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Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 1 of 70 PageID #: 1
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`
`VIDEOLABS, INC., and
`VL COLLECTIVE IP LLC
`
`
`Plaintiffs,
`
`
`
`
` v.
`
`NETFLIX, INC.
`
`
`Defendant.
`
`
`
`
`
`Civil Action No.
`
`JURY TRIAL DEMANDED
`
`
`
`
`
`Plaintiffs VideoLabs, Inc. (“VL”) and VL Collective IP LLC (“VL IP”) (collectively
`
`“VideoLabs” or “Plaintiffs”) file this Complaint against Defendant Netflix Inc. (“Netflix” or
`
`“Defendant”), and in support thereof alleges as follows:
`
`1.
`
`Digital video has become fundamental to how society interacts, communicates,
`
`educates, and entertains. In fact, video consumption now accounts for more than 82% of all
`
`Internet traffic.1 The ability to reliably provide high-quality video drives the growth of digital
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`platforms that are increasingly integral to the global economy.
`
`2.
`
`The advent of high-quality video as a staple of digital consumption did not happen
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`instantaneously. As with any complex technology, digital video presented implementation
`
`challenges. Many companies spent many years and resources to develop new and innovative
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`technologies that guide how video is created, streamed, secured, managed, and consumed.
`
`
`1 See Ex. 1, The Sustainable Future of Video Entertainment, INTERDIGITAL (Aug. 2020),
`https://www.interdigital.com/white_papers/the-sustainable-future-of-video-
`entertainment?submit_success=true (last visited Jan. 20, 2022).
`
`1
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`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 2 of 70 PageID #: 2
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`3.
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`Various inventions and technological advances have transformed digital video.
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`Some of these technologies, such as techniques to efficiently compress video file size, address
`
`central challenges to storing and transmitting video. Others enable video content to be efficiently
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`and securely streamed to the many user devices that exist today. Yet others involve managing and
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`organizing videos to provide viewers easier access to content and address how they interact with
`
`content. Successful video streaming thus requires myriad technologies that necessarily coordinate
`
`with one another.
`
`4.
`
`Because various companies played roles in developing the foundational technology
`
`for today’s digital video, no single company can provide the high-quality video experiences that
`
`consumers have come to expect without using technology owned by other companies.
`
`5.
`
`The founders of VideoLabs recognized this problem and understood that collective
`
`action was needed to address it. If the companies that developed critical video technologies
`
`worked together, everyone could benefit: innovators could receive fair compensation for their
`
`contributions, companies deploying video technology could respect the innovators’ patents and
`
`license them on affordable and predictable terms, and consumers could experience better and more
`
`affordable video technology.
`
`6.
`
`In 2019, with support from widely-recognized industry leaders, VideoLabs
`
`launched a platform to achieve these goals. VideoLabs spent millions of dollars and thousands of
`
`hours analyzing the video space and identifying the patents that reflect the innovations with the
`
`highest impact. VideoLabs then compiled a portfolio of these core patents, obtaining them from
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`leading companies, including Hewlett Packard Enterprise, Alcatel-Lucent S.A., Siemens AG,
`
`Swisscom AG, 3Com, Panasonic, LG, and Nokia.
`
`7.
`
`VideoLabs then opened-up membership on its platform to all willing companies.
`
`2
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`

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`In exchange for low-cost membership or licensing fees, VideoLabs provides access to its patent
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`portfolio and a commitment to seek out the most important patents in the video industry and clear
`
`them. Many prominent companies recognized the benefits of the VideoLabs platform and worked
`
`with VideoLabs to efficiently and responsibly license its video technology patents.
`
`8.
`
`Unfortunately, Netflix has not. Netflix is one of the world’s largest users of video
`
`technologies and operates the world’s most popular streaming TV service with over 213 million
`
`subscribers.2 It is enmeshed in practically every aspect of video, from creation to processing,
`
`delivery, and display.3
`
`9.
`
`VideoLabs contacted Netflix multiple times to offer Netflix the benefit of
`
`VideoLabs’ platform and to alert it to its use of VideoLabs’ patented technology. As an added
`
`incentive for engaging in good faith discussion, VideoLabs offered to conduct discussions with
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`Netflix under an NDA that would eliminate any legal risk from participating in the discussions,
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`including a 3-month mutual legal standstill which would provide sufficient time for full and open
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`dialogue. After many months of ignoring VideoLabs’ entreaties, Netflix finally responded. But
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`Netflix foreclosed the possibility of good faith discussions by insisting that VideoLabs agree not
`
`
`2 See, e.g., Ex. 2 at 3, https://www.cnbc.com/2021/11/10/disney-netflix-and-other-
`streaming-services-subs-arpu-q3-
`2021.html#:~:text=Netflix%20continues%20to%20outpace%20the,around%20paying%20custo
`mers%20and%20ARPU; Ex. 3 at 6-7 https://screenrant.com/ten-most-popular-streaming-
`services-ranked-subscriber-numbers/; Ex. 4 at 3-4, https://www.businessofapps.com/data/netflix-
`statistics/.
`3 See, e.g., Ex. 5 at 1, https://www.statista.com/statistics/883491/netflix-original-content-
`titles/; Ex. 6 at 1-3, https://netflixtechblog.com/high-quality-video-encoding-at-scale-
`d159db052746; Ex. 7 at 1-9, https://www.comparitech.com/blog/vpn-privacy/netflix-statistics-
`facts-figures/; Ex. 8 at 1-9, https://netflixtechblog.com/ava-the-art-and-science-of-image-
`discovery-at-netflix-a442f163af6; Ex. 9 at 1-6, https://www.webdesignerdepot.com/2020/02/3-
`lessons-ux-designers-can-take-from-netflix/; Ex. 10 at 1-4, https://uxmag.com/articles/how-
`netflix-uses-psychology-to-perfect-their-customer-experience; Ex. 11 at 1-12,
`https://uxplanet.org/the-netflix-conundrum-overcoming-the-paradox-of-choice-a-ux-case-study-
`95b19acdc28c.
`
`3
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`

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`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 4 of 70 PageID #: 4
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`to enforce its patent rights against Netflix for an indefinite period of time. When VideoLabs
`
`declined this demand, Netflix ceased responding to any of VideoLabs’ communications.
`
`10.
`
`Faced with this Hobson’s choice, VideoLabs feels that it has no recourse but to file
`
`this action to stop Netflix’s unauthorized use of VideoLabs’ patents. Failure to take action would
`
`undermine the viability of VideoLabs’ platform and permit further free-riding by Netflix of the
`
`significant innovations of VideoLabs’ patents.
`
`11.
`
`This case is ultimately about ensuring the integrity of the patent system and
`
`compensating patent owners for their protected innovations. Respect for intellectual property, as
`
`the law requires, is essential to incentivize innovation and promote technological progress.
`
`Accordingly, VideoLabs brings this action under the patent laws, 35 U.S.C. § 1 et seq., in order to
`
`stop Netflix’s willful infringement of U.S. Patent Nos. 8,139,878, 7,440,559, and 7,233,790
`
`(collectively, “patents-in-suit”).
`
`12.
`
`VL was founded in 2018 as part of an industry-sponsored and -funded effort to
`
`reduce the cost and risk of technological gridlock associated with diverse patent ownership. VL’s
`
`leadership has decades of experience in intellectual property licensing, during which they have
`
`completed over 1,000 intellectual property transactions worldwide and drawn more than $6 billion
`
`in revenue.
`
`13.
`
`VL is a corporation organized under the laws of the State of Delaware, with its
`
`principal place of business in Palo Alto, California.
`
`14.
`
`15.
`
`VL IP was founded in 2019 as a subsidiary of VideoLabs, Inc.
`
`VL IP is a corporation organized under the laws of the State of Delaware, with its
`
`principal place of business in Palo Alto, California.
`
`16.
`
`On information and belief, Netflix is a publicly traded corporation organized and
`
`4
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`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 5 of 70 PageID #: 5
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`existing under the laws of the State of Delaware and is registered to do business in the State of
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`Delaware. Netflix’s headquarters are located at 100 Winchester Circle, Los Gatos, California
`
`95032.
`
`17.
`
`This is an action for patent infringement arising under the patent laws of the United
`
`States. This Court has jurisdiction over the subject matter of this action under 28 U.S.C. §§ 1331
`
`and 1338(a), 15 U.S.C. § 1121, and 28 U.S.C. § 1367(a).
`
`18.
`
`This Court has personal jurisdiction over Netflix because, on information and
`
`belief, Netflix conducts business in and has committed acts of patent infringement in this District,
`
`and has established minimum contacts with this forum state such that the exercise of jurisdiction
`
`over Netflix would not offend traditional notions of fair play and substantial justice. Netflix is
`
`incorporated in this District. On information and belief, Netflix offers products and/or services,
`
`including those accused herein of infringement, to customers and potential customers located in
`
`this District.
`
`19.
`
`Venue is proper in this Court under 28 U.S.C. §§ 1391 and 1400(b). Netflix resides
`
`in this District. Netflix has chosen to incorporate in the state of Delaware, thereby receiving the
`
`benefits offered to Delaware corporations. Netflix must accordingly assume responsibilities to
`
`Delaware and its citizens.
`
`20.
`
`Further, on information and belief, Netflix has offered and sold, and continues to
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`offer and sell, its infringing products and services in this District. On information and belief,
`
`Netflix designs, uses, distributes, sells, and/or offers to sell the infringing products and services to
`
`consumers and businesses in this District.
`
`21.
`
`On information and belief, Netflix is a corporation with global reach and annual
`
`revenue in the billions of dollars. Netflix accordingly cannot reasonably claim it would be
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`5
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`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 6 of 70 PageID #: 6
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`inconvenient to litigate in the forum in which it is incorporated.
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`22. Moreover, litigating in this District is convenient and would serve the interests of
`
`judicial economy because of a related pending lawsuit in this District.4
`
`
`
`23.
`
`U.S. Patent No. 8,139,878 (the “’878 Patent”), titled “Picture Coding Method and
`
`Picture Decoding Method,” issued on March 20, 2012. VL owns all rights and title to the ’878
`
`Patent, as necessary to bring this action. A true and correct copy of the ’878 Patent is attached as
`
`Exhibit 12.
`
`24.
`
`The ’878 Patent was developed by engineers at Panasonic, one of the largest
`
`consumer electronics companies at the time of the invention and a major innovator in Internet
`
`technologies. In 2002, when patent applications were first filed for the ’878 Patent, Panasonic was
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`a world leader in digital video technologies.5 Panasonic developed video coding technologies and
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`designed consumer electronics –– including TVs, DVD players, and memory cards –– for storing,
`
`processing, and displaying video content.6 The inventions of the ’878 Patent are the result of years
`
`of research by teams of Panasonic engineers working at the cutting edge of video processing and
`
`encoding.
`
`25.
`
`Native video files are massive. Modern digital video cameras used by premier
`
`television and movie studios capture images at incredibly fast rates (ranging from 30 frames per
`
`
`4 See Starz Entertainment, LLC v. VL Collective IP, LLC, 1-21-cv-01448 (D. Del. filed
`Oct. 13, 2021).
`5 See, e.g., Ex. 13 at 6, 10-17, 41, Annual Report 2002, National/Panasonic Matsushita
`Electric, available at https://www.annualreportowl.com/Panasonic/2002/Annual%20Report (last
`accessed Jan. 20, 2022).
`6 See id.
`
`6
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`second up to 300 frames per second) and extremely high resolutions (up to “5k,” or 5120 x 2880,
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`for a total size of 14,745,600 pixels per frame). Storing just an hour of this raw content requires
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`more than 300 GB of memory.7 Most modern TVs, laptops, tablets, and smartphones cannot
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`possibly store and play such large files.
`
`26.
`
`Even if they could, there would be little point from the perspective of on-demand
`
`content delivery: Internet speeds are far too slow to stream such massive video files. The fact is
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`that transmitting high quality audiovisual content is simply not possible without powerful
`
`compression technologies. Streaming even just standard high-definition content (720p) requires
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`network bandwidth of approximately 1.5 Gbps,8 which is about 35 times faster than the average
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`Internet speed in the United States.9 “Encoding” and “decoding,” which respectively refer to the
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`processes of compressing and decompressing content, are thus essential to applications such as
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`video streaming, digital television, and videoconferencing.
`
`27.
`
`Encoding video content allows the content to be made small for storage and
`
`transmission, while decoding permits the viewer to watch high-quality content on his or her device.
`
`In addition to making real-time streaming of content possible, every incremental increase in
`
`compression efficiency yields substantial benefits to companies that store, process, transmit, or
`
`access video. For example, if a video streaming company can cut the size of each of its movie
`
`files in half, then it reasons that it only needs half the numbers of servers to store its movies, half
`
`
`7 See Ex. 14, How Many GB Is a 2 Hour 4k Movie?, https://gamingsection.net/news/how-
`many-gb-is-a-2-hour-4k-movie/ (last visited Jan. 20, 2022).
`8 See Ex. 15, Bryan Samis, Back to Basics: GOPs Explained, AWS MEDIA BLOG (May
`28, 2020), https://aws.amazon.com/blogs/media/part-1-back-to-basics-gops-explained/ (last
`visited Jan. 20, 2022).
`9 See Ex. 16, Average U.S. Internet Speed is 42.86 Mbps, ETI (Feb. 2, 2021),
`https://etisoftware.com/resources/blog/report-average-u-s-internet-speed-is-42-86-mbps/ (last
`visited Jan. 20, 2022).
`
`7
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`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 8 of 70 PageID #: 8
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`the network bandwidth to transmit its movies, and half of all other related expenses, such as energy
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`costs and staffing resources.
`
`28.
`
`The ’878 Patent describes breakthrough techniques for encoding and decoding
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`audiovisual content so that it can be transmitted and stored with fewer resources. The patent vastly
`
`improves upon existing methods, and the core technology it describes has been used throughout
`
`the industry for years as the gold standard for coding video.
`
`1.
`
`Background On Coding Technology
`
`29.
`
`Video “coding” refers to both the encoding and decoding of video content. Video
`
`compression techniques minimize the size of the data that is sent between the encoder and the
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`decoder by removing redundancies and imperceivable changes and then efficiently representing
`
`the remaining data for transmission.
`
`30.
`
`Video is comprised of a series of frames. These frames are successively output to
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`create the moving pictures that we recognize as video.
`
`
`Ex. 17, Iain E. Richardson, The H.264 Advanced Video Compression Standard (2d. ed. 2010)
`
`(hereinafter “Richardson”), at 33.
`
`31.
`
`In the early 2000s, certain techniques existed to reduce the amount of data needed
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`to describe each frame without any loss in picture quality. For example, if there are a series of 50
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`white pixels in a row followed by 75 green pixels, then it is more efficient to store the fact that
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`8
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`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 9 of 70 PageID #: 9
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`there are 50 white pixels followed by 75 green pixels than to store the value of all 125 pixels. This
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`algorithm, which reduces the redundancy stemming from repeating pixels within a frame, yielded
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`substantial benefits.
`
`32.
`
`Video engineers also realized that, very often, not much changes between
`
`successive frames. In the images shown above, for example, the changes between frames 1 and 2
`
`are largely concentrated in the area near the book. As a result, it is not necessary to send the
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`complete data for every frame of a video. Instead, frames can be sent periodically at strategic
`
`points, such as when there is a scene change that creates major differences between successive
`
`frames. Those strategic frames — called “key frames” — could be used to “predict” other frames
`
`nearby in time by analyzing each frame and storing the differences from one frame to the next.
`
`33.
`
`Further research yielded additional advances in what became known as predictive
`
`coding. Video engineers realized that it was advantageous to divide each frame into blocks, as
`
`shown below.
`
`34.
`
`These blocks could be analyzed and used to predict the pixels in the same block in
`
`surrounding
`
`frames
`
`(“inter-picture prediction,” also called “temporal compression”).
`
`Additionally, these blocks could be analyzed to predict the pixels in surrounding blocks in the
`
`
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`9
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`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 10 of 70 PageID #: 10
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`same frame (“intra-picture prediction,” also called “spatial compression”). While predictive
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`coding does not always recreate frames that are identical to the original frames, the differences are
`
`so minor as to be imperceptible. For example, in the middle of an intense action sequence, a frame
`
`might display a pixel as blue even though it should be green because doing so enables the image
`
`to be represented more efficiently. This minor alteration from the original content will go
`
`unnoticed by the viewer, who is distracted by all the activity.
`
`35.
`
`Once redundancy in the video content has been minimized and imperceptible
`
`details have been streamlined, a process called “entropy encoding” further compresses the data by
`
`using as few bits to represent the data as possible, while still ensuring fidelity to the original visual
`
`content. This is achieved by allocating the fewest bits to commonly appearing bit sequences, and
`
`the most bits to infrequently occurring bit sequences. By way of analogy, when training your dog,
`
`the commands you use most frequently are likely the shortest, single-word commands, like “sit”
`
`and “no.” But commands that you need less frequently may be longer, such as “wait for it” and
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`“roll over.” In this way, over the course of a week, you expend fewer (verbal) resources. Entropy
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`encoding applies this same principle to the bits of data that comprise video content.
`
`36.
`
`There are standardized ways to represent sequences of bits, and depending on the
`
`type of entropy coding, these sequences are stored in either “coding tables” or “probability tables.”
`
`Entropy coding involves selecting the optimal table for the data being transmitted and ensuring
`
`that the decoder knows the proper table to use when decoding the data.
`
`37.
`
`It was in this context that the inventors of the ’878 Patent made their contributions.
`
`2.
`
`The ’878 Patent
`
`38.
`
`The ’878 Patent is directed to encoding audio and video content. With respect to
`
`video, the ’878 Patent describes a type of coding called “Context-based Adaptive Variable Length
`
`Coding,” or “CAVLC.” See, e.g., Ex. 12, ’878 Patent at col. 1, ll. 49-52. Content encoded using
`
`10
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`the techniques of the ’878 Patent would then be stored or transmitted before ultimately being
`
`decoded for playback.
`
`39. When encoded, the image data in a particular image block is represented by, among
`
`other things, its “coefficients.” Id. at col. 1, ll. 63-67; col. 7, ll. 38-43; col. 21, ll. 60-66; col. 25,
`
`ll. 29-36. Roughly speaking, larger coefficients for a block indicate a larger amount of changes in
`
`that block as compared with a reference block. See id. For many blocks, there are no such changes,
`
`and so all the coefficients have a value of zero. See id. at col. 21, ll. 60-66. The inventors of the
`
`’878 Patent recognized that these “zero-coefficient” blocks presented an opportunity for further
`
`compression. See, e.g., id. at col. 1, ll. 49-52.
`
`40.
`
`They realized that the decoder did not need to know every single time a zero-
`
`coefficient block existed; rather, the decoder needs to know only when blocks have non-zero
`
`coefficients. They devised a technique wherein data about zero-coefficient blocks are effectively
`
`not encoded at all, and only non-zero coefficient block data is stored and transmitted. See, e.g., id.
`
`at col. 1, ll.49-52, 56-62; col. 1, l. 65 – col. 2, l. 10. The inventors thereby achieved nearly perfect
`
`compression for these zero-coefficient blocks by communicating them practically without sending
`
`any information whatsoever. See id. at col. 2, ll.11-14.
`
`41.
`
`The inventors also made a substantial contribution to the efficiency of entropy
`
`coding. They recognized that the coefficients in neighboring blocks were a good predictor of the
`
`coefficients in the block being analyzed, and so could be used to select the optimal coding table
`
`for the block, yielding enhanced compression. See, e.g., id. at col. 9, ll. 34-37; col. 13, ll. 4-11.
`
`Prior techniques lacked this level of sophistication. They did not take advantage of the predictive
`
`power provided by analyzing the coefficients of the surrounding blocks. They would also use the
`
`same coding table for both inter- and intra-predictive coding, which was inefficient because there
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`could be significant differences between neighboring blocks in the current frame and blocks in
`
`subsequent frames. See, e.g., id. at col. 1, ll. 33-38. Due to these limitations in the use of coding
`
`tables, compression efficiency in previously known entropy coding techniques would vary
`
`significantly between different types of content, and generally decreased as the quality of content
`
`increased. Id. at col. 1, ll.39-44. These problems (and others) were overcome by the inventors of
`
`the ’878 Patent.
`
`42.
`
`The innovations of the ’878 Patent provided a significant advance in compression
`
`that was recognized throughout the industry. In fact, the compression techniques of the ’878 Patent
`
`are used in the ubiquitous video codec, H.264. H.264 was revolutionary in the video industry, as
`
`it provided a quantum leap of improvement over the video codecs that had previously been
`
`commonly used, such as Motion JPEG video and MPEG-2. In particular, H.264 “has an 80%
`
`lower bitrate than Motion JPEG video” and “the bitrate savings can be as much as 50% or more
`
`compared to MPEG-2.”10
`
`
`
`43.
`
`U.S. Patent No. 7,440,559 (the “’559 Patent”), titled “System and Associated
`
`Terminal, Method and Computer Program Product for Controlling the Flow of Content,” issued
`
`on October 21, 2008. VL IP owns all rights and title to the ’559 Patent, as necessary to bring this
`
`action. A true and correct copy of the ’559 Patent is attached as Exhibit 18.
`
`44.
`
`The original assignee of the ’559 Patent is Nokia Corporation, one of the largest
`
`consumer electronics and information technology companies in the world at the time of the
`
`invention and a major innovator of digital communications technologies. In 2003, the year in
`
`
`10 See Ex. 19, What is H264 Encoding?, BlackBox, https://www.blackbox.co.uk/gb-
`gb/page/38313/Resources/Technical-Resources/Black-Box-Explains/Multimedia/What-is-H264-
`video-encoding/, at 2 (last visited Jan. 20, 2022).
`
`12
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`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 13 of 70 PageID #: 13
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`which Nokia first filed for patent protection for the innovations of the ’559 Patent, Nokia was a
`
`world leader in mobile device sales and technology. That year, Nokia launched its first media
`
`device, the Nokia 7700, and invested nearly one billion euros in research and development.11
`
`45.
`
`Customers are consuming more content via streaming services, commonly referred
`
`to in the industry as OTT (Over-The-Top) services, than ever before. At the same time,
`
`competition among video services is increasing. The number of OTT providers is constantly
`
`growing, and consumer confusion is mounting. Consumers expect the same level of innovation
`
`and development for OTT video as they do for other online services, and broadcasters and content
`
`providers are under constant pressure to distinguish their offerings through personalization and
`
`availability of innovative apps that entice and retain customers. The management, curation and
`
`optimization of audience viewing experiences across screens is becoming a core customer
`
`need, and at the same time an opportunity for service differentiation.
`
`46.
`
`In the early 2000s, the deployment of high bit-rate mobile networks such as 3G
`
`enabled the delivery of new digital services, including video calling and streaming. See, e.g.,
`
`Ex.18, ’559 Patent, col. 1, ll. 17-40. While audio could be delivered adequately using the bit rates
`
`available at the time, the limited transfer rates made it difficult to handle data-intensive tasks like
`
`delivering high quality full-motion video. See, e.g., id. For this and other reasons, alternative
`
`broadband delivery techniques were being investigated to support the delivery of data-intensive
`
`content. As digital broadband data broadcast networks evolved, there was increasing interest in
`
`combining use of mobile telecommunications with a broadband delivery technique to achieve
`
`efficient delivery of digital services to users on the move. But this led to new technical challenges
`
`
`11 See Ex. 20, Press Release, Nokia, Nokia Closes 2003 With Excellent Fourth Quarter,
`(Jan. 24, 2004), at 6, 9, available at https://www.nokia.com/system/files/files/q4-2003-earnings-
`release-pdf.pdf.
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`13
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`for content providers as they had to learn new techniques to efficiently deliver content to the
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`myriad mobile devices that could consume broadband content over mobile networks.
`
`47.
`
`At the time, mobile terminals would typically download content by “pulling” it
`
`from a server. See, e.g., id. at col. 2, ll. 25-39. This is because content providers tended to use
`
`content flow policies that had been used in non-mobile networks. See id. In those cases, the
`
`content provider typically maintained control over the content flow policy to the mobile terminal
`
`to enforce content access rights requirements. See id. The “pull” technique was thus rooted in the
`
`industry’s established habits, which ignored input from the devices consuming the content that
`
`might otherwise affect an operator’s content flow policy. Such outdated content flow policies
`
`were inefficient and undesirable as broadband content became accessible to mobile users
`
`everywhere and with myriad devices. When controlling content sent to a mobile device, they did
`
`not take into account, for example, the user preferences, terminal capabilities, previous content
`
`downloads, and/or use of previous content for that device. See id. at col. 2, ll. 40-53.
`
`48.
`
`The ’559 Patent addresses these problems, among others, by giving a network entity
`
`control of the flow of content to the terminal based, in part, on status information from the terminal.
`
`See ’559 Patent, col. 2, ln. 57 – col. 3, ln. 9. Content flow is controlled, for example, by instructing
`
`the terminal to perform actions, such as downloading pieces of content from an origin server, or
`
`other content related actions based, in part, on the status information provided to the network entity
`
`from the terminal. See id. at col. 3, ll. 20-51. For example, the content provider can control the
`
`downloading and storage of content, as well as the deletion of content, at the terminal based upon
`
`status information regarding the terminal, and if so desired, further based upon status information
`
`regarding a source of content, such as the digital broadcast receiver, an origin server, or the like.
`
`See id. at col. 11, ll. 6-30. In that way, the flow of content to the terminal is more efficient since
`
`14
`
`

`

`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 15 of 70 PageID #: 15
`
`the flow of new content to the terminal is affected by aspects of the terminal itself. See id. at col.
`
`10, ll. 45-59.
`
`
`
`49.
`
`U.S. Patent No. 7,233,790 (the “’790 Patent”), titled “Device Capability Based
`
`Discovery, Packaging and Provisioning of Content for Wireless Mobile Devices,” issued on June
`
`19, 2007. VL owns all rights and title to the ’790 Patent, as necessary to bring this action. A true
`
`and correct copy of the ’790 Patent is attached as Exhibit 21.
`
`50.
`
`The original assignee of the ’790 Patent is Openwave Systems, Inc. (“Openwave”),
`
`a leading developer of software applications for mobile devices. In the early 2000s, when the
`
`inventions of the ’790 Patent were in development, Openwave’s operating system and web
`
`browser software was being installed on billions of mobile phones.12 This provided Openwave
`
`with a front seat to the many new products and services available to consumers on mobile devices.
`
`51.
`
`The TV industry has been heavily affected by the rise of video on demand (“VOD”)
`
`and over-the-top (“OTT”) services, which allow users to conveniently stream over the Internet
`
`their favorite video content and watch it at any time, in any place, and in the format that best fits
`
`their needs. Today, digital video content is available from myriad streaming services and Pay TV
`
`operators and can be consumed on an ever-growing number of different connected consumer
`
`devices.
`
`52.
`
`In the early 2000s, when digital video delivery over the Internet was in its nascent
`
`period, delivering media to large numbers of mobile users presented challenges due to the stringent
`
`
`12 See Ex. 22, Openwave Announces Mobile Browser Integration for Qualcomm’s Brew
`Solution, INTERNET ARCHIVE WAYBACK MACHINE, (Sept. 12, 2006),
`https://web.archive.org/web/20061127222501/http://www.openwave.com/us/news_room/press_r
`eleases/2006/20060912_opwv_brew_0912.htm, at 1 (last visited Jan. 11, 2022).
`
`15
`
`

`

`Case 1:22-cv-00229-UNA Document 1 Filed 02/23/22 Page 16 of 70 PageID #: 16
`
`requirements of streaming media, mobility, wireless, and scaling to support large numbers of users.
`
`While advances in next-generation cellular networks and wireless networks were bringing higher
`
`bandwidths to mobile users, these higher bandwidths naturally created the demand for media-rich
`
`content, which in turn created requirements for a media delivery infrastructure that could handle
`
`the challenges of streaming media, user mobility, and scaling to large numbers of users accessing
`
`content with different types of devices. Traditional content delivery techniques that had previously
`
`served the market reasonably well at the time were no longer capable of meeting current needs.
`
`53.
`
`Indeed, these techniques were rooted in the nature of the old technologies, in which
`
`content was prepared and packaged once, for distribution over a traditional broadcast medium and
`
`in a singular, conventional broadcast format. From a content supplier’s perspective, an
`
`impediment to the efficient distribution of digital content was the fact that different connected
`
`devices often required different content packaging formats and provisioning protocols. In order
`
`for the content supplier to make a given item of digital content available to multiple connected
`
`devices supporting different provisioning models, a digital content supplier would normally have
`
`to deploy that item of content multiple times, packaging it differently for each of the provisioning
`
`models. Needing to package and provision digital content in a manner that is suitable for all of
`
`the connected devices in the marketplace is very burdensome. Moreover, it was a challenge for
`
`content sup

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