Research in Motion (RIM), already under pressure from declining sales and a pending class action suit from disgruntled shareholders, is being sued by audio giant Dolby for alleged patent infringement.
The lawsuit, which was filed jointly in both America and Germany yesterday, centres around patents for audio compression technology that allows for high quality sound using limited wireless bandwidth and storage space. In addition to financial damages, Dolby is seeking to halt sales of RIM devices alleged to use the technology.
Dolby claims that, despite discussions, RIM is refusing to pay licensing fees for the technology, unlike other mobile manufacturers. According to the Wall Street Journal, licensing accounts for the lion’s share of Dolby’s revenue, making up for around 80 per cent of its total over the past two years. The WSJ says the company made $214.6m in licensing revenues in the quarter ending April 1st this year, a ten per cent increase over the previous year.
As smartphone use explodes, manufacturers are increasingly looking for ways to deliver streaming audio without drastically increasing battery and other resource drain. As such, the mobile device market looks like a promising revenue stream for Dolby, which is an established player in audio processing technologies.
It’s been a difficult year for RIM. Earlier this week, shareholders launched a class action suit against the company, claiming the company issued misleading financial data and calling for a complete overhaul of the leadership. This comes on the back of a less-than-stellar foray into the tablet space, including a product recall following the discovery of a critical software flaw in its PlayBook. The recent abandonment of its Blackberry devices by the US Government in favour of iPhone and Android devices is adding to the company’s woes. RIM has yet to make any statement regarding the suit.