Here's how it sums up its position in the conclusion:

Because this case involved difficult, landmark legal issues of first impression, resulted in a mixed judgment, and was litigated in good faith, the Court should exercise its discretion to deny costs and require each party to bear its own expenses. If any costs are allowed, (1) Google's request for $2.9M in e-discovery costs should be denied, as Google has failed to separate the reasonable costs of physically copying production documents from the costs incurred for Google's purposes, and (2) Google's request for $986,978 in court-appointed expert witness costs should be denied, as Google agreed to pay those costs, and in any event, the Court should exercise its discretion to deny those costs, given the complexity and novelty of the damages issues and the extreme divergence of both parties' positions on damages.

It's the "landmark legal issues of first impression" part I can't swallow. Oracle tried to create new law, trying to extend copyright's reach to cover APIs. Not even APIs. The structure, sequence and organization of APIs, no less. A list of them. That means, in this case, Oracle ignored a lot of case law, trying to make copyright cover something it just doesn't in this picture. That swashbuckling legal adventure Oracle, in my view, should have to pay for itself and cover Google's expenses too because of putting them -- and all of us -- through all that for absolutely nothing. If you want new law, go to Congress and get it to write it and pass it for you, not to the courts. Thanks. The public would appreciate it very much. Or if you insist on trying to pass new law via a judge, when the case law is so overwhelmingly against you, as it was here, you should have to pay out of your own pocket for the fun you are having if you fail.

It might discourage extreme claims, and frankly, after the SCO saga and its outrageous positions and now Oracle's doomed claims, both brought by Boies Schiller, I think some curbing of enthusiasm of legal creativity might be helpful to the marketplace. It's too costly for the victims, who get nothing out of it but damage, and that unmerited damage shouldn't be ignored.

That's just my view, though. The judge will probably take Oracle's argument more seriously than I do, just because of how the law of costs works. It's not that APIs can never be copyrighted, after all, the judge ruled. So in that sense, one could argue, as Oracle does, that it was a close issue, with some justification that it really thought these Java APIs fell on the copyrighted side of the fence, even though in the end they didn't.

Oracle argues, again, that the jury partially found for Oracle on the SSO infringement, although unable to reach a verdict on whether it was fair use. The judge then ruled that the SSO was not copyrightable anyhow:

Contrary to Oracle, copyright law does not confer ownership over any and all ways to implement a function or specification, no matter how creative the copyrighted implementation or specification may be. The Act confers ownership only over the specific way in which the author wrote out his version. Others are free to write their own implementation to accomplish the identical function, for, importantly, ideas, concepts and functions cannot be monopolized by copyright.

After the copyright verdict, there had been some speculation around the Web that because the jury found that Google infringed copyright—but split on fair use—it was basically a pro-Oracle jury with one or two holdouts sticking up for Google. Talking to Thompson, it quickly became clear that wasn't the case at all. A majority of jurors favored Google's argument from the start, and the holdouts—primarily Thompson himself—were a beleaguered few favoring Oracle. At one point during the copyright phase, in fact, Thompson said he was the lone holdout. At the end, he swung a couple more jurors to his side, but they were still a distinct minority.

As to the jury's finding of infringement, Thompson said that the jury actually didn't debate it that long. The feeling was that the answer to the infringement question—the first one on the copyright verdict form—had basically been dictated by the judge's instructions. (Judge Alsup told the jury, among other things, that they must assume that the Java APIs are copyrighted.) "We felt that the judge's instructions put us a lot of the way towards finding infringement," Thompson explained.

No one can convince me that Oracle didn't know that "copyright law doesn't confer ownership over any and all ways to implement a function or specification." Oracle repeatedly designates its SSO claims as important to the industry, a cutting-edge legal matter of national importance. For example, it writes, "The present case involved difficult, novel legal issues of great importance to the computer software industry." I think it would be more accurate to say that the industry reacted with horror to Oracle's claims, viewing them as utterly destructive to the industry should Oracle prevail. That's not really the same thing.

Then on the copyright infringement of such nonsense as a small collection of test files that never even shipped or something as simple as rangeCheck, I don't buy that as good faith, although the court likely will. To me, suing over rangeCheck is like suing an author for using the phrase, 'In the meantime...' in a novel several times, claiming it's a copyright infringement because you wrote that in your novel, and that it cost you millions in damages. It's not a position you can defend to anyone who understands code. It was an utterly insignificant bit of code. And the 9 lines the jury found infringed were 9 lines that Oracle's own damages expert couldn't put a value on. Keep in mind that Google has a pending motion on the 9 lines of the rangeCheck code, asking for judgment as a matter of law that it was de minimis. Still, Oracle did prevail with the jury on that little corner of the litigation, so far, and so it has an argument that it shouldn't have to pay costs on that. Not a good argument when you zoom in on the details -- prevailing on something that was admitted and which has no real value and losing hugely on everything else isn't what I'd normally call a split decision -- but at least an argument that can be made and could even prevail.

To Oracle, it's a split decision:

The jury found for Google on copying of the English-language descriptions in the API documentation and the eight decompiled files, but the Court subsequently directed a verdict for Oracle on those eight files. Although Oracle stipulated to no damages arising from the code copying, Google did remove the copied code from Android as a result of this lawsuit. Judgment was ultimately entered for Google on the 37 Java API packages based on the Court's seminal ruling that the APIs were not copyrightable. With respect to the '104 and '520 patents, judgment of non-infringement was entered for Google, while judgment on Google's invalidity counterclaims was entered for Oracle. (Id.) Judgment was entered for Oracle on Google's affirmative defenses of waiver and implied license. The remaining two defenses have yet to be decided. The mixed judgment in this case supports a denial of costs.

Here's the introduction, where Oracle sets forth its position in summary:

INTRODUCTION

Google seeks costs in the amount of $4,030,669, including what appears to be the entire expense ($2.9M) of Google's electronic document discovery vendor and Google's share of the fees of court-appointed damages expert Dr. James Kearl ($986,978). Oracle objects to Google's requested costs on three primary grounds:

First, because the key disputed issues concerning API copyrightability were close, complex, without direct precedent, and of great importance to the computer software industry, and neither Oracle nor Google prevailed on all claims in this case, the Court should exercise its discretion to deny costs and allow each party to bear its own expenses. As Google's counsel acknowledged at the last hearing, district courts have broad discretion under Fed. R. Civ. P. 54(d)(1) to deny costs. (6/20/12 Hearing Tr. at 15:11-13 ("We understand it's within your Honor's discretion as to whether to award any costs or not").) Denial of costs is particularly appropriate where the issues are close, difficult, and of public importance, and where the judgment is mixed.

This case presented landmark legal issues of first impression pertaining to the copyrightability of application programming interfaces ("APIs"). In its order dismissing Oracle's copyright claim regarding the structure, sequence, and organization ("SSO") of the 37 Java API packages, the Court grappled with complex issues of copyright law, observing that "[n]o law is directly on point." (ECF 1202 at 3:8.) At the Court's request, the parties submitted many rounds of briefing, thoroughly covering all legal authorities and factual questions pertinent to the issue of API copyrightability. The Court acknowledged that deciding the issue was "one of the toughest things I've ever had to do." (Trial Tr. at 1129:10-14.) The case was closely followed by the technology press, reflecting the importance of the issues to the computer software industry. This is exactly the type of case where costs should not be awarded.

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The outcome of the case, moreover, was mixed. The jury agreed with Oracle that Google infringed the SSO of the 37 Java API packages, but was unable to reach a verdict on Google's fair use defense. Judgment on Oracle's copyright claim was divided, with Oracle prevailing on its claims for Google's code copying, but Google prevailing with respect to the copying of the English language descriptions in the API documentation and the copyrightability of the SSO of the API packages after the Court's ruling on the novel legal issues presented. On the patents, the jury found for Google on infringement, but Google abandoned its invalidity counterclaims and judgment on those was entered for Oracle. Oracle also prevailed on two of Google's four equitable defenses (the Court withheld ruling on the other two as moot). In these circumstances, each party should bear its own costs.

Second, if any costs are awarded to Google, the Court should deny Google's request for $2,900,349 in e-discovery costs, because a party's entire e-discovery expense is not a proper taxable cost under 28 U.S.C. § 1920 and Civil L.R. 54-3. The statute allows recovery of "[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." Google's Bill of Costs appears to include every invoice from its e-discovery vendor, FTI Consulting. The charges cover all processing of documents by FTI and all labor of its personnel, with no attempt to separate the reasonable cost of copying documents for production from the non-taxable costs of services provided for Google's litigation convenience (such as organizing and searching the productions). Because Google has failed to identify its reasonable copying costs, the request for $2,900,349 should be denied.

Third, if the Court awards any costs to Google, it should nevertheless deny Google's request for $986,978, representing Google's share of the fees and expenses charged by Dr. James Kearl, the Court-appointed damages expert. The parties previously agreed, and the Court ordered, that these costs would be borne "one half by each party." (ECF 413 at 4:14-16.) Google's attempt to now shift all of Dr. Kearl's fees and expenses to Oracle is contrary to that agreement and order. In addition, even if that order did not preclude Google's request for reimbursement of Dr. Kearl's fees and expenses, the Court should exercise its discretion to deny that request. As the Court previously found, Dr. Kearl's appointment was appropriate given the

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fact that this case "is unusually complex and involves starkly conflicting expert views on the subject of damages," and "[t]he damages aspect of this controversy is particularly involved." (ECF 610 at 2:1-2, 13; see id. at 3:2-4; ECF 236 at 2:8-9) Under these circumstances, each party should bear its own costs for the court-appointed expert.

07/23/2012 - 1224 - Administrative Motion to File Under Seal Certain Discovery Pricing Information filed by Oracle America, Inc.. (Attachments: # 1 Declaration Declaration of Benjamin Beck in support of Oracle's Administrative Motion to File Under Seal Certain Discovery Pricing Information, # 2 Proposed Order [Proposed] Order Granting Oracle's Administrative Motion to File Under Seal)(Muino, Daniel) (Filed on 7/23/2012) (Entered: 07/23/2012)

07/23/2012 - 1225 - OBJECTIONS to re 1216 Bill of Costs by Oracle America, Inc.. (Muino, Daniel) (Filed on 7/23/2012) (Entered: 07/23/2012)

[Update: The judge has issued an order, giving Google until August 3rd to file a reply brief:

07/26/2012 - 1226 - ORDER FOR REPLY BRIEF. Signed by Judge Alsup on July 26, 2012. (whalc1, COURT STAFF) (Filed on 7/26/2012) (Entered: 07/26/2012)

Here it is, Oracle's Objections, as text:

******************

MORRISON & FOERSTER LLP
MICHAEL A. JACOBS (Bar No. 111664)
[email]
KENNETH A. KUWAYTI (Bar No. 145384)
[email]
MARC DAVID PETERS (Bar No. 211725)
[email]
DANIEL P. MUINO (Bar No. 209624)
[email]
[address]
[phone]
[fax]

BOIES, SCHILLER & FLEXNER LLP
DAVID BOIES (Admitted Pro Hac Vice)
[email]
[address]
[phone]
[fax]
STEVEN C. HOLTZMAN (Bar No. 144177)
[email]
[address]
[phone]
[fax]

ORACLE CORPORATION
DORIAN DALEY (Bar No. 129049)
[email]
DEBORAH K. MILLER (Bar No. 95527)
[email]
MATTHEW M. SARBORARIA (Bar No. 211600)
[email]
[address]
[phone]
[fax]

Attorneys for Plaintiff
ORACLE AMERICA, INC.

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

ORACLE AMERICA, INC.
Plaintiff,
v.
GOOGLE INC.
Defendant.

Case No. CV 10-03561 WHA

ORACLE'S OBJECTIONS TO
GOOGLE'S BILL OF COSTS

Dept.: Courtroom 8, 19th Floor
Judge: Honorable William H. Alsup

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TABLE OF CONTENTS

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TABLE OF AUTHORITIES

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Pursuant to Civil L.R. 54-2, Oracle objects to Google's Bill of Costs (ECF 1216) for the reasons stated below. In accordance with Civil L.R. 54-2(b), Oracle met and conferred with Google in an effort to resolve Oracle's objections, but the parties were not able to reach agreement.

INTRODUCTION

Google seeks costs in the amount of $4,030,669, including what appears to be the entire expense ($2.9M) of Google's electronic document discovery vendor and Google's share of the fees of court-appointed damages expert Dr. James Kearl ($986,978). Oracle objects to Google's requested costs on three primary grounds:

First, because the key disputed issues concerning API copyrightability were close, complex, without direct precedent, and of great importance to the computer software industry, and neither Oracle nor Google prevailed on all claims in this case, the Court should exercise its discretion to deny costs and allow each party to bear its own expenses. As Google's counsel acknowledged at the last hearing, district courts have broad discretion under Fed. R. Civ. P. 54(d)(1) to deny costs. (6/20/12 Hearing Tr. at 15:11-13 ("We understand it's within your Honor's discretion as to whether to award any costs or not").) Denial of costs is particularly appropriate where the issues are close, difficult, and of public importance, and where the judgment is mixed.

This case presented landmark legal issues of first impression pertaining to the copyrightability of application programming interfaces ("APIs"). In its order dismissing Oracle's copyright claim regarding the structure, sequence, and organization ("SSO") of the 37 Java API packages, the Court grappled with complex issues of copyright law, observing that "[n]o law is directly on point." (ECF 1202 at 3:8.) At the Court's request, the parties submitted many rounds of briefing, thoroughly covering all legal authorities and factual questions pertinent to the issue of API copyrightability. The Court acknowledged that deciding the issue was "one of the toughest things I've ever had to do." (Trial Tr. at 1129:10-14.) The case was closely followed by the technology press, reflecting the importance of the issues to the computer software industry. This is exactly the type of case where costs should not be awarded.

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The outcome of the case, moreover, was mixed. The jury agreed with Oracle that Google infringed the SSO of the 37 Java API packages, but was unable to reach a verdict on Google's fair use defense. Judgment on Oracle's copyright claim was divided, with Oracle prevailing on its claims for Google's code copying, but Google prevailing with respect to the copying of the English language descriptions in the API documentation and the copyrightability of the SSO of the API packages after the Court's ruling on the novel legal issues presented. On the patents, the jury found for Google on infringement, but Google abandoned its invalidity counterclaims and judgment on those was entered for Oracle. Oracle also prevailed on two of Google's four equitable defenses (the Court withheld ruling on the other two as moot). In these circumstances, each party should bear its own costs.

Second, if any costs are awarded to Google, the Court should deny Google's request for $2,900,349 in e-discovery costs, because a party's entire e-discovery expense is not a proper taxable cost under 28 U.S.C. § 1920 and Civil L.R. 54-3. The statute allows recovery of "[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case." Google's Bill of Costs appears to include every invoice from its e-discovery vendor, FTI Consulting. The charges cover all processing of documents by FTI and all labor of its personnel, with no attempt to separate the reasonable cost of copying documents for production from the non-taxable costs of services provided for Google's litigation convenience (such as organizing and searching the productions). Because Google has failed to identify its reasonable copying costs, the request for $2,900,349 should be denied.

Third, if the Court awards any costs to Google, it should nevertheless deny Google's request for $986,978, representing Google's share of the fees and expenses charged by Dr. James Kearl, the Court-appointed damages expert. The parties previously agreed, and the Court ordered, that these costs would be borne "one half by each party." (ECF 413 at 4:14-16.) Google's attempt to now shift all of Dr. Kearl's fees and expenses to Oracle is contrary to that agreement and order. In addition, even if that order did not preclude Google's request for reimbursement of Dr. Kearl's fees and expenses, the Court should exercise its discretion to deny that request. As the Court previously found, Dr. Kearl's appointment was appropriate given the

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fact that this case "is unusually complex and involves starkly conflicting expert views on the subject of damages," and "[t]he damages aspect of this controversy is particularly involved." (ECF 610 at 2:1-2, 13; see id. at 3:2-4; ECF 236 at 2:8-9) Under these circumstances, each party should bear its own costs for the court-appointed expert.

ARGUMENT

I. THE COURT SHOULD EXERCISE ITS DISCRETION TO DENY COSTS AND REQUIRE EACH PARTY TO BEAR ITS OWN EXPENSES

District courts have broad discretion to award or deny costs under Rule 54(d). Ruiz v. A.B. Chance Co., 234 F.3d 654, 670 (Fed. Cir. 2000) ("[a]n award of costs under Rule 54(d)(1) falls within the discretion of the trial court"); Manildra Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1183 (Fed. Cir. 1996) ("the district court judge retains broad discretion as to how much to award, if anything"). In patent cases, Federal Circuit authority governs the determination of which party has prevailed, while regional circuit law governs the decision to award costs. Manildra, 76 F.3d at 1182-83.

Denial of costs is proper where (1) the issues were especially close and difficult, (2) the case presented a landmark issue of national importance, (3) the judgment was mixed, or (4) the losing party litigated in good faith. See Quan v. Computer Scis. Corp., 623 F.3d 870, 888-89 (9th Cir. 2010) (listing proper grounds for denying costs); Amarel v. Connell, 102 F.3d 1494, 1523 (9th Cir. 1996) ("[i]n the event of a mixed judgment, however, it is within the discretion of a district court to require each party to bear its own costs"). Any one of these grounds could be a basis for denying costs — in this case, all four are present. Because this case presented novel and difficult legal issues, had broad implications for the computer software industry, resulted in a mixed judgment, and was litigated in good faith, the Court should exercise its discretion to deny costs, as other courts have done in analogous circumstances.

The court in Endurance American Speciality Ins. Co. v. Lance-Kashian & Co., No. CV F 10-1284 LJO DLB, 2011 WL 6012213 (E.D. Cal. Dec. 1, 2011), denied costs where the issues were difficult and the judgment was mixed. In that case, plaintiff prevailed on certain

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claims for declaratory relief, but lost on its damages claims. Id. at *1. In denying costs, the court explained:

This Court's rulings resulted in a mixed judgment with both sides prevailing on issues. In addition, this action involves difficult insurance coverage and defense issues which the parties litigated in good faith. The issues required this Court's significant consideration. Given the mixed judgment and good faith dispute over difficult issues, an award of costs is unwarranted and each side is to bear its respective costs.

Id. at *2. See also K-S-H Plastics, Inc. v. Carolite, Inc., 408 F.2d 54, 60 (9th Cir. 1969) (affirming denial of costs based on "the complexity of the case, the extensive discovery made by the parties, and the limited relief granted to K-S-H"); Association of Mexican-American Educators v. California, 231 F.3d 572, 592 (9th Cir. 2000) (affirming denial of costs where the issues were "close and difficult" and "of substantial public importance").

Similarly, the Federal Circuit in Ruiz affirmed the district court's decision to deny costs "where neither party prevailed sufficiently to require an award of costs." Ruiz, 234 F.3d at 670. Plaintiffs in that case succeeded on their claim for declaratory judgment of patent invalidity, but defendants prevailed on several other claims. Id. at 662. Given the mixed judgment, the district court declined to award costs to either party. The Federal Circuit affirmed, noting that courts have broad discretion to deny costs in such situations. Id. at 670. See also Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016, 1023 (9th Cir. 2003) (affirming district court's decision to deny costs where plaintiff recovered substantially less than sought and defendant succeeded on affirmative defenses).

The present case involved difficult, novel legal issues of great importance to the computer software industry. Oracle claimed that Google infringed its copyrights by incorporating the selection, structure, sequence and organization of 37 Java API packages into the Android platform. By the time of trial, the bulk of Oracle's asserted damages were tied to this copyright claim. The jury found that Google infringed the SSO of the 37 Java API packages, but it deadlocked on Google's fair use defense. (ECF 1089 at 1.) Before that defense could be re-tried to another jury, the Court decided the seminal legal issue of the case — whether the SSO of the Java API packages was copyrightable in the first instance.

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The Court had previously grappled with that issue in ruling on Google's motion for summary judgment on copyright infringement. (ECF 433.) In a ruling largely denying Google's motion, the Court declined to hold that the 37 Java API packages were unprotectable, deferring decision on that issue until the technical facts could be presented at trial. (Id. at 9-10.) Prior to and during the trial, the Court sought additional information from the parties regarding the relevant legal authorities and the nature of the Java APIs. (See, e.g., Trial Tr. at 882:4-7, 921:1-922:6.) The parties submitted many rounds of briefing (amounting to several hundred pages), extensively surveying all available law related to API copyrightability. (See ECF 778, 780, 823, 824, 833, 852, 853, 859, 860, 887, 897, 898, 900, 955, 956.)

The Court repeatedly acknowledged the difficulty, complexity, and closeness of the copyrightability issues. (See, e.g., Trial Tr. at 7:11-16, 882:20-25, 1129:10-14, 1376:14-20, 3435:15-18.) At the very start of trial, the Court noted:

One of the issues that the judge has got to decide in this case is whether or not the 37 APIs are copyrightable or not. I think this is the most interesting problem. I've read all of those briefs that you've submitted, and I requested a lot of those briefs myself because I don't know the answer to this problem yet.

(Trial Tr. at 7:11-16.) Later in the proceeding, the Court stated:

I find this to be one of the toughest things I've ever had to do. The law is tough. It's not like the - this is harder than a patent case because this copyright part on the computer thing is not settled. And then the facts are very hard. So this is a tough problem for the judge.

(Id. at 1129:10-14.) In the Court's ruling, the Court noted that the issue of API copyrightability was one of first impression and that "[n]o law is directly on point." (ECF 1202 at 3:8.) The case was closely followed in the legal, business, and technology press, with the issue of API copyrightability receiving much attention. In difficult, close, and important cases like these, it is appropriate for the court to deny costs. See Endurance, 2011 WL 6012213 at *2.

Furthermore, the judgment on the parties' various claims was mixed, which further reinforces the propriety of requiring each side to bear its own costs. As already noted, the jury found that Google infringed the SSO of the 37 Java API packages, but was unable to decide fair use. (ECF 1089 at 1.) The jury also found Google liable for copying Oracle's rangeCheck code

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and sided with Oracle on one of the two special interrogatories related to Google's equitable defenses. (Id. at 2-3.) The jury found for Google on copying of the English-language descriptions in the API documentation and the eight decompiled files, but the Court subsequently directed a verdict for Oracle on those eight files. Although Oracle stipulated to no damages arising from the code copying, Google did remove the copied code from Android as a result of this lawsuit. Judgment was ultimately entered for Google on the 37 Java API packages based on the Court's seminal ruling that the APIs were not copyrightable. With respect to the '104 and '520 patents, judgment of non-infringement was entered for Google, while judgment on Google's invalidity counterclaims was entered for Oracle. (Id.) Judgment was entered for Oracle on Google's affirmative defenses of waiver and implied license. The remaining two defenses have yet to be decided. The mixed judgment in this case supports a denial of costs.

Finally, Oracle litigated this case in good faith throughout. Oracle helped to narrow the issues for trial by dropping asserted patent claims and ultimately agreeing to withdraw five of the original seven patents. Oracle simplified the lingering statutory damages issue at the end of the case by agreeing to forego damages for Google's code copying. The Court thanked the parties for the extensive briefing supplied on the API copyrightability issues (ECF 1202 at 3:11-13), and praised the parties for efficiently managing the presentation of evidence at trial.

For all of these reasons, the Court should exercise its discretion to deny Google's request for costs.

II. IF ANY COSTS ARE AWARDED, THE COURT SHOULD DISALLOW GOOGLE'S REQUESTED E-DISCOVERY COSTS

Even if the Court determines that costs are appropriate, Google still bears the burden of demonstrating that its requested costs are properly recoverable. "[T]he burden is on the prevailing [party] to establish the amount of compensable costs and expenses to which they are entitled. Prevailing parties necessarily assume the risks inherent in a failure to meet that burden." In re Ricoh Co., Ltd. Patent Litig., 661 F.3d 1361, 1367 (Fed. Cir. 2011) (quoting English v. Colo. Dep't of Corr., 248 F.3d 1002, 1013 (10th Cir. 2001)). To be recoverable, a particular expense must fall into one of the categories of costs statutorily authorized under 28 U.S.C.

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§ 1920. Romero v. City of Pomona, 883 F.2d 1418, 1428 (9th Cir. 1989) ("notwithstanding the district court's discretionary authority under Federal Rule of Civil Procedure 54(d) to refuse to tax costs in favor of a prevailing party, a district court may not rely on its 'equity power' to tax costs beyond those expressly authorized by section 1920") (emphasis in original), overruled on other grounds by Townsend v. Holman Consulting Corp., 929 F.2d 1358 (9th Cir. 1991). Under 28 U.S.C. § 1920, the Court may tax the following costs:

(1) fees of the clerk and marshal;
(2) fees for printed or electronically recorded transcripts necessarily obtained for use in the case;
(3) fees and disbursements for printing and witnesses;
(4) fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case;
(5) docket fees under section 1923 of this title;
(6) compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.
28 U.S.C. § 1920.

With respect to category 4, Civil L.R. 54-3(d)(2) further provides: "The cost of reproducing disclosure or formal discovery documents when used for any purpose in the case is allowable." However, the requesting party must clearly and specifically identify the costs of physically reproducing discovery documents, as distinct from other discovery costs. In Ricoh, the Federal Circuit vacated an award of costs from this district because the prevailing party's bill was insufficiently detailed. The court was "unable in many instances to determine what documents were being reproduced and to which side the copies were ultimately provided." 661 F.3d at 1368. Under Ninth Circuit authority, exemplification and copying costs are limited to "the physical preparation and duplication of documents, not the intellectual effort involved in their production." Zuill v. Shanahan, 80 F.3d 1366, 1371 (9th Cir. 1996); Romero, 883 F.2d at 1428. Following this authority, the court in Gabriel Techs. Corp. v. Qualcomm Inc., No. 08 CV 1992 MMA, 2010 WL 3718848, at *11 (S.D. Cal. Sept. 20, 2010), denied costs of $1.5M expended on an e-discovery

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vendor, concluding that "the $1.5 million fee to engage a consultant to assist with e-discovery productions is not recoverable."

Cases from this district have applied the same rule. In Campbell v. National Passenger R.R. Corp., No. C 05-5434 CW, 2010 WL 582754 at *2 (N.D. Cal. Feb. 18, 2010), the court allowed amounts that were specifically identified as costs of reproducing discovery documents, but denied amounts that were not so identified:

[T]he record is not clear on the purpose for many of the copies Deely seeks to tax. Although Deely provides over thirty pages of print and copy logs to support his Bill of Costs, a majority of the copies have no description as to their purpose. Only seven transactions, totaling 883 pages and charged at $0.20 per page, are described as relating to discovery.

Id. In Competitive Techs. v. Fujitsu Ltd., No. C-02-1673 JCS, 2006 WL 6338914, at *7 (N.D. Cal. Aug. 23, 2006), the court denied costs where the requesting party did not provide sufficient detail to show that certain copies "were necessarily obtained for use in the case rather than for the convenience of counsel." In Computer Cache Coherency Corp. v. Intel Corp., No. C-05-01766 RMW, 2009 WL 5114002, at *4 (N.D. Cal. Dec. 18, 2009), the court held that certain e-discovery costs (Bates-numbering and electronic scanning) were recoverable as reproduction costs, while other costs (such as OCR and metadata extraction) were not recoverable, as they were "merely for the convenience of counsel." See also Synapsis, LLC v. Evergreen Data Sys., Inc., No. C 0501524 JF (RS), 2007 WL 2501614, at *1 fn.4 (N.D. Cal. Aug. 30, 2007) (denying reproduction costs that were not specifically identified as related to discovery documents).

Google appears to be seeking the entirety of its e-discovery expenses in this case, in the amount of $2,900,349. From its itemized list, these expenses include all costs billed by Google's e-discovery vendor, FTI Consulting, including document processing and handling expenses, hardware expenses, shipping costs, and personnel costs. While some of these expenses may have been necessary for physical reproduction purposes, some of them surely reflect the "intellectual effort" of organizing, searching, and analyzing the documents for Google's own case preparation purposes. Google makes no effort to distinguish between the necessary costs of physically copying documents for production and costs expended for its own purposes.

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[REDACTED]

For these reasons, Google's request for reimbursement of $2.9M in e-discovery costs should be denied.

III. IF ANY COSTS ARE AWARDED, THE COURT SHOULD DISALLOW GOOGLE'S REQUESTED COSTS FOR THE FEES OF THE COURTAPPOINTED EXPERT

Google also seeks as costs $986,978, its share of the fees of court-appointed damages expert Dr. James Kearl. Even if Google were entitled to some of its other costs as a prevailing party, this request should be denied.

On August 30, 2011, the Court appointed Dr. Kearl as an independent damages expert pursuant to Federal Rule of Evidence 706. (ECF 374.) In that order, the Court directed the parties and counsel for Dr. Kearl to "draft a proposed order describing the scope of Dr. Kearl's assignment and the procedures by which the parties will pay for his work and expenses." (ECF 374 at 1:20-22.) On September 8, 2011, having met and conferred, the parties jointly submitted a proposed order which expressly provided that Dr. Kearl's "professional fees and expenses will be paid to Mr. Cooper, one half by each party within in [sic] thirty days of receipt of each of his monthly invoices." (ECF 407 at 4:14-16 (emphasis added)). The Court adopted that division of

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costs in an order signed the next day. (ECF 413 at 4:14-16). In its memorandum opinion explaining the reasons for appointing Dr. Kearl, the Court repeated that, having been warned that they would be responsible for the fees and expenses of the Rule 706 expert, neither party had objected, and the parties had in fact agreed to split those costs:

Here, the parties were warned in July 2011 that they would be required to pay the costs of any expert appointed pursuant to FRE 706 (Dkt. No. 236). The September 2011 order detailing Dr. Kearl's assignment, which counsel for both sides helped Attorney Cooper draft, provided that each party would pay one half of Dr. Kearl's monthly bills. The parties also reserved the right to negotiate reductions in Dr. Kearl's bills through Attorney Cooper, who was tasked with coordinating all payment matters (Dkt. No. 413 at 3). This arrangement was agreeable to counsel for all parties and the expert.

(ECF 610 at 5:256:3 (emphasis added).) Having previously agreed to pay one half of Dr. Kearl's fees and expenses, Google cannot now attempt to claim those fees and expenses as costs. Oracle acknowledges that under Fed. R. Evid. 706, the parties are to pay the court-appointed expert in the proportion that the court directs, and that compensation "is then charged like other costs." Fed. R. Evid. 706(c)(2). Here, however, the parties stipulated to a specific division of costs. That agreement is binding. In A.H.D.C. v. City of Fresno, No. CIV-F-97-5498 OWW, 2004 WL 5866234, at *9 (E.D. Cal. Oct. 1, 2004), the district court rejected the prevailing City's claim for trial transcript costs:

Instead of stipulating that the cost of trial transcripts would be taxable, the parties entered into an agreement to split the costs 50-50. [citation]. As Plaintiffs have cited, such an arrangement is considered an agreement to share in the costs unless the parties stipulate otherwise.

The City of Fresno appealed that ruling, which the Ninth Circuit expressly affirmed. See A.H.D.C. v. City of Fresno, 433 F.3d 1182, 1199 (9th Cir. 2006). See also Frigiquip Corp. v. Parker-Hannifin Corp., 75 F.R.D. 605, 613 (W.D. Okla. 1976) ("From the information before the Court, it seems that as the agreement between the parties apparently did not provide for the recovery of the prevailing party's share of the cost of transcription, the parties intended said agreement to constitute a final settlement of the burden of transcript expenses."). Notably, the courts in AHDC and Frigiquip enforced the parties' stipulations to split trial transcript costs even

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though the cost of transcripts is recoverable under 28 U.S.C. § 1920(2). Google should also be held to its stipulation.

Aside from this agreement, the Court should exercise its discretion to deny costs for Google's share of Dr. Kearl's fees, given the complexity and novelty of the damages issues in this case, and the fact that the Court appointed Dr. Kearl in response to the damages positions taken by Google as well as Oracle.

As explained above, denial of costs is proper where the issues are complex or novel. See Quan, 623 F.3d at 888-89 (9th Cir. 2010). In this case, the Court repeatedly acknowledged the complexity of the damages issues in particular, and expressly relied on that complexity in deciding to appoint Dr. Kearl. (ECF 610 at 2:1-2 (describing this action as "unusually complex"); id. at 2:11-12 ("this order finds the obvious, namely that the disputed facts span several fields of computer science and involve complex technologies and products"); id. at 2:13 ("The damages aspect of this controversy is particularly involved."); id. at 3:2-4 ("In 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.").) See Leesona Corp. v. Varta Batteries, Inc., 522 F. Supp. 1304, 1312 n.21 (S.D.N.Y. 1981) (declining to award costs of Rule 706 expert in complex patent case).

Further, the Court was clear in its orders that it appointed Dr. Kearl in response to the damages positions taken by both parties, not just Oracle. ECF 231 (Transcript of July 21, 2011 Daubert hearing) at 31:20-22 (Court describing Google damages argument as "ridiculous"); id. at 32:4-5 (Court stating that "See, you are both just asking for the moon, and you should be more reasonable.")); ECF 236 at 2:8-9 (Court order stating that the assistance of the Rule 706 expert would be "particularly useful because both sides have taken such extreme and unreasonable positions regarding damages in this action"); ECF 610 at 2:1-2 (describing "starkly conflicting" views on damages as warranting appointment of Rule 706 expert); id. at 2:28 (noting that Google argued that damages should be zero).) Under these circumstances, in which the Court found a Rule 706 expert necessary because of the unusual complexity of the damages issues and the extreme divergence of the parties' positions, the parties should bear their own costs for Dr. Kearl.

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CONCLUSION

Because this case involved difficult, landmark legal issues of first impression, resulted in a mixed judgment, and was litigated in good faith, the Court should exercise its discretion to deny costs and require each party to bear its own expenses. If any costs are allowed, (1) Google's request for $2.9M in e-discovery costs should be denied, as Google has failed to separate the reasonable costs of physically copying production documents from the costs incurred for Google's purposes, and (2) Google's request for $986,978 in court-appointed expert witness costs should be denied, as Google agreed to pay those costs, and in any event, the Court should exercise its discretion to deny those costs, given the complexity and novelty of the damages issues and the extreme divergence of both parties' positions on damages.

Dated: July 23, 2012

MICHAEL A. JACOBS
KENNETH A. KUWAYTI
MARC DAVID PETERS
DANIEL P. MUINO
MORRISON & FOERSTER LLP

By: /s/ Michael A. Jacobs
Michael A. Jacobs

Attorneys for Plaintiff
ORACLE AMERICA, INC.

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ATTESTATION OF FILER

I, Daniel P. Muino, am the ECF User whose ID and password are being used to file Oracle's Objections to Google's Bill of Costs. I hereby attest that Michael A. Jacobs has concurred in this filing.

Dated: July 23, 2012

By: /s/ Daniel P. Muino
Daniel P. Muino

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