Federal Circuit reverses patent decision, gives Netflix and Spotify hope

The US Court of Appeals for the Federal Circuit has reversed a finding of non-obviousness in a quarrel between licensing company Marathon Patent Group and streaming services Hulu, Spotify and Netflix.

Yesterday, December 5, the Federal Circuit handed down a decision on three appeals in “companion” cases involving CRFD Research, a subsidiary of Marathon Patent Group.

The two other appeals, one involving the US Patent and Trademark Office, were affirmed.

In June last year, the Patent Trial and Appeal Board (PTAB) issued a final written decision finding that the streaming companies had not shown by a preponderance of evidence that patent claims for US number 7,191,233 were obvious or anticipated.

The patent, which describes methods and systems for “user-directed transfer of an ongoing software-based session from one device to another device”, is owned by CRFD.

In 2014, CRFD sued the streaming companies for patent infringement at the US District Court for the District of Delaware.

In response, Hulu, Spotify and Netflix challenged the patent’s claims at the PTAB, but it rejected their case.

Hulu and the other streaming services appealed against the decision, challenging the board’s conclusion that various claims of the ‘233 patent were not unpatentable as anticipated or obvious.

“With respect to obviousness, the board first noted that Hulu relied solely on Bates [US number 6,963,901] for teaching the claimed step of transmitting a session history of a first device from the first device to a session transfer module ‘after said session is discontinued on said first device’,” said the Federal Circuit.

Circuit Judge Kathleen O’Malley, speaking on behalf of the court, said that the PTAB had erred in how it had performed its obviousness analysis and in the merits of its determination of non-obviousness.

O’Malley noted that the streaming services had raised separate arguments on the obviousness of certain claims, but that the board had undertaken “limited fact-finding” in its obviousness enquiry.

She went on to state that the board had only examined the level of ordinary skill in the art and then relied primarily on its determination that a prior art patent (Bates) did not anticipate the challenged claims.

“Whatever the merits of the board’s determination that Bates does not anticipate the ‘233 patent’s transmitting session history limitation, its findings on anticipation are insufficient as a matter of law to decide the obviousness inquiry,” said the Federal Circuit.

The court reversed the board’s determination that the streaming services didn’t show obviousness, but refused to address the anticipation claim because its decision invalidated all of the claims that Hulu, Spotify and Netflix claimed were anticipated.

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