Patents And Unpleasantries

What began as a potential partnership is degenerating into a legal fight, as Azul Systems last week fired a pre-emptive strike against Sun Microsystems.

Startup Azul, a pioneer in "network-attached processing," was in talks with Sun for more than a year about possible cross-licensing of technologies. After those talks broke down, Azul says, Sun threatened to sue it for patent infringement. So the startup decided to beat Sun to the punch, asking a U.S. District Court to rule that it hasn't infringed on Sun patents or trade secrets.

Sun tried to "unilaterally dictate terms that were unacceptable," Azul CEO Stephen DeWitt says. It wanted huge fees or an equity stake, he adds. "We were told by Sun: 'Acquiesce or we'll sue.' I think it's pathetic," DeWitt says.

Sun wouldn't say if it will sue Azul, but says it wants the company to honor the Sparc licensing terms and not try to litigate around it. "Compelling products with unique value add, built by employees not subject to non-compete agreements, is probably a better strategy," a company statement says.

Azul developed an architecture that combines 24 processing cores into a single chip, and in 2004 introduced a platform to speed execution of Java applications. Version 2 of that platform will be introduced this week. Azul has customers in banking, airline reservations, and other businesses that handle enormous transaction volumes where server throughput is critical and loads unpredictable.

DeWitt, chief marketing officer Shahin Khan, and a dozen other Azul employees used to work for Sun, but they didn't use Sun's intellectual property or trade secrets, DeWitt maintains. "Pretty much any startup in Silicon Valley is going to have some ex-Sun executives," he says. And perhaps some ill will.

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