Netflix, Inc. v. Divx, LLC

United States Court of Appeals
for the Federal Circuit
______________________
NETFLIX, INC.,
Appellant
v.
DIVX, LLC,
Appellee
______________________
2024-1541
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2020-
00558.
______________________
Decided: February 13, 2026
______________________
MARK CHRISTOPHER FLEMING, Wilmer Cutler Pickering
Hale and Dorr LLP, Boston, MA, argued for appellant.
Also represented by LAUREN MATLOCK-COLANGELO, New
York, NY; NORA N. XU, Washington, DC.
NATHAN NOBU LOWENSTEIN, Lowenstein & Weather-
wax LLP, Santa Monica, CA, argued for appellee. Also rep-
resented by PARHAM HENDIFAR, KENNETH J. WEATHERWAX.
______________________
Before MOORE, Chief Judge, DYK and TARANTO, Circuit
Judges.
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NETFLIX, INC. v. DIVX, LLC 2
TARANTO, Circuit Judge.
DivX, LLC, owns U.S. Patent No. 10,225,588, which
claims systems and methods for streaming partly en-
crypted media content. After DivX sued Netflix, Inc., alleg-
ing infringement of the patent, Netflix successfully
petitioned the Patent and Trademark Office (PTO) to insti-
tute an inter partes review (IPR) of all claims of the patent,
whose subject matter Netflix asserted would have been ob-
vious over specified prior-art references. Now before us is
a final written decision of the PTO’s Patent Trial and Ap-
peal Board in which the Board panel’s majority, over a dis-
sent, adopted a disputed claim construction and on that
basis rejected Netflix’s obviousness challenge. Netflix, Inc.
v. DivX, LLC, IPR2020-00558, 2024 WL 734765, at *4–10,
*12–14 (P.T.A.B. Feb. 22, 2024) (2024 Decision). On Net-
flix’s appeal, we reverse the Board’s claim construction, va-
cate the Board’s decision, and remand for further
proceedings consistent with the claim construction we
adopt.
I
A
To stream media content on a user’s playback device,
individual media streams, including audio, visual, and sub-
title streams, are sent from a server to the user’s device.
’588 patent, col. 1, lines 45–58. Those streams can be
stored in buffers on the user’s device in sufficient quantity
to enable uninterrupted playback—without the device hav-
ing to pause playback to await receipt of more content from
the server. Id., col. 1, lines 48–52. Individual streams of
content can be encoded at several different bitrates
(amounts of data transmitted per unit of time), producing
“alternative streams” of the same content. Id., col. 1, lines
64–67; see id., col. 1, lines 55–56.
Adaptive bitrate streaming (ABS) is a form of media
streaming in which, based on detected current streaming
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NETFLIX, INC. v. DIVX, LLC 3
conditions (notably, network bandwidth), the quality of the
streamed media to be played on the device is adjusted to
match those conditions by selecting the appropriate stream
from among alternative streams. Id., col. 1, lines 59–64.
For example, a device using ABS may select a lower quality
media stream (using less data) when network bandwidth is
poor (forcing lower bitrate transmission) so that it has
enough content to continue playback (albeit at lower qual-
ity) without interruption. See id.
To reduce unauthorized access or copying, streams of
media content can be “protected” by techniques such as
Digital Rights Management (DRM). Id., col. 2, lines 47–49.
Encryption/decryption is one such technique, requiring
that cryptographic information be provided to the playback
device. Id., col. 2, lines 49–62. The patent indicates that
one way to reduce resources needed for encryption/decryp-
tion processes (while still effectively reducing unauthor-
ized access or copying) is to encrypt only parts of streamed
media, such as “portions of frames of video,” and to furnish
the playback device information about which portions are
encrypted as well as “common” decryption information
(e.g., encryption keys), not unique to each encrypted por-
tion. See, e.g., id., col. 3, lines 13–30; col. 4, lines 39–58;
claim 1, col. 27, lines 37–40.
In ABS systems, protected source media, owned by the
provider, is usually stored on a server as a top-level index
file. Id., col. 2, lines 12–17. Top-level index files identify
alternative media streams for different audio and video
data depending on the streaming conditions (e.g., a high-
quality stream and a low-quality stream), and the alterna-
tive streams are typically located and stored within con-
tainer files. Id. One system of container files, described in
many embodiments of the patent, is evocatively named the
“Matroska” file system, based on a standard known in the
field. See, e.g., id., col. 2, lines 35–46; col. 20, lines 27–32;
id. pp. 8–11 (“other publications” listing, citing many Ma-
troska documents).
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NETFLIX, INC. v. DIVX, LLC 4
As the parties before us do not dispute, claim 1 of the
patent itself makes clear that “encryption information”
must “identif[y] encrypted portions of frames of video.” Id.,
col. 27, lines 54–55. The patent refers to several types of
“encryption information,” such as “DRMInfo,” which the
Board implicitly acknowledged was a type of encryption in-
formation. See id., col. 4, lines 42–46; 2024 Decision, at *6.
Claim 1 is representative for present purposes. We use
the annotations adopted by the parties in their briefing:
1. [a] A playback device for playing protected con-
tent from a plurality of alternative streams, com-
prising:
[b] 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:
[c] obtaining a top level index file identifying a
plurality of alternative streams of protected
video, [d] wherein each of the alternative
streams of protected video includes partially en-
crypted video frames [e] that are encrypted us-
ing a set of common keys comprising at least one
key, [f] and wherein the partially encrypted
video frames contain encrypted portions and un-
encrypted portions of data;
[g] obtaining a copy of the set of common keys;
[h] detecting streaming conditions for the play-
back device;
[i] selecting a stream from the plurality of alter-
native streams of protected video based on the
detected streaming conditions;
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NETFLIX, INC. v. DIVX, LLC 5
[j] receiving a container index that provides byte
ranges for portions of the selected stream of pro-
tected video within an associated container file;
[k] requesting portions of the selected stream of
protected video based on the provided byte
ranges;
[l] locating encryption information that
identifies encrypted portions of frames of
video within the requested portions of the
selected stream of protected video;
[m] decrypting each encrypted portion of the
frames of video identified within the located en-
cryption information using the set of common
keys; and
[n] playing back the decrypted frames of video
obtained from the requested portions of the se-
lected stream of protected video.
’588 patent, col. 27, lines 30–63 (emphasis added).
B
DivX sued Netflix in 2019, alleging infringement of the
’588 patent. In February 2020, Netflix petitioned for an
inter partes review of all the patent’s claims (1–24) under
35 U.S.C. §§ 311–19, asserting obviousness over U.S. Pa-
tent Application Publication No. 2011/0096828 (Chen) in
view of U.S. Patent Application Publication No.
2007/0083467 (Lindahl) and U.S. Patent No. 8,683,066
(Hurst). J.A. 11020–21. In August 2020, the Board insti-
tuted review. J.A. 11259. In its institution decision, the
Board rejected as “too restrictive” DivX’s proposed con-
struction of limitation [l], which DivX argued meant that
the “encryption information” itself be located “within the
requested portions of the selected stream of protected
video,” concluding that the better construction was instead
that the encryption information (wherever it was located)
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NETFLIX, INC. v. DIVX, LLC 6
simply had to identify encrypted portions of frames that
themselves were “within the requested portions of the se-
lected stream of protected video.” J.A. 11242–45. In the
Board’s view, at that stage, the encrypted-portion-contain-
ing frames of video (to be decrypted) must be within the
requested portions of the selected stream, but the encryp-
tion information (identifying the encrypted portions) need
not be. See id.
In August 2021, the Board issued a final written deci-
sion. See Netflix, Inc. v. DivX, LLC, IPR2020-00558, 2021
WL 3729361, at *11 (P.T.A.B. Aug. 23, 2021). In that deci-
sion, the Board agreed with Netflix that a relevant artisan
would have been motivated to combine the prior-art refer-
ences, and that DivX’s construction of limitation [l] was un-
persuasive, but concluded that a relevant artisan would
not have reasonably expected success in combining the
prior art in view of certain disclosures in the prior art ref-
erences. See id. at *3, *6, *10–11. On that basis, which did
not depend on the resolution of the claim-construction dis-
pute, the Board determined that Netflix had not shown un-
patentability of any of the claims. Id., at *11. Netflix
appealed, and in March 2023, we vacated the decision, con-
cluding that the Board’s analysis of reasonable expectation
of success was erroneous, and without ruling on the claim
construction of limitation [l], we remanded the matter to
the Board. See Netflix, Inc. v. DivX, LLC, No. 2022-1083,
2023 WL 2298768, at *4–6 (Fed. Cir. Mar. 1, 2023).
On remand, the Board panel (by a divided vote) con-
cluded again that Netflix had not shown unpatentability of
the challenged claims, 2024 Decision, at *14, but this time,
the Board did so by accepting the claim construction of lim-
itation [l] that DivX had pressed and that the Board had
previously rejected. The majority concluded that limitation
[l] requires “that the encryption information is located
within the requested portions of the selected stream of pro-
tected video.” Id., at *5 (emphasis in original). Based on
that construction of limitation [l], the panel majority
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NETFLIX, INC. v. DIVX, LLC 7
concluded that Netflix had not shown limitation [l] to be
met by the asserted combination of prior art and so had not
established obviousness. Id., at *14. One panel member
dissented, rejecting the majority’s claim construction and
concluding that Netflix had shown unpatentability of all
claims under the correct claim construction. Id., at *14–
30.
Netflix timely appealed the Board’s new final written
decision. We have jurisdiction to review Netflix’s appeal
under 28 U.S.C. § 1295(a)(4)(A).
II
Netflix argues that the Board incorrectly construed
limitation [l], whereas DivX argues to the contrary. Netflix
argues, and indeed shows, that, under its construction, lim-
itation [l] is indisputably taught by Lindahl and, hence, the
asserted prior-art combination, Netflix Opening Br. at 63–
66, and DivX does not disagree. Accordingly, the only issue
requiring decision is the proper claim construction of limi-
tation [l].
We review the Board’s claim construction in this mat-
ter de novo, as the required analysis here relies entirely on
intrinsic evidence and general grammatical, language-in-
terpretation principles that are not matters for findings by
the factfinder. See Intel Corp. v. Qualcomm Inc., 21 F.4th
801, 808 (Fed. Cir. 2021); SIMO Holdings Inc. v. Hong
Kong uCloudlink Network Technology Ltd., 983 F.3d 1367,
1374, 1377 (Fed. Cir. 2021). We consider the ordinary
meaning of the language specifically at issue, other claim
language providing context, the specification, and aspects
of prosecution history. See Intel, 21 F.4th at 809; World
Class Technology Corp. v. Ormco Corp., 769 F.3d 1120,
1123 (Fed. Cir. 2014); Phillips v. AWH Corp., 415 F.3d
1303, 1312–17 (Fed. Cir. 2005) (en banc). We conclude that
the Board’s construction of limitation [l] was erroneous.
We agree with Netflix about the proper claim construc-
tion—under which limitation [l] is indisputably taught by
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NETFLIX, INC. v. DIVX, LLC 8
the asserted prior-art combination. We therefore vacate
the Board’s decision and remand for further proceedings.
A
The disputed limitation requires “locating encryption
information that identifies encrypted portions of frames of
video within the requested portions of the selected stream
of protected video.” ’588 patent, col. 27, lines 54–57. One
thing is plain about this language, considered on its own
(before considering background interpretive principles,
other claim elements, and the specification): the language
is susceptible of two different interpretations, each syntac-
tically and semantically available. Considering the phrase
on its own, the modifier “within the requested portions of
the selected stream of protected video” could modify either
“encrypted portions of frames of video” or “encryption in-
formation,” i.e., could specify the location of either the en-
crypted portions or the encryption information.
Syntactically, a modifier with two distinct possible modifi-
cands is susceptible of modifying either one. And semanti-
cally, in the present example, considering the phrase on its
own (indeed, even in broader context), neither of the possi-
bilities can be excluded as obviously senseless or implausi-
ble.
But the process for arriving at a proper understanding
of even the phrase itself, in its ordinary linguistic meaning,
requires one important step beyond identifying the words
and their arrangement in the phrase. Critically, we look to
“precepts of English grammar” to determine the ordinary
meaning of the phrase as a whole. In re Hyatt, 708 F.2d
712, 714 (Fed. Cir. 1983). Not surprisingly, a general in-
terpretive principle that applies to this very situation has
long been established, precisely because the linguistic sit-
uation occurs frequently and therefore a default principle
is needed.
The principle is that (where commas or other textual
signals are not used) the modifier is presumptively
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NETFLIX, INC. v. DIVX, LLC 9
understood to be tied to the nearest available semantically
plausible modificand. See, e.g., Nearest-Reasonable-Refer-
ent Canon, BLACK’S LAW DICTIONARY 1240 (11th ed. 2019)
(“The doctrine that when the syntax in a legal instrument
involves something other than a parallel series of nouns or
verbs, a prepositive or postpositive modifier normally ap-
plies only to the nearest reasonable referent.”); ANTONIN
SCALIA & BRYAN A. GARNER, READING LAW: THE
INTERPRETATION OF LEGAL TEXTS 152 (2012); Rule of Last
Antecedent, BLACK’S LAW DICTIONARY 1449–50 (9th ed.
2009); Last Antecedent Rule, WEBSTER’S DICTIONARY OF
LAW 281 (1996). The principle also appears in normative
guides to writing, which reflect (and reinforce) how lan-
guage is most likely to be understood. See W. STRUNK &
E.B. WHITE, THE ELEMENTS OF STYLE 28, 30 (4th ed. 2000);
Chicago Manual of Style § 5.175 (16th ed. 2010), p. 248.
And the principle appears as well in judicial decisions. See,
e.g., Lockhart v. United States, 577 U.S. 347, 351–52
(2016); Finisar Corp. v. DirecTV Group, Inc., 523 F.3d
1323, 1336 (Fed. Cir. 2008); Anhydrides & Chemicals Inc.
v. United States, 130 F.3d 1481, 1483 (Fed. Cir. 1997).
This principle clearly calls for Netflix’s construction as
the proper default interpretation—only the “encrypted por-
tions of frames of video” (not the “encryption information”)
need be “within the requested portions of the selected
stream of protected video.” DivX offers a number of lan-
guage-phrase examples that it says run counter to the prin-
ciple supplying a default, presumptive interpretation here.
See DivX Br. at 20–21, 31. But DivX’s examples do not un-
dermine that principle, as, for one reason or another, they
do not involve a modifier in a phrase containing two syn-
tactically appropriate and semantically sensible modifi-
cands. See Netflix Reply Br. at 9–11. They therefore do
nothing to undermine the applicable grammar precept at
issue.
Because the precept establishes a presumptive inter-
pretation, the analysis cannot stop there. We must look to
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NETFLIX, INC. v. DIVX, LLC 10
see if there are good indications that a contrary interpreta-
tion is the better one. As explained next, we see no such
persuasive indications.
B
1
The context provided by the claim itself reinforces, ra-
ther than undermines, the interpretation called for by the
general-interpretation principle. This interpretation
makes good sense of the relationship between limitation [l]
and the limitations that follow. The action specified in lim-
itation [l] is finding the information (“encryption infor-
mation”) that “identifies” encrypted portions of frames of
video “within the requested portions” so that the actions
specified in the next two limitations can occur. In limita-
tion [m], the action specified is “decrypting” “each en-
crypted portion of the frames of video” just identified by the
action specified in limitation [l]. And the action specified
in limitation [n] is the culmination: “playing back the de-
crypted frames of video obtained from the requested por-
tions of the selected stream of protected video.” ’588
patent, col. 27, lines 54–62.1
Netflix’s interpretation thus makes a straightforward
and coherent whole out of the final three limitations, which
have the focus of the parties’ arguments about the inter-
pretive choice at issue. Nothing about those three limita-
tions requires or even suggests that the trio of actions
called for require that the “encryption information”—which
1 Limitation [m] reads: “decrypting each encrypted
portion of the frames of video identified within the located
encryption information using the set of common keys.” ’588
patent, col. 27, lines 58–60. We read “within” in this phrase
to mean what would be more clearly expressed if the word
were “by”: What is being decrypted are the encrypted video
portions identified by the “encryption information.”
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NETFLIX, INC. v. DIVX, LLC 11
simply identifies the video data needing decryption—must
be found in “the requested portions of the selected stream
of protected video.” In particular, Netflix’s interpretation
does not make limitation [l] superfluous. It preserves that
limitation’s demand that the processor locates encrypted
portions of frames of video within the specifically requested
portions of the selected streams, as opposed to within any
portion of the selected stream of protected video. Id., col.
27, lines 54–57.
Limitations within claim 1 that precede limitation [l]
play a much smaller role in the analysis here. At least one
such limitation is worth noting as claim-language context.
Netflix argues, based on the specification and prosecution
history, that encryption information need not be located in
the requested portions of the selected video stream, but can
be located elsewhere—and the elsewhere featured by Net-
flix is “a top level index file” that limitation [c] expressly
requires the playback device to obtain. Id., col. 27, lines
36–43; see Netflix Br. at 51–53. That limitation supplies
an anchor in the claim for Netflix’s argument that the in-
vention as a whole does not require the specific location of
encryption information that DivX insists is an essential
part of the invention.
2
The specification does not overcome the presumptive
meaning of this limitation driven by the well-recognized
background principle of interpretation we have identified.
Netflix does not dispute that several embodiments de-
scribed in the specification involve the location of encryp-
tion information within the requested portions of the
selected stream of protected video. See 2024 Decision, at
*6 (citing ’588 patent, col. 9, lines 23–29; id., col. 13, lines
57–63; col. 16, lines 33–52; col. 22, lines 14–17; col. 25, lines
15–21). But we agree with Netflix that the specification
does not limit the invention to that arrangement—that, in-
deed, it positively indicates that the invention covers
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NETFLIX, INC. v. DIVX, LLC 12
(though it does not elaborate on) embodiments in which en-
cryption information is not so located. It could, in fact, be
located in a top-level index file. That is enough to mean
that the specification does not overcome the presumptive
interpretation Netflix presses.
For example, while the specification highlights embod-
iments implementing a specially formatted Matroska con-
tainer file, the specification also states that “many
embodiments . . . utilize a conventional Matroska con-
tainer.” ’588 patent, col. 20, lines 30–32 (emphasis added);
see col. 2, lines 35–46; id., col. 20, lines 27–32. DivX’s ex-
pert recognized that the “conventional,” unmodified Ma-
troska container cannot contain necessary encryption
information, meaning that there is no possibility that en-
cryption information could be located “within the requested
portions of the selected stream” in an embodiment utilizing
a conventional Matroska container file. See J.A. 9461 ¶ 90.
In discussing Matroska files, the specification pervasively
discusses a “top level index file,” including, to cite just one
example, at ’588 patent, col. 20, lines 39–41. The specifica-
tion thus contemplates a location of the encryption infor-
mation at issue different from where DivX says it must be.
The dissenter in the Board highlighted another rele-
vant passage in the specification. That passage suggests
that some encryption information does not need to come
from the container files themselves—instead, the user’s de-
vice can use the information from either Uniform Resource
Identifiers or container file headers to request byte ranges
from the server. ’588 patent, col. 24, line 63, through col.
25, line 2; 2024 Decision, at *16.
In addition, Netflix points to several other specification
passages that, in describing embodiments, either are silent
about the location of the encryption information or specify
that the location of the encryption information is within the
“alternative streams of protected video” but not more spe-
cifically (as DivX’s construction requires) “within the
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NETFLIX, INC. v. DIVX, LLC 13
requested portions of the selected streams.” Netflix Open-
ing Br. at 48; see ’588 patent, col. 3, lines 1–12 (not specify-
ing a location for the encryption information); id., col. 3,
lines 13–30; col. 5, lines 4–23; col. 7, lines 8–25 (describing
DRM information, a type of encryption information, as be-
ing located within the alternative streams of protected
video, but not, more specifically, within the requested por-
tions of the streams).
In this circumstance, it is not enough, to support DivX’s
construction, that the most fully elaborated embodiments
describe a location of encryption information (in particular,
DRMInfo) within the requested portions of the video. The
specification’s description of those embodiments does not
indicate that this feature is required in the invention as a
whole. And the specification, as noted, refers (though with
less detailed elaboration) to embodiments that do not call
for the location of encryption information to which DivX
would limit claim 1. Here, “the language of the written de-
scription is sufficient to put a reader on notice of the differ-
ent” possible locations of encryption information. Pitney
Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1311
(Fed. Cir. 1999). At a minimum, the specification does not
furnish a basis for overcoming the presumptive interpreta-
tion of the claim language established by the grammar pre-
cept we have discussed.
3
The prosecution history provides one additional bit of
support for reading the specification as confirming that, as
Netflix urges, the invention is not restricted to the location
of encryption information DivX says is required by claim 1.
U.S. Patent No. 9,621,522 is the grandparent of the ’588
patent, and it shares the ’588 patent’s specification and
similarly claims ABS streaming systems and methods us-
ing partial encryption techniques. Claim 1 of the ’522 pa-
tent calls for “DRM Information” (a type of encryption
information) to be located within a “top level index file”
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NETFLIX, INC. v. DIVX, LLC 14
(“identif[ying] a plurality of alternative streams of pro-
tected video” stored in container files), which is different
from being located within the “requested portions of se-
lected streams.” ’522 patent, col. 3, lines 14–15, id., col. 9,
lines 30–32; id., col. 27, lines 31–41. DivX’s filing and the
PTO’s issuance of that claim, which requires written-de-
scription support, provide additional reason to conclude
that the specification (shared by the ’522 and ’588 patents)
contemplates encryption information being located outside
the requested portions of selected streams.
III
For the foregoing reasons, we reverse the Board’s con-
struction of limitation [l] and conclude that it is the “en-
crypted portions” of frames of video, and not the
“encryption information,” that must be located “within the
requested portions of the selected stream of protected
video.” We hold, too, that limitation [l], so construed, is
taught by the asserted prior art. We vacate the Board’s
decision and remand for further proceedings consistent
with this opinion.
Costs awarded to Netflix.
REVERSED, VACATED, AND REMANDED
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