NETFLIX, INC. v. DivX, LLC

Before Hughes, Stoll, and Stark.  Appeal from the Patent Trial and Appeal Board.

Summary: Petitioner was not required to explicitly identify secondary reference’s “field of endeavor” using specific language when briefing sufficiently communicates the field of endeavor.

Netflix petitioned for Inter Partes Review of the ’792 patent owned by DivX.  The ’792 patent generally relates to encoding, transmission, and decoding of multimedia files, such as video files, with claims directed towards functionality enabling fast-forwarding, rewinding, and skipping frames in a multimedia file by using an “index chunk” in the file. 

Before the PTAB, Netflix argued that several claims of the patent were obvious in view of two references, including a secondary reference (“Kaku”) which disclosed using an index chunk in a file to play image or sound data.  DivX argued that Kaku was non-analogous art because it was primarily directed towards image files in digital cameras, rather than streaming multimedia files.  Netflix replied that Kaku explicitly disclosed that the invention was applicable to other electronic appliances to reproduce motion images.  The PTAB rejected Netflix’s obviousness argument because Netflix had not met its burden of showing that Kaku was analogous art under the “field-of-endeavor” test.  The Board found that Netflix had failed to clearly identify the field of endeavor of either the ’792 patent or Kaku, noting that Netflix appeared to present multiple different positions on what it viewed as the field of endeavor throughout the case. 

On appeal, the Federal Circuit found that the PTAB had abused its discretion in determining that Netflix had failed to articulate a field of endeavor, stating that “[a]lthough Netflix’s reply brief before the Board did not formulaically articulate a field of endeavor using those exact words, our precedent does not require the use of magic words.”  The Federal Circuit found that Netflix’s briefing, taken in context, sufficiently communicated its position that Kaku’s field of endeavor included multimedia files.  Because the Board erred by imposing a higher burden than required by Federal Circuit precedent, the Federal Circuit vacated and remanded to allow the PTAB to decide the factual question of whether Kaku was directed to the same field of endeavor as the ’792 patent based on the parties’ arguments.