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Network Commerce Sues Liquid Audio Over Patent

Network Commerce Inc., a provider of Internet commerce tools and services, said on Wednesday it is suing digital music firm Liquid Audio Inc. for allegedly infringing its patent on a way to conduct online transactions.

Network Commerce, which was delisted from the Nasdaq in August, said the patent covered a method for online shopping that uses separate servers and a piece of downloaded software to coordinate purchase information.

“Despite our notifying Liquid Audio and offering to license the patent, Liquid Audio would not cease its unauthorized use of the patented system,” Network Commerce Chief Executive Dwayne Walker said in a statement.

Seattle-based Network Commerce said the suit, filed in U.S. District Court in Seattle, sought to make Liquid Audio stop infringing the patent.

Liquid Audio makes software for playing music downloaded from the Internet, sells a set of software tools for converting music into Web-ready digital form, and also operates a network selling songs online.

The Redwood City, California company has been grappling with dissident shareholder Steel Partners, which has criticized management for burning through cash too quickly and has offered to buy Liquid for $3 a share, or about $68 million.

Shares in Liquid fell 2 percent to $2.35 in Nasdaq trading on Wednesday. Network Commerce, which now trades on the over-the-counter after its Nasdaq delisting, was valued at 15 cents a share.

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