It seems as if Netflix and Hulu are continuously pumping out new content in their endless battle to win over more monthly subscribers. However, when a third-party asserts patents covering streaming technology against both streaming giants, the competitors find themselves on the same side of the line.
Such was the case in an inter partes review (IPR) filed by both Netflix and Hulu petitioning U.S. Patent No. 10,225,588 (“the ’588 Patent”), assigned to DivX. The streaming companies claimed that the ’588 Patent was unpatentable due to obviousness. Specifically, the petitioners argued that a “relevant artisan” would have combined three prior art patents to address the “piracy concerns, improve the efficiency of adaptive streaming, optimize the balance between bitrate and bandwidth, and improve the end-user experience with fast startup and seek,” as required by the claim limitations in the ’588 Patent. But the Board disagreed—ruling that the petitioners failed to prove the patent obvious because they did not show that an artisan would have had a “reasonable expectation of success” in combining the proposed prior art to arrive at the same system claimed in the ’588 Patent.[1]
Netflix and Hulu appealed the PTAB’s decision to the Federal Circuit, and the Court agreed that the PTAB “committed a fundamental legal error in defining the combination it was evaluating.” Specifically, the Court found that PTAB committed two errors: (1) failure to adhere to the principle that the petitioner’s contentions “define the scope of the litigation all the way from institution through to conclusion” and (2) the prior art reference must consider everything that it teaches and is not limited to the claimed invention. Therefore, the Court found that the “Board’s redefinition…was a fundamental legal error.” In finding the error not harmless, the Federal Circuit remanded the case back to the PTAB for review.[2]
This case is a single example of the less public ongoing battle streaming giants like Netflix and Hulu fight on a routine basis. While there are standard essential patents (SEPs) vital to the compatibility of streaming technologies and devices that streaming providers license, there are third-parties who believe their streaming technology patents are being infringed behind-the-scenes.
[1] Netflix, Inc. v. DivX, LLC, IPR2022-1083 (PTAB Sept. 23, 2021)
[2] Netflix, Inc. v. DivX, LLC, No. 2022-1083, 2023 WL 2298768 (Fed. Cir. Mar. 1, 2023)