9854 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 XXXVI 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 8:15 a.m., January 23, 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 9855 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 Attorney at Law Zelle, Hofmann, Voelbel, 8 Mason & Gette, LLP 500 Washington Avenue South 9 Suite 4000 Minneapolis, MN 55415 10 (612) 339-2020 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9856 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 HEIDI B. BRADLEY Attorneys at Law 12 Heller Ehrman, LLP 333 South Hope Street 13 Suite 3900 Los Angeles, CA 90071-3043 14 (213) 689-0200 15 BRENT B. GREEN Attorney at Law 16 Duncan, Green, Brown & Langeness, PC 17 Suite 380 400 Locust Street 18 Des Moines, IA 50309 (515) 288-6440 19 20 21 22 23 24 25 9857 1 RICHARD J. WALLIS Attorney at Law 2 Microsoft Corporation One Microsoft Way 3 Redmond, WA 98052 (425) 882-8080 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9858 1 (The following record was made out of 2 the presence of the jury at 8:18 a.m.) 3 MS. CONLIN: Your Honor, we have that 4 offer of proof. It will just take a moment. 5 THE COURT: Okay. 6 MS. CONLIN: Mr. Bradford, would you 7 take the stand. 8 THE COURT: You are still under oath, 9 sir. 10 OFFER OF PROOF EXAMINATION 11 BY MS. CONLIN: 12 Q. Okay. Mr. Bradford, let me take you 13 back to July 18th or 19th of 1991, and the 14 conversation that we were discussing yesterday 15 that you had with Mr. Noorda immediately after 16 Mr. Gates called him. 17 And I would like for you to tell us, 18 please, what Mr. Noorda said to you in that 19 conversation. 20 A. Ray Noorda came back to my office 21 pretty exercised and said just got off the 22 phone with Bill Gates. He called me in 23 reference to the public announcement that was 24 made associated with our letter of intent that 25 we'd signed with Digital Research. 9859 1 He indicated that Mr. Gates had been 2 pretty offensive in his words to him, and he 3 said a couple of things to Ray. 4 Number one, he said I want to 5 reinstitute those merger discussions that we 6 had in late 1989, early '90, but, number one, 7 that DRI thing, that's got to go. 8 And Ray said something like, well, 9 what about the government? 10 And Gates' reply, according to Ray, 11 was you don't worry about the government. I 12 can take care of the government. 13 MS. CONLIN: All right. Your Honor, 14 that concludes the offer of proof. 15 THE COURT: Very well. 16 MS. CONLIN: Okay. You can step down. 17 THE COURT: Thank you much. 18 MS. CONLIN: And I think, Your Honor, 19 in terms of the instruction, we had agreed on 20 everything except one word, and you've probably 21 made your mind up with respect to that. 22 THE COURT: I did. And Carrie was 23 making copies of it to show to you. 24 MS. CONLIN: Okay. Great. 25 MR. TULCHIN: Thank you, Your Honor. 9860 1 THE COURT: And I'll let you see it. 2 Do you want me to read it when? 3 MS. CONLIN: Well, Your Honor, how 4 about when I -- let's see. 5 THE COURT: After? Before? 6 MS. CONLIN: We are not going to -- 7 why don't we go off the record for a minute 8 just to try to figure this out. 9 THE COURT: Okay. 10 (An off-the-record discussion was 11 held.) 12 (The following record was made in the 13 presence of the jury at 8:31 a.m.) 14 THE COURT: Everyone else may be 15 seated. 16 Members of the jury, what Carrie 17 handed out to you was Instruction Number 34. 18 It was the instruction I read to you regarding 19 Plaintiffs' Exhibit 5166. 20 Put it in your instruction book. 21 Mr. Bradford, take the stand. You are 22 still under oath. 23 MS. CONLIN: Yeah, you need your desk. 24 THE COURT: That's the most high-tech 25 thing we have in the courtroom. 9861 1 MS. CONLIN: Really fancy and it's all 2 worn out too. 3 JUROR [redacted]: Looks like you could 4 use a bib there too. 5 THE WITNESS: Bring me some food. 6 MS. CONLIN: Everybody got their 7 instruction? 8 DAVID BRADFORD, 9 called as a witness, having been previously 10 duly sworn, testified as follows: 11 DIRECT EXAMINATION (CONT'D) 12 BY MS. CONLIN: 13 Q. Mr. Bradford, good morning. 14 Do you know a man named Toby Corey? 15 A. Yes, I do. 16 Q. Was Mr. Corey an employee of DRI and 17 Novell? 18 A. Yes, he was. 19 Q. What was his job? 20 A. Toby was in charge of the marketing 21 organization for Digital Research, at least for 22 some period of time. 23 Q. Did he stay on when the merger 24 occurred? 25 A. Yes, he did. 9862 1 Q. Where was he geographically located? 2 A. Toby was in northern California. I 3 don't know where his residence was, but he 4 operated out of our San Jose office, and, to 5 some extent, the Monterey office. 6 Q. All right. And do you know where all 7 of the development was done for DR-DOS? 8 A. I do. 9 Q. Where? 10 A. That development was done in 11 Hungerford, England. 12 Q. And do you know who the development 13 product manager was for DR-DOS 5.0 and 6.0? 14 A. Yes. That was John Constant. 15 Q. Let's move now and discuss DRI's 16 relationship with IBM and the negotiations that 17 you had with IBM about DR-DOS and Novell DOS. 18 Were you involved yourself in 19 discussions with IBM? 20 A. Yes, I was. 21 Q. Can you orient us a little bit in 22 terms of time. About when did those 23 discussions begin and about when did they end? 24 A. Shortly after we closed the merger 25 with Digital Research, that was November 1 of 9863 1 1991, we were informed by Dick Williams, who 2 was the CEO of Digital Research, that there was 3 an opportunity to do a deal with IBM. 4 And toward the end of 1991, beginning 5 early in 1992, then there was a series of 6 discussions, negotiations, information exchange 7 meetings with IBM. 8 Q. And who else besides you was involved 9 on the part of Novell? 10 A. There was -- Dick Williams was the CEO 11 of DRI, myself was part of that negotiating 12 team. It included Jack Blount, who at the time 13 was vice president, I believe, of strategic 14 relations for Novell. 15 Another fellow that was knowledgeable 16 in the DRI area was a fellow by the name of 17 Steve Maysonave. And Steve at the time was no 18 longer an employee of DRI. He was an 19 independent consultant that Dick Williams knew. 20 And so the four of us -- and there may 21 have been one or two others that were involved 22 in the Novell team working with IBM. 23 Q. Who were you negotiating with on IBM's 24 side? 25 A. Boy, as I recall, the head of that 9864 1 group was a fellow by the name of Jim Canovena. 2 There was another senior level guy by the name 3 of Lee Reiswig at IBM. There was a fellow out 4 of Dallas, I think, by the name of Art Olbert 5 who was part of the IBM negotiating team. They 6 had a couple of lawyers that were involved. 7 The fellow that I remember most distinctly is 8 Bob Anderegg. And I think Bob was chief 9 counsel for the IBM software division. 10 Q. Did I give you any exhibits? 11 A. No. 12 Q. Oh, I'm sorry. 13 For this one we can just look at the 14 -- and you probably need to know a number. All 15 right. Let me see. 16 9440. And that is a memorandum of 17 January 13th, 1992, to Mr. Williams and you and 18 -- now, who's Steve Tucker and Andy Wightman? 19 You didn't mention them. 20 A. Steve Tucker was an engineering type. 21 He kind of bridged both marketing and 22 engineering. He had a technical background, 23 but he was very good at marketing, and he 24 worked out of the DRI facility in Monterey, 25 California. 9865 1 Andy Wightman, I believe, was a more 2 technical fellow, as was John Bromhead. 3 Q. I didn't even notice him. All right. 4 And this is Mr. Maysonave; right? 5 A. That's correct, right. 6 Q. And it's a status report about IBM, 7 and I think we'll just look at that first 8 sentence. 9 And this says you met in Boca Raton. 10 And were you at that meeting in Boca Raton on 11 January 8th at the time? 12 A. Yes, I was. 13 Q. And you are referring to the code name 14 Cougar to refer to the project. And what was 15 the goal of the project? 16 A. The goal of that project was to get 17 IBM to adopt Novell's new DOS that we purchased 18 from Digital Research. 19 Q. Mr. Hagstrom found the exhibits. 20 Let's turn to the page that ends 1867 21 and Paragraph Number 10. 22 At the bottom it says, the good news 23 is that they want to help us be compatible by 24 working closely with us and providing detailed 25 specs whenever needed. 9866 1 What was necessary for IBM to do and 2 for DRI to do -- Novell/DRI to do to get DR-DOS 3 on to the IBM PCs? 4 I don't want a technical explanation. 5 A. In general, you have to make sure that 6 the operating system, Novell DOS, was 7 compatible with third-party applications, and, 8 in this instance, Microsoft Windows. 9 Q. Okay. And the negotiations went on 10 for about how long, do you think? 11 A. Oh, gosh. They started toward the end 12 of '91. And my recollection is they went 13 through approximately April, May of '92. 14 Q. At the same time, is Novell engaged 15 with IBM on any other matters? 16 A. Well, certainly IBM was the largest 17 computer hardware manufacturer in the world at 18 the time. And so we were very interested in 19 getting them to be a reseller of our network 20 operating system NetWare. 21 Q. Who starts out as the main point 22 person for these negotiations? 23 A. It was Steve Maysonave, together with 24 Dick Williams. 25 Q. And does that change, then, as time 9867 1 goes on? 2 A. Yes. As I recall, Steve Maysonave 3 left at some point in time, and I think Jack 4 Blount then took over the negotiations for 5 Novell. 6 Q. At some point do you recall meetings 7 with the IBM marketing people? 8 A. Yes. 9 Q. Did they have significant concerns 10 about switching from MS-DOS to DR-DOS? 11 A. Yes, they had concerns. 12 Q. Let's look at Defendant's Exhibit 3. 13 Now, you've got that if you want to look down 14 there, but you can look up here. 15 This is a January 19th, 1992, 16 memorandum to Dick Williams from Steve 17 Maysonave and you're among those copied. 18 And let's look at the first sentence 19 where Mr. Maysonave tells the members of the 20 negotiating team, the week of January 13th had 21 its share of surprises. 22 The good news is that our support from 23 the IBM technical team is stronger than ever. 24 They are very supportive and anxious to get 25 started. Andy and John have won them over 100 9868 1 percent. 2 And then let's go down to the next 3 paragraph. 4 MR. TULCHIN: Your Honor, I'm sorry to 5 interrupt. I didn't get a copy of this from 6 Plaintiffs' counsel. I wonder if I could. 7 MS. CONLIN: You bet. I'm sorry. 8 MR. TULCHIN: Sorry to interrupt. 9 MS. CONLIN: My system failed or I 10 failed. 11 MR. TULCHIN: I understand. The 12 system will fail too. 13 Q. Mr. Kalb apparently works for Lee 14 Reiswig and has been designated as their chief 15 negotiator and met with us on 1-16. It did not 16 appear that he had been properly debriefed and 17 brought up to speed. David knows him from past 18 negotiating sessions. 19 And that was you? You were the David 20 that knew Mr. Kalb? 21 A. That's correct. 22 Q. He started out by stating that there 23 were some major issues that had to be addressed 24 before we progressed any further on finalizing 25 an agreement. The issues and subsequent 9869 1 subissues are outlined here. 2 Number one, when it comes to the 3 substitution of DR-DOS for their current DOS, 4 IBM marketing votes no, in big capital letters. 5 Was that -- the issues with the 6 marketing team, was that the subject of 7 substantial discussion in the course of these 8 negotiations? 9 A. Certainly it was. 10 Q. And were you, on the Novell side, able 11 to resolve the concerns that the marketing 12 people of IBM had? 13 A. Over time I think we won them over, as 14 we won them over technically as well, but there 15 were still concerns at the IBM level because 16 the deal never did get done. 17 Q. All right. Let's go now, if we could, 18 to Plaintiffs' Exhibit 9350. And some pages 19 are a duplicate of the one we just looked at, 20 Defendant's Exhibit 3, but these are easier to 21 see. 22 And these are the areas of IBM 23 marketing concern. And those are the issues 24 that you addressed with IBM? 25 A. Yes. Those were among them, yes. 9870 1 MS. CONLIN: And then if we could turn 2 to the next page, Darin. 3 Q. And I'm not going to go over all of 4 these with you, but I want to do that first 5 one. 6 MS. CONLIN: Thank you. 7 Q. One of the marketing concerns was DOS 8 equals Microsoft. And no compelling reason to 9 change. Will be very unsure of compatibility. 10 Is that an issue that came up 11 regularly? 12 A. Yes, it was. 13 Q. Were there -- what was the genesis of 14 IBM's concern? Why were they so concerned 15 about compatibility? 16 A. Well, obviously, Windows was the next 17 operating system that was going to be 18 introduced by Microsoft Corporation. 19 And in order to get broad based market 20 acceptance, you needed to ensure 21 interoperability between whatever DOS system 22 that you had, whether it was MS-DOS, DR-DOS, 23 Novell DOS, IBM's own PC DOS, you had to ensure 24 interoperability between those DOSs and the 25 Windows' operating system from Microsoft's 9871 1 system. 2 Q. All right. Was anything going on in 3 the industry at this time, this is in January 4 of -- January of 1992, that's January 24th, 5 1992, that was leading to concerns on the part 6 of IBM about compatibility? 7 A. Yes. There were certainly public 8 pronouncements to the effect that Windows and 9 Novell's DOS or DR-DOS wouldn't be compatible. 10 And we were seeing increasing reports from 11 marketing and sales representatives and 12 technical folks throughout the Novell family 13 reporting that there was incompatibility 14 between Windows and Novell DOS. 15 Q. All right. And that was while Windows 16 3.1 was in beta? 17 A. That's correct, among other times. 18 Q. And have you ever heard of the AARD 19 code? 20 A. Yes, I have. 21 Q. All right. Well, I'm not going to ask 22 you to explain it, but -- 23 A. Thank you. 24 Q. And another of the concerns that the 25 marketing people had in this same paragraph, 9872 1 can't afford to risk compatibility with another 2 DOS. Microsoft perceived as standard. Large 3 OEM base. Leading compatible applications and 4 best marketing. 5 And are those all issues that you 6 discussed in the course of the negotiations? 7 A. Yes, they were. 8 Q. And you and your team were able to 9 resolve those issues? 10 A. I think for the most part we got past 11 those issues, correct. 12 Q. Let's go down, if we could, under 13 unnecessary risk, the second one. Well, both 14 of those. 15 OS/2 was an operating system that IBM 16 was doing at the time; correct? 17 A. That's right. 18 Q. And so -- 19 A. It was an alternative to Windows, I 20 think. 21 Q. All right. And the second one is 22 don't want to invest in what is perceived as a 23 nonstandard product, especially at this price 24 point. 25 Do you remember anything about that? 9873 1 A. Sitting here today, I can't remember 2 that specific issue. 3 Q. All right. Not a surprise. 4 Let's turn to the next page and look 5 at the first one. And that one says PC DOS 6 success currently achieved without aggressive 7 marketing. In other words, the product kind of 8 sold itself, is that what they were concerned 9 about? 10 A. Well, the reference there is to IBM's 11 own DOS. 12 Q. All right. 13 A. And I think the desire on many folks 14 at IBM was to get out of the DOS business and 15 turn that over to Novell. 16 And so they're saying, IBM is saying 17 that PC/DOS success is currently achieved 18 without aggressive marketing. So there were 19 some folks at least within the IBM family that 20 thought leave well enough alone, PC/DOS is 21 doing okay. 22 Q. Okay. Let's turn now if we could -- I 23 am skipping a lot of these. And let's turn to 24 two pages that begin with -- maybe they all 25 begin with this. It says Cougar at the top. I 9874 1 just want that first one, please. 2 It says, providing and continuing 3 compatibility when Microsoft will continue to 4 assert otherwise. 5 What was the nature of your 6 discussions in that regard, if you remember, 7 Mr. Bradford? 8 A. I don't remember specific discussions, 9 but, in general, there was concerns about 10 compatibility and Microsoft alleging that the 11 two wouldn't interoperate, Windows and Novell's 12 version of DOS. 13 Q. All right. Let's turn, then, to a 14 couple pages, and it's a summary of key IBM 15 marketing concerns. 16 And we've looked at only a couple of 17 them, but I want to look at the -- let's just 18 -- 19 MS. CONLIN: Can you blow up that 20 whole page, please, Darin? 21 Q. Okay. One of the things you were 22 talking about, apparently at some level is the 23 timing and positioning of the announcement. 24 And that would be the announcement of 25 cooperation or strategic partnership between 9875 1 IBM and Novell? 2 A. That's correct. 3 Q. All right. And the bottom one is 4 ability to achieve consistent family of 5 operating systems with current conflicting 6 views of the evolution of LAN systems. 7 Can you explain that a little bit to 8 us? 9 A. Sure. LAN, L-A-N stands for local 10 area network, and that was Novell's primary 11 business. And I mentioned in my testimony 12 yesterday about something called the NetWare 13 operating system. That was our principal 14 product. 15 IBM at the time had a competing 16 product, network operating system, as did 17 Microsoft. Microsoft's product was called LAN 18 manager. So managing the local area network. 19 And I can't recall what IBM's product 20 was, the name specifically, but it might have 21 been LAN Systems. 22 Q. Okay. Well, let's look at one of the 23 diagrams that accompanies this exhibit, and it 24 is on the page ending 84. Personal systems and 25 it's called operating systems positioning. 9876 1 MS. CONLIN: Oh, that's not the one I 2 like. I like that one fine, but another couple 3 pages, I think. It says -- it's got arrows 4 that go up this way. 5 Yeah, that's it. 6 Q. Okay. This is a diagram I think that 7 IBM did. And can you just sort of tell us what 8 this is supposed to mean in terms of 9 positioning, if you can? 10 A. Well, I think it is a diagram showing 11 the spectrum of operating systems. So I think 12 it's good for just a general understanding of 13 the industry, that the most base level 14 operating system for single user personal 15 computer would be DOS. 16 Moving up from there, it would be a 17 combination of Windows sitting on top of DOS 18 operating together. 19 IBM's OS/2, there's a couple of 20 versions that they identify there. I think 21 this is an IBM document. 22 Q. It is. 23 A. And so IBM is saying that their OS/2 24 2.1 and 2.0 are higher in the hierarchy than 25 Windows DOS. 9877 1 Then it moves to OS/2 LAN systems. So 2 that would be a combination of IBM's OS/2 and 3 their own LAN system, their networking system. 4 Then there's Novell with NetWare, and 5 then there's AIX. And that was a box that IBM 6 was coming out with, a piece of hardware. And, 7 boy, it's been some years since I saw the term 8 AIX, but I thought it referred to more of a 9 hardware system rather than a software system, 10 although if it's on this chart, then it 11 obviously is the operating system that drives 12 that particular piece of IBM hardware. 13 Q. Okay. So this was a possible way of 14 positioning the sort of family of operating 15 systems that would be available on IBM 16 hardware? 17 A. Yes. 18 Q. All right. At the time of your 19 deposition back in 1998, you were not able to 20 recall why these negotiations did not end in a 21 deal between IBM and Novell. 22 Are you able to recall now? 23 A. Well, I've seen more documents this 24 time. I'd never seen these IBM documents 25 before this latest iteration. I probably saw 9878 1 them. 2 I should be accurate on that. In the 3 late '91, '92 time frame when we were in these 4 negotiations, but in the '98 time frame when I 5 had my deposition taken earlier, I hadn't seen 6 these documents. 7 So this and other documents that we 8 have seen, the IBM status report from Steve 9 Maysonave, the discussions, internal 10 memorandums with Dick Williams, et cetera, 11 helped refresh my recollection as to what 12 happened there. 13 Q. All right. And did you also talk with 14 anybody? 15 A. Yes. I talked to Jack Blount, who was 16 our former lead negotiator on this transaction. 17 Q. All right. And is your memory 18 refreshed? 19 A. Yes, it is. 20 Q. Can you tell us, please, what you 21 understood to be the reason or one of the 22 reasons why IBM and Novell were not able to 23 reach a deal? 24 MR. TULCHIN: Objection, Your Honor. 25 To the extent this is based on the hearsay 9879 1 conversation with Mr. Blount and given that 2 this is a fact witness, not an expert, we 3 object. This appears to be based on hearsay. 4 THE COURT: Overruled. 5 Go ahead. 6 A. Yes, I recall. And there was a very 7 specific contract issue that I remember the IBM 8 lawyers talking to us about; that they had a 9 contract with IBM, and the essence of that 10 contract prohibited them from taking the Novell 11 software in addition to the IBM software, in 12 essence, because they had signed a contract 13 with Microsoft that essentially was a per 14 processor license that they could no longer -- 15 they would having to pay twice for Novell's 16 disk operating system if they adopted it, in 17 addition to what they were already paying IBM. 18 Q. Okay. That's the per processor per 19 CPU type license? 20 A. Right. I believe in one of the 21 documents I saw a reference to royalty issues, 22 having to pay double or something like that. 23 Q. All right. I don't remember that. 24 Do you remember anything else about 25 the rationale that IBM offered in connection 9880 1 with not doing the deal? 2 A. Well, I believe they were certainly 3 concerned with Microsoft's growing marketing 4 strength in the Windows market and the desire 5 of end user consumers broadly to get access to 6 that Windows operating system. And so I think 7 they were concerned that if they did a deal 8 with Novell, that Microsoft would withhold from 9 them future versions of the Windows operating 10 system. 11 Q. Okay. In all of your discussions with 12 IBM, was there any kind of a technical problem 13 mentioned as a deal breaker? 14 A. No, not that I recall. 15 Q. Did you ever hear of a man named Tony 16 Ingenuso? I hope I'm pronouncing his name 17 correctly. 18 A. I don't recall that name. He may have 19 been part of the negotiating team at IBM. 20 There were a number of folks there, but I don't 21 remember that name. 22 Q. All right. Well, let's move a little 23 more into this per processor license issue. 24 Who is John Edwards? 25 A. John was a senior vice president of 9881 1 marketing at Novell, and John eventually, after 2 Dick Williams' departure from the Novell 3 family, John Edwards took over the lead role 4 running that Novell division, Digital Research. 5 Q. He was a marketing -- you said senior 6 VP of marketing? 7 A. That's correct. 8 Q. And in April of 1992 when he took 9 over, what kinds of things does he do to sell 10 DR-DOS? 11 It's DR-DOS 6 that's on the market at 12 this point; right? 13 A. Correct. 14 Q. All right. 15 A. Well, I remember John got very active 16 in traveling around the world, sometimes with 17 Ray Noorda, sometimes not, but John got very 18 active in trying to convince original equipment 19 manufacturers, hardware manufacturers, like 20 Compaq and Dell and Vobis in Germany and others 21 around the world, to adopt as an alternative to 22 Microsoft's DOS, adopt Novell DOS and 23 incorporate it into their systems. 24 Q. Are some of these OEMs with which 25 Novell had a preexisting relationship on their 9882 1 NetWare operating system? 2 A. Yes, they were. 3 Q. The people that were known to Novell 4 and to Mr. Edwards, and that's who he was going 5 out to visit? 6 A. That's right. 7 Q. How do he and Mr. Noorda do on their 8 trips around the country and around the world? 9 A. They don't do very well. It's a very 10 disappointing series of trips and meetings that 11 they have. 12 Q. And what is the reason for that? 13 A. Well, the principal reason is they 14 came back and there was a series of meetings at 15 the executive committee level talking about 16 Microsoft's contracting practices that excluded 17 Novell DOS from the marketplace. 18 Q. How did it exclude Novell DOS? 19 A. Well, there was something called a per 20 processor license that Microsoft would have 21 these hardware manufacturers sign, like Compaq 22 and Dell, that said essentially for every 23 machine built at the Dell factory or the Compaq 24 factory or Acer in Taiwan or Vobis in Germany, 25 that for every machine that they built, those 9883 1 folks owed a royalty to Microsoft, whether or 2 not Microsoft actually shipped MS-DOS with 3 their systems. 4 So, essentially, the original 5 equipment manufacturer, in order to adopt 6 Novell's DOS, despite the fact that it arguably 7 had better features and functionality than 8 Microsoft DOS, in order for them to adopt our 9 software program, they would have to pay dual 10 royalties, one to Microsoft in Redmond, 11 Washington, and one to us. 12 Q. All right. And you said -- did they 13 visit Dell? 14 A. That's correct, they did visit Dell. 15 Q. Compaq? 16 A. Yes, they visited Compaq. 17 Q. All right. And when they came back, 18 either Mr. Edwards or Mr. Noorda or both would 19 visit with the executive committee about what 20 they had learned? 21 A. That's correct. 22 Q. Do you remember specifically their 23 visit to the Dell Corporation. 24 A. I do. 25 MR. TULCHIN: Objection, Your Honor. 9884 1 This is necessarily based on hearsay. 2 THE COURT: Well, overruled so far as 3 that question. The next question. 4 Q. What did you learn about their visit 5 to Dell? 6 A. They came back very concerned from 7 that meeting, very exercised. They were 8 frustrated by Dell's inability to want to adopt 9 our system. 10 Well, let's be clear. Dell seemed to 11 want to adopt our system because they met with 12 Michael Dell, the founder and CEO of Dell 13 computer and essentially -- 14 MR. TULCHIN: Objection to this, Your 15 Honor. 16 THE COURT: Sustained. 17 Q. As a result of what happened with 18 Michael Dell and Mr. -- I believe Mr. Edwards 19 will be here to talk about that, but as a 20 result of what happened with Dell and other 21 companies, did the company -- did Novell take 22 any action? 23 A. Certainly. We continued to try to 24 drive sales of the product while at the same 25 time we felt we needed to report these 9885 1 activities to the relevant government agencies. 2 Q. Okay. Now, at this point is Novell 3 aware -- I guess you are because of the -- 4 Novell's aware that there is an ongoing FTC 5 investigation? 6 A. Yes, we were, uh-huh. 7 Q. And did you cooperate and provide 8 witnesses and testimony and declarations and 9 the like to the federal government? 10 A. Well, just to set the time frame for 11 this, as the Jury probably recalls, in late 12 '91, when we negotiated or announced the deal 13 with Digital Research, IBM -- or Microsoft then 14 came to us and says we want to reinstitute 15 merger discussions between the two companies. 16 Then there was a series of meetings 17 held in late '91 with Microsoft and early 1992. 18 During this time period, we kept the 19 Digital Research Company separate and distinct 20 from Novell, Inc., while we had the discussions 21 with Microsoft. 22 Then in late March of 1992, Microsoft 23 announced its acquisition of Fox Pro. As a 24 result, the negotiations between Microsoft and 25 Novell kind of blew up at that point in time. 9886 1 Then Dick Williams left Novell. John 2 Edwards took over. And now we decided, you 3 know -- we hadn't been very aggressive, 4 honestly, marketing the Novell DOS product 5 during this period thinking that we might have 6 a deal with Microsoft. 7 So then April of '92, May of '92, John 8 Edwards and team get more active in going out 9 and meeting with the original equipment 10 manufacturers. 11 And then in June of 1992, I think it 12 was, we were contacted by regulatory commission 13 in Europe and responded to that and filed a 14 complaint against Microsoft for their alleged 15 unlawful practices in the disk operating 16 system, the operating system market. 17 Q. All right. And returning to 18 Mr. Edwards and Mr. Noorda and their marketing 19 efforts, did Novell ever get a contract for 20 Novell DOS or DR-DOS with any major OEM? 21 A. No, not that I recall. 22 Q. All right. Was Novell in any way the 23 initiator of the original federal government 24 investigation into the practices of Microsoft? 25 A. No, we weren't. 9887 1 Q. When you began being more aggressive 2 about the practices of Microsoft, did you ask 3 people in the company to provide you with 4 information about the practices that they had 5 awareness of? 6 A. Yes, I did. 7 Q. And did they do that? 8 A. Yes, they did. 9 Q. Do you then provide it to the FTC? 10 A. Yes, we do. And the European 11 commission. 12 I think to again set the time frame, 13 if you'll remember, in September of '91 when we 14 had some of those meetings with the folks at 15 Microsoft, the attorneys for Microsoft, Bill 16 Neukom, the general counsel of Microsoft, 17 explained to us that they were under 18 investigation by the Federal Trade Commission 19 at that time. 20 That may have been the first time I'd 21 heard of that. And then so now we are about 22 nine months later, and we begin to be more 23 active with the government agencies. 24 Q. All right. I'm going to show you now 25 Exhibit -- Plaintiffs' Exhibit 4 -- I beg your 9888 1 pardon -- 5473, and that is, I think, one of 2 the responses that you received. 3 Do you know Linnet Harlan? 4 A. Yes. Linnet Harlan was the general 5 counsel for -- 6 MR. TULCHIN: We object to this 7 exhibit, Your Honor, for the reasons discussed 8 yesterday. Same issue. 9 MS. CONLIN: Your Honor, if we may 10 approach. 11 THE COURT: Okay. 12 (The following record was made out of 13 the presence of the jury at 9:05 a.m.) 14 MS. CONLIN: Your Honor, we appealed 15 the Special Master. This is what the database 16 says, and I have checked all of these exhibits. 17 We appealed the Special Master's ruling 18 sustaining Microsoft's hearsay, embedded 19 hearsay objection, and you granted in part and 20 denied in part. 21 You said specifically the first and 22 second pages are admissible and the third and 23 fourth pages are inadmissible. We have removed 24 the third and fourth pages, and so we believe 25 the Court has ruled on this. 9889 1 MR. TULCHIN: That may be so, Your 2 Honor. I would like a moment to check. If Ms. 3 Conlin is correct, then, of course, you know, I 4 withdraw my objection. 5 I thought this was covered by the same 6 issues that we discussed yesterday, and I may 7 be incorrect. She may have a better database 8 than I. 9 THE COURT: Do you want to check? 10 MR. TULCHIN: Can I check? 11 THE COURT: Sure, sure. Go ahead. 12 I'll wait here. 13 MR. TULCHIN: Thank you, Your Honor. 14 My apologies. Ms. Conlin is correct. 15 MS. CONLIN: I'm right. 16 MR. TULCHIN: My indication was that 17 this was out, but it is the other two pages and 18 these are the first two. 19 THE COURT: Okay. Thank you, David. 20 (The following record was made in the 21 presence of the jury at 9:08 a.m.) 22 THE COURT: You may continue. 23 MS. CONLIN: Thank you, Your Honor. 24 You may put that back up, Darin. 25 It is Plaintiffs' Exhibit 5473. There 9890 1 we go. 2 BY MS. CONLIN: 3 Q. All right. And I think you told us 4 who Linnet Harlan was, but did you tell us who 5 Lindsey Williams is, or do you know? 6 A. Yes. Lindsey was an administrative 7 leader or the head of contracts, I should be 8 clear, in Europe for the Digital Research team. 9 I think she was based in Hungerford, England. 10 Q. All right. That's where the 11 development is going on? 12 A. That's right. 13 Q. And then let's go down to the second 14 paragraph. Okay, thanks. 15 And she tells you or tells Linnet 16 Harlan, one other -- I think this is item -- to 17 mention is that through a telephone survey 18 which we carried out, we have learned that 19 Microsoft refuses to support Windows or any 20 other of their products if run with DR-DOS if 21 the problem appears to be with DR-DOS. Yet, 22 they support competitors' applications with 23 Windows. 24 Now, explain to the Jury what that 25 means. 9891 1 A. Again, this is the incompatibility 2 concern. And the representations made by 3 Microsoft representatives, in Europe in 4 particular in this instance, that they would 5 ensure that Windows wouldn't run with Novell's 6 version of DOS. 7 Q. All right. And then the second page 8 is a different issue. 9 This is a Microsoft fax to Mike Davis 10 of Diamond Trading. Is Diamond Trading an OEM 11 to your knowledge? 12 A. Yes, that's correct. 13 Q. And it's from a woman named Ellen 14 Taylor dated January 23rd, 1992. 15 MS. CONLIN: And can you blow that up 16 a little bit more, Darin, the body of the 17 letter? 18 Thank you. 19 Q. Dear Mike, she says, further to our 20 conversation yesterday, I am writing to confirm 21 that Microsoft is unable to supply you Windows 22 as a single product. 23 Microsoft will only sell you Windows 24 as a combined packaged with MS-DOS version 5. 25 And then it's signed by Ms. Taylor. 9892 1 And it is on Microsoft letterhead. 2 What does it mean if Microsoft will 3 not sell Windows all by itself to an OEM, but 4 will only sell it combined with MS-DOS? What 5 does that mean for DR-DOS? 6 A. Obviously, they won't purchase DR-DOS 7 if it would not be able to run with Windows. 8 Q. And at this point Windows is the GUI, 9 the graphical user interface; correct? 10 A. That's correct. 11 Q. All right. I'm not sure, but -- so 12 the Jury has complete information, I'm not sure 13 if I showed you this, Mr. Bradford, but six or 14 so weeks later, there is a correction to that, 15 and Ms. Taylor or someone on behalf of 16 Microsoft says that that's not correct. 17 Did you get other reports of this kind 18 of activity on the part of Microsoft? 19 A. Yes, we did. 20 Q. Okay. From around the world? 21 A. That's right. 22 Q. All right. Let's move now to a 23 different subject matter, and that is Novell 24 DOS 7.0. 25 This would be the product that you -- 9893 1 that's issued or worked on both before and 2 after -- no, I guess only after Novell and DRI 3 join. 4 As you go forward, are there 5 discussions about generally the future of DOS, 6 of the disk operating system at the executive 7 committee level? 8 A. Yes. 9 Q. And let's take a look at the timeline. 10 Okay. September of 1991, that's when 11 DRI ships DR-DOS 6.0. And that's a month -- 12 two months, I guess, before the two companies 13 merge; right? 14 A. That's right. So I think accurately 15 that should say DRI ships DR-DOS 6.0. 16 Q. When the companies join, you don't 17 change the product name at that point, do you? 18 A. No. It remains DR-DOS 6.0. 19 Q. All right. And then December 21, 20 1991, that's the Windows 3.0 Christmas beta 21 with the AARD code. 22 And then it's after you have merged. 23 And then April 6, 1992, Windows 3.1 is 24 released. And that's the product released to 25 market? 9894 1 A. From Microsoft? 2 Q. Yes. And then March 30th, a year 3 later, MS-DOS 6.0 is released. 4 And then January of 1994 Novell DOS 5 7.0 is released; correct? 6 A. That's correct. 7 Q. All right. So from November of 1991 8 when the merger occurred until January of 1994, 9 no DOS product is issued by Novell, is released 10 by Novell? 11 A. That's correct. There may have been 12 some upgrades, you know, that sort of thing, 13 but it was called DR-DOS 6.0. 14 Q. Tell the Jury what was going on inside 15 Novell in the late fall of '92 and early '93 16 concerning how to release or if to release 17 another DOS. 18 A. Well, there was great concern broadly 19 about our DOS product line that we'd purchased 20 from Digital Research. 21 We were running into these contracting 22 issues from Microsoft, compatibility issues 23 with Microsoft with Windows, and so forth. 24 And so the sales of DR-DOS were now 25 decreasing fairly rapidly, and so there was 9895 1 concern, do we release a new Novell DOS? Do we 2 put marketing resources behind it? Do we 3 continue with the engineering group in 4 Hungerford, England, or do we terminate the 5 product and cut our losses and move on? 6 Q. All right. Was there discussion about 7 how to release it if you released it? I mean, 8 in what form? As a stand-alone or combined 9 with other things? 10 A. Sure. You know, we had those 11 discussions actively. How to, you know, make 12 it come to the customer, what would be the best 13 for the end user customer, what would be the 14 best marketing plans, et cetera. 15 Q. All right. Was there talk of 16 combining it with a product -- a personal 17 NetWare? 18 A. Yes. Just to put this in context, we 19 had the NetWare operating system that was 20 popular, and it was an operating system that 21 operated a number -- almost an infinite number 22 of personal computers together if you put 23 enough NetWare on the project. 24 But if you have a small office, maybe 25 five to ten people, and you wanted what we 9896 1 called a lighter version of the NetWare 2 operating system for, like I say, five to ten 3 users, we had a little product called NetWare 4 Lite for small businesses. 5 Q. All right. We're going to stop with 6 the discussion and go to a document. 7 9052. And that I don't -- I'm just 8 calling to your attention. 9 In March -- this is a -- I think this 10 is a news report, and this is your announcement 11 in -- let me see the date here -- March 20 -- 12 MS. CONLIN: Can you go down a little 13 bit? 14 Q. March 24th, 1993. 15 This is Novell's announcement that it 16 is going to release a 7.0 product; is that 17 correct? 18 A. That's right. 19 Q. All right. That's all I need of that 20 document. 21 And this went out to the press and the 22 public, and it was -- what was the purpose of 23 announcing in March of 1993 that, in fact, 24 Novell was going to release another DOS? 25 A. Well, we wanted the customer base to 9897 1 know that we were not abandoning our DR-DOS 2 product line. Instead, we were going to 3 release a better version, if you will, of 4 Novell DOS that had increasing functionalities 5 and capabilities. 6 Q. Okay. Let's look at 9053. And that 7 is a document, an internal Novell confidential 8 document, that deals with the same issue. 9 I think it may or may not be the same 10 date. 11 MS. CONLIN: If you could blow up the 12 whole thing, Darin. 13 Thanks. Good. 14 Q. And it talks about what to tell the 15 public and the press about the new operating 16 system that Novell is going to produce. 17 And at the bottom, it says 18 communications, opportunities, and issues, and 19 it says by announcing Novell DOS 7 just prior 20 to the official announcement by Microsoft of 21 MS-DOS 6.0, it is hoped that Novell can 22 generate enough interest to potentially stall 23 DR-DOS customers upgrading to the newly 24 released MS-DOS 6.0. 25 The industry has speculated on 9898 1 Novell's commitment to continue -- 2 MS. CONLIN: Could we get that a 3 little bit bigger, just that bottom part? 4 Okay. 5 Q. The industry has speculated on 6 Novell's commitment to continue development of 7 DR-DOS. 8 Novell DOS 7 reflects that commitment 9 and is a communications opportunity to hint at 10 future product offerings from Novell and its 11 industry partners, as well as solidify Novell's 12 continued commitment to the desktop platform. 13 I think that touches on the issue that 14 you mentioned earlier. Because of the time 15 limit, people were feeling that maybe there 16 wasn't going to be a new DOS? 17 A. Yes. 18 MR. TULCHIN: Objection. Leading. 19 THE COURT: Sustained. 20 Q. Okay. What does that address? 21 A. Well, I think it speaks for itself. 22 There was concern that the marketplace 23 was believing that Novell no longer had a 24 commitment to its desktop product, the DOS 25 operating system. 9899 1 And so I think the marketing 2 organization -- I saw Toby Corey's name up at 3 the top right of this document -- I think the 4 marketing organization was concerned that they 5 get the message right, that they get 6 information out to the marketplace that we 7 still had a commitment to this product line. 8 Q. And when you release this information 9 before Microsoft, I take it that you knew 10 Microsoft's product was coming out shortly 11 thereafter? 12 A. I assume so based on this e-mail, or 13 this letter. 14 Q. All right. I want to show you a few 15 Microsoft documents that deal with this 16 announcement. 17 Plaintiffs' Exhibit 1591. I think 18 that the Jury has already seen this, and I just 19 want to call the Jury's attention back to the 20 top e-mail. 21 And it is from Mr. Freedman to Mr. 22 Cole and Mr. Silverberg dated March 26, 1993. 23 So this would just be a couple of days 24 after your announcement? 25 A. That's correct. 9900 1 Q. And Mr. Freedberg -- Freedman, I'm 2 sorry, tells his bosses, quote, if they really 3 release a version with all this junk in it, it 4 will mean that for three MS-DOS releases in a 5 row (5, 6 and 7), DR will have had our key 6 features in their product 12 to 18 months 7 before us (kernel in HMA, compression, 8 VxD/multi-tasking). Given that track record, 9 it's going to be impossible to shake this MS as 10 follower image. It's been very difficult so 11 far as it is. 12 Would you agree with that? 13 A. Yes, I would. 14 Q. All right. And let's look at 15 Plaintiffs' Exhibit 1797. 16 This one deals with the general 17 relationship between Novell and Microsoft 18 during this time frame. 19 And if we could start down -- oh, I'm 20 not remembering this and you are not reminding 21 me. 22 Down at the bottom, the one from 23 Mr. Kruger. 24 He says, I contacted Novell following 25 our meeting this afternoon. The gears are 9901 1 turning in Provo. This guy, Jeff Turner, is a 2 very suspicious ombre. We'll get what we need, 3 but it's going to be time consuming. 4 And then Mr. Silverberg responds, what 5 are they suspicious about? Okay. 6 And then the next one is Mr. Kruger's 7 response. 8 You must be pulling my leg in asking 9 what Novell is suspicious about, right? They 10 think we're out to cheat them. We, of course, 11 did this with WFW, Windows for WorkGroups (in 12 their eyes). 13 We also haven't given them Chicago 14 code and we changed NT APIs at the last minute 15 and didn't tell them. 16 In terms of the Chicago code -- 17 MR. TULCHIN: Could I ask, Your Honor, 18 that the rest be read just for the sake of 19 completeness? 20 THE COURT: Certainly. 21 Q. In the new Novell math -- 22 MS. CONLIN: Of course, Mr. Tulchin 23 can also read it. 24 Q. In the new Novell math, this equals 25 the fact that Microsoft is not a good partner. 9902 1 Note that I didn't say this was 2 logical. 3 But not giving you the Chicago code, 4 that would be not being a good partner; 5 correct? 6 A. Among other things, right. 7 Q. And changing the APIs and not telling 8 you, that wouldn't be being a good partner, 9 would it? 10 A. That's correct. 11 Q. All right. After this announcement, 12 were there continuing discussions inside Novell 13 about what to do about DOS? 14 A. Yes. There was great consternation 15 because our sales continued to drop and we 16 weren't sure exactly what to do and how to 17 support the product, et cetera. 18 Q. Okay. And are you also trying to 19 gauge how the market is going to receive this 20 new offering from Novell? 21 A. Right. I think if there's broad-based 22 enthusiasm about the announcement of Novell DOS 23 7.0, we'll put more energy behind it, put more 24 marketing resources, do more press releases, et 25 cetera. 9903 1 Q. All right. The months before the 2 release of Novell DOS 7.0, what's it like 3 inside Novell in terms of these discussions? 4 A. Well, certainly at any company of this 5 size, there's going to be disagreement among 6 the executives as to how to position products, 7 how to position technologies, how much support 8 to throw behind a product. 9 Certainly Novell's NetWare operating 10 system was still doing reasonably well at this 11 point and was a good profitable product for us. 12 How much energy do we put behind this desktop 13 OS, et cetera. 14 Q. All right. And are there other 15 factors that are going into this discussion and 16 this difference of opinion? 17 A. Well, as mentioned earlier, of course, 18 we were concerned about Microsoft's broad-based 19 monopoly in this market and could we really 20 break into it. You know, we mentioned earlier 21 things such as the incompatibility issues, the 22 per processor licensing, the preannouncements 23 of their own products, et cetera, that were 24 hurting Novell. 25 And so with all of those things going 9904 1 on, we were concerned that, you know, would 2 Novell DOS 7.0 really be successful and really 3 be able to get a groundhold, a swell, if you 4 will, among consumer users. 5 Q. Were you concerned about what was 6 going to go on with the FTC and whether or not 7 they would take any action? 8 A. Certainly. 9 The Federal Trade Commission was very 10 interested in our ongoing desire to release a 11 product. 12 I can remember conversations with the 13 Federal Trade Commission, you know, and they're 14 kind of encouraging us to release a product and 15 to hang in there and, you know, at some point 16 in time we'll take some action and it will make 17 it better for you and open up a market 18 opportunity for you. 19 And so, you know, I would go back and 20 report those things to our executive staff 21 saying that the FTC is kind of on our side, if 22 you will, and they want us to continue to try 23 to compete in this market so that consumers 24 will have choices. 25 And so those were some of the 9905 1 interactions that were going on at the time. 2 Q. All right. Are people testifying 3 before the FTC during this time as well, from 4 Novell and DRI? 5 A. Yes, they were. 6 Q. All right. Was one of the factors 7 that you took into account in connection with 8 your decision whether or not to release another 9 product and how to release it what was going on 10 at the FTC? 11 A. Yes, that was -- 12 MR. TULCHIN: Objection. Leading. 13 THE COURT: Sustained. 14 MS. CONLIN: Withdrawn. 15 Q. All right. 16 What was one of the factors? 17 A. There were a number of factors 18 involving our decision whether or not to go 19 fully forward with Novell DOS 7.0. And one of 20 those factors was the FTC investigation. 21 Q. Was it a driving factor? 22 A. It certainly was a material factor. I 23 don't know if it's the driving factor, but 24 certainly a material factor. 25 Q. When you released this in January, 9906 1 this meaning Novell DOS 7.0, does it include 2 some peer-to-peer ability itself at that point, 3 or do you remember? 4 A. I don't know. I'd have to go back and 5 look at the announcement. 6 I think the announcement that we read 7 earlier talked about multi-tasking DOS, but 8 that's not the same as networking capabilities. 9 Q. Okay. Peer-to-peer, okay, maybe I'm 10 confused, Mr. Bradford. 11 The peer-to-peer, what is the name of 12 Novell's peer-to-peer networking? 13 A. I think that was NetWare Lite. 14 Q. Okay. And that's the one that 15 connects individual computers together? 16 A. Right. 17 Q. And then the big NetWare needs a 18 server? 19 A. Right. 20 Q. All right. 21 A. That's correct. 22 Q. All right. 23 A. So, again, just for explanation. 24 NetWare's the big one. You can run, you know, 25 hundreds of machines off a NetWare operating 9907 1 system. 2 Then there's the NetWare Lite, which 3 is just a peer-to-peer networking thing for 4 small business. 5 Q. Some other things happen in this time 6 frame that I want to discuss. 7 In November of 1993, what happens with 8 respect to the CEO of Novell, Mr. Ray Noorda? 9 A. Ray Noorda determines it's now time to 10 retire from Novell. 11 Q. And does he provide reasons to his 12 company and to the public at that time? 13 A. Yes, he does. 14 Q. What does he say? 15 A. He says that his memory's failing, 16 among other things. 17 Q. All right. I know this is a bit of a 18 sensitive subject, so -- 19 Let's -- I want to talk about it, 20 though, because Mr. Noorda's deposition is 21 going to be perhaps a part of this record. 22 Let's talk about how you interacted 23 with Mr. Noorda over the period of time and 24 what your observations were about his memory. 25 Starting, you know, when you started, 9908 1 how often would you see him? That's one of the 2 things I want to know. 3 A. Well, it was daily interaction if we 4 were both in town. He would make a habit every 5 day to come down to my office and meet with me 6 in the morning. And then in the afternoon he'd 7 come back and meet with me again. 8 In the morning we'd review, you know, 9 what I was going to do during that day and so 10 forth. I was typically the first guy he saw 11 and then the last guy he saw when he left at 12 night. 13 In the interim, he'd go off and meet 14 with engineers and have marketing meetings and 15 that sort of thing. 16 Q. Was there a time that you began to 17 notice changes in Mr. Noorda? 18 A. Yes. I would approximate that as 19 1989. I'd been there about four years at that 20 time. 21 Q. What did you notice? 22 A. I noticed that in the afternoons when 23 he would come back, he would forget what we'd 24 talked about earlier in the day. It was almost 25 as if that earlier conversation had not taken 9909 1 place. 2 And so I saw a memory problem there. 3 Q. During this time frame of -- well, 4 what did you notice about his conduct of 5 business matters? I mean by that, his 6 understanding, perhaps comprehension? 7 A. Well, he was still very lucid and he 8 understood concepts and could run a great 9 meeting for the executive team. And during the 10 two or three hours we would be in that meeting, 11 he would be great and lucid and understand 12 everything that was going on. And not only 13 understood it but, you know, comprehended and 14 could strategize with the company effectively. 15 Q. And then after the meeting? 16 A. After the meeting, if there were a 17 period of time that expired between that 18 meeting and, say, a follow-on meeting, he may 19 have forgotten what he had said or had been 20 decided at that earlier meeting. 21 Q. Do you have some specific memories of 22 things that happened in this time frame that 23 were distressing or disturbing to you? 24 A. Well, yes. 25 I can remember him from time to time 9910 1 as he would travel, he would call me and say I 2 can't believe that I woke up this morning and I 3 had to leave myself a message last night as to 4 the city that I was going to wake up in. 5 I think we all wake up in cities from 6 time to time that we are unfamiliar with. And 7 we travel a lot, but he was actually writing 8 himself notes as to I'm in Houston or I'm in 9 Dallas or I'm in Prague or wherever it might 10 have been in the world. 11 Q. And was he, to your observation and 12 knowledge, aware that his memory was failing? 13 A. Oh, yes, uh-huh. 14 Q. Was it something that you and he 15 discussed? 16 A. Yes, it was. 17 Q. All right. And was there any change 18 from the beginning of the time that you noticed 19 it in 1989 until his announcement of his 20 resignation as CEO in November of 1993? 21 A. Well, it became increasingly poor. 22 Q. Did you -- now, after he announced 23 that he resigned in April of '94, did he 24 continue for a while to serve on the board of 25 directors? 9911 1 A. Right. Just to set the time frame. 2 So he announces in November of '93 that he's 3 going to retire, cites some reasons. He stays 4 on board the company as CEO while we go and do 5 our chief executive officer search for the 6 company, and he assists in that process. 7 Bob Frankenberg comes, I believe it 8 was April, May time frame of 1994 and becomes 9 the chief executive officer for Novell. 10 And then Ray stays on the board of 11 directors for a period of time, probably 12 another six months. 13 Q. Then he resigns from the board of 14 directors? 15 A. That's correct. 16 Q. After he resigns from the board of 17 directors, do you continue to have both social 18 and business interaction with him? 19 A. Yes. I see Ray on occasion. At 20 church functions, social events, meetings of 21 the Utah Technology Council, things like that. 22 And then he also started a venture 23 capital fund that he called the Canopy Group 24 where he was busy out funding technology 25 companies. 9912 1 And in connection with that, from time 2 to time those companies would have products or 3 technologies that would interact with Novell's 4 products and technologies. And so we would go 5 and meet with them, negotiate contracts, 6 license technologies backwards and forwards 7 with the Canopy Group and those Canopy family 8 of companies that Ray was running. 9 Q. And did you continue to notice 10 anything about his mental health? 11 A. Yes. He just got increasingly, you 12 know, poor in terms of his memory and his 13 ability to communicate and remember in 14 meetings. So that was probably '94, '95, '96, 15 '97 time frame over which that got worse. 16 Q. Did there come a time when Mr. Noorda 17 no longer was -- 18 A. I'm sorry. There was a cough there. 19 That's all right. I didn't hear the 20 question. If you could repeat it. 21 Q. You bet. 22 Did there come a time when Mr. Noorda 23 no longer appeared in public? 24 A. Right. That -- I would say '98, '99 25 time frame became very reluctant to even go out 9913 1 in public. And so he was not seen much, and he 2 passed away just a couple of months ago. 3 Q. What did he die from? 4 A. It was a combination of Alzheimer's 5 and cancer. 6 Q. Did you participate in any services 7 for him? 8 A. I did. 9 Q. Did you -- 10 A. Well, he had his funeral, and Drew 11 Major, who was the inventor of the NetWare 12 operating system, spoke at that funeral. 13 And then we had a memorial service for 14 Ray and his family at Novell's offices, our 15 headquarters in Provo, Utah, and I spoke at the 16 memorial service. 17 Q. All right. Moving away from that 18 subject to the replacement for Mr. Noorda. You 19 indicated Bob Frankenberg was the replacement? 20 A. I did, uh-huh. 21 Q. And did he come after a search by the 22 company? 23 A. That's right. 24 Q. What was Mr. Frankenberg's background? 25 A. He had been an executive with Hewlett 9914 1 Packard Corporation. 2 Q. I think I made him the CEO in my 3 opening statement, but you told me that was not 4 so. 5 A. No. 6 Q. What was his area of responsibility? 7 A. I think it was a senior vice president 8 at Hewlett Packard, and he had specific 9 responsibilities over the personal computer 10 division at Hewlett Packard. 11 Q. And as a result -- when he came, you 12 continued on the executive committee during 13 this time? 14 A. That's right. 15 Q. And when he came, did you have 16 discussions with him about what he saw as the 17 future of DOS? 18 A. Yes. 19 Q. And what did he see as the future of 20 DOS? 21 A. Bob was not as optimistic as some 22 others within the company. I think I mentioned 23 that there was, you know, differing opinion 24 among the executive committee as to the future 25 of DOS and, you know, how much resources we 9915 1 should put behind the product. 2 So Bob having been at Hewlett Packard 3 and having been specifically assigned to the PC 4 division there, I think he was concerned about 5 the future of Novell's version of DOS. 6 Q. All right. 7 MS. CONLIN: Your Honor, I can move on 8 to another area. I know it's a little early 9 for our break, but I have a part two, and I can 10 move on. 11 Shall I do that or shall we stop? 12 THE COURT: We'll take a recess now. 13 Ten minutes. And remember the 14 admonition previously given. 15 Leave your notebooks here. 16 (A recess was taken from 9:39 a.m. 17 to 9:51 a.m.) 18 THE COURT: There's been a question 19 from one of the jurors, Number 8. 20 He wanted a copy of the timeline, 21 which has been displayed. 22 For the record, Ms. Conlin has 23 indicated that she may introduce it under Iowa 24 Rule of Evidence 1 point -- it can't be 1 25 point. 9916 1 MS. CONLIN: 5 point. 2 THE COURT: 1006. 3 MS. CONLIN: I'm sorry, Your Honor. 4 THE COURT: And Mr. Tulchin has yet to 5 be heard. So go ahead. 6 MR. TULCHIN: Yes, Your Honor. 7 We object to this being admitted into 8 evidence. It's been used as a demonstrative, 9 and I think it properly has been used as a 10 demonstrative. 11 In fact, it was sent to us over the 12 weekend pursuant to our agreement about 13 demonstratives, and we lodged no objection to 14 it. And I told Ms. Conlin we had no objection 15 to it as a demonstrative. But there's no basis 16 for admitting this into evidence, and I don't 17 think the Jury should get it. 18 MS. CONLIN: Your Honor, if I may 19 respond briefly. 20 Under Iowa Rule of Evidence 1006, the 21 Court may admit a document that summarizes 22 voluminous documents. 23 The Jury has particularly requested -- 24 a member of the jury has particularly requested 25 this, Your Honor, and we would offer it at this 9917 1 time. 2 I'm going to mark it, believe it or 3 not, 10,100. So it would be 10100. 4 THE COURT: Well, looking at the rule, 5 it states the contents of voluminous writings, 6 recordings, or photographs which cannot easily 7 be examined in court may be presented in the 8 form of a chart, summary, or calculation. 9 I think the timeline is more of events 10 rather than writings or recordings. It 11 certainly is a proper demonstrative. 12 MS. CONLIN: Your Honor, timelines, I 13 think, are quite often admitted under that 14 section because in order to prove each of those 15 dates, you know, would take a number of 16 documents, I think. 17 Certainly it's within the Court's 18 sound discretion as to whether or not it should 19 go to the Jury, but I think that particularly 20 given the juror's request to have it, that it 21 would be appropriate to permit it. 22 MR. TULCHIN: I continue to think 23 otherwise, Your Honor. 24 This doesn't fit within the rule. 25 It's not a summary of, for example, accounting 9918 1 records that are voluminous that would fit 2 within the rule. 3 It is a timeline. It was offered to 4 us as a demonstrative. And, on that basis, I 5 have no problem with the Jury seeing it. But 6 it's not of evidentiary quality. 7 MS. CONLIN: I can make it better. 8 I don't think -- do you want to wait, 9 Your Honor, to decide? Because I don't think 10 we need to -- 11 THE COURT: I will look at it some 12 more. I will give you a ruling this afternoon. 13 MS. CONLIN: Okay. Thanks, Your 14 Honor. 15 THE COURT: We're ready. 16 (The following record was made in the 17 presence of the jury at 9:56 a.m.) 18 THE COURT: Everyone else may be 19 seated. 20 Members of the jury, I will remind you 21 one of our jurors has to appear in court on 22 Friday and Monday, so we will be off those 23 days. 24 In light of the fact that some of our 25 witnesses are live and travel great distances, 9919 1 we may take a few extra times to try to get 2 them done. I will let you know well in advance 3 of that. Okay. But one of our jurors will be 4 gone so. 5 Mr. Bradford, you are still under 6 oath. 7 MS. CONLIN: Getting pretty good at 8 that. 9 BY MS. CONLIN: 10 Q. Mr. Bradford, shortly after -- I guess 11 not shortly, but after Mr. Frankenberg from 12 Hewlett Packard came to Novell, is there a 13 development in connection with the government 14 case? 15 A. Yes. I believe Bob came in April, May 16 time frame of '94. And in June or July -- I 17 believe it was July -- of '94 there is a 18 consent decree announced between the European 19 commission and the U.S. Department of Justice 20 and Microsoft wherein Microsoft agreed to stop 21 -- 22 Q. Wait. 23 A. I'm sorry. 24 Q. Let me go in order here. I'm sorry to 25 interrupt you. 9920 1 MS. CONLIN: But let me offer at this 2 time, Your Honor, both Plaintiffs' Exhibit 3 5664, which is the original consent decree 4 entered into by Microsoft and the United States 5 of America on July 15th, 1994. 6 And I will also offer at this time -- 7 I already gave them -- I gave them these in 8 advance. 9 And I would also offer at this time 10 Plaintiffs' Exhibit 4588, which is the final 11 decree entered August 21st, 1995. 12 THE COURT: 4568? 13 MS. CONLIN: What did I say, Your 14 Honor? 15 4388 is the final decree. 16 THE COURT: 4388? 17 So 5664 and 4388 are offered. 18 Any objections? 19 MR. TULCHIN: No objection, Your 20 Honor. 21 THE COURT: They are admitted. 22 Ladies and gentlemen of the jury, I'm 23 going to give you an instruction on that. 24 It's a 1994 agreement between 25 Microsoft and the government. Carrie is going 9921 1 to hand it out to you at this time. I'll read 2 it. 3 On July 15th, 1994, Microsoft entered 4 into a voluntary agreement with the government 5 in which Microsoft agreed not to enter into any 6 per processor license agreements with OEMs for 7 operating system software and not to include 8 certain terms in per system licenses and 9 nondisclosure agreements. 10 Microsoft also agreed not to enter 11 into any license agreement with OEMs for 12 operating system software that: Exceeds one 13 year in duration, except that an OEM at its 14 option could renew the license agreement for up 15 to an additional year; contains provisions that 16 by their terms prohibit or restrict an OEM's 17 licensing of non-Microsoft operating systems; 18 contains terms conditioning licenses for 19 Microsoft operating systems upon licensing of 20 any other product, provided that this provision 21 of the agreement did not prohibit Microsoft 22 from developing integrated products or contains 23 a minimum commitment. 24 The 1994 agreement with the government 25 also permitted Microsoft to offer volume 9922 1 discounts. 2 Microsoft entered into this agreement 3 without any trial or adjudication by a court of 4 any issue and without admitting wrongdoing of 5 any kind. 6 The 1994 agreement entered into by the 7 government and Microsoft is not evidence that 8 the OEM licensing provisions mentioned above 9 violated any law. 10 You may consider this agreement in 11 evaluating Microsoft's acts and conduct as well 12 as the intent, purpose, and reasonableness of 13 Microsoft's acts and conduct after July 15th, 14 1994. 15 MS. CONLIN: Your Honor, did you 16 assign a number to this? 17 THE COURT: 35. 18 MS. CONLIN: Thank you. 19 THE COURT: I'm sorry. 20 You may proceed. 21 MS. CONLIN: Okay. Now would you put 22 5664 up? 23 Just show the Jury the caption of that 24 so they'll recognize it and the date and the 25 stipulation. 9923 1 BY MS. CONLIN: 2 Q. And let's talk for a moment, if we 3 could, in lay language about what this 4 agreement means in terms of Microsoft and 5 Novell. 6 You've talked to the Jury about the 7 per processor licenses. And as a result of 8 this consent order, the per processor licenses 9 were no longer going to be used. 10 What impact did Novell expect that to 11 have, if any, on its DOS business? 12 A. Well, we were certainly hopeful that 13 as we approached original equipment 14 manufacturers from that point forward, folks 15 like Compaq and Dell and others, that they 16 would now be more open to signing a contract to 17 license Novell DOS rather than MS-DOS. 18 Q. All right. And then I want to just 19 show the Jury just again for the purpose of 20 recognition -- 21 MS. CONLIN: Would you put up, Darin, 22 the first page of 4388? 23 Q. And that's the final judgment, the 24 nominated final judgment and that is August 25 21st, 1995. 9924 1 Now, let's go back to July 15th, 1994 2 consent decree. At that point, I guess it's 3 not a decree, but the consent stipulation. 4 Is Novell's view of what the consent 5 stipulation means or may mean for Novell and 6 its DOS business unanimous or not unanimous? 7 A. Well, it's not unanimous. I think 8 there was broad-based enthusiasm or excitement 9 that finally a government agency had actually, 10 in concurrence with Microsoft, forced Microsoft 11 to cease certain marketing practices. 12 And so for the first time in the 13 history, this was a big deal for the industry. 14 And I think it was also historic from the 15 standpoint it was the first time that a 16 European commission had ever collaborated with 17 the United States Department of Justice in 18 stopping marketing activities of a U.S.-based 19 company. 20 Q. Shortly after this, however -- well, 21 let me show you Exhibit 9981. 22 MS. CONLIN: This is a new exhibit, 23 Your Honor, which we offer at this time not for 24 the truth of the matter asserted, but, rather, 25 to show that, in fact, notice was given to the 9925 1 press and the public about Novell's intention. 2 MR. TULCHIN: On that basis, no 3 objection. 4 THE COURT: Very well. It's admitted 5 for that purpose. 6 MS. CONLIN: Thank you, Your Honor. 7 Give us the date, if you would, Darin, 8 and the headline. 9 Q. This is September 12th, 1994, just a 10 really few months, I guess, after the consent 11 decree. 12 Novell, Inc., is planning a new system 13 for networks. 14 Was this one of a number of articles 15 that were published around this time on this 16 subject matter? 17 A. Well, this appears to be an article, 18 and I haven't seen this one before, I don't 19 think, or recently. Novell, Inc., is planning 20 a new system for networks. 21 Q. I'm going to show you the bottom of 22 it. 23 A. Oh, okay. So that's talking more 24 about networking in the title. 25 MS. CONLIN: Why don't you go on the 9926 1 very last sentence on this page. 2 Q. Novell, moreover, will discontinue 3 further development of its, and then the next 4 page, clone of DOS, the Microsoft operating 5 system for personal computers. 6 So that is the announcement, I think 7 -- generally, the announcement that Novell 8 intends to discontinue its development of 9 Novell DOS; correct? 10 A. That's correct. 11 Q. All right. So we've just got a few 12 months in between. 13 Why after this long period of time 14 working with the government and trying to get 15 some results, the results occurred and you're 16 out of the business? 17 A. Right. Well, the frustration is the 18 length of time it takes a government agency to 19 actually make a difference and to move forward 20 and stop certain what we viewed as 21 anticompetitive acts. 22 And so the exciting thing about the 23 consent decree was that it actually happened. 24 But the sad part was it was too little, 25 probably, but, more importantly, it was just 9927 1 too late. 2 Now, three years had gone by and our 3 market had dropped significantly. And so from 4 a profitability standpoint, it was no longer 5 advisable -- 6 I think the executive committee felt 7 no longer advisable that we proceed with future 8 product developments for Novell DOS. 9 Q. When you say stop development, what 10 does that mean? 11 A. Well, that means you're not going to 12 develop for future versions. Whatever's out 13 there at the time, whatever you intend to ship 14 within the next three months, that's going to 15 go out. 16 And we will support that product for a 17 period of time, say, a year, two, three, four 18 years after that last product ships. 19 But in terms of Novell DOS 8.0, there 20 wasn't going to be one. 21 Q. All right. So that's the end of 22 Novell DOS? 23 A. Right. Yes. It was the end of Novell 24 DOS, but we continued to support whatever 25 products that we had out there in the 9928 1 marketplace. 2 Q. This wasn't something you agreed with, 3 was it? 4 A. Well, no, I wasn't happy about it in 5 terms of the decision, but reasonable minds can 6 differ, and, hey, I understand -- you know, our 7 principal role as an executive committee at 8 Novell was to return value to our stockholders. 9 And if we had a product that was 10 significantly leaking that was nonprofitable, I 11 understand why the decision was made to move 12 away from this product. 13 Q. Why -- you told the Jury it was too 14 little, too late. And I'm wondering, why was 15 it too late? 16 A. Well, I think we have discussed what 17 happened. I don't know if the Jury has 18 previously seen any of our charts in terms of 19 the -- you know, our sales activities in the 20 DOS market, but it really dropped off a cliff, 21 if you will, and we were not doing well with 22 that product line. 23 Q. All right. Well, let's see. We've 24 got the April 6, 1992 release of Windows, and 25 then the March 30th, 1993 MS-DOS 6 is released, 9929 1 and then you release on January 1994. 2 And I take it the sales of Novell DOS 3 7.0 were not increasing either? 4 A. No, that was not doing robustly, 5 unfortunately. 6 Q. Did the executive committee discuss 7 why sales were dropping? 8 A. Oh, yes. 9 Q. And what were the reasons that the 10 committee felt sales were dropping? 11 A. Well, it was the broad-based reason of 12 Microsoft's monopoly in the market and the fact 13 that they had excluded us from competing 14 effectively in that marketplace. 15 Q. All right. Let's move to a different 16 subject, and we're going to go backwards again. 17 Back to perhaps late '93. I want to 18 talk with you about the WordPerfect 19 acquisition, Mr. Bradford. That's where we're 20 going. 21 A. Okay. 22 Q. What was WordPerfect? 23 A. WordPerfect was a very popular word 24 processing program that competed with several 25 in the market, including Microsoft's Word, MS 9930 1 Word. 2 Q. All right. And back in the late '93 3 or early '94, what was the strategy Novell was 4 considering in connection with WordPerfect and 5 perhaps other products as well? 6 A. Well, obviously, we were concerned at 7 the broad-based product line that Microsoft was 8 putting out, they had the desktop operating 9 systems. They were competing now effectively, 10 more effectively in the network operating 11 system market. 12 And then they had their whole suite of 13 software applications that end users saw, from 14 Excel to Microsoft Word, et cetera. 15 And so we felt that in order to not 16 just be a one-product company, the networking 17 company, we felt like we needed to expand our 18 product line and offer our consumer customers a 19 broader set of products. 20 Q. How did you implement that strategy? 21 A. Among other things, we went and 22 acquired WordPerfect Corporation. 23 Q. And give us sort of the time frame of 24 the negotiations, if you recall. 25 A. In late '93 I spent some time with 9931 1 Duff Thompson, who was my counterpart at 2 WordPerfect. He was the general counsel at 3 WordPerfect Corporation, the chief financial 4 officer Dan Campbell there, were friends of 5 mine. 6 Just geographically Novell and 7 WordPerfect were both located within six or 8 seven miles of each other in Provo, Utah, Orem, 9 Utah, about 35 miles south of Salt Lake as I 10 mentioned earlier. And so they were 11 approximately close to where we were physically 12 located. 13 And so we would interact with them, 14 and I recall that Duff or Dan from WordPerfect 15 indicated that Lotus was starting to pursue 16 WordPerfect to buy them. 17 Q. What was the product or products that 18 Lotus was making? 19 A. Lotus was known for Lotus 1-2-3, their 20 spreadsheet package, was a popular application. 21 Q. All right. So the negotiations begin 22 about when in earnest? 23 A. In earnest, it was after -- it was 24 more into 1994, the winter, spring of 1994 when 25 we negotiated in earnest with WordPerfect. 9932 1 Q. All right. And about when did you 2 announce that you and WordPerfect were going to 3 merge? I'm not sure we've got it up there. 4 Let me see. 5 A. My recollection is -- 6 Q. Oh March 1994 it says. 7 A. Right. March 1994, that would be 8 correct. 9 Q. And finalized in June? 10 A. It was finalized -- Novell completes 11 the merger with WordPerfect and purchases 12 Borland Quattro Pro. 13 Q. Okay. Tell us about that product. 14 A. Well, Borland was another company out 15 there like Microsoft, Novell, Lotus, 16 WordPerfect, that were competing in PC software 17 market. 18 Borland had a product called Quattro 19 Pro, which was a spreadsheet, spreadsheet 20 package. 21 And we needed -- Microsoft at this 22 point in time had announced that they were 23 going to start marketing a suite of products. 24 So you can buy Microsoft Office in an 25 integrated suite of products which included 9933 1 word processing, spreadsheets, database to some 2 extent, et cetera. 3 And so we felt like, yes, we'd get the 4 WordPerfect software and we could have that, 5 but in order to compete effectively with 6 Microsoft moving forward, we needed a broader 7 suite of products. 8 So we went to Borland and we purchased 9 Quattro Pro from them to give us a Novell suite 10 of software products that we could market. 11 We didn't buy the Borland corporation, 12 we just bought the Quattro Pro product suite 13 from them. 14 Q. All right. And let's look at our 15 timeline for releases. 16 After you and WordPerfect have merged, 17 let's see, shortly -- September '94 there's a 18 release of WordPerfect for the Macintosh. 19 October, WordPerfect 3.0 is released. 20 November, WordPerfect 6.1 for Windows is 21 released. And that would be Windows 3.1 or 22 whatever the current version of the GUI is; 23 correct? 24 A. That's right. 25 Q. All right. And then the WordPerfect 9934 1 3.0, that would be for the DOS product; 2 correct? I don't think we have that down 3 there, but that -- if that doesn't seem 4 correct, don't -- I could be wrong. 5 A. I don't recall to be honest -- 6 Q. All right. 7 A. -- which version was operating on what 8 system. 9 Q. All right. And then we've got 10 December 1994 Novell DOS 7.0 is withdrawn. 11 Okay, we skipped that one. 12 And then January 1995, Perfect Office 13 3.0 for Windows is released. Tell the Jury 14 what that is, Perfect Office. 15 A. Well, as we saw six months earlier, we 16 purchased from Quattro Pro -- we purchased from 17 Borland Quattro Pro, and now we combined word 18 processing spreadsheets, et cetera, into one 19 combined package. 20 Q. Did you have a presentation package as 21 a part of your Perfect Office suite? 22 A. Yes. 23 Q. And what was InfoCentral, all one 24 word? 25 A. Boy, I don't recall. 9935 1 Q. Okay. 2 A. Was that part of our product suite? 3 Q. That's what it says here. 4 A. Okay. It was probably a presentation 5 package. It might have been a desktop but -- 6 Q. Okay. Groupwise and Envoy, do you 7 remember what those were? 8 A. Well, Groupwise and Envoy were Word -- 9 or excuse me, e-mail capability. 10 Q. All right. And were those the kinds 11 of things that were in the Perfect Office 12 Suite? 13 A. Right, that's correct. 14 Q. And that is the -- January 1995 is 15 the, according to our timeline, your timeline, 16 is the only Perfect Office product released by 17 Novell; correct? 18 A. That's right. 19 Q. All right. At the time that you 20 released these various WordPerfect products and 21 your Perfect Office product, is Windows 95 also 22 known as Chicago in beta? 23 A. That's right. That's my recollection. 24 Q. All right. And you were on the 25 executive committee all during the time that 9936 1 Novell owned WordPerfect? 2 A. That's right, uh-huh. 3 Q. And continuing your cooperation with 4 the federal government? 5 A. Yes. Certainly. 6 Q. As part of your decision-making about 7 WordPerfect, did you receive reports about the 8 interaction between Novell and Microsoft during 9 the time that you owned WordPerfect? 10 A. Yes, we did. 11 Q. As to WordPerfect as an application -- 12 this is Novell's first foray into desktop 13 applications; correct? 14 A. Yes. 15 Q. What things did Novell need from 16 Microsoft, the operating system vendor, in 17 order to build your WordPerfect products? 18 A. Well, I think the analogy is if you 19 had a bridge across the Mississippi River and 20 you needed to get from the East Coast to the 21 West Coast, but the only way to get from the 22 East Coast to the West Coast was to cross that 23 bridge, think of that bridge as the Windows 24 operating system. 25 And so you had an application like a 9937 1 word processing application sitting on top of 2 Windows, but in order to get from the East 3 Coast to the West Coast, you know, in order to 4 sell word processing on top of Windows, if you 5 will, you needed access to application 6 programming interfaces, documentation, and the 7 like from Microsoft. 8 Q. How important was it to Novell to get 9 access to the betas as they came out on a 10 timely fashion? 11 A. Absolutely critical. You could not 12 compete without access to those early betas. 13 Q. All right. And did the betas come out 14 on a schedule? 15 A. I'm sure Microsoft had a schedule for 16 releasing those betas, yes. 17 Q. During this time frame, Mr. Bradford, 18 is Novell receiving what it needs to build its 19 applications on top of the Windows operating 20 system? 21 A. No, we weren't. 22 Q. Now, Windows 95 ships August 21st -- 23 no, I'm sorry. August 24th, 1995. Windows 95 24 is released August 24th, 1995; correct, 25 according to our timeline? 9938 1 Do you know when Microsoft is able to 2 ship its application products that work with 3 Windows 95? 4 A. I assume they ship them the same day. 5 Q. All right. 6 A. Virtually, the same day, but I don't 7 have any document in front of me that would 8 remind me. 9 So Windows 95 is released on August 10 24, 1995. That's our wedding anniversary. 11 Then probably the suite of software 12 applications that Microsoft sold would be 13 released at essentially the same time as that. 14 Q. All right. I'm not going to show you 15 this. I'm going to show it to Mr. Tulchin just 16 to put us in the right time frame about when 17 the applications products of Microsoft were 18 released. 19 I have Answers to Interrogatories from 20 Microsoft in another proceeding which indicates 21 that Word 95 was released August 24th, 1995. 22 Does that comport with your 23 recollection? August 24th, 1995, the word 24 processing application of Microsoft was 25 released? 9939 1 A. It ships the same day as Windows. 2 Q. All right. And Excel 95 ships August 3 24th, 1995. That's the spreadsheet? 4 A. Right. Sounds like the same day. 5 Q. And Office 95, the Office productivity 6 suite, both standard and professional, also 7 ships August 24th, 1995. 8 Is that your recollection? 9 A. Okay. 10 Q. All right. 11 A. I don't know if I have a specific 12 recollection of them shipping, you know, that 13 exact same day, but certainly it sounds like 14 you have the documents to indicate that 15 happened. 16 Q. Is Novell ever able to release a word 17 processor, WordPerfect that runs on top of 18 Windows 95? 19 A. Well, we sold the word processing 20 division of WordPerfect shortly after this 21 time. It was early 1996. And I don't think we 22 ever had a full Office suite by the time we 23 sold our WordPerfect division. It actually 24 operated on the most recently released Windows 25 platform. 9940 1 Q. All right. Let's talk about the sale 2 of WordPerfect. 3 By October of 1995 what has Novell 4 decided to do about WordPerfect? 5 A. Well, now we've had WordPerfect since 6 March, June -- actually, June of '94. So we've 7 had the product for a little over a year. 8 The word processing market for Novell 9 is going drastically downhill, much like it did 10 with the DOS market. And so now there's 11 broad-based concern among Novell executives as 12 to whether or not we keep the word processing 13 package. 14 Q. And what do you decide to do? 15 A. We decide to sell WordPerfect to 16 someone else. 17 Q. Why? 18 A. Again, we are losing money on that 19 product line. 20 There were a number of products that 21 WordPerfect brought to us, including Groupwise 22 and some other technologies that were pretty 23 good. 24 Those we were keeping, but the 25 specific word processing package known as 9941 1 WordPerfect, that particular product we decided 2 to sell. 3 Q. I'm sure there were many factors that 4 led to your decision, but why were you -- do 5 you -- why were you losing money? What was -- 6 was WordPerfect a popular word processing 7 program? 8 A. I think many of us in the courtroom 9 remember WordPerfect as a terrific product and 10 a very popular product back in the early and 11 mid '90s. 12 But at this point in time if you 13 couldn't get our word processing package to 14 interoperate effectively with the Windows 15 operating system, which, again, was that 16 bridge, then you're definitely going to lose 17 market share rapidly because unless your word 18 processing would interact with Windows at the 19 time, you as a consumer wouldn't want to have 20 that product. 21 Q. All right. Who do you sell it to? 22 A. We sell it to a company in Canada by 23 the name of Corel Corporation. 24 Q. All right. Let's see. 25 In connection with your -- well, let's 9942 1 go back for a minute because when you buy 2 WordPerfect or merge with WordPerfect, do you 3 -- in consolidating the two or try to 4 consolidate the two, do you lose some 5 salespeople? 6 What happened in that time frame with 7 respect to your sales operation? 8 A. Okay. Well, at the time I think our 9 executive vice president of sales was a fellow 10 by the name of Joe Marengi. 11 And whenever you combine two 12 organizations, you look for economies of scale 13 to help your companies. And so as you do that, 14 you look at your finance division, your sales 15 division, your marketing division, and you look 16 out where you can cut out layers of operation. 17 And so one of the areas that we cut 18 out substantially from the WordPerfect side of 19 the business was their sales organization 20 because Novell had a sales organization in 21 place. 22 Now, the nature of the sales that 23 WordPerfect had, vis-a-vis Novell, was a little 24 bit different because WordPerfect sold directly 25 to end user customers. They would go directly 9943 1 to law firms or libraries or your business as 2 opposed to Novell sold through an indirect 3 channel. We sold through distributors and 4 original equipment manufacturers, et cetera. 5 And WordPerfect did that same thing to 6 some extent, but mostly it was a retail, kind 7 of end user sale. 8 And so we cut out much of their retail 9 sales division. 10 Q. All right. Did you also let some 11 engineers go? 12 A. Certainly. 13 Q. All right. And the deal to sell 14 WordPerfect to Corel January 1996? 15 A. Uh-huh. 16 Q. So you own it for a year, year and a 17 half? 18 A. Little over a year, right. Year and a 19 half, I guess, you're right. 20 Q. And throughout the time that Novell 21 and WordPerfect were merged, did you seek 22 reports from employees on their interaction 23 with Microsoft? 24 A. Yes, we did. 25 Q. And were those kinds of reports 9944 1 provided to you? 2 A. Yes, they were. 3 Q. Did those reports contribute to your 4 decision, your later decision to sell 5 WordPerfect? 6 A. Yes, they did. 7 Q. Did you also continue to report this 8 information to the federal government? 9 A. Yes. 10 Q. All right. Let's look at 2253. 11 MS. CONLIN: Don't put it up yet, 12 please. 13 Q. Is this one -- do you have it? 14 A. Must be in this stack. 15 Q. Yes, it is in part two. 16 A. In this special case -- 17 MR. TULCHIN: We object to this, Your 18 Honor. This is one of those we discussed and 19 it was ruled upon. 20 MS. CONLIN: I don't think it was 21 ruled upon. 22 THE COURT: It hasn't been offered 23 yet.