4869 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 XVIII 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 8:30 a.m., 14 December 14, 2006, in Room 302 of the Polk 15 County 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 4870 1 A P P E A R A N C E S 2 Plaintiffs by: ROXANNE BARTON CONLIN 3 Attorney at Law Roxanne Conlin & Associates, PC 4 Suite 600 319 Seventh Street 5 Des Moines, IA 50309 (515) 283-1111 6 RICHARD M. HAGSTROM 7 MICHAEL R. CASHMAN Attorneys at Law 8 Zelle, Hofmann, Voelbel, Mason & Gette, LLP 9 500 Washington Avenue South Suite 4000 10 Minneapolis, MN 55415 (612) 339-2020 11 ROBERT J. GRALEWSKI, JR. 12 Attorney at Law Gergosian & Gralewski 13 550 West C Street Suite 1600 14 San Diego, CA 92101 (619) 230-0104 15 KENT WILLIAMS 16 Attorney at Law Williams Law Firm 17 1632 Homestead Trail Long Lake, MN 55356 18 (612) 940-4452 19 20 21 22 23 24 25 4871 1 Defendant by: DAVID B. TULCHIN 2 STEVEN L. HOLLEY SHARON L. NELLES 3 JOSEPH E. NEUHAUS JEFFREY C. CHAPMAN 4 Attorneys at Law Sullivan & Cromwell, LLP 5 125 Broad Street New York, NY 10004-2498 6 (212) 558-3749 7 ROBERT A. ROSENFELD KIT A. PIERSON 8 Attorneys at Law Heller Ehrman, LLP 9 333 Bush Street San Francisco, CA 94104 10 (415) 772-6000 11 STEPHEN A. TUGGY HEIDI B. BRADLEY 12 Attorneys at Law Heller Ehrman, LLP 13 333 South Hope Street Suite 3900 14 Los Angeles, CA 90071-3043 (213) 689-0200 15 BRENT B. GREEN 16 Attorney at Law Duncan, Green, Brown & 17 Langeness, PC Suite 380 18 400 Locust Street Des Moines, IA 50309 19 (515) 288-6440 20 21 22 23 24 25 4872 1 RICHARD J. WALLIS STEVEN J. AESCHBACHER 2 Attorneys at Law Microsoft Corporation 3 One Microsoft Way Redmond, CA 98052 4 (425) 882-8080 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4873 1 (The following record was made out of 2 the presence of the jury at 8:27 a.m.) 3 THE COURT: This is a proposed answer 4 to that juror question. Take a look at it. If 5 I need to change it, I'll change it. 6 MR. GRALEWSKI: Your Honor, while we 7 are reviewing that, both parties had e-mailed 8 you last night with respect to the Sculley 9 rulings that you issued regarding 10 clarification. 11 Did Your Honor have a chance to review 12 those? 13 THE COURT: No. I sent an amended 14 order. Did you see it? 15 MR. GRALEWSKI: Yes. The amended 16 order came very soon after the first order? 17 THE COURT: Yeah. 18 MR. GRALEWSKI: Yes. Mr. Tuggy 19 responded. There was a fourth block of 20 testimony -- 21 THE COURT: I missed the fourth block. 22 MR. GRALEWSKI: -- that you had not 23 issued a ruling on. And Mr. Tuggy had 24 requested a ruling. 25 THE COURT: Okay. 4874 1 MR. GRALEWSKI: And I can forward the 2 string again to you, but they should actually 3 be in your in box if you wanted to review it. 4 THE COURT: Let me grab it off my 5 desk. 6 I got 134 to 135. 161, 163. Right? 7 MR. GRALEWSKI: Yes. 8 THE COURT: 181 and 182? 9 MR. GRALEWSKI: Yes. And there was an 10 additional section of 98, 14 to 99, 15 that we 11 had discussed and Mr. Tuggy had requested 12 ruling on. 13 THE COURT: Okay. Was that the 14 Exhibit A? 15 MR. GRALEWSKI: Yes, it was, Your 16 Honor. 17 And then there was a follow-up e-mail 18 from me requesting a further clarification, 19 which you can look at in your e-mail or I can 20 discuss with you. 21 We don't intend to reargue. 22 THE COURT: All right. 23 MR. TULCHIN: Right. 24 THE COURT: Okay. I have 98 through 25 99. 4875 1 MR. GRALEWSKI: Yes, Your Honor. 2 98, 14, through 99, 15. 3 THE COURT: 14 through 15, okay. 4 MR. NEUHAUS: Wait. 97. 5 MR. TULCHIN: Please. 6 THE COURT: Was it 98? 7 MR. GRALEWSKI: 98, 14, Your Honor, 8 through 99, 15. 9 THE COURT: Okay. 10 MR. GRALEWSKI: And the Plaintiffs' 11 clarification was, Your Honor, in your order 12 you had said that Mr. Sculley could testify as 13 to pricing only, and in the context of the time 14 period he was employed at Apple, and we don't 15 intend to reargue that standard. That's the 16 standard that the Court has adopted. 17 Our request for clarification was both 18 answers that you had admitted on their face 19 suggests that he's talking about a period of 20 time that may include the time when he was at 21 Apple, but also may include a time subsequent 22 to that, indeed up until the present. 23 So we ask that Mr. Tulchin be 24 instructed to tell the jury if he decides to 25 play those two chunks that the testimony can 4876 1 only be taken to apply to the period '83 to 2 '93, which was when he was at Apple and seems 3 consistent with the standard you've set. 4 THE COURT: I'm going to allow 98 5 through 99. That's fine. 6 It appears to me that looking at 98 7 and 99 that I don't think that has to be 8 restricted to the 1993 time period because I 9 think he's testifying from the standpoint of 10 how he perceived Mr. Gates as a marketer. So 11 I'll allow that. That's fine. 12 What was the other one? Was there 13 another clarification? 14 MR. GRALEWSKI: Oh, the 181 through 15 182, Your Honor. That was my question. It was 16 a follow-up question. 17 I had asked one question before where 18 I had talked about I believe -- it was on my 19 computer. I'll see how fast it will power back 20 up. 21 MS. CONLIN: While we are waiting, 22 Your Honor, this seemed just a bit harsh. I 23 wonder if the Court could add something like 24 that does not mean that there was anything 25 wrong with the question or with asking it. 4877 1 THE COURT: Defendant? Any response? 2 MR. TULCHIN: To which section of the 3 Plaintiffs' arguments, Your Honor? Is this -- 4 THE COURT: Oh, this juror question. 5 MR. GREEN: The juror question. 6 MR. TULCHIN: I think it's fine as 7 drafted. I wouldn't add anything to it. 8 THE COURT: I'm going to keep it as it 9 is. 10 Would you make a copy of this and then 11 attach a copy? Just give her a copy and then 12 the original should be stapled to this and 13 filed with the clerk. 14 MR. GRALEWSKI: Your Honor, the 15 question, back to Sculley, that was followed up 16 on talked about the large install base that 17 Microsoft currently has. 18 And so, as we point out, we think that 19 the question is sort of couched at least up 20 until 2002, and Plaintiffs don't have anything 21 to say on this. Your Honor's ruling will be 22 okay. 23 THE COURT: I'll allow it. 24 MR. GRALEWSKI: All right. Thank you, 25 Your Honor. 4878 1 THE COURT: Mr. Tulchin can talk about 2 it. 3 MR. GRALEWSKI: Thank you. 4 THE COURT: Anything else before we 5 bring the jury? 6 Oh, the Court's ruling on the 7 limitation in Defendant's opening statement, 8 which was brought up yesterday. 9 There was some argument in regard to 10 whether or not the Defendant has violated the 11 Court's ruling on the motion in limine 12 regarding other acts by competitors. 13 The Court finds at this time the 14 objection of the Plaintiffs is overruled as to 15 limitation of the Defendant's opening 16 statement. 17 The Court stands by its previous order 18 that limits the presentation of evidence of 19 other conduct by competitors as stated in that 20 order. 21 The Court understands that the purpose 22 of the proposed evidence by the Defendant is to 23 show the general business practices of others 24 in the same field of business as the Defendant. 25 The alleged acts or conduct by 4879 1 Defendant's competitors discussed at opening 2 statement must be ordinary business practices 3 and must not be conduct that is illegal or 4 unlawful. 5 The Court will decide the 6 admissibility of acts or conduct of the 7 Defendant's competitors as previously ordered 8 on an issue-by-issue basis as the evidence is 9 proffered. 10 The Court also may instruct the jury 11 at the conclusion of the case something to the 12 effect that you are instructed if you find that 13 Microsoft engaged in anticompetitive conduct, 14 you cannot excuse such conduct by any showing 15 that Microsoft's competitors engaged in like or 16 similar conduct. 17 Conduct or acts by other competitors 18 of Microsoft is not a defense to nor a 19 justification of any unlawful conduct by 20 Microsoft. 21 Anything else on that issue? 22 MR. HOLLEY: No, Your Honor. 23 MR. HAGSTROM: No, Your Honor. 24 THE COURT: Okay. We're ready. 25 (The following record was made in the 4880 1 presence of the jury at 8:36 a.m.) 2 THE CLERK: All rise. 3 THE COURT: Everyone else may be 4 seated. 5 Good morning, ladies and gentlemen. 6 You may continue, sir. 7 MR. TULCHIN: Good morning, ladies and 8 gentlemen. 9 It's Thursday. We're making progress. 10 Yesterday at 2:30 I was telling you a 11 little bit about improvements in successive 12 versions of software, and I do want to return 13 to that subject soon. 14 But we're all human, certainly I am, 15 and I made an error yesterday that I now want 16 to correct. 17 And I also want to go back and tell 18 you about two additional slides. There were no 19 errors in them, but I want to give you a little 20 more information that I could have given you 21 yesterday and omitted to do. 22 So, first, I want to tell you about my 23 mistake. It's slide 87. 24 We were talking about research and 25 development, and I told you that the R and D 4881 1 investments of the other top ten software 2 companies were in the aggregate, not an 3 average. That was wrong. That's the average 4 of the other companies. 5 So this really compares Microsoft to 6 the average of the other -- in the top ten 7 software fields. 8 That was my error yesterday. 9 Now, I want to go on and -- I hope I 10 made no other errors. That's the only one I 11 know of. 12 I want to go on and point out a couple 13 of other things that, as I say, I sort of went 14 too fast and went by yesterday. 15 You know that we were -- at a couple 16 of points we talked about prices and compared 17 that to market share. 18 And when we were talking about 19 operating systems, I had not put up on the 20 screen for you the market share that Microsoft 21 had in the operating system market. 22 And I'm going to give this to you in a 23 moment for the class period. 24 I first want to remind you that the 25 Plaintiffs' expert, Professor Noll, has said 4882 1 that way back in the mid to late '80s, '86, 2 '87, he said he didn't do any analysis in the 3 period prior to '86. But even way back then, 4 Microsoft had monopoly power in operating 5 systems. 6 And as far as Professor Noll was 7 concerned, he said he made no claim that 8 Microsoft's monopoly power was acquired as a 9 result of anything anticompetitive. 10 As far as the Plaintiffs' expert is 11 concerned, Microsoft had that monopoly power 12 lawfully. Of course, we agree. 13 So in operating systems, unlike the 14 applications fields, Microsoft has long had 15 monopoly power. 16 But let's go back to the operating 17 systems. Here's the class period. And our 18 data -- this data actually comes from Professor 19 Noll, the Plaintiffs' expert. 20 And for this purpose, at least for the 21 moment, we are content to rely on that. And 22 you'll see that throughout the period in 23 question, Microsoft's share has been above 80 24 percent and rising to above 90 percent 25 beginning around '96 after Windows 95 comes 4883 1 out. 2 So, if we put the market share 3 together with prices, just to do the same sort 4 of thing we did with the slides in the 5 applications markets, you can compare the 6 consumer version through the OEM channel and 7 then on the professional version. 8 The market share was high throughout 9 this period and before that period, and prices 10 -- even as market share went up, the prices 11 stayed about flat or even went down a little 12 bit. 13 And maybe, Chris, we could go back to 14 the consumer version through the OEM channel 15 just in case I may have gone a little bit too 16 fast. 17 The market shares have always been 18 high -- that's the right scale -- going back 19 into the '80s. Really starting with the IBM 20 contract for MS-DOS to go on to the first IBM 21 PC. 22 And as market share has gone up in the 23 class period, the prices have stayed about the 24 same. 25 Okay. And then there was one other 4884 1 chart that I showed you yesterday that I wanted 2 to provide a little bit more information about 3 than what I showed you yesterday. 4 And we talked about the IBM company 5 and IBM PCs, and I was making the point to you 6 yesterday that, of course, IBM could put any 7 operating system it wanted to on its own PCs. 8 And the Plaintiffs haven't made any allegation 9 that Microsoft did anything to prevent that. 10 And we looked at the extent to which 11 Microsoft actually put OS/2, its own operating 12 system, on PCs. That's sort of that purplish 13 line. 14 I wanted to add one other piece of 15 information to that. 16 The blue, all this blue is Windows. 17 So to this extent, the IBM PC company has 18 installed Windows on its PCs. 19 There's some other operating systems 20 that are still gray that aren't included there, 21 but you can see even in '94, '95, '96 when IBM 22 was using OS/2 on its own machines, it was 23 using Windows even more. It was choosing 24 Windows. 25 And as you recall, and as I said to 4885 1 you yesterday, we believe that the evidence 2 will show that IBM, like other OEMs, chose 3 Windows because IBM believed it was the best 4 thing for it. That's what consumers, that's 5 what customers wanted. 6 Okay. So with my apologies for sort 7 of jumping around -- I went back to these three 8 points from yesterday -- I will pick up with 9 where we left off talking a little bit about 10 improvements in Microsoft software. 11 And at the end of the day yesterday, 12 we were talking about source code and lines of 13 code. 14 Windows XP, which was released in 15 2001, had actually about 45 million lines of 16 code, source code. And, as you probably know, 17 it supports literally thousands and thousands 18 of applications that can run on it, new 19 applications. 20 And we talked about backward 21 compatibility, applications and devices that 22 came out long before. 23 So if you have a game that you 24 purchased, some sort of computer game and you 25 purchased it in the mid-'90s, let's say, and 4886 1 you acquired Windows XP in 2001 or 2002, that 2 software was written to be able to run 3 applications that had come out years before. 4 And, obviously, there is a great 5 effort and expense in R and D necessary to 6 continue to improve the software. 7 And I want to talk to you a little bit 8 about specific improvements. I'm going to try 9 not to get into too much detail. 10 There will be more evidence about this 11 at the trial, but we don't want to throw too 12 much information at you in the opening 13 statement. 14 But if we go back to Windows 3.0 -- 15 you all know by now that was released in May of 16 '90. That was the first release of Windows 17 that had lots of success in the market. 18 Of course, you know, it had the GUI. 19 It had something called file manager, which 20 allowed a user to move, copy, delete, rename, 21 and organize your files and directories in the 22 GUI. And this was an improvement in the way 23 that users could use computers efficiently. 24 It had this breakthrough in memory 25 management that we've talked about, protected 4887 1 mode. And memory was a very important problem 2 going back to around 1990 because of 3 limitations in the hardware at the time. 4 Windows 3.0 had something called 5 program manager, which was sort of a control 6 center, allowing a user to launch applications 7 and manage applications together. 8 By the time we get to Windows 95, 9 which was released in August '95, you'll see 10 that Windows 95 added a number of important 11 features. 12 And the chart that we're looking at is 13 a partial list, just a partial list, of new 14 features that are added to the software with 15 each major new version. 16 There's much more than this. We used 17 one piece of paper and named those that we 18 thought you should know about at least now. 19 Windows 95 had something that many of 20 you probably take for granted now, 11 years 21 later, drag and drop functionality, which 22 allows you really to use your mouse to click on 23 an icon and drag something from one spot, one 24 location into another, into another file or 25 another program, and just drop it in the place 4888 1 that you want it. 2 That's a great and efficient tool, 3 particularly in businesses, because you don't 4 have to have someone retype everything and then 5 check the spelling and proofread and make sure 6 it's right. You just take it from one spot, 7 drag and drop it to another. 8 Windows 95 -- by the way, I should say 9 these were innovations, improvements that 10 Microsoft made in its software. 11 And as you can tell from this chart, 12 and as the evidence will show you at the trial, 13 even with a high market share, and in the 14 operating system market, Microsoft share has 15 always been high -- Microsoft has not stopped 16 working on its programs, its software. 17 Microsoft has worked hard with each version to 18 improve it. 19 Windows 95 had OLE. We talked about 20 that a little bit. Again, that means object 21 linking and embedding. You can have a memo 22 written in, let's say, Word, your word 23 processing program, and OLE allows you to link 24 and embed it into a chart like Excel. 25 So you can work collaboratively with 4889 1 other people and sort of farm out something to 2 another person, have that other person work on 3 it, and then bring it back into your document. 4 There was an Internet browser for the 5 first time on Windows 95, and I know you've 6 heard about that and know about it. 7 There was also an improved graphical 8 user interface. The same principles were 9 utilized as Microsoft had done with Windows 10 3.0, but the look was better and the user 11 interface was more efficient. 12 There was also a start button for the 13 first time with the menus and task bars that 14 the start button has that allows people to 15 better manage the work they're doing. 16 This is particularly useful in an 17 office environment. 18 And, of course, the business world is 19 an important market for software. 20 There was also something called 21 support for long file names. You used to have 22 a situation where if you had a file and 23 documents, you were limited to eight characters 24 plus a three-character suffix in what you 25 called it. 4890 1 The long file names support allowed 2 you to go out to 200. 3 And then plug and play, which really 4 means just what it says. This made it easier 5 to add new peripherals, printers, mouses, 6 keyboards, to the computer without having to do 7 a setup or configuration. You just plugged it 8 in and it played. 9 Windows 98 had more. It had active 10 desktop, which is part of the Internet browser 11 functionality in Windows. And it allows web 12 pages to be turned into items on your computer, 13 on your screen, that are updated automatically. 14 So you don't have to open your web 15 browser each time. If there are web pages you 16 want to look at every day, say, some website 17 with news or some people use it to check sports 18 scores or whatever else, you can put them on 19 your desktop and just go to them instantly, the 20 active desktop. 21 There were other features. I'm going 22 to go more quickly through some of these. 23 Web-based help features in Windows 98. 24 Automatic updates, which the updates 25 allowed you to have Windows automatically 4891 1 update itself, downloading updates to the 2 operating system from Microsoft so you have new 3 improvements coming automatically. 4 And Windows XP in 2001 had all the 5 features of the prior systems, but, of course, 6 added more. It had system file protection, 7 something called movie maker that allows you to 8 create titles, put in an audio track and 9 narrate a movie. 10 There was an Internet connection 11 firewall which protects your computer from 12 outside requests for data unless you authorize 13 those requests. And that was an effort to try 14 to help stop worms and viruses. 15 And a data CD burner. Also support 16 for digital audio devices. 17 And with Word, similarly -- again, I'm 18 not going to go through all of these. But Word 19 in each successive version had more and more 20 features. 21 Some of the features are used by 22 relatively small numbers of people. Some of 23 them are used by many, many people. 24 But as you can see, as time goes on, 25 and importantly as the price is dropping, 4892 1 Microsoft is giving you more and more features. 2 More and more functionality. More utility in 3 your software. 4 And in a case about an overcharge, of 5 course, Microsoft believes that it's important 6 for you to keep in mind not just the price you 7 pay, but what you're getting for what you pay. 8 It's as if the price of a car has gone 9 down year after year and you've gone from 10 Hyundai or a Chevrolet to a Lexus. 11 As more and more features are added 12 that Lexus is costing you less than the, let's 13 say, simple Chevrolet did years and years 14 earlier. 15 In Word, for example, these features 16 have been added consistently to every version, 17 and, of course, the features of earlier 18 versions remain in the later versions. 19 And same thing for Excel. 20 I'm going a little quick here just 21 because there will be evidence at the trial, we 22 will have witnesses on these subjects. 23 Some of this, particularly the names 24 of these features, won't be perhaps terribly 25 easy to remember, but we'll give you a 4893 1 presentation about this when we get to the 2 trial that is somewhat more detailed. 3 And, again, with Excel, you can see 4 that Microsoft over time has added a number of 5 significant features. 6 There are more than just these on our 7 chart, but these are some of the significant 8 ones. And it includes much of the 9 functionality that we've talked about earlier. 10 And I'll just show you one more for 11 Office. 12 As you know, Microsoft Office, which 13 is a suite, meaning it's a number of different 14 products integrated together, Microsoft Office, 15 we think, has been improved dramatically over 16 the years with many new features added. 17 You can see the first release of 18 Office in 1990, and as time went on, many of 19 these features are added. 20 And I think the important thing to 21 note in connection with this is that features 22 are being added without additional charge. 23 It's not like, let's say, buying a car 24 where there's a sticker price and then there's 25 a price for options. You know, somebody says 4894 1 if you want the fancy CD player put in your 2 car, it's an extra, I don't know what it is, 3 $500, or whatever. 4 There are no additional prices. These 5 features are added and the price is just for 6 the package. 7 And as you see, as time went on, 8 something in Office as important as spell check 9 in 1994 is added with no additional charge. 10 Some of us may remember -- it goes 11 back a ways -- but if you go back, for 12 instance, to the 1980s, if you wanted a spell 13 checker, there were programs out there written 14 by software companies that you could buy that 15 would allow you to check spelling. 16 Of course, they cost money. They cost 17 a significant amount of money. 18 And in thinking about bundling and 19 integration, Microsoft, sure, is bundling. 20 It's putting spell checker into Office. 21 As you can see in Office 4.X, the 22 fourth series, beginning in 1994. And we think 23 it's a benefit to consumers, there is no extra 24 charge. You are getting something you have to 25 pay for on the outside world from Microsoft for 4895 1 no additional charge. 2 And you can see many of the other 3 features that get added over the years. By the 4 time we get to Office 2003, we have these many, 5 many important features that users can use. 6 So the story of improvements in the 7 product should not be forgotten when we're 8 talking about price. Because it's not just the 9 money you spend, it's what you get for the 10 software that you buy. 11 And I want to touch on another point 12 that I've emphasized in the past couple of 13 days, which is causation. We think it's such 14 an important point in this case. 15 And you can ask the question in each 16 of the markets sort of this way. Why is it 17 that Microsoft products turned out to be as 18 successful and popular as they are? 19 The Plaintiffs gave you reasons that 20 they'd like you to accept as the reasons for 21 the popularity of that software. 22 Of course, our evidence will be that 23 Microsoft software is popular for the reasons 24 that I've pointed out to you over the past few 25 days. 4896 1 Good products at a low price that 2 consumers want to use. 3 And in connection with that, you'll 4 remember that the Plaintiffs talked about some 5 trade press, some what they called influential 6 trade press. 7 And I want to show you some of that, 8 and I want to tell you, first, that the 9 articles that we're going to give you now that 10 we ask you to look at now, are not to be 11 considered for the literal truth of what they 12 say. 13 They're to be considered for the point 14 that you'll hear from Professor Murphy, and 15 perhaps others, that reviews in the trade press 16 can influence the decisions of the public about 17 what software to use. That is sort of like a 18 review of a movie. 19 I forget what Siskell and Ebert is now 20 called because one of them passed away, but a 21 movie review can move the market, can be 22 influential in terms of what people go to see. 23 And reviews in the trade press, you 24 will hear evidence, can be influential. And 25 when we're thinking about causation, why did so 4897 1 many people choose Microsoft software? 2 We think these are certainly relevant. 3 So let's look at the first one, DX 4 3558. 5 This is from PC World. It's about 6 Excel 3.0. And it's from February 1991. 7 And you'll see this product review. 8 Again, 1991, an important time according to the 9 Plaintiffs, where the market was moving from 10 Lotus to Excel. 11 And this review says, Microsoft Excel 12 for Windows 3.0 is a cornucopia of timely 13 additions and canny improvements that vastly 14 enhance spreadsheet appearance and handling. 15 It focuses on giving ordinary users 16 easy access to often-used features, and, in 17 this, it is nothing short of spectacular. 18 This is consistent with what I spoke 19 to you about, I believe, yesterday, about 20 making things easier for consumers. 21 Let's look at the next one. This is 22 Defendant's Exhibit 2912. And it's from the 23 same publication, I believe, PC World, from May 24 of 1992. 25 This one pertains to Windows, Windows 4898 1 3.1. 2 And you may remember that 3.0 was the 3 version in 1990. 3.1 was a new version of 4 that. 5 And here's what PC World says in May 6 of '92. 7 We want more. We want breakthroughs, 8 not incremental improvements. Surprise. 9 Windows 3.1 delivers the goods three ways. 10 And then there's Defendant's Exhibit 11 3389. We're now moving to May of '94. PC 12 World. 13 And this pertains, again, to Excel. 14 We looked at Excel 5.0 in our February 15 '94 spreadsheet review, where it tied with 16 Borland's Quattro Pro 5.0 for Windows for Best 17 Buy honors. The program has nearly every 18 feature one would expect in a spreadsheet, yet 19 it is remarkably easy to learn. 20 Same kind of thing that you've heard 21 before. 22 Let's look at Defendant's Exhibit 23 2953. This is from PC Magazine, and we are now 24 in January of 1995. 25 And this pertains to Word 6.0. 4899 1 Here's the review. In a word -- so to 2 speak -- Microsoft Word 6.0 for Windows 3 automates writing and text formatting better 4 than any other word processor. Its balance of 5 raw power and precise detail is unmatched. 6 We won't go through every product 7 review that ever came out. You will hear 8 testimony about product reviews, in part from 9 Professor Murphy. 10 But let's go to January of 1996. This 11 is Defendant's Exhibit 2914. 12 From PC Magazine. And these reviews, 13 of course, will be documents. I'm picking out 14 the pieces we think are particularly worthy of 15 your attention now. 16 Far from a pale remake of other's 17 technology, though, Windows 95 adds substance 18 and gloss to the core features. The result 19 squarely matches the mainstream market's needs. 20 Again, these product reviews, I think, 21 are consistent with the sort of thing that I 22 spoke to you about in the last two days. 23 And I'll show you one more now. It's 24 Defendant's Exhibit 3573. 25 And this is about Office and the 4900 1 version of Office that came out in 1997 called 2 Office 97. 3 From February of 1997, PC World. 4 Office 97 really is full of useful new 5 stuff, more so than Office 95, which was itself 6 a PC World Best Buy. 7 In fact, Office 97 introduces so many 8 features that it's tough to say which are the 9 most important. 10 You will hear testimony from Kevin 11 Murphy, our expert economist, about these 12 product reviews. 13 And I want to point out to you now, 14 testimony from three people in the industry 15 along the same lines. 16 First, there's testimony from a man 17 named John Sculley who from 1983 to 1993 was 18 the chief executive officer of Apple Computer 19 for ten years. 20 And, of course, as you'll remember, 21 Apple wrote applications to its own Macintosh 22 operating system, as did Microsoft. 23 Microsoft's were more popular even 24 than Apple's, though Apple had the advantages 25 of knowing what its own operating system had in 4901 1 it. Knowing every wrinkle and in and out. 2 John Sculley will testify, by 3 deposition, that Microsoft, quote, made very, 4 very good applications, unquote. 5 And when he was asked about Microsoft 6 Office, he said that Office was, quote, one of 7 the smartest, best-managed business innovations 8 that went on in the high tech industry, 9 unquote. 10 That's from the guy who was the boss 11 at Apple. 12 You saw a videotape of Steve Crummey 13 yesterday of Lotus, another competitor in the 14 applications field. 15 And I think you'll remember Mr. 16 Crummey saying that when Excel was released in 17 1985 -- 1985 now, '85 for the Mac, it was 18 awesome visually, and by the late '80s he said 19 Excel was a very good product. 20 And Pete Peterson of WordPerfect, you 21 saw him on videotape yesterday. 22 He also said that when he saw the 23 Microsoft Excel application come out, it was 24 devastating for us. And he said it got rave 25 reviews and everybody loved it. 4902 1 So we have testimony from these 2 important competitors, Apple, WordPerfect, and 3 Lotus that are to the same effect exactly what 4 we've been talking about now for two days. 5 Microsoft's success in all these 6 markets was attributable, we think the evidence 7 will establish for you, attributable to its 8 really good products and products that were 9 sold at a low price. 10 All right. I want to show you some 11 more documents that pertain to that very point. 12 First is Defendant's Exhibit 6511. 13 And this was a report that summarizes 14 the results of a Windows user profile study 15 conducted by Field Research Corporation. 16 You see it there. Microsoft 17 commissioned this outside company to conduct a 18 Windows user profile study. 19 The interviews were conducted in March 20 and April of 1991. 21 And this document has lots of useful 22 information in it. 23 Let's look at the next slide. 24 What the company that did this study 25 found -- and here we have this one excerpt, as 4903 1 an additional indicator of customer 2 satisfaction, most Windows users appear very 3 likely to recommend Windows 3.0 to others. 4 Roughly three-quarters (76 percent) report a 5 score of 8, 9 or 10 on a 10-point scale, and 6 the average (mean) score across all respondents 7 is quite high (8.2). 8 And Defendant's Exhibit 6511 goes on, 9 for instance, to talk about the ratings of 10 those who have used Windows -- this is Windows 11 3.0 -- for six months or more. 12 And in that case people who had been 13 using it for a period of time, 84 percent, 14 reported a score of 8, 9, or 10. That's, 15 again, out of a scale of 10. 16 People liked the products because they 17 were great products. 18 And let's look at Defendant's Exhibit 19 6506. 20 This is about Word. And it's a 21 Microsoft document, a Word upgrade research 22 presentation. It was created, as you can see, 23 in April 1992. 24 And it's a study that was conducted 25 based on 800 telephone interviews with people 4904 1 who had registered as owners of Microsoft Word 2 as you can see in March and April 1992. 3 The question was asked, overall, how 4 satisfied are you with the new version of 5 Microsoft Word? 6 Again, just to remind you, we are 7 talking about 1992. 8 Again, at this critical period, 9 according to the Plaintiffs, and when the 10 market had been moving, was moving quickly from 11 the character-based world to the graphical 12 world. 13 And you'll see that Word for Windows, 14 what's called WinWord here has the following 15 responses. 65 percent of those interviewed say 16 very satisfied, 28 percent somewhat satisfied. 17 And I think it's quite remarkable, only 7 18 percent said they were somewhat or very 19 dissatisfied. 20 On Word written for the Macintosh, the 21 Apple system, the results are about the same. 22 Again, over 90 percent, here 95 23 percent are very or somewhat satisfied. Just 5 24 percent saying they're dissatisfied. 25 And similar type question to try to 4905 1 probe further about what people think of 2 Microsoft's products. 3 As you know, Microsoft was working 4 with customers all the time to try to make the 5 products easier to use, with more features, 6 products that people liked and wanted to use. 7 And so the question was asked how 8 likely are you to recommend the new version of 9 Microsoft Word to a friend or coworker? 10 And you see, again, very high, 11 positive responses. 12 In the unlikely category, it's 8 13 percent for Word on Windows and 9 percent for 14 Word on Mac. 15 Over 90 percent of the people 16 interviewed said they were likely, very likely 17 or somewhat likely to recommend Word. 18 So when you see market shares of 90 19 percent, you can see that this pretty much 20 matches what people are saying at the time 21 about what they think of the product. 22 And let's look further into this 23 document. Again, it's Defendant's Exhibit 24 6506. 25 Here's a summary concerning those who 4906 1 have upgraded. 2 Product satisfaction is high. Over 9 3 out of 10 are very/somewhat satisfied with 4 Microsoft Word. 5 About 9 out of 10 also said they would 6 recommend. 7 So I think the point we're making is 8 quite clear from this document. 9 I want to look at one more of these 10 surveys. It's Defendant's Exhibit 6510. 11 And this is now from 1994. It's 12 called customer satisfaction, 1994 end user 13 customer satisfaction. 14 This is a Microsoft document. The 15 copy that was produced from the Microsoft files 16 has a little -- on some pages some handwritten 17 scribbling, but the point in the document -- if 18 we go to the next page. 19 Conclusions. This document will be in 20 evidence ultimately. You can look through the 21 whole thing. 22 Brand loyalty. Microsoft has a much 23 stronger competitive company SCI. And SCI 24 stands for secured customer index. A measure 25 of brand loyalty position with the broader 4907 1 market. Over 10 points ahead of Novell and 2 Lotus. 3 Broad product line gives us tremendous 4 edge. 5 And let me just stop there. 6 As you know, some software companies 7 made products that did well in one little 8 market, let's say, spreadsheets or word 9 processors. 10 Microsoft had a broad product line 11 that went through all these important markets. 12 Operating systems, word processing, 13 spreadsheet, and suites, office suites. 14 And, then, the document says Novell 15 and Lotus have lower satisfaction with the 16 broader audience. 17 So there will be lots of evidence at 18 trial about why Microsoft products have a high 19 market share, and we think the evidence will be 20 that they have a high market share because 21 that's what people want. 22 Now, I'm switching gears and going to 23 a different subject. 24 I want to talk -- and I did refer to 25 this earlier, but I want to talk in a little 4908 1 more detail about the government case. You've 2 heard a lot about that. 3 And let's first look at Preliminary 4 Instruction Number 31 from the Court. 5 And as you know, I think you'll recall 6 this, the Court told you that he was going to 7 read some of the conclusions of law and 8 findings of fact from the government case that 9 you must accept as true. 10 The conduct at issue in the government 11 case was in the period July 15th, '95, through 12 June 24th, 1999. 13 And the conclusions and findings only 14 applied to the market for Intel-compatible PC 15 operating systems. 16 So I just want to stop there. 17 As you know, these conclusions and 18 findings do not apply to the other markets at 19 issue in this case. 20 And then Judge Rosenberg went on to 21 say, the government case addressed Microsoft's 22 conduct in the PC operating systems market 23 only. 24 I think that's important to keep in 25 mind when thinking about the government case to 4909 1 make the distinction between the markets and 2 what the government case pertains to. 3 And then I remind you, of course, as 4 you also know, the fact that Microsoft was 5 found by the courts in the government case to 6 have committed anticompetitive acts does not 7 mean that there's no work for you to do. 8 It does not mean that the Plaintiffs 9 in this case are entitled to any damages in any 10 market, even in the operating system market. 11 As I think you know by now, to obtain 12 damages, the Plaintiffs must be able to prove 13 to you by a preponderance of evidence that the 14 anticompetitive conduct caused harm to them. 15 Caused harm to them. Resulted in a world that 16 was so different from the real world that 17 prices would have been lower. 18 And then, of course, they have to 19 prove harm to them as a result of what they say 20 are these increased security vulnerabilities. 21 Vulnerabilities allegedly caused by 22 anticompetitive conduct. That's what they must 23 prove. 24 And the Court, of course you know, 25 read you a very long list of findings. There 4910 1 were a total of 146 of them. They pertain 2 principally to the web browser made by Netscape 3 called Navigator and the Java programming 4 language that was developed by Sun 5 Microsystems. 6 As you know, neither of those was an 7 operating system. They were both what has been 8 called middleware. They ran on top of an 9 operating system. 10 And I want to draw your attention, if 11 I could, to the conclusions of law which appear 12 in your notebook beginning at the page marked 13 0, which comes after page 40, when the Court 14 begins discussing conclusions of law. The page 15 is marked 0 and then goes 1, 2, et cetera. 16 And on page 0 the Court says, 17 Microsoft maintained monopoly power in the 18 operating systems market by the following 19 anticompetitive conduct, i.e., conduct which 20 caused harm to the competitive process and, 21 thereby, harm to consumers. 22 And then there's a list of 12, 12 23 conclusions, that the Court has said are 24 binding here. 25 The findings of fact in the government 4911 1 case that you have in your notebook are 2 findings that support these 12 conclusions from 3 the government case. 4 And I want to go through at least some 5 of them so that you as the jury understand a 6 little bit more about that case. 7 Here's page 0 from the Court's 8 instructions, conclusions of law. Again, the 9 12 conclusions that you'll see on page 0, 1, 10 and going to page 2 are the conclusions that 11 come out of the government case. Conclusions 12 of law. 13 And the first one is, preventing OEMs 14 from removing visible means of user access to 15 IE, (i.e., desktop, icons, folders, and start 16 menu entries). 17 And this refers to contractual 18 restrictions between Microsoft and OEMs which 19 for a time prevented OEMs from taking off, for 20 instance, an icon, the Internet Explorer icon. 21 Now, I think you know, because I 22 mentioned it maybe Monday afternoon or Tuesday 23 morning, that the government case concluded 24 with a final judgment. 25 And the final judgment in the 4912 1 government case was entered by the Court on 2 November 12, 2002. That's the federal court in 3 Washington, D.C. 4 The final judgment contains -- it's 5 the judgment of the Court -- 6 MR. HAGSTROM: Objection, Your Honor. 7 THE COURT: Sustained. 8 MR. TULCHIN: May I show, Your Honor, 9 the portion of the final judgment that pertains 10 to Conclusion Number 1? 11 MR. HAGSTROM: Objection, Your Honor. 12 THE COURT: Sustained. 13 MR. TULCHIN: All right. 14 I wonder, Your Honor, if we could take 15 our morning recess? 16 THE COURT: We may. 17 MR. TULCHIN: Thank you. 18 THE COURT: Ladies and gentlemen, we 19 will take a recess at this time for 15 minutes. 20 Remember the admonition previously 21 given. Leave your notebooks here. 22 (The following record was made out of 23 the presence of the jury at 9:26 a.m.) 24 THE COURT: You may be seated. 25 The record will reflect we are outside 4913 1 the presence of the jury. 2 Mr. Tulchin? 3 MR. TULCHIN: Yes, Your Honor. 4 The Court ruled on November 20th. 5 Your Honor stated that the Court has no problem 6 with Microsoft referring to the final judgment, 7 the consent decree, during opening statement. 8 What you said was you have no problem 9 doing that as long as the references are 10 accurate and as long as we do not suggest that 11 any damages were paid out in that case, which, 12 of course, I haven't suggested. And I've tried 13 to be careful to tell the jury that damages 14 were not at issue there. 15 There was also a sidebar on December 16 11th, that is on Monday, during my opening 17 statement, and the Court said then that it was 18 going to allow you, that's referring to me, to 19 go into it providing that you are going to link 20 it up to your evidence, which is what I intend 21 to do, Your Honor. 22 You said then, I don't want any 23 suggestion that the 2002 consent decree 24 eliminated any damage issue whatsoever. 25 And then after the jury was dismissed 4914 1 on Monday, Ms. Conlin asked again that 2 Microsoft be precluded from referring to the 3 2002 judgment, and the Court said as follows. 4 The Court stands by the ruling. It 5 allowed Mr. Tulchin to make a reference, I 6 guess, with the good faith belief that he's 7 going to be able to show to the Court it's 8 admissible at some point during the trial. 9 So -- but the Court's ruling does 10 stand. And that will be how we decide it when 11 you come to presenting any such evidence. You 12 will go through the Court first outside the 13 presence of the jury. 14 Again, Your Honor, we think this is 15 important because the Plaintiffs keep asking 16 the jury to hold Microsoft accountable for the 17 conduct found anticompetitive. 18 There is a hotly contested issue as to 19 whether that conduct caused actual injury to 20 the Plaintiffs in this case. 21 But we've already asked, and the 22 Court, I understood, had already ruled, that we 23 could refer to this document. 24 There was no objection to it, by the 25 way, during the evidentiary process. It's in 4915 1 evidence under the ground rules we've been 2 operating under. 3 And it seems clear to us that the jury 4 is entitled to know the truth; that the 5 government case ended with a judgment. 6 What I was about to do was link up the 7 Court's Conclusion Number 1, that you read to 8 the jury, with a provision in the final 9 judgment that corresponds to that, removing 10 icons for Internet Explorer, because the final 11 judgment prohibits Microsoft from entering into 12 contracts with OEMs that would prevent OEMs 13 from removing the icon. 14 They can remove the icon. And that's 15 been true now ever since the final judgment was 16 entered. Indeed, it was true since December 17 15th, 2001, because Microsoft, as the Court 18 knows, by agreement stipulated to the final 19 judgment with the Department of Justice and 20 began complying with it in December '01, five 21 years ago. 22 And then there was that process in the 23 district court in DC to seek approval of the 24 stipulated consent decree between the 25 Department of Justice and Microsoft. 4916 1 Judge Kollar-Kottely -- there was an 2 objection from some of the states -- held a 3 long trial on those objections to see what 4 remedies would be imposed. 5 And the ultimate consent decree, which 6 is the only one I intend to use that was 7 entered, was almost identical to the one that 8 Microsoft and the Department of Justice had 9 agreed to almost a year earlier. 10 So, again, Your Honor, we understood 11 the Court had ruled on this. And we also think 12 it's highly important for the Jury to 13 understand that the government case had an 14 ending and contained restrictions on what 15 Microsoft can do going forward. 16 THE COURT: Okay. What's the basis of 17 your objection then? 18 MR. HAGSTROM: Your Honor, when we've 19 discussed this previously, number one, when it 20 came up during voir dire, the point at that 21 time was a representation that Mr. Tulchin 22 wanted them to just know it was there. 23 Then the concern was whether or not he 24 can link it up to some connection for juror 25 qualification. 4917 1 When we raised this again, whenever it 2 was in the past few days, we again objected to 3 bringing up the 2002 judgment. 4 Your Honor has been following 5 Microsoft's wishes and identifying for the jury 6 that the conduct is for the period '95 through 7 '99. 8 The only reason Microsoft wants to 9 bring this up now is to suggest that the 10 conduct has ceased or there's been some 11 modification. 12 And, in fact, within the last week, 13 Judge Kollar-Kottely has had a hearing and 14 written an order stating the judgment is not 15 working. 16 So are we going to get into an entire 17 process of what has happened with, number one, 18 the extension of the judgment, the compliance 19 period by two years, the recent hearing about 20 her conclusions that it's not working? 21 You know, we are going to go down a 22 very long road here. 23 It's entirely irrelevant. The 24 relevant questions for purposes of this lawsuit 25 is whether Microsoft had ceased its conduct at 4918 1 any point in time. 2 It can put on evidence of that effect 3 if it's true. We will put on evidence that the 4 conduct continues. 5 We don't need a judgment getting into 6 evidence that will ultimately confuse the jury 7 and prejudice the Plaintiffs. It's a confusing 8 fact. 9 There's heated debate as to whether or 10 not that judgment has resolved any of the 11 issues with regard to the lack of competition 12 in the marketplace. 13 It's going to be a separate trial unto 14 itself if we start down that path. 15 MR. TULCHIN: Your Honor, if I may. 16 THE COURT: Sure. 17 MR. TULCHIN: First, as I think 18 Mr. Hagstrom knows, Judge Kollar-Kottely's 19 statement pertained to server-to-server 20 protocols. Her statement did not pertain in 21 any way to any conduct in the operating system 22 market. 23 This had to do with something entirely 24 different. Server-to-server protocols. 25 And this is the third time that the 4919 1 Plaintiffs have objected. 2 The first time it's at page 1033 of 3 the transcript from November 20th. The Court 4 said, quote, I have no problem with opening 5 statement, unquote. 6 Then, at page 4149 of the transcript, 7 we had the same objections, and the Court said, 8 quote, I'm going to allow you to go into it 9 providing that you are going to link it up in 10 your evidence. 11 So this is a third shot that the 12 Plaintiffs make. It seemed to me that their 13 effort to shut this down in front of the jury 14 after I relied on the Court's statements that I 15 could do this is just a way of, again, trying 16 to disrupt Microsoft's opening statement. 17 And the last thing, Your Honor, is 18 that Mr. Hagstrom in his comment a moment ago 19 referred to this final judgment as a fact. It 20 is a fact. This is the truth. There was such 21 a judgment. 22 We are not moving for summary judgment 23 based on it. We haven't said that this ends 24 the inquiry as to Microsoft's conduct post the 25 judgment. 4920 1 But we think the jury is entitled to 2 the truth about how the government case ended. 3 Otherwise, there's almost certainly to 4 be enduring speculation on their part about 5 what the consequences were. 6 THE COURT: What do you intend to show 7 specifically about the judgment? The order 8 that was actually issued by the Court? 9 MR. TULCHIN: Yes. The final judgment 10 that was entered by the Court, which they've 11 never objected to. 12 We had an evidentiary process. We 13 designated that as our exhibit. 14 It's my understanding -- and I believe 15 this is correct -- that there was never any 16 objection to that. 17 So under our process, that is, you 18 know, in evidence. 19 But I don't intend, Your Honor, to get 20 into every little detail of the final judgment. 21 I did intend to match up the first few 22 conclusions of law that the Court read to 23 provisions in that judgment to show the jury 24 that Microsoft has been forbidden from 25 continuing that conduct. 4921 1 I mean, that's a fact, Your Honor, 2 that may help the Plaintiffs. It shows that 3 for the period in question, the Courts, you 4 know, shut down something that Microsoft did. 5 But, certainly the jury shouldn't be 6 allowed to believe or speculate that 7 Microsoft's conduct has continued -- the 8 conduct at issue in the government case has 9 continued past the date of the final judgment. 10 If an award by the jury were made on 11 the ground that it believed that Microsoft was 12 continuing to engage in what the Courts found 13 to be anticompetitive conduct throughout the 14 class period, well, that would be based on a 15 complete untruth. 16 THE COURT: Let me get this straight. 17 You are going to introduce it to show that 18 Microsoft has engaged in no further 19 anticompetitive conduct after that? 20 MR. TULCHIN: No. That Microsoft has 21 complied with the final judgment. It's been 22 forbidden from, for instance -- 23 THE COURT: That's not -- that's 24 different. That's a different issue. 25 MR. TULCHIN: Well, Your Honor, aren't 4922 1 we entitled to put in evidence to the jury that 2 we've complied with this judgment? 3 I mean, the Plaintiffs can dispute 4 that. If they have evidence that we haven't, 5 let's hear it. 6 But certainly Microsoft can put in 7 evidence that these practices ceased. 8 Is the jury to be allowed to believe 9 that, for instance, the prohibition on removing 10 an icon or the prohibition on the size of a 11 Navigator icon, which are part of the 12 conclusions, that those prohibitions, 13 contractual prohibitions with OEMs continue 14 past the relevant date? 15 If the jury is allowed to believe 16 that, then we've headed down a road where for 17 the last four years of the class period the 18 jury apparently will be permitted to believe 19 that Microsoft's conduct includes unlawful acts 20 in accordance with the government case decision 21 when, in fact, it has not. That conduct has 22 ceased. 23 We have witnesses from Microsoft who 24 can, and we intend will, testify to exactly 25 that. 4923 1 The Court ordered us to do X, and we 2 have complied with that order. 3 MR. HAGSTROM: Your Honor, they can 4 bring in witnesses to say that their conduct 5 has ceased in certain types of conduct. They 6 should not be allowed to come in and say we 7 have complied with a judgment. 8 With regard to the Defendant's 9 exhibits, the exhibit number, I asked for the 10 number. I've not been provided that. We do 11 not believe that that is admitted into 12 evidence. We've objected to it. 13 We believe the motion in limine of 14 November 9th concerning settlements or offers 15 of settlements relates to this issue. 16 Not only settlements of other class 17 actions and competitor suits, but it refers to 18 the 1995 consent judgment and this particular 19 judgment. 20 The issue of whether or not Microsoft 21 removed icons in compliance with -- or, in 22 other words, to cease doing something with 23 regard to icons preventing their removal, 24 again, they can put on a witness and say we've 25 stopped doing that. 4924 1 We don't need to get into a judgment 2 and say, look, we've complied with the judgment 3 of 2002. We settled with the Department of 4 Justice. 5 What Microsoft is trying to do is to 6 basically direct the jury that its conduct has 7 terminated. It's trying to imply that you need 8 not consider damages because the conduct has 9 already been resolved. 10 Microsoft can put on evidence of when 11 it ceased doing certain types of things, but it 12 should not be allowed to put in evidence of any 13 resolution, settlement, or things of that 14 nature. 15 It's prejudicial. It's confusing. 16 THE COURT: Okay. 17 MR. TULCHIN: Your Honor, this is the 18 third time. The Court permitted me to do this, 19 and it seems terribly unfair after I was told 20 twice that I could refer to this in opening 21 statement, for the Plaintiffs to seek to shut 22 this down in a way to embarrass me in front of 23 the jury when the Court has ruled twice exactly 24 on this argument. 25 The motion in limine, Your Honor -- 4925 1 our motion, we specifically said in it, and it 2 was our motion the Court was deciding, 3 Microsoft does not seek by this motion to 4 exclude references to Microsoft's compliance 5 with the consent decree by which the action 6 brought by the United States Department of 7 Justice in certain states was settled. 8 So we excluded that from the scope of 9 our motion. When the Court ruled, it said 10 we'll decide this on an issue-by-issue basis. 11 And we did. 12 On November 9th, I quoted the 13 transcript. The Plaintiffs made the same 14 argument. The Court said -- let me get the 15 exact words -- I have no problem with opening 16 statement. 17 So here we are in opening statement. 18 This is a part of the Plaintiffs' 19 continued effort, Your Honor, to relitigate 20 every issue that the Court has decided so that 21 the ground rules are constantly shifting. 22 THE COURT: Okay. Anything else? 23 MR. HAGSTROM: Your Honor, the issue 24 was with regard to referring to the judgment, 25 not discussing its terms. 4926 1 And that is the distinction. We 2 objected to not only referring, but discussing 3 the terms. Your Honor ruled that he could 4 refer to it. But here he is now trying to get 5 into the terms of the judgment, and that has 6 not been previously ruled upon. 7 I think Your Honor made clear at the 8 sidebar that that was not going to be allowed. 9 I don't have that transcript in front of me, 10 and it would be erroneous from our perspective. 11 I think it's error, it's prejudicial, 12 it's confusing for the jury to allow him now to 13 get into the terms of the judgment itself. 14 Thank you. 15 THE COURT: Anything else? 16 MR. TULCHIN: Not for me, Your Honor. 17 THE COURT: Okay. Take ten minutes 18 and I'll rule on it. 19 MS. CONLIN: Your Honor, before we 20 break, we would like to know the number of the 21 exhibit that Mr. Tulchin -- 22 MR. TULCHIN: I already said it, Your 23 Honor, but I'll be happy to say it again. 24 I said it to the jury. 25 6729. 4927 1 MS. CONLIN: Thank you. 2 (Recess was taken from 9:43 a.m. to 3 9:53 a.m.) 4 (The following record was made out of 5 the presence of the jury.) 6 THE COURT: The Court has reviewed the 7 objection and the arguments of counsel. 8 The Court at this time is going to 9 allow the Defendant to state what the judgment 10 was. The Defendant will also be able to state 11 and present evidence as to what the Defendant 12 did after the judgment. 13 However, at no time can the Defendant 14 state that the Defendant's actions after the 15 judgment by the government were done in 16 compliance with a judgment or that there's a 17 conclusionary statement that the Defendant has 18 complied with the judgment. 19 That is a legal conclusion, which only 20 the Court could consider and determine. 21 Anything else? 22 MS. CONLIN: Your Honor, a couple of 23 things. 24 We do not have in our data base 6729, 25 the exhibit to which the Defendant is referring 4928 1 is not a part of the database. 2 Mr. Tulchin has represented that we 3 had no objections to that, and we've not even 4 had an opportunity to propound an objection 5 given the fact that it has only been provided 6 as an exhibit within the last recent time 7 apparently. 8 And with respect to the Court's 9 ruling, our approach to the motions in limine, 10 Your Honor, has been if the Court has ruled, 11 then I will not in my opening mention the 12 subject matter. 13 As a result, I did not, though I 14 wished to do so, mention the 1995 consent 15 decree. 16 We read the Court's ruling and 17 believed that we were not permitted to do that. 18 Given the fact that the Court is 19 permitting Mr. Tulchin to refer to the consent 20 decree that he likes, I would ask the Court to 21 consider permitting me to reopen my opening 22 statement for the sole purpose of referring to 23 and calling the jury's attention to the 1995 24 consent decree. 25 THE COURT: Okay. 4929 1 That's denied. 2 Anything else? 3 MR. TULCHIN: No, Your Honor. 4 THE COURT: Okay. 5 MS. CONLIN: Well, Your Honor, we've 6 got an exhibit that he's about to refer to that 7 is not a part of our database to which we have, 8 of course, strong objection. And so I would 9 like consideration of that question as well. 10 THE COURT: Okay. Where's the 11 exhibit? Let's see it. 12 MR. TULCHIN: Yes, Your Honor. 13 It's the final judgment in the 14 government case. 15 THE COURT: Let's see it. Do you have 16 it on the screen or something? 17 MR. TULCHIN: I have a hard copy here, 18 Your Honor. 19 THE COURT: Oh, okay. 20 MR. TULCHIN: Somewhere. I had it in 21 my hands a few moments ago. I literally had it 22 in my hands. Here it is. 23 THE COURT: Thank you. 24 MS. CONLIN: When the Court is ready, 25 I'd like to make a formal objection on the 4930 1 record. 2 THE COURT: Okay. 3 MR. TULCHIN: Your Honor, I don't know 4 if that copy had my handwriting on it. I don't 5 know, I may have made notes on it. If so, I'm 6 sure the Court can ignore those. I just -- I 7 don't know. It was sort of a working copy. 8 THE COURT: I didn't see any. Looked 9 pretty blank. 10 MR. TULCHIN: Okay. 11 THE COURT: I didn't notice any. I'm 12 just making one copy for me. 13 MR. TULCHIN: You can actually -- 14 Carrie doesn't even have to make a copy. You 15 can keep that one. We have others. 16 THE COURT: Recess till 10:30. I want 17 to look at this in more detail. 18 Tell the jury. 19 (A recess was taken from 10:07 a.m. 20 to 10:33 a.m.) 21 THE COURT: I looked over the 22 judgment. Some portions I don't believe shall 23 be shown to the jury. 24 The third paragraph, first page -- 25 MS. CONLIN: Your Honor, I hesitate to 4931 1 interrupt, but may I make my record before the 2 Court? 3 THE COURT: Oh, sure. 4 MS. CONLIN: Thank you, Your Honor. 5 The Plaintiffs object to any use of 6 Exhibit 6729 for the following reasons. 7 In its order on the motion in limine 8 brought by the Defendant, the Court ruled as 9 follows. 10 No evidence of an office compromising 11 disputed claim in this case, acceptance of such 12 an offer or a completed settlement is 13 admissible, quoting from the Court's order. 14 We believe that any use whatsoever of 15 6729 or reference to the settlement of the 16 government case violates Iowa Rule of Evidence 17 5.408 precluding settlements. 18 It also violates 401 because it is not 19 relevant, and 403 because it is highly 20 prejudicial, unfairly prejudicial, and the 21 prejudicial effect of the use of 6729 outweighs 22 any evidentiary value. 23 We object to the use or publishing of 24 the document itself. 25 Your Honor, you have been misled by 4932 1 the Defendant with respect to what is going on 2 in the proceedings currently with respect to 3 the settlement decree. 4 Mr. Tulchin told you that it had to do 5 with server-to-server protocols. In fact, it 6 also has to do with client-to-server protocols, 7 and the failure to document such protocols so 8 ISVs could -- ISV applications could 9 communicate with Windows products. 10 I'm going to hand to the Court just a 11 -- this is a report, a trade press report. So 12 we would ask permission to supplement the 13 record further with respect to this matter, 14 Your Honor. 15 But what this says, among other 16 things, is that there have been numerous delays 17 and complaints about the quality of Microsoft's 18 documentation. 19 And the article I identified, in 20 addition, there were 943 identified problems 21 with the current technical documentation, up 22 from 835 problems identified as of 30 23 September. 24 Further, Your Honor, the Plaintiffs 25 sought discovery on Microsoft's compliance with 4933 1 this consent decree back in 2004. 2 Microsoft vigorously objected and 3 prevailed. As we sit here today, and despite a 4 timely request for production, we are deprived 5 of the materials necessary to respond to 6 Microsoft's assertions which are false, that it 7 is in compliance with the Court decision. 8 It is not in compliance, and 9 Plaintiffs, however, do not have access to the 10 confidential documentation which is at issue. 11 The Court has ruled that at no -- just 12 moments ago, Your Honor, at no time can the 13 Defendant state that the Defendant's actions 14 after the judgment by the government were done 15 in compliance. 16 We see as a problem in that respect, 17 Your Honor, that Microsoft will say that it 18 complied before the judgment. 19 As the Court has heard Mr. Tulchin say 20 already, Microsoft voluntarily complied 21 beginning in December of 2001, and the consent 22 decree was not entered until almost a year 23 later. 24 Plaintiffs cite in support of their 25 contentions United States versus Microsoft 147 4934 1 F. 3rd 935 at page 950, note 14, that note 2 supports our contention that the question of 3 compliance with the decree is completely 4 separate from compliance with the law. 5 The footnote in total says as follows. 6 Quote, The antitrust question is, of course, 7 distinct. The parties agree that the consent 8 decree does not bar a challenge under the 9 Sherman Act, end quote. 10 Microsoft cannot be permitted to cloak 11 the consent decree in an aura of immunity from 12 the damages sought by Plaintiffs. That is what 13 it seeks to do. That is the only purpose for 14 which it offers this material. 15 And it is an improper purpose, and the 16 jury should be -- if the Court permits the use 17 of this document and reference to the consent 18 decree, the Plaintiffs respectfully request 19 that the jury be carefully instructed as to the 20 use to which they may put any of this 21 information. 22 THE COURT: Okay. Thank you very 23 much. 24 Mr. Tulchin? 25 MR. TULCHIN: Your Honor, yes. 4935 1 A few things, if I may. 2 I disagree quite vehemently with 3 everything Ms. Conlin said. 4 First, you have not been misled. That 5 is untrue. 6 Apparently, for the purpose of 7 disrupting Microsoft's opening statement and 8 causing a delay, which will permit the jurors 9 to speculate that Microsoft has done something 10 improper, the Plaintiffs now want to litigate 11 in full what's going on in the District of 12 Columbia District Court. 13 We are happy to provide further 14 information to the Court about that, but there 15 hasn't been any misleading. 16 Secondly, Your Honor, Ms. Conlin's 17 arguments could have been made the first time 18 the Plaintiffs raised this issue, when they 19 lost. And the Court said I will permit you to 20 refer to this in your opening statement. 21 They could have been made the second 22 time they litigated this issue, when they lost, 23 but, like everything else in this case, we're 24 back to a third trial. 25 Your Honor, no one has argued to the 4936 1 jury that the final judgment provides Microsoft 2 with immunity in this case. 3 And for Ms. Conlin to say that is, of 4 course, not correct. 5 We haven't argued that it provides 6 immunity. If we thought it did, we would have 7 asked the Court for summary judgment, for 8 judgment with respect to the period after entry 9 of this final judgment. 10 The Plaintiffs can submit their 11 evidence about Microsoft's conduct. And the 12 jury is entitled to know the truth about what 13 actually happened in the government case. 14 Thirdly, Your Honor, this problem, to 15 the extent that it's a problem -- and it's 16 not -- but if there's a problem, it's a problem 17 of the Plaintiffs' own making. 18 They move for summary judgment in 19 2004. Sorry, not for summary judgment, for 20 collateral estoppel. We opposed. We 21 litigated. We went to the Supreme Court. We 22 came back. 23 They moved again. And by seeking 24 collateral estoppel on the 146 findings that 25 the Court granted, and, of course, we opposed 4937 1 that, but by seeking collateral estoppel and 2 asking the Court to provide this kind of 3 detailed information about the government case, 4 the Plaintiffs make it necessary -- indeed I 5 think justice requires -- that the jury 6 understand that the government case concluded 7 with this final judgment for all the reasons 8 we've talked about now on three occasions. 9 It's, again, an effort for the 10 Plaintiffs to keep the jury from learning the 11 truth. 12 Thank you, Your Honor. 13 THE COURT: What's the relevance of 14 the judgment? 15 MR. TULCHIN: The relevance is, Your 16 Honor, is that the Court has instructed the 17 jury about 12 conclusions of law and 146 18 findings and said that everyone is bound and 19 that the jury must understand that Microsoft's 20 conduct was anticompetitive in this time frame. 21 We are entitled to inform the jury 22 that the conduct stopped, that a final judgment 23 was entered prohibiting Microsoft from doing 24 the acts that were the subject of the 25 government case. 4938 1 And, of course, we are entitled to 2 defend ourselves from the allegation that 3 unlawful conduct has existed in the period 4 since the government case. 5 The Court may remember, Your Honor, 6 that in Minnesota, for instance, the class 7 period was November -- sorry -- May 18th, 1994, 8 as it is here, until December 15th, 2001. 9 Judge Peterson in Minnesota cut the 10 class period off as of the date that Microsoft 11 began complying with this final judgment. 12 Here the Plaintiffs argue that they 13 wanted a class period through June 30th, 2006, 14 which allows them to seek -- and we've 15 calculated this, Your Honor -- it's about half 16 the total damages in the case apply to that 17 more recent period, the period subsequent to 18 the period in the Minnesota case. 19 It's almost half. 20 So half the damages they seek is on 21 account of purchases of software made in this 22 period from December 15th, 2001, through June 23 30th, 2006. 24 And even if you start in November of 25 2002, a substantial portion of their damages, 4939 1 something, I think, around 40 percent for that 2 period, is on account of this period since the 3 final judgment. 4 Now, of course, they can argue that 5 the class suffered damages in that period. 6 We should be permitted to submit 7 evidence to the jury that the conduct at issue 8 in the government case was prohibited beginning 9 November 12th, I believe the date is, 2002. A 10 judgment of the court was then entered. 11 This is simply the truth about the end 12 of the case as to which they have the benefit 13 of collateral estoppel. 14 THE COURT: But in order to show that 15 Microsoft has done none of -- no further acts 16 that are anticompetitive, you don't need a 17 decree from the Court to show what you did. 18 MR. TULCHIN: Well, we intend to 19 submit evidence of what the company has done, 20 Your Honor. 21 THE COURT: What's the decree offer? 22 MR. TULCHIN: The decree is simply the 23 truth of how the government case ended. 24 The jury is certainly entitled to 25 understand that there were consequences from 4940 1 the government case. It's not just that they 2 were conclusions of law. There was an end to 3 the case with a decree forbidding the same acts 4 from occurring again. 5 THE COURT: The problem is, though, is 6 maybe the jury will be prejudiced that those 7 consequences that you paid and the case has 8 already been determined. It's over. 9 MR. TULCHIN: But the Plaintiffs have 10 asked for the jury to conclude exactly the 11 opposite, which is untrue. 12 The Plaintiffs have asked the jury to 13 conclude that Microsoft has never been held 14 accountable. 15 They did it in voir dire and they did 16 it in their opening statement. They've asked 17 the jury in this case to punish Microsoft for 18 its anticompetitive conduct in the government 19 case. 20 Well, I'm not sure that's appropriate 21 at all, but to the extent the conduct in the 22 government case legitimately gives rise to 23 damages, that's what we're here for. 24 But they put at issue this concept 25 that Microsoft should be punished. 4941 1 All we're trying to do is to give the 2 jury the truth about the final judgment, the 3 end of the conclusion to the government case. 4 We have not argued, Your Honor, in 5 opening statement or otherwise, that the final 6 judgment ends the inquiry. 7 Plaintiffs have no evidence of any 8 substantial sort about conduct in the more 9 recent period. And so they ask the jury to sit 10 here in Des Moines to punish Microsoft for 11 conduct that the Court in Washington, D.C., has 12 been concerned with and entered a judgment 13 about. 14 We're not going to tell the jury that 15 that's the end of the inquiry; that they can't 16 think about damages. We're not going to tell 17 them that this gives us immunity from damages. 18 We just want to tell them the truth, 19 that this is what happened in Washington. This 20 is how it ended. 21 And in the context of the Plaintiffs 22 appealing to the jury's emotions, hold them 23 accountable. Can't you hold them accountable 24 for this unlawful conduct? It's been repeated 25 and repeated in voir dire and in opening. 4942 1 They certainly should be entitled to 2 the truth of what actually occurred in that 3 other case. 4 THE COURT: In the government case, 5 Microsoft is held accountable by way of a 6 decree, and this is in regard to damages? 7 MR. TULCHIN: That's correct, Your 8 Honor. 9 THE COURT: Would it lead the jury to 10 confusion, as I stated, that it's already been 11 solved and there's no reason to go there? 12 MR. TULCHIN: There is no confusion. 13 The Court has already instructed the jury that 14 they must accept that this conduct took place. 15 And, of course, that they can consider it in 16 considering the issues of causation and 17 damages. 18 We have not argued the reverse 19 proposition; that somehow this consent decree 20 makes their inquiry moot. Not at all. 21 But how can it be after the Plaintiffs 22 appeal to the jury to hold Microsoft 23 accountable for the conduct set forth in the 24 146 findings that Microsoft is prevented from 25 telling them here's the judgment of the Court? 4943 1 And that's all. 2 Here's the conduct in Conclusion 3 Number 1 that the Court has read to the jury, 4 and here's the judgment. Microsoft may not do 5 this again. 6 Now, if they have evidence that 7 Microsoft has done it again, let them submit 8 it. There is none. 9 But that's a different issue. I'm not 10 intending in my opening to tell the jury that 11 somehow because this judgment exists that the 12 Plaintiffs can't submit such evidence or the 13 jury shouldn't consider the Plaintiffs' 14 evidence. Not at all. 15 MS. CONLIN: Your Honor, it is safe 16 for Mr. Tulchin to say if they have evidence of 17 noncompliance, let them submit it given the 18 fact that he knows full well that we have been 19 deprived of the opportunity to have that 20 evidence, which we couldn't have submitted. 21 This is, Your Honor, ultimately, and 22 finally, the Defendant's attempt to impose 23 defensive collateral estoppel. 24 Mr. Tulchin said just moments ago, and 25 I quote, he wishes to offer that consent decree 4944 1 to, quote, show that the conduct stopped. 2 That purpose could not be more 3 improper. It doesn't show that the conduct 4 stopped, you know, to start with. 5 The Court has already instructed the 6 jury that the collateral estoppel is effective 7 as to conduct from '95 to '99. 8 The Court has already instructed the 9 jury about what they can use the findings of 10 facts for. 11 Microsoft has already been permitted 12 to tell the jury that there was a consent 13 decree. 14 To go any further is a manifest 15 violation of the Plaintiffs' rights. 16 Mr. Tulchin seems to misunderstand the 17 entire purpose of the civil justice system, 18 which is, in fact, to hold those who commit 19 wrongs accountable in damages to those that 20 they harm. That is the underlying rule that 21 applies to all civil cases. 22 Never have the Plaintiffs said that 23 Microsoft should be punished. In fact, when a 24 juror said that, that was immediately 25 corrected. 4945 1 We do not seek to punish Microsoft. 2 We seek compensation for the citizens of Iowa 3 who have been harmed by the wrongful conduct. 4 The consent decree is highly prejudicial to the 5 Plaintiffs and puts us in a position where we 6 cannot respond to it because we do not have the 7 materials. 8 And, finally, Your Honor, Microsoft 9 filed a motion on November 20th seeking 10 permission to refer to the 2002 consent decree. 11 We filed our resistance on 11-30. 12 They filed their reply on 12-4, but 13 they never sought a hearing on that matter 14 before coming to court and utilizing this 15 consent decree in a way that is clearly 16 improper. We have -- 17 MR. TULCHIN: As our brief said on 18 December 4th, Your Honor, the Court had already 19 ruled in our favor by the time we did that. We 20 didn't need to seek a hearing. 21 MS. CONLIN: We had no opportunity for 22 argument, Your Honor, and that's why I'm taking 23 this opportunity now. 24 I apologize to the Court for taking 25 the time to do this, but I want the record to 4946 1 be clear the Plaintiffs' position with respect 2 to this issue. 3 MR. TULCHIN: The Plaintiffs have 4 already successfully managed to stop my opening 5 statement now for almost an hour and a half on 6 an issue that they have twice lost previously. 7 The test here is relevance. The 8 consent decree is relevant in connection with 9 the arguments they've made, and as a result of 10 the fact that they sought and obtained 11 collateral estoppel. 12 MS. CONLIN: Your Honor, and this 13 decree now is being offered for the truth. 14 It's hearsay besides being everything else that 15 we have said. They now seek to offer the 16 consent decree for the truth of the matter 17 asserted. 18 THE COURT: Anything else? 19 MS. CONLIN: No, Your Honor, not from 20 us. 21 THE COURT: I'm going to allow partial 22 use of it. 23 Page 1, except the third paragraph, 24 may be used. 25 Page 2, 3, 4, 5, 6, and page 7, except 4947 1 for paragraph J and below may be used. 2 Page 8 cannot be used. Neither can 3 page 9, 10, 11, 12, 13, 14, 15, 16, 17, and 18 4 cannot be shown to the jury. 5 In addition, the Court intends to give 6 an instruction to the jury at the close of the 7 case regarding the import of this instruction. 8 And, again, the Defendant cannot state 9 to the jury that they have complied with a 10 court ordered decree before or after the decree 11 was entered to show that's a legal conclusion. 12 Only a court can decide whether or not 13 they have complied with its decree and this 14 order. 15 Anything else? 16 MS. CONLIN: Your Honor, we ask -- 17 MR. TULCHIN: Just a question, Your 18 Honor. 19 THE COURT: Yeah. 20 MR. TULCHIN: Will the Plaintiffs be 21 permitted through their experts to say that 22 Microsoft has not complied and, if they do, can 23 we say that we have? 24 THE COURT: You can say what you did 25 after the decree was entered. You can't say if 4948 1 you complied or not. 2 And they may say what you did after 3 the decree was entered and they can't say 4 whether it was complied or not. 5 MR. TULCHIN: So the Plaintiffs' 6 experts can say what we did, which I think is 7 perfectly fair, but the Plaintiffs' experts 8 will not be permitted to make the legal 9 conclusion of whether what we did was 10 compliance; is that correct? 11 THE COURT: Correct. And neither can 12 you. 13 MR. TULCHIN: Yes. Thank you, Your 14 Honor. 15 MS. CONLIN: Your Honor, we would ask 16 that the jury be instructed immediately that 17 this is not offered and can't be offered to 18 show that the conduct stopped. 19 That is what Mr. Tulchin just said he 20 wanted to do, and we ask that the jury be 21 immediately instructed that that is not so. 22 MR. TULCHIN: That's not what I said. 23 MS. CONLIN: That's what the 24 transcript says you said. 25 THE COURT: Okay. Granted. 4949 1 MS. CONLIN: Your Honor, we also ask 2 the Court, I will do this formally, but we are 3 going to ask this Court to compel the Defendant 4 to produce all of the evidence, all of the 5 materials produced in connection with its 6 alleged compliance with the decree. But we'll 7 do that formally, Your Honor. 8 THE COURT: Okay. How do you want to 9 proceed with the jury? Do you want to let them 10 go to lunch or do you want to -- 11 MR. HAGSTROM: I think so, Your Honor. 12 They are used to this schedule. 13 THE COURT: Defense? 14 MR. TULCHIN: I suppose so, Your 15 Honor, although -- well, I suppose so, Your 16 Honor. 17 It seems unfortunate that an hour and 18 a half of my time was taken this way. And I 19 hope the jury is not led to believe that this 20 was somehow through some fault of my own after 21 the Court had expressly given me permission to 22 refer to this document in my opening. 23 THE COURT: I'll tell them what 24 happened as far as the Court changed its mind 25 and let you do. That way the burden is on me, 4950 1 not you. 2 MR. TULCHIN: Thank you, Your Honor. 3 THE COURT: Ask the jurors, see if 4 they want to go from 11 to 12 for lunch or if 5 they want to wait until 12. 6 MS. CONLIN: Just for the record, Your 7 Honor, I can remember one time during my 8 opening statement when we started at 10:30 as 9 well as a result of numerous arguments. 10 Mr. Tulchin's whining is a little 11 disconcerting under the circumstances. 12 THE CLERK: 11:00 to 12:00. 13 THE COURT: They want to go now? 14 Okay. Recess to -- 15 THE CLERK: Do you want them back here 16 at 12:00? 17 THE COURT: Yeah, 12:00. 18 MR. HAGSTROM: Your Honor, there were 19 some motions we were going to argue. 20 THE COURT: Right. Let's see, do you 21 want to do those motions? 22 MR. WILLIAMS: I'm sorry, Your Honor? 23 THE COURT: Did you have some evidence 24 matters? 25 MR. WILLIAMS: Yes, I did, Your Honor. 4951 1 THE COURT: Let's do those. 2 MS. CONLIN: And, Your Honor, just for 3 scheduling purposes, I have another record that 4 I'd like to make at the close of business 5 today. 6 THE COURT: Okay. 7 MS. NELLES: Your Honor, could we have 8 two minutes? I need to use the ladies room 9 before we do these arguments. 10 THE COURT: Oh, sure, go ahead. 11 MS. NELLES: Thank you, Your Honor. 12 THE COURT: Okay. Which issues are we 13 taking up now? 14 MR. WILLIAMS: Good morning, Your 15 Honor. The first issue we'd like to take up is 16 Plaintiffs' motion for a corrective instruction 17 regarding testimony from absent class members. 18 If I could hand that up to Your Honor. 19 THE COURT: Yes. Thank you. 20 MR. WILLIAMS: Thank you. 21 THE COURT: Defendant's got a copy of 22 this? 23 MR. WILLIAMS: Yes, Your Honor. They 24 were served with all the motions we are talking 25 about today yesterday. 4952 1 THE COURT: Okay. Proceed. 2 MR. WILLIAMS: Thank you, Your Honor. 3 In his opening remarks, Mr. Tulchin 4 asked the jury to ascribe some significance to 5 the number of class members who Plaintiffs 6 intend to call as witnesses. And we have 7 recounted that language here, Your Honor. 8 He said that Plaintiffs say there are 9 hundreds of thousands of people in Iowa who are 10 members of the class; that there were somewhere 11 around 7.5 million licenses at issue, and then 12 he said, and we ask you to keep track during 13 the trial of how many of those class members 14 come into this courtroom and tell you that they 15 were hurt, they were injured by anything that 16 Microsoft has done. 17 Your Honor, this statement to the jury 18 was obviously intended to create the impression 19 that if we don't have scores of class members 20 trooping into court and testifying about how 21 they were hurt, that they were not, or that 22 they somehow for some reason don't care about 23 this lawsuit, don't want compensation or don't 24 think that Microsoft did anything wrong. 25 Your Honor, this would give a 4953 1 misleading impression to the jury, and it 2 violates and contradicts your preliminary 3 Instruction Number 2, which we have appended to 4 our motion. 5 And that order or that instruction 6 says, Iowa law allows class actions when there 7 are too many parties alleging the same 8 violation of the law for the courts to be able 9 to manage separate lawsuits for each of them. 10 Class actions allow courts and juries 11 to decide a common dispute between numerous 12 parties in an efficient manner. 13 Now, as we all know, as Microsoft is 14 certainly aware, since they contested the issue 15 many, many times, this is a class action. It's 16 a certified class. It has withstood appeals. 17 There's no question about that. 18 This Court, as well as the Iowa 19 Supreme Court, has determined that a class 20 action is appropriate, and it's appropriate for 21 this Court to utilize those efficiencies. 22 What that means is, we don't have to 23 have scores of people come in and testify about 24 how they were hurt. We get to do that in a 25 representative capacity. That's the whole 4954 1 point of a class action. 2 But, Your Honor, with his remarks, Mr. 3 Tulchin wants to penalize us for utilizing 4 those efficiencies and the efficiencies to 5 which we are entitled. 6 So, Your Honor, we ask for a 7 corrective instruction on this set forth in our 8 motion, and that instruction would be as 9 follows. 10 One of the purposes of class actions, 11 as I previously instructed you, is to allow 12 courts and juries to decide a common dispute 13 between numerous parties in an efficient 14 manner. There is nothing improper in having 15 only the named Plaintiffs testify on behalf of 16 class members. Indeed, that is consistent with 17 the purpose of a class action. 18 Therefore, the jury is to ascribe no 19 significance to the number of class members who 20 appear as witnesses. 21 THE COURT: Response? 22 MS. NELLES: I'll take this one, Your 23 Honor. 24 I'm going to do this quickly in the 25 hope that we'll be able to get through all four 4955 1 of these motions that Plaintiffs gave -- handed 2 to us yesterday afternoon before we need time 3 to resume. 4 The Court's instruction to the jury 5 reads, and Mr. Williams' brief here, Iowa law 6 allows class actions when there are too many 7 parties alleging the same violation of the law 8 for the courts to be able to manage separate 9 lawsuits for each of them. 10 Class actions allow courts and juries 11 to decide a common dispute between numerous 12 parties in an efficient manner. 13 Microsoft never suggested to the jury 14 that it was improper for only class 15 representatives to testify. 16 Microsoft did not comment on class 17 actions generally or their nature and purpose. 18 There is nothing in the challenged statement 19 that suggests that Plaintiffs don't have the 20 right to bring this action as a class action or 21 take advantage of the efficiencies gained from 22 doing so. 23 There's nothing in this statement at 24 all that contradicts a thing about this Court's 25 instruction. 4956 1 This is what's going on here, Your 2 Honor. Plaintiffs have made a strategic 3 decision not to have real people come and 4 testify about prices at this trial. And that's 5 their choice. And that is absolutely their 6 right. But it is their choice. 7 There is nothing that prevents them 8 from having class representatives or absent 9 class members who they are free to contact come 10 and talk about prices. 11 They had real people come and talk 12 about prices in Minnesota. And, apparently, 13 they think that hurt them. 14 So they've made a tactical decision 15 simply to do this with their experts. And what 16 they are asking -- and they talked about it ad 17 nauseam during voir dire. I'm sorry, I'll wait 18 for Mr. Hagstrom to finish so I can continue. 19 Thank you. 20 They, obviously, got a little nervous 21 about this. We spent a great deal of time 22 during voir dire talking about that people 23 weren't going to be here, weren't going to be 24 here. 25 Apparently