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Photograph by Rory McNamara

He's So Excited He Could Burst: Richard Lang, CEO and founder of Burst.com, caught Bill Gates without his data backed up when some emails pertaining to Lang's lawsuit against Microsoft were found to be missing. Did the software giant settle because it didn't want anyone taking a closer look at what wasn't there?

Discovery Phaser

Hint: If you ever want to stick it to Microsoft, file a lawsuit and then dig deep. Hell, it worked for Burst.com.

By R.V. Scheide

Microsoft wants to be in your face—everybody's face. Capturing more than 90 percent of the desktop operating system market with Windows is evidently not enough. Founder, chairman of the board and chief software architect Bill Gates—whose own net worth, if all things hold equal, will exceed $1 trillion by 2019, according to some calculations—appears to settle for nothing less than total domination of the technology sector. Windows is the octopus Microsoft executives use to "embrace, extend and extinguish" all other technological life forms that get in their way.

When Netscape debuted the first web browser available to the public in 1994, that octopus was caught napping. Once awakened, however, Microsoft quickly moved to smother its nascent competitor, extending its Explorer browser into the Windows operating system and seizing the Internet space as its own.

And when Progressive Networks (now known as RealNetworks) launched the first digital media player in 1996, Microsoft once again slithered into the scene, its far-ranging tentacles embracing, extending and slowly attempting to extinguish Real and other perceived threats in the streaming media space. The release of Corona in December 2001, the software juggernaut's "third generation streaming media platform," might have put the last, deadly squeeze on the competition.

However, there was one slight hang-up. As the details of Corona (later renamed Window Media Series 9) were revealed in subsequent weeks, they sounded all too familiar to Richard Lang, CEO and founder of Burst.com, a streaming media company. That's because Lang and his colleagues had spent the better part of the previous two years sharing their streaming media technology with Microsoft in order to persuade it to license Burst's software. Microsoft signed a nondisclosure agreement not to reveal any of Burst's trade secrets, but after 18 months of meetings, it abruptly broke off licensing negotiations.

Then, Lang claims, it hijacked Burst's technology.

"All of the new and distinguishing features that define Corona are Burst technology," Lang alleges during an interview in his company's small but tidy downtown Santa Rosa office. Here, he and Burst's two remaining employees—the company once employed over 100—have waited as their lawsuit charging Microsoft with antitrust violations, breach of contract, restraint of trade and patent infringement ground through federal court. Like the moray eel, the natural enemy of the octopus, Burst took a bite and refused to let go. Last week, its tenacity paid off.

Faced with a pretrial hearing to determine whether it had purposely destroyed emails relating to not only the Burst case, but to litigations stretching back to 1994, Microsoft agreed March 10 to license "Burstware" for a one-time fee of $60 million.

For Lang, 51, a compact, wiry man with streaks of white in his close-cropped dark hair and the focused intensity of a Formula One driver, it's been one heck of a ride. Since 1987, he's been perfecting and patenting his own distinct streaming media system—even way back then, he was calling it a "new paradigm"—and now his company's hard work is about to pay off. The exact details of the settlement remain to be worked out, but Lang can't help but feel vindicated.

"The reality is, it's just a rounding error to them," he says. "We're like a plumber that comes to your house to fix your pipes. All we want is to get paid."

Pipe Dreams

Lang, who calls himself an "inventrepreneur," is a classic ideas man. He has degrees in communications and foreign language, but doesn't know a lick of computer code. Instead, he utilized the expertise of two groups, software engineers and patent attorneys, to develop his initial concept of how to "extend TV over the Internet."

In the old broadcast paradigm, digitized video and audio files flow through the Internet "pipe" in real time. But Lang bet that files could be sent through the pipe "faster than real time," a phrase he trademarked in 1991. Using this method, a 30-minute video can be "burst" (as opposed to "streamed") through the pipe in a matter of seconds, either all at once or in chunks.

Robert X. Cringley, a noted computer consultant, technology writer and host of the PBS miniseries Electric Money, explains that Burst's software searches "for headroom in the pipe, trying to keep the pipe full 100 percent of the time." Unlike streaming digital media, the file isn't downloaded in chronological order—the sequence in which it is viewed or listened to. Instead, it's downloaded according to the size of the data bits and the amount of available headroom in the pipe.

"Bursting sends different parts ahead of time," Cringley says. "It takes a lot less time."

This is an admittedly gross simplification of a process for which Burst, beginning in 1990 under the name of Explore Technology, has received nine U.S. patents and 25 international patents. There are some in the video streaming industry—most notably Microsoft—who question whether Burst has developed any independent innovations at all. But way back in 1990, there seemed to be no question that Lang's company had a major innovation on their hands.

Achtung, Baby

A chance meeting in 1989 with the Irish rockers U2 led to a $2 million investment in Explore Technologies by the band. In these early days, Lang's company devised and built its own hardware, the Instant Video Transceiver and Receiver, to demonstrate its Instant Video Technology. In 1992 it changed its name to IVT (Instant Video Technologies), and in 1996 to Burst. By 2000, the company had grown to 110 employees, with offices in the heart of San Francisco's financial district.

Microsoft, however, with its monopoly in operating systems market—Windows was used on 96 percent of all PCs last year, according to The New York Times—could not be ignored.

"We knew that for our products to work properly, they had to interface with Microsoft," Lang says. In 1999, hoping the software giant would license its technology, Burst entered into an agreement to share its trade secrets and technology with Microsoft. "We thought, 'We'll protect ourselves the best way we can.' We got them to sign the special nondisclosure agreement."

Burst engineers met with members of the Windows Media team seven times over the following 18 months, both at Microsoft's Redmond campus and at various trade shows. A Burst-enabled version of Windows Media Player was created, and when tested by a lab routinely used by Microsoft, proved to be highly more efficient than the standard Media Player, Lang says.

As the meetings with Microsoft were taking place, Lang was also working hard preparing for Burst.com's public launch: a June 2000 live webcast of U2's Pop Art concert tour from Las Vegas, the first of its kind. Lang spent $1.5 million building a hosting network and promoting the concert. Then disaster struck. "Three weeks before the launch date, Microsoft announces a new version of its player," Lang recalls. "And guess what? There is only one existing software that doesn't work on it: Burstware. They broke our player, right before its public launch. They pretended to help us, but the problem was never fixed."

Windows users—which is to say the vast majority of PC owners—eagerly downloaded the new player, only to discover they couldn't watch the concert. Burst.com's downward spiral had begun.

By March of 2001, Burst had been downsized to just five employees. By the end of the year, they were down to two. The coup de grace came in December 2001, when Microsoft publicly released Corona, with, Lang alleges, many of the same features of Burstware.

Burst.com hit rock bottom.

Explosive Nothingness

When Lang first approached Microsoft about Corona's similarities to Burstware, he says the company informed him that it hadn't "taken anything that was secret." In June of 2002, Lang filed suit, contending that Microsoft wrongfully stole Burst's technology and used its Windows operating system—legally declared a monopoly by federal Judge Thomas Penfield Jackson in 1999, a decision upheld upon appeal—to "embrace, extend and extinguish" Burst.

Burst's lawyers found some interesting bits of evidence in the discovery phase, but far more explosive—and potentially damaging to Microsoft—is what they didn't find in the thousands of documents dumped on them by the software juggernaut. Despite meeting with members of the Windows Media team seven times over 18 months, there were virtually no emails, internal or external, concerning the meetings. "Each time we had a meeting, there are gaps in Microsoft's email record," Lang says. "After the very first meeting, they sent an announcement to the entire media division. Supposedly, not one reply to the document was received."

What Burst's attorneys discovered was that Microsoft has prohibited employees from saving email for more than 30 days on its corporate servers since 1994. Even in situations where Microsoft was ordered to retain records related to ongoing litigation, it appears to have been very selective, for its own benefit, as to which employees it ordered to retain emails. In a pretrial motion filed last October, Burst alleged that by doing so, Microsoft has destroyed evidence not only in Burst's case, but in many of the cases which have already been tried, including the Department of Justice case which resulted in Judge Jackson declaring Microsoft a monopoly.

In its "Spoilation" motion, Burst requested that when the case went to trial, the jury be instructed that the emails were intentionally destroyed by Microsoft with the assumption that the information destroyed would have hurt Microsoft and helped Burst.

When the day finally arrived that Judge H. Frederick Motz was set to rule on the Spoilation motion, Microsoft blinked. The obvious question is: Did they blink because of fear that once the company's email retention polices were made public, a whole slew of new litigation might ensue?

Not exactly, according to Microsoft spokeswoman Stacy Drake.

"We were very confident about prevailing in the case, but we wanted to resolve it without the risks of litigation," she says. Still, Drake denies that there are "any similarities between Microsoft and Burst's technology."

That's OK with Spencer Hosie, Burst's lead attorney on the case.

"From our perspective, once Microsoft did the responsible thing and licensed my client's technology, we really have inner peace with Microsoft," he says. "They did the right thing."

The proposed settlement caps off two years in which Microsoft has paid a total of more than $3 billion to settle cases with companies such as Sun Microsystems, Time Warner Inc. and Novell Inc.

"I think if you look at our efforts over the past two years, you'll see a pattern," Drake says. "We're solving the conflicts of the past and moving forward, to develop new products for our customers in the future."

Meanwhile, with one victory under its belt, Burst is still taking names. As Robert X. Cringley pointed out in his New Year's prediction column for pbs.org, the streaming media industry has been watching the case closely—particularly RealNetworks, Apple Computer and set-top box manufacturers like TiVo.

"The license from Burst's perspective is powerful validation of the integrity of the Burst intellectual property portfolio," says Hosie. "Microsoft paid a one-time licensing fee of $60 million. That's essentially Act 1, Burst. Act 2 begins next week. Burst is going to enforce its intellectual property against a series of companies that are currently infringing on their patents."

"They know who they are," says Lang.


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From the March 16-22, 2005 issue of Metro, Silicon Valley's Weekly Newspaper.

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