In an October 25, 2023 precedential opinion in Netflix, Inc. v. DivX, LLC (available here), the Federal Circuit affirmed two final written decisions finding claims of two patents directed to adaptive bitrate streaming not unpatentable.  In so doing, the Federal Circuit rejected Netflix’s argument that the Board failed to consider all of its arguments.

 

In the present case, Netflix had challenged certain claims of U.S. Patent Nos. 9,270,720 (the “’720 Patent”) and 9,998,515 (the “’515 Patent”) in petitions for inter partes review.  Those patents relate to a method for adaptive bitrate streaming of content on a playback device, such as a mobile phone or personal computer.  At issue on appeal was whether Netflix’s petitions contained certain arguments directed various limitations from the challenged claims.  “Netflix’s appeal does not challenge any of the Board’s substantive analysis.  It instead makes a purely procedural argument, accusing the Board of falling down on the job by failing to address several arguments purportedly raised in Netflix’s petitions.”

 

For the “filtering the list of assets” limitation, Netflix argued that a prior art reference’s (“Pyle”) selection of a pre-existing manifest met this limitation, and for the “generating . . .  a top level index file” limitation, Netflix argued that Pyle’s creation of a new manifest teaches the limitation.  “The Board observed a disconnect in how Netflix used Pyle to teach both the ‘filtering’ and ‘generating’ limitations of the ’720 patent.”

 

For the “retrieving . . . a list of assets” limitation in both patents, Netflix argued that the combination of two references rendered the limitation obvious.  However, the Board rejected Netflix’s arguments, finding that a result achieved in one of the references  . . . cannot, without further explanation, render obvious an intermediate prior step of “retrieving.”

 

Finally, for the “generating . . . a top level file index” limitation in the ’515 Patent, Netflix argued that Pyle’s transmission of a manifest (pre-existing or new) into storage teaches this limitation, but the Board rejected this argument and found that a skilled artisan would not have understood transmitting a file into memory to correspond to the “generating” limitation.

 

On appeal, with regard to the “filtering” limitation, the Federal Circuit stated that “Netflix’s petition plainly explained how the ‘filtering’ limitation corresponded to Pyle’s selection of a pre-existing manifest.”  The Federal Circuit saw no discussion about how Pyle’s creation of a new manifest meets this limitation.  “⁠[W]e do not fault the Board for holding Netflix to the argument it chose to make in the ‘filtering’ section of its petition, as opposed to reading in an additional potential ‘filtering’ mapping from a different petition section related to a different claim limitation. . . . Netflix argues the Board overlooked its alternative argument relying on Marusi (and not Pyle) for the step of filtering assets. We do not agree; the Board could not have overlooked that argument because it was never there. . . . We do not wish to discourage petitioners from making arguments in the alternative. Rather, we emphasize that it is the petitioner’s burden to make clear when alternative arguments are being presented and to sufficiently expound on each one. The Board should not have to work as hard as Netflix wants to identify all arguments fairly presented in a petition.”

 

With regard to the “retrieving . . . a list of assets” limitation, Netflix argued that the Board wrongly viewed Lewis, a prior art reference, as the basis for a § 103 obviousness challenge.  Netflix argued that its petition’s “use of language like ‘a [skilled artisan] would have found it obvious to retrieve a list of assets’ does not suggest that Lewis requires any modification.”  However, the Federal Circuit said that “[t]here is no word in patent law that sends a more unmistakable signal that § 103, rather than § 102, is being involved than the word ‘obvious.’”  The Board explained that Netflix had failed to explain how Lewis’s disclosure of a result necessarily would have rendered obvious an intermediate process step (retrieving a list of assets).  Netflix however argued that “creating the manifest file and retrieving a list of assets are one and the same.”  The Federal Circuit disagreed and found that “Netflix’s petition never established or suggested that Lewis’s creation of a manifest necessarily involves retrieval of a list of assets.”

 

Finally, with regard to the “generating . . . a top level index file” limitation, the Federal Circuit agreed with the Board that Netflix’s reply improperly argued for the first time that Pyle’s creation of a new manifest satisfied the “generating” limitation.  “We agree with the Board and conclude that Pyle’s transmission of a manifest into storage was the only argument presented in the petition. Netflix points to various parts of the petition . . . that allegedly describe how Pyle’s new manifest satisfies the ‘generating’ limitations. . .  While these portions of Pyle describe a new manifest, Netflix only referred to these portions in citations to support the statement that ‘Pyle further teaches transmitting a manifest file to the requesting device in response to a request for content.’ It was reasonable for the Board to consider only the theory encapsulated in the plain words of this statement and decline to discern another theory from the citations alone.”

 

In a dissenting opinion, Judge Dyk wrote that the PTAB erred by ignoring certain of Netflix’s arguments. “The Board found it ‘dispositive’ that Netflix relied on Pyle’s selection of an existing manifest, and not the creation of a new manifest, to meet the ‘filtering’ limitation. . . [C]contrary to the majority, Netflix’s petition plainly presented an alternative argument that Pyle, by generating a new manifest, met the ’720 patent’s ‘filtering’ limitation, and the Board’s institution decision credited this argument. . . Netflix presented its ‘new manifest’ argument on the very page the majority cites as lacking it. Contrary to the majority, in its institution decision the Board explicitly recognized the argument that Pyle’s new manifest meets the ‘filtering’ limitation.”  Judge Dyk would have remanded the “new manifest” argument to the Board for consideration, stating, “When the Board recognizes two arguments in its institution decision but addresses only one on the merits, a remand is required.”  Separately, relying on Netflix’s argument and use of “retrieve” in the present tense, Judge Dyk also believed that the arguments regarding the “retrieving limitations” were not that a “POSITA would find it obvious to modify Lewis to retrieve a list of assets” but that a “POSITA would have found it obvious” that Lewis already did “retrieve a list of assets.”  Thus, Judge Dyk would also have remanded on the “retrieving” limitation.