Microsoft sued over music downloads

A small New York company has sued Microsoft, charging that the software giant's new music download service in Europe infringes on a patent it owns nearly 20 years old.

E-Data, a Long Island-based company that's focused largely on licensing its patents, contends that Microsoft, internet service provider Tiscali and digital music company OD2 are collectively trespassing on its rights with their new music download services, recently released in several European countries. E-Data is asking that the services, variously called MSN Music Club and Tiscali Music Club, be shut down until a patent licensing deal is worked out.

"[Those companies] are offering downloads of music over the internet, which can be downloaded onto CDs for a fee," said E-Data spokesman Gerald Angowitz. "We believe that violates our patent."

The little-known company's claims could ultimately affect businesses on both sides of the Atlantic, as music services from MusicMatch to Sony rush to emulate the initial success of Apple Computer's iTunes music store. With razor-thin margins on digital sales of songs, any unexpected patent licenses could prove a headache for these companies.

The patent in question was granted in 1985 and covers the transmission of information to a remote point-of-sale location, where information is then transferred to a material object. Courts in the US have held that this does not include saving information such as a song onto a computer's hard drive, but that selling the information on a physical media such as a disc at an in-store kiosk could be covered.

E-Data contends that when music is sold over the internet, a person's home computer takes the role of that remote kiosk, and when the music is saved on a CD or an MP3 player, it has been transferred to the requisite physical object.

A Microsoft spokesman had no immediate comment on the suit, which E-Data filed in Germany last week. E-Data's patent is also valid in nine other European countries, including Austria, Belgium, France, Italy, Luxembourg, Sweden, Switzerland, the Netherlands and the UK.

Angowitz said his company's patent expired in the US in January, making Apple's service - which launched in April - an unlikely target for an infringement suit.

However, other music companies that previously allowed download and burning might find themselves in court on the issue. Federal law allows companies to sue for past infringements for six years after a patent has expired, and E-Data says it still may take a look at US companies that were operating services in 2002 and earlier.

"We'll likely take action to protect our past rights in the United States in a not-too-distant future," Angowitz said.

E-Data previously settled with or won court judgments against several companies over download services, including sheet music publisher Hal Leonard and computer games company Broderbund.

John Borland writes for CNET News.com