Sordid Details Come Out In Sendo Court Filing

[Ed Hansberry]

<a href="http://www.theregister.co.uk/content/7/28724.html">http://www.theregister.co.uk/content/7/28724.html</a><br /><br />Forget watching 24, CSI Crime Scene or any other gripping drama on TV this winter. Just sit back and watch the case unfold between Microsoft and Sendo!<br /><br />"Sendo's 27-page filing in a Texas court - disclosed here for the first time - is a rich litany of double dealing, betrayal and larceny - if the dramatic (and at times apoplectic) allegations can be believed.<br /><br />"The claim alleges - are you ready to start counting? - misappropriation of trade secrets, common law misappropriation, conversion, unfair competition, fraud, breach of fiduciary duty, two counts of negligent misrepresentation, two counts of breach of contract, fraudulent inducement and tortious interference. Phew."<br /><br />Phew indeed. :agrue: If these allegations are only 10% true, Microsoft has still lived up to its reputation as being a very tough company to be partners with.

[wjsteele]

Wow... TheRegister... now there is an unbiased/unpartial reporting agency. Notice the "StinkerOS" as a case in point.

Bill

[someppcuser]

See Jason? I told you MS was stealing ;) I know, nothing's been proven yet, but tons of internal memos have been proving they have lied on numerous occasions. Sendo was completely out of its league. Not even the US governement can get a fair deal. On second thought, TheDude can apparently :D

Yes, it's a TheRegister article, but most of the article is just reporting what's in the case filing.

[bagemk]

Until early last year, I worked for Microsoft in their mobile group and witnessed some of their dealings with their mobile phone partners first hand.

On that basis, I would believe the Sendo allegations. There are a few other (much bigger) ex-partners out there that probably also have cases against Microsoft.

[GregWard]

On the face of it this looks pretty negative to MS. But there are a couple of "funnies" in here.

1. The $12m investment is mentioned but not what happened to it! Did Sendo just "burn" through it or what? If so they can't have been all that strong a business!!!!

2. If you sign an NDA that gives the other partner full rights to your intellectual property (8O) in the event of you going bust - and you've (presumably) burnt the $12m they invested in you ( 8O 8O ) - why on earth would you expect them to bail you out when you needed even more money?

Still looks very bad for MS though!!!

[Ed Hansberry]

Yes, it's a TheRegister article, but most of the article is just reporting what's in the case filing.
Which is an allegation by Sendo and doesn't make it the truth. Doesn't mean it isn't true, but doesn't mean it is either. Right now we are just watching the fur fly.

[johncj]

Most of these allegations seem to hinge on the fact that Sendo is claiming that they believed that Microsoft would actually deliver a brand new OS by a certain date. If Sendo really believed that, they have to be the most naive people in the world. Now, if Microsoft actually committed to those dates contractually, Sendo might have a case, but I have I hard time believing that Microsoft would do that. As bad as this makes Microsoft look, I can't help thinking that Sendo will come out of this looking like a bunch of idiots.

[PlayAgain?]

What on earth did Sendo think they were doing when they signed an agreement that made them more valuable to Microsoft dead than alive!? :? To agree that all Z100 intellectual property would go to Microsoft should anything happen to Sendo was signing their own death warrant!

[Daniel]

It does seem like a pretty silly thing to do. Maybe Microsoft got them all drunk?

I'm sure MS would have made the terms attractive to Sendo such that they would not have expected to be in the position they are in now.

Daniel

[Janak Parekh]

To agree that all Z100 intellectual property would go to Microsoft should anything happen to Sendo was signing their own death warrant!
Yeah, I can't figure this one out either. :? Didn't Sendo have lawyers?

--janak

[Sslixtis]

Janak ParekhYeah, I can't figure this one out either. Didn't Sendo have lawyers?

Yeah, but apparently they were working for Microsoft :lol:

[Rob Borek]

"Ready for August 2001"? Uhhhh... I remember seeing early prototypes in June 2001 (the Mobility Tour) and October 2001 (Gnomedex 2001). Not sure why 2001 was set as a release timeline (much less mid-2001, especially since the deal was inked in February 2001, leaving 6 months to build a phone, test it, get it approved by regulatory agencies, sign deals with carriers, and manufacture phones).

I think Sendo was in over its head, and was trying to meet unrealistic timelines.

[pt]

when i was at a conference i tried to use the sendo phone and the hardware was kinda bad, i got a blister and cut my finger using the thumbpad (i wish i were kidding).

since then i've never been the same.

cheers,
pt

[GregWard]

What on earth did Sendo think they were doing when they signed an agreement that made them more valuable to Microsoft dead than alive!? :? To agree that all Z100 intellectual property would go to Microsoft should anything happen to Sendo was signing their own death warrant!

Although the agreement predated the investment I ASSUME they must have been talking about $$$ even then. If you look at it that way then :-

a. MS had twelve million reasons for demanding the IP was protected :D
b. Protecting the IP seems a lot more reasonable

That said - I really don't understand why (apparently) the agreement predates (and is separate from) the investment :?

Remember also that Sendo is a UK business and the law works differently here! For example I believe you can patent IP in the States? This would be very rare/impossible in the UK. So maybe MS valued IP higher than Sendo? Not now though - judging from the court case!!!!!!

[Daniel]

when i was at a conference i tried to use the sendo phone and the hardware was kinda bad, i got a blister and cut my finger using the thumbpad (i wish i were kidding).

since then i've never been the same.

cheers,
pt

You wake up screaming at night and clutching your segway right? ;) :P

I played with a pre-release model too, is there a support group that pt and I could get involved in? I don't even have a segway and a robotic vacuum cleaner to comfort me! ;)

Daniel

[Daniel]

Remember also that Sendo is a UK business and the law works differently here! For example I believe you can patent IP in the States? This would be very rare/impossible in the UK. So maybe MS valued IP higher than Sendo? Not now though - judging from the court case!!!!!!

This whole "IP grab" can be viewed in quite an interesting light if you read the article that is linked to from the Register story. It's about some memos that were made public out of the Anti-trus case against MS in the US.
http://www.theregister.co.uk/content/archive/11074.html
Basically what it is saying is that MS wants to patent stuff in the mobile space.

Now, I'm not suggesting that this was their Plan™, I'm just saying that one could draw some interesting conclusions...

Daniel

[vincentsiaw]

i won't blame microsoft by the way, maybe i will do the same if i can pay the best lawyer in the world hehhehehehe thats another way of saying that the rule here is money talks, money works, long life microsoft !!

[klinux]

MS may bear blames here but Sendo is an idiotic company in my opinion. They were literally days away from delivering their phones before they pulled out. Talk about throwing money down the drain. And whom do they partner with after the split? Nokia! Like Nokia's known to let their partners have a voice in deciding what it will do? Sendo's a goner IMHO.

[garrans]

Whether or not Sendo has a case now, its now up to the Lawyers. MS will throw big $'s at the lawyers, can Sendo afford the millions on the lawyers it will take to fight this.

The other thing here, is that MS may be able to show that it did deliver a working OS, but the hardware was the problem. It becomes a huge pissing match with operational memo's etc. All MS would need to find is a couple of Sendo memo's that say "our hardware has a problem here, here and here" which we need to fix.

[Wiggin]

Very interesting article. Kinda feels like the following:
- MS and Sendo agree to wed and negotiate
- Sendo agrees to a very strange SDMA giving MS all sorts of goodies if things go bad
- MS struggles to get industrial strength OS finished (no surprise at all!)
- MS Lawyers are asked to research "consequences" of continued delay
- MS finds a pretty interesting loop hole
- Sendo dies the slow death, MS runs away with the goodies
- MS waves with a smirk, and says "Life is like a box of chocolates..."

I spent the better part of 3 mos sitting across the table from a team of MS lawyers in 1999 negotiating a $NNN Million contract, and can recall some "fast moves" that were difficult to counter in legaleeze. (Thank God we had some outstanding legal minds in track shoes on our side of the table :D )
In the end, a doc was signed and hand shakes took place, but blood was all over the table...a very rough experience. :agrue:

Sendo certainly has reason to feel they are the wronged party. But in the end, if the SDMA was as crazy as it appears (relative to IP), I can bet that MS has other "terms" in the various agreements which they will rely upon to come out ahead in the end.

MS ... A tough marriage for anyone ... damned if you do & damned if you don't!

[DrtyBlvd]

when i was at a conference i tried to use the sendo phone and the hardware was kinda bad, i got a blister and cut my finger using the thumbpad (i wish i were kidding).

since then i've never been the same.

cheers,
pt

Sue 'em

[DrtyBlvd]

I just read the Register stuff - Bwahahahhahahah!

Bun Fight.

The one bit that sticks in my throat is the use of the word 'Partner' - exsqueeze me?

A two year old "Brum" business that trades board for 12M stock with [b]MICROSOFT is a partner??

More like their business got bought and they were too stoopid to realise it. I hope it does get interesting - as from this vantage, Sendo are dreaming unless they have some
very very very credible evidence or witnesses.

[GregWard]

More like their business got bought and they were too stoopid to realise it. I hope it does get interesting - as from this vantage, Sendo are dreaming unless they have some
very very very credible evidence or witnesses.

... or a very desperate!

[daS]

On the face of it this looks pretty negative to MS. But there are a couple of "funnies" in here.

1. The $12m investment is mentioned but not what happened to it! Did Sendo just "burn" through it or what? If so they can't have been all that strong a business!!!!

2. If you sign an NDA that gives the other partner full rights to your intellectual property (8O) in the event of you going bust - and you've (presumably) burnt the $12m they invested in you ( 8O 8O ) - why on earth would you expect them to bail you out when you needed even more money?

Still looks very bad for MS though!!!

Not to get into the merits of the case – because I certainly don’t know the facts at this point. But in regards to your “funnies”:

1) $12M is a tiny amount of money to develop and manufacture a consumer product – especially a new phone. You could easily spend that on getting the radio to pass various government certs alone. I would assume that the Microsoft investment was only a fraction of what Sendo had to “burn through” in two years.

2) In my previous career I was the director of sales and marketing for a small test equipment manufacturer that sold semi-custom machines for testing aircraft and aerospace interconnection systems. Our typical customers were companies like Boeing, Lockheed and Northrop. Because the customer was so dependent on the use of our equipment, and because it would not be maintainable if we went out of business, all major clients insisted on a similar clause that Sendo had with Microsoft to transfer IP in the event that we became insolvent. If you are a small company, and you want to do business with the “big boys” you have no choice but to agree with some of their terms. It’s easy for us to Monday morning quarterback Sendo’s deal, but it’s not so easy if you’re the one sitting at the table. I've been there and it ain't fun. 8O

One other point: I don’t know anything about corporate law in the U.K (not that I know much about it here in the states – even though I was CEO of a corporation for more than 4 years.) But the fact that Marc Brown was on Sendo’s board when this was happening might be significant. As I understand it, in US corporate law, board members have an overriding fiduciary duty to act in the interests of all shareholders. If things were starting to sour between Sendo and Microsoft, as a board member it would be Brown’s duty to look after the interests of Sendo above Microsoft.

In any case, this should be an interesting case for us guys that have an interest in Microsoft’s mobile offerings. Sort of a chance to see how the sausage is made. :grinning devil:

[PlayAgain?]

It certainly answers the question as to why the likes of Nokia, SonyEricsson and Matsu****a went the way they did. Not so much to do with not liking the platform, they just didn't want to get into bed with Henry VIII!