Comes request access to class members
Comes request access to class members ..
SnippetsMR. HOLLEY: Good morning, Your Honor. Yesterday there was a request from the plaintiffs for a curative instruction with regard to a question that Mr. Tulchin asked Mr. Bradford about a lawsuit brought by Lantec, a competing maker of network software, against Novell alleging violations of Section 2 of the Sherman Act.
..
MS. CONLIN: Your Honor, my request or an instruction was, in fact, a departure from our normal procedure because for the Defendant to ask such a question was a departure from our normal procedure.
The purpose of testimony with respect to the FTC and the DOJ was to assure that the witness was not vulnerable on cross-examination to a surprise assertion that he was simply a pawn of the government or the government was simply a pawn of his because DOJ, FTC all over the documents in this matter, Your Honor, with respect to this witness and others.
And there is also a difference in that it was Microsoft who was under investigation. Microsoft is a party to this lawsuit. lawsuit. Novell, however, is not a party, and the idea that there needs to be parity, I think, is an erroneous idea.
..
MS. CONLIN: Your Honor, the Court issued an order some time ago which precluded either side from contacting class members without the permission of the Court.
Plaintiffs have honored that order and -- but now we request the Court's permission to contact members of the Plaintiffs' class, all of them. We want to -- we want that opportunity, Your Honor. The Court may have seen the article today, and we thought perhaps it would be time for us to contact our own clients.
THE COURT: Response?
MR. TULCHIN: Your Honor, this is a surprise to us. I didn't know this motion was coming. I'd like an adequate opportunity to respond some point next week.
THE COURT: Very well.
MR. TULCHIN: Thank you, Your Honor.
MS. CONLIN: Well, I thought it would be noncontroversial, Your Honor. I was wrong.
http://antitrust.slated.org/www.iowaconsumercase.org/1.25.07_transcript.txt
Full Text
103991 IN THE IOWA DISTRICT COURT FOR POLK COUNTY ----------------------------------------------- 2 JOE COMES; RILEY PAINT, ) 3 INC., an Iowa Corporation;) SKEFFINGTON'S FORMAL ) 4 WEAR OF IOWA, INC., an ) NO. CL82311 Iowa Corporation; and ) 5 PATRICIA ANNE LARSEN; ) ) TRANSCRIPT OF 6 Plaintiffs, ) PROCEEDINGS ) VOLUME XXXVIII 7 vs. ) ) 8 MICROSOFT CORPORATION, ) a Washington Corporation, ) 9 ) Defendant. ) 10 -----------------------------------------------
11 The above-entitled matter came on for
12 trial before the Honorable Scott D. Rosenberg
13 and a jury commencing at 8:20 a.m., January 25,
14 2007, in Room 302 of the Polk County
15 Courthouse, Des Moines, Iowa.
16
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20 HUNEY-VAUGHN COURT REPORTERS, LTD.
21 Suite 307, 604 Locust Street
22 Des Moines, Iowa 50309
23 (515)288-4910
24
25 � 10400
1 A P P E A R A N C E S
2 Plaintiffs by: ROXANNE BARTON CONLIN 3 Attorney at Law Roxanne Conlin & Associates, PC 4 Suite 600 319 Seventh Street 5 Des Moines, IA 50309 (515) 283-1111 6 MICHAEL R. CASHMAN 7 Attorney at Law Zelle, Hofmann, Voelbel, 8 Mason & Gette, LLP 500 Washington Avenue South 9 Suite 4000 Minneapolis, MN 55415 10 (612) 339-2020
11 ROBERT J. GRALEWSKI, JR. Attorney at Law 12 Gergosian & Gralewski 550 West C Street 13 Suite 1600 San Diego, CA 92101 14 (619) 230-0104
15 KENT WILLIAMS Attorney at Law 16 Williams Law Firm 1632 Homestead Trail 17 Long Lake, MN 55356 (612) 940-4452 18
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25 � 10401
1 Defendant by: DAVID B. TULCHIN 2 STEVEN L. HOLLEY SHARON L. NELLES 3 JEFFREY C. CHAPMAN Attorneys at Law 4 Sullivan & Cromwell, LLP 125 Broad Street 5 New York, NY 10004-2498 (212) 558-3749 6 ROBERT A. ROSENFELD 7 KIT A. PIERSON Attorneys at Law 8 Heller Ehrman, LLP 333 Bush Street 9 San Francisco, CA 94104 (415) 772-6000 10 DAVID SMUTNY 11 Attorney at Law Heller Ehrman, LLP 12 1717 Rhode Island Ave. NW Washington, D.C. 20036-3001 13 (202) 912-2000
14 HEIDI B. BRADLEY Attorney at Law 15 Heller Ehrman, LLP 333 South Hope Street 16 Suite 3900 Los Angeles, CA 90071-3043 17 (213) 689-0200
18 DAVID E. JONES Attorney at Law 19 Heller Ehrman, LLP One East Main Street 20 Suite 201 Madison, WI 53703-5118 21 (608) 663-7460
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25 � 10402
1 BRENT B. GREEN Attorney at Law 2 Duncan, Green, Brown & Langeness, PC 3 Suite 380 400 Locust Street 4 Des Moines, IA 50309 (515) 288-6440 5
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25 � 10403
1 (The following record was made out of
2 the presence of the jury at 8:20 a.m.)
3 THE COURT: Morning.
4 Mr. Tulchin, you wanted to be heard?
5 MR. TULCHIN: Yes. With the Court's
6 permission, Mr. Holley will address this issue.
7 MR. HOLLEY: Good morning, Your Honor.
8 Yesterday there was a request from the
9 Plaintiffs for a curative instruction with
10 regard to a question that Mr. Tulchin asked
11 Mr. Bradford about a lawsuit brought by Lantec,
12 a competing maker of network software, against
13 Novell alleging violations of Section 2 of the
14 Sherman Act.
15 And for various reasons, it's
16 Microsoft's position that no such instruction
17 is warranted.
18 Initially, as Mr. Tulchin pointed out
19 yesterday, various questions by both sides on
20 direct and cross have been objected to in -- at
21 the time, and the Court has either sustained or
22 overruled those objections, and there hasn't
23 been some curative instruction telling the jury
24 that the question was improper.
25 So this would be a departure from � 10404
1 normal procedure and would call attention to
2 something which isn't warranted.
3 So that's our procedural objection.
4 On substance, Your Honor, the question
5 was perfectly appropriate because Mr. Bradford
6 testified extensively on direct examination
7 about the fact that Microsoft was investigated
8 both by the Federal Trade Commission starting
9 in 1990 and then by the Department of Justice
10 starting in 1993.
11 And the mere purpose of that testimony
12 being elicited was to suggest to the jury that
13 the fact of those investigations could be --
14 could give rise to an inference that Microsoft
15 had done something wrong. Otherwise, why was
16 the testimony being elicited.
17 And, of course, the fact of the matter
18 is that the Federal Trade Commission never did
19 anything having, investigated the matter for
20 some time.
21 On two occasions the commission
22 considered the question of bringing enforcement
23 action against Microsoft, and on both
24 occasions, there was a 2-2 vote and the
25 commission did not proceed. � 10405
1 So it is not a fair inference that
2 because the government investigated Microsoft
3 that Microsoft had done something wrong.
4 As the Iowa Supreme Court has said in
5 State against Monroe, when lawyers make
6 tactical choices that create inferences that
7 help their clients, they open the door to
8 rebuttal by their adversary.
9 So if Plaintiffs make a choice to
10 suggest through the testimony not only of
11 Mr. Bradford, but also of Mr. Alepin, that
12 Microsoft has been subjected to numerous
13 government investigations and private lawsuits
14 -- and the Court will recall that Mr. Lamb took
15 Mr. Alepin through numerous lawsuits that have
16 been filed against Microsoft in the course of
17 talking about Mr. Alepin's credentials.
18 So the jury has heard all about Sun
19 suing Microsoft and RealNetworks suing
20 Microsoft.
21 And the clear implication of this is
22 that where there's that much smoke, there must
23 be fire.
24 And that -- if that suggestion has
25 been created in the minds of the jurors, it's � 10406
1 perfectly appropriate for Microsoft to counter
2 that door opening by noting that other
3 companies that are successful in the
4 marketplace and acquire large market positions
5 are sued by their competitors.
6 It is a routine practice in American
7 business, there is an entire field of study
8 about the strategic use of antitrust litigation
9 against competitors, so it's our position, Your
10 Honor, that there was nothing improper about
11 the question and therefore no need for an
12 instruction.
13 Now if the Court is nonetheless
14 inclined to give an instruction, which we don't
15 think is appropriate, we certainly don't think
16 that the instruction that Ms. Conlin read to
17 the Court yesterday is the appropriate sort of
18 instruction because there needs to be parity on
19 this point.
20 The jury needs to be told, if they're
21 going to be told, that testimony from witnesses
22 on either side about prior investigations and
23 prior litigation should not be assumed to mean
24 that there's any merit to those cases.
25 That was not Mr. Tulchin's suggestion. � 10407
1 His point was, and it's a perfectly valid point
2 given what Plaintiffs have done, is that people
3 who are successful in business often get sued.
4 That's the point.
5 But, Your Honor, I'd like -- if I
6 could approach the Court, I'd like to hand up
7 our suggestion -- and I need to give one to
8 Ms. Conlin first -- of the sort of instruction
9 that we would suggest if the Court is inclined
10 to give it and what -- it's a neutral
11 instruction. It would apply to both parties.
12 And it would say that witnesses have
13 testified and will continue, I assume, to
14 testify about government investigations that
15 have been instigated against Microsoft, Novell,
16 and other companies.
17 The existence of these lawsuits or
18 investigations is not proof of any wrongdoing
19 and you are not to conclude from the fact that
20 a lawsuit is brought or an investigation was
21 undertaken that those claims have any merit.
22 So, Your Honor, that -- if an
23 instruction is going to be given, and as I
24 said, we don't believe it's necessary or
25 appropriate, but if it happens, we think it � 10408
1 should not be some sort of attack on Microsoft
2 or its counsel. It should apply equally to
3 both parties, and as with all of the Court's
4 other instructions, it should be a neutral
5 statement of the law.
6 That's all I have on that, Your Honor.
7 MS. CONLIN: Your Honor, my request
8 for an instruction was, in fact, a departure
9 from our normal procedure because for the
10 Defendant to ask such a question was a
11 departure from our normal procedure.
12 The purpose of testimony with respect
13 to the FTC and the DOJ was to assure that the
14 witness was not vulnerable on cross-examination
15 to a surprise assertion that he was simply a
16 pawn of the government or the government was
17 simply a pawn of his because DOJ, FTC all over
18 the documents in this matter, Your Honor, with
19 respect to this witness and others.
20 And there is also a difference in that
21 it was Microsoft who was under investigation.
22 Microsoft is a party to this lawsuit.
23 That investigation of the FTC and
24 subsequently the DOJ, as the Court is well
25 aware, forms a part of the basis of this � 10409
1 lawsuit.
2 Novell, however, is not a party, and
3 the idea that there needs to be parity, I
4 think, is an erroneous idea.
5 There's not parity of questioning and
6 there therefore should not be parity of -- in
7 connection with the instruction.
8 It was Mr. Tulchin who suddenly out of
9 nowhere brought up this antitrust lawsuit. And
10 the Court will recall it wasn't just that
11 Novell was sued. That's not the point that
12 Mr. Tulchin was making.
13 First he asked, as I recall, what the
14 market share of Novell was, and then he asked
15 the question about the lawsuit, which was, as
16 he carefully pointed out, for antitrust
17 violations.
18 If the Court is not going to instruct
19 on this issue, then -- I, of course, will not
20 do this without asking the Court's permission,
21 but I assume that when I get to the defense
22 case and the defense witnesses are here, I can
23 ask them about the lawsuits against Microsoft.
24 And I'll try to divide them up in some fashion
25 that creates parity among the witnesses. � 10410
1 The point that Mr. Tulchin was making
2 and the point that I fear the jury has gotten
3 from the question, even though it was objected
4 to and the objection was sustained, was that
5 Microsoft -- or that Novell was also guilty of
6 antitrust violations.
7 So, Your Honor, I believe that the
8 instruction is warranted, and I think that it
9 can be given, and I think that Mr. Tulchin's
10 questioning of this witness on that issue was
11 highly prejudicial to the Plaintiffs.
12 THE COURT: Anything else?
13 MR. HOLLEY: Your Honor, just briefly.
14 I'm surprised to hear Ms. Conlin say
15 that the investigation by the Federal Trade
16 Commission forms part of the basis of this
17 lawsuit.
18 There is no collateral estoppel as to
19 what is usually referred to as Microsoft I,
20 which is the series of investigations first by
21 the FTC, then taken over by the DOJ, resulting
22 in the consent decree which was signed on the
23 15th of July of 1994.
24 That is entirely separate, that
25 proceeding, from what is frequently referred to � 10411
1 as Microsoft II, which is the lawsuit which was
2 begun on the 18th of May of 1998, and that is
3 the only lawsuit that has been -- as to which
4 any findings or conclusions have been given
5 collateral estoppel effect.
6 If the Plaintiffs want to seek to
7 prove the claims that the FTC considered
8 investigated and abandoned, then they have to
9 prove them. That's their obligation, and they
10 can't piggyback on the fact that some
11 government agency looked at these claims.
12 If they do, Your Honor, then we would
13 press again our argument that we are entitled
14 to ask, as we sought to do with Mr. Alepin,
15 witnesses to show that although the FTC looked
16 at FUD, vaporware, integration, and all of the
17 claims relating to DR-DOS, that the Plaintiffs
18 are pursuing here in the exercise of their
19 public interest obligations they decided not to
20 bring those claims.
21 If they want to open the door to that,
22 then we should be able to walk right through
23 it.
24 So I just want to make that point,
25 Your Honor. � 10412
1 There is no collateral estoppel effect
2 to anything other than the second DOJ case.
3 The first DOJ case, they have to prove
4 they have no benefit of collateral estoppel.
5 THE COURT: Mr. Holley, what was the
6 case Mr. Tulchin mentioned?
7 MR. HOLLEY: There is a case, Your
8 Honor --
9 THE COURT: The one he specifically
10 asked?
11 MR. HOLLEY: There is a case brought
12 by a company called Lantec, L-a-n-t-e-c, Your
13 Honor.
14 THE COURT: Okay. And the question
15 about -- to Mr. Bradford was with regard to FTC
16 or government investigation; right?
17 MR. HOLLEY: Those questions were
18 asked by Ms. Conlin on direct.
19 THE COURT: Right. And they were
20 about FTC and the government; right?
21 MR. HOLLEY: That is correct, Your
22 Honor.
23 THE COURT: How is there parity when
24 there's a private company sued?
25 MR. HOLLEY: Because the suggestion is � 10413
1 that claims made either by private parties or
2 by the government gives rise to some inference
3 that -- no one said that explicitly, but that's
4 the clear purpose of all of this.
5 The notion is that, you know, if
6 you're investigated, there must be something
7 under there. And frankly, it's much worse when
8 the notion is that the government did it
9 because, you know, everyone can accept the
10 proposition that there are Plaintiffs out there
11 who are off the wall and bring completely
12 frivolous claims. But the jurors are much less
13 likely to believe that the Federal Trade
14 Commission brought some entirely frivolous
15 claim.
16 So in my view, Your Honor, it's
17 actually much worse when the implication is
18 created that, you know, there was a government
19 investigation because people tend to believe
20 that the government doesn't act in a completely
21 irrational way.
22 THE COURT: So according to your
23 interpretation of Monroe, any witness who
24 appears here, they can be asked if they've been
25 sued in any case whatsoever for anything; is � 10414
1 that right?
2 MR. HOLLEY: Well, I'm not sure I'd
3 go that far, Your Honor, but I believe a
4 witness --
5 THE COURT: Wouldn't that be parity?
6 After all, you're being sued.
7 MR. HOLLEY: No, Your Honor.
8 I think the point that I was seeking
9 to make is that a company -- that a witness who
10 works for a company or worked for a company
11 that had a market share within the range that
12 the Court has instructed the jury would give
13 rise to an inference of monopoly power and who
14 has been sued for antitrust violations could be
15 asked whether such a claim was brought because
16 the Plaintiffs have opened the door to that by
17 noting that Microsoft with its high market
18 share has been both sued by numerous
19 competitors and investigated by various
20 government agencies.
21 They didn't have to do that, but they
22 did.
23 THE COURT: Anything else on this
24 issue?
25 MS. CONLIN: Just very briefly, Your � 10415
1 Honor.
2 Mr. Holley just made my point in his
3 last remark.
4 Mr. Tulchin did, in fact, say to this
5 witness again and again, you know, when you
6 were complaining every day to the federal
7 government and when you were making all of your
8 complaints to the federal government -- and, of
9 course, we know there's no collateral estoppel.
10 I hope that I was clear to the Court.
11 What I meant when I said forms the basis was
12 that we, in fact, have and have relied on the
13 documents, the statements, the depositions, and
14 so on from that -- those early investigations
15 which were three- or four-fold, as I recall.
16 So, Your Honor, I believe that the
17 instruction is justified and that the record as
18 it stands is highly prejudicial to the
19 Plaintiffs.
20 THE COURT: Anything further?
21 MR. HOLLEY: No, Your Honor.
22 THE COURT: Very well.
23 Court is going to give the following
24 instruction.
25 A question was asked on the � 10416
1 cross-examination of Plaintiffs' witness
2 Mr. Bradford regarding Novell being sued by
3 another company or entity. An objection to the
4 question was sustained.
5 You are instructed that you are not to
6 find or infer anything from the question to
7 Mr. Bradford, nor may you speculate as to what
8 the answer may have been regarding any alleged
9 lawsuit against Novell.
10 A copy will be given to the parties.
11 Carrie, I need 11 copies for the
12 jurors, and give two to the parties. Then you
13 can get the jury.
14 MR. HOLLEY: Your Honor, just for the
15 record, I would note that Microsoft objects to
16 this instruction, and it's highly prejudicial
17 to us and not the sort of instruction that the
18 jury should be given in these circumstances
19 just for the record.
20 (An off-the-record discussion was
21 held.)
22 (The following record was made in the
23 presence of the jury at 8:42 a.m.)
24 THE COURT: Everyone else may be
25 seated. � 10417
1 Ladies and gentlemen of the jury.
2 Thank you for your patience. We had a matter
3 that's had to be conducted by the Court only
4 and the attorneys.
5 You've been handed Preliminary
6 Instruction No. 36 regarding David Bradford.
7 I'll read it to you real quickly.
8 A question was asked on the
9 cross-examination of Plaintiffs' witness
10 Mr. Bradford regarding Novell being sued by
11 another company or entity. An objection to the
12 question was sustained.
13 You are instructed that you are not
14 to find or infer anything from the question of
15 Mr. Bradford, nor may you speculate as to what
16 the answer may have been regarding any alleged
17 lawsuit against Novell.
18 THE COURT: You may proceed with
19 cross.
20 Mr. Bradford, you're still under oath.
21 MR. TULCHIN: Thank you, Your Honor.
22 DAVID BRADFORD,
23 recalled as a witness, having been previously
24 duly sworn, testified as follows:
25 CROSS-EXAMINATION (CONT'D) � 10418
1 BY MR. TULCHIN:
2 Q. Good morning, Mr. Bradford.
3 A. Hello.
4 MR. TULCHIN: May I approach the
5 witness, Your Honor?
6 THE COURT: Yes, you may.
7 Q. Mr. Bradford, I'm handing you
8 Defendant's Exhibit 6776, and this is a
9 memorandum that you wrote, is not, sir?
10 A. Yes.
11 Q. It's a memorandum you wrote around
12 December 3rd, 1991; correct?
13 A. That's right.
14 Q. And it records your notes of your
15 meeting of November 24, 1991, with Bill Gates
16 and Steve Ballmer; right?
17 A. Well, it records the interaction
18 between Darrell Miller and Ray Noorda, not my
19 meeting with Gates and Ballmer.
20 Q. Fair enough. I stand corrected.
21 MR. TULCHIN: Your Honor, we offer
22 Defendant's Exhibit 6776.
23 MS. CONLIN: No objection.
24 THE COURT: It's admitted.
25 MR. TULCHIN: If we could just look at � 10419
1 the first page.
2 Q. And again, Mr. Bradford, this is --
3 those are your initials there next to your
4 name?
5 A. They are.
6 Q. Is that something you commonly did
7 when you were sending a memo to the files at
8 Novell?
9 A. Yes, it is.
10 Q. And it says, results of November 24th
11 meeting with Microsoft.
12 Just below in the first paragraph, it
13 says, on Sunday, November 24, Darrell Miller
14 and Ray Noorda met with Bill Gates and Steve
15 Ballmer at the San Francisco airport.
16 Do you see that, sir?
17 A. I do.
18 Q. And I think you testified briefly
19 about that meeting on direct examination.
20 Do you recall that?
21 A. I think I testified specifically about
22 a Ray Noorda/Bill Gates meeting that occurred
23 earlier in the year.
24 Q. Was it also at the San Francisco
25 airport, is that -- � 10420
1 A. Yes.
2 Q. -- maybe why --
3 A. Yes.
4 Q. Okay, fair enough.
5 And I want to direct your attention
6 for the moment, if I may, to the second page.
7 And you'll see the letter A.
8 You have a heading which says
9 complicating factors, and then there is the
10 letter A, and then, Mr. Bradford, you say this,
11 neither Novell nor Microsoft want the source
12 code which would be shipped to these testing
13 teams to be shared with other parts of the
14 other entities' company.
15 Now, let me just pause there if I may.
16 We're talking about the source code to
17 various software products made either by Novell
18 or by Microsoft; correct?
19 A. That's right.
20 Q. And the source code, of course, is the
21 property of the company that developed that
22 software?
23 A. That's right.
24 Q. And I take it from your memorandum
25 that there had been some discussion at this � 10421
1 meeting on November 24, '91, with Microsoft
2 about testing one another's beta versions of
3 software products; correct?
4 A. Well, I assume there was. I wasn't at
5 the meeting, but these are my recollections
6 from what Darrell or Ray told me when they
7 returned.
8 Q. Right, but I skipped over the first
9 page in the interest of time.
10 A. Okay.
11 Q. But that's what's being discussed
12 here, is it not, at least in part?
13 Testing one another's software
14 products so that the two companies could find a
15 way to make each company's software work better
16 with the other company's software?
17 A. I'm sure, among other things, that
18 interoperability was discussed at that meeting.
19 Q. Right. And I think you'll see
20 reference to that on the first page.
21 But so let's go back to point A on
22 page 2.
23 You go on to say, for example, Novell
24 would not want the source code to the NetWare
25 shell to be transferred to Microsoft's LAN � 10422
1 manager group.
2 Again, I want to stop for just a
3 moment.
4 The NetWare, of course, is Novell's
5 product?
6 A. That's right.
7 Q. And Microsoft had a competing LAN
8 manager product?
9 A. Correct.
10 Q. And I think what you're saying here is
11 that if the -- if Novell, for example, is to
12 send a beta version of its product to Microsoft
13 for testing, Novell wouldn't want that beta
14 version of the NetWare shell to be used by
15 people at Microsoft who are developing a
16 competing product.
17 Is that what that means?
18 A. I suppose. Again, I'm recording the
19 discussions that Ray and Darrell had with Bill
20 and Steve as opposed to my own personal
21 opinion, et cetera, et cetera.
22 Q. I understand that, but did I state
23 accurately what your sentence is intended to
24 mean; Novell doesn't want the people at
25 Microsoft who are competing, making a competing � 10423
1 product at Novell's to get Novell's source
2 code?
3 A. Yes, in general that would be correct.
4 Q. And the other side of it is stated in
5 the next sentence.
6 By the same token, Microsoft would not
7 want the Windows source code transmitted to
8 Novell's Digital Research subsidiary. Is that
9 right?
10 A. All right, uh-huh.
11 Q. Was that a proposition that both
12 companies adhered to over the period that you
13 worked at Novell?
14 Novell didn't want its source code to
15 be used at Microsoft by people making a product
16 that competed with Novell's NetWare, and
17 Microsoft didn't want its operating system for
18 Windows source code to be used by the Digital
19 Research subsidiary of Novell?
20 A. As a general proposition, that's
21 right.
22 Q. Thank you, sir.
23 MR. TULCHIN: Your Honor, may I
24 approach the witness?
25 THE COURT: Yes. � 10424
1 Q. I want to hand you next, Mr. Bradford,
2 a memorandum that appears to have been written
3 by John Constant on the 25th of January, 1992.
4 This is Defendant's Exhibit 145.
5 MR. TULCHIN: We offer this document,
6 Your Honor.
7 MS. CONLIN: Your Honor, may we
8 approach?
9 THE COURT: You may.
10 (The following record was made out of
11 the presence of the jury at 8:49 a.m.)
12 MS. CONLIN: Your Honor, here is the
13 memorandum. I have no objection to the
14 document, but where Mr. Tulchin is going is in
15 direct violation of the Court's order with
16 respect to the question of where betas came
17 from and the like, at least that's my
18 understanding. That would be my guess where
19 he's going.
20 I'm at somewhat of a disadvantage,
21 Your Honor, because you'll recall that
22 Mr. Constant came to testify and had to return
23 to England, so he will be back. I don't want
24 this document used for this witness. He knows
25 nothing about it. It's unfair, and it also � 10425
1 violates the Court's motion in limine.
2 THE COURT: Go ahead, Mr. Tulchin.
3 MR. TULCHIN: Your Honor, I'm not
4 using this to show that Novell acquired the
5 data in some improper way, only that Novell had
6 it.
7 And the third page -- my only question
8 to this witness is on the third page. There
9 was no objection, by the way, to this document
10 ever lodged, and I didn't think there was
11 anything controversial about it. The document
12 itself doesn't reveal how Novell obtained the
13 beta, and there's no question to this witness
14 on that subject that I plan to ask.
15 But at the very top of the third page,
16 it says test latest Windows 3.1 beta with
17 DR-DOS 6.0.
18 And all I wanted to do was to ask this
19 witness whether, as far as he understood it,
20 Novell had a copy of the Windows 3.1 beta.
21 Your Honor, on direct, of course, this
22 witness said that Novell was injured over a
23 course of years because it didn't get the betas
24 or didn't get them as frequently as other
25 companies. I think this is legitimate cross. � 10426
1 I have no intention of violating the Court's
2 order by trying to explore how they got it.
3 MS. CONLIN: Your Honor, I have no
4 objection to him asking the question: Did
5 Novell have access to the betas.
6 THE COURT: Okay.
7 MS. CONLIN: That is a legitimate
8 question. But to use this document with this
9 witness, I don't have an objection to the
10 document, David. I just have an objection to
11 the document being used with this witness who
12 knows nothing about it, and it's just unfair to
13 the witness.
14 MR. TULCHIN: Well, Your Honor, if he
15 knows nothing about it, it will be very brief.
16 He'll say I know nothing about it.
17 THE COURT: Okay. Just stay away from
18 the one thing. Off the record.
19 (The following record was made in the
20 presence of the jury at 8:53 a.m.)
21 THE COURT: Sorry for the delay.
22 You were offering 145?
23 MR. TULCHIN: Yes, sir.
24 MS. CONLIN: No objection.
25 THE COURT: It's admitted. � 10427
1 Q. Mr. Bradford, sorry for the delay.
2 If you could look at the third page --
3 well, let's just look at the first page for a
4 minute.
5 John Constant is somebody you've
6 mentioned in the past; correct?
7 A. Yes.
8 Q. And he worked at Digital Research?
9 A. That's right.
10 Q. And, of course, the other names we've
11 talked about. I think you've mentioned Steve
12 Tucker, Andy Wightman, and John Bromhead
13 before. I'm not sure about Glenn Stephens.
14 A. Right. All DRI employees.
15 Q. Okay. And I just would ask you, sir,
16 to turn to the top of the third page.
17 There's a heading at the top which
18 says Windows 3.X. Do you see that?
19 And just below it, there's an entry
20 that says, test latest Windows 3.1 beta.
21 That's the symbol, is it not, for
22 beta, the Greek beta letter?
23 A. I suppose, but I -- typically, you
24 write beta if you mean beta.
25 Q. But it says, test latest Windows � 10428
1 3.1 -- and maybe that's a beta -- with DR-DOS
2 6.0, et cetera.
3 And my only question to you,
4 Mr. Bradford, is whether or not as of January
5 25, '92, the date of this memo, you were aware
6 that Mr. Constant apparently had a copy or
7 Novell had a copy of the latest Windows 3.1
8 beta?
9 MS. CONLIN: Your Honor, I object to
10 the question as compound.
11 THE COURT: Overruled. He can answer
12 if he understands.
13 A. No, I had no personal knowledge of
14 that.
15 Q. Did you become aware at around this
16 time in 1992 that Novell was getting copies of
17 the 3.1 beta, the Windows 3.1 beta?
18 A. Not necessarily.
19 As a general proposition, I remember
20 the companies exchanging betas at some point in
21 time, and we talked ad infinitum about the
22 exchange of betas, so --
23 But I have no specific recollection of
24 DRI -- again, at this point in time, remember,
25 Digital Research was a separate legal entity � 10429
1 from Novell, Inc. They were operating pretty
2 much independently of what we were doing.
3 So I had no recollection of tests,
4 latest Windows 3.1 b, or beta, with DR-DOS 6.0.
5 MR. TULCHIN: May I approach the
6 witness, Your Honor?
7 THE COURT: Yes, you may.
8 Q. I want to give you two documents at
9 the same time, Mr. Bradford.
10 Just at the end of the day yesterday I
11 think one or both of us mentioned contracts
12 between Microsoft and Novell concerning betas,
13 and I've handed you Defendant's Exhibits 3628
14 and 3627.
15 Do you have them, sir?
16 A. I do.
17 Q. Are these indeed contracts between
18 Microsoft and Novell for the beta versions of
19 certain Microsoft products?
20 A. Well, let's read through.
21 I apologize, I don't have my glasses
22 on me.
23 MS. CONLIN: Do you have your glasses?
24 THE WITNESS: I don't have them on me.
25 They're in my coat at the back of the room. � 10430
1 MS. CONLIN: Do you want me to get
2 them for you?
3 THE WITNESS: Sure.
4 MS. CONLIN: Because you're squinting
5 like this.
6 A. So Microsoft Corporation nondisclosure
7 agreement.
8 Q. Are you looking at 3628?
9 A. Yes.
10 Q. Maybe we should wait till you get your
11 glasses.
12 A. Well, I think I should read that much.
13 Q. Okay.
14 A. If you want to highlight it for the
15 jury.
16 Q. Well, we can't do it until it's in
17 evidence.
18 A. So Microsoft Corporation nondisclosure
19 agreement is what it says at the top.
20 Q. And then it says prerelease product,
21 and you see where it says product name Chicago?
22 We'll wait for your glasses. I think
23 that will make things easier. And Ms. Conlin
24 is helping us all out.
25 MS. CONLIN: May I approach, Your � 10431
1 Honor?
2 THE COURT: You may.
3 A. Good.
4 So, again, this appears to be a
5 nondisclosure agreement that relates to a
6 prerelease version of Chicago.
7 Q. And the prerelease version, that
8 refers to the beta; correct?
9 A. Yes, in all likelihood.
10 Q. And if you look at the last page of
11 3628, you'll see a signature from Richard W.
12 King. Do you see that, sir?
13 A. Yes, I do.
14 Q. And he was a Novell employee?
15 A. Right. He was a vice president in our
16 Novell products group.
17 Q. And this was signed on or about
18 December 10, 1993; is that right?
19 A. Yes.
20 MR. TULCHIN: Microsoft offers
21 Defendant's Exhibit 3628.
22 MS. CONLIN: No objection.
23 THE COURT: It's admitted.
24 Q. Let's look briefly at 3627. We'll
25 come back to the other one. � 10432
1 But is this another contract for the
2 beta version of Chicago?
3 A. Again, it's a nondisclosure agreement,
4 as it says at the top, relating to -- and I'll,
5 you know, concede it's probably a prerelease or
6 beta version of Chicago.
7 So I don't know if it relates to a
8 product exchange or it relates to nondisclosure
9 associated thereto. I'd have to look through
10 the document.
11 Q. All right. And then if you'll look at
12 the third page, the last page of Exhibit 3627,
13 you'll see it was signed by someone named David
14 Moon, M-o-o-n, Moon of WordPerfect.
15 Do you see that, sir?
16 A. That's right. Dave was a vice
17 president within our WordPerfect division, and
18 this appears to have been signed May 1994. So
19 either shortly or just before Novell's
20 acquisition of WordPerfect.
21 Q. Okay.
22 MR. TULCHIN: We offer Exhibit 3627,
23 Your Honor.
24 MS. CONLIN: No objection, Your Honor.
25 THE COURT: Admitted. � 10433
1 Q. If we could look at 3628 first.
2 That's the 1993 nondisclosure agreement for
3 Chicago.
4 You're familiar with these sorts of
5 agreements or contracts, are you not, sir?
6 A. I'm familiar with nondisclosure
7 agreements, yeah.
8 Q. Okay. And you'll see in the paragraph
9 numbered one, it says, grant of license, and
10 then it says -- and I know there's a lot of
11 legal language here, but -- Microsoft grants
12 company -- and company refers to in this case
13 Novell; is that right?
14 A. Upon receipt, Microsoft, this
15 agreement signed and completed by the
16 individual organization indicated below
17 (company).
18 Okay, so if it's indicated below --
19 okay, yes.
20 Q. Okay. So Microsoft grants company or
21 Novell the right to use the product -- and the
22 product had been defined as Chicago; right?
23 A. Yes. Operating system and prerelease
24 development kit for that.
25 Q. Right. So that would include the beta � 10434
1 for Chicago or Windows 95; correct?
2 A. If these two are equivalent, yes.
3 Q. Okay.
4 A. It says PDK release. Product
5 development kit is what that refers to.
6 Q. Right. Prerelease development kit
7 maybe, PDK?
8 A. Yes.
9 Q. Okay. So Microsoft grants Novell the
10 right to use the -- we'll call it the beta
11 version of Chicago only for the purpose of
12 developing company's -- and then it has a list
13 of products; redirectors, transports, NetWare
14 directory services. I won't read them all,
15 Mr. Bradford, but it goes on.
16 -- to run on, connect to, or
17 interoperate with the product. That would be
18 Chicago; right?
19 A. Right.
20 Q. And testing such Novell products with
21 the beta version of Chicago for evaluating the
22 product for the sole purpose of providing
23 feedback to Microsoft.
24 Do you see that, sir?
25 A. Yes, I do. � 10435
1 Q. And then it talks about a biweekly
2 status report to Microsoft by Novell.
3 There's another sentence about the
4 feedback.
5 And then later on in this paragraph,
6 it says, provided that each such copy is used
7 only for the purposes stated above and used
8 only by the authorized individuals listed in
9 Section 4.
10 Do you see that, Mr. Bradford?
11 A. Can he highlight that? I'm sorry.
12 Q. Sure.
13 I don't want to -- if I'm going too
14 fast, I'll stop, because the sentence begins by
15 saying, Microsoft grants company, or Novell,
16 the nontransferrable right to make and use the
17 number of copies as described in Section 3,
18 provided that each such copy is used only for
19 the purposes stated above and used only by the
20 authorized individuals listed in Section 4.
21 Are you with me?
22 A. Yes.
23 Q. And then it goes on, the next
24 sentence -- actually, the one beyond that.
25 Company may not reverse engineer, � 10436
1 decompile or disassemble the product's
2 software. Company must cease use of the
3 product upon the earlier of either Microsoft's
4 public release of the commercial version or
5 upon request by Microsoft.
6 And then I want to turn to the --
7 well, let me ask this question.
8 These are common terms in these kind
9 of beta contracts, are they not?
10 A. Yes.
11 Q. All right. Let's go to the next page
12 -- maybe before we do, just noting Point 3 on
13 the first page, it says, copyright, the product
14 is owned by Microsoft.
15 And that's consistent with what we've
16 talked about before; correct, sir?
17 A. That's right.
18 Q. All right. And then if you go to the
19 second page, which is a continuation of
20 paragraph four, towards the top there is a
21 sentence that begins the names and product
22 development area of the attendees Microsoft may
23 send to a developer conference or identified in
24 Exhibit A.
25 And then it says this, until the � 10437
1 product is -- software is commercially released
2 by Microsoft, Novell agrees that the product
3 will not be made available, nor will Novell
4 assign any of the individuals identified in
5 Exhibit A, to the development teams of any
6 directly competing operating system product,
7 including personal NetWare, Novell DOS
8 development (DR-DOS), et cetera.
9 And I just want to stop there.
10 And again, sorry for all this legal
11 language, but what this contract provides is
12 that the beta version of Chicago may be used by
13 Novell for a number of purposes including
14 testing, but the development team for DR-DOS is
15 not authorized to get a copy of the beta
16 correct.
17 A. That's right. Under this agreement of
18 December 1993.
19 Q. All right. And again going back to
20 the document we looked at earlier this morning,
21 your notes of the meeting in San Francisco,
22 which was Exhibit 145, that's consistent with
23 what Mr. Gates and Mr. Noorda talked about at
24 that meeting?
25 A. In general, yeah. � 10438
1 MR. TULCHIN: So could we look at
2 Exhibit 3627?
3 Q. And I think we've already identified
4 this as another nondisclosure agreement for the
5 beta version of Chicago.
6 MR. TULCHIN: Let's just go to the
7 first page quickly. Look at the top.
8 Q. And as we discussed earlier, this is
9 from May of 1994 with WordPerfect?
10 A. That's right.
11 Q. And I want to -- well, the grant of
12 license, paragraph one, is substantially the
13 same as in the prior version. Does that look
14 right to you?
15 A. Okay. For purposes of our discussion
16 to move things along, yes.
17 Q. And paragraph three says, copyright,
18 the product is owned by Microsoft, as in the
19 other paragraph; correct?
20 A. Well, let's see. I don't want to be
21 too quick on that.
22 So if we look back on number one,
23 there's a grant of license, and as I just
24 perused I saw the term open doc in it.
25 Q. Right. It's not identical to the � 10439
1 paragraph one from the prior document, but
2 speaking lawyer to lawyer, the terms are
3 substantially the same, are they not?
4 And if you don't know, Mr. Bradford, I
5 don't want to spend a lot of time on that.
6 A. Right. For purposes of our discussion
7 today, without going into the details, let's
8 agree that it's substantially the same.
9 Q. Okay.
10 And then let's look at page 2 of
11 Exhibit 3627, the 1994 agreement with
12 WordPerfect.
13 And beginning three lines from the
14 top, you'll see a sentence which begins with
15 the word however.
16 And I just want to draw your attention
17 to that one sentence for the time being.
18 However, in no event shall company,
19 and in this case --
20 A. Can it get highlighted? I'm sorry.
21 Q. Yes.
22 MR. TULCHIN: Maybe we can, in fact,
23 make that a little larger for Mr. Bradford.
24 THE COURT: Can you see on your screen
25 there? � 10440
1 A. With all that language up there, it's
2 hard, unless it's highlighted in yellow.
3 That's great.
4 Q. You got it?
5 A. Yeah.
6 Q. So here the company refers to
7 WordPerfect, Mr. Bradford. Can we agree on
8 that?
9 A. Yes.
10 Q. Okay. And it says, however, in no
11 event shall company -- that is, WordPerfect --
12 disclose the product or related information to
13 the development teams of any operating system
14 products, including personal NetWare, Novell
15 DOS development (DR-DOS), et cetera.
16 And that's a clause that's similar to
17 the one we saw in 3628?
18 A. Yes.
19 Q. And again this is more or less
20 standard in these nondisclosure agreements
21 pertaining to betas, that one company that's
22 giving a beta to a competing company for
23 testing doesn't want that competing company to
24 actually provide the beta copy to the
25 development teams that are making products that � 10441
1 compete with the company that owns the beta;
2 fair enough?
3 A. As a very general proposition, I would
4 agree with that.
5 Q. All right.
6 MR. TULCHIN: May I approach, Your
7 Honor?
8 THE COURT: Yes.
9 Q. I'm handing you Plaintiffs' Exhibit
10 2132. And this is meeting minutes from a
11 meeting of August 18, 1994.
12 MR. TULCHIN: We offer this,
13 Plaintiffs' Exhibit 2132.
14 MS. CONLIN: Your Honor, we have no
15 objection to the document. It's a duplicate.
16 It is our document so we like it. But the --
17 but there's no foundation for its use with this
18 witness.
19 THE COURT: It's admitted.
20 MR. TULCHIN: Thank you, Your Honor.
21 Q. Just one question about this,
22 Mr. Bradford.
23 MR. TULCHIN: And maybe we could show
24 the first page and -- up to Point Number 2.
25 Q. This is meeting minutes of a meeting � 10442
1 called by Dave Miller; correct?
2 A. It appears to be that.
3 Q. And it's dated August 18, '94, and it
4 shows that there was a meeting in Provo, Utah;
5 correct? And I guess Redmond too?
6 A. Looks like a conference call perhaps.
7 Q. Right.
8 A. So there's -- Walnut Creek is actually
9 in northern California.
10 Q. Oh, I see.
11 A. Provo, Utah. Redmond, Washington.
12 Q. Okay. And Item 2 says, the beta
13 agreement has been signed and copies for
14 everyone on the list will go out Fed Ex today.
15 Do you know which beta agreement this
16 refers to?
17 A. I don't.
18 Q. Do you know whether this was an
19 agreement for Novell to get a beta of Chicago?
20 Is that what is being referred to?
21 A. I don't know.
22 Q. Okay. And actually, I do want to ask
23 you one other question about this document.
24 MR. TULCHIN: If we could look at the
25 paragraph numbered six. � 10443
1 Q. Microsoft asked why they had not
2 received a beta copy of 4.1 since it began
3 shipping as of August 15, 1994.
4 Now, is it your understanding from
5 looking at this document, Mr. Bradford, that
6 4.1 refers to the NetWare product that Novell
7 was selling?
8 A. Yes, I think that's right.
9 Q. So Microsoft was asking why Microsoft
10 hadn't received a beta copy of NetWare 4.1;
11 correct?
12 A. Yes, that appears to be the question.
13 Q. And apparently, according to these
14 meeting minutes, it was explained that we are
15 not doing our mass beta ship until September
16 and that Microsoft will get a copy of the beta
17 then.
18 And then it says, and we will do about
19 an eight-week cycle.
20 Do you see that, sir?
21 A. Yes.
22 Q. Do you understand, Mr. Bradford, that
23 it's common that beta versions of various
24 software products are sent out to the
25 recipients on various cycles? And here it � 10444
1 refers to an eight-week cycle. Would that be
2 more or less common and acceptable?
3 A. Sure.
4 Q. Thank you.
5 MR. TULCHIN: May I approach the
6 witness, Your Honor?
7 THE COURT: You may.
8 Q. I want to hand you, Mr. Bradford,
9 Defendant's Exhibit 2494.
10 And we talked about Mr. Jones
11 yesterday. Mr. Richard Jones was a software
12 engineer, right, at Novell?
13 A. Correct.
14 Q. And this is at the top an E-mail from
15 him dated January 13, 1995.
16 MR. TULCHIN: We offer this document,
17 Your Honor.
18 MS. CONLIN: No objection.
19 THE COURT: 2494?
20 MR. TULCHIN: Yes, sir.
21 THE COURT: It's admitted.
22 Q. And if we look at this, Mr. Bradford,
23 at the very top the E-mail from Mr. Jones says,
24 yes, we discovered that.
25 And to put some context in this, maybe � 10445
1 we ought to show the whole thing.
2 Mr. Jones had sent an E-mail to Ben
3 Hendrick. He was at Novell; correct?
4 A. That's right.
5 Q. And then it goes on to say, Jonlu. Is
6 that Jon Ludwig at Microsoft?
7 A. Where do you see Jon -- oh, I see
8 Jonlu.
9 Q. Yeah, I'm looking at the E-mail of
10 January 12 now, towards the bottom.
11 A. Okay. So from Richard Jones to Ben
12 Hendrick, Jodyg, Jonlu. I do not know Jonlu,
13 Jon L-u.
14 Q. Do you see Bobkr? Do you think that's
15 Bob Kruger at Microsoft?
16 A. Yes, that would be my guess. He was
17 the Microsoft representative that worked with
18 the name that's next to his from Novell, Dave
19 Miller.
20 Q. Okay. And from this E-mail, can you
21 tell, sir, whether or not Novell had a beta
22 version of Chicago, Windows 95, on January 12,
23 1995?
24 A. John. So this is from Richard Jones
25 to John. � 10446
1 I received the Build 306 CD this
2 afternoon. Thanks. We'll put it up on our
3 server for our team to install tonight.
4 I did get asked if this build requires
5 a beta ID and password as with Build 224. If
6 so, could you please send us that info.
7 So I don't know if you would classify
8 this as a classic beta, but it appears that
9 some form of a program was exchanged.
10 Q. Okay. And then the E-mail at the top
11 says preliminary feedback from the team -- and
12 this is written by Mr. Jones, the software
13 engineer at Novell -- is that it is noticeably
14 more stable than 224. Good work.
15 Do you see that, sir?
16 A. Yes, I do.
17 Q. Does this appear to be an example of
18 Microsoft and Novell cooperating when it comes
19 to the beta versions of Windows 95?
20 A. In this particular instance, yes.
21 Q. Okay.
22 MR. TULCHIN: May I approach the
23 witness, Your Honor?
24 THE COURT: You may.
25 Q. I'm handing you Defendant's Exhibit � 10447
1 2508.
2 Now, this contains two E-mails, one
3 from Mr. Stanton at Microsoft and the other
4 from Dave Miller of Novell, to Mr. Stanton. Do
5 you see that, sir?
6 A. Yes.
7 MR. TULCHIN: We offer Exhibit 2508,
8 Your Honor.
9 MS. CONLIN: No objection.
10 THE COURT: It's admitted.
11 Q. Now, Mr. Bradford, just briefly.
12 This is a little later now in January.
13 The E-mails are dated January 24th and January
14 25th, and the prior E-mails were from the 12th
15 and 13th.
16 And the E-mail from Mr. Miller of
17 Novell to Mr. Stanton -- I won't read it all,
18 but he's asking for access to Microsoft's
19 CompuServe forum for Win 95.
20 Do you see that, sir?
21 A. Yes.
22 Q. And then at the bottom, he says, can
23 we do this for this particular case? I
24 understand your sensitivity to allowing
25 everyone access, Dave. � 10448
1 Do you see that, sir?
2 A. Yes.
3 Q. Do you understand this E-mail when it
4 talks about sensitivity to allowing everyone
5 access to be a reference to the provision in
6 the contracts, the type of provision in the
7 beta contracts that we looked at earlier where
8 Novell and WordPerfect had agreed that people
9 working on DR-DOS should not get a beta version
10 of Chicago?
11 A. No. I think that would be an
12 overstatement.
13 Q. All right. And then you see
14 Mr. Stanton's response to Mr. Miller at the
15 top, January 24th.
16 And I must say it's a little confusing
17 because normally we see E-mails with the first
18 one at the bottom and the second one at the
19 top, but here the dates don't quite match that,
20 and I just want to make sure I point that out
21 to you because I'm not sure which is first and
22 which is second. The one at the top has the
23 date of January 24th.
24 Mr. Stanton says to Mr. Miller, the
25 private E-mail support provided directly by our � 10449
1 Windows 95 development team is the highest
2 level of support available, and we will
3 continue to focus our support for your Windows
4 client development this way.
5 Now, when it talks about Windows
6 client development, do you have any
7 understanding as to what that refers to,
8 Mr. Bradford?
9 A. Let's see. So we're at the top now.
10 The private E-mail support provided
11 directly by our Windows 95 development team --
12 so that's the Microsoft team.
13 Q. Right.
14 A. -- is the highest level of support
15 available.
16 So this is Paul telling this to Dave
17 Miller.
18 And we will continue, says Paul, to
19 focus our support for your Windows client
20 development this way.
21 And so what that is talking about, to
22 the best of my knowledge sitting here today, is
23 Novell had a product called the NetWare
24 operating system and it built a client for a
25 user interface. And I think it was important � 10450
1 that that Novell client interoperate with the
2 Windows operating system.
3 Q. And Mr. Stanton is saying to Mr.
4 Miller, this is the highest level of support
5 available.
6 Is there any reason that you know of
7 to doubt that that was the highest level of
8 support available to a software developer like
9 Novell?
10 A. I have no reason to doubt Paul
11 Stanton's remarks. I don't know Paul, but --
12 Q. Okay.
13 MR. TULCHIN: May I approach the
14 witness, Your Honor?
15 THE COURT: You may.
16 Q. I'm handing you Plaintiffs' Exhibit
17 2274, and we're now into April 1995. Little
18 bit later in the year.
19 MR. TULCHIN: Your Honor, we offer
20 Plaintiffs' Exhibit 2274.
21 MS. CONLIN: I think, Your Honor, it's
22 already admitted.
23 MR. TULCHIN: Oh, it may be.
24 MS. CONLIN: But if not, we have no
25 objection. � 10451
1 THE COURT: Let me check.
2 Very well. It's admitted.
3 MR. TULCHIN: Thank you.
4 Q. Mr. Bradford, Exhibit 2274 is just one
5 page, and there are two E-mails from April
6 1995; correct?
7 A. Correct.
8 Q. And the bottom one from Ben Hendrick
9 at Novell goes to I guess you'd say an alias
10 called Novsup, N-o-v-s-u-p, at Microsoft.com.
11 Do you know what that referred to or
12 who the recipients were under that alias?
13 A. No, I have no idea.
14 Q. You'll see that Mr. Hendrick --
15 Mr. Hendrick, of course, was with Novell;
16 right?
17 A. Yes, he was.
18 Q. And now we're in April of '95, and the
19 subject is updated Windows 95 builds.
20 And he says, in the spirit of getting
21 regular updates as they become available, I
22 have talked to several Novell external
23 customers and ISVs who received Build 437
24 CD-ROMs and are anticipating Build 440.
25 And I'll skip a little bit. � 10452
1 And then he asks, is it possible to
2 have you send the latest build to Richard
3 Jones?
4 Now, there's more, but I want to
5 concentrate on the answer that he gets from Jon
6 Ludwig at Microsoft.
7 MR. TULCHIN: If we could show that.
8 Q. That's later the same day; correct?
9 April 7, 1995, at 10:18 a.m., less than two
10 hours later?
11 A. Okay.
12 Q. And Mr. Ludwig says, you should
13 understand a little about our processes.
14 We send out a lot of intermediate
15 builds in very small batches to address
16 specific bugs that people have raised. The
17 people that get these builds are the ones that
18 have raised the specific bugs. The process is
19 very automated.
20 I just want to stop here.
21 Was it your understanding with the
22 normal process of distributing beta versions of
23 software that not every so-called build went to
24 every beta tester?
25 A. That's probably right. I don't know. � 10453
1 You've asked me what's typical out there, and
2 I'm not a software engineer --
3 Q. I understand.
4 A. -- distributing betas back and forth,
5 so I really don't have a good answer for that.
6 Q. Well, let me be more specific then.
7 Do you know whether Novell itself when
8 it distributed beta versions, let's say of
9 Novell NetWare, sent every build to every
10 single beta tester?
11 A. I think what you do in general in the
12 software industry is you would send a beta out
13 to a small group of people initially. Maybe
14 that's the alpha release or the prebeta release
15 or the beta release. That these releases go
16 out to a small group of people.
17 And then as you get feedback from
18 those people, then you would send out another
19 release, perhaps to a broader set of people.
20 So that's in response, I hope, to your
21 question.
22 Q. Okay. But looking again at this first
23 paragraph of Mr. Ludwig, he goes on to say, we
24 don't broadly distribute these builds to the
25 entire beta program, so you will absolutely � 10454
1 hear about people getting builds more current
2 than yours.
3 The more active you are on bug filing,
4 though, the more frequently you will get a
5 build. Honestly, we haven't seen a lot of bug
6 filings from Novell.
7 Now, is this consistent with your
8 recollection of what was going on at the time
9 in April '95 when it comes to Microsoft sending
10 betas to Novell?
11 A. Well, my recollection is that what's
12 extraordinary about these is that these go over
13 a four- or five-year period that both companies
14 have hundreds of products, especially Microsoft
15 had hundreds of products. Novell had, you
16 know, let's say 50 products.
17 And I would think that there would be
18 a lot more of these beta agreements if, in
19 fact, the companies were exchanging lots of
20 betas.
21 So, you know, these are -- relate to
22 specific instances where there was cooperation.
23 Q. Okay. And this is an example of
24 cooperation, Plaintiffs' Exhibit 2274; is that
25 correct? � 10455
1 A. It appears to be, yeah.
2 Q. And then just one last point here.
3 We have Novell and a lot of other ISV
4 partners on about a biweekly regular
5 distribution schedule outside of the above
6 process.
7 Do you see that?
8 A. Yes.
9 Q. Was this your understanding that
10 people at Novell were getting betas for Windows
11 95 as did other ISV partners on about a
12 biweekly schedule?
13 A. Well, it looks like if you read the
14 next sentence, it says that we are on daily
15 builds at this point and have been for some
16 time. It doesn't surprise me that the last
17 build you had was 326. You were scheduled to
18 get 340 sent out probably today.
19 So it sounds like some people were
20 getting daily builds and others were getting
21 biweekly builds. That's the way I read that.
22 Q. Biweekly would be, let's say --
23 A. Every other week.
24 Q. Yeah, every 14 days, and 326 and 340
25 is 14. So if there's a build every single day, � 10456
1 if there is, then you'd get it each 14th build;
2 correct?
3 A. Unless you were on the schedule
4 getting one 327, 328, 329, 335. I don't know.
5 Q. Right. Well, I think what Mr. Ludwig
6 says in his E-mail is the people who file bug
7 reports get the specific builds that respond to
8 their bug reports; correct?
9 A. Yes.
10 Q. And what he also says is that Novell
11 and a lot of other ISV partners are on a
12 biweekly schedule; correct?
13 A. Yes, I see that.
14 Q. Do you have any reason to doubt that
15 that's what was going on in April of 1995?
16 A. No, not as it relates to this specific
17 E-mail and build for 326, whatever that is.
18 MR. TULCHIN: May I approach, Your
19 Honor?
20 THE COURT: Yes.
21 Q. Mr. Bradford, I hand you Defendant's
22 Exhibit 2499. This is now a little later in
23 April, April 27, 1995.
24 MR. TULCHIN: And we offer this
25 document, Your Honor. � 10457
1 MS. CONLIN: No objection.
2 THE COURT: It's admitted.
3 Q. Again, this is one page, and at the
4 top you'll see there's an E-mail from Richard
5 Jones to Dave Miller and Ben -- I think it's
6 Ben Hendrick. Does that seem right? Ben
7 H-e-n-d?
8 A. Yes, that looks like it would be Ben
9 Hendrick.
10 Q. Right. And just going down a little
11 bit, if we could, there's an E-mail in the
12 middle which says -- it looks like it's from
13 Yvesm, Y-v-e-s-m, at Microsoft -- you will
14 receive Build 450 within two days as well.
15 And then Mr. Hendrick right above that
16 says, E-mail I got from Microsoft. I did not
17 see you guys on the CC line.
18 And then just above that, again, is
19 the E-mail from Mr. Jones to Miller and
20 Hendrick April 27, 1995.
21 Do you recall having seen this before,
22 sir?
23 A. No.
24 Q. Well, Mr. Jones says, we got it a
25 couple of days ago. � 10458
1 And that appears to be a response to
2 Mr. Hendrick when he says I did not see you
3 guys on the CC line; right?
4 A. Okay. Maybe walk me through that
5 again, but --
6 Q. Well, just below that, Mr. Hendrick
7 had said, E-mail I got from Microsoft. That
8 referred to the E-mail from Yvesm on April 24,
9 saying you will receive Build 450 within two
10 days?
11 A. Can I take a second to just read the
12 whole E-mail correspondence so I --
13 Q. If I go too fast and you need time,
14 just let me know.
15 A. In this particular instance, you're
16 moving pretty quickly.
17 Q. Sorry.
18 A. Okay.
19 Okay, so this appears to be a series
20 of correspondence between Ben Hendrick and
21 someone by the name of Yves at Microsoft and
22 started April 21st, 1995. Ben sends an E-mail
23 to Yves.
24 Yves responds, you will receive the
25 Build 450 within two days. � 10459
1 And I'm going from bottom to top now.
2 And Ben does an FYI, I believe to
3 Richard Jones probably in engineering, said
4 hey, look at this E-mail I got from Microsoft.
5 I did not see you guys on the CC line. So he's
6 providing them the information.
7 Q. Right.
8 A. And then Richard responds to Ben, we
9 got it a couple of days ago.
10 So now this is Richard's
11 correspondence of April 27th. So probably on
12 or about the 24th or 25th they got something
13 from Microsoft.
14 Q. Yes. And then Richard Jones, the
15 engineer, says, once a week is plenty good
16 enough for us. We really don't want it more
17 often than that.
18 Do you see that?
19 A. I do.
20 Q. Is that consistent with your
21 understanding that the engineers at Novell
22 didn't want betas more than once a week?
23 A. Well, no. This relates to a very
24 specific product, and it could be product
25 specific. Maybe they want the Windows Chicago � 10460
1 beta every day. Maybe they want Build 330 that
2 we referenced earlier, you know, once a week,
3 and maybe they wanted some other things once
4 every two weeks. It would be dependent on the
5 circumstances and where both parties are at in
6 their respective product development.
7 Q. Okay. But in your last answer, you
8 were sort of making some assumptions or maybe
9 some guesses about what was going on? Because
10 I want to know whether you have any specific
11 recollection about this.
12 A. Of this document?
13 Q. Yes, and what was going on --
14 A. No.
15 Q. -- around April 27, 1995.
16 A. Let's see, that's a very general
17 question.
18 Do you mean do I know what was going
19 on between Novell and Microsoft?
20 Q. With respect to the provision by
21 Microsoft of Windows 95 betas to Novell, that's
22 the subject.
23 A. I don't have any specific recollection
24 of this E-mail exchange or in general of that
25 particular topic that you're addressing. � 10461
1 Your question to me said was once a
2 week enough, and I responded that sometimes
3 daily would be great, sometimes once a week
4 might be great, sometimes every two weeks might
5 be fine. It just depended on where the
6 respective parties were in their product
7 development.
8 Q. All right. Well, one last thing about
9 this document.
10 Mr. Jones concludes his E-mail to
11 Mr. Miller and Mr. Hendrick by saying, I need
12 to emphasize to you guys that from our
13 perspective, Microsoft has been very -- all
14 capital letters -- responsive and supportive
15 since January 1995.
16 Now, does this appear to be another
17 instance where Microsoft is cooperating with
18 Novell?
19 A. Yes. And I think what's most
20 interesting there is that very responsive and
21 supportive since January of 1995. In other
22 words, prior to January of 1995 there was
23 definitely a perception that they were not
24 being cooperative.
25 Q. Of course it doesn't say that, you're � 10462
1 adding that?
2 A. Yes, I am.
3 MR. TULCHIN: May I approach, Your
4 Honor?
5 THE COURT: You may.
6 Q. Let me hand you Defendant's Exhibit
7 2502. And this at the top -- this has several
8 pages. It's three pages, Mr. Bradford, but at
9 the top its an E-mail from David Thompson at
10 Microsoft to Mr. Hendrick and other people.
11 Do you see that, sir?
12 A. Yes, I do.
13 MR. TULCHIN: We offer this document,
14 Your Honor.
15 MS. CONLIN: May I voir dire the
16 witness, Your Honor?
17 THE COURT: You may.
18 VOIR DIRE EXAMINATION
19 BY MS. CONLIN:
20 Q. Mr. Bradford, you've been very patient
21 about this.
22 None of these documents that you have
23 been shown over the last some time have you as
24 either the person who wrote the E-mail or on
25 the list of those who received the E-mail; is � 10463
1 that correct?
2 A. That's correct.
3 Q. And these are E-mails going between
4 the engineering department or the development
5 department of one company to another company;
6 correct?
7 A. That's right.
8 Q. And would you in the ordinary course
9 of your business have anything whatsoever to do
10 with this kind of an exchange?
11 A. No.
12 Q. And would you in the ordinary course
13 of your duties to Novell even see this kind of
14 thing?
15 A. No, not typically.
16 MS. CONLIN: Your Honor, we do not
17 object to the exhibit, but we believe that
18 there is no foundation for the continued use of
19 documents of this sort with this witness who
20 has not seen them and who is not an engineer.
21 THE COURT: Objection is overruled.
22 It's admitted.
23 CROSS-EXAMINATION (CONT'D)
24 BY MR. TULCHIN:
25 Q. Mr. Bradford, looking at Exhibit 2502, � 10464
1 and I want to focus your attention towards the
2 top.
3 The date of the first E-mail is
4 October 9, 1995. Now, by this time, Windows 95
5 has been released; right? Because we know it
6 was on your anniversary in 1995.
7 A. That's right.
8 Q. Okay. That was in August. Now we're
9 in October.
10 And just below that there's an E-mail
11 from Mr. Jones, the same Mr. Jones who is a
12 software engineer at Novell, to Jon Ludwig at
13 Microsoft and Yves Michali at Microsoft and
14 also to Mr. Hendrick and other people. And
15 it's dated Monday, October 9, 1995.
16 Do you see that?
17 A. Yes, I do.
18 Q. And he writes to Ben. That must be
19 Ben Hendrick; right?
20 A. Yes.
21 Q. And he says, I had asked Yves Michali
22 for a copy back in July and Jon Ludwig
23 responded and declined the request at that time
24 because they were working out some internal
25 details. I don't believe we have been � 10465
1 discriminated against.
2 Do you see that, sir?
3 A. I do.
4 Q. And then below it says, we just
5 haven't asked since July, I will ask again.
6 Right at the bottom.
7 A. Yes, I see that.
8 Q. Now, in connection, Mr. Bradford, with
9 your testimony on direct examination, that
10 Novell you say wasn't getting the betas as
11 frequently as some other companies, did you
12 have occasion to look at this E-mail from
13 Mr. Jones which says I don't believe we have
14 been discriminated against?
15 A. No, I have never seen this E-mail.
16 And, again, it relates to a specific point in
17 time to a specific beta.
18 MR. TULCHIN: May I approach the
19 witness, Your Honor?
20 THE COURT: You may.
21 Q. Mr. Bradford, I'm handing you
22 Defendant's Exhibit 814.
23 And the first page is a fax cover
24 sheet, or so it appears. And if you turn to
25 the second page, there's a memorandum from � 10466
1 Mr. Sobin at the law firm of Ablondi & Foster
2 to you of October 21, 1992; is that correct,
3 sir?
4 A. Yes.
5 Q. And you received this memorandum from
6 your lawyers on or about that time?
7 A. To the best of my recollection, yes.
8 Q. I just want to ask you one thing about
9 Exhibit 814, but before I do, let me ask you
10 the general question.
11 Do you recall in 1992 that Dick
12 Williams, who had been president of DRI -- and
13 remember, I think you testified that he left
14 Digital Research in or around April of '92, he
15 resigned?
16 A. That's right.
17 Q. Do you recall hearing that
18 Mr. Williams believed that at least some of the
19 problems that had caused the deteriorating
20 sales of DR-DOS were Novell's fault?
21 A. He may have said that that was a
22 factor. It's not particularly riveting in my
23 mind today, but Dick may have said something --
24 he was frustrated.
25 Again, during this time period Novell � 10467
1 was keeping kind of arm's length from this
2 company that we had purchased, and so Dick may
3 have had a perception that there was fault on
4 Novell's part without having access to all the
5 facts and information about what Novell was
6 doing and the discussions we were having at the
7 time with Microsoft.
8 Q. Well, if I could just ask you to look
9 briefly at the second page. It's the third
10 page of the document, the second page of the
11 memo from Mr. Sobin to you, and just -- I want
12 to see if this refreshes your recollection.
13 If you could just read to yourself the
14 paragraph that is the first full paragraph on
15 the second page. It starts there are obvious.
16 Do you see that?
17 A. Okay.
18 Q. And in particular, the sentence that
19 begins for example.
20 A. Yes.
21 Q. And my question to you, Mr. Bradford,
22 is whether this memorandum to you in October
23 1992 from Mr. Sobin refreshes your recollection
24 that at that time, Dick Williams, the former
25 president of Digital Research, had expressed � 10468
1 the belief that at least some of the problems
2 that led to Novell's deteriorating sales had
3 more to do with Novell than Microsoft?
4 A. It refreshes my recollection that Dick
5 thought that some of the problems with respect
6 to deteriorating sales related to Novell's
7 problem and not necessarily Microsoft's.
8 Q. Okay. Thank you.
9 MR. TULCHIN: May I approach the
10 witness, Your Honor?
11 THE COURT: You may.
12 Q. I hand you, sir, Defendant's Exhibit
13 2535 entitled Novell business applications
14 business plan.
15 Do you recall having seen this before,
16 sir?
17 A. No, not immediately it doesn't come to
18 mind, but I may have seen it before.
19 Q. Do you recognize this document as a
20 Novell business application business plan
21 written around April 3, 1995?
22 A. Yes, that's -- that appears to be
23 accurate.
24 It says 1996 to 1998 at the top, so
25 that confused me for a second. But it appears � 10469
1 to be someone's writing on April 3, 1995,
2 projecting into the future what we need to do
3 with respect to our applications division.
4 MR. TULCHIN: Your Honor, Microsoft
5 offers into evidence Defendant's Exhibit 2535.
6 MS. CONLIN: No objection.
7 THE COURT: It's admitted.
8 Q. I just want to look at the first page
9 very briefly, Mr. Bradford.
10 As I think you were just saying, this
11 is a business plan, and it does say draft on it
12 at the bottom, draft Novell confidential right
13 at the bottom.
14 A. Yes.
15 Q. But it appears to have been written
16 around April 3, '95, and it pertains to
17 Novell's applications products; correct?
18 A. It appears to be that.
19 Q. So the applications products would be
20 -- it's not DR-DOS. It's WordPerfect and
21 Quattro Pro and maybe suites as well, is that
22 what you would say?
23 A. Yes, uh-huh.
24 Q. All right. And were these kinds of
25 business plans -- you see right at the top it � 10470
1 says Novell business applications business
2 plan? Were these type of business plans
3 prepared at Novell from time to time?
4 A. Yes.
5 Q. And if you need time to look at
6 specific portions of this, Mr. Bradford, please
7 take it.
8 But I want to just go up a few pages
9 into this document, and you'll see Roman number
10 III, marketplace analysis, which begins on the
11 page that's numbered page 4.
12 Do you see that, marketplace analysis?
13 A. Yes, I see that.
14 Q. And it talks about customer market
15 analysis, and then if you go all the way into
16 page 8 -- I'm sorry, it's page 9, at the very
17 top, it says, company weaknesses that hinder
18 Novell business applications.
19 Do you see that, sir?
20 A. I do.
21 Q. And in that section, the author of
22 this business applications business plan sets
23 forth weaknesses that are Novell weaknesses.
24 When he says company, he or she, he
25 says company, that refers to Novell; correct? � 10471
1 A. That's correct.
2 Q. And then it has a list of Novell
3 weaknesses that hinder Novell business
4 applications. And again we're talking about
5 WordPerfect, we're talking about Quattro Pro,
6 and also suites of applications; is that right?
7 A. All right.
8 Q. And it says lack of ownership on the
9 desktop. Then it says weak development tools.
10 Were development tools important in
11 the success of business applications in
12 competing in the marketplace?
13 A. That's better -- I'm sure they were a
14 factor and important, but better ask a software
15 engineer.
16 Q. Okay. The third bullet point says
17 weak developers' program which has atrophied
18 over the last few years.
19 Do you recall at the time that the
20 developers' program had atrophied at Novell?
21 A. I don't recall that.
22 Q. And then the next point says, weak
23 vis-a-vis Microsoft in perception for corporate
24 strategy, vision, and ability to develop
25 software. � 10472
1 Do you see that?
2 A. Yes, I see that.
3 Q. In your role as a member of the
4 executive committee at Novell, was it your
5 understanding at the time in 1995 that there
6 was nothing more fundamental when it comes to
7 success in the software business than corporate
8 strategy, vision, and ability to develop
9 software?
10 A. That was important, certainly.
11 Q. And then it goes on a couple more
12 bullet points, lack of perception among
13 customers that Novell is a corporate strategic
14 partner like Microsoft.
15 Was it your understanding as a member
16 of the executive committee that that was
17 important too?
18 A. I recall it being an important factor,
19 but I don't recall that there was a perception
20 among customers that Novell is a -- was not as
21 good a corporate strategic partner as
22 Microsoft.
23 Q. Okay. Just going down two more --
24 A. I think it's -- well, we don't know
25 who wrote this or -- right? I don't know who � 10473
1 wrote this.
2 Q. Fair enough, Mr. Bradford.
3 A. Right, okay.
4 Keep going.
5 Q. Sure. I'm going to just go to a
6 couple more of these type of things.
7 But two more bullet points down, we
8 talked yesterday about the sales force at
9 WordPerfect, and you'll remember that you
10 mentioned on direct that a number of members of
11 the sales team from the WordPerfect
12 organization had been laid off at the time that
13 Novell bought WordPerfect; right?
14 A. Yes.
15 Q. And here the author of this memorandum
16 says, over 50 percent of sales force does not
17 understand applications, changing but slow.
18 Over 95 percent of sales force does not
19 understand Quattro Pro or electronic publishing
20 tools.
21 Now, that sounds pretty basic, does it
22 not, for a company trying to sell software that
23 your sales force understand the products?
24 A. That would be important.
25 Q. And then if we can look at the bottom � 10474
1 half of the page, the top half was a reference
2 to company weaknesses, and the bottom half
3 talks about division (group) weaknesses.
4 Do you see that?
5 A. Yes, I do.
6 Q. And the first bullet point says, third
7 to suite market. Microsoft has enormous
8 momentum.
9 Microsoft was the first to come out
10 with a suite; correct?
11 A. I'm not sure.
12 Q. Did you recall that --
13 A. I'm not sure. They were certainly one
14 or two. I don't know if someone came out with
15 a suite before Microsoft.
16 Q. Okay.
17 A. But this appears that this author,
18 whoever it is, says that we were third to suite
19 market.
20 Q. Right. And the next bullet point
21 says, still recovering from WordPerfect 6.0 for
22 Windows which was perceived as a slow and buggy
23 product.
24 Do you recall that, that the
25 WordPerfect 6.0 product was perceived in the � 10475
1 marketplace as slow and buggy?
2 A. No, but I'd have to think that if it
3 was, it related to some extent to the fact that
4 we couldn't get betas application programming
5 interfaces, et cetera, from Microsoft.
6 Q. And let's go down a little bit
7 further.
8 Weak development environment for
9 Perfect Office. Now, Perfect Office was the
10 Novell suite that was supposed to be competing
11 with Microsoft Office; correct?
12 A. That's correct.
13 Q. What is this a reference to, if you
14 know, sir, weak development environment?
15 A. I don't know sitting here today what
16 this author had in mind there.
17 Q. All right. Towards the bottom of the
18 page, it says, weak at localization compared to
19 Microsoft and Lotus.
20 And I just want to pause on this.
21 Is localization a reference to the
22 fact that in countries around the world,
23 software is written for the language that's
24 used in those particular countries?
25 A. That's right. � 10476
1 Q. So let's say in portions of South
2 America, your software product would actually
3 be in Spanish?
4 A. That's right.
5 Q. And localization just means you're
6 writing for the local language?
7 A. That's right.
8 Q. And was it your recollection around
9 1995 that Microsoft and Lotus both were much
10 better at putting their English version
11 software products in local languages than
12 Novell had been?
13 A. No, I don't have an understanding on
14 that.
15 Q. You don't have an understanding one
16 way or another?
17 A. That's right.
18 Q. Okay.
19 MR. TULCHIN: Your Honor, I don't know
20 if it's too early for the break, but this is a
21 good time for me if it suits the Court.
22 THE COURT: Sure. We'll take our
23 recess at this time.
24 Remember the admonition previously
25 given. We'll be in recess for ten minutes. � 10477
1 Leave your notebooks here. Thank you.
2 (A recess was taken from 9:50 a.m.
3 to 10:14 a.m.)
4 THE COURT: Everyone else may be
5 seated.
6 Mr. Bradford, you're still under oath.
7 MR. TULCHIN: May I approach the
8 witness, Your Honor?
9 THE COURT: You may.
10 BY MR. TULCHIN:
11 Q. Mr. Bradford, I'm handing you what
12 we've marked as Defendant's Exhibit 6787A. And
13 these are pages from -- it's not the full
14 document, but certain pages from a Form 10-K
15 filed with the Securities and Exchange
16 Commission by Novell.
17 Do you recognize this, sir?
18 A. Yes, in general.
19 Q. Could you explain to the jury what a
20 Form 10-K is?
21 A. When there is a -- let's see, so the
22 10-Q -- so this is an annual report.
23 Q. Yes, sir.
24 A. An annual report to stockholders about
25 the company's work. � 10478
1 Q. And this particular one, Mr. Bradford,
2 was for the Novell's fiscal year ended October
3 29, 1994; correct?
4 A. I'm looking to find that date. I'm
5 sorry.
6 Q. Just on the first page under the words
7 Form 10-K, there's three lines, and the third
8 one says for the fiscal year ended October 29,
9 1994?
10 A. I'm looking above that, and this looks
11 like as of December 31, 1994.
12 Q. Well, let me back up one step.
13 Novell's fiscal year at the time ended
14 in late October; correct?
15 A. Yes, that's right.
16 Q. And I know there's a reference to the
17 number of outstanding shares as of December
18 31st --
19 A. Right.
20 Q. -- '94.
21 A. Okay.
22 Q. But this is for the fiscal year ended
23 late October, 1994; correct?
24 A. That's right, correct.
25 MR. TULCHIN: Your Honor, Microsoft � 10479
1 offers Defendant's Exhibit 6787A.
2 MS. CONLIN: No objection.
3 THE COURT: Admitted.
4 Q. And, Mr. Bradford, the Form 10-K is
5 prepared by Novell; is that right?
6 A. That's correct.
7 Q. And as the general counsel of Novell
8 at the time, would it have been part of your
9 duties and responsibilities to review at least
10 portions of the Form 10-K to make sure that
11 they were accurate and appropriate?
12 A. Yes.
13 Q. Did you review the portions of the
14 Form 10-K, the pages that make up Defendant's
15 Exhibit 6787A?
16 A. I don't know sitting here today if I
17 reviewed these particular ones, but typically,
18 I would peruse the entire 10-K.
19 Q. To make sure it was accurate before it
20 was filed; is that right?
21 A. That's right.
22 Q. What I want to do for the moment is to
23 -- well, let's look just at the first page for
24 a minute.
25 And at the top it says, Securities and � 10480
1 Exchange Commission, and that's a part of the
2 federal government in Washington; correct?
3 A. That's right.
4 Q. And then Form 10-K, and just under
5 that, there are those three lines I was
6 referring to, annual report -- there's an X
7 there -- annual report pursuant to Section 13
8 or 15D of the Securities Exchange Act of 1934,
9 for the fiscal year ended October 29, 1994.
10 And then I want to direct your
11 attention to page 9 of the document. It's the
12 fourth page of the exhibit, again, 6787A.
13 The first full paragraph starts, in
14 the market for Microsoft Windows word
15 processing applications.
16 Do you see that?
17 A. Yes, I do.
18 Q. I know this is a little -- the type --
19 the print face is very small, but this
20 particular paragraph talks about applications
21 products like suites and word processing
22 applications and spreadsheet applications;
23 correct?
24 A. Yes. And so this is under -- just to
25 get the document right, this looks like under � 10481
1 the competition section.
2 Q. Correct.
3 A. Okay.
4 Q. Yes, on page 8, the previous page, the
5 section is entitled competition.
6 A. Right.
7 Q. And I want to direct your attention in
8 this paragraph, about halfway down there's a
9 sentence that begins in addition.
10 In addition, the company's principal
11 competitors, including Microsoft, are combining
12 a number of application programs in a bundle or
13 suite for sale as one unit or arranging with
14 hardware manufacturers to preload application
15 programs on new computers.
16 Do you see that, sir?
17 A. Right.
18 Q. And at the time, of course, by the end
19 of -- sorry, I think we talked yesterday about
20 the fact that as of October '94, Novell had not
21 yet come out with its suite that competed in
22 this market; correct?
23 A. Yes, I think that's accurate.
24 Q. And then it goes on to say, the price
25 for a bundle or suite is typically � 10482
1 significantly less than the price for
2 separately purchased applications and many end
3 users are likely to prefer the bundle or suite
4 over a more expensive combination of other
5 individually purchased applications, even if
6 the latter applications offer superior
7 performance or features.
8 Do you see that, sir?
9 A. Yes.
10 Q. And is it your recollection of the way
11 your responsibilities worked at Novell at the
12 time that this is a sentence that you would
13 have reviewed and approved before Novell filed
14 the 10-K with the Securities and Exchange
15 Commission in Washington?
16 A. Well, if we had the full document
17 here, I think we would see that it's probably a
18 very lengthy one --
19 Q. It is. I have the full one if you
20 want it.
21 A. -- with all of the attachments and so
22 forth.
23 But to say I reviewed this particular
24 sentence on that particular day, I can't
25 testify to that today. � 10483
1 But typically, I would have, like I
2 said, perused the whole thing for accuracy.
3 Q. And is it, let's say, consistent with
4 your understanding today that as of 1994 the
5 statement that I just read about suites was
6 true and correct?
7 A. Yes, that's generally accurate. We
8 talked about that yesterday.
9 Q. Right. And then it says, Microsoft,
10 Lotus and the company offer bundles or suites
11 of their respective products at prices
12 significantly discounted from the prices of
13 stand-alone products.
14 Do you see that, sir?
15 A. Yes, I see that.
16 Q. And would you agree with me that
17 that's something that was good for consumers?
18 A. Yes, definitely.
19 If that were always the case, that was
20 definitely a positive for consumers.
21 Q. Okay. And looking at the last page of
22 Exhibit 6787A, would you agree that this Form
23 10-K was signed by Mr. Frankenberg, the CEO,
24 and also by the other members of the board of
25 directors of Novell? � 10484
1 A. Well, looking down, you've got Bob
2 Frankenberg, who was the CEO; Jim Tolonen, who
3 was the CFO, the chief financial officer; and
4 then you had Steve Wise, who was vice president
5 of finance at the time; and then, yes, the
6 other members that have signed this were
7 members of the Novell board of directors at the
8 time.
9 Q. Thank you, sir.
10 MR. TULCHIN: May I approach, Your
11 Honor?
12 THE COURT: You may.
13 Q. I'm handing you, Mr. Bradford,
14 Defendant's Exhibit 6790A.
15 And, again, this isn't the full
16 document, this is an excerpt. If you want the
17 full document, it's in the courtroom and we'll
18 show it to you.
19 But this is the -- these are pages
20 from Novell's 1997 annual report; correct, sir?
21 A. It appears to be that. Yes, annual
22 report to our stockholders, all right.
23 Q. Right. And is the annual report
24 typically mailed out to the stockholders of
25 record of Novell? � 10485
1 A. That's right.
2 Q. And that would be done once a year?
3 A. That's correct.
4 Q. Now, in this case -- oh, let me --
5 sorry.
6 MR. TULCHIN: Your Honor, Microsoft
7 offers Defendant's Exhibit 6790A.
8 MS. CONLIN: No objection.
9 THE COURT: It's admitted.
10 Q. The first page of the exhibit,
11 Mr. Bradford, is just the cover of the annual
12 report; correct?
13 A. That's right.
14 Q. And typically the chief executive
15 officer, the CEO of Novell, during the period
16 you were general counsel would write a letter
17 to stockholders that would be included as part
18 of the annual report; correct?
19 A. That's right.
20 Q. This 1997 annual report has a letter
21 to stockholders that was signed by Doctor Eric
22 Schmidt.
23 A. Right.
24 Q. Isn't that right?
25 A. Yes. � 10486
1 Q. And if we could look at the last page
2 of the document, that's Doctor Schmidt's
3 signature there, is it not?
4 A. Yes.
5 Q. And I think you testified on direct
6 that when you resigned in the year 2000, you
7 went into Doctor Schmidt's office and tendered
8 your resignation?
9 A. That's right.
10 Q. Doctor Schmidt was the man who took
11 over from Bob Frankenberg as the CEO?
12 A. Yes. There was an interim period
13 there where there was no CEO assigned, but,
14 yes.
15 Q. He was the next CEO after Mr.
16 Frankenberg?
17 A. Yes.
18 Q. Okay. And the letter that went out to
19 the stockholders as part of the annual report,
20 was this also something that you reviewed and
21 commented on before it was included and sent
22 out to the stockholders?
23 A. Yes, it was.
24 MR. TULCHIN: Could we look at the
25 second page of the document, the first page of � 10487
1 Doctor Schmidt's letter, which is entitled to
2 our shareholders.
3 Q. And right at the top, Doctor Schmidt
4 says -- there's a little bit of an arrow. And
5 this is how he starts out the 1997 letter to
6 stockholders. Clarity of direction and
7 strategy are essential for software companies
8 to sustain growth.
9 Now, let me just stop there,
10 Mr. Bradford.
11 I think you and I agreed you testified
12 that clarity of direction and strategy are
13 essential for software companies.
14 A. That's right.
15 Q. And then Doctor Schmidt goes on to
16 say, the Novell that I joined in April of 1997,
17 midway through the company's fiscal year, had
18 lost touch with this simple truth. In seven
19 months we have corrected that.
20 My question to you, Mr. Bradford, is
21 whether or not you agree that as of April
22 1977 --
23 THE COURT: '97?
24 MR. TULCHIN: What did I say, Your
25 Honor? � 10488
1 THE COURT: '77.
2 THE WITNESS: We're back in college.
3 MR. TULCHIN: I'm 20 years off, and I
4 apologize to all concerned.
5 Q. I'm going to ask my question again.
6 Do you agree, Mr. Bradford, with
7 Doctor Schmidt's statement here that as of
8 April 1997, Novell had lost touch with the
9 simple truth that clarity of direction and
10 strategy are essential for Novell to sustain
11 growth?
12 A. I think it was a bit of an
13 overstatement. He's trying to communicate
14 effectively with the stockholders. But in
15 general, certainly Doctor Eric Schmidt had a
16 concern on that issue.
17 Q. And it was correct, was it not, that
18 as of 1997, Novell had lost touch with the idea
19 that clarity of direction and strategy were
20 important for its growth?
21 A. Again, I think that's an
22 overstatement.
23 MR. TULCHIN: Thank you, Mr. Bradford.
24 Nothing more on cross, Your Honor.
25 THE COURT: Very well. Redirect. � 10489
1 MS. CONLIN: Thank you, Your Honor.
2 REDIRECT EXAMINATION
3 BY MS. CONLIN:
4 Q. Let's stay with this document for a
5 moment, if we could.
6 A. Okay.
7 Q. Doctor Eric Schmidt, for what period
8 of time was he Novell's CEO?
9 A. Approximately four years, five years,
10 perhaps.
11 Q. And came in '97, left in --
12 A. 2001 or 2002.
13 Q. What is his current position, do you
14 know?
15 A. Yes. He is lucky enough to be
16 chairman and CEO of Google.
17 Q. And I have a few questions -- I better
18 not say that. I have more than a few questions
19 for you.
20 A. Okay.
21 Q. We won't cover every topic, but there
22 are some that I think deserve attention.
23 First of all, let's begin with
24 Defendant's Exhibit 6770. Do you remember, the
25 document is the Arnold & Porter list of OEMs � 10490
1 who have --
2 MS. CONLIN: May I approach, Your
3 Honor?
4 THE COURT: Yes.
5 Q. -- who have licensed the DR-DOS
6 product?
7 A. Yes, I see that.
8 Q. Do you know approximately, in this
9 time frame back in the early '90s,
10 approximately how many computer hardware
11 manufacturers there would have been in the
12 world?
13 A. Well, as I recall, we talked about 247
14 here. I would guess, and this is just an
15 estimate, 10,000.
16 Q. Do the top 20 or so of those 10,000
17 OEMs sell 80-plus percent of the computers that
18 are sold?
19 A. Yes, that's my understanding.
20 Q. So on that list, Mr. Bradford, are
21 there any of the top 20 that DRI has managed to
22 secure as customers?
23 A. I could look at it in detail, but I
24 really doubt it.
25 Q. All right. Don't look at it in � 10491
1 detail.
2 A. Okay.
3 Q. I want to talk with you also about
4 Mr. Noorda and his health and your concerns
5 about it.
6 Did you in 1993 -- 1992, 1993, 1994,
7 until April when he left the company, did you
8 feel that Mr. Noorda continued to be capable of
9 running Novell?
10 A. Certainly, yes.
11 Q. If a point had come before his
12 voluntarily leaving where you felt he was not,
13 what would your obligation have been?
14 A. Report it to the board of directors.
15 Q. Did you ever do that?
16 A. No.
17 Q. And would you have done that if, in
18 fact, you doubted his ability to proceed as
19 CEO?
20 A. Yes.
21 Q. And then he stepped down in April of
22 1994; correct?
23 A. That's right.
24 Q. After that and based on your
25 continuing contact with him, did his state of � 10492
1 mental health get better or worse?
2 A. It got worse.
3 Q. All right. You were also asked about
4 some questions with regard to the revenue of
5 Novell in the mid '90s.
6 Do you recall those questions?
7 A. Yes, in general.
8 Q. And I believe that Mr. Tulchin
9 provided to you a number of approximately $2
10 billion in sales revenue for Novell.
11 Do you recall that.
12 A. Yes, I do.
13 MS. CONLIN: If I may approach, Your
14 Honor?
15 THE COURT: You may.
16 MS. CONLIN: May I give the Court a
17 copy, as well?
18 THE COURT: Thank you.
19 Q. Do you recognize this, Mr. Bradford,
20 as an annual report that Novell provided to the
21 SEC? It's actually not the whole report. It
22 is only a tiny section of it.
23 A. I think what this is is a Microsoft --
24 Q. I'm sorry, Microsoft.
25 A. -- SEC filing. � 10493
1 Q. That would be correct; I'm sorry.
2 So Exhibit 4220, which is admitted, is
3 the annual report of Microsoft -- it's so hard
4 to see the dates on these -- for the fiscal
5 year ended June 30th, 1999?
6 A. Yes. Okay, I see that at the top.
7 Q. If you'll turn to the one page that I
8 have attached and look to the bottom table, the
9 year ended June 30th, and you will see a series
10 of numbers there in the billions.
11 A. Yes.
12 Q. All right. And so for the year 1995,
13 if Novell had $2 billion in sales, Microsoft
14 had about three times that many, 6 billion 75
15 million; correct?
16 A. That's right.
17 Q. And then for the year '96, 9 billion?
18 A. Right.
19 Q. For the year '97, 11 billion?
20 A. Yes, almost 12 billion.
21 Q. All right. And then for the year '98,
22 15 billion?
23 A. Yes.
24 Q. And for 1999, nearly 20 billion;
25 correct? � 10494
1 A. That's right.
2 Q. Mr. Tulchin also talked with you about
3 the merger talks that Novell had with Lotus.
4 Do you recall those conversations?
5 A. Yes, I do.
6 Q. And Mr. Tulchin insisted that they had
7 occurred in 1991. Do you recall that?
8 A. Yes.
9 Q. And your memory was that they occurred
10 in 1990?
11 A. That's right.
12 Q. And that they were long over before
13 any communications with Microsoft began with
14 that phone call from Bill Gates?
15 A. That's right.
16 Q. Let me show you Exhibit 10017.
17 MS. CONLIN: May I approach the
18 witness, Your Honor?
19 THE COURT: Yes.
20 MS. CONLIN: May I show the Court a
21 copy, as well?
22 THE COURT: Yes, thank you.
23 Q. What I've handed you, Mr. Bradford, is
24 an article from the Microsoft library. It is
25 an IDC PC software -- to IDC PC software � 10495
1 clients. And do you recall what IDC is?
2 A. Yes. It's an industry analyst group.
3 Q. All right. And this is dated April 6,
4 1990?
5 A. Correct.
6 Q. Not '91?
7 A. That's right.
8 Q. And the headline is Lotus and Novell
9 agree to merge. Do you see that?
10 A. Yes, I do.
11 MS. CONLIN: Your Honor, Plaintiffs
12 would offer Exhibit 10017, not for the truth of
13 the matter asserted, but as a document from the
14 Microsoft library that Microsoft was aware of,
15 and also for the purpose of establishing the
16 date of the public notice of these merger
17 discussions.
18 MR. TULCHIN: On that basis, Your
19 Honor, we have no objection.
20 THE COURT: It is admitted.
21 Q. And you can see that the headline is
22 Lotus and Novell agree to merge, and then if we
23 could look just at the first sentence, Lotus
24 Development Corporation and Novell announced --
25 today announced -- actually it says today � 10496
1 announced today an agreement to merge the two
2 companies.
3 Is that consistent with your
4 recollection?
5 A. Yes, it is.
6 Q. And the talks with Microsoft first
7 merger talks -- that very first thing that
8 started in November of 1989, that's over at
9 that point?
10 A. Right. That ended approximately
11 January of 1990, and then we started
12 discussions with Lotus after that, and those
13 began April 6 of 1990, and the discussions --
14 the merger -- a tentative agreement with Lotus
15 to merge stopped about a month later, sometime
16 in May of 1990.
17 Q. I have that too.
18 A. Okay, I'm sorry.
19 Q. But I think you may have misspoken.
20 You said the merger talks started on April 6,
21 and, in fact, that's when the letter of intent
22 was signed; correct?
23 A. That's correct.
24 Q. Right. And then let me show you, if I
25 may, Plaintiffs' Exhibit 10016. � 10497
1 MS. CONLIN: May I approach, Your
2 Honor?
3 THE COURT: Yes.
4 Q. And this is an article from USA Today,
5 and the date is 5-21-91. And -- I beg your
6 pardon. It's '90. 5-21-90.
7 And is this article consistent with
8 your recollection of the date when the Lotus
9 and Novell merger talks collapsed?
10 MR. TULCHIN: Your Honor, mine says
11 '91. I don't know when this article was
12 published, but it -- I read this as '91.
13 MS. CONLIN: That is not correct. I
14 have a number of other articles, Your Honor.
15 If you will just give me a moment to find them
16 here in my --
17 THE COURT: Sure.
18 MS. CONLIN: I have no idea what
19 number, and I have only one copy of these.
20 Perhaps I could show these to
21 Mr. Tulchin for the purpose of establishing the
22 date.
23 May I do that, Your Honor?
24 THE COURT: Yes.
25 MS. CONLIN: It is a bit hard to read. � 10498
1 Can we stipulate the date the merger
2 collapsed was 5-21-90?
3 MR. TULCHIN: Your Honor, I don't know
4 one way or another. I see what's written in
5 hand on those documents. I don't know the
6 date.
7 MS. CONLIN: I will provide additional
8 information about this, Your Honor.
9 THE COURT: Okay.
10 MS. CONLIN: But I would at this point
11 offer into evidence Plaintiffs' Exhibit 10016
12 for the same purpose; that is, to show the date
13 on which the Lotus/Novell deal collapsed.
14 MR. TULCHIN: I have no objection to
15 the document, Your Honor.
16 THE COURT: It's admitted.
17 Q. I believe I already asked you this,
18 but 1990, that was your recollection then and
19 now?
20 A. Absolutely it was 1990 to be clear.
21 Q. And I believe the intent of the
22 questioning of you on that matter was for the
23 purpose of indicating that like Microsoft, if
24 these talks with Lotus had occurred in the time
25 frame that Mr. Tulchin provided to you, then � 10499
1 you, too, would have been involved in two
2 merger talks at the same time; correct?
3 A. That's right.
4 Q. But that was not the case?
5 A. That's correct.
6 Q. At the time that you and Novell were
7 discussing the possibility of merger, was that
8 the only merger that was under active
9 discussion at that time?
10 A. Yes. Of course, Microsoft knew about
11 the merger with Digital Research and so --
12 Q. That had --
13 A. That had already been announced and a
14 letter of intent had been signed, and Microsoft
15 knew about that.
16 MS. CONLIN: Could we put up the time
17 line again for the purpose of orienting
18 ourselves to the dates?
19 Can it go on this other one?
20 Q. I want to talk with you also about
21 Mr. Williams' departure from the company.
22 A. Sure.
23 Q. Can you explain why it was necessary
24 or why the people involved in those merger
25 discussions with Microsoft felt it was � 10500
1 necessary to keep Mr. Williams in the dark
2 about it?
3 A. Well, certainly.
4 Again, as we discussed the last couple
5 of days, you want to keep merger discussions to
6 as narrow a group as possible, and we wanted
7 Dick Williams' complete focus on running
8 Digital Research without being distracted by
9 other discussions that were ongoing with
10 Microsoft.
11 Q. And he was not among the group, the
12 very narrow group that was actually involved in
13 the negotiations?
14 A. Right, that's correct.
15 Q. I also want to revisit with you a
16 topic that Mr. Tulchin took some time with you,
17 and that is the issue of the payment by the
18 plaintiff class for your time.
19 Do you recall, Mr. Bradford, when we
20 first spoke whether you asked me to pay you or
21 whether I offered to make payment for your time
22 devoted to this matter?
23 A. You offered to pay for my time.
24 Q. And I offered to compensate you for
25 any losses sustained as a result of your taking � 10501
1 the time that you might otherwise be involved
2 in some other activity, perhaps even more
3 pleasant than this one?
4 MR. TULCHIN: Objection to leading,
5 Your Honor.
6 THE COURT: Sustained.
7 Q. If you were not here today, would you
8 be -- what would you be doing?
9 A. I would be running my new company and
10 spending time doing that, which would probably
11 be distinctly more pleasant than this.
12 Q. All right. Hard for me to believe
13 that.
14 Did the -- and I assume that you would
15 be -- would you state whether or not you would
16 be involved in income-generating activity on
17 your own behalf and on behalf of your company
18 if you were not here in Des Moines for four
19 days on the stand?
20 A. Yes, I would be.
21 Q. Did the --
22 A. I would also be spending time with my
23 grandkids when I get a chance.
24 Q. That is not income generating, is it?
25 A. Well, eventually I hope they support � 10502
1 and sustain me, but right now, no, my
2 eight-year-old grandson, my two-year-old
3 granddaughter's not income generating.
4 Q. Did the offer that we made to pay for
5 your time spent assisting in this case and
6 providing testimony influence your testimony in
7 any way?
8 A. Absolutely not.
9 Q. Did it make it possible for you to set
10 aside the other business matters and come here
11 and provide the information that you have to
12 this jury?
13 A. It assisted, certainly.
14 Q. Did it seem to you like a fair thing
15 to do?
16 A. Oh, yes.
17 Q. Let me also correct something that was
18 said I think yesterday.
19 When you bought -- this is back in
20 July of 1991.
21 When you and DRI entered into your
22 letter of intent and then in November when the
23 merger was completed, was a product produced by
24 Digital Research called Gem, G-e-m, on the
25 market? � 10503
1 A. I don't recall today if that was
2 actually on the market. It was certainly, as I
3 recall, under product development.
4 Q. Well, tell the jury what Gem was.
5 A. Gem was going to be or was a graphical
6 user interface to sit on top of the DRI
7 operating system, DR-DOS, as I recall.
8 MS. CONLIN: Now, I would like to move
9 to Defendant's Exhibit 814, which, Your Honor,
10 the Defendant did not offer, but we would.
11 THE COURT: Any objection?
12 MR. TULCHIN: I don't know what it is,
13 Your Honor. Sorry.
14 MS. CONLIN: It's the one you used,
15 David. It's right here.
16 MR. TULCHIN: No objection, Your
17 Honor.
18 THE COURT: That's 814?
19 MS. CONLIN: Yes, Your Honor,
20 Defendant's 814.
21 THE COURT: It's admitted.
22 Q. I don't have a copy for you, but we --
23 I think this is clear enough for us to look at
24 together.
25 This is the October 21, 1992 document � 10504
1 that Mr. Tulchin called your attention to in
2 connection with Mr. Williams' concerns that
3 Novell may have been responsible for some of
4 the problems in the third and fourth quarter.
5 Dated October 21, 1992.
6 So several months after Mr. Williams
7 left Novell; correct?
8 A. That's right.
9 Q. And down at the bottom -- this is
10 addressed to you, and down at the bottom
11 there's a paragraph: David, a note on
12 yesterday's meeting with Dick Williams. I
13 reviewed with Dick what the next few months may
14 look like for him as a witness in the FTC case.
15 It was apparent to Dick that he is going to
16 have a very prominent role and therefore will
17 be the target of a lot of litigation harassment
18 by Microsoft.
19 Do you know what that referred to?
20 A. Well, yes.
21 During this time period and others,
22 there was always a very general concern that if
23 someone were to testify against Microsoft in
24 court or in front of the Federal Trade
25 Commission, that Microsoft could take action to � 10505
1 harass or otherwise disturb the peace of those
2 providing such testimony.
3 Q. And I also want to review just briefly
4 with you another document you saw this morning,
5 which is Defendant's Exhibit 2535.
6 And what Mr. Tulchin focused on were
7 the -- in this draft report that we don't know
8 for sure who wrote.
9 MS. CONLIN: Perhaps we could show the
10 front page. It's 2535.
11 Do you have that, Darin?
12 MR. BUCHBINDER: Plaintiffs'?
13 MS. CONLIN: No, Defendant's.
14 Okay.
15 Q. Let's look at -- page 9 was the part
16 that you looked at before about the company's
17 weaknesses. So let's look at the page before
18 that, which provides a company's strengths and
19 opportunities. I just want to touch on a
20 couple.
21 MS. CONLIN: Yeah, that's good.
22 Q. Company strengths that assist Novell,
23 business applications included customer
24 support. Do you agree with that?
25 A. Certainly. � 10506
1 Q. And best network channel in the
2 industry. What does that mean?
3 A. We had a very strong distribution
4 channel for our products, one that was admired
5 throughout the industry.
6 Q. And the best infrastructure of
7 training and education resources in the
8 industry. What does that mean?
9 A. Well, we were innovators in customer
10 education, providing customer support in terms
11 of education and training manuals to assist
12 computer users with respect to their operation
13 of the network operating system, or in this
14 case I guess the applications.
15 Q. And then under B, division group
16 strengths -- I assume that's the applications
17 division?
18 A. Yes.
19 Q. And under that, it says, strong
20 expertise in word processing, spreadsheets,
21 presentation graphics and electronic publishing
22 tools.
23 Was that a correct assessment in your
24 view?
25 A. Certainly, yes, we had extraordinarily � 10507
1 good word processing spreadsheet products, et
2 cetera.
3 Q. And skipping down a couple to perfect
4 fit technology. Ideal platform for suites.
5 Way ahead of competition here.
6 Do you know what that meant?
7 A. Well, as I recall, the folks in the
8 application division felt like the suite of
9 products that they were putting together would
10 be eventually considered once it released to
11 those other competitive suites in the
12 marketplace.
13 Q. And then finally, on this -- no, I'm
14 sorry, not quite finally.
15 Next under that it says, support of
16 open architectures, ODBC, ODMA, open doc, and
17 OLE, PerfectLinks.
18 Tell the jury about the concept, if
19 you can, and if this is beyond your current
20 expertise, just tell me.
21 Can you tell the jury what this open
22 architecture means in a general way?
23 A. Yeah. In a very general way, when we
24 talk about openness in the computer industry
25 versus proprietary; in other words, some � 10508
1 companies would keep their information more
2 closed and more proprietary. Others were more
3 open in sharing their application programming
4 hooks and documentation. And so we had a more
5 open architecture, I think, than other people
6 in the industry.
7 Q. And now, finally, first to market with
8 focus on task automation.
9 Do you know what that refers to?
10 A. I don't recall that one.
11 Q. You also talked for some time about
12 the betas in the Chicago time frame with
13 Mr. Tulchin. Do you recall that?
14 A. Yes, I do.
15 Q. That was quite recent.
16 A couple of things that I wanted to
17 talk with you about in that connection.
18 One of the areas that you discussed
19 with Mr. Tulchin was the document that is
20 Defendant's Exhibit 6773.
21 MS. CONLIN: May I approach, Your
22 Honor?
23 THE COURT: You may.
24 Q. And this was introduced yesterday.
25 A. All right. � 10509
1 Q. And you commented on this as something
2 you did not recognize. In fact, you kind of
3 objected to foundation, as I recall.
4 A. Well, there was no Novell letterhead
5 on it and so forth, but I recognize Dave
6 Miller's name, but we couldn't figure out if
7 Dave wrote it or --
8 Q. Was the subject of it or -- let me ask
9 you this question.
10 Does this document look like any other
11 document you recall ever having seen at Novell?
12 A. No. This would be atypical of what we
13 would see.
14 Q. You mean not typical, atypical?
15 A. I'm sorry, yes, not typical.
16 Q. It has no author listed; correct?
17 A. That's correct.
18 Q. Let me ask, in a group of -- you had
19 about 10,000 employees at this time?
20 A. Oh, probably 8,000 or so after we
21 consolidated with WordPerfect. That would have
22 been October of '95, probably would have been
23 8,000 employees.
24 Q. Do you imagine that some substantial
25 number of those employees are named Dave? � 10510
1 A. Yes, that's a popular name. We have
2 at least three or four folks in the courtroom
3 by that name.
4 Q. Mr. Miller will be here, and he's
5 testified under oath before, and he says
6 unequivocally that he did not write this and
7 that if this Dave refers to him, he does not
8 agree with the content of that.
9 We will share his documents on this
10 issue with the jury when he comes, but let me
11 show you just a few of the ones that you were
12 not shown on your cross-examination.
13 MR. TULCHIN: Your Honor, I object to
14 the little statement to the jury about other
15 evidence.
16 THE COURT: Sustained.
17 MS. CONLIN: May I approach, Your
18 Honor?
19 THE COURT: You may.
20 Q. Let me show you 2180.
21 THE COURT: Is this Plaintiffs'?
22 MS. CONLIN: Yes, Your Honor. I'm
23 sorry.
24 Q. This is an E-mail to Mr. Miller from
25 Kevin Lewis. Does this indicate that Mr. Lewis � 10511
1 was a Novell employee, or can you tell?
2 A. I cannot tell.
3 Q. All right. And the subject is our,
4 quote, cooperative, end quote, relationship
5 with Microsoft. The date is November 16, 1994.
6 MS. CONLIN: Your Honor, at this time
7 the Plaintiffs would offer 2180.
8 MR. TULCHIN: No objection.
9 THE COURT: It's admitted.
10 A. As I have time to peruse the document,
11 it's clear that this was a Novell employee that
12 was working on the NFS client for the LAN
13 workplace.
14 Q. All right. And he addresses Mr.
15 Miller who he says, last I heard, you were
16 managing our relationship with Microsoft as far
17 as getting information and support from
18 Microsoft.
19 Could you fill me in on just what our
20 relationship with Microsoft consists of?
21 And he describes what he's doing.
22 And then the last paragraph says,
23 unfortunately, when you are implementing
24 software at the system level, some information
25 is not enough information. � 10512
1 Without source code for reference, the
2 specifications, sample source code, et cetera,
3 must be accurate and complete. I get the
4 feeling that the folks at Microsoft don't
5 understand this since they obviously have
6 source code to peruse.
7 Any suggestions on how I can get
8 information more readily out of Microsoft?
9 The problems that Mr. Lewis is having,
10 are those more typical of the problems you were
11 aware of in this time frame?
12 A. Yes, they are.
13 Q. Let's look at 2190.
14 MS. CONLIN: May I approach, Your
15 Honor?
16 THE COURT: Yes.
17 MS. CONLIN: I'm sorry, I have to give
18 you a marked copy. I don't seem to have enough
19 of the unmarked.
20 Q. This is a series of E-mails. And as
21 is the usual case, you start at the back on the
22 second page, and this E-mail is from Novsup at
23 Microsoft.com, and the subject is need Windows
24 95 TDI include files, and it's not -- the
25 heading is not quite complete because it's one � 10513
1 of those incorporated E-mails.
2 But it says -- and I think this is as
3 we go through this --
4 MS. CONLIN: Darin, can we start on
5 the first page? Because I believe that we've
6 got a whole long included string.
7 THE COURT: We're going to take a
8 break at this time, if that's okay.
9 MS. CONLIN: Yes, Your Honor, of
10 course.
11 THE COURT: We'll take our lunch
12 recess from now until 12.
13 Remember the admonition previously
14 given.
15 See you at 12.
16 (A recess was taken from 10:58 a.m
17 to 12:02 p.m.)
18 (The following record was made out of
19 the presence of the jury.)
20 THE COURT: Proceed.
21 MS. CONLIN: Your Honor, the Court
22 issued an order some time ago which precluded
23 either side from contacting class members
24 without the permission of the Court.
25 Plaintiffs have honored that order and � 10514
1 -- but now we request the Court's permission to
2 contact members of the Plaintiffs' class, all
3 of them.
4 We want to -- we want that
5 opportunity, Your Honor.
6 The Court may have seen the article
7 today, and we thought perhaps it would be time
8 for us to contact our own clients.
9 THE COURT: Response?
10 MR. TULCHIN: Your Honor, this is a
11 surprise to us. I didn't know this motion was
12 coming. I'd like an adequate opportunity to
13 respond some point next week.
14 THE COURT: Very well.
15 MR. TULCHIN: Thank you, Your Honor.
16 MS. CONLIN: Well, I thought it would
17 be noncontroversial, Your Honor. I was wrong.
18 MS. NELLES: Your Honor, if we're
19 taking a very quick moment, on housekeeping, I
20 wanted to alert the Court and Plaintiffs as
21 well, that with respect to Your Honor's order
22 this morning on motions to be heard on Monday,
23 and I understand the first in line is the --
24 relates to the prior deposition testimony of
25 Mr. Kempin, and that will be heard today at � 10515
1 three.
2 On the remaining, Microsoft can be
3 available for number 2, number 4, number 5, and
4 number 6.
5 Three has not been fully briefed, and
6 we'd like to go to our brief on that, and the
7 lawyer who will likely argue will not be
8 available on Monday.
9 But we can take care of 1, 2, 4, 5,
10 and 6 between I believe myself and
11 Mr. Tuggy.
12 THE COURT: Very well.
13 MR. GRALEWSKI: Your Honor, I didn't
14 have the order in front of me. What is number
15 3?
16 MS. NELLES: Our motion to -- our
17 meaning Microsoft's motion to preclude Stephen
18 McGeady from offering testimony regarding facts
19 subject to collateral estoppel.
20 MR. GRALEWSKI: You're proposing to do
21 that?
22 THE COURT: No. Every one but that.
23 MS. NELLES: No. Every one but that
24 one.
25 MR. GRALEWSKI: At a later time? � 10516
1 MS. NELLES: I'm not proposing any
2 time at the moment.
3 MR. GRALEWSKI: Not on Monday?
4 MS. NELLES: Not on Monday.
5 THE COURT: Thank you.
6 Thank you very much.
7 (An off-the-record discussion was
8 held.)
9 THE COURT: I've just been informed by
10 my court reporter, Janis, that [redacted] now
11 does not have to appear in trial because the
12 prosecutor or defense counsel?
13 THE CLERK: She didn't say.
14 THE COURT: One of the attorneys is
15 ill. However, at the same time, you report
16 what you heard, please, loudly for the Court.
17 THE CLERK: Patrice said she had then
18 made plans to go out of town for the weekend.
19 MS. CONLIN: That seems reasonable,
20 Your Honor. I think --
21 THE COURT: I'm not going to change
22 our plans in any way, shape, or form. Stands
23 as it is.
24 (The following record was made in the
25 presence of the jury at 12:08 p.m.) � 10517
1 THE COURT: Everyone else may be
2 seated.
3 You may proceed, Ms. Conlin.
4 MS. CONLIN: Thank you Your Honor.
5 REDIRECT EXAMINATION (CONT'D)
6 BY MS. CONLIN:
7 Q. Before we go back to the topic we were
8 discussing, Mr. Bradford, let me show you
9 Plaintiffs' Exhibit 10032.
10 MS. CONLIN: May I approach, Your
11 Honor?
12 THE COURT: Yes.
13 MS. CONLIN: I provided a copy to
14 Mr. Tulchin.
15 Q. 10032, Plaintiffs' 10032 is an article
16 dated 5-21-90 from the New York Times, the
17 headline of which is software merger collapses.
18 Do you see that?
19 A. Yes, I do.
20 MS. CONLIN: Your Honor, at this time
21 the Plaintiffs would offer 10032 not for the
22 truth of the matter asserted, but rather to
23 establish the date and on notice.
24 MR. TULCHIN: No objection, Your
25 Honor. � 10518
1 THE COURT: It's admitted.
2 Q. And this article in the New York Times
3 on May 21st, 1990, indicates that the merger
4 between Novell and Lotus collapsed at that
5 time; correct?
6 A. That's correct.
7 Q. I believe you also testified that the
8 reason that you understood the merger to have
9 collapsed is because of a disagreement about
10 the number of people on the board; correct?
11 A. That's right.
12 Q. And what was Novell's desire in that
13 respect?
14 A. We wanted to have fair and equal
15 representation with Lotus Development
16 Corporation on that board of directors.
17 So the original concept is that they
18 would have four nominees for the board and we
19 would have four, and Jim Manzi, who was CEO of
20 Lotus at the time, wanted to have a majority of
21 Lotus folks on that board of directors. We
22 couldn't come to an agreement on that, and as a
23 result of that we stopped those merger
24 discussions.
25 Q. All right. So, in fact, all of this � 10519
1 happened in -- before May 21 of 1990; correct?
2 A. That's right.
3 Q. And that would be more than a year
4 before the talks with Microsoft began; is that
5 right, July 18th --
6 MS. CONLIN: Could we have the time
7 line?
8 A. Yes. We did not start the merger
9 discussions with Microsoft again the second
10 time until on or after July 19th of 1991.
11 Q. Let's return. We were talking about
12 the Win 95 beta cycle and whether or not Novell
13 was getting timely information from Microsoft,
14 and we were looking at Exhibit 2190, and we're
15 going to kind of -- this one is a little
16 difficult, but let's look at the one from
17 Kevinl to Johnl, TDI include files -- and this
18 is dated December 2, 1994.
19 And the letter begins, sorry to be a
20 pest. I looked on FTP Microsoft.com in
21 something, for the Windows 95 TDI include files
22 this morning, but the files don't seem to be
23 there.
24 Am I looking in the wrong place?
25 And then he also says, I think that � 10520
1 the following is a copy of a previous request
2 that I sent on November 22, 1994.
3 The include files -- the include files
4 I think -- is include some software term for
5 some kind of file?
6 A. I don't know.
7 Q. Okay. The include files below are
8 referenced in the Microsoft TCP/IP VXD
9 interface specification, which was V 1.0
10 October 24th, 1994, which was sent to me
11 previously. I haven't been able to locate them
12 on the SDK or DDK for Windows 95.
13 SDK would be the software development
14 kit; right?
15 A. That's correct.
16 Q. DDK, any ideas?
17 A. I don't offhand.
18 Q. I need the Windows 95 specific files.
19 Okay, so the first request is made
20 November 22, 1994; correct?
21 A. That appears to be accurate.
22 Q. And then the second request is
23 December 2, 1994. So that would be a couple of
24 weeks.
25 Now, why would a couple of weeks � 10521
1 matter, do you know?
2 A. Well, I'm not a software engineer, but
3 seems like in any of these time frames, you're
4 having to drive and create software programs
5 that would be compatible with others in the
6 marketplace so they would achieve widespread
7 market acceptance, and so any delay would hurt
8 the company.
9 Q. Even a couple of days -- if a
10 competitor of WordPerfect got a Microsoft
11 Chicago beta a couple of days before
12 WordPerfect got it, would that permit -- what
13 would that mean for WordPerfect?
14 A. Well, that would mean that the company
15 other than WordPerfect would have a competitive
16 advantage in building their products.
17 Q. All right. He sends this second
18 request on December 2nd, and then the reply
19 comes December -- actually, December 2nd
20 Mr. Ludwig says Dave -- I believe this is Dave
21 Beaver at Microsoft.com.
22 Dave, are you going to get the files
23 up there or can you E-mail them to Kevin?
24 And then on December 6th, again from
25 Kevin, I checked the server FTP Microsoft.com � 10522
1 this morning and the files do not appear to be
2 there. I haven't received -- and then there's
3 some software language. I haven't received any
4 mail containing the files either. If there is
5 something that you can do to expedite the
6 delivery, I'd sure appreciate it.
7 So this goes for more than a month
8 with him trying to get these files. Do you see
9 that?
10 A. Let's see. So he sent the original
11 letter. The following is a copy of a request I
12 sent on November 22nd.
13 Q. I'm sorry, not more than a month.
14 A. Right. A little under a month.
15 Q. November 22nd.
16 A. Right.
17 Q. So to December 6th, a couple of weeks?
18 A. That's right.
19 Q. That amount of time might matter under
20 some circumstances or under all circumstances?
21 A. I would say the majority of
22 circumstances that would have a substantive
23 effect.
24 Q. And is Exhibit -- Plaintiffs' Exhibit
25 2190 consistent with what you understood was � 10523
1 happening in receipt of Windows 95 Chicago
2 betas?
3 A. Yes.
4 Q. And that's in late '94.
5 Now, let's move to January of 1995.
6 MS. CONLIN: May I approach, Your
7 Honor?
8 THE COURT: You may.
9 Q. I am handing you Defendant's Exhibit
10 2507.
11 And this is -- the front page shows
12 E-mail to Provo PR V mail, Richard Jones and
13 Ben Hendrick, from Jon Ludwig at Microsoft, and
14 it's dated Wednesday, January 11th, 1995. But,
15 of course, that is not the first one.
16 MS. CONLIN: I'm uncertain, Your Honor
17 -- if it's not offered I do so.
18 MR. TULCHIN: No objection.
19 THE COURT: It's admitted.
20 MS. CONLIN: Thank you, Your Honor.
21 I'm sorry.
22 Darin, if we could go -- I think if we
23 could go to the very last line of the first
24 page because I think that's what begins this
25 chain, and it's from Prakash Rao, R-a-o. � 10524
1 Is that a name with which you're
2 familiar?
3 Are you reading, David?
4 A. Yes, I am. I'm sorry.
5 Q. That's all right. It is pretty
6 fascinating.
7 Prakash Rao, Rao, or I'm perhaps not
8 pronouncing it correctly. But do you see his
9 name at the bottom of page 1? Actually, it's
10 at the bottom of page 2.
11 A. Yes.
12 Q. Is that a name that you know?
13 A. Yes. I vaguely remember him as being
14 in the engineering group at Novell.
15 Q. He on 1-1-96, he writes Ben Hendrick,
16 and I'm not sure you've had an opportunity to
17 say anything about Mr. Hendrick, but can you
18 tell the jury what role he played in -- with
19 respect to the development of products during
20 this time frame?
21 A. Yes. Ben was in our engineering group
22 or consulting services group and had much to do
23 with creating, I think, compatibility between
24 the Microsoft products and the Novell products.
25 Q. Was he at this time a very prominent � 10525
1 person in the Novell family?
2 A. I would classify him as an important
3 midterm -- midtier employee. He wasn't a
4 senior vice president or vice president, but I
5 think he later became such.
6 Q. And he was a builder of software;
7 right?
8 A. Yes, among other things.
9 Q. This Mr. Prakash Rao writes to Ben on
10 January 6, 1995, saying, we are testing our
11 Client 32 against Build 224 October '94 of Win
12 95 beta. Even though our client seems to be
13 working great on this beta, we are finding Win
14 95 very unstable. We hear that later builds
15 post 224 resolve the issues we are seeing.
16 My understanding was that we are on
17 Microsoft's beta list for biweekly updates.
18 But my team has not received any version post
19 Build 224. Can we get the later beta builds
20 ASAP please? Help, this is a very critical
21 item.
22 And then if we go back to the front
23 page, we see that Ben writes to Mr. Ludwig on
24 January 9th, 1995, and says, Jon, is it
25 possible to make the biweekly builds available � 10526
1 to us, Novell, on your FTP site? I currently
2 have an account on this FTP location.
3 And then skipping down, currently we
4 are using and working with Build 224. Getting
5 the regular builds before Beta 3 is publicly
6 released will become critical in the coming
7 months to keep the Client 32 for Windows 95 on
8 schedule.
9 And he identifies Mr. Rao as the
10 Client 32 development manager.
11 So then let's move up to Mr. Ludwig's
12 response on January 11, 1995.
13 He says, we are not going to put
14 builds on psg.microsoft.com.
15 Skipping down to the next line, we
16 have not released any builds post 224 to any
17 development partners.
18 Skipping down to I agreed to get a
19 build to Richard Jones' group as a result of
20 our meeting yesterday. This was Fed Ex'd to
21 him today, Build 306.
22 Do you see that?
23 A. Yes, I do.
24 Q. In the way that builds are numbered,
25 each -- is it correct or do you know whether or � 10527
1 not each build of the beta is given a number in
2 sequence?
3 A. I don't know if they proceed 224, 225,
4 226. I thought we saw a document earlier that
5 seemed to indicate that. So I don't know if
6 there was a number 256, for example, between
7 224 and 306. I don't know how that was
8 accounted. Maybe at some point they jumped in
9 increments of 10, but I don't know.
10 Q. Would you assume with me that, in
11 fact, they're numbered consecutively?
12 And if that is so -- for the purposes
13 of this question, please assume that to be so
14 because I believe there may be testimony to
15 that effect.
16 That would be about 79 builds between
17 224 and the Build 306 that was Fed Ex'd to
18 Novell on January 11, 1995?
19 MR. TULCHIN: Your Honor, I object to
20 Ms. Conlin's testimony on the subject.
21 THE COURT: Overruled regarding that
22 objection.
23 Go ahead.
24 MS. CONLIN: Thank you, Your Honor.
25 Q. My question was, did I do the numbers � 10528
1 right?
2 A. I think it was more like 81 or
3 something between 306 and 224 if my math is
4 right.
5 Q. We'll rely on yours.
6 And it looks also like the time
7 between the betas for Novell was October 1994
8 and then the one that was supposed to be Fed
9 Ex'd today on January 11, 1995.
10 Do you see that?
11 A. Yes, I do.
12 Q. And that would be about, well, three
13 months or more between releases provided to
14 Novell?
15 A. Roughly. I think it's closer to two
16 months.
17 Q. All right. So Mr. Jones' view that
18 you are getting timely betas would seem to
19 indicate that every three months was -- or
20 every two months was what he perceived to be
21 timely. Would you agree with that?
22 A. Mr. Jones' view?
23 Q. Yes. Mr. Jones -- remember -- you may
24 not recall this, Mr. Bradford, you've seen a
25 number of documents, but one of the documents � 10529
1 you saw, which I may have in my stack here, was
2 one in which Mr. Jones suggested that
3 everything was quite fine with respect to what
4 Microsoft was doing in terms of betas.
5 Do you recall that at all?
6 A. Vaguely.
7 Q. All right. And so if there's two or
8 three months between and 81 builds, based on
9 your limited knowledge of the beta process,
10 would that be satisfactory or unsatisfactory to
11 Novell?
12 MR. TULCHIN: Object, Your Honor.
13 This calls for speculation.
14 THE COURT: Sustained.
15 Q. Do you have enough information to tell
16 us whether this would be a satisfactory or
17 unsatisfactory delivery of betas?
18 A. It doesn't seem like a timely delivery
19 of betas, but better ask an engineer in terms
20 of those precise numbers.
21 Q. All right. Let's return to 2274.
22 This was a document offered, and I
23 don't have another copy for you, but hopefully
24 you will be able to see it on the screen.
25 This was one shown to you and offered � 10530
1 by the Defendant, and I wanted to go back to
2 it.
3 This is now -- we're moving up to
4 April 7th. So we're three months beyond, and
5 maybe four, beyond the one exhibit that we just
6 looked at, exhibit -- Defendant's Exhibit 2507.
7 And this is Mr. Hendrick again to the
8 Novell sup at Microsoft copying Mr. Miller and
9 Mr. Jones. The subject is updated Windows 95
10 builds.
11 And Mr. Hendrick says, in the spirit
12 of getting regular updates as they become
13 available, I have talked to several Novell
14 external customers.
15 Can you tell me if you know what that
16 means? External customers would be what kind
17 of folks?
18 A. Typically those would be end user
19 customers.
20 Q. All right. And ISVs who received
21 Build 437 CD-ROMs and are anticipating 440. We
22 understand there is a memory management patch
23 that was made in Build 436 that addresses some
24 issues that could affect our client.
25 Is it possible to have you send the � 10531
1 latest build to Richard Jones?
2 And the last build we officially
3 received is Build 426, and that would mean,
4 assuming that the builds are numbered
5 consecutively, that between -- I'm not going to
6 do these numbers.
7 What is the -- let's see, you take 440
8 and subtract 426?
9 A. 14.
10 Q. All right. And I don't think this has
11 a date in it, but I believe that this is -- I
12 mean a date for the receipt by Novell of the
13 Build 426 that they were working off of.
14 And then this is the one from
15 Mr. Ludwig that explains that we send out a lot
16 of intermediate builds in very small batches to
17 address specific bugs.
18 And it goes on to say, we don't
19 broadly distribute these builds to the entire
20 beta program.
21 But he also tells people at Novell
22 that we have Novell and a lot of other ISV
23 partners -- ISV, independent software vendor.
24 Novell was such an independent software vendor;
25 correct? � 10532
1 A. Yes.
2 Q. -- on about a biweekly regular
3 distribution schedule outside of the above
4 process.
5 So that is Mr. Ludwig's response to
6 that.
7 I also wanted to show you Exhibit 2306
8 which has been preadmitted.
9 MS. CONLIN: May I approach, Your
10 Honor?
11 THE COURT: You may.
12 Q. This is about -- this is 5-22-95, and
13 it is a letter to David Curtis at Microsoft
14 from Ryan Richards, associate general counsel,
15 and he was a man who worked for you as an
16 attorney; correct?
17 A. Ryan Richards was, yes, that's
18 correct.
19 Q. And this has to do with prerelease
20 ODBC and Windows 95 beta?
21 A. Correct.
22 Q. He says to Dave Curtis of Microsoft,
23 some of our international developers have been
24 experiencing long delays in getting prerelease
25 software under the beta agreements with � 10533
1 Microsoft.
2 And then if you go down to the Windows
3 -- the paragraph headed Windows 95 beta
4 software, he says, we've been trying for many
5 weeks to get copies of the Eastern -- and he
6 names the countries then -- and Middle Eastern
7 language versions of the Windows 95 beta
8 software.
9 He names the contact in Redmond.
10 She refused to send the software
11 because she and other beta administration
12 people have claimed not to have the necessary
13 beta agreements in their files.
14 On two occasions I have produced
15 copies of those agreements. We were then
16 denied the software because the specific names
17 of the developers who would have access to the
18 software had not been submitted and approved.
19 In response, I provided Jodene with
20 copies of correspondence from Bill Pope waiving
21 the requirement that the developers be approved
22 by name. I was told that Bill did not have the
23 authority to grant such a waiver.
24 MR. TULCHIN: Your Honor, I'm sorry to
25 interrupt. I do apologize. � 10534
1 I don't believe this is in evidence,
2 and as a result I don't think it should be on
3 the screen or read to the jury, at least until
4 it is.
5 MS. CONLIN: Your Honor, I would offer
6 Exhibit 2306 if it's not already a part --
7 THE COURT: Any objection?
8 MR. TULCHIN: Can I have a moment,
9 Your Honor?
10 THE COURT: Sure.
11 MR. TULCHIN: Just want to make sure
12 we're doing this right.
13 I have no objections.
14 THE COURT: 2306 is admitted.
15 MS. CONLIN: Thank you, Your Honor.
16 Q. In response -- I guess I better go
17 back.
18 On two occasions, I have produced
19 copies of those agreements, meaning the beta
20 agreements that Microsoft said they did not
21 have.
22 Then he goes on to say, we were then
23 denied the software because the specific names
24 of the developers who would have access to the
25 software had not been submitted and approved. � 10535
1 In response, I provided Jodene with
2 copies of correspondence from Bill Pope waiving
3 the requirement that the developers be approved
4 by name. I was told that Bill did not have the
5 authority to grant such a waiver and
6 name-by-name approval would be required.
7 So, we submitted the names and were
8 told a couple of weeks ago that they were
9 approved and the software was on its way.
10 Since then, we have received two of
11 the six or seven language versions we
12 requested. We have been told that all of them
13 have been mailed. We were given a tracking
14 number which we determined applied to the
15 package containing one of the two language
16 versions we already received.
17 We were then given a second tracking
18 number, and after further investigation, we
19 determined it applied to the package containing
20 the second language we had already received.
21 Jodene had no other numbers for us and told us
22 she would resend the software.
23 The delays in getting the software are
24 resulting in setbacks in our development
25 schedules for our application programs in those � 10536
1 languages.
2 And do you know in Novell development
3 whether the language -- Novell tries to release
4 foreign language applications in about the same
5 time frame or shortly thereafter it releases
6 the English language versions?
7 A. Sure. Localization of products were
8 important.
9 Q. And he goes on to say, ODBC, we've had
10 similar difficulties getting prerelease ODBC
11 SDKs, software development kits.
12 Then turning the page he talks about
13 some of the early things.
14 And then he says, so Novell KK
15 registered as a beta site and asked again for
16 the software. We were then told that the time
17 period for the last beta version had expired
18 and the next one was not yet available. We
19 were told it would be available sometime in
20 March. It never came.
21 We were then promised it would come in
22 April, but again we received nothing.
23 We were then told it would be this
24 month. Just a few days ago we were told that
25 there never has been a beta program for ODBC � 10537
1 2.0 and there won't be until sometime next
2 month.
3 And I'm skipping down.
4 In the meantime, we're aware that
5 Microsoft Access, which released earlier this
6 year, has ODBC 2.0 support.
7 And Mr. Ryan asks for assistance in
8 that connection.
9 Do you know whether or not you would
10 have seen this letter in the ordinary course of
11 events?
12 A. Yes, I likely would have seen this
13 letter.
14 Q. And, again, is this typical or not
15 typical of what you understood the relationship
16 between Novell and Microsoft to be with respect
17 to the Chicago betas?
18 A. It was typical, certainly, and, you
19 know, the frustrating part is that this has to
20 wind up in legal.
21 You're always hoping that the software
22 engineers among the two companies could just
23 work out this stuff by themselves without
24 having to resort to, you know, all of this
25 legalese and effort on the company's part to � 10538
1 get what seemed to be fairly simple
2 information.
3 Q. Did you draft a couple of letters from
4 Mr. Frankenberg, the CEO of Novell, directly to
5 Bill Gates in connection with a number of
6 matters, one of which was the issue of the
7 repair of bugs in software, in the Microsoft
8 software that was causing problems for
9 WordPerfect and running on Windows?
10 A. Yes. I certainly assisted in the
11 preparation of those letters.
12 Q. All right.
13 MS. CONLIN: Your Honor, the first
14 letter is Plaintiffs' Exhibit 2336 dated
15 June 23, 1995. It is, as I said, to Mr. Gates
16 from Mr. Frankenberg.
17 Plaintiffs propose to read only a
18 sentence or two on the second page under number
19 II, Roman numeral II.
20 The part I proposed to read to the
21 jury, Your Honor, begins with this point is
22 further illustrated and ends with to reveal
23 them.
24 MR. TULCHIN: Your Honor, this has
25 been ruled inadmissible, this document, in � 10539
1 prior rulings. So we object.
2 MS. CONLIN: Perhaps we should
3 approach, Your Honor.
4 THE COURT: Very well.
5 (The following record was made out of
6 the presence of the jury at 12:36 p.m.)
7 MS. CONLIN: Your Honor, here is my
8 rationale for offering these at this point.
9 The ruling -- I believe that they have
10 gone through the Special Master process, but I
11 don't have -- usually I have a sheet on top
12 that tells me things, but whatever that says,
13 at this point on redirect, Your Honor, I
14 believe that I am entitled to show the jury
15 that the situation that Mr. Tulchin has caused
16 the jury to believe was really not serious.
17 Mr. Jones just loved everything Microsoft was
18 doing.
19 This problem of getting these bugs
20 fixed was so serious that it was a subject of
21 two letters from Mr. Frankenberg to Mr. Gates.
22 All I propose to read and what I would
23 also say, Your Honor, is it may be entirely
24 appropriate to redact every part of the letter
25 except for that -- do you see where I'm � 10540
1 looking, Your Honor?
2 THE COURT: What part do you want to
3 read?
4 MS. CONLIN: The part I want to read
5 of --
6 THE COURT: It's not marked on here.
7 MS. CONLIN: -- of 23 --
8 THE COURT: -- 2336.
9 MS. CONLIN: Yes. 2336, Your Honor,
10 is on the second page, and it's right under
11 Roman Numeral II.
12 This point is further illustrated by
13 Microsoft's refusal to fix certain bugs in
14 Windows 95.
15 It is my understanding that these bugs
16 caused Novell applications to be incompatible
17 with Windows 95 but allow Microsoft's
18 applications to run unaffected.
19 Microsoft's OS interfaces constitute a
20 resource access to which is required in order
21 to be able to compete in the market.
22 Novell cannot duplicate these
23 interfaces. Microsoft has denied them to
24 Novell when it would be simple to reveal them.
25 And we believe that directly addresses � 10541
1 a matter that Mr. Tulchin spent quite a bit of
2 time discussing with this man who was a totally
3 inappropriate witness except his connection
4 would be these letters which he assisted in
5 drafting.
6 The point I wish for the jury to
7 understand is that whatever Mr. Jones or other
8 low-level software people may have thought
9 about the situation, they were wrong.
10 And what was true was what
11 Mr. Frankenberg, CEO, said to Mr. Gates, CEO of
12 Microsoft.
13 First, Your Honor, he said it on
14 June 23, 1995 before the release of Windows,
15 and then he said it again August 21, 1995,
16 three days before the release of Windows.
17 And at that point, Your Honor, if you
18 look at 2391, third paragraph that begins with
19 the word further, fourth line down, there are
20 still five or six bugs that Microsoft has
21 refused to fix which would allow WordPerfect to
22 run smoothly with Windows 95. We will have
23 Dave Miller send a specific list to Bob Kruger.
24 The result of lack of equal access cost Novell
25 and others months to release products that are � 10542
1 Windows 95 compatible. These are issues that
2 need to be a major topic of discussion in our
3 meeting.
4 THE COURT: Where did you just read
5 from? This exhibit or another one?
6 MS. CONLIN: I'm sorry.
7 THE COURT: You gave me one, 2336.
8 You've got another one? Oh, okay. Has this
9 been admitted?
10 MS. CONLIN: I believe that it is
11 subject to the same category, Your Honor.
12 MR. TULCHIN: It's in the same
13 category.
14 MS. CONLIN: I do see what happened
15 here because they wrote it in a different way.
16 Pending objections. Hearsay. Unduly
17 prejudicial. Hearsay. Objections sustained.
18 Plaintiffs appeal. Appeal denied. Limitation:
19 Exhibit will not be offered for its truth.
20 I think both of them are exactly the
21 same. Hearsay objection sustained on 2391.
22 Exhibit will not be offered for the truth.
23 I think, however at this time, Your
24 Honor, these are statements of fact, not
25 opinion. These are -- the witness can provide � 10543
1 foundation, and there's nothing about these
2 factual statements that is in any way -- that
3 should be in any way precluded from evidence in
4 this matter.
5 MR. TULCHIN: Your Honor, if I may.
6 THE COURT: Sure.
7 MR. TULCHIN: A few little things.
8 One, Ms. Conlin is correct that I
9 showed the witness e-mails and memos written by
10 software engineers at Novell that indicate that
11 the people actually building Novell products
12 were satisfied with what Microsoft was given.
13 That was admissible evidence. There wasn't any
14 question about it. The evidence was all
15 admitted for the most part, I think, without
16 objection.
17 These two documents are not
18 admissible, and they're not admissible
19 precisely because in the memorandum that we
20 handed the Court, I believe, on Monday of this
21 week we covered this point. Precisely because
22 this is argument and posturing in the course of
23 trying to extract a settlement from Microsoft
24 from one CEO to another. These are not
25 business records. These are mere opinions by � 10544
1 people, I must say, similar to Mr. Bradford who
2 were not in a position to understand whether or
3 not the betas, indeed, are sufficient for
4 Novell to go ahead and make their products or
5 whether the bugs are sufficient problems or
6 they're not.
7 And the reason we went through the
8 Special Master process, our objections were
9 sustained, the plaintiffs appealed, Your Honor
10 ruled against them.
11 It would be one thing, Your Honor, to
12 ask this witness if he has any recollection
13 that Mr. Frankenberg complained to Mr. Gates
14 about these subjects. It's an entirely
15 different thing to read from these documents,
16 which are not in evidence and they've been
17 ruled against, and merely to give the jury the
18 impression that somehow there is some evidence
19 here of wrongdoing when, again, the reason
20 these were excluded is this is pure argument,
21 opinion and posturing in the hope of getting,
22 as Mr. Frankenberg says -- let me find the
23 reference -- last line of Exhibit 2336, Your
24 Honor. That's the June letter.
25 Mr. Frankenberg says: We are hopeful � 10545
1 that Microsoft will want to work towards a
2 settlement of these issues.
3 The issues, all of these issues, were
4 posturing in the hope that Microsoft would pay
5 Novell for what Novell asserted to be these
6 legal claims, including attempts to monopolize
7 the software applications market.
8 There was no claim made by -- Novell
9 at the time didn't bring a lawsuit, as
10 Mr. Bradford testified, and Microsoft said no
11 to the idea that it should pay Novell at the
12 time for any of these claims.
13 So I think the rulings that the Court
14 has made were proper and these documents ought
15 not to be used or read to the jury.
16 MS. CONLIN: The Special Master, Your
17 Honor, said repeatedly in the process that
18 objections could be cured. We're also on
19 redirect. The door has been opened. I have a
20 right to go through it and provide to the jury
21 information which is of substantial importance.
22 On the second point that Mr. Tulchin
23 made, I would be so surprised if Mr. Tulchin
24 has evidence that what they were trying to do
25 was extract money. � 10546
1 What they were trying to do was
2 settle -- look at these issues, Your Honor.
3 They're business issues. Novell has never
4 filed a lawsuit against Microsoft until quite
5 recently, and these are issues of business.
6 I'm not going to go to those anyway,
7 Your Honor. All I want is the factual
8 statement in a business record to respond
9 appropriately to Mr. Tulchin's assertions by
10 way of questioning of an inappropriate witness
11 that everything was hunky-dory in terms of
12 Microsoft's provision of Chicago betas to
13 Novell.
14 THE COURT: All right. Anything else?
15 MR. TULCHIN: No, Your Honor. I think
16 that covers it.
17 THE COURT: Objection is sustained.
18 (The following record was made in the
19 presence of the jury at 12:40 p.m.)
20 THE COURT: Sorry, ladies and
21 gentlemen of the jury.
22 Back on the record.
23 BY MS. CONLIN:
24 Q. Mr. Bradford, you indicated that two
25 letters were sent to Mr. Gates from Mr. � 10547
1 Frankenberg; correct?
2 A. Yes.
3 Q. Do you recall the dates of those
4 letters?
5 A. Gosh, they seem like August time
6 frame, '94, '95.
7 MS. CONLIN: Your Honor, may I
8 approach the witness for the purpose of
9 refreshing his recollection?
10 THE COURT: Yes, you may.
11 MS. CONLIN: Thank you.
12 A. Okay.
13 Q. Does that refresh your recollection?
14 A. It does.
15 Q. All right. Tell the jury, please,
16 when these two letters were sent.
17 A. One was sent in June of 1995, and the
18 next letter was sent in August of 1995.
19 Q. Do you recall whether or not those
20 letters each contained a reference to the five
21 key bugs that were present in the Chicago beta?
22 A. Yes.
23 Q. And give the jury, if you can, an
24 explanation of why Mr. Frankenberg himself
25 would be contacting the head of Microsoft for � 10548
1 that reason, among others.
2 MR. TULCHIN: Objection, Your Honor,
3 unless he knows.
4 THE COURT: You may answer if you
5 know.
6 A. Sure.
7 Bob Frankenberg was CEO of Novell, and
8 we thought that the best way to help resolve
9 all of the frustrations that many Novell
10 employees were feeling about lack of timely
11 receipt of betas and so forth and lack of
12 finally -- timely fixing of computer bugs in
13 Windows 95 and their interoperability with
14 Novell products, the best way to get that
15 resolved was to have the CEO of the company
16 write to their CEO at a high level so that he
17 could drive down whatever commands that he
18 would within Microsoft to make sure that the
19 job got done.
20 Q. All right. And the first letter was
21 in June. The next letter was in August. And
22 during that time frame apparently, what is the
23 fact with respect to the fixing of those bugs?
24 A. I don't think they ever got resolved.
25 Q. And so in June, the release of Windows � 10549
1 95 is a couple months away.
2 On August 21st, when the second letter
3 was sent, we're three days away from the
4 release of Windows 95.
5 A. Right. From the broad base consumer
6 release of Windows 95.
7 Q. When we're looking over there, I think
8 -- do you recall the line of testimony that
9 Mr. Tulchin asked you about in terms of whether
10 or not it was Novell's lack of integrating
11 WordPerfect into -- you know, into its company
12 after the merger that caused Windows 95
13 versions of Perfect Office not to be timely
14 released? Do you recall that?
15 A. Yes, I recall that line of
16 questioning.
17 Q. Let's look at the time line and see
18 how many versions of WordPerfect Novell was
19 able to release in this time frame.
20 Do you see September 1994? That was
21 after the merger; correct?
22 A. Yes.
23 Q. And WordPerfect for the Macintosh is
24 released, and then the next month, October
25 1994, WordPerfect 3.0 is released, and then in � 10550
1 November 1994 WordPerfect 6.1 for Windows is
2 released, but that would, of course, be Windows
3 3.1 because Windows 95 wasn't out yet; right?
4 A. That's right. It was an earlier
5 version of the Windows operating.
6 Q. All right. And then January 1995,
7 Perfect Office 3.0 -- I'm doing that again.
8 Yes, I am. I'm repeating myself.
9 And then August 24, 1995, Windows 95
10 is released, and January '96 you sold the
11 company to Corel.
12 So, in fact, the product you're not
13 able to get out is a compatible suite with
14 Windows 95; would that be correct?
15 A. That's correct.
16 Q. All these other versions, no problem?
17 A. Right.
18 I wouldn't say that there were
19 problems, but -- you know, they all got out.
20 Q. I'm sure there were. I didn't --
21 little broad statement.
22 Also, you spent quite a bit of time
23 yesterday talking about how important customer
24 demand is, and certainly you agreed with
25 Mr. Tulchin that customer demand was a very � 10551
1 important factor; correct?
2 A. Yes, I do.
3 Q. And do you feel you could share with
4 the jury based on your own knowledge what
5 Novell -- what Novell's approach to increasing
6 customer demand for the products that it was
7 producing would be?
8 And I'm thinking specifically about
9 the products that are competitive with the
10 products at issue in this case, and that would
11 be your DR-DOS product and your WordPerfect
12 product and your Borland product.
13 A. Okay. That was a long one.
14 So can you repeat the question?
15 Q. Really not. Let me break it down a
16 little bit.
17 A. Okay.
18 Q. First of all, do you have the
19 knowledge necessary to talk about customer
20 demand and Novell's approach to increasing
21 customer demand for those products that
22 competed?
23 A. Sure.
24 Q. Okay, good.
25 Would you please tell the jury what � 10552
1 Novell's approach was to increasing customer
2 demand for these products that you had?
3 A. Well, first of all, we're always
4 focused on technological innovation, and that's
5 so important to have the latest products, the
6 latest technology so that the end user customer
7 has access to the top technologies in the
8 world.
9 And so first and foremost, the
10 creation of new and superior technologies was a
11 driving factor for what we were trying to do.
12 Another factor would be compatibility.
13 You have to be compatible with the dominant
14 operating system that was out there.
15 And certainly at the time, and up to
16 this day, it's that Windows operating system
17 from Microsoft which was the dominant world
18 supplier for operating systems.
19 So assuring interoperability between
20 your applications and that operating system is
21 critical to your success.
22 So those are two factors, large
23 factors.
24 Q. And the idea was if you were
25 technologically advanced and compatible, then � 10553
1 customer demand would fall?
2 MR. TULCHIN: Objection. Leading.
3 THE COURT: Sustained.
4 MS. CONLIN: I'm sorry, Your Honor.
5 Q. What was the result you expected from
6 technological innovations and compatibility?
7 A. That customer demand would increase.
8 Q. Mr. Tulchin also quoted to you from
9 Mr. Frankenberg. In fact, I believe that the
10 deposition -- part of the deposition that was
11 taken of Mr. Frankenberg was shown to the jury.
12 And let me remind you what Mr.
13 Frankenberg said that you were quoted.
14 Question: Can you describe for me the
15 steps that an OEM takes in evaluating an
16 operating system to determine whether or not it
17 ought to be included in its product offerings?
18 Answer: Well, the very first question
19 is what -- what level of demand is there in the
20 marketplace for that operating system.
21 He goes on and explains what he means
22 by that and adds in additional things.
23 Do you know what Mr. Frankenberg
24 thought the very most important issue was with
25 respect to the top OEMs' failure to license � 10554
1 DR-DOS?
2 A. I'm certain that he would say things
3 like compatibility issues were big. I'm sure
4 he would say Microsoft's licensing practices
5 were a big barrier to entry. Those
6 exclusionary contracts, et cetera.
7 So those would have been two of the
8 things that I'm sure Bob would have cited.
9 Q. When you say compatibility issues, do
10 you mean compatibility issues in the DR-DOS
11 product or compatibility issues in the
12 Microsoft product, intentional or
13 unintentional, that prevented DR-DOS from
14 running properly?
15 A. Well, what I'm talking about
16 specifically is the things that Microsoft was
17 building the error messages that they were
18 building into their operating system that would
19 say error, you know, trying to load Digital
20 Research DOS, incompatible, warning, warning,
21 warning. That sort of thing. And that became
22 a big problem for people that would see that
23 because then they would be scared that the two
24 would be incompatible.
25 Q. Do you know that Mr. Frankenberg gave � 10555
1 a declaration, a signed under oath declaration
2 to the FTC on December 1st, 1992?
3 A. That Bob Frankenberg --
4 Q. Yes.
5 A. Then he would have been an HP employee
6 when he would have given that testimony before
7 the Federal Trade Commission.
8 Q. Do you know how long a term HP had
9 given Microsoft for HP's licensing of Microsoft
10 products?
11 Let me start again, please.
12 How long a term was HP's contract with
13 Microsoft for the operating system?
14 A. My recollection was four years.
15 Q. In the software industry generally,
16 insofar as you know as former general counsel
17 and senior VP, what would be the standard
18 length of a software contract?
19 A. Very typical one year.
20 Q. And is there -- are there any reasons
21 for keeping the contract to a year?
22 A. Well, yes. Both parties -- you know,
23 business interests may change. They may no
24 longer want to carry the product. We may no
25 longer ship that product, et cetera. � 10556
1 So to provide flexibility for both
2 sides, typically one year was the target for
3 most of those contracts.
4 Q. And in the software industry, how fast
5 is the pace of innovation and change?
6 A. Oh, it's very fast.
7 Q. Do you know whether or not typically
8 contracts contain confidentiality agreements?
9 Like a contract between HP and
10 Microsoft, would that be a publicly available
11 document or would that be held under
12 confidentiality?
13 A. There may have been some
14 confidentiality provisions in those contracts,
15 but to the extent that -- typically a
16 confidentiality clause includes language that
17 says if we need to make the document available
18 to a government agency under -- for whatever
19 reason, then you know the confidentiality
20 clause does no longer apply.
21 Q. What I'm getting at, Mr. Bradford, is
22 you were asked some questions yesterday
23 indicating that you should have conducted an
24 investigation yourself, and would you be able
25 to require any OEM to give you contracts for � 10557
1 their contracts with Microsoft?
2 A. Oh, no. You know, that again was a
3 big problem. They would not willingly share
4 with us in general the contracts they'd sign
5 with Microsoft because typically there was a
6 confidentiality clause between Microsoft and
7 the OEM.
8 And even beyond that, you know, the
9 intimidation factor that OEMs were afraid to
10 share with other parties what they'd entered
11 into for fear of retribution of Microsoft.
12 MR. TULCHIN: Objection to the last
13 part, Your Honor. No basis or foundation.
14 THE COURT: Sustained.
15 Q. What was Microsoft's reputation in the
16 industry in terms of its business practices?
17 MR. TULCHIN: Same objection.
18 THE COURT: Overruled.
19 A. Particularly in this area, the
20 reputation was that they would take action to
21 withhold betas or some other activity that
22 could possibly hurt the original equipment
23 manufacturer, and so they became very reluctant
24 to share with other people information that
25 might assist people like Novell, for example. � 10558
1 Q. If you wanted -- and could you,
2 Novell, make people talk to you if they didn't
3 want to?
4 A. No. In general, no, wouldn't be able
5 to.
6 Q. Novell didn't have any subpoena power?
7 A. No.
8 Q. And so what you would do if you got
9 information indicating some practice that was
10 -- that you felt was anticompetitive in order
11 to investigate it, what would you do?
12 A. In that respect, we would typically
13 turn it over to the government authorities,
14 particularly beginning of June of 1992, so the
15 government authorities who had subpoena power
16 and influence over original equipment
17 manufacturers so that they had an opportunity
18 to investigate us.
19 We'd hear from -- we'd see an E-mail
20 or we'd get information, et cetera. It would
21 be difficult for us to go back to, say, Compaq
22 or Dell or another hardware manufacturer and
23 get that information.
24 So we would submit the information to
25 the U.S. government or the European Commission � 10559
1 or the Korean Fair Trading Commission or
2 whoever might be investigating the situation,
3 and then they would follow up, I guess, with
4 the hardware manufacturer.
5 Q. Let me show you a license that
6 Mr. Tulchin shared with you yesterday. It is
7 Defendant's Exhibit 34.
8 MS. CONLIN: May I approach, Your
9 Honor?
10 THE COURT: You may.
11 Q. The DRI license, and it is -- the
12 front page doesn't tell us too much except
13 Digital Research California, Inc., DRI and
14 I.F.C. Computer Company Limited.
15 And then turning to the next page, it
16 does, in fact, say as you suspected, that it
17 was -- or maybe you called this to the jury's
18 attention. It was a Taiwanese corporation;
19 correct?
20 A. Yes.
21 Q. And do you know how large a company
22 this was?
23 A. No, I don't recall ever having heard
24 of them, so I don't think they were very big.
25 Q. Turn, if you would, to page 8, and � 10560
1 let's look at number 11.2.
2 You can see there that the period of
3 the license -- and what was that?
4 A. 12 months.
5 Q. And in examining this earlier, did you
6 see any minimum commitment in this contract?
7 A. No, not -- my examination revealed no
8 minimum commitments required in this particular
9 contract.
10 Q. Any -- do you know whether or not this
11 is a contract that would be called a per system
12 contract or a per processor contract?
13 A. I don't know that for certain.
14 Q. All right. At this point in time,
15 which I believe was -- so many attachments to
16 these.
17 All right. June 19th, 1991. And that
18 is -- that's before the merger of the two
19 companies; correct?
20 A. That's right.
21 Q. Do you know, however, during this time
22 frame about what market share DRI would have
23 and what market share Microsoft would have in
24 1991? Rough estimate, please.
25 A. Again, rough estimate, probably 98 to � 10561
1 2, 95 to 5.
2 Q. Let's now turn to some documents that
3 may help in this area of the per processor
4 licenses and the other matters that were
5 discussed with you yesterday.
6 This is Plaintiffs' Exhibit 353.
7 MS. CONLIN: May I approach, Your
8 Honor?
9 THE COURT: You may.
10 Q. We're just going to look at one page
11 of this.
12 Do you recall yesterday that you and
13 Mr. Tulchin discussed, among other things, a
14 company called Printaform, a Mexican company?
15 A. Yes, we discussed Printaform
16 yesterday.
17 Q. Turn, please, to page numbered at the
18 bottom 13, and you'll see -- I'm sorry, let's
19 go back to the front and establish what that
20 is.
21 A. Right.
22 Q. This is a Microsoft interoffice memo,
23 international OEM sales August 1990 monthly
24 report to Joachim Kempin from Ron Hosogi with
25 various copies. � 10562
1 Now we'll turn to page 13. And this
2 is, I believe, a year or more before the
3 document that Mr. Tulchin shared with you.
4 This is 1990 and my recollection is it was
5 about 1992 or so, maybe '91.
6 Printaform. Felipe Ro and Gary
7 visited Printaform in Hermosillia, Mexico, to
8 meet with George Espinosa --
9 MR. TULCHIN: Your Honor, again this
10 document is not in evidence. I don't know what
11 it is. I haven't seen a copy of it. But I
12 object to Ms. Conlin reading from a document
13 that's not in evidence.
14 THE COURT: Sustained.
15 MS. CONLIN: Your Honor, I would offer
16 it -- Your Honor, we would offer Exhibit 353.
17 MR. TULCHIN: If I could just have a
18 minute, Your Honor, to look through it.
19 No objection.
20 THE COURT: It's admitted.
21 Q. Page 13 under Printaform. Under
22 customer activities, Printaform -- I'll try to
23 go back to where I was.
24 I met with George Espinosa, VP, to
25 negotiate DOS royalties for the second year of � 10563
1 their contract.
2 They did very well in the first year
3 finishing at 120 percent of their M/C and
4 wanted to renegotiate -- the M/C, do you know
5 what that means?
6 A. I assume it's some sort of Microsoft
7 quota.
8 Q. Finishing at 120 percent of their M/C
9 and wanted to renegotiate the license to
10 reflect higher volume.
11 Their current pricing is $15 and $25
12 on 8088/286s respectively.
13 Can you tell the jury what 8088 and
14 286 refers to?
15 A. Yes. Those were chip numbers that
16 Intel would have. So they had the Intel 8088
17 chip and then they had the Intel 286 chip. And
18 then a hardware manufacturer such as Printaform
19 or other ones listed on this document would
20 take those computer chips from Intel and build
21 them into their hardware to sell to end user
22 customers.
23 Q. All right.
24 So 15 and $25 per unit on the two
25 different kinds of chips? � 10564
1 A. That's right.
2 Q. The new deal is effective 10-1 for DOS
3 4.01/5.0 and Windows 3.0 on all 286, 386, and
4 future 486 systems.
5 Again, those are Intel processor
6 numbers?
7 A. Yes.
8 Q. They will license DOS 3.3 on the
9 8088's. The new contract is for a three-year
10 term so that we don't have to worry about
11 low-end competition. This will be the first
12 OEM in Mexico bundling Windows 3.0 on its
13 systems and we eliminated DRI's chances with
14 Printaform for at least three years.
15 I'm aware that you haven't seen this
16 document before, but -- and I have a few more
17 with respect to Printaform because it was the
18 subject of some questioning of you yesterday.
19 I would show you Plaintiffs' Exhibit
20 1020.
21 MS. CONLIN: May I approach, Your
22 Honor?
23 THE COURT: Yes.
24 Q. This is a letter to Mr. Kempin from
25 Jorge Espinosa M Zasati, vice president on � 10565
1 Printaform letterhead bearing date November 7,
2 1990, and Bates stamped MSC 00054408 to 54410.
3 MS. CONLIN: And we would offer it at
4 this time, Your Honor, as a business record.
5 MR. TULCHIN: No objection.
6 THE COURT: It's admitted.
7 Q. Let's turn to the second page.
8 Mr. Kempin is the vice president of
9 worldwide OEM sales and product support
10 services for Microsoft and --
11 MS. CONLIN: I'm sorry, Darin, could
12 we go back to the first page, please?
13 Kind of set the stage, okay.
14 Q. You've got the date and the addressee,
15 and then in the middle it says, Microsoft made
16 a proposal to Printaform on April 25, 1989, in
17 which the pricing of the licensing agreement
18 was -- and he sets out the pricing.
19 And then if we could turn to the next
20 page.
21 And that next graph is one where
22 Printaform and Microsoft reach an agreement.
23 And then the text says, the minimum
24 commitment was reduced to 505,000 dlls. Do you
25 know what that means? � 10566
1 A. The minimum commitment was reduced to
2 five hundred and five --
3 Q. I think that's --
4 A. -- thousand dollars. Dollars.
5 Q. Oh, I thought it was some kind of
6 dynamic library.
7 A. There are DLLs out there, but I don't
8 think this is one of them.
9 Q. All right, thank you.
10 The minimum commitment was reduced to
11 $505,000, but the unit price per operating
12 system was increased substantially.
13 Therefore, at the time of the
14 signature, both parties verbally agreed to sit
15 down for an evaluation of the first-year
16 performance and review the pricing for the
17 second year. The idea was to be able to have
18 the pricing proposed by Microsoft on April 25,
19 1989.
20 Our new strategies of promoting the
21 products with a lot of advertising and lower
22 pricing enabled us to exceed the minimum
23 commitment by 19 percent, but when we sat down
24 to review the pricing issue for the second
25 year, we found very unpleasant surprises. � 10567
1 One, new contract with minimum
2 commitment for three years, $600,000 per year.
3 Two, the price reduction of the
4 operating system for our XT now was conditioned
5 to the acceptance of bundling Windows with our
6 AT class computers as follows.
7 And he sets out MS-DOS 3.3, first year
8 pricing $15, second year pricing 9.5, and the
9 conditions he lists are accepting to bundle
10 Windows 3.0 with AT computers for three years.
11 Is this one of the things that you had
12 received reports about; that is to say, the
13 bundling of the Windows GUI with the Microsoft
14 dominant operating system?
15 A. Yes.
16 Q. I know that you've not seen this
17 before, but does this appear to be what you
18 were complaining about or concerned about?
19 A. Yes, I think Jorge described it pretty
20 effectively.
21 Q. All right. Turning to the next page,
22 Printaform's objections were two; (A) the
23 minimum commitment of $600 is a commitment of
24 $1.8 million.
25 And (B) there was not a formula in the � 10568
1 contract to reduce pricing if market demanded
2 lower prices.
3 Since our objections were not properly
4 considered and we had a negative answer to
5 include in the contract a royalty pricing
6 formula based as a percent of the retail price,
7 we have decided that we will introduce
8 low-priced models for schools without MS-DOS.
9 And then we'll move to the next in
10 order piece of correspondence, which is
11 Plaintiffs' Exhibit 10022.
12 MS. CONLIN: May I approach, Your
13 Honor?
14 THE COURT: You may.
15 Q. This document is dated January 7,
16 1991. It is from Mr. Kempin to Mr. Jorge
17 Espinosa Mireles on Microsoft letterhead.
18 MS. CONLIN: And we would at this time
19 offer Plaintiffs' Exhibit 10022.
20 MR. TULCHIN: No objection.
21 THE COURT: Admitted.
22 (An off-the-record discussion was
23 held.)
24 THE COURT: No objection to 10022?
25 MR. TULCHIN: Yes, sir. � 10569
1 THE COURT: It's admitted. Sorry for
2 the interruption.
3 MS. CONLIN: No problem, Your Honor.
4 Q. Mr. Espinosa is addressed by Mr.
5 Kempin as follows: I am in receipt of your fax
6 letter dated November 7, 1990. I apologize for
7 the long delay as this has just now come to my
8 attention.
9 And the November 7th -- January 7th is
10 the date of the reply.
11 In the middle of the next paragraph,
12 he says, you are the industry leader for PCs in
13 Mexico and Microsoft is the industry leader for
14 operating systems on the desktop. Our truthful
15 -- our mutual customers deserve the best
16 quality hardware and software available.
17 I am now confused about what has
18 happened to our relationship. I understand
19 that you have licensed or have plans to license
20 the DOS product from DRI. While I can
21 empathize with your being upset with our late
22 response, I am unclear as to why you would risk
23 a strategic and long-term relationship for what
24 appears to be a short-term cost gain.
25 And the response from Mr. Espinosa, � 10570
1 too late came this letter dated January 8,
2 1991.
3 And I have a few more documents about
4 Printaform.
5 MR. TULCHIN: Your Honor, is there a
6 question? Because the reading of these
7 exhibits without a question seems to me to be,
8 let's say, pointless.
9 MS. CONLIN: Well, Your Honor, I could
10 ask the question as Mr. Tulchin did.
11 Q. Do you see that?
12 A. Yes, I do.
13 Q. Okay. Let's move on to Exhibit 533.
14 MS. CONLIN: May I approach, Your
15 Honor?
16 THE COURT: Yes.
17 Q. This is a document that is an E-mail
18 string, the first one of which is from Ronh,
19 January 23, 1991, to Bradc and Sergiop.
20 MS. CONLIN: We would offer Exhibit
21 533.
22 THE COURT: Any objection?
23 MR. TULCHIN: Your Honor, I think we
24 do object on grounds of relevance and
25 prejudice, and I think we've lodged that � 10571
1 objection to the material in the middle of the
2 first page.
3 THE COURT: Just a moment.
4 MS. CONLIN: If it's helpful to the
5 Court, Your Honor, all I wish to call the
6 jury's attention to is on the second page
7 having to do with Printaform.
8 MR. TULCHIN: We have no objection to
9 the second page, Your Honor.
10 THE COURT: Very well. It's admitted.
11 MS. CONLIN: Thank you, Your Honor.
12 Q. Second page from Garype, Monday,
13 January 14th, 1991, to Bradc. And I believe
14 that would be Brad Cole. Subject: Printaform
15 and DRI.
16 Mr. Garyp says, the deal is done. We
17 tried to resolve it, but it was too late. All
18 of this happened over COMDEX. The main problem
19 was that DRI offered great pricing (commit for
20 a one year per system) -- not per processor,
21 per system, and they had 5.0 and we didn't, all
22 caps, three exclamation points.
23 Our plan will be to work with
24 Printaform's competitors and really push MS-DOS
25 5.0 and Windows, but the fact remains that � 10572
1 Printaform is market leader with 30 percent of
2 market share.
3 And with this -- let's see, January
4 12th, 1991, when the salesperson is going to
5 push MS-DOS 5.0, and let's see, MS-DOS 5.0 --
6 do you see where that -- when that's released?
7 Surely I put it on there.
8 Does it seem about right to you that
9 MS-DOS 5.0 was released -- not released until
10 perhaps early or mid 1992?
11 A. I'm sorry. Ask the question again.
12 Q. I will. Let me just be sure I know
13 what I'm talking about here.
14 Let's see, we've got 6.0 released in
15 '93, yes.
16 Would it comport with your
17 recollection that Microsoft released MS-DOS 5.0
18 in I think mid maybe March or thereabouts of
19 1992?
20 A. I don't have a specific recollection
21 of that.
22 Q. All right.
23 A. I think these documents relate to the
24 1990 time frame.
25 Q. Now, this was 1991, early, January � 10573
1 1991.
2 A. Okay, we've entered now 1991. So it's
3 just a little while before the Novell/DRI
4 merger.
5 Q. Right.
6 A. And, yes.
7 Q. All right. And finally on this series
8 -- and do you see that?
9 A. Yes, I definitely see the part where
10 it says and we didn't.
11 Q. So that would indicate that
12 Microsoft's MS-DOS 5.0 at that point is not in
13 the market; correct?
14 A. Right. We always felt like we had the
15 superior technological features and
16 functionalities in Novell/DRI DOS over and
17 above that of Microsoft.
18 MS. CONLIN: May I approach, Your
19 Honor?
20 THE COURT: You may.
21 MS. CONLIN: Thank you.
22 Q. Here is Exhibit 10025.
23 And this is a document that's a mail
24 string that begins with one from Joachim
25 Kempin, January 30, 1991, re DRI and is Bates � 10574
1 number MSC 00638091 to 8093.
2 MS. CONLIN: And, Your Honor, at this
3 time we would offer Exhibit 10025 as a business
4 record of Microsoft.
5 THE COURT: It's 10025?
6 MS. CONLIN: What did I say?
7 THE COURT: Any objection?
8 MR. TULCHIN: I just need a minute,
9 Your Honor, to look at this. I'm seeing it for
10 the first time.
11 THE COURT: No problem.
12 MR. TULCHIN: No objection, Your
13 Honor.
14 THE COURT: It's admitted.
15 MS. CONLIN: Thank you, Your Honor.
16 Q. And let's look first -- let's start
17 with the second page and incorporate an E-mail
18 from Daven to Chrism. Subject: DRI, January
19 28th -- 29th, 1991, and just right at the
20 bottom it says, I had Phil W. looking into this
21 from his end because he's new to the office and
22 is objective.
23 We just spoke, and he says the reason
24 we lost was a number of factors, some clear and
25 simple and others relationships. The top mostf � 10575
1 clear one was our not coming down in price.
2 This he said, the president of Printaform,
3 reconsider the pricing -- tried to make clear
4 to -- I'm sorry -- tried to make clear to
5 Joachim in a letter he sent to him asking him
6 to reconsider the pricing or he would talk with
7 DRI.
8 And we've seen the letter from
9 Mr. Espinosa to Mr. Kempin dated November 7,
10 1990, Exhibit 10020; correct?
11 A. That's correct.
12 Q. And then -- the jury will have this
13 whole document. I just want to look at the
14 front one from Daven to Chrism, subject: DRI.
15 I guess it's a duplicate of one that
16 we looked at and it talks about the top most
17 clear one was not coming down in price.
18 This he said, the president of
19 Printaform tried to make clear to Joachim in a
20 letter he sent to him asking him to reconsider
21 the pricing or he would talk with DRI.
22 Evidently, Joachim never responded to
23 the president's letter which really insulted
24 him.
25 And then skipping down to all of this � 10576
1 happened.
2 And then the president of Printaform
3 went to COMDEX where he saw a buddy of his who
4 had started working at DRI.
5 Low price, no commitments, and working
6 with his friend was all it took for him to sign
7 on the spot.
8 He said Felipe is an excellent sales
9 guy and has great customer skills and
10 relationships. He -- and I believe if you
11 look, you will see that the he is the Phil W.
12 who is looking into the loss of Printaform.
13 Do you see that?
14 A. All right, yes.
15 Q. He faults Felipe, who he learned was a
16 salesperson, for not being more forceful in
17 demanding lower prices for corp. and
18 campling -- probably camping -- out in Redmond
19 to get them.
20 Quote, he should have camped out on
21 Ron H's doorstep till -- until senior
22 management in OEM agreed to lower prices was
23 his comment.
24 Can you indicate what you think this
25 says about what competition from DRI may have � 10577
1 done in terms of Microsoft's pricing of its
2 competing products?
3 MR. TULCHIN: Objection. Calls for
4 speculation.
5 THE COURT: You may answer, if you
6 know.
7 Q. Do you understand what I'm asking?
8 A. Well, I think it -- yes. The answer
9 would be no, I guess, so the objection was not
10 sustained. So you're going to reask the
11 question. Help me.
12 Q. Sure.
13 Does this tell you anything about the
14 effect on Microsoft's prices of competition
15 from DRI?
16 A. Yes, it does.
17 Q. What does it tell us?
18 A. It would cause them to go down to be
19 more competitive.
20 Q. That's all I have on the Printaform
21 situation I'm thinking.
22 THE COURT: We'll take a recess at
23 this time.
24 Remember the admonition previously
25 given. Be in recess for ten minutes. � 10578
1 (The following record was made out of
2 the presence of the jury at 1:29 p.m.)
3 MS. CONLIN: Your Honor, I know there
4 is an exhibit coming up that may cause some
5 controversy. I wonder if we could take it up
6 for a moment.
7 Let me first give it to Mr. Tulchin
8 and give him an opportunity to look at it.
9 THE COURT: Okay.
10 (A recess was taken from 1:30 p.m. to
11 1:40 p.m.)
12 (The following record was made out of
13 the presence of the jury.)
14 THE COURT: What's the record you want
15 to make?
16 MS. CONLIN: Your Honor, with respect
17 to two issues.
18 We would offer Plaintiffs' Exhibit
19 5534, Your Honor, which is a lengthy document.
20 May I approach, Your Honor?
21 THE COURT: Yes.
22 Any objection?
23 MR. TULCHIN: Yes, sir.
24 This is a legal brief, Your Honor,
25 written by Novell's lawyers, Ablondi & Foster, � 10579
1 and as you'll see, this is a draft of their
2 brief, I believe, to be submitted to the
3 Federal Trade Commission.
4 This falls in the same category of the
5 other documents that we addressed in the
6 memorandum we submitted to the Court on Monday,
7 and it may even be one of them that we
8 mentioned in the brief, though I don't remember
9 specifically.
10 We also made objections to this during
11 the Special Master process for the same reason
12 as we made objections to the other documents.
13 And when we made those objections, the
14 Plaintiffs withdrew this document. So the
15 Special Master never ruled because they simple
16 withdrew it.
17 But this is just a legal brief, Your
18 Honor. It's not evidence of anything and it's
19 not of evidentiary quality at all.
20 THE COURT: Anything else?
21 MS. CONLIN: Your Honor, I don't wish
22 to argue it at this point. I just simply
23 wanted to seek the Court's ruling and have a
24 record -- a complete record.
25 I will say that we believe that � 10580
1 Mr. Tulchin opened the door wide and that we
2 should be permitted to discuss with Mr.
3 Bradford this document in which he participated
4 in the drafting, which establishes almost
5 without question that Microsoft's per processor
6 licenses do not prevent piracy.
7 THE COURT: Objection is sustained.
8 It's denied.
9 Anything else for the record?
10 MS. CONLIN: Yes, Your Honor.
11 As we were discussing this off the
12 record, and I do want to just say on the record
13 that Mr. Tulchin took a good deal longer with
14 this witness on his cross than I took on direct
15 and spending quite a bit of time on documents
16 and materials which were, in my opinion,
17 without foundation, which I then had to respond
18 to, and now indicates that he is not certain
19 that if I stop at 2:30, even if I'm not done,
20 and I think I will not be done, that he cannot
21 guarantee that he will be able to complete his
22 work before 3.
23 I'm concerned about not only my -- a
24 fair redirect for me and for the witness, but
25 also about the jurors' convenience, and most of � 10581
1 all, Mr. Bradford's convenience. He's come
2 from a long distance and stayed an extra day,
3 and I think it's unreasonable to even hint that
4 he will not be done today.
5 THE COURT: Anything else?
6 MR. TULCHIN: No, Your Honor, except I
7 just want to say if Ms. Conlin's done at 2:30,
8 I've said it two or three times now, I will do
9 my best to be finished by 3, and I expect I'll
10 be able to do so.
11 MS. CONLIN: One other thing, Your
12 Honor, with respect to that.
13 I would then have an opportunity, you
14 know, to ask a couple of questions, perhaps,
15 and the thing that we're perhaps overlooking,
16 though I suspect given our experience that the
17 jurors would be asking their questions right
18 along as we went, but we do need to leave at
19 least a little bit of time for that purpose as
20 well.
21 THE COURT: Very well.
22 Please get the jury.
23 MS. CONLIN: I assume, Your Honor,
24 that I'll be able to question Mr. Gates however
25 many weeks I wish to as well. � 10582
1 THE COURT: I don't put limits on it.
2 MS. CONLIN: I know.
3 (The following record was made in the
4 presence of the jury at 1:47 p.m.)
5 THE COURT: Everyone else may be
6 seated.
7 You're still under oath, sir.
8 THE WITNESS: All right.
9 BY MS. CONLIN:
10 Q. I first want to address an issue that
11 Mr. Tulchin took up with you yesterday, and
12 that was the issue of piracy.
13 A. Sure.
14 Q. In the course of your responsibilities
15 to Novell, as well as were you the chairperson
16 of the Business Software Alliance?
17 A. For a period, yes.
18 Q. And that group was formed in part to
19 address the issues of piracy; correct?
20 A. That's correct.
21 Q. Just tell me from your observation,
22 Mr. Bradford, is a per processor license in any
23 way, does it prevent piracy?
24 A. No.
25 Q. Let's move now to FUD. � 10583
1 Have you heard that term?
2 A. Yes.
3 Q. And what does it signify?
4 A. Confusing marketing messages.
5 Q. I'm going to talk for a moment about
6 Sears.
7 Do you remember the Sears deal, the
8 Lapheld, with the federal government?
9 A. Yes, I do.
10 Q. And that was in the 1991 time frame,
11 1991. December of 1991 is when the contract
12 was confirmed by Sears for DR-DOS, and by May
13 Sears had moved to MS-DOS.
14 Do you recall that series of events?
15 A. Yes.
16 Q. Mr. Tulchin spoke with you about it,
17 and in speaking with you, he showed you
18 Plaintiffs' Exhibit 5466. I believe that he
19 offered it at that time.
20 Let me show it to you.
21 My records indicate that it was
22 offered.
23 MS. CONLIN: May I proceed?
24 THE COURT: Yes.
25 MS. CONLIN: Thank you, Your Honor. � 10584
1 Q. And he called your attention to a --
2 this document, Exhibit 5466 dated April 14,
3 1992, and I just want to look at the bottom of
4 the second from the last paragraph, and it
5 says, if we are unsuccessful in resolving
6 compatibility issues between DR-DOS and MS-DOS
7 and Windows, I believe that the government may
8 mandate the replacement of DR-DOS with MS-DOS
9 on the contract.
10 During this time frame, do you recall
11 whether or not Microsoft was engaged in a FUD
12 campaign against DR-DOS?
13 A. Certainly.
14 Q. And I believe that you talked with
15 Mr. Tulchin quite a bit about Mr. Edwards.
16 Mr. Edwards -- remind us, please, who was
17 Mr. Edwards?
18 A. John Edwards was an executive with
19 Novell. He was a vice president in our
20 marketing organization. And after Dick
21 Williams left Digital Research, John Edwards
22 took over as head of that product division,
23 Digital Research for Novell.
24 Q. All right. So he would have been in
25 place as the head of the DR-DOS division at the � 10585
1 time that this contract was lost; correct?
2 A. That's right.
3 Q. And he was a part of the
4 decision-making with respect to whether or not
5 to agree to guarantee that future versions of
6 Windows would not break DR-DOS?
7 A. Right. He would have been involved in
8 that decision-making.
9 MS. CONLIN: All right. If we could
10 turn, Darin, to the Edwards deposition, and I
11 will be asking you to play lines 4 through 18
12 of page 128.
13 And before you begin, let me see
14 whether or not Mr. Tulchin has any objections
15 to that.
16 MR. TULCHIN: I do. I'm not sure if
17 this is to refresh recollection, Your Honor. I
18 don't think any needs to be refreshed.
19 Otherwise I do object.
20 MS. CONLIN: Your Honor, let me show
21 you what I'm proposing to do.
22 May I approach, Your Honor?
23 THE COURT: Yes, please. Thank you.
24 MS. CONLIN: This is from the
25 deposition, the videotape deposition of John � 10586
1 Edwards in the case of Caldera versus Microsoft
2 taken on June 30, 1998.
3 THE COURT: Anything else?
4 MS. CONLIN: No, Your Honor.
5 And, of course, we offer this to
6 respond to Mr. Tulchin's suggestions during his
7 cross-examination.
8 THE COURT: Objection is overruled.
9 Please play it.
10 MS. CONLIN: Thank you, Your Honor.
11 Before you play, though, this may seem
12 a bit odd because the questioner is reading
13 from a document that Mr. Edwards had signed and
14 sworn to, that's the question.
15 (Whereupon, the following video was
16 played to the jury.)
17 Question: Even though we were
18 eventually able to satisfy Sears and the Navy
19 that DR-DOS 6.0 ran well with Windows 3.1, the
20 fear created was so serious that Sears
21 eventually rescinded its award to Novell
22 because we could not agree to a clause that
23 would have contractually obligated Novell to
24 guarantee future compatibility with future
25 Windows products with significant financial � 10587
1 penalties if we were not able to satisfy any
2 future compatibility problems.
3 Answer: I agree with that.
4 Question: Okay. Was that sentence
5 meant to summarize the terms offered you by
6 Sears in Exhibit 833?
7 Answer: That sentence was meant to
8 summarize my understanding of the situation of
9 which this probably would have been one of many
10 pieces of information I would have looked at in
11 concluding this.
12 (Whereupon, playing of video
13 concluded.)
14 Q. Do you agree with that?
15 A. Yes.
16 Q. Let me show you Exhibit 851, an
17 internal Microsoft document, which I would
18 offer at this time in case it's already not in
19 the record, I believe that it is --
20 THE COURT: Plaintiffs' Exhibit 851?
21 MS. CONLIN: Yes, Your Honor.
22 THE COURT: Any objection?
23 MR. TULCHIN: I don't have it, Your
24 Honor. I'll be right with you.
25 No objection. � 10588
1 THE COURT: It's admitted.
2 MS. CONLIN: May I approach, Your
3 Honor?
4 THE COURT: Yes.
5 Q. 851 is an internal Microsoft document
6 dated -- E-mail string from Brad Silverberg.
7 Do you know who Brad Silverberg was?
8 A. He was an executive at Microsoft.
9 What his exact title was, I don't know.
10 Q. In charge of MS-DOS, I think the
11 record reflects. Does that comport with your
12 recollection?
13 A. That could be, right.
14 Q. All right. He is writing to Mr.
15 Gates. I suddenly can't remember who Jonl is.
16 Mike Hall -- Hallenan, I think, or Halleran.
17 He was then the CEO or the president, and Paul
18 Maritz and Rob Glaser and Steve Ballmer, with
19 copies to Mr. Cole and Mr. Lennon. Subject:
20 DOS dated July 22nd.
21 And I just want you to look at the
22 second from the bottom paragraph.
23 Keeping in mind the date of July 22nd,
24 1991, let's look at what Mr. Silverberg says
25 Microsoft is doing. � 10589
1 He says, we are engaged in a FUD
2 campaign to let the press know about some of
3 the bugs. We'll provide info a few bugs at a
4 time to stretch it out.
5 I know you've not seen this document
6 before, but you've -- have you seen it now?
7 A. I have seen it now.
8 Q. And, in fact, did you experience this?
9 After you and DRI merged, were you conscious of
10 this FUD campaign to let the press know about
11 some of the bugs a few at a time to stretch it
12 out?
13 A. Sure.
14 Q. Let's look at Plaintiffs' Exhibit 942
15 -- let's skip that one. Keeping an eye on the
16 clock.
17 I'm going to show you Exhibit 5401.
18 MS. CONLIN: May I approach, Your
19 Honor?
20 THE COURT: You may.
21 Q. This is an E-mail string which my
22 records show was admitted with the testimony of
23 Mr. Alepin on 1-16-07. Unless I've made a
24 mistake, we'll go forward.
25 And I want to call your attention to � 10590
1 the third page -- I beg your pardon -- the
2 second page in the incorporated E-mail, second
3 from the bottom, from Brad Silverberg again,
4 dated October 24, 1991, and this is right
5 before the merger is consummated; correct?
6 A. That's right.
7 Q. And he says -- and this is -- the
8 subject is Re: DR-DOS. Will they, won't they
9 buy?
10 And Mr. Silverberg says, this is a
11 very important point. We need to create the
12 reputation for problems and incompatibilities
13 to undermine confidence in DR-DOS 6. So people
14 will make judgments against it without knowing
15 details or fats. And we believe that means
16 facts.
17 Again, were you experiencing this as
18 you acquired Novell?
19 A. Yes, I guess the startling thing since
20 I've never seen these documents before is the
21 fact that they would be so explicit in their
22 internal E-mails about what they were doing.
23 Q. And I think that you told us that you
24 did not as a legal department feel that Novell
25 could accept the risk of future � 10591
1 incompatibilities with Windows and that's why
2 you vetoed the Sears contract; right?
3 A. That's right.
4 There was a sizable financial penalty
5 if we were unable to ensure compatibility in
6 that particular instance.
7 Q. Well, let me look at Plaintiffs'
8 Exhibit 978 admitted 1-16-07.
9 MS. CONLIN: May I approach, Your
10 Honor?
11 THE COURT: You may.
12 Q. We'll start with the E-mail that -- on
13 the second page from Mr. Silverberg again,
14 dated September 27, 1991, to a whole slew of
15 people, including Mr. Allchin and Mr. Maritz
16 and Mr. Ballmer. Subject: DRI, Novell, IBM.
17 And I just want to look at the bottom
18 sentence beginning DR-DOS.
19 MS. CONLIN: Do I see it?
20 I may have directed you to either the
21 wrong exhibit or the wrong page.
22 I think I said second page.
23 Yes, yes. Right there.
24 Q. DR-DOS has problems running Windows
25 today and I assume will have more problems in � 10592
1 the future.
2 And then if we go to the first page,
3 we can see who responds to this.
4 It's Mr. Allchin who responds right --
5 MS. CONLIN: Actually, right at the
6 bottom, Darin. Just that very bottom.
7 Q. Mr. Allchin from Jim Allchin,
8 September 27, 1991.
9 He responds to Mr. Silverberg's
10 statements that DR-DOS has problems running
11 Windows today and I assume will have more
12 problems in the future with this sentence:
13 You should make sure it has problems
14 in the future.
15 Do you see that?
16 A. Yes, I do. Unbelievable,
17 unbelievable.
18 Q. All right. Let's look at whether or
19 not, in fact, there were incompatibilities
20 between DR-DOS and Windows.
21 This is an internal E-mail admitted
22 into evidence on 1-16-07. It is Plaintiffs'
23 Exhibit 682.
24 MS. CONLIN: May I approach, Your
25 Honor? � 10593
1 THE COURT: You may.
2 Q. And this is on the first page from
3 Percyt to Phil Barrett dated Monday, April 15,
4 1991.
5 And the record reflects that
6 Mr. Barrett was the -- I think the product --
7 high-level executive in MS-DOS development,
8 also Windows, I think.
9 Mr. Percy T. says, last Thursday you
10 asked me for a user's view of DR-DOS 5.0. When
11 I worked for David Weiss's brother Ira, I used
12 DR-DOS 5.0 with a huge number of apps. I found
13 it incredibly, all caps, superior to MS-DOS
14 3.31 and IBM-DOS 4.01.
15 Number one, DOS compatibility. The
16 most important reason to use any version of DOS
17 is to run apps. DR-DOS runs every DOS app I
18 know.
19 Skipping down to the next paragraph.
20 DR-DOS 5.0 works successfully with
21 Windows 2.1, Win 386, 2.11 and Windows 3.0 and
22 3.0A, which I believe that the record will
23 reflect -- and maybe it is even on the time
24 line -- was the released May 22nd, 1990, and
25 was the then current version of Windows on the � 10594
1 market.
2 At the bottom of that he lists a
3 number of other applications with which DR-DOS
4 5.0 works successfully and then concludes in
5 that paragraph, we could not find an
6 application that wouldn't run.
7 Do you see that?
8 A. Yes, I do.
9 Q. Under utilities -- I'll skip that and
10 go to the second paragraph under number two.
11 DR-DOS has a user friendly shell
12 called ViewMax. Not as good as MS-DOS 5.0 DOS
13 shell, but is much better than PC DOS 4.01 DOS
14 shell.
15 I'm skipping some of the middle stuff.
16 And he says, in the next paragraph,
17 the setup program is truly great.
18 He goes on about the setup program on
19 the next page. DR-DOS setup program makes --
20 I'm sorry.
21 DR-DOS's setup program makes setting
22 up any memory option extremely easy. MS-DOS
23 5.0 requires the user to read UMB.TXT or the
24 manual.
25 Now, Mr. Bradford, this may be one of � 10595
1 the few documents that you can agree with. Do
2 you agree with Mr. Percy T.?
3 A. Yes, I do.
4 Q. Microsoft also hired NSTL to test
5 DR-DOS with a variety of applications. Were
6 you aware of that?
7 A. Who hired whom?
8 Q. Microsoft hired -- do you know what
9 NSTL is?
10 A. N --
11 Q. Testing labs?
12 A. Not offhand.
13 Q. Did I not give it to you?
14 A. No.
15 Q. I'm so sorry.
16 A. It was an independent third-party
17 testing lab.
18 MS. CONLIN: May I approach, Your
19 Honor?
20 I apologize to the Court and to Tammy.
21 I seem to have only one copy of this document.
22 THE COURT: That's all right.
23 Q. This is -- it is Plaintiffs' Exhibit
24 5306 and Defendant's Exhibit 742. So I would
25 offer it into evidence as Plaintiffs' Exhibit � 10596
1 5306.
2 MR. TULCHIN: No objection.
3 THE COURT: It's admitted.
4 MS. CONLIN: Thank you, Your Honor.
5 Q. This document is headed NSTL final
6 report. Microsoft Corporation, DR-DOS 5.0
7 compatibility testing on networks, June 28th,
8 1991.
9 Then we'll turn to the long list of
10 applications tested, which is Attachment B. At
11 the bottom it is Bates number 2343.
12 And at the very top it says, Windows,
13 and it says there's -- when it says yes, it
14 says --
15 MS. CONLIN: I don't even look. I
16 just assume you're right there. There you are.
17 Q. At the bottom it says, yes, the
18 application is compatible with DR-DOS 5.0.
19 And then at the very top it lists
20 Windows, and it says, yes, compatible with
21 DR-DOS 5.0.
22 Do you see that?
23 A. Yes, I do.
24 Q. Was that your understanding of the
25 compatibility between your product and Windows? � 10597
1 A. At certain moments in time it
2 certainly was, but as time progressed and code
3 was built into Windows to make it not
4 compatible with, then problems resulted.
5 MS. CONLIN: May I approach, Your
6 Honor?
7 THE COURT: You may.
8 MS. CONLIN: Let me show you what has
9 been marked as Plaintiffs' Exhibit 9986.
10 Your Honor, this is a news wire that
11 bears Microsoft's Bates stamp Monday, March 15,
12 1993, and the subject is Novell to launch
13 operating system -- I beg your pardon. Novell
14 to launch operating software to rival
15 Microsoft.
16 We would offer at this time
17 Plaintiffs' Exhibit 9986 not for the truth of
18 the matter asserted, Your Honor, but rather to
19 show notice to the industry as to Microsoft's
20 future plans and intentions.
21 MR. TULCHIN: Objection on grounds of
22 hearsay, Your Honor.
23 MS. CONLIN: What I'm going to use,
24 Your Honor, is down at the very bottom of the
25 page, and it goes over just one sentence at the � 10598
1 very top.
2 MR. TULCHIN: Same objection. It's
3 hearsay.
4 THE COURT: Sustained.
5 Q. Do you recall, Mr. Bradford, ever
6 reading anything in trade press in which
7 Microsoft indicated that it would virtually
8 guarantee that DR-DOS would not run on future
9 Windows -- would not run future Windows
10 versions?
11 MR. TULCHIN: Objection, Your Honor.
12 THE COURT: Overruled.
13 A. Yes, I remember that.
14 Q. Did that occur with some frequency?
15 A. Yes, I remember one specific instance
16 where an executive vice president of Microsoft,
17 Mike Maples, made that public statement to the
18 world that they would ensure the
19 incompatibility of Novell DOS or DR-DOS with
20 their Windows product. Mike Maples.
21 Q. Moving now to a somewhat different
22 subject matter.
23 You spoke with Mr. Tulchin yesterday
24 about Plaintiffs' Exhibit 5473.
25 MS. CONLIN: And if I may approach, � 10599
1 Your Honor, I will provide that to the witness
2 and to Mr. Tulchin.
3 THE COURT: You may.
4 MS. CONLIN: What you're holding,
5 Mr. Tulchin, is actually 5473A, and here is
6 5473 which I'm going to give you. 5473 --
7 Here is 5473 and here is 5473A.
8 MR. TULCHIN: There was a ruling, Your
9 Honor, against these two pages. They were
10 excluded.
11 MS. CONLIN: Let me hand it to the
12 Court.
13 Here's 5473. Here's 5473A. Here's
14 for the Court. I'll have to get you one.
15 MR. TULCHIN: According to our
16 records, Your Honor, this has already been
17 ruled on.
18 MS. CONLIN: And, Your Honor, my -- I
19 believe that this is a fair response to
20 Mr. Tulchin's comments yesterday on page 10279
21 with respect to the first two pages that were
22 admitted.
23 He asks Mr. Bradford about this very
24 document, and he in doing so suggests that
25 Lindsey's gathering efforts were only able to � 10600
1 come up with that one page.
2 That would be pages 10279 and -80.
3 THE COURT: 5473 has been ruled on?
4 MS. CONLIN: Yes, Your Honor. 54 --
5 MR. TULCHIN: 5473A, Your Honor.
6 5473A, the two pages have been excluded. 5473
7 is in evidence.
8 MS. CONLIN: 5473 we offer in response
9 to Mr. Tulchin's questioning on 5473.
10 MR. TULCHIN: Same objection, Your
11 Honor.
12 THE COURT: Let me look at it.
13 MS. CONLIN: Would the transcript be
14 helpful, Your Honor?
15 THE COURT: Yes, if you have it.
16 MS. CONLIN: I do. I'm handing a copy
17 to Mr. Tulchin.
18 I'm going to provide you, if I may,
19 Your Honor -- may I approach?
20 THE COURT: Yes.
21 MS. CONLIN: -- with the marked -- the
22 highlighted portion I believe opens the door to
23 these -- to this exhibit.
24 THE COURT: And 5473A was previously
25 presented to the Court for ruling? � 10601
1 MR. TULCHIN: Yes, Your Honor, as part
2 of 5473, and the ruling was that only the first
3 two pages can come in.
4 These two pages that now are 5473A
5 were part of 5473. They've just been
6 renumbered as a new exhibit, but they were
7 ruled on.
8 THE COURT: I've got you.
9 Anything else on this?
10 MS. CONLIN: Your Honor, we offer them
11 for the purpose of showing that the two pages
12 are not the only thing that Lindsey was able to
13 gather in her gathering efforts.
14 THE COURT: Objection is sustained.
15 Q. Another thing that you discussed
16 yesterday with Mr. Tulchin was the -- well, let
17 me show you what he showed you, and this is --
18 MS. CONLIN: May I approach, Your
19 Honor?
20 THE COURT: You may.
21 Q. This is Defendant's Exhibit 6775.
22 And what he called your attention to
23 in connection with 6775, which is a letter to
24 you from Linnet Harlan dated February 27, 1992,
25 he called your attention to the first � 10602
1 paragraph, which says, in anticipation of the
2 possibility of litigation by Microsoft, you
3 asked that I draft a memo outlining how DRI
4 acquired the Microsoft code that is currently
5 included in DR-DOS 6.0.
6 Then she goes on to explain that.
7 And asked you questions about the
8 proprietary nature of source code.
9 Did you understand Mr. Tulchin's
10 questioning to be intended to imply that DRI
11 had done something wrong in incorporating
12 Microsoft's source code in its VXD driver?
13 MR. TULCHIN: Objection, Your Honor.
14 My question was what it was. There was no such
15 implication.
16 THE COURT: Overruled. He may answer
17 if he knows.
18 A. Yeah, I inferred from what he said
19 that that's exactly what he was implying.
20 Q. Here is Plaintiffs' Exhibit 5159.
21 MS. CONLIN: May I approach, Your
22 Honor?
23 THE COURT: Yes. Has this been
24 previously admitted?
25 MS. CONLIN: I'm not sure, Your Honor. � 10603
1 THE COURT: I'll look. Go ahead with
2 your question.
3 Q. This is a letter of September 4, 1990,
4 on Digital Research stationery from Mr. Abel --
5 I beg your pardon -- to Rich Abel of Microsoft
6 signed by Mr. Ewald, who identifies himself as
7 the OEM product marketing manager of Digital
8 Research for the America's region.
9 MS. CONLIN: And we would offer
10 Plaintiffs' Exhibit 5159.
11 There's embedded hearsay, Your Honor,
12 in the top, which we do not offer for the
13 truth, but which we offer to show to what
14 Mr. Ewald was responding.
15 MR. TULCHIN: We have no objection to
16 5159.
17 THE COURT: It's admitted.
18 Q. Mr. Bradford, please look at the top
19 paragraph.
20 Did you know Mr. Ewald?
21 A. Yes.
22 Q. And the top paragraph, he writes to
23 Rich Abel of Microsoft, I read with great
24 interest the article which appeared on page 31
25 of PC Week dated August 20, 1990. � 10604
1 The article indicates that Microsoft
2 is willing to supply virtual device driver code
3 to companies that provide memory management
4 programs.
5 Virtual device driver code, would that
6 indicate to you that that is source code for
7 the virtual device driver?
8 A. I couldn't say whether it was source
9 or object code.
10 Q. All right. To companies that provide
11 memory management programs.
12 Based on the article, my understanding
13 is that this will allow these products to
14 relocate other device drivers and TSRs into
15 upper memory under Windows 3.0.
16 Skipping down, he says, Digital
17 Research would like to formally request that
18 this driver be provided for incorporation into
19 our memory management program, Memory Max.
20 Do you see that?
21 A. Yes, I do.
22 Q. Did you become aware of the
23 possibility or the fear that Microsoft might
24 sue you over this through Linnet's letter?
25 A. Well, yes. � 10605
1 Q. Okay. And then, if I may provide to
2 you Plaintiffs' Exhibit 1020.
3 MS. CONLIN: May I approach, Your
4 Honor?
5 THE COURT: You may.
6 MS. CONLIN: And, Your Honor, the
7 document in question is to Ms. Harlan from Greg
8 Ewald dated October 9, 1991. Subject: VXD
9 driver acquisition.
10 And I would say to the Court --
11 First I would offer Exhibit 1020 for a
12 nonhearsay purpose and part of which is to
13 respond to Mr. Tulchin's implications and to
14 show what subsequent action was taken.
15 MR. TULCHIN: Your Honor, I object to
16 the little speech about my implications.
17 I have no objection to the document
18 being admitted into evidence, and I don't
19 believe it is hearsay.
20 THE COURT: It's admitted.
21 MS. CONLIN: Thank you.
22 Q. Look, if you will, at the first page
23 and specifically -- and then that second
24 paragraph, please.
25 Mr. Ewald of Digital Research says, � 10606
1 beginning in June of 1990, shortly after the
2 release of Windows 3.0, articles began
3 appearing in the industry trade publications
4 regarding the subject.
5 The articles indicated that Microsoft
6 was providing to third-party memory management
7 developers code that Microsoft developed which
8 facilitated the uses of upper memory area
9 during Windows sessions.
10 Skipping down, after reading these
11 articles, I wrote a letter to Mr. Rich Abel at
12 Microsoft, which we've seen.
13 This letter requested the release of
14 the subject code to us for incorporation in our
15 memory management software trade marked as
16 Memory Max.
17 As we discussed, this letter was
18 reviewed with counsel prior to posting.
19 And he goes on to say, approximately
20 two weeks later I received in a floppy mailer
21 one diskette with no other documentation from
22 Microsoft.
23 I attempted to read this diskette on
24 my PC and found that the diskette was blank.
25 Turning to the second page, first full � 10607
1 paragraph. I immediately called Mr. Abel and
2 left him a voice mail message regarding the
3 fact that the diskette was blank.
4 About two weeks later I received a
5 call back from Lori Sill in Mr. Abel's office
6 apologizing for the mix-up. She indicated that
7 another diskette would be forthcoming.
8 Another week or so passed before the
9 corrected diskette was received, again with a
10 handwritten label and no documentation.
11 The diskette was verified and the code
12 was placed on the EDCBBS for the engineers to
13 work with.
14 After reviewing this matter, were you
15 satisfied that Novell and its predecessor DRI
16 had done nothing -- tell me this, Mr. Bradford,
17 after reviewing all of the information
18 available, did you conclude that Novell was or
19 was not in violation of any agreement or lack
20 thereof in connection with Microsoft?
21 MR. TULCHIN: Objection. Leading.
22 THE COURT: Overruled.
23 Please answer.
24 A. I conclude from all of the
25 documentation that I've seen that everything � 10608
1 was in order at Novell's end and our actions
2 were appropriate.
3 Q. Moving on.
4 The last subject matter I want to deal
5 with, do you recall the first -- that the
6 discussion yesterday with Mr. Tulchin in
7 connection with exhibit -- Defendant's Exhibit
8 2491?
9 Are you tired, Mr. --
10 A. Well, I'm sorry, I yawned.
11 But 2491 -- I'm energized. We're
12 going to get this finished.
13 Q. Yes, we are.
14 A. 2491, I don't recall what this exhibit
15 was in reference to.
16 MS. CONLIN: May I approach, Your
17 Honor?
18 THE COURT: Yes.
19 MS. CONLIN: I gave away all my
20 copies.
21 Q. This was on April 22, 1994 letter from
22 Mr. Neukom to Mr. Thompson.
23 Do you recall that -- Mr. Tulchin
24 called your attention specifically to the last
25 paragraph, which is -- it says, although you � 10609
1 raised -- I'm sorry, I'm going to need to say a
2 little more about what's on this letter.
3 This is about a letter to Mr. -- from
4 Mr. Thompson to Mr. Neukom about the proposed
5 nondisclosure agreement provided to
6 WordPerfect?
7 A. It's a letter from Mr. Neukom the
8 general counsel of Microsoft, to Duff Thompson
9 who was the general counsel of WordPerfect.
10 Q. Okay. And he's responding to a letter
11 from Mr. Thompson to Mr. Neukom about the
12 Windows beta?
13 A. Yes.
14 Q. Chicago beta?
15 A. Yes.
16 Q. And he calls your attention to the
17 last paragraph. Although you raised no
18 objection to the period during which
19 individuals who have access to the prerelease
20 Chicago product may not work on a product or
21 technology that competes with Chicago, we have
22 reduced that period to extend only through the
23 commercial release of Chicago.
24 Do you recall being questioned about
25 that? � 10610
1 A. Yes.
2 Q. And I believe that the questions were
3 to the effect that Microsoft voluntarily and
4 out of the goodness of its corporate heart had
5 made these changes in connection with the
6 Chicago beta.
7 Do you recall that line of
8 questioning?
9 A. Yes, I do.
10 Q. And let's also look at -- just, I
11 promise, a couple more.
12 Here is the agreement. It is
13 Plaintiffs' Exhibit 5652A. And the agreement
14 is contained as a part of a letter to
15 Mr. Neukom from Felipe Kohn of Borland.
16 MS. CONLIN: May I approach the
17 witness, Your Honor?
18 THE COURT: You may.
19 Q. I just want to call your attention to
20 the agreement itself, the exhibit --
21 MS. CONLIN: Let me offer Plaintiffs'
22 Exhibit 5652A.
23 MR. TULCHIN: No objection, Your
24 Honor.
25 THE COURT: It's admitted. � 10611
1 Q. And let's turn to the page that's
2 numbered Kohn Exhibit 00011 -- I'm sorry, let's
3 skip that one and go instead to Kohn 14.
4 And the letter from Mr. Kohn indicates
5 that this is the beta agreement to which he
6 objects.
7 And we're not going to go through the
8 letter, but I do want the jury to see the
9 section to which Mr. Kohn expressed -- with
10 which Mr. Kohn expresses disagreement on page
11 15.
12 And it begins --
13 MS. CONLIN: You see where it says
14 consideration, Darin? It says in
15 consideration.
16 Maybe you could blow that up a bit.
17 Q. In consideration of the license
18 granted herein for a period of three years,
19 company agrees -- the company would be the
20 person signing the beta; correct?
21 A. Right. The one to be the recipient of
22 the beta.
23 Q. -- the company agrees to prohibit any
24 authorized individuals who have had access to
25 the product from participating in the design � 10612
1 and/or development, feedback, or guidance of a
2 company product or technology that is
3 competitive with the product.
4 And then it lists a number of products
5 that Microsoft at that time considered to be
6 competitive.
7 Three years after the beta was made
8 available to a company, could that be even
9 after the product was released to the market?
10 A. Oh, it would likely be after.
11 Q. Do you know whether or not this
12 particular clause was covered by the Department
13 of Justice consent decree, which is Plaintiffs'
14 Exhibit 5664 which is a part of the record?
15 A. My recollection is that it was.
16 Q. All right. I want to show you an
17 excerpt from the last exhibit that I will be
18 touching on, and it is 3096. I'm providing
19 only those sections --
20 MS. CONLIN: We have the whole
21 document in court, Your Honor, if necessary.
22 Our records indicate that this has
23 been --
24 May I approach, Your Honor?
25 THE COURT: Yes. � 10613
1 Q. Exhibit 3096 is an E-mail from James
2 Plamondon, Tuesday, January 11, 2000 -- James
3 Plamondon, Tuesday, January 11, 2000, to Peter
4 Plamondon, forwarding Windows evangelism.
5 MS. CONLIN: And, Darin, if you would
6 just look at those attachments that Mr.
7 Plamondon sends to Mr. Plamondon.
8 Q. And the attachments are effective
9 evangelism, evangelism is war, generalized
10 evangelism time line, power evangelism, and
11 then I can't read the last one.
12 Let's turn to page ending 147 in the
13 document, and it says, these are a series of
14 slides that I believe the record reflects
15 Mr. Plamondon presented to other evangelists.
16 Effective evangelism.
17 And then the next page is 49. We're
18 just here to help developers.
19 And the next page is one of those --
20 next page is 50. Kind of a stop sign.
21 And then the next page, which is 51,
22 says, we are here to help Microsoft.
23 And the next page --
24 MS. CONLIN: Which I hope you have,
25 Darin. � 10614
1 Q. -- it says, so we're just here to help
2 developers; right?
3 MS. CONLIN: Okay. Good, you found it
4 before I did.
5 Q. And the next page is we're here to
6 help Microsoft.
7 Microsoft pays our wages, provides our
8 stock options, pays our expenses. We're here
9 to help Microsoft by helping those developers
10 that can best help Microsoft achieve
11 Microsoft's objectives. Did anyone miss the
12 point here?
13 Now, Novell was an ISV; correct?
14 A. Yes, we were a third-party developer.
15 Q. The next one is titled too many to
16 help.
17 A. That I have here.
18 Q. Some of these are not numbered. That
19 makes the process a bit more difficult, which I
20 didn't notice until right this very minute.
21 70. We've taken a long time to turn
22 all those pages.
23 Too many to help. Can't help them
24 all. This refers to the ISVs. We help those
25 who can help us. If they can't or won't help � 10615
1 us, screw 'em. Help their competitors instead.
2 A. Yes, I see that.
3 Q. Finally, the next page 71, we're here
4 to help Microsoft by helping those ISVs that
5 can help Microsoft achieve its objectives.
6 Was that a philosophy that Novell
7 shared?
8 A. Not the screw 'em part.
9 Q. Did you feel that Mr. Plamondon's
10 evangelism was something that Microsoft had
11 experienced? By that I mean the -- his ideas
12 about what evangelists and Microsoft were
13 supposed to do?
14 A. Right. That seemed to be the
15 prevailing view within Microsoft in terms of
16 helping themselves first and foremost.
17 And the last people that they cared
18 about were those people that had products that
19 could have been competitive with them and, you
20 know, became very discouraging to us over the
21 years having to deal with Microsoft on that
22 basis.
23 It felt like when they own the
24 operating system that -- I guess if you were to
25 create an analogy with a basketball game, and � 10616
1 you had the University of Washington against
2 the University of Iowa, for example, and
3 they're playing basketball and every time
4 University of Washington shoots a shot, it's
5 worth ten points. There's a 3-point line but
6 now it's worth ten points.
7 And the other side, the University of
8 Iowa, every time they make a shot, it only
9 counts for two points.
10 And so it just felt like, you know, in
11 that kind of environment where they own the
12 operating system, then continued to create
13 actions to secure their monopoly on that
14 desktop, that it became impossible in many,
15 many instances to compete, compete fairly.
16 MS. CONLIN: Iowa would win anyway.
17 Perhaps.
18 I have no further questions, Your
19 Honor.
20 THE COURT: Cross?
21 MR. TULCHIN: I have a few, Your
22 Honor, if I may.
23 THE COURT: Yes.
24 MR. TULCHIN: Thank you.
25 RECROSS-EXAMINATION � 10617
1 BY MR. TULCHIN:
2 Q. Mr. Bradford, good afternoon again.
3 I want to look, if we could, at
4 Plaintiffs' Exhibit 3406, which is one of the
5 documents that Ms. Conlin showed you on her
6 reexamination.
7 Maybe we can put it up on the screen
8 so you don't have to search in your pile.
9 A. Sure.
10 Q. This is Plaintiffs' Exhibit 3406, and
11 the re line says prerelease ODBC and Windows 95
12 beta.
13 Do you see that?
14 A. Yes.
15 Q. And then in the body of the first
16 page, there are two headings. One says Windows
17 95 beta software and the other one -- I just
18 want to see the heading. And the other one
19 says ODBC 2.0.
20 A. Yes.
21 Q. Now, you testified on redirect about
22 ODBC 2.0, did you not?
23 A. I may have said something about it,
24 yes.
25 Q. Well, didn't you say that ODBC 2.0 was � 10618
1 part of the Windows 95 beta?
2 A. No, it looks like it's a separate and
3 distinct --
4 THE COURT: Just a minute.
5 A. -- product.
6 Q. I'm asking you what you said on
7 redirect in response to questions from
8 Ms. Conlin.
9 MS. CONLIN: And I'm going to object
10 to the question because it misstates the
11 record.
12 THE COURT: He can answer if he knows.
13 Overruled.
14 A. I don't recall saying that ODBC 2.0
15 was part of the Windows 95 beta software. If I
16 said, I misspoke.
17 Q. Well, don't you recall discussing the
18 material that is contained underneath that
19 heading on pages 1 to 2 on redirect?
20 A. Yes, in general.
21 Q. And what is ODBC 2.0?
22 A. That refers to some form of object
23 oriented, I believe, database that Microsoft
24 had.
25 I think the DB in that particular � 10619
1 instance relates to database.
2 Q. Do you know whether or not the ODBC
3 SDKs, which is what's referred to just under
4 the heading in the first line, software
5 development kits, were ever part of the Windows
6 95 beta?
7 A. I don't know if they were part of that
8 or if it was a separate and distinct product.
9 Q. That's what I'm asking because -- and
10 perhaps I'm mistaken, but I thought I
11 understood your testimony on redirect to be
12 that the problems that are set forth here by
13 Mr. Richards, the lawyer who worked for you;
14 correct?
15 A. Yes, uh-huh.
16 Q. Mr. Richards was in your office; he
17 was a Novell lawyer, and he worked for you?
18 A. Right.
19 Q. And he's writing a letter to someone
20 at Microsoft contending that there's certain
21 problems with ODBC, and I just want to make
22 sure that I understand whether your testimony
23 is that that's part of the Windows 95 beta
24 problem that you say existed.
25 A. No. My testimony is that those are � 10620
1 separate and distinct issues that we were
2 having problems with Microsoft.
3 Q. And, again, I want to make sure we all
4 understand it.
5 Does this have anything to do with the
6 Windows 95 beta or with some effort to make
7 DR-DOS compatible with Windows or any
8 application at Novell compatible with Windows?
9 A. With the Windows operating system, no,
10 I think this is a separate issue from making
11 Windows compatible. It certainly relates to
12 making ODBC compatible with Novell
13 applications.
14 Q. And, again, how does ODBC relate to
15 any of the complaints that you've told the jury
16 about?
17 A. It's another example of withholding of
18 information from Novell.
19 Q. It has nothing to do with the
20 applications that run on Windows 95, does it?
21 A. I think if we read that, I think
22 that's what it's telling us.
23 In other words, Ryan Richards was an
24 attorney that worked for the applications
25 division primarily. � 10621
1 He's writing to David Curtis, who, by
2 the way, was an attorney in the Microsoft legal
3 department, outlining a series of complaints
4 that he had.
5 So I assume they all relate to the
6 applications division.
7 Q. Okay. I understand that you assume
8 that, but these are lawyers writing to lawyers,
9 not software engineers; correct?
10 A. You're right.
11 Q. And I just want to make sure that it's
12 your testimony that you don't know exactly what
13 ODBC is; correct?
14 A. Not exactly.
15 Q. All right. Then let's look at
16 Plaintiffs' Exhibit 1020, 1-0-2-0, and you were
17 asked some questions on redirect about this
18 document.
19 It's dated in October of 1991, and if
20 we could look at the next two pages just very
21 quickly so I can refresh your recollection as
22 to what this is about.
23 This is about the VXD driver; correct?
24 A. Yes.
25 Q. And what happened is that someone � 10622
1 named Greg Ewald at Digital Research requested
2 from Microsoft code -- we don't know what kind
3 of code -- for the VXD driver; right?
4 A. Yes.
5 Q. And the VXD driver was something that
6 Microsoft had developed; correct?
7 A. Yes, it appears from that context.
8 Q. And what happened was that someone at
9 Microsoft, namely Mr. Abel, voluntarily sent
10 the code for VXD driver to Digital Research?
11 A. Yes. I think to be accurate, though,
12 whatever he sent showed up blank the first
13 time, and then there was another floppy mailer
14 -- there was a series of mailings, but
15 eventually, it appears that Greg received
16 something.
17 Q. Without charge to Novell; correct?
18 A. Yeah, I don't know if there was a
19 charge associated with this or not.
20 Q. You don't know.
21 In any event, isn't this an example of
22 Microsoft cooperating with Digital Research?
23 A. It appears it took a while, but in
24 this particular instance, Greg eventually got
25 something that DRI could incorporate into its � 10623
1 products.
2 Q. Now, during redirect examination,
3 Ms. Conlin mentioned in a question to you the
4 phrase Bates numbers.
5 Do you remember that?
6 A. Yes.
7 Q. And you're familiar with that phrase
8 as lawyers use it, Bates numbers?
9 A. Yes.
10 Q. The phrase refers to numbers that are
11 stamped on the bottom of a page that's being
12 produced in a lawsuit pursuant to a document
13 request or to a subpoena; correct?
14 A. Yes.
15 Q. And this is something that lawyers and
16 paralegals commonly do, they use a device that
17 stamps what are called Bates numbers on a
18 document?
19 A. Yes, that's right.
20 Q. All right. Can we look at Defendant's
21 Exhibit 6773?
22 And I asked you about this on cross.
23 Ms. Conlin asked you about it a couple of days
24 ago on direct.
25 MR. TULCHIN: Let's bring up the text � 10624
1 for just a moment.
2 Q. This is this memo --
3 MS. CONLIN: I'm sure you don't mean
4 to misstate this. I never asked him about it.
5 It's your exhibit.
6 MR. TULCHIN: I don't want to argue
7 about it.
8 MS. CONLIN: Okay.
9 Q. In any event, you saw this during your
10 examination?
11 A. I did.
12 Q. And it's 10-16-95. It says five big
13 bugs now.
14 What I want to point out at the
15 bottom, and this is the document that says Dave
16 doesn't think the bugs are any big deal. DRB,
17 referring to you wrote a letter and so on.
18 I don't know if you want to see that
19 again.
20 A. Okay.
21 MR. TULCHIN: Let's bring that up,
22 Chris, if we could at the top.
23 Q. It says Dave Miller, 10-16-95, five
24 big bugs.
25 Dave thinks the August 21 letter went � 10625
1 out from DRB. And you said that probably
2 refers to you. Those are your initials; right?
3 A. That's correct.
4 Q. DRB and others believe that this bug
5 deal is a big deal, but the apps people do not.
6 Dave thinks it's mostly our fault, et cetera.
7 And we talked about this, and there
8 was some question of whether Dave meant Dave
9 Miller, whose name is here, or whether it might
10 be other Daves because it's a common name at
11 Novell and it's a name you and I share, so we
12 both like the name.
13 A. Yes.
14 Q. Now, during your testimony, I believe
15 you expressed some uncertainty as to what this
16 document was. You said it didn't look like
17 something that you would ordinarily see at
18 Novell; is that right?
19 A. That's correct.
20 Q. Okay. And I want to now point out for
21 you the Bates numbers at the bottom of this
22 page. There are two sets of numbers here,
23 correct, NL2 0000389?
24 A. Okay.
25 Q. And then NOV-25-0003888. � 10626
1 Do you see that, sir?
2 A. Yes, I do.
3 Q. And that would be what we would think
4 of as Bates numbers; correct?
5 A. I assume so. I'm not a litigator,
6 but, you know I'll take your word for it.
7 MR. TULCHIN: All right. Well, I
8 wonder if we could put on the right screen --
9 if it's possible, for example, to put up there
10 Plaintiffs' Exhibit 2132.
11 Q. And this was a document that you were
12 shown during your examination. It's meeting
13 minutes called by Dave Miller. You remember
14 this Microsoft conference call?
15 A. Yes, I do.
16 Q. And this certainly looks to you like a
17 Novell document, does it not?
18 A. Yeah, it's a little more formed,
19 right.
20 Q. Well, let's look at the Bates numbers
21 on this exhibit. NL2 0003953. It looks like
22 someone is using the same kind of production
23 numbers on Plaintiffs' Exhibit 2132 as on
24 Defendant's Exhibit 6773; isn't that right?
25 A. Yes. � 10627
1 Q. And then there's a second set of
2 numbers on the Plaintiffs' Exhibit
3 NOV-25-003955.
4 Do you see that, sir?
5 A. I do.
6 Q. And that certainly looks very similar
7 to the production numbers, the Bates numbers on
8 Defendant's Exhibit 6773; correct?
9 A. Yeah, it looks similar.
10 Q. Now, wouldn't it be reasonable to
11 conclude, sir, that the same company that had
12 produced Plaintiffs' Exhibit 2132 and used
13 these Bates numbers had also produced from its
14 files in litigation Defendant's Exhibit 6773?
15 A. Yeah.
16 Q. All right. Well, let's just look at
17 one more.
18 Let's look at Defendant's Exhibit 2507
19 on the right.
20 MS. CONLIN: Your Honor, we'd be happy
21 to stipulate to this.
22 MR. TULCHIN: If the Plaintiffs are
23 stipulating that Novell produced from its files
24 in Provo, Utah, Defendant's Exhibit 6773, then
25 there's no further need to go through any more, � 10628
1 Your Honor. If that's clear.
2 THE COURT: So stipulated?
3 MS. CONLIN: Absolutely, Your Honor.
4 We never contested it.
5 THE COURT: Very well. The
6 stipulation is made.
7 Q. Well, then let's just look at 6773 for
8 just a moment, and let's look at the text.
9 This is the document that you said
10 didn't quite look like a Novell document.
11 A. That's right.
12 Q. Now that you heard the Plaintiffs'
13 lawyer say that this is a document that was
14 produced from Novell's files in litigation,
15 does that help you conclude that this indeed
16 probably is a Novell document that came from
17 the files maintained in Provo, Utah?
18 A. Well, first Dave Miller wasn't in
19 Provo, Utah, and so Dave was in northern
20 California. But again, it doesn't look like a
21 Novell document. It could well have been a
22 Novell document, but I can't testify that it
23 was a Novell document.
24 Q. Let me ask you a slightly different
25 question. � 10629
1 A. Sure.
2 Q. And I probably shouldn't have said
3 Provo --
4 A. Okay.
5 Q. -- in my question.
6 A. Okay.
7 Q. Now that you've heard the Plaintiffs'
8 lawyer agree that this is a Novell document
9 produced from Novell's files, does that give
10 you a little more comfort or assurance that
11 indeed this is a document written at Novell?
12 A. It could well have been.
13 MR. TULCHIN: Your Honor, during my
14 cross-examination, I neglected to offer two
15 exhibits into evidence at the time. One is
16 Defendant's Exhibit 117 and the other is
17 Defendant's Exhibit 170, and I'd like to offer
18 them both now.
19 THE COURT: Any objection?
20 MS. CONLIN: No, Your Honor, no
21 objection.
22 THE COURT: They're admitted.
23 MR. TULCHIN: No further questions on
24 recross, Your Honor.
25 THE COURT: Thank you. Any � 10630
1 reredirect?
2 MS. CONLIN: Yes.
3 REDIRECT EXAMINATION
4 BY MS. CONLIN:
5 Q. I'd like to take a look at 2306,
6 Plaintiffs' Exhibit 2306.
7 That is the letter that you talked
8 about earlier and that Mr. Tulchin talked with
9 you as well.
10 And you see that the top -- if you
11 could go back to the very top thing, and we
12 won't have to bother with it much any longer.
13 It talks about a prerelease ODBC and a
14 Windows 95 beta. And prerelease means beta;
15 correct?
16 A. In many instances it did, that's
17 correct.
18 Q. And so there's a prerelease ODBC and a
19 Windows 95 beta, and they're separately dealt
20 with in the body of the document as well.
21 Do you recall that?
22 A. Yes, I do.
23 Q. Did you ever suggest to your knowledge
24 in your testimony anything but the fact that
25 these were two separate documents? And the � 10631
1 jury could also see that, of course.
2 A. I didn't think so.
3 Q. Let's look at 1020, Plaintiffs'
4 Exhibit 1020.
5 And that is the Linnet Harlan --
6 MS. CONLIN: Let me see, could you
7 turn to the Greg Ewald and blow that up, if you
8 would just a bit.
9 Q. That's the Ewald, October 9, 1991 VXD
10 driver acquisition, and that's the question of
11 whether or not you had some --
12 THE COURT: Ms. Conlin, could you turn
13 the microphone? When you move, the jury has
14 trouble hearing you sometimes.
15 MS. CONLIN: I'm sorry.
16 All right. Can you blow up the body
17 of the document, please?
18 Thank you.
19 Q. This is Mr. Ewald's recounting of the
20 events leading to our acquisition of the VXD
21 driver functions directive from Microsoft.
22 And what Mr. Tulchin asked you is was
23 this an example of Microsoft's cooperation with
24 Novell. And you said yes, it could be;
25 correct? � 10632
1 A. Yes. On a limited basis, that's
2 right.
3 Q. Well, let us take a look at
4 Plaintiffs' Exhibit 487, which was offered and
5 admitted on 1-16-07. And let me show it to you
6 and provide copies to all concerned.
7 MS. CONLIN: May I approach, Your
8 Honor?
9 THE COURT: Yes.
10 Q. Okay. This is kind of confusing. It
11 sort of goes back and forth.
12 MS. CONLIN: Darin, if you'd turn to
13 the page that starts with -- at the top with
14 from Bradsi. That I believe is the first in
15 order. It's dated December 11, 1990, and it
16 ends with Bates 13.
17 There we go.
18 Q. All right. This is Mr. Silverberg
19 again. December 11th, 1990, which you will
20 recall was right around the time that Mr. Abel
21 -- Mr. Abel's letter was in September of 1990
22 and got the VXD shortly or sometime thereafter,
23 and this is Mr. Silverberg's response to that.
24 He sends to Mr. Cole, Mr. Barrett, and
25 Mr. Abel. � 10633
1 I have a few questions, he says. When
2 the VXD was sent out to the 20 or so companies,
3 did we get licenses from every one of them? If
4 not, which ones did we not and why not?
5 I want to ensure that in the future
6 when we make sure kind of software available,
7 we get licenses before we send out the
8 software.
9 Do we have a license for DRI? If not,
10 did we just send it out because they called? I
11 think that's supposed to be called.
12 And then we can turn to two. The
13 second, I think, in order, which is also from
14 Mr. Silverberg Wednesday, December 12th to
15 Mr. Cole, Mr. Barrett, and Mr. Abel, re, memory
16 manager VXD.
17 And he says, there is a step I'm
18 missing here. We send them the disk, but don't
19 have a license from them. How do they know
20 they can't ship it? They could certainly say
21 we didn't tell them that they need a license.
22 And then if you skip down to the last
23 paragraph there, it says, I want to make sure
24 that in the future DRI gets nothing from us.
25 No Windows betas, no DOS betas, no help. � 10634
1 Is that the kind of cooperation that
2 you usually got from Microsoft?
3 A. That's correct.
4 MS. CONLIN: I have nothing further,
5 Your Honor.
6 MR. TULCHIN: Nothing, Your Honor.
7 THE COURT: Very well.
8 At this time, ladies and gentlemen,
9 we're going to recess until Tuesday at 8:30
10 a.m.
11 THE WITNESS: See you folks.
12 THE COURT: Before you leave, I'm
13 going to read to you the admonition.
14 Under your oath as jurors in this case
15 you are admonished that it is your duty not to
16 permit any person to speak with you on any
17 subject connected with the trial of this case.
18 You are not to talk with any of the
19 parties, their attorneys, or witnesses during
20 the trial, even upon matters wholly unrelated
21 to this trial.
22 Should anyone try to discuss this case
23 with you or in your presence, you should not
24 listen to such conversation. You should
25 immediately walk away. If a person should � 10635
1 persist in talking to you, try to find out
2 their name and report it immediately to the
3 Court.
4 You also are admonished not to
5 converse among yourselves or with anyone,
6 including family members, on any subject
7 connected with the trial of this case.
8 You should not form or express an
9 opinion on this case and you should keep an
10 open mind until you have heard all of the
11 evidence, the statements and arguments of
12 counsel, the instructions of the Court and the
13 case is finally submitted to you and you have
14 retired to your jury room to deliberate.
15 Not only must your conduct as jurors
16 be above reproach, but you must avoid the
17 appearance of any improper conduct.
18 You must avoid reading and listening
19 to or watching news accounts of this trial, if
20 there should be any. You should also avoid
21 looking at any Internet or websites on your
22 computer or computers you may have concerning
23 anything about this case.
24 Sometimes such accounts are based upon
25 incomplete information or contain matters which � 10636
1 would not be admissible in Court. They can
2 unduly influence your ultimate decision.
3 As a jury, you are the Judge of the
4 facts, while the Court is the Judge of the law.
5 During the course of this trial, I
6 will be required to decide legal questions, and
7 before you leave to deliberate this case, the
8 Court will instruct you in the law you are to
9 follow in reaching your verdict.
10 You should give careful attention to
11 all of the testimony as it is presented to you,
12 for you will only hear it once and you must
13 depend upon your recollection of the testimony
14 when deliberating in your jury room. As I
15 stated before, do not form an opinion and keep
16 an open mind until all of the evidence has been
17 received.
18 From time to time during the trial the
19 Court will be required to confer with the
20 attorneys upon points of law which require only
21 the consideration of the Court. These
22 conferences will be conducted outside the
23 presence of the jury. It is impossible to
24 predict when these conferences will be required
25 or how long they may last. However, these � 10637
1 conferences will be conducted so as to consume
2 as little of your time as possible while still
3 being consistent with the orderly progress of
4 the trial.
5 Also, from time to time during the
6 trial the Court will be required to rule on
7 objections or motions of the lawyers. You
8 should not infer anything by reason of the
9 objection, nor may you infer anything from the
10 rulings on the objections or that the Court has
11 any opinion one way or the other concerning the
12 merits of the case.
13 If an objection to a question of a
14 witness is made and the objection is sustained
15 and the witness is not permitted to answer, you
16 should not speculate as to what the answer may
17 have been nor may you draw any inference from
18 the question itself.
19 Additionally, in your jury room you
20 must not refer to or give consideration to any
21 testimony which may have been given but then
22 was stricken from the record by the Court.
23 Also, the lawyers in this case are
24 under an obligation not to talk with you. Do
25 not consider them to be aloof if they do not � 10638
1 greet you outside of the courtroom. They are
2 merely abiding by their own rules of ethics and
3 the rules of this Court.
4 MS. CONLIN: Your Honor, I'm terribly
5 sorry. I have a housekeeping matter. I need
6 to offer some of the exhibits that I didn't
7 offer as I went.
8 THE COURT: Very well.
9 MS. CONLIN: Plaintiffs' Exhibits
10 9982, 5305, 5473, 9052, 1797, 2270, 2399A,
11 1793, and 2266. At this time, Your Honor,
12 Plaintiffs offer those exhibits.
13 MS. NELLES: Your Honor, if I may.
14 As we were going along, I knew what
15 was in and what was not in, but I no longer
16 have each one, and if I could simply have over
17 the weekend to check the status on each of
18 these, and if we can address it first thing
19 Tuesday morning?
20 THE COURT: You may.
21 MS. NELLES: Thank you.
22 THE COURT: Drive careful. Leave your
23 notebooks here.
24 (A recess was taken from 2:59 p.m.
25 to 3:12 p.m.) � 10639
1 (The following record was made out of
2 the presence of the jury.)
3 THE COURT: Ready to proceed on -- is
4 it Joachim?
5 MR. GRALEWSKI: Joachim.
6 THE COURT: Joachim.
7 MR. GRALEWSKI: Good afternoon, Your
8 Honor.
9 THE COURT: Good afternoon.
10 MR. GRALEWSKI: As you just indicated,
11 we're here to handle objections concerning the
12 Joachim Kempin transcripts.
13 All of the issues that will be
14 presented to Your Honor today have not been
15 presented to the Special Master.
16 They are all issues stemming from
17 either collateral estoppel or recent orders of
18 the Court concerning the consent decree order
19 that the Court recently entered I believe it
20 was last Saturday.
21 THE COURT: Okay.
22 MR. GRALEWSKI: And the motion in
23 limine order regarding foreign antitrust
24 proceedings.
25 And if I may hand up a rulings chart � 10640
1 and the transcripts, Your Honor.
2 THE COURT: You may.
3 Thank you.
4 MR. GRALEWSKI: You're welcome.
5 Your Honor, I will be addressing the
6 objections that Microsoft has asserted
7 concerning the consent decree and the foreign
8 antitrust proceedings, and Mr. Cashman will
9 then address the collateral estoppel issues.
10 THE COURT: Great. Please begin.
11 MR. GRALEWSKI: As Your Honor will
12 notice from the rulings chart, there are three
13 designations, the first one, the second one,
14 and the last one that are consent decree
15 related objections.
16 The parties have spent a considerable
17 amount of time and have narrowed the objections
18 quite a bit.
19 THE COURT: Good.
20 MR. GRALEWSKI: What we are left with
21 is a -- I think a disagreement that applies
22 equally to all three of these, which I'd like
23 to address globally, and then we can look at
24 each designation individually.
25 The position that I believe Microsoft � 10641
1 will take as we've discussed during our meet
2 and confers is that these lines of testimony
3 will create the impression in the jury's mind
4 that the consent decree was not a voluntarily
5 entered into agreement.
6 The reason that Microsoft is taking
7 this position is because the testimony talks
8 about what the consent decree requires
9 Microsoft to do.
10 There's a very important distinction.
11 The testimony does not suggest that the
12 entering into of the agreement was anything
13 other than voluntary.
14 So essentially what we have, Your
15 Honor, is -- and this is applicable across the
16 board with all types of agreements, and
17 certainly all consent decrees.
18 You can voluntarily enter into an
19 agreement, but once you enter into the
20 agreement, you are required to comply with it.
21 Otherwise, there would be no sense in having an
22 agreement in the first place.
23 So it is Plaintiffs' position that in
24 each of these instances, all that's occurring
25 is testimony concerning what the requirements � 10642
1 are of the agreement once the consent decree is
2 entered into.
3 I should note that even if this was an
4 issue, which it shouldn't be because of the
5 reasons I just indicated, there is an
6 instruction that the Court has finalized. And
7 I frankly don't know whether it's been given to
8 the jury or not, but there is an instruction
9 that makes crystal clear -- there's an
10 instruction that makes crystal clear that
11 Microsoft entered into the decree voluntarily.
12 So with that preliminary global
13 argument, we can look at each individual
14 designation.
15 The first one is -- this is from the
16 Caldera transcript -- 84, 5, to 85, 8.
17 And Mr. Kempin is being asked about
18 Microsoft's -- changes in Microsoft's practices
19 as a result of the agreement.
20 And the question is: And there were
21 changes in the licensing policy and practices
22 that were required by the consent decree;
23 correct?
24 Answer: That is true.
25 Consistent with what I just said, this � 10643
1 does not suggest that Microsoft did not
2 voluntarily enter into the agreement, but it
3 certainly does suggest that once entering into
4 the agreement, they're required to comply with
5 it.
6 I'm happy to quickly do the next two
7 or we can look at each one individually.
8 They're all very similar issues.
9 THE COURT: Ms. Bradley?
10 MS. BRADLEY: We're happy to deal with
11 them all as a group.
12 MR. GRALEWSKI: Thank you.
13 THE COURT: Individually or all
14 together?
15 MS. BRADLEY: All as a group. Go on
16 ahead.
17 MR. GRALEWSKI: I should proceed.
18 The next designation at issue, Your
19 Honor, also from the Caldera transcript is on
20 page 89, lines 4 and 5.
21 And really, to be most clear, only a
22 phrase that starts with the which at the end of
23 line 4 and then the entire line 5. So all
24 that's at issue is the phrase which contained
25 the terms that were prohibited. � 10644
1 Again, this isn't testimony that
2 suggests or states in any way that Microsoft
3 was forced into the agreement. Simply that
4 Microsoft was required to comply with the
5 agreement, and it indicates what the agreement
6 was about and what it prohibited, which was the
7 substance of the agreement, the per processor
8 contracts.
9 And lastly, the third and final
10 consent decree type objection is from
11 Mr. Kempin's March 18, '98 DOJ/CID transcripts.
12 And for the record -- I know it's on
13 your rulings chart -- it's again just two lines
14 108, 2 to 3. And specifically the phrase since
15 the consent decree prohibitions on per
16 processor licenses became effective.
17 Again, this simply discusses and asks
18 Mr. Kempin about what the requirements of the
19 consent decree were and not that Microsoft did
20 not enter into the consent decree voluntarily.
21 I will note, Your Honor, that this is
22 testimony at this point that's highly probative
23 with the defense that Microsoft asserts, which
24 is that per processor contracts -- the purpose
25 of them was to prevent piracy, and this � 10645
1 testimony is offered to directly debunk that
2 assertion.
3 Mr. Kempin testifies that after they
4 stopped using the per processor agreements, he
5 did not see any increase in OEM shipments of
6 PCs without operating systems going to an issue
7 related to the piracy issue.
8 Thank you, Your Honor.
9 THE COURT: Thank you.
10 Ms. Bradley?
11 MS. BRADLEY: Your Honor, Microsoft,
12 as you can see, has objected in an extremely
13 narrowly tailored way to just the testimony
14 from Mr. Kempin that runs an extreme risk of
15 confusing the jury as to your instruction
16 regarding the consent decree.
17 If I may hand that up so that we can
18 all have it in front of us.
19 THE COURT: Thank you.
20 MS. BRADLEY: Your Honor instructed
21 that the consent decree was a voluntary
22 agreement and that type of language, the
23 voluntariness of the consent decree pervades
24 the instruction.
25 And Microsoft has objected to, as � 10646
1 you've heard, three very narrow portions of
2 testimony that seem to either contradict this
3 or run the risk of confusing the jury as to the
4 voluntariness of Microsoft's participation or
5 entry into the consent decree.
6 Plaintiffs' argument that the
7 testimony at issue is highly probative doesn't
8 go to the narrowly tailored objected-to
9 testimony but rather to the larger designations
10 which Microsoft concedes should be presented to
11 the jury.
12 The testimony that Mr. Gralewski just
13 referred to from the DOJ/CID transcript, the
14 piracy rationale testimony still comes in, and
15 only the line in the questioning attorney's
16 statement that these were prohibitions
17 indicating some sort of involuntariness is
18 objected to here.
19 The same is true in the Caldera
20 transcript at 84 -- at lines -- pages 84 and
21 89.
22 At page 84, Microsoft objects to the
23 questioning attorney's statement or question
24 that the policies and practices were required
25 by the consent decree. And as with the other � 10647
1 designations, bears the risk of confusing the
2 jury as to the voluntariness of the agreement.
3 Extricating those four lines of
4 testimony doesn't detract at all from the
5 probativeness of the remainder of the line of
6 questioning and could easily be done without
7 harm to the probativeness of the remainder of
8 the testimony.
9 The same is true at page 89 where the
10 questioning attorney's attempt to put a gloss
11 on the consent decree, which contained the
12 terms that were prohibited, would be a simple
13 way to remove a potentially very confusing
14 portion of the question from being presented to
15 the jury that runs the risk of contradicting
16 your instruction that the agreement was
17 voluntary.
18 So for that reason, we ask that Your
19 Honor sustain Microsoft's relevance and
20 prejudice -- really it's a prejudice argument,
21 prejudice objection to these three very
22 narrowly tailored portions of testimony.
23 THE COURT: Anything else on these
24 three?
25 MR. GRALEWSKI: Just one issue, Your � 10648
1 Honor, and that is I just noticed in looking at
2 the instruction again that it mimics actually
3 the exact language from at least one of the
4 questions.
5 If Your Honor would refer to the
6 Caldera testimony at page 89, the question
7 talks about prohibited terms, and I would note
8 that the instruction that the parties have
9 agreed to uses those same exact terms about
10 right in the middle of the instruction.
11 THE COURT: Yeah, but that's referring
12 to what the -- contains provisions by their
13 terms -- that by their terms prohibit or
14 restrict -- that's what the agreements did.
15 MR. GRALEWSKI: That's right. And
16 what the instruction --
17 THE COURT: She's talking about what
18 the consent decree did, isn't she?
19 MR. GRALEWSKI: No, perhaps I'm --
20 perhaps I didn't begin my rebuttal argument
21 correctly.
22 THE COURT: Maybe I'm reading it
23 wrong. Go ahead. I'm sorry. I shouldn't have
24 interrupted you. Go ahead.
25 MR. GRALEWSKI: Not at all, Your � 10649
1 Honor.
2 The instruction in the middle of the
3 page is explaining what the consent decree
4 provides for.
5 THE COURT: Right.
6 MR. GRALEWSKI: And one of the things
7 the instruction says is that -- you have to go
8 back up a little bit to the start of the
9 sentence, Microsoft also agreed not to enter
10 into any license agreements with OEMs for
11 operating systems software that, and then skip
12 down to contains provisions that by their terms
13 prohibit or restrict an OEM's licensing of
14 non-Microsoft operating systems.
15 So in the instruction itself that the
16 parties have agreed to, the jury is going to be
17 told that Microsoft, even though they entered
18 into something voluntarily, they're still
19 prohibited by the agreement from doing
20 something, and that's the essence -- that's the
21 essence of the argument.
22 THE COURT: I understand what you're
23 saying now.
24 MS. BRADLEY: But, Your Honor, I have
25 to say that I think that your initial reading � 10650
1 of this was exactly right, which is that this
2 -- the consent decree, the agreement governed
3 what Microsoft could do. Among those things
4 was that the OEMs could not be prohibited from
5 doing something.
6 So just to clarify on that.
7 And, Your Honor, the questioning
8 attorney's statements in the -- in the
9 testimony to which we've objected does not
10 contain any such context that implies the
11 voluntariness of such prohibitions.
12 MR. GRALEWSKI: I'm sorry, just -- I
13 think I need to state this for the record that
14 the instruction nor -- neither the instruction
15 nor the consent decree attempt to control OEMs'
16 ability to do things or not do things.
17 What the consent decree did and what
18 this instruction makes clear to the jury is
19 that by the consent decree, Microsoft was
20 prohibited -- to use that word again -- from in
21 their OEM license agreements putting provisions
22 in there that prevented OEMs from licensing
23 non-Microsoft software.
24 So it's not a situation where you're
25 attempting to control the actions of the OEM. � 10651
1 It is again identifying something that
2 Microsoft was prohibited from doing, and which
3 is entirely consistent with these three
4 designations we've just talked about.
5 THE COURT: Are these -- you guys went
6 through all these?
7 You guys did a good job if you
8 narrowed it down to just these. There's a lot
9 of testimony here.
10 MR. GRALEWSKI: Thank you, Your Honor.
11 THE COURT: Thank you.
12 MR. GRALEWSKI: Eight hours of
13 testimony.
14 THE COURT: Excellent job.
15 MS. BRADLEY: Although I will say,
16 Your Honor, that we have maintained quite a few
17 collateral estoppel objections, which --
18 MR. CASHMAN: Your optimism may be a
19 little bit premature.
20 MS. BRADLEY: I didn't want you to get
21 too excited.
22 MR. GRALEWSKI: But eight hours of
23 testimony and no hearsay issues to present to
24 the Judge and other issues.
25 THE COURT: 231 now? � 10652
1 MR. GRALEWSKI: Yes, Your Honor.
2 This is from the Caldera transcript.
3 THE COURT: I'm there.
4 MR. GRALEWSKI: 231, 14 through 24,
5 and then there's an objection interposed, and
6 then there's a couple lines thereafter that's
7 the same issue, 232, 2 to 5.
8 THE COURT: Okay.
9 MR. GRALEWSKI: And I believe we've
10 agreed that these can be not only addressed
11 together now, but also your ruling should -- I
12 suppose be the same for each of them. I guess
13 they could have been put on the rulings chart
14 together.
15 What is going on here, Your Honor, is
16 Mr. Kempin is being examined about one of his
17 own documents that he wrote. It's an
18 admissible Microsoft business record and
19 admission -- the testimony starts, if you go
20 back just a couple -- or actually just one
21 page, page 230, line 18, the document is
22 introduced and as his compilation of OEM sales
23 reports, there's -- they discuss what the date
24 is.
25 And then at the bottom of 230. � 10653
1 Question: And on the second page of
2 this you have a discussion of DRI?
3 And he says, yeah, I see that.
4 And then there's some questions about
5 DRI, and then we get to the objected to
6 testimony, which starts at line 14.
7 Despite the fact that this is not true
8 generates a bad atmosphere.
9 Again, this is quoting from Mr.
10 Kempin's own document.
11 These are Mr. Kempin's own words.
12 Continues we, meaning Microsoft, have
13 some indications that the Korean government is
14 trying to challenge our per processor contracts
15 under Korean trade law.
16 And then the question comes: And
17 that, in fact, it happened, did it not?
18 That is true.
19 And then there are -- then there's a
20 question about -- not unlike the consent decree
21 that we've been arguing, the question basically
22 talks about well, what was the effect of the
23 investigation.
24 And Mr. Kempin states a fact, which is
25 they stopped using per processor agreements in � 10654
1 Korea.
2 And then it goes on, you were involved
3 in deciding how to respond to the Korean
4 government's investigation? Yes, I was.
5 That's the totality of the issue here.
6 Again, the objection is prejudice.
7 I need to remind the Court that
8 Defendant brought a motion in limine to exclude
9 on a global basis all references to foreign
10 antitrust proceedings, and the Court denied
11 that motion.
12 The Court said -- the Court had
13 considered the motion and finds that it should
14 be and is denied. The Defendant's motion is
15 very broad.
16 And then Your Honor went on to state
17 that issues concerning foreign antitrust
18 proceedings should be dealt with on a
19 case-by-case basis.
20 I would think to recognize the fact
21 that certain testimony may not cross the line
22 while other testimony could be inflammatory,
23 unsubstantiated or the like.
24 Here, I would submit that these are
25 just facts. Indeed, it's Mr. Kempin's own � 10655
1 words, and he actually testifies that he was
2 involved in this, it was correct.
3 And all he does is say as a result of
4 the investigation, we stopped using per
5 processor contracts in Korea.
6 It's highly probative to an issue in
7 the case and it doesn't seem to cross that line
8 into, you know, undue prejudice that is what
9 the objection is to this testimony.
10 Thank you, Your Honor.
11 MS. BRADLEY: Your Honor, I will say
12 first that the document itself, which I wish I
13 had brought a copy with me to hand up today,
14 but doesn't reference the Korean FTC's actions
15 in any way, and so that argument is inapposite
16 here.
17 THE COURT: What's he reading from in
18 line 14 to 17? Is he reading from something?
19 MS. BRADLEY: Not reading. He's
20 describing the situation in which he was
21 involved with respect to the Korean --
22 THE COURT: So the questioner when he
23 says on line 14, page 231, despite the fact
24 that this is not true, it generates a bad
25 atmosphere, that's part of the question there? � 10656
1 Do we have some indication?
2 MS. BRADLEY: That portion is the
3 document.
4 THE COURT: So he is reading part of
5 the document?
6 MS. BRADLEY: That portion, yes, Your
7 Honor.
8 MR. GRALEWSKI: And the next sentence,
9 Your Honor. Sorry to interrupt.
10 THE COURT: All right. So we have
11 some indication.
12 MS. BRADLEY: But it doesn't tell us
13 any action the Korean government took with
14 respect to, for instance, banning per processor
15 agreements in Korea. And, in fact, that's one
16 of the problems with this whole line of
17 testimony is we do not know, nor do Plaintiffs
18 know, nor is it described anywhere in all of
19 this pile of Mr. Kempin's testimony or
20 elsewhere exactly what the Korean government
21 did, what actions they took.
22 We have some indication that what
23 happened with the Korean FTC was that Microsoft
24 entered into something akin to a consent
25 decree; that there were perhaps some letters � 10657
1 exchanged.
2 But we have no substantiated evidence
3 that there was any -- ever any order that
4 Microsoft cease using per processor licenses in
5 Korea, and the suggestion here is otherwise.
6 And that, Your Honor, is highly prejudicial to
7 Microsoft's case, especially considering all of
8 the other evidence that shows that at least in
9 the United States, and as far as we can tell
10 everywhere in the world, nobody's found per
11 processor licenses to be per se illegal.
12 I will hand up --
13 THE COURT: It seems like when he's
14 reading this, he's reading from Mr. Kempin's
15 own document; is that right?
16 MS. BRADLEY: That portion, yes, Your
17 Honor.
18 THE COURT: And he says we have some
19 indications that the Korean government is
20 trying to challenge our per processor contracts
21 under Korean trade law. That's the end of the
22 reading there; right?
23 MS. BRADLEY: Yes, Your Honor.
24 THE COURT: Then the questioner says,
25 and that, in fact, did happen, did it not? And � 10658
1 the answer is that is true.
2 MS. BRADLEY: Your Honor, Microsoft
3 doesn't dispute that the -- that Microsoft was
4 challenged by the Korean FTC on its practices
5 in Korea.
6 And to give a little bit of context
7 for what was happening here, it was a highly
8 politically charged issue for the Korean
9 government, and the issue is -- and if we look
10 at the testimony up above, it gives a little of
11 this, but not quite the full flavor of it, and
12 that is that the Korean OEMs were concerned
13 that Microsoft was giving better prices to
14 Taiwanese OEMs than it was to Korean OEMs, and
15 so there was a certain amount of national pride
16 or conflict that was implicated here that sort
17 of pervades this whole issue of the Korean FTC
18 instigated an investigation into Microsoft's
19 activities in Korea.
20 That issue is irrelevant and has
21 virtually no probative value in this case, this
22 case, which is about whether Iowa consumers
23 were overcharged for their software.
24 It's just -- I've never heard
25 Plaintiffs be able to make a link from the � 10659
1 Korean FTC's investigation of Microsoft's
2 practices in Korea that were as far as we can
3 tell a result of a sort of nationalistic
4 conflict and for which we have no real
5 understanding of the outcome of that
6 investigation. For instance, whether Microsoft
7 entered voluntarily into an agreement to cease
8 such practices in Korea or whether it was
9 ordered to do so.
10 It's just difficult to conceive of the
11 potential probativeness of that testimony being
12 shown in this courtroom to this jury and bears
13 the risk of substantial prejudicial effect
14 because the -- because the jury runs the risk
15 of coming to the conclusion that these per
16 processor licenses were similarly impermissible
17 in the United States.
18 Now, if I may hand up Microsoft's
19 motion in limine on foreign antitrust
20 proceedings.
21 THE COURT: This is what I already
22 ruled on?
23 MS. BRADLEY: Yeah, you've already
24 ruled on this.
25 And this -- to this motion in limine, � 10660
1 Microsoft attached and I've attached here a
2 declaration from a Korean attorney stating that
3 Korean antitrust law and American antitrust law
4 are very different.
5 And so the risk that the jury will
6 conclude that because it appears -- it may
7 appear from this testimony that the Korean
8 government had challenged Microsoft's use of
9 per processor licenses and perhaps found them
10 to be unlawful in Korea, that the jury would
11 make the leap to finding that per processor
12 licenses were somehow unlawful in America,
13 which has never been found, is just too severe.
14 THE COURT: This is the affidavit of
15 Mr. Ahn.
16 MS. BRADLEY: Yes, Your Honor.
17 THE COURT: Isn't it true that --
18 MS. BRADLEY: And I'll point you --
19 THE COURT: I'm sorry, go ahead.
20 MS. BRADLEY: It's at paragraph two
21 you'll see that he states that the K FTC's
22 procedures bear little or no resemblance to the
23 procedures applicable in U.S. courts and --
24 THE COURT: That has to do with
25 procedures, not whether it's in violation of a � 10661
1 particular act, isn't it?
2 MS. BRADLEY: Well, Your Honor, the
3 issue being and the point of this being that
4 because Your Honor and we all understand that
5 Korean antitrust law is distinct and that the
6 Korean procedures are distinct, that to somehow
7 draw the link, which the -- it seems that
8 Plaintiffs are attempting to do through their
9 designation of this testimony that because
10 Korean trade commissioners found a practice to
11 be unlawful in Korea that they're somehow
12 improper here is a highly improper conclusion
13 to draw and one that we -- that we're sort of
14 tempted to reach from just hearing this
15 testimony.
16 THE COURT: Is paragraph three in this
17 declaration by Mr. Ahn supposed to be all
18 inclusive of what Microsoft is alleged to have
19 violated in the Korean Fair Trade Law?
20 MS. BRADLEY: There were actually a
21 few different -- as far as I understand it,
22 there were a few different issues that came up
23 with respect to the Korean FTC, and this
24 declaration refers specifically to a different
25 issue, and that is the streaming media. � 10662
1 THE COURT: And instant messaging?
2 MS. BRADLEY: Instant messaging.
3 As Your Honor recalls, when the Court
4 ruled on this motion in limine on foreign
5 antitrust proceedings, it found that foreign --
6 evidence related to foreign antitrust
7 proceedings would be evaluated on a
8 case-by-case basis and that evidence would be
9 permitted if it were found to be relevant and
10 excluded if it were found to be irrelevant.
11 We would submit that this evidence at
12 issue here falls clearly on the irrelevant side
13 of that line, and particularly in light of the
14 danger of prejudice of submitting such
15 testimony before the jury that suggests to them
16 and to the rest of us that there's some
17 impropriety or illegality involved in this type
18 of behavior.
19 THE COURT: Mr. Gralewski?
20 MR. GRALEWSKI: Yes, Your Honor.
21 Thank you.
22 It seems that particularly a few
23 moments ago when Ms. Bradley was making
24 Microsoft's argument that really Microsoft is
25 attempting to reargue their global objection, � 10663
1 and it seems like -- it seems like what they
2 want, despite Ms. Bradley referencing at the
3 end that you need to look at things on a
4 case-by-case basis, it seems really what they
5 want is for the Court to hold that nothing
6 having to do with foreign antitrust proceedings
7 could be relevant to the case.
8 You do say in your order the Defendant
9 must make specific objections when the exhibits
10 in evidence are offered and they do that here
11 so that the Court can rule on their
12 admissibility in the context that they are
13 presented.
14 So I do think based on the argument we
15 have to go back a little bit, and I will
16 attempt to demonstrate to you this is highly
17 relevant and highly probative in the context
18 that this is presented. And of course, the
19 Court is well aware of all the testimony that's
20 been in the record about DRI.
21 And that's actually what's going on
22 here.
23 At the top of 231, the examining
24 attorney points out a portion of Mr. Kempin's
25 own document where Mr. Kempin says basically � 10664
1 that we aren't getting MS-DOS 5.0 out there and
2 as a result, DRI is gaining momentum. And
3 basically what he's saying is, you know, we're
4 in trouble.
5 He finishes by saying, I need some
6 help here.
7 And then the question is what kind of
8 help did you need?
9 He says -- you know, he says we got to
10 get to the MS-DOS product out.
11 And then the examining attorney goes
12 back to the document.
13 Mr. Kempin himself says, their
14 aggressiveness -- again continuing the DRI
15 conversation. Their aggressiveness is causing
16 us pain in Korea.
17 So Mr. Kempin -- to demonstrate the
18 relevance of this testimony, Mr. Kempin
19 acknowledges and admits that DRI and their
20 product and the way they're selling the product
21 is causing difficulties to Microsoft.
22 And he says what Mr. Williams is --
23 manner in which Mr. Williams is competing.
24 So this is all tied into competition
25 with DRI, and I would submit, Your Honor, that � 10665
1 competition with DRI is one of the
2 fundamentally relevant things of the case.
3 THE COURT: Very well.
4 Anything else on this issue?
5 MS. BRADLEY: If I may just respond
6 for one moment, Your Honor.
7 The testimony about Microsoft's
8 competition with DRI in Korea is not objected
9 to and is -- will come in with Mr. Kempin's
10 testimony.
11 That's -- the Korean FTC's
12 investigation of Microsoft's practices does not
13 bear on that and is improper.
14 And again I will ask and I will note
15 that Plaintiffs have as of yet failed to
16 provide any link between the Korean FTC's
17 investigation of Microsoft and the price Iowa
18 consumers paid for their products. It's just
19 not relevant here and it's prejudicial and
20 inadmissible, and we'd ask that Your Honor
21 sustain Microsoft's objections to this line of
22 testimony.
23 THE COURT: Anything else?
24 MR. GRALEWSKI: No, Your Honor. Thank
25 you. � 10666
1 THE COURT: Collateral estoppel then.
2 MR. CASHMAN: Your Honor, good
3 afternoon.
4 THE COURT: Good afternoon.
5 MR. CASHMAN: I'm going to hand up to
6 the Court -- I'm not sure if Mr. Gralewski,
7 what he handed up included the rulings chart on
8 collateral estoppel.
9 MR. GRALEWSKI: It did not.
10 MR. CASHMAN: So I will hand a copy of
11 that up to the Court.
12 THE COURT: Thank you.
13 MR. CASHMAN: And I'm also going to
14 hand to the Court a copy of the transcript from
15 December 7, 2006, page 3433 and 3434 where the
16 Court made its oral ruling, its last
17 pronouncement on collateral estoppel issues
18 just for the Court's reference.
19 THE COURT: Okay.
20 MR. CASHMAN: I want to start by first
21 pointing out for the Court that what we're
22 talking about here are designations from four
23 -- pardon me -- five different transcripts, and
24 I want to identify those for the Court and for
25 the record. � 10667
1 The first are designations from a
2 transcript -- a deposition taken on October 2,
3 1997, in the DOJ/CID investigative demand.
4 Those designations are on page 1 and
5 part of page 2 of your rulings chart, Your
6 Honor.
7 THE COURT: Okay.
8 MR. CASHMAN: The next transcript is
9 from the Caldera case, a deposition transcript
10 from the Caldera case, and that was taken on
11 December 18, 1997.
12 Those designations are reflected on
13 your rulings chart starting on page 2 and
14 continuing on to page 3.
15 THE COURT: Okay.
16 MR. CASHMAN: Next, there are
17 designations from a deposition transcript from
18 a DOJ civil investigative demand. That was by
19 the Department of Justice and by the Texas
20 Department of Justice, State of Texas attorney
21 general. That deposition is March 18, 1998.
22 THE COURT: Okay.
23 MR. CASHMAN: That's on your rulings
24 chart starting on page 3 and continuing to page
25 4. � 10668
1 THE COURT: Nope. Doesn't go to page
2 4.
3 MR. CASHMAN: Pardon me?
4 THE COURT: Doesn't continue on to 4.
5 MR. CASHMAN: It might end on page 3.
6 THE COURT: Yeah.
7 MR. CASHMAN: And then on page 4,
8 continuing through most of the page 7 is a
9 deposition taken of Mr. Kempin on October 1,
10 1998.
11 THE COURT: Got it, yeah.
12 MR. CASHMAN: In the government case.
13 And then lastly, there's a deposition
14 transcript from which designations have been
15 made and collateral estoppel objections
16 asserted by Microsoft to the JCCP proceeding in
17 California, and that deposition was taken on
18 January 24, 2002. That's on page 7, I think
19 the last entry.
20 THE COURT: All right.
21 MR. CASHMAN: The Plaintiffs are going
22 to ask the Court to overrule all of these
23 collateral estoppel objections and make that
24 ruling before we determine whether or not we
25 need to address these collateral estoppel � 10669
1 objections on a line-by-line basis.
2 And I'd like to explain the reason
3 why Plaintiffs think that is the appropriate
4 way to proceed, and if it's necessary to
5 address line by line, Plaintiffs submit that it
6 would be appropriate to do that only after the
7 Court makes its ruling. And we could do that
8 on Monday, if necessary, but Plaintiffs would
9 like to explain why they think this is the
10 appropriate way to proceed.
11 First of all, the Court in its ruling
12 on December 7, 2006, has already ruled from the
13 plain language of what the Court has stated on
14 the transcript that Plaintiffs are entitled to
15 use any evidence from the Department of Justice
16 case that relates to facts or issues which have
17 not been collaterally estopped.
18 I think it's also clear that the Court
19 has ruled, and this was in connection with its
20 rulings on the collateral estoppel objections
21 for Mr. Gates' deposition, that issues which
22 have not been collaterally estopped include at
23 a minimum, include causation, harm to Iowa
24 consumers, credibility and demeanor, willful or
25 flagrant conduct, anticompetitive conduct � 10670
1 affecting the applications market,
2 anticompetitive conduct affecting the operating
3 systems market either before or after the
4 period of time at issue in the government case,
5 exemplary damages, contracts or combinations
6 which unreasonably restrain trade, and
7 Plaintiffs believe that the Court has said
8 these are all issues upon which there's no
9 collateral estoppel.
10 When the Court issued its ruling on
11 the Gates deposition, it denied all of the
12 objections globally for Mr. Gates and stated
13 for the reasons stated by Plaintiffs in their
14 memo relating to Mr. Gates.
15 And in our memo and in the argument
16 that we had with the Court, you may recall that
17 all of the issues which I just mentioned were
18 issues that are new in this case and on which
19 there's no collateral estoppel.
20 So the only evidence potentially
21 subject to collateral estoppel would be
22 evidence actually considered by Judge Jackson
23 in the Department of Justice case in
24 formulating his findings.
25 Of course, Plaintiffs are not going to � 10671
1 be -- they're not proving that same case that
2 we -- that was at issue in the government case
3 so because Plaintiffs are not here attempting
4 to prove liability in the operating systems
5 market for 1994 through 1998, the evidence that
6 we're offering from the Department of Justice
7 case for these other purposes could not be
8 solely for the purposes of bolstering what
9 happened in the Department of Justice case.
10 So collateral estoppel simply would
11 not apply under the Court's order of December
12 7th.
13 There is not a single piece of
14 testimony in the designations by Mr. Kempin
15 that are being offered to prove operating
16 system viability for 1994 to 1998 since that's
17 not what the Plaintiffs are proving here.
18 Rather, everything in Mr. Kempin's
19 testimony is being offered for other purposes.
20 Now, to back up for just a moment,
21 Your Honor, I'd like to point out just how far
22 afield Microsoft is in asserting these
23 collateral estoppel objections that they have
24 asserted.
25 The fact that their collateral � 10672
1 estoppel objections are unfounded is further
2 demonstrated by the fact that the evidence to
3 which Microsoft is now objecting, specifically
4 these Kempin designations, Microsoft has failed
5 to prove even as an initial matter that any of
6 this testimony was considered by Judge Jackson
7 in issuing these findings.
8 Mr. Kempin testified as a witness in
9 the Department of Justice trial.
10 That was the evidence from Mr. Kempin
11 that Judge Jackson had available to him when he
12 made his findings.
13 Here, by contrast, and this is some
14 examples, Microsoft is asserting collateral
15 estoppel objections to testimony given in a
16 deposition by Mr. Kempin in the Caldera case.
17 Well, the Caldera case was an entirely
18 different case than what was involved in the
19 Department of Justice government case.
20 As the Court has heard testimony
21 already and argument concerning what happened
22 in the Caldera case, that's all about DRI, per
23 processor licenses, et cetera, et cetera, and
24 that wasn't what the government case was about.
25 So on its face, any of their � 10673
1 objections to Caldera are just blatantly
2 improper. Any of the designations to Caldera
3 are blatantly improper.
4 Furthermore, Microsoft even as it
5 relates to the Department of Justice
6 depositions in the CID proceedings or in the
7 Department of Justice deposition itself, that's
8 not the evidence upon which Judge Jackson
9 relied and Microsoft has failed to present any
10 evidence to suggest otherwise.
11 So Microsoft has even -- has
12 essentially failed to show that any of the
13 evidence is the same evidence.
14 So given your December -- the Court's
15 December 7th order, the fact that the
16 Plaintiffs are submitting the testimony for
17 Mr. Kempin on multiple other issues where
18 there's no collateral estoppel, Microsoft's
19 basic failure to establish that any of the
20 testimony was even considered by Judge Jackson
21 or available to be considered by Judge Jackson
22 and given the fact that the Plaintiffs are not
23 -- not using any of this testimony solely to
24 bolster collaterally estopped facts in terms of
25 proving liability for the operating system for � 10674
1 1994 to 1998, Plaintiffs think that it is
2 appropriate to overrule all of these collateral
3 estoppel objections without the necessity of
4 going line by line.
5 And that is again underscored by what
6 we did with Mr. Gates and the tremendous amount
7 of time that is going to be required -- would
8 otherwise be required to do line-by-line
9 argument on issues where the Plaintiffs have
10 multiple other reasons for submitting this
11 testimony.
12 There is just no -- really, there's no
13 way that Microsoft can carry its burden to
14 establish a collateral estoppel objection for
15 any designated testimony from Mr. Kempin.
16 So Plaintiffs would request, Your
17 Honor, that the collateral estoppel objections
18 be denied and that before we determine whether
19 line-by-line argument is appropriate or
20 necessary, that the parties take guidance from
21 whatever ruling you issue on this request.
22 THE COURT: Any response?
23 MS. BRADLEY: Your Honor, as a
24 preliminary matter, it seems that the
25 Plaintiffs have the standard that this Court � 10675
1 has set out for what evidence may be presented
2 on collaterally estopped facts all wrong.
3 Nowhere in any of Your Honor's rulings
4 or orders have I seen anything that says that
5 the Court will preclude only evidence that was
6 considered by Judge Jackson in formulating his
7 findings of fact.
8 The issue is, the facts of
9 collaterally estopped findings of fact are
10 already in evidence. They've been read to the
11 jury by Your Honor. The jurors have them in
12 their notebooks. Plaintiffs continue to read
13 them throughout their case in chief. And for
14 Plaintiffs to attempt to put in evidence, that
15 goes to those exact same facts, in fact mirrors
16 those facts, is simply improper.
17 Plaintiffs noted for Your Honor that
18 this process of walking through the testimony
19 line by line will take a tremendous amount of
20 time, and I have to agree.
21 But I have to say, that that's a
22 result of Plaintiffs' failure to provide a
23 single alternate purpose for a single line of
24 testimony that they've designated regarding
25 these collaterally estopped facts. � 10676
1 Microsoft took the time and marched
2 through all of Plaintiffs' eight hours of
3 designations from this stack of prior testimony
4 from Mr. Kempin and linked the testimony
5 directly to collaterally estopped findings of
6 fact.
7 Microsoft then requested of Plaintiffs
8 that Plaintiffs either provide some argument as
9 to why the facts stated in the Kempin testimony
10 are somehow distinct from the facts as
11 collaterally estopped in the findings or to
12 provide some alternate purpose or use for that
13 testimony.
14 Plaintiffs have failed to do so, and
15 Microsoft wishes to and plans to take the Court
16 through each of these designations and to
17 demonstrate that the facts stated in the
18 testimony are collaterally estopped and that
19 there is no conceivable alternative purpose and
20 that Plaintiffs have as of yet failed to
21 provide a single alternative purpose for any of
22 these designations.
23 And if we may just turn to the first
24 designation on the list, DOJ/CID, October 2 --
25 MR. CASHMAN: May I respond to the � 10677
1 general argument before we go on a specific --
2 THE COURT: Sure.
3 MR. CASHMAN: First of all, Ms.
4 Jackson -- pardon me, Ms. --
5 THE COURT: Bradley.
6 MR. CASHMAN: Bradley, pardon me. I
7 was going to say Bradford, and I knew that
8 wasn't right.
9 I just want to touch on a couple of
10 the issues.
11 First of all, the fact that evidence
12 would have to have been considered by Judge
13 Jackson is obviously fundamental, and Ms.
14 Bradley has clearly forgotten about all of the
15 way that Mr. Holley and Mr. Tulchin postured
16 this when we argued collateral estoppel before
17 when they kept referring to the underlying
18 evidence for the findings of fact.
19 And the underlying evidence for the
20 findings of fact issued by Judge Jackson
21 necessarily means that evidence that he
22 considered in issuing his findings of fact.
23 So as of -- as I would say as a matter
24 of law, but at the very least as a matter of
25 logic, the 2002 testimony from the JCCP � 10678
1 deposition clearly could not have been
2 underlying evidence for the Department of
3 Justice action.
4 The testimony in the Caldera case,
5 because it's a wholly different case with
6 wholly different subjects, clearly could not
7 have been underlying evidence for the findings
8 of fact issued by Judge Jackson.
9 Now, we get a little bit closer when
10 we're talking about depositions taken in the
11 DOJ discovery, but there is no, no proof in the
12 record here, Your Honor, that the evidence in
13 those transcripts was considered by Judge
14 Jackson. What he looked at, what Judge Jackson
15 looked at was the testimony that Mr. Kempin
16 gave in court.
17 That's what was the basis for his
18 findings.
19 So I think it's clear -- absolutely
20 clear that the collateral estoppel objections
21 for Caldera and the JCCP case need to be
22 dismissed summarily.
23 I think that it's also true as it
24 relates to the DOJ deposition and the DOJ/CID
25 depositions, but even more importantly, given � 10679
1 the Court's December 7th ruling, which is the
2 right ruling, that if it goes to any other
3 purpose, it's appropriate.
4 And the Plaintiffs, contrary to
5 Ms. Bradley's assertions, have provided
6 multiple reasons in the briefing associated
7 with Mr. Gates and repeated here why the
8 testimony that we have designated for
9 Mr. Kempin is going to go to other issues
10 besides proving liability for operating systems
11 market from 1994 to 1995.
12 And just so the record is clear,
13 demeanor, credibility, causation, harm to Iowa
14 consumers, anticompetitive conduct affecting
15 the applications market, contracts or
16 combinations that unreasonably restrain trade,
17 willful or flagrant conduct, exemplary damages,
18 and last but not least, and not to make this an
19 exhaustive list either, but anticompetitive
20 conduct in the operating systems market for
21 time not at issue in the government action.
22 And I want to focus on that particular
23 criteria for just a moment.
24 Let's take that as the most extreme
25 example of getting, if you will, closest to the � 10680
1 line on what might be collateral estoppel.
2 Because let's say Mr. Kempin is giving
3 testimony that is -- let's say he gave
4 testimony in his testimony at trial before
5 Judge Jackson in which he testified about some
6 operating system issue that was the basis for a
7 finding by Judge Jackson on liability for
8 operating systems market between '94 and '98.
9 That evidence would be subject to use
10 by the Plaintiffs for other purposes,
11 specifically the operating systems --
12 anticompetitive conduct in the operating
13 systems market before or after that government
14 time period.
15 So even in the -- what you might
16 characterize as the closest example, the
17 collateral estoppel objection would be
18 inadequate, and that's why Plaintiffs submit
19 here that all of these objections can be denied
20 in global just as they were in Mr. Gates
21 because these -- the evidence at issue here
22 goes to multiple other issues in the case and
23 in no way are Plaintiffs going to be proving
24 liability for the operating systems market from
25 1994 to 1998. � 10681
1 So Plaintiffs submit that the best way
2 to proceed would be to rule on the -- our
3 request to deny these in global, and depending
4 on how the Court rules, if necessary, we can
5 take up the specifics on Monday.
6 And to make use of the Court's time
7 till 4:30, that's another reason why Mr.
8 Williams is here, is because we're ready to
9 fill the available time by arguing the Laurence
10 matter also and give the Court time to consider
11 our request for a global ruling on the Kempin
12 collateral estoppel objections.
13 Thank you.
14 THE COURT: Anything else?
15 MS. BRADLEY: Your Honor, if I may
16 just turn to the first designation on the
17 rulings chart just to give a single example of
18 why this testimony must be excluded.
19 Microsoft would appreciate the
20 opportunity to at minimum do that.
21 THE COURT: Okay, go ahead.
22 MS. BRADLEY: I've prepared -- if I
23 may approach, I have a set of the collaterally
24 estopped findings as issued to the jury.
25 I'm sure you're very familiar with � 10682
1 them, but just for our reference during the
2 argument.
3 And let's turn to the October 2nd,
4 1997, DOJ/CID transcript, which should be in
5 your pile somewhere, and to the first
6 designation on the list, and that's at pages
7 15, line 3 to 16, line 23.
8 And here Mr. Kempin is asked about
9 whether versions 1.0, 2.0, and 3.0 of Internet
10 Explorer were required by Microsoft to be
11 loaded with Windows 95 by OEMs.
12 The related finding of fact, if I may
13 turn to it, we've given a range here, Your
14 Honor, but if you'll just look to Finding of
15 Fact 158, it becomes very clear that the fact
16 about which Mr. Kempin testifies is precisely
17 the fact that is collaterally estopped by
18 Finding 158.
19 In Finding 158, Judge Jackson writes,
20 and the jury has before them, that Microsoft
21 did manage to bundle Internet Explorer 1.0 with
22 the first version of Windows 95 licensed to
23 OEMs in July 1995.
24 It also included a term in its OEM
25 licenses that prohibited OEMs modifying or � 10683
1 deleting any part of Windows 95, including
2 Internet Explorer, prior to shipment.
3 The OEMs accepted this restriction
4 despite their interest in meeting consumer
5 demand for PC operating systems without
6 Internet Explorer.
7 After all, Microsoft made the
8 restriction a nonnegotiable term in its Windows
9 95 license.
10 If you'll look at the testimony,
11 that's exactly what Mr. Kempin is asked about
12 and what he testifies to.
13 The questioner asked about Internet
14 Explorer 1.0 through 3.0 and whether Microsoft
15 required that OEMs preload the Internet
16 Explorer as well as the rest of Windows 95.
17 Mr. Kempin answers in the affirmative,
18 and asks -- the questioner goes on to ask about
19 the contract mechanisms or license mechanisms
20 that require that OEMs preload Internet
21 Explorer with Windows 95, and the testimony
22 goes on like that.
23 Plaintiffs have never suggested an
24 alternative purpose for these facts to which
25 Mr. Kempin testifies, which are precisely the � 10684
1 facts that are laid out in Finding of Fact 158.
2 MR. CASHMAN: Your Honor, Finding of
3 Fact 158 -- you know, it's got a lot of words
4 there that Ms. Bradley read, but boiled to its
5 essence, 158 stands for the proposition that
6 Microsoft used OEM licenses that prohibited
7 OEMs from removing Internet Explorer.
8 That's what it boils down to in
9 essence.
10 In the testimony in 1997 in the CID
11 deposition, Mr. Kempin tells the DOJ that IE is
12 a part of Windows and OEMs are contractually
13 obligated to preinstall it and that they don't
14 have a choice under the standard Windows 95
15 license agreement.
16 Preinstalling is different than being
17 precluded from removing it.
18 However, I'm going to move on and just
19 highlight for the Court a couple of easily
20 identifiable reasons why there's other purposes
21 for this.
22 The first and most obvious kind of
23 example would be the general example that I
24 gave to the Court earlier about when the
25 closest to the line you could ever get on � 10685
1 collateral -- the collateral estoppel kind of
2 objections that Microsoft is asserting.
3 And even if you took everything as
4 Ms. -- if Ms. Bradley said is true, it still
5 would only apply to 1994 to 1998, and there's
6 other periods of class time involved here, as
7 the Court knows.
8 However, there's other more -- even
9 more substantive issues to which this testimony
10 relates.
11 As the Court will recall, Count II of
12 our petition, of Plaintiffs' petition alleges
13 that Microsoft entered into contracts,
14 combinations, or conspiracies in restraint of
15 trade.
16 Plaintiffs have the burden of proving
17 that Microsoft entered into contracts or
18 combinations that unreasonably restrained
19 trade, and we're, obviously, entitled to
20 introduce relevant evidence indicating that the
21 contracts or combinations described in the
22 findings unreasonably restrained trade.
23 These designations right here that
24 Ms. Bradley cited are relevant to whether
25 Microsoft's contracts unreasonably restrained � 10686
1 trade.
2 And it's highly probative of that
3 issue that Mr. Kempin concedes that the way
4 Microsoft writes the license agreements for
5 Windows 95 gives OEMs no choice in that these
6 are strict rules.
7 So that testimony right there goes to
8 another issue in the case, highly important
9 probative issue.
10 Furthermore, we've got this civil
11 investigative demand, which began, obviously,
12 before the suit was filed and while the DOJ was
13 still determining whether it would bring a
14 government enforcement action against
15 Microsoft.
16 The testimony designated here and
17 throughout Mr. Kempin's deposition showing how
18 Mr. Kempin, a senior vice president, was lying
19 or about whether -- about whether IE was really
20 part of Windows 95 to the DOJ during its
21 investigation in an effort to lead enforcement
22 authorities astray and not to pursue any
23 litigation is extremely probative of whether
24 Microsoft's conduct was willful or flagrant.
25 So Microsoft's prelitigation efforts � 10687
1 to mislead the authorities indicate an
2 awareness of the illegality of Microsoft's
3 actions, that's another purpose for this
4 testimony.
5 THE COURT: You're going to introduce
6 evidence which shows that this portion or parts
7 of it were made -- are you going to impeach the
8 credibility of the witness here somehow?
9 MR. CASHMAN: I don't know that I can
10 answer that question, Your Honor, but this
11 testimony is part of the case to show willful
12 or flagrant conduct; that Microsoft was not
13 being forthcoming during the investigative
14 stages of the DOJ proceedings.
15 Again, because Mr. Kempin is a senior
16 executive for Microsoft, all of this testimony
17 will go to willful or flagrant conduct.
18 So there's multiple reasons why
19 Microsoft is wrong. And just to -- I tried to
20 come up with a couple of demonstratives that
21 really illustrate the point here, Your Honor,
22 and again why I think you can decide these
23 things globally, and with your permission, I'll
24 hand them up.
25 I'm giving a copy of these to � 10688
1 Microsoft and one to the Court.
2 The first of these two demonstratives
3 I have titled the DOJ case, and the second one
4 is titled the Comes case.
5 And the first one, what I've tried to
6 convey is, obviously, what happened in the DOJ
7 case. And the left box where we have DOJ
8 facts, exhibits, and testimony, I used the
9 hypothetical one through five facts, and those
10 would be the facts that Judge Jackson
11 considered, and then he issues his findings
12 over in the box on the left.
13 That would be -- that's the government
14 case boiled down to a simple picture.
15 And now if we turn to the
16 demonstrative which I provided to the Court for
17 the Comes case, up at the top I still have the
18 DOJ situation, and then below that, of course,
19 we have new facts, exhibits, and testimony.
20 And then along the bottom, the
21 multiple examples of additional types of issues
22 that arise in this case.
23 And what I've tried to indicate here
24 is in proving those various issues, Plaintiffs
25 are entitled under the Court's order from � 10689
1 December 7th to use any combination of evidence
2 from the DOJ case or new evidence to assist in
3 proving those new matters.
4 And that's all that's going on here
5 with the testimony of Mr. Kempin. It's going
6 to be used to prove a multitude of the
7 additional claims that the Plaintiffs have in
8 this case.
9 And we believe it's -- it should be a
10 straightforward matter that all of these
11 objections should be overruled without taking
12 the time, which really isn't necessary in
13 Plaintiffs' view, to address them on a
14 line-by-line basis.
15 THE COURT: Anything else?
16 MS. BRADLEY: Your Honor, just to say
17 I have yet to hear anything from Plaintiffs
18 about this line of testimony that we're
19 discussing now that's not bolstering, sheer
20 bolstering.
21 Plaintiffs argue that somehow
22 Mr. Kempin's testimony establishes that
23 Microsoft forced OEMs to -- that OEMs felt they
24 had no choice in taking Microsoft's deal.
25 The finding of fact establishes that � 10690
1 the contracts were nonnegotiable and that OEMs
2 were required to preload Internet Explorer with
3 Windows, and so on and so forth.
4 If that's bolstering and it's
5 inadmissible, Microsoft's happy to over the
6 weekend and moving forward before we come back
7 to you, Your Honor, again to meet and confer
8 with Plaintiffs further on this, provided that
9 Plaintiffs will agree to provide Microsoft with
10 genuine bona fide alternative purposes for each
11 of the designations to which Microsoft objects
12 and to which Microsoft has linked a
13 collaterally estopped finding of fact.
14 THE COURT: All right. We'll take
15 this matter up on Monday at 8:30. And I'll
16 think about what you said over the weekend and
17 I'll decide on the weekend how we're going to
18 proceed, so be ready to go --
19 MR. CASHMAN: Thank you, Your Honor.
20 THE COURT: -- at 8:30.
21 (Proceedings adjourned at 4:27 p.m.)
22
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25 � 10691
1 CERTIFICATE TO TRANSCRIPT
2 The undersigned, Official Court
3 Reporters in and for the Fifth Judicial
4 District of Iowa, which embraces the County of
5 Polk, hereby certifies:
6 That she acted as such reporter in the
7 above-entitled cause in the District Court of
8 Iowa, for Polk County, before the Judge stated
9 in the title page attached to this transcript,
10 and took down in shorthand the proceedings had
11 at said time and place.
12 That the foregoing pages of typed
13 written matter is a full, true and complete
14 transcript of said shorthand notes so taken by
15 her in said cause, and that said transcript
16 contains all of the proceedings had at the
17 times therein shown.
18 Dated at Des Moines, Iowa, this 25th
19 day of January, 2007.
20
21
22 ______________________________ Certified Shorthand Reporter(s) 23
24
25