Court Opinion

ID: 4642623
Source: CourtListenerOpinion
Date Created: 2020-12-14 16:00:46.458316+00
Date Added: 2024-06-11T08:00:34.057897
License: Public Domain

Case: 20-1310    Document: 35    Page: 1   Filed: 12/14/2020

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

    ADAPTIVE STREAMING INC., A DELAWARE
               CORPORATION,
               Plaintiff-Appellant

                            v.

   NETFLIX, INC., A DELAWARE CORPORATION,
                Defendant-Appellee
              ______________________

                        2020-1310
                  ______________________

    Appeal from the United States District Court for the
 Central District of California in No. 8:19-cv-01450-DOC-
 KES, Judge David O. Carter.
                  ______________________

                Decided: December 14, 2020
                  ______________________

     PAUL SKIERMONT, Skiermont Derby LLP, Dallas, TX,
 for plaintiff-appellant. Also represented by ALEXANDER
 EDWARD GASSER; MIEKE K. MALMBERG, Los Angeles, CA.

    MICHAEL SOONUK KWUN, Kwun Bhansali Lazarus LLP,
 San Francisco, CA, for defendant-appellee.
                 ______________________
Case: 20-1310     Document: 35     Page: 2    Filed: 12/14/2020

2                    ADAPTIVE STREAMING INC.   v. NETFLIX, INC.

    Before PROST, Chief Judge, CLEVENGER and TARANTO,
                      Circuit Judges.
 TARANTO, Circuit Judge.
      Adaptive Streaming, Inc., owns U.S. Patent No.
 7,047,305, which claims systems that can receive a video
 signal in one format and broadcast it to at least one device
 calling for a different format. Adaptive sued Netflix, Inc.,
 in the United States District Court for the Central District
 of California, alleging that Netflix infringed the ’305 pa-
 tent. The district court held that the asserted claims of the
 ’305 patent are invalid under 35 U.S.C. § 101. Adaptive
 Streaming Inc. v. Netflix, Inc., No. SA CV 19-1450-DOC
 (KESx), 2019 WL 7841923 (C.D. Cal. Nov. 19, 2019) (Merits
 Opinion). We affirm.
                               I
                               A
     The ’305 patent is titled “Personal Broadcasting Sys-
 tem for Audio and Video Data Using a Wide Area Network”
 and “relates generally to digital video processing tech-
 niques.” ’305 patent, col. 1, lines 21–22. As background,
 the ’305 patent states that communication devices like ra-
 dio, cellphones, and televisions replaced “primitive tech-
 niques” of communicating, yet communication between
 devices of different types is hindered by the fact that de-
 vices use different formats. Id., col. 2, lines 7–34. The ’305
 patent states that it “provides a technique including a sys-
 tem for capturing audio and video information from a first
 source and displaying such video and audio information at
 a second source, where the format of the first source and
 the format of the second source are different from each
 other.” Id., col. 1, lines 22–27
     It is undisputed that claims 39, 40, and 42 are at least
 representative of all, and may be the only, claims at issue
 in the case. Limited to a video signal, they recite:
Case: 20-1310   Document: 35        Page: 3   Filed: 12/14/2020

 ADAPTIVE STREAMING INC.   v. NETFLIX, INC.                 3

        39. A system to broadcast to at least one client
    device, the system comprising:
            a processor; and
            a broadcasting server coupled to the pro-
        cessor, the broadcasting server including:
                 an image retrieval portion to retrieve
            at least one incoming video signal having a
            first format;
                a data structure usable to determine
            parameters for second compression formats
            for the at least one incoming video signal;
            and
                at least one transcoding module cou-
            pled to the image retrieval portion and
            which has access to the data structure, the
            transcoding module being capable to trans-
            code the at least one incoming video signal
            from the first format into multiple com-
            pressed output video signals having respec-
            tive second compression formats based at
            least in part on the parameters;
            wherein at least one of the second compres-
        sion formats is more suitable for the at least
        one client device than the first format; and
            wherein the multiple compressed output
        video signals having the at least one second
        compression format more suitable for the at
        least one client device can be provided by the
        broadcasting server, wherein any one of the
        multiple compressed output video signals can
        be selected to be presented at the at least one
        client device.
        40. The system of claim 39 wherein the at least
    one client device can select which of the compressed
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4                    ADAPTIVE STREAMING INC.   v. NETFLIX, INC.

     output video signals to present and may access the
     selected compressed video signals from multiple
     devices, including access of compressed output
     video signals having different second compression
     formats from different devices.
         42. The system of claim 39 wherein a different
     compressed output video signal can be dynamically
     selected to be presented at the at least one client
     device, instead of a current compressed output
     video signal, in response to a change in a band-
     width condition.
 ’305 patent, col. 27, lines 8–39, 44–48.
                               B
     In July 2019, Adaptive sued Netflix for infringement of
 the ’305 patent. Netflix moved to dismiss the complaint
 under Federal Rule of Civil Procedure 12(b)(6), arguing
 that the ’305 patent claims subject matter not eligible for
 patenting under 35 U.S.C. § 101. The district court agreed
 with Netflix and dismissed Adaptive’s complaint, without
 leave to amend. Merits Opinion, 2019 WL 7841923, at *6.
    Adaptive timely appealed. We have jurisdiction under
 28 U.S.C. § 1295(a)(1).
                               II
     On appeal, Adaptive argues that the asserted claims of
 the ’305 patent are not directed to an abstract idea and
 that, in any event, they include inventive concepts making
 them patent eligible. We disagree.
     Following Ninth Circuit law in this case, we review the
 Rule 12(b)(6) dismissal de novo. Manzarek v. St. Paul Fire
 & Marine Ins. Co., 519 F.3d 1025, 1030 (9th Cir. 2008).
 Like the district court, we must accept all factual allega-
 tions in the complaint, understood in the light most favor-
 able to the plaintiff. Id. at 1031. Subject-matter eligibility
 under § 101 is a question of law based on underlying facts.
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 ADAPTIVE STREAMING INC.   v. NETFLIX, INC.                   5

 See Aatrix Software, Inc. v. Green Shades Software, Inc.,
 882 F.3d 1121, 1124–25 (Fed. Cir. 2018). “Like other legal
 questions based on underlying facts, this question may be,
 and frequently has been, resolved on a Rule 12(b)(6) . . .
 motion where the undisputed facts, considered under the
 standards required by that Rule, require a holding of inel-
 igibility under the substantive standards of law.” SAP
 America, Inc. v. InvestPic, LLC, 898 F.3d 1161, 1166 (Fed.
 Cir. 2018).
     Section 101 provides that “[w]hoever invents or discov-
 ers any new and useful process, machine, manufacture, or
 composition of matter, or any new and useful improvement
 thereof, may obtain a patent therefor, subject to the condi-
 tions and requirements of this title.” 35 U.S.C. § 101. But
 § 101 “contains an important implicit exception: Laws of
 nature, natural phenomena, and abstract ideas are not pa-
 tentable.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S.
208, 216 (2014) (internal quotation marks omitted). “A
 claim falls outside § 101 where (1) it is directed to a patent-
 ineligible concept, i.e., a law of nature, natural phenome-
 non, or abstract idea, and (2), if so, the particular elements
 of the claim, considered both individually and as an or-
 dered combination, do not add enough to transform the na-
 ture of the claim into a patent-eligible application.” SAP,
898 F.3d at 1166–67 (internal quotation marks omitted).
                               A
     Under the first step of the Alice framework, the district
 court concluded that the claims of the ’305 patent are di-
 rected to the abstract idea of “collecting information and
 transcoding it into multiple formats.” Merits Opinion, 2019
WL 7841923, at *3. That conclusion assumes for purposes
 of eligibility analysis that, despite the “at least one client
 device” language, which might suggest coverage of a sys-
 tem limited to sending to a single device, the claims re-
 quire, as suggested by at least the term “broadcast,” the
 ability to send to multiple devices. We agree with the
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6                     ADAPTIVE STREAMING INC.   v. NETFLIX, INC.

 district court’s characterization of what the claims are di-
 rected to.
     We consider “what the patent asserts to be the ‘focus of
 the claimed advance over the prior art.’” Solutran, Inc. v.
 Elavon, Inc., 931 F.3d 1161, 1168 (Fed. Cir. 2019) (quoting
 Affinity Labs of Texas, LLC v. DIRECTV, LLC, 838 F.3d
1253, 1257 (Fed. Cir. 2016)). In this case, the claims and
 written description make clear that the focus of the claimed
 advance is the abstract idea of format conversion, from an
 incoming signal’s format to a variety of formats suited to
 different destination devices. The focus is not any specific
 advance in coding or other techniques for implementing
 that idea; no such specific technique is required.
     The written description, through material incorporated
 by reference, itself explains the familiarity of translation of
 content—from a format (including a language) of a sender
 to one suited to a recipient—as a fundamental communica-
 tion practice in both the electronic and pre-electronic
 worlds. J.A. 337–38. We have held that the ideas of encod-
 ing and decoding image data and of converting formats, in-
 cluding when data is received from one medium and sent
 along through another, are by themselves abstract ideas,
 and accordingly concluded that claims focused on those
 general ideas governing basic communication practices,
 not on any more specific purported advance in implemen-
 tation, were directed to abstract ideas. See Two-Way Me-
 dia Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329,
 1338 (Fed. Cir. 2017); RecogniCorp, LLC v. Nintendo Co.,
 Ltd., 855 F.3d 1322, 1326–27 (Fed. Cir. 2017); EasyWeb In-
 novations, LLC v. Twitter, Inc., 689 F. App’x 969, 970 (Fed.
 Cir. 2017) (holding ineligible claims to “a message publish-
 ing system that accepts messages in multiple ways, such
 as by fax, telephone, or email, verifies the message was
 sent by an authorized sender, and converts and publishes
 the message on the Internet,” requiring format change); see
 also Voit Techns., LLC v. Del-Ton, Inc., 757 F. App’x 1000,
 1003–04 (Fed. Cir. 2019) (holding ineligible claims
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 ADAPTIVE STREAMING INC.   v. NETFLIX, INC.                  7

 generally invoking use of compression techniques). We
 conclude that the claims here are likewise directed to an
 abstract idea.
                               B
     The claims also flunk the second step of the Alice in-
 quiry: They do not incorporate anything more that would
 suffice to transform their subject matter into an eligible ap-
 plication of the abstract idea. Claims 39, 40, and 42 recite
 only generic computer hardware, such as a “processor” and
 a “broadcasting server” with an “image retrieval portion,”
 “a data structure,” and a “transcoding module,” ’305 pa-
 tent, col. 27, lines 10–24, as performing the claimed func-
 tions, which the ’305 patent’s specification states were
 conventional, id., col. 10, lines 4–22 (describing elements of
 diagrams, including compression components, and stating:
 “Each of these blocks carry out functionality common[ly]
 known in the art as well as described above and throughout
 the present specification.”). “Nothing in the claims, under-
 stood in light of the specification, requires anything other
 than off-the-shelf, conventional computer, network, and
 display technology for gathering, sending, and presenting
 the desired information.” Electric Power Group, LLC v. Al-
 stom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016). In partic-
 ular, there is no identification in the claims or written
 description of specific, unconventional encoding, decoding,
 compression, or broadcasting techniques. 1
      Adaptive suggests that the Patent and Trademark Of-
 fice’s novelty and non-obviousness determinations, ren-
 dered in issuing the patent, undermine our conclusion.
 Adaptive’s Op. Br. 53–55. They do not. We have explained
 that satisfying the requirements of novelty and non-

    1   Adaptive made no separate argument in the district
 court about the application of Alice’s second step to depend-
 ent claims 40 and 42.
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8                    ADAPTIVE STREAMING INC.   v. NETFLIX, INC.

 obviousness does not imply eligibility under § 101, includ-
 ing under the second step of the Alice inquiry, because
 what may be novel and non-obvious may still be abstract.
 See Chamberlain Group, Inc. v. Techtronic Indus. Co., 935
F.3d 1341, 1348–49 (Fed. Cir. 2019).
                              C
      In its reply brief in this court, Adaptive makes two ar-
 guments that it did not raise and develop as challenges in
 the argument section of its opening brief in this court,
 merely mentioning each point in passing in the statement-
 of-the-case portion of the opening brief. One argument is
 that the district court erred by not construing certain claim
 terms before deciding the § 101 issue. Adaptive’s Reply Br.
 28. The other is that industry recognition and commercial
 success establish that the claims are to patent-eligible sub-
 ject matter. Id. at 24–25. Because neither argument was
 developed in the argument section of Adaptive’s opening
 brief, Adaptive has forfeited both arguments. See, e.g.,
 SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312,
 1319–20 (Fed. Cir. 2006) (argument not developed in open-
 ing brief’s argument section is forfeited); Martinez-Serrano
 v. I.N.S., 94 F.3d 1256, 1259 (9th Cir. 1996) (same).
                              III
    For those reasons, we affirm the district court’s judg-
 ment.
     Each party shall bear its own costs.
                        AFFIRMED