Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Netflix, Inc. v. DivX, LLC, No. 22-1203 (Oct. 25, 2023) affirming the Patent Trial and Appeal Board’s determination that two DivX patents were not unpatentable.
DivX is the assignee of U.S. Patent Nos. 9,270,720 and 9,998,515, both directed to a method of adaptive bitrate streaming of content on a play-back device, such as a phone or computer. Netflix petitioned for inter partes review of certain claims of both patents. The IPRs focused on whether three claim limitations—the “filtering,” “retrieving,” and “generating” limitations—were disclosed in the asserted prior art combinations. The Board found these limitations were missing from the asserted references and issued final written decisions upholding the validity of the challenged claims. The Board did not consider certain arguments that it determined were not raised in Netflix’s original IPR petitions. Netflix appealed, arguing that the Board erred procedurally by failing to consider the arguments purportedly raised in its petitions.
The Federal Circuit affirmed. The Court determined that Netflix forfeited each of its arguments by failing to raise them before the Board. First, the Court found that Netflix’s IPR petitions had not clearly articulated how the prior art references at issue disclosed the “filtering” limitation. The Court noted that “it is the petition’s burden to present a clear argument” and explained that “[t]he Board is entitled to discretion in how it interprets petitions.” The Board’s determination that Netflix’s argument had not been adequately raised in the IPR petition was not clearly erroneous. Second, with respect to the “retrieving” limitation, the Court rejected Netflix’s argument that the Board erred by declining to consider another piece of prior art as anticipatory under 35 U.S.C. § 102. Because Netflix’s IPR petitions included language such as “a [skilled artisan] would have found it obvious” in connection with this reference, the Board’s determination that Netflix did not assert it on anticipation grounds was not an abuse of discretion. Finally, the Court found that Netflix’s argument that a prior art reference disclosed the “generating” limitation was raised for the first time in Netflix’s IPR reply and not in the original petitions. Because it was improperly raised for the first time in reply, the Court held that the Board did not abuse its discretion in declining to consider this argument.