Dolby Sues RIM Over Patent Infringement

by Gaurav Kheterpal on June 16, 2011

If you think things can’t get any worse for RIM, you need to remember the golden rule – it can get worse before it gets better.

With the release of its first quarter earnings later today, the company will probably close out another disappointing quarter. Unless the company can spring a surprise with a magical revival plan to restore lost investor confidence, it looks like Research in Motion (RIM) co-CEOs Mike Lazaridis and Jim Balsillie may be soon be standing in the unemployment line.

While all eyes are glued to RIM’s first quarter financial results, comes another bad news – Dolby Laboratories has just announced that it has filed patent infringement lawsuits in the U.S. and Germany against the company for patent infringement. The lawsuits seek recovery of financial damages and injunctions to halt sales of “many RIM products” that Dolby claims infringes its patents.

When it’s not happening for you, it’s not happening for you – that’s RIM for you.

Dolby alleges RIM violated patents for using “highly efficient digital audio compression technologies which allow manufacturers and consumers to provide and enjoy high quality audio while using extremely limited amounts of transmission and/or storage space for such audio.”  The company claims RIM uses this patented technology in BlackBerry smartphones as well as the PlayBook tablet. Dolby is seeking monetary damages and injunctions to halt sales of BlackBerry phones and PlayBook tablets.

Dolby maintains all other major smartphone manufacturers have licensed the technology.

Litigation was regrettably our last resort after RIM declined to pay for the use of Dolby’s technology,” said Andy Sherman, executive vice president and general counsel of Dolby. “We have a duty to protect our intellectual property.

The Dolby lawsuit couldn’t have been more ill-timed for RIM. Two months back, the Canadian smartphone giant was forced to issue a dramatically scaled-back profit forecast, sending its shares into a free-fall mode. There’s no evidence that the company is poised to turn things around and the Dolby lawsuit is further likely to jolt investor confidence.

Did RIM stop paying the licensing fees all of a sudden, or is it sheer ignorance? Whatever be the case, we’ll get to know soon. As for the potential of an injunction, I don’t see that happening anytime soon but a lawsuit is surely the last thing RIM needs on its path to speedy recovery.

The US lawsuit was filed in the US District Court for the Northern District of California. The German lawsuit was filed in the District Court of Mannheim in Mannheim, Germany. RIM declined to comment saying it’s a pending litigation.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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