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

In re:
NOVELL, Inc.,

Plaintiff,

vs.

MICROSOFT CORPORATION,

Defendant.

_____________

Case No.

2:04-CV-01045 JFM

_____________

BEFORE THE HONORABLE J. FREDERICK MOTZ

November 8, 2011

JURY TRIAL

1160

A P P E A R A N C E S

JOHN E. SCHMIDTLEIN
[address]

MAX D. WHEELER
[address]

For Defendant:
DAVID B. TULCHIN
STEVEN L. HOLLEY
SHARON L. NELLES
[address]

STEVE AESCHBACHER
[address]

JAMES S. JARDINE
[address]

Court Reporters:
Ed Young
Patti Walker
Rebecca Janke
[address]

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I N D E X

Douglas Henrich (Video Deposition) - 1306

Steven Sinofsky (Video Deposition) - 1331

Exhibit - Received
Defendant's Exhibit 637 - 1188

1162

November 8, 2011 - 8:00 a.m.

P R O C E E D I N G S

THE COURT: Good morning.

Mr. Wheeler, I confirmed and I will sit next Friday, so you can make your schedule --

MR. WHEELER: Thank you. I will take care of that.

THE COURT: Okay. I understand there is an exhibit issue.

MR. JOHNSON: Yes, Your Honor. Good morning.

THE COURT: Good morning.

MR. JOHNSON: Counsel approached me this morning and indicated that he intends to use what has been marked Defendant's Exhibit 614-A. I guess I should hand it up to you --

THE COURT: Sure.

MR. JOHNSON: -- so you can see what we're talking about. This is one of those DOJ inquiry documents that Your Honor has heretofore not allowed people to use.

Two things --

THE COURT: Let me read it.

MR. JOHNSON: Sure.

THE COURT: Okay. Go ahead.

MR. JOHNSON: Two things. One, of course,

1163

apparently, despite the arguments the other day, Microsoft intends to get into the issue of bugs, which I think is unfortunate. There is going to be a frolicking detour with respect to the issues in this case. Obviously I understand why they want to use this doc, because Mr. Bradford states that the bugs have something to do with the new products, which they didn't, but I understand why they want to use it.

The other thing is, however, they have taken this doc and redacted out of the bottom the Department of Justice in the paragraph down there, which, as you will note, indicates that Novell was approached by the Department of Justice. We had that conversation awhile ago. We didn't run to the principal, the principal came to us and asked for our concerns about Microsoft's conduct during that period of time. So I don't think that if they are allowed to use this at all they get to redact who is making the inquiry here, the Department of Justice.

I also think, Your Honor, that out of fairness if they are allowed to get into our reports to the Department of Justice, we certainly should be permitted to make the jury aware that we complained about the issues that are in suit here, because that is not fair for them to place a document in front of the jury that said we complained about bugs, and for there to be a suggestion that we didn't complain about the manner that is in dispute here.

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So that is all I have, Your Honor.

THE COURT: Okay.

MS. NELLES: Good morning, Your Honor.

First of all, I just want to note that this document directly contradicts the DX-6 arguments we heard yesterday about whether or not these bugs related to the prior version or the current version.

I would also note that Mr. Frankenberg, who is here, will be well prepared to address both of these documents today. But we really just want to use, and I think Mr. Johnson understands why, and that he understands that it is relevant in this case, the top paragraph or top two paragraphs. If it is going to make things easier we don't need to use the bottom half. I redacted out the Department of Justice to be consistent with what we have done in this case, but what we would like to do and what I think is fair to do, given the testimony to date, is to talk to Mr. Frankenberg about the first two paragraphs in this document.

THE COURT: Certainly as I read this document, unless it is early in the morning -- the time of day has nothing to do with it. My mind always does not work well. I think this answers the debate from yesterday, because this clearly says that the bug is related to the new product. Rightly or wrongly, I guess, that is what it says.

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Is there some way you can get into this without using the document?

MS. NELLES: I think if that is what Your Honor would like us to do --

THE COURT: I think the best thing to do is don't use the document and don't get into the redactions. I'll wait and see how the evidence develops, but the fact of the matter is that what this really does for me is to solidify that you should be able to get into Exhibit 6.

MS. NELLES: Okay. Thank you, Your Honor. We'll do it that way.

MR. JOHNSON: Your Honor, may I have that? That is my copy.

THE COURT: Absolutely. I didn't say good morning and I didn't give your document back.

Let's get the jury.

Mr. Frankenberg, this is probably a safe time to have you come on up.

MR. FRANKENBERG: Yes, Your Honor.

(WHEREUPON, the jury enters the proceedings.)

THE COURT: Good morning, everyone. Thank you for your usual promptness.

Mr. Tulchin.

MR. TULCHIN: Thank you, Your Honor.

CROSS-EXAMINATION (Cont.)

1166

BY MR. TULCHIN

Q: Mr. Frankenberg, good morning, sir.

A: Good morning.

Q: Yesterday I showed you Exhibit 636. I know you have a lot of materials there, but you may remember that this was the document concerning the notes that were taken about the meeting between you and Mr. Gates and lots of other people on January 10th, 1995. I asked you yesterday -- the notes go on for something like eight pages, and they apparently are notes taken by Dave Miller.

I asked you yesterday is there anything in here that indicates that the subject of the namespace extension APIs or undocumented calls was ever raised at the meeting. And you said you had not had a chance to look at the entire document.

Do you recall that?

A: I do, yes.

Q: Did you have a chance to look at it overnight?

A: I looked at it after you asked me about it.

Q: Is there anything in the document that you have been able to spot that pertains in any way to undocumented calls or to the namespace extension APIs?

A: I didn't see anything in the document, no.

Q: Can we agree then that at least insofar as this document indicates, Novell didn't raise those subjects

1167

during the meeting with Microsoft, including Mr. Gates, on January 10, 1995?

A: I think we could assume that that didn't happen when Dave Miller was present. It may have been well at another session with Mr. Gates.

Q: But it is not your testimony that you recall that occurring?

A: No.

Q: Correct?

A: But I think this covers what Mr. Miller intended. There may have been other sessions.

Q: There may have been other sessions, but if there were you don't have any memory sitting here today of raising those subjects?

A: No, I don't.

Q: Thank you, sir.

Now, yesterday on direct you spoke a little bit about certain applications being cross-platformed.

Do you recall that?

A: I do, yes.

Q: PerfectOffice 3.0 was released in December of 1994, correct?

A: Correct.

Q: And that was written for the Windows 3.1 platform, right?

1168

A: Yes, it was.

Q: There was no version of PerfectOffice that was released by Novell that was written for any other platform; is that right?

A: No, not at that time. The intent was to start with that. It was not released at that time.

Q: Okay. I think I have you, but let me ask you more generally. From the time that Novell acquired WordPerfect in June of 1994, until the time Novell sold WordPerfect to Corel in 1996, Novell never released a version of PerfectOffice that was written for any other platform except Windows 3.1?

A: That is true.

Q: And is it also your understanding that when Corel acquired WordPerfect, Corel released a version of PerfectOffice for Windows 95?

A: They did release that, yes.

Q: And is it true, Mr. Frankenberg, that as far as you know Corel never released any version of PerfectOffice for any other platform except Windows?

A: I don't know what they did, sir, beyond releasing it for Windows.

Q: Mr. Frankenberg, I'm going to hand you Defendant's Exhibit 22.

The first page of Exhibit 22 is an e-mail dated April

1169

3rd, 1995 from Brad C, and I think there is evidence in the case that that is Brad Chase at Microsoft, to, among others, Mark Calkins.

Do you see that, sir?

A: I do, yes.

Q: And on the c.c. line it indicates that the e-mail was also sent to B Frank.

Do you see that, sir?

A: I do, yes.

Q: And that was you as you said yesterday?

A: Correct.

Q: Do you recall having received this e-mail on or about April 3rd, 1995?

A: Yes, I do.

Q: And this is an e-mail about the Windows logo program, correct?

A: Correct.

Q: The logo program for Windows 95.

Mr. Chase's e-mail goes on for about two and a half pages, but he is responding to an e-mail that Mr. Calkins sent to him on March 6 of 1995. I refer you, sir, to page 3 of Exhibit 22.

A: I see that, yes.

Q: Right. Mr. Calkins' e-mail of March 6 went to Brad C, Brad Chase, and also Brad Silverberg, Brad S.I. at

1170

Microsoft, and you were one of the people who got a copy of that, correct?

A: Yes, I did.

Q: And you remember that e-mail as well?

A: Yes, I do.

Q: Mr. Frankenberg, am I correct that the e-mail that begins on the third page from Mark Calkins was a request by Novell to Microsoft that Microsoft change, for Novell's benefit, the requirements of the Windows 95 logo program; is that right?

A: I believe it asked for an exception to the program --

Q: Yes.

A: -- not necessarily, generally change the program.

Q: And Microsoft responded, and that is the e-mail that starts on the first page from Mr. Chase, writing back to Mr. Calkins, and with a copy to you and other people, and Microsoft responded, and to cut through this three pages a little bit the response was that we cannot make an exception for Novell.

Is that fair?

A: That is what it says, yes.

Q: On the third page of Mr. Chase' e-mail there are two paragraphs. One begins I would be glad to have a conference call. Do you see that? And then there is one just below that.

1171

A: Yes.

Q: And Mr. Chase of Microsoft is writing to Mr. Calkins with a copy to you, and in effect saying that if you went to talk about this further let us know and Brad Struss will be glad to set up a call.

Do you see that, sir?

A: Yes. Yes, I do.

Q: Mr. Frankenberg, it is correct, it is not, that Novell never responded to that invitation for a call?

A: I don't honestly know whether we responded or not.

Q: Well, is it fair to say, Mr. Frankenberg, that sitting here today you have no recollection of Novell ever responding?

A: I do not have a recollection of that.

Q: And as we said before this took place in April of 1995, the e-mail at the top, responding to an e-mail in March of '95, right?

A: Yes.

Q: And during that period, in March and April of '95, Novell was well aware that if you wanted to speak to someone at Microsoft about some issue or concern, or if Novell wanted an exception from some requirement that you could easily send an e-mail to Mr. Chase or Mr. Silverberg at Microsoft?

A: Yes.

1172

Q: And both Mr. Chase and Mr. Silverberg were reasonably high up in the organization, correct?

A: Correct.

Q: You had their e-mail addresses and you were getting e-mails from -- at least this e-mail from Mr. Chase, right?

A: Yes.

Q: I think you testified yesterday that Mark Calkins was one of the executives who was responsible for the business applications group at Novell.

A: He was responsible for the business applications division, yes, the business unit.

Q: Division. Thank you. Sorry, sir.

You also testified that had Novell been confronted with a choice in 1994 or 1995 about which option to take, whether to get out a product very fast by writing new versions of your products to the Windows common file open dialogue, or taking a much more difficult path and trying to write an advanced file open dialogue, that a decision of that sort would probably go to a group that included Mark Calkins?

A: Yes, that is correct.

Q: You also testified yesterday that you have no recollection of ever being asked to make a decision or provide your recommendation about which path to take?

A: I don't even recall ever being asked that, no.

Q: Right.

1173

And it is correct, is it not, sir, that as far as you know there are no e-mails to Brad Chase or Brad Silverberg or anyone else at Microsoft concerning the namespace extension APIs?

A: I don't know of any.

Q: Could I ask you, sir, to look in Exhibit 22, the same document in front of you, to the second to last page. And right towards the bottom there is a heading that says conclusion, if I could direct you to that. This is still part of the e-mail that Mark Calkins of Novell wrote to Mr. Chase and Mr. Silverberg on March 6, 1995.

Do you see that, sir?

A: Yes, I do.

Q: At the bottom do you see the conclusion, the second to the last page?

A: Yes, sir.

Q: And right at the bottom it says we would like to propose that we set up a conference call to discuss this issue. This is before the e-mail that came back from Mr. Chase, and then it says we will work through our Windows 95 contact, Brad Struss, to find a time, et cetera.

A: Yes.

Q: So you knew and Mr. Calkins knew in March and April of 1995 that Novell's Windows 95 contact was someone named Brad Struss at Microsoft, correct?

1174

A: Well, certainly Mark Calkins knew that, yes.

Q: Right. But this e-mail went to you and you say you remember getting it?

A: Yes, but --

THE COURT: That was a fair answer.

Do you remember everything you have ever read?

MR. TULCHIN: No, certainly not, Your Honor. I don't remember some things I read yesterday.

BY MR. TULCHIN

Q: But --

THE COURT: I doubt that.

MR. TULCHIN: I have been reading a lot.

BY MR. TULCHIN

Q: Mr. Frankenberg, fair enough. You don't recall seeing that, but certainly Mr. Calkins wrote it in his e-mail to Chase and Silverberg?

A: Yes, he did. Certainly he knew and, as I said yesterday, the name sounded familiar, but I don't recall what Mr. Struss did.

Q: Yes, you did say that.

Now, Mr. Frankenberg, there was testimony earlier in this case from Adam Harrall that he made some phone calls to people at Premiere Support at Microsoft.

Do you know what Premiere Support is?

A: I assume it would be people who supported developers,

1175

but I don't know that to be true.

Q: Did you know at the time that it was a telephone help line that Microsoft set up so that ISVs, if they chose to pay a fee to get access to this, could seek help from developers at Microsoft in building their products?

A: That makes sense, yes.

Q: Did you understand at the time that if Novell had some significant issue about APIs in Windows 95, that the logical thing to do would be to contact the Windows 95 contact, Brad Struss, and raise those issues?

MR. JOHNSON: Objection to what was logical, Your Honor.

THE COURT: Overruled.

THE WITNESS: I think that would be a good thing to do, yes.

BY MR. TULCHIN

Q: Do you have any information at all that anyone at Microsoft ever from October 3rd, 1994, when Mr. Gates made the decision to withdraw support for the namespace extension APIs, until the time that Novell sold WordPerfect to Corel, do you have any information at all that anyone at Novell ever talked to Brad Struss about this question?

A: I do not personally have that knowledge, no.

Q: Would you agree with me, Mr. Frankenberg, that it wasn't Microsoft's obligation in '94 or '95 to help Novell

1176

build a product, a software product that would be better than Microsoft's applications, that it was not Microsoft's obligation to help Novell do better than Microsoft could do?

MR. JOHNSON: Objection to the legal question.

THE COURT: Sustained.

BY MR. TULCHIN

Q: Would you agree with me, Mr. Frankenberg, that the people at Premiere Support, as far as you understood it, were there to answer questions about how an ISV could plug into the APIs in Windows that Microsoft was supporting?

A: Yes.

Q: It wasn't their function at Premiere Support to help an ISV figure out how to use an API that Microsoft was no longer supporting.

Do you agree?

A: I am sure that is true. However, we had been using those APIs and they were removed from our ability to use them.

Q: Well, is there any information that you have that indicates that any particular specific person at Microsoft knew that you were using those APIs?

A: I am sure they did.

Q: Well, is there any document that you have ever seen, ever, from Novell to Microsoft, which indicates in any way that Novell had informed Microsoft that it was using those

1177

APIs or intended to use them in the future?

A: I have not seen documents. I have heard conversations, but I have not seen documents.

Q: Are these conversations that you have heard in the last, let's say, few months?

A: As well as conversations with, as I said -- as I testified yesterday, with Mr. Calkins and Mr. Reitveld and Mr. Waxman, that they had discussed this with Microsoft. But I don't have any document, no.

Q: Mr. Frankenberg, let me show you Exhibit 155. I should say Defendant's 155. When you have had a minute to take a look at it, let me know.

A: Okay.

Q: Thank you, sir.

Now, this is a memorandum and at the top it says Novell legal department memorandum from Ryan Richards. He was then a lawyer at Novell, correct?

A: Yes, he was.

Q: And it is written to Mark Calkins, whose name we have been talking about this morning.

Do you see that, sir?

A: I do, yes.

Q: It is written in January of 1995, and there are a number of people who get copies of this, Mr. Mella, Mr. Brereton, Mr. Moon, Mr. Bradford, Mr. Rietveld, you,

1178

David Owen and Todd Titensor.

Do you remember this memo? Do you remember receiving it in 1995?

A: Yes, I do.

Q: And this is also on the subject of the Windows 95 logo program, correct?

A: Correct.

Q: Now, the people who received copies of this are Mark Calkins, to whom it was directed, and a number of people who got c.c.s, those include the executives in the business applications group that you referred to yesterday in an answer you gave me at I think about 1:25. It was close to the time that we were breaking.

Do you recall that?

A: Yes, I do.

Q: I think you said that you would have expected that had there been a choice presented about how to respond to the withdrawal of support for the namespace extension APIs, whether to just use the Windows common file open dialogue or to build this much more difficult road, if you will, to develop a special Novell advanced file open dialogue, you would have expected that the people involved in that decision were Mr. Calkins, and I think you said Mr. Moon, and Mr. Rietveld and maybe Mr. Mella, correct?

A: Yes, most likely Mr. Mella, having marketing

1179

implications.

Q: Right. And all four of those people received this memorandum from Ryan Richards on January 12 of 1995, right?

A: Correct.

Q: Now, would it be fair to say, Mr. Frankenberg, that the decision on how to respond to the namespace extension APIs turned out to be a decision that had some real important consequences for Novell?

A: Yes, it did.

Q: And is it also fair to say, Mr. Frankenberg, that as far as you know no memorandum of this sort exists, that you have never seen any memorandum of this sort which addresses that decision about what choice to make?

A: I don't recall seeing one. That does not mean there wasn't one, but I don't recall seeing one.

Q: I understand. That was just my question.

And you don't recall seeing one at the time in 1994 or 1995, right?

A: I do not.

Q: And you don't recall seeing any such memorandum in preparation for your testimony here?

A: I do not.

Q: Now, if it is correct that no such memorandum was ever written to Mr. Calkins or Mr. Moon or Mr. Rietveld or Mr. Mella, or maybe to all four of them, if it is true that none

1180

was ever written, would that surprise you?

A: If it were true it would surprise me, yes.

Q: In any business organization faced with an important decision, it would normally be the case that a memorandum such as this would be written laying out the concerns and the issues and the considerations facing that business in making some strategetic or tactical choice, true?

A: That would normally happen but, as I have said, I don't know of any such memorandum.

Q: Do you know of any evidence whatsoever that either Mr. Calkins or Mr. Mella or Mr. Moon or Mr. Rietveld or any combination of the four of them ever were asked to make a decision about what choice to make in responding to Microsoft's decision to withdraw support for the namespace extension APIs?

A: Could you repeat your question, please. It was rather long.

Q: It was long. I will try to make it quicker.

A: Thank you.

Q: A little shorter.

Mr. Frankenberg, do you know of any evidence whatsoever that any of the four people we mentioned, Calkins, Mella, Moon or Rietveld ever were presented with a decision about how to respond to Mr. Gates' decision to withdraw support for the namespace extension APIs?

1181

A: I know of no documents that do that.

Q: My question was a little broader. Other than documents, is there any evidence that you know of that any of these four people got involved in any such decision?

A: None, other than that I was told by either Todd Rietveld or Jeff Waxman or Mark Calkins, as I testified yesterday, that those extensions were removed from our use and that that was the cause of delays. I assumed from that that they knew about it and were responding to it, but I do not have any other evidence other than that.

Q: And I think you said that you don't know when that conversation took place, correct?

A: I said that it was probably the first part of 1995, but I don't know an exact date, no.

Q: And you don't know who of those three you had the conversation with? It could be any one of them?

A: Yes. Yes, I do not know which of the three --

Q: You're agreeing with me?

A: I do not know which of the three told me that, correct.

Q: Right. And looking at Exhibit 155 about the logo program, you'll see that in the first paragraph Mr. Richards writes I want to give you and those copied on this memo an update of our discussions of the Microsoft Windows 95 logo program.

I hope this is not repetitive, Mr. Frankenberg, but you

1182

don't know of any document or memorandum or e-mail which reflects the same sort of effort to provide an update of discussions that executives at Novell had had about the namespace extension issue?

A: I think I have already answered that. No, I do not.

Q: Right. And then it goes on in the second sentence to say Glen Mella, Todd Titensor, Greg Jones, David Owen and I met this morning to try to reach a decision on a recommended response to the logo program.

Now, do you recall, Mr. Frankenberg, that Microsoft at least at one point was saying, and we looked at this in Exhibit 22, that it was not willing to make an exception for Novell to the requirement in the logo program that the ISVs product degrade gracefully on Windows NT?

Do you recall that?

A: It must have been -- I didn't read all of that in detail. Can you point out to me where that was, sir?

Q: I don't want to spend too much time, because if you don't recall, that is fine.

A: Well, if it is in here -- I will take your word for it, but I don't recall degrading gracefully.

Q: Well, there was a compatibility requirement with Windows NT.

Do you recall that?

A: Yes. That is a bit different than degrading

1183

gracefully, but --

Q: Fair enough. We'll move on.

In the second paragraph of Exhibit 155, and this is a two page memo, but we are still on the first page, the author of this memorandum says two responses that we have considered thus far are, one, to make a high profile challenge to Microsoft's program requirements and, two, to ignore the program and when asked state that we simply do not intend to support it.

Do you see that, sir?

A: Yes, I do.

Q: Is it your recollection that you as the C.E.O. of Novell ultimately made the decision to go with option two when it comes to the logo program, that is, to ignore Microsoft's logo program and simply decide not to participate in it?

A: I may well have participated in that decision or made it.

Q: Let me show you Exhibit 157.

I always forget to say Defendant's 157. Sorry.

THE COURT: We'll assume that is the case.

MR. TULCHIN: Thank you, Your Honor.

BY MR. TULCHIN

Q. Have you had a chance to take a glance at this, sir?

A: Yes. This confirms what I just said.

1184

Q: Right. This is an e-mail from Todd Titensor. He was one of the people who got the memo, Exhibit 155, and it is to a number of people. It has e-mail aliases. February 2nd, 1995. The subject is Win 95 logo requirements, issues with NT.

Then in the very first paragraph -- I should say that the e-mail is addressed to Ryan and Greg. Right below it, and directing your attention to that paragraph, it says below is the beginning of a cover message to the attached document that we are planning to send to Brad Silverberg, V.P. of operating systems at Microsoft regarding the NT requirement for Windows 95.

Do you see that, sir?

A: Yes, I do.

Q: And ultimately Mr. Calkins sent the message that we looked at earlier, Defendant's Exhibit 22, correct?

A: Yes.

Q: You'll see at the bottom of Exhibit 157, the document we are looking at, that there is a draft of the first part of what Mr. Calkins eventually sent to Mr. Silverberg at Microsoft, right?

A: Yes. That is what it says.

Q: That was the message that was sent in March.

Going back to the top of the document, Mr. Silverberg is identified as vice president of operating systems at

1185

Microsoft, right?

A: Yes.

Q: So Mr. Titensor certainly knew Mr. Silverberg's title, and anyone reading this could have seen the same thing?

A: Yes.

Q: But as with Mr. Chase there is no document that was ever sent to Mr. Silverberg as far as you know in which Novell raised the subject of the namespace extension APIs?

A: There may have been such a document, but I don't know of it.

Q: Then if you go to the third line of the first paragraph there is a sentence that begins as you may be aware, and it goes on to say Bob F has stated in a meeting with the QP team, Mark, Glen, Bruce, that he does not accept the NT requirement, and if it is not removed from the logo requirements list we will simply not support the logo.

Do you see that?

A: Yes, I do.

Q: So to go back to my earlier question, is it fair to say, looking at Exhibits 22 and 155 and 157, that you made the decision that if Microsoft didn't grant Novell an exception to the requirements of the logo program, that Novell would simply not participate in it, correct?

A: That is correct.

Q: Thank you, sir.

1186

Now, I want to direct your attention, if I could, to Defendant's Exhibit 637.

And before we look at this document, Mr. Frankenberg, we spoke yesterday about the decision in October of 1995 to announce that Novell intended to sell WordPerfect.

Do you remember that?

A: Yes, I do.

Q: And that announcement was made even before Novell had a buyer, right?

A: That is correct.

Q: In fact, you testified that one of the reasons for the announcement was to get the word out widely to attract as many potential buyers as possible?

A: That is correct.

Q: But your announcement in October that Novell intended to sell WordPerfect, had some adverse consequences in the marketplace, correct?

A: Yes, it did.

Q: And one of your competitors, Lotus, the company that was making Lotus Smart Suite, decided to exploit that announcement that you had made.

Is that fair?

A: Yes, they did. It was a very competitive environment, as this ad shows.

Q: Do you recognize Defendant's Exhibit 637 as a copy of

1187

an advertisement that Lotus placed in a number of publications after your announcement in October where Lotus was trying to exploit for its own advantages that announcement?

A: Yes, I do.

MR. TULCHIN: We offer 637, Your Honor.

THE COURT: Okay. Any objection?

MR. JOHNSON: Yes, objection, Your Honor. I have nobody from Lotus that I can cross-examine. This is hearsay. I don't think --

THE COURT: It is not hearsay. It was what Lotus did in reaction to the announcement.

Overruled.

(WHEREUPON, Defendant's Exhibit 637

was received into evidence.)

BY MR. TULCHIN

Q: Mr. Frankenberg, the advertisement that Lotus placed in a number of papers, and this included The Wall Street Journal, is that right, as you remember?

A: I don't remember which publications, but I do remember the ad, though.

Q: You certainly remember seeing it at the time?

A: Yes, I do.

Q: Would you say it was sort of galling to you to see this?

1188

A: To say the least, yes, but I thought it was a good shot on their part.

Q: And what Lotus is doing -- the ad says in very large type, now may be the time to give up on WordPerfect. Obviously Novell thinks so. Then it goes on below to the left, try Lotus Smart Suite featuring WordPro risk free for 90 days, only $199.

Do you see that?

A: Yes, I do.

Q: Is it correct, Mr. Frankenberg, that the announcement that you made in October that Novell intended to sell WordPerfect wound up hurting sales of WordPerfect and PerfectOffice?

A: Yes, it would, and did.

Q: And because you made that announcement in October, and because the announcement hurt sales, the price that you were able to get from the buyer, Corel, was lower than it otherwise would have been?

Is that fair?

A: I don't know that that is necessarily true.

Q: Well, certainly when Corel came in in 1996 and expressed an interest in buying the WordPerfect business, it asked for permission to look at the books and records of Novell, correct?

A: Of course they did due diligence on the opportunity.

1189

Q: And in doing their due diligence they looked at the sales figures for WordPerfect and PerfectOffice in November and December of 1995 and into the first part of '96, true?

A: I would assume that they did that as well as earlier sales.

Q: And if a buyer looks at sales figures and sees that the sales are declining, that would normally lead to a lower bid than you would otherwise get, true?

A: Perhaps, but if it is explainable, and it certainly was explainable, since we made the announcement and people didn't know what the future was going to be, that would have an impact on sales. Once people knew what the future would be, presumably those sales would recover somewhat. It may have had an impact, it may not. I can't say for certain.

Q: Mr. Frankenberg, I want to take you back, if I could, to the time when you first joined Novell, around April 1st of 1994. I think you said on direct examination that when you joined Novell you were enthusiastic about Novell's pending purchase of WordPerfect Corporation.

Do you recall that?

A: Yes, I do.

Q: Now, am I correct, in fact, Mr. Frankenberg, that the truth is you did not agree entirely with the strategy that Mr. Noorda had had, your predecessor at Novell, of buying WordPerfect Corporation?

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A: I think I also said that I had some significant concerns about taking Microsoft on at the head in the markets that they dominated. Sometimes we use the D word.

THE COURT: The distinction is understandable.

BY MR. TULCHIN

Q: Mr. Frankenberg, is it correct that at around the time you were coming to Novell, that you did not think that Mr. Noorda's business plan would work?

A: I thought that it was very difficult to take on an entrenched competitor in every market that they were in, and especially one approximately five times your size, that is correct.

Q: My question, and I appreciate your answer and maybe we're actually pretty close, but my question is around the time that you were coming to Novell, was it your view that Mr. Noorda's business strategy would not work?

A: It wasn't my view that it would not work, it was my view that I had significant concerns about it, and that it might well need to be modified and it was very risky. I did have concerns, yes.

Q: Mr. Frankenberg, I'm going to hand you a transcript of a deposition. This was a deposition taken in the Caldera case.

Do you remember that, sir?

A: Yes, I do.

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Q: I may have given you the wrong volume. I understand there were two. I'm sorry.

A: Worse than that, I remember doing both of them.

Q: Maybe I gave you the right volume. I'm sorry that you were subjected to two.

This is in 1998. Do you recall that?

A: Yes, I do.

Q: I mean, we are now 17 years later, this is only four years after the events, correct?

A: Correct.

Q: And could I ask you, sir, to turn to page 159. I hope you have the right volume.

THE COURT: Volume two?

MR. TULCHIN: Yes, sir.

MR. JOHNSON: I am sorry. I don't have the right volume.

MR. TULCHIN: I'm sorry, Jeff.

THE COURT: You can have mine if you want.

The only good decision I made yesterday was not taking you up on that deposition.

BY MR. TULCHIN

Q: You and I hadn't met yet, Mr. Frankenberg, so these are not my questions. But if you look at page 159, line 6 -- are you with me, sir?

A: I am, yes.

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Q: You were asked this: At the time before coming to Novell, in these conversations and in your consideration, did you think that Mr. Noorda's business plan for Novell would work? Your answer was no, just a flat no.

Do you recall that?

A: Yes.

Q: And that was your answer to the question in 1998?

A: Yes.

Q: And then the questioner goes and says why? Your answer was I should say strategy for Novell. You said business plan and I was thinking strategy. So is strategy okay? And the questioner says strategy works. And then you go on to say, okay. No, because Novell was significantly smaller than Microsoft in revenue, and even though a very successful company -- its success was largely based on networking and on integrating operating systems with networking and making the two work very well together. And going toe to toe with somebody three times your size on every front is generally not a good strategy.

That was your answer at the time?

A: Well, so it was three times not five times, but I did remember my answer.

Q: Yes. We won't quibble with the comparison in size.

A: Eventually it did get more than five times.

Q: I don't doubt that, sir.

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But my question is this, Mr. Frankenberg. Your testimony in 1998, which was four years after the event, was that you didn't agree with Mr. Noorda's strategy of buying WordPerfect Corporation, right?

A: That is not accurate. What this says is that -- the question was did I agree with the business plan, and then later modified to strategy because --

Q: Right.

A: -- that is what I had in mind was Strategy for Novell. So it wasn't just WordPerfect, it was asking about the entire company, not just buying WordPerfect. So my answer there was that it is not a good idea to take on somebody a lot bigger than you are and everything that they are doing toe to toe. In selected areas you can do that, but it is harder to do that and succeed if you're fighting on all of those fronts. That was my answer then and now.

Q: I follow you, sir.

Am I correct that one of the reasons that you gave that answer in '98 about your disagreement with the strategy, was that you didn't think it was a good idea to take on Microsoft in the suite market, correct?

MR. JOHNSON: Objection, asked and answered.

THE COURT: Overruled.

THE WITNESS: What I was concerned about was taking on Microsoft and all of the businesses that they were

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in. I said earlier -- I testified earlier that I was enthused about the suite opportunity, that I was enthused about network applications and that we had a good opportunity. I believe it was 74 percent of the people that hadn't made the decision yet, and that the network could play a big role in the success of that. So I had concerns, and I stated them in 1998 and I stated them in 2009, and I stated yesterday that I had those concerns.

BY MR. TULCHIN

Q: Could I ask you, sir, to look at page 171. This is the same transcript, your deposition in the Caldera case in 1998. Starting at line 11 --

A: What page, again, sir?

Q: 171.

A: This is very hard to read. There it is. Okay.

Q: Are you with me, sir?

A: Yes.

Q: You were asked the time period when you came on board, you indicated previously that you did not think that Mr. Noorda's strategy may have been the right strategy.

Your answer there was yes, correct?

A: Yes.

Q: And then the next question is was it known to the board that you had that view at the time that you came on? Answer, I think some of the board members knew that. I

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can't say that everyone did. I made it clear in the interviewing process that while I was enthused, for example, about the acquisition of WordPerfect, largely because of the product that became known as GroupWise and, I'm sorry, I can't remember the name it had before that, that I had some concerns about going after Microsoft toe to toe in every arena, especially in the operating system and suite areas that they dominated, personal productivity suite areas that they dominated.

Do you see that, sir?

A: Yes, I do.

Q: That was a correct answer at the time in '98?

A: Yes.

Q: So is it correct then to say that, Mr. Frankenberg, one of your concerns just at the time that you were joining Novell, around the first of April of 1994, is that it might not be a great idea to take on Microsoft in the suite area?

A: Amongst other areas, yes.

Q: And in the suite area I think you told me yesterday that Microsoft had this huge head start. They were years and years ahead of WordPerfect?

A: Actually I think you told me that.

Q: Well, you agreed with me?

A: Okay.

Q: Isn't that right?

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A: Yes.

Q: Okay. And you also told me yesterday that in the suite area Microsoft had the strongest one two punch, the strongest one two combination of Word and Excel, correct?

A: What I said, actually, was that WordPerfect was a better word processor than Word, and that Lotus One Two Three was a better spreadsheet than Excel, but that they were both strong products.

Q: But nobody had a one two punch, a combination of the word processor and a spreadsheet that was as strong as Microsoft's Word and Excel put together?

A: True. I guess two Bs versus an A and a C and a C and an A is kind of what you're talking about.

Q: All right. But you agree?

A: All right.

Q: Thank you, sir.

Now, I want to show you just briefly Exhibit 377.

Mr. Frankenberg, you recognize this document as a contract that Novell entered into in 1996 with a company called Caldera, correct?

A: Yes, I do recognize it.

Q: And if you turn to the very last page, page 21, at the bottom the contract was signed for Novell by Mr. Bentley, correct?

A: Yes, it was.

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Q: This was around the time that you were leaving Novell; is that right?

A: It was approximately a month or maybe a little more than a month before I left.

Q: Right. And Mr. Bentley was authorized by the board of directors and by you to sign this contract for Novell, correct?

A: That is correct.

Q: Could you look just briefly at the bottom of page 4 of Defendant's Exhibit 377.

MR. JOHNSON: Your Honor, may we approach, please.

THE COURT: Sure.

(WHEREUPON, a bench conference was begun.)

MR. JOHNSON: Your Honor, turn the mike away.

THE COURT: Thank you.

MR. TULCHIN: I just want to preserve this for the Tenth Circuit, Your Honor. This is the sale of claim issue, and --

THE COURT: Okay. Let's preserve it here at the bench.

MR. TULCHIN: Not in front of the jury.

THE COURT: You can preserve it here.

MR. TULCHIN: This is not in evidence.

MR. JOHNSON: Thank you, Your Honor.

MR. TULCHIN: Thank you.

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(WHEREUPON, the bench conference was concluded.)

THE COURT: For that legal issue it was right to approach the bench.

Thank you, Mr. Johnson.

MR. TULCHIN: Thank you.

BY MR. TULCHIN

Q: Mr. Frankenberg, you can put that document aside.

A: Are you okay? Did you hurt yourself?

MR. TULCHIN: No. I am afraid I may have hurt one the computers by pulling out the plug, but I hope the APIs survived.

THE WITNESS: We'll find some way to access them.

THE COURT: It might take a year.

THE WITNESS: That is right. You asked me questions last night in my sleep. You are everywhere. Actually I should say the same question over and over.

BY MR. TULCHIN

Q: Well, when I play bridge I see cards falling in my sleep.

A: I understand that, yes.

Q: I sympathize.

Mr. Frankenberg, a different subject. Novell had its own operating system, correct, the NetWare product which was an operating system for servers, right?

A: It was a network operating system, yes.

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Q: Thank you, sir.

NetWare, the NetWare operating system had APIs, application program interfaces, correct?

A: Yes, it did.

Q: In any given version of NetWare there were many, many APIs?

A: That is correct.

Q: At the time that you were C.E.O., the head of Novell, did you consider those APIs to be Novell's intellectual property?

A: Yes.

Q: And, in fact, Novell claimed a copyright on the APIs, correct?

A: That is correct.

Q: And that was the subject of a certain amount of contention in the industry, whether Novell was entitled to protect APIs through a copyright?

A: The tension was largely with Microsoft, but, yes.

Q: All right. But it was your position throughout the time that you were C.E.O. that the application programming interfaces in your operating system, NetWare, were Novell's intellectual property, correct?

A: That is correct.

Q: And you never wavered from that position?

A: No.

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Q: Am I correct, Mr. Frankenberg, that when Novell received a beta version of a Microsoft operating system, at least during the time that you were at Novell, it was understood by people at Novell that a beta version is nothing more than a prerelease version of the product?

A: Yes.

Q: And it was also --

A: It is actually a fairly advanced prerelease of the product, because it had already gone through what was normally called the alpha stage or the pre-alpha stage and had been tested and used in a number of ways qualifying it to be labeled beta.

Q: Novell sent out beta versions of NetWare to various other software companies from time to time, correct?

A: Yes, we did.

Q: And when Novell sent out beta versions of its operating system, Novell made sure that the people who were intending to use the beta understood that the beta could change, that the product could change, right?

A: Yes.

Q: And you understood when Microsoft sent a beta version of Windows 95 to Novell, that that prerelease version could change.

Am I right?

A: Yes, it could change.

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Q: You also understood that there was no obligation on anyone's part, either Novell when it sent out a beta, or Microsoft when it sent out a beta, to make a product that conformed exactly to what the beta contained?

MR. JOHNSON: Objection, calls for a legal conclusion.

THE COURT: I think so too. I will sustain it.

BY MR. TULCHIN

Q: Mr. Frankenberg, let me show you a copy of defendant's --

THE COURT: Just so you all understand, clearly it is not an industry practice, the answer to that question, but the antitrust issues that you all need to --

MR. TULCHIN: I'm handing the witness, Your Honor, Defendant's Exhibit 618.

BY MR. TULCHIN

Q: Mr. Frankenberg, do you have this, sir?

A: Yes, I do.

Q: Do you recognize this as a contract that Novell provided to developers that were receiving copies of Novell's beta versions of NetWare?

A: I see that it is a license agreement. I guess that is a contract. I don't know. I'm not a lawyer.

Q: All right. Let's call it a license agreement. You'll see at the bottom of the first page to the left it says

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copyright 1994 and 1959 Novell, Inc.

Do you see that?

A: Yes, I do.

Q: So will you agree with me that this was an agreement that Novell used in those years, '94 and '95?

A: It appears to be the case, yes.

Q: Will you look on the first page under the title disclaimer. There is a paragraph there.

Are you with me?

A: I am with you, yes. I am reading it.

Q: Sure. Take your time.

A: Okay.

Q: About five lines down in that paragraph it says Novell does not warrant that the software or associated documentation will satisfy your requirements, or that the software and documentation are without defect or error, or that the operation of the software will be uninterrupted.

Do you see that, sir?

A: Yes, I do.

Q: And that is because a beta version is nothing more than a prerelease version, true?

A: I'm a little bit confused. This is for a software developers kit that would have been released as opposed to a beta version of a product. This is not a beta license, it is a --

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Q: Could I ask you --

A: It is an agreement for a released product.

Q: Could I ask you to look at the second page of this agreement, Exhibit 618. In the first column on the left under the heading license there is a long paragraph.

Maybe we can bring that up.

A: Okay.

Q: I know this is sort of dense language, but about --

A: Yes, it is.

Q: About three --

A: Obviously designed for people younger than me.

Q: Younger or more versed to these sorts of agreements, one of the other.

A: Okay.

Q: Maybe both.

About three quarters of the way down there is a sentence that begins beta products.

Do you see that?

A: Yes.

Q: Beta products are prerelease quality and have not been fully tested and may contain errors and omissions.

Do you see that, sir?

A: Yes, I do.

Q: That was something that Novell in this agreement was telling people who received the software developer kit,

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correct?

A: Yes.

Q: Would you agree with me that that was something that was widely understood in the software industry?

A: Yes, it was.

Q: And then the next two sentences say Novell does not guarantee that beta products will become generally available to the public or that associated products will be released. The entire risk arising out of your use of beta product remains with you.

Do you see that?

A: Yes, I do.

Q: And, again, that was something that when you were C.E.O. Novell put in its agreement, Exhibit 618, covering the software developer's kit, correct?

A: Correct.

Q: Would you agree with me that that was something as well that was commonly understood in the industry at the time?

A: I think so, yes.

THE COURT: I do this at the risk of you all telling me that I say something wrong, and I know this must be confusing for you all, but here the allegation is that it is not a -- the withdrawal of the APIs, the basic extensions is not a question of industry practice, and that it is understood that that is what happened, that that is the way

1205

the industry worked, it is not a violation of a licensing agreement or anything of that nature.

What is alleged here, and the reason all along, and I am just telling you all so that you are not confused, here the allegation made by Novell is that the withdrawal of the namespace extensions, even though it was understood in the industry that that could occur, constituted a violation of the antitrust laws. I hope that clarifies it a little bit. This is not a case about licensing agreements or anything else, but it is about whether or not Novell's claim that the violation of the namespace extensions are an antitrust violation constituting anticompetitive conduct. So that is where we are. Okay.

I hope I got that right.

MR. JOHNSON: You did, Your Honor. Actually --

THE COURT: Do you want to approach?

MR. JOHNSON: Maybe at a break --

THE COURT: I don't want to misstate anything, but I don't want you all to be confused about this, and I might have misstated it, and so I will talk with you at a break.

BY MR. TULCHIN

Q: Mr. Frankenberg, I'm handing you Defendant's Exhibit 19. Take a look at it, but I think I can say to you this is a license agreement. It is entitled nondisclosure agreement between Microsoft and Novell.

1206

A: Yes.

MR. JOHNSON: Again, Your Honor, I think at this point I do need to approach.

THE COURT: Approach the bench.

(WHEREUPON, a bench conference was begun.)

MR. JOHNSON: Of course, Your Honor, remember that we had this discussion sometime ago about these documents and their significance or lack thereof. We actually formulated from what you had said at the hearing a proposed instruction that we would ask that the Court give about this document --

MR. TULCHIN: I have not seen this, Your Honor.

MR. JOHNSON: -- which is exactly what you said at the hearing.

MR. TULCHIN: I don't think any such instruction should be given now. If it is appropriate at the end in the Court's instructions to the jury, then --

THE COURT: I think I can give it now. I will give it.

MR. JOHNSON: Thank, you Your Honor.

(WHEREUPON, the bench conference was concluded.)

THE COURT: I am going to let the document in. We obviously had previously discussions about this outside your presence and I am going to let the document in. I just want to let you know that if you find that Microsoft committed

1207

antitrust violations in this case, that the contract which I am letting in does not excuse Microsoft's conduct or protect it from damages for antitrust violations. That is sort of saying what I have said before.

MR. JOHNSON: Thank you, Your Honor.

THE COURT: But now we are -- it is actually the license agreement between Microsoft and Novell.

MR. TULCHIN: Yes, sir.

BY MR. TULCHIN

Q: Mr. Frankenberg, looking at the first page, about one third of the way down, you'll see that it is about the product named Chicago, correct?

A: Yes.

Q: And this is the beta licensing agreement between Microsoft and Novell for Chicago, what became Windows 95. Is that fair?

A: Yes.

Q: Now, would you look, sir, still on the first page of Defendant's Exhibit 19, and there is a paragraph numbered two, capital letters prerelease code. You'll see there that it says this product consists of prerelease code, documentation and specifications, and it is not at the level of performance and compatibility of the final generally available product offered. The product may not operate correctly and may be substantially modified prior to first

1208

commercial shipping. Company assumes the entire risk with respect to the use of the product.

Now, that is sort of consistent with what Novell put in its license agreement that we looked at a moment ago, correct?

A: It is consistent with it, yes.

Q: They are certainly pretty much similar, right?

A: Yes.

Q: And it was your understanding at the time in 1994, when you were C.E.O. of Novell, that when Novell got a beta version from Microsoft of what eventually became Windows 95, that the beta version might change, correct?

A: Yes.

Q: Do you recall, Mr. Frankenberg, around the middle of 1995 --

A: Mr. Tulchin, could we go back to this document for a minute?

Q: Yes, of course.

A: This actually is between Novell, the systems part of Novell and not Novell WordPerfect.

Q: You're correct, and I have the one with WordPerfect if you want to see it.

A: I was only pointing that out so that we were clear.

Q: I'm sorry. Defendant's Exhibit 18 is -- we're looking for it -- it is the document that is the same contract but

1209

between Microsoft and WordPerfect.

Let me just give you a chance to take a look at that.

THE COURT: To pick it up, Mr. Frankenberg, what I said before obviously applies to this document as well.

BY MR. TULCHIN

Q: You're welcome to look at the last page, Mr. Frankenberg, and you'll see that Exhibit 18 is the same contract, but this one with WordPerfect instead of Novell, right?

A: It is actually -- yes, it is WordPerfect just prior -- about a month prior to the completion of the acquisition.

Q: Right. And the contract would continue on with WordPerfect?

MR. JOHNSON: Objection to the legal conclusion.

THE COURT: It probably is a legal conclusion, but I think it probably will help the jury to know.

Overruled.

THE WITNESS: Yes. You were a little quick for me.

BY MR. TULCHIN

Q: This Exhibit 18, I think you have now said is a contract between Microsoft and WordPerfect Corporation just before WordPerfect was acquired by Novell, correct?

A: Roughly a month before it was completed, yes.

Q: Right. And the same contract would continue in

1210

existence after --

THE COURT: Generally that is a legal conclusion, but I think subject to proof of the contract that is true.

BY MR. TULCHIN

Q: Is that your understanding?

A: I would assume so, yes.

Q: Now, we won't spend a lot of time on this, but it is exactly the same contract with the same provisions, is it not? The product name is Chicago at the top, et cetera, and the paragraph number two, prerelease code --

A: Just a second.

Q: Take a look at it, but this is the one with WordPerfect and --

THE COURT: He has already looked at that.

THE WITNESS: I looked at it and I agree it is the same.

BY MR. TULCHIN

Q: It is the same. All right. I was just responding to your point that there was a second contract.

A: Thank you.

Q: Thank you.

Do you recall, Mr. Frankenberg, and now directing your attention to the middle of '95, do you recall in the middle of 1995 telling Mr. Bradford, the top lawyer at Novell, the general counsel, that one of the reasons that PerfectOffice

1211

for Windows 95 was going to be delayed was because of five bugs in Windows?

A: No, I did not tell him that.

Q: Do you recall expressing that view to Mr. Gates at Microsoft, that there were bugs in Windows that caused PerfectOffice to be late?

A: Yes.

Q: And --

A: Those are two different things, though.

Q: I understand. I understand. I am just asking a second question. But --

MR. JOHNSON: Can we allow the witness to explain, Your Honor?

THE COURT: He can, but not right now.

Go ahead.

BY MR. TULCHIN

Q: Mr. Frankenberg, around the middle of 1995, let's say around July, August, did you tell Mr. Gates that one of the problems you were having in getting PerfectOffice for Windows 95 out to the market was because of bugs in Windows?

A: I recall telling Mr. Gates that we were having troubles running our current version of PerfectOffice, PerfectOffice 3.0, the one that had been released the previous December on Windows 95, and the issue was bugs in Windows 95.

Q: And that had nothing to do with this namespace

1212

extension API issue, correct?

A: No.

Q: You are agreeing with me?

A: Yes, I am agreeing with you.

Q: Let me hand you, sir, what we have marked as Defendant's Exhibit 6.

THE COURT: If there is an objection to this exhibit, it is overruled.

BY MR. TULCHIN

Q: Mr. Frankenberg, have you seen this document before?

A: Yes, I have.

Q: This is a one page memorandum that is dated October 16th, '95.

It says David Miller at the top, and we saw Mr. Miller's name on an exhibit earlier today, and I think it was 22.

Do you remember that?

A: I don't remember whether it was 22 or not, but I do remember seeing his name.

Q: He was director of strategic relations, I think, or something like that.

A: He very often interfaced with Microsoft, yes.

Q: Right. And Exhibit 6 at the top says Dave thinks the August 21 letter went out from DRB.

That would be Mr. Bradford, correct?

1213

A: Correct.

Q: The general counsel. DRB and others believe that this bug deal is a big deal but the apps people do not.

Do you see that?

A: Yes.

Q: The apps people would refer to people like Mr. Calkins and Mr. Moon and Mr. Rietveld and Mr. Mella?

A: It would have been people in that area. I don't know specifically who Dave Miller was referring to.

Q: All right.

A: But, yes, in that team.

Q: The next sentence says Dave thinks it is mostly our fault. When we found the bugs we didn't press Microsoft to fix them.

Do you see that?

A: Yes.

Q: And then it goes on to say when Dave was in Mac development and they found a bug in the Mac OX they called Apple daily until they were fixed. Our apps people don't do that enough. Dave said that Bruce Brereton didn't think the letter should have been sent at all. He felt that the bugs were ordinary bugs not malicious. He and Dave -- it says though, and it maybe should be thought -- our guys should just call the Q and A people at Microsoft and get them fixed, not write the letter.

1214

Now, this is an example, is it not, Mr. Frankenberg, of a case where some people at Novell were blaming Microsoft for certain bugs, right?

A: Yes.

Q: And by your recollection they were bugs that effected the old versions of WordPerfect and PerfectOffice?

A: The old versions of WordPerfect and PerfectOffice running on what became Windows 95, yes.

Q: All right. And this memorandum, Defendant's Exhibit 6, indicates that the apps people don't think that it was Microsoft's fault at all, and Dave, it looks like referring to Dave Miller, thinks it is mostly Novell's fault, correct?

A: Well, I don't know why Dave Miller would refer to himself with his name, so I don't think it refers to Dave Miller.

THE COURT: I think it is very confusing. I don't think he wrote the memo.

BY MR. TULCHIN

Q: Mr. Frankenberg, if you look towards the bottom left of the document there are the initials RR written in hand.

A: Yes.

Q: Do you see that?

A: I do.

Q: Do you recognize those initials as Ryan Richards?

A: It may be, but I am not sure. I don't recall what his

1215

handwriting looked like.

Q: Thank you, sir.

In any event, am I right that this is an example of some people at Novell blaming Microsoft for a problem with Windows when, according to this memo, the apps people don't think it was Microsoft's fault and Dave thinks it is mostly Novell's fault?

MR. JOHNSON: Objection, asked and answered.

THE COURT: Overruled.

Go ahead.

THE WITNESS: Could we try that one more time, Mr. Tulchin?

MR. TULCHIN: Sure.

THE COURT: And you have the same objection.

MR. JOHNSON: Thank you, Your Honor.

BY MR. TULCHIN

Q: I am just asking, Mr. Frankenberg, if this is an example of a case where some people at Novell blamed Microsoft for a problem, and other people at Novell didn't think it was Microsoft's fault at all, they thought it was Novell's fault?

A: Well, I think what this actually says is that there were bugs, and they should have been more diligent in asking Microsoft to fix them. I don't think it says that there were not bugs.

1216

Q: Right. But certainly it says what it says, Dave thinks it is mostly our fault?

A: Yes, for not being aggressive enough in asking them to fix them. I agree.

Q: And it goes on to say that he felt -- it looks like it was either Dave or Bruce Brereton -- he felt that the bugs were ordinary bugs not malicious, right?

A: Yes.

Q: So there was nothing malicious, according to this, in what Microsoft was doing.

Do you agree?

A: As far as the bugs are concerned, yes.

Q: All right.

A: Not in other areas.

Q: Am I right, Mr. Frankenberg, that software engineers at Novell worked with people in the systems group, the operating systems group at Microsoft on a regular basis?

A: Yes, they did.

Q: And as far as you know, and you may have said this yesterday, and if I am repeating something forgive me, but as far as you know the people in the systems group at Microsoft endeavored to be helpful to Novell, correct?

A: Generally, yes, that is true.

Q: All right. Now, am I also right, Mr. Frankenberg, that in 1995, even if it had been true that the shared code group

1217

was ready to go, that they had written an advanced file open dialogue that was ready, the QuatroPro people were not ready with their product that would have gone into PerfectOffice?

A: I don't know that personally, no. It may well have been, but I don't know that personally.

Q: Mr. Frankenberg, I'm handing you Exhibit 221. This was written on March 1st, 1995. It is from Bruce Brereton, whose name we have seen before, and it is addressed to BU staff and BU managers.

Who would that include?

A: BU would be short for business units, so that would have been the applications, business applications, business unit.

Q: That would include people like Mr. Calkins, correct?

A: Yes.

Q: And maybe Rietveld and Moon as well?

A: Perhaps, yes. Although technically they would have been group staff as opposed to business unit staff, but it may well have included them.

Q: But certainly Mr. Calkins would have gotten this?

A: Yes.

Q: At the top under the word confidential the first paragraph says in an effort to make sure that we are all in sync, et cetera, I'm sending this to group leaders. As you know our current plan of record is that we would ship or Win

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95 products as follows. WP -- and that means WordPerfect, right?

A: Yes.

Q: -- September 15th and Storm November 30th.

Do you see that?

A: Yes.

Q: Now, this is March 1st of 1995. Storm referred to the suite; isn't that right? That was the code name for the suite?

A: That was the code name for the suite, yes. The one that was designed for and ran on Windows 95.

Q: Right. So even on March 1st, 1995, according to the first paragraph of Exhibit 221, the plan -- the plan of record, and let me just stop there. That plan of record, was that something that you would have approved?

A: I probably would have been aware of it. The approval would have been done by the business unit.

Q: Mr. Calkins?

A: Mr. Calkins, perhaps Mr. Rietveld --

Q: Right.

A: -- and the others we have talked about, Dave Moon and so on.

Q: I didn't mean to interrupt.

The plan of record on March 1st this says was to ship Storm, that is the PerfectOffice suite, on November 30th,

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correct?

A: Yes.

THE COURT: I am not sure. I am sorry. I am confused. I am sorry. Read the next -- maybe we're going to get there.

MR. TULCHIN: We are, Your Honor.

THE COURT: Okay. Go ahead.

MR. TULCHIN: We are.

BY MR. TULCHIN

Q: The very next paragraph in Mr. Brereton's memorandum or e-mail says after further discussion and an analysis of several options, we feel it would be much better to have WordPerfect, which then implies PerfectFit, WPDraw and many other components on the same schedule as Storm.

Just above with Storm they talked about November 30th, right?

A: Yes.

Q: And then it says, also, the QuatroPro team have examined their product deliver time frame and feel December 30th is a more realistic date. Therefore, after reviewing this with Mark, Glen and others, we have moved the Storm RTM date -- and RTM means release to market, right?

A: Release to manufacturer.

Q: Thank you. Release to manufacturing, back by one month to December 30th, and have put WP on the same timeline as

1220

Storm.

So Exhibit 221 tells us, does it not, Mr. Frankenberg, that on March 1st of '95 the plan became to get PerfectOffice out, released to manufacturing, not even to the market, just to manufacturing, at the very end of the year, December 30th, correct?

A: Yes.

Q: There is nothing in here about the namespace extension APIs causing any delay, is there?

A: Well, I have not read the whole document.

Q: Well, feel free. So far in the stuff we have looked at there is nothing in there?

A: So far, yes.

Q: What it says is the QuatroPro team does not think they can get it done by November 30th. They feel that December 30th is more realistic and, therefore, the Storm date has been pushed back to December 30th, the very end of the year, correct?

A: What we don't know from what we have read so far is whether the QuatroPro team was delayed by the shared code team not having completed their task. So it is hard for me to say that they couldn't do what they needed to do until shared code was in shape to work with. It is a little bit hard for me to agree with your conclusion --

Q: Well, I'm happy to --

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A: -- without knowing the answer to that question.

Q: Well, I'm happy to have you look at the whole thing.

THE COURT: He does not know.

MR. TULCHIN: I understand, Your Honor.

THE COURT: Again, there is no magic to me asking the question. Well, is there a delay between, ordinarily between release to manufacturing and manufacturing to get it out to market?

THE WITNESS: In Novell's case it was a matter of usually 24 hours or --

THE COURT: So --

THE WITNESS: It was essentially the same. That is why we used the term release to manufacturer.

THE COURT: That is fine.

MR. TULCHIN: Thank you, sir.

THE WITNESS: Although, your honor, you're right, it could be significantly different.

THE COURT: But in this case it is really not?

THE WITNESS: Yes.

BY MR. TULCHIN

Q: Mr. Frankenberg, the second page shows that copies of this memo went to Mr. Calkins and Mr. Mella and to Dave, and do you know who Dave would have been?

A: Dave probably would have been Dave Moon.

Q: Dave Moon. To Todd Titensor, correct?

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A: That looks right, yes.

Q: And to others?

A: Yes.

Q: Going back to the first page we looked at the paragraph saying that we have moved the RTM date back by one month, and then right under that there is a paragraph that starts some additional comments. One, we still have several assignments that are not yet covered. We are short by about ten people so we are looking at doing some relocations of our staff. A few assignments will be temporary and some will be permanent. I'll be working with the various development directors to come up with the best proposals, and will be surveying our teams to see if there is any interest in the specific open positions.

Also, we are committed to help out the QP team, Quatropro, in any way we can. Most likely PerfectFit and Win 95 kinds of things. So please be aware that some of you will be asked to travel to Scotts Valley for short trips and may work on QP for some amount of time while here in Orem. For what it is worth, their location is beautiful.

Now, this tells you, Mr. Frankenberg, does it not --

A: It was beautiful.

Q: I know it is. This tells you, does it not, that there were problems getting the job done with QuatroPro in Scotts Valley, correct?

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MR. JOHNSON: Your Honor, we went through this. Mr. Gibb covered all this, and this is not the man to be talking about these subjects.

MR. TULCHIN: I am surprised to hear counsel say that.

THE COURT: Well, okay.

I raised the issue and, Mr. Tulchin, you can continue. I am sure you took into account what I said, but I am sure you will streamline your examination.

MR. TULCHIN: I will, Your Honor.

BY MR. TULCHIN

Q: The point here is that the author here, Mr. Brereton, says we are short by about ten people, and some people are going to have to relocate to Scotts Valley at least temporarily, correct?

A: That is what this document says, yes.

Q: And Scotts Valley --

A: I have never met a development team that didn't feel it was short by some number of people.

Q: Right. Building software is complex and complicated and time consuming and you can always use more help.

A: Yes.

THE COURT: Usually.

MR. TULCHIN: Okay.

BY MR. TULCHIN

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Q: Mr. Frankenberg, were you aware around March of 1995 that the QuatroPro team in Scotts Valley wanted to push back the date for the release of PerfectOffice?

A: No, I was not aware.

Q: I don't know if you have had a chance to look at any of the rest of Exhibit 221, but is there anything in here that you have been able to spot that has anything to do with some delay that Mr. Harrall or Mr. Richardson were having in trying to build the advanced file open dialogue?

A: I don't see anything in here along that line.

Can we go back to my answer to the previous question --

THE COURT: I don't think that is -- we understood what you said. I think we ought to just move on.

THE WITNESS: Well, I wouldn't have --

THE COURT: Your concern is that somehow what they were doing was delaying QuatroPro.

THE WITNESS: Yes.

THE COURT: We all understand that. There has been other evidence of that.

BY MR. TULCHIN

Q: Mr. Frankenberg, would you say that Windows 95 was a significant step forward?

A: Yes, it was.

Q: And would you say as well that Novell was very excited about Microsoft's impending release of Windows 95?

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A: We were very excited and very interested, yes.

Q: And there were many features in Windows 59 that Novell was eager to take advantage of?

A: Yes.

Q: What Novell wanted to do with PerfectOffice was to build the PerfectOffice suite in a way that would take advantage of all of those features and do even more, correct?

A: I don't know that it could advantage of all of the features of Windows 95, but it would certainly have taken advantage of the capabilities in Windows 95 that would give it an advantage in the marketplace, if that is your question.

Q: Was it true that Novell wanted to do even more by building the advanced file open dialogue?

A: I believe the advance file open dialogue was written in response to the APIs being withdrawn, so I don't know that it would have been as you stated.

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

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

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

A: That is true.

Q: If --

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

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

A: Yes.

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

A: True.

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

A: Presumedly it would have increased sales of Windows 95.

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

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A: Yes.

MR. TULCHIN: Nothing else, Your Honor.

THE COURT: Mr. Johnson.

MR. JOHNSON: Thank you, Your Honor.

Give me a moment, please.

THE COURT: Of course. We will go about 15 minutes, and depending on where you are we'll break.

MR. JOHNSON: Sure. Unfortunately, I have more than 15 minutes.

THE COURT: I just wanted you to know our schedule. We will break at 15.

REDIRECT EXAMINATION

BY MR. JOHNSON

Q: Mr. Frankenberg --

A: Yes, sir.

Q: -- good to be talking to you again.

A: It is for me, too.

Q: Unfortunately we have a lot of ground to cover, because that was a rather lengthy cross-examination, so we're going to have to go back and talk about some of the things that were discussed yesterday, and then we will eventually get to the things that were talked about today.

Right now I would like to --

MR. TULCHIN: Your Honor, I object to these gratuitous comments. I think we should just proceed.

1228

THE COURT: Well, that will add to the next cross-examination.

MR. TULCHIN: Appreciate that, Your Honor.

BY MR. JOHNSON

Q: There were questions from Mr. Tulchin yesterday about the fact that you never told Mr. Gates personally that WordPerfect was using the namespace extensions.

Let me show you what has been marked Plaintiff's Exhibit 220.

MR. JOHNSON: Your Honor, would you like one or is the screen okay?

Thank you.

BY MR. JOHNSON

Q: This is an e-mail from Brad Silverberg to Russel Segelman with a carbon copy to both Bill Gates and Paul Maritz dated October 5th of 1994.

Just for context, that is two days after Mr. Gates' decision not to publish the namespace extension. Mr. Silverberg states, quote, I am afraid that when we tell ISVs, there will be a firestorm of protest.

Mr. Frankenberg, you mentioned that you knew Tom Creighton, a manager of the shared code team at WordPerfect; is that correct?

A: Yes, I knew Tom.

Q: Was Tom Creighton involved in the development of the

1229

PerfectOffice suite and shared code during this time period?

A: Yes, he was.

Q: Were you aware that when Mr. Creighton found out about Mr. Gates' decision to take away the namespace extensions, that he told Microsoft personally that there would be hell to pay if they made such a decision?

A: I am sure he used words something to that effect, yes.

Q: We'll get back to that in a minute. Let's go back to this Plaintiff's Exhibit 220.

Mr. Silverberg also stated, and I want to remind you again that Bill Gates is copied on this e-mail, that, quote, other ISVs using the extensions are WordPerfect, Lotus, Semantic and Oracle.

Were you aware, Mr. Frankenberg, that Mr. Gates was advised within two days of his decision to take away the interfaces that WordPerfect was using the namespace extensions?

A: Clearly that is the case and I have reviewed this document before.

Q: Did Mr. Gates ever call you up or speak with you about whether that was a problem for WordPerfect?

A: No, he did not.

Q: Mr. Silverberg goes on to state that these companies will not be bashful about expressing their displeasure. It will play out, I predict, on page 1 of the weeklies, lead to

1230

calls for the DOJ to investigate, et cetera.

D.O.J. refers to the Department of Justice.

I would like to go now to --

MR. TULCHIN: Your Honor, I object to Mr. Johnson's testimony. I think --

THE COURT: I think generally -- the general position is that that is true, but I think we all know -- that is fine.

Go ahead.

MR. JOHNSON: Thank you, Your Honor.

THE COURT: Don't testify.

BY MR. JOHNSON

Q: Let's now turn to the topic of companies not being bashful about expressing their displeasure and take a look at Plaintiff's Exhibit 215.

Mr. Frankenberg, this is an e-mail chain within Microsoft detailing a survey that was done by Microsoft's development relations group in September of 1994, that indicates the status of independent software vendors that were using the namespace extension mechanism. Let's turn our attention to the survey results for WordPerfect, which is located in the bottom of what is marked page 48 and goes on to the next page, 49, but for now let's just turn to the page marked 48. The survey results ask have they started work? The survey answer says very likely based on Tom

1231

Creighton's feedback below.

Would it have been, Mr. Frankenberg, Mr. Creighton's job to interface with Microsoft with respect to issues such as the namespace extensions?

A: Clearly that was the case, yes.

Q: So we turn to the next page, page 49, and under the section comments, and it states a detailed survey was sent to WordPerfect but the results are likely to be very informative. Tom made the comment that there would be hell to pay in the press if we changed the interfaces from the initial release of Chicago to the next release. They will try to get feedback to us, but they don't want to tip their hand.

Mr. Frankenberg, does that sound to you look Tom Creighton was okay with Microsoft's decision to take away the namespace extensions?

A: It sounds to me like he was mad as hell and wasn't going to take it anymore.

MR. TULCHIN: It is just speculation, Your Honor. The witness is being asked to look at a Microsoft document and somehow interpret it.

MR. JOHNSON: Your Honor --

THE COURT: I think that the e-mail speaks for itself, so the objection is --

MR. TULCHIN: So do I.

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THE COURT: -- sustained. This is all for argument.

MR. JOHNSON: Your Honor, there was lengthy cross-examination with respect to what WordPerfect told these people.

THE COURT: I understand, and that is exactly why it is appropriate for you to argue it.

MR. JOHNSON: Thank you, Your Honor.

BY MR. JOHNSON

Q: If we look at the bottom of the first page of this exhibit it states that the following companies have voiced an interest in the namespace extensions and show extensibility and it indicates whether they have started work. On this page it appears that the survey found that Oracle, Semantic, Stac Electronics and DCA had started work with the namespace extensions.

Mr. Frankenberg, were you aware that other companies were also interested in using the namespace extensions?

A: I am not surprised that they were. I am not sure that I was aware of which particular companies.

Q: On the next page it gives a whole bunch of other companies, and at the top there is a reference to WordPerfect, and it says very likely, and actually the next one is Lotus which says very likely, and both of those add the parenthesis but detailed information will be difficult

1233

to get.

Mr. Frankenberg, can you think of any reason from a WordPerfect Novell perspective why detailed information would be difficult to get from Microsoft about Novell's plans for what they intended to do with the namespace extensions?

A: Well, by telling Microsoft what our plans were we would be telling our competitor in the suite business what we were going to do, and so they would have foreknowledge of what we were going to develop and take to market. It would be foolish of us to be really forthcoming and telling them what we were doing.

Q: Mr. Tulchin also asked you a number of questions of whether you had any personal knowledge about whether people within Microsoft were using the namespace extensions, and he particularly talked about, I believe, Microsoft Office. Mr. Hanson in this e-mail on the first page also evaluated what groups within Microsoft were using the namespace extensions under the heading there Microsoft, if we could highlight that.

You can see there that it states that the Chicago shell team will make use of everything. It says the Chicago networking team, including remote access, will use the namespace browser and explorer extensions. It also states that the Elsewhere Company will provide the font folder in

1234

Chicago and will use the namespace browser and explorer extensions. And then it goes on to indicate that the office team is using IShell folder and IShell link and maybe more to do file open and save dialogues.

Mr. Frankenberg, I take it is fair to say you were not aware of these facts when you answered Mr. Tulchin's questions?

A: I was not aware of these facts, but clearly I was right.

Q: The next listing says that Capone and the Info Center will do everything, and they were able to do their work on other platforms, the Mac, NT and Windows 3.1 by taking the shell source code and modifying it to their needs.

Were you aware, Mr. Frankenberg, that Capone, which was later called Info Center had access to the shell source code and were modifying it to their needs?

A: I was not aware of that, no.

Q: In your entire history at Novell, do you recall ever getting shell source code from Microsoft to use with your applications?

A: No, I do not. It certainly would have been helpful at a point in time or two.

Q: The next line indicates that Marvel, the online service will extend the namespace in the explorer.

Were you aware, Mr. Frankenberg, that Marvel, the

1235

online services application, was using the namespace extensions at this time?

A: I was not.

Q: The next line says that Microsoft Access, which I will represent to you is a Microsoft database product, would be doing a file system view with namespace browsers, shell extensibility, the works.

Were you aware of the product Microsoft Access, Mr. Frankenberg?

A: I was. In fact, I still use it today.

Q: Were you aware at this time that they were using the namespace extensions?

A: I was not aware of that, no.

Q: The next line shows that Ren, which prior testimony has indicated was Microsoft Outlook, was originally implemented totally as a shell extension, and that the hot debate right now is namespace and explorer extensibility.

Were you aware that Ren was looking into using the namespace extensions as well?

A: I was not aware.

Q: So it is fair to say, Mr. Frankenberg, that you never had any personal knowledge regarding what was going on within Microsoft with these namespace extensions?

A: I did not have personal knowledge, but it does not surprise me, and it clearly shows that my belief of them

1236

using one documented call was true.

Q: Let's turn now to plaintiff's --

THE COURT: Let's turn now to a break.

MR. TULCHIN: Thank you, Your Honor.

(Recess)

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(Jury present)

THE COURT: Mr. Johnson.

MR. JOHNSON: Thank you, Your Honor.

BY MR. JOHNSON:

Q: Mr. Frankenberg, I would now like to turn to Plaintiff's Exhibit 225. Mr. Tulchin showed you this e-mail and he quoted something that came from Brad Struss. I'm sure I'm mispronouncing that. On the first page he says, quote, so far Stac, Lotus, WP -- meaning WordPerfect -- Oracle appear to be okay with this, close quote, in reference to independent software vendors' reaction to the decision of Mr. Gates.

Now Mr. Tulchin wasn't able to identify where Mr. Struss allegedly got this information.

THE COURT: I think it's Struss.

MR. TULCHIN: Yes, sir.

MR. JOHNSON: Struss. Thank you, Your Honor.

BY MR. JOHNSON:

Q: It's fair to say, Mr. Frankenberg, that such information didn't come from you, correct?

A: Correct.

Q: Mr. Frankenberg, were you okay with the decision Bill Gates had made to withdraw support for the namespace extensions?

A: No.

1238

MR. TULCHIN: Leading.

THE COURT: He answered, but overruled.

THE WITNESS: It was definitely not okay with the decision. It was reprehensible. They had recruited us, evangelized us to use these extensions, then took them away. In Mr. Gates' memo it says that they took them away in order to allow their developers time to catch up. I don't think that's reasonable nor fair.

BY MR. JOHNSON:

Q: At the back of this e-mail chain, in Plaintiff's Exhibit 225, there is a question and answer document.

MR. JOHNSON: If we could turn to that page. Yes, you are there. Thank you, Mr. Goldberg.

BY MR. JOHNSON:

Q: Which appears to be a set of talking points that were given to people working within the Microsoft developer relations group.

Looking down at the bottom of the first page of the question and answer, there is a question which states, will Info Center, Marvel and MS APPs still continue to use these interfaces? Seems like this would be an unfair advantage. The answer provided by Microsoft to ISVs was, Info Center, Marvel and MS APPs will no longer use these interfaces. Do not mention Marvel unless asked directly.

Mr. Frankenberg, do you have personal knowledge whether

1239

info center, Marvel or Microsoft APPs, in fact, no longer used these interfaces?

A: I do not have personal knowledge of that, no.

Q: Do you have any idea why Microsoft would be instructing its employees not to mention Marvel to ISVs?

MR. TULCHIN: Calls for speculation.

THE COURT: Sustained.

BY MR. JOHNSON:

Q: Let's turn to the last page of this question and answer. There is a question -- I guess it's the next to the last question and answer. Quote, what if I decide to use some of the undocumented APIs, i.e., I am a developer that received some of the preliminary documents on the topic. What will the penalty be? Will you change the interfaces that had been defined?

The suggested answer for the developer relations group is as follows, quote, we will not arbitrarily change these interfaces, but because of how tightly these interfaces are tied to internals of the shell, we cannot guarantee ISVs that try to call into them will work in future releases of Windows 95, or even between interim beta builds. There will be no support for ISVs who use this. It will be completely at their own risk.

Mr. Frankenberg, would you ever recommend to your development teams that they use APIs which may be changed or

1240

taken out between interim beta builds of the operating system product?

A: I definitely would not recommend that.

Q: Were you aware, Mr. Frankenberg, that Windows 95 had two more interim beta builds after the date of this e-mail?

A: I don't think I was aware of that, although it wouldn't surprise me.

Q: Would you have authorized Novell developers to use namespace extensions which may not work in the next interim beta builds?

A: No, I would not.

MR. TULCHIN: Your Honor, he testified he didn't have anything to do with the decision.

THE COURT: I'll overrule the objection. The question was already answered.

BY MR. JOHNSON:

Q: Let's go back to the first page. Going down to the next -- on the first page of this e-mail, going down to the next to the last paragraph, it states, quote, as we covered in our last -- at our meeting last Friday, we were faced with the challenge of going to our ISVs and telling them about Bill G's recent decision to return the namespace extension APIs to their original system level status. Notice the wording. Let's try not to use the word undocumented or private APIs. That has a negative

1241

connotation to most ISVs.

Apparently, Mr. Frankenberg, these Microsoft employees were told not to the use the word undocumented. But isn't it a fact, Mr. Frankenberg, that that's how you understood the decision should be characterized as undocumented APIs?

A: Yes.

Q: And that is precisely what you complained about repeatedly to Mr. Gates?

A: Yes, it is.

Q: Let's turn now to Defendant's Exhibit 230.

Mr. Tulchin asked you some questions about the Quattro Pro and whether Quattro Pro was a problem with getting out the PerfectOffice suite. And you responded to almost every one of these questions that you didn't really know how far along they were at this point, or whether Quattro Pro was a problem at all.

I would like to show you now what Mr. Gibb testified about that issue.

MR. JOHNSON: Can you bring up Mr. Gibb's testimony on this issue?

BY MR. JOHNSON:

Q: In response to the question, do you recall Quattro Pro -- the development of Quattro Pro causing a delay in the shipment of PerfectOffice 95 suite? Answer: No. I mean early on, like I said, when we were first speccing out

1242

storm, we thought Quattro Pro might be critical path. So early on before we had project plans and before we tracked the progress, we were nervous about Quattro Pro because they had a lot of things to do. We were nervous that they might have a hard time getting the schedule. But they were very conservative in their estimates and kind of overdelivered. So it turned out to be a pleasant surprise.

Mr. Frankenberg, Mr. Gibb was in charge of the PerfectOffice suite; is that right?

A: Yes.

Q: Would he be in the best position to know whether Quattro Pro had anything to do with the delay in producing a PerfectOffice suite for Windows 95?

A: He would be in the very best position to know.

MR. JOHNSON: Mr. Goldberg, could we put up Plaintiff's Exhibit 1 again, please.

BY MR. JOHNSON:

Q: During cross-examination, Mr. Frankenberg, you said yesterday that Microsoft may have been making some efforts to help WordPerfect create a suite. I would like to show you PX-1 again.

Does this e-mail from Mr. Gates indicate that Microsoft was trying to help Novell/WordPerfect create a suite for Windows 95?

A: No, it does not.

1243

Q: Doesn't this e-mail indicate just the opposite?

A: Yes, it does.

In fact, it shows they were purposely delaying us in order to give their team -- their office team --

MR. TULCHIN: Move to strike about Microsoft's intent, which this witness cannot possibly testify to.

THE COURT: This witness clearly doesn't like the decision, he so testified. Move on to something else.

BY MR. JOHNSON:

Q: Now despite the fact that you had no reason at the time to know that Mr. Gates had personally ordered that the namespace extensions not be published, did you, nonetheless, repeatedly complain to Mr. Gates about undocumented calls and interfaces?

A: Yes, I do.

Q: When you complained to Mr. Gates about undocumented calls and interfaces, did that include the undocumented interfaces that you had learned about in early 1995 that were holding up the PerfectOffice product for Windows 95?

A: Yes, it did, amongst many others.

Q: I would like to take a look now at DX-271. Mr. Tulchin used this document to discuss with you a number of weaknesses that the Novell business applications group talked about -- or identified in this April 1995 business plan. You indicated, I think, that these business plans and

1244

reviews were part of the things -- one of the things that you instituted when you came to Novell; is that right?

A: Yes, I did. That was a very good way, a very good discipline for the teams to evaluate their business, their opportunities and issues.

Q: And did you encourage all these groups within the Novell to be self-critical in doing those evaluations?

A: Very much so. In fact, I chided a number of them for not being sufficiently critical or not looking objectively at their weaknesses.

Q: Did you also tell them that they should point out the strengths and opportunities presented within the group as well as the weaknesses?

A: Yes.

Q: Now Mr. Tulchin did not share with the jury any of the strengths and opportunities presented in this document. If you could turn to page 8, the Bates stamp ending 356, with respect to the company's strengths that assist business applications, let's look at some of those.

Looking at the top of the A section there, one of those company strengths indicated to be word processing strength and WordPerfect install base.

Now Mr. Tulchin represented to you that WordPerfect had an 80-percent share of the install base of word processors on the DOS platform.

1245

MR. TULCHIN: I did not say that, Your Honor. It wasn't install base.

THE COURT: Rephrase the question.

BY MR. JOHNSON:

Q: Well, whatever Mr. Tulchin said, he said you had an 80-percent share, and I don't recall the exact words he used, whether it was install base, but it certainly sounded close to the D word, which we won't mention here today.

THE COURT: It's been mentioned, just not in terms of Novell.

BY MR. JOHNSON:

Q: Do you think this DOS install base provided an opportunity for Novell as DOS users eventually shifted to Windows?

A: Yes, it did, a significant opportunity, because ultimately they would all shift from DOS to Windows, and hopefully they really enjoyed working with WordPerfect and we'd move with WordPerfect into PerfectOffice.

Q: Let's look at the some of the division group strengths under 3-B, if we could. And one of those bullet points provides -- the top one actually, strong expertise in word processing, spreadsheets, presentation graphics and electronic publishing tools.

Did you believe that that too was a strength of the applications group competing with Microsoft?

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A: It definitely was a strength and I think they showed their prowess in that by getting that first suite out between June and December of 1994. Major accomplishment.

Q: There is a reference here in a few bullet points down to PerfectFit technology. Ideal platform for suites. Way ahead of the competition here.

Mr. Frankenberg, did you believe that WordPerfect and Novell was way ahead of the competition with respect to PerfectFit technology?

A: Yes, we were. We were significantly ahead and provided the capability, as we talked about, to easily move across platforms, and also provided that capability to our other application developers. A great strength, of course.

Q: The next bullet point says, support of open architectures. Can you tell us what that means, Mr. Frankenberg?

A: Open architectures are those that have open interfaces and open definitions that anyone can develop to with confidence, and the result that is compatible with all the other applications that make use of such an architecture.

Q: Down under opportunities, which is the next section down, and particularly Section 3-C --

MR. JOHNSON: Yeah, that's it. Thank you, Mr. Goldberg.

1247

BY MR. JOHNSON:

Q: -- states in the second bullet point, getting PerfectOffice to be the suite of choice for all NetWare users is a large opportunity.

Mr. Frankenberg, why was that such a large opportunity?

A: At that time we had approximately 40 million users of NetWare. So becoming the suite of choice to 40 million users was a huge opportunity.

Q: The fourth bullet point here states, leveraging WordPerfect to sell Quattro Pro.

Mr. Frankenberg, why did the business applications group think that they could leverage WordPerfect to sell Quattro Pro?

A: Because WordPerfect was such a strong word processor that had such a strong following. And I think, as was mentioned yesterday, the word processing part of the suite was the one that most people made their decision based on because that's what they used the most. Having a strong word processor meant that we would be able to sell the suite and Quattro Pro as part of that.

Q: Finally the last bullet point reads, quote, many OEM opportunities for PerfectOffice and stand-alone applications.

Was that a part of your plan that you testified to yesterday, to sell PerfectOffice and the stand-alone

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applications to OEMs during this time period?

A: Yes, it was.

Q: Let's turn back briefly to the beginning of the SWOT analysis on the page Bates stamp ending in 2354, and turning to something Mr. Tulchin talked to you about, the top bullet point. It states here that Office holds 86 percent of the suite market share at this time. Apparently had revenues of $1.4 billion in 1994.

Now is it true, Mr. Frankenberg, that your suite had been on the market for about three months at this point in time?

A: Three or four months, yes.

Q: We saw from other documents in your direct examination that 74 percent of users had not yet made the decision with respect to which suite to purchase. So regardless of whether Microsoft held 86 percent of the suite market share at this time, was there still lots of opportunity for Novell in the suite market?

A: There was substantial opportunity. 74 percent of the market hadn't made a decision yet. We had a huge install base of WordPerfect and we had a huge install base of NetWare, and all those were ways for us to reach customers with a suite product.

Q: Do you remember, Mr. Frankenberg, how many hundreds of millions of dollars in revenue Novell made from WordPerfect

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both in its stand alone and its suite product sales in 1995?

A: I do not recall that number. At one point I would have known it off the top of my head, but that point is in the past.

Q: Let me show you a slide I used in opening.

MR. JOHNSON: If we could turn to that, Mr. Goldberg. Thank you.

BY MR. JOHNSON:

Q: This is a slide of revenue based on IDC data. Do you know what IDC data is?

A: Yes.

Q: What is that?

A: IDC is a publishing firm that tracks the relative market shares, amongst other things, in the computer and software business. They also do analysis.

MR. TULCHIN: Your Honor, sorry to interrupt. This seems to be way outside the scope of cross. It also -- I mean all these questions have been grossly leading.

THE COURT: Try not to lead. I'm not going to try to fathom right now. If it becomes a problem later, let me know.

MR. JOHNSON: Thank you, Your Honor.

BY MR. JOHNSON:

Q: We had some testimony and there were some questions from Mr. Tulchin about the fact that, you know, sales had

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dropped off in 1995 because everybody was waiting for Windows 95. I think you agreed with Mr. Tulchin that there would have been some drop off in sales?

A: Yes, I do.

Q: And does this figure seven, this chart indicate that despite that drop off in 1995, WordPerfect revenues exceeded $250 million?

A: Yes, it does.

Q: And in 1994, can you give us a guesstimate of how many hundreds of millions of dollars WordPerfect word processor revenues were?

MR. TULCHIN: Your Honor, this is just counsel testifying. This chart wasn't --

MR. JOHNSON: Your Honor, he's speaking objections. If he wants to approach the bench.

THE COURT: He's speaking objections and you're testifying. So let's move on to something else.

BY MR. JOHNSON:

Q: In your view, Mr. Frankenberg, was there plenty of room in the suite market in 1995 for a number two suite or even a number three suite to be very successful from a monetary perspective in this market?

A: There was definitely plenty of room with 74 percent of the people not having made a decision. That's a very huge opportunity.

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Q: Is it fair to say, Mr. Frankenberg, that in order to be successful in the suite market, you had to have a suite to sell?

A: I think so, yes.

Q: In 1995, when Windows 95 came out in August, Novell didn't have a suite that was built to run on Windows 95, right?

A: We did not, that's true.

We had one that was built to run on Windows 3.1 that ran on Windows 95, but did not take advantage of any of its capabilities.

THE COURT: The answer is yes, not no?

THE WITNESS: You are right, Your Honor. Yes, we did have one, but it didn't -- but it was an earlier version and gave the user no additional functionality.

THE COURT: I understand.

THE WITNESS: Thank you.

BY MR. JOHNSON:

Q: Mr. Frankenberg, Mr. Tulchin had a great deal of questions for you about WordPerfect 6.0, which was a product that was actually put out by WordPerfect prior to the merger with Novell, and the fact that it did have some issues and you said it had some functionality issues, and Mr. Tulchin repeatedly referred to an internal evaluation that characterized it as slow and buggy.

1252

Mr. Gibb testified that the product was only slow if you had a machine or a computer that didn't have a lot of memory, such as machines with only four megabytes of memory or less. Were you aware that WordPerfect 6.0 was only slow on low memory machines?

A: I was not aware of that, no.

Q: At the risk of overkill, let me show you what's been marked as Plaintiff's Exhibit 110. This is a PC Computing Magazine's award for the best products of the year for December 1993, and WordPerfect 6.0 for Windows won the MVP award for 1993. And if you conclude -- go to the end of this article, the last paragraph on the next page.

MR. JOHNSON: I want the end of the article, Mr. Goldberg. You may have been there. I can't see.

MR. TULCHIN: Your Honor, this is subject to the objections that we have discussed.

THE COURT: Absolutely. Absolutely. If you like that, it says Windows does it all.

MR. TULCHIN: It's still hearsay, Your Honor.

MR. JOHNSON: Could you bring up the last paragraph of this? Not that one, the paragraph of the text. Not the pricing.

THE WITNESS: Just in case you're interested.

BY MR. JOHNSON:

Q: And PC Computing Magazine concludes, is there any

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reason not to get WordPerfect now? No way. Version 6.0 strikes a perfect balance between Windows interface standards and WordPerfect functionality. Are there serious reasons to buy it? Only if you want a word processor that takes the brakes off of what you can do with a document -- from word processing to spreadsheet computations to drawing -- and makes the process so easy that it's more fun than work, close quote.

Does this refresh your recollection, Mr. Frankenberg, that not everyone thought WordPerfect 6.0 was slow --

THE COURT: I'm going to strike the question and strike the whole thing under 403. Whatever purpose there is for getting these in is so outweighed by your testifying about it, I'll strike the whole thing.

Please understand I'm letting all these evaluations in for limited purpose. The person is not here to be cross-examined, and that was inappropriate.

Move on.

MR. TULCHIN: Your Honor, I wonder if we could take it down, please?

MR. JOHNSON: Take it down, please.

Your Honor, I was only offering it for the same --

THE COURT: Whatever you offered it for, you know darn well what you were doing. It was inappropriate. Move on.

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The person that wrote that is not here to be cross-examined.

MR. JOHNSON: Well, then, Your Honor, I would like to turn to Plaintiff's Exhibit 378, which is what Microsoft said about WordPerfect 6.0 for Windows.

BY MR. JOHNSON:

Q: Mr. Frankenberg, this is an internal Microsoft document written by Microsoft. Turning to the first page of this competitive product analysis with respect to WordPerfect 6.0, it states, quote, the industry generally lauded WordPerfect's robust and feature-filled Windows word processor, as it seemed like WordPerfect finally created an application that has excellent high-end DTP features, 98 spreadsheet functions, and its trademark text editing and proofing tools. This product is positioned to be a one-stop solution for every level word processing user.

Mr. Frankenberg, does that conform to your recollection that WordPerfect 6.0 was generally lauded in the industry?

A: Yes. That is a very good summary.

Q: In the next paragraph, Microsoft goes on to say, WordPerfect word processing sales still rival those of Word. In the past year, WordPerfect for Windows unit shipments increased by 60 percent while Word's increased only by six percent. It goes on to say that the point is, WordPerfect's success up to now shows it is making inroads in the Windows

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market and not just by converting their DOS installed base.

Mr. Frankenberg, do you agree, is it your recollection that you were winning market share not simply by converting the DOS installed base?

A: Yes.

MR. TULCHIN: He's leading again, Your Honor.

THE COURT: It is leading. It's overruled. This is a Microsoft document. A whole different set. Please don't just lead the whole time.

Just go on. I've overruled the objection.

MR. JOHNSON: Can we bring up the last paragraph, Mr. Goldberg?

BY MR. JOHNSON:

Q: I won't read that. I will let you read it for yourself, Mr. Frankenberg. Starting with the bottom line there, could you read that to yourself.

A: Yes.

Q: Mr. Frankenberg, did WordPerfect continue to make improvements to WordPerfect with additional releases?

A: Yes, we did.

Q: Do you recall that there was a WordPerfect 6.0A release?

A: Yes, that happened shortly after the announcement.

Q: And do you recall how that was received in the marketplace?

1256

A: That was received positively.

Q: Let me show you what has been marked as Plaintiff's Exhibit 162-A.

MR. JOHNSON: Mr. Goldberg, don't put this up yet, please.

MR. TULCHIN: Your Honor, could I just have a moment? I don't know what was removed here.

THE COURT: Of course.

MR. JOHNSON: Your Honor, we would just remove the article about the product.

MR. TULCHIN: No objection.

THE COURT: That's fine. Go ahead.

BY MR. JOHNSON:

Q: So this exhibit, Plaintiff's Exhibit 162-A, shows Mr. Bill Gates' reaction to WordPerfect's 6.0A. Mr. Gates states, quote, I'm amazed at their responsiveness. This is very scary and somewhat depressing. This is as much as we plan to do for 1995. A lot of work in this release.

Mr. Frankenberg, do you recall that WordPerfect 6.0A was again named by PC Computing Magazine as the MVP award winner for 1994?

MR. TULCHIN: Same objection, Your Honor.

THE COURT: Overruled.

Go ahead.

THE WITNESS: Yes, it was. We were very proud of

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that.

BY MR. JOHNSON:

Q: Were you also aware it was chosen over Microsoft Word for Windows as the best word processor for 1994?

A: Yes, I was.

Q: Then again, Mr. Frankenberg, Novell, after it had purchased WordPerfect, issued another release of WordPerfect called WordPerfect 6.1.

A: We did release 6.1, yes, with further improvements.

Q: Do you recall that was also well received by the industry?

A: It was very well received by the industry.

Q: Do you recall that WordPerfect for Windows 6.1 received the Editor's Choice Award for PC Magazine in November of 1995?

A: Yes, I was, and very happy to see it.

Q: Mr. Frankenberg, Mr. Tulchin asked you a series of questions about your level of involvement regarding the course the company took after Microsoft took away the namespace extensions. Would such decisions ordinarily be made by the people in charge of the business unit?

A: Yes, they would.

Q: And I believe you testified --

A: Unless they encountered difficulties that they needed to raise to my attention.

1258

Q: And I think you testified that certain people were identified, including Mr. Rietveld and Mr. Calkins; is that correct?

A: Yes.

Q: Were these people highly placed executives that you trusted their judgment?

A: Mr. Rietveld was a former president of WordPerfect Corporation. He was a vice president of Novell. He had run a very substantial business and knew a lot more about word processing and the office products than most other people in the industry. I trusted him fully.

Q: You also mentioned the possibility that Mr. Glen Mella may have been involved. Now Mr. Mella was a marketing guy, right?

A: Mr. Mella was a vice president of marketing for the applications business group.

Q: So he was not a technical person, right?

A: No, he was not.

Q: He was not a developer in any sense of the word?

A: No, he wasn't.

It was a good thing he didn't write any code too.

Q: Do you have any personal knowledge whether Mr. Mella was actually involved in any decision with respect to how to develop the product for Windows 95 after Microsoft took away the namespace extensions?

1259

A: I'm sure he was involved, but I can't pin down exactly what meetings or whatever he was involved in.

Q: What I'm asking you, do you actually have personal knowledge that he was, in fact, involved?

A: Yes, he was, in fact, involved.

Q: And what do you recall about that? I thought you said you didn't recall who made that decision?

A: I'm sorry. You lost me.

THE COURT: You lost me too.

BY MR. JOHNSON:

Q: I'm just trying to figure out, Mr. Frankenberg -- I know you thought Mr. Mella may have been involved.

THE COURT: That's not what he said. He said he had personal knowledge he was involved.

MR. JOHNSON: Yes, and I'm asking him what is that personal knowledge.

THE WITNESS: Mr. Mella was the vice president of marketing responsible for the business applications. He would have been involved in all decisions that were made regarding the marketability, delivery schedule, promotions, et cetera, of the PerfectOffice suite.

BY MR. JOHNSON:

Q: Mr. Frankenberg, let's take a look at Defendant's Exhibit 621. This is Novell's 10-K filing with the Securities and Exchange Commission for the period ending

1260

10-28, 1995. I believe Mr. Tulchin drew your attention to page 8 of this exhibit. And Mr. Tulchin went on at some length about the fact that 10-Ks are filed with the SEC, that you personally signed these statements, and he tried to get you to agree that the only reason Novell sold the WordPerfect office productivity applications was because they did not contribute to Novell's network focus and core business.

As an initial matter, this document was filed on January 26th, 1996. So this filing would have been made some couple months after you made the decision to sell the business applications; is that correct?

A: That's correct.

Q: At that point Novell was refocusing its business on the NetWare product?

A: Yes, and other associated networking products.

Q: Would it be correct to say that these statements in this 10-K are forward looking with respect to Novell's plans for the future, not the past?

MR. TULCHIN: Again, leading, Your Honor.

THE COURT: Sustained. Don't lead.

BY MR. JOHNSON:

Q: Mr. Frankenberg, were the statements made in this 10-K forward looking?

MR. TULCHIN: Same objection.

1261

THE COURT: Or not.

Go ahead.

BY MR. JOHNSON:

Q: Go ahead, Mr. Frankenberg.

A: Yes, they were forward looking savings in this 10-K.

Q: Now you told Mr. Tulchin more than once that the reason Novell sold WordPerfect was that it had become very clear that Novell could not compete in that market and that it was a tilted playing field, and that no matter what Novell did, it would not be able to succeed because the playing field was unfairly spewed, and I'm quoting from your testimony.

Mr. Tulchin persisted with you with respect to the statements made in this Novell 10-K, and Mr. Tulchin further stated to you, and I'm quoting again from the transcript at page 1107, lines 16 and 18, of the official transcript we received last night, quote, feel free to look elsewhere or anywhere you want, anywhere you think you might find it, referring to your claim that you sold the business application because of Microsoft's unfair treatment.

Did Novell also file a statement with the Federal Trade Commission in Washington, D.C. detailing the reasons why Novell had announced plans to sell the applications group?

A: Yes, we did.

MR. TULCHIN: Objection, Your Honor. I think this is off limits.

1262

THE COURT: Overruled.

BY MR. JOHNSON:

Q: Let me show you what has been marked Plaintiff's Exhibit 346.

MR. JOHNSON: For identification only, Mr. Goldberg.

THE COURT: I gather if it's for identification only, you shouldn't put it up yet.

MR. JOHNSON: I hope he understood it.

THE COURT: That's fine. It's my fault.

BY MR. JOHNSON:

Q: Was this the statement that Novell, Inc. presented to the Federal Trade Commission in Washington, D.C. on December 1st, 1995?

A: Yes, it is.

Q: Turning your attention to page 8 of this statement, please read to yourself the second full paragraph.

THE COURT: It shouldn't be up.

MR. JOHNSON: It's not up, Your Honor. The screen is blank. You get to see it, but the jury does not.

THE COURT: I'm sorry.

MR. TULCHIN: Your Honor, we discussed this in Baltimore and the Court ruled it was inadmissible.

THE COURT: Yeah, but I haven't heard the cross-examination.

1263

Go ahead.

MR. JOHNSON: Thank you, Your Honor.

THE WITNESS: Yes, sir.

BY MR. JOHNSON:

Q: Does this paragraph detail those reasons for its decision to divest its applications group, the publisher of WordPerfect, Quattro Pro, and other PerfectOffice productivity applications?

A: It's a very good summary of the reasons why we decided to do that.

Q: Is this statement consistent with your testimony that the reason you decided to sell is that it had become very clear that Novell could not compete in the applications market, that it was a tilted playing field, and that no matter what Novell did, it would not be able to succeed on such a playing field?

MR. TULCHIN: Same objection.

THE COURT: Overruled.

THE WITNESS: Yes, it clearly states that.

MR. JOHNSON: Your Honor, I move for the admission of Plaintiff's Exhibit 346.

THE COURT: No.

MR. JOHNSON: With the Court's indulgence, Your Honor.

THE COURT: It goes on.

1264

BY MR. JOHNSON:

Q: Let me show you, Mr. Frankenberg, Plaintiff's Exhibit 467.

Mr. Frankenberg, do you recognize this document?

A: Yes, I do.

Q: Mr. Tulchin got into the issue of bugs?

MR. TULCHIN: We do have an objection to this document, Your Honor.

MR. JOHNSON: I'm sorry. Take it down, please. I wasn't aware he had an objection.

THE COURT: I am going to sustain the objection to the document.

MR. JOHNSON: Can we be heard on that, Your Honor?

THE COURT: Sure, but why don't you just ask a question and then I'll hear it.

MR. JOHNSON: Thank you, Your Honor.

BY MR. JOHNSON:

Q: Mr. Frankenberg, can you describe the situation involving Plaintiff's Exhibit 467?

A: The situation that occurred was that shortly before the shipment of Windows 95, Microsoft published a list of 200 purported bugs with our current PerfectOffice suite. In other words, the one that was written for the earlier version of Windows. And it was important that it -- as we've talked about before, it was important that it run on

1265

Windows 95. So they published a list of 200 purported bugs with our current suite running on Windows 95. Almost all of those had been fixed. And it had a significant detrimental effect on our introduction of that product in conjunction with Windows 95.

Q: Did you complain to Microsoft about their publishing these 200 bugs that allegedly were impacting PerfectOffice 3.0?

A: Novell complained aggressively about that.

Q: This statement you said came out right before the release of Windows 95?

A: Shortly before. I don't remember, but very close to the release, yes.

Q: Thank you, Mr. Frankenberg.

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

A: That's correct.

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

1266

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

Q: Once WordPerfect's word processor had the shared code to operate on all those differing operating systems, what issue, if any, would exist with making PerfectOffice suite cross-platform?

A: The issues that would be involved would be largely -- well, it would depend a bit on the platform. There may be some platform unique things that would need to be taken care of within the applications. And beyond that there would be, of course, a significant amount of testing to make sure that it ran properly.

Q: But the shared code, once it had been ported to another operating system, could run under any of the applications within the PerfectOffice suite?

A: That's correct. It was one of our strengths.

Q: There were a number of questions directed to you with respect to Novell's NetWare and with respect to beta versions of Novell's NetWare. During your tenure with Novell, did you ever recall a time when Novell withdrew significant functionality, withdrew APIs that had previously been published?

A: No, I don't recall us ever doing that.

Q: In fact, do you ever recall that, period, in your history in the industry by any company other than Microsoft?

A: I don't recall that, no. Not that it might not have

1267

happened, but I don't recall.

MR. JOHNSON: Nothing further, Your Honor.

THE COURT: Thank you, Mr. Johnson.

Anything further, Mr. Tulchin?

MR. TULCHIN: I will try to be quick, Your Honor. Do the best I can.

RECROSS-EXAMINATION

BY MR. TULCHIN:

Q: Mr. Frankenberg, hello again.

A: Hello.

Q: You were shown Exhibit 467, and I think you testified something about Microsoft -- you don't need the document, sir, but if you want to look at it, that's fine. It was not shown to the jury.

A: Could you remind me of what that document is?

Q: Yes, I'm going to.

A: I don't remember by numbers.

Q: Of course. Of course.

I should have started this way. You gave some testimony that just before Windows 95 came out, Microsoft published a list of bugs. Do you remember that --

A: Yes.

Q: -- a few minutes ago?

I think you said that these were bugs that pertained to the old version of PerfectOffice, PerfectOffice 3.0,

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correct?

A: Correct.

Q: We looked at Exhibit 6 this morning. That was the one that said Dave Miller, remember that, in October of '95?

A: I do remember that, yes.

Q: And Exhibit 6 -- if we can put that back up. Exhibit 6 is about the same subject, according to your testimony, it's about bugs in Windows 95 that affected PerfectOffice 3.0, correct?

A: Correct.

Q: And here in this memo we hear it reported that Dave thinks it's mostly our fault. Isn't that right?

A: That's what it says, yes.

Q: Thank you, sir.

Now you also said that with respect to these bugs --

A: May I expand on that a moment?

Q: Well, let me ask my question, Mr. Frankenberg, if I may.

MR. JOHNSON: Your Honor, he wanted to expand on his prior answer.

THE COURT: I think he expanded before in a way which was inappropriate, so no.

BY MR. TULCHIN:

Q: Mr. Frankenberg, you said that around August of '95 when this issue of the bugs came up, you complained

1269

aggressively to Microsoft.

A: I said that Novell complained aggressively to Microsoft.

Q: Yes, that's what I should have said, Novell.

Now, in contrast, in October 1994, when Mr. Gates made the decision about the namespace extension APIs, as far as you know, there was no complaint in writing ever made by Novell to Microsoft, correct?

A: As far as -- I have not seen any documents, that's correct.

Q: Nothing in November of '94, true?

A: No documents, yes.

Q: No documents in December of '94?

A: No documents that I know of in December of '94.

Q: And your complaints aggressively in August of 1995 were about the bugs, and those were put in writing, correct?

A: Yes.

Q: But there was no writing from Novell to Microsoft, as far as you know, in January of '95, true?

MR. JOHNSON: Your Honor, he stated that there were no writings.

THE WITNESS: Yes.

THE COURT: If there are no writings at all, there are no writings in the years. There's no writings.

MR. TULCHIN: Thank you, Your Honor.

1270

BY MR. TULCHIN:

Q: Now --

A: To my knowledge.

Q: Yes, and I think that's what you said, Mr. Frankenberg. But you don't remember any writing and in preparing for your testimony you didn't see any writing, true?

A: Correct.

Q: Could we look at Exhibit 225, which Mr. Johnson showed you on redirect a little while ago. This is -- the first page is an e-mail from Brad Struss to Doug Henrich, October 12th, '94. And below that there was an e-mail from Scott Henson -- this is an internal Microsoft e-mail chain -- also of October 12, '94. On the second page of Exhibit 225, towards the bottom, there is a paragraph which says, this decision not only affects people outside of Microsoft, but inside the company as well. All applications within Microsoft which were originally implementing these interfaces have been required to stop.

Now, Mr. Frankenberg, you looked at this earlier, this same document, and I think you offered your views about what pieces of Exhibit 225 mean. Do you remember that?

A: Yes.

Q: And this was, of course, a Microsoft document that you hadn't seen in 1994 or '95, true?

A: Correct.

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Q: Do you have any reason whatsoever to doubt that all applications within Microsoft which had been implementing the namespace extension APIs were required to stop as of October '94?

A: Do I have any -- please repeat the question.

Q: Do you have any information to the contrary of what is stated here, that Microsoft applications were not permitted to use the namespace extension APIs?

A: That's not exactly what it says. It says that they had to stop development. It doesn't mean they couldn't continue to use what they had already done.

Q: It doesn't say stop development.

A: It says stop.

Q: Stop. So I understand your interpretation, but let me ask my question.

A: Okay.

Q: Do you have any reason, sitting here today, to doubt that as of October 1994, Microsoft's applications were required to stop using the namespace extension APIs?

THE COURT: I think it's implementing. Doesn't it say implementing?

MR. TULCHIN: It just says stop, Your Honor.

THE COURT: Go ahead.

THE WITNESS: Could you repeat your question? Sorry to ask you again.

1272

BY MR. TULCHIN:

Q: I think you said on cross-examination earlier that you don't know whether or not Word or Excel or Office actually as released used the namespace extension APIs?

A: I do not know that, that's true.

Q: Do you have any reason to doubt that as of October, all the Microsoft applications were required to stop using those APIs?

A: This says stop development. It doesn't say stop using.

Q: The word development is not there, Mr. Frankenberg. I don't want to argue with you.

A: It says stop.

Q: Stop. I just want you to answer my question. Do you have any reason to doubt that they stopped?

A: I do not have any reason to believe that they didn't stop development with those APIs.

Q Could you look at Exhibit 215? Mr. Johnson showed you this on redirect. And on the first page at the top --

A: I'm sorry. Which one? This doesn't have labels on all of them.

Q: I'm sorry. It's Plaintiff's Exhibit 215. It's on the screen in front of you, but if you want me to help you find the hard copy, I will.

A: I'll find it.

Yeah, here it is.

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Q: Thank you, sir.

You will see that at the top there is an e-mail from Brad Struss, September 22, '94. And that e-mail is more recent in time than the e-mail from Mr. Henson that Mr. Johnson showed you in this document. Would you agree with that?

A: What was the date of Mr. Henson's --

Q: It actually doesn't say, Mr. Frankenberg, but an e-mail chain normally has the most recent one on top followed by the less recent, true?

A: That's true. They could have been pretty close to each other. There's no way of telling from this.

Q: Well, let me suggest there is a way of telling. If you look at the first three paragraphs of Mr. Struss's e-mail, he says, below is a summary, Scott HE -- that's Scott Henson -- pulled together from a couple of weeks ago of what ISVs current thoughts are. And Mr. Johnson showed you Scott's summary of a couple weeks earlier.

I want to show you what Mr. Struss said about WordPerfect as of September 22nd. Just go down one paragraph. It says WordPerfect. They have not begun any work on IShellFolder, IShellView, et cetera. I know that on cross you told me that you didn't know what the namespace extensions were, but let me just represent to you that IShellFolder and IShellView are two of them. Okay?

1274

A: Okay.

Q: Right?

A: How many others were there?

Q: Two.

A: Okay.

Q: Some would say three, but we won't debate that now.

A: All right.

Q: What Mr. Struss's e-mail says of September 22nd, 1994, is that WordPerfect hasn't begun any work on these APIs. Do you see that, sir?

A: On those two, that's what it says.

Q: Correct, et cetera.

Now do you doubt that Mr. Creighton of Novell told Mr. Struss around September 22nd of 1994 that Novell had not -- Novell/WordPerfect had not begun any work yet on these APIs?

A: I have no way of answering your question, sir.

Q: Well, you answered Mr. Johnson's question about the same document and Mr. Henson's e-mail later on which reported on what he understood WordPerfect was doing. You didn't have any problem answering those. So I just would ask you again, do you have any reason to doubt that Mr. Creighton told Mr. Struss, around September 22nd, that WordPerfect hadn't begun any work yet on the namespace extension APIs?

1275

A: Sir, I have no way of knowing.

MR. JOHNSON: Objection, asked and answered.

THE COURT: Overruled.

THE WITNESS: What Mr. Creighton said to Mr. Struss or whether Mr. Struss got this information from Mr. Creighton, I have no way of knowing.

BY MR. TULCHIN:

Q: Mr. Frankenberg, early on in the redirect I think you said that Novell didn't want to give information to Microsoft, and we were looking at this document later in where Mr. Henson says it's going to be hard to get information from WordPerfect. Do you remember that?

A: Yes.

THE COURT: You mean later in or earlier?

MR. TULCHIN: I'm sorry, Your Honor?

THE COURT: Later in or earlier?

MR. TULCHIN: Later in.

THE WITNESS: That's a good point, Your Honor. Earlier in time, later in --

BY MR. TULCHIN:

Q: I think what you said then is that Novell/WordPerfect didn't want to give information to Microsoft because Microsoft was a competitor, correct?

A: There was -- we were circumspect about that, yes.

Q: Is it your view that Microsoft was required to give

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information to Novell, its competitor, to help Novell build a better product to compete against Microsoft?

MR. JOHNSON: Objection.

THE COURT: Sustained.

MR. JOHNSON: Thank you, Your Honor.

THE COURT: You don't have to thank me. That's my job.

BY MR. TULCHIN:

Q: Now you were shown some reviews -- product reviews in magazines, correct?

A: Yes.

Q: Am I right that in 1994 and '05, and throughout that time period, there were many, many magazines that covered the PC industry?

A: Yes, there were.

Q: Would you say there were dozens of magazines that reviewed software like word processing and spreadsheet software?

A: Could easily have been that many. I don't know the exact number. There were a handful that were significant and followed closely.

Q: There were many, many of these magazines that did reviews on a frequent basis?

A: Yes, there were.

Q: Right?

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A: Yes.

Q: Sometimes a WordPerfect product might come out ahead in one review and sometimes a Microsoft product would come out in another -- come out ahead in another, true?

A: I'm sure that's possible, yes.

Q: Isn't it true, Mr. Frankenberg, that over the period of around '93, '04, '05, Microsoft products won more of these product reviews in magazines and other trade press publications than Novell's did?

MR. JOHNSON: Objection, Your Honor. How is this witness to answer that question?

THE COURT: He's going to say he doesn't know.

THE WITNESS: I'm going to say I have no way of knowing.

MR. TULCHIN: Thank you.

I have nothing else, Your Honor.

MR. JOHNSON: Your Honor, I have one question.

THE COURT: Yes, and I think I know what it is. Go ahead.

MR. JOHNSON: I hate to be so predictable.

THE COURT: I could be wrong.

FURTHER REDIRECT EXAMINATION

BY MR. JOHNSON:

Q: Mr. Frankenberg, Mr. Tulchin went into a great bit about going month by month and there being no writings. I

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just want to make sure we have your testimony from before that, in fact, you wrote to Mr. Gates about the problem of undocumented calls and interfaces in 1995, and those letters were in writing?

A: Yes, they were.

MR. JOHNSON: Thank you.

THE COURT: Next witness.

Thank you, Mr. Frankenberg.

THE WITNESS: Thank you.

MR. JOHNSON: Your Honor, we're going to show some videotaped transcript. Maybe a five-minute -- a short break?

THE COURT: Do you want five minutes just to stretch your legs and set up the equipment. I'm ready any time.

(In chambers conference)

MR. SCHMIDTLEIN: There was an issue that just got brought to us this morning. The reason why we're in here, we think the reporters are out there. There may be -- this is today's Deseret News. I'm told is a very --

THE COURT: Deseret, that's how it's pronounced?

MR. JARDINE: Deseret News.

MR. SCHMIDTLEIN: We understand is a very widely read newspaper, and one that a good deal of the jury -- frankly, the front page of it, the front page of the paper

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does have an article about yesterdays' proceedings, and included is some reporting and characterizations of comments you made yesterday. And I am not going to go into whether the reporters got it right or wrong, the fact of the matter is they are there, and as we get to sort of some of the more high profile witnesses, Mr. Frankenberg, we just wanted to sort --

THE COURT: Ask the jury, or just tell them I think probably.

MR. SCHMIDTLEIN: I don't think -- I'm not asking that we poll the jury right now as to whether anybody read it. I think it's probably -- and, you know, we do appreciate --

THE COURT: It's a good caution. I appreciate that.

MR. SCHMIDTLEIN: We find it useful to get your views.

THE COURT: I appreciate that. I appreciate that. I still was flabbergasted.

MR. JOHNSON: Your Honor, if you could hold your comments and perhaps bring us into chambers if you feel you need to talk to us.

THE COURT: That's fair.

MR. JOHNSON: This is very damaging if a juror, you know, reads this and finds out that the judge in the

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case thinks one of --

THE COURT: It's a fair comment.

MR. JOHNSON: -- our top witnesses -- you are flabbergasted what he has to say, that's incredibly prejudicial.

THE COURT: It's a fair comment. I will --

MR. TULCHIN: They were instructed not to read --

THE COURT: I understand. If you want me to ask -- I won't ask.

MR. JOHNSON: We would only ask -- we understand Your Honor likes to comment to us and let us know what you think, we appreciate that, but --

THE COURT: I appreciate that, but I'm trying to be fair to you, and there are two big problems in your case and they are going to come to the floor next week.

MR. JOHNSON: I understand that. You made that clear. I just only ask --

THE COURT: No. I've told you as much as I'm going to tell you. My biggest concern is to let you know there are gaps, or if there's something I'm missing, let me know. That's a fair comment.

(In chambers conference concluded.)

(Jury present)

THE COURT: How long is the video?

MR. JOHNSON: I've got a selection of choices to

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make. I am trying to find one that will be short.

THE COURT: When it's convenient for you, we'll break around quarter of.

MR. JOHNSON: That's going to be a 15 minuter.

Could you do Steve Sinofsky now or not?

I originally planned to play a bit longer one, Your Honor.

THE COURT: How long?

MR. JOHNSON: The longer one is 36 minutes. The one I'm thinking of now is only 12, which would probably be perfect.

THE COURT: Play the 36-minute one and we'll break.

MR. JOHNSON: You want to do the 36-minute one?

THE COURT: And we'll break at some time. There is nothing magic. It seems to work. You come back at 12:00, then we have an hour and a half.

MR. JOHNSON: So, Your Honor, we're now going to play the videotaped portions of the videotaped deposition of Microsoft executive James Allchin. This was taken January 8th of 2009. And, as I mentioned, it's about 36 minutes long.

(Videotaped deposition of James Allchin was played.)

Q: Good morning, Mr. Allchin. Thank you for your time

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today.

Where are you currently employed?

A: I'm not.

Q: How long ago did you leave your employment with Microsoft?

A: At the -- I don't remember the exact date. The beginning of 2007.

Q: Okay. And did you take employment at that time -- other employment outside of Microsoft?

A: No.

Q: Okay. Now from your prior testimony, I understand that you were hired in 1990 by Microsoft; is that correct?

A: Yes.

Q: Okay. And I believe you described in one of the depositions that you were hired to set Microsoft's networking strategy; is that correct?

A: Yes.

Q: In that context, what does networking mean?

A: Having the ability, for multiple machines, to communicate with each other, and then the -- at a physical level -- and then the software above that to create a more unified homogenous view of the resources that are available of multiple PCs or multiple other machines. You want it to appear like all those resources are combined together at your disposal.

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Q: And those resources that you wish to appear to be combined together could be on different machines, different places, including the Internet or various disks on your home machine, if you will; is that correct?

A: Right. Certainly in 1990, you know, the vision was a little bit different because some -- the Internet, although it was there, most of the world hadn't realized it yet. But the concept was something that I believed in from the beginning, along with some others.

Q: Now when you say from the beginning --

A: From the beginning of 1990.

Q: Okay.

A: But I actually believed that before with my work at Banyan Systems.

Q: Okay. When did you first come to believe that? By that I mean the importance of the visual -- the visualization of various resources, as you've described it.

A: Probably in the very early '80s before -- either while working on my master's or working on my Ph.D. In that time frame.

Q: Where did you get your master's?

A: At Stanford.

Q: Your Ph.D.?

A: George Institute of Technology.

Q: Is that Georgia Tech?

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A: Yes.

Q: Shortly after you began your employment at Microsoft, you began working on the NT code base; is that correct?

A: Yes.

Q: Can you describe for me what the NT code base was at that time? I'm talking now 1991, say.

A: There were a number of limitations in the design of Windows 3.1, along with its predecessor of DOS, that were not modern operating systems. It wasn't designed as a modern operating system. It didn't have multitasking. It had no security to speak of. It didn't support multi-processors. Networking was quite limited, et cetera.

NT was a start over while still trying to maintain the user interface of Windows. So the idea was you replumb the bottom of the operating system and maintain the application interfaces so that the applications that have run before could still run, but get the access of more powerful multi-processing machines.

It was also a portable operating system, so it was a way to move it onto, at that time, what we thought were going to be alternatives to the Intel architecture, which included MIPs, Alpha from digital. I can't remember what else we moved it to, but it seemed like there were some others as well.

So it was -- hadn't shipped at that time. Dave Cutler

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and a set of other people were working on it, and I would say that it was maybe being worked on a couple of years at that point.

Q: Did you, in the mid 1990s, view Novell as a competitor to Windows NT?

A: Yes.

Q: And why was that?

A: Because of NetWare.

Q: As part of your vision of unifying the views of places and information, did you seek to have Microsoft's future developments bring together the local operating system and the network?

A: Yes.

Q: And would that include work for the benefit of independent software vendors applications?

A: Yes.

Q: The provision of APIs to independent software vendors?

A: Yes.

Q: What benefit did you intend to provide to independent software vendors by developing toward APIs that unified views across the local computer in the network?

A: To make it easier for them.

Q: To make it easier for the ISVs?

A: Uh-huh. (Affirmative) Honestly, they could do it with or without the operating system, but to make it easier for

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them.

Q: Okay. In fact, I think you've testified somewhere that something like the best line of code is the line that isn't written. Do you recall that?

A: No, but I think I've said it before.

Q: Okay. And I believe you said in the context of Windows providing APIs such that the ISVs don't have to write the code themselves; is that correct?

A: That's right.

Q: What is the benefit of providing that API first to the ISV?

A: First to the ISV? I'm sorry. I'm not following you here.

Q: What benefits -- at the risk of asking the obvious, what benefits does providing that API -- and let's even stay on the model of an API that unifies views to an ISV as compared to having the ISV do it themselves?

A: Less code for them.

Q: Does it also lead to consistency in the look and feel of the various applications on the Windows platforms?

A: It could. It could.

Q: Would that be a benefit to Microsoft?

A: Benefit to customers, yeah, and therefore Microsoft.

Q: Okay. It was a benefit to customers to have that common look and feel among applications that are using a

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common set of APIs; is that correct?

A: Okay. The look and feel is different than the APIs. The APIs make it simpler. If the APIs have nothing to do with user interface, then it's up to the APPs to do something about it. If the APIs are common dialogs or things like that that actually embody the use of the transparency across the net into a user interface -- the applications used -- then that will get the consistency in terms of the interface. So some APIs have nothing to do with the user interface.

Q: Okay. Fair enough. Were you recommending at this time that Microsoft begin to develop and provide APIs to unified views, as we've been discussing unified views?

A: What time?

Q: Let's start with the time of this document, 1990.

A: Do you want me to read it, because I haven't a clue. 18 years ago.

Q: Whether -- I'm not trying --

A: I don't know what I was recommending.

Q: I'm not trying to trap you with regard to what that document says. I'm just --

A: I've believed in unifying views for a very long time. That I said earlier. Unifying the view between what's local and what's remote or, if you can't, making it very clear what's local, what's remote.

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I have said that. It's probably in my Ph.D. thesis. I don't know.

Q: As part of that belief in unifying views, did you, in your work at Microsoft -- let's say throughout the early to mid 1990s -- seek to provide APIs that would allow ISVs to unify the views?

A: When you say views, are you talking about user interface, or are you talking about technically so that, you know, a remote disk looks like a local disk?

Q: Exactly that -- the remote looking like the local.

A: I think that we have tried to do that.

Q: Mr. Allchin, if you could turn to page 6 of Exhibit 1, I will have a couple of questions, and then we'll get off this document.

Under heading 2.4, in the second sentence you write, applications drive the world. Do you see that?

A: Yes.

Q: Do you believe that to have been a true statement when you wrote it?

A: I assume so. I wrote it.

Q: Do you still believe it to be a true statement?

A: Yeah.

Q: Was there any time at which you can think when it was not a true statement?

A: Well, the word applications has changed over time.

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Solving people's problems drive the world, not technology. And if you put that in place of applications, I believe it will -- it has been true and will always be true.

Q: Okay. What did the word applications mean to you at this time, 1991?

A: I assume solving people's problems, you know, whether it be writing a piece of e-mail or writing a document for a legal brief, or whatever.

Q: Word processors and spreadsheets would be products that solve people's problem in the sense that you use the term?

A: They are tools, yes.

Q: They would be applications, as you used the term here?

A: Yes.

Q: That would have been the case throughout the 1990s certainly?

A: Yes.

Q: Okay. Now when you say drive the world -- and take a moment to look at the rest of that paragraph or anything else in the document that you wish -- are you referring to the world of the operating system business?

A: I'm sure.

Q: Are you essentially arguing here that an operating system's success or platform success, if you will, depends upon the quality and availability of applications that run on it?

1290

A: That's always been true.

Q: Was it, therefore, important for Microsoft itself to develop and sell good applications to run on its platforms?

A: If we're going to develop applications, they should be good, and they should run on our platform, yes. They also help drive what the platform needs.

Q: Was Windows subject to competition at the time you wrote this memo?

A: Oh, yes.

Q: Okay. From what other platforms?

A: I think there were probably many at the time, but certainly OS/2 would have been viewed as a competitor. There would have been products from Sun. There would have been historic products from Microsoft and others like DOS. Name your Unix variety. There were -- there were a lot of different systems. What was the -- I think there was a layer that Lotus created at the time. I can't remember what that was. There were many.

Q: Okay. Did these other competing platforms need the availability of applications that ran on those platforms to compete with Windows?

A: Yes. Maybe not the same applications, but people wanted to write documents, people wanted to write spreadsheets, so they probably wanted those type of applications.

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There were some operating systems competing with Windows -- and I'm talking about Windows in the most generic sense -- including NT and what was being envisioned, where those companies probably didn't even see Windows as competitive with them, but if you -- but it was longer term.

Q: Do you recall having any view as to whether WordPerfect was a good asset for Novell?

A: Nope.

Q: Do you have any view of that now?

A: Looking back in hindsight?

Q: Yes.

A: Well, it looks like they really messed it up, you know. I really don't know what I thought at the time, but, you know, its value isn't as much as it was.

Q: Do you recall giving any thought at the time -- I'm talking about the time of Novell's ownership of WordPerfect -- as to whether they could pose a competitive threat to any of Microsoft's platforms by making WordPerfect a network application?

A: I don't.

Q: Mr. Allchin, Exhibit 3 is what appears to be a memorandum authored by yourself, dated July 22, 1993; is that correct?

A: Yes.

Q: Do you recall writing this document?

1292

A: No.

Q: Any reason to doubt that you did?

A: No.

Q: Okay. You have is a heading here at number two, what is a paradigm shift. Do you recall giving thought to the question of paradigm shifts at this point in your career at Microsoft?

A: No.

Q: Can you tell me what a paradigm shift is?

A: Just conceptually?

Q: Yes.

A: A rapid change to a new model that, in many cases, could obsolete the way people are doing something or thinking about something today.

Q: That would include the way people -- strike that. There are paradigm shifts in the computer industry, correct?

A: Yes. My comments were related to that.

Q: Now does a paradigm shift lead to new competitive opportunities for market entrance? I'm talking about applications.

A: Yes.

Q: As the paradigm shifts, is there an opportunity for a new word processing product to upset the former market leader?

A: Yes.

1293

Q: Say same with respect to spreadsheets?

A: Yes.

Q: Let's just jump ahead a couple years in time. Do you consider Windows 95 to have been a paradigm shift?

A: No.

Q: And why is that?

A: Tremendous success in the marketplace doesn't necessarily mean a paradigm shift to me.

Q: Okay. What --

A: And people had already seen the graphical user interface. This sort of just made it work.

Q: Okay. Now what did you mean by tremendous success in the marketplace with respect to Windows 95?

A: I think we all know Windows 95 was quite a success in the marketplace, so there isn't much more to say.

Q: Irrespective of whether Windows 95 was a paradigm shift, did you perceive that it presented new competitive opportunities for applications developers?

A: Yes.

Q: New opportunities for a second or third position company to rise to the top and win a new market?

A: Is it an opportunity? Yeah.

Q: I'm talking specifically about competition in the business applications markets, word processing and spreadsheets.

1294

A: In order to rise, a lot of things have to be done just right. But, yes, all change is an opportunity. Change represents opportunity.

Every new operating system with a new set of APIs, the more change, the more opportunity if the APPs change with it if the operating system is successful.

Q: And Windows 95, as you said, was successful?

A: Yes, it was.

Q: And Windows 95 did represent a change over Windows 3; is that correct?

A: Yes.

Q: In conjunction with the release of Windows 95, there was an opportunity in the markets for word processing and spreadsheets; is that correct?

A: There were opportunities, yes.

Q: Specifically, I mean, there were opportunities to improve market share; is that correct?

A: Yes.

Q: There was also -- the flip side of opportunity, I imagine, is peril for whoever's formerly number one; is that correct?

A: Yes.

Q: In either case, whether you're formerly number one or formerly number five, you're going to rise or fall in the new operating system according to how well you take

1295

advantage of the new APIs in that system; is that correct?

A: That's one aspect -- certainly just one aspect. The question is are you providing the functions that customers want, how easy to use, et cetera, et cetera.

Q: Is it a necessary aspect to take advantage of those new APIs in a new platform such as Win95?

A: Not necessarily.

Q: What else could you do without taking advantage of the new APIs?

A: You could decide not to take advantage of it and say I don't -- I don't need those, I don't want those, and still make a very nice application. You could -- for example, you could still use object linking and embedding and still not use any common dialogs with inside Microsoft. In fact, I think Microsoft did that. I don't think, until recently, they ever used the file open dialog. I could be wrong about that, but I don't think they used it until just recently.

Q: What about -- the fourth bullet point you use the term shell extensibility. Can you tell me, what is that?

A: For right or wrong, the basic layer of the operating system is referred to as a shell, and the APPs were allowed to make additions to that user interface to be able to add items to the context menus or to be able to add hooks through the system. It made Windows very popular. It was bad in a bunch of computer science ways, but it made it very

1296

popular.

Q: Okay. You said that shell extensibility was bad in computer science ways.

A: The way it was implemented here because in the early days -- unfortunately even recently -- if an application had an error in it, it could take down or corrupt the user experience overall. In other words, the application could impact more than just it. So that's bad. You want -- you want this nice little boundary around the operating system that applications can't penetrate. So you write a bad application, then you wipe out a little part of the system. That's not good.

Q: That would be a lack of security, as you defined security for us earlier?

A: Or resiliency, yeah.

THE COURT: Stop. Okay. We'll take a short break and be back in 20 minutes.

(Recess)

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THE CLERK: Please rise for the jury.

(Jury comes into the courtroom.)

Please be seated.

THE COURT: Okay. We'll pick up. (Playing of video deposition of James Allchin continued.)

Q: You write, "We should get all ISV's to write to Win32."

Let me ask, what is Win32?

A: It was a collection of API's that were common -- well, first, it was a collection of API's that were 32-bit in length over the 16-bit length that had existed, and that, to the degree possible, they were common between Chicago and the NT system. And we even created a smaller subset of those called Win32S, I think, that was a subset of those that was a little layer that you could put in your applications to run on the 16-bit systems, at least that's what I think.

Q: Do you know -- strike that. Do you know why you recommended that we should get all S -- all ISV's to write to Win32?

Without reading the rest of the sentence, I say -- oh, acknowledge it goes on to discuss other technologies as well.

A: Why? Because, longer term, we were going to -- at least our dream was to move to the NT code base, and so, writing to the common set would have those applications be able to take advantage of NT systems along with, like, a

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Chicago-based system.

Q: You described, in one of your depositions, that browsing for information was part of the original vision of Information At Our Fingertips by the early 1990's. Do you recall that?

A: Do I recall writing it? Saying it? I recall --

Q: Right now, do you recall testifying to that effect?

A: No.

Q: Is it, in fact, the case that browsing for information was part of the vision known as Information At Our Fingertips, by the early 1990's?

A: Yes.

Q: By browsing for information, you're talking about more than just browsing on the internet, correct?

A: Yes.

Q: And, in fact, in the early 1990's, as you told us earlier, the internet existed but was largely unknown, right?

A: Yes.

Q: You testified at one point that you thought there were a lot of similarities between web and local browsing. Do you continue to believe that that's true?

A: Yes.

Q: What about network browsing? Are there similarities between local internet and network browsing?

1299

A: Yes.

Q: Okay. What would those similarities be?

A: Well, conceptually, the only difference is where the data is.

Q: And it was part of your own vision, I think you said, since your early days, even as a student, to unify the views so that the issue where the data is, is not terribly transparent or important to the user; is that correct?

A: Yes.

Q: The ability to browse without regard to where the data is stored, is that an ability that was valuable to ISV's?

A: Yes.

Q: And how so?

A: Less code that they would have to -- to write in order to access a particular remote object.

Q: And they would have to write less code because a Windows API was providing the functionality that we've been talking about?

A: I don't know. You made a huge jump there. I don't know if it was one API or many API's or the like, but, yes, that some part of the operating system was providing some help to create this transparency.

Q: Is that part of the concept of the best line of code being the line of code that the ISV doesn't have to write?

A: Well, I didn't say that line -- that comment about

1300

ISV's. Or let me say, it doesn't relate just to ISV's. If you don't write code, it's hard to have any bugs in it.

Q: Right.

A: And it's a lot less work, so it applies to everything. And, yes, it would apply in this particular case.

Q: Okay. And let's look at the case. I've been asking about ISV's kind of in the abstract. Let's look at the case of a word processing application. What about the Windows platform's ability to unify views would be of use to a word processing application?

A: I'm going to be just surmising here. Do you want me to?

Q: Please.

A: Well, in the case that you have physical places you have to go to get something or load something, then a user has to know where it is. In the cases that you don't need to know that, then it would be nice that it just was completely transparent.

In other words, if a document, for this word -- this word processor resided on server 1 or server 2 or server 3, whether one was in L.A. and one was in London shouldn't make any difference to you because you don't really have to go there physically, as a human. You'd just want the document to be edited and then saved back. And it would be nice that you didn't have to think about where it was stored.

1301

If you needed to know physically, like it's on this diskette or something, then you don't want it to be transparent. You want the system to say, "Go load tape 3," or whatever, "so I can get to this file."

Q: Okay. Now, as part of your work at Microsoft, you were developing technology to provide that kind of unified viewing to end users, correct?

A: As part of -- that was a vision, and part of the -- there were teams underneath me doing that, yes.

Q: And, as you worked on your vision, did you intend that word processors, spreadsheets, other common applications, would take advantage of the unified views that you envisioned and were working to provide.

A: Yes.

Q: Was it your understanding that independent software vendors had equal access to Windows 95 API's, as Microsoft's own applications developers?

A: Windows 95?

Q: Yes.

A: Was it my understanding? Yeah, but I wasn't the man making that decision.

Q: Exhibit 7, Mr. Allchin, is a series of emails, on some of which you are a recipient and at least one of which you are an author. And if you could take a moment to look at these, I'll have just a few questions.

1302

A: You want me to read it?

Q: Feel free to read as much as you want. My questions are probably going to be fairly limited and specific, and I'll direct you to some of the language.

A: Okay. Tell me where, and I'll decide.

Q: Okay. The email down below from yourself to Mr. Silverberg and Mr. Maritz.

A: Matitz.

Q: Mr. Maritz. Okay. Thank you. You are, at the risk of characterizing it, complaining to him about some decisions they have purported to have made without your input; is that correct?

A: Yes. It looks that way.

Q: Do you remember complaining about this issue?

A: No.

Q: In Mr. Maritz's response to you, in the first line of his last paragraph, he refers to Cairo interfaces. Do you see that?

A: This is the third paragraph?

Q: Yes.

A: Correct.

Q: My question is actually pretty simple. And that is, what did Cairo refer to at this time?

A: In October 3, 1993? I'm not 100 percent sure at that time frame. It was a code name for a set of

1303

technologies that were part of NT, but, at this period of time, I don't know.

Q: Okay. A little further down some that same paragraph, Mr. Maritz is asking you and/or Mr. Silverberg to let us know what would be needed for Chicago to use OLE2-based shell interfaces, i.e., for Chicago and Cairo to have the same API's for shell extensibility. Do you see that?

A: Yes.

Q: Do you know whether Chicago and Cairo did, in fact, ultimately have the same API's for shell extensibility?

A: Well, I cannot remember the time frames, okay, but conceptually what happened was the user interface team got moved over. Was this before or after that? I don't know. And when that happened, that was -- it got unified. Did Chicago have OLE2 interfaces for shell extensibility? I don't know. Did NT and -- or Windows -- I don't know whether it would be NT 3.5 or which one it was.

Did they end up having the same or to the degree they could have the same, between the Windows NT version and the Windows 95? The goal was to have them be the same, but I can't answer this.

You're taking a snapshot in time of a lot of churn of us discussing stuff, and I don't know how it all ended up.

Q: Okay. You, in your answer, referred to a time when the interface group went over. Let me just clarify that. I

1304

think I -- we probably know what each other means, but just so the record is clear, you're referring to the interface group that was in your NT group that you earlier told us moved over to Mr. Silverberg's Chicago development group; is that correct?

A: That's right. And I just don't remember when that took place. It could have been after this. I -- I really don't know.

Q: Okay. You were asked various questions by Mr. Engelhardt about Windows 95, and I just want to make sure the record is clear. Were you responsible, in the hierarchy in Microsoft, for the development of the original version of Windows 95?

A: No.

Q: Who was the person responsible for that product?

A: Brad Silverberg.

Q: And did you have any official role in deciding what technologies would be included in Windows 95?

A: No.

Q: Did you have any official role in determining what information would be provided about Windows 95 to independent software developers?

A: No.

MR. JOHNSON: That concludes Mr. Allchin.

THE COURT: Thank you. Who's next?

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MR. JOHNSON: I'm looking at the clock, Your Honor, trying to decide which is better. We could do -- probably, I'd say we would do Mr. Henrich now. He's 39 minutes. And we could slip in a short one at the end if we have time.

THE COURT: Okay. We'll try to do that.

MR. JOHNSON: Okay. Thank you, Your Honor.

Oh, I guess I should say this is Mr. Douglas Henrich, a Microsoft executive, January 8, 2009. This is 39 minutes long.

THE COURT: Thank you. We've seen that guy before.

MR. JOHNSON: He's the one that didn't have any sound last time.

THE COURT: Oh.

MR. JOHNSON: Apparently the feed was mono. THE VIDEO DEPOSITION OF MR. DOUGLAS HENRICH WAS PLAYED AS

FOLLOWS:

Q: Could you provide your full name for the record, please.

A: Douglas P. Henrich.

Q: You were an employee of Microsoft, correct?

A: Yes.

Q: When did you begin your employment with Microsoft?

A: April of 1990, roughly. I don't remember the exact

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date.

Q: Was that right out of college?

A: Nope. I wish it was. I graduated from college in -- undergraduate in '81, so about nine years earlier.

Q: When did you end your employment at Microsoft?

A: Roughly September of 2001.

Q: What was your first job with Microsoft?

A: Technical evangelist was the title. It always raises a few eyebrows. It was my job to help Novell and a variety of technology-oriented companies write network interfaces to work with Windows and DOS.

Q: What does that mean in layman's terms?

A: I help them support the Windows operating system, so whatever hardware/software interactions Windows needed to run successfully on customer, you know, equipment, if you will, we helped other third-party players build that software. So, for example, Novell had a very successful network operating system, and we helped them interface that, get the physical drivers, software drivers that made it work with Windows.

Q: Okay.

A: So whatever technical information they needed, whatever support they needed, we helped make that happen.

Q: So, was -- as a technical evangelist, would the software developer come to you and say, "We need help with some issue. Can you please provide us with help?" Or how

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would that work?

A: It could happen either way. They could come to us, which many people -- many software companies tried to do, and we were a pretty small staff at that time, but primarily we targeted what we thought were the important applications, important software that had to work with Windows.

So, as the product team said, for Windows, you know, to be successful, we need these industry players to work with us, and so, you know, primarily we'd go out after them or target them, and then they would, once that relationship was established, clearly they would keep coming back to us for more information. We need this. We need this. We need this.

Q: So, when you started as a technical evangelist, were you interacting directly with the independent software vendors?

A: I was.

Q: Okay. What were the dates of your -- approximate dates that you were a technical evangelist?

A: It's a hard question to specifically answer. I spent my first -- most of the first five years at Microsoft in what would be called a developer relations role. So, roughly the first year, I had specific customers, specific ISV's, software vendors, independent software vendors -- you've heard that term, I suppose -- that I had as accounts, if you

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will, to really work with to get their software delivered.

I spent the next four years primarily managing larger and larger groups of people, all working with independent software vendors or developers, as we called them, outside developers.

Q: Which specific vendors were --

A: Did I personally work with?

Q: Yes.

A: Boy --

Q: To the extent you know.

A: Somewhat limited with Novell in their -- purely their network operating systems part, a company called Banyan software, which is out of the Boston area, and then a number of other people that did network-oriented stuff, Ungerman Bass. I don't remember them, but they were companies that basically made this network thing work between Windows machines at that time.

Q: So, from approximately 1990, to sometime in, let's say, 1991, then, you were --

A: Roughly, yeah, somewhere in that time frame, maybe a year, maybe even less that I was on the job, I then began managing multiple evangelists.

Q: And what did that job entail?

A: As you can imagine, there were people that were working as I was in the network area. There were people working with

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the database vendors. There were people working with people -- with companies that were writing applications that you'd be more familiar with, like Lotus 123, WordPerfect. Borland had a whole variety of products.

Q: Okay. Lotus 123?

A: Yeah, Lotus 123, and I said Borland, and I said WordPerfect in there, but there were different classes of applications or software that was needed for Windows. So some of it was low-level networking things. Some of it was server oriented, with database products. Other portions of it were traditional end user applications, like word processing and spread sheets and e-mail clients, all kinds of things.

And so we had people -- I had people in each of these areas.

Q: Now, this group that you were managing, was that referred to as the developer relations group?

A: At that point, it was probably just called the ISV group or something, but it became the developer relations group. It took on that Moniker somewhere in that time frame.

Q: Okay. And that was sometimes referred to as the DRG?

A: DRG. Yeah, the DRG. Could be.

Q: You were the -- was your title at some point director of the DRG?

1310

A: Yeah, at some point. I don't remember when.

Q: Okay.

A: At that point, early on, my boss, Cameron Myhrvold, was maybe also considered, you know, the director of the DRG. Somewhere in there I became that. I don't remember exactly when.

Q: Do you recall approximately how many people reported to you when you were a director?

Roughly -- and that number changed dramatically. In '92, I would say it was about 10 to 15 people. In '93, it was probably in the range of 80 to a hundred. In '95, '96, it could have been up to about 7-, 800 people.

Q: What was the reason for the changes in the number of people in your group?

A: The first two years, it was primarily technical evangelists that worked for me, so, in '92, there was maybe eight or ten of us as technical evangelists. And these, again, are just real rough, ball-park numbers. In '93, it was in the range of 75 to a hundred. And then, beyond that, it was other groups that were reporting to me, developer marketing, a product offering and a team called MSDN.

And that was a very large team because, as our business grew with the software development community, we targeted five companies, we targeted a hundred companies, and all of a sudden we were working with millions of developers.

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And so we built tools and product offerings that would scale to those different customer bases.

Q: You mentioned MSDN. Could you explain what that is, please?

A: Msdn stands for Microsoft Developer Network, and it was a vehicle for delivering the information and content that we delivered one-on-one, hand -- you know, each evangelist delivered to a software company. It was a vehicle to take that information, package it up onto DVD's -- or CD's at that time, and to put it online so that, you know, millions of developers could get access to that same information.

So, it was really trying to get the information out as broadly as possible and to enable anybody to build a great Windows application.

Q: Could you -- when you talk about the information that you were delivering to developers --

A: Uh-huh.

Q: -- give some brief summary -- what did that information look like? What kind of information were developers -- were you giving to the developers?

A: There is no simple way to categorize the information we were giving to developers. We -- you know, on an individual basis, we would try to give them whatever we could figure out or they could figure out was needed. Sometimes that was

1312

software development kits. Sometimes that was documentation. Sometimes that was actually bringing them onto campus in a lab where we could work hand-in-hand. Sometimes that was access to a Windows developer that only knew the answer to that question.

You know, again, very broadly, whatever jointly, between them and us, we could determine would help them get a great application built. It was our job to dig that out of Microsoft. If you can imagine, at that time frame, nothing was pre-packaged in these great development kits that we have today. I mean, this was a new emerging market, and people were trying to do things that nobody had thought of, so we had to be real creative in terms of figuring out how to help them get it done.

Q: So, was your group actually writing any code itself or --

A: Yes, in the sense that we would write sample code to demonstrate for a software company how to do something. We didn't write Windows code. We did not write code for our customers, other than, you know, we might assist them while they were in the lab working on something, but it wasn't our job to write software. That was part of Windows.

Q: So, the sample code, would it be correct to say that, if there was a feature, say, in Windows that a developer could take advantage of, you would -- your group would write

1313

up some sample implementation of it to say, "Here's how you can -- here's how you can take advantage of this. Here's how you can work with a particular interface," or something.

Would that be a correct way --

A: Rough.

Q: -- to say that?

A: I'll try to wait until you're done. Roughly, between what we thought was capable of Windows, what the Windows team suggested as things you could do with Windows, or what we heard our customers, the software vendors, tell us they wanted to do, we would brainstorm ways to do that stuff, and, whenever it made sense, we would write sample code to showcase that capability, if you will. And generally that was when we thought there were maybe tens or hundreds of other developers that would want to do the same thing.

And that actually became a core capability, a core feature of the MSDN offering. We would pre-package on these disks or put online lots of sample code. And if you think about the evolution, we'd work with a few leading vendors to test these features and to make sure that they worked and they were exciting to them.

And, as we understood it better, we'd package it up in a way that hundreds, thousands and literally millions of developers could take that sample code and modify it to their application, but technically get the right implementation

1314

started with our sample code.

Q: Where did the DRG fit within Microsoft's corporate structure?

A: Well, it moved around a bit. Initially it was under -- I'm going to say it was under Steve Ballmer, when he ran the Windows team, and that would be 1990, '91. At some point, it moved under John Lazarus, who was marketing for Windows and worked for Bill. And it was just a -- he was someone that had bandwidth to have it underneath him.

And then, over a time, I think there was a period there where I worked for Paul Maritz, who ran all of Windows development in the '93, '94, '95 time frame. And then eventually it ended up under Roger Heinen, who ran the developer tools group, and I'm not sure where it went after '96 or '97. It moved around again.

It was a group unlike any others in the company in the sense it wasn't really a product team, but it was in the product area because it was very close to the engineering of Windows, so it could, sort of, sit anywhere from a lot of perspectives, because primarily either Cameron Myhrvold, when he was running it, or when I was running it, were very independent of the product teams.

Q: So, when you say it was close to engineering of Windows, what do you mean by that?

A: Well, we were taking out the new features of Windows,

1315

the programming interfaces of Windows that were going to be exposed to the software development community. Those interfaces were being written by the Windows development teams.

Q: Would it be be fair to say that one of your responsibilities was to try to get developers excited about writing to the Windows platform?

A: Absolutely.

Q: And why was that?

A: A very simple belief that, if you had the best applications on Windows, that would make Windows successful. Customers did not want to buy an operating system. They wanted to buy a series of applications that provided a lot of value for them, and most of the value of Windows is provided through the applications that it hosts and so the more and the better and the great and the exciting Windows applications generally promoted Windows itself.

Q: So, to get developers excited, like you said, about developing for Windows, you needed to communicate information about Microsoft's platform plans; is that correct?

A: That is correct. The process -- there were multiple steps in that process. From very early on, we'd share ideas or thinking about what the next version of Windows would provide for them in terms of programming interfaces, to build new applications.

1316

They'd give us lots of feedback on that. There would be an iteration where those interfaces might change. Then we would take those out, with a Beta release of Windows to these software developers with tools, software development tools, and let them start working on it, and we'd keep iterating.

When they would find things that work, you know, we'd say, "Hey, that's great. We'll keep moving in that area." If they didn't work, we would then take that back to the Windows team and say, "Fix this." or, "Is this right?" or, "Do we understand this?"

And it was a very iterative cycle that would take, you know, a lot of times two or three years until the Windows release that supported those interfaces, were made public.

Q: You referred to a Beta release. Can you explain what a Beta release is?

A: Beta release. It's very -- it's a very amorphous term. Before you release a piece of software, you have multiple builds of it, multiple versions, Beta versions of it, if you will, and they all have different goals and objectives. So, for the software developer community, we would get them something very early of the actual operating system, but they cared more about the programming interfaces, the software development kit that went on top of that, that was going to be hosted on top of that version of Windows. So that might

1317

be a developer Beta, if you will.

And there would actually be an Alpha or pre-Alpha. There would be lots of versions of software that would come out prior to a customer Beta, or an end-user Beta. So we'd have early Alpha releases or what we just called builds of Windows. A build is something -- is a version of software that is created every day out of development.

We take a build. At some point that would be called a Beta. At some point it would be called a customer Beta, you know, marketing Beta, all kinds of terms for various releases, pre-releases of a version of Windows.

Q: So, was it important to get this information, then, to developers before the final release of the Windows product?

A: Critical. And it happened multiple years before the final release, in most cases.

Q: Why was that important?

A: When Windows launches, you want to have the applications launch, so we obviously would need to get them the pre-releases of the operating system and the software development kits and the programming interfaces well in advance of the Windows release because it's going to take them 18 months, two years, to potentially create a new release of their existing Windows product that supports all these new capabilities.

Q: Was one of your goals to get -- when a new release of

1318

Windows would come out, was one of your goals to get developers outside of Microsoft to be taking advantage specifically of new features in Windows?

A: That was my job. That was job number 1. That's how I was reviewed by Bill Gates.

Q: That was actually -- my next question was just going to be, how did you define success in your group?

A: Just as you described, the quality of the new outside software vendors' applications that were available when that version of Windows launched.

Q: Did you have any interaction with applications developers within Microsoft, with the DRG?

A: Very limited. Our charter was all application vendors except Microsoft, and Microsoft, again, has lots of product teams. They have the Windows operating system, which is really our platform. And then there were lots of applications like Word and Office and PowerPoint and whatnot. It wasn't my job to evangelize the Microsoft applications team.

Q: You've mentioned certain I -- certain developers being bigger and more important developers, and I don't want to mischaracterize exactly how you said it, but something along those lines. Do you recall saying --

A: Yeah, I did say something like that. Again, maybe a little history is needed here. In the 1990 time frame, the

1319

number of Windows independent software vendors, ISV's, or developers, it's probably less than 50. And it was probably in the range of five to ten that were maybe 80 percent of the market share in terms of applications.

So those, generically, I called the bigger ones because, in terms of revenue, in terms of customers, in terms of product sales, in the '93, '94, '95 time frame, they were still, you know, very significant.

And so they obviously had a very targeted effort from my team to get their applications early, and what I'd call showcase or premier users of the new technology. It was a goal for us to have those early, large, independent software vendors to be the showcase accounts for new technology, new capabilities of Windows.

Q: Who were some of those showcase vendors, if you will?

A: At that point in, again, the '93, '94 time frame, it was clearly -- Lotus, I think, was number 1 and then probably WordPerfect. Borland had several products. Micrographics had products in the imaging -- image-editing area. There was a whole bunch more. I can't remember them. But those were the three or four biggest of the whole group, and there were probably another seven or eight that were maybe a half or a third or a fourth of the size of any of those.

Q: Exhibit Number 7 to your deposition appears to be an email from a Jeff Theil to several recepients, including you,

1320

with subject: Forward. WP scraps OS/2 version, November 18, 1993. Do you recall receiving this email?

A: No, I do not.

Q: Do you know who Jeff Theil was?

A: I'm not sure. I think he's probably part of the Windows team, but I don't know for sure.

Q: Do you recall becoming aware that, at some point, WordPerfect scrapped it's OS/2 version of software?

A: Yes.

Q: What do you recall about that?

A: They stopped doing it. You know, one of my objectives was to keep track of who was doing what, and at this point we wanted ISV's to build for Windows and not OS/2, so we would have kept track of this.

Q: Now, Mr. Theil writes, "I think this is a great example of how we Kill OS/2 by sucking up ISV bandwidth. If we do it right, the PDC, can nail -- can be the nail in OS/2's coffin."

Did you see, as one of your objectives, getting -- by getting ISV'S to focus on Microsoft technologies, that they could not develop or expend developer resources on other products?

A: I didn't look at it that way. I mean, clearly, if they were busy doing ours, they couldn't do the Mac, they couldn't do OS/2, they couldn't do Netware, they couldn't do anything

1321

else. But I also thought we had the compelling message. We had the compelling platform. We had the compelling consumer demand.

So, you know, sure, it's a zero-sum game. We only had so much cycles, but I didn't work that way. We worked to the way of, you know, let's get these guys to write great Windows applications.

Q: Mr. Henrich, you have been given what's been marked as Exhibit 8, a several-page long document with the production numbers, MS-PCA 1673786, through MS-PCA 1673792, the -- it appears to be a Microsoft internal memorandum from Brad Struss and yourself to Brad Chase. The subject: Chicago evangelism draft. And a date of January 29, 1994.

Do you recall writing this memorandum?

A: I do. Probably Brad probably wrote it, but I recall it, Brad Struss.

Q: Who is Brad Struss?

A: He worked for me at that time. He was responsible for Chicago evangelism.

Q: What was -- was this a document that was prepared in the ordinary course of your job duties at Microsoft?

A: No. This is special for Brad Chase because Brad's the V.P. of marketing and Brad liked things like this.

Q: But you prepared this as part of your job duties?

A: Oh, yes. Yes. It was summarizing all the stuff we were

1322

doing. Is this my handwriting on here, or is this somebody else's? Do you know?

Q: I don't know. I was going to ask you. Do you know whose handwriting this is?

A: Some of it looks like mine, and some of it doesn't.

Q. Do you know which handwriting --

A: Page 5 --

Q: -- is yours?

A: Or, let's see, 1, 2, 3 -- yeah, page 5 looks like my handwriting all over that page.

Q: And page 5, here, appears to be dealing with -- one of the bullets is, "Create marketing incentives to motivate ISV's to support Chicago and sim-ship. Launch exposure top ISV's September." And in all caps, in parentheses, "critical." Off to the left of that, "How do we close? ASAP."

Is that, I think, your --

A: I think so. I don't know if this is the final document or if this is -- you know, it says draft on here, so if Brad Struss had prepared this and gave it for me to review, I'm not clear on this.

It would seem weird to me that I would have all these edits on here -- a few edits at least that are mine before this was actually distributed.

Q: Who would this have been distributed to?

1323

A: I don't know. Brad Chase. Besides Brad Chase, I'm not sure.

Q: Do you recall what the purpose of the memo was?

A: To placate his politics. I don't -- I mean, it's the kind of thing that I would never -- I would never normally do, I mean, so this is the guy that's running marketing for Windows, and this could have been -- there were several periods where Brad Chase and Brad Silverberg were trying to acquire my division, my group, and so I may have been fending him off. I'm not sure.

Q: You may have been trying to fend off Brad Chase?

A: Correct.

Q: Why would that have been?

A: Very top level, Brad Silverberg and Brad Chase wanted DRG reporting to them, and I vigorously fought that, primarily because I no longer would have the independence to do what software developers needed. Brad Silverberg would have holed me up, put me in a cubical somewhere, and made every message go right through him.

Q: And how do you think that would have impacted your ability to to do your job?

A: It would have taken away my ability to do my job.

Q: Your job, as you saw it, was advocating on behalf of developers?

A: I felt like I had two core responsibilities: Number 1

1324

is to create third-party Windows applications that supported the new features and capabilities that we were building in Windows, i.e., drive the success of Windows through customers having lots of great Windows-based applications to choose from. Secondly, was a bond or a trust with these ISV's to really represent them, advocate for them within Microsoft.

It was a two-way street. We're asking them to do lots of things to help us, and, likewise, I'm trying to make sure that they get the things that they need to be successful.

Q: Could you turn to the second page of this memorandum, please. In the second paragraph, it states, "We can achieve DRG's ISV goals by getting a set of quality applications that exploit Chicago features, i.e., LFN's, shell extensibility, OLE2, PnP Event-aware, viewers, etc., and a huge number of compatible 32-bit applications with Win32S, Win32 on Chicago, or Win32 on Windows NT.".

What are LFN's.

A: Long file names.

Q: What is that, in lay person's terms?

A: We're probably all familiar with 8.3, so the old MS DOS format for file names. It could be eight characters long with a period and then a three-letter extension. Okay?

Windows 95 must have been the first version of Windows that allowed you to have a very friendly file name.

1325

It could be, you know, my favorite word, my favored document dot something else, so it was something longer than eight characters per line.

Q: And OLE2, what is that?

A: The second version of the OLE programming interfaces.

Q: The OLE that we talked about earlier?

A: Correct.

Q: What is a PnP Event-aware?

A: Plug-n-Play Event-aware, stick a new device -- you plug something into your computer and all of a sudden it recognizes that there is a new device there. So the event is new device. New device is plugged in. It tells the operating system, "I'm here." And the operating system says, "Oh, I recognize you. Tell me more about who you are." Plug-n-Play.

Q: Is this something that was new to Windows 95 or new to Chicago?

A: Correct. And this -- also, you know, I believe this is Brad Struss' list, not my list.

Q: Okay. And shell extensibility, what would that be referring to?

A: I think that's what we referred to earlier, I assume.

Q: So, when you say this is Brad Struss' list, these aren't necessarily the features that you saw as the most important or compelling features of Windows 95?

1326

A: To the best of my recollection, I would say OLE2 and a 32-bit interface were my number 1 and 2 priorities. Lots of other things were available, and for some vendors they were interesting, some they weren't. And, again, I'd reiterate, with Windows 95, we didn't provide a lot of new capabilities in the programming interfaces, so we were stretched to create interesting things.

Q: Was one of those interesting things shell extensibility?

A: Not in my mind. OLE2 was.

Q: Do you know if people in the DRG were talking to developers about shell extensibility capabilities of Windows 95?

A: I'm sure they were. I'm sure -- I mean, I have no reason to doubt that those were the things that were discussion points for every ISV.

Q: Could you turn to the next page, please. And there is a heading or a subheading saying Measuring Success. And then it lists five different -- five points, I guess, beginning 25 key applications shipping with Chicago, and ending with 1,000 applications shipping within six months.

We talked earlier -- at one point I had asked you about whether -- what your criteria was for defining success in your group. Is this a way or is this a set of criteria that you had developed for trying to measure success?

1327

A: Could be. I would -- from this document, I'd say it was probably more what Brad Chase wanted to have as his success criteria.

Q: Why do you say that?

A: We're writing to Brad, and we're keeping Brad, the vice-president of marketing, happy. But, again, those are the right kind of metrics.

Q: Exhibit 10 is a document with production -- memo with production numbers MS 7045839 through MS 7045842, and dated April 7, 1994, to WWSMN attendees from Doug Henrich, Re: DRG business plan.

Now, this memo -- have you had a chance to --

A: I recognize it, yeah.

Q: Okay.

A: I mean, it's a slight modification of the previous one.

Q: Do you recall something called a First Wave Program with respect to Chicago developers?

A: I do.

Q: What was the First Wave Program?

A: Very broadly, targetting the top or key independent software vendors to have great Windows 95 or Win32 applications available for Windows 95 shipping.

Q: Exhibit 11 is a three-page document, appears to be an email string, with production numbers MS-PCA 2405196 through

1328

true MS-PCA 2405198.

A: Okay.

Q: This appears to be an email string on which you are copied or the recipient -- or copied in a couple of instances, recipient in a couple of instances, and the top of the first page, you appear to be forwarding an email. The subject line is WordPerfect.

Do you recall this conversation?

A: I don't recall this email. I recall the topic.

Q: Can you describe what is going on.

A: WordPerfect was bought by Novell. Novell was considered a competitor by the Windows 95 team, and we were working very closely with WordPerfect from the DRG group, and the Chicago folks wanted to cut them off to early builds of Windows 95 because they saw them now as a competitor, being part of Novell.

Q: And you appear to be copied on this e-mail, subject: Forward. WordPerfect, from April 12, 1994 -- 19 -- excuse me, 1995 -- strike that -- 1994.

And the text of the message says, "The meeting with WordPerfect regarding FirstWave should happen this week. One of the key FirstWave benefits is access to interim builds. As it stands now, we will not be able to offer this to WordPerfect. This will be problematic first and foremost because it will hamper their ability to develop --" excuse

1329

me -- "to deliver a Chicago product shortly after Chicago ships, and we need to be able to justify why Borland and Lotus had access to interim builds as part of FirstWave but WordPerfect could not. I think this would probably be worthwhile discussing at your war meeting today."

Do you know what Mr. Struss is referring to here by a "war meeting"?

A: Sure. That's every Monday morning or Monday afternoon, or Tuesday morning, it's sometime a week where they just review all the thorny issues in the development problems they are having with Windows 95. So they triage bugs, whatever things they have to get done. They just call it a war meeting.

Q: Who would -- who would be attending these war meetings?

A: David Cole, John Ludwig, Dennis Adler, the key program managers for Windows 95, development managers and program managers. It's their meeting.

Q: Okay. And does this refresh your recollection as to whether or not WordPerfect was a FirstWave member?

A: Based on this -- I mean, I'm 99 percent sure they were, but based on Brad's comment here, he says they are.

THE COURT: Is that it?

MR. JOHNSON: That's it, Your Honor.

THE COURT: Do we time -- what's next?

MR. JOHNSON: We've actually got a 12-minute one, if

1330

we can get it up. It will be just about right.

THE COURT: Just about perfect. Twelve minutes.

MR. JOHNSON: This is portions of the deposition of Microsoft executive Steven Sinofsky. This one was taken on December 18, 2008, and it's about 12 minutes long.

THE VIDEO DEPOSITION OF STEVEN SINOFSKY WAS PLAYED AS

FOLLOWS:

Q: And could you state your name for the record, please.

A: My name is Steven Sinofsky. S-i-n-o-f-s-k-y.

Q: Okay. And can you just tell me what your jobs were in 1998?

A: I was in the Office team. I changed jobs four different times throughout Office, so I just don't remember what my titles were at specific times. I'm sorry. It's just been a long time ago.

Q: In any event, you were an executive within the Office group, depending on what level it was?

A: Well, I was an executive. One date I do know for sure is in December of 1998, I was promoted to vice-president, so that was when I became the executive of the Office team.

Q: Okay. And you had that vice-president job through at least 2001; is that right?

A: Correct.

Q: First some definitions. What was Ren?

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A: Ren was an internal name used to refer to a project that was under development in the email group. Today we would call it Outlook. At the time, Ren was the code -- the internal code word for that project, but I wouldn't say it was Outlook at the time. So, it underwent a significant metamorphosis over its course of its development, which I think was four or five years.

Q: Nineteen and 20 are on the right-hand side. You gave a quick description of what your job duties were. Maybe that will help you put things in context, and maybe it won't.

A: Right. That's what I thought. That's why I got confused because I did move -- in the summer of '94, I moved, so I wasn't in the Office team, as you said.

Q: Okay.

A: That's why -- that's why I got confused. You stated emphatically I was in the Office team in '94, and I agreed.

Q: No. I'm sorry. I apologize for that.

A: No. So, no, I was still working for Bill as his technical assistant to the chairman in '94, and so that's why this now makes sense to me.

Q: Fair enough. So, for the -- your responses earlier, when you weren't sure what your job was, and I said I thought up were a member of the Office team, you weren't. You were a technical advisor?

A: Technical assistant, yes, and although vaguely unsure

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of what my job was, and the timing, I think I'd know better than you.

Q: Okay. Let's go with Exhibit 18. It's FL AG 0047255 through 323. And just take a second and tell me if you recall this document.

A: It's a very long document, and, no, I don't rerecall it at all that well.

Q: The front page says, "Contact Stevesi." Was that an alias that you used?

A: Yeah. I still do.

Q: And then there's a list of authors. All appears to, again, be by aliases; is that right?

A: Correct.

Q: And did you write this document?

A: No.

Q: Did you oversee the writing of this document?

A: I think you could say I was -- I aggregated it.

Q: Okay. I wouldn't have thought to say it that way, but thank you. I do have a few questions about it. On the second page, one, two, three, four, five, fifth paragraph, last sentence:

"We will integrate this into Ren further in Office '96. Progressing through Office '98, we will make document management more full-featured and leverage the key operating system storage technologies."

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Do you see that?

A: Yes.

Q: And do you recall an effort to make document more full-featured in the office productivity suite?

A: Well, I didn't have responsibility for it, but we had a separate group to do document management, so presumably it would become more full-featured each iteration of the product cycle.

Q: And what does that mean, "document management"?

A: Well, the industry term for document management is -- means the capabilities for storing and retrieving files, much like you use at a law firm to find documents, and that's the industry term. And so we had a group that did features along those lines that we referred to, apparently, as the document management group.

Q: Okay. And do you recall what the reference to the "key operating system storage technologies" refers to?

A: I don't. It doesn't seem to refer to anything specifically, so my guess is, it refers to the evolution of the operating system.

Q: Okay. Second paragraph after Communicating Between Users and Workgroups. It says, "Leveraging the significant messaging infrastructures is a key component of our workgroup strategy."

A: Yes.

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Q: What was the workgroup strategy, as you recall it?

A: I think workgroup strategy means not a specific strategy, but the -- how does -- how do applications work when you can assume -- remember our discussion earlier that computers didn't have networks and things like that, so what would happen if, instead of giving copies of files to people over with floppy disks, how would the use of, you know, Excel and PowerPoint change if you had them all connected by a network.

And so we often referred to that as the workgroup strategy because, back then, networks only connected to the people that were close by.

Q: Okay. And what was the significant messaging infrastructures?

A: Well, email was just becoming a thing that people had, and so we referred to customers that had email as having messaging infrastructure.

Q: Okay.

A: And so something as simple today that we don't think twice about, like mailing an attachment, was a huge invention, and so how you did that, how you should surface it and things were big deals to customers.

Q: Was the exchange product, was that also part of the work group strategy?

A: No, I would call exchange part of the messaging

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infrastructure.

Q: If you could turn to what's page 48, there is a section headed Document Management (Stevebr). Do you see that?

A: Yes.

Q: Who is Steve BR?

A: Steve Brandli, B-r-a-n-d-l-i, was the person on the PowerPoint slide earlier.

Q: So he was the person responsible for the document management group at the time?

A: Yes.

Q: I might as well ask. The second paragraph says, "With the WordPerfect/SoftSolutions merger, we can expect document management to be integrated into the Perfect Suite line more so than it already is. Lotus is in a position to exploit Notes as its document management store and has already taken steps to do so. Microsoft is behind in this category, only now responding to WordPerfect's Quick Finder technology."

And it goes on. Do you have any recollection of discussions about Microsoft being behind in the document management category and responding to WordPerfect's Quick Finder technology?

A: I don't recall any specific discussions, but you can just read -- what you just read makes it perfectly clear what the status was at the time.

Q: Okay. And you don't have any recollection of any

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discussions, other than what you are reading; is that right?

A: I don't have any specific discussions in mind, no.

Q: Okay. And if you go to page 57, under the heading Novell WordPerfect, it says, "The current suite of applications in PerfectOffice are world class, and there is reason for us to follow the progress of this suite very carefully, especially given the strength of Novell's networking and sales force."

Do you see that?

A: Yes.

Q: Do you recall any discussions about the suite of -- strike that. Do you know what PerfectOffice was?

A: PerfectOffice was the current suite of applications from Novell WordPerfect.

Q: Okay. And do you recall any discussions about the quality of PerfectOffice in that time period?

A: Well, we obviously would have had many conversations about the feature set, the quality and the suite. It was a competitor.

Q: Okay. And is it your recollection that, at the time in -- whenever this document was written?

A: March.

Q: -- March of '95, that the view within Microsoft was that the suite of applications in PerfectOffice was world class?

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A: Well, the document certainly says that.

Q: Do you have any recollection beyond what the document says?

A: No.

Q: Do you have any recollection -- did you have any responsibility for following the progress of the PerfectOffice suite?

A: Well, yes, I did, and, at the time, my responsibility would have been to track the features of PerfectOffice that were the same across all the applications.

Q: Okay. The shared code?

A: Well, it didn't have to be shared code. The features could have been the same without sharing code.

Q: You're right. And what features were those, as you recall?

A: I actually don't remember any -- any specific features. I just don't.

Q: Okay. It did or did not include the file open dialog?

A: Well, it -- my responsibility didn't -- the file open dialog we had carved out as the special group, and so they -- I didn't manage them. They were sort of a peer -- a peer group during this time frame.

Q: Okay. So that's an exception to your responsibility for viewing whatever was consistent across the PerfectOffice

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suite; is that right?

A: Correct, which is why, when you look at this memo, you see that one of the key authors would have been Steve Brandli, so each of the key authors would have represented people contributing to their part of the responsibility and expertise to the overall framework. And, like I said, that's why I used the phrase "aggregate," like I brought it together. I didn't edit it. I didn't take responsibility for the whole document.

Q: Okay. Who was responsible for the marketing decisions for Office 95 and the release of Office 95 for Windows 95?

A: We had a series of leadership changes during the course of development, so there were different decisions made at different times. You know, the -- it was -- at one point, it was Hank Vigil, who we described earlier, and then I don't recall who took over. I don't recall the successions there because there were several people, several leadership changes that happened, and the organization also changed over time within Office marketing, and since I didn't have responsibility, it was hard to track.

Q: Okay. Do you recall who was responsible for making the decision to ship Office 95 simultaneously with Windows 95?

A: I -- I don't -- I think that -- no. I don't recall who made that decision. It was always the plan, from my perspective. Certainly, from the time that I joined the

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Office team, that was the plan.

Q: Okay. Were you involved that decision at all?

A: No, not that.

THE COURT: All right.

MR. JOHNSON: Very good, Your Honor.

THE COURT: Very good. See everybody at 8:00 o'clock in the morning. Have a nice afternoon, nice evening, and I'll stay her with counsel. There may be one issue I have to address.

I think we're pretty much on schedule.

(Jury leaves the courtroom.)

Please be seated. And what do we have tomorrow?

MR. JOHNSON: Your Honor, we'll be bringing Mr. Alepin in. I understand that Mr. Schmidtlein -- has he left?

THE COURT: He's gone.

MR. JOHNSON: And Mr. Holley have spoken, and I don't think we have any issues to discuss prior to that, based on that conversation. Is that right, Steve?

MR. HOLLEY: I think that's fair, Your Honor. I have spoken to Mr. Schmidtlein, and my understanding is that Mr. Alepin is not going to talk about the printing allegations as well as the licensing allegations. He's not going to talk about things like Kerberos tickets and various other --

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THE COURT REPORTER: Things like what?

MR. HOLLEY: Kerberos, K-e-r-b-e-r-o-s, is the dog that guards the gates of Hell. But the -- we're not going to talk about all those things, and we agreed that if he ventured off into other areas that I thought were outside the scope, I could object at the time.

THE COURT: Sure. I just -- I really think that's helpful. And then tell Mr. Schmidtlein. I'm sure he could go figure it out anyway. The only general guidelines that I would have, unless it's inconsistent with what you all have agreed upon, would be I don't want Mr. Alepin to say what he thinks Mr. Gates was thinking.

On the other hand, as both sides have done and I commend you for it, for not objecting, I think it's helpful for the jury to know the context in which testimony is being given. So both of you, from-time-to-time, have shown memos. Mr. Tulchin has shown memos from Microsoft, you know, to Novell witnesses, and vise versa. You can assess, Mr. Johnson, which assesses the context of the testimony, so I don't think that the experts should be opining about what's in somebody else's mind. I don't think that they should be the equivalent of a summation witness essentially making closing arguments, as you guys are good.

On the other hand, I certainly -- and I'm sure it's consistent with the other guideline, and I certainly think

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it's fair, as you all have done so far, to put something up so the jury can say, "Oh, this is what the testimony is about and why it's being testified to."

That's really the only guidelines, and I'm sure that's consistent with what you have talked to Mr. Schmidtlein about.

MR. TULCHIN: That's correct, Your Honor, and I guess the only other point that I would make is that, as I understand it now, we have heard the last of Novell's live fact witnesses. And there may be other tapes coming in which would have facts in it, and we also have facts in findings of fact, but I'm hoping that we are not going to have experts try to augment a factual record by telling the jury facts that they haven't otherwise heard. That does not seem appropriate to us, Your Honor.

THE COURT: That would be problematic.

MR. JOHNSON: Well, Your Honor, obviously there are facts that we have yet to get in.

THE COURT: I know, but by the time the experts testify --

MR. JOHNSON: Mr. Taskier --

THE COURT: -- we still --

MR. JOHNSON: Mr. Taskier --

THE COURT REPORTER: Excuse me. One at a time, please.

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MR. JOHNSON: I'm sorry. Mr. Taskier says findings agreed. We have waived other things, so, certainly, with respect to the expert testimony, there will be other things we are talking about, and with respect to your prior comment, yes, we understand that. And we understand the purpose of showing something in context, and we understand that the experts are not to gaze into the mind of Mr. Gates and try to suggest what lurks, there.

THE COURT: You can.

MR. JOHNSON: Thank you, Your Honor.

MR. HOLLEY: Thank you, Your Honor.

THE COURT: All right. Anything else? You're making it awful easy for me. Okay.

MR. JOHNSON: We're trying, Your Honor.

THE COURT: I don't blame you. Okay. I guess that's it.

MR. TULCHIN: Thank you, Your Honor.

MR. JOHNSON: Thank you, Your Honor.

THE COURT: One other thing. It's not a big deal. I mean, I think it's not a big deal at all. An exhibit came in that wasn't objected to. I just want to make sure that I have not given a contrary rule. It's a minor thing. I think it was a list of people who were discharged or something from WordPerfect, which I thought I said could come in for identification but it wasn't going to come into evidence. I

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think it actually came into evidence. It's the only thing that's happened that I didn't really expect. It's not a big deal at all.

MR. JOHNSON: Well, in fact, Your Honor --

MR. TULCHIN: It's a different document.

MR. JOHNSON: It is the same document. It has the list of all the employees. Now that I think of it, David, you're right. That document that came in was all right, Your Honor.

THE COURT: All right. Fine.

MR. JOHNSON: There was another one that had to deal with docking people's pay.

THE COURT: That one didn't come in.

MR. JOHNSON: That's right.

MR. TULCHIN: Correct, Your Honor.

THE COURT: Thank you.

MR. TULCHIN: Thank you, Judge.

(Whereupon the proceedings were concluded for the day.)

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