Potential Actions and Future Implications for Netflix in Patent Infringement Case

Netflix has been ordered to pay GoTV Streaming $2.5 Million in damages for infringing one of its wireless technology patents. Scott Hervey and Eric Caligiuri discuss this update on this episode of The Briefing.

Watch this episode on the Weintraub YouTube channel here.

Show Notes:

Scott:
I’m Scott Hervey with Weintraub Tobin. In a prior discussion with my colleague, Eric Caligiuri, earlier this year, we talked about a case where a federal court denied discovery requests aimed at uncovering details surrounding the financing of a plaintiff’s patent litigation. That case was GoTV Streaming LLC versus Netflix in the Central District of California. In response to some inquiries and requests for further updates from some of our viewers and listeners, we wanted to give you an update on the broader outcome of this case. That’s coming up on this installment of The Briefing by Weintraub Tobin.

Eric, welcome to another episode of the Briefing. Thanks for joining us today.

Eric:
Great to be here, Scott.

Scott:
Eric, what can you tell us about what’s happened in the GOTV streaming versus Netflix case since we last spoke?

Eric:
Well, Scott, California jury has found that Netflix did in fact, infringe one of GOTV Wireless’s technology patents with its television and movie streaming platform, and found Netflix owes GOTV Streaming 2.5 million for the infringement. In the verdict, the jury said that Netflix should pay GOTV the damages in one lump sum as a penalty for infringing US patent number 898715. But the jury did find that Netflix did not infringe a second patent that was also included in the suits. Both patents generally covered methods for rendering content on a wireless device.

Scott:
So, 2.5 million is not really a lot of money for Netflix. But I do have a technical question for you, and maybe you might not know, based on the judgment, does the judgment include ongoing royalties? In other words, will Netflix be able to continue to use this technology if it continues a particular royalty payment? Or does that $2.5 million include ongoing use of the patent, or is this just for past use, and Netflix can’t use this technology without further infringement? Do you know?

Eric:
Yeah. So, that judgment was just for past infringement. It was a lump sum payment. There’s nothing about ongoing royalties or future payments. There’s probably a bit of an open question in terms know what Netflix can do in the future, and they may have to go and license the patent. But there was nothing specific in the jury verdict about going forward. It was simply damages for past infringement.

Scott:
Okay, so either Netflix has to enter into a commercial deal with GOTV, or they need to come up with a technology that doesn’t infringe that particular patent. Interesting. Eric, can you tell us about some of the background of this case?

Eric:
Yeah, sure. So GOtV first sued Netflix in October of 2022, alleging certain parts of Netflix’s streaming service infringed two of its wireless technology patents. Specifically, GOTV alleged Netflix’s streaming service uses the methods covered by GOtV’s patents to lay up content on its app and website, like its widgets, menu buttons, photo imagery. Netflix argued in response that it had no pre-filing knowledge of the patents, and without that knowledge, there couldn’t be any indirect infringement or induced infringement. Instead, Netflix argued that GotV tried to create knowledge of the patents by filing suit, sorting the patents, and then alleging inducement and an amended complaint. But, according to Netflix, in order to claim induced infringement, there has to be proof that the infringer had knowledge of the patents in suit before the complaint was filed.

Scott:
Interesting. So what happened next?

Eric:
Well, after conducting discovery, including covering some of the issues into litigation funding that we discussed last time, the jury found that Netflix did in fact infringe on one of GOTV’s patents through the use of its cloud computing providers to operate its streaming platform. But it did not infringe Netflix. That is the other one of the patents which was covering Netflix’s operation of the devices. So that’s when the jury then awarded the $2.5 million for the infringement of the one patent.

Scott:
Okay, so, I mean, as I just said, I think $2.5 million is almost a rounding error for Netflix nowadays. Do you have any idea what’s going to happen next? Is Netflix just going to pay the $2.5 million, or do you think they might appeal?

Eric:
Can’t say exactly what Netflix will do, but most likely, Netflix won’t just hand over the 2.5 million to go TV at this point, and instead, they may try to challenge the jury’s verdict, either through some post-trial motions with the district court or possibly an appeal to the Federal Circuit, sort of separately. Netflix also still has some challenges to the patents at the patent office that remain pending that could invalidate the patents and thus reduce or wipe out the jury verdict if the patents are found to be invalid to the extent that Netflix hasn’t paid the money yet. This also, a little bit, goes to what you were talking before, where what’s going to happen in the future with these patents and the infringement? So, if Netflix could invalidate the patents, that would also solve that issue going forward in terms of trying to work out some future royalty or payments. So, in short, this is still far from over.

Scott:
Yeah, you raised an interesting point there, Eric. If Netflix has not created a technological workaround, and if its challenges to the patents are still pending at the patent office, then it may just continue to pursue those for the purpose of probably entering into a global licensing deal with GoTV because I’m pretty sure GOTV would not want that patent to be invalidated.

Eric:
Correct? That’s a little bit of sort of a tactic here, too, because once Netflix pays the 2.5 million for the jury verdict, that money is gone. So even if the patents will say later invalidated, it doesn’t get the money back. So it has a lot of incentive to keep fighting and not pay that money until as late as.

Scott:
Right, right. Got it. This is really interesting. Let’s keep an eye on this case, shall we? And let’s deliver more updates to our listeners and our viewers as they come up.

Eric:
We’ll do, Scott; thank you for listening to this episode of the Briefing. We hope you enjoyed the episode. If you did, please remember to subscribe, leave us a review, and share this episode with your friends and colleagues. If you have any questions about the topic we covered today, please leave us a comment, and we’ll try to get that family close.