DTS Engaged in a Patent Fight With French Rival : Entertainment: The dispute centers on new movie theater sound systems developed by the Westlake Village digital firm and L. C. Concept.

WESTLAKE VILLAGE —  Just as Digital Theater Systems is beginning to make a big noise in the entertainment world, it finds itself embroiled in bitter patent and legal disputes with a French rival.

Digital, of Westlake Village, has won the financial backing of Universal Studios and Steven Spielberg, and provided the sound for Spielberg’s blockbuster “Jurassic Park.”

Paris-based L. C. Concept sells a competing digital film sound format in Europe.

It claims that DTS is infringing on its French patent and is waging a patent battle on both sides of the Atlantic.

In March, the U. S. Patent and Trademark Office declared a patent “interference”--a proceeding taken when two or more parties claim patent rights based on similar creations.

In general, businesses must apply country by country for patents.

But as part of an international convention, the United States recognizes patent filing dates in other industrialized nations.

Patent filing dates can sometimes end up determining who holds U. S. rights to an invention.

DTS believes that it will ultimately prevail, but it could take two years before the U. S. patent office makes a decision.

DTS President Terry Beard acknowledged that L. C. and its director-general, Elisabeth Lochen, have created “a tremendous public appearance problem for us.”

DTS won the financial backing of Universal Studios, the studio owned by Japanese industrial giant Matsushita, and Spielberg in July.

“Jurassic Park” was the first movie to use the DTS format.

After Universal and Spielberg signed on as investors, several Hollywood studios introduced DTS in feature films.

At present, about 20 movies have been released in DTS, and 1,650 theaters worldwide are equipped with DTS hardware.

The L. C. digital movie sound system has been used on an estimated 30 pictures in France, Belgium and Switzerland since 1991, including “Cyrano de Bergerac,” starring Gerard Depardieu, and “Cliffhanger,” with Sylvester Stallone. L. C. won’t reveal how many theaters in Europe use its hardware.

Digital movie sound quality is similar to that of compact discs used with home stereo systems.

Clear tones are produced with the help of computer technology. Since CDs resist wear and tear, they eliminate hisses and pops that sometimes mar movie soundtracks.

L. C. has had a hard time trying to break into Hollywood.

A tentative agreement with would-be U. S. partners--including Jonathan Katz and several other Hollywood veterans--dissolved in 1992 after a flurry of lawsuits that were settled out of court.

L. C. has been aggressively seeking financial backing in the United States ever since.

Lochen said she knows that the odds are long.

She says she is struggling in a male-dominated industry, and also believes that her French nationality works against her in Hollywood.

To her, the struggle is a matter of principle. “We are not as huge a company as Matsushita,” she said, “but we own the patent.”

L. C. claims that it holds rights to a digital sound technology through a patent its president, Pascal Chedeville, received in France.

He filed for the French patent in May, 1989. Beard, president of DTS, filed a U. S. patent application in September, 1990, on some elements of the digital sound system it now markets.

L. C. doesn’t hold a U. S. patent, but if the patent office rules in its favor in the interference case, L. C. could gain a priority for its patent application in this country.

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The DTS and L. C. technologies are similar. Both deliver movie soundtracks on discs, separate from the film itself. They both feature time coding to keep the sound and picture in sync. The chief competitors to DTS in this country are Dolby Laboratories and Sony Corp.

They market a somewhat different digital system in which the sound is on the film rather than on a separate disc.

Beard says there are significant differences between the DTS sound format and the L. C. system.

One, he says, is the performance of L. C. technology when a projectionist cuts a film extensively.

Beard said the L. C. computer memory is limited, in contrast to DTS technology.

“We have a new way of doing it. She (Lochen) doesn’t understand how our system works,” Beard said.

Lochen says Beard is misinformed. She insists that the L. C. system can accommodate film cuts of any size.

The U. S. patent dispute is only one of a series of legal battles between the two companies.

L. C. has also been trying to stop DTS from selling its sound system in Europe.

The L. C. campaign against DTS suffered a defeat in Paris on Jan. 31 when a court dismissed a criminal lawsuit that L. C. had brought against the European distribution arm of Universal Studios, claiming misleading advertising.

The French company had sued in criminal court on the grounds that L. C. was hurt when “previews of coming attractions” for “Jurassic Park” in France promoted the DTS system.

Jacques Beugelmans, a Los Angeles attorney for Lochen, said the French court threw out the case on the grounds that L. C. should have sued DTS and not the Universal Studios distributor.

L. C. plans to refile the suit, naming DTS as the defendant, according to Beugelmans.

Meanwhile, Universal Studios has filed a defamation lawsuit against L. C. on behalf of its European distribution unit and DTS.

The suit claims that L. C. falsely accused them of stealing its patent.

A trial date has not been set.

Also, Universal and DTS have filed another lawsuit in London, claiming that L. C. engaged in unfair competition when it notified the movie exhibitors of its patent claims against DTS.

“Lawsuits are popping up like cancer,” said Beugelmans, who believes that Universal and DTS are trying to pummel tiny L. C. into submission with litigation.

DTS had sales of $6 million for the 10 months that ended in December. Lochen declined to give revenue figures for L. C., but they are thought to be much smaller.

Judd Funk, Universal Studios’ vice president for legal affairs, said the suits against L. C. speak for themselves.

L. C. has also hired the Los Angeles law firm of Lewis, D’Amato, Brisbois & Bisgaard to investigate possible unfair trade practices on the part of DTS and Universal.

In Los Angeles, yet another L. C. attorney, David Makous, is considering filing a lawsuit against DTS and Universal Studios in two areas: Did DTS and the movie studio coerce U. S. movie theaters into buying DTS equipment by tying it to access to “Jurassic Park”? And, is DTS dumping equipment at artificially low prices to corner the theater market?

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DTS denies any wrongdoing. Beard says that DTS never forced movie exhibitors to buy its system to get the blockbuster film, and that hardware sales are a profit center.

Makous said he hopes to persuade Universal to strike a deal with L. C. That may mean a DTS purchase of the global rights to L. C.’s patent for a lump sum.

Or L. C. may be willing to accept a lesser amount if DTS and Universal agree to participate in an ongoing relationship.

Beard insists L. C. has no technology that DTS wants or needs.

He’s hanging tough, he said. “I’m not going to be blackmailed. The truth is on our side.”