Context: Three major disputes over multimedia patents setlted last month (Nokia-HP, Access Advance-TCL and Access Advance-HP) (October 30, 2024 ip fray article). Ongoing enforcement actions over standard-essential patents (SEPs) in that field include lawsuits that Access Advance licensors Dolby and Sun Patent Trust brought against Roku in the Unified Patent Court (UPC) six months ago, but also Via LA licensor Dolby’s September 2024 lawsuit against BLU Products in the Southern District of Florida over AVC/H.264 patents. AVC/H.264 is a relatively old video codec standard but still in widespread use.
What’s new: Last week, two things happened in the Southern District of Florida in short succession that was obviously not coincidental. On Thursday (November 7, 2024), BLU Products filed its answer to Dolby’s complaint, declaring itself a willing licensee but claiming that Via LA’s “take it or leave it” approach was not FRAND-compliant and suggesting that it relied on its suppliers, which are known to be Chinese low-cost Original Device Manufacturers (ODMs), having taken the prerequisite licenses. The next day (Friday, November 8, 2024), Philips joined Dolby and filed a complaint against BLU Products over two of its AVC/H.264 SEPs.
Direct impact: Presumably, Philips’s lawyers had their complaint already prepared, but first wanted to see BLU’s defenses to Dolby’s complaint. The Philips complaint does not go into much detail on licensing. It says, rather generally, that BLU “has had numerous opportunities to license the patented inventions on fair, reasonable, and non-discriminatory terms, but has refused to do so.” It is easy to see here that the two Via LA licensors are using BLU for a proxy. In theory, it would be more efficient for them to go after the actual device makers: Chinese low-cost ODMs such as Tinno whose products BLU merely rebrands for the Americas. But patent law allows assertions at all levels of a supply chain where an infringement can be established. The most likely outcome is for BLU to take Via LA’s AVC/H.264 license, and it then remains to be seen what, if anything, Via LA’s licensors will do about the use of its patents by the actual device manufacturers.
Wider ramifications: BLU’s suggestion that Via LA’s terms are not FRAND because the pool rates are not negotiable is an attack on one of the fundamental characteristics of patent pools. VIA LA’s (formerly MPEG LA’s) AVC/H.264 pool is one of the most successful and most widely-licensed patent pools in history. At that level of market acceptance, BLU Products would have to make something more than a conclusory allegation to show that there is a FRAND issue.
BLU’s business model is, basically, arbitrage. They source ultra-low-cost Chinese phones and attach the BLU brand (stylized as BLÜ) to them. BLU stands for Bold Like Us.
BLU is based in Miami and therefore doesn’t dispute that venue is proper in the Southern District of Florida.
These are the patents-in-suit:
- Philips
- U.S. Patent No. 8.391,371 (“Embedded data signaling”)
- U.S. Patent No. 9,560,349 (“Embedded data signaling”)
- Dolby
- U.S. Patent No. 11,887,560 (“Perceptual luminance nonlinearity-based image data exchange across different display capabilities”)
- U.S. Patent No. 10,297,008 (“Method and system for improving compressed image chroma information”)
Dolby’s and Philips’s complaints were filed by Hunton Andrews Kurth’s Samuel A. Danon together with other lawyers from his firm as well as a team from Sullivan & Cromwell led by Garrard R. Beeney. BLU is represented (at least in the Dolby case, but presumably also against Philips) by a very small firm: Bernard Egozi of Egozi & Bennett.
Finally, here are the three court filings mentioned above: