7700 1 IN THE IOWA DISTRICT COURT FOR POLK COUNTY ----------------------------------------------- 2 JOE COMES; RILEY PAINT, ) 3 INC., an Iowa Corporation;) SKEFFINGTON'S FORMAL ) 4 WEAR OF IOWA, INC., an ) NO. CL82311 Iowa Corporation; and ) 5 PATRICIA ANNE LARSEN; ) ) TRANSCRIPT OF 6 Plaintiffs, ) PROCEEDINGS ) VOLUME XXIX 7 vs. ) ) 8 MICROSOFT CORPORATION, ) a Washington Corporation, ) 9 ) Defendant. ) 10 ----------------------------------------------- 11 The above-entitled matter came on for 12 trial before the Honorable Scott D. Rosenberg 13 and a jury commencing at 7:59 a.m., January 11, 14 2007, in Room 302 of the Polk County 15 Courthouse, Des Moines, Iowa. 16 17 18 19 20 HUNEY-VAUGHN COURT REPORTERS, LTD. 21 Suite 307, 604 Locust Street 22 Des Moines, Iowa 50309 23 (515)288-4910 24 25 7701 1 A P P E A R A N C E S 2 Plaintiffs by: ROXANNE BARTON CONLIN 3 Attorney at Law Roxanne Conlin & Associates, PC 4 Suite 600 319 Seventh Street 5 Des Moines, IA 50309 (515) 283-1111 6 RICHARD M. HAGSTROM 7 MICHAEL E. JACOBS MICHAEL R. CASHMAN 8 Attorneys at Law Zelle, Hofmann, Voelbel, 9 Mason & Gette, LLP 500 Washington Avenue South 10 Suite 4000 Minneapolis, MN 55415 11 (612) 339-2020 12 STEVEN A. LAMB Attorney at Law 13 Zelle, Hofmann, Voelbel, Mason & Gette, LLP 14 550 South Hope Street Suite 1600 15 Los Angeles, CA 90071 (213) 895-4150 16 ROBERT J. GRALEWSKI, JR. 17 Attorney at Law Gergosian & Gralewski 18 550 West C Street Suite 1600 19 San Diego, CA 92101 (619) 230-0104 20 KENT WILLIAMS 21 Attorney at Law Williams Law Firm 22 1632 Homestead Trail Long Lake, MN 55356 23 (612) 940-4452 24 25 7702 1 Defendant by: DAVID B. TULCHIN 2 STEVEN L. HOLLEY JOSEPH E. NEUHAUS 3 Attorneys at Law Sullivan & Cromwell, LLP 4 125 Broad Street New York, NY 10004-2498 5 (212) 558-3749 6 ROBERT A. ROSENFELD KIT A. PIERSON 7 Attorneys at Law Heller Ehrman, LLP 8 333 Bush Street San Francisco, CA 94104 9 (415) 772-6000 10 STEPHEN A. TUGGY HEIDI B. BRADLEY 11 Attorneys at Law Heller Ehrman, LLP 12 333 South Hope Street Suite 3900 13 Los Angeles, CA 90071-3043 (213) 689-0200 14 BRENT B. GREEN 15 Attorney at Law Duncan, Green, Brown & 16 Langeness, PC Suite 380 17 400 Locust Street Des Moines, IA 50309 18 (515) 288-6440 19 20 21 22 23 24 25 7703 1 RICHARD J. WALLIS STEVEN J. AESCHBACHER 2 Attorneys at Law Microsoft Corporation 3 One Microsoft Way Redmond, CA 98052 4 (425) 882-8080 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 7704 1 (The following record was made out of 2 the presence of the jury at 7:59 a.m.) 3 THE COURT: Mr. Holley, are you ready? 4 MR. HOLLEY: Yes, Your Honor. 5 THE COURT: Proceed. 6 MR. HOLLEY: So pursuant to the 7 Court's instruction, I'm going to describe the 8 sort of testimony I intend to elicit from 9 Mr. Alepin first on the subject of product 10 preannouncements. 11 As the Court is aware, Plaintiffs are 12 claiming that Microsoft engaged in a practice 13 known as vaporware, and that is a legal theory, 14 the most prominent example being a case in the 15 Seventh Circuit called MCI against AT&T. 16 And the notion is that you announce a 17 product when there is no such product and 18 you're basically just lying that you have 19 something in the pipeline when you don't. 20 The standard practice in the industry, 21 particularly in the case of operating system 22 vendors -- and the record is replete with 23 evidence about this -- is that everyone 24 preannounces their products for a variety of 25 reasons. 7705 1 One reason is that so they can get 2 feedback from people in the industry about 3 whether the operating system they're planning 4 on developing is what their customers want. 5 And they need to get that feedback early in the 6 development process so that they can respond to 7 the feedback. 8 The second reason they do it is 9 because they have to test these products quite 10 extensively before they are commercially 11 released, and it isn't practical to do the sort 12 of testing that needs to be done without 13 disclosing the existence of the product. 14 And, thirdly, they do it because they 15 have an entire, what has been referred to as an 16 echo system, of companies, both hardware and 17 software companies, that develop compatible 18 products that work with their operating system. 19 And in order to give those people lead 20 time that they need in order to introduce their 21 products contemporaneously with the new 22 operating system, operating system vendors, not 23 just Microsoft, everybody, preannounces their 24 products so that these compatible products can 25 be in the market at the same time. 7706 1 In this context, I intend to lay a 2 foundation that Mr. Alepin relied upon articles 3 that have appeared in various publications and 4 his general knowledge of vaporware lists, 5 products that have been in vapor, as they say, 6 for months and months and months. And those 7 products are not Microsoft products. They are 8 from Lotus and IBM and other vendors. 9 And then I intend to show him -- first 10 establish a foundation that he sought to review 11 the relevant prior testimony from people at 12 other companies about product preannouncements 13 and why they did it, and then show him some 14 prior testimony which is inconsistent with his 15 testimony about Microsoft's practices. 16 So that's what I intend to do, Your 17 Honor, on vaporware. 18 Then moving on to FUD -- there are 19 other things I'm going to ask about vaporware 20 but that are not relevant to our current 21 discussion. 22 Then moving on to the notion of FUD, 23 again, as Your Honor is aware, there are strict 24 legal standards applicable to FUD claims. 25 Actually, the way they are referred to 7707 1 is product disparagement, and there are very 2 few cases in this area, but what they require 3 is quite clear. 4 You need to show knowing falsity of 5 statements that are made at the time and you 6 have to show knowing falsity at the time the 7 statement was made. 8 As I said the other day, companies 9 have a First Amendment right under a line of 10 cases starting with Central Hudson Gas to make 11 statements about competitors' products. A 12 commercial speech, it's constitutionally 13 protected. 14 There is a very, very narrow band of 15 conduct that the antitrust laws prescribe for 16 obvious reasons, because people have First 17 Amendment rights to engage in comparative 18 advertising. 19 So, in that context, I intend to 20 elicit from Mr. Alepin his knowledge that IBM 21 in the context of the competition between OS/2 22 and Windows 3.1 ran ads in general circulation 23 publications talking about faults in Windows. 24 These are not, you know, Mr. Reiswig 25 running around doing demos. These are ads that 7708 1 appear in magazines like PC Week and PC World 2 telling customers that if they ran OS/2, they 3 could avoid the general dreaded protection 4 fault and their system would not crash. That's 5 IBM's word. 6 I also intend to show Mr. Alepin, 7 after laying the foundation, that he reviewed 8 whatever evidence in the record he thought was 9 relevant to his testimony about FUD; internal 10 IBM documents from the same time period, the 11 competition between OS/2 and Microsoft's 12 operating systems referring to FUD campaigns, 13 in those terms. These are IBM documents using 14 an IBM term FUD to describe what it was that 15 IBM is doing. 16 I also then intend to show that DRI 17 engaged in the same sorts of comparative 18 advertising that Microsoft engaged in. 19 So that is what I intend to do in the 20 area of FUD. 21 There is one other subject, Your 22 Honor, that I intend to go into this morning 23 that, based on Your Honor's instruction 24 yesterday, I need to inform the Court about. 25 In seeking to bolster the credibility 7709 1 of this witness, the Plaintiffs have given 2 great prominence to his role as an advisor to 3 the U.S. Department of Justice in 1993, '94, 4 and '95. 5 And Mr. Hagstrom mentioned this in 6 opening in describing Mr. Alepin to the Jury. 7 He said he was the principal advisor to the 8 U.S. Department of Justice in 1993 and 1994. 9 And then Mr. Lamb elicited quite 10 extensively testimony from Mr. Alepin in 11 seeking to qualify him as an expert about his 12 role as the personal advisor to Ann K. Bingaman 13 when she was the Assistant Attorney General in 14 charge of the antitrust division. 15 The clear purpose of this testimony 16 was to have this jury believe that Mr. Alepin 17 is more worthy of credence because of his 18 association with a government agency, which as 19 the Jury knows from the collateral estoppel 20 ruling, at some point brought a case against 21 Microsoft. And there are certain findings from 22 that case that have been given collateral 23 estoppel effect. 24 Now, the Plaintiffs filed a motion in 25 limine to prevent Microsoft from referring to 7710 1 matters in the government case, meaning the 2 1998 government case, that the government 3 either lost on or elected not to pursue. 4 The Plaintiffs could have brought, but 5 did not, a motion in limine seeking to preclude 6 Microsoft from talking about the 1994 7 government case. 8 There is no motion in limine and no 9 ruling on Microsoft's use of evidence from the 10 1994 government case. 11 In deposition testimony, both in this 12 case and in the MDL proceeding previously, we 13 elicited testimony from Mr. Alepin that all of 14 the evidence that he reviewed in reaching the 15 conclusions that he has described in this case 16 was available to the United States Department 17 of Justice in 1993. 18 We have also elicited testimony from 19 him -- and, of course, this is true -- that 20 Mrs. Bingaman told Judge Sporkin at a hearing 21 in 1993 that she had done an exhaustive 22 investigation, looked at millions of pieces of 23 paper -- her phrase was blood bled, which is 24 the only time I've ever heard that in my life, 25 but she said that they worked around the clock. 7711 1 They did everything they could conceivably do. 2 They brought the only case they had, and they 3 did not bring a claim on vaporware. They did 4 not bring a claim on FUD, and they did not 5 bring a claim on intentional incompatibilities. 6 Now, maybe in normal circumstances 7 what the government chose not to do would not 8 be relevant, but the Plaintiffs have opened the 9 door extremely widely, Your Honor, by trying to 10 bolster the credibility of this witness by 11 associating him with the Justice Department. 12 And having done that, they are 13 burdened by what the Justice Department 14 decided. And the Justice Department decided 15 not to bring, because they couldn't -- that's 16 what Mrs. Bingaman told Judge Sporkin -- they 17 couldn't prove these claims. 18 And our cross-examination would be 19 seriously impeded if the Jury does not find out 20 that the claims that are being sold to them by 21 Mr. Alepin, he also attempted to sell to 22 Mrs. Bingaman and she refused to bring them. 23 So those are the three points that we 24 have for this morning, Your Honor. 25 THE COURT: Any response? 7712 1 MR. WILLIAMS: Your Honor, if I may. 2 Kent Williams for the Plaintiffs. 3 MR. HOLLEY: Your Honor, just 4 consistent with our normal practice, this is 5 Mr. Lamb's witness. And as I understood 6 Mr. Lamb's lecture the other day, he is the 7 lawyer who is supposed to be addressing these 8 matters. 9 That role was violated yesterday 10 afternoon because Ms. Conlin was speaking, but 11 it was my understanding that when someone's 12 handling a witness, they deal with the issues 13 relating to that witness. 14 We should not have multiple lawyers 15 arguing these points, Your Honor. 16 MR. WILLIAMS: Two responses to that, 17 Your Honor. 18 First of all, if there's been any 19 violations, the prime violator has been 20 Microsoft. 21 I've been in court. I've read the 22 transcripts time and time again. Mr. Tulchin 23 has jumped into arguments. These two very 24 capable counsel have tag teamed us repeatedly 25 throughout the course of these proceedings. 7713 1 Secondly, Your Honor, the issues that 2 are implicated by the offer of proof I suppose 3 is what Mr. Holley was attempting to do there. 4 The issues that are raised by that 5 offer implicate many other witnesses, many 6 other topics that, as Your Honor is aware, I 7 have spoken to extensively. 8 And with Your Honor's leave, I would 9 like to address those issues. 10 THE COURT: Very well. Proceed. 11 MR. WILLIAMS: Thank you, Your Honor. 12 The first point that Mr. Holley said 13 he wanted to get into is vaporware, which 14 characterized as a legal theory. 15 Of course, Mr. Alepin has not been 16 offered to provide any legal opinions; that 17 what he's talking about is factual. 18 The basic premise for Mr. Holley's 19 offer is that vaporware is a standard practice 20 in the industry. 21 That's what he's trying to establish 22 with this witness. 23 And, Your Honor, that's only relevant 24 to whether Microsoft in either acquiring or 25 maintaining a monopoly did so through willful 7714 1 conduct, in the words of the Grinnell decision. 2 And willful means essentially whether they did 3 it with anticompetitive conduct. 4 And in determining whether the conduct 5 was anticompetitive, the courts have given us a 6 guidance on that. That authority has been 7 provided to Your Honor by both sides. 8 It means through conduct -- and this 9 is, again, in the words of the Grinnell case -- 10 that was through the competitive conduct rather 11 than through growth or development as a 12 consequence of a superior product, business 13 acumen or historic accident. 14 And the jump cite there is 384 U.S. at 15 570 to 571. 16 So the question, Your Honor, is what 17 conduct is anticompetitive and what conduct is 18 not. 19 And what Microsoft seems to be saying 20 is that it's somehow probative to the issue of 21 whether conduct is anticompetitive or not if 22 other companies are doing the same thing. 23 And, Your Honor, vaporware, to use the 24 term broadly, when engaged in by other 25 companies is not the same thing. It simply 7715 1 isn't. 2 The vaporware that Mr. Alepin 3 discussed in his direct testimony was a very 4 specific type, and it had a very specific 5 foundation. 6 And that foundation was set forth in 7 Microsoft documents where the purpose for the 8 vaporware that he was talking about was to 9 freeze the market. 10 And the purposes that Mr. Holley just 11 listed were much different. They were to get 12 feedback back from customers. They were to 13 enable testing of the product, and they were to 14 give a system of companies with compatible 15 products lead time to develop compatible 16 products with the new product that's coming 17 out. 18 None of those purposes were the 19 purposes that Mr. Alepin was talking about when 20 he talked about vaporware. 21 Now, freezing the market -- and this 22 is very important, Your Honor, because this 23 gets into the distinctions between the cases 24 that the parties have cited to you. 25 Microsoft has cited to you cases 7716 1 talking about conduct by other companies where 2 the conduct truly was similar. 3 Most of the cases that they cited had 4 to do with pricing, cutting prices, similar 5 behavior. And it only becomes anticompetitive 6 when the prices get cut too far and then it 7 becomes predatory. 8 So a predatory pricing or a predatory 9 pricer, if you will, would say we're just doing 10 what everybody else does. We're cutting our 11 prices. 12 And, yes, that's true, except when it 13 gets over to the level of being 14 anticompetitive. 15 In our case, vaporware as used by 16 Microsoft did become anticompetitive. It 17 wasn't simply going out there and preannouncing 18 your product in order to have an orderly 19 process for other companies to develop 20 compatible products. 21 What they did is froze the market. 22 And, Your Honor, when courts step back 23 and look at what's anticompetitive, they ask, 24 okay, is the company at issue taking action 25 that would cut into their short-term profits in 7717 1 order to adversely affect a competitor. That's 2 what they're thinking about. 3 They are thinking about in 4 distinguishing competitive from anticompetitive 5 conduct. It's, essentially, are you hurting 6 yourself, you, the defendant, by doing this, 7 and the reason you are doing it is to 8 disadvantage a rival. 9 That's right out of the Verizon case, 10 Your Honor, which I believe Microsoft cited to 11 you. I don't have the jump cite right now, but 12 I can provide that to you, Your Honor. But 13 that's the sort of thing they look at. 14 In the case of vaporware, Microsoft's 15 monopoly position becomes very important. And 16 there's a very important distinction from other 17 companies that do it because Microsoft had, in 18 the case of DRI, an 80 percent market share in 19 the early 1980s -- or 1990s, excuse me. 20 So when they are talking about 21 freezing the market, they're talking about 22 freezing 80 percent of the market. Because 23 that's a part of the market that Microsoft 24 controlled. And in that part of the market, 25 that 80 percent, Microsoft isn't just freezing 7718 1 the little smidgin that DRI is trying to 2 exploit and break open. They're freezing the 3 entire thing. That's 80 percent of the market. 4 And what they're freezing, then, are 5 all the sales of all the existing Microsoft 6 operating systems out there. That's what 7 they're freezing in order to at the same time 8 freeze the little bit that they don't have. 9 That's why it's different. 10 When DRI -- if they did arguably 11 engage in vaporware, and if they arguably did 12 it to freeze the market, which there is no 13 evidence to support whatsoever, there hasn't 14 been any. 15 And the offer of proof that Mr. Holley 16 gave wasn't for that purpose, but even if they 17 could, what are they trying to freeze? They're 18 trying to keep their existing little smidgin 19 of, what, 5, 10, 15 percent of the market. 20 And, Your Honor, that is not 21 anticompetitive. Affecting 15 percent of the 22 market, that's not even market power, much less 23 monopoly power. 24 So that's why Microsoft's monopoly 25 position becomes very important and is very 7719 1 significant and is a qualitative difference 2 between what Mr. Holley is going to try to 3 imply is the same or similar conduct. 4 And, Your Honor, under Rule of 5 Evidence 5.403, we would submit that is unduly 6 prejudicial and confusing because by eliciting 7 the testimony from Mr. Alepin, the testimony 8 being, yes, other companies engage in 9 vaporware, without explaining these qualitative 10 distinctions, which he has been prohibited from 11 making, he's not entitled to talk about the 12 markets or competition or the market effects of 13 any of his conduct, so he can't explain it. 14 So by just simply eliciting from him 15 whether, yes, other companies generally engage 16 in vaporware, it creates a misleading 17 impression on the Jury that, oh, well, what 18 Microsoft was doing must have been okay. 19 And, Your Honor, that is not the case. 20 And when Microsoft did it and the way 21 they did it and the reason they did it, it was 22 anticompetitive. 23 Moving on to FUD, Your Honor. 24 Mr. Holley essentially reduced the 25 concept of FUD to a product disparagement 7720 1 claim. That simply is not the case and is not 2 the law. 3 There are two types of conduct that 4 qualify for willfulness under the law. 5 Willfulness, again, being anticompetitive. 6 There's conduct that is just 7 anticompetitive in its own right. When a 8 monopolist does it, the conduct is 9 independently anticompetitive. 10 Examples are, you know, exclusive 11 dealing, exclusive relationships, cutting off 12 access to a necessary facility, sort of 13 stand-alone antitrust violations that the 14 courts say are just illegal in and of their own 15 right. And those qualify as willfulness. 16 But in addition to that, there's other 17 conduct that isn't by itself illegal, but can 18 be illegal, can be anticompetitive -- not 19 illegal, but can be anticompetitive when done 20 by a monopolist. 21 And those are the cases that we 22 discussed and that we had in our brief that we 23 handed up to Your Honor on December 12th. 24 And that's how FUD is. FUD doesn't 25 have to in and of itself make out a product 7721 1 disparagement claim in order to qualify as 2 anticompetitive conduct. 3 When done by a monopolist and when 4 done the way Microsoft did it and when it had 5 the effect that it had when Microsoft did it, 6 it is anticompetitive. 7 And that's relevant, Your Honor, 8 because when they talk about other companies 9 engaging in FUD where it didn't have that 10 qualitative effect, it's not the same thing. 11 It's not similar conduct. 12 Let me give an example. I'll use the 13 two that Mr. Holley used. OS/2 and DR-DOS. 14 With respect to DR-DOS, Your Honor, 15 and OS/2, for that matter -- I suppose we can 16 talk about them together -- what Microsoft did 17 was try to raise questions about those two 18 operating systems. 19 They didn't just raise questions about 20 their stability and their qualities and the 21 different functions and do sort of this 22 side-by-side comparison that Mr. Holley talks 23 about in terms of advertising. It wasn't just 24 simply advertising. 25 What they did, what they set out to do 7722 1 and what they were effective at doing was 2 convincing the public that if you buy these 3 products, you're throwing into doubt, into 4 question your ability to use thousands of 5 applications out there that are written to the 6 Microsoft platform. That's the qualitative 7 difference. 8 They were essentially attempting to 9 render -- they weren't just talking about 10 different features and different qualities and 11 things like that. They were saying -- they 12 were basically saying not only will your 13 existing platform be worse than ours, if you 14 have DR-DOS or OS/2, you will be unable to 15 reliably use thousands of other products out 16 there. 17 That's the qualitative difference. 18 In the case of DR-DOS and OS/2, it was 19 not the same thing. 20 They did not set out -- they could not 21 say that if you use MS-DOS or if you use 22 Windows, you won't be able to use thousands of 23 programs written to the Microsoft platform. 24 That's the qualitative difference. 25 And it's a real difference and a significant 7723 1 one, Your Honor, because Microsoft, because of 2 its position as a monopolist, controlled 80 3 percent of the market in the early 1990s, had 4 thousands of programs being written to it, 5 which has already been established was a 6 barrier to entry. And they exploited that with 7 the use of FUD to lock out these two 8 competitors. 9 So it was not the sort of side-by-side 10 comparison that Mr. Holley is making it out to 11 be. 12 If these companies had been on a level 13 playing field, that would be one thing. But 14 that wasn't the case. 15 Microsoft was able to use to its 16 advantage the fact that it did hold a monopoly 17 in these markets. 18 And, again, Your Honor, under Rule 4 19 -- under Evidentiary Rule 4.03, this is a 20 distinction that is, if not brought out to the 21 Jury, is a distinction that would be 22 misleading. 23 One moment, Your Honor, I'm sorry. 24 Now, we are not saying that Microsoft 25 cannot put on evidence and cannot contest 7724 1 whether or not these actions were competitive 2 or anticompetitive. I'm talking about 3 vaporware and FUD. We aren't saying that. 4 They can put on Microsoft witnesses to 5 talk about their reasons for engaging in FUD, 6 their reasons for engaging in vaporware and 7 what those effects were. 8 But for them to try to draw this link, 9 a link that has not been made and cannot be 10 made and cannot be made with this witness, Your 11 Honor, because he didn't do it in his direct, 12 didn't come close to it in his direct, and 13 isn't allowed to do it, wasn't allowed to do it 14 in his direct, Your Honor, they can't draw that 15 link here, a link they are trying to make to 16 other companies' conduct. 17 And what it does, Your Honor -- Mr. 18 Holley talking about opening the door, which I 19 will also get to in a moment -- what that does, 20 what it should do, Your Honor, is if he is 21 allowed to do it, is they open the door for us 22 to get into, okay, what are these qualitative 23 differences for this witness as an industry 24 participant. 25 Why isn't the FUD that Microsoft 7725 1 engaged in the same as the FUD that DRI engaged 2 in or that IBM engaged in? What were these 3 differences? What was the difference, in 4 effect, Your Honor? 5 And we submit to you that you really 6 start running far afield because we can't 7 forget the fact that it's Microsoft's conduct 8 that's at issue here. It's not the conduct of 9 IBM. It's not the conduct of DRI. It's 10 Microsoft. It's their conduct that's at issue. 11 And if we are going to make this case 12 be about what other companies were doing, other 13 companies that were in starkly different 14 circumstances than Microsoft, this case is 15 going to get into an area that's going to take 16 on an entire life of its own. 17 One moment, Your Honor, please. 18 Finally, Your Honor, with respect to 19 the third point that Mr. Holley mentioned was 20 the notion that we somehow opened the door to 21 Mr. Alepin talking about claims that Department 22 of Justice considered, but decided not to 23 pursue. 24 That is simply false, Your Honor. 25 There's absolutely no authority whatsoever for 7726 1 an expert testifying as to his credentials and 2 the background of his work to then get into 3 this other client that he had, what their legal 4 reasoning was, how they weigh the evidence in 5 deciding what claims to pursue and what claims 6 not to pursue. 7 Mr. Holley's correct that we didn't 8 bring a motion in limine on the DOJ actions and 9 activity that preceded the government case, 10 Your Honor, because, frankly, we thought 11 there's no way that they would ever try to 12 argue that that was in any way whatsoever 13 relevant to what's happening here. 14 But the same principles that were 15 addressed in our motion in limine on the prior 16 government action apply here, even more so, 17 Your Honor. We're talking now about legal 18 decisions that were made over a decade ago. 19 I would also point out, Your Honor, my 20 cocounsel has apprised me of the fact that 21 Microsoft tried to get into Mr. Alepin's work 22 with the DOJ back in the day in the MDL 23 proceeding. 24 And the issue that this position 25 raised if he were to -- if Mr. Holley were 7727 1 allowed to question Mr. Alepin on this, it 2 would erase work product issues with the DOJ. 3 He's not at liberty to talk about 4 them, Your Honor, and, in fact, the Department 5 of Justice opposed Microsoft's efforts in the 6 MDL case to get into that specific information 7 in the MDL case, Your Honor. 8 And so having this sprung on us 9 without proper briefing, we think, is improper 10 and that request in particular by Mr. Holley 11 should be denied. 12 Your Honor, with your leave, 13 Ms. Conlin informed me that there is one matter 14 she would like to address -- oh, I'm sorry. 15 On that last point, Your Honor, 16 Ms. Conlin reminds me that Your Honor has 17 already ruled that Mr. Alepin is not permitted 18 to get into legal opinions and legal theories. 19 So to have him testify about legal 20 decisions that were made by the Department of 21 Justice and somehow be impeached on that seems 22 to us entirely improper, wouldn't require any 23 briefing at all, in fact. 24 There's already a ruling. Microsoft 25 asked for it and got it and now they are 7728 1 seeking to escape the effect of the ruling that 2 they themselves sought. 3 And, Your Honor, again, one last 4 point, and I'm sorry for taking up so much 5 time, but this is an important issue that's 6 going to permeate others. 7 The existence of monopoly power and 8 the effect of that and in putting the actions 9 of an industry participant into that context is 10 critical because Mr. Alepin talked about a lot 11 of other companies. He talked about Be. He 12 talked about Suse and Linux -- or Linux, excuse 13 me. He talked about DRI and IBM. 14 But the distinction, again, Your 15 Honor, is that they are not Microsoft. They do 16 not have a monopoly. They do not have monopoly 17 power. 18 And unless Microsoft is prepared to 19 allow Mr. Alepin to get into why those 20 distinctions matter, then, Your Honor, we 21 believe it would be misleading to the Jury to 22 elicit that testimony, the testimony that Mr. 23 Holley seeks to elicit. And it would be 24 prejudicial. 25 And so, therefore, we ask that he be 7729 1 prevented from eliciting that testimony. 2 MR. HOLLEY: May I respond, Your 3 Honor? 4 THE COURT: Yes. 5 MR. HOLLEY: Let's take the last point 6 first. 7 In a case called State against Munro, 8 M-u-n-r-o, 295 N.W. 2d 437 at 446 to 447, the 9 Supreme Court of this state said that when 10 counsel makes a tactical choice to create an 11 inference to help his client, he opens the door 12 to rebuttal by adversary. And that's obviously 13 correct, Your Honor. That's the law of Iowa. 14 At the trial transcript, page 6424, 15 line 17 to 6425, line 4, the following 16 testimony was elicited from Mr. Alepin. 17 Quote, subsequently, I was retained by 18 the Assistant Attorney General. The Department 19 of Justice has an Attorney General who was 20 Janet Reno at the time, and there are a number 21 of other divisions within the department, one 22 of which is the antitrust division. And Ann 23 Bingaman was the Assistant Attorney General. 24 And she hired me to be her consultant 25 in some proceedings that the -- in September of 7730 1 1994 and again in 19- -- at the beginning of 2 1995 when there was another investigation that 3 the department undertook of different Microsoft 4 practices. 5 So that testimony was elicited. There 6 was only one purpose for that, which was to 7 bolster this man's credibility in the eyes of 8 the jury. 9 Now, the notion that there is some 10 work product objection is wrong, and I'm going 11 to make the following offer of proof. I'm 12 going to read the testimony of Mr. Alepin from 13 the MDL case. 14 My partner, Mr. Steinberg, asked him 15 the question. 16 Question: You understand that the 17 government of the United States of America 18 investigated a number of the very same 19 allegations that you pursue in your report; 20 isn't that correct? 21 Answer: That's correct. 22 Question: They investigated vaporware 23 allegations; correct? 24 Answer: That's correct. 25 Question: They investigated FUD 7731 1 allegations? 2 Answer: That's correct, yes. 3 Question: They investigated 4 intentional incompatibility allegations? 5 Answer: That's correct. 6 Question: They investigated 7 integration allegations that Microsoft had 8 improperly bundled utilities into its operating 9 system? 10 Answer: We heard from industry 11 participants that -- industry participants, I 12 should have said. 13 Question: They investigated the AARD. 14 The government investigated the AARD code; 15 correct? 16 Answer: Yes. 17 Question: And it investigated the 18 claims that Microsoft should have disclosed the 19 beta of its products to its competitors; 20 correct? 21 Question -- answer from Mr. Alepin: 22 Yes. 23 Question: And for all of those 24 claims, except for the licensing practices, the 25 government sought no enforcement action against 7732 1 Microsoft; correct? 2 Answer: That's correct. 3 This testimony was given. No 4 objection was made by the U.S. Department of 5 Justice. It is in the record of this case. 6 And I am entitled, Your Honor, to 7 impeach Mr. Alepin because they opened the door 8 to this testimony. 9 Now, let's return to the question of 10 vaporware and FUD. And I'm attentive to the 11 fact that we are keeping the Jury waiting, 12 which I am sorry about. 13 The Trace X Chemical case, which is 14 the leading case in the Eighth Circuit Court of 15 Appeals is dead against the position that 16 Mr. Williams is asserting. 17 Because what the Eighth Circuit said 18 in that case is that conduct engaged in by 19 other companies in the ordinary course of 20 business cannot be anticompetitive. 21 That's what the Eighth Circuit said. 22 Now, Your Honor will remember that we 23 argued over and over and over again in the 24 context of the preliminary instructions 25 precisely the points that the Plaintiffs are 7733 1 seeking to reargue today. 2 Mr. Williams is asserting two 3 propositions, both of which Mr. Hagstrom tried 4 to get the Court to embrace, and both of which 5 the Court properly rejected. 6 The first assertion is that somehow 7 behavior engaged in by a monopolist is 8 different from behavior engaged in by every 9 other company in the marketplace. 10 And Your Honor will probably recall 11 that Plaintiffs at every opportunity sought to 12 get that instruction inserted into the 13 preliminary jury instructions, and the Court 14 properly refused to do it. 15 The other instruction that they are 16 now seeking to reargue was what I call the 17 monopoly broth instruction or the pile it all 18 up and squint at it instruction. 19 And as Your Honor will recall, 20 Mr. Hagstrom repeatedly asked the Court to 21 advise the Jury that conduct which is not 22 independently anticompetitive can somehow 23 magically become anticompetitive when it's 24 aggregated with other conduct. 25 That is not what the instructions to 7734 1 the Jury say. 2 So we're back to the issue that I was 3 addressing yesterday, Your Honor. 4 Instruction Number 8, which is in the 5 instructions to this jury, tells them that they 6 have to make the difficult distinction between 7 aggressively pro-competitive conduct on the one 8 hand and anticompetitive conduct on the other. 9 It is a difficult distinction to draw. 10 There are lots of courts of appeals that have 11 some difficulty with this question. 12 And the reason why the Jury needs to 13 hear evidence about what is ordinary business 14 practice in this industry is because 15 Instruction Number 8 tells them that they have 16 to determine whether Microsoft's conduct is 17 consistent with competition on the merits and 18 whether it makes business sense but for 19 whatever adverse effect it might have on 20 competitors. 21 There is no way for the Jury to make 22 that determination without knowing what people 23 in this business do. 24 So the Plaintiffs are asking the Court 25 to cabin in Microsoft's evidentiary 7735 1 presentation and prohibit us from putting on 2 the very evidence that the Jury needs to hear. 3 So, Your Honor -- and I really do want 4 to wrap this up, if the only question on the 5 table this morning was whether this evidence is 6 consistent or inconsistent with Instruction 7 Number 8. 8 And the Court's prior in limine 9 motion, this notion that Mr. Williams is 10 asserting for the first time this morning that 11 this violates 4.03 of the Rules of Evidence is 12 an entirely new argument and not one they've 13 ever made before and one that's, frankly, 14 completely without merit. 15 If they want to argue in summation 16 about the weight to be given this evidence, 17 they are free to do that, and they are free to 18 seek to draw the distinction between what 19 Microsoft did and what these other companies 20 did. 21 My view is that it will be legally 22 irrelevant, but if they want to argue that, I 23 guess they can. 24 And the final instructions to the 25 Jury, I presume, will be consistent with 7736 1 Instruction Number 8, which tells them that 2 they can look at what everybody else did and 3 look at what Microsoft did and decide whether 4 Microsoft's conduct is consistent with 5 competition on the merits and whether it makes 6 business sense. 7 But to seek to preclude us from even 8 introducing evidence on this point when they 9 opened the door on direct by having this man 10 testify about vaporware and FUD and suggest, 11 although, you know, presumably he didn't offer 12 opinions about the economic effect, but he's 13 certainly suggested that there was some 14 impropriety on his big chart, which is now 15 facing the wall, he had a check mark next to 16 FUD, FUD, FUD, FUD, vaporware, vaporware, 17 vaporware. 18 And the clear goal of that was to 19 persuade the Jury that there was something 20 wrong with those things. 21 Fine. That was his testimony on 22 direct. We must be, within the Iowa case law, 23 permitted to impeach that testimony. 24 Thank you, Your Honor. 25 THE COURT: Very well. 7737 1 The Court's going to find that on 2 cross you may get into what is the common 3 practice in the industry. 4 The practice described as being done 5 by a particular competitor or a company must 6 not have been found to be illegal, unlawful, or 7 constituting anticompetitive conduct by that 8 particular company or competitor. 9 No legal opinions will be allowed from 10 the witness. 11 The 1994 government case matter you 12 wish to get into is hereby denied. You wanted 13 to get into the credibility not of this 14 witness, but, rather, of the government and 15 what the government did or did not do based 16 upon matters which this witness probably had no 17 knowledge whatsoever. 18 As a prosecutor, there are several 19 reasons why or why not you go forward with a 20 case. This is clearly -- will be confusing to 21 the Jury. It's not within the scope of the 22 direct examination of Mr. Alepin. It is hereby 23 denied. Defendant is precluded from doing 24 that. 25 The Plaintiffs will be allowed to show 7738 1 any differences between the Defendant doing the 2 business practice common in the industry versus 3 other competitors, including the relative size 4 of the competitors versus Microsoft as that is 5 a qualitative difference. 6 MR. HOLLEY: Your Honor, can I make 7 just one additional record, which is that 8 Mr. Alepin was asked at his MDL deposition 9 whether he was present in the courtroom when 10 Mrs. Bingaman made her statements to Judge 11 Sporkin, and he said that he was. 12 He testified that he was an active 13 participant in the decisions about whether or 14 not to bring these claims. And I want it to be 15 clear for the record that what Mrs. Bingaman 16 said, because she was being pressed. 17 I mean, you can ask about whether 18 there are separation of powers issues in this 19 regard, but she was being pressed by Judge 20 Sporkin under the Tunney Act to explain her 21 prosecution tutorial discretion and why she 22 exercised it the way she did. And what she 23 said in no uncertain terms was that she brought 24 the only case she could prove. 25 So I appreciate what Your Honor is 7739 1 saying about prosecutorial discretion, but in 2 this case there is no doubt about why the 3 government did what it did. 4 I just want to make that record, Your 5 Honor. 6 THE COURT: No, you can't. 7 MR. HOLLEY: No, for purposes of the 8 transcript. Obviously, not to the Jury. 9 I appreciate the Court's ruling. I 10 just for the record of this case I wanted to 11 make that. 12 THE COURT: Oh, I'm sorry. 13 MR. HOLLEY: I'm not saying I'm going 14 to -- 15 THE COURT: Okay. I got confused. 16 Sorry. 17 MR. HOLLEY: I'm sorry, Your Honor. 18 MR. TULCHIN: Your Honor, could I 19 raise a separate issue? It's just very briefly 20 a scheduling issue? 21 THE COURT: Yeah, go ahead. 22 MR. TULCHIN: A couple of weeks ago, 23 Your Honor, the Court said that on Friday, 24 January 12th, which now is tomorrow, the Court 25 would hear argument about evidentiary issues, 7740 1 objections that Microsoft has to Plaintiffs' 2 exhibits. 3 Earlier this week I believe it was, 4 the Plaintiffs said that they wanted to proceed 5 with the Jury and with evidence tomorrow 6 because Mr. Constant, who was going to be their 7 next witness, was here from England. 8 And, of course, we are sensitive to 9 the convenience of witnesses. We hope that the 10 Plaintiffs are sensitive to the convenience of 11 our witnesses when our turn comes. 12 But as it turns out, Mr. Constant -- 13 we were told late last evening, Mr. Constant 14 has now returned to England. He went back last 15 night for his own reasons. So we don't -- he's 16 not here and he will not be testifying 17 tomorrow. 18 And, under the circumstances, it seems 19 to me that perhaps we ought to return to Plan A 20 and have that evidence day tomorrow. Of 21 course, subject to the Court's desires and 22 convenience. 23 MS. CONLIN: Well, Your Honor, if I 24 may speak to that. 25 Mr. Constant went home to England 7741 1 because it was clear that he was not going to 2 be able to complete his testimony this week, 3 and there's a long weekend. And he has a 4 business to run. 5 So what I would expect to happen, 6 however, given what's going on in the courtroom 7 this morning is that Mr. Alepin will need to be 8 continued tomorrow. So -- 9 THE COURT: Yeah. I want to get this 10 witness done, so continue with that. 11 On the motion to strike yesterday that 12 was argued at the end of the day, based upon 13 material elicited transcript pages -- I believe 14 it's 7537 through 7541 -- I may be wrong on 15 that -- regarding Findings of Fact 173, 174, 16 177, 192, and Conclusions of Law 4.5, the 17 motion to strike is hereby denied. 18 Okay. 19 MR. WILLIAMS: Thank you, Your Honor. 20 MS. CONLIN: Thank you, Your Honor. 21 MR. LAMB: Your Honor, could I have 22 one point of clarification before we break? 23 THE COURT: Sure. 24 MR. LAMB: You said that the Defendant 25 can introduce evidence regarding others and 7742 1 their relative size. Does that mean that they 2 have to lay a proper foundation? 3 THE COURT: I said Plaintiffs. 4 MR. GREEN: Plaintiffs. 5 MR. LAMB: Oh, I thought you said 6 Defendant. I apologize. 7 THE COURT: Okay. 8 (A recess was taken from 8:43 a.m. 9 to 8:49 a.m.) 10 THE COURT: Are we ready for the Jury? 11 MR. HAGSTROM: Your Honor, we've got 12 one other quick matter we think should be 13 discussed before the Jury comes in. 14 THE COURT: Okay. Go ahead. 15 MR. CASHMAN: Your Honor, I understand 16 that yesterday Mr. Holley used some trade press 17 in his cross-examination of Mr. Alepin. 18 Plaintiffs submit that should not be 19 permitted. And I'm going to direct the Court's 20 attention to the Iowa Practice Guide, the 2006 21 practice guide, under 57052. And I'm going to 22 quote the pertinent language that Plaintiffs 23 believe applies to the situation. 24 That is, a party conducting a 25 cross-examination of an expert witness should 7743 1 not be allowed to use the questioning as a 2 vehicle for the admission of unreliable and 3 inadmissible evidence to strengthen its own 4 case under the guides of scrutinizing facts and 5 data underlying the expert witness opinion. 6 THE COURT: What page are you on? 7 MR. CASHMAN: That's on page 632 of 8 the Iowa Practice Guide. 9 THE COURT: Okay. 10 MR. HOLLEY: And, Your Honor, I would 11 just point out -- 12 MR. CASHMAN: I'm not finished yet, 13 Mr. Holley. 14 MR. HOLLEY: Oh, I'm sorry, 15 Mr. Cashman. I thought you were. 16 MR. CASHMAN: I'm sorry. The Iowa 17 Practice Guide cites a case called Bryan versus 18 John Bean Division of FMC. The cite of that 19 case is 566 F. 2nd 541. It's a Fifth Circuit 20 case from 1978. 21 I have a copy which I'll hand up to 22 the Court, and I've got the pertinent 23 provisions of the case highlighted for the 24 Court's reference. Unfortunately, I only have 25 one copy. 7744 1 The Plaintiffs submit that this case 2 is right on point to what Mr. Holley is trying 3 to do when he uses trade press to cross-examine 4 Mr. Alepin. 5 But the case really highlights the 6 importance of the need that the evidence being 7 used have a sufficient guarantee of reliability 8 so that the hearsay rule is not circumvented. 9 Here, trade press, especially trade 10 press articles where Microsoft and Mr. Holley 11 has failed to establish that Mr. Alepin 12 reviewed the specific portion of the article 13 that Microsoft is attempting to use, and 14 actually relied on that specific passage, 15 cannot be used because there is no guarantee of 16 trustworthiness. 17 The Court will recall that the Special 18 Master and the Court on several occasions has 19 ruled that trade press is hearsay and that it 20 lacks foundation. 21 So here to permit cross-examination 22 with inadmissible trade press would undermine 23 those rulings. 24 So the Plaintiffs submit that Mr. 25 Holley should not be permitted to use these 7745 1 articles to cross-examine Mr. Alepin. 2 In particular, I note that there's one 3 passage in the Bryan case, which I handed up 4 which said that hearsay evidence by other 5 experts -- and here that would purportedly be 6 the trade press authors that Microsoft has in 7 the articles that they are attempting to use -- 8 cannot be used unless they were -- and if I had 9 the case, I'd quote the particular provision, 10 but unless the testifying expert, here 11 Mr. Alepin, bases opinion on that specific 12 trade press article or testified directly from 13 one of those articles. 14 And as the Court knows, that hasn't 15 happened, and Mr. Holley hasn't laid that kind 16 of foundation for the use of those articles. 17 So for all those reasons, that kind of 18 cross-examination should not be permitted. 19 Thank you. 20 THE COURT: Thank you. 21 I agree with what you stated. 22 However, the trade press article that was used 23 by Mr. Holley, which I reversed my ruling on -- 24 I reviewed the transcript. 25 The transcript did state or Mr. Alepin 7746 1 stated that he did rely upon the trade press, 2 and, therefore, that's why I allowed him to use 3 it in that particular case. 4 The Court did not mean by a blanket 5 rule to say that he may use trade press 6 articles all the time. It was my recollection 7 from the transcript upon me reading it, that he 8 said that he normally relied upon it and it was 9 unclear -- because I don't have it in front of 10 me right now -- but that's the reason I did it. 11 MR. CASHMAN: Your Honor, just for the 12 purpose of the record at least. 13 THE COURT: Is this going to be 14 something that's going to take a long time 15 because -- can I tell the Jury to come back at 16 10? 17 MR. CASHMAN: Pardon me, Your Honor? 18 THE COURT: Is this something that is 19 going to take long? Should I tell the Jury to 20 come back at 10 or what? 21 MR. CASHMAN: No, this is not going to 22 take long. 23 I just want to note that I believe 24 Mr. Alepin said that he reviewed some trade 25 press. I don't believe his testimony was that 7747 1 he reviewed the specific article in question. 2 And, more importantly, he didn't say that he 3 relied on that specific article. 4 That's what the Bryan case requires, 5 that the testifying expert would actually have 6 had to rely on that specific article. And I 7 don't believe the testimony of Mr. Alepin was 8 that he relied on that specific article. 9 THE COURT: All right. 10 MR. CASHMAN: Thank you. 11 THE COURT: Okay. I have to look at 12 it again then. 13 Recess. 14 (A recess was taken from 8:56 a.m. 15 to 9:31 a.m.) 16 THE COURT: I've considered the 17 objection made by the Plaintiffs in this 18 matter. I have reviewed the record again. 19 I'm satisfied that the witness did 20 state he relied upon the trade press in this 21 particular circumstance. 22 However, I would note that you can't 23 just -- the proper foundation was established 24 in this particular instance regarding a trade 25 press article. 7748 1 I do agree with Mr. Cashman in regard 2 to the rule in Iowa, and the Defendant and 3 Plaintiffs would have to abide by proper 4 foundation to do that, which would be to show 5 that the article was read and either the 6 witness relied upon it or upon reading decided 7 not to rely upon it and they could go into why 8 he decided not to. 9 Anything else on that? 10 MR. HOLLEY: Your Honor, just for the 11 record, Microsoft would note that we believe 12 the law on this subject is different; that it 13 is permissible to cross-examine an expert using 14 hearsay to establish the proposition that if 15 the expert witness had reviewed that hearsay 16 which was similar to the hearsay on which the 17 expert admits that he or she relied, that that 18 review of similar hearsay would have altered 19 the opinions that the expert gave. 20 And authority for that proposition, 21 among other cases, but one we could find 22 immediately is a case called Wheeler against 23 State of Texas, a 2002 decision by the Texas 24 Criminal Court of Appeals, which is applying 25 the same line of authority that Mr. Cashman is 7749 1 relying on, John Bean Division of FMC 2 Corporation against Midland Ross. 3 So just for the record, that is 4 Microsoft -- 5 THE COURT: Cite, please. 6 MR. HOLLEY: Yes, Your Honor. It is 7 67 S.W. 2nd 879. And the discussion, the 8 relevant discussion, Your Honor, appears at 9 page 884 and crossing into page 885. 10 THE COURT: Okay. Thanks. 11 MR. HOLLEY: Thank you, Your Honor. 12 THE COURT: I appreciate that. 13 MR. CASHMAN: Your Honor, just for the 14 record, Plaintiffs obviously believe that their 15 objection should have been granted because they 16 submit that Mr. Alepin did not testify that he 17 read this specific article. 18 And Plaintiffs would have requested or 19 do request that a curative instruction be given 20 to the Jury. And at least for the record, I'd 21 like to read our proposed instruction, which 22 is, ladies and gentlemen, you will recall that 23 the Court instructed you to disregard an 24 exhibit and the testimony Mr. Holley elicited 25 from Mr. Alepin. 7750 1 The exhibit is what is referred to as 2 trade press. Magazine and newspapers and 3 similar articles are hearsay. They are 4 unreliable unless a proper foundation for 5 reliability is demonstrated by other proper 6 evidence. It was not done, so the evidence is 7 stricken. 8 That's our proposed instruction. 9 MR. HOLLEY: Well, Your Honor, that's 10 a little bizarre since the Court has -- the 11 ruling is the opposite, which is that the 12 motion to strike which was initially granted 13 has been denied, and the Court has given me 14 explicit permission to return to Defendant's 15 Exhibit 3165, which I intend to do. 16 And this morning Plaintiffs have 17 sought to reargue this, and the Court has just 18 issued a ruling denying that motion. 19 So the instruction would be 20 inconsistent with the Court's order of 21 yesterday and the order that was just issued 22 from the bench, Your Honor. 23 MR. CASHMAN: Nothing further, Your 24 Honor. 25 THE COURT: Anything else? 7751 1 MR. CASHMAN: No. 2 THE COURT: Go get the Jury. 3 (The following record was made in the 4 presence of the jury at 9:37 a.m.) 5 THE COURT: Before we begin, a couple 6 things I want to talk to you about. 7 One, I note that yesterday the Chief 8 Justice of the Iowa Supreme Court, Justice 9 Ternus talked about improving jury service. 10 And one of the things that she was going to ask 11 the legislature to do was to raise your pay, 12 but I wanted to just give you a portion of what 13 she said, and I just wanted to tell you how 14 much we appreciate your work here. 15 Each year, thousands of Iowans from 16 many walks of life take time away from your 17 families and lives to fulfill this important 18 civic function. They are essential to our 19 justice system and they are truly unsung 20 heroes. And nothing could be more true than 21 that. 22 And the other thing we are going to 23 work on is to try to get a new courthouse for 24 our courts, which would make it more convenient 25 and you notice our jury room is not very big. 7752 1 We have you in close quarters. I apologize for 2 that. 3 You are in close quarters a lot and we 4 are going to be together a long time. I don't 5 know how long. And you are going to be 6 together a long time, there's 12 of you, so 7 whenever possible, you know, we'll try to make 8 you more comfortable. 9 Anything we can do more, let Carrie 10 know. We'll try to do it. Please also respect 11 each other's personal space between jurors in 12 case, you know, they want to be apart from one 13 another in there, that's fine. We'd like to 14 make sure that there's proper respect for that 15 also. 16 Also, every week I know I've told you 17 about the admonition, but I intend to on 18 Fridays or before to reread the admonition 19 every week just to make sure that you're aware 20 of that. 21 In regard to the testimony, there was 22 a part of testimony of Mr. Alepin that I 23 ordered stricken from the record concerning an 24 article or trade press magazine. That order is 25 hereby reversed and restored to the record. 7753 1 You may consider it. 2 Anything further before we begin? 3 MR. HOLLEY: Your Honor, I just think 4 to avoid confusion, with the Court's permission 5 I would like to read the questions and answers 6 from the section that were stricken so that 7 it's clear what testimony is we're talking 8 about. 9 Would the Court permit me to do that? 10 THE COURT: Go ahead. 11 MR. HOLLEY: Okay. So starting on 12 page 7282 of the transcript -- and I'm just 13 going to read the questions and answers. 14 Question: I'd like you to look -- to 15 take a look, if you would, sir, at what's been 16 marked as Defendant's Exhibit 3165. 17 And first we're going to look at the 18 first page just so we can identify what it is. 19 This is a PC Magazine issue and it relates to 20 make Java work for you. 21 And I'm particularly interested in the 22 article that begins on page 137, and we're 23 going to now move to that. I guess we're not. 24 Have you seen this before, sir, this 25 article? 7754 1 Answer: I have been a subscriber to 2 this magazine since the first edition, so I 3 receive -- I have a garage full of PC Magazine. 4 Question: That's probably not what 5 the fire department wants to hear. 6 Answer: We won't tell them then, will 7 we? 8 Question: So you're aware that there 9 was this article entitled Java environments 10 that compared different Java runtime 11 environments? 12 Answer: I'm sure I was aware of it at 13 the time, yes. 14 Question: Okay. I'd like to direct 15 your attention, sir, to page 139, which is two 16 pages in. And here it says that based on the 17 testing that PC Magazine has done, the editor's 18 choice award for virtual machines goes to 19 Microsoft; is that correct? 20 Answer: That's correct. 21 Question: And one of the attributes 22 that Microsoft's Java Virtual Machine had that 23 made it the editor's choice was how compatible 24 it was with cross-platform applets; is that 25 right? 7755 1 Answer: I'm not seeing the 2 cross-platform reference in this particular 3 highlight. 4 Question: Okay. Well, would you 5 agree, would you not, sir, that if you wrote an 6 applet in Java and you didn't call upon any of 7 the Microsoft specific extensions in the 8 Microsoft programming tools, that Java applet 9 would be cross-platform; right? 10 Answer: Subject to some other 11 limitations, that's correct, yes. 12 Question: Now, I would like to turn 13 -- and the pagination of this article is very 14 strange, but from -- at the bottom of 146, it 15 starts talking about the Microsoft Java Virtual 16 Machine, and let me -- let the guys catch up 17 with me. 18 Can you highlight the whole thing 19 there, Chris? Thank you very much. 20 So now we're talking about different 21 JVMs on different operating systems. And what 22 it says down here is that our testing shows 23 that Microsoft's Java environment is clearly 24 the fast test with Windows NT slightly 25 outpacing Windows 95. And that's consistent 7756 1 with your earlier testimony that this was a 2 very fast Java Virtual Machine; correct, on 3 Windows? 4 Answer: That's very fast. Yes, 5 relatively speaking, yes. 6 And that's the end of the testimony 7 that was stricken and is now back in the 8 record. 9 RONALD ALEPIN, 10 called as a witness, having been previously 11 duly sworn, testified as follows: 12 CROSS-EXAMINATION (CONT'D) 13 BY MR. HOLLEY: 14 Q. Good morning, Mr. Alepin. I should 15 have said that earlier. 16 Can you look again, sir -- 17 MR. HOLLEY: And may I approach the 18 witness, Your Honor? 19 Q. I'd like you to take a look again, 20 sir, if you would at Defendant's Exhibit 3165, 21 which is what the earlier testimony was about. 22 And in particular I want to focus on the bottom 23 of page 146, which then carries on to 150. 24 Are you with me, sir? Just tell me 25 when you're there. 7757 1 A. I'm on 146, yes. 2 Q. Okay. So there is a section of this 3 article entitled Microsoft Windows 95, Windows 4 NT; correct? 5 A. Yes. 6 Q. And that's a discussion of the test 7 results as they related to Microsoft's Java 8 Virtual Machine. Is that your understanding? 9 A. Can I -- I'll read it. 10 Q. Yes, sir, please do. 11 A. Thank you. 12 Q. And just so you know, my questions 13 will focus on the text that begins Microsoft 14 Windows 95/Windows NT, and then carries across 15 the bottom of the next page below the chart 16 entitled compatibility. So that's -- yes, sir, 17 those three small paragraphs across the bottom? 18 A. And after that, does it continue? 19 Because there's -- it's an incomplete sentence 20 on page 150. 21 Q. Feel free to read as much of it as you 22 want. I think you'll see, sir, that on page 23 151, the subject changes to the JVM and 24 Netscape communicator. 25 But I don't want to constrain your 7758 1 reading. 2 A. Okay. Thank you. 3 MR. LAMB: Well, I object to the 4 extent that this is not a complete article. 5 This is a partial article that's been cut and 6 pasted. 7 THE COURT: Overruled. 8 He may read it to himself. 9 A. Yes, I've read it. 10 Q. Okay. Thank you. 11 So I'd like to direct your attention, 12 Mr. Alepin, to the sentence which begins at the 13 bottom of page 146, and then apparently there 14 were some advertisements, and it carries over 15 to 150. 16 And the sentence is Microsoft's 17 environment under both platforms turned in a 18 compatibility success rating of 70 percent. 19 Windows 95 and Windows NT each fail to 20 run only one applet. This score is almost 17 21 percent better than those of the Sun 22 environments. 23 Sir, in forming your views about 24 Microsoft's actions in relation to Java, did 25 you take account of the fact that Microsoft's 7759 1 JVM in testing had been determined to be more 2 compatible with cross-platform Java applets 3 than Sun's own Java Virtual Machine? 4 A. This scoring and mechanism varies over 5 time. So as different releases of the software 6 are made available, the scores on compatibility 7 changed over time. 8 At this point in time, the score 9 apparently is in favor of Microsoft's 10 compatibility. 11 Q. Okay. I appreciate that 12 clarification, but my question to you, sir, 13 was: Did you take into account in forming your 14 opinions about what Microsoft did at this time, 15 in this same time period, because that was, 16 after all, the time period you were talking 17 about, wasn't it, sir? 18 Did you take into account that 19 Microsoft's JVM ran more cross-platform applets 20 than Sun Microsystems own JV? 21 A. I took, I think, different information 22 into account concerning the compatibility of 23 Microsoft's JVM or interoperability of 24 Microsoft's JVM. 25 There is a suite of interoperability 7760 1 test programs that Java -- that Sun and the 2 Java community published. 3 THE COURT: Sir, could you speak into 4 the microphone? The Jury is having trouble. 5 THE WITNESS: I'm sorry. 6 A. There was a suite that Sun provides 7 that is the measure of interoperability and 8 compatibility both beyond interoperability and 9 less than -- less interoperable. 10 So I believe I considered the scores 11 that were reported on Microsoft's 12 cross-platform interoperability against the 13 test suites and not in particular the test 14 suite that Ziff Davis, the publisher of PC 15 Magazine had produced. 16 Q. Okay. In choosing the Sun test suite 17 over the independent Ziff Davis test suite, did 18 you look at testimony in the record, including 19 e-mails from Mr. Kannegaard at Sun, about how 20 the test suite was rigged to cause Microsoft's 21 JVM to fail? 22 A. Is there a particular time that you 23 have in mind? 24 Q. Yes, the same time period. The same 25 time period that we're talking about in this 7761 1 article and that you were talking about in your 2 direct testimony. 3 Did you look at internal Sun 4 Microsystems e-mails about changes made to the 5 test suites with the intention of causing the 6 Microsoft virtual machine to fail? 7 A. I'd have to see them. 8 Q. Okay. But my question to you, sir, 9 is: Did you look? Did you look for Sun 10 internal e-mails on that topic? 11 A. I looked for information that I 12 thought was relevant to the issues on which 13 I've testified, including the performance of 14 the Sun -- of the Sun Java Virtual Machine and 15 the Microsoft virtual machine. 16 My particular interest in this here, 17 of course, was, in this time frame was as a 18 developer trying to achieve the best possible 19 performance and the best possible 20 interoperability for the products that I was 21 working on. 22 And the standard for developing that 23 and measuring that was the Java test suite. 24 And the products I was working on were targeted 25 at the Windows platform and the -- and the Sun 7762 1 SPARC platform and other mainframe platforms. 2 Q. Okay. I'd like to ask you a slightly 3 different question than the one you just 4 answered. 5 I don't want to know about what you 6 were doing at Fujitsu at the time. I want to 7 know what you did to prepare to come to testify 8 here today, or this past week. 9 In urging the Jury to accept the Sun 10 test suite over an independent test suite by 11 Ziff Davis, did you think it was important to 12 investigate internal Sun documents, which are 13 part of the discovery record of this case, 14 which talk about changes made to the test 15 suites to deal with the Microsoft virtual 16 machine? 17 A. Let me first deal with the nature of 18 the Ziff Davis test suite. 19 In our industry the trade press tries 20 to provide information that's useful to the 21 readers, but, unfortunately, there's an awful 22 lot of technology and they need help to be able 23 to write articles and understand technology. 24 And oftentimes vendors provide 25 reviewer's guides and other material that seems 7763 1 to help the trade press create an article or 2 create a test suite that could be used for 3 their purposes. 4 And there might be in some instances 5 -- I don't want to say bias, but it might be 6 more targeted to one particular vendor's 7 product, the author of the reviewer's guide, 8 than it would be to other platform or other 9 vendors' products. 10 So with respect to the independent 11 test suite, I don't wish to suggest that it 12 wasn't independent. It just may have had its 13 origins from one vendor. 14 The second portion of the -- of the 15 question was did I review or consider the Sun 16 material. 17 And I reviewed, I'm certain -- I'm 18 sure I reviewed Sun material with respect to 19 this particular -- with respect to the 20 performance and interoperability of Microsoft's 21 virtual machine. 22 Q. Okay. Two things I'd like to follow 23 up on in response to that. 24 Do you recall me asking you yesterday, 25 and I'm at page 7281 of the transcript, 7764 1 starting at line 14, in forming your opinions 2 in this case, to some extent you relied on the 3 trade press; correct? 4 And then apparently we were talking on 5 top of one another. You said were we finished? 6 And the question was, I cut you off and I 7 apologize. I'm happy with the question I asked 8 you. 9 Answer: The trade press is a source 10 of information about current events, and I did 11 rely on it. 12 And that's correct, you did, sir, rely 13 on trade press in forming opinions that you've 14 delivered in this case? 15 A. I rely on trade press for -- to find 16 out that events have taken place, and then I -- 17 if they contain the press release from the 18 vendor making the announcement, I can go -- 19 they only contain a reference to the press 20 release, I'll go to the website of the vendor 21 to determine what the vendor is saying. 22 If they contain an interview with the 23 person, then I can read the interview with the 24 person. 25 If they contain a reference to or a 7765 1 summary of an analyst's report, I can use the 2 link that's in the trade press to go and read 3 the article for myself. 4 But, I mean, I -- the trade press is 5 kind of like a -- for me, it's kind of like 6 someone that says go and look at other pieces 7 of information in order to form an 8 understanding. 9 I don't get my understandings about 10 what's going on from the trade press -- my 11 analysis of what's going on from the trade 12 press. I get my awareness of things happening 13 that I need to perfect an understanding on. 14 Q. Okay. On that theory, did you explore 15 the following statement which appears in 16 Defendant's Exhibit 3165? 17 And I'm now on page 151. 18 The vendor -- and this is a reference 19 to Microsoft -- has also added a slew of 20 proprietary features that are invaluable to 21 Java developers committed to Java for Windows 22 as a platform. 23 For instance, Microsoft's application 24 foundation classes are a set of user interface 25 components also supported in the new Macintosh 7766 1 environment that make development easier than 2 the standard AWT. 3 And the AWT is the Sun technology; 4 right? 5 A. Right. And if I could, I think I gave 6 you a translation of the AWT, which it was -- 7 it's actually the abstract windowing tool kit. 8 Q. Okay. So we were both wrong on that 9 one. 10 A. That's -- and I apologize. 11 Q. Okay. I appreciate the clarification, 12 sir. 13 So let's go back to what it says here. 14 It says that Microsoft's application 15 foundation classes are a set of user interface 16 components also supported in the new Macintosh 17 environment that make development easier than 18 with standard AWT. 19 In addition, Microsoft's J direct 20 makes direct calls to end any Win32 DLL -- and 21 that's any dynamically linked library -- in 22 Windows. Is that the correct understanding of 23 what that means? 24 A. DLL is a dynamic linked library. 25 Q. Okay. -- including the operating 7767 1 system far easier than in JNI or even RNI. 2 So what this is saying is that the J 3 direct technology in Microsoft's visual J++ 4 makes it easier to call Windows functions than 5 either the remote -- I'm not even going to go 6 into them -- but the JNI or RNI native code 7 interfaces that we talked about the other day; 8 right? 9 MR. LAMB: Objection. Lacks 10 foundation. Relevance. Hearsay. 11 THE COURT: Overruled. 12 He can answer. 13 A. That's what the article is saying, 14 that it makes it easier to make direct calls 15 that would depend on the Windows operating 16 system than the other mechanisms. 17 Q. Now, did you explore through other 18 evidence in this case, or other evidence 19 available to you as an expert, these 20 statements, which is that from the standpoint 21 of someone seeking to write an application in 22 Java on Windows, the tools that Microsoft 23 provided were invaluable because they made the 24 process much easier? 25 A. Well, I explored the tools that 7768 1 Microsoft provided in connection with my then 2 current assignments. 3 Q. All right. I'd like to -- that was a 4 minor diversion, which I had to deal with. 5 I'd like to now turn back to where we 6 were yesterday afternoon. And I want to move 7 on to a new topic, and you'll be happy to know 8 we are nearing the end of this. 9 And that topic is something you 10 referred to on direct examination, and you 11 referred to something called vaporware. 12 Do you recall that, sir? 13 A. I do. 14 Q. Now, you would agree with me, would 15 you not, Mr. Alepin, that not all 16 preannouncements of software products under 17 development are what you would call vaporware? 18 A. That's -- announcements of pending 19 products are not necessarily vaporware, that's 20 correct. 21 Q. And, in fact, you have testified 22 previously that there are legitimate reasons to 23 tell the market about a product that is under 24 development well in advance of its release, is 25 that not correct, sir? 7769 1 A. Well, in advance of its release. 2 There are legitimate reasons to do that. 3 Q. Okay. And one reason why vendors of 4 new software products preannounce them is in 5 order to get feedback about whether the product 6 that they're designing is what their customers 7 want; correct? 8 A. Well, if we could just for -- if we 9 could split up preannounce and announce just so 10 it's clear. 11 Announcing would be announcing when 12 the availability of a product. This October 13 17th we are announcing the availability of the 14 products. 15 So preannouncing is -- just to be 16 clear here -- that it's announcing that we are 17 going to be delivering -- we are going to be 18 developing a new product. That's what I'm 19 taking the word preannouncement as opposed to 20 announcement just so it's clear. 21 Q. That's what I have been intending. 22 And I'm glad you clarified that because I want 23 us to be talking about the same thing. 24 A. All right. And now there -- there are 25 reasons why you would preannounce a product 7770 1 having to do with making sure the fit and 2 finish, if you will, of what you're developing 3 is what your customers want. That is the case, 4 yes. 5 Q. Well, isn't exactly what I said that 6 you want to tell your prospective customers 7 that this is the feature set of your new 8 product and you want to get their feedback 9 about whether it's a good idea? And in this 10 connection -- 11 MR. HOLLEY: May I approach the 12 witness, Your Honor? 13 THE COURT: Yes. 14 Q. I'd like you to take a look at what 15 you said in July of 2006. And this is on page 16 132, line 25, to page 133, line 6. 17 And if you could tell me when you've 18 had an opportunity to get there and look at 19 what I'm talking about. 20 A. Can I just -- 132 line? 21 Q. 132, 25, which is the very last line 22 on page 132, carrying on to 133, line 6. 23 A. I see it, yes. 24 Q. Okay. So I asked you the question why 25 do people talk about new versions of their 7771 1 products in advance of when they're available 2 for use? 3 Answer: Well, in the context of what 4 we were doing, we would want to know whether 5 people thought that this was a valuable idea. 6 Do you think we should develop this? 7 So we could get feedback from customers saying 8 I think that's a good idea. 9 And that is correct, is it not, sir? 10 One of the reasons why a software developer 11 preannounces a product is in order to get 12 feedback to ensure that the features that they 13 are planning is, in fact, what their customers 14 want. 15 A. Well, I don't -- here we are not 16 talking about preannouncement. We are talking 17 about our future plans. 18 And I thought the context in which 19 this was taking place was just that particular 20 point, that we don't have a -- we haven't 21 announced Version 7. We haven't said anything 22 about Version 7. 23 What we're thinking about doing is 24 these following things, and so we'll talk to 25 the users in order to develop a list of 7772 1 features which we believe we can build and 2 looking at the technology and whatever, this is 3 what we think we can build. And that becomes 4 input into the process of building the product. 5 And so in the context here, we talked 6 to our customers. We talk to our customers all 7 the time, but that particular phase of talking 8 to the customers is trying to set or get a 9 handle on what they need. 10 Q. Okay. And it is your experience, is 11 it not, sir, that when you are in a business of 12 serially releasing improved versions of your 13 product, that when you go to the customers to 14 talk to them about what they want in Version X 15 plus 1, they know that you are building X plus 16 1, don't they? 17 A. Well, they know that you're building X 18 plus 1 and X plus 2 and X plus 3. I mean, 19 that's their -- that's presumably the 20 understanding that we have with our customers, 21 is that we're going to -- there's a lot of 22 things that they want. And we're trying to 23 figure out what's most important across the 24 broadest community of users. 25 Q. And this process of generating 7773 1 feedback from prospective customers you said 2 previously is particularly important in the 3 case of operating systems; is that right? 4 A. It's important in large complex 5 systems. It's important in -- I mean, it's an 6 important process, yes. There are a lot of -- 7 there are a lot of stakeholders, yes. 8 Stakeholders being people with an interest. 9 Q. And they have an interest because they 10 are either writing hardware device drivers to 11 plug their components into PCs or they are PC 12 manufacturers and they want to know what kind 13 of machines to build, or they are software 14 developers who are trying to figure out what 15 services they can get from the new operating 16 system; correct? 17 A. Those are some of them, yes. 18 Q. Now, another reason why an operating 19 system vendor would want to preannounce a 20 product which is still under development is to 21 give all those stakeholders, as you described 22 them, sufficient time to develop compatible 23 products so that their products can get to 24 market roughly contemporaneously with the new 25 operating system; is that right? 7774 1 A. I think there are two actual phases in 2 that, the first of which where you collect 3 information. And you really don't want your 4 stakeholders, if you will, to spend money on 5 investing on stuff that isn't really imminent. 6 In the normal course of business, you 7 collect requirements and you have to decide 8 what you're ultimately going to try and do. 9 And during that particular portion of 10 the talking, you're not encouraging someone to 11 go out and build something dependent upon the 12 suggestion -- their own suggestion, perhaps, 13 that you include this feature in the system. 14 Q. Okay. But there is a second phase in 15 which -- well, before the commercial release of 16 the product, you start giving beta test 17 versions of your product to these stakeholders 18 so that they can start the process of 19 developing compatible hardware and software so 20 that they are in the market roughly at the same 21 time the new version of the operating system 22 is; correct? 23 A. The beta process being -- that's where 24 there's -- where you've got some flesh on the 25 bone, where you've actually got something that 7775 1 is the result of both the planning from 2 requirements, customer requirements, your own 3 internal requirements, the product and 4 technological advancements. 5 Once you've got all of that sort of 6 out, you've got the framework for the product 7 and you put some meat on the bones in terms of 8 the functionality, the community can build 9 their products to or adapt their products to, 10 yes, that's correct. 11 Q. Okay. Now, you've been involved in a 12 number of software projects over the years, 13 have you not? 14 A. I have. 15 Q. And you are familiar, are you not, 16 with the fact that sometimes expectations about 17 when one of those projects is going to be 18 completed turn out to be more optimistic than 19 perhaps they ought to have been? 20 A. Yes. 21 Q. Okay. In fact, sometimes software 22 projects run into technical problems and are 23 delayed for substantial periods of time; right? 24 A. That is the case. There are projects 25 that don't come in on time and on budget. 7776 1 We like to think that we can do a 2 better job, and there's a particular discipline 3 within the IT software development field that 4 tries to do a better job of -- or tries to help 5 people do a better job at forecasting both cost 6 and delivery. 7 Q. But despite the existence of those 8 sorts of tools, people still miss projected 9 release dates in software projects sometimes by 10 very substantial margins; correct? 11 A. Some projects are missed by a little. 12 Some, a few, are notorious. 13 Q. In forming your opinions in this case 14 on the subject of vaporware, did you have 15 occasion to look at either evidence in the 16 record of this case or other evidence that 17 related to how late products in the PC software 18 industry have been over the years? 19 A. I did. 20 Q. Okay. In particular, you're familiar, 21 are you not, with an official PC letter vapor 22 list that was published periodically about how 23 late some products were? 24 A. I believe there was such a list. 25 Q. Well, did you consider that list in 7777 1 its monthly iterations in forming your views in 2 this case about vaporware? 3 A. I'm not sure what you mean by 4 consider. 5 Q. Well, in the first instance, did you 6 look back at those official PC letter vapor 7 lists in the work you did in this case? 8 A. I'm a little -- I'm not sure what -- I 9 haven't heard the official PC -- if you could. 10 Q. Sure. What I -- 11 A. I'm aware of the vapor list, and I 12 just don't think of it in terms of the official 13 vapor list. 14 Q. Well, it's not really fair to not show 15 you what I'm talking about, so why don't we do 16 that. 17 And in the first instance, I just want 18 you to tell me whether you remember -- excuse 19 me, I just need to get one thing for Mr. Lamb. 20 MR. HOLLEY: May I approach the 21 witness, Your Honor? 22 THE COURT: You may. 23 A. Thank you. 24 Q. Mr. Alepin, when you look at what's 25 been marked as Defendant's Exhibit 3125 and 7778 1 tell me if this December 8, 1988 PC letter with 2 a vapor list on the second page is among the 3 documents in the record of this case that you 4 reviewed? 5 A. Not this document, no. 6 Q. Okay. You did -- and so I'll take 7 that back from you, sir, unless you want to 8 read it. 9 MR. HOLLEY: May I approach the 10 witness, Your Honor? 11 THE COURT: You may. 12 MR. HOLLEY: Thank you. 13 Q. But I take it from your prior 14 testimony that you did review similar lists 15 that had been created about how late various 16 products were? 17 A. Yes. 18 Q. And the products on those lists were 19 from a variety of software developers, 20 including IBM, Lotus, Borland, and WordPerfect; 21 correct? 22 A. I believe that at various times 23 various companies would be on the list, 24 probably including some of those companies. 25 Q. Do you recall, sir, that one of the 7779 1 most notoriously late products in the history 2 of the PC business was Version 3 of Lotus 3 1-2-3? 4 THE WITNESS: Excuse me. I have -- 5 there's a nail that's sticking out of the chair 6 and I think I've just -- 7 MR. HOLLEY: That's not good. 8 THE WITNESS: Do you have a claw or 9 something to take the nail out? Not of my leg, 10 but it just -- 11 THE CLERK: At the next break, I 12 can -- 13 MR. HOLLEY: Can we put a piece of 14 tape over that or something? 15 THE WITNESS: There are two or three 16 of them that are now sticking up. 17 THE COURT: We'll take care of it. 18 Ladies and gentlemen of the jury, 19 we'll take a brief recess to take care of this 20 problem. 21 Remember the admonition previously 22 given. 23 (A recess was taken from 10:17 a.m. 24 to 10:25 a.m.) 25 THE COURT: Did you want the last 7780 1 question read back or -- 2 MR. HOLLEY: I must confess, Your 3 Honor, I lost my train of thought. So if the 4 last question -- 5 THE COURT: The court reporter will 6 read the last question back, please. 7 (Requested portion of the record 8 was read.) 9 A. I was aware -- excuse me, I was aware 10 that Lotus was significantly delayed, yes. 11 Q. Almost two years delayed, sir? 12 A. I'm not sure when you -- counting from 13 when to when? 14 Q. Well, from -- an almost two-year delay 15 from when they said Lotus 1-2-3 Version 3 would 16 be available and when they actually got it into 17 the marketplace. 18 A. I don't remember now the exact amount 19 of time. 20 Q. Now, in forming your views in this 21 case about vaporware, and in particular about 22 Lotus 1-2-3, did you have occasion to review 23 the testimony from Lotus employees on this 24 topic? 25 A. I've read lots of Lotus testimony, 7781 1 lots of developer testimony and testimony from 2 executives over the past 12 -- 3 Q. And in particular -- I didn't mean to 4 cut you off. 5 A. Sorry. Over the past 14 years or so. 6 Q. And did you review the testimony of 7 Steven Crummey of Lotus on this topic of 8 vaporware and product preannouncements? 9 A. I'd have to see it in order to refresh 10 my recollection. 11 Q. But you did try to in the evidence -- 12 in the record, review testimony from other 13 companies in the industry that you thought was 14 relevant to the views you've expressed here 15 about vaporware; correct? 16 A. Absolutely, yes. 17 Q. I'm going to play you a piece of the 18 deposition transcript of Mr. Crummey from 19 Lotus, and then I have a question for you. 20 (Whereupon, the following video was 21 played to the jury.) 22 Question: Did Lotus -- what was 23 Lotus' policy about preannouncing products? 24 Answer: I think, to be fair, in that 25 time frame, everybody preannounced. Microsoft 7782 1 preannounced. Borland preannounced. Everybody 2 did -- IBM preannounced, and Lotus 3 preannounced. That was kind of common 4 behavior. 5 (Whereupon, playing of video 6 concluded.) 7 BY MR. HOLLEY: 8 Q. And that's consistent with your 9 knowledge of the industry, is it not, that in 10 the time frame that you testified about, which 11 is in the early 1990s, everybody in the 12 software business was preannouncing their 13 products for the reasons that we talked about 14 earlier; correct? 15 A. That once feature sets had been 16 determined and there was a product or a -- the 17 product that you were planning to ship, yes. 18 Q. Okay. And did you also consider this 19 testimony from Mr. Crummey on the subject of 20 vaporware? 21 (Whereupon, the following video was 22 played to the jury.) 23 Question: What's your understanding 24 of the term vaporware? 25 Answer: It's when you announce 7783 1 something to the market, a product, with some 2 specifics and give a date, and then miss that 3 date by a lot. 4 Question: Now, would you consider the 5 delay that Lotus had with version 3.0 of this 6 DOS product, was that vaporware or not? 7 Answer: I don't consider that 8 vaporware. And the reason I don't is there was 9 a plan to announce and ship on a certain date. 10 I think what happened -- just my 11 opinion -- they ran into a lot of technical 12 problems. They kept moving the date out. 13 Question: And was that pretty common 14 for software? 15 Answer: It was, yes. 16 Question: In other words, you can 17 miss a date? 18 Answer: Always. Always -- you will 19 always miss a date with software. 20 Question: Is that common in the 21 industry? 22 Answer: Yes. 23 (Whereupon playing of video 24 concluded.) 25 BY MR. HOLLEY: 7784 1 Q. Now, Mr. Alepin, when you were 2 preparing to deliver your opinions in this 3 case, did you think it was important to take 4 into account and to tell the Jury about 5 testimony like the testimony we just heard from 6 Mr. Crummey, that missing dates in the software 7 industry is something that, in his words, 8 always happens? 9 A. I factored the normal practices of our 10 industry into my analysis and into my 11 conclusion. 12 Q. Now, the specific example that you 13 focused on in your direct testimony was Windows 14 Vista; is that correct? 15 A. That was one of them. 16 Q. And you were shown Plaintiffs' Exhibit 17 7264. And if you need to see it again, I'm 18 happy to show it to you. 19 But that was the e-mail from 20 Mr. Allchin to Mr. Gates and Mr. Ballmer dated 21 January 27, 2004. 22 Do you recall that e-mail, sir? 23 A. I recall that generally, yes. 24 Q. Okay. And just -- I think it would be 25 easier for you and, therefore, I want to give 7785 1 you a copy of that Plaintiffs' exhibit that 2 Mr. Lamb showed you. 3 MR. HOLLEY: May I approach the 4 witness, Your Honor? 5 THE COURT: You may. 6 Q. Now, what was it that you derived from 7 7264, this self-described rant by Mr. Allchin 8 to Mr. Gates and Mr. Ballmer about the 9 development of Windows Vista? 10 A. Well, this is a piece of evidence 11 combined with a number of other elements, 12 including the actual content of the final 13 version of Windows, other stops along the 14 development path for Windows Vista, including 15 which components were taken out, which 16 components were left in, additional material, 17 including interviews with the top Microsoft 18 executives wherein there's a description 19 consistent with this time frame that says 20 actually that Microsoft actually began the real 21 work of Vista, I think, probably after this 22 date. I think the real work of the product 23 that ultimately we're seeing today. 24 And so I don't remember exactly what 25 the specific interview was, but it took place 7786 1 rather recently in kind of a retrospective. 2 That's consistent with what 3 Mr. Allchin is describing about the state of 4 the development project. 5 Q. You are aware, are you not, sir, that 6 after this rant that Mr. Allchin delivered to 7 his superiors, there was a reset in the 8 development of Windows Vista because the 9 product being developed was not the one that 10 Microsoft decided that it wanted developed and 11 they basically started again; is that correct? 12 A. Well, that's a little larger than what 13 I just said, but I think I said that there was 14 a -- a little bit after this point in time, 15 Microsoft's executives had gone -- changed 16 significant -- or actually their statements 17 were that they had changed the way that Vista 18 was going to be delivered, yes. 19 Q. And that is because their initial 20 plans for Vista turned out to be much harder to 21 achieve than they had anticipated at the 22 outset; is that correct? 23 A. I don't know whether it's more 24 difficult or whether it was that they were not 25 focusing on what they should be building. 7787 1 I mean, Mr. Allchin's suggestion is 2 not just technical problems. It seems to 3 suggest that they are not focusing on what they 4 need to be focusing on. 5 Q. And it's not your testimony, is it, 6 sir, that there was something untoward about 7 Microsoft taking stock of the development of 8 Windows Vista, deciding that the product being 9 built was not what Microsoft realized that the 10 market wanted, and changing in midstream the 11 product being developed in order to meet 12 consumer demand as Microsoft perceived it? 13 A. The issue, of course, is not changing 14 the product to adapt. It's whether or not 15 you're letting the world know that that's 16 what's happening. 17 And in this particular case, it was 18 business as usual about Vista and when Vista 19 was going to ship and what features it was 20 going to contain. 21 It was -- while there might have been 22 an internal reset, as you described it, that 23 was not communicated to the community who had 24 come to expect Vista with a particular feature 25 set in a particular time frame. 7788 1 Q. Well, in forming that opinion that 2 you've just expressed, did you focus on the 3 August 27, 2004 press release issued by 4 Microsoft Corporation which says Microsoft 5 announces 2006 target date for broad 6 availability of Windows Longhorn client 7 operating system. 8 Windows Win FX development 9 technologies will be made available for Windows 10 XP and Windows server 2003. 11 And then going on to say that certain 12 elements that were going to be in Windows 13 Vista, code name Longhorn, will be released in 14 later versions of Microsoft operating systems? 15 A. I did. 16 Q. So the market knew in August of 2004 17 that Microsoft had changed its plans and was 18 going to release Longhorn in 2006; correct? 19 A. Well, the market was told that 20 Microsoft was going to release it in 2006. 21 In fact, that was changed a couple of 22 times, and it will come, I believe, this month. 23 Q. Well, it was -- 24 A. 2007. 25 Q. Sorry, sir, I didn't mean to cut you 7789 1 off. 2 It was released to OEMs for inclusion, 3 these computer manufacturers, for inclusion in 4 their PCs last year, was it not, late last 5 year? 6 A. November 16th. I still can't buy one. 7 Q. Correct. But computer manufacturers 8 have it, and they've had it since November 9 16th. And what they are doing is tuning their 10 PCs to Windows Vista so that they are sure that 11 it works well with their hardware; correct? 12 A. I expect that that's one of the things 13 they're doing. 14 Q. Now, did you have occasion before you 15 came to testify to review a blog posting that 16 Mr. Allchin of Microsoft posted entitled 17 setting the record straight which constitutes 18 his comments on Plaintiffs' Exhibit 7264? 19 A. When is this? 20 Q. Well, it doesn't have a date on it. 21 I'm happy to show it to you and you can tell me 22 whether or not you looked at it. 23 MR. HOLLEY: May I approach the 24 witness, Your Honor? 25 THE COURT: You may. 7790 1 Q. Have you seen this before, sir? 2 A. No, I haven't. 3 Q. Okay. Is it something that you would 4 have wanted to see before you testified as you 5 did about Windows Vista? 6 A. Well, this -- I'm surmising that this 7 was created on the 12th of December. So less 8 than a month ago. 9 And if I'm connecting the dots here, 10 this may have been related to the use of the 11 material in this -- in this case. 12 So Mr. -- 13 Q. It was. And so my question to you, 14 sir, is: You're here testifying now, and some 15 time elapsed between December 12th and when you 16 got on the witness stand. 17 Is the information contained in this 18 blog posting by Mr. Allchin information that 19 you would have liked to have known before you 20 gave the testimony you gave about Windows 21 Vista? 22 A. Well, I haven't read it yet, other 23 than to see if I could identify the markings on 24 it. 25 But I think as I answered your 7791 1 question before, I considered Mr. Allchin's 2 e-mail in light of other things that were going 3 on at the time and that they were confirmed, in 4 part, by significant changes that were made to 5 the design in the Windows Vista product 6 following. 7 So there's not much in the way of -- 8 this may be interesting information. I don't 9 know. 10 But the purposes of viewing 11 Mr. Allchin's -- only he confirms what is 12 apparent in the Windows Vista development plan 13 and the Windows Vista product. 14 MR. HOLLEY: Your Honor, may I 15 approach the witness again? 16 THE COURT: You may. 17 Q. So as I understand your testimony, you 18 decided that your untutored review of an 19 internal Microsoft e-mail is worthy of more 20 credibility than what Mr. Allchin, the author 21 of the e-mail, said it means? 22 A. I haven't read the content of the 23 e-mail, and he's apparently writing it in 24 retrospect, I take it in response to being used 25 in a legal forum, and the purposes for which I 7792 1 used the e-mail were to confirm that the 2 development of Microsoft's Windows with Vista 3 project, which had long been announced and 4 which took an awful long time to get to the 5 market, had different features changed over 6 time with numerous delays. 7 Mr. Allchin is confirming that -- is 8 confirming that the product did not in his view 9 have the features that they needed. Microsoft 10 changed the feature list, that it needed other 11 things that it didn't have. 12 I don't think that's -- what 13 Mr. Allchin could say about that is -- would be 14 any different. 15 Q. Let's move to the topic of FUD. 16 You agree, do you not, sir, that a 17 company is entitled to tell the truth about 18 defects in its competitors' products? 19 A. That's a rather broad statement. 20 Q. But one that you agreed with in a 21 deposition, is it not, sir? 22 A. There were -- I'm sure there's a 23 context in which the questions were asked. 24 That makes it a very large proposition here. 25 Q. Right. Well, do you remember being 7793 1 asked this question: 2 And wouldn't you agree that in a free 3 market economy, that it's entitled to tell the 4 truth about its competitors' products? 5 Answer: It's entitled to tell the 6 truth about its competitors' products, yes. 7 MR. LAMB: Your Honor, can we have 8 page cites to this? It's impossible to track 9 what he's referring to. 10 THE COURT: Sure. Give us a cite. 11 MR. HOLLEY: My apologies, Your Honor. 12 I'm referring to the deposition of 13 Mr. Alepin that occurred on January 22nd of the 14 year 2000. 15 And the question and the answer 16 exchange I just read was at page 389, lines 8 17 to 12. 18 And I should have said that and I 19 apologize. 20 Q. Now, Mr. Alepin, you gave that 21 testimony; correct? 22 A. I did. 23 Q. Okay. And you also agree, sir, that 24 truthful information, distributing truthful 25 information about weaknesses that are in the 7794 1 competitor's product is not FUD? 2 A. Distributing truthful information, 3 truthful information -- 4 Q. Truthful information about weaknesses 5 in your competitor's product, not FUD; correct? 6 A. That's not FUD. 7 Q. Now, you are familiar, are you not, 8 sir, that in the software industry companies 9 frequently engage in comparative advertising in 10 which they say that their product is better 11 than a competing product? 12 A. Yes. 13 Q. Okay. And sometimes companies in the 14 software industry point out in their 15 advertisements defects in their competitors' 16 products, correct? 17 A. Sometimes. 18 Q. And one of the most famous ad 19 campaigns from the period of time that we are 20 talking here, the early 1990s, was a campaign 21 run by Apple computer entitled the hard way and 22 the easy way. 23 And what they were doing was making 24 fun of how hard it was to use Windows PCs 25 relative to using Macintoshes. 7795 1 Do you remember that ad campaign, sir? 2 A. I'm afraid not. I remember the most 3 recent one with the Mac and the PC. 4 Q. Okay. 5 A. Quite a good campaign. 6 Q. They are still doing it; right? 7 A. Yes, they are. 8 Q. Okay. They haven't changed. 9 Now, do you -- in the course of 10 forming your views about the question of FUD in 11 this case, and in particular in the era that 12 was the focus of your direct testimony, which 13 was the competition between Microsoft and DRI 14 and IBM around '91, '92, did you look at the 15 advertisements that IBM was running at that 16 time comparing Windows and OS/2? 17 A. I looked at advertisements from 18 various companies. Inevitably, they're part of 19 our business. 20 Q. Okay. And, in particular, did you 21 focus on the IBM advertisements which told 22 consumers that running OS/2 would protect them 23 from general protection faults that they would 24 possibly incur if they used -- not incur -- 25 experience if they used Windows? 7796 1 A. I'm not sure that there's a specific 2 advertisement that comes to mind. 3 Q. All right. Well, let me show you two 4 of them and see if this triggers any 5 recollection on your part. 6 MR. HOLLEY: May I approach the 7 witness, Your Honor? 8 THE COURT: Yes. 9 Q. Mr. Alepin, I'm going to show you two 10 advertisements from IBM, and I just want it to 11 be clear, the yellow highlighting is mine. 12 And my question to you at the moment 13 is: Are these among the advertisements that 14 you reviewed in forming your opinions about FUD 15 in this case? 16 A. I don't recall seeing this one at all 17 and -- other than the wave that -- I don't 18 recall this particular one. 19 Q. Okay. 20 MR. HOLLEY: May I approach the 21 witness, Your Honor? 22 THE COURT: You may. 23 MR. HOLLEY: Oh, I'm sorry. 24 Q. Did you review internal Microsoft 25 documents -- excuse me -- internal IBM 7797 1 documents on the subject of FUD in forming the 2 views that you expressed in your direct 3 testimony? 4 A. I reviewed IBM documents. 5 Q. And did you discuss IBM -- or excuse 6 me. 7 Did you review IBM documents that 8 address a FUD, fear, uncertainty, and doubt 9 campaign that IBM planned against Windows? 10 A. I don't have a specific document or 11 specific recollection here. If you have 12 something that -- 13 Q. Well, you are aware, sir, are you not, 14 that there was such a campaign by IBM against 15 Windows where IBM sought to show that OS/2 was 16 more stable than Windows by crashing Windows? 17 You know that happened, don't you, 18 sir? 19 A. Well, I know that there was a 20 demonstration that IBM executives would 21 perform. 22 Q. And the demonstration used a 23 misbehaving application to bring down the 24 Windows system, the point being in IBM's 25 submission, that OS/2 was more stable than 7798 1 Windows; correct? 2 A. I think that was the point, yes. 3 Q. Now, was it your testimony or the 4 import of your testimony about various things 5 that Microsoft did in relation to DR-DOS that 6 those things that Microsoft did were solely 7 responsible for the eventual demise of that 8 operating system? 9 A. Excuse me. Are we outside of just FUD 10 or is that a more general question or -- 11 Q. No. I appreciate the clarification. 12 So now I'm talking about all the 13 things on your chart in the column labeled DRI 14 from the end of your direct testimony. 15 So that would be intentional 16 incompatibilities, vaporware, FUD, product 17 integration, and other, if there's anything in 18 your other category that applies. 19 And my question is, is the import of 20 your testimony that but for that conduct by 21 Microsoft, we would all still be using DR-DOS 22 in 2007? 23 A. I don't think that's the import of the 24 testimony. 25 Q. Did you review internal DRI documents 7799 1 from the early 1990s talking about perceptions 2 within DRI that its days were numbered because 3 the world was moving to protected mode 4 graphical operating systems like Linux, 5 Windows, and the Mac OS? 6 A. I recall reviewing numerous DRI 7 documents on the -- on their business, yes. 8 Q. And among those documents that you 9 reviewed were documents stating the proposition 10 that as a -- basically, a replica of MS-DOS, in 11 an era of protected mode operating systems with 12 graphical user interfaces, there really was not 13 much time left for DR-DOS? 14 A. Excuse me. That's -- the word DR-DOS 15 perhaps is a -- are you talking about for DRI 16 or for DR-DOS or -- I think your question was 17 -- your earlier question was DRI, I think. 18 Maybe I missed it. 19 Q. Okay. And if I -- if there's that 20 confusion in your mind, I want to clear it up. 21 I'm not talking about DRI as a company 22 and what it might have invented or developed. 23 I'm talking about the product called DR-DOS and 24 in the time frame early 1990s. 25 You are aware, are you not, sir, of 7800 1 documents created by executives of Digital 2 Research observing that unless they are able to 3 develop a protected mode graphical operating 4 system capable of competing with Mac OS, 5 Windows, and Linux, they are not going to 6 survive in the marketplace; correct? 7 A. I think that independent of those 8 documents, that would be my conclusion. 9 Q. In considering what impact Microsoft's 10 actions had on DR-DOS as a product, did you 11 consider the testimony of Anthony Ingenoso of 12 IBM, the software engineer who was given the 13 job of reviewing and testing DR-DOS when IBM 14 was actively considering replacing MS-DOS with 15 DR-DOS? 16 A. I reviewed Mr. Ingenoso -- I'm not 17 sure if it was a declaration or a deposition, 18 but I remember that he was among the people 19 whom I considered, whose testimony or evidence 20 I considered. 21 Q. So I'm going to play you a portion of 22 the testimony of Anthony Ingenoso of IBM of a 23 deposition taken on the 24th of September, 24 2001, and then I'm going to have a question for 25 you. 7801 1 (Whereupon, the following video was 2 played to the jury.) 3 Question: So, overall, what was your 4 opinion of the DR-DOS 6 product after you had 5 tested it? 6 Answer: It needed work. 7 Question: How much work? 8 Answer: To achieve a level of quality 9 and completeness, I felt it needed more than a 10 year's worth of work, probably 18 months worth 11 of concerted effort to put the missing pieces 12 in place. 13 There were also a lot of problems with 14 the utilities. The command line switches and 15 options weren't the same as the IBM and 16 Microsoft ones or they worked a little 17 differently. All of those things would have 18 needed to get fixed. 19 If we had adopted the DR-DOS product 20 as our own, we would have had to make it 21 functionally and programmatically much closer 22 to what the IBM and Microsoft products had 23 been. It was too far off for us to ship. 24 There would have been too many customer 25 complaints about compatibility. 7802 1 (Whereupon, playing of video 2 concluded.) 3 BY MR. HOLLEY: 4 Q. Mr. Alepin, did you think it was 5 important in testifying as you did on direct 6 that Microsoft took various actions that 7 impeded DR-DOS and its acceptance that IBM had 8 taken a very close look at the product and had 9 concluded that it needed a year to 18 months 10 worth of work to fix and that if they had 11 shipped it in its current form, in 12 Mr. Ingenoso's words, there would have been too 13 many customer complaints about compatibility? 14 A. Yes. 15 MR. HOLLEY: I have no further 16 questions, Your Honor. 17 THE COURT: Okay. We'll take a break 18 for our lunch. 19 We will return at 12. 20 Remember the admonition previously 21 given. 22 See you then. 23 (A recess was taken from 10:59 a.m. 24 to 11:57 a.m.) 25 (The following record was made out 7803 1 of the presence of the jury.) 2 MR. TULCHIN: Your Honor, may I raise 3 a scheduling issue? 4 THE COURT: Go ahead. 5 MR. TULCHIN: Thank you, Your Honor. 6 We talked yesterday about some motions 7 and that there were a number of motions that 8 were addressed in the Court's list of last 9 Thursday and my letter of Monday. And we 10 agreed to put those off except for one or two, 11 and we discussed yesterday whether those would 12 be argued today or tomorrow. 13 It would be much more convenient for 14 our side if it were today, and I wanted to 15 mention that since I didn't want to wait until 16 3 o'clock and spring that on anyone, of course, 17 subject to the Court's convenience. 18 We'll do it tomorrow if we need to, 19 but I just wanted to ask if there was some 20 possibility of doing it at 3 today. 21 MR. HAGSTROM: Can't do it today. 22 THE COURT: Why not? 23 MR. HAGSTROM: Not prepared. We told 24 them yesterday we wanted to do it Friday. They 25 agreed yesterday morning to Friday. Then now 7804 1 they want to move it to Thursday. 2 THE COURT: I think what they said was 3 Thursday or Friday. 4 MR. HAGSTROM: Well -- 5 THE COURT: Well, if you are not 6 prepared, then, we won't. 7 Anything else? 8 MR. TULCHIN: I don't want to belabor 9 this, Your Honor. 10 I don't think we agreed to Friday. We 11 would much prefer to do it today. If it's 12 tomorrow, it's tomorrow. That's the way the 13 cookie crumbles. But I just wanted to -- I 14 don't think we ever agreed that it would be 15 Friday. Obviously, we said whatever is best 16 for the Court. 17 THE COURT: Okay. 18 MR. HOLLEY: And, Your Honor, one 19 other point. 20 I would like to, in front of the jury, 21 as I understand is the practice in Iowa, move 22 the admission of one, two, three, four, five, 23 six, seven, eight, nine -- eleven of 24 Defendant's exhibits that were used during the 25 cross-examination of Mr. Alepin. 7805 1 THE COURT: Okay. 2 MR. HOLLEY: And I have the numbers. 3 But we could just do it when the Jury is back. 4 THE COURT: That's fine. Okay. 5 MR. LAMB: We have one other matter, 6 Your Honor. 7 THE COURT: Okay. 8 MR. LAMB: If I could approach. 9 THE COURT: Sure. 10 MR. LAMB: Your Honor, what I've done 11 is handed you an article regarding the CCIA Ed 12 Black, the chief executive of CCIA and 13 basically what happened when the CCIA left and 14 disengaged itself from the European suit in 15 Microsoft. 16 And what Mr. Holley attempted to 17 impeach Mr. Alepin about yesterday, was that he 18 had, quote, switched horses, end quote, when 19 the CCIA withdrew from the EC case, and that is 20 at 71524 -- colon 4 and following. 21 This is a trade press article that 22 Mr. Alepin is familiar with, he's seen, and in 23 part he relied on it. And the facts contained 24 in it to do what he did, which is assist 25 another party in the EC what Mr. Holley 7806 1 characterized as switching horses. 2 MR. HOLLEY: Your Honor, there's a 3 raft of improper information in this article, 4 including the fact that Microsoft has been 5 fined $600 million by the EC, which is not 6 relevant and totally unrelated to the point 7 that Mr. Lamb made, including the fact that 8 Microsoft settled with Novell for $536 million. 9 I do not object to eliciting testimony 10 from Mr. Alepin that the head of a trade 11 association with which he chose to associate 12 himself took money from Microsoft and then 13 withdrew from a proceeding. But this article, 14 I object to strenuously. 15 It is not necessary to introduce this 16 article to elicit that testimony. And I think 17 whatever testimony is elicited should be 18 limited to Mr. Black and what he did and what 19 the consequence of that was for Mr. Alepin. 20 MR. LAMB: Well, Your Honor, it goes 21 to why. Why did you, quote-unquote switch 22 horses, as Mr. Holley tried to impeach 23 Mr. Alepin with. 24 THE COURT: So what do you want out of 25 this article? 7807 1 MR. LAMB: Basically, I believe that 2 he should be able to testify that it came to 3 his attention that there had been a settlement 4 after Microsoft had paid what he viewed as a 5 large fine, a $600 million fine, and that the 6 settlement was for only $20 million, which he 7 thought was very low in this instance, and 10 8 million of it went to the chief executive, and 9 that that really impacted his feelings and 10 impacted his ethical obligation. So he went -- 11 THE COURT: Whose feelings? 12 MR. LAMB: Mr. Alepin. 13 THE COURT: Oh, okay. 14 MR. HOLLEY: Mr. Alepin is not a 15 member of any professional association that 16 imposes any ethical rules on anyone. 17 And the purpose of introducing this 18 article as opposed to the fact of what 19 Mr. Alepin did is obviously to bring in 20 irrelevant evidence about the European 21 commission case, the size of the fine paid, and 22 the settlement with Novell. 23 There is a motion in limine ruling on 24 set elements, and there was also a ruling by 25 this Court that Mr. Alepin was not to testify 7808 1 about the outcome of other judicial 2 proceedings. 3 So, in that sense, the last two 4 paragraphs of this document violate orders of 5 the Court. 6 And I haven't heard anything which 7 would explain why that violation of a court 8 order is permissible. 9 THE COURT: Okay. Anything else? 10 MR. LAMB: Well, Your Honor, I believe 11 that individuals by implication ordinarily 12 should have ethical obligations whether their 13 professional organizations require them to or 14 not. And we believe we are entitled to ask 15 Mr. Alepin why. 16 THE COURT: Why? 17 MR. LAMB: Why he, as Mr. Holley said, 18 switched horses. 19 His view is not going to be that he 20 switched horses. His view is going to be that 21 he undertook representation. It was abandoned. 22 He was uncomfortable with the manner in which 23 it was abandoned. He was offered the ability 24 to represent others in the same proceeding, and 25 he did. 7809 1 MR. HOLLEY: That testimony, Your 2 Honor, I have no objection to. 3 THE COURT: Okay. 4 MR. HOLLEY: But in the context of 5 that, he should not be allowed to testify about 6 the $600 million fine or the $536 million 7 settlement by Novell. 8 Those aren't relevant to this 9 testimony and they're prejudicial and they 10 violate in limine rulings, Your Honor. 11 THE COURT: Okay. 12 MR. LAMB: Your Honor, this isn't 13 being offered for liability. This is being 14 offered to explain and to basically rebut 15 impeachment. 16 And at least as I understand it, Mr. 17 Holley is agreeable that Mr. Alepin can testify 18 that he's concerned that this individual, 19 Mr. Black, took money, but I don't understand 20 why he can't be uncomfortable about the fact 21 that it was because it was a fine and a 22 settlement. 23 THE COURT: Because it was what? 24 MR. LAMB: Based on a fine and a 25 settlement. 7810 1 Because that -- it's not just that he 2 took money from Microsoft. It's that he took 3 money after there had been a rather large fine 4 that Microsoft had paid. 5 The lawsuit was prosecuted and it was 6 basically resolved, you know, basically, I 7 don't know, 10 cents on the dollar, if that, 8 and half of that went to the chief executive. 9 MR. HOLLEY: Well, let's be clear 10 here. The CCIA never brought a lawsuit against 11 Microsoft seeking a penny. 12 There was a government enforcement 13 action brought by the European commission's 14 director of general for competition. 15 The CCIA sought leave to participate 16 in that case as an intervener, which is a 17 procedure permissible under the Treaty of Rome 18 and the implementing regulations in Europe. 19 There was no claim by CCIA ever for 20 damages. The $600 million fine, which is being 21 appealed, was based on the enforcement 22 proceeding brought by the commission, not by 23 CCIA. So the two numbers, the $20 million and 24 the $600 million are entirely unrelated. 25 There is an in limine order in this 7811 1 case that things like Microsoft's settlement 2 with Novell and the amount of that settlement, 3 which is the last paragraph of this document, 4 and the size of the fine and the outcome of the 5 European commission case, which is subject to 6 appeal, are not relevant and are not admissible 7 in evidence. 8 There is no need to show this document 9 in order to elicit the testimony that Mr. Lamb 10 described. 11 He can ask the questions, and 12 Mr. Alepin can answer. 13 This document is completely 14 extraneous, and it contains information which 15 is not proper under the Court's orders. 16 MR. LAMB: Your Honor, we'll follow 17 whatever your direction is, obviously, but I'm 18 not clear as to what that is because apparently 19 the $20 million is okay, but at least, in my 20 mind, the explanation of the fine explains the 21 20 million. 22 THE COURT: Okay. You can ask him 23 why. And the information regarding the 20 24 million and the 10 million is fine, and the 25 information, the first one, two, three, four 7812 1 paragraphs seem to be okay as far as -- if you 2 establish a foundation, of course. 3 I don't want him to mention the fine 4 and the settlement of 600 million -- and what 5 was the other amount? 6 MR. HOLLEY: 536 million, Your Honor. 7 THE COURT: 536. 8 Anything else? 9 MR. HOLLEY: No, Your Honor. 10 THE COURT: Okay. Get the Jury, 11 please. 12 (The following record was made in the 13 presence of the jury at 12:09 p.m.) 14 THE COURT: Mr. Holley, you wanted to 15 introduce some exhibits? 16 MR. HOLLEY: Yes, Your Honor. 17 At this time, Microsoft Corporation 18 moves for the admission of the following 19 Defendant's exhibits used during the 20 cross-examination of Mr. Alepin: Defendant's 21 Exhibit 62, Defendant's Exhibit 898, 22 Defendant's Exhibit 901, Defendant's Exhibit 23 1020, Defendant's Exhibit 1029, Defendant's 24 Exhibit 3066, and Defendant's Exhibit 3165. 25 THE COURT: Any objection? 7813 1 MR. LAMB: Your Honor, no objection to 2 62, 898, 901, and 1020. 3 As to 1021, foundation, improper 4 opinion, and speculation. 5 THE COURT: There was no 1021. 6 1029? 7 MR. LAMB: I thought he said 1029. 8 THE COURT: You said 1021. It was 9 1029. 10 MR. LAMB: Then I completely misspoke. 11 THE COURT: Okay. 12 MR. LAMB: 1029. 13 THE COURT: You object to that one? 14 MR. LAMB: I'm sorry. Foundation, 15 improper opinion, and speculation. 16 THE COURT: Okay. 17 MR. LAMB: 3066, foundation, hearsay 18 -- embedded hearsay, authenticity. 19 3165, authenticity, it's illegible; 20 foundation, hearsay, it's misleading to the 21 Jury, prejudice, and relevance. 22 THE COURT: Very well. Objections are 23 denied. They are all admitted. 24 Are you done, Mr. Holley, with any 25 further examination? 7814 1 MR. HOLLEY: I am, Your Honor. That's 2 all I had. 3 THE COURT: Okay. 4 Redirect? 5 MR. LAMB: Thank you, Your Honor. 6 THE COURT: You're welcome. 7 REDIRECT EXAMINATION 8 BY MR. LAMB: 9 Q. Good afternoon, Mr. Alepin. 10 A. Good afternoon. 11 Q. You've been now with us for five and a 12 half days. I appreciate your indulgence. I 13 know you're tired. 14 I'm sure the Jury is tired too, so 15 we'll try and move through this. Okay? 16 A. Thank you. 17 Q. The first thing I'd like to do is go 18 back and refresh you regarding your opinions in 19 this case. 20 Do you have your opinions in mind that 21 you gave? 22 A. Yes. 23 Q. Okay. Now, you've listened to three 24 days of questions and provided information for 25 Mr. Holley, and you have taken a look at some 7815 1 documents. 2 That includes trade press; right? 3 A. I did. 4 Q. It includes certain exhibits; right? 5 A. Yes. 6 Q. And it includes transcripts that were 7 shown to you, read to you, and were played for 8 you; correct, sir? 9 A. That's correct. 10 Q. And do you still to a reasonable 11 degree of professional certainty maintain your 12 opinions, sir? 13 A. Absolutely, yes. 14 Q. Nothing's changed your mind? 15 A. No, sir. 16 Q. All right. Mr. Holley said something 17 interesting this morning. He said -- and it 18 was at page 68 of the transcript, line 12 for 19 the record -- that it's not really fair to not 20 show you what I'm talking about. And he was 21 referring to a document. 22 Do you remember that interchange? 23 A. Maybe -- yes. Yes, I do. 24 Q. Okay. And what he was talking about 25 specifically was -- he asked you a question 7816 1 about if you'd seen the e-mails, the internal 2 Sun e-mails that showed that there had been 3 rigging in relation to the Sun Java testing. 4 Do you recall that? 5 A. Or words to that effect, yes. 6 Q. Okay. He didn't show you any e-mails, 7 did he? 8 A. I don't -- no, he didn't. 9 Q. I mean, here this morning, he didn't 10 show you any e-mails? 11 A. I wasn't shown any, no. 12 Q. Okay. Now, he also asked you a series 13 of questions about opening statements of 14 counsel. 15 Do you remember that, sir? 16 A. Yes, sir. 17 Q. Okay. And you've reviewed some of the 18 opening statements of the counsel in this case; 19 right? 20 A. I did. 21 Q. Statements from Mr. Tulchin; right? 22 A. Yes. 23 Q. Ms. Conlin; right? 24 A. Yes. 25 Q. And Mr. Hagstrom; right? 7817 1 A. Yes. 2 Q. And you also reviewed findings of fact 3 and conclusions of law that had been prepared 4 by the Court and presented to the Jury; right? 5 A. Yes. 6 Q. And you've also seen some of the jury 7 instructions in this case, right, sir? 8 A. Yes. 9 Q. Okay. Now, when you reviewed the 10 opening statements of Ms. Conlin and 11 Mr. Hagstrom, do you recall testimony -- excuse 12 me -- do you recall them advising the Jury to 13 beware of Microsoft's tactics? 14 A. Yes. 15 Q. Okay. And do you remember 16 specifically them advising the Jury to beware 17 of FUD, vaporware, undisclosed APIs, and things 18 of that nature, sir? 19 A. Yes. 20 Q. Okay. And over the course of the last 21 five and a half days, you've provided testimony 22 regarding your opinion as it relates to FUD, 23 vaporware, undisclosed APIs, and -- as you put 24 it on your chart that you prepared for the Jury 25 -- basically, tactics by Microsoft; right? 7818 1 A. Yes. 2 Q. Okay. Now, in doing so and putting on 3 the board, the white board that is, kind of 4 your ultimate opinions, a top-down view, that 5 was really designed to congeal for the Jury in 6 a snapshot; right? 7 A. Yes. 8 Q. Okay. 9 And do you recall when Mr. Tulchin 10 provided his opening statement to the Jury 11 basically telling the Jury that one of 12 Microsoft's defenses was essentially going to 13 be everybody's doing it? Do you recall that? 14 MR. HOLLEY: Objection, Your Honor. 15 Leading. Irrelevant. Outside the scope of 16 direct. 17 THE COURT: Overruled. 18 A. Yes. 19 MR. HOLLEY: Cross. Excuse me. 20 Q. Okay. And do you recall Ms. Conlin 21 and Mr. Hagstrom advising the Jury to not only 22 beware of the tactics of Microsoft in relation 23 to the case, but in relation to the 24 presentation before the Jury? 25 A. I do. 7819 1 Q. Okay. In fact, do you recall 2 Mr. Hagstrom referring to a gentleman by the 3 name of Paul Harvey and the phrase the rest of 4 the story? 5 A. In particular, yes. 6 Q. Okay. Well, what I want to do, sir, 7 is I want to try and take a look at the rest of 8 the story here. 9 And, in particular, I want to look at 10 testimony -- and it's been a while now. I 11 think it was on Tuesday -- regarding Andrew 12 Schulman. 13 Do you remember that? 14 A. I do. 15 Q. And do you remember the testimony 16 about his book, Unauthorized Windows 95? Do 17 you remember that, sir? 18 A. I do. 19 Q. Okay. And do you recall that Mr. 20 Holley showed a very small portion of the book; 21 right? 22 A. It's a big book. It was a small 23 portion. 24 Q. Big book, small portion, okay. 25 And that was put up on the screen; 7820 1 right? 2 MR. LAMB: Slide 777. Do you have 3 that, Darin? 4 Q. Okay. 5 MR. LAMB: And also 778. There's two 6 portions he showed you. 7 A. Yes. 8 MR. LAMB: Okay. Do you have 778? 9 Okay. 10 Q. And he asked you some questions about 11 that. 12 And you know who Mr. Schulman is, 13 don't you? 14 A. Yes, I do. 15 Q. Okay. And can you tell the Jury how 16 it is that you know Mr. Schulman? 17 A. Mr. Schulman is a person who has 18 written concerning the internal design and 19 operation of PC operating systems for 15-plus 20 years, I think. 21 He's quite a popular -- popular is a 22 relative term here. Not everyone reads his 23 books. But he writes well and authoritatively 24 on operating system software, and I have met 25 him on other occasions personally. 7821 1 Q. Okay. And you reviewed his transcript 2 in this case, didn't you? 3 A. His transcript, his -- 4 Q. Deposition transcript? 5 A. Oh, yes. I'm sorry. 6 Q. Okay. And during his deposition, he 7 was asked some questions about submissions of 8 this book; right? 9 A. Yes. 10 Q. And you've talked to him about his 11 book; right? 12 A. I have, yes. 13 Q. Okay. And, I believe -- I don't 14 remember your exact testimony, but you 15 certainly didn't say that you sat down and read 16 it page to page? 17 A. Not cover to cover, no. Not cover to 18 cover. 19 Q. But you've read large portions of this 20 book; right? 21 A. I've read large portions of it over 22 time. 23 Q. Okay. Would you characterize this 24 book as complimentary of Microsoft? 25 A. In the whole, no. 7822 1 Q. Okay. How would you characterize it? 2 A. I would characterize it as perhaps 3 uncomplimentary in some areas as well as a 4 narrative in others. A very technical -- I 5 mean, it's got some uncomplimentary remarks. 6 It's got some technical information that is 7 presented. 8 Q. Okay. At times did you find him 9 sarcastic? 10 A. Certainly, sir. 11 Q. Okay. The first page of the book -- 12 you weren't read the first page of the book; 13 right? 14 A. I probably standing in the book store 15 looking at it, I read the first page and then 16 have come back and forth, yes. 17 Q. Okay. I apologize. I wasn't clear. 18 You weren't read the first page by Mr. 19 Holley, were you? 20 A. Oh, no. No. 21 Q. You started on -- I think they started 22 on page 11 with you; right? 23 A. I didn't look at the page number, but 24 it was toward the front part of the book. 25 MR. LAMB: Go to 778, if you would, 7823 1 Darin. 2 A. I see, yes. It's 11. 3 Q. Okay. Well, the first page, the first 4 quote of the book is, quote, if someone thinks 5 we're not after Lotus and after WordPerfect and 6 after Borland, they're confused. 7 My job is to get a fair share of the 8 software applications market and, to me, that's 9 100 percent, end quote. 10 That quote is attributed to Mike 11 Maples, senior vice president for applications 12 of Microsoft. 13 Had you heard that quote before? 14 A. I have, yes. 15 MR. HOLLEY: Objection, Your Honor, if 16 this is being offered for the truth of the 17 statement attributed to Mr. Maples. 18 THE COURT: It's overruled right now. 19 Q. Is that quote consistent with what you 20 thought Microsoft was doing? 21 A. Yes. 22 Q. All right. He goes on to say, and 23 would you think of this as a treatise that's 24 used in the industry, this Unauthorized Windows 25 95? 7824 1 A. Certainly it's a reference book 2 intended to be used as a reference. 3 Q. And you've used it; right? 4 A. For that purpose. That's why it's not 5 necessarily a back to front book or front to 6 back book. 7 Q. All right, sir. 8 And you have relied on it; right? 9 A. I have, yes. 10 Q. And do you think it's reasonable for 11 other technologists in the industry to so rely? 12 A. Certainly, yes. 13 Q. All right. 14 Mr. Schulman goes on to say, in 15 typical Microsoft fashion, like a very late 16 gang buster, Windows 95 is coming. 17 When Microsoft chairman Bill Gates 18 announced that the next version of Windows, 19 code name Chicago, would be about five months 20 late, coming out probably in April 1995 instead 21 of December 1994, Microsoft stock immediately 22 shot up almost three points. 23 Do you know why Mr. Schulman started 24 his book with that quote in that paragraph? 25 MR. HOLLEY: Objection, Your Honor. 7825 1 Calls for speculation. 2 THE COURT: Sustained. 3 Q. Did Mr. Schulman ever tell you why he 4 started his book in that way? 5 A. Well, I think it follows from what 6 succeeds that particular paragraph. It's a 7 discussion of how powerful Microsoft was in the 8 operating systems market. 9 Q. Okay. On page 2, Mr. Schulman says at 10 the top, from a technical perspective, Windows 11 95 is not a revolutionary product. It's just 12 Windows 90 plus 5. 13 Do you agree with that statement? 14 A. That's correct, yes. 15 Q. Okay. On page 3 he says, what does 16 Microsoft Windows 95 mean to you as a 17 participant in the PC software business? 18 This is written to developers like 19 you; right? 20 A. Well -- yes, it's written to the 21 development, software developer community in 22 particular. And I would include myself. 23 Q. Not written to me; right? 24 A. Maybe we haven't discussed that aspect 25 of your -- of your career, but, no, I don't 7826 1 think so. 2 Q. Okay. Take my word for it. 3 It goes on to say, if you are a 4 software developer entrepreneur, the brief 5 answer is that Windows 95 should make you 6 nervous unless you work for Microsoft or have 7 invested in Microsoft stock or both. 8 At the very least, Windows 95 will 9 change how you sell software and what sort of 10 software you develop. 11 Do you agree with that statement, 12 Windows 95 changes the way ISVs and developers 13 sell software and how they develop software? 14 A. And what software they sell, yes. 15 Especially software. 16 Q. On page 6, Mr. Schulman says that the 17 PC software business as we know it is toast. 18 Microsoft started slicing the bread, so to 19 speak, back in June 1991 when it released 20 MS-DOS 5.0. 21 Do you know what he's referring to 22 there? 23 A. He's referring to the introduction of 24 Microsoft's MS-DOS 5.0 following the DR-DOS 5.0 25 introduction and that change in Microsoft's 7827 1 strategy. 2 Q. Okay. And it's hard to read. It's 3 almost covered up, but Mr. Holley referred to 4 STAC Electronics. 5 Do you remember that when he asked you 6 questions? 7 A. Yes. 8 Q. Okay. At the very top there it says, 9 so what did happen to these vendors after the 10 release of MS-DOS 6.0 in April of 1993? 11 Well, we've already seen that Central 12 Point was bought out by Symantec and that 13 Symantec and Quarter Deck have been losing 14 sales. 15 As another example, STAC Electronics 16 laid off 40 people or 20 percent of its work 17 force in May 1993. 18 Do you believe that it's 19 Mr. Schulman's intent to relay to the reader 20 that that's a good thing? 21 MR. HOLLEY: Objection, Your Honor. 22 Calls for speculation about Mr. Schulman's 23 intentions. 24 THE COURT: Sustained. 25 Q. As you read it, do you get the view 7828 1 that it's a good thing? 2 A. Not especially, no. 3 Q. Okay. Then there's a section there 4 that counsel called out to you. You see where 5 it says, if an ISV makes an application or 6 utility product that it thinks most PC users 7 should buy, then almost by definition it seems 8 that product's functionality belongs as part of 9 the OS? 10 Do you see that, sir? 11 A. I do. 12 Q. Okay. And that's blocking part of 13 that page, isn't it? 14 A. It is. 15 Q. You can't see the bottom of the page, 16 can you? 17 A. No. 18 MR. LAMB: Okay. Can you call up that 19 page, Darin? 20 Q. Okay. It goes on to say, just as a 21 data base should not include any duplicated 22 data, likewise a software base ideally should 23 not include any duplicated code. 24 For any general-purpose application or 25 utility that is widely used, it's probably only 7829 1 a matter of time before Microsoft considers 2 putting that product or its functionality where 3 it, quote, belongs, end quote, in Windows. 4 Do you see that? 5 A. I do. 6 Q. Okay. Is it your opinion that 7 Mr. Schulman is conveying to you that you're 8 supposed to understand that he believes it 9 belongs in Windows? 10 A. No, he isn't. 11 Q. Okay. He goes on to say, Windows 12 supports general-purpose non-Microsoft 13 applications in the same way that a rope can be 14 said to support someone who will soon be 15 hanged. Your product may be a Microsoft DLL 16 just waiting to happen. 17 Now, from a technological point of 18 view, what does that mean, a DLL just waiting 19 to happen? 20 A. Well, it refers to Microsoft bundling 21 and/or tying technically the functionality of 22 your product, like the browser or like the 23 media player, in the box with the Windows 24 operating system product. 25 Q. Sir, you remember Tuesday one of the 7830 1 things that Mr. Holley asked you questions 2 about was a case, Commercial Data Servers 3 versus IBM? 4 Do you remember that, sir? 5 A. I do. 6 Q. Okay. And, again, this was an 7 instance where Mr. Holley called out or showed 8 you one page of that case; right, sir? 9 A. As I recall, yes. 10 Q. Okay. And I believe you testified 11 that you weren't familiar with the case; right? 12 A. I wasn't familiar with the opinion 13 that was being read. I was, of course, 14 familiar with the case, yes. 15 Q. Okay. You weren't familiar with the 16 written opinion and the portion that Mr. Holley 17 had provided to you; right? 18 A. That's correct. 19 Q. Okay. And Mr. Holley asked you a 20 question -- it was at 7153 of the transcript 21 that this started. 22 He asked you, do you recall in that -- 23 the judge in that case rejected your testimony 24 as speculative and devoid of hard evidence? 25 Do you recall that question? 7831 1 A. I do. 2 Q. And your answer was: I'm not aware. 3 Do you remember? 4 A. I remember that was my answer. 5 Q. Okay. Now, sir, your opinion has 6 never been rejected at trial; correct? 7 A. No, I don't think so. 8 Q. Okay. You've never had a judge tell 9 you that you can't testify; right? 10 A. No, sir. 11 Q. And you've been retained by various 12 individuals. You went through and you 13 described that in detail. 14 And those also include various States 15 Attorney General; right? 16 A. Yes. 17 Q. And one of them is the State Attorney 18 General of Iowa, Tom Miller; right? 19 A. At the time, yes. 20 Q. Okay. And your opinions have been 21 accepted elsewhere; correct? 22 A. Yes, I believe so. 23 Q. All right. I want to take a look at 24 that case, Commercial Data Servers versus IBM, 25 and I want to call your attention to a couple 7832 1 specific pages. 2 MR. LAMB: If we could pull it up, 3 Darin. Do I have a number? That's a good 4 question, Darin. We didn't put a number on 5 this. 6 We have the technology. I don't know 7 how to do this, but he does. Do you have it? 8 I need you to go to 54 or actually 9 page 6 on that, I think. It is different from 10 the -- different. I'm sorry. Go down a page. 11 Can you scroll by pages? Go down a page. Go 12 down a page. One more. One more. One more. 13 It's on page 5? Can you go to page 5. 14 Okay. I'm sorry. It's in a different 15 placement than the copy where I have. Can you 16 highlight where it says 54 memorandum decision 17 on the top right and blow that up? 18 Can I approach, Your Honor? 19 THE COURT: You may. 20 Q. I'm going to hand you a copy of the 21 case. And it's on page 6 in the copy that I 22 have. Apparently, it's paginated a little bit 23 differently. 24 And it says there, memorandum decision 25 and order denying Defendant's motion to strike 7833 1 the declarations of Ronald S. Alepin and Brett 2 L. Reed, overruling Plaintiffs's objections to 3 Defendant's evidence, and granting in part 4 Defendant's motion for partial summary 5 judgment. 6 Do you see that? 7 A. I do. 8 Q. Did you know that there was a motion 9 to strike your declaration? 10 A. I believe there may have been one, but 11 I haven't paid that much attention to it. 12 Q. Okay. Did you know it was denied, the 13 Court denied it? 14 A. I was not aware that it had been 15 accepted. So, no, I was not -- I was not told 16 that my testimony had been stricken or denied. 17 Q. Okay. You've never been told your 18 testimony is stricken; right? 19 A. No, sir. 20 MR. LAMB: Okay. If you can go to 21 page -- Darin, I think this is going to be page 22 10. Right. Thank you. 23 Q. The Court says here, on April 12, 24 2002, plaintiff filed its open situation to 25 Defendant's motion for summary judgment, along 7834 1 with supporting documents, including the expert 2 affidavits of Ronald S. Alepin and Brett L. 3 Reed. 4 On April 29, 2002, defendant submitted 5 a motion to strike the expert affidavit of 6 Mr. Alepin and in a separate, yet very similar 7 motion to strike the expert affidavit of Mr. 8 Reed. Both motions argue that the affidavits 9 should be stricken on two grounds. 10 First, defendant claims that the 11 opinions expressed in each expert's affidavit 12 are so different from the opinions expressed in 13 his Rule 26 report (report pursuant to Federal 14 Rule of Civil Procedure 26) that the affidavit 15 is, in essence, a new and untimely expert 16 report. 17 Second, defendant claims that each 18 expert's opinion is unsubstantiated and 19 speculative, and argues that the affidavits 20 should thus be disregarded as conclusory. 21 Now, you'd never read this before, 22 right, sir? 23 A. No, sir. 24 Q. Okay. Then the Court goes on to say, 25 I conclude that Mr. Alepin's affidavit is 7835 1 entirely consistent with his timely Rule 26 2 report. Mr. Reed's affidavit goes well beyond 3 his Rule 26 report. 4 However, I will overlook that for 5 purposes of this motion because the failure is 6 harmless. Neither affidavit is impermissibly 7 speculative. 8 That's what the Court says; right? 9 A. Yes, sir. 10 MR. LAMB: Would you go to the next 11 highlighted section, Darin? 12 Q. And then the Court goes on to say that 13 Mr. -- I find that Mr. Alepin's affidavit is 14 substantially similar to his Rule 26 report, 15 that the opinions therein would be admissible 16 at trial (albeit subject to cross-examination), 17 and that the affidavit may be considered on the 18 motion for summary judgment. 19 You weren't shown those pages of this 20 opinion the other day, right? 21 A. I was not, no. 22 Q. Now, Mr. Holley asked you some 23 questions about the EC. Can you tell the Jury 24 what the EC is? 25 A. The EC -- actually, the E or the 7836 1 European Union. 2 Q. Okay. 3 A. Formerly the European Common Market, 4 the European Community, the European Union is 5 the correct term now. 6 Q. Okay. And you rendered some opinions 7 relating to Microsoft in the EU; right? 8 A. I was asked to do work to assess 9 technological and business matters relating to 10 Microsoft in the European Union, yes. 11 Q. Okay. And were those opinions 12 accepted by the European Union? 13 A. They were. 14 MR. HOLLEY: Objection, Your Honor. 15 Misstates the procedure applicable. 16 THE COURT: Rephrase it. 17 Q. Okay. Were you allowed to testify 18 before the European Union? 19 A. The rules are a little different. I 20 mean, the procedure's a little different, but I 21 was allowed to speak. 22 Q. Okay. Can you tell the Jury what you 23 were allowed to do? 24 A. I was allowed to present my assessment 25 of certain issues, my technical and business 7837 1 assessment of certain issues relating to 2 Microsoft's conduct before the equivalent of 3 the appellate court. 4 As I said, things are different in 5 Europe, but they have something that's like a 6 -- from what I understand, the easiest thing is 7 to think of it as an appeals court. 8 And I was allowed to present to them 9 on that, those things I was allowed to present 10 in other different or relating to this conduct 11 by people charged with making administrative, 12 as well as legal decisions about conduct in the 13 -- in the industry or in the business world as 14 a whole. 15 Q. Okay. And the decision of the 16 European Union, was it consistent with what you 17 provided to them? 18 MR. HOLLEY: Objection, Your Honor. 19 This witness is not qualified to make that 20 legal determination. 21 THE COURT: Sustained. 22 Q. Based on what you read, was it 23 consistent? I'm not asking for a legal 24 opinion. 25 MR. HOLLEY: Objection, Your Honor. 7838 1 That reformulation doesn't solve the problem. 2 THE COURT: Sustained. 3 Q. Did Microsoft submit opposing views? 4 A. It did. 5 Q. Okay. Technologically speaking, based 6 on the technology in terms of the orders that 7 you saw, were your opinions followed or were 8 Microsoft's opinions followed? 9 MR. HOLLEY: Objection, Your Honor. 10 Calls for a legal conclusion. There's nothing 11 technological about the question. 12 THE COURT: Sustained. 13 Q. There was a discussion about the CCIA. 14 Do you recall that? 15 A. I do. 16 Q. Can you tell the Jury what the CCIA 17 is? 18 A. As I believe I described them, the 19 CCIA is an industry trade association. Its 20 members include members of the computer and 21 communications industry in particular. 22 So CCIA, Computer and Communications 23 Industry Association, that's the -- CCIA, it is 24 a trade association or an industry association, 25 which is active in various proceedings that 7839 1 concern public policy as it affects their 2 members, the members of the computer and 3 communications industry. 4 Q. Okay. And who are members of the 5 CCIA? 6 A. Well, now Microsoft is a member of the 7 CCIA. 8 At the time that I was working with 9 the CCIA, I believe its members included Oracle 10 and Sun and other large computer companies, as 11 well as, I think, maybe Nokia, the cell phone 12 manufacturer. Membership changes over time. 13 Has changed over time. 14 Q. And you were accused of switching 15 horses. You remember that question; right? 16 A. I remember hearing that question 17 addressed to me, yes. 18 Q. Okay. And at the time that this 19 occurred, the CCIA was an intervener in the EU 20 proceeding; correct? 21 A. That's correct. 22 Q. Can you explain to the Jury what you 23 understand that to mean? 24 MR. HOLLEY: Objection, Your Honor. 25 Calls for a legal conclusion. 7840 1 THE COURT: I'll let him answer this. 2 Go ahead. 3 A. Well, the way things work, as I 4 understand it, is that different parties can 5 make a request in a proceeding, in an 6 administrative or a legal proceeding, to 7 intervene; that is, to be able to present their 8 views to the decision-makers, to the Court or 9 to the administrators and to basically describe 10 their particular view of what's going on. 11 And in this particular case, the CCIA 12 have requested to intervene and present 13 information that it thought would be helpful to 14 the people making the decisions about what they 15 thought of the issues involved here in 16 particular, the Microsoft conduct. 17 Q. And you were retained by the CCIA to 18 present certain viewpoints that were consistent 19 with the CCIA's viewpoints; correct? 20 A. I think -- 21 Q. No? 22 A. That's correct. No, no. It's just -- 23 I was retained to consider the information and 24 the facts and other things, and then to offer 25 opinions. 7841 1 I surmise that there was a coincidence 2 of opinion. 3 Q. All right. Okay. Fair enough. 4 And you rendered those opinions; 5 right? 6 A. I did. 7 Q. All right. But at some point in time, 8 you no longer were retained by the CCIA; right? 9 A. That's correct. 10 Q. Okay. Did you switch horses, end 11 quote? 12 A. No, I'm afraid I did not. 13 Q. Okay. 14 A. CCIA switched horses. 15 Q. Can you explain to the Jury what 16 happened? 17 A. Well, the CCIA had -- has a president, 18 Mr. Black. 19 And at some point during the 20 proceedings, Mr. Black reached an agreement, I 21 understand, with Microsoft in which, as I 22 understand it, in exchange for Microsoft's 23 membership and compensation of its legal fees 24 and it seems to be a personal payment to 25 Mr. Black, they would withdraw. 7842 1 So the CCIA would cease to intervene 2 against Microsoft in these proceedings. The 3 sums of money were rather substantial. And, as 4 a result, they were on a different course, I 5 guess, at the end of that. 6 Q. Now, how much was this payment to the 7 CCIA? 8 A. I believe it's -- it's reported as in 9 the vicinity of $20 million. 10 Q. And how much was the payment to 11 Mr. Black? 12 A. Same reports indicate that he received 13 $10 million. 14 Q. $10 million? 15 A. That's what I understand it to be, 16 yes. 17 Q. Okay. And before the payment, 18 Microsoft is not a member of the CCIA; right? 19 A. That's correct. 20 Q. And after the payment, Microsoft is a 21 member of the CCIA? 22 A. That is also correct. 23 Q. All right. And then what did you do, 24 sir? 25 A. Well, I received later on, at some 7843 1 point in time sometime later, a request to 2 review my opinions and conduct a further 3 assessment and to make myself available to the 4 Court as part of another organization, another 5 trade organization's intervention in the 6 continuation of these proceedings. 7 Q. Okay. And did one of the opinions 8 that you rendered relate to media player? 9 A. Yes. 10 Q. What was that opinion, sir? 11 A. The opinion -- of course, a couple of 12 points to the opinion, but the principal one, I 13 think, and the one to which I testified the 14 most during this past week is whether it was 15 possible to, contrary to what Microsoft had 16 stated, technically untie, separate the media 17 player to the Windows operating system product 18 and to have a functioning product as a result. 19 Q. And what opinion did Microsoft render 20 in regard to media player? 21 A. Again, several different opinions. 22 Technically, their statement was that it was 23 not possible to do so. 24 Q. Okay. And which opinion did the 25 European Union follow? 7844 1 MR. HOLLEY: Objection, Your Honor. 2 This was a proceeding that has not been 3 resolved. It is pending. 4 THE COURT: Sustained. 5 Q. In Europe today, can you get media 6 player separate from the operating system? 7 A. You can get the operating system 8 separate from the media player. 9 Q. Okay, but you -- 10 A. Perhaps a more helpful formulation. 11 Q. I appreciate that, sir. 12 But here in the United States, you 13 can't; right? 14 A. Microsoft does not offer that product 15 for sale. 16 Q. There was some testimony that you gave 17 right before the break about Anthony Ingenoso 18 of IBM; right? 19 A. Yes. 20 Q. And you were shown some videotape 21 deposition testimony; right? 22 A. I was. 23 Q. And, as I understand it, you were 24 asked if you -- basically, if that affected 25 your opinion; right? 7845 1 A. I was. 2 Q. Okay. And it appears that you 3 discounted what Mr. Ingenoso said; right? 4 A. Well, I considered it and came out 5 with the opinion that I offered here to -- over 6 the past week. 7 Q. So you considered it, but you didn't 8 agree with it? 9 A. That's correct. 10 Q. Okay. Can you explain to the Jury 11 why? 12 A. Well, Mr. Ingenoso is discussing 13 whether or not IBM can take the DR-DOS software 14 and turn around and sell it to its customers as 15 exactly what PC DOS from IBM was or a successor 16 to PC DOS, the next version of PC DOS. 17 And that kind of evaluation calls for 18 a level of compatibility and interoperability 19 that is not one that users, I believe, would 20 have required when considering whether or not 21 they would purchase the software or whether or 22 not the DR-DOS achieves a level of 23 compatibility that would be satisfactory. 24 Indeed, the information available from 25 a variety of sources of companies who had done 7846 1 reviews or evaluated the DR-DOS product found 2 it -- DR-DOS 5.0 and 6.0, found it to be very 3 compatible. 4 IBM's standard to put the label on it 5 as PC DOS 6.0 or PC DOS 7.0 would require that 6 it be identical to the PC DOS, its own PC DOS 7 operating system. 8 And that's not a standard that users 9 or other businesses would use. 10 Q. Okay. Did you believe your 11 testimony's inconsistent with Mr. Ingenoso's 12 testimony? 13 A. Well, I think there's a very simple 14 way, as I just explained, to see why what 15 Mr. Ingenoso is saying is consistent with 16 ultimately my conclusion on this matter. 17 Q. Simple way? 18 A. Simple way. 19 Q. All right. Mr. Holley didn't ask you 20 about that, though, did he? 21 A. No. 22 Q. Okay. 23 MR. LAMB: Can we go to Slide 715, 24 Darin? And it's one of their slides. 25 I apologize. We are trying to go back 7847 1 and forth between different sets. Okay, we got 2 it. 3 Thank you. 4 Q. There were some questions regarding 5 GUIs. And, again, if you could tell the Jury 6 what a GUI is, sir. 7 A. GUI, G-U-I, graphical user interface, 8 it's the means of presenting graphically the 9 interfaces and functionality to a user of a 10 computer and enabling them through keyboard and 11 mouse and other devices to activate and access 12 that functionality. 13 So it's very graphical interface to 14 the functionality for the computer. 15 Q. Okay. And Mr. Holley asked you a 16 series of questions about operating systems and 17 which GUIs they had. 18 Do you remember that? 19 A. He did, yes. 20 Q. Okay. But are operating systems 21 technically -- technologically bound to GUIs? 22 A. No, they don't have -- they are not. 23 Q. Okay. Can you explain to the Jury 24 what that means? 25 A. Well, the operating system, and indeed 7848 1 most -- most of the functionality, the core 2 functionality of the operating system that I've 3 been talking about over these past several days 4 has nothing to do with addressing on the 5 functionality that the user sees. 6 It has to do with delivering the 7 services, having to do with the disk drive and 8 the memory and the clock and being able to 9 provide information to the -- to the 10 applications programs that are running. 11 So operating system is a platform on 12 which you can put graphical user interfaces, 13 but it's not tied to the -- to the graphical 14 user interface. 15 Q. Are there operating systems in 16 existence that do not have GUIs? 17 A. There are operating systems that have 18 -- that have no GUI as part of the design of 19 the operating system and have multiple GUIs 20 that you can interchange or the user can 21 interchange or a computer manufacturer could 22 interchange without any -- without affecting 23 the operating system. 24 Q. So they're substitutable? 25 A. They are, yes. 7849 1 Q. What are the names of some of the 2 operating systems that don't necessarily come 3 with a GUI and have these substitutable or 4 replaceable, interchangeable GUIs? 5 A. Well, the Linux is one of them. We 6 talked about Linux. I think that's the one 7 that shows up on the upper left-hand corner of 8 this display while it's up. 9 And also in the lower left-hand 10 corner. Yeah, lower left-hand corner there's a 11 Suse Linux, which is an operating system that 12 does not have a GUI built into it. 13 Q. Okay. Referring to Slide 715, that's 14 one that Mr. Holley put up for you; right? 15 A. He did, yes. 16 Q. Okay. And you remember that you were 17 disturbed about something relating to the 18 Fedora Linux screen shot in the top left-hand 19 corner. 20 Do you remember that? 21 A. Well, it didn't seem quite to square 22 with my understanding of things. 23 Q. Okay. And Mr. Holley referred you to 24 Wine and said that that was created through 25 Wine; right? 7850 1 A. I think so, yes. 2 Q. Okay. Tell the Jury what Wine is. 3 A. Wine is a project, an open source 4 project, I believe, that aims to create an 5 application programming interface on Linux that 6 would allow you to run Windows application 7 software. 8 Q. And what was it about that particular 9 screen shot that disturbed you or you felt was 10 not quite right, as you put it? 11 A. Well, it looks like it's running on a 12 Macintosh. It's really what's happening. 13 There is a bottom row on the screen 14 that -- I'm not sure if you can highlight it. 15 This here -- if you are going to blow 16 it up -- is a -- it looks like an element from 17 -- from the Mac, and those are -- in particular 18 what my attention to it, those are Microsoft 19 applications for the Macintosh, the icons on 20 the bottom. 21 What looks like a W in blue there, 22 it's pretty hard to see, but that is a 23 Microsoft Word's icon for an application 24 running on the Mac. And the P in orange 25 there -- I apologize for not being good on 7851 1 colors. 2 MR. LAMB: Your Honor, with your 3 indulgence if he could just get down and point. 4 THE COURT: He may. Speak loudly. 5 A. Okay. This icon here is the icon that 6 is from Microsoft's Office for the Mac 7 PowerPoint application. 8 And this is, this green icon here is 9 from Excel for the Mac, and this W is Word for 10 the Mac. 11 Indeed this entire ribbon, if you 12 will, looks like a ribbon that is at the bottom 13 of a Macintosh computer, Macintosh operating 14 system. 15 Q. So you wouldn't see these icons if it 16 was constructed on a Fedora Linux with Wine; 17 correct? 18 A. I don't think so. 19 Q. I'm going to shift your attention to 20 Lee Reiswig. Do you remember the video that 21 was played to you of Lee Reiswig? 22 A. Yes. 23 Q. Okay. And tell the Jury again who he 24 is. 25 A. He was, I think, the head of the IBM 7852 1 software division. 2 Q. And that video showed how easy it was 3 to crash Windows; right? 4 A. It showed how easy it was to crash 5 Windows? 6 Q. I'm sorry. The video referred to him 7 going around and showing people how easy it was 8 to crash Windows? 9 A. Yes. 10 Q. Okay. Now, Mr. Reiswig, had he 11 constructed some type of special application 12 for that? 13 A. I don't believe so. 14 Q. Okay. So that was -- he was just 15 demonstrating what happened; right? 16 A. That's correct. 17 Q. All right. Now, Mr. Holley was trying 18 to contrast that and say that that was somehow 19 FUD. 20 Was that untruthful in your mind? 21 MR. HOLLEY: Object to the form of the 22 question, Your Honor. 23 MR. LAMB: I'll break it down. I'll 24 be happy to break it down. 25 THE COURT: Okay. 7853 1 Q. One of the things that Mr. Holley 2 talked about, I believe, this morning was the 3 qualification that FUD be untruthful. 4 Do you remember that? 5 A. Yes. 6 Q. Okay. And, in your mind, if someone 7 is showing that a system crashes and it's 8 truthful, is that FUD? 9 A. No. 10 Q. Okay. Why not? 11 A. Well, it has to -- it has to be a 12 reasonable or likely outcome. It has to be 13 something that can happen without being 14 particularly or specifically engineered for the 15 purpose of under extreme conditions, for 16 example, demonstrating that something might 17 possibly happen. 18 Q. Okay. And there was some testimony 19 earlier about Microsoft showing OS/2 crashing. 20 A. Yes. 21 Q. Okay. Was there a difference between 22 what happened with Microsoft showing OS/2 23 crashing and Mr. Reiswig showing Windows 24 crashing? 25 A. There was, yes. 7854 1 Q. And can you explain to the Jury what 2 the difference is? 3 A. Well, it's my understanding from an 4 examination of the record that the Microsoft 5 means for crashing OS/2 was based on internal 6 and specific knowledge of certain unusual 7 conditions within the OS/2 operating system 8 that were not likely to be encountered by users 9 or by applications in the normal course or even 10 the abnormal course of execution. 11 So it was not something that was 12 representative of the way in which the user 13 would use the system or an application would 14 use the system, but, rather, something that was 15 extreme or we might call it, in our business, 16 pathological. 17 MR. LAMB: Could you put up Exhibit 18 797? Exhibit 797. 19 Would you go to the second page, 20 Darin, and highlight the top message? 21 Q. This is a message to Paul Maritz; 22 right? 23 A. Yes. 24 Q. And who's he? 25 A. He was the overall head, I believe, of 7855 1 the operating system development group. 2 Q. Okay. And the subject is one bad app. 3 Do you see that? 4 A. Yes. 5 Q. What's a bad app, sir? 6 A. It's a misbehaving application. 7 Q. Okay. And, according to this, 8 somebody by the name of Eric says, I have 9 written a PM app that hangs the system 10 (sometimes quite graphically). You can take a 11 look at it any time, just let me know. 12 Do you see that? 13 A. I do. 14 Q. What is a PM app? 15 A. The user, the graphical user interface 16 for IBM and at one point Microsoft's operating 17 system OS/2 was called presentation manager. 18 So the abbreviation PM stands for the 19 graphical user interface for the OS/2 operating 20 system product. 21 MR. LAMB: Would you go to the front 22 page, Darin, and highlight the bottom? 23 There you go. Thank you. 24 Q. Okay. And the top message to Paul 25 Maritz from Eric F-o -- do you know who that 7856 1 is? 2 A. I'm sorry. Where are you on the page? 3 Oh, Eric. 4 Q. Eric F-o. 5 A. Perhaps it's the same Eric. 6 Q. Some developer in Microsoft? 7 A. Uh-huh. It seems like it, yes. 8 Q. All right. And he says in the message 9 -- again, subject one bad app. I tested on 10 1.21, 1.3, and 2.0 and it hangs all systems 11 equally well. 12 Do you see that, sir? 13 A. Yes. 14 Q. What is 1.21, 1.3, and 2.0? 15 A. Different versions of the OS/2 16 operating system. 17 Q. Okay. And have you ever heard of this 18 bad app in the industry referred to as 19 Terminator? 20 A. The name for this application that 21 Microsoft used to demonstrate OS/2 crashing was 22 called T 2 or Terminator. 23 And T 2, I believe there was some 24 Schwarzenegger kind of movie at the time called 25 Terminator. 7857 1 Q. And it's your opinion that it was 2 designed specifically to make OS/2 crash; 3 right? 4 A. That's my understanding. 5 MR. LAMB: If you could go to Exhibit 6 808, please. 7 If you'd turn to the second page. 8 MR. HOLLEY: Your Honor, just as a 9 point of order, it was my understanding that 10 before documents were published to the Jury on 11 the screen, I had at least an opportunity to 12 look at them and assert any objections. 13 And I'd just ask for the same courtesy 14 that I gave to Mr. Lamb during my 15 cross-examination. 16 THE COURT: So granted. 17 MR. LAMB: We will hand them to them. 18 I think they are actually in the record and 19 have been admitted. 20 But go ahead and take a minute and 21 hand them to him. 22 MR. JACOBS: I did. 23 MR. LAMB: You just did. You are 24 ahead of me. All right. 25 Can you put up the second page, Darin? 7858 1 Q. And this is from Brad Silverberg to 2 Bill Gates and Steve Ballmer; right? 3 A. Yes. 4 Q. And the subject is re: Windows 5 robustness. Do you see that? 6 A. Yes. 7 Q. And then part of this message says, on 8 the other side, though, we do have some apps, 9 developed by Eric F-o -- and that's just the 10 developer you saw in the prior e-mail; right? 11 A. Right. 12 Q. -- which will crash OS/2. We will do 13 more of these. 14 Do you see that? 15 A. Yes. 16 MR. LAMB: Can you give him Exhibit 17 860? 18 Would you put 860 up, please? Okay. 19 If you'll go to the top, Darin, it should say 20 from -- yeah, from Bill. 21 Q. Okay. This is an e-mail from Bill 22 Gates to Jon L. Do you know who John L. is? 23 A. I think it's Jon Ludwig. 24 Q. Okay. And who is he? 25 A. He was an executive at Microsoft, is 7859 1 my understanding. 2 Q. And also Steve Ballmer; right? 3 A. Steve B., yes. 4 Q. Who is he? 5 A. He is now the CEO of Microsoft or 6 perhaps even -- 7 Q. Okay. And the first line of that -- 8 MR. LAMB: Above that. Do the line 9 above it too. Can you do that? There you go. 10 Q. The first line, it says this report 11 highlights our failure to get our message out. 12 Do you see that? 13 A. Yes. 14 Q. And it references there, praises OS/2 15 2.0 endlessly. 16 Do you see that? 17 A. I do. 18 Q. And then the next highlight is it 19 praises the better Windows than Windows 20 capability. Do you see that? 21 A. I do. 22 Q. And then it says superior system 23 integrity. And it's referring to OS/2; right? 24 A. Yes. 25 Q. Okay. And then it goes on at the 7860 1 bottom of that paragraph to say greater 2 stability offered by OS/2 2.0? 3 A. Yes. 4 Q. And then OS/2 does it better? 5 A. Yes. 6 Q. Okay. Now, at this particular time, 7 based on your training and experience in the 8 industry, was Microsoft concerned about OS/2? 9 MR. HOLLEY: Objection, Your Honor. 10 He has no foundation to say what Microsoft was 11 concerned about. 12 THE COURT: Overruled. 13 A. Excuse me. There was significant 14 concern, especially in the correspondence and 15 the record from Microsoft executives, senior 16 executives, about the potential threat that 17 OS/2 posed. 18 Q. Okay, sir. 19 MR. LAMB: Darin, if you could call up 20 the second portion. All right. 21 Q. He goes on to say, OS/2 provides some 22 nice enhancements over plain Windows. 23 First, OS/2 can run both Windows 2 and 24 Windows 3 applications at the same time. 25 And then it goes on to say, later we 7861 1 read OS/2 2 is, undoubtedly, a splendid 2 integration environment. 3 Do you see that, sir. 4 A. Yes. 5 MR. LAMB: If you'll flip the page, 6 Darin. 7 Q. It goes on to say, we should recognize 8 we are losing this battle and we need a lot 9 mor, m-o-r, creativity to get on top of it. 10 Do you see that, sir? 11 A. I do. 12 MR. LAMB: And then the next message, 13 if you could highlight it, please? 14 Q. And this is an e-mail chain. It is 15 from W-Clair. Do you see that? 16 A. Right. 17 Q. Do you know what that refers to? 18 A. A Weggener Edstrom employee. Weggener 19 Edstrom is the -- was the Microsoft public 20 relations firm that handled, in particular, 21 relations with the trade press and journalists. 22 Q. Okay. And then it goes on -- and this 23 is to Bill Gates and others; right? 24 A. Yes. 25 Q. And it goes on to say, Steve B. went 7862 1 on the road to see the top weeklies. 2 Do you see that? 3 A. Yes. 4 Q. And Steve B. is Steve Ballmer? 5 A. I believe so, yes. 6 Q. Who, again, is Steve Ballmer? 7 A. President and CEO of Microsoft, now at 8 the time head of the -- I believe head of the 9 sales organization. 10 Q. Okay. And this goes on to say that, 11 including a performance comparison to Windows 12 and a, quote, bad app, end quote, that 13 corrupted other applications and crashed the 14 system. 15 It was a very valuable trip and needs 16 to be repeated by other Microsoft executives 17 throughout the next month so we hit all the 18 publications and analysts. 19 Do you see that, sir? 20 A. I do. 21 Q. And does that suggest to you that 22 Steve Ballmer went on the road and demonstrated 23 Terminator 2? 24 A. Yes. 25 Q. And is this the same Terminator 2 that 7863 1 was created specifically to crash OS/2? 2 A. I believe it was the program that was 3 designed to crash OS/2 specifically. There 4 were a couple of versions. 5 I'm not sure which one, but there were 6 several of these versions that were designed 7 specifically to crash OS/2. And that's the one 8 -- one of those is one of the -- is the one 9 that Mr. Ballmer is using in the course of 10 these worldwide tours or tours. 11 Q. Okay. And then basically the PR 12 people are suggesting that other top Microsoft 13 executives go out and do the same thing; right? 14 A. That's my understanding, yes. 15 MR. LAMB: Okay. If you go down to 16 the last highlighted section. 17 Q. And this says, the demos of OS/2 were 18 excellent. Crashing the system had the 19 intended effect -- to FUD OS/2 2.0. 20 Do you see that, sir? 21 A. I do. 22 Q. And does this meet your definition of 23 FUD as you explained to the Jury? 24 A. Yes. 25 Q. And do you believe that this is 7864 1 different from what happened with Mr. Reiswig? 2 A. I think, yes, it's quite different. 3 Q. Sir, during your testimony -- well, 4 when you say it's quite different, what do you 5 believe is quite different? 6 A. Well, I mean, you have a -- as a 7 software vendor, you have a desire to talk 8 about the virtues of your product or the ways 9 in which your product is superior to other 10 companies' products. 11 And in the normal course of doing 12 something, if that -- the user will be likely 13 to encounter this kind of a problem, then you 14 should be able to describe that and then point 15 to why your program is better. 16 But in this particular case here, 17 there was a specific application designed based 18 on internal knowledge of the design of the OS/2 19 system, not representative of problems that 20 were likely to be encountered by users of the 21 system which said nothing about their 22 reliability of your program either because it 23 wasn't -- 24 I mean, my understanding was that 25 Microsoft was not saying, well, our system's 7865 1 better. It doesn't crash as often. 2 Of course, that would not have been 3 the case. OS/2 was more reliable and would not 4 crash as often. 5 So the entire context of the 6 discussion and the purpose of getting that 7 information out was to create a concern about 8 the reliability of OS/2 that wasn't really real 9 or warranted. 10 And it certainly wasn't warranted when 11 compared with the Microsoft product and whether 12 the Microsoft product had better qualities or 13 features or even comparable qualities or 14 features in that particular regard, the 15 robustness and reliability. 16 Q. Sir, there's been a lot of discussion 17 over the past several days about killer apps; 18 right? 19 A. Yes. 20 Q. Okay. And at one point in time Mr. 21 Holley asked you a question and was challenging 22 you about whether Word was a killer app at the 23 time. 24 Do you remember that? 25 A. Yes. 7866 1 Q. Okay. What was the first killer app 2 for Macintosh? He was talking about Macintosh 3 Word being a killer app, and you said, no, it 4 wasn't. 5 What was the first killer app for 6 Macintosh? 7 A. Well, the Macintosh introduction with 8 that advertisement, that very famous 9 advertisement in the Super Bowl followed -- was 10 followed by not very much activity. 11 The Macintosh was nice, very nice, and 12 had great aesthetic appeal and other novel 13 features, but it wasn't until Desktop 14 Publishing became the -- became possible on the 15 Macintosh that people realized, wow, this is 16 the application, the killer application for the 17 Macintosh. 18 And so Desktop Publishing was the 19 first killer app for the -- for the Macintosh, 20 and it was not something that came out when the 21 Macintosh was released, but took some time and 22 required some other innovations and products to 23 get together in order to finally appear on the 24 scene for the Mac. 25 Q. Well, what was it about Desktop 7867 1 Publishing that made it a killer app? 2 A. Well, it was the ability to combine 3 this graphical representation of your 4 information for publishing, including 5 everything from creating menus for restaurants, 6 to creating newsletters and other publications, 7 and combining that layout software with the 8 capabilities of these laser jet printers from 9 Hewlett Packard and from Apple using Adobe's 10 postscript page representation language. 11 There's a lot of technology here, but 12 all this was combined together and you became 13 -- you were able to create these publications 14 on your desktop. 15 Q. Okay. And why did you disagree with 16 Mr. Holley when Mr. Holley said that Mac Word 17 was a killer app? 18 A. Well, it wasn't the application that 19 changed the way people thought of a computer or 20 a technology or a product. 21 I had previously described killer 22 apps. And I don't think, by the way, that my 23 definition is one that people find reason to 24 disagree with. 25 A killer application is something that 7868 1 changes the way you buy or you perceive a 2 particular computer or technology or platform. 3 VisiCalc for personal computers to 4 begin with, Lotus 1-2-3 for IBM PCs, Desktop 5 Publishing for the Macintosh. That's why I 6 disagree. 7 Q. When Desktop Publishing came out for 8 Macintosh, did it impact sales? 9 A. It did, yes. 10 Q. In what way? 11 A. It increased Macintosh's sales. 12 Q. And was it dramatic? 13 A. Dramatic is -- a very substantial blip 14 on the screen for the Mac. 15 Q. Okay. How about when Mac Word came 16 out? Did that increase sales? 17 A. Not -- not to my recollection, no. 18 Q. So based on your professional opinion, 19 then, the first killer app for the Macintosh 20 was not Mac Word, it was Mac Desktop 21 Publishing; right? 22 A. That's correct. 23 Q. Mr. Alepin, I'm going to switch gears 24 a little bit and talk about Phil Barrett. 25 There was some testimony elicited 7869 1 about Phil Barrett. Do you remember that? 2 A. I believe so. 3 Q. Okay. And could you tell the Jury 4 again who Phil Barrett is? 5 A. I think he was a senior technical 6 member of the DOS and DOS Windows team in the 7 early 1990s. 8 Q. Okay. 9 MR. HOLLEY: Your Honor, I'm thinking 10 about it here and I am quite confident that I 11 never said a word about Phil Barrett on cross. 12 So this is beyond the scope. 13 THE COURT: Overruled. I'll allow the 14 next question to see where it's going. 15 Go ahead. 16 Q. All right. 17 General subject area, the bundling of 18 Windows and DOS. 19 A. Yes. 20 Q. Okay. Can you tell the Jury what 21 happened there? 22 A. Well, they -- there was the DOS 23 operating system and there was the Windows 24 graphical environment software packages 25 available from Microsoft through 1990 -- 7870 1 through half of -- better than half of 1995. 2 You could purchase DOS separately and 3 Windows separately. 4 After the arrival of Windows 95, it 5 was no longer possible to purchase one without 6 the other. 7 Q. Okay. And Mr. Holley suggested to you 8 that Windows was a separate operating system 9 apart from DOS. 10 Do you recall that? 11 A. I do. 12 Q. All right. And did you agree or 13 disagree with him about that? 14 A. I agreed that they -- I think the 15 document said what the document said. 16 Q. Okay. But do you agree that it was a 17 separate operating system or not? 18 A. No. 19 Q. Okay. So he showed you a document 20 that said that, but you didn't agree with that? 21 A. No. 22 Q. Okay. And Phil Barrett, did he have 23 primary responsibility for Windows DOS 3.0 and 24 3.1? 25 A. I think at one point in time he did. 7871 1 Q. Okay. And did you review his 2 transcripts to familiarize yourself with the 3 product development history of Windows and 4 MS-DOS? 5 A. A couple of -- a couple of transcripts 6 and a couple of points in time, yes. 7 Q. Okay. Do you remember his testimony 8 about bubblegum and baling wire? 9 A. I have heard that a couple of times. 10 I have seen that a couple of times. 11 Q. Okay. I want to show you some of his 12 testimony, some of Mr. Barrett's testimony 13 starting at 5823. 14 (Whereupon, the following video was 15 played to the jury.) 16 Question: I want to back up. You 17 discussed Windows 3.0, which you had primary 18 responsibility for; correct? 19 Answer: Correct. 20 Question: And Windows 3.0, which you 21 had primary responsibility for up until right 22 before it was released; is that correct? 23 Answer: Perhaps I misheard that. I 24 had -- primary responsibility for 3.0 and then 25 primary responsibility for 3.1 up until shortly 7872 1 before it was released. 2 Question: Sure. And before Windows 3 95, if you wanted to run Windows, you had to 4 buy DOS, install DOS, and then buy Windows and 5 install Windows; correct? 6 Answer: That is correct. 7 Question: And the two products worked 8 together? 9 Answer: That is correct. 10 Question: DOS provided certain 11 functions and Windows provided certain 12 functions? 13 Answer: Yes. 14 Question: And they worked together 15 even though they were installed separately? 16 Answer: Yes, that's correct. 17 Question: And Microsoft released 18 Windows 95 in August of 1995 and changed that? 19 Answer: Yes. 20 Question: And at least the user, it 21 appears to be a single product that performs 22 the functions that it used to perform using 23 separate DOS and separate Windows? 24 Answer: That is correct. 25 Question: But it's your 7873 1 understanding, isn't it, that there's still DOS 2 in Windows 95 and there's still Windows in 3 Windows 95? 4 Answer: Yes. There -- you can -- you 5 can find -- you can actually bring up Windows 6 95 as DOS. 7 Question: I think when you and I 8 talked about it before, you described Windows 9 95 as DOS and Windows stuck together with 10 baling wire and bubblegum. 11 Answer: Yes. That is a fair 12 colloquial representation. 13 Question: And what do you mean by 14 that? 15 Answer: That basically, yes, there is 16 DOS underlying. Under the hood, there is DOS. 17 There is a form of DOS, a version of 18 DOS that was -- and I don't know all of the 19 details of what was developed. I don't 20 understand all that they did there. But you 21 can actually produce a bootable DOS diskette. 22 There's 16-bit code inside. 23 Question: And when you said they were 24 tied together with baling wire and bubblegum, 25 you were referring to the amount of integration 7874 1 between DOS and Windows and Windows 95? 2 Answer: Yes. 3 (Whereupon playing of video 4 concluded.) 5 BY MR. LAMB: 6 Q. And that concept of baling wire and 7 bubblegum holding together Windows and DOS, is 8 that consistent with your understanding of it? 9 A. That's consistent, yes. 10 MR. LAMB: Can you put up Exhibit 11 9729, please? 12 MR. BUCHBINDER: I'm sorry. I didn't 13 hear you. 14 MR. LAMB: 9729. Sorry. Okay. 15 If you could just go to the very top 16 and highlight it. Very top -- no, first, top 17 of the page. 18 MR. HOLLEY: Your Honor, if this is 19 being offered for the truth, I have a hearsay 20 objection. 21 THE COURT: Take a recess at this 22 time. 23 Remember the admonition previously 24 given. 25 We'll be in recess for ten minutes. 7875 1 Please leave your notebooks here. 2 (The following record was made out of 3 the presence of the jury at 1:25 p.m.) 4 THE COURT: Okay. Be seated. 5 What's 9729? 6 MR. HOLLEY: Your Honor, it's a 7 transcript of remarks attributed to Mr. Gates 8 at the launch of Windows XP in New York City on 9 October 25th, 2001. 10 THE COURT: Okay. 11 What purpose are you offering and what 12 are you going to show? 13 MR. LAMB: We're not necessarily going 14 to admit it. 15 What we've got here is on the second 16 page -- 17 THE COURT: Can I see it, please? 18 MR. LAMB: Sure. 19 MR. HOLLEY: May I approach the bench? 20 THE COURT: I guess he'll put it up, 21 won't he? 22 MR. LAMB: On the second page, second 23 to the last paragraph. 24 This is Mr. Gates saying, so what 25 pieces have we thrown out here? Well, in fact, 7876 1 in a sense, this is the end of an era. 2 Microsoft and the original PC rose to 3 prominence based on the MS-DOS product. And 4 even as Windows came along, Windows 3.1, 5 Windows 95, Windows 98, underneath MS-DOS was 6 running there. Windows simply sat on top of 7 MS-DOS. 8 MR. HOLLEY: Your Honor, this is 9 precisely the sort of use of hearsay that the 10 Plaintiffs were complaining about earlier. 11 No foundation was laid that this 12 witness has ever seen this document or that he 13 relied on it. 14 It's certainly not the sort of thing 15 that is routinely relied on by people in 16 Mr. Alepin's profession, whatever that is. 17 There's -- no showing has been made of 18 that. This is just an effort to introduce for 19 the truth of the matter asserted a statement by 20 a person who is coming to testify in this case. 21 It's hearsay, it's inadmissible, and 22 this witness's testimony should not be 23 permitted as a conduit for publishing this 24 hearsay to the Jury. 25 MR. LAMB: Your Honor, they waived 7877 1 their hearsay objection. They withdrew it. So 2 we went through the Special Master on this and 3 it's been withdrawn. 4 They had an embedded hearsay regarding 5 the Giuliani remarks. We're not going to 6 comment on it. 7 MR. HOLLEY: Mr. Gates is coming to 8 testify. When the Special Master process was 9 ongoing, it was unclear whether he was going to 10 be testifying in their case, in our case, or at 11 all. 12 It's now clear, based on 13 representations from counsel, that he is coming 14 to testify in this case. And he intends to. 15 This is an out-of-court statement by 16 Mr. Gates being offered for the truth of the 17 matter asserted without any sort of foundation 18 being laid. 19 And even if it was laid, it wouldn't 20 make this document admissible. It's not the 21 sort of thing that experts routinely rely upon, 22 Your Honor. They're just trying to get it in 23 front of the jury's eyes. And that's not 24 appropriate. 25 THE COURT: Well, number one, are you 7878 1 going to lay foundation? What's your 2 foundation going to be for this? 3 MR. LAMB: Whether or not he's 4 familiar with this address. This is a 5 relatively famous address. 6 THE COURT: Okay. And did he -- 7 MR. LAMB: This is on Microsoft's 8 website, Your Honor. I mean, they post this on 9 their website. 10 There's a video clip. 11 You know, I just find this odd, given, 12 you know, their reaction to how they should be 13 able to get in trade press. 14 THE COURT: This is on their website? 15 MR. LAMB: Yes. 16 MS. CONLIN: That's where it came 17 from. 18 MR. LAMB: That's where it came from. 19 MR. HOLLEY: Your Honor, there are 20 millions -- literally millions of pages of 21 information on Microsoft's corporate website. 22 I can't believe that it is Plaintiffs' 23 position that all of that information is 24 admissible in this proceeding. It's certainly 25 not. 7879 1 MR. LAMB: Well, it's an admission. 2 MR. HOLLEY: No, it's not. 3 MR. LAMB: Well, I think it's a 4 statement -- it's a corporate statement. It 5 would be like getting a 10K. 6 THE COURT: Why is it not an 7 admission, if it's on your website? 8 MR. HOLLEY: All of the information on 9 Microsoft's website constitutes an admission? 10 THE COURT: No, I didn't say that. 11 Why is this not an admission, a 12 statement reported by Mr. Gates on your 13 website? That's my question. 14 MR. HOLLEY: Not all of the -- 15 THE COURT: Why would you put it on 16 your website? 17 MR. HOLLEY: I didn't put it on the 18 website, Your Honor. 19 THE COURT: All right. Your client. 20 MR. HOLLEY: But presumably it's up 21 there because someone -- some lower level 22 public relations person at the company decided 23 it was interesting. 24 But it doesn't constitute some 25 admission by the company of some issue in this 7880 1 case. 2 And I don't understand -- if there's 3 no showing that Mr. Alepin ever saw this 4 document or relied upon it -- how they can 5 simply publish it to the Jury in this context. 6 They're doing exactly what the case 7 that Mr. Cashman relied on earlier says you're 8 not supposed to do. You're not supposed to use 9 the examination of an expert to just publish 10 hearsay to a jury. That's not the point of 11 examining experts. 12 THE COURT: Well, the problem I'm 13 having is whether or not this is, in fact, 14 hearsay. 15 I agree that if it was just a 16 statement out there that someone reported that 17 Mr. Gates said, I agree it's hearsay. 18 Even if it's a statement that's now 19 being on the corporate website operated by 20 Microsoft, which is a statement attributed to 21 Mr. Gates, it could be an admission because 22 it's now -- either was said by Mr. Gates, put 23 on the website, or it's been adopted by the 24 corporation as an admission. 25 MR. HOLLEY: Okay. Well, if that's 7881 1 Your Honor's view, then that's stage one. 2 I still have my objection, which is no 3 foundation was laid to show that this witness 4 ever reviewed or relied upon this document or 5 had any role in the formation of his opinions 6 in this case. 7 And, for that reason, I continue to 8 maintain the objection, even if it's the 9 Court's view that the document is not hearsay. 10 THE COURT: Are you going to elicit 11 testimony from Mr. Alepin that he relied upon 12 it? 13 MR. LAMB: I'm going to ask him if 14 it's consistent with his understanding. 15 Our belief is these are admissions. 16 The Court has already ruled that these are 17 admissions. 18 I don't know what we are doing here in 19 this regard. 20 If we had the Special Master 21 proceeding and we're going to revisit it every 22 time, there was not a lot of point to the 23 Special Master proceeding. 24 THE COURT: Was this withdrawn, your 25 objection? 7882 1 MR. HOLLEY: I think the -- I'm not 2 sure of the status of the hearsay objection, 3 Your Honor. 4 But the second level problem that I 5 have is precisely the one that the Plaintiffs 6 complained about during cross-examination. 7 You can't just throw up on the screen 8 in front of the jury while an expert is sitting 9 on the witness stand -- this is their view, and 10 I guess this seems to have prevailed. 11 You cannot just throw some statement 12 up on the screen and show it to the Jury 13 without laying some foundation that the expert 14 saw it and that it formed some part of the 15 expert's opinion. 16 There are many documents that I wanted 17 to stick in Mr. Alepin's face because they are 18 inconsistent with things that he said, but it 19 was my understanding that I couldn't do that 20 without laying some sort of foundation. 21 They didn't try. They just threw it 22 -- they just proposed to publish this to the 23 Jury, Your Honor. 24 MR. LAMB: Your Honor, if I may. 25 This is completely different. This is 7883 1 an admission of a party opponent, which we are 2 entitled to use for any purpose. So that step 3 is not applicable here. 4 If there's an admission, there's an 5 admission. I could have an admission on any 6 part and show it to Mr. Alepin and ask him his 7 opinion of that. 8 THE COURT: Well, there still should 9 be some foundation, I agree. 10 I'll let you establish the foundation 11 if you can and then I'll rule then. 12 MR. LAMB: I'm sorry. I cannot hear 13 you, sir. 14 THE COURT: There still has to be some 15 foundation. 16 So I'll let you try to establish the 17 foundation and then I'll rule then before you 18 show it. 19 Show it to your witness first. 20 What's the problem? 21 MR. LAMB: Pardon, sir? 22 THE COURT: What's wrong? 23 MR. LAMB: Nothing's wrong. 24 THE COURT: Okay. Anything else? 25 MR. HOLLEY: No, Your Honor. 7884 1 Thank you. 2 THE COURT: We are adjourned. 3 We've got five minutes. 4 (A recess was taken from 1:33 p.m. 5 to 1:45 p.m.) 6 (The following record was made in the 7 presence of the jury.) 8 THE COURT: Mr. Alepin, you are still 9 under oath, sir. 10 MR. LAMB: May I approach, Your Honor? 11 THE COURT: You may approach. 12 BY MR. LAMB: 13 Q. Mr. Alepin, I'm handing you what's 14 been marked as Plaintiffs' Exhibit 9729. 15 Would you take a moment, sir, and take 16 a look at it, please? 17 A. Yes. 18 Q. Okay. Mr. Alepin, is this one of the 19 many exhibits that you reviewed that assisted 20 you in forming your opinions that you've 21 expressed over the last couple of days? 22 A. Yes. 23 THE COURT: Make sure you speak in the 24 microphone, sir. 25 THE WITNESS: Oh, I turned it off. 7885 1 I'm sorry. 2 MR. LAMB: If we could put this up on 3 the board, please. And go to the top. Yeah. 4 Q. Just to identify this, this is Windows 5 XP launch remarks given by Bill Gates, New York 6 City, October 25th, 2001 for context; right, 7 sir? 8 A. Yes. 9 MR. LAMB: Okay. If you could go to 10 the second page, Darin. 11 Q. And as part of Mr. Gates' prepared 12 remarks, what he says is, so what pieces have 13 we thrown out here? 14 Well, in fact, in a sense, this is the 15 end of an era. Microsoft and the original PC 16 rose to prominence based on the MS-DOS product. 17 And even as Windows came along, 18 Windows 3.1, Windows 95, Windows 98, underneath 19 MS-DOS was running there. Windows simply sat 20 on top of MS-DOS. 21 Do you see that, sir? 22 A. I do. 23 Q. And from a technological perspective, 24 is that consistent with your understanding of 25 Windows and MS-DOS, that Windows simply sat on 7886 1 top of MS-DOS? 2 A. It sat on top of MS-DOS, yes. 3 MR. LAMB: Can you put Exhibit 912 up, 4 Darin? Okay. And if you'll go to -- not the 5 bottom, but the second to the last. Yeah, get 6 the to/from also, please, sir. 7 Q. Okay. This is from Brad Silverberg 8 dated August 15th, 1991; correct? 9 A. Yes. 10 Q. And it's to this W-Erin, W-Marne 11 again. 12 And that's the PR firm; right? 13 A. That's correct, Weggener Edstrom. 14 Q. And the subject is background; right? 15 A. Yeah, backgrounder. 16 Q. And, again, who was Brad Silverberg? 17 A. He was the head of the group at 18 Microsoft, the operating system. 19 Q. And according to Mr. Silverberg, he's 20 telling the PR people we recently decided to 21 start referring to Windows as an operating 22 system in our communications, not a graphical 23 environment or user interface for DOS. We 24 should be consistent in the new usage. Thanks. 25 Do you see that, sir? 7887 1 A. I do. 2 Q. And historically speaking, is that 3 consistent with your understanding of what 4 happened internally in Microsoft in relation to 5 how they named Windows and referred to Windows? 6 A. Internally and externally previously 7 they had referred to this graphical environment 8 for DOS. And subsequent to this that changed. 9 Q. Okay. Graphical environment or user 10 interface for DOS -- is that GUI? 11 A. Yes. 12 Q. A GUI, okay. 13 MR. LAMB: Now, could you also put up 14 the Barrett transcript, 93, 17 to 95, 9. 15 This is some more transcript from the 16 deposition of Phil Barrett. 17 (Whereupon, the following video was 18 played to the jury.) 19 Question: By the way, DR has been 20 provided a copy or has been provided access to 21 the Windows 3.0 beta. They were excluded from 22 the Windows 3.1 beta program. 23 Do you know what changed between those 24 two beta programs that were -- 25 (Whereupon, playing of video 7888 1 concluded.) 2 MR. LAMB: Can we redo that? I can't 3 hear that, Darin. We are going in and out on 4 sound. I don't know if the Jury can hear that. 5 (Whereupon, the following video was 6 played to the jury.) 7 Question: By the way, DRI had been 8 provided a copy or had been provided access to 9 the Windows 3.0 beta or were excluded from the 10 Windows 3.1 beta program. 11 Do you know what changed between those 12 two beta programs that would cause Microsoft to 13 exclude the DR program? 14 Answer: I was aware that they were in 15 the 3.0 beta. Silverberg made the decision not 16 to include them in the beta. And Silverberg 17 was not on board during -- Silverberg joined 18 right after Windows 3.0 shipped. 19 Question: And have you told me 20 everything that you can recall about 21 discussions with Mr. Silverberg about this 22 issue about excluding DRI from the Win 3.1 23 beta? 24 Answer: No. 25 Question: Tell me what else you 7889 1 remember about it. 2 Answer: His comment was -- I recall 3 his exact words -- I won't say his exact words, 4 but he said that was a complete foul-up that 5 they were included in the 3.0 beta. 6 Question: Did he explain to you why? 7 Answer: Well, yeah, he did. They're 8 a competitor. 9 Question: And did you have an 10 understanding of in what markets they were a 11 competitor of Microsoft? 12 Answer: In the DOS operating system 13 marketplace. 14 Question: Not in the Windows 15 marketplace? 16 Answer: There was a product from them 17 called Gem, but I don't think anybody at 18 Microsoft took it seriously. 19 Question: It wasn't your 20 understanding, was it, that Mr. Silverberg 21 wanted to exclude DRI from the Win 3.1 beta 22 because they had this Gem product, was it? 23 Answer: No. 24 Question: It was because DRI was 25 marketing a competing DOS, wasn't it? 7890 1 Answer: That's correct. 2 (Whereupon playing of video 3 concluded.) 4 BY MR. LAMB: 5 Q. Mr. Alepin, there were some questions 6 by Mr. Holley about whether or not DRI was 7 provided with certain betas of DOS. 8 Do you recall that testimony? 9 A. I do. 10 Q. Okay. And is Mr. Barrett's 11 transcript, in part, what you relied on when 12 you told him what your belief was? 13 A. In part. 14 Q. Okay. And can you tell the Jury again 15 what you believe happened here? 16 A. Well, I believe that Microsoft made 17 the determination that DRI would not get beta 18 copies of Windows to make their product work 19 with Windows. 20 And that was part of the other -- the 21 strategy which was aimed at making it difficult 22 for DR-DOS to have a fair chance in the market. 23 Q. All right. And at one point in time, 24 before this occurred that Mr. Silverberg -- 25 excuse me, Mr. Barrett is referring to, Windows 7891 1 is a GUI; right? 2 A. Yes. 3 Q. And it has to be run on DOS; right? 4 A. Windows has to be run on DOS, yes. 5 Q. Okay. And at that point in time when 6 Windows is just a GUI, is Microsoft a 7 competitor of DR-DOS? 8 A. Well, Microsoft's DOS is a competitor 9 of DOS, of Digital Research. 10 Q. Okay. So they both have to use DOS; 11 right? 12 A. That's correct. 13 Q. All right. And then at some point in 14 time, Windows and DOS is bundled in the OS; 15 right? 16 A. Bundled together as an operating 17 system product, yes. 18 Q. And what's the significance of that? 19 Can you explain that to the Jury? 20 A. Well, at that point, it's not possible 21 to buy Windows without DOS from Microsoft. 22 So you have to buy a Windows product 23 and you have to buy the DOS product as only a 24 single product. 25 And, of course, then there's no reason 7892 1 to buy a different operating system from a 2 company such as Digital Research, for example, 3 because it's -- you can't insert the Digital 4 Research operating system or you can't separate 5 the Microsoft DOS operating system from 6 Windows. 7 Q. Okay. So when Windows is a GUI, it 8 can operate on MS-DOS or DR-DOS; right? 9 A. That's correct. 10 Q. Okay. And Windows itself is a 11 product, is not a competitive product 12 technologically to DR-DOS; right? 13 A. No. Not at the time. 14 Q. Not at that time. 15 But once Windows is bundled to MS-DOS, 16 is it at that point in time a technological 17 threat to DR-DOS? 18 A. Well, it contains -- it includes as 19 part of the bundle an operating system product 20 DOS, which is the same as DR-DOS. 21 Q. A competitor? 22 A. Right. 23 Q. Okay. Is there a way that you could 24 diagram that for the Jury? 25 A. Sure. 7893 1 THE COURT: Is he going to be needing 2 a microphone? 3 MR. LAMB: You don't have a mike? 4 THE WITNESS: I couldn't find that. 5 I'll try and speak loudly while they get this. 6 THE COURT: There you go. Here's your 7 microphone, sir. 8 THE WITNESS: Thank you. 9 A. So you start off with MS-DOS or 10 DR-DOS, and you can buy Windows 3.0 or Windows 11 -- the same Windows 3.0 and run them together 12 with the DOS operating system of your choice. 13 Could be the DOS operating system from 14 Microsoft or the DOS operating system from 15 Digital Research. 16 You could do the same thing as this 17 went up to Windows 3.1. So you would purchase 18 a separate copy of this product or a separate 19 copy of this product, and you would combine it 20 or a PC manufacturer would combine it for you 21 and you would end up with the two products 22 together. 23 Beginning in -- excuse me. 24 Beginning in 1995 with Windows 95, 25 however, the product that you could buy, and 7894 1 the only product that you could buy, was 2 Windows 95, which included as a part of the 3 bundle Windows -- the Windows GUI and the 4 Windows operating system, but, as Mr. Gates 5 described in his Windows XP launch remarks and 6 Mr. Barrett described and others, many others 7 have described, Mr. Schulman in his remarks, 8 inside the box that you purchased were actually 9 two separate pieces, the Windows graphical user 10 environment and the DOS operating system. 11 Q. Okay. And when Mr. Holley suggested 12 that Windows 3.0 was the operating system, you 13 disagreed with that; right? 14 A. Yes. 15 Q. Okay. I've got one other thing I'm 16 going to ask you to do before you sit down. I 17 apologize. 18 And this is a little out of context, 19 but can you explain for the Jury the term 20 porting again and maybe draw a diagram that 21 graphically demonstrates what porting is? 22 A. Okay. When I introduced the term 23 during the first couple of days, I described 24 the process of software development where you 25 created a program and you made reference to, 7895 1 for example, application programming interfaces 2 that were specific to the platform on which you 3 were running. 4 And I described platform as being not 5 just the operating system, but middleware. And 6 perhaps I should not introduce new diagrams. 7 I go back to this diagram here that 8 had middleware, the operating system, and 9 applications. This is applications out here, 10 as well. 11 And what I do when I develop software 12 is, I make references to programming interfaces 13 which may be particular to a platform. Could 14 be Sun's Java Virtual Machine platform, could 15 be the Windows graphical user interface, it 16 could be the operating system, the file system. 17 So I create these dependencies here, 18 which I need to resolve if I wish to take the 19 software and change the -- take my application 20 and change the middleware or change the 21 operating system for a different middleware or 22 a different operating system. 23 We call this process porting. Where I 24 go into my application program here and I look 25 at the ways in which it connects to the 7896 1 underlying software platforms, the middleware, 2 and the hardware even, as well as the operating 3 system. 4 And I make the changes necessary to 5 take it from one environment to another 6 environment. 7 Q. Okay. Why don't you go ahead and take 8 the stand again, sir, if you would, please. 9 So getting back to Barrett's 10 testimony, Barrett testifies that this is this 11 concept of baling wire and bubblegum. So they 12 are separate; right? 13 A. Yes. 14 Q. Okay. And then Microsoft starts 15 calling Windows an operating system; right? 16 A. That's correct. 17 Q. Okay. And you saw the final 18 transcript testimony of Mr. Barrett where he's 19 talking about not getting the 3.1 beta -- that 20 Mr. Silverberg's decision was not to get the 21 3.1 beta to DR-DOS. 22 Do you remember that? 23 A. Yes, I do. 24 Q. Okay. And, technologically, what's 25 the significance of that, DR-DOS not getting 7897 1 that 3.1 beta for Windows? 2 A. Well, not getting the beta means that 3 they are unable to get their software to test 4 under the Windows 3.1 forthcoming product and 5 to make any changes, both changes that would 6 accommodate differences or incompatibilities, 7 work necessarily -- would prevent the 8 combination from working. So there's that kind 9 of problem that they wouldn't have a chance to 10 fix in a timely manner. 11 And the second one, of course, is that 12 they wouldn't have a chance to try to get their 13 product to work better with Windows 3.1. 14 So they weren't able to improve their 15 product to work with the next product in a 16 better way perhaps than the competing operating 17 system product from Microsoft. 18 Q. Okay. And once Windows 95 is created, 19 there's no separate Windows for DR-DOS? 20 A. There is no separate Windows GUI 21 product available for them to work with. 22 Q. Okay. And prior to that, when it was 23 beta, Windows 3.1 was betaed, if that had been 24 provided to DR-DOS, would there be a period of 25 time when DR-DOS would work through bugs in 7898 1 relation to that beta? 2 A. That was -- I mean, that's an 3 important, a very important part of the beta 4 process and one in which both the community -- 5 that is to say the independent software vendors 6 and other companies -- get a chance to adapt 7 their programs to the new Microsoft program. 8 And it's also the opportunity for Microsoft to 9 test its program and to make changes to its 10 program to work with the other companies' 11 programs. 12 So this beta process is intended to be 13 a two-way street -- usually works as a two-way 14 street where companies, users, third-party 15 software vendors are all working together to 16 make sure that the new product works best and 17 preserves the investments of all of the users 18 in the technology that they already have 19 installed. I mean, it's a good thing. 20 Q. Okay. So it's not just the beta 21 release. It's the beta test process; right? 22 A. Certainly, yes. It's not just 23 throwing it up on the wall. 24 Q. And you can't have a beta test process 25 without the beta release; right? 7899 1 A. That's -- yes, of course. 2 Q. Okay. How -- is there a time period 3 normally for the beta release process? 4 A. Well, it varies, depending upon -- 5 depends on a number of factors. How good you 6 did with the original software, how many 7 problems you've encountered, whether there are 8 other issues that you didn't take into account. 9 But beta processes are -- there's not 10 a rule book here that says how many days it's 11 supposed to take. 12 Q. Okay. The beta test process, can you 13 describe actually what physically happens once 14 the beta release is obtained? What would 15 DR-DOS do with it then? 16 A. Well, DR-DOS would take it and 17 determine, first of all, if they could install 18 it. And assuming that they couldn't install, 19 they'd begin working through the problems 20 associated with the installation, including, as 21 an initial matter, circumvention. 22 What I mean by circumvention is it's 23 really not a good idea to let the first problem 24 you encounter stop you and then say, okay, 25 well, we are going to fix this problem and 7900 1 then, oops, the next problem. So you don't 2 proceed in a serial manner. 3 What you try and do is you try and 4 identify a problem, see if there's anything you 5 can do that's not going to make itself all the 6 way to the final product necessarily, but you 7 are just trying to get by the first problem in 8 order to find out all of the problems. 9 You inventory the problems and then 10 you can divide them out and work on permanent 11 solutions. 12 But the first step is to get it in and 13 figure out what's broken, what -- and be able 14 to assign those breaks to the extent that there 15 are -- and there are -- and get them assigned 16 to the folks in the development team, get them 17 to work through permanent solutions to those 18 problems. 19 Q. I want to switch gears a little bit 20 here and talk about Java and the Microsoft Java 21 Virtual Machine. 22 There came a point in time, I believe 23 you testified, that Microsoft added some 24 extensions to the Java Virtual Machine. 25 Do you recall that? 7901 1 A. I do. 2 Q. Okay. And then at that point in time, 3 Java would not run on other systems; is that 4 correct? 5 A. Let's see. The extensions -- the 6 applications employing those extensions would 7 not be portable across other systems without 8 changes. 9 Q. Okay. Is there a way that you could 10 diagram that and explain that for the Jury? 11 A. Sure. 12 MR. LAMB: With the Court's approval. 13 A. This is our -- this is the operating 14 system and this is our Java Virtual Machine, 15 and here is our application. 16 And the application is making use of 17 interface specifications, APIs, between the 18 Java Virtual Machine and the application. 19 And, to the extent that it's 20 necessary, the Java Virtual Machine will react 21 or interact with the operating system and any 22 other middleware software to handle those 23 specifically for the -- for the environment in 24 which the machine or in which the application 25 is actually running in. 7902 1 You know, so you have a portable 2 application if -- if the only interfaces and 3 all of the interfaces that the application uses 4 are limited to those that are provided by the 5 Java specification and the Java Virtual Machine 6 as specified in the JDK from Sun Microsystems 7 and the Java development community. 8 Once an application makes use of an 9 interface that is in the operating system, that 10 application is -- directly, that application is 11 no longer portable. 12 And this interface here will need to 13 be reworked before that application will be 14 able to run on a different computing platform. 15 So if you take within the interfaces 16 that are provided and defined and specified by 17 the Java standard, then the application is 18 portable. 19 The moment you begin to use 20 application programming interfaces that are 21 outside of that, that are part of the operating 22 system platform on which the application is 23 running, you're not portable anymore. 24 Q. So how is that happening? Is that 25 going from the applet to Windows or from 7903 1 Windows to the applet or both? 2 A. It's going from the applet directly to 3 the operating system. 4 Q. Okay. And that's because it's a 5 Microsoft applet? 6 A. It's because it's an application or 7 applet that was designed to make use of the 8 interfaces that were unique to the Windows 9 platform. 10 Q. Okay. And then once that happens, the 11 Java Virtual Machine, what's the impact of that 12 with a different operating system? 13 A. With a different operating system, it 14 means that the developer of the applet is going 15 to have to make changes to his application in 16 order to make that application run on a 17 different platform. 18 So the maxim that Mr. Holley and I 19 talked about, the write once becomes write 20 multiple times or write/rewrite instead of 21 write once. 22 So it's the writing first time, if you 23 use the Microsoft specific platform application 24 programming interfaces. It's write/rewrite, 25 write/rewrite for each platform that you want 7904 1 to run the applet on. 2 Q. Can you take your seat again, sir? 3 MR. LAMB: Would you show them Exhibit 4 245? I think this is one we have used before. 5 Okay. If you could put up -- we'll 6 get to that in a second, but if you could put 7 up Conclusion of Law 4.11, please. 8 I know I'm making you go back and 9 forth. 10 MR. BUCHBINDER: Finding of Fact? 11 MR. LAMB: Conclusion of Law. It's in 12 -- no, it's the slide that's going to be in the 13 Alepin slides. Last day. 14 Do you understand, Darin? 15 MR. BUCHBINDER: Okay. Lot -- 16 MR. LAMB: Lot of slides. 4.11. 17 Q. Okay. Conclusion of Law 4.11 reads, 18 Microsoft maintained the monopoly power in the 19 operating systems market by the following, 20 quote, anticompetitive conduct, end quote, 21 conduct which caused harm to the competitive 22 process and thereby harm to the consumers. 23 11, deceiving Java developers about 24 the Windows-specific nature of Microsoft's Java 25 developer tools. 7905 1 How does that diagram that you just 2 drew apply to that, sir? 3 A. Well, it was -- it applies to the idea 4 of whether the green lines that I drew 5 indicating the inclusion in the application, 6 our reliance in the application on 7 Windows-specific or Windows-only interfaces was 8 something that developers were aware of as they 9 were doing it. 10 Q. Okay. 11 MR. LAMB: Can we put up Exhibit 2545, 12 please? 13 If you could highlight the from/to 14 first. 15 Q. This is from Jon Ludwig dated 16 Wednesday, August 28th, to Bob, it looks like 17 Muglia, and Ben Slivka; subject, some very high 18 level thoughts on API work. 19 Do you see that, sir? 20 A. Right. I think it's Bob Muglia. 21 Q. Bob Muglia? 22 A. I believe so. 23 Q. Who is Bob Muglia? 24 A. He's a senior executive at Microsoft. 25 Q. And we've seen Ben Slivka before. 7906 1 Who is he? 2 A. He was in the development team, the 3 development group in the platform desktop 4 operating systems and I think moved to the 5 Internet group when it was formed. 6 Q. Okay. And this is from Jon Ludwig. 7 Who is Mr. Ludwig? 8 A. He was also a senior executive inside 9 the development organization, I think. 10 MR. LAMB: Okay. If you could go to 11 the next highlighted section. 12 Q. Okay. Mr. Ludwig appears here to be 13 suggesting to Mr. Muglia and Slivka regarding 14 his thoughts on API work, subversion has always 15 been our best tactic. Don't fight AWT, enhance 16 it, and support it better than anyone else. 17 Don't fight JDBC, adopt it and move 18 on. Subversion is almost invariably a better 19 tactic than a frontal assault. It leaves the 20 competition confused. They don't know what to 21 shoot at anymore. 22 Do you see that, sir? 23 A. I do. 24 Q. Okay. And what is your understanding 25 of the use of the term subversion here, sir? 7907 1 A. Well, he's referring to it as a 2 tactic, a tactic aimed at, I believe, 3 subverting the standard, referring here to AWT, 4 which is described as a set of -- some of the 5 programming interfaces relating to Java. 6 Similarly, JDBC is another set or 7 subset of the programming interfaces available 8 on the Java platform, portable interfaces, part 9 of the Java APIs. 10 Q. Okay. And when Mr. Holley talked to 11 you about FUD and one of the characteristics of 12 it being okay if it was truthful, if it's 13 truthful, you don't think it is FUD; right? 14 A. Within the -- within the limits I 15 think I put on the -- 16 Q. Okay. 17 A. -- on it earlier, yes. 18 Q. But you don't have a problem if it's 19 truthful; right? 20 A. Not a problem. 21 Q. Okay. Now, this subversion, as 22 Mr. Ludwig puts it, do you consider that 23 truthful? 24 MR. HOLLEY: Object to the form of the 25 question. Calls for speculative conclusion. 7908 1 THE COURT: Overruled. 2 He can testify. 3 Go ahead. 4 A. I think you have to see what was done. 5 You have to look at what the subversion tactic 6 is before you actually get to the answer. 7 But, subversion, generally speaking -- 8 and, in particular, what happened here is not 9 truthful in that sense. 10 Q. Okay. Can you tell the Jury what 11 happened here? 12 A. Well, the idea here was stated, I 13 think in the conclusion of law, I think, was 14 that there was a -- 15 MR. HOLLEY: Your Honor, I object on 16 collateral estoppel grounds. 17 Could we approach the bench, please? 18 (The following record was made out of 19 the presence of the jury at 2:20 p.m.) 20 MR. HOLLEY: Your Honor, what is now 21 happening is quite remarkable. 22 Judge Jackson never did us the favor, 23 except when he chose to quote something in one 24 of his findings, of identifying what it was in 25 the record of U.S. v. Microsoft that he was 7909 1 relying on. But he did make a finding about 2 subversion of -- not subversion -- of 3 misleading Java developers. 4 He never used the word subversion, and 5 what Mr. Ludwig is talking about in this e-mail 6 that we are now looking at is something 7 entirely different. 8 He's talking about adopting Java 9 strategies and therefore subverting them in the 10 sense of embracing them. 11 So we're now engaged in a process of 12 directly talking about collaterally estopped 13 findings and having Mr. Alepin seek to explain 14 what Conclusion of Law 411 means based on his 15 speculative interpretation of some document 16 that Judge Jackson did not rely on, or at least 17 we have no idea whether he did, and it's 18 talking about a different subject. 19 It just seems to be precisely the sort 20 of action that we shouldn't be engaged in. 21 We're stuck with 411. You know, there's lots 22 of evidence I would love to put on about 411, 23 which I think is flatly wrong, but I can't 24 because I'm collaterally estopped, despite the 25 fact that the Department of Justice told the 7910 1 D.C. Circuit Court of Appeals that no one was 2 ever mislead. That's the state of the world. 3 The Justice Department changed its 4 mind, but we're collaterally estopped. We've 5 got to live with that, but it shouldn't be that 6 they get to put on evidence through Mr. Alepin 7 to bolster 411. It says what it says. 8 MR. LAMB: Your Honor, if I may, if we 9 could take a brief break because I don't think 10 that was responsive to my question. I wasn't 11 intending to have him refer back to 411. 12 MR. TULCHIN: That was the question. 13 MR. LAMB: What? 14 MR. HOLLEY: It was. 15 But he said -- 16 THE COURT: Hang on. 17 MR. HOLLEY: He referred back -- 18 THE COURT: Hang on. 19 Tammy, what was the question? 20 MS. GUENTHER: The very last one? 21 MS. CONLIN: Yeah. 22 MS. GUENTHER: Okay. 23 (The requested portion of the record 24 was read back. 25 MS. GUENTHER: The start of the answer 7911 1 was: 2 (The requested portion of the record 3 was read back.) 4 MR. LAMB: I want to know what happens 5 here in terms of the subversion, and perhaps my 6 question wasn't clear enough. But I didn't 7 refer back to 411, and I don't intend to have 8 the witness refer to or try to incorporate back 9 in conclusions of law. 10 I just want to know the factual 11 underpinnings of what happened when the 12 subversion occurred, what was subverted. 13 That's what I asked. 14 MR. HOLLEY: Okay. But the witness 15 understood it and -- 16 THE COURT: He started giving an 17 answer, which was outside the question. 18 MR. LAMB: I'll accept I screwed up. 19 It wasn't my intention to have him answer that. 20 But what I would like to do is just 21 kind of give me five minutes to explain to him 22 that I want him to stay away from those types 23 of terms. 24 THE COURT: Okay. 25 MR. LAMB: Is that okay? 7912 1 THE COURT: That's fine. You can warn 2 him that. Okay. 3 (The following record was made in the 4 presence of the jury at 2:25 p.m.) 5 THE COURT: Ladies and gentlemen, I'm 6 going to give you about a five-minute break. 7 And remember the admonition previously 8 given. 9 And leave your notebooks here. 10 We'll come and get you in about five 11 minutes. 12 (A recess was taken from 2:26 p.m. 13 to 2:31 p.m.) 14 THE COURT: You are still under oath, 15 sir. 16 Mr. Lamb? 17 MR. LAMB: Thank you, sir. 18 Could we have 2545 up again, please, 19 Darin? Okay. 20 BY MR. LAMB: 21 Q. And, again, in relation to 22 Mr. Ludwig's comments about subversion and your 23 testimony about what it was, I want you to just 24 explain to the Jury what happened in relation 25 to the subversion, sir. 7913 1 A. Well, what happened was that Microsoft 2 introduced a series of dependencies into the 3 Java -- into its implementation of Java for 4 Windows and it -- and the result was that 5 applications developers who were developing for 6 the Java platform, or believed that they were 7 developing for the Java platform, were, in 8 fact, creating platform dependent applications. 9 Q. Okay. I'm going to read back some 10 testimony that you gave earlier and ask you 11 some questions about it. 12 And it really related to when you were 13 referring to a magazine, PC Magazine. 14 And before I do that, maybe if you 15 could explain how it is that you use these 16 trade journals in relation to your work and how 17 you use them in terms of forming your opinions. 18 A. Well, in my business it's important to 19 stay aware of events in the industry and to 20 understand technological trends and to make 21 sure that I don't miss anything. 22 I get a number of different 23 publications, probably 30 or 40 monthly, and 24 weekly different publications every month which 25 serve as a basis for me to be able to identify 7914 1 things that I need to become smarter about. 2 A new product announcement, a new 3 analysis or report, an interview, people 4 talking about technological trends are things 5 that I need to dig deeper into and to be able 6 to provide my clients with the benefits of my 7 interpretations and analysis of what's being 8 done by whom and where's it going and what does 9 it mean to them. 10 So trade press for me is a way of 11 finding out that something happened and then 12 perhaps providing a couple of references where 13 I can begin my drill-down to understand it, to 14 digest it, and to be able to articulate it and 15 its meaning to my clients. 16 Q. Okay. So it's something that you look 17 to to prompt you to do further research then? 18 A. When it's interesting, yes. 19 Q. Okay. Fair enough. 20 And do you rely on it as ultimately 21 factually accurate? 22 A. Not -- not really. I mean, I 23 understand the limits of what's being reported 24 in the trade press, so -- 25 Q. Okay. Why don't you explain to the 7915 1 Jury what the limits of what's being reported 2 in the trade press. 3 A. Well, the trade press is not unlike 4 other news media. 5 There is a spin that's put on things 6 by vendors who are trying to describe whatever 7 it is that they are bringing out in terms that 8 are perhaps overwrought or greater than they 9 actually are. And so you have to be able to 10 discount that. 11 You have to be able to poke inside the 12 actual product or the technology or even go 13 down to the press releases themselves and 14 compare them from one company to another. 15 The limits of the trade press are, in 16 fact, that it's being used by companies, quite 17 understandably, to get their messages out and 18 to get them out in the way that they want them 19 to be heard. 20 So it's not always accepted with an 21 uncritical eye. Reporters don't necessarily 22 always give the best and hardest and most 23 informed analysis of what's being said to them 24 by industry participants. 25 Q. All right. 7916 1 So getting back to your testimony, you 2 were asked some questions about PC Magazine, 3 and you were looking at an article in PC 4 Magazine. 5 Do you remember that, sir? 6 A. I was. 7 Q. Okay. And the question from Mr. 8 Holley was: 9 Question: And one of the attributes 10 that Microsoft's Java Virtual Machine had that 11 made it the editor's choice was how compatible 12 it was with cross-platform applets; is that 13 right? 14 Your answer: I'm not seeing the 15 cross-platform reference in this particular 16 highlight. 17 Do you recall that testimony? 18 A. I do. 19 Q. And is it your testimony that 20 Microsoft's Java Virtual Machine is not 21 cross-platformed? 22 A. It did not run on multiple platforms. 23 Q. Okay. You go on to say, in response 24 to the question: 25 Okay. Well, you would agree, would 7917 1 you not, sir, that if you wrote an applet in 2 Java and you didn't call upon any of the 3 Microsoft-specific extensions in the Microsoft 4 programming tools, that Java applet would be 5 cross-platform; right? 6 Your answer: Subject to some other 7 limitations, that's correct, yes. 8 Now, what he's talking about is if the 9 green lines aren't there, right? 10 A. That's correct. 11 Q. But that's not what happened; right? 12 A. Well, that's not what happened, no. 13 MR. LAMB: Okay. Exhibit 2768, 14 please. 15 Thanks, Darin. 16 Q. Okay. This is from someone that I'm 17 not even going to attempt. 18 Can you read that name into the record 19 as best you can for the court reporter? 20 A. Sure. It's Prashant Sridharan. 21 Q. You are going to have to spell it or 22 she'll beat me mercifully at the break. 23 A. Prashant, P-r-a-s-h-a-n-t. Sridharan, 24 S-r-i-d-h-a-r-a-n. 25 Q. Okay. And this is visual J plus plus 7918 1 product manager from Microsoft; right? 2 A. That's his title on his -- at the 3 bottom, yes. 4 Q. Okay. And it's to Russ Aaron. Do you 5 know who that is? 6 A. I've seen the name. He's a Microsoft 7 employee, but I'm not recalling his function. 8 Q. Okay. And in the middle paragraph 9 there says, screw Sun, cross-platform will 10 never work. Let's move on and steal the Java 11 language. 12 Do you see that, sir? 13 A. I do. 14 Q. Okay. Does that connote truthfulness 15 to you? 16 MR. HOLLEY: Objection, Your Honor. 17 THE COURT: Sustained. 18 Rephrase the question. 19 MR. LAMB: All right. 20 Q. Do you believe that that qualifies as 21 FUD? 22 MR. HOLLEY: Objection, Your Honor. 23 There's no evidence that this statement ever 24 left the Microsoft Corporation. 25 THE COURT: Rephrase. 7919 1 Q. Mr. Alepin, is this consistent with 2 your understanding, based on your training and 3 experience and your review of all the documents 4 you've done in this case, of the tactics that 5 Microsoft employed in relation to Java? 6 A. That is what Microsoft, I believe, was 7 trying to do, was to take the Java -- take 8 control of that Java language and the Java 9 platform. 10 Q. Okay. And, in your view, how does 11 this relate to what you described earlier as 12 Microsoft's policy of embrace, extend, 13 extinguish? 14 A. Well, this was the follow on to 15 embrace, which Microsoft had done by taking the 16 license to Sun's Java. 17 It had now extended it in a way that 18 was incompatible across the multiple platforms. 19 And it was now going to take control of the 20 Java standard and in a different direction from 21 the rest of the community, from the 22 cross-platform objective of the language and 23 the platform. 24 Q. Okay. Mr. Alepin, you testified that 25 the objective of the Java technology or one of 7920 1 the objectives was this concept of write once, 2 read everywhere. 3 Do you remember that? 4 A. Run where -- write once, run 5 everywhere. 6 Q. Write once, run everywhere. I 7 apologize. 8 And what was the impact of Microsoft's 9 tactics to this general policy of Java, write 10 once, run everywhere? 11 A. Well, once an application had been 12 developed that included these Windows platform 13 dependencies, as I said, it was no longer write 14 once. It was write/rewrite for each platform. 15 Q. This e-mail goes on to say, that said, 16 have we ever taken a look at how long it would 17 take Microsoft to build a cross-platform Java 18 that did work? 19 Do you see that, sir? 20 A. I do. 21 Q. And, in actuality, Microsoft never did 22 build a cross-platform Java that did work; 23 right? 24 A. No, not to my knowledge. 25 Q. He goes on to say, naturally, we would 7921 1 never do it, but it would give us some idea of 2 how much time we would have to work with in 3 killing Sun's Java. 4 Do you see that? 5 A. Yes. 6 Q. And is that consistent with your 7 understanding of the embrace, extend, and 8 extinguish tactics? 9 A. That would be emblematic of it, yes. 10 Q. Sir, I want to switch over to another 11 issue that was raised by Mr. Holley. And I 12 assure you I will not go through all of them, 13 but I do want to cover a few more. 14 The next one is AARD and the error 15 message in Slide 702. 16 MR. LAMB: Can you put that up, Darin? 17 Q. Okay. Can you explain to the Jury -- 18 are you all right, Mr. Alepin? 19 A. I am, yes. 20 Q. Okay. I know it's a long day. I 21 apologize. 22 Can you explain to the Jury, again, 23 what this is, please? 24 A. This is a screen shot taken from the 25 Windows setup program for the Windows -- what 7922 1 has been referred to as the Christmas beta, I 2 believe, the beta version of Microsoft Windows 3 software. 4 During the installation process and in 5 the center there is a pop-up screen, we call 6 them sometimes, in which is displayed the text 7 nonfatal error detected, and then there's that 8 error number and the 4D53 value. 9 Q. Okay. The Christmas beta, what was 10 the Christmas beta? 11 A. This was a version of -- a beta 12 version of Microsoft's to be released software 13 for Windows 3.1 that was distributed to 14 approximately, as I understand the record, 15 15,000 beta testers, which included among them 16 the PC manufacturers, software developers, 17 important large company users, IT organization 18 people, and the like. 19 It was a software beta test program 20 that was distributed in the pre-Christmas 21 period. Hence, the name Christmas beta. 22 Q. Okay. And is it insignificant that it 23 went out to 15,000 or so developers that were 24 involved in the beta development? 25 A. Well, the 15,000 users or 15,000 7923 1 recipients were not randomly chosen from among 2 a pool of the population of personal computer 3 users. 4 Instead, they were people -- they 5 included at least the people who were the most 6 important people in the PC hardware business 7 and PC software business, with certain 8 exceptions. 9 Q. Okay. And these most important people 10 in the PC software and hardware business, what 11 do they do in terms of reporting to others as 12 they're doing this beta testing? 13 A. Well, they form opinions of the 14 software and the problems encountered and the 15 -- for example, the work that they are going to 16 need to do to fix their software as he 17 described earlier, or problems that they 18 encountered with various combinations of 19 software and hardware, and formed opinions 20 about whether they would, in fact, want to 21 purchase and install the software on their 22 computer systems or on the systems that they 23 made available for third parties. 24 Q. And as they form those opinions and 25 make determinations about the software, how do 7924 1 they convey that throughout the industry? 2 A. Well, they convey that when they talk 3 through themselves -- to others within their -- 4 Q. I'm sorry. I had a vision of you 5 talking to yourself. 6 A. In the mirror, yes. 7 When they talk among each other and 8 discuss what works and what doesn't work. 9 And it's also reflected in the 10 products that they choose to bring to market 11 and the products that they choose to work with. 12 So it's both reflected in kind of the 13 industry knowledge or the conventional wisdom, 14 sometimes we hear that, about a specific 15 product or a specific technology, like this 16 doesn't work or don't do this or whatever, it 17 becomes sort of the conventional wisdom. And 18 it's also reflected in the products that they 19 ultimately bring to market. 20 They can say, well, we're going to 21 work in this direction to support this 22 particular product. If it means that we can't 23 support that product, then we won't do that. 24 So that's kind of the beta test, 25 especially among the most influential beta 7925 1 testers. It's creation of the industry 2 conventional wisdom and the creation and 3 delivery of products that support or don't 4 support different combinations of software and 5 hardware. 6 Q. Okay. And Mr. Holley referenced -- I 7 believe he called them blogs earlier in terms 8 of people sending e-mails or blogs out 9 reporting the results of beta testing. 10 What is that? 11 A. Well, blogs are today's equivalent of 12 what forum -- I think forays -- but forums were 13 in the early 1990s. Computer forums were 14 bulletin boards. 15 Sometimes people refer to bulletin 16 boards where you would post information that 17 reflected your understanding or you could ask 18 questions and you'd get moderators or hosts who 19 would come back in and provide information. 20 So it's kind of a community -- not 21 kind of. It's really an electronic bulletin 22 board for the posting of information. And 23 organized topicly so that you might have one 24 that was focused on DOS. You might have one 25 that was focused on Windows or on Central Point 7926 1 software or Symantec or as many topics as you 2 wanted. 3 Q. Okay. And this slide, 702, this was 4 the message that came up whenever someone who 5 got the Christmas beta tried to run it on top 6 of DR-DOS; right? 7 A. That's my understanding. That's 8 correct. 9 Q. Okay. And if only a handful of these 10 folks reported this in the industry, would that 11 be not significant? 12 A. Well, it depends. 13 Q. Why? 14 A. Well, it depends on who's seeing them. 15 And in this particular case it depends on the 16 context, beta context. And this is very 17 important. 18 In beta testing, when you get a piece 19 of beta software generally, and especially for 20 high-volume beta, like 15,000, the beta 21 software is distributed as is. There's no 22 warranty. 23 You're told to save your data 24 frequently. And there's no support. It's very 25 important, there's no support. 7927 1 So normal technical support -- if you 2 are a Windows 3.0 customer, for example, and 3 you take Windows 3.1 beta, you don't get to 4 call the technical support people to get them 5 to support you under your Windows 3.0 support 6 thing because that's not the way it works. 7 So there's a very different approach 8 to -- that beta testers have to these kinds of 9 issues, problems that they encounter. 10 They're on their own more than they 11 can -- more than would be the case if they were 12 running a licensed product that was a finished 13 good. 14 Q. Okay. Now, this particular message, 15 nonfatal error detected, error, whatever the 16 code is, is that true? Is there an error? 17 A. There's no error. It's not -- it is 18 not correct. There is no error. 19 Q. Okay. And does that, then, meet your 20 definition of FUD? 21 A. It was not true, so, yes. 22 Q. Now, how do you know it wasn't true? 23 A. Well, there's a record in this 24 proceeding from other times that includes 25 transcripts, deposition testimony, and other 7928 1 expert reports that look at this and agree that 2 there is no error condition. That nothing -- 3 there was no problem detected. 4 The software was installed for the 5 simple purpose of checking whether it was a 6 different operating system, and there had been 7 no error encountered. 8 And it's simply incorrect to say that 9 because it's not Microsoft's DOS operating 10 system, that that's an error. That's wrong. 11 MR. LAMB: Your Honor, I'm going to 12 shift to something else. Would this be a good 13 time to take a -- 14 MS. CONLIN: I need a little minute, 15 Your Honor, if I may for another purpose, to 16 offer exhibits. 17 THE COURT: At this time? 18 MS. CONLIN: Yes, if I may, Your 19 Honor. 20 THE COURT: You may. 21 MS. CONLIN: Thank you, Your Honor. 22 At this time, Plaintiffs offer into 23 evidence 3,186 exhibits to which no objections 24 have been lodged. 25 And I recognize that Microsoft will 7929 1 certainly want to have an opportunity to make 2 sure we did not make a mistake in terms of what 3 we included in that category, Your Honor, but 4 at this time I offer them, subject to 5 Microsoft's assuring that we have included on 6 the list and on the disk only those which we 7 all agree there are no objections to. 8 THE COURT: I'll rule on them 9 tomorrow. 10 Anything else? 11 MR. TULCHIN: We would like an 12 opportunity, Your Honor, to look at the list. 13 THE COURT: Sure. 14 Okay. We'll take a break since he 15 wants to change subjects. 16 Again, I'll remind you of the 17 admonition. 18 JUROR [Redacted]: 3 o'clock? 19 THE COURT: Pardon? 20 JUROR [Redacted]: 3 o'clock? 21 THE COURT: Yeah. We are going to 22 take a recess until 8:30 tomorrow morning. 23 Remember the admonition previously 24 given. 25 Please drive carefully. I think there 7930 1 might be some bad weather today or tomorrow, so 2 I hope everybody gets -- 3 MR. LAMB: Your Honor, I apologize. I 4 forgot. Can I just offer our exhibits real 5 quick, too, while we're doing that? There's 6 just a handful. 7 THE COURT: Very well. 8 MR. LAMB: Plaintiffs' Exhibit 797, 9 808, 860, 9729, 912, 2768, and 2545. 10 MR. HOLLEY: No objection, Your Honor. 11 THE COURT: Very well. 12 MR. LAMB: Thank you, Your Honor. 13 THE COURT: Thank you. 14 You are excused. Thank you, ladies 15 and gentlemen. 16 (The following record was made out of 17 the presence of the jury.) 18 Just to double-check, I've got 897, 19 808. 20 MR. JACOBS: 797. 21 MR. TULCHIN: The first one was 797, 22 Your Honor. 23 THE COURT: It was? 24 MR. JACOBS: Yes. 25 MR. LAMB: I might have misspoke. 7931 1 THE COURT: 797, 808, 860, 9729, 912, 2 2768, 2545? 3 MR. LAMB: Yes, sir. 4 THE COURT: Okay. Thanks for the 5 correction on that. 6 MR. LAMB: Thank you, Mr. Tulchin. 7 (A recess was taken from 2:56 p.m. to 8 3:02 p.m.) 9 (The following record was made out of 10 the presence of the jury.) 11 THE COURT: All right. Mr. -- let's 12 see. 13 MR. CASHMAN: I think it's my turn. 14 THE COURT: Mr. Cashman wanted to make 15 some statements and then we are going to go. 16 MR. CASHMAN: Right. Michael Cashman 17 for Plaintiffs. 18 I'd like to respond to the five cases 19 that Mr. Tuggy cited yesterday to the Court. 20 THE COURT: Okay. 21 MR. CASHMAN: In particular, I'd like 22 to address the Court's attention to the last 23 three of those cases, the cases titled Ruby v. 24 Easton, Brooks versus Gilbert, and Lovely 25 versus Ewing. 7932 1 Those cases are all opinion cases and, 2 more specifically, are expert opinion cases. 3 And unfortunately for Microsoft, the 4 proposition for which it cited those cases is 5 not the law in Iowa. 6 If I may approach, Your Honor. 7 THE COURT: Sure. 8 MR. CASHMAN: I have a copy, and I 9 have just handed a copy to Microsoft, a copy of 10 Iowa Practice Guide 703.1, and I have 11 highlighted the pertinent portions of the Iowa 12 Practice Guide. 13 This points out the basis upon which 14 expert opinion testimony may be predicated 15 under 5.703. 16 In the second paragraph of the 17 practice guide, it states, quote, the rule 18 relaxes certain restrictions traditionally 19 placed upon expert opinion testimony. 20 It goes on in the third paragraph, 21 similarly, inadmissible evidence traditionally 22 could not supply a basis for expert opinion 23 testimony. 24 And it cites Footnote 2, which is the 25 Ruby versus Easton case that Mr. Tuggy cited to 7933 1 the Court yesterday. 2 However, referring back to the third 3 paragraph, this states, Rule 703, however, 4 provides that facts -- that the facts are data 5 upon which an expert opinion is based need not 6 be admitted or even admissible in evidence if 7 of a type reasonably relied upon by experts in 8 the particular field in forming opinions or 9 inferences on the subject. 10 So the three cases which Mr. Tuggy 11 cited, the Ruby v Easton case, the Brooks case, 12 and the Lovely case are not the current law in 13 Iowa. 14 They haven't been the law as it 15 relates to the propositions for which Mr. Tuggy 16 cited them since 5.703 was adopted in 1983 in 17 Iowa. 18 So not only are they inapposite 19 because they are expert opinion cases, but they 20 are not the law as demonstrated and established 21 by the Iowa Practice Guide and by 5.703 itself. 22 So those three cases should be 23 entirely disregarded. 24 The Howell case, which is the second 25 in the stack that Mr. Tuggy handed up, is not 7934 1 on point. That stands only for the 2 unremarkable proposition that -- the question 3 in that case was whether there was an admission 4 by the corporation and whether that was an 5 exception to the hearsay rule. 6 So there's no dispute about that. 7 That case is simply inapposite here. 8 Lastly, Microsoft cited the Frunzar 9 case. And this is a case in which there was a 10 single assertion of fact on the ultimate issue 11 in the case, specifically whether or not there 12 was any insurance coverage available under the 13 auto policies issued to the owner of the car in 14 which the plaintiff was riding or the owner of 15 the car that caused the accident. 16 That was the issue in the case. So 17 because it was a material -- the material, the 18 ultimate fact, that was not allowed. 19 That's a unique set of circumstances. 20 And more importantly for our purposes, the 21 Frunzar case does not even address the issue 22 before us, personal knowledge versus hearsay. 23 And, again, as I stated yesterday, 24 when we go through the Dixon testimony, I think 25 it will become apparent why the testimony is 7935 1 admissible and why the Special Master rulings 2 should be overruled. 3 I will note next that Microsoft 4 yesterday utterly failed to distinguish the 5 Agfa case, or the IBEW case, or really any 6 other of the cases. And the reason is they are 7 all on point and much more on point than 8 anything obviously that they cited. 9 Agfa is particularly instructed, as I 10 explained yesterday, and Microsoft said only 11 that it was dicta. 12 And there used to be a judge in 13 Minnesota who would say that when somebody says 14 it's dicta, that means you can't find a way to 15 explain why that case should not apply to your 16 case. 17 And I submit that's exactly what has 18 happened here because Microsoft can't 19 distinguish it. 20 In the Agfa case, the reference to 21 business people and the inferences that 22 business people draw from their interactions 23 with customers is really the key because 24 business people in those kind of dealings, the 25 evidence, the personal knowledge that they 7936 1 develop has the kind of trustworthiness and 2 reliability that makes it part of their 3 personal knowledge and not hearsay. 4 So the Agfa case is right on point 5 here, and also the other cases I cited 6 yesterday, which I'm not going to go through. 7 But I did also want to bring the 8 Court's attention to a few other cases, just, 9 again, to address this finite issue which 10 Microsoft keeps, I think, misdirecting the 11 Court on regarding what constitutes hearsay. 12 And, again, this will become clear, I 13 think, as we go through the specifics, but 14 first I'd like to direct the Court's attention 15 to a case called United States versus Mitchell. 16 This is a Third Circuit case. The cite is 365 17 F. 2nd 215. 18 And the Court there states testimony 19 about a statement is not itself a statement for 20 the purposes of the hearsay rule. 21 I have a copy of this case, which I 22 would like to hand up to the Court, if I may. 23 THE COURT: Yes. 24 MR. CASHMAN: And I have given a copy 25 to Mr. Tuggy. 7937 1 THE COURT: Thank you. 2 MR. CASHMAN: I have tagged and 3 highlighted the relevant portions of this case. 4 And I think this one is instructive 5 because the witness was testifying about a 6 declaration the witness had given in a previous 7 proceeding. 8 And as long as the witness was not 9 quoting from that declaration essentially, the 10 Court concluded that the testimony about the 11 declaration by that witness was not hearsay. 12 Next, I'd like -- some of these should 13 be obvious, but since Microsoft disputes these 14 obvious points, I think I need to bring them to 15 the attention of the Court. 16 But the next case I'd like to cite the 17 Court to is a case called State versus Wyckoff. 18 This is an Iowa Supreme Court case. The cite 19 is 255 N.W. 2d 116, and I bring this to the 20 Court's attention for the simple proposition 21 that stated by the Iowa Supreme Court here that 22 hearsay does not encompass out-of-court 23 statements that are offered to show that the 24 statement was made or to show what was said. 25 I have a copy of that case if the 7938 1 Court wants it. 2 THE COURT: What was that cite again? 3 MR. CASHMAN: The cite is 255 N.W. 2d 4 116. 5 THE COURT: Thank you. 6 MR. CASHMAN: The next case I'd like 7 to bring to the Court's attention is a case 8 called State versus Jones. This is 271 N.W. 2d 9 761. 10 And this is, I guess, a related point 11 to the Wyckoff case, but nonassertive 12 out-of-court statements are not hearsay. 13 In essence, that's saying that 14 statements -- out-of-court statements that are 15 offered to show what was said are not hearsay 16 because they, in essence, are providing 17 context. 18 And here, again, Plaintiffs take the 19 position that when we go through these 20 line-by-line pieces of testimony by Mr. Dixon, 21 and also this is true for Miss Harlan that we 22 looked at before, they are not providing -- 23 they are not making hearsay because they are 24 not out-of-court statements by a person that's 25 being offered for the truth of the matter 7939 1 there. 2 But, in those instances, to the extent 3 we come across an instance where a witness is 4 repeating virtually verbatim a statement from 5 an out-of-court declarant, those statements 6 would still be admissible here either under the 7 exception of Callahan or, in essence, for a 8 nonhearsay purpose such as what we have in the 9 Wyckoff case or the Jones case. 10 So I think that with those 11 preliminaries, we can probably go through the 12 specific line-by-line testimony. 13 I just want to add as a final point 14 that I think the most definitive examination of 15 hearsay rules by the Iowa Supreme Court are in 16 its recent decision of State versus Newell, 710 17 N.W. 2d 6. And I'll provide a copy of that 18 case to the Court just for convenience, along 19 with the Jones and the Wyckoff case. 20 THE COURT: Thank you, sir. 21 Thank you. I appreciate it. 22 MR. CASHMAN: So to sum up before we 23 go line by line, Plaintiffs' position is that 24 these statements are the personal knowledge of 25 Mr. Dixon; they are not hearsay. 7940 1 In those instances where there is even 2 -- where it might even be close to being 3 hearsay, it would only be in the case where a 4 statement by an out-of-court declarant is being 5 quoted or nearly quoted verbatim and being 6 offered for its truth, obviously, but in those 7 instances, the Callahan exception would apply 8 or it would be admissible for a nonhearsay 9 purpose for context, if no other -- if for no 10 other reason. 11 So unless Mr. Tuggy wishes to make 12 some response, I'm ready to go line by line. 13 MR. TUGGY: I'll respond briefly to 14 these legal questions, and then we should get 15 to the designation by designation review. 16 Mr. Cashman first attempts to dismiss 17 the last three cases Microsoft discussed 18 yesterday on the ground that experts may now 19 testify based on hearsay so long as it's 20 evidence that would otherwise reasonably be 21 relied upon by experts. 22 What Plaintiffs fail to consider is 23 which way that argument cuts. 24 Before 5.703 was adopted, the same 25 rule applied to experts and lay witnesses, and 7941 1 that rule was one could not testify based on 2 inadmissible hearsay. 3 And Ruby versus -- the Ruby case, 4 which Ruby versus Easton, which Plaintiffs 5 states does not currently state the rule for 6 experts is an opinion written by Justice 7 McCormick, our Special Master here, and in that 8 opinion he states the rule that applies to 9 testimony based on inadmissible evidence. 10 Presently, that rule applies to lay 11 witnesses. 12 Mr. Dixon is a lay witness. He is not 13 here to testify as an expert witness and has 14 not been qualified as an expert witness. 15 Ruby versus Easton has not been 16 overruled, and there's no view in Iowa law that 17 it has, but as it applies to experts, it's been 18 modified by 5.703, which is that experts can 19 rely on a broader base of testimony than can 20 lay witnesses. 21 But the rule that's stated there is 22 quite clear and it applies to Mr. Dixon's 23 testimony because he's testifying as a lay 24 person. He's not testifying as an expert and 25 cannot testify on the broad category of 7942 1 evidence that experts may reasonably rely upon. 2 The other two cases we cited 3 yesterday, both out of the Iowa Supreme Court, 4 Frunzar and the Howell case are exactly 5 directly on point, and establish the rule that 6 Microsoft relies upon in making its objections 7 and that the Special Master applied in 8 sustaining all these objections. 9 With respect to the Agfa case, 10 Mr. Cashman sets up a straw man, which is to 11 say my only argument was that it was dicta, 12 and, in fact, that was not Microsoft's only 13 argument. It was the first half of the 14 argument. 15 The argument was that that portion of 16 the opinion was, in fact, dictum and it's quite 17 clear that it is. 18 Basically, it's the part of the 19 opinion where the Court says when this is 20 remanded, the trial court should consider this 21 particular point of view, but it's not applied 22 to specific items of testimony. 23 And it's not that Microsoft disagrees 24 with the statements made in that case about the 25 abilities of witnesses to make inferences from 7943 1 admissible evidence or make inferences from 2 information that they personally observe. 3 And that's, for example, the basis for 4 the Steven Crummey testimony that we argue was 5 admissible when he testified that Mr. Manzi had 6 Gates envy as a person who worked Mr. Manzi. 7 It's not that Mr. Manzi told 8 Mr. Crummey, you know, I envy Bill Gates. It's 9 the actions that Mr. Manzi took. It's 10 inferences from the types of things that he 11 said. 12 It's not trying to -- it's not taking 13 a statement Mr. Manzi said and then 14 internalizing it and then stating it as a fact. 15 It's based on a long series of 16 interactions and inferences drawn from personal 17 observation, and that's what the Agfa case is 18 about. 19 The reason it's a problem as dictum is 20 that the Plaintiffs have been taking the 21 language there and applied it much too broadly 22 to basically undermine completely the rule 23 stated in Frunzar and in Howell and the other 24 three cases upon which we rely. 25 These last few cases that are new 7944 1 today are not remarkable for their content. 2 Basically, what they say is if a 3 person is testifying that a statement occurred, 4 that is not hearsay. And that's, of course, 5 true, because the statement is not being 6 offered for its truth. 7 In those cases, there's somehow some 8 relevance to the fact that the statement 9 occurred. And if there is relevance just to 10 the fact that a statement occurred, then the 11 testimony regarding that is not offering that 12 out-of-court statement for its truth. 13 It's just offering the out-of-court 14 statement for the fact that it occurred, and 15 that's not what's occurring with the testimony 16 that you are about to see. 17 So for those reasons in Microsoft's 18 view, we think the law of Iowa is quite clear 19 and the Special Master had the law right. So 20 the question now is applying it to the 21 designations we have before us. 22 THE COURT: All right. 23 MR. CASHMAN: Well, Your Honor, just 24 one comment because Microsoft is just plain 25 wrong in its attempt to explain away the 7945 1 failure to apprise the Court that the opinion 2 cases were not the law in Iowa, and that's 3 because they are opinion cases. 4 And what we are talking about is not 5 opinion testimony. This is fact testimony. 6 And so those cases have zero application and 7 can stand only for the proposition of expert 8 testimony. 9 And they aren't the law. So Microsoft 10 is just plain wrong in its attempt to rely on 11 those cases. They aren't the law. 12 So I think that's enough said about 13 the cases. We are ready to go line by line. 14 THE COURT: Page 319, line 24. 15 MR. CASHMAN: Here, Your Honor, the 16 question posed to Mr. Dixon is, do you have any 17 estimate of how much better you could have done 18 in the absence of those tactics, referring to 19 Microsoft tactics. 20 And the answer is, my understanding 21 and my belief are the marketplace was pretty 22 robust at the time. 23 So he's prefacing his answer with his 24 experience in the marketplace as sales 25 executive, which is what he was. 7946 1 And he says, I would say that we could 2 have easily doubled our market penetration. 3 And the reason is I say that, and then he goes 4 on to explain and provide the foundation for 5 his belief that their market penetration would 6 have been double. 7 That's the kind of testimony that any 8 business executive, particularly a person in 9 Mr. Dixon's position, is entitled to make. 10 The objection here was speculation and 11 lack of personal knowledge. And, frankly, it's 12 hard to see how Microsoft in good faith can 13 even make an objection to this kind of 14 testimony and answer. 15 It's clearly appropriate. It's 16 clearly the personal knowledge of Mr. Dixon. 17 And it's appropriate under the Agfa case. It's 18 appropriate under the Robinson case, and it's 19 appropriate under the Kansas City Light case, 20 and also the IBEW case. 21 I think not only is Agfa particularly 22 compelling, but here Kansas City Power and 23 Light is one that seems to be particularly on 24 point. 25 Because there the business executives 7947 1 were providing personal knowledge based on 2 their experience. And, in fact, were making 3 projections based on their experience. 4 And in the Kansas City Power case, as 5 the Court may recall from yesterday, the CFO 6 and the CEO were making predictions essentially 7 about what they thought the Missouri Power 8 Commission was going to do in certain 9 circumstances. 10 And the defendants in that case argued 11 that testimony was inappropriate, that it was 12 speculation and not within their personal 13 knowledge because the CFO and the CEO, by their 14 own admission, had not actually contacted the 15 power commission to ask what they were going to 16 do. 17 But the Court in Kansas City Power 18 said this is within their personal knowledge 19 because they have lots of years of business 20 experience dealing with these kind of issues 21 which puts them in a situation where they can 22 make projections about what they think will 23 happen. And that's their personal knowledge. 24 So for all those reasons, the 25 objection should be overruled. The Special 7948 1 Master's ruling on this was plainly incorrect 2 and should be overruled. 3 THE COURT: Mr. Tuggy, sir? 4 MR. TUGGY: Yes. I do think that 5 there is a portion of the IBEW case that's 6 worthy of examining in the context of the 7 statement so that we can see how it is that 8 Mr. Dixon's knowledge of the marketplace cannot 9 serve as the basis for his speculation and lack 10 of personal knowledge that results in the 11 opinion he states here. 12 His opinion is that had Microsoft not 13 done the things that we think it ought not to 14 have done, we would have doubled our market 15 penetration. That's his opinion. 16 Now, under the -- the way Microsoft 17 has been approaching issues of what an 18 executive can testify about is we've 19 acknowledged that where an executive has 20 knowledge of the marketplace and infers from 21 personal observation certain facts about the 22 marketplace or his or her business's role in 23 the marketplace, that's admissible testimony so 24 long as it's otherwise relevant. 25 Here, in this example, Mr. Dixon is 7949 1 not drawing inferences from facts that he 2 observed. He's drawing inferences from 3 statements made to him by others. 4 And we'll look at the testimony to see 5 how that is, and an example in the IBEW case of 6 the correct use of market knowledge to admit 7 testimony by an executive. 8 So in Mr. Dixon's testimony, when he 9 says -- to put it in context, there is a 10 section of testimony above the one where 11 Microsoft has objected. 12 And in that section of testimony, 13 Mr. Dixon is asked whether he thinks -- this is 14 at page 319, line 21. 15 Do you think that they actually 16 affected the amount of DR-DOS you were able to 17 sell in Asia Pacific? 18 So the question is, in your view, did 19 Microsoft's conduct affect your sales of 20 DR-DOS. 21 And he says absolutely. 22 That is testimony we have not objected 23 to. And it is his inference from market 24 knowledge and years of work with DR-DOS. 25 Our objection is to the subsequent 7950 1 testimony where he's asked to give an opinion 2 about how much better DR-DOS or DRI would have 3 done in the absence of those, as it says here, 4 tactics. 5 So to render this opinion, Mr. Dixon 6 speculates about four things. 7 First, at page 320, lines 9 to 13, 8 Mr. Dixon says. And the reason I say that is 9 that when you sit down with a company and a 10 customer, potential customer, and they have 11 decided that your technology is by far the 12 best, it is the superior technology -- okay. 13 So the first item of speculation here 14 is Mr. Dixon is speculating that, in fact, 15 based upon what he's told by customers, they 16 believe that their technology is by far the 17 best. That is Digital Research's technology. 18 Second, Mr. Dixon says -- and they 19 want to contract with -- this is lines 12, 13, 20 and 14. 21 And they want to contract with you. 22 There he is saying that these 23 customers wanted to enter into contracts with 24 DRI. That is based solely, as he will admit 25 later, on what customers told him. 7951 1 Then item 3, the third item of 2 speculation begins at line 15, where he says, 3 the only reason that they didn't contract with 4 you was because of their concern about 5 Microsoft. 6 So there he is basing his view on 7 market penetration on a statement by customers, 8 which we'll establish later in his testimony, 9 that the only reason they didn't contract with 10 Digital Research was because of their concern 11 about Microsoft. 12 And the fourth item of speculation or 13 lack of personal knowledge is where Mr. Dixon 14 says that, at lines 18 through 20, their 15 inability to get out of those agreements, the 16 continuing pressure of future technologies that 17 would come out from Microsoft that they 18 wouldn't be able to get. 19 So here he -- so he's basing his 20 opinion on these four facts. What OEMs have 21 decided about the quality of DR-DOS; whether 22 they, in fact, wanted to contract with DR-DOS; 23 what the impact was on their -- what the impact 24 of Microsoft's relationship with the OEMs was; 25 and what pressure was put on them relating to 7952 1 future technologies. 2 All these things are about what's in 3 the mind of the OEMs, and these are things 4 about which the witness is speculating. 5 Another thing he's speculating about 6 is the volume of purchases by OEMs over time. 7 In other words, he might be able to 8 testify that there would be some effect of 9 Microsoft's conduct on DRI, but here he's 10 speculating about how much product OEMs would 11 have purchased from DRI. 12 He's speculating about customers, not 13 the OEM customers, but end users. How much 14 they would have liked Digital Research's 15 DR-DOS. Was it going to be a popular product? 16 How many people were going to buy it? 17 All those factors are directly 18 relevant to the level of market penetration to 19 DR-DOS. And he's just speculating about how 20 much DR-DOS product would have been sold to 21 OEMs and to end users. 22 And there's no evidence regarding the 23 basis for that part of his opinion, the amount 24 of DR-DOS that would have been sold to these 25 OEMs in this but-for world that this witness is 7953 1 opining about. 2 Now, on page 321, right after his 3 answer, Microsoft's lawyer at the deposition 4 moves to strike on the grounds that the witness 5 is speculating about what's going on in the 6 minds of the OEMs. 7 And so the lawyer for the plaintiff 8 attempts to establish the basis for this 9 testimony. 10 And at line 16 the question was asked, 11 when you were telling the ladies and gentlemen 12 of the jury what customers think or what 13 customers want or things like that, you are 14 telling them that based upon what the customers 15 have told you; correct? 16 Answer: That is correct. 17 Well, tell me then -- well, that was a 18 little leading. Tell the ladies and gentlemen 19 of the jury, what is the basis for your telling 20 them what customers want or like or dislike or 21 think? 22 Answer: The customers would 23 absolutely explain their concerns with the 24 current relationship that they had with 25 Microsoft or the potential future relationship 7954 1 that they were -- that they have with Microsoft 2 and how that would be impacted if they were to 3 do business with us. 4 So it's very clear from this testimony 5 that it's all based upon what it was he was 6 told by OEMs about their relationship with 7 Microsoft, about what they thought of the 8 DR-DOS technology, about their concerns in 9 their relationship with Microsoft. 10 And if there's any question about 11 this, the next -- at page 322, lines 7 to 16, 12 the question is asked of the witness, why would 13 you believe these customers, and the witness 14 testified that these customers would tell him 15 the truth. 16 It's so clear from the statement by 17 Posner in the Agfa case that the authority upon 18 which Dixon is relying is not his own. He's 19 relying on the authority of the out-of-court 20 statements made by OEMs to come to the 21 conclusion or the opinion to which Microsoft 22 objects. 23 And, in this context, the Special 24 Master, knowing all this about the testimony, 25 sustained Microsoft's objection. 7955 1 It was not -- it is odd for Plaintiffs 2 to say that we couldn't even make this 3 objection in good faith when the Special Master 4 sustained it, but in light of the context, it's 5 clear that the witness is speculating about 6 what's going on in the minds of OEMs and what's 7 happening in the but-for world in his market. 8 To conclude, I'd like to draw an 9 analogy to the IBEW case. 10 In that case, at page 8 of the portion 11 of the case the Plaintiffs distributed to us, 12 what was at issue was an Exhibit 7 which was 13 testimony -- which was the deposition 14 transcript of a man named Joseph Ramallini, and 15 Mr. Ramallini testified about three things. 16 First, Mr. Ramallini was a project 17 manager of several construction sites in New 18 York City, and he testified first that six or 19 seven firms compete in the medium-sized cabling 20 market in New York. 21 Okay. So he's a construction manager 22 and he says, in my market, six or seven firms 23 compete. 24 The second thing he testifies about is 25 that it would be disastrous, quote-unquote, to 7956 1 hire electricians to do the more technically 2 demanding aspects of cabling work. 3 Okay. So he's a project manager and 4 he says it's disastrous to hire simple trained 5 electricians to do this complicated work. 6 And third, he says, approximately 600 7 cables were cut at a site that I supervised. 8 So the Court says all of his testimony 9 rests on knowledge of the marketplace gained 10 through years of experience and his personal 11 knowledge of particular jobs. 12 So someone who's a project manager 13 will know, just from his participation in the 14 marketplace, that he competed against six or 15 seven firms. He'll know from his participation 16 in the marketplace that it's disastrous to hire 17 untrained electricians to do a particular kind 18 of work. And he has a basis of knowing how 19 many cables were cut at a job site that he 20 personally supervised. 21 So this testimony, which was permitted 22 in the IBEW case, based on knowledge of the 23 marketplace, was based on information within 24 the personal knowledge of the witness. 25 The information upon which Mr. Dixon 7957 1 is relying for his opinion is not information 2 in his personal knowledge. It's based upon 3 what was told him by OEMs, and he's guessing 4 about what the volume of future sales might be. 5 Finally, in the Harlan argument, a 6 point was made on opinion testimony such as 7 this that perhaps this issue goes to weight 8 rather than admissibility. 9 And in the event that position is 10 taken with respect to testimony like this, then 11 the testimony ought to be excluded as unduly 12 prejudicial where a witness is basing testimony 13 solely on hearsay and the testimony is based on 14 speculation such as what levels of sales might 15 be in a but-for world, really testimony 16 belonging to an expert. 17 It is inappropriate to admit that 18 testimony based on some tiny bit of probative 19 value when the prejudicial effect of testimony 20 of this type confusing the Jury about what the 21 witness really knows is inappropriate. 22 And I'd like to hand up a case that 23 relates to this argument. It's called Schuller 24 versus Hy-Vee Food Stores. It's 407 N.W. 2d 25 347. 7958 1 In this case, this involved a 2 slip-and-fall where the plaintiff slipped on an 3 ashtray. And when the plaintiff slipped on the 4 ashtray at this particular food store, he was 5 immediately helped up by someone at the store 6 who said what a stupid place to put an ashtray. 7 The question at the trial was whether 8 that statement could be admitted into evidence 9 on the issue of liability. 10 And on the last page of the opinion as 11 I've provided to you, page 10 of 10, the very 12 top of that referenced the statement it was a 13 stupid place for an ashtray. 14 And then immediately below that part 15 of the opinion, the Court states, the statement 16 was excluded from the record at each of the 17 previous two trials, but was again offered in 18 the third trial. 19 The trial court concluded that the 20 statement would come under the exceptions 21 provided for hearsay under Iowa Rule of 22 Evidence 803. 23 However, because the declarant was 24 unknown and his statement could not be 25 substantiated or attacked on cross-examination, 7959 1 the trial court concluded that under Iowa Rule 2 of Evidence 403, the statement's probative 3 value would be substantially outweighed by its 4 prejudicial effect and, therefore, excluded the 5 statement. 6 We agree with the trial court's 7 conclusion. 8 So, fundamentally, this testimony is 9 rank speculation. The witness does not have 10 the personal knowledge to make a guess about 11 what would have happened to market penetration 12 in his but-for world. 13 And any admission of this would be 14 unduly prejudicial to Microsoft, and Microsoft 15 requests that the Special Master's ruling be 16 sustained. 17 THE COURT: Thank you, Mr. Tuggy. 18 MR. CASHMAN: Your Honor, that was the 19 most disingenuous argument because Mr. Tuggy -- 20 he was not only mixing apples and oranges, but 21 he was mixing apples and oranges and bananas 22 too. 23 He started out by arguing about 24 opinion -- the opinion of Mr. Dixon stated in 25 this testimony. That argument is without merit 7960 1 for the simple reason that they didn't have an 2 opinion objection, improper opinion objection. 3 Mr. Tuggy argued at length about the 4 alleged hearsay. Well, not only is there no 5 hearsay in this answer, but they didn't make a 6 hearsay objection to it. So that argument 7 should be totally disregarded. 8 Then he made the prejudice argument 9 right at the end of his presentation. And 10 nowhere have they made a prejudice objection 11 except right on the fly here. 12 The parties were not required to make 13 prejudice objections before the Special Master, 14 but the parties were required to advise each 15 other if they were going to be making prejudice 16 objections to each designation before we 17 presented them to the Court. And Microsoft 18 made no prejudice objections. So that's a red 19 herring, as well. 20 Furthermore, the substantive arguments 21 that Mr. Tuggy made are just wrong. 22 He says that the use of statements, 23 which he pointed out, are improper opinions is 24 how he characterized them, but, clearly, this 25 information is squarely within the knowledge of 7961 1 a sales executive such as Mr. Dixon who gains 2 his personal knowledge through his interactions 3 with his customers, which is the very 4 information he lays out in his answer. 5 Under Mr. Tuggy's analysis, no 6 businessman could make any projection. They 7 wouldn't be able to testify about what they do 8 every single day. 9 We both know that marketing people and 10 salespeople, every day they are asked by their 11 supervisors to make projections about what they 12 are going to be doing this week. What are you 13 going to be doing this month? What are you 14 going to be doing this year? What's our 15 five-year projection? 16 These salespeople are making 17 projections based on their personal knowledge 18 that they gained from the interactions with 19 their customers on a daily basis. 20 And that's why it's their personal 21 knowledge and that's exactly why in cases like 22 Agfa they're entitled to testify about it. 23 Mr. Tuggy attempts to embrace the IBEW 24 discussion of Exhibit 7 in Mr. Ramallini's 25 testimony about his years of experience in the 7962 1 marketplace, but that's exactly what Mr. Dixon 2 has, as demonstrated here, because he's got 3 years of experience in the marketplace. 4 The marketplace is dealing with 5 customer A, customer B, customer C, customer D. 6 And when you have interactions with those 7 customers, what they tell you collectively 8 becomes your personal knowledge. And that's 9 exactly what Mr. Dixon is testifying about 10 here. 11 Mr. Tuggy's argument is extremely 12 disingenuous given the position he took with 13 respect to Mr. Sculley. 14 And I think I pointed out to the Court 15 before that in the Sculley situation, in 16 response to specific questioning from the 17 Court, Mr. Tuggy said all you need for personal 18 knowledge is to be a competitor of Microsoft. 19 And that's at page -- the transcript page is 20 4317. And I'm going to read it again. 21 The Court: Other than the fact that 22 he was CEO of Apple, what's his foundation? 23 Mr. Tuggy: His foundation is that 24 Apple was a competitor with Microsoft in the 25 applications arena. 7963 1 Those are lines 5 through 9 on page 2 4317. 3 Now, the Court may recall that you 4 questioned Mr. Tuggy about that a little bit 5 further in subsequent pages because Mr. Sculley 6 didn't even provide any testimony about how he 7 came up with the views that he had. And 8 Mr. Tuggy didn't find that a problem. 9 Again, he thought it was sufficient 10 that Mr. Sculley was simply a competitor of 11 Microsoft during the years that he was the CEO 12 at Apple. 13 Now, the Court may recall that 14 Microsoft was allowed to use that testimony 15 from Mr. Sculley during its opening statement. 16 The portions of Mr. Sculley's 17 testimony that were not permitted were the 18 testimony where he was talking about monopoly 19 prices. 20 Because that was, and we argued this, 21 that was an improper opinion that Mr. Sculley 22 was -- either improper economic or improper 23 expert opinion. And those objections were made 24 and that was essentially the basis for keeping 25 that testimony out. 7964 1 However, Mr. Sculley, with far less 2 demonstration of his personal knowledge, was -- 3 that testimony was permitted, and it didn't 4 come close to the explanation that's provided 5 by Mr. Dixon. 6 Presumably Mr. Sculley obtained the 7 basis for what he testified about from people 8 in his organization and from talking to Bill 9 Gates and from talking to many other people at 10 customers of Apple and whatnot, which is 11 exactly what Mr. Dixon was doing when he gains 12 his knowledge of the marketplace. 13 And Mr. Dixon and Plaintiffs shouldn't 14 be penalized because he identifies with more 15 specificity the personal knowledge that he has 16 instead of giving global, unsupported 17 statements like Mr. Sculley did. 18 So Plaintiffs submit that Microsoft's 19 argument should be rejected, though the Special 20 Master's ruling should be overruled, and the 21 objection should be overruled. 22 Thank you. 23 THE COURT: Thank you. 24 Let's go to number two. Page 325. 25 MR. CASHMAN: Page 325, 12. 7965 1 Here, again, this is straightforward 2 personal knowledge testimony. 3 Mr. Dixon is asked, give us some 4 examples of places where you understood 5 Microsoft had per processor licenses. 6 And in context, the prior designation 7 was a situation where Mr. Dixon explained that 8 he encountered per processor licenses amongst 9 his customers. 10 So the question here is give us some 11 examples. 12 Well, he says an example is Trigem, 13 and he explains that the Trigem situation was 14 one where there were per processor licenses. 15 He goes on at a great deal of length 16 about why this is an example of per processor 17 license that he encountered. 18 Microsoft's objections to this 19 testimony are both hearsay and insufficient 20 foundation. 21 Now, I'm going to address the 22 foundation more specifically first. 23 The basis for that statement is that 24 Mr. Dixon, by his own admission, never sat down 25 and read one of the licenses, one of the per 7966 1 processor licenses. 2 Well, Your Honor, two points. Number 3 one, I'm going to harken again back to 4 Mr. Sculley. 5 You'll recall that Plaintiffs argued 6 Mr. Sculley's testimony should be excluded 7 because he hadn't read the contracts to know 8 what Microsoft's prices were. And Microsoft 9 argued well, so what. He doesn't have to read 10 the Microsoft licenses. He has his knowledge 11 from the marketplace. 12 And I fail to see how there is -- how 13 Microsoft can say that out of one side of its 14 mouth and credibly say that Mr. Dixon shouldn't 15 be allowed to testify about his personal 16 knowledge when he's right there working with 17 customers and gains this information. 18 There is really no requirement that a 19 person read a contract to have personal 20 knowledge that per processor license agreements 21 exist when you have that interaction, as 22 Mr. Dixon explains here, with customers who 23 advise you and provide you with the information 24 that you then internalize in the ongoing 25 relationship you have with that customer and 7967 1 other customers. 2 So this testimony is clearly -- it has 3 foundation. 4 As far as the hearsay argument 5 objection goes, again, Mr. Tuggy -- Mr. Dixon 6 does not cite an out-of-court statement. 7 There's no statement here. 8 And I direct the Court back to the 9 United States versus Mitchell case which I 10 handed up. 11 And in the Mitchell case, for example 12 -- in the Mitchell case, the Court stated what 13 should be a simple enough proposition for 14 Microsoft to understand, but they fail to 15 acknowledge it, is that -- I'm quoting, this is 16 at 356 F. 3rd jump cite to 258. 17 And in the right-hand column, towards 18 the bottom, it said -- the Court said, we do 19 not agree that any hearsay statements were 20 introduced. 21 Rule 801C which defines hearsay 22 concerns only, quote, statements, and so the 23 first question to ask is whether the government 24 elicited a statement. 25 The Court continues, quote, a 7968 1 statement is an oral or written assertion, and 2 then goes on to say, quote, testimony about the 3 existence of a statement is not itself a, 4 quote, statement, close quote, meaning a 5 hearsay statement. 6 Now, turning back to Mr. Dixon, whose 7 testimony we are looking at on page 325, 8 there's no statement here. There's no 9 out-of-court statement that's elicited from 10 Mr. Dixon. 11 This is personal knowledge testimony 12 that he acquired as a business executive, 13 day-to-day sales work with Trigem and other 14 customers, and Trigem is the example which he 15 is discussing here. 16 So in addition to the Mitchell case, 17 the support for why this case should be 18 admitted as testimony of personal knowledge and 19 not hearsay, we've got the IBEW case again, the 20 Agfa case, the Robinson case, and the Kansas 21 City Power and Light case, all require the 22 admission of this testimony. 23 And, secondly, even if it were 24 determined that this somehow constitutes 25 hearsay, which is -- you know, it's not hearsay 7969 1 as the Plaintiffs contend, but even if it were 2 hearsay, this testimony would be admissible 3 under Callahan. 4 So for all those reasons, the 5 objections should be overruled, both 6 insufficient foundation and hearsay. 7 Thank you. 8 THE COURT: Mr. Tuggy? 9 MR. CASHMAN: Thank you, sir. 10 MR. TUGGY: Yes, Your Honor. I'll 11 deal with foundation and hearsay together 12 because they are basically the same objection. 13 In this situation, the testimony 14 that's relevant to Mr. Dixon's foundation and 15 the hearsay objection is at page 325, beginning 16 at line 2. 17 There the examiner says, am I correct, 18 Mr. Dixon, again, so that we don't -- you don't 19 mislead the ladies and gentlemen of the jury, 20 you never saw a per processor license between 21 Microsoft and any of your OEM customers; 22 correct? 23 Answer: That's correct. 24 Question: What you have said in your 25 declaration and are going to tell us in this 7970 1 deposition today is what customers told you; is 2 that right? 3 Answer: Yes. 4 Then, he immediately thereafter gives 5 a response to a question about examples of 6 places where you understood Microsoft had per 7 processor licenses. 8 It couldn't be more plain from the 9 testimony that that testimony is based upon 10 what a customer told him about what contract 11 that customer had with Microsoft. 12 And that is hearsay. The testimony 13 lacks foundation because it's based on hearsay 14 and it also violates the hearsay -- the rule 15 against hearsay. 16 Now, the statement that, well, there 17 isn't in Mr. Dixon's answer some reference to a 18 specific quoted statement from the OEM is 19 really not relevant. 20 Under the Frunzar case, the 21 objectionable question was -- and answer was, 22 to the best of your knowledge, is there any 23 insurance that covers this accident other than 24 the insurance that Allied has? 25 Answer: No. 7971 1 There's no quoted statement in there. 2 It just turned out that the basis for that 3 testimony was a conversation between the 4 witness and another driver. 5 And the Court held that the statement 6 was based on hearsay and, therefore, 7 inadmissible and had to reverse the judgment. 8 In Howell, the question and answer, 9 the offending question and answer were, do you 10 know whose horse and wagon this was that ran 11 over you? 12 Answer: J. Mandelbaum and Sons. 13 There's no statement quoted there. 14 What's happening is, and what was established 15 later on cross was that the only basis for that 16 answer was hearsay. 17 And so that question and answer needed 18 to be excluded and the judgment had to be 19 reversed because it was admitted under the -- 20 and it needed to be excluded under the rule 21 against hearsay. 22 Plaintiffs both in the Harlan argument 23 and with Dixon have repeatedly raised our 24 argument on John Sculley so I'll try to make it 25 clear how our argument on Sculley fits right in 7972 1 IBEW and is much different than Mr. Dixon's 2 testimony. 3 Mr. Sculley testified that Microsoft 4 was a low priced competitor in the applications 5 field. 6 Now, that is testimony and that is 7 information he would know as the CEO of Apple 8 because information about whether Microsoft was 9 a low-priced competitor is information that's 10 available in the market without access or 11 without requiring hearsay. 12 For example, Microsoft sells 13 application at retail stores. That's just 14 easily available to Mr. Sculley. 15 Microsoft application pricing is 16 published in commercial publications, like IDEC 17 reports, revenue per license information. 18 That's admissible evidence upon which 19 Mr. Sculley could know what Microsoft's pricing 20 was. 21 One would expect that you would note 22 if your chief competitor is a low-price 23 competitor. It would be like saying that the 24 CEO of Target cannot testify that Wal-Mart is a 25 low-priced competitor. 7973 1 It has to do with the nature of the 2 testimony and how it relates to what 3 information can be gained with first-hand 4 knowledge. 5 In Ramallini's testimony in IBEW about 6 the fact that there are six or seven 7 competitors in the market is exactly the type 8 of testimony John Sculley is giving about 9 Microsoft's general pricing pattern. 10 Here, Mr. Dixon is not testifying 11 about information that's publicly available. 12 He's testifying about what customers told him 13 about their private relationship with 14 Microsoft. The declarant is the customer. The 15 statements are what that customer's contractual 16 relationships were with Microsoft. That is 17 plain and simple hearsay and the testimony is 18 based on hearsay. 19 And Mr. Cashman in his argument 20 admitted that Mr. Dixon's testimony is what 21 customers advised him. So there is an 22 out-of-court statement which is statements by 23 customers regarding the nature of their 24 contracts with Digital Research. 25 It is hearsay, and under clear Iowa 7974 1 authority, it's statement -- it is testimony 2 based on hearsay and it's inadmissible both 3 because it's lacking in foundation and because 4 it's hearsay. 5 And the Special Master's ruling on 6 this testimony ought to be sustained. 7 THE COURT: Thank you. 8 MR. CASHMAN: Your Honor, first of 9 all, Mr. Tuggy is incorrect that all of the 10 information that Mr. Dixon had as the 11 foundation for his testimony came from 12 customers. 13 That, in part, is demonstrated on page 14 327, line 23, through 328, line 5. 15 Mr. Dixon testifies there that he read 16 documents which were publicly available in 17 Korea from the Korean FTC, which had done an 18 investigation of Microsoft's contracts. 19 So all of the testimony provided by 20 Mr. Dixon comes at a bare minimum from the FTC 21 published materials and from his everyday 22 dealings with customers. 23 Now, moving back to the fundamental 24 basis for Mr. Tuggy's arguments. Customers 25 told you, he stated, was the reason why they 7975 1 were objecting. 2 Well, first of all, that is not a 3 hearsay statement. It's so plain and simple 4 under the rules. 5 Rule 801A says a statement -- defines 6 a statement as an oral or written assertion, an 7 oral or written assertion if it is intended by 8 the person as an assertion. 9 Nowhere in the answer provided by 10 Mr. Dixon from line 14 -- beginning on line 14, 11 through 25, and I submit anywhere else when we 12 go through, nowhere is there an oral or written 13 statement. 14 Secondly, there's no declarant. 15 The Rule 801B says a declarant is a 16 person who makes a statement. 17 There is no person making a statement 18 in this answer. 19 Mr. Dixon is not throwing up the 20 statement of some other person and letting it 21 stand on its own for its truth. 22 It's so plain that there's no hearsay 23 here that Microsoft has to go to extreme 24 gymnastics to create the impression that there 25 is. 7976 1 In Microsoft's world, it's okay if you 2 gain knowledge from people other than your 3 customers. Then it's personal knowledge and 4 you can testify about it. 5 But if you gain that knowledge from 6 your customers, it's hearsay and you have no 7 foundation to testify about it. 8 That's absurd, Your Honor. That's, 9 frankly, absurd and should be rejected out of 10 hand. 11 Mr. Tuggy talks about the Sculley, 12 information available in the market. I wrote 13 that down as a quote of why he said Sculley's 14 testimony was different. 15 And he gave a bunch of possible 16 examples. But none of those are cited in 17 Mr. Sculley's deposition by Mr. Sculley. None 18 of those sources were. Not one, as I recall. 19 But, more importantly, those are just 20 part of where you can gain information of 21 personal knowledge. 22 We saw that in the Agfa case, we saw 23 that in the Robinson case, we saw that in the 24 Kansas City Light case, we saw it in the IBEW 25 case. 7977 1 You can get personal knowledge from 2 multiple sources. But if your sources are from 3 your customers, that certainly is marketplace 4 knowledge. That's your marketplace. 5 And that becomes your personal 6 knowledge when you have that kind of 7 interaction with your customers. And you're 8 entitled to testify about it. 9 Mr. Tuggy tries to hang his hat, 10 desperately I'd say, on the Frunzar and the 11 Howell case because that's all they've got. 12 That's all they've got. 13 Well, first of all, I submit those 14 cases probably aren't correctly decided, but 15 they're easily distinguished. 16 As I pointed out, the Howell case is 17 about -- really only about whether there was an 18 admission, but, in that case, cross-examination 19 revealed that the witness had knowledge from 20 only one single statement, a single statement. 21 And that was the same in the Frunzar 22 case, had knowledge from one single statement. 23 That's not the case here. That's not 24 the case from Mr. Dixon because he gained his 25 knowledge from many sources. 7978 1 Although he's talking about a specific 2 example doesn't mean that he doesn't have 3 marketplace knowledge from many sources. 4 So the Frunzar case and the Howell 5 case don't have anything to do with the 6 situation here. 7 And I'd, furthermore, point out that I 8 think it's pretty illustrative that Microsoft 9 has to rely on a 1913 case, the Howell case, 10 which was decided at a period of time when the 11 development of common law hearsay principles 12 was in its infancy in Iowa for sure, but 13 certainly hadn't developed a level of 14 sophistication that developed over the years 15 and as examined by people like Weinstein and 16 other evidence -- esteemed evidence scholars 17 who, as I pointed out in Weinstein yesterday, 18 have noted that personal knowledge of 19 businessmen in cases like this is personal 20 knowledge and not hearsay. 21 So the Frunzar case and the Howell 22 case simply don't have any application here. 23 I think from a reading of the 24 testimony provided by Mr. Dixon, it's plain 25 that he's talking about cumulative knowledge, 7979 1 cumulative knowledge. 2 And, in fact, he states -- actually, 3 I'm going to direct your Court's attention to 4 331, line 15 -- actually, line 11 through 19. 5 The question in that right there was, 6 by the way, when these customers you were 7 talking about, would you talk to about 8 Microsoft practices or policies or licensing 9 terms, would they just do it on one occasion or 10 would it come up frequently? 11 Answer: It was a lot. In a lot of 12 ways, the OEM was asking for ideas and advice 13 on how to license our product faced with these 14 kind of conditions. 15 So it became a very common situation 16 that occurred with almost all of the 17 discussions we had with executives. 18 So what you're talking about here is 19 cumulative information obtained over months, 20 over years, with multiple people. That's 21 exactly how you gain personal knowledge. 22 Especially how a business executive obtains 23 personal knowledge about the marketplace. 24 Frankly, how else could you develop 25 personal knowledge about your marketplace 7980 1 without interacting with your customers? 2 Just as Mr. Dixon testifies he did as 3 the basis for his testimony, the partial basis 4 for his testimony. 5 So back to the designation in 6 question. 7 This is personal knowledge. Mr. Dixon 8 had the foundation to make these statements, 9 clearly, and it's not hearsay. 10 Thank you. 11 MR. TUGGY: Very briefly, Your Honor, 12 on a couple of the new points. 13 One is Mr. Cashman pointed to some 14 testimony about the Korean FTC and suggested 15 that that testimony was foundation for 16 Mr. Dixon's testimony about the -- about the 17 contracts with Trigem, which is really what's 18 the subject of the testimony. 19 At page 327 of Mr. Dixon's deposition, 20 starting at line 11, which is not testimony to 21 be played before the Jury, the witness 22 testified that the Korean FTC found that these 23 contracts were illegal and predatory toward 24 competition. That is, per processor contracts 25 were illegal and predatory toward competition. 7981 1 Microsoft's lawyer moved to strike it 2 as lacking in foundation, and the witness then 3 adds to his answer saying that the reason why I 4 had information that these contracts were 5 illegal is because the Korean FTC published 6 something saying that. 7 That testimony has nothing to do with 8 whether Trigem had a per processor agreement 9 with Microsoft. It's just not part of the 10 foundation for that testimony. 11 At page 326 within this testimony, at 12 lines 7 to 9, one of the things that Mr. Dixon 13 testifies about is not only the existence of 14 this contract with Trigem, but the fact that 15 the agreement was forced on to Trigem. 16 In other words, Trigem, in 17 negotiations with Digital Research, tells 18 Digital Research that, you know, we can't -- 19 you know, we don't want to pay what you're 20 asking us to pay on your product because 21 Microsoft is forcing us to buy its products 22 under this per processor agreement. 23 And, by the way, Trigem, as you'll see 24 later, in fact, licensed DR-DOS. 25 But in connection with that testimony, 7982 1 at page 53, line 25 of the deposition, the 2 questioner there, Microsoft asks the witness, 3 you also claim that Microsoft told OEMs that 4 they had no choice but to enter into CPU 5 contracts. 6 Do you understand what I mean when I 7 use the word CPU contracts, which are per 8 processor contracts. 9 Answer: I do. 10 Question: Did you ever hear anyone 11 from Microsoft say that? 12 Answer: I did not ever, you know, 13 hear Microsoft raise that. 14 Question: Did you ever see it in a 15 document from Microsoft? 16 Answer: No. 17 Question: Was this limited to any 18 specific country or was this the entire Far 19 East? 20 Answer: It was in countries in the 21 Far East. 22 Question: Which countries? 23 Answer: Korea and Taiwan. 24 Question: And so all of this 25 information about this is as it was relayed to 7983 1 you by some other party; correct? 2 Answer: That's correct. 3 With that cross-examination of the 4 witness, establishing that the testimony is all 5 based upon statements made by customers, it's 6 inadmissible hearsay and the Special Master's 7 ruling should be sustained. 8 THE COURT: Number 4. 9 MR. CASHMAN: Your Honor, I just want 10 to make one comment on that last point, and 11 that is that Microsoft, as Mr. Tuggy 12 demonstrated, had full opportunity to 13 cross-examine Mr. Dixon on all of his personal 14 knowledge that he testified about here, which 15 is what they did. 16 And that's why -- I mean, the fact 17 that they could cross-examine him on it and 18 that they did shows you that it was personal 19 knowledge and not hearsay. 20 Number 4, Your Honor, is -- line 328, 21 line 9, and here Mr. Dixon is asked what he 22 means when he says a minimum commitment 23 contract. 24 What he meant, what Mr. Dixon meant. 25 And, again, the objection is lack of 7984 1 personal knowledge, which is, frankly, again, 2 hard to comprehend the basis for the objection 3 since Mr. Dixon is testifying about what he 4 meant. 5 It's pretty extreme for Microsoft to 6 say Mr. Dixon is speculating about what he 7 meant. 8 So Mr. Dixon goes on and he explains 9 what he meant by minimum commitment CPU 10 contracts. 11 Now, that certainly is within his 12 personal knowledge. Again, the cases that 13 support it, clearly the Agfa case, the Robinson 14 case, the Kansas City Light and Power case, and 15 IBEW. 16 The witness has personal knowledge 17 based on his interactions in the marketplace 18 with his customers. 19 Thank you. 20 THE COURT: Mr. Tuggy? 21 MR. TUGGY: Yes, Your Honor, the 22 argument for Microsoft will be short. 23 As is clear from page 325, lines 2 to 24 10, Mr. Dixon's testimony here about what 25 Microsoft's contracts were with OEMs in the Far 7985 1 East is based entirely on statements made to 2 him by persons at OEMs and did not include any 3 personal knowledge of conversations with 4 Microsoft of a contract, of seeing a contract 5 with an OEM. 6 All this testimony about the volume 7 discounts, the amount of pricing differential 8 based on the volume purchased is pure 9 speculation. 10 He does not have personal knowledge of 11 those things. All his knowledge about this was 12 learned only from others. It is hearsay. And, 13 as a result, the testimony lacks proper 14 foundation and the Special Master's ruling 15 should be sustained. 16 I should point out that even though 17 there isn't technically a hearsay objection to 18 this testimony, under the rules -- under the 19 case law in Iowa where a party makes a 20 foundation objection, because -- or lack of 21 personal knowledge objection because testimony 22 is based on hearsay, those are treated as 23 roughly equivalent. 24 An example of that is Local Board of 25 Health, Boone County, versus Wood, Supreme 7986 1 Court of Iowa, 243 N.W. 2d decided June 30, 2 1976, and the jump cite is at page 868. 3 MR. CASHMAN: Your Honor, obviously, 4 there's no hearsay objection as Mr. Tuggy just 5 admitted. So the objection should not be 6 sustained on that basis. 7 Clearly the witness does have personal 8 knowledge. 9 The witness to have personal knowledge 10 that he testifies about here doesn't mean he 11 has to go talk to Microsoft about what's in 12 their contracts. 13 Mr. Tuggy just made that claim that 14 Mr. Dixon didn't talk to Microsoft so he 15 couldn't have personal knowledge. 16 Well, there's no requirement. That's 17 not the only way to get personal knowledge. 18 His customers certainly have personal 19 knowledge. There is no dispute that the 20 customers have personal knowledge, and in the 21 cases that I've provided to the Court 22 yesterday, and, in particular, the Agfa case 23 and the other cases, the name which escapes me 24 at the moment, the specific case which says 25 that if the other person has personal 7987 1 knowledge, they can impart that knowledge to 2 Mr. Dixon. 3 And that's clearly what's happened. 4 Just because he gets it from customers 5 doesn't mean that it's hearsay. That's the 6 rule. And Microsoft keeps trying to make up 7 the rules as it goes along. 8 Hearsay requires a statement by a 9 person, an identifiable person that is offered 10 for its truth. That's not the case here. 11 What Mr. Dixon is testifying about is 12 cumulative personal knowledge based on years in 13 the marketplace. 14 And contrary to Mr. Tuggy's assertions 15 about the FTC contract or the FTC documents, 16 that testimony on page 327, line 23 through 17 328, line 3, that's about the CPCU contracts, 18 which is contained in the prior couple of 19 answers. 20 The CPCU contracts were published by 21 the Korean FTC. And Mr. Dixon testifies that 22 he read some of the FTC documents. 23 So not only does he have that 24 information from his customers, he has it from 25 the documents. 7988 1 Now, Microsoft would have you believe 2 that the only way a witness can gain personal 3 knowledge about a contract is to sit down and 4 read it. And that's silly because there are 5 multiple ways to get personal knowledge about a 6 document without actually reading it yourself. 7 And if Microsoft thought that 8 Mr. Dixon's understanding of a term in the 9 contract was incorrect, who wanted to try and 10 undermine his testimony about his knowledge of 11 the contract, they had the opportunity to put 12 that contract in front of him and cross-examine 13 him and say so your personal knowledge is not 14 correct. 15 But they didn't do that. But that's 16 the purpose of cross-examination. But it 17 doesn't mean that the testimony provided by 18 Mr. Dixon is either without foundation or 19 hearsay or lacking in personal knowledge. 20 Those objections are wrong and should be 21 overruled. 22 Thank you. 23 THE COURT: Mr. Tuggy, is that 24 Defendant's position in regard to knowledge of 25 contracts? 7989 1 MR. TUGGY: No. 2 THE COURT: Would the person have to 3 have read it to say something about it? 4 MR. TUGGY: No. There are ways that a 5 person can learn the contents of a contract, I 6 suppose, other than reading it, but it has to 7 be -- for example, if a Microsoft 8 representative had told someone at Digital 9 Research what the content of a contract was, 10 that would be an admission. 11 So it's not that a person can only 12 know the content of a particular contract. 13 Remember, that's what we are talking 14 about here, the contract between Digital 15 Research and Trigem. 16 Microsoft has not objected to very 17 general testimony about the nature of Microsoft 18 licenses. We are objecting to testimony where 19 the witness says Microsoft had this contract 20 with this particular witness. 21 Microsoft in its contract had this set 22 of volume pricing discounts and later we'll see 23 Microsoft would trigger credit rollovers only 24 at particular points. 25 To get that specific about the terms 7990 1 of the contract with a particular OEM, the only 2 way Mr. Dixon is able to testify about in his 3 deposition is because that's information told 4 him by customers in the context of these 5 negotiations with customers, and that is 6 hearsay. 7 It's really in this situation not a 8 Callahan issue in most circumstances because 9 he's just testifying about what others told him 10 the terms of a contract were. 11 The Callahan issue arises when the OEM 12 begins to testify about state of mind. And 13 this set of testimony we're discussing right 14 now is just Mr. Dixon telling the Jury what was 15 in a Microsoft contract he never saw and has no 16 admissible basis for describing what's in 17 there. 18 And at the time Mr. Dixon was a 19 litigation consultant for Caldera. And so I 20 don't want to the Court to be led to believe 21 that this is some, you know, an executive at 22 Digital Research just being called to testify 23 innocently about Microsoft contracts. 24 This guy was paid to be a litigation 25 consultant, prepared by his lawyers to testify. 7991 1 And the lawyers knew that there was serious 2 admissibility problems with this evidence. And 3 they did the best they could with it, but it's 4 just hearsay. 5 MR. CASHMAN: Your Honor, a couple 6 points. 7 First of all, it's really ironic again 8 that Microsoft is trying to prevent this 9 testimony about the licenses, the per processor 10 contract. 11 The Court knows that we've got 12 independent evidence, which either is now in 13 the record or will be admitted about the 14 contract -- the contents of the actual CPCU 15 contracts. 16 And under the Newell versus -- or the 17 State versus Newell case where there's -- the 18 evidence has got an independent -- an 19 independent basis for corroborating it -- that 20 may be the wrong language, Your Honor, but 21 basically where there's independent evidence in 22 the record on something like that, then, this 23 hearsay argument is without merit. 24 So that's wrong. 25 And in response to your question that 7992 1 you asked Mr. Tuggy about gaining personal 2 knowledge on the contents of a contract, 3 Mr. Tuggy did the Tennessee two-step, because 4 he told you that the only way that -- the only 5 other way -- well, he said our position is that 6 you can have personal knowledge in other ways 7 if Microsoft makes an admission, which is -- 8 again, that's silly because that's not the only 9 way to gain personal knowledge of a contract. 10 If you've got a customer, they read 11 it, they know what the contents are. And if 12 they share that with Mr. Dixon or with other 13 people, that's personal knowledge. 14 That's what the -- Weinstein says so. 15 The cases that we've provided indicate that you 16 can gain personal knowledge in that fashion. 17 And, lastly, Mr. Tuggy attempts again 18 to improperly limit the reach of the Callahan 19 case. 20 I know there's been a lot of argument 21 on Callahan, but any statement by an OEM is 22 admissible if it goes to explaining their 23 motives for not doing business with DRI in this 24 instance. 25 So there's additional cases, 7993 1 longstanding cases, which I think point that 2 out. 3 One of them is a case called Lawlor 4 versus Loewe. This is a Supreme Court case. 5 235 U.S. 522. 6 And this is a case that was decided by 7 Oliver Wendell Holmes and was really the first 8 case that established the principle which later 9 was the basis for the Callahan case. 10 But Justice Holmes stated in that 11 case, quote, the reasons given by customers for 12 ceasing to deal with sellers, in this case of 13 hats that were manufactured by Loewe, are 14 admissible. 15 So the Callahan case is not nearly as 16 limited as Microsoft would suggest. 17 All of this kind of testimony goes to 18 that issue. Why are these OEMs not doing 19 business or refusing to do business with DRI? 20 And so all of this testimony goes to 21 the Callahan type issue. 22 But having said that, I don't want to 23 lose sight of the fact that this clearly is not 24 hearsay, is not hearsay evidence. 25 Microsoft doesn't have any authority 7994 1 for it. Their arguments don't make sense. 2 They don't even have any logic. What they're 3 trying to do is preclude basic testimony of 4 personal knowledge that they had full and fair 5 opportunity to cross-examine Mr. Dixon on, and 6 did. 7 Thank you. 8 THE COURT: Mr. Tuggy, going back to 9 your example of the prices, you know, how the 10 CEO of, what did you say, Target could testify 11 what the prices are at Sam's or what did you 12 say? 13 MR. TUGGY: Yeah. A CEO of Target 14 ought to be able to testify that Wal-Mart is a 15 low-priced competitor of Target. 16 THE COURT: Okay. What if he states 17 in that that he got that information because he 18 talked to Wal-Mart customers? 19 MR. TUGGY: If he says that my source 20 of information for that was -- well, was 21 statements by Wal-Mart customers -- 22 THE COURT: Isn't that hearsay? 23 MR. TUGGY: Then it's hearsay. But if 24 he -- if on cross or redirect he's 25 rehabilitated and he testifies that I would 7995 1 have come to the same conclusion had I had -- 2 because I went to Wal-Mart and I checked their 3 prices and they were lower than mine, then it 4 would be admissible. 5 Now, the twist of that -- and this is 6 in the point of impact cases we've discussed -- 7 if your opinion or your view is necessarily 8 tied to the hearsay. 9 In other words, if he says I did see 10 some pricing, but, yeah, my opinion is really 11 based on what the customers tell me, then it's 12 hearsay. 13 So for it not to be hearsay, there has 14 to be a sufficient foundation outside the 15 hearsay source of information, if that makes 16 sense. 17 THE COURT: So how can Sculley testify 18 as to prices? 19 MR. TUGGY: Because he's -- those 20 prices are available to the CEO of a company 21 through multiple public sources. 22 THE COURT: You said it has to be 23 foundation. The only foundation you gave on 24 Sculley was he's the president of Apple. 25 MR. TUGGY: And we gave substantial 7996 1 additional foundation about the fact that Apple 2 competed directly with Microsoft on the 3 products that were at issue. 4 And one would expect -- now, the 5 example -- the corollary, which we discussed 6 earlier, was Ramallini in the IBEW case where 7 there are six or seven competitors in the 8 market. 9 In that situation, it may be that -- 10 you know, there's no evidence that there was 11 some sort of foundation laid other than the 12 fact that he's been in the market for many, 13 many years. 14 It's just an inference one would 15 expect in the natural course of things a person 16 in that position could draw from exposure to 17 information in the market. 18 And there is so much publicly 19 available information concerning Microsoft's 20 pricing of applications because Microsoft has 21 nothing private about it. And these contracts 22 Microsoft has with OEMs are private contracts. 23 MR. CASHMAN: Your Honor -- 24 THE COURT: You kept mentioning 25 foundation, though. And I don't see the 7997 1 foundation if he just says -- if the answer is 2 he should know this because he deals directly 3 against it. How's that foundation? 4 MR. TUGGY: Because one would -- 5 THE COURT: It seems like your 6 position is it has to be very, very specific 7 and it has to come from a specific source 8 that's not hearsay. 9 MR. TUGGY: No. It's possible for and 10 it's typically the case that in -- where a 11 person has substantial market knowledge, a 12 court can come to the conclusion -- and they 13 often do -- that that person in observing what 14 is public can infer, come to inferences about 15 what's publicly known. 16 It's not -- but if it can be shown, 17 like we've done here, that the information is 18 based solely on hearsay, then there is clearly 19 a foundation problem. 20 MR. CASHMAN: Your Honor, I just can't 21 sit still and listen to this because everything 22 Mr. Tuggy says, if the information is publicly 23 known, that's hearsay. 24 He talks about, oh, he can go read the 25 price on a box on the shelf at Wal-Mart. 7998 1 That's hearsay, the price on that box, 2 according to their definition. 3 The IDC or whatever, all that stuff 4 out in the marketplace, that would be hearsay. 5 That just shows that Microsoft is talking out 6 of both sides of their mouth. 7 That shows just how silly their 8 argument is because all that stuff is hearsay. 9 And if the fundamental point in 10 hearsay is reliability and trustworthiness, the 11 reliance and personal knowledge that you get 12 out of your interaction with customers is the 13 most reliable and the most trustworthy market 14 knowledge and not going to IDC, you know, some 15 conference or some nebulous publicly known 16 information. 17 That just puts a fine point on why 18 their objections are without merit and should 19 be overruled. 20 When you gain personal knowledge 21 dealing with your customers, that's market 22 knowledge. That's what market knowledge is all 23 about. And that's why this testimony is 24 proper. 25 And that's why in the Agfa case Judge 7999 1 Posner recognized the inherent reliability and 2 trustworthiness of the information that a 3 business executive gains from his customers. 4 It's like -- it's similar to -- if 5 this were hearsay, would be similar to the 6 residual exception, which is designed to allow 7 for the admission of evidence where you can, 8 for some reason, be pretty sure that it's 9 reliable and trustworthy, and that's what 10 business executives do. 11 Microsoft has asserted the objections 12 for the unusual circumstance where there might 13 be business correspondence for posturing or 14 something. 15 That's not what's going on when you 16 have day-to-day interactions between the 17 salesperson, here Mr. Dixon and his customers 18 and he gains personal knowledge from those 19 cumulative sources. That's just not hearsay. 20 And, if anything, that's the kind of 21 evidence that's admissible, not the kind of 22 position that Mr. Tuggy is articulating. 23 MR. TUGGY: If I may. 24 THE COURT: Anything else on this 25 before we conclude for the day? 8000 1 MR. TUGGY: Just to respond quickly to 2 your question. I don't know if this will help. 3 But with Mr. Dixon, our objection is 4 not that the Plaintiffs have failed to show 5 foundation for what he says. 6 Our objection is that his statements 7 lack personal knowledge. It's clear that -- 8 you know, it's clear what the foundation is, 9 which is statements by customers. 10 The problem is that that's a lack of 11 personal knowledge and it's insufficient 12 foundation for these opinions because it's 13 hearsay. 14 THE COURT: Okay. Very well. We'll 15 continue on Tuesday. 16 MR. TUGGY: I just have a couple 17 scheduling issues. 18 One is my understanding is that the 19 Plaintiffs handed up a CD with around 3,000 20 exhibits to be admitted. And the first CD they 21 provided to us had a handful, about 35 to 40 22 errors in it. 23 And I've provided that information to 24 Plaintiffs, and I'm not sure whether they've 25 been corrected, but I also want to review what 8001 1 they've provided to us tonight to make sure 2 it's corrected. 3 And I'd like to have until, you know, 4 the end of the court day on Tuesday for the 5 paralegal staff to check that and just to make 6 sure it's accurate. I'm not sure what the rush 7 would be. 8 THE COURT: Now, are these 3,000 9 exhibits, are they part of the 3,760? 10 MR. TUGGY: Yes. 11 MR. CASHMAN: Your Honor, let me 12 address. 13 THE COURT: Why are they being offered 14 now? I thought we were going to take this 15 up -- 16 MR. CASHMAN: Your Honor, let me 17 address that. 18 Microsoft has provided us four batches 19 of relevance and undue prejudice and other 20 objections to those exhibits which they alleged 21 should be subject to those kind of objections. 22 The total number of documents -- of 23 exhibits to which they objected was about 600, 24 or maybe 602. 25 And, consequently, Plaintiffs have 8002 1 offered the exhibits to which Microsoft has not 2 objected. 3 THE COURT: I see. I see. 4 MR. CASHMAN: And there is no need for 5 Microsoft to take all this additional time now 6 to review those when they've taken three weeks 7 already. 8 I think this is a matter that the 9 Court can and should, as you've indicated, rule 10 on in the morning. 11 THE COURT: You just want to check 12 them to see if it's -- it's a different disk; 13 right? 14 MR. TUGGY: Yeah, and I'm not 15 asserting any new objections. I'm just trying 16 to make sure that it's accurate. 17 I don't want to say, yes, we agree to 18 admit all of these when maybe some of them 19 still have objections, which is what occurred 20 with the first one. 21 THE COURT: All right. We'll take 22 this up tomorrow on that. 23 MR. TUGGY: Okay. 24 MR. CASHMAN: Thank you, Your Honor. 25 MR. TUGGY: And then, if I may, on 8003 1 Monday I'm going to two dental appointments to 2 get a tooth installed. 3 THE COURT: We're not in session on -- 4 MR. TUGGY: And so I'm trying to get a 5 red eye back on Monday night. 6 THE COURT: Oh, I see what you're 7 saying. 8 MR. TUGGY: But if I'm unable to, 9 perhaps we can take another witness Tuesday 10 afternoon and finish this Wednesday, but I'll 11 do my best to be here. 12 THE COURT: See what happens. I'll be 13 flexible. 14 MR. CASHMAN: I know that Microsoft 15 has a lot of other people on their evidence 16 team. And because of the way we want to play 17 these witnesses, we'd like to continue with 18 Mr. Dixon. 19 And I think that one of Mr. Tuggy's 20 colleagues can fill in for him if he for some 21 reason can't get back. 22 THE COURT: We'll cross that bridge 23 when we get to it. All right. 24 Have a good trip. 25 MR. GRALEWSKI: Your Honor, is there 8004 1 not the ability to have evidence arguments 2 tomorrow afternoon? 3 THE COURT: No. We have another 4 hearing. Ms. Conlin and Mr. Tulchin wanted to 5 take up another issue. 6 MR. GRALEWSKI: Thank you. 7 MR. CASHMAN: Thank you. 8 THE COURT: That's my understanding. 9 MR. TUGGY: I'm also happy to just be 10 here in case it ends early or something. 11 THE COURT: It's my understanding we 12 are handling the motion at 3 o'clock tomorrow. 13 MR. GRALEWSKI: I'd forgotten about 14 that, Your Honor. 15 THE COURT: That's what both parties 16 want to do. 17 If you come in to hang around, you are 18 not going to get heard. So -- 19 MR. TUGGY: Okay. 20 THE COURT: Unless this motion goes 21 real quick. You may want to ask Mr. Tulchin. 22 MR. TUGGY: I'll ask. Because I'll 23 just do what they need to get this done. 24 MR. CASHMAN: If Mr. Tulchin withdraws 25 the motion -- 8005 1 THE COURT: There you go. 2 If I don't see you guys, have a great 3 trip back and be safe, okay. 4 MR. CASHMAN: Thank you, Your Honor. 5 (Proceedings adjourned at 4:41 p.m.) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 8006 1 CERTIFICATE TO TRANSCRIPT 2 The undersigned, Official Court 3 Reporters in and for the Fifth Judicial 4 District of Iowa, which embraces the County of 5 Polk, hereby certifies: 6 That she acted as such reporter in the 7 above-entitled cause in the District Court of 8 Iowa, for Polk County, before the Judge stated 9 in the title page attached to this transcript, 10 and took down in shorthand the proceedings had 11 at said time and place. 12 That the foregoing pages of typed 13 written matter is a full, true and complete 14 transcript of said shorthand notes so taken by 15 her in said cause, and that said transcript 16 contains all of the proceedings had at the 17 times therein shown. 18 Dated at Des Moines, Iowa, this 11th 19 day of January, 2007. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25