Less than two weeks after launching in the U.S., Spotify is being sued for patent infringement by PacketVideo Corporation, a San Diego-based provider of multimedia communications software. PacketVideo is a wholly-owned subsidiary of Japanese telecom NTT DoCoMo.
The patent in question was filed in 1995 and issued in 1997 by Rolf Brugger for an invention called "Device for Distribution of Music in Digital Form" ( US Patent #5,636,276) The patent's abstract describes it as a system for distributing a digital music information object "to a central memory device via a communications network to a terminal."
It its press release, PacketVideo asserts that Spotify's use of its patent enables Spotify's cloud-based music service. "PacketVideo has a strong intellectual property portfolio, and will take any necessary action needed to protect its intellectual property and prevent the misuse of its patents," said general counsel Joel Espelien in a statement.
In a statement emailed to Billboard.biz, Spotify defended what it called a "highly-innovative, proprietary hybrid technology" that incorporates P2P technology to stream content. "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."
PacketVideo is owned by Japanese telecom NTT DoCoMo, the largest mobile provider in Japan. DoCoMo acquired the company for $111.6 million from NextWave Wireless Inc. in August 2010. DoCoMo had bought a 35% stake in the company the prior year.