November 2011
The District Court appointed an independent expert on the issue of damages pursuant to Rule 706 of the Federal Rules of Evidence. The public may learn about the Court-appointed damage expert’s conclusion as early as this week, since the independent expert’s report is due on November 14, 2011.
No doubt, the District Court is frustrated by the wide range of damage claims that the parties are offering, and is attempting to reign in the large damage discrepancies. According to Judge Alsup, the starting point for damages should be the $100 million licensing offer Sun Microsystems made to Google in 2006 before it was acquired by Oracle. Instead, Google’s expert has damages as low as zero. Oracle’s damages expert reports that Google owes Oracle between $1.4 billion and $6.1 billion.
Oracle’s case against Google involves the Java technology, which became Oracle’s property when it acquired Sun Microsystems in early 2010. Instead of licensing Java technology, Google claims that it created its own mobile technology from scratch by reverse engineering the behavior of Java without using any of Sun’s copyrighted or patented technology. In opposition, Oracle claims that, instead of being a wholly independent implementation, Google directly infringed on both Java copyrights and patents. Oracle’s claim is buttressed with significant Java expertise having moved from Sun to Google, including Google’s (now former) Chief Executive Eric Schmidt, who previously was Sun’s chief technology officer through 1997. Google also hired several other Sun technology personnel.
Sun executives expressed public displeasure when Google refused to license Java technology. Google announced Android in 2007 and released the Android project source code in 2008. But, after years of disappointing financial results, Sun did not have the financial strength or will to take on Google through litigation. This all changed when Oracle acquired Sun. Oracle is both stronger financially, and has a more aggressive view of protecting its intellectual property.
The Court’s ruling gave the independent expert rather sweeping power and authority, as follows:
The independent damages expert will prepare and submit a separate expert report which will independently a) critique the damages expert reports submitted by each side, b) provide his assessment of any or all issues raised or presented in the damages expert reports of the parties, and c) address each additional issue he believes should be evaluated in order to provide the jury with a complete and independent view of damages in this case. …
The parties will have the right to conduct discovery of the independent damages expert to the same extent as any other expert witness. … Oracle and Google, collectively, will have no fewer than 7 hours to question the independent damages expert, … Oracle and Google will divide the allotted time equally. …
While the independent damages expert is not to function as a mediator, the Court is interested in full disclosure and understanding by the independent damages expert of all issues relating to damages in this action. In serving that interest, the parties are directed to agree to a procedure by which the independent damages expert can communicate with each of the parties’ expert witnesses in an informal off-the-record manner to address any ambiguities he may wish to have clarified. Such informal communications will not be subject to discovery or admissible in court, and shall be solely between the experts.
The independent damages expert will testify at trial subject to the provisions of Rule 26 of the Federal Rules of Civil Procedure. …. Each party will be permitted to cross examine Dr. Kearl as though he were an adverse expert witness. The Court will direct questions to Dr. Kearl as it deems appropriate.
Neither the independent damages expert nor any of his assistants will incur any liability to the parties as a result of their work on this matter.”
Rule 706 has been around since 1975, but judges have generally been reluctant to bring in their own technical experts, preferring to let juries hear only from the parties’ experts. The meat of Rule 706 follows:
“Rule 706. Court Appointed Experts
(a) Appointment – The court may on its own motion or on the motion of any party enter an order to show cause why expert witnesses should not be appointed, and may request the parties to submit nominations. The court may appoint any expert witnesses agreed upon by the parties, and may appoint expert witnesses of its own selection. … A witness so appointed shall advise the parties of the witness’ findings, if any; the witness’ deposition may be taken by any party; and the witness may be called to testify by the court or any party. The witness shall be subject to cross-examination by each party, including a party calling the witness.”
I have been appointed as an independent damages witness on several occasions. One of the following results all ways occurred:
- Once my conclusion was known and explained, the parties either settled the case, or they stipulated to a damage amount. With a damages stipulation, the parties still litigated liability issues, but damages were predetermined if liability was found.
- The damages were tried, and I testified. I was aggressively cross-examined by the party who did not like my answer. The other party and/or the Court lobbed me soft ball questions. In each case, the jury accepted my conclusion.
Fulcrum Inquiry frequently prepares damages calculations in litigation.