BURSTING MICROSOFT'S BUBBLE: Software giant Microsoft on Friday agreed to pay $60 million to Burst.com Inc. to settle a patent-infringement suit alleging it had stolen Burst's technology for sending video and sound over the Internet, the two companies announced.

Burst had charged that Microsoft had met with it over a two-year period and negotiated unsuccessfully for the rights to use Burst’s innovative technology. Burst also said in 2002, that Microsoft’s newly announced “Corona” product used technologies and trade secrets misappropriated from Burst.com. These proprietary technologies were protected by numerous U.S. and International patents (and patents pending).

The patent infringement case against Microsoft was due to be heard in Baltimore, Maryland yesterday.

Burst.com and Microsoft on Friday announced that Microsoft has taken a non-exclusive license to Burst’s international patent portfolio, for a one-time license fee of $60 million dollars. The license is for use only by Microsoft in its own product and does not include sub-licensing rights. The patent license also settles the outstanding litigation between both companies.

Richard Lang, Burst CEO, said that Burst intends to use the net proceeds from the license to Microsoft, after attorneys fees, in primarily 3 areas:

1. To payoff, or reserve for, its current and long term liabilities (approximately $2.8 million), which includes promissory notes (secured and unsecured), outstanding payables, debts to former employees of the company and all accrued salaries and bonuses.
2. To Reserve a sufficient amount of operating capital to launch a vigorous ongoing enforcement of its patent rights against all infringing parties, as well as pursuing software licensing and other avenues available to the Company to maximize the return to Burst shareholders.
3. Distribute a substantial portion of its funds through a cash dividend to its shareholders of record. The dividend per share and date of record will be announced at a subsequent date.

Burst said that when it is available, it will publish the settlement agreement and Microsoft patent license on its website, www.burst.com, except for any confidentiality provisions which may exist.

Get ready, because it looks like Burst is ready to spread out a whole lot of number two . . .