Music streaming giant Spotify has been hit with a $1.6 billion copyright lawsuit by a music publishing company for hosting songs it allegedly doesn’t have the full rights to. 

Wixen, a Californian company that collects royalties on behalf of artists like Tom Petty, Neil Young, Janis Joplin and The Doors, claim that Spotify “took a shortcut” when it cut deals with major labels to host their back catalogs. The lawsuit stats that Spotify didn’t obtain the composition rights in their deals, and is seeking damages of $150,000 per songs, for over 10,000 songs.

The lawsuit comes at an awkward time, as Spotify is reportedly preparing for a stock market sale in 2018. According to Reuters, the streaming service has made a confidential filing for a U.S. IPO (initial public offering) and is targeting a direct listing in the first half of 2018 that would allow some longtime investors to cash out.

If Spotify carries out with its plans, it would be the first major company to carry out a direct listing, an unconventional way to pursue an IPO without raising new capital. A direct listing eliminates the need for a Wall Street bank or broker to underwrite an IPO along with many associated fees and could change the way companies approach selling shares to the public in the future.

According to a source familiar with the matter, Spotify intends to proceed with a U.S. direct listing in the first half of 2018 despite Wixen’s lawsuit. Luke DeMarte, a copyright lawyer at Michael Best & Friedrich, said he expects Wixen to settle its case for far less than the damages it is seeking and that it is unlikely any of the publisher lawsuits go to trial. 

The company has two outstanding lawsuits filed against it in July 2017, from publishers including Bob Gaudio of the group Frankie Valli and the Four Seasons.

Spotify is reportedly valued at $19 billion and last reported more than 60 million paid users, twice that of Apple Music, its closest rival. 

(The Gaurdian, Reuters)