Microsoft, Sendo Settle Smart-Phone Dispute

As part of the settlement, Microsoft will surrender its minority shareholding in Sendo-worth around $10 million, or less than 10 percent of the company-and both companies will be absolved of any liability.

Software giant Microsoft Corp. and U.K.-based cell phone maker Sendo Holdings plc. on Monday reached a settlement to their intellectual property dispute over a failed smart-phone partnership between the two companies.

Before the January 2003 lawsuit, Sendo had been one of Microsofts earliest and staunchest allies in its bid to enter the market for high-end mobile phones. The two companies developed the z100 handset, which was to have been the first smart phone running Microsofts Windows Mobile for Smartphones operating system, a version of Windows CE.

However, the smart-phone debut instead featured a different handset manufactured by Taiwans High Tech Computer Corp., and Sendo terminated its relationship with Microsoft. The startups lawsuit alleged that Microsoft had used its relationship with Sendo to steal trade secrets related to the manufacture of high-end handsets and had transferred the information to other manufacturing partners such as HTC. The Taiwanese company, which has manufactured handheld computers for the likes of Hewlett-Packard Co., had no previous history in the phone business.

In Microsofts February 2003 response to the lawsuit, it accused Sendo of "gross incompetence."

"Microsoft poured millions of dollars and thousands of hours into the creation of the Z100 Smartphone, yet the project never bore fruit because Sendo devoted its attention and resources to the production of its other cell phone lines, and the few employees Sendo did devote to the Z100 were so disorganized and uninterested in the success of the project that it was doomed to failure," Microsoft wrote in a motion to dismiss the lawsuit

The details of the settlement are confidential, but the deal resolves Sendos claim and a Microsoft counterclaim, and affects actions in the United Kingdom and the United States. Microsoft will surrender its minority shareholding in Sendo—worth around $10 million, or less than 10 percent of the company—and both companies will be absolved of any liability.

Sendo said the decision to settle was primarily commercial. "Were pleased that weve reached this settlement, it saves us a lot of time and money," Marijke van Hooren, Sendos director of corporate communications, told "This is an opportunity to leave the lawsuit behind and focus on the future."

Tom Burt, Microsofts corporate vice president and deputy general counsel, said in a statement, "Were pleased with this resolution and look forward to continuing to collaborate with phone manufacturers to bring innovative products to mobile customers."

Following Sendos split with Microsoft, the company formed a relationship with smart-phone operating system maker Symbian Ltd., and released the Symbian OS-based Sendo X in June. Sendo does not currently sell handsets in the United States.


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