by Dennis Crouch
Adaptive Streaming Inc. v. Netflix, Inc. (Fed. Cir. 2020)
In this non-precedential decision, the Federal Circuit has affirmed the lower court’s finding that Adaptive’s asserted claims are ineligible under Section 101. In 2019, Adaptive sued Netflix in C.D. Cal. for patent infringement. Rather than filing its answer, Netflix immediately filed a motion to dismiss for failure to state a claim. Fed. R. Civ. Pro. 12(b)(6). That motion was granted — case dismissed.
The patent claims a personal broadcasting system that transcribes an incoming video into a more usable format. Us7047305 (1999 priority date). I subscribed to Netflix back in 2001 — receiving rental DVDs in the mail each month. Netflix has changed dramatically — and one bit of its process appears to be a user-based translation engine.
Claim 39 at issue here requires a “broadcasting server” coupled to a “processor” with the capability of transcoding an incoming video signal from a first compression format into a second compression format “more suitable” for the client device — and available in multiple video stream outputs. A dependent claim includes the functionality of changing the compression output “in response to a change in bandwidth conditions.”
Abstract Idea: The district court identified the abstract idea here as “collecting information and transcoding it into multiple formats.”
Directed To: With regard to what the claims are directed to, the court looked to the written description coupled with the claim language to deduce the “focus of the claimed advance of over the prior art.” (quoting Solutran (2019) and Affinity Labs 2016). Here, the court concluded that the focus of the invention is format conversion of incoming video. “The focus is not any specific advance in coding or other techniques for implementing that idea; no such specific technique is required.”
Something more: The court offered a grade for the patent’s performance under Alice Step 2: “The claims also flunk the second step of the Alice inquiry.” In particular, the court notes the presence of “generic” hardware carrying out its common function known in the art. That much was admitted in the specification.
Patent Spec. Regarding novelty + obviousness, the court here reiterated that satisfying those inquiries “does not imply eligibility under § 101, including under the second step of the Alice inquiry, because what may be novel and non-obvious may still be abstract.”
In its reply-brief, the patentee argued also that the commercial success of its invention should be used as evidence of patent eligibility.
[C]ommercial success and industry recognition serves as evidence that the technology underlying the asserted patent is far from well-understood, routine or conventional, and supports that the patent claims are directed to a technological solution to a technological problem.
[Adaptive_Streaming_Inc._v._Net_21]. The court did not consider that argument – considering it forfeited because not raised in the opening brief.
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The patent here was originally owned by the dot com LUXXON, a company developing streaming services. The patents were then assigned to an offshore holding company Hutchison Mediator (Bahamas) as part of an asset sale (part of CK Hutchison Holdings). Then WI-LAN took ownership and transferred rights to Adaptive Streaming, which appears to be a wholly owned subsidiary of WI-LAN (at least no other company owns >10%).