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British mobile phone developer Sendo Ltd. said it expects hearings to start at the end of January or early February in its lawsuit accusing Microsoft Corp. of using false promises of partnerships to gain access to Sendo's mobile phone expertise.

The suit was filed in federal court for the Eastern District of Texas, according to Marljke van Hooren, a spokeswoman for Birmingham, U.K.-based Sendo. The U.S. division of Sendo is based in Irving, Texas.

Sendo formed a partnership with Microsoft in October 1999 to help develop e-mail- and Internet-enabled mobile telephone handsets based on the Microsoft operating system code-named Stinger for use by cellular carriers worldwide. That relationship dissolved shortly after Orange SA, a London-based mobile phone operator, introduced in October of this year a mobile phone manufactured by High Tech Computer Co. in Taiwan that's based on Microsoft's Smartphone software (see story), instead of Sendo's Z100 mobile phone.

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News source: ComputerWorld

In its suit, Sendo is alleging that Microsoft developed a "secret plan" to "plunder" Sendo's intellectual property, proprietary hardware expertise and trade secrets and transfer them to low-cost original equipment manufacturers such as High Tech.

The complaint also alleged that Microsoft used Sendo's relationships with carriers such as Orange to establish its own contractual relationships with mobile carriers. Van Hooren said that Sendo is "looking into the legal implications" of the Orange/Microsoft relationship, but she declined to provide further details. She added that Sendo has discussed selling the Z100 with Orange.

Microsoft spokesman Jon Murchinson declined to comment on the Sendo lawsuit because the company was still reviewing the filing. Orange spokeswoman Sally Quigg said her company views the lawsuit as a matter between Sendo and Microsoft.

Sendo, in its complaint, is charging that after gaining access to Sendo's intellectual property and hardware, Microsoft drove "Sendo to the brink of bankruptcy." Sendo said that Microsoft was late in delivering software and was unresponsive to Sendo's requests to fix software bugs and make changes through the spring of this year. Microsoft also failed to provide $14 million in financing, and Sendo had problems raising funds from outside sources, the complaint said.

The suit also says that under their agreement, if Sendo filed for bankruptcy, Microsoft would be allowed to obtain a royalty-free license to use the intellectual property Sendo had developed for its Z100 Smartphone.

Sendo said that around October, Marc Brown, who was a director of Microsoft's corporate development and strategy group and a Sendo board member, suggested that the company consider filing for bankruptcy. On Oct. 28, Sendo said Brown resigned from its board, and the next day the company terminated its relationship with Microsoft. Since then, Sendo said, it has made "repeated requests" to Microsoft to return its intellectual property. Microsoft, Sendo added, has "failed and refused" to return this property while at the same time forging relationships with mobile phone carriers and handset manufacturers around the world.

Sendo said Microsoft has gained an advantage in the mobile phone market by "its secret plan to pillage Sendo of its technology, convert that technology to its own use, steal Sendo's customers and leave Sendo cash-starved and on the brink of receivership." Sendo is seeking an unspecified monetary award in the suit.

Craig Mathias, an analyst at Farpoint Group in Ashland, Mass., said he views the dissolution of the Sendo/Microsoft relationship in October -- shortly before the Z100 was to hit the market -- "surprising, because it was a quite innovative product." Mathias said he had no insight into the allegations Sendo is making in its lawsuit, but he did say that Microsoft is "a corporation that has acted ruthlessly in the past."

Tim Bajarin, an analyst at Creative Strategies Inc. in Campbell, Calif., said Microsoft needed partners such as Sendo because it has been unsuccessful in its attempts to make alliances with major mobile phone players such as Nokia Corp. and Motorola Inc.

"Microsoft has been running behind" in mobile phone technology, Bajarin said. He added that Microsoft views the Smartphone as a key extension of its products designed to serve enterprise markets and workers "anytime, anywhere."