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Stop, Thief!

A joint venture with a big company sounds like a dream--until the company backs out, takes your idea with it and leaves you in the dust.

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This story appears in the June 2005 issue of Entrepreneur. Subscribe »

The year 2000 started out well for Doug Augustine. His more than 75-employee San Diego company, Bidland Systems, had developed software for online auctions and was pursuing a joint-venture deal with multinational telecom company Telefonica for Spanish-speaking markets outside the United States.

The good times ended when Bidland sued Telefonica in 2000 for breach of contract, alleging that Telefonica promised a joint venture to access Bidland's marketing strategy and technology--information Telefonica then used to start its own auction site, Katalyx.com. The case was settled in November 2004 for an undisclosed amount, but Bidland didn't live to see that day--unable to raise funds or sell the business with the lawsuit in progress, the company ceased operations in 2001. "At least we got our investors their money back," says Augustine, 47. "[But] it's a hollow victory."

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