Microsoft Ordered to Find Emails

Redmond, Wash. -- The honeymoon is over for Microsoft Corp. and Santa Rosa, Calif.-based Burst.com, Inc., the maker of a rapid multimedia technology for transmitting movies and sound over the Internet.

According to Burst.com's CEO Richard Lang, Microsoft met with Burst.com over a two-year period and negotiated unsuccessfully for the licensing rights to use Burst's technology. But after failing to develop a concrete alliance, Microsoft bypassed Burst.com and developed its own similar technology, code-named "Corona," also known as Windows Media 9, which would eventually spur Burst.com into litigation against Microsoft over allegations of theft and anticompetitive behavior.

Burst.com's Faster-Than-Real-Time, Burst-Enabled video, and Burstware software enable the delivery of full-motion video and CD-quality audio over IP-based networks and could potentially provide the backbone technology for next-generation video-on-demand services across all industries, including Internet-based adult entertainment.

"What our technology does is enable programming to be delivered at an accelerated rate and be stored on local computers or set-top boxes," Lang told XBiz. "The viewing takes place locally instead of over a network and gets rid of the jittery picture quality typical of most streaming technology. People won't pay for picture quality that is not equal to what they can see on a DVD."

According to Lang, Microsoft's Corona technology uses technologies and trade secrets misappropriated from Burst.com that are protected by numerous U.S. and International patents, as well as patents pending.

Lang claims that Burst technology is essential to Microsoft because it enables high quality video-on-demand over the Internet, which is key to Microsoft's .NET strategy via Windows Media Platform applications.

Lang told XBiz that Microsoft basically bypassed dealings with his company, stole the secret sauce, and relaunched it as its own technology.

"The original idea was that they were going to license it," Lang told XBiz. "But they are using it anyway and we just want to get paid."

In June of this year, Burst.com filed a lawsuit accusing software giant Microsoft of violations of the Patent Act, Sherman Act Sections 1 & 2, California Cartwright Act (anti-trust), California Business & Professions Code Section 17200 (unfair acts or practices), the California Trade Secrets Act and for breach of contract.

"We spent over a decade patenting and developing burst technology in anticipation of the markets that are now emerging," said Lang. "Microsoft's operating system monopoly put it in the position to simply take our technology and our business opportunities. Microsoft has found that it pays to misappropriate the innovations created by others. We're asking the court to prevent that from happening here."

A U.S. District Judge recently raised the lawsuit ante by ordering the Redmond-based computer technology maker to search for any "misplaced" emails pertaining to its business dealings with Burst.com. But Microsoft is having a classic case of litigation amnesia.

Lang claims there are dozens of unaccounted for emails the two companies exchanged that could potentially reveal Microsoft's motivation for developing Corona and bypassing Burst.com's own technology.

Those emails, Lang told XBiz, comprise of correspondence over the course of 20 months between Burst.com and Microsoft executives detailing the terms of their aborted agreement.

"Suddenly Microsoft says there was no correspondence," Lang said. "It is common knowledge in this industry that Microsoft lives and dies by its emails. It's too incredible, literally, to believe that all of the emails having to do with Burst.com are gone."

Microsoft denies any wrongdoing, according to published reports. The software giant disputes that any such emails existed and insists that the burden of proof is on Burst.com and its legal team of Hosie, Frost, Large & McArthur.

Microsoft has been up to its neck in recent years with antitrust lawsuits with the federal government over its use of the Windows operating system. The company has so far resolved nearly all pending antitrust suits, except for a suit filed by Sun Microsystems and a slew of class-action consumer lawsuits.

Pending Microsoft's court-ordered internal search for more evidence, the case has been relocated from San Francisco to Baltimore.

The trial date for Burst.com v. Microsoft is slated for spring 2004.

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