A dispute over Azul's alleged infringement of Sun's patents has taken a new twist, with the small Java firm claiming that it has been threatened. Azul Systems, a company selling hardware to run Java programs, has sued Sun Microsystems in a dispute about software patent fees and royalties. Azul filed for declaratory relief on 15 March, 2006, "to protect the interests of the company in the face of unfounded allegations from Sun Microsystems". Azul says the larger company threatened to sue if it didn't pay an "exorbitant" amount, giving Sun part ownership.

Azul wants a judge in the Northern California region's US District Court to declare a judgment against Sun that Azul doesn't infringe a list of 20 Sun patents or that those patents are invalid, according to a complaint filed by the company. Several of those patents involve processors running multiple tasks at once - a technology that both Sun and Azul are pursuing through development of multicore chips.

Sun’s reacted by stating, "Sun has spent over a year trying to achieve a business resolution to Azul's unauthorized use of Sun intellectual property. During this period, Azul has repeatedly stonewalled and delayed. The latest example of this behavior is the filing of the present action despite an agreement the parties entered into allowing additional time for business negotiations to take place, and despite the fact the parties were exploring additional avenues of resolving this dispute."

In light of this action, Sun said in a statement that it has no choice but to consider all appropriate causes of action against Azul, including patent infringement. In negotiations with Azul, Sun alleged that Azul infringed Sun patents and misappropriated trade secrets.

"Sun seems to be in disbelief that a young, privately held company can independently create such industry-defining technology. Azul has been forced into this legal process as a last resort," Azul chief executive Stephen DeWitt said in a statement.

Azul has close ties to Sun, which created the Java programming language. The company’s Compute Appliance is used to provide a central computing resource to run Java programs. The systems cost as much as $800,000, but Azul argues that they provide a cost-effective adjunct to numerous separate servers running Java software. Sun has competing technology. Its UltraSparc T1 "Niagara"-based servers are well-suited to running many Java programs simultaneously, Sun argues.