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Novell v. MS Trial Transcripts - Day 3, Oct. 19, 2011 ~ pj
Monday, June 04 2012 @ 03:47 AM EDT

Here is the transcript from the third day of the Novell v. Microsoft antitrust trial. So, that makes it Wednesday, October 19, 2011. This is the day that Novell opened with the videotape of Bill Gates' 2009 depositions and then followed with the deposition of Brad Silverberg.

Neither the Gates or the Silverberg deposition was transcribed in this trial for this transcript, as they had transcripts already. Here is a transcript [PDF] of the Bill Gates depositions (67 pages). And here's Silverberg's [PDF, 37 pages].

You know what's fascinating? Mr. Gates is so rude. He learned very little from his deposition disaster in the US v. Microsoft case. I think perhaps David Boies has gotten too much credit for making Mr. Gates look bad in that deposition. Gates has the ability to achieve that all by himself, judging from this performance. Either that or Novell's lawyer is every bit as good as Mr. Boies. If anyone can do the depositions as text, I'd like to add them to our collection. Leave off the line numbers, if possible.

But before the deposition videos, there was some discussion about two motions filed by Novell the night before asking for a curative instruction to the jury because of a couple of things Microsoft said in its opening statement. First, there was a Motion [PDF] for a Curative Instruction Regarding Microsoft's Misstatement of the Court's Preliminary Jury Instruction [memorandum in support] and then the second was a motion [PDF] for a Curative Instruction Regarding Date of Case Filing [memorandum in support].

And the judge decided that rather than reading the Findings of Fact from the US v. Microsoft litigation all at once, Novell can use it as "filler", reading bits and pieces in between testimony of live witnesses. So that happens after the Gates video.

The Gates deposition lasted over two days, the first day on March 4, 2009 and the second on May 19, 2009, and Novell plays the first portion, which lasts an hour and 52 minutes, and then the second lasts for just a little over an hour. Then they played the deposition of Brad Silverberg, taken back in January of 2009, which lasted an hour and half, so they were not able to play it all today.

After the jury left for the day, Novell's motion for a curative instruction was argued, and the judge granted the motion, over Microsoft's objection.

The issue was Microsoft saying to the jury that Novell waited over a decade to file this case. Novell pointed out that under the law, a company is allowed to wait until a government case against the same defendant is complete before proceeding. Novell also pointed out that Microsoft didn't want the jury to be told that there was a government antitrust case against Microsoft, so they don't even know that the Findings of Fact they are listening to come from that case. So for Microsoft to tell the jury that Novell waited so long to bring this action was prejudicial to Novell, not only before the jury but in the media, which picked up on that statement by Microsoft. So Novell asked for a jury instruction:

The law is the law here, and under the law Novell was absolutely entitled to wait. There are good policy reasons that allow companies to wait to bring their cases after the government's case is concluded. Microsoft spent years and years and years fighting relevant market and monopoly power. We don't have to re-go over those fights and re-fight those wars because of the government case. That is part of the benefits and that was part of the policy judgment. They may not like the policy judgment that allows plaintiffs to wait and bring their suits after a government case, but it is entirely appropriate. Exercising rights that we are permitted under the Clayton Act, and for them to get up and argue that somehow that means that our claims don't have merit, that would undercut the whole purpose of the statute. How can we take advantage of the rights afforded to us under the statute, if they are allowed to get up without any knowledge being given to the jury, any instruction, anything about the government case, and say, gosh, I don't want them to know about the government case, and with all of that for them to get up and begin firing these bows and arrows at us saying, oh, this case must be bogus because you waited ten years is entirely inappropriate. We are just asking for an instruction.
That was one issue. Here's Novell's memorandum in support of its motion regarding the jury instruction on Microsoft saying Novell waited a long time to sue, minus the header, which you can find in the PDF:

NOVELL’S MEMORANDUM IN SUPPORT OF ITS MOTION FOR A CURATIVE INSTRUCTION

In light of Microsoft counsel’s blatantly improper argument about the timing of the filing of Plaintiff’s lawsuit, Novell, Inc. (“Novell”) respectfully submits this memorandum in support of its motion for a curative jury instruction.

Novell requests that the jury be given the following instruction:

During opening statements, counsel for Microsoft made reference to the fact that Novell did not file this lawsuit until 2004. The jury should draw no adverse inference against Novell based on the fact that it filed the present lawsuit in 2004 rather than at some earlier time. Under the law, Novell had the legal right to file its lawsuit when it did and was under no legal obligation to bring this lawsuit at any earlier date.
In its opening statement, Microsoft repeatedly argued that the jury should infer, from the fact that Novell’s suit was not brought until 2004, that Novell’s suit lacks merit: “Novell didn’t even file this lawsuit until November of 2004, more than ten years later.” October 18, 2011 Tr. at 91:1-2. “[T]his conduct that allegedly is so bad . . . Novell said nothing about at the time and waited more than ten years before it even brought this case . . . .” Id. “We don’t blame anyone or say it’s anyone’s fault. But making a misjudgment about a business that you buy and then, ten years later, blaming someone else for your mistake, that, with all respect, I think is wrong.” Id. at 103:23-104:2. “And as I told you when I started this opening statement way back when, though the decision was made in ’94 and Novell made no complaint in 1994, the lawsuit was filed 10 years later.” Id. at 141:3-6.

In making this argument, Microsoft took improper advantage of the fact that (1) the jury has been shielded from learning of the existence of the Government case, and (2) the jury is unaware of the fact that the statute of limitations was tolled during the pendency of the Government’s prosecution of that case. Novell has been unfairly prejudiced as a result. The

1

Court should therefore give the jury the brief instruction set forth above in order to cure this unfair prejudice.

The Clayton Act’s tolling provision provides:

Whenever any civil or criminal proceeding is instituted by the United States to prevent, restrain, or punish violations of any of the antitrust laws, but not including an action under Section 4A of the Clayton Act, the running of the statute of limitations in respect of every private or State right of action arising under said laws and based in whole or in part on any matter complained of in said proceeding shall be suspended during the pendency thereof and for one year thereafter: Provided, however That whenever the running of the statute of limitations in respect of a cause of action arising under Section 4 or 4C of the Act is suspended hereunder, any action to enforce such cause of action shall be forever barred unless commenced either within the period of suspension or within four years after the cause of action accrued.
15 U.S.C. § 16(i). The purpose of the Clayton Act’s tolling provision is to further Congress’ “clearly expressed desire that private parties be permitted the benefits of prior government actions.” Minnesota Mining & Manufacturing Co. v. New Jersey Wood Finishing Co., 381 U.S. 311, 320 (1965); see also Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 336 (1971) (purpose of Clayton Act tolling provision is to allow private plaintiffs “to await the outcome of Government suits and use the benefits accruing therefrom”). Allowing the government action to proceed to completion before the private litigant is required to file suit also serves purposes of judicial economy; for example, “difficult questions of law may be tested and definitively resolved before the private litigant enters the fray.” Minnesota Mining & Manufacturing, 381 U.S. at 319.

As the Court noted in its June 10, 2005 Order, Microsoft “acknowledges that the claim asserted in Count I is not time-barred because the focus of the government case against Microsoft (during the pendency of which limitations of private rights of action were tolled under

2

15 U.S.C. § 16(i)) was upon Microsoft’s monopoly in the operating market.”1 Moreover, on November 7, 2003, Microsoft entered into an agreement with Novell to further toll the statute of limitations after the completion of the Government case. This tolling agreement subsequently was extended by agreement of the parties on multiple occasions. For example, on November 4, 2004, David B. Tulchin on behalf of Microsoft, and R. Bruce Holcomb on behalf of Novell, signed a letter extending the tolling agreement to November 12, 2004.

As matters currently stand, the jury will not know that the existence of the Government case tolled the statute of limitations, much less the sound policy reasons for allowing private parties like Novell to await the completion of such proceedings before having to decide whether or not to bring a private action. Indeed, the Court ruled that the jury should not even be told that the findings as to which this Court granted collateral estoppel were made in the Government case, but should instead only be informed that the findings were made in a case that was brought in the District of Columbia. As a result, the jury will not be informed that, during the time period between the events at issue and the filing of Novell’s suit, a Government investigation and trial of antitrust claims against Microsoft took place and that the existence of this litigation tolled the statute of limitations for Novell’s claim.

Microsoft took unfair advantage of the Court’s prior rulings when it repeatedly argued that the reason that the present lawsuit was not filed until 2004 was because the suit lacked merit. Microsoft made this argument because it knew that the jury would not be told the real reason for the delay: the pendency of the Government antitrust case against Microsoft and the resulting tolling of the statute of limitations.

______
1 Microsoft appealed the denial of the motion to dismiss Count I on the ground of antitrust standing, but did not appeal as to Count I with respect to the statute of limitations issue.

3

It is unjust and unfair to allow Microsoft to try to impugn the merit of Novell’s claims and thereby punish Novell for exercising its legal rights under the Clayton Act, by allowing the jury to infer that the reason for the delay in filing was because the suit was not meritorious. To prevent this unfair prejudice to Novell, the jury should be given the instruction proffered above.

CONCLUSION

For the foregoing reasons, Novell respectfully requests that the Court give the requested curative instruction.

Dated: October 18, 2011

DICKSTEIN SHAPIRO LLP

By: /s/ Jeffrey M. Johnson
Jeffrey M. Johnson
Paul R. Taskier
Jason D. Wallach
Adam Proujansky

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

ADAMS HOLCOMB LLP
R. Bruce Holcomb

WILLIAMS & CONNOLLY LLP
John E. Schmidtlein

Attorneys for Novell, Inc.

The second complaint from Novell was that Microsoft misquoted the Judge's earlier jury instruction:
The second one, which he didn't even address, was they stand up and he told the jury -- I want to get this right -- for Novell to prevail in this case they have to prove to your satisfaction, as the Court instructed you yesterday, that Microsoft's monopoly in operating systems in Windows came about because of the conduct they claim was wrong. That is outrageous. This case is not a monopoly acquisition case, it is a monopoly maintenance case. He has misstated our theory and he claims that you have instructed them about that.
The judge agrees that Novell had the right to wait, but he makes the first out-and-out negative remark regarding Novell:
THE COURT: If there was an emergency, and Sun had an emergency and they wanted injunctive relief to take a buy on the product and you wouldn't let them have it. I know that from the history of the M.D.L. proceeding, and I am not going to buy this argument. I happen to agree with you. I happen to think that for a company to wait and to try to recover I guess billions of dollars -- by expert testimony is not the way the legal system -- that is exactly why I issued the injunction I did, the preliminary injunction I did in Sun and you objected. As far as I'm concerned they can wait to file the suit. You can ask about that if you thought this was going to destroy your product so much, why didn't you complain about it? That is fair. Just don't mention the fact that the lawsuit was filed ten years later.

MR. SCHMIDTLEIN: We can deal with --

THE COURT: I understand.

MR. SCHMIDTLEIN: -- why didn't you complain at the time, and that will be dealt with. We can't --

THE COURT: That is probably the same reason you all hid that you were -- I am sure there are all kinds of things going on. I don't like any of them. Be that as it may, I am going to say, and I am not going to point fingers, I am just going to say listen to my instructions about what the elements are and about what anticompetitive conduct is, and the mention about when the suit was filed just disregard it. That is all I'm going to say.

That's a little weird, I must say. He seems indeed to have a little bit of an attitude toward Novell. Maybe he doesn't like being overruled. And they did successfully overrule his earlier ruling.

The PDFs that cover this day are:

As always, go by the PDFs for anything that matters.

*********************

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

_______________ NOVELL, INC.,

Plaintiff,

vs.

MICROSOFT CORPORATION,

Defendant.

_____________

Case 2:04-CV-01045 JFM

_____________

BEFORE THE HONORABLE J. FREDERICK MOTZ

DATE: October 19, 2011

REPORTER'S TRANSCRIPT OF PROCEEDINGS

JURY TRIAL

VOLUME III

Reported by: KELLY BROWN HICKEN, CSR, RPR, RMR
LAURA ROBINSON, CSR, RPR
ED YOUNG, CSR, RPR

163

A P P E A R A N C E S

FOR THE PLAINTIFFS: DICKSTEIN SHAPIRO
BY: PAUL R. TASKIER, ESQ.
JEFFREY M. JOHNSON, ESQ.
MIRIAM R. VISHIO
[address]

WILLIAMS & CONNOLLY
BY: JOHN E. SCHMIDTLEIN, ESQ.
[address]

SNOW, CHRISTENSEN & MARTINEAU
BY: MAX D. WHEELER, ESQ.
[address]

NOVELL
BY: JIM LUNDBERG, ESQ.

FOR THE DEFENDANT:
SULLIVAN & CROMWELL
BY: DAVID B. TULCHIN, ESQ.
STEVEN L. HOLLEY, ESQ.
SHARON L. NELLES, ESQ.
[address]

MICROSOFT CORPORATION
BY: STEVE AESCHBACHER, ESQ.
[address]

RAY, QUINNEY & NEBEKER
BY: JAMES S. JARDINE, ESQ.
[address]

164

SALT LAKE CITY, UTAH, THURSDAY, OCTOBER 19, 2011

* * * * *

THE COURT: Good morning everyone. I understand there's an issue or something.

MR. JOHNSON: Yes, Your Honor. It's not really an issue. I just -- I didn't want to -- we're going to start this morning with the deposition of Mr. Gates.

THE COURT: Sure.

MR. JOHNSON: And I wanted you to be aware in advance that Microsoft had withdrawn its objection to the exhibits that we discussed, the FUD exhibit --

THE COURT: Okay.

MR. JOHNSON: -- that we discussed in chambers. They withdrew that. So that is going to play now in full. And I didn't want that to come on the screen and you say --

THE COURT: What happened?

MR. JOHNSON: -- what happened here, and be upset by that.

THE COURT: You only upset me.

MR. JOHNSON: The other things, Your Honor, I might mention since we're waiting for Juror Number 4 --

THE COURT: I think he's here now.

MR. JOHNSON: Okay. Just we had created a list of all the cleared exhibits that have -- you know, there's no objections to. And it's our intention -- may I approach?

165

THE COURT: Sure.

MR. JOHNSON: It's our intention to move them into evidence at some point during the proceeding.

THE COURT: They are now -- subject to Microsoft looking at them they're all in. Just double check to make sure there hasn't been a mistake.

MR. TULCHIN: Thank you, Your Honor. We just got this this week.

THE COURT: No. No. No. Absolutely. But you don't have to worry about you telling me later that there is no objection and you want to move them in.

MR. JOHNSON: Okay. So other than their objecting, they're deemed admitted.

THE COURT: They're in other than their objecting.

MR. JOHNSON: Thank, Your Honor, very much.

THE COURT: And the jurors can be here at 8:00. They want to stop at 1:30 because they've changed their work schedules. But they can be here at 8:00, if that's all right with you.

MR. TULCHIN: Yes, Your Honor.

MR. JOHNSON: Yeah. We heard that this morning, Your Honor, and that's wonderful.

Your Honor, I also would just like to mention, I assume you saw that we filed two motions for curative instructions with respect to the openings yesterday.

166

THE COURT: I have not.

MR. JOHNSON: Okay. We filed those last night.

THE COURT: Okay. They'll probably come to me via Baltimore. But I'll start looking at the docket in the morning.

MR. JOHNSON: Okay. Thank you very much, Your Honor.

THE COURT: Thank you.

MR. TULCHIN: Are we starting with the continuation of the findings, Your Honor?

THE COURT: I don't think so. I understand you're not going to have it continuing. You're going to start with a deposition; right.

MR. JOHNSON: We are, Your Honor. With respect to the filings, Your Honor, is there something we could do to get those to you directly here?

THE COURT: Yeah. I'm here in the morning. But I'll try to think of the easiest way.

MR. JOHNSON: Okay. Perhaps we could deliver a courtesy copy right to your temporary chambers here.

THE COURT: Yes, you can. I'm just trying to figure it out.

MR. TULCHIN: Your Honor, just for my clarification. Sorry. I don't want to take time with the jury ready. But having started reading the findings,

167

shouldn't we finish them?

THE COURT: No. We said yesterday, I'm sorry, I was not clear. I said that they could use it as filler.

MR. JOHNSON: Thank you.

THE COURT: I thought Microsoft agreed.

MR. TULCHIN: They could use it as what, Your Honor?

THE COURT: Fillers. You know, between the testimony.

MR. JOHNSON: And that's what we intend to do.

THE COURT: Thank you. I'm sorry. That's what I said when you couldn't understand what I said. But I thought other people nodded yes, and I thought you did, too.

(Whereupon, the jury returned to the court proceedings.)

THE COURT: Good morning, everybody. Sorry for the brief delay. One of the things we were discussing is I know counsel have agreed, and I've said it's okay, in fact, I even suggested it, that instead of reading those findings all at once we will sort of use them as filler in-between other witnesses to keep your attention. I think we're going to have two videotaped depositions today. The first is of Mr. Gates. And at some point either today or we'll finish reading those findings that Mr. Taskier has agreed to.

Okay. All set?

168

MR. JOHNSON: All set, Your Honor.

THE COURT: And we're just for your -- oh, one other thing. Thank you all. Let's get started at 8 o'clock in the morning. The juryroom will be open at 7:30, and we'll be ready to start at 8 o'clock. But we will stop at 1:30 because I understand you've arranged your work schedules to stop at 1:30.

And the other thing is the court reporter will leave at some point after we've started it because there's no sense in the court reporter being here to take down and have what already transcribed in the deposition.

MR. JOHNSON: Thank you, Your Honor. The plaintiff at this time is going to play portions of the deposition of William Gates. For Your Honor's benefit, this was taken over two days. The first portions of the tape run an hour 52. And the second portion of the tape runs an hour 11, just for purposes of your thinking about breaks.

THE COURT: Okay. And unless somebody needs a break ahead of time, we'll listen to the first session, and then we'll listen to the second session.

MR. JOHNSON: Thank you, Your Honor.

THE COURT: But don't be shy about raising your hand if you need a break before then.

(Whereupon, the deposition of William Gates was played.)

THE COURT: Is that it?

169

MR. JOHNSON: That's the first day.

THE COURT: We'll take a short recess. And I'm ready whenever anybody else is.

(Whereupon, the jury left the court proceedings.)

(Recess.)

170

(10:55 a.m.)

THE COURT: How long is the second segment?

MR. JOHNSON: An hour and ten minutes, Your Honor.

THE COURT: That should take us to the short lunch break.

(Whereupon, the jury returned to the courtroom.)

THE COURT: All right. The second segment of Mr. Gates' deposition will last about an hour and ten minutes and then we'll take our lunch break.

(Whereupon, the deposition continued to play but was not transcribed.)

THE COURT: That is it?

MR. JOHNSON: That concludes Mr. Gates, Your Honor.

THE COURT: All right. Okay. We'll take a brief and I'll be ready whenever anybody else is.

(Whereupon, the jury left the courtroom.) (Lunch recess.)

171

(Recess)

THE COURT: Let's be seated. What is next?

MR. JOHNSON: We're going to have the deposition of Mr. Silverberg. It is about an hour and a half long though, so what I thought we would do is show about 50 minutes and then stop, because I assume you want to let them go before 1:30. We won't be able to complete it is what I am saying.

THE COURT: You'll go until about 1:30?

MR. JOHNSON: Yes.

THE COURT: That is fine.

MR. JOHNSON: Thank you, Your Honor.

THE CLERK: Ready?

THE COURT: Yep. I am not saying that Microsoft should do this, I just want to know, but are you all going to file anything in writing in response to what Novell filed? I mean, you don't have to.

MR. TULCHIN: I am prepared to address it at any time, Your Honor.

THE COURT: Okay.

MR. SCHMIDTLEIN: Judge, did you get copies of --

THE COURT: In terms of filing, and it is whatever you all want, and I can have it printed here, and that is

172

what I did this time, or my office can print it in Word form and e-mail them to me. I don't know if the court would allow it to be given to the CSOs here and I could just ask them in the morning if there is anything for me. That may be the easiest for me, or just file them and I will find them.

MR. SCHMIDTLEIN: What time are you typically getting here? We could just bring you hard copies first thing.

THE COURT: You can do that. Right now I will probably be getting here around 7:30.

MR. SCHMIDTLEIN: Okay. I have been stopping across at the Royal Eatery and getting me a cup of coffee. They are incredibly nice fellows.

MR. TULCHIN: Would it be appropriate, Your Honor, for some indication to be given to the jury as to the date of the deposition?

THE COURT: Sure.

(WHEREUPON, the jury enters the proceedings.)

THE COURT: Okay. Another videotaped deposition?

MR. JOHNSON: Yes, Your Honor. We're going to play portions of the deposition of Brad Silverberg. The deposition was taken in January of '09 and it is about an hour and a half long. Obviously we'll stop it at some point so that you all can go, and we'll pick up again tomorrow

173

morning to finish it.

THE COURT: That is fine. Does anybody remember the dates of Mr. Gates' deposition? I don't know.

MR. JOHNSON: Yes. Mr. Gates' deposition was actually two different days, Your Honor. As you may recall, 3-4, 2009 was the first day, and 5-19, 2009 was the second date.

THE COURT: Thank you. All right.

(WHEREUPON, portions of the video deposition of Brad Silverberg were played.)

MR. JOHNSON: I think that is our stopping point.

THE COURT: Have a nice afternoon.

MR. JOHNSON: Your Honor, if you would like, we could play ten more minutes. We would be happy to do that.

MR. SCHMIDTLEIN: I got the impression that one of the jurors wanted a break.

UNIDENTIFIED JUROR: Just a quick restroom break.

THE COURT: Thank you.

See you all at 8:00 tomorrow morning.

Thank you for picking that up.

I'll stay here with counsel.

(WHEREUPON, the jury leaves the proceedings.)

THE COURT: All right.

Mr. Tulchin, I think I ought to address the motion

174

to cure instruction about anticompetitors and about whether or not the fact that the lawsuit was filed within the limitations is sufficient to say we ought to give the jury an instruction about the argument that they didn't say anything back then. I think those are the two issues.

MR. TULCHIN: Thank you, Your Honor.

First, with respect to the request by Novell for what they call a curative instruction about portions of my opening, when I was providing the Court's preliminary instructions, there are a couple of important things to be said, Your Honor.

The first is that right at the outset of Mr. Johnson's opening statement he said the following:

Novell wanted nothing more than to compete on the merits of its products. Microsoft, however, had other plans. Microsoft, as you were told yesterday, has a monopoly in operating systems. The evidence will show that Microsoft was threatened by Novell's applications and middelware products and took anticompetitive actions against those products in order to protect its operating system monopoly.
So Mr. Johnson started, and that was right out of the box, with the very thing that I referred to later, the contention that Microsoft took anticompetitive actions against those products in order to protect its operating system monopoly.

175

Secondly, Your Honor, and I know the Court will remember that we had a discussion last Thursday by telephone, and Your Honor was in Baltimore and it was a telephone conference, and among other things we discussed the preliminary jury instructions. On page 19 of the transcript the Court was saying, and I won't quote the whole thing, Your Honor, but you made reference to the fact that you were not going to decide every issue about the preliminary instructions, that you were going to reserve and do some of this at the end. And you said it seems to me I'm giving enough that in opening statements you -- I don't want to tie one side's hands or the other. I want you all to be able to fairly argue the case.

Mr. Holley responded with I think I understand your point, that the layers have some leeway in openings to say what they think the relevant standards are, but the Court does not want to be dictating that at the very outset of the case. The Court, that is basically it, and you guys are good lawyers on both sides and there are issues. I want you to be able to fairly argue the case.

So it was pretty clear last Thursday that both sides were going to have some leeway. The instructions that the Court actually gave to the jury on Monday, and I'm happy to hand up a piece of paper that contains the relevant part, Your Honor, but I think the Court will remember, and you

176

said this is just to give you a very, very general guide, that Microsoft wilfully maintained its monopoly in the P.C. operating system market by engaging in anticompetitive conduct, including conduct to thwart the development of Novell's WordPerfect.

Then you went on to say Quatrapro as well, and I won't quote all that. Then you said, quote, you can tell from the language that it had to maintain its monopoly by engaging in anticompetitive conduct, and I'm omitting a sentence, and then you said again Novell realizes it must show that Microsoft's anticompetitive conduct, if you find any, engaged in during the period, injured Novell and its business or profit, and that is the way it was reported, during the relevant period of time.

What I told the jury yesterday is exactly consistent, Your Honor, with what you said the day before, and if it is slightly different it was consistent also with the leeway that the Court explicitly said last Thursday we were permitted. It was also 100 percent consistent with exactly what Mr. Johnson said at the outset that Novell would prove.

The slide that we put in front of the jury says this: In order to prove its claim Novell must establish, among other things, that Microsoft wilfully maintained its monopoly in the operating system market by engaging in

177

anticompetitive conduct against Novell's products during the time Novell owned those products. The words are not identical to the ones that the Court used, but the substance is identical. The Court said --

THE COURT: I was a little surprised, but I thought there was a slide about business justification. Maybe I am wrong.

MR. TULCHIN: No.

THE COURT: I thought there was something about business justification, which got a little bit closer to where I was concerned. Okay. I understand what I said and what you said.

MR. TULCHIN: I think, Your Honor, with all due respect, what I said is exactly --

THE COURT: What about the other issue? How about the one that they should have filed sooner?

MR. TULCHIN: Well, Your Honor, that one I think is very simple. First of all, it is true that they waited ten years. It is fair comment in a case like this to indicate that if the decision not to support the name space extensions in 1994 was in effect going to cause the death of these products, and that is the only thing that Novell complained about in its opening statement, that the fact that Novell waited ten years to bring a lawsuit is something that the jury is certainly entitled to hear.

178

I expect tomorrow that the first witness, the first live witness will testify about how difficult it was and what problems this caused him, and maybe other software engineers at Novell, in trying to write something to get out these products in a timely way. I didn't say that the suit was barred by the statute of limitations. Novell was entitled, apparently, though we have not conceded this, but the courts have ruled that Novell was entitled to wait until 2004 with respect to count one. That much is fine.

But if Novell had filed its lawsuit, for example, two years and 364 days after the cause of action arose and the statute of limitations were three years, and had come in complaining that the conduct in October of 1994 amounted to a death sentence for these products, I think it would be fair comment to the jury as well to point out how long Novell had waited.

It is also true, Your Honor, that it is fair comment, in light of the fact that, as we just saw, the jury is being shown testimony by people whose depositions were taken in 2009 having to do with e-mails and other conduct and strategic thinking and plans and development of products from 1993, four and five. Recollections are going to be somewhat imprecise under those circumstances going back 14, 15, 16 years.

It is particularly appropriate, Your Honor, given

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the spoliation issue, which I won't go back into in great detail, because while the Microsoft documents were all preserved because, as the Court knows, there were other proceedings against Microsoft, and these documents were collected and preserved and produced in litigation going way, way back, and besides keeping the bad acts file that Novell kept, no retention notice went out to anyone at Novell until 2004. Mr. Lundberg so testified. Even though, for example, Mr. Hallow, who will be here tomorrow, testified in 2001, with Mr. Lundberg as his lawyer in a different case, about Novell's claims, the very claim they are making here, even though in 2001 Mr. Hallow was giving testimony about this so-called bad conduct that supposedly destroyed these products, Novell did nothing in 2001 to try to collect the documents.

In any event, that was more than I planned to say, but I do think that pointing out that there was a ten year delay before complaining, which is the context in which I said this, Your Honor, because there were no complaints at the time, at least none in writing, is absolutely fair for the jury to hear.

THE COURT: Thank you.

Mr. Schmidtlein.

MR. SCHMIDTLEIN: Your Honor, the press picked up, I'm told, in several reports about these very marks about

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the delay that Novell supposedly took. The law is the law here, and under the law Novell was absolutely entitled to wait. There are good policy reasons that allow companies to wait to bring their cases after the government's case is concluded. Microsoft spent years and years and years fighting relevant market and monopoly power. We don't have to re-go over those fights and re-fight those wars because of the government case. That is part of the benefits and that was part of the policy judgment. They may not like the policy judgment that allows plaintiffs to wait and bring their suits after a government case, but it is entirely appropriate. Exercising rights that we are permitted under the Clayton Act, and for them to get up and argue that somehow that means that our claims don't have merit, that would undercut the whole purpose of the statute. How can we take advantage of the rights afforded to us under the statute, if they are allowed to get up without any knowledge being given to the jury, any instruction, anything about the government case, and say, gosh, I don't want them to know about the government case, and with all of that for them to get up and begin firing these bows and arrows at us saying, oh, this case must be bogus because you waited ten years is entirely inappropriate. We are just asking for an instruction.

He can get up and say you didn't complain at the

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time. That is fine. But to sit there and say you didn't bring the claim until 2004 is entirely inappropriate. If that was the case companies are going to be substantively prejudiced and punished for exercising their rights. I would suggest to you that the statute does not give us a whole lot of rights. That is our main argument on the timing issue.

On the jury instruction issue it is one thing to have latitude, but he stood up and misquoted your instructions. We have fought over your preliminary instructions for weeks now with briefs, supplemental briefs, phone calls and hearings and the whole nine yards. To stand up, and this is a critical issue, and Your Honor is painfully aware how important the instructions are to the parties, and to stand up and to misquote materially what Your Honor gave to the jury when they didn't have notebooks, and now they are sitting there with no notebooks and they are putting slides up. That is absolutely inappropriate.

The second one, which he didn't even address, was they stand up and he told the jury -- I want to get this right -- for Novell to prevail in this case they have to prove to your satisfaction, as the Court instructed you yesterday, that Microsoft's monopoly in operating systems in Windows came about because of the conduct they claim was wrong. That is outrageous. This case is not a monopoly

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acquisition case, it is a monopoly maintenance case. He has misstated our theory and he claims that you have instructed them about that.

Now, I'm all for throwing a few hard elbows and leeway, but that is frankly just flat out wrong. That is not leeway.

Thank you, Your Honor.

MR. TULCHIN: Your Honor, on that last point and this very subtle distinction between acquisition and maintenance -- excuse me for a moment -- maybe I didn't make it clear enough, but the Court's instructions, what I said is consistent with the instructions. I didn't use the exact words, but --

THE COURT: Why didn't you use the exact words?

MR. TULCHIN: Because we had had the call on Thursday --

THE COURT: Fine. Never mind.

I am going to give an instruction tomorrow to not worry about -- you were told in opening statement about the delaying in filing suit, just disregard that. I mean, the fact of the matter is, and I happen to agree with you, but that is because in summary when I try to craft a remedy, because I didn't want expert witnesses to come in and talk about lost profits years later, that you all would object to that. The fact of the matter is they could do what they

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wanted to do. If you want to make the point that they didn't complain, that is fine, but just don't refer to when the suit was brought. As to the operating system and the operating system alone they acted within their rights and they shouldn't be penalized for it. You can certainly ask them why they didn't complain at the time and that is fair game.

As far as the other is concerned I was a little surprised. I will say, look, and I am not going to point fingers, I am just going to say whatever you were told in opening statement about what the law is about maintaining monopoly power and anticompetitive conduct, I will tell them to listen to me at the end with the instructions. They are not going to remember what you said anyway, but I will give a general instruction just telling them to listen to me at the end of the case about what is anticompetitive --

MR. SCHMIDTLEIN: I think that is along the lines of what we have proposed to you.

THE COURT: On the other I am just going to say stay away from, and you can ask them about when they complained, but they acted within their rights in waiting --

MR. TULCHIN: Of course, Your Honor, but acting within one's rights, and just as in the example I gave, if there is a three year limitations period and you sue two years and 364 days later, you are still acting within one's

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rights. But it is perfectly appropriate, it seems to me, to point out if there is some emergency --

THE COURT: If there was an emergency, and Sun had an emergency and they wanted injunctive relief to take a buy on the product and you wouldn't let them have it. I know that from the history of the M.D.L. proceeding, and I am not going to buy this argument. I happen to agree with you. I happen to think that for a company to wait and to try to recover I guess billions of dollars --

MR. TULCHIN: It is, Your Honor.

THE COURT: -- by expert testimony is not the way the legal system -- that is exactly why I issued the injunction I did, the preliminary injunction I did in Sun and you objected. As far as I'm concerned they can wait to file the suit. You can ask about that if you thought this was going to destroy your product so much, why didn't you complain about it? That is fair. Just don't mention the fact that the lawsuit was filed ten years later.

MR. SCHMIDTLEIN: We can deal with --

THE COURT: I understand.

MR. SCHMIDTLEIN: -- why didn't you complain at the time, and that will be dealt with. We can't --

THE COURT: That is probably the same reason you all hid that you were -- I am sure there are all kinds of things going on. I don't like any of them. Be that as it

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may, I am going to say, and I am not going to point fingers, I am just going to say listen to my instructions about what the elements are and about what anticompetitive conduct is, and the mention about when the suit was filed just disregard it. That is all I'm going to say.

MR. SCHMIDTLEIN: Thank you, Your Honor.

THE COURT: Okay. Court is in recess.

MR. JOHNSON: Your Honor --

THE COURT: The other thing is -- never mind. Nobody objected to it, but that deposition excerpt that I just heard about how the danger -- the second danger was Novell buying WordPerfect and Quatrapro is critical to that, was the witness's, Mr. Silverberg's concern that they were given to give away DOS. I am telling you DOS was in the operating system market, and there was no objection to it, but it brought home to me that when I hear that testimony that one of the concerns, which is exactly what happened, and it wasn't Lotus buying it, it was Novell buying WordPerfect and Quatrapro, when underlying his concern was the fact that they were going to be able to have price competition because they were going to give away their operating system for five cents, and you tell me how that is not indirectly related to the claims in his case, but that is something for the Tenth Circuit to deal with.

MR. TULCHIN: That is why there was no objection

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to it, Your Honor.

THE COURT: You can all deal with that if the time comes with the Tenth Circuit. It is there in this case that DOS was in the operating system market, and you all produced testimony that showed the concern was that there was going to be competition, price competition in the application because they were going to give away the operating system.

MR. JOHNSON: Your Honor, you had asked us to mention to you when we were going to have a witness that your clerks would probably benefit from hearing. Tomorrow we are going to bring Mr. Adam Hallow the court for testimony. This is one that I think that would be of interest to them --

THE COURT: Thank you.

MR. JOHNSON: -- to hear.

THE COURT: I think they got ought off somehow, Teresa. They got cut off before the break.

Thank you, Mr. Johnson. What time? Is he your first witness?

MR. JOHNSON: He is our first live witness.

MR. SCHMIDTLEIN: We'll finish the --

THE COURT: We'll finish this and then --

MR. JOHNSON: Go right to him.

THE COURT: Thank you very much.

MR. JOHNSON: The other thing I wanted to mention

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is we unfortunately still have a lot of depositions that need to be cleared for us to use. It is proceeding very slowly. I know obviously tomorrow that you are going to be getting aboard an airplane to go home after tomorrow's session, I presume, and I was wondering if you had any time today to --

THE COURT: Sure.

MR. JOHNSON: -- deal with a couple of depositions.

THE COURT: Absolutely.

MR. JOHNSON: Right now?

THE COURT: Tell me what the issue are and --

MR. JOHNSON: Thank you.

MR. TULCHIN: Your Honor, these won't be played tomorrow, or at least it is my understanding that they won't be.

THE COURT: At least I will know what the issues are. I may not decide them. Obviously I will give you all fair time to respond. The concern for me is that tomorrow is okay, but Monday may not be.

MR. JOHNSON: Exactly. That is what I'm concerned about, Your Honor because you're not going to be here Thursday afternoon or Friday.

THE COURT: I think my flight is at 5:00.

MR. TULCHIN: We haven't been told, Your Honor,

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who is coming next week or when or whether these depositions will even be played on Monday.

THE COURT: I understand, but Mr. Johnson is just trying to resolve the issue. I am not going to prejudice you all in not giving you time to respond.

MR. PARIS: The issue, Your Honor, is I am not prepared to address the substance and --

THE COURT: Well, let's at least find out what the issues are. If I have a 5:00 flight, what time should I leave?

MR. JARDINE: 3:30.

THE COURT: 3:30 from the hotel. If I leave here at 3:00 I will have plenty of time.

MR. JOHNSON: Your Honor, the first one we want to discuss is the deposition of Mr. Paul Maritz. This is his 2009 deposition. Are these extra copies that I could pass up? If I could approach, Your Honor?

THE COURT: Sure.

MR. JOHNSON: We thought this one was clear, and it was cleared for use until this morning, and then all of a sudden this morning we got a further demand from Microsoft that we add more stuff that they wanted to cross designate, which is apparently on pages 104 through 106. If you open up that tab, Your Honor --

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THE COURT: Yes.

MR. JOHNSON: -- the red stuff there, we had agreed and the parties had met and conferred regarding their initial and cross designations last week, and Novell sent Microsoft an e-mail on Sunday at 3:30 attaching the transcript that the parties agreed upon, the designations, and asking Microsoft to confirm as to the designations to be played to the jury.

Now they come in this morning with additional designations, and they are not only untimely but they are beyond the scope of Novell's initial designations. I don't understand why we are getting this.

THE COURT: The things I should read begin on line 20 on page 103, the things in red?

MR. JOHNSON: Yes, the things in red, Your Honor.

MR. PARIS: Page 104, Your Honor.

THE COURT: 104 and it goes through 106.

MR. JOHNSON: I think, unless we're going to have some more, that that is the only dispute. I would like to get this one ready to go. Once you get clearance on one of these transcripts, Your Honor, then you have to do all the technical work.

THE COURT: I understand. You all have done a good job on that. So what is the issue?

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Let me hear from Microsoft.

MR. JOHNSON: Sure.

MR. PARIS: Thank you, Your Honor. A couple of things. First of all, I object to having to do this now. I got an e-mail at 8:00 this morning and --

THE COURT: That is fine. If you're going to be prejudiced I am not going to do it. That makes sense.

MR. PARIS: At least as to Maritz, though, I'm aware of the issue. This deals with an issue that came up yesterday in Mr. Johnson's opening and there is going to be obviously, as you could tell from the testimony today, there is going to be a lot of discussion in this case about what is the shell that is at issue. Is it the Chicago shell, the office shell, and what are they and what is the difference and --

THE COURT: Before you all leave, you all may understand this. I don't. I don't know that the jury does. I am not sure I know what these APIs do. If I have heard Mr. Tulchin right, WordPerfect was available on the start sign and was also available by icon and this was just a third way of getting to it, and I don't -- I don't know who I am helping or who I am hurting, but somebody better explain this as we go along, because it seems to me to be inconsequential.

MR. TULCHIN: We agree, Your Honor.

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THE COURT: I'm sure you do.

MR. JOHNSON: Your Honor, Mr. Hallow will straighten it out for you tomorrow.

THE COURT: Thank you.

MR. JOHNSON: Trust me.

MR. PARIS: At least as to the deposition of Mr. Maritz, I think this is the only outstanding item.

MR. JOHNSON: Your Honor --

THE COURT: Also, the damage point is pretty telling. I don't know what your expert is going to say, but when you lose the full price of the purchase price in two days after you market it that says something. Somebody better explain that to me too. Excuse me.

MR. JOHNSON: Your Honor, we have experts that will explain --

THE COURT: I am sure that you do.

MR. JOHNSON: I mean, Your Honor, you know, it is like the jury, you have to wait until you hear the whole story.

THE COURT: I will wait until I hear it. I am just telling you.

MR. JOHNSON: Understood. What is the issue here?

MR. PARIS: I am sorry. On Maritz we added this

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one extra designation, and it is not a big item, it just deals with again some of this confusion that exists between what is the shell and how it is extensible and what we're talking about here. He speaks a little about it on these pages, and we just think it would be helpful for the jury to hear.

THE COURT: Okay.

MR. JOHNSON: Your Honor, this designation has zero to do with anything that we designated in this transcript. They may want it in for their defense, but they can do that in their case in chief if they so choose. For a cross designation it has to be something that we have designated that they need to add something for completeness.

THE COURT: Their position is is because it is confusing about what a shell is it is for completion.

MR. PARIS: And we think it is absolutely responsive to one of their designations.

MR. JOHNSON: But that issue, that question is not addressed in the Maritz deposition.

THE COURT: I think I understand the issue. If what is addressed I deem to be confusing without explanation or explication, whatever the difference is, I will read that and --

MR. PARIS: Thank you, Your Honor. The reality is the jury, as we all know, probably

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has no clue the meaning of any of these terms, especially the technical ones, so the more that they can see, and where you have Microsoft witnesses up here testifying, and I don't know how much they are absorbing and how much they understand, so if a little bit more background to sort of --

THE COURT: I will take a look at it.

MR. JOHNSON: Your Honor, when you look at it I am sure that you will not be further educated by this little bit of testimony. I assure you of that.

THE COURT: I will probably --

MR. JOHNSON: I don't like to confuse the jury, Your Honor. That is what I don't want to do. That is why we are careful with our designations.

THE COURT: You are all doing a fine job in a very confusing case. I will refrain from further comment. Off the record.

(Proceedings concluded.)

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