Sendo vs. Microsoft: The Truth Comes Out

igotmybfg writes "The Register has a story which includes many details about the phone maker's Texas suit against the software giant. It seems that Microsoft had much more to gain from letting its partner fail than helping it to succeed: in the event of a bankruptcy, Microsoft acquired all of Sendo's intellectual property related to the z100 Stinger SmartPhone, and was then free to do whatever it wanted, which in this case turned out to be going behind Sendo's back and making a deal with Orange SPA." Read our original article about this to get more background information.

You'd better believe it...

[Anonymous Coward]

I knew about this months ago - no I don't work for Sendo, Microsoft or any subsiduaries or affiliates.

I kept telling people but all they said was 'well that's not the way we've heard it'. Eventually the truth appears and it is even worse than was origionally described to me, and that made my toes curl !!! (I believe there may be even more to come out yet.)

But this is how M$ has done business for a long time. What really boggles my mind is that people still queue up to do business with M$. They must know that if what they have is slightly inovative or 'required' by M$ they are going to get screwed over !

Re:Sendo needs better lawyers...

[yeti (dn)]

That's crap, though. If you read the article, they're basically suing MS because MS won't give them more money.

Of course they will be bankrupt when MS won't give them more money (and it surely won't). But MS will also grab their know-how/IP/... as reward for making them bankrupt, and that's the point.

It's OK folks,

[countach]

Don't believe this nonsense. For example Microsoft would NEVER, screw over Miguel de Icaza and the MONO effort. Trust them. If Microsoft says they support the MONO effort, we can take them at their word. They are people of high integrity and whatever they say, they mean. They would never lead others along the garden path, with every intention of crushing them later on.

+5 Sarcasm.

Could the fate of microsoft be made in civil court

[WPIDalamar]

With all these civil cases going on, could they shape MS's behavior more than the antitrust trial?

I could see a future where microsoft is afraid to do the "bad things" they like to do for fear of lawsuits .... but then I think about their huge pile of money, and the idea seems laughable.

And what ever happened to the EU antitrust type trial?

Re:Sendo needs better lawyers...

[SerpentMage]

No the argument that Sendo is raising is very legit. Their argument is that they and Microsoft entered into a deal where the aim was to sell product. While they had backdoor clauses, MS, it would appear dealt in bad faith.

Bad Faith is not something to underestimate. Whenever you enter into a contract you have to actually pretend to support the contract. Because otherwise you will be in contempt and be VERY liable. In fact this could get very messy for MS if it is proven that they acted in bad faith.

This could be the case that kills MS. Think about it. This company had a once in a life time offer. They were ready, but the company they wanted to deal with was not. Result, you kill that company. You are liable because potentially the other party could have become very large and very rich.

I guess finally history is catching up to MS.

That's the hard way of doing it....

[countach]

The easier way is that MS just says "Sorry folks, we have a patent on XXXX, and you can't use MONO any more. Oh by the way, since it is now so ingrained into Gnome, you can't use it either. Oh, and since all those Linux disks have Gnome on them, you'll have to destroy them all too."

Re:Could the fate of microsoft be made in civil co

[Planesdragon]

I could see a future where microsoft is afraid to do the "bad things" they like to do for fear of lawsuits .... but then I think about their huge pile of money, and the idea seems laughable.

Their huge pile of money will only get them so far. If they start losing it by the billions, their stockholders (including Mr. Gates) will sit up and reign in the company.

$40 billion+ in the bank shouldn't be enough to avoid justice--but it should be enough to elminate a chance of appeal, or tiered payments, etc.

And what ever happened to the EU antitrust type trial?

AFAIK, it's still going on.

Enabling environment?

[Allt]

I found this interview [kuro5hin.org] with a former employee of Microsoft on Kuro5hin.

You worked at Microsoft for ten years, then left the company two-and-a-half years ago. From your perspective, do you think Microsoft has fundamentally changed as a result of the antitrust lawsuit?
My short answer would be "No".
There were many positive things about the Microsoft work environment. But there were some negatives. People use the term "enabling environment" to mean a situation that encourages someone to act in a negative way, such as drinking alcohol heavily, by mitigating the negative impact of the behavior, and providing tacit approval for it. Well, Microsoft constructed an enabling environment for socially obnoxious behavior: it was welcomed and rationalized into positives. If you were late for meetings it meant you were busy doing important work, if you were extremely confrontational it meant you were passionate about your job, if you required subordinates to work long hours it meant you were committed to the product, if you turned down everyone you interviewed it meant you weren't soft, and so on.
So Microsoft had this system that encouraged and rewarded people who acted a certain way. And some of that behavior trickled out into meetings with customers and partners, where they were correctly seen as negatives and helped foster the anti-Microsoft attitude. But since Microsoft kept hiring and promoting obnoxious people, they kept being obnoxious.

I don't know how much truth lies in this, but when any organization becomes big enough, culture plays a big role in dictating what is allowed and what's not.

Re:HOW STUPID CAN SENDO's executives be?

[rseuhs]

Well, business is about trust.

Think about it: Imagine you would make a deal signed with only a handshake with the local mobster-boss and another with Bill Gates.

Which deal would you trust more?

Re:duh

[malkavian]

Uhh.. Score 5? Someone's got an odd concept of Capitalism.
Capitalism works fine when everyone's honourable, and keeps their word, and basically plays the game. People make products and make money. Best product wins (votes=money).
MS, as usual, are breaking the rules, and pulling their own game (kill all other contenders), which isn't Capitalism.
In Capitalism, you end up with a flourishing ecosystem of companies providing a variety of competing products. Evolution selects the best.
In the MS game, you end up with one monolithic power providing what it thinks is best for people.
In fact, MS' way is more like communism than capitalism.
"To each unto their needs'..
MS decides what each person needs, and that's what they get, like it or not. It attempts to take all competition out of the arena, so, if you want an office suite, you have MS office, as MS has killed the competition.
So, really, MS is anti-capitalist.

Malk

Re:They're suing *who* again?

[pubjames]

If I see an antique on eBay selling for $5 that I know to be incredibly valuable, I should buy it -- I'm under no imaginable obligation to contact the seller and let him know he's an idiot.

Actually, the law may be more complex than you expect. There was a case in the UK - I believe the law in the UK is similar to the US - I can't remember the exact details, but the case was of an old lady who had led a very sheltered life and then suddenly got rich, and decided to do up her house. The builders realised that she didn't have a clue and so got her to sign contracts with greatly inflated prices. She signed them and everything was legit as far as the contracts were concerned, but friendly neighbours realised she'd been exploited and helped her take legal action against the builders. She won, despite having signed the contracts of her own free will.

Re:They're suing *who* again?

[monomania]

there is no (nor should there be any) law against getting into really sweetheart deals at the expense of the other party....

Three scenarios:

1. Your beloved wife dies, and you are paid her life insurance to compensate. You are rich, but miserable.

2. You have grown disenchanted with your marriage, and murder your wife for the insurance money.

3. You actively seek out rich women to marry and murder.

Now, business contracts with such terms as Sendo/MS implemented exist to obtain, if necessary, in worst cases, a situation similar to the First scenario. On the face of the evidence, MS operated according to the Second, and may additionally (upon examination) be shown to have operating along the lines of the Third.

This is not business as usual -- unless you are, say, an Enron executive. And it's a really bad time for MS to be proven of that ilk in court...

Re:How brazen can Microsoft's executives be?

[haggar]

Interestingly, executives in software companies don't seem to learn from history/other's mistakes: I guess you know how MS stole valuable assets and IP from borland trough their engineers - made very high offers to the Borland engineers while contacting with Borland for "cooperation". Well, the same identical thing happened years later to Oracle (with Microsoft, of course), after which MS SQL server started to suck less.

Re:HOW STUPID CAN SENDO's executives be?

[WindBourne]

I agree with you. I have been trying to figure out why so many companies sue MS for breach of contract? MS has shown that they know how to write contracts and/or how to buy courts. Either way, any company that deals with MS will get burnt if they are making any real money or they hold a key to the future. I personally think that Corel,Apple,Sun,Sybase,IBM,etc. have gotten what they deserve for doing deals with MS. I have also wondered why stock owners of public companies do not sue the company as soon as they get into a contract with MS? It shows that the company is risking too much.

Re:yeah baby

[SuperKendall]

You think Microsoft purposely delayed the product to their only partner, purposely destroyed their already damaged reputation and purposely destroyed their future in the wireless market?

What makes you think otherwise, given that's how they work? If you think about it long term (which Microsoft is), is it so bad to delay success a few years when you can have so much more of the profit? They certianly have the capital on hand to play possum for a few years.

Microsoft has been declared "dead" in too many things that they eventually returned to have the upper hand in.

Re:HOW STUPID CAN SENDO's executives be?

[grrliegeek]

I guess this is a more-or-less standard part of any (exclusive) contract: if one partner fails, the other gets the freedom to make new deals with new partners. This is not the crux of the issue. It's not about M$ being able to negotiate with other handset makers if the deal with Sendo didn't come through. It's that they gained rights to Sendo's intellectual property and the right to use that with other handset makers if the deal went bad.

Under the SDMA, in the event of a Sendo bankruptcy, Microsoft would obtain an irrevocable, royalty free license to use Sendo's Z100 intellectual property

With M$ being convicted of monopoly abuse, this is the equivalent of naming the Don of an organized crime syndicate as the beneficiary of a life insurance policy, and hoping that the Mob won't off you. IANAL nor am I a biz negotiaions guru. However, I'm sure there could have been something Sendo could have negotiated into the contract that would have given M$ financial incentive to help keep them afloat? It seems obvious that even then, knowing what was known about M$, trusting them in a business deal to be fair or non-fatal to a business partner is asking to be taken advantage of. And I'm not sure why the lawyers at Sendo allowed them to make such a self-defeating deal in the first place. But that doesn't negate the potential validity of Sendo's case. Doing business with M$ is shaky at best, given their known behavior. From a business perspective, Sendo signing a contract that was in M$'s interests and not their own was foolish enough. Signing a contract that incented M$ to help them fail was insane. However, it seems that even with a sweet deal for them, M$ was breaching the contract. "Code complete" was promised to Sendo to be delivered by June of 2001, it was never delivered. (At this point, they still haven't been able to deliver a stable embedded OS for handsets). Also:

Microsoft refuses to pay Sendo some capital that was scheduled under the earlier agreement, Sendo alleges, and by spring the relationship has deteriorated to the level of legal threats.

And, M$ appears to have lied:

However on the surface, all appeared to be cordial, and at a board meeting in May last year Brown pledged that Microsoft was "not working with anyone else as an 'initial go to market partner'". This we now know to be false.

So, there is some (allegedly) wrongdoing on M$'s part that goes beyond the contract, however foolish that was.

I'm not holding my breath,,,

[TrentC]

I guess finally history is catching up to MS.

Everyone thought the antitrust trial was where MS was going to meet up with its karma, too. Look where that got us -- a watered-down sweetheart "settlement" which does nothing to address the real problems with MS, let alone the issues presented at the antitrust trial.

If this case turns into a serious legal threat, I wonder how many bribes^H^H^H^H^H^Hdonations and contributions MS will have to make in order to get another toothless "settlement".

Jay (=

Probably Redundant, but my Karma can afford it

[EmagGeek]

But, anyone who actually believes Microsoft actually wants to be their "partner" in bringing "new products" to "market" is a blithering IDIOT. Microsoft isn't interested in being anyone's partner. M$ has enough money to go out and start its own mobile phone company. It's just cheaper and easier to spend $12M to steal the research and IP.

These little startups, in their eagerness to play "big company" to impress their fourbucks-going friends, will ink any deal that brings in money, because that's all they see. They don't think ahead, and don't have any idea whom their friends and enemies are. Microsoft was probably interting and rotating the knife in their backs before the ink was even dry...

Re:They're suing *who* again?

[kin_korn_karn]

This case seems to fall under what they call "promissory estoppel". This is where a contract is entered that will cause grievous harm to the signee if it's not carried out. Microsoft didn't hold up their end of the deal, and Sendo failed. If Sendo can prove that M$ knew this would happen M$ is liable for the bankruptcy and probably whatever back pay the former employees are owned. If they can prove that M$ INTENDED for this to happen they can get punitive damages. I kind of hope this doesn't happen because the board types are the ones who pocket the damage money.

IANAL of course, but I remember this kind of thing from business law in school. If I'm wrong, mod me to -1 so nobody gets misinformed.

Re:Oops, they did it again.

[sheldon]

Spyglass was setup to sell off licensing to the NCSA Mosaic code. Microsoft bought a license, thinking at the time that's what they had to do.

Netscape didn't buy a license, they just stole the code by stealing the developers of the original Mosaic, who then went on to write Navigator in a better way having learned the lesson of how not to write it with Mosaic. They later ended up settling a lawsuit with the University over that very issue.

But then in around about IE 3.0 Microsoft rewrote the whole thing from scratch without using the Mosaic code. They only licensed Mosaic from Spyglass to get IE 1.0(or was it 2.0?) out the door quickly.

So what's the problem with Spyglass? They received some licensing money, but they didn't have a long term revenue stream from it. Should they? Does Opera have a license with spyglass? Legitimate question, I don't know... but are you saying that to create a browser you need it?

Now why you're ragging on Microsoft I don't understand. If someone was working on an open source browser at the time(prior to Netscape dumping Navigator off), do you think they would have licensed the code from Spyglass?

This is gratutious Microsoft bashing, plain and simple and a completely different situation than this Sendo story.

Re:How brazen can Microsoft's executives be?

[Locutus]

can't figure it out why year after year and company after company falls prey from being a Microsoft "partner". It stunned me when Sun signed their now famous licensing agreement with Microsoft. The road was already littered with victims from legal contracts gone bad when one of the parties involved is Microsoft.

Maybe the legal experts hired are all so cocky they think they will be the ones to make a Microsoft "partnership" work. Maybe the exec's want to cash in on the quick boost in their stock price when the press releases hit. Personally, I think it ego and the exec's think they are smarter than all those that have failed before.

Sendo didn't "get what they deserved" but what they got was surely not unexpected if you've been in the industry for more than 5 years.

Regarding Oracle; maybe that's why they went dumpster diving? Larry surely has few kind words for the Redmond gang and would be willing to spend what it might take to fry Microsoft in court. With the right evidence of course.

LoB

Re:HOW STUPID CAN SENDO's executives be?

[richie2000]

Exactly. Mafia bosses can (most of the time anyway, there are bound to be psychopaths there too, but they usually don't dance around a stage screaming "Developers!") be relied upon to adhere to the Mafia's set of standards, ethics and rules. They have been taught since childhood to respect their elders, care for their family and provide for their 'extended family'. They are, in their own cultural context, very predictable. This makes them tempting to do business with.

On the other hand, Microsoft VPs are a pack of hungry, rabid dogs on meth that would not only bite the hand that feeds them but continue up the arm until they choke.

Herein lies also a fundamental difference between IBM twenty years ago and Microsoft today; even though many like to draw this parallell (mostly to take comfort in the fact that a near 100% market penetration can be overturned in very little time) they are in fact not alike. IBM also had this set of standards, an internal culture that predicated their every move. This was also what prevented them from keeping their grip on the PC industry. Microsoft has no such barriers. They will not refrain from anything to further their own agenda. The hope lies in the fragmentation of these rabid dogs - they have no loyalty to each other and this may distract them from uniting against common enemies outside the pack, especially sneaky, difficult-to-grasp-and-counter enemies - hint, hint, nudge, nudge, tux, tux.