Destiny Media Technologies, Inc. Provides Update on Proceedings Against Musicrypt
Vancouver B.C. – June 7, 2006 – Destiny Media Technologies (BB:DSNY.OB) is pleased to provide an update on the outstanding statement of claim against Musicrypt (MCT-TSX) which seeks a declaration that Canadian Patent No. 2,407,774 is invalid and that the Promo Only MPE™ system does not infringe.
Access to songs in the MPE™ system is controlled by authenticating the machine, not the user. The five independent claims of the Musicrypt patent describe a system which controls access to the content through verification of individual recipients using biometric techniques such as keyboard cadence. Since Promo Only MPE™ does not use biometric techniques and controls access at the level of the computer, Destiny alleges the MPE™ system does not infringe on the claims of the Musicrypt patent. The claims of the Musicrypt patent are unusually broad and Destiny alleges do not meet the requirements for a valid patent.
In the fall of 2005, Destiny and marketing 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 filed a statement of claim on March 7, 2006 in the Federal Court in Ottawa which sought a declaration that the Promo Only MPE™ system does not infringe and a declaration that the patent is invalid.
On June 7, 2006, Destiny’s counsel received a statement of defence and counterclaim from the defendants. The statement of defence alleges that Destiny’s system, the first version of which was released in 1999, infringes on a number of claims in Musicrypt’s patent, which has a priority date of 2002. In particular, the statement of defence argues that even though the MPE™ system authenticates at the level of the machine, the additional optional use of user name and password provides a form of user based access control. Although this form of access control is not based on biometric keyboard cadence techniques, the statement of defence claims that it could be construed to be covered by certain claims in the patent.
In addition, Musicrypt named Destiny and partners Promo Only in a counterclaim, requesting specified damages or audited Canadian profits from the Promo Only system as it expands into Canada.
Destiny CEO Steve Vestergaard comments on the actions, “We are confident in our position and are anxious to have a judge make an expeditious ruling on this matter as we expect Canada to be an important market as demand continues to grow. ”
Documents associated with the case are available on Destiny’s website at http://clipstream.com/dsnyarchives/invalidity:
March 8, 2006: Destiny files statement of claim
March 22, 2006: Musicrypt requests Destiny post a bond for security of $20,000
April 12, 2006: Destiny agrees to post a bond of $10,000 for possible costs
April 25, 2006: Destiny makes a settlement proposal
May 2, 2006: Musicrypt rejects the settlement proposal
May 4, 2006: Musicrypt requests particulars on the statement of claim
May 30, 2006: Destiny provides particulars on the statement of claim
June 6, 2006: Musicrypt files defence and counterclaim
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.
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"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.