2763 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 XI 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 a.m., December 4, 14 2006, 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 2764 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, Iowa 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, Minnesota 55415 10 (612)339-2020 11 ROBERT J. GRALEWSKI, JR. Attorney at Law 12 Gergosian & Gralewski 550 West C Street 13 Suite 1600 San Diego, CA 92101 14 (619) 230-0104 15 16 17 18 19 20 21 22 23 24 25 2765 1 Defendant by: DAVID B. TULCHIN 2 STEVEN L. HOLLEY SHARON L. NELLES 3 Attorneys at Law Sullivan & Cromwell, LLP 4 125 Broad Street New York, New York 10004-2498 5 (212)558-3749 6 ROBERT A. ROSENFELD Attorney at Law 7 Heller Ehrman, LLP 333 Bush Street 8 San Francisco, California 94104 (415)772-6000 9 STEPHEN A. TUGGY 10 HEIDI B. BRADLEY Attorneys at Law 11 Heller Ehrman, LLP 333 South Hope Street 12 Suite 3900 Los Angeles, CA 90071-3043 13 (213) 689-0200 14 DANIEL S. SILVERMAN Attorney at Law 15 Heller Ehrman, LLP 4350 La Jolla Village Drive 16 Seventh Floor San Diego, CA 92122-1246 17 (858)450-8400 18 BRENT B. GREEN Attorney at Law 19 Duncan, Green, Brown & Langeness, PC 20 Suite 380 400 Locust Street 21 Des Moines, Iowa 50309 (515)288-6440 22 23 24 25 2766 1 RICHARD J. WALLIS STEVEN J. AESCHBACHER 2 Attorneys at Law Microsoft Corporation 3 One Microsoft Way Redmond, California 98052 4 (425)882-8080 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2767 1 THE COURT: Go ahead, Chris. 2 MR. GREEN: Yeah. There are several 3 things pending, but I think the only thing that 4 we need to take up this morning is we'd like to 5 be heard on a curative instruction regarding 6 what we believe are improper statements made by 7 Ms. Conlin in her opening statement. 8 And I believe Ms. Nelles is going to 9 do that. And we haven't got a brief, but we're 10 prepared to argue that unless the Court wants a 11 full briefing now. 12 MS. NELLES: Your Honor, I think I can 13 be very quick and perhaps we can get this done 14 while Mr. Tuggy is on his way over and they are 15 negotiating this evidence. 16 But something that occurred on Friday 17 we wanted to raise. We think it requires a 18 correction. Your Honor, during her opening 19 statement on Friday, Ms. Conlin made several 20 statements to the Jury that are contrary to the 21 Court's instructions. 22 Specifically, during her opening 23 statement, Ms. Conlin told the Jury that the 24 Iowa Competition Law requires companies to, 25 quote, compete fairly. 2768 1 This is not the law as accepted by the 2 United States Supreme Court. It's not the law 3 as set forth by the Supreme Court of Iowa, and 4 it is not the law as the Court instructed the 5 Jury. 6 Unfair conduct, of course, is not the 7 same as anticompetitive conduct. And that is 8 what Plaintiffs must prove here. 9 And Microsoft would ask that the Court 10 provide a corrective instruction to remedy the 11 incorrect statements that were made. 12 Now, let me just tell you exactly what 13 Ms. Conlin said to the Jury. What she said 14 was, and I'm quoting, the rules say that 15 companies should compete as vigorously as they 16 can, do everything they can to win, make the 17 best, the most innovative, the most creative 18 products, get the best sales force, and try to 19 win on the merits. 20 But the rules also say you have to 21 compete fairly. If you don't, you have to be 22 held accountable for the damage that you do to 23 the competitive process and to the free market 24 and to consumers. 25 That's from Friday's transcript, the 2769 1 December 1 transcript at page 2602, lines 14 2 through 24. I have copies I can show you. 3 Now, shortly after making this 4 statement, Ms. Conlin went on to add what the 5 law requires of Microsoft is exactly what the 6 law requires of all companies. Compete fair 7 and square. Microsoft did not. That's, again, 8 the December 1 transcript, page 2604, lines 1 9 through 4. 10 And then, again, Ms. Conlin later 11 equated unfair and illegal tactics. She said 12 to the Jury, when they cannot win on fair 13 competition on features, on price, they resort 14 to unfair and illegal tactics like these 15 exclusionary contract terms, December 1 16 transcript at page 2715, lines 16 through 19. 17 These statements are just wrong. I 18 believe Mr. Holley went through this many times 19 in going through the Jury instructions. 20 The antitrust laws are not a 21 codisability. It is well settled that unfair 22 conduct does not itself constitute a violation 23 of the antitrust laws. 24 The Supreme Court of the United States 25 said this itself in Brook Limited versus Brown 2770 1 and Williamson Tobacco Corp. 2 The Supreme Court said even an act of 3 pure malice by one business competitor against 4 another does not, without more, state a claim 5 under the federal antitrust laws. 6 Those laws do not create a federal law 7 of unfair competition. That's on the 509 U.S. 8 209. The jump site is 229, a 1993 case. 9 The Iowa Supreme Court has made a very 10 similar observation. Next Generation Realty 11 versus Iowa Realty, Inc. 12 The Iowa Supreme Court said the 13 marketplace is often unfair, sometimes brutal, 14 sometimes tortious acts take place there, but 15 until an act impacts on the public's access to 16 a competitive market, the injured are left to 17 proceed with traditional tort or contract 18 remedies. 19 In other words, Your Honor, brutal and 20 tortious behavior alone and certainly unfair -- 21 and arguably unfair behavior alone is not in 22 and of itself a violation of the Iowa 23 Competition Law. 24 Your Honor, the antitrust laws 25 encourage all products, even monopolists, to 2771 1 compete aggressively and to win for themselves 2 all the business they can. 3 In order to actually prove 4 anticompetitive conduct, it is Plaintiffs' 5 burden here to demonstrate that the conduct 6 they allege was conduct without a legitimate 7 business purpose that makes sense only because 8 of eliminating competition, not simply that the 9 conduct was not fair. 10 Now, the Court and Your Honor 11 instructing the Jury, Preliminary Instruction 12 Number 8, appropriately told the Jury that not 13 all behavior that enters competitors as 14 anticompetitive and that the difference between 15 anticompetitive conduct and conduct that has a 16 legitimate business purpose can be difficult to 17 determine. 18 By implying that unfair is enough, 19 that unfair conduct is illegal, Plaintiffs' 20 counsel has contradicted this Court's 21 instruction in a fundamental way. And we would 22 ask that the Court cure the harm from counsel's 23 assertion about unfairness and provide a 24 corrective instruction to the Jury before 25 opening statements continue. 2772 1 I have a proposal I'd like to bring up 2 to Your Honor. 3 MS. CONLIN: Maybe I could see it too. 4 MS. NELLES: I'll give it to you too. 5 I'm sorry. 6 Here's the proposed instruction. 7 Here's the transcript cites, and here is the 8 Next Generation Realty case. 9 Let me get a copy for Ms. Conlin. 10 THE COURT: Anything else, Ms. Nelles? 11 MS. NELLES: No. That's it, Your 12 Honor. Thank you. 13 THE COURT: Very well. 14 Any response, Ms. Conlin? 15 MS. CONLIN: Yes, Your Honor, if I 16 may. 17 First of all, of course, we had no 18 notice whatsoever that this was going to come 19 up this morning. No objection was made at the 20 time, which is what I understand the rules 21 require. 22 This is a typical tactic on 23 Microsoft's behalf which we saw in Minnesota. 24 They take the transcript and have minions run 25 through it, parsing every word, making every 2773 1 attempt that they can think of in law or in 2 fact to criticize. And we really did have this 3 very same thing come up in Minnesota. 4 Every single morning we would come to 5 court and there would be some new thing that 6 some member of the Defendant's trial team had 7 done that overnight they had decided was 8 somehow wrong. 9 They use the term unfair in a 10 colloquial sense. It's an easily 11 understandable word. I was very clear with the 12 Jury about what was required. I did not in any 13 way attempt to contradict the words of the 14 Court. 15 In fact, as I recall, I specifically 16 said to the Jury that it was the Court and the 17 Court alone that decided what the law was and 18 that only the Court has that ability to do 19 that. 20 A curative instruction, Your Honor, 21 would -- I haven't even had a chance to look at 22 this, but a curative instruction would 23 certainly be completely unwarranted under these 24 circumstances. 25 I'm not -- I wasn't saying that they 2774 1 should be civil, they meaning Microsoft. I 2 did, in fact, say to the Jury that tough 3 competition, aggressive competition was 4 perfectly fine. But that when it crossed the 5 line, it was not. 6 I'm not trying to mislead the Jury, 7 and I think it would be manifestly unfair for 8 the Court to instruct the Jury on such a small 9 -- I mean, I'm kind of surprised that after 10 reading an entire day of testimony, they could 11 only find this one thing to bring to the Court 12 this morning. 13 And I ask the Court not to instruct 14 the Jury and to perhaps instruct Microsoft that 15 if they have objections to what I'm saying, 16 then they should be made at the time, and that 17 this kind of tactic of reading the transcript 18 with a magnifying glass and trying to find some 19 word to criticize would not be the way that we 20 would be approaching this case. 21 THE COURT: Ms. Nelles, anything 22 further, ma'am? 23 MS. NELLES: Yes, Your Honor. 24 First of all, for the record, I wish I 25 had many minions -- I don't -- going through 2775 1 the transcript. 2 And, frankly, I think there were many 3 errors in law that, in fact, were said during 4 the opening, but I think those are 5 appropriately addressed when we make our 6 opening except for one here that very much 7 conflicts with the Court's instruction. 8 And unfair is hardly a colloquial 9 term. It's a particularly troubling term to 10 use in this context. 11 Every juror has his or her own sense 12 of what it means. 13 Your Honor, if you'll forgive me, let 14 me use a very New York analogy. Here we are 15 talking about vigorous competition among 16 companies for market share. In New York, we 17 compete very vigorously for taxi cabs. 18 And I've often stood on a street 19 corner with a baby on my hip with my arm in the 20 air -- one of the very first signals my 21 children ever learned -- waiting for a taxi, 22 and the convention of people line up behind 23 you. 24 And when you finally get one, you jump 25 in that cab. And on occasion, I have stood in 2776 1 line for a very long time, had the door open, 2 been trying to fold up my stroller and have 3 someone jump in the cab. Well, I would say 4 that's unfair. 5 And, in fact, I would say if it's 6 raining out, it's pretty ruthless, but it is 7 certainly not illegal. 8 However, if someone pushes me to the 9 ground, well, that violates the law. And that 10 is what you cannot do. 11 And the difference between unfair and 12 illegal is critical to this case, Your Honor. 13 It is critical. 14 It is what Plaintiffs have to prove. 15 They have to prove anticompetitive conduct. 16 They don't have to prove unfair conduct. 17 Unfair conduct is not enough. That is 18 what Your Honor told this jury, and it should 19 not be obscured to the Jury, and it has been. 20 Thank you. 21 THE COURT: Anything further on this 22 issue? 23 MS. CONLIN: Your Honor, if the Court 24 has any inclination to give an instruction, 25 which would be an attack on my credibility, I 2777 1 would ask for some time to brief this issue. 2 It just seems -- if the Court will 3 permit me -- unfair for them to come in at the 4 crack of dawn, on Monday morning, while I'm in 5 the middle of my opening statement and say 6 here, Your Honor, tell the Jury that Ms. Conlin 7 used the wrong word. 8 So I would ask if that's -- and, of 9 course, the instruction is intended to tell the 10 Jury that they -- that they cannot count on 11 what I have to say. 12 THE COURT: Anything else? 13 MS. NELLES: Your Honor, we think we 14 gave Ms. Conlin the courtesy by not jumping up 15 in the middle of her opening and wanted to 16 resolve this during a recess. I would ask that 17 it be resolved as soon as Your Honor thinks 18 it's appropriate. 19 Thank you. 20 THE COURT: Very well. 21 Anything further on the issue, 22 Ms. Conlin. 23 MS. CONLIN: No, Your Honor. 24 THE COURT: The Court has considered 25 the matter. A curative instruction will not be 2778 1 given at this time. I will consider giving it 2 as a final instruction. 3 The Court reminds the parties that the 4 instructions as set out, particularly 5 Preliminary Instruction Number 8, is the law, 6 and it's unlawful or illegal competition, not 7 unfair competition. You should refer to it as 8 that, both parties. 9 I will allow the Defendant in their 10 opening to clarify the instruction or to read 11 from it or to state that -- or contradict 12 Ms. Conlin, to say that it's not unfair 13 competition, but illegal competition if they 14 wish. 15 Anything further? 16 MS. NELLES: No. 17 Thank you, Your Honor. 18 THE COURT: Any other issues? 19 MS. CONLIN: Yes, there are other 20 issues. 21 THE COURT: Oh, did you get those 22 resolved? 23 MR. GRALEWSKI: Your Honor, if I can 24 beg the Court's indulgence for about two 25 minutes to confer with Mr. Tuggy. 2779 1 THE COURT: Okay. Sure. 2 MR. GRALEWSKI: He has the materials 3 and he may need to speak with Mr. Tulchin. And 4 we may be in a position to take it up in about 5 five minutes. 6 THE COURT: That's fine. 7 MS. CONLIN: Then let's talk about the 8 website for a minute, Your Honor, if we could. 9 This is your order of November 2nd in 10 which you say that you are presented with the 11 issue of displaying of exhibits on a proposed 12 website during the trial. 13 The Court finds that exhibits may be 14 displayed on a proposed website approved by the 15 Court if they are first admitted into evidence 16 by the Court on the record. 17 And I'm a little unclear where we are 18 on that issue. 19 THE COURT: It's not admitted yet. 20 MS. CONLIN: No, I understand that, 21 Your Honor, but do you know if there is a 22 website? 23 THE COURT: Oh, I don't know. 24 MS. CONLIN: Carrie was here, but then 25 she left the room. 2780 1 THE COURT: When she comes back, you 2 can tell her to take a look. 3 MS. CONLIN: All right. Thanks, Your 4 Honor. 5 THE COURT: She's been gone. 6 MS. CONLIN: That's all that -- 7 Oh, no, Your Honor. One additional 8 matter. 9 The Court gave me over the weekend to 10 consider the matter of whether or not we wanted 11 to persist in bringing Mr. Ballmer and 12 Mr. Gates in our case in chief. 13 And we have decided that we will not 14 do that, that we will be patient and wait until 15 the Defendant brings those two witnesses in 16 their case, and they have promised to do so. 17 We believe that permitting the 18 Defendant to put on their case right in the 19 middle of ours by their direct evidence would 20 be confusing to the Jury and disruptive to our 21 proof. 22 So we'll wait -- we also had the 23 problem of a January 10th date, which simply 24 does not, does not work for us at all. So 25 that's the decision that we've made. 2781 1 And I appreciate the Court giving me a 2 chance to check that with my colleagues and 3 make that decision. 4 THE COURT: Okay. Any objection? 5 MS. NELLES: Not at all, Your Honor. 6 We simply appreciate Ms. Conlin letting us 7 know. 8 THE COURT: Very well. That's 9 resolved. 10 Off the record. 11 (An off-the-record discussion was 12 held.) 13 MS. NELLES: Your Honor, the website 14 if I may. 15 Just, I believe, the order is going to 16 say it's with a Court-approved website. I just 17 want to make sure that both have an opportunity 18 to look at it. 19 MS. CHRISTENSEN: Did anybody put a 20 request in for it? 21 MS. NELLES: No, not at all, Carrie. 22 MS. CONLIN: We did. We made a 23 written request. 24 MS. CHRISTENSEN: And it got to Beth? 25 And because she said it was going to take a 2782 1 long time to be approved by ISIS. 2 MS. CONLIN: We did that several weeks 3 ago. 4 THE COURT: Well, I guess I'll talk to 5 Beth. 6 (Off-the-record discussion was held.) 7 MR. GRALEWSKI: Four documents. 8 THE COURT: Sir? 9 MR. GRALEWSKI: Your Honor, if I may 10 approach. I have a couple things to aid in the 11 argument. 12 THE COURT: Okay. 13 MR. GRALEWSKI: First, Your Honor, 14 there are four documents at issue this morning. 15 This is a rulings chart and a copy of those 16 four documents for the Court. 17 THE COURT: Very well. 18 MR. GRALEWSKI: And while I'm up here, 19 Your Honor, just very quickly, Phase 6, there 20 was a document that we needed to clean up some 21 attorney comments. 22 And Mr. Reece asked me to give this to 23 you this morning. This is a copy of the 24 original document as it was produced. The 25 reference to Bob in the upper right-hand corner 2783 1 is no reference to any Bobs sitting in the 2 courtroom today. 3 Your Honor, I'm going to argue two 4 documents, and Ms. Conlin is going to argue two 5 documents. 6 The first one that I'd like to direct 7 Your Honor to is PX 9729. It's the last 8 document in your pile. It's a relatively thick 9 15-, 20-page document. 10 Your Honor, what this is is a 11 transcript of various comments by various 12 Microsoft executives concerning the Windows XP 13 launch that was held in New York City on 14 October 25th, 2001. 15 This document, Your Honor, has -- I 16 think what's at issue this morning -- hearsay 17 objections to it. 18 One issue during our meet and confer 19 process last week, Your Honor, was a foundation 20 issue. Microsoft was interested in agreeing on 21 this document's admission if we could provide 22 foundation. 23 We provided that foundation, Your 24 Honor. This document is currently to this day, 25 probably to this very moment, maintained on 2784 1 Microsoft's own website. 2 You can click a link on Microsoft's 3 website and go right to this transcript. So I 4 believe that, Your Honor, establishes and 5 proves the reliability and trustworthiness of 6 this document. 7 To the extent that Microsoft had any 8 issues with it, they certainly wouldn't still 9 maintain it on its website. 10 I think the main issue this morning, 11 Your Honor, is whether statements contained in 12 this document are admissions. 13 And quite simply, Your Honor, we 14 believe that the statements of Microsoft's 15 executives are. 16 Mr. Tulchin, I believe, is going to 17 address Microsoft's position. And I believe 18 what he's going to say is that the Plaintiffs 19 have to show that a statement by Microsoft's 20 executives in this document is contrary to a 21 position that they are taking now. 22 This was argued by Mr. Rosenfeld when 23 we were addressing the Gates motion about ten 24 days ago or so. 25 And, as Ms. Conlin articulated and is 2785 1 the Plaintiffs' position, we don't believe that 2 position has any merit in the law and certainly 3 not in the rule. The admissions provision in 4 Rule 5.801(d)(2) simply says -- and this is Sub 5 D -- a statement by the party's agent or 6 servant concerning a matter in the scope of the 7 agency or employment made during the existence 8 of the relationship. 9 So we think that is satisfied here, 10 Your Honor. 11 However, to the extent the Court is 12 indulgent of Mr. Tulchin's view, we believe 13 that the statements at issue are against 14 Microsoft's interest. 15 For example, one of the statements 16 that we offered this document for is a 17 statement by Mr. Gates where he says that until 18 the release of XP, Windows was simply a graphic 19 user interface that sat on top of DOS. 20 That is a position that the parties 21 disagree about and is certainly a position that 22 is contrary to Microsoft's interest, Your 23 Honor. 24 And at this point I have nothing 25 further on 9729. 2786 1 THE COURT: Mr. Tuggy or Mr. Tulchin? 2 MR. TULCHIN: I think Mr. Tuggy will 3 handle this, Your Honor. Thank you. 4 THE COURT: Okay. 5 MR. TUGGY: Your Honor, this 6 Plaintiffs' exhibit was not one that went 7 through our Special Master process. 8 It was a designation shortly before 9 opening statements and which has made it 10 somewhat difficult to track down its foundation 11 and the evidence that might support its 12 admission. Microsoft has asserted several 13 objections to this document. 14 One is embedded hearsay. And, based 15 on Plaintiffs' argument, it appears they are 16 conceding that statements, for example, by 17 someone from Sting, Regis Philbin, 18 non-Microsoft employees whose statements are in 19 this document are not to be admitted for their 20 truth or shown in any way. 21 The argument was restricted by 22 statements of Microsoft executives as reflected 23 in this transcript. And those go to 24 Microsoft's hearsay objection. 25 And, as to those, it is Microsoft's 2787 1 position that merely the fact that this 2 document appears on its website is not an 3 adoption or a representation in any form by 4 Microsoft. 5 That transcript is accurate and 6 accurately reflects the statements by these 7 executives at this launch. 8 And without that kind of foundation or 9 the time we've needed to confirm it, there 10 isn't the foundation under the hearsay rule for 11 this to be admitted as an admission of these 12 exhibits -- as an admission of the fact that 13 this transcript is a correct transcription of 14 what occurred at this Windows XP launch. 15 THE COURT: Where did you get the 16 transcript? 17 MR. GRALEWSKI: By clicking on a link 18 on Microsoft's website. And the link is still 19 there, Your Honor. 20 THE COURT: This is all taken from 21 Microsoft's website? 22 MR. GRALEWSKI: Yes, Your Honor. 23 THE COURT: Anything else on this 24 issue? 25 MR. GRALEWSKI: Ten seconds. We are 2788 1 not moving for its admission under Sub B of the 2 admissions rule, which is the adoptive 3 admission. We are moving under Sub D. 4 And we are not offering the comments 5 of Sting for their truth, Your Honor. 6 THE COURT: You don't trust them? 7 MR. GRALEWSKI: I do. 8 THE COURT: Mr. Tuggy, anything else? 9 MR. TUGGY: Nothing further, Your 10 Honor. 11 THE COURT: You're not a fan of Sting 12 either? 13 MR. TUGGY: No. 14 THE COURT: Very well. 15 Objection is overruled. Statements of 16 Mr. Gates and other Microsoft employees are 17 admissible. Other statements are not. 18 Next? 19 MR. GRALEWSKI: Thank you, Your Honor. 20 I know the Jury is waiting, so I'll be quick on 21 my next document. 22 4498, Your Honor. 23 THE COURT: You go from back to front. 24 Okay. 4498? 25 MR. GRALEWSKI: 4498 -- 2789 1 THE COURT: Got it. 2 MR. GRALEWSKI: -- is from Hewlett 3 Packard to Microsoft. And you'll notice that 4 there are three paragraphs of embedded hearsay. 5 The second and third paragraphs of embedded 6 hearsay Ms. Conlin will not refer to during her 7 opening statement. 8 The only issue presently before Your 9 Honor is whether Ms. Conlin may display and 10 refer to the first embedded hearsay paragraph. 11 We submit that the nonhearsay purpose, 12 Your Honor, is for notice of what HP is 13 reporting the effect of Microsoft's policies 14 are. 15 THE COURT: You're offering -- the 16 three paragraphs at issue are the ones 17 highlighted? 18 MR. GRALEWSKI: The three paragraphs 19 at issue contain the embedded hearsay. The 20 only issue before Your Honor is the first 21 paragraph because the second and third are not 22 going to be displayed to the Jury. 23 So when the document appears on the 24 screen, they won't be able to see the second 25 and third paragraphs of the embedded hearsay. 2790 1 THE COURT: Very well. 2 Mr. Tuggy? 3 MR. TUGGY: Yes, Your Honor. 4 As we have discussed with other 5 documents, Microsoft recognizes that when 6 here's -- when something that's otherwise 7 hearsay is offered as notice to a recipient, 8 that it may be admissible for that purpose. 9 However, the notice has to be relevant. 10 And in this case Plaintiffs seek to 11 offer to the Jury in the opening a section of 12 this letter where HP states that Microsoft's 13 contractual requirements prove significant and 14 costly for HP. 15 And the fact that Microsoft may have 16 been aware of such a statement by HP and, 17 therefore, quote, on notice, end quote, of that 18 is not a relevant issue in this lawsuit. 19 THE COURT: So are you agreeing or 20 saying it's not hearsay? Are you just arguing 21 relevance? 22 MR. TUGGY: It's hearsay being offered 23 for a nonhearsay purpose, but the proffered 24 nonhearsay purpose is irrelevant. 25 THE COURT: Okay. 2791 1 MR. TUGGY: In other words, it's 2 prejudicial language Plaintiffs would like to 3 display because of its prejudicial effect. And 4 the proper nonhearsay purpose is not real. 5 It's not really why they want it. 6 THE COURT: Anything else, 7 Mr. Gralewski? 8 MR. GRALEWSKI: With respect to 9 relevance, Your Honor, to remind the Court, 10 this paragraph mirrors Finding of Fact 214 that 11 you read to the Jury already. 12 On the hearsay issue, I think -- I 13 think it is not hearsay actually. The 14 introductory paragraph, as was stated -- as was 15 clearly stated on many occasions to you and 16 other members of the OEM team, that is simply 17 common phraseology used in language -- in 18 letters like this. 19 What is being stated here is being 20 stated in the letter, and that is Microsoft's 21 mandated removal of all OEM group sequences, et 22 cetera, et cetera. 23 So, for example, with that -- the 24 paragraph would stand on its own without that 25 introductory clause. And it's simply a 2792 1 statement that's being made by HP to Microsoft 2 in this instance in this letter. 3 MS. CONLIN: Your Honor, if I may add 4 to that. 5 THE COURT: Go ahead. 6 MS. CONLIN: Paragraph 214. When the 7 Court ruled on Microsoft's motion in limine 8 with respect to collateral estoppel, one of the 9 things we discussed, Your Honor, was showing 10 the Jury the documents themselves that were 11 quoted by the district court in the findings of 12 fact. This is one such document. 13 And as I understood the Court's 14 ruling, putting these findings of fact into 15 context and showing the Jury the actual 16 documents on which Judge Jackson relied in 17 making his findings was a perfectly permissible 18 use for us to make of the documents. 19 The Court has read the exact -- the 20 words that Microsoft objects to have already 21 been read to the Jury in paragraph 214. 22 I just want to show them the document 23 in my opening statement, Your Honor. 24 THE COURT: Anything else? 25 MR. TUGGY: Your Honor, if I may 2793 1 respond. 2 THE COURT: Sure. 3 MR. TUGGY: Two points. 4 One, on the issue of collateral 5 estoppel, Microsoft objects to this document 6 and also the next two on the ground that this 7 is barred by the collateral estoppel document 8 from being shown to the Jury because this is a 9 document -- and the part that Plaintiffs seek 10 to show is subsumed within a finding of fact. 11 And it is both cumulative and 12 prejudicial under the rule prohibiting the 13 admission of evidence causing undue prejudice. 14 And it is also violative of the 15 collateral estoppel doctrine in that it is 16 unfair for Plaintiffs to seek to obtain 17 collateral estoppel of finding of fact. 18 In addition to offer evidence in 19 support of that finding of fact, to take the 20 position that Microsoft is precluded from 21 offering evidence adverse to that finding of 22 fact. 23 That it was not your ruling on any 24 motion in limine or other matter previous to 25 this that the Plaintiffs are entitled to show 2794 1 evidence that is quoted in findings of fact or 2 in findings of fact. 3 In addition to obtaining collateral 4 estoppel effect, the findings of fact 5 themselves. 6 And on the argument that this is 7 nonhearsay, the time for that argument, Your 8 Honor, has passed. This was a document 9 designated during the Special Master process. 10 Microsoft asserted an embedded hearsay 11 objection. The Plaintiffs conceded the 12 objection did not submit it to the Special 13 Master for ruling. 14 And now is not the time to attempt to 15 resurrect an argument that this was nonhearsay. 16 They acknowledge and have conceded 17 that it's hearsay. And at issue here is 18 whether it could be offered for a nonhearsay 19 purpose. 20 They have not made any showing of 21 irrelevancy of this for its nonhearsay purpose. 22 The argument that it ought to be 23 admitted because it reflects what a finding of 24 fact said or that it ought to be admitted for 25 its truth is simply not available to Plaintiffs 2795 1 at this time. 2 The question is whether it is -- it is 3 admissible nonhearsay, and it is not. They 4 have not shown the relevance of their 5 nonhearsay purpose and haven't even attempted 6 to argue it. 7 So based both on the proper 8 application of the collateral estoppel doctrine 9 and the fact that there's no link to a relevant 10 nonhearsay purpose, Plaintiffs' Exhibit 4498 11 ought not be shown in the opening. 12 THE COURT: They just want to show the 13 first paragraph? 14 MR. TUGGY: Correct. That paragraph. 15 THE COURT: Anything else? 16 MS. CONLIN: No, Your Honor. 17 THE COURT: You just want a ruling 18 right now on the first paragraph or the entire 19 document? 20 MR. GRALEWSKI: No, Your Honor. Just 21 the first paragraph. 22 Very quickly, Your Honor, echoing what 23 Ms. Conlin said. 24 One relevant nonhearsay purpose with 25 respect to notice is that Plaintiffs will need 2796 1 to demonstrate to the Jury willfulness of 2 Microsoft's actions, separate and apart from 3 the findings of fact. 4 This shows that Microsoft was aware of 5 the effect of its business decisions on its 6 customers and, nonetheless, continue to go 7 forward with its OEM restrictions and its 8 licenses. 9 That's certainly a purpose over and 10 above the collaterally estopped facts from 11 paragraph 214. 12 So not only is it relevant, as 13 Ms. Conlin said to put it in context, but also 14 on the issue of willfulness. 15 THE COURT: How are you going to show 16 the date? 17 MS. CONLIN: What is the question, 18 Your Honor? 19 THE COURT: How are you going to show 20 the date? You said you want to put them on 21 notice. What's the date? 22 MR. GRALEWSKI: There is in the third 23 -- I'm sorry, Ms. Conlin. 24 MS. CONLIN: The letter from Hewlett 25 Packard is dated, Your Honor. 2797 1 THE COURT: Where? 2 MS. CONLIN: March of 1997. 3 THE COURT: I fail to see it. Where 4 is it? 5 MS. CONLIN: Well, let me see if I 6 can. 7 THE COURT: Not on my copy. 8 MR. GRALEWSKI: Also, Your Honor, in 9 the third paragraph, you'll notice that HP in 10 writing to Microsoft in a parenthetical says 11 something like -- Ms. Conlin is looking at my 12 document, but it says something like -- it says 13 -- 14 THE COURT: As of 3-10-96? 15 MR. GRALEWSKI: Right. So if the 16 document doesn't have a date specific on it, 17 there's a reasonable inference that the data is 18 current and it is at least dated in March of 19 '97. 20 MS. CONLIN: And that's what the 21 finding of fact says, Your Honor, March of 22 1997. 23 Finding of fact 214 says was a letter 24 that the manager of research and development at 25 Hewlett Packard sent to Microsoft in March of 2798 1 1997. He wrote, and then the quote. 2 MR. ROSENFELD: Your Honor, if I 3 might. 4 THE COURT: Sure. 5 Mr. Rosenfeld? 6 MR. ROSENFELD: This seems to me to be 7 a classic example of Plaintiffs trying to get 8 the benefits of collateral estoppel, to take a 9 document that is quoted in the finding and then 10 to also ask to introduce the evidence. 11 And that is precisely what collateral 12 estoppel is designed to preclude. You make a 13 choice. You get these preclusive binding 14 facts, but you then don't also get to introduce 15 the evidence. 16 And if Plaintiffs are going to be 17 allowed to argue every time that this evidence 18 is independently relevant to willfulness or 19 whatever, then, you will have allowed these 146 20 preclusive findings. And they're also trying 21 to introduce all the evidence that supports 22 them. 23 And, as I recall, Your Honor, in the 24 hearing that we had back in April, you put 25 precisely the question to me, very pointedly, 2799 1 about whether if certain preclusive findings, 2 broad, preclusive findings were entered by Your 3 Honor, whether Microsoft would try nonetheless 4 to introduce the underlying evidence. And you 5 warned me that that was not going to happen. 6 That is exactly what the Plaintiffs 7 are doing here, and this is the core example. 8 Since they want you to admit the underlying 9 evidence that is quoted in the finding. 10 If collateral estoppel means anything, 11 it means they should not be able to do that 12 here. 13 THE COURT: Counsel? 14 MR. GRALEWSKI: Your Honor, that's a 15 parade of horribles argument. This document, 16 we're not seeking its admission. We want to 17 know if Ms. Conlin can display on the screen. 18 It is, as we talked about last week, 19 relevant to the issue of willfulness, and it's 20 something that's consistent with Your Honor's 21 ruling on the Gates' deposition. The 22 Plaintiffs are entitled to proffer to the Court 23 and to the Jury. 24 THE COURT: Anything else? 25 MR. GRALEWSKI: Not from Plaintiffs, 2800 1 Your Honor. 2 THE COURT: Defendants? 3 MR. ROSENFELD: No, Your Honor. 4 Thank you. 5 THE COURT: I'll allow you to present 6 the paragraph in question without the first 7 clause. 8 MS. CONLIN: I beg your pardon, Your 9 Honor? 10 THE COURT: I will allow you to 11 present the paragraph in question without the 12 first clause. 13 MS. CONLIN: I want to be sure that I 14 understand. 15 THE COURT: In other words, you can 16 state you will not include as was clearly 17 stated on many occasions to you and other 18 members of the OEM team, that will not be 19 displayed. 20 MS. CONLIN: Okay. 21 Thank you, Your Honor. 22 THE COURT: Understood? 23 MS. CONLIN: I got it. 24 THE COURT: Next? 25 MS. CONLIN: Your Honor, there are two 2801 1 more exhibits, but having kept the Jury 2 waiting, I think that it's unlikely that I will 3 reach those today. 4 And so perhaps we can take them up at 5 the close of business today rather than keeping 6 the Jury waiting any further. 7 THE COURT: Any objection? 8 MR. TULCHIN: No, Your Honor. That's 9 perfectly fine with us. 10 THE COURT: Very well. 11 MR. GRALEWSKI: Thank you, Your Honor. 12 THE COURT: Counsel, I've been told 13 that Ms. Baldwin, our court administrator, 14 needs some detail as to what you want on the 15 website. 16 And what else? 17 THE CLERK: Just a memo to ISIS what 18 exactly needs to be on it, how you want it set 19 up so they can get started on it. 20 THE COURT: What you would like on it? 21 MS. NELLES: I would like nothing on 22 it, Your Honor. 23 THE COURT: Okay. 24 MS. NELLES: But if the Plaintiffs are 25 going to make a proposal, I'd like to see it 2802 1 and then have an opportunity to respond. 2 THE COURT: Just do a short memo of 3 what you want on it. 4 MS. CONLIN: All right, Your Honor. 5 THE COURT: And give it to Carrie and 6 she'll give it to Beth. 7 Thanks. Okay, get the Jury. 8 Thank you, Carrie. 9 (The following record was made in the 10 presence of the jury.) 11 THE CLERK: All rise. 12 THE COURT: Sorry about the delay. 13 We had a motion that only the Court 14 can consider regarding some legal issues. So, 15 as we stated earlier in the preliminary 16 instructions, sometimes that comes up. It did 17 come up. 18 Then I understand somebody had a 19 problem getting car space. Okay. 20 I will try to talk to court 21 administration about reserving spots for you. 22 We probably should have some reserved, so -- 23 [Juror Name]: Across the street. 24 THE COURT: Across the street. Okay. 25 Carrie will get on that. 2803 1 THE COURT: Then I'll hear about it 2 later. 3 All right. 4 Ms. Conlin? 5 MS. CONLIN: Thank you, Your Honor. 6 May it please the Court. Good morning. 7 Let me begin by introducing you to Sam 8 Jennison. Let me first try to get through the 9 cords. 10 Sam Jennison is from Burlington. He 11 is a representative of Riley Paint 12 Manufacturing Company, one of the class 13 representatives. 14 When we ended on Friday, I was talking 15 to you about DR-DOS, one of the competitors in 16 the operating system market with MS-DOS, and we 17 were in about the middle of 1991, 15 years ago. 18 So stay with me. 19 One of the things that we thought 20 might be helpful to you that we have prepared 21 is a time line so that you can sort of keep 22 track of what is generally happening. 23 And we are going to put the time line 24 on this screen and take it down and put it up 25 because there's also, as you will recall from 2804 1 Friday, a kind of an outline to guide us as we 2 work through this process. 3 We are in July of 1991. DR-DOS 5.1 4 has been released, and MS-DOS 5.0 is also in 5 the market, though, it was in the market more 6 than a year after DR-DOS 5.0 came out. 7 In July of 1991, on July 17th, Novell, 8 which is a networking company -- Novell is in 9 the software business, but not in the desktop 10 software business, in the server software 11 business. 12 It's a large company. It has its own 13 relationship with OEMs, the computer 14 manufacturers. 15 And on July 17th Novell announces its 16 intention to merge with DRI, the manufacturer, 17 the software developer of DR-DOS. 18 Just a very few days later Bill Gates 19 tries kind of a last-ditch effort to stop the 20 merger from becoming effective. 21 He calls Ray Noorda. Mr. Noorda is 22 the CEO of Novell. And wants to institute 23 merger discussions between Microsoft and 24 Novell. 25 He makes very clear, Mr. Gates, in his 2805 1 phone call to Mr. Noorda, that as a 2 prerequisite of discussions between Novell and 3 Microsoft about merger, it would be necessary 4 for Novell to get rid of DRI, which they just 5 days before had acquired. 6 Noorda responds that the merger that 7 Mr. Gates is proposing might have problems 8 getting government approval. And Gates says, 9 in effect, according to Mr. Noorda's testimony, 10 we know how to handle the government. 11 Now, I will tell you that Mr. Noorda 12 is no fan of Microsoft. But he is the CEO of a 13 public company. And he is obliged to inform 14 his board of directors and to explore these 15 discussions. So that's what he does. 16 David Bradford -- during this time 17 frame, during a very long period of time was 18 Novell's general counsel. He will be here to 19 talk to you about the merger discussions and 20 about a number of other things as well. 21 Negotiations occur until March of 22 1992. And in March of 1992, without any 23 warning to Novell, Microsoft acquires a 24 different company, another company. And that 25 would have made FTC approval even more 2806 1 difficult. 2 And so at that time Novell calls off 3 the discussions and is convinced that Microsoft 4 never really intended to seriously explore any 5 kind of a merger with Novell, that it was just 6 an effort to interfere with the merger of 7 Novell and DRI. 8 Mr. Noorda recently died of 9 Alzheimer's. He provided a deposition in 1998. 10 He stopped being the CEO of Novell in 1994. 11 Mr. Bradford will tell you that the 12 reason he stopped was because he was having so 13 much difficulty with his memory. He felt he 14 could no longer function adequately as the CEO 15 of a company. 16 Mr. Bradford worked daily with 17 Mr. Noorda. 18 Microsoft has indicated that it is 19 going to play that deposition anyway. You will 20 see that Mr. Noorda gets very confused. Twice 21 or three times he says that he stopped being 22 the CEO in 1944. And there are other things. 23 And I don't want you to be confused by 24 his confusion. Mr. Bradford will talk to you a 25 little bit about that. 2807 1 While the merger talks are proceeding, 2 you know, July 1991, DRI is acquired and merges 3 with Novell. 4 Right after that, at Mr. Gates' 5 instance, merger discussions go on between 6 Novell and Microsoft. 7 And even while those merger 8 discussions are proceeding, Microsoft at the 9 highest levels is thinking up all kinds of 10 things to do harm to DRI, Novell. 11 Brad Silverberg sends a working 12 outline to Steve Ballmer on August 6, 1991, 13 describing some of what they intend to do. 14 That is Plaintiffs' Exhibit 895. 15 I can't see this very well anyway, but 16 I sure can't see it if it's not even turned to 17 me. 18 And Mr. Silverberg says, here is the 19 working outline for the document. MS-DOS 5, 6 20 key issues: What unique synergies can we 21 create with Windows 3? Derail the train before 22 it starts. Communicate DR-DOS product 23 weaknesses. Lock in OEMs to long-term 24 contracts. 25 And I told you earlier about the 2808 1 long-term contracts. And the reason for the 2 long-term contracts is quite clearly stated by 3 Mr. Silverberg right here. 4 And, finally, on the document, should 5 reverse engineer their protocols just in case. 6 Now, IBM has shown interest in DR-DOS 7 for quite some time. 8 By June of 1991, Silverberg and others 9 are notified by Eric Straub, who is a Microsoft 10 employee, he's a program manager, that IBM is 11 in negotiation with DRI and that -- and here is 12 Exhibit 9832. 13 What Mr. Straub says is high-level 14 management at IBM is interested in moving away 15 from Microsoft in the DOS business if at all 16 possible. 17 Then in September of 1991, IBM 18 publicly endorses DR-DOS 6.0 saying that it's 19 excellent technology and, within a week, 20 Mr. Gates publicly vows to retaliate against 21 IBM if it moves to DR-DOS. 22 Of course, if IBM announces support 23 for DR-DOS, that will give it great impetus in 24 the market. And due to that threatened 25 retaliation, IBM does not adopt DR-DOS. 2809 1 IBM's also concerned about the same 2 problems that we discussed earlier, and that is 3 future compatibility with Windows. 4 Microsoft will say that the reason 5 that IBM withdraws its support for DR-DOS is 6 because of testing done by an IBM employee 7 named Tony -- and I'm not sure how to pronounce 8 his last name, but I'm going to give it a 9 shot -- Ingenuso. 10 Mr. Ingenuso, who is a very close 11 friend of Brad Silverberg's, who is the 12 Microsoft executive in charge of MS-DOS and 13 Windows, will provide testimony to you by 14 deposition. 15 And he will say that he tested DR-DOS 16 and found it terrible in every possible way. 17 But in order to find it terrible in every 18 possible way, he invents his own test of 19 DR-DOS. He doesn't ever discuss this with 20 anybody at DRI or Novell. 21 No one at DRI even hears of him, and 22 someone at IBM leaks this information directly 23 to Microsoft. Even IBM falls victim to FUD, 24 threats and retaliation, vaporware, just like 25 other OEMs. 2810 1 Now, we're going to move to September 2 1991, to December 1993. DR-DOS 6.0. This is 3 the shrink-wrapped package of DR-DOS 6.0, and 4 this was sold at retail. 5 And it was released in September 1991. 6 That's three months after the announced merger 7 with DRI. And, once again, releasing DR-DOS 8 6.0, that surpasses the features available and 9 any Microsoft product. 10 The most important feature in DR-DOS 11 6.0 responds to user's need for more and more 12 hard disk space. 13 This new product allows users to store 14 more data in less space. And there are other 15 new and significantly improved features in 16 DR-DOS like task switching. 17 You know, you can jump back and forth 18 between your word processing and your 19 spreadsheet. 20 A greatly improved disk cache, which 21 improves performance, improved memory 22 management, and full online help. 23 Executives at Microsoft just go 24 ballistic. Here is Mr. Allchin. Mr. Allchin, 25 one of the very most senior executives writes 2811 1 in Exhibit 948, we must slow down Novell. As 2 you said, Bill, it has to be dramatic. We need 3 to slaughter Novell before they get stronger. 4 And in this time frame Microsoft is 5 using those same exclusionary practices, those 6 same exclusionary contracts that we previously 7 discussed. 8 Per processor, minimum commitments, 9 long-term contracts, unreasonably large minimum 10 commitments. And this is the tilted playing 11 field that DR-DOS 6.0 is introduced into. 12 But there's more. The familiar FUD. 13 And, specifically, Microsoft begins to claim 14 that DR-DOS will actually cause Windows, the 15 GUI, the separate GUI I just pointed to to 16 break. 17 To block out DR-DOS, Microsoft begins 18 explicitly informing OEMs, the computer 19 manufacturers, that Microsoft would guarantee 20 that Windows would not work with DR-DOS. And 21 if they, the OEMs, licensed DR-DOS, they would 22 be making a critical mistake in the 23 marketplace. 24 The beta blacklist. You recall that 25 the beta is the early prerelease version of a 2812 1 product. And this product is Windows 3.1. 2 At this time, of course, it is the 3 graphical extension. It's a separate product, 4 and Microsoft is testing, beta testing, in the 5 marketplace the 3.1 version of Windows. 6 Windows and DR-DOS do not compete. 7 DR-DOS is an operating system. Windows is the 8 GUI that sits on top of the operating system. 9 DR-DOS competes with MS-DOS, but not 10 with Windows. It works with Windows. 11 During the beta test cycle for Windows 12 3.0, DRI was permitted to have the beta. 13 Customarily when incompatibilities 14 arise between products that are supposed to 15 work together, the practice in the industry is 16 just to fix them. 17 This is particularly true with a 18 product like Microsoft Windows, which is 19 supposed to work with lots of different 20 products. 21 And it is in Microsoft's interest to 22 make sure that its Windows product is 23 compatible with other products because the more 24 products it's compatible with, the more Windows 25 can be sold. 2813 1 And, certainly, having compatible 2 products is in the best interest of end users. 3 Microsoft, however, wants to protect 4 its monopoly. Microsoft knows that if the 5 DR-DOS development team has the Windows 3.1 6 beta, they can make it compatible. And 7 Microsoft decides to withhold from DRI that 8 beta. 9 A Windows 3.1 distribution list dated 10 May 31, 1991, indicates that 2,155 sites are 11 going to receive this Windows 3.1 beta. 12 Microsoft, then, formalizes its beta 13 exclusion policy into something called the 14 Windows DOS beta blacklist. 15 It's a list of companies that are not 16 going to be permitted to have the 3.1 betas. 17 DRI -- and I didn't make up that name. 18 That's right on the document. It's called the 19 beta, Windows DOS beta blacklist. 20 DRI is listed on this blacklist from 21 July 13, 1991. 22 Now, the beta testers are important to 23 Microsoft. Microsoft sets up a way for them to 24 communicate with Microsoft about any problems 25 they have, about any questions that they have. 2814 1 And so, you know, imagine that someone 2 gets -- it's one of these 2,000-plus beta sites 3 that gets the Windows 3.1 beta. And they load 4 it over DR-DOS. 5 When those folks call in concerning 6 the interoperability of Windows 3.1 and DR-DOS, 7 they are explicitly informed that Microsoft 8 does not want Windows to work with DR-DOS. 9 On October 31, 1991, Andy Hill, who is 10 a program manager for MS-DOS 5.0, tells his 11 Windows 3.1 beta staff -- and this is 12 Plaintiffs' Exhibit 1054 -- DR-DOS is an 13 untested and, therefore, unsupported operating 14 system. 15 MS-DOS or OEM versions of it is 16 required for Windows. Using DR-DOS with 17 Microsoft Windows is at the sole risk of the 18 user. We don't support it. 19 As you will see, this refusal is 20 happening at the very time Microsoft is making 21 decisions about the Windows code that will 22 create real or perceived incompatibilities with 23 DR-DOS, the operating system that competes with 24 its monopoly operating system. 25 Claire Lematta is a senior vice 2815 1 president of a company called Weggener Edstrom, 2 and it is Microsoft's outside PR firm. 3 She advises Silverberg on November 4 7th, 1991, of the dangerous course that 5 Microsoft has chosen with this beta blacklist. 6 This is Plaintiffs' Exhibit 1079. She 7 says PR is going to have limited ability to 8 help you if Microsoft is deliberately and 9 selectively keeping DRI from participating in 10 the beta program. 11 That is, if you are making a special 12 case of them that is not consistent with the 13 way that the beta program is being administered 14 for the rest of the industry. 15 My advice is that you really think 16 through what you are doing here, and WRT -- 17 means with regard to -- the beta program. 18 When this gets out, and it will get 19 out, we'll really reflect badly on Microsoft 20 from the press perspective. I think you should 21 also get some legal advice on this issue. 22 Microsoft's tactics work. On January 23 20th, 1992, DRI is notified, for instance, by a 24 potential corporate account of its decision to 25 reject DR-DOS 6.0. 2816 1 This is Plaintiffs' Exhibit 1190. 2 And in the letter, the corporate 3 account tells DR-DOS, what I feel is the most 4 important factor, however, is the rift 5 developing between Digital Research and 6 Microsoft. 7 By this, I mean, Microsoft not 8 allowing you to beta test Windows 3.1. Since 9 the users who would be most inclined to switch 10 to DR-DOS are also using Windows, this one 11 factor is of particular concern. 12 Windows 3.1 launches worldwide on 13 April 6, 1992. 14 And users immediately bombard 15 Microsoft product support services with 16 requests concerning setting up Windows 3.0 on 17 top of DR-DOS. 18 During the beta cycle, Silverberg has 19 told beta support -- these are the people who 20 are talking to the beta testers -- in 21 Plaintiffs' Exhibit 9840, post a nice SOL 22 message. I think I -- I think I know what that 23 means, and you probably do too. 24 Bottom line is that he needs MS-DOS, 25 something that is compatible with Windows. 2817 1 This is during the beta cycle. That 2 same thing continues after the release of the 3 product. 4 He, Silverberg, directs product 5 support services on April 9, 1992. In 6 Plaintiffs' Exhibit 1284, he says, Windows is 7 designed and tested for MS-DOS, not DR-DOS. It 8 says MS-DOS on the box, not MS-DOS or DR-DOS. 9 This is what to tell the world (in a 10 nice way). Using a system other than MS-DOS 11 puts the user at his own risk. It says this 12 very clearly, first thing in the read me. 13 There is another fix for them. Use 14 MS-DOS. That should be mentioned in addition 15 to telling them that Digital Research is 16 providing them with a new version. 17 Now, what's happening here is 18 Microsoft put the product in the market and 19 DR-DOS, then, is able to make its product 20 compatible. 21 And so when they're telling these 22 callers that DR-DOS won't work with MS-DOS, in 23 fact, they already know that DR-DOS is going to 24 provide, is providing a compatible product. 25 Novell quickly ships that update, and 2818 1 the damage is already done. When coupled with 2 the AARD code, which I'm going to talk about in 3 a minute, and with intentional 4 incompatibilities, which I'll also talk about, 5 users begin to perceive the malevolence of 6 Microsoft's intent and its ability to make that 7 intent a reality. 8 OEMs and end users abandon DR-DOS, not 9 because it isn't a good product and not because 10 it doesn't work with Windows, but because 11 Microsoft's stated intent is to make sure that 12 it doesn't work with Windows. 13 Now, let's go back to the beta program 14 because I do want to talk with you about the 15 AARD code. That is AARD, and those are the 16 initials of its developer. 17 In December 1991, Microsoft releases a 18 beta version, it's called the Christmas beta, 19 which unbeknownst to users, beta testers and 20 the press includes secret encrypted code 21 designed to produce false error messages when 22 users try to install Windows 3.0 over DR-DOS. 23 The messages themselves tell the user 24 that a nonfatal error has occurred. They don't 25 describe the error, the cause of the error, or 2819 1 whether it's safe to proceed. 2 Microsoft hides the code in five 3 different places in the source code and 4 encrypts it, which makes it very difficult for 5 anybody, no matter how sophisticated, to 6 discover that these errors are not really 7 errors. 8 No one will tell us exactly when the 9 AARD code was dreamed up or who decided it 10 would be done. 11 Even the author of the code, Aaron 12 Reynolds, says he has no knowledge of who 13 instigated this little coding excursion. 14 By September 27, however, plans are 15 sufficiently advanced to generate debate and 16 even dissent within Microsoft. 17 This is Plaintiffs' Exhibit 607A. 18 And this is Brad Chase speaking. Brad 19 Chase is MS-DOS 6.0 general manager. 20 He says two cents from Rich F, that's 21 Richard Fade and I. 22 One, the check for DR-DOS better be 23 perfect. Otherwise, you could be in a heap of 24 trouble. Ex, meaning example, comes up on 25 Compaq or Zenith DOS. 2820 1 Moreover, this check better be good 2 enough so that DR does not work around it and 3 prevent the message from coming up. 4 Two, the message has to be consistent 5 with our other error messages (caution box, et 6 cetera) and avoid making us look bad. 7 The message below, in my opinion, 8 leads us open -- I think that's supposed to be 9 leaves us open to bad PR. It surely is the 10 outer boundary of rudeness. It is also fairly 11 extreme compared to others in the product we 12 have seen. 13 The point is to tell users we don't 14 work and that they should proceed with caution. 15 We can do this more professionally. 16 I want you to remember this Exhibit 17 607A when Microsoft tells you that the AARD 18 code is not directed at DR-DOS. 19 In what I just read you, note DR-DOS 20 is specifically mentioned, not once but twice. 21 And there are lots of other exhibits. 22 Mercifully, I won't be showing you all of them 23 during my opening. 24 In this e-mail, it's clear that DR-DOS 25 is the focus of the AARD code. 2821 1 Now, Richard Abel, who is the group 2 manager of Windows, so he's in charge of the 3 product that they're making say this message, 4 this warning. 5 He says, I hate this whole thing. I 6 think it's totally rude. Reinforces the image 7 that users have of us as the evil ones, et 8 cetera. 9 Like what I told you earlier, here's 10 another employee within Microsoft expressing 11 concern about his employer's proposed tactics. 12 But, again, Microsoft just ignores this 13 employee's stop sign and drives right through. 14 Aaron Reynolds writes and tests the 15 AARD code in about seven days. And, by 16 November 8th, a decision is made to implement 17 it in the final beta, the Christmas beta, 18 December 22nd, 1991. 19 But Microsoft decides not to use the 20 final warning, but to put a softer warning in, 21 into the beta. 22 This is Plaintiffs' Exhibit 5418A. 23 And I believe this is by Mr. Reynolds. 24 5. What will be in the final beta? 25 Detection for the absence of MS-DOS will be in 2822 1 the final beta release, AKA beta 3, but the 2 message will not. Instead, the message will 3 say, nonfatal error detected, error number, 4 please contact Windows 3.1 beta support. 5 This will allow us to widely test our 6 detection scheme, but not cause undue PR 7 problems. 8 At one point, the users of Windows 3.1 9 beta on DR-DOS are going to see the warning 10 just the first time they load, but then it is 11 decided that they are going to see it every 12 time they turn the computer on. 13 Reynolds says -- and this is Exhibit 14 1133 -- yesterday it was decided to do this 15 detection and display the message, if 16 appropriate, every time we run Windows. 17 Aaron has some code that you can add 18 to win.com. 19 In setup and MSD -- now, these words 20 are different modules of the computer source 21 code. The message is a prompt message. 22 Nonfatal or detected. Error number, number, 23 number, number. Please contact Windows 3.1 24 beta support. Press enter to exit or C to 25 continue. 2823 1 And then Mr. Reynolds adds some 2 comments under the word notes. 3 Do not try and trace into this 4 routine, you will die. Try to obscure as much 5 as possible. The code that makes this call and 6 the code which prints the message based on the 7 result are well-separated. 8 That makes it harder for people to 9 find out what's going on. 10 The bit that controls the message is 11 stored in a variable that is touched, read, 12 written, all over the place. 13 The Windows 3.1 beta ships on December 14 twenty -- I think it's December 21st or 22nd, 15 and goes out to between 12,000 and 15,000 16 sites. 17 It is, according to Microsoft, a 18 marketing tool to get the product into the 19 hands of people making buying decisions, and 20 members of the press also get this beta with 21 this thing in it. 22 Microsoft anticipates that the 23 nonfatal error message will be alarming and 24 will be controversial, and that, as a PR 25 matter, they will need to lie. 2824 1 This is Plaintiffs' Exhibit 3498. And 2 it's by Andy Hill, who is a program manager for 3 bids 3.1. Janine -- and this is Janine 4 Harrison. She's the beta manager -- has 5 brought up some good questions on how we handle 6 the error messages that the users will get if 7 they aren't using MS-DOS. 8 The beta testers will ask questions. 9 How should the techs respond? Ignorance, the 10 truth, other? 11 And then Cole, the Win 3.1 group 12 program manager, said, let's plead ignorance 13 for a while. We need to figure out our overall 14 strategy for this. 15 The author of the AARD code testifies 16 clearly that the error message represents a 17 false incompatibility. He says there's no 18 problem. 19 Okay. So you are -- the beta user has 20 DR-DOS as the operating system. Loads the 21 Windows 3.1 beta and up comes this message. 22 You know, they try to figure out what 23 it is. They can't because it's all hidden in 24 there. 25 It looks like a problem. It's 2825 1 supposed to look like a problem, but it isn't a 2 problem. 3 Here is Mr. Reynolds, the author of 4 this code, telling us there is no problem. 5 (Whereupon, the following video was 6 played to the Jury.) 7 MS. ENGEL: Okay, a data collection 8 tool device program. I'm sorry, you call it 9 data collection. 10 MR. REYNOLDS: A data collection 11 program. 12 MS. ENGEL: Okay. So the data 13 collection program runs. It doesn't tell me 14 what's caused the error; is that correct? 15 MR. REYNOLDS: There is no error. 16 MS. ENGEL: Does it tell me why the 17 error message has come up? 18 MR. REYNOLDS: If you understand, as I 19 did, what was going on relating to this, yes, 20 you could tell what caused the error, which was 21 not an error. 22 You would go look at the OS version 23 field or whatever it was and see if it said 24 MS-DOS or nonMS-DOS. 25 MS. ENGEL: Okay. If I'm not you and 2826 1 I'm the beta user, am I going to be able to 2 tell what the problem is? 3 MR. REYNOLDS: There is no problem. 4 MS. ENGEL: There's no problems, but 5 I've gotten five error messages in loading 6 Windows? 7 MR. REYNOLDS: There's no problem. 8 MS. ENGEL: Okay. There's no actual 9 problem, but you have led me to believe that 10 there is with these messages; is that correct? 11 MR. REYNOLDS: I can't answer what 12 beta users thought. 13 (Whereupon, playing of video 14 concluded.) 15 MS. CONLIN: So there you go. Five 16 times this message pops up. There's the guy 17 who wrote it. No error. 18 The AARD code, of course, directly 19 impacts how OEMs view DR-DOS. They discuss the 20 error message among themselves. 21 Theo Lieven, Vobis CEO, specifically 22 says he's concerned about the nonfatal error 23 message, and Bruce Fryer -- Mr. Fryer is the 24 product manager at Zenith Data Systems in 25 1992 -- and he testifies that his software 2827 1 engineers run afoul of the AARD code during 2 beta tests of Windows 3.1 on DR-DOS, and here's 3 what he says. 4 (Whereupon, the following video was 5 played to the Jury.) 6 THE QUESTIONER: When you were -- your 7 Armstrong group was investigating the operating 8 systems, did you test to see whether Windows 9 would run on DR-DOS? 10 MR. FRYER: We did. 11 THE QUESTIONER: What did you find? 12 MR. FRYER: Our engineers found that 13 when -- and this was -- I do recollect -- I'm 14 not sure of the exact version number, but we 15 were running a beta of Windows on DR-DOS that 16 worked fine, except they got a very strange 17 error message that only occurred when you are 18 running DR-DOS, but didn't occur when you're 19 running MS-DOS. 20 My engineers further investigated it 21 and found that there was a spurious subroutine 22 that didn't cause any damage and its only 23 purpose was to produce this error message. 24 (Whereupon, playing of video 25 concluded.) 2828 1 MS. CONLIN: And even so, even though 2 Zenith knows that this is not a real error, 3 they, nonetheless, abandon any further 4 consideration of DR-DOS based on fear. 5 (Whereupon, the following video was 6 played to the Jury.) 7 MR. FRYER: One of the scenarios that 8 we envision, based on the experience with the 9 beta bug, was the fact that Microsoft might 10 intentionally put code in Windows that would 11 cause problems with DR-DOS. 12 (Whereupon, playing of video 13 concluded.) 14 MS. CONLIN: So the AARD code does 15 what it is intended to do. 16 Throughout January and February, 17 Microsoft executives continue to debate and 18 wordsmith what message should be inserted in 19 the release version of Windows 3.1, and 20 Mr. Gates and Mr. Ballmer are intimately 21 involved in those discussions. 22 They look for a clever way to say that 23 the detection is not of DR-DOS, which semantics 24 aside, it plainly is. 25 At one point, as late as January 28, 2829 1 1992, what the message is to state is, quote, 2 the Windows setup program has detected another 3 operating system on your machine. And this 4 prompts Brad Silverberg's concern expressed in 5 Plaintiffs' Exhibit 3501. 6 He says, I'm wondering if we should 7 change the detection words to say we failed to 8 detect MS-DOS, rather than we detected an OS 9 other than MS-DOS. The latter words would make 10 people think we are looking for DR-DOS. 11 By February 7th, Silverberg reports 12 that Steve B. said put in a kinder, gentler 13 message. And this prompts an exchange between 14 Cole and Silverberg, three days later. That 15 really lays the exact purpose behind this 16 entire scheme, and this is Plaintiffs' Exhibit 17 1221, and this is David Cole speaking. 18 A kind, gentle message in setup would 19 probably not offend anyone and probably won't 20 get the press up in arms, but I don't think it 21 serves much of a warning. Bill P. made an 22 excellent point. What is the guy supposed to 23 do? 24 And then in Plaintiffs' Exhibit 3506, 25 Mr. Silverberg responds to Mr. Cole's inquiry, 2830 1 what is the guy supposed to do. And he says, 2 what the guy is supposed to do is feel 3 uncomfortable. And when he has bugs, suspect 4 that the problem is DR-DOS, and then go out to 5 buy MS-DOS, or decide not to take the risk for 6 the other machines he has to buy for the 7 office. 8 This is the real goal and this is the 9 executive in charge of achieving that goal. 10 Ultimately, the code is disabled in 11 the final release. Because they were so 12 concerned over the negative PR impact. It's 13 still in there, but it is disabled. 14 Mr. Silverberg, however, says that 15 there is no code inside Windows 3.1 that checks 16 is this MS-DOS. 17 As I said, it is disabled. But it's 18 already taken its toll. When Microsoft tells 19 you that the AARD code didn't have any effect 20 because it was only in the beta, remember what 21 Mr. Fryer had to say about that. 22 Remember that it went to thousands, 23 thousands, and thousands of important users. 24 And Mr. Alepin, who is one of our technical and 25 industry experts, years of experience in the 2831 1 software industry, will also talk about the 2 kind of harm that something like the AARD code 3 does. 4 I want to talk -- besides the AARD 5 code, there was other technical sabotage that 6 Microsoft did in Windows 3.1 to harm DR-DOS. 7 Following Novell's announcement of its 8 impending merger with DRI, Microsoft executives 9 began to consider implementing other 10 intentional incompatibilities. 11 On July 17th, Mr. Allchin, Jim 12 Allchin, one of the very top executives at 13 Microsoft, proposes 8 -- this is Plaintiffs' 14 Exhibit 838. 15 We consider changing our apps to not 16 run unless the OS is our OS. 17 Remember, earlier I talked about how 18 Microsoft around September 1991 becomes 19 increasingly concerned about a partnership 20 between IBM and DR-DOS? And at the time they 21 make specific plans to change Windows 3.1 to 22 thwart compatibility with DR-DOS. 23 On September 27th, Silverberg and 24 Allchin correspond. 25 This is Plaintiffs' Exhibit 978. 2832 1 Silverberg says, We don't know 2 precisely what IBM is going to announce. My 3 best hunch is that they will offer DR-DOS as 4 the preferred solution for 286 OS/2 2.0 for 5 386. 6 They will also probably continue to 7 offer MS-DOS at $165, DR-DOS for $99. DR-DOS 8 has problems running Windows today, and I 9 assume will have more problems in the future. 10 Mr. Allchin responds, you should make 11 sure it has problems in the future. And that 12 is -- I don't know if you can see that. That's 13 a smiley face winking. 14 Four hours later, Silverberg asks Phil 15 Barrett, the guy who's in charge of Windows 16 3.1, what he's planning to do in response to 17 Allchin's suggestion. 18 This is Plaintiffs' Exhibit 0979, and 19 Silverberg says, Can you tell me specifically 20 what we're going to do to bind ourselves closer 21 to MS-DOS? Since you haven't been replying to 22 my messages, I don't know how to interpret your 23 silence. 24 Let me emphasize the importance. IBM 25 is going to announce the DR-DOS deal at COMDEX, 2833 1 almost 100 percent certain. 2 Okay. And Barrett responds -- as I 3 said, the Win 3.1 development group manager. 4 Sorry for the silence. Don't 5 interpret it as ignoring you. 6 The approach that Ralph and I have 7 discussed is to use a VxD to extend DOS by 8 patching it. Don't worry, you don't really 9 have to understand that yet, and somebody will 10 explain it later. 11 The big advantage here is that we 12 provide a legitimate performance improvement. 13 However, it won't prevent us from running on 14 foreign OSs unless we explicitly decide to 15 exclude. They -- foreign OSs -- just won't run 16 as fast. 17 Is this the approach that you want to 18 take? Or would you prefer a simple check and 19 refuse to run? That's a lot easier, but 20 clearly quite defeatable. I'll come and talk 21 to you about it. 22 And then Mr. Silverberg says let's 23 talk. 24 On September 30, 1991, Cole puts the 25 question explicitly to Silverberg and Barrett 2834 1 as to exactly how Windows 3.1 will be designed 2 to be intentionally incompatible with DR-DOS. 3 This is Plaintiffs' Exhibit 3480. September 4 30th, 1991. 5 It's pretty clear we need to make sure 6 Windows 3.1 only runs on top of MS-DOS or an 7 OEM version of it. I checked with legal, and 8 they are working up some text we are supposed 9 to display if someone tries to setup or run 10 Windows on an alien operating system. 11 We are supposed to give the user the 12 option of continuing after the warning. 13 However, we should surely crash at some point 14 shortly later. 15 Now, to the point of this mail. How 16 shall we proceed on the issue of making sure 17 Win 3.1 requires MS-DOS? We need to have some 18 pretty fancy internal checks to make sure we 19 are on the right one. 20 Maybe there are several very 21 sophisticated checks so that competitors get 22 put on a treadmill. 23 Aaron R. -- that's Aaron Reynolds of 24 AARD code. Aaron R. had some pretty wild ideas 25 after three or so beers. Earl H. -- that is 2835 1 Earl Horton -- has some too. 2 We need to make sure this doesn't 3 distract the team for a couple of reasons. 4 One, the pure distraction factor. 5 And, two, the less people know about 6 exactly what gets done, the better. 7 Please advise. 8 No one remembers precisely what they 9 do, but it is clear they do make Windows 10 incompatible with DR-DOS. All on the coding 11 team know DR-DOS is supposed to be incompatible 12 with Windows 3.1. 13 When Silverberg directs that the team 14 change all text displays in Windows 3.1 from 15 DOS to MS-DOS on October 17th, Mr. Cole 16 resists. 17 He says -- this is Plaintiffs' Exhibit 18 9838 -- I don't understand this. Are you 19 saying you want the DOS prompt to become the 20 MS-DOS prompt? 21 Given the fact that Windows 3.1 will 22 only run on MS-DOS, the rest of this seems a 23 bit silly. 24 And then in Plaintiffs' Exhibit 5402, 25 he says, I personally don't think this is going 2836 1 to matter squat since we will only run with 2 MS-DOS. 3 What he's saying here is why go to all 4 the trouble of changing everything to MS-DOS 5 when, in fact, we are only going to run on 6 MS-DOS. DR-DOS isn't going to run Windows at 7 this point. 8 When considering the blacklist issues 9 raised by the merger of DRI and Novell, 10 Silverberg says on September 24, 1991 -- this 11 is Plaintiffs' Exhibit 5383 -- remind Kaikal 12 that we do not support Windows on DR-DOS. They 13 are on their own. There are plenty of 14 problems, too, hee hee. 15 On October 29th, 1991, Mr. Freedman, 16 who you will hear from by deposition. 17 I don't expect that you'll remember 18 either all of the names or all of the titles, 19 but suffice it to say they have lots of titles. 20 They change all the time at Microsoft, and this 21 guy at this time is the MS-DOS 6.1 product 22 manager. 23 He reports that he has tested a 24 Windows 3.1 beta on DR-DOS 6.0 and -- this is 25 October 29, 1991 -- Richard Freedman tests and 2837 1 Windows 3.1 runs fine on DR-DOS. 2 Here's what he says, 1048, in short, I 3 haven't seen any basic kernel 4 incompatibilities. 5 Silverberg apparently knows, however, 6 that the latest build is designed to fail to 7 run on DR-DOS and he asks Freedman which 8 version of 3.1. 9 Why does Microsoft think that DR-DOS 10 won't be able to run Windows? Well, I talked 11 about Bambi. I just resent that this scheme is 12 called Bambi. 13 This is Microsoft's name for its disk 14 cache, a disk cache utility. And a disk cache 15 is supposed to improve performance by taking 16 advantage of available memory so that the 17 computer doesn't have to -- it minimizes the 18 number of times a computer has to read from and 19 write to a disk. 20 When it works correctly, it speeds 21 performance, and there's a group of e-mails 22 between its developers, the Bambi developers, 23 on September 29th and September 30th, 1991, 24 that reveals what happens. 25 This is Plaintiffs' Exhibit 981. This 2838 1 is from -- I think this is Eric Straub again. 2 I tracked down a serious 3 incompatibility with DR-DOS 6.0 -- 6. Just 6. 4 They don't use the normal device driver 5 interface with 32M partitions. 6 Instead of setting the regular start 7 sector field to off, off, off -- f-f-f-f-h and 8 then using a brand-new 32-bit field the way 9 MS-DOS has always done, they simply extended 10 the start sector field by 16 bits. 11 This seems like a foolish oversight on 12 their part and will likely result in extensive 13 incompatibilities when they try to run with 14 third part device drivers. I think probably 15 third-party device drivers. 16 I've patched a version of Bambi to 17 work with DRD6 and it seems to run Win 3.1 18 without difficulty. This same problem may have 19 caused other problems with Win 3.1 and swap 20 file under DRD 6. 21 It is possible to make Bambi work, 22 assuming we can come up with a reasonably safe 23 method for detecting DRD 6. 24 Mr. Barrett responds. I'm not exactly 25 sure how to pronounce that, but I'm going to 2839 1 say heh, heh, heh, which I believe is about 2 right. My proposal is to have Bambi refuse to 3 run on this alien OS. 4 Comments. 5 And then in Plaintiffs' Exhibit 986, 6 The approach we will take is to detect DR 6 and 7 refuse to load. The error message should be 8 something like invalid device driver interface. 9 Mike, Tom, Mack, do you have a 10 reliable DR 6 detection mechanism? 11 Now, this is before the AARD code. 12 This is in September. The AARD code comes in 13 December. 14 A September 30th progress report on 15 Bambi reports that Barrett's plan has been 16 implemented. Software engineer Scott Quinn 17 reports in Plaintiffs' Exhibit 990. Bambi 18 version .35 has passed developer testing. 19 The primary change fixes a major 20 problem with accessing logical units on 21 external hard disks. Also, DR-DOS is detected, 22 needs testing, and Bambi refuses to load. 23 Silverberg first hears on October 8th 24 that the detection works and forwards this 25 message to Brad Chase, Steve Ballmer, and Tom 2840 1 Lennon in Plaintiffs' Exhibit 1011. 2 Thought you'd appreciate the following 3 excerpt from Janine H.'s Win 3.1 beta report. 4 Windows 3.1 doesn't run with DR-DOS. 5 We sent one person MS-DOS 5.0 to use and Randy 6 M. is working with another large account. This 7 may stop them from going to DR-DOS 6.0. 8 Microsoft has surreptitiously 9 contacted DRI to obtain information which 10 Microsoft will then use to code in 11 incompatibility. 12 On September 30th, a Microsoft 13 employee named Cliff Garrett, who's e-mail 14 alias is Cliff G., states -- this is 15 Plaintiffs' Exhibit 989 -- I got the previous 16 mailings -- is that word -- mailings info from 17 DR personally. I have a person I can get 18 internals from. 19 And later that he posts an e-mail 20 message -- and this is 988. 21 The official way to detect DR-DOS is 22 as follows. And then he sets out the way to do 23 it. 24 Set the carry flag. 25 2, int 21h ax equals 4425h. 2841 1 And, 3, the carry will be clear if it 2 is DR-DOS and set if it's PC-DOCS. 3 Cliff calls up DRI and identifies 4 himself as Roger Sour and requests the 5 information necessary to detect DR-DOS 6.0. 6 Five days later, on November 6, the 7 FTC contacts Microsoft about this DR-DOS 8 detection scheme. Doesn't slow Microsoft down. 9 And Cole's e-mail summary is evidence 10 that the mysterious Roger Sour is well-known 11 inside Microsoft, and certainly his information 12 is proven to be very useful to Microsoft. 13 It is the exact information that they 14 use to code incompatibility into Windows 3.1 so 15 that it will not load with DR-DOS. 16 And Bambi isn't the only technical 17 sabotage. Microsoft adds a gratuitous version 18 check to the Windows 3.1 setup program. And 19 that's the program that installs Windows files 20 on to the user's disk which makes it impossible 21 for Windows to install on a normal DR-DOS 22 system. 23 There isn't any purpose for this 24 version check. Although any user who uses -- 25 who tries to install Windows is warned that it 2842 1 is. 2 As to Bambi, it's clear that a 3 Microsoft programmer already fixed any 4 purported bugs. Remember I read you that. 5 But, instead, it is instructed to 6 detect the presence of DR-DOS and refuse to 7 run. 8 Bambi, when it ships, is called 9 SmartDrive, and it is sent to beta sites with 10 the detection code in place. And SmartDrive 11 displays a message that says fatal error. 12 It says, Invalid device driver 13 interface, unable to load. Importantly, this 14 version of SmartDrive would have worked with 15 DR-DOS but for Microsoft's decision to detect 16 DR-DOS and refuse to load. 17 Microsoft also introduces another bug 18 that causes a fatal error when users try to run 19 Windows 3.1 with DR-DOS. 20 The bug appears early in the beta 21 cycle and is included in the final release 22 version of Windows 3.1. 23 This fatal error message reads, fault 24 in MS-DOS Extender and prevents users from 25 installing Windows 3.1 over DR-DOS. 2843 1 This error results from Microsoft's 2 failure to clear what's called the nested task 3 flag. 4 It is essentially simply a simple 5 on/off switch, and the error results from -- 6 well, Microsoft knows about the problem, knows 7 how to fix it, and instead of fixing it like a 8 software business looking to do something other 9 than stop -- competitor would do, Microsoft 10 blames the problem on DR-DOS. And at the same 11 time prevents DR-DOS from fixing it because 12 DR-DOS is on the beta blacklist. 13 The problem could have been easily 14 cured if DRI had had the beta. What Microsoft 15 has done is used code in Windows 3.1 for one 16 purpose and one purpose only, to make sure it 17 would not run -- Windows 3.1 would not run on 18 its operating system competitor DR-DOS. 19 There is no legitimate reason to do 20 such a thing. And remember this, Microsoft is 21 harming its own customers. These are people 22 who want to buy Windows 3.1. Microsoft is 23 selling 3.1, Windows 3.1. 24 These are people who want to use 25 Microsoft's GUI product, but they want to use a 2844 1 different operating system. And Microsoft is 2 harming those people who want to use that 3 different operating system. 4 Whatever Microsoft might say to you 5 now, Microsoft tells you clearly in its own 6 documents that it did this sneaky thing to 7 destroy competition in the operating system 8 market. 9 We talked about FUD earlier. This is 10 FUD for DR-DOS 6.0. We talked about FUD for 11 DR-DOS 5.0. We've got new and better FUD for 12 6.0. 13 Bear in mind that in June of 1991, 14 Microsoft has received the NSTL report finding 15 that Windows 3.0 is perfectly compatible with 16 DR-DOS. 17 Plaintiffs' Exhibit 5306. 18 Nonetheless, Brad Chase, Microsoft's 19 general MS-DOS 6.0 general manager has all 20 along directed that purported Windows 21 incompatibilities be raised with OEMs 22 considering the possibility of buying, loading 23 DR-DOS. 24 In Plaintiffs' Exhibit 892 he says, 25 you need to be clear to them that DR-DOS and 2845 1 Windows will get them complaints. 2 In addition, they will get even more 3 questions later as we update -- as we update 4 MS-DOS 6 and Windows as DR-DOS could not be 5 compatible, i.e., we do not support DR-DOS with 6 Windows, don't test on it, et cetera. 7 And then in Exhibit 942. Also ask 8 them -- these are the OEMs -- if they really 9 want to risk their reputation on their 10 brand-new machines with a brand-new unproven, 11 poorly tested OS. 12 What if it doesn't work with the next 13 version of Windows? They could literally blow 14 their whole PC business. First impressions are 15 hard to overcome if they blow it. 16 Raising the specter of incompatibility 17 in order to FUD DR-DOS. 18 A few months earlier, a day after the 19 announcement of the merger, we have discussed 20 this blunt statement from high-level executive 21 Jim Allchin in Plaintiffs' Exhibit 948. We 22 need to slaughter Novell before they get 23 stronger. 24 On September 9th, Digital Research 25 announces the availability of DR-DOS 6.0, and 2846 1 Mr. Chase takes FUD to an even higher level. 2 He directs his marketing staff in 3 Plaintiffs' Exhibit 954 -- this is awfully 4 harsh to read. Issues to bring up -- this is 5 954. Issues to bring up if given the 6 appropriate opening. And he's talking about 7 OEMs. 8 Future DR-DOS incompatibility with 9 Windows. Key here is not to say we will 10 purposely present compatibility with DR-DOS, 11 but if given the chance, it is okay to say the 12 truth, that we only test Windows on Microsoft 13 supported operating systems. So there's really 14 no way to know in the future what will work and 15 what will not. 16 As he says, the latter part is the 17 key. Not knowing what will work. 18 But Microsoft has no way of knowing 19 either. Microsoft doesn't know whether or not 20 DR-DOS would be incompatible with the next 21 version of Windows. It isn't done at this 22 point. 23 Plus, Microsoft does test DR-DOS. 24 When DR-DOS 6.0 hits the market, Microsoft 25 obtains a copy of the product and asks its DOS 2847 1 testers to engage in what Microsoft calls a DR 2 Hammer Fest. 3 THE COURT: Ms. Conlin, I want to 4 interrupt for just a few minutes. Why don't we 5 take a ten-minute break to stretch your legs. 6 MS. CONLIN: All right, Your Honor. 7 THE COURT: Remember the admonition 8 previously given. Leave your notebooks here. 9 (A recess was taken from 10:11 a.m. 10 to 10:22 a.m.) 11 THE CLERK: All rise. 12 THE COURT: Thank you. 13 Ms. Conlin, I apologize for the 14 interruption. 15 MS. CONLIN: No problem, Your Honor. 16 Thank you very much. 17 We are talking about the DR Hammer 18 Fest, and that's what Microsoft called it. 19 What it was going to do with DR-DOS 6.0 20 immediately after it came out. 21 The Windows -- the test suite includes 22 a test of DR-DOS 6.0 on a Windows 3.0 beta. 23 They do these tests on September 19th 24 and 20th, and they report their findings. The 25 DR Hammer Fest findings on a form specifically 2848 1 that was developed for the purpose. Lots of 2 people are doing this, and there's a great big 3 bunch of stuff about this. 4 One of the questions that testers are 5 asked is anything you like about DR-DOS that we 6 should add to future MS-DOS versions? 7 And this is, I believe Tony A., Tony 8 A., and he says DRMEM program output looks 9 sharp. Layout is clearer and offers more info 10 than ours. DOSBOOK online help looks pretty 11 fancy and helpful. 12 DR SETUP lets user t