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23 July 2020PatentsMuireann Bolger

Netflix and Hulu block Uniloc from saving digital licence patent

Streaming companies  Netflix and  Hulu have won their bid to prevent patent company  Uniloc from adding new language to retain its patent on digital product licences, following a  ruling from the  US Court of Appeals for the Federal Circuit.

Yesterday, July 22, the Federal Circuit found that the Patent Trial and Appeal Board (PTAB) has the power to reject proposed amended claims as patent ineligible, stating that “the board can cancel claims and find proposed substitute claims unpatentable, certainly”.

Netflix and Hulu have waged a dispute with Uniloc over the validity of US patent number 8,566,960 over the past four years. In 2016, Uniloc filed several lawsuits at the  US District Court of the Eastern District of Texas, alleging that Hulu’s and Netflix’s digital media content distribution systems had infringed the claims of the patent.

In March 2017, the district court dismissed the cases for failure to state a claim, holding that all claims of the ‘960 patent were ineligible. Uniloc appealed against the decision and, in August 2018, the US Court of Appeals upheld the district court’s decision. In 2018, Netflix and Hulu also challenged all claims of the ‘960 patent before the PTAB. Uniloc requested that it substitute new claims while the patent was under review so it could add new language to the patent.

But, in August that year, the board issued a final written decision, holding that Netflix and Hulu had proven the unpatentability of the ‘960 patent.  Uniloc appealed against the decision to the Federal Circuit, arguing that the “PTAB misapprehended the law in concluding it is permissible in an inter partes review (IPR) proceeding” to consider a challenge to Uniloc’s proposed substitute claims.

The Federal Circuit sided with PTAB, finding Uniloc’s arguments “unpersuasive” and concluding that Hulu had “shown by a preponderance of the evidence that [the substitute claims] are directed to non-statutory subject matter”.

In summing up, Judge Evan Wallech asserted the PTAB’s right to reject amended claims and stating that it would be unprecedented, and “contrary to the established practice of considering contingent motions to amend, to treat the contingency (finding original claims unpatentable) as ending the IPR so that the proposed substitute claims could no longer be considered”.

However, Judge Kathleen O’ Malley dissented, stating: “Here, rather than follow that usual procedure, the majority breathes life into a dead patent and uses the zombie it has created as a means to dramatically expand the scope of IPR proceedings.”

O’Malley added that the case was “dead on arrival” as there were no live claims remaining in the ‘960 patent. “I see the dead patent for what it is—a legal nullity incapable of supporting any further proceedings,” she said.

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