Vancouver Sun: "Destiny files suit against Musicrypt in digital media battle"

Four-year squabble between distributors pits Vancouver against Toronto for Canadian rights

Vancouver Sun
A rift between two Canadian providers of digital media distribution deepened Friday when Vancouver-based Destiny Software Productions Inc. filed a $25-million lawsuit in Ontario Superior Court against Toronto-based Musicrypt Inc.

Destiny Software, a wholly owned subsidiary of Destiny Media Technologies, is demanding $25 million in damages for defamation and injurious falsehood, breaches of the Trade-marks Act and Competition Act, and interfering with Destiny's economic interests. Destiny claims that Musicrypt has sent letters to Destiny's Canadian clients threatening them with legal action if they use Destiny's system.

The suit is the latest salvo in a battle the two companies have waged over the last four years, with control of the secure digital distribution of music to radio stations in this country at stake.

Both companies developed systems of digital media distribution. Musicrypt launched its Digital Media Distribution System (DMDS) in Canada in 2003 and Destiny launched its system, now called Play MPE, in both Canada and the U.S. the same year. Destiny then concentrated on the U.S. market. Musicrypt's DMDS received a patent in January 2005, while Destiny has a patent pending on its system. Both companies have had deals with major labels in the U.S., but Destiny is now fighting to be accepted in Canada because the major labels want one system throughout North America.

In July 2005, Musicrypt filed a legal letter to Destiny and its partners accusing them of patent infringement. In March 2006, Destiny and partner Promo Only filed a legal claim in federal court stating their system does not infringe on Musicrypt's patent. Musicrypt countered with a $15-million patent infringement suit.

John Heaven, president and CEO of Musicrypt, claims Destiny is dodging the real issue.

"Intellectual property rights are the foundation of a modern economy," said Heaven. "The reason technology companies can exist and grow is because their IP rights are protected by our laws.

"Destiny launching this suit is their way of circumventing the core of the matter, which is the patent infringement action."

Steve Vestergaard, CEO of Destiny Media Technologies, maintains his company does not violate Musicrypt's patent.

"Our system has been around since 1999, so we predate their patent," said Vestergaard.


"In addition, we don't have the essential features that are in their patent to infringe upon it."


Keith Loh