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Reed Elsevier Sues Microsoft, Expedia

Adding to Microsoft Corp.'s legal headaches, Reed Elsevier Inc. Tuesday filed suit against the software giant and Expedia Inc., the travel site controlled by the company.

The lawsuit, which was filed under seal at the United States District Court for the District of New Jersey, was first disclosed by Expedia in documents filed with the Securities and Exchange Commission in connection with Expedia's recently completed initial public offering.

Reed Elsevier claims that Microsoft (MSFT) and Expedia (EXPE) breached a 1998 contract involving Reed Elsevier's Cahners Travel Group business unit. Under the contract, Cahners provided hotel-related information for the Expedia.com travel-oriented Web site.

Cahners accuses Microsoft and Expedia of breaching their obligations by violating Cahners' exclusive rights with respect to providing hotel directory advertising sales support worldwide for the Expedia.com Web site.

The suit also alleges conversion and misappropriation of Cahners' proprietary hotel database, unfair competition, breach of implied covenant of good faith and fair dealing, and interference with business relationships.

According to the 1998 announcement, Cahners was to be the exclusive provider of advertising sales support worldwide for hotel directory advertising on Microsoft's Expedia.com Web site and on Microsoft Travel Technology licensed sites. The Expedia.com hotel directory is based on Cahners' expansive database of hotel-related information.

Cahners Travel Group publishes several directories of travel information, including its Hotel & Travel Index.

The announcement is the latest in a series of wrongdoings Microsoft has been accused of, including the antitrust case and Priceline.com's (PCLN) allegations that Expedia's hotel booking service infringes on its patent.