12319 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 XLV 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 8:52 a.m., February 6, 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 12320 1 A P P E A R A N C E S 2 Plaintiffs by: ROXANNE BARTON CONLIN 3 Attorney at Law Roxanne Conlin & Associates, PC 4 Suite 600 319 Seventh Street 5 Des Moines, IA 50309 (515) 283-1111 6 MICHAEL R. CASHMAN 7 Attorney at Law Zelle, Hofmann, Voelbel, 8 Mason & Gette, LLP 500 Washington Avenue South 9 Suite 4000 Minneapolis, MN 55415 10 (612) 339-2020 11 KENT WILLIAMS Attorney at Law 12 Williams Law Firm 1632 Homestead Trail 13 Long Lake, MN 55356 (612) 940-4452 14 15 16 17 18 19 20 21 22 23 24 25 12321 1 Defendant by: DAVID B. TULCHIN 2 SHARON L. NELLES Attorneys at Law 3 Sullivan & Cromwell, LLP 125 Broad Street 4 New York, NY 10004-2498 (212) 558-3749 5 KIT A. PIERSON 6 Attorney at Law Heller Ehrman, LLP 7 333 Bush Street San Francisco, CA 94104 8 (415) 772-6000 9 HEIDI B. BRADLEY Attorney at Law 10 Heller Ehrman, LLP 333 South Hope Street 11 Suite 3900 Los Angeles, CA 90071-3043 12 (213) 689-0200 13 DAVID E. JONES Attorney at Law 14 Heller Ehrman, LLP One East Main Street 15 Suite 201 Madison, WI 53703-5118 16 (608) 663-7460 17 BRENT B. GREEN Attorney at Law 18 Duncan, Green, Brown & Langeness, PC 19 Suite 380 400 Locust Street 20 Des Moines, IA 50309 (515) 288-6440 21 22 23 24 25 12322 1 RICHARD J. WALLIS STEVEN J. AESCHBACHER 2 Attorneys at Law Microsoft Corporation 3 One Microsoft Way Redmond, WA 98052 4 (425) 882-8080 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12323 1 (The following record was made in the 2 presence of the jury at 8:52 a.m.) 3 THE COURT: Everyone else may be 4 seated. Thank you. 5 Mr. Edwards, you're still under oath, 6 sir. 7 The Court neglected to rule on Exhibit 8 1324. That is admitted for nonhearsay purpose, 9 I believe. 10 MR. TULCHIN: Your Honor, thank you. 11 THE COURT: 9808, 9807 the Court 12 previously denied. The Court still denies 13 those two. 14 You may proceed. 15 MR. TULCHIN: Thank you, Your Honor. 16 JOHN EDWARDS, 17 recalled as a witness, having been first 18 previously duly sworn, testified as follows: 19 CROSS-EXAMINATION CONT'D 20 BY MR. TULCHIN: 21 Q. Mr. Edwards, good morning. 22 A. Good morning. 23 Q. I think at the end of the day 24 yesterday, we spoke very briefly about 25 Mr. Noorda, and I just want to ask you a few 12324 1 more general questions about the position of 2 chief executive officer, particularly of a 3 software company. 4 Would you agree with me, sir, that the 5 CEO is very important to the success of any 6 company, but particularly in the software 7 field? 8 A. I think it's important to any company. 9 I'm not sure why the software field carries 10 more weight than any other field. 11 Q. Okay. Well, you agree that the CEO is 12 very important? 13 A. I do. 14 Q. Okay. And the job of a chief 15 executive officer is to run the business on a 16 day-to-day basis; correct? 17 A. And I would also say to -- yes, and to 18 coordinate the efforts of those reporting to 19 him who probably have significant input on any 20 of these issues. 21 Q. Would you also say that the CEO's job, 22 in part, is to make strategic decisions for the 23 company? 24 A. Yes. 25 Q. Would you say that it's very often the 12325 1 the case that the CEO, the chief executive 2 officer, will articulate a strategic vision for 3 the company; that is, where the company intends 4 to be going in the next few years? 5 A. I think that that's pretty customary. 6 Q. And is it often the case, sir, that 7 the CEO is the person who communicates that 8 strategic vision to the marketplace? 9 A. I think it depends on the CEO. 10 I think -- I've seen companies, 11 particularly in our industry, where the CEO 12 does that. I've seen those where he or she 13 will delegate that to a spokesperson or to 14 those reporting to him in the organization. 15 Q. All right. The CEO may himself or 16 herself do it, and sometimes that gets 17 delegated? 18 A. Correct. 19 Q. Mr. Noorda, of course, was a 20 well-known person in the software field going 21 back to the early '90s? 22 A. He was. 23 Q. Okay. And would you agree as well, 24 sir, that the success or failure of a company, 25 let's say a company in the software business, 12326 1 can depend in large measure on the skills and 2 performance of the CEO? 3 A. I think it can. 4 Q. Now, yesterday on direct examination, 5 I think you said, Mr. Edwards, that you were 6 talking about the need on occasion to install 7 an operating system onto a PC; correct? 8 Let me back up and see if I can help 9 you. 10 A. I'm not sure of me saying that. Okay. 11 Q. There was some discussion on direct 12 about the retail channel and the fact that 13 DR-DOS was being sold in large measure when you 14 took over in April '92 into the retail channel; 15 correct? 16 A. I think that's accurate. 17 Q. And you talked about the fact for -- 18 that for people buying at retail, it was a big 19 effort to install an operating system onto a 20 PC; correct? 21 A. Okay. Yes, I believe it is. 22 Q. Now, at the time in 1992, Windows was 23 being sold separately from the operating system 24 on which it ran; correct? 25 A. That's correct. 12327 1 Q. So if you wanted, for example -- 2 A. Well, I think that that's correct in 3 the retail channel, but maybe not so much in 4 the OEM channel. I think that they were 5 bundled and tied together more, what I saw in 6 '92 in the OEM channel. 7 Q. Well, is it your testimony that in 8 1992 Windows was bundled with MS-DOS? Is that 9 your testimony? 10 A. In '92? 11 Q. Yeah. 12 A. No. I'm just saying -- I'm saying in 13 '92 it was presented to OEMs as a bundle. You 14 only could get it together and -- 15 Q. Let's stick with the retail channel 16 just for a minute because that's where I 17 thought we were, and maybe my question wasn't 18 clear. 19 A. All right, very good. 20 Q. In the retail channel in 1992, Windows 21 was sold separately from the operating system 22 on which it ran; correct? 23 A. I think that is correct, as I recall. 24 Q. So for a buyer at retail, you'd have 25 to buy a copy of Windows and a copy, let's say, 12328 1 of MS-DOS or DR-DOS; correct? 2 A. Typically, I think you already have 3 MS-DOS because it came on your PC, and so if 4 you are adding Windows, you would buy that and 5 add it to that environment. 6 Q. And that would be another install, 7 another installation? 8 A. Except that Windows -- it would be 9 another install, an installation, but Windows 10 isn't an operating system. So it would be a 11 different kind of install. It was a graphical 12 user add-on. So it would be installed much 13 more like an application. 14 Q. It's still an installation that the 15 user would have to go through? 16 A. I would agree. 17 Q. And as you said yesterday, that's a 18 big effort for most people; correct? 19 A. I think it is. 20 Q. Okay. Now, yesterday as well I think 21 you were talking just a little bit on direct 22 examination about Digital Research's market 23 share in operating systems around the time you 24 took over in that position in April of 1992. 25 Do you remember that? 12329 1 A. I recall it, yes. 2 Q. And you said yesterday that when you 3 took over, your hope -- you weren't sure you 4 could make this, but your hope was to get to 5 about 6 7 to 10 percent of the market; correct? 7 A. Well, I thought that -- yes, I think 8 that is of the overall market. I think we were 9 probably hitting the top 15 software list in 10 the 7 to 10 percent range and growing at the 11 time. That's how I recall it. 12 Q. Well, in fact, wasn't it the case, 13 Mr. Edwards, that at the time in April of 1992, 14 DR-DOS had about 5 to 7 percent of the 15 operating system market? 16 A. That's probably accurate. 17 Q. And that's what you testified at 18 deposition in 1998. 19 Do you remember that, sir? 20 A. I don't recall that, but it seems 21 reasonable and it fits together for me. 22 Q. So I just want to be clear on this. 23 When you took over this business in 24 April '92 at Novell, DR-DOS, as best you 25 remember it, had about 5 to 7 percent of the 12330 1 market, and your hope was to grow that to 2 somewhere in the neighborhood of 7 to 10 3 percent; right? 4 A. That seems right. 5 Q. And MS-DOS had basically the rest of 6 the market; isn't that right? 7 A. Yes, effectively. 8 Q. So even if your hopes had been 9 realized, Microsoft's DOS operating system 10 MS-DOS would still have been the dominant 11 prevalent mainstream operating system in the 12 market? 13 A. I think that would have been -- for 14 the '92, '93 time frame, I think they would 15 have maintained that position. 16 Q. And I think you said yesterday that 17 DR-DOS customers, people who use DR-DOS tended 18 to be techies. 19 Do you remember that? 20 A. Power users, techies, yes. 21 Q. And you used those terms 22 interchangeably I thought yesterday, power 23 users and techies; is that right? 24 A. Got a great memory, yes. 25 Q. Well, I also have the benefit of the 12331 1 transcript. 2 Okay. So the DR-DOS users tended to 3 be techies, and mainstream users, ordinary 4 people who were not versed in technology very 5 well, tended to use Microsoft's MS-DOS; 6 correct? 7 A. I think that's correct. 8 Q. And was it true as well that in 1992, 9 again at the same time, large corporations in 10 America overwhelmingly were using MS-DOS? 11 A. I believe that's correct. 12 Q. And, in fact, DR-DOS had not been able 13 to gain any significant penetration with large 14 companies in our country; correct? 15 A. Well, I think that that's a fair 16 statement. 17 I mean, you know, what is significant? 18 It had penetration. It had presence. But 19 certainly the dominant operating environment 20 was MS-DOS. And I think that's because of the 21 fact that it shipped on the hardware platforms 22 and people had it preinstalled, which is why we 23 wanted to do the same. 24 Q. Is it your testimony that large 25 corporations did not independently buy 12332 1 operating systems? 2 Or maybe to ask the question in a 3 better way, is it your testimony, Mr. Edwards, 4 that at the time large companies acquired their 5 operating systems through OEMs that had 6 preinstalled it, or did they make separate 7 deals with the sellers of operating systems for 8 their own computers? 9 A. It's my view that it was preinstalled, 10 and as a result, they were predisposed to buy 11 that. But they still purchased through other 12 channels. But that the hardware typically had 13 an operating system installed on it. 14 Q. Well, you were aware, were you not, 15 Mr. Edwards, that in 1992 for most large 16 companies, that company would have an IT 17 person, information technology person or some 18 skilled professional who would be employed by 19 that company and who was knowledgeable about 20 computers and also software; correct? 21 A. I would say that in large corporations 22 there was an IT organization. They were 23 typically highly understaffed and buried, but 24 they were there, yes. 25 Q. And Microsoft had salesmen calling on 12333 1 many of these large corporations; correct? 2 A. I assume so, yes. 3 Q. Well, you knew that at the time when 4 you took over, didn't you? 5 A. I think so, yes. I mean, I think that 6 they would have had people calling on those 7 companies for sure. 8 Q. And Microsoft had a large staff of 9 salespeople at the time; correct? 10 A. I don't know the size of their staff. 11 It always seemed large. 12 Q. DRI on the other hand did not? 13 A. DRI did not. It had a larger staff 14 when it joined the Novell team and could 15 benefit from the size of our staff. 16 Q. But isn't it the case, Mr. Edwards, 17 that you recognized in 1992 that in the past 18 DRI had lacked the resources to actively send 19 salespeople out to try to get the business of 20 these big companies? 21 A. What time period are you talking 22 about? 23 Q. Around the time you took over. 24 You recognize that had been the case? 25 A. Sure. They had fewer resources. 12334 1 Q. Okay. And I want to ask you some 2 questions along these same lines focusing on 3 the same period around the time in April 1992, 4 when you took over this business, the DR-DOS 5 business that was now part of Novell. Okay. 6 So that's the time period for these next 7 questions. 8 Is it the case, Mr. Edwards, that at 9 that time you recognized that Microsoft had a 10 number of business advantages as compared to 11 Novell and DRI? 12 A. I would say on the DOS front, they 13 definitely had a number of advantages, and I 14 would say that that's where their strength was. 15 Q. And I should have been clearer. 16 I don't want to make the comparison 17 between Novell's NetWare and Microsoft's 18 competing product, which I think was LAN 19 manager; is that right? 20 A. Uh-huh. 21 Q. I'm making a comparison between the 22 operating system businesses. 23 A. Certainly. 24 Q. DR-DOS and MS-DOS. 25 And one of the advantages that 12335 1 Microsoft had at the time was brand equity. 2 Would you say that's right? 3 A. I think that's correct. 4 Q. Microsoft had a lot of brand equity. 5 Its brand was very well-known among the general 6 public, at corporations, and in fact, 7 throughout the world; correct? 8 A. I think that's accurate. 9 Q. And for Digital Research, that was 10 much, much less the case; correct? 11 A. I think that's fair. 12 Q. Okay. Would it also be fair to say 13 that at the time Microsoft, again thinking 14 about operating systems, had the business 15 advantage of a very good marketing department? 16 A. Yes. They did good as in the ability 17 to sort of control the message in the 18 marketplace. 19 Q. And the marketing department at 20 Microsoft, unlike at Novell and DRI, was not 21 short of resources; correct? 22 A. Well, I think Microsoft had by far 23 more resources than DRI. And if we do 24 comparisons between the operating system 25 groups, as you said, then I would say that that 12336 1 is correct. 2 Q. Okay. Again, at the same time another 3 advantage that Microsoft had was that thousands 4 and thousands of ISVs -- I hope you can hear me 5 over the noise of the radiator. 6 A. We're not taking off, are we? 7 Q. Sorry? 8 A. We're not taking off, are we? 9 Q. No. 10 A. Not launching at this point? Is this 11 a countdown? Should I start -- 12 Q. We're not launching either a product 13 or into outer space, I hope. 14 A. Just felt like a -- 15 Q. This building I think is a hundred 16 years old, so it probably has an older heating 17 system. 18 A. Taking the steam out of the story, 19 right? 20 Q. Yeah. Okay. Good point. 21 So here was my question. 22 Again at the same time, Microsoft had 23 thousands and thousands of ISVs, software 24 companies, that developed applications that 25 worked together closely with Microsoft; 12337 1 correct? 2 A. I think that's correct. 3 Q. And -- 4 A. Whether they liked to or not, they 5 did. 6 Q. They did. 7 And Microsoft had a group of people 8 internally at the company who were called 9 evangelists whose job it was to go out and work 10 together with ISVs to try to convince ISVs to 11 write their software to the Microsoft operating 12 system; correct? 13 A. It makes sense to me. I mean, I 14 wasn't aware of specifically the title 15 evangelist, but of the function, certainly. 16 Q. Leaving aside the title, you agree 17 with me? 18 A. (Witness nods.) 19 Q. Is that a yes? 20 A. I think that there were evangelists in 21 the marketplace. 22 Q. All right. So even with the title. 23 And DR-DOS was developed to be a clone 24 of MS-DOS; correct? 25 A. I'm not sure of the word clone. I 12338 1 think it was developed to run the same set of 2 applications and services and -- I'm not sure 3 exactly what you mean by a strict definition of 4 clone. 5 Q. Well, let me ask you the question sort 6 of this way. 7 If Microsoft was successful in getting 8 ISVs to write their programs to MS-DOS, it was 9 DR-DOS's hope -- sorry, DRI's hope that DR-DOS 10 would have the same APIs, application 11 programming interfaces, and, therefore, these 12 applications written by the thousands of 13 software developers to the Microsoft platform 14 would run on DR-DOS as well; correct? 15 A. I think that's the hope, yes. 16 Q. That was the idea? 17 A. That was the idea. 18 Q. And if the idea was successful, then 19 DR-DOS didn't need to go out and do any 20 evangelizing with ISVs? All that work had been 21 done by Microsoft? 22 A. I don't think that they had to go and 23 get ISVs to write specifically to their API 24 because if they were writing to the open 25 documented and published APIs for Microsoft, 12339 1 they should have been able to run on both 2 environments. 3 I do think that they communicated and 4 evangelized to the ISV group though. 5 Q. Yesterday you testified on direct 6 examination that on the network operating side 7 of Novell, for the NetWare business, Novell had 8 -- and I think at one point you said you got 9 the responsibility for looking after this. 10 Novell had to go out proactively and 11 go after the ISVs, correct, to get them to 12 write their software to NetWare? 13 A. Yes. That didn't start when I took 14 over the group, though. I mean, Novell had 15 always had -- 16 Q. Right. 17 A. -- an ISV organization to -- 18 Q. Sure. 19 A. -- to elicit support and -- of their 20 API. 21 It's a different type of API in the 22 network operating system, but it's the same 23 concept. 24 Q. I understand. 25 But in talking about the business 12340 1 advantages that Microsoft had as of around 2 April of 1992, one of them was that on the 3 operating systems side of the business, 4 Microsoft had been working for years closely 5 with thousands of software developers, 6 companies that developed applications so that 7 their applications would run well on the 8 Microsoft operating system; correct? 9 A. I believe that. 10 Q. Okay. Another advantage that 11 Microsoft had at the time was that Microsoft 12 had Windows; correct? 13 A. Yes. 14 Q. And the jury heard testimony by 15 videotape last Friday from a man named Phil 16 Barrett who was working at the time at 17 RealNetworks and used to work at Microsoft that 18 as of about this time when you were taking over 19 the business at Novell, corporations in droves 20 were flocking to Windows. 21 Do you agree that that was so? 22 A. I don't. 23 Q. Your impression was that American 24 corporations in 1992, how were they reacting to 25 Windows 3.0 and Windows 3.1? 12341 1 A. I think the corporations thought we 2 were fairly buggy products. I think that they 3 were principally still an MS-DOS world. 4 Particularly those in the IT group that you 5 talked about, users might install it, but they 6 often hid it from the IT people who had 7 standards in place and weren't quite flocking 8 to Windows. 9 I think the perception, Microsoft over 10 the market, was that Windows' decision had 11 already been made. 12 The perception I had was that people 13 wanted MS-DOS to hang around quite a bit 14 longer, and Windows at that time offered a 15 graphical user advantage but didn't offer 16 substantially enough advantages given that the 17 investment that all these users had made in 18 applications were principally written on an 19 MS-DOS platform and the investment that the IT 20 people had in the cost of ownership, the 21 network distribution and management software 22 were principally oriented around DOS. 23 Q. Do you have any recollection sitting 24 here today of how many millions of copies of 25 Windows 3.0 had been sold by the time April of 12342 1 '92 rolled around? 2 A. I do not, and I'm not sure that the 3 issue is how many were sold as much as what I 4 thought your question to me is my perception of 5 what corporate America was doing with it. 6 And I think that they were receiving 7 it. They were receiving it bundled on some 8 platforms. They were receiving it in the 9 marketplace. 10 But for the most part, they were 11 concerned about a migration there too quickly 12 because most of their systems at the time were 13 on another platform. 14 I think it's very similar to the 15 mainframe IT guys who were concerned when the 16 LAN or the Apple and PC originally came out. 17 Most of the development was around the in-place 18 applications, and they fought moving to 19 something principally for a GUI. 20 And then you could go to businesses in 21 a marketing department and they already felt 22 they had a graphical user interface because 23 they had the Mac, so -- but I cannot recite to 24 you the number specifically. 25 Q. All right. I guess you disagree with 12343 1 Mr. Barrett on this point. 2 Let me ask you about this. Do you 3 know who Roger Noll is, N-o-l-l? 4 A. I'm not sure of the name. 5 Q. All right. Are you aware that 6 Professor Noll is an expert for the Plaintiffs 7 in this case? 8 A. I'm not. 9 Q. Have you been told that it was 10 Professor Noll's testimony that Windows 3.0, 11 which came out in May of 1990, was a 12 revolutionary technological leap in the 13 marketplace? 14 A. I have not been informed of that. 15 Q. Do you disagree with Professor Noll? 16 A. I would. 17 Q. All right. 18 Well, let's go back to where we were. 19 I asked you whether one of the Microsoft's 20 advantages in the marketplace around April of 21 '92 was whether it had Windows, and you agreed 22 that that was so; correct? 23 A. I believe that an advantage is that 24 they had Windows, yes. 25 And specifically the promise of what 12344 1 Windows would be, that really came about in 2 probably '95. But it was this idea of what it 3 would be and where it would go. 4 I think that they had advantage 5 because it gave them -- if they could tie it to 6 MS-DOS where they were the dominant providers, 7 they could cause the industry to rewrite the 8 applications and services where they already 9 had a head start, and I think that's the 10 fundamental advantage that they had. 11 Q. And I think what you've just talked 12 about, Mr. Edwards, goes back to something we 13 mentioned earlier, strategic vision. 14 This was a vision that had been 15 articulated by Bill Gates and others at 16 Microsoft; correct? 17 A. I believe so, yes. 18 Q. And by April '92 -- 19 A. I'm not sure that they -- excuse me. 20 I'm not sure that they articulated the 21 tying vision or those kinds of things, but the 22 vision in general of where they wanted the 23 market to move, I think that they did 24 articulate a graphical user interface kind of 25 vision. 12345 1 Q. And it was your testimony just a few 2 moments ago that an advantage to Microsoft in 3 1992 was the promise of what Windows would be; 4 correct? 5 A. I think it was. 6 Q. And that was something that you knew 7 about, the marketplace knew about, and that had 8 been articulated clearly by Mr. Gates and 9 others at Microsoft by that time; correct? 10 A. Yeah. I think it had been 11 articulated. I think one could argue whether 12 it was clearly, but it was out there in the 13 marketplace and there were people that were 14 listening to the Windows presentation for sure. 15 Q. Now -- 16 A. Which is precisely why we wanted to 17 have DR-DOS take advantage of it, because if 18 that was the direction that it was going, by 19 allowing us to participate at an OEM level, we 20 could have an opportunity to combine with 21 Windows as well and be a part of the future of 22 the marketplace. 23 Q. But you would agree with me, wouldn't 24 you, Mr. Edwards, that as of 1992 certainly, 25 and even afterwards, Novell did not have on the 12346 1 market a graphical user interface product that 2 could be combined with DR-DOS? 3 A. We did not. That's why we were aiming 4 to support Windows, so that the users could 5 make a choice between their disk operating 6 system, their flavor of DOS, and that it would 7 move forward with the market and with any 8 future graphical user interface that may become 9 the standard. 10 Q. And in 1992, if I understood your 11 testimony yesterday correctly, you were located 12 in Utah; correct? 13 A. Seemed like I was located on a plane. 14 Q. Well, you traveled a lot. 15 A. But I think I was -- 16 Q. But your office was -- 17 A. My home was Delta Airlines. 18 But, yes, my home and residence was in 19 -- '92 is in Utah. 20 Q. You felt like you were living at Delta 21 Airlines a little bit? 22 A. I did. 23 Q. And DRI had its principal software 24 development facility in England, this we talked 25 about it yesterday, the EDC, the European 12347 1 Development Center; correct? 2 A. They had facilities in Monterey and in 3 England, and then, of course, for the next 4 generation of the product, that was being done 5 in Provo. 6 Q. And Monterey was in California, still 7 is? 8 A. It still is. Beautiful place. 9 Q. Okay. I've been there once or twice. 10 And would you say, Mr. Edwards, that 11 it was an advantage to Microsoft in 1992 that 12 its headquarters and its software developers 13 and its strategic business thinkers were all 14 located in the same place in Redmond, 15 Washington, so that they could work together on 16 a daily basis with one another? 17 A. Well, certainly if you bought into the 18 vision of Mr. Gates, it was sort of the 19 information at your fingertips and you could be 20 distributed in any where, but I think that -- I 21 like groups that are in one location for sure. 22 I don't think it though was a 23 disadvantage to Novell necessarily that product 24 groups had a distributed development 25 environment. 12348 1 Q. Well, certainly if someone in Utah or 2 California wanted to speak to a software 3 developer in England, there is, if nothing 4 else, a big time zone issue; correct? 5 A. There is. 6 Q. You're seven or eight hours different? 7 A. There is. 8 Q. So at 10 a.m. in Utah, it would be 9 what, 5 or 6 in England in the afternoon? 10 A. I'll trust your time zone math, but -- 11 Q. Okay. That would make it -- 12 A. And that's why the product group and 13 the planning group for it was principally in 14 Monterey and the coordination of that focused 15 more over there, and then the development group 16 was all together in England around the specific 17 aspects of the operating system core OS. 18 Q. And it's the case, is it not, 19 Mr. Edwards, as well that in 1992 with respect 20 to DR-DOS as compared to MS-DOS, Microsoft had 21 the advantage of in general charging lower 22 prices; isn't that right? 23 A. I am not certain that that is the 24 case. I'm not sure where that's going. They 25 had the advantage of charging lower prices; I 12349 1 don't know. 2 Q. All right. Well, I think later we'll 3 come to some documents on this. 4 But it's also the case, is it not -- 5 A. Just going back to that last question, 6 I mean, there was a time in '92, in the time 7 period you're talking about, where we offered 8 DR-DOS for free with an incremental revenue 9 stream. 10 So, I mean, the issue around these 11 products, certainly price was there, but either 12 business could have made pricing strategies to 13 get the business that they were going to 14 target. 15 Q. In 1992, do you think that the growing 16 popularity of Windows had any impact on the 17 decrease of DR-DOS sales? 18 A. I do. 19 Q. Okay. And it's the case, is it not -- 20 I think you testified to this on direct 21 examination -- that the integration that you 22 directed, the integration of the DRI people 23 into the Novell organization went on for about 24 six months; correct? 25 A. I think that that's accurate. 12350 1 We started the sales force and support 2 groups fairly quickly right after I took over. 3 Q. In April? 4 A. In April. And then there were 5 streamlining from that point on. 6 I think it was front-loaded, though. 7 I think most of it happened in the first part 8 of that six months, but there was trailing 9 integration issues. 10 Q. And by integration, in part what 11 you're talking about is that when you took over 12 this group, you directed that more of the 13 functions of DRI be moved to Utah, correct, 14 where Novell was? 15 A. I directed the people with functional 16 responsibilities to report in to the then 17 Novell functional leader. 18 So, for example, for the attorneys 19 that were associated with DR-DOS, DRI, to 20 report in to David Bradford. For the sales 21 force worldwide, to report in to Joe Marengi 22 and the general sales organization. For the 23 support people to report in to Richard King. 24 I'm not sure by your question if you 25 mean we tried to have them move their physical 12351 1 location as much as we tried to have the 2 reporting function report in to the corporate 3 services leader for that functional area. 4 Q. Let's just separate this a little bit. 5 Some people were asked to move from 6 California to Utah; correct? 7 A. I don't recall any people -- it could 8 be correct. I don't recall any people that 9 were asked to move from California to Utah. 10 Q. Do you recall that some people 11 declined to move and left the company? 12 A. I do not -- 13 Q. Okay. 14 A. -- recall that. 15 Q. And it's the case, is it not, 16 Mr. Edwards, that an integration of two 17 organizations like this sometimes can be a 18 little bumpy? 19 A. Oh, for sure. 20 Q. And that six-month period that you 21 talked about was exactly the same six-month 22 period that your graph depicted when sales were 23 declining; correct? 24 A. It is. It is. 25 Q. During the time that this integration 12352 1 that you had directed was going on? 2 A. That's correct. 3 Q. Do you think that Microsoft had a 4 business advantage during that six-month period 5 because it wasn't going through this kind of 6 disruptive integration program that you had 7 directed for DRI and Novell? 8 A. I'm not aware of their organizational 9 changes during the period. 10 Q. Okay. Well, let me just stop here for 11 a moment, if I could, and try to summarize a 12 little bit of what we've covered in the last 13 half an hour or so. 14 I've been asking you about advantages 15 that Microsoft had in the marketplace as of 16 around April 1992 in the operating system 17 business, and I think you agreed with me that 18 Microsoft had brand equity; right? 19 A. They did have brand equity. 20 Q. Strong marketing? 21 A. They did. 22 Q. They had been working for years with 23 thousands of ISVs that were writing to the 24 Microsoft platform; right? 25 A. I agree. 12353 1 Q. Microsoft had Windows and the promise 2 of what Windows would be? 3 A. I think that's correct. 4 Q. Microsoft had all its people at one 5 location working together in one organization; 6 correct? 7 A. I don't know. 8 Q. Microsoft was not going through some 9 integration program; correct? 10 A. I don't know. 11 Q. And as far as prices, you couldn't 12 quite remember whose prices were higher or 13 lower at the time? 14 A. No -- 15 Q. Fair enough? 16 A. -- you asked me if Microsoft had an 17 advantage to go lower in price, and I'm not 18 sure that is correct or not. 19 Q. Okay. Fair enough. 20 Well, let me ask you about one other 21 advantage. 22 Would you say it was an advantage for 23 Microsoft in April of 1992 to have as its CEO 24 Bill Gates? 25 A. I think so. 12354 1 Q. And when you took over this business 2 in April 1992, you testified in response to 3 some questions from Ms. Conlin -- I think you 4 said almost immediately you went out to 5 Monterey in California and spent at least two 6 weeks there; is that right? 7 A. Yes, I think that's -- that's what I 8 remember. 9 Q. And you spoke to a number of people 10 and reviewed a number of documents in the 11 files; is that correct? 12 A. Documents, plans, a lot of oral 13 presentations from the people, yes. 14 Q. You tried to familiarize yourself with 15 the issues, advantages, problems of the DR-DOS 16 business; correct? 17 A. I did. 18 Q. All right. And one of the first 19 things you did was to change the strategy that 20 Dick Williams had had in place; correct? 21 A. I put more emphasis on the strategy of 22 going after OEMs. I think they had had some of 23 that there, but I emphasized different aspects 24 of the strategy. 25 Q. Right. And that's what I was 12355 1 referring to. 2 The strategy before you took over was 3 focused more on the retail channel, is that 4 fair, and you wanted to change it and direct 5 your energies at the OEM channel? 6 A. I did. 7 Q. Okay. In the course of conducting 8 these reviews of DRI's recent history, did you 9 have occasion to look at, let's say, memos 10 concerning strategy meetings? 11 A. I don't recall specifically, you know, 12 one of those, but I did go down there to 13 unfamiliarize myself with the business, and I'm 14 not sure I can remember it in terms of specific 15 documents that I looked at. 16 MR. TULCHIN: May I approach the 17 witness, Your Honor? 18 THE COURT: You may. 19 Q. Mr. Edwards, I'm handing you Exhibit 20 232, Defendant's 232. 21 And this is a document dated January 22 29, 1991, apparently written by Steve Tucker. 23 Now, let me just pause here for a 24 moment on the organization chart that you used 25 yesterday. 12356 1 MR. TULCHIN: Maybe we can put that on 2 the screen, 210A. 3 Q. Your name is in big letters at the 4 top. This is as of April 1992. 5 And there's a line from you directly 6 down to the Monterey development center, Steve 7 Tucker, VP engineering; right? 8 A. Correct. 9 Q. And Mr. Tucker was, is it fair to say, 10 the person in charge of software engineering at 11 Monterey in California? 12 A. Yes. 13 Q. And he was that in April '92 and had 14 been in that position for some time; correct? 15 A. I believe that to be correct. 16 I don't know -- I don't have a 17 recollection as to when he started, but it 18 seems like he had been there for a while. 19 MR. TULCHIN: We offer Exhibit -- 20 Defendant's Exhibit 232, Your Honor. 21 MS. CONLIN: No objection. 22 THE COURT: It's admitted. 23 Q. Let's look at the first page of this. 24 This is -- the subject says strategy 25 meeting presentation, and it's written by 12357 1 Mr. Tucker, the vice president of engineering. 2 Do you see that, sir? 3 A. I do. 4 Q. Among the people to whom it's written 5 are Mr. Williams, who was your predecessor, 6 correct? He was -- at the time he was running 7 DRI when it was independent; right? 8 A. That's correct, and it's during the 9 first part of his participation with Novell. 10 Q. Well, this is now January of '91 11 before -- 12 A. Well, you just asked me if he was -- 13 Q. Yes, I understand. 14 A. -- running DRI. 15 Q. You're right. 16 A. And I was just adding that yes, he was 17 there after the acquisition for a while too. 18 Q. Fair enough. 19 Now, Mr. Edwards, when you spent this 20 two weeks or so in Monterey as soon as you got 21 appointed to this position, do you recall 22 having seen strategy meeting presentations such 23 as this one? 24 A. I don't recall this specific one, but 25 I saw these kinds of -- saw presentations that 12358 1 would have been similar to this, at least maybe 2 not contentwise. I'm not sure what's here yet, 3 but we did have strategy presentations. 4 Q. All right. Well, I just want to 5 direct your attention first -- there are some 6 things in the document that we'll talk about, 7 but just to the first page initially, if I 8 could. And just to make something clear for 9 everyone. 10 On the front page, it says, please 11 treat the material on Buxton and MS-DOS 5.0 as 12 strictly confidential to Digital Research. 13 Do you see that right on the first 14 page? 15 A. No, I don't. Where is it at? 16 Okay. Well, yes, I do. Sorry. 17 Q. Okay. 18 A. Time for the glasses to come out. 19 Q. Any time you need them, take your 20 time. 21 Just a small question -- 22 A. Is it possible to take a minute to 23 review this document? 24 Q. Of course. Of course, if you need -- 25 A. I'm seeing it here and -- but go 12359 1 ahead. 2 Q. Okay. If you need time, please let me 3 know. 4 Just a small point on this first page. 5 The fact that this material was to be 6 treated as strictly confidential didn't mean, 7 of course, when Novell owned the company that 8 you couldn't see it; on the contrary, you 9 could; right? 10 A. I would -- when I took over the group, 11 I could have seen it. 12 Q. Sure. 13 A. Yes. 14 Q. And I want to turn your attention, if 15 I could, to the page -- the numbers are a 16 little hard to read, these so-called Bates 17 numbers, but it looks like it ends in 88. 18 You'll see the little numbers in the 19 bottom of the page. 20 And the page is entitled DR-DOS 21 business strategy. 22 MS. CONLIN: All the pages are titled 23 that. 24 Q. There is a whole section. Let me try 25 to help you here. 12360 1 A. They're all titled DR-DOS business 2 strategy. 3 Q. It's the eleventh page of the 4 document, and those little production numbers 5 on the bottom, they're hard to read, but I 6 think -- I think it's 8A. Blowing them up 7 doesn't make it easier. 8 MR. TULCHIN: Maybe you could just 9 highlight those, Chris. 10 A. I think I have it. 11 Q. You've got it? 12 A. I don't think highlighting that is -- 13 if that's a number, then, you have better eyes 14 than I do. 15 Q. No, I don't think I do. But anyway. 16 All right. And what I'm directing 17 your attention to here, Mr. Edwards, on this 18 page, here's a memorandum written by Mr. 19 Tucker, correct, in early 1991 in which he says 20 Windows, critical to offer viable alternative 21 to Windows to maintain 386 and above appeal? 22 Do you see that, sir? 23 A. I can. 24 Q. And 386 is a reference to the Intel 25 386 processor; correct? 12361 1 A. I would assume, yes. 2 Q. And above means Intel processors above 3 that like 486? 4 A. I would think that you picked up the 5 lingo. 6 Q. And Mr. Tucker, the vice president of 7 engineering, held this view, did he not, in 8 1991, and even when you spoke to him in '92, 9 that it was critical for Novell/DRI to be able 10 to have a viable alternative to Windows in 11 order to compete with Microsoft? 12 A. I don't think that that was the 13 general belief I heard. I think the belief I 14 heard was that they had taken a look at that 15 early in '91, had dismissed that idea, and the 16 larger focus was to -- and the focus I directed 17 was to integrate and support Windows and 18 leverage that product. 19 Q. Well, I know, and I remember you 20 testifying to that yesterday that your approach 21 was not to try to develop a GUI; correct? 22 A. That's correct. 23 Q. You had a different approach of trying 24 to integrate NetWare with the DR-DOS operating 25 system and put the features of those two 12362 1 products together; correct? 2 A. Well, yeah, but you're -- I think 3 we're mixing ideas there because you're going 4 from how do you get a GUI to talking about 5 networking features. 6 My approach in the GUI front was to 7 support Windows and then to support any other 8 alternative that came in the marketplace from 9 other providers. 10 My approach was not to have Novell or 11 DRI spend resources developing its own GUI. 12 Q. Right. 13 And Mr. Tucker is saying here that he 14 thinks it's critical for DRI at the time to 15 devote resources to develop its own GUI, a 16 strategy that was different than the one you 17 adopted; correct? 18 A. Well, I think he's saying in a year 19 and three months earlier that that was his 20 strategy. 21 If I look at this document, it's July 22 29, 1991, and you're talking about a time frame 23 with me coming in of April of '92. 24 Q. Right. 25 A. So I think what I would assume, since 12363 1 I haven't seen this particular document, is 2 that this was a part of the exploration of the 3 strategy in late '90 and early '91. 4 That's not what I heard in '92. 5 Q. From Mr. Tucker, is that your 6 testimony? 7 A. That's correct. 8 Q. You didn't hear that from Mr. Tucker? 9 A. I do not recall -- remembering hearing 10 from Mr. Tucker that we had to have -- Novell 11 had to buy or had to build a GUI in order to 12 compete in the marketplace. 13 Q. In any event, on this same page, 14 Mr. Tucker, the VP of engineering, says, 15 short-term features which improve performance 16 of Windows and then long-term Cutlass. 17 And Cutlass was DRI's code name for a 18 project to develop its own GUI; correct? 19 A. That's what I understood. I didn't 20 know a lot about Cutlass. 21 As I testified I believe yesterday, 22 when I came there, Phil Balma pulled me aside 23 and wanted to tell me about that name because 24 he still had some of that opinion that there 25 was an issue there, but I wasn't getting that 12364 1 from Mr. Tucker. 2 Q. In any event, the Cutlass project 3 never came to fruition; correct? 4 A. Yeah, I think that the investigation, 5 as I understand it, happened in early '91, and 6 the decision actually was made not to move in 7 that direction but to instead, their decision 8 prior to the time I got there, of support 9 Windows. 10 So this would have been in my thinking 11 views they had in early '91, late '90, but 12 already before I had arrived, their own 13 internal thinking had switched to the 14 importance of supporting Windows. 15 Q. Okay. Let's look next at the page -- 16 these are hard to read. I think it's 317, 17 which might mean that that other one was 308. 18 I hope you can find this, Mr. Edwards. 19 These numbers are a little bit clearer on the 20 lower right. 21 You'll see the production numbers 22 ending with 317. 23 A. I'm sorry. I think I have it. 24 Q. Okay. And when you took over in April 25 1992, do you recall reviewing what DRI had done 12365 1 in 1991 to defend, as this says, against the 2 introduction of MS-DOS 5.0? 3 A. Back to the introduction, I do recall 4 some of that. 5 Our focus was more on a trailing 6 quarter of two and moving forward. 7 I didn't spend a lot of time going 8 back to what strategies existed in '90 and 9 early '91 because to me they would have been 10 strategies that might -- if you had a few 11 minutes it would be good for historical 12 purposes, but this market changes fast and 13 quickly, let's talk about your planning now and 14 in the go-forward period of time. 15 Q. All right, but clearly it's the case, 16 Mr. Edwards, isn't it, that if it's your job to 17 set the strategy going forward, you'd want to 18 know at least a little bit about the basics of 19 what strategies had been used in the prior year 20 or so? 21 A. You may. I don't know that it's that 22 significant. 23 I think what you'd want to do is 24 inventory what the current market factors are 25 and what the strategy should be on a go-forward 12366 1 basis in terms of, you know, how to go off and 2 compete. Historical strategies may or may not 3 be important. 4 Q. Okay. And just looking at the first 5 point, DR-DOS end user pricing of $199 is 6 vulnerable to planned MS-DOS pricing at $79. 7 Did you learn in 1992 that as of early 8 1991 the retail price, the suggested retail 9 price for DR-DOS was $199? 10 A. I don't recall that. 11 Q. Did you learn in 1992 that Microsoft 12 planned to charge $79 retail for MS-DOS? 13 A. I don't recall the pricing of the 14 individual products at the retail level at that 15 time. 16 Q. And let's go to the next page, if we 17 could, and you'll see at the last point on that 18 page, there is a reference to public relations, 19 preannounce DR-DOS 6.0 under nondisclosure, et 20 cetera. 21 When you took over in April '92, were 22 you aware that DRI had preannounced some of its 23 upcoming software programs to get that 24 information out to the market? 25 A. I don't recall. I mean, this says 12367 1 preannounce under nondisclosure strategic 2 direction. So, I mean, I would have assumed 3 that they would have done things like -- I 4 don't recall specifically knowing about this 5 event here that Steve is offering up to the 6 group as a potential strategy. 7 Q. Well, let me just ask you this before 8 I think it's time maybe for our break. 9 It was common in the software industry 10 in the early '90s, was it not, for companies to 11 preannounce their product in some cases long 12 before the product actually shipped in order to 13 get that information out to the market? 14 A. Yes, to preannounce. I would say that 15 part of it is correct. 16 The definition of long -- I mean, what 17 we would typically do is move into a staged 18 rollout of a product. 19 So we might go to very early large 20 customers under nondisclosure and tell them 21 what was coming. Might go to early long lead 22 time analysts and get their feedback, and there 23 would be a rollout plan typically -- 24 Q. Eventually -- 25 A. -- three to four months before maybe 12368 1 a product came out might be standard. 2 Maybe longer if it was going to 3 require the user some form of alteration or 4 change. 5 Q. Okay. Didn't mean to interrupt. 6 Sorry. 7 And we saw a press release yesterday 8 that Novell actually made to the public about a 9 DOS software program that was issued in 1993 10 and said we expect to have the product out this 11 summer. But the product actually didn't ship 12 until next year; correct? 13 A. I think that's correct. 14 MR. TULCHIN: Your Honor, is this a 15 good time for the break? 16 THE COURT: Sure. 17 Remember the admonition previously 18 given. You can leave your notebooks here. 19 We'll be in recess ten minutes. 20 Thank you. 21 (A recess was taken from 9:46 a.m. 22 to 10:03 a.m.) 23 THE COURT: Everyone else may be 24 seated. Thank you. 25 Sir, you're still under oath. 12369 1 MR. TULCHIN: May I approach the 2 witness, Your Honor, at least once he gets 3 seated? 4 THE COURT: You may, as soon as he 5 gets settled there. 6 BY MR. TULCHIN: 7 Q. Mr. Edwards, I'm handing you what has 8 been marked as Defendant's Exhibit 129, and 9 this is a memorandum from John Bromhead. 10 Who was he in 1992? 11 A. John -- I can't remember his exact 12 title, but John is focused in on product 13 strategy, product marketing, sales, that sort 14 of thing, working with the EDC and representing 15 them over there. 16 Q. And he was located in England, in 17 Hungerford, England? 18 A. Yeah, I think John was located for all 19 of the time in England. I'm not sure if he was 20 one that came over to at some point in Monterey 21 or not, but I remember him as being in England. 22 Q. Do you recognize this document as a 23 memorandum written to summarize items discussed 24 and action items from a meeting with you on 25 May 1, 1992? 12370 1 A. Give me just one second to just -- the 2 date is May 5th summarizing May 1st, and I 3 would have been in the organization. And so, 4 yes, I -- I don't remember the specific 5 document, but the topics look familiar. 6 MR. TULCHIN: Your Honor, we offer 7 Defendant's Exhibit 129. 8 MS. CONLIN: No objection. 9 THE COURT: It's admitted. 10 Q. And if we could look at this, 11 Mr. Edwards, right at the top, Mr. Bromhead is 12 writing to a number of people. One of them is 13 John Constant; correct? 14 A. Correct. 15 Q. And others, all at Novell, part of the 16 DRI organization at Novell; correct? 17 A. Correct. 18 Q. And he's writing about a meeting with 19 you on May 1st, 1992; right? If you looked 20 under the -- 21 A. Yes. It says summary of the 1st of 22 May meeting in Hungerford. Please find 23 attached items discussed and actions from the 24 meeting with John Edwards here on Friday, 1st 25 of May. 12371 1 Q. So this was just within a few weeks 2 after you took over your new job? 3 A. Yes. 4 Q. And you had gone to England and you 5 had had a meeting with various people in the 6 organization at Hungerford; correct? 7 A. That is correct. 8 Q. And down the page a little bit, it 9 says, the briefing covered -- is it DSG? 10 A. Desktop systems group structure. 11 Q. The meeting covered desktop systems 12 group strategy and was well received by all 13 attended. 14 And then it says he covered three 15 primary areas for us to focus on. 16 The he there refers to you; correct? 17 A. That seems right. 18 Q. Right. 19 And number one, the first area 20 mentioned is integration strategy, covering 21 management, network APIs and best of breed. 22 Do you see that? 23 A. I do. 24 Q. And then create alternate platforms, 25 peer-to-peer networking as standard in the OS. 12372 1 My question to you, Mr. Edwards, is 2 this: Right from the outset when you took over 3 this job, it was your idea to come up with some 4 integration strategy; correct? 5 A. Yes. 6 Q. And the exact contours of what that 7 strategy would be were the subject of debate 8 that went on as long as you were part of the 9 group; isn't that so? 10 A. I think that we encouraged people to 11 debate it, discuss it, come up with the right 12 eventual actions. And I think it was debated. 13 Q. And you were the head of DSG, the 14 desktop systems group, for about a year and a 15 half; is that correct? 16 A. I think that is. 17 Q. And again, throughout that entire 18 period, this debate internally about the best 19 integration strategy was going on? 20 A. Yeah, but I wouldn't characterize it 21 as the main voice in the group. 22 I mean, I think the memo says it was 23 well received. I think people liked the idea 24 that we could take all of the benefits that 25 DR-DOS had at the time and we could add 12373 1 additional capabilities as a part of a 2 go-forward strategy. 3 And what was debated was not so much 4 did it make sense to do those kinds of things, 5 but we debated what the name of the product 6 should be, how it should be positioned. I 7 think there was less debate about actual 8 contribution. 9 Nobody was debating, as an example, do 10 I want to put network management into the 11 product and thereby lower the cost of ownership 12 for the user. 13 Do I want to make it easier for them 14 to network? Those kinds of things, I think, 15 were generally believed by everyone. 16 What was debated, I think, on and off 17 during the entire period is how do you succeed 18 in the market with that strategy and in 19 particular how do you position it. 20 Q. And, Mr. Edwards, I think yesterday 21 you testified on direct that what you wanted to 22 do was to put networking services into the 23 operating system; is that right? 24 A. I wanted to put -- I think that that's 25 fair. 12374 1 I think I wanted to make it easier for 2 the desktops to integrate and leverage and use 3 the networking environment out there. 4 Q. And was it your idea to bundle, if you 5 will, some of the functionality of NetWare with 6 some of the functionality of DR-DOS? 7 A. Not so much some of the functionality 8 of NetWare itself because that's on the server 9 side, but the access to NetWare's 10 functionality. 11 So you had to put on the desktop, any 12 desktop, whether it was Mac or OS/2 or Windows 13 or DOS, you had to put an access piece of 14 software that would allow it to use those 15 networks. Much like you would have a browser 16 on a desktop today. You had to have some 17 access. But the real functions were coming 18 from the networking operating systems 19 themselves. 20 Q. And did that wind up happening in 21 Novell DOS 7 that was introduced in 1994? 22 A. I believe they did put an ability to 23 get access into NetWare into other 24 environments. There was protocols put in the 25 products so that they could access, for 12375 1 example, LAN manager or NetWare or other 2 back-in networking environments. 3 Q. Was that the first Novell DOS product, 4 Novell DOS 7, that contained that networking 5 feature or features? 6 A. I don't recall if it was the first. 7 I think in -- earlier in -- even in 8 '92, we tried to do some bundling. So I'm not 9 really sure about when the first time was, but 10 it did include -- at least the plan was to 11 include additional networking functionality in 12 the NetWare DOS or Novell DOS. 13 Q. But as you sit here today, you're not 14 sure if that happened prior to '94; is that 15 correct? 16 A. I'm certain that access happened prior 17 to '94, and so what I'm not certain sitting 18 here today is what was the first time it ever 19 happened, which I think was a part of your 20 question. 21 Q. Okay. Now, would you turn to page 2 22 of Exhibit -- Defendant's Exhibit 129. 23 And just at the top, you'll see -- 24 MR. TULCHIN: Let's go down a little 25 bit further, if we could, Chris. 12376 1 There you go. 2 Q. You're shown as being one of the 3 people who attended this meeting; correct? 4 A. Correct. 5 Q. And the memo says, we then went on 6 with a much reduced meeting to cover the 7 following agenda. 8 And I just want to focus for a moment 9 on Item 2, DR-DOS technical support. 10 Can you cast your mind back to around 11 May 1st or so of 1992 and remember what the 12 issues were with DR-DOS technical support? 13 A. I can remember the general flavor of 14 the issues, I believe. Probably not the 15 specifics. 16 Q. Does this refer in any way to support 17 given to customers who phone in with problems 18 that they're experiencing with their software? 19 A. I don't know. Do you want me to read 20 it and see? 21 Q. Well, if you'd like, sure. 22 A. I mean, I'm not sure if it refers to 23 that, so I would say I don't know. 24 Q. Read it if you wish. 25 I'm not sure you're going to find an 12377 1 answer in the document. I'm asking you for 2 your memory. 3 A. Oh, I'm sorry, I thought you said that 4 this document referred to it. Okay. 5 Q. No, I don't think there's more about 6 that particular subject. 7 And then Item 5 is the same issue of 8 integration of DR-DOS -- and maybe the word 9 should be and, a-n-d, instead of a-n -- Netware 10 Lite. Do you see that? 11 A. Correct. 12 Q. And that's part of the same subject 13 that we were discussing how to integrate these 14 two products? 15 A. These two products being what? DR-DOS 16 and Netware Lite? 17 Q. DR-DOS and NetWare Lite. 18 A. Yeah. Well, that's not the same 19 subject as we were talking about before, which 20 is the integration with DR-DOS and NetWare. 21 So Netware Lite was some incremental 22 add-ons that allowed them to do peer-to-peer 23 networking, which was very different than 24 Novell's traditional form of networking. So 25 these would be kind of separate topics. 12378 1 Q. All right. And the integration refers 2 again -- does it refer to bundling in some way? 3 Is that what we're talking about, bundling the 4 features of two different products? 5 A. I don't think that probably refers to 6 bundling. I think it refers to ensuring that 7 the products worked together and that you 8 create an ability for a seamless integration. 9 The term integration referred more to 10 almost like interoperability. Bundling would 11 have a marketing strategy. Probably would have 12 just said bundling. 13 Q. Yesterday you looked on direct 14 examination at Defendant's Exhibit 204, which 15 is in evidence. 16 I don't know if you still have a copy. 17 If it's buried there, I'll bring you another. 18 A. Let me see. And this is? 19 Q. 204. 20 MR. TULCHIN: Your Honor, may I 21 approach? 22 THE COURT: Yes. 23 A. Please just -- I don't think I have a 24 copy of it. 25 Thank you. 12379 1 Q. Ms. Conlin showed you this document, 2 it's dated August 12th, 1993. 3 It was a memorandum written by Toby 4 Corey, C-o-r-e-y. 5 Do you see that? 6 A. I do. 7 Q. And I think you said yesterday that 8 Mr. Corey was in charge of the DR-DOS business; 9 is that right? 10 A. Mr. Corey was in charge of the 11 marketing programs for DR-DOS, but not 12 necessarily the DR-DOS business. 13 Q. Right, marketing for DR-DOS and -- 14 sorry, maybe I misstated it. 15 Okay. And yesterday you looked at the 16 material right at the bottom of the first page 17 that says proposal. 18 And again, this is in August of 1993. 19 The last document we looked at a moment ago was 20 from May of '92; right? 21 A. Yes. 22 Q. That was Exhibit 129? 23 A. Uh-huh. 24 Q. So here in Exhibit 204 we're now more 25 than a year and a half later; correct? 12380 1 A. Yes. 2 Q. And there's still discussion going on, 3 as this memo from Mr. Corey makes clear, about 4 what strategy to adopt. 5 And if you look at the subject of the 6 memo, what strategy to adopt in combining 7 Novell DOS 7 and personal NetWare; correct? 8 A. Yes. 9 Q. That's part of this debate that we've 10 been talking about that was going on throughout 11 the period that you were in charge of DSG? 12 A. Well, part of the debate, but also 13 just a part of the ongoing discussion about 14 these two capabilities and the best way to move 15 them into the marketplace. 16 And I'm sure that that is fairly 17 common for product groups to continually look 18 about how to update their strategy, what to do, 19 where to take the product. 20 I don't think that that's uncommon, 21 but yes -- so I don't know if I would 22 characterize it as part of the debate as well 23 as just simply part of the ongoing planning 24 around how to deal with these two products in 25 the market. 12381 1 Q. Right. And Novell hadn't yet decided 2 how to deal with the two of them; correct? 3 A. Well, what I think what we had done is 4 probably decided a few times and -- 5 Q. Decision kept changing? 6 A. I think that we did change. I think 7 we decided and had a good feel of what we 8 thought. Factors changed and we updated, so I 9 think that it's not an issue of not deciding; I 10 think it's an issue of revisiting the issue 11 several times. 12 Q. And the company changing its mind? 13 A. I think the company did change its 14 mind on these two issues, yes. 15 Q. Is it fair to say, Mr. Edwards, that 16 it's hard to articulate to the marketplace a 17 strategic vision for your software product when 18 the company itself isn't clear what that vision 19 will be? 20 A. I think that that is -- that is 21 difficult to do. 22 Q. All right. Let's look at this memo 23 just under the top subject line. 24 There is an area that says one product 25 versus two. 12382 1 And Mr. Corey, who is in charge of 2 marketing for DR-DOS, writes this memo and he 3 says, after yesterday's meeting with you and 4 the rest of the gang and our telephone 5 conversation this morning, I recommend that we 6 combine DOS and Personal NetWare into one 7 product. 8 Do you see that? 9 A. I do. 10 Q. So there's still discussion about how 11 to handle these products, and Mr. Corey is 12 making this recommendation. 13 And he then goes on to say, my 14 recommendation is based on several critical 15 data points. 16 Then there are a number of bullet 17 points. And the very first is this: Very 18 limited support from sales for a DOS product. 19 Do you see that, sir? 20 A. I do. 21 Q. Now, Mr. Corey, as head of marketing 22 for DR-DOS, surely was aware of the facts with 23 respect to the extent to which sales for a DOS 24 product were being supported by the company; 25 correct? 12383 1 A. I think he would have a viewpoint of 2 that, and I think he would have it from being 3 fairly close to the issues. 4 Q. And, in fact, he puts the word very in 5 italics to emphasize how little support for 6 this product the company is giving; correct? 7 A. I don't know why he italicized very, 8 but -- 9 Q. All right. Fair enough. 10 And then his next bullet point says, 11 the proposed budget is only large enough to 12 support one product successfully. 13 Now, does this go back to what we were 14 talking about yesterday with Mr. Noorda being 15 fairly frugal? 16 A. No. I think this goes back to a 17 difference in viewpoint as to how to compete in 18 this marketplace. 19 Toby came from a perspective of 20 retail, and he wanted to spend significant 21 amounts of money advertising in the 22 marketplace. 23 Some of us wanted to focus a lot more 24 on going after large OEMs and -- because it was 25 a more efficient marketplace and believed that 12384 1 to try to shout over Microsoft's fear and FUD 2 in the marketplace and spend money, there was 3 no company who could match the spending dollars 4 out there, but a better strategy would be to 5 focus in on going to OEMs. 6 So Toby was just in a camp where he 7 wanted to take on the battle in the Microsoft 8 -- and to your point earlier, with limited, 9 relatively limited marketing presence because 10 they had the brand equity. He wanted to attack 11 that brand equity. 12 There was a stronger group, I think, 13 in the company that -- in the executive level 14 who wanted to go after the problem not by 15 spending significantly large amounts of monies 16 that would satisfy Toby in the marketplace, but 17 by obtaining an ability to go into the OEM 18 market and get these solutions preloaded on the 19 desktop. 20 Q. Well, Mr. Edwards, it's true, is it 21 not, that Mr. Corey, Toby Corey had been with 22 Digital Research for some number of years; 23 correct? 24 A. Toby joined Digital Research just 25 right before the acquisition by Novell. 12385 1 So Toby himself was not one who had 2 years of historical understanding of the DRI 3 business. He came in right before the 4 announcement I think in 1991, and he came in to 5 that group. 6 And so he's probably been on the job 7 here less than, for example, John Bromhead for 8 Steve Tucker or -- 9 Q. Well, certainly for a couple of years? 10 A. What's the date? 11 Q. '93. August of '93. 12 A. He probably was, yes. 13 Q. Okay. And his view about the budget 14 is set forth here. 15 Now, going down through some of these 16 bullet points, you go down two more, and Toby 17 Corey says in his memo, Novell is not in the 18 DOS business (Mary has repeated it many times). 19 A. Yes. 20 Q. Do you see that, sir? 21 A. I do. 22 Q. Now a couple of things. 23 Mary, as you understand this memo, 24 refers to Mary Burnside; correct? 25 A. It does. 12386 1 Q. She was in charge of corporate 2 services. Was that her title? 3 A. That sounds like the right title. She 4 was an executive vice president and she was on 5 the executive staff and dealt with the 6 corporate services. 7 Q. Right. She was executive vice 8 president. 9 So were you. She was on the same 10 level, if I can put it that way, as you? 11 A. Yes. 12 Q. So she was a senior person at the 13 company? 14 A. She was. 15 Q. And she had said many times that 16 Novell is not in the DOS business; correct? 17 A. Well, yes, she had said this -- Toby 18 is reporting here that she had said that, and 19 Mary did say that. 20 Q. And you were aware of that at the time 21 in '93? 22 A. Certainly. 23 Q. That one of your peers at Novell had 24 the view that Novell's not in the DOS business 25 at all; correct? 12387 1 A. In '93 I think that's correct. 2 Q. And her view was that Novell's core 3 business that you should be concentrating on 4 was the networking business? 5 A. This phrase we're not in the DOS 6 business was at the heart of this idea are we 7 going to go off and compete with Microsoft 8 head-on as the dominant player in the MS-DOS 9 world as just another DOS supplier or are we 10 going to approach the business leveraging our 11 incremental strengths to provide a better 12 solution. 13 It did not have to do with her trying 14 to communicate that we're not willing to spend 15 monies or to go after the customers we have or 16 to support them or anything like that. 17 It was a phrase used to coin this idea 18 of where you put the emphasis in the 19 positioning of the product. 20 Q. Mr. Corey, in fact, in the next bullet 21 points -- bullet point indicates something I 22 think a little contrary to what you just said. 23 He refers to the lack of executive 24 support. Do you see that? 25 A. I do. 12388 1 Q. Without significant executive support. 2 And what Mr. Corey is sort of doing 3 here in this memo, I think, and tell me if you 4 agree, is saying it's one thing to compete in 5 the market against Microsoft, it's another 6 thing to try to compete when the executives at 7 our own company such as Mary Burnside, who says 8 we're not in the DOS business, won't support 9 us. 10 Isn't that what's going on here? 11 A. You know, I would characterize it 12 differently. 13 I would characterize it that Toby 14 wanted to have much larger budgets for 15 advertising, end caps, positioning at a -- an 16 end user consumer level. And he was not 17 satisfied unless we were going to spend a lot 18 of money that way because that was his 19 orientation. 20 I think that -- this is also in 1993, 21 where I, as far back as the first part of '93, 22 because of being locked -- a feeling that we 23 were locked out by Microsoft of the market had 24 believed that we were going to have to take a 25 different stand than competing head-on in the 12389 1 retail market. 2 So I don't think that it signifies 3 that executives were not supporting Toby. I 4 think it signifies that they had a different 5 solution to the problem and that Toby wanted 6 his solution, which I think happens in 7 companies. 8 Q. And isn't it fair to say that what 9 Toby's saying is that executives don't support 10 the idea of a stand-alone DOS product that 11 Novell will back in the marketplace? 12 A. You know, I think you could draw that 13 conclusion from this statement. I read it a 14 bit differently, but I think you could draw 15 that conclusion as well. 16 Q. All right. Mr. Edwards, I know you 17 said that you spent at least some of the 18 weekend preparing for this testimony with 19 Ms. Conlin, correct, some of the past weekend? 20 A. I don't think I said that, but I did. 21 I don't think anybody's ever asked me that 22 question. 23 Q. Maybe I just guessed it. I thought 24 you had said. 25 In any event, did you talk to David 12390 1 Bradford at any time about testifying for the 2 Plaintiffs in this case? 3 A. David Bradford called me a year ago 4 and told me something was going on and would I 5 be willing to come and talk, but I didn't -- 6 haven't talked to David in six months about 7 this case. 8 Q. Do you have an understanding with the 9 lawyers for the Plaintiffs in this case that 10 you will be paid for your time in connection 11 with your testimony? 12 A. I've understood that they will 13 reimburse my expenses and that they would pay a 14 -- whatever my daily compensation would be for 15 being here. Although I don't have a big 16 understanding of it, I've just assumed that 17 they will pay for that. 18 In other words, I don't have an 19 agreement. I don't have any kind of thing 20 that's been specified specifically other than 21 just simply that. 22 Q. Okay. Let's leave aside the expenses. 23 You have an understanding that you'll 24 be paid for your time in connection with your 25 testimony; correct? 12391 1 A. Yes. 2 Q. At your normal -- what did you say, 3 normal daily rate? 4 A. Normal living -- normal compensation 5 rate. If I spent these two days working in my 6 normal job, then at that factor. 7 Q. And what is that factor? How much is 8 a day -- 9 A. I have no idea because it's never been 10 talked about in monies. And, frankly, that's 11 -- that has nothing whatsoever to do with why 12 I'm here. It was not a motivation or a reason 13 why I'm here. And I really have not -- nobody 14 has communicated to me what that amount is, and 15 I'm not sure that they have any understanding 16 of what it is. 17 Q. Do you have any view in your own mind 18 as to what the appropriate amount would be for 19 a day's worth of your time? 20 A. I do not. 21 Q. Okay. 22 A. I haven't even thought about it. 23 MR. TULCHIN: Sorry. Give me one 24 moment, Your Honor. I'm looking for the next 25 document. 12392 1 May I approach, Your Honor? 2 THE COURT: Yes, you may. 3 Q. Mr. Edwards, I'm handing you 4 Defendant's Exhibit 16. 5 This is again a memorandum. It 6 appears to be written from Mr. Bromhead to you. 7 Do you see this, sir? 8 A. I do. 9 Q. Do you recognize this document? 10 A. Not really, but I believe that it was 11 sent to me. 12 MR. TULCHIN: Defendant Microsoft 13 offers Defendant's Exhibit 16. 14 MS. CONLIN: No objection. 15 THE COURT: Do you have one for the 16 court reporter? 17 MR. TULCHIN: I'm very sorry, Your 18 Honor. 19 THE COURT: It's admitted. 20 Q. You have in front of you, Mr. Edwards, 21 a memorandum -- this is the same Mr. Bromhead 22 we talked about earlier who was located at the 23 EDC in England; correct? 24 A. That is correct. 25 Q. And he writes you this memorandum in 12393 1 August of 1992. 2 Do you see that, sir? 3 A. I do. 4 Q. All right. Now, the memo is entitled 5 DR-DOS myths and facts, although the word myth 6 may have been misspelled. 7 Do you see that? 8 A. Myrths or something. I can't read it. 9 Q. And then going down to the body of the 10 memo, Mr. Bromhead starts off by saying, I'm 11 writing this memo because I am concerned that a 12 valuable part of Novell's technology offering 13 is in danger of being ignored and forgotten 14 about. 15 And is this part of the same subject 16 we've been talking about -- if I can put it 17 this way -- a little bit of uncertainty within 18 the organization as to where DR-DOS is going as 19 a product? 20 A. I think probably John was writing here 21 right towards the time when we were out in that 22 area meeting with OEMs and seeing the -- a 23 difficulty breaking through those OEM accounts 24 because of the dominant position that Microsoft 25 held, and I think John was writing from the 12394 1 heart and wanting us to win this battle. 2 And later on in the document, I notice 3 he suggests that we adopt this network desktop 4 strategy in order to compete in the 5 marketplace. 6 Q. Okay. Well, let's look down a couple 7 paragraphs below. 8 It starts in the early 1988 -- maybe 9 the word early shouldn't be in there -- it's 10 true that DR-DOS was not much more than a 11 simple clone with a few additional features. 12 Was that your understanding as well, 13 that in '88 or so, DR-DOS was really just a 14 simple clone of MS-DOS? 15 A. I didn't have a real good view of what 16 it was in 1988. 17 Q. All right. And going down a few more 18 paragraphs, Mr. Bromhead says, I believe that 19 it is inevitable that DR-DOS in its own right 20 will die away and be replaced with a product 21 with a new focus. Indeed in May of this year, 22 I recommended we consider the name NetWare DOS, 23 et cetera. 24 Do you see that? 25 A. I do. 12395 1 Q. And do you recall around this time in 2 August of '92 again being informed that there 3 were a number of people at Novell, some of them 4 who had been with DRI for some time, who 5 believed that without a GUI, DR-DOS as a 6 stand-alone product would not be able to 7 survive into the future, that it would die 8 away? 9 A. I don't tie the GUI comment to this 10 comment he's making at all. 11 Q. Well, I don't necessarily either. I'm 12 just asking. 13 A. Well, you just followed up with a 14 question right after that so I'm not sure. 15 Q. Let me try again. 16 A. Okay. 17 Q. I see this comment here from 18 Mr. Bromhead. He says, I believe that it is 19 inevitable that DR-DOS in its own right will 20 die away. 21 Do you see that? 22 A. I do. 23 Q. Okay. Now, my independent question 24 separate from this sentence. 25 Do you recall around this time, in 12396 1 August of '92, and maybe before and maybe 2 after, that people at Digital Research and 3 Novell were expressing the view that without a 4 GUI, DR-DOS eventually would die away? 5 A. The dominant positioning and feeling 6 at the time is that without Microsoft 7 integration and support for Windows, we could 8 not make the jump from the DOS world to the 9 future Windows world. 10 And as I've said before, it was not my 11 view that there was a strong belief that we had 12 to independently write a GUI in order to be 13 successful. There were other strategies. And 14 I don't believe that this document is trying to 15 speak to the issue of a GUI. 16 Q. Well, isn't it true, sir, that you 17 testified at some length about the Star Trek 18 program that you were working on with Apple? 19 A. Certainly. 20 Q. And Novell devoted a lot of time and 21 energy and resources to the Star Trek program; 22 correct? 23 A. We spent about three, four months, and 24 the resources we spent were a few, a few 25 coordinating people. 12397 1 The development side of it was 2 actually by Apple. 3 And the view there was to position in 4 the marketplace coming from an alternate source 5 a new GUI. Probably the standard in the market 6 at that time was the Apple system and finder. 7 And it was not -- that is not a position to me 8 that speaks of us writing a GUI or us 9 developing a GUI. It is a position of trying 10 to find alternatives. 11 And that came at a point in time when 12 we felt locked out because of an inability to 13 penetrate the OEM market. 14 Q. Well, wasn't it the case, Mr. Edwards, 15 that the GUI -- this project, this Star Trek 16 project, you were thinking about a GUI that it 17 would operate with DR-DOS; correct? 18 A. That is correct. 19 Q. That was the whole idea of the 20 project. 21 Novell had DR-DOS as its asset, Apple 22 had the Macintosh GUI as its asset? 23 A. Yes. 24 Q. And the two companies were working 25 together to see if they could combine the two 12398 1 and come out with an operating system product 2 that would have the two tied together; correct? 3 A. I think that that is accurate in the 4 sense that the two companies were -- had 5 reached a point -- Novell had reached a point 6 in my mind that we were not going to get a fair 7 and level playing field with respect to 8 Windows. We needed to look at other 9 alternatives in the marketplace. 10 Apple had a graphical user interface 11 and it seemed logical to give it a try, will it 12 work, will it be there. 13 Apple had then the responsibility to 14 go sell it and provide it. 15 That would have left the market with a 16 couple of choices out there provided one by 17 Microsoft, one by Apple. 18 Apple had some resources to move that 19 forward. And either DOS operating system could 20 have been selected. 21 So it would have been a very open 22 environment allowing freedom of choice for the 23 users. That was the intent with the Apple. 24 Q. And when was this going on? Just to 25 set this in time here in -- 12399 1 A. This would have been going on -- I 2 know we had a proof of concept prototype in 3 October of '92, and my guess, six weeks before 4 that maybe -- I'm not certain of the time it 5 started -- would have been the initial kind of 6 conversations. 7 Q. And this memo is August of '92? 8 A. It is. 9 Q. So roughly speaking, it's six or eight 10 weeks before October? 11 A. Yeah. 12 Q. Okay. And, in fact, I think you've 13 testified that you were quite disappointed that 14 that project with Apple never worked out? 15 A. I was. I think it would have been 16 great for the industry. 17 Q. And I think you've testified as well, 18 perhaps yesterday, that it was Apple that 19 backed away and decided it didn't want to go 20 forward with Novell on that project of 21 combining DR-DOS with the Apple GUI, the 22 Macintosh GUI; correct? 23 A. Correct. 24 I think it's helpful to point out that 25 that project was not started by the folks 12400 1 within my group, actually. 2 The project was started, initiated by 3 Darrell Miller and Jack Blount looking at 4 alternate strategies for the company. 5 Our group quickly got involved 6 because, of course, if they were going to put 7 something on DOS, it would require our 8 participation. But I think it was evidence of 9 looking at the thing that we looked at a lot in 10 that marketplace, how to provide a lot of 11 alternatives. 12 Q. And, of course, we'll never know what 13 might have happened in the marketplace if 14 Novell and Apple had combined that way; 15 correct? 16 A. Precisely. 17 Q. I want to go back just very briefly to 18 a subject that you testified about yesterday. 19 And if you need copies of the 20 documents, let me know. 21 A. All right. 22 Q. But I think you'll remember that there 23 was a press release in March of '93 about 24 Novell DOS 7. And it's in evidence as 25 Plaintiffs' Exhibit 9052. 12401 1 MR. TULCHIN: Maybe we can just put 2 this up on the screen. 3 Q. And again the first paragraph -- 4 remember you talked about this press release 5 yesterday, Mr. Edwards? 6 A. I do, yes. 7 Q. If you need another copy, let me know. 8 A. No, I think it's right. I think I've 9 got it right here. 10 Q. Do you have it? 11 A. Uh-huh. 12 Q. And the press release went out in 13 March of '93 now. 14 And it starts out by saying, 15 reflecting the company's commitment to the 16 world's largest installed operating system and 17 the needs of DOS customers for enhanced 18 functionality and better networking support, 19 Novell today announced Novell DOS 7, et cetera. 20 That's the first sentence; right? 21 A. It is. 22 Q. And, in fact, in March of '93, it's 23 correct, is it not, Mr. Edwards, as you've 24 testified at length today, that internally at 25 Novell, Novell wasn't committed to the DR-DOS 12402 1 operating system at all? 2 A. I don't think I've testified at length 3 that Novell was not committed to the DR-DOS 4 operating system at all. 5 I think that I've testified that in 6 fact we were committed to dealing with that 7 product correctly. 8 Q. But you were thinking about combining 9 it with NetWare or Netware Lite, lots of 10 integration, perhaps having only, as Mr. 11 Corey's memo said, having one product out there 12 instead of two, and that product might have 13 been NetWare with the operating system features 14 incorporated into NetWare; correct? 15 A. Those all sound like activities that 16 are in support of DR-DOS, not activities as you 17 characterized as evidence of having no desire 18 to move forward with the DOS business. 19 Q. Well, I don't want to overstate it, so 20 I won't say no. 21 A. Okay. 22 Q. But certainly there was a lot of 23 discussion about what form the operating system 24 product would take going forward and indeed 25 whether you'd have a stand-alone operating 12403 1 system product at all; correct? 2 A. There was discussion about how to 3 position the product in the marketplace. 4 There wasn't an abandonment of 5 supporting the current customers that we had 6 out there or moving the product forward in an 7 appropriate way. 8 It was an issue of positioning. As I 9 think I've said a number of times, how are you 10 going to position it. 11 There were customers in the 12 marketplace that would love if we just said 13 here's your new DOS because that was their 14 orientation. 15 There were customers in the 16 marketplace that would prefer that we say, here 17 is NetWare DOS with an emphasis on I'm a 18 NetWare customer, this is something that's 19 going to extend that capability. It's a 20 positioning battle here. 21 I also think that it's a method 22 battle. 23 Do you go after the marketplace by 24 trying to shout louder than Microsoft in the 25 marketplace from advertising dollars, or do you 12404 1 go after it by trying to get the help of the 2 OEMs? 3 But I think it's really an 4 overstatement to try to say that Novell was not 5 committed to the DOS business. 6 Q. Well, Mr. Edwards, I'm looking at your 7 testimony from yesterday and -- let me just ask 8 you this. 9 Didn't you testify yesterday on direct 10 examination that by the end of 1992, you and 11 others in a group -- as a group had concluded 12 that unless the market changed, we were going 13 to stop proactive involvement in the DOS 14 business? 15 A. I believe that unless something 16 happened, Novell could not succeed without the 17 help of the OEMs in the marketplace. But I 18 think that is a really different concept than, 19 for example, we are going to strand our current 20 customers or not give them an update path. 21 I think it's a statement about whether 22 or not we're going to continue to knock our 23 head against the wall going after the OEM 24 channel if, in fact, we are precluded from 25 succeeding there and -- 12405 1 Q. I hear you, Mr. Edwards, but -- 2 A. -- I don't think that that's possible. 3 Q. I don't mean to interrupt. 4 I hear your testimony, but you did 5 testify yesterday, and you reaffirmed it today, 6 that by the end of '92 you had concluded that 7 unless something was changing drastically in 8 the market, Novell was going to stop proactive 9 involvement or support for DR-DOS? 10 A. I mean, you've got the testimony. 11 Could I just have it read back to me? Because 12 when you say stop proactive involvement, I 13 mean, is that something I'm using and saying? 14 Q. Yes. 15 A. Okay. 16 MR. TULCHIN: May I approach counsel 17 table, Your Honor? 18 THE COURT: You may. 19 Q. I hate to add to your pile of paper. 20 MR. TULCHIN: May I approach the 21 witness, Your Honor? 22 THE COURT: Yes. 23 Q. This is the transcript from yesterday, 24 and it's page -- there are a lot of pages at 25 this trial -- 12180. 12406 1 A. 80? 2 Q. Yes, 12180. 3 MR. TULCHIN: Forgive me. I'm sorry, 4 these clips are flying now. 5 No one was struck. 6 A. I see it there. We are going to stop 7 the proactive involvement in the DOS business. 8 Q. Right. 9 And you say there that that -- you had 10 concluded that by the end of '92. 11 A. By the end of '92. 12 Q. So I just want to go back to my 13 question about this exhibit, Plaintiffs' 14 Exhibit 9052. 15 Despite the conclusion you reached at 16 the end of '92, this press release in March of 17 '93 starts out by saying that what you're doing 18 reflects the company's commitment to the 19 world's largest installed operating system, 20 meaning the DOS operating system; correct? 21 A. Yeah, the MS-DOS users as well as just 22 any DOS users out there. 23 Q. Right. 24 A. So it's our commitment to enhanced 25 functionality and better networking support, 12407 1 and that is exactly what we were trying to 2 provide. 3 Q. All right. I want to go back -- we 4 talked earlier this morning about advantages 5 that Microsoft had in the marketplace, and 6 there's one more that I neglected then to ask 7 you about, and I'd like to ask you now. 8 As of 1992 and 1993, when you were in 9 charge of the desktop systems group at Novell, 10 it was correct, was it not, Mr. Edwards, that 11 Microsoft then had software products to offer 12 the market in the operating system business, 13 the network operating system business? 14 Microsoft also had a number of different 15 applications available and also had a number of 16 different tools, software writing tools 17 available to offer to the marketplace; correct? 18 A. That's correct. 19 Q. And is it fair to say that no other 20 software company at the time, '92 to '93, had a 21 similar range of product offerings that were 22 available? 23 A. I think that that's true. 24 Q. And do you think that was an advantage 25 to Microsoft, for example, with IT managers at 12408 1 large corporations who could sort of engage in 2 one-stop shopping, they go to one company and 3 they can get everything they need? 4 A. I think it's an advantage -- I think 5 it could be viewed as an advantage by them. 6 Q. And was it also an advantage at the 7 time for Microsoft that Microsoft had a suite 8 of business applications on the market called 9 Office? 10 A. I believe so. 11 Q. I mean, it was not until later on 12 beginning in '94 that Novell attempted to get 13 into the spreadsheet business and the word 14 processing business through acquisitions so 15 that it could compete in the suite field; 16 correct? 17 A. Novell's view was to allow the best of 18 class, best of breed software from any company 19 to come together and to interoperate together. 20 Microsoft's strategy was to get people 21 locked into everything from Microsoft. 22 And their actions in the marketplace 23 to me indicated that they wanted you to go to 24 that one-stop shop and not allow the best of 25 breed services to come from an industry from 12409 1 multiple players. 2 But from an IT customer perspective, 3 they definitely had, because of how well we 4 could and others could make them work together, 5 they definitely could get a suite -- a 6 continuous -- actually, a broader set of 7 capabilities at the time by viewing and using 8 what I would call best of breed applications. 9 As an example, WordPerfect or Lotus 10 had superior capabilities in my view and market 11 share to Office at the time. 12 NetWare was an operating system that 13 -- network operating system that, yes, 14 Microsoft had one, but we had one that we felt 15 was better. 16 DOS for Microsoft was their dominant 17 product at the time. 18 You know, I felt like and the company 19 undertook a strategy to allow these best of 20 breed applications to come together and to work 21 in an open and level playing field. 22 Q. And, Mr. Edwards, in 1994 Novell 23 changed its strategy there, too, correct? 24 Because Novell then purchased WordPerfect and 25 also purchased a spreadsheet program from 12410 1 Borland; correct? 2 A. Pretty much with the same strategy, 3 which is to take those products, improve their 4 networking capabilities and to allow for there 5 to be strong alternatives to a single company 6 that would own everything end to end. 7 Q. I wonder if you could just answer my 8 question first. 9 A. I'm sorry. 10 Q. My question was in '94, Novell changed 11 its strategy. It decided to go out in the 12 marketplace and buy WordPerfect Corporation? 13 A. It did go out in the marketplace and 14 buy -- I'm sorry. 15 Q. And then also go out in the 16 marketplace and buy a spreadsheet from Borland; 17 correct? 18 A. That is correct. 19 Q. And try to combine those into a suite, 20 into a suite of business applications that 21 would compete against Office? 22 A. That is correct. 23 Q. Prior to '94, Novell didn't have those 24 combined in-house? 25 A. That's correct, because we believed 12411 1 prior to '94 that they could independently 2 exist in the marketplace. That was our 3 preferred choice. 4 We felt like the market under those 5 applications was suffering at this point and 6 they needed to become more integrated with the 7 network environment and we needed to extend 8 their features to compete. 9 MR. TULCHIN: May I approach the 10 witness, Your Honor? 11 THE COURT: You may. 12 Q. Mr. Edwards, let me show you 13 Plaintiffs' Exhibit 5583. 14 This is a document that already is in 15 evidence. 16 And the cover says Novell DOS 7, the 17 networking DOS product introduction plan. 18 Do you see that, sir? 19 A. I do. 20 Q. And this was something that -- a 21 document that was prepared on your watch, if I 22 can put it that way? It was July of '93 when 23 you were in charge of DSG? 24 A. I believe I was -- yes, I was still in 25 charge of DSG then. 12412 1 Q. Right. 2 And I think you looked at this briefly 3 yesterday, but I want to turn your attention, 4 if I could, to page 9. It has production 5 numbers 2994. 6 Do you see that, sir? 7 A. I'm still getting there. I apologize. 8 I'm getting there. 9 Q. Take your time. 10 A. There you go. 11 All right, here. 12 Q. And I just want to start on this 13 document, Plaintiffs' Exhibit 5583, by pointing 14 you to what Novell is saying in July of '93 15 about what the price of DOS 7 will be. 16 Do you see that Novell has established 17 a base list price of $129 for the standard dual 18 user packaged product; correct? 19 A. I see that. 20 Q. Was that to be the retail price, if I 21 can put it that way? 22 A. I think it was assumed. I'm not very 23 good at this point with the specific price 24 levels. I'm sure this was coming from the 25 product group recommending that price. 12413 1 Q. And was it the price that was adopted 2 by your group? 3 A. I don't know. 4 Q. All right. Let's look at the next 5 page, 2995. 6 A. Okay. 7 Q. And here I want to direct your 8 attention to Figure 3 in the middle of the 9 page. 10 It says, comparison of OEM pricing for 11 Novell DOS 7 and Netware Lite/DR-DOS bundle. 12 Do you see that? 13 A. Yes. 14 Q. And then on direct examination you 15 talked briefly with the Plaintiffs' lawyer 16 about what you called cliff pricing, c-l-i-f-f; 17 is that right? 18 A. Yes. 19 Q. Is this an example of cliff pricing? 20 A. No. 21 Q. For OEMs the price of Novell DOS alone 22 depended to a great extent on the volume that 23 they'd agreed to buy from Novell; correct? 24 A. That's correct. 25 Q. So if an OEM was buying 5,000 copies 12414 1 their price would be $15 per copy; right? 2 A. Yes. 3 Q. And as the volume went up, the prices 4 went down, sometimes significantly; correct? 5 A. Well, $5, $2, $2, $2. Yeah, I mean, I 6 think on a slope. 7 Q. All right. So if an OEM, for example, 8 was buying 100,000 units of Novell DOS 7, 9 instead of paying $15, the price would be down 10 to $6; correct? 11 A. That's correct. 12 Q. And by having this kind of volume 13 discount, if I can put it that way, that's an 14 effort that your company is making to encourage 15 OEMs to take more and more of your product? 16 A. That's correct. Well, or to just tell 17 them what the price will be at any given 18 volume. 19 Q. This was something that was quite 20 common in the software business then, and it 21 still is; isn't that right? 22 A. I believe so. 23 Q. When you're selling to the OEMs, as 24 the volume goes up, the price goes down? 25 A. I think that's correct. 12415 1 Q. And almost every company does that; 2 correct? 3 A. Correct. But that's not -- you know, 4 if this were cliff pricing, then it would be 5 $15 all the way through until the time that you 6 got a volume -- they exactly matched their or 7 closely matched their entire output, and then 8 it would go down drastically to $2, and that 9 would be -- would be gauged upon trying to make 10 a situation where they were charged for every 11 hardware unit, every CPU that would eventually 12 go out the door, and that's -- so this is not 13 anywhere near cliff pricing. 14 Q. Well, you never saw a comparable 15 discount volume price sheet that Microsoft had 16 for MS-DOS, did you? 17 A. I did not. 18 I had intelligence that would come 19 from salespeople who would be in an account 20 reporting on the pricing and the results they 21 had had when they had talked to customers. And 22 so that would be our gathering. 23 We did not have anything that would -- 24 that I recall anyway, that was direct from 25 Microsoft. 12416 1 MR. TULCHIN: Your Honor, should we 2 take a lunch break now? 3 THE COURT: Good time. 4 Ladies and gentlemen of the jury, 5 we'll be in recess till noon. 6 Remember the admonition previously 7 given. Leave your notebooks here. 8 All rise. 9 (A recess was taken from 10:58 a.m. 10 to 12:02 p.m.) 11 THE COURT: Everyone else may be 12 seated. 13 Mr. Edwards, sir, you're still under 14 oath. 15 MR. TULCHIN: You do that very 16 gracefully, Mr. Edwards. 17 THE COURT: He's got it down. 18 BY MR. TULCHIN: 19 Q. Mr. Edwards, just before lunch, we 20 were talking about Plaintiffs' Exhibit 5583. I 21 hope you still have it somewhere there with 22 you. 23 A. I do. 24 Q. Could you look at the third page of 25 the exhibit? At the bottom it has the 12417 1 production number 2987. 2 And I just want to pause here for a 3 minute to direct your attention to the second 4 paragraph which starts with the word today. 5 And this paragraph is talking about 6 the network operating system business as 7 opposed to the PC operating system business; 8 correct? 9 A. Yeah. Well, it's saying that 35 10 percent of the PCs are connected, and so I'm 11 assuming that by connected, yes, it's kind of 12 focusing in on the networking side of the 13 issue. 14 Q. Right. 15 And yesterday you said that it was 16 your estimate that Novell had about 65 -- 17 sorry -- 60 percent of the operating system 18 market. 19 A. Yeah, I answered it -- I'm sorry. 20 Q. Sorry. 21 This document is dated July of '93, 22 and just to point out to you, it says, with 23 NetWare, Novell dominates the network market at 24 over 65 percent. 25 Do you see that? 12418 1 A. I do. 2 Q. Does that refresh your recollection at 3 all that Novell was over 65 percent in the 4 network operating system market? 5 A. I think that this estimate given by 6 the author of the plan is, you know, in line 7 with what I've said. I think I said 60-plus 8 percent. 9 Q. Okay. 10 A. So I'm not sure there were actually 11 really great numbers to know because there 12 wasn't a lot of information about how many 13 things were actually connected. So there was a 14 lot of trial and error in how to get at that 15 particular number, but I believe it's somewhere 16 there. 17 Q. And could we turn, please, to page 18 2997 of the same document, Plaintiffs' Exhibit 19 5583. 20 A couple things on this page, if I 21 might. 22 Under the heading public relations 23 activities. I want to look at just the two 24 paragraphs right underneath that for the 25 moment. 12419 1 And the author starts out by saying, 2 the press is a very strategic marketing vehicle 3 in creating end user demand for Novell DOS 7. 4 Do you see that, sir? 5 A. Yes. 6 Q. And my question is whether or not, as 7 indicated here, what Novell did was to go out 8 and talk to more than 65 publications in the 9 U.S. and Europe on what's described as long 10 lead press tours? 11 A. We went on press tours. I'm not 12 seeing the part about -- 65 in the second 13 paragraph. And I don't know that that number 14 is accurate. I don't recall about the number, 15 but we did -- our team did press tours, yes. 16 Q. Well, I want to understand, if I can, 17 what long lead press tours refers to. 18 Is it correct that the long lead part 19 of that means that Novell is going out to talk 20 to the press about its products long before 21 those products are coming on the market? 22 A. That's actually not the definition of 23 what's meant by long lead. 24 The long lead refers to the type of 25 press that you're talking with. 12420 1 So some press published daily things 2 and you want to talk to them the day before you 3 want the news to be in the press. 4 Some press engines take two months, 5 three months to prepare their final 6 publication. Like maybe a Gartner report or a 7 Yankee report. And so you would go to them 8 well before their publish date, and they're 9 referred to as long lead press. 10 And so certainly it's long before or 11 before a product would be announced, but it is 12 referring to the fact that you control the 13 message by going in a certain order such that 14 you're getting the timing of it to all come out 15 to the user at a particular time. To do that 16 you have to talk earlier to some publications 17 that take longer to get the publication out. 18 Q. Okay. I appreciate that. Thank you 19 for that understanding. 20 And as of July of 1993, according to 21 this document, Novell had successfully 22 completed long lead press tours in the U.S. and 23 Europe targeting more than 65 publications. 24 Is that in accord with your 25 recollection? 12421 1 A. Yes. 2 Q. And as a result, articles had appeared 3 both domestically and internationally? 4 A. I believe that that is correct. 5 I can't think of an article right now, 6 but I believe that is correct. 7 Q. All right. And you were going to go 8 out to Asia Pacific and have a press tour where 9 you were talking to more than 25 publications; 10 correct? 11 A. That's what this document says. 12 Q. All right. 13 A. I don't recall that as much, but -- 14 Q. The very next paragraph -- 15 MR. TULCHIN: If we can put that up. 16 Q. -- talks about domestic short lead 17 press tour. So I take it from your prior 18 answer these are publications that come out, 19 let's say, quite frequently? 20 A. Yes. 21 Q. Would it be once a day or even once a 22 week, would those be the short lead? 23 A. Yeah. It's defined by what does the 24 press organization say the lead time is for 25 telling me something to get into my 12422 1 publication. 2 So you have some that are -- you need 3 to get them to them closer to the time and some 4 that you need more time. 5 Q. I take it it was considered important 6 to Novell for Novell to get the word out in 7 these trade press publications about its 8 products -- 9 A. That's correct. 10 Q. -- is that right? 11 And was it the case, sir, that Novell 12 believed that articles in the trade press could 13 be influential when it comes to end user 14 decisions about what to buy? 15 A. Yes. 16 Q. That's why you were visiting the 17 press, to try to make the point about the 18 desirability of your product? 19 A. Yeah, and not just end users, but 20 you're trying to make the industry understand 21 it. 22 So you would have an influence on end 23 users, on OEMs, on resellers. I mean, you're 24 trying to get the word out. 25 Q. Let me just ask you about a few 12423 1 publications. 2 When we talk about the trade press, 3 was PC Week one of the publications that you 4 viewed as influential? 5 A. Yes. 6 Q. And how about a publication called 7 Infoworld? Was that one of them as well? 8 A. At the time it was. 9 Q. And Computer World, was that another 10 publication that was influential in getting -- 11 A. Yes. 12 Q. -- notice to the market about 13 different products? 14 A. Yes. 15 Q. And did articles in those publications 16 -- if the articles spoke about problems with 17 the products, were those articles also a kind 18 of notice to the market that could affect 19 buying decisions? 20 A. Yes. 21 Q. Okay. On the same page that we've 22 been looking at of 5583 towards the top, 23 there's a sentence right at the beginning that 24 says, according to Novell's focus group 25 meetings -- now, this is as of July 1993 -- 12424 1 quote, there is virtually no name recognition 2 for Novell among first-time or nonnetwork PC 3 users, unquote. 4 Do you see that? 5 A. I do. 6 Q. And then it goes on to say that other 7 companies, and naming Microsoft as the first 8 one, quote, enjoy considerable name 9 recognition, unquote. 10 A. That's correct. 11 Q. And that was one of those advantages 12 for Microsoft that we talked about this 13 morning; correct? 14 A. I think it was. 15 Q. It was also something that was a bit 16 of a problem when it came to trying to 17 convince, let's say, potentially large 18 customers to back DR-DOS; isn't that right? 19 A. No, I don't think it was as important 20 for large customers or the OEM marketplace 21 because in the large customer case, you would 22 have, as you previously indicated today, IT 23 organizations that were accustomed to dealing 24 with NetWare and knew the Novell name, and so I 25 think the study here had to do with consumer 12425 1 end users that were maybe less sophisticated 2 with in terms of technology in general. 3 Q. Okay. 4 MR. TULCHIN: May I approach the 5 witness, Your Honor? 6 THE COURT: You may. 7 Q. Mr. Edwards, I'm handing you a 8 document that's already in evidence. It's 9 Defendant's Exhibit 166. 10 Mr. Bradford testified a little bit 11 about this a couple of weeks ago. 12 And you'll see from the front page, 13 it's a memorandum entitled Novell confidential 14 written by Steve Maysonave. 15 I hope I've pronounced his name 16 correctly. 17 A. I think the name is Steve Maysonave. 18 Q. Maysonave, thank you. 19 -- to Dick Williams dated January 24, 20 1992. 21 So this is just a couple months or so 22 before you take over the DSG; correct? 23 A. That's correct. 24 Q. At the time in April when you went to 25 Monterey, did you become aware of this effort 12426 1 to convince IBM to take DR-DOS on its PCs? 2 A. I did. I became aware of it, yes. 3 Q. And do you recall having seen this 4 memo? 5 A. I don't recall having seen this memo 6 at that time. 7 My name I notice is referenced in the 8 memo as someone who might come in to deliver 9 marketing and NetWare messages, but I wasn't on 10 the distribution, I don't think. 11 Q. Right. 12 Now, if you look on the fourth page of 13 Exhibit 166. Right at the top it says, Cougar 14 proposal, IBM marketing concerns, and then it 15 says customer reaction. 16 Do you see that? 17 And you understood that this was 18 coming from IBM. It was the concerns of the 19 IBM marketing people about putting DR-DOS on 20 IBM PCs; correct? 21 A. Well, as I've told you before, I 22 didn't understand anything about this document. 23 So I wouldn't have that understanding that this 24 is coming from IBM. 25 Q. All right. 12427 1 A. Makes sense from the context, but -- 2 Q. Okay, fair enough. 3 And looking at the first paragraph 4 under customer reaction, what's stated there is 5 DOS equals Microsoft. 6 Do you see that? 7 A. I do. 8 Q. Which is quite consistent with what we 9 saw in the prior document where it says that 10 Novell has almost no name recognition in the 11 operating system business; correct? 12 A. Yeah, particularly at that consumer 13 level, uh-huh. Not in the operating system 14 business in general, but at that consumer 15 buying level, I think that would be accurate. 16 Q. Okay. In any event, you understood 17 that IBM declined to take the DR-DOS product 18 and put it on its machines; correct? 19 A. What I understood about this was that 20 yes was the ultimate decision. I also became 21 aware of the -- Dick Williams and the DR-DOS 22 marketing team handling successfully a lot of 23 the issues raised by IBM. I'm not ultimately 24 sure why IBM decided not to move forward 25 because I wasn't a part of that. 12428 1 Q. Do you have any knowledge one way or 2 another as to whether or not in January 1992 3 IBM had any per processor contract with 4 Microsoft? 5 A. I do not. 6 Q. Do you know, Mr. Edwards, whether 7 later that year IBM ever signed a per processor 8 contract with Microsoft? 9 A. I'm not aware of IBM's contracts 10 nor -- 11 Q. And that would apply to '93 as well; 12 correct? 13 A. Yeah. I never saw those nor saw a 14 signature, nor saw them sign it. 15 Q. In the same period, the period when 16 you were head of the desktop systems group at 17 Novell, did, to your knowledge sitting here 18 today, did Dell or Compaq have per processor 19 licenses with Microsoft? 20 A. I believe they did. 21 Q. You testified on direct examination 22 that you spoke to a number of people at Compaq 23 including Gary Stimac. 24 A. Yes. 25 Q. S-t-i-m-a-c. 12429 1 And he attended some of the meetings 2 with you? 3 A. That is correct. 4 Q. During your preparation for your 5 testimony over the weekend or at any other 6 time, did you become aware of what Mr. Stimac 7 has testified to concerning the reasons that 8 Compaq did not want to put DR-DOS on its PCs? 9 A. I did not. 10 Q. Were you aware at the time in 1992 or 11 '93 -- are you aware today that the reason that 12 Compaq didn't want DR-DOS had nothing to do 13 with any form of contract or per processor 14 agreement, but instead, had to do with customer 15 demand? 16 A. I was not aware of that. 17 Q. Well, I wonder if we could play a 18 portion of Mr. Stimac's testimony, and I want 19 to ask you when we're done whether this 20 refreshes your recollection as to what you 21 learned at the time Compaq's reasons were. 22 (Whereupon, the following video was 23 played to the jury.) 24 Question: Did Compaq to your 25 knowledge ever give consideration to using or 12430 1 installing DR-DOS on their desktop computers? 2 Answer: We never gave major 3 consideration for that. Novell offered that to 4 us, but there were many issues dealing with 5 DR-DOS. 6 Question: When you said Novell 7 offered DR-DOS, who, if you recall, made the 8 offer? 9 Answer: I do not recall the names. 10 Question: Does the name Ray Noorda 11 sound familiar to you? 12 Answer: Yes. 13 Question: Did you ever meet with him 14 where the topic of Compaq offering DR-DOS came 15 up? 16 Answer: We met many times with Ray 17 Noorda and he discussed DR-DOS, but I don't 18 know if he specifically offered it or one of 19 his lieutenants or managers. 20 Question: Do you remember under what 21 licensing payment terms Novell was offering 22 DR-DOS to Compaq? 23 Answer: They were originally offering 24 a very low payment term, a dollar or two, and 25 then toward the end, they were basically going 12431 1 to give it to us for free, or a zero license, 2 cost license. 3 Question: And your recollection is 4 that Compaq didn't jump at that opportunity? 5 Answer: Absolutely, we did not jump 6 at that opportunity. 7 Question: Why not? 8 Answer: Because we were customer 9 driven. 10 Our customers had standardized on the 11 Microsoft DOS operating system and they did not 12 want to have another operating system because 13 of compatibility and thus court concerns. 14 We were also not interested in that 15 operating system because that meant we would 16 have had to go test all the applications in 17 that operating system as well as MS-DOS, which 18 was the most popular one. 19 So it would have doubled our support 20 costs, both from a testing and support 21 standpoint. 22 Question: So are you saying that 23 because of the support costs and the other 24 issues you just described, those in your 25 recollection outweighed the fact that you could 12432 1 get DR-DOS for virtually no cost? 2 Answer: That is correct. 3 Question: To your knowledge, did any 4 major U.S. computer company offer DR-DOS on 5 their computers? 6 Answer: Not to my knowledge. 7 Question: Do you recall whether your 8 decision not to offer DR-DOS was influenced in 9 any way by anything in the Microsoft/Compaq 10 license arrangements? 11 Answer: It had nothing to do with 12 that. 13 Question: So, as far as you know, 14 there was nothing in the license arrangements 15 between Microsoft and Compaq that would have 16 affected your decision to offer DR-DOS if you 17 had otherwise wanted to do so; is that right? 18 Answer: That was correct. 19 Question: Did Microsoft, to your 20 knowledge, or anybody from Microsoft talk to 21 you in an effort to discourage you from 22 offering or considering DR-DOS? 23 Answer: Not that I recall. 24 Question: Were there features that 25 you recall in DR-DOS' version that were 12433 1 different from the features that were in the 2 then-available Microsoft version of DOS? 3 Answer: No. 4 Question: No, you don't recall or no, 5 there weren't? 6 Answer: No, I do not recall any 7 features that were different in DR-DOS compared 8 to MS-DOS at the time. 9 Question: Do you remember ever saying 10 to anybody at Novell that people at -- be you 11 or others at Compaq thought DR-DOS was superior 12 to Microsoft DOS? 13 Answer: No, I do not remember any 14 conversation indicating that DR-DOS was 15 superior. 16 Question: Is that a statement, if 17 made, you would agree with or not? 18 Answer: Ask your question again. 19 Question: Did you back then -- 20 whether you stated it or not, did you think 21 DR-DOS was superior to Microsoft DOS? 22 Answer: No. 23 Question: And why is that? 24 Answer: Because customers were 25 wanting MS-DOS at the time. 12434 1 We were testing MS-DOS on our -- on 2 our machines and applications on top of MS-DOS 3 and that's what customers were demanding, and 4 they were not -- we had never heard of any 5 demand for DR-DOS from our customer base. 6 (Whereupon, playing of video 7 concluded.) 8 Q. Now, Mr. Edwards, Mr. Stimac was a 9 senior official at Compaq; correct? 10 A. Yes, he was. 11 Q. And he attended the meetings that you 12 referred to yesterday? 13 A. He did attend the meetings that we had 14 in October time frame of '92, and he wouldn't 15 have attended the meetings with Lori Strong or 16 Ronnie Ward or Eckert Pfeifer that Ray and I 17 went to earlier in the year. 18 Q. Well, do you have any reason 19 whatsoever to disagree with Mr. Stimac, who was 20 an official of Compaq, with his testimony that 21 his decision not to offer DR-DOS on Compaq PCs 22 had nothing whatsoever to do with the license 23 agreements between Microsoft and Compaq? 24 A. That was not the story that we were 25 hearing from Compaq at the time, so I would 12435 1 disagree with his recollection of it, and it 2 was also not the story when he didn't remember 3 the product differences. 4 I think he's also not recollecting 5 what the people in the organization did to test 6 DR-DOS. 7 Q. Mr. Edwards, in your capacity as head 8 of the desktop systems group and in your prior 9 experience at Novell, you had gone out and made 10 sales calls to people; correct? 11 A. Correct. 12 Q. You're going out and you're meeting 13 with potential customers and you're trying to 14 sell -- 15 A. Correct. 16 Q. -- correct? 17 And it's the case, isn't it, that you 18 have found that people who turn you down often 19 at the same time praise your product? 20 A. That hasn't happened very often to me. 21 They usually turn me down because they don't 22 want the product. 23 Q. Well, at deposition do you remember 24 testifying on this subject matter? 25 A. I don't. 12436 1 Q. Let me see if this will refresh your 2 recollection. 3 MR. TULCHIN: May I approach, Your 4 Honor? 5 THE COURT: You may. 6 Q. It's the deposition taken, Mr. 7 Edwards, in 1998. 8 A. So eight years ago or so. 9 Q. It's eight years ago. 10 A. Thank you. 11 Q. Or nine almost. 12 A. Yeah. 13 Q. And I think -- let me get the page 14 reference for you. 15 A. Do you guys not deal with large type 16 fonts? Okay. 17 Q. I'm going to help you. Page 168. 18 MR. TULCHIN: May I approach, Your 19 Honor? 20 THE COURT: Yeah. 21 Q. Ms. Conlin has been gracious enough to 22 give me the copy with the larger print. 23 A. This plus a magnifying glass and I'm 24 just fine. 25 What's the page? 12437 1 Q. 168. 2 A. Okay. What do you want me to look at? 3 Q. I hope I have the right page here. 4 Hold on a moment. 5 A. It says have you found people who turn 6 down and often praise your product, and I said 7 some, sure. I think that's -- 8 Q. That's it. 9 A. Doesn't happen very often though. 10 Q. Okay. 11 A. I'm not -- 12 Q. But your testimony there was -- 13 A. Sure. 14 Q. -- sometimes, sure, people praise your 15 product while they're turning you down? 16 A. Yeah. 17 Q. And I think we can agree on -- 18 A. Probably what I thought then, which is 19 -- you know, I don't know a number, but I find 20 that people turn products down because they 21 don't want them so -- 22 Q. Well, sometimes as a salesman what 23 happens in a sales call is that the person 24 you're calling on, like Mr. Stimac here, may 25 believe there's no reason at all to take this 12438 1 guy's product, there's no demand in the 2 marketplace for it, but rather than deliver a 3 harsh statement to a salesperson, the message 4 gets delivered in a different way. Doesn't 5 that occur? 6 A. I think that probably occurs. 7 I don't think that's what happened at 8 Compaq though. I think that Gary really wasn't 9 the one that interfaced with Novell all that 10 often. 11 The -- Gary was more on the desktop 12 side. The people that were talking to us were 13 contacts that we had had over a long period of 14 time who I felt were trying to help the 15 company, and I don't think that they were 16 trying to not offend me or make me feel good at 17 the end of the day. 18 I think that they were trying to 19 indicate and give me some understanding of what 20 was actually going on behind the scenes. 21 In fact, I do recall them speaking 22 specifically when Gary and I and Ronnie got 23 together to go through a week to ten days of 24 planning on what he's called the free product, 25 him speaking about just having recently come 12439 1 from Microsoft at an executive summit where 2 some of those things were talked about. 3 I'm not sure when this deposition was 4 taken, and that may not have been a big event 5 for him in his life, but as one who was out 6 trying to push hard on DR-DOS, it was fairly 7 significant for us. 8 Q. Mr. Edwards, you did say that this 9 deposition that was taken of you in 1998 was a 10 long time ago. It was eight or nine years ago; 11 correct? 12 A. Yes. 13 Q. And it will be hard for you to 14 remember every detail of what you said eight or 15 nine years ago? 16 A. Absolutely. 17 Q. In fact, we're now talking about 18 events that took place 15 or so years ago, 19 1992; correct? 20 A. That is correct. That is correct. 21 Q. And Mr. Stimac's deposition was taken, 22 I believe, in 2001, so five or six years ago, 23 if that helps. 24 Now, Mr. Stimac was the officer of 25 Compaq who was in charge of deciding what 12440 1 operating systems would be installed on Compaq 2 PCs; correct? 3 A. I think that it was -- that he was a 4 focal point of that. I also think that other 5 executives participated. 6 For example, Lori Strong who dealt 7 more with the mobile products, or ultimately 8 Eckert Pfeifer who was the CEO of the company 9 at the time. 10 Q. Nevertheless, Mr. Edwards, you have no 11 reason to believe that Mr. Stimac was 12 testifying in anything other than a truthful 13 way, do you? 14 A. I do not. 15 Q. Okay. I'd like to go back to the 16 subject of compatibility, and we talked about 17 this yesterday on cross-examination just 18 briefly in the half an hour or so of cross. 19 And you'll remember that we looked at 20 Plaintiffs' Exhibit 1324, which had a press 21 release from May of 1992, May 19th, in which 22 you were quoted. 23 Do you recall that? 24 A. I do recall. 25 Can I find that? I mean, do I have a 12441 1 copy of that? 2 I do recall the conversation. 3 Q. I'll get another copy if you need it. 4 MS. CONLIN: What number is it? 5 MR. TULCHIN: 1324. 6 A. This might work. 7 MR. TULCHIN: I see Ms. Nelles is 8 looking for another copy if you need it because 9 I don't have them here, or maybe I do and I'm 10 confused. 11 A. Is this the one up here on the screen? 12 I can just use the screen. 13 Q. Sure. Sure. 14 And Ms. Conlin again has been gracious 15 enough to give me this copy, 1324. 16 And I just -- I don't want to ask you 17 any questions about this, but this is just a 18 reminder of where we were yesterday. 19 On May 19th, '92, right at the bottom 20 of the first page, there was a press release 21 issued by Novell. 22 And we talked about this yesterday, 23 and you said that as of this time, May of '92, 24 Novell's DR-DOS was fully compatible with 25 Windows. That's what the press release says, 12442 1 and you testified yesterday on cross that that 2 had been so for the prior six or eight months. 3 Remember that? 4 A. I don't remember that being my 5 testimony, but I remember -- I'm having a hard 6 time where our customers are fully -- where do 7 I say it's fully compatible? I'm sure it's 8 there, but where is it? 9 Q. Well, the quote from you says our 10 customers want full Windows compatibility and 11 our product delivers it. 12 A. Okay. 13 Q. Isn't that what that means? 14 A. Okay. 15 Q. Good. 16 A. As I recall, the six months prior, 17 there were lots of issues with compatibility, 18 particularly with the beta version of -- Beta 3 19 version of Windows 3.1, the Beta 2 version. 20 Those products weren't released into 21 the marketplace yet and so the products we 22 would have been commenting on the press release 23 were those that were out in the marketplace. 24 At this point in time, we had received 25 time to overcome the beta incompatibilities 12443 1 that happened towards the end -- as I 2 understand it, towards the end of '91, and then 3 when this -- by the time this came out, we had 4 incompatibilities with Windows as far as I 5 knew. 6 Q. You're not changing your testimony 7 from yesterday, are you? 8 A. I'm not. 9 Q. Okay. 10 A. As I recall. 11 MR. TULCHIN: May I approach the 12 witness, Your Honor? 13 THE COURT: You may. 14 Q. I'm handing you Defendant's Exhibit 15 1043. 16 This is a memorandum from Toby Corey 17 to others at Novell dated April 2, 1992. 18 MR. TULCHIN: And we offer Exhibit 19 1043, Your Honor. 20 MS. CONLIN: I have no objection, Your 21 Honor. 22 THE COURT: It's admitted. 23 Q. Now, April 2nd, 1992, if I understand 24 your testimony yesterday, was just about a day 25 before Mr. Williams said he was leaving and you 12444 1 were told you should take over the desktop 2 systems group; correct? 3 A. It was right at the time or a day 4 before I took over the network systems group. 5 Q. And, in fact, when you went out to 6 Monterey to talk to the people in California at 7 Digital Research, were you made aware of this 8 memorandum or the subject matters that it 9 contains? 10 A. Well, the memo doesn't look familiar, 11 but what's the subject matter? 12 Q. Well, the subject says DR-DOS 6.0 and 13 Windows 3.1. And I want to come to some of the 14 specifics in a matter -- in a minute, but it 15 talks about incompatibilities. 16 I just want your best recollection. 17 Did you become aware of these issues? 18 A. Okay. Well, I haven't seen this 19 before and I don't recall seeing this, and I'm 20 just reading through the issues. If you want 21 to go through them with me -- 22 Q. Sure. 23 A. -- that would be helpful. I mean, I 24 -- you're asking me if I'm aware of the issues, 25 and I don't know what the issues are yet. 12445 1 Q. Sure. 2 Let's just set the time frame. Your 3 press release that we just looked at was in May 4 of '92 and this was in April, just a month 5 before; correct? 6 A. Yes. 7 Q. And right towards the top there's a 8 paragraph that says, I've been in touch with 9 the EDC -- those are the people in England; 10 right? 11 A. That is correct. 12 Q. -- and we're nearing a complete fix -- 13 we're nearing a complete fix for the 14 incompatibilities between Windows 3.1 and 15 DR-DOS 6.0. 16 A. Yes. 17 Q. Do you see that, sir? 18 A. I see that. 19 Q. So as of April, April 2nd anyway, 20 there were incompatibilities? 21 A. This would indicate that they were in 22 the process of fixing those incompatibilities. 23 I'll point out, though, that 24 incompatibilities would come and go. We would 25 find a point in time where we got it fixed and 12446 1 completely compatible and there would be a new 2 bug introduced that would cause us to divert 3 resources to go and fix that bug so -- or that 4 situation. 5 And so it looks like that they are hot 6 on the trail of probably another one of these 7 and they're nearing a completion of a fix. 8 Q. Well, let's be very -- 9 A. That's the way I read this. 10 Q. I hear you. 11 You haven't seen the document before, 12 you say? 13 A. I don't recall seeing the document is 14 what I intended to say. 15 Q. Well, let me ask you a question that's 16 outside the four corners of Exhibit 1043, just 17 a general question. 18 A. Okay. 19 Q. In software products, there are very 20 commonly bugs? 21 A. There are. 22 Q. And in almost every complex software 23 product, there will be bugs? 24 A. I think -- 25 Q. Correct? 12447 1 A. I think there will be. 2 Q. DR-DOS was in that category? 3 A. Yes. 4 Q. When the software engineers at Novell 5 came out with a new version of DR-DOS like 6.0, 6 there were bound to be some bugs? 7 A. That's correct. 8 Q. And there were bound to be some bugs 9 in Windows 3.1 for Microsoft? 10 A. That's correct. 11 Q. And the question, or at least a 12 question one might ask is, if there are 13 incompatibilities, are those caused by bugs in 14 the Microsoft product or are they caused by 15 bugs in the Novell product; correct? 16 A. That could be -- that would be the -- 17 what you would try to research to determine. 18 Q. Sure. And that's what the people at 19 Hungerford at the EDC would be looking at? 20 A. Yes. 21 Q. Whose bug caused the incompatibility? 22 A. Right. 23 Q. Now, if they find out that the bug 24 that causes the incompatibility is a Novell 25 bug, it's in DR-DOS 6.0, that would be, as you 12448 1 understand it, Novell's responsibility to fix; 2 correct? 3 A. That's correct. 4 Q. And if the bug turned out to be a bug 5 in the Microsoft product, then Novell would ask 6 Microsoft to fix it; correct? 7 A. That's correct. 8 Q. All right. And just because there are 9 bugs or incompatibilities doesn't tell you, 10 does it, Mr. Edwards, that any bug was put 11 there deliberately? 12 A. No. Just because there is an event of 13 a bug doesn't indicate that it's deliberate. 14 Q. Sure. And if you want to know whether 15 or not it's deliberate, it would help, for 16 example, to be a software engineer and get 17 really deep into the source code and figure out 18 what causes the problem; correct? 19 A. Absolutely. 20 Q. You were never a software engineer at 21 Novell? 22 A. That's correct. 23 Q. Okay. 24 And then on the last page of this same 25 exhibit, 1043 -- 12449 1 A. Excuse me. 2 Q. You all right? 3 A. Yeah, I'm okay. 4 Q. A little stiff in that little chamber? 5 A. Yeah, I'm in my chamber. I'm locked 6 down. 7 Q. Well, we'll let you out. 8 A. Move along, would you? 9 I'm kidding. 10 Q. On the last page, right at the top of 11 this memo by Mr. Corey says, DR-DOS 5.0 and 12 Windows 3.1 are not compatible. Customers must 13 upgrade to version 6.0 for 3.1 compatibility. 14 Do you see that, sir? 15 A. I do. 16 Q. Now, did you know at the time what 17 caused the incompatibility between DR-DOS 5.0 18 and Windows 3.1? 19 A. I don't recall. 20 Q. All right. 21 A. Was that on the same document as what 22 you -- what's the time frame of that? 23 Q. It's the same document. 24 A. Okay. 25 Q. The last page. Exhibit 1043. 12450 1 A. All right. I just wasn't picking it 2 up. 3 I don't recall what the 4 incompatibilities were in any case. 5 Q. Okay. It's from April of 1992. 6 A. Okay. 7 MR. TULCHIN: Now, may I approach the 8 witness, Your Honor? 9 THE COURT: You may. 10 A. Are you sure of the ability of this 11 thing to handle more? 12 Q. Well, these are going to be not very 13 heavy. They're very thin documents. 14 And I'm going to hand you three. 15 A. A thick board here so we can -- 16 Q. I'm going to hand you three at the 17 same time just to save on my -- the number of 18 trips I make. 19 A. Would you like to take three back? 20 I'm just teasing. 21 Q. Can I take anything away from you? 22 A. There we go. Another small print. 23 Q. I'm going to try to help you. 24 Mr. Edwards, I've handed you three 25 exhibits, Defendant's Exhibits 3083, 3083, 12451 1 Defendant's Exhibit 1534A, which I seem to be 2 out of. No, I have one. And Defendant's 3 Exhibit 1493. 4 Do you have the three of them, sir? 5 A. I do. 6 Q. And these are articles from three of 7 the publications that we talked about earlier, 8 PC Week, Infoworld, and Computer World. 9 MR. TULCHIN: Your Honor, we offer all 10 three of these not for the truth, but for what 11 they contain as notice to the market. 12 MS. CONLIN: To which we object, Your 13 Honor. 14 There are sustained hearsay and 15 foundation objections in connection with these 16 articles by the Special Master, and we would 17 urge the Court to exclude these exhibits on 18 that basis. 19 THE COURT: 1493, 3083, and 1534A? 20 MR. TULCHIN: Yes. 21 THE COURT: You may use them for a 22 nonhearsay purpose. 23 MR. TULCHIN: Thank you, Your Honor. 24 Q. Mr. Edwards, I want to direct your 25 attention first to Exhibit 1493. 12452 1 A. Okay. 2 Q. And this is an article from PC Week 3 from the December 2nd, 1991 issue of that 4 publication. 5 And you told me earlier that PC Week 6 was a trade press publication that could be 7 influential when it came to decisions of people 8 on whether to buy? 9 A. That's correct. 10 Q. And December 2nd, 1991 -- 11 MR. TULCHIN: If we can bring that up, 12 Chris, a little bit. 13 Q. -- that's just about six months before 14 your press release in May of 1992; correct? 15 A. This is December 2nd, 1991, May of 16 '92. 17 Q. Right. 18 A. Makes sense to me. 19 Q. And the article that I want to direct 20 your attention to is on the left side of the 21 page, and it's entitled utility woes bedevil 22 DR-DOS users. 23 Do you see that, sir? 24 A. I do. 25 Q. Now, were you aware around December of 12453 1 1991 that this article or a similar article had 2 run in the pages of PC Week? 3 A. I don't recall. 4 Q. You see that the article starts off by 5 saying, PC users are reporting problems with 6 some of the DR-DOS 6.0 utilities that helped 7 Digital Research, Inc., move ahead of MS-DOS 8 5.0 in the operating features race; correct? 9 A. I see that. 10 Q. And the next paragraph talks about the 11 Digital Research forum on CompuServe. 12 You were familiar with that at the 13 time, sir? 14 A. I was. 15 Q. It was sort of a kind of online 16 bulletin board even before the Worldwide Web 17 became popular; correct? 18 A. Correct. 19 Q. And users of DRI, or DR-DOS I should 20 say, sorry, DR-DOS, users of DR-DOS could post 21 messages on this CompuServe forum about 22 experiences they were having with the DR-DOS 23 product; correct? 24 A. Correct. 25 Q. And according to Defendant's Exhibit 12454 1 1493, the article says that the Digital 2 Research forum on the CompuServe online service 3 contains numerous messages from users reporting 4 problems; correct? 5 A. Correct. 6 Q. Now, this article in December of 1991 7 was published before this beta of Windows 3.1 8 ever came out; correct? 9 A. I don't know. 10 Q. Well, the Christmas beta according to 11 your time line -- 12 MR. TULCHIN: Maybe we can put that on 13 the right side of the screen. 14 Q. The time line that you used with the 15 Plaintiffs' lawyer on direct examination -- 16 A. This says December 21st, that's right. 17 Q. Yeah. Okay, you have it. 18 MR. TULCHIN: Chris, we're fine. 19 Q. December 21st was this beta version of 20 Windows 3.1, the version that went out to beta 21 testers; correct? 22 A. That's correct. 23 Q. And this article about problems, or 24 should we say incompatibilities, would that be 25 fair? 12455 1 A. Correct. 2 Q. This article about incompatibilities 3 that went out to the market in PC Week was 4 published about three weeks before the beta 5 version of 3.1 ever came out? 6 A. That is correct. 7 Q. All right. 8 A. It is after the second beta, though, 9 and these issues appearing have to do with 10 memory issues. 11 And I think that there were reported 12 problems similar to the Beta 3 issues with the 13 Beta 2 product that dealt with memory 14 incompatibilities, but I don't really have 15 significant recollection of the timing of these 16 things right here or their correlation to that 17 beta. 18 Q. Was there someone then employed at DRI 19 in December 1991 whose name was Ken Pomper, 20 P-o-m-p-e-r? 21 A. I don't know Ken, but it looks like he 22 is because he's quoted as the DR-DOS product 23 manager. 24 Q. Well, let us look a little bit further 25 down the first column. 12456 1 And again, just in terms of what 2 notice was going out to the public or readers 3 of this trade press magazine, this article 4 says, officials of DRI in Monterey, California, 5 last week acknowledged the problems. 6 Do you see that? 7 A. I do. 8 Q. And it talks about sending out an 9 update. 10 A. Yes. 11 Q. Now, this kind of an article about 12 incompatibilities, about problems with DR-DOS, 13 those were articles that might adversely affect 14 your prospects of selling DR-DOS operating 15 systems; correct? 16 A. They could. 17 Q. And this article came out just a few 18 months before the end of the second quarter '92 19 after which your sales started to drop -- 20 A. That is correct. 21 Q. -- correct? 22 Do you think that articles like this 23 might have been a factor in the drop-off in 24 your sales? 25 A. I think they could have been. 12457 1 I don't think they were the major 2 factor. 3 Q. All right. 4 Now, the other two articles in front 5 of you, let's look first at -- sorry, let me 6 get organized here. 7 Let's look at Defendant's Exhibit 8 3083, which again is in evidence not for the 9 truth, but as evidence of notice to the market. 10 And this is the article that I believe 11 comes from -- although it doesn't say that here 12 -- the publication called Infoworld, and it's 13 dated November 4th, 1991. 14 Do you see that, sir? 15 MS. CONLIN: Your Honor, I'm going to 16 renew my foundation objection. It does not 17 show on its face where it came from. 18 THE COURT: Sustained. 19 Q. All right. Well, let's take that down 20 and let's go to the next article, which is 21 1534A. 22 The first page of 1534A shows this is 23 from the publication that we've talked about 24 called Computer World. 25 Do you see that? 12458 1 A. I do. 2 Q. And underneath it says Hong Kong. Was 3 there a version of this that was published in 4 Hong Kong? 5 A. Apparently so. It says Hong Kong. 6 Q. And the date on it is November 14th, 7 1991. 8 And then the second page of this 9 exhibit has the article of interest here and 10 it's entitled users find some DR-DOS glitches. 11 And, again, the prior article was from 12 December '91. This is November. So again this 13 is before the 3.1 beta ever went out; right? 14 A. That is correct. 15 Q. And according to this article in 16 Computer World, it says users are reporting 17 glitches in Digital Research's DR-DOS 6.0, 18 including problems with its default 19 installation program that allow it to delete or 20 replace existing DOS and other like named 21 files. 22 Users also report incompatibilities 23 between the program's security features and 24 IBM's personal system/2's. 25 Now, the article goes on to talk about 12459 1 tests conducted by Infoworld -- now, this is in 2 a magazine called Computer World, but it talks 3 about tests conducted by Infoworld. 4 But I just want to stop here for a 5 moment. 6 The problems that are being reported 7 here with DR-DOS 6.0 have nothing whatsoever to 8 do with Microsoft, do they, sir? 9 A. I do not know. 10 Q. Well, if you go back to that first 11 paragraph, it talks about problems with the 12 default installation program -- that's a piece 13 of DR-DOS; right? 14 A. It is, but the interaction between the 15 systems -- you need to look at it a little bit 16 more holistically than that because you could 17 have one piece of software come from a 18 manufacturer, say Novell has DR-DOS, but it is 19 interacting with the other software from 20 Microsoft. 21 So as you indicated before, somebody 22 in an engineering perspective would need to go 23 in and make a judgment about what the cause of 24 the incompatibility was. And I don't think 25 that you can just conclude because the press 12460 1 reported that it had nothing to do with the 2 Microsoft software. 3 Q. All right, but let's look at the next 4 sentence. 5 It says there, users also report 6 incompatibilities between the program's 7 security features -- 8 MR. TULCHIN: Chris, it's still the 9 first paragraph. My apologies. 10 Q. Users also report incompatibilities 11 between the program's security features and 12 IBM's personal system/2's. 13 And that's a reference to an IBM 14 system, correct, an IBM computer? 15 A. IBM computer -- 16 Q. Right. 17 A. -- may have had Windows loaded on it 18 and may not have. 19 Q. You don't know that, do you? 20 A. Certainly in the marketplace IBM PC 21 -- PS/2s had Windows loaded on them. 22 Q. In 1991 did any of the IBM PS/2s have 23 Windows loaded on them, is that -- 24 A. I would believe they would have, but I 25 can't point you to a -- 12461 1 Q. You're guessing at this now, aren't 2 you? 3 A. I think that -- the PS/2 is a hardware 4 platform, and I don't think you can conclude 5 from the fact that it was PS/2 and a batch file 6 or another file coming from the DR-DOS team 7 that it had nothing to do with Windows. 8 I'm just asserting that it's a bit 9 more complicated than that, and somebody would 10 need to look at that particular environment, 11 and we don't have the benefit of that 12 environment from this article. 13 We have somebody in the press who 14 probably understood less about it than I do 15 sitting here writing this article, so they were 16 quoting other people. 17 Q. I hear you, but I want to be clear on 18 one thing. 19 You have no reason to believe that 20 these incompatibilities arose because Windows 21 was installed on this IBM computer, do you? 22 A. I don't. In fact, what I'm saying -- 23 MS. CONLIN: Your Honor -- 24 A. -- is I don't know -- 25 MS. CONLIN: John, just a moment. 12462 1 I believe that while Mr. Tulchin 2 offered the article not for the truth, his 3 examination is, in fact, going only and 4 exclusively to the truth, and that's not what 5 the Court admitted the document for. 6 THE COURT: I have to agree. 7 Please make a question which is more 8 appropriate to the nonhearsay use. 9 MR. TULCHIN: Thank you, Your Honor. 10 Q. Let me look -- let's look at the 11 second column and the last three paragraphs. 12 And you'll see there a reference to 13 DRI officials admitting something? 14 A. I do. 15 Q. Does this refresh your recollection in 16 any way, Mr. Edwards, about what DRI officials 17 might have said about the incompatibilities, if 18 any, between DR-DOS 6.0 and the IBM PCs? 19 A. It does not. 20 Q. Okay. What I'd like to do now is show 21 you -- I hope I have this with me. 22 MR. TULCHIN: Ms. Nelles may be able 23 to help me. 24 Q. -- Plaintiffs' Exhibit 5473. 25 THE COURT: Has this been previously 12463 1 admitted, 5473? 2 MR. TULCHIN: It is, Your Honor. It's 3 in evidence. 4 THE COURT: Okay. 5 MR. TULCHIN: Here it is. 6 Sorry, Sharon. 7 MS. NELLES: Not a problem. 8 MR. TULCHIN: As the Court can see, 9 I'm occasionally overwhelmed by the number of 10 documents and a little disorganized. 11 My apologies. 12 Q. Mr. Edwards, I've handed you 13 Plaintiffs' Exhibit 5473. It's a document in 14 evidence. I think you looked at this during 15 your direct examination yesterday. 16 Do you remember that? 17 A. I do. 18 Q. And this was a handwritten memo from 19 Lindsey Williams in May of '92 to Linnet Harlan 20 who was an internal lawyer at DRI; correct? 21 A. That is correct. 22 Q. And in the middle of the first page, 23 he says, Microsoft refused to support Windows 24 or any other of their products if run with 25 DR-DOS -- if the problem appears to be with 12464 1 DR-DOS. 2 Do you see that? 3 A. I do. 4 Q. And that's consistent with what I 5 think you testified to five or ten minutes ago; 6 that if the problem, if the bug or 7 incompatibility is caused by an engineering 8 problem with DR-DOS, that was Novell's problem 9 to fix; isn't that right? 10 A. I agree with that latter statement, 11 and I don't know if that's consistent with this 12 statement because this statement may be a bit 13 different. 14 But I do agree with the statement that 15 if it's DR-DOS's problem, they should fix it, 16 or if it's Microsoft's problem, they should fix 17 it. 18 Q. Okay. So when it comes to 19 incompatibilities, I just want to make sure 20 that you and I agree -- I think we do -- in 21 order to determine whether the problem, the bug 22 that causes incompatibilities is a Microsoft 23 problem or a Novell problem, one would need to 24 ask a software engineer, someone who had the 25 expertise to be able to look into the bugs and 12465 1 figure out whose error it was; is that fair? 2 A. I think that that would be a typical 3 way that you would investigate how to divide 4 fault or to determine a rational solution to 5 the problem. 6 Q. And Microsoft often worked together 7 with Novell to try to come up with solutions to 8 fix bugs; isn't that so? 9 A. Not often, but they did work with us 10 to do that. 11 MR. TULCHIN: May I approach the 12 witness, Your Honor? 13 THE COURT: You may. 14 Q. I'm handing you Defendant's Exhibit 2. 15 A. Okay. 16 Q. It's nice to have a single digit. 17 Defendant's Exhibit 2. This is a 18 letter from Tony Audino, A-u-d-i-n-o, and it's 19 to you, Mr. Edwards; correct? 20 A. It is. 21 Q. Do you recall having received this in 22 1992? 23 A. I do. 24 MR. TULCHIN: We offer Exhibit 2, Your 25 Honor. 12466 1 MS. CONLIN: No objection. 2 THE COURT: Admitted. 3 Q. And, Mr. Edwards, this is actually 4 dated October 19, 1992; correct? 5 A. It is. 6 Q. And Tony Audino was someone who worked 7 at Microsoft as the letterhead says; correct? 8 A. He was. 9 Q. And the letter begins, Dear John, I'm 10 enclosing a copy of our test plans for Windows 11 3.1 and Windows for Workgroups 3.1 with 12 NetWare. Included with these plans are the 13 bugs found as a result of these tests. 14 Now, I just want to stop there for a 15 moment. 16 Microsoft had done some tests, 17 according to this letter, and found bugs that 18 existed when Windows 3.1 or Windows for 19 Workgroups 3.1 was running with your NetWare 20 product, the network operating system product; 21 correct? 22 A. That is correct. 23 Q. And Microsoft voluntarily not only 24 found these bugs, but disclosed them all to 25 Novell so that the companies could work 12467 1 together to try to fix them? 2 A. Yes. 3 Q. And if you look at the second page, 4 you'll see there's a long list of what's 5 described here as Windows 3.1 NetWare testing, 6 and you'll see that Microsoft reports on lots 7 and lots of tests that it did. 8 Do you see that? 9 A. Yes. 10 Q. And right at the bottom it says, in 11 small print, all these tests were performed 12 against NetWare 2.2 and NetWare 3.1 or 3.11 13 servers. 14 And then it says, as part of this 15 testing the following bugs were found and still 16 are not resolved. 17 And then you go to the third page and 18 you'll see lots and lots of issues and bugs. 19 And this is all in the language of software 20 engineers. 21 And then there's a fourth page. 22 A. Yes. 23 Q. And after that a fifth page; right? 24 A. Yes. 25 Q. And just we'll look closely at the 12468 1 fifth page just for a second. 2 But, again, this talks about 3 description of process for creating msipx.com. 4 If I'm reading it correctly. 5 Do you see that? 6 A. Yes, msipx.com, that's correct. 7 Q. And again it's all in the language of 8 software engineers; right? 9 A. No, it's in the language of just the 10 names of the protocols. I mean, there's no 11 software language going on there. 12 Q. The names themselves can be a little 13 imposing sometimes. 14 A. I think they can. 15 There is something about this 16 document, though, that I think is a bit 17 deceptive because it's being offered up as some 18 evidence potentially that Microsoft willingly 19 came to us. 20 The problem here is that Microsoft did 21 not follow an appropriate approach to write 22 drivers for NetWare. They created what's 23 called a shim so that they could use their 24 environment to talk to a protocol that was not 25 published and supported by Novell. 12469 1 It went out into the marketplace. 2 They refused to use our open driver interface 3 because that would have allowed a lot of 4 products to be compatible. 5 And then they came back and tried to 6 say that, well, it doesn't work with NetWare. 7 When in reality, it didn't work 8 because they did not follow a prescribed 9 methodology and what anybody else would have 10 used. 11 And, in fact, that because they did 12 this, what was happening in the press is our 13 testing people were getting overrun and 14 Microsoft was sending them to us, when, in 15 fact, I believe they knew what they had done 16 and they were purposely creating a support 17 issue by not following the standard way. 18 Because to follow the standard way would have 19 been to adopt a protocol of ours, which was the 20 open driver interface, ODI, which is referenced 21 in this document. 22 By doing it this way, they didn't just 23 break NetWare. They broke backup utilities and 24 backup systems and drivers on LAN cards and a 25 lot of other things and then held it up as a 12470 1 Novell problem. 2 When I met with them, their solution 3 to it was, well, we think you should just adopt 4 NDIS and yet -- so there was this kind of 5 two-sided conversation going on. 6 Oh, yes, we'd really love to help you, 7 but in reality it was quite irritating because 8 they were creating a problem in the field and 9 then blaming it on us publicly when, in fact, 10 they knew they had not followed a prescribed 11 methodology for making integration with 12 NetWare. 13 And honestly it made the market mad, 14 and not necessarily mad at us. They were upset 15 because customers were damaged by this. 16 And I recall this one quite a bit 17 because I spent quite a bit of time, and it 18 ended up in a visit by myself and Ray to go and 19 visit Bill Gates and to visit the Microsoft 20 team later on, and it was very irritating that 21 they went down this path. 22 Q. Microsoft was adopting technologies 23 here that it believed was best overall for 24 customers; correct? 25 A. I don't believe that that's correct. 12471 1 Q. And Novell disagreed with what the 2 best technology would be? 3 A. Microsoft was effectively stealing our 4 brand here because they were trying to claim 5 they were leveraging IPX as a protocol when, in 6 fact, they were not. 7 They were leveraging their front end 8 to it, called NDIS, which is a driver interface 9 system, coming from their approach to the 10 marketplace with a shim interface down to our 11 protocol. 12 They were not adopting it in the 13 approved way that everyone else in the 14 marketplace adopted it. 15 Q. By approved, you mean approved by 16 Novell? 17 A. Approved by Novell and by the 18 independent testing group that Novell had 19 established in the marketplace to test systems. 20 And so it was not -- it was not a 21 prescribed or standard way to write to the 22 operating system. 23 It would have been like had we tried 24 to write to the Windows operating system as an 25 application provider, ignored the Microsoft 12472 1 APIs that were published for that purpose, came 2 with what -- our own way to access the code 3 directly, and then blamed it on Microsoft for 4 having a bad operating system. 5 It was just not the correct way to do 6 it. They knew it. Everybody knew it in my 7 opinion. 8 Q. Well, that's your opinion, I hear it, 9 Mr. Edwards, but I want to stick with the facts 10 for a minute. 11 You have no basis for saying that 12 Microsoft knew that there was something wrong 13 with this? Microsoft, in fact, thought that 14 its technology would be best for consumers; 15 isn't that right? 16 A. I don't -- I don't think that's right. 17 Q. All right. Well, let me try to 18 understand one thing about your testimony 19 because today just a few minutes ago you agreed 20 with me that if there was an incompatibility in 21 a Microsoft product because of some bug, that 22 should be Microsoft's responsibility to fix it. 23 And if there was a problem in a Novell product, 24 that should be Novell's. And you agreed with 25 that; correct? 12473 1 A. That's correct. 2 Q. Yesterday I thought maybe you had 3 implied -- and tell me if I'm wrong -- that 4 Microsoft because Microsoft had Windows, which 5 was the most popular GUI on the market then for 6 Intel-compatible PCs, that because Microsoft 7 had Windows, Microsoft had some obligation to 8 fix problems in DR-DOS that were problems of 9 Novell's own creation. Am I wrong about that? 10 A. I think you are. 11 I don't think they had a 12 responsibility to fix problems in DR-DOS. 13 I think that they had a responsibility 14 to create an open standard documented approach 15 to the marketplace and then support it as an 16 operating system vendor. 17 And I would say the same about this 18 situation with NDIS versus ODI. 19 They had a responsibility -- we had a 20 responsibility to create an open documented 21 approach for how to leverage our services and 22 they should have followed that open documented 23 approach for leveraging the services. And if 24 that would have happened, these issues wouldn't 25 have been there in my opinion. 12474 1 Q. So if Microsoft has Windows and MS-DOS 2 is competing against DR-DOS, do you think that 3 Microsoft had some obligation to help Novell 4 take business away from MS-DOS with Novell's 5 DR-DOS product? Was that Microsoft's 6 obligation? 7 A. I think Microsoft's obligation as a 8 dominant operating system provider is to help 9 the customers by supporting the solutions in 10 the marketplace that the customers are 11 leveraging or using and are consuming. 12 I also think they have a 13 responsibility for just simply creating an open 14 and a fair, level playing field. 15 I wouldn't couch that in the sense of 16 stealing money from the MS-DOS group 17 personally, but I think that could be the 18 result. 19 And that's part of being the dominant 20 player in the marketplace. You just create a 21 level playing field and then follow those kinds 22 of fair trade policies. 23 Q. Of course, Novell was dominant in the 24 network operating system business as one of the 25 documents we looked at today says; correct? 12475 1 A. It was the most popular network 2 operating system. 3 It wasn't dominant to the 90-plus 4 percent kind of range that Microsoft was with 5 DOS. It wasn't dominant. 6 Q. It said 65 percent or over 65 percent. 7 A. Yeah, but there's a difference. And 8 there were others out there and -- 9 Q. Well, when you were -- sorry. I 10 didn't mean to interrupt. 11 When Novell had 65 percent of the 12 network operating system business, Novell still 13 wanted more, didn't it? 14 A. Certainly we wanted to grow the 15 market, wanted to grow the whole industry. 16 Novell's approach, and Ray 17 specifically was keen on this. He was very 18 uncomfortable talking about our personal 19 growth. He was always more comfortable talking 20 about if we'll accelerate growth of the entire 21 industry and be a leader in that way, our 22 growth will move and move forward. 23 And he did more, I believe, than 24 anyone in the history of that industry to keep 25 it open and fair and to keep lots of 12476 1 competitors moving forward. 2 Q. Well, let me just see if I can get an 3 answer to my question, Mr. Edwards. 4 When Novell had 65 percent of the 5 market, it wanted to get more, it wanted to go 6 to 70 or 75? 7 A. It did. 8 Q. If you're in business and you have 9 stockholders, the objective is to keep selling? 10 A. It is. 11 Q. That's what you want? 12 A. It is. 13 Q. And in your present business, whatever 14 your market share is of whatever market you're 15 in, you want more? 16 A. I want to increase my share, that's 17 correct. 18 Q. Of course. 19 MR. TULCHIN: May I approach the 20 witness, Your Honor? 21 THE COURT: You may. 22 Q. Mr. Edwards, let me hand you exhibit 23 -- Defendant's Exhibit 240. 24 And if we can go back to your 25 organizational chart, Defendant's Exhibit 210A. 12477 1 Let's look at that for just a second. 2 I want to see if we can identify 3 someone. 4 Mas Morimoto. Do you see him there? 5 A. I do. 6 Q. He was in charge of sales in Japan? 7 A. That is correct. 8 Q. And he reported to you? 9 A. He reported to me just real briefly. 10 He ended up reporting into Joe Marengi in the 11 sales organization. 12 Q. Before you took over the desktop 13 systems group, Mr. Morimoto had the same job. 14 He was in charge of sales in Japan? 15 A. That's correct. I believe that to be 16 correct. 17 Q. And Japan was potentially important 18 because of the number of PC makers, OEMs who 19 were in Japan; correct? 20 A. Yeah. I mean, Japan was a market for 21 sales of the product. 22 Q. Okay. Now, this is a document, 23 Exhibit 240, that's dated August 20, 1990, and 24 it says it's from Mr. Morimoto to Dick 25 Williams. 12478 1 When you took over this business, do 2 you recall having looked at this document? 3 A. I don't. 4 MR. TULCHIN: We offer Exhibit 240, 5 Your Honor. 6 MS. CONLIN: Your Honor, we object on 7 the basis of relevancy. 8 This document -- excuse me -- is dated 9 August 17th, 1990. Mr. Edwards has no 10 recollection of seeing it. And for that 11 reason, we would interpose an objection to the 12 use of the document. 13 THE COURT: Overruled. 14 It's admitted. 15 Q. If we look at Exhibit 240, Mr. 16 Edwards, you'll see at the top again it's from 17 Mr. Morimoto of DRI in Japan to Dick Williams 18 dated in August 1990. And the subject is 19 survival. 20 Sounds like a pretty important 21 subject, huh? 22 A. Seems like it. I would like to do it. 23 Q. And Mr. Morimoto starts out in 1990 in 24 this memo, on the next page, saying, let's talk 25 about some of my activities here in Japan as a 12479 1 prelude to some tough talk. 2 Do you see that? 3 A. I do. 4 Q. And then he talks about NEC. That was 5 a computer maker in Japan NEC? 6 A. That's correct. 7 Q. And he says, NEC dominates the PC 8 business in Japan. The rest of the market is 9 divided helter-skelter. 10 And then I want to direct your 11 attention to -- let me find the right page. 12 MR. TULCHIN: I'm sorry, Your Honor, 13 for the delay. 14 Q. Same page, third paragraph. 15 However, as you know, it won't be 16 easy. The preliminary evaluation results are 17 in and we have compatibility problems with the 18 NEC applications. 19 Do you see that? 20 A. I do. And can you tell me what it is? 21 I'm trying to scramble -- I don't even know 22 what this is talking about. What won't be 23 easy? 24 Q. Sure. 25 A. Do you know? 12480 1 Q. Yes. 2 If you look at the second paragraph -- 3 and take your time if you want -- it talks 4 about in the second paragraph, we have now 5 demonstrated to the OEMs here that we have a 6 serious product that competes with Microsoft. 7 Of course, like the rest of the world, we 8 cannot get the major players to abandon MS 9 operating system and use DR-DOS. And then it 10 goes on. 11 So I think the it where it says it 12 won't be easy refers to the objective of 13 getting OEMs in Japan to take DR-DOS instead of 14 MS-DOS. Is that fair? 15 A. Yeah, I think that could be the case. 16 Q. Okay. And Mr. Morimoto says in his 17 memo, the preliminary evaluation results are in 18 and we have compatibility problems with the NEC 19 applications. 20 MR. TULCHIN: Now, can we highlight 21 that, Chris? 22 Q. Do you understand NEC applications to 23 refer to software applications made by or for 24 NEC? 25 A. I actually don't have any 12481 1 understanding of what he's talking about, but I 2 can assume that NEC applications could be made 3 by NEC or it could be applications that ran on 4 the NEC platform and sold by NEC. I really 5 don't know what they're talking about here. 6 Q. All right. When you took over the 7 job, were you aware of this history that DR-DOS 8 had had compatibility problems that Mr. 9 Morimoto had reported on with NEC's computers 10 in Japan or NEC's applications? 11 A. I was not aware of this memo 12 specifically or this time frame, August 17th, 13 1990, at all as to the status of NEC's products 14 or its compatibilities with DR-DOS. 15 Q. Do you have any reason to believe that 16 these compatibility problems were a function in 17 any way whatsoever of anything that Microsoft 18 did? 19 A. I just don't know the subject matter 20 of the memo at all. 21 Q. All right. 22 A. I couldn't really even speak to it. 23 MR. TULCHIN: May I approach the 24 witness, Your Honor? 25 THE COURT: You may. 12482 1 Q. I'm handing you Defendant's Exhibit 32 2 which I believe is already in evidence. 3 Do you remember someone named John 4 Linney, L-i-n-n-e-y? 5 A. I do. 6 Q. And what was his job at Digital 7 Research? 8 A. I don't recall. 9 Q. This is a memo apparently he wrote in 10 October 1991. 11 Do you see that? 12 A. I do. 13 Q. And it says DR-DOS 6.0 business 14 update. 15 Now, October '91 is around or just 16 before the time of those two articles we looked 17 at earlier, correct? One was from November '91 18 and one was from December '91. 19 A. That's correct. 20 Q. And October '91 is about, let's say 21 roughly speaking, seven or eight months before 22 that press release where you were quoted on the 23 subject of compatibility? 24 A. I think that was May, or was it -- 25 Q. May of '92. 12483 1 A. May of '92, yeah. 2 Q. That's my memory. 3 And Mr. Linney sends this memo to a 4 number of DR people, Digital Research people in 5 North America, Japan, Germany, the UK; correct? 6 Even Korea, France, lots of places. Do you 7 agree with that? 8 A. I can see that from the sheet, yes. 9 Q. And if you look in the second page of 10 Exhibit 32, the -- after the to/from and date 11 it says, DR-DOS interim business update 12 service. 13 And then it talks about additional 14 information regarding the interim DR-DOS 6.0 15 BUS. And that refers to the business update 16 service; is that right, BUS? 17 A. I believe so. 18 Q. It goes on to say, this is strictly 19 confidential and should on no account be given 20 directly to any non-DRI personnel. This 21 includes OEMs, end users and members of the 22 press. 23 Now, do you have any understanding as 24 to why the author of this document didn't want 25 this information to get outside the company? 12484 1 A. I do not. 2 Q. Well, it's all about the bugs that 3 existed in DR-DOS, is it not? 4 A. I don't know. I'm just trying to read 5 it here. 6 It looks to be about differences 7 between the memory of handling systems. 8 Q. Right. 9 MR. TULCHIN: Chris, can we bring that 10 up, the rest of the page? 11 Thank you. 12 Q. And I think you've already testified 13 that EMM stands for what, enhanced memory mode? 14 A. I don't think I testified to that, but 15 that makes -- 16 Q. Someone did in this case. 17 A. Okay. 18 Q. I forget who. 19 A. That's all right. So -- 20 Q. So -- 21 A. But I think you remembered it 22 accurately. 23 Q. Okay. Enhanced memory mode. 24 And this was a feature that was in 25 DR-DOS; correct? 12485 1 A. That's correct. 2 Q. And EMM386.sys, the 386 is what, a 3 reference to the Intel 386 processor? 4 A. Yes. 5 Q. So it would be EMM that would be 6 running on this Intel processor? 7 A. Or at least designed there. Maybe it 8 ran on, you know, 486's or other boxes. But 9 yes, I think that's accurate. 10 Q. And without spending too much time on 11 this, is it fair to say that Mr. Linney's memo 12 in October talks about a number of different 13 bugs pertaining to EMM -- this enhanced memory 14 mode 386.sys? 15 A. Well, I mean, it looks that way. He's 16 talking about the difference between these two 17 versions for a lot of it, and he's providing 18 some technical background, and he's showing 19 tests that were done on PS/2 compatible 20 systems. 21 And, you know, I read here -- these 22 are the differences between the two versions, 23 and what I'm trying to understand is -- and 24 maybe you can help me -- where the bugs are 25 referred to. 12486 1 Q. Well, let me see if I can help you. 2 A. Okay. 3 Q. In Item Number 1, let's just start 4 with that. And there's some technical language 5 at the top. 6 A. Yes. 7 Q. But it says, when EMM386.sys is used 8 with the frame, equals, I guess, or dash none 9 parameter -- 10 A. Equals none. 11 Q. -- in conjunction with Windows 3.0, 12 unreliable operation of the system may result. 13 The chief symptom is DOS applications using 14 interrupts 98H to 99H can lock the system when 15 run under Windows. 16 A. I see that. 17 MR. TULCHIN: Chris, can you bring 18 that up for us so we can see that better? 19 Q. Do you see that? 20 A. I do. 21 Q. That looks like there's a bug, does it 22 not -- 23 A. Yeah. 24 Q. -- in DR-DOS? 25 A. It does. It looks like a difference 12487 1 in these two versions that perform in -- what 2 it's saying here is an unreliable way. 3 I don't have a lot of background on 4 the memo so I really don't know. 5 Q. Fair enough. 6 A. What he's trying to communicate, and 7 I'm just cautious about trying to give summary 8 information about it when really I think on -- 9 I've never seen this before. 10 Q. Okay. Fair enough. I won't spend a 11 lot of time with it. 12 Let me just ask you a couple 13 questions. 14 Looking at Item Number 1, if we could, 15 does it look to you as someone who worked at 16 Novell for a number of years that this pertains 17 to a bug in DR-DOS that was then fixed in 18 what's called EMM386.sys version 2.01? 19 A. Yeah, I think you can read it that 20 way. And what I've tried to conclude is I just 21 don't have enough background to know what this 22 is -- the context of this document or what he's 23 really pointing out here. 24 Q. Well, then, it would be correct to 25 conclude, wouldn't it, Mr. Edwards, that you 12488 1 can't say sitting here today in 2007 that any 2 of these bugs pertain to anything that 3 Microsoft had done? 4 A. I can't. 5 Q. Okay. Let's look at one more document 6 now, if we may. 7 MR. TULCHIN: And if I may approach, 8 Your Honor. 9 THE COURT: You may. 10 Q. I'm handing you Defendant's Exhibit 11 2582. 12 Do you remember someone at Novell 13 named Dave Valentino? 14 A. I do. 15 Q. And where did he work? 16 A. He was in the sales organization. 17 Q. How about Joe -- how do you pronounce 18 his name? 19 A. Taglia. 20 Q. Taglia, T-a-g-l-i-a. 21 Where was he? 22 A. Sales organization. 23 MR. TULCHIN: We offer Exhibit 2582, 24 Your Honor. 25 THE COURT: Any objection? 12489 1 MS. CONLIN: No objection. 2 THE COURT: It's admitted. 3 Q. Now, this memorandum was dated January 4 7th, 1991. 5 A. I think that's '92. 6 Q. Oh, I beg your pardon. You're 7 absolutely right, and I meant to say '92. 8 And this was just about three months 9 before you took over the group; correct? 10 A. That is correct. 11 Q. And I want to look, if I could, at the 12 first paragraph. 13 It says Joe -- I guess talking about 14 Joe Taglia. 15 And it starts out, while we are 16 committed to holding true to the 5 million 17 number this quarter, we need to be aware of the 18 fact that sell through has flattened and 19 returns are getting worse. 20 Do you see that? 21 A. I do. 22 Q. And this is what we talked about 23 yesterday; that returns in fiscal year '92 24 started to get worse; correct? 25 A. Yes. I think yesterday we talked 12490 1 about there were returns to the operating 2 system, and I indicated that I wasn't sure 3 about the specific net numbers. And I can 4 believe that they were getting worse, but I 5 don't have the data to recollect -- 6 Q. And returns -- 7 A. To reconstruct it. Let me just 8 finish. 9 Q. Sorry. I didn't mean to interrupt. 10 My fault. 11 Returns are obviously a very bad thing 12 for the seller of a product; correct? 13 A. Yeah, you don't want returns. 14 Q. You want your customers to keep the 15 product, pay for it and use it? 16 A. Absolutely. Absolutely. 17 Q. And if they return it, they're getting 18 their money back? 19 A. Well, some returns are normal 20 rotations of product because the company has 21 decided that it does have an update or a fix 22 and it wants to return those and swap them out 23 freely and provide new stock. 24 Q. Well, I just want to see if these 25 returns are in that category, and that's why 12491 1 we're looking at Exhibit 2582, because it goes 2 on then to say, according to Sue Nageotte -- do 3 you remember her? 4 A. Yes. 5 Q. I butchered her name, I guess. 6 Sue Nageotte. There are approximately 7 6,500 callbacks in backlog at tech support and 8 they will not be able to call at least 5,000 of 9 those at all. 10 Now, I just want to stop there for a 11 second. 12 When you took over this group in 13 April, were you aware of the fact that Novell 14 was having a problem in tech support because it 15 didn't have the resources to answer phone calls 16 or to return phone calls that had been made? 17 A. I was aware of the fact that we needed 18 to integrate the tech support into the Novell 19 larger organization, the DRI tech support, 20 which is why I did that, to take advantage of 21 the larger systems, the automatic callback 22 mechanisms, the management of calls, and I was 23 aware that the DR-DOS team was not keeping up 24 with the call load. 25 Q. Okay. And if we go back 15 years to 12492 1 January of 1992, that was a time when many 2 people in our country were far less familiar 3 with computers and software than they are 4 today; agreed? 5 A. It is -- I do agree. 6 Q. And so in 1992, when people called 7 Novell, they were people who were, let's say, 8 confused about the software or having some sort 9 of problem. They called to get help. Agreed? 10 A. I would assume. I assume they didn't 11 call about the weather or other things, but 12 they called to get -- 13 Q. They certainly weren't spending their 14 time calling Novell to talk about the weather? 15 A. Right. 16 Q. So there were approximately 6,500 17 callbacks in this time in backlog, and Mr. 18 Valentino, the author, says, we're not going to 19 be able to call back at least 5,000 of them. 20 And that's a very bad thing, isn't it, 21 for the business? 22 A. Yeah, you don't want to have calls 23 that you don't return. And I don't know what 24 these calls were about specifically. 25 I do recall in the time, though, that 12493 1 there were a fairly low ratio of calls that 2 ended up in engineering fixes to the product 3 relative to calls about marketing or a coupon 4 or any other kinds of things that were more 5 product usage oriented. 6 Q. Well, of course, Mr. Valentino says to 7 the contrary. His memo says these are end 8 users who are having a problem with DR-DOS. 9 That's why they call. 10 Do you see that? 11 A. Yeah, I see that. And I don't know 12 exactly what he means by problems. 13 I don't doubt that they were having 14 problems. That's not my testimony. I'm just 15 simply saying I don't know what the mix of 16 these were because it would be easy to sort of 17 write and conclude they're having problems and 18 it could be a very specific generalization of 19 what the real mix was like. I just don't know 20 what he's speaking of here. 21 Q. All right. But then at the end of 22 this paragraph, Mr. Valentino talks about the 23 possibility of returns. If you can't call back 24 5,000 customers who have phoned your company, 25 he says, well, 5,000 units returned at a street 12494 1 price of $75 equates to an additional $375,000 2 hit. 3 Do you see that? 4 A. I do see that. 5 Q. So what he means here is if we can't 6 call back our customers who have called us, 7 it's quite likely they're going to return the 8 product and we'll take a hit of $375,000? 9 A. I think he's trying to make a point to 10 his manager about let me really call your 11 attention to this. I'm not sure if this is 12 actually what would have happened or did 13 happen. 14 I think he did want to emphasize this 15 point, clearly. 16 Q. Well, you're not testifying today, are 17 you, sir, that the facts set out here were 18 anything other than accurate? 19 A. I'm testifying that I don't really 20 know that much about them and that we're both 21 sort of trying to read what they mean and gain 22 some interpretation. 23 MR. TULCHIN: Your Honor, would this 24 be a good time for the afternoon break? 25 THE COURT: It would. 12495 1 Please remember the admonition given 2 earlier. You may leave your notebooks here. 3 We'll be in break for ten minutes. 4 All rise. 5 (A recess was taken from 1:31 p.m. 6 to 1:44 p.m.) 7 THE COURT: Everyone else may be 8 seated. 9 Mr. Edwards, you may resume your seat. 10 You're still under oath. 11 MR. TULCHIN: May I approach the 12 witness, Your Honor? 13 THE COURT: You may. 14 MR. TULCHIN: As soon as he's seated. 15 THE COURT: You may. 16 BY MR. TULCHIN: 17 Q. Mr. Edwards, here's Defendant's 18 Exhibit 158. 19 This is a memo from Mr. Bromhead who 20 we've talked to -- before to you; correct? 21 A. Yes. 22 MR. TULCHIN: We offer Defendant's 23 Exhibit 158, Your Honor. 24 THE COURT: Any objection? 25 MS. CONLIN: No objection. 12496 1 THE COURT: It's admitted. 2 Q. Now, this is in April of 1992. So 3 we're right in the period where you've taken 4 over the group and you're responsible for 5 DR-DOS; correct? 6 A. That is correct. 7 Q. And Mr. Bromhead writes this to you 8 with copies to a number of other people, 9 including Mr. Tucker, Mr. Taglia, Mr. Linney, 10 some of the names we've seen before. 11 And the subject matter, the re line 12 says reducing cost for technical support of 13 DR-DOS 6.0. 14 We had just seen a memo before our 15 break about the number of phone calls that were 16 coming in, technical support calls coming in to 17 Digital Research; correct? 18 A. That's correct. 19 Q. But I take it from this memo that 20 despite that, there was still a desire to 21 reduce costs for technical support; is that 22 correct? 23 A. Would you ask that again, please? 24 Q. Well, I mean, the prior document we 25 looked at contained reference to the fact that 12497 1 there were 6,500 phone calls that had been made 2 that you needed to return, and Mr. Linney says 3 we're probably not going to be able to call 4 back 5,000 of our customers. 5 Remember that? 6 A. I do. 7 Q. Okay. And apparently you can't call 8 them back because you don't have the resources, 9 the people to return all those phone calls; 10 right? 11 A. That the resources and the systems 12 needed to be integrated with the Novell side to 13 broaden that out because they were trying to do 14 it with a smaller team on their own. 15 Q. Right, but -- 16 A. But this says reducing costs for 17 technical support, and so I thought you were 18 talking about reducing resources for technical 19 support. 20 So I'm not sure the -- if you would 21 just repeat the question again, that would be 22 great. 23 Q. Well, it sounded from the prior memo 24 in January, it sounded like it might be a good 25 idea for Novell to incur extra costs so that 12498 1 you'd have the manpower or womanpower to return 2 phone calls; right? 3 A. Well, to deploy more resources. I 4 don't want to incur more costs for technical 5 support. I'd like to get technical support to 6 be as efficient as possible. 7 Q. Sure. 8 A. And I'd like to have ways to have even 9 more calls with fewer numbers of people 10 required. I don't want to increase my cost of 11 a support call. 12 Q. Well, you don't want to increase your 13 costs unless it's necessary to save your 14 business because your customers can't get 15 anyone on the phone? 16 A. Well, true, I want to increase 17 resources, but the cost of a particular call or 18 how much it takes to make that, I just don't 19 want to increase those costs. 20 I'd like to minimize the resources 21 required to respond to the product and yet 22 still have those be sufficient to deal with the 23 issues. 24 Q. Well, here's a question, Mr. Edwards. 25 Looking at this memo, Defendant's 12499 1 Exhibit 158, and I want to show you part of it, 2 but looking at the first page, does this 3 refresh your recollection that the number of 4 support calls coming in in around April of 1992 5 was way too high? 6 A. Well, he says, I must say I was 7 surprised to hear that requests had gone in for 8 further 16 people to bring the total up to 81 9 as I have no indication of a significant rise 10 in the call rates recently except referring to 11 the how do I get my upgrade to run Windows 3.1. 12 Q. Well, let's -- 13 A. So -- 14 Q. Let's look at the last three 15 paragraphs on this page. 16 MR. TULCHIN: Chris, if you can bring 17 those up for me. 18 Q. I mean, this is what Mr. Bromhead is 19 saying to you in his memo of April of 1992. 20 He says, to get a feel of the number 21 of calls, I have collected the sales figures 22 from the U.S. for DR-DOS 6.0 in the period 23 September '91 through February '92 (six 24 months). In that time we have shipped over 25 177,000 copies of DR-DOS; right? 12500 1 A. That's correct. That's what it says. 2 Q. And if you look at the next paragraph, 3 it says, the actual call rate for the U.S. was 4 7,680, 7,680 for the whole of February, and we 5 estimate this is now between 8,000 and 10,000 6 per month. 7 And then the next paragraph says, with 8 the help of Simon Lucy, we estimated at most 9 since the product shipped on September 9th, the 10 U.S. support calls to have totaled around 11 60,000 calls. 12 A. I see that. 13 Q. Parenthesis, although maybe a lot more 14 were also never answered and lost in the early 15 days. 16 A. I see that. 17 Q. Closed parenthesis. 18 Now, Mr. Bromhead says, just doing the 19 math, if you have 60,000 calls and 177,000 20 copies of DR-DOS sold in the U.S., you have a 21 call -- one call for every three products sold, 22 for every three units of your operating system. 23 A. That's correct. 24 Q. Well, that's an enormous ratio, isn't 25 it? 12501 1 A. Well, if you look over on the next 2 page, though, I think he puts it in context. 3 He says, since DR-DOS 6.0 shipped the 4 maintenance group has received 711 software 5 performance reports of which 141 have been 6 fixed or closed. 7 So out of the 60,000, very few, a very 8 small percentage were actually resulting in 9 technical issues with the product on a 10 percentage basis. 11 The vast majority of them had to do 12 with these other issues. Where do I get my 13 update? How is this going to work? Are you 14 going to be compatible in the future? Is 15 Microsoft going to support your product? 16 I mean, tons and tons of calls that 17 had nothing whatsoever to do with the product 18 itself, which was part of the problem in the 19 marketplace, is that when you've got the 20 largest dominant provider saying in the 21 marketplace certain negative things about the 22 product, people are going to call more often 23 increasing our costs. 24 It's also precisely why we wanted to 25 go through the OEM market where it could come 12502 1 preloaded, preinstalled just like Microsoft. 2 I don't think -- 3 Q. Mr. -- 4 A. I don't think these numbers are out of 5 whack because it also says that's a very small 6 percentage basis and in line for software 7 performance in the area. So I don't think that 8 that's -- 9 Q. Let me ask you -- 10 MS. CONLIN: Your Honor, I would 11 object to the interruption of the witness. 12 THE COURT: Are you finished with your 13 answer? 14 THE WITNESS: I'm done. Thank you. 15 MR. TULCHIN: I didn't intend to 16 interrupt. 17 Q. And maybe I started too soon, 18 Mr. Edwards. Sorry. 19 I want to come to what you are looking 20 at on the second page in just a moment, but 21 would you agree with me that having one call 22 for every three units of DR-DOS sold is a very 23 high ratio? 24 A. I think it's a high ratio. 25 Q. And would you also agree that in any 12503 1 business, if your customers start calling and 2 people don't answer the phone or their calls 3 don't get returned, that makes it much more 4 likely that those customers are going to become 5 customers of some other company? 6 A. I would agree. 7 Q. Okay. And would you agree as well 8 that this memo is in April of 1992, just as 9 your second quarter was ending? 10 A. That's correct. 11 Q. And would you agree with me as well 12 that in the third and fourth quarters after 13 these 60,000 phone calls came in, your business 14 dropped off? 15 A. I would agree that the 60,000 calls 16 goes back quite a long period of time. 17 I think he goes back -- 18 Q. Six months. 19 A. -- six months and trying to say all 20 the calls over that six-month period of time 21 and that -- 22 Q. And all the sales? 23 A. -- the connection -- 24 Q. Right, all the sales, 177,000 copies 25 in the six months? 12504 1 A. And if I can just -- 2 Q. And all the calls are 60,000? 3 A. Correct. 4 Q. And he says that's one call for every 5 three products. 60 times 3 would be 180. So 6 it's slightly more than one call for every 7 three. 8 A. Yeah, if I could just finish -- 9 Q. Slightly more? 10 A. -- the thought I was making. 11 Q. Sure. 12 A. And that is over the 60,000, people 13 call about the product -- the ones you're 14 concerned about -- well, you're concerned about 15 anybody that calls with a complaint. 16 But you're concerned mainly about 17 those that result in an actual error condition. 18 They could have been calling for help 19 to say how do I walk through something or how 20 do I do this or will it support this, which 21 would have been handled in the routine course 22 of business. 23 And I think what's interesting about 24 this memo is that actually a very small 25 percentage had to do with bugs that resulted in 12505 1 engineering fixes to the product. 2 Over 60,000, to have 141 or even 711 3 is just not a big number. It's very, very 4 small as we talked about previously. 5 So I would think -- 6 Q. I want to look at those numbers. 7 MS. CONLIN: Your Honor, again, I 8 would really ask that Mr. Tulchin permit the 9 witness to finish his answers before he 10 interrupts and says he's sorry that he did 11 that. 12 THE COURT: Please finish your answer. 13 A. So that would be my point. 14 Q. Okay. I'm trying to finish and get 15 you out of here as soon as possible. 16 A. Thank you. 17 Q. And my apologies. 18 A. Thank you. 19 Q. If we go over to the next page. I 20 want to look at the same numbers you're looking 21 at, right at the top. 22 And isn't it correct, Mr. Edwards, 23 with all respect for your last answer, this 24 doesn't say that only 711 of the calls pertain 25 to technical problems? What it says -- and I 12506 1 submit to you this is different -- is that 2 since DR-DOS 6.0 shipped, the maintenance group 3 here -- that's in England, right? Mr. Bromhead 4 is in England. -- has only received 711 5 software performance reports of which 141 have 6 been fixed or closed; correct? That's what it 7 says. 8 A. I think that he's reporting, though, 9 about more than just England support to be 10 accurate. I think he's talking about -- 11 because he references John Linney and Sue and 12 Jody Clifton in Provo. 13 He says that I'm surprised to hear 14 that you're asking me to -- I was actually 15 asking him to put more people on the project. 16 He said, I'm surprised to hear that 17 because I have no indication of a significant 18 rise in the calls. 19 And then he says, look, of all of the 20 calls that we received, some 60,000, a lot of 21 them appear to be answerable without a recourse 22 to engineering level fixes. 23 And he gives a very small percentage 24 of these that have anything to do at all with 25 bugs. And that leads me to believe that it has 12507 1 a lot to do with tell me how this works; what 2 the coupon's like. I got something or is 3 something missing. Just a lot of questions 4 that happen; that happen with everybody's 5 product in this industry, which is why at the 6 time very few software companies, including 7 Microsoft, could respond to the level of calls 8 thrown at them. 9 Maybe some of you have been in that 10 part and placed a call to a software vendor. 11 It just simply wasn't possible for any of them 12 to gear up to give 100 percent support for the 13 calls because they were too massive and too 14 many. 15 Q. Well, certainly you didn't take these 16 phone calls; correct? 17 A. I did not. 18 Well, I didn't take all of them. I 19 took some of them. 20 Q. But I want to just go back to this 21 first sentence. And bear with me just for a 22 second. 23 The distinction I'm making is between 24 calls, the 60,000 telephone calls, and software 25 performance reports. 12508 1 It may be the case, Mr. Edwards -- am 2 I not correct that the person in the U.S. 3 receiving the call, even if it's on an 4 engineering subject, may not have filled out 5 and sent to England a software performance 6 report? 7 A. It's possible, but that's not what I 8 read in the gist of the paragraph because he 9 continues, considering the estimate, that's a 10 lot of calls that appear to be answerable. 11 If I put that in connection with his 12 earlier paragraph speaking about the fact that 13 I'm surprised that you would want to put more 14 people in support, why are we doing that, I 15 don't see a significant rise in the number of 16 support calls. It looks to me like it's pretty 17 level and pretty continuous, why are you 18 authorizing more. 19 I put it together like that, which to 20 me -- 21 Q. Okay. That's -- 22 A. Let me just finish. 23 Q. Sorry. 24 A. -- which to me is consistent with what 25 we were doing at the time. 12509 1 And I think what's going here is 2 you've got the UK, the Monterey, and the Provo 3 group trying to coordinate and integrate into 4 the NetWare group and trying to resource what 5 do we need, how many people do we need to cover 6 this topic. 7 We want to do a good job. We want to 8 answer all the calls. But, look, a lot of 9 calls aren't coming for engineering issues. A 10 lot of the calls are coming for other things. 11 That's how I read the communication. 12 Q. All right. I hear you. That's how 13 you read it, but you're not quarreling with the 14 facts on the first page about the number of 15 calls and the number of units of product that 16 had been shipped for the same period? 17 A. No, I'm not quarreling with -- at all. 18 I'm not quarreling with what's said here in the 19 document. I'm just trying to interpret them 20 based upon my understanding of what was 21 actually going on in the group and how I read 22 what John Bromhead is saying here in the 23 letter. 24 MR. TULCHIN: May I approach the 25 witness, Your Honor? 12510 1 THE COURT: You may. 2 Q. Mr. Edwards, I'm handing you 3 Defendant's Exhibit 6818. It's not the easiest 4 document to read. 5 A. My goodness. 6 Q. But it's one that as you may recall 7 you looked at in your deposition in 1998. 8 Do you recall seeing it then? 9 A. No, but I will read up on it again 10 here. 11 Q. I seems to me -- 12 A. I can't -- I can't read this document. 13 There's no better copy of it? I mean, it's -- 14 Q. No. This is the way -- 15 A. Okay. 16 Q. This is the way it was produced by 17 Novell. 18 Let's just see -- if you can't read it 19 at all, we'll go by it. But let's just see if 20 we can. 21 Does it appear to be from Mr. Morimoto 22 in Japan to Mr. Balma, Phillip Balma of Digital 23 Research in Japan? 24 A. It does. 25 Q. And they're both Digital Research 12511 1 employees? 2 A. They are. 3 Q. And you can see it's May 6, 1992; 4 correct? 5 A. 06 May 92, yes. 6 MR. TULCHIN: Your Honor, we offer 7 Defendant's Exhibit 6818. 8 MS. CONLIN: Your Honor, we are going 9 to object to it because of its illegibility. 10 It really isn't fair to hand the witness a 11 document that is impossible for him to read. 12 THE COURT: Overruled. It's admitted. 13 Q. Mr. Edwards, I know it's quite faint, 14 and, again, if you can't read it, you'll let me 15 know, but what I'd like to do is to direct -- 16 Mr. Morimoto was in charge of sales in Japan; 17 correct? 18 A. That is correct. 19 Q. And he's making a report to Phil 20 Balma, B-a-l-m-a, of Digital Research; correct? 21 A. That is correct. 22 Q. He starts out by saying our holiday 23 week is now over. 24 And then if you can go down a little 25 bit, he says a problem list. 12512 1 MR. TULCHIN: And then go down a 2 little bit further, Chris. Right there. 3 Q. As requested, I attached the current 4 -- is it QA, et cetera list of DR-DOS 5 something? It's hard to read. 6 And then it says, if the U.S. DR-DOS 7 6.0 -- and that's the BUS, correct, the 8 business update package that we looked at 9 before? 10 A. I assume. 11 Q. And then Mr. Morimoto says, I 12 understand that the quality of DR-DOS 6 is very 13 low now and that of DR-DOS 6.0 something else 14 is the same. 15 Do you remember looking at this at 16 your deposition? 17 A. I do not. 18 Q. Do you remember looking down at the 19 same page towards the bottom, the last full 20 paragraph, Mr. Morimoto reporting that in Japan 21 -- well, let's just see what he says first. 22 Other than these problems, we found 23 the quality of DR-DOS 6 is low. We find 24 several serious and silly bugs in it, such as, 25 I think, COPY, et cetera, the corrupt files or 12513 1 disks. Our Japanese OEMs tend to check 2 software very thoroughly like Sharp did. Under 3 these conditions, DR-DOS 6 cannot pass their 4 tests. 5 Now, this is May of '92 when you've 6 already taken over the group; correct? 7 A. That's correct. 8 Q. And you have changed the strategy that 9 Mr. Williams had in place and you have 10 emphasized trying to sell to OEMs; right? 11 A. That is correct. 12 Q. And Mr. Morimoto is reporting from 13 Japan where there are some important OEMs; 14 right? 15 A. Yes. 16 Q. And he's reporting that we can't sell 17 DR-DOS 6 in Japan because of quality problems; 18 isn't that right? 19 A. I don't think he's saying we can't 20 sell it. I think he's commenting on the fact 21 that it has issues and problems, which I would 22 have no doubt that it did. Particularly over 23 there with the double byte character 24 environment, that was a significant additional 25 support issue to support the Kangi characters. 12514 1 It wasn't a trivial task. 2 MR. TULCHIN: Okay. May I approach, 3 Your Honor? 4 THE COURT: Yes. 5 Q. I'm going to hand you, Mr. Edwards, 6 Defendant's Exhibit 6819. 7 And, again, this is the way it was 8 produced by Novell so a little bit of apologies 9 for the quality of the copy. 10 But do you remember Electronica Zonda 11 in Mexico being a customer of Novell's in 1992. 12 A. You know, the name is familiar, but I 13 don't remember a lot about them. 14 MR. TULCHIN: Your Honor, we offer 15 Exhibit 6819. 16 MS. CONLIN: Your Honor, we object on 17 the basis of foundation and hearsay. 18 THE COURT: Was this subject to 19 Special Master review? 20 MS. CONLIN: It's new, Your Honor. It 21 has not. 22 MR. TULCHIN: No, Your Honor, it 23 wasn't. It's new on cross-examination. It's 24 from among the documents Novell produced in the 25 Caldera case. 12515 1 THE COURT: It's admitted. 2 Q. Again with some apologies for these 3 lines, these vertical lines on the document, 4 let's look at Exhibit 6819, Mr. Edwards. 5 The date on it appears to be November 6 16th, 1992. 7 Do you see that, sir? 8 A. I do. 9 Q. And Electronica Zonda, do you recall 10 them as a customer for DR-DOS in Mexico? 11 A. I remember the name and actually I 12 believe I visited with them in Mexico, but -- 13 Q. All right. 14 A. -- the recollection is not great. 15 Q. And Gloria Crieg, C-r-i-e-g, she 16 worked for Novell in November 1992? 17 A. I don't remember Gloria. 18 Q. All right. Now this letter from 19 Electronica Zonda to Novell starts out Dear 20 Sirs. 21 And just starting with the first 22 paragraph, it says, we would like to inform you 23 that your operating system software DR-DOS 6.0 24 has been consistently declining in image and 25 acceptance in our market. Ever since Novell 12516 1 acquired Digital Research, he -- and maybe it 2 should be we -- have seen no marketing support 3 for this product in our area. Consequently, 4 the appreciation of this product by the 5 consumer in our market is very poor. 6 Do you remember getting this letter, 7 sir? 8 A. I do not. 9 Q. Do you remember that DR-DOS was having 10 these problems in Mexico? 11 A. Not specifically, no. 12 Q. Do you remember complaints from Mexico 13 that ever since Novell acquired Digital 14 Research, there had been no marketing support 15 for DR-DOS in Mexico? 16 A. I don't. 17 Q. Let's look at the next paragraph. 18 The author of this letter from 19 Electronica Zonda says, we chose to add this 20 product to our computers in the belief that the 21 demand and acceptance for our product bundled 22 with your operating system software DR-DOS 6.0 23 would result in increased sales. 24 Unfortunately, the results have been quite the 25 contrary. Our sales are hurting and our 12517 1 customers are requesting that we remove the 2 software from our products. 3 Do you see that paragraph? 4 A. I do. 5 Q. Now, if an OEM like Electronica Zonda 6 is selling computers with software on it that 7 its customers don't like to the point where the 8 customers are requesting that the software be 9 removed, that's an OEM who is not going to stay 10 your customer too long; fair enough? 11 A. I wouldn't think so. 12 Q. And then let's look at the next 13 paragraph. 14 The purpose of our agreement was to 15 promote our machines with your software which 16 you would be promoting and advertising to 17 create an image that would make it desirable to 18 the consumer. We do not believe that Novell 19 has met its obligations for maintaining and 20 enhancing the DRI product line and image. In 21 our market, DR-DOS 6.0 has grown up to be a 22 product that the consumer sees as undesirable. 23 Do you remember in your capacity as 24 head of this desktop systems group at Novell 25 getting reports that in the Mexican market, DR 12518 1 6 -- DR-DOS 6.0 had become a product that the 2 consumer sees as undesirable? 3 A. I don't remember that specifically; 4 that the Mexican market was not a segment of 5 the world that we spent a lot of time pursuing 6 on either the NetWare side or the DR-DOS side. 7 It was at the time a difficult market, 8 and it would have been considered an 9 incremental market, not a mainstream market at 10 the time for us. 11 So the answer to your question is I 12 don't recall this specifically, but I can feel 13 the energy coming through in his letter, for 14 sure. 15 Q. You feel their pain? 16 Mr. Edwards, it's correct, is it not, 17 that in 1992 when this letter was written, I 18 think you've just testified that Novell wasn't 19 concentrating much on Mexico, but in contrast, 20 Microsoft was making efforts in Mexico; fair 21 enough? 22 A. It's fair. I don't know about 23 Microsoft's efforts in Mexico at the time. 24 Q. Well, isn't it also fair to say that 25 in business competition, very often if you 12519 1 don't make much of an effort and the competitor 2 does, the competitor is likely to win? 3 A. Correct. 4 MR. TULCHIN: May I approach the 5 witness, Your Honor? 6 THE COURT: Yes. 7 Q. This is Exhibit 6816. I'll hand this 8 to you, Mr. Edwards. 9 This is a memorandum dated September 10 14th, 1993 written by someone named Rob 11 Whittle. 12 Do you remember him? 13 A. I do. 14 Q. He worked at Novell? 15 A. He did. 16 MR. TULCHIN: We offer Exhibit 6816, 17 Your Honor. 18 MS. CONLIN: Your Honor, Exhibit 6816 19 has mostly embedded hearsay in it to which we 20 do object if offered for the truth. 21 MR. TULCHIN: We offer this not for 22 the truth, Your Honor, but for notice to Novell 23 of conditions in the marketplace. 24 MS. CONLIN: Then we would have no 25 objection to that use of the document as long 12520 1 as, in fact, that is the use for which the 2 document is put. 3 THE COURT: And I assume that 6819 was 4 also for nonhearsay purpose? 5 MR. TULCHIN: Yes, Your Honor. 6 THE COURT: Okay. It's admitted. 7 Q. Mr. Edwards, 6816, this memo from 8 September, 1993, this doesn't show you as an 9 addressee, but do you recall whether or not you 10 received a copy? 11 A. I do not. 12 Q. In the first sentence of the text it 13 says, below is a summary of conversations with 14 some of our key customers from the Novell 15 advisory council. 16 Could you tell us what the Novell 17 advisory council was at the time? 18 A. Yes. It was a group of customers that 19 we asked to come and provide us input, feedback 20 on our products. 21 Q. And how many, roughly, of your 22 customers were on the Novell advisory council? 23 A. I would say maybe 50. I mean, it was 24 a smaller set. I don't recall an exact number 25 of customers. 12521 1 Q. Is it the case that the customers on 2 the council were customers who were loyal to 3 Novell in the network operating system 4 business? 5 A. They could have been selected because 6 they were loyal and a current customer. They 7 could have been selected because we were 8 actually trying to get them to be a customer 9 and they were a significant business 10 opportunity. 11 So we might have had Chevron come on. 12 Even maybe they didn't use a lot of our 13 product, but we wanted them to give us input as 14 a market participant. 15 Q. And is it correct, sir, that the input 16 you were getting, even from key customers on 17 the Novell advisory council, very often was 18 that they did not want DR-DOS? 19 A. I think we did receive from our large 20 customers that feedback. 21 This one particularly is in 1993, and 22 I think that at this particular time, that is 23 not a surprising feedback for me to have heard 24 from some of our customers. 25 We already have one on here that's 12522 1 actually, I believe, looking to put -- Gates is 2 the only MLA customer to standardize on DOS 3 6.0. 4 I think in this context if I read 5 through the memo, it looks like they're asking 6 we want your personal NetWare product. We want 7 network versions of DOS. But it looks like 8 these customers have standardized on MS-DOS 9 from an end user perspective. 10 Q. Let's look at the second page. 11 You'll see there's an entry for 12 Sheldon Laub, L-a-u-b. He's identified there 13 as national director of information technology 14 for Price Waterhouse. 15 Do you see that? 16 A. Yes, I knew Sheldon. 17 Q. And Price Waterhouse, of course, was a 18 very big accounting firm at the time? 19 A. It was. 20 Q. And had offices all around the 21 country; correct? 22 A. That is correct. 23 Q. And it was a big customer for Novell? 24 A. It was a good Novell customer. 25 Q. And Sheldon Laub, who was the director 12523 1 of information technology for Price Waterhouse, 2 he was a fan of your NetWare products? 3 A. He was. 4 Q. But when it comes to DR-DOS, the 5 information he provided to Novell was that 6 DR-DOS is not a winner? 7 A. That's the way it's summarized here. 8 And I have no doubt that Sheldon did not want 9 to take DR-DOS. Sheldon was one that was quite 10 vocal on the fact that they had standardized on 11 MS-DOS. 12 Q. Sheldon was a very sophisticated 13 decision-maker, wouldn't you say, when it comes 14 to information technology? 15 A. Sheldon was very opinionated, and he 16 was a strong IT and technical person. 17 Q. And when it comes to operating 18 systems, his opinion was that Microsoft's was 19 best; isn't that right? 20 A. I think his opinion was he did not 21 want to change the standard of his organization 22 at the time. 23 Q. Which was Microsoft? 24 A. Which was Microsoft, which might be a 25 little bit different than Microsoft is best. 12524 1 I think it was there. It had already 2 been by access to the OEM market delivered 3 solutions and had it preloaded. It was simple 4 for him to use. He didn't have to go and have 5 customers do it separately. 6 So I'm sure that he was a cost of 7 ownership man and wanted to maintain his costs 8 low, and so he was in that position. 9 MR. TULCHIN: All right. May I 10 approach the witness, Your Honor? 11 THE COURT: You may. 12 A. Got to stop meeting like this. 13 Q. This is -- we're going to stop soon. 14 A. Okay. 15 Q. This is Exhibit 2497, Defendant's 16 Exhibit 2497. 17 You had mentioned, Mr. Edwards, 18 Chevron. Chevron was another big customer of 19 Novell on the NetWare side; correct? 20 A. Yes. And Chevron was also very much a 21 Microsoft devotee. They were one that we tried 22 to break through. 23 In comparison, Conoco was a lot more 24 on our side, and Chevron was -- bought the 25 entire story from the Microsoft approach for 12525 1 the most part. But we made progress in the 2 account. 3 MR. TULCHIN: Your Honor, we offer 4 Exhibit 2497. 5 MS. CONLIN: We have no objection, 6 Your Honor. 7 THE COURT: It's admitted. 8 Q. I think you may have sort of 9 summarized the memo so we won't take long with 10 it, Mr. Edwards. 11 MS. CONLIN: Of course, Your Honor -- 12 I'm sorry, Mr. Tulchin. 13 In terms of the embedded hearsay, we 14 would expect it to be put to a nonhearsay use. 15 THE COURT: So ordered. 16 Q. You remember someone at Novell named 17 Dawn Drake? 18 A. Yes, I know the name. 19 Q. And if you look at -- it looks like an 20 E-mail from Dawn Drake in December of 1994. Do 21 you see that? And she says, I just finished up 22 a client 32 briefing with Chevron. 23 Do you see that? 24 A. I do. 25 Q. And then in bold letters, or it looks 12526 1 like bold, she says, Chevron makes a strong 2 case for very focused effort on and high 3 prioritization of the Windows 95 client. 4 A. I see that. 5 Q. Now, do you recall during the time 6 that you were head of the desktop systems group 7 at Novell that Chevron was a user of Novell's 8 network operating systems? 9 A. I believe they were, yes. 10 Q. And they liked Novell's network 11 operating systems; correct? 12 A. I think they had -- they were a large 13 organization that had pockets of the 14 organization that liked it and pockets of the 15 organization that liked LAN manager. 16 Q. But was it also true when it comes to 17 operating systems, as best you can remember it, 18 Chevron was a sophisticated customer and it had 19 thousands and thousands of employees who were 20 going to be using computers; correct? 21 A. That's correct. 22 Q. And it was important for Chevron, like 23 most big companies, to select an operating 24 system for its PCs that met the needs of the 25 Chevron organization. Is that fair? 12527 1 A. That is fair. 2 Q. And Chevron in 1994 and earlier, as 3 best you can remember, Chevron made the 4 determination that Microsoft's operating system 5 would be the one that it favored and preferred 6 for all Chevron personal computers; is that 7 correct? 8 A. That sounds reasonable. I'm not aware 9 of a specific decision like that they've made, 10 but they were, as I indicated, a company that 11 favored the Microsoft desktop. 12 Q. Now, Mr. Edwards, on direct 13 examination, I think you said yesterday in 14 response to a question from Ms. Conlin that at 15 one time, maybe when you were attending Brigham 16 Young University, you had DR-DOS installed on 17 one of your personal computers; correct? 18 A. That is correct. 19 Q. It was the case, was it not, sir, that 20 during the early '90s, let's say 1990, 1991, 21 1992, you had MS-DOS installed on a personal 22 computer that you used at home? 23 A. That is correct. 24 Q. And in the office when you worked at 25 Novell prior to the time that Novell bought 12528 1 Digital Research, you had MS-DOS on your office 2 computer as well; correct? 3 A. That is correct. 4 Q. In fact, everyone at Novell before the 5 acquisition of Digital Research had a 6 standardized MS-DOS operating system on their 7 PCs at Novell; right? 8 A. I don't know about the everyone, but I 9 think it was a standard offering, either MS-DOS 10 or PC-DOS running in the environment. I 11 believe that's accurate. 12 Q. So prior to the time that Novell 13 decided to buy DR-DOS, Novell itself as a 14 company chose MS-DOS for its PCs? 15 A. I believe that's correct. 16 Q. You also testified yesterday, 17 Mr. Edwards, that when you left the desktop 18 systems group, I think you said you felt pretty 19 emotionally about what had gone on; isn't that 20 right? 21 A. I don't -- I don't recall, but I mean, 22 I did. 23 Q. You did feel emotional? 24 A. Sure. I don't recall what I said 25 about that, though. 12529 1 Q. And you said that you had had a rapid 2 rise at Novell and you had moved up the 3 corporate ladder pretty quickly? 4 A. Yes. 5 Q. And in '92 you got appointed to run 6 the desktop systems group. Mr. Noorda himself 7 asked you to do that? 8 A. That's correct. 9 Q. And about a year and a half later, or 10 maybe slightly more than that, you left that 11 job? 12 A. That's correct. 13 Q. And in that year and a half, you had 14 not accomplished the mission or the objectives 15 that you had set out to accomplish; correct? 16 A. I didn't feel like I had. 17 Q. And in many ways the fact that you 18 hadn't accomplished those objectives were due 19 to the fact that in the marketplace Microsoft 20 had a number of advantages over Novell; isn't 21 that right? 22 A. I never interpreted that as the 23 predominant reason why we were not able to 24 achieve our objectives, and I understand your 25 -- the points made earlier about the brand 12530 1 recognition and the other kind of Microsoft 2 benefits, but I still believe at a very 3 fundamental level had we been able to have open 4 and a fair, level playing field into the OEM 5 market, we would have created an opportunity 6 for those OEMs to provide DR-DOS out into a 7 small percentage of the marketplace that would 8 have allowed us to use that as a basis to 9 provide significant change in innovation of the 10 marketplace. 11 I was mostly upset that those doors 12 were locked and closed for what I feel like 13 were unfair and anticompetitive practices, and 14 that was very upsetting. 15 On the flip side, I didn't feel like 16 we accomplished what we had hoped to 17 accomplish. 18 Q. And that was upsetting to you? 19 A. It was. 20 Q. And isn't it also true, Mr. Edwards, 21 that if Mr. Stimac's testimony is correct, and 22 you remember he said that Compaq -- and let me 23 just stop. 24 Compaq at the time was one of the 25 largest OEMs in this country; correct? 12531 1 A. They were. 2 Q. And Mr. Stimac said that Compaq had 3 never heard of any demand from its customers 4 for DR-DOS. 5 If that testimony is correct, if it's 6 to be believed, Mr. Stimac's testimony, then 7 you wouldn't attribute the results there to any 8 unfair competition, would you, but instead, to 9 competition on the merits, consumers decided 10 they didn't want your product; isn't that 11 right? 12 A. That's not how I interpret that time 13 period and -- it's actually not even how I 14 remember what Mr. Stimac said in his testimony. 15 I felt he was searching to remember. 16 I felt like he didn't really understand our 17 product that well. It was taken in 2000 18 something, and he's going back to our meetings 19 in 1992, and it's believable to me that he 20 wouldn't understand that. 21 But we spent a good couple of weeks 22 with him where he had interest in our product, 23 and why he doesn't recall that then, I don't 24 think goes to him trying to mislead anybody. I 25 just don't think he remembers it. 12532 1 But it's not my view of what went 2 wrong in that time period. 3 So I would not summarize it as you've 4 just done. 5 Q. Fair enough. 6 One last question at this point. 7 A. Okay. 8 Q. You'd certainly be content, wouldn't 9 you, to allow the jury here to evaluate the 10 facts of Mr. Stimac's recollection in 2001 or 11 2002 versus yours in 2007; is that fair? 12 A. Absolutely. 13 MR. TULCHIN: No further questions at 14 this time, Your Honor. 15 THE COURT: Thank you. 16 Redirect? 17 MS. CONLIN: Yes, Your Honor. 18 REDIRECT EXAMINATION 19 BY MS. CONLIN: 20 Q. In evaluating Mr. Stimac's testimony, 21 among the things the jury may need to consider 22 is other material in his deposition, which 23 indicates that at the time his deposition was 24 taken, he was the CEO and chairman of a company 25 called RLX, which originally raised its seed 12533 1 money from Gordon Bell, who was an employee of 2 Microsoft. 3 Would that be something you would 4 think would be important for the jury to know? 5 MR. TULCHIN: Objection. Leading, 6 Your Honor. 7 THE COURT: Sustained. 8 Q. How would you react to that piece of 9 information from the deposition of Mr. Stimac? 10 MR. TULCHIN: Same objection. 11 THE COURT: You may answer. 12 A. I think that I would react to it by 13 saying that it's easy not to recall those kinds 14 of things if you're predisposed not to or to 15 believe in a certain view of the world. 16 And I have no doubt he had a certain 17 view of the world and that he had influence 18 like we all do. 19 Q. And in addition to that, the 20 deposition also indicates that one of the 21 heaviest investors in Mr. Stimac's then company 22 was Ignition. 23 And the Ignition company was an -- as 24 I said, an investor in Mr. Stimac's company, 25 and its CEO was a guy named Brad Silverberg. 12534 1 Do you remember him? 2 A. I do remember Brad. 3 Q. And he was in the Microsoft company, 4 one of the top executives? 5 A. And very upset that we were trying to 6 rock his boat in certain periods of time and 7 that actually we had had some success at 8 competing successfully. 9 Q. Let's talk for a moment about some of 10 the things that Mr. Tulchin discussed with you. 11 He asked you a number of questions 12 about resource allocation in connection with 13 DR-DOS. 14 Do you feel that DR-DOS failed in the 15 marketplace because of a lack of resources or 16 because Mr. Noorda flew on the senior citizens 17 discount or any of those things? 18 A. I do not. 19 Q. Why do you feel as the head of the 20 company or the division of the company dealing 21 with these issues, why do you feel like DR-DOS 22 was unsuccessful ultimately? 23 A. There are always many factors as to 24 why a company won't succeed. I felt the 25 predominant reason was the tying with Windows, 12535 1 the monopoly or dominant position that 2 Microsoft held and their CPU-oriented contracts 3 or the ability to not open the door for us to 4 participate. 5 And I felt like during this time there 6 was a lot of fear, uncertainty, and doubt in 7 the marketplace that generated a customer 8 confusion. And some of it was not as a result 9 of anything that we had done. 10 Having said that, having said all 11 those things, in this area I certainly believe 12 that every organization can execute better and 13 work hard, but those folks worked pretty hard, 14 and I feel like that the predominant reasons 15 are what I discussed and what I previously 16 testified to. 17 CPU, the pricing strategy, the tying 18 to Windows, not allowing another competitor, 19 and the fear, uncertainty, and doubt, I think 20 that was the predominant reason that permitted 21 -- that failed to allow us to get into the OEM 22 marketplace. 23 All of these issues about support go 24 away if you can have a good distribution 25 channel through the major OEMs. They do. 12536 1 Because if you're requiring customers 2 to go and do this install separately, you're 3 going to have more issues there. 4 If you can allow them to have a choice 5 coming through the hardware that they purchase 6 where all the configuration issues have been 7 figured out and it's installed and it's ready 8 to go, there are going to be fewer problems to 9 deal with. 10 Q. Well, let's talk about those customer 11 support issues. 12 Mr. Tulchin gave you Exhibit 2582 that 13 was the memorandum from Mr. Taglia to -- I beg 14 your pardon -- to Mr. Taglia from Dave 15 Valentino about the subject matter being 16 current sell through and return trends. 17 Do you recall that exhibit? 18 A. I do recall that. 19 Q. Well, let me show you what was going 20 on I believe at almost the same time over at 21 Microsoft. 22 MS. CONLIN: May I approach the 23 witness, Your Honor? 24 THE COURT: You may. 25 Q. Here is Exhibit 5309. 12537 1 I know you've not seen this before, 2 but I believe it's already a part of the 3 record. And this is a document from Naveenj. 4 It's dated -- 5 MS. CONLIN: Do you have that Darin? 6 5309. 7 A. I see that. 8 Q. Down at the bottom. 9 MS. CONLIN: Thank you, Darin. 10 Q. Naveenj to Brad Chase and others, and 11 the subject is DR-DOS -- I beg your pardon -- 12 DOS 5.0A and slick, and it's dated in July of 13 1991. 14 And if you turn the page, you'll see 15 that at this time at Microsoft -- second 16 paragraph. Microsoft was having a little 17 problem of its own. 18 Given the fact that PSS has 96 percent 19 busy rate, that is only 4 percent of the people 20 get through, we can safely assume that the bugs 21 that we have received so far from PSS are only 22 a tip of the iceberg. 23 Do you see that? 24 A. I do. 25 Q. And let's turn now to Plaintiffs' -- I 12538 1 beg your pardon -- Defendant's Exhibit 1476. 2 MS. CONLIN: May I approach the 3 witness, Your Honor? 4 THE COURT: You may. 5 Q. I'll have you turn in this document to 6 the second page -- I beg your pardon. Let me 7 first -- let's look at -- this is to Mr. 8 Silverberg from Brad Chase dated July 20th, 9 1991. 10 MS. CONLIN: Do you think you have 11 this? 12 And we would offer Defendant's Exhibit 13 1476, Your Honor. 14 MR. TULCHIN: No objection. 15 THE COURT: It's admitted. 16 Q. And if you turn that page, under June 17 activities you will see PSS, which stands for 18 product support services. 19 Given current call volumes, we 20 estimate that 3,000 people are trying to call 21 DOS PSS each day, and we are currently 22 servicing 1,200 per day. 23 Call times are twice what we expected. 24 A user can call the PSS phone number ten times 25 and be lucky to get through once. This leaves 12539 1 a huge shortfall, and clearly we must move 2 swiftly to provide at least a minimum level of 3 service to everyone. 4 And then under summary daily average 5 for June, the number of calls busy is 22,844. 6 And if you skip down to the page that 7 begins right now -- or the paragraph that 8 begins right now customers have the worst of 9 both worlds, high busy-outs and high wait 10 times. 11 Do you see that? 12 A. I do. 13 Q. And finally on this issue of how 14 Microsoft is doing with the area of customer 15 service, I have a more recent document 16 pertaining to Windows XP. 17 MS. CONLIN: May I approach the 18 witness, Your Honor? 19 THE COURT: You may. 20 Q. This is Plaintiffs' Exhibit 10066. 21 This is a fiscal year Q 1 1/2 22 quarterly business review draft. 23 MS. CONLIN: Do you have it? 24 And, Your Honor, at this time we would 25 offer Plaintiffs' Exhibit 10066. 12540 1 MR. TULCHIN: Your Honor, this is new. 2 I haven't had a chance to look at it. If 3 there's a particular portion that I could be 4 directed to -- 5 MS. CONLIN: Sure. 6 MR. TULCHIN: -- maybe that would 7 help. 8 MS. CONLIN: Turn to page 6. This was 9 produced by Microsoft -- 10 MR. TULCHIN: No objection to page 6, 11 Your Honor. 12 And maybe I'll have a chance to look 13 at the rest at some other time. 14 THE COURT: Very well. 15 Q. If we could put up page 6. 16 And this bears a title of Windows XP 17 FPP launch date. And you can skip down to the 18 bullet point that begins PSS. 19 A. I see that. 20 Q. Okay. Do you see that? Yes. 21 PSS has seen high abandonment rates 22 greater than 20 to 25 percent and long wait 23 times greater than 80 minutes. Overall call 24 volume is decreasing as expected. 25 And this appears to be around the time 12541 1 that Windows XP launched. 2 Do you see that? 3 A. I do. 4 Q. Was that something that was expected 5 in the industry, that when you launched a new 6 product, people might have difficulty with it 7 and call up? 8 A. It typically happened. 9 Q. All right. And they also say wait 10 time has come down from the high of 149 minutes 11 to 80 minutes. 12 Do you see that? 13 A. I do. 14 Q. And in the industry, would that still 15 be considered a pretty high wait time? 16 A. It would. 17 And I might have been one of those. 18 Q. And in the case of these abandoned 19 calls and long wait times and the like, would 20 you expect perhaps some of these customers, if 21 they had a choice, to move to another operating 22 system? 23 A. I think they could. 24 One thing I would say about this is 25 the software and operating systems industry at 12542 1 the desktop created an environment, and even 2 applications, where users had a lot of 3 problems. It was part of the business. And I 4 always thought they were pretty patient through 5 that because it was painful and things got 6 better over time, but it doesn't surprise me 7 that Microsoft has these numbers. 8 They are a little excessive. You 9 know, 149-minute wait times are long for people 10 to wait that long, so -- 11 Q. Were you surprised by the number of 12 calls that Novell got in connection with the 13 launch of its products in connection with the 14 launch of DR-DOS 6.0 when it was still owned by 15 DRI? 16 Is there anything surprising to you 17 about that? 18 A. I'm not. I really feel like, as I 19 testified before, to get over a period of time 20 six months 60,000 calls and to have only in my 21 opinion a small subset of those actually go to 22 engineering fixes is actually a pretty good 23 job. 24 And I think that it's the kind of 25 industry that it is, and I don't think we can 12543 1 conclude that people are going to abandon. I 2 think that they're going to be fairly patient. 3 And I think that's demonstrated itself across 4 both of these product companies. 5 Q. Switching to another subject, Mr. 6 Tulchin showed you Defendant's Exhibit 1493 and 7 1534A, which were -- 1493 was the PC Week 8 article and 1534A was a Computer World article, 9 and both of them are dated December -- in 10 December of 1991. 11 Do you have those in front of you? 12 A. I have one dated December of 1991 and 13 then November -- wait a second, November of 14 1991. 15 Q. Do you have the computer -- which one 16 do you have? 17 A. I have the PC Week. 18 Q. Okay. That's one. 19 A. And I have the Computer World. 20 Q. And -- oh, that's right, Computer 21 World is dated November of 1991. 22 I want to show you again a document 23 from Microsoft which may assist us in 24 understanding what was going on at that time. 25 MS. CONLIN: May I approach the 12544 1 witness, Your Honor? 2 MR. TULCHIN: Your Honor, I object to 3 these editorial comments from Ms. Conlin. 4 MS. CONLIN: May I approach the 5 witness, Your Honor? 6 THE COURT: You may. 7 Q. This is Plaintiffs' Exhibit 1088. 8 And if you'll turn to the second page 9 of that exhibit -- I beg your pardon, it's the 10 first page. This is from -- 11 MS. CONLIN: Do you have this? 12 Q. First page, rather, and it's from 13 w-Pam -- that's Pam Edstrom -- dated November 14 8th, 1991, to Jonl. And the subject is DR-DOS 15 action item summary. 16 And she encloses an E-mail from Lizsi 17 to Martyta, which is Marty Taucher, and 18 w-Carrine, and that's Greason, and w-Claire 19 Lematta. And again it's -- the subject is 20 DR-DOS action item support. 21 And this is, she says a -- here is the 22 draft of the action items for our response to 23 the DR-DOS situation. And this is in December 24 -- on November 8th, 1991. So it's in the time 25 frame of the article that is Defendant's 12545 1 Exhibit 1534A. 2 And in the second paragraph, she says, 3 following is a summary of the actions that we 4 will take over the next two weeks to counter 5 the DR-DOS situation with regard to positive 6 reviews in key publications such as PC Week -- 7 and that would be 1493 -- Defendant's Exhibit 8 1493 -- Infoworld and Byte and to attempt to 9 short-circuit any future reviews. Our goal is 10 to communicate incredible momentum for MS-DOS 11 5, promote the quality nature of our product 12 and to establish DR-DOS as an incompatible 13 product that has bugs and lacks robustness. 14 The kind of -- that kind of action or 15 activity by Microsoft in connection with the 16 contact with PC Week, was that the FUD that 17 you've talked to the jury about? 18 MR. TULCHIN: Objection. Leading. 19 THE COURT: Overruled. 20 You may answer. 21 A. This is exactly the type of situation 22 I'm speaking of. The working in the 23 background, working with customers, telling 24 people things weren't working. There's going 25 to be this imminent release of an operating 12546 1 system that comes out several years later. 2 It's the whole environment that causes 3 negative response when really the basis behind 4 it is they're trying to fight the positive 5 response that's happening in the marketplace. 6 Q. And in this case, there is mention of 7 the fact that there were positive reviews of 8 DR-DOS in PC Week, Infoworld and Byte. 9 Do you see that? 10 A. I do. 11 Q. And if you'll turn the page to the 12 second page under the paragraph that says 13 Bradsi, Brad Chase -- that would be Brad 14 Silverberg and Brad Chase. Press tour next 15 week. 16 She goes on to say, as noted above, 17 the intent of this press tour is to reinforce 18 MS-DOS momentum and highlight grave concerns 19 about DR-DOS compatibility, bugs, and 20 robustness. 21 And down at the bottom, she says, the 22 next sentence, we would take a positive 23 approach to trashing DR-DOS with clever 24 positioning and without crashing the product -- 25 talking about our concern for users and the 12547 1 risks associated with using DR-DOS. 2 And, again, is this what you saw 3 happening in the marketplace in terms of the 4 fear, uncertainty, and doubt that you indicated 5 you were facing? 6 MR. TULCHIN: Objection. Leading. 7 THE COURT: Overruled. 8 I'll let you answer. 9 A. Yes, it is. 10 Q. And turn, if you will now, to 11 Defendant's Exhibit 1493. And let's read a 12 little more of that article. 13 MS. CONLIN: I'm focusing on the 14 bottom one, two, three, four, five paragraphs 15 or so. Beginning with some experienced DR-DOS 16 users. That whole bottom part. Great. 17 Q. Some experienced DR-DOS 6.0 users said 18 the problems are mostly a result of people not 19 reading the documentation. 20 Did you find that to be a problem? 21 A. Yes. 22 Q. And then, quote, the same type of 23 person that is having problems with DR-DOS 24 would have problems with MS-DOS, said Brian 25 Mullen, a systems engineer with a large 12548 1 aerospace company. 2 It goes on to say, Microsoft Corp. was 3 flooded with similar compatibility complaints 4 this summer after releasing MS-DOS 5.0. Most 5 of those appear to have been resolved. 6 Was it also true that these concerns 7 were resolved by DR-DOS? 8 A. Yes, I believe they were. 9 Q. Other users report satisfaction with 10 DR-DOS 6.0, quote, ever since I switched from 11 MS-DOS 5.0 to DR-DOS 6.0, I've had no lockups 12 and my system runs smoother, said Chris 13 Blackburn, owner of Real Time Computer 14 Solutions, a PC consulting and support company 15 in Concord, California. 16 MR. TULCHIN: Your Honor, objection. 17 This is being used for the truth, as Ms. Conlin 18 asked before. It ought not to be used in that 19 fashion. 20 MS. CONLIN: I have a question, Your 21 Honor, that is not for the truth. 22 THE COURT: Make your question. 23 Otherwise the objection will be sustained. 24 MS. CONLIN: All right. 25 Q. My question to you, Mr. Edwards, is, 12549 1 in connection with the release of -- or any 2 kind of press discussion, what were there 3 usually both pros and cons listed? 4 A. There were. 5 I think that the people who write 6 these articles are trying to sell headline and 7 trying to sell the publication, and so they 8 purposely want to put things in edgy ways in 9 order to capture the attention. And you 10 usually find that you can go off and find 11 people on both sides of the issue, and there 12 are going to be some positive, there are going 13 to be some negative comments with a product 14 release. 15 Q. And these articles in November, 16 December of 1991, do you recall the table that 17 we used and when the drop in sales occurred? 18 A. Yes. The drop began to occur in the 19 end of the second quarter, April. 20 Q. So after -- these articles based on 21 those numbers would indicate that's not the 22 time when the drop occurred? 23 A. That's correct. 24 Q. And DR-DOS 6.0 reached the market on 25 September 1, 1991; correct? 12550 1 A. That's correct. 2 Q. Let's talk about incompatibilities. 3 Mr. Tulchin discussed with you and you 4 agreed that if the bug was in DR-DOS, it was 5 Novell's responsibility to fix; correct? 6 A. That's correct. 7 Q. And if the bug was in MS-DOS, that you 8 would ask Microsoft to fix it; correct? 9 A. That's correct. 10 Q. And if you asked -- if you asked for 11 assistance from another software company in 12 getting your product to work with its product, 13 would you usually as standard industry practice 14 expect them to respond? 15 A. Yes, we would. 16 Q. And did that happen with Microsoft? 17 A. It did not happen with Microsoft with 18 respect to the DR-DOS product very often at 19 all. 20 Q. All right. And in fact -- 21 A. If at all. 22 Q. Were there times when not only would 23 they not fix the incompatibility in their 24 product, they would announce publicly they 25 weren't going to fix it? 12551 1 A. That's correct. 2 Q. I wanted to show you a document that I 3 believe I have right in here. 4 This is Plaintiffs' Exhibit 9936. 5 MS. CONLIN: May I approach the 6 witness, Your Honor? 7 THE COURT: Yes. 8 Q. Do you remember this article that is 9 Plaintiffs' Exhibit 1 -- I beg your pardon -- 10 9936? 11 A. I do. 12 Q. Is this one that you specifically 13 referenced? 14 A. Yes. I have referenced this article 15 specifically in the past and am aware of it. 16 MS. CONLIN: Your Honor, we would 17 offer Plaintiffs' Exhibit 9936 not for the 18 truth but to indicate what was known by the 19 public in terms of computer users about 20 Microsoft's willingness to fix its bugs that 21 made DR-DOS inoperable. 22 MR. TULCHIN: We object, Your Honor. 23 I have two documents here. One 24 doesn't seem to have an exhibit number on it, 25 nor does it indicate what publication it's 12552 1 from. 2 The other seems to be 1136, unless I 3 have the wrong document. 4 In any event, it appears that it's 5 being used precisely for the truth, and it's 6 hearsay and should be kept out. 7 MS. CONLIN: Well, Your Honor, I gave 8 Mr. Tulchin 1136 to show him because the top of 9 Exhibit 9936, while it says that it is PC Week, 10 it's not as clear as it should be. So I handed 11 him the identical copy of this article from a 12 -- printed out, I think, from Westlaw that 13 shows its source. That's why I handed him the 14 document. 15 What we offer, Your Honor, is 9936. 16 THE COURT: And for what purpose are 17 you offering this? 18 MS. CONLIN: I'm offering it, Your 19 Honor, for the purpose of indicating what was 20 out in the market in terms of computer users 21 about Microsoft's willingness to fix its own 22 bugs that render DR-DOS inoperable. 23 Pretty much the same reason that 24 Mr. Tulchin used to offer trade press in 25 connection with his cross-examination of this 12553 1 witness. 2 MR. TULCHIN: Your Honor, I don't 3 think the reason is the same at all. 4 THE COURT: As I recall, Mr. Tulchin 5 offered the other articles to show the reaction 6 or the knowledge to Mr. Edwards and/or Novell. 7 MS. CONLIN: Your Honor, what this 8 shows is this -- what we contend that this is 9 offered to prove is the impact in the market of 10 this kind of article from the standpoint of 11 DR-DOS's sales, the demand for the product and 12 the like, and we think that's a perfectly 13 appropriate nonhearsay purpose to offer this. 14 It's on notice. 15 MR. TULCHIN: Doesn't seem to me, Your 16 Honor, that that's, in fact, the purpose that 17 it's being used for. 18 THE COURT: I'll allow it for that 19 nonhearsay purpose, as long as there's a 20 question that goes to that. 21 It's admitted. 22 MS. CONLIN: Thank you, Your Honor. 23 Q. The headline -- 24 MS. CONLIN: Do you have it, Darin, 25 9936? 12554 1 Q. And the headline is Microsoft won't 2 help fix DR-DOS-Win 3.1 woes. 3 And in the first paragraph, the 4 articles -- the article is by a man named Paul 5 Sherer, and it says, despite an ongoing Federal 6 Trade Commission investigation into allegations 7 that Microsoft Corp. has engaged in 8 monopolistic practices, the company is refusing 9 to work with its key DOS rival on Windows 3.1 10 compatibility. 11 And skipping one paragraph and going 12 over to the paragraph that says, users have 13 reported problems getting DR-DOS and the beta 14 versions of Windows 3.1 to work together, and 15 the two appeared incompatible in an examination 16 by PC Week last week. 17 This PC Week, I think, is one of the 18 trade publications that you indicate was widely 19 read; correct? 20 A. That is correct. 21 Q. And what would be the effect on DR-DOS 22 of an article like this? 23 A. It would have a tendency to freeze or 24 to stop or halt any positive momentum we had 25 with OEMs and the marketplace because of the 12555 1 concern of incompatibility. 2 Q. And let me conclude by asking you a 3 couple of questions without documents. 4 I have more. 5 Compaq, subject of Mr. Stimac's 6 testimony, what reasons, in fact, were offered 7 by Compaq for their unwillingness to accept 8 DR-DOS and load it on some portion of their 9 computers? 10 A. My communications with Compaq 11 executives, they were absolutely concerned 12 about time to market issues, whether Microsoft 13 would have retribution if they got too close to 14 us, and they specifically mentioned the 15 importance of being able to get early advance 16 releases and not be forced right up to the 17 wire. 18 They talked about the pricing effect 19 of the product and they talked about the 20 concerns in the marketplace. 21 I think there was a concern that we're 22 not receiving huge market demand for the 23 product. I think that's fair. But I also 24 think they were saying we don't want to risk 25 trying and experimenting here because the 12556 1 costs, meaning the threatened retribution they 2 felt and the economic impact on per CPU, is 3 just too great to take an experiment here. 4 And they had taken plenty of 5 experiments with us before trying things out in 6 the marketplace. 7 So this type of working together was 8 not the normal pattern with Compaq. And they 9 had a lot of respect for our ideas and what we 10 thought, and it was certainly different in my 11 mind from what Gary Stimac indicated in that 12 testimony. 13 Q. And when you visited the other 30 or 14 so OEMs, were the reasons you were offered for 15 their unwillingness to load DR-DOS the same in 16 substance as those that you've told the jury 17 about that were of concern to Compaq? 18 MR. TULCHIN: Objection, Your Honor. 19 I think this was covered by your ruling 20 yesterday. 21 THE COURT: Sustained. 22 MS. CONLIN: The door was opened, Your 23 Honor, by Mr. Tulchin's inquiry I thought. 24 THE COURT: Well, we'll take this 25 matter up outside the presence of the jury. 12557 1 MS. CONLIN: Your Honor, I'll stop the 2 questioning. 3 It is 3 o'clock, and I'll stop my 4 questioning at this time. 5 MR. TULCHIN: Your Honor, I have about 6 two minutes. 7 I'm concerned about the juror's child 8 care obligations and other obligations, but of 9 course I'll do whatever the Court tells me to 10 do. I have literally two or three minutes. 11 THE COURT: What's the jurors -- two 12 or three minutes? Go ahead. 13 MR. TULCHIN: Shall I proceed, Your 14 Honor? 15 THE COURT: Go ahead. 16 RECROSS EXAMINATION 17 BY MR. TULCHIN: 18 Q. Mr. Edwards, will you agree with me 19 that during the course of cross-examination you 20 and I looked at some documents that showed 21 that, in fact, DR-DOS had bugs which made the 22 product incompatible with various hardware and 23 software products? 24 A. That's correct. 25 Q. So in 1991 when there were reports in 12558 1 the press about bugs, in fact, the product did 2 have bugs; isn't that correct? 3 A. I think that's correct. 4 Q. And would you also say, sir, that when 5 there's an article saying that Microsoft won't 6 help fix bugs, that as we've discussed before, 7 if the bugs are in DR-DOS's product, of course 8 it's not Microsoft's obligation, it's Digital 9 Research's obligation to fix those; correct? 10 A. That assumes that the bugs were in 11 DR-DOS's environment, and we always maintained 12 that Microsoft was purposefully altering their 13 environment to preclude our success in the 14 marketplace, and as a dominant operating system 15 vendor, to come out and say anything akin to 16 that type of statement would be highly unusual 17 for that to happen in the marketplace when your 18 purpose is to have multiple environments run 19 and interoperate with you. That would just be 20 a highly unusual position to take. 21 Q. Well, Mr. Edwards, I hear your 22 argument about what you always maintained, but 23 during the course of cross-examination, you 24 told me quite clearly that you had no evidence 25 yourself that Microsoft had ever intentionally 12559 1 put bugs in its product in order to make DR-DOS 2 incompatible with Windows; isn't that right? 3 A. At the time we were going through that 4 process, I didn't physically have in my hands 5 the proof. 6 What I did receive from people like 7 John Constant and Steve Tucker and other 8 engineers was their belief that the kinds of 9 issues that were talked about and that upset 10 the PC testing environment were issues that 11 were not the normal routine bugs. They were 12 issues that were difficult to detect, but 13 definitely purposeful, in their opinions. 14 So they were conclusions that the 15 group made, I think -- subsequent to that time, 16 I think other information has come out, but at 17 the time I was trying to understand that, we 18 did not have in our -- I did not have in my 19 possession; others may have. 20 Q. Well, with all respect, Mr. Edwards, I 21 was asking you for your testimony -- 22 A. Okay. 23 Q. -- and not the beliefs or opinions of 24 Mr. Constant, Mr. Tucker, or anyone else who 25 might be a witness later on in this. 12560 1 And my question to you was, isn't it 2 the case that on cross-examination you agreed 3 with me that you personally had no evidence 4 that Microsoft had intentionally created 5 incompatibilities with DR-DOS? And your answer 6 to me on cross was that was correct. 7 Isn't that right? 8 A. If I interpret that question as 9 something that I personally had discovered and 10 not something that had been reported to me by 11 others, I would say that that would be correct. 12 Q. And if it was correct earlier today, 13 it's correct now? 14 A. That would be correct. 15 MR. TULCHIN: Thank you, Your Honor. 16 MS. CONLIN: Nothing further, Your 17 Honor. I wouldn't dare. 18 THE COURT: Very well. 19 MR. TULCHIN: Sorry to keep everyone 20 late. 21 THE COURT: Members of the jury, 22 remember the admonition previously given. 23 We will see you at 8:30 a.m. 24 Leave your notebooks here. You are 25 excused. 12561 1 All rise. 2 (A recess was taken from 3:02 p.m. to 3 3:12 p.m.) 4 (The following record was made out of 5 the presence of the jury at 3:12 p.m.) 6 MS. CONLIN: [redacted], by chance, I 7 think got on the elevator with us, along with 8 two other jurors who engaged in some effort to 9 make him stop. But he did engage the witness 10 in a conversation about whether or not he would 11 make it to the airport and what kind of a 12 vehicle he needed to drive. 13 The conversation was not at all 14 pertinent to the lawsuit, but I did feel the 15 necessity of telling the Court that that had 16 occurred. 17 THE COURT: Thank you. Thanks for 18 telling me. 19 All right. You may proceed on the 20 Defendant's exhibits Phase 7. 21 MR. JONES: Thank you, Your Honor. 22 At the outset I'd like to hand up a 23 rulings chart that we prepared. I've already 24 provided a copy to Plaintiffs' counsel. 25 If I may approach. 12562 1 THE COURT: Yes. 2 MR. CASHMAN: Your Honor, before we 3 begin argument, I wanted to say quickly this 4 unrelated matter, but I just wanted to hand up 5 to the Court a copy of the materials that we 6 discussed yesterday for McGeady for your 7 convenience, a copy of the slides and the cases 8 that we discussed in that ALR publication. 9 THE COURT: Fine. 10 MR. CASHMAN: And I have a copy for 11 Microsoft too. 12 THE COURT: Thank you very much. 13 Appreciate it. 14 MR. CASHMAN: This is for your 15 convenience. 16 And just for the record, it's a copy 17 of the slides that were discussed, the Hunter v 18 City of Des Moines case, Iowa Supreme Court 19 case. Another Iowa Supreme Court case that I 20 believe is called Van Oort versus Nuckolls, and 21 then a copy of the Supreme Court case that's 22 referenced in the slides called Blonder-Tongue, 23 and then the ALR publication that I referenced 24 on the record yesterday. 25 THE COURT: Okay. Thanks. 12563 1 Mr. Jones? 2 MR. JONES: Thank you, Your Honor. 3 These are the Phase 7 exhibits about 4 which Microsoft is appealing rulings of the 5 Special Master below. 6 THE COURT: Do you have a copy of the 7 exhibits? 8 MR. JONES: I can hand up the Court my 9 copy. We did file a copy of the exhibits with 10 the brief itself. 11 THE COURT: Okay. I've got to find 12 it. 13 MR. JONES: Your Honor, if you don't 14 mind, we can go back and get another set from 15 the office very quickly. 16 THE COURT: Let me look here. 17 MR. JONES: Okay. 18 MR. CASHMAN: Your Honor, you can have 19 my copy. I don't think I need them for my 20 purpose. 21 THE COURT: Just one second. 22 (An off-the-record discussion was 23 held.) 24 THE COURT: There it is. I knew I had 25 it somewhere. 12564 1 All right. Which volume are we in? 2 MR. JONES: We are in the first 3 volume, Your Honor. 4 THE COURT: Okay. 5 MR. JONES: We are on the second 6 exhibit that's listed. Plaintiffs have -- 7 well, let me just make a record on this so it's 8 clear. It's indicated in the rulings chart. 9 DX 6197 was an IDC report. Microsoft 10 had offered redacted portions of that report, 11 and we indicated the redactions -- highlighted 12 the redactions in the copy that we submitted to 13 the Court. 14 Plaintiffs have withdrawn their 15 hearsay objection to that document as redacted. 16 So if Microsoft uses 6197, the document would 17 have to be redacted to reflect only the 18 highlighted material. Otherwise, Plaintiffs 19 would maintain a hearsay objection to the 20 unredacted portions. 21 THE COURT: Is that true? 22 MR. CASHMAN: That's correct, Your 23 Honor. There's no appeal pending on the 6197. 24 THE COURT: Very well. 25 MR. JONES: There's another document, 12565 1 we'll to get to that one in the order, but 2 following 6197 is DX 6316, E Testing Labs. 3 And the objections we're going to be 4 talking about today, Your Honor, are all 5 hearsay objections, except for the last 6 document, which is an improper opinion 7 foundation type of objection. 8 The documents -- about five of the 9 documents you're going to consider are surveys. 10 So we'll talk a little bit about surveys and 11 how -- why they are excepted from hearsay. 12 And the other documents, about two or 13 three that we'll start off with, are just sort 14 of what we believe are fairly common or typical 15 business records. Plaintiffs have a different 16 view. And we'll go through those with you. 17 6316 is a document that Microsoft 18 claims satisfies the business records 19 exception. It is a testing report prepared by 20 a company that is in the business of conducting 21 such tests. 22 If you look at the last page of the 23 exhibit, they describe E Testing Labs, 24 describes its activities, and it's clear that 25 part of what they do is this type of analytic 12566 1 testing. 2 The testing reported in the document 3 is fairly objective, straightforward. This 4 software ran at this fast versus this software 5 which ran at X fast. 6 The methodology is laid out in detail 7 on page 3 and 4 of the testing report, and the 8 -- it's true that the Microsoft product did win 9 most of the tests. It simply was faster at the 10 tasks that E Testing Labs tested, but not all 11 the tasks. 12 For example, on page 13 of this -- and 13 I'm using the regular numbers, not the Bates. 14 On page 13, E Testing reports how 15 Music Match, which is now owned by Yahoo, the 16 Music Match product ran faster than the 17 Microsoft product. 18 So this is an objective 19 straightforward reporting of tests on the speed 20 of various software products. 21 It's regular course of E Testing to 22 conduct such tests, and there really -- there 23 is no -- that we have been able to determine no 24 compelling reason to conclude that this is 25 anything but a business record. 12567 1 Plaintiffs have made an argument that, 2 well, it's a -- that there was some E-mail 3 traffic from Microsoft folks who had a question 4 about the methodology. 5 But when you look at the E-mail -- and 6 they had provided these as an exhibit to their 7 brief -- the final E-mail in the string says, 8 the good news is that it sounds like the 9 results are solid, even if one could pick up 10 the methods. 11 So to be sure, if you have a bunch of 12 technical folks at Microsoft, they can think of 13 lots of different tests that they would like to 14 see, but the bottom line is the document, the 15 test is reliable. 16 Microsoft concluded that the tests 17 were sound, the tests results. 18 And, again, a document like this, 19 prepared in the regular course of E Testing 20 Labs' business, qualifies for business record 21 treatment. 22 THE COURT: So E Testing Labs tests 23 Microsoft products every day? 24 MR. JONES: They are in the business 25 of testing software products, of conducting 12568 1 analytical analyses. 2 THE COURT: Okay. 3 MR. CASHMAN: Your Honor, of course 4 the business record -- well, obviously 5 Microsoft admits this is hearsay. So the only 6 question is whether this fits within the 7 exception. 8 The only exception which Microsoft has 9 argued or alleged is the business record 10 exception. 11 Obviously they've got to prove under 12 the Rule 803(6) that the record was made 13 contemporaneously with the event; that it was 14 made by or from information transmitted by a 15 person with personal knowledge; that it was 16 done in the course of a regularly conducted 17 activity, and it was a regular practice of that 18 business activity. 19 Microsoft hasn't satisfied any of 20 those elements. 21 But most importantly, Your Honor, what 22 I'm going to focus on is the fact that the 23 business record exception is founded on the 24 assumption that the business which generates 25 the record must rely on that record for its 12569 1 accuracy. 2 And that basic presumption is 3 articulated in the Iowa Practice Guide under 4 803(6), and that's on page 747, at least in the 5 2005 version. 6 And the statement there is, quote, the 7 guarantee of accuracy rests upon the duty to 8 make and the business need for accurate 9 records, close quote. 10 This exhibit, DX 6316 doesn't satisfy 11 that basic requirement because E Testing Labs 12 is not preparing this document to rely on it 13 itself. 14 Rather, E Testing Labs is preparing 15 this document for consumers to rely on, for 16 customers, which means that it does not have 17 the inherent degree and requirement of 18 trustworthiness required for the business 19 record exception. 20 Your Honor, Plaintiffs submit that 21 Microsoft has conceded as much. Wherein on 22 page 6 of its brief, Microsoft admits that 23 E Testing Lab, quote, conducts independent 24 testing, research, development and analysis for 25 publications, websites, vendors and IT 12570 1 organizations, close quote. 2 That statement in and of itself by 3 Microsoft demonstrates why this is not a 4 business record because there is no indicia of 5 reliability sufficient to establish the 6 business records exception when the document is 7 prepared for outside use and outside 8 consumption. And it is by Microsoft's own 9 admission not going to be relied on and is not 10 relied on for accuracy by E Testing Labs 11 itself. 12 This is a product. So it's not a 13 business record. 14 And in this regard, when Mr. Jones 15 directed the Court to the last page of DX 6316, 16 and he pointed out the little blurb stating 17 that E Testing Labs is a Ziff Davis media 18 company that allegedly leads the industry in 19 Internet and technology testing. 20 So to call this a business record, DX 21 6316, is pretty much the same as the argument 22 that Microsoft has made and lost before when 23 they argued to the Court that trade press 24 articles were business records because a 25 company like Infoworld is in the business of 12571 1 writing articles. 2 That doesn't satisfy the business 3 record exception, and we had extensive argument 4 on that before, and the Court rejected those 5 claims. 6 So the Special Master had this one 7 right. This is hearsay, DX 6316. It doesn't 8 fit within the business record exception under 9 the most basic of analyses, and, therefore, the 10 hearsay objection should be sustained, the 11 Special Master should be sustained. 12 Thank you. 13 MR. JONES: Just a few brief points in 14 response, Your Honor. 15 First of all, let me address directly 16 this notion because it will come up in some 17 other documents -- this notion that has no 18 grounding in the words of 803(6) that only 19 documents that are relied on by the company 20 producing them can satisfy the business records 21 exception. 22 You can look at 803(6) all day and you 23 won't find that, and you can look in the cases 24 all day and you won't find that either. 25 If that were the rule, then 12572 1 correspondence could never be a business record 2 because by definition, correspondence is meant 3 to be relied on by someone else. So an offer 4 letter from me to another company saying I'd 5 like to buy 15 of your widgets couldn't be a 6 business records because I'm not relying on it. 7 I'm expecting the receiver to rely on it. 8 And we cite a case in our brief where 9 similarly the Court held that records of 10 transactions of bank customers that the bank 11 sent to the customers. You know, the bank 12 doesn't -- isn't supposed to rely on them, the 13 customers are. And the Court found that those 14 were proper business records. 15 So that's simply not a -- that's not 16 an argument that will carry the day here. 17 These business records -- or documents 18 that are meant to be relied on by others are 19 all the time found to be business records as 20 long as there's nothing to indicate lack of 21 trustworthiness. 22 Here there is none. And, in fact, if 23 anything, E Testing, like IDC, a company whose 24 reports, whose data the parties have agreed 25 are, you know, are solid and have agreed not to 12573 1 contest on hearsay grounds. 2 E Testing goes out of business if it 3 does not produce reports that are accurate. 4 This is what it does. So the assurance of 5 accuracy here is the business reputation and 6 the ongoing business viability of E Testing 7 Labs. It has to get these things right. 8 And finally, Mr. Cashman in argument 9 would have a lot more traction if the type of 10 report here was one of those that said, well, 11 this software is simply better. We like it 12 better. It seems to be cooler. Using 13 subjective type of phraseology. 14 This is a straight-up qualitative 15 test, and the methodology makes it clear that 16 they're standing there with a stopwatch and 17 simply timing how fast certain activities take 18 to run on the software. 19 So this is not puffery; it's not 20 posturing. It's straight objective reporting 21 of fact by a company whose livelihood depends 22 on getting it right. 23 MR. CASHMAN: Your Honor, Mr. Jones 24 fails to acknowledge the fact that E Testing 25 does -- the person whoever wrote this exhibit 12574 1 or persons who wrote the exhibit do not have a 2 business duty to report accurately. There is 3 no business duty to report accurately when 4 you're producing a product for outside 5 consumption. And that's what DX 6316 is. It's 6 a product for outside consumption. 7 It's the same as an advertisement. A 8 company that produces an advertisement for a 9 customer, that's a product. That's intended 10 for outside consumption. 11 And DX 6316 is the same thing, and it 12 doesn't qualify for business exception -- 13 business record exception treatment because 14 there's no business duty to report accurately. 15 And E Testing Labs isn't creating this 16 to rely on it itself. 17 When Mr. Jones makes the argument that 18 it must be reliable because E Testing goes out 19 of business if its reports are not accurate, it 20 would be just as easy to say that the reason 21 it's not a business record, and clearly what 22 the law would say why it's not a business 23 record, is because E Testing goes out of 24 business if it doesn't provide a product or a 25 service that its customers want. 12575 1 And here, this test was commissioned 2 by Microsoft. And it's natural that E Testing 3 wants to produce something that is satisfactory 4 to its customer, serves its customer's needs. 5 It's the same thing -- Mr. Jones' 6 argument is the same thing as saying the 7 National Inquirer is in the business of 8 providing articles that people want to read. 9 Well, that doesn't mean that the 10 articles in the National Inquirer are reliable. 11 National Inquirer is putting articles in its 12 publications that are going to sell magazines. 13 E Testing provides the kind of results 14 that its customers are looking for, and it's 15 particularly one -- when you have one like this 16 one is, that's commissioned by Microsoft. 17 So it's fundamental under the business 18 record exception that this does not qualify. 19 DX 6316 clearly does not even come close to 20 qualifying. 21 And that is demonstrated by the basic 22 words of the rule as amplified by the Iowa 23 Practice Guide on Evidence. 24 Thank you. 25 THE COURT: Thank you. 12576 1 Anything else, Mr. Jones, on that one? 2 MR. JONES: I'll just give you the 3 quick cite on the case that we rely on for this 4 that dispels the notion that it can only be 5 self-reliant or documents that are relied in 6 the office are the ones that can qualify for 7 business records. 8 It's United States against Hathaway, 9 H-a-t-h-a-w-a-y, 797 F. 2d 902, with the jump 10 at 905 to 906 from the Sixth Circuit in 1986. 11 It's cited at page 10 of our brief. 12 I won't belabor this. 13 As I pointed out, page 13 of the 14 report shows a test where the competing product 15 won. This wasn't cookbooks. This was 16 straight-up objective reporting by a company 17 that has an obligation through contract to 18 report accurately. 19 THE COURT: Very well. 20 Next exhibit, 6336. 21 MR. JONES: 6336 and 6337 are two of a 22 kind. They are both web hosting pages put out 23 by a company called Mozilla. 24 Microsoft asserts that these records 25 satisfy both the business records exception and 12577 1 that they are -- that they fall within the 2 statement against interest exception to the 3 hearsay rule found at 5.804(b)(3). 4 THE COURT: Who is making the 5 statement? 6 MR. JONES: I'm sorry? This is 7 Mozilla. 8 THE COURT: Who is making the 9 statement against interest? 10 MR. JONES: Mozilla is making a 11 statement against Mozilla. 12 THE COURT: Are they a witness or a 13 party? 14 MR. JONES: They are not a party, they 15 are a person. The rule applies to a person who 16 makes a statement against -- the rule requires 17 that the person be unavailable. 18 Mozilla is in California. It's 19 outside the subpoena power of this Court. 20 Mozilla is making statements against 21 its interest in that it's indicating or stating 22 that it has security vulnerabilities. 23 THE COURT: Okay. Go ahead. 24 MR. JONES: But our primary argument 25 is that this is a business record; that these 12578 1 are statements by Mozilla that are intended by 2 Mozilla to be read by its customers and relied 3 on to safeguard the customers who are using 4 Mozilla web browsing products. 5 I should step back. 6 Mozilla makes a web browser and a 7 product that competes with Microsoft's Internet 8 Explorer. And what these two exhibits do, 6336 9 and 6337, are provide information to Mozilla 10 users about security vulnerabilities that 11 Mozilla software is facing. 12 So it's really -- it is difficult to 13 imagine a document that would have a higher -- 14 higher indications of reliability. 15 This is one where Mozilla is telling 16 its customers you need to be careful about the 17 following things when you use our product. 18 Mozilla is going to get that right. 19 There is a high degree, a high degree of 20 incentive for Mozilla to be accurate when 21 providing this security breach information. 22 If you look at a couple of the -- on 23 the first page of 6336, in that first block 24 paragraph, it just tells the Court and tells us 25 what the purpose of the communication is. 12579 1 Here you will find alerts and 2 announcements on security and privacy issues. 3 And you can see when you thumb through 4 the remaining pages in 6336, that it's a series 5 of updated updates, security updates, 6 indicating that this is a regular part of 7 Mozilla's activity to keep its customers 8 informed about the security issues that they 9 may face when using the Mozilla product. 10 Similarly, DX 6337, if you look on the 11 first page, it's headed known vulnerabilities 12 in Mozilla products. Again this is Mozilla 13 telling its customers about Mozilla problems. 14 So this is not a piece of FUD about a 15 competing product. This is the company talking 16 about its own products. 17 And then it goes on, this page will 18 contain a list of the security vulnerabilities 19 known to affect particular versions of Mozilla 20 products and instructions on what users can do 21 to protect themselves. 22 So again, the notion -- from the face 23 of the document, it's clear that this is going 24 to be a regular activity of Mozilla to advise 25 its customers about the security issues they 12580 1 may face, and then the following pages detail 2 those security issues. 3 One argument that Plaintiffs have 4 raised is that these are web postings and 5 therefore somehow by definition cannot be 6 called business records. 7 That can't be squared with the plain 8 meaning or the plain words used in 803(6), 9 which state fairly flatly that a memorandum, a 10 record in any form, in any form can be -- can 11 qualify as a business record. 12 Goodness, if E-mails, which really are 13 no more than conversation, if E-mails qualify 14 as business records, which they have been found 15 to, then certainly the carefully produced web 16 posting of a company alerting its customers 17 about security problems, that certainly 18 qualifies as a business record. 19 THE COURT: Response? 20 MR. CASHMAN: Your Honor, Microsoft 21 has a fundamental misunderstanding of the 22 business record exception, clearly. 23 As they've indicated here, this is a 24 posting from a website for a company called 25 Mozilla Corporation, which produces and 12581 1 provides web browsing and E-mail software. 2 Let me address first the suggestion 3 that this is a statement against interest. 4 That is a ridiculous argument, Your 5 Honor, because, first of all -- and this isn't 6 necessarily the main reason why it's not a 7 statement against interest, but Microsoft 8 hasn't even identified a statement in this 9 exhibit that would -- that would arguably 10 constitute a statement against interest. 11 It doesn't cut it to say that a 12 document as a whole is a statement against 13 interest. 14 So they can't even identify a single 15 statement that they claim is a statement 16 against interest. 17 But more fundamentally, Your Honor, 18 the rule that they rely on, 804(b)(3) would 19 apply only if the statements were contrary to 20 the declarant's pecuniary interest. That's 21 what Microsoft is relying on. 22 And here, this exhibit is not contrary 23 to Mozilla's pecuniary interest. Nowhere is it 24 contrary to Mozilla's pecuniary interest, but 25 rather, this is consistent with Mozilla's 12582 1 financial interest by alerting and telling its 2 customers what is going on with the security 3 situation in its products because they want to 4 continue to do business with those customers. 5 And if they don't tell them what's 6 going on, then they wouldn't be in business 7 very long. 8 So it's not contrary to their 9 interest. It is consistent with Mozilla's 10 interest. 11 So clearly, this does not constitute a 12 statement against interest, any portion of this 13 exhibit. 14 Now, let's turn to the main show, Your 15 Honor, which is the business record exception, 16 which I think is what Microsoft really intended 17 to argue. 18 This does not constitute a business 19 record for the same kind of reasons that we 20 discussed with the prior exhibit. 21 First of all, when your communication 22 is directed outside, externally, there's no 23 business duty to report accurately. That's 24 number one. 25 And as we've discussed in connection 12583 1 with 6316 and as emphasized in the Iowa 2 Practice Guide, this document was not created 3 with the intention that Mozilla would be 4 relying on it itself. And for that reason, it 5 cannot constitute a business record. 6 These two exhibits, Your Honor, 63 -- 7 I guess it's 6336 and 6337 are like the press 8 releases that we've argued before you on prior 9 occasions where a company like Mozilla will 10 create a press release for external 11 consumption. 12 And the Court has ruled those are not 13 business records because there is no business 14 duty to report accurately and because it's not 15 created for reliance by the company itself. 16 And 6336 and 6337 fall in the same 17 category. They are hearsay. They don't fall 18 within the business records exception. 19 And Mr. Jones' arguments about 20 reliability and such would be better directed 21 to trying to fit it into the residual 22 exception. 23 But the criteria, there, Your Honor, 24 as you know, are pretty stringent also, and 25 Microsoft couldn't satisfy those. 12584 1 So they've been grasping at straws 2 trying to get clear hearsay into evidence and 3 it should be rejected. 4 This is hearsay. 5 MR. JONES: Very briefly in response, 6 Your Honor. 7 The contrary to interest statements -- 8 well, first of all, I would note that 9 Plaintiffs did not respond at all in their 10 brief to the statement against interest 11 argument. 12 I'm not going to say they waived, but 13 they were silent on that issue in their 14 briefing. 15 But now they claim, well, there are no 16 statements in interest. There were some other 17 pejoratives which I won't address. I'll just 18 speak to -- 19 THE COURT: Well, did the Special 20 Master rule on the statement against interest? 21 MR. JONES: That was not -- I don't 22 believe that that was an argument raised to 23 him. 24 THE COURT: Then it's waived by you, 25 isn't it? 12585 1 MR. JONES: It may well be. It may 2 well be. I need to check our chart to see if 3 we raised that. And we'll advise the Court. 4 THE COURT: Go ahead. 5 MR. CASHMAN: And, Your Honor -- 6 MR. JONES: If we have not raised it, 7 then, of course, we would agree we would 8 withdraw that argument. 9 But the statement against interest, to 10 the extent we have preserved it or if it was 11 asserted below, then we would simply point out 12 that, again, the first page of 6337 contains 13 the assertion by Mozilla, this page lists 14 security vulnerabilities with direct impact on 15 users. 16 These are self-admissions of security 17 violations. These are against Mozilla's 18 interest. 19 No web browser manufacturer is going 20 to readily admit that it has security issues. 21 Those are not in its interest. You do not want 22 people thinking that your web browsing software 23 has security vulnerabilities. 24 That is a statement. And you're not 25 going to sell a lot if you're riddled with 12586 1 security vulnerabilities. So that is clearly a 2 statement against Mozilla's pecuniary interest. 3 But Mr. Cashman is correct, our main 4 argument is that this satisfies the business 5 records exception. 6 What we do not -- where we differ with 7 Mr. Cashman and with the Plaintiffs is that, 8 again, there is no requirement that the 9 business records exception is limited to only 10 documents that the producing company or the 11 declaring company relies on. 12 You know, I sat here a couple of days 13 ago and we argued about whether a letter from 14 Novell's counsel to Jim Allchin was a satisfied 15 business record. 16 Now, Plaintiffs were putting forward 17 that clearly a letter that's being sent to 18 Mr. Allchin isn't going to be relied by Novell. 19 They have sent the letter. But that wasn't the 20 basis of Microsoft's argument. 21 We argued that it didn't satisfy 22 business record because it was a posturing. It 23 was part of a piece of litigation. 24 Similarly, Plaintiffs were here a 25 couple of days ago arguing that an E-mail from 12587 1 one Novell employee to a Microsoft employee 2 satisfied business records. That E-mail is not 3 going to be relied on by the sender. He's 4 sending it out of his company. He's not -- 5 Novell is no longer relying on that E-mail. 6 It's being received by someone at Microsoft. 7 We didn't contest. We didn't say, oh, 8 E-mails can't ever be -- E-mails sent outside a 9 company can't ever be business records. Our 10 problem with that E-mail was, as the Court 11 recalls, we thought that it was a posturing or 12 a piece of litigation strategy. 13 So there is no requirement or there is 14 no limitation of the business records rule to 15 documents that are relied on by the declaring 16 company. 17 Again, that would wipe out 18 correspondence. That would wipe out bank 19 transaction records. That would wipe out huge 20 swaths of documents that are commonly and 21 traditionally accepted as business records. 22 And it's certainly not a position that 23 Plaintiffs have adhered to in regard to their 24 own documents. It's not a position that we've 25 ever asserted in opposing admission of 12588 1 Plaintiffs' documents, and it has no grounding 2 in the case law. 3 Finally, these are not -- these are 4 not akin to press releases. 5 We understand the problem with press 6 releases. It's that there is the risk that 7 they are puff pieces; that they are posturing; 8 that you're talking about how you have the 9 greatest thing in the world as a product. 10 These are the exact opposite of that. 11 These are the communications of 12 Mozilla to its customers about security 13 problems with the software. 14 That's not posturing. That's not 15 puffing. That is the type of information that 16 Mozilla has every interest in the world to be 17 accurate and to provide in a manner that's 18 consistent with its overall how it does its 19 business through a web communication. 20 THE COURT: Anything else on this? 21 MR. CASHMAN: Yes, Your Honor, just 22 briefly. 23 Mr. Jones has got two things mixed up. 24 They admit in their brief -- this is 25 on page 8 -- that, quote, the posting that -- 12589 1 referring to 6336 -- is obviously intended to 2 be used and relied on by its customers, close 3 quote. Mozilla's customers. 4 So that when you are creating 5 something as Microsoft admits that others are 6 supposed to rely on, a product, your product, 7 external consumption, that doesn't qualify as a 8 business record. 9 And where Mr. Jones gets confused with 10 respect to the kind of correspondence that he's 11 describing from last week where you have Novell 12 creating a letter, they are relying on that. 13 It's Novell that's relying on the accuracy of 14 their letter. 15 So there's the difference. It's a 16 pretty easy distinction to draw, and Microsoft 17 is in error in failing to point it out. 18 The Special Master got it right here 19 when he concluded that this was hearsay and not 20 subject to an exception, both 6336 and 6337, 21 and those objections and the rulings should be 22 sustained. 23 THE COURT: Anything else on these 24 two? 25 MR. JONES: Nothing further, Your 12590 1 Honor. 2 THE COURT: 6426. 3 MR. JONES: 6426 is a document that 4 was used in a deposition with a Mr. 5 Lappenbusch. 6 Microsoft has redacted it -- the 7 Court's copy of 6426 should have highlighting 8 on it. Is that true? 9 THE COURT: Yes. 10 MR. JONES: Great. The highlighted 11 portions of the exhibit are the only parts of 12 the exhibit that Microsoft is offering. 13 We have quoted in the brief the 14 deposition transcript part where Mr. 15 Lappenbusch is talking about it. 16 Basically what happened at his 17 deposition is he is asked what does 6426 show, 18 and he says, well, these are the type of 19 services, these online services that one can 20 access with the Windows media. 21 And so that is why Microsoft only is 22 asking that the name like Napster and Cinema 23 Now and Music Now and Music Match, that these 24 be admitted as business records. 25 It's certainly the case that this is 12591 1 part of some type of press release. And we 2 understand and acknowledge that press releases 3 can't come in for their truth. 4 We believe as redacted, much like the 5 first document, 6197, the IDC report, as 6 redacted, all puffery language is gone. 7 The only thing that we would be 8 offering would be -- for its truth would be 9 those objective names of services that are 10 available with the Windows Media Player. 11 Admitting the document on that basis 12 would allow the Lappenbusch testimony to be 13 understandable. 14 He didn't say what each one of these 15 were. He simply pointed to the list. But that 16 does provide an assurance of reliability that 17 by and large business records that get admitted 18 in court don't have. We don't typically have 19 someone sponsoring in a sworn statement, you 20 know, this was an accurate statement when we 21 wrote that E-mail or when I wrote this report. 22 We rely on it because its conditions 23 of being produced give us that assurance, but 24 here we don't need to worry or need to rely 25 simply on its conditions for being produced. 12592 1 We have sworn testimony from someone 2 with knowledge at the time that the document as 3 redacted by Microsoft accurately reflects the 4 online music services that are available with 5 the Windows Media Player. 6 MR. CASHMAN: Your Honor, this Exhibit 7 DX 6426 is inadmissible hearsay because, again, 8 there's no duty -- business duty to be accurate 9 here. And this was not created to be relied on 10 by Microsoft. 11 The testimony excerpt, which Mr. Jones 12 references, does nothing to help Microsoft's 13 cause, as it fails to address any of the 14 elements of the business records exception. 15 They quote Lappenbusch on page 11 of 16 their brief, Your Honor, and here's what they 17 say. 18 What is this list that begins with 19 Napster, Cinema Now, goes over to the next page 20 with MSN Music? What are those? What are 21 these, this list? 22 Answer: Well, this is a list of music 23 stores and services that are available through 24 the Windows Media Player. 25 Question: So when -- sorry. Were you 12593 1 finished? 2 Answer: Windows Media Player 3 interface. 4 Question: So that when Windows Media 5 Player is shipped, it includes links to all 6 those other online stores; is that right? 7 Answer: Typically, yes. 8 That's all they have. It doesn't 9 address one element of the business record 10 exception. So that doesn't provide any relief 11 for Microsoft. 12 More importantly, Your Honor, for the 13 purposes of this exhibit -- and we've been down 14 this road before. I think the Court will 15 recall, or I hope the Court will recall, that 16 Mr. Tuggy was in here, I believe it was either 17 Phase 6 or it might have been one of the prior 18 phases, arguing that they should be able to get 19 press releases in by redacting everything 20 except what they alleged was purely factual 21 statement. 22 And we had argument on that before the 23 Court, and the Court correctly concluded that 24 was impermissible. When a document is hearsay, 25 you can't redact it to make it admissible. 12594 1 And the authority for that, Your 2 Honor, is cited in our brief. 3 And we've had argument on this before, 4 5805. That if either the including statement 5 or the included statement are hearsay, then the 6 document is inadmissible. 7 And Microsoft can't make a hearsay 8 document nonhearsay by trying to redact 9 everything except for what they want. 10 That doesn't make it admissible. It's 11 not permissible under the rules. 12 Mr. Jones references 6197. That's a 13 whole different situation, and if nothing else, 14 that's a negotiated deal on that one. 15 This document is different. It's 16 inadmissible. The Special Master correctly 17 concluded that redacted or not, it's 18 inadmissible. 19 And so we ask that the hearsay 20 objection be sustained. 21 THE COURT: Anything else on this one? 22 MR. JONES: Your Honor, the parties 23 have commonly reached agreements or put forward 24 to the Court redacted versions of documents so 25 that the material did satisfy or fall within 12595 1 business records. 2 Redaction is a common practice. The 3 Court, in fact, engaged in a good bit of 4 colloquy with counsel the last time we were 5 together about how documents might be redacted 6 to make them acceptable. So Microsoft is 7 simply following a practice that has much -- a 8 deep track record here before the Court. 9 THE COURT: Doesn't mean I was right. 10 MR. CASHMAN: Well, the -- 11 MR. JONES: You won't hear that from 12 me, Your Honor. 13 MR. CASHMAN: Well, Your Honor, I'll 14 say that you were right, absolutely, when we 15 had this argument before. 16 I would say that this issue has 17 already been decided. 18 The Court ruled with respect to 19 multiple press releases where this issue was 20 explicitly teed up by Microsoft and argued by 21 Mr. Tuggy and myself. That was before trial 22 began, so it probably seems like a long time 23 ago because a lot has happened since then. 24 THE COURT: No kidding. 25 MR. CASHMAN: But that ruling was 12596 1 right, and I believe this issue has been 2 decided. 3 This one is the proverbial no-brainer 4 that the objection should be sustained. 5 THE COURT: Anything else on this one? 6 MR. JONES: No, Your Honor. 7 We think that the deposition testimony 8 is a reason to treat it differently, but we 9 have nothing further. 10 THE COURT: 6259 I see Plaintiffs 11 withdraw their objection. 12 MR. JONES: They have, Your Honor, and 13 let me, just so the record is clear, on 6336 14 and 6337, Ms. Bradley helpfully checked, we did 15 not assert a statement against interest 16 exception to the Special Master, so that was 17 waived and we withdraw now that argument for 18 justification or admission. 19 We apologize to the Court for having 20 raised an argument that was not raised before 21 the Special Master. 22 If 6336 and 6337 are to be admitted, 23 they could only be admitted because they 24 satisfy the business record exception. 25 THE COURT: All right. Thank you. 12597 1 6259, there's no issue on that 2 anymore? 3 MR. JONES: 6259, that's correct. 4 Plaintiffs have withdrawn their hearsay 5 objection as to that document. 6 THE COURT: Is that right, Mr. 7 Cashman? 8 MR. CASHMAN: That's correct. 9 THE COURT: Okay. 6359. 10 MR. JONES: I think it's 6395; is that 11 correct? 12 MR. CASHMAN: That's what mine is. 13 THE COURT: Oh, I'm sorry. I read it 14 wrong. 15 MR. JONES: DX 6395. This is the 16 first of, I think, you're going to see five 17 summaries. So I'm going to address generally 18 the admissibility of summary or surveys, and 19 then I'll speak briefly about how each of these 20 surveys that we've offered satisfied or are 21 admissible. 22 The Special Master -- in that process 23 Microsoft put forward a number of surveys. 24 Surveys are of critical importance to 25 Microsoft because they go to one of the crux 12598 1 issues in this case, and that is the causation 2 issue. Why did Microsoft attain and maintain 3 such a high market share? 4 Microsoft's position is, as we stated 5 in opening -- as Mr. Tulchin stated in opening, 6 Microsoft has achieved success because it 7 offers a terrific product at a terrific price. 8 And consumer choice is the reason, not 9 anticompetitive conduct. 10 And, of course, to get -- to give the 11 jury a sense of that consumer preference, a 12 sense of sort of what consumers were thinking 13 about during this, you know, long period at 14 issue, survey evidence really is the -- about 15 the only way Microsoft can do it. 16 So Microsoft did offer a number of 17 surveys. The Special Master allowed a number 18 of surveys or overruled hearsay objections that 19 Plaintiffs had filed regarding a number of 20 surveys. 21 Where he found or where he would 22 accept a hearsay objection is where he 23 believed, or at least his rulings chart would 24 say insufficient foundation, which meant you 25 somehow failed to show you make enough showing 12599 1 of methodology or other sort of baseline 2 requirement. 3 But here we believe that the Special 4 Master -- that, in fact, the surveys that we 5 are -- that we have brought up on appeal do 6 have adequate foundation and do have adequate 7 methodology explained within the documents 8 themselves. 9 It really is -- the cases we quote on 10 page 13 of our brief make clear -- and I'll 11 just read from one quote. 12 The weight of case authority, the 13 consensus of legal riders and reasoned policy 14 considerations all indicate that the hearsay 15 rule should not bar the admission of properly 16 conducted public surveys. 17 THE COURT: Such as what? 18 MR. JONES: Such as the surveys we're 19 going to talk about now. 20 THE COURT: What do they mean by 21 public surveys? 22 MR. JONES: Surveys of the public. So 23 public information. 24 THE COURT: What types of -- are they 25 talking about census survey, like the U.S. 12600 1 government, or what type of survey? 2 MR. JONES: The survey the Court was 3 talking about in Zippo was the consumer 4 satisfaction survey. 5 THE COURT: Most of the case authority 6 says that those surveys are not hearsay? 7 MR. JONES: They are not because, 8 because they are instead -- they are present 9 sense impressions and they are also evidence of 10 state of mind. So they satisfy 5.803(1) and 11 5.803(3). 12 They are an accurate reflection of 13 state of mind. The surveys are asking classic 14 state of mind questions. And we'll see that as 15 we get into these. 16 What do you think about this product? 17 It's a state of mind. What do I think about 18 it? I think it's -- are you satisfied with it? 19 Yes, I am satisfied. 20 You know, those are -- the courts have 21 recognized that those types of statements fall 22 flatly within the state of mind in the present 23 sense impression. 24 THE COURT: That's the majority view 25 in the United States? 12601 1 MR. JONES: I'll read a quote from the 2 second case. 3 We quote from the Second Circuit. 4 Since at least 1951 the cases are now 5 unanimous that evidence of the state of mind of 6 persons surveyed is not inadmissible as 7 hearsay. 8 So the -- we have one of those rare 9 instances in evidence law where there has been 10 -- where we have a coalition and a unanimity of 11 view regarding admissibility of this type of 12 evidence. 13 THE COURT: How do the cases address 14 the trustworthiness issue? 15 MR. JONES: Well, because this 16 issue -- 17 THE COURT: They don't even address 18 it, they just say it's not even hearsay. 19 MR. JONES: They say they fall within 20 present sense impression and they fall within 21 the state of mind exceptions, and so I can -- 22 THE COURT: Doesn't present sense 23 impression have to be contemporaneous with the 24 event? 25 MR. JONES: And surveys do reflect 12602 1 that. You are being asked typically what do 2 you think of a product? Well, I think now -- 3 THE COURT: Don't you have to be 4 actually using the product at the time? 5 MR. JONES: My sense would be that you 6 do not -- you wouldn't be able to answer the 7 question unless you were using it. 8 I suppose they could ask for a 9 historic type of thing, but that's why it also 10 satisfies the state of mind requirement, 11 803(3), which doesn't have this immediacy that 12 an excited utterance type of situation has. 13 It's an accurate reflection of that 14 person's state of mind at that time. 15 THE COURT: How do they show that the 16 survey is even accurate? How do they know the 17 methodology was proper and that the results 18 weren't skewed? How do you get the foundation 19 for that? 20 MR. JONES: The foundation -- 21 THE COURT: Do the cases say that the 22 survey should just be offered and that's it? 23 Or does it have to be foundation? 24 MR. JONES: No, the foundation needs 25 to be -- there needs to be some indication in 12603 1 the survey of how it was done, and it needs to 2 -- and, of course, those opposing surveys could 3 raise issues. They may say, look, we know how 4 this survey was done and it was a hand picked 5 group of folks and this is not accurate. 6 Plaintiffs are entitled to do that. 7 Plaintiffs really haven't done that with these 8 surveys. What they've done is they've made 9 sort of a general attack on the admissibility 10 of surveys, and then they -- without citing 11 case laws and then without rebutting the fairly 12 clear statements of admissibility of providing 13 by the zip toe case and the shearing? 14 Corporation case. 15 THE COURT: Is there an Iowa case on 16 surveys? 17 MR. JONES: I have not found one. 18 There was one unreported case where a Court had 19 not allowed some surveys in. And the Appellate 20 Court from Iowa, and I don't remember the cite, 21 but the Appellate Court from Iowa said even if 22 these did satisfy some exception to the hearsay 23 rule, it didn't matter because you were done 24 anyway. It was a harmless error analysis. 25 So no Iowa court that I have found has 12604 1 addressed the admissibility of survey evidence. 2 The federal courts, though, in 3 addressing 803(1) and 803(3), which are 4 duplicated in the Iowa Evidence Code at 5 5.803(3) and 5.803(1). 6 The federal courts are, as I 7 indicated, unanimous in their view that surveys 8 can be admissible. 9 And again just so the Court is clear 10 on this, Ms. Bradley reminds me that Zippo, the 11 type of survey at issue in Zippo were where the 12 customers were asked to look at a product and 13 give their impressions, and give their 14 impressions. And it can -- and then circle 15 back. 16 Why would courts say that this is 17 okay? Because you do need to give a jury some 18 sense of what consumers thought about products 19 in a number of situations. 20 THE COURT: Tell me how you're going 21 to introduce this. 22 MR. JONES: I'm sorry? 23 THE COURT: Tell me how you're going 24 to introduce this particular exhibit. Are you 25 just going to offer it or is there going to be 12605 1 some person who will provide foundation? How 2 are you going to do it? 3 MR. JONES: My understanding is -- if 4 the Court finds, as we believe it should, that 5 these satisfy -- that these are state of mind 6 documents that come in under that hearsay 7 exception, then these documents could be used 8 with an expert, for example, in discussing, 9 well, why did you believe that consumer 10 preference shifted toward Microsoft? Well, 11 I've seen a number of consumer surveys. 12 Surveys are things that experts like myself 13 commonly use in this field. 14 THE COURT: Okay. Was this used by an 15 expert, this 6395? 16 MR. JONES: I don't know if this is on 17 a list of materials. The Court asked how I 18 would do it. I could possibly do it with an 19 expert. I could, if the Court admits the 20 document -- 21 THE COURT: Well, if I admit the 22 document, then it's admitted right now. You're 23 not going to even use foundation, you don't 24 need foundation anymore. 25 MR. JONES: Right. That's right. 12606 1 THE COURT: You can show it to the 2 jury. 3 MR. JONES: That was going to be my 4 second point. 5 THE COURT: Okay. Now, 6395, this is 6 the entire thing you want the jury to see; 7 right? 8 MR. JONES: 6395, that's correct. 9 THE COURT: Does it have a methodology 10 in here? 11 MR. JONES: It does. It talks about I 12 believe on the third page -- 13 THE COURT: Who is the author? 14 MR. JONES: It's an institutional 15 survey. 16 THE COURT: Where is the author's 17 name? 18 MR. JONES: It's prepared for 19 Microsoft. 20 THE COURT: By who? 21 MR. JONES: Let's see if I can find 22 it. I think this is the Harris Gabel. 23 THE COURT: Harris Gabel? 24 MR. JONES: Harris Gabel. We provided 25 the website -- a screen shot from Harris 12607 1 Gabel's website that describes what Harris 2 Gabel does. They are in the business of doing 3 these types of surveys. This is what they do. 4 So the company certainly is in the 5 business of doing them. 6 The methodology is provided on the 7 third page. It talks about how the survey was 8 conducted. 9 THE COURT: Third page? 10 MR. JONES: Well, the third page. 11 Unfortunately, it's not stamped out, but if you 12 go one, two, three in, it says background. 13 THE COURT: What's a dyad? 14 MR. JONES: A dyad. I looked that up 15 before I came in. 16 It's a two-person interview, 17 basically. So a group of two prepare it. 18 THE COURT: Was it by phone or in 19 person? 20 MR. JONES: These were done -- these 21 were dyads and triads in London, so these would 22 be personal meetings. 23 And then it goes on to say, when these 24 were done, the purpose designed to test message 25 strategies for upcoming release. 12608 1 And I think the purpose of these -- I 2 want to dwell on the purpose aspect because the 3 purpose of these studies provides a fairly 4 compelling basis for determining that these are 5 reliable. 6 Microsoft needs to have accurate 7 information about consumer preferences because 8 it's got -- it's developing test strategies for 9 the upcoming release of a product. 10 So this is not -- I could understand 11 -- again, if this were something that Microsoft 12 were preparing to send out to the world and 13 influence people, Plaintiffs would have a good 14 argument that there could be some reliability 15 problems. But that's not the case here. 16 This is being designed for Microsoft 17 folks to use in determining what will work best 18 in positioning Microsoft's new products. 19 So this is not an instance where 20 you're going to get the books cooked. This is 21 where Microsoft needs and Harris Gabel must 22 provide accurate information or the Microsoft 23 information is going to flop. 24 THE COURT: What about these quotes in 25 here? 12609 1 MR. JONES: These again are simply -- 2 these are present sense impressions. These are 3 not being -- these are the state of mind of the 4 survey participants. 5 THE COURT: I definitely want to check 6 it out. It would be far cheaper than a CRM 7 which we couldn't afford. 8 MR. JONES: That's -- 9 THE COURT: That's a present sense 10 impression? 11 MR. JONES: That's his state of mind. 12 I'd like to check it out. I'd like to check it 13 out. 14 THE COURT: It would be far cheaper 15 than a CRM which we couldn't afford. 16 MR. JONES: Your Honor, Plaintiffs 17 have not come to us and said, look, you need to 18 take out the embedded hearsay. They have 19 simply -- 20 THE COURT: No, I'm just asking you. 21 MR. JONES: I would agree -- 22 THE COURT: That's the present sense 23 impression? 24 MR. JONES: That is closer to a 25 statement of fact. 12610 1 And I think the Court -- it would be 2 proper for the Court to say, look, these are 3 being admitted for the state of mind of the 4 survey participants, not necessarily for the 5 truth of the underlying fact. 6 The Court has admitted a great deal of 7 evidence for -- under state of mind, and that's 8 the common understanding, that when a state of 9 mind exhibit is offered, that it's not 10 necessarily taken for the gospel truth of the 11 underlying statement, but it is an accurate 12 representation of the state of mind of that 13 particular person. 14 So, in fact, the 6395, if you go 15 through it, you see that what's being asked 16 about are these positioning statements, and the 17 positioning statements themselves are -- 18 THE COURT: Microsoft wouldn't say 19 something they couldn't deliver? How does a 20 person know that? 21 MR. JONES: Well, they're being asked 22 what is your impression of that statement. 23 They're being asked their reactions to these 24 statements. 25 THE COURT: I thought that was a 12611 1 statement made by someone surveyed under new 2 learning. 3 MR. JONES: Under new learning. 4 THE COURT: The pages aren't numbered. 5 MR. JONES: I know. That is my fault, 6 certainly. 7 This is -- I understand the Court is 8 having -- you know, clearly is reacting in a 9 way that Microsoft would rather not see, but -- 10 THE COURT: What about the one above 11 that, if Microsoft's business practices are 12 abusive, I'll be quite happy to take 20 more 13 years of being abused. 14 MR. JONES: These are the -- 15 THE COURT: Doesn't that invade the 16 province of the jury? 17 MR. JONES: No, Your Honor, this is 18 exactly why this evidence is so important, 19 because consumers prefer the Microsoft product. 20 THE COURT: Even so -- that's okay, 21 it's okay to bring in evidence that, Judge, a 22 consumer says they're happy that they're 23 violating the law because we get a cheaper 24 product? 25 MR. JONES: No. Your Honor, what that 12612 1 -- it's obviously what that declarant is 2 saying; that they're very pleased with the 3 Microsoft product, and if there are -- 4 THE COURT: Am I reading the same 5 sentence you are? If Microsoft's business 6 practices are abusive, I'll be quite happy to 7 take 20 more years of being abused. 8 MR. JONES: Because they enjoy the 9 product so much. That's what's going on here. 10 THE COURT: How can you interpret that 11 any other way that, yeah, I like the product 12 and I don't care if they're violating the law 13 or not? 14 MR. JONES: What that is is a 15 statement of a product user's satisfaction with 16 the product. It's an extreme statement. I 17 will certainly agree with that. And we would 18 certainly agree -- 19 THE COURT: Wow. 20 MR. JONES: -- that if the Court -- if 21 there are statements that need to be redacted, 22 we would be glad to do that. But these are 23 articulations. 24 I mean, in some respects, and I'm very 25 serious about that -- this, the feeling that 12613 1 consumers have about Microsoft products, how 2 much they like them, that is a major, major 3 issue in this case because causation is going 4 to be a key issue. 5 Does Microsoft have its high market 6 share because it engages in anticompetitive 7 conduct? That's what Plaintiffs say. Or does 8 Microsoft have a high share because consumers 9 really love the products? That's certainly 10 Microsoft's position. 11 And this -- surveys are the common way 12 in antitrust cases that you put forward to a 13 jury consumer preference evidence. 14 THE COURT: So most survey evidence 15 has been admitted in antitrust cases? 16 MR. JONES: Oh, yes. 17 MR. CASHMAN: No. 18 THE COURT: Just a minute. I'm 19 questioning one person at a time. 20 MR. JONES: Yeah, my understanding is 21 it has and there haven't been to -- 22 THE COURT: What's the cite? 23 MR. JONES: I'm sorry? 24 THE COURT: Give me the cite. 25 MR. JONES: The two cases we cite are 12614 1 Zippo -- 2 THE COURT: Antitrust case. 3 MR. JONES: I believe the second is an 4 antitrust case. But Zippo -- we cited two. 5 Zippo Manufacturing, 216 F. Supp. 6 THE COURT: F. Supp, no 2d? 7 MR. JONES: No, it's a 1963 case. 8 THE COURT: Okay. 9 MR. JONES: 670. 10 And then the second is Schering Corp. 11 versus Pfizer, 189 F. 3rd 218, 228. 12 I don't believe Zippo is an antitrust 13 case. I think Schering is. 14 There's a third case -- 15 THE COURT: Okay. 16 MR. JONES: -- that we cite. These 17 are all in our brief on the 13th. 18 THE COURT: Yeah, sorry to do this. 19 MR. JONES: That's fine. 20 Tracinda, T-r-a-c-i-n-d-a. 21 THE COURT: Yeah. 22 MR. JONES: Versus Daimler Chrysler, 23 362 F. Supp. 2nd 487. 24 And I don't know -- I don't know 25 whether that last case, but I can say -- 12615 1 Ms. Bradley confirms that Schering is an 2 antitrust case. 3 Thank you, Ms. Bradley. 4 THE COURT: Go ahead. Sorry. 5 MR. CASHMAN: Just for the record, I 6 have to correct that. 7 Schering is not an antitrust case. I 8 have it right in front of me. It's a Lanamac 9 case for false advertising. 10 THE COURT: Go ahead. 11 MR. JONES: My understanding is, first 12 of all, what is important in this analysis is 13 does the information go to a matter of 14 relevance in the suit. 15 Causation is an absolutely critical 16 element of this lawsuit. Mr. Tulchin stated it 17 in his opening, Ms. -- I believe Ms. Conlin in 18 her opening said, look, if all they did was 19 make a quality graphical user interface and 20 offer it at an attractive price, we wouldn't be 21 here. So clearly causation matters. 22 And there is no other way to provide a 23 jury with information about the depth and the 24 breadth of consumer satisfaction with Microsoft 25 products than survey evidence. 12616 1 THE COURT: Would you say causation is 2 also at issue in a price fixing case, for 3 instance? 4 MR. JONES: My understanding is it's a 5 different -- that not so much in price fixing. 6 I'd like to look at the law before I just shoot 7 at the mouth, but my understanding is price 8 fixing doesn't provide the type of -- doesn't 9 necessarily have the type of causation element 10 that this case does, as set forth in this 11 Court's jury instructions. 12 I mean, the jury instruction, I 13 believe it's Number 8, Preliminary Instruction 14 Number 8 says, you know, conduct -- a monopoly 15 acquired through -- because you had a superior 16 product, that's not anticompetitive. 17 And the way you show that, that the 18 product is better, isn't necessarily by having 19 a couple of lab geeks sit there and test. The 20 important -- the important perspective is what 21 did consumers think? 22 I mean, the Court will remember the 23 old beta versus VHS wars. My understanding is 24 most tech guys would have told you beta is a 25 better format. But consumers liked VHS better. 12617 1 They just did. It was easier to use. It was 2 more available. 3 And that's the analysis that's 4 important. What did consumers think? That's 5 going to be a key issue for this jury to 6 decide. 7 And they can't get that information -- 8 or one of the better ways to get that 9 information is through a survey. And the cases 10 are clear. 11 They don't carve out an exception for 12 antitrust cases. They say if the issue is 13 relevant or if survey information is relevant 14 to an issue in the case, then, survey evidence 15 is admissible as a present sense impression. 16 And there's -- as I indicated, there's 17 unanimity on the issue. 18 We would -- we'll be glad to go back, 19 and I can have a communication to the Court 20 indicating if there are particular antitrust 21 cases. 22 THE COURT: No, that's all right. 23 I'll just read the cases you gave me. 24 MR. JONES: Yeah, the analysis really 25 is is it relevant, and I think Preliminary 12618 1 Instruction Number 8 -- 2 THE COURT: That isn't the whole 3 analysis for admitting hearsay. 4 MR. JONES: No, no, it's not just is 5 it relevant. Clearly not. Because if -- and 6 we talked about this earlier. 7 If the methodology suggests that this 8 was a cooked survey, you know, if there's 9 something that tells us that the analysis 10 really shouldn't go to the jury, that it's not 11 -- that it lacks reliability, much like we do 12 with the business records analysis, if there's 13 something that tells us that, then that would 14 not be an admissible survey. 15 THE COURT: What tells me that this is 16 reliable just on its face? 17 MR. JONES: There are a couple of 18 things. One, the purpose of it. 19 The purpose of this is not to be part 20 of an ad campaign. This is designed and 21 developed for use for Microsoft internally. 22 THE COURT: How do I know that? When 23 was it done? 24 MR. JONES: It was done because it 25 says right on the background designed to test 12619 1 message method strategy for upcoming release of 2 MS Office. So that's telling you -- 3 THE COURT: So if I did a press 4 release that says designed to tell the truth 5 about my product, that's good enough. 6 MR. JONES: That's not, though, what's 7 being done here. What's being done here, I 8 think, Your Honor, is that Harris Gabel -- and 9 as indicated by the document, Harris Gabel is 10 being retained by Microsoft. 11 THE COURT: How do I know that? How 12 do I know what they're paid? How do I know who 13 works for Harris Gabel? How do I know there's 14 not interlocking board of directors? Isn't it 15 your responsibility as a proponent to show me 16 the reliability of the document? On the face 17 it shows me nothing. 18 MR. JONES: Your Honor, what we 19 provided to the Court, though, in addition to 20 the document, was the Harris Gabel website page 21 explaining what Harris Gabel does for a living 22 the document itself. 23 THE COURT: Harris Gabel 24 advertisement? 25 MR. JONES: No, it's sort of corporate 12620 1 this is what we do and -- 2 THE COURT: Does it tell me the 3 members and what -- how they know other people? 4 MR. JONES: I don't -- commonly those 5 cites will give you a directory. 6 THE COURT: Where is that at? 7 MR. JONES: I don't know if I included 8 the directory, though, in the pages we gave 9 you. We attached the website front page as an 10 exhibit to our brief. 11 THE COURT: It's in the exhibit? 12 MR. JONES: Yes. 13 THE COURT: In Exhibit 7? 14 MR. JONES: Yes, it is in the exhibit. 15 It was Appendix Tab 18. 16 THE COURT: Oh, 18. Okay, I got it 17 down here. 18 Sorry. Go ahead. 19 MR. JONES: All right. So the face of 20 the -- I mean, Your Honor, this is akin to a 21 business records analysis and in a lot of 22 respects, and what I think we've all sort of 23 coalesced around is this notion that business 24 records, as long as their indications on the 25 records themselves that they are produced in 12621 1 the regular course, then unless there is 2 something that tells us that makes us sort of 3 question it, like context or use, then we're 4 going to accept that as a business record. 5 That's the obligation that was on Plaintiffs. 6 That's been the obligation on us. 7 Now, this is not a business record. 8 It's coming in under -- if it comes in at all, 9 it will come in under 803(1) or 5.803(3). 10 But a similar analysis is appropriate. 11 The document itself, prepared professionally by 12 a company that's in the business of doing this, 13 prepared for the purpose of assisting Microsoft 14 decision-makers in testing internally how 15 consumers feel about various message strategies 16 that Microsoft is considering, these all 17 indicate that this is a document of 18 reliability. The methodology itself is set 19 forth. The date of the testing is given, the 20 type of testing, where it's taking place, who 21 the respondents are made up from. I mean, all 22 this information is there. 23 So Plaintiffs may speculate about some 24 nefarious purpose, but the document itself is 25 clear that this is simply a classic, you know, 12622 1 bedrock survey, the type of which has been 2 admissible in federal courts anyway since 1951, 3 longstanding admissibility under the 803(1) and 4 5.803(3). 5 And we'll come back to it. 6 THE COURT: Is there another one that 7 you're offering? 8 MR. JONES: I'm afraid we've got a few 9 more. 10 THE COURT: Let's argue them all at 11 once, can we? 12 MR. JONES: Sure. 13 THE COURT: What's the other one? 14 MR. CASHMAN: Your Honor, I'd like to 15 respond, at least on this one specifically and 16 maybe some of the others. 17 THE COURT: All right. Go ahead. 18 MR. CASHMAN: But I think that the 19 length of the discussion so far and some of the 20 issues touched upon, it will be helpful for the 21 Court if I could respond at this point. 22 THE COURT: Go ahead. 23 MR. CASHMAN: The Court's reaction is 24 very apropos to these surveys. 25 I think Mr. Jones unwittingly told you 12623 1 the reasons why these exhibits should not be 2 admitted, and that is -- let's just step back 3 at this and look at this globally first, Your 4 Honor. 5 Mr. Jones said over and over again in 6 his argument that these exhibits go to 7 causation because Microsoft wants to use them 8 to show what consumers allegedly think. 9 Causation he said is a key issue in 10 the case, and that is telling because by 11 putting in surveys which lack foundation for 12 many of the reasons the Court identified, that 13 the objective that Microsoft has is to prevent 14 Plaintiffs from conducting cross-examination on 15 a key issue in the case. 16 So Microsoft is trying to put in 17 evidence to preclude Plaintiffs from having any 18 ability to cross-examine on something that 19 Microsoft itself says is a key issue in the 20 case. 21 And as the Court knows, the hearsay 22 rules and the rules of foundation, the rules of 23 evidence fundamentally are designed to ensure 24 that the -- that a party such as Plaintiffs has 25 the right to cross-examine. 12624 1 And we would be deprived of that 2 fundamental right if we could not 3 cross-examine, which we can't on these kind of 4 exhibits. 5 THE COURT: How do you explain the 6 cases that you've cited? 7 MR. CASHMAN: Those cases, Your Honor, 8 I submit -- 9 THE COURT: Do you have any that are 10 opposite? 11 MR. CASHMAN: Your Honor, I haven't -- 12 there's none in our brief. 13 THE COURT: Mr. Jones is shaking his 14 head no. 15 MR. CASHMAN: But I can say this, Your 16 Honor. I can say this -- 17 MR. JONES: Sorry. 18 THE COURT: Go ahead. 19 MR. JONES: I apologize. 20 MR. CASHMAN: First of all, those 21 cases address only some hearsay issues, and 22 there's -- and they're fact specific. They 23 don't address foundation issues, for example. 24 But they are fact specific. Each one 25 of them is fact specific. They don't say that 12625 1 surveys are admissible just because they're 2 surveys. It depends on the circumstances. 3 And when the Special Master looked at 4 these issues here, he ruled that some of these 5 surveys might be admissible. And as a general 6 rule, he was looking at factors relating to 7 reliability, indicia of reliability when it 8 came to hearsay issues. 9 Then he also looked at foundation 10 issues. 11 What Mr. Jones failed to tell you is 12 that there are three objections to these 13 exhibits that we have to discuss. 14 One is hearsay, one is foundation, and 15 then you have embedded hearsay. 16 And he lumped them all together or 17 lumped the analysis all together in just saying 18 that these are reliable, but I think the more 19 principled way is to look at these first why 20 these exhibits were kept out in the first place 21 because they deprive us of the right to 22 cross-examine on the fundamental issue. 23 Secondly, if we look at this claim 24 about causation, Mr. Jones saying that what 25 Microsoft is going to put this on to show that 12626 1 consumers bought their product because they 2 liked it, well, one of the separate objections 3 that will come up eventually as it relates to 4 this and other exhibits are collateral 5 estoppel, because as we know, the Court in 6 Washington stated that Microsoft got its 7 monopoly power as a result of anticompetitive 8 conduct in the operating systems market for 9 that period of time, not because of its clause. 10 So we've already got a -- 11 THE COURT: Did they say it maintained 12 its monopoly power or did not acquire it that 13 way? 14 MR. CASHMAN: Well, that's an issue 15 that I know is going to be hashed out, but at 16 the bare minimum, it's clear that they 17 maintained their monopoly power as a result of 18 anticompetitive conduct. 19 THE COURT: Okay. 20 MR. CASHMAN: And I think that's for a 21 later day, but I just want to point that out 22 about how we have this talking out of both 23 sides of the mouth and how this relates to this 24 -- what Microsoft calls the critical element of 25 causation that they're trying to preclude 12627 1 cross-examination on a critical element by 2 their own admission. 3 So let's talk a little bit more about 4 foundation. 5 On this exhibit in particular, as the 6 Court pointed out in this, the Special Master 7 realized, there is no foundation for this 8 document. 9 And that's particularly true when it's 10 a -- something commissioned by or in the case 11 of some of these subsequent surveys, surveys 12 conducted by Microsoft. 13 These aren't independent -- alleged 14 independent surveys, but rather -- so that's 15 one element of foundation that's lacking. 16 You don't know who prepared it. We 17 don't know what instructions were given to 18 them. We don't know what was done. 19 All those things are lacking. And 20 those are the kind of things that Microsoft 21 could have done if they wanted to -- if they 22 thought surveys were important, they could have 23 done that. 24 Instead, they're trying to squeak into 25 evidence here surveys that go to a very 12628 1 fundamental issue in the case, allegedly, and 2 we don't have any of the basics, none of the 3 basics for foundation. 4 THE COURT: Do the cases say what the 5 foundation has to be for a survey? 6 MR. CASHMAN: The cases that Microsoft 7 cites, Your Honor, first of all, as I said, I 8 think each case is looking at it in the 9 individual context of that case; what the 10 issues are, what's disputed, what the purpose 11 of the survey is, and how it was conducted. 12 But the cases that Mr. Jones cited to 13 you relate specifically to hearsay, whether 14 it's present sense impression or state of mind. 15 And I know that there are -- that this 16 has been something where there's been competing 17 decisions on the admissibility under the 18 hearsay rule of surveys. 19 And again, what it really boils down 20 to are the particulars. 21 So it doesn't really help to go and 22 look at these cases because they're all based 23 on fact specific situations. 24 THE COURT: Has there been any 25 objections to surveys based on the scientific 12629 1 methodology? 2 MR. CASHMAN: There is, and there's 3 competing -- there's competing decisions about 4 what the effect of that is, and perhaps this is 5 something that may require either additional 6 briefing or additional argument on this point 7 in particular. 8 THE COURT: Well, I don't think that 9 it's -- that's not one of the issues. 10 MR. CASHMAN: But what I do want to 11 say, Your Honor, is that in the case of these 12 specific exhibits, Microsoft has utterly failed 13 to provide the kind of foundation that's 14 required under the Iowa rules of evidence. 15 And that's one objection that the 16 Special Master sustained because he realized 17 that there was no foundation for these. 18 You don't know who. You don't know 19 why. You don't know what they were doing. You 20 don't know what the purpose of the -- of it 21 was. You don't know if it was a self-serving 22 purpose. All of those things. 23 And most importantly, as Mr. Jones 24 again conceded, they are not -- they don't have 25 a witness they can put on to establish the 12630 1 foundation for any of this stuff. They just 2 say, okay, if you rule that these are not 3 hearsay, we're going to use them with our 4 expert and he's going to say -- you know, 5 testify from those. 6 And cross-examining the expert doesn't 7 provide us with the right to cross-examine that 8 we're entitled to when you don't even know who 9 the author of the survey was. You don't know 10 who they had participating in it. You don't 11 know who they contacted. You don't know 12 whether they -- some of the people they 13 contacted, whether they cut them out of the 14 survey because they didn't like their 15 responses. 16 All of those things are going to be 17 off limits that the Plaintiffs will never be 18 able to find out under the sneaky approach that 19 Microsoft has adopted here. 20 And so for those real basic reasons, 21 that's why this stuff doesn't come in. 22 And we can get into the particulars of 23 why these don't even satisfy the hearsay 24 exceptions they're talking about, and I'm going 25 to do that for the purpose of the first one, 12631 1 but it's so fundamental that they don't have 2 the foundation for these exhibits and the 3 reason why they don't want to do it and why 4 they -- and why they can't do it and why they 5 shouldn't be admitted. 6 THE COURT: Well, we'll continue this 7 tomorrow. Is that all right? It's 4:30. 8 MR. CASHMAN: That's fine. 9 THE COURT: Is 3 o'clock tomorrow 10 okay? 11 MR. CASHMAN: That's fine, Your Honor. 12 THE COURT: You can continue with this 13 new doctrine that I've never heard of before, 14 the sneaky doctrine. 15 MR. WILLIAMS: Is that going to 16 replace the chutzpa document? 17 THE COURT: At least you said it right 18 this time. 19 MR. WILLIAMS: Just got to tell me 20 once. 21 THE COURT: All right. See you 22 tomorrow. 23 (Proceedings adjourned at 4:31 p.m.) 24 25 12632 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 6th 19 day of February, 2007. 20 21 22 ______________________________ Certified Shorthand Reporter(s) 23 24 25