IPR decision of no obviousness vacated and remanded for “fundamental legal error in defining the combination it was evaluating”

Netflix, Inc. v. DivX, LLC

Docket No. 2022-1083 (IPR-2020-00558) (https://cafc.uscourts.gov/opinions-orders/22-1083.OPINION.3-1-2023_2088157.pdf) (Non-Precedential)

NEWMAN, REYNA, TARANTO

March 1, 2023

Brief Summary:   Board IPR FWD finding no obviousness vacated and remanded for “fundamental legal error in defining the combination it was evaluating”.

Summary:  Netflix and Hulu appealed the IPR final written decision (FWD) concluding the claims of DivX’s US 10,225,588 directed to systems and methods for streaming media were not shown to be unpatentable as a reasonable expectation of success was not shown.  The patents relate to a type of streaming known as adaptive bitrate streaming (ABS) “that uses diminution in quality of the media to prevent (or minimize)” disruptions in playback using Hypertext Transfer Protocol (HTTP).  Netflix and Hulu argued “that a relevant artisan would have combined ‘Chen’s adaptive streaming teachings’ with Lindahl’s encryption ‘teachings, including partial encryption and key management’ and Hurst’s encryption and common key ‘teachings…to address piracy concerns and improve efficiency” (Chen and Lindahl being US patent publications, Hurst being a US patent).  This appeal relates to the combination of Chen and Lindahl.  The FC panel explained that a patent challenger much show a motivation to combine the prior art with a reasonable expectation of success and that these are distinct requirements (Procter & Gamble, FC 2009 (citing Pfizer, FC 2007); Lilly, FC 2021; PAR Pharms., FC 2014 (motivation to combine are factual issues); Intell. Bio-Systems, FC 2016 (“substantial evidence review”)).  Netflix and Hulu did not argue with “the Board’s finding of no proven reasonable expectation of success of the combination with Chen’s ‘system’” but that it “committed a fundamental legal error in defining the combination it was evaluating as Lindahl with Chen’s ‘system,’ i.e., with the system Chen teaches as its advance over the prior art (its inventive system).”  The FC panel agreed the Board erred as it mistook the petitioner’s arguments for relying on “Chen’s own inventive ‘system’ for the petition’s focus” while it actually focused on “Chen’s disclosures about pre-Chen art” (citing, e.g., SAS, US 2018; EWP, FC 1985; In re Appld. Mat., FC 2012; In re Kahn, FC 2006).  The FC panel also found this error to be “prejudicial, i.e., not harmless” (5 USC 706; Shinseki, US 2009; Ariosa, FC 2015).  It also noted that if the Board decides to reconsider the motivation to combine issue, it should consider arguments made about whether a skilled artisan would have selected Chen for the combination (In re Kotzab, FC 2000; In re Rouffet, FC 1998; Intel, FC 2021 (does not need to be the best but only “a suitable option”).

This entry was posted in Inter Parties Review (IPR), IPR, Obviousness. Bookmark the permalink.

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