Case: 20-1310 Document: 35 Page: 1 Filed: 12/14/2020
`
`NOTE: This disposition is nonprecedential.
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`ADAPTIVE STREAMING INC., A DELAWARE
`CORPORATION,
`Plaintiff-Appellant
`
`v.
`
`NETFLIX, INC., A DELAWARE CORPORATION,
`Defendant-Appellee
`______________________
`
`2020-1310
`______________________
`
`Appeal from the United States District Court for the
`Central District of California in No. 8:19-cv-01450-DOC-
`KES, Judge David O. Carter.
`______________________
`
`Decided: December 14, 2020
`______________________
`
`PAUL SKIERMONT, Skiermont Derby LLP, Dallas, TX,
`for plaintiff-appellant. Also represented by ALEXANDER
`EDWARD GASSER; MIEKE K. MALMBERG, Los Angeles, CA.
`
` MICHAEL SOONUK KWUN, Kwun Bhansali Lazarus LLP,
`San Francisco, CA, for defendant-appellee.
` ______________________
`
`
`

`

`Case: 20-1310 Document: 35 Page: 2 Filed: 12/14/2020
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`ADAPTIVE STREAMING INC. v. NETFLIX, INC.
`
`Before PROST, Chief Judge, CLEVENGER and TARANTO,
`Circuit Judges.
`TARANTO, Circuit Judge.
`Adaptive Streaming, Inc., owns U.S. Patent No.
`7,047,305, which claims systems that can receive a video
`signal in one format and broadcast it to at least one device
`calling for a different format. Adaptive sued Netflix, Inc.,
`in the United States District Court for the Central District
`of California, alleging that Netflix infringed the ’305 pa-
`tent. The district court held that the asserted claims of the
`’305 patent are invalid under 35 U.S.C. § 101. Adaptive
`Streaming Inc. v. Netflix, Inc., No. SA CV 19-1450-DOC
`(KESx), 2019 WL 7841923 (C.D. Cal. Nov. 19, 2019) (Merits
`Opinion). We affirm.
`
`I
`A
`The ’305 patent is titled “Personal Broadcasting Sys-
`tem for Audio and Video Data Using a Wide Area Network”
`and “relates generally to digital video processing tech-
`niques.” ’305 patent, col. 1, lines 21–22. As background,
`the ’305 patent states that communication devices like ra-
`dio, cellphones, and televisions replaced “primitive tech-
`niques” of communicating, yet communication between
`devices of different types is hindered by the fact that de-
`vices use different formats. Id., col. 2, lines 7–34. The ’305
`patent states that it “provides a technique including a sys-
`tem 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.” Id., col. 1, lines 22–27
`It is undisputed that claims 39, 40, and 42 are at least
`representative of all, and may be the only, claims at issue
`in the case. Limited to a video signal, they recite:
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`Case: 20-1310 Document: 35 Page: 3 Filed: 12/14/2020
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`ADAPTIVE STREAMING INC. v. NETFLIX, INC.
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`39. A system to broadcast to at least one client
`device, the system comprising:
`a processor; and
`a broadcasting server coupled to the pro-
`cessor, the broadcasting server including:
`an image retrieval portion to retrieve
`at least one incoming video signal having a
`first format;
`a data structure usable to determine
`parameters for second compression formats
`for the at least one incoming video signal;
`and
`at least one transcoding module cou-
`pled to the image retrieval portion and
`which has access to the data structure, the
`transcoding module being capable to trans-
`code the at least one incoming video signal
`from the first format into multiple com-
`pressed output video signals having respec-
`tive second compression formats based at
`least in part on the parameters;
`wherein at least one of the second compres-
`sion formats is more suitable for the at least
`one client device than the first format; and
`wherein the multiple compressed output
`video signals having the at least one second
`compression format more suitable for the at
`least one client device can be provided by the
`broadcasting server, wherein any one of the
`multiple compressed output video signals can
`be selected to be presented at the at least one
`client device.
`40. The system of claim 39 wherein the at least
`one client device can select which of the compressed
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`Case: 20-1310 Document: 35 Page: 4 Filed: 12/14/2020
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`ADAPTIVE STREAMING INC. v. NETFLIX, INC.
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`output video signals to present and may access the
`selected compressed video signals from multiple
`devices, including access of compressed output
`video signals having different second compression
`formats from different devices.
`42. The system of claim 39 wherein a different
`compressed output video signal can be dynamically
`selected to be presented at the at least one client
`device, instead of a current compressed output
`video signal, in response to a change in a band-
`width condition.
`’305 patent, col. 27, lines 8–39, 44–48.
`B
`In July 2019, Adaptive sued Netflix for infringement of
`the ’305 patent. Netflix moved to dismiss the complaint
`under Federal Rule of Civil Procedure 12(b)(6), arguing
`that the ’305 patent claims subject matter not eligible for
`patenting under 35 U.S.C. § 101. The district court agreed
`with Netflix and dismissed Adaptive’s complaint, without
`leave to amend. Merits Opinion, 2019 WL 7841923, at *6.
`Adaptive timely appealed. We have jurisdiction under
`28 U.S.C. § 1295(a)(1).
`
`II
`On appeal, Adaptive argues that the asserted claims of
`the ’305 patent are not directed to an abstract idea and
`that, in any event, they include inventive concepts making
`them patent eligible. We disagree.
`Following Ninth Circuit law in this case, we review the
`Rule 12(b)(6) dismissal de novo. Manzarek v. St. Paul Fire
`& Marine Ins. Co., 519 F.3d 1025, 1030 (9th Cir. 2008).
`Like the district court, we must accept all factual allega-
`tions in the complaint, understood in the light most favor-
`able to the plaintiff. Id. at 1031. Subject-matter eligibility
`under § 101 is a question of law based on underlying facts.
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`ADAPTIVE STREAMING INC. v. NETFLIX, INC.
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`See Aatrix Software, Inc. v. Green Shades Software, Inc.,
`882 F.3d 1121, 1124–25 (Fed. Cir. 2018). “Like other legal
`questions based on underlying facts, this question may be,
`and frequently has been, resolved on a Rule 12(b)(6) . . .
`motion where the undisputed facts, considered under the
`standards required by that Rule, require a holding of inel-
`igibility under the substantive standards of law.” SAP
`America, Inc. v. InvestPic, LLC, 898 F.3d 1161, 1166 (Fed.
`Cir. 2018).
`Section 101 provides that “[w]hoever invents or discov-
`ers any new and useful process, machine, manufacture, or
`composition of matter, or any new and useful improvement
`thereof, may obtain a patent therefor, subject to the condi-
`tions and requirements of this title.” 35 U.S.C. § 101. But
`§ 101 “contains an important implicit exception: Laws of
`nature, natural phenomena, and abstract ideas are not pa-
`tentable.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S.
`208, 216 (2014) (internal quotation marks omitted). “A
`claim falls outside § 101 where (1) it is directed to a patent-
`ineligible concept, i.e., a law of nature, natural phenome-
`non, or abstract idea, and (2), if so, the particular elements
`of the claim, considered both individually and as an or-
`dered combination, do not add enough to transform the na-
`ture of the claim into a patent-eligible application.” SAP,
`898 F.3d at 1166–67 (internal quotation marks omitted).
`A
`Under the first step of the Alice framework, the district
`court concluded that the claims of the ’305 patent are di-
`rected to the abstract idea of “collecting information and
`transcoding it into multiple formats.” Merits Opinion, 2019
`WL 7841923, at *3. That conclusion assumes for purposes
`of eligibility analysis that, despite the “at least one client
`device” language, which might suggest coverage of a sys-
`tem limited to sending to a single device, the claims re-
`quire, as suggested by at least the term “broadcast,” the
`ability to send to multiple devices. We agree with the
`
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`ADAPTIVE STREAMING INC. v. NETFLIX, INC.
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`district court’s characterization of what the claims are di-
`rected to.
`We consider “what the patent asserts to be the ‘focus of
`the claimed advance over the prior art.’” Solutran, Inc. v.
`Elavon, Inc., 931 F.3d 1161, 1168 (Fed. Cir. 2019) (quoting
`Affinity Labs of Texas, LLC v. DIRECTV, LLC, 838 F.3d
`1253, 1257 (Fed. Cir. 2016)). In this case, the claims and
`written description make clear that the focus of 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 focus is not any specific
`advance in coding or other techniques for implementing
`that idea; no such specific technique is required.
`The written description, through material incorporated
`by reference, itself explains the familiarity of translation of
`content—from a format (including a language) of a sender
`to one suited to a recipient—as a fundamental communica-
`tion practice in both the electronic and pre-electronic
`worlds. J.A. 337–38. We have held that the ideas of encod-
`ing and decoding image data and of converting formats, in-
`cluding when data is received from one medium and sent
`along through another, are by themselves abstract ideas,
`and accordingly concluded that claims focused on those
`general ideas governing basic communication practices,
`not on any more specific purported advance in implemen-
`tation, were directed to abstract ideas. See Two-Way Me-
`dia Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329,
`1338 (Fed. Cir. 2017); RecogniCorp, LLC v. Nintendo Co.,
`Ltd., 855 F.3d 1322, 1326–27 (Fed. Cir. 2017); EasyWeb In-
`novations, LLC v. Twitter, Inc., 689 F. App’x 969, 970 (Fed.
`Cir. 2017) (holding ineligible claims to “a message publish-
`ing system that accepts messages in multiple ways, such
`as by fax, telephone, or email, verifies the message was
`sent by an authorized sender, and converts and publishes
`the message on the Internet,” requiring format change); see
`also Voit Techns., LLC v. Del-Ton, Inc., 757 F. App’x 1000,
`1003–04 (Fed. Cir. 2019) (holding ineligible claims
`
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`Case: 20-1310 Document: 35 Page: 7 Filed: 12/14/2020
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`ADAPTIVE STREAMING INC. v. NETFLIX, INC.
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`generally invoking use of compression techniques). We
`conclude that the claims here are likewise directed to an
`abstract idea.
`
`B
`The claims also flunk the second step of the Alice in-
`quiry: They do not incorporate anything more that would
`suffice to transform their subject matter into an eligible ap-
`plication of the abstract idea. Claims 39, 40, and 42 recite
`only generic computer hardware, such as a “processor” and
`a “broadcasting server” with an “image retrieval portion,”
`“a data structure,” and a “transcoding module,” ’305 pa-
`tent, col. 27, lines 10–24, as performing the claimed func-
`tions, which the ’305 patent’s specification states were
`conventional, id., col. 10, lines 4–22 (describing elements of
`diagrams, including compression components, and stating:
`“Each of these blocks carry out functionality common[ly]
`known in the art as well as described above and throughout
`the present specification.”). “Nothing in the claims, under-
`stood in light of the specification, requires anything other
`than off-the-shelf, conventional computer, network, and
`display technology for gathering, sending, and presenting
`the desired information.” Electric Power Group, LLC v. Al-
`stom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016). In partic-
`ular, there is no identification in the claims or written
`description of specific, unconventional encoding, decoding,
`compression, or broadcasting techniques.1
`Adaptive suggests that the Patent and Trademark Of-
`fice’s novelty and non-obviousness determinations, ren-
`dered in issuing the patent, undermine our conclusion.
`Adaptive’s Op. Br. 53–55. They do not. We have explained
`that satisfying the requirements of novelty and non-
`
`
` 1 Adaptive made no separate argument in the district
`court about the application of Alice’s second step to depend-
`ent claims 40 and 42.
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`ADAPTIVE STREAMING INC. v. NETFLIX, INC.
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`obviousness does not imply eligibility under § 101, includ-
`ing under the second step of the Alice inquiry, because
`what may be novel and non-obvious may still be abstract.
`See Chamberlain Group, Inc. v. Techtronic Indus. Co., 935
`F.3d 1341, 1348–49 (Fed. Cir. 2019).
`C
`In its reply brief in this court, Adaptive makes two ar-
`guments that it did not raise and develop as challenges in
`the argument section of its opening brief in this court,
`merely mentioning each point in passing in the statement-
`of-the-case portion of the opening brief. One argument is
`that the district court erred by not construing certain claim
`terms before deciding the § 101 issue. Adaptive’s Reply Br.
`28. The other is that industry recognition and commercial
`success establish that the claims are to patent-eligible sub-
`ject matter. Id. at 24–25. Because neither argument was
`developed in the argument section of Adaptive’s opening
`brief, Adaptive has forfeited both arguments. See, e.g.,
`SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312,
`1319–20 (Fed. Cir. 2006) (argument not developed in open-
`ing brief’s argument section is forfeited); Martinez-Serrano
`v. I.N.S., 94 F.3d 1256, 1259 (9th Cir. 1996) (same).
`III
`For those reasons, we affirm the district court’s judg-
`ment.
`Each party shall bear its own costs.
`AFFIRMED
`
`