Sendo-Microsoft lawsuit to proceed in Texas

Sendo's allegations that Microsoft used underhand tactics to get hold of its secrets will be scrutinised in court, after the software giant failed to have the lawsuit dismissed

UK phone-maker Sendo has won a small victory in its legal battle against Microsoft.

On Tuesday, a US judge sitting in Texarkana, Texas, rejected an attempt by Microsoft to have a lawsuit brought against it by Sendo dismissed or moved to Washington state.

Instead, the judge has allowed much of the substance of the case to proceed. The lawsuit will continue to be heard in Texas, with the trial likely to start at the end of next year.

"We're pleased with this outcome. The fact that the lawsuit was not dismissed shows that it's obviously a legitimate complaint," Sendo director of communications Marijke van Hooren told ZDNet UK on Wednesday.

Sendo has filed several charges against Microsoft, covering the misappropriation of trade secrets, engaging in unfair competition, and fraud -- charges that Microsoft continues to deny.

"Sendo's allegations against Microsoft are counter to our respect for intellectual property and to the value we place in our partnerships," said a Microsoft spokesperson. "We look forward to presenting the facts in court and refuting Sendo's baseless claims."

The lawsuit was filed after the breakdown of Microsoft and Sendo's business relationship, which began in 1999. Sendo had planned to develop a handset based on Microsoft's Smartphone 2002 platform, which was then code-named Stinger. As part of the deal, Microsoft was to invest $12m (around £7.6m) in Sendo.

Sendo alleges that Microsoft failed to provide working software, forcing the launch of the smartphone to be pushed back several times. Sendo also claims that Microsoft, despite having a place on Sendo's board and seeing a number of its trade secrets, never provided the $12m.

Microsoft and Sendo's relationship ended on 23 September 2002.

Three months later, Sendo filed its lawsuit, in which it accused Microsoft of using it as a stepping-stone to gain entry into the lucrative mobile-phone market, making use of the company's handset-manufacturing expertise and then cutting Sendo out of the picture.

One claim that wasn't allowed to proceed was Sendo's attempt to claim punitive damages from Microsoft. According to van Hooren, though, Sendo could still be awarded punitive damages if its other charges are upheld by the court.

Van Hooren explained that Sendo is keen to have its case heard in Texas because its headquarters and several of its key witnesses are based in the state. She added that the court of Texarkana has a reputation for conducting cases quickly.

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