Filing 897

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FARM-TO-CONSUMER LEGAL DEFENSE FUND et al v. SCHAFER et al Doc. 897 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA UNITED STATES OF AMERICA, Plaintiff, vs. MICROSOFT CORPORATION, Defendant. ___________________________________ STATE OF NEW YORK, ET AL, Plaintiff, CA No. 98-1233 (CKK) vs. MICROSOFT CORPORATION, Defendant. ___________________________________ CA No. 98-1232 (CKK) Washington, DC January 28, 2009 10:50 a.m. TRANSCRIPT OF STATUS CONFERENCE BEFORE THE HONORABLE COLLEEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE APPEARANCES: For Department of Justice: AARON D. HOAG, ESQUIRE ADAM SEVERT, ESQUIRE U.S. Department of Justice 600 E Street, NW Suite 9300 Washington, DC 20530 (202) 307-6153 APPEARANCES continued on following page. APPEARANCES, continued For Microsoft: CHARLES F. RULE, ESQUIRE JONATHAN S. KANTER, ESQUIRE Cadwalader, Wickersham & Taft 1201 F Street, NW Washington, DC 20004 (202) 862-2420 KEVIN KEHOE, ESQUIRE JUDY JENNISON, ESQUIRE CRAIG SHANK ERICH ANDERSON ROBERT MUGLIA ELLEN S. COOPER, ESQUIRE Assistant Attorney General Chief, Antitrust Division Office of Attorney General 200 St. Paul Place Baltimore, MD 21202 (410) 576-6470 RICHARD L. SCHWARTZ, ESQUIRE Deputy Bureau Chief, Antitrust Office of Attorney General 120 Broadway, suite 2601 New York, NY 10271-0332 (212) 416-8284 For Microsoft: For the New York Group: For the California Group: STEPHEN HOUCK, ESQUIRE Menaker & Herrmann LLP 10 E. 40th Street New York, NY 10016 CRAIG FARRINGER ESQUIRE (Calif) LAYNE LINDEBAK, ESQUIRE (Iowa) ADAM MILLER, ESQUIRE (Calif) KATHERINE E. BRITTON, ESQ.(DC) For the California Group: Court Reporter: Lisa M. Hand, RPR Official Court Reporter U.S. Courthouse, Room 6505 333 Constitution Avenue, N.W. Washington, DC 20001 (202) 354-3269 Proceedings recorded by mechanical stenography; transcript produced by computer-aided transcription 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PROCEEDINGS COURTROOM DEPUTY: Civil case 98-1232, the United States of America versus Microsoft Corporation, et al., and Civil case 98-1233, State of New York, et al. versus Microsoft Corporation, et al. Counsel, please identify yourselves for the record. MR. SEVERT: Good morning, Your Honor. Adam Severt for the United States. With me at counsel table is Aaron Hoag. THE COURT: Okay. MS. COOPER: Good morning, Your Honor. Ellen Cooper for the New York Group, and with me at counsel table is Richard Schwartz from New York. THE COURT: Good morning. MR. HOUCK: Good morning, Your Honor. Steve Houck for the California Group. And just following up on your comment, I wanted to note that like the proverbial postman, my colleagues from the west and the midwest braved the rain, snow, sleet and hail to take their appointed positions in the courtroom today. And that would be Adam Miller from California, sitting at counsel table, and Layne Lindeback from Iowa. We also have here today, with a little less difficulty, two folks from the D.C. Attorney General's Office, Katherine Britton and Craig Farringer. THE COURT: All right. You're probably more 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 accustom to the weather than we are. MR. RULE: Good morning, Your Honor. Charles Rule, Cadwalader, here representing Microsoft. With me today is my partner, Jonathan Kanter. As well, showing their hardiness from the Pacific northwest, are folks from Microsoft, Bob Muglia, who Your Honor knows, who is now the President of the Server and Tools Business at Microsoft. Next to him is Kevin Kehoe, Senior Attorney in the Law and Corporate Group at Microsoft. Judy Jennison who is next to Kevin, who is a Senior Attorney as well in that group. And then on the bench we have Erich Anderson, who is Vice-President and Deputy General Counsel, and next to him is Craig Shank. THE COURT: All right. I will note that Mr. Himes wrote to me and indicated that he was leaving the AG's office and going into private practice, so I would have new people addressing me. All right. As has been my practice over the years, I'll summarize the status of the compliance and certainly as a court hearing. Based on the reports, I have a few questions and then I'll call on counsel. When we were last in court on September 25th, that was a full compliance status hearing and this is an interim one, which generally is more focused. And we're looking also, now that we're in 2009, that the provisions that are still extant will be expiring on November 12th. Since the full compliance hearing, Microsoft has filed reports in October, 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 November and December, and then in January the Joint Status Report as well. The specific focus, as it has been for quite a number of years at this point, is the developments with respect to Section III.E and the middleware-related provisions of the Final Judgment. Although other aspects of the sections are being reviewed, those seem to be the principal ones. Again, when I talk about the TC, I'm also including Mr. Hunt who has worked with them. So, let me start with -- and it's actually a fairly short report in terms of the focus of what we need to talk about. III.E, in terms of the reset project. Since we were last here, Microsoft and the TC had finalized the two templates that will govern the preparation of the system documents. Microsoft also developed a project plan to complete all 19 system documents. Those should be done, as I understand it, by June 30th of this year, and includes seven milestones along the way for Plaintiffs and the Court to track. And on each of the completion of the milestones, the newly created documents will be made available to licensees immediately on request and included in the next readily scheduled revisions to the documentation. At this point, Microsoft has completed system documents in the first two milestones. The TC has begun reviewing those documents. There will be feedback to 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Microsoft. And Microsoft reports it's going to be on track to deliver Milestone 3 in -- I guess later in February. So, that's good news as long as these documents are good and are doing what we're supposed to. On December 5th of '08, Microsoft delivered to the TC the updated technical documents in anticipation of the release of Windows 7 beta. And there's 30 new technical documents, 87 updated technical documents, and I guess between the scope of the work of looking at the Windows 7 documents and the new system documents, the TC evidently decided to set up a different review strategy. So, it's going to shift its focus going forward, giving the direct review of the documents to the TC's engineers. And then you will, as I understand it, continue to use validation and prototyping methods to supplement the direct review. Evidently the TC feels this is the most efficient method for identifying issues with the documentation and will also allow you to look at Windows 7, which is very important, as well, more thoroughly. The prototype implementation activity as of December 31st, '08, there were a total of 1660 outstanding TDIs in the rewritten documentation, 301 were Priority 1 submitted by the TC, 776 were self-identified by Microsoft. Microsoft points out that it spans the entire range of rewritten MCPP documentation, and it should be considered in the context of 20,000 pages. I have a few questions on that 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 one, but I'll get back to it. In terms of testing of Cluster 7, that was completed on September 30th. The results were reviewed with the TC in October of '08. In addition, testing for Cluster 8 was completed in early January, and they were reviewed with the TC on January 20th. And then the next one, as I understand it, will be March 31st. And they will be using newly created technical documentation, including Windows 7, will be tested using a similar method. Microsoft is planning an active directory plug-fest for this week, five confirmed attendees. The MCPP status, their total of 51 companies now licensing patents for Communications Protocols, and 41 of those have royalty bearing licenses, so the number has gone up slowly, but gone up. As aware of 14 patent licensees shipping products under the MCPP, and Microsoft reports that 28 licensees have signed up to receive the free Technical Account Manager support, and eight have signed up for Windows source code access. Evidently, as of January 21st documents describing the protocols available have been downloaded over 270,000 times, which is quite an impressive figure. I am concerned, obviously, about the TDIs, and I realize that the more you look at it, the more these things are reviewed, but I am concerned that we do have a November 12th date looming now in this year. And I want to make sure that we see this as 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 getting resolved before that. And I guess the next thing is whether -- my other question is whether Plaintiffs agree that Microsoft is on track on these various milestones, and the reviews that you have been doing, the ones that you did testing validation on Cluster 7 back in October and January, and you'll be doing one in March. Are you satisfied with what is being produced? That's important to know. The next area is the competing middleware, and this is the Plaintiffs but not the United States, have received complaints about certain marketing programs that were announced by Microsoft from several companies that manufacture and sell a variety of products that work with Windows. Microsoft has informed the Plaintiffs that a number of changes have been made to these programs, I assume in response to this, it wasn't quite clear looking at the reports. And the other additional changes are being considered and Plaintiffs are monitoring it. So, my first question is, of course, are the Plaintiffs satisfied with the changes? Are they directed and responsive to what the concerns are that have come up in terms of these marketing programs? Any reactions based on the TC's testing of Windows 7 or the beta of IE 8? There don't seem to be any new issues on the default browser override, if that's correct. And has the TC provided Microsoft with the new codes 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for its simulator tool. And the last one we had been talking quite a bit about, an ongoing confidential inquiry about a matter that evidently involved cross platform gaming, which Plaintiffs are now reporting has been resolved to their satisfaction and without any intervention from me. And, evidently, Microsoft has agreed to provide additional compliance training to some of the employees in the Windows organization who interact with hardware vendors. And one of Microsoft's executives will publicly affirm at an appropriate industry meeting scheduled to take place within the next two months, Microsoft's ongoing commitment to support game developers on Windows, whether or not those developers choose to use other platforms as well. So, that seems to be resolved. Compliance officers, other than this one thing that evidently you're picking up in terms of doing it. The other thing is, there are media reports about cuts in jobs for Microsoft, hopefully they're not in my area. And I want to make sure that the commitment that has been made that we've been working on with Mr. Muglia continues and that we don't wind up with people being sliced from there, particularly, where, once again, deadlines are looming. So, that's pretty much it. I think those are the key things that I saw in there. I have raised a few questions, but I'm interested in knowing the Plaintiff's 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reactions to the various things that have been produced so far. So, let me start, as I always do, with Justice and then I'll move through the group. MR. SEVERT: Thank you, your Honor. As you noted in your opening remarks, Mr. Himes is not with us today, he has finally followed through on his repeated threats and left the New York Attorney General's office. I just wanted to note for myself, and I know Mr. Hoag and the rest of us with the United States, that it was a pleasure working with Mr. Himes and we will certainly miss him. I also want to introduce Ellen Cooper who is going to be -- who has been working on this case for some time. THE COURT: Yes. I certainly recognize her. MR. SEVERT: Ms. Cooper will be taking a more active leadership role with the New York Group, and we look forward to continuing to work with her in her new role. THE COURT: So, she's the new Mr. Himes? MR. SEVERT: There is no new Mr. Himes, Your Honor. THE COURT: Although, I think he's probably somewhat irreplaceable. I always enjoyed his answers to my questions and things that he brought up. Go ahead. MR. SEVERT: To shift -- to focus on your questions, let me start with III.E. You mentioned that the TDI numbers have been rising steadily. I think from our perspective we view these as normal fluctuations in the 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 numbers of TDIs and don't view it as a cause for concern at this point. THE COURT: Okay. MR. SEVERT: In terms of -- are we still on track for November of this year. I can tell you we haven't reached that question yet. THE COURT: Okay. MR. SEVERT: But we will be engaging with Microsoft over the next few months talking about what the path for the path to completion looks like. THE COURT: Are you satisfied with the work that has been produced pursuant to these milestones? I'm assuming that people are satisfied with the two templates because we've now moved forward. MR. SEVERT: Yes, Your Honor. THE COURT: So, where are we in terms of the documentation that's been related to the milestones? MR. SEVERT: Sure. You had asked about the Cluster 7 and 8, and we are very satisfied with the work that has gone on there. And, in fact, that has generated a number of TDIs from that -- from that effort. The thing that's too early to talk about yet is the system documents. We've received four from Microsoft to date, and because of how complex they are, it will be still some more time before we are able to -before we are in a position to comment on the quality of those 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 documents. So, I think that's sort of the focus for the TC right now is the system documents. And as Your Honor noted in your remarks, they have shifted their focus to this direct review, which will allow them to really focus on both the system documents and the Windows 7 documents, both the documents that are new for Windows 7 and have been changed for Windows 7, which we view as very high priority for the industry. THE COURT: I agree. MR. SEVERT: The other thing I just wanted to briefly address, unless you had any other questions on III.E? THE COURT: No. MR. SEVERT: Your Honor had asked about the announced job cuts at Microsoft, and when we read that we asked the same question and had been assured that none of the layoffs are involved in any of the Final Judgment efforts. THE COURT: Okay. I'm sure that the European union would have something to say about it, too. Go ahead. MR. SEVERT: Any further questions, Your Honor? THE COURT: No. The only other thing was in terms of the one complaint about the marketing program. Reading the report, it wasn't clear to me whether you were satisfied with the response that Microsoft has come up with. MR. SEVERT: Your Honor, are you referring to the marketing program or the cross -- 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Oh, that's not you. That's right. Sorry, I forgot. I keep forgetting. It's not the U.S., it's the wrong person. MR. HOUCK: I'll address that, Your Honor. THE COURT: That's right. I forgot about that. MR. SEVERT: Thank you. THE COURT: Okay. Ms. Cooper. MS. COOPER: For my maiden speech, Your Honor, I don't really have very much to say in this matter. We're largely in agreement with the Department of Justice in terms of how we view how things are going with, in particular, the system documents and the TDIs. And Mr. Houck is going to be addressing the questions that you raised about the middleware complaints. THE COURT: Okay. All right. Mr. Houck. MR. HOUCK: I'd like to begin with two personal notes, one is that we also will miss Mr. Himes and his excellent work, and the other thing is to congratulate Mr. Muglia, who now is one of the very most senior people in Microsoft, he has a very impressive title. So, I want Your Honor to know you've got a top level guy sitting right here. THE COURT: All right. MR. HOUCK: First, briefly, with regard to the documents, the last time I was here we did express some concern about what we perceived to be the level of commitment 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to Microsoft and Microsoft to working on this. I don't have that concern this time. Indeed, we are quite pleased as we see it from and hear it from Mr. Hunt and the technical committee, that Microsoft is working hard to get the documents into shape. We obviously remain concerned, as Your Honor does, about the level of the TDIs, but are satisfied that Microsoft is working well with the TC to get them down. Now, Your Honor mentioned the November date that is coming up, and I actually promised Mr. Rule I was going to stay away from this subject today, and I will largely, but Your Honor raised it. THE COURT: I raised it only in that we're now in the year once again. MR. HOUCK: So, I just want to give you a little information, hopefully without breaking my promise to Mr. Rule. Actually, we're not really prepared to discuss it anyhow, but I will tell you what we told him, which is that we are thinking very hard about this. We, too, are aware that that date is coming up. And what our objective is is to be in a position to talk with you about this the next time we meet. So, that's all I'll say, and I apologize to Mr. Rule. THE COURT: Okay. You can always respond to the Court and not break your promise to fellow counsel. MR. HOUCK: Your Honor trumps Mr. Rule, as far as I'm concerned. I did want to talk a little bit about the 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 marketing complaints which Your Honor alluded to, and Your Honor said you weren't clear about them, and that's not your fault. I think the JSR was deliberately vague about what they are with some reason. THE COURT: Okay. MR. HOUCK: I will start off by saying that in the six plus years that we've been enforcing the decree, this particular issue is one in which we've gotten the most number of complaints and heard the most anxiety about what Microsoft is doing. And the subject matter, very generally, is various Microsoft marketing programs that impact or potentially impact non-Microsoft middleware and applications in the OEM channel. And I don't really want to say too much more about that because the programs are changing, but I at least wanted to give you enough to orient you to what it is that we're addressing. THE COURT: Okay. MR. HOUCK: And we have had complaints, both from significant ISVs and from significant OEMs about this. I thought it might also be a little bit helpful to try to put this in some chronological context for Your Honor. I actually first raised this back at the June 2008 Joint Status Conference, and Your Honor probably doesn't remember it because I raised it in a very glancing way. I said we had heard some concerns about some Microsoft marketing programs -- 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I don't think they were actually in the report and you had raised them separately. MR. HOUCK: That's correct. So Your Honor does have a very good memory. And after the conference we were going to meet with Microsoft just to try to find out what was happening. At that point in time in the spring, that was really largely the problem, I think. It was very unclear to ISVs and OEMs exactly what Microsoft had in mind. I guess the communication wasn't very clear, and subsequently Microsoft remedied that and made it clearer. But the result of that was, I think that the concerns deepened out there when they actually realized what these programs were. And so we did hear quite a number of complaints and concerns at the end of the summer and in the early fall. And as I think I mentioned to Your Honor before, we have quarterly -- we call them all-hands meetings in Redmond where we talk about various issues, and we asked Microsoft to put this on the agenda, and that meeting was last month in December in Redmond. When we got there it was a fairly brief conversation because Microsoft told us that they had made some significant changes in the programs and were about to announce them. Which they did. And, indeed, those changes I think did move things in a positive direction, but nevertheless, since then we have still been hearing from OEMs and ISVs that they continue to have concerns about these programs. 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 vague. Microsoft had also told us when we met in Redmond that they were considering additional changes. So, essentially where we are right now is we're looking at a program that seems to us to be not finally settled, in a bit of flux. And even yesterday I sent an e-mail to Microsoft with some questions to help clarify for us how these programs work, to get some information from them about how they are working, and about their impact on ISVs. And we continue to talk with Microsoft, and we're setting up -- even this morning before we came in here, we talked about setting up a time to discuss some of these concerns. THE COURT: Okay. MR. HOUCK: So, that's the reason it's a little bit THE COURT: No. Usually the system we've set up is that you have an opportunity to resolve it and if you don't then you come to me. MR. HOUCK: We're still talking and the programs are still being shaped, so we're not prepared to discuss them substantively yet but we just wanted to let Your Honor know this is happening and we're working on it. THE COURT: But at least it sounds like -- what I couldn't tell from the report is whether -- the changes that Microsoft was making, you viewed at least as responsive to your concerns. 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. HOUCK: Yes, we do. And they were affirmative positive changes, but they haven't eliminated all our concerns, so we're still discussing it with them. THE COURT: And then the one that we've been talking for quite some time has been resolved successfully. MR. HOUCK: Correct. THE COURT: All right. Anything else? MR. HOUCK: Thank you very much. THE COURT: Okay. Mr. Rule. MR. RULE: Good morning, Your Honor. THE COURT: Good morning. MR. RULE: I want to thank Steve for certainly keeping his word, although, I grant Your Honor -- responding to your questions is more important. I also want to acknowledge Mr. Himes' absence here for the first time, and I think I can honestly say we will miss him, too. But we're glad that Ms. Cooper has stepped into his shoes, figuratively speaking, and we look forward to working with her on an ongoing basis as well as with all of our other colleagues on the Plaintiff's side. Your Honor, again, just a brief note before I hit the two areas that you have raised in your questions. Again, when we come here every three months or so, we talk about issues that have arisen. I think it's always heartening to hear Your Honor also report some other statistics that I think 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reflect the fact, and certainly we should pay some attention to, that the program by certain measurements, that is to say, the MCPP program is working. I think the 270,000 downloads that Your Honor noticed is a pretty impressive number. I think in one of our interim reports, I believe in November, we pointed out that in a blog entry on Samba -- one of the main developers of Samba made the point that while they're still working for interoperability, the bottleneck may be due to the other factors other than the MCPP program, and that they don't think it's due to missing documentation. So, I think that's positive. THE COURT: That is. MR. RULE: So, there are some I think real positives in this program that we don't want to lose sight of and we hope Your Honor doesn't lose sight of either. Moving to the TDI issue, Your Honor, I'm going to let Mr. Muglia address that in some detail. But as I understand it, the number of TDIs that are being reported are sort of to be expected, given certain other developments, like the testing program for Microsoft, the fact that we have produced to the Plaintiffs the new Windows 7 documents, 30 new documents and 87 updated documents. And a change in allocation of resources at the TC. Mr. Muglia can address that more, but we are 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 confident that the quality is there and that this process is improving that quality. And, also, I'll let Mr. Muglia address the commitment of the company. That notwithstanding Microsoft, like many other companies these days, has announced some layoffs, those layoffs will not affect the company's commitment to this Court and its obligations under the decree. Let me move to the marketing issue, which I will address, and is not really Mr. Muglia's area, so I will attempt to address that. We are going to continue to discuss this with the Plaintiffs, so let me say that at the outset, and work with them. But I think it's worthwhile putting this into a little bit of context. Your Honor may recall that when Windows Vista was first introduced there were issues that revealed themselves in the marketplace of some consumer dissatisfaction and things like boot times and compatibility of the programs. And it's an issue that Microsoft, and frankly, everybody in the PC ecosystem was very concerned about and very focused on, and Microsoft is going to address those issues very directly and hopefully very successfully in Windows 7. But as part of that process there were issues of compatible boot time, and Microsoft wanted to work with the OEMs and the ISV community to alleviate, if not eliminate, those issues, and to that extent -- to that end they developed certain tests. And initially asked OEMs to engage in some 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 testing and reporting with the expectation that in future cycles those -- compliance with those tests, meeting those tests, would factor into receiving marketing dollars. The purpose of this was goodness, which is to say, to improve the performance of PCs for consumers, which we think benefits everyone in the ecosystem, but we did get feedback from the industry, as well as from regulators. And based on that, Microsoft took certain steps to avoid certain unintended business consequences from the way the program was designed originally. And principally that meant that no longer will -- we are not intending to tie marketing dollars to compliance with the test, we're still asking OEMs to test and report, but marketing dollars will not be tied to the outcome of those tests. This is an ongoing process. We're going to continue to talk to ISVs. We're going to continue to talk to OEMs. They're going to continue to talk to us, that's absolutely clear. And we're going to continue to talk to the regulators and the folks who we are working with. And we'll continue to try to refine the program to make sure that it accomplishes its objective, which is improving the PC ecosystem, making PCs more attractive to consumers, and moving forward along that line, which I think is something that we can all agree is a good thing, but make sure that it doesn't have unintended consequences. So, we look forward to working 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with the Plaintiffs and others to make sure that this effort achieves its objective. THE COURT: All right. MR. RULE: I'll ask Mr. Muglia to come up unless Your Honor has any other questions? THE COURT: No, I'll wait to see how it works out since at this point the Plaintiffs and the TC seem satisfied with the initial response, I'll wait to see how it develops. MR. RULE: All right. Thank you. THE COURT: Mr. Muglia. Let me start by congratulating you. MR. MUGLIA: Thank you, Your Honor, and good morning. THE COURT: Good morning. MR. MUGLIA: Well, let me first address the question that you asked about the impact of the job cuts, the recent announcement of Microsoft and job cuts on this program. And, once again, give you my assurance that in no way will any changes in staffing that Microsoft is taking or also any changes we're doing in some of the contract development that we may be spending, will that affect our commitment to the program and our continued application of resources to meet all the objectives of the program that we're working on with the TC and the Plaintiffs. I've said before, this is our highest priority and it will remain so through everything. 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: All right. MR. MUGLIA: In terms of the TDIs and the question of the current number. I will start by saying again that we're working through an engineering process and if Your Honor might recall in our past two sessions I had indicated that it was likely that the number of outstanding TDIs would continue to increase as we move forward with our testing process. We were aware that the last two quarters of last year, the last two clusters of tests that completed at the end of September and the end of December had the largest number of documents coming through the process. So, it was our expectation based on the TDIs that we had been finding on an ongoing rate that the number of TDIs would increase through this period, and in fact they have. We have largely -- our engineering teams have largely kept up with that and are working through the process of resolving those TDIs on an ongoing basis. Now, as we move forward with our own testing, we are in the process of the final testing cluster on the original Blue Line project, and there are actually somewhat less number of documents in this test cluster than there had been in the previous ones. So, it's our expectations that our incoming rate of TDIs, as reported by Microsoft, will decrease during this period -- during -- between now and March. And then post that we will begin in full our efforts of testing the Windows 7 based documentation. 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The other thing that is important that has been noted a couple of times today is that the technical committee has shifted some of its resource as they move from defining the templates on the systems documents and some other projects, they have shifted their resource on to directly testing the documents -- the protocol documents, and this has caused a recent increase in the number of TDIs they have reported. We remain committed to working with the technical committee and resolving those issues as quickly as possible. It is our expectation that we will be able to continue to do so. I don't know at this point exactly what their incoming rate will be in the coming months and quarters, but regardless of what it is, it is our commitment that we'll resolve all of those issues on an ongoing basis. So, this is part of a standard engineering process. We are actually winding down our test work on the original Blue Line documents. The TDI rates will reduce associated with that wind down, but they will increase as we go to Windows 7. THE COURT: All right. MR. MUGLIA: Are there any other questions that Your Honor might have on TDIs? THE COURT: No, I think that's it. MR. MUGLIA: And there was one other question that Your Honor has asked, and I don't think it was answered at 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this point, which is that there was a simulator tool that the TC had built. And Your Honor asked the question whether that had been supplied to Microsoft, and the answer to that is yes, and our engineers are working on that right now and doing validation on that. And we expect to be able to release that broadly to the community shortly. THE COURT: All right. MR. MUGLIA: Anything else, Your Honor? THE COURT: No, I think that covers it. MR. MUGLIA: Thank you very much. THE COURT: Is there anything else anybody wants to say? If not, I think we seem to be moving. I'm happy to hear that the staffing is going to remain at the level that they are. I'm happy that the templates have been completed and everybody seems to have set out a plan and we're working towards it. What I'd like to do in terms of -- with the idea -- the ever-looming November date, is to suggest that in terms of our next periods to come in, without picking a date, would be to bring you in in April, July and October. Does that work in terms of how -- I'm trying to figure out sort of a system in terms of having certain goals that will be completed. We can shift these around if these are not the months that -- it would be better to have different months in terms of what you'd report on. But certainly to have it in October, with the idea that the November date would be coming 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 up, just to sort of see where we are and not have this done at the last minute. But if that would be -- as I said, we can pick dates specific within those months. But are those months that would work in terms of what you have projected to finish or do you want to put different dates? Because we basically have about three other -- it seems to me, three other, one full one, one interim and sort of the last full one -- if that works. Okay. MR. HOUCK: That works for the Plaintiffs, Your Honor. THE COURT: As I said, you know better in terms of when these things are -- when accomplishments will be done so that you'd be in a position to report it to the Court. Do you want to pick -- we can pick the three days in the months now or we could just pick April and take a look -- it may be that moving out is harder to do. MR. RULE: Your Honor, I think we are prepared to pick the April date. I think it's a little more difficult with Mr. Muglia's schedule to pick the others. THE COURT: Not a problem. And I forgot whether it's better for you all to -- I should know this by now, but where it is -MR. HOUCK: Monday or Friday isn't better for the people flying. 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I think what happened is we wind up having to change -- did we change this date from last week? We had already set it. Okay. I had to reschedule some things because I'm on another court and I needed to do that. How about if we did April 10th? I'm not sitting on the 24th. April 10th, does that work? MR. HOUCK: That's a Friday, and I think the west coast people prefer the middle of the week. THE COURT: Oh, middle of the week. I'm sorry. I thought you didn't want -- I thought you wanted Monday -MR. RULE: Your Honor, just speaking on behalf of our west coast contingent, I believe their west coast contingent -- the April 10th works, so -THE COURT: Do you want to talk for a few minutes? The 23rd and 24th don't work for me. MR. HOUCK: April 10th works. Ellen says it's Good Friday Easter weekend. THE COURT: That's not a good. It's also sometimes a spring recess day for the Court, so let's pick another time. We don't want to pick tax time, the 15th, unless you want to do it the 16th, or we can do it the 22nd. MR. RULE: That works for us. THE COURT: The 16th? MR. RULE: No, the 22nd. THE COURT: I can do it the 22nd. Does that work? 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. HOUCK: Yes, Your Honor. THE COURT: So, we'll do it April 22nd, and we'll do our 10:30 time. Okay. Then I'll see you back at that point. And I would just ask if you can get the report done, say, by April 16th, that will work. All right. If there's nothing else then let me excuse you all. Have a good day and safe journey back. END OF PROCEEDINGS AT 11:30 A.M. CERTIFICATE I, Lisa M. Hand, RPR, certify that the foregoing is a correct transcript from the record of proceedings in the above-titled matter. _____________________________ Lisa M. Hand, RPR

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