Sendo, the UK's only mobile manufacturer, is based in Birmingham and makes non-branded phones for network operators, such as Virgin.
It is a former Microsoft partner. Since 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.
A month later, Sendo sued Microsoft in a federal court in Texas, listing 13 counts of fraud, negligent misrepresentation, breach of contract and civil conspiracy.
The mobile phone maker alleges that Microsoft misrepresented its software as nearly complete despite serious flaws that made it incompatible with Sendo's hardware.
Sendo has 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.
Finally, Sendo claimed that Microsoft withheld payments specified in contracts between the two companies.
Microsoft's new counter-suit claims that the UK company "consistently failed to meet its contractual obligations to design and develop" the Z-100 phone by the agreed deadlines. Microsoft also accuses Sendo of misstating its financial situation to receive additional funding.
According to ComputerWire, Microsoft states in its counter-claim that, according to one of Sendo's own employees, Sendo turned the Z100 project into "a runaway train" in which "there is nobody sensible in control and a train wreck is unavoidable."
Microsoft has 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.
