Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-23-16065/USCOURTS-ca9-23-16065-0/pdf.json

Parties Involved:
Economists
Amicus Curiae
Federal Trade Commission
Amicus Curiae
SAP America, Inc.
Appellee
SAP Labs, LLC
Appellee
SAP SE
Appellee
Teradata Corporation
Appellant
Teradata Operations, Inc.
Appellant
Teradata US, Inc.
Appellant
United States of America
Amicus Curiae

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TERADATA CORPORATION; 

TERADATA US, INC.; TERADATA 

OPERATIONS, INC., 

Plaintiffs-Appellants, 

 v. 

SAP SE; SAP AMERICA, INC.; SAP 

LABS, LLC, 

Defendants-Appellees.

No. 23-16065 

D.C. No. 3:18-cv03670-WHO 

OPINION

Appeal from the United States District Court

for the Northern District of California

William Horsley Orrick, District Judge, Presiding

Argued and Submitted February 12, 2024

San Francisco, California

Filed December 19, 2024

Before: Eric D. Miller, Bridget S. Bade, and Lawrence 

VanDyke, Circuit Judges.

Opinion by Judge Miller

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 1 of 33
2 TERADATA CORP. V. SAP SE

SUMMARY*

Antitrust / Trade Secrets

The panel reversed the district court’s summary 

judgment in favor of SAP SE in Teradata Corporation’s 

action alleging that SAP illegally conditioned sales of its 

business-management software on sales of its back-end 

database engine in violation of Section 1 of the Sherman Act, 

15 U.S.C. § 1, and misappropriated Teradata’s trade secrets 

in violation of the California Uniform Trade Secrets Act. 

The panel reversed the district court’s summary 

judgment in favor of SAP on Teradata’s tying claim under 

Section 1 of the Sherman Act. As an initial matter, the panel 

held that the district court abused its discretion by excluding 

an expert’s testimony on market definition and the marketpower conclusions that followed from it. With the expert’s 

testimony, the panel held that Teradata raised a triable issue 

as to market power in the tying market under either of two 

different analytical frameworks—the per se rule and the rule 

of reason—and therefore the district court erred in granting 

summary judgment in favor of SAP on Teradata’s tying 

claim. 

The panel also reversed the district court’s summary 

judgment in favor of SAP on Teradata’s trade secrets claim 

because Teradata created triable disputes as to whether it 

properly designated the batched merge method—a technique 

for efficient aggregation of large batches of data—as 

confidential information under the parties’ agreements, and 

* This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 2 of 33
TERADATA CORP. V. SAP SE 3 

whether the parties’ agreements gave SAP a license to use 

the batched merge method in its products. 

COUNSEL

Deanne E. Maynard (argued), Bradley S. Lui, Mark L. 

Whitaker, David M. Cross, Mary Prendergast, Samuel B, 

Goldstein, and Brian R. Matsui, Morrison & Foerster LLP, 

Washington, D.C.; Jack W. Londen and James R. Sigel, 

Morrison & Foerster LLP, San Francisco, California; Bryan 

J. Wilson, Morrison & Foerster LLP, Palo Alto, California; 

Alexandra M. Avvocato, Morrison & Foerster LLP, New 

York, New York; for Plaintiffs-Appellants. 

Kannon K. Shanmugam (argued), Kenneth A. Gallo, J. 

Steven Baughman, and Abigail F. Vice, Paul Weiss Rifkind 

Wharton & Garrison LLP, Washington, D.C.; Kristin L. 

Cleveland, Klaus H. Hamm, Klarquist Sparkman LLP, 

Portland, Oregon; Joshua L. Fuchs and Joseph M. 

Beauchamp, Jones Day, Houston, Texas; Nathaniel P. 

Garrett, Jones Day, San Francisco, California; Tharan G. 

Lanier and Catherine T. Zeng, Jones Day, Palo Alto, 

California; Gregory A. Castanias, Jones Day, Washington, 

D.C.; for Defendants-Appellees.

Patrick M. Kuhlmann (argued), Daniel E. Haar, and Nickolai 

G. Levin, Attorneys; David B. Lawrence, Policy Director; 

Doha G. Mekki, Principal Deputy Assistant Attorney 

General; United States Department of Justice, Antitrust 

Division, Appellate Section, Washington, D.C.; Bradley 

Grossman, Attorney; Joel Marcus, Deputy General Counsel; 

Anisha S. Dasgupta, General Counsel; Federal Trade 

Commission, Washington, D.C.; for Amici Curiae United 

States of America and The Federal Trade Commission.

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 3 of 33
4 TERADATA CORP. V. SAP SE

Joshua M. Halen, Holland & Hart LLP, Reno, Nevada; Cory 

A. Talbot, Holland & Hart LLP, Salt Lake City, Utah; 

Cristina A. Mulcahy, Holland & Hart LLP, Santa Fe, New 

Mexico; for Amicus Curiae Economists. 

OPINION

MILLER, Circuit Judge: 

Teradata Corporation sued SAP SE, alleging that SAP 

illegally conditioned sales of its business-management 

software on sales of its back-end database engine in violation 

of Section 1 of the Sherman Act, 15 U.S.C. § 1, and 

misappropriated Teradata’s trade secrets in violation of the 

California Uniform Trade Secrets Act, Cal. Civ. Code 

§ 3426. The district court granted summary judgment to 

SAP. Because material factual disputes preclude summary 

judgment as to each claim, we reverse and remand for further 

proceedings. 

I 

SAP sells enterprise resource planning (ERP) software, 

which allows companies to manage data required to conduct 

day-to-day business activities such as finance, project 

management, and supply-chain operations. ERP applications 

operate on transactional databases, which are designed to 

process large numbers of simple transactions and to ensure 

that all of the application’s users have access to a uniform set 

of data so that queries will yield consistent results. 

Teradata sells enterprise data and warehousing (EDW) 

software. An EDW is a type of analytical database that is

designed to integrate and store data from various sources—

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 4 of 33
TERADATA CORP. V. SAP SE 5

including from transactional databases—and restructure it 

for analysis. Teradata’s flagship product is the Teradata 

Database, an EDW that employs highly scalable computing 

architecture to process and analyze vast amounts of data. 

Central to the Teradata Database is the “batched merge” 

method, a technique for efficient aggregation of large 

batches of data. 

In 2008, SAP and Teradata began the “Bridge Project,” a 

joint venture to develop software integrating SAP’s frontend applications with the Teradata Database’s back-end 

computing architecture. The companies entered two 

agreements to protect their intellectual property: a software 

development cooperation agreement, which restricted 

disclosures of each party’s confidential information, and a 

mutual non-disclosure agreement, which specified how to 

maintain the confidentiality of information that each party 

shared to further the venture.

During the course of the joint venture, the Bridge Project 

encountered technical difficulties, and Teradata’s senior 

engineer, John Graas, proposed incorporating the batched 

merge method into the Bridge Project software. To that end, 

he sent SAP a design document, labeled “Teradata 

Confidential,” that discussed the batched merge method.

The Bridge Project ultimately yielded a product called 

Teradata Foundation, which resolved the technical 

difficulties by bridging the “language gap” that was 

preventing SAP’s front-end application and Teradata’s 

back-end computer architecture from communicating with 

each other. While the project was underway, SAP had been 

developing its own EDW product called SAP HANA. In 

2011, two months after releasing HANA, SAP terminated 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 5 of 33
6 TERADATA CORP. V. SAP SE

the Bridge Project and stopped supporting, selling, and 

marketing Teradata Foundation. 

In 2015, SAP released an updated version of its ERP 

application, S/4HANA, and it combined that application 

with HANA in a single sales offering. In other words, 

customers seeking to purchase the S/4HANA application 

must purchase HANA as well—either with a full-use license 

that has no restrictions on how they can use HANA’s data or 

with a cheaper “runtime” license that restricts their ability to 

export HANA’s data for use with third-party products. Since 

SAP released S/4HANA, 88 percent of SAP’s customers 

have purchased HANA with a runtime license. 

In 2018, Teradata brought this action against SAP in the 

Northern District of California. As relevant here, it alleged

that SAP (1) unlawfully tied sales of S/4HANA to purchases 

of HANA and (2) misappropriated Teradata’s trade secrets 

involving the batched merge method. SAP counterclaimed, 

alleging that Teradata had infringed various SAP patents.

To support its antitrust claims, Teradata presented a 

report from Dr. John Asker, a Professor of Economics at the 

University of California, Los Angeles. Asker opined that the 

relevant antitrust product market for S/4HANA was “core 

ERP products for large enterprises,” while HANA was part 

of a market defined as “EDW solutions with [online 

analytical processing] capabilities for large enterprises.” 

Using those definitions of the relevant markets, he 

concluded that SAP had market power in the former market 

and that its conduct harmed competition in the latter. 

SAP moved for summary judgment on Teradata’s claims 

and sought to exclude portions of Asker’s testimony. The 

district court granted summary judgment to SAP on both of 

Teradata’s claims that are at issue here. The court excluded 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 6 of 33
TERADATA CORP. V. SAP SE 7

portions of Asker’s testimony on market definition, market

power, and harm to competition, finding his methodology 

unreliable and his opinion contradicted by undisputed facts. 

Without Asker’s testimony, the court determined that 

Teradata failed to create a material dispute on its tying claim. 

The court also concluded that the trade secret claim failed 

because Teradata had not designated the batched merge 

method as confidential in its communications with SAP and, 

in any event, the parties’ agreements granted SAP the right 

to use the method in its own products.

The district court’s order did not fully resolve the patent 

counterclaims. But having rejected all of Teradata’s claims, 

the court entered partial final judgment under Federal Rule 

of Civil Procedure 54(b).

Teradata appealed to the United States Court of Appeals 

for the Federal Circuit, which has exclusive jurisdiction over 

any appeal “in any civil action arising under, or in any civil 

action in which a party has asserted a compulsory 

counterclaim arising under, any Act of Congress relating to 

patents.” 28 U.S.C. § 1295(a)(1). The Federal Circuit 

determined that it lacked jurisdiction because SAP’s patentinfringement counterclaims did not arise out of the same 

“transaction or occurrence” as Teradata’s claims, so they 

were not compulsory counterclaims. Fed. R. Civ. P. 13(a);

Teradata Corp. v. SAP SE, No. 2022-1286, 2023 WL 

4882885, at *13 (Fed. Cir. Aug. 1, 2023). It therefore

transferred the appeal to this court. See 28 U.S.C. § 1631.

II

Section 1 of the Sherman Act prohibits “[e]very contract, 

combination in the form of trust or otherwise, or conspiracy, 

in restraint of trade or commerce.” 15 U.S.C. § 1. 

“Notwithstanding the apparent breadth of that provision, the 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 7 of 33
8 TERADATA CORP. V. SAP SE

Supreme Court has long interpreted it ‘to outlaw only 

unreasonable restraints.’” Flaa v. Hollywood Foreign Press 

Ass’n, 55 F.4th 680, 688 (9th Cir. 2022) (quoting Ohio v. 

American Express Co., 585 U.S. 529, 540 (2018) (Amex)).

This case involves an alleged tying arrangement—that 

is, an arrangement in which “the seller conditions the sale of 

one product (the tying product) on the buyer’s purchase of a 

second product (the tied product).” Cascade Health Sols. v. 

PeaceHealth, 515 F.3d 883, 912 (9th Cir. 2008). According 

to Teradata, SAP unlawfully required customers of 

S/4HANA (the alleged tying product) to purchase either a 

runtime or full-use license for HANA (the alleged tied 

product). We evaluate that claim under two different 

analytical frameworks: the per se rule and the rule of reason.

Restraints with “predictable and pernicious 

anticompetitive effect[s]” and “limited potential for 

procompetitive benefit” are per se unreasonable. State Oil 

Co. v. Khan, 522 U.S. 3, 10 (1997). Under the per se 

approach, restraints may be “conclusively presumed to be 

unreasonable and therefore illegal without elaborate inquiry 

as to the precise harm they have caused or the business 

excuse for their use.” Northwest Wholesale Stationers, Inc. 

v. Pacific Stationery & Printing Co., 472 U.S. 284, 289 

(1985) (quoting Northern Pac. Ry. Co. v. United States, 356 

U.S. 1, 5 (1958)).

“Typically only ‘horizontal’ restraints—restraints 

‘imposed by agreement between competitors’—qualify as 

unreasonable per se.” Amex, 585 U.S. at 540–41 (2018) 

(quoting Business Elecs. Corp. v. Sharp Elecs. Corp., 485 

U.S. 717, 730 (1988)). But certain tying arrangements are 

also subject to per se condemnation. See Jefferson Par. Hosp. 

Dist. No. 2 v. Hyde, 466 U.S. 2, 15 (1984), abrogated on 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 8 of 33
TERADATA CORP. V. SAP SE 9

other grounds by Illinois Tool Works Inc. v. Independent Ink, 

Inc., 547 U.S. 28, 31 (2006); Cascade Health Sols., 515 F.3d 

at 913. When a seller has market power in the tying market, 

a tying arrangement could allow “the seller [to] leverage this 

market power . . . to exclude other sellers of the tied product” 

and thereby extend its market power to the tied product 

market. Cascade Health Sols., 515 F.3d at 912. Accordingly, 

a “tie is per se unlawful if (1) the defendant has market 

power in the tying product market, and (2) the ‘tying 

arrangement affects a “not insubstantial volume of 

commerce” in the tied product market.’” Epic Games, Inc. v. 

Apple, Inc., 67 F.4th 946, 997 (9th Cir. 2023) (quoting 

Blough v. Holland Realty, Inc, 574 F.3d 1084, 1089 (9th Cir. 

2009)). A “not insubstantial” volume of commerce is merely 

a “not ‘de minimis’” amount. Id. (quoting Datagate, Inc. v. 

Hewlett-Packard Co., 60 F.3d 1421, 1426 (9th Cir. 1995)).

Even when a tie is not per se illegal, it may still be 

unreasonable under the rule of reason. The rule of reason

requires courts to determine whether “a particular contract 

or combination is in fact unreasonable and anticompetitive,” 

California ex rel. Harris v. Safeway, Inc., 651 F.3d 1118, 

1133 (9th Cir. 2011) (quoting Texaco Inc. v. Dagher, 547 

U.S. 1, 5 (2006)), by “conduct[ing] a fact-specific 

assessment of ‘market power and market structure,’” Amex, 

585 U.S. at 541 (quoting Copperweld Corp. v. Independence 

Tube Corp., 467 U.S. 752, 768 (1984)). Under the rule of 

reason, courts apply a “three-step, burden-shifting 

framework” in which “the plaintiff has the initial burden to 

prove that the challenged restraint has a substantial 

anticompetitive effect that harms consumers in the relevant 

market”—that is, in the tied market. Amex, 585 U.S. at 541

(citing Phillip E. Areeda & Herbert Hovenkamp, 

Fundamentals of Antitrust Law § 15.02[B] (4th ed. 2017)). 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 9 of 33
10 TERADATA CORP. V. SAP SE

“If the plaintiff carries its burden, then the burden shifts to 

the defendant to show a procompetitive rationale for the 

restraint.” Id. at 541. “If the defendant makes this showing, 

then the burden shifts back to the plaintiff to demonstrate 

that the procompetitive efficiencies could be reasonably 

achieved through less anticompetitive means.” Id. at 542. 

Under either the per se rule or the rule of reason, an 

essential first step is identifying relevant markets “within 

which significant substitution in consumption or production 

occurs.” Amex, 585 U.S. at 543 (quoting Areeda & 

Hovenkamp, Fundamentals of Antitrust Law § 5.02); see 

FTC v. Qualcomm Inc., 969 F.3d 974, 992 (9th Cir. 2020) 

(“A threshold step in any antitrust case is to accurately define 

the relevant market . . . .”). A relevant market encompasses 

“the group or groups of sellers or producers who have actual 

or potential ability to deprive each other of significant levels 

of business.” Thurman Indus., Inc. v. Pay ’N Pak Stores, Inc., 

875 F.2d 1369, 1374 (9th Cir. 1989).

“The principle most fundamental to product market 

definition is ‘cross-elasticity of demand,’” or “the extent to 

which consumers view two ‘products [as] be[ing] reasonably 

interchangeable’ or substitutable for one another.”

Coronavirus Rep. v. Apple, Inc., 85 F.4th 948, 955 (9th Cir. 

2023) (alterations in original) (first quoting Kaplan v. 

Burroughs Corp., 611 F.2d 286, 291 (9th Cir. 1979); and then 

quoting Gorlick Distrib. Ctrs., LLC v. Car Sound Exhaust 

Sys., Inc., 723 F.3d 1019, 1025 (9th Cir. 2013)). Crosselasticity of demand helps determine the boundaries of a

market: When products are “reasonably interchangeable,” 

they are “considered as being in the same market for the 

purpose of an antitrust claim.” Id.; see Olin Corp. v. FTC, 

986 F.2d 1295, 1298 (9th Cir. 1993). One standard approach 

to analyzing cross-elasticity of demand is the hypothetical 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 10 of 33
TERADATA CORP. V. SAP SE 11

monopolist test. Under this approach, products form a 

relevant market if a seller could profitably impose a small 

but significant and non-transitory increase in price—often of 

five percent—over a group of products. Saint Alphonsus 

Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., Ltd., 778 F.3d 

775, 784 (9th Cir. 2015); U.S. Department of Justice & 

Federal Trade Commission, Merger Guidelines § 4.3.B

(2023) (“When considering price, the Agencies will often 

use a [small but significant and non-transitory increase in 

price] of five percent of the price charged by firms for the 

products or services to which the merging firms contribute 

value. The Agencies, however, may consider a different term 

or a price increase that is larger or smaller than five 

percent.”). If a seller could not profitably impose such a price 

increase, then substitute products must exist, so the market 

definition must be expanded to include them. Id.

III

With those principles in mind, we consider Teradata’s 

tying claim. But before assessing the merits of the claim, we 

must review the district court’s exclusion of Asker’s 

testimony on market definition, market power, and harm to 

competition. We review a district court’s decision to exclude 

expert testimony for abuse of discretion. Hardeman v. 

Monsanto Co., 997 F.3d 941, 960 (9th Cir. 2021).

Under Federal Rule of Evidence 702, expert testimony 

must be “not only relevant, but reliable.” Daubert v. Merrell 

Dow Pharm., Inc., 509 U.S. 579, 589 (1993). “[D]istrict 

courts are vested with ‘broad latitude’ to ‘decid[e] how to 

test an expert’s reliability’ and ‘whether or not [an] expert’s 

relevant testimony is reliable.’” Murray v. Southern Route 

Mar. SA, 870 F.3d 915, 923 (9th Cir. 2017) (emphasis 

omitted) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 11 of 33
12 TERADATA CORP. V. SAP SE

137, 152–53 (1999)). The court may “assess the [expert’s] 

reasoning or methodology, using as appropriate such criteria 

as testability, publication in peer reviewed literature, and 

general acceptance.” Primiano v. Cook, 598 F.3d 558, 564 

(9th Cir. 2010). While evidence that “suffer[s] from serious 

methodological flaws . . . can be excluded,” Obrey v. 

Johnson, 400 F.3d 691, 696 (9th Cir. 2005), courts are not 

permitted to “determine the veracity of the expert’s 

conclusions at the admissibility stage,” Elosu v. Middlefork 

Ranch Inc., 26 F.4th 1017, 1026 (9th Cir. 2022). “Shaky but 

admissible evidence is to be attacked by cross examination, 

contrary evidence, and attention to the burden of proof, not 

exclusion.” Primiano, 598 F.3d at 564.

The district court determined that Asker’s testimony 

about market definition and harm to competition was

premised on unreliable methodologies. The court also held 

that because Asker’s “methodology for defining the relevant 

tying market [was] unreliable, his conclusions that SAP has 

market power in his proposed market should also be 

excluded.” We disagree and conclude that the court abused 

its discretion in excluding Asker’s testimony. 

A

Asker defined the relevant markets primarily based on a 

qualitative analysis of SAP’s business documents and other 

evidence. He “corroborate[d]” his results using various 

quantitative methodologies, including an aggregate 

diversion ratio analysis employing customer relationship 

management data from SAP and Oracle (SAP’s main 

competition in the tying market) that measured the number 

of times sales-representative reports mentioned certain 

competitors. Because Asker employed reasonable 

methodologies in defining the relevant markets, the district 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 12 of 33
TERADATA CORP. V. SAP SE 13

court abused its discretion in excluding his market-definition 

testimony and his conclusions about SAP’s market power in 

the tying market.

1

Asker defined the tying market as “core ERP products 

for large enterprises.” He defined large enterprises as “those 

with high annual revenues, a large number of staff, high data 

volume and complexity, and many ERP users.” Recognizing 

that “[t]he exact definition . . . varies slightly across industry 

participants,” he explained that “‘large enterprises’ are 

generally companies with over 1,000 or 1,500 employees 

and over 125 users of the ERP product” because those 

enterprises have ERP needs that differ from those of smaller 

enterprises. 

The district court excluded the “large enterprises” 

portion of Asker’s tying-market-definition testimony 

because it determined that Asker’s qualitative approach to 

defining “large enterprises” was unreliable. The court 

faulted Asker for failing to “reconcile” his “distinct separate 

market with the broad continuum of customers and varied 

and flexible approach to customer size taken by the 

industry.” Specifically, the court expressed concern that

“there is no clear line separating [large] companies or the 

products they buy from others.” 

The district court’s decision appears at least implicitly to

reflect a substantive rule of antitrust law—namely, that 

“large enterprises” is too imprecise to describe a properly 

defined market. That rule is legally erroneous because an 

antitrust plaintiff need not specify a market by precise 

“metes and bounds.” Times-Picayune Pub. Co. v. United 

States, 345 U.S. 594, 611 (1953). Instead, antitrust law 

recognizes that “some artificiality” and “fuzziness [are] 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 13 of 33
14 TERADATA CORP. V. SAP SE

inherent in any attempt to delineate the relevant . . . market.” 

United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 360 

n.37 (1963); accord Oahu Gas Serv., Inc. v. Pacific Res., 

Inc., 838 F.2d 360, 364 (9th Cir. 1988) (“The issue of product 

definition [is] always an inexact science often requiring 

distinctions in degree rather than kind . . . .”).

Alternatively, the district court’s decision can be read not 

as demanding a clear line distinguishing “large” enterprises 

from other companies, but merely requiring Asker to explain 

how he selected the specific definition he offered. See United 

States v. Hermanek, 289 F.3d 1076, 1094 (9th Cir. 2002) 

(“As a prerequisite to making the Rule 702 determination 

that an expert’s methods are reliable, the court must assure 

that the methods are adequately explained.”). SAP attempts 

to defend the court’s analysis on that basis, arguing that 

Asker did not explain why he defined “large enterprises” as 

those with “1,000 to 1,500 employees and over 125 users” 

when the documents on which he relied lacked common 

metrics or numerical thresholds distinguishing “large 

enterprises” from others.

Even assuming that the district court’s analysis rested on 

Asker’s failure to explain how he arrived at his more precise 

definition of “large enterprises,” its Daubert analysis was 

still flawed. In this context, “large” is a sufficiently intuitive 

concept that even if Asker’s selection of a particular 

numerical cutoff was somewhat arbitrary, we cannot say that 

his failure to explain the choice cast doubt on the reliability 

of his methodology. Cf. Pacific Choice Seafood Co. v. Ross, 

976 F.3d 932, 943 (9th Cir. 2020). Asker’s more general 

definition of “large enterprises” as “those with high annual 

revenues, a large number of staff, high data volume and 

complexity, and many ERP users” provides grounding for 

his more precise definition, assuring us that it was not based 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 14 of 33
TERADATA CORP. V. SAP SE 15

on “mere subjective belief[] or unsupported speculation.” 

Millenkamp v. Davisco Foods Int’l, Inc., 562 F.3d 971, 979 

(9th Cir. 2009). Inconsistencies in how “large” is quantified 

across Asker’s sources merely illustrate that “the relevant 

competitive market is not ordinarily susceptible to a ‘metes 

and bounds’ definition,” Tampa Elec. Co. v. Nashville Coal 

Co., 365 U.S. 320, 331 (1961), which, as we have already 

explained, is an insufficient basis for rejecting a proposed 

market definition. 

The district court also found unreliable Asker’s 

quantitative analyses, which he used to corroborate his 

conclusion that large enterprises form a separate market.

Because those analyses were merely confirmatory, any flaws 

they might have would not be a sufficient basis to exclude 

his tying-market testimony. See Wendell v. GlaxoSmithKline 

LLC, 858 F.3d 1227, 1233 (9th Cir. 2017) (explaining that 

district courts must “tak[e] into account the broader picture 

of the experts’ overall methodology”); Obrey, 400 F.3d at 

695 (“[O]bjections to a study’s completeness generally go to 

‘the weight, not the admissibility of the statistical evidence,’ 

and should be addressed by rebuttal, not exclusion.” (quoting 

Mangold v. California Pub. Utils. Comm’n, 67 F.3d 1470, 

1476 (9th Cir. 1995))). The district court therefore abused its 

discretion in excluding Asker’s tying-market definition and 

the market-power conclusions that followed from it.

2

Asker defined the tied market as “EDW products with 

[online analytical processing] capabilities for large 

enterprises.” The district court excluded Asker’s testimony 

about the tied-market definition, finding that Asker’s use of 

an aggregate diversion ratio analysis based on customer 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 15 of 33
16 TERADATA CORP. V. SAP SE

relationship management data made his methodology 

unreliable.

One way to implement the hypothetical monopolist test 

is to compare two values known as the critical loss threshold 

and the aggregate diversion ratio. United States v. H & R 

Block, Inc., 833 F. Supp. 2d 36, 63 (D.D.C. 2011); see FTC 

v. Wilh. Wilhelmsen Holding ASA, 341 F. Supp. 3d 27, 57 

(D.D.C. 2018). Typically, an increase in the price of a 

product leads to a decrease in sales. The critical loss 

threshold is the largest percentage decrease in sales that the 

hypothetical monopolist could experience before the price 

increase would no longer be profitable. See H & R Block, 

Inc., 833 F. Supp. 2d at 63; see also FTC v. Swedish Match 

N. Am., Inc., 131 F. Supp. 2d 151, 160 (D.D.C. 2000). “The 

aggregate diversion ratio for any given product represents 

the proportion of lost sales that are recaptured by all other 

firms in the proposed market as the result of a price 

increase.” H & R Block, 833 F. Supp. 2d at 63. “Since these 

lost sales are recaptured within the proposed market, they are 

not lost to the hypothetical monopolist.” Id. If the aggregate 

diversion ratio exceeds the critical loss threshold, then the 

hypothetical monopolist will recapture enough sales to make 

a small but significant and non-transitory increase in price

profitable across the monopolist’s entire business. The 

products controlled by the hypothetical monopolist thus 

form a relevant market. See id.; FTC v. IQVIA Holdings Inc., 

710 F. Supp. 3d 329, 371 (S.D.N.Y. 2023); Louis Kaplow & 

Carl Shapiro, Antitrust, in 2 The Handbook of Law and 

Economics 1073, 1174 (A. Mitchell Polinsky & Steven 

Shavell eds., 2007).

To the extent the district court’s ruling was premised on 

a general rejection of aggregate diversion ratio analysis as a 

market-definition tool, it was unreasonable. Such analysis 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 16 of 33
TERADATA CORP. V. SAP SE 17

“is commonly used” by economists to “frame the empirical 

estimation of demand responsiveness for the purpose of 

delineating relevant product markets.” Michael L. Katz & 

Carl Shapiro, Critical Loss: Let’s Tell the Whole Story, 17 

Antitrust 49, 49–50 (2003); see also Merger Guidelines 

§ 4.3.C & n.85 (explaining the use of aggregate diversion 

ratio analysis to implement the hypothetical monopolist 

test). 

The district court more specifically faulted Asker’s 

analysis because it used customer relationship management

data, which captures the firms that competed for a given 

sales opportunity. The court believed that such data “cannot 

measure . . . cross-elasticity of demand” because it “does not 

measure customer responses to changes in price.” Asker 

acknowledged the limitations of customer relationship 

management data as a measure of expected substitution 

effects, noting that such data “may not always be a reliable 

indicator of the actual competitors faced by a company,” so 

“it is appropriate to be cautious in using the data.” But as he 

explained, such data still “can be informative for market 

definition.” See FTC v. Tapestry, Inc., 2024 WL 4647809, at 

*30–31 (S.D.N.Y. Nov. 1, 2024) (rejecting argument that 

expert’s [aggregate diversion ratio] analysis “is unreliable 

because the survey data did not ask consumer[s] about 

switching their purchase . . . in response to a price increase,” 

and noting that “[e]conomists regularly estimate diversion 

ratios using non-price-response data”) (internal quotation 

marks omitted).

Asker’s methodology did not fall “outside the range 

where experts might reasonably differ.” Kumho Tire, 526 

U.S. at 153. The hypothetical monopolist test does not 

require showing actual diversion in response to price 

changes, only likely diversion. Although Asker’s data may 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 17 of 33
18 TERADATA CORP. V. SAP SE

not have captured actual transactions, it showed that other 

companies viewed SAP as a primary competitor, suggesting 

that customers would substitute SAP’s products for rival 

products in response to price increases. 

The few courts to have considered the issue have 

endorsed the use of customer relationship management and 

other non-price data to calculate the aggregate diversion 

ratio. See Wilhelmsen, 341 F. Supp. 3d at 57–58 (endorsing 

expert’s reliance on various sources of data, including 

customer relationship management data, to calculate 

aggregate diversion); FTC v. Sysco Corp., 113 F. Supp. 3d 1, 

35–37 (D.D.C. 2015) (relying on customer relationship 

management and other data that did not capture customer 

responses to price); H & R Block, Inc., 833 F. Supp. 2d at 

63–65 (relying on IRS switching data showing taxpayers 

who left a particular company’s tax-preparation product in a 

given tax year). Data recording actual customer responses to 

price changes is frequently unavailable, so a categorical rule 

requiring such data would be unrealistic. See Merger 

Guidelines § 4.1 (explaining that federal agencies “take into

account . . . the availability or quality of data or reliable 

modeling techniques,” recognizing “that the goal of 

economic modeling is not to create a perfect representation 

of reality, but rather to inform an assessment of the likely 

change in firm incentives”). 

The district court also reasoned that Asker’s 

methodology was “inconsistent with his methodology when 

defining the relevant [tying] market.” In his tying-market 

aggregate diversion ratio analysis, Asker included the 

minimum number of market participants and concluded that 

the relevant market consisted of only Oracle and SAP. But in 

his tied-market aggregate diversion ratio analysis, he 

included more than just the minimum number of market 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 18 of 33
TERADATA CORP. V. SAP SE 19

participants to bring SAP into the market definition. That 

difference in methodology was grounded in economic logic 

and well-established market-definition principles. Looking 

to a narrower set of market participants is appropriate when 

analyzing the tying market because “the competitive 

significance of the parties may be understated by their share 

when calculated on a market that is broader than needed to 

satisfy the [hypothetical monopolist test], particularly when 

the market includes products that are more distant 

substitutes.” Merger Guidelines § 4.4. By contrast, 

broadening the number of market participants is appropriate 

when analyzing the tied market, where the purpose is to 

determine the tied-product competitors harmed by the tie. 

Including more market participants ensures that competitors 

that may be harmed are not excluded from the analysis. As 

Asker put it, market definition “must be relevant to the 

theory of harm at issue,” which in this case was “via a tie.” 

Therefore, to exclude SAP from the tied market even though 

“documentary evidence clearly links Teradata and SAP as 

competitors in the EDW market,” and a market definition 

including SAP “passes the [hypothetical monopolist test], 

would run counter to common sense and good economic 

practice.” Of course, a trier of fact would not have to accept 

Asker’s ultimate conclusions. But his approach was 

explained sufficiently to satisfy Rule 702. See Hermanek, 

289 F.3d at 1094.

More fundamentally, the district court abused its 

discretion by narrowly focusing on Asker’s aggregate 

diversion ratio methodology as its sole justification for 

excluding his tied-market testimony. See Wendell, 858 F.3d 

at 1233 (holding that the district court abused its discretion 

when it ignored a variety of evidence supporting the expert’s 

conclusion). As with the tying-market definition, the 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 19 of 33
20 TERADATA CORP. V. SAP SE

“primary foundation” for Asker’s tied-market definition was 

not his aggregate diversion ratio analysis, but rather his 

qualitative analysis of “the deposition testimony and 

documentary record.” The district court rejected SAP’s 

challenges to Asker’s qualitative analysis, determining that 

Asker’s conclusions were consistent with the evidence. The 

court therefore seems to have excluded Asker’s testimony 

based solely on its determination that his aggregate diversion 

ratio analysis was unreliable. That was an abuse of 

discretion.

B

As to harm to competition in the tied market, Asker 

opined that by “causing sales of HANA that otherwise would 

not have occurred,” the tie “distorts purchasers’ choices of 

EDW products, which harms purchasers and competitors

competing for those sales.” In reaching that conclusion, 

Asker analyzed SAP business documents and sales data to 

understand SAP’s use of S/4HANA as leverage to sell 

HANA, HANA’s market gains, the effects of HANA’s 

“runtime” and “full use” licenses, and barriers to entry and 

fixed costs in the tied market. The district court found 

Asker’s harm-to-competition testimony unreliable on two

grounds, neither of which was reasonable. 

First, the district court faulted Asker for failing to 

analyze how SAP’s tie affected several major competitors in 

the relevant EDW market, including Oracle, Microsoft, 

IBM, and Amazon. But an expert may extrapolate harm to 

competition on a market-wide level based on the volume of 

“tied-product sales covered by tying arrangements” and the

“coercion of particular customers.” 9 Phillip E. Areeda & 

Herbert Hovenkamp, Antitrust Law ¶1729h (4th ed. 2018). 

Here, Asker provided evidence of both, estimating the 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 20 of 33
TERADATA CORP. V. SAP SE 21

percentage of SAP’s large-enterprise HANA sales 

attributable to customers who also purchased its ERP 

products and analyzing the ways in which SAP conditions 

access to S/4HANA on customers’ purchases of HANA. 

Although he did not quantitatively analyze the tie’s impact 

on other major EDW competitors, he did provide qualitative 

evidence of its impact on their market shares. As “long as 

the evidence is relevant and the methods employed are 

sound, neither the usefulness nor the strength of statistical 

proof determines admissibility under Rule 702.” Obrey, 400 

F.3d at 696.

Second, the district court rejected, as “unwarranted,”

Asker’s assumption that HANA—whether sold with a 

runtime or a full-use license—“is necessarily always sold as 

an EDW.” The court reasoned that HANA purchased with a 

runtime license is not an EDW because customers cannot 

import data from other sources or use HANA to support nonS/4HANA applications. As to HANA purchased with a fulluse license, the district court acknowledged its EDW 

capabilities but faulted Asker for failing to identify specific 

customers who use full-use HANA as an EDW. 

A jury could infer, however, that consumers use both 

runtime and full-use HANA as EDWs. Runtime customers 

might not use HANA directly with third-party products, but 

nothing precludes them from using HANA with 

complementary SAP applications. Indeed, SAP documents 

suggest that when HANA is used with SAP’s Business 

Warehouse application, a data reporting tool, it offers 

traditional EDW functionality. Teradata also points to 

evidence suggesting that when paired with Business 

Warehouse, runtime HANA can use data from third-party 

applications to perform advanced analytics. SAP embeds 

Business Warehouse into all of its ERP systems, including 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 21 of 33
22 TERADATA CORP. V. SAP SE

S/4HANA, and it offers a version of the application 

specifically designed to operate with HANA to deliver “realtime enterprise-wide analytics.” 

Asker’s claim that customers actually use both runtime 

and full-use HANA as EDWs was a “reasonable 

extrapolation[]” from the evidence. Murray, 870 F.3d at 923. 

SAP business documents describe the company’s strategy to 

use HANA to displace other EDW providers. And SAP’s 

procompetitive justifications for the tie centered on HANA’s 

ability to simultaneously leverage transactional and 

analytical capabilities. If customers did not use HANA as an 

EDW, the tie would not further SAP’s purported strategic or 

procompetitive objectives. Given SAP’s stated objectives, it 

was reasonable for Asker to conclude that customers use 

HANA as an EDW.

As with Asker’s other conclusions, a trier of fact might 

disagree. But at this stage, it is not our role to determine “the 

veracity of the expert’s conclusions.” Elosu, 26 F.4th at 

1026. Asker’s assumption that runtime HANA provides 

analytical functionality is sufficiently plausible to constitute 

a “competing version[] of the evidence.” Id.

In an effort to defend the district court’s exclusion of 

Asker’s testimony, SAP argues that Asker failed to 

distinguish between tied and non-tied HANA sales. But 

Asker addressed that issue in concluding that the tie “is 

causing sales of HANA that otherwise would not have 

occurred.” Asker found, for example, that “the 

overwhelming majority of HANA sales have been made to 

S/4HANA customers.” He also provided evidence that 

customers were concerned that the tie would force them to 

forgo investments in their preferred databases. Asker 

reasonably inferred from this evidence that tied sales, not 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 22 of 33
TERADATA CORP. V. SAP SE 23

standalone sales, drove HANA’s market share. See Kennedy 

v. Collagen Corp., 161 F.3d 1226, 1230 (9th Cir. 1998) 

(“[C]ausation need not be established to a high degree of 

certainty for expert testimony to be admissible under Rule 

702.”).

IV

Having determined that the district court abused its 

discretion in excluding Asker’s market-definition and harmto-competition testimony, we turn to whether summary 

judgment was proper on Teradata’s tying claim. “We review 

a district court’s grant of summary judgment de novo and, 

viewing the evidence in the light most favorable to the nonmovant, determine whether there are any genuine issues of 

material fact and whether the district court correctly applied 

the relevant substantive law.” Honey Bum, LLC v. Fashion 

Nova, Inc., 63 F.4th 813, 819 (9th Cir. 2023) (quoting Social 

Techs. LLC v. Apple Inc., 4 F.4th 811, 816 (9th Cir. 2021)).

As a preliminary matter, we must determine whether to 

evaluate Teradata’s tying claim under the per se approach or 

the rule of reason. SAP argues that because tying 

arrangements are vertical restraints, they must, “like nearly 

every . . . vertical restraint,” be evaluated under the rule of 

reason. Amex, 585 U.S. at 541. The “vertical restraint” label 

applies to a wide array of agreements between sellers and 

buyers. The classic type of vertical restraint is an “agreement 

between firms at different levels of distribution,” such as 

between a manufacturer and its dealers. Id. (quoting 

Business Elecs. Corp., 485 U.S. at 730). Ties are different: 

They are not agreements between multiple firms, but 

“arrangement[s] where a supplier agrees to sell a buyer a 

product (the tying product), but ‘only on the condition that 

the buyer also purchases a different (or tied) product.’” 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 23 of 33
24 TERADATA CORP. V. SAP SE

Brantley v. NBC Universal, Inc., 675 F.3d 1192, 1199 (9th 

Cir. 2012) (quoting Northern Pac. Ry. Co., 356 U.S. at 5). 

And although other kinds of vertical arrangements are 

subject to the rule of reason, tying arrangements—or at least 

some of them—have long been subject to per se 

condemnation. See International Salt Co. v. United States, 

332 U.S. 392, 396 (1947), abrogated on other grounds by 

Illinois Tool Works Inc., 547 U.S. at 31; Jefferson Par., 466 

U.S. at 9 (noting that the per se tying rule “has been endorsed 

by this Court many times”). 

To be sure, tying arrangements are subject to a 

“modified” per se approach under which a tie is unlawful 

only “if (1) the defendant has market power in the tying 

product market, and (2) the ‘tying arrangement affects a “not 

insubstantial volume of commerce” in the tied product 

market.’” Epic Games, 67 F.4th at 996–97 (quoting Blough, 

574 F.3d at 1089); see Eastman Kodak Co. v. Image Tech. 

Servs., Inc., 504 U.S. 451, 462 (1992). In other words, unlike 

the per se rule for horizontal restraints, under which “a 

restraint is presumed unreasonable without inquiry into the 

particular market context,” the tying per se rule incorporates 

an inquiry into market power. National Collegiate Athletic 

Ass’n v. Board of Regents of Univ. of Okla., 468 U.S. 85, 100 

(1984); see Epic Games, 67 F.4th at 997. But the fact remains 

that tying arrangements meeting the requirements of the 

modified per se rule are deemed unreasonable as a matter of 

law. Nothing in Amex—a case that did not involve tying 

arrangements—disturbs that long-settled rule.

SAP urges us to depart from the per se approach because, 

it says, Teradata’s tying claim “is predicated on innovative 

conduct within a technology market.” In Epic Games, we 

adopted the District of Columbia Circuit’s reasoning in 

United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 24 of 33
TERADATA CORP. V. SAP SE 25

2001), to conclude that the per se approach is inappropriate 

when (1) a tie “involv[es] software that serves as a platform 

for third-party applications,” (2) the tied good is 

“technologically integrated with the tying good,” and (3) the 

tie presents “purported procompetitive benefits that could 

not be achieved by adopting quality standards for third-party 

suppliers of the tied good.” Epic Games, 67 F.4th at 997 

(quoting Microsoft, 253 F.3d at 89–90). 

SAP claims that this case fits under Epic Games and 

Microsoft’s narrow exception to the per se rule. According to 

SAP, HANA is “platform software” because it “make[s] 

available to ERP applications thousands of functions . . . 

from data storage and retrieval to mathematical 

computations.” But unlike in Epic Games and Microsoft, the 

tying and the tied products here are not technologically or 

physically integrated. In Epic Games, Apple’s in-app 

payment processor was integrated with its app distribution 

platform because both were built into the iPhone operating 

system. See 67 F.4th at 967–68, 997. Microsoft also involved 

“an integrated physical product,” in which Internet 

Explorer’s application programming interfaces were 

embedded into the Windows operating system. 253 F.3d at 

90. HANA, on the other hand, is not a software functionality 

that is technologically or physically integrated with SAP’s 

ERP application, but a standalone EDW product that SAP 

can and does sell independently of S/4HANA. In that sense, 

this case is more akin to standard contractual tie cases, which 

courts regularly evaluate under the per se framework. See, 

e.g., Northern Pac. Ry. Co., 356 U.S. at 5–8 (conditioning 

lease of land on agreement to ship products on defendant’s 

railroad). 

We appreciate SAP’s concern that the per se rule for ties, 

especially as applied to software markets, sits uneasily with 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 25 of 33
26 TERADATA CORP. V. SAP SE

the rationale courts have articulated for the per se rule in 

other contexts—that a class of practices can be declared 

unreasonable because judicial experience has shown that 

they are almost always anticompetitive and lack redeeming 

value. See Qualcomm Inc., 969 F.3d at 990–91 (“[N]ovel 

business practices—especially in technology markets—

should not be ‘conclusively presumed to be unreasonable 

and therefore illegal without elaborate inquiry as to the 

precise harm they have caused or the business excuse for 

their use.’” (quoting Microsoft, 253 F.3d at 91)); Epic 

Games, 67 F.4th at 998 (expressing concern that when 

applied in inappropriate contexts, the per se rule risks 

“dampening innovation and undermining the very 

competitive process that antitrust law is meant to protect”). 

But as the Supreme Court has made clear, “[i]t is far too late 

in the history of our antitrust jurisprudence to question the 

proposition that certain tying arrangements”—those in 

which a seller uses its tying-market power to capture a non–

de minimis volume of commerce—“are unreasonable ‘per 

se.’” Jefferson Par., 466 U.S. at 9. We have no basis for 

expanding Epic Games’s narrow exception to that rule to

cover software markets generally. See Microsoft, 253 F.3d at 

95. 

Regardless, with Asker’s testimony, Teradata has raised 

a material dispute under either approach. Under the per se 

approach, Asker’s testimony creates a triable question as to 

market power in the tying market—the only element in 

dispute. Asker opined that SAP has economically significant 

market power in the core ERP market for large enterprises 

based on SAP’s sizable market share, high profit margins, 

and high barriers to entry and switching costs. As Asker 

explained, high switching costs make it more expensive to 

switch to an alternative ERP provider than to adopt 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 26 of 33
TERADATA CORP. V. SAP SE 27

S/4HANA, and high barriers to entry inhibit new 

competitors that might reduce SAP’s power in the ERP 

market. SAP’s high profit margins on core ERP products for 

large enterprises, combined with other evidence of coercion, 

provide another “strong indication of market power.” FTC v. 

Actavis, Inc., 570 U.S. 136, 157 (2013). A trier of fact could 

determine from that evidence that SAP had enough market 

power in the core ERP market to coerce large enterprises into 

purchasing HANA. 

Under the rule of reason, Asker’s testimony also raises a 

triable dispute as to whether the tie has substantial 

anticompetitive effects in the tied market. With Asker’s 

testimony, Teradata has presented a viable tied-market 

definition—EDW products with analytical capabilities for 

large enterprises—and raised a triable dispute as to whether 

the tie has substantial anticompetitive effects in that market. 

Asker opined that the tie would eventually foreclose at least 

65 percent of the large-enterprise EDW market, well over the 

level at which the parties agree we should presume 

foreclosure unreasonable. See Areeda & Hovenkamp, 

Antitrust Law ¶1729a (explaining that “foreclosure should 

be presumed unreasonable when it reaches 30 percent for an 

individual seller”). Asker derived that estimate from data 

indicating that 65 percent of the Forbes Global 2000—which 

lists the world’s largest public companies—relies on 

S/4HANA. Asker also cited SAP documents describing its 

ERP customers as “locked in” and predicting that a large 

share of its customers will eventually adopt S/4HANA.

Because we consider all tied-product sales attributable to the 

tie to be foreclosed, a reasonable juror could find that the tie 

has substantial anticompetitive effects. See id. ¶1729h. 

Asker also testified that HANA prices were at supracompetitive levels. High prices alone are weak evidence of

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 27 of 33
28 TERADATA CORP. V. SAP SE

market foreclosure, as they can result from procompetitive 

behavior and increased demand. See Brooke Grp. Ltd. v. 

Brown & Williamson Tobacco Corp., 509 U.S. 209, 237 

(1993) (“[A] jury may not infer competitive injury from 

price[s] . . . absent some evidence that tends to prove that . . .

prices were above a competitive level.”); Amex, 585 U.S. at 

549 (refusing to infer competitive injury from increased 

prices given that output was expanding at the same time). 

But here, Asker provided other evidence indicating that 

HANA’s high prices were the result of anticompetitive 

behavior: that HANA was of lower quality than rival EDWs, 

and that the “overwhelming majority” of HANA sales were 

to S/4HANA customers. Absent evidence that demand 

expanded for procompetitive reasons, such as increased 

output or quality advantages, a jury could infer that HANA’s 

high prices were a result of substantial market foreclosure. 

Asker’s differences-in-differences regression analysis 

quantifying Teradata’s lost revenue from the tie further 

supports his market foreclosure estimations. Contrary to 

SAP’s claim that Asker’s regression analysis measured only 

correlation, differences-in-differences is a standard 

econometric tool designed to measure causation by isolating 

the effect of a particular explanatory variable from the 

effects of other variables. See Joshua D. Angrist & JörnSteffen Pischke, Mostly Harmless Econometrics: An 

Empiricist’s Companion 169–82 (2008) (explaining how

differences-in-differences models can yield estimations of 

causal effects). In this case, Asker compared changes in 

spending for customers that adopted S/4HANA to changes 

in spending for a benchmark group of customers to attribute 

any differences to the adoption of S/4HANA. And as we 

explained above, the tie’s impact on Teradata’s sales is a 

reasonable indication of broader market foreclosure.

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 28 of 33
TERADATA CORP. V. SAP SE 29

V

Finally, we consider Teradata’s trade secret claim. The 

district court granted summary judgment to SAP because it 

determined that “Teradata failed to comply with its 

contractual obligation to designate information as 

confidential when it disclosed the alleged Batched Merge 

Method trade secret to SAP,” and that even if Teradata had 

adequately designated the information, the agreements gave 

SAP a contractual right to use the batched merge method in 

its own products. We conclude that disputed issues of 

material fact preclude summary judgment on both theories.

A

Teradata has created a triable dispute as to whether it 

properly designated the batched merge method as 

confidential information under the parties’ agreements. 

Section 2 of the mutual non-disclosure agreement, which 

governs the sharing of confidential information during the 

Bridge Project, specifies that “all information . . . in writing 

or in other tangible form and clearly identified as 

confidential or proprietary at the time of disclosure marked 

with an appropriate legend indicating that the information is 

deemed confidential or proprietary” will remain 

confidential. The parties agree that the 2008 design 

document that Graas sent to SAP—which mentioned the 

batched merge method as a solution to the problems facing 

the Bridge Project—“clearly identified” its contents as 

confidential, as it was marked “Teradata Confidential” on 

each page. 

SAP contends that the document did not provide enough 

details about the batched merge method to clearly identify 

the information it sought to protect. But the mutual nondisclosure agreement nowhere requires that a document 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 29 of 33
30 TERADATA CORP. V. SAP SE

marked confidential describe trade secrets in detail to 

maintain their confidentiality. Notably, the provisions 

covering oral disclosures of trade secrets require that a party 

“summarize the Confidential Information in writing” within 

a specified time, a requirement that would make little sense 

if written disclosures had to include all the details of the 

trade secret. And although SAP suggests that the document 

merely stated the words “batched merge,” it in fact did much 

more: It detailed the method’s essential elements to explain 

how the method could be used to solve the Bridge Project’s 

performance issues. Whether that level of detail was 

sufficient is a question for a jury to decide.

B

Teradata has also created a triable dispute as to whether 

the parties’ agreements gave SAP a license to use the batched 

merge method in its products. The district court concluded

that because the batched merge method was an “input” that 

Teradata provided during the Bridge Project, SAP gained a 

right to use it outside of the Bridge Project without breaching 

the parties’ confidentiality agreements. The court relied on 

section 9.4 of the software development cooperation 

agreement, which grants SAP a “license to use . . . any Input 

submitted by [Teradata] to SAP with respect to any 

deliverables or other items that SAP provides or shall 

provide to [Teradata].” It also invoked section 10.1, which 

gives SAP the rights to the batched merge method because it 

was “software code . . . necessary to adapt [SAP’s] software 

to” the Teradata Database. 

Teradata points out that, notwithstanding those 

provisions, section 10.2 provides that “Partner Materials” 

are to “remain vested exclusively in [Teradata],” and it

defines “Partner Materials” as “any programs, tools, 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 30 of 33
TERADATA CORP. V. SAP SE 31

systems, data or materials utilized or made available by 

[Teradata] in the course of the performance under this 

Agreement.” The dispositive question, therefore, is whether 

the batched merge method constitutes a “tool” that is 

encompassed by the reservation of rights in “Partner 

Materials.” 

That is a question for the jury. SAP emphasizes that 

Graas himself described the batched merge method as not a 

“tool” but a “technique” that leverages unique aspects of the 

Teradata Database. But Teradata provided other expert 

testimony describing the method’s central step as a “tool” for 

sending information to and from a database. If a central step 

in the batched merge method is a “tool,” it follows that the 

full method is also a “tool”—or so a rational juror could 

infer. That Graas described the method as a “technique” does 

not necessarily preclude it from also being a “tool.” 

SAP also contends that the batched merge method is not 

a “tool” because, in computer science, “tool” refers to an 

“application program.” That may be, but “tool” also has a

more general definition: “a thing (concrete or abstract) with 

which some operation is performed.” 18 Oxford English 

Dictionary 233 (2d ed. 1989). The context favors that 

broader understanding because the agreement’s definition of 

“Partner Materials” already includes “programs,” so if “tool” 

meant “application program,” then the agreement would list 

“program” twice, rendering part of the definition 

superfluous. Contradicting its argument about “application 

programs,” SAP also argues that “tool” refers to tangible 

articles. But that theory is undermined by the words

surrounding “tool” in sections 9.2 and 10.2—“programs,” 

“materials,” “systems,” and “data”—none of which refers to 

tangible articles.

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 31 of 33
32 TERADATA CORP. V. SAP SE

SAP also argues that it owns the right to use the batched 

merge method because that method constitutes “Newly 

Developed Materials,” which the software development 

cooperation agreement assigns to SAP. The agreement 

defines “newly developed materials” as “software . . .

developed by SAP and/or [Teradata] in connection with or 

as a result of a party’s interaction with the other party.” A 

jury could conclude that the batched merge method is not 

software developed through SAP’s interactions with Graas, 

but instead is preexisting intellectual property that Teradata 

developed long before the parties began the Bridge Project. 

That Graas helped SAP implement the batched merge 

method to solve technical issues does not transform it into 

software developed “in connection with or as a result of” the 

Bridge Project.

Finally, a jury could also conclude that the district court’s 

interpretation cannot be reconciled with the implied 

covenant of good faith and fair dealing under New York law, 

which governs the parties’ agreements. Under the covenant, 

“neither party shall do anything which will have the effect of 

destroying or injuring the right of the other party to receive 

the fruits of the contract.” Dalton v. Educational Testing 

Serv., 663 N.E.2d 289, 291 (N.Y. 1995) (quoting Kirke La 

Shelle Co. v. Paul Armstrong Co., 188 N.E. 163, 167 (N.Y. 

1933)). “[W]hether particular conduct violates or is 

consistent with the duty of good faith and fair dealing 

necessarily depends upon the facts of the particular case, and 

is ordinarily a question of fact to be determined by the jury 

or other finder of fact.” Tractebel Energy Mktg. v. AEP 

Power Mktg., 487 F.3d 89, 98 (2d Cir. 2007) (quoting 23 

Williston on Contracts § 63:22 (4th ed. 2006)). A jury could 

find that the district court’s interpretation violated the 

covenant by allowing SAP to develop a rival EDW product 

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 32 of 33
TERADATA CORP. V. SAP SE 33

using information that Teradata shared to enable SAP’s 

customers to enjoy fast and efficient interoperation with 

Teradata’s EDW product. 

SAP argues that the covenant is inapplicable because 

Teradata understood that SAP would use the batched merge 

method outside of the Bridge Project. As evidence of such 

an understanding, SAP cites statements from Teradata 

employees, including that “all developments of SAP 

products [are] owned by SAP (even if made by Teradata).” 

But interpreting those statements requires resolving disputed 

factual questions—for example, whether the batched merge 

method was part of the “development” of an SAP product. 

Viewing the evidence in the light most favorable to Teradata, 

a rational jury could conclude that the district court’s 

interpretation would injure Teradata’s right to the benefits of 

the contract.

REVERSED and REMANDED.

Case: 23-16065, 12/19/2024, ID: 12917383, DktEntry: 71-1, Page 33 of 33