• by Wendy Davis  @wendyndavis, March 25, 2009

Settling its differences with music search engine Project Playlist, record label EMI has withdrawn a lawsuit against the company and will now license its catalog to the site.

Federal district court judge Denny Chin in Manhattan signed off on the deal on Tuesday. The court dismissed the lawsuit with prejudice, which means that EMI -- which represents big names like Coldplay, REM and Spice Girls -- can't re-file the case in the future. The order specifies that neither company prevailed in the case.

In April, three of the major labels filed suit against Project Playlist for alleged "massive infringement" of their copyright. The lawsuit alleged that Project Playlist's search engine linked to sites that offered pirated music. "Even the most cursory review of the Project Playlist index reveals that it is composed primarily of links to sites that have no legal right to perform the music files they host," the labels alleged in court documents.

Two large record companies -- Universal Music Group and Warner Music -- are still pursuing the litigation. Sony BMG never joined in the lawsuit, and last December, announced it had struck a licensing deal with Project Playlist.

Last year, Project Playlist said in court papers that it intended to argue that the federal Digital Millennium Copyright Act protected search engines from copyright infringement claims.

The Palo Alto, Calif.-based Project Playlist, headed by former Facebook COO Owen Van Natta, also distributes a widget that allowed users to create digital mixtapes. The widget was hugely popular on MySpace and Facebook, but those sites disabled it last December in response to threatened litigation.