Lycos Sues Micron Over Internet-Portal Deal

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Internet portal Lycos Inc., Waltham, MA, has filed a lawsuit against Micron Electronics Inc., Nampa, ID, alleging that the computer direct marketer illegally terminated an agreement for Lycos to provide a customized Internet portal for Micron's personal computers.


Micron last month announced an agreement with Lycos rival Yahoo Inc., Santa Clara, CA, to provide a similar service, just days after Lycos claims it reached its exclusive pact with Micron.


The lawsuit, filed earlier this month in U.S. District Court in Boston, seeks to prevent Micron from pursuing its agreement with Yahoo and also asks for unspecified monetary damages and penalties. Lycos alleges that the agreement with Micron was particularly valuable because of the company's unique connections with small-business owners, a group Lycos said represented an area of strong potential growth for Internet use, and because most of the other major PC makers already have agreements with other Internet portals.


A Lycos spokesman said it was company policy not to comment on pending litigation. A Micron spokeswoman confirmed that the company was defending the suit but declined to comment further.


According to the suit, Micron on March 18 had agreed to collaborate on a co-branded Internet portal that would be accessible both from Micron's Web site and as an Internet starting point for certain buyers of new Micron personal computers. The agreement, according to Lycos, also involved a commitment by Lycos to buy certain computer hardware from Micron and a pledge by Micron to purchase "significant Web advertising" from Lycos.


Lycos claims that Micron expressed concern about the agreement within 24 hours after it was reached, and four days later terminated the agreement to pursue a similar strategy with Yahoo. Micron's excuse for terminating the agreement, according to the suit, was its concern that a third-party provider, Encompass Inc., Atlanta, would be unable to supply certain technology for co-branding the portal within the time frame required by Micron. Encompass did not immediately return phone calls seeking comment.
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