12633 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 XLVI 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 8:41 a.m., February 7, 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 12634 1 A P P E A R A N C E S 2 Plaintiffs by: 3 MICHAEL R. CASHMAN Attorney at Law 4 Zelle, Hofmann, Voelbel, Mason & Gette, LLP 5 500 Washington Avenue South Suite 4000 6 Minneapolis, MN 55415 (612) 339-2020 7 KENT WILLIAMS 8 Attorney at Law Williams Law Firm 9 1632 Homestead Trail Long Lake, MN 55356 10 (612) 940-4452 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12635 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 HEIDI B. BRADLEY 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 19 20 21 22 23 24 25 12636 1 RICHARD J. WALLIS Attorney at Law 2 Microsoft Corporation One Microsoft Way 3 Redmond, WA 98052 (425) 882-8080 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12637 1 (The following record was made in the 2 presence of the jury at 8:41 a.m.) 3 THE COURT: Everyone else may be 4 seated. 5 Mr. Cashman. 6 MR. CASHMAN: Good morning, Your 7 Honor. 8 Plaintiffs wish to proceed with the 9 videotaped deposition of Philip Barrett taken 10 on May 31, 2002. 11 THE COURT: Very well. 12 (Whereupon, the following video was 13 played to the jury.) 14 Question: All right. When you were 15 at Microsoft, did Microsoft provide the 16 operating system information developers needed 17 to all application developers at the same time 18 and on an equal basis? 19 Answer: Well, by its very nature with 20 the undocumented APIs and the ill behaved or I 21 should say ill characterized APIs that were 22 documented, not all information was made 23 available to all the ISVs at the same time. 24 Question: Were some applications 25 developers favored over others? 12638 1 Answer: Certainly. 2 Question: What were the criteria used 3 by Microsoft to determine which applications 4 developers were provided with favored 5 treatment? 6 Answer: There wasn't really -- I 7 don't think there was any concerted effort. 8 There was no policy. It was fairly ad hoc and 9 typically it boiled down to who you knew. 10 Question: Did Microsoft's own 11 application developers receive favored 12 treatment over independent software vendor 13 application developers? 14 Answer: Certainly. 15 Question: And in what way? 16 Answer: Well, as I testified earlier, 17 particularly the Microsoft Excel group got 18 highly favored because they were local and 19 they'd walk through the building and talk to 20 you, talk to us. 21 Chris Peters was my buddy. He'd come 22 and talk to me in my office, in my developers' 23 offices after hours. 24 Question: And that type of access was 25 not provided to independent software vendors? 12639 1 Answer: Not at all. 2 Question: Do you recall aside from 3 yourself, did Mr. Peters have other contacts or 4 primary contacts within the Windows group? 5 Answer: Yeah, he was fairly close to 6 David Weise. 7 Question: And did he obtain 8 information about Windows from David Weise? 9 Answer: Most assuredly. 10 Question: And what kind of favored 11 treatment did Mr. Peters obtain from Mr. Weise 12 or others? 13 Answer: Well, the access to the 14 information. There may have been bugs that 15 were fixed, perhaps not even going through the 16 bug tracking system, but directly -- in fact, I 17 know that there were several bugs that were 18 fixed that never got into the bug tracking 19 system. 20 Chris would come over and say what's 21 going on here, or one of his developers would 22 call up and look at it and go oh, I can fix 23 that right away. 24 So people like David Weise would do 25 that sort of thing. 12640 1 Question: Do you know whether 2 Mr. Peters was able to obtain early copies of 3 Windows 3.0? 4 Answer: Certainly, yes. 5 Question: And did he receive those, 6 those development -- early development copies 7 of Windows 3.0 before independent software 8 vendors? 9 Answer: Yeah, I'm pretty sure of 10 that, yeah. Certainly well before the 11 majority. 12 He may have received them about the 13 same time that Aldus Corporation received early 14 copies, but that's probably the only one that 15 could possibly have received it before the 16 Excel group did. 17 Question: Do you know if Mr. Weise 18 put specific APIs in Windows at Mr. Peters' 19 request? 20 Answer: Well, I think the answer is 21 yes, but I can't point to a specific one. 22 Question: Do you recall whether 23 Mr. Peters later was responsible for the Word 24 development group? 25 Answer: I believe he was promoted to 12641 1 senior position in the applications division, 2 yes. I believe that Word was under his 3 tutelage. 4 Question: Did Mr. Gates play any role 5 in the -- in promoting the exchange of 6 information between the operating systems and 7 applications groups at Microsoft? 8 Answer: Not a direct role. 9 Question: Some sort of indirect role? 10 Answer: Yeah, he chastised people, 11 groups for not working together, not talking to 12 other groups. He certainly encouraged that. 13 I can't recall a specific instance of 14 talk to Excel or the Word guys, but he was 15 pretty, pretty adamant about us working, all 16 the various groups working together. 17 Question: Let me ask you some more 18 questions about the independent software 19 vendors. 20 Did ISVs whose applications were not 21 in competition with Microsoft's applications 22 receive favored treatment over independent 23 software vendors whose applications did compete 24 with Microsoft's applications? 25 Answer: Well, I can't -- I can't say 12642 1 that there was a policy. However, it is true 2 that the ISVs that did receive favored 3 treatment tended to not be competitive. 4 Aldus Corporation, which made 5 Pagemaker, which was a desktop publishing 6 application. The folks, was it Wall Data that 7 made Rumba, a 3270 terminal emulator that 8 corporations would use. Microsoft had no 9 competing products there and they got 10 reasonably favored treatment, as I recall. 11 Question: Can you give examples of 12 the types of favored treatment that they would 13 receive? 14 Answer: Well, the most, best example 15 is access to developers who understand the 16 code. 17 Certainly meetings with developers and 18 that sort of thing within the Microsoft 19 organization, within the Windows development 20 team. 21 I can't think of anything beyond that. 22 Sometimes interim drops of the operating system 23 between betas, that sort of thing. 24 If there's a bug fix or something like 25 that, they would give -- some ISVs would get 12643 1 copies of an interim build, an interim build of 2 the operating system that would fix problems 3 and hopefully they'd verify that the problem 4 was fixed. 5 Question: And when you refer to a 6 drop, what does that mean? 7 Answer: A delivery. 8 Question: A delivery? 9 Answer: A delivery, yeah. 10 Question: Now, you referred earlier 11 to Aldus. What was the business that Aldus was 12 in? 13 Answer: They were in the desktop 14 publishing business and they made something 15 called Aldus Pagemaker, which ran on the Mac. 16 And they moved over to a Windows sometime 17 before, and so it was a layout application for 18 doing brochures and self publishing, that sort 19 of thing. 20 Question: Did you say earlier that 21 Aldus received some sort of favored treatment 22 over other applications developers? 23 Answer: Absolutely. 24 Question: And what was the reason 25 that Aldus received favored treatment? 12644 1 Answer: There was a guy named Jim 2 O'Neill who is the project lead, and I could 3 not remember his name last time, but it's come 4 to me since. 5 And Jim O'Neill was fairly good 6 friends with David Weise and several other 7 people, including myself, and he was a big 8 supporter of Windows. 9 And so we gave him very, very, very 10 early versions of Windows to port Pagemaker to 11 protected mode. And we went ahead and did that 12 and had Pagemaker running very early on so we 13 could demonstrate another application running 14 in the Windows environment. 15 Question: Did Microsoft have an 16 application that competed with Aldus' desktop 17 publishing software? 18 Answer: No. 19 Question: Was there some reason why 20 it was important for -- to Microsoft that all 21 Aldus quickly be able to develop applications 22 for Windows? 23 Answer: Yeah, probably the biggest 24 reason was that at that point in time desktop 25 publishing was very hot, and it was the domain 12645 1 of the Macintosh. And the Macintosh was viewed 2 as a competitor to Windows in general, although 3 it had low market share relative to the PC 4 world. 5 But the fact that there was a -- what 6 was perceived at the time to be a high-end 7 activity that really could only be done on a 8 Macintosh and not on a PC. 9 So there was a strong desire to move, 10 basically allow the PC to be a desktop 11 publishing environment. 12 So that's why Aldus was very, very 13 important to us at the time. 14 Question: Now, you mentioned earlier 15 that one of the things that is necessary for 16 development of applications is what you called 17 a software development kit? 18 Answer: Yes. 19 Question: And that's known by the 20 acronym SDK? 21 Answer: That's correct. 22 Question: Did Microsoft's own 23 applications development groups have access to 24 the information in the software development 25 kits before the SDKs were published to the 12646 1 independent software vendors? 2 Answer: Yes, I believe so. 3 Question: And how did that occur? 4 Answer: Well, the software 5 development kit is a product, just like Windows 6 is a product, little bit different nature the 7 way it's developed, but, you know, it has a set 8 of components to it. 9 Those components are developed. A 10 document is written, it's proofread. It's -- 11 you know, it's proofed for accuracy, those sort 12 of thing. 13 So early versions of those documents 14 were available within Microsoft prior to the 15 release of the software development kit. 16 The software development kit itself 17 including libraries and various files and that 18 sort of thing that you used to build 19 applications was similar, similar way had to be 20 put together and it had to be burned onto a CD 21 and that sort of thing. 22 So in the process of production that 23 information would be available on servers 24 within Microsoft that anybody could go and get 25 access to. 12647 1 I can't give you a name of a person 2 that went and got an early version, but I can 3 guarantee you that there were many, many 4 developers, application developers that got 5 access to that stuff before it was shipped to 6 the general public. 7 Question: And when you talk about the 8 application developers that got access before 9 it was shipped to the general public, are you 10 talking about application developers internal 11 to Microsoft's applications groups? 12 Answer: Yes, that's correct. 13 Question: What are header files? 14 Answer: That's okay. 15 Header files are special files that 16 include common definitions -- a piece of 17 software, a large piece of software has to be 18 broken up into many, many, many source files. 19 Typical operating system may have a 20 thousand source code files for different parts, 21 different features, et cetera. 22 Oftentimes they're common definitions, 23 you know. I don't know, true is defined as 24 minus one, okay. So you don't have to type, 25 use minus one in a piece of code. You could 12648 1 say if true, then this. 2 So true might be in the header file. 3 The common definition of true might be in a 4 header file that's included by all of those 5 source files. That way the operating system 6 developers can maintain a consistency of all 7 the common definitions that they use. 8 Question: Were header files used to 9 discriminate against competing applications 10 developers? 11 Answer: I have no knowledge of that. 12 I don't see how it's possible. 13 Question: Do you know whether 14 Microsoft's internal application groups 15 received header files in advance of their 16 release to independent software vendors? 17 Answer: Certainly header files are 18 part, typically part of a software development 19 kit. So everything I said about software 20 development kits applies to header files. 21 Question: Was the earlier access to 22 these header files by the internal Microsoft 23 development groups a material advantage for 24 them? 25 Answer: Absolutely. Typically the 12649 1 header files would actually contain the API 2 definitions, what they call a prototype 3 definition, so that the compiler would know how 4 to properly identify a call into the operating 5 system. 6 Question: And do you know whether 7 header files were also provided earlier to 8 applications independent software vendors 9 without competing applications to Microsoft's? 10 Answer: Certainly all those folks got 11 those header files early. 12 Question: Are you familiar with a 13 term, see if I have this right, capability 14 bites or compatibility bits. 15 Answer: Yes, I'm familiar with 16 compatibility bits. 17 Question: Compatibility bits, what is 18 that? 19 Answer: What compatibility bits are 20 or were, particularly I believe it was in 21 Windows 3.1, the idea was that there were bugs 22 or other quirky behavior that the operating 23 system had that ISVs figured out and would do 24 things in a certain way. 25 Like, for example, there was a bug in 12650 1 Windows that sometimes when you sent -- in 2 order to get a window to redisplay, you have to 3 send it an update message and that message 4 would cause the window to redisplay itself. So 5 if you change something in it, you go change, 6 change, change update and it would display 7 itself. So sometimes that update message 8 didn't take for various reasons, it got lost or 9 something, but developers figured out by trial 10 and error that if they sent two update 11 messages, it would update. 12 Unfortunately, we fixed the bug that 13 caused that that would lose one of the update 14 messages and the developers that had figured -- 15 the applications had figured out that you have 16 to send two update messages to cause some 17 flashing. 18 So what we did is we created -- we 19 recognize the applications, we knew which 20 applications it was, the important ones, and we 21 would detect them when loading and we'd set 22 this capability bit, which was essentially, 23 think of it as a flag that says when that type 24 of application is loaded, is running, revert to 25 the old behavior, revert to the quirky 12651 1 behavior. 2 So that's what capability bits are, 3 and I think there were maybe five or six, maybe 4 more than that. But they're a class, a set of 5 applications that required the capability bits 6 in order to operate correctly under 3.1. 7 Question: It's Windows 3.1? 8 Answer: Yes. 9 Question: Did different applications 10 sometimes require different capability bits in 11 order to function properly? 12 Answer: Yes, that's correct. 13 Question: And did Microsoft sometimes 14 refuse to create these capability bits to 15 ameliorate new incompatibilities that affected 16 competing applications? 17 Answer: Runs in my mind that there 18 were companies that wanted us to make some 19 capability bits and we didn't, but I don't 20 recall the specifics. 21 Question: Did you know someone at 22 Microsoft by the name of Martin Dunsmuir? 23 Answer: Yes, I did. 24 Question: And what was his position 25 at Microsoft? 12652 1 Answer: He ran some part of the OS/2 2 group at one point. I think the graphical user 3 interface group, I believe that to be the case. 4 And he did other things. He led the Xenix 5 effort, which was a variant of UNIX that 6 Microsoft had. 7 Question: Did he have any role in 8 working with industry groups in connection with 9 interoperability standards? 10 Answer: I didn't think he was 11 involved with interoperability standards. He 12 was involved with standards groups, but -- 13 Question: What's the difference 14 between regular standards groups and 15 interoperability standards? 16 Answer: Maybe the difference is vague 17 and imprecise. I view a standard as something 18 that people all agree to implement. 19 It doesn't necessarily guarantee 20 interoperability. 21 Interoperability typically means that 22 there's a set of -- there's a set of 23 interoperability tests and there's a set of -- 24 you know, you have to meet certain levels of 25 compliance in order to be interoperable. 12653 1 I believe he was involved in the Posix 2 effort is probably the most significant effort. 3 Question: What is Posix? 4 Answer: Posix was an attempt to 5 create a single standardized interface for 6 UNIX, and most UNIX implementations had 7 different APIs. 8 Question: Now, why was it considered 9 a success for Microsoft's Martin Dunsmuir to 10 drag out the acceptance of industry standards? 11 Answer: Within Microsoft standards 12 were not viewed as helpful to Microsoft's 13 business. 14 Question: Why was that? 15 Answer: Because they allowed other 16 people to implement similar products that would 17 compete. It made it easier for people to 18 compete in a nutshell. 19 (Whereupon, playing of video 20 concluded.) 21 MR. CASHMAN: Your Honor, that 22 concludes the testimony of Philip Barrett. 23 And at this time, Plaintiffs would 24 like to offer Plaintiffs' Exhibit 29, 986, 988, 25 1011, 1067, 3485, 5053, 7510, 9573, 4380A, 12654 1 7569A, and 7595A. 2 And with the Court's permission, I 3 would like to approach and provide the Court 4 with two hard copies of those exhibits and a 5 disk and to provide the same to Microsoft. 6 THE COURT: You may. 7 Thank you, sir. 8 Any objection to the exhibits? 9 MS. NELLES: Your Honor, could I ask 10 the Court's indulgence to have them read one 11 more time? I think I got most but not all of 12 them. 13 THE COURT: 29, 986, 988, 1011, 1067, 14 3485, 5053, 7510, 9573, 4380A, 7569A, 7595A. 15 MR. CASHMAN: Your Honor, I think 16 there was some on the list that may have been 17 overlooked so may I just read those one more 18 time that the Plaintiffs are offering? 19 THE COURT: Oh, did I miss some? 20 MR. CASHMAN: Plaintiffs' Exhibit 29, 21 Plaintiffs' Exhibit 184, Plaintiffs' Exhibit 22 682, Plaintiffs' Exhibit 979, Plaintiffs' 23 Exhibit 986, Plaintiff's Exhibit 988, 24 Plaintiffs' Exhibit 1011, Plaintiffs' Exhibit 25 1067, Plaintiffs' Exhibit 3473, Plaintiffs' 12655 1 Exhibit 3485, Plaintiffs' Exhibit 5053, 2 Plaintiffs' Exhibit 7510, Plaintiffs' Exhibit 3 8863, Plaintiffs' Exhibit 9573, Plaintiffs' 4 Exhibit 4380A, Plaintiffs' Exhibit 7569A, and 5 Plaintiffs' Exhibit 7595A. 6 MS. NELLES: No objection to those 7 exhibits with the exception of Exhibit 4380A, 8 7569A, and 8863. Only -- which may be fine but 9 -- which I don't have on my list, and I think 10 it's likely because they've already been 11 admitted by Plaintiffs, but if I could just 12 have a minute to double-check those three. 13 THE COURT: Sure, go ahead. 14 MS. NELLES: And I have -- if I may, 15 Your Honor, Microsoft has three exhibits it 16 would like to move at this time. 17 THE COURT: Let me finish writing all 18 these down. 19 MS. NELLES: Fair enough. 20 THE COURT: Okay. Defendant's 21 exhibits. 22 MS. NELLES: Your Honor, plaintiff -- 23 sorry, Defendant's exhibits. 24 Defendant would like to move 25 Defendant's Exhibits 2639, Defendant's Exhibit 12656 1 2736, and Plaintiffs' Exhibit 4178 at this 2 time. 3 THE COURT: 4178? 4 MS. NELLES: Yes, Plaintiffs' 4178. 5 THE COURT: All right. And did you 6 check on those other ones? 7 MS. NELLES: I have, and I believe 8 Plaintiffs' Exhibit 8863 is already admitted, 9 and I have no objection to the other two coming 10 into evidence at this time. 11 THE COURT: Very well. They're all 12 admitted. 13 Mr. Cashman, any objection to the 14 Defendant's exhibits? 15 MR. CASHMAN: I have no objection, 16 Your Honor, to DX 2639 or DX 2736. 17 If I may have until the next recess, 18 Your Honor, to check on the other one. That's 19 not in my records. 20 THE COURT: That's a Plaintiffs' 21 exhibit. Okay, I'll give you that time so you 22 can check on it. 23 The others are all admitted. 24 MR. CASHMAN: Ms. Nelles, would you 25 kindly repeat the last exhibit number? 12657 1 MS. NELLES: It's your exhibit, 2 Plaintiffs' Exhibit 4178. It was played in the 3 most recent deposition of Mr. Barrett and shown 4 to the jury. 5 MR. CASHMAN: Thank you. 6 THE COURT: So you'll check on that? 7 MR. CASHMAN: I'll check on it, yes, 8 Your Honor. 9 MS. NELLES: With the Court's 10 permission, I will give Mr. Cashman a copy of 11 those. 12 THE COURT: Very well. 13 MS. NELLES: And, of course, I will 14 provide Sandy with three copies as well. 15 MR. CASHMAN: Thank you very much. 16 Next, Your Honor, the Plaintiffs would 17 like to call the witness who gave prior 18 testimony. The witness is Andrew Hill who 19 provided testimony before the Federal Trade 20 Commission on May 5th, 1993. 21 Your Honor, this is a reading 22 deposition, and Mr. Williams will play the role 23 of Mr. Hill. 24 THE COURT: May 5, 1993, was the date? 25 MR. CASHMAN: Correct. 12658 1 THE COURT: Very well. 2 Mr. Williams. 3 MR. WILLIAMS: Your Honor, may I just 4 take a moment to introduce myself to the jury? 5 THE COURT: Yes. 6 MR. WILLIAMS: Good morning. My name 7 is Kent Williams and I'm one of the attorneys 8 representing the Plaintiffs class in this 9 matter, and as Mr. Cashman said, I'll be 10 reading the part of Andrew Hill. 11 Thank you, Your Honor. 12 KENT WILLIAMS, 13 was duly sworn by the Court to truly and 14 accurately read the answers from the deposition 15 of Andrew Hill. 16 MR. CASHMAN: Your Honor, there's some 17 portions of testimony that have been designated 18 by Plaintiffs and some designated by Microsoft. 19 Mr. Green will be reading those 20 designations that have been designated by 21 Microsoft. So from time to time I'll stop and 22 Mr. Green will pick up, and then it may come 23 back to me again. So that is why there will be 24 some switching back and forth. 25 MR. GREEN: We get to play several 12659 1 roles because -- it's pretty exciting, Your 2 Honor. 3 THE COURT: Okay. Very good. 4 Dramatic. 5 JUROR [redacted]: Won't be any shooting? 6 (Whereupon, the following deposition 7 was read to the jury.) 8 MR. CASHMAN: Good morning. 9 Question: Will you please state your 10 full name for the record? 11 Answer: Andrew R. Hill. 12 Question: And where are you employed? 13 Answer: Microsoft Corp. 14 Question: And what's your current 15 position with Microsoft? 16 Answer: Program manager. 17 Question: For any specific product or 18 group? 19 Answer: PSG, personal systems group, 20 working on the Chicago project. 21 Question: Okay. How long have you 22 been with Microsoft Corporation? 23 Answer: About two and a half years. 24 Question: How long have you held your 25 current position? 12660 1 Answer: Oh, six months maybe. 2 Question: Okay. Can you recall when 3 you began the position? 4 Answer: You mean with the Chicago 5 project? 6 Let me see. Probably since November, 7 December of '92. 8 Question: Okay. And prior to the 9 program manager in the Chicago project -- for 10 the Chicago project, what was your position at 11 Microsoft? 12 Answer: Program manager on the 13 Windows for Workgroup project. 14 Question: And when did you begin that 15 position? 16 Answer: Probably May of '92. 17 Question: Okay. And prior to that? 18 Answer: Program manager for the 19 Windows 3.1 project. 20 Question: Okay. As program manager 21 for the Windows 3.1 project, who did you report 22 to directly? 23 Answer: David Cole. 24 Question: Okay. And who reported 25 directly to you? 12661 1 Answer: At one point, Janine Harrison 2 reported to me functionally. I think she kind 3 of reported to David Cole as well. It was a 4 little bit blurred. Kala Koch reported to me 5 on a dotted line function. 6 Question: Okay. Janine Harrison, 7 what was her role in the Windows 3.1 project? 8 Answer: She started out running the 9 beta program, 3.1 beta program. I believe she 10 had other duties as well. 11 Question: Okay. Was it part of your 12 responsibilities as program manager for Windows 13 3.1 to be involved in the beta program? 14 Answer: Yes. 15 Question: In what way was that? 16 Answer: I was brought in probably 17 midway through the project to take over the 18 beta program, oversee the entire beta program. 19 Question: Okay. Now, when you took 20 over the running of the beta program from 21 Ms. Harrison, when was that in the Win 3.1 22 development process? 23 Answer: It was probably around late 24 October, early November. 25 Question: Are you familiar with the 12662 1 number of beta testers that were in Win 3.1? 2 Answer: Roughly. 3 Question: At about the time of 4 release candidate one can you estimate -- let 5 me back up a moment. 6 Is beta tester -- are beta tester and 7 beta sites synonymous terms? Is there one 8 tester per beta site? 9 Answer: There may be multiple testers 10 per beta site. 11 Question: Are you familiar with how 12 many beta sites there were at the time of 13 release candidate one? 14 Answer: Probably between 12 and 15 15,000 were sites that had been signed up and 16 shipped beta code at some time. 17 Question: From the home user to 18 corporate user, I believe, were two of the 19 examples. 20 What is the purpose of seeking the 21 broader -- a broad category of users? 22 Answer: Probably twofold. Number one 23 is to increase the number of configurations 24 that we tested on; in other words, different 25 types of machines, from different 12663 1 manufacturers, different types of software they 2 run on those machines, different types of 3 hardware they have connected to the machines, 4 different tape drives and CD-ROM devices and 5 speakers and that type of thing. 6 The other thing is to get test 7 coverage for the type of user, whether it be -- 8 a corporate user has different needs and will 9 exercise the software in a different way than a 10 home user, a secretary will use it differently 11 than an engineer. 12 So we would -- we tried to get as 13 broad a coverage as possible, because Windows 14 sells into a very broad market. 15 Question: Okay. And how -- well, if 16 you can, how would you characterize the beta 17 test group, the beta test sites in terms of 18 sophistication, I guess, in computer use? 19 Let's stick with the release candidate 20 stage to the end. 21 Answer: From the release candidate to 22 the end? 23 Question: Yes. 24 Answer: You would have it from 25 someone who rarely used the computer all the 12664 1 way to someone who was someone who used it all 2 the time, someone who sat in front of the 3 computer all day. 4 Question: Is there a marketing 5 component of beta testing software, generally? 6 Answer: I think it depends on where 7 in the beta cycle you are. There is certainly 8 something that says you want to create momentum 9 for the product by getting -- by being able to 10 say we had 12 or 15,000 people test this 11 product and, you know, I think you'll see in 12 some of the trade press or something will say 13 Microsoft had this huge beta test which is to 14 ensure it was very stable and worked on a wide 15 range of configurations or wide range of users. 16 Question: Okay. In terms of the 17 trade press that were included in the beta test 18 cycle -- 19 Answer: Uh-huh. 20 Question: -- were they also subject 21 to nondisclosure agreements? 22 Answer: Oh, boy. 23 Question: Again, to the best of your 24 knowledge. 25 Answer: To the best of my knowledge, 12665 1 I think, I believe most of them were. 2 Question: One more broad description 3 of your beta testers, if you could, how would 4 you describe the beta testers throughout the 5 Windows 3.1 beta cycle in terms of industry 6 influence? 7 Answer: Define industry influence. 8 In the way software is written? 9 Question: Well, start with -- that's 10 one way to look at it. Maybe this will help. 11 Have you heard of the term key evaluators or 12 key influencers? 13 Answer: Not -- not in the sense of -- 14 I hear it from the marketing guys in the 15 Chicago project more than I maybe heard in the 16 Win 3.1 product. 17 In terms of industry influence, you 18 know, in the beta program, we certainly had 19 people that -- we had editors in there, I think 20 they were probably influential in the industry. 21 We had end users that may -- that were 22 undoubtedly in on the decision process on 23 whether to, you know, adopt or purchase 24 software, so we certainly had that element to 25 the beta test. 12666 1 Question: Okay. Going back to the 2 selection of beta test sites. 3 Answer: Uh-huh. 4 Question: If there is a general 5 criteria -- criterion used to select those 6 sites -- 7 Answer: Uh-huh. 8 Question: -- what might that be? 9 Answer: General criterion? 10 Question: Yes. 11 Answer: For selecting a beta tester. 12 You know, again, it depends on what stage you 13 are in the program. 14 In the beginning, you probably want 15 people that can handle some real flakey 16 software, that are willing to risk their disk, 17 so to speak, risk their data. 18 As you get closer to shipment, you 19 want people that are probably more mainstream 20 users, that are not the dwiddle, the bits type 21 of people. 22 You certainly want to make sure you're 23 covering different classes of users, so you 24 would want to have end users -- make sure 25 you're covering government people, make sure 12667 1 you have a component that covers educational 2 people, you want people in education, in the 3 nonprofit sector. 4 We want to cover people that write 5 software certainly, certainly people that write 6 software to the Windows API. We want to get 7 people that make hardware that works with 8 Windows. 9 Question: Let me ask you directly. 10 Were there key influencers or key evaluators, 11 as you use these terms, in the beta program? 12 Answer: If you define an editor as a 13 key influencer, then, yes, there were. I guess 14 I'm having a hard time with how you define what 15 a key influencer is. 16 Question: Okay. Were there editors 17 of major trade press publications in the beta 18 program? 19 Answer: Yes. 20 Question: Were there software 21 developers from major application vendors 22 involved in the beta program? 23 Answer: Yes. 24 Question: Would you consider them to 25 be industry -- influential members of the 12668 1 industry? 2 Answer: In the sense that if -- I 3 don't know. I don't know if they influence 4 people to buy Windows. 5 Question: Okay. Were there 6 decision-makers from large organizations, 7 whether nonprofit or for profit, as part of the 8 beta test program? 9 Answer: Most likely, yes. 10 Question: Would you consider them to 11 be influential? 12 Answer: Perhaps influential at their 13 company, yes. 14 (Whereupon, Mr. Green read the 15 following.) 16 Question: Was there any effort made 17 to include influential decision-makers in the 18 Microsoft beta program for Windows 3.1, to the 19 best of your knowledge? 20 Mr. Holley says: If you know what he 21 means by influential decision-maker. 22 Answer: I believe the effort was to 23 get broad coverage, broad testing coverage for 24 the software. 25 Okay. Now, we may have picked up 12669 1 people that you define one way or another in 2 doing that. 3 Question: Okay. Was there an effort 4 made specifically to attract editors of trade 5 press to the beta test process? 6 Answer: No. 7 (Whereupon, Mr. Cashman read the 8 following.) 9 Question: Okay. Are there specific 10 rules about who will not be allowed to a beta 11 test site, specifically here with regard to 12 Windows 3.1? 13 Answer: Yes. There were some rules 14 and exceptions we looked for. 15 Question: Were they exceptions or was 16 there a list? 17 Answer: There was a list that said 18 these people should not beta test or we need to 19 -- we need a higher approval to allow them to 20 beta test it. 21 Question: Okay. And the higher 22 approval would have come from where or not come 23 from where? 24 Answer: I would have asked my 25 manager, and he would either answer that or he 12670 1 would ask his manager. 2 Question: Were editors of the trade 3 press treated differently in the program from 4 other testers? 5 Answer: They were certainly given -- 6 we certainly watched what their responses were. 7 If an editor had a problem with 8 something, we would look at it very closely, 9 realizing that it could have an effect on an 10 article they write down the road. 11 Question: And again, you say that you 12 saw names on bug reports. Would you recognize 13 the names of editors of trade press -- 14 Answer: Uh-huh. 15 Question: -- or that sort of person? 16 Answer: Uh-huh. 17 Question: Would that have been your 18 responsibility as a group manager or would that 19 have been the responsibility of somebody else 20 to recognize? 21 Answer: It would have been 22 everybody's responsibility. 23 Question: Going back to this list of 24 individuals or corporations, whatever it was -- 25 Answer: Yes -- 12671 1 Question: -- who either were to be 2 denied access or the decision was to be made 3 higher up, was there some explanation ever 4 given to you for why that list, as a group, was 5 being denied or -- 6 Answer: There were generally specific 7 reasons for each is one. It wasn't a broad -- 8 you know, each one there was a specific reason 9 why that person or corporation wasn't allowed 10 on the beta. 11 Question: As a general matter, there 12 was -- were there any guidelines as to who 13 should be denied, whether or not that 14 individual or organization was on the list? 15 Answer: General guideline. I mean, 16 the list -- are you asking how the list was 17 created? 18 Question: Yes, if you know. 19 Answer: Okay. People and 20 corporations would be on that list for a number 21 of reasons; they may have broken an NDA in the 22 past, they may owe Microsoft money, there may 23 have been problems in the past with another 24 beta test and, again, breaking an NDA or 25 something like that, they have been a 12672 1 competitor that we didn't want to give the beta 2 software to. Those were generally the reasons 3 for doing it. 4 Question: Okay. To get into the meat 5 of the beta testing itself, how are reports 6 from beta testers received at Microsoft? 7 Answer: On Windows 3.1, they could 8 have come over the phone, over the fax, over 9 the U.S. mail, over E-mail, via CompuServe. I 10 think that about covers it. 11 Question: In terms of -- let's winnow 12 out E-mail for the moment. In terms of phone, 13 fax, U.S. mail, and CompuServe, do you have an 14 estimate of the relative magnitude of what beta 15 testers used; in other words, X percent used 16 phone, X percent used fax? 17 Answer: I think -- I don't have an 18 estimate on the magnitude, no. Phone was less, 19 fax was more. More faxes than mail. Probably 20 more CompuServe than faxes. 21 Question: Were CompuServe messages 22 received generally over CompuServe -- was there 23 a specific beta forum? 24 Answer: There was a nonpublic, a 25 private beta forum in CompuServe. 12673 1 Question: And who had access to this 2 beta forum? 3 Answer: Only approved beta testers 4 and Microsoft personnel. 5 Question: Okay. And when I said 6 access, I should have been more clear. 7 Who had access to post messages on 8 this beta forum? 9 Answer: The same. 10 Question: The same? 11 Answer: To post or read you had to be 12 -- you had to be approved by Microsoft. 13 Question: Okay. And were there 14 specific reports that were made that, I guess, 15 would be directed to one of the four, phone, 16 fax, U.S. mail, or CompuServe, means of access 17 to your group versus another; were there 18 specific problems where it was better to call 19 or the tester was invited to pick up the phone 20 and call Microsoft or others where they were 21 told or instructed to use CompuServe? 22 Answer: Generally, we wanted people 23 to use CompuServe. We wanted people to do it 24 electronically. 25 Question: Why was that? 12674 1 Answer: It's much easier for us to 2 handle the information. And ideally, as 3 uploaded message and not as -- uploaded file, 4 excuse me. 5 What we wanted them to do was use a 6 little program that would ask them what their 7 problem was, go up and gather the appropriate 8 information, files, and then packaged into a 9 file they would upload onto CompuServe to a 10 waiting area that our beta personnel would grab 11 and then drop into our databases. 12 (Whereupon, Mr. Green read the 13 following.) 14 Question: Okay. Are beta testers 15 themselves free to discuss issues on the forum? 16 You said there was -- 17 Answer: Yeah, on the forum they were. 18 Question: And were there limits to 19 discussion? 20 Answer: Nothing formal. What would 21 happen is -- again, we were limited to -- I 22 don't know what the message limit was. Let's 23 say it was 2,000 messages. And unfortunately 24 when you just said, yeah, I understand or boy, 25 you're right, that took up one message slot. 12675 1 Sometimes we would go and say can you 2 guys please keep the chatter down because we 3 want to keep the testing -- we want to limit 4 this to testing type stuff. There was 5 invariably a lot of chatter that went on. This 6 was kind of like a party line for all these 7 people. 8 It was free also. CompuServe 9 generally costs about 12 bucks an hour, 24 10 bucks an hour. This was free. For a lot of 11 people, they liked to get up and gab on 12 Microsoft's dime. 13 (Whereupon Mr. Cashman read the 14 following.) 15 Question: Just generally, to the best 16 of your knowledge, is there a problem with 17 something like CompuServe forum with beta 18 testers giving bad information to other beta 19 testers; someone says I have a problem, someone 20 says this is the way you fix it, which is not 21 the way it should be fixed or could be fixed? 22 Answer: That's a problem. That's 23 also an advantage. 24 If someone posts a message that says, 25 oh, this particular build does this on my 12676 1 machine. Another beta tester that may have 2 encountered the same problem says, oh, yeah, I 3 had the same problem, do this. And they fix 4 it. 5 Which is really nice, that means it 6 didn't take any of our resources to do it. 7 There the town meeting actually helped us out. 8 We leveraged our support burden in that sense. 9 Question: Is this leveraging of 10 support burden a reason why you would use the 11 CompuServe beta forum rather than phone lines? 12 Answer: Certainly leveraging support 13 is one of the advantages of using CompuServe. 14 The other reason is that it is -- it's done on 15 noninterrupt basis. 16 So, the telephone is totally interrupt 17 driven. You have to answer the phone right 18 then and there, you have to answer the 19 question. 20 If a message comes through 21 electronically, like electronic mail or 22 CompuServe, you can think about it, formulate 23 the response, do it on a priority basis. You 24 don't have to answer that person right here and 25 now. 12677 1 If someone has a real serious problem, 2 like we just trashed data on their hard disk, 3 we can pick that out and go right to them, 4 instead of them getting a busy signal because 5 we're helping somebody actually figure out how 6 to make their game run faster or something like 7 that. It allows us to prioritize. One of the 8 big advantages is it allows us to prioritize 9 support. 10 (Whereupon, Mr. Green read the 11 following.) 12 Question: Okay. What do you 13 understand a nonfatal error to be? 14 Answer: It doesn't kill you. 15 Probably you know, probably not something to 16 worry about. 17 Question: You said you had seen 18 nonfatal error, you believed, in Windows 3.1. 19 Was that the beta version we're talking about? 20 Answer: Yes. 21 (Whereupon, Mr. Cashman read the 22 following.) 23 Question: Does this look familiar? 24 Answer: Looks like a CompuServe 25 message. 12678 1 MR. CASHMAN: Your Honor, could we 2 take a break at this time? It would be a good 3 time for a recess. 4 THE COURT: Sure. 5 Be a ten-minute recess. Remember the 6 admonition previously given. Leave your 7 notebooks here. 8 All rise. 9 (A recess was taken.) 10 (The following record was made out of 11 the presence of the jury 9:29 a.m.) 12 THE COURT: You may be seated. 13 MS. NELLES: Your Honor, if I could 14 have just a minute. 15 I really hate to be a nudge about 16 this, though I realize I'm introducing new 17 Yiddish into our vocabulary. 18 Back in October in one of our court 19 conferences we established a procedure for this 20 courtroom, and it was made very clear with 21 agreement among the parties and with the Court 22 that it was going to be solely the role of the 23 Court to introduce courtroom procedure to the 24 jury. 25 And I think it's an important rule and 12679 1 a rule that the parties have generally followed 2 quite well. And we reinforced that rule before 3 we began playing Mr. Gates' deposition and I 4 believe we talked about it again before we had 5 the very first deposition read to the jury to 6 explain what was going on. 7 Now, I'm not suggesting for a moment 8 that there's not always going to be a little 9 bit of back and forth among counsel, and I 10 think that's fine, but I do think we get on a 11 dangerous slope when we allow counsel to tell 12 the jury how a courtroom is going to be run, 13 which is exactly what happened before the 14 playing of -- or the reading of Mr. Hill's 15 deposition. 16 And while I don't think there is any 17 particular prejudice in this particular 18 circumstance, what I would ask is that we 19 remain consistent with procedure in this 20 courtroom. 21 And if either side thinks there's a 22 reason to vary and that they should present, 23 their counsel should present a variation in 24 procedure to the jury that they at least ask 25 the Court's permission before going forward. 12680 1 THE COURT: Anything further? 2 MS. NELLES: No. Thank you, Your 3 Honor. 4 THE COURT: Any response by 5 Plaintiffs? 6 MR. CASHMAN: Nothing, Your Honor. 7 THE COURT: Very well. We will adopt 8 that procedure. 9 MS. NELLES: Thank you, Your Honor. 10 THE COURT: Ten-minute recess. 11 (A recess was taken from 9:31 to 12 9:46 a.m.) 13 (The following record was made in the 14 presence of the jury at 9:46 a.m.) 15 THE COURT: Everyone else may be 16 seated. 17 Mr. Williams. 18 Okay, you may proceed. 19 (Whereupon, the deposition was read 20 with Mr. Cashman questioning.) 21 Question: Mr. Hill, could you read 22 the subject of this message? 23 Answer: DR-DOS test, funny error. 24 Question: Okay. It's addressed to 25 Andy and others. 12681 1 Could that conceivably -- I guess the 2 others could be you. Was this addressed to 3 you, if you know? 4 Answer: It was probably addressed to 5 Andy Thomas. 6 Question: If you'll look down to the 7 second paragraph underneath open quotation 8 mark, could you read those three lines to me 9 starting nonfatal? 10 Answer: Nonfatal error detected: 11 Error number 2726 -- second line -- please 12 contact Windows 3.1 beta support. 13 New line, press enter to cancel or C 14 to continue. 15 Question: Now, you said you believed 16 you had seen some one or two, I think was your 17 testimony, reports of nonfatal errors with 18 Windows 3.1. Is this the type of error you 19 were referring to? 20 Well, type of message and also the 21 type of nonfatal error that you might have been 22 referring to. I don't know, there may be 23 others. 24 Answer: Something would look similar. 25 There would be a message saying -- that said I 12682 1 got a nonfatal error, what do I do, what did it 2 mean. 3 Question: The error states error 4 number 2726. 5 Answer: Yes. 6 Question: Did your beta testers have 7 a list of errors with numbers? 8 Answer: Not that I know of, no. 9 Question: Do you know if there was an 10 internal list at Microsoft that your support 11 people within the beta support group had that 12 would list what this error might be? 13 Answer: I don't think they did. 14 Question: Okay. Are you familiar 15 with what this error might be? 16 Answer: Something like this, I take 17 it this is in March, it could have been for 18 some of this stuff that they had put in to 19 confirm that we had MS-DOS, a copy of MS-DOS 20 running. 21 Question: Okay. When you say, quote, 22 say some of the stuff they put in, closed 23 quote, what are you referring to? 24 Answer: Apparently, there was some 25 code that was put into the betas that looked 12683 1 for -- looked for MS-DOS, Microsoft DOS, or 2 derivative, OEM flavor of DOS. 3 (Whereupon, Mr. Green read the 4 following.) 5 Question: Okay. Do you recall any 6 rationale that was stated to you by Mr. Cole or 7 anybody else, if you recall somebody else, as 8 to why this message, this text itself, was 9 placed in the product? 10 Answer: You mean why we called it 11 nonfatal error? 12 Question: Yes. 13 Answer: I think that they were 14 working out the wording on it. And they 15 essentially put this in because it was beta. 16 They wanted to make sure it was correct. They 17 kind of wanted to test the code. 18 Generally, you know, in betas you put 19 -- error messages will get put in by 20 developers, and then the final wording gets 21 nailed down towards the end, as you get much 22 closer to the end, final wording comes from the 23 user education department. 24 Question: To the best of your 25 knowledge, was what was supposed to eventually 12684 1 replace this going to be an error message? 2 Answer: I don't know if it was going 3 to be an error message. I don't know if it was 4 going to be an informational message. I'm not 5 sure what the final wording was going to be. 6 Question: In your experience in 7 software development, would you use the word 8 quote, error, quote, again this is your 9 experience, to hold the place of an 10 informational message? 11 Answer: Oh, yeah. Yeah. 12 Question: Why? 13 Answer: Again, in beta software, you 14 just put something, your term placeholder is 15 fine, you put things that, you know, that -- in 16 general, you'll put things to hold the place 17 for something that's eventually going to come. 18 Internally they may call it an error; 19 it may actually be an informational type thing, 20 actually may mean they want to branch and do 21 something else later on in the product, may be 22 kind of an interim type thing. It may provide 23 debug output to tell you it made it to this 24 section, made it to this point, that type of 25 thing. 12685 1 Question: Would a beta tester seeing 2 a nonfatal error message such as this one on 3 Exhibit 2 assume that there was an error? 4 Answer: You know, I can't speak for 5 what a beta tester would think or not. 6 I mean, generally, my experience from 7 beta testing software is you'll get all kinds 8 of weird messages that flash up on your screen 9 when you're running beta software. 10 I mean, there have been some real 11 funny ones that have come out of the developers 12 to be used as placeholders. 13 (Whereupon, Mr. Cashman read the 14 following.) 15 Question: Mr. Hill, subsequent to the 16 time you were initially told this code was 17 being added, did anyone later give you a reason 18 as to why they wanted to put the code in the 19 software, the detection code? 20 Answer: It was -- the reason I was 21 given was to look for a Microsoft version of 22 DOS. 23 Question: Did anyone ever tell you 24 why individuals within Microsoft were 25 interested in having the software look for a 12686 1 Microsoft version of DOS? 2 Answer: I don't think anyone ever 3 told me, no, directly. 4 Question: Can you recall if you ever 5 asked why the code was being put into the 6 product? 7 Answer: I think the only question I 8 asked is how do I respond to it. 9 Question: How do you respond to what? 10 What were you anticipating having to respond 11 to? 12 Answer: A message like this. 13 Question: Way back when we were 14 talking about a list of individuals or 15 corporations who were to be denied access to 16 the beta testing process. Is the owner of 17 DR-DOS, whether it was DR-DOS or Novell, after 18 the -- whether Digital Research or Novell, 19 after their acquisition of that company, were 20 they allowed beta access? 21 Answer: No. 22 Question: I should clarify that 23 question. 24 Did the DR-DOS group, the people who 25 develop that product, were they allowed beta 12687 1 access? 2 Answer: No. 3 Question: Was Novell different -- 4 were different parts of Novell, once it 5 acquired Digital Research, were they allowed 6 beta access for Windows 3.1? 7 Answer: I don't know. 8 Question: I was thinking particularly 9 of the NetWare group. 10 Answer: I'm not sure. 11 Question: Okay. What, as the person 12 primarily responsible for the beta program, 13 what, if any, instructions were you given on 14 how to respond to beta testers' questions about 15 the interaction of the Windows 3.1 beta with 16 Digital Research DOS? 17 Answer: I believe the response was it 18 was an unsupported operating system and users 19 used it at their own risk. It was not tested 20 or supported by Microsoft. 21 Question: Okay. From whom -- did you 22 get an instruction or did you know that? 23 Answer: I received that from David 24 Cole. 25 Question: Okay. And who would you 12688 1 have disseminated that information to on your 2 own staff? 3 Answer: The beta technical support 4 team. 5 Question: Was there a policy within 6 the Win 3.1 team that all calls related to Win 7 3.1 went to beta support? 8 All beta calls, that's the question. 9 All calls that came in from a beta tester. 10 Answer: Let me try and answer it this 11 way. 12 The beta testers, when they received 13 the beta software, were given a little kit. It 14 had phone numbers, dedicated phone lines for 15 beta support. They were given here is how you 16 get into the CompuServe forum. If you need to 17 fax us, here is the phone number, and that type 18 of thing. 19 If a call came into one of those 20 lines, it would go to the beta team. The beta 21 team would handle that. If a beta tester 22 called somebody else at a different phone 23 number, I don't know what happened. 24 Question: Okay. If someone -- if a 25 legitimate beta tester called Microsoft product 12689 1 support, what would be the procedure there? 2 Answer: If a beta tester called our 3 product support that does retail products; is 4 that your question? 5 Question: That's correct. 6 Answer: And asked them a question 7 about the Win 3.1 beta? 8 Question: Yes. 9 Answer: My guess -- I mean, my guess 10 is product support would say that's a beta 11 question. You need to contact the beta team 12 for support. 13 Question: Now, the message that 14 Mr. Cole instructed you to either give out to 15 beta testers who asked questions about DR-DOS 16 or to have your team give out to beta testers 17 who asked about DR-DOS, do you recall about 18 what time that that discussion you had with 19 Mr. Cole was? 20 Answer: It was sometime during the 21 beta program. 22 Question: Okay. I would like to have 23 marked as Hill Exhibit Number 3 a Microsoft 24 document. The first page is numbered X 594614 25 and runs through 594622. Its first message, 12690 1 it's E-mail, is dated October 31st, 1991. 2 Okay. We'll take them one at a time. 3 The first message on the first page, 4 Microsoft pagination, number 594614. Do you 5 see that? 6 Answer: Yes. 7 Question: The first message states 8 from David Cole, c-o-l. Who would that be? 9 Answer: That would be David Cole, the 10 person I reported to. 11 Question: The to is Andyhi. 12 Answer: That would be me, Andy Hill. 13 Question: And the date on this, for 14 the record, is October 31st, 1991; is that 15 correct? 16 I realize there are two days on there. 17 Answer: Okay. That must have been 18 the date it was printed. So yep, October 31st. 19 Question: Could you read the 20 paragraph from Mr. Cole to yourself? 21 Answer: DR-DOS is an untested and, 22 therefore, unsupported operating system. 23 MS-DOS (or OEM versions of it) is required for 24 Windows. 25 Question: There is a second message 12691 1 below that, also from David Cole to Andyhi, 2 which appears to follow about a minute after 3 the first one. 4 Would you agree with that? 5 Answer: Uh-huh. 6 Question: Could you read the text of 7 that message? 8 Answer: Should have added that using 9 DR-DOS with Microsoft Windows is at the sole 10 risk of the user. We don't support it. 11 Question: Is this the message you 12 were referring to earlier in your testimony as 13 that which you disseminated down to your staff? 14 Answer: Correct. I believe that 15 piece of mail follows. Yep. 16 Question: We'll go down to the third 17 piece of mail, which is from Andyhi -- 18 Answer: Yes. 19 Question: -- to betaw31. 20 Answer: Yes. 21 Question: Who would betaw31 be? 22 Answer: That's the beta support team. 23 Question: Okay. 24 Answer: And cc Bradc would be who? 25 Brad Chase. 12692 1 Question: And Janineh? 2 Answer: Janine Harrison. 3 Question: Who was Brad Chase? 4 Answer: Brad Chase is -- I don't know 5 what he was at that time. He's now the general 6 manager of the MS-DOS business unit. 7 Question: Do you recall why you cc'd 8 Mr. Chase? 9 Answer: Probably as an FYI. 10 Question: And Janineh? 11 Answer: Because she was working with 12 me on the technical team at that time. 13 Question: Okay. She was on the 14 technical team? 15 Answer: She was managing the 16 technical team. She worked with me. It was 17 FYI. 18 I think she was the one that actually 19 surfaced the first question, so she was 20 included on it so she would see what the 21 response was. 22 Question: Okay. In terms of how the 23 question arose in your message of Thursday, 24 October 31st, time 13:37:18, there is a dashed 25 line underneath what appears to be the text of 12693 1 the message. 2 First, would you -- are the words for 3 beta testers that report problems with DR-DOS 4 and 3.1, DR-DOS is an untested and, therefore, 5 unsupported operating system. MS-DOS (or OEM 6 versions of it) is required for Windows. 7 Using DR-DOS with Microsoft Windows is 8 at the sole risk of the user. We don't support 9 it. 10 Is that the message you reported to 11 betaw31 and Brad Chase and Janine Harrison? 12 Answer: Yes. 13 Question: Underneath that text I just 14 read there is a dashed line. What does that 15 signify, vertical line, the vertical line on 16 the left? 17 Answer: The vertical line on the left 18 indicates a previous thread; in other words, 19 this was a reply to a previous message. 20 Question: And the message, the first 21 message there from Janineh to Andyhi, what is 22 that message, if anything? 23 Answer: Looks like Janine had 24 forwarded a message from Andy Thomas to her to 25 me. 12694 1 Question: Okay. And a-andyt is Andy 2 Thomas? 3 Answer: Correct. 4 Question: Okay. And is that message, 5 quote, what should I tell these DR-DOS people, 6 if anything, closed quote? 7 Answer: Correct. 8 Question: Okay. And you saw that and 9 then you did what with her message? 10 Answer: I sent it up the line to 11 David Cole and asked him how to respond to it. 12 Question: Okay. And then the first 13 message we read on page 1 of Exhibit 3, that 14 was his response to you? 15 Answer: Correct. 16 Question: The first half of his 17 response? There are two messages from Cole 18 back to Andy Hill. 19 Were those two messages responding to 20 the same query? 21 Answer: Yes. 22 Question: Okay. And in your message 23 to betaw31, Brad Chase and Janine Harrison, did 24 you combine both parts of Mr. Cole's message? 25 Answer: Yes, I did. 12695 1 Question: So, in late October 1991, 2 this question was asked of David Cole was the 3 Windows 3.1 beta in process at that time? 4 Answer: Yes. 5 Question: To the best of your 6 recollection, is this the first time you were 7 asked for what response should be given to 8 people with DR-DOS questions, people being your 9 beta testers? 10 Answer: As best as I can recall, yes. 11 Question: Okay. Do you recall if 12 before October 31st, 1991, beta testers had 13 questions about the way Windows 3.1 operated 14 with or loaded on DR-DOS? 15 Answer: To the best of my 16 recollection, I don't remember. I mean, I 17 don't recall that ever coming up. 18 Question: Okay. If you can move 19 forward in this document to page -- internal 20 Microsoft pagination 594617. 21 Answer: Okay. 22 Question: The question in this 23 message is -- and I'll read it. Quote, do you 24 want me to go ahead and post this as a general 25 message up on the forum? Thanks, closed quote. 12696 1 What does this refer to? 2 Answer: This would refer to the 3 message that I sent to betaw31 and Bradc and 4 Janineh saying, quote, DR-DOS is an untested 5 and, therefore, unsupported operating system. 6 MS-DOS (or OEM versions of it) is required for 7 Windows. Using DR-DOS with Microsoft Windows 8 is at the sole risk of the user, closed quote. 9 And Tom was asking me if he should 10 post that as a general message on the forum. 11 Question: Okay. What was your 12 response, if you recall? 13 Answer: My response was, no, only 14 post it privately. 15 Question: Okay. And why was that? 16 Answer: I believe I also asked David 17 Cole about that. 18 Question: Do you recall if he gave a 19 reason for that answer, rationale? 20 Answer: I don't recall. 21 Question: So your response to 22 Mr. Thomas is someone -- did you, if you can 23 recall, was it an E-mail conversation between 24 yourself and David Cole as to whether or not 25 this should be posted as a public message? 12697 1 Answer: Yes, I'm pretty sure. I 2 definitely remember saying only post it 3 private. I'm pretty sure that I went up and 4 got the okay from David Cole on that. 5 (Whereupon, Mr. Green read the 6 following.) 7 Question: Okay. Why would you, you 8 being Microsoft here, want to post this 9 privately to people who asked rather than 10 publicly, if you have an opinion? 11 Answer: I don't think it's something 12 we want to make a big deal of. 13 Question: What do you mean by make a 14 big deal out of? 15 Answer: The -- it's something that, 16 you know, looks like one user had this problem. 17 No need to post it publicly. 18 (Whereupon, Mr. Cashman read the 19 following.) 20 Question: Okay. Were there any PR 21 reasons, public relations reasons, that would 22 go into whether or not you would want to post a 23 message publicly, generally, not this specific 24 message? 25 Answer: That may be one thing you 12698 1 consider. 2 Question: With respect to this 3 specific message, would that be a 4 consideration? 5 Answer: It could have been a 6 consideration. It might be a consideration. 7 I'm not sure. 8 Question: If you could please turn to 9 page number 594619. 10 Answer: Got it. 11 Question: And you'll note that we've 12 jumped considerable in time here. 13 The message is from David Cole to 14 Bradsi. Bradsi is whom? 15 Answer: Bradsi, perhaps? 16 Question: Yes. 17 Answer: Brad Silverberg. 18 Question: The date on this is January 19 17, 1992. Previous messages we were discussing 20 were in October of 1991. On the CC list for 21 that message, you are listed. 22 Answer: Uh-huh. 23 Question: And who is w-clair1? 24 Answer: Claire something or other. 25 She was a member of our PR team or she worked 12699 1 for Wagner Instrument. 2 Question: Is that what the w- stands 3 for? 4 Answer: Generally. 5 Question: If you could read for me 6 the -- well, do you recall seeing this message? 7 Answer: Yep. Now I do. 8 Question: What was this message 9 concerning? You can avoid reading a page into 10 the record. 11 Answer: Let's see. I believe this 12 was -- I believe this was a response that we 13 wanted to post to explain the nonfatal error 14 message you are seeing. 15 Question: When you say we, yourself 16 and someone else, Microsoft generally? 17 Answer: When I say we, I mean this is 18 probably the way Microsoft wants to respond, 19 wants to tell people. 20 Question: Now, down at the bottom of 21 the page, there is a horizontal line and then a 22 caret states, quote, from Andy Hill to David 23 Cole, closed quote. 24 Is the message above, that from David 25 Cole to Brad Silverberg, a response to your 12700 1 message to David Cole? 2 What's the relationship between these 3 two messages, if you can tell me? 4 Answer: Well, they don't have the 5 same title line, so it's not a guarantee. 6 Generally if it's the same thread, it has the 7 same title line. 8 Let's see what the dates are. 9 Actually, the caret might imply that it's all 10 part of the same message. 11 Question: So would this have been 12 forwarded with David Cole's message to Brad 13 Silverberg? 14 Answer: Yes, yes. 15 Question: Now, the text of your 16 message, if I could read it since it's one 17 line, quote, David, here's the first time a 18 tester has outright asked us this question. 19 How do we respond? Closed quote. 20 What question were you referring to 21 there? 22 Answer: Asked us this question. It 23 looks like it's referring to a beta tester that 24 got a nonfatal error or got nonfatal error 25 messages. 12701 1 Question: And from what products did 2 that tester -- what components of Windows did 3 that beta tester get nonfatal errors? 4 Answer: Smart drive and Windows, he 5 says here. 6 Question: And who is Matt Sk? 7 Answer: Matt Sk is one of the beta 8 technical support people. 9 Question: What's his last name? 10 Answer: Skinner, Matt Skinner. 11 Question: If you could go back to 12 Mr. Cole's message to Mr. Silverberg. 13 Answer: Uh-huh. 14 Question: The fourth paragraph 15 states, I'll read out loud, so that our Windows 16 customers are fully aware of the hazards of 17 running Windows on a nonsupported operating 18 system, Windows detects for the presence of 19 MS-DOS and warns the user if it is not found, 20 closed quote. 21 Now, we were speaking earlier about 22 some string of code that would detect the 23 presence of Microsoft DOS or, I don't recall 24 the exact words, I assume licensed versions of 25 Microsoft DOS. 12702 1 Is that the code you were talking 2 about going back an hour or so? 3 Remember earlier we were talking about 4 some code that was to be placed within the 5 Windows 3.1 beta that would detect for the 6 presence of MS-DOS or, I take it to mean, OEM 7 versions of MS-DOS? 8 Is the code that's discussed in this 9 message from David Cole to Brad Silverberg the 10 code that you were speaking of earlier? 11 Answer: As best as I can tell. I 12 don't know. I never saw the code. I never 13 knew where it went. So, the best I can tell, 14 that's what they're referring to. 15 (Whereupon, Mr. Green read the 16 following.) 17 Question: If I can continue, quote, 18 the final beta includes this detection code and 19 the nonfatal error message you are seeing. The 20 final product will produce a more complete 21 warning message, and as with the final beta, 22 the user will be allowed to continue using 23 Windows, end of quote. 24 Was this message -- and I realize I 25 did not read it in its entirety -- ever posted? 12703 1 Answer: Not to my knowledge, no. 2 Question: Do you recall whether any 3 message was posted on CompuServe? 4 Answer: I don't think there was. 5 Question: Do you recall why? 6 Answer: I believe this was a proposed 7 response from David Cole. He was kind of 8 proposing it to Brad Silverberg, but I don't 9 think it ever got approved and I think we kind 10 of put the whole thing on hold. 11 Question: Do you recall if a DR-DOS 12 user who was also a beta tester of Windows 3.1 13 asked about these nonfatal error messages, did 14 that user get a response at this time period, 15 January 1992? 16 Answer: From January on, I don't know 17 what kind of response they got. 18 At one point, we were asking them for 19 a boot disk and some other information, but I 20 don't believe they ever got a response giving 21 them an explanation or anything like that. 22 Question: Do you recall why you were 23 asking for a boot disk? Is that standard 24 operating procedure? 25 Answer: It was for this, to make sure 12704 1 we weren't getting a false positive. 2 Question: And a false positive would 3 be what? 4 Answer: It would be that we said we 5 found -- we've detected a non -- it would be 6 that Windows detection. It would be that 7 someone is using MS-DOS, but we said they're 8 not. 9 So the user would have a version of 10 MS-DOS on the machine, and we'd run through it 11 and we would say you don't, and that would be 12 incorrect. So we wanted to confirm this code 13 was operating properly. 14 Question: Did you hear of any 15 discussion about these nonfatal error messages 16 in terms of the volume that were coming in? 17 Answer: No. 18 Question: Do you have any idea what 19 volume came in? 20 Answer: Very low. 21 Question: What would very low be? 22 Answer: A handful, five, maybe. 23 (Whereupon, Mr. Cashman read the 24 following.) 25 Question: I'd like to have marked as 12705 1 Hill Exhibit Number 4 a Microsoft document 2 numbered 5923570 through 571. In the upper 3 left hand corner, it's identified as bug number 4 12594. 5 Can you identify what this is for us? 6 Answer: This looks like a bug from 7 one of our bug databases, RAID database. 8 Question: It looks like one. Is this 9 the standard format you would find in the RAID 10 database? 11 Answer: If I were looking at the RAID 12 database on the screen, there would be another 13 screen with a lot of summary information on it. 14 Question: So we're lacking the 15 summary information? 16 Answer: Yes, but you got the body of 17 the report. 18 Question: Now, at the top of this, to 19 find out if this is one discrete document, on 20 the top it says, quote, copied from 21 dwsq12:winbeta 1-19-92, old bug number 2101, 22 related bug number 2180, closed quote. 23 Is that language related to the rest 24 of the document? 25 Answer: Yes. 12706 1 Question: And in what way are they 2 related? 3 Answer: That tells me that originally 4 this bug was in the beta database; in other 5 words, something that may have been downloaded 6 from CompuServe or came in over the phone or 7 the fax and it has been transferred into the 8 development database. 9 Question: Just briefly, if you could 10 go down to Item 5, it says, quote, I don't know 11 if this is related to the problem above, but 12 the following nonfatal errors occur every time 13 I run Windows, closed quote. 14 Then there's some discussion or some 15 reporting of nonfatal error number 1891 and 16 nonfatal error number 2726. 17 If you could just explain to me what 18 the -- it says, quote, OS version: DOS 6.0, 19 closed quote, and there's a line underneath 20 that with, quote, Andyhi, closed quote, and I 21 assume that's you -- 22 Answer: Yes. 23 Question: -- and the term active. 24 Answer: Yes. 25 Question: What does that signify? 12707 1 Answer: That means I took no action 2 on the bug. I only made an annotation on it. 3 Question: Active means you took no 4 action? 5 Answer: Yes. 6 Question: What would signify if you 7 took action? 8 Answer: If that said resolved or 9 closed. 10 Question: And resolved and closed are 11 not necessarily the same thing? 12 Answer: Correct. 13 Question: Closed being -- 14 Answer: Resolved -- active just means 15 you made an annotation or review, sent it off 16 to somebody else. 17 Resolved means that you've decided to 18 take action on it. It may be to change the 19 code. It may be you've decided to do nothing. 20 It may be that you've already seen this bug, 21 it's a duplicate. 22 Closed is when somebody from testing 23 goes through and says, okay, I'm okay with 24 this. It's essentially a quality assurance 25 measure. 12708 1 Question: Now, under the active line, 2 is that text yours, line starting, quote, this 3 is DR-DOS 6.0? 4 Answer: Yes. 5 Question: Could you read that, 6 please? 7 Answer: This is DR-DOS 6.0 problem. 8 Need to have the user send us a boot disk (see 9 E-mail from Janine on this). Other than that, 10 he needs to test under MS-DOS. DR-DOS is 11 unsupported/untested. 12 (Whereupon, Mr. Green read the 13 following.) 14 Question: The line other than that he 15 needs to test under MS-DOS, is that something 16 -- is that a note to yourself or is that a note 17 to have something said to a user, the user in 18 this instance? 19 Answer: I think it's more an FYI. 20 Question: So the person who would be 21 responsible for talking to this user, would 22 that person have been instructed to tell the 23 user -- 24 Answer: This isn't something that 25 says go tell the user he needs to test under 12709 1 MS-DOS. I'm making a comment. I'm saying -- 2 I'm just saying they've got to test it under 3 MS-DOS. Kind of making a general statement, 4 DR-DOS is unsupported, untested. 5 It's also for a -- it's an FYI for the 6 person who opened this bug so in the future 7 they'll know. It's a refresher, that type of 8 thing. 9 (Whereupon, Mr. Cashman read the 10 following.) 11 Question: Mr. Hill, you mentioned 12 something earlier as a release candidate. 13 Answer: Yes. 14 Question: How does the release 15 candidate differ from a beta? 16 Answer: A release candidate is a 17 beta. It's just a different name. It means 18 we're getting very close to shipping. 19 (Whereupon, Mr. Green read the 20 following.) 21 Question: Mr. Hill, did you ever 22 instruct the people who worked on Windows 3.1 23 beta support team to attempt to persuade beta 24 users -- beta testers who reported difficulty 25 running Windows 3.1 on top of DR-DOS that they 12710 1 ought to purchase MS-DOS instead? 2 Answer: No. 3 Question: Did you ever instruct 4 anyone on the Windows 3.1 beta support team to 5 advise beta testers who reported difficulties 6 running Windows 3.1 on top of DR-DOS to say 7 disparaging things about DR-DOS? 8 Answer: No. 9 (Whereupon, Mr. Cashman read the 10 following.) 11 Question: Did you ever instruct your 12 beta technical support staff to offer users of 13 DR-DOS who were having difficulties with the 14 Windows 3.1 beta copies of MS-DOS? 15 Answer: There may have been a 16 discussion of it. I don't know if it ever came 17 to fruition. 18 (Whereupon, Mr. Green read the 19 following.) 20 Question: Did you ever offer anybody, 21 any user of DR-DOS that was having difficulty 22 with Windows 3.1 beta, a free copy of MS-DOS? 23 Answer: No, I didn't. 24 MR. CASHMAN: That concludes the 25 testimony of Andrew Hill, Your Honor. 12711 1 THE COURT: Thank you. You may step 2 down. 3 At this time, Plaintiffs would like to 4 offer Plaintiffs' Exhibit 1055 and 1179. 5 And with the Court's permission, I'd 6 like to approach, provide the Court with a CD 7 of those exhibits and two hard copies and to 8 provide a copy to Microsoft. 9 THE COURT: Very well. 10 MR. GREEN: We have no objection, Your 11 Honor, to PX 1055 and also no objection to the 12 admission of PX 1179, with the understanding 13 that it's being offered for the limited purpose 14 of notice. 15 THE COURT: Very well. 4178, was that 16 offered? 17 MR. CASHMAN: Not with Mr. Hill, Your 18 Honor. 19 THE COURT: That was offered with 20 Mr. Barrett? 21 MR. CASHMAN: I will have to go back 22 and check my records, Your Honor. 23 MS. NELLES: Your Honor, I believe I 24 offered that exhibit. 25 THE COURT: You offered it and they 12712 1 were going to check on it. Sorry about that. 2 Okay. Call your next. 3 MR. CASHMAN: The two exhibits, are 4 they admitted? 5 THE COURT: They are admitted. I'm 6 sorry. 7 MR. CASHMAN: Okay. Thank you, Your 8 Honor. 9 Next, the Plaintiffs will be calling 10 Linnet Harlan. 11 I have a copy for the court reporter, 12 Your Honor. 13 MS. NELLES: With the Court's 14 permission, I'm going to hand off duties to 15 Mr. Green at this time. 16 THE COURT: Very well. 17 MR. CASHMAN: I have a copy for the 18 Court and a copy for Microsoft's counsel. 19 THE COURT: Very well. Thank you, 20 sir. 21 You may proceed. 22 What was the date of this deposition? 23 MR. CASHMAN: This testimony, Your 24 Honor -- 25 THE COURT: My copy says December 2nd, 12713 1 1998. Does that sound correct? 2 MR. CASHMAN: That is correct, Your 3 Honor. Taken in the Caldera action. 4 THE COURT: Very well. 5 (Whereupon, the following video was 6 played to the jury.) 7 Question: Would you please state your 8 full name for the record? 9 Answer: Linnet Cochran Harlan. 10 Question: What is your current 11 employment? 12 Answer: I'm a lawyer and a writer. 13 Question: Are you self-employed or 14 are you employed by any organization? 15 Answer: I'm self-employed. 16 Question: Do you have any, as a 17 lawyer, any current consulting or retainer 18 arrangements with anyone? 19 Answer: I had one this year with 20 Caldera. 21 Question: When did it -- do you 22 recall when that agreement with Caldera was 23 first formed? 24 Answer: Maybe August, maybe 25 September. Sometime around there. 12714 1 Question: Of this year? 2 Answer: Yes. 3 Question: Can you describe what 4 services you provided to Caldera? 5 Answer: Legal services. 6 Question: And by that, do you mean 7 you rendered legal advice or did you provide 8 historical background of the work you did while 9 you were employed by DRI and Novell? 10 Answer: I worked with them on the 11 case. 12 Question: Okay. 13 Would you describe the work you did 14 for them as providing facts to them based on 15 your experience? 16 Answer: I think it's very hard to 17 isolate what I did. 18 Question: Instead of my -- can you 19 tell me generally the kinds of services you 20 provided to them? 21 Answer: I talked with them about 22 legal strategies for the case. 23 Question: Did you provide any written 24 documents for them? 25 Answer: No. Oh, I did provide one 12715 1 document. 2 It was a document regarding strategy. 3 Question: How many hours did you 4 spend or devote to providing services to 5 Caldera under that agreement? 6 Answer: Oh, approximately 80, 7 roughly, ballpark. 8 Question: Did you review documents in 9 connection with that work? 10 Answer: Yes. 11 Question: Was your agreement with 12 Caldera in writing? 13 Answer: Yes. 14 Question: And it was with Caldera or 15 one of Caldera's law firms? 16 Answer: Actually, I think it may have 17 been with the Summit Law Group. 18 Question: At what rate were you 19 compensated under that agreement? 20 Answer: $300 an hour. 21 Question: During the time that you 22 were counsel for DRI and/or Novell, did you 23 assist in the preparation of any declarations 24 submitted to any governmental agency? 25 Answer: Yes. 12716 1 Question: Do you recall whose 2 declarations you assisted in the preparation 3 of? 4 Answer: I probably made comments on 5 most of the declarations that DRI submitted and 6 that Novell submitted. I can't say blanket 7 every one, but commented probably on most of 8 them. 9 Question: Does your agreement with 10 the Summit Law Group you described earlier 11 include compensating or reimbursing you for 12 your time today? 13 Answer: No. Well, it specifically 14 says I won't be compensated for my time today. 15 Question: Can you describe for me 16 your education? 17 Answer: I went to undergraduate 18 school at Grinnell College in Grinnell Iowa. I 19 went to law school at Northeastern School of 20 Law in Boston. I have taken some special 21 courses at Harvard Law School and at Stanford 22 Business School. 23 Question: Beginning with your 24 graduation from Northeastern School of Law, 25 could you describe for me your employment 12717 1 history? 2 Answer: Yes. 3 I first was an attorney at a law firm 4 in Santa Clara, California. 5 Then I was -- 6 Question: Let me ask you, it would be 7 helpful if you could give me the name and the 8 dates that you were there. 9 Answer: Oh, okay. I passed -- well, 10 actually I started working with them before I 11 passed the bar April -- no, February 1979. 12 My graduation from Northeastern was a 13 little unusual in that I completed all my 14 coursework in '78, but you can't graduate 15 except in January and June, so my degree says 16 '79, but I was actually working with Skjerven, 17 Morrill earlier than that. 18 And so I was there in, I'd say, 19 February or March of '79 and I left in October 20 of 1984. 21 Question: And what was your next 22 employment? 23 Answer: I was an attorney for NEC 24 Electronics. 25 Question: When did you leave NEC? 12718 1 Answer: I think it was early January 2 1990. 3 Question: What was the reason for 4 your leaving NEC? 5 Answer: I took a job with Digital 6 Research. 7 Question: To whom did you report? 8 Answer: At Digital Research? 9 Question: Yes. 10 Answer: Dick Williams. 11 Question: And were you general 12 counsel at DRI? 13 Answer: Yes. 14 Question: Did your title change at 15 all between the time you were hired in January 16 of 1990 up to the time of the merger with 17 Novell? 18 Answer: No. 19 Question: After the merger with 20 Novell, did your title change? 21 Answer: But anyway, I was no longer 22 general counsel of Digital Research. I became 23 senior corporate counsel of Novell. 24 Question: After the merger, to whom 25 did you report? 12719 1 Answer: David Bradford. 2 Question: For how long were you 3 employed by Novell? 4 Answer: I was an employee of Novell 5 until about November of 1993. 6 Question: What was the reason for 7 your leaving Novell? 8 Answer: Novell was having layoffs and 9 I was one of the people laid off. 10 Question: While you were employed by 11 DRI prior to the merger with Novell, were you a 12 member of any management committee? 13 Answer: Okay. So while I was at DRI 14 -- during the DRI period, was I a member of any 15 management committees? 16 Yes. I was a member of the executive 17 committee. And I think I was a member of 18 something called -- something like pricing 19 committee or something, and there may have been 20 other committees, too. 21 Those are the two I remember right 22 now. 23 Question: Did you belong to any 24 industry groups while you were employed by DRI? 25 Answer: Well, what industry? 12720 1 Question: I mean, the computer 2 industry groups of legal counsel focusing on 3 industrywide issues. 4 Answer: Oh, well, I was a member of 5 the Peninsula Association of General Counsel, 6 and I was a member of the executive committee 7 of the international law section of the 8 California state bar, and an officer in it, and 9 I did some work with the Business Software 10 Alliance. 11 That's all I can think of right now. 12 Question: Did you ever belong to or 13 attend any meetings sponsored by industry 14 groups to address the issue of piracy? 15 Answer: Well, the Business Software 16 Alliance had that as a primary focus. I don't 17 remember going to anything else that I can 18 think of right now. 19 Question: Would the meetings that you 20 attended or participated in of the Business 21 Software Alliance -- would those meetings have 22 included as agenda items or issues the 23 discussion of the piracy issue in the industry? 24 Answer: Yes. It turned out that the 25 Business Software Alliance -- which as you 12721 1 probably know, or at least was, at the time, 2 really dominated by Microsoft -- was not that 3 helpful to DRI because its focus was 4 application. 5 And all its programs, as far as I 6 could determine, were set up to catch people 7 who were pirating applications. 8 The programs that you need to set up 9 to catch somebody who was pirating an operating 10 system are different than somebody who is 11 pirating an application, and Microsoft made it 12 very clear that they weren't interested in 13 trying to get pirates who were pirating 14 operating systems. 15 Question: When you say Microsoft made 16 that very clear, can you tell me what 17 statements you recall on that subject by 18 representatives of Microsoft? 19 Answer: Brian McCechran. I 20 specifically asked him about that at a meeting. 21 That was at Lotus in the fall of '90, I think. 22 It could -- I'm pretty sure it was the fall of 23 '90. 24 And I remember talking to him -- well, 25 it was during a break. We were out on some 12722 1 balcony or something and saying, you know, 2 Brian, as I hear them talk about this, it's 3 clear to me that the programs they're using 4 aren't really going to catch operating systems 5 pirates and we would be interested in doing 6 that. 7 And I forget whether he specifically 8 said, oh, we're not interest in that or whether 9 he just turned away. But I came away with the 10 very definite opinion that Microsoft -- Brian 11 being a Microsoft representative to the BSA -- 12 was not interested in working on piracy issues 13 as it related to operating systems. 14 Question: Is your view that Microsoft 15 wasn't interested in that based on anything 16 other than that encounter with Mr. McCechran? 17 Answer: That was a pivotal encounter. 18 Question: My question was, is it 19 based on anything other than that experience? 20 Answer: I don't recall Microsoft ever 21 touting piracy raids relating to operating 22 systems the way they did relating to 23 applications. So with applications-related 24 things, there were press releases and such. I 25 don't recall that happening with operating 12723 1 systems. 2 Question: Is there any other basis 3 for your view that Microsoft was more 4 interested in piracy of applications than 5 operating systems, other than this experience 6 with Mr. McCechran and your perception of the 7 Microsoft press release focus? 8 Answer: Well, the way they conducted 9 their business. So, for example, one of the 10 things that I did -- that we did that I thought 11 worked extremely well -- and then I talked with 12 people about that in the industry because I 13 thought it worked well -- was DRI's use of 14 holograms. 15 At the time, Microsoft was not using 16 holograms as a form of preventing piracy, and I 17 think holograms are a very good, very important 18 way of preventing piracy. 19 Question: Did you have a view about 20 whether or not it would be appropriate or 21 proper for DRI to utilize intellectual property 22 or trade secrets of Microsoft that it had 23 received, other than in an authorized way by 24 agreement with Microsoft? 25 Answer: Well, clearly it's possible 12724 1 to get information about a company in a way 2 where no authorization is necessary, so I'm a 3 little confused by your question. 4 Question: And I assume from time to 5 time, DRI might have had access to, let's say, 6 betas of -- let's use the Windows 3.0 beta. 7 I understand that DRI had an NDA beta 8 agreement with Microsoft for it to have access 9 to the 3.0 beta. 10 Answer: I think so. I think the 11 graphics group had that. 12 Question: Let me show you what's been 13 marked as Exhibit 624. 14 This is a memo from Steve Tucker to 15 John Bromhead, Andy Wightman, Dieter Giesbrecht 16 dated October 1, 1990. 17 Mr. Tucker writes, I attach a copy of 18 a review of a beta copy of MS-DOS 5.0. 19 Do you recall whether DRI ever signed 20 an NDA with Microsoft to receive a beta copy of 21 MS-DOS 5.0? 22 Answer: I know we had agreements with 23 Microsoft, and I'm trying to remember what was 24 Windows and what were other things, so I don't 25 remember. 12725 1 Question: My representation to you 2 was that I know of no agreement, and I gather 3 from your testimony you are not aware of any 4 such agreement? 5 Answer: Not that I can think of right 6 now. 7 Question: The memo then says, the 8 review was done by John Constant and provides 9 some valuable insight into the capability of 10 the Microsoft beta 224 release. This is known 11 not to be the latest release, and does not, for 12 example, include the rumored task switcher. We 13 are aware that MS has released a later beta 14 called beta 333, but we have not yet seen this. 15 I am sure that I do not need to remind 16 you that this review and the fact that we have 17 had access to a beta release of MS-DOS 5.0 is 18 extremely confidential. Please use this 19 information carefully and do not copy the 20 review to anyone without my authority. 21 Also, do not acknowledge to anyone 22 that we have had access to any beta material on 23 MS-DOS 5.0. 24 Do you recall whether Mr. Tucker, 25 Mr. Constant, or Messrs. Bromhead, Wightman, or 12726 1 Giesbrecht, or anyone else in the company ever 2 advised you, as general counsel, that DRI had a 3 copy of the MS-DOS 5.0 beta? 4 Answer: I don't remember being told 5 that. 6 Question: Do you recall ever being 7 aware that DRI had a source for MS-DOS betas? 8 Answer: No. 9 Question: Do you recall whether you 10 ever advised anybody at DRI that they should 11 keep extremely confidential and not copy or 12 acknowledge to anyone the fact that DRI had a 13 copy of an MS-DOS beta? 14 Answer: What was the question? 15 Question: Do you recall -- 16 essentially, if you look at the second 17 paragraph of this memo, it says, the fact that 18 we have had access to a beta release of MS-DOS 19 is extremely confidential. Please use this 20 information carefully and do not copy the 21 review to anyone without my authority. Also, 22 do not acknowledge to anyone that we've had 23 access to any beta material on MS-DOS 5.0. 24 My question is, do you recall ever 25 advising anyone at DRI that that's the kind of 12727 1 precaution they should take with respect to an 2 MS-DOS beta? 3 Answer: I don't recall until about a 4 minute ago knowing that we had a copy of MS-DOS 5 5.0. 6 Question: If you had known that DRI 7 had received a copy of an MS-DOS 5.0 beta, 8 would you have objected to the company 9 utilizing it? 10 Answer: I would have wanted to 11 understand how we came to have it, and then, 12 depending on how that came out, I would have 13 had discussions with Steve and with Dick 14 Williams about what should be done. 15 Question: Assuming that you did not 16 have it from an authorized source, would you 17 have objected to it? 18 Answer: Yes. 19 Question: Having looked at those 20 documents, do you have a view about whether 21 Exhibit 727 refers to internal Microsoft -- an 22 internal Microsoft memorandum? 23 Having read these two documents, do 24 you find -- do you have a view about whether 25 the information being described in 727 relates 12728 1 to an internal Microsoft memorandum or to some 2 other kind of document? 3 Answer: I believe that every point on 4 727 -- let me just double-check -- could easily 5 have come from a nonconfidential source. 6 Question: Is there anything from your 7 reading of 727 that suggests to you that it did 8 come from a source other than Microsoft? 9 Answer: There is nothing in this 727 10 that leads me to believe that it came from 11 Microsoft. 12 Question: If you became aware that 13 DRI had received proprietary information of 14 Microsoft -- and by that I mean an internal 15 Microsoft memorandum about its product plans 16 for a competing product -- would you have 17 objected to DRI's use of it? 18 Answer: I would want to understand 19 the circumstances under which we obtained it. 20 Microsoft, I am confident, had someone 21 who was specifically -- probably several 22 someones -- who were specifically assigned to 23 specific reporters, to get information out on a 24 nonexistent product, which was MS-DOS 5.0. 25 So it would surprise me not at all if 12729 1 DRI had information from a source other than 2 Microsoft that did not have any obligation of 3 confidentiality attached to it. 4 Question: If you became aware that 5 DRI had received an internal Microsoft document 6 relating to its product plans for MS-DOS, and 7 you were aware that it came in a nonauthorized 8 way, would you have objected to DRI's use of 9 the material and information? 10 Answer: I don't think Microsoft tells 11 a reporter, we don't want you to tell -- we 12 don't want you to tell this to DRI. I think 13 that Microsoft, when it talks to a reporter, 14 given how sophisticated they are -- is very 15 clear that the information is supposed to be 16 disseminated. 17 Question: And let's exclude press 18 releases because I assume Microsoft would have 19 had no expectation of confidentiality in a 20 press release. 21 Answer: Right. 22 Question: If you knew it came from a 23 nonauthorized source and was without 24 Microsoft's permission and had not been 25 distributed to any public source, would you 12730 1 have objected to DRI's use of it? 2 Answer: So, if someone had a beta 3 copy of MS-DOS 5.0 and they were not under an 4 obligation of confidentiality to Microsoft and 5 we received a copy of that, I would not be 6 troubled by it. 7 Question: Okay. My question is 8 different. I'm trying to focus on this, which 9 appears to be a copy -- I mean, I'm going to 10 come back to this -- it appears to be -- forget 11 this. Let me make sure my hypothetical is 12 clear. 13 If you became aware that DRI had 14 received an internal Microsoft memorandum that 15 had not been disseminated to any public source 16 relating to Microsoft's plans for its launch of 17 one of its MS-DOS products and someone offered 18 it to DRI with your knowledge, and you knew 19 that it was obtained in a nonauthorized way and 20 offered to you, would you have objected to it? 21 Answer: Well, I think I'm having 22 trouble with nonauthorized because I think that 23 there's a lot of information that companies, 24 especially Microsoft, especially in this 25 circumstance, disseminate, where there's no 12731 1 legal requirement that the person to whom it's 2 disseminated be authorized to pass it on. 3 Question: Let's assume by 4 nonauthorized I mean not to be seen by anyone 5 outside of the Microsoft company. 6 Answer: So you're saying a Microsoft 7 employee, perhaps, gave it? 8 Question: However -- I mean, if you 9 understood that it was to be internal only to 10 Microsoft and regarded it as trade secret 11 information, would you object to DRI's use of 12 it? 13 Answer: I'm not trying to be 14 difficult here. You know, this is an area 15 where I've spent a lot of time working and I 16 just don't know that I'm going to be able to 17 answer this hypothetical. 18 Question: And I think you testified 19 earlier that shortly after you joined DRI, DRI 20 began the process or prepared for the release 21 of its product DR-DOS 5.0. 22 Answer: Right. 23 Question: Do you recall whether the 24 release of DR-DOS 5.0 was delayed for any 25 reason? 12732 1 Answer: There may have been a slight 2 delay, or it may be that there was a 3 preliminary meeting that I went to and then it 4 got released. I don't remember. 5 Question: Do you recall whether there 6 were any legal analyses that contributed to the 7 delay its -- the delay of the release? 8 And by that, let me -- do you recall 9 if there were any legal analyses with respect 10 to whether or not DR-DOS 5.0 might infringe any 11 intellectual property rights of MS-DOS that 12 were considered, and contributed in any way to 13 the delay of the release? 14 Answer: Do you have a document 15 relating to this? 16 Question: Let me have you mark this. 17 Before I see if -- do you have any recollection 18 of that being an issue in this time frame? 19 Answer: I know that at one point we 20 had an analysis done regarding a comparison of 21 whatever Microsoft product -- of a Microsoft 22 product that was available to a DRI product 23 that was available. 24 Now, I forget exactly when that 25 analysis was done, and I forget exactly which 12733 1 products it was done on, but the very clear 2 sense that we had was that Microsoft's product 3 infringed DRI's proprietary rights. 4 Question: So I gather your answer to 5 my question is that -- well, my question was, 6 do you recall whether the release of DR-DOS 5.0 7 was delayed by an analysis of whether or not 8 DR-DOS's product infringed the intellectual 9 property rights of Microsoft? 10 Is the answer to that question no or 11 you don't recall? 12 Answer: I don't recall. I know there 13 was an analysis done at some point. I'm not 14 sure when. 15 Question: Let me show you what's been 16 marked as Exhibit 1038 in a prior deposition. 17 This is a document that predates your 18 coming to DRI, and therefore my question to you 19 is, in your capacity as legal counsel for DRI, 20 did you become aware of the analysis that was 21 done with respect to earlier versions of 22 DR-DOS? 23 Answer: I know that at some point I 24 was aware of an analysis, or maybe there was 25 more than one analysis. 12734 1 I'm sorry, I've forgotten the rest of 2 your question. 3 Question: Whether you had become 4 aware or familiar with prior analyses that were 5 done about whether there were infringement 6 issues of the DR-DOS product with respect to 7 either the MS-DOS or the PC-DOS products. 8 Answer: Yes, I think I was. 9 Question: All right. Were you aware 10 in a general way or did you do a specific sort 11 of compilation summary to become more 12 particularly familiar with those prior 13 analyses? 14 Answer: I think the main thing was I 15 had discussions with David Lovejoy. 16 Question: And he was -- was he your 17 predecessor as general counsel? 18 Answer: No, he's at Fliesler, Dubb, 19 Meyer & Lovejoy. 20 Okay. 21 Question: Let me show you what's been 22 marked as Exhibit 716. 23 This is a memorandum dated June 26, 24 1990, from Mike Shelton to John Constant, Steve 25 Tucker, and John Bromhead. You are not shown 12735 1 as copied on this. 2 Answer: Who is Mike Shelton? 3 Question: He's a -- he was -- my 4 understanding is he was a DRI employee at the 5 time. 6 Answer: Okay. I don't -- 7 Question: I believe in England. 8 Answer: The name doesn't ring a bell 9 with me. 10 Question: It says, John, re: DR-DOS 11 5.0 status: Just a quick note to document my 12 concern at the release of DR-DOS 5.0 at this 13 time on two counts. 14 The number of outstanding Category 3 15 and 2 SPRs -- are you familiar with the acronym 16 SPR? 17 Answer: Software performance report 18 or something? 19 Question: I think that's what it is. 20 Anyway, one says, the number of 21 outstanding Category 3 and 2 SPRs in the 22 released product as shipped on Friday. 23 Category 3 = 56 outstanding. Category 2 = 61 24 outstanding. 25 Two, the number of major software 12736 1 products that are known to have 2 incompatibilities with DR-DOS 5.0. 3 Do you recall whether the issue of 4 shipping DR-DOS 5.0 with the issues described 5 in this memorandum, Exhibit 716, was ever 6 brought to your attention? 7 Answer: Well, my take on this memo is 8 that it's fantastic to be able to ship an 9 operating system with as few problems as this. 10 There are thousands and thousands of 11 applications out there -- there were at the 12 time, and probably are more now -- and to have 13 this few a number of problems is amazing. 14 Question: My question to you is, do 15 you recall whether this issue was ever brought 16 to your attention? 17 Answer: No. 18 Question: Do you recall whether in 19 your capacity as legal counsel you ever 20 reviewed any of the sales or marketing 21 information that was utilized by DR-DOS with 22 respect to the product DR-DOS 5.0 and in 23 particular whether or not you ever reviewed a 24 representation that to the effect that DR-DOS 25 5.0 was 100 percent compatible or fully 12737 1 compatible with MS-DOS? 2 Answer: I think it was more 3 compatible than some of the MS-DOS products 4 were. 5 Question: In your mind, is it clear 6 that what Cutlass was looking at was the 7 possible development of a product which would 8 compete with Microsoft Windows? 9 Answer: It was going to be a 10 graphical user interface, and I think graphical 11 user interfaces compete with each other. 12 Question: So the answer would be yes? 13 Answer: Yes, just as it would compete 14 with DRI's graphical interface product, Gem. 15 Question: Do you recall whether at 16 the time you undertook the Cutlass project, DRI 17 considered advising Microsoft that it was 18 thinking about developing a product to compete 19 with Windows, and therefore, whether Microsoft 20 might want to withdraw the Windows 3.0 beta it 21 had provided to DRI? 22 Answer: I recall that Dana Hooper had 23 a specific discussion with someone at Microsoft 24 -- I think it was around this time frame, but 25 it's very hard for me to remember -- regarding 12738 1 the Windows beta. 2 Question: I think when we get to it, 3 that will have to do with the Windows 3.1 beta, 4 and that's about a year later. 5 Answer: Okay. 6 Question: It's a little different 7 because that's the beta that Microsoft didn't 8 provide to DRI. 9 Is that what you're thinking about? 10 Answer: No. There was one that we 11 had that we were using in the graphics group, 12 and Dana specifically talked to the appropriate 13 person at Microsoft to get permission and got 14 permission to have that beta worked on, or 15 looked at -- looked at by the DR-DOS people in 16 the UK. 17 Question: Do you know if in that 18 conversation Mr. Hooper advised -- well, strike 19 that. Let me start again. 20 Do you know who he spoke with at 21 Microsoft? 22 Answer: No. 23 Question: Do you know whether -- 24 Answer: Other than it was what he 25 thought was the appropriate person. 12739 1 Question: Do you know whether 2 Mr. Hooper disclosed in that conversation that 3 DRI was considering developing a product, a new 4 product to compete directly with Windows? 5 Answer: No. 6 Question: You don't know or you think 7 he didn't? 8 Answer: I don't know. 9 Question: All right. 10 Answer: And I don't even know at the 11 time of the conversation whether we were still 12 considering doing it -- developing Cutlass. 13 Question: And if Mr. Tucker and 14 Mr. Bailinson said that their view was that 15 having a viable alternative to Windows was 16 critical to DRI to maintain 386 and above 17 appeal, you would have disagreed with that. 18 Answer: I don't know that I would 19 have disagreed with that. I have a lot of 20 respect for Steve. I don't remember Frank that 21 well. 22 But what you asked me was whether I 23 remembered people discussing it at DRI and, no, 24 I don't remember people discussing it at DRI. 25 Question: Actually, I thought your 12740 1 answer was it wasn't a concern and so maybe I 2 misunderstood your answer. 3 Answer: If you are asking -- I feel 4 like we're sort of in a swamp here and I'm 5 sorry that I'm having such difficulty here. 6 My personal view, having come to the 7 industry as someone who had a background 8 primarily in semiconductors, and having at that 9 point been at the company -- been a software 10 lawyer for approximately one year, was that 11 DR-DOS was doing spectacularly well. It had 12 won all sorts of prizes. 13 There were not -- if I'm remembering 14 seven years later -- the timing correctly, 15 there were not problems with compatibility so I 16 personally did not see a problem in our not 17 having a Windows-type product. 18 Now, other people in the company might 19 have had a different opinion. 20 MR. CASHMAN: Your Honor, this would 21 be a good place to break. 22 THE COURT: Very well. We'll take our 23 noon recess or lunch recess until 12 noon. 24 Remember the admonition previously 25 given. We'll be in recess till 12. You may 12741 1 leave your notebooks here. 2 All rise. 3 (A recess was taken from 10:56 a.m. 4 to 12:03 p.m.) 5 (The following record was made out of 6 the presence of the jury at 12:03 p.m.) 7 MR. CASHMAN: PX 4167 which Ms. Nelles 8 referenced this morning that's already in 9 evidence was admitted with our Plaintiffs' 10 proffer on January 16th, '07. So it's already 11 in evidence. Obviously there is no objection. 12 THE COURT: Very good. 13 MR. CASHMAN: And then so I don't have 14 to do it while the jury is in, I'm going to 15 give the Court copies of the next two 16 transcripts that will be coming up. 17 One is for Richard Dixon who will be 18 next, followed by Glenn Stephens. So copies 19 for the court reporter of those two. 20 (The following record was made in the 21 presence of the jury at 12:08 p.m.) 22 THE COURT: Everyone else may be 23 seated. 24 You may continue, sir. 25 MR. CASHMAN: Thank you, Your Honor. 12742 1 Plaintiffs continue with the testimony 2 of Linnet Harlan. That's L-i-n-n-e-t, Harlan, 3 H-a-r-l-a-n, from the Caldera versus Microsoft 4 case on December 2nd, 1998. 5 THE COURT: Thank you. 6 (Whereupon, the following video was 7 played to the jury.) 8 Question: Do you recall having 9 discussions with anyone at DRI about the 10 possibilities of where Windows might evolve to 11 in the future? 12 Answer: Well, certainly when 13 Microsoft intentionally began creating 14 incompatibilities, there were discussions about 15 that. 16 Question: Did you ever -- do you 17 recall ever having discussions with anyone at 18 DRI about the possibilities that Windows might 19 evolve into an operating system that didn't 20 require DOS? 21 Answer: If you talk to the technical 22 people, you will get a big argument on that, 23 because the technical people are very, very 24 firmly of the view that Windows is a graphical 25 user interface and that DOS is an operating 12743 1 system, and you can call the tail of a lamb a 2 foot, but that doesn't make it a foot, and they 3 are very firmly of that opinion. 4 Question: The question is, do you 5 recall having any discussions with anyone in 6 DRI in the period 1991, 1992 about the 7 possibilities of where Windows might evolve and 8 how that might affect DRI's business? 9 Answer: The possibilities of how 10 Windows might evolve, yes, of course. 11 Question: All right. And I gather 12 that you don't recall either the memo or any 13 discussions with Mr. Pomper related to the 14 subject matter, Exhibit 2607? 15 Answer: I recall a time frame. I 16 don't remember whether it was this specific 17 time frame where Microsoft was doing everything 18 that they could to create problems with DR-DOS, 19 and during that time frame, I had a number of 20 discussions with people about what was going 21 on. 22 Question: Do you recall what impact 23 the release of MS-DOS 5.0 had on the business 24 of DRI and its DR-DOS product line? 25 Answer: I don't know that it was so 12744 1 much the release of MS-DOS 5.0 as the manner in 2 which Microsoft released it, and it was 3 devastating. 4 Question: In your communications with 5 Novell in the context of their due diligence, 6 were you involved in discussions about the 7 impact of -- that MS-DOS 5.0 was having on the 8 business of DR-DOS -- or DRI? 9 Answer: I'm totally confident that 10 they knew about it. I don't remember 11 personally having discussions about it, but I 12 believe Pete and/or Dick did. 13 Question: As you sit here today, do 14 you have a recollection of the approach 15 Microsoft took in the retail channel to the 16 release of MS-DOS 5.0 and how that affected 17 DR-DOS? 18 Answer: Yes. 19 Question: Do you know whether 20 Microsoft had -- do you know whether MS-DOS -- 21 excuse me. 22 Do you know whether Microsoft had ever 23 released one of its MS-DOS programs in the 24 retail channel prior to MS-DOS 5.0? 25 Answer: My understanding was that it 12745 1 intentionally had not. 2 Question: So that MS-DOS 5.0 was the 3 first version of MS-DOS to be released into the 4 retail channel? 5 Answer: Right. 6 Question: Do you recall working with 7 Mr. Sobin to prepare certain answers to FTC 8 questions about the subject matter of what 9 happened in the retail channel when MS-DOS 5.0 10 was launched? 11 Answer: Yes. I mean, I don't 12 specifically remember any conversation right 13 now, but we did do that. 14 Question: Assuming that you saw these 15 answers, do you recall what you had reference 16 to when you -- when you referred to MS's 17 back-order scheme or back-order program? 18 Answer: Oh, yes. 19 Microsoft, when they introduced MS 20 5.0, implemented a program that was very 21 specifically designed to have DR-DOS 5.0 22 unavailable to customers at the time MS-DOS 5.0 23 was launched. And that campaign of theirs had 24 a very -- was very orchestrated. 25 So one prong of it was to induce the 12746 1 distributors to institute what, as far as I 2 know, was an unprecedented program, whereby at 3 a time when the product was not available and 4 could not be shipped, distributors were taking 5 orders for it, which is very much against what 6 distributors -- software distributors usually 7 do. 8 Usually software distributors will not 9 accept an order that they can't ship that day. 10 So to start 60 days ahead of time 11 taking orders for products that they couldn't 12 ship for 60 days was unprecedented. 13 They were also threatening 14 distributors that unless they committed to 15 certain quantities of MS-DOS 5.0, or unless 16 they ordered certain quantities, then, gee, 17 they just might not get any at all, which of 18 course intimidated the distributors. 19 In addition to that, they induced 20 Egghead to make MS -- DR-DOS 5.0 unavailable in 21 Egghead's stores. Again at a time when 22 Microsoft would have been the most embarrassed 23 by the fact that DR-DOS was a better product 24 than MS-DOS. 25 And essentially what it did was it 12747 1 meant that our sales of DR-DOS went to zero 2 because the -- in retail because the retail 3 channel was closed to us as a result of 4 Microsoft's actions. 5 Question: I want to be clear. 6 As I understand the back-order program 7 that you've described, was it your 8 understanding that Microsoft started having 9 distributors place orders 60 days before the 10 product was -- roughly 60 days before the 11 product was available? 12 Answer: They were taking orders then, 13 which is different than placing orders. 14 Question: From Microsoft? 15 Answer: No. From their downstream 16 customers, who might have been retailers or 17 might have been large corporate users. 18 Question: Okay. 19 Answer: And that was unprecedented. 20 Question: So did anyone at DRI to 21 your knowledge attempt to offer similar 22 programs to any of the distributors to compete 23 with Microsoft's back order program? 24 Answer: We were specifically told by 25 the distributors that we should go quiet in 12748 1 terms of advertising because they did not think 2 that we could compete, given the resources that 3 we had. 4 Question: Let me show you what's been 5 marked as Exhibit 2611. 6 The first page says a fax dated 7 September 12, 1991 to Mr. Sobin from Sherry 8 Ridings for Linnet Harlan. 9 Attached to that fax sheet is a letter 10 from Mr. Brooks of Egghead Software to Jonathan 11 Freeman of Digital Research. 12 In the letter from Mr. Brooks to 13 Mr. Freeman, he says, in the second paragraph, 14 unfortunately, I will not be able to further 15 evaluate the addition of DR-DOS 5.0 for several 16 months. Our internal promotional priorities 17 have been established and I've concluded that 18 it would not be in Egghead's best interest to 19 move forward on this issue at the current time. 20 I would like to keep the door open for 21 further consideration and I would be happy to 22 open the discussion in late July or August. 23 I look forward to meeting you 24 personally. 25 Do you recall if that letter is the 12749 1 source of your information on Egghead that you 2 were testifying to a few minutes ago? 3 Answer: That, plus discussions that I 4 had with DRI's other executives. 5 Question: Did you ever have any 6 direct communications with Egghead yourself? 7 Answer: I don't remember. We may 8 have talked about sending them a letter because 9 we thought their behavior was outrageous, and I 10 just don't remember whether we decided that 11 that was the right thing to do or not. 12 Question: By this behavior, you mean 13 that they wouldn't talk to your salesmen? 14 Answer: That at a time when DR-DOS 15 5.0's superior capabilities to Microsoft's 16 MS-DOS 5.0's were going to be clearly 17 highlighted, that Egghead, who as I recall is 18 partially owned by one of the founders of 19 Microsoft, or perhaps fully owned by one of the 20 founders of Microsoft -- they decided to 21 totally take DR-DOS out of the availability to 22 an end user. 23 I think that's outrageous, not to let 24 an end user make its own -- his or her own 25 choice. 12750 1 Question: Did it ever occur to you 2 that the distributors might be reacting to what 3 they perceived to be consumer demand? 4 Answer: It was quite clear to me that 5 end users wanted DR-DOS 5.0. 6 Question: So your answer is, you 7 don't -- the answer is, no, it never occurred 8 to you that the distributors might be 9 responding to consumer demand? 10 Answer: It was clear to me -- I think 11 a more accurate answer is to say it was clear 12 to me that it was not consumer demand that was 13 driving the distributors' decision, that it was 14 the pressure that Microsoft was putting on 15 distributors. 16 Question: Let me show you Exhibit 17 729. 18 This appears to be a memo from John 19 Constant to you dated August 12, 1991. 20 It's discussing a communication 21 between Mr. Constant and Steve Thompson of 22 Microsoft in which he asked Mr. Thompson for 23 the updated driver software to support Windows 24 3.1 and for Digital Research to be added to the 25 Windows 3.1 beta program. 12751 1 He then describes that he finally 2 received a call from Janine Harrison who 3 informed him that Steve -- and by that I think 4 -- I assume we mean DRI as a whole -- I think 5 it means Steve Thompson at Microsoft. 6 Answer: Yes, I think it means Steve 7 Thompson. 8 Question: -- that Microsoft would no 9 longer be able to give support to Windows 3.1 10 was realized and that Digital Research is not 11 eligible to become a Windows 3.1 beta site 12 because of the competitive nature of the 13 product. 14 Do you recall if this was the first 15 time you learned that Microsoft was refusing to 16 allow DRI to have or participate in the beta 17 program for Windows 3.1? 18 Answer: Well, the biggest thing that 19 this document says to me is that clearly prior 20 to August 12, 1991, Microsoft knew and 21 supported the fact that we had Windows 3.1. 22 In terms of fearing that they no 23 longer were going to support that, I think this 24 is probably the first time I learned that. 25 Question: What part of the memo tells 12752 1 you that prior to the date of this letter, 2 Microsoft was supporting DRI with respect to 3 the Windows 3.1 beta? 4 Answer: Well, the fact that John 5 Constant knew who to contact, Steve Thompson at 6 Microsoft -- knew to contact Steve Thompson at 7 Microsoft, clearly expected to get the support 8 that he asked for, clearly thinks that it's 9 surprising. The fact that Janine Harrison, a 10 new person, who I gather is a Microsoft person, 11 responded instead of letting Steve Thompson 12 respond. 13 It says to me that some order had 14 probably gone out saying, don't -- DRI is too 15 much of a threat. Don't provide them 16 information anymore. 17 Question: Do you recall having a 18 discussion with Dick Williams about the fact 19 that Microsoft would not provide a beta of 20 either the driver or the Windows 3.1 beta to 21 DRI? 22 Answer: We, I believe, had several 23 discussions along those lines. 24 Question: Did you understand, either 25 from any of the people at DRI that -- well, 12753 1 strike that. 2 Let me go back to Exhibit 729. It's 3 the one we looked at before. 4 The next to last sentence of the first 5 paragraph says in part that Digital Research is 6 not eligible to become a Windows 3.1 beta site 7 because of the competitive nature of our 8 product. 9 Did you understand that was the reason 10 Microsoft was giving to your people for why 11 they would not permit DRI to receive a copy of 12 the 3.1 beta? 13 Answer: Their reason could not have 14 been because DR-DOS competed with Windows, 15 because as you've gone to great lengths to show 16 in this deposition, DRI did not have a 17 graphical user interface other than Gem, which 18 was a very early product. 19 Question: Did you understand that the 20 reason Microsoft was giving to DRI for not 21 providing a beta copy of Windows to DRI was 22 that Digital Research -- because DR-DOS was 23 competitive to Microsoft's products -- product 24 MS-DOS? 25 Answer: No. What I understood was 12754 1 that they were saying that somehow we were 2 competitors with Windows. 3 Question: You didn't understand that 4 what they were basing this on was that you had 5 an operating system that competed with their 6 operating system; that is, DR-DOS competed with 7 MS-DOS? 8 Answer: I think that was their real 9 reason. 10 Question: Do you recall learning at 11 some point that in the third beta release of 12 Windows 3.1 there was included a nonfatal error 13 message which would tell people to check with 14 Microsoft technical support, and that, in fact, 15 it checked to see if it was running on MS-DOS 16 or not? 17 Answer: Right. That was the one 18 where they told people we're just doing a 19 marketing survey. 20 Question: I thought by your answer 21 you meant to say yes. Is the answer to the 22 question yes? 23 Answer: I can't remember. I know 24 that there were several things that they did. 25 One thing that they did was they gave 12755 1 a lot of interviews and press releases about 2 how they were going to make sure DR-DOS didn't 3 work with Windows. 4 I remember that one of the things they 5 did was to put something into their Windows 6 products so that if the product detected that 7 DR-DOS was running, it would flash a very scary 8 error message up on the screen to try to tell 9 the user that the system might crash or 10 something like that. 11 All of those things are things I 12 remember. I don't remember all the specific 13 times. 14 Question: Ms. Harlan, I'd like to go 15 back on the answer you just gave me. I think 16 you described statements that Microsoft had 17 made to the press and media. 18 Answer: Yes. 19 Question: Did you collect copies of 20 those statements? 21 Answer: Yes, I did. 22 Question: And they would be in DRI's 23 or Novell's files? 24 Answer: Well, it's been quite a 25 while, but when I left they were. 12756 1 Question: And whatever Microsoft said 2 would be reflected in those stories? 3 Whether they're in the files or not, 4 that's what you knew about, was what you read 5 in the press? 6 Answer: Yes, and what I heard from 7 people who were out meeting with customers 8 as -- 9 Question: I want to just confine this 10 to the categories and if there are other 11 categories -- I just want to talk about the 12 press for a minute. 13 Answer: Okay. 14 Question: My question is, is your 15 knowledge of what Microsoft said to the press 16 solely based on what you read in the press? 17 Answer: I don't want to sound 18 flippant, but my knowledge of the continent of 19 Africa is based solely on what I've read and 20 what I've seen on television, but that doesn't 21 mean it doesn't exist. 22 Question: You're misunderstanding my 23 question. 24 Answer: Okay. 25 Question: I'm sure that whatever they 12757 1 said is reflected in the stories and people can 2 go find those. 3 Answer: Okay. 4 Question: My question is, for your 5 statement that Microsoft made statements to the 6 press, do you have any source of knowledge 7 about those statements other than the articles 8 themselves; that is, were you present when it 9 was -- 10 Answer: Right now that's all I 11 recall. 12 Question: Did you ever call Microsoft 13 technical support and hear such a statement? 14 That's a yes or no question. 15 Answer: I did not call -- 16 Question: Please, would you answer 17 yes or no. 18 Answer: I have an obligation to tell 19 the truth, the whole truth. 20 Question: You have an obligation to 21 answer my questions, and your counsel can ask 22 you -- 23 Answer: That's not what the oath 24 says. 25 Question: Listen to me. 12758 1 Did you call -- personally ever call 2 Microsoft technical support? 3 Answer: No, I don't think I did. 4 Question: Thank you. 5 Third, you said that DR-DOS -- excuse 6 me. 7 You said that when people used the Win 8 3.1 beta, it flashed a quote, and I think you 9 used the phrase scary error message. 10 Did you personally ever see the error 11 message that was shown on the screen? 12 Answer: I believe so. 13 Question: Where and when did you see 14 it? 15 Answer: At home on our computer. 16 Question: And you were testing the 17 Windows 3.1 beta? 18 Answer: I think my husband had it and 19 he showed me the message. 20 Question: Do you know -- 21 Answer: Because he's been a satisfied 22 user of DR-DOS even today. 23 Question: Do you know where he got a 24 copy of Windows 3.1 beta? 25 Answer: He is an engineer. He would 12759 1 have gotten it from Microsoft. 2 Question: What company was he working 3 for at the time? 4 Answer: Either VLSI technology or its 5 subsidiary, Compass. Yeah, one of those. 6 Question: Do you know if he signed a 7 nondisclosure agreement? 8 Answer: I don't know. 9 Question: Did you write down what was 10 said in the error message? 11 Answer: I didn't have to. I had a 12 memo that told me what was said. 13 Question: Who was the memo from? 14 Answer: John Constant, I believe. 15 Question: Did Mr. Constant have a 16 copy of the Windows 3.1 beta from which he 17 wrote down the error message, if you know? 18 Answer: I don't know. 19 Question: You kept a copy of that 20 memo? 21 Answer: I think I kept it, yeah. 22 Question: So that would be the best 23 evidence of what the error message said? 24 Answer: The best I can think of right 25 now. 12760 1 Question: Do you recall today the 2 exact wording of the error message? 3 Answer: I remember that it implied 4 that your system is going to crash, or 5 something along those lines, which is something 6 that an end user would be very concerned about. 7 But I don't remember the specific language. 8 Question: Lastly, you said -- and I 9 think your last point was -- please correct me 10 if I'm wrong -- that you thought or understood 11 or believe that Microsoft had put code in the 12 Windows 3.1 beta or the Windows 3.1 final 13 release -- I'm not clear which -- which caused 14 it to crash when it ran on DR-DOS. 15 Did I understand you correctly to say 16 that? 17 Answer: I know that there was code in 18 there specifically to create problems if a user 19 was using DR-DOS instead of MS-DOS. 20 I think that the result was that it 21 crashed, but I don't actually remember. 22 Question: And you say you know that. 23 How do you know that? 24 Answer: I know that from several 25 press reports. I know that from investigations 12761 1 that were made by the Federal Trade Commission. 2 That's all I can think of right now, 3 but it was enough for me. 4 Question: Let me show you what's been 5 marked as Exhibit 737. 6 This is a memo from Mr. Singh to a 7 variety of people dated August 16, 1991. 8 It talks about a DR-DOS royalty 9 pricing system and a pack standard -- and a 10 package product pricing system. 11 Were you aware of the fact that DRI 12 offered volume discounts for larger quantities 13 of purchase of DR-DOS during the period you 14 were general counsel for DRI? 15 Answer: I'm sorry, I was looking at 16 the document. 17 Can you read that again and let me 18 know? 19 Question: I'll try to state it even 20 more simply. 21 While you were the general counsel of 22 DRI, were you aware that DRI offered volume 23 discounts to its OEM customers? 24 Answer: Yes. 25 Question: While you were general 12762 1 counsel for DRI, did they have a standard form 2 license agreement for OEMs? 3 Answer: Yes. 4 Question: Were variations ever made 5 to that standard form license agreement for 6 particular negotiations? 7 Answer: It was actually more the 8 custom to always make variations to it. 9 The way it was set up was to be a way 10 that was relatively easy to deal with for the 11 customers and the contract administrator. 12 So the standard contract usually was 13 the first few pages, and then any amendments 14 were added on the back, and almost always there 15 were amendments or there was something else -- 16 an addendum or something -- which was where we 17 put the pricing and the quantities. 18 So it would have been -- I don't think 19 there would have been a contract that didn't 20 have something that was different about it 21 because that was the way it was structured. 22 Question: Do you recall what the 23 standard length of the contract was? 24 Answer: I think it was a year. It 25 depended on the customer's requirements and 12763 1 what the customer requested. 2 Question: Do you recall whether DRI 3 ever granted contracts or entered into 4 contracts with terms longer than one year? 5 Answer: Sure. Sometimes the 6 customers would want to get a larger quantity, 7 but they knew it might take them longer to use 8 that quantity so we'd give them a longer term. 9 Question: Was one of the bases on 10 which DRI sought to compete with Microsoft in 11 the DOS business on price? 12 Answer: I think we did generally 13 offer a better price than Microsoft. 14 Question: As a general proposition, 15 do you agree that price competition benefits 16 the consumer? 17 Answer: Not necessarily. I think you 18 have to look at what that price competition 19 costs. 20 So, for example, when price 21 competition eliminates really competition, then 22 I think the consumer is not benefited. 23 Question: Do you recall whether DRI 24 ever offered DR-DOS to certain customers for 25 free -- at least in part for free if other 12764 1 agreements were reached -- as an effort to try 2 to see if they could persuade OEMs, and in 3 particular first-tier OEMs to license DR-DOS? 4 Answer: Sure. I remember a very 5 difficult situation in Korea where what had 6 happened was the Korean OEMs -- I think there 7 were six or seven of them, the first-tier OEMs 8 -- had Microsoft's per processor license forced 9 on them. They did not like it. They wanted to 10 take DR-DOS. 11 And, in fact, I believe Trigem had a 12 specific product that could only be done with 13 DR-DOS that it was anxious to build. 14 Then what happened was that we had 15 customers in Korea that really wanted to have 16 DR-DOS, and so we tried to work with them in a 17 way where they could get free product for a 18 certain period of time. I believe it was 60 19 days or 90 days -- so that they could not be 20 penalized for using DR-DOS, because Microsoft 21 was making them pay for Microsoft -- for MS-DOS 22 whether they used it or not. 23 Question: Let me show you what's been 24 marked as Exhibit 951. 25 This is a license agreement between 12765 1 ABC Computer and DRI, and if you turn back to 2 -- I don't know. If you look at the Bates 3 number, it's page 64. It ends with 64. 4 It's dated March of 1991. 5 Answer: Right. 6 Question: If you'd turn to the page 7 marked 65, you see where paragraph two says 8 defined hardware? 9 Answer: Uh-huh. 10 Question: -- it lists, as I read it 11 286 systems and workstations, 386 systems and 12 workstations and 486 systems and workstations. 13 Do you recall if the defined hardware 14 portion of the DRI software license agreements 15 on one or more than one occasion were licensed 16 on a per processor or a CPU basis? 17 Would it be fair to say that how broad 18 or narrow the defined hardware portion of the 19 license agreement was was a function of the 20 negotiation? 21 Answer: I would expect that usually 22 it would be. 23 Question: And that an OEM with whom 24 DRI was negotiating could choose to have it be 25 narrow or broad as suited whatever their 12766 1 interest was. 2 Answer: Right. 3 Question: Was there any prohibition 4 to your knowledge at DRI to having the defined 5 hardware being a CPU or processor-based 6 definition? 7 Answer: I don't think it ever was, 8 and obviously here, it clearly is not. 9 You know, it specifically does not 10 talk about notebook computers other than the 11 8286 and 8386. 12 Obviously, this was at a time when the 13 486 was anticipated because in the line above 14 that it calls out the 486 for a different type 15 of system. The bible-size computers don't go 16 up to 486. 17 Question: The fourth line down says 18 notebook computers in, something, 286 and 386. 19 Do you know what that has reference 20 to? 21 Answer: I would think that that's 22 part of the defined hardware. 23 Also, remember that, again, I'm not 24 representing that I've looked at every single 25 one of these things. 12767 1 I have not taken the hour it would 2 take me to look at this document thoroughly. 3 But this is telling them what hardware 4 systems they can put it on. It's not saying 5 they must put it on those systems. 6 So when you talk about this as being 7 -- what I think I'm hearing you say is that 8 this is a per processor license -- I just think 9 you're wrong. It's not. 10 It's saying, if you're going to use 11 DR-DOS, here are the systems you can use it on. 12 And sometimes we did that because we didn't 13 want somebody using it on a system that we 14 didn't think it would work appropriately on. 15 Question: And was that because you 16 were afraid of what the public reaction or 17 consumer reaction might be, or because you 18 hadn't supported it, or, I mean, what was the 19 reason why you would not want to have -- 20 Answer: We wouldn't want it to go 21 onto a system where we thought it wouldn't work 22 appropriately. 23 Question: Would you agree that it 24 would not be unlawful if both an OEM and an 25 operating system manufacturer agreed to a 12768 1 CPU-based system simply because it was the most 2 convenient way to account for use and value of 3 the license rights? 4 Answer: I think a big factor in that 5 would be whether the software licensor was a 6 monopoly. 7 Question: So you would need to 8 qualify your answer that way? 9 Answer: Yes. 10 Question: Let me show you what's been 11 marked as Exhibit 2622, which appears to be a 12 memo to you from Lindsay Williams. As I 13 recall, Lindsay Williams was a contract 14 supervisor in DRI's United Kingdom office. 15 Answer: Right. 16 Question: It's dated May 6, 1992. 17 I specifically want to ask you about 18 -- well, first, do you recall having received 19 this memo from Lindsay Williams? 20 Answer: I don't recall the memo from 21 Lindsay. I definitely recall the Diamond 22 Trading letter. 23 Question: Did you ever talk directly 24 with anyone at Diamond Trading? 25 Answer: No. 12769 1 Question: Were you ever made aware 2 that a follow-up letter was sent by Microsoft 3 to Diamond Trading within 60 days reversing 4 this letter? 5 Answer: It took them 60 days to do 6 it? My goodness. 7 Question: Were you ever made aware by 8 anyone at Diamond Trading that -- 9 Answer: No. 10 Question: Thank you. 11 Do you know Mr. Speakman? 12 Answer: I know his name, but I don't 13 know that I ever met him. 14 Question: I believe that that's his 15 -- he was a sales representative of DRI in the 16 United Kingdom. 17 Answer: Right. This is exactly the 18 type of coercion I was talking about before. 19 Question: Do you recall having 20 received this document? 21 Answer: No. I'm not disputing that I 22 got it. I just don't remember it. 23 Question: Do you recall having any 24 conversations with Mr. Speakman or anyone else 25 to see if Viglen would cooperate with DRI to 12770 1 develop or create a record of what Viglen 2 thought or was complaining about that was going 3 on in its negotiations with Microsoft? 4 Answer: What I recall was making 5 every effort I knew how to make to get someone 6 to talk to the Federal Trade Commission about 7 Microsoft's behavior. 8 Frankly, my experience at that time 9 was that it was probably easier to get somebody 10 to testify against the Mafia than against 11 Microsoft. 12 So I don't remember specific 13 discussions with Tony Speakman, and I don't 14 remember specific discussions with Viglen. I 15 am sure that I had them if I thought it would 16 be effective. 17 Question: If I understand your 18 answer, you don't recall discussions with 19 Mr. Speakman or anyone else specifically with 20 respect to a letter being drafted to Viglen? 21 Answer: I recall making every effort 22 I thought would be useful. So if I thought 23 this would be useful, I'm sure I had. 24 Question: But as you sit here today, 25 you don't specifically recall doing it? 12771 1 Answer: No. 2 Question: Ms. Harlan, let me have you 3 look at Exhibit 2623. 4 This appears to be notes, and at least 5 bears a fax number of a date of June 4th, 1993. 6 It says, cc DRB/Linnet H. And it says 7 points to be confirmed at information/evidence 8 still outstanding. It's unclear who the author 9 of this is. 10 Do you recall having received this 11 document? 12 Answer: No. 13 Question: It was produced to us by 14 Novell, I believe. I think the A is a Novell 15 stamp. 16 Answer: Do you know what these 17 paragraphs relate to? 18 Question: I think they refer to -- it 19 says complaint right above them, and I assume 20 they relate to a draft complaint, and I'm 21 assuming it's in the EC. That's what I'm 22 guessing, if I understand time frames. 23 Answer: Okay. 24 Question: Under Para 70, paragraph 25 five, it says, we need further firsthand 12772 1 evidence of all anticompetitive conduct alleged 2 in this complaint, these are, and then it says 3 CPU-based licenses. 4 We have the Sydec license for which we 5 need confirmation that we can submit it to the 6 commission on a nonconfidential basis. 7 We also have the Viglen letter. We 8 need further firsthand evidence. You said you 9 were working to gather firsthand evidence on 10 practices. 11 Do you recall if you gathered any 12 firsthand evidence on CPU licenses other than 13 what is described in that paragraph? 14 Answer: My biggest recollection is 15 that there were at least two people that I 16 talked to who very much wanted to testify 17 before the FTC. 18 They were people -- one was somebody 19 at Zenith Data Systems, and one was somebody at 20 Computer Systems I think in Austin, someplace 21 in Texas. 22 Both of the individuals were, I 23 thought, very deeply offended by Microsoft's 24 behavior. 25 Another thing that happened was, we 12773 1 were able to get someone from Trigem to come to 2 the Federal Trade Commission, and to talk with 3 the Federal Trade Commission, and I believe 4 that I think it was somebody at the Federal 5 Trade Commission, although maybe it was 6 Mr. Sobin, who generated an affidavit for him 7 to sign. I don't know whether it was signed or 8 not. 9 Question: Let me take each of those 10 for a minute. 11 Were you present when the 12 representative of Trigem met with the FTC? 13 Answer: Yes. 14 Question: You were present in the 15 meeting with the FTC? 16 Answer: Yes, I was. That's how I 17 know about the retaliation. 18 Question: If you look at the next 19 bullet point, it says, cliff effect pricing, we 20 have no firsthand evidence of this practice. 21 Do you know whether after this date 22 you or others at DRI were able to develop 23 firsthand evidence with respect to this 24 allegation? 25 Answer: We had firsthand evidence of 12774 1 that with respect to Korea. I think it only 2 appeared in Korea because that's where the 3 retaliation was. 4 Question: What I'm confused about, 5 Ms. Harlan, is that this document is drafted in 6 June of '93, so whatever you knew about Korea, 7 I assume you knew at the time whoever the 8 author of this is says, we have no firsthand 9 evidence. 10 I think I understood you to say 11 earlier you don't know whether he ever signed a 12 statement under oath or gave a statement under 13 oath. 14 Answer: I think the statement was 15 under oath. He might not have signed an 16 affidavit, but I think the statement was under 17 oath. He very clearly knew that the FTC was 18 relying upon it. 19 Question: Is it your testimony that 20 the statement he gave in that meeting that you 21 had was a statement given by him under oath, or 22 are you speculating about that in any way? 23 Answer: I don't think I'm 24 speculating. I'm trying to give my best 25 recollection. 12775 1 I don't remember whether he was sworn 2 in or not. I do remember that he took it very 3 seriously and wanted to provide accurate 4 answers. 5 Question: I think your earlier 6 testimony is you don't know whether he signed a 7 declaration. 8 You don't recall or you don't know? 9 Answer: I don't know. 10 Question: With respect to the next 11 bullet point which says tying -- 12 Answer: Although I do think he made 13 changes to it. I could be remembering 14 incorrectly, but I think he saw a draft and 15 made changes. I just don't remember whether he 16 saw it or not. 17 Question: When you say whether he saw 18 it -- whether he signed it? 19 Answer: Whether he signed it. Yes, 20 I'm sorry. 21 Question: If he had signed it, do you 22 expect a copy would be in Novell's or DRI's 23 file? 24 Answer: Not necessarily. 25 Question: Do you know under what 12776 1 circumstances you saw a draft? 2 Answer: Yes. It was sent to me. 3 Question: Do you have any reason to 4 believe that if you saw a draft, you wouldn't 5 have also had sent to you a final signed 6 version? 7 Answer: Yes. 8 Question: Let me ask you a question 9 that just struck me. 10 What date was it that you left DRI? 11 Answer: Late November 1993. 12 Question: So within four or five 13 months after this. 14 Now, going back to the tying, when you 15 say -- I want to stress the phrase further 16 firsthand evidence, because in your answer you 17 referenced Novell employees reporting on what 18 they apparently were hearing. 19 Do you know whether you developed, for 20 the complaint to provide to the EC, further 21 firsthand evidence of this practice; that is, 22 either documents from an original source or 23 statements under oath from an original source? 24 Answer: I think after Diamond 25 Trading, Microsoft became very careful about 12777 1 the documents that went out, so we certainly 2 did not have any documents from Microsoft, 3 because they meant to, and were able to, keep 4 us from having such documents. 5 Question: Did you ever have any 6 conversations with anyone at Microsoft that 7 said, we're going to be more careful about what 8 we do? 9 Answer: No. 10 Question: Did you ever look at any 11 internal Microsoft documents that indicated to 12 you that Microsoft was going to be more careful 13 in what it was going to do? 14 Answer: No. 15 Question: Was it a significant part 16 of your job at DRI to become knowledgeable 17 about issues of piracy in the software 18 industry? 19 Answer: Yes. 20 Question: Let me just stop you right 21 there and ask you, is it your understanding 22 that Microsoft used a piracy rationale as a 23 justification for the per processor license? 24 Answer: Yes. 25 Question: Ms. Harlan, how did you 12778 1 know that Microsoft used the per processor 2 agreements with the larger OEMs in the U.S., 3 the example that you gave? 4 Answer: In some instances the 5 salespeople from DRI, who were a primary source 6 of information for me, and who I found to be 7 reliable, gave me that information. 8 Question: Why is a hologram a better 9 way of preventing an OEM from lying to you? 10 Answer: Because then you have a 11 specific number of holograms that are sent to 12 the OEM, and you can go into a store and you 13 can look at the OEM's product, and you can look 14 at the software that accompanies it. 15 If it's got a hologram on it, it's a 16 legitimate piece of software. If it doesn't, 17 it's not. So you can just have your sales 18 force go into a software or hardware company 19 and know instantly. 20 Question: Are these ways of 21 combatting piracy that would allow an OEM to 22 license more than the DOS operating system if 23 it wanted to? 24 Answer: Yes. 25 Question: You mentioned that you 12779 1 believe that DR-DOS 5.0 was a far superior 2 product. 3 What leads you to that opinion? 4 Answer: Well, it was awarded one of 5 the most prestigious awards in the software 6 community -- I think the PC Week Best Product 7 of the Year award -- and that is not an award 8 that is lightly given. 9 I talked to my husband, who thought it 10 was a fabulous new product, and all of the 11 reviews were very strong. It was a great 12 product. 13 Question: Did the initial sales of 14 the product reinforce that opinion for you? 15 Answer: Yes, especially in the retail 16 channel it did really well, spectacularly well, 17 in the retail channel, and that was very 18 interesting, especially in view of the fact 19 that operating systems had not traditionally 20 been sold at retail. 21 I'm sorry, I just remembered another 22 reason that informed my opinion about DR-DOS, 23 and that was Bill Gates' comments about what a 24 superior product it was, what an innovative 25 product. 12780 1 I think that was his word. Look at 2 those guys at DRI and the innovation they were 3 achieving, or something like that. 4 Question: With regard to the 5 statement you just made about Dick Williams' 6 comments there, is that testimony of the 7 product of your conversations with Mr. 8 Williams? 9 Answer: Yes. In fact, I think that 10 we specifically talked about it a couple of 11 times, once when it first came up and then 12 again as either he or I drafted the letter to 13 Mr. Holman. 14 Question: I'm handing you Exhibit 15 2625, and I want Mr. Jardine to know that there 16 is, on the photocopy, in the upper right-hand 17 corner of the first page the remnants of a star 18 on it. 19 That is from my own marking on the 20 document. I didn't have a clean copy down 21 here. The rest of it is in the original state 22 I think it was in the files. 23 Do you recognize that document? 24 Answer: Yes. 25 Question: Would you describe what it 12781 1 is for me? 2 Answer: Well, this is the attempt 3 that I alluded to earlier to Bryan Stockdale -- 4 whose surname is spelled S-t-o-c-k-d-a-l-e, and 5 his first name is B-r-y-a-n. 6 Question: What the document says on 7 its face -- first, there is a memo from John 8 Constant saying that Microsoft employee Russell 9 Stockdale wanted to become a DOS 7.0 beta site, 10 and well, for whatever reason, he asked his 11 brother to fax his application to DRI minus the 12 information that Russell was a Microsoft 13 employee. 14 Answer: So what he was clearly trying 15 to do here was, by subterfuge, get a beta copy 16 of DR-DOS 7.0. 17 Question: Do you know why you were 18 cc'd on the routing slip that contained these 19 documents, or I should say the memo attached to 20 these documents? 21 Answer: Because I think John Constant 22 thought it was important that I be aware that 23 Microsoft, or at least a Microsoft employee, 24 was using subterfuge to try to get a copy of 25 yet another new program that we were 12782 1 innovating, where Microsoft was behind us 2 technologically. 3 Question: Do you have any reason to 4 believe that the Microsoft fax cover sheet 5 attached to the memo and the handwritten fax 6 cover sheet behind it are anything other than 7 true and accurate copies of documents that were 8 sent from the individuals listed on them? 9 Answer: No. In fact, I believe very 10 strongly John would not have sent them to me if 11 he had any doubts at all about their 12 authenticity. 13 Question: In your experience, was 14 Mr. Pomper's prediction about Microsoft's 15 efforts to tie MS-DOS and Windows in the future 16 a correct observation? 17 Answer: Absolutely. That's what they 18 did with Windows 95 clearly. And before they 19 did that, they took a succession of steps to 20 tie the products together. 21 Question: What were those steps? 22 Answer: One was the announcements 23 that they made and the press releases that they 24 put out about -- I remember one that was very 25 dramatic. 12783 1 We're going to make sure DR-DOS 2 doesn't work with Windows. It was very strong. 3 The technical support problem that we 4 talked about earlier in terms of if a customer 5 had a Windows problem and was running Windows 6 on DR-DOS, then Microsoft would say, oh, the 7 problem is with DR-DOS, even if they knew that 8 the problem was with Windows. 9 Question: Let me interrupt and ask 10 how you know that. 11 Answer: I believe one of our 12 technical support people called Microsoft, and 13 that's what came of the conversation. 14 Question: Did that person then report 15 that to you and others? 16 Answer: Yes. 17 Question: Did DRI have something 18 called 100 percent bundling? 19 Answer: Yes. 20 Question: What was that? 21 Answer: Occasionally. Sometimes -- 22 the times that I remember were instances where 23 a motherboard manufacturer wanted to license 24 DR-DOS, and Dick wanted, in those instances, to 25 make sure that the motherboard manufacturer 12784 1 bundled each of his products with a copy of 2 DR-DOS. 3 Question: How often was the 100 4 percent bundling language used? 5 Answer: I would say it was rare. 6 Question: You've talked about the 7 Microsoft per processor licenses here 8 previously with Mr. Jardine. 9 Is it your understanding that the 100 10 percent bundling contracts that you've 11 discussed are the same as Microsoft's per 12 processor in language or effect? 13 Answer: No. I'd say they're quite 14 different on at least two points. 15 One point is that the 100 percent 16 bundling only applied -- there is a term in the 17 contract, defined hardware, and the 100 percent 18 bundling tied to the defined hardware. 19 So if a manufacturer chose to say that 20 the defined hardware is 8286, then they would 21 have to have a one hundred percent bundle on 22 that. 23 But Microsoft's contract required that 24 an OEM pay a license fee for every 25 microprocessor they shipped. There were no 12785 1 exceptions. 2 Another way in which the 100 percent 3 bundle was different -- and it's a really 4 important way -- is that quantities were 5 different. DRI would license maybe 5,000 units 6 on a 100 percent bundle. Microsoft was 200,000 7 units, 250,000 units. 8 So what we had -- what we were able to 9 get, because of Microsoft's practices, were 10 licensees who saw that our product was better 11 and wanted to offer it to their customer, 12 wanted to offer it as a better product to their 13 customers, but knew that they weren't going to 14 be able to do it on every single product they 15 shipped, but were able to commit to a 16 particular piece of hardware. 17 So I don't equate the two at all. 18 Question: Assuming that an OEM did 19 sign one of these rare 100 percent bundling 20 contracts for 5,000 units -- if they produced 21 5,001 units, on the first unit after 5,000, 22 were they required to put DR-DOS on that 23 machine? 24 Answer: No. 25 Question: Did they have to pay for a 12786 1 DR-DOS operating system on that machine? 2 Answer: Only if they wanted to ship 3 it. 4 Question: Did you have an 5 understanding that Microsoft used per processor 6 licenses to keep DR-DOS from getting market 7 share? 8 Answer: Yes. 9 Question: How did you gain that 10 understanding? 11 Answer: Well, number one, I know that 12 I saw a Microsoft contract which has been 13 attached to a complaint in some litigation, and 14 because it was a public record I was able to 15 get a copy of that and look at it. 16 I read the Microsoft document, which 17 on its own terms meant that the licensee had to 18 pay for every microprocessor that it shipped. 19 There's no magic there. It's not easy language 20 to understand, but there it is. 21 Question: You've mentioned Mr. Kim. 22 Was that a source for that? 23 Answer: Mr. Kim was also very helpful 24 in terms of my understanding Microsoft's 25 practices. 12787 1 Question: Why was that? 2 Answer: Because he had gone through 3 it and I could talk to him on a face-to-face 4 basis. 5 So I felt that I came away from that 6 meeting and discussion with a very good 7 understanding of what Microsoft's practices 8 were. 9 Question: And you also mentioned 10 someone at a computer company in Texas; is that 11 correct? 12 Answer: Right. 13 Question: Did you have a similar 14 discussion with that person about the effects 15 of the per processor -- 16 Answer: Yes, very much along the same 17 lines. 18 Question: Did you get any information 19 from reports to the executives at DRI about 20 Microsoft's use of the per processor license? 21 Answer: Yes. This was often a 22 discussion at executive staff meetings. 23 Question: You've mentioned that 24 Microsoft tied the availability of Windows at 25 least at a reasonable price to a customer's 12788 1 purchase of MS-DOS; is that correct? 2 Answer: Yes. 3 Question: And is the source of your 4 information about Microsoft's tying practices 5 similar to the source of your information on 6 the per processor licenses? 7 In what ways was it different? How 8 did you come to that understanding? 9 Answer: I'm sorry? 10 Question: How did you develop an 11 understanding about Microsoft's tying of 12 Windows and DR-DOS? 13 Answer: I talked with the Novell 14 salespeople in the context of wanting to obtain 15 information that the Federal Trade Commission 16 could use and rely on in their investigation of 17 Microsoft, and hopefully in their subsequent 18 litigation with Microsoft. 19 Question: Would you explain for me 20 now what your understanding was of Microsoft's 21 efforts to block the retail channel? 22 Excuse me, let me rephrase it. 23 To block DRI out of the retail 24 channel. 25 Answer: There were several things 12789 1 that they did, and the impact of those things 2 were even more far reaching. 3 So one of the first things that they 4 did was the term we used was they froze the 5 retail channel, and they did that in two ways 6 that I recall at the moment. 7 One was by instituting a back-order 8 system, which was unprecedented in the retail 9 channel, the distribution channel. 10 And what they did was, through, well, 11 my understanding was intimidation convinced the 12 OEMs that they needed to start taking orders 13 immediately for MS-DOS even though MS-DOS at 14 that point was not available for sale. 15 So what they did was -- we had a 16 product that an end user could use right then 17 that was a better product and they made it 18 impossible for us to get that to an end user. 19 That was a major problem for us 20 because several things happened. 21 Number one, we weren't getting income 22 from the sales that we thought we were going to 23 get. 24 Number two, what it meant was we had 25 to spend management time and energy finding a 12790 1 home for those copies of the DR-DOS 5.0 that 2 had been expected to sell during that time. 3 We had to lay people off as a result 4 of that. 5 It also affected the OEM channel 6 because it's important to understand that the 7 retail channel and the OEM channel are related 8 to each other. 9 So when an end user reads a glowing 10 review in PC Week about a particular software 11 product, then they often -- not always -- but 12 want to go to their software store and get a 13 copy of it and use it. 14 And then word of mouth, if it's a good 15 product as DRI was -- DR-DOS was -- they made 16 it impossible for the end user to get that 17 product. 18 Well, one of the things that OEMs like 19 to do in the OEM channel is they like to 20 distinguish their product from other companies' 21 products. 22 So if you don't see any difference 23 between OEM A and OEM B, then clearly OEM A is 24 going to be less confident that he's going to 25 get your business. 12791 1 If it's something where OEM A has 2 reason to believe that the end user 3 particularly values a bell or whistle or 4 whatever, a software package that he can bundle 5 with his computer, then he has a higher 6 confidence level that he's going to get the 7 business. 8 So OEMs pay attention to what's 9 happening on the retail side. And before 10 Microsoft's freezing of the channel, DR-DOS was 11 on the best seller list, which again, I think 12 is unprecedented for an operating system, and 13 Microsoft just eliminated all of those because 14 they were afraid to face the competition. 15 The other thing that they did was to 16 work with Egghead, which at the time was at 17 least partially, maybe totally, owned by Paul 18 Allen, one of the Microsoft founders, and 19 ensure that Microsoft would not be on the 20 shelves at Egghead at all, again at a time when 21 we expected that there would be a big demand 22 because Microsoft as a result of its publicity 23 was generating -- introducing people to a new 24 idea of having a new operating system. 25 They had a huge, huge marketing 12792 1 budget, so they were able to get that message 2 to a lot of people. 3 And then they managed to set it up so 4 we couldn't have product that the end user 5 could buy. So it hurt us on the end user side; 6 it hurt us on the OEM side. 7 Question: Do you recall a gentleman 8 by the name of Mr. Valentino that worked at 9 DRI? 10 Answer: Yes. 11 Question: Was he involved with 12 finance issues at DRI? 13 Answer: Yes. He was the primary 14 person responsible for the retail sales 15 channel. 16 Question: Did you and he discuss 17 these issues? 18 Answer: Yes. I remember I think he 19 was almost getting ulcers over trying to deal 20 with the product that DRI had paid to 21 manufacturers, anticipating we'd be able to 22 sell it, and we weren't able to sell it because 23 of Microsoft's actions, and he had to find a 24 home for it. 25 Question: So we've discussed per 12793 1 processor licenses, tying of Windows and DOS in 2 the retail channel issue. 3 In your opinion as an executive at DRI 4 who was involved in the high-level meetings and 5 decisions of the company, based upon the 6 sources of information which you've discussed 7 today with both myself and with Mr. Jardine, 8 did these tactics prevent DRI from gaining OEM 9 business? 10 Answer: I think these tactics 11 combined with other tactics, so the fear, 12 uncertainty and doubt. 13 You know, I don't want to be unfair to 14 Microsoft, but the lies that they were telling 15 when DR-DOS 5.0 first came out -- they did not 16 have a plan for a new DOS product. 17 What they did was they heard that we 18 had a new product at the Which -- W-h-i-c-h -- 19 Computer Show, and it was introduced there 20 because -- DR-DOS was introduced there because 21 it was in England and Dick felt it was sort of 22 the tip of the hat to the fellows at 23 Hungerford, the DR-DOS design team. 24 And immediately Microsoft put out a 25 press release saying that they were going to 12794 1 have a new DOS, and they then followed up for a 2 year and a half saying, oh, we're going to have 3 it. It's going to have these features. They 4 would put out a document saying what features a 5 nonexistence product was going to have and they 6 would do comparisons. 7 I remember there was one that was 8 about a year before their product came out and 9 they were saying MS-DOS is better in this way. 10 They didn't even have a product and 11 they were saying it was better. And they spent 12 a tremendous amount of money and energy getting 13 that message to everybody. 14 They also did the same thing in terms 15 of their beta release of Windows; that they 16 touted the fact that it was such a huge 17 release. 18 Well, the reason it was such a huge 19 release was because they had intentionally put 20 these error messages and problems in that we've 21 talked about, and they wanted to make sure that 22 the OEMs were aware of that. 23 Question: When you're talking about 24 Microsoft announcing a product that wasn't 25 ready yet, is that -- have you heard the term 12795 1 vaporware before? 2 Answer: Yes. 3 Question: Is that vaporware? 4 Answer: Yes. 5 Question: Now, I want the jury to 6 understand the use of the per processor license 7 tying and the retail activities of Microsoft. 8 Those activities themselves, do you 9 believe that they had a significant impact on 10 DRI's ability to sell product? 11 Answer: I think each one of those 12 individually had a significant negative impact 13 on DRI's ability to sell the product. 14 Question: Do you believe that 15 vaporware had a similar significant negative 16 impact on DRI's ability to sell product? 17 Answer: Yes. I think that one of the 18 things that I find particularly offensive about 19 the vaporware is that it was so clearly harmful 20 to the end user and it was so clearly false. 21 (Whereupon, playing of video 22 concluded.) 23 MR. CASHMAN: Your Honor, that 24 concludes the testimony of Linnet Harlan, and 25 now Plaintiffs would like to offer Plaintiffs' 12796 1 Exhibit 5362 and Plaintiffs' Exhibit 5473A. 2 And if I may approach, I have a hard 3 copy of those exhibits and a disk for the 4 Court. 5 THE COURT: What was the second 6 exhibit? 7 MR. CASHMAN: The second exhibit I 8 mentioned was Plaintiffs' Exhibit 5473A. 9 And I'm handing a copy to Microsoft 10 and a copy for the Court. 11 THE COURT: Any objection to 5362 or 12 5473A? 13 MR. GREEN: 5362 no objection. We 14 understand the offer. There's embedded hearsay 15 and it's being offered for a nonhearsay 16 purpose, and with that understanding, we have 17 no objection. 18 And we have no objection to 5473A. 19 THE COURT: A? 5473A, right? 20 MR. GREEN: Was it A? 21 THE COURT: Yes. 22 MR. GREEN: Yes, Your Honor. 23 THE COURT: Admitted. 24 MR. CASHMAN: Thank you, Your Honor. 25 Next, the Plaintiffs -- 12797 1 THE COURT: Did you have exhibits? 2 MR. GREEN: Hold on a second. 3 Your Honor, we're going to offer DX 4 6803. 5 MR. CASHMAN: No objection, Your 6 Honor, to Defendant Exhibit 6803. 7 MR. GREEN: And we may have other 8 exhibits that we want to offer in connection 9 with the Harlan deposition, but we need to 10 check -- 11 THE COURT: Okay. 12 MR. GREEN: -- our records to see what 13 the status of those exhibits are, but would 14 like to reserve the right to make that offer 15 later if it's appropriate. 16 THE COURT: You may. 17 And there's no objection to 6803, and 18 it's admitted. 19 Okay. Mr. Cashman. 20 MR. CASHMAN: Thank you, Your Honor. 21 Next, the Plaintiffs wish to call 22 Richard Dixon, whose testimony was taken in the 23 Caldera versus Microsoft case on April 4th, 24 1998, and May 13th, 1998. 25 THE COURT: My copy says April 6th. 12798 1 MR. CASHMAN: Let me check, Your 2 Honor. 3 That's correct, Your Honor. I stand 4 corrected. 5 April 6th, 1998, and May 13th, 1998. 6 MR. GREEN: That's what we have, Your 7 Honor. 8 THE COURT: Richard Dixon, D-i-x-o-n? 9 MR. CASHMAN: That is correct, 10 D-i-x-o-n. 11 THE COURT: Very well. 12 (Whereupon, the following video was 13 played to the jury.) 14 Question: Would you please state in 15 full your name for the record? 16 Answer: Richard Douglas Dixon. 17 Question: What do you do? 18 Answer: Consultant. 19 Question: Who are some of your 20 clients? 21 Answer: Hungry Mouse, Incorporated. 22 Question: Any others? 23 Answer: Caldera. 24 Question: How long have you been a 25 consultant? 12799 1 Answer: Since October of '97. 2 Question: Prior to October of 1997, 3 by whom were you employed? 4 Answer: Ikon Office Solutions. 5 Question: And what was the reason why 6 you left Ikon? 7 Answer: I was terminated from my 8 responsibilities. 9 Question: Why was that? 10 Answer: Management difference of 11 opinion. 12 Question: In August of 1996, by whom 13 were you employed? 14 Answer: Novell Corporation. 15 Question: Were you terminated by 16 Novell? 17 Answer: No. 18 Question: Did you leave on your own? 19 Answer: Yes, I did. 20 Question: For what reason? 21 Answer: Resigned for a better 22 opportunity. 23 Question: And the better opportunity 24 was Ikon? 25 Answer: Yes, it was. 12800 1 Question: What was your position at 2 the time you left Novell? 3 Answer: Director. 4 Question: Director of what? 5 Answer: Embedded systems divisions. 6 Question: How long were you in that 7 position? 8 Answer: Three or four years. 9 Question: So that would have been 10 sometime -- you achieved that position sometime 11 in 1993? 12 Answer: Correct. 13 Question: And in the period after 14 March 13th, 1998, how much additional time have 15 you spent as a consultant to Caldera? 16 Answer: I don't recall the time. I 17 know that my last cumulative billing to them 18 was an additional $5,000. 19 Question: I'm sorry, that was an 20 additional 5,000 in addition to the $4,687.50 21 that you previously billed? 22 Answer: Correct. 23 Question: So you spent -- 24 Answer: You asked me, sir, what I had 25 been compensated, and that's what they had sent 12801 1 me in a check -- 2 Question: I'm sorry. 3 Answer: -- is the four thousand. 4 Question: How much -- that is what 5 they've paid to date, correct? 6 Answer: Correct. 7 Question: How much have you billed to 8 date? 9 Answer: Would be the $4,687.50 plus 10 an additional 5,000 plus dollars. So my 11 recollection would be around $10,000. 12 Question: What type of work -- when 13 were you first approached to do work for 14 Caldera in connection with this litigation? 15 Answer: I would say September of 1997 16 I was called by Stephen Hill. 17 Question: What occasion caused you to 18 raise the topic of being compensated for your 19 work for Caldera? 20 Answer: I believe that the extensive 21 work that I would be doing to prepare for this 22 deposition should have been compensated for, so 23 I asked them for a consulting arrangement to 24 pay for that time and expense that I would be 25 taking away from other consulting activities. 12802 1 Question: Who attended this meeting 2 that you were at where your testimony would be 3 discussed or was discussed? 4 Answer: At Caldera? 5 Question: Yes. 6 Answer: It was at Snow, Christensen. 7 Stephen Hill, Ryan Tibbitts, Stephen Susman 8 were present. 9 Question: How long did that meeting 10 last? 11 Answer: I think about four hours. 12 Question: And did you bill for your 13 time for that? 14 Answer: I did. 15 Question: Was this meeting before 16 with Messrs. Hill, Tibbitts and Susman, was it 17 at the time that you billed the $4,687 or was 18 it -- when in connection with -- I'm trying to 19 figure out the chronology. 20 When was this meeting with Hill, 21 Susman and Tibbitts? 22 Answer: It was on March 11th. 23 Question: At the time that you 24 entered into this consulting arrangement? 25 Answer: Yes, sir. 12803 1 Question: And then in the period 2 before you had read your deposition, correct? 3 Answer: Yes, sir. 4 Question: And then you read some 5 additional documents over the next two days 6 which gave rise to this $4,687 bill, correct? 7 Answer: Yes, sir. 8 Question: And then you've reviewed 9 some additional materials which has now taken 10 you an additional approximately $5,000, 11 correct? 12 Answer: Yes, sir. 13 Question: You're being compensated -- 14 Answer: And other activities, you 15 know, pertinent to that. 16 Question: Okay. You also -- what 17 types of strategy planning have you been 18 involved with? 19 Answer: Working with the attorneys 20 and talking about the activities of Microsoft, 21 how they impacted the sales of Digital Research 22 and DR-DOS. 23 Question: So the strategy planning 24 you're describing relates to the strategy of 25 this lawsuit? 12804 1 Answer: Yes, it does. 2 Question: Okay. You've also 3 indicated that you believe that Microsoft had 4 used what you call software locks in editions 5 of certain Microsoft software. 6 Are you aware of that allegation? 7 Answer: Yes, sir. 8 Question: What products were 9 contained in these software locks? 10 Answer: It was the Hangeul editions 11 of Word, Works, and Excel. 12 Question: Did you ever witness the 13 decompiling effort -- 14 Answer: No. 15 Question: -- to see whether there 16 was, in fact, a routine to check for the 17 existence of MS-DOS? 18 Answer: I did not. 19 Question: Who was involved in doing 20 that? 21 Answer: The engineers from Hope 22 Electronics. 23 Question: And that is Tae Yeong Kim, 24 and anyone else? 25 Answer: Oh, there was -- he had three 12805 1 or four engineers in the lab at that time, so 2 I'm sure they were all involved in it. 3 Question: Did they ever send you a 4 report identifying how the routine worked? 5 Answer: I don't recall that. I don't 6 know. 7 Question: Did you try other operating 8 systems, for example, Compaq DOS to see if it 9 operated with these Hangeul editions? 10 Answer: Did not. 11 Question: PC-DOS? 12 Answer: Did not. 13 Question: Following up on a couple of 14 questions on the software locks. 15 Have you ever seen a document that 16 describes the software code, decompiles or 17 disassembles the software code to show the 18 locks? 19 Answer: I have not seen it. 20 Question: There was a time when the 21 software locks ceased to be a lock or it 22 disappeared from the market? 23 Answer: Approximately six to eight 24 months after they first appeared. 25 Question: And was that in a new 12806 1 release of the software? 2 Answer: I don't remember whether it 3 was a new release or the shipments that came 4 out did not have that. 5 Question: Do you know where any of 6 the supposedly locked software is today? 7 Answer: I do not. 8 Question: Do you know if you 9 submitted any to the government? 10 Answer: I do not. 11 Question: Do you know if any of the 12 software was distributed in the United States? 13 Answer: I don't know that it was. 14 Question: Did this happen in any 15 other country, to your knowledge? 16 Answer: Not to my knowledge. 17 Question: Any other product? 18 Answer: No other products that I was 19 brought aware of. 20 Question: In the intervening period 21 before the locks disappeared, did DRI introduce 22 any new editions of DR-DOS? 23 Answer: Well, I don't know. I don't 24 recall the dates of releases of products. 25 Question: Were the programs just not 12807 1 able to load at all? 2 Answer: I think I explained that 3 pretty directly, and that was that when the 4 application attempted to be used by the 5 computer, it would check and if it found a 6 non-MS-DOS product, it would flash on the 7 screen in Korean, application terminated. 8 Question: But you didn't try it with 9 IBM PC-DOS, did you? 10 Answer: I answered that before. I 11 did not. 12 Question: Compaq DOS? 13 Answer: Did not. 14 Question: What did you tell -- did 15 you deal with a company called Essex? 16 Answer: Yes. 17 Question: Was there anyone else 18 responsible for that account, or was it just 19 you in the initial stages? 20 Answer: Initial -- give me a time 21 frame. 22 Question: 1988. 23 Answer: That would be me. 24 Question: Do you recall ever 25 discussing with them whether or not DR-DOS 12808 1 would be compatible with Windows? 2 Answer: Yes. 3 Question: And what did you tell them? 4 Answer: That it would be. 5 Question: This has been marked as 6 Exhibit 448. Can you please tell me what this 7 is? 8 Answer: I would be happy to. 9 This is a one-page fax from myself to 10 Dick Williams, August 2nd, 1988. 11 Question: And what was the -- was the 12 purpose of this to keep Mr. Williams informed 13 about issues that had been raised by Essex? 14 Answer: There was a problem with 15 Essex in that they owed us money, and it was an 16 attempt to get payment. 17 Question: Why did they owe you money? 18 Answer: They had a timed -- they had 19 a license with us in which there were payments 20 due on a quarterly basis, and they were behind 21 in a payment. 22 Question: And do you recall how many 23 -- how much had they committed to purchase from 24 DRI? 25 Answer: Again, I think it was a 12809 1 10,000 unit license at around the -- you know, 2 $120 -- $120,000 arrangement. 3 Question: And weren't they refusing 4 to pay because of compatibility issues with 5 DR-DOS? 6 Answer: And that's what this fax 7 states, that, you know, once I went in to 8 collect the money, they responded with there 9 apparently are some compatibility problems with 10 DR-DOS and they didn't want to make those 11 payments. 12 Question: So in August of 1988 when 13 Essex was first raising problems with the 14 operation of DR-DOS and Windows, you expressed 15 to him that it was your intention in the future 16 to provide support for that software? 17 It's Exhibit 448. 18 Answer: 448, this was a report to 19 Mr. Dick Williams, not to the customer. And 20 I'm saying that they would not be satisfied 21 until Windows 386 runs with DR-DOS. 22 Question: Does that refresh your 23 recollection that in August of 1980 it didn't 24 run on DR-DOS? 25 Answer: Yes. 12810 1 Question: What is Exhibit 446 -- I'm 2 sorry, what is the exhibit number? 3 Answer: It's 453. 4 Question: 453. 5 Answer: This is a letter from Wearnes 6 Technology, Vivian, and I don't know, maybe 7 Lang -- let's see, Singapore -- probably Yang, 8 Y-a-n-g, to Process Software, which became 9 Kompac, I see. And it's dated September 15th, 10 1988. 11 Question: And okay. And Kompac was a 12 VAR for you? 13 Answer: Uh-huh. 14 Question: Well, were you aware that 15 Wearnes had reported a problem with Novell 16 Advanced NetWare 2.0a? 17 Answer: Through this document I would 18 be, yes. 19 Question: Would you have been made 20 aware by Kompac at the time that NetWare 2.0a 21 didn't work? 22 Answer: They would advise me, 23 absolutely. 24 Question: And it would have been your 25 responsibility to contact the EDC and make sure 12811 1 that the problem was resolved? 2 Answer: Correct. 3 Question: Was the problem ever 4 resolved? 5 Answer: Not -- I don't know. 6 Question: Did Wearnes itself as 7 opposed to this other California entity that 8 you've mentioned ever license DR-DOS? 9 Answer: I don't believe that Wearnes 10 signed an agreement with Asian operations. 11 MR. CASHMAN: This is a good place for 12 a break, Your Honor. 13 THE COURT: Yes. Take our recess at 14 this time for ten minutes. 15 Remember the admonition. Leave your 16 notebooks here. 17 All rise. 18 (A recess was taken from 1:29 to 19 1:46 p.m.) 20 THE COURT: Everyone else may be 21 seated. 22 Plaintiffs may continue. 23 MR. CASHMAN: Your Honor, Plaintiffs 24 continue with the testimony of Richard Dixon. 25 (Whereupon, the following video was 12812 1 played to the jury.) 2 Question: Do you recall whether GES 3 was objecting to payment on its original 4 license of DR-DOS? 5 Answer: I think there was some 6 collection issues with them, yes. 7 Question: And these collection 8 issues, do you recall what -- is it just GES 9 couldn't afford it or GES had some objection to 10 paying DR-DOS for the product? 11 Answer: I believe that financially 12 they were in pretty good shape. They had a 13 very nice office. So I would say that would be 14 because they didn't want to or they were 15 pursuing a Microsoft agreement or wanted to get 16 out of our license. 17 Question: Did you ever hear it -- did 18 they ever relate to you that they want out 19 because there had not been market acceptance of 20 DR-DOS? 21 Answer: They had talked about that. 22 Question: And that was the principal 23 reason why GES was refusing to pay, correct? 24 Answer: I don't think so, no. 25 Question: What other reasons were 12813 1 they offering for why they were refusing to 2 pay? 3 Answer: They wanted to bundle MS-DOS. 4 Question: And were you not allowing 5 them to do that? 6 Answer: No, because a contract is a 7 contract. They entered it. They're obligated 8 to pay. 9 Question: And so they determined 10 instead of using DR-DOS, notwithstanding having 11 paid for it in advance, to license MS-DOS; is 12 that correct? 13 Answer: They had a license with 14 MS-DOS. They also had a license with DR-DOS of 15 which I'm sure they owed Microsoft funds on the 16 MS-DOS license as well. 17 Question: Do you recall which came 18 first? 19 Answer: Microsoft. 20 Question: And there was nothing in 21 the Microsoft contract that forbade or in any 22 way hindered GES from entering into a contract 23 with DRI? 24 Answer: I don't believe so. 25 Question: Looking at Exhibit 468, is 12814 1 this a memo that you wrote to Simon Lucy? 2 Answer: This is not a memo. This has 3 somebody else's writing on it. 4 Question: Okay. Do you recognize the 5 center part of it as being your writing? 6 Answer: Yes. 7 Question: Okay. And you were telling 8 Mr. Lucy -- what was Mr. Lucy's position? 9 Answer: He was an individual that was 10 assigned to our operation, and he worked out of 11 the United Kingdom in our development lab as 12 kind of our liaison. 13 Question: And you were telling 14 Mr. Lucy that, quote, we have a very serious 15 technical problem as described in the attached 16 report? 17 Answer: Yes. 18 Question: Does this refresh your 19 recollection that, in fact, you had a very 20 serious technical problem? 21 Answer: Yes, sir. 22 Question: Do you recall what problems 23 there were associated with DR-DOS 5.0? 24 Answer: I don't recall. I'd have to 25 take a look at this. 12815 1 Question: You learned -- is it -- did 2 you learn about the serious technical problems 3 from Samsung and they had conveyed that 4 information to you? 5 Answer: This is a copy of a Korean 6 document with some English interpretations on 7 it, so this could have been sent to our Korean 8 office. 9 Question: Did you have the contact 10 with Samsung? 11 Answer: No, it was through our Korean 12 office. 13 Question: So your Korean office 14 conveyed to you that Samsung had told them that 15 there was a serious technical problem? 16 Answer: Yes, sir. 17 Question: And so you were contacting 18 Mr. Lucy to solve the technical problem, 19 correct? 20 Answer: Yes, sir. 21 Question: Did Microsoft drop its 22 prices significantly in the period after March 23 of 1991? 24 Answer: In Korea, they did not. 25 Question: Did they drop their prices 12816 1 somewhere else? 2 Answer: Yeah, I think there was a 3 continual dropping of prices across Asian 4 markets that I was aware of. 5 Question: After this price change, 6 was DRI -- did DRI change its prices? 7 Answer: We stuck to our standard 8 pricing. We had a policy to try to stick with 9 that and provide some discount if the company 10 was willing to do marketing promotions. 11 Question: And marketing promotions 12 being what? Identifying themselves as a DR-DOS 13 reseller? 14 Answer: Well, when -- if they did an 15 advertisement, we had some trademark or 16 agreed-to language that they could put in in a 17 small box that said shipped with DR-DOS; and if 18 they would do that in their brochures and 19 advertisement, we would provide a discount for 20 them. 21 Question: And that provided some 22 value to DRI and that's why you were willing to 23 provide that? 24 Answer: Yes, sir. 25 Question: Mr. Dixon, would you please 12817 1 again state your full name for the record, sir? 2 Answer: Richard Douglas Dixon. 3 Question: And are you currently -- do 4 you currently have any relationship to Caldera 5 other than a consulting one? 6 Answer: No. 7 Question: As I understand it, you are 8 being paid for your time and out-of-pocket 9 expenses, if any? 10 Answer: Yes. 11 Question: How did you arrive at the 12 rate of -- I think it's $250 an hour? 13 Answer: Yes. 14 Question: How did you arrive at that 15 rate, sir? 16 Answer: It was a rate that seemed 17 reasonable for the offset of time that I would 18 be giving for other opportunities that I may 19 proceed, and it's an increase over a consulting 20 rate that I had about seven or eight years ago. 21 Question: Have you been promised any 22 minimum amount of time by Caldera or its 23 lawyers? 24 Answer: No. 25 Question: So you don't know whether 12818 1 they will after today ever use your services 2 again, correct? 3 Answer: Correct. 4 Question: Have you been promised any 5 part of whatever Caldera will recover in this 6 lawsuit? 7 Answer: Have not. 8 Question: Is your testimony today, 9 sir, in any way dependent upon what you are 10 receiving as a consultant? 11 Answer: No, not at all. 12 Question: Would it be the same 13 whether you were being paid as a consultant or 14 not? 15 Answer: Yes, it would. 16 Question: For what period of time, 17 Mr. Dixon, were you in charge of the sales of 18 DR-DOS to OEMs in the Asia Pacific territory? 19 Answer: That was from -- well, the 20 introduction of DR-DOS was May of 1988, so from 21 May of 1988 to August of 1992. 22 Question: Okay. That's about -- 23 that's almost five -- four and a half years, 24 something like that? 25 Answer: Yes. 12819 1 Question: Would you tell the ladies 2 and gentlemen of the jury why you accepted the 3 job of going to Asia Pacific in the first place 4 of 1988? 5 Answer: It was a great opportunity 6 for me and for the company. 7 Question: Why was it a great 8 opportunity for you and the company? 9 Answer: Well, there were certain 10 market conditions that illustrated that the 11 opportunity for marketing of a DOS product 12 would be very advantageous. 13 Those market conditions were the -- 14 IBM had introduced the personal computer in 15 1981 and it was continuing to be very popular, 16 and many companies were producing products that 17 had equivalent functionality, and the 18 opportunity for those companies became greater 19 and greater as they proved their capability in 20 the marketplace. 21 And we estimated that, in fact, 22 non-IBM computers by doing the same function 23 would grow 50 percent or so over the next 24 several years, and that created a big 25 opportunity for us to market our product on 12820 1 their product versus, you know, Microsoft's 2 product. 3 Question: Why did you think your 4 product would have any -- I mean, did you think 5 your product would have any kind of advantages 6 over the Microsoft product? 7 Answer: Yes. We thought there could 8 be significant advantages because we were 9 attempting to design new -- what we called 10 advancing the standard technologies. 11 Question: Whenever I'm asking you to 12 compare products, because I don't keep the 13 numbers in my head either, and I guess you 14 don't either, if you know it, you can give the 15 numbers, but what I'm asking you for is to 16 compare apples and apples. 17 The DR-DOS product that was introduced 18 in May of 1988 with whatever product Microsoft 19 had on the market at that time, okay? 20 I don't care whether it's called 21 Microsoft 2.1 or Microsoft 9.10. All right, 22 the comparable contemporaneous product against 23 which you were competing so we will have an 24 apples-to-apples comparison. 25 Do you understand that, Mr. Dixon? 12821 1 Answer: Yes, I do. 2 Question: Would you tell the ladies 3 and gentlemen of the jury using that 4 clarification how the DR-DOS product that came 5 out in May of '88 in your opinion was an 6 improvement over the Microsoft comparable 7 product? 8 Answer: Okay. There were a lot of 9 features that we had put in the product to take 10 advantage of some technologies that had come 11 out from the hardware manufacturers themselves, 12 the Intel company, such as ROM capability 13 within our product. 14 What that meant was that the operating 15 system could actually be housed in ROM and 16 execute from ROM, which allowed much more space 17 in the main memory for the applications to run. 18 And this was a big advantage because 19 more and more application manufacturers were 20 building robust products and it became very, 21 very tight in memory for these products to 22 execute, so this was one big advantage. 23 We had what we called a memory 24 capability or Memory Max, in which the main 25 memory of the system could be partitioned into 12822 1 a HIMEM and allow more memory to be executed. 2 We had capabilities such as Disk Max, 3 which allowed us to actually compress data and 4 make more data be resident on the disk drive 5 using our compression techniques. 6 We had lots of easy-to-use features 7 which we thought were very, very important 8 because again, the marketplace was expanding, 9 more and more people were getting into 10 computers, first-time users. 11 So we were the first company to put, 12 for example, help commands on the computer 13 itself. 14 Instead of having to refer to a manual 15 and go through and look up things, we actually 16 had that right on the system. 17 We had capabilities of what we called 18 task switching or Task Max. This allowed the 19 computer, for example, to be operating in two 20 different programs simultaneously. 21 Microsoft attempted to come without a 22 feature like this, but what they would do is 23 actually suspend the product, and it stopped 24 operating while they went to the second 25 product, while ours, because of our memory 12823 1 partitioning, allowed those two programs to run 2 simultaneously such that you could operate. 3 This became very important. A lot of 4 small businesses were operating on a computer; 5 maybe they were doing a payroll and a call 6 would come in requiring someone to search 7 inventory and find out if the product was 8 available in inventory. 9 With our system, all you would do is 10 hit a switch, refer to the inventory program, 11 answer the question, and within a few seconds, 12 be back to the payroll program uninterrupted. 13 With an MS-DOS product, you would have 14 to actually terminate that payroll, bring it 15 up, take maybe five or six minutes to do that 16 same project. 17 So Task Max was very important. 18 With the ROMing capability, an 19 introduction of small laptops and palmtop 20 computers was very important. 21 We had things like cursor control. 22 When a company would implement Microsoft's 23 MS-DOS on a small laptop computer with a very 24 small screen, the little cursor that showed you 25 where you were as you were typing along was so 12824 1 small you couldn't see it. 2 We had the ability to increase the 3 size of that cursor, make it larger, make it 4 blink at different rates, and so it was much 5 easier for the customer to use a product 6 configured with DR-DOS than it was with 7 Microsoft's products. 8 Question: All right. Mr. Dixon, over 9 the next -- the four and a half years you were 10 attempting to sell the DR-DOS to OEM customers 11 in Asia Pacific, what product -- what company's 12 product did you consider you were competing 13 with? 14 Answer: Microsoft MS-DOS. 15 Question: MS-DOS? 16 Answer: Yes. 17 Question: Now, in competing with 18 DR-DOS -- I mean, in competing with MS-DOS, how 19 would you, Mr. Dixon, compare DR-DOS product to 20 the MS-DOS product -- again, I'm asking you 21 comparing comparable versions at the same time 22 -- over the next four and a half years, how 23 would you compare them insofar as their 24 features were concerned? 25 Answer: Well, it was real clear that 12825 1 DR-DOS had extraordinary features that were 2 superior to Microsoft's products. 3 We knew that because our companies 4 that we were trying to do business with, we 5 called them OEMs, would do comparisons of the 6 products, and we would win the comparisons 7 because of the features that we had and the 8 capability that we had. 9 So from the feature standpoint, we 10 were leading the way. In fact, many times 11 Microsoft would announce a product capability, 12 deliver it much later to try to catch up with 13 us, and we talked about being able to advance 14 the standard of a DOS application to new 15 features, and I thought we did that very well. 16 So from a feature standpoint -- 17 Question: You thought you had a 18 superior product from the feature standpoint? 19 Answer: Yes. 20 Question: How about compatibility? 21 And by compatibility, I mean the ability of 22 software programs which ran on MS-DOS to also 23 run on DR-DOS. 24 Answer: Right. I think -- 25 Question: By the way, is that a fair 12826 1 definition of compatibility? 2 Answer: Yes, I understand. 3 And yes, it is fair. 4 Question: Okay. 5 Answer: The -- when you want to run 6 an application, it's important that it runs 7 without any extra user intervention and so 8 forth. 9 And clearly when we were producing a 10 product to go into this marketplace, that had 11 to be a key focus of our attention, was to make 12 sure that we had compatibility. 13 And fairly, I would say in the 14 beginning Microsoft's compatibility was better 15 than our compatibility in that all applications 16 were written to their operating system where 17 ours was a different product. 18 It was not a clone of MS-DOS, it was 19 an enhancement of MS-DOS and a better product 20 featurewise than MS-DOS. 21 So naturally, there would be programs 22 that were not compatible. 23 The majority of all software products 24 ran on our operating system. 25 As we introduced the product in the 12827 1 marketplace, we found some products that were 2 not compatible. We would modify and make it so 3 that they could run. 4 In the area of compatibility, though, 5 because there had been no innovation of 6 Microsoft's product over time, it was easy for 7 them to maintain compatibility. 8 But when they stepped away from the 9 basic DOS into a more advanced DOS such as 10 their introduction of MS-DOS 4, they hit a very 11 tremendous amount of compatibility issues. 12 In fact, at a point in time we were 13 much more compatible with DOS applications than 14 they were. They resulted to actually having an 15 OEM have an option because of the compatibility 16 problems that IBM had with their 4.01 and 17 Microsoft had with their 4.0, had to, you know, 18 provide MS-DOS three versions as an alternative 19 until those bugs could be fixed. 20 So the compatibility overall was good 21 for our product, and Microsoft had also good 22 compatibility with applications in the 23 marketplace. 24 Question: Okay. Let's talk about the 25 subject of whether the operating system had 12828 1 bugs in it, bugginess or something like that. 2 Now, what does that mean? What does 3 bugs mean? 4 Answer: Bugs in software? It's a 5 term used in the software industry to indicate 6 that there is a particular problem with a piece 7 of software. 8 It causes an error when a certain 9 condition comes up. 10 You know, all software products that 11 are introduced in the marketplace, you know, 12 have bugs. Some more. 13 Question: Did you think that DR-DOS 14 had more bugs than the comparable MS-DOS 15 program at any given time? 16 Answer: No. 17 Question: Okay. How about on the 18 issue of technical support? 19 How did DRI compare with Microsoft in 20 your area? 21 Well, just tell me how -- I'm asking 22 you for the period of May 1988 through August 23 of 1992, and if it changed during that period 24 of time, you tell us. 25 Answer: Okay. One of the -- you 12829 1 know, we talked a little bit earlier about the 2 opportunity. 3 And one of the opportunities we saw 4 was in the local markets in Asia where 5 Microsoft had not yet established an office and 6 a facility. 7 In fact, they hadn't produced a 8 brochure on MS-DOS since it was introduced in 9 1981 to that point. 10 So to us, it seemed like there was a 11 good opportunity to go in there, establish an 12 office, establish a technical support to that 13 country. In each country we attempted to 14 create that. 15 So in terms of technical support, 16 because our product was feature rich, it did 17 require quite a bit of technology discussions 18 with their engineers, so we had technical 19 support on-site whereas initially in the early 20 years, for example, in Taiwan, Microsoft did 21 not. So we had an advantage. 22 Question: Yeah, was there ever a 23 point in time, Mr. Dixon, where you felt, gee, 24 you know, I could only make more sales if I had 25 better technical support? 12830 1 I mean, did you ever feel that you 2 were impoverished in the sense of not having 3 sufficient technical support for the product 4 you were selling? 5 Answer: No. We -- you know, 6 obviously in the sales arena, you always look 7 for more resources to support your accounts, 8 but in most cases we had adequate technical 9 support. 10 We would provide evaluation kits to 11 customers. We were able to answer their 12 questions about how they were implementing 13 those in good fashion. 14 We did have some uplift of resources 15 and capability with the merger with Novell in 16 October of '91, so that was somewhat of an 17 advantage. 18 Question: Mr. Dixon, why did you 19 decide in 1992 to leave the Asia Pacific area 20 for another job with Novell? 21 Answer: At that time I was very, very 22 frustrated with the marketing and competitive 23 tactics from Microsoft. 24 They had closed us out of most new 25 opportunities that were coming up with their 12831 1 contracts and tactics, and they were attacking 2 very aggressively our backlog of accounts, 3 accounts that already had signed with us and 4 that were implementing their systems. 5 They were moving those over to their 6 agreements, and it just was too frustrating to 7 continue on; and I sought opportunity back in 8 the U.S. and was promoted back to take on new 9 assignments. 10 Question: Mr. Dixon, before I ask you 11 about those specific tactics, do you think that 12 they actually affected the amount of DR-DOS you 13 were able to sell in Asia Pacific? 14 Answer: Absolutely. 15 Question: And when you are telling 16 the ladies and gentlemen of the jury what 17 customers think or what customers want or 18 things like that, you are telling them that 19 based upon what the customers have told you, 20 correct? 21 Answer: This is correct. 22 Question: Well, tell me, then -- I 23 won't -- that was a little leading. 24 Tell the ladies and gentlemen of the 25 jury what is the basis for your telling them 12832 1 what customers want or like or dislike or 2 think. 3 Answer: The customers would 4 absolutely explain their concerns with the 5 current relationship they had with Microsoft or 6 the potential future relationship they have 7 with Microsoft and how that would be impacted 8 if they were to do business with us. 9 Question: Let me understand this, 10 Mr. Dixon. 11 How many years have you been in sales 12 in your life? 13 Answer: Over 30. 14 Question: And has your sales 15 experience in those 30 years been kind of 16 hands-on? 17 I mean, are you the guy who sits in 18 some office and does a marketing plan, or do 19 you actually go knock on doors and try to make 20 sales to customers? 21 Answer: I'd say 85 percent of my time 22 has actually been in selling environments. 23 Question: And do you think you have 24 been in -- do you have any opinion, sir, as to 25 whether over those 30 years 85 percent of your 12833 1 time you have been able to kind of get a 2 feeling that you can rely on of whether a 3 customer's telling you the truth or not? 4 Answer: Yes. In fact, if I wasn't, I 5 wouldn't be successful. I mean, that's part of 6 understanding how to negotiate. 7 During the course of my selling 8 careers with IBM and Novell, I took additional 9 curriculum, for example, at Wharton Business 10 School for the art of negotiation and 11 negotiating techniques from Cal Tech in 12 southern California. 13 So, you know, you continue to update 14 the newest selling techniques, and as a 15 professional, that's what you have to do to 16 maintain quota records and performance. 17 Question: Let's begin by talking 18 about some of Microsoft's tactics. 19 One of the things you refer to in your 20 declaration is something you call per processor 21 licenses. In a nutshell, tell us what those 22 are. 23 Answer: Sometimes referred to as 24 CPU-based contracts, meaning that every 25 computer that that manufacturer ships out, 12834 1 regardless of whether it has the licensed 2 product on it or not, you would pay a fee for. 3 Question: And am I correct, 4 Mr. Dixon, again, so that we don't -- you don't 5 mislead the ladies and gentlemen of the jury, 6 you never saw a per processor license between 7 Microsoft and any of your OEM customers, 8 correct? 9 Answer: That's correct. 10 Question: And what you have said in 11 your declaration and are going to tell us in 12 this deposition today is what customers told 13 you; is that right? 14 Answer: Yes. 15 Question: Why do you -- where do you 16 get the term cliff pricing? 17 Answer: Well, it was kind of an 18 industry term at the time. What it meant was 19 obviously if you were to graph this out -- and 20 I think there's even a graph in -- 21 Question: How long -- where did you 22 learn that from? 23 Answer: That was information provided 24 me again by Hyundai and by Trigem executive 25 management in discussing how they could license 12835 1 our product and the licensing policies that 2 Microsoft was providing to them. 3 Question: By the way, when these 4 customers you were talking about would talk to 5 you about Microsoft's practices or policies or 6 licensing terms, would they just do it on one 7 occasion or would it come up frequently? 8 Answer: It was a lot. 9 In a lot of ways, the OEM was asking 10 for ideas and advice on how to license our 11 product faced with these kind of conditions. 12 So it became a very common situation 13 that occurred with almost all of the 14 discussions I had with executives. 15 Question: Well, again, how do you 16 know it was not just a -- what led you to 17 believe it was not just a polite way of them 18 telling you, get lost, blowing you off? 19 Answer: Because in some circumstances 20 the OEMs would actually go ahead and pay the 21 penalties of licensing both sides. 22 For example, Trigem ultimately did 23 that. They were so convinced that they had a 24 great market opportunity with our product for 25 their home computer that they went ahead and 12836 1 licensed from us DR-DOS and put that on the 2 system, and additionally sent a check for 3 Microsoft for MS-DOS even though that wasn't 4 even on the computer itself. 5 So, I mean, there were circumstances 6 where this was obviously very valid. 7 Question: How long did you understand 8 the Microsoft contracts to be? The CPU 9 contract. 10 Answer: Our understanding, they were 11 on a two-year basis. There was a point in time 12 in which they were trying to get a three-year 13 term, but basically they were a two-year 14 agreement. 15 Question: Mr. Dixon, were you aware 16 of any cases where Microsoft tied MS-DOS to the 17 purchase of Windows, and by that I mean, sir, 18 priced Windows so high when it would be 19 purchased without MS-DOS that an OEM simply 20 couldn't afford to run Windows with another 21 operating system? 22 Answer: Yes. 23 Question: Okay. When and where did 24 that happen? 25 Answer: It happened on many 12837 1 occasions. I'm trying to think of an example. 2 There were several circumstances. One 3 was, of course, at Trigem in which they had an 4 established agreement for Windows at $20 a 5 copy. 6 If they were to do a deal with Digital 7 Research, DR-DOS, then their price became $40 a 8 copy. 9 That Compal in Taiwan, a similar type 10 of account, chose to do business with DR-DOS 11 and their Windows price went to $40. 12 At DTK, Duke Liao, the executive there 13 had a long discussion with us about licensing 14 our product. It turned out that even though 15 Microsoft was a lower price at that time, to 16 try to win his business he went with us, and as 17 a result of that, his pricing on Windows went 18 from $20 to $40. 19 So in each case the price doubled for 20 -- if you were to buy MS-DOS with Windows, your 21 price was low; if you were to buy Windows to 22 use on DR-DOS, your price was very high. 23 Question: Were there situations where 24 certain software applications would not run on 25 your -- provided by MS -- by Microsoft would 12838 1 not run on DR-DOS? 2 Answer: Yes, this -- that's true. 3 Question: What -- tell us about 4 those. 5 Answer: There was a condition that 6 took place in Korea in which at that time 7 Microsoft had produced applications that were 8 very popular and continuing to gain in 9 popularity. 10 These products were Microsoft Word and 11 Microsoft Excel. And they had a new edition 12 that appeared in the Korean market that had a 13 software lock on it, which is a piece of 14 software that interrogates the computer and 15 says, are you MS-DOS or are you DR-DOS or what 16 are you? Are you MS-DOS? If you're not 17 MS-DOS, then that application would terminate, 18 would stop running. 19 Of course, this created a major 20 problem for our customers who had licensed the 21 product and were providing it on the 22 marketplace, and they made lots of complaints 23 to our engineering staff regarding this lock 24 that was on the software. 25 Question: You actually sat in a room 12839 1 where they were trying to run one of these 2 Microsoft programs, Excel or Word, or something 3 like that on top of DR-DOS and it stopped? 4 Answer: Yes. 5 Question: I mean, did you see that 6 happen on the computer screen? 7 Answer: Yes. 8 Question: Were there other occasions 9 that you ran into where Microsoft suggested you 10 think falsely that DR-DOS would be incompatible 11 with software applications written to work on 12 MS-DOS? 13 Answer: You know, I think there was a 14 whole movement to try to create a fear about 15 using MS -- or DR-DOS with applications. 16 They -- for example, in December time 17 frame of 1991, Windows 3 was coming out and 18 they had a lot of betas with that product. And 19 they had a warning on the screen if you were 20 using that beta that would appear if you were 21 using it on anything but an MS-DOS product. 22 So that created a certain, you know, 23 concern about compatibility with that product 24 before it was officially released later in '92. 25 Question: Okay. Were there -- were 12840 1 some of the OEMs in your Asia Pacific territory 2 beta sites for Windows, as you understood it? 3 Answer: Yes. There were beta sites 4 at Acer and Mitac in Taiwan. 5 Their engineering staff would call our 6 staff and say, you know, we tried to run this 7 with DR-DOS and we got this warning screen that 8 came up. 9 There was obviously in Korea with the 10 big five, most of them were beta sites except 11 Trigem, they had licensed with us so they'd 12 lost their beta site for Windows, right. 13 But Samsung, Daewoo, Gold Star. 14 Question: Tell us real quickly -- 15 tell the jury real quickly, I think your 16 declaration talks about some case where you 17 were competing with Microsoft for some kind of 18 educational business. 19 Answer: Okay. This was a 20 circumstance where the Korea Telecommunications 21 is in authority to put out a bid for the 22 education department of the Korean government, 23 and it was being bid by lots of companies 24 within Korea, and one of the companies that won 25 that bid was Royal Computer. 12841 1 They had licensed from our VAR, Hope 2 Electronics in Korea the DR-DOS product, and 3 Microsoft, of course, then had lost a very, 4 very important account, the Korean education 5 account, to DR-DOS and were obviously concerned 6 about that loss and petitioned the Korean 7 Telecommunications saying that DR-DOS was not 8 compatible, that applications did not run on 9 it, and that they should, you know, cease and 10 desist that contract. 11 What happened then was that the Korean 12 Telecommunications did in fact suspend that 13 agreement and the delivery of those products 14 until a compatibility check could be done. 15 Microsoft's engineers submitted a 16 program to Royal and said run this, and, of 17 course, they were successful in running it. 18 Although it caused a delay in the agreement, 19 they did run that successfully and the contract 20 continued. 21 Microsoft again protested the 22 compatibility. 23 There was an agreement that was 24 reached between the Digital Research 25 engineering team and the Microsoft engineering 12842 1 team as to what things they were going to 2 check. 3 Once that agreement was reached, then 4 we did in fact check those, and if 5 compatibility existed with the applications, 6 then the contract continued. 7 Unfortunately, it delayed the contract 8 significantly from the delivery dates that were 9 expected and the customer, Royal, ended up 10 having to pay some penalties associated with 11 that. 12 And, of course, that was made known by 13 Microsoft to -- with a press announcement, and 14 people that would consider using DOS in the 15 future from Digital Research had to be 16 concerned about what problems they may run into 17 with -- 18 Question: What would Microsoft do to 19 them? 20 Answer: Well, you know, obviously 21 they were in a very strong position with their 22 customers and didn't want to lose any of their 23 customer base. 24 So by advising them that they -- if 25 they were to license from Digital Research, 12843 1 that they would not be permitted to see future 2 technologies from Microsoft was one method of 3 threat. 4 And I learned this because they would 5 discuss it with us in open meetings regarding 6 how we would license in the future, what 7 technologies we would bring out, are we going 8 to have a similar kind of product to Windows; 9 if they weren't able to get Windows from 10 Microsoft, if they were to license from us and 11 describe the concerns that they have, that they 12 would be shut out of 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. 16 And it was not just a threat. It was 17 actually taking place. 18 And, of course, everybody in the 19 community understood that, and it became very 20 successful tactic. 21 Question: Again, tell the ladies and 22 gentlemen of the jury where you got that -- I 23 mean, you've told us a lot, but where you pick 24 all this information up. 25 Answer: In the case of Mitac, for 12844 1 example, we had meetings with them in 1992. It 2 was a time in which we were attempting to 3 provide another product in the marketplace 4 called Netware Lite, which was a Novell 5 product, which included certain networking 6 capabilities. 7 The executives there, I think a Chan, 8 Georgiana Chan, was one of the executives that 9 we discussed, and they openly voiced a major 10 concern that they had. 11 They liked NetWare, Netware Lite, they 12 liked the product, they thought it had a good 13 opportunity, but they were very concerned that 14 if they licensed that from us, that they would 15 be prevented from obtaining Windows from 16 Microsoft or being able to attend seminars from 17 Microsoft, and told me that directly. 18 Question: Now, were there 19 occasions -- or how pervasive was the situation 20 where Microsoft would announce the availability 21 of a product or the soon to be availability of 22 a product and not deliver? 23 Answer: I think I can approach that 24 one from kind of an industry view. 25 Many times when you introduce a 12845 1 product to market, that product becomes 2 available sometime later. 3 We found it very, very curious and 4 obviously very disturbing to our marketing 5 programs in that we would introduce a product, 6 for example, DR-DOS 5. We announced in late 7 April -- excuse me, late May in England and 8 then did a major announcement of that product 9 in June, June 14th of 1990. 10 Question: In Asia Pacific? 11 Answer: In Asia Pacific. 12 At that time that product was also 13 available, so very interesting concept in the 14 software industry. You announce a product and 15 you made it available instantly and customers 16 could use it and away we'd go. 17 Two days prior to that Microsoft 18 announced a product in Asia Pacific that had 19 almost the identical features that we had in 20 our product, and thereby freezing the market 21 opportunity for OEMs. 22 They wanted to now wait for the 23 closely-to-be delivered product from Microsoft 24 which they talked about availability in August, 25 and this was now June. 12846 1 So three, four months was a reasonable 2 time. 3 Unfortunately, Microsoft did not in 4 fact deliver that product when they said that 5 they would and delivered it much later. 6 In fact, it was a year later that they 7 actually delivered that product, in June of 8 '92. 9 So during that period of time that 10 froze companies from doing business with us 11 because there were continuing delays in the 12 availability of Microsoft's product and, you 13 know, caused troubles. 14 The circumstances which are details 15 of, you know, why they were frozen were several 16 accounts. 17 One was at Samsung in Korea, another 18 was Third Wave in Taiwan, a division of Acer, 19 in which they were waiting for product 20 availability from Microsoft, having our product 21 specified and agreed to, but, you know, 22 Microsoft said they had it coming shortly. 23 And at Third Wave, Mr. Chang there 24 relayed to us that Microsoft's product had been 25 committed by the Microsoft company in a timely 12847 1 fashion and that he was going to go with that 2 product instead of ours. 3 In fact, it did not become available 4 in October of '92 -- in '91 excuse me. Was 5 made available way later, June of '92. 6 So fully eight months after it was 7 promised to them. 8 And, of course, they couldn't produce 9 the product, they missed the market 10 opportunity, did not even have a product in 11 that market category, which was the notebook 12 category. 13 Question: Would you tell us -- give 14 us some examples of where that happened. 15 Answer: Okay. To set the environment 16 a little bit, we were attempting to gain a 17 foothold in the marketplace. 18 So when we would sign a customer, we 19 liked to talk about that, and the customer 20 agreed to talk about it because it gave him 21 publicity and so forth. 22 And we had created an ad that we ran 23 in the newspaper which had ten executives 24 standing in front of their machines with their 25 picture and saying that they were using DR-DOS 12848 1 and shipping DR-DOS with their new computers. 2 You know, Microsoft directly went 3 after our customers base and attempted to move 4 them from our agreements to their agreements; 5 and in one case, for example, at Unitron, which 6 was one of our accounts in Taiwan, were very 7 successful in doing that, offered them a price 8 that was extremely low for an MS-DOS Windows 9 combination if they would no longer ship 10 DR-DOS, and made the pricing in such a way that 11 it allowed them to conclude the agreement with 12 us and move forward with them. 13 And, of course, that also had a 14 condition in it and that was that they would do 15 a press announcement and talk about moving to 16 another case -- a public announcement, a press 17 release that was filmed at their location with 18 the Microsoft executives. 19 In fact, there's an attachment of this 20 particular account I'm discussing in my 21 deposition as an attachment. 22 It's in Chinese and it states that, 23 you know, they have moved over to MS-DOS 24 because of the trends in the technology and 25 left -- and stopped using DR-DOS. 12849 1 At Aquarius -- Aquarius is an 2 interesting account in that they had -- were 3 the first licensee of DR-DOS and their 4 company -- 5 Question: Aquarius? 6 Answer: Aquarius, yeah. 7 Interesting names of computer 8 companies in Taipei and in Korea. 9 But the name of the company was 10 Aquarius and the executive there began with his 11 DR-DOS contract and began shipping. 12 Microsoft, you know, came to them, 13 offered them MS-DOS and Windows on a contract 14 for a combined total of $10 a copy. Well, that 15 was, you know, clearly, you know, 20 percent 16 of what normal contracts would have been and 17 the -- 18 Because the Aquarius executive, which 19 I was about to say, advised me that that was an 20 extremely low price, that he'd only gotten that 21 because he'd had a DR-DOS agreement before, and 22 that without that, he wouldn't have been able 23 to get that kind of pricing from Microsoft. 24 He also informed me that that became 25 kind of a standard thing that executives would 12850 1 do in Taiwan, was explain to Microsoft that 2 they were about ready to enter an agreement 3 with DR-DOS and they'd get a better price. 4 So that was a very active activity 5 that Microsoft had going. 6 Question: Now, the last three pages 7 -- see, there's a document in the middle that 8 is a letter from someone at Microsoft to 9 someone at Hope Electronics. 10 What is that? 11 Answer: Okay. That's a document 12 dated November 21st, 1989. It went out to this 13 company that happened to be our VAR for Korea, 14 Mr. Kim at Hope Electronics. 15 And it's a document describing 16 Microsoft as a world leader in its software and 17 that they were going to enforce unauthorized 18 copies and distribution of their products and 19 anybody that violated copyright agreements. 20 Question: Okay. So what? I mean, 21 you don't blame them for wanting to enforce 22 their copyrights, patents, and trademarks, do 23 you? 24 Answer: No. 25 Question: I mean, why did you deem 12851 1 this letter significant, sir? 2 Answer: Well, the circumstances 3 surrounding this letter are what are really 4 significant. 5 One of the attempts that Microsoft 6 made in Korea to prevent us from getting market 7 share was -- from getting a market share was to 8 advise customers and prospects of potential 9 companies that MS-DOS was the first product 10 out, that DR-DOS was a copy of MS-DOS and 11 anybody that used that product would be sued by 12 Microsoft. 13 They did that in open forum seminars 14 prior to this November 21st letter, then 15 followed it up to the OEMs and we understand 16 the government agencies and other companies 17 within Korea with this letter that said, you 18 know, we're serious about enforcement of what 19 you learned of in the seminar. 20 Question: Now, look, if you will, at 21 Exhibit 666. 22 Answer: 666, okay. 23 Question: Mr. Dixon, this is entitled 24 Asia Pacific operations fiscal year '92 25 business plan dated August 30th, 1991. 12852 1 And was this document written by you, 2 sir? 3 Answer: Yes, it was. 4 Question: And written on or about the 5 date indicated? 6 Answer: Yes. It was compiled in the 7 weeks before, and the final edition was dated 8 August 30, 1991. 9 Question: Look, if you will, at the 10 page -- the first page is called management 11 overview. 12 Third paragraph down reads, however, a 13 sobering fact remains that establishing DR and 14 gaining market share is a substantial 15 challenge. 16 There is an incessant attack from 17 Microsoft to win back its customers lost to DR 18 over the last three years with restrictive 19 practices, fear and uncertainty, by locking 20 customers into CPU-based binding contracts, by 21 the promise of a better (the only compatible) 22 future with MS-DOS 5, plus taking the 23 initiative with two technologies that have 24 caught the imagination of our customers in the 25 key success area of notebooks; namely, IC 12853 1 cards, flash memory, and Pen Windows while 2 platforming the future with new technology 3 operating systems coupled with Windows 3.1 4 momentum. 5 Within Korea, Asia Pacific's revenue 6 expectations have been stalled by the 7 monopolistic behavior at Microsoft. This 8 necessitates us to be more innovative to 9 protect and realize our investment in the 10 Korean market. 11 Now, were these comments intended for 12 use by the FTC or publication at all? 13 Answer: No. 14 Question: These were internal 15 comments for your superiors, correct? 16 Answer: Yes. 17 Question: Were they honest and 18 truthful at the time you made them? 19 Answer: Absolutely. 20 Question: Look, if you will, at page 21 -- I'm going to give you the identification, 22 the document identification number at the 23 bottom. It's C0057578, page entitled SWOT 24 analysis. 25 Answer: Yes. 12854 1 Question: And here you list strengths 2 and weaknesses, opportunities and threats. 3 The weaknesses are you're not the 4 preferred DOS. What did you mean by that? 5 Answer: First, let me just describe 6 what this analysis is. 7 Question: Sure. 8 Answer: I mean, in Harvard Business 9 School they teach a concept of saying when you 10 look at a market opportunity make sure you look 11 at what your strengths are, what your 12 weaknesses are, what the opportunities are, and 13 what threats you have in that market before you 14 launch the business strategy. 15 So this document or this page was an 16 attempt by me and the marketing team to really 17 take a hard look at what were the strengths, 18 weaknesses, and opportunities and threats of us 19 continuing in a marketplace. 20 So with that said, when we say not the 21 preferred DOS, that means across the world 22 markets, and looking at MS-DOS, it is, you 23 know, the preferred DOS. 24 That became a weakness for us. We 25 were not the preferred DOS, so we were going to 12855 1 have to come up with some ideas or strategies 2 to overcome that weakness. 3 Question: Low market visibility. 4 What does that mean? 5 Answer: Well, clearly Microsoft was 6 the dominant provider of MS-DOS and a lot of 7 people just didn't know about DR-DOS; so we 8 didn't have a big visibility in the marketplace 9 and we had to overcome that as well. 10 Question: Low penetration of major 11 accounts in U.S. and Europe. 12 Answer: Many customers looked at the 13 leaders within their field and we did not have 14 a good penetration of the major companies, like 15 IBM and Compaq and companies of that type. 16 So without that, it became very 17 difficult for us to move our product, and so we 18 had -- there's a statement that says we had a 19 low penetration of those big accounts. 20 Question: Limited resources to 21 compete (people and money). 22 Answer: Obviously, one of the 23 restrictions and weaknesses we had were that if 24 you were to overcome some of these weaknesses, 25 one of the answers to that was to provide more 12856 1 advertising, more promotion, more resources, 2 and so forth; and we had very limited resources 3 for this product at that time. 4 Question: And I think the last one, 5 small marketing and promotional dollars, lack 6 of published product strategy, is the same 7 thing? 8 Answer: Yeah. 9 Question: And then you talk about 10 threats below that. 11 Answer: Market polarizes to MS-DOS 5. 12 Question: Right. Okay. You say 13 DR-DOS 6 slips, is unstable at release or 14 incompatible with Windows 3.1 or other DOS 15 applications. 16 By the way, did that ever happen? 17 Answer: No. The product was 18 delivered on time. 19 Question: You didn't -- 20 Answer: Yeah, one of the things we 21 were trying to point out to management was, you 22 know, we're basing our plan on the fact that 23 you're going to deliver on time, and if you 24 don't, that is a threat to our plan here. 25 Question: Microsoft tightens 12857 1 contracts with OEMs, becomes more aggressive 2 with its contracts and restrictive practices. 3 Did that happen? 4 Answer: Oh, yeah. 5 Question: The final thing you have 6 here is Novell merger distracts the market and 7 territory objections. 8 Answer: Objectives. 9 Question: Objectives. 10 Did that happen, by the way? 11 Answer: No, that didn't. 12 You know, that was obviously one of 13 the concerns we had, was that we merged with 14 Novell and then, you know, we're in a series of 15 management meetings which takes you away from 16 the activities of your territory objectives. 17 So -- but that did not occur. 18 Question: By the way, when Novell 19 acquired DRI -- 20 Answer: Yes. 21 Question: -- what happened to the 22 resources -- I mean, did the resources devoted 23 to the sale of DR-DOS increase, decrease, or 24 remain the same? 25 Answer: They increased. 12858 1 Question: I want -- I'm talking about 2 -- I want you to focus on the period between 3 October of '91, which was the time of the 4 acquisition, correct? 5 Answer: Yes, it was. 6 Question: And August of '92 when you 7 left Asia Pacific. 8 And during that time period, what did 9 you observe as to the presence or absence of 10 resources devoted to the sale of DR-DOS? 11 Answer: Okay. With that, there was 12 an increase in available resources, there was 13 an increase in available capital for trade 14 shows and marketing activities because we would 15 combine, for example, with Novell at trade 16 shows which gave us a much bigger presence. 17 One of the continuing problems that we 18 faced were rumors that were out in the 19 marketplace that Digital Research was -- had 20 financial troubles and so forth. 21 And with the acquisition of a, at that 22 time, you know, billion and a half dollar 23 software company like Novell, those concerns 24 were erased, and, of course, we showed a lot 25 more presence in the marketplace. 12859 1 In addition, the sales teams were able 2 to provide leads to each other, so we expanded 3 the sales force in the number of leads from 4 Novell salesmen back to DR and for DR salesmen 5 back to Novell for NetWare products. 6 Question: Look, if you will, sir, at 7 page 57582. 8 Answer: Yes. 9 Question: Under the topic northern 10 region, in Korea, Microsoft has bound 11 manufacturers to CPU-based contracts. 12 Read the rest of that paragraph to 13 yourself. 14 Okay? 15 Answer: Yes, sir. 16 Question: Is that accurate? 17 Answer: Yes, sir. 18 Question: Now, I show you what's -- I 19 want to show you what's been marked as Exhibit 20 667. 21 Now we're up to December 5th, 1991. 22 Is this a memo you wrote to Mr. 23 Williams, your superior? 24 Answer: Yes, it is. 25 Question: At the bottom it says, 12860 1 current selling activities by -- it's repeated 2 on the next page, current selling activities by 3 Microsoft in Asia Pacific. 4 Answer: Yes, sir. 5 Question: You say, Microsoft has 6 increased the competitive selling tactics and 7 disparagement of DRI and DR-DOS 6.0 (see 8 attached data). What data did you attach to 9 support that allegation? 10 Answer: That was a document that 11 Microsoft was putting out to companies that was 12 called a myth versus fact, and it was talking 13 about the Digital Research DR-DOS product. And 14 it used words like dangerous, sloppy, et 15 cetera. 16 Question: Okay. I'm not sure these 17 documents go together. 18 There's one that begins appearing -- 19 your fax is a 20-page fax, right? 20 Answer: Yes. 21 Question: Let's look at the fax page 22 numbers, because I can read them better. 23 Page 6 of your fax, you see it's 24 107692? Just count back one, two, three, four 25 -- you see five? Are you at five? 12861 1 Answer: Yes. 2 Question: Now, what is that? 3 Answer: These are pages from the myth 4 versus fact document. 5 It's obviously copied in the wrong 6 order, which -- it looks like it begins on, you 7 know, your stamped page here 7695, which looks 8 like the first copy of that. 9 Question: Okay. These are just 10 excerpts from that document -- 11 Answer: Yes. 12 Question: -- you think? 13 Answer: Well, as I recall, it was a 14 20-page document that was faxed, and it was to 15 have been sent, the full myth and fact document 16 to Mr. Williams, but apparently as it came 17 across the fax machine, some pages were 18 shuffled and got in the wrong order in this 19 rendition of it. 20 Question: Look, if you will -- go 21 back to page 2 of the fax. 22 Answer: Okay. 23 Question: They have also tried to 24 lock in Korea accounts to new three-year 25 contracts per the attached. 12862 1 What do you attach to support that? 2 Or is it missing here? 3 Answer: I don't see. Oh, that was -- 4 Question: Something that begins at 5 page 7690? 6 Answer: Yes, that's correct. 7 In Korea they had offered proposals to 8 the top five accounts in which they had a new 9 three-year contract in which they would 10 establish essentially a pool of revenue money, 11 and then each one of the products would have a 12 per copy price, and if you shipped out so many 13 copies of Windows that month, then you would 14 pay that amount. 15 And by making that large commitment 16 for three years, that established your low 17 rates on all the Microsoft products. 18 And, you know, in this document, it's 19 listed DOS and Windows and Works, OS/2 1.1, Pen 20 Windows -- Pen O/S, Pen Window, multimedia 21 products. 22 Question: Item No. 3 is that they are 23 trying to buy out DRI customers' contracts in 24 Taiwan. 25 I think you told us about that 12863 1 earlier, correct? 2 Answer: Yes. 3 Question: Item No. 4, they are 4 offering Taiwan Microsoft customers 50 percent 5 discount to upgrade account now. 6 On your next page you say, Microsoft 7 is playing hardball and I feel it is time to 8 take aggressive legal action against these 9 tactics. 10 Answer: Yes. 11 Question: Okay. Now, was what you 12 reported in this fax to your superior truthful 13 and honest? 14 Answer: Yes, sir. 15 Question: Did you want to take legal 16 action? 17 Answer: Yes, I had no alternatives. 18 Question: Did these actions that you 19 detected, these selling activities, did they 20 continue until the time you left in August of 21 1992? 22 Answer: Yes. 23 MR. SUSMAN: Thank you, Mr. Dixon. I 24 don't have any further questions, sir. 25 Question: Could you please tell us 12864 1 your educational background? 2 Answer: Education? 3 Question: Where did you go to 4 college -- 5 Answer: Okay. 6 Question: -- where did you go after 7 that? 8 Answer: Yeah. I graduated from 9 college from San Jose State University in 1968. 10 I have degrees in mathematics, minors in 11 business and physical education. 12 Question: And that was in 1968? 13 Answer: Yes. 14 Question: In your examination by 15 Mr. Susman, you described the technical support 16 that DRI offered, and you've just stated that 17 DRI had an advantage by having offices in the 18 local markets. 19 Can you tell me what offices DRI had 20 in the Pacific area and when each of those 21 offices were opened? 22 Answer: I'll do my best. 23 We established an office in Taiwan in 24 say mid 1988, and from that office we handled 25 Hong Kong as well. 12865 1 We established an office in Korea. I 2 can't recall the exact date. It might have 3 been '89. 4 We established an office in Singapore 5 very close to that, about the same time, maybe 6 '89. 7 From Singapore we handled territories 8 of Malaysia, Indonesia, India. 9 In India, we established an office in 10 1990, late '91, I think. 11 With the acquisition of Digital 12 Research by Novell, that gave us an office in 13 Hong Kong, which had been in the territory for 14 a period of time. I don't recall how long it 15 had been there. 16 Question: The office in Taiwan, how 17 many full-time employees were there there? 18 Answer: Four. 19 Question: Was there any market that 20 you were aware of where after Microsoft had an 21 office there, that you had more engineers 22 present to provide OEM support? 23 Answer: An office that Microsoft had 24 that we had more engineers? 25 Question: Yes. 12866 1 Answer: Heavens, no. 2 Question: Have you ever had a 3 salesman or an OEM ever lie to you? 4 Answer: Lie? 5 Question: An OEM ever lie to you. 6 Answer: Not to my knowledge. 7 Question: Never, in order to -- 8 you've never had somebody tell you they had an 9 offer from somebody else in order to get a 10 better price? 11 Answer: Maybe. 12 Question: Do you consider that lying? 13 Answer: I would, yes. 14 Question: And has that ever occurred 15 in your business experience where someone would 16 tell you that they had a better offer from the 17 competition in order to get a better price from 18 you? 19 Answer: Yes. 20 Question: How many hours did you 21 spend between the last time that we've met and 22 today, how many hours have you logged in 23 connection with your consulting arrangement? 24 Answer: I haven't added it up, but I 25 would guess maybe eight. Those are made up of 12867 1 four hours of preparation for this, and they 2 made me reread the deposition and have a notary 3 present for me to sign and say that it was 4 accurate and official, and I did. That took 5 about four hours or so. 6 Question: You described an error that 7 appeared on a beta version of Windows. 8 Do you recall that testimony? 9 Answer: An error? 10 Question: Yes, an error message. 11 Answer: It was a warning, yes. 12 Question: Okay. What did the error 13 message say? 14 Answer: It said that the operating 15 system you're using is not an MS-DOS product 16 and that Microsoft cannot be responsible for 17 the, I guess, running or execution of Windows. 18 It was essentially that. 19 Question: Did you personally see 20 this? 21 Answer: Yes. 22 Question: And so it came up, and 23 where did you see this? 24 Answer: One of the customers in -- 25 see, I think it was Mitac, and they were 12868 1 interested in DR-DOS and they had called Henry 2 Huang and said that in using the beta site, the 3 beta version of Windows under DR-DOS they got 4 this message, and could we come out and talk 5 about it. 6 Question: And this message again is 7 -- I'm sorry. I'm a little slow this morning. 8 Answer: Is that the operating system 9 that you're operating on is not an MS-DOS 10 operating system and Microsoft cannot be 11 responsible for its running of Windows. 12 Question: And that's not something 13 that was reported to you, that was something 14 that you saw, correct? 15 Answer: It was reported to me by 16 OEMs -- 17 Question: Okay. 18 Answer: -- and through our technical 19 staff. 20 Question: But you ultimately saw that 21 error message? 22 Answer: Yes. 23 Question: Okay. And did you see that 24 at Mitac's offices? 25 Answer: Yes. 12869 1 Question: Okay. And do you know 2 which OEMs contacted your engineering staff or 3 which OEMs your engineering staff contacted to 4 discuss this warning message? 5 Answer: Yes. 6 Question: Please tell me who they 7 were. 8 Answer: Okay. 9 Question: You're getting good at 10 this. 11 Answer: In Korea, there was Hyundai, 12 Samsung, Gold Star, Daewoo. So four of the top 13 five accounts. 14 Question: And they also have this 15 same warning message as you say? 16 Answer: Yes. 17 Question: Okay. And -- 18 Answer: In Korea -- excuse me -- in 19 Taiwan there was Mitac and Acer that I called 20 into the office about this, as I recall. 21 Question: Did you see it at Acer? 22 Answer: I was not invited, no. 23 Question: Okay. Did you see it at 24 Daewoo? 25 Answer: Did not. 12870 1 Question: Gold Star? 2 Answer: No. 3 Samsung? 4 Question: Samsung? 5 Answer: No. 6 Question: Hyundai? 7 Answer: No. 8 Question: Have you ever heard of a 9 nonfatal error message? 10 Answer: Nonfatal? 11 Question: Yes. 12 Answer: Nonfatal error message, yes. 13 Question: What does that mean to you? 14 Answer: That a message that comes up 15 that's not terminal to the computer operation. 16 Question: Is -- would a user see 17 nonfatal error messages from time to time if 18 they were a beta tester? 19 Answer: I would guess. I don't know. 20 I'm not that detailed in the technology. 21 Question: Well, did you ever run beta 22 tests? 23 Answer: No. 24 Question: Did you ever run a beta 25 version of a software product? 12871 1 Answer: No. 2 Question: So the words nonfatal error 3 message just means something to you that you 4 might see, but you don't have any specific 5 recollection of actually having seen the words 6 nonfatal error? 7 Answer: Words nonfatal error -- 8 Question: In connection with a beta 9 test. 10 Answer: Yeah. I don't recall. 11 Question: Those words don't ring a 12 bell to you at all? 13 Answer: No. I was just trying to 14 interpret nonfailure in the context of what 15 that would mean, meaning it didn't terminate 16 the product. 17 Question: And so you could continue 18 on with the use of the product? 19 Answer: Yes. 20 Question: Okay. And if you could 21 continue on with the use of that product, what 22 does that mean to you? 23 Answer: Probably proceed with 24 caution. I mean, why would they warn you? I 25 guess proceed with caution. 12872 1 Question: Can you think of anything 2 else of a retaliatory nature other than the 3 pricing differentials, not being invited to be 4 a participant in a beta site, and not being 5 invited to certain technical Windows seminars? 6 Answer: Let's see. There was a 7 general concern expressed by Miss Chang at 8 Mitac that other technologies would be withheld 9 from them if they were to proceed with a DR -- 10 Digital Research contract, and at one 11 particular time, a Novell contract. 12 So they were concerned not only about, 13 you know, Windows, but also about MS-DOS 14 products. 15 Question: And do you know, did Mitac 16 ever license -- was -- did Mitac continue to 17 license DR-DOS? 18 Answer: Mitac never licensed any 19 Digital Research products. 20 Question: Okay. And the information 21 that you learned on this topic is exclusively 22 through the Mitac representatives? 23 Answer: The people at Mitac -- 24 Question: Right. 25 Answer: -- discussed this with me on 12873 1 a couple of occasions. 2 (Whereupon, playing of video 3 concluded.) 4 THE COURT: Very well. Sorry to keep 5 you five minutes late there. I hope we didn't 6 delay you too much. 7 Remember the admonition previously 8 given. We'll see you tomorrow at 8:30 a.m. 9 Leave your notebooks here. 10 Take a recess for ten minutes. 11 (A recess was taken from 3:02 p.m. 12 to 3:12 p.m.) 13 (The following record was made out of 14 the presence of the jury at 3:12 p.m.) 15 THE COURT: Mr. Holley, do something 16 short. 17 MR. HOLLEY: Yes, Your Honor. 18 Your Honor, as the Court will recall, 19 Plaintiffs made an application to the Court 20 seeking permission to disclose certain findings 21 made by Andrew Schulman concerning Microsoft's 22 compliance or noncompliance with the 2002 23 consent decree, and the Court entered an order 24 on the 15th of January modifying the protective 25 order in order to give the Plaintiffs an 12874 1 opportunity to do that, and we understand that 2 they have communicated with the justice 3 department and the Iowa Attorney General's 4 office to send a copy of Mr. Schulman's report. 5 I was in San Francisco yesterday 6 deposing Mr. Schulman, and I'm not sure that 7 this is necessary given that this is 8 Microsoft's confidential information, but we 9 would like to communicate to the justice 10 department and the Iowa Attorney General what 11 Mr. Schulman said yesterday, which I think is 12 inconsistent with statements made publicly by 13 the Plaintiffs and to this Court about 14 Microsoft's compliance with the 2002 consent 15 decree. 16 So, Mr. Lamb did not designate any 17 portion of the transcript as confidential, but 18 I didn't want to be in a position of providing 19 the transcript to the government and then 20 finding out that there was some objection to 21 it. 22 So I just wanted to be clear that we 23 would like to give the transcript to the 24 government and to talk to them about it, which 25 I think is fully consistent with the spirit of 12875 1 the Court's January 15th order. 2 MR. WILLIAMS: Your Honor, Kent 3 Williams for the Plaintiffs. 4 I did not attend the deposition 5 yesterday in San Francisco, as the Court is 6 aware. 7 I have not seen the transcript and I 8 have not spoken with Mr. Lamb. 9 I don't recall from the protective 10 order whether there's any provision of time 11 after a deposition for either side to designate 12 part of the transcript as confidential. 13 What I'd like at this point, before 14 Your Honor rules on that request, is allow 15 Plaintiffs the opportunity to consult with 16 Mr. Lamb and any other attendees for Plaintiffs 17 at the deposition and see if we have any 18 objection to that request. 19 So if we could have until tomorrow 20 morning. 21 THE COURT: What confidentiality would 22 the Plaintiffs be protecting? 23 MR. WILLIAMS: I don't know, Your 24 Honor, if there are work product concerns. I 25 don't know what all was covered at the 12876 1 deposition, and so I'm completely in the dark. 2 We had no notice of this request from 3 Microsoft before Mr. Holley just made it, so 4 we'd just like the evening to make sure we 5 don't have any objection, and then come back to 6 Your Honor tomorrow morning. 7 THE COURT: Very well. 8 Anything further? 9 MR. HOLLEY: No, Your Honor. 10 And obviously I have no objection to 11 Mr. Williams consulting with Mr. Lamb. 12 THE COURT: Okay. We'll take it up 13 tomorrow then. Thank you. 14 Anything else, Mr. Holley? 15 MR. HOLLEY: No, Your Honor. 16 THE COURT: Thank you. 17 Ready to proceed? 18 MR. JONES: Your Honor, prior to 19 addressing the Phase 7 document appeals, 20 finishing that argument, we do need to bring to 21 the Court's attention very briefly a matter, 22 just a housekeeping matter in regard to the 23 presentation of the deposition testimony. 24 As the Court is aware, both sides are 25 working very hard to get those deposition 12877 1 transcripts squared away. 2 THE COURT: Which depositions? 3 MR. JONES: The deposition -- I'm 4 going specify them for you in just a second. 5 THE COURT: Okay. 6 MR. JONES: They are -- the ones we're 7 talking about are Mr. Stephens -- I'm sorry, 8 Stephens, Harris, and Silverberg of the 9 specific issue that we're talking about, and 10 this is just a housekeeping matter for the 11 Court's information. 12 Both parties are working very hard to 13 get these complicated transcripts prepared so 14 that they are presented accurately to the jury. 15 The Court knows that's a difficult process 16 because of the way that they get designated by 17 piece and such. And then you have interlaid 18 over that the exhibits and ensuring that 19 documents are admitted properly and talked 20 about. 21 We've worked through that process and 22 we have agreed with Plaintiffs on an order of 23 presentation that, if followed, will, we think, 24 ensure that the documents or the transcripts 25 are prepared accurately. 12878 1 Plaintiffs -- and we have talked about 2 having Stephens and Harris go tomorrow, and 3 then on Friday having complete -- we would 4 complete Harris and then go to Mr. Silverberg's 5 deposition, which I understand is about a 6 five-hour-long deposition. 7 After that, we have a lot of work to 8 do over the weekend, but if that order is 9 followed for the next two days, we feel 10 confident we can provide the Court and the jury 11 with accurate transcripts. 12 THE COURT: Is this acceptable to 13 Plaintiffs? 14 MR. CASHMAN: Your Honor, I'm not sure 15 what the issue is with Mr. Jones. 16 There are certain transcripts which 17 are completed or pretty much completed that we 18 are going to be playing, and we'll work with 19 Microsoft to continue to work on the others. 20 We've got Mr. -- I think the order 21 that was agreed upon is Mr. Stephens, then 22 Harris, and then Silverberg, and there really 23 isn't any issue as I see it. 24 THE COURT: Obviously they think 25 there's an issue. 12879 1 MR. JONES: There will be an issue if 2 that order isn't followed. If that order is 3 followed, then there won't be an issue. 4 THE COURT: Are you trying to dictate 5 to the Plaintiffs which evidence to present? 6 MR. JONES: Absolutely -- 7 MR. CASHMAN: That's the problem -- 8 THE COURT: One at a time, please. 9 MR. JONES: Yes, Your Honor, let me 10 address that. 11 This is an order that the Plaintiffs 12 proposed. So we aren't trying to dictate to 13 them at all. We understand they have the right 14 to present their case the way they see it. 15 They came forward and said if we do it 16 like this, can we get it done on time? We said 17 yes, and so we're just reporting that to the 18 Court. 19 THE COURT: All right. Mr. Cashman? 20 MR. CASHMAN: Nothing further, Your 21 Honor, on that point. 22 One other housekeeping matter that I 23 meant to do some time during the course of the 24 day is I just wanted to make an offer of proof 25 relative to Mr. Hill on the stockholdings that 12880 1 he has in Microsoft stock as we've done before, 2 and I just want to provide the document as 3 we've done with some other Microsoft witnesses. 4 THE COURT: Very well. 5 MS. BRADLEY: And, Your Honor, if I 6 may put it on the record that these offers of 7 proof on stockholdings should all be held 8 highly confidential and under seal in the 9 record. 10 MR. CASHMAN: So I'm handing up to 11 Microsoft what's been marked as OP 3 and a copy 12 to the Court. 13 THE COURT: Any objection to having 14 the offer of proof exhibit? 15 MS. BRADLEY: As long as it's under 16 seal, no objection. 17 THE COURT: The Court has received the 18 offer of proof Exhibit Number 3. It will be 19 placed under seal. 20 Okay. Anything else, Mr. Cashman? 21 MR. CASHMAN: If I could just have a 22 minute, Your Honor, to get reorganized here for 23 Phase 7. 24 THE COURT: Absolutely. 25 (An off-the-record discussion was 12881 1 held.) 2 MR. CASHMAN: All right, Your Honor. 3 THE COURT: Mr. Cashman, we're at 4 Exhibit 6395. I believe you were speaking on 5 it. 6 MR. CASHMAN: Yes. We were talking 7 about surveys, Your Honor. 8 THE COURT: Yes. 9 MR. CASHMAN: And the first point that 10 I'd wish to make today is an issue that came up 11 yesterday with respect to how these matters 12 were raised before the Special Master. 13 And you'll recall that Microsoft 14 conceded that it had not raised one of its 15 issues before the Special Master that it raised 16 on appeal, and that was the statement against 17 interest relative to the -- one of the prior 18 exhibits. 19 And I wish to advise the Court that 20 Microsoft did not raise the issues with respect 21 to the surveys that it is now asserting on 22 appeal. 23 And I'm going to hand up to the Court 24 a copy of Mr. Tuggy's letter to the Special 25 Master dated September 13th, 2006, in which 12882 1 Mr. Tuggy, amongst other things, addresses 2 various issues. But he addresses specifically 3 the surveys that are now under discussion here 4 today. 5 And as the Court will see, Mr. Tuggy 6 in this letter of Microsoft argues only that 7 these exhibits are business records and argued 8 that they should be admitted or that the 9 hearsay objections should be overruled solely 10 on the basis of the business record exception. 11 And for that reason, we think it's 12 improper for Microsoft to raise the -- its 13 claims of present sense impression and state of 14 mind exceptions when those issues were not 15 presented to the Special Master on these 16 exhibits. 17 And I'm going to -- I only have one 18 copy of this letter with me today, and I'll 19 show it to Microsoft, but I'm going to provide 20 a copy to the Court. 21 But consistent with the position that 22 Mr. Jones took yesterday, conceding that any 23 issue which was not raised with the Special 24 Master was waived and Microsoft's agreement to 25 drop its arguments on the -- on issues that 12883 1 weren't raised before the Special Master, we 2 think that should also be applicable here. 3 So first I'm going to show this to 4 Mr. Jones, and then I'm going to hand a copy up 5 to the Court. 6 THE COURT: Okay. And if Carrie gets 7 back, she can make copies of it for you. 8 MR. CASHMAN: And specifically, the 9 page -- pages of the letters, Your Honor, 10 September 13th, 2006, page 3, continuing over 11 on to page 4. 12 THE COURT: Thank you, sir. 13 MR. JONES: May I respond, Your Honor? 14 THE COURT: Sure. 15 MR. JONES: The reason that the letter 16 Mr. Cashman just handed you doesn't contain 17 argument about 5.803(1) and 5.803(3) is because 18 those issues were raised in a prior letter from 19 Mr. Tuggy in a brief action filed on July 10, 20 2006. 21 The rulings chart itself states that 22 the survey results are admissible under Iowa 23 Rule of Evidence 5.803(1) and 5.803(3). 24 This is the rulings chart that the 25 Special Master had. 12884 1 And with the Court's permission I'll 2 hand it up after showing it to counsel. 3 THE COURT: Very well. 4 MR. JONES: Thank you. 5 THE COURT: I'll have copies made of 6 this. 7 MR. JONES: Thank you, Your Honor. 8 THE COURT: May we proceed then or is 9 there anything else before we go to 6395? 10 MR. CASHMAN: Your Honor, now we can 11 proceed to these exhibits. 12 And yesterday, as the Court will 13 recall, we were discussing surveys and the law 14 on the surveys. 15 And I have prepared some visual 16 presentations that make it abundantly clear why 17 these exhibits in this instance should not be 18 admitted. 19 And Darin will help us here. 20 Your Honor, I'm going to ask Darin to 21 put up what is Slide 1. 22 And this is authority -- and we'll 23 have some specific cases to discuss, but 24 surveys are admissible under very specific 25 circumstances, and there is authority from Am. 12885 1 Jur., which summarizes the law very nicely, and 2 I've cited some of that for the Court here. 3 So Slide 1 points out that all of the 4 jurisdictions where survey evidence has been 5 admitted or deemed admissible uniformly require 6 that the party seeking to introduce it, here 7 Microsoft, has to lay a proper foundation for 8 its introduction. 9 I'd like to stop there for just a 10 moment because I'm not sure if this is 11 intentional by Microsoft or if it's an 12 oversight, but when you look at their ruling 13 chart, they state that they're appealing only 14 the Special Master's hearsay ruling. 15 The Special Master, however, for these 16 surveys sustained objections that the 17 Plaintiffs asserted for hearsay, embedded 18 hearsay, and foundation. 19 And I think you'll see on the rulings 20 charts that were provided that in many 21 instances the Special Master made the notation 22 that there was insufficient foundation for 23 these surveys. 24 So I make that note in relation to the 25 first point identified in this Am. Jur. 12886 1 publication. 2 Continuing on there, that surveys must 3 be disclosed to the adverse party and the 4 results. 5 The evidence supporting the 6 interpretation and verification of the results 7 must be proven by the proponent of the evidence 8 and that the cross-examination of the 9 interviewers at a minimum has to be made 10 possible. 11 Turning to Slide 2, Darin. 12 Again, this is from Am. Jur, and they 13 state that -- this is with respect to required 14 foundation -- that the jurisdictions are 15 unanimous in requiring that proper foundation 16 be laid for the introduction of this kind of 17 evidence, and the kind of foundation that is 18 required is discussed here. 19 So, for example, under Point 1, the 20 person in charge of the survey should be called 21 to testify as to the purpose of the survey and 22 general method by which it was conducted. 23 The second, that all interviewers 24 participating in the test should be called as 25 witnesses. And the reasons why they need to be 12887 1 called are identified here. 2 Item Number 3, the tabulator of the 3 survey results needs to be called to testify 4 both as to qualifications, the methods 5 employed, and other details of the manner in 6 which the survey is prepared. 7 And then this article goes on to point 8 out that the person who designed the test and 9 selected the universe has to be qualified and 10 called to testify as to the reliability of the 11 survey and other details relating to how the 12 survey was conducted. 13 And then, Am. Jur. goes on to point 14 out that the questionnaires which form the 15 basis for a legitimate survey also have to be 16 provided. 17 If we go to Slide 3, Am. Jur. is 18 summarizing the cases, points out that it is 19 essential to the admissibility of a survey that 20 it be conducted by a recognized expert in the 21 field. 22 And Am. Jur. goes on, likewise, 23 evaluation of the results by an expert is also 24 essential. 25 And as Am. Jur. points out and as is 12888 1 discussed in most cases, that involves two 2 separate experts for a proper survey to be 3 admissible. 4 If you'll turn to the Slide 4, Your 5 Honor. 6 Am. Jur. describes the burden of proof 7 for survey evidence, and as you can see there, 8 they have to, among other matters, carry the 9 burden of proof as to the relevancy and 10 adequacy of the universe, the relevancy and 11 adequacy of the sample, qualifications of the 12 persons organizing and managing the poll, the 13 absence of bias and the method of interviewing, 14 the fact that the questions were asked -- that 15 were asked were simple and unequivocal, and in 16 this instance, the scope of the freedom of the 17 persons interviewed to frame answers in their 18 own terms. 19 So if we turn to Slide 5, Darin. 20 Am. Jur. after surveying all the law 21 identifies a checklist, which I think highly 22 instructive in the instance here, that these 23 are the kind of -- for a survey to be 24 admissible, is really an expert testimony 25 issue, and it's something that's done under 12889 1 closely supervised circumstances in connection 2 with the litigation. 3 It's not something that allows 4 self-conducted internal surveys such as what 5 we're talking about here to be introduced as 6 Microsoft requests. 7 So the checklist identified by Am. 8 Jur. points out that an expert has to organize 9 and conduct the poll, that the planners and 10 interviewers have to be ready to provide 11 testimony in Court. 12 There is multiple other issues here. 13 I'm not going to go through all these. But 14 it's clear that none of that has happened here. 15 These guidelines as established by Am. 16 Jur. are not out of the ordinary, Your Honor. 17 If we go to Slide 6, I provided 18 quotation from the Manual for Complex 19 Litigation, Section 11.493, where the manual 20 points out that surveys must conform to 21 generally recognized statistical standards. 22 And in particular, you can see the criteria 23 which have to be established for surveys to be 24 admissible. 25 And most importantly, this is 12890 1 something that is done by and under the 2 supervision of experts. 3 If we turn to Slide 7, Darin. 4 Again, Your Honor, this principle is 5 not unique. 6 This is a quotation from the United 7 States Judicial Conference Handbook of 8 Recommended Procedures For Trial of Protracted 9 Cases, and they discuss the issue of survey 10 evidence being used as evidence in complex 11 cases. 12 And they emphasize here, as the slides 13 which I've previously displayed underscore, 14 that surveys have to be done in accordance with 15 accepted principles of survey research. 16 And that's a specialized area, and 17 Microsoft hasn't provided any of that 18 foundation in connection with the surveys that 19 it seeks to have admitted. 20 I'm going to now turn to Slide 8, and 21 this is an example of a Court which -- one of 22 many, which identifies the kind of foundation 23 evidence that's required for surveys. 24 This is the Toys 'R Us, Inc., versus 25 Canarsie Kiddie Shop, 559 F. Supp. 2d 1189 from 12891 1 the Eastern District of New York in 1983. 2 But there are a number of other cases 3 which identify the same criteria. 4 And I think that what I'd like to 5 emphasize on this slide is the bottom 6 paragraph. 7 The necessary foundation will normally 8 be laid through the testimony of the persons 9 responsible for the various parts of the 10 survey. 11 And they cite not only a Manual for 12 Complex Litigation, but McCarthy on Trademarks 13 and Unfair Competition, which states, quote, 14 the presentation of survey evidence at trial 15 should include the testimony of the following 16 witnesses: The survey director, the survey 17 supervisor, interviewers, interviewees. 18 Turning to Slide 9, Your Honor, this 19 is another example of another case, even a more 20 recent case, in which they point out the kind 21 of criteria that have to be established before 22 survey evidence is admissible. 23 This is the Tunnell, T-u-n-n-e-l-l, 24 versus Ford Motor Company case, 330 F. Supp. 2d 25 707, the District Court in Virginia from 2004. 12892 1 And their citation for its authority, 2 Your Honor, is the Reference Manual on 3 Scientific Evidence. 4 And as you can see here, they go 5 through in quite a bit of detail about the kind 6 of information that has to be available to the 7 Court and to the opposing party about the 8 preparation and conduct of a survey before it 9 can be admitted. 10 Continuing on to Slide 10. 11 And here again the Tunnell Court 12 emphasizes that really survey evidence is a -- 13 an expert issue. And here they point out that 14 it requires specific expertise for survey 15 experts who design, conduct, or analyze 16 surveys. 17 I'm not going to read all that, but 18 obviously, there is a substantial requirement 19 of necessity and trustworthiness that is 20 required for survey evidence. 21 And these cases and these authorities 22 which I have provided on these slides all 23 emphasize that the key criteria for scientific 24 -- or for survey evidence is really expert 25 testimony and -- and that quite a bit is 12893 1 required -- quite a bit of foundation is 2 required in order to provide the kind of 3 trustworthiness that would make that kind of 4 evidence admissible in Court. 5 Here, obviously, Microsoft could have 6 hired experts to do whatever surveys they 7 thought were relevant, and that would have been 8 the proper procedure if they were seeking to 9 use survey evidence. 10 And they didn't do it. 11 As we'll see in discussing some of 12 these exhibits specifically, there is no 13 foundation laid for any of these exhibits and 14 they, therefore, lack the kind of 15 trustworthiness that is required under the law. 16 And I'd like to say a brief word, Your 17 Honor, before we get to the exhibits about the 18 two cases which Mr. Jones cited to the Court 19 yesterday. 20 And I should say that some of the 21 authorities that I've cited on the slides are 22 in our brief, but I presented these slides to 23 simplify the issues a little bit for the Court. 24 And I have copies for the Court, which 25 I'll hand up when the argument is over. 12894 1 But, first of all, I just want to 2 address the two cases that Mr. Jones cited in a 3 very general fashion. 4 The first was the Zippo case, and that 5 case, as I mentioned yesterday, is factually 6 black and white from the kind of exhibits we're 7 going to be looking at. 8 In the Zippo case, the survey at issue 9 or the surveys at issue were conceived and 10 supervised in connection with the litigation 11 according to the kind of principles that we 12 talked about on the slides that I just showed 13 to the Court. 14 So, in other words, the survey at 15 issue in the Zippo case was conducted according 16 to recognized survey principles. 17 And the fundamental analysis that the 18 Zippo Court went through, because it's an older 19 case from 1963, was necessity of the survey and 20 the trustworthiness of the survey. 21 And so the Zippo case does not provide 22 any help for Microsoft here. 23 Similarly, the Schering Corporation 24 case, which Microsoft cites in its brief, is 25 factually night and day difference from what 12895 1 we've been discussing because, again, there the 2 surveys at issue were fundamentally -- the 3 question was whether they had been conducted 4 according to a survey -- accepted survey 5 principles. 6 And there in that case, and in the 7 Zippo case, the experts who organized the 8 surveys, the experts who interpreted the 9 surveys, and the interviewers, et cetera, were 10 all available for cross-examination, and in 11 some instances, where it was following trial, 12 like in the Schering case, did testify. 13 And that's a wholly different 14 situation than what we're talking about here, 15 where Microsoft is never going to -- they can't 16 even identify the individuals who conducted the 17 surveys, let alone the methodology. 18 They're instead intending to use these 19 surveys to just show them to an expert who had 20 nothing to do with their preparation or the 21 conduct of the surveys. 22 So they're wholly, wholly inapposite 23 to the kind of situation addressed in the Zippo 24 and the Schering case. 25 Now, to take this a step further, Your 12896 1 Honor, the Schering case, which discusses 2 according to Microsoft the state of mind 3 exception that they seek to have their surveys 4 admitted under, if you look at the Schering 5 case and read the facts, which Mr. Jones did 6 not discuss with the Court, the surveys that 7 were discussed by the Court in its decision 8 involved questions that were asked under a 9 supervised environment within 24 hours after 10 the questions were asked. 11 You can read the facts of the Schering 12 case and you'll see that it was a question 13 about whether one pharmaceutical company was 14 making misrepresentations -- whether 15 salespeople were making misrepresentations or 16 false impressions and the doctors to whom they 17 were marketing their drugs, their drug 18 products. 19 And those briefings as they were 20 called -- as you'll see in the case, were 21 called detailings. 22 And the surveys that were conducted 23 involved surveyors, according to questions that 24 were identified, who went to the physicians 25 right after they had these so-called detailings 12897 1 and asked them specific questions, within 24 2 hours after the questioning -- after the 3 detailing, pardon me. 4 And that was a key issue in this case 5 about whether or not it might be state of mind 6 evidence. 7 But reading further into the case, 8 there were five surveys at issue and whether 9 they were admissible or not. 10 And the Court ultimately concluded, as 11 you will see if you read this case, that two of 12 the surveys could have been admissible under 13 the specific facts of this case, under the 14 state of mind exception -- first of all, 15 because the timing of the question, but even 16 then, the Court recognized that's really -- was 17 really not state of mind evidence, but they 18 allowed the -- those two surveys for a very 19 limited purpose that was based on the specific 20 allegation in that lawsuit. 21 And so it doesn't stand for the 22 general sweeping proposition that Microsoft 23 cites it for that the state of mind exception 24 applies to any survey. 25 And to continue on, the Court also 12898 1 concluded that in general these surveys were 2 hearsay and wouldn't be admissible if they were 3 designed to prove the truth of the matter 4 asserted in those statements. 5 So it is really pretty far afield from 6 what Microsoft has cited it for in its papers. 7 And I really don't think that it takes 8 a lot in reading the case to see how it's so 9 inapposite to the situation that Microsoft 10 presents these exhibits here because the 11 exhibits here, as we see when we go through 12 them, don't even get close to any of the fact 13 situations discussed in the Schering case, and 14 they certainly don't get close to the kind of 15 requirements for admissibility that are spelled 16 out in all of the case law and as I've 17 highlighted with the slides I've presented to 18 the Court. 19 And when we look specifically at the 20 first exhibit which Microsoft proffers, 6395, 21 this is something that's commissioned by 22 Microsoft Corporation entitled positioning for 23 Microsoft Office with ECMV2. 24 And when you look through the 25 authorities that I've provided on the slides 12899 1 and the cases, the fact that this was 2 commissioned by Microsoft for a business 3 purpose makes it flawed on its face. 4 When you look through this exhibit, 5 there's no indication of who prepared it. 6 There's no indication anywhere of what 7 questions were asked. There's no indication 8 anywhere of the kind of survey criteria that 9 are required under the law to even make it 10 something that would be worthy of consideration 11 for admissibility. 12 This is nothing but something that 13 Microsoft internally was using for business 14 purposes, apparently, and that doesn't cut it 15 under the law as it relates to the 16 admissibility of survey evidence. 17 There is no indicia of reliability 18 here, and it's really just a puff piece 19 internally for one Microsoft internal or 20 insider to use with other Microsoft internal 21 people as a basis for saying here's what it 22 looks like as it relates to the marketing of 23 these various issues that were presented to the 24 people, whoever they were, that they talked to. 25 So there's no basis for the admission 12900 1 of this exhibit. 2 And I in closing on this exhibit will 3 just note that's precisely why the Special 4 Master rejected this and all of these survey 5 exhibits on all of the objections that were 6 asserted by Plaintiffs because it doesn't have 7 foundation, it contains embedded hearsay 8 quotations that don't have relation to anything 9 in this case and because it doesn't satisfy any 10 of the legal criterias for survey evidence. 11 THE COURT: And your arguments go to 12 each survey? 13 MR. CASHMAN: Those general arguments 14 go to every one of these surveys. 15 THE COURT: Very well. 16 Mr. Jones? 17 MR. JONES: Thank you, Your Honor. 18 I'm going to note at the outset that 19 not one of the authorities that we got treated 20 to up on the big board was cited in Plaintiffs' 21 brief. This is all new argument; all new 22 justification. 23 I will do my best to respond to these 24 that just now that I saw for the first time 25 with the Court. But this isn't the way you're 12901 1 supposed to do it. 2 Microsoft provided in its brief the 3 case law justification for admitting surveys. 4 This is an argument that we raised and 5 discussed with the Special Master, and it's 6 important to note that the Special Master 7 admitted the vast majority of the surveys 8 offered by Microsoft. 9 These few that we're talking about are 10 the ones that the Special Master found did not 11 have what he said was insufficient foundation, 12 which was to mean that they lacked certain 13 indications to him that they were sufficiently 14 reliable. 15 And we're prepared to talk about how, 16 in fact, these surveys do have indicia of 17 reliability and do have sufficient foundation, 18 but I need to dispel a couple of things from 19 the outset. 20 First of all, Microsoft didn't mislead 21 the Court in any respect. 22 We have Zippo and Schering copies here 23 for the Court if you would like. 24 It's plain as the nose on your face 25 when you read through those that those cases 12902 1 stand unequivocally for the point that surveys 2 can come in as present sense impressions under 3 803(1) and they can come in as state of mind 4 evidence under 803(3). 5 Those are hearsay exceptions. They 6 are not for the truth. And we would accept 7 that if such -- if this evidence were 8 introduced, an instruction to the jury that 9 these are just to -- for state of mind of the 10 individuals questioned and not for the 11 underlying truth. That would, of course, be 12 acceptable. But to say that these cases don't 13 support admission of surveys is simply not the 14 case. 15 We addressed also in our brief both 16 grounds, or actually addressed both the 17 foundation and the hearsay arguments raised by 18 Plaintiffs. 19 On page 13 of our brief we point out 20 the statements in the surveys are not hearsay 21 because they fit within the present sense 22 impression and state of mind exceptions. 23 Nor is the foundation objection well 24 taken. 25 As courts have recognized that, quote, 12903 1 errors in methodology thus properly go only to 2 the weight of the evidence, close quote, but do 3 not affect admissibility. 4 And the citation we provided the Court 5 at that time was to Schering Corp., as well as 6 to a second case. 7 So we have provided the Court in our 8 brief, which Plaintiffs had a chance to respond 9 to, which they did, and which they cited only 10 Weinstein's Evidence for some general 11 propositions on state of mind. 12 We provided the authority that the 13 Special Master also had before him in the 14 process when he did the initial review of these 15 surveys. 16 Now, let me address too, though, the 17 slides that we were treated to this afternoon. 18 In fact, if you could bring up -- 19 Darin, can you put up I think it's Slide 6, the 20 Manual for Complex Litigation? I'll talk to 21 this in a second. 22 But what we provided the Court -- 23 thanks, counsel. 24 What we provided the Court were again 25 the case law support. But it's important, I 12904 1 think, for the Court to understand context. 2 Of the cases that Mr. Cashman cited, I 3 haven't seen them before, but if I were a 4 betting man, I'm going to bet they all involved 5 allegations of commercial confusion, a Lanamac 6 trademark case, and in those cases, you know, a 7 party is mad at another party because they have 8 put on the market a good that can be confused 9 with their good. 10 So, you know, a sneaker that looks 11 like Nike sneaker, and you would raise a 12 trademark violation act or trade dress. 13 In those cases, the courts do talk 14 about the need to do surveys. In fact, it's an 15 element of the case that you prove that 16 commercial confusion. 17 And in those cases, of course, as a 18 matter -- as an element that's going to be 19 required to prove the violation, that's expert 20 opinion and the surveys are commonly done, and 21 they can be done in that fashion because what 22 you're concerned about is commercial confusion 23 at that time. 24 And because these surveys are being 25 done for the purpose of litigation, that's why 12905 1 you see this panoply of requirements. 2 These are being done for litigation. 3 So, of course, when the purpose is for 4 litigation, the temptation will be to skew 5 them. 6 That's a fundamental distinction 7 between the surveys that are talked about in 8 the cases cited by Mr. Cashman and the surveys 9 that we're talking about. 10 In our case, we're talking about 11 surveys that were done for internal business 12 purposes, not for puffing; that were done so 13 that Microsoft could attain a better 14 understanding of the consumer market. 15 It wasn't done for purposes of 16 litigation. It was done to ensure that 17 Microsoft was following smart business 18 strategies and doing things it needed to do for 19 its business. That's the indication or that's 20 the badge of reliability. 21 So we don't need that Christmas -- you 22 know, all those little requirements, the guy 23 can testify and all this stuff. We don't need 24 that here because the purpose of the survey, 25 the identity of the surveyor, the questions 12906 1 asked commonly are identified in these surveys. 2 We have those things that tell us that these 3 surveys are reliable. 4 And I think something that Mr. Cashman 5 said Zippo stands for is also important, 6 necessity. 7 Now, Mr. Cashman said Microsoft could 8 have gone out and done these surveys. 9 Well, this class period runs from 1994 10 and the allegations of misconduct run to 1988. 11 It's -- it simply is not realistic to expect -- 12 to have expected Microsoft to anticipate a 13 lawsuit in 2006 and 2007 that it would have to 14 defend against and therefore develop at that 15 time rock-solid evidentiary worthy surveys. 16 That's simply -- that can't be the case. 17 And so what we have to do under that 18 necessity aspect of Zippo, we -- Microsoft is 19 entitled to put forward evidence that is, in 20 fact, reliable on what is, in fact, a key 21 question in this case, that question being 22 causation. 23 I mean, causation, as we discussed 24 yesterday, is going to be one of Microsoft's 25 major defenses. 12907 1 We discussed it. Mr. Tulchin 2 discussed it in opening. Ms. Conlin talked 3 about it in her opening. It's a part of 4 Preliminary Instruction Number 8. It's also 5 identified in Preliminary Instruction Number 1. 6 It's a subject of the expert report of Mr. -- 7 of Roger Noll. It's a subject of an expert 8 report prepared by Roger Noll, who is a 9 plaintiff expert, and this causation issue is 10 also discussed by Kevin Murphy, Defendant's 11 expert. So this is a major issue. 12 And the evidence in the surveys that 13 Microsoft has put forward do, in fact, satisfy 14 those requirements that make it reliable and 15 worthy to go before the jury. 16 Now, in fact, Mr. Cashman made these 17 documents sound a lot like business records. 18 He said that 6395 was prepared in the regular 19 course of Microsoft's business. Exactly right. 20 It sure was. And we've argued before the 21 Special Master that they, in fact, could be 22 admitted as a business record. 23 We are here saying that those things 24 about its regularity are badge -- like business 25 records, badges of reliability that make these 12908 1 surveys admissible. 2 So I think why I wanted this one up is 3 because what didn't get read was that middle 4 block there. 5 The four factors listed above are 6 relevant to assessing the admissibility of a 7 survey, but need to be applied in light of the 8 particular purpose for which the survey is 9 offered. 10 And so these are -- the Manual for 11 Complex Litigation recognizes that there needs 12 to be some play in the joints. You can't 13 demand the type of survey purity that you can 14 in a case where the survey is being prepared 15 for the litigation. 16 You can't expect that if you want to 17 know what consumer preference is and consumer 18 views were ten, 15 years before the case was 19 even filed. That's simply not a realistic 20 evidentiary standard and deprives the jury of a 21 crucial bit of information they will need to 22 know to assess the causation defense. 23 So in our view, it's a distraction to 24 think about standards that are developed for an 25 entirely different context. 12909 1 The thing we should be talking about 2 is the thing or the issues that the Special 3 Master were concerned about, and those are 4 issues that go to reliability. 5 And in the specific context of 6395, 6 we do, in fact, know who prepared the survey. 7 The Harris Gabel company did. 8 We provided the Court with background 9 information about Harris Gabel. They are 10 professional -- they are an entity that is in 11 the profession of doing these types of market 12 surveys. We know the purpose. 13 You know, Mr. Cashman, I think threw 14 out who, what, and why as the reliability 15 questions. And those are good ones. 16 But we do know the who. We do know 17 the why, because that's provided on page 3. 18 It's -- they designed the test to -- 19 they designed the survey to test message 20 strategy for upcoming release of MS Office. 21 Not for puff reason, but so that Microsoft 22 could make good decisions on what strategies it 23 was going to go forward with the public. 24 And we know the why or we know the 25 how, because the background provides as well 12910 1 the methodology employed in the survey. 2 Now, what this -- what you cannot -- 3 necessarily what aren't laid out precisely are 4 the questions used, but the questions are 5 fairly easily discerned from the responses 6 given in the survey itself. 7 And this notion of you need to know 8 the questions is again something you'd want to 9 know if you're concerned about a litigation 10 bias issue. But it really isn't -- I mean, you 11 can expect Harris Gabel to have done a survey 12 to obtain accurate information when Microsoft 13 is having to rely upon this information to make 14 crucial decisions on particular strategies it's 15 going to pursue. 16 So the professionalism of the company 17 doing it, the purpose for which they were doing 18 it all indicate, all point to this simple fact. 19 This is a reliable survey. There is foundation 20 for its admission. 21 The who, the what, the why can be 22 determined. The extra requirements that 23 Mr. Cashman talks about are wholly inapplicable 24 and wholly unnecessary because we have other 25 indications just as strong that this is an 12911 1 accurate survey; that it conveys the state of 2 mind of the participants; and that it therefore 3 is crucial for the jury to know when it 4 assesses this issue of why didn't Microsoft 5 maintain its market share. 6 Did it do that because it engaged in 7 anticompetitive conduct or did it maintain -- 8 attain and maintain market share because 9 consumers overwhelmingly preferred Microsoft 10 products? 11 There is no other way to get this 12 information to the jury. In fact, Plaintiffs 13 have opposed Microsoft from talking to absent 14 class members; have opposed Microsoft from 15 talking really to anyone. 16 So this is the -- this is the only 17 way, and this is a reliable way. 18 I would concede that necessity alone 19 is not the test. There's a trustworthiness 20 aspect as well. That aspect is satisfied here. 21 THE COURT: Anything else on 6395? 22 MR. CASHMAN: Your Honor, just a 23 couple of comments. 24 But for the Court's benefit, I have a 25 copy of the slides. I've already given a copy 12912 1 to Mr. Jones, and I'll give a copy to the 2 Court. 3 If I may approach. 4 THE COURT: Yes. 5 Thank you, sir. 6 MR. CASHMAN: Mr. Jones' arguments 7 just plain ignore the authorities, Your Honor. 8 What it really boils down to in the 9 end is this. This is an expert issue. If 10 Microsoft wanted survey evidence, they should 11 have retained the appropriate experts to do it. 12 It is improper, and this evidence is 13 improper because, as I stated yesterday, 14 Plaintiffs have no ability to inquire into any 15 of the issues that we are entitled to inquire 16 into on cross-examination and which we would be 17 entitled to do if this had been done properly. 18 For example, we'd be entitled to 19 cross-examine their experts if they had done it 20 correctly on the purpose and design of any 21 survey that was done, to determine whether it 22 addressed a relevant question, to determine 23 whether participation in the design or 24 administration or interpretation of this survey 25 was appropriately controlled to ensure 12913 1 objectivity. 2 We'd be entitled to cross-examine the 3 persons who designed, conducted, and analyzed 4 the survey to determine whether they had the 5 appropriate skills and experience. 6 We'd be entitled to cross-examine on 7 whether an appropriate population -- the people 8 who were surveyed was identified. 9 We'd be entitled to examine on whether 10 the people who were in this survey were a 11 representative and would be unbiased. 12 We'd be entitled to examine whether 13 the procedures used in the survey eliminated or 14 reduced bias. 15 We'd be entitled to examine on the 16 kind of survey questions and structure that 17 were used. 18 We'd be entitled to know whether -- 19 what the questions were. 20 We'd be entitled to know whether they 21 were clear, precise, and unbiased. 22 We'd be entitled to examine on what 23 kind of filter questions were provided to 24 reduce unbiased -- or to reduce bias. 25 We'd be entitled to examine on what 12914 1 was done to probe respondents to survey on 2 ambiguous or incomplete answers and that the 3 probing follow-up questions weren't leading or 4 biased. 5 We'd be entitled to examine on 6 causation issues. The very stuff that 7 Mr. Jones says they're entitled to get this in 8 for is again one of the reasons why the 9 exhibits that they're proffering are 10 inappropriate. 11 We don't know whether there was a 12 control group. We don't know whether there was 13 a control question. 14 We don't even know how these surveys 15 were conducted. Were they done in person? By 16 who, when, where? 17 We don't know if they were done by 18 telephone. We don't know if they were done by 19 mail. We don't know if they were done by the 20 Internet. 21 So there's all kinds of issues on 22 which Plaintiffs or a party in the position of 23 Plaintiffs here are entitled to cross-examine. 24 Mr. Jones just has this plain wrong 25 because survey evidence is an area of 12915 1 expertise. It's not something where you can 2 just produce the kind of exhibits that they're 3 seeking to produce and then have an expert 4 testify on those and say, oh, Microsoft 5 products were so great, that's why people 6 purchased them. 7 That cuts off all the examination to 8 which we're entitled and is exactly why every 9 one of the objections that were asserted to 10 these exhibits were sustained. 11 Even, you know, on some very basic 12 issues, we'd be entitled to cross-examine on 13 whether -- on issues such as finding out 14 whether the data entry and the grouping of 15 responses, how they recorded the information in 16 these exhibits, whether that was recorded 17 accurately. 18 We'd be entitled examination to know 19 what information wasn't reported in these 20 surveys. 21 I mean, there's just a whole panoply 22 of issues that Microsoft just wishes to sweep 23 under the rug. 24 And I certainly invite the Court to 25 read this Schering case, to read the Zippo 12916 1 case. There are many others, but they 2 underscore why this -- why the exhibits in this 3 instance are not admissible. 4 Mr. Jones seeks to distinguish the 5 cases that he cited saying that they're -- that 6 they're Lanamac cases, but I can tell the Court 7 that there are cases, antitrust cases where 8 survey evidence has been present. 9 And because this is an area of expert 10 testimony, it's always in the context that I've 11 described, and that's referenced in the Manual 12 for Complex Litigation and all the other 13 authorities that this is an area of expert 14 testimony. And what Microsoft failed to do 15 here is to follow the appropriate process. 16 And the reason is they don't want 17 Plaintiffs to be able to have their 18 cross-examination rights. They're trying to 19 cut us off not just at the knees, but at the 20 shoulders. 21 So these exhibits, Your Honor, are 22 inappropriate. They don't satisfy any rule of 23 evidence. They're unreliable. They're 24 untrustworthy, and the Special Master's 25 objections, all of them for each exhibit should 12917 1 be sustained. 2 Thank you. 3 THE COURT: Thank you. 4 Anything else, Mr. Jones? 5 MR. JONES: I'm just going to read, 6 Your Honor, from Plaintiffs' Exhibit 5473A. 7 This is an exhibit Plaintiffs offered 8 and has been admitted over a hearsay objection. 9 This is Plaintiffs' version of what is 10 admissibility, certainly, evidence. 11 One other gem to mention is that, 12 quote -- I'm sorry, is that, through a 13 telephone survey, which we carried out -- we 14 being Novell -- we have learned that Microsoft 15 refused to support Windows or any other -- or 16 any other of their products if run with DR-DOS. 17 That type of survey evidence was 18 offered by Plaintiffs. There's no indication 19 of the question asked. Novell was the company 20 who did the survey by telephone, we know that. 21 But we don't know sample size. We don't know 22 qualification. There's no expert being offered 23 with this. None of the many, many, many 24 requirements that Mr. Cashman claims have to be 25 satisfied were satisfied. 12918 1 But this is what Plaintiffs offer. 2 In comparison, DX 6395 is gold 3 standard to what is offered by Plaintiffs in 4 5473A. 5 We're ready to move to the next 6 document when the Court is. 7 THE COURT: Has 5473A been admitted? 8 MR. JONES: 5473A has been admitted. 9 MR. CASHMAN: Well, Your Honor, the 10 only comment on that exhibit is it's not a 11 survey and certainly not offered for that 12 purpose. 13 But anyway, I have no further comments 14 on 6395. It's clear that the exhibit is 15 inadmissible, I believe, and that the Special 16 Master should be sustained. 17 THE COURT: It's my understanding, 18 then, Mr. Jones, that 6300 has been withdrawn 19 on the appeal? 20 MR. JONES: That's correct, Your 21 Honor. We can move to -- 22 THE COURT: 6400? 23 MR. JONES: Yes, Your Honor. 24 This survey is -- let me hit the who, 25 what, why. 12919 1 We don't need to talk about the -- the 2 Court will make up its mind certainly on the 3 underlying admissibility. 4 I'm going to address the who, what, 5 why issues that I think, again, as Mr. Cashman 6 identified, are relevant to assessing 7 reliability. 8 Here we know the who. The who is TNS 9 Interresearch. 10 And if I might approach, I would like 11 to provide the Court with the website posting 12 explaining what TNS Research does. 13 This would be similar to the materials 14 we have for Harris Gabel. We did not get them 15 for TNS. We have them now. 16 If I might? 17 THE COURT: Okay. What is this 18 material again? 19 MR. JONES: What this material is -- 20 what I provided to the Court is information, 21 basic information identifying the entity that 22 took the survey at issue in 6400. 23 THE COURT: Okay. 24 MR. JONES: Again, the company's name 25 is TNS Interresearch, two r's, no hyphen. 12920 1 And we have the benefit in this survey 2 of seeing exactly what the questions were that 3 were asked. 4 This is a -- 6400 is an E-mail that 5 provides all the questions that were asked, 6 tells the number of participants. There is 7 simply no reason, really, to question the 8 reliability or trustworthiness of this 9 particular sample and this survey. 10 The purpose was -- it was simply a 11 customer satisfaction survey. Microsoft in the 12 cover -- or in the first paragraph is clearly 13 excited about the results, but when you review 14 the questions that are asked -- I'm at page 7 15 -- I'll just use the last two numbers -- page 16 72, Bates number. It's admittedly a little 17 hard to read, this version. 18 But the people are asked things such 19 as how satisfied are you with the overall 20 experience of using the following players: 21 Apple QuickTime. And then they're asked that 22 about Windows Media Player. So these are 23 classic state of mind type of questions. 24 These questions aren't being -- aren't 25 push questions trying to get one answer or 12921 1 another. These are simply customer 2 satisfaction questions. 3 Companies do these all the time. 4 Companies like TNS are in the business of 5 providing this type of information. 6 It needs to be reliable because if you 7 don't know if your customers are dissatisfied, 8 you're not going to stay in business long. 9 So there's a clear business purpose 10 for this. That provides the badge of 11 reliability. The Court has all the questions 12 that were asked. And the conclusions are 13 summarized -- or some of the conclusions are 14 summarized on the first page of the document, 15 but the underlying material, it makes clear 16 that this was a survey that simply as classic 17 state of mind information that we know from 18 court cases like Schering and Zippo is 19 admissible under 5.803(3), also present sense 20 5.803(1). 21 MR. CASHMAN: Your Honor, I'm not 22 going to belabor the point. This exhibit is 23 inadmissible. 24 All the authorities make it clear that 25 internal surveys or surveys that are 12922 1 commissioned by the proponent in the kind of 2 context that these surveys are -- were 3 commissioned are inadmissible. 4 There is no proof here sufficient to 5 satisfy the state of mind exception because you 6 don't have any evidence of what the respondents 7 said or how long after the fact their responses 8 were recorded. 9 I think that the arguments have been 10 presented and there is really nothing further 11 to say on this exhibit. The Special Master 12 should be sustained. The objections should be 13 sustained. 14 MR. JONES: We have nothing further if 15 the Court is ready to go to the next exhibit. 16 THE COURT: Okay. What's the next 17 one? 18 MR. JONES: The next one is DX 6407. 19 This is a summary -- or a survey, I'm 20 sorry, Your Honor, prepared for Microsoft. 21 The objective is or the purpose is 22 stated clearly on the next page of the exhibit. 23 It is to understand primary drivers of 24 satisfaction and the interaction between them 25 and to evaluate the marginal gains from 12923 1 increasing scores on specific attributes. 2 Methodologies then are set forth, the 3 three analytic techniques that are used to 4 produce the survey results that are then 5 reported in the following pages of the survey. 6 There's a comparative analysis that 7 appears on page -- the last two numbers are 8 page 77. And that likewise simply identifies 9 the types of questions that are asked or the 10 subject matters about which people are asked, 11 and the business purpose, the clear business 12 purpose of this internal Microsoft survey 13 provides that badge of reliability. 14 It is akin to a business record. 15 Microsoft needs this information to conduct its 16 business activities. There is no indication 17 that this is a puff piece or posturing piece or 18 anything else that would make it unreliable. 19 We believe it satisfies the 20 requirements to be admitted as a state of mind 21 statement under 803(3) and 5.803(1) for present 22 sense impression. 23 THE COURT: Response? 24 MR. CASHMAN: The exhibit does not 25 satisfy the requirements of the law. Special 12924 1 Master should be sustained. The objections 2 should be sustained. 3 THE COURT: Very well. 4 6454? 5 MR. JONES: Has been withdrawn by 6 Microsoft. 7 THE COURT: Okay. 8 Next. 9 MR. JONES: Customer satisfaction 10 survey, Defense Exhibit 6455. 11 Here again I'll do the who, what, 12 why's quickly. 13 The why this survey is being conducted 14 is identified on page 2. 15 These are classic business reasons, to 16 measure customer loyalty and retention, to 17 understand what differentiates a satisfied from 18 a vulnerable customer to allow us to focus on 19 areas key to building loyalty and retaining 20 customers. 21 Bedrock, heartland, business purposes. 22 Not to puff, not for marketing, not for some 23 purpose that would introduce the risk of bias 24 or skewing, posturing, posing. This is to 25 obtain business information. The document 12925 1 itself makes that clear. 2 The next document tells us the size of 3 the samples and what the samples -- and how 4 those sample sizes were broken out. So we have 5 some methodology information. Then we know 6 what the actual questions were. 7 If you go to page 6, to use the 8 document's pagination, you see the question 9 that's posed. 10 Considering everything you know or 11 have heard about the company, its products, its 12 services and support, what is your level of 13 satisfaction, and then to follow up -- what 14 follows are simply tabulation of the results, 15 tabulated over time. This provides more than 16 sufficient methodology. It's clearly for a 17 business purpose. It satisfies those 18 requirements that we have from Schering, Zippo, 19 for admissibility as a business record. 20 Any concerns with methodology would go 21 to this survey's weight, not its admissibility. 22 Schering makes that clear. It is 23 admissible under 5.803(3) and 5.803(1). 24 MR. CASHMAN: Your Honor, this is 25 inadmissible for all the reasons we've 12926 1 discussed before. 2 And again, this is just crystal clear. 3 Turn to the second page of the 4 exhibit. Why we measured customer 5 satisfaction. I mean, where does that come 6 from? Whose conclusions are these? 7 Turning to the next page, you don't 8 even know what the basis for any of this 9 information that's stated on the page is. 10 We turn to the -- turn to page 7 and 11 subsequent, you've got all these pie charts, 12 graph charts, percentages. These are the kind 13 of things that are obviously deficient under 14 the law as admissible survey evidence. 15 You don't know what the questions 16 were. You don't know what the methods were. 17 You don't know how the information was 18 gathered. You don't know who the respondents 19 were. I mean, the flaws from an evidentiary 20 point of view are glaring. 21 There's simply no basis for the 22 admission of this exhibit. And I won't belabor 23 all the points made earlier. The Special 24 Master should be sustained and all three of the 25 objections which he sustained should be 12927 1 affirmed. 2 THE COURT: Anything else? 3 MR. JONES: We have nothing further, 4 Your Honor, and that would conclude the appeals 5 in regard to survey evidence. So we have one 6 document left. 7 I will get this document finished 8 before 4:30, I promise, Tammy. 9 THE COURT: 6319? 10 MR. JONES: Yes, Your Honor. 11 6319, the objection was improper 12 opinion. 13 This is a document, an E-mail exchange 14 between Fran Daugherty, who is an employee at 15 Microsoft, and some colleagues at Microsoft. 16 Mr. Daugherty is in the position, as 17 he explains right in the E-mail, that he was at 18 Sun for a few years prior to coming to 19 Microsoft. 20 While at Sun, Mr. Daugherty was the 21 director of technical operations, so a 22 relatively senior official. And he would, 23 therefore, have more than adequate foundation 24 to give opinions on what he, in fact, 25 identifies he's going to articulate fundamental 12928 1 differences between the two companies' 2 cultures, the two companies being Microsoft and 3 Sun. 4 He was an employee at a high level. 5 He certainly understands the culture that 6 existed at Sun, the -- 7 I think one of the concerns from 8 Plaintiffs, well, it sounds like he's talking 9 about today. I think the jury would understand 10 he's talking about it from his context, from 11 his understanding of it. 12 He without question is a person -- a 13 senior official at a company who has a good 14 sense of the culture of that company. 15 And then when he goes into detail, he 16 talks about events at Sun that occurred while 17 he was there that occurred in the past. 18 So even this notion that, well, this 19 looks like it's present, you know, what he's 20 talking about are things -- business decisions 21 that Sun engaged in in the past as evidence to 22 support his view that, as he puts it, Microsoft 23 wakes up in the morning thinking about the 24 customer; Sun wakes up thinking about 25 Microsoft. 12929 1 There is no question that he has 2 foundation to make that assessment. It will be 3 taken for what it's worth. It's admissible. 4 THE COURT: Is he a witness in this 5 case? 6 MR. JONES: Mr. Daugherty, I do not 7 believe is a witness, no, Your Honor. 8 THE COURT: Does the document itself 9 provide the foundation? 10 MR. JONES: It does. Well, he says in 11 the document itself, having spent a few years 12 at Sun and soon coming up on my one-year 13 anniversary at MS. 14 That establishes that he knows the -- 15 he was at Sun for a few years, two, three 16 years. He's been at Microsoft for a year. He 17 has at this point more -- he has foundation to 18 make assessment of the two cultures in the 19 companies. 20 THE COURT: Okay. Thank you. 21 Anything else, Mr. Jones? 22 MR. JONES: Nothing on this document, 23 Your Honor. 24 THE COURT: Mr. Cashman? 25 MR. CASHMAN: Your Honor, again I'm 12930 1 not sure whether this is just an oversight on 2 the part of Microsoft, but the Special Master 3 sustained embedded hearsay objections to this 4 exhibit as well as foundation objections. 5 Apparently Microsoft is only appealing 6 the foundation objection, which obviously still 7 wouldn't be admissible under those 8 circumstances. 9 But be that as it may, the foundation 10 objection was properly sustained by the Special 11 Master because it's clear that Mr. Daugherty is 12 speculating about business practices at a time 13 when he's actually working at Microsoft. 14 And I think the basis for the ruling 15 by the Special Master that it's clear that he's 16 speculating about current Sun practices, 17 business practices, when, in fact, he is at the 18 time of those statements employed by Microsoft. 19 If you read in Microsoft's brief, 20 their argument is based entirely on the fact 21 that Daugherty left Sun just a year before. 22 And that does not alter the fact, Your 23 Honor, that he lacks personal knowledge to 24 testify or to make any statements about what 25 current Sun's businesses practices are. 12931 1 So the Special Master was correct. 2 The objection should be sustained. 3 THE COURT: Mr. Jones, you have the 4 last word. 5 MR. JONES: Thank you, Your Honor. 6 I'll be really quick. 7 We would -- we did not raise the 8 embedded hearsay. If the Court finds that the 9 foundation objection should be overruled, then 10 we would, of course, offer a redacted version 11 of the document. 12 And just so we're clear, what's being 13 offered here is opinion or the views of 14 Mr. Daugherty not about business practices, the 15 current business practices, but about the 16 culture of the two companies, what makes the 17 two companies tick. That's what's being 18 offered. 19 And for that, he certainly has 20 foundation. He certainly has recent enough 21 exposure to Sun to make an assessment of his 22 culture. And it would be understood by the 23 jury that, of course, he was talking about it 24 based on his time at Sun. 25 Nothing further from Microsoft, Your 12932 1 Honor. Thank you. 2 THE COURT: Thank you. 3 MR. CASHMAN: Your Honor, just for 4 your convenience, I have a copy of the -- a 5 clean copy of the Schering case that we talked 6 about earlier. 7 MR. JONES: And I have Zippo. 8 MS. BRADLEY: I think he said 9 Schering. 10 THE COURT: Thank you, Mr. Cashman. 11 Thank you. 12 MR. JONES: Anything further? 13 THE COURT: Nothing from me. 14 MR. WILLIAMS: Your Honor, before we 15 break for the day, I have consulted with my 16 team, and it appears that we were in the midst 17 of preparing a formal request to Your Honor to 18 provide the transcript of Mr. Schulman's 19 deposition to the DOJ and to Attorney General 20 Miller, so given the request by Mr. Holley, we 21 have no objection. We ask that we be able to 22 do the same. 23 The only caveat I would put on that is 24 that we ask that it would be a certified copy 25 of the transcript, not a dirty transcript or a 12933 1 transcript or anything like that. Or, you 2 know, a hurried one. 3 THE REPORTER: Rough. 4 MR. WILLIAMS: Rough, thank you. A 5 rough transcript. 6 So just so there's no question about 7 them being competing versions of what was said 8 at the deposition. 9 MR. HOLLEY: For once we're in heated 10 agreement, Your Honor. 11 THE COURT: And we heard from our 12 expert, Tammy. 13 Seeing that there's no objection, the 14 Court grants the motion by both parties. A 15 certified transcript may be submitted to the 16 Department of Justice and/or the Attorney 17 General or any other law enforcement 18 authorities the parties feel appropriate under 19 the circumstances. 20 MR. WILLIAMS: One point of 21 clarification on that, Your Honor. 22 And I don't know what Microsoft's view 23 of this is. We did not designate the 24 transcript as confidential. I'm informed that 25 we don't consider it to be confidential. If 12934 1 it's not confidential, is it the sort of thing 2 that has to be restricted to the enforcement 3 authorities or can it be made publicly 4 available? 5 THE COURT: If it's not confidential. 6 MR. WILLIAMS: We didn't designate it 7 that way. I just want to make sure Microsoft 8 has no objection to that. 9 MR. HOLLEY: I think we're perfectly 10 happy, Your Honor, for -- I mean, there is -- I 11 don't mean to tell Mr. Williams his business. 12 There is a discussion in the 13 deposition about certain tools that Mr. 14 Schulman developed to do analysis of source 15 code for his business as a litigation 16 consultant, and I just want to mention that in 17 fairness because Mr. Williams wasn't there. 18 If he's happy to let that discussion 19 of his tools be in the public record, then, we 20 don't have any objection, but I just did want 21 to make that note. 22 MR. WILLIAMS: I appreciate that from 23 Mr. Holley. I had not heard that. But, again, 24 I'm informed that we don't consider any part of 25 the transcript to be confidential. 12935 1 THE COURT: Okay. Granted. 2 MR. WILLIAMS: Thank you, Your Honor. 3 MR. CASHMAN: Thank you, Your Honor. 4 MR. JONES: Thank you, Your Honor. 5 THE COURT: See you tomorrow. Have a 6 good night. 7 (Proceedings adjourned at 4:28 p.m.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12936 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 7th 19 day of February, 2007. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25