Music Choice, a U.S. provider of digital music services backed by a group of media giants including Comcast Corp. and Time Warner Inc., is suing Canada's Stingray Digital Group Inc. for patent infringement.
In a 50-page complaint filed Monday in a court in eastern Texas, Music Choice alleges that Stingray has infringed on four of its U.S. patents, two of which were issued last month. Music Choice claims that Stingray obtained its proprietary information through an attempt to purchase the Pennsylvania company back in 2013 and that Stingray is now infringing its patents related to how its digital music content is delivered to the TV screen.
Music Choice, which serves 47.2 million monthly listeners across the United States, is seeking unspecified monetary damages and an injunction that would bar rival Stingray from using its patented technology.
Stingray, which is based in Montreal, is the latest Canadian tech company to be sued in the United States over patent infringement. Both BlackBerry Ltd. and D2L Corp. fought costly and time-consuming legal battles south of the border over their technology.
In a statement posted to its website on Tuesday, Stingray dismissed the allegations, adding that the lawsuit is "a desperate attempt to disrupt how enthusiastically customers have embraced Stingray's innovative product offering." Music Choice has categorized Stingray's actions as "a blatant violation" of its intellectual property rights, setting the stage for a fight.
Music Choice declined to comment further.
Lloyd Feldman, general counsel at Stingray, said in a telephone interview that the company is in the process of engaging patent litigation counsel that is based in Texas. The law firm that Stingray is in talks with is in the process of clearing conflicts, he added.
Music Choice has asked that the case be heard in the Marshall Division of the U.S. District Court for the Eastern District of Texas. In court filings, the company argues that Stingray conducts business in this judicial district and has servers in Texas at the facilities of AT&T Inc., which is based in Dallas.
Marshall is widely known in legal circles as being the go-to place for plaintiffs to file their high-stakes patent litigation because of its speedy trials and plaintiff-friendly juries.
"We actually don't have any equipment in Texas," Mr. Feldman said. "It may be that our patent litigation expert decides to contest the jurisdiction."
Much before this scuffle made its way to court, Stingray expressed interest in acquiring Music Choice.
Between 2011 and 2015, Stingray had considered buying Music Choice to gain a foothold in the U.S. market, the filings from Music Choice show. Music Choice says that as part of their negotiations, Stingray repeatedly sought access to Music Choice's confidential business and financial information, getting it in the summer of 2013. Deal talks fizzled and both companies forged ahead as competitors.
By the fall of 2014, Stingray unveiled an improved system that included, as Music Choice claims, the features and functionality that infringed Music Choice's patents, including those related to on-screen technology. Stingray launched its new system on AT&T's U-Verse television services, which had been carrying Music Choice's offering for years.
In October, 2014, AT&T told Music Choice that it would eliminate Music Choice on U-Verse as of March 1 and replace it with Stingray's offering.
In May, Stingray said its services would be available in the United States to customers of Comcast Xfinity.
Founded in 2007, Stingray reaches roughly 400 million pay-TV subscribers in 152 countries with its music channels.
"We have to take away from the exciting and energizing growth … in order to focus our attention on a distraction," Mr. Feldman said. "It is a problem. I'm sure it will be expensive and time-consuming and I'm sure it will distract us for at least a limited period of time from our short- and medium-term goals. We'll deal with it as it comes."