Microsoft Swiped its Stuff, TecSec Says

NORFOLK, Va. (CN) - Microsoft owes TecSec millions of dollars for violating patents on "sub-file encryption," TecSec claims in Federal Court. Microsoft licensed TecSec's intellectual property and then swiped it, says TecSec, which seek punitive damages.

TecSec says it's a leader in computer encryption and security, with more than 30 patents. It cites four patents in this complaint against Microsoft.

TecSec cites this alleged email exchange with Microsoft employee Ken Lustig:

"In an effort to secure a license at a much lower rate, Microsoft sought to carve out a 'Reserved Scenario' from the license agreement it was negotiating with TecSec. Microsoft sought to justify this lower license rate by representing to TecSec that it was not in the sub-file encryption space as described in some of TecSec's most valuable patents, the DCOM Patents. ...

"TecSec requested further assurances that Microsoft was not in the Reserved Scenario or performing sub-file encryption. Microsoft agreed to perform an investigation to assure TecSec that it was not then performing sub-file encryption. Building on the other Microsoft representations referenced above, in connection with a telephone conference to negotiate the Patent License Agreement, on or about March 25, 2004, [Microsoft employee Ken] Lustig made the following express representation to [John] Petty and [fnu] Wack of TecSec: 'I've gone back to my product managers, and we're not doing sub-file encryption.'

"Wack responded to Lustig, 'But you will.'

"In response to Wack's statement, Lustig represented on behalf of Microsoft, 'When we do, we're going to owe you a lot more money.'"

Microsoft did, and it does, TecSec says.

TeeSec is represented by Barnard DiMuro of Alexandria.

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