THE Bill Gates deposition reveals how Netscape was excluded or pushed out, elbowed from the market in spite of technical advantages, including its cross-platform nature. As it turns out, patents too were leveraged to achieve this monopolisation. But patents are "innovation" (they keep insisting), right?
"As it turns out, patents too were leveraged to achieve this monopolisation."We've isolated (below) the part about Apple and patents (we've also highlighted "patent" aspects for hurried readers; note that Mr. Maritz went on to lead a company which blatantly violated the GPL):
4 Q. My question to you now, sir, is whether
5 you believed that cancelling Mac Office 97 would do a
6 great deal of harm to Apple?
7 A. Well, I know that Apple would prefer
8 that we have a more updated version of Mac Office,
9 that that would be a positive thing for them, and so
10 that's why it was part of the negotiation relative to
11 the patent cross license.
12 Q. And did you believe that cancelling Mac
13 Office 97 would do a great deal of harm to Apple?
14 A. I told you I think it would be better
15 for Apple to have everybody doing major upgrades like
16 this. I doubt -- I can't characterize the level of
17 benefit of the upgrade to Apple, but certainly it's
18 something they wanted us to complete.
19 Q. The next sentence in Mr. Waldman's
20 June 27, 1997 e-mail to you begins, "I also believe
21 that Apple is taking this threat pretty seriously."
22 Did someone tell you in or about June
23 of 1997 that Apple was taking Microsoft's threat to
24 cancel Mac Office 97 seriously or pretty seriously?
25 A. Well, Maritz had taken the position
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1 that it didn't make business sense to finish this
2 upgrade. And it's very possible Apple might have
3 heard about Maritz's opinion there and therefore been
4 worried that we, businesswise, didn't see a reason to
5 complete the upgrade and that they would have the
6 older Mac Office as opposed to this new work that we
7 were part way along on.
8 Q. Mr. Gates, my question is not what
9 position Mr. Maritz did or did not take. My question
10 is whether anyone told you in or about June of 1997
11 that Apple was taking pretty seriously Microsoft's
12 threat to cancel Mac Office 97?
13 A. Apple may have known that senior
14 executives at Microsoft, Maritz in particular,
15 thought that it didn't make business sense to
16 complete that upgrade.
17 Q. Mr. Gates, I'm not asking you what
18 Apple may have known or may not have known. What I'm
19 asking you is whether anybody told you in or about
20 June of 1997 that Apple was taking pretty seriously
21 Microsoft's threat to cancel Mac Office 97?
22 A. Those particular words?
23 Q. Told you that in words or in substance.
24 A. I think I remember hearing that Apple
25 had heard about Maritz's view that it didn't make
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1 sense to continue the upgrade, but -- and that, you
2 know, they wanted us to continue the upgrade. But
3 I -- I don't remember any of the -- it being phrased
4 at all the way you're phrasing it.
5 Q. Well, the way I'm phrasing it is the
6 way that Mr. Waldman phrased it to you in his e-mail
7 of June 27, 1997; correct, sir?
8 A. Well, in reading it, I see those words,
9 yes.
10 Q. And you don't have any doubt that you
11 received this e-mail, do you, sir?
12 A. I have no reason to doubt it. I don't
13 remember receiving it. I do remember in general
14 sending an e-mail like the one that's at the top
15 there.
16 Q. Do you recall anyone telling you in
17 words or in substance in or about June of 1997 what
18 Mr. Waldman is writing here in this e-mail?
19 MR. HEINER: Objection.
20 THE WITNESS: This is a very long piece
21 of e-mail. Have you read the whole e-mail yourself?
22 MR. BOIES: I think my question was
23 imprecise. I was trying to avoid quoting something
24 for yet another time, but I accept your counsel's
25 view that the question was probably defective. I
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1 thought it was clear what portion of the e-mail we
2 were talking about, but I will make it clear.
3 Q. Mr. Gates, Mr. Waldman on June 27,
4 1997, sends you an e-mail that says, "The threat to
5 cancel Mac Office 97 is certainly the strongest
6 bargaining point we have, as doing so will do a great
7 deal of harm to Apple immediately. I also believe
8 that Apple is taking this threat pretty seriously."
9 Do you recall anyone --
10 A. Do you want to finish the sentence or
11 not?
12 Q. You can if you think it is necessary to
13 answer the question.
14 Do you recall anyone telling you what I
15 have just quoted in words or in substance in or about
16 June, 1997?
17 A. No.
18 MR. HEINER: It's just about 10:00 now.
19 Can we take a break?
20 MR. BOIES: If you wish.
21 MR. HEINER: Yes, thanks.
22 VIDEOTAPE OPERATOR: The time is 9:57.
23 We're going off the record.
24 (Recess.)
25 VIDEOTAPE OPERATOR: The time is 10:21.
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1 We are going back on the record.
2 Q. BY MR. BOIES: What were the primary
3 goals that you personally had, Mr. Gates, in terms of
4 getting Apple to agree to things?
5 MR. HEINER: Objection. Can you be
6 just a bit more specific on that?
7 MR. BOIES: Sure.
8 Q. In the period of 1996 forward, after
9 you concluded that Java, or as you put it, Java
10 runtime threat and Netscape were competitive threats
11 to Microsoft, what were your goals in terms of
12 dealing with Apple? What were you trying to get
13 Apple to agree to do for Microsoft?
14 A. Well, the main reasons we were having
15 discussions with Apple in this '97 period was that
16 they had asserted that various patents that they had
17 applied to various Microsoft products, and so our
18 primary focus in discussing an agreement with them
19 was to conclude a patent cross license of some kind.
20 Q. I want to be sure that the question and
21 answer are meeting. I asked for a period of 1996 to
22 the present and you answered about 1997. Were your
23 goals in 1996 or after 1997 any different than the
24 goals that you've just described in dealing with
25 Apple?
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1 A. There's only one agreement with Apple,
2 so I don't know what you're talking about.
3 Q. Okay. Do you understand the word goals
4 or objectives?
5 A. You talked about agreeing with Apple --
6 there's only one agreement with Apple that I know
7 about that we're discussing and that was one that was
8 concluded in I think late July or early August, 1997
9 and there's no other agreement that I know was even
10 discussed or considered.
11 Q. Okay. Let me ask you to look at a
12 document previously marked as Government Exhibit 369.
13 The second item on the first page of this exhibit
14 purports to be an e-mail from you dated June 23, 1996
15 to Paul Maritz and Brad Silverberg with copies to
16 Messrs. Higgins, Bradford, Waldman and Ludwig on the
17 subject of "Apple meeting."
18 (The document referred to was marked by
19 the court reporter as Government Exhibit 369 for
20 identification and is attached hereto.)
21 Q. BY MR. BOIES: Did you send this
22 e-mail, Mr. Gates, on or about June 23, 1996?
23 A. I don't remember it specifically, but I
24 don't have any reason to doubt that I did.
25 Q. In the second paragraph you say, "I
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1 have 2 key goals in investing in the Apple
2 relationship - 1) Maintain our applications share on
3 the platform and 2) See if we can get them to embrace
4 Internet Explorer in some way."
5 Do you see that?
6 A. Yeah.
7 Q. Does that refresh your recollection as
8 to what your two key goals were in connection with
9 Apple in June of 1996?
10 A. First of all, June of 1996 is not in
11 the time frame that your previous question related
12 to. And certainly in the e-mail to this group I'm
13 not talking about the patent thing, but believe me,
14 it was our top goal in thinking about Apple for many,
15 many years because of their assertions.
16 Q. My time frame in my question, sir, was
17 a time frame beginning in 1996 when you began to view
18 Netscape or the Java runtime threat as a competitive
19 threat to Microsoft.
20 A. And that was after June of 1996.
21 Q. Is it your testimony that in June of
22 1996 you did not consider Netscape to be a
23 competitive threat to Microsoft?
24 A. Netscape was a competitor, but in terms
25 of Java and all the runtime related issues, we didn't
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1 have a clear view of that at all.
2 Q. So that -- I want to be sure I've got
3 your testimony accurately. It is your testimony that
4 in June of 1996 you considered Netscape to be a
5 competitive threat but you did not consider Java or
6 Java runtime to be a competitive threat; is that your
7 testimony?
8 A. We considered Netscape to be a
9 competitor and I told you earlier that until late '96
10 we were unclear about our position on various Java
11 runtime things and what other companies were doing
12 and what that meant for us competitively.
13 Q. Do you agree that in June of 1996 the
14 two key goals that you had in terms of the Apple
15 relationship were, one, maintain your applications
16 share on the platform, and two, see if you could get
17 Apple to embrace Internet Explorer in some way?
18 A. No.
19 Q. Do you have any explanation for why you
20 would have written to Mr. Maritz and Mr. Silverberg
21 on June 23, 1996 that those were your two key goals
22 in the Apple relationship?
23 A. They weren't involved in the patent
24 issue at all. So when I write to them, I'm focused
25 on the issues that relate to them. I do mention
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1 patents in here, but that certainly was the primary
2 goal at this time and in subsequent times.
3 Q. Let me be clear. When you write to
4 Mr. Maritz and Mr. Silverberg, you talk about
5 patents, do you not, sir?
6 A. Where do you see that?
7 Q. Well, did you talk about patents?
8 A. Do you want me to read the entire mail?
9 Q. Have you read it enough to know whether
10 you talk about patents?
11 A. I saw the word "patent" in one place.
12 If I read the whole thing, I can find out if it's in
13 other places as well.
14 Q. You do talk about patent cross license,
15 do you not, in this memo? And if you want to look at
16 the last page, five lines from the bottom.
17 A. Yeah. They weren't involved in the
18 patent issues at all, so it looks like in this mail I
19 just mention that in a summary part, but it was our
20 top goal in our discussions with Apple.
21 Q. When you write to Mr. Maritz and
22 Mr. Silverberg, you don't describe that as your top
23 goal, in fact, you don't even describe it as one of
24 your two or three key goals; correct, sir?
25 A. This piece of e-mail doesn't talk about
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1 the patent goal as the top goal. It's most likely
2 that's because the people copied on the mail don't
3 have a thing to do with it and I wouldn't distract
4 them with it.
5 Q. I want to be sure I have your testimony
6 correct. In June of 1996, what was Paul Maritz's
7 title?
8 A. He was involved in product development
9 activities.
10 Q. He was involved in product development
11 activities. What was his title?
12 A. I don't know. Systems.
13 Q. Systems?
14 A. Uh-huh.
15 Q. Did he have a title that went with
16 that?
17 A. Senior vice-president systems. I don't
18 know.
19 Q. Senior vice-president systems, I see.
20 Did Mr. Silverberg have a position in
21 June of 1996?
22 A. He worked for Mr. Maritz.
23 Q. Did he have a title?
24 A. I don't know what his title was at the
25 time. He would have been an officer of some kind.
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1 Q. An officer of some kind.
2 So you're writing a memo to Paul
3 Maritz, a senior vice-president, and Brad Silverberg,
4 an officer of some kind, and you're sending copies to
5 four other people on the subject of the Apple
6 meeting, and you say, "I have 2 key goals in
7 investing in the Apple relationship."
8 A. That's quite distinct than any goals I
9 might have for a deal with Apple. It says, "I have 2
10 key goals in investing in the Apple relationship,"
11 not "I have 2 key goals for a deal with Apple."
12 Q. Well, sir, at the bottom you say what
13 you propose in terms of a deal and you talk about
14 what Apple will get out of the deal and what
15 Microsoft will get out of the deal; correct, sir?
16 A. Do you want me to read you the e-mail?
17 I mean I don't know anything more than just what it
18 says in the e-mail. I'm glad to read it to you.
19 Q. Well, sir, does it say at the bottom of
20 the e-mail that you are proposing something with
21 Apple and you are identifying what Apple would get
22 under your proposed deal and what Microsoft would get
23 under your proposed deal?
24 A. Yeah, that's at the bottom of the
25 e-mail.
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1 Q. In fact, the bottom of the e-mail
2 talking about a proposed Apple-Microsoft deal, you
3 say, "The deal would look like this," and then you've
4 got a column "Apple gets" and a column "Microsoft
5 gets" and a column "Both get"; right, sir?
6 A. I'm reading that.
7 Q. Now, in this e-mail of a page or a page
8 and a half in which you are proposing this deal, you
9 describe your two key goals as maintaining
10 Microsoft's applications share on the platform and
11 getting Apple to embrace Internet Explorer.
12 A. No, that's wrong.
13 Q. That's wrong, okay.
14 A. The word "deal" and the word
15 "relationship" are not the same word. This says, "I
16 have 2 key goals in investing in the Apple
17 relationship." This down here is an agreement which
18 I thought we could reach with Apple.
19 Q. Is it your testimony here today under
20 oath that your two key goals in investing in the
21 Apple relationship, which you mention in the second
22 paragraph of this e-mail, is different than your two
23 key goals in the proposed deal that you describe five
24 paragraphs later?
25 A. I don't see anything in here about the
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1 key goals -- two key goals in the deal. I've told
2 you that I'm certain that my primary goal in any deal
3 was the patent cross license.
4 Q. Mr. Gates, my question is whether it is
5 your testimony today here under oath that when you
6 talk about your two key goals in investing in the
7 Apple relationship in the second paragraph of this
8 e-mail, that that is different than what your key
9 goals were in the deal that you proposed five
10 paragraphs later?
11 A. That's right. Investing in a
12 relationship is different than the deal.
13 Q. Now, you don't tell Mr. Maritz or
14 Mr. Silverberg that your goals for investing in the
15 Apple relationship are different than your goals in
16 the proposed deal, do you, sir?
17 A. But the goals and the deal are quite
18 different, so obviously they would have known they
19 were quite different.
20 Q. Well, sir, you say the goals and the
21 deal are quite different. One of your two key goals
22 that you talk about in your second paragraph is to
23 get Apple to embrace Internet Explorer in some way.
24 And the very first thing under what Microsoft gets in
25 your proposed deal is, "Apple endorses Microsoft
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1 Internet Explorer technology." Do you see that, sir?
2 A. Uh-huh.
3 Q. Now, does that refresh your
4 recollection that the deal that you were proposing
5 had some relationship to the two key goals that you
6 were identifying?
7 A. Some relationship, yes, but they aren't
8 the same thing at all.
9 Q. All right, sir.
10 Did you ever prepare any e-mail to
11 anyone, Mr. Maritz or Mr. Silverberg or anyone, in
12 which you said that your primary goal in an Apple
13 deal was obtaining a cross license?
14 A. I don't remember a specific piece of
15 e-mail, but I'm sure I did with at least Mr. Maffei
16 and Mr. Maritz.
17 Q. You're sure you sent them e-mail saying
18 that?
19 A. I'm sure I communicated it to them in
20 some way.
21 Q. Do you believe you sent them anything
22 in writing or an e-mail?
23 A. I think it's likely, but I don't
24 remember a specific document.
25 Q. You certainly haven't seen any such
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1 document in being prepared for your deposition; is
2 that fair?
3 MR. HEINER: Objection. You're not
4 seeking to intrude on the attorney-client privilege?
5 MR. BOIES: No. I want to know if he
6 has seen any such document, this document he says he
7 thinks exists that wasn't produced in document
8 production. I want to see if he has ever seen it, if
9 he recalls ever seeing it now or any other time.
10 THE WITNESS: I didn't say anything
11 about what may or may not exist at this point. I
12 said I'm sure I communicated to Mr. Maritz and
13 Mr. Maffei that our primary goal in doing the deal
14 with Apple was the patent cross license.
15 Q. BY MR. BOIES: And I had thought, and
16 perhaps I misunderstood, I thought that you had said
17 that you believed that you actually communicated that
18 not merely orally but by e-mail or in writing.
19 A. I think it's likely that I communicated
20 it in e-mail.
21 Q. And if you had communicated it in
22 e-mail, would that e-mail have been preserved?
23 A. Not necessarily.
24 Q. A lot of these e-mails were preserved
25 because we now have copies of them; right?
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1 A. That's right.
2 Q. How did Microsoft decide what e-mails
3 would be preserved and what e-mails would not be
4 preserved?
5 A. Individuals get e-mail into their
6 mailbox and they decide.
7 Q. Do you have any explanation as to why
8 people would have decided to keep the e-mail that
9 described your two key goals in the Apple
10 relationship as being what they are stated to be here
11 and not have preserved your e-mail that you say you
12 sent saying you had a primary goal of a cross
13 license?
14 MR. HEINER: Objection. Lack of
15 foundation.
16 THE WITNESS: You're missing --
17 MR. HEINER: Hold it. Objection.
18 Those facts are not established. There could be 100
19 e-mails that talk about a patent cross license and
20 you may have them or you may not have them or they
21 may not have been called for. There is a range of
22 possibilities. That question is unfair and I object.
23 MR. BOIES: Okay, you've made your
24 objection. The witness will now answer the question.
25 MR. HEINER: Let's have it read back.
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1 MR. BOIES: And if you come up with
2 those hundred e-mails, we will read them with
3 interest. I don't think you're going to and you
4 don't think you're going to either.
5 MR. HEINER: I disagree with that.
6 MR. BOIES: Okay.
7 Q. I'll restate the question to just be
8 absolutely certain that it's a fair question,
9 Mr. Gates.
10 If it were the case that neither your
11 counsel nor myself, after diligent search, can find
12 an e-mail that says your primary goal in dealing with
13 Apple was a patent cross license, do you have any
14 explanation as to why that e-mail that you say you
15 think exists would not have been saved, whereas the
16 e-mail that describes one of your two key goals as
17 getting Apple to embrace Internet Explorer was
18 preserved?
19 MR. HEINER: Objection. It's not a
20 sensible question. You asked a hypothetical. How
21 can the witness explain what the facts might be in
22 your hypothetical?
23 MR. BOIES: He is not being asked to
24 explain what the facts are in a hypothetical, I think
25 that's clear. If the witness tells me he cannot
338
1 answer the question, he can do so and we will go on
2 and take that up with everything else we'll take up
3 at a subsequent time.
4 THE WITNESS: When you say "dealing
5 with Apple," there were a lot of things we were
6 dealing with Apple on. I've told you in terms of the
7 deal, the deal I was involved in discussing in '96
8 and under another management at Apple in '97, there's
9 no doubt the primary goal was the patent cross
10 license.
11 Q. BY MR. BOIES: And by "the primary
12 goal," what you mean is the primary goal that you,
13 Mr. Gates, had; is that correct?
14 A. I don't think I'm the only one who had
15 it, but certainly yes, that was the primary goal of
16 myself and for the company.
17 Q. And when you said in your June 23, 1996
18 e-mail, "I have 2 key goals in investing in the Apple
19 relationship," you were talking about yourself
20 personally; is that correct?
21 A. Yeah. When I say "investing in the
22 Apple relationship," that means spending time with
23 Apple and growing the relationship.
24 Q. And when in describing the deal five
25 paragraphs later the very first thing that Microsoft
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1 gets is, "Apple endorses Microsoft Internet Explorer
2 technology," did that indicate to you that that was
3 an important part of what you were getting in terms
4 of the deal?
5 A. No such deal was ever struck, so I'm
6 not sure what you're saying.
7 Q. Was that an important part of the deal
8 that you were trying to get, sir?
9 A. We never got as far as trying to get
10 that deal, unfortunately.
11 Q. You never got as far as trying to get
12 that deal; is that what you're saying?
13 A. No. Well, in this time frame Gil
14 Amelio's total focus was on his new OS strategy, so
15 what I outlined here we never got them to consider.
16 Q. Well, sir, your e-mail begins, "Last
17 Tuesday night I went down to address the top Apple
18 executives;" correct, sir?
19 A. That's right.
20 Q. And down at the bottom when you're
21 introducing the deal, you say, "I proposed." Now,
22 you're referring to what you proposed to the Apple
23 top executives, are you not, sir?
24 A. Yes.
25 Q. Okay. And what you proposed was
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1 "the deal" that you then describe at the bottom of
2 the first page and the top of the second page;
3 correct, sir?
4 A. That's right.
5 Q. And that was a deal that you proposed
6 the Tuesday night before June 23, 1996 to what you
7 describe as the top Apple executives; correct, sir?
8 A. I put forward some of those points.
9 Q. Well, you put them forward and you
10 describe them as proposing a deal, correct, sir?
11 A. That's how I describe it here, yes.
12 Q. All right, sir. Now, you'd said that
13 the deal that you were talking about never got done.
14 Did you ever get Apple to endorse Microsoft Internet
15 Explorer technology?
16 A. You're trying to just read part of
17 that?
18 Q. I'm actually -- what I'm doing is
19 asking a question right now, sir. I'm asking whether
20 in 1996 or otherwise, at any time did you get Apple
21 to endorse Microsoft Internet Explorer technology?
22 A. Well, you can get a copy of the
23 agreement we reached with Apple and decide if in
24 reading that you think it meets that criteria or not.
25 Q. Sir, I'm asking you, as the chief
341
1 executive officer of Microsoft, I'm asking you
2 whether you believe that you achieved that objective?
3 A. We did not get some exclusive
4 endorsement. We did get some -- there's some part of
5 the deal that has to do with Internet Explorer
6 technology.
7 Q. Do you know what that part of the deal
8 is?
9 A. Not really. It has something to do
10 with they will at least ship it along with other
11 browsers.
12 Q. Does the deal prohibit them from
13 shipping Netscape's browser without also shipping
14 Internet Explorer?
15 A. I'd have to look at the deal to
16 understand.
17 Q. It is your testimony sitting here today
18 under oath that you simply don't know one way or the
19 other whether Apple is today free to ship Netscape's
20 browser without also shipping Internet Explorer?
21 A. That's right.
22 Q. When you identify things as key goals,
23 do you typically tend to follow up and see to what
24 extent those goals have been achieved?
25 A. In a very general sense, yes.
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1 Q. Did you ever follow up to see whether
2 one of the two key goals that you identify in your
3 1996 e-mail to Mr. Maritz and Mr. Silverberg and
4 others of getting Apple to embrace Internet Explorer
5 technology in some way had been achieved?
6 A. Well, certainly what I said here,
7 "I have 2 key goals in investing in the Apple
8 relationship," that -- those weren't achieved because
9 the investments I made were with Gil Amelio, who was
10 fired from Apple very soon thereafter.
11 Q. Was there something about Mr. Amelio
12 getting fired that changed what your goals were for
13 the Apple relationship?
14 A. I said, "I have 2 key goals in
15 investing in the Apple relationship." The form that
16 investment took was spending time with Gil Amelio.
17 That turned out to be wasted time because he was
18 fired from Apple rather abruptly within about, oh,
19 eight months of this.
20 Q. When he was fired, did that change what
21 goals you had for the Apple relationship, Mr. Gates?
22 A. It was basically a complete restart
23 because we had to understand what the new management,
24 what they were going to do with Apple and where they
25 were going.
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1 Q. Did your goals change?
2 A. Goals for what? For investing in the
3 relationship?
4 Q. You say in this e-mail you have two key
5 goals for investing in the Apple relationship. One
6 of --
7 A. In investing in the Apple relationship.
8 Q. One of them is to get Apple to embrace
9 Internet Explorer technology in some way. What I'm
10 asking you is whether that changed after this person
11 got fired?
12 A. We re-evaluated all of our thoughts
13 about working with Apple based on what the new
14 management was going to do, whether they were going
15 to target the machines, what they were going to do
16 with their machines. Since they continued to say we
17 were in violation of their patents, it continued to
18 be our top goal to get some type of patent cross
19 license.