Insufficient Arguing Below Causes Forfeited Review Above

By Adam J. Cook* and Josh Nightingale –

Absent exceptional circumstances, the Federal Circuit will generally not consider arguments that a party failed to present in the tribunal under review.  In Netflix, Inc. v. DivX, LLC, the Federal Circuit held that IPR petitioner Netflix waived its claim construction arguments because it did not sufficiently raise them before the Patent Trial and Appeal Board (“PTAB”).  No. 22-1043 (Fed. Cir. Apr. 27, 2023).

DivX owns U.S. Patent No. 9,184,920 (“the ‘920 patent”), which is directed to playback devices and methods of decoding encrypted content using a playback device.  The challenged claims of the ‘920 patent require that the encrypted content includes video frames.  DivX sued Netflix for infringement of the ‘920 patent, and Netflix responded by filing an IPR petition against the asserted patent.  The PTAB instituted IPR but held in its final written decision that Netflix had not proven the unpatentability of the challenged claims by a preponderance of the evidence.  Netflix appealed.

On appeal, Netflix argued that the PTAB incorrectly construed the video frame claim limitation to require receipt of whole video frames before decryption begins.  The Federal Circuit found that Netflix did not raise these claim construction arguments in its IPR briefing despite knowing that DivX sought a contrasting claim construction.  And although Netflix “referenced portions of the claim construction arguments” in the PTAB oral hearing, the Court found this “insufficient to preserve such arguments” for appeal.  The Court thus held that Netflix waived its claim construction arguments and subsequently forfeited its right to appellate review of them.

Takeaways

Practitioners should ensure that they raise all relevant patentability and claim construction arguments to the PTAB during an IPR.  Otherwise, parties risk losing the right to have these arguments considered on appeal.  Further, merely raising arguments in PTAB oral hearings is not sufficient to preserve those arguments for appeal.

* Adam is a Summer Associate in Jones Day’s Pittsburgh Office.