Microsoft has had a preliminary injunction granted against it that threatens to block the release of its forthcoming Longhorn operating system.
The injunction bars Microsoft from "making, using, offering for sale, selling, importing or inducing others to use Microsoft's [forthcoming Windows API] Chimney or Longhorn software".
The suit was filed by data networking firm Alacritech. It centres on two alleged patent infringements in which Microsoft is accused of using Alacritech's session-layer interface control (SLIC) technology to speed up data rates across computer networks.
"After Alacritech discovered that Microsoft Chimney is based on intellectual property that we developed, patented and own, we offered Microsoft a licence," said Larry Boucher, president of Alacritech.
"Microsoft rejected licensing terms that would be acceptable to us. We were forced to sue Microsoft to stop it from continuing to infringe, and inducing others to infringe, our intellectual property rights."
The injunction claims that in 1997 Alacritech invented network interface software to speed up data flows across networks. In 1998 it approached Microsoft to see whether the software giant would be interested in licensing the technology.
Microsoft reached an agreement with Alacritech and worked with the company for a year under a non-disclosure agreement to integrate the SLIC software into Windows. It then ceased communicating with the company, according to Alaritech.
In 2003 Microsoft announced its Chimney data system, which Alaritech alleges uses its code. Microsoft distributed the code on DVD and gave a public demonstration at which it allegedly made disparaging comments about Alacritech.
"The standard required to grant a preliminary injunction is actually much higher than the standard required to win at trial," said Mark Lauer, a partner at Silicon Edge Law Group, in a statement issued by Alaritech. "I expect Microsoft to try to downplay the significance of this ruling."
This is not the first time Microsoft has been in trouble in the courts over alleged patent infringement. Last month it settled a two year legal battle with Burst over the issue, and in 2002 British mobile phone manufacturer Sendo sued over alleged stolen intellectual property.
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