Spotify sued over streaming music patent infringement

Two weeks after expanding its popular digital music platform to the U.S. market, Spotify is now the target of a patent infringement suit filed in federal court this week by multimedia software developer PacketVideo.

PacketVideo alleges that Spotify (pictured) infringed on patents PocketVideo acquired when it purchased SDC.

PacketVideo--owned by Japanese operator giant NTT DoCoMo--contends Spotify "knowingly infringed and continues to infringe on a number of PacketVideo patents" acquired when the company purchased Swiss mobile music startup SDC in 2007. U.S. Patent #5,636,276, filed in 1995 and issued two years later, outlines "Device for Distribution of Music in Digital Form," described as a system for distributing a digital music information object "to a central memory device via a communications network to a terminal." PacketVideo claims Spotify's use of the patent enables its cloud-based streaming music service, adding that the lawsuit follows attempts to amicably resolve its concerns outside of the courtroom.

In a statement emailed to Billboard, Spotify defended its streaming service. "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," the firm states. "Spotify is strongly contesting PacketVideo's claim."

Spotify finally went live in the U.S. in mid-July, ending more than a year of speculation over when the popular European service would finally expand to American shores. Spotify offers on-demand streaming access to more than 15 million songs--users can create and manage their own playlists, share tracks via Facebook, Twitter, email and SMS and wirelessly sync their playlists to their mobile phone or iPod. The U.S. version offers three flavors: Spotify Free (on-demand, buffer-free access with occasional advertising); Spotify Unlimited (uninterrupted, ad-free access via computer for $4.99 per month); and Spotify Premium (online and offline access across the desktop and mobile for $9.99 per month).

Spotify touts more than 10 million registered users across seven European countries. More than 1.6 million users are paying subscribers. Although Spotify's free service is widely considered its most disruptive element, insiders say its U.S. launch was delayed by the music industry fretting over its business model, with labels reportedly pressuring Spotify to jettison its free approach in favor of a guaranteed revenue stream. In April, Spotify instituted narrower limits on the amount of music available to users opting for the free version, a move designed to migrate consumers to the premium offering--The Wall Street Journal adds the step was also critical to convincing label partners to license their music for U.S. consumption.

For more:
- read this Billboard article

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