<em>Netflix, Inc. v. DivX, LLC</em>

80 F.4th 1352 (Fed. Cir. 2023)

The Federal Circuit vacated the Patent Trials and Appeals Board’s decision on Netflix’s asserted prior art reference, holding Netflix did not need to use the “magic words” field of endeavor to identify one in their asserted prior art reference.

DivX, the owner of U.S. Patent No. 8,472,792, presented an invention that generally relates to multimedia file encoding, transmission, and decoding. The contentious feature of the ‘792 patent is a trick play functionality, which is the ability to fast forward, rewind, and scene-skip frames of film. The specific issue is whether, as Netflix claims, Kaku, a device that shows image data and sound, is analogous art that relates to the ‘792 patent.

Following Netflix’s petition for an inter partes review of DivX’s ‘792 patent, the Patent Trial and Appeal Board (“the Board”) issued its final written decision. The Board found Netflix did not meet its burden to accurately articulate a relevant field of endeavor in its prior art reference. However, Netflix appealed to the Federal Circuit which ruled on September 11, 2023 that the Board’s directive for Netflix to more precisely articulate the relevant field of endeavor was unduly strict and vacated the Board’s decision.

In its petition, Netflix contended that Kaku was analogous art as it relates to motion image apparatuses, specifically, to a motion image reproducing apparatus applicable to a digital camera for reproducing motion image data found on a recording medium. Under the broader scope utilized by Netflix to analyze analogous art, both the ‘792 patent and Kaku included the encoding and decoding of multimedia files making them comparable for legal analysis. Furthermore, Kaku included embodiments directed to particular implementations of an AVI file format which ‘792 also makes reference to. Based on such similarities in its field of endeavor related to multimedia file trick playing functions and types of file formatting, Netflix argued that Kaku was in the same field of endeavor.

As the patent owner, DivX claimed Kaku is non-analogous art because Kaku had nothing to do with enabling trick play functionality, streamed content, or dual indexes. DivX sees a clear distinction between Kaku and the ‘792. Kaku utilizes M-JPEG files in limited memory cameras, unlike the ‘792 patent that deals strictly with sophisticated media files. Because Netflix failed to present that Kaku and the claimed invention were in the same field, the PTAB held Netflix failed to meet its burden of establishing an analogous art in its inter partes review.

On appeal before the Federal Circuit, the court addressed whether the secondary reference, Kaku, U.S. Patent No. 7,212,726, is analogous art to the ‘792 patent. Unlike the PTAB, the Federal Circuit properly applied two tests to Netflix’s argument to define the scope of analogous art: (1) whether the art is from the same field of endeavor; and (2) if not within the same field of the inventor’s endeavor, whether the reference still is reasonably pertinent to the problem with which the inventor is involved. In its address towards the Board’s initial decision, the Federal Circuit asserted that Netflix correctly identified two overlapping fields of endeavor between Kaku and the ‘792 patent. Netflix argued that Kaku’s field of endeavor is AVI files, and the Federal Circuit highlighted Netflix’s address of the ‘792 patent it cited sections of the patent description that discussed AVI files and how “chunks” of the invention’s multimedia file are defined as parts of the AVI file format. When refenced together, Netflix clearly asserted and presented that the field of endeavor for both Kaku and the ‘792 patent is AVI file formats. Although Netflix’s brief before the Board did not articulate those exact words to argue its position, according to the Federal Circuit, the Board erred by imposing a higher burden than required. 

Additionally, the court went further on to state that the PTAB analyzed the field of endeavor question without articulating a distinct view of what it viewed as a field of endeavor. In one instance, the Board cited DivX’s testimony that the ‘792 patent specifically relates to facilitating trick play functionality in multimedia content that is streamed or downloaded on the internet to establish a narrow scope that Netflix had to follow. However, in its analysis, the Board deviated from this strict requirement and did not use any specific language relating to trick play functionality. Considering the Board’s own failure to articulate a specific scope for a field of endeavor, the court found it difficult to understand why Netflix’s reply of two fields of endeavor as insufficient.

Thus, the Federal Circuit held that Kaku is in fact reasonably pertinent to Netflix’s argument of analogous art in its reference to the ‘792 patent. Thus the Federal Circuit held that the Board abused its discretion and erred in its scope of analogous art.

I would rephrase this sentence and instead highlight on Netflix’s two arguments for why Kaku and ‘792 are in the same field of endeavor: one is that the field of endeavor for both ‘792 patent and Kaku is AVI file formats. You cover this a little in the paragraph. However Netflix alternatively argues that both the ‘792 patent and Kaku’s broad scope includes encoding and decoding of multimedia files. A sentence of two on Netflix’s reasoning for this would be beneficial.

I would keep all “the Board” holding/language in two paragraphs max, the majority of the piece should focus on the result/Federal Circuit’s decision. It’s ok to have a paragraph each on Netflix and DivX’s arguments, but the Federal Circuit’s findings should match or exceed that in length/depth.