Sendo is based in Birmingham and makes non-branded phones for network operators, such as Virgin. It is also a former Microsoft partner. From 1999, the two companies worked jointly to develop the Z-100 Smartphone, a compact handset running Microsoft software and offering internet access, e-mail and multimedia functions.
In November 2002, however, Sendo ended the partnership unexpectedly, just weeks before the scheduled launch of its product. The company claimed that Microsoft did not provide access to source code and therefore Sendo was unable to tailor the necessary software.
The following month, Sendo sued Microsoft in Texas, listing 13 counts of fraud, negligent misrepresentation, breach of contract and civil conspiracy.
Sendo alleges that Microsoft misrepresented its software as being nearly complete despite serious flaws that made it incompatible with Sendo's hardware.
Sendo also claimed in its suit that Microsoft used the partnership agreements between the two companies, which gave it access to Sendo's proprietary technical knowledge and customer information, to steal trade secrets and disclose them to rival mobile makers based in Asia. It also claims that Microsoft withheld payments specified in contracts between the two companies.
In February this year Microsoft lodged a counterclaim, arguing that there is no basis to the allegations and that the case should be dismissed.
The counterclaim alleges that Sendo not only "consistently failed to meet its contractual obligations to design and develop" the Z-100 phone by the agreed deadlines, but that it also mis-stated its financial situation to receive additional funding. Microsoft also filed a motion requesting a change in the court venue, seeking to transfer the case to the Western District of Washington, as provided by its contract with Sendo.
On Tuesday the federal court in Texas ruled that the case could proceed, and that it should not be transferred to Washington, but should remain in Texas.
Marijke van Hooren, Director of Communications with Sendo, told ZDNet UK:
"We're pleased with this outcome. The fact that the lawsuit was not dismissed shows that it's obviously a legitimate complaint."
