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Infospace Hit with Ringtone Lawsuit

  Venture Business News  -   POSTED: 2007/01/22 13:05

Troubled ringtone vendor, Infospace which recently lost on of its largest clients has been hit by a US$100 million lawsuit from the music publisher, EMI. The complaint alleges that InfoSpace and its subsidiaries Moviso and Premium Wireless Services have been underpaying royalties and selling ringtones for songs to which they hold no licensing rights.

The lawsuit also claims that InfoSpace has "engaged in a deliberate effort to frustrate and obstruct the audit rights held by plaintiffs pursuant to license agreements."

EMI says that it had requested an audit of InfoSpace's accounts to ensure accurate royalty payments but was met with "diversion, obstruction, misdirection and misinformation." Specifically, EMI alleges that InfoSpace claimed it did not have access to many of its records, and then refused to turn them over.

EMI claims it turned over information it acquired to its auditors at Gelfand Rennert & Feldman, who concluded that InfoSpace was miscalculating royalties due to downloads through third-party Web sites operated by cell phone carriers Verizon and US Cellular; failing to report royalties for eight approved sub-licensees; and failing to pay royalties for compositions that appeared on its catalogue of offerings.

InfoSpace also says that it will announce fourth quarter 2006 financial results on Thursday, February 1, 2007, after market close.


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