Netflix turned a win on Monday when the Federal Circuit backed a lower court’s ruling that another company’s patent lawsuit over for video streaming did not stand up under the U.S. Supreme Court’s 2014 Alice decision. 

A three-judge panel of the appellate court delivered a non-precedential opinion holding that Adaptive Streaming Inc.’s patent on “digital video processing techniques” was too vague and wide-ranging for protection under patent law. The ruling affirmed U.S. District Judge David O. Carter’s decision to dismiss Adaptive Streaming’s case against Netflix in California federal court in 2019.

The company alleged that its technology was developed a decade ahead of Netflix as well as other streaming platforms like Hulu and YouTube. The patent was granted by the U.S. Patent and Trademark Office in 2006 by Luxxon Corp, which was acquired by Adaptive Streaming.

Adaptive Streaming is a wholly-owned subsidiary of WiLan Inc., a patent licensing business focused on technology that won a controversial $85 million jury verdict against Apple earlier this year.

The ruling on Monday found that the Adaptive Streaming patent failed to pass the two-step Alice test: 1) Does the patent deal with an abstract concept? And 2) does it add an inventive concept to the abstract idea? By those standards, the panel found Adaptive Streaming’s patent inadequate.

“[The asserted patent claims] do not incorporate anything more that would suffice to transform their subject matter into an eligible application of the abstract idea,” Judge Richard G. Taranto wrote in the decision for the panel.

Taranto also wrote that the patent claims failed in light of precedential rulings the federal court made in 2017, which found that ideas involving the simple encoding and decoding of image data were too vague by the standards of the Alice test.

The case is Adaptive Streaming Inc. v. Netflix Inc., case number 20-1310, in the U.S. Court of Appeals for the Federal Circuit.

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