What a great week. Red

by francine Hardaway on August 27, 2003

What a great week. Red wine extends your life, and chocolate protects your heart. I need nothing else. According to the latest food fads, I�m destined to live forever, having consumed enough red wine and chocolate in my lifetime to confer immortality on several people.

But something else good might happen. Yesterday, my friend Richard, whose small public company, Burst (BRST) is suing Microsoft, had a hearing in Baltimore on a motion to compel Microsoft to release some emails that pertain to the suit. Apparently, Microsoft employees, while negotiating with Burst (and before infringing on its patents for the newest versions on Media Player), exchanged some emails about the company�s intentions to avoid licensing Burst�s software. What a surprise. Employees who use email to incriminate their employers. Employers who set a corporate culture of something close to criminality. Raise your hand if you have never seen this before.

Seriously, it looks as if Microsoft is really in trouble here, and will have to settle � either by �acquiring� Burst or by paying a big fine.

This has already been suggested by Robert X. Cringely, who writes a column called �Pulpit� for PBS. (http://www.pbs.org/cringely/pulpit/pulpit20030821.html). Cringely says the EU is already going to force Microsoft to unbundle Windows Media Player from all versions of Windows sold in Europe. That will allow competition in the EU and cost Microsoft something like $3 billion.

That sets a precedent for the US, where Microsoft definitely has a strategy of distributing digital content through Windows Media Player. If Burst prevails, and can license its technology to competitors, Microsoft�s strategy fails. And, according to Cringely, settling with Burst will not be enough: Microsoft will have to actually own all Burst�s patents. So in effect, it will have to buy the company.

But what�s more exciting is that Cringely also suggests that someone else � and there are many out there who don�t love Microsoft � could conceivably buy Burst first. Wow! A bidding war for little Burst!

That would be incredible. Richard started this company in 1988, financed by five or six friends. At that time, it was called Explore Technology. The original investors (I was one) were cashed out by the rock group U-2, which was looking for some investment that would jive with their musical capabilities.

Through a series of patent filings, Burst now possesses all the intellectual property surrounding faster-than-real-time transmission of digital content � and possessed it before the capability even existed to receive digital content.

Well, in the usual manner of overnight successes, engineering has caught up with Richard�s brain fifteen years later.

Microsoft had three years of negotiations with Richard and Burst during the dot com era. Richard thought they were going to license the technology. Instead, they stole it.

Usually when Microsoft does this, the small company puts its tail between its legs and goes out of business. But not Richard. Richard was also the co-founder of GoVideo, and he filed a lawsuit against a consortium of large Japanese manufacturers who refused to supply the company with parts to create a dual-deck VCR because he owned the patents and they couldn�t create one of their own. GoVideo lost that suit eventually, but Richard learned a lot about business. He was a relative babe in the woods during the GoVideo days, but he�s an experienced serial entrepreneur today.

A fancy San Francisco law firm has taken the Burst v. Microsoft case on contingency. That�s huge. It means they think the case is a winner. Before it dissolved, the legendary Silicon Valley law firm of Brobeck, Phleger and Harrison was also involved.

But what constitutes a win? Indeed, Richard has suffered plenty during the past fifteen years. He built a company around his Burstware, took it public, and watched it dissolve after Microsoft�s Media Player came out. He elected to de-list the stock to save money on reporting requirements. He is not really in control of his own destiny, or that of the company; it will all be a function of the lawsuit. Even if he wins, he will not emerge as a CEO; he will be acquired and asked to quietly fade away. I�m sure he would have rather seen the company sell licenses and create jobs, but it seems that�s not going to happen, no matter how the case comes out. The best that can happen is financial and legal vindication. For a true entrepreneur like Richard, that may not be enough.

Reminder: FastTrac Planning begins on 10/1. If you haven�t signed up yet, you may apply at http://www.fasttrac.org/event.cfm?eventID=317. We only have about a dozen spots left.

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