The actual agreement between Microsoft and RealNetworks is secret, so it's unclear what sort of relationship Microsoft had with Real. News reports at the time painted the deal as nothing more than a routine Microsoft investment in interesting technology: Microsoft would gain a 10 percent "nonvoting" stake in the company, and Real would try to push Microsoft's streaming format in its player.

Was the deal between Microsoft and Real anything more than that -- was it "collusion"? That charge will perhaps be the most difficult, and the most important, for Burst to prove. That's because, if the Burst case ever goes to trial, Real and Microsoft's "conspiracy" to keep others out of the market for video streaming will be the only evidence that Microsoft had a motive to appropriate the technology, as Burst says it did, after Burst showed Microsoft the technology under a nondisclosure agreement.

In its one filing in this case -- a motion to dismiss the case based on what it suggests are Burst's flimsy antitrust claims -- Microsoft says that Burst is offering an incorrect reading of the contract it signed with RealNetworks. "The contract was manifestly pro-competitive," Microsoft says, and it "simply does not contain any provision that prevented RealNetworks from dealing with Burst." There was also no provision, Microsoft says, that prevented Microsoft and Real from aggressively competing with each other -- meaning that if Burst's technology really was as good as it says it was, either company was free to license it.

"If there was collusion," says Jim Dessler, a Microsoft spokesman, "that would mean there would be no innovation going on, and innovative companies such as Burst and others would have had advantages." But he suggested that was not the case as, during the past few years, Microsoft and Real competed aggressively against each other, and each "innovated" in the video market.

Dave Richards, RealNetworks' vice president of consumer systems, declined to discuss the Burst.com case, but he listed a number of improvements that RealNetworks had made to its system after the first release, and he said the firm did consider Microsoft a competitor "in certain areas."

Richard Doherty, who follows media development at the Envisioneering Group, also finds the accusation that there was collusion between Microsoft and Real difficult to believe: "I find that hard to justify. I would say that on both the technology and marketing side, that one-upsmanship has been something that everyone has enjoyed. Microsoft and Real have each out-innovated each other more than anyone else could have come close to. And if you look at the people involved on both sides, I don't see that agreement coming from them: from Will Poole and Bill Gates to Rob Glaser and his tech team. If you met Rob Glaser, you'd know that the last thing he'd be involved in is some sort of conspiratorial gentlemen's agreement with Gates."

But Lang says he has no doubt that Microsoft and Real worked together to keep others out of the market. He says that the antitrust trial -- in which a RealNetworks executive testified that he remembered the "cashectomy" Microsoft had performed on Borland software and wondered whether RealNetworks could become such a target -- indicates that Real knew that Microsoft could hurt the company if it wanted to.

The "findings of fact" portrays an aggressive Microsoft: "Microsoft's intentions toward RealNetworks in 1997, and its dealings with the company that summer," it states, "show that decision-makers at Microsoft were willing to invest a large amount of cash and other resources into securing the agreement of other companies" whose work threatened them. (Citing attorney-client privilege, Bruce Wecker, Burst's lawyer, declined to say why, if Burst was arguing collusion between Real and Microsoft, it wasn't also suing Real.)

In December of 2001, about a year after Burst showed Microsoft its "secret sauce," Microsoft announced "Corona," its next version of the Windows Media products. One of the technologies featured in Corona -- now called Windows Media 9 Series -- is FastStream, which, according to Microsoft's first press release on the system, "automatically optimizes the delivery of streaming audio and video to take advantage of the full bandwidth available to the user."

When Lang heard of this technology, he thought it sounded very similar to what Burst had been doing. He looked further into the system, and as he heard more, he says, he got increasingly suspicious. FastStream, he says now, is Burst's technology. "I don't think there's any question they're violating our patents," he said. More than that, Burst alleges that Microsoft incorporated ideas that Burst had given the company that weren't included in its patents. "Even if they didn't copy our sauce," he said, "we showed them the ingredients. They knew what had to be in it. They could say they made their own sauce, but they knew our ingredients."

It's true that Microsoft's FastStream technology does sound very much like Burst's system. Michael Aldridge, a Windows Media exec, described the technology to me. "In previous streaming technology, both ours and anybody else's, when you send out a 200 kb/s [kilobits per second] video on a 500 kb/s network, it wasn't intelligent enough to find out that I had an extra 300 kb/s of headroom," Aldridge said. The new Windows Media is "able to do faster-than-real-time delivery, so more of the file is residing locally than was capable previously. The simple example I would give you as a rule of thumb is, I'm watching a music video. In the first minute of the five-minute video, I might already have the whole thing residing [on my hard drive.] So that even if I lose my network connection I'd still be able to view my content. That helps to iron out some of the irregularities of the network."

Aldridge's description of FastStream, especially his use of the phrase "faster than real time," is almost identical to Lang's description of Burst.

But Aldridge also said that Microsoft had been working on this system for four years and that it had spent a lot of resources perfecting the product. And Bill Gates has said that during the last couple of years Microsoft has spent $500 million on Windows Media technologies -- "which is a lot, even for Microsoft," says Matt Rosoff, who tracks the company for the research firm Directions on Microsoft.

Which leads to another question: If Microsoft was spending so much money on digital media anyway, and ended up with a technology that at least sounds like Burst's, why wouldn't it have just licensed Burst's system? What could have been its reason for "stealing" from Burst -- and would it have risked litigation to do so?

Microsoft didn't comment on the specific intellectual-property claims in this case, except to deny them broadly. "I think it's also important to say, not addressing this case specifically, that you had the bubble in the tech sector which was fueled by unrealistic expectations concerning the value of business and in some cases unrealistic expectations regarding the return on intellectual property," Dessler said. "Now that the bubble has burst, people are looking at ways to mitigate their losses and we're seeing a growing number of patent-infringement suits. Unfortunately that's a part of the business now." He added that Microsoft is an "intellectual-property company, and we respect and understand the value of those rights in the industry."

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