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August 4, 2011 

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Spotify In Patent Infringement Suit
Posted: August 1, 2011
SAN FRANCISCO (AP) -- Digital music service Spotify, which recently arrived in the U.S., has been sued by music and video streaming software maker PacketVideo for allegedly violating a patent it holds for digital music distribution.

In court documents filed this week in U.S. District Court in the Southern District of California, PacketVideo said it believes Spotify's free and paid music-streaming service violates its patent for a "device for the distribution of music in digital form". The patent covers methods for streaming copyright-protected music from a central device over data networks.

Spotify offers free and paid digital music services in the U.K. and several European countries, and it launched stateside in July. It gives users free online access to more than 15 million songs. While that service is supported by audio and banner ads, Spotify tries to get users to trade up to paid alternatives - a $5-per-month computer-only version that is free of ads, or a $10-per-month version that can be used on mobile devices including iPhones and Android-powered devices.

The Swedish company, which has over 10 million registered users and 1.6 million paying customers outside the U.S., is the latest of several to offer subscription music plans with the cooperation of the major music labels.

San Diego-based PacketVideo said that since Spotify has not licensed its patent, PacketVideo is suffering "substantial damages" that are not less than a "reasonable royalty." The company is seeking an injunction to stop Spotify's alleged infringement, as well as unspecified damages and attorneys' fees and related costs.

A Spotify spokeswoman said the company's success over the past three years "is in large part due to our own, highly innovative, proprietary hybrid technology that incorporates peer-to-peer technology." With peer-to-peer networks, computers connect to share data directly between them. She said Spotify is contesting PacketVideo's claim.

PacketVideo's customers range from wireless carriers to handset makers and consumer electronics companies. PacketVideo said its software is used in more than 320 products and is on over 260 million devices.

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