Java hardware start-up Azul sues Sun

Start-up says Sun threatened to sue for patent infringement unless it paid steep royalties, gave Sun a company stake.

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Azul Systems, a company selling hardware to run Java programs, has sued Sun Microsystems over a dispute about fees and royalties.

The Mountain View, Calif., start-up filed for declaratory relief Wednesday "to protect the interests of the company in the face of unfounded allegations from Sun Microsystems." Azul says the larger company threatened to sue if it didn't pay an "exorbitant" amount, giving Sun part ownership.

Azul wants a judge in the Northern California region's U.S. District Court to declare a judgment against Sun that Azul doesn't infringe a list of 20 Sun patents or that those patents are invalid, according to a complaint the company said it filed Tuesday. Several of those patents involve processors running multiple tasks at once--a technology Sun and Azul both are pursuing through development of multicore chips.

Sun disputed Azul's account. "Sun has spent over a year trying to achieve a business resolution to Azul's unauthorized use of Sun intellectual property," the company said in a statement. "During this period, Azul has repeatedly stonewalled and delayed. The latest example of this behavior is the filing of the present action despite an agreement the parties entered into allowing additional time for business negotiations to take place, and despite the fact the parties were exploring additional avenues of resolving this dispute."

And Sun rattled a legal saber of its own. "Now that Azul has taken this litigious path, Sun has no choice but to fully protect and enforce its intellectual property rights," the company said. "Sun is considering all appropriate causes of action against Azul, including patent infringement."

Neither side comes out ahead, IDC analyst Vernon Turner said. "Both sides should have tried to resolve this as much as possible, because it's only going to hurt the industry when a judge settles the innovation (issue) and direction of the technology," he said.

In negotiations with Azul, Sun alleged that Azul infringed Sun patents and misappropriated trade secrets, Azul said. "Sun has repeatedly threatened the company with litigation unless Azul granted Sun part ownership of the company and agreed to pay exorbitant up-front fees and continuing royalties on the sale of Azul products. Attempts to reach an agreement failed when Sun gave Azul an ultimatum: Accept its final proposal or face litigation," the company said.

"Sun seems to be in disbelief that a young, privately held company can independently create such industry-defining technology. Azul has been forced into this legal process as a last resort," Azul Chief Executive Stephen DeWitt said in a statement.

Azul has close ties to Sun, which created the Java programming language. DeWitt also founded Cobalt Networks, a server start-up Sun acquired in 2000 for $2 billion--a move that ultimately proved financially damaging. And Azul's chief marketing officer is Shahin Khan, who before his departure led Sun's high-performance technical-computing group.

Azul's Compute Appliance is used to provide a central computing resource to run Java programs. The systems cost as much as $800,000, but Azul argues that they provide a cost-effective adjunct to numerous separate servers running Java software.

Sun has competing technology. Its UltraSparc T1 "Niagara"-based servers are well-suited to running many Java programs simultaneously, Sun argues.

Azul employs several ex-Sun employees besides himself, DeWitt said in an interview, including a "teeny number" of employees of the Afara Websystems start-up that created the Niagara design before Sun acquired it.

But having employees who previously worked for competitors is hardly unusual in the computing industry. "The same is true for every other Silicon Valley company," DeWitt said.