Broadcom Corporation v. Netflix, Inc.

Background

Broadcom Corp. and Avago Technologies sued Netflix Inc. for infringement of twelve patents related to video streaming. Netflix sought judgment on the pleadings under Federal Rule of Civil Procedure 12(c) as to three claims in Broadcom’s third amended complaint:

- The sixth claim, concerning U.S. Patent No. 8,572,138 (the ’138 patent); - The tenth claim, concerning U.S. Patent No. 8,548,976 (the ’976 patent); and - The eleventh claim, concerning U.S. Patent No. 7,457,722 (the ’722 patent).

Netflix argued that the asserted claims were not eligible for patent protection under 35 U.S.C. § 101. The court treated the Rule 12(c) request under the same standard used for a motion to dismiss for failure to state a claim. At this stage, the court generally accepted plausible, nonconclusory allegations in Broadcom’s complaint as true and considered the complaint and materials incorporated into it.

Legal Standard

Under the two-step test from Alice Corp. v. CLS Bank International, a court first asks whether patent claims are directed to an abstract idea, a law of nature, or a natural phenomenon. If so, the court asks whether the claims contain an “inventive concept”—a sufficiently meaningful element or combination of elements to make the claims more than an attempt to patent the ineligible concept itself.

The court explained that eligibility can be decided on the pleadings when the complaint and patent do not present factual allegations that would prevent resolving the issue as a matter of law.

The ’722 Patent

The representative claim described collecting performance data for computer programs, detecting events such as their creation, destruction, or migration, correlating the data with those events, and storing the correlated information.

The court held that this claim was directed to the abstract idea of gathering, correlating, and storing information. The claim used functional terms such as “collecting,” “detecting,” “correlating,” and “storing” without specifying how the results were achieved. The court also found that Broadcom had not identified a specific technological improvement or nonconclusory allegations showing that the claimed method was unconventional.

The court further held that the claim lacked an inventive concept. Broadcom’s allegations that earlier monitoring systems did not track life-cycle events or correlate them with performance data were conclusory and did not explain what was unconventional about the claimed method.

The ’976 Patent

The representative claims described selecting a web service, selecting a server capable of running it, determining the service’s real address, and connecting to the service. The dependent claim added a failover process: selecting a primary server when it was functional and a secondary server when the primary server was not functional.

The court held that these claims were directed to abstract ideas, including using an index to retrieve information about web services and directing requests to an available web server. The court found that the claims did not plausibly describe a specific improvement over earlier approaches to solving a computing problem. It also found that the claims lacked an inventive concept because they recited conventional functions performed by conventional web services, servers, and applications.

The ’138 Patent

The ’138 patent concerned storing and distributing virtual-machine resources in a distributed computing environment. Its claims described a software-image repository, virtual-machine managers, application images, and a control node with automation infrastructure for deploying those images across application nodes and virtual machines.

The court reached a different result for this patent. It found that the specification described a defined technical problem and that Broadcom had plausibly alleged a technical solution. Although virtual machines themselves were not new, the court concluded that efficiently managing and deploying them in a complex distributed environment was different from merely storing and distributing information. The asserted claims provided enough detail about how to address that problem and were not limited to results-based functional language.

The court therefore held that the asserted ’138 claims were directed to a non-abstract improvement in computer functionality and were patent eligible under Section 101 and Alice.

Disposition

The court dismissed the tenth and eleventh claims concerning the ’976 and ’722 patents under Section 101, with leave to amend. Broadcom could file an amended complaint consistent with the order by June 23, 2023. The order stated that failure to meet that deadline would result in dismissal with prejudice of those claims. The court denied Netflix’s motion to dismiss the sixth claim concerning the ’138 patent.

The court also rejected Broadcom’s objection that Netflix’s motion was filed too early. It found that Netflix had since filed an answer, that Broadcom identified no prejudice, and that terminating the motion solely to require Netflix to refile it would cause needless delay.