When Judge J. Frederick Motz ruled for Microsoft on its
motion for judgment as a matter of law the other day, tossing out Novell's antitrust case against Microsoft, he explained his reasons at length. One of them was that there was, he asserted, no evidence of any realistic middleware threat. However, here at Groklaw, we're continuing our project of trying to provide text versions of all the PDF exhibits from the Comes v. Microsoft antitrust litigation, and a volunteer posted an exhibit [PDF] he'd just transcribed, and as I was reading it to edit any mistakes, I started to say to myself, Hey, this contradicts the judge. My next thought was that maybe Novell never saw this exhibit. After all, one of the things that happened in this case was that neither party was able to easily find what the exhibits all were. There are thousands of them, and they were identifiable only by numbers, and numbers from other litigations. That's why we started on the project, to make them more easily searchable. But then I started to dig a little, and it turns out that Novell did offer the court this very exhibit. It's Exhibit PX 44 in this PDF collection of exhibits, attached as an exhibit to Novell's opposition to Microsoft's motion for judgment as a matter of law.
How, then, I wondered, could the judge say that there was no evidence of a middleware threat, when the 1993 email chain between Bill Gates, Brad Silverberg, and other executives at Microsoft discusses that very threat not only from Novell but from IBM, Lotus and others? Let me show you what I dug up and you can be the judge. But for me, this case is increasingly disturbing. Of course, there is an appeal to come, and hopefully the appeals court will notice what I'm noticing.
Jump To Comments
This will be fairly long because I need to show you long stretches of various documents, but there's no way to understand it without looking at a chunk of the reasoning behind the judge's ruling, so here we go, and I hope it's worth it. I'll set off the documents, so you can clearly focus on the connective threads.
At the center of all of it is the question of what is middleware? Microsoft had one definition and Novell another, and it will not surprise you to learn that this judge accepted Microsoft's definition in his order, basing it, he claims, on the Findings of Fact in the US v. Microsoft case. But let's see if he got it right.
Here's the section on middleware from Judge Motz's ruling: As described in section III, infra, according to Novell, this delay prevented WordPerfect and PerfectOffice from obtaining a sizeable share of the Windows 95-compatible word processing and suite markets. This, in turn, Novell argues, prevented Novell products from becoming successful "middleware," which could have been an effective competitor with Windows 95 in the operating systems market....
If Novell's products had been accepted in the market as middleware, ISVs would have begun to write programs using APIs exposed by the Novell applications, thereby reducing the barrier to entry into the PC operating systems market and threatening Microsoft's monopoly in that market. (Id. at 194-96).
Microsoft argues that this theory is unique and unprecedented because it is based upon conduct that occurred in one market, the software applications market, to assert a Sherman Act §2 claim in an entirely different market, the operating systems market. (See id. at 6). That alone, according to Microsoft, is fatal to Novell's claim. (Id.). Novell counters that although Microsoft, through Gates, was motivated by a desire to disadvantage Novell's applications in favor of Microsoft's own applications, its conduct was intentional, and a jury could appropriately find that its conduct had anticompetitive effects in the operating systems market. (Id. at 165-68). According to Novell, that is sufficient to establish a §2 violation.
I need not decide this issue because, even assuming Novell's argument is correct, its claim nevertheless fails for three separate and independent reasons: (1) Microsoft's conduct was not anticompetitive within the meaning of the Sherman Act; (2) Novell did not present sufficient evidence from which a jury could find that its products would have been successfully developed as middleware; and (3) there is no underlying business reality to the claims. Each of these reasons is examined in section V....
V.
I will now discuss the three reasons Microsoft's Rule 50 motion should be granted....
Novell's second argument is its middleware theory. For a middleware product to have an
impact on competition in the PC operating systems market, the product (1) must be cross-platformed to various operating systems; (2) must be ubiquitous on the "dominant operating
system"; and (3) must expose a sufficient number of APIs of its own to entice ISVs to write
applications to it rather than to the operating system on which it sits. (See Noll, Trial Tr. at
1923-26, Nov. 15, 2011; Finding of Fact §28). Novell's office productivity applications did not
meet any of these requirements.
As to the first requirement, assuming that within a reasonable period of time after 1995
effective operating systems would have come into existence to which Novell's office
productivity applications could have been written, there is no basis for inferring that Novell's
office productivity applications written for Windows 95 via the namespace extension APIs could
have been effectively ported to those systems. This is so because the namespace extension APIs
were, as Novell's own technical expert testified, "platform specific" to Windows. (Alepin, Trial
Tr. at 1482-83, 1532-33, Nov. 9-10, 2011; see Murphy, Trial Tr. at 4783-84, Dec. 7, 2011;
Bennett, Trial Tr. at 5023, Dec. 12, 2011 (stating that "namespace extension APIs . . . [were] a
unique component of Windows 95")).
As to the second requirement, although the parties agree that the dominant operating
system was Windows 95, they disagree as to the meaning of ubiquity. Microsoft contends it
means that Novell's software had to run on "all or nearly all PCs running the 'dominant
operating system.'" (Microsoft Mem. at 73-75; Microsoft Reply Supp. Rule 50 Mot. at 37-39,
ECF No. 503). Novell argues that "something less than that" might be sufficient "by weakening,
though not eliminating, the applications barrier to entry." (Novell Opp'n at 90 (quoting Noll,
Trial Tr. at 1926, Nov. 15, 2011)). Novell provided no evidence as to what this lesser threshold
might be.
In any event, under either definition of ubiquity, the evidence is clear that Novell's office
productivity applications would never have been ubiquitous on Windows 95. In 1995, prior to
the release of Windows 95, WordPerfect had roughly a 15% share of the Windows-compatible
word processing market, and PerfectOffice had less than a 5% share of the Windows-compatible
suite market.20(See Holley Decl. Supp. Microsoft Mem., Exs. G & K, ECF Nos. 495-7, 495-11). WordPerfect's share of the word processing market at the end of 1994 was substantially
greater--approximately 36%--if one includes the installed base of PCs using the DOS platform.
(See Pl.'s Ex. 599A at tbl. 13). However, 36% is only 36%, and it is entirely speculative to
assume, as Novell apparently does, that its applications would have increased to a substantially
greater number of computers using Windows if Microsoft had not withdrawn support for the
namespace extension APIs.21 This assumption is made even more speculative by the fact that an
internal Novell memorandum dated April 14, 1995, stated that "only 30% of th[e] WordPerfect
for DOS installed base is remaining with WordPerfect as they transition to a Windows word
processor." (Def.'s Ex. 224 at 20).
The parties also disagree about the meaning of the third requirement.
Microsoft argues that to constitute middleware, an application must "expose a sufficiently broad set of APIs to enable ISVs profitably to develop full-featured personal productivity applications that rely solely upon those APIs exposed by the middleware." (Microsoft Mem. at 70 (emphasis added)). Novell, on the other hand, relying upon the testimony of Roger Noll, its antitrust expert, and
Ronald Alepin, its technical expert, contends that the third element is satisfied if the application "expose[s] a wide range of APIs and sophisticated functionality to developers." (Novell Opp'n at 28). Novell concedes that if Microsoft's interpretation of the meaning of the third element is correct, Microsoft is entitled to judgment as a matter of law because Novell did not present evidence to show that its software exposed sufficient APIs of its own to allow ISVs to write full-featured personal products applications to it. (Trial Tr. at 5436-37, 5439, Dec. 15, 2011). Thus, on this issue, whether Microsoft is entitled to judgment in its favor on the Rule 50 motion turns on the meaning of the third requirement.
Microsoft's position is based upon the Findings of Fact made in the government case, upon which Novell's claim is founded. Judge Jackson found that "[c]urrently, no middleware product exposes enough APIs to allow independent software vendors ("ISVs") profitably to write full-featured personal productivity applications that rely solely on . . . APIs [of the middleware product itself]." Finding of Fact §28. In contrast, Novell argues the exposure of APIs that would result in "something less" than the writing of full-featured personal product applications is sufficient to constitute a threat to Microsoft's monopoly. (Novell Opp'n at 89-90). This argument is based on the concept, expressed by Noll, that diminishing, as opposed to nearly eliminating, the barrier to entry that protected Microsoft's monopoly in the PC operating systems market was itself sufficient. (Noll, Trial Tr. at 1926, Nov. 15, 2011). To the extent this testimony is based on the premise that other companies would produce similar middleware that, in combination with Novell's products, would diminish the barrier to entry, there is no evidence such other products existed. ... In light of these findings, it cannot be reasoned, as Novell argues, that Microsoft’s operating systems monopoly would have been threatened by a middleware product that exposed only a limited number of APIs that permitted ISVs to write only a specialized set of applications to it. The barrier to entry that Judge Jackson found in the government case was created by a “chicken-and-egg” problem, and that problem arose because ISVs would write only to programs that supported full-featured personal productivity applications. See Finding of Fact ¶ 30. In other words, contrary to what Novell argues in support of what Microsoft has aptly described as its “watered-down version” of the third requirement, Microsoft’s monopoly in the PC operating systems market was threatened not by a product that exposed only a limited number of its own APIs but only by a product that exposed sufficient APIs to entice full-featured applications to be written to it. (See Microsoft Mem. at 77–78). Otherwise stated, diminishment of the barrier to entry is not sufficient because mere diminishment would not have affected the PC operating systems market. In order to constitute a realistic threat to Microsoft’s monopoly in that market, elimination (or, at least, near elimination) of the barrier to entry through development of full-featured applications using APIs from middleware that ran on operating systems other than Windows was required. So to the judge, Novell couldn't compete as middleware anyway, because it didn't meet his/Microsoft's definition of the three elements middleware must have to "have an impact". This was based, in the judge's mind, on what Judge Thomas Pennfield Jackson wrote in his Findings of Fact from US v. Microsoft, which are binding in this case as well. Judge Motz references paragraphs 28 and 30, but he skips over paragraph 29, and I think that's a mistake. Let me fill it in for you:Middleware
28. Operating systems are not the only software programs that expose APIs to application developers. The Netscape Web browser and Sun Microsystems, Inc.'s Java class libraries are examples of non-operating system software that do likewise. Such software is often called "middleware" because it relies on the interfaces provided by the underlying operating system while simultaneously exposing its own APIs to developers. Currently no middleware product exposes enough APIs to allow independent software vendors ("ISVs") profitably to write full-featured personal productivity applications that rely solely on those APIs.
29. Even if middleware deployed enough APIs to support full-featured applications, it would not function on a computer without an operating system to perform tasks such as managing hardware resources and controlling peripheral devices. But to the extent the array of applications relying solely on middleware comes to satisfy all of a user's needs, the user will not care whether there exists a large number of other applications that are directly compatible with the underlying operating system. Thus, the growth of middleware-based applications could lower the costs to users of choosing a non-Intel-compatible PC operating system like the Mac OS. It remains to be seen, though, whether there will ever be a sustained stream of full-featured applications written solely to middleware APIs. In any event, it would take several years for middleware and the applications it supports to evolve from the status quo to a point at which the cost to the average consumer of choosing a non-Intel compatible PC operating system over an Intel-compatible one falls so low as to constrain the pricing of the latter systems.
30. Firms that do not currently produce Intel-compatible PC operating systems could do so. What is more, once a firm had written the necessary software code, it could produce millions of copies of its operating system at relatively low cost. The ability to meet a large demand is useless, however, if the demand for the product is small, and signs do not indicate large demand for a new Intel-compatible PC operating system. To the contrary, they indicate that the demand for a new Intel-compatible PC operating system would be severely constrained by an intractable "chicken-and-egg" problem: The overwhelming majority of consumers will only use a PC operating system for which there already exists a large and varied set of high- quality, full-featured applications, and for which it seems relatively certain that new types of applications and new versions of existing applications will continue to be marketed at pace with those written for other operating systems. Unfortunately for firms whose products do not fit that bill, the porting of applications from one operating system to another is a costly process. Consequently, software developers generally write applications first, and often exclusively, for the operating system that is already used by a dominant share of all PC users. Users do not want to invest in an operating system until it is clear that the system will support generations of applications that will meet their needs, and developers do not want to invest in writing or quickly porting applications for an operating system until it is clear that there will be a sizeable and stable market for it. What is more, consumers who already use one Intel-compatible PC operating system are even less likely than first-time buyers to choose a newcomer to the field, for switching to a new system would require these users to scrap the investment they have made in applications, training, and certain hardware. Do you see a difference between what Judge Motz wrote about the Findings of Fact and what they actually say? I do too.
Do you see the three requirements to qualify as middleware, for example? Any requirement for full-featured applications, or a requirement that all the APIs must be exposed? I don't either. In fact,
by Judge Motz's reasoning, the US DOJ's case against Microsoft was misguided and wrongly decided, because Netware and Java are definitely called middleware, according to what Judge Jackson said, and if there was no threat to Microsoft from middleware unless there were full-featured applications written to them, then they would not be middleware according to Judge Motz, who nevertheless claims he is basing his ruling on the Findings of Fact. By the way, the judge also referenced the testimony of Dr. Noll. You can read it for yourself, to test out how accurately the judge represented his testimony, in these transcripts:
The transcripts cover pages 1886 through 2001, so you can find each item the judge or Novell references by page number.
The judge accepted Microsoft's current position, but should he have? Does it even make any sense, after you read the Findings of Fact? And that brings us to the exhibit. Microsoft successfully persuaded the judge that their position in 2011 was correct. But this case is about events in the early to mid 1990's. Let's look at how it seemed to Microsoft back in 1993, and then I'll show you a transcript from the Novell v. Microsoft trial that you can use to see if what the judge wrote accurately depicts what Novell's position is. I think the order misrepresents Novell's position.
The exhibit, #1645, is an email thread between Bill Gates, Brad Silverberg, Paul Maritz and various underlings, dating from May of 1993, in which Silverberg expresses his fear that competitors would be able to do precisely what the judge wrote they could not do. Microsoft today scoffs as well, but let me show you what Mr. Silverberg himself said back in the relevant year of 1993, that competitors like IBM, Novell, Lotus, Borland and Sun could use the Windows APIs and then be "the provider of value added services" which would give them "more freedom to clone Windows". He wrote they already were seeing them doing this. They will, he warned, "split the windows standard" and take the Windows API as the standard "and then build their own middleware layers on top -- for networking, for object-oriented frameworks and system object models, for distributed computing, for compound documents,for messaging, for directory services, for administration, for database access, for document management, etc etc etc." With regard to Novell, he wrote that for Novell, that would make it easier to "position themselves as the supplier of connectivity services for windows to servers -- the 'middleware' which builds on windows and thus takes ownership away from us." That, of course, is exactly what the judge said wasn't a realistic threat, but it surely was to this Microsoft executive at the time, who called it "a clear threat".
Here's the exhibit showing the entire thread, as text, with the juicy bits highlighted:
PLAINTIFF'S EXHIBIT 1645
Comes v. Microsoft
From: Bill Gates
To: Brad Silverbergl Paul Maritz
Cc: Chris Peters; Jonathan Lazarus; Lewis
Levin; Mike Maples; Pete Higgins; Steve Balmer
Subject: RE: Os/2 status
Date: Tuesday, May 04, 1993 7:17PM
I totally agree with this - it describes the situation
very well.
I would add one point of great importance:
- keep delivering great applications that take full
advantage of Windows and make sure they are very
popular. This means doing a much much better job of
communication between Systems and Applications
on things like evolving the UI - I really hate hate hate
the incredible divergences in simple things like MDI
versus SDI, text selection models, tool bar handling and
icons,... Chicago will look great because our
Window applications are there in a big way. This means
being creative about ways these products help
each other. I want to see several ideas from systems about
they will do for this and from applications as
well. I want our chicago applications to lead the way
clearly just like our original Windows applications. As
it is right now I can barely keep things at all sane - we
dont share dialog management, UI ideas or enough
to keep ahead in applications. Microsoft can treat the
best Windows ISV very very well (Microsoft). I wish
the systems guys understood the importance of our
applications more and I wish Applications guys
understood the value of corrdinating with systems. We have
the basic principal of a release timed to be
right after Chicago - lets be smart about this both
technically and marketing wise. Ballmer even suggested
using more than a version number for chicago and then
allowing applications with certain features to be
labeled that way - so if Chicago is Windows FOO then this
new release of Word becomes FOO word or
Word for FOO or Word for FOO windows or Word for Windows
FOO.
From: Brad Silverberg
To: Paul Maritz
Cc: Bill Gates; Steve Ballmer
Subject: FW: Os/2 status
Date: Monday, May 03, 1993 6:22PM
what i see is that our competitors will try to turn
windows into the new
unix -- in a bad way. the unix that frankenberg
called the "bosnia
herzegovina of operating systems".
that is, they will "adopt" windows and then split the
windows standard.
they will take the win 3.1 level of api as the standard
and then build
their own middleware layers on top -- for networking, for
object-oriented
frameworks and system object models, for distributed
computing, for compound
documents, for messaging, for directory services, for
administration, for
database access, for document management, etc etc etc.
they hope to create mass confusion about exactly what the
windows api's are,
and take them out of microsoft's ownership. every time we
announce some
intention for a new wosa api or other extension to windows
api's, our
competitors will propose some alternative.
we are starting to see this from ibm, novell, lotus,
borland, and I'm sure
soon sun.
if they can freeze "windows" at 3.1 (or nt) level api,
then they can be the
provider of value added services. it gives them more
freedom to clone
windows -- the definition of "windows" is static. for
novell, it makes it
easier for them to slip dr dos underneath. it lets them
position themselves
as the supplier of connectivity services for windows to
servers - the
"middleware" which builds on windows and thus takes
ownership away from us.
this effort to balkanize windows is a clear threat and
requires that we:
- reduce the microsoft confusion caused by our various
win32 api sets.
- keep integrating our key api extensions directly into
the os. we need to
ensure that these extensions -- such as mapi and
ole2 -- are really of world
class quality.
- our evangelization efforts are critical.
- execute on building the best form of windows for the
base set which
everyone agrees is "standard". if we don't we will be
challenged much
harder in our ability to advance the standard.
- continue to support the pc company so that they sell
Microsoft Windows.
in general we have to be much more focused than we have in
terms of being
responsive to our oems.
From: Bill Gates
To: jonl; paulma
Cc: bradsi; jeffr; joachimk; johnni; mikemap; richta;
steveb
Subject: Os/2 status
Date: Friday, April 30, 1993 3:54PM
Who really tries to track what is going on with Os/2?
I am a little bit out of touch with what is going on. I do
run into a
measurable number of large accounts with measurable amount
of Os/2 -
banking and financial being most common but many other
types of
companies as well. However, I dont get a sense they are
adding
companies. I also don't know if we can get people to
switch.
I also dont get a sense they are picking up many random
power end users
either but this could be wrong.
Some data points to look at:
1. OEMS. We can ask OEMs how much they are selling. Dell,
Compaq and
others. I doubt it is much.
2. We can analyze the SPA data. I think if you take tools
out they are
still super small and not growing. This is
interesting.
3. We can look at retail seller lists and talk to dealers
and distributors.
4. We can talk to ISVs and get their attitude and
experience.
5. We can analyze the IBM bundling situation - how many
machines is
OS/2 going out on nowadays.
6. We can try and get a sense whether they still give the
product away.
7. We can get ones of these "workplace Os" presentations
they give and
try and analyze what they are really saying.
8.Someone should look over the survey that CAMP (chicago
business user
group) did that shows amazing numbers of Os/2 in lots of
their
accounts. Does this show accounts we didn't know about and
if so how
deep is that phenomena?
9. Is the situation for Os/2 different outside the US than
inside the US?
10. What revenue is PSP getting from DOS or other products
that allows
them to fund their future plans? Could we be more
agressive at avoiding
this.
To give them credit - they are still not humiliated - they
do win
awards - their ads are very direct which ours are not.
Os/2 2.1 will
ship very soon and is a solid product. Amazingly all the
improvements
focus on running Windows applications and it is somewhat
better than
Windows NT at this in certain respects.
However we should be able to communicate the following
points clearly:
API: This is a KEY KEY point. Os/2 started out as SAA and
the plan was
to attract lots of PM applications. People thought PM
might be more
popular than Windows are we would not be able to have the
best
applications. Today no one believes this will happen -
virtually
nothing is done on Os/2 first and less than 10% do their
applications
in a special version and even those who do often do
inferior versions
that cost more money (Lotus as an example). The
repositioning of Os/2
as a form of Windows puts it in a very different
position - it no
longer is an issue for ISVs or corporate developers - they
know to
develop to the Windows API. It does mean that Microsoft
has to deliver
the BEST form of Windows and this is healthy - we feel we
will be able
to do this very well so this is a great situation -
clarity for
developers about the high volume API they should focus on
(windows) - a
clear challenge to MS to keep Windows moving ahead so that
people buy
Windows itself rather than clones. I make this point
vividly when I
talk about WABI - I say this just shows thanGeven in SUNS
markets the
devlopers want to focus on the Windows API and they have
been forced
to come up with some support for it but we will announce a
better way
to run Windows API on UNIX. I wish a few slides could make
this point
clearly.
Grand strategy: When IBM had a grand strategy rather than
independent
businesses they could have their big sales force spend
time explaining
and supporting OS/2. Now they have moved into a new era
and this wont
work. We see this with their software groups providing
increasing
support for Windows. I wish I had a complete list of these
things on a
slide for everyone to use.[I also with I knew which
internal software
is still Os/2 only and what we should be doing to fight
this - we are
still super naive about IBM as an ISV. Mike Maples - do
you know
someone who could help us figure out who is who in
software development
at IBM nowadays so at least we have a chance to do good
evangelization?]
Bundling trojan horse: IBM PC hardware will deliver based
on customer
demand.
No future - I often dont make this point because so far I
am not very
good at it because I am confused about what they are
promising and it
comes across as rude which is in sharp contrast to the
other points I
make which seem very rational and business oriented. When
I am pushed I
do remind people it will be harder for them to keep up
with us because
they get no code and no user interface license from us and
they lose a
lot of money.
Action items:
1. Paul Maritz to pick someone to gather some of the
recent data about
what is going on with OS/2 and have special report sent to
Windows
focus squad. This is not urgent but I would like to see
something in
the next 45 days if possible. I would love to see included
in there
information about our transition plan for Os/2 customers.
My basic
attitude is to get some visible accounts to move over by
helping them
in any way that we can.
2. Jon Lazarus to make sure some group tries to capture
our besst Os/2
messages including the ones I give about into some slides
that can be
used in presentations or in material to brief the sales
force.
You can read more about the judge's reasoning by reading this transcript [PDF] from part of the last day of the trial. The jury was out deliberating by then, it's December 16, 2011, and the jury had sent a note to the judge, asking for clarification of what middleware was. Specifically, the question was, "Does 'PC operating systems' include
middleware that supports apps?" It set off a heated discussion between the judge and the lawyers on how the judge should explain middleware to the confused jury.
I'll show you the complete transcript, as text, at the end so you can see the full implications of the judge's ruling on how to define middleware so you can compare what the judge wrote, under Microsoft's urging, with the Brad Silverberg 1993 email. First, though, the judge referenced pages 5436-7 and 5439 in his ruling, stating that Novell had conceded on those pages of the transcript "that if Microsoft's interpretation of the meaning of the third element is correct, Microsoft is entitled to judgment as a matter of law because Novell did not present evidence to show that its software exposed sufficient APIs of its own to allow ISVs to write full-featured personal products applications to it."
But you can see from the part of the transcript the judge references that Novell didn't concede what the judge says it did, unless I'm missing something:
MR. JOHNSON: Your Honor, if I may, I think part of
the reason for the confusion is what you just said. Microsoft
has defined middleware in such a way that it is an operating
system. And that is why you get a question like we did
yesterday, is an operating system middleware? Because
Microsoft's definition takes it to the extreme, which is --
THE COURT: Yeah. But Microsoft's definition is
not and from my judgment relevant to your theory of the case,
which is -- I mean, Microsoft can define it any way it wants
for purposes of its dictionary. You have defined it in your
complaint, and you have a theory that somehow middleware, and
middleware makes sense in your theory only if it exposes some
degree of functionality which makes it a threat to operating
systems.
I don't care what Microsoft defines it as in its
dictionary. It doesn't matter. You've got a theory of the
case that got you beyond -- got you past limitations and got
you to the jury. And I just don't -- I don't care what
Microsoft's definition is.
MR. JOHNSON: Your Honor, I wasn't actually even
talking about Microsoft's definition in their dictionary at
all. I was talking about the definition they want you to
instruct the jury on, the definition that they want you to
instruct the jury on, which would be directing a verdict, by
the way, and that's what it would be here --
5436
THE COURT: No, it wouldn't. You still have your
franchise theory.
MR. JOHNSON: It would be directing a verdict on
that portion of our theory.
THE COURT: I agree with that. Maybe so, maybe
not. That's why I've got to be careful what I say. But they
want me to direct a verdict.
MR. JOHNSON: Of course. Of course. And that's
understandable given that we have no verdict, and they would
like you to, frankly, tip the scale. I don't think that would
be appropriate. Your Honor made this judgment carefully
sometime ago after this argument was had for about the fifth
or --
THE COURT: I understand.
MR. JOHNSON: -- fifth or sixth time. And Your
Honor made a reason of judgment. And I don't think that it
would be appropriate for you to change that judgment now.
I will point out that Mr. Alepin did not agree with
their definition. I read from his testimony at Page 1396.
Question. You're familiar with the term
middleware?
Answer. Yes, I am.
Question. The first bullet point there, software
that runs on top of an operating system and exposes APIs that
encapsulates meaningful functionality. Is that the sort of
5437
definition of middleware that you're comfortable with?
Answer. Yes.
So middleware does expose APIs. It does contain
meaningful functionality. But that does not mean, Your Honor,
that it's capable of being an operating system in running --
that you're able to create whatever their term they want to
use, full-service Office productivity applications on it.
That's a different thing. If middleware got to that goal,
achieved that goal, it would, in fact, destroy the application
barrier to entry, and there would be wide open competition.
But, of course, this case is not about that. If we
had to destroy the applications barrier to entry in order to
win, we could not be here today. What we have is --
THE COURT: Yes, you could. But that's a whole
different question. You could have said -- in a but for world
you could have had a technical expert who would have said that
it would have existed in which you didn't produce, that but
for Microsoft's conduct, the applications to the barrier to
entry would have been effectively destroyed. So you could
have, but you didn't.
MR. JOHNSON: What we had, though, Your Honor, was
an expert that came in and said, as applications are written
to the middleware either partially, whether it's 60 percent or
40 percent or whatever it is, that that therefore reduces
porting costs to other operating systems and therefore reduces
5438
the applications barrier to entry. And that's what Dr. Noll
testified to in this case. And again, Your Honor, this is all
a --
THE COURT: Actually it's apropos of nothing. It
seems to me that one of your experts, I think it was Noll but
it could have been Alepin, actually in his -- it's not in
evidence, but in his demonstration did have it destroyed. I
remember him showing the wall all the way knocked down.
MR. TULCHIN: He did.
MR. JOHNSON: Your Honor, the visual that you saw
showed the wall down. But the testimony of Professor Noll was
not to that effect. Clearly, Your Honor, we have two
positions with respect to the impact of middleware. Microsoft
is defining middleware in such a way that it is an operating
system which engenders frankly the confusion the jury feels
because they're saying --
THE COURT: The jury -- the fact of the matter is
the jury is just confused. I mean, I'm not sure that I
shouldn't revisit my decision because I was basing upon the
fact that the jury would have its head on straight. But it
doesn't, obviously doesn't have its head on straight.
MR. JOHNSON: Your Honor, if I could, if I may,
just to end this. As we said at the time, Your Honor would be
directing a verdict on that issue.
THE COURT: That's true.
5439 I included page 5438 for clarity, which the judge skipped. Do you see Novell conceding that Microsoft would be entitled to judgement as a matter of law if its definition was correct? If so, point it out, because I don't see it. What I do see is a judge who doesn't know what middleware is and who therefore ignored what Novell wrote in its opposition to Microsoft's motion:In its 2007 decision, the Fourth Circuit noted that Novell's
"claims echo the government's theory" in the Government Case.
Novell, Inc. v. Microsoft Corp., 505 F.3d 302, 309 (4th Cir.
2007). This Court also has correctly observed that Microsoft's
conduct to thwart Novell's office productivity applications was not
significantly different from Microsoft's efforts to thwart
Netscape's Navigator web browser and Sun's Java technologies.
Novell introduced and proffered substantial evidence to show that
all of Microsoft's conduct was part of a common plan.
Even if one looks only at the conduct "directed at" Novell, a
rational juror could conclude that Novell made a prima facie
showing that Microsoft's exclusion of Novell's office productivity
applications strengthened and extended the applications barrier to
entry. As explained in the Government Case and in trial testimony,
the applications barrier to entry protected Microsoft's monopoly
power and prevented potential operating systems from entering the
market. "Key franchise" applications and middleware such as
WordPerfect, however, could reduce the barrier and help enable
consumers to consider non-Windows operating systems. By thwarting
the development and distribution of Novell's office productivity
applications (and related middleware, e.g., PerfectFit, AppWare,
and OpenDoc), Microsoft maintained and extended that barrier to
entry.
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Microsoft incorrectly argues that Novell must show that its
office productivity applications would have completely eradicated
the applications barrier to entry or would have single-handedly
"induced users to move to operating systems other than Windows."
Microsoft Mem. at 82. Microsoft is wrong in two respects. First, as
a matter of law, conduct that helps maintain an entry barrier harms
competition and is capable of "contributing" to monopoly power.
Second, as the D.C. Circuit ruled, "neither plaintiffs nor the
court can confidently reconstruct a product's hypothetical
technological development in a world absent the defendant's
exclusionary conduct" and requiring such proof would only encourage
monopolists to take "more and earlier anticompetitive action."
Microsoft, 253 F.3d at 79. Tenth Circuit law is in accord.
Microsoft may mock the D.C. Circuit's "edentulous" causation test,
but it makes perfect sense not to immunize a monopolist from
liability for conduct targeting "nascent" threats, if the
monopolist cannot justify that conduct as pro-competitive. At that
point, the monopolist bears the uncertain consequences of its own
conduct.
Microsoft's myopic argument that its conduct could not have
harmed competition — because Windows 95's market share would
have increased "but for" the de-documentation of the namespace
extension APIs — is actually a critical concession that
Microsoft sacrificed short-run profits for a long-term gain,
consistent with its pattern of engaging in conduct that it could
not justify on any ground other than it "operated to reinforce
[its] monopoly power." United States v. Microsoft Corp., 84
F. Supp. 2d 9, 28 at ¶ 67 (D.D.C. 1999) [hereinafter
"Finding(s) of Fact"]. Antitrust law assumes that when monopolists
forgo short-term profits, they do so only in exchange for an
offsetting benefit; otherwise, their conduct would be economically
irrational. Here, the evidence at trial showed that Microsoft
planned to offset its short-term losses with ownership of the key
franchise applications and elimination of the middleware threats,
all with
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the effect of artificially maintaining and increasing barriers
to entry in the PC operating systems market, and without any
legitimate pro-competitive justification.
Microsoft's inability to establish a legitimate pro-competitive
justification is highly significant because it proves that
Microsoft was not competing on the merits. It was not trying to
design a better product or increase output. To the contrary, former
Microsoft President and CEO Bill Gates admitted that he acted to
deter innovation solely because Microsoft was not ready to compete
on the merits with Novell. The evidence exposed Microsoft's
"justifications" as pretextual. At best, Microsoft's proffered
justifications create a question of fact unsuitable for a Rule 50
motion.
Part III (Causation And Damages): Novell had every
right to rely on Microsoft's commitment to document and support the
namespace extension APIs. Novell reasonably based its development
plans on Microsoft's commitment given the long history of
cooperation between the two parties, and there was ample evidence
that Novell would have released its Windows 95 applications within
90 days of the release of Windows 95 had Microsoft not decided to
break its commitment. Mr. Gates' decision to renege on Microsoft's
commitment (without any nonpretextual, pro-competitive
justification) left Novell with no practical ability to release a
marketable product within the critical 90-day window of opportunity
for new applications. Microsoft's claim that Novell is responsible
for those delays rests entirely on disputed facts.
Microsoft's assertion of a black letter rule that a plaintiff
must either be a consumer or a competitor to have antitrust
standing relies on a misreading of a single case and ignores Tenth
Circuit and Supreme Court precedent. Microsoft's claim that Novell
failed to cite a case in which a private antitrust plaintiff
obtained a money judgment based on a "cross-market" theory of
anticompetitive harm is equally unavailing. The Government Case was
a "cross-market" case
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and there is no reason to reject that decision simply because
the United States sought equitable relief. Moreover, Novell has
repeatedly cited Reazin v. Blue Cross & Blue Shield of
Kansas, Inc., 899 F.2d 951 (10th Cir. 1990), a Tenth Circuit
case in which a hospital obtained a money judgment for an antitrust
claim against Blue Cross. The evidence showed that Blue Cross
viewed the hospital's affiliation with a health maintenance
organization as a potential threat to its monopoly in the private
healthcare financing market. The Tenth Circuit specifically
affirmed the hospital's standing even though the hospital did not
compete in the market for private healthcare financing. Id.
at 962-63.
If the jury finds that Microsoft engaged in anticompetitive
conduct that proximately caused antitrust injury to Novell, it will
have established Novell's right to recover damages. Courts accept a
degree of uncertainty in fixing the amount of damages and will not
reject them so long as the calculation is not based on
"'speculation or guesswork.'" Law v. NCAA, 5 F. Supp. 2d
921, 929 (D. Kan. 1998) (citations omitted). Thus, the question of
damages should not be determined in a Rule 50(b) motion. In any
event, Novell's damages expert properly calculated damages under
several different theories and provided the jury with a reasonable
basis to determine Novell's damages.
Part IV (Under Aspen Skiing, Judgment As A Matter Of Law
Would Be Improper): Although Novell's case is not a
unilateral-refusal-to-deal case that would be governed by
Verizon Communications, Inc. v. Law Offices of Curtis V. Trinko,
LLP, 540 U.S. 398 (2004), and Aspen Skiing Co. v. Aspen
Highlands Skiing Corp., 472 U.S. 585 (1985), applying the
Aspen Skiing framework reaches the same result — that
Microsoft's conduct harmed competition and Novell — through a
very similar analysis. Microsoft's long-standing course of dealing
with Novell/WordPerfect, and its commitment to provide the
namespace extension APIs, demonstrate
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that Microsoft's course of dealing was profitable and therefore
pro-competitive. Microsoft's admission that it lost customers by
reneging on its commitment is more than sufficient to establish a
prima facie case of harm to competition and shift to
Microsoft the burden of establishing a pro-competitive,
non-pretextual justification for its conduct. The
unilateral-refusal-to-deal cases relied on by Microsoft all involve
situations in which the monopolist increased its
short-term profits and the monopolist's conduct was therefore
rational quite apart from any potential effect on preserving
monopoly power.
Part V (Novell's Claim Is Properly Before The
Court): Microsoft waived many of the issues it now seeks to
raise by failing to raise them in its Rule 50(a) motion.
Specifically, Microsoft has waived its arguments that (1) Novell
sold its claim to Caldera in the Asset Purchase Agreement, (2)
Novell's claim is barred by the NetWare Settlement Agreement, and
(3) Novell's claim is barred by the statute of limitations.
Furthermore, even if Microsoft had not waived these issues, each
has already been definitively ruled on by the Fourth Circuit, and
therefore Microsoft's arguments are barred by the law of the case
doctrine. Microsoft has not shown, nor can it show, any exceptional
circumstances that would require the Fourth Circuit's rulings on
any of these issues to be revisited.
In any event, even assuming that Microsoft had not waived these
issues and that the law of the case doctrine did not apply here,
Microsoft's arguments still should be rejected because they are
substantively meritless. First, Novell did not, through the Asset
Purchase Agreement, sell its claim to Caldera. Microsoft's argument
hinges on the same mistaken interpretation of "association" that
the Fourth Circuit found lacked logical limiting principles. More
to the point, a mere utterance of the term "DOS" during the trial
— in reference to WordPerfect's installed base — does
not create an association to the products explicitly identified as
the subject of
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Novell's Asset Purchase Agreement with Caldera. Second, the
NetWare Settlement Agreement does not bar Novell's claim. That
agreement expressly preserved Novell's right to introduce any and
all factual evidence in support of its claims, which is exactly
what Novell has done. The evidence adduced at trial supports the
claim stated in Novell's Complaint and therefore Microsoft's
argument that Novell's claim was released under the NetWare
Settlement Agreement is without merit. Finally, the statute of
limitations does not bar Novell's claim. Microsoft's argument on
this issue suffers from two fundamental flaws: first, Microsoft
mischaracterizes the arguments made by Novell's counsel during
trial, and second, Microsoft continues to misinterpret the findings
in the Government Case. The portions of statements of Novell's
counsel relied on by Microsoft are taken out of context and do not
support Microsoft's statute of limitations argument. Moreover,
Novell's middleware and key franchise applications theories are
perfectly consistent with the findings in the Government Case.
PROCEDURAL HISTORY
I. NOVELL'S COMPLAINT
On November 12, 2004, Novell filed a Complaint alleging in Count
I that Microsoft unlawfully maintained its monopoly in the PC
operating systems market through anticompetitive conduct targeting
Novell's office productivity applications. Compl. ¶¶
151-155.2
More specifically, the Complaint alleges that Microsoft viewed
Novell's office productivity applications, including WordPerfect
and Quattro Pro, as a threat to Microsoft's PC operating systems
monopoly power in two ways. First, Novell's office productivity
applications contained
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and acted as "middleware," a category of software that
threatened Microsoft's monopoly power, as shown in the Government
Case. Compl. ¶¶ 43-51; Microsoft, 253 F.3d at
53-54. Second, Novell's office productivity applications, as
popular and important cross-platform applications available on
operating systems other than Windows, could have helped reduce the
applications barrier to entry protecting Microsoft's monopoly
power. Compl. ¶ 52; Microsoft, 253 F.3d at 55.
The Complaint outlines the Government Case against Microsoft in
detail, noting that "Microsoft's Windows monopoly was threatened by
'middleware' such as Netscape Navigator . . . and Sun Microsystems'
implementation of the 'Java' technologies." Compl. ¶ 44. It
also reiterates the courts' determination that "Microsoft engaged
in anticompetitive conduct designed to exclude such middleware from
installation on PCs using the dominant Windows operating system, on
which any middleware would depend for survival until sufficient
competing operating systems could emerge" and that Microsoft was
found to have "violated Section 2 of the Sherman Act 'by preventing
the effective distribution and use of products that might threaten
[its] monopoly'" in a dozen ways. Id. (quoting
Microsoft, 253 F.3d at 58).
The Complaint goes on to state that "[f]or related reasons,
Novell's WordPerfect and other office productivity applications
posed a significant threat to the applications barrier to entry
that protected the Windows monopoly." Compl. ¶ 45.
Specifically, the Complaint notes that Novell developed a "strategy
to provide cross-platform functionality to applications (including
its office productivity applications)," using cross-platform
middleware technologies such as "OpenDoc" and "AppWare." Compl.
¶¶ 47, 51. The Complaint describes Novell's strategy of
combining WordPerfect, AppWare, and OpenDoc as being nearly
identical to Netscape's and Sun's strategy of coupling Navigator
and Java to form a middleware platform with the potential to erode
the applications barrier to entry protecting Microsoft's PC
operating systems
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dominance. Compl. ¶¶ 47, 48, 51. "Like the
Netscape-Java combination, the combination of WordPerfect, a
popular application, with the system-neutral OpenDoc-protocol and
AppWare development environment, threatened Microsoft's operating
systems monopoly." Compl. ¶ 51.
II. MICROSOFT'S MOTION TO DISMISS
In January 2005, Microsoft moved to dismiss Novell's Complaint.
On Count I, Microsoft argued that Novell had sold its claim when it
transferred its DR-DOS (a PC operating system) business to Caldera.
Microsoft also argued that Novell lacked antitrust standing to
bring Count I because Novell was neither a competitor nor a
consumer in the PC operating systems market.3
On June 10, 2005, the Court held that Novell continued to own
the claim set forth in Count I because that claim is for damage to
Novell's applications software rather than to DR-DOS, and it would
be a "far stretch" to infer otherwise. Novell, Inc. v. Microsoft
Corp. (In re Microsoft Corp. Antitrust Litig.), No.
1:05-cv-01087, 2005 WL 1398643, at *1 (D. Md. June 10, 2005),
aff'd, 505 F.3d 302 (4th Cir. 2007). The Court also
confirmed that Novell had antitrust standing to bring Count I, as
the law does not require a plaintiff to be a competitor or a
consumer in the relevant market.4 Id. at *2-3.
At Microsoft's request, the Court certified this case for
interlocutory appeal. The Fourth Circuit granted Microsoft's appeal
request only as to the issue of standing.5 See Fourth Circuit Order
(Jan. 31, 2006) (attached as Ex. A). The Fourth Circuit affirmed
the District Court and remanded the case for further proceedings.
Novell, 505 F.3d at 305.
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III. SUMMARY JUDGMENT PROCEEDINGS
On remand, the parties undertook a lengthy discovery process
that included dozens of depositions and the exchange of millions of
pages of documents. Fact discovery closed in the spring of 2009 and
was immediately followed by expert discovery. The parties submitted
nine expert reports, and experts were deposed in August and
September 2009.
After the close of expert discovery, the parties briefed motions
for summary judgment. Novell renewed an earlier motion for summary
judgment on certain Microsoft affirmative defenses based on
Microsoft's allegation that Novell had sold its Count I claim to
Caldera. See Novell Mem. in Supp. of Renewed Mot. for Summ.
J. at 1 (Oct. 7, 2009) (D. Md. Dkt. # 102-1). Novell argued,
relying on the Court's earlier ruling, that nothing in its
transaction with Caldera regarding DR-DOS transferred claims
related to the office productivity applications. Id.
Microsoft opposed Novell's motion and cross-moved for summary
judgment, arguing that Novell had sold the claim set forth in Count
I to Caldera. See Microsoft Mem. in Opp'n to Novell's
Renewed Mot. for Summ. J. & in Supp. of Microsoft's Cross-Mot.
for Summ. J. at 1-2 (Nov. 13, 2009) (D. Md. Dkt. # 104-2).
Microsoft also moved for summary judgment on the merits, arguing
that no genuine issues of material fact existed and that Microsoft
was entitled to a judgment in its favor as a matter of law.
See Microsoft Mem. in Supp. of Mot. for Summ. J. (Oct. 7,
2009) ("Microsoft Summ. J. Mem.") (D. Md. Dkt. # 101-2). In
particular, Microsoft argued that Novell could not substantiate a
Section 2 claim because Novell's allegations fell outside of the
construct set forth in Aspen Skiing, and instead more
closely resembled the allegations deemed insufficient in
Trinko. See Microsoft Summ. J. Mem. at 29-35.
Microsoft also contended that Novell could not
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provide facts sufficient for a jury to conclude that Microsoft's
conduct harmed competition in the PC operating systems market.
Id. at 23-29.
In March 2010, the Court entered summary judgment against Novell
on Count I, holding that Novell had sold any claims associated with
the PC operating systems market in its transaction with Caldera for
DR-DOS. Novell, Inc. v. Microsoft Corp. (In re Microsoft Corp.
Antitrust Litig.), 699 F. Supp. 2d 730, 735 (D. Md. 2010),
rev'd in part, 429 F. App'x 254 (4th Cir. 2011). The Court
also held, however, that but for the sale-of-claims issue, Count I
set forth a triable claim that could not be resolved as a matter of
law.6
Id.
In holding that Count I presented a triable claim that could not
be resolved as a matter of law, the Court noted that Novell's
allegations of anticompetitive conduct go beyond a mere refusal to
cooperate that would be barred by Trinko because "Novell has
presented evidence that Microsoft affirmatively misled Novell about
Windows 95." Id. at 746. Moreover, the Court held, even
assuming Microsoft's conduct could properly be characterized as a
refusal to cooperate, "there is a question of fact about whether it
was anticompetitive under Aspen and Trinko."
Id. The Court also held Novell had presented evidence of
Microsoft's "predatory motives" and a fair inference could be drawn
that Microsoft "'sacrifice[d] short-run benefits and consumer
goodwill in exchange for a perceived long-run [anticompetitive
impact].'" Id. (second brackets in original) (citation
omitted).
The Court also found that Novell had raised a genuine issue of
fact as to whether Microsoft's conduct "directed at" Novell
significantly contributed to harming the PC operating systems
market. Id. at 749. Specifically, the Court stated:
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Novell has no obligation to create some "hypothetical market
place," in which none of the other ISVs or applications had been
weakened by anticompetitive conduct, and then prove that the
conduct at issue would still have significantly contributed to
anticompetitive harm in that hypothetical market. It would be
contrary to the purpose of § 2 to immunize a monopolist for
anticompetitive conduct, which in fact significantly contributed to
anticompetitive harm, simply because that harm was caused by
conduct directed at multiple small threats, none of which could
prove that the conduct directed at any single firm would have by
itself significantly contributed to the defendant's monopoly if
none of the other small firms had been similarly weakened. . . .
Rather, Novell need only prove that the conduct that harmed its
software applications contributed significantly to Microsoft's
monopoly in the PC operating system market considering all the
characteristics of that market at the time, including the condition
of other ISVs and applications.
Id. at 749-50 (citations omitted).
Novell appealed, arguing that it did not sell the claim set
forth in Count I to Caldera. See Novell Appellant Br. at 2-3
(Sept. 7, 2010) (relevant portions attached as Ex. B). In
opposition, Microsoft argued that the Court's judgment should be
affirmed on the same grounds on which it had been decided, or on
the alternative grounds that Count I was barred by res judicata and
that Novell could not prove as a matter of law that Microsoft's
conduct harmed competition in the PC operating systems market.
See Microsoft Appellee Br. at 1-3 (Sept. 17, 2010) (relevant
portions attached as Ex. C).
The Fourth Circuit reversed this Court's ruling regarding the
sale-of-claims issue and remanded for further proceedings, holding
that Novell did not sell the claim set forth in Count I.
Novell, 429 F. App'x at 255. Additionally, the Fourth
Circuit found that Microsoft's res judicata argument was meritless
and rejected Microsoft's arguments that it was entitled to judgment
as a matter of law on the ground that Novell could not prove harm
to competition in the PC operating systems market, finding that
Novell's Count I claim was "appropriate for trial." Id. at
261-63.
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IV. COLLATERAL ESTOPPEL EFFECT OF THE GOVERNMENT CASE
In the Government Case, the United States alleged that Microsoft
had violated both federal and state antitrust laws by engaging in
anticompetitive conduct to protect its monopoly power in the PC
operating systems market. See Microsoft, 253 F.3d at 47.
After a bench trial, Judge Thomas Penfield Jackson issued 412
Findings of Fact. See Microsoft, 84 F. Supp. 2d 9. Based on
those Findings of Fact, Judge Jackson issued Conclusions of Law
holding that Microsoft (1) illegally maintained its monopoly in the
PC operating systems market, (2) unlawfully attempted to monopolize
the web browser market, and (3) entered into an illegal tying
arrangement by bundling Internet Explorer with Windows. See
United States v. Microsoft Corp., 87 F. Supp. 2d 30, 35-56
(D.D.C. 2000), aff'd in relevant part and rev'd in part, 253
F.3d 34 (D.C. Cir. 2001). As a remedy for this conduct, Judge
Jackson ordered that Microsoft be separated into two companies, one
with responsibility for the operating systems business and the
second with responsibility for the applications business.
Microsoft, 253 F.3d at 45 (citing United States v.
Microsoft Corp., 97 F. Supp. 2d 59, 64-65 (D.D.C. 2000)).
Microsoft appealed Judge Jackson's decision and the United
States Court of Appeals for the District of Columbia Circuit
affirmed Judge Jackson's determination that Microsoft had illegally
maintained its monopoly in the PC operating systems market through
twelve types of anticompetitive conduct. See id. at 51,
58-80. The D.C. Circuit, however, reversed Judge Jackson's ruling
with respect to the tying and attempted monopolization claims, as
well as eight other types of conduct he had determined were
anticompetitive. See id. at 46, 64-97. In addition, the D.C.
Circuit reversed Judge Jackson's order of divestiture, in part
because the Government needed to prove more than just liability to
justify such a drastic remedy — it had to prove a clearer
indication of a significant causal connection between the
anticompetitive conduct
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and maintenance of monopoly power. Id. at 80, 106-07.
Nevertheless, the D.C. Circuit did not set aside any of Judge
Jackson's Findings of Fact, as Microsoft had requested. See
id. at 116. Some of those Findings of Fact have collateral
estoppel effect in this case. See, e.g., Holley Aff., Ex. B
to Microsoft Mem. (Dkt. # 495-3). ...
D. Novell's Office Productivity Applications And Suite Were
"Middleware" With
The Potential To Weaken The Applications Barrier To Entry
WordPerfect and its shared code "PerfectFit," as well as AppWare
and OpenDoc in the PerfectOffice suite, were "middleware" because
they relied on interfaces provided by the underlying Windows
operating system while simultaneously exposing their own APIs to
developers. See Finding of Fact ¶ 28. Novell's office
productivity applications and shared code technologies were
popular, were cross-platform, and exposed a wide range of APIs and
sophisticated functionality to developers.
1. Middleware Could Reduce the Applications Barrier to
Entry
Microsoft argues that Novell has failed to establish that
"WordPerfect, AppWare, OpenDoc and PerfectFit" or "some combination
of them" were middleware that could have affected competition in
the PC operating systems market. Microsoft Mem. at 6. Microsoft's
definition of middleware, however, rests on a deeply flawed
interpretation of the opinions in the Government Case and of Dr.
Noll's testimony in this case.
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The Government sued Microsoft under the theory that middleware
could reduce the "chicken-and-egg problem," Finding of Fact ¶
39, by taking over some of the platform functionality provided by
Windows and thereby "weaken the applications barrier to entry."
Finding of Fact ¶ 68. Judge Jackson defined "middleware" as
software that "relies on the interfaces provided by the underlying
operating system while simultaneously exposing its own APIs to
developers." Finding of Fact ¶ 28. The D.C. Circuit agreed,
writing that middleware simply refers to "software products that
expose their own APIs." Microsoft, 253 F.3d at 53 (citing
Finding of Fact ¶ 28).
The Government focused its attention on two specific types of
middleware software: Netscape's Navigator and Sun's Java
technologies. Id. Judge Jackson and the D.C. Circuit found
that both Navigator and Java were middleware
products. Id. (citing Finding of Fact ¶ 28). In fact,
Microsoft's counsel admitted that Navigator posed a potential
threat to Windows before the D.C. Circuit. Id. at 79.
Judge Jackson found that Navigator had three attributes that
gave it "the potential to diminish the applications barrier to
entry." Finding of Fact ¶ 69. First, the Navigator browser was
a complement to Windows and had the potential to gain widespread
use. Id. Complementing Windows thus makes a middleware
product more likely, not less likely, to diminish the
applications barrier to entry. Cf. Microsoft Mem. at 87-90.
Second, Navigator exposed "a set (albeit a limited one) of APIs"
which provided platform capabilities. Finding of Fact ¶ 69.
Third, Navigator was cross-platform. Id. Similarly, the Java
technology exposed its own APIs and had the potential to reduce
porting costs. See Findings of Fact ¶¶ 68, 77.
Although a potential threat, neither Navigator nor Java exposed
enough APIs to support the development of "full-featured
applications that will run well on multiple operating systems
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without the need for porting." Finding of Fact ¶ 74. In
fact, both products were at least "several years" away from
evolving into a real threat to the applications barrier to entry,
if at all. Findings of Fact ¶¶ 28, 29.
Novell's software had all of the characteristics of middleware.
Like Navigator and Java, Novell's office productivity applications
would complement Windows. See Tr. 265:25-267:8, 268:1-270:25
(Harral); Tr. 638:7-12 (Richardson); Tr. 1227:1-6, 1227:15-18
(Frankenberg); Tr. 1664:23-1665:11, 1666:4-1667:23 (Alepin).
Novell's office productivity applications were also very popular
and had the potential to gain widespread use on Windows 95 due to
WordPerfect's existing installed base. See, e.g., PX 378; PX
412; PX 599A; Tr. 830:22-23, 831:9-11 (Gibb) (describing
WordPerfect as "very popular" and agreeing that WordPerfect had a
"big loyal base of customers"); PX 414 at NOV-B00668860 (noting
that with PerfectFit, developers could develop programs for more
than 18 million people who use WordPerfect and other products in
the PerfectOffice suite); Tr. 1009:6-1010:18, 1011:4-20
(Frankenberg) (explaining that Novell had a large opportunity to
gain market share in suites given its installed base of millions of
users); see also discussion supra Facts Part
I.A-B.
Further, Novell's office productivity applications, and the
PerfectFit and AppWare technology integrated and bundled with them,
exposed a large set of APIs to software developers. See,
e.g., PX 371 at 6-8 (indicating PerfectFit Shared Code 2.3 had
1555 APIs, with more to be added in PerfectFit 95); PX 368 at 15-17
(same); PX 191 at FL AG 0099045-47; Tr. 1405:4-1406:16,
1408:8-1409:10, 1410:8-14 (Alepin). In addition, WordPerfect and
PerfectFit were cross-platform on a variety of operating systems,
and Novell planned to make PerfectOffice for Windows 95
cross-platform as well. Finally, Novell's AppWare and OpenDoc
technologies, when integrated and bundled with Novell's office
productivity applications,
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allowed developers to create their own cross-platform software
applications. See, e.g., PX 410 at NOV-B00656847, 54-56; PX
90 at MS-PCA 2410390; PX 412 at NOV 00498197, NOV 00498202-03; Tr.
1013:19-1015:11, 1016:9-1017:19 (Frankenberg); Tr. 1408:8-1409:10
(Alepin). In fact, unlike Navigator and Java, AppWare allowed for
the development of fully portable stand-alone programs. See
infra Facts Part I.D.3. Even if developers only partially
relied on the APIs exposed by Novell's office productivity
applications, these middleware technologies, either alone or in
combination with AppWare and OpenDoc, would reduce porting costs
and lessen the applications barrier to entry. See, e.g.,
Finding of Fact ¶ 74 (even partial reliance on Java APIs
reduces porting costs and encourages cross-platform applications
development).
2. Microsoft Reasonably Feared Novell as a Middleware
Vendor
There is substantial contemporaneous evidence in the record that
Microsoft viewed Novell's middleware technologies as a potential
threat to its continued monopoly power in the PC operating systems
market.
According to Microsoft, Novell was well positioned to threaten
the Windows monopoly even before Novell acquired WordPerfect
because "they have an installed base; they have a[] channel; they
have marketing power, they have good products. AND they want our
position. They want to control the APIs, middleware, and as many
desktops as they can in addition to the server market they already
own." PX 32 at MS7079459. Microsoft considered Novell "THE
competitor to fight against" because, in the words of senior
Microsoft executive Jim Allchin, "[t]hese guys are really good."
Id.
Novell was "dangerous not only because of [its NetWare product]
but because they are intent on becoming a 'CROSS-PLATFORM' PLATFORM
company." PX 33 at MS 5011635.
(46)
In contrast, Microsoft did not have sufficient "ability to
differentiate its applications from the competition" and did not
"have credible products to counter Notes and Novell." Id. at
MS 5011640. In Microsoft's view, Novell's "strong cross-platform
API push" was an "insidious" and ever-present threat to Microsoft's
continued dominance, see id. at MS 5011648, and Microsoft
executives continually voiced their fears that competitors would
use middleware products to undercut Windows:
What I see is that our competitors will try to turn windows into
the new unix — in a bad way. [T]he unix that Frankenberg
called the "[B]osnia [H]erzegovina of operating systems." [T]hat
is, they will "adopt" windows and then split the windows standard.
[T]hey will take the win 3.1 level of api as the standard and then
build their own middleware layers on top . . . . [T]hey hope to
create mass confusion about exactly what the windows api's are, and
take them out of microsoft's ownership. . . . If they can freeze
"windows" at 3.1 (or nt) level api, then they can be the provider
of value added services. [I]t gives them more freedom to clone
windows — the definition of "windows" is static. [F]or
[N]ovell, it makes it easier for them to slip dr dos underneath.
[I]t lets them position themselves as the supplier of connectivity
services for windows to servers — the "middleware" which
builds on windows and thus takes ownership away from us. [T]his
effort to balkanize windows is a clear threat . . . .
PX 44 at MS7080466-67. Mr. Gates "totally agree[d]" with this
view. Id. at MS7080466.
Similarly, in an internal Microsoft email thread dated June 15,
1993, senior Microsoft executive Brad Silverberg wrote "our
competitors are going to do everything they can to fragment
windows, they will build their own middleware to claim api
ownership." PX 54 at MS 0185884. In response, Microsoft executive
John Ludwig wrote to Brad Silverberg, David Cole, Paul Maritz, and
others: "[O]ur worst nightmare is novell/lotus being successful at
establishing their 'middleware' as a standard. [O]urs ought to be
ubiquitously available to forestall this. [O]ur huge advantage
vis-Ã -vis novell is our end-user franchise, we
shouldn't cast aside this advantage." Id.
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A few months later, Mr. Silverberg wrote that "Novell is coming
at us from every direction possible and has a very concerted,
multilayer attack strategy, including the political system. I would
[also] include [as competitors] other companies who are intent on
building 'middleware,' which is just system software by another
name." PX 88 at MSC 090001843-44. Mr. Silverberg cautioned that
Microsoft should not continue to "vastly underestimate the
competitive situation for operating systems" that middleware
represented because "[e]ach competitor can exploit a weakness, and
they are getting better every day." Id.
3. Novell's Office Productivity Applications and Suite Were
Middleware
Shared code was a component of the WordPerfect word
processor13 that was shared among the word processor
and other WordPerfect Corporation products for efficiency purposes.
Tr. 206:3-207:5 (Harral). WordPerfect had been working on shared
code since as early as 1991. Tr. 210:24-211:3 (Harral). Each
product had an application "engine" that was built on top of the
shared code layer, which could then move between any operating
system platform where shared code resided. Tr. 206:3-207:5
(Harral). Because multiple product engines shared a common layer of
code, their behaviors would be the same and they would all operate
in a similarly integrated way. Id. Shared code eventually
started to take on file handling and file management functionality,
such as providing dialogs for opening and saving files. Tr.
209:15-210:22 (Harral).
WordPerfect had traditionally published or provided to third
parties portions of the shared code. Tr. 218:21-219:16 (Harral).
Over time, WordPerfect began to publish all of its shared code, and
promoted it explicitly to ISVs as a resource that could be written
to and that would
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enable them to use the same code base across different operating
systems. Tr. 218:21-219:16 (Harral). When Novell acquired
WordPerfect, Novell branded the shared code as "PerfectFit."
Id.; Tr. 786:16-787:2 (Gibb). PerfectFit became a part of
the PerfectOffice suite and shipped with PerfectOffice. Tr.
212:16-19, 390:24-391:2 (Harral).
All the functionality that PerfectFit provided to WordPerfect,
including file viewers, file converters, button bars, and menus,
was available to third-party developers as well. Tr. 226:9-19
(Harral). WordPerfect offered "a PerfectFit Software Developers Kit
(SDK) to [third parties] that include[d] a broad range of developer
tools including PerfectScript, shared programming code, and APIs."
See PX 207 at NOV 00498183. PerfectFit offered third-party
developers a (1) common look and feel (menus, icons, toolbars); (2)
common dialogues (File Open, Save, Save As); (3) common tools
(Speller, Thesaurus, Grammar Checker, File Manager); (4) common
automation (QuickCorrect, QuickHelp, QuickMenus); (5) common
scripting language (record and play back across applications); and
(6) common code (shared between applications). See PX 395 at
NWP00008289.
The common scripting language in shared code, called
PerfectScript, gave third-party developers the ability to call
scriptable components and to capture and replay tasks performed in
WordPerfect. Tr. 227:23-229:10 (Harral). WordPerfect also contained
the WordPerfect Open API ("WOAPI"), which allowed developers to
intercept certain commands and insert new code to customize
WordPerfect functionality. Tr. 229:12-230:23 (Harral); see
also PX 410 at NOV-B00656859. WOAPI was supported on the
Windows, DOS, and UNIX versions of WordPerfect and other
applications. See PX 192 at MX 9037665. WordPerfect also
exposed Writing Tools APIs that were supported on the Windows and
UNIX versions of WordPerfect. Id. PerfectFit, PerfectScript,
and WOAPI were all technologies that were included in the
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WordPerfect word processor. Tr. 230:24-231:3 (Harral). These
technologies were also included within the PerfectOffice suite. Tr.
231:4-6 (Harral). In using these features, third-party developers
would write their own applications with shared code using the
shared code libraries, which contained the shared code APIs that
could be called. Tr. 226:20-227:13 (Harral). Third parties would
simply write their applications against the shared code layer and
associated APIs, and then compile their programs using the shared
code libraries for use in their products. Id. As a result of
using shared code, application developers (at least for the
functionality utilized) did not have to understand the underlying
operating systems on which their programs ran. Tr. 1016:3-8
(Frankenberg).
Novell started a program called PerfectFit Partners to market
shared code to developers outside the company who wished to license
it. Tr. 225:6-17 (Harral); Tr. 784:9-24 (Gibb); PX 192 at MX
9037665. PerfectFit Partners included at least 1,000 member
companies. See Tr. 887:17-25, 888:13-15 (Gibb); see
also PX 333 at MS-PCA 1985716. Two teams within Novell, the
shared code team and the documentation team, worked together to
document the shared code so that third parties could use it. Tr.
225:18-226:8 (Harral); Tr. 784:9-24 (Gibb). Novell also provided
support, similar to Microsoft's Premier Support, to developers
utilizing shared code in their products. Tr. 225:18-226:8
(Harral).
WordPerfect and its shared code was indisputably middleware
because it exposed its own APIs to software developers. Tr.
783:5-18 (Gibb); Tr. 1404:19-1406:16, 1408:8-1409:23, 1410:8-14
(Alepin); see also Tr. 236:2-6 (Harral); Microsoft,
253 F.3d at 53; Finding of Fact ¶ 28. It was software that sat
"in the middle" between the application core and the operating
system and provided features that would help programs work through
problems and achieve needed functionality. Tr. 233:15-234:19
(Harral). Developers would purchase or license the
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shared code as middleware so that they could use its features in
their products instead of having to incur the costs to develop
these features themselves, which could in some cases take years.
Id. Microsoft recognized that PerfectOffice was an emerging
middleware platform. For example, Cameron Myhrvold wrote in 1994
that "[Microsoft] is in a platform war with Office just as we are
with Windows" because "Lotus and Novell/WP are building competing
application 'platforms.'" See PX 201 at MX 6046625.
Microsoft was particularly concerned about Novell providing
"PerfectFit Technology and WP 'SDKs' & WP 'Windows Open API'"
to ISVs and including "Visual App Builder [AppWare] in
PerfectOffice." See id. at MX 6046634.
AppWare, which was part of the PerfectOffice suite, was both
middleware — because it provided APIs to developers —
and an interface that allowed the use of these APIs. Tr.
1406:11-16, 1408:8-1409:10, 1410:8-14 (Alepin); Tr. 236:2-8
(Harral). It was a graphical and object-oriented application
development tool (formerly known as Visual AppBuilder) that allowed
developers to build stand-alone programs. PX 410 at NOV-B00656854.
Developers could use AppWare in PerfectOffice to build applications
that integrated with PerfectOffice or were completely stand-alone
programs independent of PerfectOffice. Id. Developers could
quickly build fully portable software by linking components called
AppWare Loadable Modules ("ALMs").14 PX 412 at NOV 00498203; see
also Tr. 1408:8-1409:10 (Alepin) (noting that if a programmer
uses AppWare defined programming interfaces his "application will
be portable across multiple platforms"). As Dr. Noll explained,
"anybody who writes a program using
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AppWare, therefore is writing a program that is cross-platform,
and, by doing so, reducing the applications barrier to
entry."15 Tr. 1771:2-11 (Noll).
AppWare enabled cross-platform development by taking
WordPerfect's shared code and other technologies and presenting
them in a conceptual way that allowed non-programmers to write
programs. Tr. 234:22-236:1 (Harral). In fact, using AppWare in
PerfectOffice enabled users to build applications through a simple
interface by combining and connecting different ALM icons. PX 412
at NOV 00498203. In total, the combination of WordPerfect and
AppWare exposed more programming interfaces to third-party
developers than Netscape Navigator exposed. Tr. 1410:8-14
(Alepin).
Senior Microsoft executive Paul Maritz thought of AppWare as an
explicit attempt by Novell to develop a layer that would provide
all of the services required by applications. Dep. of P. Maritz,
May 24, 1994 (played Oct. 25, 2011) at 108:1-11 (Dkt. # 283). He
claimed internally that Novell's goal with AppWare was for
third-party software developers to know only about AppWare and
obtain all the services that their applications needed from
AppWare. Id. Microsoft viewed AppWare as one of its most
serious long-term threats because AppWare held the potential to
allow Novell to incrementally obtain what would amount to an
operating system over time. Id. at 108:12-21. In fact, Mr.
Silverberg believed that AppWare had already become the equivalent
of an operating system by 1994:
Q. What is your understanding of AppWare?
A. AppWare is an [operating] system. AppWare
contains all of the functions of an operating system and is a
wonderful attempt by Novell to again reduce Windows or anything
underneath it to a commodity so it could then
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get applications completely dependent on AppWare, have no
dependence on Microsoft or other pieces underneath it, so they can
then supply their own pieces underneath it and thus eliminate
— as Mr. Noorda has stated, his goal is a Windows-free
world.
Tr. 932:18-933:1 (Silverberg) (emphasis added).
Similarly, Mr. Silverberg wrote that Novell's strategy with
AppWare "will be an incremental, insidious one." See PX 127
at MS 5064010. Microsoft viewed AppWare as "dangerous," stating
that AppWare "might be [the] first viable platform for commercial
cross-platform development" and "could in the long run blur the o/s
API line and [squeeze] us into the camp of BIOS builders."
See PX 90 at MS-PCA 2410390. AppWare was "scary" because "it
is just another windowing API, and a fairly complete one.
This is direct competition to Windows." PX 102 at
MS7096165 (emphasis added).
Microsoft's Mr. Ludwig recognized in October 1993 that AppWare
was a very real competitive threat, writing that "[t]he AppWare
Foundation provides a 'common, cross-platform set of APIs . . .
(which) allows developers to maintain a single-source base for all
development platforms.' Basically, this layer virtualizes all
services of the underlying OSes on which it is hosted, insulating
the developer from differences in these platforms." See PX
531 at MS 0115590-91. According to Mr. Ludwig, "[t]he AppWare
Foundation is an entirely new [operating system] API.
It offers virtually all the services of the OSes it is hosted upon,
but with a brand new and different API set." Id. (emphasis
added). Likewise, a February 22, 1994 email forwarded by Microsoft
executive Steven Sinofsky to Mr. Gates states that "AppWare's
cross-platform nature makes it total goodness in the eyes of the
customer. We need to take it seriously, make sure we understand it,
create a cohesive competitive statement, and distribute appropriate
info to combat the threat." See PX 144 at MS 5036490.
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In the spring of 1995, Novell outlined a comprehensive plan to
provide OpenDoc software development through AppWare. See PX
391 at NOV-B01192363. OpenDoc was an industry-standard architecture
for component software that was backed by numerous industry-leading
software and systems vendors. Id. It enabled developers to
use interchangeable components to construct applications that could
be shared across hardware and operating system platforms, including
Macintosh, OS/2, Windows, and UNIX. Id.
Just as with WordPerfect, PerfectFit, and AppWare, Microsoft
feared the threat posed by OpenDoc. See Tr. 933:2-9
(Silverberg); Dep. of P. Maritz, May 24, 1994 (played Oct. 25,
2011) at 104:10-106:6. For example, in an email dated December 29,
1993, Mr. Silverberg wrote, "[Component Integration Laboratories]
is a group consisting of IBM, Novell, Apple, Oracle, WordPerfect,
XSoft and Taligent intent on building a competitive OS's to ours.
OpenDoc, for example, is part of their effort." See PX 488
at MS-PCA 2608514. Microsoft was so concerned with OpenDoc as a
competitive operating system technology that it wanted to impose a
nondisclosure agreement so that OpenDoc developers within
WordPerfect and other companies would not receive Microsoft's
operating system betas. See, e.g., PX 489. Mr. Silverberg in
particular wanted to "exclude those people who are working on
competitive os efforts, such as opendoc and os/2, from access to
chicago [Windows 95]." See PX 490 at MS-PCA 2618244.
4. Novell's Cross-Platform Office Productivity Applications
and Suite Could
Have Helped Alternative Operating Systems Compete with
Microsoft
WordPerfect was a cross-platform application during the relevant
time period. For example, WordPerfect architect Adam Harral
testified at trial that the company had written WordPerfect to over
a dozen different operating systems, including DEC, NeXT,
Macintosh, Amiga, DOS, Windows, and OS/2. Tr. 216:3-18
(Harral).
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Gary Gibb also testified that WordPerfect Corporation's
technology was specifically developed to run on many different
operating systems and that the company had several
platform-specific groups, including a Mac group, a VAX/VMS group, a
UNIX group, an OS/2 group, and a NeXT group. Tr. 776:2-18,
777:17-778:8, 781:14-782:2 (Gibb). Mr. Gibb noted that when he
worked in "engine" development, WordPerfect released versions of
its word processing software for all the major operating systems
available. Tr. 777:7-16 (Gibb). The whole point of the engine group
itself, according to Mr. Gibb, was to create a core engine of
software that could be leveraged across multiple operating systems
in a functionally consistent way — allowing documents to be
exchanged successfully, among other things. Id. Dr. Murphy
admitted that, at least by design, once the shared code running
under WordPerfect was made cross-platform, the other applications
that relied on shared code would also be cross-platform. Tr.
4915:1-8 (Murphy).
In addition, Mr. Frankenberg testified that WordPerfect had a
cross-platform presence:
Q. To your knowledge, did WordPerfect have experience in working
with 32bit systems prior to Microsoft's development of Chicago?
A. Yes. WordPerfect ran on a number of other 32-bit systems
including digital equipment corporations, [VAX], operating [VAX]
systems and several Unix16 systems. So they were well acquainted
with the 32-bit development.
***
Q. And during your tenure with Novell, did WordPerfect continue
to develop versions of WordPerfect for multiple operating
systems?
A. Yes, we did.
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Q. And during your tenure, did Novell also develop a version of
WordPerfect for the Linux17 operating system?
A. Yes, we did.
Q. Given that Microsoft had a monopoly in PC operating systems
using Intel Processors at this time, why did Novell continue to
develop cross-platform versions of WordPerfect?
A. Well, there were two main reasons. One reason was that our
customers, as I mentioned a moment ago, wanted to have one word
processor that could work across their work station or their PCs or
their larger systems. The other reason was to provide some
real competition in the operating system
environment.
Tr. 994:12-18, 995:24-997:5 (Frankenberg) (emphasis added).
Mr. Frankenberg also testified that, in 1994, Novell's "next
generation" WordPerfect office productivity suite (codenamed
"Tapestry") was already under development and also intended to be
cross-platform. Tr. 997:24-998:10 (Frankenberg). Thus, during Mr.
Frankenberg's entire tenure, from spring of 1994 to summer of 1996,
Novell actively developed WordPerfect and shared code for
non-Windows platforms — including Linux, an Intel-compatible
PC operating system alternative to Windows.
In addition to the testimony outlined above, numerous exhibits
admitted into evidence establish that WordPerfect was a
cross-platform application during the relevant time period. For
example, as of August 13, 1995, WordPerfect was running on DOS,
Windows, Macintosh, OS/2, and UNIX. See DX 370 at NOV
00062681-82, 89-90. WordPerfect's goal was to "[b]e number #1 in
market share in the DOS, Windows, UNIX, and OS/2 markets, and
number #2 in market share in the Mac and VMS markets for shipments
during 1994." Id. at NOV 00062687.
In 1994, a WordPerfect for Windows Marketing Business Plan noted
that WordPerfect had deep experience with "OS/2, Unix, Mac, NT" and
that WordPerfect should "[t]out engine
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concept; we understand cross-platform." PX 125 at NOV-B01491192.
WordPerfect's goal was to "leverage our years of developing
WordPerfect in the multi user environments of UNIX, Data General,
VAX and IBM Mainframe as a strength for our NT version of
WordPerfect." Id. at NOV-B01491203.
Reflecting this strong cross-platform presence, WordPerfect's
April 22, 1994 Registration Statement filed with the United States
Securities and Exchange Commission states that "WordPerfect is now
available in 23 languages and on all of the most widely used
computing platforms and operating systems, including DOS,
MS Windows, UNIX, Apple/Macintosh and DEC's VAX/VMS." PX 174 at
NOV00364208 (emphasis added). As of July 19, 1994, WordPerfect was
developing new versions of WordPerfect, Quattro Pro, and
Presentations for DOS, as well as new versions of WordPerfect for
Macintosh, UNIX, and OpenVMS. PX 200 at NOV-25-006587-90.
Following the merger in 1994, a Novell/WP/QP Integration Plan
noted under "Business Applications" that "[d]evelopment includes
PerfectOffice, WordPerfect for Windows, DOS, Macintosh and UNIX,
Presentations, Electronic Publishing tools, the PerfectOffice
engine group and Tapestry." DX 4 at NOV-25-006572. By October 1994,
WordPerfect had shipped WordPerfect Windows 5.2+ and WordPerfect
UNIX 6.0 (SCO) and was moving ahead with other WordPerfect for
UNIX, DOS, and VMS products as well. See DX 205 at
NOVB15912823-24. In fact, WordPerfect UNIX (SunOS, Solaris) was
released to manufacturing on June 7, 1994, WordPerfect 6.0 UNIX
(SCO, Intel) was released to manufacturing on October 6, 1994, and
WordPerfect 6.1 DOS was released to manufacturing on August 10,
1995. See DX 231 at NOV00161055.
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Similarly, WordPerfect's PerfectFit and WOAPI technologies were
available for Windows, DOS, and UNIX. See PX 192 at MX
9037665. Novell also intended to make OpenDoc cross-platform and
was "committed to deliver OpenDoc for Windows in 1995, which will
provide users with a clear advantage for component software and
distributed cross-platform object support, as well as
cross-application integration." PX 395 at NOV 00019492; see
also PX 412 at NOV 00498197.
Even Microsoft recognized that "WordPerfect Strengths" included
"[c]ross-platform compatibility" and that "[a] consistent use of
the cross-platform positioning could neutralize Word's Windows
leadership." PX 554 at MS-PCA 1330664; see also PX 560 at
MS7059705. Indeed, in assessing the competitive situation presented
by WordPerfect for Windows 6.0, Microsoft noted that "WordPerfect
is also available on UNIX and the Macintosh. They also have worked
to make 6.0a run as well on OS/2 as its WordPerfect for OS/2
predecessor. No one else has the same breadth across
platforms for word processors." PX 378 at MX 2175209
(emphasis added).
Likewise, Novell intended to continue developing cross-platform
office productivity applications well into the future. Mr. Harral
testified that Novell intended to make the entire PerfectOffice
suite cross-platform after the initial release of PerfectOffice 95
to make it available on DOS, OS/2, Macintosh, UNIX, and Linux
platforms. Tr. 371:13-372:7 (Harral). Mr. Gibb testified that "we
wanted to make everything cross-platform and go across the
different operating systems." Tr. 787:11-15 (Gibb). Even Dr. Murphy
acknowledged the testimony that Novell planned to release
PerfectOffice across multiple platforms. Tr. 4912:13-18
(Murphy).
Microsoft cannot dispute the collaterally estopped finding that
numerous companies existed with the technical and financial
capability to easily expand their output to create
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competition in the operating systems market if the applications
barrier were sufficiently lowered.18 Finding of Fact ¶ 30. As Judge
Jackson noted, however, the ability to meet a large demand is
useless if demand for the product is small and during the relevant
time period signs indicated that demand for alternative operating
systems was "severely constrained" by the applications barrier to
entry. Id. Mr. Gates testified that from 1995 to 1999, he
believed that Windows faced competition from Apple's Mac OS, Be's
BeOS, various versions of UNIX, and IBM's OS/2 Warp, in addition to
Linux. Tr. 2852:20-2853:2 (Gates); see also Tr. 4900:6-13
(Murphy) (acknowledging the existence of Windows competitors).
Dr. Murphy testified that by 1998, Linux had between five to ten
million users and had become increasingly competitive with
Microsoft Windows in particular segments and that Linux was
comparable in size, capability, and complexity to Microsoft's
Windows 98 and Windows NT. Tr. 4896:19-4897:8, 4900:14-21 (Murphy).
Dr. Murphy accepted that consumers might reasonably choose a
WordPerfect version written for Linux instead of Windows, because
Linux was free. Tr. 4899:25-4900:5 (Murphy).
E. Novell's Key Franchise Applications Had The Potential To
Weaken The
Applications Barrier To Entry
Microsoft cannot deny that it viewed ownership of the word
processing and suite markets as critically important to maintaining
the applications barrier to entry. In an email sent to investor
Warren Buffett, senior Microsoft executive Jeff Raikes wrote:
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If we own the key "franchises" built on top of the operating
system, we dramatically widen the "moat" that protects the
operating system business . . . . We hope to make a lot of money
off these franchises, but even more important is that they
should protect our Windows royalty per PC.
PX 360 at MS-PCA 1301176 (emphasis added).
"The 'moat' refers to the applications barrier to entry."
Novell, 505 F.3d at 317. Because consumers buy computers to
run applications, not to run operating systems, Microsoft could
keep consumer demand focused on Windows if Microsoft controlled the
office suite, word processing, and spreadsheet markets. Tr.
1387:1-1388:8 (Alepin); see also Tr. 290:5-19 (Harral); Tr.
1969:1-6 (C. Myhrvold); Finding of Fact ¶ 37; cf. Tr.
1718:21-1719:5 (Noll). According to Mr. Gibb, word processing and
spreadsheet applications amounted to 80 to 90 percent of everything
people did on personal computers in the mid 1990s. Tr. 782:3-12
(Gibb). Even if 70,000 applications were written for a rival
operating system, if that rival could not offer word processing,
spreadsheets, or suites, then it would not be able to attract
significant consumer demand. See, e.g., Microsoft, 253 F.3d
at 55; Tr. 1969:1-6 (C. Myhrvold).
Other internal Microsoft documents confirm Mr. Raikes' admission
that by owning key franchises, Microsoft helps maintain the
applications barrier to entry protecting its monopoly power. For
example, as early as 1989, Mr. Gates recognized that "a strong
applications business is extremely helpful to
[Microsoft's operating] systems strength." PX 3 at X 159503
(emphasis added). Similarly, Mr. Allchin admitted that
"[a]pplications drive the world. Applications are the reason that
the VAX was so successful. Applications make people switch computer
systems and vendors." PX 524 at MS 0119615.
As discussed more fully below, Mr. Raikes' email does more than
express a theory. Microsoft actually used its control of the key
franchise office suite market "'as a club'" to
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control a potential operating systems competitor, Apple.
See Microsoft, 253 F.3d at 73 (citation omitted). At trial,
Dr. Noll explained that the strength of the applications barrier to
entry was directly proportional to Microsoft's strength in the
applications market, and "the more market share [Microsoft] can
gain in applications, the greater the barrier to entry of new
operating systems will be." Tr. 1740:20-1741:5 (Noll).
Is it possible to read this and agree with the judge that Novell presented no evidence that it was a middleware threat? The
transcript at the very end of the day on December 15 also includes a conversation where the judge and the lawyers discuss what to do about the hung jury, which by then was clearly what was going on in the jury room. The judge has what he calls a "radical" proposal, which he won't do unless the parties' lawyers agree. He proposes, since they have 12 jurors and only need six that they ask the jurors if there are only one, two or three holding out for one side or the other that they abstain and in essence step aside. Novell's Jeff Johnson asks the right question:
MR. JOHNSON: By the way, Your Honor, do you have any law on this?
THE COURT: It's like my summary judgment opinion, which you'd like to keep sending back to me. My guess is there is no law on this. I mean, the law clerks found nothing on it. The only thing that occurred to me was we might be able to do it because it's less than -- So that's the essence of the problem in this picture, that he pushes forward with creativity even when there is no law supporting him. Now, a judge can forge ahead, and in fact he has to, if there is no law, if it's an issue that must be decided. But not every issue needs to be decided on the spot. For example, if there is a hung jury, there is a process in place already. A judge doesn't need to create a new solution, when there is a process in place that everyone follows. Here, he left it up to the lawyers, who obviously were not interested in this "radical" solution, but did you notice that the judge acknowledged that his summary judgment ruling, meaning the one that was overturned on appeal, was not based on case law. And yet we know, from the transcript of July 7th's hearing and his order on Microsoft's motion, he still thinks he called it right. I guess what I'm saying is that a case law legal system is not the best context for radical independent thinking.
And here's the complete transcript, as text, so you can reach your own conclusions about all this:
********************
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
____________________________________
NOVELL, INC.,
Plaintiff,
vs.
Case 2:04-CV-1045 JFM
MICROSOFT CORPORATION,
Defendant.
_____________________________________)
BEFORE THE HONORABLE J. FREDERICK MOTZ
DATE: DECEMBER 15, 2011
REPORTER'S TRANSCRIPT OF PROCEEDINGS
JURY TRIAL
Reported by: KELLY BROWN HICKEN, CSR, RPR, RMR
5429
A P P E A R A N C E S
FOR THE PLAINTIFFS: DICKSTEIN SHAPIRO
BY: PAUL R. TASKIER, ESQ
JEFFREY M. JOHNSON, ESQ
MIRIAM R. VISHIO, ESQ
[address]
WILLIAMS & CONNOLLY
BY: JOHN E. SCHMIDTLEIN, ESQ
[address]
SNOW, CHRISTENSEN & MARTINEAU
BY: MAX D. WHEELER, ESQ
[address]
NOVELL
BY: JIM LUNDBERG, ESQ
FOR THE DEFENDANT:
SULLIVAN & CROMWELL
BY: DAVID B. TULCHIN, ESQ
STEVEN L. HOLLEY, ESQ
SHARON L. NELLES, ESQ
[address]
MICROSOFT CORPORATION
BY: STEVE AESCHBACHER, ESQ
[address]
RAY, QUINNEY & NEBEKER
BY: JAMES S. JARDINE, ESQ.
[address]
5430
SALT LAKE CITY, THURSDAY, DECEMBER 15, 2011
* * * * *
THE COURT: Good morning again. You have a note
which is:
Does, quote, PC operating systems, unquote, include
middleware that supports apps?
Apparently it's from juror Number 4. My proposed
answer is as follows:
No. As the instructions I previously had given to
you indicate, quote, middleware, unquote, is relevant to this
case only because one of the Novell's claims is that its
Office productivity applications constituted middleware that
threatened Microsoft's monopoly in the PC operating systems.
MR. TULCHIN: I'm sorry. I didn't quite get that.
THE COURT: I'll do it again.
MR. TULCHIN: Would you?
THE COURT: This is my proposed answer:
No. As by the instructions I have previously given
you indicate, quote, middleware, unquote, is relevant to this
case only because one of Novell's claims is that its Office
productivity applications constituted, quote, middleware that
threatened Microsoft's monopoly in the PC operating systems
market.
MR. TULCHIN: Your Honor, I think that's fine. But
I do think that we should add to it. I think this emphasizes
5431
the importance of some instruction about what middleware is
along the lines of the letter that we sent in this morning,
Your Honor. You might even make it a little more abbreviated
than what we suggested by saying something like, middleware as
the term is used in this case is software that sits on top of
an operating system that is, one, cross-platform; two, is
available on all or nearly all PCs, and that's -- both of
those things are exactly what Professor Noll said; and, three,
exposes a sufficient number of APIs to make it feasible for
full-featured office -- sorry -- productivity applications to
run on top of the middleware.
And again, I'd be happy to show you
Professor Noll's testimony on this, but that is the theory,
not only the theory that exists in the complaint which is how
we got here, how the tolling provision of Clayton -- of the
Clayton Act was invoked in the first place, but that is what
Dr. Noll's theory is.
The first two of the three requirements are
precisely from his mouth, that the middleware must be
cross-platform and must be available on all or nearly all PCs.
We've had a debate about what the third is. But, I mean, I
think our view is the correct one, the complaint adopts the
definition in the government case.
And I'm afraid, Your Honor, that these notes are so
confused and reflect such a lack of understanding of what
5432
middleware is and what an operating system is that we're
really at a point that some guidance from the Court is
necessary. I mean, we've been here eight weeks, and it seems
to me that the jury at this point not only is entitled to
know, but really must know what middleware is and what it
isn't.
THE COURT: What's your understanding of how
Dr. Noll differs on the third element?
MR. TULCHIN: Well, I can get his testimony, Your
Honor. He said he didn't -- Dr. Noll didn't define exactly
what he meant, but he said it had to expose a sufficient
number of APIs, and then I don't have the exact words, but to
be attractive enough so that other ISVs would write
applications to that middleware.
And I do think that Ron Alepin provided the third
requirement probably a little more clearly than Professor Noll
did. And I think Alepin's statement that you need
full-featured productivity applications, which is what I
recall him saying, is consistent with what Novell adopted from
the government case. So the answer the Court --
THE COURT: I understand.
MR. TULCHIN: You know, it's a good start, Your
Honor. I think we have to go on and give the rest of it.
THE COURT: Mr. Johnson?
MR. JOHNSON: Yes. We've been around this horn so
5433
many times. That was not what Professor Noll said, and he did
not agree with anything other than it has to be
cross-platform. What he said about being on a lot of PCs and
what he said about writing applications to the middleware,
that it was entirely a continuum and that the more that
applications were written even partially to middleware that
that alone reduces porting costs and therefore reduces the
application barrier to entry.
THE COURT: How is that -- how is his definition
consistent with your complaint in the tolling?
MR. JOHNSON: Both our complaint and the finding of
facts, in fact, agree completely, Your Honor, with our theory
of middleware. Remember --
THE COURT: How are the findings of fact possibly
consistent with your theory of middleware?
MR. JOHNSON: Because as the findings of fact say
so as middleware grew in popularity and exposed more APIs,
there would be further applications written to the middleware.
And it is a continuum. Again, the standard --
THE COURT: Does the word continuum come out of the
findings of fact?
MR. JOHNSON: Your Honor, if I may.
THE COURT: No. I just asked you a question. You
just said continuum, and continuum is nowhere in the findings
of fact, that I'm aware of. And my question is a simple one.
5434
Does the word continuum appear in the findings of fact?
MR. JOHNSON: The word continuum does not appear.
However, the words which state that as middleware became more
popular and as more applications were written to the
middleware that this would cause a reduction. It would cause
it to erode. I believe that's the word. I can find it for
you if you'd like. Eroding is not the same as destroying.
But what Microsoft continues to do, Your Honor, is to want to
define the term middleware --
THE COURT: The simple fact is middleware is no
threat to the operating system unless it exposes lots of APIs
that people are going to write to instead of the operating
system. It's as simple as that, as far as I'm concerned. I
mean, I don't see how any other theory is -- there might be
lots of arguments short of that. But the principle has got to
be that your theory is that middleware constituted a threat to
the operating system. How middleware which doesn't suppose --
expose sufficient APIs to mirror closely or at least in some
close approximation the functionality and operating system, it
doesn't -- you know, I mean, we can argue around the edges,
but that has got to be true. It can't be that middleware,
quote, middleware to which you write, the analogy I remember
or the example I remember was box scores on top of a
spreadsheet is not full function and is no threat to an
operating system.
5435
MR. JOHNSON: Your Honor, if I may, I think part of
the reason for the confusion is what you just said. Microsoft
has defined middleware in such a way that it is an operating
system. And that is why you get a question like we did
yesterday, is an operating system middleware? Because
Microsoft's definition takes it to the extreme, which is --
THE COURT: Yeah. But Microsoft's definition is
not and from my judgment relevant to your theory of the case,
which is -- I mean, Microsoft can define it any way it wants
for purposes of its dictionary. You have defined it in your
complaint, and you have a theory that somehow middleware, and
middleware makes sense in your theory only if it exposes some
degree of functionality which makes it a threat to operating
systems.
I don't care what Microsoft defines it as in its
dictionary. It doesn't matter. You've got a theory of the
case that got you beyond -- got you past limitations and got
you to the jury. And I just don't -- I don't care what
Microsoft's definition is.
MR. JOHNSON: Your Honor, I wasn't actually even
talking about Microsoft's definition in their dictionary at
all. I was talking about the definition they want you to
instruct the jury on, the definition that they want you to
instruct the jury on, which would be directing a verdict, by
the way, and that's what it would be here --
5436
THE COURT: No, it wouldn't. You still have your
franchise theory.
MR. JOHNSON: It would be directing a verdict on
that portion of our theory.
THE COURT: I agree with that. Maybe so, maybe
not. That's why I've got to be careful what I say. But they
want me to direct a verdict.
MR. JOHNSON: Of course. Of course. And that's
understandable given that we have no verdict, and they would
like you to, frankly, tip the scale. I don't think that would
be appropriate. Your Honor made this judgment carefully
sometime ago after this argument was had for about the fifth
or --
THE COURT: I understand.
MR. JOHNSON: -- fifth or sixth time. And Your
Honor made a reason of judgment. And I don't think that it
would be appropriate for you to change that judgment now.
I will point out that Mr. Alepin did not agree with
their definition. I read from his testimony at Page 1396.
Question. You're familiar with the term
middleware?
Answer. Yes, I am.
Question. The first bullet point there, software
that runs on top of an operating system and exposes APIs that
encapsulates meaningful functionality. Is that the sort of
5437
definition of middleware that you're comfortable with?
Answer. Yes.
So middleware does expose APIs. It does contain
meaningful functionality. But that does not mean, Your Honor,
that it's capable of being an operating system in running --
that you're able to create whatever their term they want to
use, full-service Office productivity applications on it.
That's a different thing. If middleware got to that goal,
achieved that goal, it would, in fact, destroy the application
barrier to entry, and there would be wide open competition.
But, of course, this case is not about that. If we
had to destroy the applications barrier to entry in order to
win, we could not be here today. What we have is --
THE COURT: Yes, you could. But that's a whole
different question. You could have said -- in a but for world
you could have had a technical expert who would have said that
it would have existed in which you didn't produce, that but
for Microsoft's conduct, the applications to the barrier to
entry would have been effectively destroyed. So you could
have, but you didn't.
MR. JOHNSON: What we had, though, Your Honor, was
an expert that came in and said, as applications are written
to the middleware either partially, whether it's 60 percent or
40 percent or whatever it is, that that therefore reduces
porting costs to other operating systems and therefore reduces
5438
the applications barrier to entry. And that's what Dr. Noll
testified to in this case. And again, Your Honor, this is all
a --
THE COURT: Actually it's apropos of nothing. It
seems to me that one of your experts, I think it was Noll but
it could have been Alepin, actually in his -- it's not in
evidence, but in his demonstration did have it destroyed. I
remember him showing the wall all the way knocked down.
MR. TULCHIN: He did.
MR. JOHNSON: Your Honor, the visual that you saw
showed the wall down. But the testimony of Professor Noll was
not to that effect. Clearly, Your Honor, we have two
positions with respect to the impact of middleware. Microsoft
is defining middleware in such a way that it is an operating
system which engenders frankly the confusion the jury feels
because they're saying --
THE COURT: The jury -- the fact of the matter is
the jury is just confused. I mean, I'm not sure that I
shouldn't revisit my decision because I was basing upon the
fact that the jury would have its head on straight. But it
doesn't, obviously doesn't have its head on straight.
MR. JOHNSON: Your Honor, if I could, if I may,
just to end this. As we said at the time, Your Honor would be
directing a verdict on that issue.
THE COURT: That's true.
5439
MR. JOHNSON: And I don't think that that would be
appropriate.
THE COURT: It's not the time to direct a verdict
yet.
MR. JOHNSON: Thank you, Your Honor.
MR. TULCHIN: Your Honor, if I could point out the
testimony that I was referring to. On Pages 1925 to 1926
Professor Noll says:
That the middleware program has to be present on
all or nearly all of the PCs that use the operating system to
which the application otherwise would be written, and that the
middleware program has to be cross-platform.
With respect to Mr. Alepin, and I'll just stick
with him for a moment on this third requirement, Mr. Johnson
read an answer that he gave on Page 1396 that it has to be
software that exposes APIs that encapsulate meaningful
functionality. And on cross at Page 1461 to 1462, Mr. Holley
asks:
In fact, there are literally thousands and
thousands of software products that expose some APIs that can
be called by other software products. Isn't that right, sir?
Answer. Absolutely. And in part that was the
purpose of the refinement in the definition of middleware,
that they have -- there has to be some other thing that they
do other than just expose APIs. Otherwise, it's just -- it's
5440
a program with APIs.
And Mr. Holley went on:
So it's not enough to say that something is
middleware, and it isn't even enough to say that something is
middleware that exposes some APIs or that software product
that referring to to constitute any sort of a threat to
Windows; isn't that right?
Answer. There's got to be more, yes. There's got
to be more than just the exposure of APIs or the encapsulation
of meaningful abstraction of APIs. You need more.
So if I can back up for a second --
THE COURT: And that was Alepin or Holley?
MR. TULCHIN: I'm sorry?
THE COURT: Who said you need more?
MR. TULCHIN: Yes.
THE COURT: What's more?
MR. TULCHIN: That was Mr. Alepin. That you need
more. There's got to be more.
The point I'm making, Your Honor, is that the first
two requirements are not in dispute; has to be available, has
to be cross-platform. Available on a number of alternative
operating system platforms. That's -- I'm reading Dr. Noll.
The second requirement is that it has to be available on all
or nearly all of the PCs.
And as to the third, we think that our letter of
5441
this morning is direct, that the definition in the government
case was adopted in Paragraphs 44 and 48 of Novell's
complaint.
THE COURT: But that would be the equivalent of a
directed verdict.
MR. TULCHIN: Your Honor, I think on that theory,
it probably would, although the jury is so confused I'm not
sure what they would do.
But even if you went with what Mr. Alepin says that
the third requirement is that the middleware expose a
sufficient number of APIs to be a threat to Windows that it's
not enough for middleware simply to expose some APIs, that
there has to be more.
THE COURT: Let me ask you this. I mean, you've
got your point on the directed verdict, and frankly, I think
you might be right. I think if the jury came back saying they
accepted the middleware claim but not the franchise claim, it
is within my power to still grant you a directed verdict. I
mean, it's within that -- whether that's right or wrong we'll
hear argument on it, but you could be right about that, and I
hear you. I mean, I frankly don't see that -- but that's
another issue than what I should tell the jury.
What about --
MR. SCHMIDTLEIN: Your Honor, not to complicate
things further, but actually technically, does a PC operating
5442
system include middleware? Their position is that
Internet Explorer is part of the operating system. They have
said that over -- that is their position. Internet Explorer
is part of Windows. Internet Explorer is middleware.
MR. TULCHIN: Well, we don't agree with that, Your
Honor, and it's not even relevant.
THE COURT: I'm not going there.
My -- what about adding, because the jury is
obviously hung up about that, a definition of middleware that
says, at the least, middleware must, then the things that Noll
said, that it's got to be on virtually all operating systems?
And secondly, has to be cross-platform, third -- at the least;
and, thirdly, it has to expose enough APIs to constitute
whatever that language was, encapsulate -- what is it?
Substantial functionality or something like that?
MR. TULCHIN: Well, I think at the very least we
should say that, Your Honor. I think it would be helpful for
the jury. He said there's got to be more than just the
exposure of the APIs.
THE COURT: Well, before the more. The definition
he gave on direct, because I don't know what the more is. He
says more, actually, but maybe he encapsulates --
MR. HOLLEY: Your Honor, what he clearly meant by
more, if you continue reading, because I then took him through
every one of the alleged middleware products, and he said no,
5443
there are no applications written to that. So what he meant
by more is elucidated by the continuation of the cross. And
by the end of the cross, it was clear what he meant was
exactly what Novell said in Paragraphs 44 and 48 of the
complaint, which is you have to, as Your Honor said, it's
obvious as a matter of law logic, you have to have enough APIs
to serve as an alternate development platform to Windows.
Otherwise, the middleware --
THE COURT: If that's right, the jury shouldn't
even have the question. Wouldn't you agree, Mr. Holley?
MR. TULCHIN: We agree with that, Your Honor.
THE COURT: And I know that. But I'm not -- the
jury does have the question. It seems to me, and you could be
right. I'm not saying you're right or you're wrong. But I
understand your position, and I'm inclined to think you're
right. But I don't -- it seems to me that where we are at
this stage of the litigation it would be to give the
definition which incorporates the two things Novell agrees to
and then whatever it was that he testified to on direct, it
was something like encapsulate substantial functionality,
something like that.
MR. TULCHIN: And that's what I would suggest to
Your Honor, to say at the very least after we talk about the
first two requirements, when we get to the third to say that
at the very least, middleware must expose a sufficient number
5444
of APIs to be a potential threat to Windows.
And maybe just leaving it vague that way. I mean,
that, after all, is what -- there can't be any dispute about
that. That's what they say. That's the idea. And without
going further, I agree with you that if you --
THE COURT: I hear you. Okay.
MR. SCHMIDTLEIN: Your Honor, this is obviously a
very serious and controversial issue. They're making
representations about what they think our experts say.
THE COURT: They're quoting from testimony.
MR. SCHMIDTLEIN: I understand. But they're
quoting from parts of the testimony. I don't think we
entirely agree --
THE COURT: What's wrong -- with your theory, why
shouldn't it be that middleware must, one, be cross-platform;
two, whatever it is, whatever the language is --
MR. TULCHIN: Must be present on all or nearly all
of the PCs.
THE COURT: Must be present on all or nearly all
PCs?
MR. TULCHIN: That use the operating system. I
would say that use Windows. That's at the very least what
Professor Noll said.
THE COURT: They use Windows? Why they use
Windows?
5445
MR. TULCHIN: I mean, arguably it's on all or
nearly all PCs. That's what I think --
THE COURT: Okay. All PCs.
MR. TULCHIN: That's what I think their theory is.
THE COURT: And then, three, must expose sufficient
APIs as to threaten Microsoft's monopoly in the PC operating
system market.
MR. TULCHIN: Your Honor, that seems to me to be a
sensible answer to the question. I don't think it goes far
enough for purposes of the theory that Novell has. But we
would -- in the interest of trying to eliminate some of the
confusion among jurors, we would be amenable to that
instruction without waiving our position that, indeed,
Novell's theory requires more than that. I want to be clear
that we're not waiving that. And that --
THE COURT: No. No. Absolutely.
MR. TULCHIN: And that we still have the argument.
MR. SCHMIDTLEIN: Your Honor, my point is simply
this. The question that was asked was, do PC operating
systems include middleware that supports applications or apps?
This definition of middleware obviously is going well beyond
answering this question. I understand everybody --
THE COURT: Oh, no. I'm not buying that one.
They're confused, and this clearly shows -- they should have a
definition of middleware. And so I don't -- this does not
5446
fall within the two questions of yesterday. So let me --
MR. JOHNSON: Your Honor, may I respond briefly?
THE COURT: Sure.
MR. JOHNSON: Professor Noll does not agree with
the second requirement which you are putting in this
definition. He does not agree with it. What he said was,
Your Honor, Mr. Tulchin asked him a series of questions about
middleware, and he went through the three requirements that
Microsoft likes, and I will get his testimony for you. And he
said, what you're describing is a definition that would reduce
Windows to a commodity; in other words, would destroy the
applications barrier to entry.
MR. TULCHIN: It's not true, Your Honor.
MR. JOHNSON: And the wall would be completely
down. That's what Professor Noll stated. And then he went on
to say, I'm getting the testimony right now, Your Honor. He
went on to say that it is a continuum. The one thing he did
agree to, Your Honor, he agreed that the middleware needed to
be cross-platform. But with respect to the number of PCs he
was on, number two, and with respect to its abilities to
support full service, whatever the phrase is they use, he said
no, that's not how it works. That if a middle -- if
applications are written some portion of which to the
middleware, that that would reduce porting costs and will
reduce the applications barrier to entry, and that it is a
5447
continuum. Obviously it has to be significant. It can't be
de minimis. But it is simply not true to say that
Professor Noll agreed that it had to be on all PCs or the
majority of PCs.
He said, and I asked the question, Your Honor on
Page 1958:
It was quite a bit of cross-examination with
respect to whether or not full-featured applications had been
written to middleware during various time periods, and I ask
you, sir, if applications were writing to middleware that
still had relying in some senses on operating systems beneath,
does that have any affect on increasing competition?
Answer. The effect on competition in the operating
system market depends on the degree to which the middleware is
reducing the porting costs of becoming cross-platform, that if
middleware is exposing a certain number of APIs, you can write
to those APIs and be on an access function in multiple
operating systems. You may have to write additional codes
separately for each operating system. But if the middleware
reduces the amount of code you have to write to be
cross-platform, then it makes being cross-platform more
attractive. And obviously, it's a continuous relationship
that the higher the fraction of functions that can be accessed
through the middleware, the more the porting costs have been
reduced and, hence, the more the middleware affects
5448
competition.
So that's why it's a continuous process. It's not
an either/or process. Middleware can begin to have an affect
on competition in the operating systems market if it starts to
be used because it's reducing porting costs and, therefore,
increasing the number of applications that are cross-platform
and thereby reducing the application barrier to entry.
So, Your Honor, Professor Noll testified
unambiguously that it is a continuum. It is not an either/or.
The more middleware is exposed on more PCs, not on all PCs or
most PCs, but on more PCs, and the more applications use that
middleware to port in part or in whole, in other words, reduce
their dependency on the underlying Windows, that reduces
porting costs and, therefore, increases competition in the
PC operating systems market.
MR. TULCHIN: Your Honor, that --
MR. JOHNSON: So if you're going to accurately
provide the jury with what it at least has to be, that would
be something that you would need to take into consideration.
And I thought, Your Honor, frankly, that because this issue is
clearly highly contested --
THE COURT: We won't go there. It's contested
right now. I'm not sure you're even here if I buy your theory
of the events -- I mean your theory, because we're here
because you got limitations tolled, which was based on the
5449
government's case.
MR. TULCHIN: Your Honor --
MR. JOHNSON: Yes, Your Honor. And I believe that
our theory is entirely consistent with the government case.
You may recall, Your Honor, that neither Java nor Netscape had
sufficient APIs to meet the requirements being put forth now.
And what they were talking about in that findings of fact 28
is that if ultimately, if ultimately middleware achieved this
higher goal, they could reduce Windows to a commodity. That
never happened. But it was sufficient in the government case,
even though Netscape and Java would not have met the
definition posed by Microsoft here, it was sufficient in that
case to find that they were a threat and that they had the
potential -- sorry, Your Honor. I had this on in case of
another note.
THE COURT: Don't worry about that.
MR. JOHNSON: Have the potential --
THE COURT: Do you want to see if it's important?
The jury is not here.
MR. JOHNSON: I had it on because I was obviously
waiting for notes, so I needed to keep my phone on. I forgot
to turn it off when I came in this morning.
THE COURT: Okay. Let me --
MR. JOHNSON: So --
THE COURT: I want to hear from Mr. Tulchin. I
5450
understand your position.
Mr. Tulchin?
MR. TULCHIN: Mr. Johnson, of course, is correct
that Java and Netscape didn't meet the definition of
middleware as it was used in the government case. It didn't
because of the edentulous causation test.
THE COURT: Exactly.
MR. TULCHIN: And the Court of Appeals was very
clear, I think Judge Jackson was, as well, that these were
nascent threats. They were newborn threats. They couldn't
affect Microsoft's position in the PC operating system market,
precisely because they didn't meet the third requirement here.
But in a government enforcement case, of course, the attorney
general, the Department of Justice --
THE COURT: I understand. I understand.
MR. TULCHIN: But there's a second point, Your
Honor. Mr. Johnson's statement about Dr. Noll's question on
redirect didn't go to the first of the two requirements, the
first two, I should say, of the three requirements. The first
one that it has to be cross-platform. He said this on 1925 to
1926. It has to be cross-platform, and it has to be available
on all or nearly all of the PCs.
So that part of it should be clear. I don't think
there can be any dispute. I believe that Mr. Johnson used a
slide on the direct examination of Professor Noll which says
5451
that. And certainly -- and the answers at Page 1925 Line 25
through 1926 Line 13, that's what Professor Noll said.
So I do -- the response, Your Honor, that you
propose to give to the jury's question seems to me to be a
reasonable response. Again, our position is that it doesn't
fully reflect the proper --
THE COURT: No. Your position is simply that they
cannot prevail on the middleware claim. I mean --
MR. TULCHIN: Yes, but --
THE COURT: And I understand it, but we're not
there.
MR. TULCHIN: For present purposes, Your Honor, we
do think the jury should be told something so that some of
this confusion can be, I hope, ameliorated.
THE COURT: What does it mean to be on all or
nearly all PCs?
MR. TULCHIN: Well, the theory here of middleware,
which, of course, you know, it's an interesting theory, is
that you can't threaten Windows, you can't threaten Windows
market share or position in the market unless the middleware
is available on all or almost all, nearly all of the PCs.
Without that, something like WordPerfect or PerfectOffice
could not become a device by which millions of consumers would
be transferring to Linux or OS/2 or some other operating
system. It's only when it's so pervasive that the many, many
5452
millions and millions of users of Windows worldwide would have
some easily portable way, to use the phrase that
Professor Noll used, some easy access to some competing
operating system.
If, for example, PerfectOffice has 8 percent of the
market, which is all it had before Windows 95 came out, that's
what Professor Noll said, if it has 8 percent of the market,
it cannot by definition be sufficiently ubiquitous to allow
users to move to Linux. They have to go buy Linux or OS/2.
THE COURT: Well, again for free. That's another
issue.
MR. TULCHIN: Well, not really, Your Honor. There
was a version of Linux available for free, which no one really
used. I mean, almost no one. No one obviously is too strong.
And there were versions of Linux that were being sold by
companies like SUSE Linux for, I think, 59.95 at the time
that gave users a little more of the functionality that they
were used to seeing in an operating system from PCs. So there
was a version of Linux that was stripped down that was for
free that almost no one chose.
In any event, Your Honor, I mean, the first two of
the three requirements come from Professor Noll. And I just
don't know how we could be debating those two. I understand
how we can be debating the third, and I agree that there was
testimony that wasn't crystal clear, although Mr. Alepin
5453
certainly says it has to be more. It's not just exposing APIs
so that a dental practice could use WordPerfect, which was
conceivable. Could WordPerfect like any other form of
application on top of Windows expose some API?
And I believe it's correct that a dental practice
could use a piece of software written to call the APIs of
WordPerfect to allow the dentist to send out automatic
reminders to his patients or her patients of appointments
upcoming. That in itself, of course, is no threat to Windows
because it's such a narrow use of the APIs of WordPerfect that
it doesn't comprise a sufficient threat to Windows and really
no threat to Windows. You would still need the operating
system. You're not commoditizing it through a dental practice
reminder application.
So, I mean, the whole theory here is that it has to
be broad enough so that many, many, millions of users around
the world would be switching by the convenience of having
WordPerfect or PerfectOffice available on two platforms or
more, let's say Windows, let's say OS/2 or Linux, and you
could easily move to that other platform. And again, it can't
be 1 percent or 1/2 percent of the users in the world, it has
to be all or nearly all. And that's the only way that Windows
could be threatened at all. That's exactly what Noll said.
THE COURT: Yes, Mr. Johnson.
MR. JOHNSON: That is exactly what Dr. Noll did not
5454
say. In fact, Mr. Tulchin was going along this same line of
questioning at Page 1925. And he's talking about the
conditions, these first two conditions, not the third. And
Professor Noll answers:
You're overstating what I said. I said this
alternative could be an attractive option if two conditions
were met.
Fair enough.
That is what I said.
Fair enough. I'm with you.
And then he goes on to discuss those two
conditions.
And the second condition being that the middleware
program has to be cross-platform; correct?
Yes.
It has to be available on a number of alternative
operating system platforms. And that's different from being
on most or all PCs.
He says, yes.
Correct.
Yes.
Question. Okay.
Answer. Notice, although -- and he's talking about
his report, this is Professor Noll. Notice, although, at the
end it says this is a condition for eliminating the
5455
applications barrier to entry commoditizing the operating
system. It is not correct to say that something less than
that couldn't increase competition. It is just that this last
sentence is crucial. That's about eliminating the
applications barrier to entry.
Professor Noll was absolutely clear --
MR. TULCHIN: No.
MR. JOHNSON: -- in what he said, that those
conditions are only necessary to eliminate the applications
barrier to entry, not necessary to increase competition. And
he said this over and over again. And I read Your Honor
before the continuum testimony and how as more applications
are written to part of middleware it reduces porting costs and
thereby increases competition.
So to state to the jury that it has to be at least
those two conditions -- I agree it has to be cross-platform.
I certainly agree to that. But to state that it has to be on
all PCs or almost all PCs and it has to write -- you have to
be able to actually be an operating system, again, as I said,
that would be directing a verdict on this issue, and it would
be inconsistent with Novell's position in this case, which is
as Your Honor said, maybe we're wrong, but we have given this
issue to the jury appropriately, I think, Your Honor, after
careful consideration that you gave. And to be sitting here
for the --
5456
THE COURT: I really thought -- I thought before
the only dispute was about the third one.
MR. TULCHIN: That was the only dispute, Your
Honor.
MR. JOHNSON: No, Your Honor. Both the second and
third are disputed. The first is not disputed. I certainly
agree with that.
THE COURT: No. No. I'm just telling you what my
understanding was. I understood that we were only talking
about the third.
MR. JOHNSON: That's because Microsoft has been
saying that over and over and over again --
THE COURT: Well, be that as it may, okay.
MR. JOHNSON: -- without reference to what
Dr. Noll actually said.
MR. TULCHIN: My question, Your Honor, on 1925 was
whether the conditions that I was talking about could become a
threat to Windows. The question was not about eliminating the
barrier, the question was becoming a threat. And he said all
or nearly all. So --
THE COURT: Where we are, and suppose -- I'm just
trying to answer the question, suppose the answer was, no.
Quote, middleware must be cross-platform. And just forget
two. And, two, expose sufficient APIs to whatever the
language Mr. Alepin was exposed to encapsulate substantial
5457
functionality --
MR. JOHNSON: Meaningful functionality is what you
said.
THE COURT: -- meaningful functionality and
threaten Microsoft's monopoly in the PC operating system
market. Just make -- the question of threat is still there
that it has to be nearly ubiquitous arguably, but that's
something for the jury to decide. But just to say, no.
Middleware is software that is, one, cross-platform; and, two,
exposes sufficient APIs to encapsulate meaningful
functionality and threaten Microsoft's monopoly in the PC
operating market.
I understand that Microsoft objects to that on the
grounds that basically I should direct a verdict and take the
whole concept of middleware out of the case, which is a fair
position. But short of that, the answer to the jury's
question, short of direct the verdict, doesn't that get us
where we need?
MR. TULCHIN: Your Honor, when you say
cross-platform, could you at least say, in the sense that it
runs on multiple operating systems, so that they understand
what we're talking about here?
THE COURT: Okay. Cross-platform, i.e., run on
multiple operating systems; and, two, expose sufficient APIs
to encapsulate meaningful --
5458
MR. JOHNSON: Functionality.
THE COURT: -- functionality?
MR. JOHNSON: Yes, Your Honor.
THE COURT: And threaten Microsoft's monopoly in
the PC operating system market.
I'm just trying to move the jury along from that.
And I understand Microsoft's position. Look, it shouldn't
even be in the case because it doesn't expose sufficient APIs
to -- it's not ubiquitous or there's no evidence that it was
nearly going to be nearly ubiquitous, and that's a fair
position. That's something that I've -- right now I've got to
answer the question.
So the answer would be, no. Quote, middleware must
be cross-platform, i.e., run on multiple operating systems;
and, B, expose sufficient APIs to encapsulate meaningful
functionality and threaten Microsoft's monopoly in the
PC operating system market.
Nobody likes it. Nobody's satisfied with it, but
I'm trying to -- is there any problem with that?
MR. JOHNSON: Your Honor, obviously we would like
to reserve an exception to it.
THE COURT: Why?
MR. JOHNSON: Because we don't think you should be
defining to the jury --
THE COURT: Okay.
5459
MR. JOHNSON: I thought your original --
THE COURT: Oh, no. Mr. Schmidtlein's point to ask
a question. That's right.
MR. JOHNSON: Yeah. So we would except to it on
that basis.
THE COURT: Sure.
MR. JOHNSON: But it's certainly better than the
alternative.
MR. TULCHIN: Well, for present purposes, I think
we should go with that. Our position is --
THE COURT: No, I understand. I'm just trying --
MR. TULCHIN: Let's go with that for now.
THE COURT: Is it platformed or platform without
the ed?
MR. HOLLEY: Platform.
MR. AESCHBACHER: Platform.
MR. TULCHIN: No ed. Sometimes it appears that
way, but I think it's better to just have it cross-platform
forward.
THE COURT: But sometimes I say Namestake.
(Time lapse.)
THE COURT: I can't even write it, answer it. I'm
sure glad I'm not a patent lawyer. Can you imagine trying to
translate these technical things into English for them and
everybody attacks it?
5460
MR. JOHNSON: It keeps a lot of lawyers busy, Your
Honor.
THE COURT: I picked a good job.
Okay. This is the answer I propose one more time.
No. Quote, middleware, unquote, one, must be
cross-platform, i.e., run on multiple operating systems; and,
two, must expose sufficient APIs to encapsulate meaningful
functionality and threaten Microsoft's monopoly in the
PC operating system market.
I understand, and it's fair. But I just want, so
the record is clear, Novell objects on the ground that I
shouldn't define middleware at all. Microsoft objects on the
ground that I should include something about ubiquity, and,
frankly, I guess it objects on the grounds that I shouldn't
define middleware at all but rather should take the middleware
issue from the jury because there is insufficient evidence
that Novell's product in question expose sufficient
functionality so as to threaten -- I forget what the magic
language is, but it's out of the findings of fact, but
essentially the product in question, Novell's product in
question simply in no sense could constitute middleware. And
that's fair, and that's something depending on the jury's
verdict I'll have to deal with in due course.
But subject to those exceptions, is this language
okay?
5461
MR. JOHNSON: Yes, subject to the exceptions.
THE COURT: Subject to the exceptions. And I have
no quarrel with your exception. I'm just giving what I'm
giving.
MR. JOHNSON: Just trying to make the record, Your
Honor.
THE COURT: I hate to look over somebody's
shoulder.
THE CLERK: No. I don't mind at all.
THE COURT: And we'll wait until the next question
comes out to talk about it.
(Time lapse.)
THE COURT: One more time just so I've got it
right.
Answer. No. Quote, middleware, one, must be
cross-platform, i.e., run on multiple operating systems; and,
two, must expose sufficient APIs to encapsulate meaningful
functionality and threaten Microsoft's monopoly in the
PC operating system market.
MR. HOLLEY: Yes, Your Honor.
THE COURT: And that's given with the exceptions
which I understand.
THE CLERK: Operating systems. What is this?
THE COURT: Market.
And while I'm here, we won't give it now, but at
5462
some appropriate time, does Novell have, this morning, have
objection to me giving what seems to me to be a rather mild
Allen charge? I'm having my law clerks research what an Allen
charge in civil cases in the 10th Circuit is. But this one
seems to me to be relatively mild.
MR. JOHNSON: No objection, Your Honor.
THE COURT: Good. Should I do that now?
MR. SCHMIDTLEIN: It's a little early.
THE COURT: We'll wait for the next question.
MR. JOHNSON: I think we'll get one, Your Honor.
THE COURT: I think we will, too. Thank you.
(Recess.)
THE COURT: Good afternoon.
MR. HOLLEY: Good afternoon, Your Honor.
THE COURT: This one I think I can answer, as
follows:
If you have a no answer to either of the two
sub-questions in Question 4, your answer to the entire
Question 4 must be no.
MR. TULCHIN: Agreed, Your Honor.
MR. JOHNSON: Your Honor -- sorry.
MR. TULCHIN: Sorry. I wrote out something that
amounts to I think the same thing. I'll hand it up. I don't
think it's all that different.
THE COURT: That's fine. It's probably a little
5463
better.
MR. JOHNSON: You know, Your Honor, looking at the
question, I don't know obviously which part they think they've
answered yes to and which part they haven't.
THE COURT: I wouldn't speculate they think
anything.
MR. JOHNSON: That's the difficulty. But my
comment is 4 seems to have two parts.
THE COURT: Yeah, it does.
MR. JOHNSON: And 5 doesn't.
THE COURT: That's right. And that's because I
thought I stated -- I thought that Microsoft's position was
that you have to show both harm to competition and some
significant contribution. I thought your position was that
you did not have to show harm to competition, so I left it out
of 5.
MR. JOHNSON: And the reason is capable standard.
That's true. That was our position.
THE COURT: Exactly.
MR. JOHNSON: I agree. I think you have to.
THE COURT: Okay. So actually --
MR. JOHNSON: I'm there with standard.
THE COURT: It's their theory of the case, so --
MR. JOHNSON: Yeah.
THE COURT: Let me -- did I give you -- I think
5464
Mr. Tulchin's is a little better than mine, which is basically
the same.
In order to answer yes to Question 4, you must find
that Novell has proven both parts of Question 4. If you
believe that either part of Questions 4 is no, then your
answer in the verdict form should be no as to Question 4.
Okay.
MR. JOHNSON: I think that's a little more than you
need, Your Honor, but okay.
THE COURT: Well, it just -- it probably is.
MR. JOHNSON: I don't think you have to tell them
two or three times.
THE COURT: If you believe that the answer to --
I'll say what I said. If you believe, which was, Theresa, if
you have a, quote, no, unquote, answer to either of the two
sub-questions in Question 4, your answer to the entire
Question 4 must be no.
MR. JOHNSON: Thank you, Your Honor.
(Recess. )
THE COURT: Good afternoon.
MR. HOLLEY: Good afternoon, Your Honor.
THE COURT: I guess the time has come for the
charge that we discussed this morning.
MR. TULCHIN: I think so, Your Honor. That's what
I would suggest is that you give the charge that we sent in
5465
this morning to bring some assembly to it.
THE COURT: I'm sure -- I just want to make it
clear that what the note says is, may I talk to Theresa?
Thank you. It has to do with a hung jury.
I'm sure you agree with me this is not a poor
reflection on Theresa at all. I think that it's perfectly --
it's nice she's established a nice relationship with them, and
it's a natural thing for them to ask. But let's bring them
in, and I'll give the jury the --
THE CLERK: Are you ready right now?
THE COURT: I'm as ready as I'll ever be. I'm just
getting to know you guys.
(Whereupon, the jury returned to the court
proceedings.)
THE COURT: Ladies and gentlemen, it's come to my
attention that you may be having some difficulty in reaching a
unanimous agreement. That's not unusual. Sometimes after
further discussions jurors are able to work out their
differences and agree. This is as you know an important case.
All cases are important, but this one is lengthy, shall we
say. If you should fail to agree upon a verdict, the case is
left open and it may be tried again. Obviously another trial
would require the parties to make another large investment of
time and effort, and there's no reason to believe that the
case can be tried by either side better or more exhaustively
5466
than it's been tried before you.
It is your duty as jurors to consult with one
another and deliberate with a view toward reaching an
agreement if, and let me add, this is important, if you can do
so without violence to your individual judgment. Each of you
must decide the case for yourself. But as I said before, do
so only after an impartial consideration of the evidence with
your fellow jurors. In the course of your deliberations, do
not hesitate to reexamine your own views and change your
opinion if you are convinced it is erroneous. But do not
surrender your honest conviction as to the weight of the
evidence solely because the opinion of your fellow jurors or
for the -- merely for the purpose of returning a verdict.
What I've just said is not meant to pressure you
into agreeing on a verdict. Take the time you need to discuss
this. There's not -- there is not an urgency or hurry, but I
will ask you that you now retire once again and continue your
deliberations with these additional comments in mind to be
applied, of course, in conjunction with all of the
instructions that I previously gave you. Thank you.
I'll stay here with counsel for a minute.
(Whereupon, the jury left the court proceedings.)
THE COURT: Please be seated. I guess I will not
be conducting a hearing in Baltimore tomorrow.
I don't ask you all to agree to this at all.
5467
Obviously I don't have anything to do, so I've been thinking
about this. I actually thought about this last night. And I
I've had my law clerks do some research on less than a
unanimous verdict, and they haven't found anything.
Heaven knows what's happening. I don't know. I
mean, one could infer one thing, and I'm not sure that's the
proper inference. There are other inferences they try to find
something that they could agree upon wherever they found it on
the verdict form and couldn't find it.
I hesitate even to suggest this to you all, and I'm
not twisting your arms. And there's no question that I think
we would be making new law. But this is a very, very huge
investment that you all put in this case, and that is to
somehow try to come up with a solution which I either will
impose upon you, which I don't think I will do, or with your
agreement, which I don't expect to be forthcoming, to take
less than a unanimous verdict. And let me tell you my
thinking in that regard.
We have 12 jurors. All we need is six. In secular
terms, we could ask jurors to abstain. I will tell you, I
think I mentioned once before I went to a Quaker school, and
I'm probably the only Quaker that tried to join the Marines.
But I do have Quaker as my background. And they have -- and I
do know from my experience that they have, and I think I'd
like it better because more than abstention, it is stepping
5468
aside from a consensus decision if you simply can't join in
the consensus and act on the part of the person who does it
who -- I came across as a young man when we were, frankly,
incorporating friend school separately from the Quaker
meeting, which was a big step for the meeting, and there were
old timers that didn't think it should be done. But they
realized that what was being proposed probably would be in
everybody's interest, and they may be standing against a good
decision and against the times. But their own royalties made
it impossible for them to accept incorporation of a school
separate from the meeting. So several stepped aside from the
decision and allowed the decision to go forward by under
Quaker procedure had to be a consensus decision. And they
actively said, we will step aside. We recognize, we will step
aside from the decision, and so be it.
I have no idea what's going on. I have no idea
what the vote is. Everybody got's their risk in the case, and
it existed throughout. And a way to do this would be to ask
if the jurors would be willing, if there's a strong consensus
on the other side, to be able to step aside and let the
verdict be rendered without, you know, without them joining in
it. It would leave the jurors' the decision to do that.
it's -- I have no idea what it is that's motivating them. I
don't know whether it's royalty to a -- it could be that a
substantial number of jurors have decided Microsoft is right
5469
and others out of loyalty to WordPerfect and Novell said, no,
we can't -- we don't want to be associated with the
pro-Microsoft verdict. It could be as to questions, the
sequence of questions might be read as saying that the
majority of the jurors are for the plaintiff. And yet there's
just one holdout or two holdouts saying no, Microsoft,
whatever.
So I'm not asking you to make -- to address it now.
All you have to do is tell me no, and I probably won't do it.
But it occurs to me we do have legally the possibility of
doing that since really we only need six people to return the
verdict and we have 12. I would not personally be comfortable
with the process, which as I say in secular terms is basically
asking the jurors to abstain, although I think there's a
certain more active involvement of a juror stepping aside from
a verdict. I would not be comfortable if it were more than
three, to tell you truth. I've been trying to think this out.
To have six step aside or abstain and leave it up to six, I
would not be comfortable with that. If it was three, I think
probably the maximum I would be comfortable with is nine if
three stepped aside.
I'm not twisting your arms, but I know you all have
a lot invested in this case. I know that nobody has any idea
what is going on in that juryroom and who runs the risk of
what I'm suggesting, if anybody. I mean, it could be that
5470
jurors don't want to step aside, and they say no. It's got to
be a unanimous verdict, and that's my right.
But consider it, think about it, and I'm going go
call Delta and tell them I'm not going home tonight. Thank
you.
MR. HOLLEY: Thank you.
THE COURT: Maybe if I call Delta they'll come back
with a verdict.
(Recess.)
THE COURT: Let me ask you something less radical.
They've been here since 8 o'clock this morning. I'm
wondering, I would think it would probably be a good idea for
Theresa to send them a note saying, do you prefer to stop
deliberating around 5 o'clock tonight or deliberating until
7:00 or 8:00.
The reason the question should be asked now rather
than waiting is because they order dinner now, and frankly,
there's just so much one can do. And I'm not one - this is a
business-like kind of thing. If they -- I don't want -- it
seems to me -- frankly, it seems to me if I were them I would
want to stop at 5:00 and come back tomorrow.
MR. TULCHIN: I think that's a good idea, Your
Honor. I don't know if I'm reading this right, but there
looked to be a couple of faces that were maybe tense, maybe
close to upset when they came out. And I think it might be a
5471
good idea to let them go at 5:00 and tell them to come back in
the morning.
THE COURT: Give them the choice.
MR. TULCHIN: Or give them the choice.
MR. SCHMIDTLEIN: Yeah. I think there are some of
them who depending -- they've got long drives.
THE COURT: Yeah. And I can say 5:00. I can say,
would you prefer to stop now or deliberate until around 5:00
or around 7:00 or 8:00? So maybe it's now. Now that I look
at the clock it's been eight hours.
MR. SCHMIDTLEIN: Just have Theresa go back and ask
them?
THE COURT: Yeah. Why don't you go back and ask
them.
MR. SCHMIDTLEIN: Instead of bringing them out here
and putting them on the spot.
THE COURT: I was going to send them a note.
THE CLERK: Do you want me to do a note or go in
and talk to them?
THE COURT: Either. Go in and ask them.
MR. JARDINE: They love you, Theresa.
MR. JOHNSON: We love you, Theresa.
THE COURT: And we can talk about that other thing
tomorrow morning. We don't have to -- I don't need your
answer now. I realize it's radical. I don't think it's --
5472
and there are risks. And frankly I think it's a good idea.
MR. SCHMIDTLEIN: I think it's at the very least we
need to talk to our client about this.
THE COURT: Yeah. Talk to your clients about it.
MR. JOHNSON: By the way, Your Honor, do you have
any law on this?
THE COURT: It's like my summary judgment opinion,
which you'd like to keep sending back to me. My guess is
there is no law on this. I mean, the law clerks found nothing
on it. The only thing that occurred to me was we might be
able to do it because it's less than --
MR. JOHNSON: The door's not closed, Your Honor.
THE COURT: But, no.
MR. JOHNSON: Thank you for the constructive
suggestion.
THE COURT: And if you all can find something, feel
free.
MR. SCHMIDTLEIN: No. I think Mr. Johnson's
question really was obviously part of the evaluating --
MR. JARDINE: You better close that door.
THE COURT: Feel free. You won't offend me if you
try to find something.
(Whereupon, the Judge closed the door.)
THE COURT: At some point, and again, you all can
think about this tonight, we also ought to discuss the
5473
schedule for tomorrow. I mean, I do have to go back this
weekend. But as of right now, there are seats available,
there's a 5:15 flight, which would mean I would have to stop
here by around 4:00. But there also is a flight at 10 o'clock
the next morning on Saturday, which I can take, which is
probably the most realistic thing.
You all should consider -- whatever you decide on
this less than unanimous thing as to whether or not -- I mean,
they may just -- they may enter, of course, saying they just
can't reach it. But one thing you may consider is whether or
not to --
THE CLERK: They said they're making progress, and
they would like to stay at least until 7:00. And they are
ordering dinner right now.
THE COURT: That answers that. Okay. The question
is if they don't make enough progress whether or not they
should come back on Monday. Just think about that.
MR. TULCHIN: Well --
THE COURT: Obviously we have to hear what they
have to say. But that is a possibility.
MR. TULCHIN: Right. Your Honor, what I was going
to say is that it might be helpful if you want to catch a
plane tomorrow to tell them before they leave tonight that the
schedule tomorrow is that they would deliberate 'til 3:30.
And if they don't reach a verdict we'll come back Monday.
5474
THE COURT: I can do that. But, in fact, I have --
you know, it really doesn't matter. I mean, I lose my hearing
tomorrow, anyway, in Baltimore, so I probably can stay until
10:00. I mean, I can -- but maybe we ought -- before the
weekend maybe we ought to tell them we're going to stop at
sometime tomorrow, anyway. It is a weekend.
MR. TULCHIN: Right.
THE COURT: I hope they are making progress.
MR. HOLLEY: Thank you, Your Honor.
(Recess.)
5475
STATE OF UTAH
ss.
COUNTY OF SALT LAKE
I, KELLY BROWN HICKEN, do hereby certify that I am
a certified court reporter for the State of Utah;
That as such reporter, I attended the hearing of
the foregoing matter on December 15, 2011, and thereat
reported in Stenotype all of the testimony and proceedings
had, and caused said notes to be transcribed into typewriting;
and the foregoing pages number from 5429 through 5475
constitute a full, true and correct report of the same.
That I am not of kin to any of the parties and have
no interest in the outcome of the matter;
And hereby set my hand and seal, this ____ day of
_________ 2011.
______________________________________
KELLY BROWN HICKEN, CSR, RPR, RMR
5476
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