Exhibit 1: Alacritech

Alacritech has two U.S. patents: 6,427,171 & 6,697,868, that claim techniques for dynamically offloading network message processing from the CPU to a networking device, thus improving performance.

According to Alacritech, company representatives met with Microsoft in September 1998, where it described its now-patented technology under a non-disclosure agreement. Then, in April 1999, at Microsoft's request, Alacritech delivered a detailed specification describing how Alacritech's technology could be integrated with Windows.

In March, 2003, Microsoft presented its network message processing offloader debutante, "Chimney." Chimney had been slated to be incorporated into Longhorn, the new version of the Windows operating system, currently slated for public release in 2006, and in a networking package for its 2003 Windows Server product.

Larry Boucher, CEO and President of Alacritech, said in a statement: "After Alacritech discovered that Microsoft Chimney is based on intellectual property that we developed, patented and own, we offered Microsoft a license. Microsoft rejected licensing terms that would be acceptable to us. We were forced to sue Microsoft to stop them from continuing to infringe, and inducing others to infringe, on our intellectual property rights."

April 13, 2005 - Microsoft got smacked with a preliminary injunction against pimping Chimney.

Mark Lauer, partner, Silicon Edge Law Group, offered the following commentary. "The standard required to grant a preliminary injunction is actually much higher than the standard required to win at trial. Moreover, only one of Alacritech's patent claims was before the Court on this motion, as opposed to the dozens of claims pending in this case. This also provides an indication of the strength of the other hundreds of patent claims owned by Alacritech in this area. I expect Microsoft to try to downplay the significance of this ruling. But last year, at a conference Microsoft called the most important conference for the PC hardware industry, Microsoft said this technology would allow them to rule the world for the next few years."

Exhibit 2: Burst.com

In filing suit in 2002, Burst.com, a maker of network multimedia content delivery software, claimed that Microsoft stole technology and trade secrets it had acquired during two years of negotiations.

During the trial, Burst.com produced documents it said proved that Microsoft had a policy of destroying e-mail evidence approved by Jim Allchin, Microsoft group vice president of platforms. This contravened an order given in 2000 by the U.S. Department of Justice for Microsoft to preserve all relevant documents in class action and antitrust suits brought against it.

March 11, 2005 - In settlement, Microsoft agreed to pony up $60 million to Burst for patent licenses.

Other Exhibits:

Microsoft has long been hard-assed about patent infringement and its related bad habits.

Skip down memory lane to 1994, Stac Electronics, over a blatant Microsoft liking for Stac's disk compression technology. Stac stated in its filing with the court, relaying the outcome of negotiations: "Microsoft steadfastly refused, however, to offer to pay Stac any royalty for Stac's patented data compression technology." Sound familiar? In the Stac case, the court nailed Microsoft for $120 million for patent infringement.

In reference to the Alaritech case, Microsoft spokeswoman Stacy Drake was quoted as saying, "As an intellectual property company, we invest heavily in research and development, and are committed to respecting the intellectual property rights of others." Stacy was not asked to provide Microsoft's definition of "respect".

Bill Harmon, department head responsible for patent conflict and licensing at Microsoft, told me in a personal meeting in August 2004 that Microsoft "doesn't want to pay the tax for technology it has spent money developing." This was in the context of explaining why Microsoft would give absolutely no consideration to paying one red cent for a patent license if it wasn't forced to.

David Kaefer, Microsoft's director of technology policy, has said, "For those who don't have valid intellectual property or valid claims, we are not in a settlement posture." What Mr. Kaefer really meant was that anyone with patents must successfully shove their infringement complaint through court for Microsoft to pay any heed. Time and again, this is how Microsoft pays "respect" for others' intellectual property rights.

Owing to its market position and exposure, Microsoft is constantly barraged with assertions of patent infringement, some spurious, others, as the public record demonstrates, valid. What is disturbingly egregious is Microsoft's repeated bad faith and blatant theft, especially with companies that have exposed their technologies to Microsoft in a businesslike cooperative spirit, in hopes of responsible negotiation towards licensing, only to be, shall we say, sorely disappointed.