Microsoft settles with UK's Sendo over mobile phone row

A David and Goliath legal wrangle ended yesterday when Sendo, a Birmingham-based mobile phone manufacturer, announced a settlement with Microsoft over allegations that the world's biggest software company passed-on the UK group's trade secrets to rivals.

The case has been an irritation for Microsoft in its efforts to extend its all-powerful Windows operating system from personal computers into mobile phones over the past two years. It also throws a spotlight on Sendo, one of the UK's least known but fastest growing technology companies that is expected to ship 4 to 5 million advanced mobile phones this year and generate sales of about $500m (£270m).

Financial details of the settlement were not published beyond the fact that Microsoft has agreed to hand back a 4 per cent shareholding in Sendo which it acquired for $12m in 2001.

The allegations were first brought by Sendo in December 2002. The pair had embarked on a business venture to create advanced mobile phones using Microsoft's Windows operating system and Sendo's hardware and software technology. But the companies fell out after Sendo alleged Microsoft had passed on its intellectual property to other handset manufacturers. Microsoft countersued for breach of contract.

In a joint statement, the companies said: "In reaching this settlement, all parties deny any and all liability."

Sendo makes customised phones for network operators such Vodafone, O2 and T-Mobile. After abandoning the Microsoft operating system, Sendo switched to the rival Symbian system, which shares its software source code freely with licensed manufacturers - something Microsoft does not.

Hugh Brogan, the Sendo chief executive, said Symbian's open operating system meant it was easier to provide network operators with the sophisticated phones they demanded.