9607 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 XXXV 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 8:38 a.m., January 22, 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 9608 1 A P P E A R A N C E S 2 Plaintiffs by: ROXANNE BARTON CONLIN 3 Attorney at Law Roxanne Conlin & Associates, PC 4 Suite 600 319 Seventh Street 5 Des Moines, IA 50309 (515) 283-1111 6 MICHAEL R. CASHMAN 7 LINDSEY A. DAVIS 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 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9609 1 Defendant by: DAVID B. TULCHIN 2 SHARON L. NELLES JOSEPH E. NEUHAUS 3 JEFFREY C. CHAPMAN Attorneys at Law 4 Sullivan & Cromwell, LLP 125 Broad Street 5 New York, NY 10004-2498 (212) 558-3749 6 KIT A. PIERSON 7 Attorney at Law Heller Ehrman, LLP 8 333 Bush Street San Francisco, CA 94104 9 (415) 772-6000 10 HEIDI B. BRADLEY Attorneys at Law 11 Heller Ehrman, LLP 333 South Hope Street 12 Suite 3900 Los Angeles, CA 90071-3043 13 (213) 689-0200 14 DAVID E. JONES Attorney at Law 15 Heller Ehrman, LLP One East Main Street 16 Suite 201 Madison, WI 53703-5118 17 (608) 663-7460 18 BRENT B. GREEN Attorney at Law 19 Duncan, Green, Brown & Langeness, PC 20 Suite 380 400 Locust Street 21 Des Moines, IA 50309 (515) 288-6440 22 23 24 25 9610 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 9611 1 (The following record was made out of 2 the presence of the jury at 8:38 a.m.) 3 MR. CASHMAN: Just a couple of quick 4 housekeeping matters, Your Honor. 5 THE COURT: Okay. 6 MR. CASHMAN: Just for the Court's 7 information, Plaintiffs are going to play the 8 remainder of Mr. Barrett's deposition from 9 Caldera before we have a live witness by the 10 name of David Bradford. 11 And that's a little bit different than 12 what I think I told the Court on Friday that we 13 were going to interrupt Mr. Barrett's 14 deposition. 15 THE COURT: Oh, okay. 16 MR. CASHMAN: And then just secondly, 17 this morning the Plaintiffs filed a motion to 18 supplement one of the proposed preliminary 19 instructions that you issued an order on 20 Friday, I think, concerning the 1995 consent 21 decree between Microsoft and the government. 22 And just for courtesy, I'm going 23 to hand-deliver a copy to Mr. Tulchin and a 24 copy -- 25 THE COURT: What is this? 9612 1 MR. CASHMAN: -- to you. 2 THE COURT: Okay. 3 MR. CASHMAN: And Ms. Conlin, when she 4 arrives mid-morning to handle the examination 5 of Mr. Bradford, I think she'd like to address 6 this particular motion over the lunch hour, if 7 possible, before we resume in the afternoon. 8 THE COURT: All right. 9 MR. CASHMAN: I'll let her bring that 10 up with the Court. 11 THE COURT: We'll see. 12 MR. TULCHIN: Just for the record, 13 Your Honor, Mr. Cashman handed this to me just 14 one minute ago, and, of course, we had no 15 notice that anything like this was coming. 16 MR. CASHMAN: Nothing further, Your 17 Honor. 18 THE COURT: Get the jury, please. 19 (The following record was made in 20 the presence of the jury at 8:44 a.m.) 21 THE COURT: Everyone else may be 22 seated. 23 And I guess Carrie will get the 24 lights. 25 MR. CASHMAN: Thank you, Your Honor. 9613 1 Plaintiffs continue with the testimony 2 of Philip Barrett. 3 (Whereupon, the following video 4 resumed playing to the jury.) 5 Question: Windows 3.1 came to market 6 in April 1992. Does that sound right to you? 7 Answer: Yes. 8 THE COURT: Would you hold up a 9 minute? 10 (Whereupon, the playing of the video 11 to the jury was stopped.) 12 THE COURT: Sorry about that. 13 (Whereupon, the following video 14 resumed playing to the jury.) 15 Question: What did you do after that? 16 Answer: Actually, slightly prior to 17 that, I moved to a different group. The group 18 was called multimedia and consumer systems, I 19 believe. 20 Question: What prompted the move? 21 Answer: A number of factors. 22 One is I was tired of working on 23 Windows. I had been working on it for six 24 years, four years, whatever. 25 Question: Long enough? 9614 1 Answer: I had been working on it, 2 yeah, a fairly long time, six years. And, 3 frankly, I did not get along that well with 4 Brad Silverberg, the VP of the division, and 5 felt it was time to move on anyway. 6 Question: Do you recall when you made 7 the move? 8 Answer: It was just before the 9 release. It was before the release of 3.1, so 10 it would be in the first quarter of 1992. 11 Question: The product by then was in 12 its final beta release? 13 Answer: Yes. It was basically being 14 completed. 15 Question: Thanks. 16 When did you leave Microsoft? 17 Answer: In October of 1994. 18 Question: And you went to what is now 19 RealNetworks at that time? 20 Answer: That's correct. At that time 21 it was called Progressive Networks. 22 Question: Did you initiate the 23 contact with Progressive Networks? 24 Answer: No. 25 Question: Who called you? 9615 1 Answer: Rob Glaser. 2 Question: Had you known him when you 3 were at Microsoft? 4 Answer: Yes. 5 Question: He had been a Microsoft 6 employee? 7 Answer: That's correct. 8 Question: What position did you take 9 at Progressive Networks? 10 Answer: Vice president of software 11 development. 12 Question: Is that the senior 13 technical person at Progressive Networks? 14 Answer: That's correct. 15 Question: Is that still your 16 position? 17 Answer: Yes. 18 Question: You hesitated. Is there -- 19 Answer: Well, the company has grown 20 so big that I believe that all the senior 21 management would still say I'm the senior 22 technical person at RealNetworks, but there is 23 no title that reflects that within the company. 24 Question: I want to back up to, we 25 discussed Windows 3.0, which you had primary 9616 1 responsibility for; correct? 2 Answer: Correct. 3 Question: And Windows 3.1, which you 4 had primary responsibility for up until right 5 before it was released; is that correct? 6 Answer: Perhaps I misheard that. I 7 had primary responsibility for 3.0 and then 8 primary responsibility for 3.1 up until shortly 9 before it was released. 10 Question: Sure. And before Windows 11 95, if you wanted to run Windows, you had to 12 buy DOS, install DOS, and then buy Windows and 13 install Windows; correct? 14 Answer: That is correct. 15 Question: And the two products worked 16 together? 17 Answer: That is correct. 18 Question: DOS provided certain 19 functions and Windows provided certain 20 functions? 21 Answer: Yes. 22 Question: And they worked together 23 even though they were installed separately? 24 Answer: Yes, that's correct. 25 Question: And then Microsoft released 9617 1 Windows 95 August 1995 and changed that? 2 Answer: Yes. 3 Question: And at least to the user, 4 it appears to be a single product, but performs 5 the functions that it used to perform using a 6 separate DOS and separate Windows? 7 Answer: That is correct. 8 Question: But it's your 9 understanding, isn't it, that there is still 10 DOS in Windows 95 and there's still Windows in 11 Windows 95? 12 Answer: Yes. You can find -- you can 13 actually bring up a Windows 95 as DOS. 14 Question: I think when you and I 15 talked about it before, you described Windows 16 95 as a DOS and Windows stuck together with 17 baling wire and bubblegum? 18 Answer: That is a fair if colloquial 19 representation of it, yes. 20 Question: And what do you mean by 21 that? 22 Answer: That basically, yes, there is 23 DOS on the underlying -- under the hood there 24 is DOS. There is a form of DOS, a version of 25 DOS that was -- and I don't know all of the 9618 1 details of what was developed. I don't 2 understand all they did there, but you can 3 actually produce a bootable DOS diskette. 4 There is still 16-bit code inside. 5 Question: And when you said they were 6 tied together with baling wire and bubblegum, 7 you were referring to the amount of integration 8 between DOS and Windows in Windows 95? 9 Answer: Yes. 10 Question: Is it your understanding 11 that the relationship between DOS and Windows 12 in that the relationship between DOS and 13 Windows in Windows 95 is the same as it was 14 between DOS and Windows in prior versions such 15 as DOS 6.X and Windows 3.X? 16 Answer: I wouldn't say that they are 17 exactly the same. To answer your question 18 directly, no. 19 Question: What is your understanding 20 of the technological benefits that Microsoft 21 achieved in combining DOS and Windows in 22 Windows 95? 23 Answer: The main technical advantages 24 I believe are in better management of DOS 25 applications running in the Windows 9619 1 environment, and a more clean install, a better 2 installation process. 3 Question: Because it's a single 4 installation process? 5 Answer: Yeah, because it's a single 6 installation process. 7 Question: My question was, are there 8 any other reasons that it was a better install 9 process other than the fact that it was a 10 single install process? 11 Answer: I believe the answer would be 12 no. 13 Question: And when you say better 14 management of DOS applications running under 15 Windows, what do you mean? 16 Answer: The way that DOS applications 17 are run, DOS applications have a lot of 18 knowledge of the internals of MS-DOS and 19 because of that they have to be handled very 20 specially in order to run well. 21 And Windows 95 did a better job of 22 having specific knowledge of how DOS 23 applications utilize the internals of MS-DOS. 24 Question: Was it required that it be 25 one product for it to do that? 9620 1 Answer: No. 2 Question: It could have been done as 3 two separate products? 4 Answer: Yes. 5 Question: So to the best of your 6 knowledge, the only technical advantage that 7 couldn't have been achieved releasing it as two 8 products is the single install program? 9 Answer: Yes. 10 Question: This idea of combining cost 11 and Windows in the same box with a single 12 install program dated all the way back to 1991 13 as we saw this morning, didn't it? 14 Answer: Yes. 15 Question: Do you have an 16 understanding of what happens when someone 17 turns on their computer that has Windows 95 18 loaded on it, what happens first? 19 Answer: Yes. 20 Question: What happens? 21 Answer: Do you want chapter and verse 22 or do you just want general overview? 23 Question: I want general overview 24 first and I'll ask for more detail if we need 25 it. 9621 1 Answer: Okay. When you turn on your 2 computer, the first thing that happens is the 3 ROM BIOS gets control, and it's called the 4 POST, power on self-test phase. 5 Once it goes through that phase, once 6 it successfully completes that phase, it looks 7 to the hard drive to find the operating system. 8 And based on configuration of that system it 9 will look at different hard drives and that 10 sort of thing. 11 But anyway, it looks at the hard drive 12 to find the operating system and through a 13 somewhat tricky process will load the operating 14 system into memory. 15 And it looks for a specific place on 16 the hard drive to gain a pointer to that 17 operating system that loads into memory. 18 Once the operating system is loaded 19 into memory, it transfers control of the 20 operating system, and the operating system, 21 which typically is a small but first part of 22 the operating system then loads the rest of the 23 operating system into memory. 24 Question: And in the case of Windows 25 95, what loads up first after the ROM BIOS does 9622 1 its work? Is it the DOS portion? 2 Answer: I honestly don't know the 3 answer to that question, but you certainly 4 piqued my curiosity. 5 Question: So you don't know what's 6 happening while I'm staring at that screen that 7 says Windows 95 and has the clouds and all 8 that? 9 Answer: Yeah, actually I do know. 10 What happens during that phase is 11 various device drivers, DOS level device 12 drivers are being loaded, such as CD-ROM 13 drivers and that sort of thing. 14 Question: You may be the most 15 technically savvy witness we've seen in this 16 trial. 17 Would it be difficult for somebody 18 like you to write an installation program that 19 was capable of installing DOS and then Windows 20 if they were offered as separate products? 21 Answer: I don't believe it would be 22 technically difficult. 23 Question: What would be the 24 challenges associated with doing something like 25 that? 9623 1 Answer: Understanding the detailed 2 process of the boot-up sequence, understanding 3 -- or not the boot-up sequence, I'm sorry, the 4 detailed process of where the systems software 5 has to live. 6 And quite frankly, the hardest part of 7 it has nothing to do with what operating system 8 you're installing, but rather understanding the 9 widely varied hardware platforms on which it 10 would be running in order to be able to hit the 11 broad part of the market. 12 Question: Let me be a little more 13 precise. 14 Wouldn't the challenge be the same if 15 you were installing DOS and then Windows or if 16 you were installing DOS and Windows from a 17 single installation program? 18 Answer: I believe the challenge to be 19 equal in those two scenarios. 20 Q. Technically, the challenge of 21 installing DOS and Windows is the same whether 22 you install DOS and then install Windows or 23 whether you have a single installation program 24 installing DOS, then Windows; true? 25 Answer: Yes, that's true. 9624 1 Question: Now, your company now, you 2 sell your products to end users? 3 Answer: Yes, we do. 4 Question: Do you also sell your 5 products to OEMs? 6 Answer: Yes, we do. 7 Question: And do you communicate with 8 the OEMs at all? 9 Answer: Yes. 10 Question: In your dealings with OEMs, 11 have you gained any understanding of how it is 12 they go about loading software on new machines? 13 Answer: Yes. 14 Question: And is it your 15 understanding that they typically will have a 16 standard disk image that they will put on the 17 machine to send out the door? 18 Answer: Yes, they typically will 19 create an image that contains all the necessary 20 software and copy it to the disk, yes. 21 Question: And the disk image will 22 include all the programs that are going to be 23 on the computer? 24 Answer: If it's shipped out -- yeah, 25 absolutely, that's the way they do it 9625 1 typically. 2 They will have a disk image of the way 3 they want the disk to look, the hard drive to 4 look when the customer turns on their machine, 5 and it will place that on the disk through a 6 disk copy mechanism. 7 Question: If you know, is it more 8 difficult for them to place this disk image on 9 the machine if it has five programs instead of 10 two programs on it? 11 Answer: There's no difference. 12 Question: For the benefit of the 13 jury, would you just briefly explain what a 14 beta program is? 15 Answer: A beta program is a way to 16 gain real-world experience with a product 17 before it's released to determine whether or 18 not the product is, frankly, ready for release 19 and to find ways to help make that product 20 ready for release. 21 Question: And when a program is still 22 in beta test -- is that a fair way to say it, a 23 program is still in beta test -- the program is 24 still being tested and still being modified? 25 Answer: That's correct. 9626 1 Question: And you use betas here in 2 your current position, don't you? 3 Answer: Yes, that's correct. 4 Question: And you distribute betas 5 widely? 6 Answer: Very widely, yes. 7 Question: One of the reasons for 8 doing that is to test the product? 9 Answer: That's correct. 10 Question: And another reason is 11 nothing more complicated than marketing, is it? 12 Answer: That's correct. 13 Question: And the reason it works as 14 a marketing vehicle is because it gets the 15 product out in the hands of users? 16 Answer: Yes. 17 Question: Users beyond those that are 18 actually going to test the product? 19 Answer: That's correct. 20 Question: And even the press will 21 look at beta releases, won't it? 22 Answer: Uh-huh, yes. 23 Question: It's your understanding 24 that companies will also look at beta products 25 to evaluate whether to purchase them? 9627 1 Answer: Yes, that's commonplace. 2 Question: So a successful beta is 3 important in the life of a product? 4 Answer: Absolutely. 5 Question: And this is all true for 6 RealNetworks, the same was true when you were 7 at Microsoft? 8 Answer: Yes, sure. 9 Question: Mr. Barrett, could you take 10 a moment and look at what's been marked as 11 Exhibit 1103 and identify it for me? 12 Answer: This is the Windows 3.1 beta 13 plan dated December 17, 1990. 14 Question: Is this something that was 15 distributed to you? 16 Answer: I recall getting a copy of 17 this. 18 Question: We were talking earlier 19 about the different purposes of beta programs. 20 On the page that is stamped X 548718, it says 21 types of beta programs at the top? 22 Answer: Uh-huh. 23 Question: There's a technical beta, a 24 prerelease and a preview. Do you know what 25 those terms mean? 9628 1 Answer: Yes. 2 Question: Could you explain them to 3 me, please? 4 Answer: Pretty much as it states 5 here. 6 The technical beta is for finding 7 bugs, for those people that are actually going 8 to use the product and uncover problems to be 9 fixed. Prerelease is for ISVs so that they can 10 start writing their -- or modifying their 11 programs to work on the new version of the 12 product. 13 Question: And ISVs are independent 14 software -- 15 Answer: Independent software vendors, 16 yes. 17 Question: And the preview release? 18 Answer: Yeah. It was a new term. 19 I think this is the first place where 20 I ever saw the term preview used, but a preview 21 is essentially for -- it is a marketing tool to 22 get the product into the hands of people making 23 buying decisions. 24 Question: And into the hands of 25 people that would be reviewing it like press 9629 1 reviewers, product reviewers? 2 Answer: Yeah, the press would also 3 get a copy of the preview release. 4 Question: And down in the section 5 where it says objectives at the bottom there, 6 it says, provide early exposure to the product. 7 Is that what that means? 8 Answer: Yes. 9 Question: And in the Windows 3.1 10 release, did you go through all three of those 11 types of betas; a technical beta, a prerelease 12 beta and a preview beta? 13 Answer: I do not recall the details 14 of that, to be honest. I was not managing the 15 beta release at that time. 16 Question: Who was? 17 Answer: David Cole. 18 Question: But you had an 19 understanding, didn't you, of the importance of 20 a successful beta to the success of Windows 21 3.1? 22 Answer: Yes, I understand the 23 importance of that. 24 Question: Take a moment and look at 25 what's been marked as Exhibit 1104. If you 9630 1 could identify that for me. 2 Answer: Okay. 3 Question: Can you identify that, 4 please? 5 Answer: It's a piece of E-mail from 6 me to someone named Chuck Straub. 7 Question: Is that somebody who worked 8 for you? 9 Answer: Yes. 10 Question: And this was in -- 11 Answer: It's the end of 1991. 12 Question: December 17, 1991? 13 Answer: Yes. 14 Question: Do you know why there would 15 be a date -- I'm looking at the first page of 16 Exhibit 1104, why there's another date there of 17 Wednesday, February 24, looks like 1993? 18 Maybe it was forwarded at some later 19 time or -- 20 Answer: I have no idea. 21 Question: But looking at the content 22 of the E-mail, it makes sense to you that this 23 was written December 17, 1991; is that right? 24 Answer: That's correct. That's 25 absolutely correct. 9631 1 Question: I won't read the first 2 paragraph, but it appears that you're unhappy 3 with the person's performance; is that fair? 4 Answer: Yes, that's correct. 5 Question: Everybody was under a lot 6 of pressure in December of 1991? 7 Everyone in your group, the Windows 8 3.1 team. 9 Answer: Yes. 10 Question: And it says in the middle 11 of that first paragraph, this beta release is 12 critical to the success of Win 3.1. What did 13 you mean there? 14 Answer: Our goal was to get the beta 15 release out on time. When you make public 16 commitments or even private commitments to 17 outside parties outside your company or even 18 outside your group within your company and you 19 don't perform the way you say you're going to 20 perform, particularly with respect to schedule, 21 people will become disillusioned with you. 22 Question: Hurts your credibility? 23 Answer: Yes, hurts your credibility. 24 Question: Any other reason that you 25 can recall that this beta was critical to the 9632 1 success of the product? 2 Answer: Not in this context, no. 3 Question: Did you have any role in 4 determining the size of the beta program, the 5 number of beta test sites? 6 Answer: Not a direct role, no. 7 Question: Indirect role? 8 Answer: Yes, I had conversations with 9 people about it should be big. 10 Question: And why is that? 11 Answer: Because I believe that big 12 beta tests are very important. 13 Question: And the reason for that? 14 Answer: To gain widespread exposure 15 both on the technical and preview sense, 16 particularly to be able to have a wide range of 17 different machines that you test on in order to 18 find those situations that you are able to test 19 on in internal labs or developer systems. 20 Question: Let me see if I can 21 separate your answer into the two pieces I 22 think I heard, which is there are technical 23 reasons, technical advantages to having a large 24 beta program and then there's marketing 25 advantages too. Is that fair? 9633 1 Answer: Yes, that's fair. 2 Question: And on the technical side, 3 it's because your hope is that you'll have 4 problems reported that you wouldn't otherwise 5 find? 6 Answer: That's correct. 7 Question: And whether that happens or 8 not is going to depend in part on, for lack of 9 a better word, the quality of the beta test 10 sites? 11 If you understand that. 12 Answer: Yes, I do. Yes, absolutely. 13 The relative quality of the beta 14 testers is the single most important factor in 15 the quality of the feedback. 16 Question: And so the jury 17 understands, what do you mean by when you say 18 the quality of the beta test site? 19 Answer: Their ability to -- well, 20 first of all, install the product, their 21 ability to observe a problem and report it in a 22 clear and cogent fashion, the ability of that 23 person or site to specify the environment or to 24 recreate the actions or activities that they 25 went through in order to -- basically in order 9634 1 to create this bug that allow developers or 2 testers the ability to recreate the problem and 3 demonstrate it in their laboratories. 4 Question: So at least for the 5 technical objectives, we've discussed a beta 6 site that either can't install the program or 7 doesn't know how to recognize errors or doesn't 8 report errors doesn't do you any good at all, 9 does it? 10 Answer: From an engineering 11 perspective, you're correct. 12 Question: Even if you never hear back 13 from a user for whatever reason, there may be a 14 marketing value in distributing the product 15 widely? 16 Answer: Yes. There was a joke that 17 ran around that there were a lot of people that 18 were beta groupees. They just loved to get 19 beta software even if they never installed it. 20 So, yes, the answer was yes. 21 Question: The size of the beta 22 program, would it typically increase from the 23 first beta through the preview beta? 24 Answer: Typically, yes. 25 Question: Why is that? 9635 1 Answer: I think it's just a fact of 2 nature. You generally don't cut people out of 3 a beta program. So there's always demand for, 4 you know, new people being added to the beta 5 program. So, therefore, it grows rather than 6 shrinks. 7 Question: And the objective of the 8 last beta, the preview beta, is to get it in as 9 many people's hands as you can? 10 Answer: Uh-huh, yes. 11 Question: That was true back in the 12 Windows 3.0/Windows 3.1 time frame and is true 13 now at the company you're at? 14 Answer: Yes, it was. It is. 15 Question: Do you recall the size of 16 the beta programs -- back up. 17 Did you have responsibility for the 18 beta program for MS-DOS 5.0? 19 Answer: Yes. 20 Question: Do you have any 21 recollection of the size of that program? 22 Answer: I've thought about this and I 23 do not recall the exact size. It was in the 24 thousands, though. 25 Question: Somewhere -- just I want 9636 1 your best recollection. Somewhere more than 2 1,000 and less than 3,000? 3 Answer: I think it was closer to 4 3,000, as I recall. 5 Question: Was that at the end of the 6 beta cycle, start of the beta cycle? 7 Answer: We're scraping the bottom of 8 the barrel on my memories. I think it was 9 towards the end of the beta cycle. I think 10 that's right. 11 Question: Some were larger than the 12 DOS 5.0 beta program? 13 Answer: Yes. 14 Question: Which ones? 15 Answer: Windows 3.1 and Windows 3.0 16 were both larger. 17 Question: Windows 3.1 was somewhere 18 in the neighborhood of 10- to 15,000 beta 19 testers, wasn't it? 20 Answer: I recall 14,000. 21 Question: Digital Research was not 22 permitted to receive a copy of the Windows 3.1 23 beta, was it? 24 Answer: That's correct. 25 Question: That wasn't your idea, 9637 1 though, was it? 2 Answer: No. 3 Question: Do you recall whose idea 4 that was? 5 Answer: Yes. It was Brad 6 Silverberg's. 7 Question: What was the reason for 8 that? 9 Answer: They were a competitor, were 10 his exact words. They are a competitor, no 11 way. Actually, I think there were a few 12 expletives in that statement also. 13 Question: Was that a conversation 14 that you had with him or was that an E-mail 15 exchange? 16 Answer: It was a conversation. I 17 actually overheard someone else asking him. 18 Question: Did you ever discuss the 19 issue with Mr. Silverberg? 20 Answer: No. 21 Question: Did you ever express the 22 opinion to anybody at Microsoft that you 23 thought Digital Research should get a copy of 24 the Windows 3.1 beta? 25 Answer: I believe I did, but I don't 9638 1 recall when or how. 2 Question: I understand it was a long 3 time ago. Why was that your view? 4 Answer: Well, I believe that it made 5 more sense to -- I just didn't think it made 6 sense. I don't know if I had a good -- I 7 didn't have a good technical reason. 8 Question: Do you have an 9 understanding why it was important for 10 Microsoft not to give it, not to give the 11 Windows 3.1 beta to DRI? 12 Answer: Yeah, because the executive 13 vice president said not to. 14 Question: Do you have any further 15 understanding besides that? 16 I'm not quibbling with you. That's a 17 good enough reason by itself. 18 Answer: Well, in general, products -- 19 to make one product compatible with another, 20 you need a version of that product. 21 Question: Why is it important to get 22 the beta version rather than the production 23 release version? 24 Answer: Time to market. 25 Question: What do you mean? 9639 1 Answer: It takes you a fixed amount 2 of time to do any task. 3 Compatibility engineering is a 4 sequence of tasks, therefore, the sooner you 5 can start on those tasks, the sooner you'll be 6 done. Therefore, you would be in the market 7 with a compatibility-engineered product sooner 8 based on getting a version of the product 9 sooner, the product you are compatibility 10 engineering against. 11 Question: So let's take the case of 12 Windows 3.1. 13 If DRI wanted to be compatible, on 14 their product compatible with Windows 3.1 the 15 day Windows 3.1 was released, it's your view 16 that they needed to receive a Windows 3.1 beta? 17 Answer: Yes. 18 Question: By the way, DRI had been 19 provided a copy or had been provided access to 20 the Windows 3.0 beta but they were excluded 21 from the Windows 3.1 beta program. Do you know 22 what changed in between those two beta programs 23 that would cause Microsoft to exclude DRI from 24 the program? 25 Answer: I was aware that they were in 9640 1 the 3.0 beta. Silverberg made the decision not 2 to include them in the beta, and Silverberg was 3 not on board during -- Silverberg joined right 4 after Windows 3.0 shipped. 5 Question: And have you told me 6 everything that you can recall about 7 discussions with Mr. Silverberg about this 8 issue about excluding DRI from the Win 3.1 9 beta? 10 Answer: No. 11 Question: Tell me what else you 12 remember about it. 13 Answer: His comment was -- I recall 14 his exact words, I won't say his exact words, 15 but he said that was a complete foul-up that 16 they were included in the 3.0 beta. 17 Question: Did he explain to you why? 18 Answer: Well, yeah, he did. They're 19 a competitor. 20 Question: And did you have an 21 understanding of in what markets they were a 22 competitor of Microsoft? 23 Answer: In the DOS operating system 24 marketplace. 25 Question: Not in the Windows 9641 1 marketplace? 2 Answer: There was a product from them 3 called Gem, but I don't think anybody at 4 Microsoft took it seriously. 5 Question: It wasn't your 6 understanding, was it, that Mr. Silverberg 7 wanted to exclude DRI from the Win 3.1 beta 8 because they had this Gem product, was it? 9 Answer: No. 10 Question: It was because DRI was 11 marketing a competing DOS, wasn't it? 12 Answer: That's correct. 13 Question: You have 15-plus years 14 experience in the software industry? 15 Answer: Yes. 16 Question: Developing some 17 applications, developing operating systems? 18 Answer: That's correct. 19 Question: You've been involved in 20 some of the most significant product releases 21 in the last ten years? 22 Answer: Yes. 23 Question: Would it be fair to say 24 that every major product that you've worked on 25 was released with bugs? 9642 1 Answer: Yes. 2 Question: It's inevitable, isn't it? 3 Answer: It's a fact of life in the 4 software industry, yes. 5 Question: Can you explain to the jury 6 why that's true? 7 Answer: Computer software is an 8 extremely complex mechanism. It's not voodoo. 9 It's a machinery with many levers and many 10 dials and many knobs, and sometimes the gears 11 grind. The simple fact is that software is a 12 highly complex piece of machinery that has 13 evolved over time. 14 As new pieces are added or new 15 features are added, they sometimes conflict 16 with earlier components, and so it's very easy 17 to create a product that has features that 18 conflict with other features, and thus bugs are 19 born. 20 Question: When you say bug, what do 21 you mean? 22 Answer: I'm sorry. Bug is a 23 malfunction in some way of the software 24 product, of the machinery of the software 25 program. 9643 1 Question: And bugs, for lack of a 2 better term, can be minor, they can be severe. 3 Is there a whole range of types of bugs? 4 Answer: Yes, there's a standard 5 categorization scheme that has to do with 6 severity. And a severe bug will cause an 7 application or operating system to crash. A 8 minor one might be a blemish on the display 9 that you see. 10 Question: Or the product might not 11 work quite in the way that the user expects? 12 Answer: That's correct. 13 Question: Or the product might not 14 work as the documentation says it will work? 15 Answer: That's correct also. 16 Question: And that would also be 17 considered a minor bug? 18 Answer: Probably. It depends on the 19 recipient. If your product is based on some 20 other product that has a bug in it and your 21 product doesn't work, it may not be that minor 22 to you, but it may be very minor to the person 23 that developed the product you're basing it on. 24 Question: When you are considering 25 bugs, you consider not just the severity of the 9644 1 bugs but whether they affect all users or some 2 small subset of users; is that fair? 3 Answer: That is correct. That is 4 correct. 5 Question: Why is that? 6 Answer: Getting a product to market 7 is an exercise in resources, in managing 8 resources. 9 When you have X number of bugs to fix 10 and you only -- you can only fix X divided by 11 two bugs, half of those bugs in the time that 12 you have to release a product, you have to 13 choose which bugs you fix. 14 You choose those bugs based on how 15 severe they are in terms of the overall impact, 16 and you fix them based on the number of people 17 that will be affected, the number of customers 18 that will be affected. A small number of 19 customers are affected, may not be sufficient 20 enough to cause you to want to fix the bug. 21 Question: So in essence, you're 22 running a triage operation? 23 Is that a fair characterization of it? 24 Answer: Yeah, in fact that exact word 25 is used frequently, triage. 9645 1 Question: How do you make the 2 decision to release a product that even though 3 it still has bugs, it's time to release it? 4 Answer: It's a subject of great 5 debate within the industry. You have a set of 6 metrics, a number of bugs, a number of severe 7 bugs. The -- 8 Question: Can I stop you for one 9 second? 10 When you say number of bugs, you 11 typically have a list of bugs that you're 12 tracking against a product? 13 Answer: Yes. Typically, there is a 14 bug database. 15 Question: And that bug database has 16 bugs that you have discovered through internal 17 testing and bugs that you've discovered through 18 the beta test process? 19 Answer: That's correct, bugs from all 20 sources. 21 Question: Do you ever run into the 22 situation where you have bugs that were 23 generated by outside testers, by beta testers, 24 that when you turn to evaluate them, you find 25 out in fact they weren't bugs? 9646 1 Answer: Absolutely. 2 Question: Why is that? 3 Answer: The very nature of reporting 4 a bug is an exercise in opinions and in exact 5 behavior. 6 People will look at a product and 7 think that it should do X. When it does 8 something different from that, they think it's 9 a bug, even though the specification might say 10 it will do X. 11 Question: I'm sorry. I interrupted 12 you. 13 You were describing the 14 decision-making process that results in a 15 product being released even though it, of 16 course, still has bugs. 17 Answer: Yeah, the idea is that you 18 want to make sure that -- the ideal is that the 19 bug count goes to zero. How does the bug count 20 go to zero? Bugs that we can decide not to fix 21 them because they're not important enough to 22 fix or not severe enough to fix or simply, you 23 know, too minor a problem to really fix, or it 24 may even be risks inherent in doing the fix. 25 And typically, what will happen is you 9647 1 will look at the risk of introducing new bugs 2 by fixing a previous bug. And if that risk is 3 very, very high, then you decide not to fix the 4 bug even though it may be a significant bug. 5 Then you classify that bug as 6 postponed and you get your bug count to zero. 7 Once your bug count goes to zero, you ship. 8 Question: Now, the bug count being at 9 zero doesn't mean there's no bugs in the 10 product? 11 Answer: That's correct. That's 12 simply an active bug count, the bugs you are 13 considering for fixing. 14 Question: And you mentioned that even 15 when there's a severe bug you may leave it in 16 because fixing it could cause more problems. 17 What do you mean by that? 18 Answer: Basically when a bug is in 19 the central piece of code, say a tricky piece 20 of code that gets executed every time somebody 21 does something, the risk of breaking that code 22 could mean that you break the product such that 23 it doesn't work for anybody. 24 So there's a risk associated with the 25 bug fix. Every bug fix, every activity, every 9648 1 human activity has a risk associated with it. 2 Bug fixing activities are similar in 3 that the higher the risk of introducing new 4 bugs, the less you want to fix it. I don't 5 know if that answered your question or not. 6 Question: It did. 7 You then -- you take all this 8 information, and I want to talk now 9 specifically about when you were running the 10 Windows and DOS group. 11 Who would make the decision it's time 12 to release the product? 13 Answer: Generally, it was a group of 14 people; myself, Silverberg typically had last 15 say. The development lead, Tom Lennon, on DOS; 16 David Cole on Windows who was the program 17 manager. 18 Typically it's a group of people that 19 you think of as running the project. They're 20 the ones that make the decision, made the 21 decision to ship various products. 22 Question: Do you remember any 23 significant bugs in MS-DOS 5.0 as of the time 24 it was released? 25 Answer: I don't recall any specific 9649 1 bugs. 2 Question: Do you recall generally 3 that there were severe bugs or significant bugs 4 in the product when it was released? 5 Answer: Yes, I do recall there were 6 bugs in the product. 7 Question: How would you describe 8 those bugs, using the terms we've been using 9 here today? 10 Answer: There were some severe ones, 11 there were some minor bugs. I mean, it was a 12 range. Nothing stands out in my memory, 13 though, as being particularly different from 14 any other project one way or the other. 15 Question: Now, I want to back up a 16 little bit. 17 Microsoft didn't develop -- I don't 18 know whether it's PC-DOS -- should I call it 19 PC-DOS or MS-DOS for -- was it a Microsoft 20 product? 21 Answer: No, it wasn't. No, that's 22 not true, that's not true. There was some 23 MS-DOS for development that happened. 24 Question: Was that after PC-DOS 4 25 came out? 9650 1 Answer: It was concurrent with PC-DOS 2 4, but I believe we pulled back and let IBM 3 release PC-DOS 4 first. 4 Question: And then Microsoft came out 5 with MS-DOS 4.01, didn't it? 6 Answer: Yes, I believe that to be 7 correct. 8 Question: And under any definition of 9 the term, that was a very buggy product? 10 MR. STEINBERG: PC-DOS 4 or MS-DOS 11 4.01? 12 MR. HARRIS: Both. 13 Answer: Yes, both had problems. 14 Question: Severe problems? 15 Answer: Yes. 16 Question: If you would take a moment 17 to look at what's been marked as Exhibit 1107 18 and specifically the message -- I believe it's 19 message 284 that's in the middle of the page 20 there. 21 Answer: Okay. 22 Question: Is that an E-mail message 23 from Scottq addressed to you? 24 Answer: Yes, among other people, yes. 25 Question: Do you know who Scottq is? 9651 1 Answer: Scott Queen. 2 Question: Was that somebody that 3 worked for you? 4 Answer: Yes, he worked in my group. 5 Question: What was his role in your 6 group? 7 Answer: He was an engineer. He was 8 on Windows at one point and then he did move to 9 DOS. 10 Question: The subject line is DR-DOS 11 -- well, let me back up. 12 It says to dosdev. That was a group 13 of DOS developers? 14 Answer: Yes, an E-mail alias. 15 Question: An E-mail alias for a group 16 of DOS developers? 17 Answer: Yes. 18 Question: And doswar, do you know 19 what that was? 20 Answer: Yes, doswar, that war team 21 alias. 22 Question: What's the war team? 23 Answer: The war team is a concept of 24 a group of managers that get together and worry 25 about or deal with specific issues. They're 9652 1 essentially the leaders of the project. That 2 they're responsible for, among other things, 3 bug triage as well as handling any 4 extraordinary events or other issues that come 5 up. 6 Question: Were you on the doswar 7 team? 8 Answer: I believe I was. 9 Question: And can you tell me 10 anything more specifically about what the 11 doswar team did than what you just described? 12 Answer: Not really. I mean, 13 generally war teams function that way. 14 Question: So the subject on this 15 E-mail message is DR-DOS CIS message traffic. 16 Do you know what that refers to? 17 Answer: Yeah. CompuServe Information 18 Systems. This was a CompuServe news group -- 19 or chat group specifically related to DR-DOS. 20 Question: And was that something that 21 Microsoft was monitoring? 22 Answer: There were individuals at 23 Microsoft that did monitor that, yes. 24 Question: Were you one of those 25 individuals? 9653 1 Answer: From time to time, yes. 2 Question: And why would you monitor 3 that chat room? 4 Answer: Because they were a 5 competitor. 6 Question: And you wanted to learn 7 about your competitor's product? 8 Answer: That's correct. 9 Question: The message says AHEM. 10 Before we slam DR-DOS with bugs, we should be 11 aware of which ones we suffer from. In 12 particular, Super-PC-Kwik is also unsafe to 13 load high in the MS-DOS 5.0. 14 First of all, what is Super-PC-Kwik? 15 Is that a utility? 16 Answer: Yeah, I think it was a 17 caching utility. 18 Question: And do you know what Scottq 19 was referring to when he said it was unsafe to 20 load high in MS-DOS 5.0? 21 Answer: Yeah. I think it was a 22 caching utility. 23 Question: And do you know what Scottq 24 was referring to when he said it was unsafe to 25 load high in MS-DOS 5.0? 9654 1 Answer: Yeah, it would malfunction 2 under those circumstances. 3 Question: Do you know how it would 4 malfunction? 5 Answer: No, I don't. 6 Question: You just know there was a 7 problem? 8 Answer: Yes, there was a problem. 9 Question: Do you know if this was a 10 problem that DR-DOS was having too? 11 Answer: I believe so. 12 Question: Would you monitor that 13 CompuServe chat group on a regular basis? 14 Answer: Yes. 15 Question: And what would be a regular 16 basis? Weekly? Monthly? 17 Answer: Over a period of a few 18 months, I probably looked at it multiple times 19 a week, three, four maybe. 20 Question: What would you look for 21 when you monitored the discussion group? 22 Answer: Well, everything. I mean, I 23 wanted to know everything that was going on 24 with the competitor; positive things people 25 were saying, negative things people were 9655 1 saying, bugs, issues, suggestions. 2 Question: And you felt that doing so 3 would help you in your efforts to develop a 4 better DOS at Microsoft? 5 Answer: Yes. 6 Question: What was the time frame 7 which you were doing this monitoring? 8 If it's helpful to you, look at 1107. 9 In fact -- 10 Answer: Okay. I remember. 11 It was sometime shortly after the 12 release of Windows 3.0 in May, so June or July 13 through to the release of DOS 5. So that's the 14 time frame that I mentioned. 15 Question: Why during that time frame? 16 Answer: Because that's the height of 17 the DOS 5 development efforts. 18 Question: Were you monitoring any 19 discussion groups that dealt with products 20 other than DR-DOS? 21 Answer: Yes, I was monitoring the 22 Windows discussion groups. 23 Question: To get feedback on how 24 Microsoft Windows was faring in the market? 25 Answer: Yes, that's correct. 9656 1 Question: What about, did you monitor 2 the discussion groups for any DOS competitors 3 other than DR-DOS? 4 Answer: Not to my recollection. 5 Question: Were you at that time 6 concerned about DR-DOS as a competitor? 7 Answer: Yes. 8 Question: Why? 9 Answer: I'm competitive by nature. 10 Question: Were there other reasons? 11 Was it because DR-DOS was having some success 12 in the market? 13 Answer: Well, yes. 14 Question: Was it because DR-DOS at 15 that time had a product on the market that had 16 features not available in Microsoft's DOS 17 offerings? 18 Answer: Yes, that's correct. 19 Question: Do you recall as you sit 20 here today any of those features? 21 Answer: No, I actually don't. I do 22 not recall. 23 Question: Do you recall discussing 24 DR-DOS as a competitive threat with others at 25 Microsoft? 9657 1 Answer: Yes. 2 Question: Who do you recall 3 discussing that issue with? 4 Answer: Tom Lennon. I'm sure I 5 discussed it with others, but I do not recall 6 specifically. 7 Question: What about Brad Silverberg? 8 Answer: Yes, I did. 9 Question: What do you recall about 10 your discussions with Tom Lennon about DR-DOS 11 as a competitive threat? 12 Answer: How we would respond, 13 basically. How to respond, how to add features 14 to the product. 15 Question: Was there any analysis 16 being done of DR-DOS products with the intent 17 of responding to their features? 18 Answer: I'm not sure what you mean by 19 analysis. 20 Question: Were you looking at DR-DOS 21 5 to see what features it had? 22 Answer: Me personally, no. 23 Question: People in your group? 24 Answer: Yes. 25 Question: Who? 9658 1 Answer: Tom Lennon. 2 Question: Do you know if he had a 3 production release copy of it or a beta release 4 copy, do you recall? 5 Answer: I don't think he had a copy 6 of it. I do not believe he had a copy of it. 7 Question: How was he doing his 8 analysis, then, do you know? 9 Answer: He had an outside contractor 10 that was doing some analysis. 11 Question: Do you recall the name of 12 the outside contractor? 13 Answer: No. In fact, I never knew 14 the name. 15 Question: Was this something that you 16 had asked Mr. Lennon to do? 17 Answer: I don't believe I asked him 18 to do it. 19 Question: He just did it on his own? 20 Answer: I don't really recall the 21 genesis of that. 22 Question: Before the lunch break we 23 were talking about MS-DOS 5. And I believe 24 it's your testimony that it was released with 25 some bugs, just as any software product is, 9659 1 some severe and some not so severe; is that 2 correct? 3 Answer: Correct. 4 Question: What about Windows 3.0, it 5 was released by Microsoft with some bugs? 6 Answer: Yes, it was. 7 Question: Bugs that were known about 8 at the time it was released? 9 Answer: Yes. 10 Question: Some severe? 11 Answer: Yes. 12 Question: Some minor? 13 Answer: That's correct. 14 Question: And what about Windows 3.1, 15 was it released by Microsoft with some bugs? 16 Answer: Yes, I believe so. 17 Question: Some severe? 18 Answer: Yes, I believe so. 19 Question: And some minor? 20 Answer: Yes. 21 Question: If you could, would you 22 please give the jury a short version of what a 23 software development cycle looks like. 24 What's involved in a software 25 development cycle? 9660 1 Answer: Okay. Every product 2 development, every project is different, but 3 basically the ideal is that you go through a 4 process initially where there's some sort of 5 marketing requirement stated, need for the 6 product, why does the product need to exist. 7 Then there are a set of engineers or 8 technical people assigned to it. A 9 specification is generally written and that 10 specification details out detailed behavior. 11 From that specification, engineers are 12 assigned responsibility for different parts. 13 Typically at that point an 14 architecture is done that describes the major 15 components and how they will interact. 16 And then developers start working on 17 writing the code for each of the pieces that 18 they're responsible for. 19 Once the code is complete, there's an 20 integration phase where the pieces are put 21 together to see if they work. Generally they 22 don't, so there's amount of rework that goes on 23 to make the product play together, then the 24 components play together. 25 And at that point you have something 9661 1 that typically is called an alpha release, 2 which is -- sort of works, has many problems, 3 maybe doesn't have all the features completed 4 or doesn't have all the features completely 5 working, but it's close enough that people can 6 start testing against it, building test plans, 7 some limited amount, perhaps even showing some 8 limited numbers of customers. 9 Then bugs are fixed, you know, 10 features are completed, whatever. And that 11 takes you to a beta phase, beta release phase. 12 And in each beta release phase, as 13 feedback comes in, more bugs are fixed and you 14 reach convergence on what appears to be the 15 right product to ship. 16 At the end of that cycle when the bug 17 count is low enough and the customer value is 18 clearly there, you release the product. 19 Question: Is there a point in time in 20 that process where the feature set is frozen? 21 Answer: Ideally, yes. 22 Question: In practice? 23 Answer: In practice, no. Feature 24 sets are often changed. 25 Question: And more specifically, how 9662 1 would that happen at Microsoft? 2 Answer: Well, we would have a Bill 3 review, a Bill Gates review, a review of the 4 project with Bill Gates. And he will decide if 5 the product is not competitive enough or 6 doesn't meet other goals of his. That's one 7 way. 8 Other ways are the team might do a 9 similar sort of evaluation and say it's not 10 good enough, and so we'd fix it and move 11 forward. 12 Question: When you say fix it, you 13 mean change the feature set? 14 Answer: Address the deficiencies 15 typically changing the feature set, yes. 16 Question: And sometimes that would 17 involve adding new features? 18 Answer: That's correct. 19 Question: And sometimes you would 20 drop features off? 21 Answer: Yeah, but that's less likely 22 to occur. 23 Question: Why is that? 24 Answer: You don't really drop 25 features. You might just stop talking about 9663 1 them. 2 Question: And these what you called 3 -- were they referred to as Bill reviews or 4 should I call them Bill Gates reviews? 5 Answer: Internally they were Bill 6 reviews. They were called Bill reviews. 7 Question: Do you recall any of these 8 Bill reviews for the MS-DOS 5 product? 9 Answer: Not specifically, no. 10 Question: Generally? 11 Answer: Yeah, generally. 12 Question: What do you recall about 13 them? 14 Answer: They were painful. 15 Question: Why were they painful? 16 Answer: Because Bill is a very 17 forceful character and oftentimes makes things 18 very personal. 19 Question: Were these reviews that you 20 yourself would attend? 21 Answer: Yes. 22 Question: These reviews happened 23 before the product was released, didn't they? 24 Answer: That's correct. 25 Question: And the purpose of the 9664 1 review was to go over the proposed feature set 2 of the product? 3 Answer: That's correct. 4 Question: Were there other purposes 5 to the review? 6 Answer: Well, the reviews were very 7 wide-ranging in that they were feature set, 8 project status, bug lists, bug status, quality 9 status I guess is a better way of describing 10 it. Just about anything was fair game in a 11 review. 12 Question: Can you give me an estimate 13 of the number of these reviews that you 14 attended in the DOS 5 project? 15 Answer: Three, maybe four. 16 Question: What do you remember about 17 the first one? 18 Answer: I suppose you're going to 19 show me an E-mail. 20 I think there was one where I think 21 the word disaster was used a number of times, 22 referring to the IBM DOS 4 stuff. 23 Question: What did you understand 24 Mr. Gates to mean -- it was Mr. Gates -- 25 Answer: Oh, he was extremely unhappy 9665 1 with the results of the DOS 4 project or the 2 product that was shipped. 3 Question: He referred to the product 4 as a disaster? 5 Answer: I believe he did, yeah. 6 Question: And why was he -- if you 7 know, why was he telling your group that? 8 Answer: I think it's Bill Gates' 9 unique form of motivation to the group, telling 10 them that they screwed up and they have to go 11 fix the problem. 12 Question: Do you remember anything -- 13 do you remember Mr. Gates ever talking about 14 the competitive product being offered by 15 DR-DOS? 16 Answer: During his reviews, no, I 17 don't recall. 18 Question: What about at any other 19 time? 20 Answer: My recollections are that he 21 was complaining about them getting good 22 reviews, but I don't recall the circumstances. 23 I don't recall the situation. 24 Question: Complaining about the fact 25 that DR-DOS 5 was getting good reviews? 9666 1 Answer: Yes. 2 Question: Good reviews by product 3 reviewers? 4 Answer: By trade press. 5 Question: When you were brought on to 6 the -- to run the DOS 5 team, was your 7 understanding that you were to get the product 8 to market as quickly as possible? 9 Answer: Yes. 10 Question: And at least according to 11 what I've seen, the product was first announced 12 in April 1990, to be shipped, I believe, in 13 August of 1990? 14 Answer: I believe that to be the 15 case. 16 Question: But the product actually 17 didn't make it -- excuse me. 18 The product wasn't actually released 19 until some ten months later in June of 1991? 20 Answer: That sounds about right. 21 Question: I want you to take a moment 22 and just page through and look at exhibit -- 23 what's been marked as Exhibit 1109. Another 24 trip down memory lane. 25 Answer: Oh, yeah. 9667 1 (Whereupon, playing of video to the 2 jury was concluded.) 3 MR. CASHMAN: Your Honor, this would 4 be a good break for the morning recess. 5 THE COURT: Very well. Stop the tape, 6 please. 7 At this time we'll take a recess. 8 Remember the admonition previously 9 given. You can leave your notebooks here. 10 We'll be in recess ten minutes. 11 Thank you. 12 (A recess was taken from 9:51 a.m. 13 to 10:08 a.m.) 14 THE COURT: Everyone else may be 15 seated. 16 Please continue. 17 (Whereupon, the following video was 18 played to the jury.) 19 Question: In a minute I have some 20 specific questions on just two pages, but first 21 if you can just by paging through it, if you 22 can identify the document for me. That's what 23 I would like you to do. 24 Answer: Yes. 25 Question: What is it? 9668 1 Answer: This document is a postmortem 2 analysis of the DOS 5.0 project. 3 Question: What does that mean, a 4 postmortem analysis? 5 Answer: Well, an after-the-fact 6 review of the performance of the team and the 7 processes and that sort of thing. 8 Question: Do you know who MikeDr is? 9 Answer: Mike Dryfoos. 10 Question: Was he the author of this 11 report? 12 Answer: Yes, he was. 13 Question: Was that somebody that 14 worked for you? 15 Answer: Yes. 16 Question: Was this report prepared 17 under your direction? 18 Answer: Actually, no. It was 19 prepared with my blessing, but it was actually 20 undertaken by Microsoft and several of the 21 project team members. 22 Question: Okay. If you could turn to 23 page 9 of the document that's been marked as 24 Exhibit 1109, it's got Bates number 7020987. 25 Answer: Uh-huh. 9669 1 Question: Up in the history section, 2 I think it's labeled prehistory, in the first 3 paragraph it describes how the DOS 5 project 4 came together. And at the end of that 5 paragraph, it says, to provide an attractive 6 replacement for DOS 4.01. Was that MS-DOS 7 4.01? 8 Answer: Yes, I believe so. 9 Question: Eliminating the quality 10 problems and the poor user and industry 11 perception of the latter. 12 Was that your understanding of how the 13 project came together? 14 Answer: Yeah. Yes. 15 Question: Now, down at the bottom of 16 the page, it talks about the early stages of 17 the development of DOS 5. 18 And it says in the last sentence, the 19 development spec was largely complete by the 20 end of December. The schedule projected coding 21 would be complete by the end of March and the 22 product ready for final release in early 23 August. 24 At what point did you enter into the 25 project? 9670 1 Answer: Well, the project -- the team 2 always reported to me during all of this period 3 of time. It wasn't until May, I believe, that 4 I really took an active role. 5 Question: And that was because you 6 had finished with Windows 3.0 at that time? 7 Answer: That's correct. 8 Question: If you would turn to the 9 next page, page 10 of Exhibit 1109, right 10 before the title changing product -- changing 11 schedule -- well, let me stop right there. 12 Do you have an understanding of what 13 the author meant in changing product, changing 14 schedule? 15 Answer: Well, not in the specific 16 case. In general, this just simply means that 17 when you change the product it takes longer. 18 When you change the product definition, it 19 takes longer. 20 Question: When you start adding 21 features in the middle of the development 22 cycle? 23 Answer: Correct. 24 Question: It lengthens the 25 development process? 9671 1 Answer: That's correct. 2 Question: Well, if you jump ahead to 3 page 15 and you look at the section inadequate 4 specifications, if you could just take a minute 5 and read the first three paragraphs of that 6 section and tell me when you're done. 7 Answer: Okay. 8 Question: Would it be fair to say 9 that the slippage in the schedule from an 10 original projected release date of August 1990 11 to an actual release date of June '91 was due 12 principally to changes in the feature set? 13 Answer: I'd say that that is a major 14 component to that slip. 15 Question: What were the other 16 components, if you recall? 17 Answer: Well, I think the quality. 18 He mentions it here, but the fact is that the 19 quality, the base that they were starting from, 20 had many problems too. 21 Question: Was the starting point 22 actually the DOS 4 code base? 23 Answer: Yeah, it was. 24 Question: So not only was the 25 addition of features necessary -- well, the 9672 1 addition of the features in this changing 2 feature set, but there was also the problem of 3 having buggy code to start with? 4 Answer: Yes. 5 Question: One of the most important 6 stimulants for adding new features was the 7 competitive pressure from DR-DOS, wasn't it? 8 Answer: It was a stimulus. 9 Question: Well, turn with me to page 10 10 back to the section changing product - 11 changing schedule. 12 Answer: Uh-huh. 13 Question: And the end of the first 14 paragraph there it says, one of the most 15 important stimulants for adding features was 16 competitive pressure from DR-DOS 5.0, which we 17 first learned of in the spring of 1990. The 18 DR-DOS feature set led us to add UMB support, 19 task swapping and undelete. 20 Answer: Uh-huh. 21 Question: Is that an accurate account 22 of what happened? 23 Answer: I think so, yes. 24 Question: And where it says the 25 DR-DOS feature set led us to add UMB support, 9673 1 task swapping and undelete, is that one of the 2 results of your analysis of what DR-DOS was 3 offering at the time? 4 Answer: Yes. 5 Question: Other than this change in 6 the feature set stimulated in large part by 7 competitive pressures from DR-DOS, do you have 8 any other explanation for the ten-month slip in 9 the schedule in the release of DOS 5? 10 Answer: Well, a new disk cache 11 utility, SMARTDRV, was added. And that took 12 much longer to do than was anticipated just 13 because of the fact that it had the potential 14 of damaging the user's hard disk if done 15 incorrectly. 16 Question: When was that introduced, 17 if you recall? 18 Answer: I think in the fall. I think 19 in the fall of '90, maybe late summer. In that 20 time frame. 21 22 Question: I'll ask the question this 23 way. 24 Did you first turn your full attention 25 to the project in May 1990? 9674 1 Answer: Approximately in that time 2 frame. 3 Question: Following the completion of 4 Windows 3.0? 5 Answer: Yes. 6 Question: And hopefully a short break 7 afterwards? 8 Answer: Yes. 9 Question: Was there -- what was the 10 status of the project at that time? 11 Answer: I think it was in trouble. 12 It was in trouble. 13 Question: What do you mean in 14 trouble? 15 Answer: The schedules had not been 16 really well thought through. There was a lot 17 of engineering work that had to be done; 18 testing, test plans. 19 There was no beta test plan. There 20 was just a lot of stuff that needed to be done. 21 A lot of activities that needed to be completed 22 in order to ship a product that had not even 23 been completed, not even been started at that 24 point. 25 Question: Did you communicate your 9675 1 views that the project was in trouble to 2 anybody else? 3 Answer: Yeah. I had discussions with 4 Silverberg as well as Tom Lennon and a few 5 other people. 6 Question: What did you tell them? 7 Answer: Well, that the schedule was 8 wrong, we needed to rethink the schedule. And 9 features were coming in, new features were 10 being added. And as a result of Bill Gates 11 reviews features get added, as well as Steve 12 Ballmer and Brad Silverberg got their licks in, 13 so to speak. 14 Question: And in May of 1990, 15 features were still being added to DOS 5? 16 Answer: Oh, absolutely, yes. 17 Question: And that continued on until 18 when? 19 Answer: Probably early fall, mid 20 fall. 21 Question: And once that process 22 stopped, you still had to finish all the coding 23 and testing and beta testing -- 24 Answer: That's correct. 25 Question: -- before the product could 9676 1 be released? 2 Answer: That's correct. 3 Question: Did Mr. Silverberg, 4 Mr. Gates, or anyone else ask you in May 1990 5 if you had a more realistic schedule to 6 propose? 7 Answer: I don't know the answer to 8 that question. It could have been but more 9 likely wasn't. 10 Question: Did you develop what you 11 thought was a more realistic schedule at that 12 time? 13 Answer: Maybe not in May. June or 14 July would have been the time frame. 15 Question: June or July would have 16 been the time frame in which you would have 17 developed a more realistic schedule? 18 Answer: Yeah. There was a series of 19 meetings, now that I think about it. That 20 document reminded me. 21 There was a series of meetings that 22 were about getting our act together on DOS, 23 getting the feature set nailed down, getting 24 the schedule nailed down, project plans, all 25 that sort of thing. 9677 1 That came out of the result of a 2 conversation that I had with Brad Silverberg 3 probably -- that was probably the first major 4 thing that he did when coming -- after coming 5 on board, which I believe was early July, I 6 think. I think he joined after the 4th of July 7 holiday. 8 And so one of the first things, one of 9 the first conversations we had about was DOS 5 10 is in trouble and there needs to be a lot of 11 replanning. And so he basically encouraged a 12 replanning exercise. 13 Question: Did you have any belief at 14 that time that DOS 5 would be released to the 15 market by August of 1990? 16 Answer: In that time frame, no, I did 17 not believe that. 18 Question: Did you believe that it 19 could have been released, DOS 5 could have been 20 released -- I'm still talking about in May of 21 1990 when you turned your full attention to 22 this product -- that it would be released by of 23 the end of September 1990? 24 Answer: I honestly don't know what I 25 was thinking in May. I don't recall what I was 9678 1 thinking in May. 2 Question: Do you recall what you were 3 thinking in June or July when you developed a 4 more realistic schedule? 5 Answer: Well, in July it was pretty 6 clear that we weren't going to make September. 7 That was a shared view of the team. 8 Question: And did you have a view of 9 what a more realistic release to manufacturing 10 date -- or I'm sorry, release date would be? 11 Answer: Release to manufacturing is a 12 correct term. 13 I don't recall. I'm pretty sure we 14 had a realistic view -- what we believed to be 15 a realistic view. I don't know what the date 16 was, though. 17 Question: I'm going to give you what 18 was previously marked as Exhibit 822, 19 thankfully a shorter document. 20 Answer: Okay. 21 Question: It's an E-mail from, is it 22 Russ Werner? 23 Answer: That's correct. 24 Question: To Bill Gates and Steve 25 Ballmer? 9679 1 Answer: That's correct. 2 Question: It says, I have asked Phil 3 Barrett to spend a lot of time making DOS 5 4 happen fast, is the subject. 5 This is what we were discussing 6 earlier when you turned away from -- after the 7 completion of Windows 3.0 and focused on DOS 8 5.0? 9 Answer: Yes, that's correct. 10 Question: And it says, given the 11 aggressive stance taken by DRI this week, I 12 have asked Phil Barrett -- Philba -- to spend 13 more of his time on DOS 5 than on Win 3.1 14 planning, like 60 to 70 percent, to make sure 15 this product happens as fast as it can. 16 Was that your understanding at the 17 time, that it was the aggressive stance that 18 was taken by DRI that was motivating this 19 focus? 20 Answer: Yes. 21 Question: And it says, we are also 22 planning some extensive PR around our beta ship 23 in about three weeks to get across the message 24 that the product is a now thing versus a later 25 thing. 9680 1 Why was that important? 2 Answer: Digital Research was making 3 -- as it mentions in there, making a lot of 4 noises about DOS 5 being vaporware. 5 Question: So it was important to let 6 the market know that DOS 5 wasn't vaporware? 7 Answer: Yes. 8 Question: And one way to do that was 9 to let the market know about the beta that was 10 shipping in about three weeks? 11 Answer: I think that's one 12 interpretation, but I think the correct 13 interpretation was to make noise about the beta 14 when it shipped. That's typically the case. 15 Question: I stand corrected. 16 Wasn't there a beta that was shipped 17 sometime shortly after that? 18 Answer: I don't recall when that beta 19 shipped. 20 Question: Sometime in the summer? 21 Answer: But there was a beta that 22 shipped. 23 Question: Yeah, in the summer of 24 1990? 25 Answer: In the summer, yeah. 9681 1 Question: Did that beta have the 2 features in it that eventually showed up in the 3 product that was released in June '91? 4 Answer: Oh, boy. 5 Question: It couldn't have, could it? 6 The feature set was still being changed through 7 the fall of 1990. 8 Answer: It had some of the features. 9 It did not have all of the features of the file 10 in release of the file. 11 Question: I want to jump back in time 12 to 1988. 13 Answer: Okay. 14 Question: You're at Microsoft. 15 You're responsible for the Windows and DOS 16 development, correct? 17 Answer: Correct. 18 Question: Actually, start in 1989 and 19 work our way backwards. 20 I'll give you what was previously 21 marked as Exhibit 23. After you've had a 22 moment to look at it, tell me, and I've just 23 got a few questions. 24 Answer: Okay. 25 Question: Do you recognize that as a 9682 1 memo from Bill Gates addressed to, among 2 others, you? 3 Answer: Yes, that's correct. 4 Question: In November of 1989? 5 Answer: Yes. 6 Question: Is it fair to say that Bill 7 Gates wasn't very happy with Microsoft's DOS at 8 that point in time? 9 Answer: Yes, that's fair to say. 10 Question: It says in the first 11 paragraph, the widespread belief that DOS 4 12 offers no real benefits, might have bugs, takes 13 more memory and breaks things like redirectors 14 has increased the piracy of DOS and made it 15 more difficult to sell. 16 People selling DOS add-ons have been 17 doing excellent business. DR-DOS is, quote, as 18 good as, closed quote, our DOS so we get into 19 purely price oriented negotiations. 20 Is that a fair summary of the state of 21 Microsoft's DOS at that time? 22 Answer: I agree. 23 Question: You have before you what's 24 been previously marked as Exhibit 7. 25 Answer: Okay. 9683 1 Question: You see in the middle of 2 the page there on the first page of Exhibit 7, 3 there's an E-mail or what appears to be an 4 E-mail from Billg, Bill Gates, and it's 5 addressed to a few people, and you were copied 6 on it; is that correct? 7 Answer: Yes, that's correct. 8 Question: And the subject is DR-DOS? 9 Answer: Yes. 10 Question: The date is September 22, 11 1988, and it says, you never sent me a response 12 on the question of what things in app would do 13 that would make it run with MS-DOS and not run 14 with DR-DOS. 15 Do you know, first of all, why you 16 would have been copied on this message? 17 Answer: Yeah, because those guys 18 worked for me. Well, Tom Lennon worked for me. 19 Question: Do you recall receiving 20 this message? 21 Answer: Vaguely, yes. 22 Question: And do you know what 23 Mr. Gates meant when he said you never -- well, 24 in that first sentence there? 25 Answer: I think it's fairly 9684 1 self-explanatory. I don't know of anything 2 beyond that. 3 Question: That when it says what 4 things in app, is that a reference to an 5 application? 6 Answer: Yes, that's right. An app is 7 typical Microsoft shorthand for application. 8 Question: And that would be a 9 reference to a Microsoft application in this 10 context? 11 Answer: I honestly don't know. 12 Question: You don't recall discussing 13 this message with anybody? 14 Answer: I don't recall. 15 Question: It's addressed Pascalm, 16 which is -- who is that? 17 Answer: Pascal Martin. 18 Question: Pascal Martin and Russ 19 Werner and Tom Lennon? 20 Answer: Correct. 21 Question: Did any of the three of 22 them come to you and discuss this message? 23 Answer: Sorry, I just don't remember 24 the circumstances. 25 Question: What about this subject 9685 1 generally, the subject of what things an 2 application would do that would make it run 3 with MS-DOS and not run with DR-DOS? 4 Do you recall discussions at Microsoft 5 about that subject? 6 Answer: I recall generally that there 7 were discussions about that, yes. 8 Question: In this time frame in 1988? 9 Answer: It could have been that time 10 frame, it could have been later. 11 Question: You can't pin it down? 12 Answer: I can't nail it down. 13 Question: What do you remember about 14 the discussions? 15 Answer: They were fairly esoteric 16 discussions of what sort of things, device 17 driver chains, and memory blocks and that sort 18 of thing, function calls, minutia of the 19 possibilities and the differences between 20 MS-DOS and DR-DOS. 21 Question: Were you looking at any 22 products other than DR-DOS when you were 23 discussing this issue of what things an 24 application would do that would make it run 25 with MS-DOS and not run with some other 9686 1 operating system? 2 Answer: Yeah, there were -- there are 3 several other operating systems and I don't 4 know if they came up in the context of this or 5 they came up in just the general context of 6 competitors, but there were other operating 7 systems clones, if you will, that were 8 discussed. 9 Question: Clones that were discussed 10 generally? 11 Answer: Generally. 12 Question: You don't recall any 13 discussions, do you, of what can we do to our 14 applications to make it so they don't work with 15 some clone other than DR-DOS? 16 Answer: Sorry. No, the answer is no. 17 Question: This is what was previously 18 marked as Exhibit 36, and specifically what I'm 19 interested in, Mr. Barrett, is the E-mail that 20 starts there on the top half of the first page. 21 Answer: Okay. 22 Question: Do you recognize that 23 E-mail message? 24 Answer: Yes, I recognize it. 25 Question: Who is it from? 9687 1 Answer: I don't recall the name of 2 the person, Percyt. Percy somebody. 3 Question: It's addressed to you, and 4 I'm reading in the center of the page there on 5 the first page of Exhibit 36. 6 It says, last Thursday you asked me 7 for a user's view of DR-DOS 5.0. 8 Do you recall asking -- 9 Answer: I don't recall asking. It's 10 a very frequent question that I ask people. If 11 somebody says they know something about a 12 competitor, I say, give me a Cordone, tell me 13 everything you know. 14 Question: And in this case, is it 15 your understanding that that's what this 16 message is from Percyt to you? 17 Answer: Yes. 18 Question: And you took the message, 19 and it appears that you forwarded it to the DOS 20 war group? 21 Answer: That's correct. 22 Question: And why did you do that? 23 Answer: Because this is information 24 that is incredibly valuable from a competitive 25 stance. 9688 1 Question: If you turn to the third 2 page, you see Percyt's conclusion. It says, 3 DR-DOS 5.0 is vastly superior to MS/PC-DOS 3.31 4 and 4.01. It is about as good as MS-DOS 5.0. 5 Would you agree with both of those 6 statements? 7 Answer: Not in tone. I'm recalling 8 this guy was a fairly wild-eyed guy. 9 Clearly 5.0, DR-DOS 5.0 was superior 10 to 3.31 and 4.0. 11 Question: So it's the vastly 12 adjective that you don't like? 13 Answer: I'm not even sure superior. 14 I would say better than. But in terms of 5.0, 15 yeah, it would probably be fair to call them a 16 wash. 17 Question: Just to make sure I 18 understand your testimony, it's that DR-DOS 5 19 was a better product than MS/PC-DOS 3.31 and 4? 20 Answer: Yes. 21 Question: And that it was a wash or 22 it was comparable to MS-DOS 5? 23 Answer: Yes. 24 Question: It did come to market about 25 a year sooner than MS-DOS 5, didn't it? 9689 1 Answer: That's my recollection. 2 Question: This is what has been 3 marked as Exhibit 1114. And I'm interested 4 only in the message that begins in the middle 5 of the first page of Exhibit 1114. It's got a 6 604 at the start, do you see that? 7 Answer: Oh, right there. Yeah, okay. 8 Question: And then it carries forward 9 to where the 605 is on the next page, and I 10 will only ask about the message. 11 Have you had a moment to read that? 12 Answer: Okay. I've read that piece 13 of E-mail. 14 Question: Can you identify that as a 15 string of E-mail between you and Brad 16 Silverberg? 17 Answer: Yes. 18 Question: Now, if I'm going to read 19 this in the order it happened, it's my 20 understanding I start at the end and work my 21 way up? 22 Answer: In this case, yes. 23 Question: So on the second page of 24 what's been marked as Exhibit 1114, the first 25 message in the string is from Brad Silverberg 9690 1 to you; correct? 2 Answer: Yes. 3 Question: And the subject is DR. Is 4 it your understanding that's Digital Research? 5 Answer: Yes. 6 Question: It says, can you tell me 7 specifically what we're going to do to bind 8 ourselves closer to MS-DOS? Since you haven't 9 been replying to my messages, I don't know how 10 to interpret your silence. 11 Answer: Interprety. 12 Question: Interprety your silence. 13 Let me emphasize the importance; IBM 14 is going to announce the DR-DOS deal at COMDEX 15 (almost 100 percent certain.) Okay? 16 Can you explain to me what he was 17 talking about there? 18 Answer: It's fairly self-explanatory. 19 He had been asking me to determine how we were 20 going to bind our products closer to DR-DOS. 21 Question: To MS-DOS? 22 Answer: I'm sorry, MS-DOS. 23 One of these days I'll get it right. 24 To MS-DOS. 25 He wanted a plan from me, and I hadn't 9691 1 gotten it back to him. 2 Question: And what does the fact that 3 IBM is going to announce the DR-DOS deal at 4 COMDEX have to do with any of this? 5 Answer: Well, I don't recall what he 6 was -- I don't recall what was being discussed 7 there on that one. I think just being able to 8 know our plans with respect to DR-DOS was 9 important. 10 Question: And part of those plans 11 involved tying your products closer to MS-DOS? 12 Answer: I believe that's what the 13 E-mail says. 14 Question: But is that your 15 recollection? 16 Answer: Yes. 17 Question: And part of the reason that 18 there was concern at this time was the concern 19 that IBM was going to announce a deal with 20 DR-DOS at COMDEX? 21 Answer: Uh-huh. 22 Question: Is that a yes? 23 Answer: Yes. Sorry. 24 Question: It's just for her, okay. 25 Now, we go to the next E-mail, working 9692 1 our way toward the front page of Exhibit 1114. 2 And that's your response to Mr. 3 Silverberg, isn't it? 4 Answer: Correct. 5 Question: Starts with an apology for 6 the silence. 7 And then it goes on to say, the 8 approach that Ralph and I have discussed is to 9 use a VXD to extent DOS by patching it. 10 Can you explain what you meant there? 11 Answer: Yeah. VXD is a virtual 12 device driver which sits inside the virtual 13 machine manager portion, the 32-bit portion of 14 the system. 15 Typically, what happens is you can 16 extend DOS by putting these little -- they're 17 called -- using break point registers or 18 illegal instructions in 8086 mode. 19 And when a program that's executing 20 along hits those, it will have -- basically get 21 control transferred down to the virtual machine 22 manager. So the virtual machine manager can do 23 something, whatever it is. 24 So this is a way of adding features, 25 this is a way of extending DOS, and I use the 9693 1 term in quotes, so that you can add new 2 features. 3 For example, and I'm only speculating 4 here, but this is how one would implement a 5 better file system, by causing an exception or 6 basically gaining control on entry to the file 7 system code of DOS. 8 So that when a program does a file 9 open instead of actually executing DOS code, it 10 will transfer control down into the virtual 11 machine manager and execute in 32-bit code and 12 go faster or whatever, whatever could be done 13 to make it better. 14 So that's the basic idea that Ralph 15 and I had discussed. 16 Question: This virtual machine 17 manager at that time was part of Windows? 18 Answer: Yes, part of Windows 3.0 and 19 to be part of Windows 3.1. 20 Question: So it was a way not only to 21 tie MS-DOS and Windows more closely together, 22 but it was also a way to improve performance? 23 Answer: Yes, that's correct. 24 Question: I'll hand you what's been 25 marked as 1115. 9694 1 I'm interested only in the message 329 2 in the middle of the page. 3 Answer: Uh-huh. 4 Question: Have you had a chance to 5 read that? 6 Answer: Yes. 7 Question: Do you recognize that as an 8 E-mail from David Cole addressed to you and to 9 Karl -- 10 Answer: Stock. 11 Question: Stock. 12 September 1991? 13 Answer: Yes. 14 Question: And at the end of the first 15 paragraph after describing -- well, I'll be 16 more accurate. 17 It says, it's pretty clear we need to 18 make sure Windows 3.1 only runs on top of 19 MS-DOS or an OEM version of it. 20 And then goes on, describes what he's 21 done, and at the end, he says, we are supposed 22 to give the user the option of continuing after 23 the warning. However, we should surely crash 24 at some point shortly later. 25 What is he talking about there? 9695 1 Answer: I think it's fairly 2 self-explanatory. 3 Question: What is he suggesting? 4 Answer: Well, which part? 5 Question: The part where he says, we 6 should surely crash at some point shortly 7 later. 8 Answer: He is saying that Windows 3.1 9 should crash if it finds that it's not running 10 on MS-DOS or OEM versions thereof. 11 Question: And do you recall 12 discussing this issue with David Cole? 13 Answer: Yes. 14 Question: What do you recall about 15 those discussions? 16 Answer: I was in opposition. 17 Question: You thought it was a bad 18 idea? 19 Answer: Yes. 20 Question: Why? 21 Answer: Because I thought it was bad 22 for our customers. 23 Question: Why? 24 Answer: That a Microsoft product 25 crashed. 9696 1 Question: Deliberately? 2 Answer: Deliberately or not, it's bad 3 for our customers when a product crashes. 4 Question: But it would only crash for 5 those customers that were running something 6 other than MS-DOS; correct? 7 Answer: Correct. 8 Question: And you still thought it 9 was a bad idea? 10 Answer: Yes. 11 Question: Down in the second 12 paragraph, it says, maybe there are several 13 very sophisticated checks so the competitors 14 get put on the treadmill. 15 Do you know what he meant by that? 16 Answer: The concept of a treadmill is 17 to force -- yes, the competitors -- the goal 18 would be to get the competitors to continually 19 have to upgrade their products. 20 Question: And at the end, it says, 21 the less people know about exactly what gets 22 done, the better. 23 Do you know why he was suggesting 24 that? 25 Answer: I think that's fairly 9697 1 self-evident. 2 Question: Tell me -- 3 Answer: I don't know what he was 4 thinking there. 5 Question: What's your understanding 6 of why it would be better for less people to 7 know exactly about what gets done? 8 Answer: I could only speculate what 9 he's thinking about. 10 Question: Well, what did you think he 11 meant when you read this? 12 Answer: I thought he meant that it 13 was a bad idea and people would think badly of 14 Microsoft if they knew about it. 15 Question: Did you talk to anybody 16 else about this idea besides David Cole? 17 Answer: I think I mentioned, and this 18 is coming back now -- yes, I also mentioned 19 that I thought it was a bad idea to Silverberg. 20 Question: And what was Mr. 21 Silverberg's reaction? 22 Answer: I think he just nodded and 23 acknowledged hearing me. 24 Question: Did you have any 25 discussions with anybody else about this idea? 9698 1 Answer: I may have, but I don't 2 recall who. 3 Question: This message was sent in 4 September 1991 which coincides with the release 5 of DR-DOS 6. Is that what prompted this 6 concern? 7 Answer: No, I don't know. I don't 8 recall. 9 Question: Do you recall generally in 10 September of 1991 concern about the release of 11 DR-DOS 6 at Microsoft? 12 Answer: Yeah, generally people were 13 concerned about it. 14 Question: Why? 15 Answer: Because a competitor -- well, 16 if nothing else, it was about they were a 17 number ahead of us. They were on 6 and we were 18 still waiting on 5, or we had just released 5, 19 I guess. Is that right? Yeah, we just 20 released 5. 21 Question: 5 had come out in June of 22 1991? 23 Answer: Right, so they were now a rev 24 ahead of us. 25 Question: Besides the numbering 9699 1 scheme, were there other concerns about the 2 release of DR-DOS 6? 3 Answer: I think there were feature 4 concerns, but I don't recall the specifics. 5 Question: When you say feature 6 concerns, you mean -- 7 Answer: That they had more features, 8 I'm sorry. 9 Question: They had new features that 10 Microsoft's DOS didn't have at that time? 11 Answer: Correct. 12 Question: Mr. Barrett, if you could 13 take a look at what's been marked as Exhibit 14 1116, and if you could just look at the first 15 two pages for now and tell me whether you can 16 identify this as additional information that 17 you gathered in your monitoring of the DRI CIS 18 forum. 19 Answer: Yes, it is the E-mail message 20 297. 21 Question: And it starts on the bottom 22 of the first page of 1116? 23 Answer: Correct. 24 Question: And carries forward. 25 And then if it's possible for you to 9700 1 do, to flip through and look, are these the 2 actual messages out of the forum itself? Is 3 that what the dashed line down the side and the 4 addressing that you see in there indicates? 5 Answer: Yes. It appears to be that, 6 the actual messages from the CompuServe forum, 7 DR-DOS forum. 8 Question: And again, these are 9 messages that you retrieved in your monitoring 10 of the forum? 11 Answer: Correct. 12 Question: And if you look at page 2, 13 your message which is April 16, '91, it says, 14 here is the latest dirt from the CIS DRI forum. 15 And you mention some problems, and 16 then it says, also, somebody should be 17 whispering in journalists' ears to look at this 18 stuff. 19 What did you mean when you said that? 20 Answer: Well, any journalist that is 21 reviewing a product or comparing the two 22 products should have all the information. And 23 there's lots of problems, there are bugs. The 24 autoCAD bug is one, autoCAD issues. 25 There are a number of problems that 9701 1 should have been -- that frankly would -- at 2 that time there was a perception that the 3 publishing -- that basically the publications 4 were favoring DR-DOS over MS-DOS unfairly. 5 Question: And that's because DR-DOS 6 was getting good reviews? 7 Answer: Among other things. 8 Question: What are the other things? 9 Answer: Well, and the fact that as I 10 recall, there were cases where the journalist 11 ignored some of the features of MS-DOS, and in 12 general we felt the tone was definitely not a 13 fair tone. 14 Question: You thought you weren't 15 getting a fair shake in the press? 16 Answer: That's a fair statement, yes. 17 Question: And was it troubling that 18 DR-DOS was receiving awards? 19 Answer: Troubling to whom? 20 Question: To you. 21 Answer: Yes, it bothered me. 22 Question: Why? Because they were 23 your competitor? 24 Answer: Yeah, because they were a 25 competitor. 9702 1 Question: Any other reasons? 2 Answer: Not that I can think of. 3 Question: Was it troubling to 4 Mr. Silverberg? 5 Answer: Yes. 6 Question: For the same reasons? 7 Answer: You'd have to ask him 8 specifically, but it was troubling to him, Brad 9 Silverberg. 10 Question: You know that from your 11 conversations with him? 12 Answer: Yes. 13 Question: Now, you were provided a 14 number of documents where there were a lot of 15 discussions about ways of having DR-DOS be 16 incompatible. Do you remember seeing several 17 of those E-mails? 18 Answer: Yes. 19 Question: As someone in charge of the 20 MS-DOS and Windows development, do you know in 21 any release of MS-DOS, was there any way of -- 22 any code meant to hinder DR-DOS? 23 Answer: I know of no cases where code 24 was added to a Microsoft product to hinder 25 DR-DOS. 9703 1 Question: What about for Windows? 2 Are you aware of -- in any of the Windows 3 products that you worked on, are you aware of 4 any code being added to hinder DR-DOS in any 5 released product? 6 Answer: I know of no code added to 7 released products to hinder DR-DOS. 8 Question: Now, you talked a little 9 bit about, in response to some earlier 10 questions, about integration between Windows 11 95, between the DOS elements of it and 12 graphical user interface in that product? 13 Answer: Uh-huh. 14 Question: Did you ever work actually 15 on Windows 95? 16 Answer: No, I didn't. 17 Question: Have you poked around at 18 the code in Windows 95? 19 Answer: I have not actually 20 disassembled or decompiled Windows 95 code. 21 Question: Have you gone into it to 22 see how it works and how the elements of the 23 DOS kernel interact with the interface or the 24 virtual machine manager or any of those 25 elements of the -- 9704 1 Answer: Not Windows 95. I've read, 2 and some basic understandings of how it works. 3 Question: There was a discussion 4 about whether the installation, the fact of a 5 single install had some value to an end user. 6 Do you recall that discussion? 7 Answer: Yes, I do. 8 Question: Do you think there is a 9 significant value in having an end user be able 10 to install a DOS and GUI component in one 11 setup? 12 Answer: Yes, there's some value to 13 it. 14 Question: Would you say it's -- was 15 it something that you thought important? 16 Why is it a value to the end user? 17 I'll withdraw the question. 18 Answer: It's a value to the end user 19 because it simplifies the process of installing 20 two products. You only install one instead of 21 two. 22 Question: When you draft code to 23 install one product rather than two, is it just 24 something you put together or is it a complex 25 task? 9705 1 Answer: It's more complex installing 2 two products at the same time than it is to 3 install each of those products separately. 4 Question: Why is that? 5 Answer: Because there is more complex 6 interactions and that sort of thing. It just 7 is. 8 Question: Do you know if there is a 9 new DOS kernel in the Windows 95 product? 10 Answer: I don't know the answer to 11 that. 12 Question: Do you know what elements 13 of MS-DOS, actual physical elements of the 14 original code, remain in Windows 95? 15 Answer: No, I don't. 16 Question: Long file name support 17 could have been implemented without putting DOS 18 and Windows together in the same product, 19 couldn't it? 20 Answer: That's true. 21 Question: And the way that DOS boxes 22 process DOS programs for Windows 95 could have 23 been implemented without tying the two products 24 together too, couldn't it? 25 Answer: I believe that to be true. 9706 1 Question: And in fact, even the 2 single installation program could have been 3 implemented by somebody as skilled as you who 4 could have written an install program for DOS 5 that gave you an option at the end that would 6 have kicked off and installed Windows, couldn't 7 it? 8 Answer: That's true. That's not 9 particularly good integration, but that is 10 true. 11 THE COURT: Very well. 12 We will take our lunch recess at this 13 time until 12 noon. 14 Remember the admonition previously 15 given. You can leave your notebooks here. 16 See you then. 17 (A recess was taken from 10:58 a.m. 18 to 11:59 a.m.) 19 (The following record was made out of 20 the presence of the jury.) 21 MS. CONLIN: Your Honor, when would 22 you like to take up this motion with respect to 23 the instruction to be given with respect to the 24 1995 consent decree? 25 THE COURT: When can you guys be ready 9707 1 to talk about it? 2 MR. TULCHIN: Your Honor, I guess we'd 3 be happy to do it either at 3 o'clock or 8 4 tomorrow, whichever is best for the Court. 5 THE COURT: We'll do it at 3. 6 MS. CONLIN: Thank you, Your Honor. 7 If I should -- I don't think I'm going 8 to reach that today, but if I should, I'll just 9 skip over it and come back. 10 THE COURT: Oh, okay. 11 MS. CONLIN: Your Honor, I wonder if 12 we might approach just for a little moment. 13 THE COURT: Well, the jury is coming 14 in. 15 MS. CONLIN: Okay. 16 THE COURT: Is it something we need to 17 take outside of the presence of the jury? 18 MS. CONLIN: I just wanted to mention 19 to the Court that we'll be offering some 20 exhibits pursuant to McElroy versus State to 21 explain subsequent conduct. 22 THE COURT: At that point, we'll go 23 outside the presence of the jury. 24 MS. CONLIN: Okay. 25 (The following record was made in the 9708 1 presence of the jury at 12:03 p.m.) 2 THE COURT: Everyone may be seated. 3 Plaintiffs call your next. 4 MS. CONLIN: Thank you, Your Honor. 5 Glad to be back. 6 We would call David Bradford. 7 THE COURT: Approach and be sworn. 8 DAVID BRADFORD, 9 called as a witness, having been first duly 10 sworn, testified as follows: 11 THE COURT: Please have a seat, sir, 12 and adjust the microphone as you wish. 13 DIRECT EXAMINATION 14 BY MS. CONLIN: 15 Q. Good afternoon. Would you tell us 16 your name, please. 17 A. David Bradford. 18 Q. And where do you live? 19 A. I live in Newport Beach, California. 20 Q. Were you the general counsel of Novell 21 for about 14 years between 1985 and 2000? 22 A. Yes, I was. 23 Q. What is your current occupation? 24 A. I'm CEO of a prepaid debit card 25 company by the name of The Onli Card. 9709 1 Q. Do you want to tell the jury what that 2 is? 3 A. Well, sure. We hope everybody in the 4 courtroom eventually gets one. 5 But it's a company that competes 6 against companies like Citibank and large 7 financial institutions that gives you great 8 cash rewards for use of your spending card. 9 So it's a prepaid card or a debit card 10 that you might get from your local banking 11 institution labeled under our name, The Onli 12 Company. 13 Q. And the Onli means? 14 A. The only card you ever need. The only 15 card in your wallet, et cetera. 16 Q. All right. When did you accept that 17 position? 18 A. It was June of last year. 19 Q. Of 2006? 20 A. That's correct. 21 Q. And when did you start working for 22 Novell? 23 A. It was October of 1985. 24 Q. What was your position when you joined 25 Novell? 9710 1 A. Initially, I was corporate counsel for 2 the company and eventually became general 3 counsel and senior vice president for the 4 company. 5 Q. Are those the titles that you had 6 throughout your service? 7 A. Yeah, senior vice president and 8 general counsel was for the most part, and 9 secretary to the corporation. 10 Q. As senior vice president and general 11 counsel and secretary to the corporation, what 12 did you actually do? 13 A. Well, over the years, I had a number 14 of responsibilities. 15 Certainly I had the traditional legal 16 department that reported into me a series of 17 lawyers and so forth from all over the world, 18 really, and I also had government relations. 19 That was a group that interacted with 20 government officials around the world on 21 various matters involving copyright law, 22 intellectual property, those sorts of things. 23 I had another group by the name of the 24 security group. We maintained the physical 25 security of the Novell plant, the Novell 9711 1 facility, and it also had as part of its 2 responsibility, an antipiracy job, which was to 3 curb the theft of intellectual property from 4 Novell and other companies generally in the 5 software industry. 6 So the traditional legal function, the 7 government relations group, the security 8 organization. 9 And I also for a two-year stint in the 10 mid '90s had responsibility for business 11 development for the company. That included 12 strategic relationships with various companies 13 around in the computer industry. 14 Q. How big was Novell during this time 15 frame? 16 A. In 1995, shortly after our acquisition 17 of WordPerfect corporation, the company was 18 approximately 2 billion in annual revenue and 19 about 9,000, 10,000 employees on a worldwide 20 basis. 21 When I joined the company in 1985, it 22 was doing 70 million in annual revenue and then 23 grew over time. 24 Q. Do you happen to remember about how 25 many employees in 1985 when you joined the 9712 1 company? 2 A. There were roughly 200, 250 employees 3 when I joined the company. 4 Q. So during this time frame, rapid 5 growth? 6 A. Rapid growth during the late '80s and 7 early '90s in particular for Novell. 8 Q. All right. As a part of your 9 responsibilities, did you have mergers and 10 acquisitions? 11 A. Yes, specifically. 12 Q. Tell the jury, if you would, how many 13 such transactions there were and how many you 14 participated in. 15 A. Well, if you're talking about just 16 specifically mergers and acquisitions, we 17 probably in my 14 years there, we probably 18 looked at at least a hundred different 19 potential acquisitions for the company. 20 Probably 15 or so of which were 21 actually brought to fruition for the company. 22 Q. In terms of government relations, in 23 that capacity, did you play a role on behalf of 24 Novell in the government investigations of the 25 software industry? 9713 1 A. Certainly, yes. 2 Q. And would that include the 3 investigations of the government into the 4 conduct of Microsoft? 5 A. Yes, it would. 6 Q. Did you during that time frame belong 7 to any organizations that had to do with your 8 duties at Novell? 9 A. Well, certainly there were a number of 10 organizations that I participated in. 11 One was the American Corporate Counsel 12 Association. I was the founder of the 13 Intermountain Chapter of the American Corporate 14 Counsel Association, which is essentially an 15 association for in-house counsel. 16 Other things that I did in that role 17 is I chaired something called the Business 18 Software Alliance, which was an association of 19 business software companies from around the 20 world, which included Microsoft, Novell, 21 Oracle, IBM, their software division, et 22 cetera. All came together to work together to 23 promote the general good for the software 24 industry. 25 Q. Did you indicate that you were an 9714 1 officer of that? 2 A. Yeah. I was chairman at one point of 3 the Business Software Alliance. 4 Q. And we should probably tell the jury, 5 where was Novell located at the time that you 6 joined it? 7 A. Novell was located in Orem, Utah, in 8 1985 when I first joined the company. 9 Over the years the headquarters moved 10 to Provo, Utah, an adjacent city. And by the 11 time I left there in early 2000 or mid 2000, 12 the company had kind of dual headquarters in 13 California, Northern California, and Utah; 14 Provo, Utah, specifically. 15 Q. Is Provo close to Salt Lake? 16 A. Provo is about 45 miles south of Salt 17 Lake. 18 Q. Were you a member of the executive 19 committee of Novell throughout your service? 20 A. Yes, I was. 21 Q. Tell the jury, please, what an 22 executive committee of a company is responsible 23 for. 24 A. Well, an executive committee consists 25 of all of the senior most officers in a 9715 1 particular vertical within the company. 2 So, for example, you'd have a senior 3 vice president of sales. You'd have a senior 4 vice president of marketing. You'd have a 5 senior vice president of corporate 6 communications. Senior vice president of 7 legal, and senior vice president of finance. 8 And that team, together with the chief 9 executive officer of the company, then formed 10 the company's executive committee. And it was 11 a decision-making body. 12 So we would have people from 13 throughout the company that would come and meet 14 with us and present their ideas on strategy and 15 strategic objectives and the like and make 16 recommendations to us. 17 And then we would be a decision-making 18 body that would say yea or nay and let's go and 19 let us pursue this deal or not. 20 Q. All right. Let's go back a minute and 21 tell us about your education, employment 22 background before you joined Novell in 1985. 23 A. Sure. Well, I graduated from high 24 school in 1969 in a small town in Montana, a 25 little place called Red Lodge, Montana. And 9716 1 after that, I journeyed down to Brigham Young 2 University in Provo, Utah, where I attended my 3 first year of college. 4 After that I went on a two-year 5 mission for the LDS Church, and I was in France 6 for two years doing that missionary endeavor. 7 Following that I came back in 1972, 8 and from 1972 to 1977 I got my undergraduate 9 degree in political science, and then went on 10 to get my law degree in 1977 from the law 11 school at BYU. 12 We then headed to Southern California, 13 and I eventually got a master's degree in 14 business administration as well from Pepperdine 15 University. 16 Q. All right. And your employment during 17 that time frame before you joined Novell? 18 A. Yes. In 1977, right out of law 19 school, I went to work for a law firm in 20 Hollywood, California, by the name of Irsfeld, 21 Irsfeld, Younger. It's a fine mid-sized firm 22 in southern California. I worked there for 23 three years. 24 But this computer industry fascinated 25 me, and I was very excited to maybe participate 9717 1 in this fast-growing, fast-moving industry. 2 And I began looking around outside the 3 law firm for a position at a computer company, 4 and in 1980 I found one with a company called 5 Prime Computer. 6 Prime Computer was well known in the 7 computer industry at that time for its great 8 hardware that they manufactured in something 9 called a super minicomputer. It competed at 10 the upper end with companies that made 11 mainframe computers, like IBM and Honeywell, 12 that sort of thing. 13 But Prime Computer was a fine company 14 based in Boston. But I became their western 15 regional legal counsel. 16 So from 1980 to early 1985, I worked 17 for Prime Computer as their western regional 18 legal counsel. 19 Q. How did you get your job at Novell? 20 A. Well, that's an interesting story. 21 In September of 1985 my father passed 22 away, and I had a couple of sisters that lived 23 up in Utah. Now I'm living in southern 24 California, and we're perfectly happy down 25 there at the time and getting along just fine, 9718 1 working for Prime Computer -- working for -- 2 between Prime Computer, after I got my MBA from 3 -- at Pepperdine, I went to work for a company 4 called Businessland. I worked for Businessland 5 for about eight months. 6 And during that time, I found myself 7 back in Utah, as I mentioned, in connection 8 with my father's death. 9 And so I'm driving down the freeway, 10 Interstate 15 -- that is the main thoroughfare 11 through Utah north to south -- and I saw this 12 big sign off the freeway that says Novell, and 13 it kind of struck me as interesting because I 14 had a support engineer who had been talking to 15 me about the future or his views of the future 16 of the computer industry, and he says, you 17 know, one day, Dave, we're going to be kind of 18 nullified by this whole, you know, PC industry 19 that's kind of erupting, and, you know, we need 20 to keep our eye on that, et cetera, et cetera. 21 And he says, particularly computer 22 networking is a great place to go and a 23 wonderful opportunity that it represents in 24 terms of the market. 25 And I says, well, who are the players 9719 1 in that industry? 2 And he said, well, there's Novell, 3 there's 3Com, there's Lotus, et cetera. 4 Well, the name Novell had stuck with 5 me and then I saw the sign on the freeway. I 6 actually got off the freeway and stopped in and 7 walked in to a small reception area and met the 8 administrative assistant, who is still a dear 9 friend, Carol Carlson, and she -- I said, I'd 10 love to meet with the president of the company 11 if I could. And Carol said, well, I'll go see 12 if he's here. 13 And so she went back, and a few 14 minutes later Ray Noorda came out and shook my 15 hand. 16 And Ray Noorda at the time was 17 president and CEO of Novell. He had been there 18 about two years. And he greeted me warmly. 19 And as it turned out, they were on an 20 active search for corporate counsel, and so my 21 stopping in was just very, you know, good 22 timing, I guess, and great. 23 And so three weeks later we moved from 24 southern California back to Utah and joined 25 Novell in October 1985. 9720 1 Q. All right. Let's -- then you were 2 there 15 years, approximately, a little less, 3 and then why did you leave Novell in 2000? 4 A. Oh, gosh. 5 15 years in the computer -- that 6 particular aspect of the computer industry was 7 a fun ride. It had a lot of ups and it had its 8 downs, and it was a great opportunity. 9 I just turned 50 in the year 2000, and 10 it was the start of a new millennium, and I 11 thought, you know, I'm going to go off and do 12 something else. 13 And so I got very involved in the 14 venture capital business, started a couple of 15 entrepreneurial companies, and went in in 16 January of 2000 and gave my notice to Eric 17 Schmidt, who was then CEO of Novell, later CEO 18 of Google. 19 Q. What did you do -- did you have any 20 other employment after you left Novell besides 21 your Onli Card? 22 A. Yes. 23 Well, The Onli Card is a more recent 24 phenomenon, but I've done two or three things 25 since leaving Novell. 9721 1 I was general counsel to the governor 2 of the state of Utah, a gentleman by the name 3 of John Huntsman, who became governor of the 4 state of Utah. So I was general counsel to his 5 transition team. 6 Following that, I was general counsel 7 to another computer software company by the 8 name of Dynix. Dynix is a company that sells 9 library software. In fact, I'm told that the 10 Des Moines Public Library is standardized on 11 Dinex's library software. 12 So I was general counsel, but that was 13 a part-time thing. I went in two or three days 14 a week and helped them structure their legal 15 department, their contracts, et cetera, and 16 helped them with some strategic initiatives 17 that they were working on with among others 18 IBM. And so that was kind of 2002, 2003. 19 I chaired the advisory board for the 20 largest venture capital fund in the state of 21 Utah. 22 In 2005, early 2005, my wife and I -- 23 we'd been in Utah for 20 years, but we'd both 24 been actually born in southern California, and 25 my wife in particular wanted to get back to 9722 1 southern California after all those years, and 2 so we made a family determination to pursue 3 employment in southern California. 4 And so I contacted some old colleagues 5 of mine in the legal field and eventually wound 6 up at a large international law firm by the 7 name of Greenberg Traurig, and I took a 8 position as a senior partner at Greenberg 9 Traurig in April of 2005, and I was there 10 through June of 2006 when I went off to start 11 The Onli Card company. 12 Q. All right. Have you ever been a 13 witness in court before? 14 A. You know, the last time I really 15 remember being a witness in court was clear 16 back in 1972 or '73 just after my wife and I 17 had been married. 18 We had an old Toyota Corona that blew 19 up on us, and we were in small claims court, 20 and so I remember testifying distinctly about 21 you know why the car blew up and the 22 representations that had been made by the 23 dealer that had sold us the car and so forth. 24 Q. Is that the only other time? 25 A. You know, that I can remember. 9723 1 There could have been another time, 2 but, you know, I've -- I've had my deposition 3 taken on several occasions, but in general, I 4 don't find myself in this setting much. 5 Q. All right. I want to talk with you 6 about Novell's mergers and acquisitions that 7 relate to Microsoft late '80s, mid '90s, and 8 also about some other matters that involved 9 activities by the legal department in 10 connection with Novell. 11 First, let's talk about Novell's 12 principal business. 13 A. Okay. 14 Q. Tell us what that was. 15 A. Well, Novell is a computer networking 16 company. That's where it got its start. 17 That's where it had its roots. 18 And what computer networking is is, 19 you think about an operating system that 20 operates a single personal computer. I look 21 back here, I see a bunch of computers in the 22 courtroom. Each one of those has an operating 23 system on it. Likely it's the Windows 24 operating system from Microsoft. 25 But just as one personal computer 9724 1 needs an operating system to operate it, as you 2 connect a series of computers together, you 3 need a network operating system as well to be 4 the traffic cop to monitor traffic in and out 5 of all of those computers. 6 It allows you to share hard disk 7 storage among a series of computers. It allows 8 you to print off of a common printer. 9 And so, you know, we kind of take 10 networking for granted, but Novell was really 11 the, you know -- if you will, Drew Major and 12 Ray Noorda, the kind of founders of Novell, 13 were rather the fathers of network computing. 14 Q. We've got a time line to guide us and 15 sort of orient us. 16 MS. CONLIN: Can you put that up, 17 Darin? 18 Based on the document style, I wonder 19 if that can be seen. 20 Okay. There, that's better. 21 Q. Let's talk first about the first time 22 that -- after you joined Novell that there were 23 any discussions with Microsoft about the 24 possibility of a merger. 25 A. All right. 9725 1 Q. When did that first come up? 2 A. It was November of 1989. November of 3 1989 is what I remember. 4 Q. Do you remember where those 5 discussions started? 6 A. Those discussions started at COMDEX, a 7 trade show in Las Vegas, Nevada, that takes 8 place that brings together a number of computer 9 executives. 10 Q. Who initiated the discussions? 11 A. I believe that was Microsoft. 12 Q. How did they proceed? 13 A. Well, they contacted Ray Noorda, who 14 was the CEO of the company, and asked Ray if 15 they would be interested in exploring possible 16 merger of Novell and Microsoft. 17 And then a series of meetings ensued 18 in which Ray Noorda was very involved and went 19 to Redmond, Washington, and met with Bill Gates 20 and other people from Microsoft. 21 MR. TULCHIN: Objection, Your Honor. 22 This is all based on hearsay. It appears as if 23 the witness is testifying as to what others 24 told him. 25 MS. CONLIN: May I lay a little bit 9726 1 more foundation, Your Honor? 2 THE COURT: Please do. 3 MS. CONLIN: Thank you. 4 Q. Were you a part of those negotiations? 5 A. Yes, certainly. 6 Q. All right. And you were a part of the 7 meetings? 8 A. No. I did not go to Redmond, 9 Washington, with Ray. 10 Q. Were there any meetings that you 11 attended yourself? 12 A. Not in 19 -- not late 1989, no. 13 Q. All right. Do you know whether or not 14 there was any formal end to the negotiations 15 that occurred in '89? 16 A. Well, I can remember just before 17 Christmas of 1989 Ray would come back and he 18 would report to me with respect -- 19 MR. TULCHIN: Same objection, Your 20 Honor. 21 THE COURT: Sustained. 22 Q. Let's talk about -- let's approach it 23 this way, Mr. Bradford. 24 As a member of the legal department 25 and as general counsel, did you have some 9727 1 responsibilities in terms of mergers -- any 2 merger discussions? 3 A. Certainly. That was one of my primary 4 roles in the company. 5 Q. And would it be a part of your 6 responsibility to know what discussions were 7 going on and how they were proceeding? 8 A. Certainly, yes. 9 Q. And in that context, do you know when 10 those merger discussions with Microsoft ended 11 and whether or not there was a formal end? 12 MR. TULCHIN: Same objection. 13 THE COURT: Overruled. 14 He can answer this. 15 A. Yes, the answer is yes to that 16 question. 17 Q. Okay. Now I don't know which question 18 you answered yes. 19 A. Well, I believe your question was did 20 I know if there was a formal end to those 21 discussions with Microsoft in the late '89, '90 22 time frame, and basically Ray was very 23 frustrated that Microsoft -- 24 MR. TULCHIN: Objection, Your Honor. 25 THE WITNESS: I'm sorry. 9728 1 THE COURT: Overruled as to this. 2 Go ahead. 3 A. Anyway, the company was frustrated 4 that Microsoft was not getting back to us in a 5 timely manner with respect to their proposal of 6 a merger, and so eventually he contacted 7 Microsoft, and I believe they finally told him 8 no, you know, we're not interested in pursuing 9 those discussions any further at this point in 10 time. 11 Q. About how long did those discussions 12 go on? 13 A. There was great frustration that they 14 weren't getting back to us. 15 There was some initial conversations 16 that had taken place that interested Novell, as 17 well as seemingly Microsoft. 18 And so that went on for probably two 19 or three months, but there was a dead period 20 from beginning in -- just before Christmas in 21 1989, well into early 1990, where Microsoft did 22 not get back to us and tell us the state of 23 their interest going forward. 24 Q. All right. And then did Novell 25 contact Microsoft? After the dead period 9729 1 happens, does Novell then contact Microsoft to 2 see what's happening? 3 A. Yes. 4 Q. Okay. And what does Novell learn? 5 A. We learned that they were no longer 6 interested in pursuing those discussions. 7 Q. Did you learn why? 8 A. Not at that time. 9 Q. All right. Were any formal documents 10 exchanged in connection with these merger 11 discussions in '89 and '90? 12 A. No, to the best of my recollection, 13 there weren't any formal letters that were 14 exchanged or memoranda. 15 There was, however, a letter that was 16 eventually written by a Microsoft 17 representative. 18 Q. Mr. Bradford, I have given you some of 19 the exhibits that we're going to talk about, 20 and we're going to use this little board. We 21 don't have exactly a desk. This is our first 22 time to put this up. 23 MS. CONLIN: Your Honor, I'm not sure 24 this is going to fit with the microphone. 25 THE COURT: Does it work? 9730 1 MS. CONLIN: We've got it. 2 Q. Those should be in the order that 3 we're going to talk about them, but we'll see 4 if that actually works out. 5 MS. CONLIN: Would you hand a copy of 6 this to Mr. Tulchin, please. 7 Q. This is Plaintiffs' Exhibit 7567. Is 8 that the letter that you had reference to? 9 A. Yes, it is. 10 Q. And the date of the letter is -- can 11 you get that -- that's April 3, 1991. So about 12 how long after the merger talks ended did this 13 letter arrive? 14 A. About 14 months later. 15 Q. And let's see, it's addressed to 16 Mr. Noorda and it's from Mr. Ballmer? 17 A. That's correct. 18 Q. Let's look at the second -- let's look 19 first at the first sentence that says, I wanted 20 to write to you and clear up the tension 21 between our companies. I sense the tension 22 stems from two sources, our merger discussions 23 a year and a half ago and the outstanding 24 contract dispute between Microsoft and 25 Excelan/Novell. 9731 1 We'll leave the second one, but the 2 first one, let's talk about. 3 He says in the second paragraph, he 4 says, first, let me apologize for any ill 5 feelings that we may have caused in our merger 6 discussions. We approached them sincerely and 7 with great interest. We may not have been as 8 crisp, prompt, and clear about ending those 9 discussions as we should have been. You have 10 built an incredible company. We appreciated 11 that then and now. 12 The reasons we decided not to pursue 13 our discussions were threefold; one, the 14 complexity of putting the businesses together 15 and running them successfully. 16 Mr. Bradford, was that also of concern 17 to Novell? 18 A. Oh, it always is when you do a merger 19 of two large companies. There's always the 20 challenge of putting two new organizations 21 together. 22 Q. All right. And the second reason he 23 offers is the risks of U.S. government 24 disapproval of the transaction. 25 Why don't you give the jury a brief 9732 1 and nonlegalistic explanation of what two 2 public companies need to do in terms of getting 3 government approval for joining together. 4 A. Basically, there are regulatory 5 approvals that you have to get. 6 Depending on the nature of the 7 combination of the companies, various U.S. 8 government agencies can get involved. 9 If it involves companies that have -- 10 companies that are in adjacent markets or in 11 similar markets, that can have some antitrust 12 implications. 13 And so a federal agency like the 14 Federal Trade Commission or the Department of 15 Justice may have an interest in getting 16 involved in that analysis and to opine on 17 whether or not a combination of two large 18 companies makes it competitive or 19 anticompetitive for the marketplace. 20 They always have a focus on the 21 consumers, making sure that consumers have 22 product at fair and reasonable prices, et 23 cetera. 24 And so that can be the Federal Trade 25 Commission or the Department of Justice. 9733 1 There are also other regulatory 2 approvals. One of them is known as the Hart, 3 Scott, Rodino Act, when two large companies -- 4 and there are certain sizes that are in the 5 legislation that I can't quite remember right 6 now. But you have to get Hart, Scott, Rodino 7 approval of these transactions. So that's two 8 basic things. 9 Q. All right. And then he gives us a 10 third reason. Most importantly, a bias to 11 build new businesses rather than buy them. 12 So that is the only document, this 13 exhibit, that Microsoft sent Novell in 14 connection with those first merger talks? 15 A. That's correct. 16 Q. Now, let's move to the merger with 17 DRI, Digital Research, Incorporated. 18 When did merger talks begin between 19 Novell and Digital Research, Incorporated? 20 A. They began in earnest in approximately 21 -- approximately May of 1991. 22 Q. Were you a party to those 23 conversations? 24 A. Yes, I was. 25 Q. Before that, did Novell have any 9734 1 relationship with Digital Research, 2 Incorporated? 3 A. Yes, I believe that we had a strategic 4 alliance agreement with DRI. 5 Q. Besides you, who else is involved in 6 these merger discussions with Digital Research? 7 A. Well, on the Novell side, there's a 8 gentleman by the name of Darrell Miller, who 9 was, I think his title was vice president of 10 strategic relations. Certainly Ray Noorda, the 11 CEO of the company, was very involved in those. 12 Jim Tolonen, who was the chief financial 13 officer of Novell, became very involved in 14 those discussions. 15 Q. Are you one of the people who performs 16 due diligence? 17 A. Yes, certainly. 18 Q. I'm sure some of the jurors know what 19 that means, but why don't you tell us for the 20 record what it means to perform due diligence 21 in the context of merger discussions. 22 A. Certainly. 23 Whenever you're looking at buying a 24 company, you want to make sure that the company 25 is in good order, and so you perform what is 9735 1 known as a due diligence function. 2 You study the company's intellectual 3 properties. You want to make sure that the 4 code that they're transferring to you is 5 actually their code. That they wrote it; that 6 they own it, et cetera, et cetera. 7 As you look at -- on a financial side, 8 you want to make sure that their numbers are in 9 order; that they're accurate and, you know, 10 completely and well represented. 11 So there's legal aspects of due 12 diligence, financial aspects of due diligence. 13 There are marketing aspects of due diligence. 14 Getting to understand what the competition of 15 that company might be facing. Getting to 16 understand their product lines and how they 17 might fit with, you know, Novell's product 18 lines. 19 So those are all aspects of due 20 diligence. 21 Q. All right. And who -- do you do this 22 over a period of time? 23 A. Certainly. 24 It doesn't occur in one day. It is a 25 -- usually a one- to two-month period that goes 9736 1 on where you're interviewing their employees 2 and examining their legal documents and such. 3 Q. Who is negotiating on behalf of DRI? 4 A. Well, the CEO of the company, Dick 5 Williams was -- I would describe him as their 6 principal negotiator. 7 They had outside counsel, just as we 8 had outside counsel, and I believe their 9 outside counsel was the law firm of, Brobeck 10 Phleger, Harrison, et cetera, in the bay area. 11 Q. And was their general counsel Linnet 12 Harlan also involved? 13 A. Yes, certainly, my counterpart there. 14 Q. And are you having board meetings with 15 your board during this time frame? 16 A. Yes, certainly this was an important 17 enough transaction where you would take it to 18 the board. The executive committee of the 19 company would meet, come up with a 20 recommendation, and then you would organize a 21 board meeting and go to the board meeting and 22 have the outside board of directors take a look 23 at this transaction. 24 Q. In the course of your due diligence, 25 Mr. Bradford, did you talk with DRI personnel 9737 1 about what they believed were Microsoft CPU 2 licenses or per processor licenses? 3 A. Did I personally talk to -- 4 Q. Yes. Were you aware of them? 5 A. I was aware of something called a CPU 6 license, but I certainly was not aware of the 7 impact that that might have. 8 Q. They told you about it, but now at 9 this point, was Novell -- did they have any 10 kind of a desktop operating system that 11 competed with Microsoft's? 12 A. No, we did not. 13 Q. So this would be your entry through 14 DRI into that market? 15 A. That is correct, right. 16 Q. And you did talk with them about the 17 CPU licenses, but you didn't quite get the -- 18 A. Well, it certainly wasn't a big topic 19 of conversation. 20 MR. TULCHIN: Objection. Leading. 21 THE COURT: Sustained. 22 Q. I'm sorry. 23 What can you tell the jury about your 24 recollection about your discussions about the 25 CPU licenses? 9738 1 MR. TULCHIN: Objection. Calls for 2 hearsay. 3 THE COURT: I'll have to wait until I 4 hear the answer. Go ahead. 5 A. Basically there were hundreds of 6 documents that we were reviewing during this 7 time period, and I suspect CPU licenses was 8 probably something that they supplied us with 9 or referred to, et cetera. But again, as I 10 mentioned earlier, it wasn't a big subject of 11 discussion. 12 Q. What are the reasons that Novell has 13 an interest in merging with DRI? 14 A. Well, we're excited about a new 15 marketplace for us. Certainly we had been 16 relatively successful in the networking space. 17 And just like any company, you're always 18 looking at different product lines and how can 19 we compete more effectively in the marketplace 20 and what added product lines can we bring in to 21 share with our customers. 22 And so we saw that the biggest player 23 in the desktop operating system market was 24 certainly Microsoft, but DRI did not have the 25 size and the resources typically to compete 9739 1 against someone of the size of Microsoft. 2 So we thought that with Novell's size, 3 our success, our reputation in the marketplace, 4 that if we acquired a desktop operating system 5 product as well, that we could have success in 6 that market. 7 Q. Did Novell work with OEMs? 8 A. Yes, certainly. 9 Q. How? 10 A. They -- in many instances we would 11 work with original equipment manufacturers to 12 have them preload some of our products and our 13 technologies. 14 Q. So they were -- did Novell have 15 contracts and relationships with OEMs? 16 A. Yes. We had some, yes. 17 Q. Was one of the things -- tell me what 18 other factors existed at the time. And now 19 we're in, let's see -- these discussions begin 20 in May of 1991, so to orient you to the time 21 frame. 22 So at that time, did you have any 23 awareness of what the federal government was 24 doing? 25 A. I think during the course of the 9740 1 discussions with DRI, it was mentioned to me 2 that they believed that Microsoft was under 3 investigation by the Federal Trade Commission 4 so that we learned that -- or some government 5 agency at the time. 6 Q. All right. Did you know that before 7 or do you recall for sure? 8 A. I do not recall for sure. 9 Q. All right. Was that fact any -- was 10 that any factor in your acquisition of -- or 11 merger with DRI? 12 A. Well, certainly we felt that if 13 Microsoft was under investigation by regulatory 14 agencies, that they might have to back away 15 from some of the things that they were doing in 16 the marketplace, which would open up a greater 17 market opportunity for Novell on the desktop. 18 It was a factor. It wasn't the 19 principal or driving factor behind our decision 20 to do this deal. 21 Q. Did you know Mr. Williams before you 22 began these negotiations or know of him? 23 A. Well, certainly I knew of his 24 reputation in the industry. That was certainly 25 another driving factor behind our decision to 9741 1 acquire Digital Research. 2 Ray Noorda was always looking for 3 management talent to bring into the company, 4 and Dick Williams, who was president and CEO of 5 Digital Research at the time, had had a long 6 career at IBM, was well known in the industry, 7 and a skillful executive. 8 And so by an acquisition of Digital 9 Research, then he would become part of the 10 Novell family and possibly fill a management 11 role -- a senior management role within the 12 company. 13 Q. As general counsel of Novell, did you 14 also examine whether or not if you acquired DRI 15 there might be some opportunity or need to 16 bring any cause of action? 17 A. Not at that time. That wasn't my 18 principal focus. 19 Q. Did you consider it? 20 A. Did I consider it at the time that we 21 were acquiring DRI? 22 Q. Yes, or before? Or do you remember? 23 A. No, that, you know -- I mean, 24 certainly as the years went on and we saw the 25 dilatory effects of Microsoft -- 9742 1 MR. TULCHIN: Move to strike, Your 2 Honor. It's outside the scope of the question. 3 MS. CONLIN: Well, Your Honor, the 4 objection as to nonresponsive would be mine, 5 not Mr. Tulchin's. 6 THE COURT: Overruled. 7 Q. Do you want some part -- do you know 8 where you were? 9 A. Help me. 10 (Requested portion of the record 11 was read.) 12 A. -- the dilatory effects of Microsoft's 13 conduct, that, you know, the likelihood of the 14 legal action by Novell against Microsoft 15 increased in likelihood. 16 Q. Did Novell during the time that you 17 were there ever file such a suit? 18 A. No, we did not. 19 Q. At the time this was going on, was a 20 man named Gary Kildall still involved with DRI? 21 A. Yes. Gary Kildall was on the board of 22 directors of Digital Research. In fact, Gary 23 was the founder of Digital Research. 24 Going back into the history, the 25 computer industry, Kildall is a fascinating 9743 1 figure in the sense that in 1976 he wrote the 2 first desktop operating system that was known 3 as CP/M. 4 It had -- CP/M stood for a variety of 5 things, but at least one thing it stood for is 6 control program monitor, allowing for the first 7 time someone to type on a keyboard instructions 8 that someone could then see visually on a 9 screen. 10 And so he wrote the first PC operating 11 system, Gary Kildall. 12 Q. Was he somebody that you knew? 13 A. Yes, certainly, yeah. 14 Q. And admired? 15 A. Well, I admired his technical 16 expertise. There were certain aspects of his 17 lifestyle that were not to be emulated, but -- 18 Q. We don't need to know -- 19 A. Okay. 20 Q. -- the details of that. 21 Let's -- from that point, when you 22 were doing your due diligence in terms of the 23 merger with DRI, until this, do you have any 24 reason to doubt that any of the information 25 provided to you by DRI was inaccurate in any 9744 1 way? 2 A. No, none. 3 Q. Were both companies public companies? 4 A. No. Digital Research was not. It was 5 a privately held company. 6 Q. And Novell was public? 7 A. That is correct. 8 Q. Does that impose certain obligations 9 on the companies doing the mergers, the fact 10 that they're public and traded on the -- were 11 they New York Stock Exchange, was Novell -- 12 A. Well, Novell was traded on what was 13 known as -- what is known as the NASDAQ market, 14 and so being a public company, you have to file 15 information about any new transaction of this 16 size, any material transaction. You have to 17 notify the investing public of what you're 18 doing so your investors have a good sense as to 19 what you're doing and whether or not it makes 20 sense or not. 21 Q. All right. So mid May the discussions 22 begin, 1991, and then the announcement is when? 23 A. The announcement is made July 18th, 24 July 17th, something like that, of 1991. 25 Q. I think we listed July 17th, but it 9745 1 could be the 17th or 18th of '91? 2 A. Okay. Yes. 3 Q. And when is the transaction finalized? 4 A. It was finalized about four months 5 later, on November 1, 1991. 6 Q. All right. During the -- let me back 7 up to the July time frame. 8 What happened a day or two after the 9 announcement of the merger with DRI? 10 A. There was a call from Microsoft to 11 Novell concerning the transaction. 12 Q. All right. And to whom -- who makes 13 the call? 14 A. It was a call from Bill Gates. 15 Q. And to whom does he make the call? 16 A. Ray Noorda, the CEO. 17 Q. After the call is completed, does 18 Mr. Noorda come to your office? 19 A. He does. 20 Q. Immediately as far as you know after 21 the call? 22 A. Yes. 23 Q. What is his demeanor when he comes to 24 your office? 25 A. He's very exercised. He's very 9746 1 concerned. He's upset by the nature of the 2 phone call. 3 Q. And after your discussion with 4 Mr. Noorda, do you take some action based on 5 the discussion and based on the call? 6 A. Well, certainly. 7 And basically, it was Gates saying -- 8 MR. TULCHIN: Objection, Your Honor. 9 Q. Wait, wait, wait. We're not quite 10 done with this initial part here. 11 A. Fine. 12 Q. Confine yourself, if you will, to what 13 action, what subsequent action you took based 14 on the conversation with Mr. Noorda about the 15 call from Mr. Gates. 16 A. There was a board meeting held. 17 Q. And when was the board meeting held? 18 A. I believe it was a couple of days 19 later. 20 Q. All right. And that was as a result 21 of the call from Mr. Gates to Mr. Noorda that 22 Mr. Noorda told you about immediately 23 afterwards? 24 A. That's correct. 25 Q. All right. Now, can you tell the jury 9747 1 what Mr. Noorda said to you about the 2 conversation with Mr. Gates? 3 MR. TULCHIN: Same objection. 4 MS. CONLIN: Do you want to confer, 5 Your Honor, or -- 6 THE COURT: Yes. 7 MS. CONLIN: Okay. 8 (The following record was made out of 9 the presence of the jury at 12:44 p.m.) 10 MS. CONLIN: Your Honor, I believe 11 I've laid two foundations for the admission of 12 this conversation between Mr. Bradford in his 13 capacity as general counsel and Mr. Noorda. 14 I've laid a foundation for excited 15 utterances, and I have laid a foundation under 16 McElroy v. State, which permits the admission 17 of evidence to explain subsequent conduct. 18 This is the beginning, Your Honor, of 19 this whole series of conversations and contacts 20 between Microsoft and Novell and including this 21 man with respect to merger discussions that go 22 on for quite a while. 23 THE COURT: What is he going to say 24 Noorda told him? 25 MS. CONLIN: Noorda told him that 9748 1 Mr. Gates called and wanted to reopen the 2 negotiations, the merger discussions right 3 after this announcement of the merger with DRI, 4 and that he told him -- there may be other 5 things, but the two that I recall are that DRI 6 would need to go, that they couldn't -- you 7 know, that would have to be part of the deal. 8 And Mr. Noorda expressed concern about 9 the government's permission, whether or not the 10 government would allow such a merger. And 11 Mr. Gates said, in substance, we know how to 12 handle the federal government. 13 MR. TULCHIN: Your Honor, this is 14 obviously being offered precisely because 15 Ms. Conlin hopes the jury takes this supposed 16 statement made by Gates to Noorda, and then 17 apparently this witness will say transmitted 18 from Noorda, who is now dead, to Gates. 19 The hope is that the jury will accept 20 Mr. Gates' supposed statement as being true. 21 This isn't any effort to explain subsequent 22 conduct. 23 The last part of what Ms. Conlin just 24 referred to when she said Mr. Bradford could 25 testify that Noorda told him that Gates had 9749 1 said, "We know how to handle the federal 2 government," has nothing to do with some 3 explanation about subsequent conduct. 4 The only explanation presumably here 5 that is necessary is that the two companies 6 engaged in discussions about a possible merger. 7 I don't think there's any dispute that 8 the two companies did. Of course, it was 9 entirely open to Novell to say no. 10 But, of course, what is going on is 11 not that. It's the hearsay that Ms. Conlin 12 wants the jury to hear, double hearsay. 13 Gates supposedly said something to 14 Noorda. Noorda later passed that on supposedly 15 to Mr. Bradford, and the idea is to get the 16 jury to accept that as true, apparently, the 17 idea being that this was some demonstrated 18 contempt for the United States government. 19 None of that is necessary for what is coming, 20 and this is clearly hearsay. It's double 21 hearsay. 22 MS. CONLIN: Well, Your Honor, it is 23 hearsay. There isn't any question about that. 24 But it falls within two exceptions to the 25 hearsay rule specifically approved by the Iowa 9750 1 Supreme Court. One of which, of course, is 2 res gestae, which we used to call it, and now 3 we call it excited utterance and I'm trying to 4 stay with the time. 5 And the other is the McElroy -- what I 6 call the McElroy exception, which is to explain 7 subsequent conduct. 8 In addition to that, Your Honor, this 9 is a part of his official duties. I think 10 that's a little fuzzy in terms of what that 11 means in hearsay. But he needs this 12 information to perform his responsibilities to 13 this public corporation in connection with its 14 discussion of mergers. So I think there are a 15 number of reasons why this information should 16 be provided to the jury. 17 The Court may wish to make some kind 18 of instruction with respect to it. 19 THE COURT: What -- the last one in 20 particular, what Gates told Noorda, what does 21 that explain what subsequent behavior -- 22 MS. CONLIN: This is a focus -- 23 THE COURT: -- by Mr. Bradford? 24 MS. CONLIN: As these negotiations go 25 on, the question of how the government is going 9751 1 to respond to these two large companies merging 2 comes up again and again and again. And Novell 3 continues to express its concern about it. 4 And while we're in here, perhaps, we 5 should talk about a document that is coming 6 along that I will be introducing that is 7 Mr. Bradford's report of a meeting between the 8 lawyers for Microsoft and Novell in September 9 of 1991 in which that becomes another subject 10 of conversation. 11 The question of what -- how in the 12 world is the government ever going to approve 13 this, particularly given, you know, 14 Mr. Ballmer's letter that we just saw, which 15 indicates that Microsoft called off earlier 16 negotiations as a result of concern for the 17 government's -- whether or not the government 18 would approve it. 19 And, you know, Your Honor, one of the 20 reasons this is a big concern is because these 21 merger discussions -- the merger, you know, the 22 announcement of a merger, can have some impact, 23 some significant impact on what happens with 24 the company. 25 So Novell doesn't want to go forward 9752 1 with that -- doesn't think it is wise to go 2 forward if, in fact, the government is going to 3 disapprove. So that will be a part of our 4 discussion as we go forward here. 5 MR. TULCHIN: Your Honor, if I may. 6 I think we're getting into an area 7 that is actually highly important. 8 This is all for the purpose of 9 offering inflammatory double hearsay. This 10 doesn't explain subsequent conduct. 11 And if I may, I was a little puzzled 12 about what information Mr. Bradford could offer 13 to the jury that would be relevant to any of 14 the issues in this case. And we went back and 15 we looked closely at the documents that had 16 been submitted to the Special Master that 17 pertained to Mr. Bradford. 18 And there are a series of them, Your 19 Honor, six or eight, I believe. I have a brief 20 on my desk in the courtroom on this subject 21 because I was afraid that this is where this 22 thing might be going. 23 I thought Ms. Conlin might be 24 restricting herself to things Mr. Bradford 25 could legitimately testify to, but I see now 9753 1 that that is not so. 2 And the document that Ms. Conlin just 3 refers to, this memo that she says Mr. Bradford 4 wrote, is one of these six or eight 5 documents -- I've forgotten exactly how many -- 6 that was submitted to the Special Master 7 process. The Special Master ruled that they 8 were all inadmissible because they're hearsay, 9 and I want to come to something in a moment. 10 As to some of those documents, the 11 plaintiffs did not appeal to Your Honor. As to 12 others they did. In each case Your Honor 13 affirmed the Special Master's decision with 14 respect to the documents that pertain to 15 Mr. Bradford and ruled that all of these are 16 inadmissible hearsay. 17 Justice Douglas of the United States 18 Supreme Court, Your Honor, in 1943 wrote a 19 decision in Palmer against -- I hope I have it 20 right -- I think it's Hoffman. It's in the 21 brief that is sitting on our table. 22 Justice Douglas was not known for 23 being a stickler for evidentiary rules. But it 24 is the leading decision in exactly this field 25 of whether records made by a company, a 9754 1 corporation, that pertained to legal issues and 2 anticipated litigation could be considered 3 business records or otherwise be admissible 4 under some exception to the hearsay rule. 5 And the opinion authored by Justice 6 Douglas in 1943 says they cannot. The Iowa 7 Supreme Court has adhered to that in a case 8 called Frunzar, F-r-u-n-z-a-r. I don't have 9 the cite in my head. Again, it's in this 10 brief. 11 And maybe, Your Honor -- I hate to do 12 this to the witness or the jury -- but maybe we 13 ought to take a few minutes, maybe more than a 14 few, so that I can hand the Court this brief 15 and we can consider more fully what I think 16 we're coming to. 17 And what we're coming to, Your Honor, 18 is exactly this. If a witness has written or 19 received documents that are inadmissible 20 hearsay, such as the document Mr. Bradford 21 wrote that Ms. Conlin referred to, a document 22 which is inflammatory in a number of ways, Your 23 Honor, including the fact, I might note, that 24 it contains some very unflattering views of the 25 law firm of Sullivan & Cromwell. 9755 1 MS. CONLIN: Not -- 2 MR. TULCHIN: Maybe I'm thinking of a 3 different document. 4 MS. CONLIN: No. You're thinking of 5 the right document, but I have to tell you that 6 would not be the thing I would show to the 7 jury. 8 MR. TULCHIN: In any event, Your 9 Honor, if the witness's testimony is 10 necessarily based on information which he or 11 she learns from inadmissible hearsay, then, of 12 course, the testimony is inadmissible as well. 13 And I think that's where we're going 14 with Mr. Bradford. There's no dispute in this 15 case that Mr. Gates called Mr. Noorda a couple 16 of days after the announcement of the DRI 17 merger. There's no dispute about that. And 18 the inflammatory material, which everyone 19 agrees is hearsay, isn't necessary to explain 20 any subsequent conduct. 21 But if we want to get beyond this 22 question and answer that is in the courtroom to 23 some of these further documents that Ms. Conlin 24 is now making reference to, then I would 25 request just a few minutes so that I can get 9756 1 this memorandum to the Court. And, perhaps, if 2 it's convenient for the Court, ask the Court to 3 take a look at it because I think these are 4 important issues, Your Honor. 5 MR. CASHMAN: Your Honor, if I may. 6 Mr. Tulchin wasn't in the room on the 7 many occasions when Mr. Tuggy and I were here 8 last week, but Mr. Tulchin is trying to raise 9 the issue that we argued extensively last week. 10 And as the Court may recall, the 11 Frunzar case has nothing whatsoever to do with 12 the issue that Mr. Tulchin is raising nor is 13 there any Iowa case that addresses the issue 14 which Mr. Tulchin is raising. 15 In contrast, the plaintiffs provided 16 the Court with a wealth of authority which 17 demonstrates that in a case of somebody like 18 Mr. Bradford who is testifying about 19 information that he learned either through 20 conversations or interactions with people in 21 Novell or people outside of Novell, that is not 22 hearsay. That is, in fact, personal knowledge, 23 unless Mr. Bradford cites a statement by an 24 out-of-court declarant for its truth, in which 25 case we get to a different issue. 9757 1 The cases that we told the Court about 2 and provided you copies, you may recall, are 3 the Agfa v. Gevaert case, the Seventh Circuit 4 case from Justice Posner, and that directly 5 contradicts what Mr. Tulchin claimed. And we 6 provided the Court with a number of other cases 7 on that point. 8 I think it's clear that the testimony 9 that fits into that category is clearly 10 admissible. 11 THE COURT: Are you going to start off 12 reading these documents now? 13 MS. CONLIN: Pretty soon, Your Honor. 14 I think shortly after this, and I think the 15 very next one up is this September 17th 16 memorandum. 17 THE COURT: Okay. We will take a 18 recess for the jury, and I'll go through the 19 documents. 20 MS. CONLIN: Okay. Thank you, Your 21 Honor. 22 MR. TULCHIN: All these exhibits, Your 23 Honor, were excluded in the Special Master 24 process. 25 MS. CONLIN: Well, Your Honor -- 9758 1 MR. TULCHIN: The rulings were against 2 their admissible. 3 MS. CONLIN: Well, Your Honor, that is 4 not fair. They were excluded as hearsay, okay? 5 We are not there anymore. Yes, they're 6 hearsay. They are hearsay. 7 Now the question is: Do they -- can I 8 lay a foundation, which I believe I have done, 9 with this witness -- 10 THE COURT: Uh-huh. 11 MS. CONLIN: -- to permit them to come 12 in anyway as an exception. So I just think 13 Mr. Tulchin is not correct about what has 14 happened so far. 15 THE COURT: Okay. I'll take a look at 16 it. 17 Thanks, Janis. 18 (The following record was made in the 19 presence of the jury at 12:58 p.m.) 20 THE COURT: Ladies and gentlemen of 21 the jury, at this time the Court needs to take 22 a matter of law up. I don't know how long this 23 will require. We'll be in recess until that 24 time. 25 You may go to your jury lounge. 9759 1 Remember the admonition previously given. 2 (The following record was made out of 3 the presence of the jury at 12:59 p.m.) 4 THE COURT: You may be seated. 5 May I see the exhibit at issue? 6 MS. CONLIN: Yes, Your Honor. 7 The exhibit at issue is Plaintiffs' 8 Exhibit 5365. 9 Let me hand a copy to -- do you have a 10 copy of this, David? Here's one for you. 11 THE COURT: This is the first one, 12 right? 13 MS. CONLIN: Yes, Your Honor, that is 14 the first one. And that happens to be one 15 written by Mr. Bradford himself as a result of 16 a meeting that he personally attended. It's 17 his recollections of the meeting. 18 And I should also say, Your Honor, 19 this is not about litigation, this is about a 20 business transaction. This is about a merger 21 of two publicly held companies. 22 And he made this immediately upon his 23 return from the meeting with the Microsoft 24 attorneys. 25 Let me -- let's -- do you want to just 9760 1 take this one up first, Your Honor, because we 2 don't get to any of the others for a while? 3 THE COURT: Sure. 4 MS. CONLIN: But there will be other 5 documents that I will seek to offer through 6 this witness that are both written by him and 7 written to him and written to members of the 8 legal department on which the company Novell, 9 of which he was the general counsel, made 10 significant decisions, like, you know, to get 11 out of the DOS business and to get out of the 12 WordPerfect business. And, you know, there 13 were significant decisions made by this company 14 on the basis of some of these documents. 15 Now, this document is the only 16 document that I'm going to offer with respect 17 to these merger discussions, but there will be 18 other testimony from this witness on this 19 subject matter, Your Honor, and as I said, we 20 believe that this comes in under any -- under a 21 number of exceptions to the hearsay doctrine. 22 The hearsay rule. I guess it's not a doctrine. 23 THE COURT: The exception you want it 24 for is to what, to show the -- 25 MS. CONLIN: Well -- 9761 1 THE COURT: What Novell did or what? 2 MS. CONLIN: Yes, Your Honor, that's a 3 part of it, but what Mr. Cashman said better 4 than I did initially, is these are records of 5 business transactions, and I'll let him address 6 it again. 7 I understand he addressed it with the 8 Court and the Court agreed last week that these 9 kinds of records are, in fact, admissible. 10 But dealing with the hearsay issue, 11 whatever the United States Supreme Court may 12 have said through Justice Douglas in 1943, the 13 Iowa Supreme Court, governing the rules of 14 evidence which apply in the state of Iowa in 15 the case of McElroy versus State, in this very 16 millennium, that evidence with respect to 17 subsequent conduct is admissible. 18 The Court may recall that case. Judge 19 Levin was the initial Judge, and Judge Pille 20 was the Judge on the second trial. 21 And in the first trial, Judge Levin 22 had excluded a number of documents that were 23 documents involving the investigation of the 24 complaints of sexual harassment as well as 25 other documents and testimony, and that caused 9762 1 the Supreme Court to revisit a longstanding 2 Iowa rule about the admissibility of these 3 kinds of documents which are necessary to 4 explain subsequent conduct. 5 One other thing, Your Honor, that I 6 don't want to spring on the Court. 7 This is also past recollection 8 recorded. And we prefer to have the document 9 admitted, but -- under McElroy, but it is also 10 past recollection recorded, which would permit 11 the document to be displayed and read to the 12 jury, but not to go to the jury. 13 I haven't -- I don't think I've laid 14 that foundation because we're not to that 15 document yet, but I will be laying that 16 foundation as well for this document. 17 THE COURT: Very well. 18 Response? 19 MR. TULCHIN: Yes, Your Honor. 20 First, I wonder if I could hand up the 21 memorandum to which I referred. 22 THE COURT: Sure. 23 MR. TULCHIN: Thank you, Your Honor. 24 It looks more imposing than it is 25 because of the exhibits attached to it. 9763 1 MS. CONLIN: Thank you. 2 MR. TULCHIN: Sure. 3 And, Your Honor, with respect to this 4 very exhibit, 5365, our objection was sustained 5 by the Special Master. 6 The Plaintiffs appealed the Special 7 Master's ruling to Your Honor and their appeal 8 was denied by the Court. 9 So we start from at least the initial 10 proposition that arguments about whether or not 11 this is a business record or somehow has some 12 nonhearsay; that is, can be admitted as 13 nonhearsay have already been dealt with and 14 rejected. 15 This is not past recollection 16 recorded. If it were, it would not be 17 inadmissible hearsay and the Plaintiffs would 18 have prevailed on that ground. 19 They either didn't make that argument 20 or they were unsuccessful. 21 Now, with respect to the McElroy case 22 decided by the Iowa Supreme Court in 2001, the 23 Iowa Supreme Court said, among other things, a 24 statement that would ordinarily be deemed 25 hearsay is admissible if it is offered for a 9764 1 nonhearsay purpose that does not depend upon 2 the truth of the facts presented. 3 That's right towards the end of the 4 opinion at 637 N.W. 2d 488, and this is at page 5 501. 6 And later on, in that same paragraph, 7 the Supreme Court said, although a statement 8 may be purportedly offered for a nonhearsay 9 purpose, the district court must still 10 determine if the party's true purpose in 11 offering the evidence was, in fact, to prove 12 the statement's truth, unquote. 13 I submit, Your Honor, that's what -- 14 that's what's going on. 15 After some citations, the Court says 16 the following, furthermore, the Court must find 17 the statement relevant to the purpose for which 18 it is offered, unquote. 19 There's been no showing of any 20 relevance here. 21 Mr. Bradford certainly can testify, as 22 he has, that discussions were started. The 23 chronology is up there. He can testify about 24 what he did in response to any request by 25 Mr. Noorda to take action. 9765 1 But this memorandum is well outside 2 any of those boundaries. It's all about 3 hearsay, and again, through the Special Master 4 process, this has been dealt with. 5 Of course, the Iowa Supreme Court, 6 again going back to the McElroy case, and this 7 now -- the last quotes I gave you, Your Honor, 8 are just at the top of page 502. 9 The Iowa Supreme Court says, lastly, 10 if the evidence is admitted, the Court must 11 limit its scope to that needed to achieve its 12 purpose. 13 Well, we haven't heard what the 14 purpose of this memorandum is. 15 Again, there is nothing about what's 16 in here that is necessary to establish that 17 these contacts were made; that Microsoft and 18 Novell discussed the possibility of a merger. 19 And, of course, part of what's in this 20 memorandum is this rather ungracious slur on a 21 particular law firm, Your Honor, that would be, 22 among other things, prejudicial in this context 23 with the jury. 24 I just have to say, Your Honor, that 25 the memorandum that I handed you pertains 9766 1 principally to a number of other documents 2 where the problem of hearsay is at least as bad 3 if not worse than what we're faced with here. 4 Again, we had no understanding -- 5 really no idea of what it was that Plaintiffs 6 intended to ask Mr. Bradford, but if we get 7 into any of these areas where his testimony is 8 in effect legal argument based on inadmissible 9 hearsay, we go squarely back to the Palmer case 10 and the Frunzar case that we discussed in 11 chambers and that we discussed in greater 12 detail in this memorandum. 13 And, Your Honor, I'm sensitive to the 14 jury's time, but if the Plaintiffs intend to 15 offer for any purpose any of the documents that 16 are the subject of the memorandum I just handed 17 up, I do think it might be worth everyone's 18 time in advance to understand that and explore 19 it before going down that road. 20 MS. CONLIN: Your Honor, if I may just 21 make a few comments, and then perhaps we need 22 to leave the Court to think. 23 Mr. Tulchin's arguments about what the 24 Special Master ruled are simply inapposite. 25 You can't offer a document as -- under 9767 1 the McElroy exception until you lay the 2 foundation, and that's what I will do with that 3 document, and that is what I believe I have 4 done with respect to the testimony. 5 You cannot come within the exception 6 to the hearsay rule for past recollection 7 recorded without laying a foundation, which I 8 will do in connection with this document. 9 The testimony in fact as to what 10 Mr. Gates told Mr. Noorda does not depend on 11 the truth of the facts presented. 12 It's not offered for the truth, 13 doesn't depend on the truth, but there is 14 subsequent conduct in reliance on that. Not 15 just the board meeting, Your Honor. I can lay 16 further foundation. 17 But as a result of these ongoing 18 negotiations with Microsoft, DRI was never 19 until after these talks were over in about the 20 end of March of '92 or beginning of April of 21 '92, until they were over, Microsoft did not 22 combine the two companies because it would have 23 been too difficult to first combine them and 24 then unhook them. 25 And so as a result of what started 9768 1 with this phone call a day or so after the 2 merger was publicly announced and continued and 3 continued and continued until March or April of 4 1992 DRI for that period of several months was 5 not actually combined. 6 So that's -- that is significant 7 subsequent conduct. 8 Whether or not it was true that 9 Microsoft demanded that DRI be spun off if 10 there was a merger is really not an issue. 11 What is an issue is did Novell in 12 reliance on those many statements about this, 13 did they not bring this company they just 14 merged with into the Novell family. 15 And generally speaking, negotiations 16 are -- I think fall squarely within the McElroy 17 exception, any kind of negotiation, because 18 there's always subsequent conduct on the other 19 side in a negotiation -- in a negotiation in 20 terms of a negotiation setting. 21 I wonder, Your Honor, if we need to 22 take a few minutes to take a look at the 23 memorandum. And perhaps the Court would like 24 to look back at those documents that we 25 provided the Court and the briefs we provided 9769 1 the Court on this last week or on a similar 2 issue last week. 3 I'm not sure what to do with the jury 4 sitting in the jury room, but I know this is a 5 difficult issue, and that's why I tried to kind 6 of bring it up in advance. 7 THE COURT: Let me ask a couple 8 questions while we're on this particular 9 memorandum here. 10 Let's go to page RPC 002975, for 11 instance. 12 MS. CONLIN: Yes, Your Honor, I'm 13 there. 14 THE COURT: Paragraph six. 15 MS. CONLIN: Yes. 16 THE COURT: It seems to me maybe I'm 17 -- I don't want to get ahead of everybody here, 18 but it seems that the three items in that -- in 19 those three paragraphs are something that with 20 or without this memorandum Mr. Bradford could 21 testify as to anyhow. 22 MS. CONLIN: That's correct, Your 23 Honor, but his testimony will be that he can 24 testify more accurately and completely by 25 reference to this document. And under past 9770 1 recollection recorded exception, that would be 2 sufficient to lay the foundation for the use of 3 this document, but not for its going to the 4 jury. 5 THE COURT: Any response? 6 MS. CONLIN: Would it be helpful for 7 the Court to know what I wish to display to the 8 jury or is that not -- 9 THE COURT: Sure. What portions? 10 MS. CONLIN: I told Mr. Tulchin that 11 we would not be talking about anything having 12 to do with the law firms. And in fact, if it 13 would make him happy, we can take that last 14 page, which deals with I think that. I'm not 15 sure if there are other concerns, but I know 16 the last page is of concern, and so that can 17 just be ripped right off. 18 I would be asking Mr. Bradford about 19 page 2, let's see, it's one, two, three big 20 bullet points. 21 Microsoft assumed going in that the 22 FTC would require divestiture of the DR-DOS 23 software. I would be calling that to the 24 jury's attention. 25 I would be calling to the jury's 9771 1 attention the very bottom one that says, with 2 respect to the scrutiny currently being given 3 Microsoft by the FTC, Microsoft pointed out the 4 following. 5 And I would be -- and that, of course, 6 would be -- could be considered admissions as 7 well, what Microsoft said in this meeting that 8 Mr. Bradford attended, and using this as a 9 device by which he could refresh his 10 recollection. 11 And then, Your Honor, I would be 12 calling his attention to paragraph C on the 13 next page, page 3. 14 And finally, I would be discussing 15 with him paragraph 6 and 7 and 9. 16 I would also point out to the Court 17 that Mr. Tulchin's statements about not having 18 any idea what Mr. Bradford's testimony would be 19 are a little curious to me, given the fact that 20 Mr. Bradford was deposed on three days on three 21 -- once as a 30(b)(6) witness and two volumes 22 of him as a fact witness. 23 So I don't understand how they could 24 possibly not have been aware of these matters. 25 This was one of the documents that was 9772 1 discussed. 2 THE COURT: Okay. 3 MR. TULCHIN: Yes, it was discussed, 4 Your Honor, and it was discussed through the 5 Special Master process at great length. 6 The Special Master sustained our 7 objections. The Plaintiffs appealed, and their 8 appeal was denied, and the Court -- the Court's 9 ruling, which we have here somewhere and I can 10 provide, I think goes to all the points that 11 Ms. Conlin is making. 12 If all that's necessary here is to 13 refresh the witness' recollection -- and let's 14 be realistic, he was prepared for his testimony 15 here, and he's already seen this document. 16 His recollection, to the extent it was 17 refreshed, has already been refreshed during 18 the prep session. 19 I'm sure Ms. Conlin went through all 20 these paragraphs with him, and he's sitting 21 right here in the courtroom. 22 So the document itself isn't 23 necessary. The document again is hearsay, and 24 the ruling of this Court is clear on that. 25 And the paragraphs to which Ms. Conlin 9773 1 referred are inflammatory opinion-type 2 argument, really legal argument paragraphs that 3 the Plaintiffs want the jury to see, apparently 4 under some purported exception when none 5 applies. This witness can testify to whatever 6 he remembers about the negotiations in which he 7 participated. 8 And the document isn't necessary for 9 any of that. The document has been excluded. 10 There's no basis for coming back. 11 The Court's ruling on this, Your 12 Honor, I hope I have this right -- do we have a 13 date on this -- was on December -- 14 MS. CONLIN: We accept that. I mean, 15 there's no question about that, David. The 16 Court ruled on this as to the record then 17 before it. We don't contest that. 18 MR. TULCHIN: Well, I'm glad we don't. 19 I haven't heard any exception to the 20 hearsay rule that would permit the jury to see 21 or hear any of this document or that would 22 permit the Plaintiffs to get it into evidence. 23 This document certainly isn't some 24 excited utterance. 25 Mr. Bradford's memorandum on September 9774 1 18, after a meeting of September 17 of his 2 meeting with lawyers from and representing 3 Microsoft. 4 It isn't past recollection recorded. 5 This is legal argument, and if Mr. 6 Bradford can testify on the stand as to what 7 happened -- because really all the Plaintiffs 8 -- all the Plaintiffs want to be able to tell 9 the jury from what's been said so far is this: 10 Microsoft requested that during the period of 11 discussions between Microsoft and Novell that 12 Novell hold DRI as a separate subsidiary so 13 that if it had to be spun off in order to pass 14 governmental review, if Microsoft and Novell 15 were to merge, that DRI would be a separate 16 sub. It would be owned by Novell, but it would 17 be held as a separate entity. 18 That's what Microsoft asked, and 19 that's apparently what Novell agreed to do. 20 Now, if he says those things, I will 21 not object to them. He can say them. 22 This document isn't necessary for any 23 of that other than for its inflammatory 24 purposes about Mr. Bradford's characterizations 25 of the time of what was going on. 9775 1 MS. CONLIN: Your Honor, we're not 2 offering to refresh recollection. That's quite 3 a different thing than past recollection 4 recorded. 5 Under 5.803, subsection -- and of 6 course, I don't think I've said a word about 7 excited utterance, except in connection with 8 the testimony, not in connection with the 9 document. 10 I think that excited utterance does, 11 in fact, apply to what Mr. Noorda said 12 immediately after this surprise telephone call 13 from Mr. Gates. 14 I can lay further foundation about how 15 close the offices were and things of that sort 16 if that's necessary, but focusing now on the 17 document not offered as a refreshing 18 recollection, but offered as a recorded 19 recollection. 20 An exception to the hearsay rule is as 21 -- is stated as follows: A memorandum or 22 record concerning a matter about which a 23 witness once had knowledge but now has 24 insufficient recollection to testify fully and 25 accurately shown to have been made by the 9776 1 witness or adopted by the witness when the 2 matter was fresh in the witness' memory and to 3 reflect that knowledge correctly. 4 Mr. Tulchin's return again and again 5 to the Special Master's ruling on this issue is 6 simply not dispositive. 7 What the Special Master was to do was 8 make those rulings that could be made in 9 advance of trial. 10 What this Court reserved the right to 11 do and has the right to do is make those 12 rulings with respect to evidence offered when 13 foundation is laid for exceptions to the 14 hearsay rule that were not available to us at 15 the time that we offered this before the 16 Special Master because there was no foundation. 17 Now there is foundation, and there 18 will be foundation, so it's perfectly 19 appropriate for us to bring this to the Court 20 on the proper foundation. 21 He is not -- Mr. Bradford with respect 22 to document -- the document at issue, he's not 23 confined to what he happens to remember on the 24 stand. That's what the purpose of past 25 recollection recorded is; to make sure that the 9777 1 witness can testify fully and accurately. 2 And this happened in September 1991. 3 It would be unrealistic and unreasonable to 4 expect that he could remember word for word 5 what he heard and said in the course of that 6 meeting in September of 1991 without the 7 assistance of this record that he made 8 immediately thereafter, one day after the 9 events. 10 MR. TULCHIN: Your Honor, just a 11 couple things. 12 I mean, this is exactly what the 13 Special Master process was about. 14 The Court did reserve on questions of 15 relevance, but the question of whether this 16 document falls within an exception to the 17 hearsay rule is exactly what the Special Master 18 process was all about. 19 I mean, every document that -- there 20 are thousands now already in evidence. Every 21 one is hearsay unless there is an exception. 22 For example, is it a business record? 23 Does it fall within Rule 5.803(5) for recorded 24 recollection? 25 And the business record exception, 9778 1 803(6), is no different from the recorded 2 recollection exception, 803(5). These were the 3 matters about which the Special Master process 4 was designed to work. 5 These arguments were or could have 6 been made to the Special Master. The Special 7 Master ruled against the Plaintiffs. They 8 appealed to this Court, and of course, Your 9 Honor, both sides have the good sense to appeal 10 not with respect to every ruling of the Special 11 Master, but only a subset. 12 This one was appealed, and Your Honor 13 rejected the appeal on December 6th. 14 In the rulings chart for this 15 document, the Plaintiffs set forth their 16 argument as to why the hearsay objection should 17 be overruled and Microsoft set forth its 18 response, and the Court sustained the Special 19 Master's ruling. 20 So -- and secondly, Your Honor, I 21 don't believe any foundation has been laid 22 whatsoever. 23 The witness apparently is here to 24 testify that Novell maintained Digital 25 Research, Incorporated, as a separate 9779 1 subsidiary for a period of time so that Novell 2 could pursue merger discussions with Microsoft. 3 Something that was Novell's choice. 4 And he can so testify. That much he remembers. 5 And if necessary, we should call him 6 to the stand outside the presence of the jury 7 and have an offer of proof. 8 Thank you, Your Honor. 9 MS. CONLIN: Let's first see whether 10 or not the Court -- how the Court rules, but, 11 Your Honor, during the Special Master process, 12 neither Mr. Tulchin and I were there, but 13 Mr. Cashman was, and he tells me, and he can 14 tell the Court, that throughout the process, 15 the Special Master continually said that we 16 could cure foundation. 17 And the only exception apparent on the 18 face of this document would be the business 19 record exception. The only exception to -- 20 which would not require the laying of 21 foundation with the witness would be the 22 business records. 23 The Court has indeed sustained the 24 Defendant's objection to this document. 25 And we are not offering it as a 9780 1 business record. We are offering it under 2 McElroy, we are offering it under past 3 recollection recorded, and as a part of the 4 duties to this witness to his corporation. 5 THE COURT: Anything else? 6 MR. TULCHIN: No, Your Honor. 7 THE COURT: Take some time and take a 8 look at it. 9 MS. CONLIN: Thank you, Your Honor. 10 MR. TULCHIN: Thank you, Your Honor. 11 THE COURT: We'll be in recess. 12 (A recess was taken from 1:25 p.m. 13 to 1:56 p.m.) 14 (The following record was made out of 15 the presence of the jury.) 16 THE COURT: The Court has looked over 17 the objections made. 18 First, Mr. Bradford may testify as to 19 what Mr. Noorda -- did I pronounce that right? 20 MS. CONLIN: Yes, Your Honor, Noorda. 21 THE COURT: -- told him if it is for 22 the purpose of explaining a subsequent action. 23 However, he may not state what Mr. Gates stated 24 through Mr. Noorda, as that is hearsay, and 25 that is the statement that I heard in the jury 9781 1 room or I guess the court reporter room. That 2 may not be admitted. 3 MS. CONLIN: I'm sorry to stop you, 4 Your Honor, but I don't quite understand what 5 the Court is saying. 6 What Mr. Noorda told him was what 7 Mr. Gates said to him. 8 THE COURT: Well, you gave me some 9 other statements that he told -- that he had 10 some excited utterances that Mr. Noorda made. 11 Those he may state. Any utterances that 12 Mr. Gates said he cannot state. 13 That's what I understood what you 14 wanted. 15 In regard to Plaintiffs' Exhibit 5365, 16 the document is hearsay, and the question at 17 this time is whether or not foundation can be 18 made for an exception under the hearsay rule. 19 If the Plaintiffs seek to use the 20 exhibit for purposes of past recollection 21 recorded, it must be because the witness is 22 unable to recall events he was a party to in 23 order to testify fully and accurately. 24 The first question, therefore, is can 25 a witness look at the exhibit, have his memory 9782 1 refreshed, and then be able to testify without 2 proceeding to the next step to see if the 3 exhibit qualifies as past recollection 4 recorded. 5 In order to establish past 6 recollection recorded, the Plaintiffs must show 7 and establish that Mr. Bradford once had 8 personal knowledge of the matter recorded, the 9 memorandum or record was prepared or adopted by 10 him when his memory was fresh, the memorandum 11 or record accurately reflected his knowledge, 12 and that Mr. Bradford currently has 13 insufficient recall of the matter to testify 14 fully and accurately. 15 Therefore, the proper method would be 16 first to see if his memory can be refreshed 17 without using the document or showing any 18 portion thereof to the jury. 19 If he's unable to do that, then you 20 have to proceed to the next step trying to 21 establish the four elements for foundation for 22 past recollection recorded. 23 I have reviewed the portions of the 24 exhibit which the Plaintiffs intend to show if 25 they do get past those four elements for past 9783 1 recollection recorded. 2 They can't be shown to the jury 3 unless, of course, by examining the exhibit 4 Mr. Bradford does not have his memory 5 refreshed. 6 The particular paragraphs specified 7 would appear at this time to be admissible to 8 be shown to the jury if the four foundations 9 for past recollection recorded are established 10 after any attempt to refresh his recollection 11 or memory failed. 12 If in the event it is shown that his 13 memory cannot be refreshed and the four 14 elements are established, then only those 15 portions specified may be read into the record 16 because the exhibit itself is not admissible 17 under the rule, nor any portion thereof, unless 18 it is offered by the Defendant being the 19 adverse party. 20 Anything further? 21 MS. CONLIN: No, Your Honor. 22 THE COURT: Counsel? 23 MS. CONLIN: I would ask if I can make 24 an offer of proof with this witness tomorrow 25 morning on these topics. 9784 1 THE COURT: Very well. You may. 2 Anything else? 3 MR. TULCHIN: Not from us, Your Honor. 4 THE COURT: Okay. 5 (The following record was made in the 6 presence of the jury at 2:03 p.m.) 7 THE COURT: Everyone else may be 8 seated. 9 Members of the jury, I apologize for 10 the delay. It was solely my responsibility, so 11 don't blame the parties. It was a legal matter 12 I had to take up. The Court has ruled on it 13 and now we may proceed. 14 MS. CONLIN: Thank you, Your Honor. 15 DIRECT EXAMINATION (CONT'D) 16 BY MS. CONLIN: 17 Q. Mr. Bradford, we'll return to a day or 18 two after the July 17th announcement of the 19 merger between DRI and Novell. 20 Mr. Noorda comes to your office and 21 talks with you about a call that he's gotten. 22 And who is the call from? 23 A. The call he received was from Bill 24 Gates. 25 Q. And as a result of that call, you 9785 1 called a board meeting? 2 A. That's correct. 3 Q. Okay. Tell the jury the subject of 4 the board meeting that you called. Was it just 5 the next day, July 20th? 6 A. It was the 21st. It was a couple of 7 days after that call. 8 The subject of that board meeting was 9 the proposal by Microsoft that we reinstitute 10 merger discussions between Novell and 11 Microsoft. 12 Q. And did you decide to -- what did the 13 board decide? 14 A. Well, they decided that in the best 15 interest of our stockholders, as owing a 16 fiduciary obligation to our stockholders, we 17 always will take a look at any offer that's 18 being made by the company. 19 So we agreed to proceed and continue 20 the discussions that had been reinstituted by 21 Microsoft. 22 Q. All right. Did the board have 23 concerns about reinstituting merger discussions 24 with Microsoft? 25 A. Certainly. 9786 1 Q. And what were those concerns? 2 A. Well, among other things, they were 3 concerned about the length that this might 4 take. They were concerned that the -- might be 5 disingenuous in terms of their desire, 6 Microsoft's desire to obtain information from 7 us, and that the real reason for the merger 8 discussions wasn't really to talk about a real 9 desire to merge, but rather to get information 10 from Novell about our product road maps, our 11 technical information, et cetera. 12 So there was concerns along those 13 lines. 14 Q. Was there any discussion about what to 15 do about DRI? 16 A. At that board meeting, not that I 17 recall. 18 Q. All right, and was there then another 19 -- let me see if I can figure out how to ask 20 this question. 21 Was there a meeting between Mr. Gates 22 and Mr. Noorda that weekend? 23 A. Yes, there was. 24 Q. Where did the meeting occur? 25 A. In the San Francisco airport. 9787 1 Q. Were you present? 2 A. No, I was not. 3 Q. When Mr. Noorda came back, did he talk 4 to you about what the conversation was? 5 A. He did. 6 Q. Did he seek your advice? 7 A. Certainly as -- uh-huh. 8 Q. As a result of this discussion with 9 Mr. Noorda, did you -- did Novell then continue 10 and go forward with the merger of DRI? 11 A. We did. 12 Q. Did you also go forward with the 13 merger talks with Microsoft? 14 A. Yes, we did. 15 Q. And when DRI was taken into or merged 16 with Novell, what form did you keep DRI in? Do 17 you know what I'm asking you? 18 A. Uh-huh, yes. 19 Q. Okay, good. 20 A. There were a number of ways in which a 21 company can bring another company and merge it 22 together. 23 One of the ways is to simply make it a 24 division for the broader company. 25 Another way is to keep it a separate 9788 1 and distinct, yet wholly-owned subsidiary of 2 Novell, and so we decided to keep Digital 3 Research as a separate and distinct legal 4 entity from Novell, albeit a wholly-owned 5 subsidiary of the company. 6 Q. Why? 7 A. With respect to the merger discussions 8 that we were having with Microsoft, one of the 9 suggestions made by the Microsoft folks is that 10 if as Novell merged with Microsoft, if that 11 should come to fruition, that the justice 12 department would be concerned about having two 13 large companies in the marketplace merging 14 together with the only desktop alternative to 15 Microsoft DOS. 16 And so they suggested that if we keep 17 this Digital Research a separate and distinct 18 legal entity, then it would be easily spun out 19 if Microsoft and Novell came together. 20 Q. And that's why you did that? 21 A. That is correct. 22 Q. As a -- as to get to keep the merger 23 talks with Microsoft going forward and make the 24 end result easier? 25 A. Certainly, it was our plan if things 9789 1 were to work out with Microsoft, that -- and if 2 we all agreed on doing this and if the justice 3 department required a spin-out of Digital 4 Research, it would have been easier to do if it 5 was a separate and distinct legal entity. 6 Q. All right. In the course of your 7 discussions with Microsoft, was there any 8 condition Microsoft imposed on DRI -- I'm 9 sorry, let me start again. 10 In the course of your discussions with 11 Microsoft, was there any condition Microsoft 12 imposed on DRI and Novell? 13 A. Well, certainly one of the statements 14 made was that this DRI thing, that's got to go. 15 Q. Is that a statement made by Mr. Gates? 16 A. Yes. 17 MR. TULCHIN: Objection, Your Honor. 18 Move to strike. 19 THE COURT: Overruled. 20 Q. In your involvement with this, and 21 with mergers generally -- let's talk about 22 generally. 23 How long do merger discussions usually 24 go on? 25 A. Well, as a public company, you have to 9790 1 be very careful with respect to extended merger 2 discussions because you know that inevitably 3 there will be a leak from the discussions, and 4 so you want to make sure that you shorten the 5 time frame for those merger discussions. 6 The Digital Research merger discussion 7 was very typical. We started those merger 8 discussions in earnest in May of '91. We 9 signed a letter of intent in July, about two 10 months later, and it was publicly announced. 11 So we kept that time frame to about 12 two months. I'd say that's pretty typical. 13 Q. All right. And were the parties to 14 the Microsoft/Novell merger talks able to keep 15 them secret? Were there any leaks to your 16 knowledge? 17 A. I'm sorry. Repeat the question. 18 Q. I may have not asked it correctly. 19 We've got too many mergers going on here. 20 A. Right. 21 Q. All right. Were the parties to the 22 conversations between Microsoft and Novell able 23 to keep those conversations, merger 24 negotiations secret? 25 A. Right. I don't believe that there was 9791 1 ever a leak with respect to those discussions 2 at the time of those discussions. 3 Q. What does the company do in terms of 4 other employees? What does Novell do? 5 Let me see if I can ask a better 6 question because I can see this isn't a good 7 one. 8 What -- how many people, how's that? 9 How many people at Novell know that these 10 discussions are going on? 11 A. Oh, it's a very small group. 12 And so there was probably -- it wasn't 13 all of the executive committee. It was the 14 chief financial officer of the company. It was 15 myself as senior vice president and general 16 counsel. It was Ray Noorda knew that they were 17 going on. Very small, narrow group. 18 Q. Who was your outside counsel? 19 A. Wilson, Sonsini, Goodrich & Rosati. 20 Q. That's a Bay area law firm? 21 A. It is. 22 Q. And do any of the employees or 23 officers of DRI know that these merger 24 discussions are going on? 25 A. No, they didn't. 9792 1 Q. And do they know that the form in 2 which they are being merged is a result of any 3 merger talks? 4 A. No, they didn't. 5 Q. What did Novell's legal advisors 6 estimate the chance of federal approval of this 7 potential merger between Microsoft and Novell 8 to be? 9 A. Well, we felt that it was very low. 10 Certainly under 50 percent of any government 11 approval of a combined Microsoft/Novell. 12 Q. What were the estimates by Microsoft's 13 lawyers that they told you at least that they 14 thought the chances of government approval 15 would be? 16 A. They believed they were very high. I 17 would say 70 or 80 percent. 18 Q. So they started as a result of this 19 phone call on July 19th or so, and when did 20 they conclude? 21 A. They concluded in early April of 1992. 22 Q. So July until April? 23 A. That's correct. 24 Q. In your experience, was that longer or 25 shorter than most such talks? 9793 1 A. Certainly longer. 2 Q. Did you participate in any meetings 3 with Microsoft's lawyers specifically calling 4 your attention to September 17, 1991? 5 A. Yes, I did. 6 Q. And did you make notes at the time? 7 A. Yes, I did. 8 Q. When you returned, what did you do 9 with those notes? 10 A. I reduced them to writing. I 11 typically will read over my notes and dictate a 12 memo that my administrative assistant will type 13 up. 14 Q. And when you made those notes and made 15 your dictation from those notes, was the 16 meeting fresh in your mind? 17 A. Certainly, yes. 18 Q. And did you make notes as accurately 19 as you could? 20 A. Yes, I did. 21 Q. And let me ask you to take a look, if 22 you would, at Plaintiffs' Exhibit 5365. And 23 I'm going to ask you to take a quick look at 24 it, if you would -- I know that I showed it to 25 you the other day as well -- and ask you if I 9794 1 took that away from you, would you be able to 2 testify fully and accurately as to the contents 3 of Plaintiffs' Exhibit 5365? 4 A. Well, the memorandum was written over 5 15 years ago, so my memory -- this would 6 certainly help to refresh my recollection of 7 those conversations that took place at that 8 time. 9 Q. Okay. I have to ask you the question 10 again. 11 A. Okay. 12 Q. Because of the rules of evidence, not 13 because you're not answering correctly, but 14 would it be possible for you to testify fully 15 and accurately without reference to Plaintiffs' 16 Exhibit 5365? 17 A. No, it would be impossible to testify 18 fully and accurately. 19 I have some recollection of the 20 meeting sitting here today, but to testify 21 fully and accurately I would need to look at 22 the document. 23 MS. CONLIN: All right. Your Honor, 24 at this time we would offer Plaintiffs' Exhibit 25 5365 as past recollection recorded. 9795 1 MR. TULCHIN: Same objection, Your 2 Honor. 3 THE COURT: Objection is sustained. 4 You have to ask the particular 5 question first. 6 MS. CONLIN: All right. Let me try 7 again. 8 Q. Let me do the stage business here. 9 I'm showing you Plaintiffs' Exhibit 10 5365. Is this the memorandum that you made 11 from the notes that you took of the meeting 12 that occurred with the Microsoft lawyers on 13 September 17, 1991? 14 A. Yes, it is. 15 Q. All right. And take a moment to 16 review it and then tell me whether or not 17 looking at the memorandum refreshes your 18 recollection so that you can testify fully and 19 accurately as to the meeting. 20 I'm going to take it from you now. 21 A. Okay. 22 Q. Can you testify fully and accurately 23 having refreshed your recollection as to the 24 meeting that occurred on September 17, 1991, 25 with Microsoft's attorneys? 9796 1 A. I think I have a pretty good 2 recollection of what occurred at that meeting 3 now. 4 Q. Then I'm going to keep this and ask 5 you the questions. 6 Do you recall who was present at the 7 meeting? 8 A. Yes, I do. 9 Q. Tell me who the people were. 10 A. Well, from the Novell side there was 11 Larry Sonsini, who was outside counsel for the 12 company, along with Chris Compton and Tor 13 Braham, who were a couple of attorneys with 14 whom I'd worked previously at Wilson seen. 15 There was myself. And so there were four 16 lawyers on the Novell side. 17 Microsoft brought in eight lawyers, 18 from two different law firms, as I recall, and 19 they had their general counsel there as well, 20 Bill Neukom. 21 Q. And what was the purpose of the 22 meeting? 23 A. The meeting was to discuss 24 specifically the antitrust concerns that Novell 25 had about a proposed combination of the 9797 1 companies. 2 Q. All right. And let's -- let me ask 3 you, have you had further discussion with 4 respect to the divestiture of DRI during that 5 meeting? 6 A. Yes, we did. 7 Q. Can you tell us, please, what the 8 nature of those discussions was? 9 A. Yes. Microsoft certainly wanted to 10 encourage us to keep DRI as a separate and 11 distinct legal entity so that in the event a 12 merger came together it would be easily spun 13 out of the combined company. 14 Q. All right. Was there also discussion 15 about the -- about any interaction that 16 Microsoft was having with the federal 17 government, specifically the FTC, during this 18 time frame? 19 MR. TULCHIN: Objection. Relevance. 20 THE COURT: Overruled. 21 You may answer. 22 A. Yes, there was. 23 Bill Neukom, the general counsel of 24 Microsoft at the time, explained to us that 25 Microsoft at that point in time was under 9798 1 investigation by the Federal Trade Commission 2 for anticompetitive conduct. 3 Q. And for how long a period had they 4 been under investigation? Did he tell you 5 that? 6 MR. TULCHIN: Same objection, Your 7 Honor. 8 THE COURT: Overruled. 9 A. 16 months. 10 Q. All right. And did he tell you, 11 Mr. Neukom, the general counsel of Microsoft, 12 did he tell you what he thought that the FTC's 13 reaction would be to a merger of Novell and 14 Microsoft? 15 A. Yes, he did. 16 Q. What did he say? 17 A. He indicated that their reaction would 18 be very negative. 19 Q. And how did he propose to handle that? 20 A. He suggested, among other things, that 21 they -- Microsoft was going to continue to 22 supply information to the Federal Trade 23 Commission, kind of on a piecemeal basis, and 24 kind of slow things down there. And then if 25 Microsoft and Novell came together, that Novell 9799 1 would spin out of its company the Digital 2 Research company and that Microsoft would spin 3 out of their company a product that competed 4 with Novell's Netware operating system. 5 Their product was called LAN manager, 6 and it was a network operating system much like 7 Novell's was. 8 So the concept was that they proposed 9 that they -- you know, to get past federal 10 government muster that we spin out Novell's DRI 11 their LAN manager. 12 Q. Did Mr. Neukom indicate that Microsoft 13 had received any process, any subpoena from the 14 federal government in the recent past? 15 A. I don't know if it was technically a 16 subpoena, but I certainly know that they were 17 under investigation. If that involved a 18 specific subpoena, I don't recall. 19 Maybe I put it in my notes of that 20 meeting, but I don't recollect right now. 21 Q. All right. Would it now -- would it 22 help you to refresh your recollection from 23 these notes about the nature of the process 24 that Microsoft had received and how they 25 proposed to respond to it? 9800 1 A. Certainly, that would help. 2 Q. All right. I'm going to first to 3 refresh your recollection. Then I take it away 4 from you. 5 A. Okay. 6 Q. Turn if you would to page 3, I 7 believe, and look at number C. 8 A. Yes, it appears that -- 9 Q. Okay. Got to take it away from you 10 before -- 11 A. Okay. 12 Q. Sorry. 13 Okay, now. 14 A. It appears from what Microsoft told us 15 that they had actually received a formal 16 subpoena from the Federal Trade Commission. 17 Q. All right. And you said that 18 Mr. Neukom had told you that he intended to do 19 something on a piecemeal basis. Could you 20 explain to us what you took that to mean? 21 A. I am sure that the scope of the 22 subpoena that was supplied to Microsoft from 23 the Federal Trade Commission was very broad and 24 asked for lots of different information. 25 And so by responding on a piecemeal 9801 1 basis, what I took from what Bill Neukom was 2 saying is that they would supply a piece of 3 information relevant to this market over here 4 and then that market over there and then carry 5 it out over a period of time. 6 Q. Did he indicate how long he thought he 7 could do that? 8 A. I don't recall a specific date. Maybe 9 it's in the document, but -- sitting here today 10 I don't remember. 11 Q. All right. Did he say it would 12 continue well into the future? 13 A. Certainly, yes, that was -- that would 14 be accurate. 15 Q. And do you recall what the subpoena 16 called for? 17 A. I'm sure it called for specific 18 information relative to Microsoft's alleged 19 monopoly in the desktop operating system 20 business. 21 Q. Okay. Let's turn to a somewhat 22 different subject and that was the -- your view 23 of Microsoft's points it urged in favor of the 24 negotiations. 25 Do you recall what points Microsoft 9802 1 made that you had some concern about? 2 A. Yes. There were a number of concerns. 3 Their confidence level that we could 4 get this thing past the United States 5 Department of Justice surprised me because of 6 their clearly 90 percent plus position in the 7 desktop operating market, plus they thought we 8 had 70 percent of the network operating system 9 market, which we didn't. It was closer to 50 10 to 60 percent, in that range. 11 But, nevertheless, despite those large 12 market shares that each company had relative, 13 they still thought that they could get this 14 deal done and they thought they'd just blow 15 right by the government. 16 Q. Did you have any concerns about 17 whether or not this kind of a merger would be 18 good for consumers? 19 A. Oh, certainly, yes. 20 And, you know, whenever, you know, 21 there's monopoly power, there's a tendency to 22 be able to raise prices if there's no 23 competition. 24 Q. If Microsoft and Novell came together 25 and you had to spin out the DRI and the DR-DOS 9803 1 product, would it be easy or hard to find 2 somebody to buy that product? 3 A. Well, it would have been very 4 difficult to find someone to buy Digital 5 Research at the time because, you know, with 6 Microsoft's dominance in the desktop and our 7 success in the network operating system market, 8 it would have been very difficult to get 9 someone to buy that product. So I know there 10 was a specific concern on that. 11 Q. Did you have a view after your 12 discussion as to whether -- what kind of 13 enthusiasm Microsoft had for doing the deal? 14 A. That group, those attorneys that we 15 met with, seemed genuinely interested in 16 getting a deal done and thought that they could 17 get it past the U.S. government. 18 Q. Did you attend other meetings about 19 this -- about this merger with -- 20 A. Yes, I did. 21 Q. And did you -- did Novell continue to 22 have these concerns throughout these 23 discussions? 24 A. Yes. 25 Q. Were they ever brought up in your 9804 1 presence with Mr. Gates directly? 2 A. Yes. 3 Q. And tell the jury, if you would, what 4 concerns Novell brought up and what you recall 5 about Mr. Gates' response to those concerns. 6 A. Well, certainly he was confident, like 7 his lawyers, that this deal could get done and 8 he could get it past the United States 9 government. 10 And when we met with him in Redmond, 11 Washington -- Ray Noorda and I had a separate 12 meeting with Bill Gates where we sat in his 13 office and visited about various concerns about 14 the combined company. We talked about 15 intellectual property and licensing of various 16 technologies from one company to another. 17 Q. And it was just the three of you in 18 that meeting? 19 A. That's correct. 20 Q. And Novell goes forward with the 21 merger with DRI while these talks are going on, 22 and then do the talks continue after the merger 23 between DRI and Novell? 24 A. Yes, they did. 25 Q. And based on your observation, and not 9805 1 just in terms of the wholly-owned subsidiary, 2 but how do these talks affect the ability of 3 Novell to integrate DRI and its products into 4 Novell? 5 MR. TULCHIN: Objection, Your Honor. 6 He was not in the business end. He's speaking 7 only as a lawyer. 8 THE COURT: Overruled. 9 A. At the time, among other things, 10 business development was an area of mine within 11 the company. 12 Actually, I'm not sure. That wouldn't 13 be accurate. I want to be perfectly accurate 14 with the jury on that. 15 This was '91-'92 time frame. I had 16 business development responsibilities given to 17 me more like '95, '96. 18 At the time I had other divisions 19 within the company. 20 But, you know, let's go back to your 21 original question before the objection was 22 made. I want to be clear on the question. 23 Q. Let me restate it. 24 Based on your observation -- and you 25 are a member of the executive committee; 9806 1 correct? 2 A. That's correct. 3 Q. And the executive committee is the 4 decision-making body for Novell? 5 A. That's right. 6 Q. Based on your observations, how do the 7 merger negotiations between Novell and 8 Microsoft affect the integration of DRI and its 9 products into Novell? 10 A. Well, frankly, it made it very 11 difficult. 12 So the first thing you want to do once 13 you combine companies is get the sales groups 14 working together. You want the marketing 15 groups working together. You want the finance 16 teams working together, et cetera, et cetera 17 and, that's a matter of great urgency. 18 I would say the first one, two months 19 of a combined company really tells the 20 long-term tail of how effective you're going to 21 be to integrate one company into another. 22 And so when we were kind of forced to 23 set aside DRI and let them kind of continue to 24 operate on their own without integrating and 25 lots of meetings between the two companies, it 9807 1 made it difficult. 2 Q. And as these merger talks go on, does 3 Novell have concerns about the time it's 4 taking? 5 A. Oh, certainly, yes. We were concerned 6 about that. 7 Q. Does Novell make a specific request of 8 Microsoft in the February time frame? 9 A. Yes, we did. 10 Q. What was that request? 11 A. Well, we requested that for the first 12 time they actually put their interest level in 13 writing. Up to that point, it had been a 14 series of meetings and conversations and calls 15 from Gates to Noorda, et cetera, et cetera, but 16 nothing had actually been put in writing in a 17 firm fashion from Microsoft. 18 Q. So from July 17th until February, no 19 documents had changed hands? 20 A. That's correct. 21 Q. All right. Was something put in 22 writing? 23 A. Yes. 24 Q. Who wrote something down? 25 A. I believe -- boy, if memory serves me 9808 1 correctly, was it Frank Gaudette, I think, an 2 executive at Microsoft. 3 Q. And what kinds of -- and then was it a 4 letter or was it like a legal document setting 5 out the terms of a merger proposal? 6 A. No, it wasn't a terms sheet. It was 7 merely a letter about a page, page and a half 8 from Frank Gaudette to Ray Noorda setting out 9 preliminary terms under which a deal might come 10 together. It specifically stated, as I recall, 11 that it wasn't to be deemed to be a firm offer. 12 Q. And after you got that, did the talks 13 go on? 14 A. Yes, they did. They continued from 15 there. 16 Q. What stops them? 17 A. So mid to late March of that year, so 18 approximately a month, month and a half after 19 Frank Gaudette's preliminary letter -- 20 MS. CONLIN: We might have this on our 21 calendar. 22 A. Let's see, February 13th, '92, Frank 23 Gaudette. I don't think he was Microsoft 24 counsel though. 25 Q. All right. 9809 1 A. I think he had a different role at 2 Microsoft. 3 But in any event, it was Frank 4 Gaudette. 5 Q. Then March 25th -- 6 A. Okay. So March 25th, 1992, Microsoft 7 announces the merger -- or their acquisition of 8 a company called Fox, Fox Pro. They 9 manufactured a database product that actually 10 competed with a product that we had, a database 11 product that we had called BTrieve. 12 And so they announced this to the 13 world that they're acquiring Fox Pro. And 14 their product was called Access. That was 15 their database software. 16 And this came out of left field from 17 us. We were kind of stunned and surprised that 18 we had all of these discussions ongoing. We 19 now had a letter from early February in our 20 files indicating Microsoft's sincere intent to 21 merge and so forth, and yet here, you know, 22 they go off and now they're going to do a whole 23 new deal, which was a fairly significant deal. 24 Q. But why did that make it stop? Why 25 did that make Novell want to stop the merger 9810 1 discussions with Microsoft? 2 A. Well, first of all, they didn't 3 disclose to us that they had ongoing merger 4 discussions with Fox Pro while they were 5 talking to us. 6 And as a matter of courtesy, 7 professionalism and whatnot, if they really 8 were serious about acquiring Novell, I believe 9 they would have disclosed to us the fact that 10 they were also talking to Fox Pro and looking 11 at acquiring a database technology that was 12 competitive with Novell's database. 13 Q. Any other reasons why that caused 14 Novell to stop the negotiations with Microsoft? 15 A. Well, certainly in terms of time, just 16 sheer time and management direction at 17 Microsoft, the Microsoft executives from Bill 18 Gates on down would be very busy responding to 19 inquiries from government, inquiries from the 20 SEC, et cetera, about the nature of that 21 transaction. 22 And it was going to take, you know, 23 them a lot of time to get that deal done, 24 probably two months. Like I've described 25 earlier, two to three months. So we knew that 9811 1 was going to take them away. 2 And during that time period, we didn't 3 want to distract our executives from doing what 4 they were supposed to do, selling product, 5 marketing the company, building new 6 technologies. 7 Q. So at that point are there any further 8 negotiations? 9 A. No. There's a subsequent phone call 10 that occurs between our outside counsel and I 11 believe their outside counsel. 12 Q. All right. Well, but there's no 13 negotiation? 14 A. No, that's done. 15 At that point we're stunned, we're 16 surprised. You know, we assume the deal's not 17 going forward. 18 So at that point we just go back to 19 doing what we're doing. Actually at the time, 20 we were all kind of puzzled, you know, what 21 does that mean, what do we do at this point, et 22 cetera. 23 Q. In retrospect, and with the board's 24 consideration, did you reach any conclusions 25 about Microsoft's intent in terms of these 9812 1 merger discussions? 2 MR. TULCHIN: Objection, Your Honor. 3 Calls for speculation. 4 THE COURT: Sustained. 5 Q. Did the board and Mr. Noorda and you 6 discuss what Microsoft -- what your view was of 7 what Microsoft's intent was in pursuing these 8 negotiations for this long period of time? 9 A. Yes, we did. 10 MR. TULCHIN: Same objection, Your 11 Honor. 12 THE COURT: Sustained. 13 Q. As a part of your responsibilities to 14 Novell and as its general counsel, you 15 participated in the merger discussions. Did 16 you participate in a -- in any sort of review 17 of those discussions? 18 A. Yes. 19 Q. And was that at a board meeting? 20 A. Yes. 21 Q. And was that the subject of any formal 22 notes to your knowledge? 23 A. Typically we maintained notes from our 24 board meetings. 25 Q. And in discussing this with the board, 9813 1 did it matter to you as a company what 2 Microsoft's intent was in terms of starting and 3 continuing these merger negotiations? 4 A. Yes, it was a matter of great concern 5 to us. 6 Q. And did that come up in the course of 7 the negotiations as well? 8 A. Certainly it did, at least on our 9 side. 10 We expressed concern that the 11 reason -- 12 Q. Wait, wait. 13 A. I'm sorry. 14 Q. Don't say the reason until I -- I'm 15 sure that the Court will permit it. 16 And in that discussion, did Novell 17 ever reach a conclusion about its own conduct 18 as to whether or not those discussions were in 19 error from Novell to enter into? 20 A. Yes, I think in retrospect we thought 21 that it was a mistake that we had taken all of 22 that time to negotiate with Microsoft. 23 Q. And why did Novell think it was an 24 error for it to enter into those discussions? 25 A. Because we believed that Microsoft's 9814 1 -- 2 MR. TULCHIN: Objection, Your Honor. 3 A. -- purpose -- 4 Q. Wait. 5 MR. TULCHIN: Objection. Calls for 6 speculation again. 7 THE COURT: Overruled. You may 8 answer. 9 A. We believed that the reason that 10 Microsoft entertained those discussions over a 11 nine-month period was for the express purpose 12 of deterring us from moving forward with 13 Digital Research and competing effectively with 14 them in the desktop operating system market. 15 Q. When you stopped talking with 16 Microsoft in late March of 1992, does the 17 process of actually combining the two companies 18 begin at that point? 19 A. Yes, it begins in greater earnest at 20 that point. 21 Q. And about this time, what happens with 22 Mr. Williams, the former CEO of DRI? 23 A. Dick Williams resigns from Novell. 24 Q. And do you know why? 25 A. I think that there was -- I think he 9815 1 was frustrated that during the negotiations for 2 buying Digital Research that Mr. Noorda had 3 extended to him certain promises as to his 4 ongoing role in the combined company, and I 5 think he was hopeful of being president or 6 certainly a senior executive within Novell, and 7 seeing that wasn't happening, seeing we closed 8 the deal November 1, and here we are now in 9 late April and nothing had been done, he was 10 probably frustrated by that, and so he left the 11 company. 12 There may have been other reasons. 13 Q. Was his leaving a loss to Novell? 14 A. I felt it was a loss. I liked Dick 15 Williams. I thought he was a very measured and 16 smart and senior executive that could have 17 added value to Novell moving forward. 18 Q. And was Mr. Williams any party to the 19 negotiations with Microsoft between Microsoft 20 and Novell? 21 A. No, he was not. 22 Q. I want to move now to another subject 23 matter, and that is a negotiation -- or I beg 24 your pardon. I was thinking of negotiations. 25 A deal between the DRI people and Sears. 9816 1 A. Yes. 2 Q. Remember that in general? I know it's 3 not specific. 4 A. Yes, generally I remember a proposed 5 transaction that DRI was pretty excited about 6 that they were going to do with Sears. 7 Q. Let me first show you Plaintiffs' 8 Exhibit 9039. 9 Do you have that one with you? I 10 didn't take that one away from you. 11 A. Yes, I've got it. 12 Q. This is a document already in 13 evidence, and it is dated December 26, 1991, 14 and it is -- 15 MS. CONLIN: Do you have that? 16 Q. Okay, there we go. 17 December 26, 1991, from Sears to -- 18 let's see, Lisa Peery, OEM sales assistant 19 Digital Research, Santa Clara. 20 And let's look at what Sears says. 21 Now, the first paragraph, Dear Ms. Peery, 22 congratulations on winning the Navy Lapheld II 23 contract as a Sears team member. I look 24 forward to a long-term, mutually beneficial 25 relationship. 9817 1 And let's turn over to the next page, 2 and this is dated April 2, 1992. 3 And in that, DRI's addressed as Dear 4 Lapheld -- tell the jury -- this is not a term 5 I don't think we use very much anymore, but 6 what's a Lapheld? Do you know what it is? 7 A. I assumed that it was a laptop. 8 Q. All right. Lapheld II teaming 9 partner. 10 I'm pleased to report that the Sears 11 federal systems group has completed acceptance 12 testing on Lapheld II. I am expecting to 13 receive a formal letter to that effect shortly. 14 And then let's look at -- I'm showing 15 you these documents. They've been a part of 16 the record, and I -- in preparation for asking 17 you a question about what the legal department 18 of Novell did in connection with this deal. 19 So that's why we're going to kind of 20 go through these exhibits. 21 And the next one is 5466, and that's a 22 fax to the Sears Business Center -- from the 23 Sears Business Center, I'm sorry, to Anil Singh 24 dated 4-14-92. Who is Mr. Singh? Am I 25 pronouncing his name correctly? 9818 1 A. Yes, uh-huh. 2 Anil Singh had specific 3 responsibilities at DRI for sales and 4 marketing. 5 Q. All right. Let's turn to the body of 6 the letter and look at the third paragraph and 7 the clause that begins at the bottom of that 8 paragraph. My team is having a very difficult 9 time satisfying the government's concerns 10 regarding DR-DOS. 11 MS. CONLIN: Do we have that? Do you 12 see where I am? 13 Yeah, that would be good. Then down 14 there at the bottom, Darin, it says my team is 15 having a very difficult time satisfying the 16 government's concerns regarding DR-DOS. 17 Q. And then we're going to go to the next 18 paragraph as well, and that whole paragraph 19 says, the government MIS -- MIS is what, do you 20 know that? 21 A. Management information systems. 22 Q. All right. People who deal with 23 computer technology? 24 A. Yes. 25 Q. The government MIS players are 9819 1 familiar with MS-DOS, know that it is 2 compatible with previous versions of their 3 product and believe that DR-DOS has bugs and 4 incompatibility issues. 5 And then we're going to go to the next 6 paragraph and look at the bottom. 7 If we are unsuccessful in resolving 8 compatibility issues between DR-DOS and MS-DOS 9 and Windows, I believe that the government may 10 mandate the replacement of DR-DOS, with MS-DOS, 11 on the contract. 12 I know that you're not a technical 13 person, Mr. Bradford, but in your capacity as a 14 member of the executive committee, did you know 15 whether or not DR-DOS was compatible with 16 MS-DOS and other Microsoft products in the 17 market at the time? 18 A. Yes, generally it was. 19 Q. All right. 20 Let's look at the next document in 21 order, which is Defendant's Exhibit 170, and 22 that is another Sears document, and it is dated 23 April 29, 1992, from Mr. Price to Mr. Singh 24 again, and we're going to look at the topic is 25 -- oh, I'm sorry. 9820 1 The topic is Novell DR-DOS technical 2 support and bug fixes. 3 Now, let's see, we had the letter of 4 April 14th that we just looked at, and then I 5 think right after that Novell gets this letter 6 that's a part of the 9039 -- no, I think that's 7 before, I'm sorry. 8 So this is the next document we've 9 located, and it says, again, Sears agrees to 10 bundle DR-DOS 6.0 with all laptop systems 11 delivered under the Lapheld II contract for a 12 period of 12 months. 13 Novell agrees to a license fee of 14 $9.50 per copy delivered. 15 And there's a whole section of 16 software error corrections. 17 And at this point, it says, Novell 18 agrees to fix errors and/or bugs in the DR-DOS 19 6.0 operating system which affects Sears' 20 performance on the Lapheld II contract within 21 45 days of written notification by Sears. 22 Then it goes on to describe the 23 problems that -- this would mean that Novell 24 would take the responsibility for repairing any 25 incompatibilities that might arise in the 9821 1 course of this contract; correct? 2 A. That's correct. 3 Q. All right. And the kind of 4 incompatibilities that Novell would take the 5 responsibility to repair would be, number one, 6 incompatibility with the software currently 7 offered by Sears on the Lapheld II contract; 8 and, two, incompatibility with software already 9 in use by Sears' customers on the Lapheld; and, 10 three, incompatibility with Microsoft Windows 11 3.0 and 3.1 as well as future releases of 12 Windows. 13 And four, incompatibility with other 14 DOS applications. 15 And then let's turn to the next 16 document in order that we've got, and that is a 17 new exhibit to which Microsoft has not lodged 18 an objection, and that is 9982, and that is a 19 document sent about -- not quite a month later 20 back to Mr. Price from Mr. Palmer. 21 Do you recall who Mr. Palmer is? 22 Doesn't say. 23 A. Yeah. 24 Q. Okay. Well, he's proposing -- 25 MR. TULCHIN: I'm sorry, Your Honor, 9822 1 was there an answer to that question? I may 2 have missed it. 3 A. I don't recall. 4 T. J. Palmer, it sounds familiar, but 5 he was probably in the sales organization of 6 Digital Research, but I can't sitting here 7 today recall. 8 Q. And he writes that he wants to propose 9 a variation to the current Sears/Donnelly 10 contract regarding the compatibility issue, and 11 he talks about compatibility with MS-DOS 3.X, 12 which was the industry baseline, and then he 13 says, we would also need to limit our liability 14 to $9.50 per user if a DOS replacement was 15 required for Sear-installed customer base. 16 And that was how much Novell was being 17 paid for the product; correct? 18 A. That's right. 19 Q. All right. Then let's look at 5305, 20 and this is a document -- this is a document 21 that you did not see until I showed it to you, 22 Mr. Bradford, and this is an internal Microsoft 23 document. 24 And I just want to call your attention 25 to the last page of this document. And this is 9823 1 from Jon Kechejian to Mr. Silverberg and Chase 2 and the system MS-DOS marketing team, and the 3 subject is Sears, Navy Lapheld contract Win. 4 The date is June 1, 1992. 5 MR. TULCHIN: Your Honor, sorry, I 6 don't mean to interrupt. 7 Could I just find out from Ms. Conlin 8 what page she's on of this lengthy document? 9 MS. CONLIN: I'm sorry, last page. 10 MR. TULCHIN: Thank you, Your Honor. 11 MS. CONLIN: Let's go, if we could, 12 Darin, to -- we're going to actually kind of go 13 through this whole thing, but let's start with 14 the first paragraph. Let's start at the 15 beginning. 16 Q. And it says, Debbie Rea, Microsoft 17 federal sales rep, and I called on Sears 18 Business Systems federal group in their 19 Washington, D.C., offices on May 13, 1992. 20 Sears had recently won the Navy 21 Lapheld contract, 25,000 to 75,000 PCs per year 22 for three years, the only notebook award in the 23 federal government, which included DR-DOS. 24 Debbie and I met with Sears' technical 25 lead to discuss DR-DOS support issues versus 9824 1 MS-DOS and future Windows compatibility in an 2 effort to get Sears to replace DR-DOS with 3 MS-DOS 5. 4 Sears said they were not -- they were 5 going with DR-DOS unless DR cannot abide by the 6 terms of the Navy contract. Sears was content 7 to let DR assume the risk of Windows 8 compatibility. 9 Mr. Bradford, was Novell willing to 10 assume the risk of Windows compatibility? 11 A. Yes. 12 Q. All right. Then going on to the next 13 paragraph, Debbie Rea and Bret Swartz found a 14 clause in the Navy contract requiring 15 compatibility with Windows and got the Navy to 16 insist Sears honor it. After Debbie and I made 17 clear to Sears DR-DOS and Windows compatibility 18 would always be a major issue as well as DR's 19 regular business updates for which Sears is 20 responsible. 21 Sears included a clause guaranteeing 22 DR-DOS would be compatible with Windows now and 23 in the future in Sears' agreement with DR. 24 DR's lawyers refused to sign the contract. 25 That would be somebody in your 9825 1 department, correct, someone under your 2 jurisdiction? 3 A. That's correct. 4 Q. Mr. Bradford, why, why would Novell 5 not accept this clause that they found and 6 insisted that Microsoft found and got Sears to 7 insist would be -- 8 A. Because it would impose upon Novell 9 large legal damages in the event that these two 10 products were found to be incompatible at some 11 future point in time. 12 Q. Did you have any reason to believe 13 that there might be possibility or probability 14 that Windows would not be compatible with Mike 15 -- I beg your pardon. Let me start again, 16 please. 17 Did Novell have any reason to believe 18 that a future Windows product would be 19 incompatible, perhaps intentionally, with 20 DR-DOS? 21 A. Yes, we had those concerns. 22 Q. Why? 23 A. Well, there were public pronouncements 24 at the time by Microsoft to the effect that 25 they would ensure the incompatibility between 9826 1 Novell DOS or DR-DOS and Microsoft Windows. 2 Q. So DR lawyers did refuse to sign the 3 contract? 4 THE COURT: I didn't hear your answer, 5 sir. 6 A. Yes. I'm sorry. 7 MS. CONLIN: So moving down, if we 8 could, Darin, to the last paragraph of that 9 E-mail. 10 Q. The deal was signed Friday, May 29th, 11 with Sears solidly behind MS-DOS and already 12 looking to swap the bid applications for 13 Windows and Windows applications. Sears 14 expects to sell at least 150 PCs over the life 15 of the contract to federal agencies. 16 150 PCs, in light of what you knew 17 about the DR-DOS business, would that be a 18 large amount or a small amount or someplace in 19 between for DRI? 20 A. That would be a huge contract for DRI. 21 Q. For DRI? 22 A. And Novell. 23 Q. Let's look at the next document, again 24 Microsoft document, and it is Exhibit 3518, and 25 this is on the front page. 9827 1 If we could look at the page with the 2 title on it. 3 It is -- this is that same Jon 4 Kechejian. He is on the MS-DOS transition 5 team, and he's doing his monthly report for May 6 1992. 7 There is no actual -- I've not at 8 least found an actual date on this, but 9 presumably sometime after May. 10 And we'll turn to the second from the 11 last page ending in Bates number 141. 12 And this is his recounting of the 13 Sears Business Center Federal Group, and we're 14 going to look at all of this. 15 May 12th, 1992, he says that he and 16 Mark Zelinger, Bela Orban, Jonathan, Price and 17 Debbie Rea, who was Microsoft's government 18 account exec, met to discuss Sears Business 19 Center Federal Group's decision to provide 20 DR-DOS 6 on the Navy Lapheld contract -- let's 21 skip over the numbers again -- Sears bid based 22 on price and DR's willingness to work on Sears 23 where Mark says Microsoft would not. 24 Debbie is working with Bela to replace 25 enable with Windows and Windows applications 9828 1 further adding incentive to switch to MS-DOS. 2 Sears is very defensive in their 3 selection of DR over MS-DOS but will not 4 reverse this decision unless DR falters. 5 DR has since faltered by not agreeing 6 to sign the Sears contract which included a 7 guarantee to run future versions of Windows. 8 With this misstep, Jonk, Debbie Rea, and Don 9 Hardwick were able to get series to sign up for 10 Microsoft DOS 5.0. 11 As a legal representative of Novell, 12 did you know what was happening over in 13 Microsoft in terms of the contract with the 14 federal government? 15 A. I didn't know what was happening 16 internally to Microsoft with respect to this 17 contract. 18 Q. You knew what was happening in -- 19 generally at Novell with respect to the 20 contract? 21 A. Right. That a significant bid had 22 been won by Digital Research and that there was 23 an issue with respect to an ongoing guarantee 24 that the representatives of Sears were asking 25 us to make as a company. 9829 1 Q. That you would not permit them to 2 make? 3 A. That's correct. 4 MS. CONLIN: Your Honor, is this a 5 good time? I'm about to start a new -- 6 THE COURT: Perfect. 7 Ladies and gentlemen of the jury, we 8 will take our recess for the day. 9 Remember the admonition given. Leave 10 your notebooks here, and Carrie will collect 11 them, and we'll see you at 8:30 a.m. tomorrow. 12 Drive safely. 13 (The following record was made out of 14 the presence of the jury at 2:57 p.m.) 15 THE COURT: Take a short recess. Then 16 we'll take up this issue of proposed 17 preliminary instruction. 18 (A recess was taken from 2:57 p.m. 19 to 3:09 p.m.) 20 (The following record was made out of 21 the presence of the jury.) 22 THE COURT: The issue before the 23 Court, I did enter a ruling in regard to the 24 1995 consent decree and I had a proposed 25 preliminary instruction. 9830 1 The Plaintiffs have filed a proposed 2 preliminary instruction supplement, and I said 3 we'd have a hearing this afternoon. 4 Ms. Conlin, do you wish to add 5 anything else to your motion? Go ahead. 6 MS. CONLIN: I don't, Your Honor, but 7 if -- I wonder -- I'm uncertain what 8 Microsoft's objections might be, but if they 9 are those that we might be able to resolve in 10 our meet-and-confer process, then maybe that 11 would be the thing to do, but I don't know. 12 What do you think, Joe? 13 MR. NEUHAUS: I think this is -- I'd 14 like to make a few remarks about the general 15 proposition. 16 THE COURT: Go ahead. 17 MR. NEUHAUS: I think the motion 18 really is and the points being made are 19 untimely. And we had an argument about this. 20 They made proposals for changes to the 21 instructions. Your Honor didn't accept those 22 changes. Some of the changes are now coming 23 back in sort of a different guise. And I just 24 think we've got to sort of stop. And you've 25 ruled on it, we've made our arguments, and 9831 1 there's no point to going back and, you know, 2 going back and making new arguments about 3 things that they could have argued last week. 4 THE COURT: Well, and to be clear, one 5 of the reasons I put proposed on it was I 6 wasn't absolutely set in stone on it yet. 7 There are some problems -- well, first 8 of all, the Plaintiffs wish to add some more in 9 regard to the agreement itself I see. Then 10 they changed some language at the end. 11 Do you have any comments on those? 12 MR. NEUHAUS: I do. 13 THE COURT: Go ahead. 14 MR. NEUHAUS: As to the specific 15 comments, you know, I think that the points 16 that were in the initial instruction were the 17 right ones. They were the key points for 18 purposes of this case; that is, the per 19 processor license, the minimum commitments, and 20 the option to renew -- the one-year duration. 21 That was in the original. 22 They want to add a few other points in 23 there. 24 If those are added, there is -- you 25 know, the way they drafted this is quite 9832 1 inaccurate and misleading. 2 First of all, they have taken out 3 entirely the concept that the license 4 agreements that this is talking about are only 5 with respect to operating systems software. 6 That is gone entirely from their sort 7 of preambular language. 8 And then as to a number of the 9 subpoints, they've omitted as well some 10 important provisos. For example, the first one 11 about one-year duration. 12 And our instruction had a proviso that 13 said that except that the OEM at its option 14 could renew the license agreement for up to one 15 year. 16 That's gone. I don't know why. 17 The second one is really just a 18 language thing that bars restrictions on OEMs' 19 ability to offer non-Microsoft -- a 20 non-Microsoft operating system. 21 What the thing actually says, the 22 license agreement actually says is provisions 23 that by their terms I think prohibit or 24 restrict an OEM's licensing of non-Microsoft 25 operating systems, which is a quite different 9833 1 thing from a restriction on the OEMs' ability 2 to offer. 3 The fourth one, it's crucially flawed. 4 It says, terms, conditioning licenses from 5 Microsoft operating system -- sorry -- licenses 6 upon licensing of any other covered product. 7 There was a really important proviso 8 to this consent decree, which was that -- that 9 provided, however, that this provision in and 10 of itself shall not be construed to prohibit 11 Microsoft from developing integrated products. 12 That proviso is, in fact, the subject 13 of a whole litigation, a contempt litigation 14 which the government lost and that appeals 15 court held that Microsoft could integrate 16 Internet Explorer into Windows. 17 So that proviso is critically 18 important if you're going to get into these 19 other details of the consent decree. 20 There are -- and there are other 21 things like that. 22 I think also F and G, the language of 23 F and G about acceptable per system license or 24 prohibited nondisclosure agreement is slanted. 25 It's not in the consent decree. 9834 1 And if you're just going to talk about 2 things -- terms in very general terms, it 3 should say something like certain terms in per 4 system license agreements or nondisclosure 5 agreements. 6 And finally, Your Honor, their motion 7 doesn't mention at all that they've changed the 8 last paragraph. They don't explain that at 9 all. But they've changed it pretty 10 substantially. 11 And here, this is exactly what we 12 argued about with Mr. Williams. They've wanted 13 to change various things. And as I understood 14 it, Your Honor didn't accept those points, but 15 if we're going to address it, I don't think 16 they should be using the terms prohibited 17 conduct or prohibited by the agreement. 18 That suggests very much the kind of 19 thing that this is -- that the instruction is 20 intended to get at, that this was an agreement 21 not to engage in certain conduct and wasn't and 22 shouldn't be used to infer, you know, 23 prohibitions, illegal prohibitions. 24 And the last sentence about you must 25 evaluate the effect on competition of the 9835 1 prohibited conduct based on the evidence 2 presented, you know, puts the rabbit in the 3 hat, or whatever the expression is. 4 It assumes that there's an effect on 5 competition from these clauses. 6 And what the instruction that was 7 adopted in the Gordon case and that we had 8 proposed and that Your Honor adopted or what -- 9 that you had -- 10 THE COURT: I made some changes, yeah. 11 MR. NEUHAUS: -- was you may consider 12 this agreement in evaluating Microsoft's intent 13 and purpose and the reasonableness of 14 Microsoft's behavior after July 15, 1994, which 15 is a much more neutral way of putting the 16 point. 17 THE COURT: Did you see my changes I 18 made? I put conduct and -- 19 MR. NEUHAUS: I thought I'm reading 20 from your agreement, from the one that you sent 21 us. 22 THE COURT: Did I not attach it, the 23 right one? 24 MR. NEUHAUS: The one -- I didn't see 25 any changes. Did you change some -- what was 9836 1 attached to your order? 2 THE COURT: Okay. I made some 3 changes. 4 MS. CONLIN: I think that we've got 5 some -- 6 THE COURT: I copied the wrong one. 7 Go ahead. 8 MR. NEUHAUS: I had not seen any 9 changes. There was some changes in the last 10 sentence? 11 THE COURT: Yeah, and it's on my desk. 12 MR. NEUHAUS: Okay. Maybe we should 13 walk through these. 14 THE COURT: Hang on. Let me get it. 15 It's in my ruling book. 16 Mr. Neuhaus, what do you have there, 17 the last sentence? 18 MR. NEUHAUS: The last sentence of the 19 one that I received I thought was you may 20 consider this agreement in evaluating 21 Microsoft's intent and purpose and the 22 reasonableness of Microsoft's behavior after 23 July 15, 1994. 24 THE COURT: You got the wrong one. 25 What I -- 9837 1 MS. CONLIN: That's what I have too, 2 Your Honor. 3 THE COURT: That's my error. 4 Mine states, the one I should have 5 had, and it says, you may consider this 6 agreement in evaluating Microsoft's acts and 7 conduct as well as the intent, purpose, and 8 reasonableness of Microsoft's acts and conduct 9 after July 15, 1994. 10 MR. NEUHAUS: Can I just get that 11 down, acts and -- 12 THE COURT: I'm going to have her make 13 a copy of this. 14 MR. NEUHAUS: All right. 15 THE COURT: She's making a copy for 16 you to take a look at. 17 I apologize for that. It's my error. 18 MS. CONLIN: No problem, Your Honor. 19 I don't know how you keep all this straight 20 anyway. 21 (An off-the-record discussion was 22 held.) 23 MS. CONLIN: Is that the only change, 24 Your Honor, the one that you read us? 25 THE COURT: That was the change I 9838 1 made. The only one I made -- I felt it was too 2 constrictive as it was because I thought they 3 could use it to evaluate anything that 4 Microsoft has done. 5 MR. NEUHAUS: We have no problem with 6 that, Your Honor. 7 THE COURT: In other words, like I 8 stated in my order, the jury instructions for 9 the purpose of explaining that the consent 10 decree is not evidence of any alleged 11 wrongdoing by the Defendant may be used to show 12 that the government and the Defendant agreed to 13 help explain or evaluate or put into context 14 evidence of subsequent conduct or acts of the 15 Defendant. 16 And I think that's fair. 17 MS. CONLIN: Your Honor, dealing 18 perhaps first with the last paragraph because 19 that's kind of what we're looking at, I think 20 that if we -- you know, the first sentence is 21 the same in all proposed instructions, I think. 22 THE COURT: Yes. 23 MS. CONLIN: The second sentence, the 24 point that we are trying to make is that the 25 agreement in itself is not evidence that the 9839 1 OEM license provisions mentioned above violated 2 the law. 3 It's just the in itself that we would 4 like to see the Court add so that the jury 5 hopefully is not too confused about this whole 6 thing. 7 MR. NEUHAUS: I mean, Your Honor, I 8 think that it's fine and clear, plain English 9 the way it is. 10 This agreement is not evidence. I 11 don't think we should try to weight this one 12 way or the other, suggesting that there is 13 evidence to the contrary. 14 THE COURT: Let's see what Ms. Conlin 15 has here. 16 Are you talking about the existence 17 of? 18 MS. CONLIN: Yes, Your Honor, but I 19 would think that, you know, we could -- all we 20 would like to see the Court do is add the word 21 the agreement itself is not evidence or the 22 agreement is not in itself evidence or 23 something that confines your instruction only 24 to the agreement and doesn't permit the jury to 25 contemplate all the evidence that is not 9840 1 evidence. 2 Do you understand what I'm saying, 3 Your Honor? 4 THE COURT: Sure. 5 MS. CONLIN: I just want one little 6 word in there. 7 MR. NEUHAUS: Your Honor, my only view 8 is, again, it shouldn't be slanted. And the 9 agreement in itself suggests you're only 10 talking about the piece of paper and not the 11 act of agreeing or the fact -- the final 12 judgment that followed the agreement, and 13 that's why I just don't think we should sort of 14 be slanting this. I think it's -- you know, 15 frankly plain English is fine. 16 MS. CONLIN: Well, we're a great fan 17 of plain English and we don't think it should 18 be slanted either, but we don't think it should 19 be slanted in Microsoft's favor by implying 20 that this is the only evidence that exists and 21 it's not really evidence. 22 The real issue, I guess, Your Honor -- 23 I don't know if you want us to move off of that 24 and -- 25 THE COURT: Go ahead. Move on. 9841 1 MS. CONLIN: Is whether or not the 2 instruction should be complete. 3 And though Mr. Neuhaus has told the 4 Court that he thinks the way that he puts it is 5 the best way and it doesn't -- we don't need 6 all of these other provisions, they are in fact 7 in the agreement and they do in fact matter to 8 this lawsuit. 9 And I agree with Mr. Neuhaus totally 10 that this should definitely be limited to 11 operating systems, and that is an oversight, 12 and we believe that that definitely should be 13 in there; that the Court should make clear, as 14 we have tried to ourselves throughout, that 15 this is only about operating systems. So 16 that's not a problem. 17 The problem becomes how much more do 18 we tell the jury about the consent decree in 19 the instruction. 20 And I think if we tell them anything, 21 we should tell them everything, and I think -- 22 not everything. 23 I mean, it's a complicated agreement. 24 It's filled with legalise. It's got proviso 25 after proviso after proviso. 9842 1 Perhaps Mr. Neuhaus and Mr. Williams 2 could try to work out some relatively simple 3 language if the Court agrees that these other 4 provisions should be there. 5 Mr. Neuhaus' instruction has three of 6 the six. What -- or maybe it's seven. 7 What Mr. Neuhaus' instruction does not 8 include, Your Honor, are our B, D, F, and G, 9 and the Court can see that restrictions on the 10 ability of an OEM to offer a non-Microsoft 11 operating system goes directly to the issue of 12 retaliation, and that's certainly an issue 13 here. 14 And Microsoft's imposition on OEMs of 15 the requirement that as a condition for getting 16 its operating system, they could not offer a 17 non-Microsoft operating system was we've 18 certainly -- we certainly believe that's at 19 issue. 20 THE COURT: Do you intend to show the 21 jury the prohibited conduct portions of -- 22 MS. CONLIN: You know, Your Honor, 23 before we start tomorrow, I probably should say 24 what I do intend to do with it. 25 THE COURT: Okay. 9843 1 MS. CONLIN: This witness -- I intend 2 to use it with this witness, and what I intend 3 to do with this witness is, you know, before 4 this consent decree goes into effect, he on 5 behalf of Novell is cooperating and providing 6 information and witnesses and the like to the 7 FTC and the DOJ. 8 When it goes into effect, when it's 9 originally filed, and on July 15, 1994, then I 10 would -- what I would do is go through with him 11 not every provision, but some of the provisions 12 and say what was the impact on Novell DOS or 13 something like that, just to get it in the 14 context of the witness. 15 I would not expect to read the whole 16 thing to the jury, Your Honor, at all, and I'm 17 not sure when the Court wants to make this 18 instruction, but -- 19 THE COURT: Are all the -- I'm sorry, 20 were you done? 21 MS. CONLIN: Yes, I was, Your Honor. 22 THE COURT: Were all the prohibited 23 conduct provisions, they all refer to operating 24 systems only? 25 MS. CONLIN: Absolutely, Your Honor, 9844 1 and we definitely should include that part. 2 THE COURT: Okay. 3 MS. CONLIN: But we also in the same 4 light should include all the parts that we 5 think, you know, that have anything to do with 6 this lawsuit, and certainly the terms -- they 7 all do, you know. 8 Number D, terms conditioning licenses 9 upon -- and, you know, I said to Mr. Neuhaus, 10 this is not something that we should take the 11 Court's time with if it's possible for the 12 parties to get together this evening -- perhaps 13 Mr. Neuhaus and Mr. Williams -- and try to 14 hammer out some language that everybody can 15 agree with, if the Court agrees with me that -- 16 if the Court's going to mention any of the 17 provisions, then it should be all of the 18 provisions, not just the three that Microsoft 19 likes the best. 20 MR. NEUHAUS: Your Honor, if there are 21 other provisions that we're going to be 22 referring to, there are others that Microsoft 23 would refer to too. 24 I mean, there's provisions in here 25 that it is not a violation of this final 9845 1 judgment for Microsoft to use royalty rates, 2 including rates embodying volume discounts. I 3 would want to get that in. 4 MS. CONLIN: We don't even argue about 5 that, you know -- 6 MR. NEUHAUS: If we're going to be 7 going into this kind of detail. 8 MS. CONLIN: There isn't any detail. 9 I don't know, Your Honor. I think this is 10 kind of a sticky problem, but we would like 11 either -- 12 THE COURT: Well, it goes A through M; 13 is that right? 14 MS. CONLIN: The -- mine doesn't, Your 15 Honor. It only goes A through G. 16 Yes. M -- let me see. 17 MR. NEUHAUS: You're talking about the 18 consent decree itself? 19 THE COURT: Yes. 20 MS. CONLIN: Though we wouldn't think 21 -- some of them are reporting requirements. 22 Some of them are, you know, sub, sub, sub, sub 23 things that I don't think the jury will 24 understand. 25 We think the NDA provisions -- where 9846 1 are the -- any prohibited nondisclosure 2 agreement. 3 THE COURT: They're back on K. 4 MS. CONLIN: Yeah, they are, Your 5 Honor, and all I wanted to say -- all I think 6 that's necessary is I don't think we need to 7 say to the jury what's prohibited, but I do 8 think we need to say that there is -- there's a 9 provision in here about nondisclosure 10 agreements. 11 THE COURT: I see. Some of these have 12 like positive language rather than negative. 13 MS. CONLIN: Right. 14 THE COURT: It is an interesting 15 issue. 16 MR. NEUHAUS: Your Honor, if you're 17 inclined to add provisions that cover some of 18 these other points, maybe what I should do is 19 sit down and write up provisions that I think 20 are accurate that cover each of the points that 21 we've discussed and get that to you in a couple 22 hours. 23 THE COURT: Well, the agreement itself 24 has it all. 25 MR. NEUHAUS: I'm sorry? 9847 1 THE COURT: Doesn't the agreement 2 itself have them all? 3 MR. NEUHAUS: It is complicated, and I 4 don't think -- I agree that it's not necessary 5 to go through and flag each and every one. 6 I did try to draft something that 7 would pick up the points that Ms. Conlin had 8 made but put them in proper language, but it 9 doesn't include everything -- it doesn't 10 include the point about royalty rates, which I 11 omitted to get in about -- sorry -- volume 12 discounts. 13 So, I mean, I could share that with 14 Your Honor and with Ms. Conlin. Maybe we could 15 work it out right here. 16 THE COURT: You're talking like on 17 page 8? 18 MR. NEUHAUS: On page 10 is the volume 19 discount. 20 THE COURT: Page 8 talks about 21 royalties also. 22 MS. CONLIN: We could spend a lot of 23 time on this. 24 THE COURT: I guess I'm just trying to 25 narrow it down. 9848 1 MS. CONLIN: I still think the best 2 approach might really be if the Court's 3 inclined to include, you know, some more 4 language for someone with more expertise in 5 this than me to be chatting with the Court 6 about it and perhaps chatting with Mr. Neuhaus 7 more productively about it. 8 THE COURT: He's going to enter this 9 -- are you going to start talking about this 10 tomorrow at 8:30 with him? 11 MS. CONLIN: I will be talking about 12 it tomorrow, Your Honor, sometime. 13 THE COURT: Okay. 14 MS. CONLIN: And I sent my boxes back 15 so I can't -- I don't think I'm too terribly 16 far away from it. 17 THE COURT: Okay. 18 MR. NEUHAUS: Your Honor, I did try to 19 write up what they had proposed with proper 20 language, which maybe we could work on right 21 now and get this done. 22 Can I hand that up? 23 THE COURT: Sure. 24 Oh, you just worked on something right 25 now? 9849 1 MR. NEUHAUS: Yeah, and I just had it 2 sent to me on the printer here. 3 The only thing is it doesn't have Your 4 Honor's last sentence. So we'd need to change 5 that to add in the acts and conducts. 6 And I would like to get in this point 7 about volume discounts, which is not here 8 either. 9 But otherwise, I think it picks up the 10 points that Plaintiffs wanted to make. 11 Although again, Your Honor, I think it 12 was a fine agreement -- a fine instruction that 13 was given in Gordon and covered the key points, 14 and we would rather -- we would object to 15 changing it. 16 If it's going to be changed, here's 17 language that would capture what I think is the 18 provisions that Plaintiffs wanted to add, but 19 do so accurately. 20 MS. CONLIN: Except where is the NDA? 21 MR. NEUHAUS: Should be here. 22 THE COURT: Is there something else 23 you wanted to add? 24 MR. NEUHAUS: Yes. I wanted to get in 25 -- and I'm just trying to think of a way to do 9850 1 it. 2 THE COURT: Can you E-mail it to me 3 tonight? 4 MR. NEUHAUS: Sure. 5 THE COURT: And E-mail it to Ms. 6 Conlin and then I'll decide tomorrow morning. 7 MR. NEUHAUS: All right. And I would 8 add, of course, your language about acts and 9 conduct in the last sentence. 10 MS. CONLIN: I think that's a good way 11 to approach it, Your Honor. 12 I'll be on my E-mail tonight, Joe. 13 THE COURT: Okay. 14 MS. CONLIN: On first glance, it looks 15 to me as though we should be able to work this 16 out, Your Honor. It really does. 17 THE COURT: Send me something tonight, 18 and then I'll finalize it. 19 MR. NEUHAUS: I'll do that, Your 20 Honor. 21 THE COURT: How does that sound? 22 MS. NELLES: Your Honor, if I may just 23 very briefly, just because as Tammy pointed 24 out, I haven't gotten myself on the record yet 25 today. 9851 1 I would just suggest that on a 2 going-forward basis if -- you know, we were 3 handed this at 8 a.m. without warning, asked to 4 be prepared to come in and argue it today, 5 which Mr. Neuhaus did, came over and argued it. 6 But if indeed what Ms Conlin wanted 7 was Mr. Neuhaus and Mr. Williams, to see if 8 they could work out something together, if that 9 had simply been asked, I think we would have 10 been able to accommodate that, and I think the 11 effort to try to meet and confer, where 12 possible, ahead of time is certainly worth 13 doing. 14 And if Plaintiffs don't want to do it 15 and/or Microsoft doesn't want to do it, that's 16 fine, but to hand us a motion and demand we 17 come argue it and then suggest we go meet and 18 confer is a little awkward. 19 THE COURT: And I was more than happy 20 to give Defendant time. I asked them previous 21 if it was okay. Mr. Tulchin said it was. 22 MS. NELLES: And we were. And we were 23 here and happy to do it. 24 THE COURT: If he'd asked for more 25 time, I would have given that. 9852 1 MS. NELLES: I know you would have, 2 Your Honor. I appreciate that. 3 MS. CONLIN: Your Honor, we're 4 required to do this all the time, Your Honor. 5 We're in trial here. 6 THE COURT: Anything else? 7 MR. NEUHAUS: I'll send you something 8 tonight. Thank you, Your Honor. 9 THE COURT: Don't work too late, okay. 10 MR. NEUHAUS: Okay. 11 THE COURT: All right. 12 MS. NELLES: Thank you, Your Honor. 13 (Proceedings adjourned at 3:36 p.m.) 14 15 16 17 18 19 20 21 22 23 24 25 9853 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 22nd 19 day of January, 2007. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25 21 other provisions that we're going to be 22 referring to, there are others that Microsoft 23 would refer to too. 24 I mean, there's provisions in here 25 that it is not a violation of this final 9845 1 judgment for Microsoft to use royalty rates, 2 including rates embodying volume discounts. I 3 would want to get that in. 4 MS. CONLIN: We don't even argue about 5 that, you know -- 6 MR. NEUHAUS: If we're going to be 7 going into this kind of detail. 8 MS. CONLIN: There isn't any detail. 9 I don't know, Your Honor. I think this is 10 kind of a sticky problem, but we would like 11 either -- 12 THE COURT: Well, it goes A through M; 13 is that right? 14 MS. CONLIN: The -- mine doesn't, Your 15 Honor. It only goes A through G. 16 Yes. M -- let me see. 17 MR. NEUHAUS: You're talking about the 18 consent decree itself? 19 THE COURT: Yes. 20 MS. CONLIN: Though we wouldn't think 21 -- some of them are reporting requirements. 22 Some of them are, you know, sub, sub, sub, sub 23 things that I don't think the jury will 24 understand. 25 We think the NDA provisions -- where 9846 1 are the -- any prohibited nondisclosure 2 agreement. 3 THE COURT: They're back on K. 4 MS. CONLIN: Yeah, they are, Your 5 Honor, and all I wanted to say -- all I think 6 that's necessary is I don't think we need to 7 say to the jury what's prohibited, but I do 8 think we need to say that there is -- there's a 9 provision in here about nondisclosure 10 agreements. 11 THE COURT: I see. Some of these have 12 like positive language rather than negative. 13 MS. CONLIN: Right. 14 THE COURT: It is an interesting 15 issue. 16 MR. NEUHAUS: Your Honor, if you're 17 inclined to add provisions that cover some of 18 these other points, maybe what I should do is 19 sit down and write up provisions that I think 20 are accurate that cover each of the points that 21 we've discussed and get that to you in a couple 22 hours. 23 THE COURT: Well, the agreement itself 24 has it all. 25 MR. NEUHAUS: I'm sorry? 9847 1 THE COURT: Doesn't the agreement 2 itself have them all? 3 MR. NEUHAUS: It is complicated, and I 4 don't think -- I agree that it's not necessary 5 to go through and flag each and every one. 6 I did try to draft something that 7 would pick up the points that Ms. Conlin had 8 made but put them in proper language, but it 9 doesn't include everything -- it doesn't 10 include the point about royalty rates, which I 11 omitted to get in about -- sorry -- volume 12 discounts. 13 So, I mean, I could share that with 14 Your Honor and with Ms. Conlin. Maybe we could 15 work it out right here. 16 THE COURT: You're talking like on 17 page 8? 18 MR. NEUHAUS: On page 10 is the volume 19 discount. 20 THE COURT: Page 8 talks about 21 royalties also. 22 MS. CONLIN: We could spend a lot of 23 time on this. 24 THE COURT: I guess I'm just trying to 25 narrow it down. 9848 1 MS. CONLIN: I still think the best 2 approach might really be if the Court's 3 inclined to include, you know, some more 4 language for someone with more expertise in 5 this than me to be chatting with the Court 6 about it and perhaps chatting with Mr. Neuhaus 7 more productively about it. 8 THE COURT: He's going to enter this 9 -- are you going to start talking about this 10 tomorrow at 8:30 with him? 11 MS. CONLIN: I will be talking about 12 it tomorrow, Your Honor, sometime. 13 THE COURT: Okay. 14 MS. CONLIN: And I sent my boxes back 15 so I can't -- I don't think I'm too terribly 16 far away from it. 17 THE COURT: Okay. 18 MR. NEUHAUS: Your Honor, I did try to 19 write up what they had proposed with proper 20 language, which maybe we could work on right 21 now and get this done. 22 Can I hand that up? 23 THE COURT: Sure. 24 Oh, you just worked on something right 25 now? 9849 1 MR. NEUHAUS: Yeah, and I just had it 2 sent to me on the printer here. 3 The only thing is it doesn't have Your 4 Honor's last sentence. So we'd need to change 5 that to add in the acts and conducts. 6 And I would like to get in this point 7 about volume discounts, which is not here 8 either. 9 But otherwise, I think it picks up the 10 points that Plaintiffs wanted to make. 11 Although again, Your Honor, I think it 12 was a fine agreement -- a fine instruction that 13 was given in Gordon and covered the key points, 14 and we would rather -- we would object to 15 changing it. 16 If it's going to be changed, here's 17 language that would capture what I think is the 18 provisions that Plaintiffs wanted to add, but 19 do so accurately. 20 MS. CONLIN: Except where is the NDA? 21 MR. NEUHAUS: Should be here. 22 THE COURT: Is there something else 23 you wanted to add? 24 MR. NEUHAUS: Yes. I wanted to get in 25 -- and I'm just trying to think of a way to do 9850 1 it. 2 THE COURT: Can you E-mail it to me 3 tonight? 4 MR. NEUHAUS: Sure. 5 THE COURT: And E-mail it to Ms. 6 Conlin and then I'll decide tomorrow morning. 7 MR. NEUHAUS: All right. And I would 8 add, of course, your language about acts and 9 conduct in the last sentence. 10 MS. CONLIN: I think that's a good way 11 to approach it, Your Honor. 12 I'll be on my E-mail tonight, Joe. 13 THE COURT: Okay. 14 MS. CONLIN: On first glance, it looks 15 to me as though we should be able to work this 16 out, Your Honor. It really does. 17 THE COURT: Send me something tonight, 18 and then I'll finalize it. 19 MR. NEUHAUS: I'll do that, Your 20 Honor. 21 THE COURT: How does that sound? 22 MS. NELLES: Your Honor, if I may just 23 very briefly, just because as Tammy pointed 24 out, I haven't gotten myself on the record yet 25 today. 9851 1 I would just suggest that on a 2 going-forward basis if -- you know, we were 3 handed this at 8 a.m. without warning, asked to 4 be prepared to come in and argue it today, 5 which Mr. Neuhaus did, came over and argued it. 6 But if indeed what Ms Conlin wanted 7 was Mr. Neuhaus and Mr. Williams, to see if 8 they could work out something together, if that 9 had simply been asked, I think we would have 10 been able to accommodate that, and I think the 11 effort to try to meet and confer, where 12 possible, ahead of time is certainly worth 13 doing. 14 And if Plaintiffs don't want to do it 15 and/or Microsoft doesn't want to do it, that's 16 fine, but to hand us a motion and demand we 17 come argue it and then suggest we go meet and 18 confer is a little awkward. 19 THE COURT: And I was more than happy 20 to give Defendant time. I asked them previous 21 if it was okay. Mr. Tulchin said it was. 22 MS. NELLES: And we were. And we were 23 here and happy to do it. 24 THE COURT: If he'd asked for more 25 time, I would have given that. 9852 1 MS. NELLES: I know you would have, 2 Your Honor. I appreciate that. 3 MS. CONLIN: Your Honor, we're 4 required to do this all the time, Your Honor. 5 We're in trial here. 6 THE COURT: Anything else? 7 MR. NEUHAUS: I'll send you something 8 tonight. Thank you, Your Honor. 9 THE COURT: Don't work too late, okay. 10 MR. NEUHAUS: Okay. 11 THE COURT: All right. 12 MS. NELLES: Thank you, Your Honor. 13 (Proceedings adjourned at 3:36 p.m.) 14 15 16 17 18 19 20 21 22 23 24 25 9853 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 22nd 19 day of January, 2007. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25