Gracenote.com, a company that licenses digital music management technology, filed a lawsuit Thursday against Roxio, maker of the most popular CD-burning software on the market, alleging patent and trademark infringement, as well as breach of contract.
The lawsuit, filed in federal court in San Francisco, hits Roxio just as it is spinning off from its parent company, storage access maker Adaptec, and preparing to begin trading on the Nasdaq on Monday.
Until a license agreement that expired April 22, Roxio directed users of its CD-burning software to Gracenote Inc.'s CDDB database containing data on 11 million audio tracks and 880,000 titles.
Gracenote's database and server software allows users recording or listening to digital music, either via CDs or online music services, to match particular tracks with the artist, album or song title and other information. The service gives digital music files recognizable names rather than the generic "Track 1" or "Track 2" so that users can know what song is playing and can create jackets for CDs they may be burning.
Roxio's software, which was bundled with more than 20 million PCs last year and is integrated with Microsoft and RealNetworks software, allows people to download audio, video and photographs off the Internet and burn them onto CDs.
In the version of its software released since the licensing agreement expired, Roxio directs users to an alternative music recognition database operated by an open-source group called Freedb.org, which Gracenote says illegally uses its database technology. Attempts to reach the operators of Freedb.org were unsuccessful.
"There are 1,800 commercial licensees of ours who pay to access our database, including AOL, RealNetworks and MusicMatch," said Dave Marglin, general counsel for Berkeley, California-based Gracenote. "Roxio is trying to get for free what other people pay for. It's our valuable intellectual property that's underlying all this."
Kathryn Kelly, a spokeswoman for Roxio, said the company and its lawyers had not seen a copy of Gracenote's lawsuit and therefore could not comment.
The timing of the lawsuit couldn't be worse for Roxio, which canceled plans for an initial public offering in January because of general market malaise, but now is going public in a practice known as "one-step spin off," a faster route to the public trough that minimizes the cost to shareholders. Roxio shares essentially will be handed out to Adaptec shareholders as a tax-free dividend rather than being sold. Trading in Roxio stock began Friday on a "when issued" basis, but regular trading won't begin until Monday. Roxio shares started trading at $13, and since have risen to $15.90, but closed down 9 cents on the day.
Gracenote, which boasts that it is the industry standard of digital music recognition, is helping beleaguered Napster filter copyrighted songs from its peer-to-peer service. Gracenote's database is accessed by one million people each day, the company says.
Copyright 2001 The Industry Standard