Music Choice Sues Rival Stingray Digital Over Patents

Federal complaint cites replacement on AT&T U-verse and access gained via merger talks
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Music Choice, the music-channel provider partly owned by U.S. cable operators, said it filed a patent-infringement lawsuit against Stingray Digital Group, the Montreal, Canada-based owner of The Karaoke Channel, today (June 6) in a federal court in Texas.

The lawsuit involves AT&T U-verse’s decision in 2014 to drop Music Choice after launching the Stingray Music service.

According to Music Choice, the Stingray Music service included digital audio music and video-on-demand features that infringe on Music Choice patents.

Music Choice claims those features were enhancements made by Stingray after obtaining access to confidential information about Music Choice technology and distribution agreements as part of talks about possibly acquiring Music Choice.

Stingray servers used to distribute the service are placed in U-verse TV headends located in the jurisdiction of the U.S. District Court for the Eastern District of Texas, where the lawsuit was filed.

Lloyd Feldman, senior vice president and general counsel for Stingray Digital Group, said Stingray had not yet seen the complaint nor had it received any demands to cease and desist from Music Choice. "Generally you don’t file a lawsuit unless a demand has been made that is not complied with," Feldman said. He said Stingray would seek out a copy of the complaint and would defend itself vigorously.

After hearing a description of the claims in the lawsuit, Feldman said: "Obviously we take our proprietary technology very seriously. We have unqualified legal opinions that our technology does not infringe any patents. I can assure you no knowledge regarding technology was gained or was necessary to be gained through our discussions with Music Choice. Between our launch and our technology today, we’ve just gotten really good at what we do. After a number of years your technology improves -- it’s just a matter of innovation."

Feldman also said: "To extent that this is just an attempt to cause damage to our reputation because we are gaining increasingly market share in the U.S. at Music Choice expense, we will make sure that we bring the appropriate action."

Music Choice cited four patents it said were infringed on, including ones that cover Music Choice’s onscreen technology that includes music and song-related visuals and facts.

It has asked for an injunction preventing Stingray from using patented Music Choice technology in its products and services and also wants unspecified payments for damages.

In a statement to the media, Music Choice CEO Dave Del Beccaro said: “Music Choice has invested a lot of time and money developing innovative products for our customers. We have gone through great measures to secure patents for our intellectual property and feel compelled to take legal action to protect our business investment. Stingray must compete fairly in the marketplace without using Music Choice’s proprietary, patented technology in blatant violation of our intellectual property rights. While competition and innovation in our industry will undoubtedly provide benefits to our customers, the competition must be fair and the innovation original. Stingray’s unauthorized and infringing use of technology developed and patented by Music Choice is detrimental, not only to Music Choice, but to our customers and the industry as a whole.”

A Music Choice representative would not comment on the Stingray assertion that there had not been a demand to cease and desist.

According to the complaint, which Music Choice said was filed at the court electronically Monday afternoon, Music Choice and Stingray executed a confidentiality agreement in May 2013 that led to Stingray receiving access to confidential business and financial agreements, technology and issued patents and pending applications.

Stingray, which had expressed interest in buying Music Choice, also had personnel and their representatives visit Music Choice facilities in Horsham, Pa., and New York City and interviewed Music Choice employees, according to the lawsuit.

Music Choice said it first launched on AT&T U-verse in 2006. Starting around 2010, Stingray started trying to gain a foothold with U.S. multichannel providers, Music Choice said. "At that time, it appeared the Stingray product offering was an inferior product that lacked the enhanced functionality enabled by technology designed, developed and patented by Music Choice," the complaint states.

From 2011 to 2015, Stingray “had repeated contacts with Music Choice, as well as with Music Choice’s partners, and MVPDs and affiliates that Music Choice had contracts with, about its interest in acquiring Music Choice,” according to the complaint.

Music Choice was informed in October 2014 that AT&T was eliminating Music Choice on U-verse when the carriage contract expired on March 1, 2015. Stingray in October 2014 announced its U-verse agreement and said it would launch in March 2015.

The Music Choice complaint also cites coverage of a May 2016 announcement that Comcast and Stingray had an agreement to expand Stingray Music services offered to Comcast Xfinity customers. Coverage of that announcement in Multichannel News quoted a Stingray official as citing an "ability to curate playlists or access already created playlists on your large screen," features that Music Choice claim are part of the technology developed by Music Choice.

While it is not mentioned in the lawsuit, Music Choice in 2008 sued Viacom for patent infringements over the MTV Networks' Urge music service after U-verse dropped Music Choice. U-verse later reinstated Music Choice and dropped Urge. A Music Choice representative on Monday said that lawsuit was settled.

In addition to U-verse, Stingray digital music channels are offered on about 50 U.S. cable providers via the National Cable Television Cooperative, according to Stingray. The company also provides Karaoke and Concerts channels to 55 million and 66 million homes, respectively. Stingray bought the former Concert TV from Interactivation in 2010. 

Music Choice is owned by a partnership among subsidiaries of Microsoft, Arris, Sony Corp. of America, EMI Music Publishing, Time Warner Inc. and these U.S. cable providers: Comcast Cable Communications, Cox Communications and Time Warner Cable (now owned by Charter Communications). It launched in 1991 and claims 47 million monthly listeners. In addition to digital audio services, it launched a music-video on-demand service in 2004.

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