Opinion
Case No. CV 19-1602 PSG (JCx) Case No. CV 19-1606 PSG (JPRx)
11-04-2019
DivX, LLC v. Netflix, Inc. DivX, LLC v. Hulu, LLC
CIVIL MINUTES - GENERAL
Present: The Honorable Philip S. Gutierrez, United States District Judge Wendy Hernandez
Deputy Clerk Not Reported
Court Reporter Attorneys Present for Plaintiff(s): Not Present Attorneys Present for Defendant(s): Not Present
Proceedings (In Chambers): The Court DENIES Defendants' Motions to Dismiss the FACs WITHOUT PREJUDICE
On March 5, 2019, Plaintiff DivX, LLC ("DivX" or "Plaintiff") filed these two actions for patent infringement against Defendants Netflix, Inc. ("Netflix") and Hulu, LLC ("Hulu," collectively with Netflix, "Defendants"). See LACV 19-1602 PSG (JCx) ("Netflix Case"), Dkt. # 1 ("Netflix Case Compl."); LACV 19-1606 PSG (JPRx) ("Hulu Case"), Dkt. # 1 ("Hulu Case Compl."). Plaintiff alleges that Hulu infringes seven of its United States Patents: U.S. Patent Nos. 7,295,673 ("the '673 patent"), 8,139,651 ("the '651 patent"), 8,472,792 ("the '792 patent"), 9,270,720 ("the '720 patent"), 9,998,515 ("the '515 patent"), 10,212,486 ("the '486 patent"), and 10,225,588 ("the '588 patent"). Hulu Case Compl. ¶ 9. Plaintiff alleges that Netflix infringes the same seven patents, as well as an eighth patent, U.S. Patent No. 9,184,920 ("the '920 patent"). Netflix Case Compl. ¶ 9.
All further citations will be to the Netflix Case unless otherwise noted.
Defendants previously filed motions to dismiss Plaintiff's Complaints pursuant to 35 U.S.C. § 101. Because Plaintiff's briefing presented factual characterizations of the asserted claims that were not reflected in its Complaints, the motions were granted with leave for Plaintiff to amend its complaints. Dkt. # 59 ("Netflix Order"); Hulu Case, Dkt. # 58 ("Hulu Order"). Plaintiff subsequently filed a First Amended Complaint in each case. Dkt. # 60 ("Netflix Case FAC"); Hulu Case, Dkt. # 59 ("Hulu Case FAC").
Before the Court are Defendants' Motions to Dismiss the FACs. See Dkt. # 61 ("Netflix Mot."); Hulu Case, Dkt. # 60 ("Hulu Mot."). Plaintiff has timely opposed each motion. See Dkt. # 67 ("Opp. to Netflix"); Hulu Case, Dkt. # 68 ("Opp. to Hulu"). Defendants have each replied. See Dkt. # 68 ("Netflix Reply"); Hulu Case, Dkt. # 69 ("Hulu Reply").
After considering the arguments presented, the Court DENIES Defendants' Motions (CV19-1602, Dkt. # 61; CV19-1606, Dkt. # 60) WITHOUT PREJUDICE.
I. Background
Defendants argue that all of Plaintiff's infringement claims for the '720 Patent, '515 Patent, '792 Patent, '673 Patent, and '588 Patent should be dismissed on the basis that the claims of those patents are invalid under 35 U.S.C. § 101. Each of these five asserted patents was described in the Court's previous Orders regarding Defendants' motions to dismiss Plaintiff's original Complaints. See generally Netflix Order; Hulu Order. For convenience, the same summaries of the five patents are repeated herein. Discussion of Plaintiff's pleadings has been updated to refer to the currently-operative FACs.
A. The '720 Patent and '515 Patent
The '720 Patent issued February 23, 2016 and is titled "Systems and Methods for Automatically Generating Top Level Index Files." The '515 Patent is a continuation of the '720 Patent and shares the same title. It issued on June 12, 2018. The two patents share substantially the same specification.
Citations are to the '720 Patent unless otherwise noted.
The '515 and '720 Patents state that they "generally relate to streaming media and more specifically to the automatic generation of top level index files for use in adaptive bitrate streaming." '720 Patent at 1:17-19. They explain that "streaming media" refers to the playback of media on a device, "where the media is stored on a server and continuously sent to the playback device over a network." Id. at 1:23-26. In this context, "[a]daptive bit rate streaming or adaptive streaming involves detecting the present streaming conditions (e.g. the playback device's network bandwidth and video decoding capacity) in real time and adjusting the quality of the streamed media accordingly." Id. at 1:30-34. The patents further explain that "[i]n adaptive streaming systems, the source media is typically stored on a media server as a top level index file pointing to a number of alternate streams that contain the actual video and audio data. Each stream is typically stored in one or more container files." Id. at 1:57-61. Elsewhere, the patents state that for adaptive bitrate streaming, "[i]n many instances, video streams are created for different classes of playback devices." Id. at 12:23-24.
Plaintiff's FACs allege that "[t]he computing resources needed to compile and maintain a separate index file for each combination of content and device would have made such a system infeasible." Netflix Case Compl. ¶ 173; Hulu Case Compl. ¶ 150. They allege that these asserted patents are directed to the "automatic[ ] generat[ion of] a top-level index file tailored to a particular playback device that the playback device uses to request video streams, improving [adaptive bitrate streaming]." See, e.g., Netflix Case Compl. ¶ 169; Hulu Case Compl. ¶ 146 (discussing '720 Patent); see also Netflix Case Compl. ¶ 190; Hulu Case Compl. ¶ 167 (same as to '515 Patent).
The '720 Patent has 18 claims, including two independent claims: Claim 1 and Claim 13. Claim 1 is a method claim and Claim 13 is directed to a "playback server system." Plaintiff alleges that Defendants each infringe at least Claim 1 of the '720 Patent. Netflix Case Compl. ¶ 354; Hulu Case Compl. ¶ 309. Claim 1 of the '720 Patent states:
1. A method of generating a top level index file, comprising:
receiving a request from a playback device at a playback server system, where the request (i) identifies a piece of content and (ii) includes a product identifier;
retrieving, using the playback server system, (i) a list of assets associated with the identified piece of content and (ii) at least one device capability based upon the product identifier, wherein each asset is a different stream associated with the piece of content;
filtering the list of assets using the at least one device capability using the playback server system, wherein the playback server system maintains a database of product identifiers and associated device capabilities;
generating a top level index file describing each asset in the filtered list of assets using the playback server system; and
sending the top level index file to the playback device using the playback server system, wherein the top level index file is used by the
'720 Patent at Claim 1.playback device to determine which assets to request for playback on the device.
The '515 Patent has 21 claims, including two independent claims: Claim 1 and Claim 16. Claim 1 is a method claim and Claim 16 is a system claim. Plaintiff alleges that Defendants each infringe at least Claim 1 of the '515 Patent. Netflix Case Compl. ¶ 368; Hulu Case Compl. ¶ 323. Claim 1 of the '515 Patent states:
1. A method for authorizing playback of content, comprising:
'515 Patent at Claim 1.receiving a request for content from a playback device at a playback server, where the request includes a product identifier that identifies a device configuration;
identifying, using the playback server, based on the product identifier, a plurality of device capabilities including a device type and a device software version indicating a version number for an adaptive streaming software component implemented on the playback device;
retrieving, using the playback server, a list of assets associated with the identified piece of content, wherein each asset is a different stream associated with the piece of content;
filtering, using the playback server, the list of assets based on the plurality of device capabilities;
generating, using the playback server, a top level index file describing each asset in the filtered list of assets, wherein the top level index file identifies locations and bitrates of a plurality of alternative streams capable of being used to perform adaptive streaming of the content; and
sending the top level index file from the playback server to the playback device.
B. The '792 Patent
The '792 Patent issued June 25, 2013 and is titled "Multimedia Distribution System." The '792 Patent states that it "relates to the encoding, transmission and decoding of multimedia files that can include tracks in addition to a single audio track and a single video track." '792 Patent at 1:22-24. The '792 Patent further describes using "a complete index that can be used to locate each data chunk in each of these tracks and an abridged index that can enable the location of a subset of the data chunks in each track." Id. at Abstract. The FACs allege that such a system addressed the need "for an improved multimedia file format and systems for generating, distributing, and decoding multimedia files with an improved index structure that could enable desirable playback features while reducing the computing resources, and associated delays, required to obtain and process the index." Netflix Case Compl. ¶ 125, Hulu Case Compl. ¶ 117.
The '792 Patent has 23 claims, including three independent claims: Claims 1, 9, and 15. All three independent claims refer to a "decoder for decoding [a] multimedia [file]." Plaintiff alleges that Defendants each directly infringe at least Claim 9 of the '792 Patent. Netflix Case Compl. ¶ 309; Hulu Case Compl. ¶ 286. Claim 9 of the '792 Patent recites:
9. An encoder for encoding a multimedia file comprising at least one video track and at least one audio track, the encoder comprising:
'792 Patent at Claim 9.a processor;
a memory including a file containing at least one sequence of encoded video frames and a full index that includes information indicative of the location within the file and characteristics of each encoded video frame;
wherein the processor is configured to generate an abridged index that references a subset of the encoded video frames in the sequence of encoded video frames and to encode a multimedia file including the abridged index, the at least one sequence of encoded video frames, and a full index so that the abridged index is located within the multimedia file prior to the series of encoded video frames, the first and second indexes enabling trick play functionality.
C. The '673 Patent
The '673 Patent issued November 13, 2007 and is titled "Method and System for Securing Compressed Digital Video." The '673 Patent states that it relates to "a method and system for generating a protected stream of compressed digital video and for decrypting the protected stream in a bounded-bandwidth fashion." '673 Patent at 1:17-20. The '673 Patent explains that a "frame" is "a matrix of pixels at a given resolution." Id. at 1:26-27. It further states,
[t]he representation of digital video involves the display of a series of frames in sequence . . . . As a consequence of the large amount of data associated with uncompressed digital video, various compression techniques have been employed in an effort to reduce the bandwidth required to transmit digital video.Id. at 1:41-49. The '673 Patent then describes some known video encoders and encrypters and considerations related to the amount of processing power required to decode or decrypt a series of frames once encoded. See id. at 1:50-3:51. The Background of the Invention section concludes by stating: "a need exists for an adequately secure technique for bounding the resources consumed during decryption, thereby reducing peak processing requirements." Id. at 3:49-50. The '673 Patent purports to address these concerns by disclosing systems and methods for "encrypting selected parts of selected frames of the sequence of frames" and "generating frame decryption information necessary to decrypt the set of encrypted frames." Id. at 3:57-63.
The '673 Patent has 32 claims, including four independent claims: Claims 1, 14, 21, and 29. Claims 1 and 14 are method claims for encrypting and decrypting data, respectively. Claims 21 and 29 refer to "digital video encoder[s]" for encrypting and decrypting, respectively. Plaintiff alleges that Defendants each infringe at least Claim 1 of the '673 Patent. Netflix Case Compl. ¶ 268; Hulu Case Compl. ¶ 241. Claim 1 of the '673 Patent states:
1. A method for producing a protected stream of compressed video content, said method comprising:
receiving an input stream of compressed video content containing a sequence of frames;
generating a frame encryption key and storing the encryption key in a key table;
'673 Patent at Claim 1.creating a set of encrypted frames by encrypting at least selected portions of selected frames of said sequence of frames using the frame encryption keys in accordance with a frame encryption function;
generating frame decryption information necessary to decrypt said set of encrypted frames including an encryption key pointer identifying a decryption key to be used in the decryption of each encrypted frame; and
assembling at least said set of encrypted frames, unencrypted frames of said sequence of frames, and said frame decryption information to produce the protected stream of compressed video content;
wherein said frame decryption information is synchronized with said set of encrypted frames into a synchronized frame decryption stream.
D. The '588 Patent
The '588 Patent issued March 5, 2019 and is titled "Playback Devices and Methods for Playing Back Alternative Streams of Content Protected Using a Common Set of Cryptographic Keys." The '588 Patent describes "performing adaptive bitrate streaming using alternative streams of protected content." '588 Patent at Abstract. The '588 Patent explains that in adaptive bitrate streaming, "the source media is encoded at multiple bitrates and the playback device or client switches between streaming the different encodings depending on the available resources." Id. at 1:59-67. The FACs further allege that "[p]rior to the '588 invention, each stream used different cryptographic information for authorizing secure playback," requiring more computing resources and increasing "the cost and complexity of the playback device." Netflix Case Compl. ¶ 225; Hulu Case Compl. ¶ 202. The '588 Patent allegedly purports to address this problem by providing that "each of the alternative streams of protected content are encrypted using common cryptographic information." '588 Patent at Abstract.
The '588 Patent has 24 claims, including two independent claims: Claim 1 and Claim 12. Claim 1 refers to a "playback device," including a non-volatile storage that performs certain steps. Claim 12 is a method claim. Plaintiff alleges that Defendants each infringe at least Claim 1 of the '588 Patent. Netflix Case Compl. ¶ 421; Hulu Case Compl. ¶ 377. Claim 1 of the '588 Patent states:
1. A playback device for playing protected content from a plurality of alternative streams, comprising:
a set of one or more processors; and
a non-volatile storage containing an application for causing the set of one or more processors to perform the steps of:
'588 Patent at Claim 1. / / / / / /obtaining a top level index file identifying a plurality of alternative streams of protected video, wherein each of the alternative streams of protected video includes partially encrypted video frames that are encrypted using a set of common keys comprising at least one key, and wherein the partially encrypted video frames contain encrypted portions and unencrypted portions of data;
obtaining a copy of the set of common keys;
detecting streaming conditions for the playback device;
selecting a stream from the plurality of alternative streams of protected video based on the detected streaming conditions;
receiving a container index that provides byte ranges for portions of the selected stream of protected video within an associated container file;
requesting portions of the selected stream of protected video based on the provided byte ranges;
locating encryption information that identifies encrypted portions of frames of video within the requested portions of the selected stream of protected video;
decrypting each encrypted portion of the frames of video identified within the located encryption information using the set of common keys; and
playing back the decrypted frames of video obtained from the requested portions of the selected stream of protected video.
II. Legal Standard
A. Rule 12(b)(6) Motion to Dismiss
To survive a motion to dismiss under Rule 12(b)(6), a complaint must "contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In assessing the adequacy of the complaint, the court must accept all pleaded facts as true and construe them in the light most favorable to the plaintiff. See Turner v. City & Cty. of San Francisco, 788 F.3d 1206, 1210 (9th Cir. 2015); Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). The court then determines whether the complaint "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Accordingly, "for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (internal quotation marks omitted).
B. Title 35, Section 101 Patent Eligibility
Under § 101 of the Patent Act, "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor . . . " 35 U.S.C. § 101. One may not obtain a patent for "laws of nature, natural phenomena, [or] abstract ideas." Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208, 217 (citations omitted).
The Supreme Court in Alice established the two-step test that district courts apply in a patent eligibility analysis under § 101. Id. First, at "Alice step one," a court must "determine whether the claims at issue are directed to one of those patent-ineligible concepts." Alice, 573 U.S. at 217 (citing Mayo Collaborative Servs. v. Prometheus Labs, Inc., 566 U.S. 66, 77 (2012)). The courts "therefore look to whether the claims . . . focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery." McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016). "The 'directed to' inquiry . . . cannot simply ask whether the claims involve a patent-ineligible concept, because essentially every routinely patent-eligible claim . . . involves a law of nature and/or natural phenomenon." Enfish LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (emphasis in original). Rather, district courts are to review claims "in light of the specification, based on whether 'their character as a whole is directed to excluded subject matter.'" Id. at 1335 (quoting Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015)).
Because "[s]oftware can make non-abstract improvements to computer technology," it is "relevant to ask whether [computer-related] claims are directed to an improvement to computer functionality versus being directed to an abstract idea." Id. at 1335. "Abstraction is avoided or overcome when a proposed new application or computer-implemented function is not simply the generalized use of a computer as a tool to conduct a known or obvious process, but instead is an improvement to the capability of the system as a whole." Trading Techs. Int'l, Inc. v. CQG, Inc., 675 F. App'x 1001, 1005 (Fed. Cir. 2017) (citing Enfish, 822 F.3d at 1336 ("In this case . . . the plain focus of the claims is on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.")).
If a claim is directed to a patent-ineligible concept, the court must ask at "Alice step two" "[w]hat else is there in the claims . . . ?" Alice, 573 U.S. at 217 (citing Mayo, 566 U.S. at 76-77). To answer this question, courts must "consider the elements of each claim both individually and 'as an ordered combination' to determine whether the additional elements 'transform the nature of the claim' into a patent-eligible application." Id. (citing Mayo, 566 U.S. at 78-79). Step two of the test is a "search for an 'inventive concept'—i.e., an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.'" Id. at 217-18 (citing Mayo, 566 U.S. at 72). This inquiry determines whether claims reciting an abstract idea "do significantly more than simply describe that abstract method" and instead "'transform' the claimed abstract idea into patent-eligible subject matter" with "additional features." Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014). "Those 'additional features' must be more than 'well-understood, routine, conventional activity.'" Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1349 (Fed. Cir. 2016) (citing Alice, 573 U.S. at 223 (explaining that claim steps requiring "electronic recordkeeping" and "use of a computer to obtain data, adjust account balances, and issue automated instructions" do "no more than require a generic computer to perform generic computer functions")). However, "[t]he inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art . . . . [A]n inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces." Id. at 1350.
Whether a claim recites patent eligible subject matter is a question of law which may contain underlying factual disputes. Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018). "Any fact . . . that is pertinent to the invalidity conclusion must be proven by clear and convincing evidence." Id.
"Patent eligibility has in many cases been resolved on motions to dismiss or summary judgment." Id.; Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1125 (Fed. Cir. 2018) ("[P]atent eligibility can be determined at the Rule 12(b)(6) stage" but "only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law."). If there are questions of fact or claim scope that require resolution, dismissal at the motion to dismiss stage is not appropriate. Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1317 (Fed. Cir. 2019) ("[P]lausible and specific factual allegations that aspects of the claims are inventive are sufficient" to defeat a motion to dismiss); Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1273-74 (Fed. Cir. 2012) ("[I]t will ordinarily be desirable—and often necessary—to resolve claim construction disputes prior to a § 101 analysis, for the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter.").
III. Discussion
A. Representative Claims for 35 U.S.C. § 101 Inquiry
For purposes of the analysis under § 101, "[c]ourts may treat a claim as representative in certain situations, such as if the patentee does not present any meaningful argument for the distinctive significance of any claim limitations not found in the representative claim or if the parties agree to treat a claim as representative." Berkheimer, 881 F.3d at 1365; see also Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass'n, 776 F.3d 1343, 1348 (Fed. Cir. 2014) (agreeing with district court's decision to conduct representative claim analysis in its § 101 inquiry based on district court's determination that the claims at issue were "substantially similar and linked to the same abstract idea").
In their first round of motions, Defendants identified certain claims of the five asserted, challenged patents as representative. Specifically, they referred to Claim 1 of the '720 Patent, Claims 1 and 16 of the '515 Patent, Claims 9 and 15 of the '792 Patent, Claims 1 and 14 of the '673 Patent, and Claim 1 of the '588 Patent. See, e.g. Netflix Order 12-14. Plaintiff did not respond to this identification in its oppositions or otherwise argue at the hearing on those motions that other claims in these patents have one or more limitations with distinctive significance compared to the limitations in Defendants' identified claims. The Court "deemed Plaintiff to have waived any argument to the contrary, both for purposes of [those] motions and any future motions to dismiss." Id. 15.
Claim 16 of the '515 Patent states:
16. A playback device, comprising:
memory containing information used to identify capabilities of the playback device; and
a processor configured by a client application;
wherein the client application configures the processor to:
'515 Patent at Claim 16.request, using the playback device, a top level index file from a playback server, where the request identifies a piece of content and includes a software version indicating a version number for an adaptive streaming software component implemented on the device;
receive, using the playback device, a top level index file from the playback server, where the top level index file identifies locations and bitrates of a plurality of different alternative streams capable of being used to perform adaptive streaming of the identified piece of content and accessible to the playback device;
select, using the playback device, an initial stream from the plurality of different alternative streams;
retrieve, using the playback device, at least a portion of the initial stream from the locations identified in the top level index file; and
play back, using the playback device, the portion of the initial stream.
Claim 15 of the '792 Patent states:
15. A decoder for decoding multimedia comprising at least one video track and at least one audio track, the decoder comprising:
a processor configured to decode multimedia;
wherein the multimedia includes:
a sequence of encoded video frames;
a complete index referencing each encoded video frame in the sequence of encoded video frames;
an abridged index referencing a subset of the encoded video frames in the sequence of encoded video frames;
'792 Patent at Claim 15.wherein the processor is configured to locate a particular encoded video frame within the multimedia using the abridged index and to playback the sequence of encoded video frame starting from the located encoded video frame, the first and second indexes enabling trick play functionality.
Claim 14 of the '673 Patent states:
14. A method for decrypting a protected stream of compressed video content comprising:
'673 Patent at Claim 14.receiving an input stream of compressed video content containing encrypted frames and unencrypted frames;
receiving frame decryption information necessary to decrypt said encrypted frames, said frame decryption information is synchronized with said set of encrypted frames into a synchronized frame decryption stream and distinguishes said encrypted frames from said unencrypted frames;
obtaining an applicable frame decryption key from the received frame decryption information; and
decrypting selected portions of said encrypted frames using a frame decryption function in accordance with said frame decryption information, which identifies the specific portions of the frames to be decrypted and the applicable frame decryption key from the frame decryption information.
Now, Plaintiff argues that Defendants' identified claims should not be treated as representative for purposes of the 35 U.S.C. § 101 inquiry and that it should not be deemed to have waived such a position. See, e.g. Opp. to Netflix 8:24-9:16. Plaintiff offers no basis for its failure to timely raise its arguments regarding representative claiming during the first round of motions on this exact same issue, and the Court finds its conduct on this issue inappropriate and possibly exceptional. However, rather than resolve the issue as to all patents, the representative claiming issue will be considered on a patent-by-patent basis to the extent it is necessary to resolve the parties' disputes at this time.
B. The '720 Patent and '515 Patent
Plaintiff has alleged that the claims of the '720 and '515 Patents are drawn to "automatically generating (or, on the device side, requesting and using) an improved , device-specific top level index file for a particular playback device based on that playback device's capabilities, creating more efficient ABS [("adaptive bitrate streaming")] and improving the performance of both the ABS server and the playback device." Opp. to Netflix 3:6-10 (emphasis added) (internal citations omitted) (citing Netflix FAC ¶¶ 174, 176, 183, 186, 196). Defendants argue that there are no factual disputes regarding the nature of the claimed top level index files and assert that the FACs admit device-specific index files already existed. See, e.g. Netflix Reply 3:13-14. Defendants do not actually cite the FAC for this assertion or otherwise persuasively show that there indeed are a lack of relevant disputed facts as to this issue.
The FACs include sufficient factual allegations to support patent eligibility at this stage. Specifically, the FACs include allegations suggesting that the claims are drawn to generating a new, device-specific file in response to a request so that "[t]he server does not need to store a static top level index file for every unique playback device, and each playback device receives an index to streams compatible with that specific device." Opp. to Netflix 3:15-15. See Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1305 (Fed. Cir. 2018) (claims not abstract where they "employ[ed] a new kind of file that enables a computer security system to do things it could not do before."); see also Aatrix, 882 F.3d at 1127 (allegations in proposed pleading sufficient at motion to dismiss stage to support that claimed "data file" may be non-routine and unconventional because "[t]he complaint alleges that the claimed software uses less memory, results in faster processing speed, and reduces the risk of thrashing which makes the computer process forms more efficiently. These allegations suggest that the claimed invention is directed to an improvement in the computer technology itself and not directed to generic components performing conventional activities." (citation omitted).).
A § 101 challenge to the '720 and '515 Patents may ultimately be appropriate and successful. Specifically, the claims of the '720 and '515 Patents are likely at least drawn to an abstract idea. Generating a specific index in response to a request from a particular user device is highly analogous to a restaurant making food "to order" in response to a particular customer request, as opposed to a restaurant providing a customer with pre-prepared meals available at the time the customer orders. In other words, the claims appear directed to the abstract idea of generating a response to a specific request at the time of the request, as opposed to having some pre-prepared response ready at the time of the request. The critical issue for purposes of the § 101 inquiry likely then shifts to whether the claimed "device-specific" top level index file in the context of the asserted patents is more than a routine, conventional, and well-understood component (at step two) or otherwise conveys some technological improvement to the claims (at step one) beyond improvements that flow from implementing this abstract concept. Cf. Opp. to Netflix 14:11-12 ("DivX does not claim to have invented top level index files; rather, it pleaded facts showing that it invented an improved kind of top level index file." (emphasis in original).) The parties' arguments on these points appear to present factual disputes that are better resolved on a more robust record after the scope of the claims is better understood (including whether, as Plaintiff alleges, the claimed steps for some of the asserted claims must be carried out in a particular order and whether Claim 16 of the '515 Patent is as narrowly-directed as Plaintiff alleges).
The parties' dispute is best revisited after claim construction proceedings and when a factual record can be considered in connection with the issue. Defendants' Motions are DENIED without prejudice as to the asserted claims of the '720 and '515 Patents.
C. The '792 Patent
In its previous Orders, the Court stated:
On some level, Defendants' position appears to assume that the use or creation of an "index" is categorically abstract. This position further assumes that the term "index" carries the same meaning and long history of use across all technological fields. Defendants' cited cases relate to indexes for electronic databases that are created and used based on labeling/categorizing input information. See Erie, 850 F.3d at 1326-27; see also BSG Tech LLC v. Buyseasons, Inc., 899 F.3d 1281, 1283-84, 1286 (Fed. Cir. 2018) (patents related to systems and methods for indexing information stored in "wide access" databases across a "wide area network" such that systems could provide "summary comparison information to users before they input data"); In re TLI Commc'ns LLC Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016) (patents related to classifying digital images and sending them to a server for storage). Especially before claim construction has occurred in this case , the Court is not particularly persuaded that the "full index" (or "complete index") and "abridged index" described in the asserted patents[ , including the '792 Patent,] in the specific context of adaptive bitrate streaming should be equated to the database indexes described in Defendants' cited cases. [Footnote omitted.]
Defendants' cited cases also differ in that they do not purport to create, for instance, a new type of multimedia file with technological benefits. Here, Claim 1 of the '792 Patent specifically claims "a multimedia file including the abridged index, the at least one sequence of encoded video frames, and a full index so that the abridged index is located within the multimedia file prior to the series of encoded video frames, the first and second indexes enabling trick play functionality." Although Claim 15 does not include the same requirement for the
location of the "abridged index," it still similarly describes a "multimedia" as "a sequence of encoded video frames; a complete index . . . [and] an abridged index." If true that the claims are describing "a new kind of multimedia file," this could support patent eligibility, at least at the motion to dismiss stage. See [Finjan, 879 F.3d at 1305; Aatrix, 882 F.3d at 1127].Netflix Order 17-18 (emphasis added). Defendants' arguments in their new motions in response to these earlier findings of the Court (see Netflix Mot. 11:22-14:4) are not persuasive. In particular, Defendants have not shown that it is appropriate to disregard the allegations in the FACs that the claims relate to a "new multimedia file" that "allows the playback device to more quickly access index information and, as a result, navigate and more efficiently request the video content during streaming." Netflix FAC ¶¶ 124, 128. And again, the Court rejects the notion that claims must necessarily be abstract if they are directed to an "index," regardless of the specific claim requirements relating to the claimed index. See Netflix Reply at 6:5-6 ("the '792 patent claims are directed to using an index, which is abstract."). As further discussed infra, Defendants' logic would permit them to impermissibly short-circuit the § 101 analysis and fail to meaningfully consider whether the claims are directed to, for instance, an index that provides a technological improvement in a certain technological environment. Plaintiff's allegations are sufficient to create a factual question regarding the patent eligibility of the '792 Patent claims, particularly at Alice Step Two.
Defendants' Motions are DENIED without prejudice as to the asserted claims of the '792 Patent.
D. The '673 Patent
Defendants do not meaningfully dispute that their position regarding the patentability of claims "directed to" encryption or decryption would effectively result in a per se rule finding any such claims categorically abstract. See Netflix Mot. at 16:5-8 ("Netflix does not argue that any claim that mentions encryption or decryption 'no matter the context' are abstract. Rather here, it is the asserted claims recite an abstract idea because they are directed to that abstract concept." (emphasis added)). In other words, as with their arguments for the '720, '515, and '792 Patents regarding indexes, Defendants suggest through their positions and arguments for both the '673 and '588 Patents that there could never be claims directed to conducting encryption and decryption within a particular technological environment in a way that provides a technological improvement. The Court rejects this position, which is unsupported by any binding authority, contrary to the Supreme Court's § 101 test under Alice and Mayo, and would effectively permit Defendants to short-circuit a meaningful § 101 analysis. See Netflix Mot. at 16:5-8 (relying on circular logic to assert, "the asserted claims recite an abstract idea because they are directed to that abstract concept.").
Here, Claims 1 and 14 of the '673 Patent require specific methods of conducting encryption or decryption of video content, including through partial encryption and by synchronizing the encrypted stream with decryption information. These are not claims that simply state "obtain data and encrypt it." Instead, they refer to a particular type of data (video data with a sequence of frames) and include specific requirements about how encryption or decryption of that data must be performed (partially and such that synchronized decryption data is available). Accepting the allegations in the FAC as true that performing the claimed methods results in improved allocation of processing power for video encryption systems (Netflix FAC ¶ 95), at least at the motion to dismiss stage, the Court would not find the claims to be directed to an abstract concept.
But even assuming that the claims are drawn to the abstract idea of encrypting or decrypting data, Defendants have not shown that "encrypting . . . selected frames of said sequence of frames using the frame encryption keys in accordance with a frame encryption function" as claimed was routine, conventional, and well-understood at the time the patent was filed. Defendants' arguments do not sufficiently address the specific scenario contemplated by the claims of selecting frames from a particular piece of video content for partial encryption. Nor is there information regarding whether this form of "partial-frame encryption" in combination with synchronizing decryption information was routine, conventional, and well- understood at the time the patent was filed. See Netflix Case Compl. ¶ 77; cf. Bascom, 827 F.3d at 1350 ("The district court's analysis in this case, however, looks similar to an obviousness analysis under 35 U.S.C. § 103, except lacking an explanation of a reason to combine the limitations as claimed. The inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art. As is the case here, an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces."). A determination of patent ineligibility on the current record would be, at the least, premature.
It is not clear to the Court what "frame encryption function" means in the context of the claims, and for this reason as well, it would be premature to reach a final patent eligibility determination at this time.
To support an argument that synchronizing decryption information is routine and conventional, Defendants cite to a portion of the patent specification describing using encryption/decryption keys to reverse an encryption/decryption process. Netflix Mot. 21:18-22 (quoting '673 Patent at 3:20-29); Netflix Reply 18:7-9. However, other excerpts of the '673 Patent suggest that, for instance, a "synchronized frame decryption stream" is not necessarily the same as an encryption/decryption key. See, e.g., '673 Patent at 6:57-67. Thus, Defendants' assertion that this claim component is routine and conventional is not supported by its citation to the record. In addition to the concerns stated in the body of this Order, more information is needed about the meaning of the claim phrase "synchronized frame decryption stream" before a final patent eligibility determination can be made.
Defendants' Motions are DENIED without prejudice as to the asserted claims of the '673 Patent.
E. The '588 Patent
For similar reasons to those already explained regarding the other four challenged patents, it would be premature to find the claims of the '588 Patent invalid as a matter of law at the motion to dismiss stage.
However, the Court notes that Plaintiff presents less plausible allegations and less persuasive arguments for patent eligibility for the '588 Patent claims compared to some of the other asserted patents. Plaintiff emphasizes that the focus of the analysis at Alice Step One must be on all the claim limitations collectively. Netflix Opp. 23:23-24:3. However, Plaintiff does not meaningfully dispute that the Background of the Invention section of the '588 Patent specification acknowledges that many of the claim steps were "typical" in prior art systems. See '588 Patent, 1:45-2:62 (describing, among other things, using ABS to stream media to a playback device, including using top level index files, container files, and encryption keys to encrypt streamed content). Particularly at Alice Step One, Plaintiff has not cited to legal authority to support that these "typical" aspects recited in the claims would be able to supply the technological improvement that could take the claims outside the realm of being directed to an abstract idea.
Indeed, Plaintiff appears to concede that the core limitation for patent eligibility purposes is reflected in the portion of Claim 1 that requires:
obtaining a top level index file identifying a plurality of alternative streams of protected video, wherein each of the alternative streams of protected video includes partially encrypted video frames that are encrypted using a set of common keys comprising at least one key , and wherein the partially encrypted video frames contain encrypted portions and unencrypted portions of data[.]'588 Patent, Claim 1 (emphasis added). The Court tends to agree with Defendants that this limitation could ultimately be found directed to the abstract concept of encryption using a common key (as opposed to different keys for different data streams). As Defendants observed previously in this litigation, choosing a common key in this context does not appear to present many differences from long-standing real-world analogies, including selecting locks for a house that can all be unlocked by the same housekey. To support patent eligibility at this stage, however, Plaintiff heavily emphasizes the role of the claimed partial frame video encryption and the combination of partial frame encryption methods with encryption employing a set of common keys. Netflix Opp. 22:10-16. For instance, Plaintiff states,
[b]efore the '588 invention, each video stream used different cryptographic information for authorizing secure playback, which increased requirements for computing resources . . . . The claimed inventions reduce the computing resources required to perform secure ABS by using top level index files, container index files, and video stream container files employing partial-frame encryption and common encryption keys.Id. 23:7-13 (citations omitted). On the current record, where the Court is obligated to accept Plaintiff's allegations as true, the combination of applying partial-frame encryption to alternative video streams, where all the streams are encrypted using a common key, could support that the claims are likely directed to a technological improvement. See Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1318 (Fed. Cir. 2019) ("Accepting the allegations . . . as true, we cannot conclude that the asserted claims lack an inventive concept.").
Further, even if the Court were to find the claims abstract as a matter of law at this time, factual questions would preclude dismissal. At this stage, the Court cannot accept or adopt Defendants' position that partial-frame encryption was routine and well-understood at the time the '588 Patent was filed. Although the '673 Patent was filed long before the '588 Patent and referred to partial frame encryption, this is insufficient to resolve the issue in Defendants' favor now. See Berkheimer, 881 F.3d at 1369 ("Whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art. The mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional."). The parties also appear to have a dispute over whether the "container index" recited in the '588 Patent claims is equivalent to previously-known container files or otherwise supplies an inventive concept. See Netflix Opp. 25:2-7; see also Netflix FAC ¶ 227. This dispute also precludes a patent eligibility determination in Defendants' favor.
Defendants' Motions are DENIED without prejudice as to the asserted claims of the '588 Patent.
IV. Conclusion
For the reasons stated, the Court DENIES Defendants' Motions WITHOUT PREJUDICE.
IT IS SO ORDERED.