court-appointed

expert. Our court of appeals reviews the appointment of a Rule 706 expert for abuse of

discretion. Walker v. Am. Home Shield Long Term Disability Plan, 180 F.3d 1065, 1071 (9th

Cir. 1999). Neither the rule nor any decision from our court of appeals offers guidance for the

exercise of that discretion in assessing a Rule 706 expert’s independence, but several district

courts in our circuit have described Rule 706 experts as “neutral.” See, e.g., Gorton v. Todd,

793 F. Supp. 2d 1171, 1177 (E.D. Cal. 2011) (Judge Lawrence K. Karlton) (“The Rule only

allows a court to appoint a neutral expert.”). Often, the appointment of a Rule 706 expert is

contrasted with the selection of an expert to be called by an advocate for either side. See, e.g.,

Hollis v. Sloan, No. 08-2674, 2010 WL 4069336, at *1 (E.D. Cal. Oct. 18, 2010) (Judge

Kendall J. Newman).

Throughout the process of selecting a Rule 706 expert in this matter, the Court sought

candidates that could “provide a neutral explanation and viewpoint,” that had “no conflicts,”

and that were “unimpeachable” to the extent that the candidate had not taken a position in a

prior case that might “compromise [his] freedom of movement” here (Dkt. Nos. 236 at 2, 610

at 4, and 350 at 23). The parties jointly vetted Dr. Kearl for conflicts (and approved) before

submitting his name for consideration (Dkt. No. 270). The Court held a hearing further vetting

Dr. Kearl and one other candidate (Dkt. No. 350). Considerable effort went into the selection

of Dr. Kearl.

At oral argument on this motion, counsel for Oracle proposed that a Rule 706 expert

should be dismissed if his prior work presents an “appearance of impropriety,” but counsel did

not cite any authority as support. Only one decision has ever mentioned “appearance of

impropriety,” and that was in a dictum. The expert there, the judge found, had not indulged in

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 There, the Rule 706 expert organized a conference sponsored in part by a defendant, participated in

a professional meeting organized by a defendant, and discussed serving as a clinical investigator for a

defendant. That decision held that those contacts did not “impair [the expert’s] objectivity, impartiality, or

neutrality . . . [or] result in any bias, conflict of interest, or, when the facts are known, any appearance of bias or

conflict of interest.” Id. at *5. That holding rested on a consideration of “all of the relevant facts, not just those

selected by a party.” Id. at *8. 

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an appearance of impropriety. See In re Silicone Gel Breast Implants Products Liability

Litigation, MDL No. 926, 1999 WL 34815588 (N.D. Ala. Apr. 26, 1999) (Chief Judge Sam C.

Pointer).4

***

Oracle has not pointed to a single statement ever made by Dr. Kearl in the Apple

case (or elsewhere) relating to Android or Google, or one usable to impeach any position he

may take here. Nor could it. Dr. Kearl’s role was specifically limited to assessing the

reasonable-royalty damages resulting from Apple’s alleged infringement of Samsung’s

patented inventions in Apple devices. That analysis had no relationship to Android or to

Google. In short, Dr. Kearl provided no opinion in Apple v. Samsung that compromises his

neutrality in the instant case.

Oracle’s argument reduces to the proposition that in the marketplace, Apple remains at

war with Google and Samsung (both of whom use Android) and that by testifying at the

request of Samsung’s counsel, Dr. Kearl allied himself with Google. Google’s agreement to

defend and indemnify Samsung, Oracle posits, shows the alliance. This argument, to repeat,

ignores the critical point that Dr. Kearl steered completely clear of Android and limited himself

to consideration of Apple’s implementation of Samsung’s patented inventions. Google only

provided financial assistance to Samsung’s defense and provided no financial assistance to

anyone in connection with the issues on which Dr. Kearl testified. Dr. Kearl only served as an

expert as to Samsung’s counterclaims.

Oracle also contends that Samsung only brought its counterclaims against Apple (and

retained Dr. Kearl) as a foil to produce a low-ball study to contrast against Apple’s affirmative

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 The jury found in Samsung’s favor as to one of its two asserted patents and awarded damages in the

amount of $158,400 — the amount of Dr. Kearl’s estimate (Apple v. Samsung, Dkt. No. 1877 at 11 (May 2,

2014).). The jury found in Apple’s favor on the Samsung’s other claim, which Dr. Kearl estimated at just over

six million dollars.

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damages claim.5 This type of speculation regarding litigation motives by counsel is too flimsy

to impugn Dr. Kearl. Whether or not Samsung intended its affirmative case to bolster its

defense (and thereby to protect Google as indemnitor), that intention did not inform Dr.

Kearl’s work. Again, Dr. Kearl did not opine on Apple’s claims against Samsung or anything

related to Android or Google. Nor did he offer any opinion on the measure of damages for any

copyright claims (neither side had alleged copyright infringement). 

Nevertheless, Oracle contends that Dr. Kearl’s involvement in the Apple v. Samsung

case will place it between Scylla and Charybdis. On the one hand, Oracle wishes to crossexamine Dr. Kearl about issues of bias. On the other hand, Oracle purports to fear that the jury

may then infer that the Court has endorsed Google’s side by appointing an expert with alleged

bias. If this “problem” arises, the Court will solve it with an admonition to the jury.

After full consideration, the Court is firmly convinced that Dr. Kearl remains qualified

to serve and will be neutral and fair in this matter and finds that Oracle has failed to supply

grounds to the contrary. The motion to disqualify is DENIED. 

2. A RULE 706 EXPERT REMAINS NECESSARY.

Oracle also contends that a Rule 706 expert is no longer necessary in this case because

the damages calculations have been simplified now that Oracle is not asserting any patent

claims. It is true that the patent claims have fallen away, but the complexity of the damages

issues remain monumental. 

In the joint case management statement submitted after the reversal, Oracle noted that it

seeks damages in an amount that includes “(1) Oracle’s actual damages resulting from

Google’s infringing activity, including harm to Java, harm to Oracle’s actual and potential

business, and loss of licensing revenues; and (2) Google’s profits attributable to the

infringement, including all revenues derived directly or indirectly from the exploitation of all

products containing the infringing material” (Dkt. No. 1273). This could amount to multiple

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billions of dollars. The fact that the patent claims have fallen away does not remove the need

for the jury to understand the roles and relative importance of the accused items as elements of

products, rather than entire products. The damages question remains complicated by the fact

that the parties employ elaborate, nontraditional business models for the products at issue. 

Oracle’s claim for Google’s infringement profits is especially challenging because Google, not

Oracle, bears the burden of proving the amount of its offset, if any, for “deductible expenses” it

incurred in generating the revenues claimed (and proven) by Oracle. See Petrella v. MetroGoldwyn-Mayer, Inc., 572 U.S. ___, 134 S.Ct. 1962, 1973 (2014). Indeed, the Court granted

Oracle’s recent discovery motion compelling Google to produce numerous internal profit and

loss reports that Oracle intends to scour in order to rebut Google’s arguments over deductible

expenses (Dkt. No. 1372). Additionally, Oracle’s claim for lost licensing revenues as a

component of its actual damages may still rely on the same “hypothetical license” analysis

proffered the first time around.

It is worth recalling here that Oracle’s damages expert, Dr. Iain Cockburn, needed

three tries before producing a viable damages study, and parts of his third faced successful

challenges as well (Dkt. Nos. 230, 685, 785). Thus, the appointment of a Rule 706 expert

proved prescient. Dr. Kearl’s continued involvement will be useful both in assisting the

jury in comprehending the complexity of the question of damages and in assisting the Court

in navigating any Daubert issues that will arise with the parties’ new damages studies. 

Accordingly, a Rule 706 expert remains appropriate in this case, subject to the remote

possibility that after application of Daubert the surviving damage theories by both sides will be

so uncomplicated that a Rule 706 expert will be unnecessary to assist the jury, a possibility the

Court will consider before the trial gets under way.

CONCLUSION

Oracle’s motion is DENIED.

IT IS SO ORDERED.

Dated: November 23, 2015. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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