Context: In March 2020, Broadcom (Avago) initiated a slew of lawsuits against Netflix over video streaming patents in the Northern District of California, alleging that the company’s business of selling “semiconductor chips used in the set top boxes that enable traditional cable television services” was substantially and irreparably harmed by Netflix (PDF). Broadcom’s next suits were filed in other jurisdictions, such as Germany, but the company suffered several setbacks in 2024: a Bundespatentgericht (Federal Patent Court of Germany) decision declaring one of its enforced patents invalid (PDF (in German)) and a United States Court of Appeal for the Federal Circuit decision reviving (PDF) two challenges brought by Netflix. To round out the year, Netflix then filed a countersuit against Broadcom and its VMware subsidiary in the Northern District of California, alleging that the companies had infringed five of its former HP patents (December 24, 2024 ip fray article).
What’s new: Broadcom yesterday brought a motion to dismiss Netflix’s countersuit in the Northern District of California. The motion comes approximately a week after the same court declined to grant an earlier Broadcom motion seeking to relate the countersuit to Broadcom’s own patent infringement suit in the Eastern District of Texas (which was stayed pending inter partes review proceedings regarding the patents-in-suit in March 2022).
Direct impact and wider ramifications: The court’s decision to decline to relate the cases caused another dent in Broadcom’s long-running enforcement campaign against Netflix. The company’s motion to dismiss the countersuit therefore comes as no surprise – but it will be interesting to see whether the court grants it this motion or sides with Netflix again. The latter could make for an interesting turn in Broadcom’s enforcement campaign, which Netflix has so far proven to be quite resilient and perseverant against.
This is the motion to dismiss Netflix’s countersuit:
In the motion, Broadcom claims that Netflix’s lawsuit is a “meritless retaliatory case designed to gain leverage in connection with [the company’s] rampant infringement of patents owned by Broadcom-related entities.”
The company notes that on November 25, 2024, Netflix acquired a portfolio of U.S. patents of “dubious provenance” from a company in the British Virgin Islands, which had in turn acquired the patents when they were cast off by the original owner, “likely in a fire sale.” Less than a month later, Netflix brought its case against Broadcom and VMware, accusing them of infringing the following five patents:
- U.S. Patent No. 7,779,424 (“System and method for attributing to a corresponding virtual machine CPU usage of an isolated driver domain in which a shared resource’s device driver resides”)
- U.S. Patent No. 7,797,707 (same family and title as the ‘424 patent)
- U.S. Patent No. 8,799,891 (“System and method for attributing CPU usage of a virtual machine monitor to a corresponding virtual machine”)
- U.S. Patent No., 8,185,893 (“Starting up at least one virtual machine in a physical machine by a load balancer”)
- U.S. Patent No. 8,863,122 (“Remote control of a plurality of virtual machines using actions facilitated through a graphic user interface”)
Broadcom urges the court to “recognize this case for what it is”:
“…an attempt by Netflix to distract from its own infringement and harass Broadcom by forcing it to expend resources defending a worthless case. The Court can and should put an end to this case now, before it too expends its scarce resources indulging Netflix’s folly.”
Among other arguments, Broadcom claims that each of the five asserted patents is directed to ineligible subject matter under 35 U.S.C. § 101, and thus should now be held invalid on this basis in view of numerous Federal Circuit cases that have affirmed the dismissal of similar cases at the outset on eligibility grounds.
It also argues that Netflix’s complaint fails to plausibly allege the defendants’ knowledge of infringement of any of the asserted patents, and fails to state a claim for willful infringement. Broadcom points to a Federal Circuit decision in Lifetime Indus v. Trim-Lok:
“For an allegation of induced infringement to survive a motion to dismiss, a complaint must plead facts plausibly showing that the accused infringer ‘specifically intended [another party] to infringe [the patent] and knew that the [other party]’s acts constituted infringement.’”
The complaint does not allege that Broadcom and VMware were ever provided notice of infringement by Netflix, the seller from whom Netflix bought the patents-in-suit, or anyone else, it notes. “Nor does the complaint allege that [Broadcom and VMware] performed any type of infringement analysis of the patents on their own.”
Today’s motion to dismiss this countersuit comes after a rather eventful past couple of years for Broadcom and Netflix. The plaintiff in December 2023 announced a €7.05 million contempt fine that the Munich I Regional Court had imposed on Netflix (December 22, 2023 Broadcom press release) over its continued infringement of Broadcom’s (Avago’s) EP2575366 (“Signaling of coding unit prediction and prediction unit partition mode for video coding”), but soon saw the pendulum swing in the opposite direction.
Counsel
Netflix is being represented by Rachael Lamkin, Lauren J. Dreyer, and Megan White at Baker Botts. Broadcom is being represented by Ramy Hanna, Steven Rizzi, Alan P. Block and Christopher McNett at McKool Smith.
In July 2024, the Federal Patent Court of Germany found Broadcom’s EP2575366 invalid. As reported previously, invalidity works retroactively in Germany, therefore this overturned any past contempt fines. Later that month, the United States Court of Appeal for the Federal Circuit then revived two Netflix challenges to a Broadcom patent after the Patent Trial & Appeal Board of the United States Patent & Trademark Office had initially sided with Broadcom.