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Novell v. Microsoft Trial Transcripts - Day 9, Nov. 7, 2011 (Frankenberg) ~pj -Updated 2 Xs
Thursday, June 21 2012 @ 10:26 PM EDT

Here's the transcript, as text, for Day 9 in the Novell v. Microsoft antitrust trial over WordPerfect. That brings us to Monday, November 7th, right after a break after Day 8 on October 27 for Thanksgiving. And the first witness of this new week is Robert Frankenberg. After him will come Novell's experts, beginning on Tuesday, and then Novell's side will be done, after which Microsoft will begin putting its witnesses and experts on the stand.

Jump To Comments

The jury at this trial eventually deadlocked on damages, although they all agreed Microsoft was guilty of anticompetitive behavior or so the jurors who talked about it indicated, so we are waiting for the judge to decide if there will be a second jury or whether he will hand a win to Microsoft without a second trial. While we wait, we're putting the transcripts here, as text, so we can learn more about trials and for historians, so that searching by keywords will be easier.

I just posted an exhibit, as text, in our Comes v. Microsoft antitrust trial exhibit collection, #1309 [PDF], that seems pertinent. It's an executive level email to Frankenberg on what Novell should do going forward in that Microsoft saw them as a real threat and was willing to do anything to destroy them. The email's subject line is "High-Stakes Strategy Decisions." The part that I found interesting is that this May 25, 1995 email indicates that Novell thought of itself then as Microsoft's only real competition, and that as of that point, it felt it was holding its own. Microsoft at the trial portrayed Novell as a bunch of lead-footed bunglers, who destroyed their own chances. But that seems to be a latter-day revisionism. The email says:

Microsoft knows that Novell has the potential to become a long-term major player in general-purpose software, and REGARDLESS of whether we position ourselves in that way, Microsoft knows that we’re in that position, and will stop at nothing to destroy us.
The point of the litigation, from Novell's viewpoint, is that a few months later, when Windows 95 was released, Novell was stabbed in the back by some Microsoft dirty tricks involving documentation, so Novell couldn't be ready by launch date with WordPerfect. This email supports Novell's position, rather than Microsoft's, given the date.

[ Update: Here's another exhibit, #1387 [PDF], an internal email at Microsoft saying that Novell is a well-run company and Microsoft's most serious competitor. Contrast that with the picture Microsoft paints of Novell in this trial, as a bunch of bumbling old fogies who couldn't keep up in the fast-paced computer field.]

[Update 2: Here's yet another exhibit, #2996 [PDF], another internal email thread, in which Bob Muglia is talking to Bill Gates about APIs and how duplicating a proprietary API is the least of the job someone faces, that it's the complex implementation that is hard:

In contrast, there are some proprietary implementations which haven't been cloned. Sun failed in their Windows clone. Why? Not because the Windows API is proprietary. Creating their own window.h file from our documentation is the least of their problems. IP may have been an issue but they failed on their own. I submit that Sun failed because the semantics of the Windows implementation (particularly user) are unbelievable complex. Creating an independent implementation of the APIs and messages is within reach; what is hard is matching the underlying semantics in ways which ISVs rely on.
That's essentially what happened to Novell, or so their evidence represents, that they could reproduce the APIs, but the complexity that underlies the APIs, that was the sticky wicket that they couldn't achieve in time.]

The PDFs for this date are:

Once again, the day begins with the judge telling what he thinks is so, only to be told by Novell that he's got it wrong again. It's in the context of an exhibit that Microsoft wishes to use but that Novell says isn't about the case on trial. It references bugs in WordPerfect, but Novell says it's about legacy WordPerfect, the 16-bit version that ran on Windows 3.1 and eventually on Windows 95. But the trial is about the 32-bit version of WordPerfect, which you couldn't even open on Windows 95, thanks to Microsoft withdrawing the APIs, so the exhibit, Novell argues, can't be about bugs in the 32-bit version, since at the time of the exhibit, there was no 32-bit version. You can't have bugs, Novell lawyer Jeff Johnson says, unless you have a product to find them in. Duh.

The judge struggles. In his mind, Novell's WordPerfect ran just fine on Windows 95. I have no idea where he got that idea. If it had, there'd be no need for a trial. But this is what's stuck in his head at this point in the trial, after Novell explains about not being able to have a list of bugs about a product that doesn't exist yet:

THE COURT: That is not true. As I understand it, WordPerfect would run on Windows 95, it just wouldn't be able to get all of the information from other sources....

My understanding as of right now is that WordPerfect has been developed through the partnerships into that nature was able to access information not simply in the word processing program. And that -- and the problem was that the withdrawal of the APIs prevented WordPerfect from being able to recreate that functionality. That is what the core of the problem is. For example, in the one that I really want to understand is QuickFinder but QuickFinder you all used as an -- that you could QuickFind from various sources of information not just word processing. But that is the core of the whole problem the shell and everything else that you just couldn't access the information sources. Now my understanding is that there is no question that WordPerfect, as a word processor, would work on top of Windows 95 and could be accessed either through the start button or through the icon.

MR. JOHNSON: No, Your Honor.

THE COURT: That is not correct?

MR. JOHNSON: I think that you -- you don't completely understand.

That's a tactful way to put it. He doesn't understand at all. Clearly, he can't seem to grasp the technology. He perhaps thinks if your software product was about 80% done, it can run just fine. So Novell runs it past him one more time:
THE COURT: Well --

MR. JOHNSON: Let me make sure, let me try to make this very clear. Um, the 16-bit WordPerfect product, the Legacy product, 6.0, 6.1, would run fine on Windows 3.1 and eventually ran fine on Windows 95, even though Microsoft said it didn't, but it did, it ran fine on Windows 95.

WordPerfect and Novell was engaged in trying to build a new product, a 32-bit product, a different product for the new Windows 95. That is the product that Mr. Harral and Mr. Richardson were working on. That product, during all of 1995, did not run on the betas of Windows 95. They had this problem with the file open dialogue, and I think Mr. Gibb may have testified, you have to be able to open. So they had this problem that caused the entire product, the 32-bit product, not to be able to be built in a timely fashion and, in fact, was not released until sometime in 1996, I forget the exact date.

So there was no 32-bit product during 1995 of WordPerfect or of PerfectOffice that was -- that was running on the Win 95, Windows 95 operating system beta. There was no product. So when we talk about bugs here, what we're -- the only thing we're talking about is fixing problems with running the Legacy products, the 16-bit products that were already in existence. And that was the bug problem.

Of course, Microsoft doesn't help. It tells the judge that Novell did have a product, enough to test on Windows 95 and it ran. But Novell explains that they almost had a product. It didn't run well, and when they tried to get info from Microsoft, they were shut out. At that point, they decided they had to come up with their own solution. And so this list of bugs, Novell argues, simply could not be about the new 32-bit product, because bug lists are about products that exist.

The discussion is interrupted by the jury walking in and taking their places. At this point, I'm imagining the Novell side absolutely pulling their hair out. Once again, we see that when a judge doesn't understand the technology underpinning a case, it's hard for him to get it right. And when the judge does understand, as Judge William Alsup did in the Oracle v. Google case, he has no trouble seeing through any dancing about or smoke and mirrors.

Robert Frankenberg, who used to be the CEO of Novell from 1994 to 1996, now takes the stand. He is now retired, but he serves on several boards of directors. Before Novell, he worked for HP for 25 years, ending up as "leader of the personal computer business for Hewlett Packard". While there, he was the liaison with Novell, and he says Novell was a very capable company. It was Ray Noorda who first brought up the subject of him coming to Novell. And the WordPerfect merger happened just a few days before he began at Novell. The first thing that happened was the stock dropped, and it's interesting to hear Frankenberg's explanation:

Q. Do you recall at the time of the merger that the Novell stock price declined?

A. Yes, it did.

Q. Do you recall how much it declined?

A. If I remember correctly, about 20 percent.

Q. Did you anticipate that decline in Novell's stock?

A. Yes, I did. I thought that the market would react negatively to Novell taking on Microsoft.

Lotus was trying to buy WordPerfect too, because Frankenberg explains, it was considered "the best word processor in the market at that point in time" and Lotus had the best spreadsheet, so Lotus wanted to put them together and compete with Microsoft, but Novell beat them in the bidding war.

If you recall, the judge earlier was confused about WordPerfect, thinking the plan at Novell was to just run it on Windows 95, so Novell asks Frankenberg to explain why a business memo references other operating systems:

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

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

A. Yes, we did.

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

A. Yes, we did....

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

A. Yes, we were.

Q. The last sentence states here, "We do not want to be significantly behind Microsoft, if at all, in releasing a Chicago suite." How important was it for Novell not to be significantly behind Microsoft, if at all, in releasing a Chicago suite?

A. It was vitally important.

Hopefully the judge understands that point now.

As for the legacy WordPerfect product, Frankenberg explains what that was:

Q. You have mentioned PerfectOffice a number of times. Can you tell us what PerfectOffice was?

A. PerfectOffice was our suite of office productivity applications that included WordPerfect, Quattro Pro, WordPerfect Presentations, a personal information manager, a forms package, a database package and somebody's hiring products and AppWare.

Q. When did Novell first release a version of PerfectOffice?

A. In late December of 1994.

Q. And do you recall the particular version number for that PerfectOffice?

A. Yes, I do. It was my Christmas present. It was called PerfectOffice 3.0.

Q. And what operating system was PerfectOffice 3.0 developed to run on?

A. It ran on Windows 3.1.

That is *not* what this litigation is about.

In 1994, Frankenberg testifies, WordPerfect had more users than Microsoft Word. And of course at that point in time, most people hadn't yet chosen any word processor, so the opportunity was there for growth. Plus Novell had arranged to bring Netscape into the mix, so once you opened WordPerfect, you could just live there, do your work, surf, etc., without leaving WordPerfect. At that time in history, Netscape was the lead browser. And Novell also developed middleware for developers to use to develop applications, called AppWare. Microsoft's Paul Maritz described AppWare like this, under oath:

Q. I would like to share with you what Microsoft's Paul Maritz said about AppWare under oath in 1994, and you will find that on the screen in front of you.

Mr. Maritz stated in 1994, during the time you were at Novell, that AppWare was quote, "An explicit attempt by Novell to develop a layer that will provide all of the services required by applications. And so that they are explicit in their stated goal of saying that in the future a third-party software developer should have to know only about AppWare and obtain all the services that their applications need from this AppWare sub system."

You agree, Mr. Frankenberg, that Mr. Maritz of Microsoft accurately described the goal of AppWare?

A. He described it very well.

From that, I think we can easily see why Microsoft would have viewed Novell as a threat.

In the first quarter of 1995, Frankenberg was told that there was a problem, that Microsoft had withdrawn access to its interfaces, while continuing to have them to use themselves if they wanted to. He is asked if he ever complained to Bill Gates about it:

Q. Did you ever personally complain directly to Mr. Gates about the issue of undocumented calls and interfaces in Microsoft's operating systems?

A. Yes I did on a number of occasions.

Q. And do you recall the general time frame of these complaints?

A. Those would have been during 1995.

Q. And what did you complain about?

A. I complained about being denied access to application programming interfaces that people at Novell --- at Microsoft had access to.

Q. Did you make such complaints on multiple occasions to Mr. Gates?

A. Yes, in person and in writing.

Gates, he says, refused to discuss it with him, so after a while, he stopped bringing it up and worked on trying to find a workable workaround. And when they missed the launch of Windows '95, he goes on, they decided that there was no level playing field for WordPerfect, and so they sold it:
A. It became clear level playing field. Um, our key competitor, Microsoft, could control our ability to put product out the door and did so. And that meant that it was impossible for us to fulfill our promises to customers, it was impossible for us to derive significant value, and it made much more sense for us to sell product and pursue other opportunities.
And that's Novell's case, in a nutshell.

Then, David Tulchin gets to cross examine. He brings out in questioning that WordPerfect didn't yet have a suite to challenge the Word-Excel-Powerpoint suite of products, so its numbers in the summer of 1994 were falling. Also, the then-version, 6.0, was buggy and slow on Windows. That's why Frankenberg's first priority on becoming CEO was to work on PerfectOffice, their suite, and WordPerfect for Windows 95. But mainly Tulchin tries to get Frankenberg to agree that Novell wasn't nimble enough and that it had weaknesses. He tries to get him to agree by reading bits of documents like a 10K list of things that could lead to failure that was filed with the SEC back then.

But all SEC 10Ks have lists like that. It doesn't mean the company thinks any of them will happen or are happening or if they are that they are a big deal. It's more a protective list. In fact, Microsoft's 10Ks have lists like that too. So Frankenberg doesn't agree with his theory.

Tulchin is very aggressive, so much so the judge several times tells him to move on, that he already has an answer or that he can try to prove it some other way. But in his aggression, he fails to notice something. He goes on at length trying to prove that Frankenberg made the decision to sell WordPerfect in 1994. But Frankenberg says no, it was 1995. Even when Tulchin shows him his testimony in SCO v. Novell where he said it was 1994, Frankenberg persists that it was 1995. This is beginning on page 1099 (or page 7 of the PDF numbered docket 420) Frankenberg says he's sure it was 1995, and he must have mispoken at the SCO trial.

The very next series of questions are based on some Novell board meeting notes from October of 1995. This is beginning on page 1108 (or page 16 of the same PDF). It talks about the October 20th proposed fiscal year budget for 1996. Novell's year was October to October. And on page 4 of that document, you find it saying that Novell wanted to get the company refocused and moving the core business forward. And they are discussing here, as Tulchin himself says, the "question of whether WordPerfect should be sold." If the CEO had made up his mind in 1994 to sell, they wouldn't still be debating whether or not to do it in October of 1995.

Some things are just obvious. To me, anyway.

Tulchin also tries to establish that Microsoft itself never used the namespace extensions that it pulled back from Novell. But Frankenberg says he has no knowledge about that. Then Tulchin brings out that it was in 1995 that Microsoft pulled back support for those APIs. That too, to me, establishes that the decision to sell couldn't have been in 1994.

After the jury is excused for the day, a rather extraordinary conversation ensues, with the judge expressing his views again. Here's just a taste, from page 1151:

THE COURT: I've said what I've said. It may not have anything to do with the lawsuit. I'm telling you that if I was a chief executive and chairman of the board of a company and this decision was not put on my plate -- forget the first option, because maybe I'm wrong about my recollection, which is perfectly possible. But the choice between using Microsoft's open face dialog, which may decrease the functionality that your clients have come to expect or going off on some uncertain path, whether it's a year or whatever -- what I know from -- clearly one thing, this is an industry in which people can't predict what's going to happen, I would want to make the decision as the chairman of the board and the CEO, and I am not -- I'm sorry, I'm just telling you what I'm thinking. It may have nothing to do with -- if responsible people made the decision, it may have nothing to do with the lawsuit. It may make a big difference.

MR. TULCHIN: It actually doesn't help Novell to say we didn't know it would take a year, because three months in, or four, or four and a half, or five, or six,

when they hadn't solved the problem yet, and they could get the product out in a moment's notice, according to all the testimony, we'll collect it, I will be happy to show it to you.

THE COURT: Somebody knew something that year. These people -- two or three people, they didn't want to hire people. A bunch of associates researching a project.

MR. TULCHIN: That executives made a decision, there is not a single document --

THE COURT: This is my fault. This is my fault. All I'm saying is that I did not think that this speaks well of Novell management that Bob Frankenberg was not involved in the decision. That's all I'm saying. It got us here. I think you've made that point, Mr. Tulchin. I think it's something the jury may or may not consider. But I don't think that pursuing the issue of whether the file -- or whether the resignation of the Quattro Pro people made a difference is to going to impact it. That's how we got here. That's all I'm saying.

MR. JOHNSON: Your Honor, may I say, all of this is under the category of blame the victim without reference to the fact of what Mr. Gates did and the reasons he --

THE COURT: Mr. Gates was, according to -- I understand. The answer is that he was involved in a highly competitive industry in which he was worried about paradigm

shifts in a minute, and he didn't want his product to be used by somebody who he saw as a major competitor that might be used against him and completely wipe out what he had accomplished.

MR. JOHNSON: If that was the case, they never should have evangelized that stuff to us. They shouldn't have given it to us. They shouldn't have told us this is what you should do to develop your product and we might not be here today. But he took a calculated I'm taking that away from them in order to advantage my suite and to hurt WordPerfect and Lotus, and he did so, frankly, with malice....

THE COURT: Okay. Fair enough.

Look, I understand. If I'm wrong, the first option, I could very well -- it could be it's the lack of documentation, plus what the people on the phone refused to say. It could also be -- and, frankly, it's the first time today as I realized it, I guess, that the APIs could have been withdrawn in the first release of Windows 95. Frankly, I had just gotten the impression that everybody was talking about were the APIs being withdrawn in future versions of Windows. That is what prompted my original question of last week, which is why didn't somebody consider using the documented APIs, at least simultaneously while the house was being built, to which you said there are two answers. Number one, they couldn't even use the existing APIs because they were getting stonewalled by whatever --

MR. JOHNSON: Premier Support, Your Honor, which, by the way, wasn't some hotline. It was a paid service that cost a lot of money, and you had direct excess to Microsoft's developers.

THE COURT: I understand.

MR. TULCHIN: Your Honor, it's not an antitrust claim that unnamed people at Premier Support, who they have never identified, somehow didn't help them enough because they weren't competent enough to write their own product.

THE COURT: It's your fault because you don't have the records of Premier Support.

MR. TULCHIN: Yes, we had the duty to collect those documents. They knew they were going to sue us. They had the duty. Of course, we don't have those records.

MR. JOHNSON: There were lawsuits against Microsoft at the time. They had an equal amount of duty at the time. There were all kinds of documents.

THE COURT: I think --

MR. TULCHIN: No one else has had the nerve to sue about calls to Premier Support.

The judge, then, just speaks out loud what he's thinking about, and as you can see, at least one issue where he had misunderstood earlier, he in this transcript seems to finally comprehend.

How do you enjoy watching Microsoft's attitude? Getting a hint why Novell persuaded the jurors that Microsoft did something anticompetitively?

And here is the full day, putting the three PDFs together, for the day's text version:

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

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

In re:
NOVELL,

Plaintiff,

vs.

MICROSOFT,

Defendant.

_____________

Case No.

2:04-CV-01045JFM

_____________

BEFORE THE HONORABLE J. FREDERICK MOTZ

November 7, 2011

Transcript of Jury Trial

Laura W. Robinson, CSR, RPR, CP
[address, phone]

964

Appearances of Counsel:

For the Plaintiff:
Jeffrey M. Johnson
John E. Schmidtlein
James Robertson Martin
Miriam R. Vishio
Attorneys at Law
Dickstein Shapiro LLP
[address]

Max Wheeler
Maralyn M. English
R. Bruce Holcomb
Attorneys at Law
Snow, Christensen & Martineau
[address]

For the Defendant:
FOR THE DEFENDANT:
David B. Tulchin
Steven L. Holley
Sharon L. Nelles
Adam S. Paris
Qian A. Gao
Attorneys at Law
Sullivan & Cromwell
[address]

James S. Jardine
Attorney at Law
Ray, Quinney & Nebeker
[address]

965

I N D E X

Examinations - Page ROBERT JOHANN FRANKENBERG - 982
DIRECT EXAMINATION - 983
BY MR. JOHNSON -
CROSS-EXAMINATION - 1036
BY MR. TULCHIN -
REDIRECT EXAMINATION -
BY MR. JOHNSON -

966

Salt Lake City, Utah, November 7, 2011

* * * * *

THE COURT: We are, as you know, waiting for a juror. Since he is coming in, I think we ought to wait. Um, let's talk a little bit though about scheduling. Where do we stand in terms of how long we think this is going to last?

MR. JOHNSON: Well, Your Honor, in terms of Plaintiff's case, we're pretty much on schedule.

THE COURT: Well, what does that mean?

MR. JOHNSON: That means that we would anticipate, well, of course you never know about how long cross-examination is going to be, but we would anticipate finishing our case, um, next week sometime.

THE COURT: Okay.

MR. JOHNSON: And it obviously depends on the scope of cross.

THE COURT: When do the experts, when do they testify?

MR. JOHNSON: Mr. Alepin will be next after Mr. Frankenberg.

THE COURT: Okay.

MR. JOHNSON: So as early as tomorrow if we were able to complete Mr. Frankenberg today. Um, and I would expect Mr. Alepin would be a while. We do still have some videos to show.

THE COURT: Okay.

967

MR. JOHNSON: Um, and then we would anticipate probably Mr. -- Professor Noll probably the beginning of next week.

THE COURT: So you think you will be finished next week?

MR. JOHNSON: Well --

THE COURT: Subject to cross-examination.

MR. JOHNSON: Subject to cross. I mean if we have two days of cross on each witness, no, we're not going to make it. If we have -- if the cross comes anywhere close to the direct, then we would clearly make it.

THE COURT: What can Microsoft add at this point in time to what he has said?

MR. TULCHIN: Your Honor, we hadn't been told who the witnesses would be other than just in the last couple of days. We heard it was Mr. Frankenberg today followed by Mr. Alepin. Assuming that the only other live witnesses are Professor Noll and then Dr. Warren-Boulton who is the expert on damages, um, I guess I agree with Mr. Johnson we should be finished by, you know, I'm going to guess Wednesday or Thursday of next week with the plaintiff's case.

THE COURT: When -- how long do you think your case is going to last?

MR. TULCHIN: Um, my best hunch, Your Honor, and again --

968

THE COURT: I am not going to hold you down but just --

MR. TULCHIN: Right. I'm going to -- my guess is it will be somewhere in the neighborhood of three and a half to four weeks which is what we thought pretty much from the outset.

THE COURT: Which would take us through when?

MR. TULCHIN: Just doing the calculations, Your Honor, the week of Thanksgiving is a two-day week. We may have a couple of days next week to start, a day or two, because that is a five-day week, if I remember correctly.

THE COURT: That is one of the things I want to talk about, okay.

MR. TULCHIN: Okay. And then let's see if I'm doing the math right, I think that takes us until about the 14th or 15th of December. But I'm doing it in my head very quickly.

THE COURT: So realistically, let's see what day of the week is the 16th?

MR. TULCHIN: The 16th is next witness, Your Honor, if we're talking about November.

THE COURT: No, I'm talking about -- realistically, as I look at it, um, if we finish next week sometime, then we have got two weeks, Thanksgiving week, then one week the 28th.

969

MR. TULCHIN: Yes, I think that is a full week, Your Honor.

THE COURT: Week of the 5th.

MR. TULCHIN: Yes.

THE COURT: Week of the 12th.

MR. TULCHIN: Yes. And --

THE COURT: We're going to go up -- we're going to go the week of the 19th.

MR. TULCHIN: Well, I'm hoping not, Your Honor. I'm hoping the three and a half weeks would get us to around to -- I hope I'm done around the 14th, 15th of December. Does that make sense?

THE COURT: But then there is closing arguments.

MR. TULCHIN: Correct, Your Honor, of course.

MR. JOHNSON: And there might be some rebuttal, Your Honor. I don't know.

THE COURT: Realistically, I don't see us -- I see us going right up until Christmas.

MR. TULCHIN: Well let me just say, Your Honor, that of course when Novell rests, we will re-evaluate the need to call all of the people on our list. And maybe again --

THE COURT: No. No. No. I'm just -- I am not -- I'm not looking for the --

MR. TULCHIN: I'm hoping we can do it quicker than what I just estimated.

970

THE COURT: Well, I had a hearing last Friday that did not complete in a National Security Case, and it would be helpful if we could have, for me, to have a four-day trial instead of the five-day trial next week. I assume we're going to have relatively substantial argument on the motion for judgment notwithstanding verdict.

MR. TULCHIN: We certainly will be prepared for that, Your Honor, of course at the Court's pleasure.

THE COURT: Well, this tells me as much as I'm going to know. Um, frankly it looks to me like I don't think we're -- my guess is we're not going to finish with the evidence until next Thursday. So we might have Thursday afternoon. I think I will take Friday off and maybe on Monday for the arguments and pick up on Tuesday, unless -- unless that causes problems with people. Does that cause witness problems?

MR. TULCHIN: It may, Your Honor. I wonder if we could get back to you on that.

THE COURT: Well, that is exactly why I'm having this discussion.

MR. TULCHIN: Okay, yeah. I would like to --

THE COURT: Sounds to me like we need -- that I shouldn't take next Friday off.

MR. TULCHIN: Of course we're not in a position to tell the Court what schedule to adopt, Your Honor, but --

971

THE COURT: No. No. No.

MR. TULCHIN: But if you could sit next Friday, I think that would be helpful.

THE COURT: Okay. Well, that is right. All right. So for today then no evidentiary issues I gather.

MR. TULCHIN: Sorry, Your Honor?

THE COURT: For today there are no evidentiary issues that people know about?

MR. TULCHIN: There is one issue, Your Honor, concerning one document that is Defendant's Exhibit 6.

THE COURT: Tell me I didn't get your memo to it, it is my fault. Let me see the exhibit first.

MR. TULCHIN: Okay.

MR. JOHNSON: You have actually seen this exhibit before.

THE COURT: I have seen it before and I have seen your opposition.

MR. JOHNSON: We had a bench conference on this at the time of Mr. Harral's testimony.

THE COURT: Right. Comes out of Novell's file but Novell one of the few documents they preserved.

MS. NELLES: Here you go. Here is the copy of the exhibit.

THE COURT: I'm not happy about your wanting to keep it out, but that is the basis for a look. Okay tell me, I

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have read the opposition, so tell me -- let me hear from Microsoft first sort of what is your position.

MS. NELLES: Good morning, Your Honor. I'm going to do my best Adam Paris imitation who is off running a marathon this weekend. I think this is, I won't belabor it, a simple point. This is a Novell document that is plainly a party admission. Um, it relates to a letter that went out on August 21 that was signed by Mr. Frankenberg who is going to testify today. We have heard it doesn't relate. First we heard it relates to NetWare, now we're hearing it doesn't relate to the 32-bit product. Um, Mr. -- you know Mr. Reynolds whose initials are at the bottom of this, he is available to Novell if they want to bring him in. If nothing else, it goes plainly to a pattern of delay and it comes from blaming Microsoft and it is relevant and we should be able to use it to cross-examine today.

THE COURT: I have read the opposition. I mean it sounds to me like you're trying to walk away from a document which you can, but it is your document.

MS. NELLES: It is their document, Your Honor.

MR. JOHNSON: Your Honor, we're not trying to walk away from it at all. Can I be heard?

THE COURT: Yeah.

MR. JOHNSON: You may recall that this document came up once before and we had a bench conference about it with

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respect to the cross-examination of Mr. Harral who, as you know, was a developer with the share code team.

You allowed him to show the document to Mr. Harral. And Mr. Harral professed complete lack of knowledge with respect to this document and appropriately so. Then Mr. Tulchin then simply withdrew it and we had no further discussion. Now, that exchange should have given a bit of a clue to folks that the bugs being talked about here had nothing to do with the product that Mr. Harral was working on. Because as you know, Your Honor, without shared code, nothing will run on Windows 95. So if Mr. Harral didn't know about these bugs, um, it is very clear they have nothing to do with the new product.

THE COURT: That assumes that Mr. Harral is telling the truth. I am simply -- I'm not saying he is not, but theoretically --

MR. JOHNSON: But let me go on. You can't -- you can't have bugs unless you have something to run on the beta version of Win 95. In other words, how would you find the bug without a product to run on Win 95. There was no product, no known product, for the new Win 95 version of PerfectOffice. Mr. Harral and Mr. Richardson and other folks were working on that. There was no product. So when you're talking about bugs here, the evidence will show and I -- and I really think you were being misled here by

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Microsoft, the bugs relate to Legacy products because there has to be backwards compatibility. In other words, PerfectOffice 3.0, which was a 16-bit product already in existence, WordPerfect 6.1 and 6.0A, need to be able to run on the new operating system which is about to come out. So they take the beta version of Win 95, they run these Legacy applications on that beta version, and lo and behold, despite Microsoft's promises that there was going to be compatibility, there are bugs which makes it so our Legacy products will not run on the new operating system.

Now, that has nothing to do with this case. It is a frolic and detour. We have never -- we have never asserted that because Microsoft when they had these bugs, and there was some delay in fixing them, that that was an anticompetitive act or there was any problem with that. But what Microsoft is trying to do with this document is suggest that it had something to do with the new product being developed for Windows 95. It doesn't. It is all Legacy product. In fact, the reference to the Win 95 client in there is a reference to the NetWare client which, of course as you know, is the -- is the server operating system of Novell. So these bugs, every last single one of them, relate to Legacy products which are not in issue in this case.

So the jury is going to be very confused by this. Now

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I will say this, if we're going to get into bugs, that the fact of the matter is just prior to the release of Windows 95, Microsoft came out with a list of some 200 bugs claiming that WordPerfect's products, including -- including PerfectOffice 3.0, the Legacy product, didn't work on Windows 95. It was a terrible article for us. And we stood up and said look, what are you talking about? These bugs have all been fixed. Our product now works fine on Windows 95 yet they came out with this and put -- cast a shadow on the ability of our Legacy products to work on the new operating system that was about to come out. We have not gone there. We have not raised this issue because it is wholly tangential to the issues before this Court which is the new product that was being built for Windows 95. So this is not an omission, this document, we don't even know who wrote it. Mr. Miller who was deposed about this in 2001 didn't recognize the document at all. Said he didn't say any of the things in there, and he didn't -- and he didn't know what even what it was about.

So we have got a document with an author unknown that cannot constitute an admission because the requirements for admission are that you have somebody that is in a position to have done something within the normal duties of employment, et cetera, et cetera, and you can't have that here. So if we are going to get into a debate about bugs,

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it is just going to confuse the jury and we're going to be talking about an area that dealt with the Legacy products. We don't think that the Court should allow that unless they can provide -- I mean Mr. Frankenberg is going to testify, if they get into this with him, that it is a Legacy product. It is nothing to do with the new product for Windows 95. So the notion that there would have been bugs with respect to a product that wasn't even in existence yet is totally illogical.

In other words, for Microsoft to fix the bug, they have to have something to run on the operating system. They certainly didn't have a product, a new window, new WordPerfect for Windows 95 product to run. Mr. Harral and Mr. Richardson were laboring away night and day trying to create the shared code that would enable these products to even run on Windows 95.

THE COURT: That is not true. As I understand it, WordPerfect would run on Windows 95, it just wouldn't be able to get all of the information from other sources.

MR. JOHNSON: Let me make this clear, the Legacy products which were already in existence, PerfectOffice 3.0 which was released in December 1994, that is the subject of the bugs.

THE COURT: I just want to understand conceptually that I am not -- my understanding is that WordPerfect is a

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pure word processing application that would work on Windows 95.

MR. JOHNSON: Not the new product being developed for Windows 95.

THE COURT: That is not my question. As I understand it, I mean again because it is -- is the jury here? As soon as they're here, we will start. I just want to conceptually make sure I understand it. My understanding as of right now is that WordPerfect has been developed through the partnerships into that nature was able to access information not simply in the word processing program. And that -- and the problem was that the withdrawal of the APIs prevented WordPerfect from being able to recreate that functionality. That is what the core of the problem is. For example, in the one that I really want to understand is QuickFinder but QuickFinder you all used as an -- that you could QuickFind from various sources of information not just word processing. But that is the core of the whole problem the shell and everything else that you just couldn't access the information sources. Now my understanding is that there is no question that WordPerfect, as a word processor, would work on top of Windows 95 and could be accessed either through the start button or through the icon.

MR. JOHNSON: No, Your Honor.

THE COURT: That is not correct?

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MR. JOHNSON: I think that you -- you don't completely understand.

THE COURT: Well --

MR. JOHNSON: Let me make sure, let me try to make this very clear. Um, the 16-bit WordPerfect product, the Legacy product, 6.0, 6.1, would run fine on Windows 3.1 and eventually ran fine on Windows 95, even though Microsoft said it didn't, but it did, it ran fine on Windows 95. WordPerfect and Novell was engaged in trying to build a new product, a 32-bit product, a different product for the new Windows 95. That is the product that Mr. Harral and Mr. Richardson were working on. That product, during all of 1995, did not run on the betas of Windows 95. They had this problem with the file open dialogue, and I think Mr. Gibb may have testified, you have to be able to open. So they had this problem that caused the entire product, the 32-bit product, not to be able to be built in a timely fashion and, in fact, was not released until sometime in 1996, I forget the exact date.

So there was no 32-bit product during 1995 of WordPerfect or of PerfectOffice that was -- that was running on the Win 95, Windows 95 operating system betA: There was no product. So when we talk about bugs here, what we're -- the only thing we're talking about is fixing problems with running the Legacy products, the 16-bit products that were

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already in existence. And that was the bug problem. And what I'm trying to --

THE COURT: We have got two levels of inquiry here. One is about what the problem was about, the other about Exhibit 6. Who wants to start.

MR. HOLLEY: Your Honor, Mr. Johnson could not be more wrong. His own witness Mr. Richardson testified that they had the product up and running on Windows 95 betas using the windows common file open dialogue. The product was running and they were testing it. And Your Honor is exactly right. Instead of just doing that, which would have been perfectly fine, they decided to try to do a lot more work so that things like QuickFinder and the e-mail client would show up in the windows shell and make windows a better operating system. But I think it is completely wrong to say that there were no bugs encountered in developing the product on Windows 95. That is what they were doing all during 1995. And the whole point of the beta is to have people report bugs on the new operating system. So I regret to say that what Mr. Johnson is saying is flatly wrong.

MR. JOHNSON: It is not wrong, Your Honor, and here is why. If Microsoft can point to an alpha or a beta of the new 32-bit operating system that they had in order to fix some bugs on the new 32-bit product, then there might be some validity to what Mr. Holley just said. But there was

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no alpha or beta version of PerfectOffice for Windows 95. It didn't exist because of the problems the shared code team was having, because the shared code team, as you remember, is the starting point for everything else. You cannot run these products without having the shared code work. So when Mr. Richardson said we had -- they started and had something running which was slow and had a lot of problems and it wasn't working and they went back to Microsoft and tried to get more information to make it work and they were shut down by Premier Support and they wouldn't talk to them about the shell any more, it was at that point they made the decision to go to -- to take another option and to try something else to build the product that would work on Windows 95. But the important part for you to understand, Your Honor, in order to report a bug you have to be able to give a product to the people trying to fix the bug so they can test it. In other words, the people in Microsoft in order -- you tell them you have a bug and they say well give me the product and let us see if we can recreate that bug, let us see if we can fix that bug, the only products that were being tested for bugs during this 1995 period, were the Legacy products. The products that needed to be compatible with the new operating system.

So when they tried to claim that this memo or the bugs and Mr. Frankenberg's letter had anything to do with the --

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with the matters in dispute in this case, they're misleading the Court and they're going to mislead the jury. There is -- there is no -- and if there had been such bugs, the developers of shared code would have known about it. And there certainly isn't any indication that Mr. Harral is sitting up there lying. This man has no stake in this. He has not been a Novell employee for years.

THE COURT: I'm not suggesting that.

THE CLERK: They are here.

THE COURT: Let's get them in. Let's get them in.

(Whereupon, the jury returned to the courtroom.)

THE COURT: Good morning everybody. I hope you had a nice week.

Next witness?

MR. JOHNSON: Good morning, Your Honor. Thank you very much. We're going to start this morning with Mr. Robert Frankenberg.

THE COURT: Mr. Frankenberg.

THE CLERK: Raise your right hand, please.

ROBERT JOHANN FRANKENBERG,
called as a witness at the request of the Plaintiff,

having been first duly sworn, was examined

and testified as follows:

THE WITNESS: I do.

THE CLERK: Please be seated.

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MR. JOHNSON: Your Honor, these are the exhibits that we will be using with Mr. Frankenberg.

THE COURT: Thank you.

THE CLERK: Please state your full name and spell it for the record.

THE WITNESS: Robert Johann Frankenberg, R-O-B-E-R-T J-O-H-A-N-N F-R-A-N-K-E-N-B-E-R-G.

DIRECT EXAMINATION

BY MR. JOHNSON:

Q: Mr. Frankenberg, here is a set of exhibits for you. Good morning, Mr. Frankenberg. Can you tell the jury where you presently live?

A: We live in Alpine, Utah.

Q: And how long have you lived in Utah?

A: Since 1994.

Q: What caused you to move to Utah in April of 1994?

A: Um, I accepted the position of president of Novell and moved from California to here.

Q: And how long were you with Novell?

A: Almost two and a half years.

Q: Can you tell us why you left Novell?

A: My wife was diagnosed with metastasized breast cancer in July of 1996 and the prognosis was not good. She was given less than a 20 percent chance of surviving. Fortunately, the prognosis was wrong. She is still with us

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and feisty as ever. But I needed time to be with my wife and, um, chose to leave Novell at that point in time.

Q: And why did you stay in Utah after leaving Novell?

A: This is a great place to live. We had come to enjoy the environment, loved the outdoors, and where better than Utah to enjoy that.

Q: Are you currently employed, sir?

A: No, I am retired.

Q: Are you a member of any local boards of directors?

A: Yes, I am. I am on the board of Westminster College and have been on the board since 1997. The last five years I have been privileged to be the chair of that board. I am also on the board of the Sundance Institute which is in Park City, and a company by the name of Veracity Communications which is headquartered in Provo.

Q: Can you tell the jury about your early educational and work experience after graduating high school?

A: When I graduated from high school, I was drafted actually before graduation, and chose instead to go into the Air Force. I spent four years in the Air Force and during that during that time, I was able to complete two years of college. Upon leaving the Air Force, I went to work for

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Hewlett Packard and worked full-time, went to school full-time, and completed a degree in computer engineering from San Jose State in 1974. Later, Hewlett Packard sent me to Stanford to get an Executive MBA which I completed in 1986.

Q: What was Hewlett Packard's business at the time that you began working for them?

THE COURT: It is hot in here. That is the reason that window is open.

THE WITNESS: Hewlett Packard was best known at that time for its electronic instrumentation, a wide range of instruments for testing electronics. They had a small computer start up business which I joined in 1969.

Q: (By Mr. Johnson) How long were you at, and I'm going to refer to Hewlett Packard as HP if that is all right with you?

A: Works for me and they won't mind.

Q: How long were you at HP?

A: Almost 25 years. A couple of months short of 25 years.

Q: Can you take the jury through the progression of any position changes you had at HP?

A: I started at Hewlett Packard as a manufacturing technician. And my job was to troubleshoot and fix computers on the production line. After about a year of

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doing that, I went into the development lab and did technician work and I was shortly thereafter I was fortunate to be able to do design work. So I designed a computer memory and then later a number of -- participated with the design of a number of computers for Hewlett Packard. Became -- I was promoted to a project manager and I led the development of a number of computer systems. Moved into marketing, which was fascinating, and got well acquainted with what we weren't doing right and what we needed to improve on. And from there went back in to development and became a developing executive, a general manager, and in 19 -- excuse me, in 1989 became the vice president of the corporation responsible for the networking business. And in 1991, I became the leader of the personal computer business for Hewlett Packard.

Q: And was that your last position at HP?

A: Yes, it was.

Q: And while in that vice president position, did you have any relationship with Microsoft?

A: Yes. Microsoft was a very key supplier to Hewlett Packard. We met with them on approximately a quarterly basis to discuss issues, to look at new things that they were doing, and had, I would say, regular sessions with them.

Q: While you were in as a vice president of HP, did

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you have any relationship with Novell?

A: Yes, I did. Hewlett Packard executives at the time had additional assignments. And one of my additional assignments was to be the liaison with Novell. And in that time I met on a quarterly basis with Novell and specifically with Ray Noorda who was the chairman and CEO at the time.

Q: And what was your impression, if any, of Novell as a company based on those interactions?

A: Novell was clearly a very capable company. They built a very strong operating system called NetWare that had garnered a lot of -- a huge customer base and had grown that into a very significant business.

Q: So after I think you said 25 years at HP you came to Utah to work for Novell. Why did you leave HP to come to work for Novell?

A: Um, well the -- in looking at Novell's capabilities and what I thought were important opportunities in the computer business, I believe that Novell was in a wonderful position to lead the next major advance in the computer business and that was to make the network available and useful to everyone.

Q: Can you describe the events that led up to you taking over eventually as the Chief Executive Officer of Novell?

A: Yes, I can. I remember very clearly one of these

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meetings that I mentioned that we had on a regular basis, um, Ray Noorda and I had met with our respective teams and listened to the issues and decided on a number of action items. And as was our custom, we would get together afterwards for an hour or so, just the two of us, and talk about what was going on in the industry and what we needed to do to make progress.

Toward the very end of that, Ray said well I suppose that you know that the board wants to replace me as CEO. And I said well Ray it would be hard not to know, it is all over the papers, you know. And he said who do you think would be a good replacement? And I said, well I always thought I would be, joking. And that afternoon the search firm called me and I looked into the opportunity over the next week or so and accepted the position as president, not CEO, but as president of Novell.

When I arrived at Novell a few days after that, Ray had concluded that it would be a better idea for me to join as CEO, and he discussed that with the board. And so I was offered and accepted the position of CEO of Novell at that point in time.

Q: When you were in discussions with Novell, what, if anything, did Novell tell you about its plans to acquire WordPerfect?

A: They had me sign a nondisclosure agreement and

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told me that they had nearly completed, essentially completed, an agreement with WordPerfect to acquire the company and with Moreland would acquire its Quattro Pro spreadsheet product, and that they were going to use that to create a suite of applications to compete with Microsoft Office.

Q: Let's turn now to Defendant's Exhibit 308 which should be the first document in the binder in front of you. And let me show that to the jury, Mr. Goldberg. And Mr. Frankenberg, can you explain to the jury what this document is?

A: This was a briefing document for, I believe, for the announcement of my joining Novell.

Q: And drawing your attention to the first question and answer here, um, does this answer reflect your thoughts about the proposed merger between Novell and WordPerfect?

A: Yes, it does.

Q: And as stated here, were you enthusiastic about the deal?

A: Yes, I was. I had some concerns about taking Microsoft on, but I was very enthusiastic about the opportunity to create networked applications.

Q: When was the merger announced in relation to when you arrived at Novell, the merger between WordPerfect and Novell?

989

A: A few days before I arrived.

Q: Do you recall at the time of the merger that the Novell stock price declined?

A: Yes, it did.

Q: Do you recall how much it declined?

A: If I remember correctly, about 20 percent.

Q: Did you anticipate that decline in Novell's stock?

A: Yes, I did. I thought that the market would react negatively to Novell taking on Microsoft.

Q: Did the Novell Board of Directors have any reaction to that decline?

A: No, they -- I think they anticipated it as well.

MR. TULCHIN: Objection as to what others thought, Your Honor.

THE COURT: Sustained and struck.

Q: (By Mr. Johnson) Mr. Frankenberg, did you have any understanding as to what the other members of the board of directors reaction was to that decline?

MR. TULCHIN: Same objection.

THE COURT: Sustained.

Q: (By Mr. Johnson) Um, was there any second guessing amongst the board with respect to -- based on the decline in the stock price?

A: Um, no, there was not.

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Q: Were you aware of whether there were any other bidders for WordPerfect?

A: Yes, Lotus Corporation was an avid bidder for WordPerfect.

Q: To your knowledge, was there a bidding war for WordPerfect?

A: Yes, there was.

Q: Let me show you what has been marked as Plaintiff's Exhibit Number 153 which is the next document in your binder. Can you identify this document, please?

A: This is the Board Meeting Minutes from March 20 of 1994. It was the -- these are the Board Meeting Minutes for Novell for March 20th 1994.

Q: Turning to the third page of these minutes with the Bates stamp ending 7229, Mr. Goldberg if you could highlight the third, that would be fine, the third point there where it states, quote, "Lotus Development Corporation was continuing to up its proposed purchase price for WordPerfect over and above what Novell was willing to pay." Did these minutes reflect the bidding war that was ongoing between Lotus and Novell over WordPerfect?

A: Yes, they clearly do.

Q: Do you have any understanding as to why Lotus was interested in WordPerfect?

A: Well, WordPerfect was the best word processor in

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the market at that point in time, and Lotus had the best spreadsheet, Lotus 123, and they were desirous of putting those together and creating a suite of applications to compete with Microsoft Office.

Q: Now going back to the merger between Novell and WordPerfect, do you recall when the transaction was finalized, actually closed?

A: Um, late June of 1994.

Q: Was a plan developed for integrating the business applications into the Novell Company?

A: Yes, it was.

Q: As a part of that plan, were the business applications run as a separate division?

A: Yes, it was.

Q: And why was that?

A: To give it the freedom of actually to make its own decisions and address the market at both its opportunities and its challenges.

Q: Let's turn now to Defendant's Exhibit Number 4 which should be the next document in your binder there. Take a moment to take a look at that. Do you recognize this document?

A: Yes, this is a version of the unification plan or the integration plan for WordPerfect.

Q: And what is the purpose of this document?

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A: The purpose of the document is to lay out the plan for how WordPerfect and Quattro Pro would be integrated into the company, and how the new organization would be set up to address the business applications.

Q: If you could turn, please, to the second page, the Bates stamp ending 6569, and if we could focus in on the second full paragraph, how many business units would the business applications products be divided into?

A: Three business units.

Q: And they are?

A: Um, the business applications, consumer products and workgroup products.

Q: Now, this paragraph goes on to talk about relying on the Novell organization for a number of services, quite a list of services, including operations, corporate marketing, education and training, services and support, sales, legal, financing and accounting, et ceterA: It has a number of other ones there. Can you explain to the jury why you would be relying on Novell for those services for the business applications?

A: Well, these were shared services so that they could be far more efficient. And they were shared amongst all of the business units of Novell. The reason for doing that was to centralize it and say make them efficient and also it aligned the business units, the new business units,

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business applications, with the other business units in the company.

Q: Staying on the same page and looking at the sub heading some key points down below, you will see the first one says that quote, "We are making new investments in Chicago Development." What is Chicago, Mr. Frankenberg?

A: Chicago is the code name of the project at Microsoft that ultimately became Windows 95.

Q: To your knowledge was Chicago a 32-bit operating system?

A: Yes, it was.

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

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

Q: If you could turn to the next page which is the second page of the document with the Bates stamp ending 6570. Under the heading business application, applications, the third bullet point says, quote, "After Windows 3.1 16-bit products are released this year, move large percentage of Windows resources over to Chicago 32-bit." Prior to the date of this memo, and the date of this memo is

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August 3, 1994, was WordPerfect already working on a Chicago based release?

A: Yes, it was.

Q: And what part of the business applications group was working on the Chicago based release?

A: The shared code group would have been working on it at that time.

Q: If you would turn then to Page 4 of this document that was Bates ending 6572, there is some details about the business of the business applications unit. Drawing your attention to the first and second bullet points, is this an overview of what was included within the development group of the business applications division?

A: Yes, it is.

Q: I would like you to focus in on the fact that development includes WordPerfect for Windows, DOS, Macintosh, and Unix. Can you explain to the jury what that means?

THE COURT: I'm sorry, where are you?

MR. JOHNSON: Page 3 of the document, Your Honor, with the Bates stamp note Bates stamp ending 6572 under the heading business applications.

THE COURT: I found it.

Q: (By Mr. Johnson) And I'm looking at the first two bullet points. Um, again, I would like to focus you in

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on, Mr. Frankenberg, the fact that development included WordPerfect for Windows, DOS, Macintosh and Unix. Can you explain to the jury what that means?

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

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

A: Yes, we did.

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

A: Yes, we did.

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

A: Well, there were two main reasons. One reason

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

Q: If you turn to page five, the next page in this document, that is Bates stamp ending 6573, and turning to the second bullet point under business applications, it states that quote, "There are very few resources on Chicago at this time. Even though we are phasing out WordPerfect for VMS, all resources need to be applied to Chicago, and in parentheses (or Tapestry). We do not want to be significantly behind Microsoft, if at all, in releasing a Chicago suite."

First of all what was VMS?

A: VMS was the operating system for digital equipment, fax, computer system. The large 32-bit system that was very popular at the time.

Q: And why were you phasing out further development on VMS?

A: Because we had a completed product, it was working well, it was well accepted and further development wasn't necessary.

Q: This bullet point states that "all resources need to be applied to Chicago," and then in parenthesis "or

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Tapestry." Can you tell us what Tapestry was?

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

Q: Was Tapestry planned to be cross-platformed?

A: Yes, it was.

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

A: Yes, we were.

Q: The last sentence states here, "We do not want to be significantly behind Microsoft, if at all, in releasing a Chicago suite." How important was it for Novell not to be significantly behind Microsoft, if at all, in releasing a Chicago suite?

A: It was vitally important. The reason is that the moment a new operating system environment is announced, typically, previously sales, previous products drop dramatically, and customers begin making decisions about which products they'll use in this newly released operating system. Um, so, if we weren't there at the point in time that the new operating system was released, we wouldn't be considered. And every day that we weren't there, it would be a day that we would lose business. Not only then, but for the future because people would make decisions to go

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with someone else.

Q: And is the reference to releasing a Chicago suite in this paragraph a reference to PerfectOffice?

A: It is a reference to PerfectOffice, yes.

Q: Can you describe -- I think we're done with that, Mr. Goldberg. Thank you.

Can you describe your understanding of how WordPerfect had been -- had traditionally been selling its products prior to the merger with Novell?

A: WordPerfect was very effective in selling their products face-to-face. They had a large number of very knowledgeable people who went out and called on large and small customers, even individuals, and sharing with them the capabilities, demonstrated product, and people bought the product and that was fine except for the fact that it was very expensive to sell it that way, especially one on one.

Q: How did that differ, if at all, from Novell's mode of selling software products?

A: Novell had the largest and one of the most effective distributor dealer organizations in the world. We had between 20 and 25,000 dealers who sold the products to end customers including a large, medium to large customers and individuals. It was highly respected and it was very efficient. And one of the key things that made the combination of WordPerfect and Novell interesting from a

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business standpoint was being able to take advantage of these 20 to 25,000 dealers in selling the product. It was also more efficient because you didn't have to have a knowledgeable person in front of an individual buyer. That knowledge could be transferred to a dealer, and that person in the dealership could provide that information. So much like buying a car. The dealer, the sales rep at the dealer, could represent us in that regard.

Q: So what were your plans for selling the business applications after the merger?

A: We were -- our plan was to shift the model to sell product through our huge dealer and distributor network, to retain people who were knowledgeable so that they could train people in the dealers, and retain a number of people that could sell to large companies directly. But that we would make use of this distinct advantage that we had in the marketplace to sell software.

Q: Did your plan include any changes to the combined sales force of Novell and WordPerfect after the merger?

A: Yes. Unfortunately it meant that we needed to reduce the number of people, it is always painful to do that, but we had to reduce the number of people in the company, um, to gain the advantages of being more efficient and more effective in selling.

Q: And have you been, during your history of

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business, have you been part of other mergers?

A: Yes, many times.

Q: And are layoffs after mergers usual or unusual?

A: It is almost always the case, unfortunately.

Q: Are you familiar with the acronym OEM?

A: Yes. OEM means original equipment manufacturer.

Q: Now, you worked for HP for many years. Was HP an OEM?

A: Yes. HP was an OEM. We built and sold personal computers, hence the original equipment, and we were the manufacturer of that equipment.

Q: During your tenure at Novell, did Novell have any plans to sell its business applications to OEMs?

A: Yes, we did. Um, we -- we planned on selling applications that would be preloaded onto the computer so that people wouldn't have to load them and get them started and go through all of that work. We also planned to have systems preloaded with demos and with free trials so that people could try them out and then hopefully purchase them after the fact.

Q: What if any advantages are there to applications, developers and selling to the OEM channel?

MR. TULCHIN: Objection, Your Honor. This is irrelevant. This is all Count VI material.

THE COURT: Overruled.

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Q: (By Mr. Johnson) Go ahead, Mr. Frankenberg.

A: Um, the key advantages are several. One is that you could reach customers that you wouldn't otherwise reach. Especially with the free trial that people give your software a try and see how it works and hopefully come to like it.

It was also very advantageous from the standpoint of cost. The product was there, preloaded, ready to go, um, and didn't require a box of software and inventory and all that sort of thing. And so it was a very efficient way to reach potential new customers.

Q: Mr. Frankenberg, I would like to go back to that Defendant's Exhibit 308 which was the first document that we looked at. And again, that first question and answer on this document. You spoke here of the opportunity with WordPerfect to develop a new class of networked applications. Can you explain to the jury what you meant by networked applications?

A: Yes, networked applications were applications that worked together so you could create something in a spreadsheet and include it in a word processing document. So they were integrated in that way and you didn't have to cut and paste as you used to have to do. They were also integrated with the network so that anything on the network could be accessed from those applications without the user

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having to understand all of the details of the network. In many ways we have that today, although it could be a little easier than what it is, um, but that was the idea behind networked applications. It was a very exciting new area and an area where we could hide the complexity of the network and the complexity of the systems from users and yet give them the capability to make it useful.

Q: Before you began as CEO of Novell, what was Novell's main product?

A: Novell's largest product and most significant product was called NetWare.

Q: So how does Novell's strength with NetWare relate, if at all, to the concept of NetWare applications?

A: Novell had approximately 40,000,000 users of their networks. And one of the things that Novell brought to the table was in depth understanding of network. And we saw the opportunity to make the network even more useful to people by hiding it, by making it so that you didn't have to understand it, putting it behind the applications, and from that giving them more value to our current users as well as new users.

Q: Are you familiar with the concept of the thin client?

A: Excuse me. Usually I don't talk this much. Can you repeat the question?

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Q: Sure. Are you familiar with the concept of the thin client?

A: Yes, I am.

Q: Can you explain to the jury what thin client means?

A: A thin client means that the user interface to an application is on the device that is on the desktop. And all of the application and information is across the network on the server. What that means is that you can have a much lower cost device on the desktop and you can centrally administrate the applications so it is much more efficient rather than having them scattered all over potentially a large company all over the world.

Q: Was the thin client concept a part of your vision for network applications?

A: Yes, it definitely was.

Q: I would like you to turn now to Plaintiff's Exhibit 229. Can you tell us what this document is?

A: This document is a transcript of my speech to the fall Comdex Convention in November of 1994.

Q: And would this document have been created in the ordinary course of Novell's business?

A: Yes, it would have. I regularly gave speeches, public and not so public speeches, to a significant number of audiences.

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Q: And what is Comdex?

A: Comdex was the largest computer convention in the world. It typically was held in Las Vegas and people attended it from the -- from the industry. The press was there, the customers were there, it was a great place to preview new capabilities and learn about what was going on in the industry.

Q: If we could bring up, Mr. Goldberg, the third paragraph there on the first page. Um, that paragraph begins with a reference to pervasive computing. Can you tell the jury what that is?

A: Yes, I can. Um, pervasive computing is connecting people to other people, and the information that they need, and it is giving them the power to act on that information any time, any place. In fact, it has come about as so we expect today from computers and networking. At the time it was only a vision.

Q: I noticed you were able to say that phrase without even looking at the document. Was this a phrase that you developed?

A: Yes, it was. I said it many times every week.

Q: How does persuasive computing relate, if at all, to your product vision for WordPerfect's office productivity applications?

A: We saw the WordPerfect office product suite,

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PerfectOffice, as the interface to pervasive computing. People would go there, be able to access all of the information they need, manipulate it, communicate about it to other people, and even perform transactions in cyberspace.

Q: How, if at all, did pervasive computing relate to the internet?

A: The internet in 1994 was still in its infancy. It grew quickly. And it was clear at that time that it would become one of the most important, as they were called then, information highways to provide connectivity to other businesses, to information sources, and ultimately to provide the ability to perform transactions over the internet.

Q: And what, if anything, did Novell do to include the internet in its pervasive computing model?

A: We licensed NetScapes Navigator which was the foremost browser at the time and included it in our PerfectOffice product.

Q: Do you recall whether Novell ever entered into an agreement with NetScape?

A: Yes, we did. We entered into an agreement to license the NetScape Navigator and that includes the ability to distribute the product through our huge distribution channel.

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Q: And if you would turn now to Plaintiff's Exhibit Number 268 in your binder. And do you recognize this document?

A: Yes. This is the software license agreement between NetScape and Novell for NetScape Navigator.

Q: And why did Novell enter into this licensing agreement with NetScape?

A: Because the NetScape Navigator was the foremost browser available at the time. Um, we saw the opportunity to integrate with NetScape Navigator to connect our PerfectOffice products with it and for our customers to be able to make use of it to access information throughout the internet. NetScape saw it as a big positive because we --

MR. TULCHIN: Object to what NetScape said.

THE COURT: Sustained. Sustained.

MR. JOHNSON: That is fine, Mr. Frankenberg.

Q: (By Mr. Johnson) Can you tell us generally what this agreement provided to Novell?

A: It provided Novell with the ability to include NetScape Navigator with our products, to integrate them, and to distribute the product.

Q: And during your tenure at Novell, did Novell actually bundle NetScape Navigator with any of its business applications?

A: Yes, we did, with WordPerfect office.

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Q: You have mentioned PerfectOffice a number of times. Can you tell us what PerfectOffice was?

A: PerfectOffice was our suite of office productivity applications that included WordPerfect, Quattro Pro, WordPerfect Presentations, a personal information manager, a forms package, a database package and somebody's hiring products and AppWare.

Q: When did Novell first release a version of PerfectOffice?

A: In late December of 1994.

Q: And do you recall the particular version number for that PerfectOffice?

A: Yes, I do. It was my Christmas present. It was called PerfectOffice 3.0.

Q: And what operating system was PerfectOffice 3.0 developed to run on?

A: It ran on Windows 3.1.

Q: If we could turn now to Plaintiff's Exhibit Number 412. Do you recognize this document?

A: Yes, I do. It is a strategy paper for PerfectOffice.

Q: And turning to Page 2 of the actual document which is past the table of contents, Bates stamped at the end 8191, if we could bring up, Mr. Goldberg, the top two paragraphs. Mr. Frankenberg, the top paragraph talks about

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the strengths and weaknesses of the suite offerings by Microsoft and Lotus. Do you have a recollection or any recollection in both Microsoft's Office and Lotus's smart suite offered only partial integration solutions in 1994?

A: Yes, I do.

Q: Turning your attention to the second paragraph which states quote, "the majority of customers today have not chosen to adopt either one of today's leading suites. According to the January 1994 ComputerWorld Software Suites Study, 74 percent of users have not yet adopted a suite standard."

What significance, if any, is it to Novell that the majority of customers have not yet chosen to adopt either Microsoft's Office or Lotus's smart suite?

A: Well, I admit that we had a significant opportunity, had a large number of customers or the vast majority of customers already chosen it, it would have been very difficult to overcome. But fortunately for us, three quarters of the market approximately hadn't made a decision yet. So it was a great opportunity for us.

Q: Moving down to the section marked "what do customers really want," if we could bring up the first paragraph there. It states in part, I think, beginning with the second sentence, quote, "Traditionally, the word processor, more than any other application, has played the

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largest role in influencing the purchasing decision of a potential suite buyer and it quotes to an IDC Summer Software Survey, 1993. As the leading vendor of word processing software, WordPerfect has direct access to the largest user base of potential suite customers in the industry."

What significance, if any, did WordPerfect's access to the largest user base of potential suite customers have on Novell's plans for the PerfectOffice suite?

A: Well, the largest, having the largest user base gave us a distinct advantage. As the earlier point that was made in this same document said that the word processor was the most frequently used application and people would not want to learn another word processor, find that awkward, so we had the advantage of being able to go to that largest install base and with the most important application convince them to use our suite rather than Lotus's or Microsoft's.

Q: And perhaps you should explain. What do you mean by WordPerfect's user base, a large install of user base?

MR. TULCHIN: Objection, Your Honor. The witness hasn't said that he wrote this document. So when the question asked what do you mean, I think Mr. Johnson is just asking the witness to say what the document means. Just slightly different.

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THE COURT: Overruled.

MR. JOHNSON: Go ahead, Mr. Frankenberg.

THE WITNESS: Could you repeat the question, please.

Q: (By Mr. Johnson) Sure. I just wanted you to provide some context to the jury of what is meant by WordPerfect's user base as used in this document?

A: We have the largest install base, the largest user base of word processing software in excess of 20 billion users.

Q: And in 1994, was WordPerfect's user base bigger or smaller than Microsoft's word user base?

A: It was larger.

Q: In 1994, did you have a view, if any, as to whether there was an opportunity for Novell to capture a significant portion of the new users of office productivity application suites?

A: Yes, we thought we had a very good opportunity to do that both because of the install base of word processing WordPerfect and because so many had not yet made a decision as to which suite they were going to buy.

Q: Could you turn next to Page 5 of this document, PX-412, with a Bates Stamp ending 8914. At the top it states, "introducing PerfectOffice 3.0, the perfect place to work." Can you tell us what that means, "the perfect place to work"?

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A: Well, what it means is that users could go to PerfectOffice, click on it, turn it on, and stay there and do all of their work from that, including the office tools but also access information across the internet or access information in their company systems. So therefore it was the perfect place to work.

Q: The second paragraph indicates that PerfectOffice 3.0 was scheduled to ship by the end of 1994. Do you recall if Novell met that goal?

A: Yes, we did.

Q: And I believe you stated it was released in late December 1994?

A: December 23rd. As I said, it was my Christmas present that year.

Q: So I would like to get the timing straight here. When did the WordPerfect Quattro Pro deals with Novell actually close?

A: It actually closed in June, late June, of 1994.

Q: And then Novell put out its first PerfectOffice Suite in December of 1994?

A: That is correct. The team -- we had wonderful developers. The team did an extraordinary job completing that in less than six months and provided great integration amongst these and proved the products themselves. I was very proud of that team and they had a right to be proud of

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what they had accomplished.

Q: Oh by the way, had Novell delivered to the marketplace any versions of WordPerfect word processor for Windows prior to release of the PerfectOffice Suite in December of 1994?

A: Yes. WordPerfect 6.0A and WordPerfect 6.1 were delivered before the suite. These were enhancements to the original WordPerfect for Windows.

Q: A little lower on this page the document notes that the PerfectOffice 3.0 will be available in three configurations. I would like to draw your attention to the PerfectOffice Professional Model in the middle there and it states that the professional model added paradox. What was paradox?

A: Paradox was a relational database. It could be used by either individuals or by groups of people to store information away and then retrieve it in meaningful ways later.

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

A: Visual app builder is a middleware product that allowed developers to develop applications and connect to -- get its connections to the operating systems through AppWare. That meant that they didn't have to note as much or be as dependent on individual operating systems. It was

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a key tool in our effort to create cross-platform applications and competition in the operating system environment.

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

A: Yes, it was.

Q: I would like to share with you what Microsoft's Paul Maritz said about AppWare under oath in 1994, and you will find that on the screen in front of you.

Mr. Maritz stated in 1994, during the time you were at Novell, that AppWare was quote, "An explicit attempt by Novell to develop a layer that will provide all of the services required by applications. And so that they are explicit in their stated goal of saying that in the future a third-party software developer should have to know only about AppWare and obtain all the services that their applications need from this AppWare sub system."

You agree, Mr. Frankenberg, that Mr. Maritz of Microsoft accurately described the goal of AppWare?

A: He described it very well.

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

A: Because we saw it as important to have third-party developers not have to be dependent on

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

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

A: Yes, it was.

Q: Let's turn to Page 6 of this Exhibit 412 with the Bates number 8195. And it says about half way down the page "introducing PerfectFit technology." Are you familiar with the concept of shared code as it was used at WordPerfect?

A: Yes, I am.

Q: And what is shared code?

A: Shared code was -- is the interface to the operating environment that provides the connectivity to the engines above it and makes it so that the engines are not dependent on the under pinning operating system.

Q: Was PerfectFit Technology the same as shared code?

A: Yes, it was.

Q: Was PerfectFit technology in all of the

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configurations of PerfectOffice 3.0?

A: Yes, it was.

Q: Was PerfectFit Technology a form of middleware?

A: Yes, it definitely was.

Q: Why?

A: Because it made it so that the developers of the applications didn't have to understand the underpinning operating systems that they ran on.

Q: And how, if at all, did AppWare and PerfectFit Technology fit in with your vision of networked applications and pervasive computing?

A: It was a central -- both of those were central to the division. If we could make it so that developers could develop applications that made use of the network and not have to understand it, could access information on different computer systems regardless of what operating system ran them, we could provide users with a far greater set of capabilities and hide the complexity of the network and the system.

Q: If you could turn to Page 8 of this exhibit with the Bates Stamp ending 8197, I would like to draw your attention to the third paragraph there which states in part quote, "WordPerfect is committed to deliver opendoc for Windows in the future which will provide users with distributed cross-platform support, as well as cross

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application integration." Can you tell us what is opendoc?

A: Opendoc was a document standard. This was proposed as an industry standard so that one could create -- an application could create documents that could be understood by other applications and thereby be able to be manipulated by multiple applications even though the developers wouldn't have worked together to make it happen.

Q: And was Novell involved in the development of opendoc?

A: Yes, we were. We were intimately involved.

Q: Were other companies involved in the development of opendoc?

A: Yes. Amongst them IBM, Apple, Lotus, several others.

Q: What does it mean here where it talks about cross-platform support?

A: Cross-platform support meant across multiple operating systems and across multiple networks. A user wouldn't have to know about that nor would the developer.

Q: In your view was opendoc a form of NetWare?

A: Yes, it was.

Q: During your tenure with Novell, were there any releases of opendoc technology?

A: Yes, there was a developer's release in -- at Brain Share in March of 1995. Developer release meaning

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making it available to the developers to look at and try out.

Q: Did Novell continue to pursue opendoc technology after the sale of WordPerfect to Corel in 1996?

A: No, we did not. At that point we were no longer involved in application development and in document development so we stopped our involvement in opendoc.

Q: If you could turn to Page 11 of this Exhibit 412 of Bates stamp 8200 at the end. If you could bring up the first paragraph and heading Mr. Goldberg. The heading states the first networks suite. What does that mean, Mr. Frankenberg?

A: What that means was that PerfectOffice was the first suite designed to work on networks. And that meant that the suite could be easily installed across the network. It could be administered across the network and ultimately the goal was to make it easy for users of PerfectOffice to make use of the network in other ways.

Q: At the end of this paragraph the last sentence states, "network integration will be a major focus for future PerfectOffice development." Did future PerfectOffice development include the development of PerfectOffice for Windows 95?"

A: Yes, it did.

Q: Going back again then to PerfectOffice 3.0, how

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was PerfectOffice 3.0 received in the marketplace?

A: It was received very well. We got very positive reviews, um, our market share moved up into the mid twenties. We were very heartened by the response and also by the satisfaction that we heard from customers. Very, very successful launch.

Q: Let's turn now to Plaintiff's Exhibit 213. Take a moment to take a look at that. And first of all, do you recognize this document?

A: Yes, I do.

Q: What is it?

A: It is my speaker notes from a presentation demonstration that I gave at Agenda 95 in September of 1994.

Q: Would this document have been created in the ordinary course of Novell's business?

A: Yes, it would have been. As I said earlier, I frequently gave presentations and speeches.

Q: And can you tell us what was Agenda?

A: Agenda was an industry conference that, as its name implies, it was setting the agenda for the next year. It was always held in the fall. And so Windows, sorry, Agenda 95 was held in September of '94 looking forward to the next year. And people from throughout the industry would attend, press would attend, it was an invitation only kind of a conference and it was a great place for people to

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see what was emerging in the computer market.

Q: If you look down in the bottom left hand corner of this document there is a date given of September 20th, 1994. Would that have been the date or about the date that you gave this presentation?

A: Yes, it would be.

Q: Did Mr. Bill Gates attend this Agenda Conference?

A: Yes, he did. In fact, Bill attended most of the Agenda Conferences all of the ones that I attended.

Q: Looking at the first page on this slide three it details Novell's information services architecture and references open standards. What is meant by the term open standards?

A: Open standards are standards that are not owned by a particular vendor. They are often also called industry standards. These were standards that anyone could develop to with confidence that they would be there and wouldn't change and promoted inner operations of applications and systems.

Q: Was Novell interested in supporting open standards in the industry?

A: Yes, we were. It was a key tenet of Novell's.

Q: What value, if any, do open standards provide for competition in the computer software business?

A: Open standards make it possible for there to be

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substantial competition because it is the implementation that people compete on, not the interfaces and not controlling the interfaces.

Q: Underneath that it gives the acronyms APIs. First of all, I think the jury knows what APIs are now, but you better, for the record, tell us what APIs are?

A: Application programming interface.

Q: And why would you be talking about APIs in this presentation?

A: Because having APIs, application programming interfaces that were stable and open and with equal access was key to encouraging the development of applications in the industry.

Q: And what do you mean when you say open and equal access?

A: That all comers were able to access freely and have the confidence that those interfaces would be supported in the systems that claimed to support them.

Q: And I would like to turn now to Plaintiff's Exhibit 222 and ask you, Mr. Frankenberg, have you seen this document before?

A: Yes, I have.

Q: The jury has already seen this document and actually heard Mr. Gates testify about it. Um, this is his reflections with respect to your speech as you see the

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subject Frankenberg Speech at Agenda?

A: Right.

Q: And second paragraph of Mr. Gates e-mail states that Corsair was demonstrated, if you could highlight that, Mr. Goldberg, in the second -- yeah, there we go. What was Corsair?

A: Corsair was a shell that provided an interface, user interface, to the network and to your local applications and capabilities.

Q: Mr. Gates goes on to state cross-platform, including API, and then in parenthesis, Mac, Unix, Windows, et cetera, close parenthesis, can you explain to the jury what you were talking about at the Agenda Conference that may have led Mr. Gates to make that remark?

MR. TULCHIN: Objection to what may have led Mr. Gates to write this e-mail or say this.

MR. JOHNSON: I just said, Your Honor, may have led Mr. Gates.

MR. TULCHIN: I'm sure the witness has testified to his recollection of his speech.

THE COURT: I think the question goes to what the witness was talking about at the time of the speech. Overruled.

MR. JOHNSON: Go ahead, Mr. Frankenberg.

THE WITNESS: Okay. Corsair was designed, like many

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of our products, to work on a range of systems so that users could have single user interface across platforms and the examples that I talk about were Mac, or Macintosh, Unix, Windows and other operating systems.

Q: (By Mr. Johnson) Mr. Gates goes on to state, again continuing in the same paragraph, multiprotocol, worldwide web, virtual world, unified views exclamation point. What did you discuss with respect to these subjects during your speech?

A: Um, multiprotocol refers to multiple network protocols. And at the time, there were a number of network protocols including the one that has become most popular sometimes called the IP network today. So this ran across multiple networks and their protocols. It connected to the worldwide web, one of the early connections to the worldwide web. Virtual world referred to the idea that we put forward a 3D representation of your office and of your company and outside the company so that instead of having to remember www.xyz.com, you simply pointed at the company and it gave you access to their website, if they had one, or to your file cabinet. And then it would -- you would pick up a file and that file would come up together with the application, that application or applications that could manipulate it and immediately be available for use.

Q: And what about Unified views?

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A: Unified views means that regardless of the underlying systems, the user saw the same interface and the same way of looking at things. So they only had to learn one view. And after that, they didn't have to understand the underpinning systems.

Q: There is also a reference in Mr. Gates' e-mail to a browser called Ferret. What was Ferret?

A: It was aptly named. Ferret was a browser that, an early browser, that went out across the internet much like other browsers have since, and provided access to websites and capabilities on the net.

Q: And did you demonstrate these products at this Agenda Conference in September of 1994?

A: Yes, I did.

Q: How, if at all, did Corsair and Ferret relate to Novell's office productivity applications like WordPerfect?

A: Well, our plan was to include Ferret and Corsair in future versions of the PerfectOffice so that users would have this ability to go across the network, go across the systems, and make use of a single interface to a wide range of information, applications and systems.

Q: Mr. Gates goes on to say, and I quote, clicked on desk with financial quotes and went out and got today's stock prices on a server. Launched WP 6.1 and showed how its hypertext capability lets you navigate around the world

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using URLs, with three exclamation points. First of all, would WP 6.1 be a reference to the WordPerfect word processor put out by Novell prior to the release of PerfectOffice 3.0?

A: Yes, it was.

Q: Can you explain to the jury what you demonstrated here with WordPerfect 6.1?

A: What we did, what I demonstrated was pretty astounding at the time. It is no longer astounding. But if you had a hypertext, which is indicated by something that is underlined and often it has a different color of text saying it is a link, you could click on that and go to that website. We think nothing of that today, of course you can do that. But at that point in time it was revolutionary and it even surprised Bill Gates.

MR. TULCHIN: Objection. Objection, Your Honor. Could we strike what surprised Mr. Gates from just reading this document.

THE COURT: It is struck.

MR. JOHNSON: Your Honor, there are three exclamation points behind this what he just described. I think --

THE COURT: When it comes to the appropriate time you can argue that.

MR. JOHNSON: Thank you, Your Honor.

Q: (By Mr. Johnson) By the way, were Corsair and

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Ferret ever released as products?

A: No, they were not.

Q: Why not?

A: Well, NetScape Navigator was so successful as a browser that we chose to adopt it rather than Ferret. And the capabilities of Corsair were slated to be taken advantage of in the next version, the following version of PerfectOffice, and, of course, that was not released by Novell.

Q: Mr. Frankenberg, I would like to show you now what has been marked Plaintiff's Exhibit 1 which is an e-mail from Bill Gates to a large number of Microsoft executives.

It is dated October 3rd, 1994, a couple of weeks after your presentation at the Agenda Conference. Now the jury has already seen this document a number of times. Have you seen this document before?

A: Yes, I have.

Q: And when did you first see this document?

A: In 2009.

Q: And what was that in connection with?

A: That was in connection with my deposition for this trial.

Q: Do you recall your reaction upon seeing this document?

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MR. TULCHIN: Objection, relevance.

THE COURT: Sustained.

Q: (By Mr. Johnson) Were you surprised by the contents of this document when you saw it in 2009?

MR. TULCHIN: Objection.

THE COURT: Sustained.

Q: (By Mr. Johnson) During your tenure at Novell, Mr. Frankenberg, did you have occasion to speak with Mr. Gates?

A: On a number of occasions, yes.

Q: Did Mr. Gates ever tell you in any of those conversations that he had decided not to publish the namespace extensions?

A: No, he did not.

Q: Did Mr. Gates ever tell you that he had decided to wait until Microsoft had a way to do a high level of integration that would be harder for the likes of Notes WordPerfect to achieve and which would give Microsoft's Office a real advantage?

A: No, he did not.

Q: Mr. Frankenberg, do you know specifically what namespace extensions are?

A: I know generally what they are, I don't know specifically what they are.

Q: Have you ever heard of the phrase undocumented

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calls or interfaces in reference to Microsoft's operating systems products?

A: Yes, I have. In fact, I have used the phrase many times myself.

Q: What does that phrase mean as you use it?

A: It means interfaces, application interfaces to the operating system that were not generally available to people outside of Microsoft, developers outside of Microsoft, but were available to those inside of Microsoft.

Q: During the course of Novell's development of the PerfectOffice suite for Windows 95, how involved were you, if at all, with the hands on development efforts in the application -- in the business applications unit?

A: I was not hands on in the development.

Q: And can the jury safely assume that you did not actually write any code for that product?

A: Yes, and that is a good thing.

Q: So your role was not that of a developer like Mr. Harral or Mr. Richardson?

A: No, it was not.

Q: Did there come a point in time when you became aware that the business applications unit was having a problem in developing the PerfectOffice Suite to run on Windows 95?

A: Yes.

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Q: And what do you recall, if anything, about those problems?

A: Um, the problems had to do with being denied access to interfaces that we previously had access to.

Q: Can you give a general time frame of when you learned about these problems?

A: It would have been in the first quarter of 1995.

Q: Do you remember who you learned this from?

A: Not specifically, but it would have been either Mark Calkins, who was the division manager, or Jeff Waxman who was the group manager, the applications group.

Q: Did you ever personally complain directly to Mr. Gates about the issue of undocumented calls and interfaces in Microsoft's operating systems?

A: Yes I did on a number of occasions.

Q: And do you recall the general time frame of these complaints?

A: Those would have been during 1995.

Q: And what did you complain about?

A: I complained about being denied access to application programming interfaces that people at Novell -- at Microsoft had access to.

Q: Did you make such complaints on multiple occasions to Mr. Gates?

A: Yes, in person and in writing.

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Q: And what if any reaction did Mr. Gates have to your complaints about undocumented calls and interfaces?

A: He refused to talk about it.

Q: Did he say why?

A: He said because when we had a meeting in early 1995 that I had said that in the interest of our customers, we should put things in the past behind us. Unfortunately, undocumented interfaces continued to be an issue, so they weren't in the past. Hence, I had complained about them.

Q: Did there come a point in time when you stopped raising the issue of undocumented calls and interfaces with Mr. Gates?

A: Yes, there was.

Q: And when did you stop raising those issues?

A: Probably late summer of 1995.

Q: Why did you stop raising the issues of undocumented calls and the interfaces?

A: Because Bill refused to address that issue and we had other issues that were vitally important to Novell that we needed to make progress on. And, um, so I turned my attention to those issues.

Q: Was Novell dependent in any way upon Microsoft's cooperation in other aspects of its business at the time?

A: Yes, we were intimately dependent on Microsoft's cooperation.

1030

Q: Can you explain that a bit to the jury?

A: Yes. Um, Novell's largest product, as I think we talked about a little while ago, was NetWare. And NetWare relied on having a client, software on the -- that worked in conjunction with Microsoft's operating system to access our servers. If we didn't have Microsoft's cooperation on that, our flagship product wouldn't work properly. And as such, it was important that we have Microsoft's cooperation in those areas amongst others.

Q: Do you recall that at some point Novell reached a decision to sell the business applications?

A: Yes, I do.

Q: And when was that, if you recall?

A: That would have been in late October of 1995.

Q: So that would have been after the release of Windows 95 by Microsoft in August?

A: That is correct.

Q: What applications did Novell plan on selling?

A: Planned on selling the WordPerfect, Quattro Pro, WordPerfect Presentations, all of those except for -- all of those included in the standard suite except for GroupWise.

Q: And what was GroupWise?

A: GroupWise was a GroupWare product that allowed -- that provided a number of capabilities including e-mail, group calendaring, scheduling, and group access to the

1031

information.

Q: Microsoft has a damages expert in this case as do we. Um, and he filed a report which I know you haven't seen. But I want to read you something Microsoft's damages expert said about you in his report. I'm referencing the Hubbard report Paragraph 112. Quote, "Mr. Frankenberg also testified that the value of the GroupWise assets was approximately half of the value of the word processing and spreadsheet application assets in March of 1994." Um, did you ever say that, Mr. Frankenberg?

A: No, I did not.

Q: Now, March of 1994, would that have been the time that Novell entered into its agreement to buy WordPerfect?

A: Yes, it was.

Q: Do you recall the total revenues of GroupWise, of the GroupWise assets in 1993 prior to Novell's purchase?

A: It would have been approximately $25,000,000.

Q: And what were the total revenues of WordPerfect Corporation in 1993 prior to that purchase?

A: Approximately $700,000,000.

Q: So if you're actually trying to put a monetary value on GroupWise at the time of the purchase in 1994, what fraction of the total value of the WordPerfect assets was attributable to GroupWise?

A: From a revenue standpoint about four percent.

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Q: Now you testified in your deposition in this case that at the time of the sale moving forward to 1996, on a going forward basis, GroupWise held the most promise for you. Do you remember that testimony?

A: Yes, I do.

Q: And why did you think that?

A: Well, because GroupWise was inherently a network application. It provided us with a much more open field to compete than the -- than in office suites, and I saw that as a great opportunity for Novell.

Q: What, if anything, had happened to the value of the other products besides GroupWise?

A: They had declined significantly.

Q: Why?

A: Because Microsoft delayed our introduction and their suite was there at the day of announcement, Windows 95 and ours was not.

Q: Let's return to the sale of the office productivity applications. Um, can you explain to the jury why Novell decided to sell its office productivity applications in late 1995?

A: It became clear that we were not competing on a level playing field. Um, our key competitor, Microsoft, could control our ability to put product out the door and did so. And that meant that it was impossible for us to

1033

fulfill our promises to customers, it was impossible for us to derive significant value, and it made much more sense for us to sell product and pursue other opportunities.

Q: In the absence of the reasons you just described and the decision to sell, do you believe Novell would have continued to own and develop WordPerfect and the other business applications?

MR. TULCHIN: Objection relevance.

THE COURT: Sustained.

Q: (By Mr. Johnson) Um, can you describe for the jury how Novell went about selling the business applications?

A: Yes. We generated a list of potential buyers and we announced to the world that we were planning on selling the applications, gave a date by which bids would be received, received those bids, contacted everyone on our list and discussed the opportunity with them and then chose to sell it to Corel.

Q: When you announced the sale, you made it public that you were looking to sell these applications, did Novell have a buyer?

A: No, we did not.

Q: Why did Novell announce the sale without having a buyer in hand?

A: To make sure that we reached everyone who might

1034

be interested in buying it.

Q: And in your view, did that help or hurt Novell's ability to sell the business applications?

A: It helped immensely. As it turned out, Corel, who ultimately did buy the applications, was not on our list of people to contact. So had we not made this announcement, the best bid in our, ultimately in our view, wouldn't have been made.

Q: During the time period between the decision to sell the business applications and the actual sale to Corel, were there any changes in Novell's support to the business applications units efforts to get out a PerfectOffice suite for Windows 95?

A: No, there were not any changes. It would have been foolish of us to do that because the buyer then would have suffered, potential buyers would have looked at that and said that we were decreasing the value by not continuing to do the development.

MR. JOHNSON: Thank you, Mr. Frankenberg. No further questions.

THE COURT: Perfect timing. Let's take a recess and I'm ready any time anybody else is.

(Recess.)

1035

THE COURT: Let's get the jury.

MR. JARDINE: Your Honor, were you able to watch the Baltimore Ravens last night?

THE COURT: No. I saw the highlights after. I was a happy person, unlike last Tuesday a week ago.

(Jury brought into the courtroom.)

THE COURT: Mr. Tulchin, cross?

CROSS EXAMINATION

BY MR. TULCHIN:

Q: Mr. Frankenberg, good morning.

A: Good morning.

Q: Good to see you again.

A: Good to see you.

THE COURT: You're under oath, Mr. Frankenberg.

THE WITNESS: Thank you, Your Honor.

MR. TULCHIN: We had a very nice time at his deposition, Your Honor, a couple years ago.

Q: Mr. Frankenberg, you still have that notebook in front of you, sir?

A: Yes, I do, sir.

Q: These were the documents that your lawyer showed you on direct. The second document is Plaintiff's Exhibit 153. And that's the minutes of the meeting of the board of directors of Novell, March 20, 1994. Do you have that, sir?

A: Yes, I do.

1036

Q: You weren't intending, on direct, to tell the jury about what happened at that meeting, were you, sir?

A: No, I was not.

Q: You were not present at the meeting?

A: I was not present at the meeting.

Q: This was before you even agreed to join Novell?

A: That's correct.

Q: So that's March 20. And, in fact, the announcement of the deal to buy WordPerfect Corporation and Quattro Pro from Borland came the next day, March 21, correct?

A: That may be right. Yes, sir.

Q: Okay. And you testified on direct that Mr. Gates never told you that, in October, 1994, he had decided to withdraw support for the name space extension API's. Do you recall that testimony?

A: Yes, I do.

Q: Now, you're certainly not implying, are you, Mr. Frankenberg, that other employees of Microsoft told other employees of Novell about that decision?

A: I'm sure they did, sir.

Q: And, in fact, Novell was told by Microsoft of Mr. Gates' decision very promptly after the decision was made, right?

A: That may be the case. I don't know that for sure.

Q: I think you said on direct that you don't recall

1037

hearing about that decision until sometime in 1995, correct?

A: Correct.

Q: But you're aware now, are you not, that in October, within a week or ten days or so of the decision, Novell was told about it?

A: That may well be the case. I don't know that personally.

Q: Okay. It's just that that information didn't get up to you until sometime months and months later, fair?

A: I think that's fair, yes.

Q: And also, with respect to the documents in front of you, there were some questions about Plaintiff's Exhibit 268. That's the license agreement between Novell and Netscape. Do you recall those questions?

A: I do, yes.

Q: Now, I don't think you ever said, on direct examination, when it was that this agreement was entered into, did you, sir?

A: No, I did not.

Q: Could you -- maybe we could bring up page 11 of Plaintiff's Exhibit 268. There, on page 11, is the signature of Steve Markman of Novell, correct?

A: Correct.

Q: And he was executive vice-president at the time?

A: Yes, he was.

1038

Q: And that contract with Netscape was signed in February of 1995, correct?

A: That's correct.

Q: Okay. So, just to be clear on this, you weren't implying during your direct examination, were you, Mr. Frankenberg, that you had this deal with Netscape before PerfectOffice 3.0 was released, which you said was December 23, 1994?

A: I was not implying, that, no.

Q: In fact, the deal took place a couple months later?

A: Yes.

Q: All right. And when you said on direct that you bundled Navigator, Netscape's browser called Navigator, with PerfectOffice; in fact, that didn't happen with PerfectOffice 3.0, did it?

A: It was available with PerfectOffice 3.0, yes.

Q: I'm asking whether it was bundled with PerfectOffice 3.0, which was the word that you used on direct.

A: If I said that, I may have been in error, yes.

Q: Thank you, sir. I wonder if you could just go back, and if I could direct your attention to the last three years or so, when you worked at Hewlitt Packard, and I think you said, sir, that from January, 1991, until around March of '94, you were running Hewlitt Packard's PC business, correct?

1039

A: That's correct.

Q: And that was the business of making personal computers, right?

A: Yes.

Q: Just prior to the time that you started running that business, Hewlitt Packard had been using Microsoft as a supplier of operating systems, correct?

A: That's correct.

Q: And, in the'80's, Hewlitt Packard licensed Microsoft's MS DOS operating system on HP's PC's?

A: Also correct.

Q: Right. And when you started running that business in January of 1991, it was your view, right at the outset, that the future of the PC business lay in graphical user interfaces, correct?

A: Correct.

Q: It was your view, right at the outset, that the future of HP's business, the PC business that you were running, depended on acquiring a graphical user interface to put on the PC's; isn't that right?

A: That's right.

Q: And, in fact, it was your view that it was vital for Hewlitt Packard to offer Windows on all its PC's?

A: That's correct.

Q: And, during the time that you ran the PC business for

1040

Hewlitt Packard, the company went from being the 24th or 25th largest PC maker to being something like number 7, right?

A: That's also correct, yes.

Q: And you said in the past that that success, in the PC business, was something that you got some credit for?

A: I did, as well as the team that I worked with, yes.

Q: Right. And your success in selling PC's for Hewlitt Packard, at least in part, led you to get the offer from Novell to become the president and then CEO?

MR. JOHNSON: Objection as to why they offered him the job. How would he know?

THE COURT: What's sauce for the goose is sauce for the gander. Sustained.

MR. TULCHIN: I knew we would come across that rule sooner or later.

Q: BY MR. TULCHIN: Mr. Frankenberg, can we agree, sir, that Hewlitt Packard's success in moving from 24th or 25th, to 7th in the PC business was attributable in part to the fact that Hewlitt Packard installed Windows on all its PC's?

A: That's true.

Q: And you said that you couldn't have done it if you hadn't used Windows?

A: That's true.

Q: And you also said that you recognized, in this same

1041

period, from January, '91, until March, '94, when you left Hewlitt Packard, that users across the United States and elsewhere were clamoring for Windows?

A: That's true.

Q: That was something that lots of people in the PC business recognized in that same period, correct?

MR. JOHNSON: Objection.

THE COURT: Yeah. I'm going to overrule that. I think, in terms of the industry, what the industry knew, if you knew from what the industry knew. I mean, obviously, you can't say what other people thought, but you can say what you knew of the industry. You can say that.

THE WITNESS: So, yes, it was generally known in the in the industry that Windows was required for success in the business.

Q: BY MR. TULCHIN: Mr. Frankenberg, the fact that people -- that you recognized in the early '90's that customers were clamoring for Windows, that was, in large measure, a result of Windows 3.0, which Microsoft had released in May of 1990, correct?

MR. JOHNSON: Objection. Now we've got people clamoring rather than the industry clamoring.

THE COURT: Overruled. I think people know what's going on. Go ahead.

THE WITNESS: Mr. Tulchin, could you please repeat

1042

the question. Sorry.

Q: BY MR. TULCHIN: Yes. Let me try it again. When you were running the PC business at Hewlitt Packard, was it your view that the popularity of Windows and the reason that you wanted Windows on all your PC's was, to a great extent, a result of Windows 3.0, which had come out in 1990?

A: Yes, and the subsequent minor releases, yes.

Q: Including Windows 3.1, which came out in '91. Is that fair?

A: Yes, sir.

Q: And was it also the case, Mr. Frankenberg, that, in the early 1990's, not just when you were at Hewlitt Packard, but into the time that you were CEO of Novell, that the computer business and the software business, both, were very competitive businesses?

A: Yes, they were.

Q: And the software business, in particular, was, I think we might say, a dynamic industry, correct?

A: Yes, it was.

Q: Things were changing all the time?

A: Yes.

Q: And sometimes things changed very fast, wouldn't you say?

A: Yes, they did.

Q: And if a company wasn't nimble enough to see the

1043

changes coming, that company could be left behind. Is that a fair statement?

A: Yes, it is.

Q: And you recognized, when you joined Novell, that if Novell wasn't able successfully to adapt to the rapid change which took place in the industry, the profitability, the revenues, the future of Novell might be adversely affected?

A: Yes.

Q: Could you tell the jury, Mr. Frankenberg, what a form 10-K is?

A: A form 10-K is the annual report of your financial results filed with the SEC, the Securities & Exchange Commission.

Q: Right. And this is filed with the Securities and Exchange Commission in Washington, D.C., correct?

A: Yes.

Q: And this is an official statement by the company which is filed publicly so that the company's stockholders can get information about the company and prospective stockholders, people who might want to buy the stock, can also get information; is that right?

A: Yes, it's correct, as well as others. It's a public document.

Q: And during the years that you were CEO, Novell was a public company?

1044

A: Yes, we were.

Q: Mr. Frankenberg, let me hand you what's been marked as Defendant's Exhibit 380. And I wonder if you want to just tell the jury what that is.

A: This is a copy of the form 10-K for Novell Corporation for the fiscal year that ended October 29, 1994.

Q: And Novell had a fiscal year that didn't match the calendar year, correct?

A: That's correct.

Q: It ended, I guess, the last Friday of October every year, at the time?

A: That's correct.

Q: And this form 10-K was filed with the SEC early in 1995, correct?

A: That's correct.

Q: And if we can go to page 19, I think we'll see that you are listed as the first signator of this form?

A: Yes, I am.

Q: This shows that you signed the 10-K on January 23, 1995, as chairman of the board, president, chief executive officer and director. And then, in parentheses, it says principal executive officer. Do you see that, sir?

A: Yes, I do.

Q: So this is an official statement, filed with the SEC, meant to provide information to stockholders and other

1045

members of the public, correct?

A: Correct.

Q: And it's obviously very important that you get everything in it accurate. Is that fair?

A: Yes.

Q: I wonder if we could look at pages 6 to 7, right at the bottom. You'll see, sir, that, at the bottom of page 6 and on to page 7, there's a section entitled Product Development. And I want to just direct your attention to that first sentence under product development. It says:

"Due to the rapid pace of technological change in its industry, the company believes that its future success will depend, in part, on its ability to enhance and develop its network and application software products to meet dynamic market needs."

Do you see that, sir?

A: Yes, I do.

Q: And that's what we were talking about a moment ago, that market needs were dynamic in this industry, correct?

A: Yes.

Q: And they could change and sometimes change quickly?

THE COURT: He has already said that.

Q: BY MR. TULCHIN: Right.

A: Yes.

Q: And there was a risk to the company that, if products

1046

weren't developed in a satisfactory way, that the company's future success could be in jeopardy. Isn't that right?

MR. JOHNSON: Also asked and answered. Objection, Your Honor.

THE COURT: Overruled.

THE WITNESS: That's correct.

Q: BY MR. TULCHIN: Okay. And then, could we look at page 8 of this form 10-K. This is Defendant's Exhibit 380. There is a section on page 8 entitled Competition, and I want to just look at the first paragraph under that. You'll see that the statement, which you signed, says:

"Novell competes in the highly competitive market for computer software, including, in particular, network and general purpose operating systems, network services, desktop operating systems and application software. Novell believes that the principal competitive factors are technical innovation to meet dynamic market needs."

And I just want to stop there. The sentence goes on, and you're welcome to read as much as you want, Mr. Frankenberg. But you were telling the SEC there and the public that what Novell believed was that the principal competitive factors include, and this is the first one mentioned, technical innovation to meet dynamic market needs. Isn't that right?

A: That's correct.

1047

Q: And is it fair to say, Mr. Frankenberg, that you understood, when you took over at Novell, that there was no guarantee at all that Novell would be able to keep up in the -- these very competitive markets?

A: There was no guarantee, but Novell had a track record of successful competing, yes.

Q: Well, let me talk a little bit about the track record of WordPerfect if I could because, as you've testified, you started in late March or early April; is that right?

A: That's correct.

Q: Could we say around April 1?

A: Close to that, yes.

Q: '94. And the deal to acquire WordPerfect closed in June?

A: Correct.

Q: You said late June?

A: Yes.

Q: Okay. When you had been running the PC business at Hewlitt Packard, you had had meetings, I think you said quarterly, with Mr. Noorda of Novell?

A: That's correct.

Q: Right?

A: Yes, I did.

Q: And you were familiar with Novell's business when it came to Netware?

1048

A: Correct. And some of the other associated products as well.

Q: Right. Novell, during those years when you were at HP, didn't own the WordPerfect word processing application, correct?

A: No, they did not.

Q: And, is it fair to say that, when you joined Novell, you weren't as familiar with WordPerfect's business as you had been with Novell's?

A: That's fair to say, yes.

Q: Netware, by the way, was the dominant product in its market at the time; is that right?

A: It had the largest market share.

Q: It had about 70 --

A: I have been taught never to use the word "dominant."

Q: I'm sorry sir?

A: I've been taught never to use the word "dominant" in a court of law.

THE COURT: When talking about Novell.

Q: BY MR. TULCHIN: Okay. Just going back one step. In '94, when you took over at Novell, Netware had about 70 percent of the market for network operating systems; is that right?

A: That's approximately correct, yes.

Q: And you don't want to use the word "dominant," but

1049

let's just say 70 percent is a very high share, is that fair, of that market?

A: That's a fair statement, yes.

Q: And Netware was Novell's most important product in 1994?

A: Yes, sir.

Q: Correct?

A: Yes, it was.

Q: Okay. And it remained the most important in '95 and thereafter?

A: During at least through the time that I was there, yes.

Q: Yes. And is it fair to say, Mr. Frankenberg, that your focus -- during the two years and several months that you were CEO of Novell, your focus was principally on Netware; is that right?

A: No. That's not right.

Q: Well, Netware was the most important product for the company, correct?

A: Correct.

Q: It accounted for more than half of the revenues of the company; is that about right?

A: Significantly more than half, yes.

Q: And it accounted for more than half of the profits of the company as well, correct?

A: Correct.

1050

Q: Would you say that, during the time that you were CEO of Novell, it was important to you to make sure that Netware retain its very strong market share in the network operating system market?

A: Yes. That was very important.

Q: That was Novell's core business, right?

A: That was our largest business.

Q: Would you say it was your core business, c-o-r-e?

A: I would say that it was our largest business.

Q: So, you don't want to say core for some reason.

A: We were in the process of changing what we were doing to pursue our basic **computer business, so Netware was a very important part of what we were doing. The core was becoming something different than Netware.

Q: Mr. Frankenberg, just because Netware had 70 percent of the market in network operating systems did not mean that you wanted to sort of lift your foot off the accelerator a little bit and allow others to get a higher market share, right?

A: Correct.

Q: Even at 70 percent, your job was to get as much of the business as you could?

A: As much as we could, yes.

Q: And if you have 70 percent, any business wants to get 71. Is that fair?

A: That's the job the shareholders expect you to pursue,

1051

yes.

Q: And after 71, you're going to try for something above that, correct?

A: Yes.

Q: Okay. When you took over at Novell, I think you said before that you found that -- actually, let me strike that. At the time that the WordPerfect deal closed in late June of '94, I think you said that you found that WordPerfect people were not in the habit of putting in writing business plans, formal business plans; is that right?

A: That's correct. That was also true of a number of other Novell businesses.

Q: And it was your decision, when you became CEO, that every business, every group within the company, should create business plans; is that right?

A: That's true.

Q: Was it also your view, Mr. Frankenberg, when you took over in 1994, that when a company, a big public company like Novell makes important strategic or tactical decisions, it's usually a good idea for someone to put in writing the issues and questions that should be considered by those who are making those decisions?

A: That's generally a very good practice, yes.

Q: And Novell, at the time, was in the top of Fortune 1,000, one of the largest public companies in the country,

1052

correct?

A: I think it was closer to the border of the Fortune 1,000. I don't remember the exact position, so I don't want to be inaccurate.

Q: But you certainly said that it had revenues about $2 billion?

A: Slightly less than 2 billion a year, yes.

Q: And thousands of employees?

A: Correct.

Q: Okay. So, for a company of that size, it was your view that if there's an important decision to be made, if I could put it this way, a fork in the road, we have an option, two options or three options, which choice should we make; that, ordinarily, business people would create some sort of document, a memorandum or something setting forth the options and the considerations and issues that decision-makers should be thinking about; is that right?

A: Yes.

Q: And that was something you tried to enforce, tried to get people to do that?

A: Yes, I did.

Q: Sorry about the delay, Your Honor.

THE COURT: No problem.

Q: BY MR. TULCHIN: Mr. Frankenberg, I'm handing you what we've marked as Defendant's Exhibit 312. This was a document

1053

written to you by David Bradford in April of 1994, correct?

A: Correct.

Q: And would you tell the jury who Mr. Bradford was at the time?

A: David Bradford was our general counsel.

Q: Your chief lawyer?

A: Yes.

Q: He was an important part of the team, your team, when you were at Novell, correct?

A: Correct.

Q: And this is just after you started at your job, correct?

A: It was within a few days, yes.

Q: Within a few days. Novell has announced that it's going to buy WordPerfect Corporation, but the deal hasn't closed yet, right?

A: Right.

Q: And Mr. Bradford is sort of writing a welcome memorandum to you. Is that a fair way to put it?

A: I would say that's a good description, yes.

Q: Could I ask you to turn to page 3. I'm sorry. I said page 3, and I meant the second page, page 2. It has the production number 3199 at the bottom. Do you see that, sir?

A: Yes.

Q: Right at the top, Mr. Bradford is discussing business

1054

development. Do you see that paragraph?

A: Yes, I do.

Q: And he says: "Novell speaks a great deal about partnerships, and we like to think of ourselves as the partnership company. However, in my view, we have done a poor job at properly developing new business opportunities."

This was one of the first things you were told by Mr. Bradford, your top lawyer, when you took the job, right?

A: Correct.

Q: And, in fact, as you looked into things, you agreed with him. In some cases, Novell had done a poor job in developing new business opportunities?

A: In some cases that was true, yes.

Q: And then, in the third paragraph on on that same page, Mr. Bradford says, again in April of '94: "In some respects, even worse has been our job at integrating new businesses within the Novell corporate structure once the acquisition has been made."

And, when you looked into that, you found that that was true as well, correct?

A: In a number of of cases that was true as well, yes.

Q: And, of course, when one company buys another, there may be a number of very difficult issues about how to integrate the two organizations and make them one, correct?

A: Yes.

1055

Q: A business organization isn't going to function well unless you integrate two organizations well, correct?

A: Correct.

Q: And that could be a difficult job?

A: It can be, yes.

Q: Sometimes the two organizations have different corporate cultures; is that right?

A: That's right.

Q: Sometimes the two organizations may be located in geographically disparate places. One might be in Utah, one in Scotts Valley, CaliforniA: Correct?

A: Correct.

Q: And sometimes personalities may not get along. There's a whole new structure, and somebody at, let's say, WordPerfect, a company that's being acquired, may get a new boss, correct?

A: Correct.

Q: And, unless the integration goes well, sometimes the combined company can fall flat on its face. True?

A: That's true.

Q: And if I could ask you, Mr. Frankenberg, to look at the very next page. Now we're on page 3. Mr. Bradford has a Roman Numeral 4, which says Microsoft. And he says:

"There are so many levels to deal with when speaking of Microsoft, it is difficult to know where to begin. The

1056

first should be a given. We need a single point of contact to coordinate our relationship with Microsoft."

Now, let me just stop there. When you took over this job at Novell, you found out that, in fact, there had been no single point of contact at Novell to deal with Microsoft, correct?

A: That's what this memo says, yes.

Q: Right. On the other hand, Microsoft had a well-organized team whose sole responsibility was to work with Novell, a team that was headed by Bob Kruger, right?

A: That's what it says, yes.

Q: Now, in the two years or so that you were the CEO of Novell, did you ever follow Mr. Bradford's recommendation to appoint a single person as the point of contact to deal with Microsoft?

A: No, I did not.

Q: And, if you look down at the next paragraph, just that one sentence, My Recommendation. Bradford says it very explicitly there, quote: "My recommendation is that one individual within the company be assigned full-time responsibility to coordinate our efforts with Microsoft."

And, despite that, no one person ever was appointed, correct?

A: Correct.

Q: You testified on direct you had some conversations from

1057

time to time with Mr. Gates, but, in fact, there were others at Novell, such as Mr. Creighton. Do you remember Mr. Creighton?

A: I do remember Tom Creighton, yes.

Q: Did you know, at the time, that he was talking to various people at Microsoft?

A: I probably did know that.

Q: And did you know that Dave Moon and Ad Rietveld were also talking to people at Microsoft?

A: They should have been doing that, yes.

Q: Mr. Rietveld was -- had formerly been the president of WordPerfect; is that right?

A: That's right.

Q: And after the merger, he came to Novell, and I think his title was Executive Vice-president at Novell; is that correct?

A: That's correct.

Q: And he was the guy running the applications business for you, right?

A: That's correct, yes.

Q: Okay. Now, to go back to something we talked about a little bit earlier, I think on direct examination you answered one of Mr. Johnson's questions by saying that WordPerfect had a history of being successful with the word processing application called WordPerfect, right?

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A: Yes, I did, and they were.

Q: They were very successful on the DOS platform; isn't that right?

A: Yes, they were. I wouldn't use the word dominant, but they were successful

Q: Well, I think that -- I'm going to try to stay away from that word right now as well.

A: Okay.

Q: On the DOS platform, WordPerfect, in the early '90's, had 70, 80 percent of the whole market, correct?

A: I don't know that personally, but that would not surprise me. Yes.

Q: At the time of the acquisition, it wouldn't surprise you that WordPerfect had more than 80 percent of the market on the DOS platform, correct?

A: That wouldn't surprise me either, although I don't recall that specific number.

Q: And, during the time you were running Novell, do you recall hearing about something called the first-mover advantage, or sometimes referred to as the first-in advantage?

A: I heard about it long before I was at Novell, yes.

Q: Okay. But you certainly heard about it at Novell, too?

A: I did, yes.

Q: And, generally, the principle there is that, in a

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technology field, in a high-tech industry, the first company to come out with a product usually winds up doing very well, correct?

A: I would say that's a shortened version of what it really means. The first one that comes out with a product that really addresses the users' requirements and is able to market it as well. Just having it isn't enough, and just being the first one there without it being adequate to the task isn't enough either.

Q: Right. And I accept your amendment. That's a good clarification. So, the first-mover advantage or first-in advantage means that if you have a good product and you have to do well marketing it, it has to be something that consumers want, you're going to have a big advantage over companies that come into that same market later?

A: Correct.

Q: Correct?

A: Yes.

Q: Maybe a good example, later in time, would be the Apple iPod, which came out in 2001, right?

A: That would be a good example, yes.

Q: It was a device for -- a portable device for playing music, and it turned out to be very popular, correct?

A: Correct.

Q: Had a big share of the market?

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A: Correct.

Q: And a number of companies developed and then commercialized and marketed competing devices later on, right?

A: Yes.

Q: Nobody else has ever been able to crack that first-mover advantage. Apple is still number 1 by far in that market. Fair?

A: Fair.

Q: And the same thing has happened in various software businesses; isn't that right?

A: Yes.

Q: In fact, WordPerfect was very late coming out with a word processor for the Windows platform; isn't that right?

A: I don't know exactly how late they were. That was before I was there.

Q: Well, it was, but when you took over Novell, and when the acquisition of WordPerfect closed in June of '94, part of your job was to learn a little bit about the history of the company, right?

A: Yes.

Q: It was very important for you to understand the businesses that WordPerfect was in and how they had done in the past?

A: Yes.

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Q: You knew that Windows 3.0 had come out in May, 1990. You knew that because you were at Hewlitt Packard at the time and you've told us already that users were clamoring for Windows, right?

A: Right.

Q: Did you come to learn, as CEO of Novell, that WordPerfect didn't come out with its first word processor for the Windows platform until November, 1991, a year and a half after Windows 3.0 came out?

A: I probably did learn that at the time, but we're talking 17 years ago. I don't remember everything that I learned in the first few months I was there. Sorry.

Q: I understand that, sir. We were younger then.

A: If we were back then, we were a little closer in time, I probably would be able to answer your question.

Q: Okay. But, can you and I agree that, in a dynamic industry -- and the word "dynamic" comes from Exhibit 380, your 10-K that we looked at earlier -- in a dynamic industry, being 18 months late to get into the market can itself be a big disadvantage?

A: It can be, yes.

Q: And, if you're the second player in or the third or fourth, very often, to get market share, you have to come out with something not just as good as the first company that came to that market, but something considerably better; is

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that right?

A: Correct.

Q: And when you -- when the deal with WordPerfect closed in June of 1994, you also learned something about where WordPerfect had been in the market for suites; is that right?

A: Yes.

Q: And, again, WordPerfect was very late to come to that market; is that correct?

A: When I joined Novell, they were not in the market yet.

Q: Microsoft had come out with Microsoft Office, which was a suite that included Word and Excel in 1990; is that right?

A: That may be correct. I don't know the exact date of Microsoft's introduction.

Q: And it's your testimony, Mr. Frankenberg, that, even as of June of '94, WordPerfect wasn't in that market at all?

A: Correct.

Q: So, when it comes to suites, Microsoft had a huge head start; isn't that right?

A: That's correct.

Q: And that head start, itself, is a big advantage in the market, just as we talked about earlier the Apple iPod. The first guy in has a big advantage?

A: Yes.

Q: That was true with suites as well, wasn't it?

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A: Yes.

Q: And it wasn't surprising to you, sir, was it, that the market share of Borland Office, which was before the acquisition that Novell made of WordPerfect and the Quattro Pro Office, Borland Office was a combination of WordPerfect and Quattro Pro. Do you remember that?

A: I do not remember that, no.

Q: All right. All right. Fair enough. If you don't remember it, let me go on. In, let's say, '93 and '94, just before, and about the time that Novell was buying the WordPerfect Corporation, was it your understanding that WordPerfect's share of word processors written to Windows was much, much, much lower than WordPerfect's share on the DOS market?

A: Yes.

Q: WordPerfect's share on Windows was down around 25 or 30 percent; is that right?

A: I don't recall the exact percentage, Mr. Tulchin.

Q: Well, it certainly wouldn't surprise you if it was in that range, would it, sir?

A: It would not, no.

Q: And, at the same time, you had recognized, going back to January, '91, when you were at Hewlitt Packard, that the future of this business was a future on Windows, correct?

A: Correct.

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Q: That's why you made sure that Windows was on every PC that Hewlitt Packard sold?

THE COURT: You've been there.

Q: BY MR. TULCHIN: That's why, isn't it?

THE COURT: You've been there, and we don't want to stay here forever.

MR. TULCHIN: Okay. Thank you, Your Honor.

Q: BY MR. TULCHIN: Is it also true, Mr. Frankenberg, that, when you took over as CEO of Novell, one of the things that you came to understand is that, when WordPerfect first began making word processing software to run on the Windows platform, that software had been slow and buggy?

A: There were performance issues, yes.

Q: Well, you say there were performance issues. Let me be specific and talk about WordPerfect 6.0. That was a product that had come out in, I believe, December of 1993, and if it wasn't December, it was very late in the year. Do you remember WordPerfect 6.0?

A: I do, yes.

Q: And that product certainly had been viewed as slow and buggy, correct?

A: There were performance issues and quality issues, yes.

Q: Well, is it your recollection, Mr. Frankenberg, that the market perceived WordPerfect 6.0 as being a slow and

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buggy product?

A: I don't know how to answer you so that we can -- there were performance issues, and there were reliability issues, I agree, with 6.0.

Q: Let me show you a copy of the transcript of your deposition, Mr. Frankenberg. This was taken on March 25, 2009.

A: Uh-huh.

MR. TULCHIN: Do you want a copy, Your Honor? No.

Q: BY MR. TULCHIN: And just so we're clear on this, could I ask you to turn to page 123. And you'll see that there are some questions at the bottom about WordPerfect 6.0.

A: Right.

Q: And then right at line 25, I asked you this question:

"Is it your recollection --" now we're going over to 126 -- "that the market perceived WordPerfect --" I'm sorry, 124. My error "-- that the market perceived WordPerfect 6.0 as being a slow and buggy product?"

And you answered that yes. Do you recall that?

A: Yes.

Q: And that was correct?

A: Yes.

Q: And it was also correct --

A: I think that's the same thing as having performance issues and reliability issues. Okay?

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Q: I wasn't sure. I wasn't sure if you meant the same thing.

A: Didn't mean to be non-responsive. I just couldn't understand what you were looking for.

Q: Okay. All right. My apologies. I didn't mean to waste your time. But certainly, in the year 1994, when Novell acquired WordPerfect Corporation, the fact that this last major release of WordPerfect, WordPerfect 6.0, had been perceived by the market as slow and buggy, that was something that was hurting the reputation of WordPerfect; is that right?

A: Yes, it did.

Q: And, of course, in a business like software, particularly in the early to mid-'90's, a company's reputation for making high quality products was extremely important in terms of its having success?

A: And it still is, yes.

Q: Still is. Okay. Fair enough. Am I right, Mr. Frankenberg, that, during the year 1994 -- again, it's June. We've said this several times. You're the new CEO of the company. WordPerfect is being acquired. And, for the next six months, through the end of 1994, was it true that the sales of WordPerfect were being hurt? They were falling because of these problems with reputation?

A: The sales were falling, yes.

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Q: Did you perceive, at the time, that one of the reasons that WordPerfect's products were falling, that the sales were diminishing, was because the prior products had had this sort of bad reputation as being slow and buggy?

A: That would have been part of it, but the major reason was we didn't have a suite to offer customers, and customers were buying suites rather than individual products.

Q: So, that was right at the time, around 1994, when the market was moving quickly from stand-alone products to suites?

A: That's correct.

Q: And you didn't have one?

A: Not yet, no.

Q: Your objective, for the last six months of 1994, was to have Novell, as the new owner of WordPerfect, devote its resources to coming out with the best version of PerfectOffice that it could make. Isn't that right?

A: Correct.

Q: And that's where the company put most of its efforts, when it comes to the business applications unit?

A: There and on the next generation product for Windows 95.

Q: Well, let me come back to that in just a minute, but --

A: But most of the resources were on what became WordPerfect Office 3.0.

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Q: And on direct examination, Mr. Frankenberg, I think you said that you were very proud of PerfectOffice 3.0?

A: I was. I think the team did a great job.

Q: Right. And it came out, you said, in December of '94?

A: Yes.

Q: And am I right, sir, that it was only after PerfectOffice 3.0 was released that Novell decided to place a great deal of its resources on developing a PerfectOffice product for Windows 95?

A: No. That's not accurate.

Q: Well, you remember looking at Exhibit 4, Defendant's Exhibit 4, under direct examination?

A: I remember looking at a lot of them. I don't remember the name. Sorry.

THE COURT: It's in the book.

Q: BY MR. TULCHIN: It's in the book. It's the third document that you were shown.

A: There it is. Yes, sir.

Q: Okay. And this was written in August, 1994, right?

A: Yes.

Q: And although it says on the first page from Maile -- I hope I'm pronouncing it right -- M-a-i-l-e --

A: Her name is Maile.

Q: Maile -- thank you -- Patterson. If you go to the next page, you'll see that this was submitted by Mr. Rietveld,

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right?

A: That's correct.

Q: And he had been the president of WordPerfect, as we talked about, correct?

A: Correct.

Q: And it was your decision to make him -- to put him in charge of the WordPerfect business, going forward?

A: Yes, the business applications group.

Q: Now, would you look at page 5, sir. And under the title Business Applications, there are 3 bullet points there. The first says: "Getting company resources focused on supporting Quattro Pro."

And let me just stop there for a moment. It was true, was it not, Mr. Frankenberg, in 1994 and 1995, that the company had not focused many resources on Quattro Pro?

A: Well, I guess it depends on your definition of many resources. There were resources assigned to big improvements to it and to make it part of the suite. There were the people that came over from Borland with the acquisition who were working on it. I'm sorry. I don't know quite how to answer your question, Mr. Tulchin.

Q: Okay. Fair enough. Quattro Pro, the Quattro Pro developers, the software developers, were all located in Scotts Valley, California, correct?

A: Correct.

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Q: And when Novell bought Quattro Pro from Borland, some of those developers quit and got new jobs, correct?

A: That's correct.

Q: For whatever reason, they decided to leave?

A: Yes, sir.

Q: And the remainder of the development group remained in California, right?

A: That's correct, although there were some people who knew the product and began working on the product in Utah, but the vast majority were in California.

Q: All right. And am I right that, of the people who quit when Novell took over, many of those developers were not replaced?

A: I don't know the answer to that question.

Q: Okay. Well, let's go on. We're still in Exhibit 4, Defendants' 4. And then there's a bullet point that says Chicago. There were very few resources on Chicago at this time. That's what Mr. Rietveld said. Am I right?

A: That's correct.

Q: And that was correct?

A: Yes, but it's important to note that the initial developments for Chicago were done by the shared code team, and, as such, there would not have been a lot of people initially on that development.

Q: In the year 1994, did you, as a general proposition,

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speak to the developers in the shared code team?

A: No, I did not.

Q: Did you do so in 1995?

A: No, I did not.

Q: Did they rub shoulders with you or you with them?

A: No. I'm sure I met some of them, but I don't know quite what you mean by rub shoulders, but, okay.

Q: Well, do you ever remember having a conversation with Mr. Harral or Mr. Richardson --

A: I do not.

Q: -- about their work?

A: I do not remember that.

Q: Do you remember having a conversation ever with Mr. Creighton, who was Mr. Harral's boss?

A: I know that I had conversations with Tom Creighton, but I don't remember the conversations.

Q: Could I ask you to look at Exhibit 380 again. That was the form 10-K that we looked at earlier.

A: Yes, sir.

Q: And I would point you, sir, to page 10. And you'll see there's a paragraph that begins "As is common" towards the bottom of the page?

A: I see that, yes.

Q: What Novell told the public and shareholders in this form 10-K for Novell's 1994 fiscal year was that it was

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common in the software industry for companies to experience delays in developing software products; is that right?

A: I'm still reading the paragraph.

Q: Oh. Take your time. Sorry.

A: I just want to make sure that I can answer your question properly. Okay.

Q: Well, let me ask you, without reference to the document, just for a minute.

A: Okay.

Q: When you took over Novell -- and let's say in the first year that you were chairman and CEO -- was it your view then that it was common in the software industry for companies to experience delays in developing new software products?

A: Yes. It was common.

Q: It was something that had happened to Novell in its own business in the past, correct?

A: Correct.

Q: And that happened from time to time, whether or not some operating system vendor withdrew support for certain API's, right?

A: That could happen for a variety of reasons, to Novell and virtually everyone else in the software business, including Microsoft.

Q: Writing a complicated piece of software, that may have many, many thousands of lines of code to it is a difficult

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job, fair?

A: Yes, it is.

Q: It's complicated?

A: Very complicated.

Q: Mistakes can be made, correct?

A: Mistakes are made.

Q: And people can go off in the wrong direction and choose, let's say, a path that's more difficult and complicated than might have been necessary, just because judgments that human beings make are not always perfect. Is that fair?

A: Of course.

Q: And so, in the form 10-K, going back to that, Novell was basically saying all that to the public?

A: Correct.

Q: Is that fair?

A: Uh-huh.

Q: And Novell was warning the public and Novell's stockholders, again, in the first sentence, that -- sorry. Now I'm on the second sentence: "Significant delays in developing, completing or shipping new or enhanced products would adversely affect the company."

And, in fact, a delay in getting PerfectOffice for Windows 95, you say, did adversely affect Novell?

A: It did.

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Q: Correct?

A: It did. Yes.

Q: Now, do you recall at your deposition being asked whether you could assess the extent to which any delay was attributable to something Microsoft had done?

A: I do not recall that. I may well have. We may well have talked about it, but --

Q: Okay.

A: (Holding up deposition) It's a lot to recall.

Q: I understand. Let me just ask you directly, Mr. Frankenberg, sitting here today, you cannot attribute to Microsoft any particular length of delay, can you?

A: I believe that -- I cannot do it precisely, but I can identify it.

THE COURT: I assume you mean in bringing the WordPerfect product for Windows 95 to market?

Q: BY MR. TULCHIN: Yes. And PerfectOffice.

THE COURT: And PerfectOffice.

THE WITNESS: I assumed that's what you were talking about.

Q: BY MR. TULCHIN: Yeah. You can't say, well, anything Microsoft did caused us a week or a month or a year or some other amount of time, right?

A: I can provide an approximation for that, knowing that -- two dates that were involved.

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Q: Well, didn't you say in your deposition that there were others at the company who we should ask if we wanted to know how much delay had been caused by Microsoft?

A: Yes.

Q: You didn't have any view in 2009 about that?

A: Correct.

Q: Okay. And I want to go back to PerfectOffice 3.0, which came out at the end of 1994. As it turned out, having a good office suite, what you say was a good office suite on the market, beginning in December, 1994, turned out to be less important than it might have been at other times because, in fact, everyone knew that Windows 95 was coming out in 1995?

A: I'm sorry. Could you ask your question again?

Q: Yes.

A: I'm a little confused by it.

Q: I hope it wasn't a bad question. Let me try again. I think you said in direct examination --

THE COURT: Could you rephrase. Maybe I'm wrong, but it seemed to me -- and I could be wrong, but it seemed to me that Chicago would be coming to market soon. I'm not sure anybody knew an exact date. If they did by '95, I just don't remember. I know that, in the past, there was talk about Windows 95 coming out in '94. You all know the evidence better than I do.

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Q: BY MR. TULCHIN: Mr. Frankenberg, sorry. Let me try it again. It wasn't a good question. As of December, '94, you knew that Chicago, what became Windows 95, would be released in 1995; is that right?

A: That was the projection from Microsoft, yes, sir.

Q: And the market knew that, too. That had been publicly announced?

A: Yes.

Q: And I think you said on direct examination that, when the maker of an operating system publicly announces that a new product is coming out to market, people in the market generally stop buying, correct?

A: If they believe the announcement and the dates, yes, they generally stop buying until they can discern what they need to do for the new operating system.

Q: And that happened to PerfectOffice 3.0 to some extent, didn't it, that sales were not all that strong because, as you understood things at the time, users in the marketplace were waiting for the new operating system before they started buying new applications?

A: It put a chill on the market, but I think I also testified that our market share on suites moved up into the mid-20 percent range, and we thought that was a very good performance.

Q: Well, that wasn't for a full year, was it,

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Mr. Frankenberg? The 20 percent was just for a couple of months or so?

A: The first part of the year, yes.

Q: Right. For the full year of 1995, PerfectOffice's market share was around 3 percent, correct?

A: I don't know the exact number for the whole year, but it was less than what was achieved at its peak, yes.

Q: Right. The peak was just the first few months of the year, when people were still several months away from Windows 95, right?

A: Right.

Q: And, as time went on, and if you look at the year as a whole, PerfectOffice's share of the market was much, much lower than 20 percent. Would you agree with me?

A: I would agree with that, yes.

Q: So, when you said the 20, you didn't mean to be speaking about the full year, just a small segment of it?

A: Right. I tried to be careful to point out that it rose to that and then decreased, yes.

Q: Could you look, sir -- I'm going to hand you Exhibit 271. And looking at the first page of this document, Mr. Frankenberg, it says Novell Business Applications Business Plan. Do you see that at the very top?

A: Yes, I do.

Q: And at the bottom, on the left corner, the date is

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given as April 3, 1995. Do you have that?

A: Yes. Yes, I see that.

Q: And it says Business Plan For 1996 To '98, correct?

A: Correct.

Q: And this was one of the business plans that you directed people to start preparing, correct?

A: Correct.

Q: We talked about this earlier. These business plans you thought were useful in formulating strategy for the future?

A: Correct.

Q: All right. Do you remember seeing this business plan in 1995?

A: I would have seen -- yes, I would have seen it and reviewed it with the team. This says "draft" on the bottom of it, so it may not have been this particular version of it. It may have been a later version.

Q: Could I ask you, Mr. Frankenberg, to turn to page 6. The production number in the bottom, what sometimes we call the Bates number, is 2354.

A: Yes.

Q: And there's something called SWOT analysis, S-W-O-T. That stands for strengths, weaknesses, opportunities and threats. Correct?

A: Correct.

Q: And this was an analysis that you wanted people at your

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company to do?

A: Correct.

Q: Number 1 is existing competitors. And first is Microsoft. And it says that Microsoft Office holds 86 percent of the suite market. Do you see that, sir?

A: I do, yes.

Q: Would you agree with me that that was a function of the fact that Microsoft had been first to that market, had really created that category, and that Microsoft office had been very popular with consumers?

A: Yes.

Q: Would you also agree that Word, Microsoft's word processor, and Excel, were the strongest 1, 2 punch in the industry?

A: They weren't the best word processor. They weren't the best spreadsheet, but together they were a strong combination, and I believe it was described as a 1, 2 punch, yes.

Q: As far as word processors go, Word was strong. Excel was a strong spreadsheet, and nobody else had two products as strong as those two, two products to bundle together in a suite. Fair enough?

A: Fair enough.

Q: A little bit further down the page, just more than halfway, there's a bullet point that says: "Microsoft has a

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very strong presence and is very aggressive in the international markets. They have fully localized versions of Office in many Asian countries. Windows '95 and Office '95 are likely being shipped in multiple languages simultaneously."

Do you recall, as CEO of Novell, that one of the problems in selling PerfectOffice was that that product was not localized, written to as many languages as what Microsoft had done?

A: That's true.

Q: And in many Asian countries, there were strong sales of office suites, right?

A: Yes. It says that here.

Q: Novell WordPerfect was way behind Microsoft in successfully writing its products for other languages, languages other than English, fair?

A: Well, certainly Asian languages as it says here, yes.

Q: And the next bullet point says -- this is, again, under Microsoft's Strong On Macintosh platform. Now, on direct you said to Mr. Johnson that one of the things you liked, when the deal was made to buy WordPerfect, was that WordPerfect had written its word processor to the Macintosh, right?

A: Amongst other systems, yes.

Q: Yes. Microsoft had been the first company that wrote a word processor to the Macintosh platform; is that right?

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A: I don't know that.

Q: Am I right that what you learned at --

A: You may be right, but I don't know that to be true.

Q: All right. Fair enough.

THE COURT: Other than Apple, or you just don't know?

MR. TULCHIN: Including Apple.

THE COURT: Including Apple.

MR. TULCHIN: Or maybe I should say second to Apple, Your Honor. I'm sorry.

Q: BY MR. TULCHIN: Mr. Frankenberg, when it came to the Apple operating system, Microsoft had no advantages over WordPerfect, true?

A: What do you mean "advantages," Mr. Tulchin? I'm sorry.

Q: Here's what I mean. Sorry. Maybe that was a bad question. Apple Computer Company developed the Macintosh and used an operating system for it that Apple itself had developed.

A: Correct.

Q: They didn't use a Microsoft operating system?

A: Correct.

Q: They had their own. And Microsoft didn't have that operating system anymore than WordPerfect did?

A: Correct.

Q: It was proprietary to Apple?

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A: Correct.

Q: So, Microsoft and WordPerfect were both ISV's when it came to the Macintosh?

A: Correct.

Q: Neither had an advantage over the other in terms of getting access to the operating system source code?

A: I don't know that for sure, but I would assume that's the case.

Q: Do you know, sir, that Microsoft Word out sold WordPerfect for the Macintosh -- I'm talking now for the Macintosh platform -- by a factor of four or five to one or more, year after year after year?

A: I do not know that.

Q: Well, does that accord with your general recollection that Word for Microsoft had been far more successful on the Macintosh platform than WordPerfect had been?

A: I think that's your assertion, sir, not mine. I think -- could you ask me your question again.

THE COURT: No, no, no. You have answered. If he wants to prove it, he's got to prove it. You don't have to.

Q: BY MR. TULCHIN: I'm just asking if you remember that. If you don't, sir, that's -- you know, that's --

A: I don't remember it.

Q: Going back to Exhibit 271, I want to ask you, sir, to turn to page 9 -- well, let's start at 8, just at the very

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bottom. This was the SWOT analysis. There are strengths listed for the company, and, at the bottom of the page, there are weaknesses and threats. That's item 4. Do you see that, sir?

A: Yes.

Q: And this is the business plan written in April, 1995. Now, could you turn to page 9, the next page. At the very top there's a heading that says Company Weaknesses That Hinder Novell Business Applications. And there are something like 10 bullet points that set forth company weaknesses. That would be a reference to Novell?

A: Correct.

Q: Novell weaknesses?

A: Yes.

Q: True?

A: Yes.

Q: The fourth one, just to pick this one first, says:

"Weak vis-a-vis Microsoft in perception for corporate strategy, vision and ability to develop software. Recent user focus groups have indicated a perceived lack of direction at Novell."

Now, you saw this in 1995, correct?

A: I would have seen this, yes.

Q: This was one of these business plans that you asked people to create for you?

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A: Yes.

Q: And one of the things that it says is that Novell is weak, as compared to Microsoft, in its ability to develop software. Do you see that?

A: Yes.

Q: You didn't disagree with that at the time, did you?

A: I don't know whether I disagreed with it at the time or not.

Q: Well, do you recall at your deposition saying that you had no reason to disagree?

A: I still have no reason to disagree, but I don't recall that I agreed with it.

Q: Fair enough. Fair enough. It was a different question Thank you.

A: Uh-huh.

Q: And the same bullet point says that Novell is weak vis-a-vis Microsoft in perception for corporation strategy and vision. Do you see that?

A: Yes.

Q: And I think you'll agree with me that in 1994 and '95, when Mr. Gates was CEO of Microsoft, the perception out in the market was that Microsoft had a very strong strategy and vision, true?

A: True.

Q: Now, if you go down a couple of bullet points, about

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four more, under Company Weaknesses, this document, Defendant's Exhibit 271, says: "Over 50 percent of sales force does not understand applications. Changing, but slow. Over '95 percent of sales force does not understand Quattro Pro or electronic publishing tools."

Now on direct you said to Mr. Johnson that, when the deal was done in June of '94, you decided to change the way that the WordPerfect product had been sold in the past. Remember that?

A: Yes.

Q: In the past, you said WordPerfect, I think you said, had a very strong group of salespeople who went out there and met face-to-face with corporate customers; is that right?

A: Well, not only corporate customers, but small businesses and individuals and people on street corners. I'm sorry. The last one was in jest.

Q: Fair enough. Fair enough. But certainly, sir, that was known as one of WordPerfect's strengths at the time of the acquisition was the great sales force that met face-to-face with people and did a great job selling the product?

A: It was one of their historical strengths, yes.

Q: And you changed that?

A: And it had become a very expensive -- as I testified earlier, it had become a very expensive way to sell

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individual pieces of software.

Q: As a result of the fact that it was expensive, you decided to change it, true?

A: Yes.

Q: And so, here we are in April of '95, and in this business plan, it's stated that over 50 percent of sales force does not understand applications. Now, certainly you weren't hoping for that result, were you?

A: Actually, that's a pretty good result.

Q: More than half doesn't understand the product they are trying to sell?

A: Actually, most of the sales force were managers of the relationship between Mike and Novell and the dealers. The people who are really needed to understand the applications were the experts in the product areas, and those were people who went out and taught folks at dealers and distributors about the product. So, it's a very different model than what Ad Rietveld and his team were accustomed to.

So, having 50 percent of the sales force or perhaps slightly less than 50 percent of the sales force understand the application products was quite a good result.

Q: Well, Mr. Rietveld, in fact, was very unhappy about this change in the way the product was being sold, correct?

A: Yes, he was, but to compete with Microsoft in the market, we needed to be far more efficient in our selling

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process than the old model. And sometimes it's hard to give up the old model.

Q: And then, just below, it says: "Over '95 percent does not understand Quattro Pro."

Now, PerfectOffice, of course, included the Quattro Pro spreadsheet, right?

A: Correct.

Q: And wouldn't you expect that a salesperson trying to sell PerfectOffice should understand one of the two major products that's in it?

A: That's a shortcoming. I agree.

Q: It's sort of like you talked about having car dealers, a network of dealers for an automobile company, but if you went to a Chevy dealer, and 95 percent of the salespeople in the dealership didn't understand the Malibu, so if I had questions about it -- I happen to own a Malibu. That's why I asked you.

A: I'm sorry.

Q: If I had questions -- it's a great car. It's a great car. I love it.

A: Okay. Sorry.

Q: I love my Malibu. I didn't mean to get off in that direction. I won't ask you what car you have. That's okay.

A: Toyota pickup.

Q: But, wouldn't it be a little bit of a problem if you

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went to a salesman and he didn't understand the product that you were interested in buying?

A: Yes. And let me take your example and tell you how it worked. Your example, the salesperson at the dealer absolutely had to know a lot about your Malibu in order to sell it to you. And that person learned it from somebody at General Motors. And the salesperson at the dealer, not the salesperson selling to the dealer, was the one who had to know that. And they were taught that by people at General Motors.

The same thing was true with our software. The person at the dealer, who was there talking with customers, had to understand WordPerfect and Quattro Pro in detail and be able to sell it and sell it well. And that was done very well by people who understood it and went out and trained people who, in turn, trained people at the dealers. But the sales rep who sold your dealer his -- that Chevy Malibu probably didn't know it in as much depth as the guy in the lobby, and that's the difference.

Q: Am I right --

A: The guy in the lobby.

Q: I'm sorry to interrupt. Am I right, Mr. Frankenberg, that Mr. Rietveld didn't agree with that? He thought that the sales force should know your products, the applications products?

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A: That's correct. And a number of people at WordPerfect didn't agree with that. They liked the old model, and it's always hard, when you make a change, to have everybody agree. That's okay. Everybody didn't have to agree. But if you have to make a change, you have to make a change.

Q: Well, let's look down again on page 9 of Exhibit 271.

A: Okay.

Q: There's then a title which says Division, parentheses, Group, closed parentheses, Weaknesses.

A: Yes.

Q: And the division refers to the business applications division, right?

A: I believe that this would encompass both divisions, which would have been any of the three business units, as well as the group overall. So, yes, with that minor enhancement.

Q: And there were a number of bullet points, also roughly ten. It goes on to the next page, under the heading of Division Weaknesses. Do you see that, sir?

A: Yes.

Q: The first one says: "Third to suite market. Microsoft has enormous momentum."

This was true even in 1995, that Microsoft had that momentum. Correct?

A: Correct.

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Q: And not only had Microsoft Office been first to the market, but Lotus SmartSuite had been second, right?

A: Yes.

Q: And Microsoft Office was number 1 in sales in market share, and Lotus was number 2 at this time in '95, right?

A: That could well be, yes. I don't recall the exact market shares month by month, but it could we will be.

Q: And then the next bullet point says: "Still recovering from WordPerfect 6.0."

That was the product that had come out at the very end of '93. Do you remember that?

A: Yes.

Q: That was before Novell took over?

A: Yes.

Q: But here in '95, the author of this business plan says that you're still recovering from that, a product which was perceived as slow and buggy. Do you see that?

A: Yes.

Q: And that's because, as we talked about earlier, once you get a reputation as making slow and buggy software, that reputation can stick around for a long time. True?

A: True.

Q: In fact, it had stuck around, and Novell was still doing its best to try to overcome that. Is that fair?

A: That's fair. That's what this says.

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Q: Thank you, sir. If can we go back to Exhibit 308 for just a moment.

THE COURT: How about if we break for lunch? We will see everybody at five after 12.

MR. TULCHIN: Thank you, Your Honor.

(Lunch recess.)

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THE COURT: Let's get the jury.

(Jury present)

MR. TULCHIN: Thank you, Your Honor.

BY MR. TULCHIN:

Q: Mr. Frankenberg, on direct I think you indicated that when the announcement was made in March of 1994 that Novell had a contract to buy WordPerfect, Novell's stock fell by 20 percent. Do you recall that?

A: I said yes, by approximately 20 percent. I don't remember exactly.

Q: Do you remember that the fall was from a price a little bit under $24 to, a couple days later, $19?

A: Again, I don't remember the exact numbers, but I do recall that it dropped about 20 percent.

Q: It was certainly very unusual, was it not, at the time, Mr. Frankenberg -- the stock market I think is a little more volatile these days, but it was very unusual at the time for the stock of a big public company to fall in a two-day period by something like 20 percent?

A: That was a significant drop, yes.

Q: It was very unusual, particularly back in those days?

A: I have no way of judging whether it was -- how unusual it was. I'm sure it wasn't a common occurrence.

Q: Do you recall that this had ever happened at Hewlett Packard when you were there, a drop of 20 percent a day or

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two on the stock market?

A: I think it may have come close to that, but I don't recall any specifics.

Q: Maybe it came close to that, and there was a crash in 1986, the crash of the market in general?

MR. JOHNSON: Objection --

THE COURT: I think he answered your question, unless you want to qualify him as an investment banker.

MR. TULCHIN: No.

THE WITNESS: Please don't do that.

MR. TULCHIN: I wouldn't do that to you, I promise.

THE WITNESS: Thank you.

MR. TULCHIN: Could we show slide 35-C from Microsoft's opening statement in this case.

BY MR. TULCHIN:

Q And, Mr. Frankenberg, what I'm about to inquire has to do with the loss in value or market capitalization for Novell. Assuming these numbers are right, that on March 21, '94, Novell's stock, which was traded on the NASDAQ, closed at 23.75, and then closed at $19 two days later. Do you see those numbers?

A: Yes, I do.

Q Are they pretty much in accord with your memory?

A: Again, I will say, I don't remember those specific

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numbers, but the drop was approximately what I do recall, yes.

Q: Fair enough.

The market capitalization of a company is simply a matter of how many shares there are outstanding multiplied by the price on the stock market, right?

A: Correct.

Q: And if you do the math -- and I won't try to do it with you, but if you do the math and you do 23.75 times the number of Novell's shares, which was then more than 309 million, then you do 19 times the number of shares, the loss in value -- the loss in market capitalization for Novell in two days was the number you see there in red, 1,467,000,000, et cetera. Do you see that?

A: I do, yes.

Q: That's an extraordinary drop, isn't it?

A: It's a very significant drop, yes.

Q: If you added together the costs to Novell of buying WordPerfect Corporation and also buying the Quattro Pro spreadsheet, the cost wasn't very much different than that, just over 1.5 billion. Is that in accord with your memory?

A: I think that's in the right neighborhood. I don't remember this number of decimal points, but, yes.

Q: Would you say, Mr. Frankenberg, that the stock market reaction indicated that the market, shareholders of Novell,

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the market believed that the value to Novell for buying WordPerfect and Quattro Pro was close to zero?

MR. JOHNSON: Objection, Your Honor.

THE COURT: Sustained.

Again, you can argue it.

MR. TULCHIN: Thank you, Your Honor. Your Honor, thank you.

BY MR. TULCHIN:

Q Do you recall there being discussions at board meetings about this decline in value of the stock?

A: There may well have been, but I don't recall any specifically, no.

Q: And you made the decision shortly after you took over -- which was just within a week or ten days of this, right?

A: Yes.

Q: You made a decision to cut expenses?

A: Not immediately upon entering the company, no.

Q: I didn't mean to imply immediately, but within two or three months of taking charge at Novell, you were out there cutting expenses, as I think you testified earlier?

A: Yes, but the decision wasn't made within days of this occurrence. It was made later --

Q: I understand.

A: -- after an opportunity to look at the situation and

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talk with people and see what was required.

Q: I'm handing you, Mr. Frankenberg, Defendant's Exhibit 15. This is a document that was prepared in August of 1994, correct?

A: Correct.

Q: And it was from Joe Marengi and Paul Cook. They were trusted officers of Novell, correct?

A: Joe Marengi was the sales vice president and Paul Cook was his HR representative.

Q: Right. And this memo is being written to you and also to Tim Harris?

A: Correct.

Q: And this is in August. And the subject matter is Novell/WordPerfect integration, something we talked about a little bit earlier. And you will see on the first page under Roman II, notes, there is reference to 378 reduction in headcount. Do you see that?

A: Yes.

Q: And what Exhibit 15 reflects is that as of August you made a decision to lay off, to reduce 378 employees, correct?

A: That's correct.

Q: And is it also your recollection, Mr. Frankenberg, that of the 378 that were laid off, or let go, that the vast majority of those came from WordPerfect Corporation?

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A: A significant majority were from WordPerfect previously, yes.

Q: And do you remember at deposition looking at Exhibit 15 with me and I think we calculated together that 93 percent of the 378 people who were being let go in August of '94, 93 percent were people who had come from WordPerfect? Do you recall that?

A: I do. I think if you looked in the back it would verify something in that range, yes.

Q: All right. That had a significant impact at WordPerfect among those who remained when it came to morale; did it not?

A: Whenever there are layoffs, there is impact on morale, so --

Q: More than 90 percent of these 378 people who were being laid off were WordPerfect people. The remaining WordPerfect people in many cases were upset to see their friends and colleagues and neighbors get laid off. Is that fair?

A: Well, they weren't all neighbors. I'm sure some of them were friends. I'm sure it was hard for them, as it was for all of us.

Q: So you don't disagree that this had an impact on morale at the company?

A: I believe it did have an impact on morale, but also I believe it was necessary.

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Q: Am I right, Mr. Frankenberg, that you decided that Novell should sell WordPerfect and Quattro Pro and the PerfectOffice Suite sometime within about a year after you joined Novell?

A: The decision was made in October -- late October of 1995, so that would have been close to a year and a half.

Q: Well, I did hear you say that on direct, but am I right, sir, that you have testified in another case that you made the decision that WordPerfect and Quattro Pro and PerfectOffice should be sold during the winter of 1994 to '95?

A: No, that's not correct.

Q: It's not right that you so testified?

A: That's not when the decision was made.

Q: Well, let me back up one step. You did testify for Novell last year in this courthouse, I think on the first floor, in another case, correct?

A: Yes.

Q: A case having nothing to do with Microsoft, correct?

A: Correct.

Q: And you were called by Novell as a witness -- I think the first witness in the case; is that right?

A: That's correct.

Q: You do recall testifying about your decision to sell WordPerfect; do you not?

1099

A: I don't recall that, but that could well have been the subject, yes.

Q: Do you recall being asked this question and giving this answer? This is in the SCO against Novell case last year. Question -- I will bring this to you in a moment, sir. Question --

THE COURT: What page are you on?

MR. TULCHIN: I'm on page I think 88 or 89. Let me just get it up, Your Honor. I'm sorry.

MS. NELLES: Eighty-eight.

THE COURT: What page are you on?

MS. NELLES: Eighty-eight.

MR. TULCHIN: Page 88, Your Honor. Thank you.

It's actually 89, lines 14 to 18.

BY MR. TULCHIN:

Q: Do you recall being asked this question and giving this answer? When did you come to the view that these businesses should be sold? Answer: That would have been in late '94 or early '95. I remember having made the decision and driving through a blinding snowstorm to get home. So it was mid winter.

MR. JOHNSON: Your Honor, I request that -- I can do it on redirect, but the prior answer shows that he was talking about any number of products.

THE COURT: Why don't you provide the context.

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MR. TULCHIN: Let me provide him with the transcript, Your Honor.

BY MR. TULCHIN:

Q: Mr. Frankenberg, I have my thumb right there. There you go.

A: I'm running out of room.

Q: I'm sorry, sir?

A: I'm running out of room.

Q: Do you need a paperclip?

A: No.

Q: I was just trying to be helpful.

Let's start, Mr. Frankenberg, just so we can put some context to this.

MR. JOHNSON: Your Honor, I would like to give him a chance to read what he said on this page and the prior page.

THE COURT: That's fine. Go ahead. I think that's what Mr. Tulchin was doing, but go ahead.

MR. TULCHIN: I would be happy to do that. And any time you want to read, let me know and I will stop and you can read.

THE COURT: I think he wants you to stop right now.

THE WITNESS: If I may --

1101

BY MR. TULCHIN:

Q: Maybe I can suggest that you start reading at page 87, line 18.

A: Okay.

Q: All right. Maybe what we should do, Mr. Frankenberg, is start at page 88, line 9, and you are welcome to look at anything before that, anything after. You were asked, did there come a time when you decided as chief executive officer that it would be in the best interest of Novell to sell one or more of those businesses. And you will see that just above that you describe a number of Novell's businesses, correct?

A: Yes.

Q: And at line 18 -- I'm sorry, 12, you say, yes, we did come to that conclusion. We did a very careful study, beginning shortly after I arrived, looking at all of the businesses that Novell was involved in.

Now skipping a sentence, feel free to read it, but then at line 18 it says -- this is your answer, we came to the conclusion that we were trying to do too much and that we were not properly funding the products that we felt we could be successful with, and so we came to the conclusion that we should sell several of those businesses, find good homes for them and find jobs for as many of the people involved with it as possible, and then focus on our networking product

1102

area.

Line 25, on page 88, you were asked this question, so what businesses did you decide to sell? Page 89, line 1, we decided to sell WordPerfect, the WordPerfect product, not the company.

Now you can go on and read as much of the rest as you want to line 13.

MR. JOHNSON: I would like to have them read out loud, Your Honor, to provide some context to his next answer, which he's trying to use.

THE COURT: That's fine. Go ahead.

BY MR. TULCHIN:

Q: Do you want to read the whole thing out loud, this answer, Mr. Frankenberg, or do you want me to?

A: Now I'm lost guys.

Q: The very bottom of page 88, line 25, you were asked, so what businesses did you decide to sell. And then your answer starts on page 89, line 1, we decided to sell WordPerfect, the WordPerfect product, not the company. It had already been integrated into Novell, and a suite that we called PerfectOffice, which combined it with the other elements that I mentioned that had just been purchased before I got there.

MR. JOHNSON: It doesn't say just.

MR. TULCHIN: That had just been purchased before

1103

I got there.

MR. JOHNSON: I see where you are.

MR. TULCHIN: Your Honor, may I continue?

THE COURT: Go ahead.

BY MR. TULCHIN:

Q: Going to line 6, Mr. Frankenberg, we decided to sell Unix and UnixWare. Unix was and still is a very popular operating system. UnixWare was that same operating system but with networking capabilities built in consistent with NetWare, Novell's product. We also decided to sell Tuxedo, which was another product that we had purchased at the same time. That had been purchased, I should say, and I was not there, but at the same time that Unix was purchased from AT&T.

Now I just want to stop there. Your answer goes from line 1 to line 13, and in your answer you say, we decided to sell WordPerfect, we decided to sell Unix and UnixWare, we also decided to sell Tuxedo. Correct?

A: Yes.

Q: Those are the things you said that you had decided to sell. The very next question on line 14 was, when did you come to the view that these businesses, plural, should be sold? Answer: That would have been in late '94 or early '95. I remember having made the decision and driving through a blinding snowstorm to get home. So it was mid

1104

winter.

Now, Mr. Frankenberg, not trying to be unfair or take anything out of context, isn't it the case, sir, that your testimony in the SCO v. Novell case, last year, 2010, was that you decided to sell WordPerfect, among other things, in late '94 or early '95?

A: And I was mistaken.

Q: Fair enough. Your testimony --

A: It would have been late '95, early '96. In fact, the other sales occurred in late '95 and into early '96. So I made an error in my testimony.

Q: Okay. Fair enough.

Your testimony today is that this is incorrect, it was not in late '94 or early '95?

A: It was one year later, in late '95 or early '96.

Q: On direct you said it was October of '95, correct?

A: Yes.

Q: All right. Now the reason that you decided to sell WordPerfect was so that Novell could sharpen its focus, its focus on its network product, NetWare; isn't that right?

A: The reason we sold WordPerfect was that it had become very clear that we could not compete in that market, that it was a tilted playing field, and that no matter what we did, we would not be able to succeed. So, of course, we refocused our efforts on those areas where we thought we

1105

could do the best, and that was in networking and network operating systems.

Q: Did you not tell the Securities and Exchange Commission in your form 10-K of the reason that you sold WordPerfect?

A: I'm sure we did, yes.

Q: Let me hand you Exhibit 621. This is Novell's form 10-K for the year ending October 28th, 1995. Of course, we looked at Exhibit 380 earlier. That was the 10-K for the prior year. Do you remember this?

A: Yes, I do.

Q: And this form 10-K, like the other one, was signed by you?

A: I'm sure it was, yes.

Q: You were the principal executive officer, correct?

A: Yes, I was.

Q: It was your obligation to make sure that the statements in this form 10-K filed publicly so that your shareholders and others could evaluate Novell as a public company, it was your obligation to make sure that the statements were true?

A: Yes.

Q: Correct?

A: Yes.

Q: You read them before you signed -- you read the contents of this document?

A: Yes, I did.

1106

Q: Could you look at page 8, please, sir.

Sorry. I'm running out of room too, I think.

Just before the heading halfway down the page, there is a paragraph which begins, as the company sharpened its focus. Do you see that, Mr. Frankenberg?

A: Yes, I do.

Q: What it says is, as the company sharpened its focus, it decided to sell two lines of business, UnixWare and the WordPerfect personal productivity applications, which did not contribute to Novell's network focus. That was the reason you gave for the sell of WordPerfect in your 10-K, correct?

A: Yes, but not quite correct. We sharpened our focus to networking because that's what we could succeed with. We couldn't succeed in the personal productivity applications.

Q: Well, I hear you, but, of course, that's not stated here, is it? Feel free to look elsewhere or anywhere you want, anywhere you think you might find it.

A: What is stated here is that we sharpened our focus to a particular area, our networking business, and that's what we did.

Q: That was the reason for selling WordPerfect, was it not, to sharpen your focus, to return the company's focus to its most important product, NetWare?

MR. JOHNSON: Objection, asked and answered.

1107

THE COURT: Sustained.

BY MR. TULCHIN:

Q: Let me show you Exhibit 353, if I may, Mr. Frankenberg. This is Defendant's 353, and this is from October 1995. It says on the front page, Novell, Inc. Board of Directors Meeting. Do you see that, sir?

A: Yes, I do.

Q: October 20th proposed fiscal year '96 budget. And Jim Tolonen -- am I pronouncing his name correct?

A: Tolonen.

Q: Tolonen, was then the CFO, the chief financial officer, correct?

A: Yes, he was.

Q: If you look about four pages in, the page has a production number that ends with 852.

A: I'm there, yes.

Q: I'm sorry. Just give me a moment.

Right at the bottom, last sentence, we wish to get the remaining 65 percent of the company refocused, morale improved, and on to moving the core business forward.

That's what Mr. Tolonen says to the board of directors, correct?

A: Correct.

Q: And what he's describing here -- we can go through it in more detail if you would like, but what he's describing

1108

here is the question of whether WordPerfect should be sold, right?

A: Yes.

Q: There were various options laid out. You will see higher on the page there's an option three, an option four, an option five, and on earlier pages options one and two I believe appear. These were options for what to do with the WordPerfect business, correct?

A: As well as Unix, yes.

Q: Unix too. Thank you, sir.

In this report to the board of directors Mr. Tolonen is recommending a sale of WordPerfect?

A: Yes.

Q: And what he says at the very bottom of this page is that one of the good reasons to sell is to get the remaining 65 percent of the company refocused. He also refers to improving morale, and to moving the core business forward. Do you see that?

A: Yes, I do.

Q: You were the chairman of the board of directors at the time, right?

A: Yes, I was.

Q: And you agreed with that; did you not?

A: Yes, I did.

Q: When we talked earlier today on cross I asked you a

1109

question about the core business, c-o-r-e. The core business is a reference to NetWare?

A: The networking business, NetWare and other networking products, yes.

Q: Fair enough.

You understood that in this memo at the time in 1995 that what Mr. Tolonen was recommending is that the company move the core business, the networking business forward --

A: Correct.

Q: -- isn't that right?

A: Yes.

Q: Thank you, sir.

Now you testified on direct that GroupWise, from a revenue standpoint, thinking about 1994 -- and I'm not sure if you were thinking March or June, but it doesn't matter, somewhere in that period in 1994, GroupWise was only -- I think you said four percent -- is that what you said -- of the total revenues of WordPerfect Corporation?

A: For the year 1993, GroupWise and its associated products were approximately $25 million, which amounted to a little less than four percent of the total, yes.

Q: I think I remembered it about right, but thank you. It was 1993 you were talking about?

A: Yes.

Q: Thank you.

1110

And it's correct, is it not, though, Mr. Frankenberg, that regardless of what GroupWise's revenues had been in the past, you thought in 1994 that GroupWise represented half the value of what Novell was buying when it was buying WordPerfect Corporation?

A: I thought it represented a very significant strategic opportunity for us and that was an important part of what we came to call pervasive computing, and it was a wide open field, unlike some of the other areas, including the office suite.

Q: You've testified, haven't you, Mr. Frankenberg, that at least half the value of WordPerfect Corporation was in the product that became known as GroupWise?

MR. JOHNSON: Could we have a time period for that question, Your Honor?

MR. TULCHIN: Yes. Yes. I'm happy to pull out the transcript, Your Honor, if we want to take the time.

BY MR. TULCHIN:

Q: It was when Novell bought WordPerfect Corporation. Do you want to see the testimony, Mr. Frankenberg?

A: Yes.

Q: Do you have that transcript of the deposition in 2009?

A: Somewhere. I think I have all of your documents.

Q: I'm sorry for all the papers.

A: Is this the one?

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Q: It looks like it.

Could I ask you first, Mr. Frankenberg, to turn to page 176. This is the deposition taken on March 25, 2009.

MR. TULCHIN: Mr. Johnson, do you have a copy?

MR. JOHNSON: I do. Thank you.

Do you have a page reference?

MR. TULCHIN: Yes. 176, line 1.

BY MR. TULCHIN:

Q: You can look at 175, if you want, where my question starts. I say, tell me if this is accurate. Your testimony at the time -- and I was referring to testimony you gave in 1998 in the Caldera case -- was that, depending on how you calculated it, Novell bought WordPerfect Corporation for $855 million? And you answered yes.

Do you see that, sir?

A: Yes.

Q: And then on 176 we talked a little bit about the sale, and feel free to read that, but I want to direct your attention to 177.

A: Okay.

Q: This gets a little complicated because what I'm doing is reading your testimony from 1998 during this part of the 2009 deposition. But what I'm reading is your statement, page 177, line 13, quote, so my view had always been that at least half the value of WordPerfect was in the product that

1112

became known as GroupWise. Answer: Yes. I then said, unquote. You said, yeah. That was your testimony in 1998? Answer: Yes. Question: That was your view in 1998? Answer: Yes. Question: Your testimony here is accurate and truthful? Answer: Yes.

And then we can go over to 178 -- sorry to take so much time -- line 1, question, now sitting here today in 2009, is it still your view that at least half the value of what Novell bought when it acquired WordPerfect Corporation was in the product that became known as GroupWise? Answer: It was my opinion that on a going forward basis that GroupWise held the most promise for us. And if you go further on in the testimony, it says, so, yes, some deterioration, probably in the neighborhood of 50 percent or so of the value was due to the reduction in value of the personal productivity part of the application.

Those were your answers to my questions two years ago in deposition, correct?

A: Those are my answers, yes.

Q: So I hope this isn't repetitive, but to summarize, when Novell bought WordPerfect, you thought that at least half the value of the WordPerfect Corporation was represented by the product that eventually was called GroupWise?

MR. JOHNSON: Objection, Your Honor, those answers clearly show that that's at the time of sale, not at the

1113

time of purchase.

MR. TULCHIN: I think he can answer, Your Honor.

THE COURT: You can answer.

THE WITNESS: Thank you, Your Honor.

Can you repeat the question?

MR. TULCHIN: Yes, sir.

THE WITNESS: Just trying to be accurate.

MR. TULCHIN: I am too.

THE WITNESS: Good.

BY MR. TULCHIN:

Q: It was your view in 1994, at the time that Novell bought WordPerfect, that at least half the value of the WordPerfect Corporation was represented by the product that later became known as GroupWise; is that correct?

A: On a go forward basis, yes.

Q: Thank you, sir.

A: But not when they bought it.

Q: Well, of course, when you buy something as a business, you are looking to future profits?

A: This was a strategic -- to me it was the most valuable strategic asset in the purchase. And it had gotten to the point by the time we sold it, that by the time we sold PerfectOffice that the others had deteriorated significantly, so a big part of the value going forward was GroupWise.

1114

Q: Just so that the jury is clear on this, when Novell sold WordPerfect and Quattro Pro to Corel in 1996, Novell did not sell GroupWise, it kept GroupWise?

A: That's correct.

Q: Thank you, sir.

Now on direct you made some reference -- it was about ten minutes of 10:00 -- to undocumented APIs. Do you remember that, sir?

A: Yes, I do.

Q: And I think what you did -- tell me if I have this right -- is that you defined that phrase, undocumented APIs, to mean cases where APIs were not made available to ISVs, to companies outside Microsoft, but were available to Microsoft; is that right?

A: That's right.

Q: Do you have any information at all, one way or another, Mr. Frankenberg, as to whether or not Microsoft Office, the version of Microsoft Office released in 1995 to run with Windows 95 or any subsequent version of Microsoft Office, utilized or called the namespace extension APIs?

A: I do not.

Q: Do you know one way or another as to whether or not Word, Microsoft's word processing software, whether Word, either the version released in 1995 or any subsequent version, ever utilized the namespace extension APIs?

1115

A: I do not personally know that, no.

Q: Same question for Excel, Microsoft's spreadsheet?

A: I do not.

Q: So it's not your testimony to this jury that Microsoft itself ever used those APIs when it released products that competed with PerfectOffice or WordPerfect or Quattro Pro?

MR. JOHNSON: Objection, Your Honor. He said he didn't know.

THE COURT: Overruled.

You may answer.

THE WITNESS: I do not know.

BY MR. TULCHIN:

Q: So you weren't -- when you used the phrase undocumented APIs, you weren't implying that somehow Novell was prohibited from using these APIs but Microsoft used them itself?

A: I was not implying that. I don't know whether that was true or not.

Q: Thank you, sir.

Now I think you said that it was sometime in 1995 when either Mr. Calkins -- and I think the second name was Mr. Waxman; am I right?

A: Yes.

Q: Either Mr. Calkins or Mr. Waxman informed you that Microsoft had decided to withdraw support for certain APIs.

1116

Do you recall that testimony?

A: Yes, I do.

Q: Did you get that information from them in writing?

A: No, I did not.

Q: So that was something they told you?

A: Best of my recollection, yes.

Q: You don't know when you were so told. Sometime in '95 is all we have?

A: Sometime in the first part of '95. I don't have an exact date.

Q: As far as you know, there is no writing, no piece of paper that was ever provided to you with that information; is that true?

A: That's true. I'm sure given all the paper you have that you would have found it, if it existed.

THE COURT: Don't make assumptions.

THE WITNESS: Sorry. I'll behave, Your Honor.

BY MR. TULCHIN:

Q: In preparing for your testimony here with the lawyers, you certainly didn't see something like that, did you?

MR. JOHNSON: Objection, what he saw with the lawyers.

THE COURT: He hasn't seen any.

BY MR. TULCHIN:

Q: You also said on direct that there were occasions when

1117

you complained to Mr. Gates about undocumented APIs. Do you remember that testimony?

A: Yes, I do.

Q: Now Microsoft Windows had thousands of APIs in it, correct?

A: I don't know the exact count, but I'm sure there were many.

Q: Would you take my representation that Windows 95 had thousands of APIs?

A: I'm sure you would know better than I would.

Q: Okay. In any of these conversations with Mr. Gates, did you specify which APIs you were talking about?

A: No, I did not.

Q: So you never said to Mr. Gates the problem is the namespace extension APIs?

A: I don't recall ever saying that, no.

Q: You never said something about IShellBrowser, one of the specific APIs?

A: I don't remember saying that either, no.

Q: Did you ever say anything to Mr. Gates about any APIs that permitted an ISV to extend the shell?

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

Q: So your only testimony is that whatever these conversations were with Mr. Gates had to do with undocumented APIs as a general matter?

1118

A: Yes.

Q: And do you happen to recall any letter that you sent to Mr. Gates which mentions the namespace extension APIs?

A: No, not specifically.

Q: Have you seen any such letter?

A: No.

Q: How about an e-mail?

A: Would you repeat the question?

Q: Yes. Sorry. It was too cryptic.

Have you seen any e-mail that you ever sent to Mr. Gates which made reference to his decision to withdraw support for the namespace extension APIs?

A: No, I have not seen an e-mail from me. I saw an e-mail from Bill Gates to a number of his people, but not from me.

Q: That was the e-mail that Mr. Johnson showed you today?

A: Correct.

Q: You didn't see that at the time, of course?

A: No. I didn't see it until 2009.

Q: Okay. So let me back up. Do you have any way of specifying to the jury or the Court when it was that these conversations with Mr. Gates took place, the conversations about undocumented APIs?

A: In the documents that I have reviewed prior to trial, there are letters and references to meeting dates where those things were discussed. Perhaps that would help pin

1119

down the dates of those discussions.

Q: Mr. Frankenberg, there were some occasions where you and Mr. Gates got together and met face-to-face, correct?

A: Correct.

Q: And it wasn't necessarily just the two of you, there may have been some other Novell people, there may have been some other Microsoft people, correct?

A: All of those happened, other Microsoft people, other Novell people, and also the two of us face-to-face, just the two of us.

Q: Let me show you Exhibit 636.

Would it help if I took any of this away, or do you want to leave it there?

A: Is there some of it you are not going to go back to?

I was beginning to wonder if I was going to be like that window over there.

MR. TULCHIN: Don't put it up yet. Sorry.

MR. JOHNSON: I've not seen this exhibit before.

BY MR. TULCHIN:

Q: Mr. Frankenberg, Exhibit 636 was a memorandum prepared by Dave Miller of Novell; is that right?

A: Yes, that's what it says.

Q: It's a memorandum about a meeting on January 10th, 1995, correct?

A: Yes.

1120

Q: And it was sent to a number of people, including you?

A: Yes.

Q: And it was prepared in the ordinary course of business at Novell, correct?

A: I'm sure that's the case.

MR. JOHNSON: We have no objection.

MR. TULCHIN: We offer this, Your Honor.

THE COURT: No objection.

(Defendant's Exhibit 636 was received into evidence.)

MR. TULCHIN: Now we can show it. Thank you.

BY MR. TULCHIN:

Q: Mr. Frankenberg, do you recall that there was a meeting attended by a number of people from both companies on January 10th, '95?

A: Yes, I do.

Q: And this was three months after Mr. Gates had decided to withdraw support for the namespace extension APIs, correct?

A: That's correct.

Q: And certainly people at Novell were aware of that by January?

A: Some people at Novell would have been aware of that, yes.

Q: Now I have looked through Exhibit -- let me first ask

1121

this question. Exhibit 636 are notes that were taken by Dave Miller of Novell of the meeting, correct?

A: Yes, that's what it says.

Q: Starting at page 4 at the top, it says, the following transcript was obtained. I tried to be as accurate as possible. However, because of the speed of the conversations and my lack of typing skills, some of the information has been interpreted. And it goes on. The whole document is a total of eight pages. But looking further on page 4, you will see there are initials. BG is Bill Gates, correct?

A: I believe that relates back to --

Q: And BF is you?

A: -- the attendees on the list, yes.

Q: So one of your people at Novell, Mr. Miller, took notes of this meeting with Microsoft. The meeting went on for some hours, correct?

A: I don't recall how long the meeting was. Sorry.

Q: Was it up in the State of Washington at Redmond, Washington where Microsoft's headquarters are?

A: I believe that was the case, yes.

Q: Do you recall if there was any mention at this meeting in January about the namespace extension APIs?

A: I don't recall any discussion.

Q: I have looked through Exhibit 636, sir, and I hope I'm

1122

getting this right, but I don't see any reference to that topic. I'm happy to have you look at this document overnight, if you want. I will try to be quick and get you out of here as soon as I can, but if you see it, maybe tomorrow morning you could point it out to me.

MR. JOHNSON: I guess that means we're not going to finish today, Your Honor.

MR. TULCHIN: I'm going to try to get as far as I can, Your Honor.

THE COURT: We'll see how it goes.

BY MR. TULCHIN:

Q: Now, Mr. Frankenberg, am I correct that at the Agenda '95 Conference that you have testified about on direct, that was in September, correct?

A: Yes.

Q: September of '94, you presented a demo of Corsair?

A: Yes.

Q: And it was just a demonstration, there was no functioning product yet; am I right?

A: It was a product under development. It wasn't one that was released, if that's what you mean.

Q: Okay. There was a product under development, it hadn't yet been released to the market, and you testified it never was released?

A: That's also true, yes.

1123

Q: And the demo was of a nonfinal product. You were showing what you hoped could be achieved. It was something that was never actually achieved in a functioning product that was offered for sale?

A: That's true.

Q: And at Agenda '95 in September of 1994, did you have occasion to speak to Mr. Gates?

A: I may have, but I don't recall if I did.

Q: Do you recall ever telling Mr. Gates, before October 3rd, 1994, that Novell or WordPerfect was planning in any way to use the namespace extension APIs in developing WordPerfect or PerfectOffice?

A: No, I don't recall ever saying that to Bill Gates.

Q: As far as you know, did anyone else ever tell Mr. Gates that?

A: I don't know of anybody who did that, no.

Q: Then you also talked on direct about the COMDEX meeting in November of '94, correct?

A: Yes.

Q: And I think you said that you made a speech at COMDEX?

A: I did, yes.

Q: Mr. Gates made his own speech at COMDEX in November '94, right?

A: Could well be. Bill did that frequently, as I did.

Q: Did you have occasion to speak face-to-face with

1124

Mr. Gates at the COMDEX meeting in Las Vegas in November of 1994?

THE COURT: The question isn't whether he had a chance to but whether he did.

MR. TULCHIN: That's correct, Your Honor. That's a better question.

THE WITNESS: We may have talked. But if we did, I don't recall.

BY MR. TULCHIN:

Q: Were you aware, sir, that Microsoft had designated someone to be the contact man for Novell concerning Windows 95 issues?

A: I'm sure there was a person who had that responsibility, yes.

Q: Do you know who that person was?

A: I'm not sure. I think it may have been Bob Kruger, but I'm not sure of that.

Q: Have you ever before today heard of the name Brad Struss, S-t-r-u-s-s?

A: Sounds vaguely familiar, but I don't recall specifically.

Q: Do you recall ever getting any reports from Norm Creighton of Novell about his conversations with Mr. Struss?

A: I may have, but I don't remember.

Q: Do you recall ever being told that Mr. Struss had asked

1125

Novell/WordPerfect whether they were okay with Mr. Gates's decision to withdraw support for the namespace extension APIs?

MR. JOHNSON: Can we identify an individual where this alleged conversation took place?

THE COURT: You mean the conversation between Mr. Struss and somebody at Novell?

MR. TULCHIN: No. I was asking -- sorry, Your Honor.

THE COURT: I'm not sure what the alleged conversation is he's asking him. I just don't remember.

BY MR. TULCHIN:

Q: I'm asking you whether anyone at Novell ever told you of a conversation that he or she had with Mr. Struss in which Mr. Struss inquired, are you okay with withdrawal of support for these namespace extension APIs?

A: I don't remember any such conversation.

Q: Let me hand you what we've marked as Defendant's Exhibit 3.

Now, Mr. Frankenberg, just to be clear, Defendant's Exhibit 3 is some internal e-mails at Microsoft. One of them on the first page is from Brad Struss, Wednesday, October 12, 1994.

A: I see that, yes.

Q: Did you ever talk to Brad Chase of Microsoft?

1126

A: I'm sure I did at one or more meetings, but I don't recall any particular conversation.

Q: You don't recall talking to him about the namespace extension APIs?

A: No.

Q: Is it true to say that in 1994 and 1995, throughout that entire period, you didn't know what the namespace extension APIs were?

MR. JOHNSON: Objection, Your Honor. He already testified he learned in early 1995 about this.

THE COURT: Overruled.

THE WITNESS: I knew that there were extensions to the APIs that we were using for PerfectOffice for Windows 95. And those, as it turns out, are the namespace extensions, amongst others.

BY MR. TULCHIN:

Q: I know you say as it turns out, but I'm asking back in '94 and '95, did you know what the namespace extension APIs were, what functionality they provided?

A: No, I did not.

Q: Okay. Returning to Exhibit 3, Exhibit 3 says -- this is Mr. Struss's e-mail to Brad Chase and others, subject, namespace extension decision, per Paulma -- and there's been evidence in this case that refers to Paul Maritz of Microsoft -- we're now in the process of proactively

1127

notifying ISVs about the namespace API changes, paren, will not document them and they'll go away/change, close paren. So far Stac, Lotus, WP -- that was a common abbreviation for WordPerfect, correct?

A: Correct.

Q: WP, Oracle, SCC appear to be okay with this.

My question, Mr. Frankenberg, is whether you remember being told by anyone at Novell in 1994 or '95 that they, that person at Novell, had told Microsoft we're okay with the namespace extension decision?

A: No, I don't recall anybody telling me that.

Q: Do you recall around the same time in the fall of 1994 that WordPerfect -- Novell/WordPerfect were focusing their attention on the 16-bit version of the products, for instance, PerfectOffice 3.0?

A: There was a team of people working on what became PerfectOffice 3.0. There was a team working on the next generation, which became -- which was to become PerfectOffice for Windows 95.

Q: But am I right that the attention -- most of the attention was being focused on the 16-bit products?

A: Depends on which team you are talking about. The team working on the Windows 95 version had intense attention on that. The team working on the one for Windows gave it a lot of attention.

1128

Q: I wasn't really trying to compare the amount of attention that given people were paying. Let me ask you another question.

MR. JOHNSON: Your Honor, I might add, we've been through this. This is repetitive.

THE COURT: I'm going to let -- we have been through it to some extent, but Mr. Tulchin can get into it again. It's a slightly different angle.

BY MR. TULCHIN:

Q: Do you recall in the fall of 1994 that there were far more developers, software develops working on the 16-bit version of your products than there were working on the Windows 95 versions?

A: I'm sure that was the case.

Q: Let me show you Exhibit 2 -- sorry. Yes, 2, Defendant's Exhibit 2.

Now again, just to be clear, this is an internal Microsoft e-mail, and you will see just a little ways down the first page there is an e-mail from Brad Struss again, and he's writing to Bob Muglia, Brad Chase, Brad Silverberg, and a number of other people.

Do you see that?

A: I do, yes.

Q: And he's writing about first wave status report and issues. That's the subject. Do you see that?

1129

A: Yes.

Q: And, Mr. Frankenberg, did you know at the time about Microsoft's first wave program?

A: I did not, no.

Q: Fair enough.

If you look at the second page, this is still Mr. Struss's e-mail, October 21, '94, right in the middle of the page there is a paragraph about WordPerfect. And Mr. Struss writes to his superiors at Microsoft as follows: WordPerfect, due to focus on 16-bit product revision this fall, there are limited resources working on next year's 32-bit release. Given this and the fact that they'd rather deliver a great product later than a mediocre one sooner, they currently expect to ship September '95 or around 120 days of Windows 95 ship. Working with their senior management to see about getting more focus on their 32-bit release.

Were you aware in around October 1994, that people at Microsoft were working with senior management at WordPerfect to see if WordPerfect would put more focus on the products for Windows 95?

A: I was not aware of that, no.

Q: Well, it was certainly the case, Mr. Frankenberg, wasn't it, that Microsoft was trying to help WordPerfect, trying to help Novell come out with a good product for

1130

Windows 95? Is that fair?

A: It doesn't say that here.

Q: No, I'm asking you from your recollection.

A: From my recollection, I don't recall that conversation where they were trying to help us, but they may well have been.

Q: I mean isn't it the case, Mr. Frankenberg, that people in the systems group at Microsoft -- the systems group was Microsoft's name for the group that was developing operating systems. Do you recall that?

A: Yes.

Q: And isn't it true that people in the systems group at Microsoft were trying to help WordPerfect/Novell produce a great application for Windows 95?

A: I'm sure they were, but I did not personally witness that. That's what you asked me earlier.

Q: I'm just asking for your general recollection. Microsoft was trying to help. That's fair?

A: Yes.

Q: Okay. Do you recall any other face-to-face meetings, let's say in the period from October 1, '94 to June 1, '95, that's eight months, October, November, December of '94 and the first five months of '95, do you recall any other meetings that you had with Mr. Gates other than the COMDEX meeting in November and the January 10th meeting about which

1131

we spoke earlier?

A: I think I said that I didn't recall whether we met with Mr. Gates at the meeting -- at the COMDEX meeting. I do recall the November 10th meeting. I do not recall any meetings in between then and -- I think your question was June of '95. I don't recall any. There may have been meetings, but I don't recall.

Q: Did anyone from the shared code group ever, in 1994 or 1995, present you with any written document setting forth the three choices that they were faced with?

A: No.

Q: Do you know whether anyone from the shared code group ever prepared any written document to set forth the three choices to Mr. Rietveld or Dave Moon or Mr. Brereton?

A: They may well have done that, but I don't recall ever seeing anything like that, no.

Q: You certainly have seen no such document?

A: Not to my recollection, no. It's a long time ago.

Q: Are you aware of the testimony that was given in this courtroom by Mr. Harral, Mr. Richardson and Mr. Gibb about the three choices, the three options that were presented to them after the decision to withdraw support for the namespace extension APIs?

A: I know that those three gentlemen testified here. I don't know the content of their testimony, no.

1132

MR. JOHNSON: Which by the way, Your Honor, would be improper under the rule of witnesses. I don't know why he asked such a question.

THE COURT: The answer is what it is.

BY MR. TULCHIN:

Q: Mr. Frankenberg, are you aware that one of the choices that the shared code group had in 1994 and 1995 was to write their code to the namespace extension APIs?

A: I know one of the options that they had was to write their code to interfaces that were extended. I don't know if it was the namespace extensions.

Q: What you do know is that one choice was to keep using the APIs for which the support was being withdrawn, correct?

A: Correct.

Q: And that was a choice that had some risk because in later versions of Windows those APIs might not even appear, right?

A: That was the nature of undocumented APIs, yes.

Q: Well, I want to be clear about something. These APIs had been documented to Novell, correct?

A: I believe that's true, yes.

Q: I'm sorry? I couldn't hear you.

A: I believe that's true, yes.

Q: So when you say undocumented, the APIs in question, Microsoft had provided documentation for; is that right?

1133

A: I believe that's true, yes.

Q: So they weren't undocumented. They were documented, true?

A: Yes.

Q: And one of the choices that the shared code group had was to write code to those APIs and to make a business decision about whether or not it was more important to get these products out to market really fast than it was to take the risk that the APIs might not be supported in future versions of Windows, right?

A: I didn't know that at the time. Obviously if that was a choice, it would have been a poor choice.

Q: If you had been asked to make the decision at the time, you would have chosen to get the products out fast, correct?

A: I wasn't asked to make the decision at the time.

Q: I appreciate that. I heard you say that. I am asking you now, testifying today in 2011, if you had been asked to make the decision in 1994 or '95 about whether or not to get PerfectOffice and WordPerfect out to market at around the time Windows 95 came out or to choose some third path, some difficult and complicated path of adding functionality to Windows, you would have chosen -- you would have made the decision to go for getting the products out quickly?

MR. JOHNSON: Objection, lacks foundation.

THE COURT: He can answer. Overruled.

1134

THE WITNESS: I would have to have a lot more facts than just the couple things that you have stated in order to make such a decision.

MR. TULCHIN: Well, let me go through some of the facts.

If we could have slide 83.

BY MR. TULCHIN:

Q: If this isn't enough for you to answer the question, I'm sure you will tell me, Mr. Frankenberg. But we've excerpted some of the testimony from the prior three live witnesses in this case. And I would also be happy to have you see --

MR. TULCHIN: Can we put up Plaintiff's Demonstrative Exhibit 15?

MR. JOHNSON: Can we have a copy of this, please?

MR. TULCHIN: Yes.

BY MR. TULCHIN:

Q: This is a slide that Mr. Johnson used, I believe with Mr. Harral, the first witness.

THE COURT: It could have been the first witness. I thought it was the second or third one.

MR. TULCHIN: It could have been. I'm losing track, Your Honor.

BY MR. TULCHIN:

Q: In any event, I know this was Novell's slide, and it

1135

talks here about the three options. The first one would be to continue to use the documentation that they had for the APIs. Do you see that?

A: I see that, yes.

Q: The second would be to see if they could avoid using the APIs and use the Windows common file open dialog, which --

A: It doesn't say that.

Q: No, it doesn't, but I think that's a fair summary. The witnesses said we could have used the Windows common open file dialog. It wouldn't have given us as much functionality as we wanted to put into PerfectOffice.

And the third option was to try and recreate what was missing or what we did not yet have. That was the option that Mr. Harral, Mr. Gibb and Mr. Richardson testified was chosen to engage in a job that they say took as much as a year to try to get this extra functionality into Novell's products.

Are you with me so far?

A: Yes.

MR. JOHNSON: Your Honor, this is so far beyond the scope of direct. He's asking the CEO about developers' choices.

THE COURT: I don't see these as just developers' choices or we wouldn't be here.

1136

MR. TULCHIN: Thank you, Your Honor.

BY MR. TULCHIN:

Q: Then slide 83, which I showed you a moment ago, has some of the testimony about the first option. Mr. Harral said that a developer, given a month, should be able to work out the issues of tying into the namespace extension APIs. Mr. Richardson says that Steve Giles, one of the developers at Novell, had written a file open dialog that made use of the namespace extension APIs.

Do you see that, sir?

A: Yes, I do.

Q: And I represent to you that these witnesses said that had they used the namespace extension APIs, there would not necessarily have been any delay in the shared code group's work?

MR. JOHNSON: Objection, that's a total mischaracterization. Your Honor, they said they couldn't use this option because Microsoft Premier Support shut them down on any information about the shell.

MR. TULCHIN: This is just argument, Your Honor.

THE COURT: Approach the bench. This has something to do with what I asked you all the other day, I think.

(Side-bar conference held)

THE COURT: I think what I was asking, I never

1137

understood why they didn't consider the first option, which was to use the documented APIs if they wanted to simultaneously pursue the third option. But the problem -- because the problem, as I understood it before, it was in the future versions of Windows 95. APIs may not be there. You could temporarily use the APIs as were there. And if you were really worried about time, you could do what they did by the time the year had past.

MR. TULCHIN: That was the testimony, Your Honor.

MR. JOHNSON: That was not the testimony. We'll bring up the testimony to you tomorrow so you can see it again. But the testimony was that was the first option to pursue -- you're right, had they been able to pursue that option, maybe they could have done exactly what you have said. But what happened was when they called Premier Support to get the answers for how to tie into network neighborhood, recycle bin, all the other things that were required to use these APIs, Premier Support shut them down and no information about the shell. So they couldn't, therefore, use the APIs.

THE COURT: I understand what you are saying.

MR. JOHNSON: So it's completely incorrect to suggest --

THE COURT: Wait. Wait. Just testimony. It's the combination of the shut down of Premier Support and

1138

the -- I had come into this thinking that that was an incidental matter, but the fact of the matter is they had documentation.

MR. JOHNSON: It wasn't incidental at all.

MR. TULCHIN: Your Honor, if I could respond just for a moment?

MR. JOHNSON: There was a great risk as they could change them at any moment. It wasn't future applications, as you said. Nonetheless, our people were prepared to take that risk if they could have gotten support that allowed them to use these APIs.

THE COURT: I hear him.

MR. TULCHIN: If I may just respond to this, Your Honor? Number one, strangest antitrust case I've ever heard of based on a lack of support from people on a telephone, on the line. When Mr. Kruger and Mr. Struss and lots of people at Microsoft were available to help Novell, the Premier Support was a telephone help line for developers. And we're now into the duty to build Novell's products for it.

THE COURT: That's a different question. I will sustain the objection on the ground this is a somewhat murky area as to what any of this witness's knowledge would be. We can have argument later. I will sustain the objection.

(Side-bar conference concluded.)

1139

BY MR. TULCHIN:

Q: Mr. Frankenberg, let me try it this way. Had you been asked in 1994 or 1995 which course of action you preferred, to get the products out to market in a timely way or to spend a year trying to write an advanced file open dialog, which choice would you, as CEO, have made?

MR. JOHNSON: Objection, calls for speculation.

THE COURT: Overruled.

THE WITNESS: Well, I would have to have a lot more information before I could answer your question. And the developers had that information, so that would have been a choice that they and direct management would make. It wouldn't have been me.

BY MR. TULCHIN:

Q: Is it not your testimony, Mr. Frankenberg, that the choice that was made to spend a year to write an advanced file open dialog had serious negative consequences for Novell?

A: The way that it turned out, yes.

Q: And is it also your testimony that a business decision that could cost the company many millions of dollars with very serious negative consequences was left to developers like Adam Harral and Greg Richardson?

A: It was -- as I testified earlier, that we put the business applications in its own division and group so that

1140

it could act and react to the market and to things as they progressed. That decision would have been made by the development team, the marketing team, and the executives of that group.

Q: The executives were Mr. Rietveld, right?

A: He may still have been there, yes.

Q: Mr. Moon?

A: Yes.

Q: Was Mr. Brereton considered an executive?

A: I don't recall his exact position.

Q: Do you remember Mr. Brereton at all?

A: I remember the name, yes.

Q: Were there other executives in that group besides Adrian Rietveld and Dave Moon?

A: Mark Calkins, who was the division manager responsible for business applications, would have been central to any such division.

Q: Maybe Glen Mella?

A: Glen was the person responsible for marketing, and he certainly would have had an input into that process.

Q: So is it your testimony today that it would have been your expectation at the time that a decision about what choice to make to spend a year writing the advanced file open dialog or to get the product out fast using the namespace extension APIs, that that decision would have been

1141

entrusted to the executives, the people we just mentioned, Rietveld, Moon, Calkins and Mella?

A: It may have been Mr. Waxman in place of Mr. Rietveld because he may have left by then. But, yes, of course.

Q: And that decision --

A: You keep saying spend a year. I don't know that it was going to take a year. I have no way of knowing that, so --

Q: Let me amend my question to ask, spend a considerable period of time. That decision would have been made by the executives, correct? That was your expectation?

A: That's correct.

Q: The decision would not have been made by individual developers within the shared code group; is that right?

A: I believe that's true, yes.

Q: Now am I right, Mr. Frankenberg, that when the announcement was made in October that Novell intended to sell WordPerfect and PerfectOffice, that that announcement in and of itself had an adverse impact on the efforts to develop these products?

A: I don't believe that it did. I believe that the team continued forward.

Q: Do you recall, Mr. Frankenberg, that a couple months later, less than two months later, there were mass resignations among the developers in Scotts Valley, the Quattro Pro team?

1142

A: I don't know about mass resignations. I'm sure there were resignations, yes.

Q: Let me ask you this question. In order to get PerfectOffice out to market, you needed to have Quattro Pro ready to go, right?

A: Yes.

Q: That was an essential element of your suite?

A: Yes.

Q: Let me show you Exhibit 230. This is an e-mail, Mr. Frankenberg, dated December 23rd, 1995. It's written by Bruce Brereton, whose name I mentioned earlier?

A: Yes.

Q: On the to line, it says -- it's hard for me to read, but I think it might be orm-corp.bfrank. Do you see that?

A: Yes.

Q: Is that you?

A: That's me.

Q: That was your sort of alias or e-mail name at Novell?

A: Ask me and I'll always be frank.

Q: I appreciate that. I thank you for it.

Now Exhibit 230, Mr. Brereton's e-mail in December, says, Glen asked me to give you all an update on the situation in Scotts Valley and also report what our plan of action is. One, on this past Thursday/Friday, about 15 additional people submitted their resignations, all except

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one going to Oracle. From a development standpoint, this leaves us with just two people.

I know it's a long time ago, we're in 2011, but do you recall this at the end of '95 that 15 developers submitted resignations and that left Quattro Pro with only two people?

A: I don't remember those specific numbers, but I do remember there were resignations, yes.

Q: Certainly if there weren't any software developers in Scotts Valley, people at Quattro Pro working on the product, you would have a hard time getting your suite out, correct?

A: I guess that depends on how far along the project was at the time of the resignations, and I have no way of remembering that.

Q: Well, what it says is that -- item three certainly implies that the project wasn't ready. It says, we've now assigned a development manager in Orem. Do you see that?

A: Yes.

Q: And we're putting together a team. Two to three of these people will be on-site at SV. That was Scotts Valley, SV?

A: I would assume so, yes.

Q: On Tuesday, January 2. Then it says what the Orem team will be initially made up of one manager, two from the old PlanPerfect, three to four other top-notch developers, and it goes on.

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Item four says they will be working closely with whoever is left at the Quattro Pro group. Do you see that?

A: Yes.

Q: And it goes on to say, we feel that it is essential that these key people have a full development environment at home, such that they can fix bugs.

Doesn't this tell you, Exhibit 230, Mr. Frankenberg, that the Quattro Pro team was not ready even then in December of '95?

A: It would imply that it wasn't released -- certainly saying it wasn't released to manufacturing, but -- so having the ability to fix bugs from home implies that they could respond to further testing. So clearly the product wasn't complete. It just doesn't say how far from completion it was.

THE COURT: It's after 1:30. Let's break for the day. I'm afraid you will have to come back tomorrow, Mr. Frankenberg. I'll sit here with counsel for a minute.

(Jury excused)

MR. JOHNSON: Can Mr. Frankenberg be excused?

THE COURT: You can leave.

THE COURT: I'm a little worried that you are getting now into, with Mr. Frankenberg, things that were covered by other people. I think you have established what he knew, but we can't get in the whole critical path issue

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now. There's going to be times when you aren't going to want people on the other side repeating things that are in evidence. I am just wondering whether this is a fruitful line of examination.

MR. TULCHIN: I'll take that to heart, Your Honor.

THE COURT: I understand your point, but the fact of the matter is you have got plenty of arguments, things wouldn't have happened anyway, as I understood the testimony of one of the witnesses that talked about the critical path, this became irrelevant because of the delay, catching up. I don't think Mr. Frankenberg knew that.

MR. JOHNSON: Of course, he doesn't. I mean we seem to be having a trial --

MR. TULCHIN: Your Honor, I am going to try not to respond to Mr. Johnson's constant criticisms. I'm sure we'll hold him to the same thing. But I do want to respond to the Court and I'm taking this to heart. If there's been repetition, I apologize.

THE COURT: It's not repetition. I'm just not sure it's going to be fruitful.

MR. TULCHIN: I understand. I think I have about another half an hour. If it turns out to be slightly more, I hope you will forgive me.

THE COURT: That's not the issue. I wanted to stop because it's seemed to me that you've clearly

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established Mr. Frankenberg really was not involved in the ins and outs of this decision. We did hear the testimony about the critical path, which, according to Novell, you can certainly argue to the contrary, but according to the testimony of Mr. -- I think it was the fellow who testified --

MR. JOHNSON: Mr. Gibb.

THE COURT: Mr. Gibb, that it became immaterial because of the timing on the --

MR. TULCHIN: But, Your Honor, I think it's very important for the jury to hear and also for the Court that in a case brought seeking billions of dollars in damages --

THE COURT: That's a whole different issue, Mr. Tulchin. I've heard you loud and clear.

MR. TULCHIN: If I may? I just want to -- I hope by way of an apology for taking so long. It's very important to note, this is the only live witness who they are calling, or so I now infer, other than these three low level developers. He was the CEO. And I think it's important for the jury to understand that when Novell is seeking billions of dollars in damages, the case turns on the testimony of three low level developers about choices that they make. Business people apparently never made this choice. We don't have a single document from any executive within the business applications group at Novell indicating

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here is the decision we're going to make. In lieu of getting the product out quickly, let's try for the super duper advanced file open dialog. It was a decision that Harral and Richardson say that they made, although both of them frequently used the word we without defining who else they were talking to.

So again --

THE COURT: I hear you loud and clear. I think you have made that point. I'm just suggesting that getting into whether or not -- and you make your own decision, but getting into issues about whether the delay in Quattro Pro, because people left, impacted upon what ultimately happened, that does not seem to me to get you anywhere. I think you have established, and I heard you loud and clear at least, it's mind boggling to me, to tell you the truth, that Mr. Frankenberg was not intimately involved in this decision. I can't imagine -- I mean you did establish the executives, not the three we heard from. That's a point too. But, frankly, it's mind boggling to me that you have a decision made of this magnitude without Mr. Frankenberg having been involved. It's beyond anything I can comprehend.

MR. JOHNSON: May I respond, Your Honor?

THE COURT: Yes, please do.

MR. JOHNSON: Thank you.

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First of all, Mr. Gibb was not some low level developer. He was the project manager for the PerfectOffice suite.

THE COURT: You are telling me that you would let a junior partner -- never mind. Go ahead.

MR. JOHNSON: And Mr. Gibb testified that they had weekly meetings with the entire team and a number of executives with the company. These choices were not being made randomly. Because you don't bring the CEO to make a decision -- and what I think here is that Your Honor, once again, is focusing on the notion that they could have made the decision to use these interfaces, and the testimony is to the contrary.

THE COURT: That may or may not be the case. I hear you.

MR. JOHNSON: I think it's very important.

THE COURT: No. That's a whole different issue. Your clients chose not to keep any documents. Your clients chose to talk to their lawyers a long, long time ago about bringing an antitrust case. And Mr. Frankenberg, the president of the company, is not even involved in the decision as to whether -- you know, maybe the decision was right. Maybe it was wrong. As far as I'm concerned, it's mind boggling to me that somebody didn't say, Bob, this is the situation. We have two ways to go. We can either get

1149

this product out within a short period of time with Windows 95 coming out, but it may have problems. It could be they are going to withdraw the APIs or it could be we're using their functionality, which our client base is not going to be happy with because it's a step backwards. Or we can wait a year and bring it out.

Frankly, it is to me mind boggling -- it may have nothing to do with the law. It's having to do with business. Why the chief executive officer and the chairman of the board is not involved in that decision is just shocking to me.

MR. JOHNSON: Your Honor, if I may. Certainly at the time these decisions were being made -- and I must say they didn't have the choice to use the extensions. That's what the testimony is. Okay. Certainly at the time the choice was being made, they did not know it was going to take over a year to do this. So it's not like you had the stark decision of saying either we do A or we're going to be in 1996. This is something that you find out over time. This is something that is brought to Mr. Frankenberg's attention in early 1995, hey, we have a real problem here. The developers have a real problem. They don't know at that point in time it's going to cost them a year to get to home. They don't know how difficult the problem is going to become.

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So to say that there was some choice to be made in 1995 that, oh, okay, if we go that route, we're going to miss the time to market, we're going to be somewhere off in 1996, and we're doomed. They did not have that information. They did not know that. What they knew --

THE COURT: I've said what I've said. It may not have anything to do with the lawsuit. I'm telling you that if I was a chief executive and chairman of the board of a company and this decision was not put on my plate -- forget the first option, because maybe I'm wrong about my recollection, which is perfectly possible. But the choice between using Microsoft's open face dialog, which may decrease the functionality that your clients have come to expect or going off on some uncertain path, whether it's a year or whatever -- what I know from -- clearly one thing, this is an industry in which people can't predict what's going to happen, I would want to make the decision as the chairman of the board and the CEO, and I am not -- I'm sorry, I'm just telling you what I'm thinking. It may have nothing to do with -- if responsible people made the decision, it may have nothing to do with the lawsuit. It may make a big difference.

MR. TULCHIN: It actually doesn't help Novell to say we didn't know it would take a year, because three months in, or four, or four and a half, or five, or six,

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when they hadn't solved the problem yet, and they could get the product out in a moment's notice, according to all the testimony, we'll collect it, I will be happy to show it to you.

THE COURT: Somebody knew something that year. These people -- two or three people, they didn't want to hire people. A bunch of associates researching a project.

MR. TULCHIN: That executives made a decision, there is not a single document --

THE COURT: This is my fault. This is my fault. All I'm saying is that I did not think that this speaks well of Novell management that Bob Frankenberg was not involved in the decision. That's all I'm saying. It got us here. I think you've made that point, Mr. Tulchin. I think it's something the jury may or may not consider. But I don't think that pursuing the issue of whether the file -- or whether the resignation of the Quattro Pro people made a difference is to going to impact it. That's how we got here. That's all I'm saying.

MR. JOHNSON: Your Honor, may I say, all of this is under the category of blame the victim without reference to the fact of what Mr. Gates did and the reasons he --

THE COURT: Mr. Gates was, according to -- I understand. The answer is that he was involved in a highly competitive industry in which he was worried about paradigm

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shifts in a minute, and he didn't want his product to be used by somebody who he saw as a major competitor that might be used against him and completely wipe out what he had accomplished.

MR. JOHNSON: If that was the case, they never should have evangelized that stuff to us. They shouldn't have given it to us. They shouldn't have told us this is what you should do to develop your product and we might not be here today. But he took a calculated I'm taking that away from them in order to advantage my suite and to hurt WordPerfect and Lotus, and he did so, frankly, with malice.

THE COURT: That's what I will be hearing on a motion for judgment as a matter of law.

MR. JOHNSON: Thank you, Your Honor.

THE COURT: What's tomorrow in addition to we have Mr. Frankenberg?

MR. JOHNSON: Well, Your Honor, obviously I didn't know -- I am going to have to --

THE COURT: No. No. No. I just want to --

MR. JOHNSON: -- do quite a bit of redirect. We're going -- we had wanted to put on Mr. Alepin tomorrow, but clearly we're going to take at least half the day finishing up the cross, then I have to do a fair amount of redirect because of the length of the cross. We do have some film, still have videos to show, Your Honor. So I

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think we'll go back and take a look at it and decide -- clearly I think we can either show film, or if we did Mr. Alepin, it would only be the very start of his testimony.

THE COURT: Okay. Fair enough.

Look, I understand. If I'm wrong, the first option, I could very well -- it could be it's the lack of documentation, plus what the people on the phone refused to say. It could also be -- and, frankly, it's the first time today as I realized it, I guess, that the APIs could have been withdrawn in the first release of Windows 95. Frankly, I had just gotten the impression that everybody was talking about were the APIs being withdrawn in future versions of Windows. That is what prompted my original question of last week, which is why didn't somebody consider using the documented APIs, at least simultaneously while the house was being built, to which you said there are two answers. Number one, they couldn't even use the existing APIs because they were getting stonewalled by whatever --

MR. JOHNSON: Premier Support, Your Honor, which, by the way, wasn't some hotline. It was a paid service that cost a lot of money, and you had direct excess to Microsoft's developers.

THE COURT: I understand.

MR. TULCHIN: Your Honor, it's not an antitrust

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claim that unnamed people at Premier Support, who they have never identified, somehow didn't help them enough because they weren't competent enough to write their own product.

THE COURT: It's your fault because you don't have the records of Premier Support.

MR. TULCHIN: Yes, we had the duty to collect those documents. They knew they were going to sue us. They had the duty. Of course, we don't have those records.

MR. JOHNSON: There were lawsuits against Microsoft at the time. They had an equal amount of duty at the time. There were all kinds of documents.

THE COURT: I think --

MR. TULCHIN: No one else has had the nerve to sue about calls to Premier Support.

THE COURT: I still want to know -- I am going to want to know at some point whether there's any other -- any case anywhere, including those against Microsoft, where a competitor, the duty of the competitor requires you -- and you said the only -- the only case you cited to me was my own decision in Novell v --

MR. JOHNSON: Well, Your Honor, I pointed that out as a fine example that you wrote --

THE COURT: I don't know of any other -- any other where -- as far as I know the other cases involving Microsoft had to do with objective business practices, for

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example, which clearly could have an impact upon -- but what was done to Sun and Netscape perceived as really hurting -- being active products that might destroy the operating system. Here the more I hear, it is that Novell was complaining that Microsoft did not share its own enhanced product, which is Windows 95, with Novell so that Novell could write its program -- its suite the way it wanted to. That to me is a substantial antitrust issue, particularly against a background of what clearly was a competitive industry.

If Raikes's e-mail didn't establish it, these sure establish it, because all they talk about is how competitive and dynamic the software industry is. So according to contemporaneous evidence from your own client, this was a highly competitive industry. I know from Mr. Raikes's memo and what the concern is there is a paradigm shift. Assuming Mr. Gates made the most deliberate, intentional decision at all, the most that I see was he saw Novell as a major competitor and he wasn't going to allow, after that presentation of the product of Corsair, which was never marketed -- he was scared, and he didn't want to give to Novell things that he had developed that could be used against them. That to me, as I understand Microsoft's position, I understand your position, but I will have to decide this.

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MR. JOHNSON: The problem was it wasn't just a matter of withholding it, it was a matter of giving it to us and then jobbing us by yanking them away. That is the difference and that is the difference you identified in your opinion as making a difference in this case.

MR. TULCHIN: At the risk of stating the obvious, no police officer came to Novell and took anything away. They had the beta. They had the documentation. The testimony was clear they could have used the namespace extensions if they wanted to. Mr. Johnson even played Maritz's testimony that any ISV faced with the withdrawal of support for any API, any API had a difficult business decision. Either use them at your own risk, use them if you think it's worthwhile using them because it can save you time to get the product out to market, or follow a new path, build a road around the mountain, good luck. It's not Microsoft's job to build that road for Novell.

THE COURT: Another problem I have, which is a related issue which I mentioned before, I thought, frankly, Mr. Frankenberg had gotten there when he talked about how WordPerfect was being used for other 32-bit systems. I see absolutely no evidence -- and I am not going to allow an expert to make it up. I see absolutely no evidence that contemporaneously your client was trying to write, was trying to develop something that would have allowed it to

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reach all of the sources of information that it wanted on Unix or on anything else. It wanted to use Windows 95, and it seems to me that absent some evidence that -- not speculative evidence, but some real evidence that, in fact, what Microsoft did prevented you all from writing to other operating systems is a problem in your case. That's something we'll talk about at the appropriate time.

MR. WHEELER: Your Honor, could I raise a less contentious issue? I'm trying to maintain a practice and I have scheduled meetings on Friday when we're not in session. You indicated this morning you may change that. If that's the case, I need to change some meetings that I have scheduled. When will I know when --

THE COURT: Tomorrow I'm going talk to my office. I think, based upon what I've been told, I am going to sit next Friday.

MR. JOHNSON: Next Friday, Your Honor, not this Friday?

THE COURT: This Friday is a holiday, I think.

MR. JOHNSON: Right.

MR. WHEELER: We'll not be sitting this coming Friday, but --

THE COURT: Next Friday, unless I tell you to the contrary. Based upon what I told you all this morning, I would mess you all up terribly. This is my practice too --

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who volunteered for this?

I'm just telling you -- I'm just telling you what I see as a potential issue. I've not made up my mind. If I'm wrong -- I absolutely understand I might be wrong about that first option. But I absolutely understand if -- it just came to mind, look, it's going to be withdrawn from future Windows, you could use it for the present Windows, why didn't somebody consider the fourth alternative, which is use the undocumented APIs temporarily while you recreate the system. You tell me there isn't. I understand.

(Whereupon, the trial was continued to Tuesday, November 8, 2011 at 8:00 a.m.)

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