A small hardware start-up packed full of former Sun Microsystems executives has sued Sun. Azul Systems alleges that Sun has tried to bully it with the threat of legal action over patent infringement claims.
The Azul lawsuit centers around numerous patents relating to server and software technology such as handling multi-threaded software and performing garbage collection tasks. In all, Azul has listed close to 20 patents that it claims sit at the heart of the beef with Sun.
In the lawsuit, the start-up goes on to allege that discussions around the patents broke down after Sun suggested it would file a lawsuit against Azul and sought high licensing fees.
"Sun has repeatedly threatened the company with litigation unless Azul granted Sun part ownership of the company, and agreed to pay exorbitant up-front fees and continuing royalties on the sale of Azul products," Azul said in a statement. "Attempts to reach an agreement failed when Sun gave Azul an ultimatum: accept its final proposal or face litigation."
A few hours after Azul's statement hit the newswires, Sun chipped in with its own statement.
"Sun has spent over a year trying to achieve a business resolution to Azul's unauthorized use of Sun IP," the company said. "During this period, Azul has repeatedly stonewalled and delayed. The latest example of this behavior is the filing of the present action despite an agreement the parties entered into allowing additional time for business negotiations to take place, and despite the fact the parties were exploring additional avenues of resolving this dispute.
"It is unfortunate, but now that Azul has taken this litigious path, Sun has no choice but to fully protect and enforce its intellectual property rights."
Azul's CEO Stephen DeWitt and Sun have a long and somewhat painful history.
DeWitt led Cobalt Networks - a server appliance maker that Sun acquired during the height of the boom for $2bn. Sun only managed to push out a couple new Cobalt-style products before killing off the product line as interest in server appliances faded. DeWitt stayed on at Sun for a short time as an executive before leaving and taking the helm at Azul.
Sun CEO Scott McNealy has mocked himself for doing this deal and when asked whether Sun planned to acquire Azul, McNealy once said that it was most unlikely that he would do business with DeWitt again.
A number of other former Sun staffers, including former high performance computing chief Shahin Khan, now work at Azul.
The start-up has created its own multi-core chip for the specialized purpose of running Java applications.
In an interview, DeWitt charged that Sun refused to follow "Silicon Valley traditions" by finding a way to agree to acceptable licensing structures.
"There is a very well established (cross-licesning) process that all of us tech companies go through," he said. "This is as an established practice as breathing. You collaborate with one and other and strike licensing deals."
Of course, patent infringement cases are just about as much of a Silicon Valley tradition as cross-licensing arrangements.
Azul's lawyers have gone over the patents in question and decided Sun's stance is "without merit," DeWitt said.
In the lawsuit, Azul describes months of negotiations between the two companies. In May, Azul said it offered to conduct an "independent trade secret audit for Sun." Sun responded by saying in a letter that it did "not need a mediator or independent auditor to point out the obvious," according to the lawsuit.
The suit also alleges that a high level Sun executive informed a member of Azul's board that Sun planned to sue and that the Sun executive had "seen a draft of the complaint."
While DeWitt describes himself as abhorrent to the idea of litigation, he felt the company had no choice but to proactively sue Sun before the larger company could file a lawsuit.
"You don't stand there when a 400 pound gorilla with significantly more market resources than you is threatening to fire," DeWitt said. "You defend your rights and that's it." ®