As business battles go, this one sure looks like a mismatch.

Software maker Bristol Technology's 75 employees share an old Union Carbide headquarters with some 10 other companies in Danbury, Conn.

Microsoft Corp. sprawls over a 48-building complex in Redmond, Wash., the mother ship for its 27,000 employees worldwide.

Last year, Microsoft had its best year ever for revenue -- $11.4 billion. Closely held Bristol also had a banner year -- $8.7 million.

So why is tiny Bristol suing Microsoft, of all things? The Connecticut company -- which makes software that helps programmers convert Microsoft Windows applications to other operating systems -- says Microsoft is trying to kill it by putting prohibitive conditions on the use of certain computer code that is the heart of Bristol's products. That's because, Bristol alleges, its products let rival companies' operating systems run Microsoft's ubiquitous Windows software, in competition with Microsoft's own operating system. Bristol wants the courts to force Microsoft to hand over the code under "reasonable" terms.

Of course, Bristol is only the latest of many in the computer business to claim the West Coast software leviathan destroys its rivals with predatory, anticompetitive tactics. But what makes this quixotic case noteworthy is that without the code, Bristol's flagship product will become obsolete.

Microsoft spokesman Jim Cullinan says Bristol's suit is baseless. "They want the courts to help negotiate something that's left to business negotiations," he says.

Not so, says 36-year-old Bristol President Keith Blackwell. "They moved from being simply hard-nosed, which they've always been, to being purely predatory."

That's a tough legal point to prove, even with an army of lawyers behind you -- as the U.S. Justice Dept. and Sun Microsystems Inc. are finding. Both are trying to make allegations of anticompetitive behavior stick against Microsoft in separate cases. What makes tiny Bristol think it has the evidence and the endurance to sweat this one out?

"It's certainly a challenge to take on a company like Microsoft," concedes Tony Clapes, one of the team of lawyers representing Bristol. He's seeking a court order to force Microsoft to provide source code to Bristol before the case goes to trial.

POWER SHIFT. The Microsoft-Bristol relationship was more amicable back in 1991, when brothers Keith and Ken Blackwell founded Bristol to develop tools that made Windows programs "portable," or convertible to other operating systems such as Unix, which are commonly used by corporations. At that time, Microsoft lagged far behind in software for corporate servers and regarded Bristol's products as a welcome bridge to that market. The company approached Bristol about licensing its source code, a necessity for Bristol to stay current with Microsoft's constantly evolving operating systems. The two companies finally struck a deal in September, 1994.

With Microsoft's imprimatur, Bristol grew briskly, notching 23 straight profitable quarters. From 1994 to 1997, revenues doubled as the company wooed a growing list of customers, including IBM, Sybase, and General Electric. Microsoft repeatedly said it would continue to support Windows-to-Unix conversions, say Bristol's court papers. "They made very public statements to Bristol and the market as a whole -- all the way from Bill Gates down," says Blackwell.

During those same years, Microsoft's previously weak server software began to make inroads with corporate clients, who had stuck to Unix and other more obscure operating systems. By last year, it had a 39.8% share of the server market, up from 24.5% in 1996, according to International Data Corp.

That power shift augured badly for Bristol. In its complaint, Bristol says Microsoft now saw Unix portability as a threat, not an asset. Why? Bristol contends that Microsoft was trying to extend its monopoly on the desktop into the workstation and server markets. In 1997, when Bristol's code license came up for renewal, it claims Microsoft negotiated in bad faith, driving up certain license costs by 400% and blocking access to essential portions of the source code. "This is a clear case of a use of a monopoly in one market to foreclose competition in another," the complaint states.

Microsoft frames the issue as simply a business negotiation, saying that Bristol's first contract was essentially a sweetheart deal, and now the stakes are higher. "This is the most important asset of our company," says Microsoft's Cullinan. "We're negotiating a different contract." As for Bristol, he asks, "If Microsoft is a monopoly, why is there a need for their product?"

Unfortunately for Bristol's case, since the complaint was lodged, Microsoft has come to terms on sharing source codes with Bristol's main competitor, Mainsoft Corp. in Sunnyvale, Calif. That makes it harder to argue that Microsoft is blocking all Unix development.

Where does that leave Bristol? Ernest Gelhorn, an antitrust lawyer and George Mason University law professor who has studied its complaint, gives the company a "slim or modest chance" of winning such a complex and potentially draining case, not least because it must navigate through a labyrinth of legal theories to prove its core point -- that Microsoft acted with intent to monopolize.

"Every company has a right to refuse to deal with someone, unless you're a monopoly. And that depends on what market you're in," says Gelhorn. "I'm skeptical that it could succeed, but every once in a while, it works."

It might be cold comfort for Bristol, which faces a slow suffocation without the source code. That leaves Blackwell with little other choice but to sue. He insists he has the stomach for it. But, he adds ruefully, "This isn't what we had in our business plan."

By Dennis Berman in New York
dennis_berman@businessweek.com

To: LAW