Wow. That means that all 12 jurors found Microsoft guilty of anticompetitive behavior. The video is extraordinary. Alvey even says that, while he'd not wish to call Bill Gates a liar, he certainly saw that his testimony on the stand did not match up with his emails from the 90s that Novell presented.

In short, Microsoft escaped (for the moment) by the skin of its teeth. In the next trial, whenever it's scheduled, with a new jury Novell can work on explaining that Microsoft not only tried to harm Novell, but it *succeeded*. Microsoft has a motion in asking the judge to toss the case out as a matter of law, of course, and the judge has been very favorable to Microsoft throughout, so that would seem to be Microsoft's best hope.

Jump To Comments

AFFIDAVIT/DECLARATION of Steven L. Holley in Support re 297 MOTION for Judgment as a Matter of Law filed by Defendant Microsoft. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P, # 17 Exhibit Q, # 18 Exhibit R, # 19 Exhibit S, # 20 Exhibit T, # 21 Exhibit U, # 22 Exhibit V, # 23 Exhibit W, # 24 Exhibit X, # 25 Exhibit Y, # 26 Exhibit Z, # 27 Exhibit AA, # 28 Exhibit BB, # 29 Exhibit CC)(Jardine, James)(Entered: 11/17/2011)

303 - NOTICE OF FILING of Exhibits to Novell's Opposition to Judgment as a Matter of Law re 302 Memorandum in Opposition to Motion filed by Plaintiff Novell. (Attachments: # 1 Exhibit Cover letter to Judge Motz, # 2 Exhibit DX0205, # 3 Exhibit DX0231, # 4 Exhibit DX0303, # 5 Exhibit DX0323, # 6 Exhibit DX0370, # 7 Exhibit DX0379a, # 8 Exhibit DX0379b, # 9 Exhibit DX0379c, # 10 Exhibit PX0001, # 11 Exhibit PX0003, # 12 Exhibit PX0017, # 13 Exhibit PX0031, # 14 Exhibit PX0032, # 15 Exhibit PX0033, # 16 Exhibit PX0044, # 17 Exhibit PX0047, # 18 Exhibit PX0050, # 19 Exhibit PX0051, # 20 Exhibit PX0052, # 21 Exhibit PX0054, # 22 Exhibit PX0055, # 23 Exhibit PX0056, # 24 Exhibit PX0057, # 25 Exhibit PX0061, # 26 Exhibit PX0062, # 27 Exhibit PX0063, # 28 Exhibit PX0064, # 29 Exhibit PX0072, # 30 Exhibit PX0074, # 31 Exhibit PX0078, # 32 Exhibit PX0082, # 33 Exhibit PX0083, # 34 Exhibit PX0084, # 35 Exhibit PX0085, # 36 Exhibit PX0088, # 37 Exhibit PX0090, # 38 Exhibit PX0091, # 39 Exhibit PX0093, # 40 Exhibit PX0094, # 41 Exhibit PX0102, # 42 Exhibit PX0105, # 43 Exhibit PX0106, # 44 Exhibit PX0113, # 45 Exhibit PX0114, # 46 Exhibit PX0115, # 47 Exhibit PX0127, # 48 Exhibit PX0129, # 49 Exhibit PX0131, # 50 Exhibit PX0134, # 51 Exhibit PX0137a, # 52 Exhibit PX0137b, # 53 Exhibit PX0137c, # 54 Exhibit PX0144, # 55 Exhibit PX0148, # 56 Exhibit PX0154, # 57 Exhibit PX0156, # 58 Exhibit PX0174a, # 59 Exhibit PX0174b, # 60 Exhibit PX0174c, # 61 Exhibit PX0174d, # 62 Exhibit PX0174e, # 63 Exhibit PX0176, # 64 Exhibit PX0179, # 65 Exhibit PX0181, # 66 Exhibit PX0184, # 67 Exhibit PX0192, # 68 Exhibit PX0200, # 69 Exhibit PX0201, # 70 Exhibit PX0207, # 71 Exhibit PX0212, # 72 Exhibit PX0213, # 73 Exhibit PX0215, # 74 Exhibit PX0216, # 75 Exhibit PX0219, # 76 Exhibit PX0220, # 77 Exhibit PX0221, # 78 Exhibit PX0222, # 79 Exhibit PX0224, # 80 Exhibit PX0225, # 81 Exhibit PX0227, # 82 Exhibit PX0231, # 83 Exhibit PX0248, # 84 Exhibit PX0268, # 85 Exhibit PX0279, # 86 Exhibit PX0312, # 87 Exhibit PX0324, # 88 Exhibit PX0333, # 89 Exhibit PX0344, # 90 Exhibit PX0355, # 91 Exhibit PX0361, # 92 Exhibit PX0364, # 93 Exhibit PX0374, # 94 Exhibit PX0379, # 95 Exhibit PX0391, # 96 Exhibit PX0395, # 97 Exhibit PX0400, # 98 Exhibit PX0410, # 99 Exhibit PX0412, # 100 Exhibit PX0471, # 101 Exhibit PX0473, # 102 Exhibit PX0482, # 103 Exhibit PX0483, # 104 Exhibit PX0488, # 105 Exhibit PX0489, # 106 Exhibit PX0490, # 107 Exhibit PX0491, # 108 Exhibit PX0499, # 109 Exhibit PX0506, # 110 Exhibit PX0509, # 111 Exhibit PX0515, # 112 Exhibit PX0517, # 113 Exhibit PX0524, # 114 Exhibit PX0530, # 115 Exhibit PX0531, # 116 Exhibit PX0543, # 117 Exhibit PX0554)(English, Maralyn) (Entered: 11/18/2011)

We have uploaded all the rest of the most recent filings here, including a fierce paper battle over what the jury instructions should be. No doubt as we read through them, we will be able to figure out what caused the hold-out juror to hold out, I'm thinking.

There was also some back on forth on Microsoft's theory that deception can't be an antitrust violation, with Novell arguing that of course it can be.

If anyone has any coin left in this crazy economy and can hit my paypal donation to help with the expense, I'd appreciate it greatly. Thanks if you can, and if you can't, you no doubt contribute in other ways, like with your geek brains. Or by transcribing more Comes v. Microsoft exhibits. It's all good. Meanwhile, I'll try to do text versions. If anyone feels inspired, dig in and lend a hand.

Update: Here's Microsoft's Motion for Judgment as a Matter of Law, as text:

David B. Tulchin
Steven L. Holley
Sharon L. Nelles
Adam S. Paris
SULLIVAN & CROMWELL LLP
[address, phone]

James S. Jardine (A1647)
Justin T. Toth (A8434)
John Mackay (A6923)
RAY QUINNEY & NEBEKER
[address, phone]

Steven J. Aeschbacher (A4527)
MICROSOFT CORPORATION
[address, phone]

Attorneys for Microsoft Corporation

_______________

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

________________

NOVELL, INC.,

Plaintiff,

-v- MICROSOFT CORPORATION,

Defendant.

_________________________

MICROSOFT'S MOTION FOR
JUDGMENT AS A MATTER OF LAW

Civil No. 2:04 CV 1045
Honorable J. Frederick Motz

November 17, 2011

Pursuant to Federal Rule of Civil Procedure 50(a) and District of Utah Civil Rule 7-1(a), Defendant Microsoft Corporation ("Microsoft") hereby moves for judgment as a matter of law now that Plaintiff Novell, Inc. has rested.

For the reasons set forth in Microsoft's Memorandum in Support of its Motion for Judgment as a Matter of Law, and the reasons stated in open Court, Microsoft respectfully requests that the Court grant this motion and enter judgment in favor of Microsoft.

Dated: November 17, 2011

Respectfully Submitted,

/s/ James S. Jardine
James S. Jardine (A1647)
Justin T. Toth (A8434)
John Mackay (A6923)
RAY QUINNEY & NEBEKER
[address, phone, fax]

David B. Tulchin
Steven L. Holley
Sharon L. Nelles
Adam S. Paris
SULLIVAN & CROMWELL LLP
[address, phone, fax]

Steven J. Aeschbacher (A4527)
MICROSOFT CORPORATION
[address, phone, fax]

Attorneys for Microsoft Corporation

CERTIFICATE OF SERVICE

I hereby certify that on the 17th day of November, 2011, I caused a true and correct copy of the foregoing MICROSOFT'S MOTION FOR JUDGMENT AS A MATTER OF LAW, the memorandum of law in support thereof and the accompanying declaration and exhibits, to be filed with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following:

Max D. Wheeler
Maralyn M. English
SNOW, CHRISTENSEN & MARTINEAU
[address]

Jeffrey M. Johnson
Paul R. Taskier
Jason D. Wallach
DICKSTEIN SHAPIRO LLP
[address]

R. Bruce Holcomb
ADAMS HOLCOMB LLP
[address]

/s/ Jasmine Diamanti

David B. Tulchin
Steven L. Holley
Sharon L. Nelles
Adam S. Paris
SULLIVAN & CROMWELL LLP
[address, phone]

James S. Jardine (A1647)
Justin T. Toth (A8434)
John Mackay (A6923)
RAY QUINNEY & NEBEKER
[address, phone]

Steven J. Aeschbacher (A4527)
MICROSOFT CORPORATION
[address, phone]

Attorneys for Microsoft Corporation

_______________

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

________________

NOVELL, INC.,

Plaintiff,

-v- MICROSOFT CORPORATION,

Defendant.

_________________________

MICROSOFT'S MEMORANDUM IN
SUPPORT OF ITS MOTION FOR
JUDGMENT AS A MATTER OF LAW

Civil No. 2:04 CV 1045
Honorable J. Frederick Motz

November 17, 2011

TABLE OF CONTENTS

Page

STATEMENT OF FACTS ....................................10

A. What Novell Was Required to Prove In Its Case-In-Chief ...................................10

B. The Evidence Novell Presented at Trial ................................12

1. Custom Print Processor and Logo Licensing Program ............................12

2. Namespace Extension APIs ......................................14

(a) The Development of Windows 95 ................................................14

(b) The M6 Beta and License Agreement ..........................................17

(c) Novell’s Plan to Use the Namespace Extension APIs ..................19

(d) Microsoft’s Decision to Withdraw Support for the Namespace Extension APIs ............................................22

(e) Novell Decides to Build Its Own Advanced File Open Dialog ....25

ARGUMENT ................................................34

I. Novell Failed To Introduce Evidence that Would Permit a Reasonable Jury To Find
that Microsoft Harmed Competition in the PC Operating System Market .......................35

A. The Evidence at Trial Shows that the Timely Release of WordPerfect and
Quattro Pro Would Have Enhanced Microsoft’s Monopoly in the PC
Operating System Market .................................35

B. The Evidence at Trial Refutes Both of Novell’s Theories of Harm to
Competition in the PC Operating System Market ........................40

II. Novell Failed To Introduce Evidence that Would Permit a Reasonable Jury To Find
that Microsoft Engaged in Anticompetitive Conduct ...........................48

A. Novell Must Prove that Microsoft’s Decision to Withdraw Support for the
Namespace Extension APIs Falls Within the Limited Aspen Skiing Exception ..............................................................48

B. The Withdrawal of Support for the Namespace Extension APIs Did Not
“Terminate” the Relationship with Novell ......................52

C. The Practice in the Software Industry and the Terms of the Beta License
Agreement Permitted Microsoft to Withdraw Support for APIs that Novell
Received as Part of a Beta Version of Windows 95 .........................58

i

D. The Evidence at Trial Establishes that Microsoft Had Several Legitimate
Business Justifications for Its Withdrawal of Support for the Namespace
Extension APIs ..........................................62

CONCLUSION ....................................................68

ii

TABLE OF AUTHORITIES

Page(s)

CASES

Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,
472 U.S. 585 (1985) ............................................. passim

Bell v. Dow Chemical Co.,
847 F.2d 1179 (5th Cir. 1988) ............................10, 66

Boellstorff v. State Farm Mutual Automobile Ins. Co.,
2009 U.S. Dist. LEXIS 21748 (D. Colo. March 18, 2009) .....................................................35

Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.,
509 U.S. 209 (1993) ..........................................35, 52, 57

Christy Sports, LLC v. Deer Valley Resort Co.,
555 F.3d 1188 (10th Cir. 2009) ............................. passim

Compliance Marketing, Inc. v. Drugtest, Inc.,
2010 U.S. Dist. LEXIS 34315 (D. Colo. April 7, 2010) .........................................................49

Daisy Mountain Fire District v. Microsoft Corp.,
547 F. Supp. 2d 475 (D. Md. 2008) ....................................50

Forsgren v. Hydraulics Int'l, Inc.,
2011 U.S. Dist. LEXIS 35641 (D. Utah March 31, 2011) ......................................................35

Four Corners Nephrology Assocs., P.C. v. Mercy Med. Ctr. of Durango,
582 F.3d 1216 (10th Cir. 2009) ...................................... passim

In2 Networks, Inc. v. Honeywell International,
2011 U.S. Dist. LEXIS 117589 (D. Utah Oct. 12, 2011) ................................................. 50-51

In re Microsoft Corp. Antitrust Litigation,
274 F. Supp. 2d 743 (D. Md. 2003) ................................. 50

Intergraph Corp. v. Intel Corp.,
195 F.3d 1346 (Fed. Cir. 1999) ....................................... 52, 56-57, 60

Multistate Legal Studies v. Harcourt Brace Jovanovich Legal & Professional Publications,
63 F.3d 1540 (10th Cir. 1995) .................................................66

Novell, Inc. v. Microsoft Corp.,
699 F. Supp. 2d 730 (D. Md. 2010) ........................ passim

iii

Olympia Equipment Leasing Co. v. Western Union Telegraph Co.,
797 F.2d 370 (7th Cir. 1986) .................................59

Telex Corp. v. International Business Machines Corp.,
510 F.2d 894 (10th Cir. 1975) ....................................9, 58, 61

Trace X Chemical, Inc. v. Canadian Industries, Ltd.,
738 F.2d 261 (8th Cir. 1984) ..................................61

United States v. Syufy Enters.,
903 F.2d 659 (9th Cir. 1990) ........................................59

Verizon Commc'ns, Inc. v. Law Offices of Curtis V. Trinko, LLP,
540 U.S. 398 (2004) ........................................49, 50

Welding v. Bios Corp.,
353 F.3d 1214 (10th Cir. 2004) ...............................34

RULE

FED. R. CIV. P. 50(a) .........................................................34

OTHER AUTHORITY

3 PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW ¶ 772c2 (3d ed. 2011) ...........66

iv

Microsoft Corporation ("Microsoft") respectfully submits this Memorandum in Support of its Motion for Judgment as a Matter of Law on Novell, Inc.'s ("Novell") claim under Section 2 of the Sherman Act for unlawful monopolization of the PC operating system market. Based on the evidence at trial, no reasonable jury could find in Novell's favor. The Court should therefore enter judgment as a matter of law in favor of Microsoft.

To prevail at trial, Novell must prove (a) that Microsoft engaged in anticompetitive conduct by withdrawing support for the namespace extension APIs; (b) that this conduct "thereby delay[ed] and impair[ed] Novell's development of the versions of WordPerfect and Quattro Pro that were optimized for Windows 95;" and (c) that the delay caused by Microsoft's conduct also "caused anticompetitive harm in the PC operating system market." Novell, Inc. v. Microsoft Corp., 699 F. Supp. 2d 730, 743 (D. Md. 2010). In order to prove that the alleged harm to WordPerfect and Quattro Pro (i.e., the delay) reduced competition in the PC operating system market, Novell has advanced two theories: (a) that WordPerfect, either alone or in combination with AppWare and OpenDoc, was cross-platform "middleware" that exposed a broad enough set of application programming interfaces ("APIs") that Independent Software Vendors ("ISVs") could use to profitably develop general-purpose personal productivity applications, and (b) that WordPerfect and Quattro Pro were such popular franchise applications that, if available on rival operating systems, they would have popularized those operating systems and thereby substantially reduced the dominance of Microsoft Windows. Id; see also October 18 Trial Tr. at 40-41 (describing Novell's "middleware" theory); Compl. ¶¶ 47-52 (describing Novell's franchise applications theory).

In view of the evidence Novell presented at trial, Novell's claim fails as a matter of law for several independent reasons.

First, Novell has failed to present evidence that the withdrawal of support for the namespace extension APIs enabled Microsoft to unlawfully maintain its monopoly in the market for PC operating systems. The evidence shows that, absent Microsoft's allegedly anticompetitive conduct, Novell would have taken steps to enhance Windows 95, thereby contributing to Microsoft's dominance in the PC operating system market. Novell's then-CEO, Robert Frankenberg, testified that if Novell had released versions of WordPerfect and Quattro Pro at or about the time that Microsoft released Windows 95 in August 1995, "[i]t would have made Windows 95 more desirable in the marketplace" and "would have made Windows 95 market share even higher than what it turned out to be." (Testimony of Robert Frankenberg ("Frankenberg"), Nov. 8 Trial Tr. at 1226-27.) As the Court observed, Microsoft's withdrawal of support for the namespace extension APIs "did not maintain the monopoly" because Novell's witnesses were "clear that [Novell] wanted to marry the two products, the operating system and WordPerfect . . . both through 1996 and the foreseeable future." (Oct. 27 Trial Tr. at 928-29; see also pp. 17, 20-21, infra (quoting trial testimony of Novell's witnesses).)

The evidence at trial further demonstrates that Novell sought to use the namespace extension APIs in order to "augment" Windows 95--and thereby "make Windows the best version of Windows that it could be." (Testimony of Adam Harral ("Harral"), Oct. 24 Trial Tr. at 372-74, 515.) "It was our intent to make the user's experience on Windows better because they had WordPerfect installed." (Testimony of Greg Richardson ("Richardson"), Oct. 25 Trial Tr. at 613.) Evidence that Novell intended to use the namespace extension APIs to make Windows a better and more popular operating system refutes Novell's theory that Microsoft's withdrawal of support for the namespace extension APIs in October 1994 adversely affected competition in the PC operating system market. Novell introduced no evidence at trial

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that it had any intention of mounting a challenge to Microsoft's leading position in the PC operating system market or even that it intended to assist another actor to mount any such challenge.

Second, Novell cannot prove harm to competition in the PC operating system market because both its franchise applications theory and its "middleware" theory are entirely inconsistent with the evidence presented at trial.

Novell's franchise applications theory fails in light of the evidence that, in the early 1990s, versions of WordPerfect ran on many non-Microsoft operating systems, including IBM OS/2, Apple Macintosh, Digital VMS, UNIX, and NeXT (Harral, Oct. 20 Trial Tr. at 216; Testimony of Gary Gibb ("Gibb"), Oct. 26 Trial Tr. at 776; Frankenberg, Nov. 7 Trial Tr. at 996), none of which diminished the popularity of Windows. (See Finding of Fact 35 (throughout the 1990s "Microsoft's share of the market for Intel-compatible PC operating systems has stood above ninety percent"), read to the jury on Oct. 18.) As the Court observed, the idea that the availability of WordPerfect and Quattro Pro on non-Microsoft operating systems would have allowed a rival operating system to challenge Windows therefore "is counterfactual." (Nov. 9 Trial Tr. at 1501.) Novell's franchise applications theory is further refuted by the collaterally estopped Findings of Fact, which establish that even an operating system that ran several thousand applications could not surmount the applications barrier to entry protecting Microsoft's monopoly in the PC operating system market. (Finding of Fact 37-39, read to the jury on Oct. 18.) The notion that just two applications, no matter how popular, could surmount the applications barrier to entry flies in the face of a central tenet of the District of Columbia Case (a tenet incorporated into Novell's Complaint).

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Novell's "middleware" theory likewise fails in view of the evidence introduced at trial. According to the Findings of Fact, the only form of "middleware" that could conceivably erode Microsoft's monopoly in the PC operating system market had to (a) be cross-platform, and (b) expose a sufficient number of APIs to allow for the development of general-purpose personal productivity applications that relied solely on those APIs as opposed to APIs exposed by Windows. (See, e.g., Findings of Fact 68, 74, read to the jury on Nov. 14.) Novell's antitrust economist, Professor Roger Noll, added an additional requirement. Noll testified that in order to "threaten[]" Microsoft's "operating systems monopoly," middleware had to be not only cross- platform but "ubiquitous," meaning that it had to be "an extremely successful product . . . having a large install[ed] base and running on different platforms." (Testimony of Roger Noll ("Noll"), Nov. 14 Trial Tr. at 1787.) Indeed, Professor Noll agreed "that to be middleware in the sense of some product or platform that could imperil the applications barrier to entry, the middleware program has to be present on all or nearly all of the PCs that use the operating system to which the application otherwise would be written." (Noll, Nov. 15 Trial Tr. at 1923.)

Novell's applications lacked all three characteristics. By 1994 and 1995, WordPerfect and Quattro Pro were not "cross-platform" or ubiquitous. As Novell's shared code group software developer Adam Harral explained, "whatever [WordPerfect] exposed in terms of its own APIs or everything else, it was going to be operating on the Windows 95 operating system." (Harral, Oct. 24 Trial Tr. at 559-60.) Further, Novell's technical expert, Ronald Alepin, testified that software developers did not, and would not, write general-purpose personal productivity applications to run on top of WordPerfect. (Testimony of Ronald Alepin ("Alepin"), Nov. 9 Trial Tr. at 1480.) Indeed, Alepin testified that software developers could not write general-purpose personal productivity applications such as Corel Draw to run on top of any

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Novell application. (Alepin, Nov. 10 Trial Tr. at 1533, 1538-40; see also Alepin, Nov. 9 Trial Tr. at 1489-90.)

Novell's antitrust economist, Professor Roger Noll, also acknowledged that even "as of 1999, there had never been any middleware that could imperil the applications barrier to entry." (Noll, Nov. 15 Trial Tr. at 1920.) Indeed, according to the binding Findings of Fact, there was no software product as of 1999--four years after the events at issue in this lawsuit--that served as the type of "cross-platform middleware" that could threaten Microsoft's PC operating system monopoly, and there was no prospect of such a software product emerging in the foreseeable future. (See, e.g., Findings of Fact 28-29, 32, read to the jury on Oct. 18.)

Third, Novell's claim fails because the evidence establishes that Microsoft's withdrawal of support for the namespace extension APIs was not anticompetitive conduct under the antitrust laws. Under Tenth Circuit law applying Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), the only circumstance in which a monopolist may be liable for refusing to cooperate with a competitor (even in cases not involving intellectual property) is where the monopolist (a) "terminated a profitable relationship" and (b) did so "without any economic justification." Four Corners Nephrology Assocs., P.C. v. Mercy Med. Ctr. of Durango, 582 F.3d 1216, 1225 (10th Cir. 2009) (citation omitted). The trial evidence establishes that Microsoft's withdrawal of support for the namespace extension APIs does not come anywhere close to fitting within this limited exception, for several independent reasons. First, Microsoft's decision to withdraw support for the namespace extension APIs was not the termination of a profitable relationship with Novell. Further, Novell's ability to release its products was not affected by that decision. Rather, the evidence establishes that WordPerfect and Quattro Pro did not need to call the namespace extension APIs in order to be compatible

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with Windows 95, or to enable Novell to release those applications in a timely manner. As Adam Harral testified, "I don't know anything that WordPerfect [the] word processor needed to do for a NameSpace extension." (Harral, Oct. 20 Trial Tr. at 327; see also Harral, Oct. 24 Trial Tr. at 476.) This admission completely undermines Novell's allegations that, as a result of Microsoft's conduct, "in many instances, a user literally could not open a document he previously created and saved," or that "Novell was suddenly unable to provide basic file management functions in WordPerfect." (Compl. ¶ 75.)

To the contrary, the evidence shows that Novell sought to use the namespace extension APIs to "augment" Windows, by embedding Novell's QuickFinder search engine, Soft Solutions document management system, e-mail client, Presentations clip-art gallery, and FTP/HTTP browser directly in the Windows shell. (Harral, Oct. 20 Trial Tr. at 268-69, 285, 292, 309-10; Richardson, Oct. 25 Trial Tr. at 635-38, 691-92.) Novell's goal was to make these different Novell products available in the tree view of the Windows Explorer and the Windows 95 common file open dialog, regardless of whether a user was running WordPerfect and QuattroPro. (Harral, Oct. 20 Trial Tr. at 269-70; Richardson, Oct. 25 Trial Tr. at 613.) Novell introduced no evidence at trial that adding these five products to the Windows 95 shell was important to the functioning of WordPerfect or Quattro Pro.

Novell's witnesses testified that Novell had three options to release WordPerfect and Quattro Pro for Windows 95 after learning in October 1994 that Microsoft had withdrawn support for the namespace extension APIs: (1) Novell could call the namespace extension APIs using the documentation it received in June 1994; (2) Novell could use the Windows 95 common file open dialog that Microsoft made available for free to ISVs; and (3) Novell could write its own custom file open dialog. (Harral, Oct. 20 Trial Tr. at 342-43; Richardson, Oct. 25 Trial Tr.

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at 628-30.) Novell chose the third option (Harral, Oct. 20 Trial Tr. at 342-43, 346-47; Richardson, Oct. 25 Trial Tr. at 625, 630)--and this risky business decision implicates the antitrust laws not at all. In fact, in writing its own custom file open dialog, Novell could have used common controls in Windows 95 to display the Windows 95 namespace, including virtual folders like My Computer and Network Neighborhood, and add folders for Novell products such as Quickfinder. (Richardson, Oct. 25 Trial Tr. at 607, 624-25; Alepin, Nov. 10 Trial Tr. at 1602- 04.) Instead of using common controls in Windows 95 that Microsoft made available for free to ISVs, Novell chose to do something much more complex: attempting to replicate the functionality of the Windows Explorer. (Harral, Oct. 24 Trial Tr. at 366-67; Richardson, Oct. 25 Trial Tr. at 625, 630; Gibb, Oct. 26 Trial Tr. at 848-49.) Novell was aware that its decision would require a significant investment of time and resources, whereas simply calling the namespace extension APIs or using the Windows 95 common file open dialog would not have caused any delay in the release of WordPerfect and Quattro Pro for Windows 95. (Harral, Oct. 24 Trial Tr. at 366-67, 485-86, 504; Gibb, Oct. 26 Trial Tr. at 847-48.)

It was Novell's choice to try to create an advanced file open dialog based on its belief that such a file open dialog would provide WordPerfect and Quattro Pro with a competitive advantage--even if it meant that their release was substantially delayed. Microsoft did not terminate its relationship with Novell, did not foreclose Novell from releasing applications that were compatible with Windows 95, and did not treat Novell differently from other software developers creating applications to run on Windows 95, including Microsoft's own software developers working on Microsoft Office. (DX 3, e-mail from Brad Struss, dated

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Oct. 12, 1994 at 2, Holley Decl. Ex. A.)¹ Accordingly, Novell cannot show that Microsoft's conduct was anticompetitive under the relevant legal standard. Four Corners Nephrology, 582 F.3d at 1225.

Next, the evidence further establishes that Microsoft's conduct was not anticompetitive as a matter of law because Novell received documentation for the namespace extension APIs as part of a "beta" version of Windows 95 while the new operating system was still under development. (DX 18, Microsoft Corporation Non-Disclosure Agreement (Pre- release Product) with WordPerfect Corporation, executed May 24, 1994 at 1, ¶ 2, Holley Decl. Ex. B.) At trial, Bob Frankenberg acknowledged that companies who obtained prerelease versions of software products pursuant to beta license agreements, including Novell, understood that these products "might change" and "could change," and that this was "something that was widely understood in the software industry." (Frankenberg, Nov. 8 Trial Tr. at 1201, 1204-05, 1209.) Because Novell was "aware that the relationship was temporary and subject to [Microsoft's] business judgment," Microsoft's decision to withdraw support for the namespace extension APIs does not constitute anticompetitive conduct as a matter of law. Christy Sports, LLC v. Deer Valley Resort Co., 555 F.3d 1188, 1196 (10th Cir. 2009). Moreover, an "ordinary business practice[] typical of those used in a competitive market"--here, the decision by a software developer to modify a product under development prior to final release--is not

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anticompetitive conduct. Telex Corp. v. International Business Machines Corp., 510 F.2d 894, at 925-26, 928 (10th Cir. 1975).²

Novell's claim also fails because the evidence at trial establishes that Microsoft had legitimate business justifications for its decision to withdraw support for the namespace extension APIs, which, as a matter of law, precludes a finding that Microsoft engaged in anticompetitive behavior. Four Corners Nephrology, 582 F.3d at 1225. Support was withdrawn because the namespace extension APIs (a) posed a risk to the stability and reliability of Windows 95; and (b) failed to achieve the level of integration that Bill Gates anticipated they would. (See pp. 22-24, infra.) There is no evidence to the contrary or that Microsoft's contemporaneous reasons were pretextual.

Indeed, Novell's experts confirm that Microsoft's decision to withdraw support for the namespace extension APIs was supported by legitimate justifications. Ronald Alepin testified that an application calling the namespace extension APIs would run in the same process as the Windows 95 shell and "had the potential to make the system unresponsive" if it crashed. (Alepin, Nov. 10 Trial Tr. at 1588-89.) Roger Noll confirmed that if "APIs are unstable," then that would be a "valid reason not to document[]" them. (Noll, Nov. 15 Trial Tr. at 1872.) Although Alepin and Noll challenged the sufficiency of Microsoft's justifications (i.e., whether the benefits to Microsoft of withdrawing support for the namespace extension APIs outweigh the

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purported cost of that decision to Novell), their opinions as to the sufficiency of Microsoft's justifications are irrelevant as a matter of law (see pp. 65-67, infra); once Microsoft has shown a legitimate justification for its conduct, the inquiry ends. A jury would not be permitted to weigh the merits of Microsoft's proffered justifications and could not accordingly find in Novell's favor. See Bell v. Dow Chemical Co., 847 F.2d 1179, 1186 (5th Cir. 1988) (stating that a jury cannot "weigh the sufficiency of a legitimate business justification against the anticompetitive effects of a refusal to deal" and that "[t]he fact determination that may be left to a jury is whether the defendant has a legitimate business reason for its refusal, not whether that reason is sufficient" (emphasis in original) (citing Aspen Skiing, 472 U.S. at 597)); see also Four Corners Nephrology, 582 F.3d at 1225 ("Aspen Skiing does not require more economic justification than [that] to avoid Section 2 liability.").

For all of these reasons and the others mentioned below and in open court, the Court should grant Microsoft's motion for judgment as a matter of law.

STATEMENT OF FACTS

A. What Novell Was Required to Prove In Its Case-In-Chief

In opposing Microsoft's summary judgment motion, Novell asserted that Microsoft engaged in three allegedly anticompetitive acts: "(1) Withdrawing access to information about, and otherwise changing course regarding, the Windows 95 namespace extensions, thereby delaying and impairing Novell's development of the versions of WordPerfect and Quattro Pro that were optimized for Windows 95"; (2) "Misleading Novell about Windows 95 print functionality, thereby increasing WordPerfect's costs and decreasing its functionality"; and (3) "Refusing to grant a Windows 95 logo license for certain Novell software applications." Novell, Inc. v. Microsoft Corp., 699 F. Supp. 2d 730, 743 (D. Md. 2010).

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In its March 30, 2010 decision on Microsoft's motion for summary judgment, the Court explained that in order to succeed on an unlawful monopolization claim under Section 2 of the Sherman Act, a plaintiff "must prove not only that the defendant's conduct was anticompetitive, but also that it caused anticompetitive harm in the relevant market." Novell, 699 F. Supp. 2d at 747-48. The Court held that "Novell must prove that the specific Microsoft conduct which caused injury to Novell's applications also caused anticompetitive harm in the PC operating system market." Id. at 748 (emphasis in original). The Court further held that, in order to prevail, Novell must establish "that the conduct that harmed its software applications contributed significantly to Microsoft's monopoly in the PC operating system market."³Id. at 750.

Finally, the Court recognized that "a monopolist generally has a right to refuse to cooperate with a competitor," but held that a jury may decide whether the three allegedly anticompetitive acts directed at WordPerfect and Quattro Pro fall within the limited exception provided in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), to this general rule. Novell, 699 F. Supp. 2d at 745-47. Under the narrow Aspen Skiing exception, Novell was required to prove at trial (a) that Microsoft's allegedly anticompetitive conduct

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constituted the termination of a pre-existing and profitable relationship between the parties, and (b) this conduct lacked any legitimate business justification.

The Court's decision on Microsoft's summary judgment motion created the framework for assessing the proof adduced by Novell at trial. Novell failed at every step of the analysis to prove its claim.

B. The Evidence Novell Presented at Trial

Novell called four fact witnesses to the stand and introduced the deposition testimony of eleven additional Microsoft witnesses. Novell also called three expert witnesses: Mr. Ronald Alepin on technical issues, Dr. Roger Noll on competition issues, and Dr. Frederick Warren-Boulton on damages.

In his opening statement, Novell's lawyer stated that while the jury might "hear about other acts taken by Microsoft against Novell that were also anticompetitive, . . . none of those had the impact of these namespace extensions." (Oct. 18 Trial Tr. at 85.) Novell's lawyer did not mention the lack of support for custom print processors in Windows 95 or the requirements of the Windows 95 logo licensing program in his opening statement, and the evidence at trial failed to create an issue of fact for the jury on either score.

1. Custom Print Processor and Logo Licensing Program

Novell introduced no evidence whatsoever in support of its custom print processor claim. As a result, that claim has been abandoned. With respect to the Windows 95 logo licensing allegation, Novell offered the testimony of two witnesses, Bob Frankenberg and Greg Richardson, each of whom addressed the subject on direct in only a perfunctory way. Bob Frankenberg testified that in March 1995 Novell requested an exemption from the requirement that an application displaying the Windows 95 logo either run or "degrade gracefully" on Windows NT because achieving such compatibility purportedly would be difficult for Novell to

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achieve. (Frankenberg, Nov. 8 Trial Tr. at 1170-1171, 1183.) Microsoft responded in April 1995 that the issues raised by Novell did not warrant an exemption from the requirement that WordPerfect and Quattro Pro run or "degrade gracefully" on Windows NT and Brad Chase, the General Manager of the Personal Systems Division at Microsoft, told Novell in an April 3, 1995 e-mail that he "would be glad to have a conference call" to discuss the matter further. (DX 22 at 13, Holley Decl. Ex. C.) This offer to confer further was never accepted; Novell never even responded to it. (Frankenberg, Nov. 8 Trial Tr. at 1171-72.) Bob Frankenberg testified that Novell chose not to participate in the Windows 95 logo licensing program and did not recall Novell pursuing the matter any further with Microsoft. (Frankenberg, Nov. 8 Trial Tr. at 1172, 1186.)

The contemporaneous documentary evidence confirms that Novell made a voluntary choice not to participate in the logo program. (See DX 157, e-mail from Todd Titensor, dated February 2, 1995, Holley Decl. Ex. D ("Bob F. has stated (in a meeting with the QP team, Mark, Glen, Bruce) that he does not accept the NT requirement and if it is not removed from the logo requirements list we will simply not support the logo.").) Novell's executives were concerned that if Novell publicly challenged Microsoft's Windows 95 logo licensing requirements, other ISVs might challenge Novell's YES logo program. A January 12, 1995 internal Novell memo "noted the similarities" between Microsoft's logo program and Novell's YES logo program, which "similarly require[d]" compatibility with other operating systems, and concluded, "if we push this with Microsoft, our ISVs will have increased standing to challenge the YES program." (DX 155 at 1, Holley Decl. Ex. E.) Therefore, Novell concluded that it was "not willing at this time to satisfy the Windows NT compatability requirements." (Id.)

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Greg Richardson, Novell's other witness to discuss the Windows 95 logo licensing program, testified that he had no first-hand knowledge of discussions between Novell and Microsoft on the issue. (Richardson, Oct. 25 Trial Tr. at 721-31.) Richardson also acknowledged that the office productivity applications ultimately released by Corel as part of WordPerfect Office 7 in May 1996 ran on Windows NT (Richardson, Oct. 25 Trial Tr. at 727- 28), undermining the notion that it was not feasible for Novell to meet the Windows NT compatibility requirement of the Windows 95 logo licensing program. In short, Novell made a business decision not to participate in the Windows 95 logo licensing program.

2. Namespace Extension APIs

Novell's remaining allegation is that Microsoft's withdrawal of support for the namespace extension APIs in October 1994 was anticompetitive, caused harm to Novell because it delayed Novell in releasing WordPerfect and Quattro Pro for Windows 95, and that such delay harmed competition in the PC operating system market.

(a) The Development of Windows 95

In May 1990, Microsoft released Windows 3.0, an operating system described by Professor Noll as a "revolutionary technological event." (Noll, Nov. 15 Trial Tr. at 1910.) This new operating system, and its successor (Windows 3.1, released in 1991 (Frankenberg, Nov. 7 Trial Tr. at 1043)) became immensely popular and caused a dramatic shift in the market from the old character-based operating systems to new graphical-user interface operating systems. (See Frankenberg, Nov. 7 Trial Tr. at 1040-43; see also Noll, Nov. 15 Trial Tr. at 1910.)

In about 1993, Microsoft began developing its next PC operating system, codenamed "Chicago," and gave ISVs information about user interface features Microsoft was planning to include in Chicago. (See, e.g., PX 113, New Windows "Chicago" UI: What It Means for Your Application, at NOV-00734380, Holley Decl. Ex. F.) In July 1993,

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WordPerfect developers attended Microsoft's Chicago User Interface Design Preview. (PX 63, Trip Report: Chicago User Interface Design Preview, July 8-9, 1993, Holley Decl. Ex.G.) At the Interface Design Preview, Microsoft provided WordPerfect and other ISVs with preliminary information about Chicago's new user interface, including common dialogs and various common controls supplied by the operating system. (Id. at NOV-B06507480, 87.)

In September 1993, WordPerfect employees created a "Trip Report" about a Win32 Developers Workshop they attended on September 9 and 10, 1993. (PX 78, Holley Decl. Ex. H.) According to the WordPerfect employees, Microsoft stated that the "[m]ail client [in Chicago] will tie into the shell as just another folder." (Id. at NOV-00721981.) Microsoft told WordPerfect that it did not want to document the APIs used to integrate Microsoft's e-mail client into the Chicago shell because Microsoft did not "want to force" another Microsoft operating system then under development "to support them." (Id.)

At a December 1993 conference, Microsoft made another presentation to ISVs describing the planned user interface of Chicago. (PX 113 at NOV-00734380, Holley Decl. Ex. F.) On December 10, 1993, shortly before the conference, Novell executed a license agreement with Microsoft, which stated that any information Novell employees were given at the conference "may be substantially modified prior to first commercial shipment" of Windows 95. (DX 19, Microsoft Corporation Non-Disclosure Agreement (Pre-release Product) with Novell, Inc., executed December 10, 1993 at 1 ¶ 2, Holley Decl. Ex. I.) Among the features that Microsoft described at the conference were common dialogs that ISVs could use as well as various "Shell Extensibility" features of Windows 95. (PX 113 at NOV 00734380, 89, Holley Decl. Ex. F.) According to the presentation, the extensible shell in Chicago would allow software developers to take advantage of features such as "Drag-and-Drop," "Property Sheet

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Extensibility" and "Explorer UI Integration." (Id. at NOV 00734389.) The presentation described the ability to add "custom container[s]" to the Windows Explorer (Id. at NOV 00734389-90), which was a new general purpose viewer included in Windows 95.

Two former Novell software developers, Adam Harral and Greg Richardson, testified at trial that certain of the functionality described in the December 1993 presentation was the functionality ultimately provided by the namespace extension APIs. (Harral, Oct. 20 Trial Tr. at 296-300; Richardson, Oct. 25 Trial Tr. at 590-91.) Although Adam Harral did not attend the December 1993 presentation, he testified that the presentation slides were "distributed amongst developers and evangelists and managers at WordPerfect." (Harral, Oct. 20 Trial Tr. at 294.) The presentation warned that the namespace extension mechanism was "[n]ot for most applications!" and that integration with the Windows Explorer "[o]nly should be used if your application displays a pseudo folder: electronic mail, document management, etc." (PX 113 at NOV 00734390, Holley Decl. Ex. F.) The presentation stated that "[u]sers should NOT edit documents with an explorer extension!" (Id.) Of course, editing documents is a central function of word processing and spreadsheet applications.

On May 10, 1994, Microsoft's Kyle Marsh wrote an article in the Microsoft Developer Network, entitled "Extending the Chicago Shell," which provided software developers with information regarding several categories of shell extensions in Chicago. (DX 72, Holley Decl. Ex. J.) The article noted that one "type of shell extension" called a "namespace browser, which allows users to browse the contents of objects using the shell's familiar explorer view," would be discussed in a later article. (Id. at NOV-B03687515.) The May 1994 article did not provide any information about the namespace extension APIs, but rather discussed the much larger set of shell extension APIs in Windows 95. (Id.)

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Novell software developers testified that they were "excited about [Microsoft's impending release] of Windows 95" and eager to take advantage of many of its new features. (Harral, Oct. 20 Trial Tr. at 256; Richardson, Oct. 25 Trial Tr. at 587-88.) Harral characterized Windows 95 as a "technological breakthrough" for the PC. (Harral, Oct. 24 Trial Tr. at 313; see also Noll, Nov. 15, Trial Tr. at 1911 (Windows 95 was a "substantial step forward").) The evidence at trial showed that Novell was devoting its efforts to creating versions of WordPerfect and Quattro Pro for Windows 95 from the time that PerfectOffice 3.0 was released in December 1994 through the sale of WordPerfect and Quattro Pro to Corel in March 1996. (Frankenberg, Nov. 8 Trial Tr. at 1168-69; Gibb, Oct. 26 Trial Tr. at 787.)

(b) The M6 Beta and License Agreement

Novell's former CEO, Robert Frankenberg, agreed that "Windows 95 was a significant step forward." (Frankenberg, November 8 Trial Tr. at 1225-26.) Although Novell planned to develop versions of WordPerfect and Quattro Pro for Windows 95, there were "very few resources" on that effort as of August 1994 because Novell was focused on creating improved versions of its applications for the Windows 3.1 platform. (DX 4, Novell/WP/QP Integration Plan, submitted by Ad Rietveld, dated Aug. 3, 1994, at NOV-25-006573, Holley Decl. Ex. K; see also Gibb, Oct. 26 Trial Tr. at 845-46; Frankenberg, Nov. 7 Trial Tr. at 1071.)⁴

On June 10, 1994, Microsoft provided Novell with the Milestone 6 ("M6") beta version of Windows 95--the first beta version of the new operating system provided to ISVs in

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general and to Novell in particular. (Harral, October 24 Trial Tr. at 434-35; PX 388, Microsoft Windows "Chicago" Reviewer's Guide at MSC 00762731, Holley Decl. Ex. M.)

Microsoft provided the beta version of Windows 95 to Novell pursuant to a license agreement, which provided that such beta versions "may not operate correctly and may be substantially modified prior to first commercial shipment," and that Novell "assumes the entire risk with respect to the use of the" beta. (DX 18 at ¶ 2, Holley Decl. Ex. B; see also DX 19 at ¶ 2, Holley Decl. Ex. I.) Further, the M6 beta version of Windows 95 was accompanied by documentation that expressly cautioned software developers that it did "not represent a commitment on the part of Microsoft for providing or shipping the features and functionality in the final retail product offerings of Chicago [Windows 95]." (PX 388 at MSC 00762731, Holley Decl. Ex. M.)

At trial, Frankenberg testified that Novell understood that beta versions of Windows 95 both "could change" and "might change" prior to commercial release of the new operating system. (Frankenberg, Nov. 8 Trial Tr. at 1201, 1209.) Importantly, Frankenberg testified that it "was widely understood in the software industry" that beta versions of software products may change, that such software products may never be released at all, and that the entire risk arising from use of a beta version of a software product is borne by the beta tester. (Frankenberg, Nov. 8 Trial Tr. at 1204-1205.) Professor Noll also testified that "all beta versions of all software are provisional, and they are not guarantees of what the program will contain upon final release." (Noll, Nov. 15 Trial Tr. at 1878.) Bob Frankenberg also acknowledged that Novell's own license agreements for beta versions of its Netware server operating system software included provisions that were "certainly pretty much similar" to those found in

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Microsoft's license agreement with Novell for beta versions of Windows 95. (Frankenberg, Nov. 8 Trial Tr. at 1208-09.)

(c) Novell's Plan to Use the Namespace Extension APIs

Novell received documentation for the namespace extension APIs as part of the M6 beta release of Windows 95. (PX 181, Header File, dated June 9, 1994, Holley Decl. Ex. N.) The namespace extension APIs were intended to allow software developers to add custom containers to the "tree view" in the scope pane of the Windows Explorer and to the Windows common file open dialog. (Harral, Oct. 24 Trial Tr. at 509-10.)⁵

Importantly, Adam Harral testified that Novell did not need the namespace extension APIs to release either WordPerfect or Quattro Pro for Windows 95. Adam Harral explained, "I don't know anything that WordPerfect [the] word processor needed to do for a Namespace extension. They did have shell extensions, but I don't recall a NameSpace extension that they needed to do." (Harral, Oct. 20 Trial Tr. at 327; see also Harral, Oct. 20 Trial Tr. at 281; Harral, Oct. 24 Trial Tr. at 476-77; Richardson, Oct. 25 Trial Tr. at 650-55.)

There is no dispute that the namespace extension APIs were not needed to provide various mechanisms to launch Novell's applications. Novell could place icons for WordPerfect and Quattro Pro directly on the Windows desktop and include those applications in the Windows Start menu, either of which would have allowed users to "get to those products very easily." (Harral, Oct. 24 Trial Tr. at 504-08; see also Richardson, Oct. 25 Trial Tr. at 651-52; Alepin, Nov. 10 Trial Tr. at 1577-78.) Novell could also associate WordPerfect and Quattro Pro with particular file types so that when the user clicked on an icon for one of those files, the associated

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application would launch and the file would open. (Alepin, Nov. 10 Trial Tr. at 1578-79.) Moreover, Novell did not need the namespace extension APIs to access the Windows 95 system namespace, including the Network Neighborhood virtual folder that gave users easy access to network servers. (Harral, Oct. 24 Trial Tr. at 485-86; see also Richardson, Oct. 25 Trial Tr. at 631, 633-34; Alepin, Nov. 10 Trial Tr. at 1604.) The namespace extension APIs also were not needed to add a folder to the Windows 95 file system that was the default location for storing WordPerfect documents and Quattro Pro spreadsheets. (Alepin, Nov. 10 Trial Tr. at 1578; Richardson, Oct. 25 Trial Tr. at 608-09.) Novell did that by adding a folder called "MyFiles" to the Windows 95 file system that showed up both in the tree view of Windows Explorer and in the Windows 95 common file open dialog. (Alepin, Nov. 10 Trial Tr. at 1578; Richardson, Oct. 25 Trial Tr. at 608-09).⁶

The evidence at trial also conclusively establishes that Novell sought to use the namespace extension APIs for something altogether different than improving WordPerfect and Quattro Pro, the two products at issue in this action: Novell intended to use the namespace extension APIs in order to augment Windows 95, by embedding Novell's QuickFinder search engine, Soft Solutions document management system, e-mail client, Presentations clip-art gallery and FTP/HTTP browser directly in the Windows shell. (Harral, Oct. 20 Trial Tr. at 268-70; Harral, Oct. 24 Trial Tr. at 372-74; Richardson, Oct. 25 Trial Tr. at 628-30, 691-92.)⁷ Novell intended to display these products in the tree view of the Windows Explorer and Windows 95

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common file open dialog, even when WordPerfect and Quattro Pro were not running. (Harral, Oct. 20 Trial Tr. at 268-70; Richardson, Oct. 25 Trial Tr. at 636-38, 691-97.) This meant that these five Novell products would be displayed in the Windows 95 common file open dialog inside applications created by other software developers. (Richardson, Oct. 25 Trial Tr. at 636- 37, 641-42.)

Adam Harral testified that Novell intended to exploit the functionality exposed by the namespace extension APIs not to create an alternative to Windows 95, but to "make Windows [95] the best version of Windows that it could be." (Harral, Oct. 24 Trial Tr. at 372- 74.) Greg Richardson agreed that "[i]t was our intent to make the user's experience on Windows better because they had WordPerfect installed." (Richardson, Oct. 25 Trial Tr. at 613.) According to Bob Frankenberg, if the versions of WordPerfect and Quattro Pro for Windows 95 had been released at or about the time Microsoft released Windows 95, "[i]t would have made Windows 95 more desirable in the marketplace" and "would have made Windows 95's market share even higher than what it turned out to be." (Frankenberg, Nov. 8 Trial Tr. at 1226-28.) Finally, when questioned by the Court outside the presence of the jury, Adam Harral explained that "no matter what happened," Novell was going to "connect" WordPerfect to Windows 95. (Harral, Oct. 24 Trial Tr. at 559-60.)

No witness has testified--and there is no evidence--that in the period from December 1994 (when Novell released PerfectOffice 3.0 for Windows 3.1) to March 1996 (when Novell sold its applications to Corel), Novell was developing versions of WordPerfect or Quattro Pro for any operating system other than Windows 95.

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(d) Microsoft's Decision to Withdraw Support for the Namespace
Extension APIs

On September 22, 1994, Brad Struss, who led the Windows 95 team in Microsoft's Developer Relations Group ("DRG") (Jan. 8, 2009 Deposition of Douglas Henrich, Nov. 8 Trial Tr. at 1382), reported on the results of a survey conducted to determine the extent to which ISVs were using the namespace extension APIs in their development of applications for Windows 95. (DX 17, e-mail from Brad Struss, Holley Decl. Ex. O.) Struss reported that WordPerfect had "not begun any work on IShellFolder, IShellView, etc." (i.e., the namespace extension APIs). (Id.) Struss further reported that WordPerfect had said that if Microsoft's e-mail client used the namespace extension APIs, WordPerfect would "figure it out" even if the APIs were "not documented." (Id.) This document also notes that WordPerfect's "current plan" was to use the "common dialogs" in Windows 95. (Id.)

On October 3, 1994, Bill Gates decided that Microsoft would withdraw support for the namespace extension APIs. (PX 1, e-mail from Bill Gates, Holley Decl. Ex. P.) In an e-mail stating his decision, Mr. Gates stated that "[t]he shell group did a good job defining extensibility interfaces," but that Microsoft should "wait until we have a way to do a high level of integration that will be harder for likes of Notes, Wordperfect to achieve, and which will give Office a real advantage." (Id.) Gates explained that the namespace extension APIs did not achieve the "level of integration" with the Windows Explorer that he had envisioned. (May 19, 2009 Deposition of Bill Gates ("Gates Dep.") at 253-55, used at trial on Oct. 19, Holley Decl. Ex. Q.) Gates testified that as written, the namespace extension APIs did not allow software developers to "invoke applications" in the view pane on the right-hand side of the Windows Explorer, as Gates had conceived. (Gates Dep. at 249-50.) In Gates' view, the functionality of the namespace extension APIs as implemented was "so trivial" that the APIs were not "worth the

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trouble" of supporting. (Gates Dep. at 255.) There is no evidence that Bill Gates was aware of Novell's plans to use the namespace extension APIs before his October 3, 1994 decision.

The evidence at trial shows that because the namespace extension APIs were "design[ed] to [be] part of the system," these APIs would "run in the explorer's process space" and, as a result, "[b]adly written name space extension[s] could cause the reliability of Windows 95 to be less th[a]n what it should." (DX 3 at MX 6055843, Holley Decl. Ex. A.)

Paul Maritz, the Microsoft executive in charge of all operating systems, testified that a program written by an ISV that called the namespace extension APIs "could bring down the shell." (Jan. 9, 2009 Deposition of Paul Maritz ("Maritz Dep.") at 129, used at trial on Oct. 27, Holley Decl. Ex. R.) James Allchin, the Microsoft executive in charge of Windows NT, testified that, because of the way the namespace extension APIs were implemented in Chicago, "if an application had an error in it, it could take down or corrupt the user experience overall." (Jan. 8, 2009 Deposition of James Allchin ("Allchin Dep."), Nov. 8 Trial Tr. at 1297.) Even Ronald Alepin testified that the namespace extension APIs ran in the same process as the remainder of the Windows 95 shell, so an error in an application calling the namespace extension APIs "had the potential to make the system unresponsive." (Alepin, Nov. 10 Trial Tr. at 1589.) Indeed, Professor Noll testified that "one valid reason for not documenting an API" is "where those APIs are unstable." (Noll, Nov. 15 Trial Tr. at 1872.) Thus, even Novell's experts in effect agreed that Microsoft had a valid reason for withdrawing support for the namespace extension APIs. Alepin's testimony, at its heart, was merely that he disagreed with the decision, not that it lacked technical justification.

The day after Bill Gates decided to withdraw support for the namespace extension APIs, Robert Muglia, the lead program manager for Windows NT (Alepin, Nov. 10, 2011 Trial

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Tr. at 1606), wrote that the decision was "very good news for BSD [Business Systems Division]" (DX 21, e-mail from Robert Muglia, dated Oct. 4, 1994, Holley Decl. Ex. S), because "these interfaces introduce significant robustness issues," and "[s]ince Bill has decided these interfaces won't be published, NT development does not have to expend precious energy on implementing these for NT." (Id.)

The namespace extension APIs--although no longer supported by Microsoft--remained part of the Windows 95 operating system. (Frankenberg, Nov. 7 Trial Tr. at 1133-34; Richardson, Oct. 25 Trial Tr. at 624; Harral, Oct. 24 Trial Tr. at 530.) Software developers were permitted to keep the documentation they had received as part of the M6 beta, i.e., the documentation was not taken away from ISVs. (Richardson, Oct. 25 Trial Tr. at 624-25.) However, ISVs were advised by Microsoft not to rely upon the namespace extension APIs because it was possible they would change in the future. (DX 3 at MX 6055844, Holley Decl. Ex. A.) Microsoft told ISVs that it would not change the namespace extension APIs just for the sake of doing so, and thus that ISVs could choose to take a calculated risk of using the namespace extension APIs. (Id.)

Alepin testified that no commercially released version of Microsoft Word, Microsoft Excel, Microsoft PowerPoint, Microsoft Access, or Microsoft Office used the namespace extension APIs during the 1994 through 1996 time period. (Alepin, Nov. 10 Trial Tr. at 1641-43.) In fact, Alepin could not say whether any of those applications ever called the namespace extension APIs at any time. (Id.) Frankenberg testified that he was unaware of "any information at all, one way or another . . . as to whether or not Microsoft Office, the version of Microsoft Office released in 1995 to run with Windows 95 or any subsequent version of

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Microsoft Office, utilized or called the namespace extension APIs." (Frankenberg, Nov. 7 Trial Tr. at 1115.) Novell is simply wrong to argue that Microsoft "tilted" the playing field.

On October 12, 1994, Brad Struss reported that "we're now in the process of proactively notifying ISVs about the namespace extension api changes." (DX 3 at MX 6055844, Holley Decl. Ex. A.) Struss reported that "[s]o far Stac, Lotus, WP [WordPerfect], Oracle, SCC appear to be OK with this." (Id.) There is no evidence that anyone at Novell contacted any Microsoft executive, anyone in the Microsoft DRG, or anyone in the operating systems group at Microsoft to complain in any fashion or to explain that the decision to withdraw support for the namespace extension APIs had or might have an adverse impact on Novell's development efforts.⁸

(e) Novell Decides to Build Its Own Advanced File Open Dialog

Novell's witnesses testified that upon learning of Microsoft's decision to withdraw support for the namespace extension APIs, Novell had three choices: (1) to continue relying on the namespace extension APIs; (2) to use the Windows 95 common file dialog that Microsoft provided to ISVs for free; or (3) to build a custom file open dialog that sought to replicate the functionality of the Windows Explorer. (Harral, Oct. 20 Trial Tr. at 342-43; Richardson, Oct. 25 Trial Tr. at 602-04.)

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Novell's witnesses testified that PerfectOffice for Windows 95 could have been released without any delay by choosing option 1 or option 2. (Harral, Oct. 24 Trial Tr. at 502-04; Gibb, Oct. 26 Trial Tr. at 847-48.) With respect to the first option, Harral explained that "[o]ne option would be to continue to use the documentation that we had for the APIs and be relied upon our ability to ferret out all of the issues we would have had help from their support to do. So basically we could do it on our own with something that we were told we shouldn't be using. That was one option." (Harral, Oct. 20 Trial Tr. at 342.) Frankenberg confirmed that one of the choices available to Novell was to use the namespace extension APIs at Novell's risk: "That was the nature of undocumented APIs, yes." (Frankenberg, Nov. 7 Trial Tr. at 1133.) Richardson testified that Novell's shared code group had already created a file open dialog that called the namespace extension APIs by October 1994, but chose not to use it in WordPerfect and Quattro Pro because "as we were trying to optimize and work through the final issues, we discovered performance issues that were unacceptable." (Richardson, Oct. 25 Trial Tr. at 677-78.)

With respect to the second option, Gary Gibb, who headed development of PerfectOffice for Windows 95, testified that Novell was testing its Windows 95 applications using the Windows 95 common file open dialog, and that it would have been "quite easy" for Novell to release WordPerfect and Quattro Pro using that Windows 95 common file open dialog. (Gibb, Oct. 26 Trial Tr. at 847-48; see also Harral, October 24 Trial Tr. at 502.) A July 11, 1995 internal Novell document confirms that Novell's applications could "support Common Open Dialog functionality" and that Novell was planning on giving users the choice of using the Windows 95 common file open dialog rather than the custom file open dialog that Novell was attempting to create. (DX 114, PerfectFit 95: Open File Dialog--Function and Issues, at 10,

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Holley Decl. Ex. T.) However, Gibb explained that Novell wanted to "do something cooler" and "exceed what was the default stuff." (Gibb, Oct. 26 Trial Tr. at 848-49; see also Richardson, Oct. 25 Trial Tr. at 629-30.)

Harral and other software developers in Novell's shared code group chose option three. (Harral, Oct. 20 Trial Tr. at 342-43.) Harral testified that he knew by late 1994 that option three--attempting to build an advanced file open dialog--"would be a significant commitment in resources." (Id. at 342.) The decision to create a custom file open dialog was made despite the fact that Novell was fully aware that Microsoft was no longer supporting the namespace extension APIs after October 3, 1994. (Harral, Oct. 20 Trial Tr. at 332, 345; Harral, October 24 Trial Tr. at 363-65; Richardson, Oct. 25 Trial Tr. at 702-03.) It was a business choice freely made by Novell. There has never been a successful antitrust suit based on facts anywhere close to these.

Harral testified at trial that Microsoft's Premier Support group was "starting to give us less and less information about the shell in general." (Harral, Oct. 20 Trial Tr. at 345.) On direct examination, Harral testified that he spoke with Premier Support three times, although he was unable to provide even a month in which any such call took place. (Harral, Oct. 20 Trial Tr. at 329-31). On cross examination, when asked to provide the names of any people in Microsoft's Premier Support group with whom he spoke, Harral was entirely unable to do so. (Harral, Oct. 24 Trial Tr. at 397, 399, 414.)⁹ Novell introduced no evidence at trial of any e-mail sent to Microsoft referring to any such call; no internal Novell e-mail or memorandum indicating

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that such a call took place or complaining about Microsoft's lack of cooperation; and no document of any kind that could in any way confirm or even imply that there was ever any such contact between the two companies.¹⁰Other than Harral's testimony, Novell introduced no evidence at trial--documentary or testimonial--reflecting communications between anyone at Novell and anyone in Microsoft's Premier Support group.¹¹

Harral and the other developers in Novell's shared code group spent "almost a year" trying to write Novell's own custom file open dialog. (Richardson, Oct. 25 Trial Tr. at 605, 630; see also Harral, Oct. 24 Trial Tr. at 366-67.) Novell did not prove at trial that the time it took for Novell's shared code group to create a file open dialog was the result of Microsoft's withdrawal of support for the namespace extension APIs. As Professor Noll testified, "to an antitrust economist, that there can't be any harm to competition under the facts here if the conduct at issue, the decision to withdraw support for the namespace extension APIs did not cause any delay." (Noll, Nov. 15 Trial Tr. at 1880-81.) Frankenberg explained that it was "common in the software industry for companies to experience delay in developing new software products." (Frankenberg, Nov. 7 Trial Tr. at 1072-73.) Alepin agreed that in the software industry projects "tend to be late and they don't meet their deadlines, their announced deadlines," that "some organizations" are "overly optimistic" and "frequently miss release dates." (Alepin,

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Nov. 10 Trial Tr. at 1544-45; see also Noll, Nov. 15 Trial Tr. at 1881 (acknowledging that "[d]elays happen" in software development, and "there are occasions when they release software late").) Finally, Novell's own filings with the SEC make the same point, stating that delays are "common in the computer software industry" and that Novell "has experienced delays in its product development and `debugging' efforts, and the Company can be expected to experience similar delays from time to time in the future." (E.g., DX 380, Novell Form 10-K for Fiscal Year ending Oct. 29, 1994, filed Jan. 25, 1995, at 10, Holley Decl. Ex. U.)

There are reams of Novell documents showing that the delay until May 1996 in the release of PerfectOffice was caused by other issues, particularly the fact that the Quattro Pro group was far behind schedule in releasing a program for Windows 95 (e.g., DX 211, Project Proposals for "Storm,"¹² at NOV-B01491217, Holley Decl. Ex. V (as of December 1994, a September 30, 1995 release date for Quattro Pro for Windows 95 was "barely achievable with all their resources and with no additional functionality"); DX 219 at NOV-B06655277, Holley Decl. Ex. W (February 2, 1995 notes from a "Storm Coordination Meeting" stating that "Quattro Pro folks [were] still working on International versions of QP 6.0," and that they "[e]xpect[ed] to finish that by end of March and then will begin on next version of QP" for Windows 95) (emphasis added); DX 227 at NOV-B00642501, Holley Decl. Ex. X (a 1995 document noting that in 1994 "[w]e all determined that after we ship PerfectOffice 3.0, our #1 goal is to get PerfectOffice on Windows 95 ASAP. We initially targeted October 95, but due to Quattro Pro localization delays we moved the date back to December 95.") These documents never say that

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the delay was caused by Microsoft's withdrawal of support for the namespace extension APIs. The testimony of Harral and Richardson to the contrary cannot create a jury issue, for their memory of these events of 16-17 years ago is refuted at every turn by the documentary record of the reasons for the delay. (E.g., DX 226 at NOV-B01425535, Holley Decl. Ex. Y (May 26, 1995 Project Development Plan for Storm noting that schedule was already "modified" because of "delays in the QP development effort" and that the likelihood of "Quattro Pro delivering late" was the highest overall risk of the PerfectOffice for Windows 95 project).

The record conclusively establishes that no senior executive at Novell was ever asked to, or did, approve the decision for Novell's shared code group to try to write Novell's own custom file open dialog. CEO Frankenberg testified that he believed "[i]t was vitally important" to release versions of Novell's applications for Windows 95 on time because "the moment a new operating system environment is announced . . . previous products drop dramatically, and customers begin making decisions about which products they'll use in this newly released operating system." (Frankenberg, Nov. 7 Trial Tr. at 998-99.)¹³ Frankenberg testified that any decision that could jeopardize the timely release of WordPerfect or Quattro Pro--which "had some real important consequences for Novell"--would have been made by senior executives, including Ad Rietveld, the Executive Vice President of the Novell Applications Group, Dave Moon, Vice President and General Manager of the Business Applications Group, Mark Calkins, the Vice President and General Manager of the Business

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Applications Group, and Glen Mella, the Vice President of Marketing. (Frankenberg, Nov. 7 Trial Tr. at 1140-42; Nov. 8 Trial Tr. at 1179-80.) Frankenberg also agreed that "[i]n any business organization faced with an important decision," such as Novell, a formal memorandum would normally be presented to the senior executives "laying out the concerns and the issues and the considerations facing that business in making some strategic or tactical choice." (Id. at 1181.)

Notably, the evidence at trial includes a January 12, 1995 internal Novell memorandum directed to Messrs. Rietveld, Moon, Calkins, and Mella, which lays out the issues to be considered about whether to participate in the Windows 95 logo licensing program. (DX 155, Holley Decl. Ex. E.) By contrast, there is no evidence of any similar memorandum concerning the decision to create an advanced file open dialog instead of choosing option 1 (continuing to call the namespace extension APIs) or choosing option 2 (using the Windows file open dialog).

Moreover, when Frankenberg was asked whether he knew of "any evidence whatsoever that any of the four people we mentioned, Calkins, Mella, Moon or Rietveld ever were presented with a decision about how to respond to Mr. Gates' decision to withdraw support for the namespace extension APIs," he answered "[n]one." (Frankenberg, Nov. 8 Trial Tr. at 1181-82.) Frankenberg acknowledged that during the 1994-1995 time period he did not even know what the namespace extension APIs were. (Frankenberg, Nov. 7 Trial Tr. at 1127.) Frankenberg testified that he had never seen any memoranda regarding Microsoft's decision to withdraw support for the namespace extension APIs, and that he was never consulted by anyone before the software developers in Novell's shared code group spent almost a year attempting to

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write an advanced file open dialog. (Frankenberg, Nov. 7, Trial Tr. at 1132; Frankenberg, Nov. 8 Trial Tr. at 1180-81.)

Novell introduced no formal memorandum, or any other document, in which Frankenberg or the four senior executives he identified were presented with options or issues or strategic choices, although Frankenberg testified that Messrs. Calkins, Mella, Moon and Rietveld would have been involved in any important business decision involving WordPerfect and Quattro Pro. (Frankenberg, Nov. 8 Trial Tr. at 1180-81.) There is no evidence that any of them ever got involved. Similarly, each of Harral, Richardson and Gibb testified that they never spoke with any Novell senior executive regarding what Novell should do in light of Microsoft's decision to withdraw support for the namespace extension APIs. (Harral, Oct. 24 Trial Tr. at 401-02; Richardson, Oct. 25 Trial Tr. at 703; Gibb, Oct. 26 Trial Tr. at 869.) ¹⁴ This also completely undermines the weak testimony of Novell's low-level software. No reasonable jury could conclude that Novell chose a "suicidal" business path based solely on such software developers' vision of a really "cool" new file open dialog. Novell did not call any of the four former senior executives to testify at trial or take their depositions.

The evidence at trial also shows both that Microsoft personnel were available to--and did--help Novell with issues it encountered in developing applications to run on Windows

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95. (Frankenberg, Nov. 7 Trial Tr. at 1130-31; Nov. 8 Trial Tr. at 1217.) Frankenberg said that he is "sure" that "people in the [operating] systems group at Microsoft were trying to help WordPerfect/Novell produce a great application for Windows 95." (Frankenberg, Nov. 7 Trial Tr. at 1131; Nov. 8 Trial Tr. at 1217.) In other words, Microsoft never terminated any relationship; it instead continued to assist Novell. Nevertheless, while there is ample record evidence that executives at Novell dealt with and knew Brad Struss, Bob Kruger, David Cole, Doug Henrich, Brad Silverberg and Bill Gates--and also knew how to contact them (and often did)--there is no evidence that anyone at Novell ever contacted or attempted to contact any of these Microsoft officers and employees concerning any issue raised by the decision to withdraw support for the namespace extension APIs. (Frankenberg, Nov. 7 Trial Tr. at 1027-29, 1125 (Gates, Struss, Kruger); Frankenberg, Nov. 8 Trial Tr. at 1172, 1174-76 (Silverberg, Chase); DX 22 (Struss, Chase); DX 161 Holley Decl. Ex. AA, e-mail from Brad Silverberg, dated November 18, 1993 (Struss, Cole); DX 155, Holley Decl. Ex. E (Silverberg); Nov. 8 Trial Tr. at 1307-09 (Henrich).) Both Harral and Richardson testified that they never even tried to speak to anyone at Microsoft's Developer Relations Group or operating systems about the namespace extension APIs. (Harral, Oct. 24 Trial Tr. at 413-14, 418; see Richardson, Oct. 25 Trial Tr. at 702-03.) And six months after Microsoft's decision to withdraw support for the namespace extensions, an April 7, 1995 internal Novell e-mail stated that "the cooperation between Microsoft and Novell has been very good." (DX 172, e-mail from Scott Nelson, Holley Decl. Ex. BB.) Microsoft did not stop cooperating with Novell.

In the end, according to Ronald Alepin, the file open dialog included in Corel WordPerfect Suite 7 for Windows 95, released in June 1996, had functionality that was substantially similar to the functionality in the file open dialog included in PerfectOffice 3.0 for

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Windows 3.1, released in December 1994. (Alepin, Nov. 10 Trial Tr. at 1579-86.) ¹⁵ Alepin acknowledged that both file open dialogs gave users access to QuickFinder; the ability to preview documents without launching an application; and a list of recently accessed information stores. (Alepin, Nov. 10, 2011 Trial Tr at 1586-88.) Comparing the two file open dialogs, Alepin concluded that "the top level functionality" is "the same." (Alepin, Nov. 10 Trial Tr. at 1587.) The efforts of Novell's shared code group resulted in a file open dialog that was little different than the one Novell had already created for the Windows 3.1 version of PerfectOffice, a product that also ran on Windows 95. Id.

On November 17, 2011, Novell rested.

ARGUMENT

Under Rule 50 of the Federal Rules of Civil Procedure, a motion for judgment as a matter of law should be granted "[i]f a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue." Fed. R. Civ. P. 50(a)(1). "The inquiry for summary judgment and [judgment as a matter of law] are essentially the same: `whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Welding v. Bios Corp., 353 F.3d 1214, 1217 (10th Cir. 2004) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)). Judgment as a matter of law may be entered "when the evidence and all the inferences to be drawn therefrom, viewed in the light most favorable to the nonmoving party, is `so patently in favor of the moving party that

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a jury verdict in favor of the opposing party would be improper and would have to be set aside by the trial judge.'" Forsgren v. Hydraulics Int'l, Inc., 2011 U.S. Dist. LEXIS 35641, at *2-3 (D. Utah March 31, 2011) (quoting Taylor v. Cooper Tire & Rubber Co., 130 F.3d 1395, 1399 (10th Cir. 1997)).

Under this standard, a defendant is entitled to judgment as a matter of law where the evidence presented at trial cannot be reconciled with plaintiff's theory of the case. Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 237-38 (1993) (affirming judgment as a matter of law in oligopolistic pricing case where the testimony of plaintiff's fact witnesses "contradicted [plaintiff's] theory" of the case); Boellstorff v. State Farm Mutual Automobile Ins. Co., 2009 U.S. Dist. LEXIS 21748, at *20 (D. Colo. March 18, 2009) (defendant entitled to judgment as a matter of law where testimony of only witness with personal knowledge of issue in dispute "directly refuted" plaintiff's theory).

Novell has failed to provide any basis for a reasonable jury to find in its favor on its claim. Judgment should therefore be entered in Microsoft's favor as a matter of law.

I. Novell Failed To Introduce Evidence that Would Permit a Reasonable Jury To Find
that Microsoft Harmed Competition in the PC Operating System Market.

A. The Evidence at Trial Shows that the Timely Release of WordPerfect and
Quattro Pro Would Have Enhanced Microsoft's Monopoly in the PC
Operating System Market.

Novell claims that Microsoft unlawfully maintained its monopoly in the PC operating system market by conduct--namely, withdrawal of support for the namespace extension APIs--that harmed Novell's applications. Novell must prove, among other things, that "the specific Microsoft conduct which caused injury to Novell's applications also caused anticompetitive harm in the PC operating system market." Novell v. Microsoft Corp., 699 F. Supp. 2d 730, 748 (D. Md. 2010) (emphasis in original). Yet all of Novell's fact witnesses

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testified that, had there been no delay in the released of versions of WordPerfect and Quattro Pro for Windows 95, Windows 95 would only have become stronger. Indeed, Frankenberg testified that had Novell's applications for Windows 95 been more successful, the market share of Windows 95 would have increased:

Q. Was it your view at the time, in 1994 and 1995, that if PerfectOffice, the new version of PerfectOffice for Windows 95 had been released by Novell, that that would have made Windows 95 even more desirable in the marketplace than it otherwise would have been?

A. Definitely. It would have made Windows 95 more desirable in the marketplace.

Q. It was your view at the time that if PerfectOffice for Windows 95 had been released by Novell, that would have been a benefit to Microsoft for exactly the reason you just said, it would have made Windows 95 even more desirable for consumers?

A. That is true.

Q. If --

A. Especially those who use WordPerfect products. They would be able to use Windows 95, and they wouldn't otherwise have been able to do that if they wanted to continue using WordPerfect.

Q. If anything, that would increase the sales of Windows 95; correct?

A. Yes.

Q. Having a good PerfectOffice product out there would make Windows 95 even more popular than it turned out to be; true?

A. True.

Q. If PerfectOffice had been released in 1995 by Novell and had been successful, and had gained a reasonably good share of the market how, if at all, would that have effected [sic] sales of Windows?

A. Presumedly [sic] it would have increased sales of Windows 95.

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Q. And would have made Windows 95's market share even higher than what it turned out to be, correct?

A. Yes.

(Frankenberg, Nov. 8 Trial Tr. at 1226-1228 (emphasis supplied); see also Noll, Nov. 15 Trial Tr. at 1949 (completely agree[ing]" with Frankenberg's testimony).) This testimony by Novell's former CEO at the time that Novell intended to make Windows 95 "more desirable" to consumers and that, had Microsoft not withdrawn support for the namespace extension APIs, the purportedly earlier release of Novell's applications for Windows 95 would have "increased sales of Windows 95" is fatal to Novell's claim.¹⁶ It affirmatively disproves the assertion that the alleged anticompetitive conduct had some adverse effect on competition in the market for PC operating systems.¹⁷

The evidence at trial also establishes that, far from pursuing a cross-platform strategy, Novell recognized that Windows 95 was a huge step forward technologically, and Novell chose to take advantage of the new features that Windows 95 offered. Frankenberg testified that Windows 95 was a "significant step forward" and that Novell was "very excited and very interested" in Windows 95. (Frankenberg, Nov. 8 Trial Tr. at 1225-26.) Frankenberg also

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explained that Novell's business strategy was to "take[] advantage of the capabilities in Windows 95" in order to give Novell's PerfectOffice suite "an advantage in the marketplace." (Frankenberg, Nov. 8 Trial Tr. at 1226.) Harral likewise testified that "Windows 95 was in my view a significant step forward for the P.C. and for Microsoft," and Novell was "excited about Windows 95" and the "wonderful evolution" in technology it provided. (Harral, Oct. 20 Trial Tr. at 253-54, 256-57; see also Gibb, Oct. 26 Trial Tr. at 788) ("Well, from a technology standpoint, Windows 95 was a huge step forward."); Richardson, Oct. 25 Trial Tr. at 607 ("There were many features in Windows 95 that we were very excited about.").) Of course, the more features of Windows 95 that Novell's applications relied on, the more tied they were to Windows 95, and the more difficult it would be for Novell to port WordPerfect and Quattro Pro to other PC operating systems.¹⁸

Harral and Richardson explained that Novell wanted to use the namespace extension APIs not to improve WordPerfect and Quattro Pro--the products at issue in this action--but to enhance Windows 95 itself. According to Harral and Richardson, they planned to use the namespace extension APIs to put five other Novell products in the tree view of the Windows Explorer and the Windows 95 common file open dialog. (Harral, Oct. 20, 2011 Trial Tr. at 268-70; Harral, Oct. 24 Trial Tr. at 373-74; Richardson, Oct. 25, 2011 Trial Tr. at 629-30, 638.) Had Harral and Richardson done what they wanted to do, Novell's QuickFinder search engine, Soft Solutions document management system, e-mail client, Presentations clip-art gallery and FTP/HTTP browser would have appeared in the Windows 95 shell once a user had installed

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Novell's applications. (Harral, Oct. 24 Trial Tr. at 515; Richardson, Oct. 25 Trial Tr. at 593, 612, 638, 691-92.) The purpose of adding these five Novell products to the Windows 95 shell was, according to Novell, to "make Windows [95] the best version of Windows that it could be." (Harral, Oct. 24 Trial Tr. at 372-74; see also Richardson, Oct. 25 Trial Tr. at 613 ("It was our intent to make the user's experience on Windows better because they had WordPerfect installed.").) In other words, Novell did not care about how wide the moat was around Microsoft's PC operating system monopoly, because Novell had decided it was happy to be inside the Windows 95 castle.

No reasonable jury could conclude that Novell has proven its theory of harm to competition in the PC operating system market because, as the Court has emphasized, Novell's own witnesses testified that Novell "wanted to marry the two products, the operating system and WordPerfect . . . both through 1996 and the foreseeable future." (Oct. 27 Trial Tr. at 928-29.) Because the unanimous testimony is that Novell's business strategy was to exploit fully the new features of Windows 95 and hoped thereby to enhance--not supplant--Windows as a development platform for full-featured personal productivity applications, no reasonable jury could conclude that "the specific Microsoft conduct which caused injury to Novell's applications also caused anticompetitive harm in the PC operating system market," Novell, 699 F. Supp 2d. at 748 (emphasis in original), let alone "that the conduct that harmed [Novell's] software applications contributed significantly to Microsoft's monopoly in the PC operating system market." Id. at 750.

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B. The Evidence at Trial Refutes Both of Novell's Theories of Harm to
Competition in the PC Operating System Market.

Novell's claim fails for the separate and independent reason that both of Novell's alleged theories of harm to competition in the PC operating system market, its franchise applications theory and its "middleware" theory, are refuted by the evidence presented at trial.

Novell's Franchise Applications Theory: Novell offered no evidence that WordPerfect and Quattro Pro were so popular such that, if available on rival operating systems, they would have popularized those non-Microsoft operating systems and thereby reduced the dominance of Windows. Indeed, the evidence refutes this theory.

First, Novell's own witnesses admit that, in the early 1990s, there were versions of WordPerfect that ran on many non-Microsoft operating systems--including IBM's OS/2, Apple Macintosh, Digital VMS, UNIX, and NeXT.¹⁹ Yet, the availability of WordPerfect on these other operating systems in no way diminished Microsoft's large share of the PC operating system market. Microsoft maintained at least a 90 percent share of that market throughout the 1990s. (E.g., Finding of Fact 35, read to the jury on Oct. 18 ("Every year for the last decade, Microsoft's share of the market for Intel-compatible PC operating systems has stood above ninety percent.").) As the Court observed, in light of the trial record, the idea that the availability of WordPerfect and Quattro Pro on non-Microsoft operating systems would spark competition in the PC operating system market "is counterfactual," because WordPerfect and Quattro Pro were available "on other operating systems since time immemorial." (Nov. 9 Trial Tr. at 1501.)

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Second, Novell's franchise applications theory is refuted by collaterally estopped Findings of Fact that Novell introduced into evidence. Those Findings of Fact conclusively establish that even if several thousand applications had been available for a particular non- Microsoft operating system, that would not have been enough to surmount the applications barrier to entry. Novell's theory that having just its two applications--WordPerfect and Quattro Pro--available on a non-Microsoft operating system would be enough to erode the applications barrier to entry and increase competition in the PC operating system market is flatly inconsistent with the Findings of Fact that are binding in this action.

Novell sought and obtained issue preclusion on Findings of Fact 37 through 39 (see Court's October 4, 2011 Memo to Counsel (Docket #163)), which explain that the applications barrier protecting Microsoft's PC operating system monopoly arises from a "positive feedback loop" created by the tens of thousands of applications written to run on Windows. (Findings of Fact 37-39, read to jury on Oct. 18, 2011.) Finding of Fact 37 explains that "[t]he fact that a vastly larger number of applications are written for Windows than for other PC operating systems attracts consumers to Windows, because it reassures them that their interests will be met as long as they use Microsoft's product." (Finding of Fact 37.) Finding of Fact 39 establishes that "[t]he large body of applications thus reinforces demand for Windows, augmenting Microsoft's dominant position and thereby perpetuating ISV incentives to write applications principally for Windows." (Finding of Fact 39.)

Accordingly, the theory that WordPerfect and Quattro Pro standing alone could increase competition in the PC operating system market if, at some indeterminate future time, Novell decided to develop versions of those applications for a non-Microsoft operating system cannot be reconciled with the Findings of Fact. The relevant Findings of Fact have "binding

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effect here" (Oct. 18 Trial Tr. at 143), so no reasonable jury could find that the availability of WordPerfect and Quattro Pro on non-Microsoft operating systems posed a threat to Microsoft's PC operating system monopoly.

Novell's "Middleware" Theory:

Novell presented no evidence that WordPerfect, either alone or in combination with AppWare and OpenDoc, was a species of "middleware" that could erode Microsoft's dominance in the PC operating system market. According to the collaterally estopped Findings of Fact, which are binding on Novell, a software product could pose a "middleware" threat to Microsoft's PC operating systems monopoly only if that software product (a) runs on multiple operating systems, and (b) exposes a sufficient number of APIs to allow ISVs profitably to develop general-purpose personal productivity applications that call upon APIs exposed by the software product, rather than on APIs exposed by the underlying operating system. (Findings of Fact 28, 29, 32.) Novell is bound to this definition of "middleware" because, as Novell alleged in the Complaint (Compl. ¶ 48), the "middleware" threat posed by Novell is the same middleware threat as was at issue in the District of Columbia Case. If it is anything different, Novell's claim is time-barred because Novell escaped the statute of limitations only by arguing that its claim was substantially related to the claims asserted in the District of Columbia Case. Novell, Inc. v. Microsoft Corp., 505 F.3d 302, 307 (4th Cir. 2007) ("[A]ll of Novell's claims asserted in its November 2004 complaint are time-barred unless the statute of limitations is tolled by the filing of the DOJ complaint in May 1998.").

In addition to the requirement that "middleware" be cross-platform, Novell's antitrust economics expert, Roger Noll, testified that in order to pose a threat to the applications barrier to entry, the cross-platform "middleware" must also be ubiquitous--that is, must run on

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"most" operating systems and "on all or nearly all of the PCs that use the operating system to which the application otherwise would be written." (Noll, Nov. 15 Trial Tr. at 1923; see also Noll, Nov. 14 Trial Tr. at 1717-18 (acknowledging that a "middleware" product "provid[es] the opportunity to run that particular application or middleware product on numerous operating systems."); Noll Nov. 15 Trial Tr. 1925-26 ("for middleware to become a threat to the applications barrier to entry," it "has to be available on a number of alternative operating systems.").)

Novell's supposed "middleware" lacks all three of the key characteristics. The evidence at trial establishes that the versions of WordPerfect, Quattro Pro and Novell's PerfectFit technology that purportedly posed a "middleware" threat to Microsoft's PC operating system monopoly were neither cross platform nor ubiquitous because they were developed to run solely on Windows 95. During the period from December 1994--when Novell released PerfectOffice 3.0 for Windows 3.1--until March 1996--when WordPerfect and Quattro Pro were sold to Corel--Novell was not developing a version of PerfectOffice for any operating system other than Windows 95. (Frankenberg, Nov. 8 Trial Tr. at 1168-69; Gibb, Oct. 26 Trial Tr. at 787.) Frankenberg also testified that, to his knowledge, after Corel purchased WordPerfect and Quattro Pro from Novell in March 1996, "Corel never released any version of PerfectOffice for any other platform except Windows." (Frankenberg, Nov. 8 Trial Tr. at 1169.) Upon questioning by the Court, Harral agreed that, regardless of whether WordPerfect could be characterized as "middleware," Novell's word processing application was going to run only on Windows 95:

Q. In fact, no matter what happened, you were trying to connect WordPerfect and whatever it exposed in terms of its own APIs or everything else, it was going to be operating on the Windows 95 operating system?

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A: Yes.

Q: No matter what happened. And if somebody could use what it exposed in terms of APIs and use them eventually as whatever, it was still going to be operating on the basis of the Windows 95?

A. Yes.

(Harral, Oct. 24 Trial Tr. at 559-60; see also Frankenberg, Nov. 8 Trial Tr. at 1168-69; Gibb, Oct. 26 Trial Tr. at 787.) Dr. Noll testified that in 1994 and 1995 Novell was "devoting virtually all of their energy to being on Windows 95," and that Novell "had plans to develop it for other platforms" at some unspecified point in the future. (Noll, Nov. 14 Trial Tr. at 1844-46.)

Therefore, even if Novell's applications had exposed enough APIs that other software developers could use to create general-purpose personal productivity applications, those Novell applications would not be cross-platform "middleware" because they were running only on Windows 95. Moreover, having been developed for one platform, Novell cannot show that its products were ubiquitous enough to threaten the applications barrier to entry surrounding Microsoft's PC operating system monopoly. Indeed, Novell has not introduced any evidence at trial of the market share of WordPerfect, Quattro Pro or PerfectOffice on non-Windows operating systems.²⁰

Moreover, Novell's "middleware" theory is contradicted by the collaterally estopped Findings of Fact that Novell read to the jury. The Findings of Fact make clear that the threat posed by "middleware" in the District of Columbia case was that applications written

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solely to APIs exposed by "middleware" would run on any operating system on which the "middleware" itself would run. For example, the Findings of Fact explain that the nascent threat that Sun's Java technology posed to Microsoft's PC operating system monopoly stemmed from its intended availability on non-Microsoft operating systems:

The inventors of Java at Sun Microsystems intended the technology to enable applications written in the Java language to run on a variety of platforms with minimal porting. A program written in Java and relying only on APIs exposed by the Java class libraries will run on any PC system containing a JVM that has itself been ported to the resident operating system.

(Finding of Fact 74, read to the jury on Nov. 14; Finding of Fact 68 ("The applications relying exclusively on middleware APIs would run as written on any operating system hosting the requisite middleware."), read to the jury on Nov. 14.) Novell's applications--with or without AppWare and OpenDoc--lack this defining characteristic--namely, availability on non- Microsoft operating systems.

Indeed, fully four years after the events at issue in this action, even Sun's Java technology--which was designed to run on non-Windows operating systems--was not yet more than a theoretical threat to Windows as a platform for developing full-featured personal productivity applications. Finding of Fact 28 states that "[c]urrently [November 1999] no middleware product exposes enough APIs to allow independent software vendors (`ISVs') profitably to write full-featured personal productivity applications that rely solely on those APIs." (Finding of Fact 28, read to the jury on Oct. 18.)

Finding of Fact 32 emphasizes that it still "remains to be seen whether server- or middleware-based development will flourish at all. Even if such development were already flourishing, it would still be several years before the applications barrier eroded enough to clear the way for the relatively rapid emergence of a viable alternative to incumbent Intel-compatible

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PC operating systems." (Finding of Fact 32, read to the jury on Oct. 18; see also Finding of Fact 29 ("It remains to be seen, though, whether there will ever be a sustained stream of full-featured applications written solely to middleware APIs."), read to jury on Oct. 18, 2011.) In short, "these middleware technologies have a long way to go before they might imperil the applications barrier to entry." (Finding of Fact 77, read to the jury on Nov. 14.) Consistent with these binding Findings of Fact, Dr. Noll testified that in "the period of this case plus the government case" there "never was" a middleware product that "ran on various operating systems." (Noll, Nov. 15 Trial Tr. at 1929; see also id. at 1920 (agreeing that "as of 1999, there had never been any middleware that could imperil the applications barrier to entry"). Thus, Novell's effort to establish that WordPerfect--alone or in combination with AppWare and OpenDoc--was "middleware" capable of decreasing the market share of Windows 95 during the time Novell owned WordPerfect flies in the face of the relevant Findings of Fact and the testimony of its own expert.

Novell's cross-platform "middleware" theory is further undermined by the fact that the namespace extension APIs were unique to Windows 95. Novell's lawyer "agree[d]" there is no evidence that Novell's PerfectFit technology "could have been easily ported to another platform." (Nov. 15 Trial Tr. at 2060.) Moreover, Alepin conceded that no operating system other than Windows 95 exposed the same functionality as the namespace extension APIs, because the namespace extension APIs were "platform specific" to Windows. (Alepin, Nov. 9 Trial Tr. at 1482-83; Alepin, Nov. 10 Trial Tr. at 1532-33.) As a result, if Novell used the namespace extension APIs in WordPerfect and QuattroPro, those applications would only have become more tightly tied to Windows, and thus more difficult to port to non-Microsoft operating systems. WordPerfect could therefore not rely on the namespace extension APIs (as Harral and

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Richardson said they wanted to do) and, at the same time, pose a "middleware" threat to Microsoft's PC operating systems.

Finally, the evidence is undisputed that software developers could not write general-purpose personal productivity applications that would run on top of Novell's products. On cross examination, Alepin conceded that Novell's purported "middleware" (including WordPerfect, Appware, OpenDoc and PerfectOffice, or some combination of those products) did not expose a sufficiently broad set of APIs to enable development of general-purpose personal productivity applications. (Alepin, Nov. 9 Trial Tr. at 1489-90; see also Alepin, Nov. 10 Trial Tr. at 1533-35, 1538-40.) The APIs exposed by Novell's products could only support applications "that worked with and were complimentary to the WordPerfect system," such as a thesaurus application or a spell-checker application. (Alepin, Nov. 9 Trial Tr. at 1479.) Alepin admitted that no ISV would bother to attempt to write a general-purpose personal productivity application on top of WordPerfect--this "would not be the best use of [an ISV's] time." (Alepin, Nov. 9 Trial Tr. at 1480.) Dr. Noll agreed with Alepin's concession, explaining that there were no third party applications "that would threaten the applications barrier to entry that were written to this platform, PerfectFit and/or appware." (Noll, Nov. 15 Trial Tr. at 1922-23.)

As the collaterally estopped Findings of Fact make plain, the only "middleware" that could pose a threat to Microsoft's PC operating systems monopoly is one that "exposes enough APIs to allow independent software vendors (`ISVs') profitably to write full-featured personal productivity applications that rely solely on those APIs." (Finding of Fact 28, read to jury on Oct. 18, 2011.) Novell introduced no evidence that any such product ever emerged, much less that any of Novell's products qualified during the time period relevant to this case, i.e., before March 1996.

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It did not matter--and could not matter--whether WordPerfect and Quattro Pro were released at or about the time that Microsoft released Windows 95 or nine months later because whenever they were released they had no potential to displace Windows as a platform for developing full-featured personal productivity applications. Accordingly, Novell failed to present evidence that would permit a reasonable jury to conclude that Microsoft's withdrawal of support for the namespace extension APIs in October 1994 caused harm to competition in the PC operating system market.

II. Novell Failed To Introduce Evidence that Would Permit a Reasonable Jury To Find
that Microsoft Engaged in Anticompetitive Conduct.

A. Novell Must Prove that Microsoft's Decision to Withdraw Support for the
Namespace Extension APIs Falls Within the Limited Aspen Skiing Exception.

Novell contends that once Microsoft made the namespace extension APIs available to ISVs in the M6 beta version of Windows 95, Microsoft had no right to withdraw support for those APIs. According to Novell, Microsoft was obligated to continue supporting the namespace extension APIs because Novell planned to use them, not to improve WordPerfect and Quattro Pro, but to embed other Novell products, such as its QuickFinder search engine, into the Windows 95 shell. Novell further contends that Microsoft's Premier Support group should have helped Novell's software developers use the namespace extension APIs even after Microsoft withdrew support for them.

At the heart of Novell's claim is the meritless argument that Microsoft was obligated to provide its intellectual property to help a competitor add its own products (such as QuickFinder) to the Windows 95 shell, even if Microsoft had determined that it did not want to commit to supporting the namespace extension mechanism in future versions of Windows. As the Court explained in its March 2010 decision on Microsoft's motion for summary judgment, to

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prevail on its Section 2 claim, Novell is required to prove at trial that Micosoft's withdrawal of support for the namespace extension APIs fell within the limited exception provided in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), to the general rule that "a monopolist has a right to refuse to cooperate with a competitor." Novell, 699 F. Supp. 2d at 745-47.

Novell's proof at trial falls far outside the limited Aspen Skiing exception. "[A]s a general matter, the Sherman Act `does not restrict the long recognized right of [a] trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.'" Verizon Commc'ns, Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 408 (2004) (second alteration in original) (quoting United States v. Colgate & Co., 250 U.S. 300, 307 (1919)). This rule applies with equal force to a monopolist. Four Corners Nephrology Assocs., P.C. v. Mercy Med. Ctr. of Durango, 582 F.3d 1216, 1221 (10th Cir. 2009) ("The Supreme Court has recently emphasized the general rule that a business, even a putative monopolist, has `no antitrust duty to deal with its rivals at all.'" (quoting Pac. Bell Tel. Co. v. Linkline Commc'ns, Inc., 555 U.S. 438, 444 (2009))). Novell's claim does not come close to falling within the narrow confines of the Aspen Skiing exception.

"[T]he Supreme Court has found a duty to deal in only one limited circumstance: where a monopolist terminates a pre-existing profitable relationship with a competitor without a lawful business purpose if that termination has an anticompetitive effect." Compliance Marketing, Inc. v. Drugtest, Inc., 2010 U.S. Dist. LEXIS 34315, at *53 (D. Colo. April 7, 2010) (emphasis added) (citing Trinko, 540 U.S. at 409); see also Four Corners Nephrology, 582 F.3d at 1224-25 (quotation omitted). This is the so-called Aspen Skiing exception. The Aspen Skiing exception is narrow "`because of the uncertain virtue of forced sharing and the difficulty of

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identifying and remedying anticompetitive conduct by a single firm.'" Christy Sports, 555 F.3d at 1194 (quoting Trinko, 540 U.S. at 408).

Novell's claim is that Microsoft was required to continue to provide support for the namespace extension APIs because it initially supported those features in the June 10, 1994 beta version of Windows 95. It is undisputed that Windows 95 was Microsoft's intellectual property. Indeed, Ronald Alepin stated that the namespace extension APIs were invented by Satoshi Nakajima, a Microsoft employee, and were patented. (Alepin, Nov. 10 Trial Tr. at 1625-26.) As the Court has recognized in the past, "to require one company to provide its intellectual property to a competitor would significantly chill innovation." In re Microsoft Corp. Antitrust Litigation, 274 F. Supp. 2d 743, 745 (D. Md. 2003) (Motz. J.) (citations omitted); see also Daisy Mountain Fire District v. Microsoft Corp., 547 F. Supp. 2d 475, 489-90 (D. Md. 2008) (Motz. J.). The Court has also recognized that, in light of the fact that "the software development industry is dynamic and involves continuous innovation," Microsoft has no duty to "disclose significant information to its competitors." In re Microsoft, 274 F. Supp. 2d at 745; see also Four Corners Nephrology, 582 F.3d at 1221 ("Allowing a business to reap the fruits of its investments is an important element of the free-market system: it is what induces risk taking that produces innovation and economic growth." (quotation and citation omitted)).

Further, courts have refused to extend Aspen Skiing to require a technological innovator to provide its intellectual property to its rivals. See In re Independent Service Organizations Antitrust Litigation, 989 F. Supp. 1131, 1139 (D. Kan. 1997) (distinguishing Aspen Skiing on the ground that "Aspen Skiing did not involve intellectual property rights" and explaining that extending Aspen Skiing to require the disclosure of intellectual property would "seriously undermin[e] the intellectual property laws"); see also In2 Networks, Inc. v. Honeywell

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International, 2011 U.S. Dist. LEXIS 117589, at *16 (D. Utah Oct. 12, 2011) (stating in dicta that, under Christy Sports, there is no duty "to allow [a rival] to use [one's intellectual] property, like Deer Valley was not required to invite competitors onto its property to rent skis").

Even if Novell's claim could be twisted to come within the limited Aspen Skiing exception, it would fail as a matter of law. Under Tenth Circuit law, a plaintiff relying on the Aspen Skiing exception must prove that a monopolist (a) "terminat[ed] a profitable business relationship" with the plaintiff, and (b) did so "without any economic justification." Four Corners, 582 F.3d at 1225. As the Tenth Circuit stated, the "key fact" in an Aspen Skiing claim is that a "monopolist was willing to jettison a profitable short-term business relationship and deny to a rival the retail prices available to all other consumers." Id. (emphasis in original). In addition, for a business relationship to serve as the predicate of a claim under Aspen Skiing, it must not be "temporary" or "subject to [the defendant's] business judgment" because termination of such a relationship "does not reach the outer boundary of § 2 liability, at which Aspen Skiing lies." Christy Sports, LLC v. Deer Valley Resort Co., 555 F.3d 1188, 1197 (10th Cir. 2009) (internal citation and quotation omitted).

No reasonable jury could find that Microsoft's withdrawal of support for the namespace extension APIs was anticompetitive under these standards. First, there was no "termination" of a profitable business relationship. The very opposite is true; the relationship continued and Microsoft continued to assist Novell (which never even informed Microsoft that it was supposedly struggling to cope with the withdrawal of support for the namespace extension APIs. Second, it is well understood in the software industry that a beta version of a product under development "might change" and "could" change, and indeed the beta license agreement pursuant to which Microsoft provided Novell with documentation for the namespace extension

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APIs made clear that the M6 beta version of Windows 95 was subject to change. Third, the trial evidence shows that Microsoft's decision to withdraw support for the namespace extension APIs was supported by legitimate business justifications.²¹

B. The Withdrawal of Support for the Namespace Extension APIs Did Not
"Terminate" the Relationship with Novell.

Microsoft's October 3, 1994 decision to withdraw support for the namespace extension APIs did not "terminate a business relationship" between Microsoft and Novell. Four Corners Nephrology, 582 F.3d at 1225 (citation omitted). Even after Microsoft's withdrawal of support for the namespace extension APIs, WordPerfect and Quattro Pro remained compatible with Windows 95, and Novell could have used the Windows 95 common file open dialog or built its own file open dialog using common controls supplied by Windows 95. There is no dispute that such functionality was free to all ISVs and was easy to use. What the evidence shows is that Novell chose not to use functionality supplied by Windows 95, but delayed the release of WordPerfect and Quattro Pro for Windows so that it could try to develop a "cooler" file open dialog that Novell thought would give it a competitive advantage. (Gibb, Oct. 26 Trial Tr. at 848-49.) Frankenberg added that he is "sure" that "people in the systems group at Microsoft were trying to help WordPerfect/Novell produce a great application for Windows 95." (Frankenberg, Nov. 7 Trial Tr. at 1131; see also Nov. 8 Trial Tr. at 1217) and, in fact, six months

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after Gates' October 3, 1994 decision, Scott Nelson of Novell reported in an e-mail that "the cooperation between Microsoft and Novell has been very good." (DX 172.)

Harral and Richardson both testified that, after Microsoft's decision to withdraw support for the namespace extension APIs, they believed Novell had three options. First, if the namespace extension APIs were as important as Novell contends, Novell could have continued to call those APIs, just as Richardson said Novell's shared code group had done between June 1994 and October 1994. (Richardson, Oct. 25 Trial Tr. at 667, 677-78.) Richardson and Harral testified that the namespace extension APIs remained in Windows 95, and that Novell could "continue to use the documentation" it had received from Microsoft in June 1994. (Harral, Oct. 20, 2011 Trial Tr. at 342; Richardson, Oct. 25, 2011 Trial Tr. at 624.) Novell rejected this option, not because it was impossible but because (according to Richardson) Novell "discovered performance issues" with the namespace extension APIs "that were unacceptable." (Richardson, Oct. 25 Trial Tr. at 677-78.)

Second, Novell could have used the Windows 95 common file open dialog, which Microsoft made available for free to all ISVs. Gary Gibb testified that Novell was testing its Windows 95 applications using the Windows 95 common file open dialog, and that it would have been "quite easy" for Novell to release WordPerfect and Quattro Pro using that Windows 95 common file open dialog. (Gibb, Oct. 26 Trial Tr. at 847-48; see also Harral, Oct. 24 Trial Tr. at 502.) Gibb explained that Novell decided not to "use the Windows 95 common file open dialog that Microsoft provided for free to developers in the Windows 95 operating system" because Novell thought it "could do something cooler." (Gibb, Oct. 26 Trial Tr. at 848-49.)

Third, Novell could write its own file open dialog without relying on the namespace extension APIs, either using common controls supplied by Windows 95 or writing a

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file open dialog from scratch, which would be more difficult and time-consuming. (Harral, Oct. 20 Trial Tr. at 342-43.) Harral and Richardson both testified that they rejected options one and two, and instead chose option three. (Harral, Oct. 20 Trial Tr. at 344-47; Harral, Oct. 24 Trial Tr. at 502-04; Richardson, Oct. 25 Trial Tr. at 628-30.) There was no evidence that Novell executives made that strategy choice--only low-level software developers. Option three posed the greatest risk of delaying the release of WordPerfect and Quattro Pro for Windows 95, which Harral understood when he embarked on the project of creating an advanced file open dialog that sought to replicate the functionality of the Windows Explorer in Windows 95. (Harral, Oct. 20 Trial Tr. at 342-43.)

This evidence does not support a claim under Section 2 of the Sherman Act because (a) WordPerfect and Quattro Pro remained compatible with Windows 95 after Microsoft's withdrawal of support for the namespace extension APIs, (b) the namespace extension APIs remained in Windows 95 and Novell's developers had the same access to those APIs that all other developers had, (c) Novell could have used the Windows 95 common file open dialog to release versions of WordPerfect and Quattro Pro for Windows 95 without delay, and (d) Novell could have used common controls supplied by Windows 95 to create its own file open dialog that both provided access to the Windows 95 system namespace as well as Novell products such as QuickFinder. Novell chose to develop a very complex file open dialog, one that delayed the release of WordPerfect and Quattro Pro for Windows 95, because Novell believed such a file open dialog would provide Novell with a competitive advantage. In light of this evidence, no reasonable jury could find that Microsoft "jettison[ed]" or "terminated a business relationship" between the parties. Four Corners Nephrology, 582 F.3d at 1225. The relationship continued; it was Novell that chose to try to get a competitive advantage by adding functionality

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to Windows 95 that Microsoft itself never used in its own personal productivity applications. This is similar to the plaintiff in Aspen Skiing being offered several arrangements for continuing the four-mountain pass (albeit arrangements that were all somewhat different from the prior one) and then choosing an option that wound up being unsuccessful as a business matter. It is inconceivable that this could give rise to an antitrust claim.

Novell also failed to prove that Microsoft "den[ied] to [its] rival the [APIs] available to all other" ISVs. Four Corners Nephrology, 582 F.3d at 1225. Microsoft's decision to withdraw support for the namespace extension APIs applied to all ISVs creating personal productivity applications for Windows 95--as well as to the Microsoft Office team. (See, e.g., DX 3 at MX 6055841, Holley Decl. Ex. A ("All applications within Microsoft which were originally implementing these interfaces have been required to stop.").) Microsoft provided Novell with the same access to Windows technology such as the Windows 95 common file open dialog and common controls on the same terms it provided this technology to all others. (Id.) And, there is no evidence, as Alepin testified, that Microsoft Office or Microsoft Word or Microsoft Excel ever called the namespace extension APIs. (Alepin, Nov. 10 Trial Tr. at 1643.) Because Novell was still able to utilize the thousands of APIs exposed by Windows 95 to build versions of WordPerfect and Quattro Pro for Microsoft's new operating system (Harral, Oct. 24 Trial Tr. at 455-56, 462), Novell cannot prove that Microsoft's decision to withdraw support for the namespace extension APIs amounted to the "terminat[ion] of a profitable relationship" with Novell. Four Corners Nephrology, 582 F.3d at 1225 (quotation omitted). This, again, places Novell's claim well outside the limited exception recognized in Aspen Skiing.

Finally, the Court asked counsel several times whether there is a case in which the failure of a company with monopoly power to "share[] technological information provided any

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basis for an antitrust action." (Oct. 27 Trial Tr. at 926-28; see also Oct. 25 Trial Tr. at 574-77.) There is no such case. In fact, the case most directly on point--which Novell has never brought to the Court's attention--demonstrates that a monopolist has no duty to share technological information with rivals.

In Intergraph Corp. v. Intel Corp., 195 F.3d 1346 (Fed. Cir. 1999), the defendant, a monopolist in the manufacture of microprocessors, provided the plaintiff "with various special benefits, including proprietary information and products." Id. at 1350. After a disagreement arose between the parties as to intellectual property licensing issues, defendant reduced the "technical assistance and other special benefits" it previously had provided to the plaintiff. Id.²² Specifically, defendant "refus[ed] to authorize help to Intergraph for removal of a `bug' or defect in a product," which "requir[ed] Intergraph to spend substantial time and resources to solve the problem and delay[ed] Intergraph's product entry into the market." Id. at 1365-66 (quotation omitted). After the district court granted a preliminary injunction in favor of plaintiff requiring defendant to restore the assistance it had provided to plaintiff in the past, defendant appealed, "arguing that no law requires it to give such special benefits" to plaintiff. Id. at 1351.

The Federal Circuit agreed with defendant and vacated the injunction. The Court squarely held that "[t]he withdrawal of technical service is not a violation of the antitrust laws." Id. at 1366 (Fed. Cir. 1999). The Court further explained that "[t]he federal antitrust laws do not

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create a federal law of unfair competition or purport to afford remedies for all torts committed by or against persons engaged in interstate commerce," id. at 1364, quoted with approval in Gregory v. Fort Bridger Rendezvous Ass'n, 448 F.3d 1195, 1205 (10th Cir. 2006), and that even "`an act of pure malice by one business competitor against another does not, without more, state a claim under the federal antitrust laws.'" Id. at 1366 (quoting Brooke Group, 509 U.S. at 225).

Likewise, Microsoft's withdrawal of support for the namespace extension APIs during the beta testing of Windows 95--even if that withdrawal forced Novell "to spend substantial time and resources to solve the problem and delay[ed] [Novell's] product entry into the market"--does not give rise to a cognizable claim under Section 2 of the Sherman Act. Seeking to compare Novell's claim with the facts of Aspen Skiing, the Court offered a hypothetical in which the owner of three ski resorts "decided to build a tram line--a tram line to connect all three slopes, which improved its competitive position." (Nov. 10 Trial Tr. at 1670.) "The plaintiff, the owner of the fourth slope, was asking for a perpetual easement to tie the tram line built by the defendant to a tram line that the plaintiff wanted to build, and part of the easement was to connect into the power source that was used by the defendant's tram line." (Id. at 1670-71.)

Plaintiff in the Court's hypothetical could not possibly prevail under Aspen Skiing, and Novell's claim is materially weaker than the hypothetical. Microsoft allowed Novell to connect its "tram line" to Microsoft's "tram line," because Microsoft not only allowed Novell to create versions of WordPerfect and Quattro Pro that ran Windows 95, but affirmatively assisted Novell in that enterprise. Microsoft provided several "power source[s]" to Novell, including the Windows 95 common file open dialog and various common controls, in addition to more than 2,500 APIs in Windows 95 that exposed a wide range of functionality. Novell's

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complaint is not that Microsoft denied Novell access to Windows 95--the "tram line"--or that Microsoft denied Novell access to a "power source" used by Microsoft's "tram line." It is undisputed that none of Microsoft's personal productivity applications used the namespace extension APIs during the time Novell owned WordPerfect and Quattro Pro. Novell was not denied access to Windows 95. At bottom, Novell's complaint is that, after Microsoft first contemplated (while the tram line was being built) that it would include heated seats on its tram cars, Microsoft later decided to withdraw support for the heated seats after coming to believe that the heated seats could start an electrical fire that would crash the whole tram system.

C. The Practice in the Software Industry and the Terms of the Beta License
Agreement Permitted Microsoft to Withdraw Support for APIs that Novell
Received as Part of a Beta Version of Windows 95.

The trial evidence establishes that, in the software industry, a beta version of a product under development might change before its commercial release. Here, Novell received documentation for the namespace extension APIs pursuant to a written license agreement with Microsoft in connection with Novell's testing of a beta version of Windows 95 that made explicitly clear, consistent with the software industry practice, that the beta version might change before the commercial release of Windows 95. This fact alone defeats Novell's claim, for two reasons.

First, Novell's claim fails because the license agreement that permitted Microsoft to change beta versions of Windows 95 was consistent with common software industry practice. Under Tenth Circuit law, a monopolist is free to engage in "ordinary business practices typical of those used in a competitive market," and cannot violate Section 2 for engaging in "the type of competition prevalent throughout the industry." Telex Corp. v. International Business Machines Corp., 510 F.2d 894, 925-26, 928 (10th Cir. 1975). If a defendant's conduct is "consistent with a competitive market," then "the purpose of the antitrust laws is amply served." United States v.

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Syufy Enters., 903 F.2d 659, 668-69 (9th Cir. 1990); Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370, 375 (7th Cir. 1986) ("[T]he lawful monopolist should be free to compete like everyone else; otherwise the antitrust laws would be holding an umbrella over inefficient competitors.").

CEO Frankenberg testified that Novell understood that the commercial release of Windows 95 "might change" and "could change" from the M6 beta version before the new operating system was commercially released. (Frankenberg, Nov. 8 Trial Tr. at 1201, 1204-05, 1209.) Frankenberg further acknowledged that Novell's own license agreements for beta versions of its Netware products included substantially similar provisions to the Microsoft license agreement covering beta versions of Windows 95. (Id. at 1209.)²³ Finally, Frankenberg agreed that it "was widely understood in the software industry" that beta versions of software products can and do change. (Id. at 1204-1205.)

Second, as the Tenth Circuit held in Christy Sports, temporary business relationships that are subject to change cannot, as a matter of law, form the predicate of an Aspen Skiing claim. 555 F.3d at 1190-91. In Christy Sports, plaintiff brought suit under Section 2 of the Sherman Act alleging that defendant's revocation of permission for plaintiff to operate a ski rental facility under the terms of a restrictive covenant in a lease was anticompetitive conduct under Aspen Skiing. Id. at 1197. The court held that the restrictive covenant, which prohibited plaintiff from operating a ski rental facility without defendant's consent, made clear to plaintiff

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"that the relationship could change at any time," and that plaintiff "should have been aware that the relationship was temporary and subject to [the defendant's] business judgment." Id. at 1196. The court further observed that it did "not see why an initial decision to adopt one business model would lock [defendant] into that approach and preclude adoption of the other at a later time." The court concluded that even though "[c]onceivably, such a change might lead to a claim under contract law or as a business tort," enforcing the restrictive covenant in the lease did not amount to anticompetitive conduct under the Sherman Act. Christy Sports, 555 F.3d at 1197; see also Intergraph Corp., 195 F.3d at 1364-66 (holding that withdrawal of technical information did not violate Section 2 of Sherman Act because "proprietary information and pre-release products" were provided under "non-disclosure agreements," which provided that "both parties may `cease giving Confidential Information to the other party without liability,' and that either party can `terminate [the] Agreement at any time without cause upon notice to the other party'").

Novell's claim regarding Microsoft's withdrawal of support for the namespace extension APIs fails for the same reason that the claims in Christy Sports and Intergraph failed. Novell received a beta version of Windows 95 pursuant to a license agreement with Microsoft that expressly provided notice to Novell that the product was still under development and was subject to change:

2. PRE-RELEASE CODE. This PRODUCT consists of pre- release code, documentation and specifications and is not at the level of performance and compatibility of the final, generally available product offering. The PRODUCT may not operate correctly and may be substantially modified prior to first commercial shipment. COMPANY assumes the entire risk with respect to the use of the PRODUCT.

(DX 18, Microsoft Corporation Non-Disclosure Agreement (Pre-release Product) with WordPerfect Corporation, executed May 24, 1994, at 1, ¶ 2, Holley Decl. Ex. B.) Moreover, the

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documentation provided with the M6 beta version of Windows 95 in June 1994 (Harral, Oct. 24 Trial Tr. at 434-35), which included documentation for the namespace extension APIs, included clear warnings that the documentation did "not represent a commitment on the part of Microsoft for providing or shipping the features and functionality in the final retail product offerings of Chicago [Windows 95]." (PX 388, Microsoft Windows "Chicago" Reviewer's Guide, at MSC 00762731, Holley Decl. Ex. M.)

In light of the "temporary" nature of Novell's rights to use the M6 beta version of Windows 95, and the evidence that Novell knew that Windows 95 was still under development and could change in accordance with Microsoft's own "business judgment," Novell cannot make a Section 2 claim based on the fact that Microsoft provided documentation for the namespace extension APIs with the M6 beta release of Windows 95. Christy Sports, 555 F.3d at 1197. To allow Novell to do so would "lock" Microsoft into a design of a pre-release version of a product in contradiction to the parties' understanding that the beta was subject to change--a result the Tenth Circuit has rejected. Id.

Thus, the evidence establishes that Microsoft's allegedly anticompetitive conduct--the withdrawal of support for the namespace extension APIs--was not only authorized by the agreement pursuant to which Novell obtained access to beta versions of Windows 95, but was consistent with the "ordinary business practices typical of those used in" the software industry. Telex, 510 F.2d at 925-26. As a result, that conduct is not actionable under the antitrust laws. Id. at 925-26, 928; see also Trace X Chemical, Inc. v. Canadian Industries, Ltd., 738 F.2d 261, 266 (8th Cir. 1984).

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D. The Evidence at Trial Establishes that Microsoft Had Several Legitimate
Business Justifications for Its Withdrawal of Support for the Namespace
Extension APIs.

Finally, Novell's claim fails because Novell failed to present evidence that Microsoft's withdrawal of support for the namespace extension APIs was "without any economic justification." Four Corners Nephrology, 582 F.3d at 1225 (quotation omitted). In Four Corners, defendant hospital terminated the credentials of unaffiliated nephrologists in order to protect the hospital's budding nephrology practice. Four Corners, 582 F.3d at 1217-19. The Tenth Circuit held that "the evidence suggest[ed] that [defendant] refused to deal with [the plaintiff] to avoid an unprofitable relationship, and that the [defendant] pursued the course it did to protect and maximize its chances of profitability in the short-term." Four Corners Nephrology, 582 F.3d at 1225. The Court held that "Aspen Skiing does not require more economic justification than [that] to avoid Section 2 liability." Id.

Here, Novell failed to establish that Microsoft's decision to withdraw support for the namespace extension APIs lacked any legitimate business justification. Rather, the evidence at trial showed that there were ample justifications for Microsoft's decision.

Third-party applications that called the namespace extension APIs ran in the same process as the Windows shell and, as a result, if the third-party application crashed, the Windows shell would also crash. Novell's technical expert, Ronald Alepin, agreed that the namespace extension APIs posed a risk to the stability of Windows 95, noting that the crash of a third-party application running the namespace extension APIs "had the potential to make the system unresponsive." (Alepin, Nov. 10 Trial Tr. at 1589.) Professor Noll testified that "the developer of an operating system[] is free not to document APIs . . . where those APIs might crash the whole system" (Noll, Nov. 15 Trial Tr. at 1872-73), and further testified that an operating system developer is justified in choosing "not to document APIs . . . where those APIs are unstable."

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(Noll, Nov. 15 Trial Tr. at 1872-73.) This testimony completely blows away the contention of Novell's lawyers that Microsoft's justifications for the withdrawal of support for the namespace extension APIs were a pretext.

The testimony quoted above is also consistent with the rest of the evidence at trial. Paul Maritz, the Microsoft executive in charge of all operating systems, testified that the namespace extension APIs had the "downside[]" of running "in the same context as the shell" and thus that an ISV's "application code could bring down the shell." (Maritz Dep. at 129, used at trial on Oct. 27, Holley Decl. Ex. R.) Maritz further testified that as a result, Microsoft had important concerns about "robustness and reliability" (id. at 124-125), and that the namespace extension APIs "expos[ed] a potential weakness[] in the system." (Id. at 130; see also Noll, Nov. 15 Trial Tr. at 1872.) James Allchin, the Microsoft executive in charge of Windows NT, expressed the same concern, testifying that if an ISV wrote an application that called the namespace extension APIs that "had an error in it, it could take down or corrupt the user experience overall" and "wipe out a little part of the [operating] system." (Allchin Dep., used at trial on Nov. 8, Trial Tr. at 1297; see also id. ("In other words, the application could impact more than just it. So that's bad.").) Indeed, the contemporaneous evidence shows that Microsoft was concerned that the namespace extension APIs could crash the Windows 95 shell: In an October 12, 1994 e-mail, Brad Struss of Microsoft explained that "Names space extensions were design[ed] to [be] part of the system. As such they run in the explorer's process space. Badly written name space extension[s] could cause the reliability of Windows 95 to be less th[a]n what it should." (DX 3 at MX 6055843, Holley Decl. Ex. A.) Robert Muglia, the lead program manager in charge of Windows NT, observed on October 4, 1994--the day after Bill Gates made the decision to withdraw support for the namespace extension APIs--that the decision "is very

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good news for BSD Division. Since Bill has decided these interfaces won't be published, NT development does not have to expend precious energy on implementing these for NT." (DX 21, E-mail from Bob Muglia, dated October 4, 1994, Holley Decl. Ex. S.) Muglia further stated that because the namespace extension APIs "introduce significant robustness issues, we don't have to spend time on building a robust implementation of IShellBrowser." (Id.)

Despite this evidence, Mr. Alepin testified that he did not believe that the risk to the stability of Windows was a sufficient justification for the withdrawal of support for the namespace extension APIs because "there were lots of ways to get Windows 95 to crash," and ISVs "take on" the "burden" of "writing good quality tested software that does not cause the system to fail." (Alepin, Nov. 9 Trial Tr. at 1393-94, 1428.) Neither point, however, negates the fact--acknowledged by Alepin--that the namespace extension APIs posed a risk to the stability of Windows 95. (Alepin, Nov. 10 Trial Tr. at 1589.) The existence of other ways to crash Windows 95 does not mean Microsoft was not justified in eliminating one such source of instability. Moreover, Alepin testified that Microsoft had no ability to impose quality control requirements on third-party applications that called the namespace extension APIs (Alepin, Nov. 10 Trial Tr. at 1593-94), so Alepin's blithe assertion that the market would discipline ISVs who wrote applications that caused Windows 95 to crash does not mean that Microsoft was not justified in taking steps on its own to protect users of Windows 95 from such badly behaved applications. Under Four Corners, 582 F.3d at 1225, Microsoft's justifications are sufficient as a matter of law.

The limited functionality of the namespace extension APIs was another reason that Microsoft decided to withdraw support for those APIs. Bill Gates, whose deposition Novell played at trial, testified that he decided to withdraw support for the namespace extension APIs

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because they did not enable the level of integration with the Windows 95 shell that Gates had hoped to achieve. Specifically, Gates testified that the namespace extension APIs did not allow users to "invoke the application" in the view pane of the Windows Explorer, and thus that the functionality supplied by the namespace extension APIs was "just not interesting enough to us or anyone else" to justify Microsoft's continued support of those APIs. (Gates Dep. at 253-55, used at trial on Oct. 19, Holley Decl. Ex. Q.) Gates concluded that the namespace extension APIs were "so trivial" that they were not "worth the trouble" of publishing and supporting. (Id. at 255; see also March 5, 2009 Deposition of Russell Siegelman, Nov. 15 Trial Tr. at 2042 (agreeing that even if "applications could have been browsed through the Explorer folder tree" it would not "have been an important feature").) Novell offered no evidence that Microsoft Office or any Microsoft personal productivity application could ever be invoked in the view pane of Windows Explorer.²⁴

The existence of these business justifications for Microsoft's decision to withdraw support for the namespace extension APIs is another separate and independent reason why Novell's claim fails as a matter of law. Four Corners Nephrology, 582 F.3d at 1225; Christy Sports, 555 F.3d at 1197. At bottom, Novell's only attempt to counter Microsoft's business justifications for withdrawing support for the namespace extension APIs is Alepin's opinion that the purported costs of that decision to Novell outweighed the benefits of the decision to

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Microsoft. That opinion is legally irrelevant. Once Microsoft has shown that legitimate business justifications exist for the decision to withdraw support for the namespace extension APIs, the inquiry is at an end. See Aspen Skiing, 472 U.S. at 597, 605; Multistate Legal Studies v. Harcourt Brace Jovanovich Legal & Professional Publications, 63 F.3d 1540, 1550 (10th Cir. 1995). The sort of balancing of costs and benefits engaged in by Alepin and Noll is impermissible.

As the Fifth Circuit held in Bell v. Dow Chemical Co., a jury cannot "weigh the sufficiency of a legitimate business justification against the anticompetitive effects of a refusal to deal." 847 F.2d 1179, 1186 (5th Cir. 1988). Indeed, "[t]he fact determination that may be left to a jury is whether the defendant has a legitimate business reason for its refusal, not whether that reason is sufficient." Id. (emphasis in original) (citing Aspen Skiing, 472 U.S. at 597); see also 3 PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW ¶ 772c2 (3d ed. 2011) ("[T]he Court [in Aspen Skiing] did not call for any balancing of social gains from refusing to deal or cooperate with rivals based on legitimate business purposes against the losses resulting from that refusal. Rather, the Court classified conduct or intention as either lawful or not on the basis of the presence or absence of legitimate business purposes."). Opinions offered by Novell's experts that the benefits to Microsoft of withdrawing support for the namespace extension APIs are outweighed by the purported costs of that decision to Novell would not entitle a jury to ignore those justifications. Thus, the admission by Novell's technical expert that applications calling the namespace extension APIs could cause Windows 95 to crash (Alepin, Nov. 10 Trial Tr. at 1589) is all that is legally required to take this case outside the limited exception of Aspen Skiing.

Even if, contrary to the evidence at trial, Novell could establish that its claim falls within the narrow exception of Aspen Skiing, no reasonable jury could conclude that Novell has

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met the requirement that Novell prove that Microsoft's withdrawal of support for the namespace extension APIs is what caused the delay in the release of WordPerfect and Quattro Pro for Windows 95--much less than such a delay had any impact on competition in the PC operating system market. Novell, Inc., 694 F. Supp. 2d at 748-50. Given the uncontroverted evidence that there were other reasons why Novell's applications were not released at or about the time Microsoft released Windows 95 (see pp. 25-30, supra), Novell has failed to prove the requisite causal connection between withdrawal of support for the namespace extension APIs and the purported harm to WordPerfect and Quattro Pro.

-67-

CONCLUSION

Microsoft respectfully requests that the Court enter judgment in Microsoft's favor on Novell's claim.

Dated: November 17, 2011

Respectfully Submitted,

/s/James S. Jardine
James S. Jardine (A1647)
Justin T. Toth (A8434)
John Mackay (A6923)
RAY QUINNEY & NEBEKER
[address, phone, fax]

David B. Tulchin
Steven L. Holley
Sharon L. Nelles
Adam S. Paris
SULLIVAN & CROMWELL LLP
[address, phone, fax]

Steven J. Aeschbacher (A4527)
MICROSOFT CORPORATION
[address, phone, fax]

Attorneys for Microsoft Corporation

_____________________

¹ All documents cited in this memorandum have been admitted into evidence, except for demonstrative exhibits 93, 95, 96 and 102 to which reference is made on pages 19, 20 and 34.

² Although Novell often has attempted to mischaracterize the significance of the evidence concerning the license agreements and the industry understanding, Microsoft does not contend that the beta license agreement with Novell immunizes it from liability under the antitrust laws. Rather, the express terms of the contract, consistent with the evidence of the common practice in the software industry that a beta release is subject to change, establish that Microsoft's withdrawal of support for the namespace extension APIs was not anticompetitive. See pp. 58-61, infra.

³ The Court's October 11, 2011 letter concerning preliminary jury instructions explained that, "although I remain of the view that the 'significant contribution' test applies in determining whether Microsoft's anticompetitive conduct during the relevant period enabled it to maintain its monopoly in the PC operating system, my preliminary instruction does not address the issue. I would prefer to postpone final decision on the issue until a later stage of this litigation." (Docket No. 206, at 3.) For the purposes of this motion, the Court need not resolve Novell's objections to the causation standard set forth in the Court's March 2010 decision. As demonstrated below, see p. 35-48, infra, Novell's trial evidence demonstrates that Novell has failed to prove harm to competition in the PC operating system market under either causation standard.

⁴ An October 21, 1994 internal Microsoft e-mail authored by Brad Struss reported that, according to Novell, it was "focus[ing] on 16-bit product revision this fall" and, as a result, "there are limited resources working on next years 32-bit release." (DX 2 at 2, Holley Decl. Ex. L.) The e-mail further explains that Microsoft was "[w]orking with [Novell's] senior management to see about getting more focus on their 32-bit release." (Id.)

⁵ See Appendix A, Microsoft's Demonstrative 102, shown at trial on Nov. 10, Trial Tr. at 1631.

⁶ See Appendix B, Microsoft's Demonstrative 93, shown at trial on Nov. 10, Trial Tr. at 1578.

⁷ See Appendix C, Microsoft's Demonstrative 96, shown at trial on Nov. 10, Trial Tr. at 1665.

⁸ Bob Frankenberg offered vague testimony on direct examination about later contact with Bill Gates (Frankenberg, Nov. 7 Trial Tr. at 1029-30), but when asked on cross examination whether he ever raised with Bill Gates concerns about Microsoft's decision to withdraw support for the namespace extension APIs between October 1994 and June 1995, Frankenberg answered that he did not recall ever "sa[ying] to Mr. Gates the problem is the namespace extension APIs," and that he did not recall ever sending or seeing any such letter or e-mail to Mr. Gates that mentioned the namespace extension APIs. (Frankenberg, Nov. 7 Trial Tr. at 1118-19.)

⁹ Although Greg Richardson testified that he recalled that Microsoft "tightened . . . down" Novell's access to the Premier Support group (Richardson, October 25 Trial Tr. at 702), Richardson acknowledged that he never personally participated in any call with Microsoft's Premier Support group, explaining that doing so "wasn't normally my responsibility." (Id.)

¹⁰ As the Court is aware, despite its anticipation of litigation against Microsoft since the early 1990s, Novell did not retain documents evidencing any of Mr. Harral's purported communications with Microsoft's Premier Support group. Indeed, Novell's preservation of relevant evidence has been entirely selective; Novell retained evidence concerning Microsoft's alleged "bad acts," but took no steps to preserve all evidence relevant to the claims asserted in the Complaint.

¹¹ As shown below (pp. 52-58, infra), whether these alleged phone calls occurred, and what may have transpired on these phone calls, makes no difference to the outcome.

¹² "Storm" was the codename for "the suite for Windows 95." (Gibb, Oct. 26 Trial Tr. at 790.)

¹³ Indeed, as Novell's experts testified, in the software industry "[t]here is always a decision about whether to release something or to continue to work on it to make it better. . . . That is a trade-off." (Noll, Nov. 15 Trial Tr. at 1871; see also Alepin, Nov. 10 Trial Tr. at 1629 ("These are types of conversations that occur frequently in software development projects. It's the practical and pragmatic against the utopian and elegant.").)

¹⁴ According to a February 1995 organization chart for Novell's Business Applications Development division, the PerfectFit Technology group was comprised of 45 people. (PX 372, Business Applications Development Organization, dated February 16, 1995, Holley Decl. Ex. Z.) This included Greg Richardson, who reported to Adam Harral, who reported to Jim Johnson, who reported to Tom Creighton, the Director of PerfectFit Technology. Creighton and Gary Gibb, the Director of PerfectOffice for Windows 95, were two of ten people who reported to Bruce Brereton, the Vice President of the Business Applications business unit. (Id.) Mr. Brereton reported to Dave Moon, the Senior Vice President of Development for the Applications Group. (DX 380 at 14.) Mr. Moon reported to Ad Rietveld, the Executive Vice President for the Novell Applications Group. (DX 380.) Mr. Rietveld reported to Mr. Frankenberg. (DX 380 at 13.)

¹⁵ See Appendix D, Microsoft's Demonstrative 95, shown at trial on Nov. 10, Trial Tr. at 1585.

¹⁶ According to Professor Noll, Microsoft's share of the PC operating system market in 1995 was 83.4%, in 1996 was 91.6% and in 1997 was 93.6%. (Noll, Nov. 15 Trial Tr. at 1929-30.) Accordingly, in a case about competition in that market, those shares would have gone up if Microsoft had not withdrawn support for the namespace extension APIs. Accordingly, in a case about competition in that market, those shares would have gone up if Microsoft had not withdrawn support for the namespace extension APIs.

¹⁷ Although Professor Noll speculated that the timely release of PerfectOffice for Windows 95 may have--in a "but-for" world--resulted in a price decrease for the Windows 95 operating system at some unknown future time (Noll, Nov. 15 Trial Tr. at 1930-31), he conducted no analysis, and Novell has presented no evidence, regarding the pricing of Windows 95 (or of any other operating system or application), and how such a price decrease would have had any impact on Novell is entirely unclear. Novell is not championing the interests of consumers--it is seeking to recover treble damages for harm allegedly inflicted on WordPerfect and Quattro Pro.

¹⁸ Ronald Alepin testified that no operating system other than Windows 95 exposed the same functionality as the namespace extension APIs because the namespace extension APIs were "platform specific" to Windows. (Alepin, Nov. 9 Trial Tr. at 1482-83; Alepin, Nov. 10 Trial Tr. at 1532-33.)

¹⁹ See Harral, Oct. 20 Trial Tr. at 216:3-18 (WordPerfect ran on Apple Macintosh, Amiga, OS/2 and NeXT operating systems); Gibb, Oct. 26 Trial Tr. at 776:2-11 (WordPerfect ran on Apple Macintosh, Digital VMS, UNIX, OS/2 and NeXT operating systems).

²⁰ Although Dr. Noll testified that a version of WordPerfect was released for the Linux operating system, Dr. Noll testified that Linux "was actually introduced in `93, but `96 is when it became a full-fledged commercial product"--after Novell sold its applications to Corel. (Noll, Nov. 15, 2011 Trial Tr. at 1961; see also id. at 1903 ("[I]n the time period of '94 to '96 Linux wasn't really a competitor at the beginning of that period. It had been introduced by the end.")

²¹ Top the extent Novell bases its claim on some purported "bait and switch" (see Novell Opening Statement, Oct. 18 Trial Tr. at 29), such a business tort claim falls outside the narrow Aspen Skiing exception and is not cognizable under the federal antitrust laws in any event. "Even an act of pure malice by one business competitor against another does not, without more, state a claim under the federal antitrust laws . . . ." Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 225 (1993); see also Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1354-55 (Fed. Cir. 1999) ("[T]he Sherman Act does not convert all harsh commercial actions into antitrust violations"). In any event, there is no evidence that Microsoft provided the M6 beta release to ISVs in June 1994 with the intent to later on withdraw support for the namespace extension APIs.

²² Because the evidence at trial demonstrates that Microsoft's withdrawal of support for the namespace extension APIs did not constitute anticompetitive conduct under well-settled antitrust law, Novell's case now hinges on the unsubstantiated testimony of one Novell developer that he received less than satisfactory technical support from unnamed members of Microsoft's Premier Support group at some unspecified time. (See pp. 27-28 & nn. 9, 10, supra.) The notion that the provision of allegedly imperfect technical support by some unnamed premier support employee is an antitrust violation that generates more than a billion dollars of damages demonstrates the ludicrous nature of Novell's claim.

²³ Novell's license agreement stated, in relevant part: "Beta Products are of pre-release quality, have not been fully tested, and may contain errors and omissions. Novell does not guarantee that the Beta Products will become generally available to the public or that associated products will be released. The entire risk arising out of your use of Beta Product remains with you." (DX 618, Novell Software Developer's Kit License and Limited Warranty, at NOV- B07520261, Holley Decl. Ex. CC.)

²⁴ Alepin implied that a basic e-mail client called Athena which was not released until 1996 used the namespace extension APIs to run in the view pane of Windows Explorer. (Alepin, Nov. 9 Trial Tr. at 1426-27; Alepin, Nov. 10 Trial Tr. at 1643-44.) He acknowledged, however, that he did not remember doing any analysis to confirm what APIs were relied on by Athena and had no answer when confronted with the output of a software disassembly program called PE Explorer, which showed that Athena did not call any of the namespace extension APIs. (Alepin, Nov. 10 Trial Tr. at 1644-47.)

-68-

CERTIFICATE OF SERVICE

I hereby certify that on the 17th day of November, 2011, I caused a true and correct copy of the foregoing MICROSOFT'S MEMORANDUM IN SUPPORT OF ITS MOTION FOR JUDGMENT AS A MATTER OF LAW to be filed with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following:

Max D. Wheeler
Maralyn M. English
SNOW, CHRISTENSEN & MARTINEAU
[address]

Jeffrey M. Johnson
Paul R. Taskier
Jason D. Wallach
DICKSTEIN SHAPIRO LLP
[address]

R. Bruce Holcomb
ADAMS HOLCOMB LLP
[address]

/s/ Jasmine Diamanti

APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

MAX D. WHEELER (3439)
MARALYN M. ENGLISH (8468)
SNOW, CHRISTENSEN & MARTINEAU
[address, phone, fax]

JEFFREY M. JOHNSON (admitted pro hac vice)
PAUL R. TASKIER (admitted pro hac vice)
ADAM PROUJANSKY (admitted pro hac vice)
JAMES R. MARTIN (admitted pro hac vice)
DICKSTEIN SHAPIRO LLP
[address, phone, fax]

R. BRUCE HOLCOMB (admitted pro hac vice)
ADAMS HOLCOMB LLP
[address, phone, fax]

JOHN E. SCHMIDTLEIN (admitted pro hac vice)
WILLIAMS & CONNOLLY LLP
[address, phone, fax]

Attorneys for Novell, Inc.

_______________________

UNITED STATES DISTRICT COURT
for the District of Utah
Central Division

________________________

Novell, Inc.,
Plaintiff,

v.

Microsoft Corporation,
Defendant.

_____________________

NOVELL'S OPPOSITION TO
JUDGMENT AS A MATTER OF LAW

Case No. 2:04-cv-01045-JFM
Hon. J. Frederick Motz

__________________________

Table of Contents

Page

TABLE OF AUTHORITIES .................................................... iii

I. INTRODUCTION ....................................................1

II. LEGAL PRINCIPLES .................................................6

A. Motion For Judgment Of Law Is Permissible Only When The Evidence So
Overwhelmingly Favors The Moving Party As To Permit No Other
Rational Conclusion...................................................6

B. Novell Must Only Establish A Prima Facie Case That Microsoft
Unlawfully Maintained Its Monopoly Power In The PC Operating
Systems Market In Violation Of Section 2 And That The Anticompetitive
Conduct Caused Antitrust Injury To Novell................................................7

III. FACTUAL BACKGROUND.................................................9

A. Relevant Technologies And Terminology .................................9

B. The Relevant Market And Microsoft's Monopoly Power .....................................10

C. The Applications Barrier To Entry ...............................................11

IV. UNDER THE LAW-OF-THE-CASE DOCTRINE, THIS COURT MUST DENY
MICROSOFT'S MOTION .......................................11

A. Because This Court Has Already Held That Novell's Evidence Presents A
Triable Issue For The Jury, And The Court Of Appeals Has Affirmed That
Ruling, That Decision Is Binding Under The Law Of The Case Doctrine............15

V. MICROSOFT VIOLATED SECTION 2 BY WILLFULLY MAINTAINING ITS
OPERATING SYSTEM MONOPOLY THROUGH ANTICOMPETITIVE
CONDUCT, INCLUDING CONDUCT DIRECTED AT NOVELL................................17

A. The Sherman Act Precludes Monopolists From Excluding Potential
Competitors That Threaten To Commoditize The Relevant Market .....................18

B. Microsoft Engaged In Conduct Other Than Competition On The Merits
That Had The Effect Of Preventing Or Excluding Competition Or
Frustrating The Efforts Of Other Companies To Compete For Customers
Within The Relevant Market. .......................20

1. The Office Shell Plan.................................................................................20

2. Microsoft Evangelizes The Namespace Extensions To WordPerfect .......26

3. Microsoft Withdraws Support For The Namespace Extension APIs ........30

4. Microsoft’s Deceptive Scheme To Eliminate WordPerfect Was Deliberate
and Premeditated..........................................35

i

5. Microsoft's Conduct Against Novell Was Part Of A Scheme To Eliminate
Potential Threats ..................................38

C. The Court Should Not Limit The Temporal Scope Of Evidence Of Harm
To Competition .............................40

D. The Reasonably Capable Standard Is Appropriate ......................45

1. Microsoft's Conduct Effected Lotus (and later IBM)................................50

E. Even If This Jury Only Views The Effects On Competition Before The
Sale, Novell Has Met Its Burden Of Proof ......................55

1. Microsoft Feared the Threat Posed by Novell's Office Productivity
Applications ....................................55

2. WordPerfect's Shared Code Technologies ("PerfectFit") And AppWare
Constituted Middleware With The Potential To Weaken The Applications
Barrier To Entry Or "Moat" Protecting Microsoft's Monopoly Power In The
PC Operating Systems Market......................56

3. Novell's Office Productivity Applications Were "Key Franchises" That
Microsoft Sought to Own to Widen the Moat Protecting its PC Operating
Systems Monopoly ............................71

4. WordPerfect Was A Cross-Platform Application..........................72

5. Novell's Distribution Of Netscape Navigator Constituted A Threat With The
Potential to Weaken the Applications Barrier To Entry Or "Moat" Protecting
Microsoft's Monopoly Power In The PC Operating Systems Market.......76

F. There Is Abundant Evidence In The Record To Show That Microsoft
Sacrificed Windows 95 Quality And Profits In The Short Run To Exclude
Potential Competition And Maintain Its PC Operating System Monopoly...........79

VI. Abundant Evidence Exists In The Record To Show that the Anticompetitive
Conduct Caused Antitrust Injury to Novell ...................................84

VII. There is Abundant Evidence in the Record To Show Microsoft Violated Section 2 ........89

A. This Case Is Nowhere Near The Limits Of Aspen Skiing......................................92

B. Microsoft's Conduct Is Not Immune From Antitrust Scrutiny As A
Technological Innovation .....................................94

C. Microsoft's Conduct Did Not Make Business Sense Apart From Any
Effect It Has On Excluding Competition Or Harming
Competitors......................95

1. Microsoft's Claim That A Program Written To Use The Namespace
Extension APIs Could Potentially Crash The Windows 95 Shell .............98

2. Microsoft's Claim That The Namespace Extension APIs Were Not
Compatible With Future Versions Of Windows That Were Then Being
Developed ..................................100

ii

3. Microsoft's Claim That The Namespace Extension APIs Did Not Achieve
The Functionality That Bill Gates Hoped For .........................................102

VIII. CONCLUSION.............................................105

iii

TABLE OF AUTHORITIES

Page

Cases

Angelico, M.D. v. Lehigh Valley Hosp., Inc., 184 F.3d 268, 273-76 (3d Cir. 1998) .....................84

Aspen Highlands Skiing Corp. v. Aspen Skiing Co., 738 F.2d 1509 (10th Cir. 1984).....................9

Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985)............................ passim

Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227 (1st Cir. 1983).....................................49

Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979)................................94, 95

Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982) ....................................................48, 50

Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3d Cir. 2007) ................................................89

Brown v. Presbyterian Healthcare Servs., 101 F.3d 1324 (10th Cir. 1996)....................................2

Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295 (D. Utah 1999) ........................9, 42, 94, 95

Capps v. Sullivan, 13 F.3d 350 (10th Cir. 1993) .............................14

Christy Sports, LLC v. Deer Valley Resort Company, Ltd., 555 F.3d 1188 (10th Cir. 2009)....................................3, 93

City of Anaheim v. S. Cal. Edison Co., 955 F.2d 1373 (9th Cir. 1992) .........................................42

Cnty. of Suffolk v. Stone & Webster Eng'g Corp., 106 F.3d 1112 (2d Cir. 1997).........................14

Cont'l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962) ......................................8

Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984)...........................................8

CTC Commc'ns Corp. v. Bell Atl. Corp., 77 F. Supp. 2d 124 (D. Me. 1999) ...............................46

Cytologix Corp. v. Ventana Med. Sys., Inc., Nos. 00-12231-RWZ, 01-10178-RWZ, 2006
WL 2042331 (D. Mass. July 20, 2006)...............................6

Daisy Mountain Fire District v. Microsoft Corp., 547 F. Supp. 2d 475 (D. Md. 2008) .................4

iv

Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147 (1st Cir. 1994)...................45, 46

David L. Aldridge Co. v. Microsoft Corp., 995 F. Supp. 728 (S.D. Tex. 1998)............................91

Doctor's Hosp. of Jefferson, Inc. v. Se. Med. Alliance, Inc., 123 F.3d 301 (5th Cir. 1997)..........84

Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534 (9th Cir. 1983)..........................98

Fox Motors, Inc. v. Mazda Distributors (Gulf), Inc., 806 F.2d 953 (10th Cir. 1986) ...................48

GAF Corp. v. Eastman Kodak Co., 519 F. Supp. 1203 (S.D.N.Y. 1981)......................................94

Guides, Ltd. v. Yarmouth Grp. Prop. Mgmt., Inc., 295 F.3d 1065 (10th Cir. 2002) .......................7

Hertz Corp. v. Enter. Rent-A-Car Co., 557 F. Supp. 2d 185 (D. Mass. 2008) ..............................46

Hewlett-Packard Co. v. Boston Scientific Corp., 77 F. Supp. 2d 189 (D. Mass. 1999) ................46

Huffman v. Saul Holdings Ltd. P'ship, 262 F.3d 1128 (10th Cir. 2001) .................................12, 14

In re Microsoft Corp. Antitrust Litigation, 274 F. Supp. 2d 743 (D. Md. 2003).....................94, 95

Instructional Sys. Dev. Corp. v. Aetna Cas. & Sur. Co., 817 F.2d 639 (10th Cir. 1987) ..............46

Kiernan v. City of New York, 374 F.3d 93 (2d Cir. 2004) ..........................................13

Klay v. All Defendants, 389 F.3d 1191 (11th Cir. 2004) ...........................................14, 39

Lantec, Inc. v. Novell, Inc., 146 F. Supp. 2d 1140 (D. Utah 2001) .....................................46

Lehigh Valley Hosp., Inc., 184 F.3d 268, 273-76 (3d Cir. 1998) ..................................................84

LePage's v. 3M (Minn. Mining & Mfg. Co.), 324 F.3d 141 (3d Cir. 2003) (en banc) ............42, 48

Mishawaka v. Am. Electric Power Co., 616 F.2d 976 (7th Cir. 1980) ..........................................42

Morgan v. Ponder, 892 F.2d 1355 (8th Cir. 1989) .........................................44, 46

Multistate Legal Studies, Inc. v. Harcourt Brace Jovanovich Legal & Prof'l Publ'ns, Inc., 63
F.3d 1540 (10th Cir. 1995) ....................................46, 47

Nobody in Particular Presents, Inc. v. Clear Channel Commc'ns, Inc., 311 F. Supp. 2d 1048
(D. Colo. 2004) ...................................................46

Novell, Inc. v. Microsoft Corp., 505 F.3d 302 (4th Cir. 2007) .............................................. passim

v

Novell, Inc. v. Microsoft Corp., 699 F. Supp. 2d 730 (D. Md. 2010), aff'd in relevant part,
rev'd in part on other grounds, 429 F. App'x 254 (4th Cir. 2011) ................................. passim

Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370 (7th Cir.
1986) .........................................................91

Orient Mineral Co. v. Bank of China, No. 2:98-CV-238BSJ, 2010 WL 624868 (D. Utah Feb.
19, 2010), aff'd, 416 F. App'x 721 (10th Cir. 2011), cert. denied, --- U.S. ----, 2011 WL
4533788 (Oct. 3, 2011) .............................12, 13

Procter & Gamble Co. v. Haugen, 317 F.3d 1121 (10th Cir. 2003) ....................................13

PSI Repair Servs., Inc. v. Honeywell, Inc., 104 F.3d 811 (6th Cir. 1997) .....................................46

Reazin v. Blue Cross & Blue Shield, Inc., 663 F. Supp. 1360 (D. Kan.1987) .........................19, 20

Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 899 F.2d 951 (10th Cir. 1990)...........7, 19 55

Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010) ..................................45

Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133 (2000)............................................7, 13

Rohrbaugh v. Celotex Corp., 53 F.3d 1181 (10th Cir. 1995) ...................................12, 14

S. Pac. Commc'ns Co. v. Am. Tel. & Tel. Co., 740 F.2d 980 (D.C. Cir. 1984).............................46

Shaw v. AAA Eng'g & Drafting, Inc., 213 F.3d 519 (10th Cir. 2000).............................................6

Smith v. United States, 555 F.3d 1158 (10th Cir. 2009) ............................................6

Spirit Airlines v. Northwest Airlines, 431 F.3d 917 (6th Cir. 2005) ........................................44, 50

Taylor Publ'g Co. v. Jostens, Inc., 216 F.3d 465 (5th Cir. 2000).............................46

Telecor Commc'n, Inc. v. Sw. Bell Tel. Co., 305 F.3d 1124 (10th Cir. 2002) ...............................55

Town of Concord, Mass. v. Boston Edison Co., 915 F.2d 17 (1st Cir. 1990)................................46

Twin Laboratories, Inc. v. Weider Health & Fitness, 900 F.2d 566 (2d Cir. 1990)......................92

United States v. Alvarez, 142 F.3d 1243 (10th Cir. 1998) ..........................................14

United States v. Dentsply Int'l, Inc., 399 F.3d 181 (3d Cir. 2005) ................................................47

United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966) .......................................................7

vi

United States v. Jordan, 429 F.3d 1032 (11th Cir. 2005)...........................................12

United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (en banc) ........................... passim

Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP,
540 U.S. 398 (2004)........................................ passim

Walker v. U-Haul Co. of Miss., 747 F.2d 1011 (5th Cir.1984) .............................84

Weese v. Schukman, 98 F.3d 542 (10th Cir. 1996) ....................................6

Westwood Lumber Co. v. Weyerhaeuser Co., No. CV 03-551-PA, 2003 U.S. Dist. LEXIS
27213 (D. Or. Dec. 29, 2003), aff'd, 411 F.3d 1030 (9th Cir. 2005), vacated and
remanded on other grounds, 549 U.S. 312 (2007) ......................................................44, 45, 50

Wichita Clinic, P.A. v. Columbia/HCA Healthcare Corp., No. 96-1336-JTM, 1997 WL
225966 (D. Kan. Apr. 8, 1997) ..........................................46

World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467 (10th Cir. 1985) ..............................84

Z-Tel Commc'ns, Inc. v. SBC Commc'ns, Inc., 331 F. Supp. 2d 513 (E.D. Tex. 2004)................46

Zapata Gulf Marine Corp. v. Puerto Rico Maritime Shipping Auth., No. 86-2911, 1989 U.S.
Dist. LEXIS 13650 (E.D. La. Nov. 15, 1989) .........................44, 50

Rules

Fed. R. Civ. P. 50.................................... passim

Fed. R. Civ. P. 56.......................................2, 12, 17

Other Authorities

James Wm. Moore et al., Moore's Federal Practice ¶ 0.404[1], at II-2II-3 (2d ed. rev.
1996) ..............................................12

vii

I. INTRODUCTION

After seven years of pre-trial activities and two appeals to the United States Court of Appeals for the Fourth Circuit, this Court empanelled a jury of 12 Utah citizens to hear the evidence in this case and resolve the disputed issues of fact. For the past month, the jurors have listened to over 62 hours of deposition and live testimony from 18 witnesses and been presented with 555 exhibits to consider and evaluate. The issue now before the Court is whether to send the jury home without completing the record for the inevitable appeals, thereby risking that the entire effort will have to be duplicated in the future. Given the state of the record, and the inferences that must be drawn in plaintiff's favor at this juncture of the case, such a retreat would be improper as a matter of law.

The testimony and documents presented to the jury demonstrate, at the least, the following: (1) Microsoft possessed monopoly power in the market for Intel-compatible personal computer ("PC") operating systems at all times relevant to the issues in this case; and (2) Plaintiff Novell, Inc. ("Novell") has presented evidence from which the jury can conclude that Microsoft engaged in anticompetitive conduct, including conduct to thwart development of Novell's office productivity applications. Further, with regard to the second element, Novell has presented abundant evidence that Microsoft's actions toward Novell were a "significant contributor" to anticompetitive harm in the PC operating systems market. Thus, Novell has met its burden of proof as set forth in the Court's preliminary jury instruction and has presented the exact evidence that led this Court and the Fourth Circuit to conclude that this case was appropriate for a jury to determine.

Because this Court and the Fourth Circuit rejected Microsoft's arguments on summary judgment that it is entitled to judgment as a matter of law on the ground that Novell cannot establish

1

the elements of its claim, and held instead that the case presented triable issues for the jury, that determination is binding on remand under the law of the case doctrine. Novell presented not only the same evidence that was before the Court on summary judgment, but far more evidence, in support of its claim. Although Microsoft has attempted to dispute and impeach much of this evidence at trial, that is irrelevant for purposes of a motion for judgment as a matter of law under Rule 50, or a motion for summary judgment under Rule 56 the Court must view the evidence in the light most favorable to Novell, resolve all evidentiary conflicts in Novell's favor, and give Novell the benefit of all reasonable inferences. The Court must, therefore, deny Microsoft's motion for judgment as a matter of law.

The legal analysis that lead to this Court's and the Fourth Circuit's convening the trial has not changed. Microsoft's repeated attempts to characterize this case as a pure unilateral, refusal-to-deal subject to analysis under Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), and Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) ("Trinko") is still improper. The evidence presented at trial, like that at summary judgment, demonstrates that Microsoft's anticompetitive conduct involved affirmative representations and deception, regardless of whether it owed a duty to cooperate under Aspen Skiing. The jury could find that Microsoft's conduct caused the delay in Novell's release of WordPerfect and PerfectOffice for Windows 95. Indeed, this Court previously rejected Microsoft's attempt to position this case as exclusively a refusal-to-deal. "As an initial matter, Novell has presented evidence that Microsoft affirmatively misled Novell about Windows 95 and entered into anticompetitive agreements with OEMs," thus taking the case out of the "refusal-to- deal" paradigm. Novell, Inc. v. Microsoft Corp., 699 F. Supp. 2d 730, 746 (D. Md. 2010), aff'd in

2

relevant part, rev'd in part on other grounds, 429 F. App'x 254 (4th Cir. 2011). If Microsoft had refused to cooperate from the beginning, Novell's developers, without any help from Microsoft, could have built the open dialogues they needed in about one year and finished the PerfectOffice suite for Windows 95 with the functionality its historic, installed-base customers had come to expect in time to go to market with Windows 95 in or around August 1995. But this is not what happened. Microsoft affirmatively induced Novell's reliance, causing the delay. That is not competition on the merits nor is it merely refusing to deal with a competitor. This in no way depends on the question raised by the Court with regard to Microsoft's right to refuse to share its intellectual property with Novell.

If Microsoft had told Novell (or at that time WordPerfect), when the two met in November 1993, that the namespace functionality would not be provided, Novell's developers would have had ample time to do all the work themselves without any assistance from Microsoft there would have been no delay. Consequently, Novell's antitrust claims are not dependent on establishing Microsoft's failure to continue to cooperate under the Aspen Skiing line of cases, which require a wholly distinct analysis. See Christy Sports, LLC v. Deer Valley Resort Co., Ltd., 555 F.3d 1188, 1196 (10th Cir. 2009) (Aspen Skiing is inapplicable when the monopolist invites investment then disallows use of the investment.)

After recognizing that Novell's misrepresentation theory is not dependent on showing that Microsoft had a duty to cooperate, this Court commenced the separate analysis: "Even assuming Microsoft's conduct should be characterized as a refusal to cooperate, there is a question of fact about whether it was anticompetitive under Aspen and Trinko." Novell, 699 F. Supp. 2d at 746. The evidence shows a long history of a pre-existing profitable cooperation. It is established

3

that it was in Microsoft's interest as an operating systems vendor to provide consumers with the widest and best collection of applications possible. Specifically, Microsoft worked with WordPerfect to ensure that it could provide Windows-specific applications. Microsoft abruptly changed course after Novell acquired WordPerfect and Gates saw Novell's plans. It seems obvious that a monopolist who "evangelizes" the technology to third parties has sought out and established a pre-existing profitable relationship. At the very least, it presents a question of fact for the jury.

Because it is impossible to deny that it voluntarily cooperated, Microsoft has moved the debate to focus on the extent of the cooperation it was obligated to provide. Microsoft has claimed that even if it had an obligation to share intellectual property that would help Novell get ahead, it provided a common open dialog which was sufficient for Novell. Contrary to Microsoft's assertions, however, it did not cooperate to the extent it was obligated. Mr. Richardson testified that without the namespace extensions PerfectOffice "wouldn't be functional enough to be considered a reasonable product in Windows 95." Tr. at 629. He further explained that "the common dialog wouldn't even give us the level of functionality we had in our last release in Windows or that we had on our DOS card. It was a huge step backwards for us. And we felt it simply wasn't an option. If we were to go with that option we didn't really have a product." Id. at 630.

Whether the jury finds anticompetitive conduct through standard Section 2 principles as set forth in the preliminary instructions, as discussed above, or through the Aspen Skiing analysis, the record is equally clear that the conduct harmed competition and significantly contributed to Microsoft's monopoly maintenance. There is abundant evidence that Microsoft knowingly harmed consumers by degrading Windows 95 and excluding one of the premier "key franchises" for an anticompetitive purpose. There is also substantial evidence that Microsoft perceived the

4

Novell/WordPerfect combination as a threat to its PC operating systems monopoly rightly so and that Gates withdrew the extensions not to improve Windows 95, but to harm Novell and eliminate a threat to the applications barrier to entry protecting its monopoly. In fact, the evidence is more than sufficient to support a jury finding that Gates knowingly harmed Windows 95 in the short term (foregoing revenue from sales of Windows 95 to WordPerfect's installed-based customers who might have jumped at the opportunity to upgrade their operating system if, at the same time, they could upgrade the office productivity applications they had been using for years) in exchange for the long-term benefit of excluding Novell and maintaining its operating systems monopoly, and that Gates' conduct was part of a broader attack by Microsoft on "nascent" platform threats. The record further confirms that Novell intended to make WordPerfect and PerfectOffice available on other platforms, including Linux and Apple, but that in order to survive as a viable business in the long-run, it needed to be successful on Windows 95.

The middleware threat is the exact same threat that the D.C. Circuit found was sufficient to establish harm to competition and unlawful monopoly maintenance, and that the Fourth Circuit found was sufficient to create a jury question. In addition, the Fourth Circuit has recognized that WordPerfect posed an additional threat as a "key franchise." Novell has, in fact, proffered concrete proof that Microsoft abused its ownership of the word-processing and suite markets to control potential rivals in the operating systems market. See Docket# 296.

Finally, Microsoft's position that the D.C. Circuit case can be distinguished because it was an equitable action is contrary to the law in other Circuits. More than a dozen cases, including binding 10th Circuit precedent and this Court's summary judgment ruling, apply the "reasonably capable" test. Any other rule would encourage monopolists to take more and earlier action to

5

exclude potential threats, which cannot be reconciled with the purposes of the Sherman or Clayton acts. Indeed, by Microsoft's incorrect view of the law, even Netscape and Sun would be foreclosed from seeking damages despite the many findings made by the DC Circuit. That simply cannot be the law.

This Court has on several occasions expressed its confidence in the jury system. Novell respectfully submits that this Court should adhere to its previous ruling, affirmed by the Fourth Circuit, that allows the jury to perform its fact-finding functions.

II. LEGAL PRINCIPLES

A. Motion For Judgment Of Law Is Permissible Only When The Evidence So
Overwhelmingly Favors The Moving Party As To Permit No Other Rational
Conclusion

Under Rule 50 of the Federal Rules of Civil Procedure, a district court may grant judgment as a matter of law only if "a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue." Fed. R. Civ. P. 50. "`[J]udgment as a matter of law is appropriate only if the evidence points but one way and is susceptible to no reasonable inferences which may support the nonmoving party's position.' This is a difficult and high standard for the movant to satisfy." Smith v. United States, 555 F.3d 1158, 1162 (10th Cir. 2009) (citation omitted); see also Shaw v. AAA Eng'g & Drafting, Inc., 213 F.3d 519, 529 (10th Cir. 2000) ("Judgment as a matter of law is improper unless the evidence so overwhelmingly favors the moving party as to permit no other rational conclusion."); Weese v. Schukman, 98 F.3d 542, 547 (10th Cir. 1996) (citation omitted) ("A motion for a judgment as a matter of law is cautiously and sparingly granted and then only when the

6

court is certain the evidence `conclusively favors one party such that reasonable men could not arrive at a contrary verdict.'").

In ruling on a motion for judgment as a matter of law, the court "review[s] all the evidence in the record, construing it and all inferences drawn therefrom most favorably to the nonmoving party, and refrain[s] from making credibility determinations or weighing the evidence." Guides, Ltd. v. Yarmouth Grp. Prop. Mgmt., Inc., 295 F.3d 1065, 1073 (10th Cir. 2002). "`Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.'" Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000) (citation omitted). In reviewing the record, therefore, the court "must disregard all evidence favorable to the moving party that the jury is not required to believe." Id. at 151. The Court may "give credence" to evidence favoring Defendant only when it "is uncontradicted and unimpeached" and comes from "disinterested witnesses." Id. at 150-51.

B. Novell Must Only Establish A Prima Facie Case That Microsoft Unlawfully
Maintained Its Monopoly Power In The PC Operating Systems Market In
Violation Of Section 2 And That The Anticompetitive Conduct Caused
Antitrust Injury To Novell

The offense of monopolization under Section 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market, and (2) the willful acquisition or maintenance of that power. United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966). To maintain a private action under Section 2, the plaintiff must also prove "`the fact of injury and damages suffered by reason of a violation of the antitrust laws.'" Reazin v. Blue Cross & Blue Shield of Kan., Inc., 899 F.2d 951, 973 (10th Cir. 1990) (citation omitted). While Microsoft has attempted to make this analysis complex, it is straightforward and simple. First, the jury should

7

determine whether Microsoft violated Section 2. Second, if the jury finds that Microsoft violated Section 2, then it will determine whether it was a material cause of Novell's antitrust injury. The Court's preliminary instruction largely adopted this framework.¹ Letter from the Court, October 11, 2011, at 2. The line between legitimate business conduct and anticompetitive conduct can be very hard to draw. Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 767-68 (1984); United States v. Microsoft Corp. ("Microsoft II"), 253 F.3d 34, 58 (D.C. Cir. 2001). Juries are typically instructed to consider whether the conduct was consistent with competition on the merits, whether it provided benefits to consumers, and whether the conduct made business sense apart from any effect it had on excluding competition or harming potential competitors. See ABA Section of Antitrust Law, Model Jury Instructions in Civil Antitrust Cases, 2005 Edition, at C-26 to C-30 (2005). If Novell has established its prima facie case, then Microsoft bears the burden of providing a "procompetitive justification" for its conduct, namely a "nonpretextual claim that its conduct is indeed a form of competition on the merits because it involves, for example, greater efficiency or enhanced consumer appeal." Microsoft II, 253 F.3d at 59. If Microsoft makes that showing, then the burden shifts back to Novell to rebut the claim or show that the anticompetitive harm of the conduct outweighs the procompetitive benefit." Id.

In evaluating the evidence, the jury should consider it as a whole without "tightly compartmentalizing the various factual components." Cont'l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962), quoted in Aspen Highlands Skiing Corp. v. Aspen Skiing Co., 738

8

F.2d 1509, 1522 n.18 (10th Cir. 1984), and Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295, 1307 n.6 (D. Utah 1999);² Novell, 699 F. Supp. 2d at 745, 750.

III. FACTUAL BACKGROUND

A. Relevant Technologies And Terminology

An "operating system" is a software program that controls the allocation and use of computer resources (such as central processing unit time, main memory space, disk space, and input/output channels). Finding of Fact ¶ 2. The operating system also supports the functions of software programs, called "applications," that perform specific user-oriented tasks. Id. The operating system supports the functions of applications by exposing interfaces, called "application programming interfaces," or "APIs." Id. These are synapses at which the developer of an application can connect to invoke pre-fabricated blocks of code in the operating system. Id. These blocks of code in turn perform crucial tasks, such as displaying text on the computer screen. Id. Because it supports applications while interacting more closely with the PC system's hardware, the operating system is said to serve as a "platform." Id.

An application that relies on APIs specific to one operating system will not, generally speaking, function on another operating system unless it is first adapted, or "ported," to the APIs of the other operating system. Id. ¶ 4.

In 1981, Microsoft released the first version of its Microsoft Disk Operating System, commonly known as "MS-DOS." Finding of Fact ¶ 6. The system had a character-based user interface that required the user to type specific instructions at a command prompt in order to

9

perform tasks such as launching applications and copying files. Id. When IBM selected MS-DOS for pre-installation on its first generation of PCs, Microsoft's product became the predominant operating system sold for Intel-compatible PCs. Id.

In 1985, Microsoft began shipping a software package called Windows. Finding of Fact ¶ 7. The product included a graphical user interface, which enabled users to perform tasks by selecting icons and words on the screen using a mouse. Id. Although originally just a user- interface, or "shell," sitting on top of MS-DOS, Windows took on more operating-system functionality over time. Id.

In 1995, Microsoft introduced Windows 95, which was announced as the first operating system for Intel-compatible PCs that exhibited the same sort of integrated features as the Mac OS running PCs manufactured by Apple Computer, Inc. Id. ¶ 8.

Microsoft is the leading supplier of operating systems for PCs. Id. ¶ 9. Microsoft licenses copies of its software programs directly to consumers. Id. ¶ 10. The largest part of its MS- DOS and Windows sales, however, consisted of licensing the products to manufacturers of PCs (known as "original equipment manufacturers" or "OEMs"), such as the IBM PC Company and the Compaq Computer Corporation. Id. An OEM typically installs a copy of Windows onto one of its PCs before selling the package to a consumer under a single price. Id.

B. The Relevant Market And Microsoft's Monopoly Power

During the relevant time period, there is no dispute that the relevant market is Intel-compatible PC operating systems and that Microsoft had monopoly power in that market. Microsoft does not dispute that it had "monopoly power," nor can it given the findings in the Government Case. Microsoft enjoyed so much power in the market for Intel-compatible PC

10

operating systems that if it wished to exercise this power solely in terms of price, it could charge a price for Windows substantially above that which could be charged in a competitive market. Finding of Fact ¶ 33. Moreover, it could do so for a significant period of time without losing an unacceptable amount of business to competitors. Id.

C. The Applications Barrier To Entry

Although Microsoft overwhelmingly dominated the PC operating systems market, other PC operating systems existed. Novell, Inc. v. Microsoft Corp., 505 F.3d 302, 305 & n.8 (4th Cir. 2007). Because these PC operating systems work differently from each other, software developers must create separate versions of their applications for each PC operating system in order for the applications to function properly on it. Id. Modifying an application written for one PC operating system so that it can run on another, i.e., porting, is time-consuming and costly. Id. Because of this, a new or less popular PC operating system faces significant obstacles to gaining market share. Id. As the D.C. Circuit has explained:

the `applications barrier to entry' stems from two characteristics of the software market: (1) most consumers prefer operating systems for which a large number of applications have already been written; and (2) most developers prefer to write for operating systems that already have a substantial consumer base. This `chicken-and-egg' situation ensures that applications will continue to be written for the already dominant Windows, which in turn ensures that consumers will continue to prefer it over other operating systems.

Microsoft II, 253 F.3d at 55; see also Findings of Fact ¶¶ 30, 31, 36.

IV. UNDER THE LAW-OF-THE-CASE DOCTRINE, THIS COURT MUST DENY
MICROSOFT'S MOTION

As we demonstrate below, there is abundant evidence in the record to establish all of the facts necessary for Novell to meet its burden of proof. This Court, however, need not look any

11

further than the Fourth Circuit's opinion affirming its denial of Microsoft's prior summary judgment motion.

"The law of the case `doctrine posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.'" Huffman v. Saul Holdings Ltd. P'ship, 262 F.3d 1128, 1132 (10th Cir. 2001) (citation omitted). "The doctrine has particular relevance following a remand order issued by an appellate court." Id. After remand, the Court of Appeals' ruling "is not subject to further adjudication" in the district court because "`[w]hen a case is appealed and remanded, the decision of the appellate court establishes the law of the case, which must be followed by the trial court on remand.'" Orient Mineral Co. v. Bank of China, No. 2:98-CV-238BSJ, 2010 WL 624868, at *14 (D. Utah Feb. 19, 2010) (emphasis in original) (quoting 1B James Wm. Moore et al., Moore's Federal Practice ¶ 0.404[1], at II-2II-3 (2d ed. rev. 1996)), aff'd, 416 F. App'x 721 (10th Cir. 2011), cert. denied, --- U.S. ----, 2011 WL 4533788 (Oct. 3, 2011). The rule that the Court of Appeals' decision is not subject to further adjudication "applies to all `issues previously decided, either explicitly or by necessary implication.'" Rohrbaugh v. Celotex Corp., 53 F.3d 1181, 1183 (10th Cir. 1995) (citations omitted). "An argument is rejected by necessary implication when the holding stated or result reached is inconsistent with the argument." United States v. Jordan, 429 F.3d 1032, 1035 (11th Cir. 2005) ("We did not address that argument in so many words, or in any words for that matter, but we did reject it `by necessary implication,' which is enough under our decisions to bring the law of the case doctrine to bear in this appeal.").

"The legal standard for granting judgment as a matter of law is identical to the standard for granting summary judgment under Fed. R. Civ. P. 56." Brown v. Presbyterian Healthcare

12

Servs., 101 F.3d 1324, 1329 (10th Cir. 1996); see also Reeves, 530 U.S. at 150. Because the standards under Rule 50 and Rule 56 are identical, the law of the case doctrine dictates that "when the court of appeals has remanded a case for trial after ruling that summary judgment in favor of a given party was inappropriate because the evidence indicated the existence of genuine issues of material fact to be resolved by the jury, the district court cannot properly, on remand, grant judgment as a matter of law to that party on the basis of trial evidence that is not substantially different." Kiernan v. City of New York, 374 F.3d 93, 110 (2d Cir. 2004). Thus, in the present case, because this court denied summary judgment to Microsoft, and the Fourth Circuit affirmed this Court's ruling, under the law of the case doctrine this Court is precluded from granting a judgment as a matter of law in Microsoft's favor, given that the facts adduced at trial were not substantially different than the facts taken as true for purposes of summary judgment.

This result is supported by a plethora of decisions in the Tenth Circuit holding that, on remand, a district court cannot disturb a ruling of the Court of Appeals. "According to the Tenth Circuit, an `important corollary' to the law of the case doctrine `known as the "mandate rule," provides that a district court "must comply strictly with the mandate rendered by the reviewing court."'" Orient Mineral Co., 2010 WL 624868, at *14 (citations omitted). "The mandate consists of [the Tenth Circuit's] instructions to the district court at the conclusion of the opinion, and the entire opinion that preceded those instructions." Proctor & Gamble Co. v. Haugen, 317 F.3d 1121, 1126 (10th Cir. 2003). The mandate rule seeks "to preserve the finality of judgments, to prevent `continued re-argument of issues already decided, . . . and to preserve scarce court resources.'" Id. at 1132 (alteration in original) (citation omitted).

13

A district court may depart from the "mandate rule" only "`under exceptional circumstances,'" none of which are present here: "`(1) a dramatic change in controlling legal authority; (2) significant new evidence that was not earlier obtainable through due diligence but has since come to light; or (3) if blatant error from the prior . . . decision would result in serious injustice if uncorrected.'" Huffman, 262 F.3d at 1133 (alteration in original) (citation omitted). These three "`exceptional circumstances'" that permit departure from the "mandate rule" essentially mirror the three "`exceptionally narrow'" grounds that permit departure from the law of the case doctrine substantially new evidence, a change in controlling authority, or a prior decision that was clearly erroneous and would cause a manifest injustice if followed.³Id. (citation omitted).

Moreover, "`a legal decision made at one stage of litigation, unchallenged in a subsequent appeal when the opportunity to do so existed, becomes the law of the case for future stages of the same litigation, and the parties are deemed to have waived the right to challenge that decision at a later time.'" Capps v. Sullivan, 13 F.3d 350, 353 (10th Cir. 1993) (citation omitted). The reason for this rule is that "`[i]t would be absurd that a party who has chosen not to argue a point on a first appeal should stand better as regards the law of the case than one who had argued and lost.'" Cnty. of Suffolk v. Stone & Webster Eng'g Corp., 106 F.3d 1112, 1117 (2d Cir. 1997) (citation omitted). In Rohrbaugh, the Tenth Circuit held that plaintiffs "waived their right to challenge the correctness of the holdings in [the prior Court of Appeals' decision] by failing to seek review of that decision when they had the opportunity to do so." 53 F.3d at 1184; see also Klay v.

14

All Defendants, 389 F.3d 1191, 1199 (11th Cir. 2004) ("[Defendants'] failure to seek en banc review or certiorari with respect to these issues caused our previous ruling to become law of the case."). Similarly, in the present case, Microsoft did not seek review of the Fourth Circuit's decision in the Supreme Court, and thus waived any right to challenge the correctness of the Fourth Circuit's decision.

A. Because This Court Has Already Held That Novell's Evidence Presents A
Triable Issue For The Jury, And The Court Of Appeals Has Affirmed That
Ruling, That Decision Is Binding Under The Law Of The Case Doctrine

Microsoft's motion for summary judgment argued that Novell's evidence was insufficient to prove anticompetitive conduct or harm to competition as a matter of law. Microsoft's Memorandum in Support of its Motion for Summary Judgment at 22-35. For example, Microsoft argued that it had no affirmative duty to assist or to continue assisting a competitor, and that therefore Novell's claim was barred under cases such as Trinko. Id. at 29-35. In response, Novell cited much of the evidence it has now presented at trial, including expert opinion testimony and Microsoft documents, to demonstrate that it had established a prima facie case for trial. See Novell's Opposition to Microsoft's Motion for Summary Judgment at 1-32. This Court held that "Novell has raised an issue of triable fact as to whether Microsoft's Novell-injuring conduct was anticompetitive and whether that conduct caused anticompetitive harm in the PC operating system market," and therefore rejected Microsoft's argument that Novell could not establish the elements of a Section 2 claim as a matter of law. Novell, 699 F. Supp. 2d at 743. As to Microsoft's argument that Novell's claim was a refusal to cooperate claim barred by Trinko, the Court held that this was not so: "Novell has presented evidence that Microsoft affirmatively misled Novell about Windows 95 and entered into anticompetitive agreements with OEMs," thus taking the case out of the "refusal

15

to cooperate" paradigm. But, even if analyzed as a pure refusal to cooperate case, the Court held, Novell had presented sufficient evidence to create a triable jury question as to whether Microsoft had violated the antitrust laws including evidence of Microsoft's "predatory motives." Id. at 746. "A fair inference arises that inhibiting WordPerfect's and Quattro Pro's ability to achieve functionality on Windows 95 was an effort to `sacrifice short-run benefits and consumer goodwill in exchange for a perceived long-run [anticompetitive impact].'" Id. (quoting Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 610-11 (1985)).

Microsoft argued on appeal "[a]s a separate and distinct ground for affirming the district court's grant of summary judgment, Count I fails on the merits." Brief of Appellee Microsoft at 28. For example, Microsoft argued that "Novell cannot show that WordPerfect and Quattro Pro posed any threat to the applications barrier to entry." Id. According to Microsoft, "[t]he district court was incorrect when it found that `Novell has raised an issue of triable fact as to whether Microsoft's Novell-injuring conduct was anticompetitive and whether that conduct caused anticompetitive harm in the PC operating system market.'" Id. at 29 (quoting Novell, 699 F. Supp. 2d at 743).

The Fourth Circuit reversed this Court's order granting summary judgment. In doing so, it expressly rejected "Microsoft's claim that there are no remaining disputed issues of material fact." Novell, 429 F. App'x at 262. The Court of Appeals made a particular point of rejecting Microsoft's argument that "Novell cannot make the required showing that Microsoft's conduct toward its office productivity applications helped maintain Microsoft's monopoly power." Id. The Court of Appeals further noted that Dr. Noll's testimony "leaves ample room for `a finding that Microsoft's actions toward Novell were a significant contributor to anticompetitive harm in the PC operating system

16

market in light of the weakened state of other applications and [independent software vendors].' That issue is appropriate for trial." Id. at 262-63 (citation omitted).

Thus, the Court of Appeals rejected, either expressly or by necessary implication, all of Microsoft's arguments that "there are no remaining disputed issues of material fact" and that Microsoft was entitled to judgment as a matter of law on the ground that Novell presented insufficient evidence for a finder of fact to conclude that Novell had established a prima facie case under Section 2. Under the law of the case doctrine, that ruling is binding on this Court. Because the Rule 56 standard for summary judgment and the Rule 50 standard for judgment as a matter of law are the same, this Court cannot grant judgment as a matter of law in favor or Microsoft in the face of the Court of Appeals' decision that summary judgment in favor of Microsoft was inappropriate. The record on the prior summary judgment motion included the opinions of experts and other key evidence that Novell has now presented at trial. Indeed, Novell has presented the evidence that this Court and the Court of Appeals previously found to be sufficient to present a triable case and much more. In sum, the law of the case dictates the denial of Microsoft's motion.

V. MICROSOFT VIOLATED SECTION 2 BY WILLFULLY MAINTAINING ITS
OPERATING SYSTEM MONOPOLY THROUGH ANTICOMPETITIVE
CONDUCT, INCLUDING CONDUCT DIRECTED AT NOVELL

Even if this Court were to revisit the issues previously resolved by the prior rulings of this Court and the Court of Appeals, Novell has introduced more than sufficient evidence to establish that Microsoft violated Section 2, even applying the Court's preliminary instruction that Novell must prove that "Microsoft willfully maintained its monopoly in the PC operating system market by engaging in anticompetitive conduct, including conduct to thwart development of

17

Novell's WordPerfect word processing application and its other office productivity applications, during the period relevant to this case."

A. The Sherman Act Precludes Monopolists From Excluding Potential
Competitors That Threaten To Commoditize The Relevant Market

As an initial matter, this Court has questioned whether it is unlawful for a monopolist to eliminate companies that pose a threat to a monopoly because they could commoditize the monopolist's product, even if the competition comes from outside the relevant market. This Court seems concerned that the threats to Microsoft came from outside the PC operating systems market and that they threatened to create new forms of competition, but not necessarily from within the relevant market.⁴ In markets characterized by network effects, where competition is for the market instead of within it, monopolists actually are more likely to seek to exclude "threats from outside the field instead of from within." Novell, Inc. v. Microsoft Corp., 505 F.3d 302, 319 (4th Cir. 2007).⁵ In the Government Case, the D.C. Circuit found that Microsoft violated Section 2 by excluding Java and Navigator even though "they were not competitors or potential competitors" but rather "they could enable an alternative operating system to compete with Windows." As a matter of logic, that has to be correct. A monopolist cannot be allowed to eliminate potential threats to its

18

monopoly from outside the market that enable or enhance the competitiveness of existing or potential entrants within the relevant market. Any other rule would ignore the importance to consumers of competition and innovation.

Moreover, the Tenth Circuit held in Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 899 F.2d 951 (10th Cir. 1990), that a monopolist who excluded a "perceived competitor" violated Section 2 by engaging in anticompetitive conduct to eliminate that competitor, even though the potential competitor did not compete, nor seek to compete, in the relevant market. In that case, Blue Cross was a traditional third-party medical insurer that, through special enabling legislation, monopolized the market for private health care financing in the area. It perceived a threat to its monopoly when a local health maintenance organization ("HMO") purchased the largest hospital in the area and sought through that combination to offer a different type of health care financing by combining the HMO concept with hospital ownership. Id. at 954-55. The monopolist's concern was that the HMO/hospital concept was part of a "health care revolution" that threatened to render irrelevant Blue Cross' monopolization of traditional third-party private health care financing by offering consumers a variety of alternatives. Reazin v. Blue Cross & Blue Shield, Inc., 663 F. Supp. 1360, 1383 (D. Kan.1987). The jury found that Blue Cross's conduct restricted the ability of buyers to purchase hospital services through alternative delivery systems, "thereby restraining competition in the health care financing market." Id. at 1413.

In its JNOV motion, Blue Cross argued that it could not have monopolized the market for private health care financing because many new and existing conventional insurance companies could easily enter the market. In rejecting that argument, the trial court found that Blue Cross missed the thrust of plaintiffs' evidence: "conventional insurance coverage provides only limited

19

competition to defendant and poses little, if any, threat to its entrenched and dominant market position. The only effective challenge to that position comes from alternative delivery systems." Id. at 1417 (emphasis added). As the trial court noted, "The Sherman and Clayton Acts ensure consumers the benefits of free, open and unrestrained competition. The only competition conceivably benefiting consumers at the consumption level is that between different products, prices, terms, services, etc., i.e., market competition through which consumers are offered a choice among competing products." Id. at 1436.

B. Microsoft Engaged In Conduct Other Than Competition On The Merits
That Had The Effect Of Preventing Or Excluding Competition Or
Frustrating The Efforts Of Other Companies To Compete For Customers
Within The Relevant Market.

The evidence Novell has presented at trial discloses that Microsoft engaged in a pattern of conduct directed at Novell and other products that it perceived to be threats to its operating systems monopoly. This Court has properly ruled that the jury should look at "Microsoft's behavior, taken as a whole," Novell, 699 F. Supp. 2d at 745, and may consider conduct "directed at" those other threats. We first discuss the conduct that thwarted Novell's office productivity applications and then discuss the other conduct.

1. The Office Shell Plan

In early June of 1993 a retreat was held at Bill Gates’ home compound on Hood Canal to focus on how Microsoft’s “Systems” and “Apps/Tools” could leverage each other. PX0047 at MS 5025271.⁶ Microsoft felt that this was a “crucial issue” if Microsoft was to avoid “commodization” of its Windows operating system. Id. at MS7085723. In a memo for the retreat, Bill Gates outlined

20

that "Chicago offers an opportunity to redefine what it means for applications to integrate together, and we must fully exploit our advantage to do so." PX0050 at FL AG 0103212. Gates also noted that "[i]ntegration and synergy will be the paradigm shift that will drive the Chicago wave of applications and the Chicago Office." Id.

At a presentation given at the retreat by several senior Microsoft executives, a radical idea was proposed that Microsoft would create a shell specifically designed for Microsoft's office productivity applications, called "The Office Shell." PX0051 at MS-PCA 2535292. The basic approach of the plan was to hold all extensible shell technology for Microsoft's Office product and to make the shell that would ship with Microsoft's Window 95 product "non-extensible." Id. The idea was that by shipping an extensible shell with Office, this would differentiate Office and give Microsoft's office productivity applications an advantage over competitors when it came to shell integration. Id. The Microsoft slide indicates that Microsoft would offer an excuse to ISVs as to why the Chicago shell would be non-extensible, and that the excuse would be that Microsoft "couldn't get it done in time." Id.

Notes from the retreat indicate that Bill Gates was thinking about ways to "win market share" from Lotus and Novell. PX0052 at MS7089439. Gates noted that Chicago provided a huge opportunity for Microsoft's applications to gain synergy with the operating system, and that all Microsoft apps should "bet on Chicago." Id. at MS7089440. Notes from the retreat also indicate that Gates supported the Office Shell scheme, as he was recorded as stating emphatically to "Ship extensible shell in Office!!!" "Billg sez do it!" Id. at MS7089441.

Based on the discussion at the retreat, Christopher Graham developed an "Office Shell Plan." See e.g., PX0057. The paper Graham wrote investigated and summarized a proposal that the

21

next major version of Office consist of a Windows shell and applications optimized to work together. PX0061 at MS 0097121. Graham noted that the proposal originated at the senior technical retreat at Hood Canal and recommended that Microsoft follow the "aggressive" version of the plan. Id. The proposed plan was that Office would ship an enhanced Windows shell and that it would be a functional superset of the Chicago shell, designed for maximum synergy with Office. Id. Chicago would ship limited extensibility and Office would ship with the optimized shell six months after Chicago. Id. Office would include many features that would exploit the new shell. Id. The goal of the plan was to give Office a "big jump on competitors in creating apps optimized for the new shell." Id. at MS 0097122. Graham however recognized that there were some downsides to the plan, in particular, that the plan would result in "Risk of ISV retaliation" and could result in a "Negative impact on [Microsoft's] corporate image." Id. The aggressive version of the plan, recommended by Graham, would undertake greater user interfaces changes, and according to Graham, could "pull off the `UI Paradigm Shift' to document centricity" two years sooner that if they didn't follow the aggressive approach. Id. Graham noted that the aggressive plan would give Microsoft "a very significant lead over our competitors, and make our competitors' products look `old'." Id.

Tom Evslin also described the plan outlined at the system/apps retreat in an e-mail on June 16, 1993, stating that "[a] very interesting plan was developed and tentatively adopted to bundle the extensibility of Chicago shell and some of the shell sizzle with Office rather than release with Chicago itself. This makes these features a compelling reason to buy Office rather than icing on the cake of an OS we can't make as much profit on." PX0055 at MS 5048640.

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In sum, the office shell plan was aimed at leveraging Microsoft's control of platform technology. PX0074 at MS 0150226. Microsoft would be able to anticipate the changes in platform technology, or the "left turn" of the platform before everyone else and as a result, Microsoft could "[r]epeat [the] advantage [Microsoft] gained from the bet on Windows." Id. The end result would be an advantage for Microsoft against Lotus, Borland and WordPerfect, that would "lock in users" and "lock out competition," enabling Microsoft to "[k]eep prices up and increase market share." Id. at MS 0150227.

The office shell plan was widely discussed within Microsoft. Bob Muglia wrote in an e-mail to Paul Maritz on July 1, 1993 that Microsoft should not continue along their current path of exposing shell extensibility. PX0062 at MX 1389851. Muglia stated that while "this is the current plan, it seems like a bad option no matter how you view it" because "Word and Excel are forced to battle again their competitors on even turf." Id. Muglia continues: "Given that Lotus and Wordperfect have largely caught up, [Word and Excel] almost certainly lose ground if not in market share, than in margins." Id. However, not everyone within Microsoft liked the Office Shell plan or was enthusiastic about limiting Chicago's shell extensibility in order to benefit Office. See, e.g., PX0056 at MS7080520. For example, Tandy Trower wrote to Bill Gates, Brad Silverberg, Paul Maritz and others on June 23, 1993, that he was highly critical of the plan, stating:

This strategy signals a sign of weakness. This stinks of `proprietary-ness,' something that we have been critical of others for embracing....We are better focused on making this transition, like we did from character to GUI, than trying to leverage some weak extensions. If we really wanted to leverage a technological advantage we should have kept OLE 2 as a proprietary set of APIs. It just doesn't appear to me to be a smart strategy. It seems contrived and the possible repercussions not worth the risk. In the twelve years, I have been here, I've always taken pride in the fact that we excelled by doing things better than our competition, not by withholding some functionality that we

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might uniquely leverage. That doesn't mean that I think we should just give away all our technology. I just don't think this particular proposal is a good one and doesn't fit our character.

PX0056 at MS7080520.

Others on the Chicago team, such as David Cole, Brad Silverberg and John Ludwig feared that shipping a shell in office would lead to "Shell Wars" and that Microsoft's competitors would be forced to ship their own shell in their office productivity applications to remain competitive and that this could have a detrimental effect on the consistency of the Windows user interface, and could result in fragmentation of Windows as competitors layer their own shells and APIs on top of Windows. PX0054 at MS 0185884-85; PX0499 at MS7093049. If such a fragmentation occurred, Microsoft could theoretically "lose control" of Windows and the future evolution of the operating system, if developers started to make use of other vendor's shells. Id. at MS 0185885. In fact, John Ludwig indicates in the same e-mail thread that Microsoft's worst nightmare would be "novell/lotus being successful at establishing their `middleware' as a standard." Id. at MS 0185884.

On July 8th and 9th of 1993, Microsoft held a Chicago User Interface Design Preview for third party ISVs including WordPerfect. See, e.g., PX0063. During the presentation, Microsoft's Joe Belfiore showed off the Chicago Shell and its new user interface. Id. at NOV-B06507480-81. Brad Silverberg wrote in an e-mail on July 13, 1993, that ISVs were clamoring for shell extensibility and that they "continued to press for this in every way, whether cabinet extensibility so they could put in their own right pane handler; add properties to prop sheets; hook find file; etc." PX0064 at MS7093163. Silverberg noted that the ISVs "were afraid and angry that

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Microsoft would use the hooks for its own purposes (apps, mail, etc) but not provide to ISV's" and that "This was a very hot button." Id.

On September 9th and 10th, 1993, Microsoft held a "Win32 Developers Workshop Featuring Chicago." See, e.g., PX0078. During the Workshop, Microsoft's Joe Belfiore showed the Chicago shell and the new MS Mail client (Capone) that would tie into the shell just as another folder using the namespace extension APIs. Id. at NOV00721981. During the workshop, Belfiore stated that there were no plans to allow ISVs to extend the explorer in the same way, and WordPerfect developers complained that "this was an unacceptable situation." Id.

As a result of ISVs' complaints, a debate erupted within Microsoft in September of 1993 regarding whether Microsoft had to publish the namespace extension APIs since Capone would make use of them. See, e.g., PX0483. Some within Microsoft, such as Doug Henrich, felt that not providing the same namespace extension APIs Microsoft was using for Capone was "problematic from a PR and ISV issue" and that several "big and small email vendors will be upset, and this will play out as an unfair advantage issue with the press." PX0083 at MS 0186379. Henrich felt that by not publishing the "interfaces/APIs that Capone uses" that "Lotus will make a big deal of this" because Lotus CEO Jim Manzi had "already mentioned it" to Bill Gates. PX0084 at MS 5043511. Others, such as Ken Ong, believed that the APIs being utilized by Capone to tie into the shell were "fit for public consumption" and that it was just a "question of whether Chicago choose[s] to publish those calls." PX0084 at MS 5043511-12. Brad Silverberg felt that Microsoft clearly had to "publish whatever api's capone uses." Id. at MS 5043513; PX0085 at MS 5042229. Jonathan Lazarus was more blunt, stating that Microsoft's failure to publish the namespace extensions APIs that Capone would be using would be "D U M B!!!". PX0082 at MS 5042220. Finally on

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September 27, 1993, Brad Silverberg indicated in an e-mail that he and David Cole met with Bob Muglia and Jim Allchin to discuss the namespace extension APIs Capone was using, and that the group decided that the APIs would be published (on the A-list). PX0473 at MS 0186458. Silverberg states that "we decided that we would document the shell extensibility . . . ." Id. While the extensibility mechanisms would not be full OLE2 compatible, the Chicago team would use a "lighter weight OLE implementation" and Chicago UI exploitive applications would work decently on Cairo, Microsoft's next version of NT, and there would be "no need for ISVs to do different work to run on Cairo." PX0094 at MS7048981.

2. Microsoft Evangelizes The Namespace Extensions To
WordPerfect

Shortly after the decision to document the namespace extension APIs, Jeff Thiel, Brad Struss, and David Cole visited WordPerfect on November 11th, 1993, to evangelize Chicago and “what [Microsoft] thought a good Chicago app was and what barriers they would have to doing one close to the time Chicago shipped.” PX0105 at MS7086583. David Cole described the visit as follows:

Overall, the visit was good. There were around 10 WP guys, (VP dev lead types) sitting around a table so it was much more intimate than the Borland visit. They weren’t nasty at all, in fact had good feedback and decent questions. These guys will bet on Chicago, they’ve never had any doubts about that....It was interesting to see how enthusiastic WP was about Chicago, much in contrast with the ho-hum attitude of our own apps group...They were very happy about us deciding to document the shell extensions. I explained conceptually how the extensibility would work and what controls they’d have. Since they just acquired a document management system (I forget from who) I assume they will want to plug that in, plus WP mail and other part of WP office too. . . I anticipate that WP will have a very exploitive Chicago app ready close to when Chicago ships.

PX0105 at MS7086583.

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Adam Harral, a WordPerfect developer, testified that at this meeting Microsoft told WordPerfect that it had decided to document the shell extensions and that this was one of the primary reasons for the meeting. Tr. at 289:14-22. WordPerfect was "very enthusiastic" about Microsoft's decision to document the shell extensions. Id. at 289:10-13; 290:1-4 (Harral). At the meeting, David Cole explained to WordPerfect how the extensibility would work and what controls they would have, and that Microsoft would provide information at a later time related to the details. Id. at 290:25-291:9 (Harral).

A month later at the December 1993 Professional Developers Conference ("PDC `93") Joe Belfiore presented a slideshow entitled "New Windows `Chicago' UI: What It Means For Your Application." See e.g., PX0113. The presentation indicated that ISVs would be provided with "Explorer UI integration" and that "[i]f you have an application that displays a collection of file-like objects, you can create your own `custom container' displayed in the folder/explorer hierarchy." Id. at NOV 00734389. Belfiore outlined that the technology, while not for most applications, was perfect for certain types of applications such as "electronic mail, document management, etc." Id. at NOV 00734390. This slideshow was distributed amongst developers and evangelists and managers at WordPerfect. Tr. at 294:8-17 (Harral). Mr. Harral also indicated that the Shell Extensibility portion of the document, dealing with Explorer UI integration dealt directly with the namespace extension functionality. Id. at 296:21-298:13 (Harral).

The sections of the presentation dealing with pseudo folders also were specifically about the namespace extension APIs. Id. at 298:14-299:8. He also testified that both of the topics outlined in the Belfiore slideshow were among the topics that were discussed with Mr. Cole a month earlier in November of 1993. Id. at 299:9-299:12.

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Gregory Richardson testified that he reviewed the Belfiore slideshow, stating that it was a "presentation describing functionality that was being provided in Windows 95 to promote those features" and that the presentation related to how to provide custom namespaces into the shell, including pseudo-folders for electronic mail, document management, and then make them accessible via the File Open dialogue. Tr. at 589:17-589:25, 590:22-591:21, 592:9-593:19 (Richardson).

Prior to receiving the M6 beta from Microsoft, WordPerfect's shared code team had started work on moving shared code to Windows 95, including the file open dialog component. Tr. at 318:23-319:25. In June 1994, Microsoft shipped and rolled out to approximately 20,000 sites world-wide the Chicago beta 1 (M6) release. See PX0179 at MX 2217526. The M6 beta of Chicago contained partial documentation for the namespace extension API functionality. Tr. at 303:16-305:6; see also PX0181. This partial documentation included a header file called shlobj.h which contained general definitions for the extensions and some general comments on how they could be invoked and utilized by WordPerfect. Id; PX0181.

This did not provide WordPerfect with full and complete documentation regarding the namespace extension functionality, which was not expected until the next milestone beta release, entitled M7. Tr. at 317:6-317:12. In order to fully invoke and utilize the namespace extension interfaces, a developer would need additional documentation that would describe in greater detail how these computer definitions were meant to be used. Id. at 317:13-318:6.

Relying on the M6 partial documentation, the shared code team began working on namespace extension related aspects. Id. at 320:1-321:4. The shared code team also started working with other groups, such as the mail team, the document management team, and others

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regarding what extensions they thought they could provide. Id. The documentation and M6 beta gave the shared code team for the first time the ability to hook the WordPerfect code to the namespace extension APIs to see how they behaved. Id. at 321:5-321:25. WordPerfect developers, including Adam Harral, spoke with Microsoft's Premier Support regarding the namespace extension interfaces at least three times. Id. at 331:7-331:12. Other liaisons in the company, such as Lynn Monson were also having conversations with Premier Support about the interfaces. Id. at 331:13- 331:19. By October of 1994, "significant work" had already been done on the shell extensions, and the shared code was about 80 percent of the way through hooking up the shared code pieces into the Windows 95 system. Id. at 322:1-322:8; 326:9-326:25. The only thing the shared code team needed from Microsoft was additional information on the namespace extension interfaces, which was promised in M7. Id. at 322:9-323:5. WordPerfect developer Adam Harral predicted that if WordPerfect would have received the final documentation from Microsoft with respect to the namespace extension APIs in M7, the process of hooking shared code up to Windows 95 would have been completely finished by December of 1994. Id. at 323:6-323:14.

On September 20, 1994, Novell CEO Bob Frankenberg gave a presentation at the Agenda '95 conference in Scottsdale, Arizona. See PX0213 at NOV-B01939861. Bill Gates described the speech given by Frankenberg in an e-mail to senior Microsoft leadership, indicating that Frankenberg demonstrated a new shell technology called Corsair that exposed cross-platform APIs on the Macintosh, Unix and Windows. Id. Gates also noted that Frankenberg demonstrated a new web browser called Ferret and that he "launched WP 6.1 and showed how its Hypertext capability lets you navigate around the world using URLs!!!" Id. Gates indicated that this work by

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Novell "emphasizes the importance of our shell integration" and that "Novell is a lot more aware of how the world is changing than I thought they were." Id.

3. Microsoft Withdraws Support For The Namespace Extension
APIs

On October 3, 1994, only two weeks after seeing Mr. Frankenberg demonstrate Novell’s latest innovations in WordPerfect 6.1, Bill Gates decided to withdraw support for the namespace extension APIs, contrary to Microsoft’s previous representations and course of conduct. See PX0001 at MX 9030733. In a memorandum regarding his decision, Mr. Gates admitted that the “shell group” had done a “good job defining extensibility interfaces,” and that the extensions were “a very nice piece of work.” He also admitted that it was “very late in the day to [be] making changes to Chicago.” Id. Mr. Gates stated that he decided Microsoft “should not publish these extensions” until the company had “a way to do a high level of integration that will be harder for [the] likes of Notes, Wordperfect to achieve, and which will give Office a real advantage.” Id. Mr. Gates added that Microsoft could not “compete with Lotus and WordPerfect/Novell without this” and that Microsoft’s goal was “to have Office ’96 sell better” because of “shell integration work.” Id.

After the decision was made, Tom Evslin asked in an e-mail to Gates and other top executives whether Marvel, Microsoft’s MSN client, and Capone, Microsoft’s e-mail client, had to stop using the interfaces. See PX0219 at MX 5117033. In response, Brad Silverberg wrote that Microsoft should “take them out of marvel and capone” because “[t]here is no one in the world outside of Microsoft who will buy the argument that they are ‘part of Chicago’ so [Microsoft] get[s] the interfaces while others don’t” and that such a position was “an impossible sale.” Id. An

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investigation was then conducted by Russell Siegelman, researching the impact of the namespace extension decision on Marvel. See PX0220 at MX 5103184. Siegelman had Sean Nolan, a Marvel developer, look into the implications of losing the Chicago namespace extension mechanism implementation. See PX0221 at MX 5103234. In a memorandum to Siegelman, Nolan wrote that the decision amounted to a "bombshell" and that having to redesign the Marvel "shell from the group up is not a realistic solution due to time constraints." Id. Nolan then recommended that Marvel be allowed to continue to use the Chicago Implementation. Id.

On October 5, 1994, Siegelman then passed along Nolan's recommendation to Gates, Silverberg and Maritz among others, stating that his team had fully researched the impact of the decision on Marvel, and that the "bottom line is that there is only 1 solution that doesn't cause huge risk to the Marvel project: using the Chicago implementation of IShellBrowser." See PX0220 at MX 5103184. According to Siegelman, other options would require the Marvel team to write "significant code" and perform testing, and could jeopardize Marvel making the Chicago launch date. Id. Siegelman felt that there were only two reasonable options for Marvel, either (1) overturn the decision not to publish the namespace extensions and allow Marvel to continue to use the interfaces or (2) don't publish the namespace extension interfaces, but continue to allow Marvel to use them. Id. The third option, having Marvel "[c]reate a private version of [the namespace extension interfaces]" was described by Siegelman as "lunacy." Id. at MX 5103184-85.

In response to Siegelman's e-mail, Brad Silverberg argued that Microsoft should do the first option and "make the extensions public." Id. at MX 5103184. Silverberg states:

I am afraid that when we tell ISV's, there will be a firestorm of protest. I heard today that the Outside-In people (SCC), from whom we've licensed our viewers, are building their business based on shell extensions...Other ISV's

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using the extensions are WordPerfect, Lotus, Symantec and Oracle. These companies will not be bashful about expressing their displeasure. It will play out, I predict, on page one of the weeklies, lead to calls for the DOJ to investigate, etc. We have not yet figured out how to really take them out, as the shell needs them itself. We can't just not document, because (a) the doc is already out, and (b) they will just get reverse engineered.

PX0220 at MX 5103184 (emphasis added).

However, Microsoft did not reverse the decision and Marvel was permitted to continue to use the interfaces. Paul Maritz informed Gates that "there is no way they can move off the current interfaces and still have a chance of shipping with Win'95," and that as a result, Microsoft would not disable the interfaces, but would not document the interfaces. See PX0530 at MX 6025435. Applications such as Marvel that continued to use the interfaces would open into a separate window, to "appear to be separate apps" not using the interfaces, but Marvel and Capone would still be executing in process. See PX0543 at MX 5067022; PX0530 at MX 6025435.

On October 10, 1994, Satoshi Nakajima, an inventor of the namespace extension interfaces, sent an e-mail indicating changes being made to the shlobj.h header-file in the Windows 95 Software Development Kit. PX0224 at MS98 0103243. Nakajima wrote, "[b]ased on the recent decision, we are hiding one of [the] shell extension mechanisms...I marked all those interfaces and definitions `;Internal' so that we don't put them in the SDK header files any more. [Outside development] partners will receive these new headers (shlobj.h and shlguid.h) before M7 release." Id. Nakajima noted that because of the decision, the following changes were made to Windows 95 interfaces: "IShellFolder" and "IEnumIDList" became "read-only" and could not be implemented in a customized way, and the "name space extension mechanism," which consisted of "IShellBrowser," "IShellView," "IPersistFolder," "ICommDlgBrowser" became private. Id. In

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Microsoft's next M7 beta release, the shlobj.h SDK header file contained no documentation on the namespace extension mechanism, and the interfaces were no longer supported by Microsoft. See generally PX0227.

By October 12, 1994, Microsoft's Developer Relations Group had worked up a plan of action for "going to our ISVs and telling them about BillG's recent decision to return the namespace extension API's to their original system-level status." PX0225 at MX 6055840. The plan warned people to not "use the word *undocumented* or private API's" and "[t]his has a negative connotation to most ISVs." Id. The document instructed people to contact ISV's by the end of the day to inform them of Gates' decision, stating that Microsoft had "changed the status of the API's which allow objects to be represented in the explorer as if they were part of the Windows 95 namespace." Id. The document indicated that this kind of functionality could be seen in InfoCenter (Capone) and with Marvel, but warned people to "NOT MENTION MARVEL IN ANY OF YOUR CONVERSATIONS." Id.

The instructions also contained a call script, that was to be used when communicating the decision to the ISV community. The script stated the following:

There is a set of APIs which allows you to extend the explorer visually in a manner that makes an application look as though it were a system-level hierarchical component...We have taken a hard look at these APIs and because it makes it very difficult for us to support our long-term objectives with the Windows shell we have decided to return these interfaces back to their system-only status. This means that if you are using these API's you should stop. The API's affected are: IShellBrowser, IShellView, ICommDlgBrowser, and IPersistFolder. These allowed for the CREATING (rather than browsing) of the shell's namespace (file system, net, control panel(...) and for extending the namespace in general.

PX0225 at MX 6055841.

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The Developer Relations Group plan of action also included a Question & Answer ("Q&A") document that was to be used as a reference and guide regarding how to answer questions from the ISVs related to Gates' decision to take out the namespace extension APIs. If an ISV asked what the "penalty" would be if they continued to use the interfaces and documentation that was provided in M6, the sample answer instructed Microsoft staff to tell ISV's that Microsoft would:

not arbitrarily change [the] interfaces, but because of how tightly [the] interfaces are tied to internals of the shell, [Microsoft] cannot guarantee ISVs that try to call into them will work in future releases of Windows 95 (or even between interim beta builds). There will be no support for ISVs who use this. It will be completely at their own risk.

PX0225 at MX 6055844 (emphasis added).

Adam Harral discovered that Microsoft had withdrawn the namespace extensions after a call to Microsoft's Premier support sometime in the October time frame. Tr. at 331:24-332:10. After inquiring on a couple of issues that he needed clarification on related to the WordPerfect file open dialog and some of the namespace, he was told by Premier Support that the namespace extensions were no longer something that they could discuss. Id.

The shlobj.h header file that eventually shipped with the M7 beta did not contain the full documentation of the namespace extension interfaces. Instead, all references to the namespace extension mechanism had been removed. Compare PX 181 to PX 227; Tr. at 332:11-333:2. The ability of WordPerfect to present its namespaces in the Windows 95 shell, to negotiate where it was going to place its namespace items, and to enhance the Microsoft common file open dialogs, was missing. Tr. at 333:3-333:9 (Harral).

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4. Microsoft’s Deceptive Scheme To Eliminate WordPerfect Was
Deliberate and Premeditated

The evidence shows that Microsoft’s conduct regarding the namespace extension APIs was a premeditated deception that Microsoft executed for the purpose of harming Lotus and Novell. Microsoft’s deceptive scheme had an anticompetitive effect on the market and “dramatically widen[ed] the moat that protects [Microsoft’s] operating system business.” See Novell, Inc. v. Microsoft Corp., 505 F.3d 302, 310 n.15 (4th Cir. 2007).

The evidence shows that Microsoft planned from the start to deceive Novell regarding the namespace extension APIs. As mentioned earlier, Microsoft held an Executive Retreat at Mr. Gates’ home at Hood Canal in June of 1993. See PX0047. At that retreat, Mr. Gates was shown a presentation by Mike Maples, Jon Lazarus, Tandy Trower, Steve Madigan, David Cole, Chris Graham, Ed Fries and Nathan Myhrvold. See PX0051. In an apparent attempt to hide the presentation from outside scrutiny, the slide show was labeled: “Note: Client-Attorney Privileged Material.” Id. at MS-PCA 2535283. However, none of the members on the team who gave the presentation was an attorney, and most were executives from either Microsoft’s applications division or systems division.

One of the slides presented a proposal entitled “The Radical Extreme: The Office Shell.” Id. at MS-PCA 2535292. The “Basic Approach” presented was to “[h]old extensible shell for Office,” Microsoft’s suite of office productivity applications. Id. In order to preserve this differentiation feature for Office, the Chicago shell (Windows 95) would be “non-extensible.” Id. The prepared excuse to be offered ISV’s for Chicago being non-extensible was that “we couldn’t get it done in time.” Id. (emphasis added).

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On June 14, 1993, Dennis Adler, a Chicago Program Manager, sent notes from the Hood Canal Executive Retreat to Brad Silverberg, the Microsoft Vice-President responsible for Chicago, and David Cole, the Group Program Manager for Chicago. See PX0052. The notes confirm that Mr. Gates himself approved the Office Shell scheme: "Ship extensible shell in Office!!!" "Billg sez do it!" Id.

This evidence is confirmed by a document entitled "Office Shell Ideas and Issues," dated July 3, 1993, and authored by Chris Graham, one of the team members who had developed the "Radical Extreme" plan. See PX0061. Mr. Graham states that the plan "originated at a senior technical retreat at Hood Canal in June/93." Id. at MS 0097121. The plan calls for an enhanced Windows shell to be bundled with the next major version of Office to ship after Chicago. "The Office shell would be functionally a superset of the Chicago shell." Id. It would be only after the Office shell ships that the enhanced shell would become the next standard Windows shell for both Chicago and Cairo (Windows NT). Id. The new shell would not be "initially available with Windows itself." Mr. Graham expressly states the motivation for this plan:

• "Office gets a big jump on competition in creating apps optimized for the new shell." See PX0061 at MS 0097122.

• "We could gain a much bigger advantage from the Office shell. We could pull off the `UI Paradigm shift' to document centricity possibly two years sooner than if we did not follow this plan . . . . This would give us a very significant lead over our competitors, and make our competitors' products look `old.'" Id. at MS 0097123.

With Mr. Gates' approval of the Office Shell Plan in place, Microsoft's Systems Group, together with the Developer Relations Group (DRG) at Microsoft, began to evangelize the benefits

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of Chicago and the namespace shell extensibility APIs that Mr. Gates had already decided he was going to deny all ISVs.

Bill Gates' intent to attack and destroy Novell/WP is further demonstrated by PX0482, an internal Microsoft e-mail dated April 1994 from Mike Murray to Bill Gates, with the subject "Novell/WP." In the e-mail, Murray states to Gates: "At yesterday's Exec Staff meeting you asked what else could be done to attack Novell/WP....I suggested that we should lock up the LDS Church (and BYU)...we would inflict an incredible amount of FUD..." See PX0482 at MS98 0185989.

Then, on October 3, 1994, "very late" into the development process of Windows 95, and after Novell had relied to its significant detriment on Microsoft's previous misrepresentations, Mr. Gates announced the decision to de-document the namespace extension APIs. See PX0001. In Mr. Gates' view, this would give Microsoft Office `96 a real advantage, and help "Office '96 sell better because of the shell integration work..." Id.

Moreover, evidence appears in the record that Microsoft was working on an Office Shell for Office 96 called the Office Explorer, and that this shell was using the same namespace extension APIs that Gates de-documented after the de-documentation. See PX0231 at MX 1189913; see also PX0379 at MS-PCA 1566800-01.

The only reasonable conclusion that can be drawn from this evidence is that Bill Gates executed the Chris Graham Office Shell Plan to withhold functionality from ISVs for Microsoft's own competitive advantage, and then took that scheme a step further into the realm of deliberate deception when he and his top executives told ISVs, including WordPerfect, that Microsoft would publish and document the namespace extension interfaces (see PX0105) when Gates knew all along that he had planned to keep the interfaces for Microsoft's exclusive use.

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This conclusion is bolstered by an examination of the similarities between the "Radical Extreme" plan outlined at Hood Canal in June 1993 and approved by Mr. Gates and Mr. Gates' announcement of the decision to de-document the namespace extensions in October of 1994:

The "Radical Extreme" Plan, June 1993	Gates Announcement, Oct. 1994
* "Chicago Ships. Shell has limited extensibility	* "I have decided that we should not publish these extensions."
* "Chicago + 6 Months Office ships with optimized shell . . . Pros: Office gets a big jump on competitors in creating apps optimized for the new shell"	* "Our goal is to have Office '96 sell better because of the shell integration work."
* "Sometime after Office ships Cairo ships with a shell that is a superset of the Office shell . . . When Cairo ships Enhanced Shell added to Chicago"	* "Our goal is to . . . have the Ren/Office effort yield technology that can be an integral part of the shell in Windows '97."
-	* "We should wait until we have a way to do a high level of integration that will be harder for the likes of Notes, WordPerfect to achieve, and which will give Office a real advantage . . . We can't compete with Lotus and WordPerfect/Novell without this."
See PX0061.	See PX0001.

A reasonable jury could easily conclude, based upon the evidence, that this was not competition on the merits, but a deliberate deception by Microsoft designed to lure WordPerfect down a path, and then spring a preexisting plan. Thus, a reasonable jury could conclude from these facts that Microsoft engaged in anticompetitive conduct.

5. Microsoft’s Conduct Against Novell Was Part Of A Scheme To
Eliminate Potential Threats

The Government Case established that Microsoft engaged in a broad pattern of unlawful conduct during the 1990s with the purpose and effect of thwarting emerging threats to its powerful

38

and well-entrenched operating system monopoly. See generally United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001). Most prominent among the threats discussed in the Government Case was the threat posed by Netscape Navigator and Java, two types of middleware products that were determined to have the potential to weaken the applications barrier to entry protecting Microsoft's monopoly power. Findings of Fact ¶¶ 70, 74, 75, 77.

However, all middleware, including Novell's AppWare and PerfectFit shared code technologies, had the potential to form the center of an emerging middleware platform that could have helped erode the high applications barrier to entry that protects Microsoft's monopoly. Finding of Fact ¶ 68 (noting that "Microsoft was concerned with middleware as a category of software; each type of middleware contributed to the threat posed by the entire category."). Microsoft acted quickly during the 1990s to destroy this evolving middleware threat to its "desktop paradise," by embarking on a predatory campaign against any actual or potential middleware threats to its operating system monopoly, including Intel's Native Signal Processing, Apple's QuickTime, and Novell's WordPerfect word processor and PerfectOffice suite (which included AppWare).

Mr. Gates took aim at WordPerfect by de-documenting the namespace extension interfaces, because Microsoft could not "compete with Lotus and WordPerfect/Novell" without an uneven playing field. See, e.g., PX0001. In fact, Microsoft could only win against Lotus Notes and Novell/WordPerfect if it took away functionality it had promised in order to gain a strategic advantage in the area of shell integration, which Gates felt would help future versions of Office '96 sell better. Id.

Microsoft's predatory campaign against middleware threats during the 1990s was a success from Microsoft's standpoint. Microsoft's actions destroyed WordPerfect, thwarted the

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distribution of Netscape, and prevented the successful development of alternative platforms that could have eroded its Windows monopoly and given consumers greater choice. In other words, Microsoft prevented consumers from getting what they wanted so that Microsoft could keep what it had, a monopoly in operating systems.

Because of Microsoft's anticompetitive conduct in this case, personal computer consumers are locked into a Microsoft-only world. By gaining control of the "key franchise" of word processing, Microsoft widened the moat protecting its operating system monopoly.

C. The Court Should Not Limit The Temporal Scope Of Evidence Of Harm To
Competition

Microsoft's conduct against Novell harmed competition because WordPerfect and Quattro Pro were nascent cross-platform threats to Microsoft's operating system monopoly, and Microsoft's elimination of a large number of such nascent threats enabled it to enhance the applications barrier to entry and maintain its operating system monopoly. Competition was thus harmed by Microsoft's entire course of conduct against nascent middleware and cross-platform threats--a course of conduct that lasted well beyond Novell's sale of the PerfectOffice suite in March 1996.

Professor Noll's testimony at trial, like his reports that were before this Court on summary judgment, demonstrated harm to competition in part by examining Microsoft's course of conduct in destroying the multiple cross-platform threats that could otherwise have eroded its operating system monopoly. Tr. at 1763:14-1828:23; see Novell, 699 F. Supp. 2d. at 749. That methodology has been expressly endorsed by the Fourth Circuit as a valid basis for "a finding that Microsoft's actions toward Novell were a significant contributor to anticompetitive harm in the PC

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operating system market in light of the weakened state of other applications and [independent software vendors]." Novell, 429 F. App'x at 262-63 (emphasis in original). And this Court has ruled that Professor Noll's conclusion that "there was anticompetitive harm caused by the combination of the conduct directed at Novell's software applications and the anticompetitive conduct directed at Netscape, Java, and other third party applications," is sufficient to demonstrate injury to Novell cognizable under the antitrust laws notwithstanding the impossibility of separating out the specific harm to competition caused by Microsoft's actions against Novell alone. Novell, 699 F. Supp. 2d at 749-50.

There is no valid reason to restrict the jury's consideration of evidence postdating Novell's sale of WordPerfect and Quattro Pro. Such evidence is relevant not only to show Microsoft's motive, intent, preparation, plan, and knowledge, as the Court's previous rulings have expressly recognized, see Oct. 4, 2011 Mem. to Counsel (Dkt. #163), but also to demonstrate the anticompetitive effect of Microsoft's scheme to eliminate the competitive threats posed by Novell, Netscape, Sun, and other producers of cross-platform applications and middleware.

As this Court has recognized, "[i]t would be contrary to the purpose of § 2 to immunize a monopolist for anticompetitive conduct, which in fact significantly contributed to anticompetitive harm, simply because that harm was caused by conduct directed at multiple small threats, none of which could prove that the conduct directed at any single firm would have by itself significantly contributed to the defendant's monopoly if none of the other small firms had been similarly weakened." Novell, 699 F. Supp. at 749; see also Microsoft II, 253 F.3d at 79 ("[I]t would be inimical to the purpose of the Sherman Act to allow monopolists free reign to squash nascent, albeit unproven, competitors at will--particularly in industries marked by rapid technological advance

41

and frequent paradigm shifts."). As the Third Circuit stated in LePage's, "[t]he relevant inquiry is the anticompetitive effect of [the defendant's] exclusionary practices considered together. . . . [T]he courts must look to the monopolist's conduct taken as a whole rather than considering each aspect in isolation." LePage's v. 3M (Minn. Mining & Mfg. Co.), 324 F.3d 141, 162 (3d Cir. 2003) (en banc); see, e.g., City of Anaheim v. S. Cal. Edison Co., 955 F.2d 1373, 1376 (9th Cir. 1992) ("It would not be proper to focus on specific individual acts of an accused monopolist while refusing to consider their overall combined effect. . . We are dealing with what has been called the `synergistic effect' of the mixture of the elements."); Mishawaka v. Am. Elec. Power Co., 616 F.2d 976, 986 (7th Cir. 1980) ("[The defendant] would have us consider each separate aspect of its conduct separately and in a vacuum. If we did, we might agree with [the defendant] that no one aspect standing alone is illegal. It is the mix of the various ingredients of utility behavior in a monopoly broth that produces the unsavory flavor." (internal quotation, alteration, and citation omitted)); Caldera, Inc. v. Microsoft Corp., 72 F. Supp. 2d 1295, 1313 (D. Utah 1999) ("Caldera's claim of unlawful predatory conduct is based on the aggregate effect of all of Microsoft's anticompetitive behavior. While each separate fact used to support Caldera's § 2 claim may not by itself legally support the claim, the overall effect may be prohibited anticompetitive conduct. Accordingly, it would be inappropriate to view these alleged incompatibilities in isolation and out of the context in which they occurred.").

Because Novell was an early victim of Microsoft's anticompetitive scheme, by the time Microsoft had destroyed the threats posed by WordPerfect and Quattro Pro, Microsoft had not yet fully extended its conduct to any number of other middleware and cross-platform threats. Thus, Microsoft's conduct against Novell had not yet caused its full anticompetitive effect because that

42

course of conduct had only begun to damage other nascent threats such as Navigator and Java. For that reason, Microsoft has argued on the one hand that Novell cannot demonstrate that Microsoft's conduct against Novell itself caused contemporaneous anticompetitive harm, Microsoft Mot. Summ. J. 26, Dkt. No. 101-2 (Case 1:05-cv-01087-JFM D. Md.), and on the other that the jury should not be permitted to consider Microsoft's conduct as to Netscape and Sun because it supposedly is irrelevant to demonstrating the contemporaneous effect of its conduct toward Novell, Microsoft Mot. in Limine To Preclude Evid. re Netscape & Java 7-8 (Dkt. #101).

Microsoft's argument urges the Court to adopt an erroneous requirement that the anticompetitive effect of its actions must be contemporaneous with those actions in order to be actionable. Microsoft's argument ignores this Court's holding that under the "contributed significantly" standard, Novell need not present direct proof that Microsoft's "`continued monopoly power is precisely attributable to its anticompetitive conduct'" against Novell, for to require such proof would require that Section 2 liability "`turn on a plaintiff's ability or inability to reconstruct the hypothetical marketplace absent a defendant's anticompetitive conduct.'" Novell, 699 F. Supp. 2d at 748 (quoting Microsoft II, 253 F.3d at 79). Assessing a monopoly maintenance claim under § 2 of the Sherman Act--particularly in the technology sector--is often forward-looking and predictive, because the central concern of the antitrust laws in such cases is whether the exclusionary conduct at issue will enable the monopolist to maintain its dominant position in the future, which often cannot be ascertained at the moment the conduct occurs. See, e.g., Microsoft II, 253 F.3d at 79.

Where a plaintiff seeks to show that a defendant's anticompetitive scheme was in fact successful, it is commonplace for the finder of fact to consider evidence of the defendant's conduct

43

that postdates the conduct directed toward the plaintiff. For example, plaintiffs alleging monopoly maintenance via predatory pricing often use evidence of the defendant's subsequent conduct to demonstrate actual recoupment after the pricing scheme succeeded in driving the plaintiff from the marketplace. See, e.g., Spirit Airlines v. Northwest Airlines, 431 F.3d 917, 931, 935-36 (6th Cir. 2005) (assessing defendant's conduct during the period after the predatory scheme had forced plaintiff from the market to ascertain whether the scheme had an anticompetitive effect); Zapata Gulf Marine Corp. v. Puerto Rico Maritime Shipping Auth., No. 86-2911, 1989 U.S. Dist. LEXIS 13650, at *5-9 (E.D. La. Nov. 15, 1989) (evidence, postdating plaintiff's withdrawal from market, of (1) demise of subsequent would-be competitors, and (2) subsequent increase in defendants' prices, was relevant to whether earlier conduct directed at plaintiff was anticompetitive); see also e.g., Westwood Lumber Co. v. Weyerhaeuser Co., No. CV 03-551-PA, 2003 U.S. Dist. LEXIS 27213, at *13 (D. Or. Dec. 29, 2003) ("The Westwood Plaintiffs could offer evidence of Defendant's earlier conduct bearing upon the period at issue in this case, for instance, to show Defendant's intent to monopolize, its possession of monopoly power and ability to influence prices, the manner in which Defendant obtained and maintained its monopoly, and the harm to competition."), aff'd, 411 F.3d 1030 (9th Cir. 2005), vacated and remanded on other grounds, 549 U.S. 312 (2007); cf. Morgan v. Ponder, 892 F.2d 1355, 1358 (8th Cir. 1989) (considering defendant's post-conduct pricing behaviors and profits in assessing anticompetitive effect, but rejecting them as independent bases to conclude competition had been harmed, as plaintiff lacked evidence that defendant had priced below an appropriate measure of cost).⁷

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The need for the jury to consider evidence of conduct postdating the conduct directed toward the plaintiff is even stronger in this case. Without such evidence, the jury would be unable to appreciate fully the state of the market after Microsoft had eliminated the threat posed by Novell's software, because the fact that Microsoft was in a position to destroy the threats posed by Navigator and Java is itself reflective of the strengthening of Microsoft's operating system monopoly that was achieved in significant part by its elimination of the earlier threat posed by Novell.

D. The Reasonably Capable Standard Is Appropriate

On the question of harm to competition and unlawful maintenance, this Court engaged in a thorough analysis of Dr. Noll's testimony and concluded that "[a] reasonable person may disagree with Dr. Noll, but the decision whether or not to do so is within the province of a jury." Novell, 699 F. Supp. 2d at 749-50. In so ruling, this Court held that Novell must introduce evidence to show that the conduct "contributed significantly" to Microsoft's monopoly maintenance. Id. at 748. But the Court applied the quoted phrase consistent with the D.C. Circuit in the Government Case such that Novell meets its burden of proof if it shows that the conduct was "`reasonably capable of contributing significantly'" to Microsoft's "`continued'" monopoly power. Id. (quoting Microsoft II, 253 F.3d at 80, and citing Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1182 (1st Cir. 1994), abrogated on other grounds by Reed Elsevier, Inc. v. Muchnick,

45

130 S. Ct. 1237 (2010)); Morgan v. Ponder, 892 F.2d 1355, 1361-63 (8th Cir. 1989). Thus, this Court, and presumably the Fourth Circuit, actually applied the "reasonably appears capable" standard used in United States v. Microsoft Corp., that the evidence must show that the conduct was "`reasonably capable of contributing significantly'" to maintenance of a monopoly. Novell, 699 F. Supp. 2d at 748 (quoting Microsoft II, 253 F.3d at 80); compare with Microsoft II, 253 F.3d at 79 ("`reasonably appears capable of making a significant contribution to . . . maintaining monopoly power'" (alteration in original) (citations omitted)). Microsoft has argued that this standard should be limited only to equitable enforcement actions, but there are more than a dozen private action cases that use the "reasonably capable" standard,⁸ and Novell is not aware of any that apply a stricter test. Most importantly, the Tenth Circuit endorses the "reasonably capable" formulation. Multistate Legal Studies, Inc. v. Harcourt Brace Jovanovich Legal & Prof'l Publ'ns, Inc., 63 F.3d 1540, 1550 (10th Cir. 1995).

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In Multistate, a provider of Bar review courses challenged conduct of the dominant supplier and its licensee of engaging in various acts to exclude it from the market. Id. at 1543. The Tenth Circuit stated that it defines anticompetitive conduct as "`conduct constituting an abnormal response to market opportunities. Predatory practices are illegal if they impair opportunities of rivals and are not competition on the merits or are more restrictive than reasonably necessary for such competition,' if the conduct appears `reasonably capable of contributing significantly to creating or maintaining monopoly power.'" Id. at 1550 (citation omitted). The Tenth Circuit applied this test to the various acts, including the dominant supplier's decision to schedule its classes at times that made it difficult for students to also attend classes provided by the rival. Id. at 1550-56. The rival scheduled its workshop from 9 a.m. to 4 p.m., and the monopolist held its classes from 6 p.m. to 9 p.m. Id. at 1552-53. The monopolist argued that, to be actionable, the schedule had to make it "impossible" for students to take both sets of classes. Id. at 1553. The Tenth Circuit disagreed, ruling that "[w]hat matters is not so much whether the classes actually overlapped as whether the scheduling pattern was reasonably capable of contributing significantly to a monopolization attempt . . . ." Id. (emphasis added). Thus, the analysis of harm to competition is inherently forward looking unlike the separate question of harm to the plaintiff and may be based on events that occur after the plaintiff goes out of business or sells its business.

In Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 608 (1985), for example, the United States Supreme Court upheld jury instructions that allowed the jury to consider whether the monopolist sacrificed short-run benefits to reduce competition "over the long run."⁹ If

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a monopolist successfully eliminates a competitor or forces the competitor to sell, the law must allow the victim to show that the conduct, including the victim's exclusion, would have affected competition in the relevant market.

This Court correctly held that under its "contributed significantly standard," Novell need not present direct proof that Microsoft's "`continued monopoly power is precisely attributable to its anticompetitive conduct'" and explained that to "require such proof would `require that § 2 liability turn on a plaintiff's ability or inability to reconstruct the hypothetical marketplace absent a defendant's anticompetitive conduct[,]' which `would only encourage monopolists to take more and earlier anticompetitive action'" to eliminate potential threats. Id. (alteration in original) (quoting Microsoft II, 253 F.3d at 79). When a monopolist engages in anticompetitive conduct, courts "should be reluctant to demand too much certainty in proving that such conduct caused anticompetitive harm because `[t]o some degree, "the defendant is made to suffer the uncertain consequences of its own undesirable conduct."'" Id. (alteration in original) (quoting Microsoft II, 253 F.3d at 79).

Finally, the Court accepted Dr. Noll's 1,000 firm hypothetical and wrote that "[i]t would be contrary to the purpose of § 2 to immunize a monopolist for anticompetitive conduct, which in fact significantly contributed to anticompetitive harm, simply because that harm was caused by

48

conduct directed at multiple small threats, none of which could prove that the conduct directed at any single firm would have by itself significantly contributed to the defendant's monopoly if none of the other small firms had been similarly weakened." Id. at 749. The Court's view is consistent with the Sherman Act's purpose to prevent monopolists from unlawfully wielding their market power to eliminate potential threats to competition. See Microsoft II, 253 F.3d at 79 ("[I]t would be inimical to the purpose of the Sherman Act to allow monopolists free reign to squash nascent, albeit unproven, competitors at will particularly in industries marked by rapid technological advance and frequent paradigm shifts.").

As shown, Microsoft cannot support its assertion that the "reasonably appears capable" standard is limited to equitable actions. Indeed, although the D.C. Circuit noted that the Government Case was an equitable enforcement action, it cited two damages cases for its "reasonably appears capable" standard and emphasized that it was only considering "§ 2 liability" (emphasis in original). The D.C. Circuit explained that in order to obtain the equitable remedy of divestiture, the Government may have to prove a more significant connection between the conduct and the maintenance of market power, but "these queries go to questions of remedy, not liability. In short, causation affords Microsoft no defense to liability for its unlawful actions undertaken to maintain its monopoly in the operating systems market." Id. at 80 (emphasis added).¹⁰

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Notably, the Fourth Circuit indicated that it would have granted standing to Netscape and Sun to pursue damage claims. Microsoft admits that, for its position to be correct, neither Netscape or Sun would have been able to pursue a private damages claim, which would completely undermine the purpose of Clayton Action Section 4.¹¹ The Supreme Court has recognized that "in enacting § 4[,] Congress sought to create a private enforcement mechanism that would deter violators and deprive them of the fruits of their illegal actions, and would provide ample compensation to the victims of antitrust violations." Novell v Microsoft 505 F.3d at 317 (quoting McCready, 457 U.S. at 472). The broad language of the statute, "and the avowed breadth of the congressional purpose, caution[ ] us not to cabin § 4 in ways that will defeat its broad remedial objective." Id. at 477, 102 Sect. 2540.

In fact, where a plaintiff seeks to show that a defendant's anticompetitive scheme was in fact successful, it is commonplace for the finder of fact to consider evidence of the defendant's conduct that postdates the conduct directed toward the plaintiff. See, e.g., Spirit Airlines, 431 F.3d at 931, 935-36; Zapata Gulf Marine Corp. v. Puerto Rico Maritime Shipping Auth., 1989 U.S. Dist. LEXIS 13650, at *5-*9; see, e.g., Westwood Lumber Co. v. Weyerhaeuser Co., 2003 U.S. Dist. LEXIS 27213, at *13.

1. Microsoft’s Conduct Effected Lotus (and later IBM)

Another middleware product that Microsoft targeted was Lotus Notes. Notes is groupware, which is a popular category of software that provides the kind of collaboration tools that

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enterprises use. Tr. at 1402:23-1403:8 (R. Alepin). Groupware products like Lotus Notes included functionality such as e-mail/messaging, calendaring, scheduling, contact management, and document libraries. Tr. at 1402:23-1403:8 (R. Alepin). Lotus Notes and groupware products were development platform to which other development applications could write. Tr. at 1404:1-14 (R. Alepin). In particular, Lotus Notes acted as a middleware development platform throughout the 1990s and up through the present, as it provided a "complete set of tools to develop applications for independent software vendors." Tr. at 1404:15-18 (R. Alepin).

Microsoft perceived Lotus Notes as a threat to its operating systems monopoly. For example, one Microsoft executive stated in April 1992 that "Lotus is effectively using Notes . . . to challenge both our desktop applications and systems businesses." PX 17, at MS 0076890. The same document notes that "Notes is being sold not just as an application, but as an operating system itself, establishing competitive APIs to the native Windows APIs." PX 17, at MS 0076890. Similarly, a March 1993 Microsoft memorandum stated that Lotus Notes "attacks [Microsoft's] systems business by relegating Windows to the OS level and taking over the middleware and shell functionality Notes is the portable platform, not Windows." PX 31, at FL AG 0034585. Finally, in April 1993, another Microsoft executive recognized Notes as a "Danger," describing it as "the combination of an app (Notes) that leverages a platform (Notes)." PX 33, at MS 5011635.

To combat the threat of Lotus Notes, Microsoft used its Messaging Application Programming Interface ("MAPI") as a fulcrum. MAPI is a set of APIs "that allow independent software vendors and Microsoft to access and use the services of messaging software in an operating system." Tr. at 1444:13-21 (R. Alepin). Depending on the context, MAPI may refer to

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the "APIs themselves or it may be the software that actually does the work that the APIs as the software to do." Tr. 1444:13-21 (R. Alepin).

The fundamental concept of MAPI is to connect desktop applications with mail servers, regardless of the vendor that developed each product. Using a desktop application to invoke an e-mail or messaging command like "send" MAPI relays the information the user wants sent through the MAPI middleware in the operating system, which then routes the information to the appropriate server product needed, and more specifically, to the particular function of the server being invoked (i.e., transporting the message or identifying the recipient). See Tr. at 1445:17-1447:4 (R. Alepin).

The computer industry relies on standards because standards define the way that two products from potentially different companies can work together. Tr. at 1448:11-17 (R. Alepin).¹² MAPI is a set of specifications that make up a standard, and Microsoft is the author of those specifications. Tr. at 1447:5-9 (R. Alepin). Groupware products other than Microsoft's products make use of the MAPI specification. Tr. at 1447:12-16 (R. Alepin). MAPI was initially developed in 1991 and became available for use some time in the early 1990s. Tr. at 1447:25-1448:4 (R. Alepin).

At the time that MAPI was introduced, Lotus Notes was the leading groupware product in the market. Tr. at 1448:5-7 (R. Alepin). Lotus Notes was a development platform that competed

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with Microsoft both at both an applications and systems level. It was also a cross-platform application developed to run on multiple operating systems. Tr. at 1450:16-1451:1 (R. Alepin). During the time that MAPI was being developed and promoted by Microsoft, another standard existed, called Vendor Independent Messaging ("VIM"). VIM was primarily promoted by Lotus and certain other ISVs, including Novell. Tr. at 1450:2-15 (R. Alepin).

To compete with VIM, and to recruit ISVs to build their products with MAPI, Microsoft told ISVs that MAPI would be "open and would not . . . favor Microsoft in its design or in its specifications." Tr. at 1451:2-11 (R. Alepin). In light of Microsoft's representations that MAPI would be an open standard, eventually, Lotus and other ISVs adopted MAPI. Tr. at 1451:12-14 (R. Alepin).

In 1994 and 1995, not everyone who bought a Windows PC was connected to the Internet or a network. Therefore, some portions of Windows were not installed on every computer until the user undertook to explicitly install that portion. Tr. at 1451:25-1452:17 (R. Alepin). MAPI was one particular portion of Windows 95 that was not automatically installed if a user did not actively make the choice. From this perspective, it is important to understand that MAPI is not only APIs, but also software that is called to implement those APIs. Tr. at 1452:7-12 (R. Alepin). These functions, which implement the MAPI APIs, are called "when an applications would send mail inside [a] Windows PC." Tr. at 1452:7-12 (R. Alepin).

Therefore, if users decided they wanted to use e-mail, they would have to manually install the MAPI software from the Windows 95 installation disk. Tr. at 1452:17-20 (R. Alepin). In doing so, not only the MAPI software would be implemented, but it would also "stick an icon on your desktop that said [Inbox]. And it would do that regardless of whether you were planning on

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installing Lotus or cc.Mail or Microsoft Exchange or MS Mail or anything." Tr. at 1452:17-25 (R. Alepin). If you were to click on the Inbox icon, you would be asked to complete setting up Microsoft's mail product, which would "come as a surprise to you, especially if you thought you were preparing to set up Lotus or some other product." Tr. at 1453:3-7 (R. Alepin).

The Inbox icon was not like other icons, in that it created a problem by being "really stuck on the screen. So if you tried to delete it, you couldn't delete it." Tr. at 1453:8-11 (R. Alepin). The icon could not be removed via right-mouse click, by highlighting the icon and hitting the delete key, or by moving the icon to the Recycle Bin. Tr. at 1453:11-15 (R. Alepin). A number of customers complained and queried how to remove the icon, and ultimately, the required remedy was to edit the Windows 95 Registry. Tr. at 1453:16-20 (R. Alepin). Only sophisticated users would be able to open the Registry because any incorrect modification could "crash your system" yet, that was the only means for removing the Inbox icon. Tr. at 1453:20-23 (R. Alepin). The takeaway for ISVs was increased support costs and unhappy customers. Tr. at 1453:24-1454:7 (R. Alepin).

Microsoft has not offered, nor does it have, any technical justification for forcing users to install its messaging applications to obtain access to MAPI functionality. See Tr. at 1443:25-1454:7 (R. Alepin.). Moreover, Microsoft's conduct with respect to MAPI "created a barrier to the use of messaging software produced by other vendors, because if you had Windows 95 you automatically had the Microsoft messaging software installed on your computer as an icon on your screen." Tr. at 1812:25-1813:8 (R. Noll). This barrier to entry for competing messaging products caused anticompetitive harm in the PC operating systems market. Tr. at 1814:9-19 (R. Noll). Microsoft's conduct had no offsetting pro-competitive benefit. Tr. at 1813:12-14 (R. Noll).

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E. Even If This Jury Only Views The Effects On Competition Before The Sale,
Novell Has Met Its Burden Of Proof

As shown below, even if this Court only allows the jury to consider the effects of Microsoft's conduct on competition before Novell sold its office productivity applications (which Novell contends would be error), the evidence still is more than sufficient to support a jury finding that Microsoft violated Section 2 of the Sherman Act.

1. Microsoft Feared the Threat Posed by Novell’s Office
Productivity Applications

While Novell need not show that Microsoft engaged in conduct with the intention of maintaining its PC operating systems monopoly, the intentions underlying a defendant’s conduct has long played an important role in Section 2 cases. Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 602 (1985); Antitrust Law Developments (Sixth) at 242. A jury may consider the monopolist’s intent to understand the likely effect of the conduct.¹³ Microsoft II, 253 F.3d at 59; see also Telecor Commc'n, Inc. v. Sw. Bell Tel. Co., 305 F.3d 1124, 1138 (10th Cir. 2002) (jury may properly consider the purpose or intent of an allegedly anticompetitive act in assessing its legality).

Novell’s office productivity applications could perform well on a variety of operating systems, and though Novell’s applications were not themselves competitors to Microsoft’s Windows, Novell’s applications offered operating systems that competed with Windows the prospect of surmounting the applications barrier to entry. Tr. at 996:4-13 (Frankenberg); PX0033; Finding of Fact ¶ 68. Specifically, if Novell’s office productivity applications had remained viable, consumers and corporate customers would have felt more comfortable purchasing Intel-compatible

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operating systems other than Windows 95 with which these office productivity applications were compatible, and third-party ISVs would have begun to write software to competing Intel-compatible operating systems supported by a viable key franchise application. Moreover, WordPerfect and its shared code "PerfectFit," combined with AppWare¹⁴ in the PerfectOffice suite, constituted "middleware," because it relied on interfaces provided by the underlying Windows operating system while simultaneously exposing its own APIs to developers. Finding of Fact ¶ 28. As a result, these technologies served as a platform for software development, lessening dependence on functionality provided by Windows itself. Finding of Fact ¶ 68. Thus, these middleware technologies also had the potential to weaken the applications barrier to entry. Id.

2. WordPerfect’s Shared Code Technologies (“PerfectFit”) And
AppWare Constituted Middleware With The Potential To
Weaken The Applications Barrier To Entry Or “Moat”
Protecting Microsoft’s Monopoly Power In The PC Operating
Systems Market

a. Middleware Was a Categorical Threat to the Applications Barrier
to Entry

Middleware technologies have the potential to weaken the applications barrier to entry. Finding of Fact ¶ 68. Microsoft was apprehensive that the APIs exposed by middleware technologies would attract so much developer interest, and would become so numerous and varied, that there would arise a substantial and growing number of full-featured applications that relied largely, or even wholly, on middleware APIs. Id. The applications relying largely on middleware APIs would potentially be relatively easy to port from one operating system to another. Id. The applications relying exclusively on middleware APIs would run, as written, on any operating system

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hosting the requisite middleware. Id. So the more popular the middleware, and the more APIs it exposed, the more the positive feedback loop that sustains the applications barrier to entry would dissipate. Id. Microsoft was concerned with middleware as a category of software; each type of middleware contributed to the threat posed by the entire category. Id (emphasis added).

b. Microsoft Feared Novell as Middleware Vendor

There is substantial evidence in the record that Microsoft viewed Novell as a vendor of middleware, and that Novell's middleware technologies and APIs were viewed as a potential threat to the Windows operating system. For example:

• PX0032 is an e-mail from Jim Allchin to Bill Gates, Paul Maritz, and Brad Silverberg dated March 26, 1993. In the e-mail, Allchin writes, "I feel we are much too smug in dealing with Novell...This isn't IBM. These guys are really good; they have an installed base; they have an channel; they have marketing power, they have good products. AND they want our position. They want to control the APIs, middleware, and as many desktops as they can in addition to the server market they already own. We need to start thinking about Novell as THE competitor to fight against not in one area of our business, but all of them....If you want to get serious about stopping Novell, we need to start understanding this is war nothing less....As an aside, I feel almost this strongly about Lotus and Notes as well. We need to make sure that we are being consistent across the board in attacking Notes. It ain't no app anymore. It's a platform. As far as I'm concerned, Lotus has turned into an mini MS complete with evangelism units and the like. That means we should treat them completely as the enemy." See PX0032 at MS7079459.

• PX0033 is a memorandum by senior Microsoft executive Paul Maritz, dated April 4, 1993. In the document, Maritz stresses the growing threat to Microsoft's business posed by companies such as Lotus and Novell who were developing applications with platform capabilities. Id. at MS 5011634. Maritz writes that while Microsoft had been able to achieve much success in the operating systems market, this success could be "broken" by standards that were being driven by "[a]pplications that are really platforms." Id. Mr. Maritz explains his worry that "'non-MS' APIs will get established on the desktop" and that this threatened Microsoft because the "next generation of NON-COMMODITY applications" were going to be differentiated by their "information access, information categorization, information publishing, information tracking" and "transaction

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processing capabilities," and that Novell and Lotus were precisely the "non-MS" forces that were doing a successful job of defining these sort of APIs and capabilities. Id. In outlining the dangers posed by Novell and Lotus, Mr. Maritz states that Novell was "dangerous not only because of [its NetWare product] but because they are intent on becoming a `CROSS-PLATFORM' PLATFORM company." Id. at MS 5011635. Maritz cites as an example the threat from Lotus Notes, which he described as the combination of an application that leveraged a platform. Id. Maritz states that Microsoft faced numerous problems competing against Lotus and Novell applications, particularly, Microsoft had a "[d]eclining ability to differentiate its applications from the competition and was facing severe price pressure" and Microsoft did not "have credible products to counter Notes and Novell." Id. at MS 5011640. Maritz finishes up by noting that "Novell" was "getting more insidious all the time" as they were making a "strong cross-platform API push..." Id. at MS 5011648.

• PX0044 is an e-mail dated May 4, 1993 from Brad Silverberg to Paul Maritz, Bill Gates, and Steve Ballmer. Brad Silverberg writes, "What I see is that our competitors will try to turn windows into the new unix in a bad way. The unix that frankenberg called the `bosnia herzegovina of operating systems.' That is, they will `adopt' windows and then split the windows standard. They will take the win 3.1 level of api as the standard and then build their own middleware layers on top for networking, for object-oriented frameworks and system object models, for distributed computing, for compound documents, for messaging, for directory services, for administration, for database access, for document management, etc etc etc. They hope to create mass confusion about exactly what the windows api's are, and take them out of microsoft's ownership. Every time we announce some intention for a new wosa api or other extension to windows api's, our competitors will propose some alternative. We are starting to see this from IBM, Novell, Lotus, Borland, and I'm sure soon Sun. If they can freeze `windows' at 3.1 (or nt) level api, then they can be the provider of value added services. It gives them more freedom to clone windows the definition of `windows' is static. For Novell, it makes it easier for them to slip DR DOS underneath. It lets them position themselves as the supplier of connectivity services for windows to servers the `middleware' which builds on windows and thus takes ownership away from us. This effort to balkanize windows is a clear threat..." PX0044 at MS7080466-67. In response to Silverberg's e-mail regard the "threat" posed by third-party middleware, Bill Gates responds, "I totally agree with this it describes the situation very well," however, he implies that in order to prevent the balkanization Microsoft needs to "make sure [its applications] are very popular." Id. at MS7080466.

• PX 54 is an internal Microsoft e-mail thread dated June 15, 1993. Senior Microsoft executives are debating the wisdom of shipping a shell in Microsoft

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Office. Senior Microsoft executive Brad Silverberg writes, "our competitors are going to do everything they can to fragment windows, they will build their own middleware to claim API ownership." PX0054 at MS 0185884. In response, John Ludwig writes to Brad Silverberg, David Cole, Paul Maritz and others: "our worst nightmare is Novell/Lotus being successful at establishing their `middleware' as a standard. Ours ought to be ubiquitously available to forestall this. Our huge advantage vis-à-vis Novell is our end-user franchise, we shouldn't cast aside this advantage." Id.

• PX0088 is an e-mail by Brad Silverberg to Andrew Schulman dated September 30, 1993. Silverberg writes, "I didn't mean to convey that Taligent, NeXT, Go were my only competitors. Hardly. I also have IBM, Novell, Apple, Sun, HP (Unix), Novell Unix, SCO, ... These are very determined companies that each have strengths, both technically and marketing wise....Novell is coming at us from every direction possible and has a very concerted, multilayer attack strategy....I would include other companies who are intent on building `middleware,' which is just system software by another name. In fact, Jim Manzi just said today that by 1995 Windows will just be a graphical C: prompt; users will instead live in Notes. I think many people yourself included vastly underestimate the competitive situation for operating systems....Each competitor can exploit a weakness, and they are getting better everyday." PX0088 at MSC 090001843-44.

• PX0091 is an internal Microsoft e-mail to Brad Silverberg, John Ludwig and others from LuisT, dated Oct. 9, 1993. In the e-mail LuisT writes "rob mentioned that a few of lotus' technical big shots will be in town soon to talk about chicago. After [Jim Manzi's] big public push to make notes the c-prompt for network users, it worries me that we open our kimono and show them what chicago will bring, its UI and net features. It seems to me that notes can be as dangerous middleware as a well thought out appware strategy..." See PX0091 (emphasis added).

• PX0093 is an e-mail dated October 12, 1993 from Paul Maritz to Brad Silverberg, Jim Allchin and Jonathan Lazarus attaching a memorandum in which Maritz writes, "The document does not articulate our middleware strategy. We are getting our butts kicked here by Novell and Lotus....We must have a strong story here otherwise people will continue to be seduced by os-independent cross- platform middleware....The morale issue for the NT team is a direct consequence of their continued laboring under a mission that we know they cannot and will not achieve...Let's give them focused achievable objections. Like push Novell off the server. Like knock off AppWare." PX0093 at MS7088909-10.

• PX0115 is an internal Microsoft document, a "Systems Release Plan," dated December 2, 1993. The document notes that Novell's strategic goal was to "get

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control of client API's" and was one of several "Middleware providers" that was supporting "OpenDoc" and "Appware." Id. at 5011462. The internal Microsoft document notes that it was important to work to "ensure that customers do not turn to middleware for needed new functionality, eg. Notes, DSOM, OpenDoc, Talligent, Appware, etc." Id. at MS 5011463.

• PX0127 is an internal Microsoft e-mail from Brad Silverberg to Paul Maritz dated January 19, 1994. Silverberg writes in the e-mail, "The middleware threat is once again another example of companies `embracing' Windows as the `transport' and then layering new services on top services with api's so that customers are now wedded to the middleware vendor. Each one of the middleware vendors Lotus, Novell, IBM with SOM, OpenDoc/CIL, etc used to be on the rampage against Windows. They are more clever today. The rhetoric is now in `support' of Windows. They all say they want to have `great support for Windows (or Chicago). But also they reduce Windows to a `BIOS' or `transport' level, and position themselves as the new supplier of value-added services." Id. at 5064010. Under the heading "Novell," Silverberg mentions that Novell is a supporting of Wabi, a "plan" to "embrace Windows as a `standard' and then wrest control away from msft via a committee" with the goal to "level the playing field." Id. Silverberg also notes that Novell fits under the middleware category, and that their "strategy with AppWare will be an incremental, insidious one. Get developers using Appware step by baby step, at each turn of the crank, requiring the ISV to use a bit more of Appware framework to access the new service." Id. As a result, Novell's strategy appeared "non-threatening" while getting in a "position to assert control step by step." Id.

• PX0471 is an e-mail from Tom Evslin to Brad Silverberg, Russ Siegelman, Jim Allchin, Paul Maritz and others, attaching a slideshow. Page 6 of the slideshow states: "Keep middleware such as Notes, Novell, OpenDOc, and DSOM and OS competitors such as OS/2 and Personal Netware at bay." PX0471 at M 1012687.

• PX0154 is an e-mail sent by Bill Gates to his Executive Staff and Direct Reports related to Novell's merger with WordPerfect. Gates outlines his thoughts on "Novell's new strategy and its impact on us." PX0154 at MX 9037682. Gates writes in the attached memorandum, "The merger of Novell-Wordperfect and acquisition of Quattro Pro by Novell changes our competitive framework substantially. The already intensely competitive software business has become even more competitive." Id. at MX 9037683. Gates states that as a result of the merger, "initiatives to promote anti-Microsoft platforms/API's/object models become easier to coordinate because fewer companies are involved. Novell itself will be able to set more standards for workgroup, document management, image systems and all of the `services' they have been moving towards." Id.

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• PX0156 is an e-mail by Bill Henningsgaard of Microsoft, to Pete Higgins in response to Bill Gates' e-mail regarding the Novell/WordPerfect merger. Henningsgaard states: "Some thoughts. For Novell, the key goal will be to maximize penetration of their suite to help them control o/s and workgroup standards. They want to quit letting us dictate the pc technical agenda....if they're successful at getting penetration, they'll be in a position to introduce alternative standards (ie opendoc) that will give us a much harder time to drive the O/S and apps agenda." PX0156 at MS-PCA 1253952.

i. Novell's WordPerfect Shared Code Technologies
(PerfectFit)

Since as early as 1991 WordPerfect had been working on shared code. Tr. at 210:24- 211:3 (Harral). Shared code was a component of the WordPerfect word processor¹⁵ that was shared between the word processor and other WordPerfect Corp. products for efficiency purposes. Tr. at 206:3-207:5 (Harral). Each WordPerfect Corp. product had an application "engine" that was built on top of the shared code layer, which could then move between any operating system platform where shared code resided.¹⁶Tr. at 206:3-207:5 (Harral). Because multiple product engines shared a common layer of code, their behaviors would be the same and they would all operate in a similar integrated way. Tr. at 206:3-207:5 (Harral). Shared code eventually started to take on file handling

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and file management functionality, such as providing dialogs for opening and saving files. Tr. at 209:15-210:22 (Harral).

WordPerfect had traditionally published or provided to third parties portions of the shared code. Tr. at 218:23-219:16 (Harral). Over time, WordPerfect began to publish all of the shared code, and promoted it explicitly to ISVs as a resource that could be written to, that would enable them to utilize the same code base across different operating systems. Tr. at 218:23-219:16 (Harral). When Novell acquired WordPerfect, the company productized the shared code and then branded it PerfectFit. Tr. at 218:21-219:16 (Harral); Tr. at 786:16-787:2 (Gibb). PerfectFit became a part of the PerfectOffice suite and shipped with PerfectOffice. Tr. at 212:16-212:19; 390:24- 391:2 (Harral).

All the functionality that shared code provided to WordPerfect was available to third-party developers as well, including WordPerfect interface elements, file viewers, file converters, button bars, status bars, menus, and a macro system. Tr. at 220:9-220:13; 226:8-226:19 (Harral). In fact, PerfectFit offered to applications in the suite and to third-party developers17 a (1) common look and feel (menus, icons, toolbars), (2) common dialogues (File Open, Save, Save As), (3) common tools (Speller, Thesaurus, Grammar Checker, File Manager), (4) common automation (QuickCorrect, QuickHelp, QuickMenus), (5) common scripting language (Record and play back across applications) and (6) common code (shared between applications). See PX0395 at NWP00008289.

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The common scripting language in shared code was called PerfectScript, which provided to third-party developers the ability to call scriptable components and to capture and replay tasks performed in WordPerfect. Tr. at 227:23-229:10; 228:21-229:10 (Harral). WordPerfect also contained a layer of APIs called the WordPerfect Open Applications Programming Interface ("WOAPI"), which allowed developers to intercept certain commands and insert new code to customize WordPerfect functionality. Tr. at 229:12-230:23 (Harral); see also PX0410 at NOV-B00656859. The Open Interface APIs were supported on Windows, DOS, and UNIX versions of WordPerfect and other applications. See PX0192 at MX 9037665. WordPerfect also exposed Writing Tools APIs that were supported on Windows and UNIX versions of WordPerfect. PX0192 at MX 9037665. PerfectFit, PerfectScript, and the Open Interface API were all technologies that were included in WordPerfect the word processor. Tr. at 230:24-231:3 (Harral). These technologies were also included within the PerfectOffice suite.¹⁸Tr. at 231:4-231:6 (Harral).

In using these features, third-party developers would write their own applications with shared code using the shared code libraries, which contained the shared code APIs that could be called. Tr. at 226:20-227:13 (Harral). Third parties would simply write their applications against the shared code layer and associated APIs, and then compile their programs using the shared code libraries for use in their products. Tr. at 226:20-227:13 (Harral).

WordPerfect and its shared code foundation was indisputably middleware. Tr. at 233:13-234:19 (Harral); see also Tr. at 783:5-783:18 (Gibb). The software sat "in the middle"

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between the application core and the operating system, and provided features that would help programs work through problems and achieve needed functionality. Tr. at 233:15-234:19. Developers would purchase or license the shared code as middleware so they could use certain features in their products, such as internationalization features, instead of having to hire the expertise to do these features themselves, which could in some cases take years. Tr. at 233:15-234:19 (Harral). Even Microsoft thought of PerfectOffice as an emerging development platform. For example, Cameron Myhrvold wrote in 1994 in a slideshow presentation entitled "Recruiting Developers for Office," that "MS is in a platform war with Office just as we are with Windows" because "Lotus and Novell/WP are building competing application `platforms'" See PX0201 at MS-PCA 1432262. Microsoft was particularly concerned about "PerfectFit Technology and WP `SDKs' and WP `Windows Open API,'" and Novell including "Visual App Builder [AppWare] in PerfectOffice." See PX0201 at MX 6046634.

Novell started a program called PerfectFit Partners to market shared code to developers outside the company who wished to license it. Tr. at 225:6-225:17 (Harral); Tr. at 784:9-784:24 (Gibb); PX0192 at MX 9037665. Membership of PerfectFit Partners was at least 1,000 companies. Id; PX0333 at MS-PCA 1985716 (noting 1,500 members). The shared code team at Novell understood that they were providing the shared code abstraction layer not only to people inside of WordPerfect and Novell, but to other entities outside the company, and as a result, a documentation team worked with the shared code team to create documentation so third parties could use the shared code. Tr. at 225:18-226:8 (Harral); Tr. at 784:9-784:24 (Gibb). Novell also provided support, similar to Microsoft's Premier Support, that developers utilizing shared code could use to get help with PerfectFit. Tr. at 225:18-226:8 (Harral).

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Because shared code was the foundation for each of Novell/WordPerfect's individual applications, the shared code team would usually be scheduled out six months to a year in advance of the regular applications when developing to a new platform. Tr. at 221:25-222:18 (Harral). Because shared code typically starts development before the applications that depend on it, it was unusual for shared code to be the "critical path" in releasing a product. Tr. at 225:1-225:5 (Harral).

Microsoft's anticompetitive conduct in this case destroyed WordPerfect and its ability to ship with the shared code it relied on. It also substantially delayed and interfered with PerfectOffice, which also contained the shared code middleware layer. In sum, Microsoft's de-documentation of the namespace extension mechanism harmed the distribution of PerfectFit middleware, a component of WordPerfect with the potential to weaken the applications barrier to entry.

ii. Novell's AppWare And OpenDoc

Harm to WordPerfect and its shared code caused by Microsoft's de-documentation of the namespace extension mechanism harmed the distribution of PerfectOffice and the included AppWare environment, which had an anticompetitive effect on competition in the operating systems market. AppWare was middleware (because it provided libraries) and an interface as well, which allowed the use of middleware, which was part of the PerfectOffice suite. Tr. at 236:2-236:8 (Harral). It was a graphical and object-oriented application development tool (formerly known as Visual AppBuilder) that allowed developers to build stand-alone programs.¹⁹ PX0410 at NOV- B00656854. Developers could quickly build fully portable software by linking components called

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AppWare Loadable Modules (ALMs).²⁰ AppWare also took WordPerfect's shared code and other technologies and presented them in a conceptual way that allowed common non-programmers to write programs. Tr. at 234:22-236:1 (Harral). In fact, using AppWare in PerfectOffice, users could build applications using a simple interface by combining and connecting different ALM icons. PX0412 at NOV 00498203.

Senior Microsoft Executive Paul Maritz thought of AppWare as an explicit attempt by Novell to develop a layer that would provide all of the services required by applications. Deposition of P. Maritz (May 24, 1994) at 108:1-108:5. He claimed that Novell's stated goal with AppWare was for third-party software developers to know only about AppWare and obtain all the services that their applications needed from AppWare. Id. at 108:6-108:11. As a result, Microsoft viewed AppWare as one of its most serious long-term threats because, if Novell continued to add functionality to the AppWare layer, Novell could incrementally obtain what would amount to an operating system over time. Id. at 108:12-108:21. In fact, Microsoft executive Brad Silverberg believed that AppWare had already become the equivalent of an operating system by 1994:

Q. What is your understanding of AppWare?

A. AppWare is an operating system. AppWare contains all of the functions of an operating system and is a wonderful attempt by Novell to again reduce Windows or anything underneath it to a commodity so it could then get applications completely dependent on AppWare, have no dependence on Microsoft or other pieces underneath it, so they can then supply their own pieces underneath it and thus eliminate as Mr. Noorda has stated, his goal is a Windows-free world.

Tr. at 932:18-933:1 (B. Silverberg).

Similarly, Brad Silverberg wrote in PX0127 that Novell's strategy with AppWare "will be an incremental, insidious one." See PX0127 at MS 5064010.

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Bob Frankenberg, Novell's CEO, was also asked about AppWare:

Q. And just below paradox the document references visual app builder? What is that?

A. Visual app builder is a middleware product that allowed developers to develop applications and connect to get its connections to the operating systems through AppWare. That meant that they didn't have to note as much or be as dependent on individual operating systems. It was a key tool in our effort to create cross-platform applications and competition in the operating system environment.

Q. Now you mentioned in your answer AppWare, was visual app builder another name for AppWare?

A. Yes, it was.

***

Q. Why was Novell interested in having third-party developers obtain all of the services for applications needed from AppWare?

A. Because we saw it as important to have third-party developers not have to be dependent on individual operating systems. If you want to have applications that span multiple operating environments as ours did, we needed to have it so that others could do that as well. And furthermore, it made the underlying operating system far less significant to the developer, perhaps not even at all important, and for us that matters because it gave real competition to the operating system market.

Q. Now the jury has heard quite a bit of testimony on the concept of middleware. And in your view, was AppWare middleware?

A. Yes, it was.

Tr. at 1013:19-1014:11 (B. Frankenberg).

Other evidence in the record indicates Microsoft's fear of AppWare and proves that AppWare was a competitive threat to Microsoft's operating system monopoly:

• PX0090 is an internal Microsoft summary of Novell's AppWare product strategy dated October 7, 1993. In the document, Microsoft states: "AppWare is a Novell product strategy that includes, for now, a cross platform development foundation (AppWare Foundation), a visual Appbuilder, an object model (Appware Bus) and a distributed system services strategy..." See PX0090 at MS-PCA 2410389. "Why is Appware dangerous?" "1. quality: might be first viable platform for commercial cross-platform development" "could in the long run blur the o/s API line and squeeze us into the camp of BIOS builders." See PX0090 at MS-PCA 2410390.

• PX0102 is an e-mail from Steven Sinofsky to Bill Gates, Brad Silverberg and others dated November 5, 1993, with the subject "FW: Novell AppWare first

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impressions." Sinofsky states in reference to AppWare, "it is scary since it is just another windowing API, and a fairly complete one. This is direct competition to Windows..." PX0102 at MS7096165.

• PX0137 is an internal memorandum entitled "Mission Plan Draft" dated February 4, 1994. Referring to Novell, the document states, "Their overall goal is to provide network services via NetWare, applications services via UnixWare and networked development tools via AppWare to create a `virtual mainframe.'" "They will minimize our key benefits SMP and portability introduced into NetWare and SMP into UnixWare. And, try to reduce our advantage with developers thought AppWare." See PX0137 at MS7059681.

• PX0144 is an internal Microsoft e-mail from Bob Kruger dated February 22, 1994, that is forwarded by Microsoft executive Steven Sinofsky to Bill Gates. Bob Kruger writes, "AppWare's cross-platform nature makes it total goodness in the eyes of the customer. We need to take it seriously, make sure we understand it, create a cohesive competitive statement, and distribute appropriate info to combat the threat. The AppWare task force needs to accelerate efforts." See PX0144 at MS 5036490.

• PX0491 is an e-mail from Bob Kruger dated March 29, 1994. Kruger writes, "I believe that Novell's objective is to hit the desktop from both an OS and apps platform perspective. I feel they will soon bundle AppWare into NetWare thereby providing a cross-platform environment. This bundle would offer networking and dev tools; couple with Novell's commitment to OpenDoc, there would be support for compound docs and the SOM/DSOM object model....The message of AppWare is total goodness." PX0491 at MS 5035963.

• PX0531 is a draft Microsoft memorandum by John Ludwig with the subject entitled "Novell's AppWare." Ludwig writes, "The AppWare Foundation provides a `common, cross-platform set of APIs...(which) allows developers to maintain a single-source base for all development platforms.' Basically, this layer virtualizes all services of the underlying OSes on which it is hosted, insulating the developer from differences in these platforms....The AppWare Foundation is an entirely new OS API It offers virtually all the services of the OSes it is hosted upon, but with a brand new and different API set." See PX0531 at MS 0115590-91.

In the spring of 1995, Novell outlined a comprehensive plan to provide OpenDoc software development through the AppWare visual programming environment. See PX0391 at NOV-B01192363. OpenDoc was an industry-standard architecture for component software that

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was backed by numerous industry-leading software and systems vendors. Id. It enabled developers to use interchangeable components to construct applications that could be shared across hardware and operating system platforms, including Macintosh, OS/2, Windows, and UNIX. Microsoft executive Brad Silverberg had this to say about OpenDoc in his 1994 disposition, which was read to the jury:

Q. What about OpenDoc, do you regard that as an operating system?

A. I regard OpenDoc as an essential operating system component. At the recent Apple worldwide developer conference Apple got up on stage in front of thousands of developers and indicated that OpenDoc was its essential operating system strategy for competing with Microsoft and ridding the world of Windows.

Tr. at 933:2-933:9 (B. Silverberg).

Similarly, Paul Maritz stated the following in this case regarding OpenDoc:

Q. And what is OpenDoc?

A. OpenDoc is a set of conventions developed by Apple to allow application software and system and software in general to cooperate with each other. And there is an effort under way by Novell and Apple and IBM to in some way link those standards together into a broader set of standards as to how software should be constructed.

Q. Now both of those items were mentioned under Novell with the reference there is "DSOM/Open Doc Supporter." Why did you mention Novell's support of those technologies here?

A. Because we regard Novell as one of our principal systems software competitors and they, we believe, have a goal of competing with us at every level and in providing system software services. And the fact that they are allied with Apple and IBM in that endeavor is a significant fact.

Q. Do you regard DSOM and Open Doc as products or technologies that are competitive to yours?

A. Yes.

Q. And in what sense are they competitive?

A. Because they represent specifications on how software should be constructed and how services from the system software should be provided to applications software, and they provide in that sense it's a way to To go back to the earlier definition of an operating system as something that provides services to applications and end users, they are building software that does that, and they expect to make that software progressively more functional over time. And we have every belief that over time they'll make it so functional that no other software is required.

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Q. Are these products or technologies substitutes for products or complementary to what your company offers?

A. They are substitutes in the sense that they are alternative ways of doing things that we are offering to application vendors as ways of structuring their applications.

Deposition of Paul Maritz, May 24, 1994 (played Oct. 25, 2011) at 104:10-106:6.

Documentary evidence in the record also shows that Microsoft feared Novell's work with OpenDoc and perceived it as a threat to its operating systems. For example, PX0488 is a Brad Silverberg e-mail dated Dec. 29, 1993 to Bob Kruger and Paul Maritz. In the e-mail, Silverberg writes that "[Component Integration Laboratories] is a group consisting of IBM, Novell, Apple, Oracle, WordPerfect, XSoft and Taligent intent on building a competitive OS's to ours. OpenDoc, for example, is part of their effort." See PX0488 at MS-PCA 2608514. In fact, Microsoft was so concerned about OpenDoc that it considered it competitive OS activity and Microsoft desired to restrict via non-disclosure agreement, so internal OpenDoc developers within WordPerfect and other companies would not receive Microsoft operating system technology. See, e.g., PX0489. For example, in PX0490, Brad Silverberg writes to Dennis Adler, "what I want to do is exclude those people who are working on competitive os efforts, such as opendoc and os/2, from access to chicago." See PX0490 at MS-PCA 2618244.

Ultimately, Microsoft's anticompetitive conduct which thwarted WordPerfect's office productivity applications and PerfectOffice suite also disrupted Novell's plans to integrate AppWare and OpenDoc, two middleware components that had the potential to weaken the applications barrier to entry and thus threaten Microsoft's monopoly in the operating systems market.

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3. Novell’s Office Productivity Applications Were “Key Franchises”
That Microsoft Sought to Own to Widen the Moat Protecting its
PC Operating Systems Monopoly

Microsoft understood that a “strong applications business” was “extremely helpful to [its] systems strength.” See PX0003 at X 159503. Senior Microsoft executive Jeff Raikes, in his e-mail to Warren Buffett, stated that if Microsoft “own[ed] the key ‘franchises’ built on top of the operating system, [Microsoft would] dramatically widen the ‘moat’ that protect[ed] the operating system business.” See PX0361 at MS-PCA 1301180. As senior Microsoft executive Jim Allchin outlined in a memorandum to Bill Gates and Steve Ballmer: “Applications drive the world. Applications are the reason that the VAX [operating system] was so successful. Applications make people switch computer systems and vendors.” PX0524 at MS 0119615. Thus, Microsoft intended to destroy Novell’s “key franchise” application, WordPerfect – even though its destruction would have a short-term negative impact on Windows 95 – because WordPerfect’s destruction would help solidify Microsoft’s monopoly in the operating system market in the long term. See Tr. at 314:20-24 (Harral) (testifying that Microsoft’s decision to withdraw the namespace extension APIs was “confusing” to him because in the short run the decision hurt Microsoft’s own product).

WordPerfect was a cross-platform application in the “key franchise”²¹ category of word processing. Tr. at 994:12-18; 995:15-996:13 (Frankenberg). It was an extremely popular application in the mid-1990s, and Microsoft considered WordPerfect to be a Tier “A” ISV. PX0517 at MS7045839. In fact, Microsoft considered WordPerfect’s support of Windows to be “critical to the general perceptions of its success.” PX0517 at MS7045839.

3.

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Case 2:04-cv-01045-JFM Document 302 Filed 11/18/11 Page 80 of 114

During Robert Frankenberg's tenure at WordPerfect in the mid-1990s, WordPerfect focused a substantial amount of its attention on Windows, but it also continued to develop versions of the WordPerfect word processor for multiple operating systems. Tr. at 996:14-1996:20 (Frankenberg). Novell also had a plan to make the PerfectOffice suite available on multiple operating systems after its Windows release. Tr. at 787:11787:15 (Gibb). In Microsoft's view, Novell represented a threat because it was "intent on becoming a `CROSS PLATFORM' PLATFORM company." PX0033 at MS 5011635. Microsoft perceived Novell as even more of a threat in fact a "nightmare" after its merger with WordPerfect. See, e.g., PX0072.

The importance of WordPerfect to an operating system was so great, in Microsoft's estimation, that when WordPerfect decided to stop developing for OS/2 in November of 1993, Microsoft celebrated the victory as the death of OS/2, writing: "I think this is a great example of how we kill OS/2 by sucking up ISV bandwidth. If we do it right the PDC can be the nail in OS/2's coffin." PX0106 at MS 5044763.

Similarly, the death of WordPerfect widened the "moat" protecting Windows dominance in the PC operating system market. With its dominance of the word processing franchise in place, Microsoft felt free to use Microsoft Office as a "club" to keep a tight grip on competition in the PC operating system market. See Finding of Fact ¶ 354 (not collaterally estopped).

4. WordPerfect Was A Cross-Platform Application

An overwhelming amount of evidence in the record establishes that WordPerfect was a cross-platform application during the relevant time-period:

• DX 370 indicates that as of August 13, 1993, WordPerfect was running on DOS, Windows, Macintosh, OS/2 and UNIX. See DX 370 at NOV 00062681-82; NOV 00062689-90. The document notes that WordPerfect’s goal was to be #1 in market share in DOS, Windows,

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UNIX and OS/2 markets and number 2 in market share in Mac and VMS markets for shipments during 1994. Id. at NOV00062687.

• A WordPerfect Quarterly Product Review dated March 31, 1994 indicates there was a WP DOS, WP WIN, Macintosh, UNIX/VAX product. See DX 303 at NOV 00069951.

• PX0174 is an April 22, 1994 S-4 registration statement filed with the Securities and Exchange Commission in Washington D.C. See PX0174. On page 3 of the statement, the document states that "WordPerfect is now available in 23 languages and on all of the most widely used computing platforms and operating systems, including DOS, MS Windows, UNIX, Apple/Macintosh and DEC's VAX/VMS." Id. at NOV00364208. On page 66 of the document, under "Product Development" states that "WordPerfect's product development objective is to create software applications that appeal to a broad range of users, run on a wide range of operating systems and hardware platforms and are focused on helping user communicate more effectively." Id. at NOV00364271.

• Similarly, the S-4 Amendment No. 3 dated June 23, 1994 repeats again on page 3 that "WordPerfect is now available in 23 languages and on all of the most widely used computing platforms and operating systems, including DOS, MS Windows, UNIX, Apple/Macintosh and DEC's VAX/VMS." See DX 379 at p. 3.

• DX 323 is Novell/WordPerfect's Merger Questions and Answers dated on or around June 30, 1994. In the document, a question is asked whether WordPerfect will continue to support non-Novell environments, including Windows, Macintosh, UNIX, DOS, NLM, OS/2, NT, NetWare, LAN Server, and Banyan. DX 323 at NOV-B00642696.

• PX0200 is a WordPerfect Business Review Exercise Summary dated July 19, 1994. It indicates that WordPerfect was still developing versions of WordPerfect, Quattro Pro and Presentations for DOS, a WordPerfect version for the Macintosh, a WordPerfect version for UNIX, and WordPerfect version for OpenVMS. PX0200 at NOV-25-006587-90.

• DX 4 is a Novell/WP/QP Integration plan dated August 3, 1994. Under Business Applications the document states that "Development includes PerfectOffice, WordPerfect for Windows, DOS, Macintosh and UNIX, Presentations, Electronic Publishing tools, the PerfectOffice engine group and Tapestry." DX0004 at NOV-25-006572. The document continues: "Product marketing consists of teams focused on Tapestry, Windows Product Management (include PerfectOffice, WordPerfect for Windows and Presentations), Windows Marketing Development, WordPerfect for Macintosh, and WordPerfect for UNIX and Electronic Publishing tools." DX0004 at NOV-25-006572.

• DX 205 is an October 1994 status report. It indicates that WordPerfect shipped WordPerfect Windows 5.2+ and WordPerfect UNIX 6.0 (SCO). It also indicates that WordPerfect was

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moving ahead with other WordPerfect for UNIX, DOS and VMS products as well. See DX 205 at NOV-B15912823-24.

• DX 231 is a document entitled Development Project Status. It indicates that WordPerfect had shipped on multiple operating system platforms during the relevant time-period. For example, it states that WordPerfect Unix (SunOS, Solaris), was released to manufacturing on June 7, 1994, that WordPerfect 6.0 Unix (SCO, Intel) was released to manufacturing on October 6, 1994, and that WordPerfect 6.1 DOS was released to manufacturing on August 10, 1995. See DX 231 at NOV00161055.

• PX0192 is a June 30, 1994 e-mail by Scott Raedeke regarding Novell/WordPerfect's PerfectFit Program. It notes that the PerfectFit Technologies were available on Windows, DOS and UNIX; specifically it states that the Open Interface APIs are supported on Windows, DOS, and UNIX versions of WordPerfect and other applications. See PX0192 at MX 9037665. It also outlines that these APIs "provide access for 3rd party DLLs and macros to communicate with, enhance or modify the functionality of WordPerfect applications. They give you control of over 2,000 WordPerfect commands." Id. On the next page it states: "Writing Tools APIs supported on Windows and UNIX versions of WordPerfect, these new APIs allow you to directly manipulate text in WordPerfect." Id.

• PX0554 is an internal Microsoft document entitled Year of the Office Marketing Plan DRAFT v0.9. It states that "WordPerfect Strengths" are "Cross-platform compatibility" and notes that "A consistent use of the cross-platform position could neutralize Word's Windows leadership." PX0554 at MS-PCA 1330664.

• PX0312 shows WordPerfect revenue by product line for the years 1993, 1994, and 1995. On each chart Novell is selling "WP DOS," "QP DOS," "WP MAC," and "WP UNIX." See generally PX0312.

Gary Gibb also testified that WordPerfect was developed to be cross-platform and that the WordPerfect engine could go across DOS, OS/2, Windows and UNIX. Tr. at 781:14-782:2. In addition, Robert Frankenberg, the former CEO of Novell from April of 1994 to July of 1996,²² testified to the following regarding WordPerfect's cross-platform presence:

Q. To your knowledge, did WordPerfect have experience in working with 32-bit systems prior to Microsoft's development of Chicago?

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A. Yes. WordPerfect ran on a number of other 32-bit systems including digital equipment corporations, VAX operating systems and several UNIX systems. So they were well acquainted with the 32-bit development.

***

Q. [Referencing DX 4] And I'm looking at the first two bullet points. Um, again, I would like to focus you in on, Mr. Frankenberg, the fact that development included WordPerfect for Windows, DOS, Macintosh and UNIX. Can you explain to the jury what that means?

A. Well, what that means is that WordPerfect was designed to run across a range of operating systems. So not only in Windows, but DOS which was the earlier version of Microsoft's operating system, Macintosh works [sic] from Apple, and Unix which there were a number of implementations from quite a few different companies. And it was one of the things that was very attractive about WordPerfect that it could run across all of those. And if a company had those systems, people learned one word processor and would be able to use it on all of the systems.

Q. And during your tenure with Novell, did WordPerfect continue to develop versions of WordPerfect for multiple operating systems?

A. Yes, we did.

Q. And during your tenure, did Novell also develop a version of WordPerfect for the Linux operating system?

A. Yes, we did.

Q. Given that Microsoft had a monopoly in PC operating systems using Intel Processors at this time, why did Novell continue to develop cross-platform versions of WordPerfect?

A. Well, there were two main reasons. One reason was that our customers, as I mentioned a moment ago, wanted to have one word processor that could work across their work station or their PCs or their larger systems. The other reason was to provide some real competition in the operating system environment.

***

Q. This bullet point states that "all resources need to be applied to Chicago," and then in parenthesis "or Tapestry." Can you tell us what Tapestry was?

A. Tapestry was the next generation of our of our suite, and it included a number of various IT capabilities that were under initial development at that point in time.

Q. Was Tapestry planned to be cross-platformed?

A. Yes, it was.

Q. So do I understand correctly that back in 1994 Novell WordPerfect was already working on its next generation of cross-platform business application products?

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A. Yes, we were.

Tr. at 994:12-998:10 (Frankenberg).

On re-direct Bob Frankenberg continued:

Q. Today Mr. Tulchin asked you a series of questions about PerfectOffice and whether PerfectOffice, during your tenure with Novell, had come out in a cross-platform version. I think you previously testified that WordPerfect historically had been cross-platform and that during your tenure WordPerfect continued to be brought out under multiple platforms; is that right?

A. That's correct.

Q. Now in order to run cross-platform, it would be necessary for the shared code running underneath WordPerfect to be able to run on those different operating systems?

A. Yes, it would be essential for that to happen.

Tr. at 1266:15-1267:11 (Frankenberg).

Adam Harral testified that Novell intended to make the entire PerfectOffice suite cross- platform as well after the initial release of PerfectOffice 95, claiming that Novell was looking at moving PerfectOffice and its features to DOS, OS/2, the Macintosh, UNIX and Linux. See Tr. at 371:13-372:7 (Harral). Similarly, Gary Gibb and Bob Frankenberg also testified that Novell planned to make PerfectOffice available on multiple operating systems. Tr. at 787:11-787:15 (Gibb); Tr. at 1169:2-1169:6.

5. Novell’s Distribution Of Netscape Navigator Constituted A
Threat With The Potential to Weaken the Applications Barrier
To Entry Or “Moat” Protecting Microsoft’s Monopoly Power In
The PC Operating Systems Market

In December 1994, Netscape Communications Corporation (“Netscape”) brought to market the first widely popular graphical browser distributed for profit. Finding of Fact ¶ 17. Upon its release on December 15, 1994, Navigator “began to enjoy dramatic acceptance by the public; shortly after its release, consumers were already using Navigator far more than any other

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browser product." Id. ¶ 72. In particular, Navigator possesses "three key middleware attributes that endow it with the potential to diminish the applications barrier to entry": (1) Navigator is a complementary product to Windows, and can therefore gain widespread use on Windows operating systems; (2) Navigator exposes a limited set of APIs and "can serve as a platform for other software used by consumers," such as "network-centric applications that run in association with web pages"; and (3) Navigator has been ported to more than fifteen different operating systems, meaning that applications written to Navigator will run on any of those operating systems without porting.²³ Id. ¶ 69.

By the spring of 1995, Navigator also included various Java Technologies, a form of middleware developed by Sun Microsystems. See id. ¶ 76. By combining its own APIs with Sun's Java Technologies, Navigator offered "an increasingly broad platform for the development of applications where you would not leave the browser and you would not see the operating system." Tr. at 1400:20-1402:3 (R. Alepin). Specifically, Navigator included its own APIs for developers to write to, Java Script (which allowed people who were sending web pages to include little programs inside), and "programming for Java Virtual Machine, which allowed programmers to develop full-on business applications and transport them from a server over the Internet to the browser and have them execute in the browser."²⁴ Id.; see also Findings of Fact ¶¶ 28, 76.

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Netscape's quick rise to popularity "alarmed Microsoft, which feared that Navigator's enthusiastic reception could embolden Netscape to develop Navigator into an alternative platform for applications development. Finding of Fact ¶ 72. Microsoft's "dread" only increased moving into 1995, when Netscape added Sun's Java Technologies to Navigator. Id. ¶ 77. Microsoft's concern was well-founded, as the combination of Netscape's Navigator and Sun's Java Technologies, "threatened to hasten the demise of the applications barrier to entry, opening the way for non-Microsoft operating systems to emerge as acceptable substitutes for Windows." Id. Consequently, Microsoft set out to (and did) foreclose Navigator from various distribution channels, including Original Equipment Manufacturers ("OEMs") and Internet Access Providers ("IAPs"). See generally id. ¶¶ 143-148, 158-161, 164. The record also shows that Novell's office productivity applications, including WordPerfect and PerfectOffice, would have been another distribution channel for Navigator, and thus, another threat to Microsoft's PC operating systems monopoly. Conduct that prevents effective distribution and use of products that might threaten Microsoft's PC operating systems monopoly is anticompetitive conduct. Microsoft II, 253 F.3d at 58.

In the same time frame that Netscape brought Navigator to market, Novell pursued its own strategy of "pervasive computing" geared towards providing all users with easy access to information. Tr. at 1005:8-17 (B. Frankenberg). A component of pervasive computing involved making the internet accessible to users, and to that end, in February 1995 Novell entered into a licensing agreement with Netscape (the "Netscape Agreement"). Tr. at 1006:6-19 (B. Frankenberg); PX 268 at NOV 00052206. Novell entered this agreement because Navigator

disputed that "Microsoft was concerned with middleware as a category of software; each type of middleware contributed to the threat posed by the entire category." Id. (emphasis added).

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was "the foremost browser available at the time" and because Novell wanted to connect and integrate its office productivity applications with Navigator to better enable Novell's customers to access information throughout the internet. Tr. at 1007:6-13 (B. Frankenberg). The Netscape Agreement gave Novell the right to distribute Navigator with Novell's own products, including its office productivity applications. Tr. at 1006:20-1007:25 (B. Frankenberg); PX 268 at NOV 00052197. In fact, Novell did distribute Netscape Navigator with PerfectOffice. Tr. at 1007:22-25 (B. Frankenberg).

Moreover, Novell planned to create an Internet namespace for Navigator using the namespace extension APIs, thereby allowing users to browse the Internet through WordPerfect's file open dialog. Tr. at 593:20-594:18 (G. Richardson). Novell planned to include Internet support in its applications because users wanted WordPerfect to be a place that they could access and edit the voluminous content on the web. Tr. at 595:23-596:7 (G. Richardson). In addition, Novell sought to leverage its QuickFinder technology to browse Internet content in Navigator. See Tr. at 801:16-802:23 (Gibb); PX 374. Ultimately, Novell's office productivity applications would not only have shipped with Navigator, but they would also have had a level of technical integration, making the combination even more potent. See, e.g., Tr. at 593:20-594:18 (G. Richardson); Tr. at 801:16-802:23 (Gibb).

F. There Is Abundant Evidence In The Record To Show That Microsoft
Sacrificed Windows 95 Quality And Profits In The Short Run To Exclude
Potential Competition And Maintain Its PC Operating System Monopoly

Microsoft continually releases "new and improved" versions of its PC operating system. Findings of Fact ¶ 44. Each time it does, Microsoft must convince ISVs to write applications that take advantage of new APIs, so that existing Windows users will have incentive to buy an upgrade.

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Id. Since ISVs are usually still earning substantial revenue from applications written for the last version of Windows, Microsoft must convince them to write for the new version. Id. As a result, Microsoft works closely with ISVs to help them adapt their applications to the newest version of the operating system. Id. In turn, a large body of applications on Windows reinforces demand for Windows, augmenting Microsoft's dominant position and thereby perpetuating ISV incentives to write applications principally for Windows. Findings of Fact ¶ 39.

An operating system's success is largely determined by the applications that are written to run on it. Tr. at 290:5-290:19 (Harral). As a result, Microsoft had a long history of evangelizing and cooperating with WordPerfect in order to get its popular word processing application running on Microsoft's operating systems. Tr. at 253:3-253:17 (Harral); see PX0506. Indeed, Microsoft had a continuous course of evangelizing and cooperating with WordPerfect to create applications for Microsoft's operating systems dating all the way back to MS-DOS. Tr. at 253:3-253:17 (Harral). Microsoft representatives met with Novell repeatedly throughout this course of dealing to promote different Microsoft operating systems, and the features and advantages these new operating systems would bring. Tr. at 253:3-253:21. WordPerfect developers, such as Adam Harral, were also routinely invited to attend events where Microsoft promoted its operating systems. Tr. at 253:18-253:21 (Harral); see also PX0063 (Trip Report Chicago User Interface Design Preview); PX0078 (Trip Report Win32 Developers Workshop Featuring Chicago).

In keeping with this course of conduct, when Microsoft began its development of Windows 95, it continued its vigorous evangelization efforts, specifically targeting WordPerfect as a "key" ISV critical to the success of Windows. PX0131 at MS-PCA 1673787. WordPerfect also

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attended numerous meetings and events related to the Chicago platform and Microsoft's Win32 system strategy. See PX0515; PX0063; PX0078.

Novell/WordPerfect also joined, at Microsoft's request, a "First Wave" program for Windows 95 a program that was designed by Microsoft's Developer Relations Group ("DRG") to get a critical mass of (1) key Chicago applications (2) to ship within 90 days of Chicago's shipment, (3) supporting the key features necessary to make Chicago successful. See PX0148 at MS-PCA 2150196. The goal of the program was to get firm commitments from the most important ISVs in a signed Letter of Intent that they would pursue best efforts to ship their application within 90 days of the shipment of Chicago. PX0148 at MS-PCA 2150197; PX0248 at MX 7155007-09; Tr. at 282:24-283:13 (Harral). In return, the limited group of First Wave ISVs would get special technical, informational and marketing assistance from Microsoft to improve their applications for Windows 95 and maximize their chances of success. PX0148 at MS-PCA 2150196; MS-PCA 2150198-201; Tr. at 301:13-301:15 (Harral). By June 1994, WordPerfect was a member of the First Wave and was receiving Chicago Status Updates from Microsoft. See e.g., PX0184; PX0248 at MX 7155006. Microsoft also provided WordPerfect with betas of Chicago that it could use to build software for the platform. Tr. at 301:13-301:15, 303:23-304:18; see also PX0181 (partial documentation provided by Microsoft in June 1994 on namespace extensions).

One of Microsoft's top executives, David Cole, who was directly responsible for the marketing and product management of Windows 95, even went to WordPerfect personally in November of 1993 to evangelize the namespace extension functionality. Tr. at 282:14-282:16; 284:3-284:4 (Harral); see also PX 509. Microsoft's purpose in visiting WordPerfect, according to Adam Harral (who attended), was to encourage WordPerfect to be a great Windows 95 application

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and to adopt the look and feel of the new operating system, so that WordPerfect's shared code technologies were congruent with the way that Windows 95 was trying to approach its users. Tr. at 284:12-287:8 (Harral).

According to Mr. Harral's testimony, Microsoft discussed and evangelized the namespace extension APIs, and promised to provide WordPerfect with information to enable WordPerfect to plug its own technologies into the Windows 95 platform so that any user who was "living" in the shell could find and utilize WordPerfect features and functionality. Tr. at 287:1- 287:8; 290:25-291:9; 293:15-294:7 (Harral). In fact, WordPerfect talked at length with Microsoft representatives about WordPerfect's document management system, its clip art libraries, and hooking its Quickfinder technologies into the operating system. Tr. at 284:12-287:8; 292:18-292:21 (Harral).

If WordPerfect had had the ability to utilize the namespace extension interfaces as promised, it would have made Windows a better product and driven more customers to Windows in the short term. In fact, WordPerfect's customers were telling the company that they wanted to move to Windows 95 and "live" in the shell of the operating system. Tr. at 268:1-18. As a result, WordPerfect believed that it needed to bring forward its features, including those in shared code, and evolve its technologies to work in the same place as where its customers lived. Tr. at 268:1- 268:18. Customers expected when they purchased a Windows 95 product that they would get the Windows 95 experience, and the ability to use and work with namespaces. Tr. at 275:13-276:19 (Harral).

Despite this, Bill Gates decided on October 3, 1994, to de-document the namespace extensions, intentionally degrading the functionality of Windows and putting a roadblock in the way

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of the development of Novell's applications and suite for Windows 95. This decision was not motivated by any legitimate technical problem indeed, Bill Gates called them "a very nice piece of work" and thought the shell group who worked on the extensions "did a good job defining the extensibility interfaces." Thus, Bill Gates destroyed an advanced, valuable²⁵ functionality in his own operating system that would have made the operating system better, allowing for better applications products and a better user experience for customers, for the purpose of making it harder for two pieces of middleware, Notes and WordPerfect, to achieve a "high level of integration" with the operating system, because he thought Microsoft having an advantage in shell integration would help "Office '96 sell better." See, e.g., PX0001. And the reason, from Microsoft's standpoint, that Office '96 had to sell better than WordPerfect and Lotus was because Microsoft feared Novell's middleware (along with other middleware products such as Netscape) and felt that it had to control key "franchises" built on top of the operating system, such as word processing and browsing, in order to achieve the long-term benefit of widening the "moat" that protects its operating system monopoly. See PX0361 at MS-PCA 1301180.

Microsoft's "worst nightmare" would be allowing "novell/lotus" to be successful at establishing their "middleware" as a standard on Windows. PX0054 at MS 0185884; see also PX0127; PX0156; PX0499. Microsoft executives feared Novell and Lotus would build their own middleware on top of Windows to claim API ownership. See PX0499. And in the end, after seeing that Bob Frankenberg and Novell were further ahead than Microsoft in building cross-platform technologies and middleware, and in integrating WordPerfect with the Internet (See PX0222), Bill

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Gates decided to take a short term hit to Windows and its functionality that would result from de-documenting the namespace extensions, for the long term gain of entrenching Office as a "key franchise," which would widen the barriers protecting the operating system monopoly and preserve dominance in the PC operating systems market.

VI. ABUNDANT EVIDENCE EXISTS IN THE RECORD TO SHOW THAT THE
ANTICOMPETITIVE CONDUCT CAUSED ANTITRUST INJURY TO NOVELL

As this Court's preliminary jury instruction reflects, if the jury concludes that Microsoft violated Section 2, then the jury will next consider whether the anticompetitive conduct injured Novell. There is abundant evidence in the record to support this aspect of an unlawful monopolization claim, which is supported by the Fourth Circuit's 2007 decision confirming that Novell has antitrust standing to pursue its treble damages claim. Notably, establishing causation and injury is not an element of a Section 2 violation. See, e.g., World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467, 1477-78 (10th Cir. 1985) ("[U]nder Section 4 of the Clayton Act, . . . a plaintiff must show `a causal connection between the defendant's actions violative of the Sherman Act and the actual injury to the plaintiff's business.'" (citation omitted)). In fact, commingling the separate issues of anticompetitive effect and antitrust injury is reversible error. Angelico, M.D. v. Lehigh Valley Hosp., Inc., 184 F.3d 268, 273-76 (3d Cir. 1998).²⁶

There can be no legitimate dispute that Novell has adduced facts that show (1) Novell was in fact injured as a result of Microsoft's anticompetitive conduct; (2) Microsoft's

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anticompetitive conduct was a "material cause" of Novell's injury; and (3) Novell's injury is an injury of the type that the antitrust laws were intended to prevent. The Fourth Circuit has already decided that a question of fact exists on the antitrust injury component, ruling that if Novell proved its Section 2 claim then "the injury that Novell alleges here is plainly an injury to competition that the anti-trust laws were intended to forestall. Microsoft's activities . . . were intended to and did restrain competition in the PC operating-system market by keeping the barriers to entry into that market high. Novell, 505 F.3d at 316.

The impact and effect on WordPerfect caused by Bill Gates' decision to de-document and withdraw support for the namespace extensions was dramatic. Due to the de-documentation of the namespace extension APIs, WordPerfect was unable to integrate its own namespace into the operating system in such a way that users who "lived" in the shell could use or access them. Tr. at 333:3-333:9 (Harral). WordPerfect was also no longer able to extend the Windows 95 common dialogs as promised. Tr. at 333:14-334:22. The decision also put at risk WordPerfect's ability to talk to the regular default Windows 95 shell extensions, such as Network Neighborhood and Recycle Bin. Id.

Ultimately, the decision created a twofold problem: (1) WordPerfect couldn't expose its own namespaces to users of the shell, and (2) WordPerfect was having problems getting all the Windows 95 namespaces integrated into its own products. Id. While the number of the APIs withdrawn was small, the impact was enormous. As Adam Harral testified when questioned about the impact of the decision:

"We're not talking about changing the color that's the background of a picture, you know, of a little image on a desktop here. The [IShellBrowser API] stopped anybody from finding a place to put things on the shell. The

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[ICommDlgBrowser API] stopped them from getting at those things in the common dialog and adding things for people beyond what the shell provided. And the [IPersistFolder API] just made sure they couldn't even if they could do that, they wouldn't be able to save it so that the user would have the same consistent view from one time to the next. Those were the four removed APIs, that's the impact that we saw in removing those four little APIs. You can do something to my house, but if the thing you decide to do is remove the door and close it up, that's a pretty significant thing to do to your house."

Tr. at 335:5-336:3.

Faced with Gates' decision to de-document the namespace extension functionality, Novell had three theoretical options. Id. at 342:6-344:7. Option one was to continue to use the now unsupported APIs and attempt to invoke them using the partial documentation provided in the M6 beta documentation. Id. The second option was to see if they could somehow fit within the common framework provided by Microsoft, even though it would result in significantly reduced functionality which could have a dire impact on WordPerfect's customers and Novell's relationship with them. Id. The third option was to try to recreate what was lost as a result of Microsoft's decision to de-document the namespace extension APIs Id.

Novell decided to try to explore the first option continuing to use the now unsupported namespace extension APIs. Id. at 344:8-345:7. However, when it went down that road, Novell was shut down by Microsoft, and Microsoft's Premier Support refused to provide any help on the shell at all, let alone help on invoking the partially documented shell namespace extensions that were now unsupported. Id. at 345:8-346:11. Novell concluded that it was useless to continue trying to explore the namespace extensions, and that option one was not a viable option. Id.

Novell then decided to explore the second option, which was to try to use the basic common file open dialog and evaluate whether the lost features and functionality would seriously

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impact customers. Id. at 346:12-347:4. In talking with customers, Novell concluded that losing features that had been in use for 10 years was not an acceptable option. Id. Novell concluded that customers bought WordPerfect because of enhanced file management capabilities, and that the concept of living in WordPerfect was a big deal to Novell's customers all of which would be lost if option 2 were pursued. Id. Novell then abandoned Option 2, and began to evaluate what it would take to implement Option 3, in which Novell would imitate the namespace extension APIs inside what WordPerfect was doing so it could give the same view of namespaces inside WordPerfect's own file open dialog. Id.

After the de-documentation of the shell namespace extensions, efforts were made by Novell management to continue to seek the assistance of Microsoft's Premier Support to resolve the issue. Id. at 349:19-350:7. However, by January of 1995, Novell had moved to trying to reproduce the lost functionality. Id. at 350:8-352:3. In order to solve the problem, Novell efficiently escalated resources so the team could split the problem up and work as efficiently as possible. Id. The team was working around the clock, and 80 hour weeks were common. Id. at 354:1-354:5. Mr. Harral personally complained about the de-documentation of the namespace extensions to Premier Support, as that was the primary avenue of communication open to him. Id. at 354:9-354:14.

Novell's top priority was to release a great suite that ran well on Windows 95 close in time to the Windows 95 release. Tr. at 796:10-796:18; 797:5-797:8 (Gibb). The evidence at trial showed that Novell was prevented from achieving this goal by Microsoft's de-documenting of the namespace extension APIs, without which PerfectOffice "wouldn't be functional enough to be considered a reasonable product in Windows 95." Id. at 629 (Richardson). Mr. Richardson testified that "the common dialog wouldn't even give us the level of functionality we had in our last release

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in Windows or that we had on our DOS card. It was a huge step backwards for us. And we felt it simply wasn't an option. If we were to go with that option we didn't really have a product." Id. at 630.

Once it became clear that Option 3 was the only viable route, the PerfectFit shared code team quickly became critical path.²⁷ It then took the shared code team almost a year to complete the new file open dialog that could mimic the interfaces and functionality that had been promised and then taken away by Microsoft. Id. at 347:13-347:18. As a result, Novell was unable to release PerfectOffice suite (and WordPerfect) within 60 to 90 days after the release of Windows 95. Tr. at 804:20-805:7 (Gibb). PerfectOffice finally shipped a suite for Windows 95 in 1996, after Novell sold WordPerfect to Corel. Tr. at 804:13-804:19 (Gibb).

Microsoft's misrepresentations regarding the namespace extension APIs delayed Novell's introduction of its office productivity applications and suites past the critical period represented by Microsoft's introduction of Windows 95; by contrast, Microsoft's suite "was there at the day of announcement." Tr. at 1033:15-17 (Frankenberg). As a result, the value of Novell's products (besides GroupWise) "declined significantly." Id. at 1033:11-17. Mr. Frankenberg testified that Novell was forced to sell these applications at a loss because "[i]t became clear that we were not competing on a level playing field . . . our key competitor, Microsoft, could control our ability to put product out the door and did so. And that meant it was impossible for us to fulfill our

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promises to customers, it was impossible for us to derive significant value, and it made much more sense for us to sell [the office productivity applications] product and pursue other opportunities." Id. at 1033:22-1034:3.

Microsoft's de-documentation of the namespace extension API's not only delayed completion of WordPerfect's shared code, but also had a significant impact on the overall functionality that Novell and Corel wished to deliver in the product. Id. at 355:7-355:14. During the development process, Novell cut back the functionality of the file open dialog in an attempt to ship as soon as possible, cutting features they were once going to add to the file open dialog. Tr. at 815:16-817:1. In fact, from an architectural perspective, Adam Harral and his team did not achieve until Windows 98, the next version of Windows, the suite that they planned to release for Windows 95. Id.

VII. THERE IS ABUNDANT EVIDENCE IN THE RECORD TO SHOW
MICROSOFT VIOLATED SECTION 2

As the Third Circuit explained in Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 316 (3d Cir. 2007), the Trinko plaintiff failed to state a claim because it "did not allege that the defendant engaged in a voluntary course of dealing with its rivals," nor would the defendant have "publicly marketed the allegedly withheld services absent a statutory duty to do so." Here, Microsoft voluntarily undertook a 15-year course of conduct that spanned every platform from DOS to Windows 95, and included the publication of tens of thousands of APIs.

As the record shows, operating system vendors and ISVs have a symbiotic relationship that, in many respects, is required so that both groups of developers can best serve their customers. In particular, operating systems vendors need ISVs for two reasons: first, the operating system

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vendor needs ISVs to develop their software products to run on the operating system. Tr. at 1387:9-10 (R. Alepin). Novell's technical expert Ronald Alepin explained that "people buy computers to run applications not to run operating systems." Id. at 1387:9-10 (R. Alepin). Therefore, operating system vendors "encourage" ISVs to develop their applications to the new operating system. Id. at 1387:12-16 (R. Alepin). Second, operating system vendors need ISVs "because ISVs are close to users and they understand what users want and need." Tr. at 1387:17-24 (R. Alepin). In the same vein, ISVs require the assistance of the operating system vendor to learn about the future of the operating system, including the functionality planned, the timing of the operating system's release, and how the changes in the operating system will enable the ISV to better sell applications to their customers. Id. at 1388:2-8 (R. Alepin).

As Mr. Harral testified and as noted earlier an operating system's success is largely determined by the applications that are written to run on it. Tr. at 290:5-290:19 (Harral). This led Microsoft to work closely with WordPerfect; the two entities had a long history of cooperation, in which Microsoft evangelized its operating systems to Novell/WordPerfect so that WordPerfect would develop its popular word processing application running on Microsoft's operating systems. See Tr. at 253:3-253:17 (Harral); see PX 506. As previously detailed, that course of conduct involved Microsoft's visits to WordPerfect (PX 105), WordPerfect's attendance at multiple Microsoft evangelism events and developers conferences (PX 63, PX 78, PX 113), and a general course of conduct stretching as far back as development for Microsoft's MS-DOS operating system, Tr. at 253:3-253:17 (Harral). WordPerfect also joined Microsoft's "First Wave" program for critical ISVs. See PX 148, at MS-PCA 2150196.

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This course of dealing continued through the development of Microsoft's Windows 95 operating system, including with respect to the namespace extension APIs. Generally speaking, Microsoft identified WordPerfect as a "key" to the success of its new platform and WordPerfect developers continued to attend events dedicated to Windows 95 and Microsoft's 32-bit strategy. See, e.g., PX 131, at MS-PCA 1673787; PX 515. At a visit in November 1993, discussed above, Microsoft told WordPerfect that the namespace extension APIs would be documented (Tr. at 282:14-282:16; 284:3-284:4 (Harral)), it continued to evangelize the APIs through late 1993 and early 1994 (see, e.g., PX 113), and finally, documented the APIs in the June 1994 M6 beta release of Chicago, (see, e.g., PX 181).

While all of this is discussed in greater depth above, even this summary view illustrates the depth of the prior course of dealing between Microsoft and Novell/WordPerfect. Microsoft reversed course on this prior relationship when it realized that Novell was using certain Chicago APIs more effectively than Microsoft's own applications developers, and that withdrawing key pieces of promised technology would crush Novell's business. As in Aspen Skiing, Microsoft unilaterally terminated this "voluntary (and thus presumably profitable) course of dealing," which shows "a willingness to forsake short-term profits to achieve an anticompetitive end." Trinko, 540 U.S. at 409 (emphasis in original) (citing Aspen Skiing, 472 U.S. at 608, 610-11).²⁸ This is the hallmark of a monopolist.

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A. This Case Is Nowhere Near The Limits Of Aspen Skiing

While this Court has already acknowledged that the facts of this case go well beyond a pure "unilateral-refusal-to-deal" violation,²⁹ it recently posited a hypothetical attempting to compare this case to Aspen Skiing. In the Court's hypothetical, the monopolist that owned three of the four mountains decided to build a tram line to connect all of its slopes and the plaintiff owner of the fourth mountain asked for a perpetual easement to tie the monopolist's tram line to the plaintiff's tram line and to connect to the monopolist's power source.

The hypothetical is inconsistent with the record in this case. To more accurately capture the facts of this case, Novell would modify it as follows: The monopolist planned to build a tram line connecting all of its mountains and voluntarily offered to the plaintiff to route the tram line to the plaintiff's mountain so that the plaintiff could connect its own tramline and offer consumers a better way to experience all four mountains. In reliance on that offer, the plaintiff chose not to pursue alternative plans to purchase easements and build its own transportation network to give skiers a way to move easily from the monopolist's mountains to the plaintiff's mountain, and vice versa. The plaintiff obtained a second mortgage and invested heavily to build its own transportation network to build a restaurant, a recreational center, and otherwise improve its mountain to a state-of-the art mountain. The monopolist became concerned that the plaintiff would divert all of the most valuable customers to its mountain and decided not to make the tram available to plaintiff.

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The plaintiff did not have enough time or money to build its own transportation network in time to avoid foreclosure.

As in this case, the monopolist's misconduct was not necessarily in withholding access but in offering access, inducing reliance, and then retracting access which eliminated the competitor and harmed the competitive process. The case upon which Microsoft has placed substantial reliance, Christy Sports, LLC v. Deer Valley Resort Company, Ltd., 555 F.3d 1188 (10th Cir. 2009), is in accord with Novell's theory of antitrust liability. In that case, a covenantee ski rental company alleged that a covenantor ski resort owner attempted to monopolize the market for ski rentals at the resort by enforcing a restrictive covenant granting the resort owner a right of approval over conduct of ancillary businesses at the resort. The court found that the covenantee could not complain that the covenantor chose to exercise its contractual rights but noted that an antitrust claim might have arisen if "by first inviting an investment and then disallowing the use of the investment the resort imposed costs on a competitor that had the effect of injuring competition in a relevant market." Id. at 1196. That is exactly what happened here. Having invited Novell to utilize its APIs and sending Novell down a path of reliance, Microsoft's decision to disallow Novell access to those APIs imposed substantial costs on Novell and prevented Novell from producing a product for Windows95 within the critical window of opportunity for markets characterized by network effects, and exclusion of Novell's OPAs harmed competition in the market for PC operating systems, as set forth more fully below. All of Microsoft's arguments to the contrary rest on disputed questions of fact.

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B. Microsoft's Conduct Is Not Immune From Antitrust Scrutiny As A
Technological Innovation

"Intellectual property rights do not confer a privilege to violate the antitrust laws." Microsoft II, 253 F.3d at 63. Microsoft, as a matter of law, does not have an unfettered right to its intellectual property to harm competition. In the government case, Microsoft argued "if intellectual property rights have been lawfully acquired, [then] their subsequent exercise cannot give rise to antitrust liability." Id. The D.C. Circuit rejected Microsoft's argument, which it characterized as "border[ing] on frivolous," and noted that "it is no more correct than the proposition that use of one's personal property, such as a baseball bat, cannot give rise to tort liability." Id. The antitrust laws will tolerate any success that a monopolist may achieve "solely through `the process of invention and innovation.'" Foremost Pro Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 544-45 (9th Cir. 1983) (emphasis added) (quoting Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 281 (2d Cir. 1979)). There is no blanket immunity for design changes and product introductions; it is the monopolist's "`associated conduct,'" and not the innovation itself, that determines liability under Section 2. Id. at 545 (quoting Berkey Photo, 603 F.2d at 286 n.30). A wide variety of conduct can be considered anticompetitive, including fraudulent inducement, and "a host of other activities that improperly stifle competition." Caldera, 72 F. Supp. 2d at 1306. The "associated conduct" here is actionable. Because Microsoft's success was at least "`partial[ly] root[ed]'" in the use of its monopoly power, Microsoft's actions may be condemned under Section 2. GAF Corp. v. Eastman Kodak Co., 519 F. Supp. 1203, 1227 (S.D.N.Y. 1981) (quoting Berkey Photo, 603 F.2d at 292).³⁰

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Further, there is no question here of a legitimate first-mover advantage. Microsoft claims that it never used the technologies at issue. It cannot simultaneously claim that it was seeking to gain temporary benefits from using the technologies. See In re Microsoft, 274 F. Supp. 2d at 746. While Microsoft "may normally keep its innovations secret from its rivals as long as it wishes, forcing them to catch up on the strength of their own efforts after the new product is introduced," Berkey Photo, 603 F.2d at 281, that is not what Microsoft was doing here. In fact, Microsoft's effective destruction of the namespace APIs was more like vandalism than "us[ing] its superior knowledge," as this Court used the term in In re Microsoft, 274 F. Supp. 2d at 746.

C. Microsoft's Conduct Did Not Make Business Sense Apart From Any Effect
It Has On Excluding Competition Or Harming Competitors

Microsoft has put forth what it claims are legitimate technical justifications for its decision to withdraw support for the namespace extension interfaces. Specifically, Microsoft claims that (1) a program written to use the Namespace Extension APIs could potentially crash the Windows 95 shell, (2) the namespace extension APIs were not compatible with future versions of Windows that were then being developed and (3) the namespace extension APIs did not achieve the functionality that Bill Gates hoped for. Because the alleged existence of technical justifications is an issue on which Microsoft has the burden of proof, and Microsoft has not yet presented any

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testimony on this issue, it is impossible for Microsoft to prevail on this issue on its Rule 50 motion. Nevertheless, there is already substantial evidence in the record that none of these purported technical justifications hold water.

As an initial matter, Microsoft's purported technical justifications for de-documenting the namespace extension APIs are shown to be pretextual by the very fact that Microsoft's own products continued to use the interfaces after they were withdrawn. For example, Microsoft allowed its Marvel client to continue to use the namespace extension interfaces even after Bill Gates de-documented the namespace extension APIs. See PX0530. Similarly, Microsoft's Office '96 team also utilized a de-documented namespace extension interface in the development of an "Office Explorer" an interface similar to Outlook that users would use to find documents, appointments, tasks and mail in a single place in a consistent manner. See PX0231 at MX 1189911-13. An internal Microsoft document entitled "Chicago Explorer Superset and Replacement," indicates that the "Office Explorer will superset and replace the Chicago Explorer to become the single place where users can find and manipulate all their information irrespective of its type, including all documents and files, in addition to personal information such as appointments, task lists and mail" and that such functionality "undercuts Lotus Notes, giving away a large part of the Notes functionality for free." PX0379 at MS-PCA 1566798. The document, updated on November and December of 1994, well after Bill Gates' decision to withdraw support for the namespace extension interfaces, also states that the Office Explorer implementation strategy was "to leverage the Chicago shell team's work" and that one of the "crucial interfaces" to be utilized was "IShellView," an important namespace extension interface. Id. at MS-PCA 1566800-01.

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In addition to Marvel and Office '96, the evidence also shows that Microsoft continued to utilize the namespace extension interfaces in 1995 in the development of Internet Explorer. See, e.g., PX 344. A document entitled "Web-like Shell: Architecture," dated November 8, 1995 outlines that Internet Explorer, Athena, and MSN Marvel were all using the shell namespace extension mechanism. See PX0344 at MS98 0116190. The document outlines that Microsoft intended to integrate the shell explorer and the Internet Explorer so that users could navigate documents on local volumes, local area networks and the world wide web. Id. at MS98 0116189. The document notes that while Microsoft hadn't yet clearly defined how it would present documents on the World Wide Web to the end user on the Explorer left pane (i.e., the hierarchy), that it was "quite natural to use the Namespace Extension mechanism to plug the URL namespace into the explorer's name space." Id. at MS98 0116190. Despite Microsoft's claims that the namespace extension mechanism was somehow incompatible with future versions of Windows, unstable or poorly designed, and that they didn't achieve the functionality Gates hoped for, the evidence in fact shows that Microsoft was basing one of its important products, Internet Explorer, on these same interfaces.

Similarly, an internal Microsoft e-mail by Scott Henson entitled "Shell extensibility and ISVs" from August 1995 also indicates that Microsoft continued to utilize the namespace extension interfaces in the development of their own products even after Microsoft had withdrawn support for them. Henson writes in the e-mail to top Microsoft executives that he is voicing a "STRONG concern" for the ISVs because "approximately a year ago we told ISVs that a set of interfaces (known as namespace extensions) were no longer going to be a part of the standard Win32 API set"

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and were instead moving to an unsupported status. See PX0324 at MS98 0120901. Henson continues,

Given this, we went and told the ISVs that there was a lot that they could do in the system with respect to extensibility BUT they COULD not integrate into the explorer (like the control panel and briefcase) as we had previously mentioned was possible. HOWEVER, this is not the limit of what is going on internally. As I mentioned there is a lot of internal development going on where various groups are implementing these interfaces to varying degrees. . . . I have just installed Athena (the lightweight PIM from the PSD group) onto my system and to my dismay they are not only using the namespace extensions but they are also displaying themselves in the scope (left) pane and view (right) pane. This is the EXACT thing we told ISVs they could (and should) not do! In short we have a product that will be sold in the very near future that will implement interfaces that we told ISVs they should not use because we would not be able to support them moving forward. In the meantime we were developing a product that did exactly that. I can't even express how BAD this is! We loose everything when we do this! Credibility, trust, leverage, the works! Assuming that we are going to support these APIs as a part of the standard Win32 API set we should document them -- QUICK! Our ISVs are already months behind.

PX0324 at MS98 0120901 (emphasis added).

The evidence clearly shows that Microsoft continued to use the namespace extension mechanism for strategic advantage after it had told ISVs such as WordPerfect not to use those interfaces. For this reason alone, Microsoft's purported technical justifications can be seen as a sham.

1. Microsoft’s Claim That A Program Written To Use The
Namespace Extension APIs Could Potentially Crash The
Windows 95 Shell

Microsoft’s claim that robustness issues were a legitimate technical justification for Mr. Gates’ decision to de-document the namespace extension APIs is clearly an after-the-fact pretext. First, Mr. Gates did not cite robustness or quality concerns regarding the Namespace Extension APIs in his October 3, 1994 decision to withdraw support for those APIs. See PX0001. In fact, Mr.

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Gates states in his e-mail that there was nothing "wrong with the extensions on the contrary they are a very nice piece of work." Id.

Second, when Microsoft re-documented the namespace extension mechanism in 1996, it did not change the interfaces at all, and they continue to run in-process. For example, the David Campbell article in July 1996, entitled "Extending the Windows Explorer with Name Space Extensions," which re-documented the interfaces, notes that name space extensions still must be implemented in process, as "OLE in-proc" servers. See PX0355. As a result, namespace extensions, even after the re-publication in 1996, still ran in the shell's process. If there was a serious problem with running shell namespace extensions in process, Microsoft would never have re-documented the interfaces.

Third, Microsoft's own applications continued to run in-process in 1994 and 1995. For example, Capone and Marvel in 1994 continued to execute "in process" after the decision was made to de-document the interfaces. See PX0543. Microsoft's Athena PIM also continued to run "in process" on Windows 95 in 1995. See PX 324.

Fourth, robustness issues relating to namespace extensions on Windows NT had been fixed by at least March of 1995. See PX0279. If similar problems existed and were considered serious on Windows 95, a similar fix could have been implemented on Windows 95. Instead, Microsoft chose to republish the documentation, and Windows 95 namespace extensions, to this very day, run in the shell's process.

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2. Microsoft’s Claim That The Namespace Extension APIs Were
Not Compatible With Future Versions Of Windows That Were
Then Being Developed

Microsoft also claims that supposed incompatibility with future versions of Windows is a legitimate technical justification for the decision to de-document the namespace extension mechanism. However, this purported justification is also a sham. The extensions were implemented in Windows 95 in a manner that made them completely compatible with all future versions of the Windows operating system. For example, when Microsoft made the original decision to publish the namespace extension interfaces, Paul Maritz stated to Bill Gates that the APIs exposed by Chicago, including the shell extension APIs, would use a “lighter weight OLE implementation” that would be compatible with future versions of Windows NT called Cairo. See PX0094 at MS7048981. Maritz states that “any Chicago UI exploitive apps would work decently on Cairo – i.e. No need for ISVs to do different work to run on Cairo.” Id.

In fact, Satoshi Nakajima, the investor of the namespace extensions, spent weeks working on new lightweight shell extensibility mechanisms that Cairo would support. See PX0114 at MS7083975. When Nakajima finished re-writing the interfaces to be Cairo compatible, Brad Silverberg wrote that he was “very proud of the way the team has architected the extension mechanism to use OLE interfaces but have a lightweight implementation underneath.” See PX0129 at MS 5064050. In fact, by May of 1994, Nakajima bragged that his new implementation ran well on 4MB systems and was completely OLE2-compatible “in future versions of windows.” PX0176 at MX3171070. Nakajima outlined that “[t]his compatibility is the key of this technology, and we should emphasize it.” Id. He explained in answering a question regarding compatibility with OLE2, that: “To achieve our size goal, we decided to put a sub-set implementation of OLE 2 (light-

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weight binder) in the shell (so that we can run the shell and old Windows apps without loading OLE2), but it uses the same algorithm when loading In-Proc server DLLs. When we switch to the real OLE2, nobody will notice the difference." Id. at MX3171071. Nakajima explained that they took all compatibility issues into account, and that ISVs would switch to the real OLE 2 implementation without having to "re-write their extensions." Id. at MX3171072.

In addition, any compatibility issues between Windows 95 and future versions of the Windows operating systems such as Cairo disappeared in September 1994 (before Gates' decision to de-document the namespace extensions), when the Chicago shell codebase was chosen for future Windows operating systems. See e.g., PX0212; PX0216. For example, PX0212 outlines that a decision was made by September 19, 1994 to ship Windows NT Cairo with a Chicago-compatible user interface and that Microsoft had went from multiple centers of shell-like efforts to just two: one in systems and one in applications. PX0212 at MSC 00524455-57. The document also indicates that systems would ship a Chicago-derivative shell on Nashville (Windows '96) and Cairo. Id. at MSC 00524458. In fact, in an e-mail to Windows NT employees, senior Microsoft executive Jim Allchin outlines on September 27, 1994 that:

Bill recently made a decision to move the Cairo shell effort to Office...Given the above decision, we have decided to use the Chicago shell codebase for the NT Workstation. A positive benefit from this is that the NT workstations shell will be the same as Chicago. This gives ISVs one set of APIs to target and minimizes the user training issues.

When the decision was made to use the Chicago shell codebase on Cairo and Windows '96, all potential compatibility problems with future versions of Windows were eliminated. In fact, Brad Silverberg stated that the win95 team kept NT in mind from the beginning for the shell, which is why it ported so easily, and that "the win95 shell will be on winnt and the shell extensions will run

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fine there there is no issue about supporting on nt." PX0324 at MS98 0120900. Getting the namespace extension APIs to run robustly on Windows NT also posed no issues. See PX0279 at MS-PCA 1405389 ("there shouldn't be any issues with shell extensions being run robustly on NT. The big ones (namespace extensions) end up in a separate process").

3. Microsoft’s Claim That The Namespace Extension APIs Did Not
Achieve The Functionality That Bill Gates Hoped For

Microsoft has long asserted that the namespace extensions were “trivial and unimportant,” and had a much more limited functionality than originally envisioned by Mr. Gates – and that this purported fact somehow excuses Mr. Gates’ anticompetitive conduct. However, the evidence refutes Microsoft’s assertion.

In fact, Bill Gates himself calls the namespace extension interfaces in 1994 a key component that was “central to [Microsoft’s] whole strategy – email, [document library], applications, file system...” See PX0134 at MSC 00795586. Further, on October 3, 1994, when Mr. Gates made the decision to withdraw the namespace extensions, he stated that the “shell group did a good job defining extensibility interfaces,” that there was nothing “wrong with the extensions” and that “on the contrary, they are a very nice piece of work.” PX0001 at MX 9030733. Similarly, the Office ’96 team, while working with the namespace extension interfaces after Bill Gates made his decision to de-document them, stated in a specification document that IShellFolder and IShellView, (two of the namespace extensions) were “crucial interfaces” for their development of an Office Explorer. See PX0400 at MS-PCA 1566793.

In addition, other evidence in the record shows that the namespace extensions were widely called by ISVs during the short period of time they were partially documented after the release of

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the M6 beta. For example, in addition to WordPerfect, a report from Scott Henson indicates that Oracle, Symantec, Stac Electronics and DCA had already started work on the interfaces. See PX0215 at MX 6109491-92. If the interfaces were "trivial and unimportant," as Microsoft now claims, it makes no sense that so many third-party developers and ISV's were clamoring for the access to the interfaces and using them. See e.g., PX0064 at MS7093163 (noting that ISV's "*really* want extensibility" and were "afraid and angry that Microsoft would use the hooks for its own purposes (apps, mail, etc) but not provide to isv's. This was a very hot button.")

Furthermore, Microsoft itself extensively utilized the namespace extension APIs in a variety of its own products. Scott Henson's report details that various divisions, groups, and products within Microsoft were actively using namespace extensions in September of 1994, including Microsoft Marvel, Access and Ren. See PX0215 at MX 6109491. Capone, an e-mail client in Windows 95, was also clearly using the interfaces as well. See PX0219 at MX 5117033. In addition, Mr. Henson's e-mail of August 8, 1995 reveals that "there is a lot of internal development going on where various groups are implementing these interfaces to varying degrees," including the development of Athena, a lightweight personal information manager. See PX0324 at MS98 0120901. Athena used the name space extensions in the exact manner Bill Gates envisioned and claimed never happened (i.e., in the right hand pane). In fact, Mr. Henson stated in his e-mail blowing the whistle on Microsoft's malfeasance, that he installed Athena and found to his dismay that "they are not only using the namespace extensions but they are also displaying themselves in the scope (left) pane and view (right) pane. This is the EXACT thing we told ISVs they could (and should) not do!" Id. at MS98 0120901.

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Microsoft also architected one of the most important products it ever developed, Internet Explorer, around the Windows 95 shell namespace extensions in 1995, using them as the chief method for integrating Internet Explorer into the Windows shell. See PX0344 at MS-PCA 1085016. Microsoft also re-documented the exact same extensions it now claims were "trivial and unimportant" in July of 1996 with the publication of a lengthy MSDN article. See PX0355. If, as Microsoft now claims, the extensions were flawed or had little benefit to applications developers, it makes no sense that Microsoft would go to such efforts to re-publish and promote the functionality.

Finally, Microsoft also sought and eventually received a patent for the namespace extension interfaces. See PX0364. If they were of little value, then it makes no sense for Microsoft to have gone to such trouble to protect this intellectual property. The only logical conclusion is that the extensions, far from being "trivial," were an important and valued piece of property Microsoft wanted to protect.

In sum, Microsoft's claim that the namespace extensions were trivial and never achieved some supposedly hoped for functionality is unsupported by the evidence, and cannot validly justify Microsoft's anticompetitive conduct.

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VIII. CONCLUSION

For the foregoing reasons, Microsoft's Motion for Judgment as a Matter of Law should be denied.

Dated: November 18, 2011

SNOW, CHRISTENSEN & MARTINEAU
By: /s/ Maralyn M. English
Max D. Wheeler
Maralyn M. English

DICKSTEIN SHAPIRO LLP
Jeffrey M. Johnson
Paul R. Taskier
Adam Proujansky
James R. Martin

ADAMS HOLCOMB LLP
R. Bruce Holcomb

WILLIAMS & CONNOLLY LLP
John E. Schmidtlein

Attorneys for Novell, Inc.

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CERTIFICATE OF SERVICE

I hereby certify that on the 18th day of November 2011, I electronically filed the foregoing document with the Clerk of the Court using the CM/ECF system which will send notification of such filing to all counsel of record.

By: /s/ Maralyn M. English

__________________

¹ As the Court knows, Novell does not agree that the "directed at" language is appropriate and the Court has acknowledged Novell's objection to that language.

² See also Antitrust Law Developments (Sixth) at 244 ("Effect may be assessed on an aggregate basis, as distinguished from examining the impact of its discrete component parts.").

³ The exception that permits a departure from the law of the case doctrine when the decision is "clearly erroneous" and would work a "manifest injustice" is "rarely, if ever, invoke[d]." United States v. Alvarez, 142 F.3d 1243, 1247 (10th Cir. 1998). "In fact, in the only case we found in which a panel used this exception, the en banc court subsequently reversed the panel." Id. (citation omitted).

⁴ This concern appears to relate to Novell's middleware theory of harm to competition. As discussed below, middleware is not the only theory on which Novell proceeds to establish harm to competition. The "moat" theory arises from the proposition accepted by Microsoft business executives that Microsoft maintained its monopoly power by, in part, owning the "key franchises." Microsoft understood that a potential operating system rival needed key franchises written for its operating system to even attempt to challenge Microsoft's operating system monopoly. In this case, the threat was not only that Novell's OPAs could promote the development of an alternative platform, but that it could promote the development of competition within the relevant market.

⁵ See id. at 308 ("[F]irms compete to dominate the market, and once dominance is achieved, threats come largely from outside the dominated market, because the degree of dominance of such a market tends to become so extreme.").

⁶ Trial exhibits referenced herein will be provided to the Court in separate binders organized in numerical order by plaintiff’s exhibits and defendant’s exhibits.

⁷ As we already have made clear, Novell will not use this evidence in support of its damages claim, which is limited to the period from June 24, 1994 through March 1, 1996. But whether the evidence is admissible to show damages is a different question from whether it is relevant--and necessary-- to show the anticompetitive effects of the defendant’s anticompetitive scheme. See, e.g., Westwood Lumber Co., 2003 U.S. Dist. LEXIS 27213, at *13-14 (“[The fact that] Plaintiffs may be unable to recover damages for injuries inflicted prior to 1999 does not automatically render defendant’s pre- 1999 conduct inadmissible, nor impair the preclusive effect of the [prior] verdict on the question of whether Defendant possessed a monopoly in the alder sawlog market through 2001. Plaintiffs still must prove that Defendant continued to possess monopoly power in 2002, as that question is beyond the scope of the [prior] verdict.”).

⁸ See, e.g., Taylor Publ'g Co. v. Jostens, Inc., 216 F.3d 465, 475 (5th Cir. 2000); PSI Repair Servs., Inc. v. Honeywell, Inc., 104 F.3d 811, 822 (6th Cir. 1997); Town of Concord, Mass. v. Boston Edison Co., 915 F.2d 17, 21 (1st Cir. 1990); Morgan v. Ponder, 892 F.2d 1355, 1363 (8th Cir. 1989) (cited in the Government Case); S. Pac. Commc'ns Co. v. Am. Tel. & Tel. Co., 740 F.2d 980, 999 n.19 (D.C. Cir. 1984); Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227, 230 (1st Cir. 1983) (Breyer, J.) (cited in the Government Case); Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1182 (1st Cir. 1994) (cited by this Court in its summary judgment decision); Instructional Sys. Dev. Corp. v. Aetna Cas. & Sur. Co., 817 F.2d 639, 649 (10th Cir. 1987); Hertz Corp. v. Enter. Rent-A-Car Co., 557 F. Supp. 2d 185, 193 (D. Mass. 2008); Cytologix Corp. v. Ventana Med. Sys., Inc., Nos. 00-12231-RWZ, 01-10178-RWZ, 2006 WL 2042331, at *4 (D. Mass. July 20, 2006); Z-Tel Commc'ns, Inc. v. SBC Commc'ns, Inc., 331 F. Supp. 2d 513, 522 (E.D. Tex. 2004); Nobody in Particular Presents, Inc. v. Clear Channel Commc'ns, Inc., 311 F. Supp. 2d 1048, 1105 (D. Colo. 2004); Lantec, Inc. v. Novell, Inc., 146 F. Supp. 2d 1140, 1145 (D. Utah 2001); Hewlett-Packard Co. v. Boston Scientific Corp., 77 F. Supp. 2d 189, 197 (D. Mass. 1999); CTC Commc'ns Corp. v. Bell Atl. Corp., 77 F. Supp. 2d 124, 144 (D. Me. 1999); Wichita Clinic, P.A. v. Columbia/HCA Healthcare Corp., No. 96-1336-JTM, 1997 WL 225966, at *7 (D. Kan. Apr. 8, 1997). Novell could supply the Court with additional decisions upon request.

⁹ Similarly, in predatory pricing cases, the monopolist lowers prices in the short term to eliminate competition and later recoups its short-term losses through price increases. In exclusive dealing cases, the harm to competition is the foreclosure of potential competition. United States v. Dentsply Int’l, Inc., 399 F.3d 181, 191 (3d Cir. 2005). Tying and bundling arrangements are condemned because a monopolist exerts power in one market to erect barriers to entry in another market that may exclude potential competition. See, e.g., Fox Motors, Inc. v. Mazda Distributors (Gulf), Inc., 806 F.2d 953, 957 (10th Cir. 1986); LePage’s Inc. v. 3M, 324 F.3d 141, 155 (3d Cir. 2003). In the Government Case, the fact that AOL acquired Netscape in late 1998 did not factor at all into the analysis of the future harm to competition caused by Microsoft’s anticompetitive conduct. Indeed, the U.S. Supreme Court observed in Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982), that a § 4 plaintiff “need not ‘prove an actual lessening of competition in order to recover. [C]ompetitors may be able to prove antitrust injury before they actually are driven from the market and competition is thereby lessened.’” Id. at 482 (alteration in original) (citation omitted).

¹⁰ Even the lone authority on which Microsoft has relied, Areeda, fails to support its position. Microsoft has quoted a single sentence out of context: "[I]t [is] critical that treble damage remedies be strictly limited to those aspects of a plaintiff's injury that were in fact caused by an unlawful exploitation of market power or an unlawful quest for such power in attempt cases." 3 Phillip E. Areeda & Herbert Hovenkamp ¶ 657a (3d ed. 2011). The quote is taken from a larger academic discussion of the potential that a monopolist might be held liable for damages for a "reasonable but mistaken judgment that it was doing nothing unlawful." In the same paragraph from which Microsoft takes its quote, Areeda continues: "[I]t is well established that the damage plaintiff must demonstrate not only that the defendant has violated the antitrust laws, but also that the plaintiff's business or property in fact suffered compensable injury as the result of that violation . . . . Proper adherence to that principle would moderate the treble damage consequences of finding ‘exclusionary’ conduct.” Id. (emphasis added).

¹¹ Novell, 505 F.3d at 314 n.22.

¹² When standards are "publicly owned by a standards organization" that independently accepts suggestions for additions and considers those suggestions as a group for acceptance, and when "no one company owns the standard," it is called an open standard. Nov. 9, 2011 Tr., at 1449:1-6 (R. Alepin). "Open standards are rules where the process for amending them is not under control of a single company, but rather part of a standards body which adopts the decision according to the rules of the standards organization." Nov. 9, 2011 Tr., at 1449:6-10 (R. Alepin).

¹³ In Reazin, for example, the 10th Circuit found it significant that the monopolist “perceived” the defendant to be a competitor, even though the defendant was not an actual competitor. Reazin, 899 F.2d at 954, 962, 965.

¹⁴ AppWare was also integrating support for OpenDoc.

¹⁵ Shared code amounted to around one third of the WordPerfect word processing product. Tr. at 217:24-218:3 (Harral).

¹⁶ WordPerfect made efforts to isolate its engine, or program core from the underlying operating system, and to instead, make it dependent on a shared code layer sitting above the underlying operating system. Tr. at 216:22-217:16 (Harral). As a result, in order to port applications dependent on shared code such as WordPerfect to another operating system, only the shared code layer would have to be retooled and ported to the new platform. Tr. at 216:22-217:16 (Harral). The WordPerfect program engine itself, would not have to be rewritten. Tr. at 216:22-217:16 (Harral). While in some instances the program engine would talk to the underlying operating system, such instances were rare, and most of the features that dealt with the operating system were part of shared code. Tr. at 218:4-218:20 (Harral). This resulted in a very efficient way to move WordPerfect products across operating systems. Tr. at 216:22-217:16 (Harral).

¹⁷ WordPerfect offered "a PerfectFit Software Developers Kit (SDK) to third parties that included a broad range of developer tools including PerfectScript, shared programming code, and APIs." See PX0207 at NOV 00498183.

¹⁸ Novell had a plan to make the PerfectOffice suite available on multiple operating systems and wanted to eventually make everything cross-platform across the different available operating systems such as DOS, OS/2, Macintosh, UNIX and Linux. Tr. at 787:11-787:15 (Gibb); Tr. at 371:13-372:7 (Harral).

¹⁹ Developers could use AppWare in PerfectOffice to build applications that both integrated with PerfectOffice or which were completely stand-alone programs independent of PerfectOffice. PX0410 at NOV-B00656854.

²⁰ PerfectOffice Professional came with a library of PerfectOffice ALMs. See PX0412 at NOV00498203.

²¹ Word processing and spreadsheets applications amounted to 80 to 90 percent of everything people did on personal computers during the mid-1990s. Tr. at 782:3-782:12 (Gibb).

²² See Tr. at 983:16-984:2 (Robert Frankenberg).

²³ As the Government case found, adding to "Navigator's potential to weaken the applications barrier to entry is the fact that the Internet has become both a major inducement for consumers to buy PCs for the first time and a major occupier of the time and attention of current PC users." Finding of Fact ¶ 70.

²⁴ It is undisputed that in the Government case against Microsoft, it was determined that middleware technologies, like Netscape's Navigator, have the potential to weaken the applications barrier to entry protecting Microsoft's PC operating systems monopoly. Finding of Fact ¶ 68. Nor can it be disputed that “Microsoft was concerned with middleware as a category of software; each type of middleware contributed to the threat posed by the entire category.” Id. (emphasis added).

²⁵ Microsoft patented as intellectual property the namespace extension API functionality. See PX0364.

²⁶ The appellate court observed that, unlike a Rule of Reason case brought under Section 1, injury to competition is not a separate element of a Section 2 claim. Angelico, 184 F.3d at 276 n.5. That is because injury to competition is presumed to follow from the conduct proscribed by Section 2. See, e.g., Doctor's Hosp. of Jefferson, Inc. v. Se. Med. Alliance, Inc., 123 F.3d 301, 305 (5th Cir. 1997); Walker v. U-Haul Co. of Miss., 747 F.2d 1011, 1016 (5th Cir.1984).

²⁷ Critical path means the portion of the overall software project that is currently going to take the longest to complete on the schedule. Tr. at 794:3-794:11; 804:20-805:22 (Gibb). Gary Gibb testified that Quattro Pro was not critical path it did not cause the delay in shipment of PerfectOffice 95. Tr. at 806:15-806:25 (Gibb). Early on, Gary Gibb thought Quattro Pro might be critical path. Tr. at 806:15-806:25. However, the Quattro Pro team was very conservative in their estimates and over delivered. Tr. at 806:15-806:25 (Gibb).

²⁸ The essential facilities cases on which Microsoft has previously relied are not remotely analogous. The opinion in Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370, 377 (7th Cir. 1986), is distinguishable for the same reason as Trinko the defendant was not in the business of providing the service that the plaintiff demanded, nor did it historically provide the withheld service to competitors. In David L. Aldridge Co. v. Microsoft Corp., 995 F. Supp. 728, 748-56 (S.D. Tex. 1998), the complaint was that Windows 95 solved a shortcoming of Windows 3.1, depriving the plaintiff of a market for its third-party solution. The court found, in effect, that the prior defect was not an essential facility. The plaintiff in Twin Laboratories, Inc. v. Weider Health & Fitness, 900 F.2d 566, 569 (2d Cir. 1990), experienced growth in profits and market share after the defendant withdrew its facility, which therefore could not be considered “essential.”

²⁹ Novell, Inc. v. Microsoft Corp. (In re Microsoft Antitrust Litig.), 699 F. Supp. 2d 730, 746 (D. Md. 2010) (“As an initial matter, it is not entirely clear that Microsoft's conduct was merely a refusal to cooperate: Novell has presented evidence that Microsoft affirmatively misled Novell about Windows 95 and entered into anticompetitive agreements with OEMs.”).

³⁰ This Court's decisions in In re Microsoft Corp. Antitrust Litigation, 274 F. Supp. 2d 743 (D. Md. 2003), and Daisy Mountain Fire District v. Microsoft Corp., 547 F. Supp. 2d 475 (D. Md. 2008), do not support Microsoft’s defense. Both cases concerned essential facilities and monopoly leveraging claims, which are not at issue; nor does Novell complain that Microsoft’s own developers were given preferential access to the withdrawn technology, nor seek an injunction that would involve the Court in micro-managing Microsoft’s disclosures of technology. See In re Microsoft, 274 F. Supp. 2d at 745. As the Caldera court observed upon rejecting the same defense, the relief here would not “impose an affirmative duty on a monopolist to prerelease sensitive corporate information or innovations to a competitor under all circumstances.” See Caldera, 72 F. Supp. 2d at 1317. Microsoft generally can decide what APIs to disclose, but it cannot refuse to disclose or selectively disclose information as part of an anticompetitive scheme to destroy a rival. See, e.g., id.

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