Dolby Not Licensing AC-4 Patents for ATSC 3.0 on FRAND Terms: LG

Dolby Labs violated the Sherman Antitrust Act when it reneged on its promises to ATSC to license its Dolby AC-4 audio codec patents for NextGenTV on fair, reasonable and nondiscriminatory (FRAND) terms, alleged LG Electronics in a heavily redacted memorandum of law in support of its motion for a temporary restraining order and preliminary injunction against Dolby, as posted Thursday in U.S. District Court in Manhattan in docket 1:22-cv-42. The court granted LG’s Dec. 23 application to file its complaint against Dolby under seal (see 2112240001), and the docket says the court locked the sealed complaint in a vault Tuesday.

LG “has suffered and will suffer irreparable harm” from Dolby’s alleged misbehavior, argued LG as grounds for the injunction. “Ensuring consistent, timely, and complete delivery requires an exceptionally delicate balancing act in any situation, but even more so now when the economy is in the throes of historic disruptions.” The rest of that section is redacted to hide the nature of the harms LG is alleging, and the Dolby practices the provoked LG to take Dolby to court.

Standards-setting organizations (SSOs) like ATSC “memorialize” FRAND requirements in their intellectual property rights policies, said the memorandum. The commitment of the holder of a standard-essential patent to license IP on FRAND terms to “implementer companies” like LG is “so important” that SSOs “generally will not include an SEP in a standard without such a commitment.” ATSC is known to have such stipulations in its bylaws. We asked ATSC for comment Thursday but didn’t immediately hear back. Dolby didn’t respond to requests seeking comment.

Dolby has “a history of audit abuse” in licensing its patents and collecting royalties, said the memorandum. When a dispute over a royalty audit arose in August between Dolby and South Korea’s Kaon Media, “Dolby blocked Kaon from using Dolby’s IP in respect of products not the subject of the audit dispute, despite the existence of a license agreement between Dolby and Kaon,” it said.

The FCC said in November 2017 that it would use the first five years of 3.0's voluntary deployment “to monitor how the marketplace handles patent royalties for essential patents,” but its order didn’t require FRAND licensing. That five-year review would be up toward the end of 2022 (see 1711210004).

ATSC's patent policy “provides assurance that necessary IP will be available” for 3.0's deployment, said then-ATSC President Mark Richer in June 2017. “Patent statements must be filed by holders of patents that may be essential to an ATSC standard prior to a vote on the standard at issue,” both to disclose the existence of the patent and commit to FRAND licensing of the disclosed patent, he said then. ATSC’s patent policy “is in line with best practices for patent policies in standards organizations globally,” said Richer.