LG Says It Risks Lost Market Share From Dolby’s AC-4 ‘Monopoly' Demands

With so many redactions in LG’s memorandum of law in support of a preliminary injunction and a 14-day temporary restraining order against Dolby Labs (see 2201060058), it’s virtually impossible for the public to identify the allegedly harmful Dolby conduct that LG is asking the court to enjoin. Dolby violated the Sherman Antitrust Act and California unfair-competition laws when it reneged on its ATSC commitments to license its Dolby AC-4 audio codec patents for NextGenTV on fair, reasonable and nondiscriminatory (FRAND) terms, alleges LG in the memorandum. A sealed complaint, unavailable for public view even in redacted form, was locked in a vault Jan. 4 in U.S. District Court in Manhattan, according to the case's 1:22-cv-42 docket report. Once a standards-setting organization (SSO) selects a technology “to perform a function,” as ATSC did when it picked AC-4 as NextGenTV’s codec for North America, “it eliminates the competing technologies in the relevant market,” says LG’s 34-page memorandum. “Equipped with SSO-derived monopoly power,” it says, “Dolby has acted anticompetitively to exploit that power by demanding” actions from LG that are blacked out in the document. When LG “refused to give in to its demands, Dolby exerted maximum pressure,” it says, but the nature and specifics of Dolby’s allegedly bad behavior also are hidden from public view. “That violated Dolby’s FRAND commitment” to ATSC, “which was the only thing protecting competition from Dolby’s monopoly power,” it says. The supply chain crisis adds further urgency to LG’s preliminary injunction and TRO motion, according to the few snippets of readable text in the memorandum. LG “has suffered and will suffer irreparable harm” from Dolby’s actions, it says. “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,” it says. The “risks” to LG from Dolby’s actions, including the loss of market share and the threat of lost customers, “are exacerbated because of how tight the global supply chain is,” it says. Dolby and LG haven't responded to multiple requests for comment since LG applied to the court Dec. 23 to file its complaint under seal. Dolby filed a declaration statement with ATSC in June 2016 agreeing to license its AC-4 patents on FRAND terms, as ATSC's patent policy requires.