Netflix, Inc. v. DivX, LLC, Nos. 2022-1203, -1204 (Fed. Cir. (PTAB) Oct. 25, 2023). Opinion by Chen, joined by Linn. Dissenting opinion by Dyk.

Netflix appealed two IPR final written decisions determining that Netflix failed to meet its burden of proving certain claims unpatentable under 35 U.S.C. § 103. On appeal, Netflix did not challenge any of the Patent Trial and Appeal Board’s substantive analysis. Netflix instead made “a purely procedural argument, accusing the Board of falling down on the job by failing to address several arguments purportedly raised in Netflix’s petitions.”

The Federal Circuit disagreed with Netflix and affirmed, seeing no error in how the Board understood Netflix’s petition arguments. The court thus held that “all of Netflix’s arguments on appeal were not presented below and are thus forfeited.”

At the start, the Federal Circuit observed that Netflix’s appeal “is yet another instance where an IPR petitioner contends that a particular argument was properly raised, but overlooked or otherwise incorrectly interpreted by the Board.” The court acknowledged the challenges the Board faces and concluded that, “while the Board should not take an overly mechanistic view of a petition and decline to address an argument because the petitioner did not present it with ideal vigor and clarity, the Board should also not have to decode a petition to locate additional arguments beyond the ones clearly made.”

The Federal Circuit explained that, “ultimately, it is the petitioner’s burden to present a clear argument,” and “the Board is entitled to discretion in how it interprets petitions.” “Any argument not raised to the Board is forfeited, and [the Federal Circuit will] decline to consider it for the first time on appeal.”

Applying this framework, the court determined that Netflix had not clearly presented to the Board the arguments now being presented on appeal. For some of the arguments, the Federal Circuit ruled that the Board reasonably interpreted Netflix’s IPR petitions. For another, the court ruled that “the Board could not have overlooked [Netflix’s] argument because it was never there” in the petitions. For others still, the Federal Circuit determined that Netflix had not clearly presented its alternative arguments. The court summarized that “the Board should not have to work as hard as Netflix wants to identify all arguments fairly presented in a petition.”

In the end, the Federal Circuit concluded that the Board did not abuse its discretion in its interpretation of Netflix’s IPR petitions.

Judge Dyk dissented because, in his view, “the Board improperly ignored arguments that Netflix raised in its petition.” According to Judge Dyk, “contrary to the Board’s conclusions, Netflix’s petitions adequately raised” certain arguments that the Board failed to address. Judge Dyk therefore would remand for the Board to consider those arguments.

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