Here's the transcript, as text, for Day 9 in the Novell v. Microsoft antitrust trial over WordPerfect. That brings us to Monday, November 7th, right after a break after Day 8 on October 27 for Thanksgiving. And the first witness of this new week is Robert Frankenberg. After him will come Novell's experts, beginning on Tuesday, and then Novell's side will be done, after which Microsoft will begin putting its witnesses and experts on the stand.
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The jury at this trial eventually deadlocked on damages, although they all agreed Microsoft was guilty of anticompetitive behavior or so the jurors who talked about it indicated, so we are waiting for the judge to decide if there will be a second jury or whether he will hand a win to Microsoft without a second trial. While we wait, we're putting the transcripts here, as text, so we can learn more about trials and for historians, so that searching by keywords will be easier. I just posted an exhibit, as text, in our Comes v. Microsoft antitrust trial exhibit collection, #1309 [PDF], that seems pertinent. It's an executive level email to Frankenberg on what Novell should do going forward in that Microsoft saw them as a real threat and was willing to do anything to destroy them. The email's subject line is "High-Stakes Strategy Decisions." The part that I found interesting is that this May 25, 1995 email indicates that Novell thought of itself then as Microsoft's only real competition, and that as of that point, it felt it was holding its own. Microsoft at the trial portrayed Novell as a bunch of lead-footed bunglers, who destroyed their own chances. But that seems to be a latter-day revisionism. The email says: Microsoft knows that Novell has the potential to become a long-term major player in general-purpose software, and REGARDLESS of whether we position ourselves in that way, Microsoft knows that we’re in that position, and will stop at nothing to destroy us. The point of the litigation, from Novell's viewpoint, is that a few months later, when Windows 95 was released, Novell was stabbed in the back by some Microsoft dirty tricks involving documentation, so Novell couldn't be ready by launch date with WordPerfect. This email supports Novell's position, rather than Microsoft's, given the date. [ Update: Here's another exhibit, #1387 [PDF], an internal email at Microsoft saying that Novell is a well-run company and Microsoft's most serious competitor. Contrast that with the picture Microsoft paints of Novell in this trial, as a bunch of bumbling old fogies who couldn't keep up in the fast-paced computer field.]
[Update 2: Here's yet another exhibit, #2996 [PDF], another internal email thread, in which Bob Muglia is talking to Bill Gates about APIs and how duplicating a proprietary API is the least of the job someone faces, that it's the complex implementation that is hard: In contrast, there are some proprietary implementations which haven't been
cloned. Sun failed in their Windows clone. Why? Not because the Windows API is
proprietary. Creating their own window.h file from our documentation is the
least of their problems. IP may have been an issue but they failed on their own.
I submit that Sun failed because the semantics of the Windows implementation
(particularly user) are unbelievable complex. Creating an independent
implementation of the APIs and messages is within reach; what is hard is
matching the underlying semantics in ways which ISVs rely on. That's essentially what happened to Novell, or so their evidence represents, that they could reproduce the APIs, but the complexity that underlies the APIs, that was the sticky wicket that they couldn't achieve in time.]
The PDFs for this date are:
Once again, the day begins with the judge telling what he thinks is so, only to be told by Novell that he's got it wrong again. It's in the context of an exhibit that Microsoft wishes to use but that Novell says isn't about the case on trial. It references bugs in WordPerfect, but Novell says it's about legacy WordPerfect, the 16-bit version that ran on Windows 3.1 and eventually on Windows 95. But the trial is about the 32-bit version of WordPerfect, which you couldn't even open on Windows 95, thanks to Microsoft withdrawing the APIs, so the exhibit, Novell argues, can't be about bugs in the 32-bit version, since at the time of the exhibit, there was no 32-bit version. You can't have bugs, Novell lawyer Jeff Johnson says, unless you have a product to find them in. Duh. The judge struggles. In his mind, Novell's WordPerfect ran just fine on Windows 95. I have no idea where he got that idea. If it had, there'd be no need for a trial. But this is what's stuck in his head at this point in the trial, after Novell explains about not being able to have a list of bugs about a product that doesn't exist yet:
THE COURT: That is not true. As I understand it, WordPerfect would run on Windows 95, it just wouldn't be able to get all of the information from other sources....My understanding as of right now
is that WordPerfect has been developed through the
partnerships into that nature was able to access information
not simply in the word processing program. And that -- and
the problem was that the withdrawal of the APIs prevented
WordPerfect from being able to recreate that functionality.
That is what the core of the problem is. For example, in
the one that I really want to understand is QuickFinder but
QuickFinder you all used as an -- that you could QuickFind
from various sources of information not just word
processing. But that is the core of the whole problem the
shell and everything else that you just couldn't access the
information sources. Now my understanding is that there is
no question that WordPerfect, as a word processor, would
work on top of Windows 95 and could be accessed either
through the start button or through the icon.
MR. JOHNSON: No, Your Honor.
THE COURT: That is not correct?
MR. JOHNSON: I think that you -- you don't completely
understand.
That's a tactful way to put it. He doesn't understand at all. Clearly, he can't seem to grasp the technology. He perhaps thinks if your software product was about 80% done, it can run just fine. So Novell runs it past him one more time:
THE COURT: Well --
MR. JOHNSON: Let me make sure, let me try to make
this very clear. Um, the 16-bit WordPerfect product, the Legacy product, 6.0, 6.1, would run fine on Windows 3.1 and eventually ran fine on Windows 95, even though Microsoft said it didn't, but it did, it ran fine on Windows 95.
WordPerfect and Novell was engaged in trying to build a new
product, a 32-bit product, a different product for the new Windows 95. That is the product that Mr. Harral and Mr. Richardson were working on. That product, during all of 1995, did not run on the betas of Windows 95. They had this problem with the file open dialogue, and I think Mr. Gibb may have testified, you have to be able to open. So they had this problem that caused the entire product, the 32-bit product, not to be able to be built in a timely fashion and, in fact, was not released until sometime in 1996, I forget the exact date.
So there was no 32-bit product during 1995 of WordPerfect or of PerfectOffice that was -- that was running on the Win 95, Windows 95 operating system beta. There was no product. So when we talk about bugs here, what we're -- the only thing we're talking about is fixing problems with running the Legacy products, the 16-bit products that were already in existence. And that was the bug problem. Of course, Microsoft doesn't help. It tells the judge that Novell did have a product, enough to test on Windows 95 and it ran. But Novell explains that they almost had a product. It didn't run well, and when they tried to get info from Microsoft, they were shut out. At that point, they decided they had to come up with their own solution. And so this list of bugs, Novell argues, simply could not be about the new 32-bit product, because bug lists are about products that exist. The discussion is interrupted by the jury walking in and taking their places. At this point, I'm imagining the Novell side absolutely pulling their hair out. Once again, we see that when a judge doesn't understand the technology underpinning a case, it's hard for him to get it right. And when the judge does understand, as Judge William Alsup did in the Oracle v. Google case, he has no trouble seeing through any dancing about or smoke and mirrors. Robert Frankenberg, who used to be the CEO of Novell from 1994 to 1996, now takes the stand. He is now retired, but he serves on several boards of directors. Before Novell, he worked for HP for 25 years, ending up as "leader of the personal computer business for Hewlett Packard". While there, he was the liaison with Novell, and he says Novell was a very capable company. It was Ray Noorda who first brought up the subject of him coming to Novell. And the WordPerfect merger happened just a few days before he began at Novell. The first thing that happened was the stock dropped, and it's interesting to hear Frankenberg's explanation:
Q. Do you recall at the time of the merger that the Novell stock price declined?
A. Yes, it did.
Q. Do you recall how much it declined?
A. If I remember correctly, about 20 percent.
Q. Did you anticipate that decline in Novell's
stock?
A. Yes, I did. I thought that the market would
react negatively to Novell taking on Microsoft. Lotus was trying to buy WordPerfect too, because Frankenberg explains, it was considered "the best word processor in the market at that point in time" and Lotus had the best spreadsheet, so Lotus wanted to put them together and compete with Microsoft, but Novell beat them in the bidding war. If you recall, the judge earlier was confused about WordPerfect, thinking the plan at Novell was to just run it on Windows 95, so Novell asks Frankenberg to explain why a business memo references other operating systems:
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 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 WordPerfect for the Linux operating system?
A. Yes, we did....
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?
A. Yes, we were.
Q. The last sentence states here, "We do not want to be significantly behind Microsoft, if at all, in releasing a Chicago suite." How important was it for Novell not to be significantly behind Microsoft, if at all, in releasing a Chicago suite?
A. It was vitally important. Hopefully the judge understands that point now.
As for the legacy WordPerfect product, Frankenberg explains what that was: Q. You have mentioned PerfectOffice a number of times. Can you tell us what PerfectOffice was?
A. PerfectOffice was our suite of office productivity applications that included WordPerfect, Quattro Pro, WordPerfect Presentations, a personal information manager, a forms package, a database package and somebody's hiring products and AppWare.
Q. When did Novell first release a version of PerfectOffice?
A. In late December of 1994.
Q. And do you recall the particular version number for that PerfectOffice?
A. Yes, I do. It was my Christmas present. It was called PerfectOffice 3.0.
Q. And what operating system was PerfectOffice 3.0 developed to run on?
A. It ran on Windows 3.1. That is *not* what this litigation is about. In 1994, Frankenberg testifies, WordPerfect had more users than Microsoft Word. And of course at that point in time, most people hadn't yet chosen any word processor, so the opportunity was there for growth. Plus Novell had arranged to bring Netscape into the mix, so once you opened WordPerfect, you could just live there, do your work, surf, etc., without leaving WordPerfect. At that time in history, Netscape was the lead browser. And Novell also developed middleware for developers to use to develop applications, called AppWare. Microsoft's Paul Maritz described AppWare like this, under oath: Q. I would like to share with you what Microsoft's Paul Maritz said about AppWare under oath in 1994, and you will find that on the screen in front of you.
Mr. Maritz stated in 1994, during the time you were at Novell, that AppWare was quote, "An explicit attempt by Novell to develop a layer that will provide all of the services required by applications. And so that they are explicit in their stated goal of saying that in the future a third-party software developer should have to know only about AppWare and obtain all the services that their applications need from this AppWare sub system."
You agree, Mr. Frankenberg, that Mr. Maritz of Microsoft accurately described the goal of AppWare?
A. He described it very well. From that, I think we can easily see why Microsoft would have viewed Novell as a threat. In the first quarter of 1995, Frankenberg was told that there was a problem, that Microsoft had withdrawn access to its interfaces, while continuing to have them to use themselves if they wanted to. He is asked if he ever complained to Bill Gates about it: Q. Did you ever personally complain directly to Mr. Gates about the issue of undocumented calls and interfaces in Microsoft's operating systems?
A. Yes I did on a number of occasions.
Q. And do you recall the general time frame of these complaints?
A. Those would have been during 1995.
Q. And what did you complain about?
A. I complained about being denied access to application programming interfaces that people at Novell --- at Microsoft had access to.
Q. Did you make such complaints on multiple occasions to Mr. Gates?
A. Yes, in person and in writing.
Gates, he says, refused to discuss it with him, so after a while, he stopped bringing it up and worked on trying to find a workable workaround. And when they missed the launch of Windows '95, he goes on, they decided that there was no level playing field for WordPerfect, and so they sold it:
A. It became clear level playing field. Um, our key competitor, Microsoft, could control our ability to put product out the door and did so. And that meant that it was impossible for us to fulfill our promises to customers, it was impossible for us to derive significant value, and it made much more sense for us to sell product and pursue other opportunities. And that's Novell's case, in a nutshell.
Then, David Tulchin gets to cross examine. He brings out in questioning that WordPerfect didn't yet have a suite to challenge the Word-Excel-Powerpoint suite of products, so its numbers in the summer of 1994 were falling. Also, the then-version, 6.0, was buggy and slow on Windows. That's why Frankenberg's first priority on becoming CEO was to work on PerfectOffice, their suite, and WordPerfect for Windows 95. But mainly Tulchin tries to get Frankenberg to agree that Novell wasn't nimble enough and that it had weaknesses. He tries to get him to agree by reading bits of documents like a 10K list of things that could lead to failure that was filed with the SEC back then.
But all SEC 10Ks have lists like that. It doesn't mean the company thinks any of them will happen or are happening or if they are that they are a big deal. It's more a protective list. In fact, Microsoft's 10Ks have lists like that too. So Frankenberg doesn't agree with his theory. Tulchin is very aggressive, so much so the judge several times tells him to move on, that he already has an answer or that he can try to prove it some other way. But in his aggression, he fails to notice something. He goes on at length trying to prove that Frankenberg made the decision to sell WordPerfect in 1994. But Frankenberg says no, it was 1995. Even when Tulchin shows him his testimony in SCO v. Novell where he said it was 1994, Frankenberg persists that it was 1995. This is beginning on page 1099 (or page 7 of the PDF numbered docket 420) Frankenberg says he's sure it was 1995, and he must have mispoken at the SCO trial. The very next series of questions are based on some Novell board meeting notes from October of 1995. This is beginning on page 1108 (or page 16 of the same PDF). It talks about the October 20th proposed fiscal year budget for 1996. Novell's year was October to October. And on page 4 of that document, you find it saying that Novell wanted to get the company refocused and moving the core business forward. And they are discussing here, as Tulchin himself says, the "question of whether WordPerfect should be sold." If the CEO had made up his mind in 1994 to sell, they wouldn't still be debating whether or not to do it in October of 1995. Some things are just obvious. To me, anyway. Tulchin also tries to establish that Microsoft itself never used the namespace extensions that it pulled back from Novell. But Frankenberg says he has no knowledge about that. Then Tulchin brings out that it was in 1995 that Microsoft pulled back support for those APIs. That too, to me, establishes that the decision to sell couldn't have been in 1994. After the jury is excused for the day, a rather extraordinary conversation ensues, with the judge expressing his views again. Here's just a taste, from page 1151:
THE COURT: I've said what I've said. It may not
have anything to do with the lawsuit. I'm telling you that
if I was a chief executive and chairman of the board of a
company and this decision was not put on my plate -- forget
the first option, because maybe I'm wrong about my
recollection, which is perfectly possible. But the choice
between using Microsoft's open face dialog, which may
decrease the functionality that your clients have come to
expect or going off on some uncertain path, whether it's a
year or whatever -- what I know from -- clearly one thing,
this is an industry in which people can't predict what's
going to happen, I would want to make the decision as the
chairman of the board and the CEO, and I am not -- I'm
sorry, I'm just telling you what I'm thinking. It may have
nothing to do with -- if responsible people made the
decision, it may have nothing to do with the lawsuit. It
may make a big difference.
MR. TULCHIN: It actually doesn't help Novell to
say we didn't know it would take a year, because three
months in, or four, or four and a half, or five, or six,
when they hadn't solved the problem yet, and they could get
the product out in a moment's notice, according to all the
testimony, we'll collect it, I will be happy to show it to
you.
THE COURT: Somebody knew something that year.
These people -- two or three people, they didn't want to
hire people. A bunch of associates researching a project.
MR. TULCHIN: That executives made a decision,
there is not a single document --
THE COURT: This is my fault. This is my fault.
All I'm saying is that I did not think that this speaks well
of Novell management that Bob Frankenberg was not involved
in the decision. That's all I'm saying. It got us here. I
think you've made that point, Mr. Tulchin. I think it's
something the jury may or may not consider. But I don't
think that pursuing the issue of whether the file -- or
whether the resignation of the Quattro Pro people made a
difference is to going to impact it. That's how we got
here. That's all I'm saying.
MR. JOHNSON: Your Honor, may I say, all of this
is under the category of blame the victim without reference
to the fact of what Mr. Gates did and the reasons he --
THE COURT: Mr. Gates was, according to -- I
understand. The answer is that he was involved in a highly
competitive industry in which he was worried about paradigm
shifts in a minute, and he didn't want his product to be
used by somebody who he saw as a major competitor that might
be used against him and completely wipe out what he had
accomplished.
MR. JOHNSON: If that was the case, they never
should have evangelized that stuff to us. They shouldn't
have given it to us. They shouldn't have told us this is
what you should do to develop your product and we might not
be here today. But he took a calculated I'm taking that
away from them in order to advantage my suite and to hurt
WordPerfect and Lotus, and he did so, frankly, with malice....
THE COURT: Okay. Fair enough.
Look, I understand. If I'm wrong, the first
option, I could very well -- it could be it's the lack of
documentation, plus what the people on the phone refused to
say. It could also be -- and, frankly, it's the first time
today as I realized it, I guess, that the APIs could have
been withdrawn in the first release of Windows 95. Frankly,
I had just gotten the impression that everybody was talking
about were the APIs being withdrawn in future versions of
Windows. That is what prompted my original question of last
week, which is why didn't somebody consider using the
documented APIs, at least simultaneously while the house was
being built, to which you said there are two answers.
Number one, they couldn't even use the existing APIs because
they were getting stonewalled by whatever --
MR. JOHNSON: Premier Support, Your Honor, which,
by the way, wasn't some hotline. It was a paid service that
cost a lot of money, and you had direct excess to
Microsoft's developers.
THE COURT: I understand.
MR. TULCHIN: Your Honor, it's not an antitrust
claim that unnamed people at Premier Support, who they have
never identified, somehow didn't help them enough because
they weren't competent enough to write their own product.
THE COURT: It's your fault because you don't have
the records of Premier Support.
MR. TULCHIN: Yes, we had the duty to collect
those documents. They knew they were going to sue us. They
had the duty. Of course, we don't have those records.
MR. JOHNSON: There were lawsuits against
Microsoft at the time. They had an equal amount of duty at
the time. There were all kinds of documents.
THE COURT: I think --
MR. TULCHIN: No one else has had the nerve to sue
about calls to Premier Support.
The judge, then, just speaks out loud what he's thinking about, and as you can see, at least one issue where he had misunderstood earlier, he in this transcript seems to finally comprehend. How do you enjoy watching Microsoft's attitude? Getting a hint why Novell persuaded the jurors that Microsoft did something anticompetitively?
And here is the full day, putting the three PDFs together, for the day's text version:
***********************
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
In re:
NOVELL,
Plaintiff,
vs.
MICROSOFT,
Defendant.
_____________
Case No.
2:04-CV-01045JFM
_____________
BEFORE THE HONORABLE J. FREDERICK MOTZ
November 7, 2011
Transcript of Jury Trial
Laura W. Robinson, CSR, RPR, CP
[address, phone]
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Appearances of Counsel:
For the Plaintiff:
Jeffrey M. Johnson John E. Schmidtlein James Robertson Martin Miriam R. Vishio Attorneys at Law
Dickstein Shapiro LLP
[address]
Max Wheeler
Maralyn M. English
R. Bruce Holcomb
Attorneys at Law
Snow, Christensen & Martineau
[address]
For the Defendant:
FOR THE DEFENDANT:
David B. Tulchin Steven L. Holley Sharon L. Nelles
Adam S. Paris Qian A. Gao Attorneys at Law
Sullivan & Cromwell
[address]
James S. Jardine
Attorney at Law
Ray, Quinney & Nebeker
[address]
965
I N D E X
Examinations - Page
ROBERT JOHANN FRANKENBERG - 982
DIRECT EXAMINATION - 983
BY MR. JOHNSON -
CROSS-EXAMINATION - 1036
BY MR. TULCHIN -
REDIRECT EXAMINATION -
BY MR. JOHNSON -
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Salt Lake City, Utah, November 7, 2011
* * * * *
THE COURT: We are, as you know, waiting for a juror.
Since he is coming in, I think we ought to wait. Um, let's
talk a little bit though about scheduling. Where do we
stand in terms of how long we think this is going to last?
MR. JOHNSON: Well, Your Honor, in terms of
Plaintiff's case, we're pretty much on schedule.
THE COURT: Well, what does that mean?
MR. JOHNSON: That means that we would anticipate,
well, of course you never know about how long
cross-examination is going to be, but we would anticipate
finishing our case, um, next week sometime.
THE COURT: Okay.
MR. JOHNSON: And it obviously depends on the scope of
cross.
THE COURT: When do the experts, when do they testify?
MR. JOHNSON: Mr. Alepin will be next after
Mr. Frankenberg.
THE COURT: Okay.
MR. JOHNSON: So as early as tomorrow if we were able
to complete Mr. Frankenberg today. Um, and I would expect
Mr. Alepin would be a while. We do still have some videos
to show.
THE COURT: Okay.
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MR. JOHNSON: Um, and then we would anticipate
probably Mr. -- Professor Noll probably the beginning of
next week.
THE COURT: So you think you will be finished next
week?
MR. JOHNSON: Well --
THE COURT: Subject to cross-examination.
MR. JOHNSON: Subject to cross. I mean if we have two
days of cross on each witness, no, we're not going to make
it. If we have -- if the cross comes anywhere close to the
direct, then we would clearly make it.
THE COURT: What can Microsoft add at this point in
time to what he has said?
MR. TULCHIN: Your Honor, we hadn't been told who the
witnesses would be other than just in the last couple of
days. We heard it was Mr. Frankenberg today followed by
Mr. Alepin. Assuming that the only other live witnesses are
Professor Noll and then Dr. Warren-Boulton who is the expert
on damages, um, I guess I agree with Mr. Johnson we should
be finished by, you know, I'm going to guess Wednesday or
Thursday of next week with the plaintiff's case.
THE COURT: When -- how long do you think your case is
going to last?
MR. TULCHIN: Um, my best hunch, Your Honor, and
again --
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THE COURT: I am not going to hold you down but
just --
MR. TULCHIN: Right. I'm going to -- my guess is it
will be somewhere in the neighborhood of three and a half to
four weeks which is what we thought pretty much from the
outset.
THE COURT: Which would take us through when?
MR. TULCHIN: Just doing the calculations, Your Honor,
the week of Thanksgiving is a two-day week. We may have a
couple of days next week to start, a day or two, because
that is a five-day week, if I remember correctly.
THE COURT: That is one of the things I want to talk
about, okay.
MR. TULCHIN: Okay. And then let's see if I'm doing
the math right, I think that takes us until about the 14th
or 15th of December. But I'm doing it in my head very
quickly.
THE COURT: So realistically, let's see what day of
the week is the 16th?
MR. TULCHIN: The 16th is next witness, Your Honor, if
we're talking about November.
THE COURT: No, I'm talking about -- realistically, as
I look at it, um, if we finish next week sometime, then we
have got two weeks, Thanksgiving week, then one week the
28th.
969
MR. TULCHIN: Yes, I think that is a full week, Your
Honor.
THE COURT: Week of the 5th.
MR. TULCHIN: Yes.
THE COURT: Week of the 12th.
MR. TULCHIN: Yes. And --
THE COURT: We're going to go up -- we're going to go
the week of the 19th.
MR. TULCHIN: Well, I'm hoping not, Your Honor. I'm
hoping the three and a half weeks would get us to around to
-- I hope I'm done around the 14th, 15th of December. Does
that make sense?
THE COURT: But then there is closing arguments.
MR. TULCHIN: Correct, Your Honor, of course.
MR. JOHNSON: And there might be some rebuttal, Your
Honor. I don't know.
THE COURT: Realistically, I don't see us -- I see us
going right up until Christmas.
MR. TULCHIN: Well let me just say, Your Honor, that
of course when Novell rests, we will re-evaluate the need to
call all of the people on our list. And maybe again --
THE COURT: No. No. No. I'm just -- I am not -- I'm
not looking for the --
MR. TULCHIN: I'm hoping we can do it quicker than
what I just estimated.
970
THE COURT: Well, I had a hearing last Friday that did
not complete in a National Security Case, and it would be
helpful if we could have, for me, to have a four-day trial
instead of the five-day trial next week. I assume we're
going to have relatively substantial argument on the motion
for judgment notwithstanding verdict.
MR. TULCHIN: We certainly will be prepared for that,
Your Honor, of course at the Court's pleasure.
THE COURT: Well, this tells me as much as I'm going
to know. Um, frankly it looks to me like I don't think
we're -- my guess is we're not going to finish with the
evidence until next Thursday. So we might have Thursday
afternoon. I think I will take Friday off and maybe on
Monday for the arguments and pick up on Tuesday, unless --
unless that causes problems with people. Does that cause
witness problems?
MR. TULCHIN: It may, Your Honor. I wonder if we
could get back to you on that.
THE COURT: Well, that is exactly why I'm having this
discussion.
MR. TULCHIN: Okay, yeah. I would like to --
THE COURT: Sounds to me like we need -- that I
shouldn't take next Friday off.
MR. TULCHIN: Of course we're not in a position to
tell the Court what schedule to adopt, Your Honor, but --
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THE COURT: No. No. No.
MR. TULCHIN: But if you could sit next Friday, I
think that would be helpful.
THE COURT: Okay. Well, that is right. All right.
So for today then no evidentiary issues I gather.
MR. TULCHIN: Sorry, Your Honor?
THE COURT: For today there are no evidentiary issues
that people know about?
MR. TULCHIN: There is one issue, Your Honor,
concerning one document that is Defendant's Exhibit 6.
THE COURT: Tell me I didn't get your memo to it, it
is my fault. Let me see the exhibit first.
MR. TULCHIN: Okay.
MR. JOHNSON: You have actually seen this exhibit
before.
THE COURT: I have seen it before and I have seen your
opposition.
MR. JOHNSON: We had a bench conference on this at the
time of Mr. Harral's testimony.
THE COURT: Right. Comes out of Novell's file but
Novell one of the few documents they preserved.
MS. NELLES: Here you go. Here is the copy of the
exhibit.
THE COURT: I'm not happy about your wanting to keep
it out, but that is the basis for a look. Okay tell me, I
972
have read the opposition, so tell me -- let me hear from
Microsoft first sort of what is your position.
MS. NELLES: Good morning, Your Honor. I'm going to
do my best Adam Paris imitation who is off running a
marathon this weekend. I think this is, I won't belabor it,
a simple point. This is a Novell document that is plainly a
party admission. Um, it relates to a letter that went out
on August 21 that was signed by Mr. Frankenberg who is going
to testify today. We have heard it doesn't relate. First
we heard it relates to NetWare, now we're hearing it doesn't
relate to the 32-bit product. Um, Mr. -- you know
Mr. Reynolds whose initials are at the bottom of this, he is
available to Novell if they want to bring him in. If
nothing else, it goes plainly to a pattern of delay and it
comes from blaming Microsoft and it is relevant and we
should be able to use it to cross-examine today.
THE COURT: I have read the opposition. I mean it
sounds to me like you're trying to walk away from a document
which you can, but it is your document.
MS. NELLES: It is their document, Your Honor.
MR. JOHNSON: Your Honor, we're not trying to walk
away from it at all. Can I be heard?
THE COURT: Yeah.
MR. JOHNSON: You may recall that this document came
up once before and we had a bench conference about it with
973
respect to the cross-examination of Mr. Harral who, as you
know, was a developer with the share code team.
You allowed him to show the document to Mr. Harral.
And Mr. Harral professed complete lack of knowledge with
respect to this document and appropriately so. Then
Mr. Tulchin then simply withdrew it and we had no further
discussion. Now, that exchange should have given a bit of a
clue to folks that the bugs being talked about here had
nothing to do with the product that Mr. Harral was working
on. Because as you know, Your Honor, without shared code,
nothing will run on Windows 95. So if Mr. Harral didn't
know about these bugs, um, it is very clear they have
nothing to do with the new product.
THE COURT: That assumes that Mr. Harral is telling
the truth. I am simply -- I'm not saying he is not, but
theoretically --
MR. JOHNSON: But let me go on. You can't -- you
can't have bugs unless you have something to run on the beta
version of Win 95. In other words, how would you find the
bug without a product to run on Win 95. There was no
product, no known product, for the new Win 95 version of
PerfectOffice. Mr. Harral and Mr. Richardson and other
folks were working on that. There was no product. So when
you're talking about bugs here, the evidence will show and
I -- and I really think you were being misled here by
974
Microsoft, the bugs relate to Legacy products because there
has to be backwards compatibility. In other words,
PerfectOffice 3.0, which was a 16-bit product already in
existence, WordPerfect 6.1 and 6.0A, need to be able to run
on the new operating system which is about to come out. So
they take the beta version of Win 95, they run these Legacy
applications on that beta version, and lo and behold,
despite Microsoft's promises that there was going to be
compatibility, there are bugs which makes it so our Legacy
products will not run on the new operating system.
Now, that has nothing to do with this case. It is a
frolic and detour. We have never -- we have never asserted
that because Microsoft when they had these bugs, and there
was some delay in fixing them, that that was an
anticompetitive act or there was any problem with that. But
what Microsoft is trying to do with this document is suggest
that it had something to do with the new product being
developed for Windows 95. It doesn't. It is all Legacy
product. In fact, the reference to the Win 95 client in
there is a reference to the NetWare client which, of course
as you know, is the -- is the server operating system of
Novell. So these bugs, every last single one of them,
relate to Legacy products which are not in issue in this
case.
So the jury is going to be very confused by this. Now
975
I will say this, if we're going to get into bugs, that the
fact of the matter is just prior to the release of Windows
95, Microsoft came out with a list of some 200 bugs claiming
that WordPerfect's products, including -- including
PerfectOffice 3.0, the Legacy product, didn't work on
Windows 95. It was a terrible article for us. And we stood
up and said look, what are you talking about? These bugs
have all been fixed. Our product now works fine on Windows
95 yet they came out with this and put -- cast a shadow on
the ability of our Legacy products to work on the new
operating system that was about to come out. We have not
gone there. We have not raised this issue because it is
wholly tangential to the issues before this Court which is
the new product that was being built for Windows 95. So
this is not an omission, this document, we don't even know
who wrote it. Mr. Miller who was deposed about this in 2001
didn't recognize the document at all. Said he didn't say
any of the things in there, and he didn't -- and he didn't
know what even what it was about.
So we have got a document with an author unknown that
cannot constitute an admission because the requirements for
admission are that you have somebody that is in a position
to have done something within the normal duties of
employment, et cetera, et cetera, and you can't have that
here. So if we are going to get into a debate about bugs,
976
it is just going to confuse the jury and we're going to be
talking about an area that dealt with the Legacy products.
We don't think that the Court should allow that unless they
can provide -- I mean Mr. Frankenberg is going to testify,
if they get into this with him, that it is a Legacy product.
It is nothing to do with the new product for Windows 95. So
the notion that there would have been bugs with respect to a
product that wasn't even in existence yet is totally
illogical.
In other words, for Microsoft to fix the bug, they
have to have something to run on the operating system. They
certainly didn't have a product, a new window, new
WordPerfect for Windows 95 product to run. Mr. Harral and
Mr. Richardson were laboring away night and day trying to
create the shared code that would enable these products to
even run on Windows 95.
THE COURT: That is not true. As I understand it,
WordPerfect would run on Windows 95, it just wouldn't be
able to get all of the information from other sources.
MR. JOHNSON: Let me make this clear, the Legacy
products which were already in existence, PerfectOffice 3.0
which was released in December 1994, that is the subject of
the bugs.
THE COURT: I just want to understand conceptually
that I am not -- my understanding is that WordPerfect is a
977
pure word processing application that would work on Windows
95.
MR. JOHNSON: Not the new product being developed for
Windows 95.
THE COURT: That is not my question. As I understand
it, I mean again because it is -- is the jury here? As soon
as they're here, we will start. I just want to conceptually
make sure I understand it. My understanding as of right now
is that WordPerfect has been developed through the
partnerships into that nature was able to access information
not simply in the word processing program. And that -- and
the problem was that the withdrawal of the APIs prevented
WordPerfect from being able to recreate that functionality.
That is what the core of the problem is. For example, in
the one that I really want to understand is QuickFinder but
QuickFinder you all used as an -- that you could QuickFind
from various sources of information not just word
processing. But that is the core of the whole problem the
shell and everything else that you just couldn't access the
information sources. Now my understanding is that there is
no question that WordPerfect, as a word processor, would
work on top of Windows 95 and could be accessed either
through the start button or through the icon.
MR. JOHNSON: No, Your Honor.
THE COURT: That is not correct?
978
MR. JOHNSON: I think that you -- you don't completely
understand.
THE COURT: Well --
MR. JOHNSON: Let me make sure, let me try to make
this very clear. Um, the 16-bit WordPerfect product, the
Legacy product, 6.0, 6.1, would run fine on Windows 3.1 and
eventually ran fine on Windows 95, even though Microsoft
said it didn't, but it did, it ran fine on Windows 95.
WordPerfect and Novell was engaged in trying to build a new
product, a 32-bit product, a different product for the new
Windows 95. That is the product that Mr. Harral and
Mr. Richardson were working on. That product, during all of
1995, did not run on the betas of Windows 95. They had this
problem with the file open dialogue, and I think Mr. Gibb
may have testified, you have to be able to open. So they
had this problem that caused the entire product, the 32-bit
product, not to be able to be built in a timely fashion and,
in fact, was not released until sometime in 1996, I forget
the exact date.
So there was no 32-bit product during 1995 of
WordPerfect or of PerfectOffice that was -- that was running
on the Win 95, Windows 95 operating system betA: There was
no product. So when we talk about bugs here, what we're --
the only thing we're talking about is fixing problems with
running the Legacy products, the 16-bit products that were
979
already in existence. And that was the bug problem. And
what I'm trying to --
THE COURT: We have got two levels of inquiry here.
One is about what the problem was about, the other about
Exhibit 6. Who wants to start.
MR. HOLLEY: Your Honor, Mr. Johnson could not be more
wrong. His own witness Mr. Richardson testified that they
had the product up and running on Windows 95 betas using the
windows common file open dialogue. The product was running
and they were testing it. And Your Honor is exactly right.
Instead of just doing that, which would have been perfectly
fine, they decided to try to do a lot more work so that
things like QuickFinder and the e-mail client would show up
in the windows shell and make windows a better operating
system. But I think it is completely wrong to say that
there were no bugs encountered in developing the product on
Windows 95. That is what they were doing all during 1995.
And the whole point of the beta is to have people report
bugs on the new operating system. So I regret to say that
what Mr. Johnson is saying is flatly wrong.
MR. JOHNSON: It is not wrong, Your Honor, and here is
why. If Microsoft can point to an alpha or a beta of the
new 32-bit operating system that they had in order to fix
some bugs on the new 32-bit product, then there might be
some validity to what Mr. Holley just said. But there was
980
no alpha or beta version of PerfectOffice for Windows 95.
It didn't exist because of the problems the shared code team
was having, because the shared code team, as you remember,
is the starting point for everything else. You cannot run
these products without having the shared code work. So when
Mr. Richardson said we had -- they started and had something
running which was slow and had a lot of problems and it
wasn't working and they went back to Microsoft and tried to
get more information to make it work and they were shut down
by Premier Support and they wouldn't talk to them about the
shell any more, it was at that point they made the decision
to go to -- to take another option and to try something else
to build the product that would work on Windows 95. But the
important part for you to understand, Your Honor, in order
to report a bug you have to be able to give a product to the
people trying to fix the bug so they can test it. In other
words, the people in Microsoft in order -- you tell them you
have a bug and they say well give me the product and let us
see if we can recreate that bug, let us see if we can fix
that bug, the only products that were being tested for bugs
during this 1995 period, were the Legacy products. The
products that needed to be compatible with the new operating
system.
So when they tried to claim that this memo or the bugs
and Mr. Frankenberg's letter had anything to do with the --
981
with the matters in dispute in this case, they're misleading
the Court and they're going to mislead the jury. There
is -- there is no -- and if there had been such bugs, the
developers of shared code would have known about it. And
there certainly isn't any indication that Mr. Harral is
sitting up there lying. This man has no stake in this. He
has not been a Novell employee for years.
THE COURT: I'm not suggesting that.
THE CLERK: They are here.
THE COURT: Let's get them in. Let's get them in.
(Whereupon, the jury returned to the courtroom.)
THE COURT: Good morning everybody. I hope you had a
nice week.
Next witness?
MR. JOHNSON: Good morning, Your Honor. Thank you
very much. We're going to start this morning with
Mr. Robert Frankenberg.
THE COURT: Mr. Frankenberg.
THE CLERK: Raise your right hand, please.
ROBERT JOHANN FRANKENBERG,
called as a witness at the request of the Plaintiff,
having been first duly sworn, was examined
and testified as follows:
THE WITNESS: I do.
THE CLERK: Please be seated.
982
MR. JOHNSON: Your Honor, these are the exhibits that
we will be using with Mr. Frankenberg.
THE COURT: Thank you.
THE CLERK: Please state your full name and spell it
for the record.
THE WITNESS: Robert Johann Frankenberg, R-O-B-E-R-T
J-O-H-A-N-N F-R-A-N-K-E-N-B-E-R-G.
DIRECT EXAMINATION
BY MR. JOHNSON:
Q: Mr. Frankenberg, here is a set of exhibits for
you. Good morning, Mr. Frankenberg. Can you tell the jury
where you presently live?
A: We live in Alpine, Utah.
Q: And how long have you lived in Utah?
A: Since 1994.
Q: What caused you to move to Utah in April of 1994?
A: Um, I accepted the position of president of
Novell and moved from California to here.
Q: And how long were you with Novell?
A: Almost two and a half years.
Q: Can you tell us why you left Novell?
A: My wife was diagnosed with metastasized breast
cancer in July of 1996 and the prognosis was not good. She
was given less than a 20 percent chance of surviving.
Fortunately, the prognosis was wrong. She is still with us
983
and feisty as ever. But I needed time to be with my wife
and, um, chose to leave Novell at that point in time.
Q: And why did you stay in Utah after leaving
Novell?
A: This is a great place to live. We had come to
enjoy the environment, loved the outdoors, and where better
than Utah to enjoy that.
Q: Are you currently employed, sir?
A: No, I am retired.
Q: Are you a member of any local boards of
directors?
A: Yes, I am. I am on the board of Westminster
College and have been on the board since 1997. The last
five years I have been privileged to be the chair of that
board. I am also on the board of the Sundance Institute
which is in Park City, and a company by the name of Veracity
Communications which is headquartered in Provo.
Q: Can you tell the jury about your early
educational and work experience after graduating high
school?
A: When I graduated from high school, I was drafted
actually before graduation, and chose instead to go into the
Air Force. I spent four years in the Air Force and during
that during that time, I was able to complete two years of
college. Upon leaving the Air Force, I went to work for
984
Hewlett Packard and worked full-time, went to school
full-time, and completed a degree in computer engineering
from San Jose State in 1974. Later, Hewlett Packard sent me
to Stanford to get an Executive MBA which I completed in
1986.
Q: What was Hewlett Packard's business at the time
that you began working for them?
THE COURT: It is hot in here. That is the reason
that window is open.
THE WITNESS: Hewlett Packard was best known at that
time for its electronic instrumentation, a wide range of
instruments for testing electronics. They had a small
computer start up business which I joined in 1969.
Q: (By Mr. Johnson) How long were you at, and I'm
going to refer to Hewlett Packard as HP if that is all right
with you?
A: Works for me and they won't mind.
Q: How long were you at HP?
A: Almost 25 years. A couple of months short of
25 years.
Q: Can you take the jury through the progression of
any position changes you had at HP?
A: I started at Hewlett Packard as a manufacturing
technician. And my job was to troubleshoot and fix
computers on the production line. After about a year of
985
doing that, I went into the development lab and did
technician work and I was shortly thereafter I was fortunate
to be able to do design work. So I designed a computer
memory and then later a number of -- participated with the
design of a number of computers for Hewlett Packard. Became
-- I was promoted to a project manager and I led the
development of a number of computer systems. Moved into
marketing, which was fascinating, and got well acquainted
with what we weren't doing right and what we needed to
improve on. And from there went back in to development and
became a developing executive, a general manager, and in 19
-- excuse me, in 1989 became the vice president of the
corporation responsible for the networking business. And in
1991, I became the leader of the personal computer business
for Hewlett Packard.
Q: And was that your last position at HP?
A: Yes, it was.
Q: And while in that vice president position, did
you have any relationship with Microsoft?
A: Yes. Microsoft was a very key supplier to
Hewlett Packard. We met with them on approximately a
quarterly basis to discuss issues, to look at new things
that they were doing, and had, I would say, regular sessions
with them.
Q: While you were in as a vice president of HP, did
986
you have any relationship with Novell?
A: Yes, I did. Hewlett Packard executives at the
time had additional assignments. And one of my additional
assignments was to be the liaison with Novell. And in that
time I met on a quarterly basis with Novell and specifically
with Ray Noorda who was the chairman and CEO at the time.
Q: And what was your impression, if any, of Novell
as a company based on those interactions?
A: Novell was clearly a very capable company. They
built a very strong operating system called NetWare that had
garnered a lot of -- a huge customer base and had grown that
into a very significant business.
Q: So after I think you said 25 years at HP you came
to Utah to work for Novell. Why did you leave HP to come to
work for Novell?
A: Um, well the -- in looking at Novell's
capabilities and what I thought were important opportunities
in the computer business, I believe that Novell was in a
wonderful position to lead the next major advance in the
computer business and that was to make the network available
and useful to everyone.
Q: Can you describe the events that led up to you
taking over eventually as the Chief Executive Officer of
Novell?
A: Yes, I can. I remember very clearly one of these
987
meetings that I mentioned that we had on a regular basis,
um, Ray Noorda and I had met with our respective teams and
listened to the issues and decided on a number of action
items. And as was our custom, we would get together
afterwards for an hour or so, just the two of us, and talk
about what was going on in the industry and what we needed
to do to make progress.
Toward the very end of that, Ray said well I suppose
that you know that the board wants to replace me as CEO.
And I said well Ray it would be hard not to know, it is all
over the papers, you know. And he said who do you think
would be a good replacement? And I said, well I always
thought I would be, joking. And that afternoon the search
firm called me and I looked into the opportunity over the
next week or so and accepted the position as president, not
CEO, but as president of Novell.
When I arrived at Novell a few days after that, Ray
had concluded that it would be a better idea for me to join
as CEO, and he discussed that with the board. And so I was
offered and accepted the position of CEO of Novell at that
point in time.
Q: When you were in discussions with Novell, what,
if anything, did Novell tell you about its plans to acquire
WordPerfect?
A: They had me sign a nondisclosure agreement and
988
told me that they had nearly completed, essentially
completed, an agreement with WordPerfect to acquire the
company and with Moreland would acquire its Quattro Pro
spreadsheet product, and that they were going to use that to
create a suite of applications to compete with Microsoft
Office.
Q: Let's turn now to Defendant's Exhibit 308 which
should be the first document in the binder in front of you.
And let me show that to the jury, Mr. Goldberg. And
Mr. Frankenberg, can you explain to the jury what this
document is?
A: This was a briefing document for, I believe, for
the announcement of my joining Novell.
Q: And drawing your attention to the first question
and answer here, um, does this answer reflect your thoughts
about the proposed merger between Novell and WordPerfect?
A: Yes, it does.
Q: And as stated here, were you enthusiastic about
the deal?
A: Yes, I was. I had some concerns about taking
Microsoft on, but I was very enthusiastic about the
opportunity to create networked applications.
Q: When was the merger announced in relation to when
you arrived at Novell, the merger between WordPerfect and
Novell?
989
A: A few days before I arrived.
Q: Do you recall at the time of the merger that the
Novell stock price declined?
A: Yes, it did.
Q: Do you recall how much it declined?
A: If I remember correctly, about 20 percent.
Q: Did you anticipate that decline in Novell's
stock?
A: Yes, I did. I thought that the market would
react negatively to Novell taking on Microsoft.
Q: Did the Novell Board of Directors have any
reaction to that decline?
A: No, they -- I think they anticipated it as well.
MR. TULCHIN: Objection as to what others thought,
Your Honor.
THE COURT: Sustained and struck.
Q: (By Mr. Johnson) Mr. Frankenberg, did you have
any understanding as to what the other members of the board
of directors reaction was to that decline?
MR. TULCHIN: Same objection.
THE COURT: Sustained.
Q: (By Mr. Johnson) Um, was there any second
guessing amongst the board with respect to -- based on the
decline in the stock price?
A: Um, no, there was not.
990
Q: Were you aware of whether there were any other
bidders for WordPerfect?
A: Yes, Lotus Corporation was an avid bidder for
WordPerfect.
Q: To your knowledge, was there a bidding war for
WordPerfect?
A: Yes, there was.
Q: Let me show you what has been marked as
Plaintiff's Exhibit Number 153 which is the next document in
your binder. Can you identify this document, please?
A: This is the Board Meeting Minutes from March 20
of 1994. It was the -- these are the Board Meeting Minutes
for Novell for March 20th 1994.
Q: Turning to the third page of these minutes with
the Bates stamp ending 7229, Mr. Goldberg if you could
highlight the third, that would be fine, the third point
there where it states, quote, "Lotus Development Corporation
was continuing to up its proposed purchase price for
WordPerfect over and above what Novell was willing to pay."
Did these minutes reflect the bidding war that was ongoing
between Lotus and Novell over WordPerfect?
A: Yes, they clearly do.
Q: Do you have any understanding as to why Lotus was
interested in WordPerfect?
A: Well, WordPerfect was the best word processor in
991
the market at that point in time, and Lotus had the best
spreadsheet, Lotus 123, and they were desirous of putting
those together and creating a suite of applications to
compete with Microsoft Office.
Q: Now going back to the merger between Novell and
WordPerfect, do you recall when the transaction was
finalized, actually closed?
A: Um, late June of 1994.
Q: Was a plan developed for integrating the business
applications into the Novell Company?
A: Yes, it was.
Q: As a part of that plan, were the business
applications run as a separate division?
A: Yes, it was.
Q: And why was that?
A: To give it the freedom of actually to make its
own decisions and address the market at both its
opportunities and its challenges.
Q: Let's turn now to Defendant's Exhibit Number 4
which should be the next document in your binder there.
Take a moment to take a look at that. Do you recognize this
document?
A: Yes, this is a version of the unification plan or
the integration plan for WordPerfect.
Q: And what is the purpose of this document?
992
A: The purpose of the document is to lay out the
plan for how WordPerfect and Quattro Pro would be integrated
into the company, and how the new organization would be set
up to address the business applications.
Q: If you could turn, please, to the second page,
the Bates stamp ending 6569, and if we could focus in on the
second full paragraph, how many business units would the
business applications products be divided into?
A: Three business units.
Q: And they are?
A: Um, the business applications, consumer products
and workgroup products.
Q: Now, this paragraph goes on to talk about relying
on the Novell organization for a number of services, quite a
list of services, including operations, corporate marketing,
education and training, services and support, sales, legal,
financing and accounting, et ceterA: It has a number of
other ones there. Can you explain to the jury why you would
be relying on Novell for those services for the business
applications?
A: Well, these were shared services so that they
could be far more efficient. And they were shared amongst
all of the business units of Novell. The reason for doing
that was to centralize it and say make them efficient and
also it aligned the business units, the new business units,
993
business applications, with the other business units in the
company.
Q: Staying on the same page and looking at the sub
heading some key points down below, you will see the first
one says that quote, "We are making new investments in
Chicago Development." What is Chicago, Mr. Frankenberg?
A: Chicago is the code name of the project at
Microsoft that ultimately became Windows 95.
Q: To your knowledge was Chicago a 32-bit operating
system?
A: Yes, it was.
Q: To your knowledge, did WordPerfect have
experience in working with 32-bit systems prior to
Microsoft's development of Chicago?
A: Yes. WordPerfect ran on a number of other 32-bit
systems including digital equipment corporations, fax,
operating fax systems and several Unix systems. So they
were well acquainted with the 32-bit development.
Q: If you could turn to the next page which is the
second page of the document with the Bates stamp ending
6570. Under the heading business application, applications,
the third bullet point says, quote, "After Windows 3.1
16-bit products are released this year, move large
percentage of Windows resources over to Chicago 32-bit."
Prior to the date of this memo, and the date of this memo is
994
August 3, 1994, was WordPerfect already working on a Chicago
based release?
A: Yes, it was.
Q: And what part of the business applications group
was working on the Chicago based release?
A: The shared code group would have been working on
it at that time.
Q: If you would turn then to Page 4 of this document
that was Bates ending 6572, there is some details about the
business of the business applications unit. Drawing your
attention to the first and second bullet points, is this an
overview of what was included within the development group
of the business applications division?
A: Yes, it is.
Q: I would like you to focus in on the fact that
development includes WordPerfect for Windows, DOS,
Macintosh, and Unix. Can you explain to the jury what that
means?
THE COURT: I'm sorry, where are you?
MR. JOHNSON: Page 3 of the document, Your Honor, with
the Bates stamp note Bates stamp ending 6572 under the
heading business applications.
THE COURT: I found it.
Q: (By Mr. Johnson) And I'm looking at the first
two bullet points. Um, again, I would like to focus you in
995
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 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
996
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: If you turn to page five, the next page in this
document, that is Bates stamp ending 6573, and turning to
the second bullet point under business applications, it
states that quote, "There are very few resources on Chicago
at this time. Even though we are phasing out WordPerfect
for VMS, all resources need to be applied to Chicago, and in
parentheses (or Tapestry). We do not want to be
significantly behind Microsoft, if at all, in releasing a
Chicago suite."
First of all what was VMS?
A: VMS was the operating system for digital
equipment, fax, computer system. The large 32-bit system
that was very popular at the time.
Q: And why were you phasing out further development
on VMS?
A: Because we had a completed product, it was
working well, it was well accepted and further development
wasn't necessary.
Q: This bullet point states that "all resources need
to be applied to Chicago," and then in parenthesis "or
997
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?
A: Yes, we were.
Q: The last sentence states here, "We do not want to
be significantly behind Microsoft, if at all, in releasing a
Chicago suite." How important was it for Novell not to be
significantly behind Microsoft, if at all, in releasing a
Chicago suite?
A: It was vitally important. The reason is that the
moment a new operating system environment is announced,
typically, previously sales, previous products drop
dramatically, and customers begin making decisions about
which products they'll use in this newly released operating
system. Um, so, if we weren't there at the point in time
that the new operating system was released, we wouldn't be
considered. And every day that we weren't there, it would
be a day that we would lose business. Not only then, but
for the future because people would make decisions to go
998
with someone else.
Q: And is the reference to releasing a Chicago suite
in this paragraph a reference to PerfectOffice?
A: It is a reference to PerfectOffice, yes.
Q: Can you describe -- I think we're done with that,
Mr. Goldberg. Thank you.
Can you describe your understanding of how
WordPerfect had been -- had traditionally been selling its
products prior to the merger with Novell?
A: WordPerfect was very effective in selling their
products face-to-face. They had a large number of very
knowledgeable people who went out and called on large and
small customers, even individuals, and sharing with them the
capabilities, demonstrated product, and people bought the
product and that was fine except for the fact that it was
very expensive to sell it that way, especially one on one.
Q: How did that differ, if at all, from Novell's
mode of selling software products?
A: Novell had the largest and one of the most
effective distributor dealer organizations in the world. We
had between 20 and 25,000 dealers who sold the products to
end customers including a large, medium to large customers
and individuals. It was highly respected and it was very
efficient. And one of the key things that made the
combination of WordPerfect and Novell interesting from a
999
business standpoint was being able to take advantage of
these 20 to 25,000 dealers in selling the product. It was
also more efficient because you didn't have to have a
knowledgeable person in front of an individual buyer. That
knowledge could be transferred to a dealer, and that person
in the dealership could provide that information. So much
like buying a car. The dealer, the sales rep at the dealer,
could represent us in that regard.
Q: So what were your plans for selling the business
applications after the merger?
A: We were -- our plan was to shift the model to
sell product through our huge dealer and distributor
network, to retain people who were knowledgeable so that
they could train people in the dealers, and retain a number
of people that could sell to large companies directly. But
that we would make use of this distinct advantage that we
had in the marketplace to sell software.
Q: Did your plan include any changes to the combined
sales force of Novell and WordPerfect after the merger?
A: Yes. Unfortunately it meant that we needed to
reduce the number of people, it is always painful to do
that, but we had to reduce the number of people in the
company, um, to gain the advantages of being more efficient
and more effective in selling.
Q: And have you been, during your history of
1000
business, have you been part of other mergers?
A: Yes, many times.
Q: And are layoffs after mergers usual or unusual?
A: It is almost always the case, unfortunately.
Q: Are you familiar with the acronym OEM?
A: Yes. OEM means original equipment manufacturer.
Q: Now, you worked for HP for many years. Was HP an
OEM?
A: Yes. HP was an OEM. We built and sold personal
computers, hence the original equipment, and we were the
manufacturer of that equipment.
Q: During your tenure at Novell, did Novell have any
plans to sell its business applications to OEMs?
A: Yes, we did. Um, we -- we planned on selling
applications that would be preloaded onto the computer so
that people wouldn't have to load them and get them started
and go through all of that work. We also planned to have
systems preloaded with demos and with free trials so that
people could try them out and then hopefully purchase them
after the fact.
Q: What if any advantages are there to applications,
developers and selling to the OEM channel?
MR. TULCHIN: Objection, Your Honor. This is
irrelevant. This is all Count VI material.
THE COURT: Overruled.
1001
Q: (By Mr. Johnson) Go ahead, Mr. Frankenberg.
A: Um, the key advantages are several. One is that
you could reach customers that you wouldn't otherwise reach.
Especially with the free trial that people give your
software a try and see how it works and hopefully come to
like it.
It was also very advantageous from the standpoint of
cost. The product was there, preloaded, ready to go, um,
and didn't require a box of software and inventory and all
that sort of thing. And so it was a very efficient way to
reach potential new customers.
Q: Mr. Frankenberg, I would like to go back to that
Defendant's Exhibit 308 which was the first document that we
looked at. And again, that first question and answer on
this document. You spoke here of the opportunity with
WordPerfect to develop a new class of networked
applications. Can you explain to the jury what you meant by
networked applications?
A: Yes, networked applications were applications
that worked together so you could create something in a
spreadsheet and include it in a word processing document.
So they were integrated in that way and you didn't have to
cut and paste as you used to have to do. They were also
integrated with the network so that anything on the network
could be accessed from those applications without the user
1002
having to understand all of the details of the network. In
many ways we have that today, although it could be a little
easier than what it is, um, but that was the idea behind
networked applications. It was a very exciting new area and
an area where we could hide the complexity of the network
and the complexity of the systems from users and yet give
them the capability to make it useful.
Q: Before you began as CEO of Novell, what was
Novell's main product?
A: Novell's largest product and most significant
product was called NetWare.
Q: So how does Novell's strength with NetWare
relate, if at all, to the concept of NetWare applications?
A: Novell had approximately 40,000,000 users of
their networks. And one of the things that Novell brought
to the table was in depth understanding of network. And we
saw the opportunity to make the network even more useful to
people by hiding it, by making it so that you didn't have to
understand it, putting it behind the applications, and from
that giving them more value to our current users as well as
new users.
Q: Are you familiar with the concept of the thin
client?
A: Excuse me. Usually I don't talk this much. Can
you repeat the question?
1003
Q: Sure. Are you familiar with the concept of the
thin client?
A: Yes, I am.
Q: Can you explain to the jury what thin client
means?
A: A thin client means that the user interface to an
application is on the device that is on the desktop. And
all of the application and information is across the network
on the server. What that means is that you can have a much
lower cost device on the desktop and you can centrally
administrate the applications so it is much more efficient
rather than having them scattered all over potentially a
large company all over the world.
Q: Was the thin client concept a part of your vision
for network applications?
A: Yes, it definitely was.
Q: I would like you to turn now to Plaintiff's
Exhibit 229. Can you tell us what this document is?
A: This document is a transcript of my speech to the
fall Comdex Convention in November of 1994.
Q: And would this document have been created in the
ordinary course of Novell's business?
A: Yes, it would have. I regularly gave speeches,
public and not so public speeches, to a significant number
of audiences.
1004
Q: And what is Comdex?
A: Comdex was the largest computer convention in the
world. It typically was held in Las Vegas and people
attended it from the -- from the industry. The press was
there, the customers were there, it was a great place to
preview new capabilities and learn about what was going on
in the industry.
Q: If we could bring up, Mr. Goldberg, the third
paragraph there on the first page. Um, that paragraph
begins with a reference to pervasive computing. Can you
tell the jury what that is?
A: Yes, I can. Um, pervasive computing is
connecting people to other people, and the information that
they need, and it is giving them the power to act on that
information any time, any place. In fact, it has come about
as so we expect today from computers and networking. At the
time it was only a vision.
Q: I noticed you were able to say that phrase
without even looking at the document. Was this a phrase
that you developed?
A: Yes, it was. I said it many times every week.
Q: How does persuasive computing relate, if at all,
to your product vision for WordPerfect's office productivity
applications?
A: We saw the WordPerfect office product suite,
1005
PerfectOffice, as the interface to pervasive computing.
People would go there, be able to access all of the
information they need, manipulate it, communicate about it
to other people, and even perform transactions in
cyberspace.
Q: How, if at all, did pervasive computing relate to
the internet?
A: The internet in 1994 was still in its infancy.
It grew quickly. And it was clear at that time that it
would become one of the most important, as they were called
then, information highways to provide connectivity to other
businesses, to information sources, and ultimately to
provide the ability to perform transactions over the
internet.
Q: And what, if anything, did Novell do to include
the internet in its pervasive computing model?
A: We licensed NetScapes Navigator which was the
foremost browser at the time and included it in our
PerfectOffice product.
Q: Do you recall whether Novell ever entered into an
agreement with NetScape?
A: Yes, we did. We entered into an agreement to
license the NetScape Navigator and that includes the ability
to distribute the product through our huge distribution
channel.
1006
Q: And if you would turn now to Plaintiff's Exhibit
Number 268 in your binder. And do you recognize this
document?
A: Yes. This is the software license agreement
between NetScape and Novell for NetScape Navigator.
Q: And why did Novell enter into this licensing
agreement with NetScape?
A: Because the NetScape Navigator was the foremost
browser available at the time. Um, we saw the opportunity
to integrate with NetScape Navigator to connect our
PerfectOffice products with it and for our customers to be
able to make use of it to access information throughout the
internet. NetScape saw it as a big positive because we --
MR. TULCHIN: Object to what NetScape said.
THE COURT: Sustained. Sustained.
MR. JOHNSON: That is fine, Mr. Frankenberg.
Q: (By Mr. Johnson) Can you tell us generally what
this agreement provided to Novell?
A: It provided Novell with the ability to include
NetScape Navigator with our products, to integrate them, and
to distribute the product.
Q: And during your tenure at Novell, did Novell
actually bundle NetScape Navigator with any of its business
applications?
A: Yes, we did, with WordPerfect office.
1007
Q: You have mentioned PerfectOffice a number of
times. Can you tell us what PerfectOffice was?
A: PerfectOffice was our suite of office
productivity applications that included WordPerfect, Quattro
Pro, WordPerfect Presentations, a personal information
manager, a forms package, a database package and somebody's
hiring products and AppWare.
Q: When did Novell first release a version of
PerfectOffice?
A: In late December of 1994.
Q: And do you recall the particular version number
for that PerfectOffice?
A: Yes, I do. It was my Christmas present. It was
called PerfectOffice 3.0.
Q: And what operating system was PerfectOffice 3.0
developed to run on?
A: It ran on Windows 3.1.
Q: If we could turn now to Plaintiff's Exhibit
Number 412. Do you recognize this document?
A: Yes, I do. It is a strategy paper for
PerfectOffice.
Q: And turning to Page 2 of the actual document
which is past the table of contents, Bates stamped at the
end 8191, if we could bring up, Mr. Goldberg, the top two
paragraphs. Mr. Frankenberg, the top paragraph talks about
1008
the strengths and weaknesses of the suite offerings by
Microsoft and Lotus. Do you have a recollection or any
recollection in both Microsoft's Office and Lotus's smart
suite offered only partial integration solutions in 1994?
A: Yes, I do.
Q: Turning your attention to the second paragraph
which states quote, "the majority of customers today have
not chosen to adopt either one of today's leading suites.
According to the January 1994 ComputerWorld Software Suites
Study, 74 percent of users have not yet adopted a suite
standard."
What significance, if any, is it to Novell that
the majority of customers have not yet chosen to adopt
either Microsoft's Office or Lotus's smart suite?
A: Well, I admit that we had a significant
opportunity, had a large number of customers or the vast
majority of customers already chosen it, it would have been
very difficult to overcome. But fortunately for us, three
quarters of the market approximately hadn't made a decision
yet. So it was a great opportunity for us.
Q: Moving down to the section marked "what do
customers really want," if we could bring up the first
paragraph there. It states in part, I think, beginning with
the second sentence, quote, "Traditionally, the word
processor, more than any other application, has played the
1009
largest role in influencing the purchasing decision of a
potential suite buyer and it quotes to an IDC Summer
Software Survey, 1993. As the leading vendor of word
processing software, WordPerfect has direct access to the
largest user base of potential suite customers in the
industry."
What significance, if any, did WordPerfect's
access to the largest user base of potential suite customers
have on Novell's plans for the PerfectOffice suite?
A: Well, the largest, having the largest user base
gave us a distinct advantage. As the earlier point that was
made in this same document said that the word processor was
the most frequently used application and people would not
want to learn another word processor, find that awkward, so
we had the advantage of being able to go to that largest
install base and with the most important application
convince them to use our suite rather than Lotus's or
Microsoft's.
Q: And perhaps you should explain. What do you mean
by WordPerfect's user base, a large install of user base?
MR. TULCHIN: Objection, Your Honor. The witness
hasn't said that he wrote this document. So when the
question asked what do you mean, I think Mr. Johnson is just
asking the witness to say what the document means. Just
slightly different.
1010
THE COURT: Overruled.
MR. JOHNSON: Go ahead, Mr. Frankenberg.
THE WITNESS: Could you repeat the question, please.
Q: (By Mr. Johnson) Sure. I just wanted you to
provide some context to the jury of what is meant by
WordPerfect's user base as used in this document?
A: We have the largest install base, the largest
user base of word processing software in excess of 20
billion users.
Q: And in 1994, was WordPerfect's user base bigger
or smaller than Microsoft's word user base?
A: It was larger.
Q: In 1994, did you have a view, if any, as to
whether there was an opportunity for Novell to capture a
significant portion of the new users of office productivity
application suites?
A: Yes, we thought we had a very good opportunity to
do that both because of the install base of word processing
WordPerfect and because so many had not yet made a decision
as to which suite they were going to buy.
Q: Could you turn next to Page 5 of this document,
PX-412, with a Bates Stamp ending 8914. At the top it
states, "introducing PerfectOffice 3.0, the perfect place to
work." Can you tell us what that means, "the perfect place
to work"?
1011
A: Well, what it means is that users could go to
PerfectOffice, click on it, turn it on, and stay there and
do all of their work from that, including the office tools
but also access information across the internet or access
information in their company systems. So therefore it was
the perfect place to work.
Q: The second paragraph indicates that PerfectOffice
3.0 was scheduled to ship by the end of 1994. Do you recall
if Novell met that goal?
A: Yes, we did.
Q: And I believe you stated it was released in late
December 1994?
A: December 23rd. As I said, it was my Christmas
present that year.
Q: So I would like to get the timing straight here.
When did the WordPerfect Quattro Pro deals with Novell
actually close?
A: It actually closed in June, late June, of 1994.
Q: And then Novell put out its first PerfectOffice
Suite in December of 1994?
A: That is correct. The team -- we had wonderful
developers. The team did an extraordinary job completing
that in less than six months and provided great integration
amongst these and proved the products themselves. I was
very proud of that team and they had a right to be proud of
1012
what they had accomplished.
Q: Oh by the way, had Novell delivered to the
marketplace any versions of WordPerfect word processor for
Windows prior to release of the PerfectOffice Suite in
December of 1994?
A: Yes. WordPerfect 6.0A and WordPerfect 6.1 were
delivered before the suite. These were enhancements to the
original WordPerfect for Windows.
Q: A little lower on this page the document notes
that the PerfectOffice 3.0 will be available in three
configurations. I would like to draw your attention to the
PerfectOffice Professional Model in the middle there and it
states that the professional model added paradox. What was
paradox?
A: Paradox was a relational database. It could be
used by either individuals or by groups of people to store
information away and then retrieve it in meaningful ways
later.
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
1013
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: I would like to share with you what Microsoft's
Paul Maritz said about AppWare under oath in 1994, and you
will find that on the screen in front of you.
Mr. Maritz stated in 1994, during the time you were at
Novell, that AppWare was quote, "An explicit attempt by
Novell to develop a layer that will provide all of the
services required by applications. And so that they are
explicit in their stated goal of saying that in the future a
third-party software developer should have to know only
about AppWare and obtain all the services that their
applications need from this AppWare sub system."
You agree, Mr. Frankenberg, that Mr. Maritz of
Microsoft accurately described the goal of AppWare?
A: He described it very well.
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
1014
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.
Q: Let's turn to Page 6 of this Exhibit 412 with the
Bates number 8195. And it says about half way down the page
"introducing PerfectFit technology." Are you familiar with
the concept of shared code as it was used at WordPerfect?
A: Yes, I am.
Q: And what is shared code?
A: Shared code was -- is the interface to the
operating environment that provides the connectivity to the
engines above it and makes it so that the engines are not
dependent on the under pinning operating system.
Q: Was PerfectFit Technology the same as shared
code?
A: Yes, it was.
Q: Was PerfectFit technology in all of the
1015
configurations of PerfectOffice 3.0?
A: Yes, it was.
Q: Was PerfectFit Technology a form of middleware?
A: Yes, it definitely was.
Q: Why?
A: Because it made it so that the developers of the
applications didn't have to understand the underpinning
operating systems that they ran on.
Q: And how, if at all, did AppWare and PerfectFit
Technology fit in with your vision of networked applications
and pervasive computing?
A: It was a central -- both of those were central to
the division. If we could make it so that developers could
develop applications that made use of the network and not
have to understand it, could access information on different
computer systems regardless of what operating system ran
them, we could provide users with a far greater set of
capabilities and hide the complexity of the network and the
system.
Q: If you could turn to Page 8 of this exhibit with
the Bates Stamp ending 8197, I would like to draw your
attention to the third paragraph there which states in part
quote, "WordPerfect is committed to deliver opendoc for
Windows in the future which will provide users with
distributed cross-platform support, as well as cross
1016
application integration." Can you tell us what is opendoc?
A: Opendoc was a document standard. This was
proposed as an industry standard so that one could create --
an application could create documents that could be
understood by other applications and thereby be able to be
manipulated by multiple applications even though the
developers wouldn't have worked together to make it happen.
Q: And was Novell involved in the development of
opendoc?
A: Yes, we were. We were intimately involved.
Q: Were other companies involved in the development
of opendoc?
A: Yes. Amongst them IBM, Apple, Lotus, several
others.
Q: What does it mean here where it talks about
cross-platform support?
A: Cross-platform support meant across multiple
operating systems and across multiple networks. A user
wouldn't have to know about that nor would the developer.
Q: In your view was opendoc a form of NetWare?
A: Yes, it was.
Q: During your tenure with Novell, were there any
releases of opendoc technology?
A: Yes, there was a developer's release in -- at
Brain Share in March of 1995. Developer release meaning
1017
making it available to the developers to look at and try
out.
Q: Did Novell continue to pursue opendoc technology
after the sale of WordPerfect to Corel in 1996?
A: No, we did not. At that point we were no longer
involved in application development and in document
development so we stopped our involvement in opendoc.
Q: If you could turn to Page 11 of this Exhibit 412
of Bates stamp 8200 at the end. If you could bring up the
first paragraph and heading Mr. Goldberg. The heading
states the first networks suite. What does that mean,
Mr. Frankenberg?
A: What that means was that PerfectOffice was the
first suite designed to work on networks. And that meant
that the suite could be easily installed across the network.
It could be administered across the network and ultimately
the goal was to make it easy for users of PerfectOffice to
make use of the network in other ways.
Q: At the end of this paragraph the last sentence
states, "network integration will be a major focus for
future PerfectOffice development." Did future PerfectOffice
development include the development of PerfectOffice for
Windows 95?"
A: Yes, it did.
Q: Going back again then to PerfectOffice 3.0, how
1018
was PerfectOffice 3.0 received in the marketplace?
A: It was received very well. We got very positive
reviews, um, our market share moved up into the mid
twenties. We were very heartened by the response and also
by the satisfaction that we heard from customers. Very,
very successful launch.
Q: Let's turn now to Plaintiff's Exhibit 213. Take
a moment to take a look at that. And first of all, do you
recognize this document?
A: Yes, I do.
Q: What is it?
A: It is my speaker notes from a presentation
demonstration that I gave at Agenda 95 in September of 1994.
Q: Would this document have been created in the
ordinary course of Novell's business?
A: Yes, it would have been. As I said earlier, I
frequently gave presentations and speeches.
Q: And can you tell us what was Agenda?
A: Agenda was an industry conference that, as its
name implies, it was setting the agenda for the next year.
It was always held in the fall. And so Windows, sorry,
Agenda 95 was held in September of '94 looking forward to
the next year. And people from throughout the industry
would attend, press would attend, it was an invitation only
kind of a conference and it was a great place for people to
1019
see what was emerging in the computer market.
Q: If you look down in the bottom left hand corner
of this document there is a date given of September 20th,
1994. Would that have been the date or about the date that
you gave this presentation?
A: Yes, it would be.
Q: Did Mr. Bill Gates attend this Agenda Conference?
A: Yes, he did. In fact, Bill attended most of the
Agenda Conferences all of the ones that I attended.
Q: Looking at the first page on this slide three it
details Novell's information services architecture and
references open standards. What is meant by the term open
standards?
A: Open standards are standards that are not owned
by a particular vendor. They are often also called industry
standards. These were standards that anyone could develop
to with confidence that they would be there and wouldn't
change and promoted inner operations of applications and
systems.
Q: Was Novell interested in supporting open
standards in the industry?
A: Yes, we were. It was a key tenet of Novell's.
Q: What value, if any, do open standards provide for
competition in the computer software business?
A: Open standards make it possible for there to be
1020
substantial competition because it is the implementation
that people compete on, not the interfaces and not
controlling the interfaces.
Q: Underneath that it gives the acronyms APIs.
First of all, I think the jury knows what APIs are now, but
you better, for the record, tell us what APIs are?
A: Application programming interface.
Q: And why would you be talking about APIs in this
presentation?
A: Because having APIs, application programming
interfaces that were stable and open and with equal access
was key to encouraging the development of applications in
the industry.
Q: And what do you mean when you say open and equal
access?
A: That all comers were able to access freely and
have the confidence that those interfaces would be supported
in the systems that claimed to support them.
Q: And I would like to turn now to Plaintiff's
Exhibit 222 and ask you, Mr. Frankenberg, have you seen this
document before?
A: Yes, I have.
Q: The jury has already seen this document and
actually heard Mr. Gates testify about it. Um, this is his
reflections with respect to your speech as you see the
1021
subject Frankenberg Speech at Agenda?
A: Right.
Q: And second paragraph of Mr. Gates e-mail states
that Corsair was demonstrated, if you could highlight that,
Mr. Goldberg, in the second -- yeah, there we go. What was
Corsair?
A: Corsair was a shell that provided an interface,
user interface, to the network and to your local
applications and capabilities.
Q: Mr. Gates goes on to state cross-platform,
including API, and then in parenthesis, Mac, Unix, Windows,
et cetera, close parenthesis, can you explain to the jury
what you were talking about at the Agenda Conference that
may have led Mr. Gates to make that remark?
MR. TULCHIN: Objection to what may have led Mr. Gates
to write this e-mail or say this.
MR. JOHNSON: I just said, Your Honor, may have led
Mr. Gates.
MR. TULCHIN: I'm sure the witness has testified to
his recollection of his speech.
THE COURT: I think the question goes to what the
witness was talking about at the time of the speech.
Overruled.
MR. JOHNSON: Go ahead, Mr. Frankenberg.
THE WITNESS: Okay. Corsair was designed, like many
1022
of our products, to work on a range of systems so that users
could have single user interface across platforms and the
examples that I talk about were Mac, or Macintosh, Unix,
Windows and other operating systems.
Q: (By Mr. Johnson) Mr. Gates goes on to state,
again continuing in the same paragraph, multiprotocol,
worldwide web, virtual world, unified views exclamation
point. What did you discuss with respect to these subjects
during your speech?
A: Um, multiprotocol refers to multiple network
protocols. And at the time, there were a number of network
protocols including the one that has become most popular
sometimes called the IP network today. So this ran across
multiple networks and their protocols. It connected to the
worldwide web, one of the early connections to the worldwide
web. Virtual world referred to the idea that we put forward
a 3D representation of your office and of your company and
outside the company so that instead of having to remember
www.xyz.com, you simply pointed at the company and it gave
you access to their website, if they had one, or to your
file cabinet. And then it would -- you would pick up a file
and that file would come up together with the application,
that application or applications that could manipulate it
and immediately be available for use.
Q: And what about Unified views?
1023
A: Unified views means that regardless of the
underlying systems, the user saw the same interface and the
same way of looking at things. So they only had to learn
one view. And after that, they didn't have to understand
the underpinning systems.
Q: There is also a reference in Mr. Gates' e-mail to
a browser called Ferret. What was Ferret?
A: It was aptly named. Ferret was a browser that,
an early browser, that went out across the internet much
like other browsers have since, and provided access to
websites and capabilities on the net.
Q: And did you demonstrate these products at this
Agenda Conference in September of 1994?
A: Yes, I did.
Q: How, if at all, did Corsair and Ferret relate to
Novell's office productivity applications like WordPerfect?
A: Well, our plan was to include Ferret and Corsair
in future versions of the PerfectOffice so that users would
have this ability to go across the network, go across the
systems, and make use of a single interface to a wide range
of information, applications and systems.
Q: Mr. Gates goes on to say, and I quote, clicked on
desk with financial quotes and went out and got today's
stock prices on a server. Launched WP 6.1 and showed how
its hypertext capability lets you navigate around the world
1024
using URLs, with three exclamation points. First of all,
would WP 6.1 be a reference to the WordPerfect word
processor put out by Novell prior to the release of
PerfectOffice 3.0?
A: Yes, it was.
Q: Can you explain to the jury what you demonstrated
here with WordPerfect 6.1?
A: What we did, what I demonstrated was pretty
astounding at the time. It is no longer astounding. But if
you had a hypertext, which is indicated by something that is
underlined and often it has a different color of text saying
it is a link, you could click on that and go to that
website. We think nothing of that today, of course you can
do that. But at that point in time it was revolutionary and
it even surprised Bill Gates.
MR. TULCHIN: Objection. Objection, Your Honor.
Could we strike what surprised Mr. Gates from just reading
this document.
THE COURT: It is struck.
MR. JOHNSON: Your Honor, there are three exclamation
points behind this what he just described. I think --
THE COURT: When it comes to the appropriate time you
can argue that.
MR. JOHNSON: Thank you, Your Honor.
Q: (By Mr. Johnson) By the way, were Corsair and
1025
Ferret ever released as products?
A: No, they were not.
Q: Why not?
A: Well, NetScape Navigator was so successful as a
browser that we chose to adopt it rather than Ferret. And
the capabilities of Corsair were slated to be taken
advantage of in the next version, the following version of
PerfectOffice, and, of course, that was not released by
Novell.
Q: Mr. Frankenberg, I would like to show you now
what has been marked Plaintiff's Exhibit 1 which is an
e-mail from Bill Gates to a large number of Microsoft
executives.
It is dated October 3rd, 1994, a couple of weeks after
your presentation at the Agenda Conference. Now the jury
has already seen this document a number of times. Have you
seen this document before?
A: Yes, I have.
Q: And when did you first see this document?
A: In 2009.
Q: And what was that in connection with?
A: That was in connection with my deposition for
this trial.
Q: Do you recall your reaction upon seeing this
document?
1026
MR. TULCHIN: Objection, relevance.
THE COURT: Sustained.
Q: (By Mr. Johnson) Were you surprised by the
contents of this document when you saw it in 2009?
MR. TULCHIN: Objection.
THE COURT: Sustained.
Q: (By Mr. Johnson) During your tenure at Novell,
Mr. Frankenberg, did you have occasion to speak with
Mr. Gates?
A: On a number of occasions, yes.
Q: Did Mr. Gates ever tell you in any of those
conversations that he had decided not to publish the
namespace extensions?
A: No, he did not.
Q: Did Mr. Gates ever tell you that he had decided
to wait until Microsoft had a way to do a high level of
integration that would be harder for the likes of Notes
WordPerfect to achieve and which would give Microsoft's
Office a real advantage?
A: No, he did not.
Q: Mr. Frankenberg, do you know specifically what
namespace extensions are?
A: I know generally what they are, I don't know
specifically what they are.
Q: Have you ever heard of the phrase undocumented
1027
calls or interfaces in reference to Microsoft's operating
systems products?
A: Yes, I have. In fact, I have used the phrase
many times myself.
Q: What does that phrase mean as you use it?
A: It means interfaces, application interfaces to
the operating system that were not generally available to
people outside of Microsoft, developers outside of
Microsoft, but were available to those inside of Microsoft.
Q: During the course of Novell's development of the
PerfectOffice suite for Windows 95, how involved were you,
if at all, with the hands on development efforts in the
application -- in the business applications unit?
A: I was not hands on in the development.
Q: And can the jury safely assume that you did not
actually write any code for that product?
A: Yes, and that is a good thing.
Q: So your role was not that of a developer like
Mr. Harral or Mr. Richardson?
A: No, it was not.
Q: Did there come a point in time when you became
aware that the business applications unit was having a
problem in developing the PerfectOffice Suite to run on
Windows 95?
A: Yes.
1028
Q: And what do you recall, if anything, about those
problems?
A: Um, the problems had to do with being denied
access to interfaces that we previously had access to.
Q: Can you give a general time frame of when you
learned about these problems?
A: It would have been in the first quarter of 1995.
Q: Do you remember who you learned this from?
A: Not specifically, but it would have been either
Mark Calkins, who was the division manager, or Jeff Waxman
who was the group manager, the applications group.
Q: Did you ever personally complain directly to
Mr. Gates about the issue of undocumented calls and
interfaces in Microsoft's operating systems?
A: Yes I did on a number of occasions.
Q: And do you recall the general time frame of these
complaints?
A: Those would have been during 1995.
Q: And what did you complain about?
A: I complained about being denied access to
application programming interfaces that people at Novell --
at Microsoft had access to.
Q: Did you make such complaints on multiple
occasions to Mr. Gates?
A: Yes, in person and in writing.
1029
Q: And what if any reaction did Mr. Gates have to
your complaints about undocumented calls and interfaces?
A: He refused to talk about it.
Q: Did he say why?
A: He said because when we had a meeting in early
1995 that I had said that in the interest of our customers,
we should put things in the past behind us. Unfortunately,
undocumented interfaces continued to be an issue, so they
weren't in the past. Hence, I had complained about them.
Q: Did there come a point in time when you stopped
raising the issue of undocumented calls and interfaces with
Mr. Gates?
A: Yes, there was.
Q: And when did you stop raising those issues?
A: Probably late summer of 1995.
Q: Why did you stop raising the issues of
undocumented calls and the interfaces?
A: Because Bill refused to address that issue and we
had other issues that were vitally important to Novell that
we needed to make progress on. And, um, so I turned my
attention to those issues.
Q: Was Novell dependent in any way upon Microsoft's
cooperation in other aspects of its business at the time?
A: Yes, we were intimately dependent on Microsoft's
cooperation.
1030
Q: Can you explain that a bit to the jury?
A: Yes. Um, Novell's largest product, as I think we
talked about a little while ago, was NetWare. And NetWare
relied on having a client, software on the -- that worked in
conjunction with Microsoft's operating system to access our
servers. If we didn't have Microsoft's cooperation on that,
our flagship product wouldn't work properly. And as such,
it was important that we have Microsoft's cooperation in
those areas amongst others.
Q: Do you recall that at some point Novell reached a
decision to sell the business applications?
A: Yes, I do.
Q: And when was that, if you recall?
A: That would have been in late October of 1995.
Q: So that would have been after the release of
Windows 95 by Microsoft in August?
A: That is correct.
Q: What applications did Novell plan on selling?
A: Planned on selling the WordPerfect, Quattro Pro,
WordPerfect Presentations, all of those except for -- all of
those included in the standard suite except for GroupWise.
Q: And what was GroupWise?
A: GroupWise was a GroupWare product that allowed --
that provided a number of capabilities including e-mail,
group calendaring, scheduling, and group access to the
1031
information.
Q: Microsoft has a damages expert in this case as do
we. Um, and he filed a report which I know you haven't
seen. But I want to read you something Microsoft's damages
expert said about you in his report. I'm referencing the
Hubbard report Paragraph 112. Quote, "Mr. Frankenberg also
testified that the value of the GroupWise assets was
approximately half of the value of the word processing and
spreadsheet application assets in March of 1994." Um, did
you ever say that, Mr. Frankenberg?
A: No, I did not.
Q: Now, March of 1994, would that have been the time
that Novell entered into its agreement to buy WordPerfect?
A: Yes, it was.
Q: Do you recall the total revenues of GroupWise, of
the GroupWise assets in 1993 prior to Novell's purchase?
A: It would have been approximately $25,000,000.
Q: And what were the total revenues of WordPerfect
Corporation in 1993 prior to that purchase?
A: Approximately $700,000,000.
Q: So if you're actually trying to put a monetary
value on GroupWise at the time of the purchase in 1994, what
fraction of the total value of the WordPerfect assets was
attributable to GroupWise?
A: From a revenue standpoint about four percent.
1032
Q: Now you testified in your deposition in this case
that at the time of the sale moving forward to 1996, on a
going forward basis, GroupWise held the most promise for
you. Do you remember that testimony?
A: Yes, I do.
Q: And why did you think that?
A: Well, because GroupWise was inherently a network
application. It provided us with a much more open field to
compete than the -- than in office suites, and I saw that as
a great opportunity for Novell.
Q: What, if anything, had happened to the value of
the other products besides GroupWise?
A: They had declined significantly.
Q: Why?
A: Because Microsoft delayed our introduction and
their suite was there at the day of announcement, Windows 95
and ours was not.
Q: Let's return to the sale of the office
productivity applications. Um, can you explain to the jury
why Novell decided to sell its office productivity
applications in late 1995?
A: It became clear that we were not competing on a
level playing field. Um, our key competitor, Microsoft,
could control our ability to put product out the door and
did so. And that meant that it was impossible for us to
1033
fulfill our promises to customers, it was impossible for us
to derive significant value, and it made much more sense for
us to sell product and pursue other opportunities.
Q: In the absence of the reasons you just described
and the decision to sell, do you believe Novell would have
continued to own and develop WordPerfect and the other
business applications?
MR. TULCHIN: Objection relevance.
THE COURT: Sustained.
Q: (By Mr. Johnson) Um, can you describe for the
jury how Novell went about selling the business
applications?
A: Yes. We generated a list of potential buyers and
we announced to the world that we were planning on selling
the applications, gave a date by which bids would be
received, received those bids, contacted everyone on our
list and discussed the opportunity with them and then chose
to sell it to Corel.
Q: When you announced the sale, you made it public
that you were looking to sell these applications, did Novell
have a buyer?
A: No, we did not.
Q: Why did Novell announce the sale without having a
buyer in hand?
A: To make sure that we reached everyone who might
1034
be interested in buying it.
Q: And in your view, did that help or hurt Novell's
ability to sell the business applications?
A: It helped immensely. As it turned out, Corel,
who ultimately did buy the applications, was not on our list
of people to contact. So had we not made this announcement,
the best bid in our, ultimately in our view, wouldn't have
been made.
Q: During the time period between the decision to
sell the business applications and the actual sale to Corel,
were there any changes in Novell's support to the business
applications units efforts to get out a PerfectOffice suite
for Windows 95?
A: No, there were not any changes. It would have
been foolish of us to do that because the buyer then would
have suffered, potential buyers would have looked at that
and said that we were decreasing the value by not continuing
to do the development.
MR. JOHNSON: Thank you, Mr. Frankenberg. No further
questions.
THE COURT: Perfect timing. Let's take a recess and
I'm ready any time anybody else is.
(Recess.)
1035
THE COURT: Let's get the jury.
MR. JARDINE: Your Honor, were you able to watch the
Baltimore Ravens last night?
THE COURT: No. I saw the highlights after. I was
a happy person, unlike last Tuesday a week ago.
(Jury brought into the courtroom.)
THE COURT: Mr. Tulchin, cross?
CROSS EXAMINATION
BY MR. TULCHIN:
Q: Mr. Frankenberg, good morning.
A: Good morning.
Q: Good to see you again.
A: Good to see you.
THE COURT: You're under oath, Mr. Frankenberg.
THE WITNESS: Thank you, Your Honor.
MR. TULCHIN: We had a very nice time at his
deposition, Your Honor, a couple years ago.
Q: Mr. Frankenberg, you still have that notebook in front
of you, sir?
A: Yes, I do, sir.
Q: These were the documents that your lawyer showed you on
direct. The second document is Plaintiff's Exhibit 153. And
that's the minutes of the meeting of the board of directors
of Novell, March 20, 1994. Do you have that, sir?
A: Yes, I do.
1036
Q: You weren't intending, on direct, to tell the jury
about what happened at that meeting, were you, sir?
A: No, I was not.
Q: You were not present at the meeting?
A: I was not present at the meeting.
Q: This was before you even agreed to join Novell?
A: That's correct.
Q: So that's March 20. And, in fact, the announcement of
the deal to buy WordPerfect Corporation and Quattro Pro from
Borland came the next day, March 21, correct?
A: That may be right. Yes, sir.
Q: Okay. And you testified on direct that Mr. Gates never
told you that, in October, 1994, he had decided to withdraw
support for the name space extension API's. Do you recall
that testimony?
A: Yes, I do.
Q: Now, you're certainly not implying, are you,
Mr. Frankenberg, that other employees of Microsoft told other
employees of Novell about that decision?
A: I'm sure they did, sir.
Q: And, in fact, Novell was told by Microsoft of
Mr. Gates' decision very promptly after the decision was
made, right?
A: That may be the case. I don't know that for sure.
Q: I think you said on direct that you don't recall
1037
hearing about that decision until sometime in 1995, correct?
A: Correct.
Q: But you're aware now, are you not, that in October,
within a week or ten days or so of the decision, Novell was
told about it?
A: That may well be the case. I don't know that
personally.
Q: Okay. It's just that that information didn't get up to
you until sometime months and months later, fair?
A: I think that's fair, yes.
Q: And also, with respect to the documents in front of
you, there were some questions about Plaintiff's Exhibit 268.
That's the license agreement between Novell and Netscape. Do
you recall those questions?
A: I do, yes.
Q: Now, I don't think you ever said, on direct
examination, when it was that this agreement was entered
into, did you, sir?
A: No, I did not.
Q: Could you -- maybe we could bring up page 11 of
Plaintiff's Exhibit 268. There, on page 11, is the signature
of Steve Markman of Novell, correct?
A: Correct.
Q: And he was executive vice-president at the time?
A: Yes, he was.
1038
Q: And that contract with Netscape was signed in February
of 1995, correct?
A: That's correct.
Q: Okay. So, just to be clear on this, you weren't
implying during your direct examination, were you,
Mr. Frankenberg, that you had this deal with Netscape before
PerfectOffice 3.0 was released, which you said was December
23, 1994?
A: I was not implying, that, no.
Q: In fact, the deal took place a couple months later?
A: Yes.
Q: All right. And when you said on direct that you
bundled Navigator, Netscape's browser called Navigator, with
PerfectOffice; in fact, that didn't happen with PerfectOffice
3.0, did it?
A: It was available with PerfectOffice 3.0, yes.
Q: I'm asking whether it was bundled with PerfectOffice
3.0, which was the word that you used on direct.
A: If I said that, I may have been in error, yes.
Q: Thank you, sir. I wonder if you could just go back,
and if I could direct your attention to the last three years
or so, when you worked at Hewlitt Packard, and I think you
said, sir, that from January, 1991, until around March
of '94, you were running Hewlitt Packard's PC business,
correct?
1039
A: That's correct.
Q: And that was the business of making personal computers,
right?
A: Yes.
Q: Just prior to the time that you started running that
business, Hewlitt Packard had been using Microsoft as a
supplier of operating systems, correct?
A: That's correct.
Q: And, in the'80's, Hewlitt Packard licensed Microsoft's
MS DOS operating system on HP's PC's?
A: Also correct.
Q: Right. And when you started running that business in
January of 1991, it was your view, right at the outset, that
the future of the PC business lay in graphical user
interfaces, correct?
A: Correct.
Q: It was your view, right at the outset, that the future
of HP's business, the PC business that you were running,
depended on acquiring a graphical user interface to put on
the PC's; isn't that right?
A: That's right.
Q: And, in fact, it was your view that it was vital for
Hewlitt Packard to offer Windows on all its PC's?
A: That's correct.
Q: And, during the time that you ran the PC business for
1040
Hewlitt Packard, the company went from being the 24th or 25th
largest PC maker to being something like number 7, right?
A: That's also correct, yes.
Q: And you said in the past that that success, in the PC
business, was something that you got some credit for?
A: I did, as well as the team that I worked with, yes.
Q: Right. And your success in selling PC's for Hewlitt
Packard, at least in part, led you to get the offer from
Novell to become the president and then CEO?
MR. JOHNSON: Objection as to why they offered him
the job. How would he know?
THE COURT: What's sauce for the goose is sauce for
the gander. Sustained.
MR. TULCHIN: I knew we would come across that rule
sooner or later.
Q: BY MR. TULCHIN: Mr. Frankenberg, can we agree, sir,
that Hewlitt Packard's success in moving from 24th or 25th,
to 7th in the PC business was attributable in part to the
fact that Hewlitt Packard installed Windows on all its
PC's?
A: That's true.
Q: And you said that you couldn't have done it if you
hadn't used Windows?
A: That's true.
Q: And you also said that you recognized, in this same
1041
period, from January, '91, until March, '94, when you left
Hewlitt Packard, that users across the United States and
elsewhere were clamoring for Windows?
A: That's true.
Q: That was something that lots of people in the PC
business recognized in that same period, correct?
MR. JOHNSON: Objection.
THE COURT: Yeah. I'm going to overrule that. I
think, in terms of the industry, what the industry knew, if
you knew from what the industry knew. I mean, obviously, you
can't say what other people thought, but you can say what you
knew of the industry. You can say that.
THE WITNESS: So, yes, it was generally known in the
in the industry that Windows was required for success in the
business.
Q: BY MR. TULCHIN: Mr. Frankenberg, the fact that
people -- that you recognized in the early '90's that
customers were clamoring for Windows, that was, in large
measure, a result of Windows 3.0, which Microsoft had
released in May of 1990, correct?
MR. JOHNSON: Objection. Now we've got people
clamoring rather than the industry clamoring.
THE COURT: Overruled. I think people know what's
going on. Go ahead.
THE WITNESS: Mr. Tulchin, could you please repeat
1042
the question. Sorry.
Q: BY MR. TULCHIN: Yes. Let me try it again. When you
were running the PC business at Hewlitt Packard, was it your
view that the popularity of Windows and the reason that you
wanted Windows on all your PC's was, to a great extent, a
result of Windows 3.0, which had come out in 1990?
A: Yes, and the subsequent minor releases, yes.
Q: Including Windows 3.1, which came out in '91. Is that
fair?
A: Yes, sir.
Q: And was it also the case, Mr. Frankenberg, that, in the
early 1990's, not just when you were at Hewlitt Packard, but
into the time that you were CEO of Novell, that the computer
business and the software business, both, were very
competitive businesses?
A: Yes, they were.
Q: And the software business, in particular, was, I think
we might say, a dynamic industry, correct?
A: Yes, it was.
Q: Things were changing all the time?
A: Yes.
Q: And sometimes things changed very fast, wouldn't you
say?
A: Yes, they did.
Q: And if a company wasn't nimble enough to see the
1043
changes coming, that company could be left behind. Is that a
fair statement?
A: Yes, it is.
Q: And you recognized, when you joined Novell, that if
Novell wasn't able successfully to adapt to the rapid change
which took place in the industry, the profitability, the
revenues, the future of Novell might be adversely affected?
A: Yes.
Q: Could you tell the jury, Mr. Frankenberg, what a form
10-K is?
A: A form 10-K is the annual report of your financial
results filed with the SEC, the Securities & Exchange
Commission.
Q: Right. And this is filed with the Securities and
Exchange Commission in Washington, D.C., correct?
A: Yes.
Q: And this is an official statement by the company which
is filed publicly so that the company's stockholders can get
information about the company and prospective stockholders,
people who might want to buy the stock, can also get
information; is that right?
A: Yes, it's correct, as well as others. It's a public
document.
Q: And during the years that you were CEO, Novell was a
public company?
1044
A: Yes, we were.
Q: Mr. Frankenberg, let me hand you what's been marked as
Defendant's Exhibit 380. And I wonder if you want to just
tell the jury what that is.
A: This is a copy of the form 10-K for Novell Corporation
for the fiscal year that ended October 29, 1994.
Q: And Novell had a fiscal year that didn't match the
calendar year, correct?
A: That's correct.
Q: It ended, I guess, the last Friday of October every
year, at the time?
A: That's correct.
Q: And this form 10-K was filed with the SEC early in
1995, correct?
A: That's correct.
Q: And if we can go to page 19, I think we'll see that you
are listed as the first signator of this form?
A: Yes, I am.
Q: This shows that you signed the 10-K on January 23,
1995, as chairman of the board, president, chief executive
officer and director. And then, in parentheses, it says
principal executive officer. Do you see that, sir?
A: Yes, I do.
Q: So this is an official statement, filed with the SEC,
meant to provide information to stockholders and other
1045
members of the public, correct?
A: Correct.
Q: And it's obviously very important that you get
everything in it accurate. Is that fair?
A: Yes.
Q: I wonder if we could look at pages 6 to 7, right at the
bottom. You'll see, sir, that, at the bottom of page 6 and
on to page 7, there's a section entitled Product Development.
And I want to just direct your attention to that first
sentence under product development. It says:
"Due to the rapid pace of technological change in
its industry, the company believes that its future success
will depend, in part, on its ability to enhance and develop
its network and application software products to meet dynamic
market needs."
Do you see that, sir?
A: Yes, I do.
Q: And that's what we were talking about a moment ago,
that market needs were dynamic in this industry, correct?
A: Yes.
Q: And they could change and sometimes change quickly?
THE COURT: He has already said that.
Q: BY MR. TULCHIN: Right.
A: Yes.
Q: And there was a risk to the company that, if products
1046
weren't developed in a satisfactory way, that the company's
future success could be in jeopardy. Isn't that right?
MR. JOHNSON: Also asked and answered. Objection,
Your Honor.
THE COURT: Overruled.
THE WITNESS: That's correct.
Q: BY MR. TULCHIN: Okay. And then, could we look at page
8 of this form 10-K. This is Defendant's Exhibit 380. There
is a section on page 8 entitled Competition, and I want to
just look at the first paragraph under that. You'll see that
the statement, which you signed, says:
"Novell competes in the highly competitive market
for computer software, including, in particular, network and
general purpose operating systems, network services, desktop
operating systems and application software. Novell believes
that the principal competitive factors are technical
innovation to meet dynamic market needs."
And I just want to stop there. The sentence goes
on, and you're welcome to read as much as you want,
Mr. Frankenberg. But you were telling the SEC there and the
public that what Novell believed was that the principal
competitive factors include, and this is the first one
mentioned, technical innovation to meet dynamic market needs.
Isn't that right?
A: That's correct.
1047
Q: And is it fair to say, Mr. Frankenberg, that you
understood, when you took over at Novell, that there was no
guarantee at all that Novell would be able to keep up in
the -- these very competitive markets?
A: There was no guarantee, but Novell had a track record
of successful competing, yes.
Q: Well, let me talk a little bit about the track record
of WordPerfect if I could because, as you've testified, you
started in late March or early April; is that right?
A: That's correct.
Q: Could we say around April 1?
A: Close to that, yes.
Q: '94. And the deal to acquire WordPerfect closed in
June?
A: Correct.
Q: You said late June?
A: Yes.
Q: Okay. When you had been running the PC business at
Hewlitt Packard, you had had meetings, I think you said
quarterly, with Mr. Noorda of Novell?
A: That's correct.
Q: Right?
A: Yes, I did.
Q: And you were familiar with Novell's business when it
came to Netware?
1048
A: Correct. And some of the other associated products as
well.
Q: Right. Novell, during those years when you were at HP,
didn't own the WordPerfect word processing application,
correct?
A: No, they did not.
Q: And, is it fair to say that, when you joined Novell,
you weren't as familiar with WordPerfect's business as you
had been with Novell's?
A: That's fair to say, yes.
Q: Netware, by the way, was the dominant product in its
market at the time; is that right?
A: It had the largest market share.
Q: It had about 70 --
A: I have been taught never to use the word "dominant."
Q: I'm sorry sir?
A: I've been taught never to use the word "dominant" in a
court of law.
THE COURT: When talking about Novell.
Q: BY MR. TULCHIN: Okay. Just going back one step. In
'94, when you took over at Novell, Netware had about 70
percent of the market for network operating systems; is that
right?
A: That's approximately correct, yes.
Q: And you don't want to use the word "dominant," but
1049
let's just say 70 percent is a very high share, is that fair,
of that market?
A: That's a fair statement, yes.
Q: And Netware was Novell's most important product in
1994?
A: Yes, sir.
Q: Correct?
A: Yes, it was.
Q: Okay. And it remained the most important in '95 and
thereafter?
A: During at least through the time that I was there, yes.
Q: Yes. And is it fair to say, Mr. Frankenberg, that your
focus -- during the two years and several months that you
were CEO of Novell, your focus was principally on Netware; is
that right?
A: No. That's not right.
Q: Well, Netware was the most important product for the
company, correct?
A: Correct.
Q: It accounted for more than half of the revenues of the
company; is that about right?
A: Significantly more than half, yes.
Q: And it accounted for more than half of the profits of
the company as well, correct?
A: Correct.
1050
Q: Would you say that, during the time that you were CEO
of Novell, it was important to you to make sure that Netware
retain its very strong market share in the network operating
system market?
A: Yes. That was very important.
Q: That was Novell's core business, right?
A: That was our largest business.
Q: Would you say it was your core business, c-o-r-e?
A: I would say that it was our largest business.
Q: So, you don't want to say core for some reason.
A: We were in the process of changing what we were doing
to pursue our basic **computer business, so Netware was a
very important part of what we were doing. The core was
becoming something different than Netware.
Q: Mr. Frankenberg, just because Netware had 70 percent of
the market in network operating systems did not mean that you
wanted to sort of lift your foot off the accelerator a little
bit and allow others to get a higher market share, right?
A: Correct.
Q: Even at 70 percent, your job was to get as much of the
business as you could?
A: As much as we could, yes.
Q: And if you have 70 percent, any business wants to get
71. Is that fair?
A: That's the job the shareholders expect you to pursue,
1051
yes.
Q: And after 71, you're going to try for something above
that, correct?
A: Yes.
Q: Okay. When you took over at Novell, I think you said
before that you found that -- actually, let me strike that.
At the time that the WordPerfect deal closed in late June of
'94, I think you said that you found that WordPerfect people
were not in the habit of putting in writing business plans,
formal business plans; is that right?
A: That's correct. That was also true of a number of
other Novell businesses.
Q: And it was your decision, when you became CEO, that
every business, every group within the company, should create
business plans; is that right?
A: That's true.
Q: Was it also your view, Mr. Frankenberg, when you took
over in 1994, that when a company, a big public company like
Novell makes important strategic or tactical decisions, it's
usually a good idea for someone to put in writing the issues
and questions that should be considered by those who are
making those decisions?
A: That's generally a very good practice, yes.
Q: And Novell, at the time, was in the top of Fortune
1,000, one of the largest public companies in the country,
1052
correct?
A: I think it was closer to the border of the Fortune
1,000. I don't remember the exact position, so I don't want
to be inaccurate.
Q: But you certainly said that it had revenues about $2
billion?
A: Slightly less than 2 billion a year, yes.
Q: And thousands of employees?
A: Correct.
Q: Okay. So, for a company of that size, it was your view
that if there's an important decision to be made, if I could
put it this way, a fork in the road, we have an option, two
options or three options, which choice should we make; that,
ordinarily, business people would create some sort of
document, a memorandum or something setting forth the options
and the considerations and issues that decision-makers should
be thinking about; is that right?
A: Yes.
Q: And that was something you tried to enforce, tried to
get people to do that?
A: Yes, I did.
Q: Sorry about the delay, Your Honor.
THE COURT: No problem.
Q: BY MR. TULCHIN: Mr. Frankenberg, I'm handing you what
we've marked as Defendant's Exhibit 312. This was a document
1053
written to you by David Bradford in April of 1994, correct?
A: Correct.
Q: And would you tell the jury who Mr. Bradford was at the
time?
A: David Bradford was our general counsel.
Q: Your chief lawyer?
A: Yes.
Q: He was an important part of the team, your team, when
you were at Novell, correct?
A: Correct.
Q: And this is just after you started at your job,
correct?
A: It was within a few days, yes.
Q: Within a few days. Novell has announced that it's
going to buy WordPerfect Corporation, but the deal hasn't
closed yet, right?
A: Right.
Q: And Mr. Bradford is sort of writing a welcome
memorandum to you. Is that a fair way to put it?
A: I would say that's a good description, yes.
Q: Could I ask you to turn to page 3. I'm sorry. I said
page 3, and I meant the second page, page 2. It has the
production number 3199 at the bottom. Do you see that, sir?
A: Yes.
Q: Right at the top, Mr. Bradford is discussing business
1054
development. Do you see that paragraph?
A: Yes, I do.
Q: And he says: "Novell speaks a great deal about
partnerships, and we like to think of ourselves as the
partnership company. However, in my view, we have done a
poor job at properly developing new business opportunities."
This was one of the first things you were told by
Mr. Bradford, your top lawyer, when you took the job, right?
A: Correct.
Q: And, in fact, as you looked into things, you agreed
with him. In some cases, Novell had done a poor job in
developing new business opportunities?
A: In some cases that was true, yes.
Q: And then, in the third paragraph on on that same page,
Mr. Bradford says, again in April of '94: "In some respects,
even worse has been our job at integrating new businesses
within the Novell corporate structure once the acquisition
has been made."
And, when you looked into that, you found that that
was true as well, correct?
A: In a number of of cases that was true as well, yes.
Q: And, of course, when one company buys another, there
may be a number of very difficult issues about how to
integrate the two organizations and make them one, correct?
A: Yes.
1055
Q: A business organization isn't going to function well
unless you integrate two organizations well, correct?
A: Correct.
Q: And that could be a difficult job?
A: It can be, yes.
Q: Sometimes the two organizations have different
corporate cultures; is that right?
A: That's right.
Q: Sometimes the two organizations may be located in
geographically disparate places. One might be in Utah, one
in Scotts Valley, CaliforniA: Correct?
A: Correct.
Q: And sometimes personalities may not get along. There's
a whole new structure, and somebody at, let's say,
WordPerfect, a company that's being acquired, may get a new
boss, correct?
A: Correct.
Q: And, unless the integration goes well, sometimes the
combined company can fall flat on its face. True?
A: That's true.
Q: And if I could ask you, Mr. Frankenberg, to look at the
very next page. Now we're on page 3. Mr. Bradford has a
Roman Numeral 4, which says Microsoft. And he says:
"There are so many levels to deal with when speaking
of Microsoft, it is difficult to know where to begin. The
1056
first should be a given. We need a single point of contact
to coordinate our relationship with Microsoft."
Now, let me just stop there. When you took over
this job at Novell, you found out that, in fact, there had
been no single point of contact at Novell to deal with
Microsoft, correct?
A: That's what this memo says, yes.
Q: Right. On the other hand, Microsoft had a
well-organized team whose sole responsibility was to work
with Novell, a team that was headed by Bob Kruger, right?
A: That's what it says, yes.
Q: Now, in the two years or so that you were the CEO of
Novell, did you ever follow Mr. Bradford's recommendation to
appoint a single person as the point of contact to deal with
Microsoft?
A: No, I did not.
Q: And, if you look down at the next paragraph, just that
one sentence, My Recommendation. Bradford says it very
explicitly there, quote: "My recommendation is that one
individual within the company be assigned full-time
responsibility to coordinate our efforts with Microsoft."
And, despite that, no one person ever was appointed,
correct?
A: Correct.
Q: You testified on direct you had some conversations from
1057
time to time with Mr. Gates, but, in fact, there were others
at Novell, such as Mr. Creighton. Do you remember
Mr. Creighton?
A: I do remember Tom Creighton, yes.
Q: Did you know, at the time, that he was talking to
various people at Microsoft?
A: I probably did know that.
Q: And did you know that Dave Moon and Ad Rietveld were
also talking to people at Microsoft?
A: They should have been doing that, yes.
Q: Mr. Rietveld was -- had formerly been the president of
WordPerfect; is that right?
A: That's right.
Q: And after the merger, he came to Novell, and I think
his title was Executive Vice-president at Novell; is that
correct?
A: That's correct.
Q: And he was the guy running the applications business
for you, right?
A: That's correct, yes.
Q: Okay. Now, to go back to something we talked about a
little bit earlier, I think on direct examination you
answered one of Mr. Johnson's questions by saying that
WordPerfect had a history of being successful with the word
processing application called WordPerfect, right?
1058
A: Yes, I did, and they were.
Q: They were very successful on the DOS platform; isn't
that right?
A: Yes, they were. I wouldn't use the word dominant, but
they were successful
Q: Well, I think that -- I'm going to try to stay away
from that word right now as well.
A: Okay.
Q: On the DOS platform, WordPerfect, in the early '90's,
had 70, 80 percent of the whole market, correct?
A: I don't know that personally, but that would not
surprise me. Yes.
Q: At the time of the acquisition, it wouldn't surprise
you that WordPerfect had more than 80 percent of the market
on the DOS platform, correct?
A: That wouldn't surprise me either, although I don't
recall that specific number.
Q: And, during the time you were running Novell, do you
recall hearing about something called the first-mover
advantage, or sometimes referred to as the first-in
advantage?
A: I heard about it long before I was at Novell, yes.
Q: Okay. But you certainly heard about it at Novell, too?
A: I did, yes.
Q: And, generally, the principle there is that, in a
1059
technology field, in a high-tech industry, the first company
to come out with a product usually winds up doing very well,
correct?
A: I would say that's a shortened version of what it
really means. The first one that comes out with a product
that really addresses the users' requirements and is able to
market it as well. Just having it isn't enough, and just
being the first one there without it being adequate to the
task isn't enough either.
Q: Right. And I accept your amendment. That's a good
clarification. So, the first-mover advantage or first-in
advantage means that if you have a good product and you have
to do well marketing it, it has to be something that
consumers want, you're going to have a big advantage over
companies that come into that same market later?
A: Correct.
Q: Correct?
A: Yes.
Q: Maybe a good example, later in time, would be the Apple
iPod, which came out in 2001, right?
A: That would be a good example, yes.
Q: It was a device for -- a portable device for playing
music, and it turned out to be very popular, correct?
A: Correct.
Q: Had a big share of the market?
1060
A: Correct.
Q: And a number of companies developed and then
commercialized and marketed competing devices later on,
right?
A: Yes.
Q: Nobody else has ever been able to crack that
first-mover advantage. Apple is still number 1 by far in
that market. Fair?
A: Fair.
Q: And the same thing has happened in various software
businesses; isn't that right?
A: Yes.
Q: In fact, WordPerfect was very late coming out with a
word processor for the Windows platform; isn't that right?
A: I don't know exactly how late they were. That was
before I was there.
Q: Well, it was, but when you took over Novell, and when
the acquisition of WordPerfect closed in June of '94, part of
your job was to learn a little bit about the history of the
company, right?
A: Yes.
Q: It was very important for you to understand the
businesses that WordPerfect was in and how they had done in
the past?
A: Yes.
1061
Q: You knew that Windows 3.0 had come out in May, 1990.
You knew that because you were at Hewlitt Packard at the time
and you've told us already that users were clamoring for
Windows, right?
A: Right.
Q: Did you come to learn, as CEO of Novell, that
WordPerfect didn't come out with its first word processor
for the Windows platform until November, 1991, a year and a
half after Windows 3.0 came out?
A: I probably did learn that at the time, but we're
talking 17 years ago. I don't remember everything that I
learned in the first few months I was there. Sorry.
Q: I understand that, sir. We were younger then.
A: If we were back then, we were a little closer in time,
I probably would be able to answer your question.
Q: Okay. But, can you and I agree that, in a dynamic
industry -- and the word "dynamic" comes from Exhibit 380,
your 10-K that we looked at earlier -- in a dynamic industry,
being 18 months late to get into the market can itself be a
big disadvantage?
A: It can be, yes.
Q: And, if you're the second player in or the third or
fourth, very often, to get market share, you have to come out
with something not just as good as the first company that
came to that market, but something considerably better; is
1062
that right?
A: Correct.
Q: And when you -- when the deal with WordPerfect closed
in June of 1994, you also learned something about where
WordPerfect had been in the market for suites; is that right?
A: Yes.
Q: And, again, WordPerfect was very late to come to that
market; is that correct?
A: When I joined Novell, they were not in the market
yet.
Q: Microsoft had come out with Microsoft Office, which was
a suite that included Word and Excel in 1990; is that right?
A: That may be correct. I don't know the exact date of
Microsoft's introduction.
Q: And it's your testimony, Mr. Frankenberg, that, even as
of June of '94, WordPerfect wasn't in that market at all?
A: Correct.
Q: So, when it comes to suites, Microsoft had a huge head
start; isn't that right?
A: That's correct.
Q: And that head start, itself, is a big advantage in the
market, just as we talked about earlier the Apple iPod. The
first guy in has a big advantage?
A: Yes.
Q: That was true with suites as well, wasn't it?
1063
A: Yes.
Q: And it wasn't surprising to you, sir, was it, that the
market share of Borland Office, which was before the
acquisition that Novell made of WordPerfect and the Quattro
Pro Office, Borland Office was a combination of WordPerfect
and Quattro Pro. Do you remember that?
A: I do not remember that, no.
Q: All right. All right. Fair enough. If you don't
remember it, let me go on. In, let's say, '93 and '94, just
before, and about the time that Novell was buying the
WordPerfect Corporation, was it your understanding that
WordPerfect's share of word processors written to Windows was
much, much, much lower than WordPerfect's share on the DOS
market?
A: Yes.
Q: WordPerfect's share on Windows was down around 25 or 30
percent; is that right?
A: I don't recall the exact percentage, Mr. Tulchin.
Q: Well, it certainly wouldn't surprise you if it was in
that range, would it, sir?
A: It would not, no.
Q: And, at the same time, you had recognized, going back
to January, '91, when you were at Hewlitt Packard, that the
future of this business was a future on Windows, correct?
A: Correct.
1064
Q: That's why you made sure that Windows was on every PC
that Hewlitt Packard sold?
THE COURT: You've been there.
Q: BY MR. TULCHIN: That's why, isn't it?
THE COURT: You've been there, and we don't want to
stay here forever.
MR. TULCHIN: Okay. Thank you, Your Honor.
Q: BY MR. TULCHIN: Is it also true, Mr. Frankenberg,
that, when you took over as CEO of Novell, one of the things
that you came to understand is that, when WordPerfect first
began making word processing software to run on the Windows
platform, that software had been slow and buggy?
A: There were performance issues, yes.
Q: Well, you say there were performance issues. Let me be
specific and talk about WordPerfect 6.0. That was a product
that had come out in, I believe, December of 1993, and if it
wasn't December, it was very late in the year. Do you
remember WordPerfect 6.0?
A: I do, yes.
Q: And that product certainly had been viewed as slow and
buggy, correct?
A: There were performance issues and quality issues,
yes.
Q: Well, is it your recollection, Mr. Frankenberg, that
the market perceived WordPerfect 6.0 as being a slow and
1065
buggy product?
A: I don't know how to answer you so that we can -- there
were performance issues, and there were reliability issues, I
agree, with 6.0.
Q: Let me show you a copy of the transcript of your
deposition, Mr. Frankenberg. This was taken on March 25,
2009.
A: Uh-huh.
MR. TULCHIN: Do you want a copy, Your Honor? No.
Q: BY MR. TULCHIN: And just so we're clear on this, could
I ask you to turn to page 123. And you'll see that there are
some questions at the bottom about WordPerfect 6.0.
A: Right.
Q: And then right at line 25, I asked you this question:
"Is it your recollection --" now we're going over to
126 -- "that the market perceived WordPerfect --" I'm sorry,
124. My error "-- that the market perceived WordPerfect 6.0
as being a slow and buggy product?"
And you answered that yes. Do you recall that?
A: Yes.
Q: And that was correct?
A: Yes.
Q: And it was also correct --
A: I think that's the same thing as having performance
issues and reliability issues. Okay?
1066
Q: I wasn't sure. I wasn't sure if you meant the same
thing.
A: Didn't mean to be non-responsive. I just couldn't
understand what you were looking for.
Q: Okay. All right. My apologies. I didn't mean to
waste your time. But certainly, in the year 1994, when
Novell acquired WordPerfect Corporation, the fact that this
last major release of WordPerfect, WordPerfect 6.0, had been
perceived by the market as slow and buggy, that was something
that was hurting the reputation of WordPerfect; is that
right?
A: Yes, it did.
Q: And, of course, in a business like software,
particularly in the early to mid-'90's, a company's
reputation for making high quality products was extremely
important in terms of its having success?
A: And it still is, yes.
Q: Still is. Okay. Fair enough. Am I right,
Mr. Frankenberg, that, during the year 1994 -- again, it's
June. We've said this several times. You're the new CEO of
the company. WordPerfect is being acquired. And, for the
next six months, through the end of 1994, was it true that
the sales of WordPerfect were being hurt? They were falling
because of these problems with reputation?
A: The sales were falling, yes.
1067
Q: Did you perceive, at the time, that one of the reasons
that WordPerfect's products were falling, that the sales were
diminishing, was because the prior products had had this sort
of bad reputation as being slow and buggy?
A: That would have been part of it, but the major reason
was we didn't have a suite to offer customers, and customers
were buying suites rather than individual products.
Q: So, that was right at the time, around 1994, when the
market was moving quickly from stand-alone products to
suites?
A: That's correct.
Q: And you didn't have one?
A: Not yet, no.
Q: Your objective, for the last six months of 1994, was to
have Novell, as the new owner of WordPerfect, devote its
resources to coming out with the best version of
PerfectOffice that it could make. Isn't that right?
A: Correct.
Q: And that's where the company put most of its efforts,
when it comes to the business applications unit?
A: There and on the next generation product for Windows
95.
Q: Well, let me come back to that in just a minute, but --
A: But most of the resources were on what became
WordPerfect Office 3.0.
1068
Q: And on direct examination, Mr. Frankenberg, I think you
said that you were very proud of PerfectOffice 3.0?
A: I was. I think the team did a great job.
Q: Right. And it came out, you said, in December of '94?
A: Yes.
Q: And am I right, sir, that it was only after
PerfectOffice 3.0 was released that Novell decided to place a
great deal of its resources on developing a PerfectOffice
product for Windows 95?
A: No. That's not accurate.
Q: Well, you remember looking at Exhibit 4, Defendant's
Exhibit 4, under direct examination?
A: I remember looking at a lot of them. I don't remember
the name. Sorry.
THE COURT: It's in the book.
Q: BY MR. TULCHIN: It's in the book. It's the third
document that you were shown.
A: There it is. Yes, sir.
Q: Okay. And this was written in August, 1994, right?
A: Yes.
Q: And although it says on the first page from Maile -- I
hope I'm pronouncing it right -- M-a-i-l-e --
A: Her name is Maile.
Q: Maile -- thank you -- Patterson. If you go to the next
page, you'll see that this was submitted by Mr. Rietveld,
1069
right?
A: That's correct.
Q: And he had been the president of WordPerfect, as we
talked about, correct?
A: Correct.
Q: And it was your decision to make him -- to put him in
charge of the WordPerfect business, going forward?
A: Yes, the business applications group.
Q: Now, would you look at page 5, sir. And under the
title Business Applications, there are 3 bullet points there.
The first says: "Getting company resources focused on
supporting Quattro Pro."
And let me just stop there for a moment. It was
true, was it not, Mr. Frankenberg, in 1994 and 1995, that the
company had not focused many resources on Quattro Pro?
A: Well, I guess it depends on your definition of many
resources. There were resources assigned to big improvements
to it and to make it part of the suite. There were the
people that came over from Borland with the acquisition who
were working on it. I'm sorry. I don't know quite how to
answer your question, Mr. Tulchin.
Q: Okay. Fair enough. Quattro Pro, the Quattro Pro
developers, the software developers, were all located in
Scotts Valley, California, correct?
A: Correct.
1070
Q: And when Novell bought Quattro Pro from Borland, some
of those developers quit and got new jobs, correct?
A: That's correct.
Q: For whatever reason, they decided to leave?
A: Yes, sir.
Q: And the remainder of the development group remained in
California, right?
A: That's correct, although there were some people who
knew the product and began working on the product in Utah,
but the vast majority were in California.
Q: All right. And am I right that, of the people who quit
when Novell took over, many of those developers were not
replaced?
A: I don't know the answer to that question.
Q: Okay. Well, let's go on. We're still in Exhibit 4,
Defendants' 4. And then there's a bullet point that says
Chicago. There were very few resources on Chicago at this
time. That's what Mr. Rietveld said. Am I right?
A: That's correct.
Q: And that was correct?
A: Yes, but it's important to note that the initial
developments for Chicago were done by the shared code team,
and, as such, there would not have been a lot of people
initially on that development.
Q: In the year 1994, did you, as a general proposition,
1071
speak to the developers in the shared code team?
A: No, I did not.
Q: Did you do so in 1995?
A: No, I did not.
Q: Did they rub shoulders with you or you with them?
A: No. I'm sure I met some of them, but I don't know
quite what you mean by rub shoulders, but, okay.
Q: Well, do you ever remember having a conversation with
Mr. Harral or Mr. Richardson --
A: I do not.
Q: -- about their work?
A: I do not remember that.
Q: Do you remember having a conversation ever with
Mr. Creighton, who was Mr. Harral's boss?
A: I know that I had conversations with Tom Creighton, but
I don't remember the conversations.
Q: Could I ask you to look at Exhibit 380 again. That was
the form 10-K that we looked at earlier.
A: Yes, sir.
Q: And I would point you, sir, to page 10. And you'll see
there's a paragraph that begins "As is common" towards the
bottom of the page?
A: I see that, yes.
Q: What Novell told the public and shareholders in this
form 10-K for Novell's 1994 fiscal year was that it was
1072
common in the software industry for companies to experience
delays in developing software products; is that right?
A: I'm still reading the paragraph.
Q: Oh. Take your time. Sorry.
A: I just want to make sure that I can answer your
question properly. Okay.
Q: Well, let me ask you, without reference to the
document, just for a minute.
A: Okay.
Q: When you took over Novell -- and let's say in the first
year that you were chairman and CEO -- was it your view then
that it was common in the software industry for companies to
experience delays in developing new software products?
A: Yes. It was common.
Q: It was something that had happened to Novell in its own
business in the past, correct?
A: Correct.
Q: And that happened from time to time, whether or not
some operating system vendor withdrew support for certain
API's, right?
A: That could happen for a variety of reasons, to Novell
and virtually everyone else in the software business,
including Microsoft.
Q: Writing a complicated piece of software, that may have
many, many thousands of lines of code to it is a difficult
1073
job, fair?
A: Yes, it is.
Q: It's complicated?
A: Very complicated.
Q: Mistakes can be made, correct?
A: Mistakes are made.
Q: And people can go off in the wrong direction and
choose, let's say, a path that's more difficult and
complicated than might have been necessary, just because
judgments that human beings make are not always perfect. Is
that fair?
A: Of course.
Q: And so, in the form 10-K, going back to that, Novell
was basically saying all that to the public?
A: Correct.
Q: Is that fair?
A: Uh-huh.
Q: And Novell was warning the public and Novell's
stockholders, again, in the first sentence, that -- sorry.
Now I'm on the second sentence: "Significant delays in
developing, completing or shipping new or enhanced products
would adversely affect the company."
And, in fact, a delay in getting PerfectOffice for
Windows 95, you say, did adversely affect Novell?
A: It did.
1074
Q: Correct?
A: It did. Yes.
Q: Now, do you recall at your deposition being asked
whether you could assess the extent to which any delay was
attributable to something Microsoft had done?
A: I do not recall that. I may well have. We may well
have talked about it, but --
Q: Okay.
A: (Holding up deposition) It's a lot to recall.
Q: I understand. Let me just ask you directly,
Mr. Frankenberg, sitting here today, you cannot attribute to
Microsoft any particular length of delay, can you?
A: I believe that -- I cannot do it precisely, but I can
identify it.
THE COURT: I assume you mean in bringing the
WordPerfect product for Windows 95 to market?
Q: BY MR. TULCHIN: Yes. And PerfectOffice.
THE COURT: And PerfectOffice.
THE WITNESS: I assumed that's what you were talking
about.
Q: BY MR. TULCHIN: Yeah. You can't say, well, anything
Microsoft did caused us a week or a month or a year or some
other amount of time, right?
A: I can provide an approximation for that, knowing
that -- two dates that were involved.
1075
Q: Well, didn't you say in your deposition that there were
others at the company who we should ask if we wanted to know
how much delay had been caused by Microsoft?
A: Yes.
Q: You didn't have any view in 2009 about that?
A: Correct.
Q: Okay. And I want to go back to PerfectOffice 3.0,
which came out at the end of 1994. As it turned out, having
a good office suite, what you say was a good office suite on
the market, beginning in December, 1994, turned out to be
less important than it might have been at other times
because, in fact, everyone knew that Windows 95 was coming
out in 1995?
A: I'm sorry. Could you ask your question again?
Q: Yes.
A: I'm a little confused by it.
Q: I hope it wasn't a bad question. Let me try again. I
think you said in direct examination --
THE COURT: Could you rephrase. Maybe I'm wrong,
but it seemed to me -- and I could be wrong, but it seemed to
me that Chicago would be coming to market soon. I'm not sure
anybody knew an exact date. If they did by '95, I just don't
remember. I know that, in the past, there was talk about
Windows 95 coming out in '94. You all know the evidence
better than I do.
1076
Q: BY MR. TULCHIN: Mr. Frankenberg, sorry. Let me try it
again. It wasn't a good question. As of December, '94, you
knew that Chicago, what became Windows 95, would be released
in 1995; is that right?
A: That was the projection from Microsoft, yes, sir.
Q: And the market knew that, too. That had been publicly
announced?
A: Yes.
Q: And I think you said on direct examination that, when
the maker of an operating system publicly announces that a
new product is coming out to market, people in the market
generally stop buying, correct?
A: If they believe the announcement and the dates, yes,
they generally stop buying until they can discern what they
need to do for the new operating system.
Q: And that happened to PerfectOffice 3.0 to some extent,
didn't it, that sales were not all that strong because, as
you understood things at the time, users in the marketplace
were waiting for the new operating system before they started
buying new applications?
A: It put a chill on the market, but I think I also
testified that our market share on suites moved up into the
mid-20 percent range, and we thought that was a very good
performance.
Q: Well, that wasn't for a full year, was it,
1077
Mr. Frankenberg? The 20 percent was just for a couple of
months or so?
A: The first part of the year, yes.
Q: Right. For the full year of 1995, PerfectOffice's
market share was around 3 percent, correct?
A: I don't know the exact number for the whole year, but
it was less than what was achieved at its peak, yes.
Q: Right. The peak was just the first few months of the
year, when people were still several months away from Windows
95, right?
A: Right.
Q: And, as time went on, and if you look at the year as a
whole, PerfectOffice's share of the market was much, much
lower than 20 percent. Would you agree with me?
A: I would agree with that, yes.
Q: So, when you said the 20, you didn't mean to be
speaking about the full year, just a small segment of it?
A: Right. I tried to be careful to point out that it rose
to that and then decreased, yes.
Q: Could you look, sir -- I'm going to hand you Exhibit
271. And looking at the first page of this document,
Mr. Frankenberg, it says Novell Business Applications
Business Plan. Do you see that at the very top?
A: Yes, I do.
Q: And at the bottom, on the left corner, the date is
1078
given as April 3, 1995. Do you have that?
A: Yes. Yes, I see that.
Q: And it says Business Plan For 1996 To '98, correct?
A: Correct.
Q: And this was one of the business plans that you
directed people to start preparing, correct?
A: Correct.
Q: We talked about this earlier. These business plans you
thought were useful in formulating strategy for the future?
A: Correct.
Q: All right. Do you remember seeing this business plan
in 1995?
A: I would have seen -- yes, I would have seen it and
reviewed it with the team. This says "draft" on the bottom
of it, so it may not have been this particular version of it.
It may have been a later version.
Q: Could I ask you, Mr. Frankenberg, to turn to page 6.
The production number in the bottom, what sometimes we call
the Bates number, is 2354.
A: Yes.
Q: And there's something called SWOT analysis, S-W-O-T.
That stands for strengths, weaknesses, opportunities and
threats. Correct?
A: Correct.
Q: And this was an analysis that you wanted people at your
1079
company to do?
A: Correct.
Q: Number 1 is existing competitors. And first is
Microsoft. And it says that Microsoft Office holds 86
percent of the suite market. Do you see that, sir?
A: I do, yes.
Q: Would you agree with me that that was a function of the
fact that Microsoft had been first to that market, had really
created that category, and that Microsoft office had been
very popular with consumers?
A: Yes.
Q: Would you also agree that Word, Microsoft's word
processor, and Excel, were the strongest 1, 2 punch in the
industry?
A: They weren't the best word processor. They weren't the
best spreadsheet, but together they were a strong
combination, and I believe it was described as a 1, 2 punch,
yes.
Q: As far as word processors go, Word was strong. Excel
was a strong spreadsheet, and nobody else had two products as
strong as those two, two products to bundle together in a
suite. Fair enough?
A: Fair enough.
Q: A little bit further down the page, just more than
halfway, there's a bullet point that says: "Microsoft has a
1080
very strong presence and is very aggressive in the
international markets. They have fully localized versions of
Office in many Asian countries. Windows '95 and Office '95
are likely being shipped in multiple languages
simultaneously."
Do you recall, as CEO of Novell, that one of the
problems in selling PerfectOffice was that that product was
not localized, written to as many languages as what Microsoft
had done?
A: That's true.
Q: And in many Asian countries, there were strong sales of
office suites, right?
A: Yes. It says that here.
Q: Novell WordPerfect was way behind Microsoft in
successfully writing its products for other languages,
languages other than English, fair?
A: Well, certainly Asian languages as it says here, yes.
Q: And the next bullet point says -- this is, again, under
Microsoft's Strong On Macintosh platform. Now, on direct you
said to Mr. Johnson that one of the things you liked, when
the deal was made to buy WordPerfect, was that WordPerfect
had written its word processor to the Macintosh, right?
A: Amongst other systems, yes.
Q: Yes. Microsoft had been the first company that wrote a
word processor to the Macintosh platform; is that right?
1081
A: I don't know that.
Q: Am I right that what you learned at --
A: You may be right, but I don't know that to be true.
Q: All right. Fair enough.
THE COURT: Other than Apple, or you just don't know?
MR. TULCHIN: Including Apple.
THE COURT: Including Apple.
MR. TULCHIN: Or maybe I should say second to Apple,
Your Honor. I'm sorry.
Q: BY MR. TULCHIN: Mr. Frankenberg, when it came to the
Apple operating system, Microsoft had no advantages over
WordPerfect, true?
A: What do you mean "advantages," Mr. Tulchin? I'm
sorry.
Q: Here's what I mean. Sorry. Maybe that was a bad
question. Apple Computer Company developed the Macintosh and
used an operating system for it that Apple itself had
developed.
A: Correct.
Q: They didn't use a Microsoft operating system?
A: Correct.
Q: They had their own. And Microsoft didn't have that
operating system anymore than WordPerfect did?
A: Correct.
Q: It was proprietary to Apple?
1082
A: Correct.
Q: So, Microsoft and WordPerfect were both ISV's when it
came to the Macintosh?
A: Correct.
Q: Neither had an advantage over the other in terms of
getting access to the operating system source code?
A: I don't know that for sure, but I would assume that's
the case.
Q: Do you know, sir, that Microsoft Word out sold
WordPerfect for the Macintosh -- I'm talking now for the
Macintosh platform -- by a factor of four or five to one or
more, year after year after year?
A: I do not know that.
Q: Well, does that accord with your general recollection
that Word for Microsoft had been far more successful on the
Macintosh platform than WordPerfect had been?
A: I think that's your assertion, sir, not mine.
I think -- could you ask me your question again.
THE COURT: No, no, no. You have answered. If he
wants to prove it, he's got to prove it. You don't have to.
Q: BY MR. TULCHIN: I'm just asking if you remember that.
If you don't, sir, that's -- you know, that's --
A: I don't remember it.
Q: Going back to Exhibit 271, I want to ask you, sir, to
turn to page 9 -- well, let's start at 8, just at the very
1083
bottom. This was the SWOT analysis. There are strengths
listed for the company, and, at the bottom of the page, there
are weaknesses and threats. That's item 4. Do you see that,
sir?
A: Yes.
Q: And this is the business plan written in April, 1995.
Now, could you turn to page 9, the next page. At the very
top there's a heading that says Company Weaknesses That
Hinder Novell Business Applications. And there are something
like 10 bullet points that set forth company weaknesses.
That would be a reference to Novell?
A: Correct.
Q: Novell weaknesses?
A: Yes.
Q: True?
A: Yes.
Q: The fourth one, just to pick this one first, says:
"Weak vis-a-vis Microsoft in perception for
corporate strategy, vision and ability to develop software.
Recent user focus groups have indicated a perceived lack of
direction at Novell."
Now, you saw this in 1995, correct?
A: I would have seen this, yes.
Q: This was one of these business plans that you asked
people to create for you?
1084
A: Yes.
Q: And one of the things that it says is that Novell is
weak, as compared to Microsoft, in its ability to develop
software. Do you see that?
A: Yes.
Q: You didn't disagree with that at the time, did you?
A: I don't know whether I disagreed with it at the time or
not.
Q: Well, do you recall at your deposition saying that you
had no reason to disagree?
A: I still have no reason to disagree, but I don't recall
that I agreed with it.
Q: Fair enough. Fair enough. It was a different question
Thank you.
A: Uh-huh.
Q: And the same bullet point says that Novell is weak
vis-a-vis Microsoft in perception for corporation strategy
and vision. Do you see that?
A: Yes.
Q: And I think you'll agree with me that in 1994 and '95,
when Mr. Gates was CEO of Microsoft, the perception out in
the market was that Microsoft had a very strong strategy and
vision, true?
A: True.
Q: Now, if you go down a couple of bullet points, about
1085
four more, under Company Weaknesses, this document,
Defendant's Exhibit 271, says: "Over 50 percent of sales
force does not understand applications. Changing, but slow.
Over '95 percent of sales force does not understand Quattro
Pro or electronic publishing tools."
Now on direct you said to Mr. Johnson that, when the
deal was done in June of '94, you decided to change the way
that the WordPerfect product had been sold in the past.
Remember that?
A: Yes.
Q: In the past, you said WordPerfect, I think you said,
had a very strong group of salespeople who went out there and
met face-to-face with corporate customers; is that right?
A: Well, not only corporate customers, but small
businesses and individuals and people on street corners. I'm
sorry. The last one was in jest.
Q: Fair enough. Fair enough. But certainly, sir, that
was known as one of WordPerfect's strengths at the time of
the acquisition was the great sales force that met
face-to-face with people and did a great job selling the
product?
A: It was one of their historical strengths, yes.
Q: And you changed that?
A: And it had become a very expensive -- as I testified
earlier, it had become a very expensive way to sell
1086
individual pieces of software.
Q: As a result of the fact that it was expensive, you
decided to change it, true?
A: Yes.
Q: And so, here we are in April of '95, and in this
business plan, it's stated that over 50 percent of sales
force does not understand applications. Now, certainly you
weren't hoping for that result, were you?
A: Actually, that's a pretty good result.
Q: More than half doesn't understand the product they are
trying to sell?
A: Actually, most of the sales force were managers of the
relationship between Mike and Novell and the dealers. The
people who are really needed to understand the applications
were the experts in the product areas, and those were people
who went out and taught folks at dealers and distributors
about the product. So, it's a very different model than what
Ad Rietveld and his team were accustomed to.
So, having 50 percent of the sales force or perhaps
slightly less than 50 percent of the sales force understand
the application products was quite a good result.
Q: Well, Mr. Rietveld, in fact, was very unhappy about
this change in the way the product was being sold, correct?
A: Yes, he was, but to compete with Microsoft in the
market, we needed to be far more efficient in our selling
1087
process than the old model. And sometimes it's hard to give
up the old model.
Q: And then, just below, it says: "Over '95 percent does
not understand Quattro Pro."
Now, PerfectOffice, of course, included the Quattro
Pro spreadsheet, right?
A: Correct.
Q: And wouldn't you expect that a salesperson trying to
sell PerfectOffice should understand one of the two major
products that's in it?
A: That's a shortcoming. I agree.
Q: It's sort of like you talked about having car dealers,
a network of dealers for an automobile company, but if you
went to a Chevy dealer, and 95 percent of the salespeople in
the dealership didn't understand the Malibu, so if I had
questions about it -- I happen to own a Malibu. That's why I
asked you.
A: I'm sorry.
Q: If I had questions -- it's a great car. It's a great
car. I love it.
A: Okay. Sorry.
Q: I love my Malibu. I didn't mean to get off in that
direction. I won't ask you what car you have. That's okay.
A: Toyota pickup.
Q: But, wouldn't it be a little bit of a problem if you
1088
went to a salesman and he didn't understand the product that
you were interested in buying?
A: Yes. And let me take your example and tell you how it
worked. Your example, the salesperson at the dealer
absolutely had to know a lot about your Malibu in order to
sell it to you. And that person learned it from somebody at
General Motors. And the salesperson at the dealer, not the
salesperson selling to the dealer, was the one who had to
know that. And they were taught that by people at General
Motors.
The same thing was true with our software. The
person at the dealer, who was there talking with customers,
had to understand WordPerfect and Quattro Pro in detail and
be able to sell it and sell it well. And that was done very
well by people who understood it and went out and trained
people who, in turn, trained people at the dealers. But the
sales rep who sold your dealer his -- that Chevy Malibu
probably didn't know it in as much depth as the guy in the
lobby, and that's the difference.
Q: Am I right --
A: The guy in the lobby.
Q: I'm sorry to interrupt. Am I right, Mr. Frankenberg,
that Mr. Rietveld didn't agree with that? He thought that
the sales force should know your products, the applications
products?
1089
A: That's correct. And a number of people at WordPerfect
didn't agree with that. They liked the old model, and it's
always hard, when you make a change, to have everybody agree.
That's okay. Everybody didn't have to agree. But if you
have to make a change, you have to make a change.
Q: Well, let's look down again on page 9 of Exhibit 271.
A: Okay.
Q: There's then a title which says Division, parentheses,
Group, closed parentheses, Weaknesses.
A: Yes.
Q: And the division refers to the business applications
division, right?
A: I believe that this would encompass both divisions,
which would have been any of the three business units, as
well as the group overall. So, yes, with that minor
enhancement.
Q: And there were a number of bullet points, also roughly
ten. It goes on to the next page, under the heading of
Division Weaknesses. Do you see that, sir?
A: Yes.
Q: The first one says: "Third to suite market. Microsoft
has enormous momentum."
This was true even in 1995, that Microsoft had that
momentum. Correct?
A: Correct.
1090
Q: And not only had Microsoft Office been first to the
market, but Lotus SmartSuite had been second, right?
A: Yes.
Q: And Microsoft Office was number 1 in sales in market
share, and Lotus was number 2 at this time in '95, right?
A: That could well be, yes. I don't recall the exact
market shares month by month, but it could we will be.
Q: And then the next bullet point says: "Still recovering
from WordPerfect 6.0."
That was the product that had come out at the very
end of '93. Do you remember that?
A: Yes.
Q: That was before Novell took over?
A: Yes.
Q: But here in '95, the author of this business plan says
that you're still recovering from that, a product which was
perceived as slow and buggy. Do you see that?
A: Yes.
Q: And that's because, as we talked about earlier, once
you get a reputation as making slow and buggy software, that
reputation can stick around for a long time. True?
A: True.
Q: In fact, it had stuck around, and Novell was still
doing its best to try to overcome that. Is that fair?
A: That's fair. That's what this says.
1091
Q: Thank you, sir. If can we go back to Exhibit 308 for
just a moment.
THE COURT: How about if we break for lunch? We
will see everybody at five after 12.
MR. TULCHIN: Thank you, Your Honor.
(Lunch recess.)
1092
THE COURT: Let's get the jury.
(Jury present)
MR. TULCHIN: Thank you, Your Honor.
BY MR. TULCHIN:
Q: Mr. Frankenberg, on direct I think you indicated that
when the announcement was made in March of 1994 that Novell
had a contract to buy WordPerfect, Novell's stock fell by
20 percent. Do you recall that?
A: I said yes, by approximately 20 percent. I don't
remember exactly.
Q: Do you remember that the fall was from a price a little
bit under $24 to, a couple days later, $19?
A: Again, I don't remember the exact numbers, but I do
recall that it dropped about 20 percent.
Q: It was certainly very unusual, was it not, at the time,
Mr. Frankenberg -- the stock market I think is a little more
volatile these days, but it was very unusual at the time for
the stock of a big public company to fall in a two-day
period by something like 20 percent?
A: That was a significant drop, yes.
Q: It was very unusual, particularly back in those days?
A: I have no way of judging whether it was -- how unusual
it was. I'm sure it wasn't a common occurrence.
Q: Do you recall that this had ever happened at Hewlett
Packard when you were there, a drop of 20 percent a day or
1093
two on the stock market?
A: I think it may have come close to that, but I don't
recall any specifics.
Q: Maybe it came close to that, and there was a crash in
1986, the crash of the market in general?
MR. JOHNSON: Objection --
THE COURT: I think he answered your question,
unless you want to qualify him as an investment banker.
MR. TULCHIN: No.
THE WITNESS: Please don't do that.
MR. TULCHIN: I wouldn't do that to you, I
promise.
THE WITNESS: Thank you.
MR. TULCHIN: Could we show slide 35-C from
Microsoft's opening statement in this case.
BY MR. TULCHIN:
Q And, Mr. Frankenberg, what I'm about to inquire has to
do with the loss in value or market capitalization for
Novell. Assuming these numbers are right, that on March 21,
'94, Novell's stock, which was traded on the NASDAQ, closed
at 23.75, and then closed at $19 two days later. Do you see
those numbers?
A: Yes, I do.
Q Are they pretty much in accord with your memory?
A: Again, I will say, I don't remember those specific
1094
numbers, but the drop was approximately what I do recall,
yes.
Q: Fair enough.
The market capitalization of a company is simply a
matter of how many shares there are outstanding multiplied
by the price on the stock market, right?
A: Correct.
Q: And if you do the math -- and I won't try to do it with
you, but if you do the math and you do 23.75 times the
number of Novell's shares, which was then more than 309
million, then you do 19 times the number of shares, the loss
in value -- the loss in market capitalization for Novell in
two days was the number you see there in red, 1,467,000,000,
et cetera. Do you see that?
A: I do, yes.
Q: That's an extraordinary drop, isn't it?
A: It's a very significant drop, yes.
Q: If you added together the costs to Novell of buying
WordPerfect Corporation and also buying the Quattro Pro
spreadsheet, the cost wasn't very much different than that,
just over 1.5 billion. Is that in accord with your memory?
A: I think that's in the right neighborhood. I don't
remember this number of decimal points, but, yes.
Q: Would you say, Mr. Frankenberg, that the stock market
reaction indicated that the market, shareholders of Novell,
1095
the market believed that the value to Novell for buying
WordPerfect and Quattro Pro was close to zero?
MR. JOHNSON: Objection, Your Honor.
THE COURT: Sustained.
Again, you can argue it.
MR. TULCHIN: Thank you, Your Honor. Your Honor,
thank you.
BY MR. TULCHIN:
Q Do you recall there being discussions at board meetings
about this decline in value of the stock?
A: There may well have been, but I don't recall any
specifically, no.
Q: And you made the decision shortly after you took
over -- which was just within a week or ten days of this,
right?
A: Yes.
Q: You made a decision to cut expenses?
A: Not immediately upon entering the company, no.
Q: I didn't mean to imply immediately, but within two or
three months of taking charge at Novell, you were out there
cutting expenses, as I think you testified earlier?
A: Yes, but the decision wasn't made within days of this
occurrence. It was made later --
Q: I understand.
A: -- after an opportunity to look at the situation and
1096
talk with people and see what was required.
Q: I'm handing you, Mr. Frankenberg, Defendant's Exhibit
15. This is a document that was prepared in August of 1994,
correct?
A: Correct.
Q: And it was from Joe Marengi and Paul Cook. They were
trusted officers of Novell, correct?
A: Joe Marengi was the sales vice president and Paul Cook
was his HR representative.
Q: Right. And this memo is being written to you and also
to Tim Harris?
A: Correct.
Q: And this is in August. And the subject matter is
Novell/WordPerfect integration, something we talked about a
little bit earlier. And you will see on the first page
under Roman II, notes, there is reference to 378 reduction
in headcount. Do you see that?
A: Yes.
Q: And what Exhibit 15 reflects is that as of August you
made a decision to lay off, to reduce 378 employees,
correct?
A: That's correct.
Q: And is it also your recollection, Mr. Frankenberg, that
of the 378 that were laid off, or let go, that the vast
majority of those came from WordPerfect Corporation?
1097
A: A significant majority were from WordPerfect
previously, yes.
Q: And do you remember at deposition looking at Exhibit 15
with me and I think we calculated together that 93 percent
of the 378 people who were being let go in August of '94,
93 percent were people who had come from WordPerfect? Do
you recall that?
A: I do. I think if you looked in the back it would
verify something in that range, yes.
Q: All right. That had a significant impact at
WordPerfect among those who remained when it came to morale;
did it not?
A: Whenever there are layoffs, there is impact on morale,
so --
Q: More than 90 percent of these 378 people who were being
laid off were WordPerfect people. The remaining WordPerfect
people in many cases were upset to see their friends and
colleagues and neighbors get laid off. Is that fair?
A: Well, they weren't all neighbors. I'm sure some of
them were friends. I'm sure it was hard for them, as it was
for all of us.
Q: So you don't disagree that this had an impact on morale
at the company?
A: I believe it did have an impact on morale, but also I
believe it was necessary.
1098
Q: Am I right, Mr. Frankenberg, that you decided that
Novell should sell WordPerfect and Quattro Pro and the
PerfectOffice Suite sometime within about a year after you
joined Novell?
A: The decision was made in October -- late October of
1995, so that would have been close to a year and a half.
Q: Well, I did hear you say that on direct, but am I
right, sir, that you have testified in another case that you
made the decision that WordPerfect and Quattro Pro and
PerfectOffice should be sold during the winter of 1994 to
'95?
A: No, that's not correct.
Q: It's not right that you so testified?
A: That's not when the decision was made.
Q: Well, let me back up one step. You did testify for
Novell last year in this courthouse, I think on the first
floor, in another case, correct?
A: Yes.
Q: A case having nothing to do with Microsoft, correct?
A: Correct.
Q: And you were called by Novell as a witness -- I think
the first witness in the case; is that right?
A: That's correct.
Q: You do recall testifying about your decision to sell
WordPerfect; do you not?
1099
A: I don't recall that, but that could well have been the
subject, yes.
Q: Do you recall being asked this question and giving this
answer? This is in the SCO against Novell case last year.
Question -- I will bring this to you in a moment, sir.
Question --
THE COURT: What page are you on?
MR. TULCHIN: I'm on page I think 88 or 89. Let
me just get it up, Your Honor. I'm sorry.
MS. NELLES: Eighty-eight.
THE COURT: What page are you on?
MS. NELLES: Eighty-eight.
MR. TULCHIN: Page 88, Your Honor. Thank you.
It's actually 89, lines 14 to 18.
BY MR. TULCHIN:
Q: Do you recall being asked this question and giving this
answer? When did you come to the view that these businesses
should be sold? Answer: That would have been in late '94
or early '95. I remember having made the decision and
driving through a blinding snowstorm to get home. So it was
mid winter.
MR. JOHNSON: Your Honor, I request that -- I can
do it on redirect, but the prior answer shows that he was
talking about any number of products.
THE COURT: Why don't you provide the context.
1100
MR. TULCHIN: Let me provide him with the
transcript, Your Honor.
BY MR. TULCHIN:
Q: Mr. Frankenberg, I have my thumb right there. There
you go.
A: I'm running out of room.
Q: I'm sorry, sir?
A: I'm running out of room.
Q: Do you need a paperclip?
A: No.
Q: I was just trying to be helpful.
Let's start, Mr. Frankenberg, just so we can put some
context to this.
MR. JOHNSON: Your Honor, I would like to give him
a chance to read what he said on this page and the prior
page.
THE COURT: That's fine. Go ahead. I think
that's what Mr. Tulchin was doing, but go ahead.
MR. TULCHIN: I would be happy to do that. And
any time you want to read, let me know and I will stop and
you can read.
THE COURT: I think he wants you to stop right
now.
THE WITNESS: If I may --
1101
BY MR. TULCHIN:
Q: Maybe I can suggest that you start reading at page 87,
line 18.
A: Okay.
Q: All right. Maybe what we should do, Mr. Frankenberg,
is start at page 88, line 9, and you are welcome to look at
anything before that, anything after. You were asked, did
there come a time when you decided as chief executive
officer that it would be in the best interest of Novell to
sell one or more of those businesses. And you will see that
just above that you describe a number of Novell's
businesses, correct?
A: Yes.
Q: And at line 18 -- I'm sorry, 12, you say, yes, we did
come to that conclusion. We did a very careful study,
beginning shortly after I arrived, looking at all of the
businesses that Novell was involved in.
Now skipping a sentence, feel free to read it, but then
at line 18 it says -- this is your answer, we came to the
conclusion that we were trying to do too much and that we
were not properly funding the products that we felt we could
be successful with, and so we came to the conclusion that we
should sell several of those businesses, find good homes for
them and find jobs for as many of the people involved with
it as possible, and then focus on our networking product
1102
area.
Line 25, on page 88, you were asked this question, so
what businesses did you decide to sell? Page 89, line 1, we
decided to sell WordPerfect, the WordPerfect product, not
the company.
Now you can go on and read as much of the rest as you
want to line 13.
MR. JOHNSON: I would like to have them read out
loud, Your Honor, to provide some context to his next
answer, which he's trying to use.
THE COURT: That's fine. Go ahead.
BY MR. TULCHIN:
Q: Do you want to read the whole thing out loud, this
answer, Mr. Frankenberg, or do you want me to?
A: Now I'm lost guys.
Q: The very bottom of page 88, line 25, you were asked, so
what businesses did you decide to sell. And then your
answer starts on page 89, line 1, we decided to sell
WordPerfect, the WordPerfect product, not the company. It
had already been integrated into Novell, and a suite that we
called PerfectOffice, which combined it with the other
elements that I mentioned that had just been purchased
before I got there.
MR. JOHNSON: It doesn't say just.
MR. TULCHIN: That had just been purchased before
1103
I got there.
MR. JOHNSON: I see where you are.
MR. TULCHIN: Your Honor, may I continue?
THE COURT: Go ahead.
BY MR. TULCHIN:
Q: Going to line 6, Mr. Frankenberg, we decided to sell
Unix and UnixWare. Unix was and still is a very popular
operating system. UnixWare was that same operating system
but with networking capabilities built in consistent with
NetWare, Novell's product. We also decided to sell Tuxedo,
which was another product that we had purchased at the same
time. That had been purchased, I should say, and I was not
there, but at the same time that Unix was purchased from
AT&T.
Now I just want to stop there. Your answer goes from
line 1 to line 13, and in your answer you say, we decided to
sell WordPerfect, we decided to sell Unix and UnixWare, we
also decided to sell Tuxedo. Correct?
A: Yes.
Q: Those are the things you said that you had decided to
sell. The very next question on line 14 was, when did you
come to the view that these businesses, plural, should be
sold? Answer: That would have been in late '94 or early
'95. I remember having made the decision and driving
through a blinding snowstorm to get home. So it was mid
1104
winter.
Now, Mr. Frankenberg, not trying to be unfair or take
anything out of context, isn't it the case, sir, that your
testimony in the SCO v. Novell case, last year, 2010, was
that you decided to sell WordPerfect, among other things, in
late '94 or early '95?
A: And I was mistaken.
Q: Fair enough. Your testimony --
A: It would have been late '95, early '96. In fact, the
other sales occurred in late '95 and into early '96. So I
made an error in my testimony.
Q: Okay. Fair enough.
Your testimony today is that this is incorrect, it was
not in late '94 or early '95?
A: It was one year later, in late '95 or early '96.
Q: On direct you said it was October of '95, correct?
A: Yes.
Q: All right. Now the reason that you decided to sell
WordPerfect was so that Novell could sharpen its focus, its
focus on its network product, NetWare; isn't that right?
A: The reason we sold WordPerfect was that it had become
very clear that we could not compete in that market, that it
was a tilted playing field, and that no matter what we did,
we would not be able to succeed. So, of course, we
refocused our efforts on those areas where we thought we
1105
could do the best, and that was in networking and network
operating systems.
Q: Did you not tell the Securities and Exchange Commission
in your form 10-K of the reason that you sold WordPerfect?
A: I'm sure we did, yes.
Q: Let me hand you Exhibit 621. This is Novell's form
10-K for the year ending October 28th, 1995. Of course, we
looked at Exhibit 380 earlier. That was the 10-K for the
prior year. Do you remember this?
A: Yes, I do.
Q: And this form 10-K, like the other one, was signed by
you?
A: I'm sure it was, yes.
Q: You were the principal executive officer, correct?
A: Yes, I was.
Q: It was your obligation to make sure that the statements
in this form 10-K filed publicly so that your shareholders
and others could evaluate Novell as a public company, it was
your obligation to make sure that the statements were true?
A: Yes.
Q: Correct?
A: Yes.
Q: You read them before you signed -- you read the
contents of this document?
A: Yes, I did.
1106
Q: Could you look at page 8, please, sir.
Sorry. I'm running out of room too, I think.
Just before the heading halfway down the page, there is
a paragraph which begins, as the company sharpened its
focus. Do you see that, Mr. Frankenberg?
A: Yes, I do.
Q: What it says is, as the company sharpened its focus, it
decided to sell two lines of business, UnixWare and the
WordPerfect personal productivity applications, which did
not contribute to Novell's network focus. That was the
reason you gave for the sell of WordPerfect in your 10-K,
correct?
A: Yes, but not quite correct. We sharpened our focus to
networking because that's what we could succeed with. We
couldn't succeed in the personal productivity applications.
Q: Well, I hear you, but, of course, that's not stated
here, is it? Feel free to look elsewhere or anywhere you
want, anywhere you think you might find it.
A: What is stated here is that we sharpened our focus to a
particular area, our networking business, and that's what we
did.
Q: That was the reason for selling WordPerfect, was it
not, to sharpen your focus, to return the company's focus to
its most important product, NetWare?
MR. JOHNSON: Objection, asked and answered.
1107
THE COURT: Sustained.
BY MR. TULCHIN:
Q: Let me show you Exhibit 353, if I may, Mr. Frankenberg.
This is Defendant's 353, and this is from October 1995. It
says on the front page, Novell, Inc. Board of Directors
Meeting. Do you see that, sir?
A: Yes, I do.
Q: October 20th proposed fiscal year '96 budget. And Jim
Tolonen -- am I pronouncing his name correct?
A: Tolonen.
Q: Tolonen, was then the CFO, the chief financial officer,
correct?
A: Yes, he was.
Q: If you look about four pages in, the page has a
production number that ends with 852.
A: I'm there, yes.
Q: I'm sorry. Just give me a moment.
Right at the bottom, last sentence, we wish to get the
remaining 65 percent of the company refocused, morale
improved, and on to moving the core business forward.
That's what Mr. Tolonen says to the board of directors,
correct?
A: Correct.
Q: And what he's describing here -- we can go through it
in more detail if you would like, but what he's describing
1108
here is the question of whether WordPerfect should be sold,
right?
A: Yes.
Q: There were various options laid out. You will see
higher on the page there's an option three, an option four,
an option five, and on earlier pages options one and two I
believe appear. These were options for what to do with the
WordPerfect business, correct?
A: As well as Unix, yes.
Q: Unix too. Thank you, sir.
In this report to the board of directors Mr. Tolonen is
recommending a sale of WordPerfect?
A: Yes.
Q: And what he says at the very bottom of this page is
that one of the good reasons to sell is to get the remaining
65 percent of the company refocused. He also refers to
improving morale, and to moving the core business forward.
Do you see that?
A: Yes, I do.
Q: You were the chairman of the board of directors at the
time, right?
A: Yes, I was.
Q: And you agreed with that; did you not?
A: Yes, I did.
Q: When we talked earlier today on cross I asked you a
1109
question about the core business, c-o-r-e. The core
business is a reference to NetWare?
A: The networking business, NetWare and other networking
products, yes.
Q: Fair enough.
You understood that in this memo at the time in 1995
that what Mr. Tolonen was recommending is that the company
move the core business, the networking business forward --
A: Correct.
Q: -- isn't that right?
A: Yes.
Q: Thank you, sir.
Now you testified on direct that GroupWise, from a
revenue standpoint, thinking about 1994 -- and I'm not sure
if you were thinking March or June, but it doesn't matter,
somewhere in that period in 1994, GroupWise was only -- I
think you said four percent -- is that what you said -- of
the total revenues of WordPerfect Corporation?
A: For the year 1993, GroupWise and its associated
products were approximately $25 million, which amounted to a
little less than four percent of the total, yes.
Q: I think I remembered it about right, but thank you. It
was 1993 you were talking about?
A: Yes.
Q: Thank you.
1110
And it's correct, is it not, though, Mr. Frankenberg,
that regardless of what GroupWise's revenues had been in the
past, you thought in 1994 that GroupWise represented half
the value of what Novell was buying when it was buying
WordPerfect Corporation?
A: I thought it represented a very significant strategic
opportunity for us and that was an important part of what we
came to call pervasive computing, and it was a wide open
field, unlike some of the other areas, including the office
suite.
Q: You've testified, haven't you, Mr. Frankenberg, that at
least half the value of WordPerfect Corporation was in the
product that became known as GroupWise?
MR. JOHNSON: Could we have a time period for that
question, Your Honor?
MR. TULCHIN: Yes. Yes. I'm happy to pull out
the transcript, Your Honor, if we want to take the time.
BY MR. TULCHIN:
Q: It was when Novell bought WordPerfect Corporation. Do
you want to see the testimony, Mr. Frankenberg?
A: Yes.
Q: Do you have that transcript of the deposition in 2009?
A: Somewhere. I think I have all of your documents.
Q: I'm sorry for all the papers.
A: Is this the one?
1111
Q: It looks like it.
Could I ask you first, Mr. Frankenberg, to turn to page
176. This is the deposition taken on March 25, 2009.
MR. TULCHIN: Mr. Johnson, do you have a copy?
MR. JOHNSON: I do. Thank you.
Do you have a page reference?
MR. TULCHIN: Yes. 176, line 1.
BY MR. TULCHIN:
Q: You can look at 175, if you want, where my question
starts. I say, tell me if this is accurate. Your testimony
at the time -- and I was referring to testimony you gave in
1998 in the Caldera case -- was that, depending on how you
calculated it, Novell bought WordPerfect Corporation for
$855 million? And you answered yes.
Do you see that, sir?
A: Yes.
Q: And then on 176 we talked a little bit about the sale,
and feel free to read that, but I want to direct your
attention to 177.
A: Okay.
Q: This gets a little complicated because what I'm doing
is reading your testimony from 1998 during this part of the
2009 deposition. But what I'm reading is your statement,
page 177, line 13, quote, so my view had always been that at
least half the value of WordPerfect was in the product that
1112
became known as GroupWise. Answer: Yes. I then said,
unquote. You said, yeah. That was your testimony in 1998?
Answer: Yes. Question: That was your view in 1998?
Answer: Yes. Question: Your testimony here is accurate
and truthful? Answer: Yes.
And then we can go over to 178 -- sorry to take so much
time -- line 1, question, now sitting here today in 2009, is
it still your view that at least half the value of what
Novell bought when it acquired WordPerfect Corporation was
in the product that became known as GroupWise? Answer: It
was my opinion that on a going forward basis that GroupWise
held the most promise for us. And if you go further on in
the testimony, it says, so, yes, some deterioration,
probably in the neighborhood of 50 percent or so of the
value was due to the reduction in value of the personal
productivity part of the application.
Those were your answers to my questions two years ago
in deposition, correct?
A: Those are my answers, yes.
Q: So I hope this isn't repetitive, but to summarize, when
Novell bought WordPerfect, you thought that at least half
the value of the WordPerfect Corporation was represented by
the product that eventually was called GroupWise?
MR. JOHNSON: Objection, Your Honor, those answers
clearly show that that's at the time of sale, not at the
1113
time of purchase.
MR. TULCHIN: I think he can answer, Your Honor.
THE COURT: You can answer.
THE WITNESS: Thank you, Your Honor.
Can you repeat the question?
MR. TULCHIN: Yes, sir.
THE WITNESS: Just trying to be accurate.
MR. TULCHIN: I am too.
THE WITNESS: Good.
BY MR. TULCHIN:
Q: It was your view in 1994, at the time that Novell
bought WordPerfect, that at least half the value of the
WordPerfect Corporation was represented by the product that
later became known as GroupWise; is that correct?
A: On a go forward basis, yes.
Q: Thank you, sir.
A: But not when they bought it.
Q: Well, of course, when you buy something as a business,
you are looking to future profits?
A: This was a strategic -- to me it was the most valuable
strategic asset in the purchase. And it had gotten to the
point by the time we sold it, that by the time we sold
PerfectOffice that the others had deteriorated
significantly, so a big part of the value going forward was
GroupWise.
1114
Q: Just so that the jury is clear on this, when Novell
sold WordPerfect and Quattro Pro to Corel in 1996, Novell
did not sell GroupWise, it kept GroupWise?
A: That's correct.
Q: Thank you, sir.
Now on direct you made some reference -- it was about
ten minutes of 10:00 -- to undocumented APIs. Do you
remember that, sir?
A: Yes, I do.
Q: And I think what you did -- tell me if I have this
right -- is that you defined that phrase, undocumented APIs,
to mean cases where APIs were not made available to ISVs, to
companies outside Microsoft, but were available to
Microsoft; is that right?
A: That's right.
Q: Do you have any information at all, one way or another,
Mr. Frankenberg, 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 Microsoft Office,
utilized or called the namespace extension APIs?
A: I do not.
Q: Do you know one way or another as to whether or not
Word, Microsoft's word processing software, whether Word,
either the version released in 1995 or any subsequent
version, ever utilized the namespace extension APIs?
1115
A: I do not personally know that, no.
Q: Same question for Excel, Microsoft's spreadsheet?
A: I do not.
Q: So it's not your testimony to this jury that Microsoft
itself ever used those APIs when it released products that
competed with PerfectOffice or WordPerfect or Quattro Pro?
MR. JOHNSON: Objection, Your Honor. He said he
didn't know.
THE COURT: Overruled.
You may answer.
THE WITNESS: I do not know.
BY MR. TULCHIN:
Q: So you weren't -- when you used the phrase undocumented
APIs, you weren't implying that somehow Novell was
prohibited from using these APIs but Microsoft used them
itself?
A: I was not implying that. I don't know whether that was
true or not.
Q: Thank you, sir.
Now I think you said that it was sometime in 1995 when
either Mr. Calkins -- and I think the second name was
Mr. Waxman; am I right?
A: Yes.
Q: Either Mr. Calkins or Mr. Waxman informed you that
Microsoft had decided to withdraw support for certain APIs.
1116
Do you recall that testimony?
A: Yes, I do.
Q: Did you get that information from them in writing?
A: No, I did not.
Q: So that was something they told you?
A: Best of my recollection, yes.
Q: You don't know when you were so told. Sometime in '95
is all we have?
A: Sometime in the first part of '95. I don't have an
exact date.
Q: As far as you know, there is no writing, no piece of
paper that was ever provided to you with that information;
is that true?
A: That's true. I'm sure given all the paper you have
that you would have found it, if it existed.
THE COURT: Don't make assumptions.
THE WITNESS: Sorry. I'll behave, Your Honor.
BY MR. TULCHIN:
Q: In preparing for your testimony here with the lawyers,
you certainly didn't see something like that, did you?
MR. JOHNSON: Objection, what he saw with the
lawyers.
THE COURT: He hasn't seen any.
BY MR. TULCHIN:
Q: You also said on direct that there were occasions when
1117
you complained to Mr. Gates about undocumented APIs. Do you
remember that testimony?
A: Yes, I do.
Q: Now Microsoft Windows had thousands of APIs in it,
correct?
A: I don't know the exact count, but I'm sure there were
many.
Q: Would you take my representation that Windows 95 had
thousands of APIs?
A: I'm sure you would know better than I would.
Q: Okay. In any of these conversations with Mr. Gates,
did you specify which APIs you were talking about?
A: No, I did not.
Q: So you never said to Mr. Gates the problem is the
namespace extension APIs?
A: I don't recall ever saying that, no.
Q: You never said something about IShellBrowser, one of
the specific APIs?
A: I don't remember saying that either, no.
Q: Did you ever say anything to Mr. Gates about any APIs
that permitted an ISV to extend the shell?
A: No, I don't recall doing that either.
Q: So your only testimony is that whatever these
conversations were with Mr. Gates had to do with
undocumented APIs as a general matter?
1118
A: Yes.
Q: And do you happen to recall any letter that you sent to
Mr. Gates which mentions the namespace extension APIs?
A: No, not specifically.
Q: Have you seen any such letter?
A: No.
Q: How about an e-mail?
A: Would you repeat the question?
Q: Yes. Sorry. It was too cryptic.
Have you seen any e-mail that you ever sent to
Mr. Gates which made reference to his decision to withdraw
support for the namespace extension APIs?
A: No, I have not seen an e-mail from me. I saw an e-mail
from Bill Gates to a number of his people, but not from me.
Q: That was the e-mail that Mr. Johnson showed you today?
A: Correct.
Q: You didn't see that at the time, of course?
A: No. I didn't see it until 2009.
Q: Okay. So let me back up. Do you have any way of
specifying to the jury or the Court when it was that these
conversations with Mr. Gates took place, the conversations
about undocumented APIs?
A: In the documents that I have reviewed prior to trial,
there are letters and references to meeting dates where
those things were discussed. Perhaps that would help pin
1119
down the dates of those discussions.
Q: Mr. Frankenberg, there were some occasions where you
and Mr. Gates got together and met face-to-face, correct?
A: Correct.
Q: And it wasn't necessarily just the two of you, there
may have been some other Novell people, there may have been
some other Microsoft people, correct?
A: All of those happened, other Microsoft people, other
Novell people, and also the two of us face-to-face, just the
two of us.
Q: Let me show you Exhibit 636.
Would it help if I took any of this away, or do you
want to leave it there?
A: Is there some of it you are not going to go back to?
I was beginning to wonder if I was going to be like
that window over there.
MR. TULCHIN: Don't put it up yet. Sorry.
MR. JOHNSON: I've not seen this exhibit before.
BY MR. TULCHIN:
Q: Mr. Frankenberg, Exhibit 636 was a memorandum prepared
by Dave Miller of Novell; is that right?
A: Yes, that's what it says.
Q: It's a memorandum about a meeting on January 10th,
1995, correct?
A: Yes.
1120
Q: And it was sent to a number of people, including you?
A: Yes.
Q: And it was prepared in the ordinary course of business
at Novell, correct?
A: I'm sure that's the case.
MR. JOHNSON: We have no objection.
MR. TULCHIN: We offer this, Your Honor.
THE COURT: No objection.
(Defendant's Exhibit 636 was received into
evidence.)
MR. TULCHIN: Now we can show it. Thank you.
BY MR. TULCHIN:
Q: Mr. Frankenberg, do you recall that there was a meeting
attended by a number of people from both companies on
January 10th, '95?
A: Yes, I do.
Q: And this was three months after Mr. Gates had decided
to withdraw support for the namespace extension APIs,
correct?
A: That's correct.
Q: And certainly people at Novell were aware of that by
January?
A: Some people at Novell would have been aware of that,
yes.
Q: Now I have looked through Exhibit -- let me first ask
1121
this question. Exhibit 636 are notes that were taken by
Dave Miller of Novell of the meeting, correct?
A: Yes, that's what it says.
Q: Starting at page 4 at the top, it says, the following
transcript was obtained. I tried to be as accurate as
possible. However, because of the speed of the
conversations and my lack of typing skills, some of the
information has been interpreted. And it goes on. The
whole document is a total of eight pages. But looking
further on page 4, you will see there are initials. BG is
Bill Gates, correct?
A: I believe that relates back to --
Q: And BF is you?
A: -- the attendees on the list, yes.
Q: So one of your people at Novell, Mr. Miller, took notes
of this meeting with Microsoft. The meeting went on for
some hours, correct?
A: I don't recall how long the meeting was. Sorry.
Q: Was it up in the State of Washington at Redmond,
Washington where Microsoft's headquarters are?
A: I believe that was the case, yes.
Q: Do you recall if there was any mention at this meeting
in January about the namespace extension APIs?
A: I don't recall any discussion.
Q: I have looked through Exhibit 636, sir, and I hope I'm
1122
getting this right, but I don't see any reference to that
topic. I'm happy to have you look at this document
overnight, if you want. I will try to be quick and get you
out of here as soon as I can, but if you see it, maybe
tomorrow morning you could point it out to me.
MR. JOHNSON: I guess that means we're not going
to finish today, Your Honor.
MR. TULCHIN: I'm going to try to get as far as I
can, Your Honor.
THE COURT: We'll see how it goes.
BY MR. TULCHIN:
Q: Now, Mr. Frankenberg, am I correct that at the Agenda
'95 Conference that you have testified about on direct, that
was in September, correct?
A: Yes.
Q: September of '94, you presented a demo of Corsair?
A: Yes.
Q: And it was just a demonstration, there was no
functioning product yet; am I right?
A: It was a product under development. It wasn't one that
was released, if that's what you mean.
Q: Okay. There was a product under development, it hadn't
yet been released to the market, and you testified it never
was released?
A: That's also true, yes.
1123
Q: And the demo was of a nonfinal product. You were
showing what you hoped could be achieved. It was something
that was never actually achieved in a functioning product
that was offered for sale?
A: That's true.
Q: And at Agenda '95 in September of 1994, did you have
occasion to speak to Mr. Gates?
A: I may have, but I don't recall if I did.
Q: Do you recall ever telling Mr. Gates, before
October 3rd, 1994, that Novell or WordPerfect was planning
in any way to use the namespace extension APIs in developing
WordPerfect or PerfectOffice?
A: No, I don't recall ever saying that to Bill Gates.
Q: As far as you know, did anyone else ever tell Mr. Gates
that?
A: I don't know of anybody who did that, no.
Q: Then you also talked on direct about the COMDEX meeting
in November of '94, correct?
A: Yes.
Q: And I think you said that you made a speech at COMDEX?
A: I did, yes.
Q: Mr. Gates made his own speech at COMDEX in November
'94, right?
A: Could well be. Bill did that frequently, as I did.
Q: Did you have occasion to speak face-to-face with
1124
Mr. Gates at the COMDEX meeting in Las Vegas in November of
1994?
THE COURT: The question isn't whether he had a
chance to but whether he did.
MR. TULCHIN: That's correct, Your Honor. That's
a better question.
THE WITNESS: We may have talked. But if we did,
I don't recall.
BY MR. TULCHIN:
Q: Were you aware, sir, that Microsoft had designated
someone to be the contact man for Novell concerning
Windows 95 issues?
A: I'm sure there was a person who had that
responsibility, yes.
Q: Do you know who that person was?
A: I'm not sure. I think it may have been Bob Kruger, but
I'm not sure of that.
Q: Have you ever before today heard of the name Brad
Struss, S-t-r-u-s-s?
A: Sounds vaguely familiar, but I don't recall
specifically.
Q: Do you recall ever getting any reports from Norm
Creighton of Novell about his conversations with Mr. Struss?
A: I may have, but I don't remember.
Q: Do you recall ever being told that Mr. Struss had asked
1125
Novell/WordPerfect whether they were okay with Mr. Gates's
decision to withdraw support for the namespace extension
APIs?
MR. JOHNSON: Can we identify an individual where
this alleged conversation took place?
THE COURT: You mean the conversation between
Mr. Struss and somebody at Novell?
MR. TULCHIN: No. I was asking -- sorry, Your
Honor.
THE COURT: I'm not sure what the alleged
conversation is he's asking him. I just don't remember.
BY MR. TULCHIN:
Q: I'm asking you whether anyone at Novell ever told you
of a conversation that he or she had with Mr. Struss in
which Mr. Struss inquired, are you okay with withdrawal of
support for these namespace extension APIs?
A: I don't remember any such conversation.
Q: Let me hand you what we've marked as Defendant's
Exhibit 3.
Now, Mr. Frankenberg, just to be clear, Defendant's
Exhibit 3 is some internal e-mails at Microsoft. One of
them on the first page is from Brad Struss, Wednesday,
October 12, 1994.
A: I see that, yes.
Q: Did you ever talk to Brad Chase of Microsoft?
1126
A: I'm sure I did at one or more meetings, but I don't
recall any particular conversation.
Q: You don't recall talking to him about the namespace
extension APIs?
A: No.
Q: Is it true to say that in 1994 and 1995, throughout
that entire period, you didn't know what the namespace
extension APIs were?
MR. JOHNSON: Objection, Your Honor. He already
testified he learned in early 1995 about this.
THE COURT: Overruled.
THE WITNESS: I knew that there were extensions to
the APIs that we were using for PerfectOffice for
Windows 95. And those, as it turns out, are the namespace
extensions, amongst others.
BY MR. TULCHIN:
Q: I know you say as it turns out, but I'm asking back in
'94 and '95, did you know what the namespace extension APIs
were, what functionality they provided?
A: No, I did not.
Q: Okay. Returning to Exhibit 3, Exhibit 3 says -- this
is Mr. Struss's e-mail to Brad Chase and others, subject,
namespace extension decision, per Paulma -- and there's been
evidence in this case that refers to Paul Maritz of
Microsoft -- we're now in the process of proactively
1127
notifying ISVs about the namespace API changes, paren, will
not document them and they'll go away/change, close paren.
So far Stac, Lotus, WP -- that was a common abbreviation for
WordPerfect, correct?
A: Correct.
Q: WP, Oracle, SCC appear to be okay with this.
My question, Mr. Frankenberg, is whether you remember
being told by anyone at Novell in 1994 or '95 that they,
that person at Novell, had told Microsoft we're okay with
the namespace extension decision?
A: No, I don't recall anybody telling me that.
Q: Do you recall around the same time in the fall of 1994
that WordPerfect -- Novell/WordPerfect were focusing their
attention on the 16-bit version of the products, for
instance, PerfectOffice 3.0?
A: There was a team of people working on what became
PerfectOffice 3.0. There was a team working on the next
generation, which became -- which was to become
PerfectOffice for Windows 95.
Q: But am I right that the attention -- most of the
attention was being focused on the 16-bit products?
A: Depends on which team you are talking about. The team
working on the Windows 95 version had intense attention on
that. The team working on the one for Windows gave it a lot
of attention.
1128
Q: I wasn't really trying to compare the amount of
attention that given people were paying. Let me ask you
another question.
MR. JOHNSON: Your Honor, I might add, we've been
through this. This is repetitive.
THE COURT: I'm going to let -- we have been
through it to some extent, but Mr. Tulchin can get into it
again. It's a slightly different angle.
BY MR. TULCHIN:
Q: Do you recall in the fall of 1994 that there were far
more developers, software develops working on the 16-bit
version of your products than there were working on the
Windows 95 versions?
A: I'm sure that was the case.
Q: Let me show you Exhibit 2 -- sorry. Yes, 2,
Defendant's Exhibit 2.
Now again, just to be clear, this is an internal
Microsoft e-mail, and you will see just a little ways down
the first page there is an e-mail from Brad Struss again,
and he's writing to Bob Muglia, Brad Chase, Brad Silverberg,
and a number of other people.
Do you see that?
A: I do, yes.
Q: And he's writing about first wave status report and
issues. That's the subject. Do you see that?
1129
A: Yes.
Q: And, Mr. Frankenberg, did you know at the time about
Microsoft's first wave program?
A: I did not, no.
Q: Fair enough.
If you look at the second page, this is still
Mr. Struss's e-mail, October 21, '94, right in the middle of
the page there is a paragraph about WordPerfect. And
Mr. Struss writes to his superiors at Microsoft as follows:
WordPerfect, due to focus on 16-bit product revision this
fall, there are limited resources working on next year's
32-bit release. Given this and the fact that they'd rather
deliver a great product later than a mediocre one sooner,
they currently expect to ship September '95 or around 120
days of Windows 95 ship. Working with their senior
management to see about getting more focus on their 32-bit
release.
Were you aware in around October 1994, that people at
Microsoft were working with senior management at WordPerfect
to see if WordPerfect would put more focus on the products
for Windows 95?
A: I was not aware of that, no.
Q: Well, it was certainly the case, Mr. Frankenberg,
wasn't it, that Microsoft was trying to help WordPerfect,
trying to help Novell come out with a good product for
1130
Windows 95? Is that fair?
A: It doesn't say that here.
Q: No, I'm asking you from your recollection.
A: From my recollection, I don't recall that conversation
where they were trying to help us, but they may well have
been.
Q: I mean isn't it the case, Mr. Frankenberg, that people
in the systems group at Microsoft -- the systems group was
Microsoft's name for the group that was developing operating
systems. Do you recall that?
A: Yes.
Q: And isn't it true that people in the systems group at
Microsoft were trying to help WordPerfect/Novell produce a
great application for Windows 95?
A: I'm sure they were, but I did not personally witness
that. That's what you asked me earlier.
Q: I'm just asking for your general recollection.
Microsoft was trying to help. That's fair?
A: Yes.
Q: Okay. Do you recall any other face-to-face meetings,
let's say in the period from October 1, '94 to June 1, '95,
that's eight months, October, November, December of '94 and
the first five months of '95, do you recall any other
meetings that you had with Mr. Gates other than the COMDEX
meeting in November and the January 10th meeting about which
1131
we spoke earlier?
A: I think I said that I didn't recall whether we met with
Mr. Gates at the meeting -- at the COMDEX meeting. I do
recall the November 10th meeting. I do not recall any
meetings in between then and -- I think your question was
June of '95. I don't recall any. There may have been
meetings, but I don't recall.
Q: Did anyone from the shared code group ever, in 1994 or
1995, present you with any written document setting forth
the three choices that they were faced with?
A: No.
Q: Do you know whether anyone from the shared code group
ever prepared any written document to set forth the three
choices to Mr. Rietveld or Dave Moon or Mr. Brereton?
A: They may well have done that, but I don't recall ever
seeing anything like that, no.
Q: You certainly have seen no such document?
A: Not to my recollection, no. It's a long time ago.
Q: Are you aware of the testimony that was given in this
courtroom by Mr. Harral, Mr. Richardson and Mr. Gibb about
the three choices, the three options that were presented to
them after the decision to withdraw support for the
namespace extension APIs?
A: I know that those three gentlemen testified here. I
don't know the content of their testimony, no.
1132
MR. JOHNSON: Which by the way, Your Honor, would
be improper under the rule of witnesses. I don't know why
he asked such a question.
THE COURT: The answer is what it is.
BY MR. TULCHIN:
Q: Mr. Frankenberg, are you aware that one of the choices
that the shared code group had in 1994 and 1995 was to write
their code to the namespace extension APIs?
A: I know one of the options that they had was to write
their code to interfaces that were extended. I don't know
if it was the namespace extensions.
Q: What you do know is that one choice was to keep using
the APIs for which the support was being withdrawn, correct?
A: Correct.
Q: And that was a choice that had some risk because in
later versions of Windows those APIs might not even appear,
right?
A: That was the nature of undocumented APIs, yes.
Q: Well, I want to be clear about something. These APIs
had been documented to Novell, correct?
A: I believe that's true, yes.
Q: I'm sorry? I couldn't hear you.
A: I believe that's true, yes.
Q: So when you say undocumented, the APIs in question,
Microsoft had provided documentation for; is that right?
1133
A: I believe that's true, yes.
Q: So they weren't undocumented. They were documented,
true?
A: Yes.
Q: And one of the choices that the shared code group had
was to write code to those APIs and to make a business
decision about whether or not it was more important to get
these products out to market really fast than it was to take
the risk that the APIs might not be supported in future
versions of Windows, right?
A: I didn't know that at the time. Obviously if that was
a choice, it would have been a poor choice.
Q: If you had been asked to make the decision at the time,
you would have chosen to get the products out fast, correct?
A: I wasn't asked to make the decision at the time.
Q: I appreciate that. I heard you say that. I am asking
you now, testifying today in 2011, if you had been asked to
make the decision in 1994 or '95 about whether or not to get
PerfectOffice and WordPerfect out to market at around the
time Windows 95 came out or to choose some third path, some
difficult and complicated path of adding functionality to
Windows, you would have chosen -- you would have made the
decision to go for getting the products out quickly?
MR. JOHNSON: Objection, lacks foundation.
THE COURT: He can answer. Overruled.
1134
THE WITNESS: I would have to have a lot more
facts than just the couple things that you have stated in
order to make such a decision.
MR. TULCHIN: Well, let me go through some of the
facts.
If we could have slide 83.
BY MR. TULCHIN:
Q: If this isn't enough for you to answer the question,
I'm sure you will tell me, Mr. Frankenberg. But we've
excerpted some of the testimony from the prior three live
witnesses in this case. And I would also be happy to have
you see --
MR. TULCHIN: Can we put up Plaintiff's
Demonstrative Exhibit 15?
MR. JOHNSON: Can we have a copy of this, please?
MR. TULCHIN: Yes.
BY MR. TULCHIN:
Q: This is a slide that Mr. Johnson used, I believe with
Mr. Harral, the first witness.
THE COURT: It could have been the first witness.
I thought it was the second or third one.
MR. TULCHIN: It could have been. I'm losing
track, Your Honor.
BY MR. TULCHIN:
Q: In any event, I know this was Novell's slide, and it
1135
talks here about the three options. The first one would be
to continue to use the documentation that they had for the
APIs. Do you see that?
A: I see that, yes.
Q: The second would be to see if they could avoid using
the APIs and use the Windows common file open dialog,
which --
A: It doesn't say that.
Q: No, it doesn't, but I think that's a fair summary. The
witnesses said we could have used the Windows common open
file dialog. It wouldn't have given us as much
functionality as we wanted to put into PerfectOffice.
And the third option was to try and recreate what was
missing or what we did not yet have. That was the option
that Mr. Harral, Mr. Gibb and Mr. Richardson testified was
chosen to engage in a job that they say took as much as a
year to try to get this extra functionality into Novell's
products.
Are you with me so far?
A: Yes.
MR. JOHNSON: Your Honor, this is so far beyond
the scope of direct. He's asking the CEO about developers'
choices.
THE COURT: I don't see these as just developers'
choices or we wouldn't be here.
1136
MR. TULCHIN: Thank you, Your Honor.
BY MR. TULCHIN:
Q: Then slide 83, which I showed you a moment ago, has
some of the testimony about the first option. Mr. Harral
said that a developer, given a month, should be able to work
out the issues of tying into the namespace extension APIs.
Mr. Richardson says that Steve Giles, one of the developers
at Novell, had written a file open dialog that made use of
the namespace extension APIs.
Do you see that, sir?
A: Yes, I do.
Q: And I represent to you that these witnesses said that
had they used the namespace extension APIs, there would not
necessarily have been any delay in the shared code group's
work?
MR. JOHNSON: Objection, that's a total
mischaracterization. Your Honor, they said they couldn't
use this option because Microsoft Premier Support shut them
down on any information about the shell.
MR. TULCHIN: This is just argument, Your Honor.
THE COURT: Approach the bench. This has
something to do with what I asked you all the other day, I
think.
(Side-bar conference held)
THE COURT: I think what I was asking, I never
1137
understood why they didn't consider the first option, which
was to use the documented APIs if they wanted to
simultaneously pursue the third option. But the problem --
because the problem, as I understood it before, it was in
the future versions of Windows 95. APIs may not be there.
You could temporarily use the APIs as were there. And if
you were really worried about time, you could do what they
did by the time the year had past.
MR. TULCHIN: That was the testimony, Your Honor.
MR. JOHNSON: That was not the testimony. We'll
bring up the testimony to you tomorrow so you can see it
again. But the testimony was that was the first option to
pursue -- you're right, had they been able to pursue that
option, maybe they could have done exactly what you have
said. But what happened was when they called Premier
Support to get the answers for how to tie into network
neighborhood, recycle bin, all the other things that were
required to use these APIs, Premier Support shut them down
and no information about the shell. So they couldn't,
therefore, use the APIs.
THE COURT: I understand what you are saying.
MR. JOHNSON: So it's completely incorrect to
suggest --
THE COURT: Wait. Wait. Just testimony. It's
the combination of the shut down of Premier Support and
1138
the -- I had come into this thinking that that was an
incidental matter, but the fact of the matter is they had
documentation.
MR. JOHNSON: It wasn't incidental at all.
MR. TULCHIN: Your Honor, if I could respond just
for a moment?
MR. JOHNSON: There was a great risk as they could
change them at any moment. It wasn't future applications,
as you said. Nonetheless, our people were prepared to take
that risk if they could have gotten support that allowed
them to use these APIs.
THE COURT: I hear him.
MR. TULCHIN: If I may just respond to this, Your
Honor? Number one, strangest antitrust case I've ever heard
of based on a lack of support from people on a telephone, on
the line. When Mr. Kruger and Mr. Struss and lots of people
at Microsoft were available to help Novell, the Premier
Support was a telephone help line for developers. And we're
now into the duty to build Novell's products for it.
THE COURT: That's a different question. I will
sustain the objection on the ground this is a somewhat murky
area as to what any of this witness's knowledge would be.
We can have argument later. I will sustain the objection.
(Side-bar conference concluded.)
1139
BY MR. TULCHIN:
Q: Mr. Frankenberg, let me try it this way. Had you been
asked in 1994 or 1995 which course of action you preferred,
to get the products out to market in a timely way or to
spend a year trying to write an advanced file open dialog,
which choice would you, as CEO, have made?
MR. JOHNSON: Objection, calls for speculation.
THE COURT: Overruled.
THE WITNESS: Well, I would have to have a lot
more information before I could answer your question. And
the developers had that information, so that would have been
a choice that they and direct management would make. It
wouldn't have been me.
BY MR. TULCHIN:
Q: Is it not your testimony, Mr. Frankenberg, that the
choice that was made to spend a year to write an advanced
file open dialog had serious negative consequences for
Novell?
A: The way that it turned out, yes.
Q: And is it also your testimony that a business decision
that could cost the company many millions of dollars with
very serious negative consequences was left to developers
like Adam Harral and Greg Richardson?
A: It was -- as I testified earlier, that we put the
business applications in its own division and group so that
1140
it could act and react to the market and to things as they
progressed. That decision would have been made by the
development team, the marketing team, and the executives of
that group.
Q: The executives were Mr. Rietveld, right?
A: He may still have been there, yes.
Q: Mr. Moon?
A: Yes.
Q: Was Mr. Brereton considered an executive?
A: I don't recall his exact position.
Q: Do you remember Mr. Brereton at all?
A: I remember the name, yes.
Q: Were there other executives in that group besides
Adrian Rietveld and Dave Moon?
A: Mark Calkins, who was the division manager responsible
for business applications, would have been central to any
such division.
Q: Maybe Glen Mella?
A: Glen was the person responsible for marketing, and he
certainly would have had an input into that process.
Q: So is it your testimony today that it would have been
your expectation at the time that a decision about what
choice to make to spend a year writing the advanced file
open dialog or to get the product out fast using the
namespace extension APIs, that that decision would have been
1141
entrusted to the executives, the people we just mentioned,
Rietveld, Moon, Calkins and Mella?
A: It may have been Mr. Waxman in place of Mr. Rietveld
because he may have left by then. But, yes, of course.
Q: And that decision --
A: You keep saying spend a year. I don't know that it was
going to take a year. I have no way of knowing that, so --
Q: Let me amend my question to ask, spend a considerable
period of time. That decision would have been made by the
executives, correct? That was your expectation?
A: That's correct.
Q: The decision would not have been made by individual
developers within the shared code group; is that right?
A: I believe that's true, yes.
Q: Now am I right, Mr. Frankenberg, that when the
announcement was made in October that Novell intended to
sell WordPerfect and PerfectOffice, that that announcement
in and of itself had an adverse impact on the efforts to
develop these products?
A: I don't believe that it did. I believe that the team
continued forward.
Q: Do you recall, Mr. Frankenberg, that a couple months
later, less than two months later, there were mass
resignations among the developers in Scotts Valley, the
Quattro Pro team?
1142
A: I don't know about mass resignations. I'm sure there
were resignations, yes.
Q: Let me ask you this question. In order to get
PerfectOffice out to market, you needed to have Quattro Pro
ready to go, right?
A: Yes.
Q: That was an essential element of your suite?
A: Yes.
Q: Let me show you Exhibit 230. This is an e-mail,
Mr. Frankenberg, dated December 23rd, 1995. It's written by
Bruce Brereton, whose name I mentioned earlier?
A: Yes.
Q: On the to line, it says -- it's hard for me to read,
but I think it might be orm-corp.bfrank. Do you see that?
A: Yes.
Q: Is that you?
A: That's me.
Q: That was your sort of alias or e-mail name at Novell?
A: Ask me and I'll always be frank.
Q: I appreciate that. I thank you for it.
Now Exhibit 230, Mr. Brereton's e-mail in December,
says, Glen asked me to give you all an update on the
situation in Scotts Valley and also report what our plan of
action is. One, on this past Thursday/Friday, about 15
additional people submitted their resignations, all except
1143
one going to Oracle. From a development standpoint, this
leaves us with just two people.
I know it's a long time ago, we're in 2011, but do you
recall this at the end of '95 that 15 developers submitted
resignations and that left Quattro Pro with only two people?
A: I don't remember those specific numbers, but I do
remember there were resignations, yes.
Q: Certainly if there weren't any software developers in
Scotts Valley, people at Quattro Pro working on the product,
you would have a hard time getting your suite out, correct?
A: I guess that depends on how far along the project was
at the time of the resignations, and I have no way of
remembering that.
Q: Well, what it says is that -- item three certainly
implies that the project wasn't ready. It says, we've now
assigned a development manager in Orem. Do you see that?
A: Yes.
Q: And we're putting together a team. Two to three of
these people will be on-site at SV. That was Scotts Valley,
SV?
A: I would assume so, yes.
Q: On Tuesday, January 2. Then it says what the Orem team
will be initially made up of one manager, two from the old
PlanPerfect, three to four other top-notch developers, and
it goes on.
1144
Item four says they will be working closely with
whoever is left at the Quattro Pro group. Do you see that?
A: Yes.
Q: And it goes on to say, we feel that it is essential
that these key people have a full development environment at
home, such that they can fix bugs.
Doesn't this tell you, Exhibit 230, Mr. Frankenberg,
that the Quattro Pro team was not ready even then in
December of '95?
A: It would imply that it wasn't released -- certainly
saying it wasn't released to manufacturing, but -- so having
the ability to fix bugs from home implies that they could
respond to further testing. So clearly the product wasn't
complete. It just doesn't say how far from completion it
was.
THE COURT: It's after 1:30. Let's break for the
day. I'm afraid you will have to come back tomorrow,
Mr. Frankenberg. I'll sit here with counsel for a minute.
(Jury excused)
MR. JOHNSON: Can Mr. Frankenberg be excused?
THE COURT: You can leave.
THE COURT: I'm a little worried that you are
getting now into, with Mr. Frankenberg, things that were
covered by other people. I think you have established what
he knew, but we can't get in the whole critical path issue
1145
now. There's going to be times when you aren't going to
want people on the other side repeating things that are in
evidence. I am just wondering whether this is a fruitful
line of examination.
MR. TULCHIN: I'll take that to heart, Your Honor.
THE COURT: I understand your point, but the fact
of the matter is you have got plenty of arguments, things
wouldn't have happened anyway, as I understood the testimony
of one of the witnesses that talked about the critical path,
this became irrelevant because of the delay, catching up. I
don't think Mr. Frankenberg knew that.
MR. JOHNSON: Of course, he doesn't. I mean we
seem to be having a trial --
MR. TULCHIN: Your Honor, I am going to try not to
respond to Mr. Johnson's constant criticisms. I'm sure
we'll hold him to the same thing. But I do want to respond
to the Court and I'm taking this to heart. If there's been
repetition, I apologize.
THE COURT: It's not repetition. I'm just not
sure it's going to be fruitful.
MR. TULCHIN: I understand. I think I have about
another half an hour. If it turns out to be slightly more,
I hope you will forgive me.
THE COURT: That's not the issue. I wanted to
stop because it's seemed to me that you've clearly
1146
established Mr. Frankenberg really was not involved in the
ins and outs of this decision. We did hear the testimony
about the critical path, which, according to Novell, you can
certainly argue to the contrary, but according to the
testimony of Mr. -- I think it was the fellow who
testified --
MR. JOHNSON: Mr. Gibb.
THE COURT: Mr. Gibb, that it became immaterial
because of the timing on the --
MR. TULCHIN: But, Your Honor, I think it's very
important for the jury to hear and also for the Court that
in a case brought seeking billions of dollars in damages --
THE COURT: That's a whole different issue, Mr.
Tulchin. I've heard you loud and clear.
MR. TULCHIN: If I may? I just want to -- I hope
by way of an apology for taking so long. It's very
important to note, this is the only live witness who they
are calling, or so I now infer, other than these three low
level developers. He was the CEO. And I think it's
important for the jury to understand that when Novell is
seeking billions of dollars in damages, the case turns on
the testimony of three low level developers about choices
that they make. Business people apparently never made this
choice. We don't have a single document from any executive
within the business applications group at Novell indicating
1147
here is the decision we're going to make. In lieu of
getting the product out quickly, let's try for the super
duper advanced file open dialog. It was a decision that
Harral and Richardson say that they made, although both of
them frequently used the word we without defining who else
they were talking to.
So again --
THE COURT: I hear you loud and clear. I think
you have made that point. I'm just suggesting that getting
into whether or not -- and you make your own decision, but
getting into issues about whether the delay in Quattro Pro,
because people left, impacted upon what ultimately happened,
that does not seem to me to get you anywhere. I think you
have established, and I heard you loud and clear at least,
it's mind boggling to me, to tell you the truth, that
Mr. Frankenberg was not intimately involved in this
decision. I can't imagine -- I mean you did establish the
executives, not the three we heard from. That's a point
too. But, frankly, it's mind boggling to me that you have a
decision made of this magnitude without Mr. Frankenberg
having been involved. It's beyond anything I can
comprehend.
MR. JOHNSON: May I respond, Your Honor?
THE COURT: Yes, please do.
MR. JOHNSON: Thank you.
1148
First of all, Mr. Gibb was not some low level
developer. He was the project manager for the PerfectOffice
suite.
THE COURT: You are telling me that you would let
a junior partner -- never mind. Go ahead.
MR. JOHNSON: And Mr. Gibb testified that they had
weekly meetings with the entire team and a number of
executives with the company. These choices were not being
made randomly. Because you don't bring the CEO to make a
decision -- and what I think here is that Your Honor, once
again, is focusing on the notion that they could have made
the decision to use these interfaces, and the testimony is
to the contrary.
THE COURT: That may or may not be the case. I
hear you.
MR. JOHNSON: I think it's very important.
THE COURT: No. That's a whole different issue.
Your clients chose not to keep any documents. Your clients
chose to talk to their lawyers a long, long time ago about
bringing an antitrust case. And Mr. Frankenberg, the
president of the company, is not even involved in the
decision as to whether -- you know, maybe the decision was
right. Maybe it was wrong. As far as I'm concerned, it's
mind boggling to me that somebody didn't say, Bob, this is
the situation. We have two ways to go. We can either get
1149
this product out within a short period of time with
Windows 95 coming out, but it may have problems. It could
be they are going to withdraw the APIs or it could be we're
using their functionality, which our client base is not
going to be happy with because it's a step backwards. Or we
can wait a year and bring it out.
Frankly, it is to me mind boggling -- it may have
nothing to do with the law. It's having to do with
business. Why the chief executive officer and the chairman
of the board is not involved in that decision is just
shocking to me.
MR. JOHNSON: Your Honor, if I may. Certainly at
the time these decisions were being made -- and I must say
they didn't have the choice to use the extensions. That's
what the testimony is. Okay. Certainly at the time the
choice was being made, they did not know it was going to
take over a year to do this. So it's not like you had the
stark decision of saying either we do A or we're going to be
in 1996. This is something that you find out over time.
This is something that is brought to Mr. Frankenberg's
attention in early 1995, hey, we have a real problem here.
The developers have a real problem. They don't know at that
point in time it's going to cost them a year to get to home.
They don't know how difficult the problem is going to
become.
1150
So to say that there was some choice to be made in
1995 that, oh, okay, if we go that route, we're going to
miss the time to market, we're going to be somewhere off in
1996, and we're doomed. They did not have that information.
They did not know that. What they knew --
THE COURT: I've said what I've said. It may not
have anything to do with the lawsuit. I'm telling you that
if I was a chief executive and chairman of the board of a
company and this decision was not put on my plate -- forget
the first option, because maybe I'm wrong about my
recollection, which is perfectly possible. But the choice
between using Microsoft's open face dialog, which may
decrease the functionality that your clients have come to
expect or going off on some uncertain path, whether it's a
year or whatever -- what I know from -- clearly one thing,
this is an industry in which people can't predict what's
going to happen, I would want to make the decision as the
chairman of the board and the CEO, and I am not -- I'm
sorry, I'm just telling you what I'm thinking. It may have
nothing to do with -- if responsible people made the
decision, it may have nothing to do with the lawsuit. It
may make a big difference.
MR. TULCHIN: It actually doesn't help Novell to
say we didn't know it would take a year, because three
months in, or four, or four and a half, or five, or six,
1151
when they hadn't solved the problem yet, and they could get
the product out in a moment's notice, according to all the
testimony, we'll collect it, I will be happy to show it to
you.
THE COURT: Somebody knew something that year.
These people -- two or three people, they didn't want to
hire people. A bunch of associates researching a project.
MR. TULCHIN: That executives made a decision,
there is not a single document --
THE COURT: This is my fault. This is my fault.
All I'm saying is that I did not think that this speaks well
of Novell management that Bob Frankenberg was not involved
in the decision. That's all I'm saying. It got us here. I
think you've made that point, Mr. Tulchin. I think it's
something the jury may or may not consider. But I don't
think that pursuing the issue of whether the file -- or
whether the resignation of the Quattro Pro people made a
difference is to going to impact it. That's how we got
here. That's all I'm saying.
MR. JOHNSON: Your Honor, may I say, all of this
is under the category of blame the victim without reference
to the fact of what Mr. Gates did and the reasons he --
THE COURT: Mr. Gates was, according to -- I
understand. The answer is that he was involved in a highly
competitive industry in which he was worried about paradigm
1152
shifts in a minute, and he didn't want his product to be
used by somebody who he saw as a major competitor that might
be used against him and completely wipe out what he had
accomplished.
MR. JOHNSON: If that was the case, they never
should have evangelized that stuff to us. They shouldn't
have given it to us. They shouldn't have told us this is
what you should do to develop your product and we might not
be here today. But he took a calculated I'm taking that
away from them in order to advantage my suite and to hurt
WordPerfect and Lotus, and he did so, frankly, with malice.
THE COURT: That's what I will be hearing on a
motion for judgment as a matter of law.
MR. JOHNSON: Thank you, Your Honor.
THE COURT: What's tomorrow in addition to we have
Mr. Frankenberg?
MR. JOHNSON: Well, Your Honor, obviously I didn't
know -- I am going to have to --
THE COURT: No. No. No. I just want to --
MR. JOHNSON: -- do quite a bit of redirect.
We're going -- we had wanted to put on Mr. Alepin tomorrow,
but clearly we're going to take at least half the day
finishing up the cross, then I have to do a fair amount of
redirect because of the length of the cross. We do have
some film, still have videos to show, Your Honor. So I
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think we'll go back and take a look at it and decide --
clearly I think we can either show film, or if we did
Mr. Alepin, it would only be the very start of his
testimony.
THE COURT: Okay. Fair enough.
Look, I understand. If I'm wrong, the first
option, I could very well -- it could be it's the lack of
documentation, plus what the people on the phone refused to
say. It could also be -- and, frankly, it's the first time
today as I realized it, I guess, that the APIs could have
been withdrawn in the first release of Windows 95. Frankly,
I had just gotten the impression that everybody was talking
about were the APIs being withdrawn in future versions of
Windows. That is what prompted my original question of last
week, which is why didn't somebody consider using the
documented APIs, at least simultaneously while the house was
being built, to which you said there are two answers.
Number one, they couldn't even use the existing APIs because
they were getting stonewalled by whatever --
MR. JOHNSON: Premier Support, Your Honor, which,
by the way, wasn't some hotline. It was a paid service that
cost a lot of money, and you had direct excess to
Microsoft's developers.
THE COURT: I understand.
MR. TULCHIN: Your Honor, it's not an antitrust
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claim that unnamed people at Premier Support, who they have
never identified, somehow didn't help them enough because
they weren't competent enough to write their own product.
THE COURT: It's your fault because you don't have
the records of Premier Support.
MR. TULCHIN: Yes, we had the duty to collect
those documents. They knew they were going to sue us. They
had the duty. Of course, we don't have those records.
MR. JOHNSON: There were lawsuits against
Microsoft at the time. They had an equal amount of duty at
the time. There were all kinds of documents.
THE COURT: I think --
MR. TULCHIN: No one else has had the nerve to sue
about calls to Premier Support.
THE COURT: I still want to know -- I am going to
want to know at some point whether there's any other -- any
case anywhere, including those against Microsoft, where a
competitor, the duty of the competitor requires you -- and
you said the only -- the only case you cited to me was my
own decision in Novell v --
MR. JOHNSON: Well, Your Honor, I pointed that out
as a fine example that you wrote --
THE COURT: I don't know of any other -- any other
where -- as far as I know the other cases involving
Microsoft had to do with objective business practices, for
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example, which clearly could have an impact upon -- but what
was done to Sun and Netscape perceived as really hurting --
being active products that might destroy the operating
system. Here the more I hear, it is that Novell was
complaining that Microsoft did not share its own enhanced
product, which is Windows 95, with Novell so that Novell
could write its program -- its suite the way it wanted to.
That to me is a substantial antitrust issue, particularly
against a background of what clearly was a competitive
industry.
If Raikes's e-mail didn't establish it, these sure
establish it, because all they talk about is how competitive
and dynamic the software industry is. So according to
contemporaneous evidence from your own client, this was a
highly competitive industry. I know from Mr. Raikes's memo
and what the concern is there is a paradigm shift. Assuming
Mr. Gates made the most deliberate, intentional decision at
all, the most that I see was he saw Novell as a major
competitor and he wasn't going to allow, after that
presentation of the product of Corsair, which was never
marketed -- he was scared, and he didn't want to give to
Novell things that he had developed that could be used
against them. That to me, as I understand Microsoft's
position, I understand your position, but I will have to
decide this.
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MR. JOHNSON: The problem was it wasn't just a
matter of withholding it, it was a matter of giving it to us
and then jobbing us by yanking them away. That is the
difference and that is the difference you identified in your
opinion as making a difference in this case.
MR. TULCHIN: At the risk of stating the obvious,
no police officer came to Novell and took anything away.
They had the beta. They had the documentation. The
testimony was clear they could have used the namespace
extensions if they wanted to. Mr. Johnson even played
Maritz's testimony that any ISV faced with the withdrawal of
support for any API, any API had a difficult business
decision. Either use them at your own risk, use them if you
think it's worthwhile using them because it can save you
time to get the product out to market, or follow a new path,
build a road around the mountain, good luck. It's not
Microsoft's job to build that road for Novell.
THE COURT: Another problem I have, which is a
related issue which I mentioned before, I thought, frankly,
Mr. Frankenberg had gotten there when he talked about how
WordPerfect was being used for other 32-bit systems. I see
absolutely no evidence -- and I am not going to allow an
expert to make it up. I see absolutely no evidence that
contemporaneously your client was trying to write, was
trying to develop something that would have allowed it to
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reach all of the sources of information that it wanted on
Unix or on anything else. It wanted to use Windows 95, and
it seems to me that absent some evidence that -- not
speculative evidence, but some real evidence that, in fact,
what Microsoft did prevented you all from writing to other
operating systems is a problem in your case. That's
something we'll talk about at the appropriate time.
MR. WHEELER: Your Honor, could I raise a less
contentious issue? I'm trying to maintain a practice and I
have scheduled meetings on Friday when we're not in session.
You indicated this morning you may change that. If that's
the case, I need to change some meetings that I have
scheduled. When will I know when --
THE COURT: Tomorrow I'm going talk to my office.
I think, based upon what I've been told, I am going to sit
next Friday.
MR. JOHNSON: Next Friday, Your Honor, not this
Friday?
THE COURT: This Friday is a holiday, I think.
MR. JOHNSON: Right.
MR. WHEELER: We'll not be sitting this coming
Friday, but --
THE COURT: Next Friday, unless I tell you to the
contrary. Based upon what I told you all this morning, I
would mess you all up terribly. This is my practice too --
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who volunteered for this?
I'm just telling you -- I'm just telling you what
I see as a potential issue. I've not made up my mind. If
I'm wrong -- I absolutely understand I might be wrong about
that first option. But I absolutely understand if -- it
just came to mind, look, it's going to be withdrawn from
future Windows, you could use it for the present Windows,
why didn't somebody consider the fourth alternative, which
is use the undocumented APIs temporarily while you recreate
the system. You tell me there isn't. I understand.
(Whereupon, the trial was continued to Tuesday,
November 8, 2011 at 8:00 a.m.)
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