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Microsoft, Wang Resolve Lawsuit Over Patent Infringement

April 12, 1995

BOSTON (AP) _ Wang Laboratories Inc., once nearly given up for dead after being forced from the computer hardware business, settled a patent dispute Wednesday with Microsoft Corp. over an emerging software technology and got an investment infusion.

Now the two companies will join in a drive to make the disputed technology _ known as object linking and embedding, or OLE _ an industry standard.

But they face a tough coalition, including Apple, IBM and Novell, that has similar technology called OpenDoc, which works on programs beyond those connected to Microsoft’s Windows operating systems.

``It’s a move by Microsoft to try to get a broader piece of the market, and Wang has nothing to lose,″ said Judith Hurwitz, president of Hurwitz Consulting Group in Watertown, Mass.

``Clearly, what Microsoft would like to do is establish this approach as an industry standard,″ she said. ``This is a big political battle going on for control of the industry.″

Wang sued Microsoft in July 1993, claiming it owned the patent on OLE. With the settlement, Microsoft agreed to purchase $90 million of Wang preferred stock, representing 10 percent of Wang’s common stock after conversion.

The news boosted Wang common stock $1.56 1/4 to $15.87 1/2 in late trading on the Nasdaq Stock Market.

``I think it’s an excellent resolution for both parties,″ said Jerome Facher, Wang’s trial attorney. ``It’s always a good deal to resolve amicably what would be a very long, expensive piece of litigation.″

It also gives Wang an emotional lift.

``Microsoft has finally admitted that a key piece of Windows technology was rightfully developed by Wang,″ said Scott C. McCready, analyst at IDC-Avante, a technology research firm in Framingham, Mass.

``If Wang ever wanted validation of their corporate direction this is as good as it gets,″ he said.

Once a leading maker of calculators and specialized word-processing computers, the company was knocked hard by the personal computer revolution. Since emerging from bankruptcy in 1993, Wang has focused on creating office software and providing services such as computer maintenance to large companies.

Even though Wang expected to prevail, Facher said, its finances could have been hurt by a lengthy lawsuit. The company recently spent $160 million, most of its cash reserves, to purchase Groupe Bull’s imaging, workflow and service businesses.

Microsoft, with $4.6 billion in sales in 1994, easily could have kept the case in court for years. To do so, however, could have hurt OLE’s prospects in the marketplace.

OLE and OpenDoc both allow computer users to move chunks of software code, known as objects, between different types of software. For example, a person can import part of a database into a word processing program, and the database object will still look like and act like its parent database.

They are core technologies in a broad idea called ``object orientation″ that is slowly changing how software is designed, used and priced.

As part of the settlement, Wang’s workflow and imaging software will be incorporated into future releases of Windows 95 and Windows NT, Microsoft Office and the Visual Basic tool kit, used by programmers to develop software.

Workflow software allows companies to automate and link various procedures, such as product manufacturing, cost, and shipping information. Imaging technology allows documents to be scanned, stored and manipulated in a computer.

Microsoft also has designated Wang as one of its five authorized worldwide support centers, which will enlarge Wang’s computer services business, its most profitable division.

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