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Microsoft suit stays in Texas

A judge in Texarkana rejects an attempt by the software giant to get dismissed a lawsuit brought against it by British phone maker Sendo.

British phone maker Sendo has won a small victory in its legal battle against Microsoft.

On Tuesday, a judge in Texarkana, Texas, rejected an attempt by Microsoft to have a lawsuit dismissed or moved to Washington state that was brought against it by Sendo.

Instead, the judge has allowed much of the substance of the case to proceed. The lawsuit will continue to be heard in Texas, with the trial likely to start at the end of next year.

"We're pleased with this outcome. The fact that the lawsuit was not dismissed shows that it's obviously a legitimate complaint," said Marijke van Hooren, Sendo's director of communications.

Sendo has filed several charges against Microsoft, including misappropriation of trade secrets, engaging in unfair competition and fraud--charges that Microsoft continues to deny.

"Sendo's allegations against Microsoft are counter to our respect for intellectual property and to the value we place in our partnerships," a Microsoft representative said. "We look forward to presenting the facts in court and refuting Sendo's baseless claims."

The lawsuit was filed after the breakdown of Microsoft and Sendo's business relationship, which began in 1999. Sendo had planned to develop a handset based on Microsoft's Smartphone 2002, which was then code-named Stinger. As part of the deal, Microsoft was to invest $12 million in Sendo.

Sendo alleges that Microsoft failed to provide working software, forcing the launch of the smart phone to be pushed back several times. Sendo also claims that Microsoft, despite having a place on Sendo's board and seeing a number of its trade secrets, never provided the $12 million.

Microsoft and Sendo's relationship ended on Sept. 23, 2002.

Three months later, Sendo filed its lawsuit, in which it accused Microsoft of using it as a stepping-stone to gain entry into the lucrative mobile phone market by making use of Sendo's handset-manufacturing expertise and then cutting the company out of the deal.

The judge didn't allow Sendo's claim of punitive damages from Microsoft to proceed. According to van Hooren, though, Sendo could still be awarded punitive damages if its other charges are upheld by the court.

Van Hooren explained that Sendo is keen to have its case heard in Texas because its headquarters and several of its key witnesses are based in the state. She added that the Texarkana court has a reputation for conducting cases quickly.

Graeme Wearden of ZDNet UK reported from London.