Network Commerce Sues Liquid Audio Over Online Payment Patent

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Network Commerce Inc. has filed a patent infringement lawsuit against Liquid Audio Inc., charging the online music distributor with violating its patents for its method of online payments.


The suit, filed in the U.S. District Court in Seattle, seeks to have Liquid Audio stop using its method of online payment. According to Network Commerce, which offers domain registration and Web hosting services, its patented payment system allows users to "conduct electronic commerce by using separate servers and a download component to coordinate the download of information for online transactions."


Liquid Audio's online payment system uses similar methods, Network Commerce said.


"We need to take this action because despite our notifying Liquid Audio and offering to license the patent, Liquid Audio would not cease its unauthorized use of the patented system," said Dwayne Walker, Network Commerce's CEO.


Liquid Audio, based in Redwood City, CA, refutes Network Commerce's claims and said its lawsuit has no merit.


"Liquid Audio has always respected valid intellectual property rights and is a key innovator in the digital distribution space, creating and licensing new technology to address market needs," said Leon Rishniw, vice president of engineering. "We have reviewed the claims in the Network Commerce patent and have determined that we don't infringe on their intellectual property."


Rishniw said Liquid Audio explained to Network Commerce why it feels it is not in violation of Network Commerce's patent and that its response was to file the lawsuit.


"Network Commerce spent extensive resources on developing and patenting its technology and cannot allow others to use it without a license," said Walker.


Liquid Audio said it plans to defend itself against the lawsuit in court.


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