Either a direct license from Wixen or a compulsory license would have permitted Spotify to reproduce and/or distribute the Works as part of the Service, including by means of digital phonorecord deliveries ("DPDs"), interactive streaming, and limited downloads.
Earlier in the week it was reported that Spotify used the Christmas break - when everyone was otherwise occupied - to file some confidential paperwork in relation to its long awaited stock market listing.
The company is also now preparing for an initial public offering (IPO).
Through the years, Spotify faced criticisms from music artists for allowing non-paying users to listen to their full songs anytime. At the heart of the suit, filed December 29 in U.S. District Court in Los Angeles, is Wixen's allegation that Spotify did not obtain one of two licenses required to distribute music. Some of these songs are owned by Wixen via copyright.More news: HP recalls 50000 computer batteries over fire hazard
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Unlike Apple Music, Spotify also offers free, ad-monetized music streaming. "But Spotify failed to obtain either license type", and instead outsourced that role to the Harry Fox Agency, which the suit says "Spotify knew ... did not possess the infrastructure to obtain the required mechanical licenses and Spotify knew it lacked these licenses".
Spotify has yet to comment on the issue.
The lawsuit is unlikely to have a major impact on Spotify's IPO, said Luke DeMarte, a copyright lawyer at Michael Best & Friedrich not involved.
Spotify was sued by Wixen Music Publishing Inc last week for allegedly using thousands of songs without a license and compensation to the music publisher. The settlement has yet to be finalized; if it goes through, the $43.4 million will go into a fund to compensate rights holders for past infringement.