Trial begins in Dragon software battle

Opening arguments began today in the case brought by two Boston technology entrepreneurs against investment banking giant Goldman Sachs, which advised them during the sale of their company to a Belgium firm that later collapsed from a massive fraud.

James and Janet Baker alleged that Goldman Sachs did a poor job of vetting Lernout & Hauspie, which bought their speech recognition company, Dragon Systems, in 2000 for $580 million. The Bakers took their portion of the payment, about $300 million, in stock of Lernout & Hauspie, which began worthless only months later when the Belgium firm failed after being exposed for faking sales.

The Bakers are considered pioneers in the field of speech recognition software. The technology developed by Dragon Systems is now owned by Nuance Communications Inc. of Burlington, which sells a line of software products bearing the Dragon name.


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