Microsoft and UK mobile phone maker Sendo have settled a two-year legal dispute over smartphones.
Sendo sued Microsoft in December 2002, alleging the software maker stole proprietary technology and trade secrets and used those to launch itself into the mobile phone market. The lawsuit came one month after Sendo abruptly dropped Microsoft's software for its smartphone product in favour of the rival Symbian operating system.
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Microsoft denied the allegations and in February last year filed a countersuit alleging breach of contract. The trial was scheduled for early 2005.
The settlement ends all litigation between them, the companies said. As part of the agreement, both parties deny any and all liability and Microsoft will surrender its 4% stake in Sendo. Further details of the settlement, which also includes a "monetary component", will not be disclosed.
Sendo said it can now focus on product development and growth. "This means that we will no longer have to spend time and money on this case," said Sendo spokeswoman Marijke van Hooren.
Microsoft is pleased to have the case resolved, said corporate vice-president and deputy general counsel ,Tom Burt.
Sendo, a privately owned company, partnered with Microsoft in 1999 to develop phones running its Windows Mobile software for smartphones. In 2001 Microsoft invested about $12m (£6.7m) in the company.
In October 2002 mobile phone operator Orange launched a smartphone based on Microsoft's software, but made by High Tech Computer. A month later, Sendo dropped Microsoft and said it would work with rival software suppliers.
Joris Evers writes for IDG News Service