Microsoft settles cell phone dispute

Microsoft and British phone maker Sendo said on Monday they had settled a lawsuit in which the cell phone firm had accused the software giant of stealing its technology and customers.

The exact conditions of the settlement were not disclosed, but privately-held Sendo said it was "extremely pleased with the terms". One of the outcomes is that Microsoft will return its four percent shareholding in the phone maker.

The British phone maker was Microsoft's key partner in entering the 650-million-units a year mobile phones market until the two companies unexpectedly cut ties in late 2002, just weeks before the first phone launch was due.

A month later Sendo sued its former partner.

The court filings alleged that Microsoft, in search of new growth markets but lacking mobile phone expertise, extracted crucial information about the industry from Sendo and passed it on to low-cost contract manufacturers in Asia.

In the filings Sendo said that "Microsoft provided Sendo's proprietary hardware expertise and trade secrets to low-cost original equipment manufacturers (OEMs) who would not otherwise have had the expertise to manufacture handsets that would use (Microsoft software) and used Sendo's carrier-customer relationships to establish its own contractual relationships." "We've always said we believed we had an extremely strong case," a Sendo spokeswoman said.

In reaching the settlement all parties deny any and all liability.

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Tom Burt, Microsoft's corporate vice president and deputy general counsel said his firm was "pleased with this resolution and look forward to continuing to collaborate with phone manufacturers to bring innovative products to mobile customers."

Microsoft initially had a hard time breaking into the cell phone software market, because the big phone vendors were afraid the software giant would dominate the sector in the same way it is ruling in the desktop computer software industry.

But after bringing out the first phones with young and aspiring manufacturers like Taiwan's High Tech Computer, Microsoft signed deals with U.S.-based Motorola and South Korea's Samsung Electronics, respectively the world's second and third-largest mobile phone producers.