Napster targeted by infringement suit - News - Business

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This story was printed from ZDNet Australia.
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Napster targeted by infringement suit

By John Borland, Special to ZDNet
January 13, 2005
URL: http://www.zdnet.com.au/news/business/soa/Napster-targeted-by-infringement-suit/0,139023166,139177093,00.htm

Napster is once again the target of an intellectual-property lawsuit, this time on the receiving end of a patent infringement claim from a small company called SightSound Technologies.

SightSound, which holds several patents related to selling and downloading music and video online, on Monday asked a court to block Napster from selling music online while the trial unfolds. Licensing discussions had broken down, leading to the suit, SightSound executives said.

"This lawsuit is the regrettable outcome of a long process that could have been resolved amicably," Scott Sander, chief executive officer of SightSound, said in a statement. "It is surprising that Napster has taken this road given that it seems to have been working to restore its brand value."

SightSound is one of a handful of companies that are pursuing patent royalties for what many critics say are basic Internet functions such as e-commerce or streaming video. The spate of lawsuits and royalty demands has added an extra twist of financial uncertainty to many Web businesses, leading to calls for reform of the patent process.

Despite their basic nature, several of the patent drives have been successful, however. SightSound itself won early court rulings in a long-running lawsuit against Bertlesmann subsidiary CDNow, and ultimately settled with the conglomerate for US$3.3 million.

Because the case did not go to a full trial, and CDNow did not admit it had infringed on the patents, the claims could still be overturned by a court.

The lawsuit also has given a possible glimpse at Napster's future business plans. SightSound said the two companies were close to a licensing deal, but Napster also sought licenses for selling video online.

Napster chief executive officer Chris Gorog has said in previous interviews that the company would likely expand into distributing other forms of media aside from music over time. But the company has announced no such plans as of yet.

A Napster representative could not immediately be reached for comment. Until recently, Napster was the CD management company Roxio, but it sold its previous business and changed its name to focus on the music download market.