Stingray files non-infringement counter-suit against Music Choice in Texas court

Montreal-based provider of streaming music services Stingray Digital Group Inc. (TSX:RAY.A)(TSX:RAY.B) today filed an Answer and Counterclaim in the U.S. District Court for the Eastern District of Texas (Marshall Division), vigourously denying a patent infringement claim filed by Music Choice this past June, shortly after Stingray announced its intention to expand into the United States through a new agreement with cable provider Comcast.
Pennsylvania-based Music Choice was initially backed by Microsoft, Sony, Time Warner Cable and Comcast, making Comcast’s apparent pact with Stingray especially significant.
Music Choice’s patent infringement suit demanded an injunction that would bar Stingray from using patented Music Choice technology in its products and services, and also unspecified damages.
Music Choice asserts that Stingray had accessed confidential information relating to its technology following a 2013 attempt to acquire the American company.
“Stingray answers Music Choice’s Complaint as a first step in establishing the invalidity and non-infringement of Music Choice’s patents,” says Stingray President, Co-founder and CEO Eric Boyko. “In fact, as Stingray will demonstrate at trial, the asserted patents are invalid based, in part, upon certain prior art technology previously owned by a Music Choice subsidiary (subsequently purchased by Stingray in a share purchase transaction) of which the U.S. Patent Office was unaware during the prosecution of the patents. Furthermore, in its own action, Stingray Music USA, Inc. will be seeking monetary damages for the harm it suffered as a result of Music Choice’s attempts to damage Stingray’s reputation and exclude it from lawfully competing in the U.S. market.”
In its counter-suit, Stingray outlined what it refers to as unmerited accusations made by Music Choice, whose earlier suit alleged that Stingray’s digital music service infringes four Music Choice patents, including patents that cover Music Choice’s onscreen technology providing music- and song-related visuals and facts.
Stingray’s counterclaim asserts non-infringement, and further seeks to invalidate the five patents asserted in the First Amended Complaint for Patent Infringement filed on August 12, 2016.
In a separate lawsuit, Stingray Music USA, Inc. additionally asserts claims of unfair competition, defamation, trade libel, tortious interference with existing and prospective contractual relationships, and unfair competition.
“As explained in our Complaint, Music Choice has displayed a pattern of trying to stifle new market entrants with false statements and unfair commercial practices” says Boyko. “Instead of disseminating false facts and filing lawsuits, Music Choice should use its resources to innovate its offerings and improve relations with its remaining customers and suppliers.”
Stingray Music USA, Inc. asserts that the separate lawsuit was necessary because Music Choice allegedly sued the wrong party in its First Amended Complaint for Patent Infringement.
No trial dates have been scheduled, but the complete filings are on record with the United States District Court for the Eastern District of Texas (Marshall Division), or are available by request from Stingray.
“Music Choice has invested a lot of time and money developing innovative products for our customers,” said Music Choice President and CEO Dave Del Beccaro in June, when his company’s initial lawsuit was filed. “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.”
Stingray, which IPO’d in June, reaches an estimated 400 million Pay-TV subscribers, or households, in 152 countries.
Stingray is headquartered in Montreal and employs nearly 300 people worldwide, in the United States, the United Kingdom, the Netherlands, Switzerland, France, Israel, Australia and South Korea, and has just opened a new regional headquarters in Singapore.
Stingray closed down 0.42% today on the TSE, at $7.17 a share.