Spotify has only been operating in the U.S. for two weeks, but already it’s being sued for patent infringement.Earlier this week, Packet Video, a company that develops software to help people wirelessly listen to music and watch video, sued Spotify in the U.S. and the Netherlands for allegedly violating U.S. patent 5,636,276. According to PacketVideo, the patent, which it secured in 1997 by acquiring Switzerland-based company Basel, relates to the “distribution of music in digital form.” In a statement, PacketVideo said that Spotify’s use of its patented technology “enables Spotify’s cloud-based music service.”
Over the years, PacketVideo has licensed its patented software to a host of companies, including Verizon Wireless. The company said that its software is currently embedded in more than 260 million devices around the world and more than 320 different products.
In a filing with the U.S. District Court for the Southern District of California, PacketVideo contends that “Spotify USA has offered for sale, sold, and imported products and/or services configured to infringe the ‘276 patent, and instructed and encouraged others to use the ‘276 patent in an infringing manner.” PacketVideo said it tried contacting Spotify in May about its patent
After a number of delays, Spotify finally brought its streaming-music service to the U.S. in mid-July. The service allows people to listen to tracks on their PCs. Spotify offers unlimited streaming for $4.99 per month, while a $9.99-per-month option delivers offline and mobile-device support.
In its lawsuit, PacketVideo requested a permanent injunction against Spotify’s service. The company is also seeking damages and attorneys’ fees. If it succeeds, PacketVideo’s victory could have a profound impact on the marketplace. It appears that the patent is quite broad.
But Spotify doesn’t plan to go down without a fight. In an e-mailed statement to CNET, the streaming company said that it will battle PacketVideo to the end. In its statement, Spotify said:
 In just under three years, Spotify has become more popular than any other music service of its kind. This success is, in large part, due to our own highly innovative, proprietary hybrid technology that incorporates peer-to-peer technology. The result is what we humbly believe to be a better music experience-lightning fast, dead simple and really social.
PacketVideo is claiming that by distributing music over the Internet, Spotify (and by inference, any other similar digital music service) has infringed one of the patents that has previously been acquired by PacketVideo. Spotify is strongly contesting PacketVideo’s claim.
[Cnet]
