The Software IP Report

Factual Allegations Save Streaming Patents From Dismissal

The Central District of California upheld validity under 35 U.S.C. § 101 of several patents related to encryption and decryption of streaming video content, noting that the factual allegations in the complaint sufficed to survive the pleading stage. DivX, LLC. v. Netflix, Inc., CV 19-1602 (C.D. Cal. Nov. 4, 2019).

Plaintiff asserted several patents, and while the discussion of each could be its own separate blog post, U.S. Patent No. 7,295,673 is most relevant. Claim 14 is representative, and recites, in part “decrypting selected portions of said encrypted frames using a frame decryption function in accordance with said frame decryption information, which identifies the specific portions of the frames to be decrypted and the applicable frame decryption key from the frame decryption information.” Defendants filed Motions to Dismiss under Rule 12(b)(6), claiming the patents are invalid under § 101 when applying the Alice test.

While Defendants argued that such encryption and decryption is abstract and lacks a technological improvement, the Court rejected this position as “effectively permit[ting] Defendants to short-circuit a meaningful § 101 analysis.” The claim’s recitations of a specific type of data, here, video data within a sequence of frames, and the required frame decryption function show that claim 14 is not directed to an abstract concept, noting that the Court must accept as true Plaintiff’s allegations that the method improves allocation of processing power for video encryption systems. Furthermore, the Court held that Defendants lacked evidence of whether the decryption was “routine, conventional, and well-understood,” echoing Berkheimer. In particular, the Court focuses on the claim’s selection of frames from a particular piece of video content for partial encryption as a possible inventive concept that Defendants should address. The factual allegations provided by the Plaintiff in the complaint that the claims are directed to specific technological improvements convinced the Court that additional fact-finding and claim construction was necessary before making a final validity decision.

Lessons for Practice

Courts are more convinced lately that factual allegations present sufficient factual questions to survive motions to dismiss, especially in light of Berkheimer. While the Court here hinted that, with further fact finding, the claims of the asserted patents may be ineligible under § 101, the shift toward delaying invalidity decisions past the pleading stage provides avenues for software patent holders. For software patent prosecutors, incorporating the technological improvements into the specification can help future litigators prepare the necessary factual allegations to survive a § 101 challenge.