Site Presented By
Thursday, Nov 26, 2009
Bill Gates wants to control the delivery of digital entertainment into your home. And according to a lawsuit brought by a pioneering software company, he's prepared to crush anything that gets in his way. First of two parts.
Oct 29, 2002 | Richard Lang looks out of his lawyer's office at the bright orange Coast Guard cutters clipping the San Francisco Bay. It's a chilly morning in the middle of October, and Lang, the CEO of a video software company called Burst.com, has spent the last hour talking about unfair competition in the software industry and about how he became a victim of Microsoft's vicious effort to dominate digital entertainment. But he's been distracted the whole time, pointing out the choppers and the sailboats. You get the sense that Lang is vaguely embarrassed to be here, that he would rather be out there on the bay, or somewhere else far away, working on ways to improve digital technology rather than explaining why he's suing the biggest company in the industry.
Richard Lang is suing Microsoft because, he says, the company violated Burst.com's patents covering video delivery on the Internet and engaged in "unfair competition" to prevent Burst from gaining a foothold in the market. Lang says that in the late 1990s, as software companies battled each other for dominance in the emerging world of digital media on the Internet, Microsoft colluded with its main competitor, RealNetworks, in an effort to prevent Burst and other firms from entering the market. And then, after it had sufficiently weakened Burst, Microsoft "stole" its intellectual property, says Lang, incorporating in its latest Windows Media Player the video-streaming technology that Burst had developed -- and had shared with Microsoft under nondisclosure agreements -- during more than a decade of research.
Microsoft denies any wrongdoing in the case and has vowed to fight Burst's allegations. Since 1998, Microsoft has been named in dozens of patent-infringement lawsuits, and the company -- which has lost almost none of them -- has suggested that many of the plaintiffs are failed ventures whose claims are at least partly motivated by the attractive target posed by Microsoft and its $39 billion in cash. Burst.com is one such failed venture. The company is still around, but its prospects are far slimmer than they once were, and the main reason for that, Lang claims, is Microsoft's bullying.
There's some debate among insiders in the streaming-media industry over whether Lang has a legitimate, actionable reason to be sore at Microsoft, or whether he is, as a few privately suggest, an opportunistic, litigious hoarder of patents. The courts will have plenty of time to figure that out; his case, which was filed in June, is expected to last -- if it's not dismissed or settled first -- at least until 2004.
But Richard Lang's personal saga -- the tale of how he came to see the future of video on the Internet, to form a company around that vision, and to nevertheless fail to make a bundle on his ideas -- is just a small part of the larger, ongoing fight over who will control media standards in the digital era. It's not hyperbole to say that in the future, when all the media we consume is digitized, the company that controls the media formats and the players to decode those formats will have enormous influence over the culture at large -- and it's no secret that Microsoft would like to have such influence. During the past couple of years, Microsoft has poured $500 million into the Windows Media set of technologies, a staggering sum considering that Microsoft has made no money from the software yet. In some ways, the company is pursuing the same strategy it used so successfully during the Web browser wars, marshaling its formidable resources against competitors and flooding the marketplace with good, free technology -- and perhaps edging very close to the line of what's legally permissible.
Microsoft's misdeeds in the browser fight are well known; they formed the basis of a federal court's decision, in 2000, that the company was a monopoly and had violated antitrust laws. And now it looks as though that misbehavior will form the basis of Burst.com's case. On Oct. 24 in Baltimore, U.S. District Judge Frederick Motz, who is overseeing the preliminary motions in Burst's case, ruled that to prove its case against Microsoft, Burst can use some of the "findings of fact" handed down by the court in the antitrust suit.
Microsoft says that Motz's ruling, which didn't indicate how many of the 412 findings Burst can use, doesn't significantly hurt its chances in the suit. What's clear, though, is this: All the while Microsoft was fighting, in court and in the media, a charge that it was an unfair monopolist, it was throwing its weight around the world of digital media. Microsoft had to make sure, Lang says, that a small firm like Burst couldn't stand in the way of Microsoft's efforts to integrate media delivery into its operating system.
"They didn't want some little company putting a tax on Windows," Bruce Wecker, one of Lang's attorneys, said.
And in the end, Microsoft succeeded. For all practical purposes, Burst has gone bust. Lang maintains that the company is still licensing its technology to set-top box firms in Korea, and that some American hotel chains are providing video through its software. But the company has vastly slashed its payroll and is struggling to stay alive; meanwhile, deep-pocket winners are poised to dominate the future of media. It's not inconceivable that sometime in the next 10 years, all the media delivered to your computer or your digital TV will come in the form of a Windows Media file. And if that happens, we might look back and see Richard Lang's failure as the event that laid the foundation of a proprietary media world.
