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Friday, May 19, 2006 - Page updated at 12:00 AM

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Symantec suit targets Vista

Seattle Times business reporters

Symantec filed a lawsuit Thursday accusing Microsoft of abusing a business relationship between the two and misappropriating its technology and trade secrets for use in the upcoming Vista operating system.

In the lawsuit, filed in U.S. District Court in Seattle, Symantec said it wants Microsoft to stop work on Vista until its technology is removed from the system.

"Copying is not competition, and misappropriation is not innovation," Michael Schallop, director of legal affairs at the Cupertino, Calif.-based Symantec, said Thursday. "We're not willing to compete against our own [intellectual property]."

Microsoft said it has acted appropriately, adding that the dispute stems from a "very narrow" contract disagreement.

The lawsuit is significant for both companies, analysts said. With its increasing emphasis on security — and on developing its own tools in the area — Microsoft is directly encroaching on Symantec's core business.

Symantec sells the Norton line of computer-security software. Microsoft is also moving into the bread-and-butter territory of storage-software company Veritas, which Symantec acquired last year in an $11 billion deal.

"Microsoft is emerging as Symantec's biggest competitor, and so that means the timing [of the lawsuit] is more than a coincidence," said Simon Robinson, an analyst at The 451 Group.

The lawsuit centers on Veritas software that helps businesses store and manage data. Microsoft licensed a bare-bones version of the software for its Windows 2000 operating system, and gave Veritas the exclusive right to sell more advanced products for the operating system, the lawsuit said.

Symantec said that Veritas shared its trade secrets and even trained Microsoft engineers as the companies began working together. But Microsoft used those trade secrets to start developing products that directly competed with Veritas' offerings, the lawsuit said.

Now, Microsoft is building into Vista some of the advanced features that were supposed to be reserved for Veritas to sell for the operating system, the lawsuit said.

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In a statement Thursday, Microsoft said that in 2004 it bought from Veritas the rights to the technologies in question.

"We are confident that our actions are wholly consistent with the legal agreements between Veritas and Microsoft, and that these claims will be shown to be without merit," the statement said.

Companies need to protect their intellectual property, said Carolyn DiCenzo, an analyst at Gartner Research.

"Symantec is doing that," DiCenzo said. "Sometimes you just need to show how serious you are to get these things resolved."

In a gathering of technology leaders in San Diego on Monday, Symantec Chief Executive John Thompson said he was concerned that Microsoft will "play fairly."

"If they deliver their classic technology portfolio, we're not concerned at all," he said. "However, if they do something that is unfair, then that will be something that will be difficult to compete against, but we'll have other venues for making our point."

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

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