“The CAFC cited Two-Way Media Ltd. v. Comcast Cable Commc’ns in stating that ‘ideas of encoding and decoding image data and of converting formats, including when data is received from one medium and sent along through another, are by themselves abstract ideas.’”
On December 14, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed a decision of the United States District Court for the Central District of California in Adaptive Streaming Inc. v. Netflix, Inc., holding that that claims of Adaptive Streaming Inc.’s patent were invalid under 35 U.S.C. § 101. In particular, the CAFC agreed with the district court that the claims of the patent in suit were directed to the abstract idea of “collecting information and transcoding it into multiple formats” and that the claims did not incorporate anything more that would transform the claimed subject matter into an eligible application of the abstract idea.
District Court Proceedings
In July 2019, Adaptive Streaming Inc. (Adaptive) sued Netflix in the district court for infringement of U.S. Patent No. 7,047,305, which was titled “Personal Broadcasting System for Audio and Video Data Using a Wide Area Network” and “provides a technique including a system 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.” Netflix moved to dismiss the complaint, alleging that the claimed subject matter was not eligible for patenting under 35 U.S.C. § 101. The district court agreed with Netflix and dismissed Adaptive’s complaint. Adaptive appealed to the CAFC.
Federal Circuit Analysis
On appeal, Adaptive argued that the claims of the ’305 patent were not directed to an abstract idea and that they included inventive concepts making them patent eligible. Reviewing the dismissal de novo, the CAFC explained that matter eligibility under § 101 is a question of law based on underlying facts.
The CAFC analyzed the patent eligibility of the claims using the two step framework set forth in Alice Corp. Pty. Ltd. v. CLS Bank Int’l. With respect to the first step of the Alice framework, the CAFC agreed with the district court that the claims were directed to the abstract idea of “collecting information and transcoding it into multiple formats.” Citing Solutran, Inc. v. Elavon, Inc., the CAFC also considered “what the patent asserts to be the ‘focus of the claimed advance over the prior art.’” The CAFC explained that the claims and written description of the ‘305 patent make clear that 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 court added that the “focus is not any specific advance in coding or other techniques for implementing that idea; [thus,] no such specific technique is required.”
The CAFC cited Two-Way Media Ltd. v. Comcast Cable Commc’ns in stating that “ideas of encoding and decoding image data and of converting formats, including when data is received from one medium and sent along through another, are by themselves abstract ideas.” Thus, the CAFC concluded that the claims of the ‘305 patent were also directed to an abstract idea.
With respect to the second step of the Alice inquiry, the CAFC explained that the claims do not incorporate anything more that would transform the subject matter into an eligible application of the abstract idea. The CAFC noted that the claims recited only generic computer hardware, such as a “processor” and a “broadcasting server” with an “image retrieval portion,” “a data structure,” and a “transcoding module,” which were described in the specification as conventional. According to the CAFC, there was “no identification in the claims or written description of specific, unconventional encoding, decoding, compression, or broadcasting techniques.”
In response to Adaptive’s argument that the U.S. Patent and Trademark Office’s novelty and non-obviousness determinations, which were rendered in issuing the patent, undermined the conclusion of ineligible subject matter, the CAFC noted that “satisfying the requirements of novelty and non-obviousness does not imply eligibility under § 101, including under the second step of the Alice inquiry, because what may be novel and non-obvious may still be abstract.” Thus, the CAFC affirmed the district court’s holding of invalidity under 35 U.S.C. § 101.