Dolby laboratories tells us a fascinating story how over many decades various business models were developed as reaction to changing market environments and how they were protected with IP. Dolby laboratories themselves were founded in 1965 in London by inventor Ray Dolby. He first developed a noise reduction system for cassette tapes and soon started to target the professional markets for various audio equipment. But also the general consumer electronics market was interested to sell devices with noise reduction technology. Here, Dolby decided to use a licensing strategy, so that the device manufacturers with their ability to produce large number of devices focus on the manufacturing and selling, while his small team of experts focusses on the improvement of the technology.
Next, Dolby targeted the Hollywood ecosystem to become the number 1 professional film equipment supplier. The strategy here was to create connections with the movie producers and directors and supply them for a low price with the necessary technology and equipment. The revenue was then created through the cinemas, who needed to buy equipment to show the movies created with Dolby technology.
During the maturing of the consumer electronics market for audio equipment two different types of market players emerged, the component makers for audio equipment on the one hand and the system integrators on the other. Here Dolby created two new and separate licensing schemes. The chipmakers buy a simple license to produce components, which incorporate the Dolby technology, and pay royalties for that. The implementors, i.e. sellers of end consumer products, are taking a different set of licenses, where they closely cooperate with Dolby in the testing and improvement of consumer electronics, so that they can use the Dolby logo on their devices for a mutual benefit.
With the digital transformation of the audio industry new challenges for Dolby arose. Dolby took here a two-pronged approach with creating new solutions for digital movies, but also creating a analog-digital hybrid approach, which made movies compatible with both analog and digital equipment and helped studios with the transition to the new digital era. With the digital transformation in full swing, Dolby started then to enter a period of technological standardization, because the need to play digital audios on many different devices demanded a high degree of interoperability, which was only possible to reach with standardization.
For more detailed information, please read the case study about “Doing intellectual property the Dolby Labs way” at Doing intellectual property the Dolby Labs way – IAM (iam-media.com).
1 . Please describe the following business strategy and aligned IP strategy by Dolby Labs:
a . Group 1: Inflexion point one: sell pickaxes or mine for gold?; What was Dolby’s business strategy to enter the consumer electronics market in the 1960s and which IP strategy did it use for it?
b . Group 2: Inflexion point two: Hollywood and the ecosystem approach; What was Dolby’s business strategy to enter the Hollywood film industry in the 1970s and which IP strategy did it use for it?
c . Group 3: Inflexion point three: crafting a new licensing model; What was Dolby’s business strategy to stay successful in the more complex consumer electronics market of the 1980s and which IP strategy did it use for it?
d . Group 4: Inflexion point four: innovating for a new digital world; What was Dolby’s business strategy to enter the digital markets in the 1990s and which IP strategy did it use for it?
e . Group 5: Inflexion point five: the push into standards and multilateral licensing; What was Dolby’s business strategy to answer the challenges of interoperability in the 2000s and which IP strategy did it use for it?
2 . Please identify relevant IP rights (patents, trademarks, design rights etc.), which supported the identified IP strategy of Dolby in the past and today.
3 . Please identify a company, which uses a similar IP strategy to Dolby in another industry, and describe which aspects of the IP strategy are the same and which needed to be adapted.
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