Music service Spotify is being sued in the US and Europe for allegedly violating patents held by PacketVideo.
The lawsuit claims that Spotify has violated at least two patents owned by PacketVideo that cover methods of streaming music over data networks.
The legal action comes barely two weeks after Spotify launched a US version of its music streaming service.
Spotify said it would "strongly contest" the claims PacketVideo made in its lawsuit.
Court papers that kicked off the legal action were filed by PacketVideo lawyers on 28 July. The patents in question were filed in 1995 and became the property of PacketVideo when it bought Swiss-based SDC AG in 2007.
PacketVideo has filed legal papers in San Diego and the Netherlands. It said the lawsuit had been filed following attempts to "amicably resolve" the dispute over the patents outside the court.
"PacketVideo has a strong intellectual property portfolio, and will take any necessary action needed to protect its intellectual property and prevent the misuse of its patents," said Joel Espelien, PacketVideo's general counsel in a statement.
In response, Spotify said in a statement that its success was due to its "highly innovative, proprietary hybrid technology that incorporates peer-to-peer technology".
"PacketVideo is claiming that by distributing music over the internet, Spotify (and by inference any other similar digital music service) has infringed one of the patents that has previously been acquired by PacketVideo," it added. "Spotify is strongly contesting PacketVideo's claim."
The lawsuit is the latest in a growing number of patent wrangles that have set tech firms against each other. Apple, Nokia, HTC, Google, Oracle, Samsung, Electronic Arts, AT&T and many others are all fighting or have launched, sometimes simultaneously, legal action over patents.
In addition, many firms who claim to own patents but have never turned them into working code or gadgets are also suing tech firms for infringing on their intellectual property.
The situation led Kent Walker, Google's top lawyer, to decry the "explosion in patent litigation" which "threatens to stifle innovation".