Settlement agreement between Music Choice and Stingray Digital
Music Choice vs Stingray Settlement arrives right before trial. This case has been analyzed by our experts from two angles:
- ♠ Technology Aspects of Infringement and Validity
- ♠ Damages and Liability
On February 4th, 2020, Music Choice announced that has settled the case for around $13.3M, right before an important hearing, and a few weeks before a potential trial date set for March 3rd, 2020.
Obviously, there is no more hearing and no more trial. Yahoo finance reported:
Stingray has agreed to pay Music Choice US$13,250,000. Half of that amount was paid to Music Choice on February 3, 2020. The other half is payable February 15, 2021 with 2.5% interest. The Agreement settles all United States patent and other litigation between the two companies (Music Choice v. Stingray Digital Group Inc. / 2:16-cv-00586-JRG-RSP/ United States District Court for the Eastern District of Texas Marshall Division). Source: https://finance.yahoo.com/news/music-choice-stingray-group-inc-175000607.html
All these events are a a consequence of several litigation decisions made during “Greenberg and Traurig’s” (GT) counsel timeframe. As, we reported before, GT charged Stingray digital over $9M in legal fees for their defense in this patent case, including IPRs and other court proceedings. If you add the settlement amount to the legal fees a total of $21M in losses will hit Stingray Digital’s balance sheet.
Stingray generates about $30M in revenues per year from the US Market, and likely at a loss or no profits, as court proceedings indicated that Stingray charged way under the price of what they would be paying Sound Exchange’s on “Statutory Licenses.” We can infer from those court proceeding that Stingray was already having looses from US sales and that in that case, the profits lost could be higher losses than just settlement plus legal fees.
Now the best day for Stingray, as their stock was traded at TSX (Toronto Stock Exchange) at $7.10/share around Jan 8th, and today was traded at the close at $5.93/share. That’s roughly $50M in 4 weeks a of substantial decline in market cap.
Stingray digital indicated in their 3rd quarter financial report that no disruption was expected in current US operations – Source: Stingray – Financial Report – February 5th, 2020.