The Future of Digital Cinema May Be At Stake in Lawsuit Over Interoperability

GDC and Dolby go to war over whether the messages and commands that allow motion pictures to play on screen are a protected form of intellectual property.
Courtesy of Dolby Labs

While Oracle is about to square off against Google in a $9 billion trial over copyrighted Java API code, the entertainment industry is witnessing its own cutting-edge dispute over interoperability codes now being used in the digital cinema industry.

As theater owners across the country continue to switch from the use of physical film prints to entirely digital systems, a lawsuit was filed Monday by GDC Technology Limited against Dolby Laboratories. The plaintiff counts itself as one of the largest sellers of software and hardware to theater owners, and it has a system that has been installed on approximately 40,000 screens worldwide that allows video and audio content to be stored and played.

To bring motion pictures like Batman v. Superman: Dawn of Justice to fans, digital cinema systems rely upon media servers, sound processors, projectors and maybe most essentially, software that contains the messages and commands that tie everything together.

"There is nothing secret about these interoperability codes," states GDC's complaint filed in California federal court. "For years market participants, including GDC and Dolby, have readily shared their interoperability codes and related information with one another.... Were the market participants to not share this information, they would make it more difficult to sell their products to theater owners, whose needs may be better served by buying the four basic digital cinema components from different manufacturers and sellers, or in different combinations."

According to the lawsuit, Dolby shared its codes "enthusiastically" and without license for years, but once it acquired a media server manufacturer called Doremi, it decided it would no longer do so. The change in position allegedly not only benefited its newly owned subsidiary, but also enhanced the prospect of Dolby's theater sound system called Atmos, which went head-to-head with a GDC licensed immersive sound system called DTS:X.

Dolby is said to be claiming intellectual property rights in the interoperability codes to "pressure" customers, notifying GDC "that its protocols and interconnection codes are subject to copyright and other unspecified intellectual property rights. Further, Dolby demanded that GDC refrain from telling GDC’s customers that GDC has the right to use Dolby’s interconnection codes."

GDC says Dolby knows very well that interoperability codes are "not protectable forms of intellectual property," pointing to dozens of digital cinema related works registered by Dolby that don't assert coverage for those codes. And even if that's not true, GDC says it "is engaged in fair use," that it writes its own software code and that the only element being used from Dolby are the messages and commands being used by other participants in the industry.

The plaintiff, represented by Robert Schwartz at Irell & Manella, is now in court seeking declaratory relief that the codes don't constitute copyrighted subject matter nor trade secrets and that Dolby should be held liable for tortious interference and unfair competition. Read the entire complaint.

We've reached out to Dolby and will add any statement.