The Walt Disney Company has another fight on its hands as a result of the fallout of its patent standoff with the U.S. company InterDigital. A European consumer rights group called Euroconsumers has just filed the first lawsuit against the company on behalf of subscribers, who have lost access to premium features such as 4K HDR and 3D on Disney+.
The streaming service hasn’t offered Dolby Vision or 3D content to subscribers in 11 EU countries since the middle of June, while 4K and HDR10 content have been absent since July. According to FlatpanelsHD, the affected countries are Austria, Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Portugal, Romania and Sweden.
Disney+ cannot provide the services in those countries after losing a lawsuit to InterDigital regarding its refusal to pay licenses for certain streaming technologies and codecs the American firm claims to hold patents for.
Rather than come to an agreement and fork over expensive fees each month, Disney+ has tried to argue that it shouldn’t have to pay, claiming that InterDigital is essentially just a patent troll. For its part, InterDigital rejects that accusation, pointing to the millions of dollars it spends on wireless research and development each year. But it doesn’t sell any products or services based on those technologies.
At the same time, Disney has tried to implement a workaround that avoids using InterDigital’s claimed tech, which relates to the popular HEVC codec. It has instead used VP9 to stream some 4K content to subscribers in the 11 countries, but its effectiveness is limited. That codec only works on some types of devices, and InterDigital has started claiming it holds patents relating to VP9, too.
Disney+ has also lost support for AirPlay 2 and Google Cast smartphone mirroring features in some of the countries.
European consumers had been fairly patient with Disney until now, but after nine months of intermittent 4K and HDR services that are costing them more money, they seem to have reached their limit. Euroconsumers is a Europe-wide umbrella organisation that represents consumer rights groups in six countries. Its partners include Italy’s Altroconsumo, Belgium’s Testachats and DECO PROteste in Portugal.
Euroconsumers sent a cease-and-desist letter to Disney on October 6, demanding reduced prices for its premium subscriptions, along with compensation for account holders of €5 per month. In the 11 affected countries, that adds up to around €63 million. The letter gives Disney 14 days to take action before Euroconsumers files a complaint with the EU’s Consumer Protection Network and the authorities of the countries concerned.
Disney could potentially be fined 4% of its annual turnover in each country if it’s found guilty of breaking EU consumer laws.
The demand cites the Digital Content Directive, which states that any patent dispute involving a services provider does not free it from its obligations to deliver a service as advertised. It also says consumers should receive a proportionate price reduction in cases where patent disputes result in significant changes to what a service had advertised. The directive also states consumers are entitled to cancel their subscriptions free of charge.
Disney may be guilty of breaking the directive’s rules if it is found to have continued advertising “4K UHD HDR” benefits to premium subscribers when those features were no longer available. If it’s deemed to have failed to properly inform subscribers, that may constitute another breach.
In the cease-and-desist order, Euroconsumers Head of Litigation Marco Sciadone said patent disputes should not come at the expense of consumer rights. He argues that if a company is no longer able to deliver a premium service as advertised, it needs to take responsibility for that and offer appropriate remedies to those who’ve already paid for it.
“It has to offer more than merely refunds that subscribers have to chase,” Sciadone said. “We expect Disney+ to ensure fair, transparent and automatic compensation for all affected consumers.”
It’s not clear yet whether Disney will fight the complaint, but the company told FlatpanelsHD in a statement that it cannot cave in to InterDigital’s patent demands, which it deems to be unfair. To do so would result in higher costs being passed on to subscribers anyway. A spokesperson also said the company is working to restore 4K and HDR in the affected countries with a different technology.
“We will respond to Euroconsumers directly and look forward to working with them,” Disney’s dry response continued. “We acted quickly to put solutions in place to support affected consumers. We have complied with the court rulings while continuing to challenge the underlying claims and meet our obligations to consumers. DIsney supports the protection of intellectual property and has always been willing to pay reasonable license fees for patents.”
