Dolby Laboratories, Inc. v. Intertrust Technologies Corporation

Background

Dolby sued Intertrust seeking a declaratory judgment—a court ruling clarifying the parties’ legal rights—that Dolby did not infringe eleven Intertrust patents. The dispute involved Dolby’s DCI-compliant digital cinema media-block servers and Intertrust’s allegations that Dolby customers infringed the patents by using DCI-compliant theater equipment.

In April 2018, Intertrust sent infringement letters to AMC, Cinemark, and Regal, which were Dolby customers. The letters accused the customers of infringing at least one claim of each of the eleven patents and offered to discuss licensing. Intertrust later emailed Dolby about its patent assertions against theater owners and the customers’ indemnification requests. Dolby and Intertrust then entered into a nondisclosure agreement effective November 12, 2018. Dolby filed this case in June 2019.

Subject-Matter Jurisdiction

Intertrust moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), arguing that no actual case or controversy existed after information covered by the nondisclosure agreement was removed from Dolby’s amended complaint. The court treated the argument as a facial challenge to the complaint and considered the referenced letters and email under the incorporation-by-reference doctrine.

The court denied this part of the motion. Even without the nondisclosure-agreement information, the April 2018 letters, the October 2018 email, and the parties’ later meetings showed a sufficient dispute. The court concluded that there was a reasonable potential for Intertrust to assert a claim that Dolby contributed to its customers’ alleged infringement. The court did not rely on Intertrust’s August 2019 lawsuits against the customers for this conclusion.

Failure to State a Claim

Intertrust also moved under Rule 12(b)(6), which allows dismissal when a complaint does not adequately state a legally sufficient claim. The court granted this part of the motion. Although the opinion states that one of Intertrust’s arguments was unpersuasive, it found merit in Intertrust’s argument that Dolby did not explain how a particular patent limitation was missing from Dolby’s products.

The court dismissed Dolby’s declaratory-relief claims without prejudice and gave Dolby leave to amend to correct the deficiency. Dolby had three weeks from the date of the order to amend.

Sealing and Disposition

The court directed Dolby and Intertrust to meet and confer about whether the requested sealing of portions of the amended complaint, Intertrust’s motion, and the order could be narrowed or whether sealing was unnecessary. The parties were ordered to report back within one week.

The court granted in part and denied in part Intertrust’s motion to dismiss. Specifically, it denied the motion to dismiss for lack of subject matter jurisdiction and granted the motion to dismiss for failure to state a claim for relief.