Streaming video provider DiStream have filed a against startup console manufacturer Infinium Labs.

The complaint surrounds Infinium allegedly offering DiStream and its founder, Royal O'Brien, "significant ownership interests" in Infinium Labs, to induce them into providing technological knowledge for their future gaming network's streaming and encryption systems.

According to DiStream a previous press release announcing the two company's relationship said that "Infinium has taken a big step toward its goal of offering consumers the largest selection of game software."

It is then alleged that Infinium pulled the rug -

"In February, 2004, without warning, Infinium terminated its relationship with both DiStream and Mr. O'Brien. In clear violation of its agreements with DiStream and Mr. O'Brien, Infinium refused to tender to DiStream and Mr. O'Brien either the shares to which each was entitled for their efforts on Infinium's behalf, or promised cash consideration."

DiStream say they are also seeking an injunction to prevent Infinium using any of their trade secrets to help build the gaming network, or aquire financing.

The filing of this case draws some parallels with a case a couple of weeks ago by former Infinium Labs executive Terry Nagy. He alleged he had not been paid, in stock, for the work he carried out for the company in 2003. Nagy, in a similar fashion to DiStream, said that Infinium Labs had used his knowledge and influence to raise funding of $15m (£8.4m). The case was later cancelled when Infinium offered to negotiate a settlement out of court.

By Jason Cartwright