Sendo is based in Birmingham and makes non-branded phones for
companies 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 alleged 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 claimed that Microsoft
withheld payments specified in contracts between the two
companies.
In February 2003 Microsoft lodged a counterclaim, alleging 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 misstated its financial situation to
receive additional funding.
Microsoft argued that there was no basis to the allegations
against it and that the case should be dismissed, but a Texas court
rejected that request in October last year.
The case has now settled, and while the terms of the deal remain
confidential, Sendo has confirmed that Microsoft will give up its
shareholding in the small UK company. Both parties deny
liability.
