Dolby Sues Roku for Allegedly Distributing its Technology Improperly
The suit alleges that Dolby tech has been integrated into Roku streaming players without meeting the conditions of a 2016 licensing agreement.
Roku has made it more difficult for customers to bring lawsuits against it in recent months, but it appears corporate partners are another story. According to reporting from Reuters, last week, Dolby brought suit against Roku in California federal court, alleging that the streaming device and smart TV manufacturer has been improperly integrating Dolby technology into its products against the terms of a 2016 licensing agreement between the two companies.
Key Details:
- Dolby says that Roku has distributed millions of copies of its audio and imaging software without conforming to the licensing agreement between the two.
- Roku allegedly folded Dolby’s intellectual property into its devices sometime between 2016 and 2020 and lied to Dolby about its use.
- Dolby is asking for damages, and an order blocking Roku from improperly distributing its technology.
Roku is at odds with Dolby for allegedly selling millions of Roku-branded devices using Dolby technology without complying with the terms of a 2016 licensing agreement between the two. According to Dolby, sometime between 2016 and 2020 Roku secretly began incorporating Dolby audio and visual software into its devices, lied to Dolby about doing so, and refused to allow an audit to see what it was doing with Dolby’s tech.
The two companies do have a licensing agreement in place, which was signed in 2016, that allows Roku to distribute Dolby software with conditions in place. The agreement stipulations include royalty payments from Roku and compliance with Dolby quality assurance tests and reporting requirements.
Dolby is asking the court for an unspecified amount in damages, as well as an order to stop Roku from distributing its software improperly. Roku’s streaming platform accounted for $3 billion in revenue in 2023, according to the suit. In its most recent quarterly earnings report, Roku said its devices were available in more than 120 million homes, and that it had 83.6 million monthly active users on The Roku Channel streaming service.
The real irony in this case for Roku is that it has done so much work to prevent customers from filing lawsuits against it. In March, the company unveiled new terms of service for customers, which prevented Roku users from watching anything on their devices until they agreed. Embedded in those terms was a clause that made it nearly impossible for viewers to sue Roku.
Just a few weeks later, it was revealed that Roku had suffered a data breach that affected hundreds of thousands of customers. Hundreds of users had their payment information stolen to purchase Roku devices or streaming subscriptions unlawfully due to the breach.
Now Roku has another mess on its hands, and despite a successful second quarter in financial terms, this suit will likely darken the mood of executives around the company. The suit could have impacts on how device manufacturers and software companies do business in the future, though it’s unlikely to keep anyone from doing business with Roku, which had the best-selling TV and streaming device operating system on the market last quarter.
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