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As a result, the case can now go to trial—and promises to be a headache for everyone who hopes to make money by selling digital content online. Bertelsmann will have to pony up damages if it's ultimately found to have infringed SightSound's patents.

SIGHTSOUND: PATENT POUNDING?

Federal Court Upholds Company's Claim in Patent Case Against CDNow and N2K—Will It Hold Licensing Rights for Downloadable Entertainment?
Pittsburgh-based digital media company SightSound has claimed for some time that the patents it holds entitle it to payment for all vending of audio and video downloads on the Net. The firm has been pressing its claim in court against Bertelsmann-owned CDNow and N2K since 1998.

SightSound further insists it was behind the first music track for sale as an online download, in 1995. I think we all remember what we were doing when we heard about that. The company also claims that its offering of the acclaimed indie flick Pi was the first instance of a feature film sold on the Net as a digital file.

But SightSound's patents—filed by co-founder Arthur Hair in the late 1988 and granted in 1993—haven't exactly been top-of-mind for content owners who've lately embraced digital distribution as a revenue source. Until this week, that is.

Pennsylvania-based Federal Magistrate Kenneth Benson has swatted down CDNow's argument that since the patent only referred to "telecommunications networks," online activity was exempted. As a result, the case can now go to trial—and promises to be a headache for everyone who hopes to make money by selling digital content online. Bertelsmann will have to pony up damages if it's ultimately found to have infringed SightSound's patents.

SightSound has written to label-backed online services Pressplay and MusicNet regarding its patent claims.

"This is an important step forward in the aggressive enforcement of our patent rights," reads a statement from SightSound President/CEO Scott Sander.

Speaking of which, assuming the patent claims withstand legal challenge, how much cheddar will media moguls have to fork over to license the right to sell downloads?

"It's nothing we're discussing right now," Marketing Director Jennifer Pesci-Kelly told HITS. Hmm, what do you think she meant by that?

"We're very pleased with the judge's decision," lead counsel William Wells of Kenyon and Kenyon declared. "We have always believed that, if the facts were fairly applied in a manner consistent with the appropriate legal standards, SightSound's patents would be found to include the Internet, as the judge has confirmed."

Keep your eyes on this case—if you can keep them open, that is.

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