Priceline.com filed suit against Microsoft Wednesday, stating that MS's Expedia.com travel site has launched a "copycat" hotel service that violates Priceline patents.
In its suit, filed in the US District Court in Connecticut, Priceline claims Expedia's Hotel Matcher -- which lets users name the price they're willing to pay for lodging -- is a knock-off of technology it created. On both the Priceline.com site and Expedia, users select their price, the type of hotel they want and dates of their stay. The best match is automatically charged to the person's credit card.
Priceline is suing Microsoft for violating its patent for the technology that charges consumers automatically once a hotel room meets their conditions. It also accuses Microsoft of violating the Connecticut Unfair Trade Practices Act by swiping technology from its patent applications. Priceline claims the computer giant stole the disputed technology during a series of meetings before the company went public. During those meetings, Priceline said it shared technical data with Microsoft under a non-disclosure agreement, as the companies tried to work toward a business partnership.
Microsoft spokesman Tom Pilla said he hadn't seen the filing yet, but he called it "a transparent attempt by Priceline to slow us down. We're confident that when all the facts are on the table, Microsoft's position will prevail," he said. "We certainly respect the intellectual property rights of companies."
Priceline said the talks broke off shortly before Priceline's IPO in March because Microsoft wanted shares below the IPO price. But discussions resumed in the summer. During one of those meetings, Priceline said Microsoft CEO Bill Gates told Priceline founder Jay Walker that he wasn't going to let patent infringement claims stand in his way. According to a Priceline press release announcing the suit: "Mr. Gates went on to say that many other companies were suing Microsoft for patent infringement and that Priceline.com could, in effect, get in line."
Microsoft unveiled Hotel Price Matcher in September, a few weeks after that meeting. Evan Chesler, an attorney for Cravath, Swaine & Moore, which is representing Priceline, said the timing of the launch was suspicious. "The Expedia Web site has been around for a couple of years," he said. "It didn't launch the Hotel Matcher until just last month."
This is not the first time a company has claimed that Microsoft stole its technology after meeting to discuss a business relationship. In December 1998, Goldtouch Technologies sued the software giant, saying Microsoft illegally copied its design for an ergonomic mouse after the two companies had discussed the product. Other companies who've sued Microsoft for patent infringement include Eolas Technologies, which claimed earlier this year that the Redmond giant infringed upon a plug-in patent. And in 1994, a jury ordered Microsoft to settle with Stac Electronics for violating a data-compression patent.