Music Choice vs Stingray Settlement arrives right before trial. This case has been analyzed by me, from an expert witness perspective from two angles:
♠ Technology and Patent infringement 7 Validity
♠ Damages and Liablitiy Exposure
On February 4th, 2020, a Settlement with Music Choice announced that has the case settled for $13.3M right before an important hearing and a potential trial date set for March 3rd, 2020. Obviously, there is no more hearing and no more trial.
Stingray has agreed to pay Music Choice US$13,250,000. Half of that amount was paid to Music Choice on February 3, 2020. The other half is payable February 15, 2021 with 2.5% interest. The Agreement settles all United Statespatent and other litigation between the two companies (Music Choice v. Stingray Digital Group Inc. / 2:16-cv-00586-JRG-RSP/ United States District Court for the Eastern District of Texas Marshall Division). Source: https://finance.yahoo.com/news/music-choice-stingray-group-inc-175000607.html
This is a consequence of several litigation decisions made during “Greenberg and Traurig’s” counsel timeframe. As, we reported GT charge over $9M to Stingray for this defense, which would total an amount of $21M in losses to Stingray Digital.
Stingray makes about $30M per year from the US Market, and likely at a loss or no profits, as court proceedings indicated that Stingray charged way under Sound Exchange’s on “Statutory Licenses,” which would amount to much higher losses to Stingray Digital.
Savings To Stingray? Could Have Been Worst?
Certainly going into trial after spending $9M in legal fees, maybe having to allocate $3-5M in time for a new set of attorneys to get up to speed with a case in 30 days, represented higher risk.
Unknown to us, is why Stingray just didn’t license our patents? Obviously, they could have spent some litigation costs, but the main reason to arrive to a Settlement with Music Choice for $13M is because Dr. Ugone’s damages report was requesting $23M, at the very least, plus punitive damages (likely), and other unforeseen expenses.
Stingray would have been in a better position to negotiate if it would have presented a non-infringing alternative to Music Choice’s patents, decreasing the damages to reasonable royalty instead of loss profits.
Stingray stated in its 3rd Quarter Report that no disruption is expected in their US operations, and this matter is obviously over. – Source: Stingray’s 3rd Quarter Report 2020 – stingray.com
Music For Cable And Cloud To Cable Intellectual Property – A Non-Infringing Alternative
Besides demonstrating our expertise as expert, our creativity and ingenuity has brought a patent portfolio that demonstrated its value. Clearly, Cloud to cable demonstrates how important having a set of patents is, instead of spending $23M and who know how many hours of depositions, discovery, and other potential issues that are derived from litigation. Innovation is the key, and creating your own intellectual property is crucial for success, savings, and bringing more value to your shareholders.
Cloud to Cable is clearly a non-infringing alternative to Music Choice patents for SVOD and Linear distribution of music and tv content to MVPDs, 4G, 5G, ATSC 3.0, and Satellite systems