9281 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 XXXIV 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 19, 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 9282 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 MICHAEL R. CASHMAN 7 LINDSEY A. DAVIS THOMAS DARDEN 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 ROBERT J. GRALEWSKI, JR. Attorney at Law 13 Gergosian & Gralewski 550 West C Street 14 Suite 1600 San Diego, CA 92101 15 (619) 230-0104 16 KENT WILLIAMS Attorney at Law 17 Williams Law Firm 1632 Homestead Trail 18 Long Lake, MN 55356 (612) 940-4452 19 20 21 22 23 24 25 9283 1 Defendant by: DAVID B. TULCHIN 2 STEVEN L. HOLLEY SHARON L. NELLES 3 Attorneys at Law Sullivan & Cromwell, LLP 4 125 Broad Street New York, NY 10004-2498 5 (212) 558-3749 6 STEPHEN A. TUGGY Attorney at Law 7 Heller Ehrman, LLP 333 South Hope Street 8 Suite 3900 Los Angeles, CA 90071-3043 9 (213) 689-0200 10 DAVID E. JONES Attorney at Law 11 Heller Ehrman, LLP One East Main Street 12 Suite 201 Madison, WI 53703-5118 13 (608) 663-7460 14 BRENT B. GREEN Attorney at Law 15 Duncan, Green, Brown & Langeness, PC 16 Suite 380 400 Locust Street 17 Des Moines, IA 50309 (515) 288-6440 18 RICHARD J. WALLIS 19 Attorney at Law Microsoft Corporation 20 One Microsoft Way Redmond, WA 98052 21 (425) 882-8080 22 23 24 25 9284 1 (The following record was made out of 2 the presence of the jury.) 3 THE COURT: Where are we? 4 MR. CASHMAN: Good morning, Your 5 Honor. Michael Cashman for Plaintiffs. 6 We're continuing with appeals on 7 Richard Dixon. 8 As an initial matter -- may I 9 approach, Your Honor? 10 THE COURT: Sure. 11 MR. CASHMAN: I'm handing the Court 12 yet another case on this issue, which I have 13 located. 14 This case is called CIGNA Fire 15 Underwriters Company versus McDonald and 16 Johnson, Inc., 86 F. 3rd 1260. 17 This is a First Circuit case from 18 1996. 19 The pertinent language, Your Honor, is 20 on the Westlaw page 10 under the headnote 12. 21 This is a case in which the -- one of 22 the chief executives or high-ranking executives 23 of the McDonald and Johnson Company was 24 testifying about damage that had been done to 25 his company. 9285 1 And the Defendant in this case, or I 2 should say CIGNA objected to that evidence on 3 speculation and hearsay, and as the Court can 4 see, those objections were overruled. 5 The reason I'm bringing this case to 6 the attention of the Court today is because it 7 emphasizes the point that I've been making with 8 respect to the individual Dixon appeals; that 9 the individual's testimony went to credibility 10 and not its admissibility and that it was 11 subject to rigorous cross-examination and that 12 CIGNA could introduce its own witnesses to 13 contradict the testimony provided by the -- 14 this high-ranking business executive. 15 And that's exactly what has happened 16 in the case of Mr. Dixon and others when he's 17 providing testimony about his personal 18 knowledge. 19 Microsoft had full opportunity to 20 cross-examine, and they did cross-examine. 21 Now, next in the hope to expedite 22 this, may I approach, Your Honor? 23 THE COURT: Sure. 24 MR. CASHMAN: I've tried to make it 25 easier for the Court by on each of Plaintiffs' 9286 1 appeals putting the testimony at issue in one 2 place and summarizing our arguments -- 3 Plaintiffs' arguments about why each of the 4 appeals should be granted. In essence, why the 5 testimony is personal knowledge and is not 6 hearsay. 7 We were, I believe, on Appeal Number 8 15. 9 THE COURT: That's correct. That's 10 what I have in my notes. 11 MR. CASHMAN: Since I have -- since 12 I'm losing my voice a little bit and since 13 I'm -- 14 THE COURT: I hope you're not -- are 15 you getting ill? 16 MR. CASHMAN: I hope not. 17 THE COURT: I hope not either. 18 MR. CASHMAN: Since our argument is 19 summarized there about why this testimony is 20 not hearsay, I won't reargue it. 21 I just wish to note that in these 22 argument summaries that I've provided, I have 23 emphasized why the testimony is not hearsay or 24 why there's not a lack of personal knowledge or 25 lack of foundation. 9287 1 I do want the record to be clear that 2 in the event that any of this testimony by 3 Mr. Dixon could arguably be deemed as hearsay, 4 Plaintiffs believe that it would still be 5 admissible even under the Callahan exception, 6 the state of mind exception, or the residual 7 exception for the reasons that I've previously 8 stated under the State versus Rojas case in 9 Iowa. 10 Next, Your Honor, may I approach one 11 more time? 12 THE COURT: Sure. 13 MR. CASHMAN: Here, I've included the 14 testimony that's at issue in Microsoft's 15 appeals of Mr. Dixon's testimony. 16 And the first three on the first page 17 of what I've just handed to the Court are 18 rulings by the Special Master. 19 In these instances, the Special Master 20 overruled Microsoft's objections to the same 21 kind of testimony that we've been looking at in 22 previous days, and I think the Court can see 23 that there's no substantive difference in the 24 kind of testimony that the Special Master 25 allowed and which Microsoft is appealing, and 9288 1 consequently, it's our view that not only 2 should this testimony that's on Microsoft 3 appeals one, two, and three be permitted, but 4 for the same reason, all the 18 appeals by 5 Plaintiffs should be granted and the Special 6 Master and Microsoft's objections there be 7 overruled. 8 I further want to point the Court now 9 to the last four pages of what I've just handed 10 up on Microsoft's Dixon appeals of testimony, 11 and I've grouped the -- the reason there are 12 four pages, these really fall into four 13 categories of testimony. 14 And the Court will recall that the 15 other day I was inclined to withdraw our 16 objections to these various pieces of 17 testimony. 18 As I've explained on each of these 19 sheets, the testimony at issue by Mr. Dixon 20 which Microsoft wants to designate is virtually 21 the same kind of testimony that they're 22 objecting to; that is, knowledge that Mr. Dixon 23 gained from various other sources. 24 It highlights, Your Honor, that there 25 -- that this is a matter of Mr. Dixon's 9289 1 personal knowledge and that Microsoft is 2 talking out of both sides of its mouth when it 3 objects to some of our testimony, but wishes to 4 designate other testimony that is functionally 5 equivalent. 6 And as we've explained over the prior 7 days, we think Microsoft's position is just 8 wrong, and if the Court agrees with us and 9 overrules Microsoft's objections on Plaintiffs' 10 18 appeals, then Plaintiffs have no problem 11 with their objections to Microsoft's 12 designations being overruled. 13 That would be the consistent approach 14 to this kind of testimony. 15 So just to put a little bit finer 16 point on it, Microsoft appeals four, five, and 17 six. 18 You can see this is testimony about 19 one of the exhibits that is at issue here, 20 Plaintiffs' Exhibit 33, and I have a copy of 21 that and the other exhibit at issue, Your 22 Honor, if I may approach. 23 THE COURT: Yes. Thank you very much. 24 45A. 25 MR. CASHMAN: I've given the Court 9290 1 45A, Defendant exhibit, and Plaintiffs' Exhibit 2 33. 3 Plaintiffs' Exhibit 33 relates to the 4 testimony that's at issue in Microsoft appeals 5 four, five, and six. 6 And as you can see, this isn't a 7 letter written by Mr. Dixon nor is it a letter 8 directly to Mr. Dixon, and yet Microsoft 9 questioned Mr. Dixon about this, about the 10 contents of this exhibit. And again, that's 11 knowledge he's gaining from another source. 12 And under Microsoft's interpretation, that 13 would seem to be hearsay. 14 Plaintiffs think that's wrong. But if 15 that's what the position is, then the approach 16 should be consistent. 17 I think that the inconsistency in 18 Microsoft's position is even more dramatically 19 demonstrated in their appeal of Number 8, if 20 the Court will turn the page. 21 This is testimony that Microsoft wants 22 about a contract that Microsoft had with 23 Samsung and Mr. Dixon's testimony about it. 24 So they want to designate testimony 25 that says question -- by Microsoft -- do you 9291 1 recall at the end of 1990 that Samsung's 2 contract with Microsoft is expiring? 3 Answer: Yes. 4 They go on, did you make sales effort 5 to try and get Samsung to sign up with DRI? 6 The answer is, we had ongoing 7 discussions with them, no question. 8 And then the question is about issues 9 that Samsung raised during those discussions. 10 Now, to me, that's all personal 11 knowledge. There's no out-of-court statement 12 there. That's not hearsay. But under 13 Microsoft's interpretation of lack of personal 14 knowledge and lack of foundation and hearsay, 15 this testimony is the same kind of thing that 16 they're objecting to. 17 So it just doesn't make sense. 18 If we turn to Appeal Number 9, Your 19 Honor, Microsoft's Appeal Number 9. 20 THE COURT: Okay. 21 MR. CASHMAN: This is testimony that 22 Microsoft wants to designate about Defendant's 23 Exhibit 45A. 24 And I think again this is pretty 25 dramatic. I mean, this 45A attaches a contract 9292 1 in Korean, and they ask Mr. Dixon about it, and 2 they asked where he obtained his knowledge 3 about alleged serious technical problems that 4 he's communicating about with Simon Lucy, and 5 under their interpretation of the lack of 6 personal knowledge and lack of foundation and 7 hearsay, issues that they've articulated them, 8 this testimony certainly would be inadmissible. 9 Again, Plaintiffs think that's the 10 wrong-headed approach and that this testimony 11 is really cross-examination about personal 12 knowledge that Mr. Dixon has as a high-ranking 13 business executive at DRI. 14 Lastly, Your Honor, turning to their 15 appeals on 11 and 12, this is testimony where 16 they ask Mr. Dixon, did Microsoft drop its 17 prices significantly in the period after March, 18 1991? 19 Well, how would Mr. Dixon have gained 20 that knowledge? 21 You know, under the theory that 22 Microsoft articulates, all this testimony would 23 be inadmissible. And we think that's just 24 plain wrong. But if that is the position that 25 is adopted, then this testimony has to be 9293 1 stricken for the very same reasons that 2 Microsoft has argued. 3 Now, backing up more in the global 4 context, Your Honor, Plaintiffs again think 5 Microsoft's arguments on these issues as it 6 relates to Mr. Dixon are just way off base and 7 that they would constitute a clear error of law 8 if this evidence that the Plaintiffs wish to 9 have read from the testimony of Mr. Dixon is 10 not permitted, and we don't want the record to 11 be inundated with that kind of -- with that 12 kind of error. 13 Under Microsoft's interpretation, just 14 to point out why it's so absurd, if they put 15 Mr. Gates on the stand, he wouldn't be able to 16 testify about anything that he knows as a 17 result of interactions with the people in his 18 own company. 19 He could never say Microsoft did this 20 or we knew that or we did this because that 21 information would be based on things that he 22 gathered either from interacting with people in 23 his company or with customers. 24 That's where a huge portion of 25 Mr. Gates' knowledge would obviously come from, 9294 1 and that's so clearly incorrect that it 2 highlights why all the testimony by Mr. Dixon 3 that we've been discussing should be admitted. 4 And just one last note because I know 5 Mr. Tuggy loves his 1913 Howell case and the 6 Frunzar case, those just are wholly 7 inapplicable because they're -- the courts 8 thought they saw a -- an out-of-court statement 9 by a declarant. There was a statement by an 10 identifiable out-of-court declarant. That's 11 not the case here. 12 If you'll look back at Mr. Tuggy's 13 1913 case, all they were talking about is an 14 identifiable single statement by one Mr. 15 Mandelbaum. One clearly identifiable statement 16 that the testimony was about and where the case 17 turned on whether that statement by Mr. 18 Mandelbaum was true or not. 19 That's not the case with any of this 20 testimony in Dixon. 21 In the Frunzar case, it was -- I mean, 22 if we went and looked at the cases surrounding 23 that Frunzar case, an uninsured motorist 24 coverage case, that's a unique area of the law 25 as it relates to whether -- or in how uninsured 9295 1 motorist coverage is established. 2 But, again, there was a statement, a 3 single identifiable out-of-court statement by a 4 gentleman by the name of Mr. Kilgore, and that 5 the truth of that statement, out-of-court 6 statement by Kilgore was the crux of that 7 entire case, how it would be resolved. 8 Here in all this testimony at issue by 9 Mr. Dixon, there is no statement, there's no 10 statement by an identifiable person, and none 11 of his testimony turns on the truth of an 12 out-of-court statement by that person. 13 There just is no statement, no 14 out-of-court oral assertion. 15 So this is not a case of hearsay. 16 This is a case of personal knowledge by 17 Mr. Dixon gathered through well-recognized, 18 appropriate means, and it's reliable, it's 19 trustworthy. Microsoft had full and fair 20 opportunity to cross-examine. 21 When their case comes, I assure the 22 Court that Microsoft has -- is presenting a lot 23 of evidence, or will be attempting to present a 24 lot of evidence to rebut the kind of testimony 25 that's properly provided by Mr. Dixon. 9296 1 So Plaintiffs submit that all of their 2 appeals should be granted; that is, Microsoft's 3 objections overruled, in which case that also 4 takes care of Microsoft's objections for the 5 reasons I've explained. 6 Thank you. 7 THE COURT: You say the Court should 8 grant their appeal or deny their appeal? 9 MR. CASHMAN: It should grant 10 Plaintiffs' appeal; that is, overrule 11 Microsoft's objections. 12 THE COURT: Mr. Tuggy? 13 MR. TUGGY: Yes, Your Honor. 14 In the five remaining minutes, I'd 15 like to address the next in order, which is 16 336, line 11, through 337, line 1. 17 If I may, I'd like to combine it with 18 the next one, which is 337, 2 to 21, because 19 those two segments of testimony deal with the 20 same issue. 21 As to both segments of testimony, the 22 Special Master Justice McCormick sustained 23 Microsoft's hearsay objection and that ruling 24 should be itself sustained and the appeal 25 denied. 9297 1 The testimony beginning at 336, line 2 11, starts with the question where the examiner 3 asks Mr. Dixon, did you run into any occasions, 4 sir, where Microsoft allegedly, according to 5 your customers, were telling them that they 6 would -- Microsoft would make sure that there 7 would be incompatibility between DR-DOS and 8 Microsoft applications? 9 So the question is, Mr. Dixon, did 10 your customers tell you that Microsoft told 11 them that Microsoft would make sure that there 12 would be incompatibility between DR-DOS and 13 Microsoft applications. It's just rank 14 hearsay. 15 The answer by the witness is, yes, 16 there were several circumstances of that where 17 customers told me what Microsoft told them. 18 This is being offered for the truth of 19 what Microsoft told the customers. 20 The customers' statements to Mr. Dixon 21 which are being reported here in his testimony 22 are hearsay and inadmissible. 23 In addition, in the earlier part of 24 Mr. Dixon's examination where Microsoft is 25 cross-examining Mr. Dixon, Mr. Dixon testified 9298 1 at page 58 of his deposition, lines 2 to 13 -- 2 this is 58, lines 2 to 13. 3 There the question was asked, have you 4 ever heard anyone from Microsoft tell a 5 customer or tell anybody that Windows would not 6 run on DR-DOS? 7 Answer: I've never heard anybody from 8 Microsoft say that, no. 9 Question: Have you seen that in any 10 Microsoft documents? 11 Answer: Not that I recall. I mean, 12 there may have -- I mean, there have been 13 documents, but I don't remember. 14 So he has no personal knowledge of a 15 statement by Microsoft to this effect. He has 16 seen no Microsoft documents saying that this 17 occurred. He's never witnessed it himself. 18 He's just reporting what customers told him. 19 Under Howell versus Mandelbaum, 20 Frunzar and Ruby versus Easton, his testimony 21 is clearly inadmissible hearsay. 22 The next section of this testimony is 23 where Mr. Dixon recounts what he says occurred 24 with an OEM or a company called Twin Head. 25 And he reports about Twin Head's 9299 1 alleged conversations with Microsoft, and he 2 becomes specific at page 337, beginning at line 3 6. 4 And in that segment of testimony 5 Mr. Dixon testifies there was a Microsoft 6 salesperson who led that account. His name was 7 Richard Novatny. And Mr. Novatny subsequently 8 left Microsoft and interviewed for a job with 9 our company Digital Research. 10 Okay. So this is a person who is not 11 employed by Microsoft at the time of the 12 statements we're about to encounter. 13 Line 9. With one of our executives, 14 in fact, our president Richard Williams -- 15 THE COURT: You think that 6 through 16 10 is hearsay? 17 MR. TUGGY: The fact that there was a 18 Microsoft salesperson who met with Mr. Dixon -- 19 Mr. Williams, no, that fact is not hearsay, but 20 he's just giving background for the hearsay. 21 THE COURT: Okay. 22 MR. TUGGY: With one of the 23 executives, in fact, our president Richard 24 Williams. 25 And in the discussions with Mr. 9300 1 Williams, Novatny relayed the story of how he 2 won the Twin Head account. And the way that he 3 did that was that he brought in the Windows 4 product manager and explained to Charles Chin 5 and the Twin Head executive staff that they 6 would guarantee that Windows would not work 7 with DR-DOS. 8 And he goes on to say more of what 9 Mr. Novatny said, not while employed by 10 Microsoft, but by -- during the course of an 11 interview with Mr. Williams, who apparently 12 relayed that information to Mr. Dixon. 13 So here we have hearsay within hearsay 14 within hearsay. 15 There's -- this statement that 16 Mr. Novatny made is not subject to any hearsay 17 exception. It's not an admission of Microsoft. 18 He's a former employee, in fact, seeking to 19 curry favor while interviewing for a job with 20 Digital Research. 21 And Mr. Dixon's testimony about 22 Microsoft supposedly making this incendiary 23 statement that it would make sure there would 24 be incompatibility between DR-DOS and Microsoft 25 applications is based on a statement by a 9301 1 former Microsoft employee during an interview 2 with Richard Williams which was later 3 communicated to Richard Dixon. 4 It's rank hearsay, and the Special 5 Master's rulings on both of these segments of 6 this particular testimony ought to be 7 sustained. 8 Mr. Cashman during his argument wants 9 to throw in Callahan with every one of these at 10 this point, and there's no state of mind 11 evidence here. This is just reporting on the 12 supposed statement by Microsoft. 13 He also wants to throw in the residual 14 exception. And, of course, it would be a 15 shocking result that a statement made during an 16 interview for a job has the requisite indicia 17 of trustworthiness to satisfy the residual 18 exception. 19 If that were the scope of the residual 20 exception, I submit that that exception would 21 completely swallow the rule against hearsay. 22 This is just classic rank hearsay, and 23 the Special Master's rulings on 336, 11; 337, 24 1; and 337, 2 to 21 should be sustained, the 25 hearsay rulings. 9302 1 I'm not sure what Mr. Cashman was 2 doing, whether he's completed his argument on 3 all of these or whether he had that long 4 opening statement and he wants to respond 5 individually. But I've completed my argument 6 on these two segments. 7 I will at the close of my argument on 8 Dixon recap the legal position that Microsoft 9 has, and I've just received this morning this 10 case that Mr. Cashman handed up, and it's just 11 on its face inapposite, and I can -- I'll point 12 that out here with the last minute I have. 13 THE COURT: Well, what's the 14 designations on page 5 of your rulings chart, 15 Mr. Cashman? 16 Are these further -- refers to page 17 341 of the transcript, 355 through 358. Is 18 this something that -- 19 MR. CASHMAN: The three designations 20 on page 5 are -- Microsoft made the same kind 21 of objections that we've been looking at -- 22 THE COURT: Are these Microsoft's 23 objections? 24 MR. CASHMAN: -- but Microsoft's 25 objections were overruled by the Special Master 9303 1 so Microsoft is appealing. 2 THE COURT: These are Microsoft's 3 appeals? 4 MR. TUGGY: Correct. 5 THE COURT: All right. 6 MR. TUGGY: So we just finished 16 and 7 17, rows 16 and 17 of the Plaintiffs' appeals, 8 and all we have left of the Plaintiffs' appeals 9 is 340, line 17, to 341, line 2. Do you see 10 that on page 4 of their -- 11 THE COURT: That's their appeal? 12 MR. TUGGY: Right. That's the last 13 one of their appeal. 14 And then on page 5 is Microsoft's 15 appeals, and as we will see when we go through 16 this, they're very different than what we've 17 been -- than the appeals that Plaintiffs have 18 made. 19 On the second appeal on page 5, 20 Microsoft has withdrawn that appeal. This is 21 the one for 355, line 25, and 356, line 3. 22 That's Appeal Number 2 on page 5. 23 THE COURT: How do you know that? 24 MR. TUGGY: How do I know what? 25 THE COURT: They withdrew that? 9304 1 MR. TUGGY: No, Microsoft withdrew the 2 appeal. 3 THE COURT: Oh, you withdrew the 4 appeal. 5 MR. TUGGY: Right. 6 THE COURT: I'm sorry. 7 MR. CASHMAN: Gets a little confusing. 8 MR. TUGGY: I have personal knowledge 9 of this one. 10 THE COURT: You withdraw this one? 11 MR. TUGGY: Yes. So there's two 12 appeals, Microsoft appeals, left. We have only 13 three total. 14 THE COURT: Okay. 15 MR. TUGGY: And then on page 6, this 16 is testimony Microsoft seeks to admit, and the 17 Plaintiffs have asserted the objection as 18 explained by Mr. Cashman, and I'm prepared this 19 afternoon to argue that, and then, you know, 20 these set of issues on Dixon will be completed. 21 THE COURT: And you're going to argue 22 one and three on page 5 also? 23 MR. TUGGY: Correct. 24 THE COURT: We'll do that at 3 25 o'clock. 9305 1 MR. CASHMAN: Thank you, Your Honor. 2 MR. TUGGY: Your Honor, I've been 3 discussing another witness with Mr. Gralewski, 4 and we have one issue left, and I had planned 5 with Mr. Gralewski to deal with that right at 6 the beginning this afternoon to clear that 7 witness out. 8 Mr. Holley will be arguing for 9 Microsoft, and rather than having Mr. Holley 10 sit all the way through the rest of Dixon, my 11 request is we finish up that witness, Mr. 12 Harris, and then we move back to Dixon and 13 finish him, the argument like 3:20. 14 MR. CASHMAN: That's fine, Your Honor. 15 THE COURT: Is that something I have 16 already had, Harris? 17 MR. TUGGY: No. Mr. Gralewski will 18 handle it. 19 MR. CASHMAN: We'll present the 20 information necessary for you to make the 21 ruling. 22 THE COURT: But it's short, I gather? 23 MR. CASHMAN: Right. 24 THE COURT: Just one. Great. Thank 25 you. 9306 1 MR. GREEN: Your Honor, just to 2 complete the oral argument we had yesterday on 3 the opt-out motion. 4 THE COURT: Oh, you've got those 5 things? 6 MR. GREEN: I want to just for the 7 record hand up the exclusion request forms we 8 have on the rest of the late -- quote, late 9 opt-outs, quote. 10 THE COURT: Thanks, Mr. Green. I 11 appreciate it. 12 MR. GREEN: I've served Plaintiffs by 13 E-mail with those, but I have a copy also. 14 THE COURT: Thank you very much. 15 MR. GREEN: Thank you, Your Honor. 16 MR. CASHMAN: May I have a minute to 17 change -- 18 (A recess was taken from 8:28 19 to 8:38 p.m.) 20 (The following record was made in the 21 presence of the jury.) 22 THE COURT: Everyone else may be 23 seated. 24 Mr. Cashman. 25 MR. CASHMAN: Thank you, Your Honor. 9307 1 I'd like to introduce the jury to my 2 colleague, Lindsey Davis. She's at the Zelle, 3 Hofmann firm also. 4 We'd like to resume -- Plaintiffs 5 would like to resume the testimony of Richard 6 Freedman. 7 (Whereupon, the following video was 8 played to the jury.) 9 Question: I hand you what I have 10 marked as Exhibit 952. And there is an E-mail 11 thread that begins at the bottom with a reply 12 from Brad Chase to Terri AN. 13 Do you happen to know who that is? 14 You are cc'd on it. 15 Answer: Yeah, a Terrianna, possibly. 16 I don't remember. 17 Question: On the next page, you will 18 see at the bottom of that page, there is a 19 message from Terri, and below that, there is a 20 Nancy SP. 21 Do you happen to know who Nancy SP 22 might be? 23 Answer: I don't remember. 24 Question: I'll ask you to take a look 25 at this E-mail to refresh yourself. 9308 1 It does indicate on the first page 2 that you were cc'd on the entire thread, right? 3 Answer: That's what it says. 4 Question: Okay. So if you'll start 5 with the last E-mail and read it and then work 6 backwards, and then I'll ask you some questions 7 about it. 8 Answer: Okay. 9 Question: Starting with the last 10 E-mail, and it looks to me like it was sent 11 June 14, 1991; is that correct? 12 Answer: Yes. 13 Question: So we're talking, this is 14 going to be approximately within a week of the 15 release of MS-DOS 5.0? 16 Answer: That's correct. 17 Question: And this first one from 18 Nancy SP, you say you don't know who she is? 19 Answer: No. 20 Question: Does it appear that she is 21 in product support? 22 Answer: Yes, it does. 23 Question: And as I understand product 24 support, correct me if I'm wrong, these were 25 people who manned telephone lines so that 9309 1 people can call in when they're having problems 2 with a software product that's been released by 3 Microsoft and Microsoft can try to help correct 4 the problem, correct? 5 Answer: That's correct. 6 Question: She says on the second 7 page, there is a comment, Why? It says, we're 8 currently hearing from numerous callers, 9 approximately 150 per day, who are experiencing 10 severe incompatibility with MS-DOS 5.0 to the 11 point that PSS is -- that's product support 12 services? 13 Answer: That is correct. 14 Question: -- is unable to get the 15 operating system to work successfully on their 16 machines. 17 Problems range from occasional hangs 18 to total lockups of their machines that require 19 the removal of hard drives in order to boot 20 from a floppy. 21 Does that refresh your recollection 22 that immediately following the release of 23 MS-DOS 5.0 there were numerous reports of 24 several incompatibilities -- severe 25 incompatibilities with that product? 9310 1 Answer: This mail is totally out of 2 context, which you obviously know. 3 First of all, this paragraph was 4 written by someone in product support. It was 5 not written by someone from product management. 6 So it is not my words and it's not Brad Chase's 7 words. 8 Question: Of course, it's not. 9 I'm asking if that refreshes your 10 recollection. 11 Answer: Now, it is certainly within 12 the realm of comprehension and possibility, 13 given the sales volume of MS-DOS 5, that there 14 were people having problems with the product. 15 And it is certainly conceivable that the scope 16 of the problems encompassed some of the things 17 that she said. That is certainly possible. 18 I don't know where the 150 a day comes 19 from, the calls weren't coded that closely, 20 from my memory, that they would actually be 21 able to track all of those things. 22 But the bottom line was, this product 23 was considered to be one of the all-time great 24 stable operating system releases ever, and 25 there is just no dispute about that. That is 9311 1 the case with this product. And the problems 2 that PSS had were a function of volume, sales 3 volume, that was the cause of the problem. 4 Question: Sales volume. 5 So if there was less volume, there 6 would have been less people reporting problems 7 because not too many people would have had the 8 product, right? 9 Answer: That is correct. 10 Question: But the fact that a lot of 11 people bought the product meant that a lot of 12 people had problems, correct? 13 Answer: I don't know what a lot means 14 and I don't know how many people did have 15 problems. No one actually knows the exact 16 number. And, obviously, with any software 17 product, some percentage of people are going to 18 have problems. 19 Question: Is that always a fact, no 20 matter what the software product, people are 21 always going to have problems with it, some 22 users will always have problems with the newly 23 shipped and released software product, correct? 24 Answer: Perhaps there are rare 25 exceptions, but I would say as a general fact, 9312 1 yes. 2 Question: And MS-DOS is no exception 3 to that, correct? 4 Answer: That is correct. 5 Question: And DR-DOS is no exception 6 to that? 7 Answer: That is also correct. 8 Question: So here we have someone 9 reporting 150 calls per day of severe 10 incompatibilities, and it's your testimony that 11 that is probably a mistake? 12 Answer: I don't believe that number. 13 I just don't. 14 Question: So this is again -- 15 Answer: I don't believe that number. 16 I just don't. 17 Question: This is, if you go back to 18 the first page, it says Nancy SP to Terry AN. 19 Answer: Right. 20 Question: Actually, let's look at 21 this this way, because it seems to me that 22 actually this E-mail, although you are not on 23 that thread, is actually being referred 24 directly to you because it says: Rich, Brad: 25 We like your response and feel comfortable 9313 1 using it when responding to very general 2 questions about MS-DOS 5. I'm looking at the 3 bottom of page 2. 4 Am I right in thinking that the little 5 thread above that from Terry AN where it is 6 CCing you and Brad Chase, she is inserting this 7 comment for your review when you look at the 8 rest of the message forwarded from Nancy SP? 9 Answer: I assume, yes. 10 Question: So this is being forwarded 11 to you for your direct comment and action, and 12 you have a report that there are 150 people per 13 day calling in with severe incompatibility, and 14 you don't know whether that number is correct, 15 whether it's too high, too low, and your 16 testimony is you didn't do anything to verify 17 that number one way or the other? 18 Answer: I don't remember what I did 19 to verify the number. 20 The other important point is, it's all 21 -- it's all a matter -- there is obviously no 22 black and white here. It's all a matter of 23 shades of gray. What is it as a percentage? 24 What's an acceptable percentage? I don't know. 25 Do you know what is an acceptable percentage? 9314 1 I don't think anyone knows what an 2 acceptable percentage is, but I would maintain 3 that whatever the right number was, it was 4 extremely low, extremely low as a percentage of 5 sales of this product. Extremely low. This is 6 150 -- the product sold hundreds of thousands 7 of units -- 8 Question: Actually sold millions of 9 units. 10 Answer: -- I'm talking about -- over 11 the life of the span of the product it sold 12 millions of units, but I'm talking about over 13 this time period. 14 I don't know what the exact number 15 was, but it was probably into six figures. So 16 that's a huge number, a huge number. No one 17 had ever sold that much software before in such 18 a short period of time. 19 So as a percentage, let's -- let's 20 suppose that this number is right. I don't 21 know if it is or not. Perhaps it's quite low 22 as a percentage. Perhaps it's vanishingly low. 23 Question: Perhaps, but perhaps it's 24 approximately 150 a day -- 25 Answer: Who knows? 9315 1 Question: -- of severe 2 incompatibilities? 3 Are you disagreeing that there were 4 severe incompatibilities with MS-DOS 5.0 for 5 some users? 6 Answer: I don't know if there were 7 severe incompatibilities or not. Certainly 8 some users had serious problems. What they 9 were due to, I don't remember. 10 Question: On the last page, going 11 back to this mail from the NCSP, there is a 12 sample response, and this is a sample response 13 and reply to it, what is phrased as a typical 14 question having to do with the Zenith PC and 15 whether they should do the MS-DOS 5.0 upgrade 16 or wait until Zenith does its own, you know, 17 slight modification of the 5.0 to release, 18 correct? 19 Answer: Correct. 20 Question: I can just read it into the 21 record if you want. 22 Typical question: I have a Zenith PC 23 with Zenith DOS 3.3 plus. Should I buy the 24 MS-DOS 5.0 upgrade or wait until Zenith comes 25 out with their version? What, if any, features 9316 1 will I gain or lose? Will the MS-DOS 5.0 2 upgrade even be compatible with my machine? 3 And the sample response, first 4 paragraph states: The MS-DOS 5.0 upgrade is 5 designed to be as generic as possible, meaning 6 that it is designed to work on as many 7 different machines as possible. The further a 8 machine strays from the standard PC 9 architecture, the more difficult it is for a 10 generic operating system to install properly. 11 Is that last sentence I read a correct 12 statement? 13 Answer: What? 14 Question: It says, is it true that 15 the further a machine strays from the standard 16 PC architecture, the more difficult it is for a 17 generic operating system to install properly; 18 is that correct? 19 Answer: That sounds correct. 20 Question: And that's going to be true 21 whether you're talking about MS-DOS or DR-DOS, 22 correct? 23 Answer: Or any other operating system 24 that runs on a PC. 25 Question: Of course, there are all 9317 1 sorts of different hardware configurations out 2 there in the market, correct? 3 Answer: That's correct. 4 Question: And the fact that an 5 operating system has been tested and beta 6 tested and released does not mean and there is 7 no representation by that corporation to mean 8 that it is going to work in every instance with 9 every hardware configuration, correct? 10 Answer: In terms of what is 11 represented by the corporation or not, I don't 12 know the details of that. 13 But I would certainly be surprised if 14 a product released -- an operating system that 15 was released worked 100 percent of the time in 16 every single time on every single machine. 17 That would be very surprising. 18 Question: Okay. Given that fact, do 19 you think it was fair for Microsoft to monitor 20 the DR-DOS CompuServe forum and report every 21 instance of incompatibility regardless of the 22 system configuration, release that to the media 23 and the OEMs? Do you think that's fair? 24 Answer: Monitoring the CompuServe 25 forum of products that compete against you is a 9318 1 standard competitive tactic. 2 Question: Of course it is. 3 But do you think it's fair to monitor 4 that forum and no matter what report of a 5 problem that DR-DOS was having with a 6 particular system configuration, you would pull 7 that together into what you term an ad smear -- 8 termed a smear sheet and release it to both 9 media and OEMs? Do you think that's a fair 10 tactic? 11 Answer: Your question is a gross 12 exaggeration. 13 Question: Did you not use the words 14 smear sheet? 15 Answer: Gross exaggeration. 16 I don't remember what terms I used. 17 We certainly monitored DRI's forum, and that 18 certainly sounds like that something we did. 19 And certainly the data that's on the forum is 20 relevant when you go to do your own testing. 21 This is all shades of gray. It's all 22 a matter of percentages, of frequency, of 23 severity. That's the whole point of a beta 24 test, and that's the -- and that's the whole 25 point of product support. It's all shades of 9319 1 gray. 2 And I would maintain from now until 3 next decade that MS-DOS 5 was a substantially, 4 dramatically more stable product than DR-DOS 5 5 or DR-DOS for that matter. 6 I mean, there is just no question 7 about it. I mean, it's -- I mean, it's so 8 patently obvious to me, having worked there. I 9 mean, it's clear, clear, clear, clear, clear, 10 clear. 11 Now, we're going to get into arguments 12 about if New York City probably has more cases 13 of hepatitis than Des Moines does because it 14 has more people. Does that mean it's a less 15 safe place to live? 16 Well, who really knows. It's all -- a 17 matter of percentages. Of course it's going to 18 have more. More people live there. 19 And that's what is generating these 20 numbers like 150 a day, whether that number is 21 accurate or not. 22 Question: Okay. I'm not referring to 23 the 150 calls per day. 24 Answer: I know exactly what you're 25 referring to. Okay. 9320 1 Question: Well, then let me get you 2 to answer the question about what I was 3 referring to, which was do you think it's fair 4 of Microsoft to monitor the DR-DOS forum and 5 put together -- pull together every instance of 6 incompatibility regardless of the system 7 configuration that's under review, pulling that 8 together into sheets to release to media and to 9 OEMs? 10 Answer: First of all, your question 11 is inaccurate. 12 Is it fair for us to monitor the 13 CompuServe forum and use the information in the 14 CompuServe forum as a basis for competitive 15 information that's handed out to our customers? 16 Yes, that's fair. 17 The phrasing of your question is 18 inaccurate. 19 Question: Which part of it? 20 Answer: I don't remember taking every 21 single negative thread. That would have been a 22 hell of a document. It would have been about 23 this thick, every single thread that ever 24 appeared to CompuServe and put it in a document 25 without verifying it, of course, and handed it 9321 1 out. 2 Question: And it was handed out. 3 What you pulled together was actually handed 4 out to media sources. 5 A DR-DOS bug sheet, that's what it was 6 called, wasn't it? 7 Answer: It's possible. 8 Question: It's possible, I mean, you 9 know, that it was true and it was handed out to 10 media types, correct? 11 Answer: It's certainly possible that 12 we put together a bug sheet of DR-DOSes. 13 Question: Are you embarrassed about 14 the fact -- 15 Answer: No, I'm not embarrassed at 16 all. 17 Question: Why don't you admit that 18 you did that? 19 Answer: No, but you're asserting that 20 I took every single thread that was posted for 21 what? A year? 22 Question: You tell me. How long did 23 you monitor -- 24 Answer: I don't remember. I don't 25 remember. It was eight years ago. 9322 1 Question: So you don't remember -- 2 Answer: If you have got the 3 documents, why don't you just show them to me. 4 Question: I'm trying to get you to 5 testify truthfully. 6 Answer: I am testifying truthfully. 7 It's fair for us to use 8 incompatibilities that are in a competitor's 9 product and hand it out to their customers. 10 Question: We're back on the record. 11 And turning our attention to Exhibit 953, which 12 I have just handed to you. 13 We were talking about DR-DOS bug 14 sheets that you prepared. And if you look at 15 the center of a very brief E-mail from Brad 16 Silverberg to you dated January 17, 1992, 17 subject, DR-DOS bug sheet. Mr. Silverberg 18 states, can't I get another copy, annotated? I 19 gave mine to byte. 20 What is byte? 21 Answer: I assume byte is Byte 22 magazine. 23 Question: Which is, please describe 24 for the jury what Byte magazine is, because 25 they may not be familiar with it. 9323 1 Answer: Byte is a computer magazine 2 for people who use personal computers. 3 Question: Who prepared the DR-DOS bug 4 sheet that Mr. Silverberg is referring to? 5 Answer: I don't remember. It was 6 probably me, but I don't remember. 7 Question: Did you give him another 8 copy, annotated, of the DR-DOS bug sheet? 9 Answer: I have no idea. 10 Question: Did it surprise you that he 11 had taken that and given it to Byte? 12 Answer: I don't really have a 13 reaction one way or another. It's possible. 14 Question: And you don't see a problem 15 with him doing that, do you? 16 Answer: No. 17 Question: And as far as you are 18 concerned, it would have been okay for Brad 19 Silverberg to also have given the exact same 20 DR-DOS bug sheet to PC Magazine, PC Week, 21 Computer World, Infoworld, and any other 22 computer magazine that he saw fit, correct? 23 Answer: I don't know what magazines 24 he gave it to. 25 Question: Do you think he gave it to 9324 1 more than Byte? 2 Answer: I have no idea -- your 3 question is -- I'll rephrase your question. 4 Do I have an objection with his 5 handing it out to computer magazines? And the 6 answer is no. 7 Question: And you don't know which 8 organization beyond Byte he gave it to? 9 Answer: No, I don't know. 10 Question: Are you familiar with the 11 term FUD? 12 Answer: Yes. 13 Question: Can you please describe 14 your familiarity with that term to the jury? 15 Answer: FUD is an acronym for fear, 16 uncertainty, and doubt. 17 Question: Let's focus on the MS-DOS 18 product line. 19 How did Microsoft use and implement 20 the tactic of FUD? 21 Answer: I don't remember. I mean, 22 you know, handing out bug sheets is obviously 23 one way for us to communicate that there are 24 problems with this product and that there are 25 legitimate concerns with it. 9325 1 Question: So one of the ways to do 2 that is to monitor the DR-DOS forum and pull 3 together these bug sheets and hand them out, 4 right, and that is how Microsoft goes about it, 5 at least one way of generating FUD? Correct? 6 Answer: Microsoft collects bugs about 7 a product and would disseminate them so that 8 people have a true impression of what the 9 product is about, that they may not know. 10 Question: And it's regardless of 11 whether it's a PC architecture that is straying 12 from the generic architecture that an operating 13 system may have been designed for, any bug is 14 okay for Microsoft to distribute, correct? 15 Answer: No, no. That's not true. 16 Question: Okay. Which bugs were okay 17 for Microsoft to collect and distribute? 18 Answer: Presumably, ones that are 19 repeatable, that would be a good start. 20 Question: What others? 21 Answer: Ones that are important, 22 perhaps. 23 Question: How could it be important 24 if it's not repeatable? 25 It seems to me like you're saying that 9326 1 there are some bugs that are repeatable and 2 there are others that are important. 3 Answer: Some bugs are minor and 4 they're repeatable. 5 Question: Okay. 6 Answer: For example, a string comes 7 up with one character that is wrong, the text 8 is misspelled in a help message. I don't 9 consider that to be -- it's a bug, but it's not 10 a bug of particular note. 11 Question: Is it your testimony that 12 as far as you are aware, Microsoft only ever 13 distributed repeatable major bugs about DR-DOS 14 products? 15 Answer: I have no idea. I don't 16 remember. 17 Question: How about you personally? 18 Answer: I don't remember. 19 Question: What bugs did you -- when 20 you pulled together this bug sheet, did you 21 include only major repeatable bugs? 22 Answer: I don't remember what I 23 distributed, to tell you the truth. 24 Question: So it very well could have 25 contained minor bugs, right? 9327 1 Answer: Could have? Maybe, maybe 2 not. I don't remember. 3 Question: The fear, uncertainty and 4 doubt is what Microsoft was trying to overcome 5 when going from 4.0 to 5.0, right? 6 Answer: Microsoft was really trying 7 to overcome inertia. 8 Question: Didn't we just look at a 9 document that actually said fear and pain of 10 upgrading? 11 Answer: Which is basically inertia. 12 People don't want to move. Either 13 they don't see a compelling benefit or they are 14 afraid to move. It's one of those two things. 15 Question: Perhaps it's a tautology. 16 If you create fear, uncertainty and doubt in 17 someone, they are less likely to make the 18 change, right? 19 Answer: That would seem to be a 20 perfectly reasonable statement, yes. 21 Question: And, therefore, you have 22 introduced inertia into the decision process, 23 correct? 24 Answer: Yes, you have. 25 Question: And that is what Microsoft 9328 1 is trying to do to the DR-DOS product line when 2 it's creating FUD, is to create inertia, fear 3 about going to the DR-DOS product? 4 Answer: Correct. 5 We wanted the true story told. That 6 was what we wanted. 7 Question: When Microsoft was 8 distributing these bug sheets and everything 9 else it did to create FUD, what you were trying 10 to do was to emphasize the inertia that's 11 already there about people's fear of upgrading, 12 correct? 13 Answer: The point of distributing -- 14 Question: Can you answer the question 15 yes or no, and I'll give you a chance to 16 explain? 17 Answer: Could you repeat the 18 question, please? 19 (Requested portion of the record 20 was read.) 21 Answer: Could I have that one more 22 time, please? 23 (Requested portion of the record 24 was read.) 25 Answer: Could I have that one more 9329 1 time, please? 2 (Requested portion of the record 3 was read.) 4 Answer: Well, the question has lots 5 of compound parts to it, so it's pretty 6 difficult for me to answer it the way you've 7 asked it. 8 Question: And as I stated at the 9 beginning, any time you have a problem with the 10 question, ask me to rephrase it and I will. 11 Answer: Please rephrase. 12 Question: Okay. Let's do this more 13 directly. 14 Can you go back to Exhibit 951, 15 please? 16 And this is your memo about the final 17 DOS RUP prerelease corporate accounts plan, 18 correct? 19 Answer: That is correct. 20 Question: And under the second 21 heading, Competition, the last sentence of that 22 first paragraph, to overcome the fear and 23 inertia in corporations, we must communicate 24 the message that the benefits in DOS 5.0 make 25 an overwhelming case for upgrading. 9330 1 My question to you, sir, is when 2 Microsoft engaged in its FUD tactics and 3 campaign against DR-DOS, what you were trying 4 to do was play to the fear and inertia in 5 corporations that already existed about making 6 an upgrade, correct? 7 Answer: The question presumes that 8 there was this massive campaign, right. 9 Question: You're denying that there 10 was a deliberate FUD campaign against DR-DOS? 11 Are you going to deny that? 12 Answer: This word FUD, obviously this 13 is the word on which this whole thing hinges, 14 obviously, and I said it before. 15 The reason we distributed bugs, which 16 we obviously did, was because DR-DOS was held 17 to a considerably lower standard than MS-DOS 18 was, and so we felt that we were well within 19 our rights to make known the fact that this 20 product had significant problems. 21 Question: The question, I believe 22 was, are you going to deny that Microsoft 23 engaged specifically in a FUD campaign against 24 DR-DOS? 25 Yes or no? 9331 1 THE WITNESS: Could you read back the 2 question? 3 (Requested portion of the record 4 was read.) 5 Answer: Yeah, I'll deny that. 6 Question: Okay. 7 Answer: We certainly -- we certainly 8 -- we certainly were out publicizing problems 9 with the product, but this term FUD campaign -- 10 Question: You have a problem with the 11 term FUD campaign? 12 Answer: Yeah. 13 Question: You have denied, Mr. 14 Freedman, that Microsoft engaged in a FUD 15 campaign against DR-DOS, correct? 16 Answer: Right. 17 Question: And I just want to make 18 sure that you're not limiting that denial 19 simply to its campaign when marketing MS-DOS 20 5.0, and do you recall whether Microsoft 21 engaged in that type of campaign with MS-DOS 22 6.0? 23 Answer: I don't recall. 24 Question: Okay. Let me hand you what 25 has previously been marked as Exhibit 77. This 9332 1 was marked and used in Mr. Chase's deposition. 2 And this is the MS-DOS 6 PR plan, 3 November 1992, prepared for you and Mr. Chase 4 by Waggener Edstrom, which I understand is 5 Microsoft's outside PR firm. 6 Now, it's called the Waggener Group, 7 right? 8 Answer: That's correct. 9 Question: Okay. And we'll just very 10 quickly, because I believe the jury is already 11 familiar with this document, on the first page 12 of text down at the bottom, competitive issues, 13 objectives: FUD DR-DOS with every editorial 14 contact made. 15 That was an objective, wasn't it, sir? 16 Answer: It says it here in the 17 document. 18 Question: Are you distancing yourself 19 from this document? 20 Answer: I didn't write it. 21 Question: Of course you're not, but 22 did you receive it and say, hey, whoa, that is 23 something that Microsoft wants to be involved 24 in? Did you say that? 25 Answer: I don't recall saying that. 9333 1 Question: And strategy is to position 2 new features of MS-DOS 6 while positioning 3 DR-DOS as a less stable product with poor 4 MS-DOS functionality. 5 And Microsoft then pursued that 6 strategy, correct? 7 Answer: I don't remember exactly how 8 this was implemented. 9 Question: Okay. The fourth point, 10 and it's on the next page, says develop key 11 DR-DOS FUD points for all press tours. 12 And that was done, wasn't it? 13 Answer: I don't remember. It's 14 certainly possible, but I don't remember. 15 Question: And following that, it 16 talks about all of the different press tours 17 that are going to be coming, doesn't it? 18 Answer: Yes, that is what it looks 19 like. 20 Question: When you received this 21 memo, did you talk with Brad Chase about it? 22 Answer: I don't remember. 23 Question: Did you read this memo when 24 you saw that it said one of the objectives was 25 FUD DR-DOS with every editorial contact made, 9334 1 did you go to Brad Chase and say, I really 2 don't think we should do that, that would be 3 wrong? 4 Answer: I don't remember. 5 Question: You were in favor of 6 Microsoft going out and giving FUD about DR-DOS 7 with every editorial contact made, weren't you, 8 sir? 9 Answer: I don't remember. 10 Question: Do you recall pulling 11 together smear sheets about DR-DOS products? 12 Answer: I don't recall -- I don't 13 remember the term smear sheet. I do remember 14 -- I do recall writing competitive reports on 15 the product. 16 Question: Okay, and -- but you don't 17 think that these competitive reports could be 18 accurately called a smear sheet? 19 Answer: I don't remember using the 20 term. 21 Question: Let me hand you Exhibit 22 954. This is from you to Mr. Chase, March 4, 23 1992, DR bug update. 24 First sentence, my tests are done and 25 I've been up on CompuServe. The new bugs that 9335 1 weren't in my original smear sheet are: Norton 2 backup can't restore. VDefend, the TSR from 3 Central Point Antivirus is incompatible. 4 Certain machines have serious problems with 5 floppy access time. 6 Does this refresh your recollection 7 that what you were doing in pulling together 8 were smear sheets about DR-DOS products? 9 Answer: No. Actually, it doesn't. 10 Question: Okay. It goes on to say 11 that the other bugs from the smear sheet have 12 been fixed. 13 Do you recall what bugs you might have 14 put in that first smear sheet? 15 Answer: I have no idea. 16 Question: Apparently they were 17 resolvable because -- by this time, Novell in 18 1992, Novell had bought the DR-DOS business, 19 right, do you recall that? I'll represent to 20 you that that concluded in the fall of 1991. 21 Answer: Okay. This was subsequent to 22 that. 23 Question: So Novell had -- I'm 24 assuming that your sentence means that Novell 25 had already fixed all of the bugs that you had 9336 1 identified in your first smear sheet, correct? 2 Answer: I assume, based on what it 3 says. 4 Question: And so you were looking for 5 other bugs to try to smear DR-DOS with, right? 6 Answer: I was looking for other bugs 7 for a smear sheet, that is what this says, yes. 8 Question: Okay. And some of the bugs 9 that you've come up with now are that certain 10 machines have serious problems with floppy 11 access time; that's what you state, correct? 12 Answer: Right. 13 Question: And you are going to 14 include that in a smear sheet for Mr. Chase, 15 right? 16 Answer: That is what it says. 17 Question: And if we can refer back to 18 exhibit -- I believe it was 953, was the E-mail 19 thread with several different messages. 20 952, I'm sorry. On the second page, 21 under the sample response, that second 22 sentence: The further a machine strays from 23 the standard PC architecture, the more 24 difficult it is for a generic operating system 25 to install properly. 9337 1 When you were first looking at 952, I 2 mean, you were saying this was not a problem. 3 This was a rock-solid MS-DOS 5.0 product and 4 the things that are being identified here 5 simply had to do with nonstandard PC 6 architecture, it's not a problem with MS-DOS 5. 7 It's a problem with the hardware, correct? 8 Answer: No, that is not what I said. 9 Question: Okay. 10 Answer: It's not clear what the 11 problem -- what the cause of the problem is. 12 It could be a software configuration problem. 13 It could be a hardware configuration problem. 14 It could be a problem with the product. It's 15 conceivable. It's certainly within the realm 16 of comprehension. 17 Question: What type of self-editing 18 did you do when you were coming up with your 19 smear sheets? 20 Answer: I don't remember. I'm just 21 looking at these. 22 I mean, the first one is -- seems to 23 be configuration independent. The second one 24 seems to be configuration independent, and the 25 third one, it could be configuration 9338 1 independent and it could be a bug in the 2 product. Who knows? 3 Question: You didn't investigate to 4 confirm one way or the other about that, did 5 you? 6 Answer: I don't remember what I did. 7 Question: Do you think that you 8 actually went to see if it was a hardware 9 problem as opposed to a DR-DOS problem? 10 Answer: It could have been either. 11 It could have been either. It's certainly 12 possible. 13 Question: You just don't know one way 14 or the other? 15 Answer: No, I don't. 16 Question: You conclude the final 17 paragraph: It's not enough for smear sheet 2. 18 I think we're back to where we were in the 19 pre-DR-DOS 6 days, which is perhaps we take one 20 of these and leak it to Spencer or Cringely. 21 Who is Mr. Spencer? 22 Answer: Spencer was a columnist for 23 PC Week. 24 Question: And who was Mr. Cringely? 25 Answer: He was a columnist for 9339 1 Infoworld. 2 Question: So prior to DR-DOS 6 days, 3 you all were leaking this kind of stuff to 4 columnists of very well-reknowned and highly 5 regarded media magazines, correct? 6 Answer: One, I don't remember. Two, 7 these are gossip columnists. These are rumor 8 columns. 9 Question: So you didn't want facts 10 being reported. You wanted rumors and gossip 11 to be reported about DR-DOS, is that what 12 you're saying? 13 Answer: No. 14 Question: Why are you leaking this 15 type of stuff to gossip columnists? 16 Answer: Because those are the kinds 17 of people who print these things. 18 Question: And that is who you wanted 19 to print stuff. 20 By gossip, I'm assuming that you don't 21 necessarily mean it's true and accurate, 22 correct, just gossip? 23 Answer: That is what -- like what 24 they print in their business, but our stuff, 25 this is accurate. I mean, it's factual stuff. 9340 1 Question: So what you were trying to 2 do was get buzz in the industry, rumors, 3 whispers, gossip, that DR-DOS was an unstable 4 product, right? 5 Answer: I don't remember. 6 Question: Why would you be looking -- 7 leaking it to gossip columnists if you didn't 8 want busy tongues to be wagging about it? 9 Answer: These columnists printed fact 10 on products. They printed a lot on our 11 products, and they printed a lot on everyone 12 else's products. It's a good place to get news 13 disseminated. 14 Question: You conclude, or keep them 15 in your hip pocket for your next press tour. 16 And by that I take it you mean next 17 time you're out talking with the media, give it 18 to them directly, right? 19 Answer: If it's appropriate, yes. 20 Question: If you don't like it, then 21 why would you leak it, then why wouldn't you 22 just issue a press release? 23 Answer: I don't see why you would 24 just issue a press release on something like 25 this, it doesn't warrant a press release. 9341 1 Question: It is not unusual that 2 DR-DOS 5.0 would come out and have bugs that 3 needed to be fixed, which were then fixed in 4 the ordinary course of business by DRI and 5 Novell, correct? 6 Answer: No. It's not unusual that a 7 product would release with bugs. The question 8 is the frequency and the severity of bugs, 9 which I stated earlier. 10 Question: And just to make sure I 11 understood correctly, MS-DOS 5.0 was the most 12 rock-solid product you have ever heard of and 13 there weren't any real serious bugs with it, 14 right? 15 Answer: The most rock-solid -- it was 16 considered rock-solid. 17 And the second part of your question 18 was? 19 Question: Did it have any severe bugs 20 that you were aware of? 21 Answer: I don't remember. 22 Question: I hand you what's been 23 marked as Exhibit 955. It is from you on 24 July 26, 1991, so we're looking six to eight 25 weeks after MS-DOS 5.0 released. 9342 1 And you are sending this to Bill 2 Gates, Mike Hallman, Steve Ballmer, Brad 3 Silverberg and some others. 4 So obviously the top people at 5 Microsoft are getting this report from you, 6 right? 7 Answer: Right. 8 Question: Do you think that you would 9 have included any mistakes in this document if 10 you're sending something to Bill Gates and Mike 11 Hallman, who was at that time president? Were 12 you in the habit of sending them mistaken 13 material? 14 Answer: Probably not. 15 Question: Okay. If you could refresh 16 yourself with this. There are several things 17 in it pulled together. I will represent to you 18 that this came to us stapled this way. Okay. 19 Answer: This is long. 20 Question: Just refresh yourself 21 generally. I can focus you on where I'm 22 talking, and you'll have as much time to look 23 at it as you want. 24 You took about ten minutes or so to 25 read through the document fairly and carefully, 9343 1 correct? 2 Answer: Right. 3 Question: Did you see any mistakes in 4 the document in your review? 5 Answer: I wasn't reading for 6 mistakes. 7 Question: Okay. Turning to the 8 second page of text, at the top it says tactic, 9 there is a column. 10 Answer: Right. 11 Question: Tactic, MS-DOS 5.0A. 12 Beside that description, fix frequent 13 and dangerous bugs about 20 in total. 14 Does that refresh your recollection, 15 that you believed there were about 20 frequent 16 and dangerous bugs in MS-DOS 5.0? 17 Answer: I guess so, if it's there. 18 Question: Okay. And MS-DOS 5.0A was 19 in fact a bug-fix release that you all 20 implemented a couple of months after MS-DOS 5.0 21 released, shipped, originally shipped, correct? 22 Answer: That's correct. 23 Question: You didn't change the 24 version number to 5.01 or 5.1, you simply fixed 25 the bugs that were in the product that went out 9344 1 in June 1991? 2 Answer: That is my memory. 3 Question: Now, if you'll turn a 4 little farther in there is an E-mail 5 MSC00044740, and it's from NaveenJ, N-a-v-e-e-n 6 J, which I believe is Naveen Jane Jain, June 7 24, 1991, right? And you're on the list of 8 recipients. 9 Following is an overview of the 10 problems that we have discovered after MS-DOS 5 11 release. The first one, Adaptec, ESDI 12 controller with speed storer driver. Data 13 loss. 14 Can there be a more serious problem 15 with an operating system than the one that 16 leads to data loss? 17 Answer: No. Data loss is serious. 18 Question: And the next one, BSR 19 systems, data loss. 20 So there are two instances of MS-DOS 21 5.0 leading to data loss, correct? 22 Answer: That's correct. It's all a 23 question of how frequent this -- these things 24 occur. 25 That is the crux of the matter. 9345 1 Question: Task swapper bug, potential 2 data loss, right? 3 Answer: That is right. Again, it's a 4 question of frequency. 5 Question: Well, the first two may or 6 may not be done frequently, but task swapper, 7 that is one of the features that you all 8 implemented in MS-DOS 5.0, right? That was one 9 of the big selling points? 10 Yes or no to that first. 11 Answer: Yes, it's a major feature, 12 but look at what we think is causing it. 13 Question: The first sentence, there 14 is a bug in DOS task swapper that could 15 potentially lead to data loss. And then it 16 explains two cases where it may happen. 17 And you're saying that those cases may 18 be rare? 19 Answer: Yes, they may be rare. 20 Question: I mean, did anybody write 21 back to Naveen and say, where the heck did you 22 get this list of stuff, this is a rock-solid 23 product and -- 24 Answer: Oh, I don't know. I doubt 25 it. 9346 1 Question: And then there is a setup 2 on a monochrome system, system hang. 3 Does that mean it just goes into an 4 endless loop and you have a blank screen? 5 Answer: Hang means the system stops. 6 Question: And you have to, what, 7 power down to reboot? 8 Answer: Typically. 9 Question: Load high and networks, 10 loss of functionality. 11 This, it says user is unable to load 12 any TSR in the UMB after running Net5. TSR is 13 a terminate and stay resident. 14 Answer: Right. 15 Question: What is an UMB? 16 Answer: Upper memory block. 17 Question: It goes on to say, this bug 18 would also show up in Banyan VINES and 19 Lantastik networks. 20 Banyan VINES and Lantastik networks 21 are pretty serious software products, aren't 22 they? 23 Answer: Yes. They were big products. 24 But again, you know, who knows exactly what 25 cases it happens in. 9347 1 Question: Exactly, you don't know one 2 way or the other? 3 Answer: I don't know. 4 Question: But just to bring it back, 5 that is, the same thing could be said about the 6 DR-DOS problems you were pulling together and 7 sending out smear sheets. You really don't 8 know how often it's happening and whether it's 9 significant or not, right? 10 Answer: When you have a software 11 problem, that generally happens all of the 12 time. 13 Question: And that is in fact like on 14 the DR-DOS CompuServe forum, that is what 15 people were doing, they were reporting problems 16 so that DRI and Novell could help them remedy 17 those problems, right? 18 Answer: That is correct. 19 Question: And Microsoft did the same 20 thing, right? 21 Answer: Right. 22 Question: And that is a reasonable 23 marketing tactic, right? 24 Answer: To use CompuServe to do 25 product support? 9348 1 Question: Right. 2 Answer: Yes. 3 Question: And if you look at the 4 second to last page, Naveen Jain is again 5 reporting some serious DOS 5 issues from PSS 6 June 20, 1991, and he lists six problems. I 7 think some of these we have already been over. 8 Problem number one, for instance, 9 AutoCad and extended memory, you have seen 10 that. 11 Problem two, EMM386, hanging machine 12 on boot. 13 What is EMM386? 14 Answer: It's a memory management. 15 Question: This is a problem that has 16 come up fairly frequently on a number of 17 systems. 18 So that is a repeatable problem, 19 right? 20 Answer: All of the problems here are 21 repeatable. Repeatable means that when you 22 bring the system into a lab, you can get it to 23 happen again. 24 These are all repeatable problems. 25 You can't fix it unless it's repeatable. 9349 1 Question: Is it still your testimony, 2 sir, that MS-DOS had no severe or serious bugs, 3 MS-DOS 5.0? 4 Answer: I don't remember what I said. 5 Obviously from this there are, you 6 know -- there were data loss bugs in the 7 product. 8 How often they happened, who knows? 9 Couldn't have been too often, though, because 10 otherwise it would have showed up much more 11 frequently, I assume, in the calls. 12 Question: Well, you were getting 13 about 120 calls a day, as I recall. From a 14 previous E-mail, actually 150 calls a day, 15 right? 16 Answer: No. It was 150 calls a day. 17 I don't remember what her phrasing was. It was 18 150 who were experiencing severe 19 incompatibility. 20 I don't know how she defines that. 21 This says we were getting 1300 calls a day in 22 total. 23 Question: So actually 1300 calls a 24 day with severe incompatibility? 25 Answer: No, no, no, no, no. 9350 1 This says we were getting 1300 calls a 2 day total. She says there were 150 a day on 3 severe problems. And again, I don't know how 4 she defines that or where the number comes 5 from. 6 Do you recall when DR-DOS 6.0 was 7 released? 8 Answer: September of -- must have 9 been September of '91, '91. 10 Question: Okay. That is my 11 indication too. I mean, I think that's 12 correct. 13 Did you or did anyone at Microsoft 14 frequently leak to a lot of the media the 15 problems that you all were having, that you all 16 were finding with DR-DOS 6.0? 17 Answer: I remember writing a report 18 based on problems we found on DR-DOS 6, and I'm 19 pretty certain it was distributed to the press. 20 Question: Okay. Do you recall 21 getting -- do you recall that tactic being 22 particularly effective? 23 Answer: No. No. 24 Question: You don't recall or -- 25 Answer: I don't remember. 9351 1 Question: Let me hand you what I have 2 marked as Exhibit 956. 3 On the second page towards the middle, 4 there is an E-mail from you to Brad Chase, 5 December 4, 1991, seen on DR forum. 6 I take it that means the DR-DOS 7 CompuServe forum? 8 Answer: I assume. 9 Question: You wrote, one of the DR 10 bigots said he had been contacted by three PC 11 publications recently because a rash of DR 6 12 bugs had been reported to them. One of them 13 was Paul Sherer -- didn't mention the other 14 two. He is one of those Microsoft conspiracy 15 theory guys and is convinced we're planting all 16 of those calls to the magazines. As if DR 17 really had no serious bugs. 18 Answer: I don't know what magazines 19 we spoke to. From this mail, it looks like we 20 didn't talk to all of them. I don't remember 21 what magazines were spoken to. 22 Question: It says, looks like your 23 trip might have had an effect. 24 You're writing that to Brad Chase. 25 What trip was that? That was a press tour, 9352 1 wasn't it? 2 Answer: Must have been a press tour. 3 Question: And by an effect, are you 4 stating that you believed the fact that he went 5 and visited some media persons led to reports 6 in the media about problems with DR-DOS? 7 Answer: Yeah, I assume that's what he 8 meant, yeah. 9 Question: Can you go back to the 10 previous page? 11 That first E-mail, the subject is PC 12 Week antDR story. It's also December 4, 1991. 13 You're not on this thread, but I just 14 want to ask you a question about it. 15 This was from W. Carrin, and that is 16 Carrin Greason from Waggener Edstrom; is that 17 right? 18 Answer: Yes, Carrin. I don't 19 remember her last name. 20 Question: To Brad Chase, Brad 21 Silverberg, Liz Sidnam and Steve Ballmer, 22 right? 23 Answer: Uh-huh. 24 Question: And it says at the 25 beginning, please see the made-to-order story 9353 1 in this week's PC Week by Paul Sherer. 2 And Sherer is, he's the gossip 3 columnist that you were talking about before? 4 Answer: No. Paul Sherer was just a 5 reporter. 6 Question: Okay. You had stated 7 before that he wrote a gossip column, right? 8 Answer: No, that was Spencer. 9 Question: Oh, I'm sorry. You're 10 right. You're right. 11 Then you got to, quote, apparently the 12 title of the article, utility woes bedevil 13 DR-DOS users seems to have come directly from 14 information and tips the MS-DOS team shared 15 with Paul. 16 Do you know what information and tips 17 were shared with Paul? 18 Answer: I don't recall. I don't 19 recall what it could have been. I mean, it 20 could have been the report I wrote. I don't 21 remember what it was. 22 Question: It continues on about he 23 got on CompuServe and looked at all that. 24 At the end of the mail, it says, 25 highly visible result from your recent press 9354 1 tour looks good. 2 I mean, this is the type -- when we 3 were looking about earlier FUD, DR-DOS with 4 every editorial contact made, that was in 5 regard to the MS-DOS 6.0 PR plan, right? 6 Do you recall that? 7 Answer: Yeah. That was from '92. 8 Question: Right. And this -- what is 9 being summarized here in this E-mail is the 10 type of result you wanted to get by indicating 11 you FUD DR-DOS with every editorial contact 12 made? 13 Answer: This report is from '92 and 14 this E-mail is from '91. 15 Question: Right. And what they 16 wanted in regard to MS-DOS 6.0 is this type of 17 result, this type of story being written by 18 media types, right? 19 Answer: Yeah, I assume. 20 Question: Because it worked for the 21 MS-DOS 5.0 PR plan, right? 22 Answer: I don't know what the MS-DOS 23 5 PR plan was. Obviously, it worked in this 24 particular case. 25 Question: And the E-mail that begins 9355 1 at the bottom, again, you're not copied on this 2 one, but I have a question for you about it. 3 It's from Brad Chase to Brad Silverberg. 4 Now, Brad Chase was your boss, right? 5 Answer: Right. 6 Question: And Brad Silverberg was 7 Brad Chase's boss, right? 8 Answer: Right. 9 Question: Okay. And this was also 10 written December 4, 1991. 11 And he writes, what do you think about 12 you or me sending this to Paul? By Paul, is 13 that Paul Sherer? 14 Answer: I assume. 15 Question: And then here is the 16 message that he proposes. Hey, Paul, how was 17 your Thanksgiving? Read your article on DR. 18 It reinforces how critical our beta test has 19 been to our success. 20 Naturally, I do take issue with two 21 points that I wanted to discuss with you. 22 We never had the flood of problems DR 23 is experiencing. The magnitude of problems 24 also cannot be compared. DR users are losing 25 data, having things not work, et cetera. 9356 1 Do you know whether this message was 2 ever sent to Paul Sherer? 3 Answer: I have no idea. I don't 4 know. 5 Question: 150 calls a day of serious 6 problems, 1394 calls per day is not a serious 7 issue for Microsoft? 8 Answer: It's all a function of 9 volume. It's all a function of frequency. 10 That's the crux of the matter. It's all a 11 matter of frequency. The sales rates of the 12 two products were just not comparable at all. 13 Question: DR users are losing data, 14 having things not work, et cetera. Most of our 15 questions were (are) about moving to one large 16 partition or the difference between extended 17 and expanded memory. 18 That's not true, is it? 19 Answer: No, that's true. 20 Question: Didn't we look at a 21 document that talked about data loss problems? 22 Answer: Yeah, but we haven't 23 established what the frequency of those 24 problems was. There's no data on what the 25 frequency of those problems was. It's all 9357 1 speculation. 2 Question: This doesn't talk about the 3 frequency, this talks about the magnitude. 4 Answer: No, it talks about the word 5 frequency. It uses the word most. Most is a 6 word of frequency. 7 Question: Did you ever have this type 8 of communication with someone in the media, 9 sending them an E-mail, something like this? 10 Answer: I don't recall. I just don't 11 remember. 12 Question: You might have, but you 13 don't know? 14 Answer: It's possible. 15 Question: Do you recall ever talking 16 with media people on the telephone? 17 Answer: All the time. 18 Question: All the time. 19 Did you ever make a comment to anyone 20 in the media that DR users were losing data? 21 Answer: I don't remember. 22 Question: You might have? 23 Answer: I don't know. 24 Question: If you had said to someone 25 in the media on the telephone, DR users were 9358 1 losing data, would you have qualified it by 2 saying, but you know what, MS-DOS users were 3 also losing data? 4 Answer: I don't know what I would 5 have said. 6 Question: You wouldn't have said 7 that? 8 Answer: It was a long time ago. 9 Question: You wouldn't have said 10 that, would you have, Mr. Freedman? 11 Answer: I don't know. I don't know 12 what I would have said. Again, it was a long 13 time ago. 14 Question: On this next page, that 15 first full paragraph, Mr. Chase writes, I also 16 seem to recall that this is the second article 17 where you refer to DR-DOS leapfrogging us in a 18 feature war. 19 Is it an accurate statement to say 20 that DR-DOS was ahead of the currently shipping 21 MS-DOS versions in terms of features? 22 Answer: Are you referring to DR-DOS 23 6? 24 Question: Let's talk about, first of 25 all, when MS-DOS 4.01 was shipping and DR-DOS 9359 1 shipped DR-DOS 5.0. 2 Between that time and June of 1990, 3 until June of 1991, was DR-DOS ahead in a 4 feature war? 5 Answer: Yes. DR-DOS had more 6 features. 7 Question: Okay. And then MS-DOS 5.0 8 came out in June of 1991, and three months 9 later, in September of 1991, DR-DOS 6.0 came 10 out, correct? 11 Answer: Right. 12 Question: And DR-DOS 6.0 from 13 September '91 until MS-DOS 6.0 shipped in March 14 of 1993, DR-DOS was again ahead of MS-DOS in 15 terms of features, correct? 16 Answer: Well, they had some features. 17 You know, they had some features that we didn't 18 have, sure. 19 Question: Okay. Did you think that 20 that was a problem for Microsoft from a 21 marketing perspective? 22 Answer: Is it a problem to have less 23 features than a competitor? 24 Question: Yes. 25 Answer: Yes, of course. 9360 1 Question: What kind of tactics apart 2 from actually shipping the product, what kind 3 of tactics come to mind to combat a competitor 4 that is ahead of you in a features war? 5 Answer: Well, the key thing you do 6 is, you point out other things that are 7 important to people other than features. 8 Question: Such as? 9 Answer: Compatibility. 10 Question: Do you also engage in FUD 11 to make sure that users don't go to the DR-DOS 12 version -- 13 MS. NELLES: Your Honor, may we 14 approach? 15 THE COURT: Stop, please. 16 (The following record was made out of 17 the presence of the jury at 9:43 a.m.) 18 MS. NELLIS: Your Honor, I'm not sure 19 what is going on, and I'm going to assume it's 20 by mistake and not by purpose, but throughout 21 the morning we've had a series of small errors 22 that I haven't raised. 23 But the first one happened back on 24 page -- it looks like 66 of the transcript, 25 where you may recall the witness was asking to 9361 1 have something read back and it looped several 2 times so it looked like he asked more times 3 than he actually did. And I didn't want to 4 disrupt the presentation, and I let it go. 5 We then had a moment on page 90 of the 6 transcript where material that was not supposed 7 to be played wasn't played, however, if you 8 notice, the plaintiffs have begun to play the 9 transcript at the bottom of the video. I have 10 no objection to that. I think it's perfectly 11 appropriate and it helps the jury. While they 12 took it out of the video clip, they left the 13 line in the transcript. 14 And I understand when putting these 15 things together, there are mistakes. Again, I 16 simply let it go. I thought it wasn't 17 important to disrupt the presentation, however, 18 it did raise my level of alert to watch what 19 was going on here, particularly because I 20 thought the first one was a little more 21 damaging than it looked what the witness was 22 doing. 23 Now we just had a moment and then I 24 had another situation on page 102 of the 25 transcript where it was read a little quickly, 9362 1 but material that was not to be shown, not 2 played, but again, scrolled through the 3 transcript on the bottom. 4 But now we just had a situation on 5 page 115 of the transcript where a question 6 that is not supposed to have been read, 7 particularly: "Do you also engage in FUD to 8 make sure you don't go to the DR-DOS version 9 that is ahead of Microsoft DS-DOS in terms of 10 features" was read. 11 Now again, perhaps this my error, but 12 my record shows that material was not supposed 13 to be in. And this was a situation where -- 14 and if it's a mistake, then my mistake, I 15 apologize, but there's been a series of errors, 16 and I simply wanted -- or potential errors, and 17 I wanted to make sure we're on page here, that 18 the presentation that is being done is correct 19 in terms of what was negotiated between the 20 parties because my records show that that 21 wasn't supposed to be in. 22 And I even have a note here that we 23 checked -- I don't know if it was Lindsey, and 24 that wasn't to be played, that was to be 25 clipped. 9363 1 So I don't want to break their 2 presentation, but there seems to be some 3 sloppiness in how this is going in. I very 4 much believe it is not intentional, but I would 5 ask that when we break, particularly over the 6 lunch, if we could get some effort here to make 7 sure that what is being played is what is 8 supposed to be played and that the transcript 9 that is being played at the bottom matches what 10 has been agreed would be shown to the jury. 11 MR. CASHMAN: Well, Your Honor, I 12 don't think there's been any mistakes up to 13 this point. I did notice that the scroll was 14 stuck for a moment at the point when the 15 witness said several times, "Could you rephrase 16 the question?" 17 MS. NELLIS: It looked like he asked 18 several times. 19 MR. CASHMAN: It wasn't -- the video, 20 I think, was correct, but the scrolling was 21 stuck for a second or two. And I indicated to 22 our technician Darin, and they corrected it 23 right away. 24 And little things like that are just 25 bound to happen in these kind of circumstances. 9364 1 The current instance, which I think 2 triggered Ms. Nellis' objection, I'm not sure 3 if that was a mistake or not, but in my clip 4 report it indicates there's two answers in a 5 row. So I think -- there may have been some 6 agreement that the question had to be 7 reinserted for that answer, but I don't know. 8 We can check on it. But again, I think just on 9 technical issues, sometimes little things like 10 this are bound to happen. 11 MS. NELLIS: I agree little things are 12 bound to happen, and that is why I haven't 13 mentioned most of the little things that have 14 happened. However, we have an instance, one, 15 where -- and I believe the video was replayed, 16 Mr. Cashman, not simply the scroll was stuck, 17 where it made it seem as if the witness was 18 asking the court reporter over and over again 19 to reread a question. 20 THE COURT: It did ask twice. 21 MS. NELLIS: Right, and it was played 22 three times. 23 THE COURT: Right. 24 MS. NELLIS: The second thing that 25 happened was that there was a line here that 9365 1 was by negotiation not to be out where there is 2 a slightly sarcastic question played for the 3 witness where a line of it is supposed to have 4 been clipped. It was appropriately clipped in 5 the video, but it was left standing, quite 6 plainly, the language, on the transcript. 7 Again, I'm not complaining about small 8 technical issues. I haven't raised them, but 9 that is a damaging thing to have happened. 10 And the third thing happens all the 11 time where we have questions and answers that 12 both parties agree should not be coming into 13 the jury. And Darin is wonderful. They've 14 done a great job of clipping this video so it 15 looks like a continuous presentation, and you 16 can do that so the answer follows from the next 17 answer and it's by agreement. But what they 18 did is inserted an objectionable question into 19 the presentation. I'm in no way suggesting it 20 was done intentionally, but we've had several 21 small issues that I have not raised. There 22 have been three that I think have been 23 damaging, and I would like some agreement that 24 there will be some effort made to make certain 25 that going forward that we're going to check 9366 1 for these kinds of issues because it is 2 damaging to Microsoft and it's not fair for 3 this to happen. 4 And I certainly don't want to jump up 5 and down and I won't jump up and down every 6 time a word is misspelled or there's a little 7 technical issue or we clipped a piece of 8 nondamaging testimony. But these were three 9 particularly important issues that shouldn't 10 have happened, and I'm not asking for an 11 instruction. I'm asking simply for a 12 commitment that we're going to take -- the 13 plaintiffs will take the time to look at this 14 and make sure it's going correctly. 15 THE COURT: Anything else? 16 MR. CASHMAN: Well, Your Honor, 17 plaintiffs have spent a tremendous amount of 18 time trying to make sure that this is accurate, 19 and I believe that it has been accurate. We'll 20 check into this one instance, and as we have 21 been trying to prevent any mistakes. And I 22 just want it known that these kinds of things 23 are bound to happen both ways. 24 Yesterday the Court will recall that 25 there was an instruction that the demonstrative 9367 1 for Mr. Apple was to be shown for no longer 2 than necessary, and Microsoft kept it up there 3 all the way throughout, even when the witness 4 wasn't testifying about was on the 5 demonstrative. And I didn't get up and raise 6 an issue right at the point -- at that point, 7 but it just goes both ways. And I know both 8 parties are going to work to try to prevent it, 9 but it happens. 10 MS. NELLIS: I agree, and I think both 11 parties should and will work together. I think 12 they've done a very good job, and I realize 13 these things are coming in late in the last 14 minute. I just think when three damaging 15 incidents happened, I had no choice but to stop 16 and raise it with plaintiffs so that we can see 17 if we can fix it going forward. I'll let it 18 go. 19 But I must respond to Mr. Cashman's 20 assertion about the Apple demonstrative. I was 21 at the Apple testimony when it came in in 22 Minnesota. I sat there. I watched my 23 colleague, Mr. Pepperman, draw that 24 demonstrative. It was -- as you go through the 25 testimony, it was absolutely clear every single 9368 1 time he put his hand to paper and wrote a 2 moment on it and what was shown tracked exactly 3 what was done in the Minnesota trial precisely. 4 And I must respond to the gratuitous comment, 5 but I won't say another word about it. 6 Thank you. 7 THE COURT: Anything else? 8 MR. CASHMAN: No, Your Honor. 9 THE COURT: All right. We're going to 10 take a recess. And maybe you can get together 11 with your technician and maybe if you want to 12 point out to Darin too anything else you found 13 going forward. 14 MS. NELLIS: Thank you, Your Honor. I 15 appreciate that. 16 THE COURT: I'll tell the jury we're 17 going to take a recess. 18 (The following record was made in the 19 presence of the jury.) 20 THE COURT: Thank you for your 21 patience, ladies and gentlemen of the jury, and 22 since it's about time we take a break, we're 23 going to take one right now for ten minutes. 24 Remember the admonition previously 25 given. So you get kind of a bonus break, and 9369 1 we'll get you in about ten minutes. 2 Okay. Leave your notebooks here. 3 (A recess was taken from 9:50 a.m. 4 to 10:07 a.m.) 5 THE COURT: I apologize for the delay. 6 The court reporters had a problem with their 7 realtime service, and they had to call them in 8 Illinois and see what's going on. 9 (Whereupon, the following video was 10 played to the jury.) 11 Question: Are you familiar with the 12 term vaporware? 13 Answer: Sure. 14 Question: Preannouncement? 15 Answer: Yes. 16 Question: Can you describe for the 17 jury what those terms mean? 18 Answer: I can describe my 19 understanding of those terms, obviously. Don't 20 consider this to be a definitive definition. 21 Vaporware is when you announce 22 something that generally doesn't exist, and 23 preannouncement is just when something gets 24 announced before it's shipping. 25 Question: And which of those tactics 9370 1 does Microsoft engage in as far as the MS-DOS 2 product line is concerned? 3 Answer: Well, that's a good question. 4 Certainly not vaporware. It was always a real 5 product. 6 Question: Always? 7 Answer: When I worked on the 8 business, there was. There was always a real 9 product in development. 10 Question: What about MS-DOS 7.0? 11 Answer: That was never announced. 12 Question: Was there never a PC Week 13 article written in August of 1993 about the 14 upcoming release of -- 15 Answer: What PC Week writes and what 16 Microsoft officially announces are two totally 17 separate and distinct things. Reporters chase 18 down stories. 19 Question: And apart from what's 20 officially announced, what about things that 21 are being leaked to the press about future 22 product development plans? 23 Answer: That's just not how PR works. 24 Question: Is that not something that 25 Brad Silverberg would do? 9371 1 Answer: Look, I don't know what Brad 2 Silverberg did. 3 PR -- MS-DOS is a product that a lot 4 of people use and it's considered newsworthy, 5 and so Paul Sherer and reporters for Infoworld, 6 PC Week, Computer Reseller News, all of the 7 weekly publications have made it their business 8 to find out things about what we were doing, 9 what we were up to. 10 Where these stories came from, 11 sometimes I spent more time trying to contain 12 information to keep it from getting out than I 13 spent talking to reporters about things that we 14 were comfortable discussing. 15 That was true on MS-DOS and that was 16 true on Windows for sure, on both. 17 Question: So you don't believe, as 18 far as you know, nothing about MS-DOS 7.0 was 19 ever leaked to the press to try and stifle 20 interest in Novell DOS 7.0? 21 Answer: As far as I know, we never 22 leaked anything about DOS 7. There never was a 23 DOS 7. 24 Question: There never was a DOS 7? 25 Answer: There was never a formal 9372 1 development, developed product that was being 2 developed for release that was called DOS 7, 3 not as far as I know. 4 There might have been some things that 5 were being worked on, but there was never a 6 formal schedule and a launch plan and a 7 marketing team and the whole nine yards for 8 this thing. 9 Question: Let me hand you what I have 10 marked as Exhibit 958. It's something you 11 wrote on May 24, 1993 called MS-DOS 7 product 12 plan straw man. 13 Do you care to reconsider your 14 previous testimony, Mr. Freedman? 15 Answer: Absolutely not. 16 Question: Tell me why what you just 17 said is consistent with the title of this 18 document. 19 Answer: The document says that it's a 20 straw man, the document says Version 0.1. 21 The first sentence of this document 22 says, the purpose of this document is to 23 initiate the discussion on future MS-DOS 24 product plans. 25 So obviously there was no formal plan 9373 1 because otherwise I wouldn't have written this 2 document. And not much ever came after this 3 document as far as I remember. 4 Question: Not much ever came -- I 5 want to make sure, because we're going to get 6 into this later. 7 I want to make sure of your testimony 8 on this point so that the jury is familiar with 9 it. 10 Not much came of MS-DOS 7.0 after this 11 document was written, that is your testimony, 12 and you are sure about that answer? 13 Answer: There may have been other 14 product planning documents, but as far as I 15 know -- I didn't know of any development that 16 ever happened on this product. I mean, you may 17 have more documents like this thing, but the 18 product never really got off the ground. 19 Question: In fact, MS-DOS 7.0 is 20 shipping with Windows 95, isn't it? 21 Answer: That is a nomenclature. That 22 is a semantic thing. Because when you type VER 23 at the command line, it reads MS-DOS 7. 24 Question: Which means version? 25 Answer: Right. 9374 1 Question: MS-DOS Version 7.0? 2 Actually, it's 7.1 now, isn't it? 3 Answer: I don't know what it is now, 4 to tell you the truth, but there is no 5 separately available product called MS-DOS. 6 Question: Exactly. That is the 7 point, isn't it, Mr. Freedman, because there is 8 no separately available MS-DOS 7.0 because it 9 was tied to the Windows that was being 10 developed and has been released as one product, 11 Windows 95; correct, sir? 12 Answer: There is no MS-DOS 7 because 13 there was no market demand and there was no 14 market need for an MS-DOS 7. That's why there 15 is no MS-DOS 7. 16 Question: Just to be clear, your 17 testimony is that nothing was being developed 18 called MS-DOS 7.0? 19 Answer: Look -- 20 Question: Just a question. 21 Answer: I don't know what was being 22 done in various development labs at Microsoft, 23 what it was being called, but all I know is I 24 never worked on the launch of a product called 25 MS-DOS 7. 9375 1 Question: I know that you didn't work 2 on the launch of a product called MS-DOS 7 3 because there was no launch of the product, 4 because everything that was being done to 5 develop and extend the DOS operating system was 6 then simply folded into the Chicago project, 7 which was released under the name Windows 95; 8 correct, sir? 9 Answer: No, that's certainly not my 10 understanding. Absolutely, absolutely not, no. 11 Question: Well, in fact, you were 12 very concerned about Microsoft having -- being 13 perceived by the industry as a follower as far 14 as DOS technology was concerned, right? 15 Answer: Certainly is possible. 16 Question: Were you or were you not? 17 Answer: I don't remember. I mean, 18 it's certainly possible. 19 Question: Well, if Microsoft is being 20 perceived as a follower, that would mean it's 21 being perceived as a follower to Novell and 22 DRI's development with DR-DOS, right? 23 Answer: Well, we could be perceived 24 as a follower to a bunch of people. That would 25 certainly be one, and there are other 9376 1 competitive operating systems also. 2 Question: Let me hand you what's been 3 marked as Exhibit 959 at the top -- there's 4 several different E-mails here. The top one is 5 from you to Brad Chase and Brad Silverberg. 6 MS-DOS 6 positioning. March 26, 1993. 7 Can you read that first paragraph into 8 the record, please? 9 Answer: You want me to read it? 10 Question: Yeah, I do. 11 Answer: If they really release a 12 version with all of this junk in it, it will 13 mean that for three MS-DOS releases in a row, 14 open paren, 5, 6 and 7, close, DR will have had 15 our key features in their product 12 to 18 16 months before us, open paren, kernel and HMA, 17 compression, BXD/multitasking, close paren. 18 Given that track record, it's going to 19 be impossible to shake this MS as follower 20 imagine. It's been very difficult so far as it 21 is. Excuse me. 22 Question: Do you agree that DR-DOS 23 was 12 to 18 months ahead of MS-DOS as to every 24 one of those versions discussed there, or do 25 you want to qualify that statement somehow? 9377 1 Answer: I mean, if that is the time 2 frame, that's the time frame. I mean -- I 3 don't remember the exact dates of the releases, 4 but that looks reasonably accurate. 5 Question: One way to shake the MS's 6 follower imagine was to merge MS-DOS into 7 Windows and release it as one product, right? 8 Answer: No. I mean, one has nothing 9 to do with the other. 10 Question: Well, it removes the 11 ability of Novell to compete for the DOS 12 business, doesn't it? Yes or no? 13 THE WITNESS: Can you read the 14 question? 15 (Requested portion of the record 16 was read.) 17 Answer: You vastly, vastly, 18 overestimate the importance of DRI in the 19 development of the Windows 95 product plans. 20 Vastly. 21 Question: Okay. Are you not aware of 22 a document called Chicago strategy document 23 from 1992 where it indicates one of the primary 24 motivating reasons for Chicago was the fact 25 that Novell was after the desktop? 9378 1 Answer: I don't remember. 2 Question: You're not familiar with 3 that document? 4 Answer: No. 5 Question: So now your boss's boss is 6 incorrect about whether or not there is an 7 MS-DOS 7 under development? 8 Answer: I don't know. Maybe he's 9 talking about some stuff that's in some 10 preliminary specs, but -- 11 Question: Well, this is actually even 12 two months before Exhibit 958, your memo of 13 May 24, 1993. 14 Answer: I mean, that's perfectly 15 plausible, I mean, that someone else was doing 16 something else. 17 Question: Now, what does MVDM mean? 18 Answer: I think it's multiple virtual 19 DOS machines. 20 Question: Is it possible for MS-DOS 21 to be a multiple virtual DOS machine? Does 22 that mean multitasking? 23 Answer: No. Actually, it's -- I 24 think it's -- I think it means a lot more than 25 multitasking. I mean, MVDM is what's in 9379 1 Windows 3.0. 2 Question: Is it possible for that to 3 be in MS-DOS? 4 Answer: I don't know. 5 Question: Okay. Lots of cool stuff. 6 Were you curious about what stuff he was 7 referring to? 8 Answer: I don't remember. This is 9 ancient history. 10 Question: Okay. It's ancient history 11 unless MS-DOS 7 is actually shipping in Windows 12 95 and a subsequent version shipping in Windows 13 98, right? Because if it's there, it means 14 it's current history, correct? 15 Answer: No, I didn't say there was an 16 MS-DOS 7. Those were your words. 17 Question: Do you agree that MS-DOS 18 was absorbed into Windows when Windows 95 was 19 released? 20 Answer: MS-DOS functionality became 21 part of Windows. 22 Question: What does that mean, MS-DOS 23 functionality? 24 Answer: The ability to run DOS 25 applications, the ability to run DOS device 9380 1 drivers. 2 Question: So MS-DOS was absorbed into 3 Windows and released as Windows 95? 4 Answer: MS-DOS functionality 5 certainly became part of Windows 95, but MS-DOS 6 is a separate product, is still on the market. 7 You can still buy 6.2 still there. 8 Question: Well, there's a difference 9 between dead-ending a product and continuing 10 its development, right? 11 Answer: Development was stopped on 12 MS-DOS as a separate product because there was 13 no need for MS-DOS as a separate product, as I 14 stated earlier. 15 Question: Because it was being 16 absorbed into Windows, correct? 17 Answer: The functionality that it 18 provides is absorbed into Windows. 19 Question: Is it just -- do you have a 20 problem -- is it just a phrasing problem about 21 saying MS-DOS has been absorbed into Windows? 22 Answer: Well, but there was still an 23 MS-DOS. 24 I mean, you know, the product wasn't 25 terminated. I mean, it's still available. The 9381 1 functionality that it provided certainly was 2 absorbed into the product. 3 Question: Could the -- is it your 4 understanding that the MS-DOS product 5 functionality that is within Windows 95 could 6 have been separated and offered separately from 7 Chicago, from Windows 95? 8 Answer: No. I'm not a technical guy. 9 My understanding was that it would have been 10 darn near impossible, just about impossible. 11 Question: Do you know what an SKU is? 12 Answer: Sure. 13 Question: What does that stand for? 14 Answer: Stockkeeping units. 15 Question: What does that mean? 16 Answer: An SKU is a particular box 17 that you sell, and it's a particular 18 stockkeeping unit that has a serial number that 19 someone can order separately. 20 Question: Okay. And when the Chicago 21 plans were through -- and that was the code 22 name for Windows 95, right? 23 When the plans for Chicago were 24 through, was there consideration about offering 25 separate SKU's, one with MS-DOS 7, one with 9382 1 MS-DOS 7 plus Windows, i.e., Windows 95? 2 Answer: Well -- 3 Question: Yes or no, and then you can 4 explain. 5 Answer: Let me rephrase. 6 Question: No. Please answer my 7 question. 8 Answer: Well, your question is not 9 accurate. 10 Question: Was there consideration? 11 Answer: First of all, there certainly 12 was consideration of a separate product called 13 MS-DOS 7, but it never got very far, as I said. 14 Notwithstanding these documents and other 15 documents you undoubtedly have, the 16 consideration never got very far. 17 And certainly as far as I know, the 18 technical investigation of what would have been 19 necessary to separate the two, I don't think 20 ever really went anywhere. 21 What I object to in your question is 22 there was two stockkeeping units, MS-DOS 7 and 23 MS-DOS 7 plus Windows. There was no MS-DOS 7 24 plus Windows 7. The product is called Windows 25 95. 9383 1 Question: Because both the graphical 2 user interface and the DOS operating system 3 were being extended and developed in tandem, 4 correct? 5 Answer: Absolutely not, no. 6 Question: That's not true? 7 Answer: No. Windows 95 was developed 8 as a single unified product, and it certainly 9 provided DOS functionality -- provides to this 10 day DOS functionality, and even provided some 11 enhanced DOS functionality, quite a bit, as a 12 matter of fact. But it certainly wasn't 13 developed as two separate things that were 14 merged into one. Absolutely not. Absolutely 15 not. 16 Question: Let me hand you what's 17 marked as Exhibit 960. 18 The first mail is from Brad Silverberg 19 to Brad Chase, the future of DOS plan. 20 The thread that begins about five 21 lines below that is from Brad Chase to Martin 22 Middlewood, and you and Mr. Silverberg are cc'd 23 on it. 24 Why don't you take a look at this and 25 I'll ask you a couple of questions. 9384 1 Who is Martin Middlewood? 2 Answer: I think he was a PR person 3 for this business who worked at Waggener 4 Edstrom. 5 Question: His mail begins at the 6 bottom of the first page. It was simply to 7 Brad Chase, future DOS plan, June 12, 1992. 8 That second paragraph, it says, in 9 addition, the presence of DR-DOS has added some 10 interest and conflict to the DOS operating 11 system market where there was none. Microsoft 12 has the opportunity to capsulize on this 13 increased interest by rising above the function 14 war that DRI uses to compete with MS-DOS by 15 focusing on the better future that MS-DOS 16 provides its users. 17 Recommendation: Implement a PR 18 program focusing on communicating the future of 19 MS-DOS to pave the way for the introduction of 20 MS-DOS 6 this winter and Cougar/Jaguar later 21 next year. 22 What are Cougar and Jaguar code names 23 for? 24 Answer: My memory is they were code 25 names for some future stuff that was being 9385 1 worked on that was DOS functionality, that a 2 few developers were working on. 3 Question: It was a code name for 4 MS-DOS 7, wasn't it? 5 Answer: I don't think so. Because 6 there never was an MS-DOS 7. It was just 7 some -- 8 I mean, technology is developed all 9 over Microsoft for future products that never 10 get released, and the tech knowledge gets 11 folded into other products, and this is one of 12 those cases. 13 Question: Have you ever been told by 14 anyone at Microsoft, hey, don't talk about 15 MS-DOS 7.0, don't say that that product ever 16 existed because we want to have a story that 17 Windows 95 is a total self-contained operating 18 system? 19 Answer: No, I was never told that. 20 That's why I say it didn't exist because it 21 didn't exist. There was no MS-DOS 7. 22 There might have been work going on. 23 Some people might have called it MS-DOS 7 for 24 lack of a better term. People call it all 25 different things. There might have been spec 9386 1 documents like the one I wrote, as a matter of 2 fact. There are spec documents written all 3 over Microsoft on products that never get 4 released, that never get developed. 5 Question: Objectives: This is from 6 Mr. Middlewood's E-mail. Raise editorial 7 awareness about the importance of MS-DOS in 8 Microsoft's long-term strategies. 9 Do you know what long-term strategies 10 Microsoft had for MS-DOS? 11 Answer: No. 12 Question: In 1992, would it be 13 considered a long-term strategy to have your 14 last version be in 1994 for MS-DOS; is that 15 what is meant by long-term? 16 Answer: Who really knows what Martin 17 meant at the time. 18 Question: Well, what did you think he 19 meant? You got this mail. 20 Answer: I don't know what he meant. 21 I mean, the market changes so fast. I mean, 22 the market was -- changes from '92 to '93 to 23 '94. I mean, the market is just dramatically 24 different. 25 Question: Because you have to respond 9387 1 to different competitive threats, right? 2 Answer: No, actually because of the 3 popularity of Windows. That is what has really 4 changed dramatically in the market in that 5 two-year span. 6 Question: So you would have a problem 7 agreeing with that part of what changes your 8 plans is responding to competitive threats; you 9 disagree with that statement? 10 Answer: The competitive threat that 11 we were more responding to with Windows 95 was 12 actually OS/2. 13 Question: Next objective: Quell any 14 fears that MS-DOS will go away or it is an 15 operating system dead-end. 16 Why did -- why was your PR person 17 wanting to quell fears about MS-DOS going away 18 if, in fact, MS-DOS was going away at this 19 point in time? 20 Answer: I don't know. I don't think 21 anyone knew what was going to happen two years 22 later at this time. 23 I don't know what the disbursement of 24 the development team was. 25 Question: You have no idea if MS-DOS 9388 1 developers moved on over to the Windows 95 2 team, and you were the product manager for 3 Windows 95 as well as MS-DOS 6.0; is that your 4 testimony? 5 Answer: I was a product manager. I 6 was a marketing person. 7 I have no doubt that some of the 8 MS-DOS developers went on to work on Windows 9 95. Seems certainly likely. I mean, the 10 product had MS-DOS functionality in it, so I 11 mean, who was going to develop it? Did all of 12 them go over? Did some of them go over? I 13 haven't the slightest memory of that, to tell 14 you the truth. 15 Question: The next objective is 16 demonstrate that MS-DOS has a path for both the 17 Windows and the character-oriented user. 18 Once MS-DOS was absorbed into Windows, 19 there was no further path for the 20 character-oriented user, was there? 21 Answer: If the user was only going to 22 use character-based DOS software after the 23 introduction of Windows 95, they would have to 24 learn to live with a graphical user interface 25 if they wanted to continuing enhancement in 9389 1 their operating system. 2 And there were few enough of those 3 users out there that it did not warrant 4 development of a separate product. 5 Question: So the continuing 6 enhancement of MS-DOS was going to take place 7 under the umbrella of Windows 95; is that 8 correct? 9 Answer: Yes. Whatever enhancements 10 are -- who knew at the time, though? I mean, 11 you know, this was '92. This is -- 12 Q. But my statement was correct, right? 13 (Requested portion of the record 14 was read.) 15 Answer: That is correct to the extent 16 that that's how it worked out. 17 At the time that this was written, I 18 would say it's fair to say that people didn't 19 know that. 20 Question: Messages: First message: 21 MS-DOS is alive, well, prospering, and has an 22 important future. 23 Just surprisingly, that turned out not 24 to be true? 25 Answer: Yep, that's exactly the case. 9390 1 It was believed at the time, and it turned out 2 not to be true. 3 Question: Oh, I skipped an objective 4 up above, the last objective. 5 Preempt the introduction of DR-DOS 6 7.0, which is expected this fall. 7 So all of this stuff about MS-DOS and 8 its future had nothing to do with your 9 perception of the next coming product from 10 Novell? 11 Answer: Well, most of this is talking 12 about MS-DOS 6 actually, which you haven't 13 mentioned. 14 Question: Okay. 15 Answer: But that is what a lot of 16 this stuff that he's talking about is to 17 communicate. It's to talk about MS-DOS 6, 18 which -- 19 Question: Well, and Cougar/Jaguar 20 later next year, to be fair? 21 Answer: Who knows if that was ever 22 talked about. I mean, this is a memo from 23 Martin to Brad. This is a memo from Martin to 24 Brad. Who ever knows if it was implemented. 25 What happens, what was done, who knows? 9391 1 Question: If you look at Brad Chase's 2 message back to Middlewood, and he forwarded it 3 to you and Mr. Silverberg, he says, a lot of 4 good ideas here. 5 It's not like Mr. Middlewood is just 6 shooting blanks. He's got some good thinking 7 in this E-mail, right? 8 Answer: I assume that's what Brad 9 thought. Of course, he's got a lot of ideas in 10 here, and who knows which ones Brad thought was 11 good and which ones Brad just didn't use. 12 Question: The next message: MS-DOS 13 will continue to develop into a more robust 14 operating system. 15 That did not happen, but it was 16 possible, wasn't it, Mr. Freedman? 17 Answer: No, it didn't happen. 18 Whether or not it was possible, who 19 knows. It was never done. 20 Question: MS-DOS is strategic to 21 Microsoft's operating system product line and 22 part of a coherent Microsoft operating system 23 strategy. 24 In fact, Microsoft was reverting back 25 to the old days of DOS is dead, wasn't it, 9392 1 Mr. Freedman? 2 Answer: No, that's not true. 3 It says MS-DOS is strategic. We 4 subsequently released another major version and 5 updated that version. 6 This was well after these things were 7 written. 8 We're talking over a year. That 9 certainly seems to fall within the time frame 10 that could be possibly forecast by something 11 like this. 12 Question: Well, in fact, Microsoft 13 had no plans for a DOS 6.0, which along the 14 lines of the utility bundle that was released 15 until DR-DOS 6.0 came out, correct? 16 Answer: I don't remember when we 17 developed those ideas relative to that time. 18 Question: After Microsoft shipped 19 MS-DOS 5.0 in June of 1991, was a product being 20 spec'd to be called MS-DOS 6.0? 21 Answer: Immediately after the launch? 22 Question: Even before the launch. 23 Answer: I don't remember. 24 Question: After MS-DOS 5.0 shipped, 25 what did you believe was going to be the next 9393 1 version of MS-DOS, what features did you 2 believe were going to be in MS-DOS 6.0? 3 Answer: I don't remember. I don't 4 remember. 5 Question: June of '91 or after. You 6 don't remember? 7 Answer: I don't remember immediately 8 after the launch. I mean, eventually we 9 developed what became known as MS-DOS 6, but I 10 don't remember. 11 Question: And was it always -- is it 12 your testimony that MS-DOS 6.0 was always being 13 intended to be something comparable to the 14 utility bundle that was shipped as MS-DOS 6.0? 15 Answer: I don't remember exactly what 16 was -- I just don't remember. I don't remember 17 if MS-DOS 6 was always product that was what 18 was released. 19 I certainly never called it an utility 20 bundle, I don't think. I just -- I don't 21 remember what the original spec was and what 22 the final spec was. I don't remember what the 23 chronology of that is. 24 Question: You don't have any recall 25 of Microsoft needing to revise its plans for 9394 1 MS-DOS 6.0 in response to the features that 2 were shipped in September of '91 by DR-DOS with 3 its Version 6.0? 4 Answer: Well, certainly some of the 5 features that are in MS-DOS 6 were in part a 6 response to what was shipped in DR 6. 7 But, more importantly, they were there 8 because they were compelling and we thought 9 that it would cause people to want to buy the 10 product. 11 I mean, we would have been pretty 12 remiss if we had just totally ignored what a 13 competitor had released into the market. That 14 would sort of stretch the bounds of 15 believability. 16 Question: And Microsoft needed a 17 competitor in the market to begin innovating 18 MS-DOS, which had languished from 1984 to 1988, 19 correct? 20 Answer: No. And I actually don't 21 know what was the genesis of all the versions 22 that came before and why they were what they 23 were. That was long before my time. 24 Question: Looking back at Exhibit 25 960, on the third page towards the bottom, it 9395 1 says materials for first tour. 2 Do you see that? 3 Answer: Right. 4 Question: Microsoft operating system 5 backgrounder, an eight- to ten-page document 6 describing the Microsoft operating system 7 strategy and how MS-DOS, Windows, and Windows 8 NT fit within this strategy, as well as their 9 respective market positions. 10 Is that a document that existed or was 11 to be drafted? 12 Answer: I assume it was to be 13 drafted. 14 Question: Do you know if it was 15 drafted? 16 Answer: I have no idea. 17 Question: The next paragraph: The 18 future of MS-DOS backgrounder. A five- to 19 eight-page document describing the dynamics of 20 MS-DOS development. 21 The backgrounder will cover how the 22 product will grow into a more robust operating 23 system through the addition of increased 24 functionality, whether that be by adding 25 utilities or by new commands. 9396 1 This document should also discuss how 2 MS-DOS will change to handle various platforms, 3 from the palmtop to full 32 bit workstations 4 and niche products. 5 We will need to communicate new 6 markets MS-DOS is conquering and explain why. 7 Was that an existing document or one 8 to be developed? 9 Answer: I think it was -- I think it 10 was to be developed, based on how he's phrasing 11 it. I mean, I don't know of any document like 12 this. 13 Question: Okay. 14 Answer: This is written by a guy from 15 the PR agency. 16 Question: Of course. 17 So you don't know whether that was 18 written or not? 19 Answer: No. 20 Question: Okay. Going back to the 21 first page, Brad Chase's message to Middlewood, 22 CC'ing you and Mr. Silverberg. A lot of good 23 ideas here. I like some of the creative ideas 24 too. I like doing this early September or just 25 before DR-DOS hits. 9397 1 Not sure why we need a second press 2 tour. That will come out of Astro MS-DOS 6 3 visits anyway. 4 We do need to discuss how we get the 5 technology message out without dampening the 6 sales of Astro. Let's focus on this after PC 7 Magazine visit. Rich F will work on most of 8 the legwork with you. 9 Did you do some legwork with 10 Mr. Middlewood? 11 Answer: I don't remember. 12 Question: Do you remember any 13 meetings or anything that you did about the 14 future of DOS plans with Mr. Middlewood after 15 the time that this E-mail was written? 16 Answer: No. 17 Question: Do you think you just 18 ignored Mr. Chase's suggestion that you work on 19 this with Mr. Middlewood? 20 Answer: No, I probably didn't. I 21 just don't remember what I did. 22 Question: Now, the very first E-mail 23 is from Silverberg back to Brad Chase. You are 24 not on this so you have never seen this before 25 today. 9398 1 But it says, actually, this is a very 2 tough question with debate now happening at the 3 Bill G., Steve B., Paul Ma, John L., Brad C., 4 level. 5 That's Bill Gates, Steve Ballmer, Paul 6 Maritz, John Lazarus, and Paul Silverberg, 7 correct? 8 Answer: Yes. 9 Question: That is the highest level 10 of decision making at Microsoft, correct? 11 Answer: That's right. 12 Question: So Mr. Middlewood clearly 13 is not off the mark because he's raising 14 questions that are being debated even by Bill 15 Gates himself, right? 16 Answer: I don't know what off the 17 mark means. But, sure, he's raising questions 18 according to this that are being debated at the 19 highest levels of the company. 20 Question: Did MS-DOS live or did it 21 die? 22 Answer: Development of MS-DOS was 23 stopped or was never continued, I suppose is a 24 more accurate phrase. 25 Question: Because it was absorbed 9399 1 into Windows, right? Yes? 2 Answer: Yes. 3 Question: He goes on to say, another 4 is to absorbed MS-DOS into Windows, Windows 5 will be our integrated OS and MS-DOS gets 6 absorbed into. 7 And that is what happened with Windows 8 95, correct? 9 Answer: Right. MS-DOS is part of 10 Windows 95. The functionality it provides is 11 in Windows 95. For backwards compatibility 12 reasons, it's got to be there. 13 Question: If it could, it could be 14 teased out, that would mean that the products 15 could have been offered on separate SKU's, 16 right? 17 Answer: But it couldn't. So it's a 18 moot point. 19 Question: But if it could, those 20 could have been offered on separate SKU's, 21 right? 22 Answer: I suppose if Microsoft had 23 wanted to. I don't know what the point would 24 have been. Very few people would have bought 25 it. 9400 1 Question: I hand you what has been 2 marked as 961. 3 This is dated August 8, 1992 and it is 4 from you to Colleen Lacter at Waggener Edstrom, 5 as well as Martin Middlewood and you, CC Brad 6 Chase. Business Week story thoughts. 7 After you have a chance to look at it, 8 I'll ask you some questions. 9 Answer: Okay. 10 Question: I take it that you became 11 aware that Business Week was going to be 12 writing some story about MS-DOS, or what? 13 Answer: From reading this, it looks 14 like we were trying to encourage them to write 15 a story. 16 Question: Did they do so? 17 Answer: I don't know. 18 Question: You don't remember. 19 Down at the bottom of the page, you 20 have fears, et cetera. 21 Answer: Right. 22 Question: It's a series of quotes. 23 The first one is, MS sat on their ass 24 for three years while DR cloned their OS. 25 The only reason MS kept their 9401 1 franchise was because DR was undercapitalized. 2 MS didn't wake up until 1991 with MS-DOS 5. 3 What do you mean that MS didn't wake 4 up until 1991? 5 Answer: Well, these are quoted not 6 because this is what I believe. These are 7 quoted because this is what I feared would be 8 written in this story, and I should make that 9 quite clear. 10 Question: Okay. Why did you fear 11 that? 12 Answer: That people would say that we 13 didn't -- you know, that -- I feared that 14 people would say that they would take this 15 slant on this story, that they would say we 16 didn't have our own attractive MS-DOS release 17 until Version 5.0 in '91. 18 Question: Which was a year behind 19 DR-DOS 5.0, right? 20 Answer: It was a year after DOS 5.0 21 -- well, roughly a year. 22 Question: Why wake up? Was this 23 something that you had actually heard? I mean, 24 this is what was being discussed by end users 25 or in the industry generally? 9402 1 Answer: I don't remember why I used 2 these words. 3 Question: Okay. Next, it's 4 impressive that a little company like DR 5 captured 5 percent against big bad MS who had 6 all its OEMs locked in on long-term contracts. 7 Locked in on long-term contracts, why 8 did you choose those words? 9 Answer: I was just afraid that that 10 is what somebody would write. I mean, I don't 11 know the details of what the OEMs' contracts 12 were. But I was afraid that that is what the 13 reporter would write. 14 Question: Next quote, DR took DOS 15 retail first. MS was just copying them. 16 It is a fact that DR -- that Digital 17 Research took DOS retail first, correct. 18 Answer: That is a fact, yes. 19 Question: So you were just afraid 20 that people were going to say that Microsoft 21 was a copycat? 22 Answer: That's correct. 23 Question: Any dope could see there 24 was an MS-DOS upgrade business that only took 25 MS ten years to see it. 9403 1 You were just afraid that was going to 2 be the perception? 3 Answer: That is correct. 4 Question: By that you mean Microsoft 5 was ten years old and had never done an upgrade 6 product. It simply released new versions to 7 OEMs? 8 Answer: That's correct. 9 I didn't get that. 10 Question: The next asterisk is a 11 to-be-continued story, but I'm more interested 12 in the next one that says, I want this to be a, 13 quote, the game is up, closed quote, story. 14 This ending would make me happy: 15 Quote, DR missed their window of opportunity. 16 Although still big, the MS-DOS market is on the 17 wane, as evidenced by sales of Windows and 18 Windows apps. And once the inevitable fusion 19 of MS-DOS and Windows happens, DR will be 20 competing with MS in a dramatically smaller 21 market. 22 But as evidenced by its aggressive 23 MS-DOS product plans, MS intends to maintain 24 its 95 percent share in that market as well. 25 What inevitable fusion of MS-DOS and 9404 1 Windows were you referring to? 2 Answer: I assume I'm referring to -- 3 well, this is pretty early. I assume I'm 4 referring to Chicago. 5 Question: And that is what became of 6 Windows 95, right? 7 Answer: Right. 8 Question: The fusion of MS-DOS and 9 Windows, correct? 10 Answer: Well, fusion is my word. I 11 mean, you know -- 12 Question: Of course it's your word. 13 I'm just asking you that Windows 95 is a fusion 14 of MS-DOS and Windows, right? Your words. 15 Answer: Those were my words in 1992 16 before I saw Windows 95. I certainly wouldn't 17 call it a fusion now. 18 Question: Okay. 95 percent market 19 share. 20 If I was to say that Microsoft had a 21 95 percent share of the DOS market, would you 22 know what I was referring to? 23 Answer: Yes. I would know what you 24 were referring to. 25 Question: What is the DOS market? 9405 1 Answer: The DOS market is sales of 2 MS-DOS and MS-DOS clones. 3 Question: And Microsoft had a 95 4 percent share of that market as of August 1992? 5 Answer: Well, that was my guess. I 6 mean, no one really knew what DR's revenues 7 were, and it wasn't really clear what the 8 revenues of other products were as well, since 9 they weren't really reported. 10 Question: Let's go back to the first 11 page. 12 If you look at the second heading, it 13 says, revitalizing the franchise. 14 The third asterisk says, Innovate: We 15 not only protected our business, but 16 dramatically expanded it. Not easy when you 17 already have 95 percent share. 18 Answer: I mean, same comment. 19 Question: Your opinion was that 20 Microsoft had a 95 percent share of the MS-DOS 21 market? 22 Answer: Maybe a little bit less. 23 I don't know what the exact number 24 was. It was obviously -- it was -- from my 25 stipulation, it was a high number, but, you 9406 1 know, again, I didn't have good numbers on 2 anyone but us. 3 Question: Just before the break, we 4 were finishing looking at Exhibit 961, which is 5 dated August 8, 1992. 6 And at that point in time, August 7 1992, was Microsoft developing an MS-DOS 7.0 8 product? 9 Answer: Not that I know of. Not that 10 I know of. 11 MR. CASHMAN: Your Honor, this would 12 be a good place for a break. 13 THE COURT: Very well. 14 Take our lunch recess at this time. 15 Remember the admonition previously 16 given. You can leave your notebooks here. 17 See you at noon. 18 All rise. 19 (A recess was taken from 10:54 a.m 20 to 12:03 p.m.) 21 (The following record was made in the 22 presence of the jury at 12:03 p.m.) 23 THE COURT: Everyone else may be 24 seated. 25 Wait just a moment. I think Carrie 9407 1 went to get something for one of the jurors. 2 You may continue. 3 (Whereupon, the following video was 4 resumed playing to the jury.) 5 Question: I hand you what's marked as 6 Exhibit 962. 7 There is a mail at the beginning from 8 Brad Chase to Bill Gates, Brad Silverberg, Mike 9 Maples, Paul Maritz, and Steve Ballmer and you 10 are on the CC line. 11 It's about MS-DOS directions. This is 12 in response to an E-mail on the second page 13 from Bill Gates to Steve Ballmer. 14 Answer: Right. 15 Question: Take a look at it. Or I 16 can just direct you to the question, whichever 17 you prefer. 18 Answer: I would just like to look at 19 it first. 20 Question: Okay. 21 Answer: Okay. 22 Question: Okay. On the second page, 23 Bill Gates' E-mail to Steve Ballmer, he CC's 24 some other executives, Brad Silverberg, 25 Jonathan Lazarus, Mike Maples and Paul Maritz. 9408 1 He titles the subject line as stick 2 with DOS and an arrow, Microsoft. 3 He states, there is one thing about 4 our strategy that I am wondering if we are 5 positioning properly. It's a fairly major 6 issue so let me explain it clearly. 7 As a PC user, I am probably convinced 8 I need to have 32 bit and multitasking 9 certainly as a large corporate customer. 10 The easy way to capture this is that I 11 am convinced that DOS will not meet my needs in 12 the future, so I need to make a change. 13 And he talks about different hardware 14 choices and other operating systems that are 15 out there, right? 16 And the next paragraph begins, 17 however, this is not our strategy at all. Our 18 strategy is to keep updating DOS as long as we 19 need to with every mainstream feature people 20 want until we have something that matches their 21 hardware so well and has so much compatibility 22 that it will really be considered a form of 23 DOS. 24 Specifically, we are developing DOS 7 25 that has virtually all of the features that 9409 1 people don't expect in DOS and are causing them 2 to have to make a painful change. 3 I am really wondering if we should get 4 a lot more public about DOS 7, even doing 5 public demos of the product this fall, and make 6 sure people know they aren't forced to change. 7 Mr. Gates is specifically referring to 8 a product being developed called DOS 7, 9 correct? 10 Answer: Right. 11 Question: And he in August of 1992 is 12 so confident about its development and the fact 13 that it is being developed that he's wondering 14 whether it should start being demoed that fall, 15 two to three months later. 16 What the heck is he talking about? 17 Answer: He's talking about something 18 that some guys must have been working on. No 19 such product. 20 Question: I mean, you're the DOS 21 product manager. 22 Answer: And I sure would have known 23 if we were imminently about to send something 24 into the market. 25 Question: Well, I mean -- 9410 1 Answer: I don't care what it says. 2 No such product. 3 Question: I'm just -- you are on the 4 CC line on Brad Chase's message, and he's 5 sending it back to Bill Gates and Steve 6 Ballmer, Brad Silverberg and a bunch of people. 7 You are cc'd. 8 That would be a pretty cool thing to 9 be cc'd on, a message that is going to Bill 10 Gates, and in fact having been forwarded to you 11 a message from Bill Gates about the future of 12 what is going to happen with the product that 13 you manage, right? 14 Answer: Well, I got mail forwarded to 15 me that Bill was on the trail all of the time. 16 Question: But Mr. Gates wrote this 17 entire thing that we just read at the bottom. 18 I mean, he has a message that he himself wrote 19 about the product strategy and he's talking 20 about DOS 7 and demoing it. 21 Answer: Right. 22 Question: Did you just not read that 23 part of it when you got this forwarded to you? 24 Answer: I have no idea what I read. 25 Question: Did you write back to 9411 1 anybody and say, hey, whoa, there is no DOS 7, 2 I should know, I'm the product manager? 3 Answer: I have no idea. It certainly 4 wasn't real enough for me to be able to do 5 anything about it, I mean, at this point in 6 time. 7 Question: It was real enough to demo 8 as Mr. Gates suggested. 9 Answer: At this point in time, it 10 looks like we were getting ready to start 11 gearing up for the launch of what became MS-DOS 12 6. 13 So I'm going to speculate, but that is 14 probably what I was thinking about most. 15 Was there anything to demo? Not that 16 I know. 17 Question: He's talking about getting 18 public with DOS 7 plans, right, going public? 19 Answer: Yes. He says that in one of 20 the last sentences. 21 Question: It's a product that never 22 existed, in your words, and he's saying be 23 public about it? 24 Answer: Maybe he thought it was more 25 real than I did or than I knew. I mean, what 9412 1 can I tell you? 2 Question: Okay. Let's go back to 3 Exhibit 958, which is the MS-DOS 7 product 4 straw man that you wrote and circulated May 24, 5 1993. 6 Answer: Yeah, I'm just looking for my 7 sticker. Here we are. 8 Question: Do you recall who you sent 9 this to? 10 Answer: No. Must have gone to at 11 least Brad Chase, but I just don't remember. 12 Question: Okay. It says why -- the 13 second paragraph, why MS-DOS 7 at all? 14 Regardless of OEM penetration of 15 Windows, there is still substantial demand for 16 MS-DOS only on new PCs. 17 For that reason, no one can guarantee 18 that Chicago will penetrate 100 percent of new 19 PCs. 20 Did you ever change your opinion about 21 that? 22 Answer: Sure, certainly. 23 Question: And that was at the time 24 that Microsoft decided to simply merge MS-DOS 25 into Windows? 9413 1 Answer: I don't remember when it was. 2 I mean, by the time we got around to 3 the Windows 95 launch, there -- clearly Windows 4 was the dominant force in the market. 5 Question: On the second page, there 6 is MS-DOS vision and overview. In the second 7 paragraph -- well, it has some assumptions that 8 Chicago will be an excellent environment in 9 which to run DOS apps and users will choose 10 MS-DOS 7 over Chicago for what it lacks, no 11 GUI. 12 Given these assumptions, here is a 13 straw man vision. 14 MS-DOS 7 should be just good enough to 15 justify the 7 with customers and the press and 16 be just good enough to fend off Novell and IBM. 17 In other words, we should dedicate as 18 few resources as possible to MS-DOS 7. 19 Answer: That seems to be what I'm 20 saying. 21 Question: Okay. And was that the 22 approach that Microsoft took to MS-DOS 7? 23 Answer: No. No. Microsoft didn't 24 develop MS-DOS 7 at all. 25 Question: Okay. 9414 1 Answer: Microsoft dedicated no 2 resources, as far as I know. 3 Question: On the very last page, 4 Appendix A, CompuServe Beta Forum Research, it 5 says, Andy Thomas has tabulated all of the 6 responses to our posting asking for MS-DOS 7 7 suggestions on our beta forum. 8 Do you remember that posting that 9 Mr. Thomas made? 10 Answer: Just from reading this 11 document. 12 Question: You don't recall asking for 13 suggestions on how to improve MS-DOS for a 7.0 14 version? 15 Answer: We must have. I mean, I 16 don't know what we asked for. Obviously, we 17 asked for something because it's right -- the 18 survey results are right here. 19 Question: Will you look at the list 20 of things that it says, longer file names and 21 et cetera, through break, 1024 cylinder 22 barrier, and tell me which of those to your 23 knowledge are included in Windows 95? Just 24 read them out as they are. 25 Answer: Longer file names is in 9415 1 Windows 95. 2 New file system -- not really. 3 Question: Okay. 4 Answer: I mean, these are what -- get 5 rid of 640K barrier. Well, that's in Windows 6 3.0, and Windows 3.0 is 32 bit. So those were 7 in Windows 3.0 which came out in 1990. 8 Question: So 32 bit. That's what the 9 people wanted MS-DOS to have, to be able to be 10 32 bit? 11 Answer: I guess. 12 Tape backup support, no -- tape backup 13 support? Was that in Windows 95? It might be. 14 I don't remember. I don't remember. 15 One-pass disk copy, I think that was 16 in 6.2. 17 Question: Okay. 18 Answer: Peer to peer networking was 19 in Windows for Workgroups 3.1, that was a 1992 20 product. 21 Question: And so that was also in 22 Windows 95? 23 Answer: Preemptive multitasking was 24 in Windows 3.0. In Windows 95 enhanced batch 25 language, no. 9416 1 Dialogue box style utilities. Well, 2 that is not really applicable since Windows is 3 a graphical interface and by definition it has 4 those things. 5 Longer path -- I don't know. 6 Break 1024 cylinders, that is -- yes, 7 that's in Windows 95. 8 Question: Okay. So a lot of these 9 responses that were gathered about improvements 10 that customers wanted for another version of 11 MS-DOS 7 were incorporated into the Windows 95 12 product or previously into other Windows 13 versions, right? 14 Answer: Yeah. I mean, this is all 15 pretty obvious stuff. 16 Question: Not to the jury, Mr. 17 Freedman, so -- 18 Answer: But, I mean, to anyone in the 19 business, this is -- I mean, there is no 20 surprises. 21 And, in fact, if you go back to -- I'm 22 sure to the early specs of Windows 95, which 23 must have been written before this thing was -- 24 they probably have a lot of this stuff. And as 25 I said, a lot of these features were already in 9417 1 Windows anyway, even when this document was 2 written. 3 Question: If these things were 4 already in Windows why -- are people also 5 wanting the same thing in DOS? Is it possible 6 that something can be in Windows but DOS as 7 well? 8 Answer: Well, I mean, anything is 9 possible. The question is, is it worthwhile. 10 That is the key. Is it worth doing, not is it 11 possible. 12 Question: What became of this product 13 straw man? 14 Answer: I don't think anything became 15 of this, actually. Just -- 16 Question: You don't even remember 17 this document at all, do you? 18 Answer: Well, I remember it now. 19 I don't think anything ever became of 20 this. I mean, you know, the fact that this was 21 written in '93 and a lot of these references 22 that we have been making to DOS 7 were in '92 23 tells you that there was really nothing 24 happening. 25 I don't think anything really ever 9418 1 came of it because, you know, there was no 2 development around this product. 3 Question: I mean, do you ever 4 remember being asked specifically to do a spec 5 for MS-DOS 7? 6 Answer: I don't really remember. I 7 mean, we did some preliminary work like this on 8 our next version, but nothing really ever came 9 of it. 10 Question: I'm going to hand you what 11 I've marked as Exhibit 963. 12 The first one is from Brad Chase to 13 Brad Silverberg. He is forwarding notes from 14 the initial July 14. 15 Next, Chico DOS planning meeting, and 16 it says, as I told you a while ago, I have put 17 together a team of Eric ST -- that's Eric 18 Straub? 19 Answer: Correct. 20 Question: Mike DR -- that is Mike 21 Dryfoos? 22 Answer: Right. 23 Question: And Rich F., that is you, 24 to get the spec done for MS-DOS 7. 25 They have as a primary objective to 9419 1 make a product proposal and have a list of 2 must-do work items done in time so that as soon 3 as my developers are done with Elroy, they can 4 work on MS-DOS 7. 5 Elroy being 6.2? 6 Answer: Right. 7 Question: Does this refresh your 8 recollection about work you did on spec for 9 MS-DOS 7.0? 10 Now, you know that you were working 11 with Eric Straub and Mike Dryfoos, and they are 12 technical guys? 13 Answer: They are technical guys, 14 sure. 15 It's possible we put together 16 everything -- I don't really remember, but 17 again, nothing ever came of it so it wouldn't 18 really stick in my mind very much because it 19 was never used. 20 Question: As of July 14, 1993, 21 Microsoft still had plans to do a MS-DOS 7, 22 because you are on a team to at least spec the 23 product, right? 24 Answer: Well, I mean, I'm just 25 looking at my straw man, and for my straw man 9420 1 there is actually a great amount of doubt in 2 whether this thing even deserves to be 3 developed. 4 I guess Brad has us off doing a spec 5 but, you know -- in the least time frame, when 6 is it going to come out, what it's going to do. 7 Obviously, we never progressed very, very far. 8 We spec'd a lot of things. 9 Question: I hand you what has been 10 marked as Exhibit 964. 11 This document, excuse me, was written 12 a month -- approximately a month prior to 13 Exhibit 963, and you title this one Companion 14 Vision Doc, the next page, the MS-DOS companion 15 for Windows. 16 Do you recall this document? 17 Answer: Yes, I think I remember this. 18 Question: Can you generally describe 19 what the companion vision -- what the MS-DOS 20 companion for Windows was? 21 Answer: It was my idea, actually. 22 It only existed in this document. It 23 was for an add-on document for Windows that 24 would just provide some, you know, DOSish, 25 DOS-like functionality, enhanced functionality. 9421 1 Question: Okay. So the seventh page, 2 the Bates number is MS 7089517, there is 3 italics in that first paragraph. 4 Pull MS-DOS features from Chicago. 5 Appendix A lists all of the MS-DOS improvements 6 in Chicago. We could pull some and put them in 7 the MS-DOS companion. 8 Now, I see an Appendix A, competitive 9 products review, and Appendix B, which says 10 MS-DOS features in Chicago. I'm assuming that 11 that statement means to refer to Appendix B? 12 Answer: I guess. 13 Question: Okay. Well, in any event, 14 MS-DOS is being improved in Chicago, right? 15 Answer: The functionality of MS-DOS 16 is being improved in Chicago. 17 Question: Okay. And Appendix B says 18 MS-DOS features in Chicago. There is a list of 19 about 11 of them, I think. 20 And then following that, other MS-DOS 21 features that have been pulled from Chicago, or 22 are under debate. 23 I mean, when you are saying MS-DOS 24 features in Chicago, how did you know that 25 those features were there? 9422 1 Answer: Because at this point I think 2 the product was well under development. 3 Windows 95 was well down the track by June 11 4 of '93. That is how I knew. 5 Question: So you could look at the 6 spec and say here is Chicago, here is what is 7 being done, here is how Microsoft is being 8 incorporated and improved, and you have listed 9 these features? 10 Answer: Here is features that relate 11 to MS-DOS users, and yes, they relate to -- I 12 guess applications a little, somewhat. 13 Question: It's got things like long 14 file names. 15 Answer: Right, that is applications 16 features. 17 Question: Which we saw on our 18 previous document and also 1024 cylinder 19 support, things like that? 20 Answer: Right. 21 Question: I'm reading that correctly. 22 It says MS-DOS features, and those 23 are, in fact, MS-DOS features that are in 24 Windows 95, right? 25 Answer: Well, some of them are MS-DOS 9423 1 features, but long file names is pretty 2 compelling to a Windows user too. 3 So 1024 cylinder support is compelling 4 to a Windows user. Last access is compelling 5 to a Windows user. 6 Question: What are you trying to say 7 here? 8 The 1024 cylinder support, is that 9 different for the Windows part of Chicago and 10 different for the MS-DOS part of Chicago, just 11 the 1024 cylinder support? 12 Answer: I think it's pretty much the 13 same, but the benefit passes through to both 14 user of DOS applications, which is typically 15 what you call DOS user and user of a Windows 16 application, which is what you call a Windows 17 user. 18 Question: And people with Windows 95 19 can do both DOS apps and Windows apps, right? 20 Answer: Right. 21 This was a Windows product. I don't 22 know if you understand that. 23 Question: I'm aware of that. I'm 24 aware of that. You're talking about an add-on 25 product for a Windows 95. 9424 1 Answer: It's a Windows product. It's 2 not a DOS product. 3 Question: I know. 4 That is why I'm asking -- 5 Answer: This was an idea document. 6 Nothing ever came of this. 7 Question: I was wondering why on this 8 Windows product you have all of this talk about 9 most DOS features. 10 Answer: Because it's a product that 11 would appeal to people -- you know, in the end, 12 we could have never taken most of this stuff 13 out. 14 I mean, long file names? No. I don't 15 think it would have sat too well if we had 16 taken that out of Windows 95. 17 Question: Whatever vision did you 18 settle on for what MS-DOS 7 would be? If 19 somebody asked you in early '94 what is MS-DOS 20 7 going to be, what would your answer be? 21 Answer: There probably isn't going to 22 be an MS-DOS 7 unless there's some demand for 23 it that we haven't engaged at that time. 24 Question: Were people asking you that 25 in early '94, where is MS-DOS 7, what is it 9425 1 going to be? 2 Answer: I certainly don't remember 3 any significant number of questions. I mean, 4 people were intensely focused on Windows 95 at 5 that point. 6 Question: I mean, it wasn't being 7 asked so frequently that you had a standard 8 answer for what you would give about MS-DOS 7? 9 Answer: Oh, I mean, there might have 10 been a standard answer. It came up. People 11 are going to want to know. But at that point, 12 you know, I was a marketing guy on Windows 95 13 by that point, which tells you a lot about what 14 the future of MS-DOS was going to be, so -- 15 Question: I hand you what is marked 16 as 965. 17 This is an E-mail from you to the 18 personal systems group marketing team, and it's 19 MS-DOS 7, question mark. 20 Who is the personal systems group 21 marketing team? 22 Answer: What was it? 23 Question: Yeah. Who would have been 24 on that thread? Maybe not by name, but what 25 types of people? 9426 1 Answer: That was the entire -- PSG, 2 that was the entire Windows marketing team. 3 Question: Okay. So this is a message 4 that you sent to the entire Windows marketing 5 team? 6 Answer: That's what it seems to be, 7 yep. 8 Question: And you state on April 12, 9 1994, here is my standard answer on, quote, 10 where is MS-DOS 7? Closed quote. 11 The bottom line is that if customers 12 want MS-DOS 7, we'll do it and we'll ship it a 13 few months after Chicago. 14 If we do an MS-DOS 7, it will be 15 Chicago without the GUI. 16 So that means it will be Windows 95 17 without the Windows interface, right? 18 Answer: Well, that's what I say here, 19 but I actually -- you know, I don't think that 20 -- subsequently, I don't think it was actually 21 feasible. 22 And I certainly don't think it was 23 worthwhile. I mean, it would have been an 24 ungodly amount of work. 25 I mean, you know, I never really -- we 9427 1 never got very far down the path with this 2 thing. 3 Sure, it came up here. People asked. 4 It was a big product. A lot of people use it, 5 MS-DOS. Where is the next version? 6 Question: For instance, the thread 7 that originated to you is from Brent Ethington. 8 Answer: Right. 9 Question: Who is he? 10 Answer: Brent was a product manager 11 who worked for me. 12 Question: And he states -- this is 13 what prompted your message. 14 Was asked about this in each of my 15 Chicago overview talks at TechEd. I said that 16 product packaging decisions had not been 17 finalized, but never said that we weren't doing 18 one, nor did I say we were. 19 I mean, that's just talking -- he's 20 just referencing, okay, people want MS-DOS 7, 21 and that's a packaging decision. He's not 22 talking about an ungodly amount of technical 23 work, is he? 24 Answer: What Brent says, or for that 25 matter what I say about how things are packaged 9428 1 are one thing and what's actually required to 2 do them is a totally different issue. 3 I mean, we were marketing people, so I 4 would hardly take what Brent says as the 5 definitive work estimate on how much it would 6 take to do an MS-DOS 7 from Windows 95. 7 Question: How did you know to state 8 if we do an MS-DOS 7, it will be Chicago 9 without the GUI? How do you know that? 10 Answer: I don't remember. 11 I mean, I guess that that's -- you 12 know, that was the vague notion that, you know, 13 if we were going to do it, that would be the 14 only possible thing it could be, but, you know, 15 then it goes on to say all these other things 16 about how it would be a real strange product. 17 Question: I see that -- 18 Answer: Who would want it. 19 Question: You say, if we do an MS-DOS 20 7, it will be Chicago without the GUI. 21 Had you seen a document that said 22 that? 23 Answer: No. 24 Question: Had you had discussions 25 with Mr. Gates or Silverberg or Ballmer or 9429 1 anyone about it? 2 Answer: No, I don't remember that. 3 Question: You don't even know if it 4 was going to take such work or not, you were 5 just going to tell Windows marketing people to 6 go ahead and answer questions about MS-DOS this 7 way? 8 Answer: No. I think that was the 9 vague notion, if we were going to do this 10 thing, it would be Chicago without the GUI, but 11 this is hardly a commitment to do this thing. 12 This basically says we're probably not going to 13 do it. 14 This is a honest, straightforward 15 answer to the people from the public who ask us 16 that. Why would you want this thing, since 17 Chicago does everything that you want and more. 18 Question: It couldn't have taken more 19 than a few months to get MS-DOS 7 ready to go, 20 right? 21 Answer: I seriously doubt it would 22 have taken only a few months. 23 It would have been -- you know, this 24 was written in early '94, you know, I was just 25 wrong. There is just no if's, and's or but's 9430 1 about it. I really doubt it could have been 2 done in a few months based on, for example, how 3 long it took to get Chicago out. So -- 4 Question: But you say, the bottom 5 line is if customers want MS-DOS 7, we'll do 6 it, and we'll ship it a few months after 7 Chicago. 8 So it's going to take a few months. 9 That is all, you're just wrong about that? 10 Answer: I'm just wrong. Plain out 11 wrong. 12 Question: The last paragraph you 13 write, but if customers insist on MS-DOS 7, 14 we'll build it. Never leave an opening for 15 Novell or IBM. 16 And that is what drove the decision as 17 to whether or not there was going to be a 18 separately released MS-DOS 7, correct? 19 Answer: No. It says if customers 20 insist that we build this product, we'll build 21 it. 22 And there was never any insistence, 23 and that is why it wasn't built. 24 Question: What happened between April 25 1994 and August of 1995 that cemented in 9431 1 Microsoft's mind that it did not need to 2 release MS-DOS 7? 3 Answer: I don't think anything in 4 particular happened over that time frame. 5 I think based on my E-mail here, it 6 was already pretty clear that -- and, in fact, 7 I think we have already looked at a couple of 8 other E-mails that were dated quite a bit 9 earlier that say that the Windows momentum was 10 overwhelming at this point. 11 Question: When did Novell announce 12 that it was going to discontinue development of 13 future Novell DOS, DR-DOS products? 14 Answer: I don't remember. 15 Question: Was it in September of 16 1994? 17 Answer: I don't remember. 18 Question: If it was in September 19 1994, did that have any reason as to why 20 Microsoft would not pursue MS-DOS 7.0 plans any 21 further? 22 Answer: No. 23 Question: Even though you're saying 24 here, but if customers insist on MS-DOS 7, 25 we'll build it, never leave an opening for 9432 1 Novell or IBM, that's totally unrelated in your 2 mind? 3 Answer: Yep. 4 Question: I mean, even as late as 5 September of 1993, you were thinking that 6 MS-DOS 7.0 would be available on a stand-alone 7 basis, didn't you? 8 Answer: I don't think so. 9 Question: Were you doing any model, 10 revenue model about that? 11 Answer: Oh, I mean, that's a whole 12 different story. 13 Sure, it's possible I was doing 14 revenue models. I revenue model a lot of 15 things. 16 Question: Why would you revenue model 17 something that's not under consideration? 18 Answer: To see if it's worth 19 considering it. I mean, that's one reason you 20 do revenue models. 21 Question: When Microsoft is 22 considering revenue that it's earning and how 23 much of it is profit, on the margin, is it 24 accurate to say that OEM revenue is 100 percent 25 profit? 9433 1 Answer: I don't really know. I don't 2 know how the accounting was done for the OEM 3 guys. I was a retail guy. 4 Question: Well, I mean apart from any 5 little accounting tricks that can be brought to 6 bear, is there any marginal cost to the next 7 incremental unit to an OEM? 8 Answer: Yeah. I mean, Microsoft did 9 some support for the OEMs, so I suppose there 10 could be some incremental cost associated with 11 that. 12 There was obviously no cost to goods. 13 Question: Right. No cost to goods? 14 Answer: There was no cost to goods. 15 Question: Let me hand you Exhibit 16 966. 17 This was -- Silverberg is responding 18 to you on something regarding Chicago product 19 strategy, December 31, 1993. 20 I guess you all are working on 21 Christmas Eve day, I see. 22 Answer: New Year's Eve day. 23 Question: New Year's Eve day. That's 24 what I meant. 25 And your message first to him -- 9434 1 actually, he first sends something to you and 2 it's trying to discuss, you know, 1.1 billion 3 in revenue, 550,000,000 in profit. I mean, 4 look at this. 5 But those are the types of dollar 6 volumes that you all were expecting to reap 7 from Windows 95, right? 8 Answer: That certainly sounds within 9 the right realm. 10 Question: I mean, in a single year, 11 1.1 billion? 12 Answer: A billion in revenue in one 13 year would be -- yeah. 14 Question: Okay. Just from that one 15 product, correct? I mean, that's what I'm 16 talking about. 17 Answer: Revenues from Windows 95 in 18 one year, could they be a billion dollars? In 19 the first year after launch? 20 Question: Yes. 21 Answer: Yeah. 22 Hold it. No, I'm asking you is that 23 what you mean. 24 Yes, it's possible. Sure. 25 Question: Okay. Your message to him 9435 1 says, 1.1 billion in revenues for fiscal year 2 '93 is exactly what I have. 3 Fiscal year '93 obviously was not the 4 year that Windows 95 launched. Was that 5 revenue for DOS plus Windows or DOS alone, or 6 do you have any idea? 7 Answer: Yes, I don't really know what 8 that refers to. 9 Question: Your second paragraph says, 10 as for profits, I should have stated my 11 methodology. In his mail, Bill -- is that Bill 12 Gates? 13 Answer: Yes, probably. 14 Question: -- stated his goal is 15 profit based, quote, get another 500,000,000, 16 close quote. And so I figured at BOOP -- what 17 does that mean? 18 A. BOOP is Bill and office of the 19 president. It was Bill, Steve -- 20 Question: Okay. Paul Maritz? Mike 21 Maples? 22 Answer: Mike Maples, yes. 23 Question: Anyway, that is basically 24 Bill -- 25 Answer: It's top management. 9436 1 Question: -- and the three -- top 2 management. 3 We should measure the different 4 scenarios by profit and not revenue, but it's 5 not really profits we need to measure, but 6 incremental profits. 7 Our fixed costs, development marketing 8 channel, et cetera, will be about the same 9 regardless of our revenues. 10 Is that an accurate statement as to 11 the DOS market and as to Windows 95? 12 Is that an accurate statement as to 13 the DOS market? 14 Answer: Are our fixed costs the same 15 regardless of how many we sell? 16 If you're including development, 17 marketing expenditures, channel expenditures, I 18 mean, yeah, those are more or less fixed. 19 Those fixed -- that's what a fixed cost is. 20 Fixed cost is fixed. It's the variable costs 21 that change with revenues. 22 Question: Right. And that same 23 statement, it's true about MS-DOS. Is it also 24 true about Windows 95? 25 Answer: Yes. I mean, yeah, it's the 9437 1 same for both. 2 Question: Okay, and then you go on. 3 The question is, how do you calculate 4 incremental profit? I kept it simple and said 5 the -- and said that OEM revenues are 100 6 percent profit and retail revenues 75 percent 7 profit. 8 On the margin, these percentages are 9 pretty accurate. 10 Is that correct, that on the margin 11 those percentages are pretty accurate? 12 Answer: Yeah, yeah. More or less, 13 yeah. 14 Question: I mean, they're not going 15 to be wildly -- it's not going to be like the 16 OEM revenue is actually only 61 percent. I 17 mean, it's 100 percent, or maybe on the margin 18 it's 98 percent or something like that? 19 Answer: Give or take, right. 20 Question: Maybe product support 21 affects it a little, but it would be pretty 22 close to 100 percent profit, right? 23 Answer: Yes. On the margin, what I 24 said here is accurate. 25 Question: Do you recall in the summer 9438 1 of 1991 when Novell announced that it was going 2 to be purchasing DRI? 3 Answer: Yes. Yeah, more or less, 4 yeah. 5 I mean, I didn't -- I don't remember 6 exactly when it was, but I remember that there 7 was an announcement and that there were -- 8 sure. 9 Question: You do remember that? 10 Answer: Yeah. 11 Question: Okay. And that was -- 12 would you say that the people -- the executives 13 at Microsoft were concerned or worried about 14 that impending merger? 15 Answer: Yeah. There was some 16 concern, sure. 17 Question: Why is that? 18 Answer: Because Novell has a large -- 19 or has had at the time and has a large 20 installed base. 21 Question: Did you see that as 22 Novell's purchase of DRI, did you see that as 23 giving some instant credibility to DR-DOS? 24 Answer: I don't really remember. I 25 mean, I don't really remember how we viewed it 9439 1 in terms of giving them -- it's possible we 2 did. I just -- I don't really recall. 3 Question: Let me hand you what has 4 previously been marked as Exhibit 299. 5 And before you strain your eyes 6 reading it, because I don't know why that one 7 got marked, I'm going to mark a more legible 8 version of it, just making a record on this, 9 Exhibit 967 is what I'll hand you. It's in a 10 different format. 11 That's a July 25, 1991 E-mail from 12 Mr. Freedman to Brad Chase, Brad Silverberg, 13 David Cole, Mike Dryfoos, Phil Barrett, Rich 14 Able, Rich Tom, Tom Lennon, and who is Russ S? 15 Answer: Russ Seigelman. 16 Question: Did I get all of those 17 E-mail names right? 18 Answer: Yes. 19 Question: It's entitled Novell/DRI 20 summary. 21 And do you need to take a look at this 22 one or have you looked at this recently? 23 Answer: I need to take a look at 24 that. 25 Question: Your first paragraph 9440 1 states, here's my cut at a summary of our 2 discussions (assume from Brad SI). 3 First of all, why in parentheses, 4 assume from Silverberg? 5 Answer: I have no idea. 6 Question: Does that mean he has 7 reviewed and approved of this summary? 8 Answer: I just don't know what I 9 meant. 10 Question: You say summary of our 11 discussions. 12 Do you know who you have been having 13 discussions with? 14 Answer: Well, I mean, I assume it was 15 most of the people on this line, some subset of 16 the people on this line. 17 Question: Did you either swap E-mails 18 or just go by and talk with each of these 19 fellows to come up with thoughts about what the 20 Novell strategy might be? 21 Answer: I remember we had some 22 meetings. Brad -- both Brads were in the 23 meetings, and I don't remember exactly who else 24 was in them, but I certainly remember having 25 some meetings. 9441 1 Question: You state, over the last 2 several days, I have been meeting with DOS/Win 3 product management, program management, and 4 development to discuss the Novell takeover of 5 DRI, and this mail summarizes our current 6 thinking. 7 The product management, program 8 management, development, are the heads of each 9 of those listed on the to lines up here? 10 Answer: Right. Let's see. 11 Question: Product management would be 12 Brad Chase? 13 Answer: Yes. And Rich Tom and Rich 14 Able. 15 This is what, July of '91? 16 Program management would be -- I guess 17 would be Tom and David Cole, and development 18 would be Mike and Phil. 19 Question: Okay. 20 Answer: I don't know exactly who I 21 met with. It's possible I met with those 22 people. 23 Question: Okay. And the summary 24 states, there are two basic scenarios to 25 explain Novell's takeover of DRI. It was 9442 1 either fundamentally a defensive move or an 2 offensive move. The defensive scenario is less 3 interesting. It supposes Novell took over DRI 4 to squash Lantastic and to preempt some mind 5 share from Win Peer and Win NT. 6 That was not the strategy that Novell 7 was pursuing, right, it wasn't just a defense 8 active acquisition? 9 Answer: Actually, I'm not really sure 10 what the strategy was, even now. 11 Question: Okay. The offensive 12 scenario presumes Novell is actively developing 13 products to compete with the Win Peer and NT, 14 and ultimately plans to enter the stand-alone 15 OEM DOS business. 16 It is this worst-case scenario we're 17 focusing on. 18 And that is, in fact, the way it plays 19 out, right; that is what Novell was focusing 20 on? 21 Correct? 22 Answer: I really don't know what 23 Novell was focusing on. 24 Question: From subsequent events, you 25 don't know whether generally that was the 9443 1 strategy that Novell was pursuing? 2 Answer: To compete with Win Peer and 3 NT, I don't know about that. 4 And ultimately plans to enter the 5 stand-alone OEM DOS business. I guess DRI was 6 in that business too. 7 Question: Well, you have -- did you 8 just put it together, this memo, and then not 9 ever think about it again, or did you put 10 together this memo and then actually keep track 11 of what Novell was doing to see how you all 12 should be reacting? 13 Answer: I always kept track of DR. 14 That was part of my job. 15 Question: That's why I'm confused. 16 So it's just that you don't remember 17 anything about it right now? 18 Answer: How did we follow up to this 19 thing? 20 I'm sure it was in subsequent tactics 21 that we used as -- on the marketing team. 22 Question: I'm just asking you because 23 I read you a statement and then you act like 24 you have no idea what Novell did, or whether 25 that was a kookie thing for you to have written 9444 1 down on July 25th, or whether it was actually a 2 legitimate thing that, in fact, Novell was 3 pursuing. 4 Answer: I really honestly don't know 5 what their grand master plan strategy was 6 because it was never really -- it's not really 7 even been clear to this day exactly what their 8 plans were for this product, and if their plans 9 were to integrate the two together, then they 10 never really accomplished that. 11 Question: Was Microsoft ever worried 12 about IBM licensing, using DR-DOS? 13 Answer: Well, I mean from this 14 document it certainly looks like we were. It 15 says right here IBM's licensing DR-DOS is a 16 major X factor, so it was at least present in 17 the thinking. 18 Question: Well, subsequent to this 19 time, wasn't there a very, very strong 20 possibility that IBM was considering doing just 21 that, licensing DR-DOS at the expense of 22 MS-DOS? 23 Answer: I don't remember. 24 Question: You don't remember that? 25 Answer: Because it never happened, 9445 1 so -- 2 Question: Yeah, but do you remember a 3 product called Blue Janus? 4 Answer: Yeah, I think I remember Blue 5 Janus. 6 Question: Okay. What was Blue Janus? 7 Answer: Blue Janus was a -- I don't 8 remember if it was an upgrade or if it was an 9 OEM version of MS-DOS for PS/2s, I think. For 10 IBM PCs -- 11 Question: IBM is called big blue, 12 right? 13 Answer: Right. 14 Question: Janus was a product that 15 you all had in mind to combine MS-DOS 5.0 with 16 Windows 3.1, offering it together as a product, 17 right? 18 Answer: I think it was basically just 19 a bundle. It was, you know, they were boxed 20 together. 21 Question: Right. MS-DOS 5.0 with 22 Windows 3.1, right? 23 Answer: Right. I think so. 24 Question: And Blue Janus was that 25 exact bundle targeted specifically for IBM's 9446 1 computers, PS/2s, right? 2 Answer: I think so. 3 Question: And Microsoft was planning 4 to do that specifically because and in reaction 5 to the fact that IBM was about to license 6 DR-DOS, right? 7 Answer: No. That's certainly not 8 something I remember. 9 Question: It says, DOS, a fixed 10 standard, allows Novell to make compatibility a 11 nonissue over time. 12 What does that mean? 13 Answer: The APIs in DOS weren't 14 changing, so over time Novell would be able to 15 eventually shake all of the bugs out, 16 compatibility bugs out, given enough time. 17 Question: With DOS becoming a fixed 18 standard -- was DOS becoming a fixed standard? 19 Answer: No. DOS was not becoming a 20 fixed standard. DOS was a fixed standard and 21 it had been for many years. 22 Question: Is that one reason why 23 Microsoft decided to dead-end DOS and merge 24 that functionality into Windows, where it had 25 no competition? 9447 1 Answer: No, no. No, no. 2 Development on MS-DOS was stopped 3 because there was no market need for the 4 product. There was no demand. 5 Question: Even though all of that 6 functionality is still in Windows 95, do you 7 stand by that statement? 8 Answer: There was no demand for a 9 stand-alone product MS-DOS. I didn't say there 10 was no demand for the functionality. I said 11 there was no demand for a stand-alone product 12 called MS-DOS, and those are two very different 13 things. 14 Question: Windows 3.1 ran on top of 15 MS-DOS and DR-DOS, right? 16 Answer: Yeah. My understanding is -- 17 certainly my memory is they ran on both. 18 Question: You could not run Windows 19 3.1 without either MS-DOS or DR-DOS underneath 20 it, correct? 21 Answer: Yes, that's correct. 22 Question: And do you know what the 23 Bluemoon Plan was? 24 Answer: I don't remember. It sounds 25 like it's related to IBM. 9448 1 Question: I hand you what has been 2 marked as Exhibit 968. 3 It's called Bluemoon Plan. It's from 4 Brad Silverberg to you, Brad Chase, Eric 5 Straub, John Enslang, Tom Lennon, and who is 6 Jim LA? 7 Answer: You know, I don't know. I 8 think he was a tester. I just don't remember. 9 Question: If you'll review this. 10 Answer: Okay. 11 Question: Is Bluemoon what we were 12 talking about earlier as Blue Janus? 13 Answer: I don't think so. 14 Question: What was it? 15 Answer: Well, Bluemoon, I think is 16 what's described in here. I assume it's a 17 version of MS-DOS. Just MS-DOS. 18 Blue Janus, I think was a bundle. 19 Janus is the two-headed beast. 20 Question: I know Janus, yeah. 21 Answer: MS-DOS Windows. I'm pretty 22 sure Janus was an MS-DOS Windows bundle. I 23 think that product actually shipped. Did it? 24 I'm not sure. 25 Question: You have on the -- well, 9449 1 let's just go through it. 2 Beginning with the third paragraph, in 3 case it's not clear, let me briefly describe 4 our situation and what I see needs to happen. 5 We think IBM is going to announce 6 support for DR-DOS at COMDEX in just over two 7 weeks. It may happen at COMDEX, it may happen 8 in January, but I'm quite certain it will 9 happen. 10 Do you recall having heard rumors 11 along those lines? 12 Answer: I guess we must have. 13 Question: No, I mean you personally. 14 Answer: I just don't remember. 15 I mean, you know, looking at this 16 mail, I must have heard rumors to that effect. 17 I mean, they seem to be even referenced in this 18 document, 967. 19 Question: This looks to me like 20 Silverberg communicating to you and the other 21 people on the to line what he perceived to be a 22 real and severe threat to Microsoft's operating 23 system revenue. 24 I'm just wondering, given that sense 25 of urgency, there is nothing that you recall 9450 1 about this, sitting here today? 2 Answer: Not really. 3 Question: Okay. 4 Answer: It never happened. 5 Question: It says in the next 6 paragraph, when they do it, it will be a direct 7 frontal attack on Microsoft's core business, 8 the product that accounts for 35 percent of the 9 company's income. This is no game, no joke. 10 It's the real thing. 11 Now, when he talks about the product, 12 is he talking about MS-DOS? 13 Answer: I assume he is. He must be. 14 Question: And MS-DOS alone accounted 15 for 35 percent of Microsoft's income? 16 Answer: Who knows? I mean, I don't 17 know where the number comes from and -- 18 Question: Well, is that something 19 that you weren't familiar with as the MS-DOS 20 product manager, that you were responsible for 21 managing the product by which Microsoft was 22 deriving about a third of its income? 23 Answer: What percentage of its income 24 did it represent -- did our company? Actually, 25 no, I didn't think about that every single day 9451 1 when I came to work. No, I didn't. 2 Question: You didn't even have a 3 passing knowledge about it? 4 Answer: I'm sure at the time I knew 5 what the number was. Right now, I mean, this 6 number means nothing to me. Certainly if Brad 7 said it, it's probably accurate. 8 Question: Okay. Starting with the 9 last paragraph on that page, our response has 10 two components: Finding and communicating 11 reasons for not adopting DR-DOS to our OEMs, 12 customers, and press. 13 What -- I mean, is that a euphemism 14 for a FUD campaign? There was actually a FUD 15 campaign, a euphemism for what's stated there? 16 Answer: This pretty much says what it 17 is right here, and what I said before, finding 18 and communicating reasons for not adopting the 19 product. That is a standard competitive 20 tactic. 21 Question: In preparing the Bluemoon 22 product. 23 Do you see a product that is 24 described, I mean, I just -- that's why I'm 25 curious. I don't really see why -- what's 9452 1 being described here or what you all had in 2 mind. 3 Answer: I'm really inferring from 4 this document, which is not a good idea, so I 5 think I'll just pass. I mean, I just don't 6 remember what it was. 7 Question: You have no memory about 8 what it was? 9 Answer: It's got to be an MS-DOS 10 product, MS-DOS and MS-DOS alone. I just don't 11 know what else it could be. 12 Question: Do you recall when Windows 13 3.1 shipped? 14 Answer: Yeah. Win 3.1 shipped in -- 15 it must have been April of '92. 16 Question: Do you remember in the fall 17 of 1991 when Windows 3.1 was in beta tests 18 about a certain code that was being encrypted 19 in the betas to detect whether or not MS-DOS or 20 DR-DOS was running, give a warning to the 21 viewer if it wasn't MS-DOS? 22 Answer: I have vague memories of this 23 message, and again, they were prompted by the 24 document review. 25 Question: What memories do you have 9453 1 of those messages? 2 Answer: Well, again it's from the 3 document review. 4 There was a message that says you're 5 running a nontested operating system. Please 6 call product support. I think that was the -- 7 basically the gist of the message. 8 Question: Did you think that was a 9 good idea to do or a bad idea? 10 Answer: I don't really remember what 11 I thought of it at the time. 12 Question: Was it an unusual thing for 13 Microsoft to do? 14 Answer: I don't know. I don't know 15 if we had done anything like that before, but 16 of course, you know, there aren't many 17 comparable cases. 18 Question: Let me hand you what's been 19 marked as Exhibit 969. And do you need to take 20 a look at this? 21 Answer: Yes, please. 22 Okay. 23 Question: Rich Able is the first 24 person on the thread back to Brad Chase and 25 Brad Silverberg. You're copied on that. This 9454 1 is from September 27, 1991. 2 His message is in response to one that 3 Brad Chase sent to Brad Silverberg on which he 4 copied you, Rich Able and Tony Audino? 5 Answer: Right. 6 Question: Brad Chase says, two cents 7 from Rich F and I. 8 So that's from you? 9 Answer: Right. 10 Question: Having looked at this, was 11 this all -- I mean, was this, in fact, from you 12 and Brad jointly? 13 Answer: Yeah. This looks like it 14 could have reflected my views at the time, 15 sure. 16 Question: It says, the check for 17 DR-DOS better be perfect. Otherwise you could 18 be in a heap of trouble. Example comes up on 19 Compaq or Zenith DOS. 20 Moreover, this check better be good 21 enough so that DR does not work around it and 22 prevent the message from coming up. 23 So you wanted to make sure that the 24 message was going to be seen, right? 25 Answer: Yes. We wanted to make sure 9455 1 that the message would be seen at the proper 2 time. 3 Question: Okay. And the proper time 4 would be when DR-DOS is being used instead of 5 MS-DOS? 6 Answer: That's correct. 7 Question: The message has to be 8 consistent with our other error messages, 9 caution box, et cetera, and avoid making us 10 look bad. 11 Why were you all worried -- why were 12 you worried about Microsoft looking bad by 13 doing this? 14 Answer: Well, because we had a 15 legitimate concern, and we were afraid in 16 addressing it that we would be left open to bad 17 PR, as Brad says. 18 Question: So the way Microsoft -- I 19 mean, are you aware that this code was 20 encrypted and hidden and unable to be discerned 21 with a debugger? 22 Answer: No. 23 Question: You're not aware of any of 24 that? 25 Answer: No, no. 9456 1 Question: Why didn't Microsoft just 2 include in it written material that said 3 Windows 3.1 is tested with MS-DOS, so if you're 4 on DR-DOS, use caution? 5 Answer: What if the user didn't read 6 the manual before they installed the product, 7 like, you know, probably 90 percent of the 8 users? 9 Question: That's your testimony? 10 Answer: Yeah. 11 Question: You answered my question 12 with a question. 13 Answer: Because in most cases it 14 wouldn't have been written -- excuse me, it 15 wouldn't have been read. 16 Question: Do you know why when the 17 beta shipped it was just -- it was called an 18 error message? I mean, it said error, didn't 19 it? Do you recall? 20 Answer: I don't remember what it 21 said. I just -- I don't remember what it said. 22 Question: But it wasn't detecting an 23 error, was it, it was just detecting the fact 24 that DR-DOS was running, right? 25 Answer: I mean, error message is a 9457 1 generic term for a lot of things. I mean, lots 2 of things are called error messages. 3 Question: In an end user's mind, what 4 does an error mean though? 5 Answer: To a user, an error message 6 means there is something that they have to look 7 into. 8 Question: The last paragraph, 9 recommend that we very carefully craft this and 10 include Liz and PR in the loop. We can get the 11 message out that they don't work with Windows 12 without seeming so manipulative. 13 We need to say the right thing so that 14 people get the right message. 15 We are helping users by giving them 16 info that Windows is only tested on MS-DOS. 17 Do you believe that is an accurate 18 statement? 19 Answer: What statement? 20 Question: The statement I just read. 21 Answer: The whole thing? 22 Question: Yes. 23 Answer: Yeah, that seems accurate. 24 Question: You think it's accurate to 25 state that Windows is only tested on MS-DOS? 9458 1 Answer: I can't -- I just don't know 2 what they tested it on. I wasn't on the test 3 team, and I, in fact, wasn't on the Windows 4 marketing team at this time. 5 Question: But you yourself tested 6 Windows 3.1 on DR-DOS, didn't you? 7 Answer: Yeah, but I would hardly call 8 that a thorough test. 9 Question: Did you test it, Mr. 10 Freedman? 11 Answer: I certainly am sure I 12 installed it and ran it. 13 Question: And you found that it 14 worked, didn't you? 15 Answer: Yeah, but I'm not a tester, 16 I'm a product manager. 17 Question: That's fine. 18 You have a technical background, don't 19 you, sir? 20 Answer: I was not a tester. I do 21 have a technical background, but I was not a 22 tester, most certainly not a tester. 23 And the fact that one person in 24 Microsoft installed it does not qualify as a 25 test. 9459 1 Question: But the fact is that you 2 installed Windows 3.1 onto your DOS and you 3 found it to work just fine, correct? 4 Answer: That is my recollection from 5 the E-mail I saw, most certainly. 6 Question: And you have a technical 7 background, we have established that, correct? 8 Answer: I do. 9 Question: Rich Able says at the top 10 of this E-mail, I hate this whole thing. I 11 think it's totally rude, reinforces the 12 imagine -- image that users have of us as the 13 evil ones, et cetera. 14 Did you agree with that sentiment? 15 Answer: I think I pretty much agreed 16 with Brad that it was a reasonable thing to do, 17 but, you know, Rich was certainly entitled to 18 his opinion. 19 Question: Did you go talk with Rich 20 about his opinion? 21 Answer: I don't remember. 22 Question: He thinks something is 23 totally rude and it reinforces an image of 24 Microsoft as the evil ones. 25 You didn't go ask him, hey, that might 9460 1 be a little harsh, or anything about it at all? 2 Answer: No, not that I remember. 3 Question: Did Brad Chase? 4 Answer: I have no idea. 5 I mean, again, this was really a 6 Windows -- this is a question of Windows and 7 the Windows beta, and we were MS-DOS. 8 Question: Who is Rich Able? Was he 9 sort of your peer and he was in charge of 10 Windows 3.1 or was he on a different product? 11 Answer: I think he was on Windows 12 3.1. He was Brad's peer. He wasn't my peer. 13 Question: Brad Chase's peer? 14 Answer: Brad Chase. 15 Question: But the entire -- but the 16 entire E-mail is called Windows message. 17 Do you recall what message was under 18 consideration at the time? 19 Answer: No, I don't. 20 Question: Was the goal to, at least 21 in part, to instill some fear, uncertainty, and 22 doubt in end users and OEM minds that Windows 23 might not be stable on top of DR-DOS? 24 Answer: I am totally lost. 25 THE WITNESS: Could you read the 9461 1 question back, please? 2 (Requested portion of the record 3 was read.) 4 Question: OEMs' minds, m-i-n-d-s. 5 Answer: No, I think the goal was to 6 communicate to users that it might not be 7 stable on DR-DOS, period, or anything else that 8 was DOS compatible, DOS high, DOS -- you know. 9 Question: I hand you Exhibit 970. 10 The first two E-mails are both from 11 Brad Silverberg, and they have the same message 12 from you attached. 13 The first one says, looks like DR-DOS 14 works with Windows 3.1. And below that you 15 have a message to him and Brad Chase, subject 16 DR at Windows 3.1 October 29, 1991. 17 Can you read that into the record, 18 please, what you wrote? 19 Answer: I loaded DR 6 on my own 20 system about a week ago and have been using it 21 since. Although I was unable to get Windows to 22 run in enhanced mode using DR's EMM386.SYS, I 23 do run it using HIDOS.SYS, their equivalent to 24 HIMEM. So while I have no UMB support, it 25 doesn't matter much since I use all Windows 9462 1 apps. I was also able to run standard mode 2 using HIDOS.SYS. 3 I haven't had any UAE or crashing 4 problems of note. The only difference, which I 5 haven't tested so I can't confirm, seems to be 6 that printing from Winword 2 is much slower 7 than it was under MS-DOS 5. 8 In short, I haven't seen any basic 9 kernel incompatibilities. 10 Question: Now, when you wrote this, 11 you were testing a Windows 3.1 beta on DR-DOS 12 6, right? 13 Answer: I must have been, yeah. 14 Question: Okay. Brad Silverberg in 15 the next E-mail responds to you: Which version 16 of Windows 3.1? 17 Do you have any idea which version of 18 3.1 you were running? 19 Answer: No, I have no idea. 20 Question: Were you aware that after 21 you wrote this E-mail, there began to be 22 reports in the media of DR-DOS users having 23 trouble with Windows 3.1 betas, getting them to 24 work? 25 Answer: No. 9463 1 Question: You don't remember anything 2 about that at all? 3 Answer: No. 4 Question: Are you aware of any 5 changes that occurred in the Windows 3.1 betas 6 after you wrote your E-mail that led to 7 problems, incompatibility with DR-DOS 6.0? 8 Answer: No. 9 Question: What did you do, did you do 10 anything other than what you state here, loaded 11 DR 6 on my own system, and doing this 12 assessment of whether DR-DOS 6.0 would work 13 with the Windows 3.1 beta? 14 Answer: Did I run -- 15 Question: What did you do? 16 Answer: Just inferring from this, it 17 looks like I just ran my system. 18 Question: I don't want you to infer 19 anything. 20 I want you to think about what you did 21 the week prior to October 29, 1991, and tell 22 the jury what you did to conclude that you had 23 not seen any basic kernel incompatibilities 24 between DR-DOS 6.0 and the Windows 3.1 beta. 25 Answer: I don't remember what I did. 9464 1 Question: But whatever you did, you 2 concluded there were no basic kernel 3 incompatibilities, correct? 4 Answer: That was my conclusion. 5 Question: Okay. From the PR 6 standpoint, was there an ongoing plan to come 7 up with ideas about how to derail DR-DOS? 8 Answer: Can you give me some time 9 frame? 10 Question: Yes. Let's -- following 11 October of 1991, which was the month that saw 12 the -- let's actually go back to Exhibit 970 13 for just a second. 14 October 1991 was the month that DR-DOS 15 6.0 shipped, correct? I think we established 16 that earlier. Or was it September? 17 Answer: I think it was September. 18 Question: So this was the newest 19 version of DR-DOS on the market that you were 20 testing with Windows 3.1? 21 Answer: Yes. DR 6, that is right. 22 Question: Following the release of 23 that version of DR-DOS, do you recall the ideas 24 or plans that you or Microsoft PR generally had 25 to derail DR-DOS? 9465 1 Answer: My recollection is that we 2 had standard competitive tactics, competitive 3 documents. 4 Since the product had just released, 5 that was obviously the right time to see how 6 well it worked. 7 Question: Please list for me every 8 idea or tactic you can recall that was 9 implemented by you or Microsoft or the PR 10 company generally to derail DR-DOS. 11 Answer: The term derail, I can't -- 12 you know, I can't countenance that term. 13 Question: Well, hold on a second. 14 I don't want you to -- I don't want it 15 to be like it's my term that I'm using. 16 Let's make sure we understand whose 17 term it is. 18 I hand you Exhibit 971. There's an 19 E-mail that begins at the bottom from Leeta W. 20 She is somebody at the Waggener group, I 21 assume. 22 Do you remember who she was? 23 Answer: No, but W dash is the 24 somebody from the Waggener firm. 25 Q. And you're on the to line, along with 9466 1 Brad Chase, Sergio Pineda, Silverberg is cc'd 2 on it. 3 On the second page, the second bullet 4 point, MS-DOS ongoing plan. Incorporated 5 marketing feedback into MS-DOS plan. Held 6 additional brainstorming session to further 7 identify derail DR-DOS ideas. 8 Did you write back to Leeta, whoever 9 it was, and say, hey, I just can't countenance 10 that term, derail DR-DOS? 11 Answer: I don't know. Probably not. 12 Question: Okay. Instead, you all 13 came up with some ideas how to derail DR-DOS, 14 right? 15 Answer: I remember one principal 16 idea. I only really remember one idea, which 17 was this master document that subsequently went 18 out to customers, and I think probably a few 19 press people as well. 20 Question: And please describe this 21 master document. 22 Answer: It was an analysis of DR-DOS 23 6. 24 Question: How lengthy was it? 25 Answer: It was long. 9467 1 Question: And how many -- when you 2 say customers, do you mean end users or OEMs? 3 Answer: I actually don't know exactly 4 who it went to, but I think it was distributed 5 to the OEM user group for their use. 6 Who it went to exactly, I don't know, 7 and it was also distributed to the field sales 8 force. 9 Question: And you think it was also 10 given to some media types, you just said? 11 Answer: I think so. 12 Question: Is this sort of a 13 compatibility piece that we were talking about 14 earlier in the day you got on the CompuServe 15 forum? 16 Answer: It was based on a lot of 17 things. I don't know if it was based on the 18 CompuServe forum. A lot of it was 19 functionality related. Compatibility related. 20 Feature related. 21 Question: Did it have anything to do 22 with the functionality of DR-DOS with Windows? 23 Answer: It's possible. Maybe Windows 24 3.0, because Windows 3.1 wasn't in the market 25 at that time, so it's certainly possible. 9468 1 I mean, after all, DR-DOS 6 came out 2 after Windows 3.0 and it was usually 3 compatibility. Presumably they would have 4 tested it. 5 Question: Do you recall whether 6 DR-DOS 6.0 was compatible with Windows 3.1 when 7 it was shipped? 8 When Windows 3.1 shipped? 9 Answer: I think so. I'm not sure. 10 I think it was. I'm pretty sure it 11 was. Depends on how you define compatible, I 12 guess. Were some people able to get it to run? 13 I think so. 14 Question: Sure. What -- and I don't 15 mean -- this isn't intended to be facetious or 16 anything, but to say something is compatible, 17 what does -- how do you use that term and how 18 do you understand that it's normally used in 19 the industry? 20 Answer: Well, compatible usually 21 means that it really works most of the time. 22 That's what compatible means. 23 Question: Works most of the time? 24 Answer: Well, the vast majority of 25 the time. 9469 1 Question: Okay. MS-DOS, two bullet 2 points further along in the Exhibit 971, MS-DOS 3 press tour action items. Performed basic 4 research and drafted memo regarding results 5 from our anti-DR campaign. 6 Do you recall anything about the 7 anti-DR campaign? 8 Answer: No. 9 Question: I want to go back up to 10 additional brainstorming sessions to further 11 identify derail DR-DOS. 12 Were you involved in any brainstorming 13 sessions like that? 14 Answer: Boy, I don't remember. 15 Probably, since I was the marketing guy and I 16 was the guy responsible for competitive 17 analysis, but I just -- I don't remember. 18 Question: Can you share with the jury 19 any ideas that were either kicked around or 20 actually decided to be implemented from any 21 brainstorming session about derailing DR-DOS? 22 Answer: Well, as I said, the one main 23 tactic I remember was this document. 24 Question: Right. Was there anything 25 else? 9470 1 Answer: I mean, there might have 2 been. I don't remember what else there was. 3 Question: Did it include 4 incorporating into the betas the code to detect 5 whether DR-DOS or MS-DOS was running and to 6 give an error message if it was not MS-DOS? 7 Answer: I have no idea. 8 Question: Okay. Did it include 9 preannouncing later versions of MS-DOS 10 products, whether under development or not? 11 Answer: I really, really doubt it. I 12 don't remember. 13 Question: Did it include trying to 14 broaden the usage of per processor licenses, 15 getting the OEM group to pursue that? 16 Answer: I don't know. 17 Question: Did it include perhaps 18 extending the license duration of MS-DOS 19 contracts to continue to lock DR-DOS out of the 20 channel, the OEM channel? 21 Answer: I don't know. I didn't work 22 on that side of the business. 23 Question: Okay. Did it include 24 deciding to have Windows absorb MS-DOS in the 25 project that was later spec'd to be Chicago, 9471 1 i.e., Windows 95? 2 Answer: I don't remember, but I 3 really doubt it. 4 Question: So you don't remember -- 5 Answer: This was tactical stuff. 6 This was written by a PR person. This is the 7 media tactical stuff that she's talking about, 8 and that includes things like competitive 9 documents. 10 Question: And you don't remember 11 anything else about that? 12 Answer: No. 13 MR. ESKRIDGE: No further questions at 14 this time. 15 Question: At the outset of his 16 examination, Mr. Eskridge asked you a few 17 questions about MS-DOS 6.2. Do you remember 18 that subject? 19 Answer: Yes. 20 Question: Did Microsoft consider 6.2 21 to be simply a bug fix? 22 Answer: No. 6.2 was released into 23 the market certainly to address concerns that 24 people had about DoubleSpace, but it was really 25 a feature release because it had a lot of 9472 1 features. 2 Question: And I think Mr. Eskridge 3 also asked you some questions about the MS-DOS 4 5 beta program. 5 What, sir, in your view, are the 6 benefits of having a large beta program? 7 Answer: Well, for an -- operating 8 systems are different than applications in that 9 the number of possible different combinations 10 of system configurations is huge. 11 And while obviously you can't possibly 12 test them all, you try and catch as many as you 13 can, and it's just not possible to simulate all 14 of that testing in a lab. 15 So you have to send it out into the 16 market and have a lot of different people test 17 the product on their various and sometimes 18 strange combinations of hardware and software 19 to see what turns up. 20 Question: Was the beta program for 21 MS-DOS 5.0 considered to be successful by 22 Microsoft? 23 Answer: Definitely. I mean, it was 24 the first time Microsoft had ever done this 25 huge broad scope beta and MS-DOS 5 was, I 9473 1 think, universally considered to be a very, 2 very stable beta. 3 So, yeah, I think the beta program was 4 certainly considered to be a big success. 5 Question: Mr. Eskridge asked you some 6 questions about product support calls after 7 MS-DOS 5.0 was released. 8 What in your view was the reason for 9 the high number of product support calls? 10 Answer: We got swamped by sales, 11 actually. We -- 12 Question: Could you describe what you 13 mean by swamped by sales. 14 Answer: We underforecasted the number 15 of units that we were going to sell I think by 16 about half. 17 And consequently, we had -- one of the 18 most important things that comes out of a 19 product forecast before launch is the number of 20 product support technicians that you are going 21 to have trained and waiting on the phone lines 22 at the time the product launches. 23 And we were very short-staffed because 24 we dramatically underforecasted the sales. 25 Consequently, we just had -- we were deluged 9474 1 with calls, which was -- it turns out given a 2 lot of time, and many, many months of time 3 past, it was that in retrospect it was due 4 entirely to sales and that the number of calls 5 that we had received per unit that we sold was 6 actually quite low. 7 Question: Mr. Eskridge also asked you 8 some questions about communications between 9 Microsoft and people in the press about DR-DOS. 10 Do you remember those questions 11 generally? 12 Answer: Yes. 13 Question: Did you ever say anything 14 about DR-DOS that you did not believe to be 15 true and accurate? 16 Answer: Absolutely not. 17 Question: To your knowledge, did 18 anyone else in Microsoft say anything about 19 DR-DOS that was not true and accurate? 20 Answer: No. 21 Question: Mr. Eskridge also showed 22 you an exhibit, I'm not sure what the exhibit 23 number was, but it was by a product support 24 person, which talked about some bugs in MS-DOS 25 5.0. 9475 1 Do you remember that? 2 Answer: Yes. 3 Question: As the product manager of 4 MS-DOS, do you have a view as to the relative 5 quality of MS-DOS 5.0 versus DR-DOS 5.0? 6 Answer: Yeah. I mean, I think MS-DOS 7 5 was a much stabler product. 8 I think relatively DR-DOS 5 was a 9 stabler product than DR-DOS 6 because it was 10 less ambitious and it attempted to do less 11 things. But hands down, I would say 5 to 5 and 12 6 to 6, that is the relevant comparison, I 13 think MS-DOS was a stabler product along the 14 way. 15 Question: How do you think that 16 MS-DOS 5 compared to DR-DOS 6 in terms of 17 stability? 18 Answer: I think it was much stabler. 19 Question: MS-DOS 5? 20 Answer: MS-DOS 5, certainly. 21 Question: You also referred during 22 Mr. Eskridge's examination to an analysis you 23 had done of DR-DOS 6.0. 24 Do you remember that? 25 Answer: Yes. 9476 1 MR. PEPPERMAN: If Mr. Eskridge will 2 let me borrow a sticker, I appreciate that. 3 I'll mark as Exhibit 972 a copy of a 4 document from you to Mr. Chase dated October 5 17, 1991, and titled, A First Look at DR-DOS 6 6.0. 7 Have you seen this document before, 8 sir? 9 Answer: Yes, I have. 10 Question: Can you identify what that 11 is? 12 Answer: This was an analysis of 13 DR-DOS 6 that was intended to be disseminated 14 to customers. 15 Question: Was one of the subjects of 16 this document DR-DOS 6's compatibility? 17 Answer: Yes. 18 Question: If I could refer you to the 19 third page of this document. It's actually the 20 second page past the cover. 21 There is a heading there, 22 compatibility, and there are two paragraphs 23 underneath it. If you could briefly look at 24 those. 25 And my question for you is going to be 9477 1 whether these paragraphs refresh your 2 recollection of what the basis was for your 3 findings regarding compatibility. 4 Mr. Freedman, what was the basis for 5 the conclusions you set out here regarding 6 DR-DOS 6's compatibility? 7 Answer: These were tests that we ran 8 with an independent lab. 9 Question: What was that independent 10 lab -- 11 Answer: XXCAL. 12 Question: Did you do anything to 13 confirm XXCAL's test findings? 14 Answer: Yes. I mean, we -- we have 15 the developers confirm these things. 16 Question: These findings that you 17 listed here, were these simply things that you 18 have pulled down off of CompuServe and included 19 in your report? 20 Answer: No. These were out of the 21 test or out of what the developers had found 22 looking for problems. 23 Question: Was everything that you 24 included in this document, to your knowledge, 25 true and accurate? 9478 1 Answer: Absolutely. 2 Question: Did you make an effort to 3 ensure that? 4 Answer: Yes. Because we confirmed 5 all of these things in-house, and a lot of 6 these memory numbers I got myself. 7 There is a huge amount of stuff in 8 here. But this was done scrupulously. 9 Is this Exhibit 972 the smear sheet 10 that we were referring to before? 11 Answer: I don't know. 12 Question: Could be? 13 Answer: I don't think so. 14 Question: So there is something else 15 floating around out there that was the smear 16 sheet? 17 Answer: Yeah, because the smear sheet 18 -- I mean, my memory of that mail is it 19 referred mostly to CompuServe threads, and this 20 is not from CompuServe threads. 21 Question: And this was designed 22 specifically for distribution to the media and 23 to OEMs, correct? 24 Answer: And customers. 25 Question: And this was done to derail 9479 1 DR-DOS sales, correct? 2 Answer: This was done to publicize 3 problems with DR-DOS. 4 Question: Okay. We looked before -- 5 did you all -- we looked before at Exhibit 955, 6 and this was the MS-DOS 5 upgrade product 7 support plan July 26, 1991. 8 And we, of course, have all of the 9 different data loss and potential data loss 10 problems, loss of functionality problems that 11 we went over at a great length earlier, 12 correct? 13 Answer: Right. 14 Question: Did you release this to the 15 media or to your customers? 16 Answer: I don't believe so. 17 Question: Absolutely not, you did not 18 release this, did you? 19 Answer: I doubt it. 20 Question: Why wouldn't you want your 21 customers to know about all of the problems 22 that MS-DOS 5.0 had? Wouldn't you want to warn 23 them about that if it's such a concern to the 24 market? 25 Answer: I actually think some of this 9480 1 stuff was publicized on CompuServe. I don't 2 remember exactly. Some of it might have been 3 publicized on CompuServe. 4 Question: Let me just ask you why you 5 would pull together something about the DR-DOS 6 product to educate the media about problems 7 with DR-DOS, but you wouldn't want to 8 communicate the same things about your own 9 shipping products. 10 Answer: We were competitors, perhaps. 11 Question: Right. 12 Answer: That's my answer. 13 Question: Okay. So problems with 14 your own products you needed to keep silent and 15 do as silent releases, do a 5.0A as opposed to 16 a 5.1? 17 Answer: No, I don't think we were 18 totally silent. I think again, I think a lot 19 of this stuff -- certainly not all of it, but 20 some of this stuff was posted on CompuServe. 21 Question: Didn't MS-DOS 5.0 and 22 DR-DOS 5.0 really only go head to head for two 23 or three months, because DR-DOS 6.0 came out so 24 quickly? 25 Answer: About. 9481 1 Question: So the true basis for 2 comparison should be DR-DOS 6.0 versus MS-DOS 3 5.0 because those were the versions that 4 competed with each other from September 1991 5 through March of 1993, correct? 6 Answer: That is a good basis. That 7 is fine. 8 Q. Mr. Eskridge asked you some questions 9 about whether the more accurate comparison 10 would be between MS-DOS 5 and DR-DOS 6. 11 Sir, do you have a view as to the 12 relative quality of MS-DOS 5 versus DR-DOS 6? 13 Answer: Yeah. I think MS-DOS 5 was a 14 stabler product than DR-DOS 6 was. 15 Question: I just want to refer you 16 one last time back to Exhibit 972, which is 17 your October 17, 1991 memorandum. And again, 18 refer you to the third page of that document 19 with the production numbers 570009. 20 And the sentence is underneath the 21 heading compatibility, which reads, Digital 22 Research themselves position DR-DOS 6.0 as 23 another operating system, in their words, a 24 fully DOS compatible operating system. The 25 irony, of course, is that they're not DOS 9482 1 compatible. 2 Was one of the reasons why you were 3 circulating information about incompatibility 4 problems with DR-DOS 6.0, that because Novell 5 or Digital Research were making representations 6 that they were 100 percent compatible? 7 Answer: Yes. 8 THE COURT: Ladies and gentlemen, 9 we'll take a recess at this time for ten 10 minutes. 11 Remember the admonition previously 12 given. 13 You can leave your notebooks here. 14 (A recess was taken from 1:34 p.m. 15 to 1:46 p.m.) 16 (The following record was made out of 17 the presence of the jury.) 18 THE COURT: We're talking about the 19 two juror questions. 20 One is from Juror Number 12. Is mark 21 Chestnut still to this day an employee of MS? 22 And the other -- I don't know who the 23 juror was that wrote this. 24 It says, what was Richard Freedman's 25 position and place of employment at the time of 9483 1 this deposition? 2 We were talking about Mr. Freedman in 3 particular because the Plaintiffs think there's 4 a distinction. 5 On the very first paragraph of Mr. 6 Freedman's testimony, it states, in answer to a 7 question, the question was, I'm the plaintiff 8 in a lawsuit. I represent -- sorry. 9 I am representing the plaintiff in a 10 lawsuit, an antitrust lawsuit against Microsoft 11 Corporation which I understand is your former 12 employer, correct? 13 Answer: This is correct. 14 MR. TULCHIN: Yes, Your Honor. 15 He did testify that Microsoft at the 16 time of the deposition in 1998 was his former 17 employer. 18 There's nothing in this deposition as 19 far as I know -- 20 THE COURT: Oh, I see. 21 MR. TULCHIN: -- about where he was 22 employed at the time of the deposition. 23 I don't think the question was asked 24 or answered, but there's a more fundamental 25 point here, Your Honor, which is -- if I may. 9484 1 THE COURT: Yes. 2 MR. TULCHIN: The Court has instructed 3 the jurors that when a live witness is here, 4 they can submit questions to the Court, and 5 those questions will be discussed and 6 considered, et cetera. 7 If questions are put about a 8 deposition that's been read or played by 9 videotape, we get into a very slippery slope 10 about do you replay some of it, do you reread 11 some of it. That would emphasize, I think 12 improperly, particular excerpts that one juror 13 is interested in. When the standard view, I 14 think is, that the jury collectively remembers 15 what they remember. They've heard what they've 16 heard, and the evidence ought not to be 17 repeated because one juror has a question. 18 The slippery slope becomes even let's 19 say a little steeper, Your Honor, if there's a 20 substantive question. 21 So one juror says, for example, when 22 Mr. Freedman was talking about FUD -- I'm 23 making this up as a hypothetical. 24 When Mr. Freedman was talking about 25 FUD, did he in his testimony define what FUD 9485 1 meant to him? 2 Well, we'll all be scurrying around 3 trying to figure out whether the transcript 4 contains some definition. 5 And I won't belabor this, Your Honor, 6 but I don't think we should be answering 7 questions about what's in a deposition. What 8 they've heard is what they heard. What they 9 remember collectively is what they remember. 10 THE COURT: Anything else on this? 11 MR. CASHMAN: Yes, Your Honor. 12 The issue is if the testimony was 13 given just a simple matter of juror 14 understanding -- I think everybody wants the 15 jurors to understand, and there's nothing 16 that's unduly emphasized if something that was 17 contained in the testimony is provided is an 18 answer to the jury. 19 And I think that the answer to the 20 question was provided in the testimony as it 21 relates to Mr. Freedman. So I'd submit that 22 the juror question relating to Mr. Freedman 23 should be answered. 24 THE COURT: Anything else? 25 MR. CASHMAN: No, Your Honor. 9486 1 THE COURT: Okay. What I read to you 2 is what I'm going to tell them. 3 Anything else? 4 MR. CASHMAN: Your Honor, one other 5 thing that I want to do real quickly before the 6 jurors come back in, is consistent with the 7 practice that we mentioned the other day -- 8 THE COURT: Go ahead. 9 MR. CASHMAN: -- we want to make our 10 offer of proof on the financial information for 11 Mr. Freedman, which is Plaintiffs' OP 2, and 12 I'm quickly going to also make the offer of 13 proof for Mr. Barrett, which would be OP 4. 14 THE COURT: What are you requesting 15 the Court to do at this time? 16 The other one that was given to me, 17 you said there would be some hearing on it. 18 MR. CASHMAN: I believe that these 19 were addressed in Ms. Conlin's argument 20 yesterday, Your Honor, but I will -- I believe 21 that she will follow up, if necessary, but I 22 believe these are subject to the motion that 23 she argued yesterday. 24 THE COURT: Okay. Great. 25 The one on the -- the limitations? 9487 1 MR. CASHMAN: The financial interest 2 and such. 3 THE COURT: Okay. Thanks. 4 All right. You may get the jury. 5 (The following record was made in the 6 presence of the jury at 1:54 p.m.) 7 THE COURT: Everyone else may be 8 seated. 9 MR. CASHMAN: Your Honor. 10 THE COURT: Yes, sir. 11 MR. CASHMAN: At this time Plaintiffs 12 would like to offer the exhibits referenced 13 during the testimony of Richard Freedman. 14 THE COURT: Okay. 15 MR. CASHMAN: Specifically Plaintiffs' 16 Exhibits 607A, 864, 1025, 1048, 1188, 1260, 17 1359, 1389, 1392, 1472, 1591, 3012, 5325, 5399, 18 5558, 7587, 7635, 7637, 7682, 7686, 7687, 7706, 19 and 7724. 20 And, Your Honor, I'm going to hand up 21 to the Court -- may I approach? 22 THE COURT: Yes. 23 MR. CASHMAN: -- a copy of the chart, 24 a hard copy and two CD disks. 25 THE COURT: Any objections? 9488 1 MS. NELLES: That included Plaintiffs' 2 Exhibit 1025; is that correct? 3 THE COURT: Yes. 4 MS. NELLES: Then no objection, Your 5 Honor. 6 We put in a request that we get a copy 7 of the CD that's being provided to the Court so 8 we can check that it's accurate against our 9 records, but no objection to that list. 10 THE COURT: Okay. Plaintiffs will 11 provide a CD? 12 MR. CASHMAN: Yes, Your Honor. 13 THE COURT: Very well. 14 Did you want to offer any exhibits? 15 MS. NELLES: He included the one I 16 wanted in, Your Honor. 17 THE COURT: Okay. Without objection, 18 they are hereby admitted. 19 And, Carrie, you'll make a copy of 20 this for the court reporter, please, and I'll 21 give her all the exhibits. Give the original 22 back to me. 23 MR. CASHMAN: Next, Your Honor, the 24 Plaintiffs wish to call by prior testimony 25 Philip Barrett. The testimony was taken in the 9489 1 matter of IBM/Microsoft before the Federal 2 Trade Commission on May 4, 1993. 3 THE COURT: Very well. 4 And members of the jury, the first 5 part of this is going to be -- well, actually 6 it's two different parts, right? 7 Mr. Darden is going to be the reader. 8 Mr. Darden, you're a member of the Plaintiffs' 9 law firm; is that right? 10 MR. DARDEN: Yes, I am. And I'm 11 admitted. 12 THE COURT: What's the name of the 13 firm again? 14 MR. DARDEN: Zelle, Hofmann. 15 THE COURT: Very well. Come on up. 16 (Whereupon, the following deposition 17 was read to the jury.) 18 Question: Will the witness please 19 state his name for the record. 20 Answer: Philip L. Barrett. 21 Question: Who is your employer? 22 Answer: Microsoft Corporation. 23 Question: How long have you been 24 employed by Microsoft Corporation? 25 Answer: Seven years. 9490 1 Question: What is your current title 2 or position at Microsoft? 3 Answer: Hold on. 4 I'm a development manager in the 5 advance consumer technology group, and I 6 actually have two titles. I'm manager of 4D 7 graphics model development and manager of 8 multimedia kernel development. 9 Question: How long have you held 10 these positions? 11 Answer: About two weeks. 12 Question: I don't think I'll be 13 asking you too much about those. 14 Prior to two weeks ago, what was your 15 title and position at Microsoft? 16 Answer: I was the development manager 17 for the multimedia and consumer systems group. 18 Question: And how long were you in 19 that position? 20 Answer: Approximately a year. 21 Question: Prior to holding that 22 position, what was your title or position at 23 Microsoft? 24 Answer: I was a development manager, 25 Microsoft Windows 3.1. 9491 1 Question: Do you remember the time 2 frame in which you held that position, when you 3 began that position, and about the time frame 4 when you left it? 5 Answer: Yeah. 6 Question: When did you start? When 7 did you first become development manager for 8 Windows 3.1? 9 Answer: It would have been when 10 Windows 3.0 shipped in May of 1990. 11 Question: And when did you leave that 12 position? 13 Answer: In April of 1992. 14 Question: Prior to becoming the 15 development manager for Windows 3.1, what title 16 or position did you hold? 17 Answer: I was the development manager 18 for Microsoft Windows 3.0. 19 Question: I don't believe I asked you 20 this. When did you first become the 21 development manager for Windows 3.0? 22 Answer: Well, I don't recall 23 specifically. It was sometime in 1988. 24 Question: Can you generally describe 25 the duties and responsibilities you had as 9492 1 development manager? 2 Answer: Well, I was responsible for 3 the development of internal code, managing the 4 people that actually wrote -- designed, wrote 5 and debugged the code. And I was responsible 6 for delivering final product to testing and 7 final tested product to manufacturing. 8 Question: At any point in time, did 9 you have any responsibilities related to MS-DOS 10 development? 11 Answer: Yes. Yes, I did. 12 Question: At what point in time? 13 Answer: From sometime in 1988 through 14 '92, I believe. I'm sorry, I'm not -- I can't 15 remember the exact date. 16 Question: And did you consider DR-DOS 17 to be a competitor of yours? 18 Answer: Of what product? 19 Question: Microsoft Windows, was a 20 competitor of Microsoft Windows. 21 Answer: No, I didn't consider it to 22 be a competitor of Microsoft Windows. 23 Question: Why? 24 Answer: Because they're two different 25 products. Two different categories. 9493 1 Question: Did you consider it to be a 2 competitor of MS-DOS? 3 Answer: Yes. 4 Question: Now, you mentioned that 5 Microsoft Windows is in a different category 6 than DR-DOS. What category would Windows be in 7 that would be different than the category that 8 MS-DOS or DR-DOS is in? 9 Answer: Operating environments. 10 Question: And what are DR-DOS and 11 MS-DOS? 12 Answer: Operating systems. 13 MR. CASHMAN: That concludes the 14 direct. 15 THE COURT: Very well. Ms. Nelles, 16 cross. 17 MS. NELLES: My big moment, Your 18 Honor. 19 THE COURT: Take your time. 20 CROSS-EXAMINATION 21 Question: Mr. Barrett, are you aware 22 of any instance where Microsoft has taken steps 23 to intentionally create an incompatibility 24 between Windows 3.1 and OS/2 or any other 25 software product? 9494 1 Answer: No. 2 Question: Mr. Barrett, you were just 3 asked if you had any knowledge of any Microsoft 4 effort to produce any incompatibility between 5 OS/2 or DR-DOS and Microsoft Windows. How do 6 you define incompatibility within that context? 7 What was your understanding of what you meant 8 by that? 9 Answer: To prevent the products from 10 working together. 11 Question: Would you consider an 12 incompatibility something that popped up in, 13 say, a nonfatal error message when there was no 14 error that was being detected by that software? 15 Answer: No, I would not call that 16 incompatibility. 17 Question: How would you make the 18 distinction between the two? 19 Answer: Well, there was nothing done 20 explicitly to prevent Windows from running on 21 that operating system. 22 That's what is meant by 23 incompatibility. It's simply a message. If we 24 played a tune, that wouldn't be an 25 incompatibility. 9495 1 MS. NELLES: No further questions from 2 Microsoft. 3 THE COURT: You may step down. That 4 concludes that portion. 5 Mr. Cashman, you have another portion? 6 MR. CASHMAN: Yes, Your Honor. 7 Now Plaintiffs wish to call 8 Mr. Barrett again, Philip Barrett again, by 9 prior testimony designation taken in the case 10 Caldera versus Microsoft on July 31, 1997. 11 (Whereupon, the following video was 12 played to the jury.) 13 Question: Good morning, Mr. Barrett. 14 For the record only, would you please 15 state your name. 16 Answer: Philip Barrett. 17 Question: I want to back up to your 18 employment with Microsoft. You started in 19 1986, correct? 20 Answer: Correct. 21 Question: What were you doing before 22 that time? 23 Answer: I was at Intel Corporation. 24 I was a manager in a software development group 25 in their microcomputer systems division. 9496 1 Question: How many years were you at 2 Intel? 3 Answer: Approximately seven and a 4 half. 5 Question: So from 1978, 1979? 6 Answer: July 1978 to March 1986. 7 Question: Did you have the same job 8 the entire time you were there? 9 Answer: No. I had various jobs. I 10 worked on very similar jobs. 11 I started out as an individual 12 engineer and became a lead and then became a 13 manager. I worked on realtime operating 14 systems. I worked on -- a number of years I 15 worked on UNIX ports and designing and 16 implementing UNIX for various Intel 17 microprocessors, and some other miscellaneous 18 work, but those are the two major job 19 assignments. 20 Question: Software engineering? 21 Answer: Software engineering. 22 Question: You were not a hardware 23 engineer? 24 Answer: No, I was not a hardware 25 engineer. 9497 1 Question: And before that were you in 2 school? 3 Answer: Yes. I graduated from 4 college, the University of Wisconsin in 1978. 5 Question: Computer science degree? 6 Answer: Computer science. Master's 7 degree -- master's degree in computer science. 8 Question: And your undergraduate 9 degree? 10 Answer: Bachelor's in mathematics 11 from Rutgers University in 1975. 12 Question: The software engineering 13 that you did at Intel, was it directed 14 primarily in the area of operating systems? 15 Answer: Yes, by and large. 16 Question: 1986, you moved to 17 Microsoft? 18 Answer: Correct. 19 Question: What was the project that 20 you were hired to do? 21 Answer: To do what was later called 22 Windows 386. Essentially it was a virtual 23 machine. It was a version of the operating 24 system designed to use the virtual 8086 mode of 25 the 386, which at that time was a pretty major 9498 1 advancement in capabilities. 2 Question: Who else was working on 3 that with you? 4 Answer: Richard Hargrove, Mark 5 Wilson, Aaron Reynolds, and -- I'm sure there 6 were others, but those are the only three names 7 that stick in my mind. 8 Question: It was a pretty small team? 9 Answer: Yeah, it was a very small 10 team. I think total there were five of us so 11 there's one person that I don't recall. 12 Question: Had the project already 13 been started before you arrived? 14 Answer: No. I started the project. 15 Question: Were you the lead engineer 16 in the group? 17 Answer: Yeah. Well, I don't think 18 Microsoft actually had titles at that time. My 19 business card just said systems software, but I 20 was called -- Steve Ballmer frequently referred 21 to me in the presence of customers and others 22 as the main guy. 23 Question: You were responsible for 24 the project, though? 25 Answer: Completely. 9499 1 Question: And you were involved both 2 -- correct me if I'm wrong, in somewhat of a 3 management role, but you also had a technical 4 role in the project? 5 Answer: That is correct, yeah. I was 6 the technical lead, as well as the team 7 manager. 8 Question: So you wrote sections of 9 what became Windows 386? 10 Answer: I wrote some. I did not 11 write the lion's share, though. 12 Question: And the code writing 13 responsibilities spread among these individuals 14 you mentioned before? 15 Answer: That's correct. 16 Question: How long did this project 17 last? Until you broke up the group. 18 Answer: Well, the group never really 19 broke up. I mean -- 20 Question: Okay. Let's take his 21 suggestion. Until you released the product. 22 Answer: Yes, until we released the 23 product. But there were multiple releases, 24 so -- 25 Question: First commercial release. 9500 1 Answer: The first commercial release 2 was in -- I think it was in late '96. 3 Question: '86? 4 Answer: Yeah, right, excuse me. I 5 think it was late 1986. It might have been in 6 '87. 7 Question: What was it called when it 8 was -- 9 Answer: It was called Windows 386. 10 It was Windows 2.01 was the version number, but 11 it was also called Windows 386. 12 Question: According to my notes, 13 Windows 2.0 was out in October of 1987. Does 14 that sound right to you? 15 Answer: Yes. Okay, then I was 16 incorrect. 17 The release was in -- the release of 18 Windows 386 was in -- 2.01 was released through 19 Compaq probably, yeah, in October of '87, that 20 is correct. 21 There were also additional releases. 22 There was a 2.03 release which happened in the 23 first quarter of '88. 24 Question: Do you remember what month 25 you started at Microsoft in '86? 9501 1 Answer: Yeah, March. March 31 was my 2 start date. 3 Question: So from March of '86 4 through to at least October '87, were you 5 working full time on the Windows 386 project? 6 Answer: Yes, that's correct. 7 Question: What's the difference 8 between Windows 2.0 and Windows 2.01? 9 Answer: I don't actually recall a 10 Windows 2.0 actually being released. I think 11 that what was called Windows 2.0 to the 12 marketplace was actually -- the version number 13 was 2.01. I believe that to be the case. 14 Question: And the difference between 15 Windows 2.01 and Windows 2.03 which you said 16 came out in the first quarter of 1988? 17 Answer: I was not involved in those 18 efforts, but I believe there were some printer 19 driver support bug fixes, minor work. I 20 believe that was the first real mode Windows 21 release. 22 2.01 was the Windows 386 release. I 23 believe that was with Compaq. My memory is not 24 super sharp, super crisp on that. 25 Question: This was a long time ago. 9502 1 I appreciate your efforts here. 2 What did you do after October of 1987? 3 Answer: Well, after the release of 4 the real mode Windows, I was given management 5 responsibility for all of Windows and -- both 6 Windows 386 and Windows 286, as it came to be 7 called. 8 Question: This was in early 1988? 9 Answer: Yes. 10 Question: What do you mean 11 responsibility for all of Windows? 12 Answer: Well, again, titles were not 13 crisp, but the position that I had was 14 eventually called development manager, which is 15 responsibility for all facets of the software 16 engineering effort. And that included testing, 17 as well as the software development. 18 Question: So that would include, for 19 example, managing the beta program for any 20 release of Windows? 21 Answer: At one point, yes. However, 22 my responsibility for the beta program, later 23 on that was taken up by a group called program 24 management. 25 Question: When you first started in 9503 1 this position where you had responsibility for 2 all of Windows, it included responsibility for 3 beta testing? 4 Answer: Yeah. 5 Question: And that changed at some 6 later time? 7 Answer: Yeah. 8 Question: Do you remember 9 approximately when? 10 Answer: Yeah. Approximately when we 11 released a product called Windows -- well, the 12 version number was 2.1 and there was a Windows 13 386 and a Windows 286. I do not recall if 14 there was actually a Windows 386 version of 15 2.1. There was definitely something called 16 Windows 286. 17 Question: 2.1 was a release that 18 followed 2.03? 19 Answer: Correct. 20 Question: You worked on 2.1? 21 Answer: Yes. 22 Question: What was the difference 23 between 2.1 and 2.03? 24 Answer: The main difference is we 25 found some extra memory. In the PC 9504 1 architecture -- it's fairly esoteric, but 2 basically we found an extra 64 kilobytes of 3 memory to give applications. 4 Question: Why was that important? 5 Answer: Because Windows -- the 6 existing Windows environment was a very 7 constrained memory environment. And 8 applications typically were much larger than 9 the available memory, so there was a 10 significant performance hit in swapping memory 11 in and out, data in and out of memory. The 12 more memory you have, the less swapping you 13 have to do. 14 Question: You're talking about 15 swapping, you're talking about swapping data 16 from the main memory in the PC out to the disk 17 and back? 18 Answer: Yes, correct. 19 Question: And that slows down 20 performance? 21 Answer: Dramatically. 22 Question: Are there other problems 23 caused by lack of memory or are there some 24 programs you can't run at all? 25 Answer: Yes, yes, there would be 9505 1 problems that could not run because of memory 2 constraints. 3 Question: So finding this additional 4 64K of memory that you could make available in 5 Windows 2.1 was a significant improvement? 6 Answer: Yes, it was significant. 7 Question: What did you work on next 8 after -- let me back up. 9 Do you remember approximately when 2.1 10 was released? 11 Answer: No, I don't. It would be in 12 -- I believe it was in '88, though, probably 13 late '88. But that's just speculation on my 14 part. 15 Question: How big was your group at 16 that time, the group working for you? 17 Answer: I think total it was less 18 than 20 people. That runs in my mind. But 19 I've never really paid a lot of attention to 20 the size of my group. 21 Question: Was the entire group 22 working on Windows 2.1 before it came out or 23 did you have the group divided up? 24 Answer: I had the group divided up. 25 One group was focused on Windows 386 portions 9506 1 and then the other part was focused on the 2 windowing components. 3 Question: That was all part of 4 Windows? 5 Answer: Yeah, it was all part of a 6 Windows group. 7 Question: Did you start work, then, 8 on what eventually became Windows 3.0? 9 Answer: Yes. Actually, there were 10 people working on what was eventually going to 11 become Windows 3.0 before 2.1 released. 12 Question: According to my notes, 13 Windows 3.0 was released in May 1990. Does 14 that sound correct to you? 15 Answer: Yes. That's a date I recall 16 well, yes. May 1990. 17 Question: Why is it a date you recall 18 well? 19 Answer: Well, because it was an 20 industry-changing event. 21 Question: Windows 3.0 was a 22 breakthrough product, wasn't it? 23 Answer: Yes. 24 Question: Why is that? 25 Answer: I don't think we have enough 9507 1 time, but I'll try. 2 Prior to Windows 3.0, there were a 3 number of attempts at building a windowing 4 graphical user interface system. 5 Most of those attempts fell short -- 6 no, all of those attempts fell short in one way 7 or another to achieve mass market penetration. 8 Windows 3.0 had the distinct or unique 9 difference in that it ran on machines that were 10 typical of the installed base, and it provided 11 enough value and performance that people were 12 able to use it to significantly improve their 13 productivity. 14 Also, the other reason why it was 15 successful, why it was groundbreaking, is that 16 application developers recognized the potential 17 to be able to put very large programs into 18 memory without having to have swapping. 19 In fact, some applications as the 20 question was asked earlier, would not run or 21 could not run or ran so poorly as to not be 22 economically viable in memory constrained 23 environments. And Windows 3.0 was the first 24 time that that memory constraint was 25 dramatically pushed back. 9508 1 Question: In May 1990 as Windows 3.0 2 was being released, did you have any idea that 3 it was going to be as successful as it was? 4 Answer: I believed that it would be 5 successful. I personally was surprised by the 6 level of success that it had. 7 Question: Rolling into the release of 8 Windows 3.0 in the middle of 1990, how big was 9 your team then? 10 Answer: I believe it was on the order 11 of 40, 45 people. 12 Question: Did you get a break 13 afterwards? 14 Answer: A little bit. You know, we 15 gave people the day off. People took vacations 16 and that sort of thing. 17 Question: Did you start work on 18 Windows 3.1 right away? 19 Answer: Very shortly thereafter, yes. 20 Question: Did you also have 21 responsibility during that time frame for any 22 DOS development? 23 Answer: Yes. I was also the DOS 24 development manager. 25 Question: When did that change occur? 9509 1 When were you given the additional 2 responsibility of being the DOS development 3 manager? 4 Answer: I don't recall the precise 5 date, but I believe it was in the same time 6 frame as I got the full Windows responsibility. 7 Question: So back in 1987 or early 8 '88? 9 Answer: Late '87, early '88, in that 10 time frame. 11 Question: So from '87, '88 forward 12 through at least middle of 1990, you had 13 responsibility for all Windows development and 14 all DOS development? 15 Answer: That's correct. 16 Question: These teams that you've 17 described earlier of anywhere from around 20 to 18 more than 40 engineers, did that include the 19 engineers that were also working on DOS? 20 Answer: Yes. 21 Question: The time period, say, 22 January 1990 through May 1990 as you were 23 preparing to release Windows 3.0, were any of 24 your engineers working on DOS development? 25 Answer: Yes. There was a team of DOS 9510 1 developers, yes. 2 Question: Do you recall how big that 3 team was? 4 Answer: Five to eight, something like 5 that. 6 Question: Did you have team members 7 that worked on both DOS development and Windows 8 development? 9 Answer: Yes. There were -- there was 10 at least one, yeah. 11 Question: That wasn't typical? Most 12 team members -- let me rephrase it. 13 Most team members were either Windows 14 developers or DOS developers? 15 Answer: Yes. 16 Question: But you had responsibility 17 for all of them? 18 Answer: That's correct. 19 Question: Do you recall in early 1990 20 what release of DOS your DOS developers were 21 working on? 22 Answer: Well, there had been a 23 release of DOS 4.0, and the team was focused on 24 the next release, which eventually was called 25 5.0. 9511 1 Question: Your Windows developers, 2 did they have to have an understanding of DOS 3 to do their Windows development? 4 Answer: Some of them did. The kernel 5 people had to. The majority of Windows 6 developers had no understanding of DOS. 7 Question: What about you with your 8 role being responsible for both groups; did you 9 have to have an understanding of both Windows 10 and DOS? 11 Answer: Yes. 12 Question: Is it fair to say that you 13 did? 14 Answer: Yes, it's fair to say. 15 Question: Would it be fair to say 16 that you were one of the people at the company 17 with the most knowledge about DOS and Windows 18 during that time period? 19 Answer: No, no, I wouldn't say that. 20 No. 21 Question: There were other people 22 with more technical knowledge of Windows? 23 Answer: Yeah, that's correct. 24 Question: And there were more people 25 with more technical knowledge of DOS? 9512 1 Answer: That's correct. 2 Question: Take us back to the middle 3 of 1990. Windows 3.0 is a release that's 4 wildly successful. What do you do after that? 5 Answer: Well, I did at some point go 6 to Disneyland. Anyway, there were two projects 7 that were important, Windows 3.1 and getting 8 DOS 5 done, completing DOS 5. 9 Question: You had responsibility for 10 both of those projects? 11 Answer: Yes. 12 Question: You said they were 13 important. Why were they important? 14 Answer: Well, it was a product 15 imperative in any software company to get 16 products out. 17 Windows 3.1 was important because 18 there were a lot of things that had been left 19 undone with Windows 3.0. A lot of corners had 20 been cut to get Windows 3.0 out. 21 Question: What do you mean corners 22 had been cut? 23 Answer: Bugs that weren't fixed. 24 Features that didn't get implemented. Well, 25 like selling a house without doing the yard and 9513 1 all the things that you think about when you 2 think about a nice house wouldn't have been 3 done, by analogy. 4 Question: Features that had been left 5 out that you would have liked to have added? 6 Answer: Uh-huh. 7 Question: And there were bugs that 8 needed to be fixed? 9 Answer: Correct. 10 Question: Leaks in the roof, if we're 11 going to use the house analogy? 12 Answer: Yeah, leaks in the roof and 13 that sort of thing. 14 Question: But the foundation was 15 sound? 16 Answer: Foundation had a few cracks 17 too. 18 Basically, the virtual machine 19 portion, the way it interfaced with DOS and 20 with the multitasking components of Windows, 21 particularly the kernel. 22 There were -- basically, there were 23 three different ways of executing programs, and 24 they didn't work well together. They worked 25 well enough, but they didn't work well 9514 1 together. 2 And DOS application support under 3 Windows was still problematic and there were 4 reliability problems in the bug area. 5 Question: What do you mean liability 6 problems? 7 Answer: Reliability, sorry. 8 Question: When you say reliability, 9 you mean the system would crash sometimes? 10 Answer: Yes. Or freeze or whatever, 11 yes. 12 Question: And the reason for that was 13 there were bugs in the product? 14 Answer: There were bugs, yeah. 15 Question: That's not atypical, is it? 16 Answer: Commonplace. 17 Question: Commonplace in the software 18 industry? 19 Answer: Yes, that's correct, 20 commonplace in the software industry. 21 Question: And these were problems 22 that you knew about when you had released 23 Windows 3.0? 24 Answer: Not all of them. 25 Question: Some of them -- 9515 1 Answer: We knew about some of them. 2 Some of them came to light after the release. 3 Question: Which, again, is typical 4 with a major release, isn't it? 5 Answer: Yes, that's correct. It's 6 typical with release of any product. Bugs are 7 found after the release date. 8 Question: And the reason for that is 9 the product is widely distributed, and when 10 it's widely distributed among many users, 11 problems crop up that you haven't seen before? 12 Answer: That's correct. 13 Question: And was it your idea, then, 14 that Windows 3.1 would fix these problems that 15 you described? 16 Answer: That was one of the goals of 17 Windows 3.1, yes. 18 Question: And then Windows 3.1 would 19 also add features that had been left out of 20 Windows 3.0? 21 Answer: That's correct. 22 Question: Do you remember any of the 23 specific features? 24 Answer: I knew you'd ask that 25 question. 9516 1 You know, no, I do not recall the 2 specific features at this time, but I do recall 3 that there were a number of features that were 4 needed. 5 Question: And you mentioned that 6 releasing DOS 5.0 -- I'm sorry, completing DOS 7 5.0 was important at that time. 8 Why was that? 9 Answer: Probably the biggest problem 10 -- no, definitely the biggest problem was that 11 DOS 4, which had been done by IBM or a lot of 12 work on DOS 4 by IBM that we had taken back had 13 serious problems, and it was, frankly, an 14 embarrassment to the company. And it was a 15 well-stated goal within the company to 16 basically fix the problems of DOS 4. 17 Question: It was an embarrassment 18 because it was full of bugs? 19 Answer: Yeah, it was buggy and it was 20 not user friendly. There were a number of what 21 we called somewhat jokingly, user-hostile 22 features that were added. 23 Question: Do you remember any of 24 those features? 25 Answer: I don't remember the 9517 1 specifics. There was some memory management 2 things that were going on, and yes, I do 3 remember it. 4 One of them was the way that they 5 implemented extended memory support which was 6 different from the way Windows implemented 7 extended memory support. And there were some 8 problems relating to that. Typically, what a 9 user had to do was do a lot of tinkering with 10 DOS 4 to get it to run Windows. 11 Question: Anything else come to mind? 12 Answer: Not at this time. 13 Question: Do you remember in May 1990 14 how many people you had on your teamwork go on 15 MS-DOS 5.0? 16 Answer: I don't recall the exact 17 number. It was, again, between five and eight, 18 in that range. 19 Question: Had some of those engineers 20 been working on Windows 3.0 also? 21 Answer: Yes, there was one that moved 22 over to work on SMARTDRV. I don't recall the 23 date of that move. 24 Question: And did that team working 25 on MS-DOS 5.0 grow, then, after May 1990? 9518 1 Answer: I believe so. 2 Question: Was Gordon Letwin on that 3 team? 4 Answer: Gordon Letwin was part of 5 that effort. I believe he came on earlier. 6 And he actually was focused on something beyond 7 5.0. He was actually focused on what was 8 called DOS 6.0. 9 Question: And was that the product 10 that was eventually released as DOS 6? 11 Answer: No, it wasn't. 12 Question: What was it? I mean, did 13 it ever become a commercially released product? 14 Answer: I believe the answer is no. 15 There were some components of what 16 Gordon did that found its way into, I believe, 17 Windows 95 at one point. But, frankly -- no, 18 actually into Windows for Workgroups, I think 19 the version was 3.11. But I believe that that 20 was through a rather tortuous process of other 21 people engineering and modifying his work. 22 Question: So you had part of your 23 team working on MS-DOS 5.0 and part of your 24 team working on Windows 3.1, correct? 25 Answer: Middle -- 9519 1 Question: Do you want to take a 2 moment to look at that and identify it for me? 3 Answer: Yeah. 4 Question: Can you tell me what this 5 is, please. 6 Answer: This document is a status 7 report for November 1991. 8 Question: Drafted by you? 9 Answer: Yes. 10 Question: Is this a report that you 11 would produce on a regular basis? 12 Answer: Sporadically, not regular. 13 But yes, I produced these reports. 14 Question: And it's a status report on 15 Windows 3.1 development? 16 Answer: Correct. 17 Question: If I could direct your 18 attention to what is marked as page 1 of the 19 document. 20 It says -- right down on the end of 21 first paragraph, it's difficult to read because 22 of the line breaks. 23 It says, we also began work on a 24 combined MS-DOS/Windows product. 25 Answer: Right. 9520 1 Question: If you look over on page 2, 2 up near the top of the page there it says, the 3 combined MS-DOS/Windows product got underway in 4 November. A preliminary plan was presented to 5 Steve Ballmer. 6 MR. STEINBERG: It says Steve B. 7 Question: I'm sorry. Is Steve B. 8 Steve Ballmer? 9 Answer: Yes. Steve B. is Steve 10 Ballmer's E-mail name. 11 Question: Thank you. 12 Can you tell me what that project, 13 this combined MS-DOS/Windows product was? 14 Answer: I've completely forgotten 15 about this. I do not recall the specifics, 16 quite frankly. 17 Yeah, this was a project to do a 18 single install of MS-DOS and Windows. I 19 honestly do not recall the details of it. It 20 was not something that I put a lot of thought 21 and effort into. 22 Question: It wasn't something you 23 spent a loft time on? 24 Answer: No. I spent very little time 25 on that project. 9521 1 Question: Do you recall whose idea 2 the project was? 3 Answer: Yeah. This had been a 4 longstanding desire of Bill Gates to build a 5 combined product. 6 Question: Why, if you know? 7 Answer: I can't tell you why he 8 wanted to because I don't know. 9 Question: Did you talk to others 10 about reasons for doing the project? 11 Answer: Yes. 12 Question: Did you ever talk to Steve 13 Ballmer about it? 14 Answer: Yes, I believe so. 15 Question: What did he say to you 16 about it? 17 Answer: I don't think he ever 18 motivated -- I don't recall him specifically 19 motivating why it should be done. It was well 20 understood that it was important. 21 Personally, I believed it was 22 important because we wanted to do something 23 that was very simple for the user, the end 24 user. 25 Typically, you would have to install 9522 1 DOS in Windows, and we wanted the end user to 2 install it all at once. We also wanted the 3 OEMs to install it, and they didn't like having 4 to install two components. 5 So basically a customer benefit was 6 the reason that I recall. 7 MR. CASHMAN: Your Honor, may we have 8 a brief recess to correct some of the technical 9 issues? 10 THE COURT: We're close to the end of 11 the day so I'm going to let you have a full 12 recess, okay, because -- I notice there's some 13 glitches so why don't we take care of that. 14 I have to read some things to the jury 15 anyhow, okay. 16 MR. CASHMAN: Okay. Thank you. 17 THE COURT: Couple things, members of 18 the jury. 19 I have received two questions from 20 jurors, one regarding Mark Chestnut and the 21 other regarding Richard Freedman. 22 The Court informs you that the 23 questions can't be answered at this time and 24 does not know if they will be answered. 25 Also, as I stated I was going to do on 9523 1 every Friday, I'm going to read the admonition 2 to you. 3 So sorry if it's repetitive, but it's 4 a good idea, and we're going to take our recess 5 for the weekend. 6 We'll have you report back at 8:30 7 a.m. on Monday. 8 Under your oath as jurors in this 9 case, you are admonished that it is your duty 10 not to permit any person to speak with you on 11 any subject connected with the trial of this 12 case. 13 You are not to talk with any of the 14 parties, their attorneys, or witnesses during 15 the trial, even upon matters wholly unrelated 16 to this trial. 17 Should anyone try to discuss this case 18 with you or in your presence, you should not 19 listen to such conversation. You should 20 immediately walk away. 21 If any person should persist in 22 talking to you, try to find out their name and 23 report it immediately to the Court. 24 You also are admonished not to 25 converse among yourselves or with anyone, 9524 1 including family members, on any subject 2 connected with the trial of this case. 3 You should not form or express an 4 opinion on this case and you should keep an 5 open mind until you have heard all of the 6 evidence, the statements and arguments of 7 counsel, the instructions of the Court, and the 8 case is finally submitted to you and you have 9 been -- and you have retired to your jury room 10 to deliberate. 11 Not only must your conduct as jurors 12 be above reproach, but you must avoid the 13 appearance of any improper conduct. 14 You must avoid reading, listening to, 15 or watching news accounts of this trial, if 16 there should be any. 17 You also should avoid looking on the 18 Internet or on websites concerning matters 19 having to do with this trial or with the 20 parties. 21 Sometimes such accounts are based upon 22 incomplete information or contain matters which 23 would not be admissible in Court and could 24 unduly influence your ultimate decision. 25 You may not visit or investigate the 9525 1 scene of this occurrence unless directed to do 2 so by the Court. 3 I don't know why I keep adding that 4 in, but it's in there. 5 As a jury you are the judge of the 6 facts, while the Court is the judge of the law. 7 During the course of this trial, I 8 will be required to decide legal questions, and 9 before you leave to deliberate this case, the 10 Court will instruct you on the law you are to 11 follow in reaching your verdict. 12 You should give careful attention to 13 all of the testimony as it is presented to you, 14 for you will only hear it once and you must 15 depend upon your recollection of the testimony 16 when deliberating in your jury room. But, as 17 stated before, do not form an opinion and keep 18 an open mind until all of the evidence has been 19 received. 20 From time to time during the trial the 21 Court will be required to confer with the 22 attorneys upon points of law that require only 23 the consideration of the Court. These 24 conferences will be conducted outside the 25 presence of the jury. It is impossible to 9526 1 predict when these conferences will be required 2 or how long they may last. However, these 3 conferences will be conducted so as to consume 4 as little of your time as possible while still 5 being consistent with the orderly process of 6 the trial. 7 Also, from time to time during the 8 trial, the Court will be required to rule on 9 objections or motions of the lawyers. 10 You should not infer anything by 11 reason of the objection, nor may you infer 12 anything from the rulings on the objections or 13 that the Court has any opinion one way or the 14 other concerning the merits of the case. 15 If an objection to a question of a 16 witness is made and the objection is sustained 17 and the witness is not permitted to answer, you 18 should not speculate on what the answer may 19 have been nor may you draw any inference from 20 the question itself. 21 Additionally, until your jury room, 22 you must not refer to or give consideration to 23 any testimony which may have been given, but 24 then was stricken from the record by the Court. 25 Also, the lawyers in this case are 9527 1 under an obligation not to talk with you. Do 2 not consider them to be aloof if they do not 3 greet you outside of the courtroom. They are 4 merely abiding by their own rules of ethics and 5 the rules of the Court. 6 So at this time, hope you have a great 7 weekend. 8 Leave your notebooks here. We'll lock 9 them up. 10 We'll see you on Monday. Drive 11 safely. 12 All rise. 13 (The following record was made out of 14 the presence of the jury at 2:42 p.m.) 15 MS. NELLES: I have something very 16 brief, Your Honor, if I may. 17 I think when Mr. Cashman introduced 18 the deposition testimony of Mr. Barrett, he 19 incorrectly stated that the deposition was 20 taken on July 7 -- I'm sorry, July 31, 1997, 21 and it was actually taken on July 31 1998. 22 I completely understand why, because I 23 know there appears to be a typo in the first 24 page of this, but I was simply going to suggest 25 if -- 9528 1 Plaintiffs are certainly welcome to 2 check, though I'm confident I'm correct about 3 this, and that I thought probably the easiest 4 thing when they reintroduced or restarted the 5 testimony, they could simply restate the date. 6 I think the jury got it because it's date 7 stamped, but I think the record should be 8 clear. 9 THE COURT: Mr. Cashman, you can check 10 that if you want. On Monday you can check. 11 MR. CASHMAN: Yeah, we'll correct it. 12 I think Ms. Nelles is correct. 13 THE COURT: Okay. I'll try to make a 14 note of it on Monday. 15 You're not going to fire Darin, are 16 you? 17 MR. CASHMAN: No. 18 MS. NELLES: This one clearly was not 19 Darin's fault. 20 In fact, I'm under the impression 21 nothing was Darin's fault. 22 THE COURT: Very well. 23 Let's see, I think we got 24 Mr. Tuggy coming over. 25 MR. TULCHIN: Maybe Mr. Holley. 9529 1 MR. CASHMAN: Holly first to argue one 2 issue related to Mr. Harris. 3 For us, Mr. Williams will argue that. 4 MR. TULCHIN: I think they may be 5 expecting to start at 3, Your Honor. I know 6 we're a little early, but you could use the 7 break. 8 THE COURT: Fine with me. 9 I'll take a break. 10 (A recess was taken from 2:44 p.m. 11 to 3:01 p.m.) 12 MR. WILLIAMS: I guess Mr. Tuggy is 13 getting a transcript for the Court. We each 14 have a copy. Your Honor does not have a copy. 15 There's probably ten pages at the most 16 that we're talking about here. So if you want, 17 we could just get a copy for you here and you 18 could have it in front of you rather than 19 wait for a -- 20 THE COURT: She can make one. 21 MR. HOLLEY: Or, Your Honor, I think I 22 can look at Mr. Tuggy's. 23 MR. WILLIAMS: You guys have two? 24 THE COURT: Carrie, can you make a 25 copy? 9530 1 MR. HOLLEY: Actually, if you could 2 use Mr. Williams' copy because this one I'm 3 afraid isn't going to be legible. 4 THE COURT: Do you have a ruling chart 5 with it or do I need one? 6 MR. WILLIAMS: I have one to hand up, 7 Your Honor. There you go. 8 THE COURT: Are these appeals by both 9 sides or just one? 10 MR. TUGGY: Just an objection by 11 Plaintiffs. 12 THE COURT: Objection by Plaintiffs? 13 MR. WILLIAMS: By Plaintiffs, right. 14 THE COURT: Okay. I'm on page 107. 15 MR. WILLIAMS: Your Honor, I'll lead 16 off. Kent Williams for the Plaintiffs. 17 What we have at issue here is 18 testimony of Mr. Adam Ralph Harris that is 19 going to be shown to the jury. 20 And at issue is a portion of the 21 cross-examination of Mr. Harris that Microsoft 22 has designated and wants to have played for the 23 jury, as well. 24 The portion that's at issue is at page 25 107. It starts at line 4 with the in fact 9531 1 question. 2 If Your Honor wants me to read this 3 into the record, I can. It's relatively short. 4 But if you read through it, you can see that 5 what's being asked about here -- or what the 6 issue is, there was a DR-DOS license to this 7 company, the company at issue and -- which was 8 called Opus. It's an OEM. 9 There was a DR-DOS license that was a 10 per processor type of license and there was 11 also a Windows/MS-DOS license. 12 They covered both over the course of 13 time as additional amendments were made to it. 14 And the point that's being made in 15 cross-examination is that the DR-DOS license 16 had an exclusion in that per processor license, 17 which said you don't have to put DR-DOS on a 18 processor if the customer specifically requests 19 you not to do so. 20 And the question that's being elicited 21 or that's being asked and the answer that's 22 being elicited has to do with Windows, and it 23 says, didn't Microsoft give you the same sort 24 of exclusion from the Windows license that DRI 25 had given you on the DR-DOS contract? 9532 1 You can see that picks up at line 4. 2 And the witness for Opus answers, you 3 have lost me. 4 And then the question is, you remember 5 the DR-DOS contract had an exclusion that you 6 were to put DR-DOS on every single machine that 7 you sold of the types covered by the contract 8 unless the customer said they did not want it? 9 Answer: Correct. 10 Question: You negotiated the exact 11 same exclusion for Windows in this contract. 12 Do you recall that? 13 Answer: No, I do not. 14 Then the part that would be shown to 15 the jury picks up again at line 24. 16 Question: That is the same provision 17 that you got out of DRI and you negotiated that 18 with Mr. Duncan at Microsoft? 19 Answer: For six months, yes. 20 Question: In fact, you got the same 21 exclusion when you extended the license, did 22 you not? 23 Answer: I can't remember. 24 And the last portion, Your Honor, is 25 on page 109 at line 21. 9533 1 Question: With respect to the Windows 2 license, it is fair to say, is it not, that the 3 terms of that license parallel the terms of the 4 DRI license for DR-DOS in the sense that you 5 were to install the product on all your 6 computers except for those where there is an 7 exclusion? 8 Answer: Yes, I agree. 9 So that's the testimony at issue. 10 Our objection to this testimony, Your 11 Honor, is based on Rule 403. That is, that any 12 privilege -- and there is privilege -- 13 outweighs any relevance, and the relevance we 14 submit to Your Honor is nil, and here's the 15 reason why. 16 Later in his testimony -- and we also 17 have those pages before Your Honor. 18 Later in his testimony, Mr. Harris 19 says, well, the exclusion to the per processor 20 license for -- that Microsoft got was for 21 Windows and it was the Windows 3.1 product, 22 which was essentially a GUI, not an operating 23 system. 24 And it's made clear in these other 25 pages that Microsoft never gave Opus the 9534 1 customer specific request exclusion for MS-DOS. 2 Windows 3.1 is not a substitute for 3 DR-DOS or for MS-DOS. It's not an operating 4 system. 5 So we submit to Your Honor that the 6 reason for which Microsoft wants to show this 7 testimony to the jury, which is the notion, of 8 course, that everybody's doing it, DRI did it, 9 just like we did it, is not valid because this 10 has to do with something other than an 11 operating system. 12 DRI did it for an operating system. 13 Microsoft did it for a GUI, but specifically 14 did not do it for an operating system. 15 And it was MS-DOS and DR-DOS that were 16 competing with each other. 17 And, Your Honor, the specific 18 testimony I can point you to that bears that 19 out is at page 120, starting at line 15. 20 THE COURT: Are you saying that where 21 it starts page 120, line 15, it explains the 22 prior testimony? 23 MR. WILLIAMS: It explains that the 24 exclusion that was applicable to the Microsoft 25 license was limited to Windows and did not 9535 1 apply to MS-DOS. 2 THE COURT: Okay. 3 MR. WILLIAMS: So we submit, Your 4 Honor, that for that reason the testimony that 5 Microsoft wants to get in is not relevant and 6 runs the risk of jury confusion. 7 And, in fact, that's borne out by the 8 fact that it's so obscure the witness didn't 9 even recall it at first and had to explain 10 that, oh, that's right, that had to do with 11 Windows, not MS-DOS. 12 And he makes that clear in this 13 testimony, as well. 14 THE COURT: Okay. 15 Response? 16 MR. HOLLEY: Yeah, just initially, 17 Your Honor, the original objection which I 18 guess the Plaintiffs are withdrawing was that 19 this testimony violated the Court's in limine 20 ruling, and, of course, it doesn't for the 21 reasons that the Court stated on the 11th of 22 January, which is that there's nothing illegal, 23 nor has there ever been anything found to be 24 illegal, about per processor licenses. 25 And so the fact that other people 9536 1 engaged in exactly the same licensing practices 2 goes to what is common practice in the 3 industry, which is relevant to Microsoft's 4 defense under Preliminary Instruction Number 8. 5 On the 403 objection, it is 6 Plaintiffs' assertion, or at least I always 7 understood it to be Plaintiffs' assertion, that 8 per processor licenses have exclusionary 9 effects. 10 And one of Microsoft's answers to 11 that, not our principal answer, but one answer 12 to that is that OEMs that asked got exclusions 13 from -- for particular machines where they 14 didn't have to pay for Microsoft operating 15 systems. 16 Now, I don't know what DRI provided, 17 but it's important to bear in mind that 18 Microsoft's licenses never required OEMs to 19 install Microsoft operating systems on any of 20 their machines. 21 This was simply a license agreement 22 that gave OEMs the right to install, but 23 imposed no obligation whatsoever to install on 24 any machines. 25 And these exclusions did exist. Opus 9537 1 had one of them. 2 And the distinction between MS-DOS and 3 Windows is not a valid one. By the time 4 Windows 3.1 rolled around -- and the evidence 5 will show this quite clearly -- 99 percent of 6 the functionality of the operating system was 7 residing in Windows 3.1. MS-DOS was nothing 8 but a trivial boot loader. The real operating 9 system was Windows 3.1. 10 Our technical experts will explain 11 that, Mr. Alepin grudgingly accepted that 12 proposition. 13 The kernel of the operating system is 14 Windows 3.1. That's where the file system is. 15 That's where the scheduler is. That's where 16 all of the important functions of the operating 17 system reside. 18 So this distinction that Plaintiffs 19 are seeking to draw that Windows 3.1 was not an 20 operating system and, therefore, somehow this 21 exclusion is irrelevant is based on a factual 22 misunderstanding. 23 So for that reason, Your Honor, we 24 don't think there's any prejudice whatsoever 25 and the relevance is clear. 9538 1 One of the things that the jury should 2 bear in mind in determining whether or not 3 there was an exclusionary effect of per 4 processor licenses is whether OEMs got 5 exceptions or exclusions, and this testimony 6 shows that they did. 7 THE COURT: Anything else on this, 8 Mr. Williams? 9 MR. WILLIAMS: Yes, Your Honor, a 10 couple of things. 11 First of all, we did not concede or 12 abandon our original objection, Your Honor. 13 We submit to you that this does run 14 afoul of the Court's in limine ruling which was 15 that the defense of everybody's doing it will 16 not be allowed, but that you would decide that 17 on an issue-by-issue basis. We submit to you 18 this is one of those issues because essentially 19 that's what they're saying broadly, is 20 everybody's doing it. 21 And, you know, we heard a little bit 22 of mincing of words over specifically what was 23 required of the OEMs and what they could and 24 could not do. 25 The fact and the import of all of 9539 1 this, of course, is that the OEMs had to pay 2 Microsoft a fee regardless of whether or not 3 they installed MS-DOS in the machines, and 4 that's the point of all this testimony at its 5 most fundamental level. 6 Furthermore, Your Honor, with respect 7 to the functionality, if you will, of Windows 8 3.1, the fact it didn't work without MS-DOS, 9 it's not a substitute for MS-DOS, but MS-DOS 10 and DR-DOS were interchangeable. Those were 11 the competing products. 12 I don't want to repeat myself, Your 13 Honor. 14 That's the distinction that we're 15 drawing. That's why we're saying here what 16 they're really asking for is an everybody's 17 doing it sort of a proffer for the relevancy of 18 this testimony. We submit it doesn't fit under 19 this circumstance. 20 THE COURT: Okay. Anything else on 21 this one? 22 MR. HOLLEY: No. Just remind the 23 Court of what Trace X Chemical against Canadian 24 Industries Limited said, the Eighth Circuit 25 case which is most directly on point, which is 9540 1 that monopolists like every other company are 2 free to engage in, quote, ordinary business 3 practices typical of those used in a 4 competitive market, closed quote. 5 And that's what we believe this 6 evidence shows, and that's what the jury needs 7 to determine under Instruction Number 8. 8 THE COURT: Anything else? 9 MR. WILLIAMS: Nothing further, Your 10 Honor. 11 THE COURT: Okay. I'll take it under 12 -- you need to know by Monday; is that right? 13 MR. HOLLEY: I think it may well be, 14 Your Honor, that Plaintiffs are planning on 15 having Mr. Bradford on Monday and suspending 16 the playing of things for a while, but I don't 17 know exactly -- 18 MR. CASHMAN: That's possible, yes, 19 Your Honor. 20 THE COURT: You're going to suspend 21 who? Mr. Barrett? 22 MR. CASHMAN: Just until Bradford is 23 finished because that's a live witness. 24 THE COURT: Bradford is a live 25 witness? 9541 1 MR. CASHMAN: Right. 2 MR. WILLIAMS: Monday is fine, Your 3 Honor. 4 THE COURT: So you can get Harris 5 ready? Is this your depo you're going to play, 6 Harris? 7 MR. WILLIAMS: Yes, it's ours. 8 I believe Monday would be fine. 9 THE COURT: You sure? 10 MR. WILLIAMS: No, but I believe it's 11 okay. 12 THE COURT: I could fax it to you. 13 I've got all the E-mail numbers. 14 MR. HOLLEY: Your Honor, I don't think 15 we need to impose on the Court on some rush 16 basis. 17 THE COURT: I'm going to be working 18 anyhow. 19 I didn't put down -- Kent Williams, 20 what's your E-mail? Sorry. 21 MR. WILLIAMS: Classcert, 22 c-l-a-s-s-c-e-r-t. 23 THE COURT: Hold it. C-l-a-s-s -- 24 MR. WILLIAMS: C-e-r-t@aol.com. 25 THE COURT: What's classcert? 9542 1 MR. WILLIAMS: You should know by now. 2 MR. HOLLEY: There were a lot of 3 Plaintiffs' lawyers fighting for that one, Your 4 Honor. 5 THE COURT: Just do the classcert? 6 MR. WILLIAMS: Classcert@aol.com. 7 THE COURT: All right. And Mr. 8 Holley. 9 MR. HOLLEY: It's H-o-l-l-e-y, s as in 10 Sam, @s-u-l-l-c-r-o-m.com. But if you send it 11 to Mr. Neuhaus. 12 THE COURT: Holleys? 13 MR. HOLLEY: Holleys@sullcrom.com. 14 THE COURT: You used your last name 15 first? 16 MR. HOLLEY: Yeah. Doesn't make any 17 sense, but that's the way the IT guys did it. 18 THE COURT: Okay. I'll do that. 19 MR. HOLLEY: Thank you, Your Honor. 20 MR. WILLIAMS: Thank you, Your Honor. 21 MR. HOLLEY: Your Honor, may I be 22 excused because that was my cameo experience? 23 THE COURT: Yeah. 24 MR. WILLIAMS: May I be excused, as 25 well? 9543 1 THE COURT: All right. You guys 2 leaving town? 3 MR. HOLLEY: No. I'm here for the 4 weekend, Your Honor. 5 MR. WILLIAMS: As am I. 6 THE COURT: All right. 7 MR. HOLLEY: Nice to see you, Your 8 Honor. 9 THE COURT: Good to see you. Take 10 care. 11 Tuggy versus Cashman. 12 MR. CASHMAN: Your Honor, I have one 13 matter that I'd like to take up with the Court 14 before we go back to Mr. Dixon, and this is 15 back to the 3,160 exhibits that were admitted 16 without objection -- 17 THE COURT: Yes. 18 MR. CASHMAN: -- I think at the 19 beginning of the week. The Court may recall 20 that. 21 THE COURT: Yes. 22 MR. CASHMAN: But subsequent to that 23 order, we received from Microsoft, from 24 Mr. Tuggy specifically, a list of exhibits 25 which Microsoft claims is -- are confidential, 9544 1 55 exhibits, and then yesterday they filed a 2 motion with the Court to -- because it's their 3 burden to establish that these are commercially 4 sensitive documents under the Court's January 5 8, 2007 order. 6 THE COURT: Yes, sir. 7 MR. CASHMAN: And I think now we have 8 a copy of Microsoft's motion, and I'm going to 9 hand it up to the Court -- a copy of it up to 10 the Court. 11 THE COURT: Okay. 12 MR. CASHMAN: Plaintiffs submit that 13 Microsoft's motion fails as a matter of law on 14 its face. That is just blatantly insufficient 15 to satisfy their burden under the Court's order 16 and under the applicable law. 17 The Court's order of January 8, 2007, 18 stated, quote, either party may request that 19 the Court pursuant to protective order or 20 Section 22.7 of the Code of Iowa make any 21 further orders necessary to protect trade 22 secrets or financial information as set out in 23 Sections 22.73 and 25 of the Code of Iowa, 24 closed quote. 25 We think that this motion, as I 9545 1 stated, is just wholly insufficient, and the 2 basis for our contention is not only how 3 obvious it is on its face, but the Iowa Supreme 4 Court has interpreted the Section 22.7 to, 5 quote, impose a presumption in favor of 6 disclosure and to give a narrow interpretation 7 to statutory exemptions from disclosure, closed 8 quote. Such as those for trade secrets and 9 financial information. 10 This case that I'm citing is US West 11 Communications versus Office of Consumer 12 Advocate, 498 N.W. 2d 711. The jump cite is to 13 713. That's an Iowa Supreme Court case from 14 1993. 15 There are other Iowa cases on this as 16 well, but most importantly, that case and 17 others like it show that the burden on a party 18 seeking confidential status like Microsoft is 19 substantial, and in that context, under the 20 case, Microsoft is not anywhere close to 21 satisfying that burden. 22 Microsoft did not put in any evidence 23 whatsoever to support its claims of 24 confidentiality. 25 They have nothing more than bald 9546 1 attorney argument. 2 And that's not enough to satisfy their 3 burden to establish the applicability of the 4 narrow exclusions in Iowa Code 22.7; in 5 particular, US West Communications, when it 6 concluded in that case, that the movant's 7 burden had not been satisfied to establish 8 trade secret. 9 There they noted, quote, while 10 affidavits and testimony by West and its 11 subsidiary employees provide opinions 12 concerning the deleterious effects disclosures 13 will have on Wester's affiliates, such evidence 14 is self-serving and does not contain hard 15 facts, closed quote. 16 That's 498 N.W. 2d at 715. 17 I have a copy of the US West 18 Communications case for the Court. 19 THE COURT: Thank you. 20 MR. CASHMAN: So in the US West 21 Communications case, the movant supplied some 22 affidavits, and the Court in the -- the Iowa 23 Supreme Court concluded that the affidavits 24 were self-serving and insufficient to meet the 25 burden imposed under Iowa law to establish 9547 1 confidentiality. 2 Here in contrast, Your Honor -- and 3 you can see this from Microsoft's motion on its 4 face -- they didn't even supply any affidavits. 5 Nothing. Zero. 6 And the Plaintiffs submit that is a 7 failure on its face by Microsoft to even create 8 a justiciable controversy, and therefore the 9 Plaintiffs request that Microsoft's motion on 10 confidentiality be summarily dismissed so that 11 the Plaintiffs may display these 55 documents 12 pursuant to the Court's January 7, 2007 order. 13 Thank you. 14 THE COURT: Did I get a disk of these? 15 I think I did, didn't I? 16 Those 3,000 exhibits were admitted on 17 the 16th, weren't they? 18 MR. TUGGY: Correct, Your Honor. 19 MR. CASHMAN: Of those 55, Microsoft 20 gives -- makes conclusory claims of 21 confidentiality. 22 THE COURT: I'm trying to figure out 23 which disk has it. Would it be the disk that's 24 labeled 1 through 9876? 25 MR. CASHMAN: No, they have -- they 9548 1 have 55. 2 THE COURT: I understand. There's a 3 disk that has all of them on it, all 3,000. 4 MR. CASHMAN: That's not what's at 5 issue, Your Honor, and so that's not the 6 correct disk, I don't believe. 7 Microsoft lists -- 8 THE COURT: You misunderstand my 9 question. 10 MR. CASHMAN: Oh, I'm sorry. 11 THE COURT: You introduced on the 16th 12 and was admitted 3,000 exhibits. 13 MR. CASHMAN: Correct. 14 THE COURT: Of those 3,000 exhibits, 15 are these ones that you -- that were admitted, 16 subject to your motion? 17 MR. TUGGY: Yes, Your Honor. 18 THE COURT: So they would be on the 19 disk that has the 3,000 exhibits; is that 20 right, Mr. Cashman? 21 MR. CASHMAN: They would be on that 22 disk, yes, Your Honor. 23 THE COURT: Okay. That's all I wanted 24 to know. So I could go to them right on this 25 disk. 9549 1 I think this is the right one, but I'm 2 not sure. It ends 9876; is that right? 3 MR. CASHMAN: Well, let me make the 4 Plaintiffs' position clear. 5 We're asking that the motion -- that 6 Microsoft's motion that was filed yesterday be 7 denied summarily because it's so blatantly 8 insufficient. 9 If the Court actually thinks it's 10 necessary to look at the particulars of these 11 exhibits, then the Plaintiffs would like to 12 address on the merits. But here's the problem, 13 Your Honor. 14 When Microsoft has failed to put forth 15 any evidence whatsoever or even really any 16 substantive argument, there's nothing for 17 Plaintiffs to respond to. 18 They haven't met their burden, so it 19 hasn't even shifted to Plaintiffs for them to 20 make a meaningful response. 21 So I think that this request can be 22 decided by looking at the Microsoft motion and 23 its insufficiency as a matter of law, its 24 inadequacy as a matter of law. 25 Under the US Communications case, and 9550 1 there are number of Iowa cases that establish 2 that the burden which has to be established is 3 much higher than what Microsoft has done in its 4 papers submitted yesterday. 5 THE COURT: So what you're just saying 6 is on the face of the filing, it's insufficient 7 without affidavits and such? 8 MR. CASHMAN: That's correct, Your 9 Honor. 10 THE COURT: Mr. -- who wants to talk 11 about it? 12 MR. TUGGY: Your Honor, I'll respond. 13 First, I object to argument by ambush 14 such as this. 15 We came here to argue Mr. Dixon's 16 designations, and Microsoft has submitted this 17 motion in due course in compliance with your 18 order. The Plaintiffs ought to respond in 19 writing, and Microsoft in a regularly or 20 properly noticed hearing can address these 21 issues. 22 This is not -- this is a side show. 23 This is not -- does not relate to the conduct 24 of this trial. It relates to whether certain 25 evidence that is not shown to the jury and has 9551 1 not been discussed in the trial may be loaded 2 by Plaintiffs on their website. 3 And the case that they cite to the 4 Court is a case where the press has requested 5 access to information to which they have a much 6 stronger public interest than the Plaintiffs 7 have in posting on their own website these 8 particular exhibits. 9 And as the cases we cite indicate, the 10 question of whether protection ought to apply 11 is a balancing test, particularly when it 12 involves documents submitted to Court. 13 What we have provided to you is those 14 that we believe require protection. You have 15 copies of the exhibits themselves. 16 We had 48 hours to do this work. It 17 would be a physical impossibility to obtain 18 affidavits and declarations regarding such a 19 huge volume of material. 20 We've objected to only 55 out of 21 3,000. We've submitted a motion in compliance 22 with your order in the time frame there and we 23 believe properly under the law. 24 And for that reason, Microsoft's 25 position is that this ought to be handled in a 9552 1 way that is not trial by surprise or by ambush, 2 but that we be permitted to review and respond 3 to the authorities Plaintiffs have cited. 4 THE COURT: I'm going to set a hearing 5 date on it, okay? 6 MR. TUGGY: Thank you, Your Honor. 7 THE COURT: Let's move on to Dixon, 8 please. 9 MR. CASHMAN: Your Honor, I believe 10 that -- 11 THE COURT: Where were we? 12 MR. CASHMAN: Mr. Tuggy it appeared 13 elected to go back to the line-by-line approach 14 on the Dixon appeal. 15 So the last one that he talked about 16 was Plaintiffs 337, 6, to line 21. 17 THE COURT: Okay. Did you finish your 18 arguments on that, Mr. Tuggy? 19 MR. TUGGY: I did, Your Honor. Thank 20 you. 21 THE COURT: You did? Okay. 22 MR. TUGGY: Yes, I did. 23 THE COURT: Do you want to respond? 24 MR. CASHMAN: All I'm simply going to 25 say is that the statement here is not hearsay 9553 1 as Mr. Tuggy alleges. There is no statement. 2 What is happening here is simply 3 Mr. Dixon is describing how he came into the 4 possession of information that formed part of 5 the basis of his personal knowledge. 6 It's admissible, Your Honor. 7 THE COURT: Which one did you want to 8 discuss next, Mr. Tuggy? 9 MR. TUGGY: Next designation at issue 10 is at page 340, line 17. 11 THE COURT: That's what I have too. 12 Good, we're on the same page. 13 MR. TUGGY: Here Mr. Dixon is asked, 14 beginning at line 17, whether Microsoft either 15 engaged in or threatened to engage in 16 retaliation against customers who used DR-DOS, 17 and the question asked by the examiner was, 18 quote, was that reported to you by customers 19 ever, end quote. 20 And the answer is, yes, it was. 21 And then the questioner asked 22 Mr. Dixon to give the jury some examples of 23 customers who had said that, and he gave 24 examples of Trigem and Compal. 25 The Special Master sustained 9554 1 Microsoft's hearsay objection, and it is clear 2 from the question that was asked, which was is 3 the fact that Microsoft said this something 4 that was reported to you by customers. 5 So he's reporting on an out-of-court 6 statement, and that is in the question itself, 7 and it is also within prior testimony by this 8 witness shown through Microsoft's 9 cross-examination that this was not information 10 that Mr. Dixon heard from Microsoft either by 11 way of documents or by way of statements from 12 Microsoft. 13 The retaliation about which Mr. Dixon 14 is speaking, as we'll see here, is that he says 15 Microsoft told OEMs that if they purchased 16 DR-DOS, then the OEMs could not attend 17 conferences or get technology from Microsoft, 18 and that type of information is information 19 that Mr. Dixon learned only from statements by 20 individuals at OEMs. 21 At page 219, which is in Volume I of 22 the deposition, lines 7 to 25, Microsoft 23 examined this witness about his personal 24 knowledge on these facts. 25 Question was asked: Are you 9555 1 personally aware of any -- have you ever heard 2 Microsoft indicate that they weren't going to 3 invite somebody to a seminar or offer them 4 something because of their having contracted 5 with DR-DOS or DRI? 6 Answer: Yes. 7 Question: Who? 8 Answer: Trigem, Hope, DTK, Compal, 9 which are -- which were later identified in 10 questions and answers we just discussed. 11 Question: Are those all you can 12 recall? 13 Answer: That's all I recall. 14 Question: Did you ever witness anyone 15 from Microsoft saying that they weren't going 16 to invite Trigem, Hope, DTK or Compal to any 17 conference because they were contracting? 18 Answer: I did not. 19 Question: Okay. Have you ever seen 20 any document from Microsoft indicating that any 21 of these four companies would not be invited to 22 seminars or presentations because of their 23 affiliations with DTK? 24 Answer: Did not. 25 So these -- this evidence is based 9556 1 solely on statements by customers, and that was 2 what the question that was asked was, and that 3 was the nature of the witness' response. And 4 as a result, the testimony, which is this is 5 something Microsoft told OEMs, is hearsay 6 because he's only reporting what OEMs told him, 7 and the Special Master's ruling should be 8 sustained. 9 THE COURT: So you're covering 341, 3 10 to 21 also, or not? 11 MR. TUGGY: 341, 3 to 21. 12 THE COURT: Isn't that part of it too? 13 MR. TUGGY: That's different because 14 for that section the Special Master overruled 15 Microsoft's hearsay objection. 16 THE COURT: Okay. 17 MR. TUGGY: So the first section, the 18 Special Master sustained it, and Microsoft 19 requests that that ruling be affirmed. 20 As for the overruled testimony, it is 21 directly related. 22 And I'd like to discuss what I think 23 occurred here and why the Special Master's 24 ruling here should be reversed. 25 MR. CASHMAN: May I respond to 340, 9557 1 17, to 341, 2, before we move on? 2 THE COURT: Sure. For clarification, 3 341, line 3 to 21 is what you want admitted? 4 MR. TUGGY: No, that's something the 5 Plaintiffs have designated. Our objection was 6 overruled. 7 THE COURT: Okay. 8 MR. CASHMAN: Your Honor, Plaintiffs 9 appealed number 18 on the -- the materials that 10 I gave you this morning, it's the last page of 11 the Plaintiffs' Dixon appeal, number 1 through 12 18, last page. 13 You can see the testimony that's 14 directly at issue. 15 And the first question is -- the first 16 question is whether it was ever reported to 17 Mr. Dixon that Microsoft had engaged in or 18 threatened to engage in retaliation against 19 customers who used DR-DOS. 20 That's a factual, clearly a personal 21 knowledge question. 22 Yes, there's no statement there. 23 There is no statement of an out-of-court 24 declarant that's being offered for its truth. 25 That's just a simple matter of whether it was 9558 1 ever reported. 2 Give the jury some examples of what 3 customers told you Microsoft was doing or 4 threatening to do to them if they used the 5 product. 6 Now, if the witness had gone on and 7 said, quote, Mr. So-and-So said, quote, blah, 8 blah, blah, that might be hearsay, but what he 9 did is he gave examples of customers; Trigem in 10 Korea and in Taiwan Compal and DTK. 11 He's not citing any statements. All 12 he's doing is identifying the companies where 13 he was aware that threats of retaliation had 14 been made. 15 Now, that's just ordinary personal 16 knowledge. 17 As I think we heard testimony from 18 Mr. Freedman today, which emphasizes that this 19 is the kind of stuff that any businessman would 20 know, there was a question of Mr. Freedman 21 about one of his issues, and he said, quote -- 22 this was at 199, lines 3 to 4. 23 He said, quote, I always kept track of 24 DR. That was part of my job, to keep track of 25 what his competition was doing through his 9559 1 customers. That's who he dealt with, OEM 2 customers. 3 That's just the same thing that 4 Mr. Dixon is doing, and that's personal 5 knowledge. 6 There is no hearsay here under Iowa 7 law and the Special Master should be overruled 8 and the Microsoft objection should be 9 overruled. 10 And the last comment by the Court and 11 based on the comments this morning, I prepared 12 over the course of the day a chart that makes 13 it clear what we think the rulings should be, 14 and I can hand that up to the Court. 15 It just simply points out which 16 appeals are ours and which testimony we think 17 should be admissible. 18 I'm going to show this to Mr. Tuggy. 19 And as the Court will see, the last 20 several appeals of Microsoft's testimony as 21 I've indicated, I think the rulings should be 22 consistent, so I've left those blank so that 23 whatever way the Court rules, the rulings on 24 the Microsoft appeals should be consistent with 25 the appeals of our testimony. 9560 1 THE COURT: Okay. Thank you. 2 MR. TUGGY: If I may say, Your Honor, 3 I prefer that the rulings continue to be made 4 on the rulings chart as they've been done as 5 opposed to that list just handed up. 6 THE COURT: Anything else on this one 7 before we move to your appeal on page 341? 8 MR. TUGGY: Nothing further. 9 MR. CASHMAN: Nothing further, Your 10 Honor. 11 THE COURT: Please go to 341 then. 12 Line 3, right? 13 MR. TUGGY: Line 3, correct, Your 14 Honor. 15 Here the questioner is following up on 16 his prior questions about what Microsoft told 17 these OEMs, which Plaintiffs are offering for 18 the truth. 19 And the question was, what would 20 Microsoft do to them? 21 So the -- and the answer at the 22 beginning, at lines 4 to 9, Mr. Dixon 23 testifies, well, you know, obviously they were 24 in a very strong position with their customers 25 and didn't want to lose any of their customer 9561 1 base. 2 So by advising them that they -- if 3 they were to license from Digital Research, 4 that they would not be permitted to see future 5 technologies from Microsoft was one method of 6 threat. 7 Then he describes how he learned this 8 at lines -- line 10. I learned this because 9 they would discuss it with us in open meetings. 10 Now, when this work was done by the 11 Special Master, he was given the transcript of 12 the objections and he ruled reading through 13 them. 14 We didn't have as much line-by-line 15 argument as we're having now on the appeals. 16 And in my view, because of the 17 ambiguous term they that I just read -- this is 18 at line 10 -- I believe the Special Master 19 thought they referred back to Microsoft. 20 All right. So the answer is at line 21 10, and I learned this because they would 22 discuss it with us in open meetings. 23 Now, certainly if Microsoft had been 24 in open meetings with Mr. Dixon present and 25 stated a threat such as this, that would not be 9562 1 hearsay. That would be within the personal 2 knowledge of the witness. 3 And I learned this because they would 4 discuss it with us in open meetings, according 5 to Mr. Dixon, regarding how we would license in 6 the future, what technologies we would bring 7 out, are we going to have a similar kind of 8 product to Windows. If they weren't able to 9 get Windows from Microsoft, if they were to 10 license from us and describe the concerns that 11 they have, that they would be shut out of 12 seminars and so forth. 13 And, in fact, they were. They did 14 license from us and they were shut out of 15 seminars. They did lose their beta sites. And 16 it was not just a threat, it was actually 17 taking place. 18 And, of course, everybody in the 19 community understood that, and it became a very 20 successful tactic. 21 This information that Mr. Dixon is 22 reporting here makes it appear as though it was 23 something he heard from Microsoft, but in fact, 24 in prior testimony, Mr. Dixon makes it clear 25 that he did not hear that from Microsoft. 9563 1 And that's at page 143, line 21 of 2 Mr. Dixon's testimony where the examiner asks, 3 let me ask one other question that I realized 4 that I might have asked before, which is, in 5 talking about the allegations that you're aware 6 of about Microsoft and its conduct, have you 7 ever seen anyone from Microsoft tell a customer 8 or threaten a customer in any way if that 9 customer were to use DR-DOS as an operating 10 system? 11 Answer: Never. 12 Question: Have you ever seen a 13 document, a Microsoft document in which a 14 threat is made to an OEM or any other customer 15 if that customer were to use DR-DOS as opposed 16 to any other operating system? 17 Answer: A Microsoft document? 18 Question: Yes. 19 Answer: I don't recall. 20 So Mr. Dixon makes it clear in other 21 testimony that he never heard a Microsoft 22 threat. And for that reason, this information 23 he's providing here about what Microsoft 24 reportedly said to OEMs and did to OEMs is 25 based upon what the OEMs told him, not based 9564 1 upon something that he heard from Microsoft, 2 which his answer appears to imply. 3 And for that reason, Microsoft 4 requests that the Special Master's ruling -- 5 that its appeal be granted and that its 6 objection that this is not based on personal 7 knowledge, but based instead on secondhand 8 information, be sustained and the Special 9 Master's ruling be reversed. 10 THE COURT: Mr. Cashman? 11 MR. CASHMAN: My only comment, Your 12 Honor, is that the testimony should be 13 considered on its own. 14 It's clear that it's personal 15 knowledge. And I think the basis for our 16 position has been clearly stated already. 17 There's nothing further that needs to be said. 18 THE COURT: Very well. 357, line 24. 19 MR. TUGGY: Today I was able to 20 confirm with Plaintiffs that the paragraph of a 21 document that was at issue in this testimony 22 has been redacted by agreement such that 23 Microsoft is now willing to withdraw this 24 appeal. 25 So we withdraw the appeal. 9565 1 THE COURT: On 357? 2 MR. TUGGY: On 357, 24, to 358, 7. 3 THE COURT: Because it's been 4 redacted? 5 MR. TUGGY: Yeah. What happened was, 6 is there was testimony where the witness was 7 shown a document and it was said read the 8 paragraph, is that accurate. So I would expect 9 that paragraph to be shown. 10 The paragraph contained information 11 about activity by the Korean FTC, and the 12 Plaintiffs had agreed to redact that. So if 13 they show the other part of the paragraph in 14 this testimony, Microsoft withdraws its appeal. 15 THE COURT: Okay. So I don't have to 16 rule on that one? 17 MR. TUGGY: Correct, Your Honor. 18 THE COURT: Okay. 141. 19 MR. TUGGY: Yes, Your Honor. 20 These are cross designations by 21 Microsoft relating to two documents. The cross 22 designations can be grouped. 23 The first three cross designations 24 actually on the chart I received from 25 Plaintiffs, they were numbered 2, 3, and 4. I 9566 1 don't think there's a number 1, is there? 2 THE COURT: I'm sorry? 3 MR. CASHMAN: I think there are 4, 5, 4 and 6. 5 THE COURT: Starts at number 4, I 6 think. 7 MR. TUGGY: The chart I have -- 8 THE COURT: 141, line 3 to 8? 9 MR. TUGGY: Yes. Mine says number 2. 10 So rather than referring to the numbers, the 11 page line references, 141, 3 to 8; 141, 16 to 12 17; and 142, 6 to 22 all relate to PX 33. 13 And I'd like to discuss these three 14 items of testimony and these three segments as 15 a single whole because they relate to the same 16 issue in this exhibit. 17 PX 33 -- at page 141 of the 18 transcript, at line 3, the witness is asked 19 about what PX 33 is, and the witness answers 20 that it's a letter from Wearnes Technology. 21 I'd like to provide -- actually, you 22 have a copy of this exhibit that Plaintiffs 23 provided to you this morning, but I have 24 another copy if you need it. 25 THE COURT: I've got it. Got it right 9567 1 here. Okay. 2 MR. TUGGY: Now, the Plaintiffs for 3 the first time, actually 10 o'clock last night, 4 asserted a hearsay objection to this document 5 arguing that it's similar in nature to what 6 Microsoft has contended is hearsay and so these 7 ought to be treated consistently. 8 I'll argue how it's so much different 9 than Microsoft's, but a little bit more 10 background I think is important. 11 PX 33 is an already admitted exhibit. 12 And when Plaintiffs submitted their 13 3,000-plus exhibits to the Court, this is one 14 on their exhibit list which Microsoft had no 15 objection, and the Plaintiffs moved it into 16 evidence without objection, either by them 17 because it's their own motion to bring it into 18 evidence, or Microsoft, and there was no 19 limitation on this document. 20 I'll hand up the chart that Plaintiffs 21 provided -- actually only the first page of it. 22 It's a 61-page chart of these 3,000-plus 23 exhibits where PX 33 is listed. And it's the 24 exhibit that we're discussing at this point. 25 THE COURT: Thank you. 9568 1 MR. TUGGY: So what we're discussing 2 in this testimony is an already admitted 3 exhibit that Plaintiffs have conceded relevant, 4 and the question is whether this testimony 5 about the exhibit ought to also be allowed so 6 that the jury can understand the exhibit that's 7 been admitted. 8 Now, the exhibit here, this Wearnes 9 Technology letter, I think Mr. Cashman said 10 that it wasn't written to or by Mr. Dixon, but 11 as you can see from the face of the letter and 12 a handwritten note, a copy was sent to Dick 13 Dixon, which he acknowledges in his deposition. 14 In this letter, in the second 15 paragraph, the Wearnes Technology company tells 16 this Kompac Equipment Systems -- Kompac 17 Equipment Systems, as you'll see in the 18 testimony, is a value-added reseller, and 19 Wearnes Technology is a customer writing a 20 letter saying that they had decided to defer 21 their commitment to using DR-DOS because of 22 lack of compatibility with other software, 23 including Netware 2.0. 24 And in the testimony, beginning at 25 page 141, the witness identifies the document, 9569 1 explains that Kompac is a value-added reseller, 2 and then in the testimony at page 142, 3 Mr. Dixon was asked whether he was aware that 4 Wearnes had reported this problem, and 5 Mr. Dixon acknowledges that through this 6 document he would have been aware of that fact, 7 and he also admits that he doesn't know how 8 exactly this problem was resolved, but he does 9 believe that Wearnes never did sign an 10 agreement to -- for DR-DOS. 11 THE COURT: How does he have knowledge 12 of that? 13 MR. TUGGY: Who? Mr. Dixon? 14 THE COURT: Mr. Dixon, yes. 15 MR. TUGGY: He's the -- Mr. Dixon is 16 the salesperson for DRI and would know what -- 17 to whom DRI had sold products. 18 THE COURT: Is this one of his 19 customers? 20 MR. TUGGY: A value-added reseller -- 21 it would be the direct customer of a 22 value-added reseller, who has the relationship 23 with Mr. Dixon, and they work closely together. 24 That's why this is copied on Mr. Dixon. 25 So the value-added reseller works with 9570 1 DRI to sell a product to a customer. 2 THE COURT: But Wearnes was his 3 customer? 4 MR. TUGGY: Wearnes was the direct 5 customer of Kompac Equipment. 6 THE COURT: Kompac was a customer of 7 DRI? 8 MR. TUGGY: Right. 9 THE COURT: Okay. 10 MR. TUGGY: Now, in the testimony that 11 Plaintiffs have designated, and that's in -- 12 this is not testimony to which Microsoft has 13 objected. 14 The Plaintiffs have offered testimony 15 that DR-DOS was desirable to certain customers 16 because they wanted to use DR-DOS with Netware, 17 this particular product. 18 And that is at page 342, line 6, to 19 342, line 18. 20 And in that testimony Mr. Dixon is 21 describing an interaction with a customer 22 called Mitac, and he says, in the case of 23 Mitac, for example, we had meetings with them 24 in 1992. 25 It was a time in which we were 9571 1 attempting to provide another product in the 2 marketplace called Netware Lite, which was a 3 Novell product, which included certain 4 networking compatibilities. 5 The executives there, I think a Chan, 6 Georgiana Chan was one of the executives that 7 we discussed, and they openly voiced a major 8 concern that they had. 9 They liked Netware, Netware Lite. 10 They liked the product. They thought it had a 11 good opportunity. But they were very concerned 12 that if they licensed that from us, they would 13 be prevented from obtaining Windows from 14 Microsoft or being able to attend seminars from 15 Microsoft and told me that directly. 16 Now, to go back to our prior argument, 17 this is a designation to which the Special 18 Master overruled our hearsay objection on the 19 ground that it was a statement of state of 20 mind. It was a Callahan exception ruling in 21 Plaintiffs' favor. 22 THE COURT: On page 342? 23 MR. TUGGY: And that's not one we've 24 appealed. 25 THE COURT: Okay. 9572 1 MR. TUGGY: But it is directly related 2 to whether customers really wanted Netware to 3 work with DR-DOS, to which our designations at 4 page 141 respond. 5 Second, this designation at page 141, 6 the cross designation, also responds to the 7 Plaintiffs' designations at page 315 -- it's 8 actually a short designation that's in 315, 9 lines 17 to 21, where the witness, Mr. Dixon, 10 testified that the majority of all software 11 products ran on our operating system. 12 As we introduced the product in the 13 marketplace, we found some products that were 14 not compatible, and we would modify and make it 15 so that they could run. 16 Here Mr. Dixon is testifying that 17 compatibility was not an issue because most all 18 products were compatible and they fixed them 19 when there was an incompatibility problem. 20 This testimony undermines his 21 credibility and directly confronts the 22 testimony at page 315, lines 17 to 21. 23 Finally, Microsoft -- strike that. 24 Plaintiffs' Exhibit 33 is a business 25 record, and the way that the Court has been 9573 1 applying the business records rule in this case 2 -- this is a communication not involving a 3 dispute or a possibility of dispute in 4 litigation, and as such, it has been admitted 5 into evidence. 6 This is not similar to the testimony 7 by Dixon, where he is discussing oral 8 communications with customers. 9 This is a business record. He's 10 testifying about a business record. There is 11 no hearsay issue here for that reason, and the 12 testimony is directly responsive even for the 13 nonhearsay purpose of attacking the witness' 14 credibility with respect to other statements 15 made on his direct. 16 So it's admissible as nonhearsay, 17 attacking the witness's credibility, and it's 18 also admissible under the hearsay exception. 19 Plaintiffs' Exhibit 33 is of the business 20 records exception, and this document has 21 already been admitted into evidence and so 22 should the testimony that explains it. 23 For that reason, Microsoft requests 24 that these cross designations be approved and 25 that Plaintiffs' objection be overruled. 9574 1 THE COURT: Response? 2 MR. CASHMAN: Your Honor, we believe 3 that the testimony -- and it's only the 4 testimony which is at issue here -- is no 5 different substantively than what Microsoft has 6 objected to, and all we ask is that we be given 7 the same treatment. 8 We think that all this testimony is 9 about personal knowledge and that it should all 10 be permitted. But if Microsoft's view is 11 adopted, then this testimony fits in the same 12 type of category of testimony to which they've 13 objected. 14 So all we're asking for is consistent 15 treatment. 16 THE COURT: 236. 17 MR. TUGGY: The next series of 18 designations involve Defendant's Exhibit 45A. 19 That's designations at 236, 6 to 22, and 238, 20 17, to 240, 04. 21 And the Court again earlier today 22 received Defendant's Exhibit 45A. 23 And what I'd like to do is hand up a 24 history of our negotiations on this exhibit. 25 Defendant's Exhibit 45A was initially 9575 1 objected to by the Plaintiffs when we 2 designated this exhibit back in late 2005, and 3 I've handed the Court the letter from the -- I 4 received from Plaintiffs on January 27, 2006, 5 and on the -- and the first page of their 6 objections, where at DX 45, the bottom of the 7 first page, the Plaintiffs asserted three 8 objections; relevance, authenticity, and 9 foundation. 10 Through the negotiation process at -- 11 in the second letter I've provided to the 12 Court, the February 28 letter, the Plaintiffs 13 withdrew, as is indicated by the chart attached 14 to this letter -- again, I've only attached the 15 first page of the chart where DX 45 is 16 referenced. 17 They withdrew their foundation 18 objection which included the speculation 19 objection related to it. 20 Then the next document I've provided 21 to the Court is where the Plaintiffs withdrew 22 their illegibility objection to the exhibits 23 listed at the third page of this E-mail, where 24 DX 45 is listed there. 25 And one can tell because after 9576 1 Microsoft provided the cleaner copy, which was 2 DX 45A, this exhibit did not appear in what 3 they submitted to the Special Master, which is 4 -- and I provided the Special Master's rulings 5 chart relating to illegibility at the -- and 6 I've connected it to this E-mail. 7 And you can see there where DX 44 is 8 mentioned and DX 155. There's no DX 45 listed 9 there. We've cured the illegibility by 10 providing the best copy that we could. 11 I give this history only to point out 12 that this exhibit was clear of objection. They 13 never asserted a hearsay objection and they are 14 asserting it for the first time now. It should 15 have been asserted before. 16 And the argument that it's somehow the 17 same as Microsoft's objections to other 18 testimony allows them to resurrect an objection 19 they never made when we went through this whole 20 process of dealing with objections to this 21 exhibit in the Special Master process is really 22 inappropriate. 23 And as to this exhibit, it is clearly 24 a business record, which is why they didn't 25 assert a hearsay objection before. 9577 1 This is not oral communications by a 2 customer that are being repeated as Mr. Dixon 3 had done. This is a business record. It's 4 admissible for that reason. 5 The Plaintiffs' only remaining 6 objection from the original ones they asserted 7 is relevance, and they certainly don't take 8 that seriously. 9 This Exhibit 45A involves one of the 10 most significant customers of DRI, where Mr. 11 Dixon is reporting -- and this is on the face 12 page of DX 45A. 13 THE COURT: Is he the author of this? 14 MR. TUGGY: Yes. It says, attention: 15 Simon Lucy from Dixon. 16 THE COURT: Yes. 17 MR. TUGGY: Subject: Samsung tech 18 report on DR-DOS 5.0. 19 Dear tech team, we have a very serious 20 tech problem as described in the attached 21 report. 22 And then he begins the next paragraph, 23 if we cannot resolve quickly, then we will lose 24 to Microsoft. 25 So this document and the testimony 9578 1 related to it is actually critical evidence in 2 Microsoft's defense in this case because 3 Plaintiffs claim that DR-DOS was technically 4 better than MS-DOS, and for that reason it was 5 -- and for that reason, DR-DOS should have had 6 many more sales and but for Microsoft's alleged 7 anticompetitive conduct, they would have had 8 more sales. 9 And here, with one of their most 10 significant customers, Samsung, it's clear that 11 there are very serious technical problems, and 12 that's the subject of the testimony. 13 And in the -- Mr. Dixon's testimony 14 beginning at page 314 and going to page 318, he 15 testifies extensively in sections of testimony 16 that are not subject to Microsoft objections 17 about the technical superiority of DR-DOS; how 18 technical support was not a problem or an issue 19 for Digital Research. And this experience with 20 Samsung is directly contrary to Mr. Dixon's 21 testimony on direct. 22 So this is cross-examination. Its 23 nonhearsay purpose is attacking his credibility 24 where he says we didn't have technical problems 25 with our product and with technical support. 9579 1 But with Samsung, a key customer, they did. 2 And in addition, it's admissible for 3 its truth because DX 45A is a business record 4 admissible for its truth, and the testimony 5 based on DX 45A is similarly admissible for the 6 same purpose. 7 Again, Samsung is a customer of DRI 8 and Mr. Dixon as the salesperson for the 9 company would know whether or not they were 10 successful in making sales to Samsung and would 11 have information at his disposal about the 12 reasons why he was unable to make this sale. 13 THE COURT: Isn't this negotiations 14 evidence at page 236 which you claim is 15 unreliable, not trustworthy? Sure looks like 16 it. 17 MR. TUGGY: There were -- certainly 18 Mr. Dixon received information from Samsung in 19 the course of negotiation. 20 This is -- 21 THE COURT: I'm not talking about the 22 exhibit, I'm talking about the testimony that 23 you want on page 236. 24 MR. TUGGY: The testimony that is 25 given on page 236 is -- 9580 1 THE COURT: 6 to 22. 2 MR. TUGGY: Right -- is testimony 3 about information that Mr. Dixon received from 4 Samsung about the problems that Samsung was 5 having with the product. 6 I'm not sure -- I'm trying to figure 7 out in that context where Samsung's incentive 8 to prevaricate is. 9 THE COURT: Isn't Samsung a customer 10 of DRI? 11 MR. TUGGY: It's a customer of DRI, 12 and it's done tests and it's found technical 13 problems with the product. 14 THE COURT: With DR-DOS? 15 MR. TUGGY: Right. And it's reporting 16 those technical problems. 17 THE COURT: I can see the intent. If 18 you tell them you're going to cover the product 19 so if it's not a good product you better give 20 it to us for a lower price. 21 MR. TUGGY: But the information that 22 he's learning is from business records internal 23 to Samsung about their testing. 24 THE COURT: Not right there. Not on 25 page 236. There's no mention of Exhibit 45. 9581 1 Not one word. 2 MR. TUGGY: Well, the information -- 3 we do know that the information he received 4 from Samsung about the technical problems was 5 at least in part from -- 6 THE COURT: Isn't that posturing then? 7 It's posturing, isn't it? You've used that 8 term several times, posturing, negotiations. 9 What's the trustworthiness? 10 MR. TUGGY: Well, because Samsung did 11 an internal technical review, provided that 12 review to DR-DOS -- to DRI and DRI accepted it 13 and said we've got serious technical problems. 14 If Mr. Dixon himself says we have 15 technical -- we have a very serious technical 16 problem as described in the attached report, 17 there's no indication here that Mr. Dixon is 18 suggesting that there isn't any technical 19 problem. 20 He has adopted the fact that there is 21 a technical problem and it has to be resolved. 22 So it's not a situation where 23 Mr. Dixon believes, as Microsoft does when it's 24 involved in a dispute, that the party on the 25 other side of the dispute making the posturing 9582 1 communication is communicating something false 2 for posturing reasons. 3 Here, Mr. Dixon in responding to the 4 information he receives accepts it as true, and 5 that's what his report to Simon Lucy states. 6 So there's -- 7 THE COURT: Okay. Go ahead. 8 MR. TUGGY: So when here in the course 9 of the negotiation and discussion and client 10 relationship, the party who is in the 11 negotiation on the other side of it accepts as 12 true what's said, in that situation where 13 Microsoft has done that, the Plaintiffs would 14 claim that was an adoptive admission. 15 Now, Digital Research is not a party 16 to this lawsuit, is not involved in admissions, 17 but it is accepting as true what the customer 18 says, and there, it seems to me, that while 19 there is a risk of posturing, I grant that to 20 Your Honor, that in the negotiation context, 21 there is posturing, but under the business 22 records exception, the trustworthiness prong, 23 it seems to me, overcomes that problem where 24 the party against whom the charge is made here 25 that there are technical problems accepts that 9583 1 it's true. 2 THE COURT: Why can't the exhibit 3 itself be posturing? 4 MR. TUGGY: Mr. Dixon is -- 5 THE COURT: He wrote the letter, I'm 6 sorry. 7 MR. TUGGY: Right. 8 THE COURT: Excuse me. I messed up 9 there. I beg your pardon. All right. 10 Did you want to go on to 237 then? 11 MR. CASHMAN: Your Honor, let me just 12 mention, I think Mr. Tuggy is either confused 13 or conflated the issue because 45A isn't the 14 issue, it's the testimony. 15 And Mr. Tuggy always wants to go 16 outside the testimony that's in issue to 17 justify his position, and I submit that we 18 should be looking at the testimony which is in 19 dispute. 20 And, again, I think our position has 21 been pretty clearly stated that we think this 22 is all personal knowledge and that Microsoft's 23 appeal should be overruled -- I should say 24 Plaintiffs' appeals should be granted and the 25 Special Master overruled, and if that were the 9584 1 case, then I would agree that this testimony 2 should come in because it's of the same type. 3 It's about information that's gained 4 through interactions with OEMs. 5 But if Plaintiffs' appeals are not 6 granted, this is the same kind of testimony to 7 which Microsoft is objecting. 8 They're asking about the length of 9 Samsung -- that Microsoft contracts with 10 Samsung and such, and that information comes 11 through interaction with customers. So it 12 should be treated similarly. 13 And just for the record, when it's -- 14 I mean, Microsoft mischaracterizes when it's 15 convenient Plaintiffs' claims and what the 16 issues are, when really what we should be 17 looking at is the testimony here, and there is 18 -- this is no different than what they've 19 objected to, and all we want is consistent 20 treatment. 21 Thank you. 22 THE COURT: Let's go to page 238 then 23 to 240 if that's okay. 24 MR. CASHMAN: 238 to 240, again, we 25 think this is the same kind of testimony. 9585 1 There's really not much to say, but for the 2 most part, some of this testimony is about the 3 document, but some of the testimony also is 4 about interactions, oral interactions with 5 Samsung. 6 So we think it should be treated 7 similarly to the way that the other testimony 8 at issue is treated. 9 THE COURT: Mr. Tuggy? 10 MR. TUGGY: Yes, Your Honor. 11 At pages 238 to 240 the witness 12 provides foundation for the document, admits 13 that he wrote it, explains that Simon Lucy is a 14 member of the DRI development lab in the UK, 15 and explains that in this situation, Samsung 16 provided information about technical problems 17 to the DRI Korean subsidiary and that Mr. Dixon 18 is reporting to the head office so that these 19 problems can be somehow resolved. 20 And this is both an attack on his 21 credibility for a nonhearsay purpose where he 22 says we didn't have problems, and it's also a 23 situation where he has personally adopted the 24 truth of what's been said adverse to him about 25 the quality of his product. 9586 1 MR. CASHMAN: Your Honor -- 2 THE COURT: How does he adopt the 3 truth on this? 4 MR. CASHMAN: Your Honor, he didn't 5 adopt the truth. He's conveying information 6 that was provided to him by an OEM. 7 The question I think it is -- I don't 8 have the line, but where Mr. Dixon is asked, 9 are you telling Mr. Lucy we have a very serious 10 technical problem as described in the attached 11 report, the answer is yes. 12 That information came from an OEM. 13 He's not vouching for its truth. He's 14 just conveying information. And that really 15 highlights what I've said before in relation to 16 the testimony that Microsoft has objected. 17 It's really not hearsay, but again, we just 18 think that it should be treated the same. It's 19 not hearsay. 20 Just as the testimony which we looked 21 at earlier in relation to our appeals, 22 Plaintiffs' appeals is not hearsay. 23 So I think our position is clear. I'm 24 not going to belabor the point. 25 THE COURT: Mr. Tuggy? Why is this 9587 1 not hearsay? 2 MR. TUGGY: Well, first, at page -- 3 well, in the deposition Mr. Dixon specifically 4 testifies that they had no technical support 5 problems. 6 So here he is saying that our tech 7 resources are not able to respond here locally. 8 We need your best advice. We can't resolve 9 quickly. We'll then lose to Microsoft. 10 And the -- this evidence is directly 11 relevant and attacks the credibility of a 12 witness who says we didn't have technical 13 problems and didn't have problems with 14 technical support. 15 As for the hearsay issue, offering 16 this for the truth of the matter asserted that 17 in fact Samsung had technical problems, this is 18 information clearly that Samsung has provided 19 to Mr. Dixon, and Mr. Dixon has written in a 20 business record that this information is true. 21 It's contrary to his interests and 22 it's in a business -- and it's in a business 23 record that he has both from the Korean part of 24 DRI and also his own note. I mean -- 25 THE COURT: So if Samsung would have 9588 1 wrote to him in the same document that, by the 2 way, we're also having problems with 3 Microsoft's software, that wouldn't be hearsay 4 either, would it? 5 MR. TUGGY: I just don't -- I'm trying 6 to determine whether that would be a valid 7 business record of Samsung's to say that we 8 tested Microsoft's products and found some 9 problems with it. I'm not sure what the -- 10 THE COURT: Well, it says here on page 11 239, for instance, you learned -- line 15, did 12 you learn about the serious technical problems 13 from Samsung and they had conveyed that 14 information to you and then they talk about 15 this is a copy of a Korean document simulation 16 to interpretation. 17 What if the question was, did you 18 learn that there was serious technical problems 19 from Samsung not only with your product, but 20 also of Microsoft products and they include it 21 in the same report? It's not hearsay, then, is 22 it, under your theory? 23 MR. TUGGY: If it's part of a -- if 24 it's part of a business record that satisfies 25 the business records exception, then although 9589 1 it is hearsay, it's admissible as a business 2 record. 3 THE COURT: You agree that what 4 Samsung told him is hearsay? 5 MR. TUGGY: Yes. 6 THE COURT: But there's also case 7 authorities that say that what customers tell 8 the businessman or salesman can be used in 9 certain circumstances, right? 10 MR. TUGGY: Typically, when a customer 11 makes a statement about state of mind, it can 12 be used under the state of mind exception. 13 THE COURT: Okay, right. 14 This goes on to 240. 15 Did you want to say anything more 16 about it? 17 MR. TUGGY: No, Your Honor. 18 MR. CASHMAN: Well, Your Honor, I just 19 wanted to make -- 20 THE COURT: Go ahead. 21 MR. CASHMAN: I just wanted to make 22 the comment that I think this discussion 23 highlights the inconsistent position that 24 Microsoft is taking. 25 This -- the testimony that the Court 9590 1 is highlighting in its question that it just 2 had is no different than the kind of testimony 3 to which Microsoft was objecting when 4 Plaintiffs designated it. 5 And we could go through any one of 6 those appeals, Plaintiffs appeals 1 through 18, 7 and if we put this testimony next to the 8 testimony of Microsoft that's claiming should 9 not be admitted, there's no functional 10 difference. 11 The reason is that there's no 12 difference is because it's not an oral 13 assertion by an out-of-court declarant for its 14 truth and, therefore, it's not hearsay. What 15 you're talking about is personal knowledge of a 16 business executive. 17 So the Plaintiffs are the ones who 18 take the consistent view. 19 And in our view all of the testimony 20 that has been discussed over the last several 21 days should come in, and all we ask for is 22 consistent treatment of these designations. 23 MR. TUGGY: And Microsoft believes 24 it's being consistent as well by arguing that 25 for hearsay to be admitted it has to fall under 9591 1 an exception. 2 And in this situation, this testimony 3 is about -- and the information he received is 4 about -- is through business records. Business 5 records have indicia of reliability to make 6 them admissible. 7 The question then is whether these 8 business records are within the context of 9 negotiation or dispute such that they would be 10 unreliable. 11 And the line I thought that had been 12 drawn with business records as opposed to oral 13 conversations is where it's a record involving 14 a dispute, then it -- the risk of bias is high 15 and it's excluded. If it's just a discussion 16 between parties negotiating terms of a deal, 17 that evidence has been admitted. 18 MR. CASHMAN: Well, Your Honor, I 19 don't think that just because a business record 20 -- arguably a business record is at issue, 21 makes testimony about it admissible, but again, 22 our view is that this is -- none of this 23 testimony is hearsay. This is examination 24 about personal knowledge. 25 Mr. Tuggy keeps making the point that 9592 1 Microsoft cross-examined on these points and 2 that's why their testimony should be admitted, 3 and that really underscores the fact that it's 4 not hearsay. 5 The fact that Mr. Dixon could be 6 cross-examined on all of these issues the way 7 that he was shows that it is not hearsay and 8 that it's personal knowledge. 9 And we've provided now the Court a 10 plethora of authorities that demonstrate that 11 this kind of testimony is not hearsay. 12 I think the example I cited this 13 morning is really apropos because under 14 Microsoft's theories about hearsay, Mr. Gates 15 himself couldn't testify about virtually 16 anything because he wouldn't -- everything he 17 knows would be by virtue of hearsay or a great 18 deal of it. 19 All of his -- if he went, for example, 20 to a COMDEX meeting and interacted with 21 Microsoft customers and gained information 22 there, he talks to multitude a people, and 23 after talking to a multitude of people comes to 24 some personal conclusions about something or 25 another. 9593 1 Under Microsoft's theory, he wouldn't 2 be able to talk about that because it's 3 information gained from other people through an 4 oral context, and obviously that's not the law. 5 That's not right. 6 Hearsay is not as all encompassing as 7 Microsoft is suggesting it is. 8 The rules are pretty clear that it has 9 to be a statement and here we don't have the 10 very fundamental of a statement on any of these 11 designations. 12 So they should all -- Plaintiffs 13 believe that the consistent ruling should be 14 that it all comes in. 15 THE COURT: Let's move on to the last 16 two designations -- unless you have something 17 else to say Mr. Tuggy on that. 18 MR. TUGGY: No, Your Honor. 19 THE COURT: That would be pages 284 20 and 285 and 286. 21 Go ahead, Mr. Tuggy. 22 MR. TUGGY: I'm not clear on the 23 objection to this testimony. 24 Here Mr. Dixon is testifying that 25 Microsoft generally dropped its prices, and the 9594 1 question was, well, when Microsoft dropped its 2 prices, was that an improper way to compete in 3 your view? 4 And he says no. 5 And I think the only objection we have 6 to this testimony is that it's hearsay, but 7 there's no basis for that objection. 8 I mean, here's the sales 9 representative for Asia testifying generally 10 about the fact that Microsoft dropped its 11 prices, and that is -- if you take a look at 12 the testimony that has not been objected to 13 here, we have allowed here and with other 14 witnesses a lot of testimony where someone in 15 -- who has market knowledge can testify about 16 general conditions in the market because that's 17 things they can observe based on personal 18 observation. 19 This is not Mr. Dixon testifying that 20 he spoke with an OEM and based on what the OEM 21 told him, Microsoft prices were X or Y or had 22 dropped by a certain percentage or number. 23 He's just giving general testimony about prices 24 dropping. 25 THE COURT: There's no indication 9595 1 where he got this information. 2 MR. TUGGY: Correct, except that we 3 know, based on his position in the company and 4 all the testimony he's given about what his 5 role was in those Asian markets with Digital 6 Research, that he ought to know what his 7 primary competitors' prices generally were 8 doing and that that's the type -- and he can 9 find that information from multiple sources 10 that are nonhearsay sources. 11 THE COURT: How is he qualified on 12 page 285 to give a legal opinion? Line 10. 13 MR. TUGGY: Mr. Dixon is not qualified 14 to give a legal opinion. That objection wasn't 15 asserted, but he is not qualified to give a 16 legal opinion. 17 THE COURT: What was the objection to 18 this 284, 285, 286? 19 MR. CASHMAN: Your Honor, again -- 20 THE COURT: Was it hearsay? 21 MR. CASHMAN: Yeah. Under Microsoft's 22 theory, this is no different than what they've 23 objected to before. 24 And if you look at our Appeal Number 25 1, if the Court may recall, a day or two when 9596 1 we were talking about -- 2 THE COURT: I want to make sure I've 3 got the right objection. 4 There was no -- it's just a hearsay 5 objection and not foundation? 6 MR. CASHMAN: It was relevance and 7 hearsay, that's correct. 8 THE COURT: Oh, okay. I'm sorry, 9 Mr. Tuggy, I've got the wrong one. 10 Go ahead. 11 MR. CASHMAN: In our view, this is no 12 different than when Mr. Dixon is asked, what's 13 your view about what kind -- how you would have 14 succeeded in the marketplace and he is giving 15 -- what Mr. Dixon is really doing here is 16 giving marketplace knowledge, which is gained 17 from OEMs. 18 Mr. Tuggy said it, and that's really 19 the point of all these designations. 20 And, again, our view is that they 21 should be given consistent treatment. 22 This designation by Microsoft 23 highlights its inconsistency when compared with 24 the appeals -- or the objections that they've 25 asserted to Plaintiffs' testimony and when in 9597 1 fact all of the testimony given by Mr. Dixon in 2 which we have been discussing the last several 3 days is about knowledge he gained from the 4 marketplace. 5 That's the -- that is exactly the 6 point and knowledge gained from the marketplace 7 isn't hearsay. 8 So again, all the Plaintiffs are 9 asking for is consistent treatment. 10 Thank you. 11 THE COURT: One question I've got. 12 At the time that Mr. Dixon worked for 13 DRI, had Novell already bought it, or vice 14 versa, when he's giving this testimony? 15 MR. CASHMAN: I think his testimony is 16 primarily before they were acquired by Novell. 17 MR. TUGGY: I believe so. It may be 18 that he worked for Novell for some short period 19 and then left long before he gave his 20 testimony. 21 MR. CASHMAN: I think that's correct, 22 Your Honor. 23 MR. TUGGY: Yes, that is what 24 happened. 25 THE COURT: Anything else? 9598 1 MR. TUGGY: Well, this morning 2 Mr. Cashman handed up the CIGNA Fire 3 Underwriters Case, and in this case -- this 4 case was a case where a witness had given 5 testimony about damages and in -- it was a case 6 involving a lawsuit by an insurance company 7 against a broker, and then a cross-claim by the 8 broker against the insurance company. 9 And in the broker's case, testimony 10 was given about how much money the broker lost 11 because they lost customers to the insurance 12 company for -- based on something the insurance 13 company had done, and the broker testified that 14 he kept records of the clients that they lost 15 and the premiums that were lost as a result. 16 And the insurance company objected on 17 two grounds to the damages testimony. 18 THE COURT: I'm trying to find the 19 case. I'm sorry, I apologize here. I thought 20 I had it. I know you gave it to me. 21 Hang on. I apologize. What was the 22 title of the case again? 23 MR. TUGGY: This was CIGNA Fire 24 Underwriters Company versus McDonald and 25 Johnson, Inc. 9599 1 THE COURT: What's the cite? I've got 2 it, found it. Sorry. 86 F. 3rd? 3 MR. TUGGY: Yes, 86 F 3rd 1260. 4 And the part of the opinion where the 5 Court discusses this damages testify is at page 6 10 of the document that Mr. Cashman handed up. 7 THE COURT: Right. 8 MR. TUGGY: And on -- at page -- that 9 keynote 12, the Court says that it's not 10 impressed by CIGNA's objections that the 11 evidence on damages was based on speculation 12 and hearsay. 13 So there's a speculation objection and 14 a hearsay objection, and Lombard's -- this is 15 the person who testified about damages. 16 L-o-m-b-a-r-d. 17 Lombard's testimony was based on his 18 own records and experience in the insurance 19 business. 20 That the testimony was self-serving 21 according to the Court, went to its 22 credibility, not its admissibility. 23 All right. So it was the one 24 objection by CIGNA was that this was 25 self-serving testimony. And the Court said 9600 1 that that objection does not result in an 2 admissibility of the evidence. 3 Then the Court, as it later in that 4 same paragraph discussed the hearsay question, 5 and what the Court doesn't do in, and it's 6 actually hard to discern from the opinion, is 7 identify which part of Lombard's damages 8 testimony may have been based on hearsay. 9 But what the Court says is even if 10 Lombard's testimony was hearsay, in part, it 11 did not affect the verdict. 12 And on the next page, page 11, the 13 first full paragraph says, any violation of the 14 hearsay rule was de minimis. 15 So I say that to point out that in 16 this case, the Court is not saying that a 17 hearsay problem with testimony goes only to 18 weight and not admissibility. Here the Court 19 is saying that if there was any violation of 20 the hearsay rule it's de minimis, didn't affect 21 the verdict. 22 And the Court does not discuss in any 23 kind of detail what evidence may have been 24 hearsay or what part of the person's testimony 25 may have been hearsay. 9601 1 And for those reasons, this case is 2 inapposite. It doesn't really discuss and does 3 not at all discuss the hearsay rule at issue in 4 the testimony. And many items of the testimony 5 we've discussed for Mr. Dixon. 6 Howell, the Howell case, the Frunzar 7 case and the Ruby case, however, are on all 8 fours. 9 These were cases where the witness 10 testified to a fact as if it were true and then 11 it was determined on cross-examination that 12 that fact was based on particular conversations 13 or statements made to that person about that 14 fact. 15 So, for example, in the Howell case, 16 it was just whether it was the buggy -- or 17 whether the delivery wagon that struck the 18 plaintiff was owned by Mandelbaum and Sons, and 19 the Plaintiffs said it was in her direct 20 testimony, but it was determined that the basis 21 for that testimony was a statement made by 22 someone who couldn't bind the company Maurice 23 Mandelbaum, and on that basis the Court said 24 that that testimony should have been excluded 25 and the judgment was reversed. 9602 1 Mr. Cashman's example of Mr. Gates' 2 testimony is just too broad to really get my 3 arms around. 4 For example, Mr. Gates receives 5 business records all day long, and he's 6 entitled to rely on business records when 7 coming to conclusions about how to operate the 8 company, and he can communicate the contents of 9 business records without violating the hearsay 10 rule because business records are an exception 11 to the hearsay rule. 12 So this notion that no one can testify 13 about anything is really far too esoteric. You 14 know, the Posner statement in the IBEW -- quote 15 in the IBEW case talking about Kant, these are 16 just esoteric theoretical questions. 17 Here with Dixon, we have statements he 18 made that he admits were things that customers 19 told him. 20 And in those cases where Mr. Dixon is 21 saying something about what a customer said, 22 that doesn't go to the customer's state of 23 mind, it's just trying to prove -- for example, 24 one of the things they want to try to prove is 25 that Microsoft told OEMs that if they bought 9603 1 DR-DOS, Microsoft would retaliate. 2 Did Microsoft make that statement? If 3 a customer says Microsoft made that statement, 4 that's rank hearsay. 5 If Mr. Dixon heard Microsoft's 6 statement, that's personal knowledge. 7 We're not discussing the esoteric 8 questions about whether someone can testify 9 whether, you know, Egypt is in Africa, the 10 globe is round, you know, what Mr. Gates can 11 testify or not testify about. 12 We're dealing with specific 13 designations where it's clear that the 14 testimony is based on hearsay, just as it was 15 in Howell, Frunzar, and the Ruby case. 16 So this law in Iowa and elsewhere, 17 frankly, is settled, and the Special Master was 18 correct in sustaining Microsoft's hearsay 19 objections, and we respectfully request that 20 those rulings be sustained. 21 THE COURT: Anything else, Mr. 22 Cashman? 23 MR. CASHMAN: I'll just say that 24 Microsoft's reliance on the Howell, Frunzar, 25 and Ruby cases is misplaced for the reasons 9604 1 previously stated. 2 The cases that the Plaintiffs have 3 relied on are voluminous and directly on point, 4 and when used against the testimony that is at 5 issue, it is clear that the testimony is 6 admissible and is not hearsay; that Mr. Dixon 7 has foundation, he has personal knowledge to 8 testify about what he did. 9 There is no such limitation as 10 Microsoft suggests on a witness being able to 11 testify about information they've obtained from 12 their customers. 13 And Mr. Tuggy, I think, is incorrect 14 when he tries to distinguish or show that 15 Mr. Gates could testify, number one. 16 He could -- he might be testifying 17 about a subject where all of his knowledge 18 comes from interactions with customers, and I'm 19 sure that Microsoft would want to put that kind 20 of testimony on, or even if it's testimony that 21 he has solely based on conversations with 22 people within his own organization, that isn't 23 related to a document. Under their theory, all 24 of that kind of testimony would be 25 inadmissible, which goes to show how absurd 9605 1 their argument is, because under that scenario, 2 Mr. Gates would have no personal knowledge, and 3 that is exactly what the Agfa case and the 4 Robinson case, the Kansas City Power and Light 5 case and the CIGNA case are designed to show, 6 that a witness can get personal knowledge 7 through their own troops and through their 8 interaction with the marketplace. 9 And I also meant to add the IBEW case. 10 All of those cases make it clear that, 11 without exception, this testimony by Mr. Dixon 12 should be permitted. 13 Thank you. 14 THE COURT: Thank you. Anything else? 15 MR. TUGGY: Nothing further, Your 16 Honor. 17 THE COURT: Thank you. Excellent 18 presentation, really. 19 And have a great weekend. Thank you 20 for answering my questions, both of you. I 21 appreciate it very much. 22 MR. TUGGY: Thank you. 23 THE COURT: We'll see you Monday. 24 (Proceedings adjourned at 4:38 p.m.) 25 9606 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 19th 19 day of January, 2007. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25