11435 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 XLII 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 8:38 a.m., February 1, 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 11436 1 A P P E A R A N C E S 2 Plaintiffs by: RICHARD M. HAGSTROM 3 Attorney at Law Zelle, Hofmann, Voelbel, 4 Mason & Gette, LLP 500 Washington Avenue South 5 Suite 4000 Minneapolis, MN 55415 6 (612) 339-2020 7 ROBERT J. GRALEWSKI, JR. Attorney at Law 8 Gergosian & Gralewski 550 West C Street 9 Suite 1600 San Diego, CA 92101 10 (619) 230-0104 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 11437 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 HEIDI B. BRADLEY 6 Attorney at Law Heller Ehrman, LLP 7 333 South Hope Street Suite 3900 8 Los Angeles, CA 90071-3043 (213) 689-0200 9 DAVID E. JONES 10 Attorney at Law Heller Ehrman, LLP 11 One East Main Street Suite 201 12 Madison, WI 53703-5118 (608) 663-7460 13 BRENT B. GREEN 14 Attorney at Law Duncan, Green, Brown & 15 Langeness, PC Suite 380 16 400 Locust Street Des Moines, IA 50309 17 (515) 288-6440 18 STEVEN J. AESCHBACHER Attorneys at Law 19 Microsoft Corporation One Microsoft Way 20 Redmond, WA 98052 (425) 882-8080 21 22 23 24 25 11438 1 (The following record was made in the 2 presence of the jury at 8:36 a.m.) 3 THE COURT: Everyone else may be 4 seated. Thank you. 5 You may continue. 6 MR. HAGSTROM: Thank you, your Honor. 7 (Whereupon, the following video of 8 Stefanie Reichel continued playing to the 9 jury.) 10 Question: Let me show you what has 11 previously been marked as Exhibit 604. 12 Exhibit 604 consists of a series of 13 advertisements Theo Lieven, the CEO of Vobis, 14 produced at his deposition. I wanted to see if 15 you've seen these ads or these types of ads 16 before. 17 Answer: I'm familiar with the Denk 18 Zettel, which was their weekly advertising 19 letter that would be inserted in all the 20 newspapers across the country as well as 21 advertising we would do. 22 Question: What is Denk Zettel ? 23 Answer: Denk is thinking or thought, 24 and then Zettel is letter. So it's the thought 25 letter newspaper, letter. 11439 1 Question: Okay. And Vobis 2 distributed these Denk Zettels in weekly 3 newspapers? 4 Answer: Yes, across the country. 5 Question: On a weekly basis? 6 Answer: Uh-huh. 7 Question: Were any distributed 8 throughout the country? 9 Answer: Uh-huh. 10 Question: And were they placed in -- 11 how widely would they be disseminated? Would 12 they be in most of the major or all the major 13 newspapers? 14 Answer: All the major ones, and 15 everywhere you went, you'd see them, specially 16 when I was flying back and forth on planes, 17 you'd see people reading them in airplanes 18 because they were inserted in the papers. 19 So they were unique in the fact that 20 they did that. 21 Question: Did these advertisements 22 help create a market for the products that were 23 advertised? 24 Answer: Yes. 25 Question: Do you know why you were 11440 1 assigned the Vobis account? Were you ever 2 told? 3 Answer: I was assigned the account by 4 Juergen Huels because he wanted somebody on it 5 who could handle what was going to be a 6 difficult and challenging account, and he knew 7 that I had experience doing that. 8 He felt I was the most experienced and 9 the right person for the job. 10 Question: What were you told about 11 the Vobis account at the time it was assigned 12 to you? 13 Answer: Probably not enough because I 14 wouldn't have wanted it otherwise. 15 No, I was told that it was a large 16 account for them, that their business was 17 growing and that there was a lot of opportunity 18 there for me to make it a successful account. 19 Question: That's all you were told? 20 Answer: I was told that they were 21 growing fast and they were important. 22 Question: Were you told anything 23 about the history of the account? 24 Answer: I was told some and I would 25 get additional history, it seemed, as I went 11441 1 along by the more questions that I asked. 2 Question: Were you told about 3 Mr. Lieven, L-i-e-v-e-n? 4 Answer: I was told initially who he 5 was, and that he was difficult. But beyond 6 that, I didn't really, you know, know much 7 about him. 8 When I started taking over the 9 account, I came to realize, first of all, he 10 didn't want to talk to me initially, didn't 11 return calls, but he eventually did. 12 And he wasn't -- I was also told he 13 wasn't crazy about Microsoft at the time. 14 Question: Do you recall whether Vobis 15 was licensing MS-DOS at the time that you were 16 assigned the account? 17 Answer: Yes, they were. 18 Question: Were they also selling 19 DR-DOS at the time? 20 Answer: Yes, they were. 21 Question: Do you recall -- would you 22 have considered Vobis to be a market leader in 23 Germany? 24 Answer: They were one of the market 25 leaders. 11442 1 Question: The manner in which 2 Microsoft sold its products was by licensing 3 them; is that correct? 4 Answer: Licensing to the OEMs? 5 Question: Right. And then the OEMs 6 would resell the products to the ultimate 7 consumers. 8 Is that the way it worked? 9 Answer: Yes. 10 Question: And do you recall what type 11 of licenses Microsoft offered? 12 Answer: Do you mean for product or -- 13 Question: Yes. Well, let's take 14 MS-DOS, for example. What types of licenses 15 did Microsoft offer for MS-DOS? 16 Answer: They would offer a per copy, 17 a per system, and a per processor. 18 Question: Can you describe the 19 difference between these three types of 20 licenses? 21 Answer: Per copy is pretty 22 self-explanatory. Essentially, you would pay 23 for each copy and the price would be based on 24 that and you would report how many copies you 25 sold. 11443 1 Per system would be that you would 2 specify a specific system, and you would list 3 what that system included or if it had a name 4 or a particular kind of processor, you know, 5 components that were added in. And you would 6 pay based on that system as you would report 7 having sold or shipped those computers, that 8 system. And then there was pricing based on 9 that. 10 And then there was per processor, 11 which was essentially that an OEM would report 12 how many PCs that they shipped and the 13 processor amounts. 14 And then based on that as their 15 agreements, they would pay us for each of 16 those. 17 Question: Were you trained to try to 18 obtain a particular type of license? In other 19 words, of those three license types, which was 20 the license that Microsoft preferred? 21 Answer: Per processor. 22 Question: Why was that? 23 Answer: Well, it helped reduce some 24 of the gray market in counterfeit copies that 25 were going on in the market, and it helped 11444 1 assure that we would regulate that. 2 Question: Was there another reason? 3 After an OEM had signed up for a per processor 4 license, would that license effectively 5 preclude the OEM from shipping a different or a 6 competing systems products? 7 Answer: We wanted their -- I mean, we 8 wanted their business. I mean, we wanted to 9 have a hundred percent of their business. We 10 wanted a win for us. And, obviously, the more 11 software that's on their computers was a win. 12 Question: The more Microsoft 13 software? 14 Answer: And that could be 15 applications. It could be a lot of things, but 16 yeah. 17 Question: Was it your expectation 18 that if a customer signed a per processor 19 license that that customer was going to ship a 20 hundred percent Microsoft system software? 21 Answer: Well, they had an option as 22 it states here, that they could choose to sell 23 and ship other software if they wanted to. 24 Question: But if they did, they would 25 have to pay Microsoft as well as pay the other 11445 1 software supplier? 2 Answer: Correct. 3 Question: And that would tend to 4 create disincentive to ship a competing 5 product; isn't that correct? 6 Answer: I don't know if it would for 7 them or not. I mean, I think they would follow 8 what the customers are asking for. 9 Question: How did these three 10 different types of licenses, how were they 11 priced relative to each other? 12 MR. JARDINE: At what point in time? 13 Question: At the time you joined 14 Microsoft in late '91 or early '92. 15 Answer: Well, the per processor was 16 the least expensive. The per system was the 17 next level up, and that was a bit higher, and 18 the cost per copy being the most expensive. 19 Question: During the training you 20 received, were you taught that you should 21 always try to obtain a per processor license if 22 possible? 23 Answer: Uh-huh. 24 Question: And was that something you 25 were taught during the training in the United 11446 1 States or in Germany? 2 Answer: In both. 3 Question: Was that something that was 4 a stated objective that was repeated throughout 5 the course of your employment as an account 6 manager with Microsoft that you try to obtain 7 per processor licenses whenever possible? 8 Answer: It was repeated and we were 9 encouraged. 10 Question: We referred earlier to 11 DR-DOS. 12 What was DR-DOS or what is DR-DOS? 13 Answer: It is the DOS operating 14 system from a company at the time called 15 Digital Research. The DR stood for Digital 16 Research. 17 Question: Did Microsoft consider 18 DR-DOS to be competitive to MS-DOS? 19 Answer: It was a competing operating 20 system to MS-DOS. 21 Question: Was it an objective of 22 Microsoft to get DR-DOS out of OEM accounts if 23 possible? 24 Answer: It was our objective to have 25 a hundred percent of our products on the 11447 1 systems. 2 Question: Were you specifically given 3 as an objective getting DR-DOS out of specific 4 accounts? 5 Answer: Yes, I was. 6 Question: Do you recall which ones? 7 Answer: In particular Vobis. 8 Question: Do you recall other 9 accounts where DR-DOS was considered a threat 10 or a competitive concern to Microsoft? 11 Answer: In a couple of other 12 accounts, which were larger, that -- it was 13 there. Actebis was one of them, Escom, but 14 they weren't my accounts. 15 Question: Did you -- before you 16 joined Microsoft, did you ever -- had you ever 17 heard of DR-DOS? 18 Answer: No. 19 Question: So to be precise, following 20 Mr. Jardine's suggestion, from the period at 21 least October '91 through -- on into '92 or '93 22 at least, competing versions would have been 23 MS-DOS 5.0 versus DR-DOS 6.0; is that correct? 24 Answer: I don't remember the specific 25 date of when MS-DOS 6 was released. I believe 11448 1 it was summer or fall of '92. I'd have to 2 check. I don't remember. 3 Question: Do you recall when MS-DOS 4 5.0 was released? 5 Answer: That was before I joined 6 Microsoft. 7 Question: Did you ever have 8 discussions with Vobis about the issue of 9 compatibility? 10 Answer: Compatibility of what? 11 Question: In the software business is 12 compatibility of software products between each 13 other a significant concern? 14 Answer: It is important that you have 15 your operating system working with the 16 applications and they all interwork 17 appropriately, yes. 18 Question: And was compatibility, as 19 you've described it, was that ever an issue 20 that came up with your discussions with Vobis? 21 Answer: There was an issue whether or 22 not Windows and another DOS operating system 23 outside of MS-DOS would, you know, function as 24 well or appropriately or be compatible, 25 depending on your definition of compatibility. 11449 1 Question: So do you recall as having 2 a specific discussion with anyone at Vobis 3 about whether DR-DOS would be compatible with 4 Windows? 5 Answer: Yes, I do. 6 Question: Who did you talk to about 7 that subject? 8 Answer: Mr. Dahmen and Mr. Lieven and 9 also Mr. Metz, Dirk Metz, I believe. 10 Question: Did anyone at Microsoft 11 ever tell you to suggest that Vobis or any 12 other OEM that DR-DOS was not compatible with 13 Windows? 14 Answer: It's not that they were not 15 compatible. It was the fact that we -- DR-DOS 16 was a different product. It's not our product, 17 so since we didn't support it, we couldn't 18 guarantee the way doctor DOS and Windows would 19 work together. 20 Question: So was that what you were 21 instructed to tell OEMs? 22 Answer: When I would discuss it with 23 my manager or with product managers after it 24 was brought up, that would be essentially what 25 I'd be told, that we don't support DR-DOS, so 11450 1 we don't know what the interaction is going to 2 end up being. 3 Question: Who told you to say that? 4 Answer: Various people. I mean, my 5 manager obviously. 6 Question: Do you recall ever telling 7 OEMs to watch out, that DR-DOS may not be 8 compatible with Windows in the future? 9 Answer: I remember on that issue of 10 when it would come up about whether or not they 11 were working together that I would address the 12 fact that since we didn't support that product, 13 we couldn't be certain to what the results of 14 the two combined would be. 15 Question: Did you tell me that the 16 two products may not be compatible in the 17 future? 18 Answer: I don't know if I used the 19 word concern, but I probably told them to think 20 about it. 21 Question: Going back to Vobis, do you 22 recall what specific discussions you had about 23 this issue of DR-DOS and Windows compatibility? 24 Answer: Well, I had many 25 conversations with them on issues related to 11451 1 that. 2 Question: Do you remember what the 3 time period was when you had those discussions? 4 Answer: It would have been sometime 5 between January of '92 and spring. 6 Question: And what do you recall 7 about the discussions specifically? 8 Answer: Mr. Lieven, Mr. Dahmen, and 9 Mr. Metz were all concerned about the content 10 -- I mean, of what would happen when they had 11 DR-DOS, I guess, version 6.0 running with 12 Windows 3.1 beta that we had. 13 Question: Did you ever hear about 14 code built into the Windows 3.1 beta that 15 detected DR-DOS? 16 Answer: I've heard and seen 17 references in the media that refer to, you 18 know, allegations. I don't know what the code 19 within itself was but that there had been 20 allegations made that there was some code to 21 detect competitive products. 22 Question: Did you ever hear of that 23 the Win 3.1 beta generated a nonfatal error 24 message when it was running with DR-DOS? 25 Answer: I heard about that, yes. 11452 1 Question: Did you talk to Mr. Dahmen 2 and Mr. Lieven about that? 3 Answer: Yes. 4 Question: Were they concerned about 5 that? 6 Answer: Yes, they were. 7 Question: Did you offer them any 8 explanation? 9 Answer: They had asked about it. And 10 my understanding is that when -- and this was 11 in the beta, not the final product, but that 12 when you installed it, it would detect if it 13 was something other than MS-DOS version, I 14 think, 3.0 and that it would search for 3 dot 15 -- 3 something or higher, and if it detected -- 16 if it didn't detect those, that's when an error 17 message would come up. 18 Question: So let me see if I 19 understand. So what you're saying your 20 understanding was that the Windows 3.1 beta 21 would look to see if it was running on top of 22 something other than MS-DOS 3.0 or higher? 23 Answer: Or actually I should rephrase 24 it. It would look to see if something below 25 MS-DOS 3.0 or something different was running. 11453 1 In other words, if it detected, I 2 think, 3.0 or 4.0 or 5.0 or 3.2, or whatever 3 versions there may have been, if it detected 4 that, the error message wouldn't come up, but 5 if it was anything other than those, it could 6 have been MS-DOS 2.0, it would have an error 7 message or if it was a product other than 8 MS-DOS. 9 Question: Do you -- so it was your 10 understanding that if DR-DOS, any version of 11 DR-DOS was running under Windows 3.1, an error 12 message would come up? 13 MR. JARDINE: Objection. You mean the 14 Windows 3.1 beta? 15 Question: Right. I'm sorry. 16 Answer: Correct. So while if the 17 Windows 3.1 beta was running with any version 18 of DR-DOS, the error message would come up. 19 Question: And it's further your 20 understanding that this -- the fact of this 21 error message coming up under Windows 3.1 was 22 reported in the German press? 23 Answer: I think it was in the German 24 press because a lot of press things that I read 25 were U.S. trade, so I don't know which press I 11454 1 saw it in. But it definitely had gotten 2 attention, yes. 3 Question: And so you discussed this 4 with Mr. Dahmen and Mr. Lieven, and it was a 5 concern to them? 6 Answer: Yes. 7 Question: Do you know -- did you ever 8 hear or do you know what customer support 9 people would tell customers if they called in 10 to inquire about the reason for the nonfatal 11 error message that we've been discussing? 12 Answer: I don't know the specifics. 13 I do know that Dahmen had called in a few times 14 and was not happy with the responses he was 15 getting. 16 Question: Do you recall what he said 17 they told him? 18 Answer: No, I don't. 19 Question: Did you ever hear that 20 customer support would tell customers who would 21 call in and inquire about those error messages 22 that Windows was not supposed to work with 23 DR-DOS? 24 Answer: I don't remember if it was 25 because he got it from a customer support 11455 1 person or what. He felt that Microsoft wasn't 2 being straight with him, but he was always 3 suspicious of Microsoft from the beginning of 4 the relationship. 5 Question: Do you know why Microsoft 6 did not support DR-DOS? 7 Answer: It wasn't their product. 8 Question: Doesn't Microsoft support 9 an array of non-Microsoft products? 10 Answer: I can't think of specific 11 examples, but I know there have been. 12 Question: But you did testify that 13 what you were told and what you told customers 14 was that Microsoft did not support DR-DOS? 15 Answer: Correct. 16 Question: There were -- Vobis had 17 shipped a lot of computers with DR-DOS on it; 18 isn't that true? 19 Answer: Yes. 20 Question: Okay. I have shown you 21 what's been marked as Exhibit 1338, and can you 22 identify the exhibit? It appears to be your 23 performance review for May 1992. 24 Answer: Uh-huh. 25 Question: And who gave you the 11456 1 review? 2 Answer: That was done by Juergen 3 Huels, my manager. 4 Question: And so as I look at this, 5 it appears it goes through account by account 6 and lists specific objectives that had been 7 provided for you during the previous period. 8 Answer: Correct. So this would be 9 running from the time that I started to when I 10 was being reviewed for that period going 11 through May. 12 Question: Okay. If we turn to it 13 looks like the fourth page of the exhibit, 14 halfway down the page it says, previous 15 objective/goal. Win Vobis' commitment to ship 16 all computer systems with MS-DOS, at least one 17 representative model by the end of May. 18 So if I understand this correctly, the 19 objective you had been given was to win Vobis' 20 commitment to ship all of its systems loaded 21 with MS-DOS; is that correct? 22 Answer: Uh-huh. 23 Question: Did you consider that if 24 Vobis was shipping a hundred percent MS-DOS, 25 that that -- and if Vobis correspondingly 11457 1 ceased shipping DR-DOS, that that would have an 2 impact on what other accounts might do? 3 Answer: They were the leader in the 4 market, so I'm sure that those worked hand in 5 hand. 6 Question: Was Vobis considered 7 particularly strategic account? 8 Answer: What's your definition of 9 strategic? 10 Question: Well, I think Microsoft has 11 used that term. But was Vobis an account that 12 was seen as a market leader, one that was very 13 important to having ship hundred percent 14 Microsoft products because of its influence in 15 the Central and European market? 16 Answer: They were important like a 17 Compaq or an HP or a Dell would be in the U.S. 18 market. So they were the market leader, and 19 revenue-wise, they were in the top five in 20 Europe. 21 So, you know, naturally, you know, a 22 company that's watching their business would 23 definitely want to make sure that they're doing 24 well in an account like that. 25 Question: I think you indicated that 11458 1 certainly there was a possibility that if 2 Microsoft could not -- that if Windows were not 3 compatible with DR-DOS, that Microsoft would 4 lose some sales because people that were 5 committed to DR-DOS would then not purchase 6 Windows; is that correct? 7 Answer: That potentially existed 8 assuming they wanted to stick with the 9 nongraphical based operating system. 10 Question: Assuming that they wanted 11 to stick with DR-DOS -- 12 Answer: In the case -- 13 Question: -- it wouldn't run with 14 Windows, Microsoft, could lose some sales? 15 Answer: Uh-huh. 16 Question: And that could cost 17 Microsoft some money; correct? 18 Answer: Uh-huh. 19 Question: And isn't it ordinarily the 20 case that software companies try to make their 21 products compatible with as wide a range of 22 products as possible? 23 Based on your experience as an account 24 manager, isn't that something that's always a 25 concern when you try to sell software products? 11459 1 Answer: I assume companies -- if they 2 want to do well in business, they do make sure 3 their products are compatible with market 4 leaders and other software products in the 5 industry. 6 Question: And certainly Novell and 7 DRI would have wanted their product to be 8 compatible with Windows; isn't that so? 9 Answer: I assume they would have. 10 Question: That it would have been 11 important for Novell and DRI to have DR-DOS run 12 well with Windows; isn't that so? 13 Answer: If I was running those 14 companies, yes, I would have -- if I were them, 15 I would have done that, yes. 16 Question: Think I asked you if Vobis 17 was a strategic account to Microsoft. Do you 18 recall that? 19 Answer: Uh-huh. 20 Question: And would you agree that 21 Vobis was one of Microsoft's most strategic 22 accounts? 23 Answer: Yes. 24 Question: And why was that? 25 Answer: They were the market leader 11460 1 in Germany. They were one of the largest OEMs 2 in Europe. They set standards for the 3 industry, and they were making lots of money 4 for us. 5 Question: I'm showing you what's been 6 marked Exhibit 1339. It's entitled Vobis 7 Microcomputer AG account profile for Q1FY93, 8 which I understand would be first quarter 9 fiscal year '93; is that correct? 10 Answer: Uh-huh. 11 Question: It says Microsoft and 12 Vobis, Stefanie Reichel, OEM account manager, 13 Germany. This is a document that you produced 14 pursuant to the subpoena. 15 Do you recall having prepared this 16 document? 17 Answer: Yes, I do. 18 Question: And what was Microsoft's 19 fiscal year? What period would have been 20 covered by the first quarter? 21 Answer: July 1st is the beginning of 22 the fiscal year. 23 Question: So July 1st of '92? 24 Answer: Yes. 25 Question: So this would have been 11461 1 prepared sometime prior to July 1, 1992; is 2 that correct? 3 Answer: It was a living document. I 4 had prepared this document as far back as the 5 beginning of the year doing the research that's 6 contained in it. And I was updating it as I 7 went along. 8 Question: Let's refer to the 9 executive summary, first paragraph, states 10 Vobis Microcomputer AG represents one of the 11 most strategic accounts to Microsoft both in 12 terms of the revenue they bring us, but also 13 because of their fast growth and strong 14 presence in the German and European market. 15 Do you agree with that? 16 Answer: Yes. 17 Question: From a market share 18 standpoint, Vobis is by far the largest 19 manufacturer and seller of IBM-compatible 20 computer in 1991. Is that true? 21 Answer: Yes. 22 Question: Third paragraph. Vobis is 23 also projected to continue to grow rapidly and 24 dominate the German market and eventually 25 expand in the rest of the European market with 11462 1 as much momentum. 2 Was that your belief at the time? 3 Answer: Yes. 4 Question: Next paragraph. From a 5 royalty revenue standpoint for Microsoft, Vobis 6 is by far our largest OEM in Germany and one of 7 our largest in Europe. 8 Is that true? 9 Answer: Uh-huh. 10 Question: Turning to the next page, 11 first paragraph. Our greatest challenge and 12 threat in this account has been Digital 13 Research (DRI). Vobis is still DRI's largest 14 OEM in Europe and where they have had their 15 strongest foothold in an account. 16 Was that true? 17 Answer: Yes, it was. 18 Question: There are many reasons that 19 DRI was able to get this position with them. 20 One of them is that Vobis does not want to feel 21 dependent on one vendor and this means 22 Microsoft. 23 In other words, Vobis did not want to 24 be dependent on Microsoft, is that true? 25 Answer: Correct. 11463 1 Well, I think most companies in 2 general never, especially in any manufacturing 3 business, do not want to be completely 100 4 percent dependent on one supplier. 5 Question: But most of your OEMs did 6 end up becoming dependent on Microsoft; isn't 7 that true? 8 Answer: Dependent meaning -- 9 Question: Meaning that Microsoft is 10 their sole system software supplier. 11 Answer: But they chose to do that. I 12 mean, they -- 13 Question: I'm not arguing about that. 14 I'm just saying isn't it true that most of the 15 OEMs you worked with in Germany depended on 16 Microsoft exclusively for their system 17 software? 18 Answer: With the PCs that they were 19 shipping, yes. 20 Question: And Vobis was particularly 21 resistant to that happening, unusually so; 22 isn't that true? 23 Answer: Yes. I think he used it as a 24 negotiation tactic. 25 Question: Mr. Lieven made it clear in 11464 1 his deposition very important to have multiple 2 suppliers wherever possible. Wasn't that your 3 experience with that? 4 Answer: He would state that, yes. 5 Question: Okay. And you state 6 another reason is that internally at Vobis 7 there are several DRI disciples who preach 8 within and to the Vobis customer base that 9 DR-DOS 5.0 is better than MS-DOS 5.0. 10 Is that true? 11 Answer: Yes. 12 Question: And I think you previously 13 testified there were several people that told 14 you DR-DOS 6.0 was a better product than MS-DOS 15 5; correct? 16 Answer: Yes. 17 Question: Referring to Exhibit 1340, 18 it's a document that you produced pursuant to 19 the subpoena. It looks like several -- at 20 least two e-mails? 21 Answer: It looks like a string of 22 e-mails -- 23 Question: Right. 24 Answer: -- that are together. 25 Question: And the one I was 11465 1 specifically interested in is halfway down the 2 first page. It says from joachimk. Is that 3 Joachim Kempin? 4 Answer: Yes. 5 Question: It says to chrissa. Is it 6 chrissa with two S's and an A? Who would that 7 be? 8 Answer: I think that was one of the 9 PR people. 10 Question: Then stefanir, is that you? 11 Answer: That's me, stefanir. 12 Question: Stefanir. 13 And then bengta. Is that Bengt 14 Akerlind? 15 Answer: Correct. 16 Question: And then collinsh. Who is 17 that? 18 Answer: He was the head of PR, I 19 think, in Europe. I forget, but I don't 20 remember his last name. 21 Question: Jeffl, would that be Jeff 22 Lum? 23 Answer: Yes. 24 Question: And simoned, who's that? 25 Answer: It was a woman Simone Droll. 11466 1 I think. I don't remember her last name. 2 Question: All right. So this -- 3 anyway it's from joachimk to chrissa and 4 stefanir. 5 First sentence says, I recommended 6 that Vobis puts a company backgrounder together 7 and we distribute this with it. 8 Do you know what this is -- that's 9 being referred to there? 10 Answer: There meaning the company 11 backgrounder that Vobis would give us would be 12 distributed with the press release. 13 Question: And the press release would 14 refer to the strategic alliance between MS and 15 Microsoft and Vobis? 16 Answer: Announcing that, correct. 17 Question: And I'm sure we'll talk 18 about that later. I just wanted to focus on 19 the next sentence there. 20 Answer: Right. Bigger PC seller to 21 Germany than IBM, might get some attention. 22 Uh-huh. 23 Question: The point being in the 24 German market Vobis was a very important OEM? 25 Answer: In the German market Vobis 11467 1 was like a Compaq. Whereas, here in the U.S. 2 when you ask about Vobis, no one's heard of it 3 before. 4 Question: Exhibit 1341. Okay. 5 This is a document entitled MS-GmbH 6 OEM report, April 1991. First MS or GmbH is 7 German shorthand for, I think, it's called 8 gesellschaft. 9 Answer: Gesellschaft. 10 Question: In any event, this is the 11 MS-GmbH would be the German subsidiary of 12 Microsoft? 13 Answer: Of Microsoft, correct. 14 Question: And MS-GmbH OEM report, was 15 this a report that was generated on a monthly 16 basis? 17 Answer: Yes, it was. 18 Question: Okay. And I'm referring to 19 the paragraph entitled Vobis. It states, we 20 are focusing on getting these guys to ship DOS 21 5.0 ASAP. 22 If we can do this quickly, this will 23 have a huge influence on other DRI OEMs that 24 look to Vobis and think it is okay and 25 competitive to ship DR-DOS. 11468 1 Was it your experience that OEMs that 2 shipped DR-DOS looked to Vobis for leadership 3 in that regard? 4 Answer: My understanding was that 5 they knew that Vobis was leading the market and 6 they would follow what Vobis was doing. 7 Question: All right. And part of the 8 reason for that was that Vobis by its broad 9 advertising helped to create a market for 10 whatever product it was advertising? 11 Answer: Correct. 12 Question: And Vobis widely advertised 13 DR-DOS during the period you were in Germany; 14 is that correct? 15 Answer: Correct. 16 Question: At least up until the end? 17 Answer: Yes. 18 Question: 1342. And this is a 19 document prepared by Jeff Lum apparently, to 20 Joachim Kempin dated February 25, 1992. It's 21 January Europe OEM sales status report. 22 Do you recall having seen this 23 previously? 24 Answer: I got to see copies often of 25 these. I wasn't on the distribution list, but 11469 1 I would see these final reports that Juergen 2 Huels was copied on. So this could have been 3 one of multiple ones that I have seen. 4 Question: All right. These reports 5 were prepared by Mr. Lum monthly to advise a 6 lot of people about the status of their 7 accounts, various accounts in Europe? 8 Answer: Correct. 9 Question: Turn to page 11 of the 10 report. 11 Answer: Okay. 12 Question: Under the page heading 13 Vobis. Stefanie Reichel. States, during the 14 mid-year review, Bill Gates visited Vobis -- 15 excuse me -- visited the Vobis store in the 16 Arabella Center in Munich. Arabella spelled 17 A-r-a-b-e-l-l-a. 18 Bill has now seen their efforts for 19 DR-DOS, unfortunately, but we are working on a 20 long-term plan to dramatically improve the 21 presence of MS-DOS in Vobis stores. 22 You were aware of Mr. Gates' visit to 23 the Arabella store? 24 Answer: It wasn't planned. 25 Question: But you were aware that he 11470 1 did make such a visit? 2 Answer: Oh, yes. 3 Question: And Mr. Gates threw a 4 temper tantrum, did he not? 5 Answer: What's a temper tantrum? 6 Question: He was extremely upset. 7 Answer: He was not pleased. 8 Question: He was shouting and 9 yelling; correct? 10 Answer: He was not happy. 11 Question: And he was not very happy 12 because he saw DR-DOS advertising in the store 13 in the Arabella Center? 14 Answer: That apparently was not 15 something he had wanted to see and held us 16 responsible for that. 17 Question: He chewed you out and 18 others that were responsible for the Vobis 19 accounts at that time? 20 Answer: I personally wasn't chewed 21 out, but I know my management -- 22 Question: Mr. Heuls was? 23 Answer: I believe that he and a 24 couple others were the beneficiaries of that. 25 Question: The beneficiaries, your -- 11471 1 Answer: He wasn't happy. 2 Question: He was not happy. 3 Answer: Well, I mean, if you think 4 about it, you don't want to see the CEO of your 5 company who wants you to be, you know, doing a 6 good job, and they walk into the store and see 7 nothing but the competitor. 8 Question: And he was extremely upset, 9 correct? 10 Answer: He was not happy. 11 Question: And he made that known to 12 Mr. Heuls and others in Germany; correct? 13 Answer: Uh-huh. 14 Question: And it goes on to say, on 15 January 28th, we had a meeting with Vobis 16 together with Dahmen to discuss the 17 relationship and to officially introduce 18 Stefanie as their contact. 19 Dahmen, that's the Heinz-Willi Dahmen 20 that we've referred to earlier today? 21 Answer: Yes. 22 Question: Was that the first time you 23 were introduced to anybody at Vobis? 24 Answer: That was the first time I had 25 been up at their location. 11472 1 Question: And prior to that, had you 2 met any Vobis people? 3 Answer: No. 4 Question: You hadn't met Lieven at 5 that point? 6 Answer: No. Lieven wouldn't even 7 return phone calls to us. 8 Question: How long after that did you 9 meet Mr. Lieven? 10 Answer: I don't remember the first 11 time he and I met. 12 Question: Wasn't long after that, was 13 it? 14 Answer: It took a little bit of time 15 because I had to work to get finally a meeting 16 with him where he would agree to meet with me. 17 Question: And wasn't the first 18 meeting with him the result of your sending him 19 a bottle of wine? 20 Answer: Yeah. 21 How did you know about that? 22 Question: I have my sources. You 23 sent him a bottle of wine. 24 Answer: Did he say that in the 25 deposition that I did that because, yes, I did 11473 1 do that. He -- I did a little research on him 2 and discovered that he likes fine wines and 3 fine food. 4 And so on one of my trips back to the 5 U.S., I obtained a better bottle of California 6 cabernet and sent it to him as a way of getting 7 his attention and introducing myself. And it 8 did get a response. 9 Question: And after he met with you? 10 Answer: He agreed to meet with me. 11 Question: During the first meeting, 12 did you discuss business? 13 Answer: Yes. That was the purpose of 14 the meeting. 15 Question: Okay. During the meeting 16 he indicated to you that he was very upset 17 about that relationship with Microsoft, didn't 18 he? 19 Answer: He was not shy to express his 20 feelings on the relationship. 21 Question: And there were at least two 22 things he was very upset about. One was 23 Microsoft had threatened to cease providing his 24 customer support and information unless he quit 25 shipping DR-DOS. Wasn't that true? 11474 1 Answer: He claimed that those things 2 had been said to him in the past, and that was 3 one of the reasons why he was upset. 4 Question: And wasn't he also upset 5 because Mr. Kempin had told him that unless he 6 licensed both MS-DOS and Windows in a package 7 that he was going to have to pay more than 8 double the price of Windows than he would have 9 for Windows separately? Wasn't he upset about 10 that? 11 Answer: That was another. 12 Question: And you were aware that he 13 had been told if he purchased Windows 14 separately it was $35, correct? 15 Answer: I don't remember the exact 16 amount, but it was definitely much higher than 17 what he had been paying or had been wanting to 18 pay, yes. 19 Question: And the Windows price 20 separate would have been more than the price of 21 DOS Windows combined. Wasn't it what 22 Mr. Kempin -- 23 Answer: It was a significantly higher 24 amount. 25 Question: And he was very upset about 11475 1 that and made that clear to you? 2 Answer: Yeah. There was actually 3 another thing he was upset about, and it's in 4 the profile document that there had been also 5 problems going way back before my time which 6 dealt with the contract that had taken place 7 where he had signed a contract agreeing to 8 something. 9 And then it come back to him later or 10 they came back and wouldn't sign it and had 11 doubled the price and that outraged him. I 12 don't know if that is related. I mean, I think 13 that's a separate thing, but -- 14 Question: That's a separate, but he 15 felt that he had been treated unfairly by 16 Microsoft? 17 Answer: Oh, he was not happy. 18 Question: In effect, Microsoft had 19 gouged him? 20 Answer: That was his impression. 21 That is what he conveyed to me when we met. 22 Question: Isn't it true that aside 23 from Vobis, you on at least one or more 24 occasions heard Mr. Kempin tell other OEMs that 25 the price for Windows separately would be 11476 1 significantly more or more than the price of 2 DOS and Windows combined? 3 Answer: I have heard that said. 4 Question: By Mr. Kempin? 5 Answer: I've heard it by him and 6 others, yes. 7 Question: And others. Which others? 8 Mr. Heuls? 9 Answer: Mr. Heuls, yes. 10 Question: And Mr. Haink? 11 Answer: Not Mr. Haink. 12 Question: Who else? 13 Answer: Mr. Lum. 14 Question: Let me show you a document 15 to try to refresh your recollection. 16 Look at Exhibit 607. 17 Answer: Okay. 18 Question: It states -- look at the 19 second paragraph. 20 Answer: First page? 21 Question: I'm sorry. Page 3, and we 22 referred to the first sentence of that 23 paragraph before lunch, and let's look at the 24 sentence that starts round 2. It's the fourth 25 line of the second paragraph. 11477 1 Do you see that? 2 Answer: Uh-huh. 3 Question: And let me just read it. 4 It says, Round 2. I took the opportunity to 5 negotiate in German, sign our offer as is. 6 This is an agreed-upon package deal or if you 7 change any component, we will, too. 8 Second option, scratch the DOS clause. 9 Paid $35 for Windows instead of $15. You have 10 until 4/1/91 to consider. 11 Do you see that? And do you recall 12 that the price that was negotiated for DOS was 13 $9? 14 Answer: I wasn't at the company at 15 that time, but I recall that the price that 16 they ended up finally agreeing on was $9 for 17 DOS. 18 Question: So DOS was $9. Windows was 19 15 for a total of $24. 20 So if they bought -- the deal was if 21 Vobis agreed to a combined price of $24 for DOS 22 and Windows, they can have it, or if it wanted 23 Windows separately, they'd have to pay $35, 24 correct? 25 Answer: Obviously, $9 and $15 do 11478 1 equal 24, so based on what this says here, that 2 seemed to be the agreement that was made. 3 Question: Isn't it true that you 4 heard Mr. Kempin, Mr. Lum, Mr. Heuls, at least, 5 offer similar pricing to other OEMs, in other 6 words, in the range of $35 for Windows alone or 7 $24 for DOS and Windows combined? 8 Answer: I don't remember if the exact 9 amount was 35. It could have been less. It 10 could have been higher. My guess, it was 11 higher because $9 for DOS was lower than what 12 had been given to other OEMs. 13 But I do recall more than once that 14 there were times that that would be offered or 15 suggested to OEMs. 16 Question: Do you remember OEMs to 17 whom that suggestion was made? 18 Answer: Ones specifically that I was 19 involved with? 20 Question: Yeah. 21 Answer: I would say I recommended it 22 at IPC, at Actebis and Peacock. 23 Question: Let's take those one at a 24 time. 25 Did IPC eventually sign a per 11479 1 processor license with Microsoft for DOS and 2 Windows? 3 Answer: I don't remember. 4 Question: Same question as to 5 Peacock. 6 Answer: Peacock, I believe, if I 7 recall correctly, did per processor. 8 Question: Same question as to 9 Actebis. Did Actebis eventually sign a per 10 processor license for both DOS and Windows? 11 Answer: My recollection on Actebis is 12 it was a per system, if I remember, but I'd 13 have to look back on it and refresh my memory 14 because it's been a while since obviously I 15 managed those accounts. 16 But the point is they did agree to 17 signing an agreement that were either per 18 processor based on a particular processor chip 19 or system. 20 Question: Based on -- 21 Answer: Based on getting the price 22 for MS-DOS and Windows. 23 Question: Let me continue down the 24 paragraph we were just reading. 25 It says, the proposal showed impact. 11480 1 They threatened with GeoWorks, Lotus, et 2 cetera. We asked if the DOS price was an 3 issue. He answered no. We parted as friends, 4 believe it or not. Manfred will follow up with 5 a letter and a phone call, and I have a bet 6 with Jeff that they will sign as is. 7 In my judgment, they will hurt if they 8 do not ship Win, meaning Windows, I assume, and 9 paying $35 for it is out of the question. 10 What I just read includes this, in my 11 judgment, they will hurt if they do not ship 12 Win. They being Vobis, Win being Windows, 13 correct? 14 Answer: Win was referring to Windows. 15 Question: And isn't it true that what 16 he's saying that it was essentially to be 17 competitive for Vobis to ship Windows at that 18 time frame? 19 Answer: I actually believe and know 20 that they wouldn't have been able to be 21 competitive with other OEMs if they hadn't been 22 offering Windows. 23 Question: And it was your experience 24 during the time period when you were an account 25 manager in Germany that it was essentially in 11481 1 order for OEMs to be competitive with other 2 OEMs to ship Windows; isn't that true? 3 Answer: It would. 4 Question: By that time it had become 5 a standard in the marketplace? 6 Answer: And I think more so with 3.1, 7 though, that that was going to be -- 8 Question: That was my understanding 9 as well. 3.1 was very popular, and it was -- 10 for an OEM to be competitive, it had to offer 11 that graphical option to its customers, 12 correct? 13 Answer: Uh-huh. 14 Question: I'm handing you what's been 15 marked as Exhibit 1343, and it appears to be 16 the first and last page of a report dated 17 October 15, 1991, written by Jeff Lum to 18 Joachim Kempin. 19 Do you recall having previously seen 20 this document? 21 Answer: Once again, this is right 22 around the time I was joining Microsoft, and I 23 did see many of these copies of documents 24 because they were kept in files that I was 25 given access to in order to get a history of an 11482 1 account. 2 Question: Okay. 3 On page 9 under the heading Vobis, it 4 states, although they sold a lot of MS-DOS, 5 penetration is significantly more than 60 6 percent as estimated until we see the royalty 7 reports. 8 It looks like DRI is urging them to 9 focus on DR-DOS. Lieven is complaining about 10 the per processor license. He does not want to 11 pay $9 with every computer system and thinks 12 about shipping both DR-DOS and MS-DOS. 13 I assume this is consistent with your 14 recollection that Mr. Lieven did not like 15 paying $9 with every computer system he shipped 16 because he was at the time shipping -- at the 17 time when you first met him was shipping both 18 MS-DOS and DR-DOS; is that correct? 19 Answer: He expressed to me on 20 multiple occasions that he did not like having 21 to pay $9 per processor. 22 Question: Because he was trying to 23 ship both DR-DOS and MS-DOS, correct? 24 Answer: Well, he didn't -- he felt he 25 was paying double. 11483 1 Question: That's right. And every 2 time he shipped a system with DR-DOS, he had to 3 pay Microsoft, correct? 4 Answer: If it was a per processor 5 contract at that time that he had negotiated, 6 yes. 7 Question: And were you aware that at 8 the time you joined Microsoft, Vobis also had a 9 license with DRI that was a per copy license on 10 which Vobis had prepaid? 11 Answer: Was I aware? 12 Question: Were you aware of that? 13 Answer: Yes, I was. 14 Question: And were you aware that 15 Vobis had signed the DRI license prior to the 16 time it had signed a contract amendment with 17 Microsoft that changed the basis of the 18 relationship with Microsoft to a per processor 19 contract? 20 Answer: Which amendment contract are 21 you referring to? 22 Question: I'm sorry. I was hoping to 23 skip through this. 24 Let me show you first Exhibit 605. 25 This is a license agreement between Microsoft 11484 1 and Vobis dated September 1, 1994, and MS-DOS 2 version 4.01. 3 Do you recall having seen that? 4 Answer: Is this the actual -- I don't 5 see when it was signed or -- yeah, I mean, this 6 looks familiar. 7 Question: Let me show you what's been 8 marked as Exhibit 608. 9 This is Amendment Number 1 to Exhibit 10 605. 11 Do you recall having seen that before? 12 Answer: Yes. 13 Question: Exhibit 608 was signed by 14 looks like Mr. Lieven March 28th, 1991, 15 correct? 16 Answer: Uh-huh. 17 Question: And it looks like Mike 18 Hallman who was -- at that time wasn't he the 19 president of Microsoft? 20 Answer: Yes. 21 Question: Signed April 4, 1991. 22 And Exhibit Number 1, wasn't this the 23 first license for MS-DOS 5.0? 24 Answer: Yeah. I mean, I've seen all 25 these because obviously future amendments all 11485 1 related back to these, and these are not -- as 2 any and most contracts are -- the easiest to 3 understand, so let me quickly look back through 4 -- 5 Question: Let me look back to make 6 sure I'm right. 7 Answer: Okay. Exhibit Number 608 is 8 the amendment to the original contract, which 9 is your Exhibit 605. And it is what was giving 10 them, licensing them the rights for MS-DOS 5.0. 11 Question: And if I can find the right 12 page. Doesn't it -- and the royalty basis on 13 this amendment is per processor, is it not? 14 Answer: Let me -- 15 Question: Yeah, there it is. 16 Refer to page 9. It's Exhibit C7. 17 Answer: Based on Exhibit M1 of the 18 original contract, which lists the per -- the 19 processors that's to be covered or the systems, 20 that this is a per processor agreement. 21 Question: All right. And it lists 22 the royalty rate in U.S. dollars. I'm 23 referring now to Exhibit 608 at page 9. Lists 24 a royalty rate of $7.82 in U.S. dollars. 25 Answer: Correct. 11486 1 Question: And do you know why the 2 price that's referred to in other documents 3 that was negotiated was $9? Do you know why 4 the contract lists the amount of $7.82? 5 Answer: Yeah, because this price is 6 -- well, it's a U.S. agreement, you know, it's 7 a worldwide agreement. The prices are based on 8 U.S. price plus their foreign language 9 versions, and obviously, in Germany they're not 10 selling the U.S. English version. They're 11 selling German. Maybe somebody asked for 12 another language. Or if they're selling into 13 France or other countries, then it's the 14 foreign language. 15 And actually, even if they were to 16 sell the U.S., it would be the U.K. version 17 which is still considered foreign language. 18 Question: And the foreign language 19 versions were $9? 20 Answer: Based on the way the 21 calculations for that uplift price of foreign 22 language, it would have totaled $9. 23 Question: So the way it worked was 24 Microsoft had entered into this per processor 25 license with Mr. Lieven or with Vobis at $9. 11487 1 At the time they entered into that 2 license, Vobis had unused copies of DR-DOS they 3 had already paid for, correct? 4 Answer: Since this contract was 5 signed before I joined, I don't know if they 6 had or not, or I don't recall whether or not 7 they had actually and what their agreement with 8 Digital Research was. 9 Question: But if Mr. Lieven testified 10 that he had signed a license with DRI on a per 11 copy basis, that he had prepaid for, and that 12 subsequently he signed this per processor 13 license with Microsoft, you are in no position 14 to disagree with that testimony, are you, 15 correct? 16 Answer: No, I don't disagree with 17 that. 18 Question: Okay. Do you recall what 19 the -- with reference to Exhibit 608 that there 20 was a minimum commitment that was made by Vobis 21 for purchase of MS-DOS? 22 MR. JARDINE: Of MS-DOS 4.0 or 5.0? 23 Question: 5.0. 24 Answer: There's always a minimum 25 commitment schedule that they would pay 11488 1 quarterly. 2 Question: Let me refer you to Exhibit 3 610. 4 Exhibit 610, let me try to identify. 5 It is a document that was marked in 6 Mr. Lieven's deposition. First page says from 7 Stefanie Reichel dated July 6, 1992, and the 8 heading toward the top of the page says license 9 summary. 10 Do you recall having seen this 11 document previously? 12 Answer: Yes, I wrote it. 13 Question: And starting on the fourth 14 page of the document is a license agreement 15 between Vobis Microcomputer and Microsoft 16 effective July 1, 1992. 17 Do you see that? 18 Answer: Yes, I do. 19 Question: And this was an agreement 20 that you negotiated with Vobis, correct? 21 Answer: Uh-huh. 22 Question: Referring back to the first 23 page, the executive summary states, Vobis has 24 changed their annual commitment level from 200K 25 units per year for MS-DOS and 100K for Windows 11489 1 to 400K units of MS-DOS and 320K units of 2 Windows per year. 3 Is that in keeping with your 4 recollection? 5 Answer: Yes. 6 Question: So under the previous 7 amendment, the minimum commitment Vobis had 8 made was for 200,000 units of MS-DOS, correct? 9 Answer: Was that 100 or 200 that you 10 said? 11 Question: 200. 12 Answer: Yes. 13 Question: And as a result of this new 14 agreement, Vobis committed to 400,000 units of 15 MS-DOS per year, correct? 16 Answer: Yes, correct. They doubled 17 it. 18 Question: And this new agreement was 19 also per processor license, correct? 20 Answer: Yes, it was. 21 Question: Per processor for both DOS 22 and Windows? 23 Answer: Yes. 24 Question: I've handed you what's been 25 marked as Exhibit 1344. 11490 1 Unfortunately, I only have one page of 2 this document which appears to have been a 3 multi-page document. 4 At the top of the page it says status 5 report Germany OEM sales, page 7. And first 6 line under that heading states, account name 7 Actebis computer GmbH. 8 First, let me ask you, are you 9 familiar with a report entitled status report 10 Germany OEM sales? 11 Answer: I think that's the reports 12 that we've been looking at. 13 Question: Okay. Let me just refer -- 14 Exhibit 1341 was written by whom, Manfred 15 Schindler? 16 Answer: Manfred Schindler. 17 Question: Okay. And Exhibit 1344, 18 have you seen that document before? 19 Answer: I mean, once again, I saw 20 reports. Anything that Juergen wrote or that 21 Manfred had written or reports that they had 22 turned -- that they got back from Lum or 23 Joachim Kempin were kept in a file in the OEM 24 department that I had access to. 25 I believe that the reason this is from 11491 1 Juergen was because A, I'm shown at the bottom 2 listed there working, which was during that 3 time, including a couple other people who 4 started after I had joined or -- and also, when 5 he talks about -- it says down here that I was 6 at CeBIT, that would have been in '92. 7 That's also when Juergen was there. 8 And this meeting that he's referring to, it 9 wouldn't have been Schindler, it was Juergen. 10 Question: Okay. So you've reached 11 the same conclusions I have reached about the 12 document that CeBIT -- it's referred to under 13 account name Actebis, that was the CeBIT 14 conference in the spring of 1992, correct? 15 Answer: Uh-huh. 16 Question: And CeBIT, as I understand 17 it, is the largest computer industry trade show 18 in the world; is that correct? 19 Answer: Yes, it is. 20 Question: And it's in Hanover, 21 Germany? 22 Answer: Yes. 23 Question: And apparently you met 24 Mr. Pursch, is that his name? 25 Answer: Pursch, yes. 11492 1 Question: Do you recall his first 2 name? 3 Answer: Ulrich. 4 Question: Ulrich Pursch? 5 Answer: Ulrich. 6 Question: He was the CEO of Actebis? 7 Answer: Yes. 8 Question: And you met him at CeBIT? 9 Answer: Yes, CeBIT. 10 Question: Before we get down to that, 11 let me ask you a few more questions about this 12 document. 13 This is status report Germany OEM 14 sales. Was that something that Juergen 15 prepared monthly? 16 Answer: If this is the same thing as 17 this, and that's what I believe he called his 18 monthly reports to Lum and Joachim, that would 19 be it. 20 Question: Okay. When you say this -- 21 the same as this, you're referring to Exhibits 22 1344 and 1341, correct? 23 Answer: Yes. I'm referring to those 24 two documents. 25 Question: You say it was prepared for 11493 1 Joachim Kempin and Jeff Lum? 2 Answer: Yes. 3 Question: Were there others who were 4 copied on the report? 5 Answer: Jochen Haink would have been 6 copied on this. 7 Question: Any others that you can 8 think of? 9 Answer: You mean outside of OEM? 10 Question: No -- yeah. Were there 11 other corporate people? 12 Answer: Christian Wedell. Basically, 13 anybody in top management, like Jochen Haink 14 and Christian Wedell would have been copied at 15 the GmbH and our team would have seen this as 16 well. Even if we weren't officially copied on 17 it, he would publish for us what he was turning 18 in. 19 Question: So these documents went to 20 Redmond, to management at Microsoft 21 headquarters; is that correct? 22 Answer: Yes. 23 Question: Would Mr. Gates have seen 24 these documents? Did he review OEM reports? 25 Answer: I don't know. I mean, I 11494 1 assume that just like in this case of -- where 2 in Exhibit 1341, where Mr. Schindler is sending 3 it to Jochen Haink and Jeff Lum and cc'ing some 4 people, it's possible that Juergen might have 5 cc'd Mr. Gates and Mr. Ballmer, but I don't 6 know since I don't see a cover page. 7 Question: Okay. But you've -- 8 certainly Mr. Gates was very aware of what was 9 going on in Germany and at Vobis in particular, 10 correct? 11 Answer: I assume Mr. Gates pays 12 attention closely to his business. 13 Question: And my question was 14 predicated on what we discussed earlier, 15 Mr. Gates visiting the Vobis store in Munich in 16 January of 1992. He was certainly -- Mr. Gates 17 knew that Vobis was a very strategic and 18 important account? 19 Answer: I don't think he would have 20 forgotten Vobis after that, yes. 21 Question: Okay. Let's continue on. 22 Referring again to Exhibit 1344, it 23 says, on the CeBIT we had a meeting between 24 Bernard Vergnes, Christian Wedell, Stefanie 25 Reichel, and myself. Myself being Juergen 11495 1 Huels, correct? 2 Answer: It would appear so, yes. 3 Question: During that meeting Pursch 4 showed us his new dealer catalog. In this 5 catalog he was advertising a system bundle with 6 DR-DOS. This was quite an embarrassing 7 situation because we did not know this at the 8 time. Urban was able to clarify the situation 9 afterwards. 10 Who's Urban? 11 Answer: Urban was somebody who worked 12 for Mr. Pursch. He was essentially like the 13 COO of operations, and he was in charge of 14 purchasing. 15 Question: He was telling us that 16 Novell was offering him a good deal only if he 17 would agree to advertise such a bundle in his 18 catalog. 19 Actebis wanted to cut a good Novell 20 deal so they agreed. We hear of this from 21 different customers right now. We decided to 22 give them more and better support, and we 23 mentioned to him that this is a system he is 24 already paying Microsoft royalties for. 25 You were present at this meeting, I 11496 1 take it? 2 Answer: Yes. 3 Question: So what he's saying is Mr. 4 Heuls pointed out to Mr. Pursch that if Actebis 5 shipped DR-DOS, it would already be paying 6 Microsoft for systems software, correct? 7 Answer: Based on what he says here, 8 that is what he had pointed out. 9 Question: And I think you indicated 10 you were uncertain whether Actebis had a per 11 processor agreement. 12 Does this refresh your recollection 13 that it either had a per system or per 14 processor license? 15 Answer: It was one of those two. I'd 16 have to see the agreement with Actebis in order 17 to confirm exactly what was the agreement with 18 them. 19 But what he was specifically referring 20 to at the time was in his catalog that all of a 21 sudden he was showing this. 22 Question: Wasn't it your 23 understanding that what he was communicating to 24 Mr. Pursch is that if he shipped DR-DOS, he 25 would be paying twice because he was already 11497 1 paying for Microsoft MS-DOS, correct? 2 Answer: I don't remember specifically 3 him saying that, although I have heard Mr. 4 Heuls say that before, yes. 5 Question: And certainly based on your 6 experience, that would be something that he 7 would be trying to point out to Mr. Pursch to 8 discourage him from shipping DR-DOS, correct? 9 Answer: He would have pointed that 10 out. 11 Question: Isn't it true in your 12 experience that per processor license -- the 13 fact that Mr. Heuls pointed out to OEMs that 14 they'd be paying twice once they signed up per 15 processor license was very effective in 16 discouraging OEMs from shipping DR-DOS? 17 Answer: I don't know if, in fact, 18 that's what they would ultimately base their 19 decision on. They might have taken it into 20 consideration. 21 Question: Mr. Lieven told us that 22 once he signed a per processor license, it made 23 no financial sense for him to license DR-DOS. 24 Now, are you telling the Jury here 25 that you were unaware that once an OEM signed a 11498 1 per processor license for MS-DOS it did not 2 make financial sense for the OEM to sign a 3 license for DR-DOS? 4 Answer: The OEMs had a choice of what 5 kind of agreement they would go into, so they 6 had a choice of between going with a per 7 processor, per system or per copy. 8 And if they had chosen to go with 9 something other than a per processor, that 10 would have allowed them flexibility where they 11 weren't essentially if you want to call it 12 paying double. But they chose per processor 13 because it was giving them a better price. 14 Question: Let's go back to -- we got 15 off the subject. 16 We were talking about your initial 17 meeting with Mr. Lieven and he expressed 18 certain complaints he had about Microsoft. 19 Do you recall how long that meeting 20 lasted? 21 Answer: The initial meeting? 22 Question: Yeah, the initial meeting. 23 Answer: I don't remember the exact 24 time, but it was probably anywhere from 30 25 minutes to an hour. 11499 1 Question: Do you -- at that time did 2 you ask him for anything, did you indicate that 3 you wanted to sell him something in particular 4 or cause him -- or you wanted to see him 5 selling DR-DOS's -- what was the purpose of 6 that meeting? 7 Answer: No. That meeting was really 8 to introduce -- I mean, especially given some 9 of his past history. It was a way for me to 10 introduce myself, it was a way for me to gather 11 information. And the last thing I wanted to do 12 on top of that was go, and by the way, I want 13 you to do the following thing. That wouldn't 14 have been appropriate. 15 Question: Okay. Then subsequent to 16 that I assume you had a series of meetings with 17 him and others at Vobis? 18 Answer: Yes. 19 Question: Between that initial 20 meeting and, say, August of 1992, do you recall 21 -- or, actually, let's say between that and 22 July of 1992, when Vobis signed the new license 23 agreement we just referred to, do you have an 24 estimate as to the number of times you met with 25 people at Vobis? 11500 1 Answer: I don't remember. I don't 2 have an exact count, but on average I was up 3 there at least once a week. 4 Question: Okay. So -- and the first 5 meeting would have been in what month, 6 February? 7 Answer: I don't remember, but I 8 believe it was February, yeah. 9 Question: Okay. So between February 10 and July is about five months. Okay. 11 February, March, April, May, June. 12 Answer: So 20. 13 Question: Five months. So maybe 20 14 meetings between your initial meeting and the 15 time Mr. Lieven signed the contract? 16 Answer: Yeah, and maybe in some cases 17 there would have been an additional meeting 18 during the week or something, yeah, but at 19 least 20. 20 Question: Were there others at 21 Microsoft who accompanied you to various of 22 those meetings? 23 Answer: Yes. 24 Question Mr. Heuls, I assume? 25 Answer: Yes. 11501 1 Question: What about Mr. Kempin? 2 Answer: When he was in Europe and 3 would go to each of the subsidiaries, he would 4 come along. 5 Question: When did you first meet 6 Mr. Gates? 7 Answer: I met him at an OEM event in 8 Europe that was being held, and I think it was 9 the spring. 10 Question: Was it in April of 1992? 11 Answer: It may have been, yes. 12 Question: Was it in Monte Carlo? 13 Answer: Yes, it was. 14 Question: That was the first time you 15 met Mr. Gates? 16 Answer: In person, yes. 17 Question: And on that occasion, did 18 you take the opportunity to discuss the Vobis 19 account with him? 20 Answer: Yes, I did. 21 Question: Did he inquire of you -- 22 what do you recall about that discussion? 23 Answer: Discussing with him the 24 progress that was being made in the account, 25 what was happening related to discussions for 11502 1 negotiations on the contract, the relationship, 2 the stores. 3 Question: Did he indicate, reaffirm 4 it was his desire that Vobis not ship any 5 DR-DOS, that he wanted DR-DOS out of the Vobis 6 account? 7 Answer: Yes, he did. 8 Question: Do you recall discussing in 9 April with Mr. Gates incentives that you could 10 offer to Vobis that would get DR-DOS out of the 11 account? 12 Answer: I remember discussing with 13 him some of the ideas and things that we were, 14 you know, either presenting or thinking about 15 doing, yes. 16 Question: And isn't it true that he 17 basically told you he was willing to offer 18 anything -- you could offer just about anything 19 you wanted in order to accomplish the goal of 20 getting DR-DOS out of the Vobis account? 21 Answer: He wanted to make sure it was 22 taken care of, and he offered his assistance, 23 if needed. 24 Question: I assume there came a time 25 when you did get to the point with Mr. Lieven 11503 1 where you started talking about specific types 2 of business that Microsoft would like to do 3 with Vobis, correct? 4 Answer: Uh-huh. 5 Question: And obviously you were 6 interested in selling a number of products. 7 You wanted to get DR-DOS out of the account, 8 correct? You wanted -- you wanted Vobis to be 9 shipping a hundred percent MS-DOS and no 10 DR-DOS, correct? 11 Answer: I wanted them to be shipping 12 a hundred percent of our product, yeah. 13 Question: Right. And, of course, you 14 were interested in selling applications 15 software as well, correct? 16 Answer: They had already had 17 WinWorks. And in Europe, unlike the U.S., we 18 didn't license application products. 19 Question: Okay. So your chief focus 20 was on systems products, correct? 21 Answer: Yes. 22 Question: All right. And eventually 23 got to the point where you started discussing 24 price and minimum commitments with Mr. Lieven, 25 I assume, correct? 11504 1 Answer: I don't remember all the 2 dates, but I would pretty much say that from as 3 soon as I had had some of my initial meetings 4 with Lieven in February, that by the time of 5 the March, April time frame, we were already 6 discussing, you know, some of the core pieces 7 of what he wanted, what we wanted, and what 8 potential Ts and Cs would be. 9 So even though it came together in 10 July with it being signed, I would say that it 11 had been in the works essentially from March 12 with it coming together in, say, April, May. 13 (Whereupon, the playing of the video 14 to the jury adjourned.) 15 MR. HAGSTROM: Is this a good time for 16 a break, your Honor? 17 THE COURT: Yes, it is. 18 Remember the admonition previously 19 given. 20 We'll take a ten-minute recess at this 21 time. Leave your notebooks here. 22 Thank you. 23 All rise. 24 (A recess was taken from 9:49 a.m. 25 to 10:07 a.m.) 11505 1 THE COURT: Everyone else may be 2 seated. 3 Go ahead. 4 (Whereupon, the following video 5 resumed playing to the jury.) 6 Question: Didn't he initially 7 indicate to you that it was his strong 8 preference to have a per copy license? 9 Answer: Who are you talking about, 10 Lieven or -- 11 Question: Mr. Lieven. 12 Answer: Yes. It was his preference 13 to do that. 14 Question: And it eventually got to 15 the point where you started discussing price of 16 the various types of licenses that could be 17 made available to him, correct? 18 Answer: Uh-huh. 19 Question: And isn't it true that you 20 quoted him -- you quoted him the following 21 prices, per copy. $20 per system, $14 per 22 processor, $9 for MS-DOS. 23 Answer: What are you reading this off 24 of? I don't remember this. 25 Question: This is my notes. 11506 1 Answer: I don't remember the exact 2 prices. I'd have to refer because I would be 3 following the pricing guidelines, plus with the 4 approval of my management, what I could offer 5 before I did it, and I don't remember the exact 6 numbers, but that sounds right in terms of the 7 progression of numbers. 8 Question: Okay. And these numbers 9 I've given you, the per copy price is slightly 10 more than twice the per processor price. 11 Does that sound about like the right 12 differential? 13 Answer: Sounds about right, yes. 14 Question: Okay. And was that the 15 usual practice, to quote OEMs a per copy price 16 that was twice the per processor price? 17 Answer: I don't know if there was an 18 actual formula that when they just did their 19 pricing, they said, oh, it's twice as much or 20 three times as much. I just know that based on 21 however they came up with their pricing and put 22 it in guidelines, that we would quote what's in 23 there. 24 Question: But I want to -- this is 25 important. 11507 1 It's your recollection, isn't it, that 2 the price you quoted to Vobis was roughly twice 3 as high for per copy as per processor? 4 Answer: Roughly, yes. 5 Question: All right. And isn't that 6 about the usual difference between per copy and 7 per processor that you quoted to OEMs? 8 Answer: I'm not sure I follow the 9 exact question. When I would speak to other 10 OEMs? 11 Question: When you -- in the case of 12 other OEMs, didn't you quote them a price that 13 was roughly in the range of twice as high for 14 per copy versus per processor licenses? 15 Answer: Roughly, yes. 16 Question: Isn't it true that Vobis 17 competed very aggressively on price in its 18 market? 19 Answer: Yes, that's true. 20 Question: So any money he could save 21 on system software was important to Mr. Lieven? 22 Answer: Software or even components. 23 I mean, anywhere he could cut down on his costs 24 that can allow him to have lower prices than 25 his competitors, of course. 11508 1 Question: The prices that you 2 ultimately quoted to Mr. Lieven, those were 3 discussed with and approved by your 4 supervisors, including Mr. Heuls and Mr. Lum; 5 is that correct? 6 Answer: I couldn't present something 7 without first having had the okay if it 8 differed from the pricing guidelines. 9 So if it was nonstandard versus the 10 standard pricing guidelines, and if there was 11 -- there was something that was counter 12 proposed or nonstandard, I would have to go 13 back and get approval from Mr. Heuls, Mr. Lum, 14 Mr. Kempin in order to go ahead and say yes to 15 the customer. 16 Question: The prices, the $20 per 17 copy, $14 per system, $9 per processor, 18 assuming that's correct, those are prices that 19 you had to get approval from Mr. Heuls or 20 Mr. Lum, correct? 21 Answer: Right. If those were, in 22 fact, the prices, I mean, regardless of whether 23 those were the prices or any other prices, you 24 know, anything I quoted to Mr. Lieven or said 25 we're going to do this, I had to get prior 11509 1 approval first from Mr. Heuls or Mr. Lum. 2 Question: So it's your recollection 3 that the prices you quoted had to be approved 4 by Mr. Heuls and were approved by Mr. Heuls, 5 correct? 6 Answer: Correct. 7 Question: Thank you. 8 I've handed you what's been marked as 9 Exhibit 1345. 10 This appears to be a document that you 11 produced. It's from Juergen Huels to Jeff Lum, 12 a copy to you, correct? 13 Answer: Uh-huh. 14 Question: Subject, IPC, Actebis, 15 Vobis, dated February 3rd, 1992, and it's a 16 copy of an e-mail, correct? 17 Answer: Uh-huh. 18 Question: Okay. This Exhibit 1345 19 refers to a meeting at Vobis last week. 20 Stefanie has the goal to get contact 21 to several people within Vobis. Do you see 22 that? That includes Lieven, Frahling -- is it 23 Frahling? 24 Answer: Yes. Frahling, yes. 25 Question: And Dahmen. And we know 11510 1 who Lieven and Dahmen were. Who was Herr 2 Frahling? 3 Answer: Herr Frahling was one of the 4 executives on the board for Vobis. 5 Question: And then dropping down, it 6 says, next step includes that Stefanie will go 7 together with Ricarda. Is that Ricarda 8 Cisneros? 9 Answer: Okay, where are we now? 10 We're done on -- okay. 11 Next up includes that Stefanie will go 12 together with Ricarda. Yes, that is Ricarda 13 Cisneros. 14 Question: To support Dahmen 15 extensively to create the royalty report. And 16 that's the report of Vobis shipments based upon 17 what the royalty would be computed, correct? 18 Answer: Correct. 19 Question: This is an e-mail dated 20 January 30, 1992. It's from Joachim Kempin, 21 correct? 22 Answer: The top one says it's from 23 Joachim Kempin, and it looks like he's 24 forwarding an e-mail. 25 Question: And can you tell who it 11511 1 would have been forwarded to? 2 Answer: It was -- this e-mail is 3 being sent from Joachim Kempin to the 4 distribution list of DOEM and IOEM. 5 Question: All right. And what does 6 DOEM stand for? 7 Answer: Don't remember what DOEM is, 8 but I do remember that IOEM is international 9 OEM. 10 Question: And that would have been 11 you? 12 Answer: It would have been myself and 13 my colleagues in OEM international. 14 Question: Okay. Oh, and DOEM is 15 probably domestic OEM. 16 Does that sound right? 17 Answer: That's probably a good guess, 18 yeah. 19 Question: Well, do you recall 20 receiving this document? 21 Answer: I obviously did since it's 22 from me and I found it, and I would get 23 information on products. And so this is an 24 example of that, yes. 25 Question: This is a document that you 11512 1 would have maintained in your files at 2 Microsoft? 3 Answer: Uh-huh. 4 Question: Next to the last or 5 actually -- yeah, next to the last paragraph, 6 looks like this is referring to -- I can't tell 7 whether it's -- looks like a defragger. It 8 should have been an MS-DOS a while ago, like 9 lots of other things. 10 Is that referring to the defragger? 11 Answer: Let me read through this. 12 He is referring -- being from, I 13 guess, richf. I don't know if that's Richard 14 Fade. I don't have no idea who richf is. It's 15 referring to the defragger. 16 Question: Okay. It says from richf 17 to billg. Rich -- that would be Richard Fade 18 to Bill Gates. That would make sense, wouldn't 19 it? 20 Answer: It could. 21 Question: Then the others -- and on 22 what we have here, the e-mail from richf to 23 billg and others, was forwarded by Joachim 24 Kempin to international OEM. 25 Answer: To OEM. 11513 1 Question: Okay. And the others on 2 the original OEM besides billg are bradsi. 3 That's Brad Silverberg, correct? 4 Answer: Yes. Joachimk, that's 5 Joachim Kempin. Mikemap, is Mike Maples? 6 Answer: Yes. 7 Question: And Steve Ballmer, correct? 8 Answer: Uh-huh. 9 Question: And those are the 10 seniormost -- well, Bill Gates is the chairman 11 of Microsoft, correct? 12 Answer: Correct. 13 Question: Mike Maples, was he in the 14 office of president at the time? 15 Answer: I believe he was, yes. 16 Question: And do you recall, what was 17 Mr. Ballmer? He was VP of international or 18 senior VP in sales. 19 Answer: It was sales and marketing, 20 maybe support. I don't remember, but he was in 21 the office of the president. 22 Question: What about Brad Silverberg? 23 What was his position? 24 Answer: He was not in the office of 25 the president, but I believe the senior vice 11514 1 president. 2 Question: All right. Referring to 3 the defragger, which is, as I understand it, is 4 that compression technology? 5 Answer: I think it's a component of 6 compression technology. 7 Question: Okay. But referring -- 8 we're referring to the defragger. It says, it 9 should have been in MS-DOS a while ago, like 10 lots of other things. DR 6 has it -- hasn't 11 been a major feature. 12 DR 6 referring to DR-DOS 6.0; is that 13 correct? 14 Answer: Yes. 15 Question: Okay. Down at the bottom 16 it says, my comment. In DOS 6.0, we will have 17 it as well, meaning the next version of MS-DOS 18 Microsoft is going to add this feature that DR 19 6.0 already has? 20 Answer: Yeah. I mean, reading 21 through this, it sounds like that's what it's 22 saying. 23 Question: I've handed you what's been 24 marked as Exhibit 1348. 25 It appears to be a copy of an e-mail 11515 1 dated July 15, 1992, correct? 2 Answer: Uh-huh. 3 Question: And it's from gerdab. Do 4 you know who that is? 5 Answer: Gerda Beining. 6 Question: Who's Gerda Beining? 7 Answer: She was the person I worked 8 with who was over in the marketing department 9 for Microsoft Germany. 10 Question: It's Beining. How do you 11 spell that? 12 Answer: B-e-i-n-i-n-g. 13 Question: Okay. And it's to Baerblb. 14 Answer: Who is Baerbl Brockman? 15 Question: Brockman, how do you spell 16 that? 17 Answer: B-r-o-c-k-m-a-n. Might have 18 been two N's at the end, but I don't know. 19 Question: Was this a document that 20 you maintained in your files at Microsoft? 21 Answer: Yes, it was. 22 Question: And let's see if we can 23 identify the others on the list. Christian 24 Wedell, and, again, what was his position? 25 Answer: Director of Central Europe. 11516 1 Question: And okay, CC, it shows 2 Gerda Beining, again. 3 Jochen Haink, who was head of 4 Microsoft Germany? 5 Answer: Uh-huh. 6 Question: Juergen Huels and Stefanie 7 Reichel and Wolfe? 8 Answer: I don't know who that was. 9 Question: Just generally, it's in 10 German. Can you take a look and explain what 11 it is referring to? 12 Answer: It's coming from Gerda 13 sending it to Baerbl Brockman, who is the 14 director of marketing. And she's thanking her 15 for her quick input for the Microsoft Vobis 16 marketing promotional concept. 17 Question: Okay. A GROB refers to a 18 GROB-konzept, g-r-o-b, k-o-n-z-e-p-t. That 19 means rough concept; is that right? 20 Answer: Yeah. I don't know the exact 21 translation, but that's basically what it 22 means, is the rough concept package that was 23 being put together. 24 Question: Okay. Let me refer you to 25 the paragraph that starts Baerbl, es handelt 11517 1 sich. 2 Do you see that? 3 Answer: Yeah. 4 Question: Then you see the second 5 sentence, it starts die intention von Stefanie. 6 Answer: Okay. Let me just read that 7 sentence. 8 Question: I wonder if you can just 9 translate that sentence for us. 10 Answer: She says that the intent from 11 myself, meaning here, Gerda and Stefanie, is 12 for starters or, first of all, to use the 13 potential at this time for one of the most 14 important accounts in Germany to use that 15 better and then to eventually take that and 16 maybe do something somewhere with other type of 17 accounts. 18 Question: Okay. Do you recall what 19 the program was that it's referring to in the 20 document? 21 Answer: It was an overall marketing 22 program that Gerda and I were putting together 23 in order to do things with Vobis. And it, you 24 know, had two purposes. 25 One, it helped me in the purpose of 11518 1 making Lieven happy in that it gave him 2 additional visibility and met needs and things 3 that he wanted to see more from us in a 4 marketing effort. 5 And it helped her coming from 6 marketing in Germany so that she could get more 7 visibility and help drive her products, 8 finished good products in particular 9 applications. 10 Question: Dropping down, do you see 11 where it says nun zu Deinen Fragen, which I 12 understand to mean now to your questions. 13 Answer: Yeah, on to your questions. 14 Question: Okay. And then under 1, it 15 says -- can you read, there's a question 16 Wieviel mehr -- 17 Answer: Software wollt ihr durch 18 preinstallationen verkaufen? It says how much 19 more software do you want to sell through 20 preinstallation? 21 Question: Okay. What is the -- can 22 you tell me what the first sentence says? 23 Answer: The preinstallation from 24 Vobis is being done without charge or without 25 cost. 11519 1 Question: 1351, the first page is a 2 fax cover sheet addressed from you to Bill 3 Gates, correct? 4 Answer: Correct. 5 Question: And the handwriting on the 6 document is yours? 7 Answer: Yes, it is. 8 Question: And then it looks like the 9 first or the remaining pages of Exhibit 1351 10 are summary type pages? 11 Answer: Yes. It's a memo saying 12 what's following. 13 Question: All right. And then what 14 is the document that goes with it? What's the 15 exhibit number? 16 Answer: The exhibit number that goes 17 with it is 1339, which is the Vobis account 18 profile. 19 Question: Okay. So the combination 20 of Exhibit 1351 and 1339 are what you prepared 21 for Mr. Gates to brief him for the meeting that 22 was held in London, correct? 23 Answer: Yes. 24 Question: All right. Now, do you 25 know what the occasion was that brought 11520 1 Mr. Gates to London? My understanding is it 2 was in connection with a Microsoft board 3 meeting; is that correct? 4 Answer: Yeah. There was the annual 5 board of directors meeting and other business 6 meetings that he had. 7 Question: And was this the first time 8 that Mr. Gates met with Theo Lieven? 9 Answer: I believe it was. They met 10 on -- I mean on other occasions, but I believe 11 this was the first meeting. 12 Question: Okay. Let's refer to the 13 first page of Exhibit 1351, looking at your 14 handwritten notes on the bottom of the page, it 15 says, Bill, please find attached the requested 16 information for the meeting with Vobis in 17 London this week. I will be briefing you in 18 more detail on Tuesday at the Hyatt Carlton 19 Towers. 20 Do you recall -- did you, in fact, 21 have a meeting on Tuesday at the Hyatt Carlton 22 Towers with Mr. Gates? 23 Answer: Yes, I did. 24 Question: Okay. And then the second 25 page of Exhibit 1351 indicates that the meeting 11521 1 would take place on the day before the annual 2 board of directors meeting held in London, 3 England, correct? 4 Answer: Right. So I guess -- 5 Question: The board meeting was the 6 following day. 7 Answer: So your question was what? 8 Question: Yeah, I'm just trying to 9 clarify that, indeed, as the document reflects 10 you met with Mr. Gates and Mr. Lieven at the 11 Chez Nico on Wednesday, August 19th, and that 12 was the day before the annual Microsoft board 13 meeting. 14 Answer: Which would have been 15 Thursday, the 20th. 16 Question: So the people in attendance 17 were Mr. Lieven, Bill Gates, Juergen Huels, and 18 yourself, correct? 19 Answer: Yes. 20 Question: And then second -- or the 21 third page of Exhibit 1351 indicates several or 22 states several objectives, number 5 of which is 23 get a commitment to get DRI/Novell out of the 24 account, correct? 25 Answer: Yes. 11522 1 Question: And was that a subject that 2 was discussed at the meeting? 3 Answer: Which meeting? 4 Question: At the lunch meeting at the 5 Chez Nico -- 6 Answer: Yes, it was. 7 Question: -- on the 19th of August. 8 And at the conclusion or during the 9 meeting, did Mr. Lieven commit to Mr. Gates 10 that he would no longer ship DR-DOS? 11 Answer: I'm not remembering. I mean 12 -- 13 Question: Isn't it true that he 14 agreed at the meeting that he would no longer 15 ship any more DR-DOS? 16 Answer: I remember him making 17 reference to that, yes. 18 Question: There were a variety of 19 topics discussed at the meeting, correct? 20 Answer: Yes. 21 Question: Things that Microsoft 22 wanted to do in a strategic alliance with 23 Vobis, correct? 24 Answer: Correct. 25 Question: And details of those were 11523 1 worked out over the next several weeks; isn't 2 that true? 3 Answer: That's correct. 4 Question: All right. And Mr. Lieven, 5 based on what was discussed and his expectation 6 that things would work out committed that he 7 was no longer going to ship out DR-DOS? 8 Answer: If the things that he had 9 indicated were met, that's correct. 10 Question: And you state, dropping 11 down a paragraph, up until recently, he favored 12 DR-DOS despite the fact that he had to pay for 13 these licenses extra, since he has a per 14 processor agreement on MS-DOS, correct? 15 Answer: Correct. 16 Question: And then you say, he's most 17 likely paying $5 for DR-DOS on a per copy 18 basis. 19 Is that what he told you? 20 Answer: That I believe is based on 21 information he and others have provided me 22 that, you know, I had gotten tidbits of 23 information, so my calculations figured out to 24 be about $5 per copy. 25 Question: Okay. And then the last 11524 1 paragraph of the page you say, he is even 2 willing to discuss no longer offering DR-DOS if 3 we are willing to work together with him in 4 marketing in the European market and helping 5 him sell our software with his hardware. 6 And that was the taking off point for 7 trying to get a commitment from him to no 8 longer ship DR-DOS, correct? 9 This notion that he wanted a number of 10 things out of Microsoft, he was willing to 11 negotiate no longer shipping DR-DOS? 12 Answer: Correct. That was his 13 negotiation point. 14 Question: All right. Let's refer to 15 Exhibit 1352. 16 What was the purpose of this document? 17 Generally, looks like it was to brief this long 18 list of people that this meeting was coming up 19 between Mr. Lieven and Bill Gates, correct? 20 Answer: Correct. 21 Question: I think the question was it 22 appears -- and I'm just trying to speed this 23 up, so you're free to correct me if I'm wrong, 24 but it looks like the purpose of the document 25 is to brief this list of recipients on the 11525 1 upcoming meeting that you were going to have 2 with Mr. Lieven and Bill Gates in London within 3 the following week. 4 Answer: Yes, that is. 5 Question: And at the time you were 6 aware that Vobis was still selling DR-DOS, and 7 that was something that one of the outcomes you