SIGHTSOUND SEES SETTLEMENT FROM BERTIE SUBSIDIARIES

If you or someone close to you offers downloads of music or movies for sale, you might want to know about SightSound Technologies. The Lebanon, PA-based company has patents covering the commercial downloading of music on the internet, which it used as a basis to sue Bertelemann subsidiaries CDNow and N2K. The companies reached an out of court settlement yesterday, which resulted in the pair paying SightSound $3.3 million, after they agreed not to contest a series of patents held by SightSound.

CDNow and N2K accepted a consent order issued by the court under which those patents are called “valid and enforceable.” SightSound now has the precedent to try to enforce those patents against iTunes, Buymusic.com, Napster and other sites selling songs online.

Said SightSound Technologies President/CEO Scott Sander: “When we made the world's first electronic sale of music downloads in 1995 and the first electronic sale of feature film downloads in 1999, we changed the way consumers access entertainment, and our patents gave us the power to change the business practices of an entire industry. Our success today indicates that the industry has entered a new era of respect for intellectual property, both copyrights and patent rights. We invented the internet too.”

Ominously, SightSound attorney William Wells said: “SightSound can now look forward with renewed strength to licensing those in the music and movie industry who seek to employ SightSound's patented technology in downloading music and movies over the internet. Let the lawsuits begin.”

Neither company acknowledged they had participated in any infringing activity, but agreed to pay the settlement. The case was headed for a jury trial in federal court in Pittsburgh next week. SightSound originally sued N2K in 1998 when it started selling paid downloads as part of pact with Liquid Audio.

Said a CDNow spokeswoman: "This matter does not affect our core business, which is the sale of CDs through traditional and online sales channels. This settlement does, however, position us well for the future if we wish to engage in the sale of downloaded music.”

According to Daily Variety, potential buyers for the patents have already started contacting the company. Sander said: “We realize that someone bigger than us might have to have these patents for the industry to really move ahead. We hope that with our success today the industry has entered a new era of respect for intellectual property, both copyrights and patent rights."

SightSound Technologies Inc. announced today that it has reached a final settlement in its patent infringement litigation against CDnow and N2K.

Those patents, for you law students out there, are 5,191,573, 5,675,734, and 5,966,440.