In a precedential opinion, the Federal Circuit affirmed two Patent Trial and Appeal Board ("PTAB") patentability decisions, holding that the PTAB did not abuse its discretion by not addressing arguments not clearly presented in the petitions. Netflix, Inc. v. DivX, LLC, Nos. 2022-1203, 2022-1204 (Fed. Cir. Oct. 25, 2023).
In 2019, DivX sued Netflix for infringing U.S. Patent Nos. 9,270,720 ("the '720 patent") and 9,998,515 ("the '515 patent"). Both patents claim a method for "adaptive bit rate streaming," which involves requesting video content from a streaming device (such as a mobile phone or personal computer), retrieving a list of assets associated with the requested content, filtering such list of assets based on certain device capabilities (i.e., network bandwidth and video decoding capacity), generating an index that describes each asset in the filtered list, and sending the index back to the streaming device. In response to DivX's suit, Netflix filed petitions for inter partes review ("IPR") for several claims of the '720 and '515 patents, alleging unpatentability under 35 U.S.C. § 103. The PTAB determined that Netflix failed to meet its burden of proof and Netflix appealed.
On appeal, Netflix did not challenge the PTAB's substantive analysis—instead, Netflix contended that the PTAB ignored several of Netflix's arguments. In particular, Netflix argued that its petition contained certain arguments directed to (1) the "filtering" limitation of a claim in the '720 patent, (2) the "retrieving" limitation of a claim in both the '720 and '515 patents, and (3) the "generating" limitation of a claim in the '515 patent.
The Federal Circuit reviewed the PTAB's decisions for abuse of discretion, which may be found if a decision: "(1) is clearly unreasonable, arbitrary, or fanciful; (2) is based on an erroneous conclusion of law; (3) rests on clearly erroneous fact finding; or (4) involves a record that contains no evidence on which the Board could rationally base its decision." Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359, 1367 (Fed. Cir. 2016). In this case, the Federal Circuit found that Netflix failed to (or did not clearly) articulate the above unpatentability arguments in its petitions. The court noted that although it is important for the PTAB to address a petitioner's arguments, the PTAB should "not have to decode a petition to locate additional arguments beyond the ones clearly made." Therefore, the Federal Circuit found no abuse of discretion because the PTAB's analysis was reasonable and properly addressed the arguments set forth in the petitions. Furthermore, the court held that Netflix forfeited its appellate arguments by not presenting them in its petitions.
Takeaway
Practitioners should ensure that their IPR arguments are clear and unambiguous, leaving no room for the PTAB to misinterpret or overlook arguments. In addition, it is important to raise all relevant patentability arguments to the PTAB during an IPR, to avoid a finding of waiver or forfeiture on appeal.
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