Microsoft buys Liquid Audio media delivery patents

Digital media delivery company Liquid Audio Inc. is selling its intellectual property assets, including patents for digital rights management (DRM) and the delivery of content to portable devices, to Microsoft Corp. in preparation for a merger that will shift Liquid's focus away from product development.

The Redwood, California, technology firm is preparing for the completion of its merger with offline entertainment distributor Alliance Entertainment Corp., and plans to concentrate on the delivery of media to retail outlets, Liquid Audio said Monday.

Coral Springs, Florida, Alliance distributes products such as CDs, DVDs, VHS movies and video games through a wide base of retailers, as well as numerous physical and online stores. The merger aims to meld the companies' online and offline media delivery prowess.

As part of the transition, Liquid is selling the domestic and foreign rights to its patents to Microsoft for US$7 million, and will receive in exchange a royalty-free license to continue using the patented technology in its digital distribution system.

The sale will enable Microsoft to add to its cache of digital distribution tools. The software maker just released the beta version of its Windows Media Player 9 earlier this month, with the gold version due out later this year. While it remains to be seen if Liquid's technology gets incorporated into the new Media Player, patents for the delivery of media to portable devices and technology that honors territorial restrictions for digital music content will surely come in handy as the software maker goes to the mat with industry competitors.

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