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 potential avenue for appeal, many IPR-losers comb through their IPR filings in an attempt to identify potential 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 authored 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 choosing 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 petitions arguing that the claims should be cancelled.  Although the PTAB granted the petition, it did ultimately sided with the patentee in holding 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 petitioner’s arguments.

Reviewing the PTAB’s interpretation of petition 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-hoc attempts on appeal to include additional, new arguments not contained in the petition.”  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 anticipates 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 petition’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 petition and thus finding no abuse of discretion by the Board in “declining to consider Yita’s argument about modifying the teaching 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 holding HPC to the obviousness theory in its petition”);
  • 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.”).

Without delving deeply into the technology, Netflix had argued that a “filtering” limitation had been shown 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 petition and the Board’s initiation decision, both the petitioner 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.

= = =

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 those citations.

9 thoughts on “Post-Hoc Party: You Should Have Said That Before

  1. 4

    Is there an equivalent for this at the ex parte prosecution level? The concept of “compact prosecution” does not seem to be legally binding on Examiners. For example, how many Office Actions can an Examiner issue before they are prohibited from raising 101 issues? The answer seems to be that there is no limit on Examiners dragging out prosecution. If anyone has any case law or authority to offer that puts a limit on how long an Examiner can drag out a prosecution (to the point of abuse of the applicant), I’d love to see it.

    1. 4.1

      Compact prosecution is merely a ‘recommendation.’

      Sorry, but “wear them down” actually only goes against the applicant.

    2. 4.2

      If anyone has any case law or authority to offer that puts a limit on how long an Examiner can drag out a prosecution (to the point of abuse of the applicant), I’d love to see it.
      If the patent attorney does it right and the application eventually gets allowed (oftentimes that may require a trip to the Board), the patent term adjustment can be EPIC.

      Few things are as good in life as a patent with an OLD priority date but still having years and years of patent term left.

    3. 4.3

      The PTO’s position is that they are entitled to get it wrong as many times as they want. Why do you think they fought so hard against Hyatt to keep their ability to re-open prosecution in response to an appeal brief?

  2. 3

    EVERY district court case is, by definition, “non-precedential.” And so are most appellate decisions. It was dumb to have a rule forbidding such citations. And if there is a “non-prec” appellate decision squarely on point, it SHOULD and MUST be cited (if it is the most on-point decision one can find)

  3. 1

    The pre-2007 rule was a bit extreme, no? It’s one thing to cite a non-precedential case for its holding (as if the court seeing the citation should be bound by it) and another thing to note that, e.g., 17 of 20 relevant non-precedential cases were resolved in a particular manner. Barring the latter citation(s) made little sense.

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