Velos Media LLC v. Walt Disney Co

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Velos Media, LLC (Delaware)
  • Defendant: The Walt Disney Company; Disney Media and Entertainment Distribution LLC; Disney DTC LLC; Disney Streaming Services LLC; Disney Entertainment & Sports LLC; Disney Platform Distribution, Inc.; BAMTech, LLC; Hulu, LLC; and ESPN, Inc. (collectively "Disney") (Delaware)
  • Plaintiff's Counsel: McKool Smith, P.C.
• Case Identification: 2:26-cv-03052, C.D. Cal., 03/20/2026
• Venue Allegations: Venue is alleged to be proper as Defendants have committed acts of infringement in the district and maintain regular and established places of business, with specific offices for The Walt Disney Company, Disney Entertainment & Sports LLC, Disney Streaming Services LLC, ESPN, Inc., and Hulu, LLC located within the Central District of California.
• Core Dispute: Plaintiff alleges that Defendant's streaming services (Disney+, Hulu, Hulu Live, and ESPN+) infringe six patents related to video compression and decoding technologies compliant with the H.265/HEVC standard.
• Technical Context: The technology at issue is High Efficiency Video Coding (HEVC), also known as the H.265 standard, which is a foundational technology for compressing digital video to enable high-quality streaming over the internet with reduced bandwidth.
• Key Procedural History: The complaint details a history of unsuccessful licensing negotiations, alleging that Plaintiff, through the Avanci Video patent pool and directly, made good-faith offers to license its patent portfolio to Disney on reasonable and non-discriminatory (RAND) terms, which Disney did not accept. Plaintiff alleges Disney has been aware of the patents since at least December 2025.

Case Timeline

Date	Event
2011-01-21	'843 Patent - Earliest Priority Date
2011-10-24	'338 Patent - Earliest Priority Date
2011-11-01	'849 and '962 Patents - Earliest Priority Date
2012-01-20	'184 and '395 Patents - Earliest Priority Date
2015-02-24	'849 Patent - Issue Date
2015-04-14	'184 Patent - Issue Date
2023-04-11	'338 Patent - Issue Date
2023-06-01	Alleged licensing negotiations initiated with Disney
2024-09-10	'843 Patent - Issue Date
2025-01-07	'395 Patent - Issue Date
2025-06-24	'962 Patent - Issue Date
2025-12-17	Date of email placing Disney on notice of patents
2026-03-20	Complaint Filing Date

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 11,627,338 - Significance map encoding and decoding using partition selection

• Patent Identification: U.S. Patent No. 11,627,338 ("the '338 Patent"), Significance map encoding and decoding using partition selection, issued on April 11, 2023.

The Invention Explained

• Problem Addressed: The patent addresses the high computational cost and inefficiency in video coding associated with context modeling for "significance maps" Compl. ¶¶116-117 These maps, which indicate the positions of non-zero data (transform coefficients), can account for a large portion of a video bitstream, and tracking a separate context for every position is computationally expensive Compl. ¶¶116-117
• The Patented Solution: The invention proposes a "non-spatially-uniform partitioning" of the significance map Compl. ¶118 Instead of assigning a unique context to every bit position, the map is divided into parts; some bit positions get their own contexts, while others are grouped together to share common contexts Compl. ¶118 '338 Patent, abstract This focuses the computational expense of context adaptation on the map positions that benefit most from having unshared contexts, thereby improving coding efficiency '338 Patent, col. 3:8-13
• Technical Importance: This approach allows for a more balanced trade-off between compression accuracy and computational speed in HEVC decoders, a critical factor for real-time streaming on consumer devices Compl. ¶118

Key Claims at a Glance

• The complaint asserts infringement of at least Claim 1 Compl. ¶146 Compl. Ex. 3
• The essential elements of independent claim 1 include:
  • A method of decoding a bitstream to reconstruct a significance map for a 4x4 transform unit.
  • For each bit position in the map, determining a context based on a "partition set".
  • The partition set assigns contexts such that different contexts are assigned to different quadrants and positions within the 4x4 map in a non-spatially-uniform way.
  • Decoding the encoded data for that bit position based on the determined context.
  • Updating the context based on the reconstructed bit value.
• The complaint does not explicitly reserve the right to assert dependent claims but makes general allegations covering "one or more claims" Compl. ¶139

U.S. Patent No. 9,008,184 - Multiple sign bit hiding within a transform unit

• Patent Identification: U.S. Patent No. 9,008,184 ("the '184 Patent"), Multiple sign bit hiding within a transform unit, issued on April 14, 2015.

The Invention Explained

• Problem Addressed: The patent addresses the data overhead associated with encoding the sign (positive or negative) for each non-zero transform coefficient in a video data block, which can consume a significant amount of the bitstream Compl. ¶122 '184 Patent, col. 1:65-67
• The Patented Solution: The invention improves upon a technique called "sign bit hiding," where the sign of one coefficient is implicitly encoded using the parity (even or odd) of the sum of other coefficient values Compl. ¶122 The '184 Patent's improvement is to apply this technique not just to an entire transform block, but to multiple partitioned "sets of non-zero coefficients" within a larger transform unit, thereby compounding the data-saving benefits '184 Patent, col. 8:28-32
• Technical Importance: This method allows for more efficient encoding of coefficient signs, reducing the overall bitrate required to transmit video data without sacrificing quality Compl. ¶120

Key Claims at a Glance

• The complaint asserts infringement of at least Claim 1 Compl. ¶156 Compl. Ex. 5
• The essential elements of independent claim 1 include:
  • A method of decoding a bitstream by reconstructing coefficients for a transform unit.
  • The bitstream encodes two or more sets of sign bits for the transform unit, each set corresponding to a respective set of coefficients.
  • For each of the two or more sets of sign bits, summing an absolute value of the coefficients for the respective set to obtain a parity value.
  • Assigning a sign to one of the coefficients within the respective set based on whether the parity value is even or odd.
• The complaint makes general allegations covering "one or more claims" of the patent Compl. ¶149

U.S. Patent No. 12,186,395 - Multiple sign bit hiding within a transform unit

• Patent Identification: U.S. Patent No. 12,186,395 ('395 Patent), Multiple sign bit hiding within a transform unit, issued January 7, 2025.
• Technology Synopsis: This patent is a continuation of the '184 Patent and further refines the "sign bit hiding" technique Compl. ¶126 It introduces more flexibility by applying the technique only when a given subset of coefficients meets a certain threshold, such as having a minimum number of coefficients between the first and last non-zero coefficient, which improves efficiency Compl. ¶126 '395 Patent, col. 9:18-25
• Asserted Claims: Claim 1 is asserted Compl. ¶166 Compl. Ex. 7
• Accused Features: The accused features are Disney's H.265-compliant encoders and decoders that are alleged to implement this conditional sign bit hiding technique Compl. ¶159

U.S. Patent No. 8,964,849 - Multi-level significance maps for encoding and decoding

• Patent Identification: U.S. Patent No. 8,964,849 ('849 Patent), Multi-level significance maps for encoding and decoding, issued February 24, 2015.
• Technology Synopsis: The patent seeks to reduce the amount of data needed to signal a significance map (which indicates positions of non-zero transform coefficients) Compl. ¶¶129-130 It achieves this by allowing a decoder to infer the presence of certain significance flags under specific circumstances, rather than requiring them to be explicitly signaled in the bitstream, thereby enabling higher quality video with less data '849 Patent, col. 18:11-19:24 Compl. ¶130
• Asserted Claims: Claim 1 is asserted Compl. ¶176 Compl. Ex. 9
• Accused Features: The accused features are Disney's H.265-compliant decoders that allegedly infer significance flags as described in the patent to reduce signaling overhead Compl. ¶169

U.S. Patent No. 12,088,843 - Method for deriving a motion vector

• Patent Identification: U.S. Patent No. 12,088,843 ('843 Patent), Method for deriving a motion vector, issued September 10, 2024.
• Technology Synopsis: The patent addresses the problem of efficiently determining a list of candidate motion vectors for inter-picture prediction Compl. ¶133 Including too many candidates increases memory requirements, while too few leads to unreliable predictions. The patented solution derives candidate motion vectors based on the motion vectors of a "co-located block" in a previously decoded picture, reducing complexity and storage while maintaining reliability '843 Patent, col. 4:15-20 Compl. ¶133
• Asserted Claims: Claim 1 is asserted Compl. ¶186 Compl. Ex. 11
• Accused Features: The accused features are Disney's H.265-compliant decoders that allegedly use co-located blocks from prior frames to help predict motion vectors in the current frame Compl. ¶179

U.S. Patent No. 12,341,962 - Multi-level significance maps for encoding and decoding

• Patent Identification: U.S. Patent No. 12,341,962 ('962 Patent), Multi-level significance maps for encoding and decoding, issued June 24, 2025.
• Technology Synopsis: This patent, related to the '849 Patent, improves video encoding by more efficiently representing transform coefficient information Compl. ¶¶135-136 It provides better ways of encoding the values of significant-coefficient flags within groups, such as by using indirect signaling to convey a "group flag" corresponding to a group of flags, reducing the data needed to signal the transform information '962 Patent, col. 33:20-28 Compl. ¶136
• Asserted Claims: Claim 1 is asserted Compl. ¶196 Compl. Ex. 13
• Accused Features: The accused features are Disney's H.265-compliant encoders that allegedly use group flags and indirect signaling to more efficiently encode significance maps Compl. ¶189

III. The Accused Instrumentality

Product Identification

• The accused instrumentalities are the Disney+, Hulu, Hulu Live, and ESPN+ streaming platforms (collectively, "Disney platforms") Compl. ¶14 Specifically, the complaint targets the H.265-compliant encoders and decoders used on Disney's servers for transcoding and within Disney's end-user applications for playback Compl. ¶¶15-16

Functionality and Market Context

• The complaint alleges these platforms are used by nearly 200 million subscribers to stream a wide variety of content, including movies, TV shows, and live sports Compl. ¶2 The core accused functionality is the use of encoders and decoders that operate according to the H.265 (HEVC) video compression standard to deliver this content efficiently Compl. ¶16 Compl. ¶55 The complaint provides a screenshot from the Disney+ website showing various subscription bundles, which illustrates Disney's marketing of these services to consumers Compl. p. 35 The complaint alleges that these services share backend technology, product development, and sales functions, presenting them as an integrated ecosystem Compl. ¶¶75-85

IV. Analysis of Infringement Allegations

'338 Patent Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
A method of decoding a bitstream of encoded data to reconstruct a significance map for a transform unit, the method comprising:	The Accused Instrumentalities include an H.265 decoder that employs a method of decoding a bitstream to reconstruct a significance map for a transform unit.	¶146; Ex. 3, p. 2	col. 23:52-54
for each bit position in the significance map having a significant coefficient flag that is to be decoded using context-adaptive decoding:	The H.265 decoder decodes significant coefficient flags using context-adaptive, arithmetic entropy coded syntax elements.	¶146; Ex. 3, p. 5	col. 23:55-57
determining a context for that bit position based upon a partition set, wherein the partition set assigns contexts to the bit positions in the significance map such that:	The H.265 decoder determines a context for each bit position based on a partition set, which assigns contexts to the bit positions. This is allegedly done by determining a "ctxIdx" based on "ctxInc", which is derived from the bit position.	¶146; Ex. 3, p. 6	col. 23:58-61
each bit position in an upper left quadrant of the significance map is assigned one of four contexts different from each of the other assigned contexts in the upper left quadrant...	The complaint alleges the H.265 standard's "ctxIdxMap" for the upper left quadrant corresponds to four different context values (0, 1, 2, and 3).	¶146; Ex. 3, p. 8	col. 23:62-67
decoding the encoded data based on the determined context for that bit position to reconstruct a bit value of the significant coefficient flag for that bit position; and	The H.265 decoder decodes encoded data to reconstruct bit values for significant coefficient flags based on the determined context for the corresponding bit position.	¶146; Ex. 3, p. 15	col. 24:22-25
updating the context for that bit position based on the reconstructed bit value of the significant coefficient flag for that bit position,	The H.265 decoder updates the context variables associated with a "ctxTable" and "ctxIdx" based on the decoded value "binVal" and "valMps" of the context variable.	¶146; Ex. 3, p. 16	col. 24:26-31
wherein the transform unit is sized 4×4.	The H.265 decoder employs this functionality when "log2TrafoSize" is equal to 2, which corresponds to a 4x4 transform unit.	¶146; Ex. 3, p. 17	col. 24:32-33

• Identified Points of Contention:
  • Scope Questions: A central question will be whether the term "partition set" as defined and used in the '338 Patent can be properly construed to read on the context derivation mechanism of the H.265 standard, specifically the use of the "ctxIdxMap" table as alleged in the complaint's claim chart (Compl. Ex. 3, pp. 6-14). The defense may argue that the standard's mechanism is technically distinct from the claimed "partition set."
  • Technical Questions: The infringement allegation relies on a direct mapping of the H.265 standard's functions to the claim elements. A factual question for the court will be whether Disney's implementation of the H.265 standard in its encoders and decoders performs the precise, multi-part context assignment scheme as required by the claim's sub-elements detailing the quadrant-specific context assignments.

'184 Patent Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
A method of decoding a bitstream of encoded video by reconstructing coefficients for a transform unit,	The Accused Instrumentalities include an H.265 decoder that decodes a bitstream of encoded data by reconstructing coefficients for a transform unit.	¶156; Ex. 5, p. 2	col. 15:21-23
the bitstream encoding two or more sets of sign bits for the transform unit, each set of sign bits corresponding to a respective set of coefficients...	The H.265 decoder decodes information for each transform unit including a "coeff_sign_flag" that indicates whether the corresponding coefficient level has a positive or negative value.	¶156; Ex. 5, p. 5	col. 15:23-28
for each of the two or more sets of sign bits, summing an absolute value of the coefficients for the respective set corresponding to that set of sign bits to obtain a parity value; and	The H.265 decoder sums the "coeff_abs_level_remaining" and the "baseLevel" to obtain "sumAbsLevel" to determine the parity of that value.	¶156; Ex. 5, p. 7	col. 15:29-32
assigning a sign to one of the coefficients within the respective set based on whether the parity value is even or odd.	The H.265 decoder assigns a negative value to "TransCoeffLevel" based on the determined parity of "sumAbsLevel" being odd.	¶156; Ex. 5, p. 8	col. 15:33-35

• Identified Points of Contention:
  • Scope Questions: The infringement analysis will likely focus on whether the H.265 standard's procedure for conditionally inverting the sign of the first significant coefficient in a sub-block based on parity constitutes "assigning a sign to one of the coefficients within the respective set" for "two or more sets of sign bits." A question for the court is whether the claim requires a distinct sign-hiding operation for each of the "two or more sets," or if a single sign-hiding operation within a transform unit that is partitioned into sets meets the limitation.
  • Technical Questions: The complaint alleges the H.265 decoder performs the claimed summing and assigning steps. Evidence will be required to show that the accused decoders actually implement the logic of summing absolute values ("sumAbsLevel") and then assigning a sign based on the parity of that sum, as opposed to a functionally different but outcome-equivalent process.

V. Key Claim Terms for Construction

'338 Patent: "partition set"

• Context and Importance: This term is the lynchpin of the infringement allegation for the '338 Patent. Practitioners may focus on this term because the plaintiff's theory depends on equating the H.265 standard's "ctxIdxMap" table with the claimed "partition set". The definition will determine if the standard's pre-defined context-selection logic falls within the scope of the claim.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The specification describes the partition set as a "mapping" that associates bit positions with a given context '338 Patent, col. 8:5-10 This language could support an argument that any systematic mapping, including a table-based one like in the H.265 standard, qualifies.
  • Evidence for a Narrower Interpretation: The patent repeatedly illustrates the "partition set" using diagrams of non-spatially-uniform geometric divisions of a block (e.g.,'338 Patent, Figs. 3-6). A defendant may argue that these specific embodiments limit the term to such geometric partitioning, rather than a more abstract context-indexing table.

'184 Patent: "for each of the two or more sets of sign bits, summing... and assigning a sign..."

• Context and Importance: This phrase is critical because it requires the summing and assigning actions to be performed for "each" of the sets. The infringement case will turn on whether the H.265 standard, which applies a single sign-hiding rule to the first coefficient of a sub-block based on the sum of all coefficients in that sub-block, satisfies this "for each" requirement when a transform unit contains multiple sub-blocks.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: A plaintiff may argue that as long as a transform unit is partitioned into multiple sets (e.g., sub-blocks) and the sign-hiding logic is available for each, the "for each" limitation is met, even if the logic is only triggered for the first coefficient in each set. The specification's goal is to compound the benefits of sign hiding "by applying the technique to two or more sets of coefficients" '184 Patent, col. 8:29-32, which could support this view.
  • Evidence for a Narrower Interpretation: A defendant may argue that the plain language requires the full summing-and-assigning process to be performed independently for every set. The specification describes hiding "a sign bit...for each set" '184 Patent, abstract, which could be interpreted to mean a distinct sign bit is hidden within each set, a potentially narrower reading than what the H.265 standard performs.

VI. Other Allegations

Indirect Infringement

• The complaint alleges induced infringement against all defendants, asserting they encourage and instruct subscribers and end-users to use the infringing Disney applications Compl. ¶141 This is supported by allegations that Disney provides documentation and marketing materials, such as the bundle offers depicted in screenshots, that facilitate the infringing use Compl. ¶142 Compl. p. 35

Willful Infringement

• The complaint alleges willful infringement based on Defendants having knowledge and notice of the asserted patents since "at least as of Velos' December 17, 2025 email" Compl. ¶138 The complaint further alleges that Defendants "took the above actions intending to infringe and/or cause infringing acts by others, and/or it willfully blinded itself as to the existence of the Asserted Patents" Compl. ¶104

VII. Analyst's Conclusion: Key Questions for the Case

• A core issue will be one of definitional scope: can the term "partition set" from the '338 patent, which is described with geometric partitioning examples, be construed to cover the algorithmic context-indexing tables ("ctxIdxMap") used in the H.265 standard? Similarly, does the H.265 standard's method of hiding the sign of only the first coefficient in a sub-block meet the '184 patent's requirement for a sign-hiding operation "for each" of the "two or more sets"?
• A second central question will be one of RAND Obligations and Negotiations: The complaint dedicates significant space to the parties' failed licensing negotiations and the plaintiff's alleged compliance with its RAND obligations to the ITU standards body Compl. ¶3 Compl. ¶¶42-52 Compl. ¶¶197-216 This raises the key question of whether Disney, as an implementer of the H.265 standard, has breached a good-faith negotiation obligation, and conversely, whether Velos has met its own obligations as a holder of standard-essential patents. The outcome could impact the availability of injunctive relief and the ultimate damages calculation.
• A key evidentiary question will be one of functional implementation: While the complaint maps the claims to the H.265 standard specification, the plaintiff will ultimately need to prove that Disney's accused encoders and decoders actually practice the standard in the specific manner alleged. This will require technical evidence showing, for instance, that the accused products' software or hardware performs the exact context-updating and sign-assignment logic required by the claims.