Microsoft, Tiscali and OnDemand settle E-Data patent suit

E-Data has settled a patent dispute with Bristol company OnDemand Distribution (OD2), Microsoft and Italian ISP Tiscali over...

E-Data has settled a patent dispute with Bristol company OnDemand Distribution (OD2), Microsoft and Italian ISP Tiscali over their western European on-demand music service, with OD2 agreeing to pay past and future royalties to E-Data.

E-Data filed a lawsuit last October in Mannheim, seeking an injunction against the German subsidiaries of Microsoft, Tiscali and OD2 in an attempt to defend a European patent. It also filed a similar lawsuit against OD2 in June.

The patent covers the downloading and recording of information, such as music, news articles and films, from a computer onto a tangible object such as a CD or a sheet of paper.

Any financial arrangements between E-Data and OD2 cannot be publicly disclosed as part of the terms of its settlement, said Koos Rasser, managing partner of Howrey Simon Arnold & White, the law firm representing E-Data.

The arrangement with OD2, which provides back-end operations for Microsoft's and Tiscali's online music services, also resolves all outstanding litigation with  Microsoft and Tiscali.

Representatives from Microsoft, Tiscali and OD2 could not comment immediately.

The pay-per-song service from OD2, Microsoft and Tiscali is offered under both the MSN Music Club and the Tiscali Music Club brands, and draws from an OD2 music catalogue of more than 200,000 tracks from the five major labels and a handful of independents. OD2's distribution platform uses Microsoft's Rights Manager v.7 software.

The settlement between OD2 and E-Data was reached before any injunctions had been issued, so users experienced no interruption to the OD2 service.

E-Data said that the settlement with OD2 sends an "important message to other companies infringing upon E-Data's intellectual property," Rasser said, adding that "OD2's service in Europe parallels iTunes Music Store", from Apple Computer, which is expected to launch in Europe sometime this year.

"We are in dialogue with Apple, though I wouldn't consider it negotiations," Rasser said. "We are explaining to Apple why we believe they need a licence and they are telling us why they believe they do not."

As for Napster and its parent company Roxio, E-Data has yet to enter into discussions with the company as Napster has not fully fleshed out its plans for a European launch of its service, though it too is expected this year.

Representatives from Apple and Napster also could not comment immediately.

Following its success with OD2, E-Data has initiated "an aggressive new licensing and patent enforcement campaign" in the European Union countries where it owns the rights to the patent, which will also include the transfer of stock photographs from computer to CD or paper, Rasser said.

E-Data is in talks with "a number of prominent companies in Europe" it considers to be infringing upon its intellectual property, and "may seek injunctions against these companies if necessary," Rasser said.

Laura Rohde writes for IDG News Service

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