The U.S. Court of Appeals for the Federal Circuit issued a decision Feb. 13, 2026, reversing the Patent Trial and Appeal Board in a closely watched patent dispute between streaming giant Netflix, Inc. and video technology company DivX, LLC over encrypted media streaming technology.
The case centers on DivX's U.S. Patent No. 10,225,588, which claims systems and methods for streaming partly encrypted media content. DivX initially sued Netflix for patent infringement, alleging that Netflix's streaming platform violated the patent's claims.
In response to the infringement lawsuit, Netflix petitioned the Patent and Trademark Office to institute an inter partes review of all claims in DivX's patent. Netflix argued that the patent's subject matter would have been obvious over specified prior-art references, seeking to invalidate the patent through the IPR process.
The Patent Trial and Appeal Board granted Netflix's petition and conducted the inter partes review under case number IPR2020-00558. However, in a final written decision issued Feb. 22, 2024, the Board's majority panel rejected Netflix's obviousness challenge. The Board's decision turned on a disputed claim construction, with the majority adopting an interpretation that favored DivX's position.
The Board's decision was not unanimous. One member of the three-judge panel dissented from the majority's claim construction and would have reached a different conclusion on Netflix's obviousness arguments.
Netflix appealed the adverse Board decision to the Federal Circuit, the specialized appellate court that handles all patent appeals from the PTO. The case was heard by a three-judge panel consisting of Chief Judge Kimberly Moore and Circuit Judges Timothy Dyk and Raymond Taranto, with Judge Taranto writing the court's opinion.
In its appeal, Netflix challenged the Board's claim construction as erroneous. Claim construction is a question of law that appellate courts review de novo, meaning they give no deference to the lower tribunal's interpretation.
The Federal Circuit agreed with Netflix's position on claim construction. In its Feb. 13, 2026 decision, the court held that the Board had incorrectly interpreted the patent claims. Judge Taranto, writing for the court, reversed the Board's claim construction and adopted a different interpretation of the disputed patent language.
Based on the corrected claim construction, the Federal Circuit vacated the Board's final written decision rejecting Netflix's obviousness challenge. Rather than deciding the obviousness question itself, the court remanded the case back to the Patent Trial and Appeal Board for further proceedings.
The remand will allow the Board to reconsider Netflix's obviousness arguments under the claim construction established by the Federal Circuit. With the corrected interpretation of the patent claims, the Board may reach a different conclusion on whether the patent would have been obvious over the prior art references cited by Netflix.
The case was argued by experienced patent attorneys from prominent law firms. Netflix was represented by Mark Christopher Fleming of Wilmer Cutler Pickering Hale and Dorr LLP in Boston, along with Lauren Matlock-Colangelo from the firm's New York office and Nora N. Xu from Washington, D.C. DivX was represented by Nathan Nobu Lowenstein of Lowenstein & Weatherwax LLP in Santa Monica, California, along with Parham Hendifar and Kenneth J. Weatherwax.
The dispute highlights ongoing tensions in the streaming media industry over patent rights and technology licensing. DivX has been involved in various patent disputes related to video compression and streaming technologies, while Netflix and other major streaming platforms face regular patent challenges as they expand their technological capabilities.
The Federal Circuit's decision represents a procedural victory for Netflix, though the ultimate outcome on patent validity remains to be determined. The case will return to the Patent Trial and Appeal Board, where the panel will need to apply the Federal Circuit's claim construction to determine whether Netflix's obviousness arguments succeed under the corrected interpretation.
If the Board ultimately finds the patent obvious and invalid on remand, Netflix would prevail in defending against DivX's infringement allegations. However, if the Board again rejects the obviousness challenge even under the revised claim construction, DivX's patent would remain valid and enforceable.
The remanded proceedings at the Patent Trial and Appeal Board will likely focus on applying the prior art references to the patent claims as newly construed by the Federal Circuit. Both parties will have the opportunity to present arguments on obviousness under the corrected claim interpretation established by the appellate court.