ISP EarthLink Network today said it has sued low-cost PC maker Microworkz.com for allegedly breaching a distribution agreement. Microworkz responded by saying it intends to sue EarthLink right back.
Under the terms of the distribution pact Microworkz distributed EarthLink's Internet access software with a $299 no-frills PC called the Webzter. EarthLink terminated the distribution agreement Thursday, saying Microworkz hadn't upheld its side of the contract.
The following day, EarthLink filed a lawsuit in the Federal District Court for the Middle District of California, charging Microworkz with failing to deliver payments that were part of the distribution agreement. The payments were based on EarthLink software distributed with Microworkz PCs, and the lawsuit seeks payment of those unpaid fees, EarthLink says.
Microworkz responded by saying it will file its own lawsuit against EarthLink next week. The lawsuit will accuse EarthLink of supplying faulty software and failing to educate its technical support staff about Microworkz' Webzter program.
"The resulting EarthLink sign-up chaos slowed shipping of Webzter machines to a crawl, damaging Microworkz.com and its customers," Microworkz says.
EarthLink didn't immediately return a call seeking comment on Microworkz' intention to countersue.
This hasn't been a banner year so far for Microworkz. The company's luck started to turn sour after its CEO hinted in June that the vendor was close to signing a deal with America Online to offer AOL's Internet access software with its new PC, the $199 iToaster.
AOL wouldn't confirm the talks, and nothing appears to have come of them since. But shortly afterwards, reports emerged that complaints had been filed about Microworkz with consumer watchdog group the Better Business Bureau (BBB) and with the attorney general's office in its home state of Washington.
In a report, the BBB asserted that Microworkz had an "unsatisfactory business record." In particular, the report cited "a pattern of not responding in a timely manner to customer complaints," alleging nondelivery of products and failure to produce refunds.
Microworkz claimed that the troubles stemmed from its switching to new, larger premises while it was rolling out the Webzter.
Microworkz sent letters to its customers saying that it has decided to discontinue the Webzter to focus on the iToaster. However, Microworkz and EarthLink say they will continue to support customers who bought the Webzter bundled with EarthLink's Internet access.
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