N2IT’s Lawsuit against M-Audio Dismissed

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N2IT, the original patent holders for DVS technology like Final Scratch, has settled its complaint against M-Audio and its Torq technology. On November 17, the original civil action was dismissed “with prejudice.” It was widely speculated that N2IT would pick the lowest hanging fruit on the DVS money tree (Traktor Scratch and Torq) before going after the cash cow and industry leader, Serato Scratch. Without any court precedence set in either of its respective lawsuits against Native instruments or more recently M-Audio, N2IT may not have the ammunition it needs to take on Serato and grab the golden goose. Is this good news for the DJ industry or bad news for private patent holders?  You will have to make that judgment call.

THE SMALL TEXT

small

There is very little information publicly available on the case, but it’s possible to draw together a picture of what may have happened from the Joint Stipulation of Dismissal (available through public records) which reads:

“It is hereby stipulated by and between Plaintiff N2IT Holding B.V. and Defendant M-Audio LLC (collectively, “the Parties”) through their designated counsel that the above-captioned action be and hereby is dismissed with prejudice pursuant to Fed. R. Civ. P. 41(a)(1)(a)(ii). Each Party shall bear its own costs and attorney’s fees.

Dated: November 17, 2009″

“dismissed with prejudice”

Translation- the plaintiff is barred from filing another case on the same claim (wikipedia)

“pursuant to Fed. R. Civ. P. 41(a)(1)(a)(ii)”

Translation- The Plaintiff (N2IT), Voluntarily dismissed the case without a court order by filing a dismissal signed by all parties” (cornell law)

The exact nature of the dismissal could mean one of two things. One, both parties settled out of court — possibly arriving at a licensing deal similar to the one currently in place with Traktor Scratch. Two, with M-Audio set to dig its heels in and fight the case with the legal backing of its parent company Avid, N2IT backed away and dropped the case. Either way, it does not look too good if N2IT hopes to take on Serato — especially considering the claims brought up by M-Audio during their defense of the case.

THE RUB

fs-beosdc

In its defense, M-Audio filed claims with the United States district court of Virigina on September 4th asserting that N2IT’s patent is “unenforceable on the basis that it was procured through inequitable conduct is without merit and should be denied.” The “inequitable conduct” is essentially withholding information from the US patent office that would have possibly resulted in the patent being denied. Specifically that the technology was in the public domain before the patent was filed. First in a 1998 thesis paper that described the DVS concept by Chris Bauer at Middlesex University, and in a public demonstration of the concept, which resulted in a BeOS award (more info on this topic from Create Digital Music).

While we are not exactly patent lawyers, it does seem rather difficult to enforce a patent on an idea that appears to have been floating around in public. The ethics of enforcing such a patent when you don’t have a product in the market to protect is the philosophical crux of the bigger argument that pits free market proponents against IP holders.

COLLATERAL DAMAGE

msPinky

While this may appear to be a clear-cut case of the small (ish) guy VS. the really big guy, there is actually a twist in which a really small company, Ms. Pinky, may end up bearing the brunt of the lawsuit. M-Audio didn’t actually own the technology it was defending. M-Audio simply licensed it from Ms Pinky, which has been producing a low-cost DVS alternative for years. We suspect that if there were settlement that the Ms. Pinky folks might not be too happy.

END RESULT

The sad truth is that no one ever really wins a lawsuit, and all parties usually lose face, cash or often both. In cases that involve publicly available products, the backlash can roll into your wallet as companies must recoup defense costs or roll license fees into their prices. NI’s complicated Traktor Scratch pricing structure is just one example, where any product that involves an N2IT license must be a clearly separated SKU and is usually higher in cost. If N2IT’s patent claims prevail, then the price of DVS systems may have risen and development could slow. Then again, cases like this may dissuade private individuals from investing in research and development if they feel that a patent is only as good as the lawyer defending it.

  • Escapemcp

    QUOTE: “The sad truth is that no one ever really wins a lawsuit”… 
    Yeah, except the lawyers, moneysucking vampires!

  • I must say that this is good news for djs, if the patent had gone through, these other companies wouldn’t of developed their dvs meaning no fair market and where would digital djing be nowhere, I even doute this blog would of even existed.

  • steve

    I know this is an old thread, but it looks like there haven’t been any thoughts from patent lawyers. I’m a DJ and a patent lawyer. Based on what’s written in this article, there’s a couple of points that probably haven’t been mentioned here.

    If M-Audio licensed this technology from Ms. Pinky, surely Ms. Pinky has a very big interest in this lawsuit. In fact, if M-Audio had the proper representation from their patent attorney, they would have required indemnification from Ms. Pinky in the event of such a patent infringement lawsuit (basically means Ms. Pinky would have to pay/defend). That being said, it’s likely Ms. Pinky defended or bankrolled M-Audio’s defense behind the scenes.

    On the other hand, it’s interesting that N2It pulled the plug on litigation and settled without dealing defending an invalidity defense. It sounds like there were some serious questions of invalidity and they’d rather not risk it. So, will they go after FS? Only if they have the balls to gamble again with the validity of their patent.

    Without getting into any discussion on whether patent law stifles competition and development of science, the practical result is that it won’t have any effect on us as consumers. If N2IT goes after FS, you might even see everyone end up being friends (cross-licensing) with some undisclosed amount of $ being exchanged of course (i.e. Nvidia v. Silicon Graphics). But, the possibility of DJ’s losing the right to use FS, Ms. Pinky or Torq is probably slim to none. Case in point: RIM (blackberry company) got screwed and paid crazy dollars in royalties, which really could have been avoided, but they gambled and lost. Yet, they’re still around and everyone’s still got their crackberries. Nothing’s changed.

  • Kevin Hackett

    reading all this makes me glad I own Denon HS5500 AND 3700’s, best piece of dj kit made so far. 86 the computer, Denon is the only company looking at the future.

  • chEx

    [quote comment=”24528″]chEx – that’s not the case at all. N2IT now is not the same company it was then. I’ve been following this case since the beginning and have very clear info on what happened. The case being dismissed is a very good thing, since it would have mostly impacted Ms. Pinky. And Ms. Pinky did not “reverse engineer” FS – they work in different but similar ways. I can’t help but feel there was a bit of the litigiousness of the SCO Unix lawsuit in this case.[/quote]

    Never mind then. It’s been quite a few years since i really gotten myself in the legal issues with in2it. So i guess n2it is not what i thought they were.

  • timofey

    [quote comment=”24511″]Pure speculation, but this may be good for Ms. Pinky and Serato, since both of those have different technology underlying the product, and aren’t derived directly, or even indirectly, from N2IT’s patent, as opposed to the N2IT-Final Scratch-Traktor products, which are all from the same technology and are undeniably related. At least it may be a tougher case than N2IT was willing to pursue.

    At least I hope it is, since I am a fan and user of Ms. Pinky.[/quote]
    i want become a fan too, what do u think about it pitch control and sound not for turntablism, but for mixing?

  • I am am just a user of this technology so here is my two cents. I am just glad m-audio didn’t receive heavy damage from this. Mainly because if this led to a situation where Torq’s development was hampered I would be very upset. LONG LIVE DVS AND CONTROLLERISM! Can’t wait to see whats next!

  • I must respectully disagree with your point. But I am sure we are both proud to live in a country of freedom where we can agree to disagree.

  • Remote

    I my opinion this sort of lawsuit and patent law is annoying and debilitates creativity. This technology really isn’t that complex and could easily be invented in isolation. And even if the companies did know of the others work I doubt they’d need to directly steal the others designs. A noise on a record and software that tracks it isn’t all that complex. I’m sure any Computer Sciences uni student could copy this tech.

    Sure if you’ve got match algorithms maybe then there’s a case, but I’m sure there is more than one way to skin this cat.

  • Gustavo you are right… Ms. Pinky was developed without knowledge about FS and lawsuit is bad for Ms. Pinky, maybe Serato could/want to help or maybe not…

    At last copyright and patents make people lost opportunities to choice…

    Let’s see.

  • [quote comment=”24530″]who is behind N2IT company ? isn’t it Acquaviva ?[/quote]

    I know he claims to have something to do with Traktor, because he hooks my friend up with a huge discount somehow… and i have seen pics of him using this like giant ball of like duct tape looking thing that apparently the first proto type of final scratch… but i am still really confused as to who has what to do with each company… ?

  • danny

    who is behind N2IT company ? isn’t it Acquaviva ?

  • Gustavo

    chEx – that’s not the case at all. N2IT now is not the same company it was then. I’ve been following this case since the beginning and have very clear info on what happened. The case being dismissed is a very good thing, since it would have mostly impacted Ms. Pinky. And Ms. Pinky did not “reverse engineer” FS – they work in different but similar ways. I can’t help but feel there was a bit of the litigiousness of the SCO Unix lawsuit in this case.

  • Hipnotikk

    well.. on the upside, i could have made a pretty penny off of my red TSP vinyls if they had been slapped with copyright infringement 😛

    let’s all look at the positives..!

  • chEx

    It’s a shame looking at the past history seeing N2it always seemed to get the short end of the stick. They first licensed the technology to Stanton; as final scratch that ran on a proprietary version of linux. It still Imo was in development stages when stanton decided to release it prematurely with great disaster. N2it later sold the technology to Stanton who later licensed it to Native Instruments for further development. then came out 1.1, 1.5 and fs 2.0 series. If my understanding is right, Ms. Pinky backwords engineered the software and remarketed it from the linux 1.0 build. Meanwhile in 99-2000 Serato was developing their own Scratch which at the time was nothing more than a plugin and not a true dvs for live use.
    Honestly I feel bad for N2it for not having the proper attorney feedback about their past decisions. However, It’s their fault for not holding all patents, practically giving their technology to Stanton, Ms Pinky. If they would of gained the necessary funding to properly develop and publicly release their software things would of been different. Look at Apple, Xerox, and Microsoft. Xerox came out with a gui to use in a workstation. They allowed Apple to get their technology and use it to build a gui based os for their pcs. Then Microsoft came and asked if they can have a prototype Lisa for development purposes. Bill convinced Steve to give him one on lease. The rest is history. Now Apple Hates MS, Xerox hated Apple; everyone steals!

  • FS

    Can’t sell Serato Scratch LIVE in The Netherlands. This is because N2IT (the inventor of the first version of Final Scratch) holds a patent which could be interpreted to include the Scratch LIVE technology (although it is technically distinct). The same patent application was submitted all over the world and was declined in every country except The Netherlands. All this way back in the day until now.
    March 16, 2006 N2it’s Mark-Jan Bastian was granted a US patent for the technology he invented. Sh!t hits the fan…

  • kbooms1w

    Pure speculation, but this may be good for Ms. Pinky and Serato, since both of those have different technology underlying the product, and aren’t derived directly, or even indirectly, from N2IT’s patent, as opposed to the N2IT-Final Scratch-Traktor products, which are all from the same technology and are undeniably related. At least it may be a tougher case than N2IT was willing to pursue.

    At least I hope it is, since I am a fan and user of Ms. Pinky.

  • I remember this from a while back. Comes with the territroy.

  • Mark

    Sounds like a case of patent trolling and another example of why our copyright laws prevent progress and promote monopolies.

  • so is N2IT the owners of Traktor, or are they separate? Did they own final scratch and sell it to Native? Sorry, just a bit confused as to who is who…

    thx!

  • james B

    this is gud news for djs, if the patent had gone through, these other companies wouldn’t of developed their dvs meaning no fair market and where would digital djing be nowhere, I even doute this blog would of even existed

  • I dont think there is no such thing as both sides. Someone released a paper about the concept behind the system before the company started. So this seems more or less like prior art.
    I also think especially software patents are to be considered harmful.

  • Vinicius Hoffmann [Brazil]

    this is sad, and we have to look both sides of history before make a judgement.

  • jorge

    =(