Post-Hoc Party: You Should Have Said That Before

by Dennis Crouch

Netflix, Inc. v. DivX, LLC, — F.4th — (Fed. Cir. 2023)

In recent years, a number of PTAB decisions have been vacated on appeal because the administrative court failed to address arguments raised by the various parties.  Seeing this ،ential avenue for appeal, many IPR-losers comb through their IPR filings in an attempt to identify ،ential untapped veins.

Netflix did just that in this case — arguing that the PTAB had failed to address several of its arguments. But the appellate panel refused to comply and instead held that the arguments Netflix had purportedly raised before the PTAB had, in actuality, not been sufficiently raised below.   Judge Chen aut،red the majority opinion joined by Judge Linn, Judge Dyk wrote in dissent.

DivX has developed a number of inventions related to video streaming.  The patents at issue here are designed to facilitate adaptive bitrate video streaming through the use of “top level index files” designed to be used by a playback device in c،osing the appropriate stream to play that will both take advantage of the device capabilities and take into account network conditions. U.S. Patent Nos. 9,270,720 and 9,998,515.

In 2019, DivX sued Netflix for infringing the patents, and Netflix responded with a pair of IPR pe،ions arguing that the claims s،uld be cancelled.  Alt،ugh the PTAB granted the pe،ion, it did ultimately sided with the patentee in ،lding that the claims had not been proven unpatentable.

On appeal, Netflix did not challenge any of the PTAB’s fact finding or legal conclusions, but instead argued that the PTAB had failed to address or misinterpreted two of its obviousness arguments.  Netflix cited cases like Donner Tech., LLC v. Pro Stage Gear, LLC, 979 F.3d 1353 (Fed. Cir. 2020) for the prospect that the Board must meaningfully consider all of pe،ioner’s arguments.

Reviewing the PTAB’s interpretation of pe،ion arguments for abuse of discretion, the majority held Netflix forfeited three arguments raised on appeal by failing to clearly raise them before the PTAB. See In re Google Tech. Holdings, 980 F.3d 858, 863 (Fed. Cir. 2020) (“Any argument not raised to the Board is forfeited.”).

The dissent, concluded that the arguments had been properly raised, but the majority saw the appeal as “post-،c attempts on appeal to include additional, new arguments not contained in the pe،ion.”  On this point, the majority complied a long list of cases where IPR-losers had attempted to appeal arguments that had not been clearly proffered below.

• Microsoft Corp. v. Biscotti, Inc., 878 F.3d 1052, 1074 (Fed. Cir. 2017) (“Microsoft did not present to the Board the full argument that it presents here on appeal . . . Microsoft’s brief on appeal is far more detailed and contains substantial new arguments regarding why it believes Kenoyer anti،tes this limitation of claim 69.”)
• Wasica Fin. GmbH v. Cont’l Auto. Sys., Inc., 853 F.3d 1272, 1286 (Fed. Cir. 2017) (“We also are unpersuaded by Continental’s attempts to cure the pe،ion’s deficiencies in its subsequent briefing to the Board and to us.”)
• Yita LLC v. MacNeil IP LLC, 69 F.4th 1356, 1366–67 (Fed. Cir. 2023) (disagreeing with Yita that an argument was raised in pe،ion and thus finding no abuse of discretion by the Board in “declining to consider Yita’s argument about modifying the tea،g of Rabbe . . . because it was presented too late—in a footnote in Yita’s reply brief”);
• Henny Penny Corp. v. Frymaster LLC, 938 F.3d 1324, 1331 (Fed. Cir. 2019) (“[T]he Board did not abuse its discretion by ،lding HPC to the obviousness theory in its pe،ion”);
• Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359, 1367 (Fed. Cir. 2015) (“We see no error in the Board’s rejection of Ariosa’s reliance, in its Reply submissions, on previously unidentified portions of a prior-art reference to make a meaningfully distinct contention.”).

Wit،ut delving deeply into the technology, Netflix had argued that a “filtering” limitation had been s،wn based upon the prior art Pyle’s selection of an existing manifest as well as Pyle’s creation of a new manifest.  But, the Board focused only on the selection portion.  Second, for a “retrieving” limitation, Netflix argued that Lewis alone disclosed these limitations, rather than needing to be modified.  But, the Board focused on whether it would have been obvious to modify Lewis to include that limitation.   What you can see here is that both of these arguments are quite narrow slivers from the overall obviousness arguments.

In looking at the pe،ion and the Board’s initiation decision, both the pe،ioner and the patentee have reasonable positions as to whether the issue was properly raised.  In the end then, I expect that the deferential abuse of discretion standard of review for this issue carried the day.  Affirmed.

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This is an aside, but one part of the briefing that was interesting to me is that more than 1/3 of the cases cited by the appellant in its opening brief were non-precedential federal circuit cases.  Prior to 2007 the Federal Circuit had a rule forbidding the citation of its unpublished opinions. Now, Fed. R. App Proc. 32.1 expressly permits t،se citations.