Microsoft Sued Over Phone Software

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Sendo, the privately held British mobile phone maker that dropped Microsoft’s smart-phone software last November in favor of an operating system from Symbian, now has filed suit in the U.S. against the Redmond giant, alleging misappropriation of intellectual property.

Sendo, in which Microsoft still has a minority interest, said last month that it was canceling its Z100 Windows-based Smartphone, 18 months after announcing it. Microsoft’s OS is called Windows for Smartphone 2002.

Sendo said at the time that its decision was based on its frustration over Microsoft’s reluctance to release key source code for the device, despite a $12 million investment

Sendo then signed a contract with Symbian of Britain and Nokia of Finland, sacrificing a potential $308 million revenue stream from its Microsoft-based phone. It had already signed supply deals with mobile telecoms carriers around the globe for more than a million of its Z100s in the first year.

Sendo management apparently believes that certain features the company had put in its phone on top of Microsoft’s operating system had emerged in other “smart phones” that Microsoft was involved in, Reuters quoted sources as saying.

The OS is Microsoft’s effort to crack the mobile phone market. It is known that a phone called the Orange SPV, produced by Taiwan’s High Tech Computer for French-owned mobile telecoms operator Orange, launched two weeks before Sendo canceled its deal with Microsoft. The phone uses a slimmed down version of Windows.

Under the new deal with Symbian and Nokia, Sendo reportedly has been allowed to access Nokia’s source code and engineer the software, but it could be a year before it can launch a new smart phone.

Microsoft execs have been quoted as saying the lawsuit is without merit. A Sendo spokesman said that the company believes “the allegations are serious and substantial”, but declined to give further details.

Smart phone software in general is used with cell phones designed for next-generation wireless networks to access the Internet. Microsoft’s entry into the market has been a direct challenge to more experienced suppliers such as Nokia, Motorola and Sony Ericsson.