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1 May 2020Sarah Morgan

Spotify accused of stealing ad software trade secrets

Spotify stole trade secrets to build its user-generated advertising platform by “dangling partnership prospects” in front of a Canadian audio company, according to a newly-filed lawsuit.

This is a case about a “big business stealing from a small business”, claimed VoxTonePro in its suit, filed yesterday, April 3, at the US District Court for the District Court of Delaware.

VoxTonePro alleged that it had a series of meetings with Spotify in 2016 and 2017 in which Spotify “dangled partnership prospects”, at a time when Spotify had no system for self-service voiceover ad creation.

“Lulled into a false sense of trust and confidentiality, VoxTonePro revealed its trade secrets to Spotify,” said the claim. Spotify allegedly misappropriated trade secrets covering VoxTonePro’s audio ad creation technology—an online application that generates audio ads with voiceover narrations, music and/or sound effects.

VoxTonePro said that, after several meetings where Spotify led the company to believe a partnership was coming, Spotify then “scrambled to launch a platform” just like VoxTonePro’s.

The Canadian company went on to allege that, in May 2017, Spotify “abruptly informed” VoxTonePro that it would not be pursuing a partnership. “Having gotten what it wanted from VoxTonePro, Spotify brushed VoxTonePro aside,” added the suit.

Four months later, in September 2017, Spotify launched the  Spotify Ad Studio, which allows advertisers to create audio ads and launch ad campaigns.

According to the suit, Spotify falsely described its ad studio as “truly the first self-service ad platform that lets [small and medium businesses] easily create an audio ad in minutes”.

The claim added: “Spotify’s own estimates thus indicate that it has derived hundreds of millions of dollars from the proprietary system it stole from VoxTonePro.”

VoxTonePro has asked the court for injunctive relief, damages, punitive damages, a reasonable royalty and profits.

A spokesman for Spotify said: “We don't comment on pending litigation.”

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