San Francisco technology licensing company Friskit has filed suit against RealNetworks and Listen.com, charging that they had infringed on its patents relating to search engines for creating nonstop playlists for streaming media players.
Friskit claimed RealNetworks' RealOne Player Plus software and Listen.com's Rhapsody streaming music service infringe on its patented technology. The suit potentially encompasses revenues from sales of the players and subscription products.
RealNetworks is in the process of acquiring Listen.com, and also runs a subscription-based streaming media service of its own, RealOne Superpass.
"They are no longer buying an asset, Rhapsody, they are buying a large contingent liability. The more subscribers they get, the more they will owe us in damages," said Friskit chairman and chief executive officer George Aposporos.
RealNetworks declined to comment on the matter.
One of the biggest dangers to a company like RealNetworks, if infringement is proved, is that it might be barred from using the technology.
"The greatest financial risk to the defendants, RealNetworks and Listen.com, is the possibility of a permanent injunction," said David Schlitz, head of the litigation group of law firm Burns, Doane, Swecker & Mathis in Alexandria, Virginia. Schlitz is not involved in the case.
As a general rule, courts award permanent injunctions once there is a determination of infringement and, as a result, the litigants in many patent cases - probably up to 85% - settle because of the enormous risk, Schlitz said.
Friskit was in talks with RealNetworks to license its technology, but filed the lawsuit after licensing negotiations failed, Aposporos said.
Friskit's claims relate to three US patents. In November 2000, Friskit launched a service via its website allowing consumers to search for streaming music from their favourite artists and to build dynamic playlists of such content. It removed the service in early 2001, Aposporos said.
"We created a lot of interesting technology. We had the beginnings of a consumer hit on our hands, but in 2000, if you were in music, that wasn't enough. You could have 10 million or 20 million users, and still not win," he added.
So far, Friskit has only filed suit against RealNetworks and Listen.com, but could spread the net wider. "We are looking at other services, but we have not reached any conclusions yet," Aposporos said.
Friskit may already have enough on its plate with one lawsuit pending, according to Schlitz.
"Patent litigation is long and expensive. The average cost of a medium-sized litigation in the US is about $2m. It can take a year, two years in some jurisdictions. And this is just the first scene in the opening act: It can go to appeal. Friskit has a long road ahead of it," he said.
Peter Sayer writes for IDG News Service