10126 1 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 XXXVII 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 8:15 a.m., January 24, 14 2007, in Room 302 of the Polk County 15 Courthouse, Des Moines, Iowa. 16 17 18 19 20 HUNEY-VAUGHN COURT REPORTERS, LTD. 21 Suite 307, 604 Locust Street 22 Des Moines, Iowa 50309 23 (515)288-4910 24 25 10127 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 RICHARD M. HAGSTROM 7 MICHAEL R. CASHMAN Attorneys at Law 8 Zelle, Hofmann, Voelbel, Mason & Gette, LLP 9 500 Washington Avenue South Suite 4000 10 Minneapolis, MN 55415 (612) 339-2020 11 ROBERT J. GRALEWSKI, JR. 12 Attorney at Law Gergosian & Gralewski 13 550 West C Street Suite 1600 14 San Diego, CA 92101 (619) 230-0104 15 16 17 18 19 20 21 22 23 24 25 10128 1 Defendant by: DAVID B. TULCHIN 2 SHARON L. NELLES JEFFREY C. CHAPMAN 3 Attorneys at Law Sullivan & Cromwell, LLP 4 125 Broad Street New York, NY 10004-2498 5 (212) 558-3749 6 ROBERT A. ROSENFELD KIT A. PIERSON 7 Attorneys at Law Heller Ehrman, LLP 8 333 Bush Street San Francisco, CA 94104 9 (415) 772-6000 10 STEPHEN A. TUGGY HEIDI B. BRADLEY 11 Attorneys at Law Heller Ehrman, LLP 12 333 South Hope Street Suite 3900 13 Los Angeles, CA 90071-3043 (213) 689-0200 14 BRENT B. GREEN 15 Attorney at Law Duncan, Green, Brown & 16 Langeness, PC Suite 380 17 400 Locust Street Des Moines, IA 50309 18 (515) 288-6440 19 20 21 22 23 24 25 10129 1 RICHARD J. WALLIS Attorney at Law 2 Microsoft Corporation One Microsoft Way 3 Redmond, WA 98052 (425) 882-8080 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10130 1 (The following record was made out of 2 the presence of the jury at 8:18 a.m.) 3 THE COURT: Mr. Cashman, you had 4 something you wanted to talk about? 5 MR. CASHMAN: Yes, I do, Your Honor. 6 These would fall in the category of scheduling 7 or housekeeping. 8 And since we don't have court on 9 Friday before the Jury, my understanding 10 there's been nothing discussed about other 11 matters that we may be able to handle on that 12 day. 13 And if the Court is available, there's 14 some things that the Plaintiffs would like to 15 schedule for that day. 16 THE COURT: My understanding is Mr. 17 Tulchin and some of the counsel for defense are 18 going to use that day to travel. 19 MR. CASHMAN: Well, I don't think that 20 these motions require Mr. Tulchin. I mean, 21 these would be other various people. 22 THE COURT: Oh, what are they? 23 MR. CASHMAN: And so here is what the 24 Plaintiffs -- at least we want to advise the 25 Court this is what Plaintiffs would like to do, 10131 1 is there will be arguments this afternoon and 2 tomorrow afternoon after court on some of the 3 prior testimony designations, and some of that 4 may carry over on to Friday for some witnesses, 5 such as Joachim Kempin and potentially others. 6 So that would be the first item on the agenda. 7 The second item would be one of the 8 motions that's fully briefed and has been ready 9 for a while, but which has not been heard yet 10 is Plaintiffs' motion to preclude Charles 11 Laurence from testifying. So we'd like to get 12 that argued on Friday. 13 The third motion which we would like 14 to argue on Friday is Microsoft's motion for 15 the protective order on those 55 exhibits that 16 they contend are confidential. 17 Yesterday we received an order from 18 the Court, which I believe was intended to 19 schedule a hearing on this specific motion for 20 February 9th, which would have been if the full 21 briefing schedule had been implemented, but the 22 Plaintiffs are prepared to go ahead and argue 23 that motion on Friday and would like to do that 24 because we would like to get those exhibits 25 cleared and the status clarified as soon as 10132 1 possible. 2 So we'd like to do that on Friday. 3 And to the extent we have to go through those 4 on an exhibit-by-exhibit basis, that could take 5 a little bit of time. 6 Fourth, we would like to address our 7 motion, Plaintiffs' motion for -- to prevent 8 Microsoft from introducing those 2,860 9 exhibits, Defendant exhibits in the Plaintiffs' 10 case. 11 The Court may or may not be aware that 12 we filed a motion to prevent Microsoft from 13 doing that. We filed it on Monday after Ms. 14 Nelles' proffer last week of those exhibits. 15 So if Microsoft is willing to proceed 16 with that argument on Friday, we would like to 17 do that. 18 Or, in the alternative, if Microsoft 19 opposes arguing that motion on Friday, we'd 20 like a stay from the Court so that we don't 21 have to go through the process that we talked 22 about before where we have to identify all our 23 objections to those exhibits by the 15th of 24 February, I believe it was. We don't want to 25 have to do that until this motion is resolved. 10133 1 And then last, Your Honor, is we'd 2 like to schedule time to have argument on 3 Microsoft's motion to preclude Stephen McGeady 4 from offering testimony in Plaintiffs' case 5 regarding what Microsoft claims are facts 6 subject to collateral estoppel. 7 And that would be the last item on the 8 list. 9 MR. TULCHIN: Your Honor, I'm taking 10 them sort of in reverse order if I may. 11 The motion on Stephen McGeady has not 12 been fully briefed yet. We just received the 13 Plaintiffs' response, I believe, yesterday. 14 And we will, of course, prepare a reply. 15 We're not against having it heard, of 16 course. We'd like to have it heard, but Friday 17 would not be convenient for us. 18 With respect to the motion concerning 19 the exhibits that we offered, as to which there 20 have been no objections, I think the Court very 21 generously gave the Plaintiffs until February 22 15th to lodge any objections so that we could 23 proceed with that. 24 And I don't know what the urgency is 25 to have this heard on Friday or why it is that 10134 1 the Plaintiffs now when they had over a month, 2 I think, from the time the Court ruled on this, 3 why the Plaintiffs don't want to proceed in the 4 fashion that the Court instructed. 5 With respect to the motion for Charlie 6 Laurence, I'd have to check and see whether the 7 person involved is taking advantage of this 8 long weekend to travel. I don't know. 9 With respect to the prior testimony 10 issues, again, I'd like to check. That's 11 Mr. Tuggy. He'll be here at 3 o'clock today. 12 I don't know his schedule for the rest of the 13 week. If he's available, I'm sure that would 14 be fine. 15 Did I miss one? 16 MS. NELLES: Motion for protective 17 order on particular confidential documents, 18 which would also be Mr. Tuggy. 19 MR. TULCHIN: Right. 20 MR. CASHMAN: I'm sorry, what was 21 that? 22 THE COURT: The last one. The one on 23 the protective order. 24 MR. CASHMAN: The confidentiality 25 order, Your Honor, as I -- 10135 1 THE COURT: It was already set. 2 MS. NELLES: And it was set by Your 3 Honor already. 4 MR. TULCHIN: Yes, that one, Your 5 Honor, I think you issued an order saying it 6 would be argued on February 6th, if my memory 7 is correct, and that seems to make perfect 8 sense to us. 9 MR. CASHMAN: Well, Your Honor, the 10 motion for Charles Laurence, I guess Microsoft 11 is saying there's no objection as long as their 12 particular lawyer is here and available on 13 Friday. We think that should happen. That 14 motion has been ready for a long time. 15 The prior testimony, that's critically 16 important to the Plaintiffs to make sure that 17 we have these things resolved to the extent 18 possible in advance, so I think that Microsoft 19 should be required to be available for any 20 arguments that are necessary to implement that 21 process on Friday. 22 The issue regarding the confidential 23 documents, Your Honor, the important factor 24 here is that, as I explained to the Court 25 before, Microsoft failed to give any reasons at 10136 1 all about why these documents were confidential 2 in the first instance. And that was one of the 3 reasons why I asked the Court to deny their 4 motion summarily on its face. 5 There really is no basis upon which 6 Plaintiffs can even file a resistance given 7 Microsoft's failure to meet its initial burden, 8 and that's why Plaintiffs are ready to go 9 forward on Friday. And we think that we should 10 go forward on Friday and resolve that issue. 11 In that connection, I want to clarify 12 what appears to be an apparent misunderstanding 13 that some of these exhibits -- I'm not sure if 14 this includes any of those 55 specifically, but 15 the exhibits that Plaintiffs moved in that had 16 no objections, the 3,160 exhibits, those 17 exhibits, many of those exhibits are discussed 18 in the testimony, for example, the prior 19 testimony designations. 20 Some of those exhibits do come up. 21 They are not just can exhibits that are being 22 offered in the record just so they are in the 23 record. And so that is an additional reason 24 why we wanted to get those exhibits cleared up 25 as soon as we can. 10137 1 This issue about confidentiality we 2 think is ripe for hearing and argument right 3 now, and we'd like to take care of that on 4 Friday. 5 THE COURT: Very well. 6 Mr. Tulchin will check with his people 7 and see what availability they have, and then 8 I'll make the decision on how we are going to 9 handle the motion. 10 MR. CASHMAN: Thank you, Your Honor. 11 THE COURT: You're welcome. 12 Could I see counsel back in chambers 13 or back in the Jury -- whatever we call that 14 room. 15 (The following record was made out of 16 the presence of the jury at 8:27 a.m.) 17 (At this time, a sealed-by-the-Court 18 record was made by Janis Lavorato.) 19 (The following record was made in the 20 presence of the jury at 8:45 a.m.) 21 THE CLERK: Everybody can have a seat. 22 It will be just a few minutes. 23 THE COURT: Is our witness here? 24 MS. CONLIN: Yes, Your Honor. 25 THE COURT: There he is. 10138 1 You are still under oath, sir. 2 Juror Number 8 has been excused. 3 DAVID BRADFORD, 4 called as a witness, having been previously 5 duly sworn, testified as follows: 6 CROSS-EXAMINATION (CONT'D) 7 BY MR. TULCHIN: 8 Q. Mr. Bradford, good morning. 9 A. Hello. 10 THE COURT: Excuse me. Mr. [redacted], if 11 you are more comfortable moving over if you can 12 see better, you can. 13 JUROR [redacted]: Oh, I'm fine. I can 14 see. 15 Q. I know we said hello in the hall, 16 Mr. Bradford, but good morning again. 17 A. Yes. 18 Q. Mr. Bradford, directing your attention 19 to operating systems and your testimony about 20 per processor licenses, do you know how many 21 per processor licenses Microsoft had with OEMs, 22 makers of computers? 23 A. I do not. 24 Q. And we're going back, I'm asking you 25 with respect to the time period, let's say, 10139 1 1990 through '94 or '- 5. 2 A. No. 3 Q. Do you have any estimate as to how 4 many per processor licenses Microsoft had with 5 OEMs, again in the same period, around 1990 to 6 '95, and we're talking about operating systems? 7 A. No, I don't. 8 Q. Okay. Are you aware that at the time, 9 let's say, 1990 up until July 15th, '94, 10 Microsoft offered OEMs three different types of 11 license agreements, three different types of 12 contracts? 13 A. No, I'm not aware of that. 14 Q. You weren't aware of that. 15 Were you aware at the time that 16 Microsoft offered a per copy license agreement, 17 a per system license agreement, and a per 18 processor license agreement? 19 A. No. 20 Q. Are you aware now -- were you aware in 21 the same time period, let's say about 1990 to 22 July 15th, 1994, as to what percentage of the 23 OEMs chose per processor -- and I'm talking 24 about the OEMs who had contracts with Microsoft 25 -- chose per processor agreements as compared 10140 1 to the other two kinds? 2 A. No, I wouldn't have any idea. 3 Q. Did you have any idea as to the 4 relative price for MS-DOS or for Windows 5 depending which type of contract the OEMs 6 chose? 7 A. No. 8 Q. Were you aware that the OEMs who had 9 contracts with Microsoft, in fact, had a choice 10 of which of the three types of contracts to 11 enter into? 12 A. No. 13 Q. Do you recall, going way back to that 14 period, 1990 to July 15th, '94, do you recall 15 trying to find out how many OEMs had per 16 processor contracts or what percentage of the 17 overall OEM Microsoft contracts were per 18 processor? 19 A. I don't recall that specifically, no. 20 Q. Were you aware at the time that the 21 per processor contracts and the per system 22 contracts and the per copy contracts that 23 Microsoft had with OEMs would from time to time 24 expire? 25 A. No, not particularly. 10141 1 Q. So you weren't aware of the fact that, 2 for instance, let's just say, we'll call it OEM 3 Number 1, without specifying which company it 4 is, were you aware that that OEM, if it had a 5 per processor contract, that that contract 6 would at some point expire? 7 A. Oh, very typically contracts do have a 8 termination date, be it one year, five years, 9 ten years, whatever it might be, but I was not 10 aware of, you know, Microsoft's practices in 11 that regard, other than longer term contracts 12 that they had. 13 Q. I see. And were you aware that people 14 at Digital Research, both before Novell bought 15 it in '91 and afterwards, were soliciting OEMs 16 to try to get their business at the time that 17 their contracts with Microsoft were expiring? 18 A. I'm sure they were trying to solicit 19 business from OEMs during the time the 20 contracts were expiring, after they expired, 21 before they were expiring. 22 Q. Okay. Now, during the same period 23 that we've been talking about, 1990 until July 24 15th, '94 -- and let me just stop there. 25 It's your understanding, is it not, 10142 1 sir, that as of July 15th, '94, Microsoft 2 agreed with the government in that consent 3 stipulation not to use per processor contracts 4 anymore? 5 A. Yes, that's my understanding. 6 Q. And as far as you know, Microsoft 7 complied with that agreement; correct? 8 A. I wouldn't have the information to be 9 able to say that yes or no. 10 Q. Okay. You don't contend that 11 Microsoft failed to comply? 12 A. I would contend they failed to comply 13 with the consent decree in ways, but whether 14 it's on specifically the per processor issue or 15 not, I wouldn't contend that. 16 Q. All right. And during your 17 preparation over the weekend on Saturday and 18 Sunday, did you ask to see any of the Microsoft 19 contracts with OEMs? 20 A. No. 21 Q. Were you aware that among the 25 22 million pages of documents that Ms. Conlin has 23 in this case there are Microsoft contracts, 24 thousands, I think, Microsoft contracts with 25 OEMs for operating systems? 10143 1 A. All right. 2 Q. Were you aware of that? 3 A. Not thousands, no. 4 Q. Were you aware there were a good 5 number of them? 6 A. I hadn't really thought about it, but 7 I suppose in thinking about it, yeah, there 8 were probably lots of contracts in the records. 9 Q. Over a period of years? 10 A. Right, sure. 11 Q. And my question then is, have you made 12 any efforts to try to find out the extent to 13 which these per processor contracts were used 14 as compared to whether OEMs selected a per 15 system contract or a per copy contract? 16 A. No. 17 Q. Now, Digital Research, of course, had 18 its own license agreements, contracts, with 19 OEMs for DR-DOS; correct? 20 A. Can you restate the question? 21 Q. Sure. 22 During the period that Novell owned 23 Digital Research and prior to that, Digital 24 Research had its own license agreements, 25 contracts, with OEMs for DR-DOS? 10144 1 A. Sure. Of course, they would. 2 Q. Because, typically, you don't sell or 3 license an operating system like DR-DOS without 4 a formal written contract? 5 A. That's correct. 6 Q. And those are called license 7 agreements in the industry; right? 8 A. Sure, uh-huh. 9 Q. Okay. Do you recall in your 10 communications with the federal government in 11 connection with your complaints about 12 Microsoft, do you recall having one of your 13 lawyers inform the federal government about the 14 contracts that Novell had, Digital Research had 15 with OEMs itself? 16 A. I suppose that could have been 17 possible, but sitting here today, I don't 18 recall that. 19 MR. TULCHIN: May I approach the 20 witness, Your Honor? 21 THE COURT: You may. 22 Q. Mr. Bradford, let me hand you 23 Defendant's Exhibit 6770, DX 6770. 24 Now, the law firm of Arnold & Porter 25 in Washington, D.C., was a law firm that you 10145 1 had hired to represent Novell in connection 2 with your discussions with the Department of 3 Justice; correct? 4 A. That's correct. 5 Q. And the author of this letter is 6 someone named Randall Shaheen; correct? 7 A. That's right. 8 Q. And he was one of your lawyers? 9 A. I don't remember Randall's name 10 specifically. I remember Sturge Sobin and some 11 other folks from Arnold & Porter. 12 Let's see, this is Arnold & Porter. 13 Okay. There was a Ablondi & Foster that was a 14 law firm that did some work for us, and here 15 this is Arnold & Porter. Okay. 16 Q. Right. Mr. Sobin was one of your 17 lawyers, and he was with the firm that you 18 mentioned, Ablondi & Foster, was it? 19 A. That's correct. 20 Q. And then you also had this law firm in 21 Washington named Arnold & Porter; correct? 22 A. That's correct. 23 Q. And this letter, Defendant's Exhibit 24 6770, was a letter that was sent on Novell's 25 behalf to the Department of Justice by this law 10146 1 firm; correct? 2 A. If I could look it over. 3 Q. Certainly, sir. 4 A. Okay. Thanks. 5 Yes, it appears to be. 6 MR. TULCHIN: Your Honor, we offer 7 Exhibit 6770. 8 MS. CONLIN: Plaintiffs have no 9 objection. 10 THE COURT: It's admitted. 11 Q. Now, if we could just take a look at 12 the screen at the first page of this letter, 13 you'll see, Mr. Bradford, that right in the 14 first paragraph, first two sentences, your 15 lawyer at this law firm in Washington -- oh, 16 and I should say this letter is dated December 17 8, 1993. Correct, sir? 18 A. That's right. 19 Q. And your lawyer directs a letter to 20 the Department of Justice. 21 MR. TULCHIN: Maybe we can see that, 22 Chris. 23 Thank you. 24 Q. And he says, attached please find the 25 following. First, I have attached a list of 10147 1 OEMs who have licensed DR-DOS from Novell. 2 Do you see that, sir? 3 A. Yes, I do. 4 Q. And attached to this exhibit, 6770, is 5 that list; correct, sir? 6 A. I assume that's so, yes. 7 Q. Well, is it the case, Mr. Bradford, 8 that your lawyer in Washington would not have 9 sent a list to the Department of Justice 10 without checking with Novell and Digital 11 Research to make sure that the list was 12 accurate? 13 A. That's correct. In fact, I see Linnet 14 Harlan's name referenced on the second page of 15 the letter, so I'm sure Linnet, who was general 16 counsel of Digital Research, collaborated with 17 Randall in submitting this to the DOJ. 18 Q. And Linnet Harlan worked for you at 19 the time; right? 20 A. Yes, that's right. 21 Q. Okay. Now, if we could look at the 22 third page of Defendant's Exhibit 6770. 23 This is the first page of the list of 24 OEMs that have contracts for DR-DOS; correct? 25 A. I suppose this is a set of OEMs over a 10148 1 period of time. In other words, at the time 2 this was submitted to the Department of 3 Justice, this wouldn't have been all the OEMs 4 currently licensing DR-DOS. I assume that this 5 is over a period of time, maybe from 1990 to 6 1993. 7 Q. Okay. 8 MR. TULCHIN: And can we just show a 9 portion of this so we make it a little easier 10 to read? 11 Q. And this is set up alphabetically, 12 correct, Mr. Bradford? 13 A. Yes. 14 Q. So the first OEM is ABC Computer 15 Company, and this list of OEMs who have 16 licensed DR-DOS goes on for about seven pages? 17 A. Yes. 18 Q. Now, I'm not asking you to take the 19 time to do so, but feel free if you need. 20 I tried to count up the number of OEMs 21 that were on the seven-page list that your 22 lawyer sent to the Department of Justice, and I 23 came up with the number of 247 OEMs. 24 A. All right. 25 Q. Does that seem about right to you? 10149 1 A. Seven times 40 or thereabouts? 2 Q. Well, it's a little less than 40, but, 3 you know. 4 A. Okay. It's fair enough. 5 Q. But you can see that there are quite a 6 few listed on each page, correct? 7 A. Let's agree that it's between 200 and 8 250. 9 Q. Okay. I counted 247, but I could be 10 wrong. Whatever. I think we get the range. 11 A. Right. 12 Q. And this list of OEMs, again, are 13 computer manufacturers who have licensed DR-DOS 14 from Novell. That's what the letter says; 15 correct? 16 A. That's correct. 17 Q. All right, sir. 18 Now, do you have any recollection as 19 to what, let's say, the high-water mark in 20 terms of OEMs was for Novell for its product 21 DR-DOS? How many OEMs did you have at any one 22 time? What was the maximum number? 23 A. I wouldn't hazard to guess at this. 24 There's 247 here. Maybe a high-water mark was 25 100. I don't know. 10150 1 I see the dates in the far right-hand 2 column. Some are 1990. Some are 1991. Some 3 are 1992. There aren't any that I can see that 4 are in 1993. 5 Q. Right. And the date is the date -- 6 MR. TULCHIN: Maybe we can show the 7 dates, Chris. 8 Q. The date all the way in the right-hand 9 column is the date on which the OEM entered 10 into the contract at issue; correct? 11 A. I assume that's correct, yes. 12 Q. And those contracts typically lasted 13 for some period of time? 14 A. Yes. Typically one, two years. 15 Q. Yeah. They could have been one year 16 or two years, and sometimes more; correct? 17 A. Could have been, sure. 18 Q. So these contracts, although some of 19 them go back to '91 and some of them are dated 20 other years, and you can look through all seven 21 pages -- 22 A. I see some that go back to 1989 right 23 there. 24 Q. Yes, I see one that does in that group 25 too. 10151 1 But these contracts typically last for 2 a period of years; correct? 3 A. Typically a minimum of one year. 4 Q. And I don't want to go through all 247 5 OEMs on this list in the interest of time -- 6 A. Right. 7 Q. -- but is it fair to say that if a 8 consumer, someone who is interested in buying a 9 personal computer, if a consumer in the United 10 States wanted to find a computer that had 11 DR-DOS bundled with it preloaded, that you 12 could find it? 13 A. Well, you'd have to study the names of 14 the hardware manufacturers here to see if any 15 of them were commonly selling products in the 16 United States. 17 I see some from Germany. I see some 18 from France. I see some from England. I 19 suspect there were some from the United States 20 as well. But we have to look in more detail at 21 the list to determine if any of them were 22 quote-unquote popular hardware manufacturers 23 that you would find typical at the time, 24 Computerland or Businessland store. 25 Q. Right. Well, certainly, Mr. Bradford, 10152 1 it's true, is it not, that some OEMs located in 2 Europe and some located in Asia, maybe in 3 Japan, for example, would ship their computers 4 into the United States? 5 A. Yes, that would be true. 6 Q. So just because an OEM is in France or 7 England or Japan doesn't mean the consumers in 8 the United States couldn't get one? 9 A. I'll concede that. That's fine. 10 Q. Okay. So during this period, 11 certainly -- and the letter, again, is dated in 12 December 1993 -- there were lots and lots of 13 OEMs around the world who had agreed in license 14 agreements to bundle DR-DOS on their computers? 15 A. Can you repeat the question? 16 Q. Sure. Let me -- 17 A. Yeah. I want to make sure of the 18 date. 19 Q. Okay. December 1993 is the date of 20 the letter. 21 A. Correct. 22 Q. And as of that date, and prior to 23 then, all right -- and let's just talk about 24 the period that Novell owned Digital Research. 25 So we're talking about November 1st, 10153 1 '91, until December '93. About two years. 2 A. Okay. 3 Q. And during that two-year period there 4 were many, many OEMs who had agreed to bundle 5 DR-DOS on their computers? 6 A. I wouldn't describe it as many, many. 7 Q. All right. Certainly whatever the 8 number is, that's what it is. 9 A. Right. 10 Q. Okay. And if DR-DOS turned out to be 11 a very, very popular operating system that end 12 users were clamoring for, there was a way to 13 get DR-DOS by going to one of these OEMs; 14 correct? 15 A. Well, the average consumer couldn't go 16 directly to the original equipment 17 manufacturer. He typically would walk into a 18 Computerland store or Businessland store or the 19 popular retailers at the time in order to 20 access a personal computer. 21 If one, for example, from -- I don't 22 know, these are hard to read -- Cody Automation 23 Systems. If Cody Automation Systems wasn't 24 sitting in that Computerland store, then the 25 end user customer couldn't get access to that 10154 1 operating system. 2 Q. Unless he went to another store that 3 had that computer. 4 A. Yes. 5 Q. And, of course, these retail stores 6 compete among one another; correct? 7 A. Sure. 8 Q. So let's say there's Best Buy and 9 there's -- as one store and there's another 10 chain that sells computers. They're competing. 11 And if the executives of one computer 12 store chain believed that consumers are looking 13 for DR-DOS, well, they're going to stock 14 computers that have DR-DOS bundled; correct? 15 A. Right. If they have access to that, 16 right. 17 Q. Sure. So, in the end, wouldn't you 18 say that consumer demand is what drives the 19 OEMs' decisions about which operating system to 20 put on their computer? 21 A. Well, that's certainly the way it 22 ought to be, but it's not the way it was. 23 Q. Well, you say it wasn't the way it 24 was. 25 Did you ever gain any information as 10155 1 to what Mr. Frankenberg thought about that 2 subject matter? He was your boss when he took 3 over from Noorda; right? 4 A. Yes. That would have been 19- -- 5 spring of 1994. 6 Q. Did you ever gain any information as 7 to what Mr. Frankenberg thought about that? 8 A. I'm not -- I don't know -- I don't 9 recall specifically to what you're referring. 10 Q. Well, I wonder maybe if we can ask you 11 to look at his testimony which was taken by 12 deposition. This deposition was in August of 13 1998. 14 (Whereupon, the following video was 15 played to the jury.) 16 Question: Can you describe for me the 17 steps that an OEM takes in evaluating an 18 operating system to determine whether or not it 19 ought to be included in its product offerings? 20 Answer: Well, the very first question 21 is what -- what level of demand is there in the 22 marketplace for that operating system. 23 And the elements of that include 24 direct demand, what kinds of inputs are you 25 hearing from the channel and from customers 10156 1 requesting a particular operating environment; 2 implied demand, which is how many applications 3 have been written by independent software 4 vendors and others that run on that 5 environment. 6 The third is cost, reliability, and 7 the amount of investment that's required to put 8 it in place and maintain it and properly 9 support customers. It's pretty much in that 10 order. 11 Question: Okay. And that actually 12 was my next question. 13 And that would be the order that you 14 would evaluate whether to support or not 15 support an operating system? 16 Answer: Yes. 17 (Whereupon playing of video 18 concluded.) 19 BY MR. TULCHIN: 20 Q. So, Mr. Bradford, you recognize 21 Mr. Frankenberg; correct? 22 A. Yes, sure. 23 Q. He was the CEO of Novell. And before 24 that he actually worked for an OEM; correct? 25 A. That's right. Hewlett Packard. 10157 1 Q. Hewlett Packard. And his 2 responsibilities included responsibilities for 3 Hewlett Packard's OEM business? 4 A. That's right. 5 Q. And what Mr. Frankenberg said was that 6 the first thing when OEMs are deciding what 7 operating system to put on their computers, the 8 first thing they consider is customer demand, 9 the demand among their customers; correct? 10 A. That's very important, right. 11 Q. And you wouldn't disagree with that? 12 A. I wouldn't disagree with that. 13 Q. All right. And how about Tony 14 Speakman? You know Mr. Speakman; correct? 15 A. Refresh my recollection on who Tony 16 is. 17 Q. Well, Mr. Speakman was a witness by 18 videotape deposition in this case, and I wonder 19 if you are familiar with what Mr. Speakman says 20 on the subject. 21 He was in England with DRI. 22 A. Okay. 23 Q. Do you remember Anthony Speakman? 24 A. I remember the name generally. 25 Q. Okay. 10158 1 MR. TULCHIN: May I help, Your Honor, 2 here? 3 MS. CONLIN: I don't think I got it on 4 myself. Usually I spill a glass of water. 5 This is pretty dramatic. 6 MR. TULCHIN: Here. Sorry for the 7 interruption, Your Honor. 8 THE COURT: That's okay. 9 THE WITNESS: I think we would 10 acknowledge it wasn't your fault. 11 MR. TULCHIN: We'll stipulate. 12 THE WITNESS: Okay. 13 MS. CONLIN: Thank you. I think you 14 can go ahead. 15 MR. TULCHIN: Tell me when you are 16 ready. 17 MS. CONLIN: I do apologize. 18 MR. TULCHIN: No problem. 19 Shall I proceed, Your Honor? 20 THE COURT: Sure. 21 Q. Let me show you just a little bit of 22 Mr. Speakman's testimony on the same general 23 subject. 24 (Whereupon, the following video was 25 played to the jury.) 10159 1 Question: Turning to the next page, 2 the first half of the page, there's a 3 discussion of issues in choosing an operating 4 system. 5 In your experience, what factors did 6 OEMs consider in selecting an operating system? 7 Answer: What factors did who 8 consider? 9 Question: OEMs consider, in deciding 10 which operating system to license. 11 Answer: I think the biggest single 12 factor that an OEM would consider would be what 13 its customers would perceive as the most 14 attractive solution. 15 Question: The customer preference? 16 Answer: Their customer, yes. 17 Basically, it was a very competitive market for 18 the PC assemblers. As I say, there were two or 19 300 of these guys, smaller guys in the UK. And 20 there's obviously a worldwide market of the 21 bigger players as well, and they're all 22 competing for the same sets of customers. 23 So they would be trying to offer the 24 customer a system that was most attractive. 25 (Whereupon playing of video 10160 1 concluded.) 2 BY MR. TULCHIN: 3 Q. So, Mr. Bradford, again, I mean, you 4 have no reason to disagree with Mr. Speakman or 5 Mr. Frankenberg that when OEMs were deciding 6 what operating system to put on their PCs, the 7 number one consideration was what their 8 customers wanted? 9 A. I think they were very interested in 10 their customer preferences. 11 Q. Okay. And you have no reason to 12 disagree with your boss, Mr. Frankenberg, or 13 Mr. Speakman, who was on the ground in the UK? 14 A. I think taken out of context and 15 looking at their narrow testimony there, I 16 wouldn't disagree with that as just a pure 17 contention. 18 Q. I wonder if we could look at -- well, 19 before we look at the next document, 20 Mr. Bradford, I want to ask you a little bit 21 about due diligence. 22 You testified on direct examination in 23 response to some questions from Ms. Conlin that 24 Novell, and I think you personally, conducted 25 due diligence on Digital Research at the time 10161 1 in 1991 when you were considering acquiring the 2 company? 3 A. That's right. 4 Q. And due diligence involves, among 5 other things, going into the files of a company 6 like Digital Research that you were considering 7 acquiring and making sure that you understood 8 what the key documents were at the company; 9 correct? 10 A. Yes, that's correct. 11 Q. And Linnet Harlan, who was the general 12 counsel of Digital Research, supplied you and 13 other people at Novell with a great many 14 documents at the time in 1991 when you were 15 considering buying Digital Research? 16 A. That's my recollection. It's 15 years 17 ago, 16 years ago -- 18 Q. Right. 19 A. -- but I'm sure we looked at 20 documents. 21 Q. Right. And I think you testified on 22 direct examination that you looked at many 23 documents and thereafter you were satisfied and 24 proceeded to buy the company, you, Novell? 25 A. That's right. 10162 1 Q. Okay. Well, let's look at Defendant's 2 Exhibit 117 if we might. 3 MR. TULCHIN: Your Honor, I wonder if 4 I -- 5 MS. CONLIN: Wait a minute. May I see 6 it first? 7 MR. TULCHIN: Sure. I wonder if I may 8 go to counsel table for just a moment? 9 THE COURT: Sure. 10 MR. TULCHIN: I believe this has no 11 objection, Your Honor. 12 May I proceed? 13 MS. CONLIN: Yes, Your Honor. 14 THE COURT: What was the exhibit 15 number again? 16 MR. TULCHIN: It's Defendant's Exhibit 17 117, Your Honor. 18 THE COURT: Thank you. 19 MR. TULCHIN: Would you like a copy? 20 THE COURT: No. I'm okay. 21 MR. TULCHIN: Thank you. 22 Q. And if we could just look at the top. 23 This is dated in October 1990, so it's prior to 24 the time that Novell entered into its agreement 25 to buy Digital Research. 10163 1 And Frank Bailinson was someone you 2 knew at DRI or came to know later; correct? 3 A. I certainly knew John Bromhead and 4 Steve Tucker. I don't recall Frank. 5 Q. All right. You don't recall 6 Mr. Bailinson at all? 7 A. Not offhand. 8 Q. Do you remember whether or not he 9 continued at DRI after Novell bought the 10 company? 11 A. I don't know that. 12 Q. All right. In the course of your due 13 diligence, did you have occasion to look at 14 documents such as this? 15 And let's look at the first paragraph. 16 This is from Mr. Bailinson to 17 Mr. Bromhead and Mr. Tucker, or maybe I should 18 stop. 19 Can you identify Mr. Bromhead for the 20 Jury, please, tell us who he was? 21 A. John was an employee at Digital 22 Research, and I think he had responsibility, 23 kind of a technical marketing responsibility 24 for the company. 25 Q. And how about Steve Tucker? 10164 1 A. Steve Tucker, I think, was John's 2 boss, had broader responsibility. I think he 3 was the VP of marketing for Digital Research. 4 Q. So Mr. Tucker is the VP of marketing, 5 you referred to as an executive of the company? 6 A. Yes. It's safe to say that Steve was 7 an executive with the company. I'm not 100 8 percent sure on his title. 9 Q. Okay. And what Mr. Bailinson, the 10 author of this memo, says to Mr. Bromhead, with 11 a copy to Mr. Tucker, he starts out by saying, 12 John, what follows are the criteria that I used 13 in my rankings and the rankings themselves. 14 And the subject matter, as you see, is 15 DR-DOS feature rankings/selection criteria; 16 right? 17 A. Yes, that's right. 18 Q. And in the very next paragraph where 19 he says ranked selection criteria, in the 20 second sentence, Mr. Bailinson says, I've done 21 this because our primary OEM sales obstacle is 22 lack of perceived end-user appeal, awareness 23 and pull. 24 Do you see that? 25 A. Yes, I do. 10165 1 Q. And he's underlined the word end-user; 2 correct? 3 A. Yes. 4 Q. Now, do you recall in the course of 5 due diligence having seen this document? 6 A. No, I don't. 7 Q. Do you know whether others at Novell 8 who were conducting due diligence saw it? 9 A. No. 10 Q. But certainly this is an indication 11 from DRI before the purchase of DRI by Novell 12 that its primary sales obstacle with OEMs is 13 lack of perceived end-user appeal; correct? 14 A. All right, yes. 15 Q. And, in fact, that's consistent, is it 16 not, Mr. Bradford, with what you understood in 17 1991 when you were buying DRI that the biggest 18 obstacle that DRI had in selling DR-DOS, the 19 operating system, to OEMs was that there was a 20 lack of perceived end-user appeal for DR-DOS in 21 the marketplace? 22 A. No, I wouldn't agree with that. 23 Q. But you certainly understood, as 24 Mr. Frankenberg testified, that for OEMs, that 25 was the number one issue, is this operating 10166 1 system going to appeal to our customers? 2 A. Yes. Okay. 3 Q. And here are the people at DRI, 4 including a memo to the top marketing guy, 5 right, Mr. Tucker? 6 A. Certainly an executive, right. 7 Q. That say that was the number one 8 obstacle. It doesn't say number one and I 9 shouldn't say that. 10 It says, it's our primary OEM sales 11 obstacle; correct? 12 A. Yeah. I think we can all agree that 13 end-user appeal is a very important factor in 14 whether or not an OEM selects an operating 15 system. 16 Q. Well, certainly beyond very important, 17 according to Mr. Bailinson of DRI, it was the 18 primary obstacle? That's what he says; 19 correct? 20 A. Well, he lists a lack of perceived 21 end-user appeal, awareness and pull. So he 22 lists three primary obstacles the way I read 23 that. I don't think he, you know -- right? 24 Q. Well, let's just take this one at a 25 time. Sure. 10167 1 End-user appeal, awareness and pull. 2 They're all very closely related, are they not? 3 They're talking about end-user appeal, 4 awareness and pull. 5 A. No. I think they're separate and 6 distinct issues. End-user appeal, awareness 7 and pull. They're three different obstacles. 8 Q. Okay. If that's how you read it, 9 that's fine. That's your testimony. But 10 that's certainly what the marketing people at 11 Digital Research were saying in 1990? 12 A. I agree with that. 13 Q. Now, I want to go back to the subject 14 of per processor licenses. 15 Normally when two companies are 16 competing, let's say Digital Research or Novell 17 when it owned Digital Research is competing 18 with Microsoft in selling operating systems. 19 If one company is using a particular 20 kind of sales tactic, ordinarily the other 21 company will find some tactic or strategy to 22 try to counter it; correct? 23 A. To some extent, you're absolutely 24 right. 25 Q. Sure. 10168 1 A. To some extent. 2 Q. And customers very often tell the 3 salesmen what's going on in the market; 4 correct? 5 A. That's right. 6 Q. So an OEM is telling people at Novell 7 about what they're doing with Microsoft when 8 they talk to Novell. And when they talk to 9 Microsoft, they're telling them what they're 10 doing with Novell? 11 A. Sure. 12 Q. Okay. And the salesmen in the field 13 get a pretty good feel of what's happening in 14 the marketplace? 15 A. That's right. 16 Q. All right. Now, my question to you at 17 this point, Mr. Bradford, is whether or not 18 Novell and DRI use contracts with OEMs that 19 were the equivalent of the per processor 20 contracts that Microsoft entered into with some 21 of its OEMs. 22 MS. CONLIN: Objection, Your Honor. 23 THE COURT: It's overruled. 24 A. I'm not sure. 25 Q. All right. 10169 1 A. I'm sure we had contracts that we, you 2 know, were creating that were attempting to be 3 competitive in the marketplace. 4 But we did not have the market power 5 that Microsoft had to impose certain terms on 6 the original equipment manufacturers. 7 Q. Well, you say impose, Mr. Bradford, 8 but I think we've already agreed that you're 9 not aware of the three types of contracts that 10 Microsoft actually offered OEMs; correct? 11 A. I'm certainly aware of the per 12 processor license. 13 Q. But you weren't aware of the other 14 two? 15 A. I was aware in general that there 16 would have been other contracts, but I had no 17 idea in specificity what those would have been. 18 Q. And the choice of which kind of 19 contract to enter into was the choice that the 20 OEM made; right? 21 A. Yes. That was their decision. 22 Q. Okay. 23 MR. TULCHIN: I wonder if we could 24 look at Defendant's Exhibit 108. 25 MS. CONLIN: Just a moment, please. 10170 1 THE COURT: Do Plaintiffs have a copy? 2 MS. CONLIN: I'm going to take this 3 opportunity to try to open my pop again. 4 THE WITNESS: Careful. 5 MR. TULCHIN: Don't shake it first. 6 MS. CONLIN: No, I didn't shake it. 7 THE WITNESS: It was Angela's fault. 8 MR. TULCHIN: 108. No, don't put it 9 up on the screen. We need the hard copies. 10 MS. NELLES: My box isn't even 11 perfect. 12 MR. TULCHIN: Well, at this time, Your 13 Honor, I guess the delay is my fault, and I 14 apologize. There's so many pieces of paper 15 floating around. 16 MS. NELLES: Are you sure you want 108 17 or 180? 18 MR. TULCHIN: 180. 1-8-0. 19 THE COURT: Oh, I thought you said 20 108. 21 MR. TULCHIN: Maybe I misspoke. It's 22 probably my fault. 23 MR. HAGSTROM: Yes, you said 108. 24 MR. GREEN: It was your fault. 25 MR. TULCHIN: I apologize to everyone. 10171 1 Until today, I didn't think I was 2 dyslexic, but maybe I'm switching the numbers. 3 180. 4 THE COURT: All right. 5 MR. TULCHIN: No wonder. 6 THE COURT: All right. 7 MS. CONLIN: Okay. Your Honor, we do 8 have a relevance objection to this exhibit, and 9 we object to it also on the grounds that we 10 have previously urged. 11 THE COURT: May I see it? 12 MR. TULCHIN: Certainly, Your Honor. 13 THE COURT: Okay. Overruled. 14 Continue. 15 MR. TULCHIN: Defendants offer Exhibit 16 180, Your Honor. 17 MS. CONLIN: We already made our 18 objections, Your Honor. 19 THE COURT: It's admitted. 20 Q. Do you have a copy, Mr. Bradford? I'm 21 sorry. 22 MR. TULCHIN: May I approach, Your 23 Honor? 24 THE COURT: You may. 25 Q. Here we go. And I'll try to get the 10172 1 number right. 180. 2 A. All right. 3 Q. 1-8-0. 4 Now, Mr. Bradford, looking at the 5 first page, and maybe we can just bring the top 6 up to make it more visible. 7 This is an OEM software license 8 agreement between Digital Research and a 9 company called D. Top Europe in Italy; correct? 10 A. Okay. Yes. 11 Q. Do you see that, sir? 12 A. Yes. 13 Q. And looking at Exhibit 180, a little 14 bit further down the page, you can see that 15 it's signed on the first page by someone from 16 Digital Research. That's Robert Gunn; is that 17 right? 18 A. Yes. 19 Q. Do you recognize that name? 20 A. I do. 21 Q. And Mr. Gunn in April of 1992 was a 22 managing director for Digital Research UK; 23 correct? 24 A. That sounds right, uh-huh. 25 Q. And then the OEM in Italy also signed 10173 1 the contract in 1992, correct? 2 A. That's right. 3 Q. So this was after the time that Novell 4 had bought Digital Research? 5 A. That's right. 6 Q. At the time you were making complaints 7 to the Department of Justice about the nature 8 of Microsoft's license agreements with OEMs, 9 did you do any investigation to see what type 10 of license agreements Digital Research was 11 entering into with its own OEMs? 12 A. I don't recall that specifically, no. 13 Q. All right. Would you look, sir, on 14 what is the third to the last page of the 15 document. It has at the bottom the number 16 C0508793. 17 And you'll see at the very bottom of 18 that page, the last paragraph, which is 19 paragraph D, it says, the per copy price stated 20 in Schedule B hereto is granted solely on the 21 fact that licensee -- and that's the OEM, 22 right, licensee? 23 A. That's right. 24 Q. Licensee hereby agrees to bundle the 25 license program with each and every defined 10174 1 hardware unit shipped by licensee as it leaves 2 licensee's premises. 3 Bundle shall be defined as including 4 one copy of the licensed program in the box 5 containing a defined hardware unit. 6 Do you see that, sir? 7 A. Yes. 8 Q. And if you look on the prior page 9 which ends with the Number 792, you'll see that 10 defined hardware is a term which is defined as, 11 D. Top-branded personal computers. And then 12 motherboards included for DR-DOS release, and, 13 finally, motherboards not included for DR-DOS 14 release 6. Do you see that, sir? 15 A. Yes. 16 Q. So -- and if you need time to look 17 further at this, Mr. Bradford, please do, but 18 would you agree with me that this contract that 19 Digital Research had in 1992 was the equivalent 20 of a per processor contract? It required the 21 OEM to pay for Digital Research DR-DOS with 22 every copy of its computers that it shipped? 23 A. Yes, it appears to be that. 24 Q. All right. And do you know that Mr. 25 Gunn, the person who signed this contract, gave 10175 1 a deposition on this question? 2 A. I'm not aware of that. 3 MR. TULCHIN: I wonder if we could 4 show his deposition. It's from the Caldera 5 case in 1998. October 29th, 1998. 6 MS. CONLIN: Is this for the purpose 7 of impeachment? 8 MR. TULCHIN: No, no. Just I want to 9 refresh his recollection as to what this person 10 in Europe was saying. 11 MS. CONLIN: I think that's improper 12 in cross-examination, Your Honor. There is no 13 impeachment issue. 14 THE COURT: Show it to the witness. 15 MR. TULCHIN: Thank you. May I 16 approach, Your Honor? 17 THE COURT: Yes. 18 Q. Here, Mr. Bradford, are some of the 19 pages from Mr. Gunn's deposition in the Caldera 20 case. 21 And if you look starting at pages 160 22 and then running through 164, you'll see that 23 Mr. Gunn testifies about the contract that 24 we've been looking at, Exhibit 180; correct? 25 A. I don't see a page 160. I see it goes 10176 1 page 7, then to 161. 2 Q. Right. 3 A. I want to make sure I have the same 4 document you have. 5 Q. I think we do. 6 A. Okay. 7 Q. I think we do. Page 7 was just the 8 first -- 9 A. Introductory page. 10 Q. Yes, introductory page. 11 A. Okay. 12 Q. But if you see, and if you look at 13 164, you'll see Mr. Gunn testifying that this 14 contract that we just looked at, Exhibit 180, 15 is essentially a per processor contract; 16 correct? 17 A. I didn't contest that. 18 Q. And you agree with that? 19 A. Yes. 20 Q. All right. Well, let's look at 21 Defendant's Exhibit 34. 22 MR. TULCHIN: May I approach, Your 23 Honor? 24 THE COURT: You may. 25 Q. Mr. Bradford, I'm handing you 10177 1 Defendant's Exhibit 34. 2 This is a license agreement that DRI 3 entered into in 1991; correct? 4 A. I see a 1989 date on this. Let's see. 5 Q. Well, let me show you -- if you look, 6 sir, at the signature pages, the production 7 number of the page that has the signatures, 8 Mr. Bradford, is 825776. 9 Do you see that? 10 A. Yes, I do. 11 Q. And you see that this contract has 12 been signed by Peter DiCorti of Digital 13 Research; correct? 14 A. Yes. 15 Q. And Peter DiCorti was working for 16 Digital Research in California? 17 A. Yes, that's my recollection. 18 Q. Did you know Mr. DiCorti? 19 A. Yes. 20 Q. In 1991, was he the vice president and 21 CFO, chief financial officer of Digital 22 Research? 23 A. I don't recall specifically. I don't 24 think he stayed on board, but that sounds 25 right, yeah. 10178 1 Q. All right. And this is a contract 2 that was signed in June of 1991; correct? 3 A. Yes, I see those signature dates, but 4 I'm also confused by dates of 1989 and 1990. 5 I see -- it well could have been that 6 when this contract was originally signed, it 7 was maybe originally signed in '89 and maybe 8 they did an addendum to it in '91, but -- 9 Q. Well, there are some pages that 10 contain dates in 1989 which might indicate, 11 Mr. Bradford, might it not, that this was a 12 form contract that was originally prepared in 13 1989? 14 A. That could have been. I'm also seeing 15 dates in 1990 toward the end. So it's a little 16 confusing. But it appears to have been signed 17 in 1991. 18 Q. Okay. And this was in June of '91, 19 the signature. That's what it says; correct? 20 A. That's correct. 21 Q. And this is a contract between Digital 22 Research and an OEM called I.F.C. Computer 23 Company; correct? 24 A. Yes. Again, one I've never heard of, 25 but -- 10179 1 Q. Well, I.F.C. Computer Company was 2 located in the United States; is that right? 3 A. It says Taiwan. 4 Q. I beg your pardon. You're right. It 5 was located in Taiwan, but shipped computers 6 into the United States? 7 A. I don't know that. 8 Q. And I.F.C. is on that list that we 9 looked at from December 1993 that was sent to 10 the Justice Department. Do you remember that? 11 A. Well, I don't remember -- 12 Q. I don't know if you want to look at it 13 -- 14 A. -- one of 247, but I -- yeah, the 15 document will speak for itself. I assume you 16 are right. 17 MR. TULCHIN: Microsoft offers Exhibit 18 34, Your Honor. 19 MS. CONLIN: We object on the basis of 20 relevance, Your Honor. 21 THE COURT: Overruled. 22 It's admitted. 23 Q. Now, if you look, Mr. Bradford, let's 24 put this on the screen -- if you look at 25 Exhibit 34, the license agreement between 10180 1 Digital Research and I.F.C., and you look first 2 at the page that has the production number that 3 ends with 777. Let's just look at the top 4 first. 5 This is a license agreement with an 6 OEM for DR-DOS 5.0; correct? 7 A. Yes. 8 Q. And it talks about 25,000 copies; 9 right? 10 A. Yes. 11 Q. It's a license to distribute that many 12 for I.F.C.; is that right? 13 A. Yes. I assume so. 14 Q. And then a little bit further down the 15 page, next to number 5, special terms, the 16 contract says, in consideration of the special 17 pricing discount, licensee -- and, again, 18 that's the OEM, right, I.F.C.? 19 A. That's right. 20 Q. -- agrees to, 5.1.1, distribute one 21 copy of the DR-DOS licensed program with each 22 and every unit of the defined hardware 23 distributed by licensee during the term of this 24 agreement. 25 Do you see that? 10181 1 A. Yes. 2 Q. And if you want to look at the 3 definition of defined hardware, it's on the 4 very -- it's on the second page of Exhibit 34. 5 Let's go to that. 6 And you'll see, Mr. Bradford, that 7 defined hardware is the third definition from 8 the bottom. 9 Defined hardware means those computer 10 hardware products manufactured by or for 11 licensee. 12 That's the OEM; correct? 13 A. Yes. 14 Q. So let's go back to the page we were 15 looking at. 16 A. I think it adds and identified in the 17 applicable supplements. So I think you'd have 18 to go back to the supplement to find out what 19 the defined hardware is, and I've done that. 20 And it looks like it just says I.F.C. systems 21 in general. 22 Q. Right. And thank you for jumping 23 ahead. I was going to try to take you through 24 that, but we saved a little bit of time. 25 A. Sure. 10182 1 Q. Thank you. 2 So let's go back to the page with the 3 Number 777. And what this says is that -- 4 MR. TULCHIN: Let's put that back up. 5 Thank you. 6 Q. -- in consideration of the special 7 pricing discount, I.F.C., the OEM, agrees that 8 it's going to bundle on each and every PC that 9 it sells one copy of DR-DOS; correct? 10 A. That's right. 11 Q. So in order to get a lower price than 12 it would otherwise get, this OEM has agreed to 13 enter into what is the equivalent of a per 14 processor contract; right? 15 A. Yes, that's right. 16 Q. All right. So it's correct, is it 17 not, then, Mr. Bradford, having looked at 18 Defendant's Exhibits 34 and 180, that Digital 19 Research, both before the time that Novell 20 bought it and after the time that Novell bought 21 it, was itself entering into the kind of per 22 processor contract that you say Microsoft had 23 with its OEMs? 24 A. Yes. In Taiwan and Italy I've seen. 25 Q. Okay. You don't deny that there were 10183 1 others, do you, Mr. Bradford? 2 A. I have no way of knowing that. 3 Q. All right. I want to move to a 4 different subject, Mr. Bradford. 5 During your direct examination, you 6 provided to the Jury some testimony about a 7 contract that Novell and Digital Research had 8 entered into with Sears. 9 Do you remember that? 10 A. Yes. 11 Q. And Sears, in turn, had a contract 12 with the U.S. Navy; is that right? 13 A. Yes. 14 Q. So in this case would it be fair to 15 say that Sears was, in essence, the OEM? 16 A. Or distributor. 17 Q. Distributor, is that a better way to 18 put it? 19 A. I think so. 20 Q. We don't know whether Sears was 21 putting together the PC itself or it was just 22 reselling it? 23 A. Right. I don't know the Sears 24 structure. 25 Q. Okay. And during your examination, 10184 1 you were shown by Ms. Conlin a document that is 2 Plaintiffs' Exhibit 5466. 3 MR. TULCHIN: And I wonder if we could 4 look at that again. This is in evidence. 5 Let's look at the second -- well, 6 let's start with the first page. My apologies, 7 Chris. 8 Q. The first page of Plaintiffs' Exhibit 9 5466 is a fax cover sheet in April of 1992 from 10 Mark Zelinger. He was working for Sears; 11 right? 12 A. From -- yes, it appears to be, yes. 13 Q. And Mr. Zelinger was with something 14 called Sears Federal Systems in Washington, 15 D.C.; right? 16 A. Yes. 17 Q. And his customer was the U.S. Navy? 18 A. Yes. 19 Q. And he sends a fax to Mr. Singh, who 20 you identified in direct as a Digital Research, 21 Novell OEM person; correct? 22 A. I'm not sure if I said OEM, but he 23 certainly worked for Novell, Digital Research. 24 Q. Okay. And you remember Mr. Singh from 25 1992; correct? 10185 1 A. Right. 2 Q. Okay. So let's look at the second 3 page of Exhibit 5466. 4 And Mr. Zelinger is writing a 5 memorandum to Mr. Singh of Digital Research, 6 and he's sending a copy to various people, 7 including Jonathan Price who works for Novell; 8 right? 9 A. Yes. 10 Q. Okay. And then let's look at the 11 first -- well, it's the second paragraph, which 12 starts per your April 10th memo. 13 And towards the end of the paragraph, 14 Mr. Zelinger of Sears says -- there's a lone 15 sentence. It starts, when we discussed this by 16 telephone the other day, I indicated that Sears 17 would have to review its position on paying for 18 a patch to the DR-DOS product to bring it into 19 compliance with the specifications of the 20 contract. 21 Do you see that? 22 A. I do. 23 Q. And the contract to which Mr. Zelinger 24 is referring is the contract that Sears had 25 with the U.S. Navy; right? 10186 1 A. That's right. 2 Q. Now, during the course of your direct 3 examination, you were shown two Microsoft 4 documents. 5 Do you remember that? 6 A. Yes. 7 Q. I think it was an e-mail written by 8 Mr. -- and I don't know how to pronounce his 9 name either. Kechejian. 10 A. Sounds right. 11 Q. K-e-c-h-e-j-i-a-n. And then a May 12 1992 report I think was also written by 13 Mr. Kechejian. 14 Do you happen to remember the dates of 15 those two Microsoft documents? 16 A. I don't offhand. 17 Q. Well, one of them was Plaintiffs' 18 Exhibit 5305. That's the e-mail. And that was 19 actually dated June 1st, '92. 20 Does that accord with your memory? 21 And if you want me to, I'll find a 22 copy and show it to you. 23 A. I don't know. Yeah, it would be 24 helpful if I saw copies -- 25 MR. TULCHIN: Could I have a copy of 10187 1 Plaintiffs' Exhibit 5305 for Mr. Bradford? 2 A. -- to confirm that. 3 MR. TULCHIN: May I approach the 4 witness, Your Honor? 5 THE COURT: You may. 6 Q. This is 5305, Plaintiffs' 5305, and 7 the e-mail from Mr. Kechejian -- let's hope we 8 are not butchering his name -- was on the very 9 last page. 10 Do you remember that? And Ms. Conlin 11 showed you this at the time. 12 A. Yes. 13 Q. It's right at the top of the page. 14 It's dated June 1st, 1992; correct? 15 A. That's right. 16 Q. All right. And you were also shown by 17 Ms. Conlin Plaintiffs' Exhibit 3518, which was 18 that May 1992 monthly report. 19 Remember that? 20 A. Was it in a memorandum form? I don't 21 remember a formal report. 22 MR. TULCHIN: May I approach, Your 23 Honor? 24 THE COURT: Yes. 25 MR. TULCHIN: Thank you, sir. 10188 1 Q. John Kechejian and MS-DOS transition 2 team monthly report. 3 A. Oh, okay. That was the cover, yeah. 4 Q. And there was one page in there about 5 the Sears material; correct? 6 Do you remember Ms. Conlin showed you 7 one page? 8 A. Yes. 9 Q. And I think she said at the time that 10 this must necessarily have been written after 11 May of 1992; correct? 12 A. I don't remember our talking about 13 that, but it could have been. 14 Q. Well, it was a monthly report for the 15 month of May of 1992? 16 A. Right. So undoubtedly written about 17 the same time as his June e-mail or something 18 like that. 19 Q. Okay. And that's all I wanted to 20 establish when talking about Mr. Zelinger's 21 memo to Mr. Singh of Digital Research. 22 That was in April of '92. 23 A. That's right. 24 Q. And the only two Microsoft documents 25 that you were shown on this same subject were 10189 1 from June. 2 We agree? 3 A. The record would show that. I assume 4 that's right. But I don't know for certain. 5 Q. Okay. And that's two months later. 6 You certainly weren't implying in your 7 testimony, were you, Mr. Bradford, on direct 8 examination that Microsoft caused Sears to back 9 away with its contract -- back away from its 10 contract with Digital Research? 11 A. I think I was saying that. 12 Q. Is that what you were saying, that 13 Microsoft caused that to occur? 14 A. Right. I'm sure there could have been 15 other factors, but Microsoft's influence was 16 certainly a large one. 17 Q. Well, let's go back to Exhibit 5466, 18 which was written two months before the two 19 Microsoft documents you see. And let's look at 20 the fourth paragraph on the first page. 21 It says, the most important issue that 22 Sears has -- do you see that? That's how it 23 starts out. 24 A. I do. 25 Q. And that sentence continues, the most 10190 1 important issue that Sears has with Lapheld is 2 customer satisfaction. 3 A. Right. 4 Q. And Lapheld -- again, I think you saw 5 this on direct, Lapheld is what they were 6 calling the computers that Sears was going to 7 sell to the U.S. Navy? 8 A. That's right. 9 Q. And Sears is saying the same thing 10 that Mr. Frankenberg said and that we talked 11 about at some length earlier today, which is 12 the key thing for an OEM, or in this case 13 perhaps a distributor, the key thing is what 14 does their customer want; right? 15 A. Right. That's a driving factor, no 16 question. 17 Q. And here's Mr. Zelinger of Sears 18 saying the same thing. He says, Sears, as a 19 corporation, bases its business decisions 20 around the needs and solutions of our 21 customers. 22 And that makes perfect sense to you; 23 correct? 24 A. Yes. 25 Q. You have no reason to doubt that? 10191 1 A. Right. 2 Q. And then he says, based on this 3 practice, my team is having a very difficult 4 time satisfying the government's concerns 5 regarding DR-DOS. 6 A. Right. 7 Q. So the concerns that Sears was passing 8 along to Novell in 1992, April, were concerns 9 apparently that the government had been 10 expressing about the DR-DOS product; correct? 11 A. Yes. That was one of their concerns. 12 Q. All right. Well, let's go -- 13 A. Their specific concerns about DR-DOS 14 I'm not sure, but -- 15 Q. Well, let's look at the next 16 paragraph. I mean, this document was a 17 document that you looked at during your direct 18 examination with Ms. Conlin; correct? 19 A. Yes. 20 Q. And you testified about it? 21 A. Uh-huh. 22 Q. So I just want to make sure we look at 23 some of the important pieces of it. 24 In the very next paragraph after 25 saying that Sears was passing along the 10192 1 government's concerns, Mr. Zelinger says, the 2 government MIS players -- now MIS stands for -- 3 these are information -- 4 A. Management information systems. 5 Q. Thank you. So they are what we might 6 call today IT or information technology people? 7 A. Sure. Folks working for the 8 government specializing in information systems. 9 Q. Right. And it says they're familiar 10 with MS-DOS, know that it is compatible and 11 believe that DR-DOS has bugs and 12 incompatibility issues. 13 Correct? 14 A. Correct. 15 Q. That's what the government IT people 16 or MIS people believed? 17 A. That's right. 18 Q. And is there any evidence anywhere 19 that you know of, anywhere, that Microsoft had 20 done anything to lobby these government people 21 on the subject of DR-DOS's bugs? 22 A. I'm not sure. 23 Q. Well, you haven't seen any during 24 your -- 25 A. I haven't seen any direct information 10193 1 other than the e-mails that we reviewed 2 yesterday that were pretty clear that Microsoft 3 was apparently doing just that. 4 Q. Well, Microsoft was talking to Sears, 5 and that's what the e-mail indicates; correct? 6 A. Microsoft was talking to Sears, as 7 their prospective customer, that's right. 8 Q. Right. And I asked you whether you 9 knew of any evidence that Microsoft was talking 10 to the government MIS players, the people who 11 believe that DR-DOS has bugs and 12 incompatibility issues. 13 A. I don't know that, right. 14 Q. All right. And then Mr. Zelinger 15 tells Mr. Singh, the Sears Lapheld team is not 16 capable of satisfying the government concerns; 17 correct? 18 A. That's right. That's what it says. 19 Q. And then let's go to the next 20 paragraph on the first page. 21 Again, this is Plaintiffs' Exhibit 22 5466. 23 Mr. Zelinger appeals to Novell, to 24 Digital Research, to help him out. He says, 25 Digital Research must lead the way in 10194 1 satisfying our customer. I am thus requiring 2 immediate marketing and technical support to 3 work with my team in satisfying the government. 4 If we are unsuccessful in resolving 5 compatibility issues between DR-DOS and MS-DOS 6 and Windows, I believe that the government may 7 mandate the replacement of DR-DOS (with MS-DOS) 8 on the contract. 9 Do you see that? 10 A. I do. 11 Q. And then the very last paragraph on 12 the same page. This is a very serious issue 13 for Sears. We cannot afford to win the 14 contract but lose the business due to 15 government concerns about the operating system. 16 Now, what, if anything, do you know 17 about what efforts Mr. Singh of Novell or 18 anyone else at Novell or Digital Research made 19 after getting this memorandum to satisfy Sears 20 or the government concerning the bugs and 21 incompatibility issues that the technical 22 people who work for the government were 23 concerned about? 24 A. Oh, I'm sure they worked hard to 25 resolve them. 10195 1 Naturally, it was a very, very large 2 contract that they wanted to secure. 3 So, naturally, I'm sure they worked 4 hard. 5 Q. Well, you're say you're sure. I take 6 it what you're saying is you're assuming they 7 did so? 8 A. That's right. 9 Q. And where's the evidence that you know 10 about? Any documents or anything else on this 11 subject? 12 A. Well, we've seen a series of documents 13 expressing, you know, interest in this 14 government contract. 15 You know, these were Novell employees, 16 Digital Research employees excited about 17 securing a very large contract from Sears for 18 the U.S. government. And so, gosh, if they 19 weren't working hard to resolve the 20 incompatibility issues, I would be shocked, as 21 you would be. 22 Q. Okay. Well, let's look at Defendant's 23 Exhibit 170. 24 THE COURT: Before we do that, could 25 we take a recess? 10196 1 MR. TULCHIN: Oh, certainly, Your 2 Honor. I wasn't aware of the time. 3 THE COURT: We'll take a recess. 4 Remember the admonition previously 5 given. Leave your notebooks here. 6 We will recess for ten minutes. 7 (A recess was taken from 9:57 a.m. 8 to 10:15 a.m.) 9 THE COURT: Everyone else may be 10 seated. Let's wait a minute for Mr. Shiner to 11 move over. 12 MR. TULCHIN: Do you need help with 13 that, Mr. Bradford? 14 THE WITNESS: Got it. 15 THE COURT: All right. Mr. Bradford, 16 you are still under oath. 17 MR. TULCHIN: Shall I proceed, Your 18 Honor? 19 THE COURT: Yes. Please. 20 MR. TULCHIN: And may I approach the 21 witness? 22 THE COURT: You may. 23 BY MR. TULCHIN: 24 Q. We are still talking about Sears, 25 Mr. Bradford, and here is Defendant's Exhibit 10197 1 170. 2 MR. TULCHIN: And if we can show this. 3 I believe it's without objection. 4 Q. This is a memorandum later in the 5 month of April from Mr. Price to Mr. Singh of 6 Novell; correct? 7 A. Yes. 8 Q. And it's dated April 29th, so it's a 9 couple weeks after the document we just looked 10 at; correct? 11 A. Correct. 12 Q. And there's a copy to Mr. Zelinger and 13 other people. 14 And the subject says Novell DR-DOS 15 technical support and bug fixes. 16 And maybe we could just show on the 17 screen the rest of the document. 18 What's happening here, Mr. Bradford, 19 is it not, it's that Sears is making a proposal 20 to Novell about how to deal with the concerns 21 that the government has expressed about bugs 22 and incompatibilities in DR-DOS; correct? 23 A. That appears to be correct. 24 Q. And among the things that Sears is 25 saying is that -- if you look under the heading 10198 1 software error corrections, Sears is proposing 2 that one way for Novell to keep this contract 3 with the government, the contract that you say 4 was so important, was for Novell to agree to 5 fix errors and/or bugs in DR-DOS 6.0; correct? 6 A. That's what it says. 7 Q. And what it says is that Novell would 8 agree to fix errors or bugs that affect Sears' 9 performance of the Lapheld within 45 days of 10 written notification by Sears; correct? 11 A. That's correct. 12 Q. So the Sears proposal, at least as of 13 the end of April, was that if there was a bug 14 in DR-DOS 6, Sears would have to put it in 15 writing and Novell would get 45 days to fix 16 that; correct? 17 A. That's right. 18 Q. And then it goes on to say, this 19 includes, but is not limited, to the following 20 types of problems, and it lists four types of 21 problems, incompatibilities with software 22 currently offered by Sears, software already in 23 use by Sears' customers, Windows 3.0 and 3.1 as 24 well as future releases of Windows, and other 25 popular DOS applications. 10199 1 Do you see that? 2 A. Yes, I do. 3 Q. And then in the next paragraph -- 4 MR. TULCHIN: And maybe we can blow 5 that up a little bit, Chris. 6 Q. -- what Sears goes on to say is that 7 after Novell gets this written notification of 8 a problem, Novell has 10 days to respond in 9 writing describing the nature of the problem 10 and the process to resolve it. 11 And then it says, if Novell believes 12 the problem is related to hardware or software 13 other than the operating system. So that means 14 anything other than DR-DOS; right? Is that how 15 you understand this? 16 A. No, not necessarily. 17 Q. Well, okay. It goes on to say, Novell 18 will respond with evidence which satisfies 19 Sears' technical staff. 20 A. Okay. 21 Q. And Novell would be responsible for 22 indemnifying Sears if there were problems only 23 if the problems are with DR-DOS. Is that what 24 this amounts to? 25 A. Well, the problems with DR-DOS and its 10200 1 compatibility with the four items listed above, 2 which include significantly Microsoft Windows 3 3.0 and 3.1. 4 Q. Right. But Sears is proposing to 5 Novell that if the problem is with some other 6 software, not DR-DOS, that Novell won't be 7 financially responsible for that; correct? 8 A. I'm not sure what you mean. 9 Q. Well, I think you testified in direct 10 examination that you personally instructed 11 other people at Novell to turn down the Sears 12 contract because you were worried about 13 Novell's responsibility for reimbursing Sears 14 if there were incompatibilities; right? 15 A. I don't know if I testified that I 16 directed that activity. It was probably 17 someone in the legal department, and it could 18 have been me. 19 Q. Yeah, I thought you said it was you, 20 but maybe not. 21 A. Right. 22 Q. But someone in the legal department 23 certainly said, you know, don't enter into the 24 Sears contract, we're worried about Novell's 25 responsibility if it turns out there are 10201 1 incompatibilities with Windows? 2 A. That's right. 3 Q. And the Sears proposal to you in 4 April, April 29th, 1992 -- and when I say to 5 you, I don't mean you personally, you're not 6 copied on this memo, but to Mr. Singh who 7 worked at Novell -- was that Novell -- let's go 8 back to the very first part of this under 9 software error corrections. 10 Sears proposes Novell agrees to fix 11 errors or bugs in the DR-DOS 6 operating 12 system. 13 So the bugs have to be in DR-DOS, 14 right, for Novell to be responsible 15 financially? 16 Isn't that what that says? 17 A. Yes. But those bugs may be 18 specifically related to the fact that it's 19 incompatible with Windows and the government or 20 Sears could deem that to be a bug. 21 Q. Right. Let's assume -- 22 A. The fact that the two aren't operating 23 together. 24 Q. Let's assume that's so. What Sears is 25 proposing is that if that incompatibility is 10202 1 the fault of DR-DOS, that is of the software 2 engineers at Novell, then Novell should be 3 responsible, but if it's not the fault of 4 DR-DOS, you would have no responsibility; 5 correct? 6 A. I think the government would assume, 7 since they're utilizing our operating system, 8 that if it wasn't compatible with Windows, 9 wasn't operating effectively with Windows 3.0 10 and 3.1, that they would look to Novell for a 11 remedy. And that's what worried us, I'm sure. 12 Q. Well, regardless of your worry, if we 13 look at that next paragraph that starts upon 14 written notification, again, what Sears is 15 saying is that Novell will have the chance to 16 convince Sears that the problem is related to 17 something other than DR-DOS. 18 Do you see the second sentence there, 19 if Novell believes the problem is related to 20 hardware or software other than the operating 21 system, Novell will respond with evidence which 22 satisfies Sears' technical staff? 23 So, again, just to make sure we're 24 together on this, Defendant's Exhibit 170 is a 25 proposal by Sears of how to deal with the 10203 1 government's concerns about the quality of 2 DR-DOS; isn't that right? 3 A. No. I would not classify that as the 4 quality of DR-DOS. 5 Q. Well, we looked at Exhibit 5466, and I 6 don't want to go back to that. We spent a few 7 minutes on it, but, in 5466, Sears is reporting 8 on what the government technical people are 9 concerned about with DR-DOS. 10 A. Which is the incompatibility issues 11 and bugs that are associated with those 12 incompatibilities. 13 Q. And that are associated with DR-DOS? 14 A. Certainly. 15 Q. Okay. And here what Sears is 16 proposing is that if the problem is not a 17 problem in DR-DOS, if the incompatibility comes 18 about because of some other software, for 19 example, Windows, Sears is proposing that 20 Novell would have a chance to convince Sears' 21 technical staff that it's not your fault, and 22 in that case you wouldn't have to pay to 23 reimburse Sears? 24 A. That was not the way we read that. 25 Q. In any event, what occurred with the 10204 1 Sears contract is that the Novell legal 2 department instructed the Novell marketing 3 people not to make the deal; is that right? 4 A. Is that a statement or a question? 5 Q. No, it was a question. I'm sorry. I 6 left out the last three words. 7 A. I think that's my recollection. 8 Q. Okay. 9 A. Is that it imposed upon the company a 10 significant financial risk if we could not make 11 DR-DOS compatible with Windows. 12 Q. And that was a risk that the legal 13 department thought Novell shouldn't take? 14 A. That's correct. 15 Q. All right. Let's go to another 16 subject. 17 Yesterday in my cross-examination, we 18 were talking about suites. And I think you 19 will remember, Mr. Bradford, that you agreed 20 with me that in around 1994, 1995 Novell 21 recognized that end users, customers, people 22 who were buying PCs, preferred to get their 23 applications in the form of suites where the 24 products were bundled together; right? 25 A. In general, that's a correct 10205 1 statement. 2 Q. Okay. 3 A. I'm sure there were single individuals 4 that only wanted the word processing module or 5 only wanted the Excel spreadsheet or only 6 wanted, you know, separate and distinct things, 7 but, in general, you know, to have a suite 8 combined was of value to the stockholders -- or 9 to the end user, customers. 10 Q. To the end users? 11 A. Yes. 12 Q. And because it was of value to the end 13 users, OEMs wanted to give those customers what 14 those customers wanted; right? 15 A. Sure. 16 Q. And we talked yesterday about Office 17 Suites and I just want to see if this refreshes 18 your recollection as to when Microsoft released 19 Office. 20 So I have two questions for you. 21 Do you recall that Office for the Mac, 22 Office for the Macintosh graphical user 23 interface was released by Microsoft in the 24 1980s? 25 A. I don't recall that. 10206 1 Q. And how about Microsoft Office for 2 Windows? Do you recall that that was released 3 in October 1990? 4 A. No, I don't recall that. I think 5 specifically yesterday we were talking about a 6 new release of Windows in the '94, '95 time 7 frame. Windows 5 or something like that. And 8 then the Microsoft Office suite was shipping at 9 the same time. 10 Q. Yes, you did talk about that, but my 11 question was when Microsoft first released an 12 Office Suite for the Windows 5.0. And I'm just 13 asking, does October 1990 seem about right to 14 you? 15 A. No, I have no basis to know that 16 particular date when Microsoft issued, first 17 issued their Office Suite. 18 Q. And we talked yesterday about the fact 19 that for the engineers, software engineers at 20 Novell, it was going to take a period of some 21 months after Novell acquired WordPerfect and 22 the Quattro Pro spreadsheet to integrate them 23 and put them together in a suite that could be 24 offered to customers? 25 A. That's right. 10207 1 Q. I went back and looked. And according 2 to what I can find, the first time that Novell 3 introduced such a suite was in January of 1995. 4 Does that seem about right to you? 5 A. Yes. If Windows was released in 6 August of '94 -- 7 Q. No, August of '95. Windows -- sorry. 8 Maybe I'm -- I shouldn't have interrupted you. 9 A. Let's get our dates correct. 10 Q. Windows 95, of course, was released in 11 August of '95. 12 A. Okay. 13 Q. And, of course, to go back again, 14 Novell acquired WordPerfect in June of '94. 15 That's when the deal closed. 16 A. That's right. 17 Q. And acquired the Quattro Pro 18 spreadsheet from Borland at the same time, in 19 June of '94? 20 A. That's right. 21 Q. And we were talking about how many 22 months it took Novell to put them together, to 23 integrate them, to sort of sew them together 24 tightly and come out with an Office Suite that 25 customers might want? 10208 1 A. Right. 2 Q. And you said you thought it was a few 3 months, and I went back and looked. And 4 according to the records we have, it was 5 January 1995, which would be about seven 6 months. 7 A. Okay. 8 Q. And I'm just asking if that seems 9 about right to you. 10 A. Yes, that probably is correct. 11 Q. Okay. And that was a suite that 12 Novell came out with in early '95 that was 13 written to run on the Windows platform; 14 correct? 15 A. That's right. 16 Q. Now, I think you testified yesterday 17 on direct examination, but perhaps it was 18 Monday, that Novell bought WordPerfect, and, 19 again, the deal closed in June '94, Novell 20 decided to layoff -- to discharge a number of 21 salespeople who worked at WordPerfect; correct? 22 A. Yes. It was a consolidation of the 23 two companies. And, naturally, you would go in 24 and make selections as to who should move on 25 and, you know -- economies of scale we call it. 10209 1 Q. And Novell was in Provo and 2 WordPerfect was located, what did you say, 20 3 miles away? 4 A. Oh, no, four or five miles. 5 Q. Four or five miles. I knew it was 6 close by. 7 A. Yeah. 8 Q. And I think you said that -- and tell 9 me if I'm wrong -- that most of the salespeople 10 at WordPerfect were discharged, were fired when 11 this consolidation occurred in the middle of 12 '94? 13 A. No. I didn't say that most of them 14 were discharged. 15 Q. Well, was it most of them? 16 A. I don't think so, no. 17 Q. Do you remember there being some 18 significant criticism in the industry of Novell 19 for getting rid of the WordPerfect salespeople 20 who were most familiar with that product? 21 A. I assume there would be, sure. 22 Q. Well, I'm asking whether you remember 23 that criticism. 24 A. I don't remember specific criticism at 25 this point in time, no. 10210 1 Q. Okay. And certainly the Novell sales 2 force, as of the middle of 1994, had no 3 experience selling a word processing 4 application; correct? 5 A. That's right. 6 Q. And, in fact, the Novell sales force 7 to a large extent had concentrated on selling 8 operating systems, DR-DOS, to computer makers, 9 OEMs; correct? 10 A. That's right. Along with the NetWare 11 operating system. 12 Q. Which also was sold primarily to OEMs? 13 A. And distributors. 14 Q. Okay. But not retail? 15 A. That's right. 16 Q. Okay. So WordPerfect's business had 17 been concentrated to a large extent on selling 18 the WordPerfect word processing software to 19 retail outlets; correct? 20 A. Right. I think they sold both to 21 retail and through distribution and through 22 dealers. 23 Q. Right. A lot of the salespeople at 24 WordPerfect had lots of contacts in the retail 25 field, agreed? 10211 1 A. Certainly, yes. 2 Q. And the Novell people did not? 3 A. Yes. That would be accurate, in 4 general. 5 Q. All right. And despite that, what 6 happened in the middle of '94 is that Novell 7 decided that these salesmen at WordPerfect who 8 had this experience in selling to the retail 9 outlets would be laid off? 10 A. Not as a whole group, certainly not. 11 No, you go in and you take a look -- whenever 12 you do a merger, you take a look at who's 13 performing, who's successful, you know, how 14 much of their quotas they're achieving and you 15 go back and you look at and say, okay, does it 16 make sense to lay off this person? 17 No, he's doing really great. So let's 18 keep this person. This person's struggling. 19 They're not meeting quota, let's eliminate 20 them. 21 And I'm sure that there were people on 22 the Novell side, as well as the WordPerfect 23 side, that were eliminated in that 24 consolidation process. 25 Q. And do you recall -- well, let's back 10212 1 up just a moment. 2 You acquired WordPerfect in '94, and 3 then in '96 you sold it? 4 A. That's correct. 5 Q. And do you recall that being widely 6 viewed in the industry at the time as a bit of 7 a disaster for Novell? 8 A. There wasn't great enthusiasm out 9 there about the fact that it had been such a 10 short period of time that we had held the 11 product, WordPerfect specifically. There were 12 other products and technologies that we kept. 13 Q. Right. But with respect to 14 WordPerfect, I think you said on direct 15 examination that you actually only held that 16 for about 18 months before you decided to sell 17 it. 18 A. Yes, the specific word processing 19 package, that's right. 20 Q. And there was tremendous criticism 21 among investors as well as people in the 22 industry for what Novell had done to 23 WordPerfect; isn't that right? 24 A. I don't know if you would say 25 tremendous criticism. I'm sure there was some. 10213 1 Q. Well, do you remember, for example, 2 articles in the business where Mr. Frankenberg 3 was interviewed and quoted? 4 A. Not specifically. It wouldn't 5 surprise me if there were some, though. That 6 would be natural. 7 Q. Well, Mr. Bradford, let me ask you 8 this. 9 In the mid 1990s, did you read the 10 Wall Street Journal from time to time? 11 A. Occasionally. 12 Q. Did you read it in your office on a 13 regular basis? 14 A. No. 15 Q. Did people at Novell subscribe to it? 16 A. Yes. 17 Q. And certainly the Wall Street Journal 18 is a very prominent publication? 19 A. That's right. 20 Q. And perhaps has among the highest 21 circulations of any daily newspaper in the 22 country? 23 A. I assume that to be the case. 24 MR. TULCHIN: Could I have Exhibit 25 3148, please, Defendant's Exhibit 3148? 10214 1 Your Honor, I apologize for the delay. 2 This is probably my fault, as the other one 3 was, and let me move on and come back to that 4 if we need to. I don't want to keep anyone 5 waiting. 6 Oh, we have it. Thank you. 7 May I approach the witness, Your 8 Honor? 9 THE COURT: You may. 10 Q. Mr. Bradford, I've handed you 11 Defendant's Exhibit 3148, and this is an 12 article from the Wall Street Journal of January 13 12, 1996. 14 Do you see that, sir? 15 A. Yes, I do. 16 Q. And do you recall reading this article 17 at about the time it came out? 18 A. No. 19 Q. Do you recall talking to 20 Mr. Frankenberg about an interview that he gave 21 to the Wall Street Journal shortly before 22 January 12, 1996? 23 A. No, but I may have. 24 Q. Clearly, you met with Mr. Frankenberg 25 on a regular basis; right? He was your boss? 10215 1 A. Yes. Not as regularly as I did with 2 Ray, but, yes. 3 Q. Okay. And is this the sort of thing 4 that Mr. Frankenberg would have told you that 5 he was being interviewed by the Wall Street 6 Journal? 7 A. Not necessarily. 8 Q. All right. Was it a subject of some 9 discussion at Novell after this article was 10 published? 11 A. Sitting here today, I don't recall it. 12 I mean, at the time that Novell spun out the 13 WordPerfect division, there was numerous 14 articles in the trade press, in the financial 15 press, I'm sure, on this very subject. So I 16 don't remember this specific one. 17 Q. Well, do you recall, for example, in a 18 -- 19 MS. CONLIN: Wait a minute. If you 20 are going to read from the exhibit, Your Honor, 21 we have a pending objection to this on the 22 basis of hearsay that has been sustained. 23 And the witness has not -- there's 24 been no foundation for any conversation with 25 this witness about this article. 10216 1 THE COURT: Very well. Proceed. 2 MR. TULCHIN: Thank you, Your Honor. 3 Q. Mr. Frankenberg (sic), do you recall 4 any discussion at Novell in around January of 5 1996, on the subject of what the business press 6 was saying about Novell's announcement that it 7 was going to sell WordPerfect? 8 A. No, not in general. We had our 9 heads-down getting the deal done and so forth. 10 So we just tried to run a business. 11 We weren't thinking about, oh, what's 12 the trade press going to say or you know what 13 -- 14 Q. I'm not now asking you about the trade 15 press. I want to make a distinction -- 16 A. -- or the financial press. 17 Q. -- between the trade press and the 18 financial press. Clearly Novell was a public 19 company and you had -- we talked about this 20 yesterday. You had stockholders all around the 21 country? 22 A. That's right. 23 Q. And it's important for a public 24 company to maintain good relations with 25 investors; correct? 10217 1 A. Sure, uh-huh. 2 Q. In fact, Novell had a whole department 3 that was responsible for investor relations; 4 correct? 5 A. It was one guy in particular, but 6 wasn't a whole department. 7 Q. Okay. One guy, and whoever worked for 8 him? 9 A. Maybe at Microsoft they have a whole 10 department, sorry. 11 But, no. 12 Q. Okay. You certainly had someone 13 responsible for investor relations? 14 A. That's right. 15 Q. And investor relations can be 16 significantly affected by what appears in 17 financial publications such as the Wall Street 18 Journal; correct? 19 A. Yes, I would say that's accurate. 20 Q. Many of the stockholders of Novell 21 might look at or read articles about Novell in 22 the Wall Street Journal? 23 A. That's right. 24 Q. So what appears in the Wall Street 25 Journal about the company is of concern to the 10218 1 company? 2 A. We have to do what we've got to do as 3 a business and can't -- 4 Q. Sure. 5 A. I mean, honestly, our first priority 6 is to that stockholder, right. And Ray used to 7 have a saying, he said customer first, employee 8 second, shareholders third. 9 He always said that if we took care of 10 the customers first, then the other things 11 would take care of themselves. But certainly 12 our shareholders were a significant and 13 valuable asset to us. 14 Q. Sure. And an important constituency. 15 A. Right, absolutely. 16 Q. And if the shareholders are unhappy, 17 that can depress the stock price; correct? 18 A. Well, if they're unhappy, that's one 19 thing. But -- 20 Q. Let's say they are unhappy with 21 management and the decisions of management? 22 A. Right. They might choose to sell the 23 stock rather than buy the stock. 24 Q. And if enough people choose to sell, 25 the price starts going down? 10219 1 A. That's right. 2 Q. So does it refresh your recollection 3 at all, Mr. Bradford, that in January 1996 in 4 the financial press there was criticism about 5 Novell's decision to sell WordPerfect? 6 A. I'm sure it was a factor, but, you 7 know, again, a small factor. We're trying to 8 run a business. We're trying to create a 9 profitable company, et cetera. I think we've 10 been over that. 11 Q. Does it refresh your recollection that 12 the Wall Street Journal specifically criticized 13 Novell's decision in 1994 to dismantle the 14 WordPerfect sales team? 15 A. No, I don't relate those two things. 16 Q. I couldn't hear you, sir. 17 A. I said I don't relate, you know, the 18 Wall Street Journal criticism to our concern at 19 the time. 20 Q. And do you recall Mr. Frankenberg 21 saying at the time -- 22 MS. CONLIN: Your Honor, I object to 23 any quote from Mr. Frankenberg from an article 24 that's not been introduced and that, indeed, 25 cannot be introduced. 10220 1 THE COURT: Sustained. 2 MR. TULCHIN: This wasn't from the 3 article, Your Honor. 4 THE COURT: Okay. 5 MR. TULCHIN: I apologize. Let me ask 6 another question. 7 Q. Do you recall Mr. Frankenberg saying 8 at the time to you or the executive committee 9 or the board of directors that there had been 10 criticism in the financial press about the 11 dismantling of the WordPerfect sales force? 12 A. No, I don't recall Bob saying that. 13 Q. Do you recall any report to the board 14 of directors or the executive committee, from 15 Mr. Frankenberg or anyone else, in January '96 16 on the subject of whether or not part of the 17 problem with WordPerfect over the prior 18 18 months has been that the WordPerfect employees 19 who were acquired as part of the deal and began 20 working for Novell had become demoralized when 21 working at Novell? 22 A. Can you repeat that question? 23 Q. Sure. 24 A. That was a long one. 25 Q. It was a long one, and I'm sorry. 10221 1 I'm asking whether you remember in 2 January '96 any report by Mr. Frankenberg or 3 any other executive of Novell to the board or 4 to the executive committee about whether or not 5 part of the problem that Novell had had with 6 WordPerfect was that the WordPerfect employees 7 who had come over as part of the acquisition 8 had been demoralized working for Novell? 9 A. No, I don't recall any such report. 10 Q. Was the reason to cut the sales force 11 that you've testified about, was that reason to 12 cut cost, to reduce the payroll? 13 A. Certainly that was a factor, yeah. 14 Q. Now, do you remember a gentleman named 15 Ed Bastian, B-a-s-t-i-a-n? I hope I have the 16 first name right. One of the founders of 17 WordPerfect. 18 A. Oh, there was a Bruce Bastian. 19 Q. Bruce. I thought I might have had 20 that wrong. Thank you. 21 A. Okay. 22 Q. I got a number wrong earlier, now I 23 have a name wrong. What's next? 24 Bruce Bastian, who was one of the 25 cofounders of WordPerfect; correct? 10222 1 A. Bruce was, that's right. 2 Q. And after Novell acquired WordPerfect, 3 Mr. Bastian went on to the board of directors 4 of Novell? 5 A. For a short period of time. 6 Q. Right. The short period of time was 7 until about the beginning of 1996? 8 A. I don't recall specifically. 9 Q. And Mr. Bastian in the acquisition 10 that Novell had made of WordPerfect was given 11 Novell stock; correct? 12 A. Yes. And I believe there's some cash 13 involved as well. 14 Q. Right. But he got some Novell stock 15 so he had become a significant stockholder of 16 Novell when Novell bought WordPerfect? 17 A. That's right. 18 Q. And he was put on the board of 19 directors? 20 A. That's right. 21 Q. Do you recall Mr. Bastian saying at a 22 board meeting or telling the executives of 23 Novell that he was very unhappy with the way 24 Novell had treated its employees? 25 A. I don't recall any specifics on that. 10223 1 Q. Was that part of the reason 2 Mr. Bastian resigned from the board? 3 A. Oh, I have no idea. 4 Q. Okay. I want to go to another 5 subject. 6 MR. TULCHIN: May I approach the 7 witness, Your Honor? 8 THE COURT: You may. 9 Q. I'm handing you a copy of Defendant's 10 Exhibit 6796. 11 Do you recognize this, Mr. Bradford? 12 A. Not particularly, but I'm familiar 13 with the business software alliance that's 14 referenced herein. 15 Q. Well, the business software alliance I 16 think you told Ms. Conlin on direct examination 17 was an organization that at one point you were 18 the chairman of? 19 A. That's right. 20 Q. And were you the chairman from around 21 '96 to '98? 22 A. It was a one-year stint, as I recall, 23 and I -- it was a one-year stint, as I recall, 24 and I don't know if it was 1996 or '97 or '98. 25 Q. Well, you were a member of the board 10224 1 of directors of the business software alliance 2 for more than a year; correct? 3 A. That's right. 4 Q. And if you look at the second to the 5 last page of Exhibit 6796, you will see that 6 there's a listing of eight members of the board 7 of directors of BSA, the business software 8 alliance? 9 A. Sure. 10 Q. And you are listed as one of them? 11 A. That's correct. 12 Q. Does this appear to be the mission 13 statement that the BSA issued at around the 14 time that you were on the board of directors? 15 A. Well, let's see, what's it titled? 16 The business software alliance represents the 17 producers of the world's leading -- what we 18 are, who we are. 19 Certainly, some sort of marketing 20 document. I don't know if it's a quote-unquote 21 mission statement. 22 Q. All right. But this is something you 23 recognize as something that BSA issued during 24 the time you were on the board? 25 A. Well, my recollection is vague about 10225 1 this specific document. I was on the board of 2 directors at the time, and they well could have 3 issued this at that time. 4 MR. TULCHIN: Your Honor, we offer 5 Exhibit 6796. 6 MS. CONLIN: Objection on the basis of 7 foundation, Your Honor. 8 THE COURT: Sustained. 9 Q. Mr. Bradford, I want to talk for a 10 moment about the issue of software piracy. 11 A. All right. 12 Q. And I think you may have said, I'm not 13 sure, that software piracy was an issue of 14 concern to you and to other people who served 15 on the board of the business software alliance; 16 correct? 17 A. That's right. 18 Q. And I think you may have said that one 19 of the purposes for the formation of BSA, the 20 business software alliance, was to fight 21 piracy; correct? 22 A. I don't know if I said it was one of 23 the reasons for the formation, but it certainly 24 was, yes. I don't know if I testified on -- 25 Q. I see. 10226 1 A. I don't think I said that yesterday, 2 but if I didn't, I could have. 3 Q. Because it's true? 4 A. Because it's true. 5 Q. Okay. 6 A. One of the reasons -- 7 Q. Now I got you. 8 A. -- for the formation of the business 9 software alliance was to fight software piracy. 10 Q. All right. And could you tell the 11 Jury what software piracy means, what it is? 12 A. It's the acquisition of and use of an 13 illegal copy of a piece of software, computer 14 software, be it a copy of Microsoft Word, 15 Novell's NetWare operating system, Adobe's 16 photo shop. 17 Q. And how does a person who wants to 18 acquire a piece of software illegally, how 19 would such a person do so? I don't want you to 20 give too big a recipe here, but just in 21 general. We are not encouraging it. 22 A. They make a copy. 23 Q. So is it fair to say that for someone 24 who knows how to do so, it's very easy and very 25 inexpensive to make a copy and then install it 10227 1 on a different computer? 2 A. Well, no, I wouldn't say that because 3 there are certainly a number of codes and 4 encryption written into copies of software that 5 make it difficult to make an elicit copy. 6 Q. Is the problem of software piracy a 7 problem that Novell as a business was concerned 8 about throughout the 1990s? 9 A. Yes. 10 Q. And let's just take Novell's network 11 operating system product for a minute. If end 12 users engage in piracy, Novell doesn't get paid 13 for those copies of the software that 14 somebody's using; correct? 15 A. That's right. 16 Q. That's the whole idea of piracy, is to 17 pay nothing? 18 A. Right. You've worked hard, you've 19 created a copyrighted work, and you want to 20 gain the rewards from that effort. 21 Q. And, in fact, for Novell to develop 22 the network operating system took a tremendous 23 investment in research and development; 24 correct? 25 A. Sure. 10228 1 Q. It's very expensive? 2 A. Yes. 3 Q. And it's very expensive for Microsoft 4 to develop its own operating systems? 5 A. Sure. 6 Q. And so companies like Microsoft and 7 Novell and other companies like Adobe came 8 together with the business software alliance. 9 And, as you said earlier, one of their purposes 10 was to try to combat piracy? 11 A. Correct. 12 Q. Now, you mentioned a minute ago 13 something about copyrighted software. Was it 14 Novell's practice to have copyrights for the 15 software that Novell wrote? 16 A. Yes. 17 Q. So for Novell's network operating 18 system, for example, Novell would get a 19 copyright from the U.S. copyright office for 20 each version of that system? 21 A. Typically, that's right. Of course, 22 when you complete a copyrighted work and you 23 simply identify it at the bottom as copyrighted 24 Novell or Microsoft or whatever, that copyright 25 exists whether or not the actual registration 10229 1 has been filed with the U.S. copyright office, 2 so -- 3 Q. Right. And was it of concern to 4 Novell to make sure that the copyright was 5 projected? 6 A. Well, certainly, yeah. 7 Q. Of course. And, again, if people are 8 acquiring Novell's software for free, for 9 nothing, Novell is losing the chance to get 10 paid and get reimbursed for the investment it's 11 made in developing its software? 12 A. That's right. 13 Q. Now, did the business software 14 alliance during the period that you were on the 15 board of directors issue any information about 16 the rate of software piracy worldwide? 17 A. Yes, I believe that would be correct. 18 Yeah. 19 Q. Does it refresh your recollection that 20 during the time you were on the board of 21 directors the BSA estimated that piracy rates 22 worldwide were 40 percent? 23 A. I don't remember those figures. 24 Q. In any event, piracy was a significant 25 concern? 10230 1 A. Completely agree on that, right. 2 Q. And piracy rates worldwide were quite 3 significant, were they not? 4 A. That's right. 5 Q. So American companies that make 6 software, and most of the companies on the BSA 7 were American -- most of the members of the BSA 8 were American, were they not? 9 A. That's correct. 10 Q. The big American software companies 11 were mostly members? 12 A. Correct. 13 Q. So American companies are losing 14 revenues all around the world to piracy that is 15 taking place; correct? 16 A. That's right. 17 Q. And would you say as well that it's 18 very difficult for a software company in the 19 United States to police these acts of piracy 20 that might be taking place not just in our 21 country, but, for example, in China or 22 Indonesia or throughout the world? 23 A. It's a challenge, but there are a 24 number of methodologies that you can build into 25 the software to assist in protecting your code. 10231 1 Q. And despite that, even with those 2 protections, piracy rates were quite high in 3 the 1990s; correct? 4 A. Sure. 5 Q. One of the ways you can deal with 6 piracy is to ask an OEM to install on its 7 systems a copy of your operating system; 8 correct? 9 Let me ask a better question because I 10 see you are a little puzzled and the question 11 wasn't a great one. 12 If an OEM ships an operating system 13 that has no -- sorry -- ships a PC that has no 14 operating system on it, that's referred to as a 15 naked machine; right? 16 A. Possibly. 17 Q. Okay. Well, bear with me for a 18 moment. 19 MR. TULCHIN: Just one minute, Your 20 Honor. 21 Q. If a naked machine goes out, an OEM 22 sells a machine that has no operating system 23 preinstalled on it, software companies 24 typically believe that there's a higher risk of 25 piracy for those machines than for machines 10232 1 that already have operating systems on it; 2 correct? 3 A. I'm not sure if that's accurate. 4 Q. Well, isn't it the case that the naked 5 machine that has no operating system, the user 6 is going to have to put an operating system on 7 it? 8 A. That's right. 9 Q. And the user could do that legally or 10 illegally and no one probably is going to know? 11 A. Well, that's not necessarily true. 12 But I agree with your first part. 13 Q. Okay. 14 MR. TULCHIN: This is a good time, 15 Your Honor. Thank you. 16 THE COURT: Yes. Take our recess for 17 lunch. 18 Remember the admonition previously 19 given. Leave your notebooks here. 20 See you at noon. 21 (The following record was made out of 22 the presence of the jury at 10:58 a.m.) 23 THE COURT: Before you go, just one 24 moment. 25 There was an offer of an Exhibit 10233 1 10100, the timeline. 2 MS. CONLIN: Yes, Your Honor. 3 THE COURT: The Court at this time 4 wanted to make this ruling outside of the 5 presence of the jury. 6 Denied at this time. The Court finds 7 it needs further foundation as to accuracy and 8 authentication by the witness, that it is a 9 reliable timeline or summary. 10 MS. CONLIN: All right, Your Honor. 11 We'll make that additional foundation. 12 THE COURT: Anything else? 13 MS. CONLIN: I think there was another 14 -- was there another exhibit that you had 15 reserved ruling on? 16 Oh, no, Your Honor. Let me talk to 17 Sharon on -- it was 2266, which was the Stan 18 McDonald Spokane thing. 19 THE COURT: Okay. 20 MS. CONLIN: So let me just see if 21 there's anything more we need to do about that. 22 THE COURT: Okay. See you then. 23 (A recess was taken from 11 a.m. to 24 12:03 p.m.) 25 THE COURT: Everyone else may be 10234 1 seated. 2 Mr. Bradford, you are still under 3 oath, sir. 4 THE WITNESS: All right. 5 MR. TULCHIN: Your Honor, may I 6 approach the witness? 7 THE COURT: You may. 8 CROSS-EXAMINATION (CONT'D) 9 BY MR. TULCHIN: 10 Q. Mr. Bradford, I'm handing you two 11 exhibits that are in evidence and that 12 Ms. Conlin showed you during her direct 13 examination. 14 The first is Exhibit 9052. 15 MR. TULCHIN: And if you can show 16 that. 17 A. Okay, I have that. 18 Q. That is a Novell press release; 19 correct? 20 A. Yes. 21 Q. And right at the top it says, Novell 22 announces multi-tasking, networking DOS. 23 A. That's right. 24 Q. And beneath that the date is March 25 24th, 1993. 10235 1 Do you see that, sir? 2 A. That's right. 3 Q. So this was an announcement made to 4 the public as a press release on March 24th, 5 1993; correct? 6 A. Yes. 7 Q. And in that same paragraph, a little 8 bit further down, I think it's the second 9 sentence, it says, Novell DOS 7, available this 10 summer. 11 Do you see that? 12 A. Yes, I do. 13 Q. And this is what's known as a 14 preannouncement; correct? 15 A. Yes. An announcement that occurs 16 prior to the actual launch to the market of the 17 product. 18 Q. Right. And so what Novell is telling 19 the market is that a product called Novell DOS 20 7 will be available this summer. And this 21 summer means the summer of 1993? 22 A. I assume so, that's right. 23 Q. Okay. Now, Novell DOS 7 was the 24 continuation of the DR-DOS product, correct? 25 A. That's right. 10236 1 Q. With a new name. Instead of DR-DOS 7, 2 now it's Novell DOS 7? 3 A. Right. 4 Q. Okay. When was it that this product 5 was actually released? 6 A. For use in the general public, I think 7 it wasn't until later in the year. I don't 8 think we got that summer date, and I think it 9 was after that time. 10 Q. Do you think it was significantly 11 after the summer? 12 A. Boy, I don't know what significantly 13 means in this context. 14 Q. Well, let's say at least several 15 months later. 16 A. Yes. 17 Q. You've heard the term vaporware? 18 A. Yes, I have. 19 Q. Does that word have different meanings 20 or definitions to different people in the 21 industry? 22 A. I suppose it could. 23 Q. What does it mean to you? 24 A. Vaporware means that you announce a 25 product and there's no substantive product that 10237 1 you're really developing at the time. 2 Q. And if you're developing a product and 3 you're working on something and something 4 really exists, that's not vaporware by your 5 understanding? 6 A. In general, I would say that's 7 accurate. 8 Q. All right. Now, let's look at the 9 next document, which is Plaintiffs' Exhibit 10 9053, which again you looked at a day or two 11 ago with Ms. Conlin. 12 And at the very top you'll see it 13 says, not for public distribution, internal use 14 only. 15 And this refers to a target date of 16 March 24th, '93. That was the date of the 17 actual announcement, in fact; correct? 18 A. That's right. 19 Q. And in the upper right it talks about 20 product marketing, contact Toby Corey, but the 21 legend in large type where it says not for 22 public distribution, internal use only, that 23 means exactly what it says, right, that people 24 at Novell didn't want the public to know, 25 didn't want the market to know what this 10238 1 document contains? 2 A. That's right. Very typical when 3 you're working on any kind of a press release, 4 you kind of do an internal evaluation of what 5 you want to say to the public, and, you know, 6 that's not for public distribution. The press 7 release that's going to follow, that's for 8 public distribution. 9 Q. Right. And at Novell, this kind of a 10 document, which is labeled for internal use 11 only, was prepared on a regular basis? 12 A. Yes. 13 Q. There are some things you want the 14 public to know and some things that are private 15 to the corporation? 16 A. That's right. 17 Q. All right. And then if you look at 18 the body of Exhibit 9053, there's a third 19 bullet point under key messages. 20 And the third bullet point says, 21 Novell DOS 7 reaffirms Novell's continuing 22 commitment to the world's largest client 23 operating system installed base, DOS. 24 Do you see that? 25 A. I do. 10239 1 Q. Now, at the time this was written, was 2 Novell already considering whether or not to, 3 let's say, end its commitment to DR-DOS? 4 A. In any given point in time, and I 5 can't remember the time frame, there were 6 certainly discussions as, you know, how much 7 marketing power do we put behind this product, 8 how much development resources do we put behind 9 it. 10 We're concerned about what's happening 11 in the market with Microsoft and the per 12 processor licenses and the other things that 13 we're running up against. And so we're trying 14 to figure out do we release a new product, how 15 much resource do we put behind this product. 16 Q. Right. So it's fair to say, is it 17 not, sir, that as of March 1993, Novell is 18 beginning to think about whether or not it 19 wants to continue with DR-DOS at all? 20 A. I don't know that for certain. I 21 mean, there might be documents that say that, 22 but, sitting here today, I don't know if, you 23 know, in March that we were planning to not 24 support that product in the future. 25 Q. All right. Do you know when it was 10240 1 that Microsoft was scheduled to release its 2 MS-DOS 6.0 product? 3 A. Not offhand. 4 Q. Would you disagree if I said that the 5 Microsoft release of MS-DOS 6.0 was scheduled 6 to occur on March 30th, 1993? 7 A. I really couldn't agree or disagree 8 because I just don't have any facts on that. 9 Q. All right. Well, let's look down in 10 the body of this same document. You'll see a 11 heading communications, opportunity, and 12 issues. 13 And maybe we can look at the first 14 bullet point under there. 15 MR. TULCHIN: Thank you, Chris. 16 Q. And you'll see what is said on Exhibit 17 PX 9053, in this document that's for internal 18 use only, is this, by announcing Novell DOS 7 19 just prior to the official announcement by 20 Microsoft of MS-DOS 6.0, it is hoped that 21 Novell can generate enough interest to 22 potentially stall DR-DOS customers upgrading to 23 the newly released MS-DOS 6.0. 24 A. Yes. 25 Q. Do you see that, sir? 10241 1 A. I do. 2 Q. Now, is it your recollection that in 3 1993 one of the purposes of the press release, 4 the document we looked at a minute ago, was to 5 stall customers from upgrading to MS-DOS 6.0? 6 A. The company was pretty desperate at 7 the time. You know, as we discussed earlier, 8 DR-DOS sales were dropping and we had an 9 installed base. And we hoped they would 10 upgrade to Novell DOS 7.0 rather than upgrade 11 to a Microsoft product. 12 Q. Well, I hear you, sir, but what I'm 13 asking is whether or not it was one of the 14 purposes of the press release to stall 15 customers from going to MS-DOS? 16 A. Yes, I think that's a fair assessment. 17 That's precisely what we were trying to do. 18 Q. And, Mr. Bradford, was this a 19 frequently used tactic at Novell and in other 20 companies in the software industry to issue 21 preannouncements in order to try to get 22 customers to wait for your product? 23 A. Well, it was a frequent occurrence in 24 the industry to put together press releases and 25 announcements regarding your products. 10242 1 And the primary purpose behind them is 2 to get information to the market what your 3 product is that you're coming out with. 4 Q. And that's something Novell did? 5 A. In terms of this precise language, 6 that would be pretty rare language. It 7 reflects the fact that our DOS business was in 8 some serious trouble. 9 And we were trying to resurrect that 10 and make sure that customers knew we were going 11 to have continually better products and 12 technologies than Microsoft did. 13 Q. I think you mentioned in your direct 14 examination early on, towards the beginning of 15 your examination on Monday, that Mr. Corey, 16 whose name we see in the upper right of this 17 document, was one of the executives at Novell 18 at this time; correct? 19 A. I wouldn't classify him as a Novell 20 executive. He wasn't on the executive 21 committee of the company, if that's what you 22 mean. 23 Q. Well, was he the senior director of 24 desktop products for Novell? 25 A. I don't know if that was his title or 10243 1 not. 2 Q. That was his title at the time, wasn't 3 it, '92, '-3, and '-4? 4 A. Senior director of? 5 Q. Desktop products. 6 A. Well, that could be. I don't see 7 that, and maybe you have a document that says 8 that. 9 But that -- you know, that's not even 10 a vice president level. 11 Q. Well, you're not indicating, are you, 12 sir, that Mr. Corey didn't know the purpose for 13 this announcement? 14 A. No. He probably did. 15 Q. And did you ever talk to Mr. Corey 16 about the purpose for making the announcement 17 of Novell DOS 7 when the announcement was made? 18 A. No. 19 Q. I want to switch just briefly to the 20 subject of the merger discussions that you had 21 with Microsoft in the period '91 to '92. 22 A. All right. 23 Q. All right. And I think you testified, 24 sir, that one of the reasons that Mr. Noorda 25 agreed to enter into discussions with Microsoft 10244 1 back sort of a second time was because he felt, 2 or perhaps you and he felt, that you owed a 3 duty to the stockholders to listen to 4 Microsoft. 5 A. Yes. 6 Q. Was it also the case, sir, that you 7 were genuinely fascinated by the possibility of 8 the deal? 9 A. I don't know what you mean by 10 fascinated. 11 Q. Well, do you recall testifying at your 12 deposition in September 1998 on this subject? 13 MS. CONLIN: Your Honor, if I may. If 14 Mr. Tulchin wishes to refresh his recollection, 15 he should do so by handing the document to the 16 witness. 17 MR. TULCHIN: I intend to. 18 THE COURT: I think he's starting that 19 path. 20 Overruled. Go ahead. 21 MR. TULCHIN: I intend to, Your Honor. 22 Q. Do you recall giving a deposition in 23 September 1998? 24 A. Yes, I do. 25 MR. TULCHIN: May I approach the 10245 1 witness, Your Honor? 2 THE COURT: You may. 3 Q. Mr. Bradford, let me hand you a copy 4 of the transcript of the September 29th, 1998 5 deposition. And I would ask you, sir, to turn 6 first to page 94. It only starts around 70 or 7 so, so it's not that far in. 8 A. Got it. 9 Q. Do you recall being asked this 10 question on September 29, 1998, and giving this 11 answer, starting at page 94, line 24. 12 Question: Based on your participation 13 in discussions either at the company or the 14 board, would you be able to say whether 15 Novell's continuation of such discussions with 16 Microsoft was more a function of a duty to 17 listen to an offer or of real interest in the 18 possibility of the deal or somewhere in 19 between? 20 Answer: It's probably a combination 21 of factors. 22 Certainly the board of directors felt 23 a fiduciary obligation to listen to any serious 24 offer by a third party. That was certainly a 25 compelling reason to continue discussions. 10246 1 We were also genuinely fascinated by 2 what would a combined Microsoft/Novell look 3 like. 4 Do you recall that, sir? 5 A. I don't recall it, but, obviously, I 6 said it, and that's fine. 7 Q. And was that correct that you were 8 also genuinely fascinated by what the deal 9 would look like, the combination of Microsoft 10 and Novell? 11 A. Yes. I think the term there has 12 reference to our interest in what kind of 13 products, technologies could we ship together, 14 what impact would it have on the marketplace, 15 what would it look like if these two companies 16 came together and what kind of marketing 17 abilities would they have to succeed in the 18 marketplace. 19 Q. And when you said we were genuinely 20 fascinated, were you speaking for you and 21 Mr. Noorda or some broader group? 22 A. Well, again, it was a very narrow 23 group that even knew about these discussions, 24 so certainly it would include Ray and I. And 25 it certainly would also include the board of 10247 1 directors. 2 Q. So is it fair to say, then, 3 Mr. Bradford, that Novell didn't engage in 4 these discussions with Microsoft unwillingly, 5 instead Novell itself was genuinely fascinated 6 by the possibility of a deal? 7 A. Yes. We were interested. 8 Q. Now, you also testified on direct 9 about a possible deal that you were discussing 10 with IBM that went under the phrase project 11 Cougar. 12 A. Yes. 13 Q. C-o-u-g-a-r. 14 A. I think that has reference to the 15 Brigham Young University Cougar football team. 16 Q. I see. And could you explain to us 17 what Cougar stood for? What was that a code 18 name for, other than the Brigham Young football 19 team? I don't want to get back to football. 20 A. The proposed adoption by IBM of 21 Novell's version of the disk operating system, 22 in general. 23 There were certainly other factors and 24 strategic alliances ongoing that would have 25 been part and parcel to a broader deal with 10248 1 IBM. 2 Q. And at the time -- well, let's set the 3 time. 4 These discussions with IBM took place 5 in '91 and 1992; correct? 6 A. Yes. 7 Q. At the time, was it the case that -- I 8 think you said this on direct -- that IBM was 9 the largest OEM in the world? 10 A. I think I said largest computer 11 hardware manufacturer in the world. But we 12 could go back and look. 13 Q. Is that the same thing? 14 A. Yeah. Largely, uh-huh. 15 Q. When it comes -- 16 A. Yes. 17 Q. I just want to make sure I understand. 18 We're talking about PCs, not main 19 frames or other hardware? 20 A. Right. 21 Q. When it comes to PCs, was it your 22 testimony that IBM, then, was the biggest in 23 the world? 24 A. Well, no, I said specifically the 25 largest hardware manufacturer in the world. I 10249 1 would have to go back to the time frame '91, 2 '92 and figure out if IBM had greater market 3 share than, say, Compaq or other people that 4 were manufacturing PCs at the time. They were 5 certainly among the largest, if not the 6 largest. 7 Q. Okay. And your discussions with IBM 8 on project Cougar were taking place during the 9 same time period that you were having your 10 discussions with Microsoft about a possible 11 merger of Novell and Microsoft? 12 A. Well, I want to make sure that we've 13 got our dates right on that. So refresh my 14 recollection on the time frame we're talking 15 about then. 16 Q. You know what I'd like to do is to 17 bring back your chronology -- 18 A. Let's do that. 19 Q. -- which I think has that. 20 A. Okay. 21 MR. TULCHIN: Can we put that up? 22 THE WITNESS: That was quick. 23 MR. TULCHIN: May I approach the 24 screen, Your Honor? And maybe I can make sure 25 we have this here. 10250 1 Q. But I think you said July '91 -- this 2 is your chronology -- Bill Gates called Ray 3 Noorda; right? 4 A. Right. 5 Q. Okay. And then it was -- I'm looking 6 for Fox. Here it is. Right here. March '92 7 when, according to your chronology, Microsoft 8 announces it's acquiring Fox, and the merger 9 talks between Microsoft and Novell collapse? 10 A. Yes. 11 Q. Okay. So we've got that time frame. 12 A. Right. 13 Q. And I just want to make sure that we 14 agree that the IBM talks were going on during 15 that same general period. 16 A. Well, that's what I'm trying to 17 recall. 18 Q. Well, let me see if I can give you a 19 document that helps. 20 MR. TULCHIN: May I approach the 21 witness, Your Honor? 22 THE COURT: You may. 23 Q. This is Defendant's Exhibit 166. 24 A. Okay. Yes, we looked at this 25 yesterday. 10251 1 Q. Yes, I think we did. 2 I think Ms. Conlin showed you a copy 3 of this that's a Plaintiffs' exhibit. 4 A. Right. 5 Q. And I couldn't find the Plaintiffs' 6 exhibit number, but the same document -- I 7 believe it's the same -- happens to be a 8 Defendant's exhibit as well. 9 MR. TULCHIN: Your Honor, we offer 10 this into evidence, Defendant's Exhibit 166. 11 MS. CONLIN: We have no objection. 12 THE COURT: It's admitted. 13 Q. Now, Mr. Bradford, this is a 14 memorandum, and maybe we can look at the first 15 page, from Steve Maysonave. 16 A. Right. 17 Q. You testified about this earlier -- to 18 Dick Williams. And Dick Williams, of course, 19 was the head of DRI? 20 A. That's right, in this time frame. 21 Q. And in January '92, Novell already 22 owned DRI. That took place in the middle of 23 '91; right? 24 A. Well, took place November 1, 1991. 25 The end of '91. 10252 1 Q. Fair enough. You're correct. 2 A. Okay. 3 Q. In any event. This -- 4 A. So -- I'm sorry. 5 Q. This memorandum deals with the 6 discussions with IBM concerning this project 7 Cougar; correct? 8 A. Yes. 9 Q. Okay. So is it fair to say that at 10 least from Defendant's Exhibit 166, you can see 11 that the discussions with IBM were taking place 12 during the same period that there were 13 discussions with Microsoft about a possible 14 merger with Microsoft? 15 A. In general. 16 Q. Okay. 17 A. There was a period of time, in the 18 early January, where we weren't hearing from 19 Microsoft, and our most serious discussions 20 with IBM took place in early January of '92. 21 Q. All right. And you told me yesterday 22 that there were good reasons to keep merger 23 discussions confined to the smallest number of 24 people possible, particularly when you're a 25 public company. 10253 1 A. Sure, that's right. 2 Q. Sure. And during the time that Novell 3 was talking to IBM about project Cougar, Novell 4 didn't tell Microsoft about this, did it? 5 A. That's correct. 6 Q. The discussions you had with IBM were 7 private to Novell and IBM? 8 A. That's right. They weren't merger 9 discussions, let's be clear. 10 Q. Correct. Correct. They were 11 discussions about IBM, one of the largest PC 12 makers in the world at the time, taking DR-DOS 13 instead of a Microsoft operating system? 14 A. That's right. 15 Q. And, of course, you didn't tell 16 Microsoft about that? 17 A. That's right. 18 Q. And as far as you know, IBM didn't 19 tell Microsoft either? 20 A. As far as I know. 21 Q. Right. And during the merger 22 discussions that you had with Microsoft, of 23 course, Microsoft didn't tell you that it was 24 having discussions about a possible merger with 25 Fox? 10254 1 A. That's correct. They said nothing 2 about that. 3 Q. And I think you expressed in your 4 testimony on direct, you said you were 5 surprised to learn that this Fox acquisition 6 was announced in the first part of 1992; 7 correct? 8 A. That's right. 9 Q. Were you implying that Microsoft 10 should have told you about the discussions 11 before the deal was done? 12 A. I'm being very direct in telling you 13 that I think what should have happened is, in 14 my experience, that you wouldn't be negotiating 15 a big merger over on this side and an equally 16 big one over here on this side at the same 17 time. 18 Q. Well, of course, if Novell entered 19 into a deal with IBM to sell DR-DOS, let's say, 20 in the millions, millions of units to IBM, that 21 might have some impact on either Novell's 22 willingness to merge with Microsoft or visa 23 versa? 24 A. It may have had an impact. 25 Q. And nobody told Microsoft about it? 10255 1 A. That's right. Well, not to my 2 knowledge. There may have been some folks from 3 IBM that told Microsoft. 4 Q. Of course. 5 A. But I don't know. 6 Q. Novell did what it should have done. 7 It kept those discussions secret while they 8 were occurring; correct? 9 A. Correct. 10 Q. All right. Let's look at Exhibit 166 11 in a little bit more detail. 12 I know you looked at this once before, 13 but on the first page, second sentence of the 14 text, the author, Steve Maysonave says, 15 attached is a summary of IBM's marketing 16 objections that have to be addressed to gain 17 their support. 18 Do you see that, sir? 19 A. I do. 20 Q. And if I understand this correctly, 21 what's going on is that Novell is trying to 22 convince IBM to license DR-DOS on IBM PCs, and 23 the IBM marketing people are setting forth in 24 the attachments to this document their, as 25 Mr. Maysonave says, objections; correct? 10256 1 A. Yes. 2 Q. And for Novell to succeed in 3 convincing IBM to do this deal, according to 4 Mr. Maysonave, you're going to have to overcome 5 those objections. You're going to have to 6 address them before IBM will do the deal? 7 A. That's right. 8 Q. And let's look at what's attached, the 9 IBM -- the third page of Exhibit 166, says at 10 the top IBM confidential. 11 This is an attachment to 12 Mr. Maysonave's -- is it Maysonave, Maysonave? 13 A. Maysonave. 14 Q. Maysonave. It's an attachment to 15 Mr. Maysonave's memo to Mr. Williams -- oh, and 16 I should say this went to you too; correct? 17 A. Yes. 18 Q. You're shown as a cc on the first 19 page. 20 A. That's right. 21 Q. All right. And he attaches some IBM 22 documents to his memo; correct? 23 A. That's right. 24 Q. And the remainder of the pages, from 25 page 3 on, were prepared by people at IBM? 10257 1 A. I assume that's accurate, yeah. 2 Q. Well, each of them says IBM 3 confidential at the upper right. 4 A. Yeah. They appear to be prepared by 5 IBM. 6 Q. All right. And then the first page 7 says, Cougar proposal, areas of IBM marketing 8 concern. 9 Do you see that? 10 A. Right. 11 Q. And then it has a number of bullet 12 points. 13 The first one is customer reaction. 14 Do you see that? 15 A. Yes. 16 Q. And by putting that first, I guess IBM 17 is indicating, like Mr. Frankenberg testified, 18 and you and I agreed, that the most important 19 thing for an OEM is what their customers want; 20 right? 21 A. That's an important factor, right. 22 Q. Okay. Then let's look at the next 23 page, which details the IBM concerns about 24 customer reaction. 25 Under customer reaction, the first 10258 1 point says DOS equals Microsoft. No compelling 2 reason to change. Will be very unsure of 3 compatibility. 4 Now, was it the case of -- by the way, 5 Mr. Bradford, that there were wide reports in 6 the industry as of early 1992 that there were 7 bugs and compatibility problems with DR-DOS? 8 A. I think compatibility issues and the 9 bugs associated with compatibility. I think 10 there was wide appreciation for the fact that 11 DR-DOS technology was superior to that of 12 Microsoft's. Notwithstanding that, it was 13 important that DR-DOS interoperated with the 14 Windows operating system. There was a big 15 demand for Windows at this time. 16 Q. Were there wide reports about bugs and 17 compatibility that had nothing to do with 18 whether or not DR-DOS was compatible with 19 Windows, but, instead, whether DR-DOS was 20 compatible with other software products, 21 particularly applications? 22 A. I'm -- I don't know that for sure. 23 Q. Well, you don't deny that as of this 24 time, January of '92, there were wide reports 25 -- well, let me stop. 10259 1 You've heard of something called 2 CompuServe; correct? 3 A. CompuServe. Yes. Weren't they an 4 early Internet service provider? 5 Q. Yeah, it was sort of like a bulletin 6 board before the web was very widespread. 7 A. Okay. 8 Q. Do you remember that? 9 A. I remember them launching as an 10 Internet service provider, but perhaps not -- 11 that would have been more '95 time frame. But 12 perhaps they had products before then. 13 Q. Well, do you recall whether as of '92 14 there were postings on a CompuServe site from 15 customers about bugs and compatibility problems 16 with DR-DOS? 17 A. No, I wouldn't have any knowledge of 18 that. 19 Q. So when this IBM document refers to 20 compatibility, is it your testimony that you 21 know that what IBM is talking about is 22 compatibility with Windows as compared to 23 compatibility with other software in general? 24 A. Well, that's a fair assumption from 25 the reading of the document. No compelling 10260 1 reason to change. Will be very unsure of 2 compatibility. Windows is critical. 3 Q. Microsoft perceived a standard, large 4 OEM base, leading compatible applications, best 5 marketing. 6 So what IBM is saying there to Novell, 7 among other things, is that Microsoft has the 8 best marketing; isn't that right? 9 A. Well, I think this is a subset of 10 folks within IBM who perceive that. And I 11 think it was kind of, okay, here's a list of 12 issues. We need to overcome these. Let's see 13 what we can do. 14 You know, there could be a perception 15 out there that Microsoft has the best marketing 16 that, you know, their applications are going to 17 be standard; that they will all interoperate 18 together and let's do what we can to overcome 19 that issue that these folks were outlining. 20 Q. Well, was it the case at the time, 21 Mr. Bradford, that DR-DOS was more expensive 22 than MS-DOS? 23 A. No, I certainly don't recall that. 24 Q. Well, let's go down this page from IBM 25 a little bit. And you'll see under unnecessary 10261 1 risk, the second point says, don't want to 2 invest in what is perceived as nonstandard 3 product, especially at this price point. 4 A. Right. 5 Q. Do you recall that one of the 6 objections from the IBM marketing people was 7 that the discussions that they were having with 8 Novell about acquiring DR-DOS were at a price 9 that was too high? 10 A. Well, I think what the issue was, 11 frankly, at the time was -- at IBM was that 12 they were paying Microsoft royalties for their 13 DOS. 14 And I think if any price was added on 15 to the top of that, that that would be too high 16 a price point to pay for the product. 17 In other words, paying two royalties 18 rather than just one royalty string. 19 Q. I was going to come to this point, but 20 let me do it right now, Mr. Bradford, given 21 your answer. 22 You did testify on direct that IBM had 23 a per processor license with Microsoft. 24 Is that your testimony? 25 A. I think they did. 10262 1 Q. All right. Let me be sure. 2 In 1992 or 1993 or 1994, is it your 3 sworn testimony that IBM ever had a per 4 processor license with Microsoft? 5 A. I testified that there was a contract 6 that Bob Anderegg, the attorney for IBM, told 7 me about. 8 There was a contract that Microsoft 9 and IBM had entered into associated with the 10 licensing of Microsoft technologies. 11 Now, whether that was a per processor 12 license or, you know, some other form, I don't 13 know. 14 Q. Okay. Well, that's what I was trying 15 to get to. 16 A. Yes. 17 Q. Of course, there was a contract. I 18 think you and I have already agreed that when 19 software companies license an operating system, 20 including Novell's NetWare, commonly there's a 21 written contract which is called a license 22 agreement? 23 A. Yes. 24 Q. So, of course, there was a contract 25 between IBM and Microsoft; right, for IBM to 10263 1 use -- 2 A. Correct. 3 Q. -- MS-DOS, or Windows? 4 A. Right. 5 Q. Okay. But your testimony today, just 6 a moment ago, is that you don't know whether or 7 not IBM had a per processor contract? 8 A. My perception was that it was in the 9 nature of a per processor license because of 10 the very issue that you see up there, 11 especially at this price point. 12 There was no way that if you had 13 apples to apples, Novell DOS versus Microsoft 14 DOS, that Novell was going to actually charge a 15 higher price than Microsoft DOS. 16 Q. Did you ever see an IBM/Microsoft 17 license agreement that was a per processor 18 contract or what you just said, was something 19 similar to that? 20 A. No. I was told about it. 21 Q. So you've never seen those contracts? 22 A. Not to the best of my recollection. 23 Bob may have shown me at some point 24 the contract, but I don't recall. 25 Q. Well, in the past year, during the 10264 1 time that you've been working with and for 2 Ms. Conlin and have been paid for your time, 3 have you looked at any license agreements that 4 Ms. Conlin has between Microsoft and IBM? 5 MS. CONLIN: Your Honor, I object to 6 the question because it misstates the record. 7 THE COURT: Sustained. 8 Q. Let me ask another question. 9 Have you looked at any of the 10 contracts that were produced in this litigation 11 to the Plaintiffs that contain license 12 agreements between IBM and Microsoft? 13 A. No. 14 Q. Okay. Was it ever the case as far as 15 you know, ever, going back to the first 16 contract in 1980, that IBM had a per processor 17 contract for operating systems with Microsoft? 18 A. I don't know that. 19 Q. Okay. So let's go back to Exhibit -- 20 Defendant's Exhibit 166. 21 We were talking about the price 22 points. And then later down on that page, last 23 item on the page, this comes from the IBM 24 marketing people, those who feel MS-DOS is 25 industry standard will not want PS/2. 10265 1 Now, let's just stop here. PS/2 was 2 the brand name of the IBM personal computer at 3 the time, right? 4 A. That's right. 5 Q. That was their PC, PS/2. 6 So will not want PS/2 with Cougar. 7 Now, that's a reference to DR-DOS; 8 right? 9 A. Certainly, yes. 10 Q. With DR-DOS preloaded. We must be 11 able to respond to customer objections. 12 A. That's right. 13 Q. Now, again, here the marketing people 14 at IBM -- and the marketing people are supposed 15 to be the people at the company most in touch 16 with the market; right? 17 A. I assume so. 18 Q. That's their job? 19 A. Right. 20 Q. Okay. And the marketing people at IBM 21 are saying, basically, looking at this last 22 point, customers don't want DR-DOS. They want 23 Microsoft's MS-DOS. It's the industry 24 standard. Isn't that what that means? 25 A. No, I'm not going to interpret it that 10266 1 way. Let the statement stand for itself. 2 Q. Okay. I'm happy to do that. 3 A. Okay. 4 Q. Let's go to the page with the 5 Production Number 987. It's the second to the 6 last. Again, it's from IBM. Cougar proposal, 7 IBM marketing concerns. 8 And then under OEM it says, vendors 9 presently preloading, shipping DR-DOS unknown. 10 Now, that was something -- that was 11 information you could have provided to IBM; 12 correct? 13 A. Sure, we could have provided some 14 information on that. 15 Q. And I assume you did? 16 A. If it was an objection that IBM was 17 having, then we probably supplied them with 18 documentation relative to whatever hardware 19 manufacturers we have that were preloading 20 Novell DOS. 21 Q. And then let's look at the next point. 22 ISV, that stands for independent 23 software vendor; right? 24 A. That's right. 25 Q. And those are the people who make 10267 1 applications -- 2 A. That's right. 3 Q. -- develop applications. 4 So next to ISV it says endorsements, 5 compatibility statements unknown. 6 And I want to pause here for just a 7 minute on this document, Defendant's Exhibit 8 166. 9 As of January 1992, had Novell been 10 successful in getting ISVs, independent 11 software companies, to endorse DR-DOS? 12 A. There may have been some. It 13 certainly wasn't as broad a set as Microsoft's. 14 Q. Microsoft had a very, very broad set 15 of endorsements from ISVs, wouldn't you say? 16 A. Including their own software 17 application developers. 18 Q. You wouldn't call Microsoft's 19 application developers to be an ISV, would you? 20 They're not independent. They're part of 21 Microsoft. 22 A. That's right. 23 Q. Okay. So Microsoft had a very broad 24 set of endorsements, and Novell, DRI, had just 25 a very few; correct? 10268 1 A. That would be fair to say. 2 Q. Yeah. And then when it talks about 3 compatibility statements unknown, the reference 4 there is to compatibility between DR-DOS and 5 applications that are made by ISVs; correct? 6 A. I assume so because it's under the 7 category of ISVs. 8 Q. Right. And -- 9 A. But, again, they were unknown. 10 Q. Correct. Correct. 11 But isn't this a concern by IBM in 12 light of information that's on the market 13 already that it was unknown to IBM at the time 14 in January 1992 whether or not DR-DOS would be 15 compatible not with Windows -- we're not 16 talking about Windows here at all -- but with 17 applications made by ISVs? 18 A. Sure. It was a concern of theirs. I 19 think that's fair. 20 Q. Do you have any direct information 21 that Digital Research/Novell ever satisfied 22 IBM's concern about the compatibility between 23 DR-DOS and applications that were supposed to 24 run on it? 25 A. My sense is that it's a broad 10269 1 statement. IBM was satisfied with our 2 responses in many respects. I don't know with 3 specificity with respect to this particular 4 one. 5 Q. Well, what we do know, Mr. Bradford, I 6 think you and I will agree, is that IBM never 7 did this deal -- 8 A. That's correct. 9 Q. -- with Novell. IBM never agreed to 10 install DR-DOS on any significant number of the 11 IBM PCs; correct? 12 A. Right. That's correct. 13 Q. And as far as you know, that had 14 nothing to do with the question of whether IBM 15 had per processor licenses because, as far as 16 you know, IBM never had a per processor 17 license; isn't that right? 18 A. I knew that they had licenses. I 19 didn't know what they contained. But my sense 20 walking away from these discussions after 21 several months is that that was a concern of 22 IBM's. 23 Q. And today I'm asking you not for your 24 sense when you were walking away, but from 25 whether or not you can give sworn testimony 10270 1 that IBM ever had those kind of contracts. 2 And, in fact, I think you've already 3 testified that you can't. 4 A. Right. 5 Q. It's a good thing that I'm flipping 6 pages. Okay. 7 I want to ask you a little bit about 8 software bugs because we've testified about 9 bugs and incompatibilities. 10 And the Jury has heard testimony from 11 witnesses before you took the stand, 12 Mr. Bradford, including by videotape. 13 But I just want to make sure that you 14 and I have the same understanding. 15 Is it correct to say that all software 16 products are going to have bugs? 17 A. Certainly in their earliest 18 iterations, in their alpha stages and their 19 beta stages there are always and frequently 20 bugs. 21 Q. And is it also fair to say that 22 complex software products, including, for 23 instance, Novell's NetWare operating system, is 24 going to have bugs even after the product is 25 released to the public? 10271 1 A. Right. The small -- you know, the 2 nature of those bugs could vary. 3 You try to get rid of all of what I 4 would say material bugs before the product 5 actually ships. 6 And then when you discover bugs and 7 you install the product in the marketplace, you 8 then ship upgrades, updates, et cetera, to 9 correct some of those bugs. 10 Q. And one of the reasons for the beta 11 testing process is that a software developer 12 like Novell with NetWare is sending out a beta, 13 a prerelease version to many, many people so 14 that each of those people will test the beta 15 version of that software and report back about 16 what bugs they have found; right? 17 A. That's right, yes. Sure. 18 Q. It wouldn't be possible for Novell to 19 test its own software on as many possible 20 hardware and software configurations as is 21 possible when you send out the beta? 22 A. That's right. 23 Q. And when you get reports back in from 24 the beta testers, the people who are developing 25 the software have to, if I can put it this way, 10272 1 prioritize what bugs they are going to work on; 2 correct? 3 A. Yes. 4 Q. And they'll work on those that seem 5 most important and significant; true? 6 A. True. 7 Q. And is it also true that when you have 8 reports of bugs, you have to think about 9 whether or not in fixing a particular bug you 10 might actually make the product worse and break 11 it in some more significant way? 12 MS. CONLIN: Your Honor, I'm going to 13 object to this line of questioning. I thought 14 perhaps it was going to be connected up, but I 15 believe this is well outside the scope of 16 direct examination. 17 MR. TULCHIN: It will be connected up, 18 Your Honor, and he has testified about bugs. 19 THE COURT: I'll allow it. Go ahead. 20 A. But you are pushing my knowledge with 21 respect to bugs. 22 Q. Okay. Fair enough. 23 A. I'm not a software engineer. 24 Q. I'm going to stop -- I know that, and 25 I'm going to stop pushing. 10273 1 But is it fair to say that the people 2 developing the product have to make a decision 3 about what bugs to try to fix and what bugs not 4 to? 5 A. Certainly. 6 Q. And when the product ships, I think 7 we've agreed, any complex software product, 8 there are going to be some bugs left over, 9 still in the product; correct? 10 A. Hopefully not significant ones. 11 Q. Right. 12 A. Hopefully ones that do not impact the 13 actual operation of the code. 14 Q. Right. Now, I want to make sure I 15 understand your testimony concerning the beta 16 version of Windows 95. 17 Microsoft sent out beta versions of 18 Windows 95 beginning many, many months before 19 it shipped; correct? 20 A. I suspect they did. 21 Q. Did it go back to '94 even, into the 22 prior year? 23 A. Well, I don't know. You have the 24 Microsoft records. I don't know when they 25 began shipping the Microsoft betas to the 10274 1 world. 2 Q. Well, maybe we can look at Exhibit 3 2399 and 2399A. These are Plaintiffs' exhibits 4 that you looked at yesterday. And I just want 5 to understand something about them. 6 MR. TULCHIN: Sharon, do you have 7 those? 8 MS. NELLES: I do. 9 MR. TULCHIN: Could we put up 2399, 10 please? 11 Sorry for the delay, Your Honor. 12 Q. This is -- 2399, Mr. Bradford, I think 13 you testified was a letter from Dave Miller who 14 worked for Novell; correct, to Mr. Kruger at 15 Microsoft? 16 A. That's right. 17 Q. And you talked about this yesterday. 18 Now -- 19 MR. TULCHIN: Thank you, Sharon. 20 Roxanne, do you have yours? 21 MS. CONLIN: Yeah, I do. Thank you. 22 Q. And, Mr. Bradford, was it the import 23 of your testimony yesterday that Microsoft was 24 not cooperating with Novell in trying to fix 25 bugs that either Microsoft or Novell discovered 10275 1 in the beta of Windows 95? 2 A. Yes. I think it's fair to say that 3 our perception was that Microsoft had no sense 4 of urgency in assisting Novell. 5 Q. Well, Mr. Miller's letter -- this is 6 just a few days after the product shipped, 7 right? 8 The product was shipped around the 9 24th of August in '95? 10 A. I think we agreed it was our 11 anniversary date, August 24th. 12 Q. I thought you said that. It's your 13 wedding anniversary? 14 A. Yes. 15 Q. Mine is just a couple days off, so 16 we're close. 17 So this is about a week later. And 18 Mr. Miller writes to Mr. Kruger at Microsoft, 19 and he says that there's a list, which we're 20 going to look at in a moment. 21 And it says it contains a description 22 and, in some cases, a consequence. Further 23 details regarding each bug will have to be 24 addressed by our respective QA engineering 25 staffs. 10276 1 Do you see that? 2 A. That's right, yes. 3 Q. Is QA quality assurance? 4 A. That's right. 5 Q. Okay. So Mr. Miller is saying that 6 the engineers on both sides will have to 7 address this; correct? 8 A. Right. 9 Q. And doesn't that imply to you that 10 some of the problems might be Microsoft's and 11 some might be on the Novell side? 12 A. Not necessarily. 13 Q. All right. And then he says, I hope 14 that we can continue to work together to 15 resolve these and any future problems that 16 might occur. 17 A. Sure. 18 Q. Clearly that implies that -- when he 19 says continue to work together, that he thinks 20 they have been working together up until then? 21 A. Yeah. I think Dave Miller was being 22 very kind in this letter, hoping that Microsoft 23 would accommodate and cooperate. 24 Q. All right. Well, we'll look at some 25 of that. I want to look at the list first, 10277 1 2399A. 2 And I think you testified on direct -- 3 it's two pages -- that this was the attachment 4 that went with Mr. Miller's letter; right? 5 A. Yes. 6 Q. Okay. 7 MR. TULCHIN: Can we bring up the 8 first half, the top half of this? 9 Thank you. 10 Q. And Novell has this list and it's 11 entitled bug description in Windows 95. 12 And then it says, for instance -- just 13 to pick one, let's pick the first one, Win 95. 14 Hanging when putting 66-char -- is that 15 character? C-h-a-r, does that stand for 16 character? 17 A. I think it's a fish, a char in the 18 Norwegian waters. I'm joking. 19 I think that's what it means, but I 20 don't really know. Again, I'm starting to look 21 and kind of glaze over as I look down that list 22 of bugs. 23 Q. Well, and that's really what I was 24 getting to. I mean, you don't know anything 25 about these particular bugs; correct? 10278 1 A. That's right. 2 Q. And you're not here to tell the Jury 3 that these bugs were Microsoft's fault as 4 compared to possibly being a fault in the 5 engineering -- the software engineering done at 6 Novell; correct? 7 A. That's right. 8 Q. And, in fact, sometimes bug reports 9 are made by beta testers, let's say, a company 10 like Novell, and the bug reports themselves are 11 in error, there was no bug. That can happen; 12 right? 13 A. I suppose theoretically it could. 14 Q. Well, has it happened to Novell? 15 Novell sends out betas of its own operating 16 system. 17 A. I don't know. I don't know. 18 Q. Okay. 19 A. We've gotten bug reports back that 20 weren't really bugs. 21 Q. All right. And if we could look at 22 5473, Plaintiffs' 5473. This was also shown to 23 you during direct. 24 You remember this, I think this came 25 from -- this is a handwritten note from Lindsey 10279 1 Williams in 1992 to Linnet Harlan. 2 A. That's right. 3 Q. And I know I'm jumping around in time 4 a little bit. This is not '95, and I just want 5 to emphasize that to you. 6 A. Right. 7 Q. We're not talking about Windows 95. 8 But what the note said, and I just 9 want to make sure we look at this carefully -- 10 Lindsey writes to Linnet, I'm afraid that this 11 is the sum total of my gathering efforts. 12 And her gathering efforts were efforts 13 that were being made at your behest to try to 14 gather up problems that you could report to the 15 Department of Justice; correct? 16 A. What is the date of this letter again? 17 Q. 1992. May 6, 1992. 18 A. Okay. 19 Q. Do you remember this from yesterday? 20 I'll get you a hard copy if you need it. 21 A. Yeah. No, I remember it from 22 yesterday. I just -- I didn't see the date on 23 the document. 24 MR. TULCHIN: Chris, can we go back 25 and show that just to make sure there's no 10280 1 question? 2 Q. Do you have that, Mr. Bradford? 3 A. Yes. 4 Q. Okay. So Lindsey's note says, one 5 other item to mention is that -- I'm sorry, I 6 forgot to ask you to actually answer my 7 question because you were talking about the 8 date. 9 When Lindsey talks about her gathering 10 efforts, these, again, were the efforts that 11 were being made at your behest to try to gather 12 information that you could send to the 13 Department of Justice so that Novell could 14 continue complaining about Microsoft? 15 A. Yeah. I don't know about continuing 16 to complain. DR-DOS had -- or the DRI folks 17 had complained a little bit. 18 That was a compound question there. 19 And so you threw in a couple of qualifiers I'm 20 not prepared to agree to. 21 So if you want to repeat the question 22 or have the court reporter repeat it, then I'll 23 respond. 24 Q. All right. I'll try to go quickly. 25 Lindsey was making -- 10281 1 A. You mentioned the Department of 2 Justice. 3 Q. It might have been the FTC. 4 A. We were talking the Federal Trade 5 Commission. I just want to be clear. 6 Q. So let's go on. Lindsey says, one 7 other item to mention is that through a 8 telephone survey which we carried out, we have 9 learned that Microsoft refuses to support 10 Windows or any other of their products if they 11 run with DR-DOS, dash, if the problem appears 12 to be with DR-DOS. 13 Do you see that? 14 A. Yes, I do. 15 Q. Now, that's certainly common in the 16 software industry, isn't it, that each company 17 is responsible for fixing bugs or problems with 18 its own software? 19 A. Certainly. But the problem here, of 20 course, is that if you can't get access to 21 Microsoft betas or access to Microsoft's 22 engineers, then you don't know the code that 23 you've got to interface with. 24 Q. Well, we are going to come to access 25 to the betas. 10282 1 But first I want to ask you this. You 2 agree with me, do you not, sir, that if the 3 problem is with DR-DOS, it's the responsibility 4 of the company that makes DR-DOS, DRI and then 5 Novell, to fix them? 6 A. Sure, uh-huh. 7 Q. And I think Ms. Conlin said in her 8 opening statement we are not saying that 9 Microsoft has an obligation to make its 10 products compatible with DR-DOS. 11 Do you agree with that? 12 A. Not necessarily. 13 Q. All right. Well, certainly that's 14 what the lawyer for the Plaintiffs in this case 15 told the Jury. 16 That if it's a problem with DR-DOS, if 17 the problem is with the code within DR-DOS, 18 that's a problem that DRI or Novell should be 19 fixing. 20 A. The problem, of course, is that -- it 21 goes back to my bridge analogy. If you own the 22 bridge, if you own the operating system and 23 you've got to get from the East Coast to the 24 West Coast, the only way you can get from the 25 East Coast to the West Coast is to cross that 10283 1 operating system bridge. 2 So you need access to that information 3 in order to create your software so that it 4 will allow the applications that are on the 5 other side to operate in connection with your 6 product. 7 Q. Well, let's just work with your 8 analogy for a moment. 9 A. Okay. 10 Q. Whether it's good or bad, that's 11 something we'll leave for another time. 12 A. Okay. 13 Q. If you're trying to get over the 14 bridge and it turns out that your car breaks 15 down because there's an engineering problem, 16 you wouldn't blame the owner of the bridge, 17 would you? 18 A. That's correct. 19 Q. Okay. So if the problem is with the 20 bridge, that's one thing. 21 A. Right. 22 Q. But the question with software and how 23 it interoperates together is, I think you'll 24 agree, a complicated one requiring both 25 companies to do a good engineering job; 10284 1 correct? 2 A. Yes, that's right. 3 Q. Okay. 4 MR. TULCHIN: May I approach the 5 witness, Your Honor? 6 THE COURT: Yes. 7 Q. Let me hand you Defendant's Exhibit 8 32. This is a document from October 1991. 9 And it's on Digital Research 10 stationery. 11 Do you see that, sir? 12 A. I do. So this is just prior to our 13 finalization of Novell's acquisition of DRI, 14 which occurred November 1, just to set the time 15 frame. 16 Q. Right. But, of course, Novell had 17 agreed to buy Digital Research several months 18 earlier. Was it in June? 19 A. We signed a letter of intent in July. 20 Q. In July. 21 A. That we were going to buy them subject 22 to due diligence. 23 Q. Right. And you have no reason to 24 disagree that this is a Digital Research 25 document; correct? 10285 1 A. I have no reason to disagree, or agree 2 necessarily, but it looks like it's on their 3 letterhead and so forth, so -- 4 Q. Well, do you remember who John Linney 5 was, L-i-n-n-e-y? 6 A. Let's see. I'm trying to think of -- 7 I recognize the name, and he probably worked 8 for DRI, but it's not someone that I had a lot 9 of interface with. 10 Q. And you recognize the names of 11 Mr. Bromhead and John Constant of Digital 12 Research? 13 A. I do see theirs. Let's see, John 14 Bromhead, Richard Gibbs not as sure, but John 15 Constant, uh-huh. 16 MR. TULCHIN: We offer Exhibit 32, 17 Your Honor. 18 MS. CONLIN: Your Honor, we object to 19 Exhibit 32 on the basis of relevance at least 20 as used with respect to this witness, Your 21 Honor. 22 This is a technical document that 23 lists a number of things that are, I think, 24 fairly said to be incomprehensible to anyone 25 but a software engineer. 10286 1 May I approach, Your Honor, and show 2 the Court why I am concerned? 3 THE COURT: Thank you. 4 MR. TULCHIN: Here's another copy if 5 you want. 6 MS. CONLIN: Thanks. 7 THE COURT: Overruled. It's admitted. 8 MR. TULCHIN: Thank you, Your Honor. 9 Could we look at the first page of 10 Exhibit 32, please? 11 Q. And I know this is just prior to the 12 acquisition by Novell, Mr. Bradford, but you'll 13 see that the memorandum on the first page -- 14 MR. TULCHIN: That's it, Chris, just 15 those two paragraphs. 16 Q. This is written by John Linney in 17 October '91. And it says, attached is a 18 two-sheet summary of the technical changes 19 appearing in the interim DR-DOS 6.0 BUS, BUS, 20 which is soon to be released. 21 Do you see that? 22 A. Right. 23 Q. Do you remember what BUS stood for? 24 A. I don't, but it -- the added -- the 25 fact that it's added there tells me that it's 10287 1 not the whole disk operating system. It's one 2 aspect of the disk operating system called the 3 BUS. 4 Q. Does it stand for the business -- 5 sorry -- business update? 6 A. No, I don't think so. 7 Q. Or business update service, if you 8 look at the next page? I'm sorry. 9 Do you see the title on the next page 10 DR-DOS interim update service technical 11 background? 12 A. DR-DOS interim update service. I'm 13 not familiar with that term. 14 Q. All right. Fair enough. 15 In any event, on the first page 16 Mr. Linney says, please treat this as highly 17 privileged information. 18 As such, it must be used for your own 19 reference, but never released to external 20 parties. This includes OEMs and press as well 21 as end users. 22 Do you see that? 23 A. Yes, I do. 24 Q. And then the next two pages after that 25 contain a list of bugs, are they not, in the 10288 1 DR-DOS product? 2 A. I have no idea. Differences between 3 EMM3866.SYS versions 2.0 and 2.02, I don't know 4 what that is. 5 Q. Okay. And if you just look down this 6 quickly, if you will. I don't want you to 7 spend a lot of time with it. But is it the 8 case that you don't know what any of these 9 issues are about? 10 A. Let's see, Number 2 when running 11 Windows 3.0 in standard mode with -- 12 blupitibop. I don't know what that is, but 5 13 refers to Windows 3.0. 6 refers to a Dell 14 notebook. You know, I'm just looking for terms 15 that I know. 16 Support has been added for advanced 17 microdevices. They were a chip manufacturer. 18 Pretty much that's it, to my knowledge, of this 19 document. 20 Q. Okay. And having looked at this, does 21 this look like it's a summary of certain bugs 22 which appear to DR-DOS 6.0? 23 A. I can't say that, no. 24 Q. But, in any event, was it the practice 25 at Novell after the acquisition to make sure 10289 1 that some of the bugs that might have appeared 2 in DR-DOS were not disclosed to OEMs and the 3 press and end users? 4 A. I don't get that connection that 5 you're making. 6 Q. Well -- 7 A. You're assuming that this was a bug 8 fix document, and then you're saying because 9 the language in here says make sure this 10 doesn't go to OEMs and users and members of the 11 press, but we never established that this was a 12 bug fix document. 13 Q. Okay. And you say you don't know. 14 A. I don't know. 15 Q. You do see that some of the items in 16 the second page talk about -- for instance, you 17 look at one, and you read it, item two, when 18 running Windows 3.0 in standard mode, some 19 unreliability of operation was possible. 20 Do you see that? 21 A. Again, I -- not helping me. 22 Q. Okay. Well, let me ask you about 23 Windows 3.0. 24 A. All right. 25 Q. Do you remember when Windows 3.0 was 10290 1 released? Can you tell the Jury approximately 2 when that was? 3 A. No. Refresh my recollection, if you 4 would. 5 Q. 1990. 6 A. When in 1990? 7 Q. Now, you're testing me. 8 A. Okay. 9 Q. And I'm becoming the witness. 10 A. Okay. I'm sorry to ask you questions. 11 Q. I think it was June. I think it was 12 June. 13 A. Okay. 14 Q. But my memory is failing. I hope I 15 have that right. 16 A. Okay. So June 1990 Windows 3.0 is 17 released. 18 Q. Was that a major event in the software 19 world and operating system world at the time? 20 A. Yes. A release of any new version of 21 Windows would have been a fairly significant 22 event. 23 Q. But how about Windows 3.0? Do you 24 recall that being a revolutionary technological 25 leap? 10291 1 A. No. That would be an overstatement of 2 my views on it. 3 Q. Okay. I want to go back now and 4 return to the subject of whether or not 5 Microsoft was cooperating with Novell when it 6 came to the Windows 95 product and finding 7 bugs. 8 And if we can look at DX 2496, please. 9 MR. TULCHIN: May I, Your Honor? 10 THE COURT: Yes. 11 MR. TULCHIN: Thank you. 12 Q. I'm handing the witness Defendant's 13 Exhibit 2496. 14 A. All right. 15 Q. And this is from Dave Cutler to Dave 16 Miller and Richard Jones at Novell; correct? 17 A. That's right. 18 Q. Do you recall having seen this before? 19 A. No, not offhand. 20 Q. Before testifying here this week, do 21 you have any memory of seeing this document? 22 A. No. 23 MR. TULCHIN: We offer Exhibit 2496, 24 Your Honor. 25 MS. CONLIN: The document contains 10292 1 embedded hearsay, Your Honor, to which we have 2 lodged an objection in the earlier process 3 which we maintain. 4 THE COURT: Has the Court ruled on it 5 previously? 6 MS. CONLIN: No, Your Honor. 7 THE COURT: Very well. 8 Ladies and gentlemen of the jury, we 9 are going to take up a matter outside of your 10 presence. 11 Remember the admonition previously 12 given. Leave your notebooks here. 13 Thank you. 14 (The following record was made out of 15 the presence of the jury at 1:09 p.m.) 16 THE COURT: Please be seated. 17 Do you have a copy for me? 18 MS. CONLIN: Your Honor, let me be 19 sure that -- 20 MS. NELLES: The embedded hearsay 21 objection was withdrawn by Plaintiffs, Your 22 Honor, according to my records. 23 MS. CONLIN: Let's see what mine says. 24 Your Honor, what mine says is embedded 25 hearsay highlights being offered for nonhearsay 10293 1 purpose. 2 So what I would ask is that the 3 Defendant state the nonhearsay purpose for 4 which the embedded hearsay is being offered. 5 THE COURT: Very well. What is the 6 purpose? 7 MR. TULCHIN: I don't know what the 8 embedded hearsay is to which reference is being 9 made. 10 THE COURT: Can I see it? 11 MS. NELLES: I am most delighted. 12 THE COURT: Thank you. 13 MS. NELLES: So, again, Your Honor, 14 our records show that objection was withdrawn 15 by Plaintiffs. 16 MS. CONLIN: Well, subject to the 17 Defendant identifying a proper nonhearsay 18 purpose for the -- under limitation of use, 19 embedded hearsay highlights being offered for 20 nonhearsay purpose. 21 So I'm assuming that the Defendant can 22 state a nonhearsay purpose for which this 23 embedded hearsay is being offered. 24 And maybe you are not even going to 25 use that part. I don't know. 10294 1 MR. TULCHIN: I don't know what it is 2 that Ms. Conlin is referring to. 3 I thought this had no objection, Your 4 Honor. There was an objection originally 5 lodged to it, and then withdrawn in the Special 6 Master process, which I think both sides 7 understand to mean there was no hearsay 8 objection. 9 MS. CONLIN: Your Honor, it was 10 withdrawn because the non- -- the embedded 11 hearsay was being offered for a nonhearsay 12 purpose. 13 My question is simply that the 14 Defendant state the nonhearsay purpose for 15 which the embedded hearsay is being offered. 16 MR. TULCHIN: I don't see any embedded 17 hearsay. That's my initial problem. 18 MS. CONLIN: Oh, I see. My copy is 19 not marked. 20 THE COURT: Do you intend to use all 21 of this? 22 MR. TULCHIN: Well, I intend to 23 actually only spend a couple minutes on it, 24 maybe less than a couple. 25 THE COURT: Wait a minute. This is 10295 1 just one page; right? 2 MR. TULCHIN: I have two pages. 3 THE COURT: Two pages? 4 MS. CONLIN: I do too. 5 THE COURT: You gave me -- 6 MS. NELLES: How many did I give you, 7 Your Honor? 8 THE COURT: You gave me three pages of 9 the first page. 10 MS. NELLES: Let me make sure 11 everybody is on the same of the same pages. 12 I need the second page of this 13 exhibit, please. 14 THE COURT: Maybe that's where all the 15 problems were at. 16 MS. NELLES: Maybe that's where the 17 embedded hearsay is since I don't see it 18 either. 19 THE COURT: Yeah, I didn't see it 20 either. 21 MR. TULCHIN: I just don't see any. 22 THE COURT: Well, I assume you are 23 referring to the second page of Colin Dixon, 24 Colin Dixon. 25 MS. CONLIN: I'm a little confused 10296 1 myself, Your Honor. I don't know which of 2 these people are Novell people and which of 3 these people are Microsoft people. 4 Perhaps the concern was this top 5 paragraph that talks about Microsoft debugging 6 a problem and noticing a misuse of something. 7 THE COURT: Well, from a Ben Hendrick? 8 MS. CONLIN: Yes, Your Honor. 9 Mr. Hendrick is a Novell employee. But he is 10 reporting what Microsoft reported, which makes 11 it embedded hearsay. 12 MR. TULCHIN: This is just a business 13 record, Your Honor, in which Mr. Hendrick at 14 Novell reports that Microsoft found a bug and 15 helped Novell out. 16 THE COURT: Okay. 17 MR. TULCHIN: I don't know what the 18 embedded hearsay is. This is truly a business 19 record. 20 MS. CONLIN: But, Your Honor, we spent 21 many, many hours before the Special Master 22 discussing embedded hearsay and business 23 records. So that's the -- 24 MR. TULCHIN: We did, and their 25 objection was withdrawn. 10297 1 I just don't understand now how it's 2 being raised again, particularly in the middle 3 of my examination. We ought to be proceeding. 4 MS. CONLIN: But, Your Honor, that's 5 really not a fair comment on Mr. Tulchin's 6 part. 7 The embedded hearsay objection was 8 withdrawn subject to the statement of a proper 9 nonhearsay reason for the use of the material. 10 So perhaps there is no need to do this unless 11 you are going to refer to that particular part. 12 MR. TULCHIN: Well, what I intended to 13 do was to refer to the two sections above the 14 line. I don't know if it's a line or a series 15 of asterisks or what it is. 16 MS. CONLIN: I think that's one of 17 them. 18 Your Honor, can we take just a moment 19 to look at our records? 20 THE COURT: Sure. Go ahead. 21 MS. CONLIN: Thank you. 22 THE COURT: We are going to take a 23 short break. 24 (A recess was taken from 1:15 p.m. 25 to 1:19 p.m.) 10298 1 (The following record was made out of 2 the presence of the jury.) 3 THE COURT: Anything else on this? 4 MS. CONLIN: Your Honor, I'm uncertain 5 of the contents of the database. I'm 6 withdrawing the objection. 7 I apologize to the Court and Counsel 8 for the interruption and I wish we had a 9 fail-safe system, but we do not. 10 THE COURT: Okay. Too many exhibits, 11 so what can you do? 12 MS. CONLIN: Agreed. We can stipulate 13 to that. 14 MS. NELLES: We can stipulate to that. 15 MR. TULCHIN: Can we limit each side 16 to a dozen? 17 MS. NELLES: I'll do it. 18 (The following record was made in the 19 presence of the jury at 1:20 p.m.) 20 THE COURT: Everyone else may be 21 seated. 22 Sir, you are still under oath. 23 Ms. Conlin? 24 MS. CONLIN: Oh, not my turn. 25 I'm sorry, Your Honor. I was prepared 10299 1 to move forward. Instead, I'll move backwards 2 and withdraw the objection. 3 THE COURT: Okay. 4 MR. TULCHIN: Your Honor, we offer 5 Exhibit 2496. 6 MS. CONLIN: No objection, Your Honor. 7 THE COURT: It's admitted. 8 Q. Did your copy get up there, Mr. 9 Bradford? Perhaps it's -- can I help you or 10 can you get that? 11 A. Let's see. 2496, yes, I have that. 12 Q. Good. Thank you, sir. 13 MR. TULCHIN: And let's put that on 14 the screen. 15 Q. Now, at the very top of the first 16 page, this is an e-mail from Dave Cutler to 17 Dave Miller and Richard Jones; correct? 18 A. That's right. 19 Q. November 20th, 1994, and the subject 20 says Novell-Microsoft success story. 21 Do you see that? 22 A. Yes. That's riveting to me because 23 it's such an exception to the rule, but -- 24 Q. I've heard you on that subject. 25 A. Right. 10300 1 Q. Richard Jones was who at the time? 2 A. I believe Richard Jones was in 3 engineering. I knew Dave Miller and Dave 4 Cutler better. 5 Q. Well, let me just make sure we 6 understand this. 7 Mr. Miller was not a software 8 engineer; correct? 9 A. I don't know what his technical 10 background was. I don't know what his 11 technical training was. At this time Dave 12 Miller was the Novell/Microsoft representative. 13 Q. Correct. He was sort of a liaison 14 with Microsoft? 15 A. Yes, that's right. 16 Q. I'm just asking whether you know or 17 whether you don't if Mr. Miller was a software 18 engineer? 19 A. I do not know. 20 Q. And when it comes to Mr. Jones, he was 21 in a very high-level engineering position, was 22 he not? 23 A. I wouldn't describe it as that. He 24 certainly wasn't in our senior most engineering 25 ranks. 10301 1 Q. Wasn't he the director of engineering 2 of Novell's client development group in 1994 3 and 1995? 4 A. Well, when you talk about a director 5 level, that's not a vice president or a senior 6 vice president level. 7 Q. Neither was Mr. Miller. He wasn't a 8 vice president or senior vice president? 9 A. No, that's true. 10 Q. Okay. But Mr. Jones was a director of 11 engineering? 12 A. Of the client development part of 13 NetWare, a small part of NetWare. 14 Q. Okay. 15 A. But I mean -- sure. 16 Q. And how about Mr. Cutler? Was he an 17 engineer, do you know? 18 A. I believe Dave Cutler was an engineer 19 by training, but he was also -- and I don't 20 know whether it was in this time frame or 21 later, he became vice president of customer 22 service. 23 Q. Okay. 24 MR. TULCHIN: And if we can show the 25 next little piece as well. 10302 1 Q. I just want to direct your attention 2 to these two paragraphs at the top. 3 And Mr. Cutler is telling Miller and 4 Jones that somebody at Microsoft, right, one of 5 the Windows 95 core development team, that's 6 someone at Microsoft? 7 A. That's true. 8 Q. And that guy at Microsoft was doing 9 testing with our Lanalyser for Windows product. 10 That's a Novell product? 11 A. That's right. 12 Q. Lanalyser for Windows? 13 A. Right. 14 Q. Would you say that was an important 15 Novell product? 16 A. I think if you listed it in terms of 17 its importance within the Novell family, it 18 probably represented certainly 1 percent or 19 less of our revenue. 20 Q. Okay. And the guy at Microsoft, the 21 person at Microsoft proactively reported the 22 following bugs. And there's much more on this 23 page about the bugs, but I just want to stop 24 here. 25 What this is saying is that someone at 10303 1 Microsoft was doing testing and reported to 2 Novell some bugs so that Novell could fix them; 3 correct? 4 A. Yes. It had to do with, again, our 5 Lanalyser product. And I doubt that Microsoft 6 had a competing product. 7 Q. Right. So Microsoft had a competing 8 product to Lanalyser -- 9 A. No. I said I don't think they did. 10 Q. All right. Okay. I hear your 11 testimony. 12 A. Okay. 13 Q. But what Microsoft noticed was that in 14 the engineering that Novell had done, there was 15 a misuse of something called V86 16 MMGR_Set_Mapping info call, right? 17 A. Are you referring to the next 18 paragraph down, Microsoft was debugging a 19 problem and noticed the following misuse of 20 whatever. And wanted to make sure you guys got 21 this information, here's the e-mail from the 22 Windows 95 developer at Microsoft. 23 Okay. It seemed like the Microsoft 24 representative was being responsive to a bug 25 issue. 10304 1 Q. Right. And here's an example of 2 Microsoft proactively and without any 3 obligation helping out Novell; correct? 4 A. Conceded. One time. 5 Q. Well, you say one time. 6 A. I don't know. 7 Q. You certainly weren't in the 8 engineering group. You don't know how many 9 times it happened? 10 A. Right. 11 Q. Okay. Fair enough. 12 MR. TULCHIN: May I approach the 13 witness, Your Honor? 14 THE COURT: You may. 15 Q. I'm showing you Defendant's Exhibit 16 6773. And this is a document that was produced 17 in litigation by Novell. 18 Do you see that, sir? 19 A. No. How would I know -- 20 Q. Can you tell that by the production 21 numbers NOV 25, et cetera. 22 A. Oh, okay. Or is that November 25th? 23 Maybe it could be Novell. I don't know. 24 Q. And you see at the top it refers to 25 Dave Miller 10-16-95, five big bugs. 10305 1 Do you see that? 2 A. Correct. 3 Q. And Dave Miller is the fellow you 4 talked about at Novell? 5 A. Yes. 6 MR. TULCHIN: We offer Exhibit 6773, 7 Your Honor. 8 MS. CONLIN: No objection. 9 THE COURT: Admitted. 10 Q. This is a one-page document. And 11 under the name and the date, Dave Miller 12 10/16/95, it says five big bugs. 13 Do you see that? 14 A. Yes, I do. 15 Q. Have you ever seen this document 16 before? 17 A. Possibly. But it -- you know, it's 18 not marked. It's not on Novell letterhead. I 19 don't know if it's from Dave Miller to 20 whomever. It's kind of confusing. 21 Do you see what I'm saying? It goes 22 Dave thinks the August 21 letter went out from 23 DRB, and the DRB reference is to me 24 undoubtedly. 25 But, again, I don't know who sent this 10306 1 or -- you know, there's not enough information 2 to figure that out. 3 Q. I hear you, Mr. Bradford, but my only 4 question was whether you had seen this before. 5 A. Possibly. 6 Q. Well, did you see it in the last week, 7 for example? 8 A. Counsel for the class may have shown 9 it to me, but I don't recall it, again, in 10 specifics. 11 Q. All right. Well, let's look at the 12 first paragraph of the text that's on the 13 screen. 14 And it says, Dave -- and reading it 15 today, that looks like a reference to Dave 16 Miller? 17 MS. CONLIN: Objection, Your Honor. I 18 think, in fact, that the record will reflect 19 something quite different. 20 THE COURT: He may answer if he can. 21 A. I have no idea. 22 Q. Okay. And it says, Dave thinks the 23 August 21 letter went out from DRB. 24 And that was a letter that went from 25 Novell to Microsoft, an August 21st letter. 10307 1 I think we already -- we may have 2 looked at. Or maybe we didn't. I don't 3 remember. 4 A. I don't remember either. 5 Q. Okay. There are too many dates 6 floating around. 7 A. There was a letter that Bob 8 Frankenberg sent to, I believe, someone at 9 Microsoft -- it probably was Bill Gates -- and 10 it might have been August 21 of this year. 11 Q. Of '95? 12 A. Yes, of 1995, that's right. I'm 13 sorry. 14 Q. Right. And this reference says DRB 15 and others believe that this bug deal is a big 16 deal, but the apps people do not. 17 Do you see that, sir? 18 A. I do see that. 19 Q. Dave thinks it's mostly our fault. 20 When we found bugs, we didn't press MS -- 21 that's Microsoft; right? 22 A. Uh-huh. 23 Q. -- to fix them. 24 Now, do you recall in 1995 that apps 25 people at Novell didn't think that these five 10308 1 bugs that had been found were a big deal? 2 A. No, I don't recall that. 3 Q. Do you recall hearing any of the 4 engineers say it's mostly our fault, Novell's 5 fault, because when we found bugs, we didn't 6 press Microsoft to fix them? 7 A. No, I didn't hear that. 8 Q. Do you know, sir, whether or not 9 Novell had betas to the Windows 95 operating 10 system prior to the time that Windows 95 was 11 released to the market? 12 A. I don't know that for sure. 13 Q. Well, you did testify on direct, 14 didn't you, that Novell got some betas? 15 A. We got some betas. Many betas we did 16 not get. 17 So you're referring to a specific 18 Windows 95 beta. Give me a time frame. Give 19 me a date. Give me a document that might 20 refresh my recollection, and that might help 21 me. 22 Q. Well, let's just start with this. 23 For the year '95, January 1st, '95, up 24 until the issuance of Windows 95, on your 25 anniversary, August 24th of that year, did 10309 1 Novell during that period receive betas to the 2 Windows 95 product? 3 A. I don't know. 4 Q. All right. If we can look at the next 5 paragraph. 6 The important matter in Dave's mind 7 was when Microsoft censored the beta releases 8 we got. 9 Do you see that? 10 A. Yes, I do. 11 Q. Now, is that a reference to you or to 12 Dave Miller, or do you know? 13 A. The important matter in Dave's mind 14 was when Microsoft censored the beta releases 15 we got. He has a letter proving it. 16 I have no idea. 17 Q. And then let's look at the next 18 sentence after that. 19 Dave's conclusion is that our problems 20 came from inept engineers. 21 Do you know if that was a conclusion 22 that was expressed by Dave Miller or by you, 23 Dave Bradford, or someone else? 24 A. It's certainly not a conclusion I 25 would have drawn, but -- so I don't know if 10310 1 it's Dave Jones or Dave Smith. I have no idea. 2 The document really doesn't help me figure that 3 out. 4 Q. And going back to the second paragraph 5 which I started with and then I skipped over. 6 The last sentence of that paragraph 7 says, but the big problem is that we have 8 dragged our feet on the development of the Win 9 95 client. We fumbled development. 10 Now the we there refers to Novell, 11 does it not, as far as you can tell? 12 A. Again, this letter -- there's no -- I 13 hate to use a legal term, but there's no 14 foundation for it. You can't tell who it's 15 from, et cetera. It appears to have reference 16 to Novell. 17 Q. And certainly the Dave Miller and the 18 five big bugs, that's all about Novell; right? 19 You remember -- 20 A. Right. 21 Q. -- the August 31st letter that we did 22 look at which referred to the five big bugs? 23 A. Right. 24 Q. And this document, Exhibit 6773, 25 contains the statement the big problem is that 10311 1 we have dragged our feet. 2 Now, when it talks about the 3 development of the Win 95 client, do you know 4 what the Win 95 client is referring to? Is 5 that WordPerfect or what is it? 6 A. Let's see, but the big problem is that 7 we have dragged our feet on the development of 8 the Win 95 client. We fumbled development. 9 So there's a reference to NSG in 10 there, which refers to Novell. But the big 11 problem is that we have dragged our feet on the 12 development of the Win 95 client. That would 13 have been Novell's client interface with 14 Windows 95. 15 Q. Okay. And NSG does refer to Novell. 16 What is NSG? 17 A. Novell Systems Group. 18 Q. Okay. Is it your recollection, 19 Mr. Bradford, that in 1995 when some people at 20 Novell were complaining about the kind of 21 information they had received from Microsoft 22 and possibly bugs, is it your recollection that 23 there were other people at Microsoft who were 24 -- sorry -- other people at Novell who were 25 concluding at the same time that the problem 10312 1 lay with Novell? 2 A. No. 3 Q. Now, during your direct examination 4 you talked just briefly about application 5 programming interfaces, APIs. 6 Do you remember that? 7 A. Uh-huh. Yes. 8 Q. And I think you generally referred to 9 the fact that you thought that some APIs had 10 been withdrawn by Microsoft. 11 Did you say that? 12 A. Certainly some documentation or 13 something associated with the APIs, right. We 14 talked about that yesterday. 15 Q. Right. Now, what APIs did Microsoft 16 withdraw that Novell wanted to use or needed to 17 use? 18 A. Sitting here today, I don't recall 19 specific ones other than just the general 20 frustration of the engineering group having had 21 APIs withdrawn from them. 22 Q. Well, sitting here today -- that's 23 just one day after you testified about them -- 24 and I just want to find out what the APIs were 25 that you say Microsoft somehow withdrew and it 10313 1 shouldn't have withdrawn. 2 Do you know what they were? 3 A. I'm sure we can go back and look at 4 the testimony from yesterday. 5 Q. Well, we could. I'm just asking as of 6 today, which is Wednesday, January 24th, do you 7 have any recollection of what APIs Microsoft 8 withdrew all these years ago? 9 A. The specific names of those, I do not 10 recall. 11 Q. And is it your understanding, 12 Mr. Bradford, that there were some APIs that 13 ought to be internal APIs and not disclosed to 14 outside developers? 15 A. I think that's a question for the 16 engineers. 17 Q. Certainly Novell has long made a 18 NetWare network operating system; correct? 19 A. Yes. 20 Q. And Novell develops its own network 21 operating system. It doesn't publish all the 22 APIs for that system, does it? 23 A. That's a very broad statement. I 24 don't know the answer to that. 25 Q. Okay. 10314 1 A. I want to give you a correct answer, 2 but, again, an engineer in that department can 3 probably tell you whether or not that's true. 4 Q. Right. And, similarly, we need an 5 engineer to tell us whether the APIs in 6 Microsoft's operating systems, like Windows or 7 MS-DOS, were properly internal or should have 8 been external; correct? 9 A. Well, I think there was big debate in 10 the industry as to Microsoft, since they owned 11 a monopoly in the Windows desktop and the 12 MS-DOS operating system market, whether or not 13 they should be compelled to share those 14 application programming interfaces broadly and 15 fairly and equally across the industry. 16 Q. Well, on that subject, Mr. Bradford, 17 isn't it true that Novell had a high market 18 share in network operating systems at the same 19 time we've been talking about, let's say '94, 20 '95? Novell had 60 percent or more of the 21 market for network operating systems? 22 A. I don't think so. Not in 1994-95. We 23 can go back and look at the records, but our 24 high I think was in the early '90s, '90, '91, 25 '92, and it was probably 58, maybe maximum 60 10315 1 percent. 2 But certainly never the market power 3 or the percentage of the market that Microsoft 4 had. 5 Q. Well, Novell had the 58 percent that 6 you've referred to, and maybe it was '93 and 7 not '94, whatever, Novell had that 58 percent. 8 Was Novell out there every day trying 9 to get more? 10 A. Certainly. Trying to sell more 11 product, that's right. 12 Q. Because that's consistent with what 13 you said your obligation was, which is to 14 maximize the return for your stockholders? 15 A. That's right. 16 Q. And at 58 percent, you don't stop 17 competing. You're out there trying to get up 18 to 59 or 60? 19 A. That's right. 20 Q. And when you get to 60, you want to 21 get 65; isn't that right? 22 A. Yes. 23 Q. And that's the way it's supposed to 24 work. 25 And, in fact, a company called Lantec, 10316 1 L-a-n-t-e-c, brought suit against Novell in '95 2 alleging that Novell unlawfully had a monopoly 3 in network operating systems; correct? 4 MS. CONLIN: Your Honor, I object to 5 the question. It is totally improper. 6 THE COURT: Sustained. 7 Q. Mr. Bradford, in your direct 8 examination, I think you referred to MAPI, 9 M-A-P-I, and you said that somehow something 10 Microsoft did with MAPI had hurt Novell. 11 Do you remember that? 12 A. Yes. 13 Q. Sitting here today, what was it that 14 Microsoft did with MAPI that hurt Novell? 15 A. I'd have to have a document to refresh 16 my recollection on that. 17 Q. You have no recollection as to what 18 Microsoft did or what your testimony on the 19 subject was yesterday? 20 A. I think they were withholding APIs or 21 withdrawing what they'd already given us or 22 given us a different set of application 23 programming interfaces associated with MAPI. 24 Q. Do you know, Mr. Bradford, as of today 25 whether or not the MAPI interfaces were always 10317 1 disclosed by Microsoft to the public at large, 2 to software developers at large? 3 A. I don't know that. 4 Q. So you don't know whether these MAPI 5 interfaces were out there and available for 6 anyone or whether they weren't; correct? 7 A. I'm sure there was frustration. If 8 our folks were frustrated, there was a specific 9 reason associated with that. 10 Either someone else was getting them 11 and we weren't or it prevented us from 12 proceeding with our engineering as we would 13 have otherwise wanted to to get the best 14 products to the end users, customers. 15 Q. Can we agree that in the business 16 world, very often people and companies get 17 frustrated when in the course of competition 18 they're not getting everything they want to 19 get? Isn't that fair? 20 A. That's a very broad statement. What 21 do you mean not getting everything that they 22 want to get? In terms of market share? 23 Q. Sure, they're not as successful, sure. 24 One company isn't as successful as it had hoped 25 to be. 10318 1 A. No. We always want to be successful 2 as we start businesses. 3 Q. Sure. And as you do that and you 4 compete in the business world and it turns out 5 you were a little less successful than what you 6 had hoped to be, frustration can set in; 7 correct? 8 A. Sure. 9 Q. And sometimes when people get 10 frustrated, isn't it a natural human tendency 11 to blame someone else for the fact that your 12 success is a little bit less than you would 13 have liked? 14 A. No. You know what, I'm very big on 15 taking personal responsibility for one's own 16 actions, right. 17 So you start there. You figure out 18 what is it that I'm doing right. What is it 19 that I'm doing wrong. How could I improve my 20 performance. 21 Then once you've examined that, and 22 then suddenly you are running into a bunch of 23 extraneous factors that are completely outside 24 your control, you start -- then the frustration 25 sets in because there's nothing further that 10319 1 you as a company or individual can do to 2 improve your performance due to external 3 factors and the actions of third parties. 4 MR. TULCHIN: May I approach the 5 witness, Your Honor? 6 THE COURT: You may. 7 Q. Mr. Bradford, I'm handing you Exhibit 8 218, Defendant's Exhibit 218. 9 A. Thank you. 10 MR. TULCHIN: Someone is going to go 11 down sooner or later, Your Honor. I hope it 12 isn't me. 13 THE WITNESS: It's likely to be me. 14 MR. TULCHIN: I may be in this 15 courtroom longer than you, so I'll have more 16 opportunity. 17 Q. Mr. Bradford, Exhibit 218 is a 18 memorandum from Mr. Singh. 19 We've seen his name before; correct? 20 A. Yes. 21 Q. To Mr. Taglia dated January 6, 1992. 22 MR. TULCHIN: We offer Exhibit 218, 23 Your Honor. 24 THE COURT: Any objection? 25 MS. CONLIN: No objection, Your Honor. 10320 1 THE COURT: It's admitted. 2 Q. And if you look at the top, it says 3 subject, sales tool/requirements, competitive 4 issues. And then just below that -- this is in 5 January of '92. 6 So Novell owns Digital Research; 7 right? 8 A. That's right. 9 Q. Okay. Just below that, Mr. Singh, who 10 we've seen before, says, below is a brief 11 summary of things we need to make the new 1992 12 sales plan. 13 Since you are already familiar, I have 14 not described each point in detail here. 15 And then there's a 1. Manufacturing 16 quality. Every month we encounter the same 17 problems with manufacturing of all, all capital 18 letters, products. 19 The lack of quality is not limited to 20 packaged product, for example, CompuAdd 21 received 6.0 RDK with boot tracks not set up 22 and had to fix it themselves. 23 There is no quality control or process 24 to ensure orders get shipped on time. Due to 25 competitive pressures and the marketplace, the 10321 1 low-end activity will inevitably increase. We 2 cannot compete if the situation persists. 3 Do you see that? That's paragraph 1. 4 A. Yes. 5 Q. And this is written by Digital 6 Research concerning the Digital Research 7 products; correct? 8 A. Anil Singh worked for Digital 9 Research, and I'm not sure who Joe Taglia was. 10 I don't recall that name, but he could have 11 worked for DRI. 12 And so this is an e-mail or a letter 13 from Anil outlining things that they could do 14 to make sure that they succeeded in 1992 with 15 respect to their sales objectives. 16 Q. Sure. And item number 1 talks about 17 manufacturing quality. 18 And I don't want to read the whole 19 thing, but it's fair to say, isn't it, 20 Mr. Bradford, that Mr. Singh is saying -- Anil 21 Singh is saying the quality of the 22 manufacturing at DRI is very low? 23 A. Yes, that was his perception at the 24 time. 25 Q. He says the low-end activity will 10322 1 inevitably increase. We cannot compete if the 2 situation persists. 3 That was his view? 4 A. Right. He wanted to improve the 5 quality of our manufacturing operations. 6 Q. Which was low? 7 A. In his perception. And I don't know 8 if it's relative to the rest of the industry or 9 what. 10 I don't remember having huge problems 11 with the DRI manufacturing facility, but -- 12 Q. You were in Utah at Provo; right? 13 A. Right. This is in Monterey, 14 California. 15 Q. Right. So he's a little closer to 16 where the manufacturing is taking place? 17 A. I'm not sure where Anil was based, and 18 I'm not sure where Joe was based. We'd have to 19 go back in the records. 20 Q. Well, certainly you weren't in the 21 plant where the DR-DOS product was being 22 manufactured and shipped? 23 A. You are right. 24 Q. And then he says Item Number 2, DR-DOS 25 vision. 10323 1 And I think yesterday on cross you 2 agreed with me that it was very important for a 3 software company to have clarity of direction 4 and clarity of strategy; correct? 5 A. Yes, that's right. 6 Q. And that made some impact in the 7 market as to whether or not you were going to 8 succeed? 9 A. Sure. 10 Q. The software business was then very 11 fast changing; correct? 12 A. Then as now. 13 Q. Correct, as now. I agree with that. 14 DR-DOS vision. This is Mr. Singh. 15 The ability to present a direction, vision and 16 product plan for DR-DOS would allow us to 17 position ourselves firmly against MS, 18 Microsoft. 19 Today, we cannot tell an OEM where the 20 product is going and have no opportunity to 21 capitalize on the intangible aspects of OEM 22 sales. Without these tools, new major OEM -- 23 perhaps it should be prospects, an S is 24 missing -- will never close. 25 Furthermore, we are at a severe 10324 1 disadvantage since Microsoft has clearly 2 described their vision for DOS/Windows and a 3 course to get there. OEMs are buying the 4 Microsoft vision because we have no alternative 5 for them. 6 Now, let me just stop there. We 7 looked at problems 1 and 2 in Mr. Singh's memo 8 in Exhibit 218. Let's take them one at a time. 9 Manufacturing quality. Do you now or 10 did you then blame Microsoft for the low 11 quality of the manufacturing for DR-DOS? 12 A. No. That would have been something 13 clearly within our control. 14 Q. And how about having a vision for your 15 own product? Isn't that up to you to come out 16 with a vision so you can convince OEMs that 17 they know where you're going? 18 A. Well, I think -- I think that 19 highlights the problems that we were having in 20 19- -- in January specifically of 1992 with 21 Microsoft. 22 Remember, during this time frame we 23 were in those merger discussions with 24 Microsoft, and DRI was now a separate and 25 distinct legal entity. 10325 1 The integration wasn't happening 2 because we were all a small group of executives 3 talking to the group at Microsoft. 4 And so I think this is an expression 5 of frustration that, you know, they acquired us 6 November 1st and here we are in January and we 7 still don't have a vision to where this product 8 is going. 9 Q. And there was nothing about the merger 10 discussions that made it impossible for Novell 11 to come out with a vision, was there, sir? 12 That was up to Novell, to Mr. Noorda, 13 the board of directors, the executive 14 committee, and even you? 15 A. No, I disagree with that. I think 16 that had a direct impact on, you know, how are 17 we going to ship the products, what do we 18 combine with it, you know, what are the 19 marketing plans, what are the product 20 consolidation plans, et cetera. 21 They were having a direct impact on 22 our communication with this DRI group of people 23 in Monterey. 24 Q. Mr. Williams, who was the president of 25 Digital Research, didn't even know about the 10326 1 merger discussions, did he? 2 A. That's correct. 3 Q. Okay. 4 MR. TULCHIN: May I approach the 5 witness, Your Honor? 6 THE COURT: You may. 7 Q. Here's Defendant's Exhibit 167. 8 This is a memorandum from Mr. Palmer 9 to Mr. Williams, Dick Williams, January 27th, 10 1992, with a copy to Anil Singh. 11 MR. TULCHIN: And we offer this 12 document, Your Honor. 13 THE COURT: Any objection? 14 MS. CONLIN: No objection I'm told. 15 THE COURT: It's admitted. 16 MR. TULCHIN: Thank you, Your Honor. 17 Q. Mr. Bradford, this is again in January 18 of 1992. 19 Do you see that, sir? 20 A. I do. 21 Q. And this is a document written by 22 people at -- written by a person at Digital 23 Research, Mr. Palmer? 24 A. Correct. I don't remember T. J. 25 Palmer, but -- 10327 1 Q. And this reports, does it not, on a 2 meeting -- let's go down just below the line -- 3 on a meeting with Printaform and two people 4 named Jorge Espinosa Mirales and Jorge Espinosa 5 Zasati, I hope I'm pronouncing this correctly, 6 the son; correct? 7 A. It appears to be that, yes. 8 Q. And the father and son, as far as we 9 can tell, appear to be the owners of 10 Printaform; correct? 11 A. I have no way of knowing that, but I 12 assume, as you would, from the nature of the 13 document that they had ownership interest in 14 Printaform, whoever that was. 15 Q. And if you go down a little bit 16 further, Printaform you can see was an OEM and 17 -- down further. Bottom of the first page. 18 Suggested topics to cover. The 19 importance of having DR-DOS on their computer 20 systems as DR-DOS and Novell become more 21 tightly integrated. 22 Do you see that? 23 A. And I think the their must refer to 24 Printaform. 25 Q. Okay. So Defendant's Exhibit 167 10328 1 reports on a meeting with people from 2 Printaform, an OEM, where logically enough 3 Mr. Williams, the president of DRI, is trying 4 to sell them on DR-DOS; right? 5 A. That's what it appears to be. 6 Q. Okay. And if you look at the next 7 page, right in the middle, it says key issues. 8 We need to reinforce the benefits of remaining 9 an OEM for DR-DOS. 10 Then the next paragraph says, when 11 discussions began two weeks ago to renew our 12 contract with Printaform. They were seriously 13 considering not renewing their contract. The 14 reason is that results from a survey of their 15 dealers showed that about 50 percent of them 16 take off DR-DOS 5.0 and load a bootleg copy of 17 MS-DOS 3.3 onto the Printaform computer. 18 Well, let me just stop there for a 19 moment if I may. 20 What Printaform, the OEM, is telling 21 the president of Digital Research, 22 Mr. Williams, is that about half the computers 23 they send out, when they get to the dealers, 24 the dealers strip out DR-DOS and load a bootleg 25 copy of MS-DOS onto that Printaform computer; 10329 1 correct? 2 A. You're making a lot of assumptions. 3 Q. I'm just reading the document. 4 A. I know you are. So let's figure out 5 who is saying what to whom. 6 So this is from T. J. Palmer. And so 7 T. J. is saying to Dick Williams, the CEO, on 8 the next page key issues we need to reinforce. 9 So this is T. J. talking now, it's not Dick 10 Williams. 11 Q. Right. 12 A. We need to reinforce the benefits of 13 remaining an OEM for DR-DOS; i.e., Printaform 14 remaining an OEM for DR-DOS. 15 So then T. J. goes on, when 16 discussions began two weeks ago to renew our 17 contract with Printaform, they were seriously 18 considering not renewing their contract. 19 The reason is that results from a 20 survey of their dealers, meaning the Printaform 21 dealers, showed that about 50 percent of them 22 take off DR-DOS 5.0 and load a bootleg copy. 23 So this is I think what T. J. is 24 saying they were told from Jorge and his son. 25 Q. Right. We agree on that. 10330 1 A. Okay. I just want to get clear. 2 Q. So Digital Research is trying to sell 3 DR-DOS operating systems. And, of course, 4 that's their business to sell it. 5 A. Right. 6 Q. And they have an OEM named Printaform. 7 And Printaform is reporting to them that half 8 the computers that Printaform sells -- and they 9 find this out from a survey -- half the 10 computers go out there and the dealers who are 11 selling to the public take DR-DOS off and put 12 MS-DOS on instead; right? 13 A. That appears to be what this is. 14 Q. Do you think, Mr. Bradford, that that 15 might reflect what we talked about earlier, 16 consumer preferences, what the end user 17 demands? 18 A. I'm sure the end user wanted 19 compatibility with applications. 20 Q. Right. And I think you and I have 21 agreed, or perhaps we have, in the past that as 22 of this time there were wide-spread reports in 23 the industry that DR-DOS was not compatible 24 with applications that ran on DR-DOS? 25 A. I don't think we ever completely 10331 1 agreed broadly on that. 2 Q. Shall we say you didn't disagree with 3 me? Is that okay? 4 A. Okay. 5 Q. Is that fair, Mr. Bradford, that you 6 hadn't disagreed with that? 7 A. It was important that applications run 8 on top of operating systems and that the two be 9 compatible. 10 Q. Right. 11 A. I agree with that. 12 Q. And the applications that we're 13 talking about are not Microsoft applications at 14 all. They're applications made by an assorted 15 variety of ISVs? 16 A. Well, they're certainly applications 17 that Microsoft manufactured, including those 18 from other ISVs. 19 Q. Okay. Now, it was either Monday or 20 yesterday you testified that Dick Williams, the 21 president of DRI, resigned in about -- I think 22 you said April of 1992; correct? 23 A. To the best of my recollection, that's 24 right. 25 Q. And the reason that Mr. Williams 10332 1 resigned, as you testified, was that he was 2 frustrated that Mr. Noorda had made promises to 3 him that had not yet been kept; correct? 4 A. Yes, that's what I said, among other 5 things. I'm sure there were other reasons why 6 Dick left. 7 Q. Now, in connection with Novell's 8 acquisition of Digital Research, it was 9 necessary for the stockholders of Novell to 10 vote on whether they wanted the acquisition to 11 go ahead; correct? 12 A. Yes, I think so. 13 Q. And a public company in that position 14 prepares something called a Form S-4 that is 15 filed with the Securities and Exchange 16 Commission in Washington, D.C.; correct? 17 A. That's right. 18 Q. And, in fact, you were the guy who was 19 responsible for preparing the S-4, were you 20 not? 21 A. That's correct. Along with a couple 22 of outside lawyers. 23 Q. Okay. 24 MR. TULCHIN: May I approach the 25 witness, Your Honor? 10333 1 THE COURT: You may. 2 A. But I want to be clear -- come on up. 3 I'm just -- I'm not sure whether this 4 acquisition was the size of which the Novell 5 outside stockholders actually voted on. 6 The S-4 might have been more in the 7 nature of an informational statement to our 8 stockholders. 9 But the records would reflect whether 10 the Novell stockholders actually got to vote on 11 this deal or not. But I think we can agree -- 12 Q. The question of the vote isn't 13 important. 14 A. Right. Exactly. 15 Q. But there was a Form S-4 that you 16 prepared and that you had filed on Novell's 17 behalf with the Securities and Exchange 18 Commission in Washington, D.C.? 19 A. Yes. Specifically in connection with 20 this transaction. 21 Q. Right. And is this document, Exhibit 22 6794, does that contain the cover sheet of the 23 Form S-4 and page 37 which is entitled risk 24 factors? 25 A. Yes. 10334 1 MR. TULCHIN: We offer Exhibit 6794, 2 Your Honor. 3 THE COURT: Any objection? 4 MS. CONLIN: Don't know yet, Your 5 Honor. 6 I have no objection, Your Honor. 7 THE COURT: It's Defendant's Exhibit 8 6794? 9 MR. TULCHIN: Yes, sir. 10 THE COURT: Okay. It's admitted. 11 MR. TULCHIN: Thank you, Your Honor. 12 Q. Mr. Bradford, if you look at the first 13 page, your name David R. Bradford, Esquire, 14 appears right in the middle; correct? 15 A. Yes. 16 Q. And that indicates that you were the 17 person principally responsible for preparing 18 this form for Novell? 19 A. Yes, on Novell's behalf. 20 Q. Okay. And if we can go back, it was 21 filed at the SEC on September 27, 1991. Do you 22 see that? 23 A. Yes. 24 Q. And I know you said that there were 25 some outside lawyers who helped you prepare it, 10335 1 and their names are there too, Mr. Sonsini and 2 Mr. Green and so on. 3 A. That's right. 4 Q. Okay. And this did pertain to the 5 acquisition of Digital Research; correct? 6 A. Yes. 7 Q. And if you look at page 37 -- well, 8 let me ask you a general question. 9 When you filed this with the SEC in 10 Washington, clearly your purpose is to provide 11 truthful and accurate information; correct? 12 A. That's right. 13 Q. And, as a lawyer, that you understood 14 was your obligation, to do the best you could 15 to make this information truthful and accurate? 16 A. Sure. 17 Q. Okay. Let's look at page 37, the 18 second page of Exhibit 6794. 19 Right at the top, do you see it says 20 risk factors, and then it says uncertainties 21 related to the merger, and below that it says 22 competition with Microsoft? 23 And maybe we can just highlight that 24 one paragraph and bring it up a little bit. 25 And here in this document that you 10336 1 filed with the SEC, you are telling your 2 stockholders, correct -- 3 A. Yes. 4 Q. -- and the public at large? 5 A. Yes. 6 Q. Because this is a public document 7 filed in DC; right? 8 A. Right. 9 Q. You're telling them DRI's major 10 competitor is Microsoft, the dominant supplier 11 of operating systems for the personal computing 12 industry. 13 Microsoft is also a competitor of 14 Novell in the provision of software for network 15 computers. 16 A. Correct. 17 Q. And then it says, Microsoft recently 18 commenced commercial sales of MS-DOS 5.0, an 19 enhanced version of its personal computing 20 operating system, which offers many of the 21 competitive features of DRI's major product, 22 DR-DOS, thus increasing the competitive threat 23 to DRI's business. Correct? 24 A. That's right. 25 Q. And then you go on to say, one of the 10337 1 major reasons is to combine Novell's marketing 2 and distribution network, strong relationships 3 with OEMs, et cetera, with the technical 4 prowess of DRI. 5 However, there can be no assurance 6 that Novell will be able to penetrate 7 Microsoft's accounts or gain any market share 8 at the expense of Microsoft in the face of 9 Microsoft's strong name recognition, broad 10 marketing and development resources and 11 effective distribution network. 12 Do you see that? 13 A. Right. 14 Q. Now, was it the case at this time in 15 1991 that the things you just mentioned about 16 Microsoft, strong name recognition, broad 17 marketing and development resources and 18 effective distribution network, that those were 19 all advantages that Microsoft had as compared 20 to Digital Research? 21 A. Yes. 22 Q. And there's nothing about those 23 advantages that have anything to do with per 24 processor licenses, do they, sir? 25 A. No. Those specific ones do not have 10338 1 anything to do with the numerous other things 2 that we mentioned that Microsoft was doing in 3 the marketplace to prevent fair competition in 4 the industry. 5 Q. Well, I hear you say that, but there's 6 nothing in this risk factors section that says 7 anything about per processor licenses or any of 8 the other things you've told us about today, is 9 there? 10 A. No. 11 Q. And is there anything else, as you 12 remember it, in the rest of the document about 13 that subject? 14 A. In the rest of this S-4? 15 Q. Yeah. 16 A. No, I don't think so. 17 Q. Okay. Then if I could bring your 18 attention down to the very last paragraph on 19 the same page. 20 A. Let's also be clear the time frame for 21 this was September of '91. 22 Q. That's what I said. 23 A. Okay. 24 Q. And I think, Mr. Bradford, you will 25 remember that I showed the Jury on the first 10339 1 page that this was filed with the SEC on 2 September 27th, 1991. 3 A. Right. 4 Q. Nobody is disputing that. 5 A. Okay. 6 Q. Now, the last paragraph on this page, 7 page 37 of the document, the second page of the 8 exhibit says, attraction and retention of key 9 employees. 10 A. Yes. 11 Q. And your statement there to your 12 stockholders and to the public was this, 13 competition for qualified personnel in the 14 computer industry is intense. 15 That was true then and it's still 16 true? 17 A. Sure. 18 Q. It's been true through all these 19 years? 20 A. I've always respected Microsoft for 21 their ability to hire smart people. 22 Q. And they've had a lot of smart people? 23 A. Yes, they have. 24 Q. Starting with, number one, Mr. Gates? 25 A. I will grant you that. 10340 1 Q. Okay. And then it says, the future 2 success of the combined companies -- and that 3 refers to DRI and Novell, the combined 4 companies; right? 5 A. Uh-huh. Yes. 6 Q. -- will depend in large part on its 7 ability to attract and retain key employees. 8 That was true too? 9 A. Yes. 10 Q. In particular, the document says, 11 Novell and DRI believe that the continued 12 employment of Raymond J. Noorda, president, 13 chairman and CEO of Novell, and Richard 14 Williams, president and CEO of DRI, is 15 important to the continued success of the 16 combined companies. 17 Now, here's my question about that. 18 That was a statement that obviously 19 you thought was true in September '91? 20 A. Yes. 21 Q. And in April '92 Mr. Williams was 22 gone? 23 A. That's right. 24 Q. Just about six months later; correct? 25 A. Yes. 10341 1 Q. Six or seven? 2 A. Yeah. 3 Q. Mr. Williams was gone because he was 4 frustrated by the fact that Mr. Noorda didn't 5 seem to be keeping his promises to 6 Mr. Williams? 7 A. One of the reasons. 8 Q. One of the reasons. 9 And Mr. Williams' importance to the 10 combined companies was stated here as something 11 that you said was important to the continued 12 success? 13 A. Yes. We felt that at the time. 14 Q. Mr. Williams was gone, and 15 Mr. Noorda's problems -- his problems with 16 forgetfulness at this time were getting worse 17 and worse; true? 18 A. They got progressively worse from '89 19 through '93, correct. 20 THE COURT: We are going to take our 21 break at this time for about ten minutes if 22 that's okay. 23 MR. TULCHIN: Yes, that's perfect, 24 Your Honor. 25 I was just going to suggest that. 10342 1 THE COURT: Remember the admonition 2 previously given. Leave your notebooks here. 3 (The following record was made out of 4 the presence of the jury at 2:09 p.m.) 5 THE COURT: You may be seated. 6 MS. CONLIN: Your Honor, I want to 7 make a record with respect to Mr. Tulchin's 8 highly improper questioning of this witness 9 with respect to a lawsuit and claims made 10 against Novell. 11 First of all, it violates a 12 fundamental rule of this Court. And, second of 13 all, I believe that it -- it's possible that we 14 did not file a motion in limine on such a 15 fundamental thing, but I think that it was 16 highly improper. And I know that Mr. Tulchin 17 must certainly know that. 18 And my concern is by putting that into 19 the record with this lengthy question about 20 what the allegations were may confuse the Jury, 21 may cause the Jury concern, and my having to 22 object to it because of its impropriety may 23 lead the Jury to believe that there's something 24 about that cause of action that was brought 25 against Novell that I don't want them to know. 10343 1 And, of course, the fact is that Mr. 2 Tulchin never should have brought it up. 3 I'm asking the Court to give the Jury 4 an instruction that Mr. Tulchin's inquiry was 5 inappropriate; that such matters are not proper 6 for the consideration of the jury, and I might 7 add, Your Honor, that Mr. Tulchin certainly 8 knows that. 9 MR. TULCHIN: Your Honor, I thought my 10 question was proper. Otherwise, I wouldn't 11 have put it. 12 And I think Ms. Conlin is going way 13 out on a limb in saying that I did something 14 knowingly improper. I did not. 15 There have been objections made and 16 sustained to a number of questions and lines of 17 inquiry that Ms. Conlin has made as well thus 18 far with the two live witnesses we've had. 19 There may well be in the future. 20 There is no basis whatsoever to make 21 this one, this one question to which an 22 objection was sustained a major issue that 23 would require some special instruction. 24 The Jury's already heard that my 25 question was not going to -- that the Court 10344 1 wasn't permitting an answer to my question. 2 Novell's market share at the time was 3 in the range, Your Honor, that the Court has 4 already instructed the Jury raises questions 5 about monopolization. 6 MS. CONLIN: It was a petition or a 7 complaint filed in court. It was -- nothing 8 about that proves anything. 9 Perhaps the remedy, Your Honor, is for 10 the Court to explicitly permit the Plaintiffs 11 to read into the record all of the allegations 12 that have been made against Microsoft in the 13 dozens, if not hundreds, of lawsuit that have 14 been filed again Microsoft over the course of 15 time that this class has been pending and 16 before. 17 I think perhaps Microsoft would wish 18 to object to such a thing, but perhaps that is 19 the appropriate remedy, Your Honor. 20 MR. TULCHIN: Your Honor, I don't 21 think any remedy is necessary besides what has 22 already occurred. And if the question was 23 improper, I apologize. I certainly didn't 24 think it was at the time. 25 THE COURT: Do you have a proposed 10345 1 instruction for the Court to look at? 2 MS. CONLIN: I can write one up, Your 3 Honor. 4 THE COURT: Okay. 5 MS. CONLIN: Thank you. 6 THE COURT: We'll take a break. 7 (A recess was taken from 2:13 p.m. 8 to 2:23 p.m.) 9 (The following record was made out of 10 the presence of the jury.) 11 THE COURT: Go ahead. 12 MS. CONLIN: Asking a question about 13 the claims made in a lawsuit is improper and is 14 not permitted. You are instructed to disregard 15 Mr. Tulchin's question. 16 Filing a lawsuit proves nothing at 17 all. The lawsuit to which the Court granted 18 collateral estoppel went to trial and was 19 subject to a full appeal. 20 For Mr. Tulchin to ask a question 21 about the contents of the complaint violated 22 the rules of this Court. 23 THE COURT: I'll take a look at it. 24 MR. TULCHIN: Your Honor, I believe 25 that to be, first of all, unjustified in its 10346 1 entirety, but extremely harsh and far more 2 harsh than would be deserving under any view of 3 what occurred. 4 I think it's important, Your Honor, to 5 note that Mr. Bradford has spent a couple of 6 days talking about complaints that he passed on 7 to the Department of Justice, complaints about 8 Microsoft's conduct as if that had 9 significance. 10 If we're going to have an instruction 11 that the filing of a lawsuit means nothing, or 12 I think Ms. Conlin said means nothing at all, 13 and that it was improper for me to ask a 14 question about it, how about days of testimony 15 from this witness in which he says he delivered 16 a series of complaints to the Department of 17 Justice or the Federal Trade Commission about 18 Microsoft's conduct. 19 That was elicited by Ms. Conlin from 20 this witness, and, indeed, it's the heart and 21 soul of his testimony. 22 And if the filing of a lawsuit means 23 nothing, it means much, much less presumably to 24 pass on a series of complaints, particularly 25 complaints that for the most part weren't acted 10347 1 on. 2 THE COURT: Anything else on this 3 subject? 4 MR. TULCHIN: I think it would be very 5 unfair, Your Honor, to select one question and 6 make it into a device for punishing Microsoft's 7 lawyer. 8 MS. CONLIN: Your Honor, the 9 suggestion that what Mr. Bradford's direct 10 testimony was in connection with complaints to 11 the federal government is really stretching. 12 First of all, one of the reasons that 13 I brought that up is because I was fully aware 14 that Mr. Tulchin in his cross-examination would 15 make a point of the fact that Novell was 16 cooperating with the government's investigation 17 of Microsoft. 18 Second, some of the documents show on 19 their face that that was their purpose. And in 20 order to assure that there was no 21 misunderstanding, that was necessary to 22 mention. 23 No objection was made because I'm 24 certain that Mr. Tulchin was aware, and, 25 indeed, in Mr. Bradford's examination in his 10348 1 depositions he was very closely questioned 2 about Novell's cooperation with the FTC as 3 though it was wrong and as though it indicated 4 that somehow Novell's cooperation was motivated 5 by something other than a public spirit. 6 In any event, Your Honor, we believe 7 that this is such a serious violation that it 8 does deserve and require an instruction, or the 9 alternative that I suggested, which is 10 permission from the Court for us to go out and 11 gather the dozens or hundreds of lawsuits 12 against Microsoft and make those available to 13 the Jury in the same way that Mr. Tulchin read 14 to the Jury from a complaint filed against 15 Novell. 16 THE COURT: The Court will consider 17 the matter. I'll rule on it tomorrow. 18 MR. TULCHIN: May I say two quick 19 things, Your Honor? 20 THE COURT: Sure. Go ahead. 21 MR. TULCHIN: One, I didn't read from 22 a complaint. 23 Two, I had no intention in 24 cross-examination of delving into Novell's 25 constant stream of complaints to the FTC and 10349 1 the Department of Justice. 2 Ms. Conlin can't know that I intended 3 to do it, and I didn't intend to. It was 4 elicited on direct examination in a series of 5 questions and answers. 6 Thank you, Your Honor. 7 THE COURT: Very well. 8 (The following record was made in the 9 presence of the jury at 2:29 p.m. ) 10 THE COURT: Everyone else may be 11 seated. 12 MR. TULCHIN: Tell me when you are 13 ready, Mr. Bradford. 14 THE COURT: You are still under oath, 15 sir. 16 THE WITNESS: Thank you. 17 I'm ready. 18 MR. TULCHIN: May I approach the 19 witness, Your Honor? 20 THE COURT: Yes. 21 BY MR. TULCHIN: 22 Q. Mr. Bradford, I'm handing you three 23 exhibits, Defendant's 68, 67, and 66, they are 24 in that reverse order. 25 THE COURT: What were the numbers 10350 1 again? 2 MR. TULCHIN: 68, 67, and 66. 3 THE COURT: Thank you. 4 Q. Mr. Bradford, if we could just look at 5 the three of them together for just a moment. 6 A. All right. 7 Q. These are three letters that you 8 received at Novell in 1994 from Robert Kohn, 9 who then worked at Borland; correct? 10 A. That's correct. 11 MR. TULCHIN: We offer these three 12 documents, Your Honor. 13 MS. CONLIN: We object on the basis of 14 relevance, Your Honor. 15 THE COURT: May I see them? 16 MS. CONLIN: If I may approach, Your 17 Honor? 18 THE COURT: Sure. Thank you very 19 much. 20 Overruled. 21 They're admitted. 22 Q. Mr. Bradford, in 1994 I think you said 23 a couple of times, Novell acquired the Quattro 24 Pro spreadsheet product from Borland; correct? 25 A. That's correct. 10351 1 Q. And in connection with that, Novell 2 had the opportunity to hire some of the Borland 3 people who had worked on that product; correct? 4 A. Sure. 5 Q. And these are three letters from Mr. 6 Kohn, who was then the vice president or senior 7 vice president of Borland, to you on the 8 subject of whether Novell was going to take 9 steps to actually hire or extend offers of 10 employment to these Quattro Pro people at 11 Borland; correct? 12 A. Yes. 13 Q. Let's just look quickly at the three 14 of them. 15 Exhibit 68 is in April of 1994, April 16 19th, to you. And Mr. Kohn says, at the 17 outset, the purpose of this letter is to follow 18 up on our most recent and prior conversations 19 regarding transition of Borland Quattro Pro 20 employees to Novell. 21 And we can read the rest of it 22 together if you want, Mr. Borland (sic), but 23 what's going on here is that Mr. Kohn is 24 reminding you that Novell needs to address 25 promptly the question of whether or not it's 10352 1 going to hire the Borland people who had worked 2 on the Quattro Pro product; correct? 3 A. Right. Some or all. 4 Q. Correct. And I think we've talked 5 about today, and perhaps yesterday as well, 6 we've talked a little bit about the need to 7 have software engineers work on integrating 8 products if you are going to come out with a 9 suite; right? 10 A. Correct. 11 Q. And Novell wanted to use Quattro Pro 12 as the spreadsheet portion of the suite that 13 Novell came out with; correct? 14 A. That's right. 15 Q. That's why you bought Quattro Pro, it 16 was a spreadsheet, and you needed that to have 17 a suite? 18 A. Yes. 19 Q. Okay. And Mr. Kohn's first letter to 20 you in April says -- if you look at the second 21 paragraph -- we must again urge Novell to 22 address this matter as a priority item lest it 23 run the risk of losing significant numbers 24 and/or key members of the team. 25 Do you see that? 10353 1 A. Yes. 2 Q. And then it goes on. 3 A. Yes. 4 Q. And, in fact, Novell didn't address 5 this very promptly, did it? 6 A. Oh, I'm certain we did analyze how 7 many of the employees we would need from 8 Borland. 9 Q. Well, let's look at the next exhibit, 10 67. This is -- the first one was in April. 11 This is in July. 12 And Mr. Kohn writes you another letter 13 July 7th. I'm writing to remind you that if 14 your people are still expecting to make offers 15 to the international employees, they should do 16 so as soon as possible. 17 The substantial delay that has 18 occurred has probably decreased the likelihood 19 that offers would be accepted by the employees 20 on terms consistent with Novell's original 21 expectations. 22 If the decision has been made not to 23 extend offers, could you please let me know as 24 soon as possible. 25 So what's happening here, is it fair 10354 1 to say, Mr. Bradford, is that Mr. Kohn is 2 saying, as far as we know, you haven't even let 3 it be known what decisions you're making with 4 respect to the international employees, do you 5 want them or don't you want them? 6 A. Right, with respect to the 7 international employees. 8 Q. Right. And then in August, Exhibit 9 66, Mr. Kohn writes you the third letter, 10 August 9th, Dear David, we have just been 11 informed that Novell intends to notify the 12 technical support personnel for Quattro Pro in 13 Scotts Valley. 14 Was Scotts Valley in California, sir? 15 A. It was. That was the corporate 16 headquarters of Borland. 17 Q. And I guess I should say it probably 18 still is in California, Scotts Valley. 19 A. Yes. Well, I know they moved out of 20 that headquarters office that they had in 21 Scotts Valley. I don't know where they are 22 now. 23 Q. All right. Have just been informed 24 that Novell intends to notify the technical 25 support personnel for Quattro Pro in Scotts 10355 1 Valley that Novell desires them to relocate to 2 Utah. 3 And then it goes on to say Dorothy 4 Wise has indicated to us that Novell expects 5 only about one-half of the support staff that 6 will choose to relocate. 7 A. That's right. Let's be clear that's 8 the support people who get on the phone and 9 offer customer support, representative work for 10 on behalf of the company. 11 It's to be distinguished from the 12 engineering personnel who build and create the 13 products. 14 Q. Right. And those support people are 15 very important in assisting people who run into 16 the problems, correct? 17 A. Yes, but they are much more fungible 18 than the core engineering staff. 19 Q. Nevertheless, the question I have for 20 you is this, Mr. Bradford. 21 Was it the case that as Novell was 22 trying to integrate and put together in a way 23 that customers would find pleasing the Quattro 24 Pro spreadsheet with WordPerfect and other 25 software programs to bundle those together in a 10356 1 suite, was it a problem for Novell that as the 2 months passed, there were some indications from 3 Borland about uncertainty as to which of the 4 Borland people who were familiar with Quattro 5 Pro were going to come over and work for 6 Novell? 7 A. Right. His first letter refers to the 8 broader set of employees. The second letter 9 refers specifically to international employees, 10 and the third letter refers to technical 11 support personnel. 12 Q. Correct. 13 A. So at the time, I'm sure we're looking 14 at their organization and trying to figure out 15 who are the best people to write programs, to 16 assist, and do the really core stuff that we 17 need. 18 Obviously, when we acquire a product 19 like that, we're not going to need all of their 20 people because we have technical support 21 personnel who can get on the phones. We have 22 international sales representatives that can do 23 that job as well. 24 Q. Right. But my question, Mr. Bradford, 25 if I could was, didn't -- I mean, let's back up 10357 1 one step. I'm sorry. 2 In 1994, when you made the decision to 3 acquire Quattro Pro, that decision was made 4 because at the time Novell didn't have a 5 spreadsheet product? 6 A. That's right. 7 Q. And Novell wanted Quattro Pro so they 8 could start competing against Microsoft in 9 suites when Microsoft's Office had been on the 10 market for some period of years; right? 11 A. Yes. 12 Q. And, again, I think you've agreed with 13 me that it's a big job for software engineers 14 to try to integrate separate products, like a 15 spreadsheet here and a word processor there, so 16 that they run well together in a suite and the 17 look and feel of both products is pleasing to 18 an end user; correct? 19 A. Certainly. Uh-huh. 20 Q. And it's also important to hire people 21 from Borland who are familiar with the Quattro 22 Pro product, whether they're engineers or 23 technical support people; correct? 24 A. It's important to get the best people 25 that we could do under the circumstances, 10358 1 certainly. 2 Q. Did it cause a problem to Novell, 3 perhaps a delay, in getting your suite on the 4 market, that it took a number of months, 5 apparently, before decisions were made about 6 which employees from Borland who were familiar 7 with Quattro Pro would be hired by Novell? 8 A. No. 9 Q. Now, on another subject, Mr. Bradford. 10 Was it the case, as far as you know, 11 that going back to 1991, when you acquired 12 Digital Research, Novell and people from 13 Digital Research recognized that the future of 14 operating systems for the desktop would be in 15 having a graphical user interface? 16 A. I think all folks in the industry 17 thought that a GUI would be important, yes. 18 That was a new technology. Macintosh had one 19 that was popular and -- yes. 20 Q. And Windows 3.0 had come out in 1990? 21 I represented that to you. You couldn't 22 remember. 23 A. Okay. 24 Q. But I told you it was 1990. 25 A. Okay. 10359 1 Q. Remember you said what month and I 2 told you I couldn't remember that. 3 A. We guessed it 1990, right. Okay. You 4 guessed, yes. 5 Q. Fair enough. 6 In 1991, Novell bought DRI, DRI had no 7 GUI on the market; correct, graphical user 8 interface? 9 A. That's right. 10 Q. DRI had some projects that it was 11 working on to try to develop a GUI; correct? 12 A. To the best of my recollection they 13 did, yes. 14 Q. And the idea there was that if DRI 15 could come out with -- DRI/Novell could come 16 out with an operating system that had a 17 graphical user interface, that would make 18 Novell's operating system more competitive with 19 what Microsoft could offer; correct? 20 A. Yes. 21 Q. And you were trying to do that, but 22 DRI/Novell, never succeeded with coming out 23 with any graphical user interface that could be 24 used with DR-DOS; correct? 25 A. That's right. 10360 1 Q. So to be clear about this, DR-DOS by 2 itself was a character-based operating system; 3 correct? 4 A. As opposed to a graphical user 5 interface. 6 Q. Right. 7 A. Yes. Okay. 8 Q. And was it the case that people at 9 Novell, after the acquisition of DRI, 10 recognized that the long-term future of 11 operating systems necessarily lay in being able 12 to offer a GUI, a graphical user interface? 13 A. I think that was an important factor 14 that the company was considering. We also 15 recognized that the DOS market itself -- you 16 know, set aside the graphical user interface -- 17 was a huge market in and of itself, billions in 18 that market. 19 So even without the graphical user 20 interface, there was still a significant DOS 21 market. 22 But you're right in saying that a 23 graphical user interface certainly was going to 24 be the wave of the future. 25 Q. And, in fact, when Windows 95 came out 10361 1 in 1995, it turned out to be more than just a 2 wave. It was sort of a tsunami, wasn't it? 3 A. That's your term. 4 Q. Well, wasn't it the case that it was 5 widely known throughout the software industry 6 that when Windows 95 was first released on 7 August 24th, '95, consumers lined up outside of 8 retail stores at midnight waiting for the doors 9 to open so that they could be one of the first 10 to get a copy of Windows 95? 11 A. I don't remember that specifically. 12 MS. CONLIN: Wait, wait, wait. You 13 may know the answer to this, but first I want 14 to say what I want to object to. 15 THE WITNESS: I'm sorry. 16 MS. CONLIN: This question assumes 17 facts not in evidence. And it's not very 18 relevant to any issue in this case. 19 THE COURT: Overruled. 20 You may answer. 21 A. I don't recall August 24 -- I was 22 probably, again -- 23 Q. Celebrating. 24 A. -- on my anniversary with my wife 25 that day and was not lined up at the store. 10362 1 Q. Okay. Do you recall that Windows 95 2 was a very, very popular product? 3 A. Sure. 4 Q. Okay. 5 MR. TULCHIN: Do we have Exhibit 6775, 6 Defendant's 6775? 7 Thank you. May I approach, Your 8 Honor? 9 THE COURT: You may. 10 Q. I know we jump around sometimes in 11 time periods. 12 A. Right. 13 Q. And I want to make sure that both of 14 us understand. 15 This is a document that's dated in 16 February 1992. And I'm telling you this 17 because we were just talking about 1995. And I 18 want to make sure there's no confusion. 19 A. Right. We're back in the time frame 20 just shortly after our acquisition of Digital 21 Research. 22 Q. Right. 23 A. There's some merger discussions going 24 on. There's some discussions with IBM, et 25 cetera. 10363 1 Q. And this is a memorandum that Linnet 2 Harlan, who had been the general counsel of 3 Digital Research, and was now reporting to you; 4 correct? 5 A. Yes, that's right. 6 Q. Linnet Harlan, she wrote to you on 7 February 27th, 1992; correct? 8 A. Yes, that appears to be accurate. 9 Q. And you recognize her signature on the 10 second page? 11 A. Yes, that looks like Linnet Harlan's. 12 MR. TULCHIN: Your Honor, Microsoft 13 offers Defendant's Exhibit 6775. 14 THE COURT: Any objection? 15 MS. CONLIN: Your Honor, I believe 16 this document is probably not relevant with 17 respect to this witness. 18 We do not have an objection generally 19 to the document, but we would object to the use 20 of it with this witness because it is probably 21 not something that he'll be able to comment on 22 very effectively. 23 THE COURT: Overruled. 24 It's admitted. 25 Q. Mr. Bradford, I don't intend to spend 10364 1 a lot of time on this document with you, but do 2 you recall in 1992 Ms. Harlan informing you 3 that there was some Microsoft source code that 4 had been included in DR-DOS 6.0? 5 A. Sitting here today, I don't remember 6 it, but this will probably refresh my 7 recollection. 8 Q. Okay. Do you want to take just a 9 minute to look at it? 10 A. Sure. 11 All right. 12 Q. All right. Do you have any 13 recollection having read this document about 14 the materials, the matters that Ms. Harlan 15 refers to in here? 16 A. Not specifically. 17 Q. Do you recall that there was some 18 Microsoft source code that was included in the 19 DR-DOS 6.0 product? 20 A. Honestly, I don't remember that. 21 Q. Do you recall -- in the middle 22 paragraph on the first page, do you recall 23 that? In this instance, we won't go through 24 this in any detail, Mr. Bradford. 25 Digital Research, through Greg 10365 1 Ewald -- this is before the acquisition -- made 2 a request to Microsoft of some virtual device 3 driver code that provides memory management 4 programs and that Microsoft sent two diskettes 5 to Digital Research containing that code. 6 Does that ring a bell with you? 7 A. No. I think the letter speaks for 8 itself. They sent -- yeah, keep going. I'm 9 sorry. 10 Q. Do you have any memory of you or 11 anyone else in the legal department informing 12 Microsoft that DR-DOS 6.0 contains some source 13 code that had been written by Microsoft? 14 A. No, I don't remember that. 15 Q. Do you know whether anyone at the 16 company ever informed Microsoft of that? 17 A. No. I assume from reading the letter, 18 though, that the explanation was satisfactory 19 to me, that they had received the source code 20 from Microsoft and proceeded to incorporate it. 21 Q. Mr. Bradford, would you agree with me 22 that normally source code is the property, and 23 sometimes copyrighted property of the company 24 that writes it? 25 A. Sure. Certainly, yeah. 10366 1 MR. TULCHIN: Do we have Exhibit 6773? 2 May I approach, Your Honor? 3 THE COURT: You may. 4 MR. TULCHIN: And maybe go visit Ms. 5 Nelles. 6 MS. NELLES: Just wait until it's his 7 turn to find these. 8 MR. TULCHIN: There's a lot of paper, 9 Your Honor, I apologize. 10 THE COURT: That's all right. 11 MR. TULCHIN: If we don't have this, 12 we'll go to another subject because we are 13 almost at the end of the day, Your Honor, and I 14 don't want to take the Jury's time. 15 Ah, thank you, Sharon. 16 Well, this is obviously my fault, Your 17 Honor, because that's not the document that I 18 -- I apologize for my disorganizations, Your 19 Honor. 20 THE COURT: That's all right. 21 MR. TULCHIN: My note here about the 22 exhibit number is clearly incorrect. We will 23 come back to this tomorrow morning. It won't 24 take long. 25 Q. I want to look at Defendant's Exhibit 10367 1 2491. And it will be the last one of the day. 2 MR. TULCHIN: May I approach the 3 witness, Your Honor? 4 THE COURT: Yes. Sorry. 5 MR. TULCHIN: Thank you. 6 Q. I've handed you, Mr. Bradford, a 7 letter dated April 22, 1994, from Mr. Neukom of 8 Microsoft to R. Duff Thompson, executive vice 9 president and general counsel of WordPerfect. 10 Do you see that, sir? 11 A. Yes, I do. 12 Q. You remember Mr. Thompson? 13 A. Yes, I do. 14 Q. And before Novell acquired 15 WordPerfect, Mr. Thompson was the general 16 counsel of WordPerfect; correct? 17 A. That's right. 18 Q. And this is a letter from April 22nd, 19 1994. 20 Have you seen this letter before, sir? 21 A. Not to my recollection. 22 Q. I want to direct you, if I could, to 23 the second paragraph of the letter. 24 There's reference to an NDA, which 25 means a nondisclosure agreement, is there not? 10368 1 A. Yes. 2 Q. Okay. And do you recall learning that 3 there had been some discussions between 4 WordPerfect and Microsoft on the question of 5 disclosing the betas to other people who might 6 be working at WordPerfect or Novell? 7 A. Yes, in general. 8 MR. TULCHIN: We offer this Exhibit, 9 Your Honor, 2491. 10 MS. CONLIN: No objection. 11 THE COURT: Admitted. 12 MR. TULCHIN: If we can show that, 13 please. 14 Q. April 22nd, '94 to Mr. Thompson. 15 And you knew Mr. Neukom, of course, 16 the general counsel of Microsoft? 17 A. Yes, I did. 18 Q. Among other things, you and he served 19 together on the business software alliance as 20 directors? 21 A. Yes, we did. 22 Q. And if you look at the last paragraph 23 on the first page of Exhibit 2491, Mr. Neukom 24 of Microsoft says to Mr. Thompson of 25 WordPerfect, although you raised no objection 10369 1 to the period during which individuals who have 2 access to the prerelease Chicago product may 3 not work on a product or technology that 4 competes with Chicago, we have reduced that 5 period to extend only through the commercial 6 release of Chicago. 7 Now, I just want to stop you here, 8 sir. 9 Novell took over WordPerfect -- 10 A. Yes. 11 Q. -- you became, in effect, Mr. 12 Thompson's boss; correct? 13 A. Actually, that's not accurate. When 14 Duff came -- when the two companies came 15 together, Duff became a coequal of mine, senior 16 vice president of business development. I 17 retained the traditional legal department. 18 Q. Okay. But the legal function which 19 would include things like contracts for betas 20 would be yours? 21 A. Yes, that's right. 22 Q. For WordPerfect? 23 A. Yes. 24 Q. So, in '94, do you remember that 25 Microsoft had said to WordPerfect that it was 10370 1 willing to confine the period during which 2 people working on products competing with 3 Chicago could get the beta to the period before 4 the commercial release? 5 A. I don't remember that specifically. 6 Q. Okay. Well, let me ask you this. 7 Chicago stands for Windows 95; right? 8 It was the code name that everybody used for 9 Windows 95? 10 A. That's my recollection. 11 Q. And the prerelease Chicago product 12 refers to the beta for Windows 95; is that 13 right? 14 A. I think that's probably accurate, 15 yeah. 16 Q. And according to Mr. Neukom's letter, 17 Mr. Thompson of WordPerfect raised no objection 18 to the period during which individuals who have 19 access to the beta may not work on a product 20 that competes with Chicago, with what became 21 Windows 95; right? 22 A. Okay. 23 Q. And my question to you, sir, was this. 24 Was it common, in your experience, at 25 Novell that betas would be sent out from one 10371 1 software company to another with the 2 restriction that the company receiving the beta 3 could not give it to people who were working on 4 competing products? 5 A. I don't recall that specifically. 6 Q. Well, for example, let me be more 7 specific, if I could. 8 Novell as we've talked about had a 9 network operating system. And at one point 10 Microsoft competed in that same business; 11 correct? 12 A. Yes. 13 Q. Yes. And Novell sent out betas for 14 its network operating system to Microsoft; 15 correct? 16 A. Correct. 17 Q. When Novell did that, did Novell ask 18 Microsoft to promise that no one working on a 19 product that competed with Novell's network 20 operating system would have access to Novell's 21 beta? 22 A. I don't know the answer to that. I 23 would have to go back and look at the 24 nondisclosure agreements that we had in effect 25 during that time frame. 10372 1 MR. TULCHIN: I'd like to do that 2 tomorrow morning, Your Honor, if this is a good 3 time. 4 THE COURT: Yes. 5 Remember the admonition given earlier. 6 We'll see you at 8:30 a.m. 7 Drive carefully. Leave your notebooks 8 here. 9 (A recess was taken from 2:59 p.m. to 10 3:11 p.m.) 11 (The following record was made out of 12 the presence of the jury.) 13 THE COURT: Okay. Who wants to go 14 first? 15 MR. TUGGY: Your Honor, I wanted to 16 respond to some of the discussion at the 17 beginning of the day today on what our schedule 18 might be for Friday and Monday. 19 My understanding is that the Jury will 20 not be here each of those days. 21 THE COURT: Correct. 22 MR. TUGGY: And my understanding also 23 was that Friday was to be basically a day off 24 and the court reporters and others had planned 25 to take that day off, and there are people who 10373 1 will be out of town, and we'd like for that day 2 to be dark for that reason. 3 I personally will be here Friday, and 4 if the Court desires, I will be available on 5 Friday to conduct oral argument on whatever 6 motions may need to be heard. 7 I don't think -- and I'll walk through 8 some of those motions -- there is an urgency 9 that would require for them to be heard on 10 Friday as opposed to, for example, on Monday or 11 even at a later time in this trial. 12 But there are some motions that have 13 been fully briefed and submitted for which we 14 are waiting for a hearing. And these are 15 motions that have to do with the conduct of the 16 trial and ought to be resolved first. 17 The first one is the parties' appeals 18 of the Special Master's rulings in Phase 7. 19 There are approximately 30 -- I believe it's 20 approximately 30 to 35 exhibits at issue in 21 that appeal. 22 Plaintiffs have appealed I believe 18, 23 Microsoft has appealed 11. That would be 29 24 exhibits. And the oral argument on those 25 appeals has yet to occur, and Microsoft would 10374 1 like to have that done. 2 There is the motion in limine relating 3 to Charles Laurence. I do not know whether the 4 Microsoft lawyers involved with that are 5 available on Friday. 6 And then there is also the motion 7 which doesn't require hearing, but still needs 8 a ruling. And that is on two exhibits in Phase 9 6 that we've requested some -- a ruling by the 10 Court and Plaintiffs have agreed that a ruling 11 is appropriate. 12 So my suggestion is that we not 13 conduct motion practice on Friday, that we use 14 this afternoon, tomorrow afternoon to take care 15 of some witnesses where we have designations at 16 issue. 17 If need be, we can argue some motions 18 on Monday, but the motions that ought to be 19 argued on Monday are the ones that have been 20 fully briefed and are ready for argument. 21 I know that this morning Plaintiffs 22 asked first that the Court hear Microsoft's 23 motion for protective order relating to 55 24 exhibits out of the 3,000 plus they had 25 admitted in mass. 10375 1 The Court has issued an order setting 2 the hearing date for February 9. Microsoft 3 will be prepared to argue the motion on that 4 date and would like that date to be the date 5 upon which the motion is heard. 6 And there is no reason with respect to 7 the conduct of the trial, a request by any 8 third parties relating to those documents to 9 have it heard any earlier. 10 And Microsoft would like the 11 additional time that the Court's schedule has 12 provided for preparation and whatever 13 presentation need be made at that hearing. 14 The Plaintiffs also requested that the 15 Court hear their expedited motion to preclude 16 Microsoft to introduce some exhibits during 17 Plaintiffs' case in chief. 18 I was watching today's examination and 19 noted several instances where objections were 20 made to exhibits and that were clearly 21 objections. 22 And it seems that if we were able to 23 resolve this, it would be quite useful. 24 However, Microsoft would like to 25 respond to the written submission made by 10376 1 Plaintiffs and we do intend to do that so that 2 will not be ready for hearing on Friday. 3 Also, with respect to the motion to 4 preclude Mr. McGeady from offering testimony, 5 Microsoft also intends to submit reply briefing 6 on that. And so that motion is not ready for 7 hearing on Friday as well. 8 So, for those reasons, my request is 9 that we not conduct hearings on Friday. That 10 we focus the next few days on prior testimony 11 designations, which Plaintiffs would like to 12 see cleared which I am fully cooperating and 13 will work with the Plaintiffs to do. 14 MR. CASHMAN: Your Honor, the first 15 thing that Mr. Tuggy did not address is prior 16 testimony designation appeals which we will 17 have some this afternoon, we'll have some 18 tomorrow afternoon, but it's entirely possible 19 that those which are scheduled for tomorrow 20 afternoon for Mr. Kempin could extend over into 21 Friday. 22 And we may have another witness or 23 witnesses whose prior testimony designations 24 would be ripe for argument. And Plaintiffs 25 request that argument on such prior testimony 10377 1 be given priority. 2 Mr. Tuggy can handle that. He's going 3 to be here on Friday, and that's imperative to 4 keep the ball rolling so that there's enough 5 prior testimony in the can, so to speak, so 6 that we have it available when we need it. So 7 the Plaintiffs have it available when it's 8 needed. 9 So we request that at the very minimum 10 the prior testimony arguments continue on 11 Friday and, if possible, if the parties can get 12 witnesses ready for argument on Monday, to the 13 extent we can do that, we'd like to have 14 argument on that on Monday. 15 That is certainly a pressing need. 16 The second motion which Plaintiffs 17 would like to see argued is Microsoft's motion 18 for protective order on certain trial exhibits. 19 That's the 55 exhibits. 20 Microsoft does not need any more time 21 for that motion because they filed the initial 22 papers. It's Plaintiffs who would normally be 23 filing the responsive papers. And we wish to 24 go forward with that argument on Friday after 25 we finish whatever prior testimony designation 10378 1 arguments there are. 2 Mr. Tuggy has stated that he'll be 3 available on Friday. He's the person on the 4 Microsoft side who knows about those exhibits 5 and would be a person to argue him, and to the 6 extent there's any argument on an 7 exhibit-by-exhibit basis, that could take some 8 time, and we think that Friday and/or Monday 9 should be spent addressing those 55 exhibits. 10 Next, the Plaintiffs think that the 11 proper motion to address, if there's time, 12 would be Plaintiffs' motion to preclude 13 Microsoft from introducing those 2,800 and some 14 odd exhibits during Plaintiffs' case in chief. 15 And the reason for that, Your Honor, 16 is either we need to get that argued and 17 resolved expeditiously, or, if the Court would 18 issue an order staying our obligation to 19 address those until this motion is fully 20 briefed and resolved, that would be fine also. 21 But because of the timing that has 22 been placed on Plaintiffs to address those, we 23 would like to get that motion heard on an 24 expedited basis. 25 After that, we think the next motion 10379 1 that should be resolved would be the Laurence 2 motion. And if there's time on Monday, we'd be 3 okay with addressing the Phase 7 appeals. 4 Although that's the oldest item, I 5 think that's probably of the lowest importance. 6 If it was important, the parties would have 7 brought those exhibits to your attention. And 8 the fact that it hasn't happened until now 9 indicates that those appeals are not pressing 10 need. 11 So that doesn't address all of the 12 motions. There are a couple others. But I 13 think that the parties have plenty to do. 14 And if the Court is available, the 15 parties should address those motions. And it's 16 imperative to the Plaintiffs that we keep the 17 matter going so that we have the evidence 18 available and the prior testimony available 19 when we need it. 20 Thank you. 21 THE COURT: Thank you. 22 Anything else on this issue? 23 MR. TUGGY: Yes, Your Honor, if I may 24 respond. 25 As for prior testimony, the Plaintiffs 10380 1 have plenty of prior testimony in the queue to 2 last through next week in light of information 3 we've received from Plaintiffs on which 4 witnesses they want to play next week. 5 And if there are -- if there is a 6 witness or two that requires resolution, we can 7 deal with that on Monday. It would not take a 8 long time. 9 And if Kempin extends past tomorrow 10 afternoon, that could continue on Monday as 11 well. 12 As for Microsoft's motion for 13 protective order, Microsoft believes that the 14 Phase 7 appeals are more important because they 15 deal with issues that matter for this trial as 16 opposed to the side show regarding whether 17 Plaintiffs should be able to post Microsoft's 18 trade secrets on their website. 19 And, second, Microsoft requests that 20 we just stick with the current order which set 21 the hearing for February 9. 22 As for the 2,800 plus exhibits, 23 Microsoft needs to respond in writing to 24 Plaintiffs' submission, their motion, and we 25 need the opportunity to do that. And that 10381 1 won't be done in time for a hearing on Friday. 2 And, also, the Plaintiffs have said 3 that they already reviewed all these documents 4 and made their relevance and undue objections. 5 You may recall the argument we had on 6 this, where the Plaintiffs' view was we had -- 7 in the Special Master process our understanding 8 was we had to make all those objections in that 9 process. 10 Microsoft explained that that was not 11 our understanding, so we didn't. And we were 12 given an additional opportunity based on the 13 Court's rulings to make those objections. 14 I'm not begrudging the Plaintiffs the 15 opportunity to add objections that they didn't 16 make before, but they did review all of these 17 with the thought in mind that they had to make 18 these objections. 19 And so I suspect that this final 20 review will not take the time that they're 21 leading us to believe that it might. 22 And then, finally, with respect to the 23 Phase 7 appeals, they've been pending since 24 late November, and it is time to get these 25 exhibits cleared out and the objections 10382 1 resolved. 2 And that's a much higher priority than 3 the motion for protective order because these 4 exhibits are exhibits to be used in this trial 5 and they affect the conduct of the trial, 6 whereas, the motion for protective order 7 doesn't. 8 For those reasons, Microsoft requests 9 that its hearing schedule be adopted. 10 THE COURT: Anything else on the issue 11 before we go into the first part? 12 MR. CASHMAN: I guess just a couple of 13 quick comments. 14 Mr. Tuggy's position seems to be based 15 on the notion that there should be a vacation 16 on Friday. 17 And I don't recall that the Court or 18 anybody ever saying anything about a vacation 19 just because the Jury wasn't going to be 20 hearing evidence. 21 And so I'm sure that while Microsoft 22 lawyers want to leave town, I don't think 23 that's really a basis for putting off these 24 things which need to be addressed, especially 25 since Mr. Tuggy has indicated he's going to be 10383 1 here. 2 Second of all, I just want to again 3 emphasize the importance of these 55 exhibits 4 that Microsoft has said should be given 5 confidential status. 6 These exhibits are important. Some of 7 them, I believe, come up with some witnesses. 8 So it's not just a matter of these being 9 admitted and then being -- and that's the end 10 of it. 11 What really is going on is that 12 Microsoft wants to interfere with our ability 13 to put on our case in a way that Plaintiffs see 14 fit. And there's no reason given the fact that 15 Plaintiffs are ready to proceed with argument 16 on those 55 exhibits why we have to wait until 17 February 9th to do it. 18 The issues are ready to go. The 19 exhibits have been admitted. And if Microsoft 20 thinks that they should be given confidential 21 status, they should have to explain why. 22 And the only possible reason for the 23 delay that Microsoft seeks would be for them to 24 try to mend the hole and cook up some 25 additional reasons that they failed to put in 10384 1 their memo about why these exhibits should be 2 given confidential status. 3 They were required or should have been 4 required to put that in the memo initially. 5 They failed to do it. They shouldn't be given 6 two or three weeks so that they can try to cure 7 the defect in their motion. 8 We're ready to go now. We should hear 9 that now. 10 The last is that comment that I want 11 to make on the Microsoft proffer of the 2,800 12 and some odd exhibits. 13 If Microsoft is willing to concede 14 that Plaintiffs do not need to provide their 15 objections by the 15th of February in lieu of 16 this motion and when it becomes ripe and is 17 argued and is resolved, then I would agree we 18 don't need to hear it on Friday or Monday. 19 But if Microsoft is not so willing to 20 concede or if the Court is not inclined to 21 provide an order staying that obligation, then, 22 Plaintiffs think that this motion should be 23 heard either on Friday or on Monday. 24 Thank you. 25 THE COURT: Well, first of all, my 10385 1 recollection about this thing with this juror 2 being gone on the 26th and 29th is we wouldn't 3 have court. 4 I don't recall until you mentioned it 5 this morning that you wanted to have court 6 proceed anyhow without the Jury. I don't 7 remember Ms. Conlin mentioning it. 8 And I guess I labored under that 9 belief that we would not have court at all. So 10 apparently I was mistaken in my assessment of 11 that since I have first heard of that today 12 that you want to go ahead and take the whole 13 day and do the motions. 14 Secondly, the matters that I thought, 15 those 50-some exhibits have been admitted. 16 They can be used for whatever purpose the 17 Plaintiffs desire in the courtroom. 18 MR. TUGGY: Correct. 19 THE COURT: That's not going to hold 20 up your case at all. 21 And, frankly, the website has very 22 little to do with how this proceeds in front of 23 a jury. 24 So I don't see that as an imperative 25 thing that the Court needs to do right away. I 10386 1 will look at it further and decide, but those 2 could be used right now in front of the jury. 3 I will come up with a schedule by 4 tomorrow morning on how we are going to proceed 5 on the motions. 6 Anything else? 7 MR. CASHMAN: Nothing further, Your 8 Honor. 9 THE COURT: Okay. 10 Now, we are moving on to Mr. Fryer? 11 MR. GRALEWSKI: Yes, Your Honor. Good 12 afternoon. 13 THE COURT: Is this just one thing we 14 are looking at? 15 MR. GRALEWSKI: Yes, Your Honor. 16 THE COURT: Okay. 17 MR. GRALEWSKI: Two preliminary 18 points, Your Honor. 19 Number one, background. The prior 20 testimony at issue today is that of Bruce 21 Fryer, as you mentioned. 22 Mr. Fryer worked in the first half of 23 the 1990s for a company called Zenith Data 24 Systems. He was a product manager at Zenith, 25 and Zenith developed a product called Z-STOR, 10387 1 all caps, Z-STOR. And its code name was 2 Armstrong. I only mention that in case you see 3 it in the transcript as you are leafing 4 through. 5 Z-STOR was a file server that provided 6 data storage and print services for small local 7 area networks. And without getting into the 8 further minutia of the technical workings of 9 it, suffice it to say that the issues we are 10 here to discuss today involve the fact that 11 Zenith opted to install DRI's and later 12 Novell's DOS product on its Z-STOR product. 13 And the deposition of Mr. Fryer 14 largely involves this decision and the 15 DRI/Novell contract and the use and operation 16 of that particular operating system on the 17 product. 18 Here's the second background point, 19 Your Honor. 20 As we've alluded to, as a result of 21 mutual cooperation and compromise, there is 22 only one issue to present today for ruling. 23 And that issue, as Your Honor can tell 24 from the joint rulings chart that I've provided 25 to you, stems from the Court's motion in limine 10388 1 order regarding other technology companies. 2 Specifically the sole issue Plaintiffs 3 wish to present for ruling today is whether 4 Microsoft may offer evidence that suggests that 5 its contractual provisions concerning prepaid 6 balances are legal because Novell purportedly 7 offered contracts with similar provisions. 8 And as the Court ruled in its motion 9 in limine order, a defense of everybody else is 10 doing it is not going to be allowed in this 11 case. 12 Now, Plaintiffs are keenly aware of 13 rearguing matters already resolved by the 14 Court, and Plaintiffs do understand the Court's 15 views on this matter and certainly have read 16 the Court's order concerning the Harris 17 testimony issue very recently. 18 In light of these known views and the 19 Harris order, I will be brief, but I do have a 20 job to do, and Plaintiffs do want to make a 21 record on this particular issue which we view 22 as an important one. 23 So briefly then, as the rulings chart 24 that I handed up indicates, Plaintiffs object 25 to lines 89, 15, through 90, 12, and 90, 16 10389 1 through 24 of the cross-examination of 2 Mr. Fryer under Rule 5.403. 3 The testimony elicited here about 4 Novell's licensing provisions would confuse the 5 issues and mislead the Jury for two reasons. 6 One, unlike Microsoft, Novell did not 7 have an operating systems monopoly; and two, 8 demonstrating this lack of market power, Novell 9 freely permitted Zenith data, Mr. Fryer's 10 company, and presumably other OEMs, to apply 11 unused prepaid royalties to different products, 12 not just DOS. 13 Now, moreover, to establish an 14 industry practice, even if that is relevant, 15 which Plaintiffs disagree with, Plaintiffs 16 submit that Microsoft needs to make a 17 preliminary showing that more than just one 18 other company, here Novell, offered contractual 19 terms that were purportedly similar to 20 Microsoft's. 21 The fine point here, Your Honor, is 22 that just because Novell may offer certain 23 terms, that is not evidence that the entire 24 industry competes in a particular manner. 25 Therefore, before offering this 10390 1 evidence, especially in light of the motion in 2 limine order, Microsoft should at least have to 3 show that prepaid balances like the ones 4 offered by DRI and Novell were an industry-wide 5 practice. 6 And for these reasons we believe that 7 this particular testimony should not be 8 allowed. 9 Thank you, Your Honor. 10 THE COURT: Thank you, Mr. Gralewski. 11 Mr. Tuggy? 12 MR. TUGGY: Yes, Your Honor. 13 The testimony at issue begins at page 14 89 of Mr. Fryer's deposition, which I believe 15 you have. 16 And the first question at 89, 15, asks 17 did you understand you had prepaid royalty 18 obligations under this contract? 19 Now, the question is referencing a 20 contract which in the deposition is Deposition 21 Exhibit 1434. It's a Plaintiffs' exhibit. I'd 22 ask Mr. Gralewski, did you bring a copy of 23 that? 24 MR. GRALEWSKI: I provided it to the 25 Court. 10391 1 MR. TUGGY: Okay. So which 2 Plaintiffs' exhibit is that? I didn't get a 3 copy. 4 THE COURT: 7692A. 5 MR. TUGGY: 7692A. 6 MR. GRALEWSKI: I apologize. 7 MR. TUGGY: This is the contract that 8 was the subject -- was a subject of Plaintiffs' 9 designations, and in Microsoft's 10 cross-examination questions were asked about 11 the same contract and those questions are at 12 issue in Plaintiffs' objection. 13 Plaintiffs' objection, as 14 Mr. Gralewski explained, is that they believe 15 this is barred by the motion in limine, but 16 have conceded that this is the same issue as 17 those presented in the deposition of Ralph Adam 18 Harris, and that is this was conduct by Novell 19 that has never been adjudicated illegal. 20 It is not illegal per se under the 21 antitrust laws to have a minimum commitments 22 contract with the ability on the part of the 23 licensee to credit unused portions of the 24 minimum commitment to other products by the 25 same company. 10392 1 In this case, as the testimony makes 2 clear upon reviewing it, the customer here if 3 unable to make the minimum commitment to Novell 4 has the opportunity to credit what was unused 5 to other Novell operating system products. 6 Mr. Gralewski raised for the first 7 time a 403 argument, something to the effect 8 that there would be some confusion because this 9 contract permitted prepaid royalties to apply 10 to other products, but the examination makes 11 clear that what Novell permitted was the 12 crediting of minimum commitments that were 13 unmet to other Novell operating system 14 products. 15 Mr. Gralewski's point that Novell did 16 not have market power or a monopoly position 17 somehow distinguishes it from Microsoft, but 18 actually that makes the point that parties who 19 do not, as Mr. Gralewski conceded, have that 20 sort of market power nonetheless use these 21 kinds of provisions, which is evidence that the 22 provisions have some sort of pro-competitive 23 purpose. 24 Microsoft has in its briefing on the 25 motion in limine and many times this issue has 10393 1 arisen before, has explained the many possible 2 relevant uses of this type of information, that 3 being one. 4 And for those reasons Microsoft 5 requests that the objection be -- that the 6 objection be overruled and that the testimony 7 be permitted as it was in the deposition of 8 Ralph Adam Harris. 9 THE COURT: Are you going to try to 10 show this is an industry-wide thing? 11 MR. TUGGY: Well, at this time there 12 were actually not many operating system 13 vendors. Novell was one. Microsoft was one. 14 We will attempt to show that IBM had 15 similar provisions. It was another selling 16 OS/2. 17 So Microsoft does intend to show that 18 it was industry-wide, but its relevance doesn't 19 depend on that. 20 Because even if it weren't 21 industry-wide, if there were companies without 22 market power who were engaging -- who were 23 entering into the same types of contracts with 24 their OEMs, it evidences the fact that there is 25 a purpose for the contract other than trying to 10394 1 leverage market power. 2 If a company without market power is 3 using the exact same provision, then the 4 logical inference is that company had a 5 pro-competitive reason for doing so because 6 they couldn't have used it for an 7 anticompetitive purpose. 8 THE COURT: That logic doesn't follow 9 to me. It could be an anticompetitive reason. 10 MR. TUGGY: Well, they're claiming -- 11 Plaintiffs claim that Microsoft used it for an 12 anticompetitive purpose because of its market 13 power. 14 THE COURT: Could they also claim that 15 Novell and IBM did the same thing for 16 anticompetitive purpose? 17 MR. TUGGY: I have not seen Plaintiffs 18 make that claim with respect to minimum 19 commitments. 20 THE COURT: That's just as logical as 21 a pro-competitive commitment, isn't it? 22 MR. TUGGY: No. It is not conceivable 23 how requiring a minimum commitment in a 24 contract and then allowing a party to apply the 25 minimum commitment if not met to other products 10395 1 is anticompetitive when a company in Novell's 2 position uses it. 3 Novell would have to have a 4 pro-competitive purpose, which is, as experts 5 will testify in this case and as OEMs -- as 6 company representatives will testify, the 7 reason why these type of commitments are 8 entered into is to allow a company to predict 9 volume of sales, to allow a company to make 10 volume discounts. And those are 11 pro-competitive purposes. 12 And Novell -- 13 THE COURT: Wouldn't you agree that 14 there's a difference between Novell and 15 Microsoft sizewise? Size of company, size of 16 sales, volume of sales? 17 MR. TUGGY: At this time, Novell and 18 Microsoft were both substantial players in the 19 market, but Microsoft's market share in the 20 operating system market was higher than 21 Novell's. 22 THE COURT: All right. 23 Anything else? 24 MR. TUGGY: Nothing further, Your 25 Honor. 10396 1 THE COURT: Mr. Gralewski? 2 MR. GRALEWSKI: Nothing further, Your 3 Honor. 4 THE COURT: Very well. 5 Is there any other issues on this Mr. 6 -- who does this refer to again, Mr. Fryer? 7 MR. TUGGY: Mr. Fryer. 8 MR. GRALEWSKI: Yes, Your Honor. 9 There were a number. There are no longer as a 10 result of the parties continuing to meet and 11 confer. 12 THE COURT: I thought you said you had 13 something else. 14 MR. TUGGY: No, Your Honor. We were 15 able to come to agreement on all of those. 16 THE COURT: Oh, okay. I thought at 17 the start of this, you kind of interrupted 18 saying, no, there's more than just -- 19 MR. TUGGY: Oh, no, no, you 20 misunderstood. 21 What I had said was we had done well. 22 THE COURT: Oh, okay. I'm sorry. I 23 thought there were more. 24 All right, I'll do this by tomorrow. 25 MR. GRALEWSKI: Thank you, Your Honor. 10397 1 MR. CASHMAN: Thank you, Your Honor. 2 THE COURT: I'll do a schedule and 3 I'll rule on what Mr. Cashman wants. 4 MR. TUGGY: Thank you, Your Honor. 5 THE COURT: You guys have a good 6 night. 7 (Proceedings adjourned at 3:41 p.m.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10398 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 24th 19 day of January, 2007. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25 23 So briefly then, as the rulings chart 24 that I handed up indicates, Plaintiffs object 25 to lines 89, 15, through 90, 12, and 90, 16 10389 1 through 24 of the cross-examination of 2 Mr. Fryer under Rule 5.403. 3 The testimony elicited here about 4 Novell's licensing provisions would confuse the 5 issues and mislead the Jury for two reasons. 6 One, unlike Microsoft, Novell did not 7 have an operating systems monopoly; and two, 8 demonstrating this lack of market power, Novell 9 freely permitted Zenith data, Mr. Fryer's 10 company, and presumably other OEMs, to apply 11 unused prepaid royalties to different products, 12 not just DOS. 13 Now, moreover, to establish an 14 industry practice, even if that is relevant, 15 which Plaintiffs disagree with, Plaintiffs 16 submit that Microsoft needs to make a 17 preliminary showing that more than just one 18 other company, here Novell, offered contractual 19 terms that were purportedly similar to 20 Microsoft's. 21 The fine point here, Your Honor, is 22 that just because Novell may offer certain 23 terms, that is not evidence that the entire 24 industry competes in a particular manner. 25 Therefore, before offering this 10390 1 evidence, especially in light of the motion in 2 limine order, Microsoft should at least have to 3 show that prepaid balances like the ones 4 offered by DRI and Novell were an industry-wide 5 practice. 6 And for these reasons we believe that 7 this particular testimony should not be 8 allowed. 9 Thank you, Your Honor. 10 THE COURT: Thank you, Mr. Gralewski. 11 Mr. Tuggy? 12 MR. TUGGY: Yes, Your Honor. 13 The testimony at issue begins at page 14 89 of Mr. Fryer's deposition, which I believe 15 you have. 16 And the first question at 89, 15, asks 17 did you understand you had prepaid royalty 18 obligations under this contract? 19 Now, the question is referencing a 20 contract which in the deposition is Deposition 21 Exhibit 1434. It's a Plaintiffs' exhibit. I'd 22 ask Mr. Gralewski, did you bring a copy of 23 that? 24 MR. GRALEWSKI: I provided it to the 25 Court. 10391 1 MR. TUGGY: Okay. So which 2 Plaintiffs' exhibit is that? I didn't get a 3 copy. 4 THE COURT: 7692A. 5 MR. TUGGY: 7692A. 6 MR. GRALEWSKI: I apologize. 7 MR. TUGGY: This is the contract that 8 was the subject -- was a subject of Plaintiffs' 9 designations, and in Microsoft's 10 cross-examination questions were asked about 11 the same contract and those questions are at 12 issue in Plaintiffs' objection. 13 Plaintiffs' objection, as 14 Mr. Gralewski explained, is that they believe 15 this is barred by the motion in limine, but 16 have conceded that this is the same issue as 17 those presented in the deposition of Ralph Adam 18 Harris, and that is this was conduct by Novell 19 that has never been adjudicated illegal. 20 It is not illegal per se under the 21 antitrust laws to have a minimum commitments 22 contract with the ability on the part of the 23 licensee to credit unused portions of the 24 minimum commitment to other products by the 25 same company. 10392 1 In this case, as the testimony makes 2 clear upon reviewing it, the customer here if 3 unable to make the minimum commitment to Novell 4 has the opportunity to credit what was unused 5 to other Novell operating system products. 6 Mr. Gralewski raised for the first 7 time a 403 argument, something to the effect 8 that there would be some confusion because this 9 contract permitted prepaid royalties to apply 10 to other products, but the examination makes 11 clear that what Novell permitted was the 12 crediting of minimum commitments that were 13 unmet to other Novell operating system 14 products. 15 Mr. Gralewski's point that Novell did 16 not have market power or a monopoly position 17 somehow distinguishes it from Microsoft, but 18 actually that makes the point that parties who 19 do not, as Mr. Gralewski conceded, have that 20 sort of market power nonetheless use these 21 kinds of provisions, which is evidence that the 22 provisions have some sort of pro-competitive 23 purpose. 24 Microsoft has in its briefing on the 25 motion in limine and many times this issue has 10393 1 arisen before, has explained the many possible 2 relevant uses of this type of information, that 3 being one. 4 And for those reasons Microsoft 5 requests that the objection be -- that the 6 objection be overruled and that the testimony 7 be permitted as it was in the deposition of 8 Ralph Adam Harris. 9 THE COURT: Are you going to try to 10 show this is an industry-wide thing? 11 MR. TUGGY: Well, at this time there 12 were actually not many operating system 13 vendors. Novell was one. Microsoft was one. 14 We will attempt to show that IBM had 15 similar provisions. It was another selling 16 OS/2. 17 So Microsoft does intend to show that 18 it was industry-wide, but its relevance doesn't 19 depend on that. 20 Because even if it weren't 21 industry-wide, if there were companies without 22 market power who were engaging -- who were 23 entering into the same types of contracts with 24 their OEMs, it evidences the fact that there is 25 a purpose for the contract other than trying to 10394 1 leverage market power. 2 If a company without market power is 3 using the exact same provision, then the 4 logical inference is that company had a 5 pro-competitive reason for doing so because 6 they couldn't have used it for an 7 anticompetitive purpose. 8 THE COURT: That logic doesn't follow 9 to me. It could be an anticompetitive reason. 10 MR. TUGGY: Well, they're claiming -- 11 Plaintiffs claim that Microsoft used it for an 12 anticompetitive purpose because of its market 13 power. 14 THE COURT: Could they also claim that 15 Novell and IBM did the same thing for 16 anticompetitive purpose? 17 MR. TUGGY: I have not seen Plaintiffs 18 make that claim with respect to minimum 19 commitments. 20 THE COURT: That's just as logical as 21 a pro-competitive commitment, isn't it? 22 MR. TUGGY: No. It is not conceivable 23 how requiring a minimum commitment in a 24 contract and then allowing a party to apply the 25 minimum commitment if not met to other products 10395 1 is anticompetitive when a company in Novell's 2 position uses it. 3 Novell would have to have a 4 pro-competitive purpose, which is, as experts 5 will testify in this case and as OEMs -- as 6 company representatives will testify, the 7 reason why these type of commitments are 8 entered into is to allow a company to predict 9 volume of sales, to allow a company to make 10 volume discounts. And those are 11 pro-competitive purposes. 12 And Novell -- 13 THE COURT: Wouldn't you agree that 14 there's a difference between Novell and 15 Microsoft sizewise? Size of company, size of 16 sales, volume of sales? 17 MR. TUGGY: At this time, Novell and 18 Microsoft were both substantial players in the 19 market, but Microsoft's market share in the 20 operating system market was higher than 21 Novell's. 22 THE COURT: All right. 23 Anything else? 24 MR. TUGGY: Nothing further, Your 25 Honor. 10396 1 THE COURT: Mr. Gralewski? 2 MR. GRALEWSKI: Nothing further, Your 3 Honor. 4 THE COURT: Very well. 5 Is there any other issues on this Mr. 6 -- who does this refer to again, Mr. Fryer? 7 MR. TUGGY: Mr. Fryer. 8 MR. GRALEWSKI: Yes, Your Honor. 9 There were a number. There are no longer as a 10 result of the parties continuing to meet and 11 confer. 12 THE COURT: I thought you said you had 13 something else. 14 MR. TUGGY: No, Your Honor. We were 15 able to come to agreement on all of those. 16 THE COURT: Oh, okay. I thought at 17 the start of this, you kind of interrupted 18 saying, no, there's more than just -- 19 MR. TUGGY: Oh, no, no, you 20 misunderstood. 21 What I had said was we had done well. 22 THE COURT: Oh, okay. I'm sorry. I 23 thought there were more. 24 All right, I'll do this by tomorrow. 25 MR. GRALEWSKI: Thank you, Your Honor. 10397 1 MR. CASHMAN: Thank you, Your Honor. 2 THE COURT: I'll do a schedule and 3 I'll rule on what Mr. Cashman wants. 4 MR. TUGGY: Thank you, Your Honor. 5 THE COURT: You guys have a good 6 night. 7 (Proceedings adjourned at 3:41 p.m.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10398 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 24th 19 day of January, 2007. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25