Western District of Texas District Judge Alan D. Albright once found himself regularly at odds with the Federal Circuit, which repeatedly reversed him over his handling of convenience transfers starting in early 2020. Now, not only have those reversals largely subsided, Judge Albright has even begun to sit by designation on that very court: After writing his first Federal Circuit opinion earlier this summer, Judge Albright has just authored his first precedential opinion in another appeal. That decision overturned an award of attorney fees for DISH and Sling TV against Realtime Adaptive Streaming LLC (RAS), ruling that District of Colorado Judge R. Brooke Jackson erred in finding the case exceptional based on several identified “red flags” related to patent ineligibility and invalidity.

District Court: Litigation over Eligibility Challenges Raised “Red Flags”

RAS filed the litigation below in August 2017 (1:17-cv-02097), asserting three patents (8,275,897; 8,867,610; 8,934,535) broadly directed to data compression against certain streaming media products offered by the defendants. The plaintiff dropped the ‘897 patent via amended complaint that same October.

A series of interrelated validity challenges, and various developments during the ensuing litigation over them, would later form the basis for the court’s attorney fee ruling. In December 2017, the defendants filed motions for judgment on the pleadings that the ‘610 and ‘535 patents were ineligible under Alice, but the district court dismissed those motions without prejudice, both due to the need for further claim construction and because other districts had rejected eligibility challenges against similar patents. However, in October 2018, the Central District of California invalidated claims 15-30 of the ‘535 patent under Alice in an RAS case against Alphabet (Google), though it upheld claims 1-14 on that basis; while the District of Delaware found claim 15 to be ineligible two months later in a case against Netflix—decisions that the District of Colorado collectively treated as the first of multiple red flags that should have served as “warnings” to RAS that “its case was fatally flawed” (as later framed by the Federal Circuit). The second red flag was the Federal Circuit’s subsequent nonprecedential affirmance of a different Central District of California Alice ruling that invalidated another RAS patent (7,047,305) under Alice, also in response to a motion from Netflix.

In February 2019, soon after the district court issued its claim construction order, the Patent Trial and Appeal Board (PTAB) invalidated claims 1-14 of the ‘535 patent as obvious over prior art. That invalidity ruling would later serve as the district court’s third red flag, the fourth being a set of January 2021 nonfinal office actions invalidating claim 1 of the ‘610 patent as obvious in an ex parte reexamination. A notice letter sent by DISH to RAS underscoring its position on ineligibility in the wake of the aforementioned Alice decisions—and warning that it would seek attorney fees should RAS proceed with its claims—was deemed to be a fifth red flag, while the sixth and final red flag identified by the court was an opinion from defense expert Alan Bovik that addressed ineligibility.

In July 2021, Judge Jackson then granted the defendants’ motion for summary judgment of ineligibility, finding that the Bovik opinion as well as the Google and Netflix district court decisions, and the Federal Circuit’s Netflix decision, were all “persuasive”. The following January, while this invalidity ruling was still on appeal (the Federal Circuit summarily affirming it last year), the district court granted the defendants’ motion for attorney fees, citing the six aforementioned red flags (for reasons discussed further below) and concluding that RAS’s “dogged pursuit of the case notwithstanding those danger signals renders this an exceptional case”.

The Federal Circuit’s Ruling on Appeal

On August 23, the Federal Circuit issued its opinion on appeal—one that was, as noted above, authored by Judge Albright, sitting by designation on a panel that also included Chief Circuit Judge Kimberly A. Moore and Circuit Judge Alan D. Lourie. The court faulted Judge Jackson for “rel[ying] on the six red flags without explaining the weight for each flag”, further finding that “[s]ome of these red flags should not have been accorded any weight”.

The Federal Circuit then proceeded with an analysis of each red flag, beginning with the two related to patent eligibility. The court first held that Judge Jackson did not err in her determination that the district court ineligibility rulings for Google and Netflix, addressing claims from the ‘535 patent, were a “significant red flag to Realtime to reconsider its patent eligibility position of the asserted claims of the ’610 patent”. Like Judge Jackson, the Federal Circuit was unpersuaded by RAS’s attempts to distinguish those two cases. In particular, while RAS had argued that the lower court was wrong to presume that related patents rise and fall together, the Federal Circuit countered that this was not what Judge Jackson had done—countering he had instead “made a specific finding that Claim 15 of the ’535 patent was ‘essentially the same in substance’ as Claim 1 of the ’610 patent”. Among other purported distinctions, the Federal Circuit also rejected RAS’s contention that claim 1 of the ‘610 patent was closer to two other patents (9,769,477; 7,386,046) that the Central District of California did not hold to be ineligible, finding that the plaintiff-appellant had failed to lay out any basis for this comparison.

However, the Federal Circuit also concluded that Judge Jackson was wrong to treat the Federal Circuit’s decision affirming the ineligibility of the ‘305 patent as a red flag. In contrast to the “nearly identical” claim language in the Google and Netflix district court decisions discussed above, the Federal Circuit found that the ‘305 patent “was about a different technology entirely”, declining to accept DISH’s argument that there was a “close factual relationship” between that patent and the claims here at issue.

The Federal Circuit next found error in Judge Jackson’s flagging of the IPR decisions finding anticipation and obviousness as a red flag, noting that he had “failed to explain why the decisions were relevant in awarding attorneys’ fees”. Nor was the court convinced by DISH’s arguments on appeal that the identified lack of novelty and obviousness “undercut Realtime’s allegation that the ’610 patent has an unconventional arrangement of claim elements”, as relevant to the factual component of step two of the Alice test (which concerns whether a challenged claim contains a sufficient “inventive concept”). Rather, the Federal Circuit found that “[a]t best, the two Board decisions establish that the throughput limitation was known in the prior art”—concluding that at any rate, a lack of conventionality would not necessarily be fatal because an inventive concept can still “be found in the non-conventional and non-generic arrangement of known, conventional pieces” (citing its own 2016 decision in Bascom Global Internet Services v. AT&T Mobility).

The Federal Circuit also reached a similar conclusion as to the reexam nonfinal office actions that reached a determination of obviousness, finding that the lower court’s “analysis is lacking for many of the same reasons discussed above regarding the ’535 patent IPR”. Any greater relevance gained by the fact that the actions were “at least” related to the same patent, the appellate court found, was offset by the examiner’s use of the “broadest reasonable interpretation” claim construction standard, based on which “the Board considered and expressly rejected” the district court’s construction of a key term (emphasis in original).

Additionally, the Federal Circuit found that the district court was wrong to rely on the aforementioned notice letter from DISH regarding its position on ineligibility. In that letter, the defendant stated that in light of the Google and Netflix district court decisions invalidating the ‘535 patent, “[e]ven a casual comparison of the ’610 patent asserted claims to the now invalid claims of the ’535 patent reveals that the ’610 asserted claims are likely to suffer the same ineligibility finding”. The letter also invoked the Federal Circuit’s decision as to the ‘305 patent as allegedly supporting this point. Here, the Federal Circuit found that apart from its citation of the aforementioned Alice rulings, it was unclear from the district court’s analysis why the letter would serve as a red flag, determining instead that the letter “contains no analysis sufficient to put the patentee on notice that its arguments regarding ineligibility are so meritless as to amount to an exceptional case”. Indeed, the Federal Circuit noted that “[i]f such a notice letter were sufficient to trigger § 285, then every party would send such a letter setting forth its complaints at the early stages of litigation to ensure that— if it prevailed—it would be entitled to attorneys’ fees”.

The Federal Circuit lastly found error in the lower court’s identification of the opinion from Bovik, Dish’s expert on patent ineligibility, which the district court cited in its ineligibility ruling, as a red flag. Far from meriting “serious consideration”, as the district court had underscored, the Federal Circuit instead found that the relevant section of Bovik’s opinion was “all typical of the ordinary, unexceptional patent infringement case” and that “DISH’s citations only show that Realtime and Dr. Rhyne took a contrary position”. This, explained the appellate court, would not have put RAS on notice as to any lack of merit in its case.

The Federal Circuit then concluded by vacating the attorney fee award and remanding for further consideration “in light of this opinion”, underscoring that it was not offering an “opinion on the correct disposition of DISH’s attorneys’ fees motion on remand”.

For more on the thaw between Judge Albright and the Federal Circuit on convenience transfers—including reasons for the greater deference identified in recent mandamus decisions upholding his decisions on this issue—see “A Telling Trio of Recent Convenience Transfer Denials” (August 2024).