Destiny Media Technologies Commences Action in Federal Court
March 7, 2006 – Destiny Media Technologies (BB:DSNY.OB) announced today that it will be commencing an action in Federal Court seeking a declaration that the Promo Only MPE product does not infringe on Canadian Patent No. 2,407,774, owned by Musicrypt, Inc. (MCT-TSX). The action commenced by Destiny also seeks a declaration that Musicrypt's patent is invalid.
The five independent claims of the Musicrypt patent describe a system for distributing content to a plurality of recipients and controlling access to the content through verification of individual recipients. Access control to the Promo Only MPE system is through a fingerprinting process that uniquely identifies authorized machines, not users. Since Promo Only MPE does not use biometrics and controls access at the level of the computer, the MPE system does not infringe on the claims of the Musicrypt patent.
The claims of the Musicrypt patent are unusually broad and do not meet the requirements for a valid patent. Destiny is therefore also pursuing an invalidation of the patent claim based on numerous examples of prior art that predate Musicrypt's patent.
In the fall of 2005, Destiny and partner Promo Only became aware that executives and employees of Musicrypt were making statements to customers of the Promo Only MPE system that implied that they were infringing on Musicrypt's rights, merely by using the system in Canada. Destiny was provided with a letter from Musicrypt to a radio station in Canada that made it clear that they were contacting users of the system in Canada with such implications.
On December 19, 2005, Destiny's litigation counsel, Edwards, Kenny & Bray sent a letter to John Heaven, CEO of Musicrypt demanding that Musicrypt cease and desist from any further wrongful characterization of Destiny's technology. Recently, Destiny came into possession of a letter from John Heaven, CEO of Musicrypt to a label customer who had recently contracted to purchase Promo Only MPE services. Despite the warning sent on December 19th, Mr. Heaven has continued to interfere with Destiny's relations with its customers by implying that customers of the Promo Only MPE system may be infringing the patent.
Destiny has retained Stikeman Elliott LLP in Ontario to protect its Canadian intellectual property interests. A Statement of Claim seeking a declaration that Promo Only MPE does not infringe the Musicrypt patent, and a declaration that the patent is invalid, will be filed on March 7, 2006 in the Federal Court in Ottawa. Destiny is continuing to review its options and may proceed with a claim for damages for defamation and an injunction against further actions by Musicrypt in Ontario Superior Court as necessary.
Destiny CEO, Steve Vestergaard, commented on the action, "The Promo Only MPE system has become the recognized industry standard for securely moving pre-release music. We don't proceed with litigation lightly, but it is important that we protect our customers from unjustified interference from Musicrypt as we begin offering our system in Canada."
Promo Only MPE has been leading the music industry in digital distribution in the United States since its launch in October of 2004. To date, the system has over 6,400 individual registered users. In excess of 9000 tracks have been distributed through the Promo Only MPE System for labels including Universal Music Group, Sony BMG, EMI Music Group and Warner Music Group. 2005 marked the partnership deal with Mediabase 24/7 monitoring service and the unveiling of the first ever digital distribution system with Spanish language capabilities, allowing it to serve the growing number of Spanish speaking radio stations and Latin label divisions in the United States. In 2006, Radio and Records announced that they will combine with Promo Only as the exclusive sales representative for the Promo Only MPE System.
Promo Only MPE recently announced the availability of a Mac version of its digital distribution system as well as the release of version 2.0 featuring a number of key upgrades including full iPod support, music video delivery capabilities and linear HD audio support.
About Promo Only
Promo Only MPE is used and supported by every major broadcaster including Clear Channel, Infinity, Citadel, Cox, Cumulus, Salem Communications, Radio One, Emmis, Entercom, Sirius, Journal, ABC, DMX, CBS, Jones Radio, Yahoo, AOL, Music Choice, Disney, Univision, Westwood One, Regent, Premiere Radio, Next Media and many others.
About Destiny Media Technologies
Destiny Media Technologies, Inc. (www.dsny.com) (DSNY.OB) is a leader in developing easy-to-use tools for distributing media through the internet. The company's suite of streaming and downloadable products includes: Clipstream ™, Destiny Media Player ™, Radio Destiny ™, and MPE ™. Established in 1991, the company is headquartered in Vancouver, Canada.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This release contains forward looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of competitive products and pricing, product demand and market acceptance, new product development, reliance on key strategic alliances, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.