IP Law Daily, PATENT—D. Del.: Netflix must face infringement suit over streaming technology, (May 15, 2024)

By Kevin M. Finson

Certain patents for streaming video content were not shown to be invalid for being directed at an abstract idea.

Netflix failed to show at the motion to dismiss stage that three patents asserted against it were invalid as directed to a patent-ineligible abstract idea, the U.S. District Court in Wilmington has held. The patents were directed at technological improvements, not abstract ideas (VideoLabs, Inc. v. Netflix, Inc. , No. 1:22-cv-00229-JHS (D. Del. May 14, 2024)).

VideoLabs, Inc. and VL Collective IP, LLC (collectively, VideoLabs) owned a large portfolio of video streaming patents. VideoLabs brought suit against Netflix, Inc. (Netflix) for infringement of U.S. Patents Nos. 8,139,878 (the ’878 patent), 7,440,559 (the ’559 patent), 7,233,790 (the ’790 patent), and 8,605,794 (the ’794 patent), all of which were directed to video streaming technology.

Netflix moved to dismiss the claims based upon the ’559, ’790, and ’794 patents on the ground that the patents concerned patent ineligible subject matter under 35 U.S.C. §101. Netflix also moved to dismiss indirect and willful infringement claims as to all four patents. The court applied the two-step Alice test.

Abstract idea. The ’790 patent claimed a method of providing access to digital content on wireless devices that could send the content in different formats based upon the capabilities of the wireless device used to access it. The ’559 patent claimed a method of having the wireless device transmit to the server information about its own capabilities. The ’794 patent claimed a method for ordering audio and video content.

Netflix argued that each patent was directed to the abstract ideas of simply organizing and directing information. Specifically, Netflix contended that the ’790 patent is directed to the abstract idea of “cataloging content and tailoring content based on device capabilities.” VideoLabs countered that claim 2 of the ’790 patent “makes a selection based on device capabilities, not user information, constituting an improvement to the computing system that allows the system to perform more efficiently, effectively, and automatically.” The court found that VideoLabs sufficiently pleaded that the ’790 patent overrides the routine and conventional sequence of events by “storing and distributing multiple items of digital content in multiple provisioning and packaging formats from one server system.”

Netflix argued that the ’559 patent is directed to the abstract idea of controlling the flow of data. However, according to the court, VideoLabs sufficiently pleaded that the ’559 patent improves on previous network architecture and improved the functioning of computers.

Concerning the ’794 patent, Netflix asserted that the patent claims are directed at the abstract idea of transmitting data in a synchronized fashion. The court again disagreed, finding that the ’794 patent takes an existing process—the existing ordering and aligning of data segments for playback—and improves it by using assignment rules that interrelate the segments rather than rely on timestamps. Further, the patent describes a new technique for ordering and aligning audio segments that is more efficient than prior techniques.

The court held that, at least based on the record as it existed at the motion to dismiss stage, the claims were directed to specific technological improvements to existing computer systems and were therefore not abstract. Finding that each patent was not directed to an abstract idea, the court did not reach the inventive concept step of the Alice test.

Indirect and willful infringement. Netflix argued that the complaint did not adequately allege pre-suit knowledge of the asserted patents. The court noted that the complaint alleged several conversations between representatives of the parties discussing the specific patents and infringement allegations, which was sufficient to allege pre-suit knowledge.

The court denied Netflix’s motion to dismiss.

The Case is No. 1:22-cv-00229-JHS.

Judge: Slomsky, J.

Attorneys: Michael J. Farnan (Farnan LLP) for VideoLabs, Inc. and VL Collective IP LLC. Jennifer Ying (Morris, Nichols, Arsht & Tunnell LLP) for Netflix Inc.

Companies: VideoLabs, Inc.; VL Collective IP LLC; Netflix Inc.

Cases: Patent TechnologyInternet DelawareNews