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Trial: Day 03 Vol. A Plattner, Hagiu, Bakewell Direct, Bakewell Cross 8/19/2009 8:30:00 AM
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION .
`VERSATA SOFTWARE, INC.
`* Civil Docket No.
`• 2:07-CV-153
`* Marshall, Texas
`
`VS.
`
`•
`* August 19, 2009
`* 8:30A.M.
`SAP AMERICA INC., ET AL
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`TRANSCRIPT OF TRIAL
`BEFORE THE HONORABLE CHAD EVERINGHAM
`UNITED STATES MAGISTRATE JUDGE
`ANDAJURY
`8
`APPEARANCES:
`9
`10 FOR THE PLAINTIFFS: MR. SAM BAXTER
`McKooi-Smith
`104 East Houston, Suite 300
`Marshall, TX 75670
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`MR. THEODORE STEVENSON, Ill
`McKooi-Smith
`300 Crescent Court, Suite 1500
`Dallas, TX 75201
`MR. SCOTT COLE
`MR. STEVEN J. POLLINGER
`MS. LAURIE L GALLUN
`MR. JOSH W. BUDWIN
`MR. KEVIN M. KNEUPPER
`McKooi-Smith
`300 West 6th Street, Suite 1700
`Austin, TX 787011
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`20 APPEARANCES CONTINUED ON NEXT PAGE:
`21
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`MS. SUSAN SIMMONS, CSR
`COURT REPORTERS:
`MS. JUDITH WERLINGER, CSR
`. Official Court Reporters
`100 East Houston, Suite 125
`Marshall, TX 75670
`903/935-3868
`(Proceedings recorded by mechanical stenography,
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`VERSATA v. SAP
`
`Unsigned
`A001708
`
`Page 1
`VERSATA EXHffiiT 2013
`SAP v. VERSATA
`CASE CBM2012-00001
`
`

`

`Trial: Day 03 Vol. A Plattner, Hagiu, Bakewell Direct, Bakewell Cross 8/19/2009 8:30:00 AM
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`that's occurring away from Trilogy, and towards SAP as
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`SAP added hierarchy accesses in October of 1998.
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`Q. All right. I want to shift gears now from the
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`Trilogy mindset in the negotiation over to the SAP
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`Did you do any investigation into the facts in
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`this case in order to inform yourself about what things
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`SAP would be thinking about during the negotiation?
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`A.
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`I did.
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`Q. Okay. And did you see any evidence in SAP's
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`11 mindset about the importance of the patented technology
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`back around the time of the hypothetical negotiation and
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`before?
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`A. Yes, sir, I did.
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`Q. Okay.
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`MR. COLE: If we could bring up the next
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`slide, which is Plaintiffs' Exhibit 150.
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`Q . (By Mr. Cole) Can you tell us what this is?
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`A. Well, this is an internal SAP e-mail from May
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`of 1997 from Bernard Neumann. who is a senior technical
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`executive within SAP, to his colleague.
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`Q. Okay. And what's the subject of this e-mail?
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`It appears that 'Mlirtpool is mentioned.
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`Is that" a company we've heard something about?
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`A. We have. We've heard testimony about that
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`VERSATAv. SAP
`
`Unsigned
`A001830
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`Page 123
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`

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`Trial: Day 03 Vol. A Plattner, Hagiu, Bakewell Direct, Bakewell Cross 8/19/2009 8:30:00 AM
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`previously.
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`Q. Okay. And they announced some-- they said
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`something about having plans having a -- excuse me -- we
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`plan to have a SAP pricing engine.
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`Does that indicate that was in existence at
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`the time in 1997 or still on the horizon?
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`A This is May 1997, and it says-- SAP is saying
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`we plan to have an SAP pricing engine, so it's clear
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`it's not there yet.
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`Q. Okay. What-- what significance is it that
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`SAP is informing Whirlpool of a plan in the future about
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`adding functionality just like Trilogy's SC Pricer?
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`A. Well, they're telling Whirlpool that, look, we
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`Just wait, and we'll put it into our products.
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`Q. Does that have an impact on demand in sales in
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`the market for a company like Trilogy?
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`A Oh, absolutely. We've heard testimony about
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`that before as well from Mr. Carter and Mr. Dholakia.
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`MR. COLE: Mr. Diaz, if we could go to
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`the next slide, which is Plaintiffs' Exhibit 1088.
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`Q. (By Mr. Cole) I think this is another internal
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`Can you tell us what this one is?
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`A This is an e-mail from August 1997 from
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`VERSATA v. SAP
`
`Unsigned
`A001831
`
`Page 124
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`

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`Trial: Day 03 Vol. A Plattner, Hagiu, Bakewell Direct, Bakewell Cross 8119/2009 8:30:00 AM
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`1 Mr. Neumann again to his colleague, another senior--
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`very senior executive within SAP, named Peter Zencke.
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`And in this e-mail, Mr. Neumann says that Trilogy is
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`raking in the cash among the SAP customers with their
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`SAP price.
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`Q. Okay. And it mentions two customers
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`specifically. Are those customers that we've heard
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`testimony about being customers who bought Trilogy's
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`Pricer product?
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`A. Yes, sir.
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`Q. Okay. And what's Mr. Neumann's final
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`statement there?
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`A Mr. Neumann says: It bothers me that Trilogy
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`is always one step ahead.
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`Q. What does that indicate to you about the
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`in order to obtain the right to use the Trilogy pricing
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`technology in their products?
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`A. Well, clearly it's evidence that it's
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`important to SAP, because SAP is bothered that Trilogy
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`is one step ahead.
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`MR. COLE: Mr. Diaz, if we could go to
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`the next exhibit, Plaintiffs' Exhibit 7.
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`Q. (By Mr. Cole) It looks like the subject of
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`this internal SAP e-mail is Goodyear.
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`VERSATA v. SAP
`
`Unsigned
`A001832
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`Page 125
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`

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`Is that another customer we've heard about
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`that-- that was a Trilogy Pricer customer?
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`A. Yes, sir.
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`Q. Okay. And can you tell us what's going on in
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`this e-mail?
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`A. Well, this is a November '97 e-mail saying
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`that SAP perceives an urgent situation at Goodyear Tire.
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`Trilogy is in at an executive level with their pricing
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`offering, positioned as part of their Selling Chain.
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`Q. And it says something about seats at risk. Do
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`you see that?
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`A. Yes.
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`Q. What's the significance of that to your
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`opinions?
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`A. Well, we talked about that a little bit
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`previously, about how the business model in this field
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`is based upon seats. And seats being at risk means lost
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`revenues for somebody.
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`Q. Okay. And does this impact your opinions
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`about whether the Trilogy pricing technology was driving
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`demand for SAP's own products?
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`A. Yes, sir. This is further evidence of that.
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`Q. And the 2000 seats that are referenced in this
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`e-mail, are those SAP seats or Trilogy seats?
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`A. Those are SAP seats at risk.
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`VERSATA v. SAP
`
`Unsigned
`A001833
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`Page 126
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`

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`Trial: Day 03 Vol. A Plattner, Hagiu, Bakewell Direct, Bakewell Cross 8/19/2009 8:30:00 AM
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`Q. Or the possibility of future SAP seats?
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`A Th~t's right.
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`MR. COLE: If we could go-- actually,
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`let's move -- in the interest of time, if we could go to
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`Slide 11.
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`Q.
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`(By Mr. Cole) I think the most significant
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`part of this e-mail, which is a 1998 e-mail, is the last
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`sentence, which says that they will -- this is talking
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`about Eastman Chemical in Tennessee-- that they will
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`also consider SAP pricing/SPE, if it meets their needs.
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`Do you see that?
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`A.
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`I do.
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`Q. What's the significance ofthat statement from
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`that Trilogy and SAP were competing in?
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`A. Well, Eastman is saying that with the added
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`functionality, they would consider purchasing additional
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`seats or additional product.
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`Q. Does that indicate that functionality was
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`important or unimportant to Eastman Chemical?
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`A.
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`Important.
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`MR. COLE: Finally, I guess the last in
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`our group here, Slide 12, Mr. Diaz.
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`Q.
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`(By Mr. Cole) And this, I believe, is another
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`internal SAP e-mail. I don't think I have the date on
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`VERSATA v. SAP
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`Unsigned
`A001834
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`Page 127
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`

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`Trial: Day 03 Vol. A Plattner. Hagiu. Bakewell Direct, Bakewell Cross 8/19/2009 8:30:00 AM
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`it. It's PX581.
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`Can you read the first~- the first little
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`cut-out and tell us how that affects your opinions?
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`A. Well, the first cut-out says: Due to market
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`pressures, for example, Trilogy and SAP development
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`plans, SFA --the competitive landscape has changed.
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`Q. Okay. What does that indicate to you with
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`regard to the reasonable royalty analysis?
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`A. Well, this fits into the things that we've
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`been discussing previously, that a-- there's
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`competition between the parties, and the landscape is
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`changing when SAP adds development plans.
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`Q. All right. Okay. I want to -- I want to move
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`off now from the internal SAP documents about their
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`state of mind back in that time period and move over to
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`another piece of evidence that-- that you considered
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`in-- in the assessing the dynamics in the hypothetical
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`negotiation.
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`In particular, I'm talking about publications
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`from industry groups or industry analysts that follow
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`technology market and make it-- give advice to
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`companies that buy technology.
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`A. Okay.
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`Q. A~d are you familiar with a -- an organization
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`called the Gartner Group?
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`VERSATA v. SAP
`
`Unsigned
`A001835
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`Page 128
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`

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`Trial: Day 03 Vol. A Plattner, Hagiu, Bakewell Direct, Bakewell Cross 8/19/2009 8:30:00 AM
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`A.
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`I am. We've heard testimony about how they're
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`a well-regarded research organization and con~ulting
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`firm, and that's consistent with my experience as well.
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`Q. Have you seen some Gartner Group research
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`5 memos or analyses back in the time period we've been
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`talking about that impacted your views in this case?
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`A. Yes, sir.
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`Q. Okay.
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`MR. COLE: If we could look at Slide 13.
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`Q .
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`(By Mr. Cole) I believe this is Plaintiffs'
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`Exhibit 736, and I think the date on this is around
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`1998.
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`And can you tell us the context of this
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`particular Gartner Group report and how it affects your
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`opinions?
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`A. Well, we see indication that SAP's competitors
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`vary from one to two generations ahead. What I think is
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`informative as well is that this document specifies that
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`integration is irrelevant, if the deployed applications
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`do not meet the needs of the sales organization.
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`Q. And does Trilogy sales- were Trilogy's
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`products directed at sales organizations?
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`A. Yes, sir.
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`.
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`Q. In fact, does this Gartner Group report call
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`out Trilogy?
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`VERSATA v. SAP
`
`Unsigned
`A001836
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`Page 129
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`

`

`Trial: Day 03 Vol. A Plattner, Hagiu. Bakewell Direct. Bakewell Cross 8/19/2009 8:30:00 AM
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`A.
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`It calls out Trilogy as being functionally
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`superior.
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`a. Okay. And if you continue on, what is the
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`last paragraph that we've blown out say?
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`A.
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`It says: Prospective SAP clients have cited
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`functionality gaps to support sales organizations and
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`poor system administration tools as the primary reasons
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`for selecting other SCS vendor alternatives.
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`a. And so this is saying that functionality gaps
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`are one of the primary reasons for selecting other
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`vendor alternatives; is that right?
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`A. That's right.
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`a. Okay. 'Mlat does that tell you about whether
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`functionality as opposed to integration or brand name or
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`scope was important in driving demand. in this
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`A. Well, clearly that's so. And what this shows
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`is the importance of features in driving demand and
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`creating revenue opportunities for companies.
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`a. And there's- actually, in talking about
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`this, the last paragraph uses an acronym, SCS, as the
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`context that they're talking about.
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`A. That's right.
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`a. 'Mlat is SCS?
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`A. Selling Chain Solutions, I believe.
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`VERSATA v. SAP
`
`Unsigned
`A001837
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`Page 130
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`

`

`Trial: Day 03 Vol. A Plattner, Hagiu, Bakewell Direct, Bakewell Cross 8/19/2009 8:30:00 AM
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`Q. Okay. Is that a moniker for the marketplace
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`that Trilogy competed in?
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`A That's right.
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`· MR. COLE: We'lllook at one more,
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`Slide 15.
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`Q. (By Mr. Cole) This is another Gartner Group
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`report from April of 1998. The title says SAP Makes
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`Another TES Product Announcement.
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`V\hlat is TES?
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`A Technology-enabled solutions or selling.
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`Q. Okay. And what was the conclusion about SAP's
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`announcement?
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`A. That those with good functionality, for
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`example, Trilogy and Siebel, have successfully
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`integrated their solutions with R/3 at production sites.
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`Q. Okay. And what does it say about in the
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`first-- the first thing on the title about SAP's
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`announcement, whether it delivered or not?
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`A
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`It says it has yet to deliver.
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`Q. Thank you.
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`And that was Plaintiffs' Exhibit 92.
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`MR. COLE: Thank you very much.
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`Q. (By Mr. Cole) Other than the internal e-mails
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`reflecting SAP's mindset, the industry papers we saw,
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`did you also investigate whether there were acceptable
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`VERSATA v. SAP
`
`Unsigned
`A001838
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`Page 131
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`

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