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Microsoft's Reply to Novell's Opposition to Microsoft's Motion for Judgment as Matter of Law ~ pj
Monday, April 02 2012 @ 08:33 AM EDT

Microsoft is trying to avoid a second trial with Novell in the WordPerfect antitrust case that Novell brought against it, after the first trial ended in a mistrial back in December of 2011. It filed a motion for judgment as a matter of law at the end of evidence, but the case went to the jury, which came close to ruling against Microsoft.

After the trial, Microsoft filed a renewed motion for judgment as a matter of law in the hopes of avoiding a second trial. Novell opposed the motion, naturally, and now Microsoft has filed its Reply [PDF] to Novell's opposition:

In its brief in opposition to Microsoft’s renewed motion for judgment as a matter of law, Novell ignores many of the most important facts in this case and “responds” to various assertions that Microsoft has never made. Novell’s brief makes clear that it is time to dispose of this meritless action.
Meritless? I suggest you put this document up side by side with Novell's opposition, and see if you agree.

Here are the filings, and note that the exhibits are huge:

03/30/2012 - 503 - REPLY to Response to Motion re 396 MOTION for Judgment as a Matter of Law (Renewed) filed by Defendant Microsoft. (Attachments: # 1 Appendix Appendix, # 2 Exhibit Exhibits Part 1, # 3 Exhibit Exhibits Part 2, # 4 Exhibit Exhibits Part 3)(Jardine, James) (Entered: 03/30/2012)

In the Microsoft Reply, it complains that Novell is introducing new materials:
In order to defeat Microsoft’s motion for judgment as a matter of law, Novell was required to point to substantial trial evidence in support of each element of its claim. Despite its length, Novell’s brief refers to precious little evidence and instead offers far-fetched arguments that cannot overcome the overwhelming showing made by Microsoft in support of its motion. Indeed, Novell goes so far as to make highly improper—and false—arguments about the jury deliberations and to rely on other material outside the trial record. These include: (i) nine documents never admitted into evidence, including a series of letters that Novell did not even offer into evidence,2 and (ii) a so-called “proffer” consisting of assertions made by Novell’s lawyers about what Gary Gibb might have said in rebuttal, which is not a proper “proffer” at all.3

It remains truly stunning that there are no contemporaneous documents showing that (a) anyone at Novell believed that the October 3 Decision caused harm to Novell’s efforts to develop applications for Windows 95, (b) anyone at the company complained to Microsoft about the October 3 Decision or (c) any Novell software developer (in the shared code group or elsewhere) told management that Microsoft’s conduct had caused a problem or urged management to take any steps to address any such problem.

2 The letters are DX 215A, 215B, 215C, 215D, 215E, 215F and 215G. The other two documents never admitted into evidence are PX 317 and PX 320. (See Novell Br. at 69.)

3 Novell’s brief also relies on 42 documents that were never used with a witness or even mentioned during Novell’s summation. In Petit v. City of Chicago, 239 F. Supp. 2d 761, 781 (N.D. Ill. 2002), the court found on a Rule 50(b) motion that documents that were in evidence “but for which no or little related testimony was presented at trial” are “not information that can be considered to have been before the jury.” The same should apply here, where Novell did not use or refer to any of the following 42 documents during the eight weeks of trial: PXs 31, 44, 50, 56, 77, 88, 90, 91, 102, 117, 125, 127, 140, 148, 168, 184, 193, 198, 207, 239, 241, 248, 317, 320, 368, 371, 391, 395, 400, 410, 414, 488, 489, 490, 492, 504, 515, 531 and 560, and DXs 168, 205 and 370. Many of these documents, like the documents in Petit, are technical in nature and require—or would at least benefit from—explanation by a trial witness. 239 F. Supp. 2d at 781.

No contemporaneous documents showing Novell complained? Is that honest?

Novell doesn't think so, and in its filing it lists some evidence that Novell complained about Microsoft's behavior at the time. If you are wondering which party is right, I suggest you go through and read all the exhibits Novell attached to its opposition. For one thing, Microsoft surely knows that Novell complained to the Department of Justice at the time, and the then-CEO wrote more than once to Bill Gates about it, Novell points out, but Gates refused to discuss it. The judge, who certainly seemed to many to be favoring Microsoft, wouldn't let much of the evidence be shown to the jury; that doesn't make it non-existent.

Here's a filing [PDF] by Microsoft during the first trial, showing a bit of the effort it put forth to try to keep the jury from knowing about the DOJ's successful litigation against Microsoft for antitrust violations, so it certainly knew it happened. I'll show you now how Microsoft argues at trial. But you have to pay attention to details very closely. I assume Microsoft hopes juries don't and that the judge won't either.

Novell was arguing that it should be allowed to show the jury materials that it had sent to the DOJ in 1995, but the judge had said it mostly couldn't, feeling that it would be prejudicial. But then, in its opening statement, Microsoft opened the door to that line of evidence when its lawyer told the jury that Novell would not be presenting any "contemporaneous document written in 1994 or 1995, that will indicate that they complained to Microsoft about the decision." Note the dates, please.

Microsoft made it sound like there weren't any complaints, but there were. How can it do so with a straight face? It states, on page 5 that its lawyer accurately stated that "[a]t the time, Novell never complained about Mr. Gates' decision to withdraw the name space extension API's. That's October of 1994". Get it? They complained to the DOJ in 1995, not 1994. Blech. Accurate but misleading.

It must be infuriating to be Novell's lawyers and hear statements like that. But then, we are used to things like Microsoft's old "Get the Facts" campaigns, where essentially the same device was used.

Novell lists specific points in the trial where the evidence was mentioned during the trial. Note all the evidence Novell cites just in footnote 33:

33 Microsoft contends that there is no evidence that Novell complained about Microsoft's withdrawal of support for the namespace extension APIs. As the Court is aware, there is substantial evidence to the contrary, although much of it was not permitted to be shown to the jury. See Novell's Mot. to Overrule Microsoft Objs. to Docs. Concerning Commc'ns with DOJ (Oct. 23, 2011) (Dkt. # 247); Novell's Letter to the Court regarding Frankenberg/Gates Correspondence (Nov. 20, 2011) (Dkt. # 306).

First, Novell complained to the Department of Justice ("DOJ") about Microsoft's actions. See, e.g., PX 317 (Ex. to Dkt. # 247); PX 320 (Ex. to Dkt. # 247). For example, a July 1995 email prepared by the head of development for Novell's Business Applications Division lists several issues that Novell planned to raise with DOJ, including that "MS removed the ability to hook into the Explorer. That is why we are doing our Open Dialog/Name space browser from scratch." PX 317 at NOV 00516407. The same document also references Novell's difficulty in tying QuickFinder into the Windows 95 shell subsequent to Microsoft's de-documentation of the namespace extension APIs. Id. Similarly, another July 1995 email between Novell's in-house lawyers described several issues, including de-documentation of the namespace extension APIs, to be raised with DOJ during a conference call that same day. PX 320.

Mr. Frankenberg also complained directly to Mr. Gates about undocumented APIs, although Mr. Gates rebuffed Mr. Frankenberg's entreaties for discussion. Tr. 1029:12-1030:3, 1241:17-1242:9 (Frankenberg). Documentary evidence — in the form of letters — corroborates Mr. Frankenberg's testimony. Although these letters were not admitted at trial, they were raised during oral argument on Microsoft's initial Rule 50 motion and provided to the Court at its request. Tr. 2682:11-22; Novell's Letter to the Court regarding Frankenberg/Gates Correspondence (Dkt. # 306). Microsoft subsequently withdrew its designation of those documents as exhibits. See Microsoft Letter Withdrawing Defendant's Exhibits 215A Through 215G (Nov. 29, 2011) (attached as Ex. D). The first salient letter from Mr. Frankenberg to Mr. Gates, dated June 23, 1995, noted that "It is [Novell's] view that Microsoft's OS's contain undocumented calls, features, and other interfaces that are made available to its own applications developers to give competitive advantages to its applications products." DX 215D at DB 0041 (Ex. to Dkt. # 306). Nonetheless, Mr. Gates refused to acknowledge the issue in his July 1995 response. See DX 215E at 3 (Ex. to Dkt. # 306). Mr. Frankenberg again raised the point in August 1995, and again, Mr. Gates refused to address the issue in his response. DX 215F (Ex. to Dkt. # 306). Knowing that such documents exist, it is disingenuous for Microsoft to argue that Novell remained silent.

And yet, here comes Microsoft once again, still saying it. Well, notice all the dates? 1995. So the lawyer was accurate in saying nobody complained in 1994, even though the decision came near the end of 1994. It's true, but it's misleading. Like a used car salesman.

Microsoft is constrained, in that this is a renewed motion, meaning it should be limited to whatever grounds it raised in the original motion filed during the trial, Novell argues, but Microsoft is trying to relitigate issues already decided and not in the first motion:

A. Microsoft Cannot Now Raise Any Grounds For Judgment As A Matter Of Law That Were Not Raised In Its Rule 50(a) Motion Before The Case Was Submitted To The Jury

Microsoft is precluded from asserting any grounds for judgment as a matter of law in the present motion that were not raised in its Rule 50(a) motion before the case was submitted to the jury. The present motion is a renewal, pursuant to Fed. R. Civ. P. 50(b), of the motion for judgment as a matter of law filed by Microsoft pursuant to Fed. R. Civ. P. 50(a) before the submission of the case to the jury. "Because the Rule 50(b) motion is only a renewal of the preverdict [Rule 50(a)] motion, it can be granted only on grounds advanced in the preverdict motion." Advisory Committee Notes to 2006 Amendment to Fed. R. Civ. P. 50. "[A] renewed motion under Rule 50(b) cannot assert grounds for relief not asserted in the original [Rule 50(a)] motion." Marshall, 474 F.3d at 738-39. "'[A] posttrial motion for judgment as a matter of law can properly be made only if, and to the extent that, such a motion specifying the same grounds was made prior to the submission of the case to the jury.'" Id. at 739 (citation omitted). This rule "'"protect[s] the Seventh Amendment right to trial by jury, and ensur[es] that the opposing party has enough notice of the alleged error to permit an attempt to cure it before resting."'" Id. (citations omitted). Thus, the failure to raise an issue in a Rule 50(a) motion precludes the defendant from raising the issue in its Rule 50(b) motion, even if the same issue was raised in the defendant's answer, or in a summary judgment motion. Therefore, by not raising in its Rule 50(a) motion its current arguments that Novell sold its claim to Caldera in the Asset Purchase Agreement, that Novell's claim (which includes allegations relating to PerfectOffice) is barred by the NetWare settlement agreement, and that Novell's claim is barred by the statute of limitations, Microsoft has waived these grounds and is barred from raising them in its renewed motion for judgment as a matter of law pursuant to Rule 50(b).

Here's [PDF] Microsoft's memorandum in support of its initial motion for judgment as a matter of law, by the way, in case you want to check to see if Microsoft is playing fair or not. Hint: Note on page 15 of Microsoft's own memorandum, it states clearly that the Court of Appeals had ruled that Novell did *not* sell its claims to Caldera. Yet here they are, saying that it did.

By the way, I have had a bit of time to look through the exhibits to Novell's opposition, and we get to see the WordPerfect-Novell agreement. I have added it to the Novell section on Groklaw's permanent Contracts page. The Agreement and Plan of Reorganization, dated March 21, 1994, is in seven parts, all PDFs:

However, my favorite exhibit is this one, Appendix 225 [PDF] or this part of one, from a Scott Henson email dated October 12, 1994 to the Microsoft troops, explaining how they should spin the change in the Namespace Extension APIs to everyone outside the company:

Microsoft Confidential


As we covered at our meeting last Friday, we are faced with the challenge of going to our ISVs and telling them about BillG's recent decision to return the namespace extension API's to their original system-level status (notice the wording - Let's try not to use the word *undocumented* or private API's. This has a negative connotation to most ISVs). This email will hopefully provide you with the necessary information you will need to communicate the changes and the justifications to the technical contacts at our FirstWave (and eventually all) companies. The objective is to call ALL of the ISV's by the end of the day today (yes this is ambitious but let's try!). After you have called please send me a one paragraph summary of the conversation with the ISV. We would like to build a press reference list - so if you feel the conversation went well ask the ISV if they would be willing to be used as a press reference. In addition, it is very important that we are able to summarize the impact of this decision for upper management. One last point is that if there is anything we have missed in this document we want to be sure and cover it in subsequent phone calls.


We have changed the status of the API's which allow objects to be represented in the explorer as if they were a part of the Windows 95 namespace. You have most likely seen this kind of functionality demonstrated with the InfoCenter and with Marvel (PLEASE DO NOT MENTION MARVEL IN ANY OF YOUR CONVERSATIONS). These API's return to their original status of becoming programmatic [unclear] for system-level objects such as the Printers Folder, Fonts Folder, Control Panel, Wastebasket, Briefcase, and Remote Access to the Windows 95 namespace. Applications that have architected themselves to achieve this functionality need to remove themselves from the system and if they wish to implement similar views, to do it using the common controls without the explicit use of these system-only APIs....

Remember the number one question will be, "Why have you decided to do this?" The answer is: Because they (the APIs) make it very difficult to support long-term. We don't want to send ISVs down a dead-end path.

So that was the party line to be followed, but just from the tone, does that sound like business as usual to you? That the APIs were "irrelevant" to word processing programs and useful only for email programs, which is what Bill Gates reportedly testified? That's what Microsoft today is claiming, that everyone knows changes are made in software development. But if it were commonplace to do what Microsoft did, there'd be no need for press releases and PR spin, would there, or urgent phone calls all in one day with reports on reactions to be funnelled to the guy coordinating this effort? Novell writes this in its Opposition about the game plan's success:
The third form of deception was Microsoft's cover-up following Mr. Gates' decision to de-document the namespace extension APIs. Novell told Microsoft prior to October 3, 1994 that there would be "hell to pay in the press" if Microsoft changed the namespace extension APIs. PX 215 at MX 6109494. And Mr. Silverberg informed Mr. Gates two days after his decision that there would be a "firestorm of protest" from ISVs who were using the namespace extension APIs, including WordPerfect, Lotus, Symantec, and Oracle: "These companies will not be bashful about expressing their displeasure." PX 220 at MX 5103185. Mr. Silverberg predicted


that Mr. Gates' decision would play out on "page one of the weeklies," and would "lead to calls for the DOJ to investigate." Id.

DRG was tasked with avoiding these consequences at all costs. Telling ISVs the truth — that Mr. Gates had de-documented the namespace extension APIs to give Office a real advantage — was not an option. Fearing what would happen "if/when the press gets wind of this," DRG carefully prepared a script designed to deceive ISVs and the press about why Microsoft was withdrawing support for the namespace extension APIs:

We are faced with the challenge of going to our ISVs and telling them about BillG's recent decision to return the namespace extensions to their original system-level status (notice the wording — Let's try not to use the word "undocumented" or private APIs. This has a negative connotation to most ISVs).

PX 225 at MX 6055840.30

DRG's script was designed to avoid an adverse press reaction. For example, Mr. Struss emphasized that DRG should work on building a list of ISVs for press references in case the press caught wind of Mr. Gates' decision. Id. Indeed, Microsoft hoped to forestall premature press coverage by "stressing to ISVs the confidentiality of this" and emphasizing that their conversations were "obviously covered by [a] mutual non-disclosure agreement." Id. at MX 6055840-41. The script also instructed ISVs to keep Mr. Gates' decision "close to their chests" and requested that they "not post any questions about this on Compuserve" in an effort to keep the decision confidential. Id. at MX 6055842.

DRG's script was also designed to mislead ISVs about the real reasons for Mr. Gates' decision. The script emphasized that "the number one question [from ISVs] will be: 'Why have


you decided to do this?' The answer is: Because they (the APIs) make it very difficult to support long-term. We don't want to send ISVs down a dead-end path." Id. at MX 6055841. DRG was instructed to "emphasize this part very strongly." Id. at MX 6055842. Contrary to what ISVs were told, there was nothing "dead-end" about the namespace extension APIs: the APIs were never changed and were never removed from Windows 95 or future versions of Windows. Id. at MX 6055841. Similarly, ISVs were told that Microsoft's own applications would be "required to stop" using the APIs. Id. Yet Microsoft continued to use the namespace extension APIs in its applications and in Windows 95 itself. To avoid this issue, the script instructed "PLEASE DO NOT MENTION MARVEL31 IN ANY OF YOUR CONVERSATIONS." Id. at MX 6055840.

Microsoft also misled ISVs with pretextual technical justifications. The first reason Microsoft gave to ISVs for de-documenting the namespace extension APIs was "compatibility." Id. at MX 6055843. However, the unrebutted evidence is that prior to Mr. Gates' decision, the namespace extension APIs ran on Windows NT and "there was no remaining concern about compatibility." Tr. 3825:4-7, 3826:12-18 (Nakajima); Tr. 3513:12-18 (Muglia). The second reason given to ISVs was "system robustness." PX 225 at MX 6055843. Notwithstanding that Mr. Gates did not mention robustness in his October 3, 1994 email, to the extent robustness was an issue it was resolved within a month of Mr. Gates' decision and many months before the release of Windows 95. Tr. 3837:16-24 (Nakajima); Tr. 3525:25-3626:5 (Muglia); Tr. 4369:23-4370:2 (Belfiore). The third reason given to ISVs was "ship schedule," which was reminiscent of the excuse conjured at the Hood Canal retreat: "we couldn't get it done in time." PX 225 at MX 6055843; PX 51 at MS-PCA 2535292. In fact, the namespace extension APIs were "essentially done" in early 1994 after "many months of tuning," and no changes were made to them through their republication in 1996. PX 139; PX 142. Finally, Microsoft attempted to persuade ISVs that Microsoft would provide "equivalent visual functionality" that would give ISVs the "same look and feel" as the namespace extension functionality. PX 225 at MX 6055843. In reality, all Microsoft provided was "window dressing," Tr. 348:12-349:18 (Harral), which Marvel did not use.

Microsoft's deception was a great success. There was no "firestorm of protest" or "hell to pay in the press" for Microsoft. Instead, Novell and other ISVs reasonably believed Microsoft when it warned ISVs that the namespace extension APIs may stop working "in future releases of Windows 95 (or even between interim beta builds)," and that ISVs that chose to use the APIs would "be completely at their own risk." PX 225 at MX 6055844. For a few months, Novell continued to ask for more information about the namespace extension APIs,32 but, as described below, Microsoft effectively foreclosed Novell's ability to implement them.

That left, Novell says, not enough time to get ready for the release of Windows 95, no matter what it did next. Meanwhile, Microsoft now claims that Novell was "fine with it", even though at the time of this email, it had no idea the full implications of Gates's decision and last-minute switch.

So, what do you think? Does this seem like a meritless case to you?

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