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MSFT denies patent charge
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October 14, 1999: 4:14 p.m. ET
Priceline suit claims Microsoft willfully infringed on hotel search technology
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NEW YORK (CNNfn) - Microsoft Corp. officials fired back Thursday at Priceline.com, calling its patent-infringement lawsuit a "desperate attempt" to keep from losing its customers to Microsoft's Expedia Inc. subsidiary.
Priceline.com (PCLN) filed the lawsuit against Microsoft and Expedia Wednesday, accusing the companies of willfully infringing on its hotel search service technology.
But Microsoft officials shot back Thursday, saying the prospect of losing customers to Expedia led to priceline.com's suit.
"This is obviously a desperate attempt by priceline to avoid competing with Expedia on the merits," said Tom Pilla, a Microsoft spokesman. "We certainly respect the intellectual properties of other companies, but at the same time, we are committed to giving our clients the best and most innovative products on the market."
The Stamford, Conn.-based priceline.com, which allows customers to bid for everything from airline tickets to home mortgages online, filed the suit in U.S. District Court in Connecticut. The suit also charges Microsoft (MSFT) with violating Connecticut's Unfair Trade Practices Act.
The lawsuit quotes Microsoft Chairman Bill Gates as telling priceline.com officials he would not permit patent rights to stand in the way of Microsoft launching its hotel search service. Those comments supposedly came after eight months of negotiations broke down on possible partnerships between the two companies.
A few weeks later, the company asserts, Microsoft launched Expedia's Hotel Price Matcher service, utilizing priceline.com's patented technology.
"Microsoft is a large and successful company, but no one -- not even Microsoft -- is above the law," said Evan Chesler, priceline.com's attorney.
Microsoft still waiting for lawsuit
Pilla said Microsoft lawyers still had not been served a copy of the lawsuit as of early Thursday afternoon and, therefore, could not comment on the specifics of the case.
The filing comes just three weeks after Microsoft filed to spin off a portion of Expedia in an initial public offering.
Expedia provides travel services for Microsoft's MSN Internet service. In addition to finding hotel rooms, customers can also book airline flights and rent cars using the online service.
Company officials say weekly travel sales using Expedia, initially launched in November 1996, now exceed $16 million. Priceline.com does not break out weekly sales figures, but claims it now sells roughly 2 percent of all airline tickets sold in the United States and recently set an internal single-week sales record by booking 16,000 hotel rooms.
Priceline.com shares fell for the second straight day Thursday, losing 2 to 70-1/4 in late afternoon trading, while Microsoft lost 1/8 to 90-15/16.
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